Trade liberalisation, quality upgrading, and export prices

Haichao Fan, Yao Amber Li, Stephen Yeaple 06 September 2014

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Rapid trade liberalisation has transformed the economies of many developing countries. As these countries have scaled back tariffs, their firms have gained access to cheaper and higher quality intermediate inputs from abroad. A growing literature shows that trade liberalisation has led to a surge in imports of intermediate inputs and that the improved access to foreign-made inputs has had a large impact on firm productivity and product scope (e.g. Amiti and Konings 2007; Goldberg et al. 2010).

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Topics:  International trade Productivity and Innovation

Tags:  tariff reduction, Export prices, China, goods quality

Will Chinese household savings plummet with the end of the one-child policy? Maybe, maybe not….

Abhijit Banerjee, Xin Meng, Tommaso Porzio, Nancy Qian 04 September 2014

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As China relaxes its draconian fertility laws, a key question for policymakers is how the resulting increase in fertility will affect economic performance – in particular, whether it will lower household savings. This concern is motivated by the observation that China’s rapid rise in household savings rates coincided with a drastic reduction in fertility that began in the mid 1970s as a result of what came to be known as the one-child policy. During the 1990s, household savings rates reached highs of 34%.

Figure 1

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Topics:  Development Financial markets

Tags:  China, personal saving, one-child policy, fertility

Conflict between US-led and China-led economic architecture

Pradumna B. Rana 05 August 2014

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The Bretton Woods agreement – which is 70 years old this month – established three institutions to promote law and order in international economic relations:

  • The IMF to promote macroeconomic stability,
  • The GATT (and its successor, the WTO) to ensure an open trading environment, and
  • The World Bank to provide development finance for poverty reduction.

The smooth operation of this rules-based, US-led global economic architecture contributed to the unprecedented economic growth and worldwide prosperity of the post-WWII period.

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Topics:  Global governance

Tags:  US, China, IMF, global governance, World Bank, multilateralisation, troika

Agglomeration and product innovation in China

Hongyong Zhang 21 July 2014

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Spatial agglomeration of economic activities is generally assumed to improve productivity and spur firms’ innovation through localisation economies and urbanisation economies.1 There is an extensive empirical literature investigating the effects of localisation and urbanisation on firm-level productivity. Despite its economic importance, there are few empirical studies focusing on agglomeration and product innovation. Feldman and Audretsch (1999) and De Beule and Van Beveren (2010) are two of the few exceptions.

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Topics:  Productivity and Innovation

Tags:  R&D, productivity, China, spatial concentration, innovation, subsidies, clusters, agglomeration

The Chinese labour market: High unemployment coexisting with a labour shortage

Yang Liu 19 July 2014

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In China, both a labour shortage and unemployment have emerged as problems in recent years. The number of university students scheduled to graduate in June 2014 is 7.27 million, increasing with 280,000 from 2013 (MHRSS 2014). Following 2013 – at the time considered the most difficult year for job seekers in history – 2014 is expected to be even harsher. Problems in the labour market in China, which is a key region for Japanese companies advancing overseas, are also attracting attention in Japan.

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Topics:  Labour markets

Tags:  China, unemployment, labour shortage

Through the looking glass: CEO pay in China's listed companies

Alex Bryson, John Forth, Minghai Zhou 24 June 2014

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For many in the West China remains a paradox: a single-party Communist state with a vibrant, thriving economy set to challenge the US in the coming decade. Some have questioned the sustainability of the Chinese growth miracle in the absence of fully-fledged democracy and root-and-branch market reforms. But others point to state-sponsored decentralised market reforms over the past three decades as the key to China's success (Xu 2012).

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Topics:  Financial markets Labour markets

Tags:  China, executive pay, corporate governance, Executive compensation, CEOs

Do capital controls deflect capital flows?

Paolo Giordani, Michele Ruta, Hans Weisfeld, Ling Zhu 23 June 2014

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The size and volatility of capital flows to developing countries have increased significantly in recent years (Figure 1), leading many economists to argue that national policies and multilateral institutions are needed to govern these flows (Forbes and Klein 2013, Blanchard and Ostry 2012). The IMF itself has reviewed its position on the liberalisation and management of capital flows, while recognising that “much further work remains to be done to improve policy coordination in the financial sector” (IMF 2012, p. 28).

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Topics:  International finance

Tags:  China, capital flows, spillovers, South Africa, capital controls, Brazil, Capital inflows, international capital flows

Curriculum and ideology

Davide Cantoni, Yuyu Chen, David Y. Yang, Noam Yuchtman, Y. Jane Zhang 29 May 2014

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Education shapes young minds. Contemporary debates rage on whether it also shapes people’s political views, attitudes, and their values. Examples range from teaching of evolution in US schools, to the role of madrassas in the Islamic world, and the coverage of World War II in Japanese history textbooks. In 2012, an attempt to introduce a mainland Chinese curriculum into Hong Kong schools led to tens of thousands of people taking to the streets in protest.

Scholars across the social sciences have argued that schools play an important role in shaping political attitudes:

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Topics:  Education

Tags:  education, China, curriculum reform

Why are savings so high among the young in urban China?

Mark R. Rosenzweig, Junsen Zhang 21 May 2014

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A well-known phenomenon in contemporary China is the high personal savings rates of households compared with those in developed countries and many low-income countries. A less-studied aspect of this is the elevated savings rates of the young relative to the middle-aged, first shown by Chamon and Prasad (2010) based on urban household data covering the years 1986–2005 for ten provinces.

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Topics:  Frontiers of economic research Global economy

Tags:  China, housing, family, savings, one-child policy

Minimum wages and firm employment: Evidence from China

Yi Huang, Prakash Loungani, Gewei Wang 16 May 2014

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The impact of the minimum wage on employment is a polarising issue in ‘advanced’ – the term commonly used for ‘high-income’ – economies. In the blogosphere, one side is often accused of cruelty (‘they don’t care about the working poor’) and the other of stupidity (‘they don’t realise that labour demand curves slope downwards’). The evidence is mixed. The majority of studies find that minimum wage changes lower employment by a modest amount (Neumark and Wascher 2007) or have little impact (Schmitt 2013).

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Topics:  Labour markets

Tags:  China, minimum wage

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