Trade and Development Working Papers

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Access status: Open Access ,
Economic and Diplomatic Impacts of the Belt and Road Initiative on Western Nations in Infrastructure Investment Competition: Evidence from Japan
(Arndt-Corden Department of Economics, Crawford School of Public Policy, ANU College of Law, Governance and Policy, 2026-08-27) Shuhei Nishitateno; Yasuyuki Todo
China's Belt and Road Initiative (BRI) has driven a global surge in large-scale infrastructure projects. While existing research has focused primarily on the BRI's effects on economic outcomes in participating countries, such as investment, trade, and debt dynamics, its economic and diplomatic implications for Western nations that do not participate in the BRI yet compete with China in global infrastructure development remain underexplored. This study addresses this gap by examining how the BRI has affected Japanese overseas infrastructure projects and Japan's diplomatic engagement with BRI countries. Using an event-study framework within a staggered difference-in-differences design and a panel of 123 low- and middle-income countries from 2007 to 2020, we find that the BRI significantly crowded out Japanese infrastructure projects and reduced visits to Japan by political leaders from BRI countries. These effects are especially pronounced among countries geographically proximate to Japan and China, where competitive pressures are most intense.
Access status: Open Access ,
Forces Behind South Australia’s Unusual Structural Changes Since 1840
(Arndt-Corden Department of Economics, Crawford School of Public Policy, ANU College of Law, Governance and Policy, The Australian National University, 2026-07) Anderson, Kym
The agricultural sector’s share of GDP in growing economies typically declines but, for a century from the early 1850s, Australia’s did not. That trend is most evident for the former colony and now State of South Australia (SA). Moreover, that share for SA has been almost flat since 1980 as well, along with the agricultural sector’s share of SA exports. This paper seeks to shed light on the forces behind the unusual evolution of these sectoral shares for SA both up to 1950 and since 1980. The extensive time series data compiled for this paper suggest various partial explanations. For 1850-1950 they include the huge arable land area per worker, clearly defined and enforced property rights in settled rural areas as the frontier of European settlement expanded, the absence of a need to do any processing of the main 19th century exports (copper, wool and wheat), a strong public agricultural research and extension system, and the absence of major mining booms after the copper finds in the 1840s and 1860s.
Access status: Open Access ,
Thailand’s Automobile Industry: The ‘Detroit of Asia’ Confronting the Bev Transition
(The Australian National University, 2026-07) Athukorala, Prema-chandra; Kohpaiboon, Archanun
This paper explores the growth trajectory and current state of Thailand’s automotive hub—often dubbed the “Detroit of the East”—and the adjustment challenges it faces in transitioning from the combustion engine era to the electric vehicle era. The findings suggest that Thailand’s success has been driven by a combination of structural changes in the global automotive industry, which opened opportunities for peripheral countries to join production networks, and the pragmatic, market-oriented policy approach of Thai authorities, which made the country an attractive location for international production. Despite this impressive performance during the combustion engine era, Thailand’s automotive sector is now undergoing significant structural adjustments due to the rise of electric vehicles. Whether Thailand can continue to function as a global automobile hub under the emerging dominance of Chinese BEV manufacturers remains uncertain. Even under the optimistic scenario of vehicle assembly continues to expand in Thailand under Chinese dominance, the parts and components segment—which accounts for the bulk of employment in the industry—is likely to face a substantial contraction in the BEV era. This gloomy prospect underscores the need for a reorientation of industrial and labour market policies, including targeted support for supplier upgrading, workforce reskilling, and the development of complementary manufacturing and services capabilities to mitigate employment losses.
Access status: Open Access ,
Servicification and Manufacturing Performance: Plant-Level Evidence from Indonesia, 1985–2014
(Arndt-Corden Department of Economics, Crawford School of Public Policy, ANU College of Law, Governance and Policy, The Australian National University, 2026-07) Patunru, Arianto A
Servicification and Manufacturing Performance: Plant-Level Evidence from Indonesia, 1985-2014 Abstract: Services are increasingly embedded in manufacturing production and exports, but their role in developing-country manufacturing remains under-examined. This paper studies servicification in Indonesian manufacturing by combining OECD TiVA evidence on services embodied in manufacturing exports with plant-level data from Indonesia's Survei Industri for 1985-2014. The macro evidence shows that services account for a substantial share of manufacturing export value added, reinforcing the importance of producer services for manufacturing competitiveness. The plant-level analysis focuses on purchased industrial services, a narrow but observable measure of input servicification. Industrial-service use is limited but persistent: most plants report no such purchases, while user firms tend to be larger, more import-intensive, more foreign-owned, and more export-oriented. Fixed-effects regressions show that the continuous service-input share is positively associated with gross output per worker, while its relationship with value added per worker is weaker. The extensive margin is more robust: plants that purchase industrial services have higher subsequent labour productivity, especially in gross-output terms. Results for exporting firms are positive but less robust. The findings suggest that servicification is not only a macro value-chain phenomenon but also a plant-level feature associated with manufacturing performance.
Access status: Open Access ,
The Philippine Economy: No Longer the East Asian Exception? Revisited*
(Arndt-Corden Department of Economics, Crawford School of Public Policy, ANU College of Law, Governance and Policy, 2026-06) Hill, Hal
The Philippine economy has long been the East Asian outlier. In the early postwar period, with a per capita income higher than many of its neighbors, it was forecast to be one of Asia’s most dynamic economies. However, beginning in the mid-1970s, its growth trajectory increasingly diverged from its high-growth neighbors. By 2000, its per capita income remained roughly the same as it had been in 1980. Nevertheless, in the 21st century, the Philippines rejoined the East Asian mainstream, growing at a rate comparable to that of other Southeast Asian counterparts and faster than its traditional comparator, Thailand. This paper explores these development dynamics and identifies key development issues that need to be addressed if the current growth trajectory is to be maintained and accelerated.
Access status: Open Access ,
Indonesia in global manufacturing value chains: Policy ambivalence and arrested growth
(2025-10) Athukorala, Prema-chandra; Patunru, Arianto
This paper explores Indonesia's experience in leveraging opportunities presented by global manufacturing value chains (GMVCs), with a comparative focus on Southeast Asia. It is motivated by growing concerns in recent policy discussions regarding the country’s underutilized growth potential, which could be unlocked through more effective integration into GMVCs. Indonesia initially had promising prospects for export-oriented industrialization by engaging in GMVCs. However, its industrialization trajectory over the subsequent years has not lived up to expectations. Strong evidence indicates that Indonesia’s deep-rooted policy ambivalence has hindered its full participation in global production networks. The findings highlight the need for a proactive investment promotion strategy to attract multinational enterprises (MNEs) involved in GMVCs.
Access status: Open Access ,
Philippines agricultural protection and insulation in international perspective
(Arndt-Corden Department of Economics, Crawford School of Public Policy, ANU College of Law, Governance and Policy, 2025-10) Anderson, Kym; Briones, Roehlano
For decades the Philippines has protected many of its farmers from import competition, taxed farm exports, and insulated domestic markets from fluctuations in international prices. Policy developments to the mid-1960s are summarized by Power (1971), and were updated to the mid-2000s by David, Intal and Balisacan (2009). This paper looks at what has changed in terms of agricultural assistance and food market insulation in the two decades since then, with emphasis on the extent to which those rates of assistance have fluctuated from year to year with international price movements as governments attempted to stabilize the nation’s domestic prices of farm products, most notably for rice. Philippine policies have been similar to those of other food-importing countries in adopting farm-support policies but have been unusual in being so protectionist so early in the country’s economic development. The paper explores the prospect of re-purposing support away from price-distorting measures – which are highly inequitable – toward more-direct forms of support for just the poorest rural households and boosting investment in rural public goods such as infrastructure and agricultural research. The latter would benefit a larger proportion of rural people as well as reduce food prices in urban areas.
Access status: Open Access ,
Four Decades in the global apparel value chain: Evidence from Bangladesh
(Arndt-Corden Department of Economics, Crawford School of Public Policy, The Australian National University, 2025-01) Mohammed, Abul Bashar
The remarkable growth of the Bangladesh apparel industry within the global apparel value chain is an interesting case because the industry grew from virtually zero export capacity to become the second largest apparel exporter in the world. The country attained its unprecedented success against the speculations made by some industry experts that it would lose its market share after the abolition of the Multi-Fibre Arrangement (MFA) with effect from 2005. This paper aims to delineate the role of national policies and world demand and abolition of MFA through an econometric analysis using data from 1976-2018. The findings suggest that, contrary to the gloomy predictions, ample availability of labour and the pragmatic domestic policy posture helped Bangladesh to consolidate its position in the global apparel value chain in competitive market conditions during the post-MFA era. The policy challenge for the country is to achieve structural adjustments and industrial upgrading within the value chain as the surplus labour pool gradually depletes.
Access status: Open Access ,
What causes structural change?
(Arndt-Corden Department of Economics, Crawford School of Public Policy, The Australian National University, 2025-01) Warr, Peter; Yusuf, Arief
Structural change refers to long-term, systematic changes in the sectoral composition of aggregate economic output. Ordinarily, it means the contraction of agriculture relative to industry and services. We analyse its economic causes, using a small, comparative-static, empirically-based computable general equilibrium model of the economy of Thailand, a country experiencing rapid structural change over recent decades. We test the explanatory power of five potential contributors to structural change, suggested by simple economic theory and relevant literature, using Thai data: (a) differential growth rates of aggregate supplies of physical capital, labour, and land (the Rybczynski effect); (b) differential growth rates of total factor productivity between sectors; (c) changes in relative international prices; (d) changes in sectoral rates of trade protection; and (e) income growth with differences in expenditure elasticities of demand between final consumer goods (Engel’s law). It is concluded that, in Thailand’s case, explanation (b) dominates the other four.
Access status: Open Access ,
Economic growth and savings transition in Asia: Unity in diversity
(Arndt-Corden Department of Economics, Crawford School of Public Policy, The Australian National University, 2025-01) Athukorala, Prema-chandra; Suanin, Wanissa
This chapter examines the national saving behaviour in the process of economic growth through a comparative analysis of countries in developing Asia from a historical perspective. Developing Asia provides an ideal laboratory for the study, with considerable differences in the saving behaviour among countries and over time within individual countries, notwithstanding the ‘model saver’ image of the region that is based mainly on the experience of high-performing East Asian economies. The empirical analysis distinguishes between private and government saving rates, with specific emphasis on the former. The results of the empirical analysis are consistent with the view of a ‘virtuous circle’ between growth and saving, with growth initiating the saving transition. There is no evidence to suggest that a prior phase of promoting saving through specific policy initiatives is needed to initiate the process of growth and structural transformation. The private saving rate is also associated positively with export orientation of the economy, and net foreign capital inflows and negatively with the young dependency ratio of the population and domestic credit availability.
Access status: Open Access ,
Anticipating unintended consequences of policy: Learnings from Indonesia's child labor reform
(Arndt-Corden Department of Economics, Crawford School of Public Policy, The Australian National University, 2025-01) Elghafiky Bimardhika; Firman Witoelar
We study the causal effects of a labor law that governs child workers on labor market outcomes and the well-being of individuals. We exploit the timing of the national legislation to identify the causal effects of child labor reform using the Regression Discontinuity Design. We find that individuals who entered adulthood after the reform are less likely to have participated in the labor market during childhood. The reform also lowers the likelihood of poor health and improves the probability of working in paid jobs when children have reached adulthood. Our heterogeneity analysis highlights the importance of complementing regulation with enforcement and support programs to minimize unintended consequences that plagued many similar reforms.
Access status: Open Access ,
Food one click away: The impact of online food delivery platforms on food security in Indonesia
(Arndt-Corden Department of Economics, Crawford School of Public Policy, The Australian National University, 2025-03) Muchtar, Pyan; Resosudarmo, Budy
This paper examines the causal effects of online food delivery (OFD) platforms on household food security in the context of a developing country, Indonesia. We construct food security data from households consumption surveys from 2012 to 2022 and merged it with a novel dataset on OFD platform penetration across districts, compiled through a combination of internet scraping and machine learning. Utilizing a contemporary event-study estimator to analyze the impact, our findings indicate that the expansion of OFD services enhances food security at the district level, with a more pronounced effect in rural areas, among younger households, and male-led households. We also show that this impact is likely driven by increased competition in the food market.
Access status: Open Access ,
Structural change and income inequality: Evidence from Thailand
(Arndt-Corden Department of Economics, Crawford School of Public Policy, The Australian National University, 2025-06) Warr, Peter; Yusuf, Arief Anshory
Structural change is the contraction of agriculture as a share of both aggregate economic output and employment and the corresponding expansion of the combined shares of industry and services. First, we describe this process in the context of Thailand, a country experiencing significant structural change in recent decades. Second, we analyse its causes using a simple, comparative static computable general equilibrium model of the Thai economy, operated in long-run mode. We test the explanatory power of three hypotheses about the causes of structural change: differences in the growth rates of aggregate factor supplies (the Rybczynski effect; sectoral differences in total factor productivity growth; and the differences between commodities in expenditure elasticities of demand (Engelâ€™s law). The first two hypotheses operate on the supplyside of the economy, implying changes in the shape of the production possibility frontier (PPF). The third, a demand-side effect, implies changes in output prices during growth that induce movements around the PPF. The results indicate that the first two explanators predict the observed structural change accurately, but that the third, Engelâ€™s law, predicts poorly. Third, we use the above framework to study the impacts these drivers of structural change have on the functional distribution of incomes. The results show that the explanators of structural change do not predict the observed changes in factor income shares. We conclude that these two phenomena have different drivers and that stable empirical relationships between them should not be expected.
Access status: Open Access ,
Under the water: flood impacts and economic dynamics in northern Peru
(Arndt-Corden Department of Economics, Crawford School of Public Policy, The Australian National University, 2025-05) Alvarez, Jose Cobian; Resosudarmo, Budy
This paper assesses the effects of devastating flooding on household welfare in northern Peru. Remote sensing data are used to construct a novel damage index as a proxy for the local economic impact caused by the 2017 coastal El Niño floods. Using 5-year panel data from the Peruvian National Household Survey (ENAHO), we observe that affected households experience a decrease in income and expenditure compared to those in unaffected areas during the period 2015–2019. Additionally, poverty increases as a result of this natural hazard, especially among households in urban areas. Although there is a recovery in income and expenditure in the aftermath of the floods, households mitigate their consumption through donations of food and clothing. We suggest that, in a context where the occurrence of flooding affects the most vulnerable groups, the development of formal riskcoping strategies such as insurance is crucial for boosting their ability to reduce, mitigate, or adapt to future disaster risk.
Access status: Open Access ,
Impacts of a US-led tariff war on international trade in wine, beer and spirits
(Arndt-Corden Department of Economics, Crawford School of Public Policy, The Australian National University, 2025-05) Anderson, Kym; Wittwer, Glyn
The announcements by President Trump in April 2025, of unilateral hikes of 10-50 percentage points on US import tariffs on all countries’ goods, are under threat of coming into force on 8 July 2025. This article estimates their likely effects on trade in alcoholic beverages, using a global model of national beverage markets. Various scenarios are compared. They suggest that if the tariff hike was restricted to just 20% on goods from the European Union, the value of global trade in each of the three beverages would shrink by one-tenth. But the US tariff hikes are to apply to all countries’ goods, which is estimated to shrink global exports by 13% for wine, 22% for spirits and 33% for beer. In that broader scenario, most countries’ wine exports would shrink, but exports of beer and spirits would expand for some countries thanks to the trade divergence generated by the varying tariff hikes. If the increasing uncertainty associated with these developments led to a cumulated 2% drop in consumer spending, virtually all wine-exporting countries would sell less wine to both the US and the rest of the world. That is, wine trade destruction would outweigh trade diversion.
Access status: Open Access ,
The impact of the Belt and Road initiative on foreign direct investment from China, the United States, and major investor countries
(Arndt-Corden Department of Economics, Crawford School of Public Policy, ANU College of Law, Governance and Policy, 2025-05) Todo, Yasuyuki; Nishitateno, Shuhei; Brown, Sean
This paper investigates the impact of the Belt and Road Initiative (BRI) on foreign direct investment (FDI) in BRI countries from China and other major source countries by applying staggered difference-in-differences (DID) event study estimator to a gravity model. In addition to country-pair fixed effects, we introduce source and host country-year fixed effects in estimating the model to control for changes in any host country attribute due to the BRI, such as infrastructure, and highlight the effect through changes in bilateral relationships. We find that FDI from China, Hong Kong SAR, the US, Switzerland, Japan, and France to BRI countries increased in the post-BRI period, whereas FDI from the United Kingdom (UK), the Netherlands, and Luxembourg decreased. After controlling for country-year fixed effects, there remains a post-BRI upward trend in FDI from the US, Switzerland, and France and a downward trend in FDI from the UK, the Netherlands, and Luxembourg. These findings suggest that FDI from non-China countries to BRI countries can be affected by their bilateral relationship with China. For example, the investors from the US may have invested more in BRI countries to strategically compete with China in those countries, whereas investors from France and Switzerland may have done so because of investment cooperation with China in Africa.
Access status: Open Access ,
China's wine market: Recent shocks, long-term prospects
(Arndt-Corden Department of Economics, Crawford School of Public Policy, The Australian National University, 2025-05) Kym Anderson
China was one of the world’s most important areas of growth in wine demand in the 2010s, accounting for 7% of the world’s wine consumption and 8% of its value of wine imports by 2017. But China’s per capita wine consumption peaked in the mid-2010s, and its wine imports have more than halved since then. As well, the sources of China’s imports of wine have fluctuated considerably over the past two decades, making this a risky market for wine exporters. Certainly the COVID-19 disruption played a role, but between 2019 and 2022 the fall in sales was considerably larger for wine (47%) than for spirits (17%) and beer (9%), such that wine’s share of alcohol consumption in China fell by two-fifths over those three years alone. The article examines reasons behind the dramatic gyrations in this globally important market and their impact on wine-exporting countries and speculates on future trends.
Access status: Open Access ,
Nudging alcohol moderation via excise tax reform: The case of beer in Australia
(Crawford School of Public Policy, The Australian National University, 2025-11) Anderson, Kym
Australia taxes alcohol consumption more than most other affluent economies. A switch to low-alcohol beer has been encouraged in Australia by it being subject to a lower rate of excise tax than regular beer, but no such incentive applies to packaged mid-strength beer. Would more or less alcohol be consumed if the tax rates for mid-strength beer were lowered, for example to those for low-strength beer? This study estimates changes in demand that could result from such a policy change. It finds that alcohol consumption from each of beer, wine and spirits could fall, but by little more than 1% in total
Access status: Metadata only ,
Evolving from a rum state: Australia's alcohol consumption
(Crawford School of Public Policy, The Australian National University, 2020-02) Anderson, Kym
Europeans settlers in the Australian colonies had a reputation of being heavy drinkers. Rum dominated during the first few decades, followed by beer. It took until the 1970s before Australia's annual per capita consumption of wine exceeded 10 litres, and even then wine represented only one-fifth of national alcohol consumption. But over the next two decades per capita wine consumption nearly trebled and beer consumption shrunk - the opposite of what happened to global alcohol consumption shares. This paper draws on newly compiled datasets (a) to reveal that Australia was not much more alcoholic than Britain or southern Europe during the nineteenth century and (b) to help explain why it took so long for a consumer interest in wine to emerge in Australia.
Access status: Metadata only ,
Identification of common and idiosyncratic shocks in real equity prices: Australia 1982 to 2002
(Crawford School of Public Policy, The Australian National University, 2003-03) Dungey, Mardi; Fry-McKibbin, Renee A.
A structural vector autoregressive (SVAR) model of real equity prices in Australia is specified to contain common shocks in international equity markets and domestic shocks in Australian financial and goods markets. Common shocks are identified through the long-run comovements of international equity markets, resulting in the model being characterized as having more shocks than variables. The empirical results show that the dot-com crisis of 2000 causes Australian real equity values to depreciate significantly below a precrisis baseline forecast, while contagion from the Asian financial crisis of 1997-1998 is found to have a much smaller negative impact.

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