Some Economic Effects of APEC

Warwick McKibbin, David Pearce

Research output: Book/ReportCommissioned reportpeer-review

Abstract

Prepared for the Department of Foreign Affairs and Trade by the Centre for International Economics, Canberra & Sydney.

Background
In November 1994 leaders of APEC nations met in Bogor, Indonesia, to continue a process started in 1989 - the discussion of trade and other liberalisation within the APEC region. At the end of this meeting, the leaders declared:

We further agree to announce our commitment to complete the achievement of our goal of free and open trade and investment in the Asia Pacific no later than the year 2020. The pace of implementation will take into account the differing levels of economic development among APEC economies, with the industrialised economies achieving the goal of free and open trade and investment no later than the year 2010 and developing economies no later than the year 2020. (APEC 1994)

These are ambitious goals which if achieved are likely to have significant economic effects, both worldwide and within the APEC region (for general discussions of the Bogor declaration and regional liberalisation see Australia Japan Research Centre 1995, Anderson and Blackhurst 1993 and Garnaut and Drysdale 1994).

The prospect of such liberalisation immediately raises a number of questions. What will be the order of magnitude of the economic effects? What will be the distribution of benefits - both between countries and between sectors - from liberalisation and what factors will determine this distribution? Are there likely to be losers, and if so why?


This report
This report contributes to the analysis of the economic effects of APEC by using a new modelling framework - the APG-Cubed model - quite different from those used in previous studies. Like all models, APG-Cubed has strengths and weaknesses. We believe, however, that because it can
account for a number of interactions not included in many of the analyses to date, it can make a valuable contribution to the analysis of the effects of APEC.

Section 2 of this report sets out key details of the APG-Cubed model and the way in which it is used to analyse the effects of APEC liberalisation. Section 3 presents results from a number of simulations designed to provide insights into the effects of APEC.
Original languageEnglish
PublisherCentre for International Economics
Number of pages18
Publication statusPublished - Feb 1996

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