OECD Economic Studies No. 23, Winter 1994

The effect of trade and foreign direct investment on employment and relative wages

Robert E. Baldwin

This paper summarises and assesses recent studies on the impact of current trends in trade and direct investment on employment and wages in OECD countries and discusses various policy options being considered to meet the concerns of policy makers about these trends. Consistent with earlier OECD studies, a general conclusion is that such factors as changes in labour supplies, technology and demand are more important than changes in trading patterns in accounting for changes in employment and shifts in relative wages. However, further studies are needed to understand better the employment and wage
impact of foreign direct investment.

The EC's internal market: implementation and economic effects

Peter Hoeller and Marie-Odile Louppe

This article provides a brief overview of the content of the EC's internal market initiative and progress made in its implementation. It also describes the EC's medium-term programme towards ensuring that it becomes a practical reality, It analyses the mechanisms which should lead to welfare gains, and reviews a wide variety of micro- and macroeconomic indicators in order to ascertain whether integration has proceeded since the mid- 1980s. Policy issues, which are more or less closely linked to the success of the internal market initiative, are also addressed. These include competition policy, social and regional policy aspects and changes to the foreign trade regime.

Costs and benefits of moving from low inflation to price stability

Malcolm Edey

This paper reviews issues concerned with the long-run objectives of monetary policy. In particular, it looks at the case for aiming at zero inflation rather than a low positive rate in the long run. Available evidence on the net costs and benefits of disinflating within inflation ranges that are very close to zero appears inconclusive. Measurement biases in standard price indices may be large enough to be materially relevant to the choice of inflation objectives.

Estimating pension liabilities: a methodological framework

Paul Van den Noord and Richard Herd

This paper forms part of on-going OECD work on the economic assessment of public pension systems in view of the process of the ageing of populations. It provides indicative estimates of the size of public pension liabilities in the main seven economies based on simplifying assumptions, and analyses the sensitivity of these estimates for changes in pension rules and the discount rate. The methodology developed here combines actuarial approaches used in the private sector with so-called generational accounts. Such accounts indicate in present-value terms the lifetime financial burden government programmes impose on present and future generations.

A survey of the trade and environment nexus: global dimensions

John Beghin, David Roland-Holst, Dominique van der Mensbrugghe

This paper presents a survey of the growing literature on trade and environment linkages, focusing on the link between trade and environmental policies; environmental regulation and competitiveness; and trade liberalisation, growth and the environment. Linkages refer to environmental externalities; environmental and trade policies; consumer and social preferences towards the environment; factor mobility, technology diffusion, and trade orientation. The paper contrasts South issues which are largely production-based and institutional, with North issues where both demand and supply generate substantial trade-environment linkages. Finally, the paper highlights the need for more empirical results and indicates directions and priorities for this work.