Brookings: Experts - Susan M. Collins

Rebalancing the U.S. Economy in a Post-Crisis World

Barry P. Bosworth and Susan M. Collins — Tue, 11 May 2010 10:01:00 -0400

Abstract

The objective of this paper is to explore how the external balance of the United States might evolve in future years as the economy emerges from the recession. We examine the issue both from the domestic perspective of the saving and investment balance and from the external side in terms of the basic determinants of exports and imports and the role of the real exchange rate.

Using these two respective perspectives, we highlight (1) causes and consequences of low private and public saving in the U.S., and (2) sensitivity of trade to variations in the real exchange rate. We highlight the need for sustained depreciation of the dollar to improve the competitiveness of U.S. exports and argue that the current exchange rate is consistent with a significant reduction in the size of the trade deficit.

However, the favorable external outlook is very inconsistent with a projected domestic situation of low rates of private saving and a very large public sector budget deficit matched by a cyclically depressed rate of investment. Changes in U.S. corporate tax structure, reconsideration of capital controls, and perhaps some further decline in the level of real exchange rates could help soften the impact of a potentially very hard post-recession landing for the United States.

Paper prepared for the “Trans-Pacific Rebalancing” Conference jointly organized by Asian Development Bank Institute and The Brookings Institution, March 3-4, ADBI, Tokyo.

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The U.S. External Deficit: A Soft Landing, Doomed or Delayed?

Barry P. Bosworth and Susan M. Collins — Mon, 23 Nov 2009 11:37:00 -0500

ABSTRACT

The objective of this paper is to explore how the external balance of the United States might evolve in future years as the economy emerges from the recession. We examine the issue both from the domestic perspective of the saving and investment balance and from the external side in terms of the basic determinants of exports and imports and the role of the real exchange rate. We highlight the need for sustained depreciation of the dollar to improve the competitiveness of U.S. exports and argue that the current real exchange rate is consistent with a significant reduction in the size of the trade deficit to 3-4 percent of GDP. However, the favorable external outlook is very inconsistent with a projected domestic situation of low rates of private saving and a very large public sector budget deficit matched by a cyclically depressed rate of investment. A recovery of investment is likely to be accompanied by a widening of the current account deficit.

INTRODUCTION

The United States has had a substantial current account deficit ever since the early 1990s. For most of that period, the deficit has increased steadily, reaching a peak of $800 billion or 6.7 percent of national income in 2006. There has been widespread agreement that deficits of that magnitude could not be sustained and thus a pervasive fear that the economy might be heading toward a hard landing–with an abrupt collapse of the dollar and severe economic disruptions both domestically and globally.

In the fully-employed economy of the mid-decade, the rebalancing of the U.S. economy was viewed as a relatively straight-forward, though politically-difficult twopronged task. It would require: (1) changing the composition of domestic demand away from an over-emphasis on domestic consumption in order to free up resources for increased production in the tradable-goods sector, and (2) expenditure-switching aimed at directing those resources into increased exports. The first goal was often described as a need to increase national saving, and the second as a change in the relative price of U.S.-produced products to make them more competitive in world markets.

For a brief period in the middle of the decade, it appeared that a relatively benign adjustment might be underway. A real depreciation of the U.S. dollar improved the competitiveness of American products and the current account deficit gradually began to recede during 2007 and the first three quarters of 2008. The improvement would have been even more marked were it not for the sharp increase in the price of petroleum imports. Export volumes grew by 18 percent between the 2nd quarter of 2006 and the 2nd quarter of 2008, while import volumes were flat. The U.S. seemed to have begun a softlanding.

However, there was little evidence of adjustment on the domestic side. The national saving rate continued to decline, turning negative in early 2008 due largely to sharply higher federal budget deficits. It was falling rates of investment, not increases in saving that freed up domestic resources. The government responded to a weakening of residential investment with a temporary tax cut aimed at stimulating consumption, further reducing saving.

All of this changed in the fall of 2008 with the onset of a global financial crisis centered on the United States. There has been a severe contraction of domestic demand and employment, and concerns about the composition of aggregate demand have largely vanished in the midst of extreme countercyclical policies aimed at stabilizing the economy. The external economy experienced an even larger collapse as global trade declined 25 percent below trend in the first half of 2009. U.S. exports fell 20 percent below year earlier levels, with imports falling an even larger 28 percent. In 2009, the U.S. current account deficit is estimated at only 3.5 percent of national income - half its value in the peak year of 2006. Perversely, the U.S. real exchange rate also soared - temporarily reversing about half of the prior decline from its peak as investors sought a safe haven in U.S. treasury securities

What will be the future of external rebalancing, and should it still be a major policy concern? The recession is ending, but most forecasts for the United States suggest a weak recovery with high levels of unemployment continuing for several years. Furthermore, distortions in the domestic saving and investment balance are far worse than before the crisis: the fiscal deficit has pushed the national saving rate highly negative and the rate of net investment is a third that of the pre-crisis years. In other countries that experienced severe financial crises, recovery was largely driven by improvements in the trade balance (export-led growth). However, such a scenario may be difficult in a global recession where most countries will see increased exports as a solution to their problems. Will the recovery of trade flows leave the United States with an imbalance comparable to that of the pre-crisis years?

The objective of this paper is to explore how the U.S. economy and its external balance might progress in future years. In the next section, we review the evolution of the external imbalance over the past quarter century - both from the domestic perspective of the saving and investment balance and from the external side as reflected in the U.S. current account imbalance and international investment position. The bulk of the paper then focuses on challenges to external rebalancing from both the domestic and external perspectives. We examine the causes of low private saving in the United States and how saving might evolve in the future. Second, we highlight the challenges faced by the public sector as the result of the aging of the population and continued rapid growth of health care costs. On the external side, we summarize the recent research on the determinants of trade flows and other elements of the current account. We focus particularly on the sensitivity of trade to variations in the real exchange rate and on concerns related to U.S. export performance. Finally, we pull these strands together to consider the risks to a resumption of the soft-landing that the crisis has arrested.

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Publication: Macroeconomic Conference of the Tokyo Club Foundation for Global Studies

Brookings Trade Forum 2007 : Foreign Direct Investment

Susan M. Collins, ed. — Thu, 01 May 2008 00:00:00 -0400

2008 210pp.

Foreign direct investment plays a critical and growing role in the global economy. For a host country, FDI promises a source of new resources and new technologies that could spur economic growth and development. For multinational firms, FDI offers the promise of new markets and less expensive production facilities. But there are clearly risks involved as well as legitimate concerns about the extent to which potential benefits are appropriately shared.

This tenth issue of the Brookings Trade Forum examines a variety of dimensions of FDI. On balance, have developing countries benefited from FDI inflows? To what extent has FDI played an important role in China's impressive economic performance? How do tax and productivity differences between source and host countries affect bilateral FDI flows? How have profits been shared between multinational corporations and host country governments in resource-rich economies? Why do U.S. investors appear to earn substantially higher returns on their investment abroad than foreigners earn on their investments in the United States?

Contributors: Laura Alfaro, Barry Bosworth, Gabriel Chodorow-Reich, Mihir A. Desai, Beata Smarzynska Javorcik, Nicholas R. Lardy, Margaret McMillan, Theodore H. Moran, Assaf Razin, Efraim Sadka, Deborah Swenson, Cédric Tille, Andrew R. Waxman, Shang-Jin Wei, John Whalley, Wing Thye Woo, Xian Xin

ABOUT THE EDITOR

Susan M. Collins

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Determinants of U.S. Exports to China

Barry P. Bosworth and Susan M. Collins — Fri, 04 Apr 2008 00:00:00 -0400

INTRODUCTION

This paper empirically examines U.S. goods trade with China, focusing on the performance of exports. Throughout the analysis, we explore whether U.S. trade is unusual by contrasting it with trade from Japan and the EU-15. The issue is examined from three perspectives: the commodity composition of exports, the role of multinational firms and from the determinants of trade as specified in a formal “gravity model”,. As an initial point of departure, we show that the commodity composition of U.S. exports to China is similar to the pattern of exports to the world as a whole, and that the operations of U.S. multinationals have only minor implication for trade with China. Consequently, we emphasize the estimation of a set of “gravity equations” that explore the role of market size and distance from the United States. Distance exerts a surprisingly large effect on trade. Finally, while exports to China may be a small share of U.S. GDP, they are relatively substantial compared to U.S. exports to other countries. In other words, the measure of U.S. trade performance in China is distorted by the low level of its exports to all countries. We present evidence that the United States underperforms as an exporter relative to a peer group of high-income European countries and Japan.

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Accounting for Growth: Comparing China and India

Barry P. Bosworth and Susan M. Collins — Wed, 17 Jan 2007 00:00:00 -0500

Abstract

The emergence of China and India as major forces in the global economy is one of the most significant economic developments of the past quarter century. Their continued growth is likely to dominate the course of the world economy for the next several decades. Up to now, only a small fraction of the world's population has enjoyed the fruits of economic well-being, with high-income industrial countries accounting for less than a fifth of the world's population. However, China and India together comprise over a third of the world's population; and since 1980, they have achieved remarkable rates of economic growth and poverty reduction.

The purpose of this paper is to examine sources of economic growth in the two countries and to compare and contrast their experiences over the past 25 years. In many respects, China and India seem similar. Both are geographically large countries with enormous populations that remain very poor. In 1980, roughly the beginning of our analysis, both had extremely low per capita incomes, although we note that there is some controversy in the literature about their relative income levels. Since then, GDP per capita has more than doubled in India and has increased a remarkable 7-fold in China. However, the details of their economic growth are in fact quite different. While initially both were largely autarkic countries, isolated from the global economy, China acted more quickly and aggressively to lower trade barriers, and attract foreign direct investment inflows. In addition, as discussed more fully in later sections, China has experienced explosive growth in its industrial sector, whereas India's growth has been fueled by the expansion of service-producing industries.

In this paper, we investigate the patterns of economic growth for China and India by constructing a set of growth accounts for each that uncover the supply side sources of output change. In addition to aggregate output, the accounts are constructed for the three major economic sectors: primary (agriculture, forestry and fisheries), industry (manufacturing, mining, construction, and utilities), and services. This level of detail enables us to assess the magnitude of efficiency gains associated with the movement of workers out of agriculture, where they are frequently under-employed, into higher productivity jobs in industry and services.

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Publication: Economics of Developing Countries Papers

Brookings Trade Forum: 2006 : Global Labor Markets?

Carol Graham and Susan M. Collins, eds. — Fri, 01 Dec 2006 00:00:00 -0500

Brookings Institution Press 2006 254pp.

An important feature of globalization is the increasing cross-national integration of labor markets. Yet there is little consensus on the implications of that integration, or the costs and benefits for the many very different groups involved. While there is agreement—at least among most economists—that there are likely to be aggregate gains from increased integration, it is clear that there are losers as well as winnder in both developed and developing countries.

The ninth issue of the Brookings Trade Forum brings together some of the foremost experts on migration, representing diverse perspectives and backgrounds.

Contents:

Editors' Summary (Full Text - PDF)

Boom Towns and Ghost Countries: Geography, Agglomeration, and Population Mobility (Abstract - PDF)
Lant Pritchett

Global Wage Differences and International Student Flows (Abstract - PDF)
Mark R. Rosenzweig

Wages Dynamics and Economic Development (Abstract - PDF)
Andrew M. Warner

What's Wrong with Plan B? International Migration as an Alternative to Development Assistance (Abstract - PDF)
Devesh Kapur and John McHale

For Better or for Worse? Job and Earnings Mobility in Nine Middle- and Low-Income Countries (Abstract - PDF)
Suzanne Duryea, Gustavo Marquéz, Carmen Pagés, and Stefano Scarpetta

Panel Discussion—Global Labor Markets: Issues and Implications

Globalization of Labor Markets and Inequality (Abstract - PDF)
Michael Kremer

Migration: Who Gains, Who Loses (Abstract - PDF)
Arvind Panagariya

Do Open Borders Produce Greater Happiness? An Underanalyzed Question (Abstract - PDF)
Isabel Sawhill

ABOUT THE EDITORS

Carol Graham

Susan M. Collins

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Key Steps in IMF Reform: Taking Stock on the Eve of the Annual Meetings in Singapore

Tue, 05 Sep 2006 11:00:00 -0400

Event Information

September 5, 2006
11:00 AM - 12:00 PM EDT

Falk Auditorium
The Brookings Institution
1775 Massachusetts Ave., NW
Washington, DC

Rodrigo de Rato, managing director of the International Monetary Fund (IMF), discussed progress in reforming the IMF in advance of the IMF/World Bank annual meetings, which were held in Singapore in mid-September. Mr. de Rato addressed specifically the IMF's governance structure, reforms of surveillance, the IMF's role in emerging markets, and its engagement with low-income countries. Looking beyond the annual meetings, Mr. de Rato discussed plans to further adapt the IMF to the new global economy. The event is part of the Brookings Institution's 90th Anniversary Leadership Forum series.

Transcript

Transcript (.pdf)

Event Materials

20060905_derato

Participants

Moderator

Panelists

Rodrigo de Rato

Managing Director, International Monetary Fund

Strobe Talbott

President, The Brookings Institution

Restoring Growth in Puerto Rico : Overview and Policy Options

Barry P. Bosworth, Miguel A. Soto-Class and Susan M. Collins, eds. — Tue, 01 Aug 2006 00:00:00 -0400

Brookings Institution Press and Center For The New Economy 2006 136pp.

Puerto Rico is at an important crossroad. After emerging as one of the world's fastest-growing economies following World War II, the island's growth has slowed over the past quarter century. Although they are American citizens, nearly half of Puerto Rico's residents lived below the U.S. poverty line at the close of the millennium—and the income gap relative to the mainland was widening.

Restoring Growth in Puerto Rico examines the island's economy and presents policy options for sustainable growth. A number of overlapping issues are at the heart of Puerto Rico's economic difficulties: labor supply and demand, entrepreneurship, the fiscal situation, financial markets, and trade. Here, economists from Puerto Rico and the United States propose a set of policy recommendations to increase employment, encourage private sector development, improve education, upgrade infrastructure, and fix governmental finances.

The chapters in this book summarize original analyses appearing in The Economy of Puerto Rico: Restoring Growth, a much larger book also copublished by the Brookings Institution and the Center for the New Economy. The final chapter appears here in its entirety, presenting policy recommendations and setting out a growth strategy for Puerto Rico.

Contributors: James Alm (Georgia State University), Barry P. Bosworth and Gary Burtless (Brookings Institution), Susan M. Collins (Brookings Institution and Georgetown University), Steven J. Davis (University of Chicago), María E. Enchautegui, Juan Lara, Luis A. Rivera- Batiz, and Orlando Sotomayor (University of Puerto Rico), Richard B. Freeman and Robert Z. Lawrence (Harvard University), Helen F. Ladd (Duke University), Rita Maldonado-Bear and Ingo Walter (New York University), Francisco L. Rivera-Batiz (Columbia University), and Miguel A. Soto-Class (Center for the New Economy).

Press Release: Scholars Present Study on Puerto Rico Economy to Congress.

Brookings and Center for the New Economy Briefing: Puerto Rico's Economic Challenge, May 25, 2006.

ABOUT THE EDITORS

Barry P. Bosworth

Miguel A. Soto-Class

Miguel A. Soto-Class is the executive director of the Center for the New Economy, a Puerto Rico-based think tank focusing on economic development issues.

Susan M. Collins

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Sources of Growth in the Indian Economy

Barry P. Bosworth and Susan M. Collins — Sat, 15 Jul 2006 00:00:00 -0400

Introduction

Recent years have witnessed a growing optimism about the potential for Indian economic growth. In part, this is fueled by the example of strong sustained growth in China, raising the obvious question of why India cannot do as well. However, the optimism also reflects the fact that India's growth has accelerated over the past two decades. And while its growth rate remains well below that of China, this favorable performance contrasts with the slowing of growth in other regions. It has also enabled the emergence of a significant middle class in India. Interestingly, India's economic performance has differed from that of China and other parts of Asia in at least two dimensions. First, India's success has not been based on strong growth in the manufacturing sector and in exports. Instead, it has reflected very rapid expansion of service-producing industries. Second, it has been associated with relatively modest levels of investment. Even incorporating recent data revisions, India's physical capital accumulation has not been impressive. And despite substantial increases in the number of Indians attaining higher education, illiteracy rates remain high.

In this paper, we build on a growth accounting framework to empirically examine these dimensions of India's recent growth. Where has the growth been concentrated, as among agriculture, industry, and the service-producing sectors? What are the major contributors to that growth: increased employment, capital per worker, educational attainment, or improvements in the basic efficiency of resource use (total factor productivity)? We also examine each of the features noted above that distinguish India's recent performance. Thus, we are particularly interested in the sources of growth in the service-producing industries. Is it sustainable or should India place greater emphasis on the manufacturing sector and the promotion of rapid growth in export markets? We also emphasize the roles of both physical and human capital accumulation. Throughout the analysis, we are particularly concerned about the quality of the available statistical data, and the influence this may have on our conclusions.

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Puerto Rico's Economic Challenge

Thu, 25 May 2006 09:00:00 -0400

Event Information

May 25, 2006
9:00 AM - 12:00 PM EDT

Falk Auditorium
The Brookings Institution
1775 Massachusetts Ave., NW
Washington, DC

Puerto Rico presents a puzzling economic situation. As a territory of the United States, it has many of the institutions that economists judge crucial to growth. It is one of the world's most open economies, with free mobility of goods, services, capital, and labor to the large, prosperous U.S. market; and firms and individuals and firms who are resident in Puerto Rico are exempt from federal taxes. One might expect these conditions to pave the way for rapid economic development in Puerto Rico, with living standards converging steadily toward those enjoyed in the rest of the nation. However, since the mid 1970s, that growth has stalled. Puerto Rico's per capita income is only about half that of the poorest U.S. state and a majority of its residents live below the U.S. poverty line.

What went wrong? Motivated by Puerto Rico's economic dilemmas, researchers from Puerto Rico and the mainland collaborated on an extensive project led by the Center for the New Economy (CNE) and the Brookings Institution. The resulting book examines the island's low-employment rates, comparatively small private sector, trade performance, and the effectiveness of its educational, financial and fiscal systems. Chapters also focus on the effects of key U.S. policies on the island, particularly in the areas of taxation and social transfers.

To discuss the book and recent developments in Puerto Rico, Susan Collins, Barry Bosworth and William Dickens, all Brookings senior fellows, were joined by Miguel Soto-Class from the CNE; Maria Enchautegui from the University of Puerto Rico; Steven Davis from the University of Chicago and the American Enterprise Institute for Public Policy Research (AEI); and Francisco Uriarte also of CNE.

Panel One: Economic Growth in Puerto Rico

Moderator:
Miguel Soto-Class
Center for the New Economy

Presenter:
Susan Collins
The Brookings Institution & Georgetown University

Panel Two: Why is Employment So Low?

Moderator:
William Dickens
The Brookings Institution

Panelists:
Maria Enchautegui, University of Puerto Rico
Steven Davis, University of Chicago & AEI

Panel Three: Options for Restoring Growth

Moderator:
Francisco Uriarte
Center for the New Economy

Presenter:
Barry Bosworth
The Brookings Institution

Transcript

Transcript (.pdf)

Event Materials

The Economy of Puerto Rico : Restoring Growth

Barry P. Bosworth, Miguel A. Soto-Class and Susan M. Collins, eds. — Wed, 01 Mar 2006 00:00:00 -0500

Brookings Institution Press and Center For The New Economy 2006 607pp.

A non-incorporated territory of the United States, Puerto Rico operates under U.S. legal, monetary, security and tariff systems. Despite sharing in these and other key U.S. institutions, Puerto Rico has experienced economic stagnation and large scale unemployment since the 1970s. The island's living standards are low by U.S. standards, with a per capita income only half that of Mississippi, the poorest state. While many studies have analyzed the fiscal implications of Puerto Rico's political relationship with the United States, little research has focused broadly on the island's economic experience or assessed its growth prospects.

In this innovative new book, economists from U.S. and Puerto Rican institutions address a range of major policy issues affecting the island's economic development. To frame the current situation, the contributors begin by assessing Puerto Rico's past experience with various growth policies. They then analyze several reforms and new initiatives in labor, education, entrepreneurship, fiscal policy, migration, trade, and financing development, which they incorporate into a proposed strategy for jumpstarting Puerto Rican economic growth.

Contributors include Gary Burtless (Brookings Institution); Orlando Sotomayor, Luis Rivera-Batiz, Ramón Cao, Maria Enchautegui, José Joaquín Villamil, Eileen Segarra, Marinés Aponte, and Juan Lara (University of Puerto Rico); Richard Freeman and Robert Lawrence (Harvard University); Helen Ladd (Duke University); Francisco Rivera-Batiz (Columbia University); Steven Davis and Bruce Meyer (University of Chicago); James Alm (Georgia State University); Ingo Walter, Rita Maldonado-Bear, and William Baumol (New York University); Belinda Reyes (University of California, Merced); Alan Krueger (Princeton University); Carlos Santiago (University of Wisconsin); David Audretsch (Indiana University); Ronald Fisher (Michigan State University); Fuat Andic (UN Advisor); Arturo Estrella (NY Federal Reserve); James Hanson and Daniel Lederman (World Bank); James Dietz (University of California, Fullerton); and Katherine Terrell (University of Michigan).

Press Release: Scholars Present Study on Puerto Rico Economy to Congress.

Brookings and Center for the New Economy Briefing: Puerto Rico's Economic Challenge, May 25, 2006.

ABOUT THE EDITORS

Barry P. Bosworth

Miguel A. Soto-Class

Miguel A. Soto-Class is the executive director of the Center for the New Economy, a Puerto Rico-based think tank focusing on economic development issues.

Susan M. Collins

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Brookings Trade Forum: 2005 : Offshoring White-Collar Work

Lael Brainard and Susan M. Collins, eds. — Wed, 01 Mar 2006 00:00:00 -0500

Brookings Institution Press 2006 490pp.

The media stokes popular images of white-collar jobs disappearing from America's shores, frequently through dramatic, often anecdotal or inconsistent "statistics." This volume of Brookings Trade Forum illuminates questions surrounding offshoring from a variety of complementary angles—from theory to empirics, from industry studies to aggregate labor market effects, and from both developed and developing country vantage points.

Existing evidence suggests that relatively few service and white-collar jobs have been offshored to date, but concerns on what might happen in the future persist. Will high-skilled workers in advanced economies such as the United States gain or lose from increased offshoring of services? Are workers in services more or less exposed to global competition than those in manufacturing? What are the complex effects on developing countries? And, what is the policy agenda that emerges from the spread of offshoring into services? The contributors here demonstrate that existing economic theory can go a long way toward capturing, and understanding, key dimensions of the services offshoring phenomenon.

Contents Include:

Editors’ Summary (Full Text)

WHAT DO WE LEARN FROM TRADE THEORY?

Modeling the Offshoring of White-Collar Services: From Comparative Advantage to the New Theories of Trade and Foreign Direct Investment (Abstract)
James R. Markusen (University of Colorado—Boulder)

Service Offshoring: Threats and Opportunities (Abstract)
Daniel Trefler (University of Toronto)

EXPLORING THE EMPIRICS

Tradable Services: Understanding the Scope and Impact of Services Offshoring (Abstract)
J. Bradford Jensen (Institute for Ineternational Economics) and Lori G. Kletzer (University of California—Santa Cruz)

Trends in Employment at U.S. Multinational Companies: Evidence from Firm-Level Data (Abstract)
Maria Borga (U.S. Bureau of Economic Analysis)

Potential Offshoring: Evidence from Selected OECD Countries (Abstract)
Desirée van Welsum (OECD) and Xavier Reif (OECD)

OFFSHORING—INDIA'S ROLE

Information-Technology-Enabled Services and India’s Growth Prospects (Abstract)
T. N. Srinivasan (Yale University)

Globalization and the Offshoring of Services: The Case of India (Abstract)
Rafiq Dossani (Stanford University)

LESSONS FROM INDUSTRY STUDIES

Offshoring in the Semiconductor Industry: A Historical Perspective (Abstract)
Clair Brown (University of California—Berkeley) and Greg Linden (University of California—Berkeley)

Service Management and Employment Systems in U.S. and Indian Call Centers (Abstract)
Rosemary Batt (Cornell University), Virginia Doellgast (Cornell University), and Hyunji Kwon (Cornell University)

Determinants of Operational Risk in Global Sourcing of Financial Services: Evidence from Field Research (Abstract)
Ravi Aron (University of Pennsylvania) and Ying Liu (University of Pennsylvania)

The Emerging Offshore Software Industries and the U.S. Economy (Abstract)
Ashish Arora (Carnegie Mellon University)

Offshoring and Radiology (Abstract)
Frank Levy (Massachusetts Institute of Technology) and Ari Goelman (Massachusette Institute of Technology)

WHAT ROLE FOR POLICY?

A Fairer Deal for America’s Workers in a New Era of Offshoring (Abstract)
Lael Brainard (Brookings Institution), Robert E. Litan (Brookings Institution and Kaufmann Foundation), and Nicholas Warren (Brookings Institution)

The Role of U.S. Tax Policy in Offshoring (Abstract)
Kimberly A. Clausing (Reed College)

ISSN 1520-5479

ABOUT THE EDITORS

Lael Brainard

Susan M. Collins

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Brookings Trade Forum: 2004 : Globalization, Poverty, and Inequality

Carol Graham and Susan M. Collins, eds. — Wed, 15 Dec 2004 00:00:00 -0500

Brookings Institution Press 2004 311pp.

How is globalization linked to global poverty and to global inequality? Such questions are at the center of a heated and, at times, acrimonious debate, despite the large and growing literatures in economics and other disciplines. This volume of the Brookings Trade Forum aims to summarize what is known from the existing body of scholarly research and identify the questions on which there is less conclusive evidence and consensus. The debate is further fueled by the absence of agreed-upon definitions of globalization, poverty and inequality. Yet clarifying the way such terms are used is critical, as studies based on different definitions of the terms yield starkly contrasting conclusions. All contributors grapple with this difficult issue.

Contents:

Editors' Summary (Full Text)

GLOBALIZATION AND INEQUALITY

Competing Concepts of Inequality in the Globalization Debate (Abstract)
Martin Ravallion (World Bank)

Channels from Globalization to Inequality: Productivity World versus Factor World
William Easterly (New York University)

Health in an Age of Globalization (Abstract)
Angus Deaton (Princeton University)

BROADER INDICATORS OF WELL-BEING

Assessing the Impact of Globalization on Poverty and Inequality: A New Lens on an Old Puzzle (Abstract)
Carol Graham (Brookings Institution)

Poverty and the Organization of Political Violence: A Review and Some Conjectures (Abstract)
Nicholas Sambanis (Yale University)

IMPACT OF GLOBALIZATION

Trade, Inequality, and Poverty: What Do We Know? (Abstract)
Pinelopi Goldberg (Yale University) and Nina Pavcnik (Dartmouth College)

The Impact of Globalization on the Poor (Abstract)
Pranab Bardhan (University of California, Berkeley)

LOOKING FORWARD

Why Global Inequality Matters (Abstract)
Nancy Birdsall (Center for Global Development)

Some Speculation on Growth and Poverty over the Twenty-First Century
Kenneth Rogoff (Harvard University)

ISSN 1520-5479

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ABOUT THE EDITORS

Carol Graham

Susan M. Collins

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Brookings Trade Forum 2003

Dani Rodrik and Susan M. Collins, eds. — Tue, 02 Mar 2004 00:00:00 -0500

Brookings Institution Press 2004 350pp.

ISSN 1520-5479

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This annual series provides comprehensive analysis on current and emerging issues of international trade and economics. In this volume, researchers use theory and empirics to provide novel analyses of six of the key issues surrounding the integration of developing countries into the global market place.

Contents include:

Editors' Summary (Full Text)

Trade Policy and Industrial Sector Responses in the Developing World: Interpreting the Evidence (Abstract)
Erkan Erdem and James Tybout (Pennsylvania State University)

Globalization's Impact on Compliance with Labor Standards (Abstract)
Ann Harrison and Jason Scorse (University of California, Berkeley)

When Economic Reform Goes Wrong: Cashews in Mozambique (Abstract)
Margaret McMillan (Tufts University), Dani Rodrik (Harvard University), and Karen Horn Welch (Stanford University)

Staying The Course: Maintaining Fiscal Control In Developing Countries (Abstract)
Christopher Adam and David Bevan (Oxford University)

Through What Channels Does External Debt Affect Growth? (Abstract)
Catherine Pattillo, Helene Poirson, and Luca Ricci (International Monetary Fund)

Crisis Resolution: Next Steps (Abstract)
Barry Eichengreen (University of California, Berkeley), Kenneth Kletzer (University of California, Santa Cruz), and Ashoka Mody (International Monetary Fund)

ABOUT THE EDITORS

Dani Rodrik

Dani Rodrik is professor of international political economy at the John F. Kennedy School of Government, Harvard University. He has published widely on issues related to trade policy and economic reform in developing economies, including Has Globalization Gone Too Far? (Institute for International Economics, 1997) and The New Global Economy and Developing Countries: Making Openness Work (Overseas Development Council, 1999).

Susan M. Collins

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The Empirics of Growth: An Update

Barry P. Bosworth and Susan M. Collins — Mon, 22 Sep 2003 00:00:00 -0400

Over the past decade, there has been an explosion of empirical research on economic growth and its determinants. Despite this large volume of work, many of the central issues of interest remain unresolved. For instance, no consensus has emerged about the contribution of capital accumulation versus improvements in total factor productivity in accounting for differences in economic growth. Nor is there agreement about the role of increased education or the importance of economic policy as determinants of economic growth. Indeed, results from the many studies on a given issue frequently reach opposite conclusions. And two of the main empirical approaches—growth accounting and growth regressions—have themselves come under attack, with some researchers going so far as to label them as irrelevant to policymaking.

In this paper, we argue that, when properly implemented and interpreted, both growth accounts and growth regressions are valuable tools, that can—and have—improved our understanding of growth experiences across countries. We also show that careful attention to issues of measurement and consistency goes a long way in explaining the apparent contradictions among findings in the existing empirical literature. Thus, we combine growth accounts and growth regressions with a focus on measurement and procedural consistency to address the issues raised above. The growth accounts are constructed for 84 countries that represent 95 percent of the world's GDP and 85 percent of the population, over a period of 40 years from 1960 to 2000. This also enables us to compare growth experiences across two 20-year time periods: 1960-80 versus 1980-2000.

Understanding characteristics and determinants of economic growth requires an empirical framework that can be applied to large groups of countries over a relatively long time frame. Growth accounts and growth regressions provide such frameworks in a way that is particularly informative because the two approaches can be used in concert, enabling researchers to explore the channels (factor accumulation versus factor productivity) through which various determinants influence growth. While the information provided is, perhaps, best considered descriptive, it can generate important insights that are complementary to those gained from indepth case studies of selected countries, or from estimation of carefully specified econometric models that are designed to test specific hypotheses.

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Brookings Trade Forum: 2002

Dani Rodrik and Susan M. Collins, eds. — Mon, 03 Feb 2003 00:00:00 -0500

Brookings Institution Press 2003

ISSN 1520-5479

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Currency crises are extremely perplexing problems, initially erupting in a country's financial markets and spreading throughout a country's economy and beyond—often with devastating consequences for real economic activity.

In the 2002 volume of Brookings Trade Forum, experts on the two most recent crises—in Argentina and Turkey—together with others who have studied currency crises more broadly, examine why such crises continue to erupt and how to mitigate their impact, possibly preventing additional crises in the future.

Contents Include:

Editors' Summary (Full Text)

Argentina's Avoidable Crisis: Bad Luck, Bad Economics, Bad Politics, Bad Advice (Abstract)
Andrew Powell (Universidad Torcuato di Tella)

Hard Money's Soft Underbelly: Understanding the Argentine Crisis (Abstract)
Ricardo Hausmann (Harvard University) and Andrés Velasco (Harvard University)

Banking Sector Fragility and Turkey's 2000-01 Financial Crisis (Abstract)
Fatih Özatay (Merkez Bankasi) and Güven Sak (Merkez Bankasi)

Panel:

Lessons of Recent Currency Crises (Abstract)
Morris Goldstein (Institute for International Economics)

Currency Crises: A Practitioner's View (Abstract)
Jose Luis Machinea (Inter-American Development Bank)

Does East Asia Need a New Development Paradigm? (Abstract)
Yung Chul Park (Korea University)

ABOUT THE EDITORS

Dani Rodrik

Susan M. Collins

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Brookings Trade Forum: 2001

Dani Rodrik and Susan M. Collins, eds. — Tue, 01 Jan 2002 00:00:00 -0500

Brookings Institution Press 2002 294pp.

ISSN 1520-5479

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This annual series provides comprehensive analysis on current and emerging issues of international trade and macroeconomics. Practitioners and academics contribute to each volume, with papers that provide an in-depth look at a particular topic.

The 2001 edition focuses on the issues and implications of globalization.

Contents Include:

Editors' Summary (Full Text)

Holding International Reserves in an Era of High Capital Mobility (Abstract)
Robert P. Flood (International Monetary Fund) and Nancy Marion (Dartmouth College)

The Impossible Duo? Globalization and Monetary Independence in Emerging Markets (Abstract)
Andrés Velasco (Harvard University)

The Adoption of International Labor Standards Conventions: Who, When, and Why? (Abstract)
Nancy H. Chau and Ravi Kanbur (Cornell University)

The Determinants of Individual Trade Policy Preferences: International Survey Evidence (Abstract)
Kevin O'Rourke and Richard Sinnott (Trinity College, Dublin)

Borders, Trade and Welfare (Abstract)
James E. Anderson (Boston College) and Eric van Wincoop (Federal Reserve Bank of New York)

Expansion Strategies of U.S. Multinational Firms (Abstract)
Gordon Hanson (University of Michigan), Raymond J. Mataloni Jr. (BEA), and Matthew J. Slaughter (Dartmouth College)

ABOUT THE EDITORS

Dani Rodrik

Susan M. Collins

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Brookings Trade Forum: 2000

Dani Rodrik and Susan M. Collins, eds. — Wed, 21 Feb 2001 00:00:00 -0500

Brookings Institution Press 2001 335pp.

The third edition focuses on policy challenges for the next millennium.

Contents include:

Editors' Summary (Full Text)

Fixing for Your Life
Guillermo Calvo and Carmen Reinhart (University of Maryland)

Verifiability and the Vanishing Intermediate Exchange Rate Regime
Jeffrey Frankel (Harvard University), Sergio Schmukler, and Luis Servén (World Bank)

Short- and Long-Run Integration: Do Capital Controls Matter?
Graciela Kaminsky (George Washington University) and Sergio Schmukler (World Bank)

The Role and Effectiveness of the WTO Dispute Settlement Mechanism
John H. Jackson (Georgetown University)

Regulatory Protectionism, Developing Nations, and a Two-Tier World Trade System
Richard E. Baldwin (Graduate Institute of International Studies)

Trade Policy: What's Next?
W. Bowman Cutter (Warburg Pincus), Richard Haass (Brookings Institution), and Daniel Tarullo (Georgetown University)

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ISSN 1520-5479

ABOUT THE EDITORS

Dani Rodrik

Susan M. Collins

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Minority Groups in the Economics Profession

Susan M. Collins — Wed, 01 Mar 2000 00:00:00 -0500

ABSTRACT

The primary objective of this paper is to provide information about minorities (blacks, Hispanics and Native Americans) in economics, at various stages in the education pipeline, and in the labor market. Despite sustained increases in the numbers and percentages of minorities earning bachelors degrees and Ph.D.s, the absolute numbers remain very small -- only about 36 new Ph.D.s per year, including permanent residents. Minority economists are relatively under-represented on four-year college faculties and in government employment. The paper also discusses activities by the AEA's committee on minority groups, aimed at increasing minority representation in the profession.

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Susan M. Collins

Publication: The Journal of Economic Perspectives

From Boom to Crisis and Back Again: What Have We Learned?

Barry P. Bosworth and Susan M. Collins — Fri, 10 Dec 1999 00:00:00 -0500

The 1997-98 financial crisis in Asia dramatically altered perceptions of the region's economic performance. Discussion of an economic miracle was replaced by claims of severe structural imbalances and policy distortions. Even the high rates of capital formation that were originally stressed as a sign of Asia's strength were seen by a new set of commentators as excessive and often in the wrong sectors of the economy. And what was once seen as an important contributor to growth, the intermediation of savings through the banking system, became an illustration of 'crony capitalism' and a predictor of crisis. Prior to the crisis, governments were often seen as having made a positive contribution to growth by coordinating and encouraging private saving and investment. After the crisis, they were blamed for creating situations of severe moral hazard through implicit guarantees on investment and the encouragement of excessive foreign borrowing.

The precise causes of the financial crisis continue to be the cause of heated disputes. One viewpoint blames poor economic fundamentals and inconsistent policies in the affected countries. The other traces the crisis to a panic by domestic and international investors, similar to an old-fashion bank run. While reality undoubtedly lies between the two interpretations, the strength of the economic recovery in 1999 casts doubts on the more extreme claims of severe structural imbalances. If the problems were as systemic as suggested, we would have expected a gradual and incomplete recovery. Instead, the whole episode is beginning to look more like a typical, albeit severe, business cycle -- triggered by a sharp drop in domestic demand and a buildup of excess inventories -- of the type often experienced in industrial economies. Unlike Latin America in the 1980s debt crisis, but like Mexico in 1995, the Asian economies appear to be bouncing back relatively quickly.

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Publication: ADBI Workshop on Development Paradigms