Managing Macroeconomic Policies for Sustainable Growth

Managing Macroeconomic Policies for Sustainable Growth

John Asafu-Adjaye and Renuka Mahadevan

The authors expertly reveal a model-based analysis of economic development and environmental issues with policy prescriptions for enhancing sustainable development. Within the last four decades, there has been a rapid deterioration in the quality of our environmental and natural resources, raising grave concerns about the sustainability of unbridled economic growth. In light of these concerns, the authors analyse a range of economic and environmental issues, and propose policy recommendations that would enhance sustainable economic growth. The book covers a variety of issues related to economic development, trade, energy and climate change, and focuses on countries in the Asia-Pacific region including Australia, Thailand, Papua New Guinea and Fiji.

Chapter 5: Trade Policy in the Pacific: Which is the Best Way Forward?

John Asafu-Adjaye and Renuka Mahadevan

Subjects: asian studies, asian development, asian economics, development studies, asian development, development economics, economics and finance, asian economics, development economics


____________________________________________________ 5.1 INTRODUCTION Despite numerous attempts by the World Trade Organisation (WTO), trade negotiations on a multilateral level remain stalled since the Doha round in November 2001. The consequence of the failed trade agreements has been the proliferation of other types of trade arrangements and liberalisation effrts, namely bilateral and regional in nature, between specific countries or a group of them. From 54 Free Trade Agreements (FTAs) in 2000, the ADB has identified 238 bilateral and plurilateral FTAs as of January 2011. Of these, 93 are in effect, 27 are signed, 63 are under negotiation and 55 are in the proposal stage (ADB, 2011). While the dominant view of trade liberalisation is that free (or freer) trade fosters economic growth, studies such as Brown et al. (1992), Scollay and Gilbert (2000), Yu and Jensen (2005), among many others, show that the impacts of various trade liberalisation measures and trade arrangements vary for different countries and regions. Thus the issue of which form of trade liberalisation or agreement is most beneficial remains an empirical one. This study aims to enrich the existing literature by shedding light on the possible effects of some trade options and policy implications using the PICs as a case study for the following reasons. First, although there are more than 50 small island developing states characterised by their significant openness to trade (Santos-Paulino, 2007), there is a dearth of research on these economies. Second, although trade liberalisation has been identified as an important policy reform for the Pacific...

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