The Journal of World Economy
Vol.29 No.11 Monthly Since 1978
November 2006
International Finance
3 Lu Feng Twin Surplus in China: Reflections on China's One Trillion Dollar Foreign Exchange Reserves
This paper examines the evolution, characteristics and causes of the “twin surplus” phenomenon in China. Twin surplus serve a crucial factor for the long run changes in the RMB real exchange rate. We explain the imbalances in China's balance of payment and associated disequilibrium for the RMB real exchange rate in 1998-2005. We also briefly comment on a future prospects in which the emerging excessive scale of foreign exchange reserves in China introduce the growing pressure to reduce the size of foreign exchange reserves and appreciate the RMB real exchange rate in the coming future.
International Trade and Investment
11 Li Zhuo, Liu Yang, Chen Yongqing Strategic Choice of TNCs in Developing Countries on Internationalisation
Based upon the models of Yeaple(2003) and Grossman and Helpman(2005), we construct a set of models to analyze the internationalization strategic choice of development countries’ TNCs. We show that there are similarities between strategicchoice of developed and developing countries’TNCs, but there exist distinct facets among those behavior choices. And we focus on the potential strategicconsideration of Chinese TNCs when they pursuing “going outside” strategy.
23 Zhong Changbiao Horizontaland Vertical Spillover of FDI in China's Electronic Industry
Using a panel data set for China's electronics industry for 1999-2002, this paper examines the spillover effects arising from foreign direct investment. An important contribution is that it explicitly distinguishes horizontal from vertical spillover. We find the evidence of both types of spillover, but it appears that horizontal spillover is larger than vertical spillover. Furthermore, we also find that foreign direct investment generates more spillovers in domestic market oriented industries than in export oriented industries. These findings have important policy implications.
30 Fan Aijun, Lin Lin International Competitivenessof China's Industrial Products
Economic Growth
38 Xu Kangning, Shao Jun Natural Resources Abundance and Economic Growth: A Re-examination of the “Resource Curse”Hypothesis
Based on Sachs and Warner's (1997) analytical framework and post-war world growth experience, this paper makes a thorough investigation on the relationship between natural resource abundance and economic growth. The findings reveal that the relationship still holds negative even after controlling relevant growth variables such as investment, openness, human capital, etc., which confirm the hypothesis of “Resource Curse”. This paperalso finds that reducing openness is the most important transmission channel of “Resource Curse”.
48 Bao Qun, Peng Shuijun Growth and Pollution：An Estimation of the Panel Data
Macroeconomics
59 Cui Guangcan Asset Price, Financial Accelerator, and Macroeconomic Stabilization
This paper discusses the effect of asset price's fluctuation on macroeconomic stabilization. Basedon the BGG model, usinga two-sect dynamic macro economic model, we analyze the financial accelerator's effect of asset price in different sectorsand compare the effect between nominal shock and real shock. We conclude that the financial acceleratorcan be used to explain the macroeconomic fluctuation in China. The implication is that theauthority may stabilize the nominal shock like interest rate, andcould applydifferent credit policiesto different sectorswhen asset price fluctuated heavily.
70 Dai Qian, Bie Zhaoxia Human Capital, Dynamic Comparative Advantages and the Upgrading of Industrial Structure of Developing Countries
This paper develops a dynamic comparative advantage model on the base of Dixit and Norman (1980), Krugman (1987), and Grossman and Helpman (1991b). We analyze the role of human capital in dynamic comparative advantage. On the one hand, human capital can serve as an input into production; on the other hand, it has its externality: human capital accumulation can enhance productivities of workers, lower production cost, and improve efficiency in the R&D sector. Thus, human capital is the core of dynamic comparative advantage in the long run. Hence, developing countries can accumulate human capital to build up their dynamic comparative advantage, to improve their industrial structure, and to realize economic growth.
Transitional Economics
85 Lu Wei Definition and Realization of the Functions of Public Finance in Transitional Economy