Foreign aid in the new global economy, edited by Peter Burnell and Oliver Morrissey (Cheltenham: Edward Elgar, 2004, pp. 628 + xxiv)

✍ Scribed by Arjan Verschoor

• Book ID: 102353472
• Publisher: John Wiley and Sons
• Year: 2006
• Tongue: English
• Weight: 36 KB
• Volume: 18
• Category: Article
• ISSN: 0954-1748
• DOI: 10.1002/jid.1270

✦ Synopsis

farmers are unlikely to gain from trade reform unless some state protection is implemented. Chapter 6, by Laroche Dupraz and Matthews, is one of the most informative pieces of the book. It deals with the welfare gains arising from the agricultural tariff rate quotas (TRQ) access to the European Union (EU) market. It uses an impressively clear and rigorous graphical analysis to show that welfare gains for developing countries take two forms: increased export surplus, and quota rents when the TRQ is binding. The empirical analysis demonstrates that the majority of the rents generated by the TRQ are appropriated by import agents in the EU and not by exporters in developing countries.

The remaining chapters of the book analyse manufacturing. Bacchetta and Bora, Chapter 7, review very carefully the tariff situation of non-agricultural products and conclude that only six per cent of the total number of non-agricultural products is bounded duty free. Although tariffs in manufacturing products are generally low, high tariff escalation negatively affects least-developed countries. Chapter 8, by Haveman and Shatz, is a rigorous econometric analysis of the effects of removing industrial countries tariffs on least-developed nations. It shows that most gains would come from increased exports to the US, although exports to Japan and, in less magnitude, to the EU would also increase. Chapter 9, by Cernat, Laird, Monge-Roffarello and Turrini, analyses the EBA initiative and discusses its effects on specific countries. Beneficiary countries gain while donors lose in terms of welfare terms. Although some regions gain and others lose, the world net gains are positive. The impact of the EBA, however, appears to be concentrated in a few sectors, such as sugar and rice. The final chapter, by Ahuja, discusses aspects of the WTO Agreement on Subsidies and Countervailing Measures. It argues that although some export subsidies are allowed for certain countries the rules are sometimes complex, which prevents potential beneficiaries from using them. A simplification of the system, therefore, would clearly benefit these countries.

The one omission from the book is that it does not address in detail the issue of non-tariff barriers. As it is well known, non-tariff barriers have had a negative impact on developing countries exports and are still used by industrial countries. One may argue, however, that given the complexity of this topic it would be necessary to devote another volume to analyse it in detail. In summary, this is an excellent source of information and arguments for trade liberalization, which is strongly recommended to anyone interested in the effects of trade reform on poor nations. Policy makers in developing countries should benefit most from this volume, although academics and students interested in trade-led growth will also find interesting information in some of the essays.