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Abstract
Assessments to date of the consequences of implementing the Uruguay Round
(UR) of multilateral trade negotiations have assumed medium-term rates of economic
growth in East Asia that now seem unsustainable. This paper compares one set of
those estimates to 2005 with an alternative set involving an interruption to East Asian
economic growth in the late 1990s, using the global, economy-wide GTAP model.
Attention focuses on results for Indonesia, the worst-affected country in the region.
An important consequence of the crisis is that Indonesia is likely to become more
agrarian for a time than it otherwise would have been. Also, both income levels and
the gains from the UR will be lower at the completion of UR implementation in 2005
than would have been the case without the crisis. Hopefully this will boost support in
Indonesia (and other East Asian countries) for a push to catch up through further
unilateral, regional and global trade and investment liberalizations and domestic
policy reform. The benefits to Indonesia from embracing further unilateral reform, as
estimated by the GTAP model, are contrasted with the costs of the alternative strategy
of reneging on UR commitments to liberalize trade. Of particular importance are
policies affecting agriculture’s capacity to be an engine of growth recovery.