Trade Policy Reforms and Development

Trade Policy Reforms and Development

Essays in Honour of Peter Lloyd, Volume II

Edited by Sisira Jayasuriya

Trade Policy Reforms and Development, comprises 11 essays offering new contributions on the following topics: globalisation and political economy of trade; trade, labour standards and economic crisis; the changing role of the WTO; competition policy and the WTO; choice of formulas for market access negotiations; regionalism and bilateralism in ASEAN; ANZUS free trade agreement; new criteria for optimum currency areas; trade policy and poverty in Asia; impact of agricultural trade reforms on poverty; and recent behaviour of US imports.

Chapter 2: The economic crisis, labour standards and trade performance in East Asia

Keith E. Maskus

Subjects: economics and finance, international economics


Keith E. Maskus* 1. INTRODUCTION It is a pleasure to honour Peter Lloyd, who for decades has been at the top rank of applied international trade economists. Peter has made fundamental contributions in trade measurement, in the theory of trade policy, and in empirical analysis of trade restrictions. He has also been intimately involved in considering the role of trade in the development of East Asian economies. In that context, I am delighted to offer this chapter. In this chapter I analyse a question that is both straightforward and difficult to answer: ‘Did the economic crisis in East Asia of the late 1990s have the effect of weakening labour rights in those countries, with a consequent increase in export performance of labour-intensive manufacturing goods?’ The question seems straightforward because, as has been suggested in the popular literature, collapsing economic conditions would be expected to diminish social protection and because, as civil society would have it, such diminution would expand export competitiveness. It is difficult to answer both because the logic is far more complex and because available data are poorly suited to the task. Despite these difficulties the question is of considerable interest and deserves analytical attention. To this end I review available evidence on relationships between labour standards and trade, then go on to an empirical analysis of the recent East Asian experience. The data suggest that exports of labour-intensive goods may have increased in those countries that were hit hardest by the...

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