Stanford University

Economic Affairs

Postcolonial Discourse in South Korean Film

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This seminar is part of Shorenstein APARC's Korea Luncheon Seminar Series, sponsored by the Korean Studies Program. The luncheon is free and open to the public, but RSVPs are required. Please RSVP to Okky Choi by 12 noon on Wednesday, October 8 if you wish to attend and have lunch reserved for you. Chiho Sawada received his Ph.D. from Harvard in East Asian Languages and Civilizations, earned his B.A. in Economics from the University of California, San Diego, and did graduate research at Seoul National University and University of Tokyo.

Phillipines Conference Room

Chiho Sawada Korean Studies Research Fellow APARC
Seminars
Korea Program

The 2003 APARC Asia Briefing

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8:30 AM, Bechtel Conference Center, First Floor, Encina Hall

WELCOME

Gi-Wook Shin, Acting Director, Shorenstein APARC

KEYNOTE SPEECH: FROM SILICON VALLEY TO SHANGHAI: The Information Age Opens To Asia

James Morgan, CEO, Applied Materials, Inc.

CRISIS ON THE KOREAN PENINSULA

Gi-Wook Shin, Acting Director, Shorenstein APARC

Michael Armacost, Shorenstein Distinguished Fellow, Shorenstein APARC

INDIA AS A DESTINATION FOR GLOBAL BUSINESS PROCESS OUTSOURCING: Key Factors and Trends

Rafiq Dossani, Senior Research Scholar, Shorenstein APARC

SOUTHEAST ASIA: A Region at Risk

Donald Emmerson, Senior Fellow, IIS

JAPAN'S PROLONGED ECONOMIC SLUMP: Explanations and Implications

Daniel Okimoto, Senior Fellow, IIS

Michael Armacost, Shorenstein Distinguished Fellow, Shorenstein APARC

ASIA'S EMERGING HOTBEDS FOR INNOVATION AND ENTREPRENEURSHIP

Henry Rowen, Senior Fellow, IIS

William F. Miller, Senior Fellow Emeritus, IIS

Marguerite Gong Hancock, Associate Director, Stanford Project on Regions of Innovation & Entrepreneurship

ABOUT THE ASIA/PACIFIC RESEARCH CENTER

Russell Hancock, Director of Programs, Shorenstein APARC

PLENARY SESSION

CHINA AFTER THE 16TH PARTY CONGRESS

Andrew Walder, Director, Shorenstein APARC

Lawrence Lau, Kwoh-Ting Li Professor of Economic Development

Jean Oi, William Haas Professor of Chinese Politics

Ramon Myers, Senior Fellow, Hoover Institution

CLOSING REMARKS

Gi-Wook Shin, Acting Director, Shorenstein APARC

Bechtel Conference Center

James Morgan CEO Keynote Speaker Applied Materials
Conferences

Designing Competitive Wholesale Markets for Latin American Countries

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Executive Summary

 

The purpose of this paper is to present a general framework for electricity market design in Latin American Countries (LACs) that addresses the current problems facing electricity supply industries (ESIs) in this region. The major issue addressed is what market rules, market structures, and legal and regulatory institutions are necessary to establish a competitive wholesale market that provides the maximum possible benefits to consumers consistent with the long-term financial viability of the ESI.

The paper first presents a theoretical foundation for analyzing the electricity market design problem. A generic principal-agent model is presented and its applicability to the electricity market design problem explained. It is then applied to illustrate the incentives for firm behavior under regulation versus market environments. The impact of government versus private ownership on firm behavior in both market and regulated environments is also addressed using this model. This discussion is used to guide our choices for the important lessons for electricity market design in developed countries and LACs.  Using the experiences from ESI reform in developed countries, the paper presents five essential features of a successful wholesale electricity market. The first is the need for a sufficient number of independent suppliers for a competitive market to be possible. Merely declaring the market open to competition will not result in new entry unless no single supplier is able to dominate the market. Second is a forward market for electricity where privately-owned firms are able to sell long-term commitments to supply lectricity. This report argues that the conventional wisdom of establishing a competitive spot market first leading to a competitive forward market is an extremely expensive process in developed countries and is prohibitively expensive in developing countries. Third is the need for the active involvement of as many consumers of electricity as is economically feasible in the operation of the wholesale market.  This involvement should occur both in the long-term and short-term market. In the short-term market, there must be a number of buyers willing to alter their consumption of electricity in response to short-term price signals. Fourth is the importance of a transmission network to facilitate commerce, meaning that the transmission network must have sufficient capacity so that all suppliers face significant competition. This implies a dramatically different approach to determining the quantity and magnitude of transmission network expansions in a market regime.  The final lesson is the need to establish a credible regulatory mechanism as early as possible in the restructuring process. An important lesson from developed countries around the world is that the initial market design will have flaws. This implies the need for ongoing market monitoring to correct these flaws before they develop into disasters.

The paper then takes on the issue of the specific challenges to LAC restructuring. Rather than focus on the details of specific markets, the paper instead identifies a number of problems common to LACs and provides recommended solutions to each of these problems. A major theme of this section is a warning that short-term solutions to market design flaws can have longterm market efficiency costs. The paper identifies seven major challenges to Latin American ESI restructuring. The first is related to the problem of introducing wholesale markets in systems dominated by hydroelectric capacity. This section also deals with the related issue of using cheap hydroelectric power as a way to keep electricity prices low and the risk of electricity shortages high. The second issue is concerned with the difficulties of establishing an active forward market for electricity in LACs. The third relates to the LAC-specific challenges associated with establishing an independent and regulatory body. The fourth addresses the advisability of cost-based versus bid-based dispatch of generation units in LAC wholesale markets. The fifth is how to regulate the default provider retail electricity price in LACs. Sixth concerns the advisability of capacity payments mechanism for ensuring energy adequacy in markets where demand is expected to grow rapidly. The final issue is the role for government versus private ownership in LACs.

The report then discusses specific market design challenges in five LACs. These countries are Brazil, Chile, Colombia, Honduras, and Mexico. A number of these challenges are specific examples of the general challenges discussed earlier in the paper, whereas others are unique to the geography, natural resource base or legal environment in the country.

The report closes with a proposed market design that should serve as a baseline market design for all LACs. Deviations from this basic design could be substantial depending on initial conditions in the industry and the country, but the ideal behind proposing this design is to have a useful starting point for all LAC restructuring processes.

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Publication Type
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Stanford University, Department of Economics
Authors
Frank Wolak

Korean Economy, Five Years since the Crisis: Policy Performance's Recovery and Transformation

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11:45 am luncheon 12:00 pm program begins Lunch provided only to those who make a reservation with Ms. Okky Choi by 12:00 pm on Wednesday, May 28. You can contact her via email at okkychoi@stanford.edu or via phone at 650-724-8271.

Philippines Conference Room, Encina Hall, Third Floor, Central Wing

Seung-woo Chang Former Minister of Planning and Budget Speaker Republic of Korea
Seminars

Formulating Tax Policies for Enhancing the Stable Development of the Chinese Stock Market

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In recent years, despite the Chinese economy's rapid growth -- the highest in the world -- and China's progress in improving its financial system, serious risks and problems in the Chinese stock market remain. After examining such issues as high speculation and high P/E ratios in the Chinese stock market, Ms. Wang, in her work with Dr. Lawrence Lau (Shorenstein APARC), argues that the Chinese government should formulate certain tax policies. These proposed policies would not only increase the corporate after-tax profits but they would also encourage the substitution of equity for debt. Currently such a strategy would lower the P/E ratios without lowering the stock prices, attract new long-term investors, and strengthen the stability of the stock market. It will not significantly reduce fiscal revenue but likely increase the tax revenue in the long run. Please join us for a lively discussion of the issues and policies that Ms. Wang proposes in her presentation.

Okimoto Conference Room, Encina Hall, Third Floor, East Wing

Guijian Wang Ministry of Finance Speaker PRC
Seminars

The brewing trade battle over GM crops will cost America dear, say Victor and Runge

Authors
David G. Victor
News Type
Commentary
Date
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In an article appearing in The Financial Times, David Victor and C. Ford Runge argue that the pending WTO case over genetically modified foods will do the U.S. more harm than good.

America's farm lobbyists have long been pressing their government to launch a formal trade dispute against the European Union's ban on genetically modified crops. This week they got their way, as the US and more than a dozen allies started proceedings within the World Trade Organisation.

For US farmers - the world's top planters of GM crops - the case is a welcome chance to crack open a lucrative market. But the case may ultimately do their country more harm than good.

Now is a particularly bad time to embark on a dispute that will inflame anti-Americanism in Europe. In the broader, already deteriorating relationship with continental Europe, the US has much more important issues at stake, notably reviving the Doha round on trade and mending diplomatic relationships strained by the Iraq war. Moreover, a close look at the options reveals that each of the plausible outcomes from a dispute would leave the US worse off than before.

First, the US could pay the political costs of launching an inflammatory dispute and then lose. Most press accounts compare this case with one of the first disputes ever handled by the WTO: the EU's ban on beef that had been produced using hormones. The EU lost because its ban had no basis in science and in "comparable" areas of food policy it had adopted much less strict rules - a telltale sign that the ban was a protectionist gambit.

On the surface, the cases appear similar. Although the science on the health risks of GM food is contested, essentially all the credible evidence shows that these foods are safe, which would seem to indict the EU ban. But in critical ways the cases differ. Across the board, the EU is tightening food safety regulations in ways that seem irrational by standard cost/benefit tests but, crucially, are broadly non-discriminatory and consistent - the key tests for whether a trade ban is legitimate. Moreover, the GM ban is a temporary measure - unlike the permanent ban on beef hormones - and trade rules allow more flexibility for countries that implement temporary measures when they can claim the science is uncertain.

Second, the EU could change its rules in the middle of the dispute. For several years, EU bureaucrats have been designing a new set of standards that would "reopen" Europe's markets to GM foods if traders complied with onerous tracing and labelling requirements. This shift would make it harder for the US to win because trade laws are tolerant of labels that allow consumers to make the final choice. While the US might respond by dropping the suit, it would be more likely to redirect the dispute against the tracing and labelling rules. In the past, hotly contested trade disputes have usually taken on a myopic life of their own. Each side digs in and the political damage spreads.

Third is the most likely (and worst) outcome: the US could win. The victory would be Pyrrhic because the issues are fundamentally ones of morality and technology - they must be settled in the courts of consumer opinion. On this score, the beef hormones case is instructive. Even today, hormone-treated beef is no more able to find European consumers than it was before the US won its case; and the years of legal wrangling have led to counter-sanctions that have harmed a wide variety of unrelated products and industries. The antagonism over GM foods appears to be unfolding in much the same way.

A better strategy would have been to stay the course that US policy has followed ever since the controversy over GM crops broke out in the late 1990s. Time is on America's side because the technology is already proving itself in the marketplace and European opponents will find themselves increasingly isolated.

But now that Washington has pulled the trigger, what can be done? The greatest danger is that both sides of the Atlantic slide into a tit-for-tat retaliation. But a trade war will cause untold harm to an alliance already in stress and make it harder to rejuvenate the soggy world economy. Cooler heads must prevail.

In Europe, the critical need is to reform the moratorium on GM foods. Frustration over its inability to get the import ban lifted is what pushed Washington to this desperate act. In the US, serious movement in Europe must be seized as pretence to rescind the WTO case before the antagonisms of hearings, judgment, appeal and retaliation unfold.

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2002-2003 A/PARC Visting Fellows' Final Paper Presentations

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11:30 a.m.: "Digital Content Industry in the Information Technology Era" Eiji Tsujimoto, Impress Corporation (Advisor: Harry Rowen) 11:50 a.m. : "Internet Business Strategy for Newspaper Companies" Hiroshi Nozawa, Asahi Shimbun Company (Advisor: Russ Hancock) 12:10 p.m.: "Venture Capital and Entrepreneurship in the Silicon Valley and the Greater China Region" Joseph Huang, AllCan Investment Company (Advisor: Marguerite Hancock) 12:30 p.m. : "How Can Japan Make Effective Industrial Policies For Promoting New Technologies and Industrial Revitalization?" Kosuke Takahashi, Development Bank of Japan (Advisor: Mike Armacost) 12:50 p.m. : "The Difference of Information Strategy Between the USA and Japan" Tatsushi Tatsumi, Sumitomo Corporation (Advisor: Marguerite Hancock) 1:10 p.m. : "Comparative Study of Technology Policy for Small Business Between the USA and Japan" Hidetaka Nishimura, Ministry of Economy, Trade and Industry (Advisor: Mike Armacost) 1:30 p.m. : "How Can China Learn from U.S. Small Business Policies?" Tingru Liu, Infotech Ventures Comapany (Advisor: Harry Rowen) Lunch served to those who respond to Yumi Onoyama by 12:00 noon Tuesday, May 20, 2003. Please contact Yumi via email at yumio@stanford.edu.

Philippines Conference Room, Encina Hall, Third Floor, Central Wing

Supplier-Managed IT Services Outsourcing: When Is It Worthwhile?

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This is a presentation of joint work with Dr. Rafiq Dossani, Shorenstein APARC. About the Talk: IT (Information Technology) outsourcing has become a standard approach for many Fortune 3000 and smaller companies to achieve cost-effectiveness. However, while outsourcing at the low end of the value chain has gained acceptance, many issues remain unresolved at the high end of the IT value chain. We develop a characterization of outsourcing firms, suppliers, and tasks that is useful in providing guidelines on when to outsource, and whom to outsource to. These guidelines for IT outsourcing strategies are based on a study of US customers, and Indian IT suppliers, involving questionnaires and interviews. To our knowledge, this is first study that has captured the supplier characteristics in the level of detail, which will be discussed by Dr. Akella in his talk. Professor Ram Akella is currently professor of IE and Management, and was the founding director, SUNY Center for Excellence in Global Enterprise Management. At Stanford, the University of California, Berkeley, and Carnegie Mellon University, as a faculty member and director, Professor Akella has led major multi-million dollar interdisciplinary team efforts in high tech and semiconductors. His current research interests include in process learning, quality, fab economic models, cost of ownership and financial justification for IT Management and equipment, production planning and control, and bio-informatics. His other interests are enterprise systems, IT and software, financial engineering, high tech and e-business, and range from cell and factory level design and control to enterprise-wide coordination and logistics, including supply chain management and contracts, financial engineering and investment, demand management, e-commerce and e-business exchanges, and product and process portfolios for risk management and design capacity management.

Daniel and Nancy Okimoto Conference Room

Ram Akella Professor, IE and Management SUNY
Seminars

Japanese Fiscal Decentralization

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In Japan, fiscal decentralization has recently received public attention as a solution for the problematic intergovernmental fiscal relationship between its central and local governments, and as a potential solution for some of the country's most serious problems such as the large size of total government expenditures, its continuously inactive economy, and its huge public debt. This fiscal decentralization policy is actively being discussed within the Koizumi cabinet especially between Mr. Shiokawa and Mr. Katayama. Mr. Akaiwa will discuss following issues based on his interdisciplinary research:

  1. What are the problems in the current intergovernmental fiscal relationship in Japan?
  2. How has the fiscal decentralization policy been argued among bureaucrats and politicians for several decades?
  3. What are the expected effects of the fiscal decentralization policy in both economic and political contexts?
  4. How should the Japanese government implement fiscal decentralization policy?

Daniel and Nancy Okimoto Conference Room

Hirotomo Akaiwa Fellow Speaker Stanford Program in International Legal Studies (SPILS)
Seminars

War in Iraq: Implications for Asia and U.S.-Asian Relations

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How is the American-led war in Iraq affecting Asian countries and their relations with the United States? Is a clash of civilizations underway? Will Islamist rage in Southeast Asia spawn terrorist attacks on Americans there? Will Islamist parties in Indonesia be able to ride this wave of anger into power in the elections to be held in April 2004? Will the regime in North Korea take advantage of American preoccupations in Iraq and Afghanistan to escalate tensions in Northeast Asia? How will the economies of Southeast and Northeast Asia be affected by the conflict in Iraq? Will Washington's priority on ousting Saddam Hussein undermine its effort to stabilize Afghanistan? And what will the repercussions in Asia be if, against the expectation of many observers, the Iraq war turns out to be short and the seeds of Iraqi democracy are successfully sown?

Founders Room, 5th floor
Public Policy Institute of California
500 Washington Street, San Francisco

Robert Scalapino Professor Emeritus Panelist Department of Political Science, University of California, Berkeley
Theordore Eliot, Jr. Dean Emeritus Panelist Fletcher School of Law and Diplomacy, Tufts University
Greg Fealy Visiting Professor Panelist School of Advanced International Studies, Johns Hopkins University
Workshops
Southeast Asia Program
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