computational analysis of the accession of chile to the nafta and western hemisphere integration we present the results based on the michigan computational general equilibrium model of western hemisphere economic integration it is shown that tariff elimination will have beneficial effects for most countries involved although the benefits as well as the costs of liberalizatio n are small however if a hemispheric treaty were to stimulate an increase in the capital stocks of the major south american economies the welfare gains would be substantial sensitivity tests reveal that the model exaggerates the likely gains from economies of scale due to liberalization but the error is small in this context because the impact of trade liberalization is small when econometric estimates of scale economies are incorporated into the model the welfare gains due to capital flows nevertheless remain robust a comparison of results for chile using different databases indicates that the impact of regional liberalization using a 1980 database may overstate the impact on the nonferrous metals sector in particular and manufacturing more generally nonetheless when using a 1990 database the change in output of the nonferrous metals sector remain larger than for any other sectors in the chilean economy

armington models and terms of trade effects some econometric evidence for north america elasticities of substitution among u s imports from mexico canada the rest of the world and competing domestic production are estimated for twenty two mining and manufacturing sectors based on quarterly data for 1980 88 these elasticities will provide a benchmark for computable general equilibrium models of north american trade liberalization the authors also find that estimated armington elasticities are low and therefore researchers may want to reconsider the device of using high values of armington elasticities in multicountry computable general equilibrium models to avoid large terms of trade losses associated with preferential trade liberalization

the role of market forces in assuring contractual performance the conditions under which transactors can use the market repeat purchase mechanism of contract enforcement are examined increased price is shown to be a means of assuring contractual performance a necessary and sufficient condition for performance is the existence of price sufficiently above salvageable production costs so that the nonperforming firm loses a discounted steam of rents on future sales which is greater than the wealth increase from nonperformance this will generally imply a market price greater than the perfectly competitive price and rationalize investments in firm specific assets advertising investments thereby become a positive indicator of likely performance

terms of trade and global efficiency effects of free trade agreements 1990 2002 this paper infers the terms of trade effects of free trade agreements ftas implemented in the 1990s we estimate large fta effects on bilateral trade volume in 2 digit manufacturing goods from 1990 2002 using panel data gravity methods to resolve two way causality the terms of trade changes implied by these volume effects are deduced for 40 countries plus a rest of the world aggregate using an endowments general equilibrium model some countries gain over 5 of real manufacturing income some lose less than 0 3 global efficiency of manufactures trade rises 0 9 based on a distance function measure of iceberg melting

approaches to the privatization of fertilizer marketing in africa abstract agricultural marketing privatization has been a central feature of structural adjustment recommendations this paper briefly analyses the main issues related to privatization in the fertilizer sector in africa reviews developments and examines possible reasons for the relatively slow progress to date constraints to effective privatization are identified and policy changes and other reforms necessary if fertilizer marketing privatization is to succeed are proposed effective privatization will not be achieved without detailed planning and consideration of potential problems at an early stage

ngos agricultural technology and the rural poor abstract a wide range of agencies outside the public and private commercial sectors is involved in generating introducing testing and promoting agricultural technology particularly for small farmers and landless labourers in marginal areas of less developed countries their experience is largely undocumented and tends to be overlooked for specific locations this paper discusses the significance of different types of voluntary agency vis a vis the public sector focusing on non government organizations it then examines in what roles they can be expected to perform well although still fragmentary the evidence from africa asia and latin america indicates substantial unexploited complementarities between agencies within and outside the public sector

developing countries and the gains from regionalism links between trade and farm policy reforms in mexico we use a multi country computable general equilibrium cge model with agricultural policy details to simulate the effects of north american free trade agreement nafta we find that mexico gains from nafta only when it also removes domestic distortions in agriculture in that case agriculture can generate allocative efficiency gains large enough to offset the terms of trade losses that arise because mexico has higher initial tariffs than its nafta partners when an rta forces a developing country to reform its domestic distortions that are linked to trade restrictions it becomes a building block toward multilateralism

policies for african seed enterprise development abstract the commercial seed sector has been slow to develop in sub saharan africa the paper examines the major impediments and identifies areas in which seed policies can be strengthened seed enterprise development has been hampered by regulatory frameworks that favor parastatal enterprises and that inhibit commercial innovation in addition government and donor projects provide large amounts of free or subsidized seed that further discourages seed enterprise development in addition to regulatory reform and the curtailment of many seed distribution projects there are other policy changes that need to be implemented national agricultural research institutes need to invest more resources in promoting their varieties and helping to stimulate commercial seed production greater emphasis is required on regional strategies for public plant breeding and private seed marketing national policies need to strengthen input marketing capacity and infrastructure finally donors governments and ngos should shift from trying to encourage village level commercial seed production and instead strengthen farmers capacities to assess new varieties and to be effective consumers of commercial inputs

liberalization and agricultural marketing recent causes and effects in third world economies abstract from merely being the dream of some economists a few years ago the liberalization of national marketing systems has suddenly taken a tangible form on a worldwide scale why have governments hitherto clinging to state participation and controls especially in their agricultural and currency trading systems changed their policies so swiftly are market structures entrepreneurial and private sector financing potentials capable of filling the gaps will the liberalization move lead of the envisaged competitive market and price mechanism with its resource mobilizing effects or will this move lacking efficient implementation get stuck somewhere in between inviting resurrection of interventionist policies this article provides both evidence and analysis on these questions in an introductory assessment of the dynamic process of radical policy changes faced by the food and agricultural marketing systems in most developing countries today

agricultural policy reform in zambia the dynamics of policy formulation in the second republic abstract the agricultural policy reform process in africa during the 1980s has been slow partly because it has neglected a number of key factors analysis of zambia s experience during the second republic suggests that greater attention needs to be given to institutional heritage political acceptability the diversity of policy making organizations and the policy freedom of subsectoral organizations neglect of these issues has led to difficulties in getting policy makers to even conceptualize reform and has led to much concern over the political implications of insensitive reform proposals

best execution in securities markets an application of signaling and agency theory a securities broker executing a customer s purchase or sale order acts as an agent for that customer and thereby assumes certain duties in the eyes of the law the restatement of agency 2d 1958 observes that a broker has a duty to obtain terms which best satisfy the manifested purposes of his customer 424 and that he must act solely for the benefit of his customer in all matters connected with his agency 387 the securities and exchange commission sec has more specifically observed that a broker who accepts a customer s sell order has a fiduciary duty to sell the stock at the highest possible price 1 the legal characterizations of a broker s duty to obtain best execution of a customer s order seem reasonable at first glance however they ignore the economic characteristics of an agency relationship in particular a principal knows that an agent has an incentive to act in his own self interest and he will try to set his agent s fee schedule to induce what he views as favorable behavior by the agent see ross 1973 shavell 1979 holmstrom 1979 baron 1979 and baron and holmstrom 1980 more importantly the sec position fails to recognize that search for better purchase or sale opportunities is not free but consumes real resources see stigler 1961 mccall 1965 1970 nelson 1970 and garbade and silber 1976 the sec position can if taken literally result in inefficient order execution in markets with imperfect information flows and costly search this paper addresses the problems of defining and obtaining best execution of an agency order for the purchase or sale of securities section ii develops the definition of best in the sense of efficiency section iii describes why a customer has an incentive to use a broker as an agent to complete his order and section iv analyzes the conflicts of interest that arise between brokers and customers 2 section v discusses the institutional arrangements that have emerged in securities markets to elicit favorable agency executions three arrangements are described 1 explicit contracting to limit an agent s discretion 2 signaling by agents to validate claims of superior execution and 3 collective action to mitigate the

promoting high input maize technologies in africa the sasakawa global 2000 experience in ethiopia and mozambique abstract critics argue that high external input technologies heit are too costly for african farmers and that programs to promote them are economically unsustainable this paper assesses sasakawa global 2000 programs in ethiopia and mozambique using financial and economic analysis yield models and subsector analysis the sg 2000 technology was much more profitable in ethiopia than in mozambique but varied depending on production location fertilizer and transport costs domestic and international prices regional surplus or deficit conditions and production as import substitute or export the case studies provide further evidence that high input technologies can be successfully introduced through well funded high profile programs but not conclusive evidence that such programs can be scaled up and sustained five major implications are discussed concerning 1 prospects for scaling up and sustaining heit adoption 2 the need for expanded profitability analysis 3 the role of trade prospects and policies 4 institution building requirements and 5 infrastructure investments to reduce marketing costs

the multibank holding company effect on cost efficiency in banking abstract this paper tests the hypothesis that differences in the organizational form embodied in independent banks one bank holding companies and multibank holding companies result in differences in operating cost efficiency the transaction and agency cost paradigms for analysis of organizational efficiency provide theoretical motivation for the hypothesis the effects of organizational form on bank operating expenses for individual banks are evaluated on subsamples divided into quartiles based on total revenue results indicate that for banks having revenues in the lowest quartile both one bank and multibank holding company affiliates are cost efficient relative to independent banks multibank holding company affiliates are cost efficient relative to both one bank affiliates and independent banks for banks in the interquartile range no significant differences in cost efficiency are noted banks in the highest revenue quartile relative efficiency at the organizational level is also evaluated results provide evidence of lower operating costs for banking operations of both multibank and one bank holding company organizations relative to independent banks taken as a whole the results imply that holding company affiliation conveys cost advantages to banking units below the 75th revenue percentile

global models applied to agricultural and trade policies a review and assessment the continuing process of global integration bears implications for farmers and related supplying and processing industries in all parts of the world but also for the rest of the world economy an assessment of agricultural and trade policy impacts is bound to be complex and is often supported by quantitative modeling analysis this article provides an assessment of the present state of applied modelling in the area of trade and agricultural policies we provide in this paper a comparative assessment of alternative modelling approaches considering a total of 16 partial equilibrium and general equilibrium models the assessment includes theoretical modelling foundations datasets employed and institutional aspects such as model maintenance and dissemination of results a typology of models is provided by structuring the assessment along a clear set of evaluation criteria

marketmaker behavior in an auction market an analysis of scalpers in futures markets this paper focuses on the role of scalpers as marketmakers in the competitive auction of futures exchanges we use transactions data of a representative scalper to identify the source of scalper earnings we find that scalpers provide liquidity services to incoming market orders thereby facilitating commercial hedging scalper earnings are positively related to the bid asked spread and negatively related to the length of time a position is held futures trading is organized as an auction market with buyers and sellers confronting each other directly in a trading pit or ring on an exchange floor bids and offers are represented in the pit by open outcry trades are consummated throughout a trading session which usually last 4 to 6 hours whenever a bid is hit or an offer lifted by some other agent on the floor participants in futures markets include hedgers and speculators whose orders are called in and are represented by floor brokers in the pit in addition floor traders participate by bidding and offering for their own account some floor traders fall into the category of short term speculators day traders who prefer to trade for themselves rather than execute orders through a floor broker a somewhat more specialized group of floor traders are known as scalpers they are essentially marketmakers who quote bids and offers against which market orders can be executed they do not have an affirmative obligation to provide liquidity by quoting bids and offers but do so in the expectation of earning a return this paper examines the activities of scalpers on futures exchanges in order to identify the role of marketmakers in a freely competitive auction we focus on the nature of scalper decision making as well as on the contribution of scalpers to economic welfare one of our main concerns is with the source of a scalper s

seed regulation choices on the road to reform major changes in national seed systems including the rapid development of commercial seed enterprises the growth of non governmental organization ngo seed projects and the concomitant decline of public sector seed provision call for a re examination of seed regulatory frameworks in developing countries privatization and deregulation are often presented as logical partners but the nature of seed system change and the complexities of regulatory responsibility make seed regulatory reform less straightforward than it first appears challenges include the limited opportunities for commercial seed development the need to provide guidance to seed systems in transition the international pressures for plant variety protection pvp and significant differences among various national regulatory approaches problems with the conduct of current seed regulations include significant inefficiency the use of inappropriate standards inadequate opportunities for the participation of new entrants to the seed system and a lack of transparency specific guidelines are offered for reorganizing variety registration and performance testing providing a balanced opportunity for pvp and broadening participation in seed quality control national seed regulatory agencies will see their role shift from the direct supervision of seed production towards technical and policy support for the development of a wider range of seed provision options

governments ngos and agricultural development perspectives on changing inter organisational relationships there are divergent interests in involving ngos in public sector programmes of agricultural development some commentators seek to foster popular participation through such involvement while others view it largely within the logic of public sector cutbacks using material primarily from latin america and also from africa and asia the potential gains and risks inherent in a range of ngo government relationships are considered strengths and weaknesses in ngo development strategies and practice are reviewed and potential public sector contributions discussed while closer relationships between ngos and governments seem likely to emerge in the context of current public sector reform the form these relationships will assume is less clear and will probably be highly diverse

private research and public benefit the private seed industry for sorghum and pearl millet in india in contrast to conventional wisdom private firms are spending substantial amounts of money on research to develop new cultivars for small farmer subsistence agriculture indian firms spend almost as much as the government on breeding pearl millet and sorghum the hybrids developed by firms are becoming popular with farmers about 900 000 ha were planted with private pearl millet and sorghum hybrids in 1987 the higher yields of private hybrids increased grain output by at least 200 000 t although prices for seed of private hybrids are higher than seed of cultivars developed by government research most of the benefits from private breeding research accrue to farmers and consumers the research for this paper was primarily financed by usaid new delhi we also received support from icrisat we would like to thank the scientists of the aicsip a1cpmip iari officials of the ministry of agriculture nsc sscs and executives of private seed companies for their cooperation we also appreciate the comments of john witcombe tom walker and wayne freeman on earlier drafts of this paper the opinions expressed in the paper are those of the authors and do not represent the opinions of usaid or icrisat

public open access and private timber harvests theory and application to the effects of trade liberalization in mexico a common popular assertion is that trade liberalization encourages deforestation but whether this is true depends on how trade policies affect the allocation of land among competing uses and how they influence illegal cutting of public forests a model is presented that allows for forests to be either public or private and public forests are divided into protected or managed and threatened categories effects of price changes are shown on each part of the forest an empirical version of the model is applied to the case of mexico with nafta most scenarios considered show that nafta will have positive long run effects on forest cover in mexico but that this is net of losses on private lands

zimbabwe s maize based green revolution preconditions for replication abstract the green revolution was launched in 1960 in zimbabwe five years before it got underway in india since zimbabwe s green revolution was spearheaded by white commercial farmers however it was ignored by africa s new leaders in the 1960s as they experimented with state farms from moscow communal farms from china and land settlement schemes from israel at zimbabwe s independence in 1980 the new majority ruled government introduced a number of programs to help smallholders increase food and cash crop production drawing on a backlog of hybrid maize varieties expanded access to credit higher guaranteed government maize prices and marketing subsidies smallholders doubled maize production during 1980 1986 zimbabwe s maize based green revolution challenges those who allege that hybrid maize cannot compete with sorghum in low rainfall areas and that it is unsuitable for resource poor farmers because of the need to purchase new seed each year today virtually 100 of zimbabwe s maize area is under hybrids and short season hybrids are outcompeting other foodgrains in many low rainfall areas zimbabwe s biggest challenge is to develop cost effective marketing policies and institutions to sustain its maize based green revolution countries trying to replicate zimbabwe s success story should focus on fulfilling four interrelated preconditions political technological economic and institutional

regional trade agreements versus global trade liberalisation implications for a small island developing state this study undertakes an empirical investigation of the macroeconomic and sectoral impacts of two forms of regional trade agreements vis a vis global trade liberalisation on a small island country using fiji as a case study in order to capture the feedback effects of such a complex set of policies we employ a dynamic computable general equilibrium model of the fijian economy to investigate i the impact of the pacific island countries trade agreement picta ii the impact of picta the pacific agreement for closer economic relations pacer and the economic partnership agreements epas iii the impact of full tariff liberalisation i e tariff removal only and iv the impact of full trade liberalisation with removal of both tariff and non tariff barriers while picta consistently provides the least benefits across a range of macroeconomic indicators including real output welfare trade volumes and employment full trade liberalisation involving the removal of tariff and non tariff barriers provides the greatest benefits compared to the other scenarios in terms of real output however the latter scenario is outperformed by picta pacer the epas and full tariff liberalisation in terms of welfare effects trade volumes and employment the policy implications hold important lessons for developing countries considering trade liberalisation

economic policy reform in developing countries the role and management of political factors abstract increased recognition of the role of sound economic policies in economic development has stimulated interest in the political and administrative factors that determine policy responses of different developing countries this article provides a critical introduction to three further papers in this special section of world development all of which deal with political and administrative dimensions of economic policy reform certain common themes are isolated and addressed these include the role of political analysis and explanation the concept of political will to undertake reforms and the importance of the implementation phase in the reform process

invisible hands indigenous knowledge and inevitable fads challenges to public sector agricultural research in ghana abstract support for public sector agricultural research in developing countries is declining at the same time many donors feel that alternative institutions will be able to perform the functions traditionally reserved for the public sector these alternatives include private sector initiatives nongovernment organizations and farmer organizations and highly publicized special projects in agricultural development the logic of these alternatives is examined using evidence on maize research in ghana although each of the alternatives offers contributions and public sector research undoubtedly requires an overhaul emphasis is placed on the necessity of continued suport to building strong public sector agricultural research capacity

political explanations of macroeconomic management a survey abstract this paper surveys eight overlapping types of political explanation for patterns of macroeconomic management in the third world 1 historical traditions 2 socio structural determinants 3 the self interest of politically powerful sectors 4 entrenched characteristics of the political system 5 formal properties of the political institutions 6 the influence of economic ideologies 7 vicious virtuous circles and 8 a residual category of conjunctural factors it then considers the scope and limitations of such explanations and reassesses the notion of political constraints on economic optimization

assessing global computable general equilibrium model validity using agricultural price volatility computable general equilibrium cge models are commonly used for global agricultural market analysis concerns are sometimes raised however about the quality of their output since key parameters may not be econometrically estimated and little emphasis is generally given to model assessment this article addresses the latter issue by developing an approach to validating cge models based on the ability to reproduce observed price volatility in agricultural markets we show how patterns in the deviations between model predictions and validation criteria can be used to identify the weak points of a model and guide development of improved specifications with firmer empirical foundations

input use and market development in sub saharan africa an overview abstract this paper sets forth the background and objectives of this special issue trends in input use since 1980 are reviewed and a conceptual framework is presented for analyzing problems of input use and formulating strategies for resolving them reasons for low levels of fertilizer use by smallholder farmers are summarized briefly the essential points of the papers in the special issue and their implications for further expansion of input use in sub saharan africa are then outlined

investment strategies to combat rural poverty a proposal for latin america abstract the economic crisis that started in 1980 has forced the latin american countries to implement drastic stabilization policies and structural adjustment programs the consequent appreciation of the real exchange rate has transformed agriculture into the most dynamic sector of the economy this creates the possibility of defining a forward looking rural development strategy that is consistent with this new role for agriculture and that has the potential of significantly lessening rural poverty starting from a social poverty map for the rural areas we identify a five pronged approach that includes 1 farm oriented rural development projects for the upper subfamily and family farms 2 household oriented rural development projects for the lower subfamily farms 3 access to addtional assets for the landless and subfamily farmers through land reform and colonization 4 employment creation and labor market rationalization and 5 the promotion of backward forward and final demand linkages with agriculture located in the rural areas

the nafta preference and us mexico trade aggregate level analysis this paper focuses on the us tariff preference afforded to mexico relative to non nafta trading partners and evaluates the trade effects of nafta in a manner consistent with the idea behind a preferential trading agreement the estimation technique exploits the time varying dimension of the tariff preference over 1989 to 2001 this is important because the tariff preference for mexico into the united states market existed prior to nafta further the nafta preference was phased in over time we find that a higher us tariff preference for mexico corresponds to increased us import demand for mexican goods and that a higher mexican tariff preference for the united states corresponds to increased mexican demand for us exports interestingly import demand was more responsive to changes in the tariff preference once nafta was in place than it was on average

policy reform and reform myopia abstract recent decades witnessed major efforts on the part of many developingcountry government to alter existing economic policies and undo constraints on agricultural growth this article compares the dynamics of agricultural policy reform initiatives of the 1970s with those of the 1980s the authors argue that when the definition of what is needed in terms of policy to get agriculture moving changes the political economy of policy making and implementation also shifts such shifts are often accompanied by a myopic focus on new crisis definitions and new policy solutions to the detriment of more integrated approaches to agricultural development

who makes economic policy in africa and how abstract to understand the considerable detorioration in the economic policies of many african countries during the 1970s it is essential to go beyond the economist s analytical models the pressing drive of authoritarian rulers to survive adds an important dimension to economic policy choices although constrained to varying degrees by ethnic regional and class loyalties among populations they govern african rulers enjoy a measure of autonomy in making policy they did not react speedily to the growing economic crisis during the early 1980s however most reforms were undertaken under pressure and many policy efforts failed some countries managed to sustain reforms but the important question is how to go beyond these idiosyncratic cases

trade creation and trade diversion in the canada united states free trade agreement in this paper the changes in trade patterns introduced by the canada united states free trade agreement are examined variation in the extent of tariff liberalization under the agreement is used to identify the impact of tariff liberalization on the growth of trade both with member countries and non member countries data at the commodity level are used and the results indicate that the canada united states free trade agreement had substantial trade creation effects with little evidence of trade diversion jel classification f13 f14

after the decision implementing policy reforms in developing countries abstract implicit in many reform proposals is a model of the policy process that is roughly linear a proposed reform gets on the agenda for government action a decision is made on the proposal and the new policy or institutional arangement is implemented either successfully or unsuccessfully this article presents an alternative interactive model of implementation that focuses on the conflict and reactions that are evoked by efforts to bring about changed policy or institutional contexts for development and the resources that policy makers and managers are likely to require to sustain a reform in the face of such reactions central to the analysis is the assertion that characteristics of the reform being implemented will largely determine the kind of conflict it engenders where such reaction is likely to become manifest and what resources are needed for sustainability the analysis suggests a framework for the strategic management of reform initiatives

a north american free trade agreement analytical issues and a computational assessment abstractthe following sections are included introductionissues in analyzing the economic impact of the naftathe computational modelcomputational resultsconclusionsstudy questionsreferencessuggested further reading this abstract was borrowed from another version of this item

free trade areas in east asia discriminatory or non discriminatory ver the past decade we have witnessed the worldwide proliferation ofregional trade arrangements rtas even after the launch of the wtomultilateral trading system rtas have continued to spread however there havebeen marked variances across regions in terms of the degree to which regionaltrade integration has been carried out the east asian region is characterised bythe dearth of rtas regional integration moves have involved merely partial orloosely institutionalised groupings i e afta asean free trade area andapec asia paci c economic cooperation in particular the major three eastasian countries china japan and korea have tended to bypass the prevalenttrend of regionalism and instead have generally preferred multilateral trade liberal isation approaches under the gatt and wto regulations regarding rtas their stance against regionalism has mainly been for the following reasons i relative predominance of interregional trade and investment relations overintraregional transactions ii historical animosities stemming from the legaciesof japanese colonialism iii lack of central leadership and iv diversities inculture race language and level of economic development within the region in recent years however the region s support has shifted from multilateraltrade arrangements to rtas a turning point was the outbreak of the east asian nancial crisis in 1997 besides triggering massive economic unrest in east asia the crisis revitalised the demand for regional economic cooperation which calledfor more cooperation and policy coordination among neighbouring economies

global models of trade in agriculture and related environmental modelling a review and assessment the continuing process of global integration bears implications for farmers and related supplying and processing industries in all parts of the world but also for the rest of the world economy an assessment of agricultural and trade policy impacts is bound to be complex and is often supported by quantitative modeling analysis this article provides an assessment of the present state of applied modelling in the area of trade and agricultural policies we provide in this paper a comparative assessment of alternative modelling approaches considering a total of 16 partial equilibrium and general equilibrium models the assessment includes theoretical modelling foundations datasets employed and institutional aspects such as model maintenance and dissemination of results a typology of models is provided by structuring the assessment along a clear set of evaluation criteria

from regressive pollution taxes to progressive environmental tax reforms european countries have increased their use of environmental tax instruments by designing new tax bases but many countries face opposition from public opinion for fear of the distributive consequences of these environmental tax reforms this paper sheds light on the distributive consequences of environmental tax policies when households are heterogeneous the objective is to assess whether an environmental tax reform could be pareto improving when the revenue of the pollution tax is recycled by a change in labor tax properties we show that whatever the degree of regressivity of the environmental tax alone it is possible to design a recycling mechanism that renders the tax reform more pareto efficient by simultaneously decreasing the wage tax and increasing its progressivity