Agriculture Reference
In-Depth Information
that rase a regon's margnal product of physcal captal and hence the
regon's average return on nstalled captal. 9 Other things equal, then, in
the long-run applcatons n ths paper mprovements n trans-sectoral
efficiency, such as might stem from a trade reform, raise capital returns
permanently and hence they rase r j e .
The long-run closure adopted for the model n ths paper dffers from the
short-run closure used by Yang and Tyers (2000) and by Rees and Tyers (2002)
n that there are no nomnal rgdtes (no rgdty of nomnal wages) and
hence full employment s retaned and money s neutral; 10 larger producton
and consumption elasticities are used to reflect the additional time for
adjustment; 11 physical capital is not sector specific, it redistributes across
sectors to equalse rates of return; Chna's captal controls are gnored;
and changes n government revenue assocated wth tarff ncreases are
assumed to not be offset via direct (income) tax changes, with the result
that the fiscal deficit changes, so that the ratios of government revenue
and expendture to GDP are endogenous whle the average drect tax rate
s exogenous. 12
Data and parameters
The regions, primary factors and sectors identified in our analysis are listed
in Table A8.1. Considering regions first, we draw on the now well-known
GTAP Version 5 global database for 1997, which divides the world into 66
countres and regons. Although ths database separates manland Chna
from Taiwan province, it amalgamates Hong Kong with the mainland. 13 Our
further aggregaton of manland Chna wth Tawan provnce overlooks
effects that are nternal to these regons but such effects are not our focus.
Instead, we seek to illustrate the strong interaction between self-sufficiency
rates, agricultural protection and overall economic performance. These
nteractons are mportant for all the economes of East Asa.
Turning to primary factors, skill is separated from raw labour on
occupational grounds, with the 'professional' categories of the International
Labour Organization (ILO) classification included as skilled. 14 The structure
of factor demand has skll and physcal captal as complements. Ths enables
the model to represent the links between skill availability, capital returns
Search WWH ::




Custom Search