TRADE POLICY ISSUES IN ASIAN DEVELOPMENT This book examines issues of trade policy in the light of the experience of developing Asian economies Case studies highlight rapidly unfolding issues in trade and development, with reference to Sri Lanka, Malaysia, India, Indonesia, Pakistan, South Korea, Taiwan and Thailand The issues explored include trade liberalisation and industrial adjustment, employment and equity outcomes of export-oriented industrialisation, the impact of structural adjustment reforms on savings and investment, the role of foreign direct investment in export expansion, problems involved in the use of inter-industry linkages as policy criteria under export-oriented industrialisation and the role of world market conditions in determining export success Prema-chandra Athukorala offers an overview of the evolution of post-war thinking on trade and development, followed by ten self-contained case studies, each of which focuses upon a specific policy issue The author draws upon current theory and methodology and demonstrates the policy implications of his findings Two key concerns which guide the empirical analysis throughout are the interconnection between theory and practice and the choice of analytical procedures with a view to getting the maximum out of available data Trade Policy Issues in Asian Development places a unique emphasis upon methodology and data handling and offers a comprehensive subject coverage This will be a valuable reference for professional economists, policy makers and researchers working on trade and development issues in developing countries Prema-chandra Athukorala is a Senior Fellow in the Research School of Pacific and Asian Studies, Australian National University He has been a consultant to the World Bank, the International Labour Organisation, the Economic Commission for Asia and the Pacific, the Asian Development Bank and the government of Sri Lanka Routledge Studies in the Growth Economies of Asia The Changing Capital Markets of East Asia Edited by Ky Cao Financial Reform in China Edited by On Kit Tarn Women and Industrialization in Asia Edited by Susan Horton Japan’s Trade Policy Action or reaction? Yumiko Mikanagi The Japanese Election System Three analaytical perspectives Junichiro Wada The Economics of the Latecomers Catching-up, technology transfer and institutions in Germany, Japan and South Korea Jang-Sup Shin Industrialization in Malaysia Import substitution and infant industry performance Rokiah Alavi Economic Development in Twentieth Century East Asia The International context Edited by Aiko Ikeo The Politics of Economic Development in Indonesia Contending perspectives Edited by Ian Chalmers and Vedi Hadiz 10 Studies in the Economic History of the Pacific Rim Edited by Sally M.Miller, A.J.H.Latham and Dennis O.Flynn 11 Workers and the State in New Order Indonesia Vedi R.Hadiz 12 The Japanese Foreign Exchange Market Beate Reszat 13 Exchange Rate Policies in Emerging Asian Countries Edited by Stefan Collignon, Jean Pisani-Ferry and Yung Chul Park 14 Chinese Firms and Technology in the Reform Era Yizheng Shi 15 Japanese Views on Economic Development Diverse paths to the market Kenichi Ohno and Izumi Ohno 16 The Thai Economy Uneven development and internationalization Chris Dixon 17 Technological Capabilities and Export Success in Asia Edited by Dieter Erust, Tom Ganiatsos and Lynn Mytelka 18 Trade and Investment in China The European experience Edited by Roger Strange, Jim Slater and Limin Wang 19 Technology and Innovation in Japan Policy and management for the 21st century Edited by Martin Hemmert and Christian Oberländer 20 Trade Policy Issues in Asian Development Prema-chandra Athukorala 21 Economic Integration in the Asia Pacific Region Ippei Yamazawa TRADE POLICY ISSUES IN ASIAN DEVELOPMENT Prema-chandra Athukorala London and New York First published 1998 by Routledge 11 New Fetter Lane, London EC4P 4EE This edition published in the Taylor & Francis e-Library, 2004 Simultaneously published in the USA and kanada by Routledge 29 West 35th Street, New York, NY 10001 © 1998 Prema-chandra Athukorala All rights reserved No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Athukorala, Prema-chandra Trade policy issues in Asian development/Prema-chandra Athukorala p cm.—(Routledge studies in the growth economis of Asia) Includes bibliographical references and index Asia-Commercial policy Asia-Foreign economic relations I Title II Series HF1583.A886 1998 382’ .3’095–dc21 98–6012 CIP ISBN 0-203-39843-2 Master e-book ISBN ISBN 0-203-39946-3 (Adobe eReader Format) ISBN 0-415-16927-5 (Print Edition) IN MEMORY OF MY FATHER CONTENTS List of figures List of tables Preface xi xii xv Introduction 1 Trade policy and economic development: background and overview State of the debate Scope and outline of the book Notes 13 PART Trade policy and development 17 Trade policy reforms and industrial restructuring in Sri Lanka 19 Policy context 21 Industrial growth and adjustment 31 Conclusion 45 Notes 47 Export-oriented industrialisation, growth and equity in Malaysia Policy context 50 Growth and structural change Employment and equity 58 54 vii 49 CONTENTS Conclusion 65 Notes 67 Structural adjustment reforms, saving and investment in India 69 Saving and investment behaviour in india: an overview 71 The intriguing behaviour of household physical investment 74 Determinants of private corporate investment 79 Results 83 Conclusion 85 Notes 86 Appendix 87 Linkages and gains from export growth: issues and evidence from Indonesia 90 Conceptual issues 92 Methodology and data 96 Results 99 Conclusion 103 Notes 104 Appendix 105 PART II Foreign investment and export-oriented industrialisaton Export-oriented foreign direct investment: a typology with evidence from Sri Lanka Export-oriented foreign direct investment: a typology Foreign investment climate 119 Trends and patterns of EOFDI 123 Conclusion 133 Notes 133 111 Multinationals and export performance: analytical issues and empirical evidence Theory and hypotheses 137 Methodology and data 139 viii 113 114 135 CONTENTS Results and conclusions 143 Notes 146 Multinationals, employment and real wages in Malaysian manufacturing Multinationals and employment: an overview Overall wage trends 153 MNEs and real wage growth 155 Conclusion 163 Notes 164 Appendix 165 148 150 PART III Export orientation and the world economy Demand and supply factors in agricultural exports 169 171 Policy context 172 Export performance 177 Determinants of exports: an econometric analysis 183 Conclusion 189 Notes 190 Appendix 192 10 The demand for NIC exports: does the small country assumption hold? 193 Analytical framework 195 Data and econometric procedure 196 Results 201 Conclusion 205 Notes 206 Appendix 206 11 Terms of trade for manufactured exports from developing countries Existing evidence 210 Data and method 211 Results 214 Conclusion 219 ix 208 REFERENCES Lall, S and Mohammed, S (1983) ‘Foreign Ownership and Export Performance in the Large Corporate Sector of India’, Journal of Development Studies 20(1): 56– 57 Lall, S and Rao, K (1995), ‘Indonesia: Sustaining Manufactured Export Growth’, vol 1, Ministry of Trade and Industry, Jakarta Lall, S and Streeten, P (1977) Foreign Investment, Transnationals and Developing Countries, London: Macmillan Laumas, P.S (1990) ‘Monetization, Financial Liberalization, and Economic Development’, Economic Development and Cultural Change, 38(2): 377–90 Lee, E (1984) Export Processing Zones and Industrialization in Asia, Bangkok: ILOARTEP Lee, L.F and Maddala, G.S (1985) ‘The Common Structure of Tests for Selectivity Bias, Serial Correlation, Heteroscedasticity and Non-normality in the Tobit Model’, International Economic Review, 6(1): 1–20 Lewis, S.R (1989) ‘The Experience of Primary Exporting Countries’, in Hollis B.Chenery and T.N.Srinivasan (eds) Handbook of Development Economics, vol 11, North Holland: Elsevier, pp 1542–600 Lewis, W.A (1980) ‘The Slowing own of the Engine of Growth’, American Economic Review, 74(4): 555–64 Lim, D (1977) ‘Do Foreign Companies Pay Higher Wages than their Local Counterparts in Malaysian Manufacturing?’, Journal of Development Economics, 58(2): 55–66 ——(1981) ‘Malaysia’, in Romeo M.Bautista et al Capital Utilization in Manufacturing, New York: Oxford University Press ——(1992) ‘The Dynamics of Economic Policy-making: A Study of Malaysian Trade Policies and Performance’, in A.J.Maclntyre and K.Jayasuriya (eds) The Dynamics of Economic Policy Reforms in South-east Asia and the South-west Pacific, Singapore: Oxford University Press, pp 94–114 Lin, T.B and Monk, V (1985) ‘Trade, Foreign Investment, and Development in Hong Kong’, in W.Galenson (ed.) Foreign Trade and Investment: Economic Development in the Newly Industrializing Asian Countries, Madison, WI: University of Wisconsin Press, pp 219–56 Lipsey, R.E., Molineri, L and Kravis, I.B (1990) ‘Measurement of Prices and Price Competitiveness in International Trade in Manufactured Goods’, in P.Hooper and J.D.Richardson (eds) International Economic Transactions: Issues in Measurement and Empirical Research, Chicago: University of Chicago Press, pp 144–95 Little, I.M.D (1982) Economic Development: Theory, Policy and International Relations, New York: Basic Books ——(1995) ‘Trade and Industrialisation Revisited’, Pakistan Development Review, 33(4): 359–89 Little, I.M.D Scitovsky, T and Scott, M (1970) Industry and Trade in Some Developing Countries, Oxford: Oxford Univeristy Press Little, I.M.D., Cooper, R.N., Corden, W.M and Rajapatirana, S (1993) Boom, Crisis, and Adjustment: The Macroeconomic Experience of Developing Countries, Oxford: Oxford University Press Love, J (1984) ‘External Market Conditions, Competitiveness, Diversification, and LDC Exports’, Journal of Development Economics, 16(3): 279–91 MacBean, A.I (1989) ‘Agricultural Exports of Developing Countries: Market Conditions and National Policies’, in N.Islam (ed.) The Balance Between Industry and Agriculture in Economic Development, London: Macmillan, pp 129–64 Maddala, G.S (1983) Limited Dependent and Qualitative Variables in Econometrics, Cambridge: Cambridge University Press 230 REFERENCES ——(1989) Introduction to Econometrics, London: Collier Macmillan Manning, C and Jayasuriya, S (1996) ‘Survey of Recent Developments’, Bulletin of Indonesian Economic Studies, 32(2): 3–43 Manor, J (ed.) (1984) Sri Lanka: Change and Crisis, London: Croom Helm Marquez, J and McNeilly, C (1988) ‘Income and Price Elasticities for Exports of Developing Countries’, Review of Economics and Statistics, 70(2): 306–14 Mazumdar, D (1981) The Urban Labour Market and Income Distribution: A Study of Malaysia, New York: Oxford University Press ——(1993) ‘Labour Markets and Adjustment in Open Asian Economies: The Republics of Korea and Malaysia’, World Bank Economic Review, 7(3): 349–80 Mckinnon, J.G (1991) ‘Critical Values for Cointegration Tests’, in R.F Engle and C.W.J Granger (eds) Long-run Economic Relationships: Readings in Cointegration, Oxford: Oxford University Press McKinnon, R.I (1973) Money and Capital in Economic Development, Washington, DC: Brookings Institution ——(1993) The Order of Economic Liberalization, Baltimore, MD: John Hopkins University Press Michaely, M (1984) Trade, Income Levels and Dependence, Amsterdam: North Holland Michaely, M., Papageorgiou, D and Choksi, A.M (1991) Liberalizing Foreign Trade: Lessons of Experience in the Developing world, Oxford: Basil Blackwell Mills, T.C (1991) Time Series Techniques for Economists, Cambridge: Cambridge University Press Ministry of Finance India (1995) The Economic Survey 1994–95, Delhi Moreno, R (1989) ‘Exchange Rates and Trade Adjustment in Taiwan and Korea’, Economic Review—Federal Reserve Bank of San Francisco, No (Spring): 30–48 Murray T and Ginman, P.J (1976) ‘An Empirical Estimation of the Traditional Import Demand Model’, Review of Economics and Statistics, 58(1):75–80 Muscatelli, V.A (1995) ‘NIE Export Performance Revisied: The Estimation of Export Demand Elasticities, and the Role of Product Differentiation and Growth’, in D.Vines and D.Currie (eds) North-South Linkages and International Macroeconomic Policy, Cambridge: Cambridge University Press, pp 9–28 Muscatelli, V.A., Srinivasan, T.G and Vines, D (1992) ‘Demand and Supply Factors in the Determination of NIE Exports: A Simultaneous Error-correction Model for Hong Kong’, Economic Journal, 102:1467–77 ——(1994) ‘The Empirical Modelling of NIE Exports: An Evaluation of Different Approaches’ , Journal of Development Studies, 30(2): 279–302 Myint, H (1965) The Economics of the Developing Countries, London: Huchinson University Library ——(1967) ‘The Inward and Outward Looking Countries of South Asia’, Malayan Economic Review 12(1):1–13 ——(1979) ‘Exports and Economic Development of Less Developed Countries’, in I.Adelman (ed.) Economic Growth and Resources, New York: St Martin’s Press, pp 102–20 ——(1984) ‘Inward and Outward-Looking Countries Revisited: The Case of Indonesia’, Bulletin of Indonesian Economic Studies, 20(2): 39–52 Natke, P and Newfarmer, R.S (1985) ‘Transnational Corporations, Trade Propensities and Transfer Pricing’, in UNCTC Transnational Corporations and International Trade: Selected Issues, New York:UN Nayyar, D (1978) ‘Transnational Corporations and Manufactured Exports from Poor Countries’, Economic Journal, 88(349): 59–84 Nelson, C.R and Plosser, C.I (1982) Trends and Random Walks in Macroeconomic Time Series’ Journal of Monetary Economics, 10(1): 139–62 231 REFERENCES Nelson, C.R and Kang, H (1984) ‘Pitfalls in the Use of Time as an Explanatory Variable’, Journal of Business and Economic Statistics, 2(1): 73–82 Newfarmer, R.S (1985) Transnational Conglomerates and the Economics of Dependent Development, Greenwich: JAI Press Newfarmer, R.S and Marsh, L.C (1981), ‘Foreign Ownership, Market Structure and Industrial Performance’, Journal of Development Economics, 8(1): 47–75 Nguyen, D.T (1989) ‘The Demand for LDC Exports of Manufactures: Estimates from Hong Kong: A Comment’, Economic Journal, (99): 461–66 OECD (1985) Cost and Benefits of Protection, Paris Oi, W (1990) ‘Employment Relations in Dual labour Markets’, Journal of Labour Economics, 8(1): 124–49 Olechowski, A (1987) ‘Nontariff Barriers to Trade’, in J.Michael Finger and Andrzej Olechowski (eds) The Uruguay Round: A Handbook for the Multinational Trade Negotiations, Washington, DC: World Bank, pp 121–26 On, F.C (1989) ‘Wage and Labour Welfare in the Malaysian Electronic Industry’, Labour and Society (special issue on high tech and labour), 14:81–97 Orcutt, G.H (1950) ‘Measurement of Price Elasticities in International Trade’, Review of Economics and Statistics, 32(2): 117–32 Osman-Rani, H (1983) ‘Structural Changes and Employment Expansion in the Manufacturing Industry of Peninsular Malaysia 1963–78’, Kajian Ekonomi Malaysia, 20(2): 127–41 Phillips, P.C.B and Hansen, B.E (1990) ‘Statistical Inference in Instrumental Variables Regressions with I(1) Processes’, Review of Economic Studies, 57(1): 99–125 Phillips, P.C.B and Loretan, M (1991) ‘Estimating Long-run Economic Equilibria’, Review of Economic Studies, 58(4): 407–36 Pillai, Patrick (1995) ‘Malaysia’, Special Issue on Labour Migration in Asia, Asean Economic Bulletin, 12(2): 221–36 Pitt, M (1990) ‘Indonesia’, Part in D.Papageorgious, M.Michaely and A.M.Choksi (eds) Liberalizing Foreign Trade, vol 5, Oxford: Basil Blackwell Powell, A (1991) ‘Commodity and Developing Country Terms of Trade: What Does the Long Run Show?’, Economic Journal, 101:1485–96 Prebisch, R (1950) The Economic Development of Latin America and its Principal Problems, New York: UN Commission for Latin America ——(1964) Towards a New Trade Policy, UNCTAD E/Conf AG13, New York: UN Rajapatirana, S (1988) ‘Foreign Trade and Economic Development: Sri Lanka’s Experience’ World Development, 16(10): 1143–57 Rakshit, M (1983) ‘On Assessment and Interpretation of Saving-Investment Estimates in India’, Economic and Political, Annual Number: 753–76 Ramanayake, D (1984) ‘Katunayake Investment Promotion Zone’ in E.Lee (ed.) Export Processing Zones and Industrialization in Asia, Bangkok: ILO-ARTEP Ranis, G and Schive, S (1985) ‘Direct Foreign Investment in Taiwan’s Development’ in W.Galenson (ed.) Foreign Trade and Investment: Economic Development in the Newly Industrializing Asian Countries, Madison, WI: University of Wisconsin Press, pp 85–137 Rao, C.H.H (1995) ‘Budget: Welcome Social Focus’, The Economic Times, April 1926 Rasiah, R (1995) Foreign Capital and Industrialisation in Malaysia, Houndmills: Macmillan RBI (Reserve Bank of India) (1982) Capital Formation and Saving in India: 1950–51 to 1979– 80, (Report of the Working Group on Saving), Delhi: RBI ——(various issues) Monthly Bulletin, Delhi ——(various issues) Report on Currency and Banking, Delhi 232 REFERENCES Rhee, Y.W., Ross-Larrson, B and Pursell, G (1984) Korea’s Competitive Edge: Managing the Entry into World Markets, Baltimore, MD: Johns Hopkins University Press Richardson, R and Ying, S.L (1990) ‘Wage Trends and Structures in Malaysia, Report for Malaysian Human Development Project’, Kuala Lumpur Riedel, J (1974) ‘Factor Proportions, Linkages and the Open Developing Economy’, Review of Economics and Statistics, 75(4), 487–94 ——(1975) The Nature and Determinants of Export-Oriented Direct Foreign Investment in a Developing Country: A Case Study of Taiwan’, Weltwirtschaftliches Archiv, 111:505–28 ——(1976) ‘A Balanced-growth Version of the Linkage Hypothesis: A Comment’, Quarterly Journal of Economics, 90(3), 319–22 ——(1984) ‘Trade as the Engine of Growth in Developing Countries, Revisited’, Economic Journal, 94:56–73 ——(1988) ‘The Demand for LDC Exports of Manufactures: Estimates from Hong Kong’, Economic Journal, 98:138–48 ——(1993) ‘Vietnam: On the Trail of the Tigers’, World Economy, 16(4): 401–23 Riedel, J and Athukorala, P (1995) ‘Export Growth and the Terms of Trade: The Case of the Curious Elasticities’ in D.Vines and D.Currie (eds) North-South Linkages and International Macrcoeconomic Policy, Cambridge: Cambridge University Press, pp 29–45 Riedel, J., Hall, C and Grawe, R (1984) ‘Determinants of Indian Export Performance in the 1970s’, Weltwirtschaftliches Archiv, 120(1): 40–63 Rodrik, D (1991a) ‘Policy Uncertainty and Private Investment in Developing Countries’, Journal of Development Economics, 36(2): 229–43 ——(1991b) ‘Premature Liberalization Incomplete Stabilisation: the Ozal Decade’, in M.Bruno et al., Lessons of Economic Stabilization and its Aftermath, Cambridge, MA: MIT Press ——(1992) ‘The Limits of Trade Policy Reforms in Developing Countries’, Journal of Economic Perspectives, 6(1): 87–106 ——(1995a), ‘Trade and Industrial Policy Reform’, in J.R.Behrman, and T.N.Srinivasan (eds) Handbook of Development Economics, vol III, Amsterdam: North Holland, pp 2927–82 ——(1995b) ‘Comment’, in A.O.Krueger Trade Policies and Developing Nations, Washington, DC: Brookings Institution, pp 101–14 Roy, T and Sen, K (1991) ‘Changes in Saving Rate and its Implications for Growth’, Economic and Political Weekly, 20 April, pp 1055–58 Sachs, J.D (1985) ‘External Debts and Macroeconomic Performance in Latin America and East Asia’, Brookings Papers on Economic Activity, 2:523–64 Sachs, J.D and Warner, A (1995) ‘Economic Reforms and the Process of Global Integration’, Brookings Papers on Economic Activity, 25th Anniversary Issue: 1– 95 Salleh, I.M Dhevan, S and Meyanathan, D (1993) Malaysia: Growth, Equity, and Structural Transformation, The Lessons of East Asia, Washington, DC: World Bank Santosa, B.H (1994) ‘Export Expansion and the Indonesian Economy: An InputOutput Approach’, Masters thesis, La Trobe University, Australia Sapsford, D (1990) ‘Primary Commodity Prices and Terms of Trade’, Economic Record, 66(195): 342–56 Sarkar, P and Singer, H.W (1991) ‘Manufactured Exports of Developing Countries and Their Terms of Trade Since 1965’, World Development, 19(4): 333–40 233 REFERENCES Schwert, G.W (1987) ‘Effects of Model Specification on Tests for Unit Roots in Macroeconomic Data’, Journal of Monetary Economics, 20(1): 73–103 Serven, L and Solimano, A (1993) ‘Debt Crisis, Adjustment Policies and Capital Formation in Developing Countries: Where we stand?’, World Development, 21(1): 127–40 Shaw, E (1973) Financial Deepening in Economic Development, Oxford: Oxford University Press Shepherd, G and Alburo, F (1990) ‘The Philippines’, part in D.Papageorigious, M.Michaely and A.M.Choksi (eds) Liberalizing Foreign Trade, vol 2, Oxford: Basil Black-well Shetty, S.L (1990) ‘Saving Behaviour in India in the 1980s: Some lessons’, Economic and Political Weekly, March 17:555–60 Shin, S.D (1986) ‘An Empirical Analysis of the Export and Import Demand and Export Prices’, Bank of Korea Quarterly Review, Quarter: 21–29 Siamwalla, A and Setboonsarn (1988) ‘Political Economy of Agricultural Pricing Policies in Indonesia’, Washington, DC: World Bank Singer, H.W (1950) ‘The Distribution of Gains Between Investing and Borrowing Countries’, American Economic Review, 40(2): 473–85 ——(1987) ‘Terms of Trade’, in John Eatwell, Murray Milgate and Peter Newman (eds) The New Palgrave: A Dictionary of Economics, London: Macmillan, pp 626–28 Snodgrass, D.R (1980) Inequality and Economic Development in Malaysia, Kuala Lumpur: Oxford University Press ——(1995) ‘Successful Economic Development in a Multi-cultural Society: The Malaysian Case’, Cambridge, MA: Harvard Institute for International Development Solimano, A (1992), ‘How Private Investment Reacts to Changing Macroeconomic Conditions: The Chilean Experience in the 1980s’, in A.Chibber at al., Reviving Private Investment in Developing Countries: Empirical Studies and Policy Lessons, Amsterdam: North Holland Spraos, J (1983) Inequalising Trade? A Study of Traditional North/South Specialisation in the Context of Terms of Trade Concepts, Oxford: Clarendon Press Sri Lanka, Department of Census and Statistics (1985) Census of Industry 1983, Colombo: Government Publication Bureau Srinivasan, T.N (1994) ‘Data Base for Development Analysis: An Overview’, Journal of Development Economics, 44(1): 3–27 Stiglitz, J.E (1996) ‘Some Lessons from the East Asian Miracle’, World Bank Research Observer, 11(2): 151–77 Taylor, L (1988) Varieties of Stabilization Experience: Towards Sensible Macroeconomics in the Third World, Oxford: Clarendon Press ——(1991) ‘Economic Openness: Problems to the Century’s End’, in T.Baruni (ed.) Economic Liberalisation: No Panacea: The Experience of Latin America and Asia, Oxford: Clarendon Press, pp 99–147 Teitel, S (1989) ‘Industrialisation, Primary Commodities and Exports of Manufactures’, in Nurul Islam (ed.) The Balance Between Industry and Agriculture in Economic Development, London: Macmillan, pp 315–41 Thirlwall, A.P and Bergevin, J (1985) ‘Trends, Cycles and Asymmetries in the Terms of Trade of Trade of Primary Commodities from Developed and Less Developed Countries’, World Development, 13(7): 805–17 Thomas, V., Nash, J and Associates (1991) Best Practices in Trade Policy Reforms, New York: Oxford University Press 234 REFERENCES UN (United Nations) (various years) Statistical Yearbook, New York: UN UNCTAD (United Nations Conference on Trade and Development) (1995), Trade and Development Report—1995, Geneva ——(1996) World Investment Report—1995, New York: United Nations UNCTC (United Nations Centre of Transnational Corporation) (1986) Transnational Corporations in the International Semiconductor Industry, New York: United Nations ——(1988) Transnational Corporations in World Development: Trends and Prospects, New York: UN ——(1992), World Investment Report—1992, New York: United Nations Voice of Women (1983) Women Workers in the Free Trade Zone of Sri Lanka: A Survey, Colombo Wade, R (1990) Governing the Market: Economic Theory and the Role of the Government in East Asian Industrialization, Princeton, NJ: Princeton University Press Warr, P.G (1986) Indonesia’s Other Dutch Disease’, in J.P.Neary and S.van Wijnbergen (eds) Natural Resources and the Macroeconomy, Oxford: Basil Blackwell ——(1987), ‘Malaysia’s Industrial Enclaves: Benefits and Costs’, Developing Economies, 25(1): 30–71 Weigand, R (1983) ‘International Investments: Weighing the Incentives’, Harvard Business Review, 61(6):146–52 Weisskoff, R and Wolf, E (1977) ‘Linkages and Leakages: Industrial Tracking in an Enclave Economy’, Economic Development and Cultural Change, 25(4): 607–28 Wells, L.T Jr (1983) The Third World Multinationals: The Rise of Foreign Investment From Developing Countries, Cambridge, MA: MIT Press ——(1986a) ‘New and Old Multinationals Competitors or Partners’, in K.M.Khan (ed.) Multinationals of the South: New Actors in the International Economy, London: Frances Pinter Publishers, pp 196–210 ——(1986b) ‘Investment Incentives: An Unnecessary Debate’, TNC Reporter, no 22 (Autumn): 12–16 Westphal, L.E., Rhee, Y.W and Pursell, G (1979) ‘Foreign Influence on Korean Industrial Development, Oxford Bulletin of Economics and Statistics, 41(4); 359–88 Wheeler, D and Mody, A (1992) ‘International Investment Location Decisions: The Case of U.S.Firms’, Journal of International Economics, 33(1): 57–76 Wheelwright, E.L (1963) ‘Industrialisation in Malaysia’, in T.H.Silcock and E.K.Fisk (eds) The Political Economy of Independent Malaya, Canberra: Eastern University Press Wignaraja, G (1994) ‘Outward-oriented Trade Policy and Industrial Performance in Sri Lanka, 1977–92’, Contemporary Asia, 3(3), 203–15 Wijesinghe, M.E (1982) Sri Lanka’s Development Trust, Colombo (published by the author) Willmore, L.N (1976) ‘Direct Foreign Investment in Central American Manufacturing’, World Development, 4(6): 499–517 ——(1986) ‘The Comparative Performance of Foreign and Domestic Firms in Brazil’, World Development, 14(4): 490–501 Wolf, M (1982) India’s Exports, London: Oxford University Press World Bank (1987) World Development Report 1987, New York: Oxford University Press ——(1991) World Development Report 1991, New York: Oxford University Press ——(1993) The East Asian Miracle: Economic Growth and Public Policy, New York: Oxford University Press ——(1994) East Asia’s Trade and Investment: Regional and Global Gains from Liberalization, Washington, DC: World Bank 235 REFERENCES ——(1995) World Development Report 1995, New York: Oxford University Press Worthy, F.S (1989) ‘Asia’s Reluctant Growth Champs’, Fortune, 24 April: 125–30 Wortzel, L.H and Wortzel, H.V (1980) ‘Export Marketing Strategies for NIC and LDC-based Firms’, Colombia Journal of World Business, 16(1): 51–61 WTO (World Trade Organisation) (1993) Trade Policy Review: India, Geneva: WTO ——(1995) Sri Lanka Trade Policy Review, Geneva: WTO Yang, Y.Y and Hwang, M (1994), ‘Price Behaviour in Korean Manufacturing’, Review of Economics and Statistics, 76(3): 461–70 Yotopoulos, P.A and Nugent, J.B (1976) Economics of Development: Empirical Investigations, New York: Harper and Row 236 INDEX Abbreviations DCs EOFDI EPZs FDI ICMNEs ICs MNEs NBTT NECs NICs NTBs QRs SOEs TWMNEs VERs developing countries export-oriented foreign direct investment export processing zones (or FTZ Free Trade Zones) foreign direct investment industrial country multinational enterprises industrial countries multinational enterprises net barter terms of trade new exporting countries newly industrialised countries non-tariff barriers quantitative restrictions state-owned enterprises third world multinational enterprises voluntary export restraints affirmative action policy 51–3, 66 agricultural exports 12, 171–90; and antiexport bias 172–3, 174, 175–7; comparative export performance 177–9; demand and supply factors 171–2, 183–5, 187–90; econometric analysis of determinants 183–9; and economic growth 177–9; export performance 177–84; Malaysia 12, 171–3, 177–83, 187–9; market share of major commodities 179–83; product diversification 173, 179, 181–3, 184–5; public sector management 173, 175–6; and trade policy 172–7, 185; see also primary commodity exports Ahluwalia, I.J 76–7 anti-export bias 121, 139, 144, 145; and agricultural exports 172–3, 174, 175–7 Athukorala, P and Riedel, J 193, 194, 205 augmented Dickey-Fuller (ADF) test 82, 186–7, 197–8, 214, 215 balance of payments: and import substitution 5; and multinational enterprises (MNEs) 120–1; Sri Lankan 22 Brazil 135, 145 Bretton Woods institutions 4, 6, 22, 23 buying groups, international 116, 138,142 Canada 210 capital intensity 93, 114–16, 158, 163 Chow test 84, 187–9, 218 Clavijo, F see Faini, R., Clavijo, F and Senhandji-Semlali, A Cline, W.R 210 clothing industry: Indonesia 94–5, 98, 99, 101; Sri Lanka 31, 34–5, 36–7, 129, 132, 142, 144 237 INDEX Cochrane-Orcutt autocorrelation correction procedure 213–14, 216 coconut products 175, 180–3 coffee 180–3 comparative advantage 90, 92–3, 132; Malaysia 58, 66; Sri Lanka 119 competitiveness: of agricultural exports 183–6, 187–9; Malaysian 62; and rising wages 117; Sri Lankan 30 component production and assembly 93–4, 95, 115, 118–19; Malaysia 118, 150, 163; Sri Lanka 119, 127–8, 129–31; and wage costs 118–19 concentration of industry 159 Corden, W.M 14 credit policy 4, demand and supply: agricultural exports 171–2, 183–5, 187–90; NIC export elasticities 12–13, 193–205, 208; price and income elasticity 193–4; and small country assumption 193–5, 196, 204–5 developed countries multinational enterprises (DCMNEs) see industrial country multinational enterprises (ICMNEs) developing countries: agricultural exports 171–90; import substitution or exportoriented industrialisation 3–9; manufactured goods exports 8–9, 93–5, 211–19; NBTT for manufactured exports 211–19; product categories of manufactured goods 93–5, 115–19; state-owned enterprises 4; terms of trade 13, 193, 208–19; trade policy and growth 5, 12; see also new exporting countries (NECs); newly industrialised countries (NICs) distribution of income: gains from growth and 49–50; MNEs and income income inequality 148, 155; poverty and equity in Malaysia 51–2, 62–5, 155; Sri Lanka 45; and trade policy 5, 10 domestic markets: effect of size 145; MNEs manufacturing for 136, 148–9, 151 Durbin-Watson test 216–17 econometric analyses: agricultural exports 183–9; determinants of private investment 79–85; export demand and supply elasticities 195–205; export orientation of MNEs 139–43; interindustry wage growth 155–64; linkages and export performance 96–103; of net barter terms of trade 211–19 econometric methodology: augmented Dickey-Fuller test 82, 186–7, 197–8, 200–1, 214, 215; Chow test 84, 187–9, 218; Cochrane-Orcutt autocorrelation correction procedure 213–14, 216; Durbin-Watson test 216–17; EngleGranger procedure 197–8; Hendry error correction modelling procedure 83, 88, 199–201, 204–5; Johansen test 199–201, 214, 215; KwiatkowskiPhillips-Schmidt-Shin test 82, 197–8, 200–1; Lagrange multiplier test 216–17; Lee and Maddala simultaneous equation estimation 136, 140–1; Leontief inter-industry accounting 96; Phillips-Hansen procedure 193–4, 199–201, 204–5; Ramsey’s RESET test 187–8, 202–3 economic growth see growth El Salvador 118 elasticities of demand and supply: for NICs exports 12–13, 193–205; primary commodities 208; small country assumption 193–5, 196, 204–5 electronics industry 118; Malaysia 130, 150, 151, 163; MNEs in 118, 130–1, 151, 153, 163; Sri Lanka 129, 130–1 employment: development of linkages 91, 95, 102–3; impact of MNEs and FDI on 12, 148–53; Indonesia 101–3; Malaysia 12, 58–62, 65, 150–3; and manufactured exports 91, 95, 101–3; Sri Lanka 10, 41–5, 46; and trade policy 5, 12, 95, 151–3; and wages 162 Engle, C.F see Engle-Granger procedure Engle-Granger procedure 197–8 entrepreneurship 116–17 equity see distribution of income ethnicity: Malaysia 50, 51–3, 62–3, 66, 150; Sri Lanka 122 exchange controls 26, 121, 122–3 exchange rates, Sri Lanka 27–30, 31, 40 export performance: agricultural products 177–84; EOFDI and 126–7; and export policy 177–83; MNEs 135–46; 238 INDEX TWMNEs and ICMNEs compared 141–3, 144–5 export policy: and agricultural exports 172–7; and export performance 177–83 export price index 197; and unit value index 197 export processing zones (EPZs), Sri Lanka 24–6, 44–5, 121–2, 123 export promotion schemes 11, 90–1; Malaysia 51; manufactured product bias 173, 174; Sri Lanka 24–6, 41, 44–5, 121–2, 126–8 export propensity: inter-firm differences 135–46; and ownership of firms 11–12, 135–9; and trade protection 142, 144 export structure: DCs 208–9; Malaysian 151 export-oriented foreign direct investment (EOFDI) 113–33, 145–6; and export performance 126–7; greenfield 114, 115; incentives 120, 121, 127–8, 129–30, 133, 145–6; linkages in assessment of 90–1; location decisions 93, 119, 129, 130–1; in Malaysia 52, 53, 57–8, 130, 150–1; and MNEs 113, 115–19, 135, 148; in Sri Lanka 11, 20, 39, 46, 119–33; trade protection as stimulation of 117–18; typology of 114–19; see also foreign direct investment (FDI) export-oriented industrialisation 3–9, 10; assessing market potential 92, 93–5; development of linkages 91–2, 95, 103–4; and employment 151–3; and FDI 7–8, 11, 113, 115–19; import substitution as precondition to 40–1, 46; Malaysian 10, 51–66, 150, 151–3, 176; MNE involvement 148–9, 151–3, 154–5; neo-classical (mainstream) economics 49; and primary commodity exports 190; Sri Lankan 20–1, 24–6, 38–41, 46, 121–3; and terms of trade 209; and wage rates 148–50, 154–64 exports: agricultural and primary commodity 12, 171–90, 208–9, 211; demand and supply elasticities 12–13, 193–205; net barter terms of trade (NBTT) 13, 208–19; small country assumption 193–205; see also manufactured exports Faini, R., Clavijo, F and Senhandji-Semlali, A 193–4, 197 Findlay, R 190 first-comer advantages ‘footloose’ industries 91, 92–3, 95, 103, 149, 163 foreign direct investment (FDI) 113–23, 148–51; employment and real wages 12, 148–50; and export-oriented industrialisation 7–8, 113, 115–19; Malaysia 12, 51, 57–8, 66, 149, 150–1; in NECs by NICs 117, 133; NICs and NECs compared 113–14, 116–19; Sri Lanka 24–6, 35, 38, 46, 114, 119–23; see also export-oriented foreign direct investment (EOFDI) France 210 free trade zones (FTZs) see export processing zones (EPZs) General Agreement on Tariffs and Trade (GATT) Germany 210, 212 government intervention 7, 20–1; in linkages development 91, 93, 103–4 Granger, C.W.J see Engle-Granger procedure Greece 118 growth: and agricultural exports 177–9; industrial 31–3, 35–8, 56–8, 59–60; Malaysian 54–8, 59–60, 66; and savings 69–70; Sri Lankan 22, 31–3, 35–8; in total factor productivity 20, 31–3, 58; and trade policy 5, 7, 10, 12 Haiti 118 Harris Corporation 130–1 Hendry error correction modelling procedure 83, 88, 199–201, 204–5 Hong Kong 5, 193–4;as source of FDI 131 import intensity: and development of linkages 95, 103; Indonesian 91, 98–100; of manufactured exports 91, 94, 95, 99–100; Sri Lankan 21, 38–9 import substitution 3–5, 6–7, 19, 90–1; and agricultural exports 172–3, 174; Malaysian 50–1; MNEs in 114–15, 148–9, 151, 154; as precondition to export-orientation 40–1, 46; Sri Lankan 9, 19–20, 21–2, 40–1, 46 239 INDEX incentives: export-oriented FDI 120, 121, 127–8, 129–30, 133, 145–6 income elasticity of demand 193–4 India 70–86, 118, 145; agricultural exports 12, 174, 178–83, 187–9; India (cont.) domestic saving 71–9, 85; econometric analysis of private sector investment 79–85; NBTT for manufactured exports 211–12, 215, 216–17, 219; private corporate investment 73–4, 79–86; public sector investment 71, 73–4, 81–2, 84, 86; quantitative restrictions (QRs) 75, 86, 174; structural adjustment programmes 70–86; trade liberalisation 6, 74–5, 77–8, 83–6 Indonesia 90–104; agricultural exports 12, 176, 177–8, 180–3, 188–9; analysis of linkages and export performance 98– 103; clothing industry 94–5, 98, 99, 101; employment 101–3;import intensity 91, 98–100; industrial policy 91–2; manufactured exports 93–4, 99–103; net export earnings 102–3; plywood industry 98, 99, 101 industrial country multinational enterprises (ICMNEs) 117, 119, 135, 138–9, 209; and export performance 141–3, 144–5 industrial growth: Malaysia 56–8, 59–60; Sri Lanka 31–3, 35–8 industrialisation: Indonesian policy 91–2; as key to development 3–4; Sri Lanka 20; see also export-oriented industrialisation; import substitution; industrial growth industrialised countries: and terms of trade 208–19; trade protection 116, 117–19, 129, 142 infant industry protection inter-sectoral linkages see linkages International Monetary Fund (IMF) 4, 22 internationalisation of production 93, 103–4, 163–4; and ‘slicing up’ value chain 94, 95 investment: direction of 90, 91; effect of structural adjustment programmes 10–11, 74–9, 81–6; liberalisation of 20–1, 46, 150–1; Sri Lankan investment policy 20–1, 24–6, 119–23, 127–8, 129–31, 133; see also export-oriented foreign direct investment (EOFDI); foreign direct investment (FDI); savings and investment Ireland 118 Italy 210 Japan 7, 210, 212; investment in East Asia 116, 132 Johansen test 199–201, 214, 215 Kang, H see Nelson, C.R and Kang, H Keesing, D.B 210 Korea see South Korea Kwiatkowski-Phillips-Schmidt-Shin test (KPSS) 82, 197–8 labour force participation by women: Malaysia 59, 65, 162–3; Sri Lanka 44–5, 46 labour market 53–4, 154, 158–9; available skills 130; migrant labour 62, 163 labour productivity: Malaysia 62; Sri Lanka 45 labour-intensive goods 92–4, 115, 116, 127, 128; and comparative advantage 92–3, 132; and MNEs 115, 116, 132, 133, 138; in NICs 49, 93–4, 133; Sri Lankan 36, 39, 44, 119, 127–8, 129, 132 Lagrange multiplier test 216–17 late-industrialising countries Lewis, W.A liberalisation: effect on savings and investment 10–11, 74–5, 81–6; of investment 20–1, 46, 150–1; in Sri Lanka 9–10, 20–1, 22, 23–47, 121–3; see also trade liberalisation light consumer goods see labour-intensive goods linkages 38–40, 90–104; in assessment of EOFDI 90–1; empirical analysis 96–103; and employment 91, 95, 102–3; and export promotion schemes 11, 90–1; and export-oriented industrialisation 91–2, 95, 103–4; and exports earnings 91, 95, 102–3; government policy intervention 91, 93, 103–4; and import intensity 95, 103; Indonesian 98–103; inter- industry 104; Sri Lankan 38–40 Look East policy 52 macroeconomic policy, Sri Lanka 27–30, 40, 46–7 Malaysia 50–66, 149–64; agricultural 240 INDEX exports 12, 171–3, 177–83, 187–9; at independence 50–1; component production and assembly 118, 150, 163; economic growth 54–8, 59–60, 66; electronics industry 130, 150, 151, 163; employment 12, 58–62, 65, 150–3; equity and poverty 51–2, 62–5, 155; ethnicity/affirmative actionprogrammes 50, 51–3, 62–3, 66, 150; export-oriented industrialisation 10, 51–66, 150, 151–3, 176; FDI/EOFDI 51–3, 57–8, 66, 130, 149, 150–1; Free Trade Zones (FTZs) 52, 150; heavy industry 52, 58; import substitution 50–1, 52; inter-industry wage growth regression 155–64; investment liberalisation 150–1; labour force participation by women 59, 65, 162–3; labour market 53–4, 154, 158–9; Look East policy 52; manufacturing sector 56–8, 59–60; migrant labour 62, 163; MNEs in 149–53; National Development Policy (NDP) 53–4; New Economic Policy (NEP) 51–3, 59, 150; primary commodity sector 55; privatisation 53; productivity 58, 62; real wages 12, 60–2, 153–5; trade policy 50–1, 66, 150–1, 172–3; trade protection 50–1, 53, 173 Malta 118 manufactured exports 8–9; analysis of market potential 92, 93–5, 115–19; contribution of MNEs 144–5; employment impact 91, 95, 101–2; import intensity 91, 94, 95, 99–100; Indonesian 93–4, 99–103; Malaysian 56–8; Sri Lankan 29–30, 35–41, 126–7; terms of trade of DCs 208–9, 210–19 manufactured goods: component production and assembly 93–4, 95, 115, 118–19; defining 211–12; differentiated final products 93, 115–16; and import substitution 4; labour-intensive see labour-intensive goods; MNEs and domestic markets for 136, 148–9, 151; product categories for developing countries 93–5, 115–19; resource-based 35, 93, 115–16, 127; small country assumption 194; see also industrial growth; manufactured exports market potential, for manufactured exports 92, 93–5 market-oriented reform: effect on savings and investment 85–6; Malaysian 53–4; Sri Lankan 20, 23, 33–5, 45–7, 137; structuralist critique 20; see also liberalisation;structural adjustment programmes Mazumdar, D 162 Mexico 118 migrant labour 62, 163 Motorola 130–1 Multi-Fibre Arrangement (MFA) 31, 129, 32, 142, 194, 196–7 multinational enterprises (MNEs) 12, 114–19, 120–1, 135–46, 148–63; and balance of payments 120–1; in development of linkages 91;econometric study of export performance 139–46; in electronics industry 118, 130–1, 151, 153, 163; and employment 148, 150–3; EOFDI 113, 115–19, 133, 135, 148; export orientation and propensity 136–9; in export-oriented industrialisation 148–9, 151–3, 154–5; ICMNEs and TWMNEs compared 117, 119, 135, 138–9, 141–5; and import intensity 94–5; in import substitution and domestic markets 114–15, 136, 148–9, 151, 154; inequitable distribution of gains 148, 155; in labour- intensive goods 115, 116, 132, 133, 138; location decisions 93, 130–1, 133, 149; in Malaysia 149–53; in Sri Lanka 120–1, 130–1, 137–46; technology 139, 209; typology of product categories 115–19; and wages 12, 148–9, 153–63 Muscatelli, V.A 193 Muscatelli, V.A., Srinivasan, T.G and Vines, D 193–5, 197, 205 nationalisation: of planataions in Malaysia 173; in Sri Lanka 175 Nelson, C.R and Kang, H 213–14 neo-classical (mainstream) development theory 19, 49 net barter terms of trade (NBTT), for developing countries 13, 208–19; comparison with developed countries 210; empirical analysis 211–19; Prebisch-Singer hypothesis 208–9, 219; 241 INDEX primary commodities or manufactured goods 208–9, 211, 219; research review 210–11; Singer hypothesis 209, 218, 219 new exporting countries (NECs) 12–13, 113–14, 116–19, 193–205; NIC experience of FDI as predictor for 113–14, 116–19, 133; trade elasticities of demand and supply 12–13, 193–205, 208; trade protection by ICs against 116, 117–19, 129, 142 newly industrialised countries (NICs) 11, 12–13, 49, 113–14, 116–19, 193–205; newly industrialised (cont.) entrepreneurship 116–17; export demand 12–13, 193–205; FDI by 117, 133; first-comer advantages 9; labour-intensive manufactured goods 49, 93–4, 133; as predictor of NEC experience of FDI 113–14, 116–19, 133; price-taking in export markets 193–4; QRs and small country assumption 194–5, 196–7, 205; savings 69; trade protection by ICs against 116, 117–19, 129, 142 non-tariff barriers (NTBs) 51, 197 open trading economies: Malaysia as 50–1, 150–1; Sri Lanka as 21–2, 120 Orcutt, G.H 194; see also Cochrane-Orcutt autocorrelation correction procedure ownership of firms: and export propensity 11–12, 135–9; foreign 25, 132; see also multinational enterprises (MNEs); stateowned enterprises (SOEs) Pakistan, agricultural exports 12, 175, 178, 179–83, 188–9 palm oil 173, 179, 180–3 Philippines: agricultural exports 12, 176–83, 188–9; component production and assembly 118 Phillips-Hansen estimates 193–4, 199–201, 204–5 policies see credit policy; export policy; export-oriented industrialisation; import substitution; macroeconomic policy; trade liberalisation Portugal 118 poverty, in Malaysia 51–2, 62–5 Prebisch, R 5, 208–9 Prebisch-Singer hypothesis 208–9, 219 price controls 4, 23 price elasticity of demand 193–4 price-taking: in NIC export markets 193–4; small country assumption 196, 205 primary commodity exports 190, 208–9, 211; Malaysian 55; Sri Lankan 35–6, 46, 126; see also agricultural exports private sector: investment (Indian) 73–4, 79–86; Malaysian 53; Sri Lankan 34–5, 46 privatisation: in Malaysia 53; in Sri Lanka 23, 26–7, 122 product diversification, agricultural exports 173, 179, 181–3, 184–9 productivity see labour productivity; total factor productivity growth protection see trade protection public sector:and agricultural exports 173, 175–6; investment in India 71, 73–4, 81–2, 84, 86; Sri Lankan 28, 31 quantitative restrictions (QRs) 117, 194–5, 196–7, 205; agricultural exports 173, 174, 175, 177; and export elasticities of demand 194–5, 196, 205; in India 75, 86, 174; in South Korea 196–7; in Sri Lanka 24, 175; see also voluntary export restraints (VERs) quota restrictions 129, 142 Ramsey’s RESET test 187–8, 202–3 regional preferential arrangements 117 resource-based manufacturing 35, 93, 115–16, 127–9 rice 173, 180–3 Richardson, R and Ying, S.L 162–3 Riedel, J 193–4; see also Athukorala, P and Riedel, J rubber 173, 175, 179–83 Sarkar, P and Singer, H.W 209, 210–11, Sarker-Singer tests 209, 210–11, 217 savings and investment 69–86; econometric analysis of Indian 79–85; effect of structural adjustment programmes 10–11, 69–86; and growth 69–70; methodology of Indian statistical estimates 76–9, 85–6; relationship between public and private 81–2, 84; savings in NICs 69 242 INDEX Senhandji-Semlali, A see Faini, R., Clavijo, F and Senhandji-Semlali, A Singapore 5, Singer, H.W 13, 208–9, 219; see also Prebisch-Singer hypothesis;Sarker-Singer tests Singer hypothesis 209, 218, 219 ‘small country assumption’ 193–205; review of research 193–5 South Korea 5, 7, 194, 196–205; analysis of NBTT 211–12, 215, 216–17, 218–19; ‘small country assumption’ 193, 194, 196–205; as source of FDI 131–2; trade elasticities 196–7, 201–4; VERs and QRs 196–7, 201–4, 205 Spain 118 spillover effects 21, 33, 38 Sri Lanka 9, 20–47, 119–33, 137–46; agricultural exports 175–6, 177–83, 187–9; assembly activities 119, 127–8, 129–31; Board of Investment (BOI) 26, 38, 123, 125–6, 132; clothing industry 31, 34–5, 36–7, 129, 132, 142, 144; econometric analysis of export performance 139–46; employment 10, 41–5, 46; exchange controls 26, 121, 122–3; Export Development Board (EDB) 24, 25, 28; export processing zones (EPZs) 24–6, 44–5, 121–2, 123; export promotion schemes 24–6, 44–5, 121–2, 127–8; export- oriented industrialisation 20–1, 24–6, 38–41, 46, 121–3; FDI/EOFDI 11, 20, 35–8, 39, 46, 114, 119–33; Free Trade Zones (FTZs) 25–6, 41, 44–5, 126–7; growth 20, 22, 31–3, 35–8; import intensity 21, 38–9; import substitution 9, 19–20, 21–2, 40–1, 46, 120–2; industry profile 38, 127–31; investment policy and climate 20–1, 24–6, 46, 119–23, 127–31; labour force participation by women 44–5, 46; labour-intensive consumer goods 36, 38–9, 44, 119, 127–9, 132; liberalisation and market-oriented reform 9–10, 20–1, 22, 23–47, 121–3, 137; linkages 38–40; macroeconomic policy 27–30, 40, 46–7; manufactured exports 29–30, 35–41, 126–7; MNEs and foreign-owned firms 11–12, 25, 120–1, 130–1, 132, 137–46; and Multi-Fibre Arrangement (MFA) 31, 129, 132, 142; political climate 22–3, 122–3; primary commodity exports 35–6, 46, 126; private sector 34–5, 46; privatisation 23,26–7, 122; public sector and SOEs 21, 26–7, 28, 31, 33–4; real exchange rates 27–30, 31, 40; resourcebased manufacturing 35, 127–9; spillover effects 21, 33, 38; trade policy 20–6; trade protection 23–4, 122, 144, 175–6; wages and productivity 45 Srinivasan, T.G see Muscatelli, V.A., Srinivasan, T.G and Vines, D state-owned enterprises (SOEs) 4; and inefficiency spillover effects 21; in Sri Lanka 21, 26–7, 33–4 structural adjustment programmes 69–70; effect on savings and investment 74–9, 80–6; see also market-oriented reform structuralist (revisionist) development theory 20, 46, 49 sugar 180–3 supply see demand and supply Taiwan 5, 7, 194;analysis of NBTT 211–12, 214–15, 216–17, 219 tariffs: agricultural exports 173; Indian 75, 86; Malaysian 51, 53, 173; protection for industrialised countries 116, 118–19; Sri Lankan 23–4, 122–3, 175–6 tea 175, 180–3 technology: and export performance 138; and MNEs 139, 209 terms of trade: developing countries 13, 193, 208–19; industrialised countries 210; see also net barter terms of trade (NBTT) Thailand 118, 173, 176; agricultural exports 12, 171–3, 177–83, 188–9 third-world multinational enterprises (TWMNEs) 117, 119, 135, 138–9; export performance 141–3, 144–5 tobacco 180–3 total factor productivity growth: in Malaysia 58; in Sri Lanka 20, 31–3 trade liberalisation: effect on savings and investment 10–11, 74–5, 81–6; in India 6, 74–5, 77–8, 83–6; in Sri Lanka 22, 27–30, 33, 40–1, 46–7, 121–2; ‘under distress’ 69–70 trade policy: and agricultural exports 172–7, 243 INDEX 185; Malaysia 50–1, 66, 150–1, 172–3; Sri Lanka 20–6; Thailand 173; see also export-oriented industrialisation; import substitution; trade liberalisation trade protection 4, 6, 117–19; against developing countries 116, 117–19, 129, 142; and agricultural exports 173, 174, 175, 176–7; and export- orientation 142, 144; Malaysian 50–1, 53, 173; non-tariff barriers 51, 197; Sri Lankan 23–4, 122, 144, 175–6; and stimulation of EODFI 117–18, 129; see also quantitative restrictions (QRs); tariffs; voluntary export restraints (VERs) Tunisia 118 unemployment see employment unionisation 159 United Kingdom 210 United States 118–19, 210, 212 value chain, ‘slicing up’ 94, 95 Vines, D see Muscatelli, V.A., Srinivasan, T.G and Vines, D voluntary export restraints (VERs) 117, 118, 194–5, 196, 201–4, 205; see also quantitative restrictions (QRs) wages 12, 45, 60–2, 117, 118–19, 148–50, 153–64; competitiveness and rising 117; component production and assembly and wage costs 118–19; effect of MNEs and FDI 12, 148–50, 153–64; and employment growth 162; export-oriented industrialisation and 148–50, 154–64; gender differentials 158–9, 162–3; interindustry wage growth regression 155–63; Malaysian 12, 60–2, 153–5; Sri Lankan 45 Wolf, M 174 World Bank 4, 6, 22; East-Asian Miracle study Ying, S.L see Richardson, R and Ying, S.L Yugoslavia 118 244 .. .TRADE POLICY ISSUES IN ASIAN DEVELOPMENT This book examines issues of trade policy in the light of the experience of developing Asian economies Case studies highlight rapidly unfolding issues. .. reforms, saving and investment in India 69 Saving and investment behaviour in india: an overview 71 The intriguing behaviour of household physical investment 74 Determinants of private corporate investment... for short) in determining gains from export growth Policy makers often place emphasis on linkages in setting sectoral priorities in export development policy, particularly in designing export