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The Consequences of China's WTO Accession for Its Neighbors

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  • Warwick J. McKibbin

    (Research School of Pacific and Asian Studies Australian National University Canberra, ACT 0200 Australia and The Brookings Institution 1775 Massachusetts Avenue, N.W. Washington, DC 20036 USA)

  • Wing Thye Woo

    (Economics Department University of California One Shields Avenue Davis, CA 95616, USA,)

Abstract

Our simulations of a global macroeconomic model suggest that China's WTO accession could create significant welfare losses in the ASEAN-4 if foreign direct investment (FDI) is significantly redirected away from these countries toward China, and if the ASEAN-4 countries are unable to implement policies to make up for the slower rate of technological diffusion from the reduced FDI inflow. If the ASEAN-4 do not fall behind technologically, then they will be able to find lucrative niches within the lengthened international manufacturing production chains. The ASEAN-4 must therefore strengthen their abilities to absorb new foreign technologies quickly and to engage in indigenous technical innovations. Copyright (c) 2003 Center for International Development and the Massachusetts Institute of Technology.

Suggested Citation

  • Warwick J. McKibbin & Wing Thye Woo, 2003. "The Consequences of China's WTO Accession for Its Neighbors," Asian Economic Papers, MIT Press, vol. 2(2), pages 1-38.
    • Handle: RePEc:tpr:asiaec:v:2:y:2003:i:2:p:1-38
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    References listed on IDEAS

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    1. McKibbin, Warwick J & Vines, David, 2000. "Modelling Reality: The Need for Both Inter-temporal Optimization and Stickiness in Models for Policy-Making," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 16(4), pages 106-137, Winter.
    2. Wing Thye Woo, 1999. "The Economics and Politics of Transition to an Open Market Economy: China," OECD Development Centre Working Papers 153, OECD Publishing.
    3. McKibbin, Warwick J. & Wilcoxen, Peter J., 1998. "The theoretical and empirical structure of the G-Cubed model," Economic Modelling, Elsevier, vol. 16(1), pages 123-148, January.
    4. Ianchovichina, Elena, 2001. "Trade Liberalization in China’s Accession to WTO," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 16, pages 421-445.
    5. Wing Thye Woo, "undated". "Chinese Economic Growth: Sources And Prospects," Department of Economics 96-08, California Davis - Department of Economics.
    6. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
    7. Wang, Zhi, 2003. "WTO accession, the "Greater China" free-trade area, and economic integration across the Taiwan Strait," China Economic Review, Elsevier, vol. 14(3), pages 316-349.
    8. Warwick J. McKibbin & K. K. Tang, 2000. "Trade and Financial Reform in China: Impacts on the World Economy," The World Economy, Wiley Blackwell, vol. 23(8), pages 979-1003, August.
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    Cited by:

    1. Eichengreen, Barry & Tong, Hui, 2007. "Is China's FDI coming at the expense of other countries?," Journal of the Japanese and International Economies, Elsevier, vol. 21(2), pages 153-172, June.
    2. Rod Tyers & Yixiao Zhou, 2023. "Automation and inequality with taxes and transfers," Scottish Journal of Political Economy, Scottish Economic Society, vol. 70(1), pages 68-100, February.
    3. Matthieu Bussière & Bernd Schnatz, 2009. "Evaluating China’s Integration in World Trade with a Gravity Model Based Benchmark," Open Economies Review, Springer, vol. 20(1), pages 85-111, February.
    4. Chan, Tze-Haw, 2012. "Assessing the international parity conditions and transmission mechanism for Malaysia-China," MPRA Paper 38930, University Library of Munich, Germany.
    5. Eichengreen, Barry & Tong, Hui, 2006. "Fear of China," Journal of Asian Economics, Elsevier, vol. 17(2), pages 226-240, April.
    6. Rammal, Hussain Gulzar & Zurbruegg, Ralf, 2006. "The impact of regulatory quality on intra-foreign direct investment flows in the ASEAN markets," International Business Review, Elsevier, vol. 15(4), pages 401-414, August.
    7. Elena IANCHOVICHINA & Will MARTIN, 2006. "Trade Impacts of China's World Trade Organization Accession," Asian Economic Policy Review, Japan Center for Economic Research, vol. 1(1), pages 45-65, June.
    8. Tyers, Rod, 2015. "International effects of China's rise and transition: Neoclassical and Keynesian perspectives," Journal of Asian Economics, Elsevier, vol. 37(C), pages 1-19.
    9. Benoît Mercereau, 2005. "FDI Flows to Asia: Did the Dragon Crowd Out the Tigers?," IMF Working Papers 2005/189, International Monetary Fund.
    10. Ramkishen S. Rajan & Sadhana Srivastava, 2010. "Implications Of The Economic Rise Of The PRC For Asean and India: Trade and Foreign Direct Investment," Working Papers id:2680, eSocialSciences.
    11. Chan, Tze-Haw, 2011. "A structural modeling of exchange rate, prices and interest rates between Malaysia-China in the liberalization era," MPRA Paper 32955, University Library of Munich, Germany.
    12. Elisha Houston & Julia Minty & Nathan Dal Bon, 2008. "Investment in East Asia since the Asian financial crisis," Economic Roundup, The Treasury, Australian Government, issue 2, pages 13-34, July.

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