Vol. 20, No. 1, June 2013 IN THIS ISSUE: The economic impact of new regional trading developments in the ESCAP region Dynamics in human development: partial mobility and “jump” Matching resources with demand: a flawed strategy? Perpetuating the global division of labour: defensive free trade and development in the third world Financing young and elderly dependents: the case of Indian public policy The secretariat of the Economic and Social Commission for Asia and the Pacific (ESCAP) is the regional development arm of the United Nations and serves as the main economic and social development centre for the United Nations in Asia and the Pacific. Its mandate is to foster cooperation among its 53 members and 9 associate members. It provides the strategic link between global and country-level programmes and issues. It supports Governments of countries in the region in consolidating regional positions and advocates regional approaches to meeting the region’s unique socioeconomic challenges in a globalizing world. The ESCAP secretariat is in Bangkok. Please visit the ESCAP website at <www.unescap.org> for further information. The shaded areas of the map indicate ESCAP members and associate members. Asia-Pacific Development Journal Vol. 20, No. 1, June 2013 New York, 2013 i Asia-Pacific Development Journal Vol. 20, No. 1, June 2013 ASIA-PACIFIC DEVELOPMENT JOURNAL Vol. 20, No. 1, June 2013 United Nations publication Sales No. E.13.II.F.6 Copyright © United Nations 2013 All rights reserved Manufactured in Thailand ISBN: 978-92-1-120661-6 e-ISBN: 978-92-1-056295-9 ISSN: 1020-1246 ST/ESCAP/2663 This publication may be reproduced in whole or in part for educational or non-profit purposes without special permission from the copyright holder, provided that the source is acknowledged. The ESCAP Publications Office would appreciate receiving a copy of any publication that uses this publication as a source. No use may be made of this publication for resale or any other commercial purpose whatsoever without prior permission. Applications for such permission, with a statement of the purpose and extent of reproduction, should be addressed to the Secretary of the Publications Board, United Nations, New York. ii Asia-Pacific Development Journal Vol. 20, No. 1, June 2013 Advisory Board Members Dr. YILMAZ AKYÜZ Chief Economist, South Centre (former Director and Chief Economist, UNCTAD), Switzerland Dr. RASHID AMJAD Vice-Chancellor, Pakistan Institute of Development Economics (PIDE), Pakistan Dr. MYRNA AUSTRIA Vice-Chancellor for Academics, De La Salle University, Philippines PROFESSOR RAJESH CHANDRA Vice-Chancellor and President, University of the South Pacific, Fiji PROFESSOR TAKATOSHI ITO Professor, Graduate School of Economics and Graduate School of Public Policy, University of Tokyo, Japan Dr. MURAT KARIMSAKOV Chairman of the Executive Body of the Eurasian Economic Club of Scientists, Kazakhstan Dr. SAMAN KELEGAMA Executive Director, Institute of Policy Studies, Sri Lanka PROFESSOR DEEPAK NAYYAR Jawaharlal Nehru University (former Chief Economic Adviser to the Government of India), India PROFESSOR REHMAN SOBHAN Chairman, Centre for Policy Dialogue, Bangladesh Dr. CHALONGPHOB SUSSANGKARN Distinguished Fellow, Thailand Development Research Institute, Thailand PROFESSOR YU YONGDING Chinese Academy of Social Sciences, China Editors Chief Editor Dr. Anisuzzaman Chowdhury Director, Macroeconomic Policy and Development Division Managing Editor Dr. Aynul Hasan Chief, Development Policy Section Macroeconomic Policy and Development Division iii Asia-Pacific Development Journal Vol. 20, No. 1, June 2013 Editorial statement The Asia-Pacific Development Journal is published twice a year by the Economic and Social Commission for Asia and the Pacific. Its primary objective is to provide a medium for the exchange of knowledge, experience, ideas, information and data on all aspects of economic and social development in the Asian and Pacific region. The emphasis of the Journal is on the publication of empirically based, policy-oriented articles in the areas of poverty alleviation, emerging social issues and managing globalization. Original articles analysing issues and problems relevant to the region from the above perspective are welcomed for publication in the Journal. The articles should have a strong emphasis on the policy implications flowing from the analysis. Analytical book reviews will also be considered for publication. Manuscripts should be sent to: Chief Editor Asia-Pacific Development Journal Macroeconomic Policy and Development Division ESCAP, United Nations Building Rajadamnern Nok Avenue Bangkok 10200 Thailand Fax: 66 2 288-3007 or 66 2 288-1000 E-mail: [email protected] iv Asia-Pacific Development Journal Vol. 20, No. 1, June 2013 ASIA-PACIFIC DEVELOPMENT JOURNAL Vol. 20, No. 1, June 2013 CONTENTS Page John Gilbert The economic impact of new regional 1 trading developments in the ESCAP region Atanu Sengupta and Dynamics in human development: 33 Abhijit Ghosh partial mobility and “jump” Ashfaq Ahmad Khan and Matching resources with demand: 63 Wiqar Ahmad a flawed strategy? Yakub Halabi Perpetuating the global division of labour: 91 defensive free trade and development in the third world Laishram Ladusingh Financing young and elderly dependents: 121 the case of Indian public policy v Asia-Pacific Development Journal Vol. 20, No. 1, June 2013 Explanatory notes References to dollars ($) are to United States dollars, unless otherwise stated. References to “tons” are to metric tons, unless otherwise specified. A solidus (/) between dates (e.g. 1980/81) indicates a financial year, a crop year or an academic year. Use of a hyphen between dates (e.g. 1980-1985) indicates the full period involved, including the beginning and end years. The following symbols have been used in the tables throughout the journal: Two dots (..) indicate that data are not available or are not separately reported. An em-dash (—) indicates that the amount is nil or negligible. A hyphen (-) indicates that the item is not applicable. A point (.) is used to indicate decimals. A space is used to distinguish thousands and millions. Totals may not add precisely because of rounding. The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Where the designation “country or area” appears, it covers countries, territories, cities or areas. Bibliographical and other references have, wherever possible, been verified. The United Nations bears no responsibility for the availability or functioning of URLs belonging to outside entities. The opinions, figures and estimates set forth in this publication are the responsibility of the authors and should not necessarily be considered as reflecting the views or carrying the endorsement of the United Nations. Mention of firm names and commercial products does not imply the endorsement of the United Nations. vi Asia-Pacific Development Journal Vol. 20, No. 1, June 2013 THE ECONOMIC IMPACT OF NEW REGIONAL TRADING DEVELOPMENTS IN THE ESCAP REGION1 John Gilbert* In this paper the results of a number of numerical simulations of possible trade liberalization scenarios in the ESCAP region are presented. The scenarios considered include: expansion of existing trade blocs to encompass new members; consolidation and deepening of existing trade agreements; and a region-wide free trade area. The simulations were conducted using the model of the Global Trade Analysis Project (GTAP) and were based on a projection of the database to 2010. JEL Classification: C68, F13, F15, F17. Key words: Computable general equilibrium, trade reform, Asia-Pacific region. I. INTRODUCTION Preferential trading agreements have been proliferating rapidly across the globe, and the Asia-Pacific region is no exception (for early work on this area, see Scollay and Gilbert, 2001, and more recently Mikic, 2007). The architecture that will emerge in this new environment remains uncertain, although several tendencies are discernible (Scollay and Gilbert, 2010). The trend that has progressed most rapidly has been the proliferation of small, bilateral free trade agreements, a trend about which Menon (2009) has been critical. According to Scollay and Gilbert (2010), since 2000 some 30 bilateral free trade agreements (FTAs) have been concluded among Asia-Pacific economies, with several others being under negotiation for some time * Professor, Department of Economics and Finance, Jon M. Huntsman School of Business, Utah State University, 3565 Old Main Hill, Logan, UT 84322-3565, United States of America (Tel: 435-797-2314; fax: 435-797-2701; e-mail: [email protected]). 1 The simulations presented in this paper were originally prepared as background for the ESCAP report, entitled “Growing Together: Economic Integration for an Inclusive and Sustainable Asia-Pacific Economy”. The author would like to thank Alberto Isgut, Nagesh Kumar and Mia Mikic for very helpful comments on the earlier drafts of the paper, and also to express his gratitude to Albert Isgut for kindly having compiled and furnished the trade cost data used in a number of the simulations. 1 Asia-Pacific Development Journal Vol. 20, No. 1, June 2013 and still others at the stage of preliminary study. Asia-Pacific economies have also been actively negotiating