The international trading order at the crossroads
As economic theory shows and experience underlines, international trade and the specialization associated herewith is one important source of economic growth, employment creation and technological innovation in participating countries. In awareness of this potential for increasing economic prosperity throughout the world, the architects of the international trading system, which was to emerge from the ashes of World War II, envisaged a framework of rules leading to, and securing, open markets. The General Agreement on Tariffs and Trade (GATT), which came into being in 1948, laid down such trade rules, basically the principles of non-discrimination and multilateralism in world trade. The aim was not to establish free trade, without any government intervention. What was meant is liberal trade, in which governments may interfere, but using price measures which are transparent and do not rule out competition (i.e. non-prohibitive tariffs rather than quantitative restrictions or subsidies). Adherence by the member countries to the principles of multilateralism and non-discrimination was expected to give rise to the production of an international public good: stability and predictability of trade rules.
The UN convention on the law of the sea: an inefficient public good supplied by an inefficient organization
The Convention on the Law of the Sea is the still controversial outcome of the longest and perhaps most expensive international conference of the century. The most debated issue at UNCLOS III was the Convention's regime to govern seabed mining; differences of opinion on this regime have seriously challenged the purpose of the Conference and are likely to keep the Convention from becoming effective as international law. This paper is an inquiry into the economic causes for such an outcome. In Section II the efficieny of the Convention's regulation for minerals production from the ocean bed is analyzed. Section III deals with the efficiency of the Convention's production process at UNCLOS, focusing on the determinants of voting behaviour and on the rules of procedure used. The last section explores the rationale for alternative multilateral organizations for an efficient management of seabed mining.
Will bank interest rate deregulation jeopardize economic growth? A case study of South Korea
The first purpose of this paper is to demonstrate, as a theoretical.proposition, that elimination of controls on bank interest rates would not necessarily lead to a decline in output in those sectors which were previously able to obtain cheap bank credit, The efficiency gains obtained by eliminating these controls need not, therefore, come at the expense of economic growth (or whatever other benefits were presumed to accrue by fostering particular sectors using credit controls). The key to this result lies in a proper understanding of the way in which credit price control and quantity rationing in the regulated sector affects resource allocation, given the existence of a dual, unregulated financial sector. The second purpose of this paper is to present quantitative estimates of the macroeconomic and sectoral effects of the removal of bank interest rate controls in South Korea. In many ways the Korean experience is tailor-made for a study of this kind.