Computational Analysis of Global Trading Arrangements.

Kulkarni, Kishore G.

This is a collection of already published papers by Professors Deardorff and Stern in years between 1985 and 1989. The common thread among all these articles is the use of Michigan Model of World Production and Trade. After presenting the model in 1986, the authors had received several useful comments from other researchers on their work. The present book is an extension made after incorporating these comments. The book is divided into four parts. Part 1 has two chapters that deal with the modeling of global trading arrangements. While chapter 2 discusses the model, chapter 3 discusses the model's data requirements and parameters, solution procedure and reporting of results.

Part 2 consists of eight chapters that carry out the computational analysis of the effects of protection. Chapter 4 answers the question of whether one should consider, home country's tariffs or foreign country's tariffs to analyze the effects of protection. Chapter 4 also considers the question of how important is the non-tariff barrier for trade. By using the structure of input-output table, chapter 5 measures the sensitivity of protection. Chapter 6 evaluates the benefit (or cost) of own country protection for developing country as against own country protection in developed country group. Chapter 7 uses empirical data of the U.S. and Japan to test the effects of protection on the factor contents of their trade. Chapter 8 studies the Heckscher-Ohlin context to the effects of protection in the U.S. and Japan. The question of feasibility of unilateral tariffs on the part of U.S. administration is examined in Chapters 9-11.

Part 3 deals with the computational analysis of different aspects of multilateral trade negotiations. In chapters 12, 13 and 14 such issues as the Tokyo Round of Multilateral Trade Negotiations, Uruguay Round of removing existing tariffs, and potentially disruptive effects of surging imports in the U.S. are considered. Part 3 therefore is completely devoted to the applications of the theoretical concepts. The last part, Part 4, has the summary chapter of the lessons learned in the preparation and application of the Michigan Model.

Overall this is a book about the protection implications with special reference to the U.S. It incorporates the findings of Michigan Model that has become famous in the last few years. Even though the subject matter is of interest to the students of protection policy and the actual practitioners of it, the book is also an interesting reading for those who interest does not lie in it. The authors' efforts in applying the hardcore theory to the practical problems are to be commended.