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The influence of policies on trade and foreign direct investment
Giuseppe Nicoletti, Stephen S. Golub, Dana Hajkova, Daniel Mirza and Kwang-Yeol Yoo
This paper focuses on four widely-advocated policies for global economic integration: removing restrictions to trade and foreign direct investment (FDI); promoting domestic competition; improving the adaptability of labour markets; and ensuring adequate levels of infrastructure capital. The study which covers FDI and trade in both goods and services, argues that despite extensive liberalisation over the past two decades, reducing barriers further could provide a substantial boost to the integration of global markets. It estimates that remaining barriers such as anticompetitive domestic regulations and restrictive labour market rules curb integration as much as explicit trade and FDI restrictions.
Measures of restrictions on inward foreign direct investment for OECD countries
Stephen S. Golub
This paper provides new ways of measuring restrictions on inward foreign direct investment (FDI) in OECD countries. Several types of restrictions are considered: limitations on foreign ownership, screening or notification procedures, and management and operational restrictions. New aggregate measures calculated for a country’s economy as a whole show just how dramatic liberalisation was in this area during the 1990s. OECD countries are now generally open to inward FDI, although marked differences remain between countries and across industries. The most open countries are now in Europe, at least as far as statutory restrictions are concerned. Most of the remaining restrictions are in services, with almost no overt restrictions in manufacturing.
The decline in private saving rates in the 1990s in OECD countries. How much can be explained by non-wealth determinants?
Alain de Serres and Florian Pelgrin
The marked decline in private sector saving rates in several OECD countries in the late 1990s coincided in several cases with a sharp increase in household financial net worth. This was seen by many observers as evidence that the strong rise in equity and residential property prices during the late 1990s had been treated by households as a permanent increase in wealth, leading to an unsustainable drop in saving and raising fears of an eventual negative wealth effect. This paper looks at basic determinants of private saving for a sample of 15 OECD countries and finds that the sharp decline in saving observed after 1995 can be largely explained by fundamentals other than financial wealth. The rise in public?sector saving is found to have contributed the most to the decline in private saving between 1995 and 2000. Based on this investigation, there is little evidence that consumers had gone too far in responding to the stock market boom of the late 1990s, even in countries where private saving rates have fallen to historically low levels. On the other hand, the results suggest that a loosening of fiscal policy may have a limited stimulatory impact on private consumption.
Fiscal relations across government levels
Isabelle Joumard and Per Mathis Kongsrud
Despite its apparent advantages, devolution of taxation and spending responsibilities has not proceeded evenly over the past two decades. Decentralisation can strengthen the democratic process, allow governments to tailor the supply of public goods to local preferences and introduce some competition across jurisdictions, so raising public sector efficiency. It can also, however, entail efficiency losses, make it difficult to implement redistributive policies and complicate macroeconomic management. On the spending side, local provision may fail to exploit economies of scale and lead to decisions by one jurisdiction which fail to take account of their impact on another -- a serious issue since few public goods are purely local by nature. On the revenue side, few tax bases can be used by local governments for their own ends without putting national objectives at risk or raising serious distributive concerns. This paper, which is largely based on the experiences of different countries in mitigating the potential drawbacks of decentralisation while obtaining most of its benefits, provides a framework for assessing fiscal relations between central and local government.
Tariff bindings, unused protection and agricultural trade liberalisation
Peter Walkenhorst and Nora Dihel
Quantative assessments of the effects of agricultural trade liberalisation have until now assumed that a cut in the negotiated benchmark (or "bound") tariff of a given product will result in a corresponding reduction in the import duty that traders face (the "applied" tariff). However, as the applied tariffs are often much lower than bound tariffs this approach overestimates the benefits of trade liberalization. This paper suggests that the distortion of estimates is particularly pronounced for modest tariff cuts, as well as for countries where the differences between bound and applied rates are substantial. Hence, quantitative policy analysts who aim to inform decision makers on the likely impacts of negotiated tariff cuts should consider the relationship between bound and applied tariff rates in their assessments in order to avoid mistaken advice.
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The complete edition of the OECD Economic Studies No. 36 is available from:
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