Openness and Development: Yearbook of Economic and Social Relations 1996

246 Pages·1996·8.51 MB·English

by  Dr. Gunnar Muent

Studies in Contemporary Economies
Editorial Board
D.Bös
B. Felderer
B. Gahlen
H.J.Ramser
K. W. Rothschild
Franz Peter Lang
Renate Ohr (Eds.)
Openness
and Development
Yearbook ofEconomic
and Social Relations 1996
With 13Figures
and 23Tables
Springer-Verlag Berlin Heidelberg GmbH
Professor Or. Pranz Peter Lang
TU Braunschweig
Institut für Wirtschaftswissenschaften
Spielrnannstr. 9
0-38106 Braunschweig, Germany
Professor Or. Renate Ohr
Universität Hohenheim (520)
Institut für Volkswirtschaftslehre
Lehrstuhl für Außenwirtschaft
Schloß Mittelhof-Ost
0-70593 Stuttgart, Germany
ISBN 978-3-7908-0958-9 ISBN 978-3-662-12627-1 (eBook)
DOI 10.1007/978-3-662-12627-1
Die Deutsche Bibliothek - CIP-Einheitsaufnahme
Openness and development / Franz Peter Lang; Renate Ohr
(ed.). - Heidelberg: Physica-VerJ., 1996
(Yearbook of economic and social relations ... ; 1996)
NE: Lang, Franz Peter [Hrsg.)
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© Springer-Verlag Berlin Heidelberg 1996
Originally published by Physica-Verlag Heidelberg in 1996
The use of registered names, trademarks, etc. in this publication does not imply, even in
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SPIN 10544399 88/2202-5432 1 0 -Printed on acid-free paper
Contents
vn
Preface
Part I
General Perspectives 1
Gunnar Muent and HariolfGrupp
Changes in Technological and Trade Specialisation Among Open
Economies - A Comparison Between Europe, the United States
andJapan 3
Thomas Straubhaar
Openness, Economic Growth and Locational Competition 33
Dieter Bender
Domestic Financial Liberalization and Capital Account Openness 57
Thusnelda Tivig
Coping with Changing Exchange Rates:
Does Openness Harm Firms? 77
Part 11
Regional Perspectives 93
Sonning Bredemeier
EXPO - Measure for the Internationalisation ofRegional
Economic Policy 95
Franz Peter Lang
Japan' s Experiences with Recent Developments
in the World Economy 123
VI Contents
Heinz G. Preusse
Change in Development Strategies in Latin America - Another
Transitory Move Towards an Open Market System? 133
Michael von Hauff
Vietnam's Economy in Transition - Perspectives ofEconomic
Development 165
Rainer Schweickert
Which Target for Exchange Rate Policy in Developing Countries:
Stability or Competitiveness 189
Renate Ohr
Exchange Rate Policy in Eastem Europe 217
Preface
Openness and development are key words of central importance in
describing the dynamism within the present world economy. Openness
denotes the entire process of internationalization and liberalization now
underway in the commodity markets, factor markets and financial mar
kets. Today there is hardly anational economy or company left which can
afIord to ignore international dependencies. In the broadest sense of the
an
word, development encompasses those dynamic endogenous economic
processes which create prosperity and a high standard of living via inno
vation and structural change. Modem economic research has shown that
both of these fields of economic causalities - which are themselves
afIected by a wide variety of interdependencies - detennine the economic
destiny of the national economies and of their actors in the industrial,
newly industrializing, transitional and developing countries.
The present volume focuses on the significance of these two key words
while conveying, at the same time, an impression of the broad spectrum of
related issues. It contains papers written by economists working at uni
versities and research institutes as well as papers submitted by "economic
practitioners"; the latter, in particular, provide valuable insights on current
issues by taking account of theoretical and practical considerations.
Whereas the papers printed in Part I analyze their subjects from a general
perspective, the emphasis in Part TI is on specific regional aspects.
Part I begins with a theoretical-empirical study on the development of
foreign trade. In this paper, Gunnar Muent and Hariolf Grupp explore the
question of whether the patterns of specialization discemible in the inno
vation and foreign trade activities of the leading industrial nations since
the early 1960s have developed in a converging or diverging manner. An
empirical analysis conducted on the basis of patent data has yielded
evidence of a convergence of specialization within Europe. In contrast, a
comparison of the patterns exhibited by the members of the USA-Japan
Europe triad has revealed divergence.
vm
Preface
In the second paper, Thomas Straubhaar investigates the factors deter
mining the global competitiveness of national locations in an open world
economy. He demonstrates that the relative attractiveness of a location for
international mobile factors of production depends primarilyon the extent
to wbich local authorities succeed in adapting socio-economic, political
and institutional structures to international developments. In particular,
Straubhaar shows clearly that goods markets and factor markets with the
quality of openness have the best prospects of reacting flexibly to chang
ing location-specific conditions.
Growth effects resulting from the elimination of financial repression and
opening of the capital account are analyzed by Dieter Bender in the third
paper. Viewed from the perspective of either traditional neoclassical
growth theory or the modem theory of endogenous growth, bis theoretical
study shows clearly that simultaneous internal and external liberalization
is superior to step-by-step reform of the financial markets for promoting
catching-up processes, and consequently the process of economic de
velopment as weil.
In the fourth paper the impact of exchange-rate effects on companies is
examined. Thusnelda Tivig takes a microeconomic approach to assessing
the impact of openness. In this context, the welfare of the actors is a
function of corporate profits and is thus dependent on the extent to which
companies cope successfully with exchange-rate fluctuations. She points
out that openness creates risks, but also greater opportunities for success,
for both corporations and the economy. To a large extent, strategic
mastery of exchange-rate fluctuations affecting both export and import
business is an important prerequisite for attaining this goal.
The papers presented in Part II exhibit a distinct regional orientation. In
the first paper in this section, Sonning Bredemeier investigates the eco
nomic effects of EXPO 2000 in Hanover. Taking the EXPOs in Van
couver and Seville as examples, he describes world expositions of this
kind as "one-off instruments" of regional development policy resulting in
an extreme degree of openness to the global economy. Such expositions
have both short and long-term effects on regional economic development.
Prejace IX
The fonner are expansive but only temporary during the preparation and
implementation phases; they are attributable to the construction and con
version measures necessitated by the exposition and the expenditures
made by domestic and foreign visitors. The latter, i.e. long-tenn, effects of
the exposition result from the modernized infrastructure, the utilization of
new technologies and the altered awareness of the population sparked by
the phase of greater openness.
The process of economic liberalization now underway on a global scale
also has a massive impact on the conditions for development in the lead
ing industrial nations. Discussing the pertinent example of the current
crisis in Japan, Franz Peter Lang sketches several possible causes of this
crisis. To a large extent, these can be found in mistakes made by Japanese
development and foreign trade policies in the past. This paper also shows
clearly, however, that the liberalization of fonnerly restrictive national
economies, along with the concomitant changes occurring in international
policies, have made a substantial contribution to the present difficulties.
In the following paper, Heinz G. Preusse undertakes an analysis of the
new development policies in Latin America. The issues here are economic
refonns and a more open foreign trade policy. U sing an indicator incorpo
rating macroeconomic, trade policy and growth policy criteria, Preusse
examines the relative state of the refonn process in nine Latin American
countries. He comes to the conc1usion that to date only a few Latin
American countries have actually completed the necessary transfonnation
process. Since the new economic models enjoy a broad political accep
tance, however, it is expected that the refonn process will proceed despite
the apparent obstac1es.
The transfonnation of Vietnam is the subject of the paper submitted by
Michael von Hauff. He sees this country faced with the task of solving the
problem of underdevelopment and simultaneously accomplishing the
transfonnation from a centrally planned to a market economy. Aseries of
positive developments are visible; these are opposed, however, by serious
real economic obstac1es attributable to the low level of human capital
which is the legacy of underdevelopment and the institutional structures
created by the socialist planned economy.
x
Pre/ace
The problem of selecting an optimal exchange rate system for developing
countries is analyzed by Rainer Schweickert in the next paper. He shows
that fixed exchange rates create high risks for international competitive
ness and require a radical stabilization policy. An analysis of the situation
in various countries demonstrates that this kind of system can work under
the right conditions but that a system of flexible exchange rates is a supe
rior way to seeure international competitiveness.
The transformation process underway in Eastern Europe is inseparably
linked to the opening of these countries to trade with the West. In the last
paper, Renate Ohr examines the significance of exchange-rate policies for
the development process and for a transformation country' s successful
integration into the global economy. It is shown that a credible linking of
exchange rate policy to a consistent stability-oriented and adjusted overall
economic policy is more crucial for its success than the decision about the
type of specific exchange-rate arrangement.
The present compendium is the second volume of the Yearbook of Eco
nomic and Social Relations, which focuses on a current economic topic
each year. The editors hope, that the present volume - like the first vol
ume, "International Economic Integration" - will provide some significant
contribution to the debate in the subjects mentioned above. The working
tide of the next yearbook is "International Competitiveness" .
The editors would like to express their appreciation to all contributors. In
particular, they would like to thank Konrad Bommas and Jochen Gutzy
for their critical and constructive comments, their excellent production
skills and their unfailing patience during the revision and final editing of
each manuscript. The editors are also very grateful to the Norddeutsche
Landesbank Girozentrale in Hanover for its generous financial support.
Franz Peter Lang
Renate Ohr
June 1996