Globalization, Growth and Sustainability

Transcription

1 Globalization, Growth and Sustainability

2 RECENT ECONOMIC THOUGHT SERIES Editors: Warren J. Samuels Michigan State University East Lansing, Michigan, USA William Darity, Jr. University of North Carolina Chapel Hill, North Carolina, USA Other books in the series: Magnusson, Lars: MERCANTILIST ECONOMICS Garston, Neil: BUREAUCRACY: THREE PARADIGMS Friedman, James W.: PROBLEMS OF COORDINATION IN ECONOMIC ACTIVITY Magnusson, Lars: EVOLUTIONARY AND NEO SCHUMPETERIAN APPROACHES TO ECONOMICS Reisman, D.: ECONOMIC THOUGHT AND POLITICAL THEORY Burley, P. and Foster, J.: ECONOMICS AND THERMODYNAMICS: NEW PERSPECTIVES ON ECONOMIC ANALYSIS Brennan, H.G. and Waterman, AC.: ECONOMICS AND RELIGION: ARE THEY DISTINCT? Klein, Philip A.: THE ROLE OF ECONOMIC THEORY Semmler, Willi.: BUSINESS CYCLES: THEORY AND EMPIRICS Little, Daniel: ON THE RELIABILITY OF ECONOMIC MODELS: ESSAYS IN THE PHILOSOPHY OF ECONOMICS Weimer, David L.: INSTITUTIONAL DESIGN Davis, John B.: THE STATE OF THE INTERPRETATION OF KEYNES Wells, Paul: POST KEYNESIAN ECONOMIC THEORY Hoover, Kevin D.: MACROECONOMETRICS: DEVELOPMENTS, TENSIONS AND PROSPECTS Kendrick, John W.: THE NEW SYSTEMS OF NATURAL ACCOUNTS Groenewegen, John: TRANSACTION COST ECONOMICS AND BEYOND King, J.E.: AN ALTERNATIVE MACROECONOMIC THEORY Schofield, Norman: COLLECTIVE DECISION MAKING: SOCIAL CHOICE AND POLITICAL ECONOMY Menchik, Paul L.: HOUSEHOLD AND FAMILY ECONOMICS Gupta, Kanhaya L.: EXPERIENCES WITH FINANCIAL LIBERALIZATION Cohen, Avi J., Hagemann, Harald, and Smithin, John: MONEY FINANCIAL INSTITUTIONS AND MACROECONOMICS Mason, P.L. and Williams, R.M.: RACE, MARKETS, AND SOCIAL OUTCOMES Gupta, Satya Dev: THE POLITICAL ECONOMY OF GLOBALIZATION Fisher, R.C.: INTERGOVERNMENTAL FISCAL RELATIONS Mariussen, A. and Wheelock, J.: HOUSEHOLDS, WORK AND ECONOMIC CHANGE: A COMPARATIVE INSTITUTIONAL PERSPECTIVE

3 Globalization, Growth and Sustainability Edited by Satya Dev Gupta St. Thomas University, Fredericton, New Brunswick Canada with Nanda K. Choudhry University of Toronto Toronto, Ontario Canada ~. " Springer Science+Business Media, LLC

4 Library of Congress Cataloging-in-Publication Data Globalization, growth and sustainability / edited by Satya Dev Gupta with Nanda K. Choudhry. p. cm. -- (Recent economic thought series ; 58) Includes bibliographical references (p. ). ISBN ISBN (ebook) DOI / International economic integration. 2. Economic development. 3. Regional economic disparities. 4. Sustainable development. 1. Gupta, Satya Dev. II. Choudhry, Nanda K. III. Series. HF G dc CIP 1997 Springer Science+Business Media New York Origina11y published by Kluwer Academic Publishers, New York in 1997 Softcover reprint ofthe hardcover Ist edition 1997 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, mechanical, photo-copying, recording, or otherwise, without the prior written permission of the publisher, Springer Science+Business Media, LLC. Printed on acid-free paper

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6 CONTENTS Preface XI 1. Globalization, Growth and Sustainability: An Introduction 1 Satya Dev Gupta and Nanda K. Choudhry Liberalization and Growth 4 Regional Integration 6 Equity and Sustainability 9 Concluding Remarks 12 References 13 I. LlBERALIZA TION AND GROWTH 2. Trade Barriers and Economic Growth: Theory and Evidence 15 Jong-Wha Lee and Phillip Swagel Theoretical Frameworks 17 Empirical Implementation 21 Data 22 Estimation Results 27 Conclusions 32 References Trade Liberalization and the International Distribution of the Gains from Growth 35 Francisco L. Rivera-Batiz The Empirical Evidence on Trade and Growth 36 Trade and Growth: The Theoretical Linkages 38 Endogenous Technical Change and Economic Growth 39 Trade, Technological Change and Long-Run Growth 41 National Innovation Systems and Long-Run Economic Growth 43 The Impact of International Trade on Endogenous Growth 51 Summary and Conclusions 53 References Trade Liberalization and Growth 61 David Greenaway, Steve Leybourne and David Sapsford Modeling Exports, Trade Liberalization and Growth 62 Smooth Transitions Analysis 72 Model Estimation 74 Summary and Concluding Remarks 79 References 81

7 5. Trade Liberalization and Growth in Developing Countries, ~ Bartholomew Armah Growth and Trade Liberalization Outward Orientation Measures in Selected Countries The Granger Procedure for Detecting Causality Findings Conclusions Appendix References II. REGIONAL INTEGRA TION Regional Trading Blocs and Their Implications for the Indian Economy 119 D. M Nachane and Lakshmi R. EC and the NAFTA: General Considerations 121 Trading Arrangements 122 Generalized System of Preferences 125 Multifibre Agreement 127 EC Impact on India 129 NAFT A Impact on India 133 Trade Blocs in the South 137 Conclusions 139 References Globalization, Free Trade and Economic Growth in Mexico 145 Hassan Bougrine The Orthodox Model of Trade and Growth 147 The Alternative Explanation 148 Economic Performance in Mexico 149 Patterns of Foreign Investment in Mexico 151 Foreign Trade 154 Saving, Consumption, Employment and Wages 155 Economic Growth 157 Conclusion 159 References Asia Pacific Economic Cooperation in the Changing World Economy 161 Youn-Suk Kim Historical Sketch of APEC 162 APEC's Open Regionalism 166 Asian Dimension 168 Flying-Wild-Geese Formation 171

8 Trade Liberalization within APEC 173 Conclusion 175 References Trade and Foreign Direct Investment Linkages Among APEC Economies 179 Ashfaq Ahmad and Someshwar Rao Internationalization of APEC Economies 182 APEC Trade Linkages 185 APEC Investment Linkages 188 Interrelationship Between Trade and Investment Linkages 194 Conclusions and Policy Implications 198 Appendix 200 References Succeeding in the Global Business Environment: A Challenge for Small States In the Twenty-first Century 215 Betly Jane Punnett The Global Business Environment 216 Characteristics of Small States 218 Small is Dangerous 219 Small is Beautiful 222 Strategic Solutions Proactive Policies Conclusions References 111. EQUITY AND SUSTAINABILITY Globalization and Sustainable Development Meghnad Desai Can Sustainable Economic Growth be Measured? Market Prices as Appropriate Green Signals Globalization Conclusion Appendix References Globalized Trade and Environmental Protection 243 Sohrab Abizadeh, Michael Benarroch, Wilson Brown and Robert Fenton Environment in Trade Theory 245 Trade, Development and Sustainable Growth 247 Environmental Damage and Trade: Empirical Evidence 249 Policy Issues 250

9 Conclusion 254 References Global Market Relations and the Phenomenon of Tropical Deforestation 259 Mohammed Dore, Mark Johnston and Harvey Stevens Seven Econometric Models Explaining Deforestation 261 Global Market Relations and Endogeneity 266 Conclusion 270 References What Is Sustainable Trade? 273 Patricia Perkins Alternative Definitions of Sustainable Trade 274 Indicators of Sustainable Trade 285 Conclusion 290 References Global Economic Integration and Justice: A Capabilities Approach George DeMartino Harmonization and Its Discontents An Internationalist Normative Principle Capabilities Equality and the Integration Debate The Social-Index Tariff Structure Conclusion References Index Contributors

10 PREFACE Globalization is transforming the world at an accelerating pace. Integration of the world continues, widening and intensifying international linkages in economic, political and social relations. Liberalization of trade and fmance, lubricated by revolutionary changes in information technology, has resulted in significant economic growth at the global level. On the other hand, the process of globalization is changing the nature of production relations, threatening the traditional roles of the nation-state, and carrying with it far-reaching implications for sustainable growth, development and the environment. Although both developed and developing countries are actively participating in this saga of globalization, nearly ninety countries, as the United Nations' Human Development Report, 1996 indicates, are worse off economically than they were ten years ago, leading to "global polarization" between haves and have nots. The report further indicates that the gap between the per capita incomes of the industrialized world and the developing countries, far from narrowing, has more than tripled during the last thirty years. A majority of the countries benefiting from globalization have seen a rise in inequality and poverty. This failure of market driven globalization to distribute its benefits equitably led the United Nations to proclaim 1996 as the International Year for the Eradication of Poverty (IYEP) and the decade of as the international decade for the eradication of poverty, and to promote "people-centered sustainable development". It is against this backdrop that nearly seventy leading scholars world wide have come together to explore and analyze a variety of challenges facing the "global village". Their research is contained in a set of three volumes. One volume, entitled Dynamics o/globalization and Development, examines the impact ofliberalization in the fields of aid, fmance, capital, technology and management policies both at the micro and macro levels. Another volume, The Political Economy o/globalization focuses on the issues arising from a political economy perspective on globalization, including issues such as erosion of national sovereignty, increasing tensions between North and South and between capital and labor, and possible roles of international institutions in ameliorating the situation. This volume focuses on the implications of both regional and global trade liberalization and complementary macroeconomic policy reforms on growth, equity, and sustainability. While considerations of growth, equity, and sustainability permeate the entire volume, the studies have been classified in three sections according to their particular focus. The studies contained in the first section focus

11 on the issue of economic growth with a special reference to less developed economies. Contributions in the second section debate the pros and cons of the regional economic integration movement for the countries participating in the regional groups and for countries outside such groups. The third part includes a number of studies that focus on the issues of equity and sustainability. A general thrust of most of the studies in this volume is that the process of globalization will not automatically lead to sustainable and equitable economic growth. Thus, several contributors point to the need for a set of proactive policies which must be adopted by all stakeholders to remedy intra-national, international, and inter-generational inequities aggravated by the rapid globalization of the world economy. This anthology will provide valuable insights and important background analysis for scholars working in the field of globalization as well as senior undergraduate and graduate students in a variety of curricula, including economics, development studies, and international studies. A project of this nature, obviously, can not be carried out without substantial help from others. Nearly two years ago, William Darity Jr. and Warren Samuels, co-editors of the Recent Economic Thought Series invited me to edit one volume for the Series; I appreciate very much their advice and encouragement through out this endeavor. My first debt, of course, is to all the scholars who contributed to the project and I apologize to those who, in spite of their excellent proposals, could not be included. lowe a special gratitude to Nanda Choudhry who has collaborated with me in developing this project and in co-authoring the introductory chapter. I am also thankful to the large number of reviewers whose comments, though invisible, are well reflected in the chapters of this book. In addition, I wish to acknowledge the research grants provided by st. Thomas University, the encouragement and support of my colleagues including Stan Atherton, Roger Barnsley, Ian Fraser, Tom Good, Jeannette Gaudet, Gary Hughes, John Jennings, Mary Ann Johnson, Santosh Kabadi, Alan Mason, Joan McFarland, Richard Myers, Andrew Secord and Jim Williams, and the technical assistance of those who have helped me in preparing the camera-ready manuscripts. Zachary Rolnik, Christopher Collins, Yana Lambert and other staff at Kluwer deserve special thanks for their help and understanding in publishing what has evolved into a three volume set on the subject. Finally, I wish to express my deep sense of appreciation to my wife, Sarita, and children, Hansa and Santosh, who not only went through the usual disruption of family life that such projects entail, but also contributed their labor of love on a number of tasks associated with this volume. Dev Gupta March 17, 1997