The increasing interest in dynamic models and in particular the development of the Dynamic GTAP model at the Center for Global Trade Analysis has highlighted the need for the development of a baseline scenario depicting how the world economy might be expected the change over the next 20 years. The purpose of this paper is to describe in detail the baseline scenario developed for the Dynamic GTAP model (Ianchovichina and McDougall, 2000) and the GTAP data base (Dimaranan and McDougall, 2005).In the dynamic GTAP model the policy experiment of interest is compared against a counterfactual baseline scenario. The baseline scenario should reflect as closely as possible the changes expected to occur in the world economy, excluding the particular policy of interest. In this baseline we examine the expected changes in macro economic variables such as the growth of real GDP, capital, skilled and unskilled labour etc.While there is a tendency in this paper to speak of the Dynamic GTAP baseline scenario, it should be understood that in practice each baseline is likely to be unique, incorporating those elements of a baseline which are most relevant to the actual policy question being examined.There are, however, certain key variables which form the basis of most baseline scenarios, it is with these variables that the focus of this paper lies. Despite the fact that baseline scenario's will differ, there are significant benefits to be gained, in terms of time-saved and comparability of results, from sharing a common set of forecasts for these variables.The paper may also refer to the baseline program. This is the program developed to calculate the growth rates of the macro variables and then aggregates these shocks for use with a GTAP data aggregation.

No abstract

Export growth, Terms of trade, China, India, General equilibrium, F11, F12, F43, F47,

This paper analyzes the impact of continued rapid, growth in china on her trading partners using a multiregion, applied general equili,brium model. con_ trary to conuentional wisdom, we find that most deueloping countries benefit from china's growth. Product dffirentiation plays a key role in this flnding. systematic analysis of these welfare gains shows that, as exfected,, simple terms of trade calculations based on net trade positions and aaerage world price changes Predict a loss for the deueloping countries. Howeaer, with the exceptions of south Asia and rhailand, this /oss l's oaershadowed, by a positiue rnnue_

This paper aims to shed light on the potential interests of developing countries in reforms to domestic support for agriculture in the OECD economies. In order to accomplish this goal, we begin by reviewing the literature on the impacts of domestic support on key variables, including farm income, in the OECD economies themselves.We then proceed to revise the standard GTAP model of global trade, based on recent work at the OECD, in order to better capture these impacts. This work at OECD and analytical results derived by Hertel (1989) suggest the possibility of policy reinstrumentation, whereby farm income is stabilized in the face of cuts to overall support levels by shifting the mix of subsidies away from the more trade-distorting instruments which also tend to be ineffective tools for boosting farm incomes.We conclude that developing countries will be well advised to focus their efforts on improved market access to the OECD economies, while permitting these wealthy economies to continue -indeed even increase -direct support payments. Provided these increased payments are not linked to output or variable inputs, the trade-distorting effects are likely to be small, and they can be a rather effective way of offsetting the potential losses that would otherwise be sustained by OECD farmers. This type of policy reinstrumentation will increase the probability that such reforms will be deemed politically acceptable in the OECD member economies, while simultaneously increasing the likelihood that such reforms will also be beneficial to the developing economies.

The rapid economic growth of China and India has been associated with much more rapid growth in their trade. In some cases, this has created enormous opportunities for their trading partners. In others, it has created strong competition either in home markets, or in third markets. Those who face increases in competition are frequently more vocal, but a balanced assessment is needed to help develop appropriate policy responses. If some countries lose from increased competition, as found by Freund and Ozden (2006) and Hanson and Robertson (2006), which countries and which industries will face the most serious competition? And where will the largest opportunities be found?A key determinant of the distributional implications of global competition is the extent to which countries' baskets of goods overlap. Traditional trade models where comparative advantage follows from countries' relative endowments imply that extremely labor-abundant countries like China and India will manufacture and export labor-intensive goods, while skill-and capital-abundant developed countries will specialize in skill-and capital-intensive products. According to these models, developed economies have little reason to be concerned by the emergence of China and India as global economic powers. However, other labor-abundant developing economies have much to lose as traditional theory highlights expansion of existing products (the intensive margin) as the only source of export growth.Many of these expectations about the potential impact of the expansion of exports from China and India may be biased or exaggerated. The expansion of China and India's trade is quite different from the expansion of developing country exports considered in much of the development literature. It involves, for instance, two-way trade in manufactures and services, which make the recipient countries the beneficiaries of improvements in efficiency in their trading partners (Martin 1993). It also involves fragmentation and global production sharing, where part of the production process is undertaken in one economy, and subsequent stages are undertaken in another (Ando and Kimura 2003;Gaulier, Lemoine and Unal-Kesenci 2004). This makes participants in this process beneficiaries from, rather than victims of, improvements in the competitiveness of their partners. And new trade theory now recognizes that export expansion does not involve just increases in exports of the same products. Rapidly growing

Rapid industrialization in East Asia, particularly China, is raising questions about who will feed the region in the next century and how Asia will be able to pay for its food imports. The paper ®rst reviews existing food sector projections and then takes an economy-wide perspective using projections to 2005, based on the global CGE model known as GTAP. After showing the impact of implementing the Uruguay Round, the paper explores several alternative scenarios. A slowdown in farm productivity growth is shown to be costly to the world economy, as is slower economic growth in China. Failure to honour Uruguay Round obligations to open textile and clothing markets in OECD countries would reduce East Asia's industrialization and thereby slow its net imports of food. On the other hand, the trade reform that is likely to accompany China's (and hence Taiwan's) membership of the World Trade Organization (WTO) adds 30 per cent to estimated global gains from the Uruguay Round. Their WTO accession is projected to boost exports of manufactures and strengthen food import demand by not only China but also its densely populated neighbours with whom it trades intensively.The 1995±96 season saw a dramatic rise in international grain prices and a drop in per capita world grain stocks to near-record low levels. That, together with concerns about the erosion of agriculture's resource base, and in particular the projections by the Worldwatch Institute suggesting massive grain imports by China in the twenty-®rst century, have called into question the long-term prospects for the world food situation. By contrast, a soon-to-be-published study by Mitchell, Ingco and Duncan suggests grain will be abundantly available for the foreseeable future so

The impacts of faster growth in China and India for Europe are analysed taking into account terms-of-trade effects, second-best welfare impacts and improvements in product quality and variety. More rapid growth in these giants could improve Europe's terms of trade, but second-best effects on energy markets could lower welfare unless these taxes are Pigovian. Whether growth arises from productivity or capital accumulation has important implications, with capital-driven growth involving higher energy and agricultural prices. When quality and variety growth are taken into account, the benefits to Europe are substantially greater. If agricultural protection in emerging Asia increases with growth, the impacts on Europe appear to be adverse but small.