Innovation and Economic Growth [Working Papers]

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    US-India cooperation on clean coal
    (Honolulu, HI : East-West Center, 2020-07-20) Ashwarya, Sujata
    One of the essential elements in the US-India bilateral relationship on energy has been cooperation on the use of coal in a clean manner. Supported by the United States Agency for International Development (USAID), the Department of Energy (DOE), laboratories, and utilities in the United States, the core of clean coal activities in India over the past several decades has been to introduce, demonstrate, and commercialize new technologies and practices to promote better utilization of coal in order to lower greenhouse gas and other pollutant emissions while promoting energy security. Starting in the mid-1980s, the US team, in partnership with the Indian Ministry of Power, NTPC (previously, the National Thermal Power Corporation, India's largest state-owned utility), and several state utilities, has worked to improve the operations and performance of India's power plants. These have included coal beneficiation, heat rate improvement, optimal blending techniques, and the introduction of best Operations and Maintenance (O&M) practices. The DOE/USAID support for India’s research on advanced gasification of coal technology was also a part of the clean coal activities, which built capacity and demonstrated results, but awaits deployment. USAID's clean coal projects in India were designed to reconcile three key aspects, namely, the abundance of coal, need for energy, and sustainable energy
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    Going digital, going green : changing value chains and regimes of accumulation in the automotive industry in China
    (Honolulu, HI : East-West Center, 2019-12) Luethje, Boy
    This paper analyzes the changes in production and innovation networks in the automobile industry in China that have resulted from the transition to new-energy vehicles and digital driving technologies. This transformation is seen as a fundamental break with the present "neo- Fordist" regime of accumulation in the car industry and a rise of new forms of network-based mass production, comparable to the IT industry since the 1990s. The paper traces the complex politics of this transition embedded in different modes of regulation in the Chinese automotive sector, its impact on work and regimes of production, and the perspective of a broad-ranging "Foxconnization" of car manufacturing.
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    North Korea : sanctions, engagement, and strategic reorientation
    (Honolulu, HI : East-West Center, 2018-10) Noland, Marcus
    This paper examines the roles that sanctions, and inducements might play in resolving the North Korea problem. It finds that while the "maximum pressure" narrative is plausible, the evidence to substantiate it is thin. Likewise, the North Korean regime is aware of the potentially constraining (or even destabilizing) political implications of cross-border economic integration and has acted to structure engagement in ways to blunt its transformative impact. Maximizing the transformative possibilities of engagement will require conscious planning by North Korea's partners. Multilateral guidelines and voluntary codes on corporate conduct could be used to anchor this process, but they will only be effective if there is greater political commitment to such norms than has been witnessed to date. Without such commitments, engagement risks enabling North Korea's doctrine of the parallel development of weapons of mass destruction and the economy.
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    US international economic policy in the Trump Administration
    (Honolulu, HI : East-West Center, 2018-01) Noland, Marcus
    The United States benefits from international trade, and Asia and the United States have a mutually beneficial and deepening economic relationship. A byproduct of that deepening economic integration, however, is a tendency toward increased income and wealth inequality within the United States. The appropriate response is not to adopt trade protection but rather implement a package of improved adjustment measures and longer-term policies to enhance US competitiveness.
    The rejection of TPP was, to borrow a sports term, an own goal that damaged US interests and further opened the door for Chinese leadership. The United States has a multifaceted economic relationship with China, and the issues of currency manipulation, NME status, and market access are all potential flashpoints. Mismanagement of these issues could harm the US economy and create collateral damage elsewhere in Asia. The pursuit of bilateral deals is likely to be difficult (because of the perception of their zero-sum nature) and have relatively limited impact. Rather than retreating or pursuing bilateralism, a re-examination, revision, and expansion of a regional agreement along the lines of TPP is more likely to generate substantial and sustained benefits to the US economy.
    Unfortunately, the Trump administration is in effect doing the opposite: increasing contingent or process protection, which could significantly hurt some Asian partners, and demanding renegotiation of existing deals such as NAFTA and KORUS, threatening to terminate them if renegotiations are unsuccessful. There is scope for improvement of both agreements. But badly renegotiated deals could harm the US economy and disadvantage trade reliant partners in Asia. In the worst case, these actions could spark trade wars to the detriment of all.
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    Putting women's economic empowerment in the Asia Pacific at the core of the G20
    (Honolulu, HI : East-West Center, 2018-01) Dutkiewicz, Marianne ; Ellis, Amanda
    This paper presents background and resource information used to develop the formal report for the Inaugural 2017 Women20 for the G20 Asia-Pacific Dialogue, hosted by the East-West Center and sponsored by the global professional services organization EY. Participants included current and former heads of state, government officials, academic experts, representatives of regional and international organizations, business, and civil society leaders.
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    Standard-essential patents within global networks--an emerging economies perspective
    (Honolulu, HI : East-West Center, 2016-12) Ernst, Dieter
    Efficient licensing of standard-essential patents (SEPs) is crucial for achieving a rapid and broad-based diffusion of innovation. Owners of large SEP portfolios (and their supporters) argue that the governance of SEPs works reasonably well and that patent holdup and other negative effects are "purely theoretical". In reality however, the governance of SEPs remains highly inefficient. This paper addresses two unresolved issues. First, most of the existing SEP research has focused on advanced countries. It is time to address growing concerns in emerging and developing countries that SEP-related market failures may create added uncertainty for their companies, generating unpredictable and often quite significant costs and delaying market entry of their products. Second, such SEP-related market failures are even more important in a world where increasingly complex and diverse global corporate networks integrate dispersed production, engineering, product development and research across geographic borders. The paper seeks to extend the analysis of SEPs to include challenges that companies from an emerging economy face that when they are deeply integrated into these global networks of production (GPNs) and innovation (GINs). The paper summarizes what we know about SEP-related market failures and their impacts on standard implementers, and highlight drivers and the hierarchical nature of GPNs and GINs, distinguishing network flagships and different layers of network suppliers. The paper will then discuss a new "gains from trade" doctrine for economic development, promoted by the OECD, the WTO, and the World Bank, which emphasizes the role of global network integration as "the 21st century's fast lane to industrial development". Participation in these global corporate networks raises new challenges, especially for lower-tier suppliers, many of them based in emerging or developing countries. Also discussed are restrictions imposed by the new "gains from trade" doctrine on national innovation policies, especially with regard to patents and standards. These restrictions may well constrain the capacity of those companies to cope with the imperfect governance of SEPs. It is on this basis that a preliminary research agenda is sketched out for exploring impacts that Chinese companies may face within GPNs or GINs. Suggested responses to some of these market failures are reviewed, using illustrative examples from standard development organizations and competition policy.
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    Patents and technology transfer through trade and the role of regional trade agreements
    (Honolulu, HI : East-West Center, 2016-10) Maskus, Keith
    Regional trade agreements can have powerful impacts on technology transfer (TT), primarily through their effects on trade in high-technology goods and services, foreign direct investment (FDI), and licensing, all of which are key channels of information diffusion. In that context, regional trade agreements (RTAs) and mega-regionals such as the TPP embody considerable promise for direct expansion of TT, if primarily within the agreement. Moreover, recent econometric evidence largely finds that each of these flows responds positively to strengthened patent laws and other intellectual property rights (IPR), though this conclusion must be conditioned on a variety of factors (Maskus, 2012). These basic observations suggest that there could be an important complementarity between the formation of trade agreements and their IPR standards, a critical question that has not yet attracted much investigation.

    In addition, it stands to reason that countries joining RTAs are likely to observe growing within-agreement patent registrations. In that context, patent applications in themselves can facilitate the international diffusion of technological information. Patents are published and may be read by firms seeking to learn new technologies and invent around them, or simply to imitate them if associated patents are not in force in a particular location. At the same time, patents embody market power and may be deployed in ways that diminish access to technologies, whether through restrictive licensing practices or unaffordable rights fees.

    These basic observations point to the importance of thinking about how international strategies might be devised to increase TT on affordable terms in key sectors going forward, with some emphasis on the potential roles RTAs could play. An opportunity for such reflection arises in the recently completed negotiations of the TPP and continuing intergovernmental and NGO work on climate change and access to medicines. In brief, I argue that RTAs could play a positive role if they are supplemented with additional financing commitments, technical assistance, and knowledge sharing. In this context they could be useful complements to larger global initiatives, including an agreement on access to basic science and technology.
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    China's bold strategy for semiconductors--zero-sum game or catalyst for cooperation?
    (Honolulu, HI : East-West Center, 2016-09) Ernst, Dieter
    This paper explores whether China's bold strategy for semiconductors will give rise to a zero-sum game or whether it will enhance cooperation that will benefit from increased innovation in China. As the world's largest producer and exporter of electronic products, China is by far the top market for integrated circuits (ICs), accounting for nearly a third of global demand. Yet its ability to design and produce this critical input remains seriously constrained. Despite decades and many billions of dollars of state-led investment, China's domestic production of semiconductors covers less than 13% of the country's demand. As a result, China's IC trade deficit has more than doubled since 2005, and now has surpassed crude oil to become China's biggest import item. To correct this unsustainable imbalance, China seeks to move from catching up to forging ahead in semiconductors through progressive import substitution. The "National Semiconductor Industry Development Guidelines (Guidelines)" and the "Made in China 2025" (MIC 2025) plan were published by China's State Council in June 2014 and May 2015, respectively. Both plans are backed by huge investments and a range of support policies covering intellectual property, cybersecurity, procurement, standards, rules of competition (through the "Anti-Monopoly Law”), and the negotiation of trade agreements, like the Information Technology Agreement. The objective is to strengthen simultaneously advanced manufacturing, product development and innovation capabilities in China's semiconductor industry as well as in strategic industries that are heavy consumers of semiconductors. Based on a review of policy documents and interviews with China-based industry experts, key policy initiatives and stakeholders involved in the current strategy are described; important recent adjustments in the strategy to broaden China's semiconductor product mix are highlighted; and the potential for success of China's ambitious efforts to diversify into memory semiconductors, analog semiconductors, and new semiconductor materials (compound semiconductors) are assessed. The chances for success are real, giving rise to widespread worries in the US and across Asia that China's bold strategy for semiconductors may result in a zero-sum game with disruptive effects on markets and value chains. However, Chinese semiconductor firms still have a long way to go to catch up with global industry leaders. Hence, global cooperation to integrate China into the semiconductor value chain makes more sense than ever, both for the incumbents and for China.
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    Advanced manufacturing and China's future for jobs
    (Honolulu, HI : East-West Center, 2016-08) Ernst, Dieter
    This paper explores how China's push into advanced manufacturing and services through robots and other new disruptive technologies might affect the country's future for jobs. After decades of rapid-fire growth, China's comparative advantage in manufacturing and the extraordinary size of its economy explain why China has not followed Dani Rodrik's pattern of "premature de-industrialization". However, China now has reached a level of development where catching up through an investment-driven "Global Factory" model is no longer sufficient to create long-term economic growth and prosperity. Chinese firms now need to adopt, absorb and develop advanced manufacturing technologies. At the same time, severe headwinds are constraining China's growth. International trade, a primary source of China's rise, has fallen to its lowest level since 2009, and keeps languishing. Since the turn of the century, a declining labor force, rising wages, and skill bottlenecks are eroding China's international competitiveness. To break out of this growth impasse, China's leadership has decided to leapfrog into advanced manufacturing and services. Two policy initiatives are the expression of that ambition: the China Manufacturing 2025 (MIC 2025) Plan, and China's Internet Plus (IP) Plan both seek to promote innovation-driven development through robots, 3D printing, Big Data, and the integration of manufacturing and services through the mobile Internet. The chapter examines how these two major policy initiatives might affect China's Future for Jobs. While China has improved its position and capabilities in advanced manufacturing (especially in robots), the country still has a long way to go to catch up with global industry leaders. A critical weakness of both the MIC 2025 and the IP plans is an almost exclusive focus on technology, and a failure to collect data on possible impacts of advanced manufacturing and services on jobs, skills, income and inequality. To reduce this knowledge gap, the chapter reviews newly available data for China on unemployment, income inequality, skill requirements, and the development and quality of service jobs. These data show that China still has a long way to go to create the necessary skills (especially for soft and vocational skills), as well as enough well-paying knowledge-intensive service jobs. Forging ahead in advanced manufacturing thus will face major hurdles. If China fails to upgrade the quality of the new jobs that are being created in its service sector, this might slow down the growth of household incomes and consumption. As China's push into advanced manufacturing coincides with the "new normal" of a lengthy industrial slowdown, any such slowdown in income might eventually begin to constrain the service sector too, as the profit squeeze in manufacturing companies and declining income of workers might lead to a cut in investment in services and in their consumption. In order to avoid this "worst case scenario", it is necessary that both the MIC 2025 and the IP Plans are based on realistic projections of employment and other labor market impacts.
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    Asia on the medal stand : Rio Olympic forecasts
    (Honolulu, HI : East-West Center, 2016-07)
    This paper updates and extends forecasts originally contained in the working paper on "Asian Participation and Performance at the Olympic Games," with Kevin Stahler, May 2015. It was subsequently published as Noland, Marcus, and Kevin Stahler. 2016. Asian Participation and Performance at the Olympic Games. Asian Economic Policy Review 11:1 70-90.
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