Structural Revolution in International Business Architecture

Structural Revolution in International Business Architecture

Structural Revolution in International Business Architecture Modelling and Analysis: Volume 1 Dipak Basu Nagasaki University, Japan Victoria Miroshnik Tsukuba University Graduate School of Management, Tokyo, Japan

Dipak Basu and Victoria Miroshnik 2016 Softcover reprint of the hardcover 1st edition 2016 978-1-137-53564-1 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6 10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2016 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave and Macmillan are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN 978-1-349-57340-0 ISBN 978-1-137-53566-5 (ebook) DOI 10.1057/9781137535665 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress. Typeset by MPS Limited, Chennai, India.

My father Walter, with love My uncle Nisith Ranjan Mitra, with respect Victoria Dipak

Contents List of Tables List of Figures Preface viii x xi Introduction 1 1 The Meaning of Structural Revolution 3 2 Tariff Policy and Employment Structure in the UK 21 3 Structural Reforms in China 50 4 Structural Reforms in India 91 5 Structural Reforms in Nigeria 127 6 Structural Reforms in Egypt 162 References 193 Index 207 vii

List of Tables 1.1 Exports and Gross Domestic Product, 1980 2000 5 1.2 Sub-Saharan Africa: evolution of employment in the formal sector during the early adjustment phase (as percentage of the active population) 6 1.3 Informal employment as percentage of labour force (non-agricultural) in early globalization in selected countries in Latin America 6 1.4 Composition of social sector expenditures (percentage of GDP) 10 1.5 Trends in the selected social indicators 11 2.1 Distribution of the UK exports 41 2.2 Origins of the UK imports 42 2.3 Structure of employment, UK (percentage share of total) 43 2.4 Effects of different import control regimes on imports of the UK 46 3.1 China historical data: 1985 90 63 3.2 Investment, savings and foreign investment 64 3.3 Policy assumptions simulation 1 and 2 64 3.4 Chinese economy, simulation 1 65 3.5 Chinese economy, simulation 2 66 3.6 Historical exchange rate 1987 95 74 3.7 Chinese economy, simulation 3 75 3.8 Country share for China 78 3.9 The Chinese economy, simulation 1 80 3.10 The Chinese economy, simulation 2 81 3.11 Export growth rates in East Asian economies (unit: %) 84 3.12 Trade destructions caused by China 85 4.1 Per-capita daily availability of food grain (grams) 98 4.2 Annual growth in food grains production (per cent) 99 viii

List of Tables ix 4.3 Money supply, GNP and price levels: 1985 97 102 4.4 Some important ratios 102 4.5 Financial policies, 1985 97 103 4.6 Fiscal dynamics 116 4.7 Debt ratios and foreign borrowings: history (%) 117 A1 Historical data for all variables in the model 124 A2 Target 125 A3 Simulated planned solutions 126 5.1 Simulation assumptions Nigeria 138 5.1a Movement of policy instruments, 1985 92 140 5.2 Summary table Nigeria, historical data 141 5.3 Simulation 1 143 5.4 Simulation 2 145 5.5 Simulation 3 147 5.6 Simulation 4 152 6.1 Selected macroeconomic indicators of Egypt, 2000 10 163 6.2 Historical data, Egypt 1987 1991 175 6.3 Historical data, Egypt 1992 1997 175 6.4 Policy assumptions, simulation 1 176 6.5 Policy assumptions, simulation 2 177 6.6 Policy assumptions, simulation 3 177 6.7 Policy simulation 1 of the Egyptian economy 178 6.8 Policy simulation 2 of the Egyptian economy 180 6.9 Policy simulation 3 of the Egyptian economy 182

List of Figures 3.1 Simulation 1, GDP and domestic demand, China 69 3.2 Simulation 1, current account balances, China 70 3.3 Simulation 1, consumer prices, China 71 3.4 Simulation 2, GDP and domestic demand, China 72 3.5 Simulation 2, current account balances, China 73 3.6 Simulation 2, consumer prices, China 74 4.1 Comparisons, GNP 118 4.2 Comparisons, public budget 118 4.3 Comparisons, net foreign borrowing 119 4.4 Comparisons, government bond sales 119 4.5 Comparisons, government expenditure 120 4.6 Comparisons, tax revenues 120 5.1 Nigeria, growth in aggregate GDP, 1990 2010 132 5.2 Nigeria, Dollar/Naira exchange rate, 1990 2010 133 5.3 Nigeria s medium and long-term debt by creditor group 149 5.4 Nigeria history 150 5.5 Nigeria simulation 1 151 5.6 Nigeria simulation 2 153 5.7 Nigeria simulation 3 154 6.1 Egypt, GDP and foreign exchange reserve 171 6.2 Egypt, simulation 1 172 6.3 Egypt, simulation 2 173 6.4 Egypt, simulation 3 174 x

Preface This book is the result of many years of fierce debates and discussions between us, the authors, and with our friends including Alexis Lazaridis, Shigeru Uchida, Buddhadev Ghosh and participants of seminars in the Indian Statistical Institute, Calcutta, India. Garry Mason went through the entire text to improve the language. Liz Barlow of Palgrave Macmillan contributed the most by supporting our effort to publish this book. In this book, we are going against the tide by raising questions against the privatization process and the new international economic order, against which both the youths of the USA and the workers in India are protesting in vain. In this book we have tried to analyse some prominent countries of the world the UK, China, India, Egypt and Nigeria to examine the above issue from two specific points of view. The first is to answer the basic question of whether it was necessary to dismantle the old system and privatize the economy rather than utilizing the traditional stabilization policy through monetary and fiscal instruments, when economic crises appeared in the late 1980s and early 1990s. The second objective is to examine whether there was any alternative way. In this book, in the analysis of the recent globalization, we have used the techniques of simulations of economy-wide models to analyse alternative policy frameworks for the countries we have covered. The purpose is to re-examine the relative merits of alternative economic and international business policy regimes. This project is unique because it uses simulation techniques to discuss possible alternative policy regimes. We hope this book will initiate the debate regarding the efficiency of this new international business system and be a call for action to change the reform agenda. xi