Trade, Inclusive Growth, and the Role of Policy Aid for Trade Seminar Hotel Jen Tanglin, Singapore | 21 April 2016 Emmanuel A. San Andres APEC Policy Support Unit Copyright © 2016 APEC Secretariat Outline • What is APEC? • Economic growth and trade • Inclusive growth: concept and measurement • Trade and inclusive growth • The role of policy What is APEC? • Established in 1989. • Forum for facilitating economic growth, cooperation, trade and investment in the AsiaPacific region. • Intergovernmental grouping that operates on the basis of non-binding commitments, open dialogue, and equal respect for the views of all participants. • Composed of 21 Member Economies. Copyright © 2013 APEC Secretariat APEC Member Economies APEC Official Observers • Association of South East Asian Nations (ASEAN) Secretariat • Pacific Economic Cooperation Council (PECC) • Pacific Islands Forum (PIF) Copyright © 2013 APEC Secretariat APEC’s Significance Source: StatsAPEC, Key Indicators Database. Copyright © 2015 APEC Secretariat APEC Policy Support Unit • APEC Policy Support Unit (PSU) is the research and analysis arm of APEC. • Conducts independent research in line with APEC’s core priorities. • Mission: To provide rigorous research & analysis needed to improve the quality of APEC's deliberations and decisions. • Provide APEC members and fora with professional & tailor-made research, analysis, policy support & evidence-based policy suggestions. • Five focus areas: • • • • • Trade & Investment Liberalization & Facilitation Structural Reform Connectivity including Supply Chain Connectivity & Global Supply Chains Economic and Financial Analysis Sustainable Economic Development Copyright © 2013 APEC Secretariat Trade and economic growth • Economies trade because it is mutually beneficial • Classical trade theory: specialise in goods you can make efficiently (comparatively) and trade for goods you cannot make efficiently (comparatively) • New trade theories: global value chains, horizontal integration, economic geography and networks, etc. • Empirical data show synergies between trade and economic growth • More open economies grow faster than less open economies • Economies that trade more get richer more quickly (e.g., East Asian miracles) Trade and economic growth Period 1960-1988 1989-2013 1960-1988 1989-2013 • Elasticity Observations (in %) APEC Economies 0.428 376 0.565 453 Rest of the World 0.305 1,914 0.389 2,878 Overall R2 0.687 0.783 0.737 0.886 Elasticities: impact on GDP growth of 1% growth in trade • Positive for all economies; more positive in APEC • More synergistic in recent decades • But what about inclusive growth? What is inclusive growth? • Two aspects: inclusiveness and growth • Growth is a necessary condition for inclusive growth • But inclusiveness implies an improved distribution Economic growth • GDP per capita • Mean household income Inclusive growth • [no commonly used measures] Inclusiveness • Gini coefficient • Poverty measures • Poor’s share of income Measuring inclusive growth inclusive growth = growth in mean household income – increase in inequality • Inclusive growth is income growth adjusted for changes in inequality • Both average income growth and reduction in inequality are considered • An increase in inequality reduces the inclusiveness of income growth • Note: mean HH income ≠ per capita income (but closely related) Inclusive growth in APEC Inclusive growth and per capita GDP growth, 1989-2012 Note: IG = inclusive growth; PCGDP = per capita GDP growth; ROW = rest of the world. Aggregate growth rates are averages of economy-level growth rates weighted by population. Source: PovcalNet data and APEC Policy Support Unit estimates. Inclusive growth in APEC Components of inclusive growth in APEC, 1989-2012 Note: Figures for inequality are presented in the negative: a negative growth rate means an increase in inequality while a positive rate means more equality. Aggregate growth rates are averages of economy-level growth rates weighted by population. Source: PovcalNet data and APEC Policy Support Unit estimates. Trade and inclusive growth Inclusive growth GDP growth Trade growth Trade and inclusive growth • Increased income and employment • Investment and consumption multipliers • Progressive public policy: taxation and service provision GDP growth Inclusive growth Trade growth Trade and inclusive growth • Increased income and employment • Investment and consumption multipliers • Progressive public policy: taxation and service provision GDP growth Inclusive growth • Exports sector employs poor workers; located in poorer areas • Imports make goods more affordable • Access to educational materials and medicines; food security Trade growth Trade and inclusive growth Bivariate analysis of inclusive growth and trade openness Trade openness Group 1 (least open) Group 2 Group 3 Group 4 Group 5 (most open) p-value All Inclusive growth years APEC Inclusive growth years Rest of the world Inclusive growth years 41.8 53.1 46.3 52.0 16.7 54.6 43.2 60.5 50.0 52.5 47.0 51.1 57.3 0.004 53.9 0.000 57.9 0.096 • More open economies are significantly more likely to report inclusive growth • Bivariate correlation seems to be stronger in APEC Trade and inclusive growth Multivariate correlations with inclusive growth Variable Exports growth Imports growth Trade growth Merchandise trade growth GDP growth x exports growth GDP growth x imports growth GDP growth Population growth Inequality (Gini index) (1) Negative* Negative (2) (3) (4) Negative* Positive Negative* Positive Positive Negative Negative* Positive Negative Negative* Positive Negative Negative* Positive* Negative Positive Negative Negative* Note: Trade indicator independent variables for the models are: (1) exports and imports growth separately; (2) total trade growth (exports + imports); merchandise trade growth (goods exports + goods imports); and (4) exports and imports growth separately and interacted with GDP growth. Source: PovcalNet and WDI data and APEC Policy Support Unit estimates. Trade and inclusive growth • Empirically, direct relationship between inclusive growth and trade is mixed • Could be positive or negative depending on specification and econometric model used • Statistically insignificant in many cases • Indications that the direct beneficiaries of trade growth are the more well-off segments of society • Bulk of APEC trade is in skill-intensive industries • APEC top 3 exports: (1) integrated circuits and microassemblies; (2) ICT electric appliances; (3) petroleum oils (not crude) Trade and inclusive growth • However, indirect linkages point to positive effects • Coefficient for the exports-GDP growth interaction variable is positive and significant • Although direct beneficiaries of exports growth are the well-off, evidence to say the poor also benefit indirectly through the overall economy • Interestingly, all coefficients for imports growth are not significant • No indication that the poor, in general, are hurt by imports • Negative and positive impacts of trade seem to even out • Protectionism not necessarily pro-poor The role of policy • Inclusive growth is not automatic with trade • Trade can play a positive role in inclusive growth • But inclusiveness doesn’t just happen with trade; need to think about inclusiveness in policy/programme development • APEC: SME internationalisation, cooperation in services sector • Trade openness should be accompanied by structural reforms that enhance inclusiveness • Human capital investment and skills development • Social protection (e.g., unemployment and health insurance) • Labour market and financial sector policies that expand opportunities • Access to finance and markets among the poor Thank You www.apec.org APEC PSU: www.apec.org/About-Us/Policy-Support-Unit.aspx www.facebook.com/APECnews @APEC and @Bollard_APEC www.linkedin.com/company/asia-pacificeconomic-cooperation-apec-secretariat
© Copyright 2024 Paperzz