Three Essays on the International Economic Development

Abstract

This dissertation contains three essays as three chapters. The equilibrium displacement model (EDM) is employed to investigate the issues associated with the economic development in different context. Chapter 1 analyses the incidence of the agricultural direct subsidy based on the data of China’s wheat production from 2009 to 2011. The results show that the direct grain subsidy in China can increase both the domestic production and Chinese farmers’ welfare, which are the main aims of the policy. The results also indicate that imports play an important role in the distribution of total welfare between producer surplus and consumer surplus. The producers will gain more from the subsidy if the net imports take a substantial share of China’s wheat market. The increase in both the subsidy and the net imports will increase the net welfare loss in China. Thus, the Chinese government needs to adjust both imports and subsidy policy to let farmers get more benefits from the subsidy and at the same time avoid larger net welfare loss. Chapter 2 examines the effect of the mining boom on Mongolia’s agricultural sector, and in particular, tests whether currency strengthening associated with increased FDI reduced the size of Mongolia’s trade-sensitive agricultural sector, as predicted by the Dutch Disease Hypothesis (DDH). Econometric analysis suggests each 1% increase in FDI increases the value of Mongolia’s currency by 0.19% and each 1% increase in GNP increases the value of the currency by 0.34%, all else equal. Monte Carlo simulations of a Keynesian-style equilibrium displacement model of Mongolia’s economy based on these econometric estimates suggest the FDI-led mining boom had no effect on Mongolia’s agricultural sector when exchange rate effects are taken into account. The 90% confidence interval for elasticity of agricultural value added with respect to FDI is [-0.082, 0.002] when exchange rate is endogenous. The corresponding 90% confidence interval when exchange rate is exogenous is [0.025, 0.129]. Although the DDH is rejected, the mechanism identified by the hypothesis clearly is important. Chapter 3 studies the factors affecting the livestock inventory based on the panel data from 12 prefectures (or cities) in Inner Mongolia from 1980 to 2010. Specially, this study attempts to understand the dynamic changing of the inventory. Based on the livestock products market, an EDM is combined with an inventory equation to show the link between the livestock products market and the livestock inventory. The results indicate that compared to policy and weather status, prices of the livestock products play a more important role in the inventory of the livestock.