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101. An Economic Defense of Multiple Antitrust Goals: Reversing Income Inequality and Promoting Political Democracy

Author:
Mark Glick
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Two recent papers by prominent antitrust scholars argue that a revived antitrust movement can help reverse the dramatic rise in economic inequality and the erosion of political democracy in the United States. Both papers rely on the legislative history of the key antitrust statutes to support their case. Not surprisingly, their recommendations have been met with alarm in some quarters and with skepticism in others. Such proposals by antitrust reformers are often contrasted with the Consumer Welfare Standard that pervades antitrust policy today. The Consumer Welfare Standard suffers from several defects: (1) It employs a narrow, unworkable measure of welfare; (2) It excludes important sources of welfare based on the assumption that antitrust seeks only to maximize wealth; (3) It assumes a constant and equal individual marginal utility of money; and (4) It is often combined with extraneous ideological goals. Even with these defects, however, if applied consistent with its theoretical underpinnings, the consideration of the transfer of labor rents resulting from a merger or dominant firm conduct is supported by the Consumer Welfare Standard. Moreover, even when only consumers (and not producers) are deemed relevant, the welfare of labor still should consistently be considered part of consumer welfare. In contrast, fostering political democracy—a prominent traditional antitrust goal that was jettisoned by the Chicago School—falls outside the Consumer Welfare Standard in any of its constructs. To undergird such important broader goals requires that the Consumer Welfare Standard be replaced with the General Welfare Standard. The General Welfare Standard consists of modern welfare economics modified to accommodate objective analyses of human welfare and purged of inconsistencies.
Topic:
Economics, Democracy, Income Inequality, and Antitrust Law
Political Geography:
Global Focus

102. Government Deficits and Interest Rates: A Keynesian View

Author:
Brett Palatiello and Philip Pilkington
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
We test the neoclassical loanable funds model which postulates that, ceteris paribus, government borrowing increases the long-term rate of interest. The empirical literature exploring such a connection remains largely mixed. We clarify the conflicting results by deploying an ARDL model to decompose the relationship in the United States into long and short-run effects across multiple measures of the government deficit and long-term interest rate. We find a tendency for changes in the deficit to increase long-term interest rates in the short run but the effect is reversed in the long run. We argue that these results are consistent with John Maynard Keynes’ view of the long-term rate as being heavily influenced by monetary policy, central bank credibility and market convention.
Topic:
Economics, Governance, Economic Theory, Keynes, and Deficit
Political Geography:
Global Focus

103. Setting the Record Straight on the Libertarian South African Economist W. H. Hutt and James M. Buchanan

Author:
William Darity Jr., M'Balou Camara, and Nancy MacLean
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
In their stormy response to Nancy MacLean’s book Democracy in Chains, some academics on the libertarian right have conducted a concerted defense of Nobel Laureate James Buchanan’s credentials as an anti-racist, or at least a non-racist. An odd component of their argument is a claim of innocence by association: the peripatetic South African economist and Mont Pelerin Society founding member William Harold Hutt was against apartheid; Buchanan was a friend and supporter of Hutt; therefore, Buchanan could not have been abetting segregationists with his support for public funding of segregationist private schools. At the core of this chain of argument is the inference that Hutt’s opposition to apartheid proves that Hutt himself was committed to racial equality. However, just as there were white supremacists who opposed slavery in the United States, we demonstrate Hutt was a white supremacist who opposed apartheid in South Africa. We document how Hutt embraced notions of black inferiority, even in The Economics of the Colour Bar, his most ferocious attack on apartheid. Whether or not innocence by association is a sound defense of anyone’s ideology or conduct, Hutt, himself, was not innocent of white supremacy.
Topic:
Economics, Discrimination, Racism, and Libertarianism
Political Geography:
Global Focus

104. Inflation in the Time of Corona and War

Author:
Servaas Storm
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Reliance on established macroeconomic thinking is not of much use in trying to understand what to do in response to the constellation of forces driving up inflation in these times of COVID-19 and war. This paper attempts to reduce the heat and turn up the light in the debate on the return of high inflation and looming stagflation—by providing evidence-based answers to the main (policy) questions concerning the return of high inflation: is the increased inflation due to (global) supply and/or demand factors? Is the inflation in the US exceptional or are other OECD and emerging economies experiencing similar inflationary pressures? Is the increase in inflation permanent or transitory? Can the Fed safely bring down inflation? Is fiscal policy the underlying cause of inflation? Are there alternative, less socially costly, ways to bring inflation down? And what will happen to inflation in the longer run, when the US and other economies will face the impacts of global warming?
Topic:
Economics, War, Inflation, and COVID-19
Political Geography:
Global Focus

105. Working Paper Permanent Scars: The Effects of Wages on Productivity

Author:
Claudia Fontanari and Antonella Palumbo
Publication Date:
07-2022
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
This paper explores how stagnating real wages may have contributed to the slowdown of US productivity. Through shift-share analysis, we find that after a sharp change in distribution against wages, some historically high-productivity sectors (like manufacturing) switched towards slower productivity growth. This supports our hypothesis that the anemic growth of productivity may be partly due to the trend toward massive use of cheap labor. Our estimation of Sylos Labini’s productivity equation confirms the existence of two direct effects of wages, one acting through the incentive to mechanization and the other through the incentive to reorganize labor use. We also show that labor ‘weakness’ may exert a further negative effect on labor productivity. On the whole, we find that a persistent regime of low wages may determine very negative long-term consequences on the economy.
Topic:
Economics, Labor Issues, Economic Theory, and Wages
Political Geography:
Global Focus

106. Monetary Policy for the Climate? A Money View Perspective on Green Central Banking

Author:
Jakob Vestergaard
Publication Date:
07-2022
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Central banks can potentially influence the investment decisions of private financial institutions, which in turn will create incentives towards green technology adoption and development of lower emission business models. This paper examines how monetary policies can be deployed to promote a greening of finance. To guide the efforts, the paper mobilizes the Money View literature. This enables a comparative assessment of different monetary policy options. The main finding is that a promising way forward for green monetary policy is to adopt a strategy of expanding collateral eligibility through positive screening and widening haircut spreads to change relative incentives in favor of green over brown assets.
Topic:
Climate Change, Economics, Monetary Policy, Banking, and Green Transition
Political Geography:
Global Focus

107. The Role of Public REITs in Financialization and Industry Restructuring

Author:
Rosemary Batt, Eileen Appelbaum, and Tamar Katz
Publication Date:
07-2022
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Real Estate Investment Trusts (REITs) are important but little studied financial actors that control over $3.5 trillion in gross assets and over 500,000 properties in the U.S. Yet they have been largely ignored because tax rules define them as ‘passive investors.’ The evidence in this report shows that they are actually financial actors that aggressively buy up property assets and manage them to extract wealth at taxpayers’ expense. This study identifies the powerful impact that REITs, as owners of the real estate that houses productive enterprises, have had on operating companies and on the US economy more generally. It draws on case study evidence from markets where REITs have a major presence – nursing homes, hospitals, and hotels. The tax treatment of REITs has facilitated a growing and worrying influence on health care markets in particular at taxpayer expense.
Topic:
Health Care Policy, Finance, Tax Systems, and Banking
Political Geography:
Global Focus

108. Navigating the Crises in European Energy

Author:
Michael Grubb
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The energy crisis engulfing Europe is a crisis of both gas and electricity markets, with huge cost impacts on consumers across all European countries. In Britain, half of typical household energy expenditure arises from electricity. This paper examines how the cost of gas-powered generation feeds through to electricity bills, on the principle of marginal cost pricing, setting the price for most of the time though it accounts for only about 40% of GB generation. Combined with the steep decline in wind and solar costs over the past decade, this has resulted in an unprecedented degree of ‘cost inversion’ in the electricity system. We offer estimates of the increase of revenues across the wholesale market, and outline five principles for reform for addressing the combined challenges of energy costs and accelerating low-carbon transition.
Topic:
Climate Change, Energy Policy, Environment, Green Technology, and Energy Crisis
Political Geography:
Global Focus

109. Inflation in the Time of Corona and War: The Plight of the Developing Economies

Author:
Servaas Storm
Publication Date:
11-2022
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Reliance on established macroeconomic thinking is not of much use in trying to understand what to do in response to the constellation of forces driving up inflation and slowing down growth in these times of COVID-19 and war. This paper attempts to reduce the heat and turn up the light in the debate on the return of high inflation and looming stagflation—by providing evidence-based answers to key (policy) questions concerning the return of high inflation: How close are the parallels between the current conjuncture and the 1970s? What are the differences? Does what is currently happening already amount to stagflation? Can central bankers engineer a ‘soft landing’ of their economies or are we already poised for a deep (global) recession? What are the likely spill- over effects of monetary tightening in the US on the emerging economies? What, if anything, can we learn from the monetary and fiscal policy experiences and policy mistakes of the 1970s? And, finally, are there alternative, less socially costly, ways to bring inflation down?
Topic:
Economics, War, Conflict, Inflation, Pandemic, and COVID-19
Political Geography:
Global Focus

110. Western financial warfare and Russia’s de-dollarization strategy: How sanctions on Russia might reshape the global financial system

Author:
Maria Shagina
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Finnish Institute of International Affairs
Abstract:
Since 2014, Russia’s de-dollarization plan has been guided by security and geopolitical considerations. By dumping the US dollar from its foreign currency reserves, Russia diverted from the traditional approach where liquidity and the credibility of the issuer determine the choice of currency. In 2022, Russia has doubled down on its efforts to de-dollarize the economy. What started as de-dollarization in 2014, transformed into full-blown rouble-ization in 2022. Following the dynamic of an emerging multipolar world order, the global financial system is also gravitating towards fragmentation and currency multipolarity. The overuse of sanctions could strengthen revisionist countries’ desire to increasingly conduct their trade in non-dollar currencies in an attempt to avoid US oversight. If current trends continue, the de-dollarization effort could gain ground and undermine the primacy of the US dollar.
Topic:
Monetary Policy, Sanctions, Finance, and Conflict
Political Geography:
Russia, Europe, and Global Focus

111. Large-Scale Land Deals and Social Conflict: Evidence and Policy Implications

Author:
Alexander De Juan, Daniel Geissel, Jann Lay, and Rebecca Lohmann
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
How do large-scale land acquisitions (LSLAs) increase the risk of conflict, and what kind of policies can mitigate this effect? We address these questions with a systematic and poli-cy-oriented synthesis of prior research. First, we suggest a simple conceptual framework linking LSLAs to social conflict through relative deprivation. Second, we present empirical evidence on the associations between land investments and social conflict, drawing on pre-existing quantitative and qualitative studies as well as on own descriptive analyses and case studies. Taken together, this evidence suggests that conflicts accompany a sub-stantive share of LSLAs (10 to 20 percent). Specifically, contentious dynamics often start with violations of community interests, which spur largely peaceful community protests that trigger coercion and violence at the hands of armed actors associated with national governments and investors. Third, we develop a set of policy recommendations in high-lighting the need for thorough regulatory frameworks, meaningful consultation, and full transparency.
Topic:
Reform, Regulation, Conflict, Transparency, Land, and Community
Political Geography:
Global Focus

112. Sustaining Civic Space in Times of COVID-19: Global Trends

Author:
Jasmin Lorch, Monika Onken, and Janjira Sombatpoonsiri
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
In this paper we challenge the conventional wisdom that COVID-19 and related legal restrictions invariably reinforce a global trend of shrinking civic space. We argue that the legal guarantee of civil liberties is not the sole factor configuring civic space. Instead, civic space is best understood as being configured by three interacting components: 1) the legal guarantee (or restriction) of civil liberties, that is, rights-based space; 2) socio-economic needs that configure needs-induced space; and, 3) civil society activism. During the pandemic needs-induced space for civil society has emerged both from the health crisis and because restrictive government responses have had severe socio-economic side effects on people’s livelihoods. These socio-economic conditions, along with civic discontent over restrictions on civil liberties, have driven civil society engagement in the form of both relief and advocacy/protest activism. Along with the structural condition of needs-induced space, this civil society activism has worked to sustain civic space.
Topic:
Civil Society, Pandemic, COVID-19, and Lockdown Policies
Political Geography:
Global Focus

113. The return of inflation: Can we protect real incomes?

Author:
Manos Matsaganis and Sotiria Theodoropoulou
Publication Date:
11-2022
Content Type:
Working Paper
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
High inflation, virtually unknown in advanced economies since the 1980s, has made a comeback. In this policy paper, we first explain where inflation comes from, and describe how the policy context for dealing with it was shaped after Keynesian demand management proved unable to defeat stagflation. We then critically examine the various policy options. Generally speaking, policy makers may attempt to (i) contain inflation by raising interest rates or, more directly, by controlling prices, (ii) alleviate the impact of inflation on household budgets through price subsidies or income transfers, and (iii) protect workers’ real incomes via wage indexation and social pacts. We conclude by assessing the merits, costs, and distributional implications of each option in turn.
Topic:
Economy, Inflation, and Income
Political Geography:
Europe and Global Focus

114. Policy Options for an Equitable Re-globalization

Author:
Constantine Michalopoulos
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
Developing countries made impressive gains in reducing poverty and global income inequality in the past half century, many riding the wave of globalization. But the dozen years that followed the 2008 financial crisis witnessed a deterioration of global commitments to a more equitable economic order made in the early years of the 21st century. The pandemic undermined development prospects, intensified pre-existing anti-globalization sentiments, and raised questions about the effectiveness of the international institutions within which developing countries achieved great progress. Russia’s invasion of Ukraine created a major geopolitical split and contributed to large increases in energy and food prices with disastrous results for developing countries, many of which were just recovering from the increased poverty created by the pandemic. This paper sets out an agenda for what I call a more equitable re-globalization. This has several parts: addressing climate change, providing economic assistance to help reduce poverty in low income countries, strengthening the social safety net, limiting the power of MNCs, and reestablishing an effective multilateral trading system. The potential calamities of future pandemics and the threats posed by climate change require countries to submerge narrow national political objectives and develop a collaborative global multilateral approach. The last part of the paper discusses the steps the international community must take to revitalize multilateralism to enable it to cope with global challenges effectively and equitably.
Topic:
Globalization, Poverty, Income Inequality, and Multilateralism
Political Geography:
Global Focus

115. They melted down our tanks, we are creating the strongest power in the region – militarist narratives serving the purpose of state capturing

Author:
Luka Steric
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Belgrade Centre for Security Policy
Abstract:
In this publication, BCSP researcher Luka Šterić analyzes how are the militarist narratives used for the legitimising in public the capturing of the state. Defence system capturing is done in various ways. The authorities are using the procurement of armament from different parties to achieve foreign policy goals in order to reduce the external pressure on the authoritarian regime. Insisting on military neutrality and foreign policy balancing, Serbia is trying to keep access to both the Eastern and Western armament markets. Also, through non-transparent contracts, individuals and companies close to the government opulently profit at the expense of the military industry, as well as through exporting weapons oftentimes conducted in contravention of both domestic and international law and norms. However, the focus of this analysis shall be on the militarist narratives constructed by the authorities to legitimise in public the capturing of the state and its defence system. In this publication, we shall present three major militarist narratives used by the authorities to capture the state: the narrative of the personal power of the “commander-in-chief“, the narrative of non-transparent armament in order to defend the country from the external enemy and the narrative of discrediting criticism and political opponents on topics of defence. The narrative of efficient personal power in the defence system has got a dual function. On the one hand, building the cult of a leader as the only guarantor of the state’s success, thus the Army’s success, justifies the non-constitutional concentration of power in the hands of the President. On the other hand, it normalises the military hierarchy as the most efficient model for civilian authorities’ structure, too, whereby the institutional and other mechanisms of government control are discredited. The narrative about the external enemy and the necessity of armament serves to justify the reduced transparency and scandals related to the defence system. The narrative about the inept and non-patriotic former government is used for settling the political accounts with political opponents, as well as for suppression of any criticism against the regime regarding the topics of defence.
Topic:
Security, Defense Policy, Military Strategy, and Military
Political Geography:
Global Focus

116. Impact of the Regional Comprehensive Economic Partnership (RCEP): A Global Computable General Equilibrium (CGE) Simulation

Author:
Ken Itakura
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This study estimates the potential economic effects of the Regional Comprehensive Economic Partnership (RCEP) by using a recursively dynamic computable general equilibrium (CGE) model, which incorporates the global supply chains (GSCs) structure, also referred as the global value chains (GVCs). The tariff reduction schedules for the RCEP agreement are incorporated in addition to other large FTAs, such as the CPTPP. Second, the structure of GSCs is included in the CGE model to take into account the importance of trade in intermediate goods and services. This study implements the RCEP simulation scenarios for tariff reductions, services trade liberalization, logistic improvements, and investment commitments. Results show that the real GDP of RCEP members increases by $675 billion in total, of which ASEAN grows by $160 billion
Topic:
Economics, International Trade and Finance, Tariffs, and Supply Chains
Political Geography:
Global Focus

117. Climate Finance Effectiveness: Six Challenging Trends

Author:
Beata Cichocka and Ian Mitchell
Publication Date:
12-2022
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
This paper identifies and explores a number of challenges in using international public climate finance effectively towards contributing to low-carbon and resilient growth in lower- and middle-income countries. We explore key quantitative and qualitative trends in the climate finance architecture, including predictability of disbursements, affordability and concessionality of funding, provider proliferation and project fragmentation, implementation via modalities supporting recipient ownership, and the degree to which climate-related interventions are evaluated. Our research considers these trends against globally agreed principles of development effectiveness, with the aim of improving understandings of both the common and the climate-specific challenges within development finance. Ultimately, we find that climate-related development finance faces a number of challenges relative to other official development flows, including significantly lower disbursement ratios, a higher share of finance provided through debt instruments—and a rising share of loans to lower-income countries assessed as being at high risk of debt distress, a faster pace in proliferation of providers and shrinking project sizes, and fewer efforts to systematically evaluate impacts of interventions. Each of these areas will need to be tackled by public climate finance providers to ensure that the available funding is used towards climate objectives effectively. These and other issues related to the quality of climate finance should also be considered during the design of the new quantitative climate finance target under the UNFCCC to ensure that the structure of the goal promotes accountability and increases recipients’ ability to trust in the climate finance architecture.
Topic:
Climate Change, Environment, International Cooperation, and Resilience
Political Geography:
Global Focus

118. A Global Development Paradigm for a World in Crisis

Author:
Rachael Calleja, Beata Cichocka, Mikaela Gavas, and Samuel Pleeck
Publication Date:
11-2022
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
This paper explores how and whether responses to COVID-19, particularly from non-DAC actors, have deepened the transition from an “international” to a “global” development paradigm, and it considers implications for the future of development cooperation. To do so, we map international responses to COVID-19—financial and beyond—to understand the changing nature of development challenges and cooperation as well as the growing role of non-DAC actors as part of this shift. Our analysis shows that while a diversity of actors contributed to international COVID-19 responses, the transition towards a global development paradigm has yet to materialize. Instead, responses to COVID-19 demonstrated clear tensions between the imperative for collaboration and the national interest, with the latter trumping the former.
Topic:
Development, International Cooperation, Pandemic, and COVID-19
Political Geography:
Global Focus

119. Building a Portfolio of Pull Financing Mechanisms for Climate and Development

Author:
Ranil Dissanayake and Bernat Camps Adrogue
Publication Date:
11-2022
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Pull financing is a powerful but underused mechanism for incentivising progress on hard-to-tackle social problems for which innovation or the take-up of innovation may be part of the solution. It should become part of the ongoing landscape for climate and development work. This paper sets out the specific design features for a portfolio of pull financing mechanisms to support the accelerated development of socially valuable innovations with both climate and development implications. It considers the institutional structure required to manage such a novel mechanism, a process for finding and developing a potential application, and the objectives pull financing should pursue. It then looks in detail at seven applications of pull financing in the climate and development space, each selected to illustrate the potential and challenges of the approach. We conclude by setting out how to construct a high-ambition portfolio of pull financing projects that is both tractable and attractive to potential funders.
Topic:
Climate Change, Development, Environment, and Finance
Political Geography:
Global Focus

120. Costing Healthcare Services Using Time-Driven Activity-Based Costing: A Simple Step-By-Step Guide for Data Collection and Analysis

Author:
Lumbwe Chola, Ryan McBain, and Y-Ling Chi
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Cost information is essential for priority setting and optimized resource allocation in the healthcare sector, especially in low- and middle-income countries (LMICs) where resource constraints and opportunity costs are significant. In recent years, a costing approach labelled time-driven activity-based costing (TDABC) has gained prominence, as a means for more closely estimating unit costs. TDABC is a process-based micro-costing methodology that adopts a patient perspective to identify resources that are allocated over the course of service provision, mapping each step of a patient journey. Unlike other activity-based costing methods, TDABC includes the recording of the amount of time that resources are utilized for each activity. The manuscript is developed as a step-by-step guide for researchers, students and policy makers intending to undertake TDABC. While there are many academic resources explaining the theory and steps to conduct TDABC, in this paper, we provide easily accessible descriptions of methods for collecting data, tools that can be adapted to diverse research questions and settings, as well as practical data collection “tips” we learned from applying approaches on the ground.
Topic:
Science and Technology, Health Care Policy, Medicine, and Cost-Benefit Analysis
Political Geography:
Global Focus

121. Do Cash Transfers Deter Migration?

Author:
Michael A. Clemens
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Conditional Cash Transfers are increasingly used by development aid agencies to reduce the incentives for migration from low-income countries. The evidence to date suggests that such transfers typically increase the rate of migration when they are conditional on investment, such as investment in education. They do this primarily by facilitating acquisition of human capital and by lowering capital constraints—increasing both migration aspirations and the means to achieve them. But with certain design features, particular transfer programs have reduced the incentive to migrate. Broadly speaking, migration can be deterred by transfer programs that are conditional on presence in the origin country—provided that the condition is strict, targeted, and lengthy.
Topic:
Economics, Migration, Finance, and Investment
Political Geography:
Global Focus

122. The Next Game Changers: A Priority Innovation Agenda for Global Health

Author:
Cordelia Kenney and Rachel Silverman
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Over the last century, scientific and technological innovation has led to unprecedented improvements in health outcomes—yet research and development (R&D) investments and progress to address health threats has been uneven. Commercial R&D has focused where investors can expect substantial financial returns: rich countries, the diseases that affect them, and high-tech solutions designed for the richest and most sophisticated systems. Despite supplemental funding from philanthropic and government grants, R&D to address many leading causes of death and disability—especially those that primarily affect low- and middle-income countries (LMICs) or insure against future risk—has been consistently underfunded relative to potential health gain. This implies that many untapped opportunities remain to dramatically improve global health and welfare via biomedical innovation. In this paper, we report the results of a horizon-scanning exercise to source opportunities for global health R&D investment—that is, high-value potential biomedical innovations which are currently underfunded but which could be transformative for health, quality of life, and health security in LMICs and around the world. Drawing from a literature review and expert interviews with researchers, economists, funders, advocates, and implementers, we lay out an expansive and high-promise (though non-comprehensive) biomedical innovation agenda for global health spanning the unfinished MDG agenda; non-communicable diseases; and global health security. We conclude with a discussion of implications for research, funding, and practice.
Topic:
Development, Health, Science and Technology, Innovation, and Emerging Technology
Political Geography:
Global Focus

123. Is There a Better Way to Use Global Reserves?

Author:
Mark Plant
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Global reserves can serve as a global public good, facilitating the short-term global recovery from the economic impacts of the pandemic and Russian invasion of Ukraine, as well as the longer-term global transition to a sustainable and equitable economic future. Strategic allocation of Special Drawing Rights (SDRs) could facilitate sharing of global reserves with low- and middle-income countries to the mutual benefit of advanced and developing countries. This will require the development of new SDR sharing mechanisms, in which multilateral development banks could be instrumental. Other SDR reforms should also be pursued.
Topic:
Development, Multilateralism, Sustainability, and Banking
Political Geography:
Global Focus

124. What’s the Best Way to Bolster the IMF’s Capacity to Lend to Low-Income Countries?

Author:
David Andrews
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The IMF’s concessional lending to low-income countries through its Poverty Reduction and Growth Trust (PRGT) has risen dramatically since the start of the pandemic and demand for the PRGT resources is expected to remain above pre-pandemic levels for quite some time. But the surge in lending has strained the PRGT's finances—loan resources have dwindled, subsidy costs have risen sharply, and reserves need bolstering. Projections show the risks to PRGT financing are accentuated given the Russian invasion of Ukraine and rising global interest rates. A multi-pronged decade-long effort is needed to ensure sound PRGT financing: (1) reinforce current fundraising efforts for loan and subsidy resources; (2) promote the use of the PRGT's deposit investment account; (3) terminate the reimbursement of PRGT administrative resources to the IMF's General Resources Account and (4) begin a discussion on IMF gold sales to take place in the out years. Each prong of the effort should start immediately, given the time lags involved in reaching consensus and implementation.
Topic:
Development, International Cooperation, Finance, and IMF
Political Geography:
Global Focus

125. Why and How Development Agencies Facilitate Labor Migration

Author:
Helen Dempster and Beza Tesfaye
Publication Date:
08-2022
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Development agencies in high-income countries spend a large amount of both official development assistance (ODA) and other forms of financing on migration programming. While most of this spending is aimed at deterring migration, increasingly more is being focused on facilitating migration: to the high-income country itself; within and between low- and middle-income countries; and supporting people on the move and the diaspora. This paper, written by the Center for Global Development and Mercy Corps, aims to explore why and how development agencies in high-income countries facilitate labor, or economic, migration, and how they have been able to justify and expand their mandate in this area. Based on interviews with nine development agencies, we find that development agencies use a range of arguments to justify their work in this area, including supporting economic development and poverty reduction in partner countries while also meeting labor market demands at home or other countries. Yet expanding a mandate in this area requires substantial cross-government coordination and political buy-in, both of which are difficult to achieve. It also requires the ability to be able to use ODA to facilitate labor migration, which is currently up for debate. As development agencies seek to expand their work on labor migration, it will be necessary to define shared goals and start with pilot projects that focus on low-hanging fruit, while maintaining a focus on development and poverty reduction.
Topic:
Development, Migration, Diaspora, and Labor Issues
Political Geography:
Global Focus

126. Let Them Eat Carbon

Author:
Vijaya Ramachandran and Arthur Baker
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The push for the World Bank and others to link their investments to addressing climate concerns stems from a fear that, unless developing countries take action to decarbonize now, their economic growth will lead to vast emissions that will derail all global efforts to limit climate change. This approach, which treats low- and middle-income countries as a monolith, is unhelpful to the conversation about climate change. To understand better where emissions are concentrated and how to address them, we projected carbon dioxide emissions to 2035—the point at which observers believe they will level off in most countries due to technological advances and accumulating wealth—under some simple assumptions. Emissions from the world’s poorest 64 countries, those which get IDA loans, will remain very low for decades to come, even if their economies grow rapidly and without action to reduce emissions. Pressuring low- and lower-middle-income countries to replace plans for gas power with solar or wind energy will have limited climate benefits compared to replacing coal generation in richer countries. It is just more efficient—and just—to focus on climate mitigation where emissions are high, and on poverty reduction where poverty is high. And given that there is no sign of an increase in aid spending, especially in the poorest countries, rich countries must not cannibalize development aid or reinvent the development finance architecture
Topic:
Climate Change, Environment, World Bank, Finance, Banking, and Green Transition
Political Geography:
Global Focus

127. Assessment of Expenditure Choices by Low- and Low- Middle-Income Countries During the Pandemic and Their Impact on SDGs

Author:
Sanjeev Gupta and Lucas Sala
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Until the COVID pandemic, public spending in low- and low-middle-income countries had been growing modestly. As a result, governments expanded service provision, including in social sectors, and enlarged welfare programs. This was made possible in part by domestic revenue growth. However, the pandemic has significantly lowered revenue receipts of these countries, while creating pressures to spend more on shielding the population and providing support to the economy. Unfortunately, health outlays did not increase as a share of total output during 2000-2018. The preliminary evidence compiled in this paper shows that health spending in relation to GDP increased virtually in all low and low-middle income countries in 2020, though not by as much as in advanced economies. However, higher health spending in low and low-middle income countries is unlikely to be sustained because of the pandemic’s adverse impact on revenues and other spending pressures. Furthermore, COVID has critically scarred the future productivity of these countries. Before the pandemic, the achievement of the Sustainable Development Goals (SDGs) by 2030 was doubtful in part because of the slow pace in generating additional revenues from domestic sources. As the financing needs have increased, the achievement of these goals will be delayed beyond 2030, unless additional financing sources can be found. This means that policy actions will need to be taken by these countries to create additional fiscal space going forward. There is potential to raise more revenues from domestic sources by implementing politically difficult policy measures and generating savings by improving the quality of public spending, including on health.
Topic:
Development, Sustainable Development Goals, Sustainability, Pandemic, and COVID-19
Political Geography:
Global Focus

128. Development Effectiveness in the “New Normal”: What Do the Changing Roles and Purposes of ODA Mean for the Effectiveness Agenda?

Author:
Rachael Calleja and Beata Cichocka
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
This paper explores how the roles and purposes of official development assistance (ODA) are changing and what these shifts mean for the future of the development effectiveness agenda. Using data obtained through a survey of officials working in development agencies and partner countries, this paper maps perspectives on the changing role and purposes of ODA as well as perceptions of the continued relevance of the effectiveness agenda and the Busan principles in this changing development landscape. Our results show that providers are increasingly prioritizing global challenges and private sector development as main purposes of ODA, and that the catalytic role of ODA is becoming increasingly important. In spite of substantive changes to the development landscape, survey respondents overwhelmingly thought that the current effectiveness agenda remains relevant – however, they also expressed the need to revise or renew the effectiveness principles to keep pace with changing demands. Working from our survey responses, we propose a basic framework for considering options for the future of the effectiveness agenda and conclude by proposing four possible paths forward.
Topic:
Security, Development, International Cooperation, and Development Assistance
Political Geography:
Global Focus

129. Domestic Revenue Mobilization and Debt Relief: The Lack of Any Link

Author:
Mark Plant and Nancy Lee
Publication Date:
02-2022
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
As the global financial community considers how to extend debt relief accompanied by IMF adjustment programs to vulnerable low-income countries, the issue of policy conditions for fiscal adjustment will inevitably arise. This paper considers the effectiveness of conditions related to domestic revenue mobilization (DRM) in the last systematic round of debt relief in the early 2000s Highly Indebted Poor Countries Initiative and the Multilateral Debt Relief Initiative (HIPC/MDRI). We find that debt relief had no impact on low-income countries’ DRM. Countries benefitting from debt relief had roughly the same DRM as those that did not. And DRM grew only slightly over time for both sets of countries. In the months to come there will be pressure to use debt restructuring and leverage to accelerate fiscal reforms and boost domestic revenue mobilization so that LICs can be seen to be contributing “their fair share” to economic recovery and transformation. Experience with the HIPC/MDRI tells us that we must be realistic in our expectations: external forces have limited impact unless combined with strong internal will and implementation capacity.
Topic:
Debt, Economics, IMF, and Credit
Political Geography:
Global Focus

130. Country Platforms and Delivery of Global Public Goods

Author:
Daouda Sembene, Nancy Lee, and Mark Plant
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
This paper discusses three potential requirements for country platforms to facilitate effective delivery of GPGs. We propose that existing country platforms be repurposed to coordinate the contribution of domestic and external stakeholders to GPG delivery efforts at the country level. For this proposed approach to be successful, an explicit link must be introduced between country-level efforts and global initiatives to provide GPGs. There is also merit in setting up country and global coordination mechanisms, with relevant agencies assigned to operate them both at the national and international levels. Using relevant country platforms, we suggest that international financial institutions (IFIs) such as the IMF and multilateral development banks (MDBs) be mandated with helping developing countries meet the financing needs associated with the provision of GPGs. In addition, technical support from the IFIs should be put on the table to improve the effectiveness of developing countries’ contribution to GPG delivery. In this regard, MDBs can and must play a central role in developing capacities in these countries as part of their own contribution to GPG delivery. At the same time, securing the contribution of civil society and the private sector to GPG delivery efforts is essential given the magnitude of potential financing needs.
Topic:
International Cooperation, Finance, Multilateralism, IMF, and Public Goods
Political Geography:
Global Focus

131. IDB COVID-19 Response Projects and Gender Integration

Author:
Shelby Bourgault, Kelsey Ross, and Megan O'Donnell
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
This paper aims to determine the extent to which gender was considered in the Inter-American Development Bank’s (IDB) operations aimed at responding to the COVID pandemic and associated economic crisis. Using keywords to identify COVID response projects, we found 264 projects approved between March 1, 2020, and July 31, 2021 for our analysis. We found that 135 projects (51 percent) had publicly available project documents for analysis, and of these, 32 projects (24 percent) included gender-focused indicators in their results frameworks. Most gender indicators focus on women as participants of social protection programs or as owners of small- and medium-sized enterprises. Our recommendations to the IDB include increasing transparency by publishing more project documents and ensuring gender indicators are included in projects’ results frameworks across sectors. This project builds on previous analysis of gender integration in COVID response projects at the World Bank, Asian Development Bank, and African Development Bank.
Topic:
Pandemic, COVID-19, Social Groups, and Gender
Political Geography:
Global Focus

132. Prioritizing Public Spending on Health in Lower-Income Countries: The Role of the Global Financing Facility for Women, Children and Adolescents

Author:
Janeen Madan Keller, Rachel Silverman, Julia Kaufman, and Amanda Glassman
Publication Date:
12-2022
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The Global Financing Facility (GFF), launched in 2015, is a partnership backed by a multi-donor World Bank trust fund that aims to “prioritize and scale-up evidence-driven investments to improve reproductive, maternal, newborn, child, and adolescent health and nutrition (RMNCAH-N) interventions” in low- and lower middle-income countries. A major component of the GFF’s operational model is centered around the investment case, described by the GFF as “a description of the changes that a country wants to see with regard to reproductive, maternal, newborn, child, and adolescent health (RMNCAH) and a prioritized set of investments required to achieve these results.” Looking retrospectively at investment cases and associated ongoing World Bank operations, this paper aims to shed light on specific aspects of the GFF’s operating model, approach, theory of change, and results to date related to the “development of a costed and prioritized investment case,” and whether the investment case helps to prioritize public spending on health in the real world. The portfolio-wide findings suggest that the GFF delivers a clear value-add within the global health architecture by directing more funding to flow directly through governments via increased World Bank lending for RMNCAH-N (especially in the context of COVID-19-related service disruptions and fiscal contractions). The role of the investment case in aligning and prioritizing resources behind a consensus set of highest-value RMNCAH-N interventions within a specific funding envelope is less well documented in the public domain; GFF efforts to directly influence government RMNCAH-N spending decisions and their efficiency seem to occur primarily through follow-on resource mapping and expenditure tracking. The paper concludes with three recommendations for the GFF and its donors: (1) pursue a deliberate strategy for prioritization of RMNCAH-N services and products within the realistic budget constraint to advance evidence-based decisions on certain trade-offs; (2) increase transparency and public visibility into GFF-supported activities and funding, especially related to RMNCAH-N product procurement and overall resource tracking; and (3) explore incentives for increased donor co-financing within the framework of World Bank projects as a strategy to pool and channel more resources through government coffers.
Topic:
Health, Children, Women, Public Spending, and Gender
Political Geography:
Global Focus

133. AI Startups and the Fight Against Mis/Disinformation Online: An Update

Author:
Anya Schiffrin, Hiba Beg, Pablo Eyzaguirre, Zachey Kliger, Tianyu Mao, Aditi Rukhaiyar, Kristen Saldarini, and Ojani Walthrust
Publication Date:
07-2022
Content Type:
Working Paper
Institution:
German Marshall Fund of the United States (GMFUS)
Abstract:
The events following Russia’s invasion of Ukraine have shown again the power of online mis/disinformation. As it continues to grow and spread, there are new and continuing attempts to address this problem. These include supply-side and demand-side fixes (including media-literacy programs, fact-checking and, in Europe, new regulations) but few of these have scaled. This paper looks at one kind of supply-side attempt to tackle the prevalence of online mis/disinformation: the market for tech-based solutions that use some form of artificial intelligence (AI) machine/deep learning for content moderation, media integrity, and verification. This paper presents the findings of interviews of 20 niche firms that use AI to identify online mis/disinformation, many of which were previously surveyed for a 2019 paper on the role of AI startups in the fight against disinformation. These companies did not release their revenue figures but it seems that the market for their services is smaller than many entrepreneurs had originally hoped, and that Google and Facebook are not relying on such firms for help in identifying online mis/disinformation. The cost of the services provided by these startups and the desire to keep things in-house and protect their activities from outside scrutiny are part of why the tech giants do not rely on small startups for help with screening online mis/disinformation. This may be why funding for these startups does not seem to have grown significantly and so more than half of them are now focusing on the business-to-business market, selling mis/disinformation mitigation services to, for example, insurance companies, large public entities, and governments, among others. There also appears to be a limited market for business-to-consumer solutions for detecting mis/disinformation. However, continuing advances in AI as well as forthcoming regulation by the European Union and the United Kingdom will continue to spur innovation, which may stimulate demand. University initiatives, academics, journalism organizations, and cybersecurity experts are all also trying to come up with ways to identify and control the spread of mis/disinformation. Ultimately, despite its advances, technology alone will not solve the online mis/disinformation problem. Giant social media platforms have few financial incentives to crack down on this—quite the opposite, in fact. To push social media platforms to act against online mis/disinformation and illegal speech, regulation must deftly address the issue while preserving freedom of expression. There is a further problem in the form of the political polarization that has intensified in the United States and other parts of the world. Fixing this is likely to be well beyond the role of business and technologists.
Topic:
Science and Technology, Cybersecurity, Democracy, Artificial Intelligence, Disinformation, Misinformation, and Startup
Political Geography:
Global Focus

134. AI Audit-Washing and Accountability

Author:
Ellen P. Goodman
Publication Date:
11-2022
Content Type:
Working Paper
Institution:
German Marshall Fund of the United States (GMFUS)
Abstract:
We are still some distance from a worldwide robot takeover, but artificial intelligence (AI)—the training of computer systems with large data sets to make decisions and solve problems—is revolutionizing the way governments and societies function. AI has enormous potential: accelerating innovation, unlocking new value from data, and increasing productivity by freeing us from mundane tasks. AI can draw new inferences from health data to foster breakthroughs in cancer screening or improve climate modeling and early-warning systems for extreme weather or emergency situations. As we seek solutions to today’s vexing problems—climate disruption, social inequality, health crises—AI will be central. Its centrality requires that stakeholders exercise greater governance over AI and hold AI systems accountable for their potential harms, including discriminatory impact, opacity, error, insecurity, privacy violations, and disempowerment. In this context, calls for audits to assess the impact of algorithmic decision-making systems and expose and mitigate related harms are proliferating1 , accompanied by the rise of an algorithmic auditing industry and legal codification. These are welcome developments. Audits can provide a flexible co-regulatory solution, allowing necessary innovation in AI while increasing transparency and accountability. AI is a crucial element of the growing tech competition between authoritarian and democratic states—and ensuring that AI is accountable and trusted is a key part of ensuring democratic advantage. Clear standards for trustworthy AI will help the United States remain a center of innovation and shape technology to democratic values. The “algorithmic audit” nevertheless remains ill-defined and inexact, whether concerning social media platforms or AI systems generally. The risk is significant that inadequate audits will obscure problems with algorithmic systems and create a permission structure around poorly designed or implemented AI. A poorly designed or executed audit is at best meaningless and at worst even excuses harms that the audits claim to mitigate. Inadequate audits or those without clear standards provide false assurance of compliance with norms and laws, “audit-washing” problematic or illegal practices. Like green-washing and ethics-washing before, the audited entity can claim credit without doing the work. To address these risks, this paper identifies the core questions that need answering to make algorithmic audits a reliable AI accountability mechanism. The “who” of audits includes the person or organization conducting the audit, with clearly defined qualifications, conditions for data access, and guardrails for internal audits. The “what” includes the type and scope of audit, including its position within a larger sociotechnical system. The “why” covers audit objectives, whether narrow legal standards or broader ethical goals, essential for audit comparison. Finally, the “how” includes a clear articulation of audit standards, an important baseline for the development of audit certification mechanisms and to guard against audit-washing. Algorithmic audits have the potential to transform the way technology works in the 21st century, much as financial audits transformed the way businesses operated in the 20th century. They will take different forms, either within a sector or across sectors, especially for systems which pose the highest risk. But as algorithmic audits are encoded into law or adopted voluntarily as part of corporate social responsibility, the audit industry must arrive at shared understandings and expectations of audit goals and procedures. This paper provides such an outline so that truly meaningful algorithmic audits can take their deserved place in AI governance frameworks.
Topic:
Science and Technology, Cybersecurity, Democracy, Regulation, Accountability, and Artificial Intelligence
Political Geography:
Global Focus

135. Leaning-against-the-wind intervention and the “carry-trade” view of the cost of reserves

Author:
Eduardo Levy-Yeyati and Juan Francisco Gómez
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
For a sample of emerging economies, we estimate the quasi-fiscal costs of sterilized foreign exchange interventions as the P&L of an inverse carry trade. We show that these costs can be substantial when intervention has a neo-mercantilist motive (preserving an undervalued currency) or a stabilization motive (appreciating the exchange rate as a nominal anchor) but are rather small when interventions follow a countercyclical, leaning-against-the-wind (LAW) pattern to contain exchange rate volatility. We document that under LAW, central banks outperform a constant size carry trade, as they additionally benefit from buying against cyclical deviations, and that the cost of reserves under the carry-trade view is generally lower than the one obtained from the credit-risk view (which equals the marginal cost to the country´s sovereign spread).
Topic:
Foreign Exchange, Economy, International Reserves, Trade, and Exchange Rates
Political Geography:
Global Focus

136. Public policy actors view success differently, and it matters

Author:
Matt Andrews
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Literature tells us there are many dimensions of public policy success, and different actors in the policy process will likely focus on different dimensions. This paper asks how different actors in the policy process view policy success, and how much their views differ. It finds evidence that actors devising policy plans— designers—view success narrowly, as achieving near-term, programmed goals; whereas other actors involved in advocating for, authorizing, and implementing policies have a broader success perspective, paying more attention to non-program criteria like long-term impact, distributional and endurance success, and intertemporal gains that manifest in the way policies grow capability, political support, stakeholder satisfaction, and process legitimacy. Such finding raises a question about how policy objectives are determined when actors disagree, given that literature also tells us that policies are more likely to succeed when actors agree on what success is and how to achieve it.
Topic:
Government, Governance, and Public Policy
Political Geography:
Global Focus

137. A Simple Theory of Economic Development at the Extensive Industry Margin

Author:
Dario Diodato, Ricardo Hausmann, and Ulrich Schetter
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
We revisit the well-known fact that richer countries tend to produce a larger variety of goods and analyze economic development through (export) diversifcation. We show that countries are more likely to enter ‘nearby’ industries, i.e., industries that require fewer new occupations. To rationalize this fnding, we develop a small open economy (SOE) model of economic development at the extensive industry margin. In our model, industries difer in their input requirements of non-tradeable occupations or tasks. The SOE grows if proft maximizing frms decide to enter new, more advanced industries, which requires training workers in all occupations that are new to the economy. As a consequence, the SOE is more likely to enter nearby industries in line with our motivating fact. We provide indirect evidence in support of our main mechanism and then discuss implications: We show that there may be multiple equilibria along the development path, with some equilibria leading on a pathway to prosperity while others resulting in an income trap, and discuss implications for industrial policy. We fnally show that the rise of China has a non-monotonic efect on the growth prospects of other developing countries, and provide suggestive evidence for this theoretical prediction.
Topic:
Industrial Policy, Poverty, Reform, Economy, Diversification, Exports, and Convergence
Political Geography:
Global Focus

138. What is public policy success, especially in development?

Author:
Matt Andrews
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Public policy work is hard, especially when one works in developing countries. It is even difficult to define what success looks like, and thus how to manage towards success. Literature helps manage such difficulty, providing studies that define the concept and show how it can be achieved. A core message from such is that success is multi-dimensional, and practitioner need to focus on multiple criteria when doing their policy work. But what dimensions and criteria matter? And do development practitioners really adopt this multi-dimensional view? Tackling such questions, the current paper reviews 45 applied studies from the public policy, project management and development evaluation literatures to see what they identify as key success criteria and if the practical studies (about development evaluation) are in sync with the more academic messages. Reading across all three literatures, I identify 30 potential success criteria in 6 categories or dimensions (program, impact and endurance, capability, political, stakeholder, and process). I find that the development evaluation literature focuses on a narrow set of 7 criteria, mostly in one dimension (program success) as compared to broader perspectives in the other literatures. This suggests that development practitioners have a narrow view on success, which is out of step with academic views on the topic. A conclusion proposes a broader approach for these practitioners.
Topic:
Development, Public Policy, and Project Management
Political Geography:
Global Focus

139. This is How to Think About and Achieve Public Policy Success

Author:
Matt Andrews
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Officials working on public policies must answer questions like ‘What does policy success mean?’ and ‘How should I pursue policy work in order to achieve success?’ These are difficult questions, but there are ways to respond. One way draws on what I call the program logic of policy success, which suggests that: (i) Success requires efficiently meeting goals that stakeholders view as relevant, (ii) by doing work focused on impacting high-level objectives through programs that deliver promised time-sensitive outputs and outcomes according to a clear, logical plan. I believe this logic dominates the global public policy community, as ‘the way’ officials and organizations should think about and do policy work. This paper tests such belief, showing that officials do think in this way and that this thinking is influenced by common budgeting and evaluation mechanisms. I conclude by asking if this way of thinking poses any concerns, especially if it biases policy organizations to produce some kinds of policy success and not others.
Topic:
Government, Public Policy, and Policymaking
Political Geography:
Global Focus

140. The international financial system after COVID-19

Author:
Maurice Obstfeld
Publication Date:
02-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
In March 2020, international markets seized up with a violence unequaled since the global financial crisis nearly a dozen years before. As economies around the world locked down in the face of the potentially deadly but completely novel SARS-CoV-2 virus, stock markets fell, firms and governments scrambled for cash, liquidity strains emerged even in the market for US Treasurys, and capital flows to emerging-market and developing economies (EMDEs) reversed violently. This paper reviews the evolution of global financial markets since the global financial crisis, changes in academic thinking about these markets’ domestic impacts, the strains seen during the COVID-19 crisis, and perils that may lie ahead. A key theme is that stability will be enhanced if the global community embraces reforms that elevate market resilience, rather than depending on skillful policymakers wielding aggressive but ad hoc policy interventions to ride to the rescue again.
Topic:
Economics, Markets, COVID-19, and Financial Systems
Political Geography:
Global Focus

141. Socioeconomic diversity of economics PhDs

Author:
Robert Schultz and Anna Stansbury
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
It is well documented that women and racial and ethnic minorities are underrepresented in the economics profession, relative to both the general population and many other academic disciplines. Less is known about the socioeconomic diversity of the profession. In this paper, we use data from the National Science Foundation’s Survey of Earned Doctorates to examine the socioeconomic background of US economics PhD recipients as compared with US PhD recipients in other disciplines, proxying for socioeconomic background using PhD recipients’ parents’ educational attainment. We find that economics PhD recipients are substantially more likely to have highly educated parents, and less likely to have parents without a college degree, than PhD recipients in other disciplines. This is true both for US-born and non-US-born PhD recipients, but the gap between economics and other disciplines is starker for those born in the United States. The gap in socioeconomic diversity between economics and other PhD disciplines has increased over the last two decades.
Topic:
Economics, Women, Diversity, and Academia
Political Geography:
Global Focus

142. WTO 2025: Restoring binding dispute settlement

Author:
Alan Wm. Wolff
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Binding dispute settlement—the ability to obtain a final judgment of whether a member of the World Trade Organization (WTO) has acted inconsistently with its obligations—was the defining attribute of the WTO as created in 1995. Global commerce thrived on having the certainty provided by its taking place within this system. For well over a decade, the United States had complained that the dispute settlement system was undermining the trade remedies—antidumping, countervailing duties against subsidies, and safeguard actions against injurious imports—that were allowed under the WTO’s rules. When a populist US administration assumed office in 2017, it blocked appointments to the WTO’s Appellate Body. Today, the WTO dispute settlement system has become balkanized. The European Union and a number of other countries have banded together to put into place an alternative mechanism. Outside this system are the other two-thirds of the WTO members, including the United States. For most WTO members, no definitive result can be reached as to whether WTO obligations have been violated, as there is no assurance that WTO dispute settlement will be binding for them. This paper addresses how to reconstruct a system that the United States could join that would be broadly acceptable to others. It sets out a wide range of elements for negotiators to consider to rebuild the WTO dispute settlement system and make WTO agreements enforceable again.
Topic:
Economics, Trade, WTO, and Disputes
Political Geography:
Global Focus

143. WTO 2025: Enhancing global trade intelligence

Author:
Alan Wm. Wolff
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
International trade flows based on information. Is the foreign market open? What are the conditions for entry? Are there customs duties to be paid and other regulations that need to be satisfied? Businesses thrive on getting as much certainty as they can find, and this requires reliable information. Is the competition subsidized? Are the competitors favored state-owned companies? During the pandemic, governments needed to know if food and medical supplies were going to be available from foreign sources and, most importantly, how available vaccines would be as most of the world’s countries could not produce any. Effective public policy cannot be made in the dark. The World Trade Organization, and the General Agreement on Tariffs and Trade before it, were founded with the idea of providing transparency. But more is needed to understand why trade is taking place, and even more important, when it is not, why not?
Topic:
Economics, Markets, Trade, and WTO
Political Geography:
Global Focus

144. WTO 2025: Getting back to the negotiating table

Author:
Alan Wm. Wolff
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The negotiation of multilateral agreements has stalled at the World Trade Organization (WTO). The action is among groups of like-minded WTO Members, either regionally or in open plurilateral agreements (OPAs) in Geneva at the WTO. There is currently no consensus among WTO Members to include plurilateral agreements officially in the set of WTO agreements. Many additional challenges require multilateral—that is, global—agreements: the pandemic, food security, and climate change, among them. A breakthrough is needed to get WTO negotiations back on track.
Topic:
Climate Change, Treaties and Agreements, Food Security, Multilateralism, COVID-19, and WTO
Political Geography:
Global Focus

145. WTO 2025: Constructing an executive branch

Author:
Alan Wm. Wolff
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The World Trade Organization (WTO) as an institution accords much less of a role to its chief officer and her staff, namely the WTO Director-General and the Secretariat, than do any of its sister international organizations—the World Bank, the International Monetary Fund, the Organization for Economic Cooperation and Development—to their chief officers and staff. The WTO Secretariat is much smaller than its peer international organizations and underfunded. In considering WTO reform, this deficiency needs to be rectified if the WTO’s performance is to live up to its Members’ needs.
Topic:
Economics, World Bank, IMF, WTO, and OECD
Political Geography:
Global Focus

146. South Korea's Public Diplomacy during the COVID-19 Pandemic: Seeking Status as an Authority in Global Governance

Author:
Kadir Ayhan
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The COVID-19 pandemic caught almost all countries unprepared. Some countries, including South Korea (hereafter Korea), managed to deal with the pandemic relatively more successfully than others and had a proactive global posture from early on, including providing aid, and public diplomacy campaigns. In this paper, I explore Korea’s COVID-19-related public diplomacy activities and its aims. I analyze Korea’s COVID-19 humanitarian aid trends, its policy documents, and the tweets related to the pandemic posted by the country’s official public diplomacy account. I find that the pandemic catalyzed what Korea had already been aiming to do, which is improve its global status to be among top authorities across various issue-areas. Due to the nature of the pandemic, Korea’s public diplomacy has been themed around international cooperation and solidarity. I suggest that Korea should hold onto its international cooperation emphasis on public diplomacy, to form the basis for its status-seeking as an authority in global governance in the post-pandemic era.
Topic:
International Relations, Diplomacy, Domestic Policy, COVID-19, and Health Crisis
Political Geography:
Asia, South Korea, and Global Focus

147. On data and trends in horizontal inequality

Author:
Carla Canelas
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Economic, social, and political inequalities are at the forefront of today’s public debate. While governments around the world have made conscious efforts to promote social inclusion, and major progress in fulfilling basic needs has been witnessed during the last decades, certain groups of people are still left behind in many domains of life. This paper aims to summarize recent horizontal inequality trends across and within countries and to better understand these changes over time. Overall, horizontal inequalities have been falling in the developing world, in spite of significant country variation. Importantly, significant differences exist for different inequality dimensions, i.e. economic, social, political. In terms of data, few cross-country horizontal inequality datasets are available for research. In general, there is a trade-off between the coverage of countries and time periods as well as comparability of the results between countries and years. Contrary to vertical inequalities, there has not been a systematic effort to construct and maintain an up-to-date dataset on horizontal inequalities.
Topic:
Inequality, Ethnicity, and Data
Political Geography:
Global Focus

148. Poverty, inequality, and growth: trends, policies, and controversies

Author:
Ines A. Ferreira, Vincenzo Salvucci, and Finn Tarp
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Reducing poverty and inequality and promoting inclusive growth are fundamental to achieving the United Nations Sustainable Development Goals. Much has changed in the global economy in recent decades and perspectives on progress made vary widely. This is even more so in light of the ongoing COVID-19 pandemic. However, getting to grips in a meaningful manner with existing trends is critical to evidence-based policy-making. This contribution aims to provide an original review and evaluation of the main stylized facts concerning poverty, inequality, and growth. It will uncover existing trends, put controversies into perspective, and help to provide a platform for informed policy debate.
Topic:
Poverty, Inequality, Sustainable Development Goals, and Economic Growth
Political Geography:
Global Focus

149. Wartime governance and state-building trajectories in post-conflict societies

Author:
Patricia Justino
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
To date, there is limited understanding about the consequences of wartime dynamics for post-war state-building processes. This paper explores one such dynamics—the forms of governance exercised by armed groups during wartime—and proposes a theoretical framework outlining how forms of wartime governance affect trajectories of state-building in the aftermath of civil wars. Six possible trajectories are mapped out: stable democracy, weak democracy, stable autocracy, fragmented rule, contested autocracy, and durable disorder. Each trajectory is shaped by the interaction between two dimensions of wartime governance: how armed groups build institutional capacity in wartime and the characteristics of wartime civilian rule by armed groups. The core argument is that civil wars generate within themselves bureaucratic and institutional capacity—through how armed groups govern territories and civilians within them—that under certain circumstances may be harnessed in the post-war period to build states capable of governing. The characteristics and durability of those forms of wartime governance shape the type of statebuilding and political regime trajectories that emerge in the post-war period.
Topic:
Political Violence, Development, War, Conflict, Peace, and State Building
Political Geography:
Global Focus

150. Aid’s impact on democracy

Author:
Miguel Niño-Zarazúa, Ana Horigoshi, and Rachel M. Gisselquist
Publication Date:
02-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper investigates the impact of foreign aid on democratic outcomes using a panel of countries for the period between 1995 and 2018. In so doing, it speaks to a major critique of foreign aid, which is that it negatively impacts democratic governance. The analysis distinguishes between developmental aid and democracy aid, and examines democracy aid to specific sectors, in order to explore variation across different aid types. It draws on the Organisation for Economic Co-operation and Development’s (OECD) Creditor Reporting System (CRS) data on foreign aid and indices of democracy from the Varieties of Democracy project, employing a combination of a maximum likelihood estimation and structural equation modelling (ML-SEM) model and fixed effects models. Overall, using a more extensive set of data and methods than previous analyses, we offer comprehensive evidence pointing to aid having a positive if modest impact on democratic outcomes. Our analysis suggests this effect is more significant for democracy aid than developmental aid, but there is no evidence of negative impact for either. These results are robust to multiple specifications.
Topic:
Development, Foreign Aid, and Democracy
Political Geography:
Global Focus

151. Global oil theft: impact and policy responses

Author:
Etienne Romsom
Publication Date:
02-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper, the first of two on global oil theft and fraud, discusses the prevalence, methods, and consequences of global oil theft, valued at US$133 billion per year and equivalent to 5–7 per cent of the global market for crude oil and petroleum fuels. However, the impact of oil theft is significantly larger than the value of theft itself. Government tax yields have been assessed for 30 developing countries associated with oil theft and found to be significantly lower than in the International Monetary Fund’s benchmark study. Oil theft, smuggling, and illicit trade in petroleum products are often seen as lesser forms of crime than human trafficking, the drugs trade, smuggling of weapons, kidnapping, and terrorism. However, oil theft as an act of opportunity tends to evolve into organized crime and, if left unchecked, oil theft may interlink with other organized crime activities and groups. Actions against oil theft should target the transnational crime syndicates that continue to find ways to replicate their thefts by adapting their theft strategies and business models. However, there is a lack of basic data, including how much oil is stolen, how the stolen oil is transported, and how illicit oil transactions are conducted. The mixing of legal commercial operations with illegal oil theft activities and fraud obscures many oil theft crimes.
Topic:
Corruption, Oil, International Crime, and Tax Evasion
Political Geography:
Global Focus

152. The legacies of armed conflict: insights from stayees and returning forced migrants

Author:
Isabel Ruiz and Carlos Vargas-Silva
Publication Date:
02-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
How does conflict, displacement, and return shape trust, reconciliation, and community engagement? And what is the relative impact of exposure to violence on these indicators? In this paper we explore these questions by focusing on the legacies of armed conflict and the differences between those who stayed in their communities of origin during the conflict (stayees) and those who were displaced internally and internationally and who returned home over time (returnees). The results, which rely on analysis of data we collected in Burundi, suggest that internal returnees have significantly lower levels of trust, reconciliation, and community engagement than stayees, whereas the differences between international returnees and stayees are mostly statistically insignificant. Greater exposure to violence has a more positive effect on trust for returnees compared to stayees. On the other hand greater exposure to violence has a more negative effect on reconciliation and community engagement for returnees compared to stayees.
Topic:
Displacement, Conflict, Reconciliation, Trust, and Migrants
Political Geography:
Global Focus

153. Does the adoption of peer-to-government mobile payments improve tax revenue mobilization in developing countries?

Author:
Abdoul-Akim Wandaogo, Fayçal Sawadogo, and Jesse Lastunen
Publication Date:
02-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Developing countries need to raise sufficient tax revenue to finance development. Revenue mobilization is often hampered by limited tax compliance, weak institutions, and technical problems with tax collection. One solution to these challenges is person-to-government (P2G) mobile phone payments, adopted in a number of developing countries since the early 2000s. This study assesses the causal effect of P2G adoption on tax revenue using propensity score matching. According to the matching estimates, countries that adopt P2G services experience a 1.2–1.3 percentage point boost in direct tax revenue as a share of GDP. P2G adoption increases revenue from both corporate and personal income taxes, with larger effects on the latter. The results remain robust to matching quality tests and alternative estimation methods, including function control, two-stage least squares, and system generalized method of moments. The average treatment effects are largest among lower-middle-income countries and countries characterized by limited tax compliance and corruption control, and by low levels of urbanization and domestic credit to the private sector. The findings suggest that developing countries, particularly those with poor institutions and low levels of financial inclusion, should promote the adoption and use of mobile money services for tax transactions.
Topic:
Development, Government, Finance, Economy, and Tax Systems
Political Geography:
Global Focus

154. Revisiting the links between economic inequality and political violence: The role of social mobilization

Author:
Patricia Justino
Publication Date:
02-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The main aim of this paper is to explore theoretically important mechanisms through which economic inequalities may affect the emergence of political violence given the forms of social mobilization they (may) generate. The paper identifies and explores two mechanisms under which social mobilization in unequal societies may result in either non-violent or violent collective action and, ultimately, in violent conflict. The first condition is the level of social cooperation between different social groups that are formed during the process of social mobilization. The second is the efficacy of collective action to drive change, which is in turn shaped by the ability of individuals within groups to coordinate their actions. Forms of social mobilization become violent when antagonism is the dominant form of social interaction between different social groups in unequal societies, and when each of these social groups exhibits high levels of internal coordination.
Topic:
Political Violence, Economics, Social Movement, Inequality, Mobilization, and Collective Action
Political Geography:
Global Focus

155. Measuring illicit financial flows: A gravity model approach to estimate international trade misinvoicing

Author:
Lourenço S. Paz
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Illicit financial flows have recently attracted the attention of academia, practitioners, and multilateral organizations who consider them harmful to economic development. Some observers suggest that many of these flows occur via the misinvoicing of international trade transactions. This study develops a novel methodology based on the gravity model of international trade to estimate illicit financial flows using publicly available product-level international trade data. It contributes to the literature by estimating product-level transportation and insurance costs and providing, for the first time, an estimation for all countries of an upper bound of the values of export and of import over- and under-misinvoicing separately, without resorting to assumptions about trade statistics reliability. Application of the methodology is illustrated using six-digit product-level UN Comtrade data for 2013–16. The results indicate that misinvoicing is not confined to a few products or countries but is a widespread phenomenon that deserves future research.
Topic:
International Trade and Finance, Transportation, Illicit Financial Flows, and Misinvoicing
Political Geography:
Global Focus

156. Ethnic dominance and exclusion: Unpacking cross-national data

Author:
Andrea Vaccaro
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
It is widely accepted that the distribution of power between ethnic groups within a country plays a key role in major social, political, and economic outcomes. Researchers working on the topic have various measures of ethnic dominance and exclusion, and other closely related aspects such as ethnic fractionalization, polarization, and heterogeneity, available to them. These measures are, however, often used without sufficient critical reflection and their empirical differences are not entirely understood. The literature does not provide too much guidance either. In fact, efforts to comparatively evaluate data on how power is distributed between ethnic groups are in short supply. To address this gap in the literature, the study at hand provides a comprehensive descriptive analysis of publicly available common cross-national country-level measures on ethnic dominance and exclusion. The findings of this study suggest that Varieties of Democracy’s Exclusion by Social Group and Ethnic Power Relations’ Ethnic Exclusion are more alike than the other measures under scrutiny, yet in general the empirical differences among common measures of ethnic dominance and exclusion are substantial. Scholars should thus reject an ‘any measure will do’ approach when choosing among competing measures.
Topic:
Ethnicity, Data, and Exclusion
Political Geography:
Global Focus

157. The global inequality boomerang

Author:
Ravi Kanbur, Eduardo Ortiz-Juarez, and Andy Sumner
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
In this paper we argue that the decline in global inequality over the last decades has spurred a ‘sunshine’ narrative of falling global inequality that has been rather oversold, in the sense, we argue, it is likely to be temporary. We argue the decline in global inequality will reverse due to changes in the between-country component. We find there is a potentially startling global inequality ‘boomerang’, possibly in the mid-to-late 2020s, which would have happened even if there were no pandemic, and that the pandemic is likely to bring forward the global inequality boomerang.
Topic:
Inequality, Pandemic, and COVID-19
Political Geography:
Global Focus

158. Impact of female peer composition on gender norm perceptions and skills formation in secondary school

Author:
Martina Querejeta
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper examines peer effects on students’ gender norm perceptions and skills formation. I use a Uruguayan nationally representative survey of 9th grade students and exploit the quasi-random variation in the proportion of female peers across classes within schools for causal identification. Results show that a higher exposure to female peers in the class leads to more progressive gender norms. Furthermore, these effects in gender perceptions are driven mostly by male students. Female students are also impacted by peers’ sex composition and significantly reduce the time devoted to domestic work and improve mathematics scores when exposed to more female peers. No effects on language were found for either sex. Thus, exposure to female peers operates not only by reducing traditional gender perceptions but also by changing actual behaviour regarding housework and academic performance of female students. My results suggest that short peer interactions in secondary school contexts may have substantial effects on reducing gender stereotypes and change gendered behaviours among students.
Topic:
Developing World, Inequality, Peer Effects, and Gender Norms
Political Geography:
Global Focus

159. Affirmative action: meaning, intentions, and impacts in the big picture

Author:
Satu Kuitunen
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper provides a broad overview of the meaning of affirmative action and its intended and unintended impacts. The paper is a literature review and does not make any arguments specifically for or against affirmative action but describes the broad arguments and findings in the existing literature. Central to the definition of affirmative action is its proactive nature in rectifying horizontal inequalities and historical wrongdoing. Motivations can be ethical, economic, or political. The designation criteria and the scope of affirmative action also vary across countries, which affects how its effectiveness and value are measured. Affirmative action can have positive intended impacts as well as adverse unintended impacts, and the jury is still out on its overall effectiveness. Affirmative action has also been implemented on the grounds of conflict management, but the results have been mixed, and the evidence of affirmative action as a conflict management tool is limited.
Topic:
Education, Inequality, Literature Review, and Affirmative Action
Political Geography:
Global Focus

160. The indirect costs of corporate tax avoidance exacerbate cross-country inequality

Author:
Javier Garcia-Bernardo, Daniel Haberly, Petr Janský, Miroslav Palanský, and Valeria Secchini
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Corporate tax avoidance hampers domestic revenue mobilization and, with it, the development of lower- and middle-income countries. While a wide range of studies has shed light on the magnitude of profit shifting by multinational corporations, the indirect costs of this behaviour is underexplored. These indirect costs are likely to be skewed based on a country’s level of income. We hypothesize that developed countries tend to recover a larger part of corporate tax revenue losses (primary effects or direct costs) via capital gains and dividend taxes on corporate investors (secondary effects). Furthermore, developed countries can offset tax losses by borrowing in financial markets at very low interest rates (tertiary effect or, together with secondary effects, indirect costs). In this paper, we introduce a dynamical model that includes not only corporate tax revenue losses but also tax revenue collected from capital gains and dividend taxes, as well as government borrowing costs. We use country-by-country reporting data on the operations of multinational corporations to estimate profit shifting, alternative operationalizations of the location of investors to proxy the tax revenues from capital gains and dividend taxes, and yields on government bonds to measure the cost of borrowing. Our results show that when these indirect costs are included, the total cost of profit shifting for developing countries increases significantly, while some developed countries can often offset or recover the majority of the direct costs of profit shifting. The ability of the latter to do this is, however, uneven with, for example, most European countries losing revenues from profit shifting even after indirect effects are taken into account. Only a handful of other countries actually appear to profit from profit shifting—and by an amount that is far smaller, in relation to gross domestic product, than the losses suffered by others.
Topic:
Inequality, Multinational Corporations, Tax Systems, and Tax Havens
Political Geography:
Global Focus

161. Countering global oil theft: responses and solutions

Author:
Etienne Romsom
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This second of two papers on global oil theft discusses ways to reduce oil theft, misappropriation, and fraud. At US$133 billion per year, oil is the largest stolen natural resource globally, while fuel is the most smuggled natural resource. Oil theft equates to 5–7 per cent of the global market for crude oil and petroleum fuels. It is so engrained in the energy supply chain that thefts are priced in by traders and tolerated by many shipping companies as petty theft. Oil theft and related insecurity have substantial negative economic effects on developing countries, whether they produce oil or not. In 2012, non-oil-producing Benin saw a 28 per cent drop in taxable income after a spate of oil tanker hijacking incidents in the Gulf of Guinea in 2011. In Nigeria, the oil capacity shut-in and amount of oil deferred is more than twice the amount estimated as stolen, with a US$20 billion annual loss in petroleum profit tax—63 per cent of total government tax revenue in 2019. Organized oil crime syndicates are often transnational and conduct theft and fraud professionally, exploiting gaps in jurisdiction and adapting their practices when law enforcement becomes more effective. They evolve from ship piracy to stealing tanker cargoes to kidnapping tanker crews; from physical ransom of assets to digital hijacking via ransomware. The proceeds of oil theft often finance other organized crime, and it triggers violence against the community and in crime-on-crime activities. Twelve commonalities in oil theft and fraud have been identified that can direct international solutions, in three target areas: stolen oil volumes, stolen oil transport, and stolen oil money. Prosecution for acts of bribery offers opportunities for action: transport of or payment for illegal oil could constitute a bribe under the US Foreign Corrupt Practice Act if government officials were involved in the transaction or shipment. Bribe charges could be raised for paid ‘services’ that facilitate oil theft (through action or non-action).
Topic:
Corruption, Oil, Piracy, Cybersecurity, Fossil Fuels, Tax Evasion, and Theft
Political Geography:
Global Focus

162. Corruption and crisis: do institutions matter?

Author:
Shrabani Saha and Kunal Sen
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
While the short-term effects of the COVID-19 pandemic on lives and livelihoods are well understood, we know little about the effect of the pandemic for longer-term outcomes such as corruption. We look at the historical data on political and economic crises to assess what we can learn from the long-term effects of past crises on corruption. We hypothesize that strong rule of law institutions may ameliorate the possible adverse effects of political and economic crises on corruption. We test our hypotheses using panel data for over 100 countries during the years 1800– 2020. The results suggest heterogeneous effects depending on the type of crisis and how we measure it. We find that rule of law institutions can control corruption in cases of political violence and economic slowdown, but the effect is not seen for democracy breakdowns, coups, armed conflict and civil war, and economic crisis such as currency and debt crisis.
Topic:
Corruption, Politics, Rule of Law, Institutions, Data, COVID-19, and Economic Crisis
Political Geography:
Global Focus

163. Prosperity and Resilience: Diverse Production and Comparative Advantage in Modern Economies

Author:
David Henig and Anna Guildea
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
A common version of trade theory suggests that countries will specialise in a limited number of products. Using the example of David Ricardo from 1817, England specialises in cloth and Portugal in producing wine – and then they trade with each other to mutual benefit. However, this is a crude version of comparative advantage that routinely leads to political concerns about trade. Today the prime concern is that Europe and other developed countries have become too dependent on China by allowing the logic of comparative advantage to work. In short, trade has made us vulnerable. The observed reality is different. Most advanced economies produce and export a broad range of goods and services. Their governments have similar aspirations to develop and support diverse manufacturing and services, including in the most traded global sectors such as pharmaceuticals, automotive, business services, and food and drink. Modern specialisation comes in countries producing various, but not all, products within global supply chains. Patterns of trade suggest such specialisation has allowed countries to both grow and become resilient to individual shocks. Knowledge and ownership of the whole supply chain is more important than producing everything.
Topic:
Globalization, Economy, Services, Resilience, WTO, and Production
Political Geography:
Europe and Global Focus

164. A Task-Based Theory of Occupations with Multidimensional Heterogeneity

Author:
Sergio Ocampo
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
I develop an assignment model of occupations with multidimensional heterogeneity in production tasks and worker skills. Tasks are distributed continuously in the skill space, whereas workers have a discrete distribution with a finite number of types. Occupations arise endogenously as bundles of tasks optimally assigned to a type of worker. The model allows us to study how occupations respond to changes in the economic environment, making it useful for analyzing the implications of automation, skill-biased technical change, offshoring, and worker training. Using the model, I characterize how wages, the marginal product of workers, the substitutability between worker types, and the labor share depend on the assignment of tasks to workers. I introduce automation as the choice of the optimal size and location of a mass of identical robots in the task space. Automation displaces workers by replacing them in the performance of tasks, generating a cascading effect on other workers as the boundaries of occupations are redrawn.
Topic:
Occupation, Automation, Skills, and Tasks
Political Geography:
Global Focus

165. UN Peacekeeping and the Protection of Civilians from Sexual and GenderBased Violence

Author:
Jenna Russo
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
International Peace Institute
Abstract:
While all UN multidimensional peacekeeping operations are mandated to prevent and respond to conflict-related sexual violence (CRSV), the missions in the Democratic Republic of the Congo (DRC) and South Sudan, as well as in the Central African Republic, are also mandated to protect civilians from sexual and gender-based violence (SGBV). While SGBV is often used and understood interchangeably with CRSV, SGBV is broader in scope, as it encompasses nonsexual forms of gender-based violence and need not be connected to armed conflict. This report examines how missions are implementing their mandates to protect civilians from SGBV, including CRSV, and assesses good practices, gaps, and opportunities for improvement. The report draws on lessons learned from the UN missions in South Sudan (UNMISS) and the DRC (MONUSCO). It considers how the complexities of preventing and responding to SGBV necessitate a whole-of-mission approach to the protection of civilians (POC) that encompasses not only physical protection from violence but also activities that address cultural norms related to gender, strengthen the rule of law, and enhance women’s participation. This report thus considers a range of protection activities carried out by missions, as well as structures and processes that promote the effective integration of gender into mission planning and activities. The paper concludes with several recommendations for UN peacekeeping missions, the UN Department of Peace Operations (DPO), and member states on the Security Council to strengthen work on SGBV: Provide clear guidance on what it means to protect civilians from SGBV as part of a peacekeeping mandate; Systematically and meaningfully integrate gender advisers and women’s protection advisers into POC planning at the strategic and operational levels; Include gender-sensitive indicators in monitoring and reporting systems and prioritize the gathering of sex-disaggregated data; Take a holistic approach to protecting civilians from violence, recognizing the risks of armed responses and prioritizing partnerships; and Continue to combat impunity and engage with governments and armed groups to promote accountability.
Topic:
Security, Peacekeeping, Women, Gender Based Violence, Sexual Violence, Peace, Civilians, and Protection
Political Geography:
Global Focus

166. Managing for Motivation as Public Performance Improvement Strategy in Education & Far Beyond

Author:
Dan Honig
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
People management has an important role to play in improving public agency performance. This paper argues that a ‘Route Y’ managerial approach focused on supporting the empowered exercise of employee judgment will in many circumstances prove superior to conventional reform approaches steeped in ‘Route X’ monitoring and incentives. Returns to Route Y are greater when employees are or can become more “mission motivated” – that is, aligned with the goals of the agency in the absence of monitoring and extrinsic incentives. Returns to Route Y are also greater when monitoring is incomplete or otherwise likely to unproductively distort effort, thus lowering the returns to using performance-linked rewards and penalties. I argue that education systems are one (but far from the only) setting where Route Y is a lever worth focusing on in efforts to improve public performance in the developed and developing world alike.
Topic:
Development, Education, Public Policy, Performance Evaluation, and Project Management
Political Geography:
Global Focus

167. The Role of Storage in Commodity Markets: Indirect Inference Based on Grains Data

Author:
Christophe Gouel and Nicolas Legrand
Publication Date:
07-2022
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
Understanding commodity prices dynamics is of crucial importance for assessing the persistence of cost-push costs or for countries dependent on commodity exports. Unfortunately, despite decades of research, the workhorse theoretical model in the field, the rational expectations storage model, is yet to be empirically validated. This paper provides the first full empirical test of the storage model. We first build a new storage model featuring a supply response, long-run demand and cost trends, and four structural shocks. We then develop a flexible empirical approach which relies on the indirect inference method and exploits the joint dynamics of prices and quantities unlike previous estimations which only use price information. The information contained in quantities is essential to relax restrictive identifying assumptions and empirically assess the overall consistency of the model's new features. Finally, we carry out a structural estimation on the aggregate index of the world most important staple food products: maize, rice, soybeans, and wheat. The results show that our extended storage model is consistent with most of the moments in the data, including the high price autocorrelation of which up to 42% can be explained by the transfer of inventories over time. They also show that, although for these commodities supply shocks are the main drivers of market dynamics, over the past 60 years all price spikes have been associated with large positive demand shocks.
Topic:
Agriculture, International Trade and Finance, Commodities, and Price
Political Geography:
Global Focus

168. The Culture-Promotion Effect of Multinationals on Trade: the IKEA case

Author:
Dylan Bourny, Daniel Mirza, and Jamel Saadaoui
Publication Date:
07-2022
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
In this paper, we investigate how some MNEs which spread their home culture over time and space to the rest of the world are affecting, in turn, trade flows from home. By selling products embodying cultural information related to their country of origin, those MNEs embrace the role of ambassadors of their home country. We argue that IKEA offers an ideal case to identify a multinational's culture-promotion effect on trade. We build a dataset on IKEA's presence in foreign markets between 1995 and 2015 and merge it with disaggregated product level trade between pairs of countries. We find solid evidence of an externality linked to IKEA: a setting of an IKEA new store in a destination increases trade flows by around 2% from Sweden for products that resemble to what the multinational offers (despite being completely unrelated to that multinational). This result is driven primarily by the products identified to encompass a high-cultural content. Other robustness checks and tests seem to be very much consistent with the hypothesis of IKEA promoting the Swedish culture to the world.
Topic:
Globalization, International Trade and Finance, Culture, and Multinational Corporations
Political Geography:
Global Focus

169. Behavior Change in the Face of Disaster Risk Finance

Author:
Theodore Ezike
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Feinstein International Center, Tufts University
Abstract:
Large-scale Disaster Risk Finance (DRF) mechanisms are relatively new tools in the field of humanitarian assistance and anticipatory action that can have significant positive effects on disaster recovery. However, there is a lack of analysis on how DRF can affect behavior or risk perception, which is important for countries to understand. Drawing on findings from similar programs, such as community health and microfinance, provided insights on areas where DRF may have impact on behavior. The available research indicates that disasters make people risk averse and that insurance and other DRF mechanisms can enable beneficial outcomes. Trust in public institutions, ideally the ones that manage DRF, alongside accurate and timely information from government or other relevant actors, is needed for acceptable levels of risk to be communicated and for appropriate corresponding actions to be taken.
Topic:
Climate Change, Finance, Disaster Management, and Humanitarian Response
Political Geography:
Global Focus

170. Work from Home – How Good is it for the Environment?

Author:
Anna Agarwal
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Centre for Policy Research, India
Abstract:
The COVID-19 pandemic led to a large-scale global experiment on work from home (WFH). WFH is expected to continue, albeit at a smaller scale, in the post-pandemic world. WFH is commonly considered to be an energy saving measure that can help reduce office travel related energy demand and energy use in offices. This article presents a framework to analyze the various direct and indirect energy use changes that WFH can potentially induce. We discuss the different long-term structural and behavioral changes from WFH, which will ultimately define energy consumption patterns. We conclude the energy savings and the related environmental impacts are ambiguous. An illustrative analysis has been performed to quantify the direct air quality impacts of work from home adoption in the Delhi region. The results show modest reductions in the levels of PM2.5 emissions, and point to the underlying uncertainties that have the potential to highly amplify or diminish the environmental benefits. The article highlights the need for in-depth multi-sectoral study of the various WFH related energy use changes over both the short- and the long-term. Such an assessment will be key to designing effective policy measures to support work from home as an environmentally beneficial practice.
Topic:
Environment, Work Culture, COVID-19, and Energy
Political Geography:
Global Focus

171. The Belt and Road Initiative as Ten Policy Commandments: Review of Xi’s Kazakhstan and Indonesia Launch Speeches

Author:
Lauren A. Johnson
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
China Studies Centre, The University of Sydney
Abstract:
In 2019 Foreign Policy described China’s Belt and Road Initiative (BRI) as “the most talked about and least defined buzzword of this decade”. Given that confusion and the importance of leader political speeches in China, especially those of current President Xi Jinping, it is surprising that the BRI literature has little in-depth analysed the two launch speeches of 2013. This article seeks to fill that gap with study of those speeches and focus on the five cooperationoriented areas announced in each. In comparative context those ten pillars appear not to be descended from New Era Chinese heaven but rather demonstrate substantive thematic overlap with the ten pillars of what was once relatively mainstream macroeconomic development policy, the Washington Consensus. Yet, in the case of the BRI there is a relative implicit implementation emphasis also. In forward context of contemporary global political economy tensions, the need to recover from the COVID-19 pandemic, the G7’s Build Back Better and the European Union’s Global Gateway ambitions also, this article may offer a timely fresh and comparative lens on the BRI.
Topic:
Development, International Cooperation, Infrastructure, Hegemony, and Belt and Road Initiative (BRI)
Political Geography:
China, Asia, and Global Focus

172. Putting Development at the Centre of G20 Policy Agenda: Lessons for the T20

Author:
Daniele Fattibene and Alice Fill
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
The G20 Development Working Group has gradually evolved throughout the years, following a haphazard and contradictory path. On the one hand, it has been progressively overshadowed by a sectoralisation of G20 activities, with several action tracks (i.e., the Finance Track) taking a more prominent role in the definition of the leaders’ priorities. On the other hand, its (unexploited) potential has increased due to the emergence of several global crises that have shown the importance of rekindling multilateral solutions at the G20 level. The T20 has a strong potential to boost G20 legitimacy on development cooperation worldwide, by drafting evidence-based and pragmatic policy proposals for the decision-makers. However, although often advocating for similar solutions, the Development Working Group and T20 have not necessarily fed into each other’s policy agendas, leading to misalignment and reducing their chances to influence other G20 tracks on crucial development issues such as development finance, food security or the global climate agenda.
Topic:
Development, Political Economy, Governance, G20, and Sustainability
Political Geography:
Global Focus

173. Heroes on Strike: Trends in Global Health Worker Protests During COVID-19

Author:
Sorcha A. Brophy, Veena Sriram, Haotian Zong, Chloei Andres, Maria Paz Mawyin, and Narayanan GL
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Accountability Research Center (ARC), American University
Abstract:
This Accountability Note describes global trends in health worker protests between March 11, 2020 and March 10, 2021. We argue that the frequent characterization of health workers as heroes of the pandemic obscures the fact that health workers themselves describe the challenges they face during this time as violations of their rights as workers, highlighting the obligations of their employers to provide working conditions and remuneration that justify the risk they assume. Using data from the Armed Conflict Location & Event Data (ACLED) Project, we first provide a global overview of the growth in health worker protest activity in the March 2020–2021 period as compared to the March 2019–2020 period. Health workers engaged in protest activity with greater frequency during the first year of the pandemic than during the prior year. The eighty-five countries included in the ACLED data set in both the March 2019–2020 period and the March 2020–2021 period experienced a sixty-two percent increase in health worker protest activity (from 2416 protests to 3913 protests). We then provide an overview of the content of the 6589 health worker protests in the ACLED dataset between March 2020 and March 2021, describing protests in 149 countries in terms of five categories: working conditions and remuneration, resources, health system delivery issues, public policy, and other. By far, the largest category of protests during this period are those related to working conditions and remuneration. Approximately sixty-six percent (N=4358) of global protests in the 2020–2021 period expressed health worker dissatisfaction about issues such as: occupational hazards, unpaid wages, risk allowances and job security. Surprisingly, personal protective equipment (PPE) concerns—an issue covered frequently in the media—motivated a relatively low percentage of the protests (less than nine percent). We note this not to downplay the gravity of global PPE shortages, but to situate PPE shortages as one among many health worker concerns during the pandemic. Protests initiated by health workers about health system delivery issues provide an important reminder that even in the middle of a pandemic, not everything was about COVID-19. Sixty-two percent of the health system-related protests during the 2020–2021 period were about issues that were not coded as directly related to the COVID-19 pandemic. Similarly, the vast majority of health workers’ protests around public policy were not about pandemic-related government policy, but about social issues like climate change, immigration, police brutality, and elections. The aim of this analysis is to understand what health workers advocated for during a time of immense pressure, and to identify some broad areas of concern for health sector accountability. Through this analysis, we prepare the groundwork for future research and action, and share preliminary guidance regarding how health sector stakeholders—including government, health worker associations, unions, and civil society—might develop improved systems of accountability.
Topic:
Health, Protests, Crisis Management, and COVID-19
Political Geography:
Global Focus

174. A Gravity Theory of Subordinate Financialisation

Author:
Photis Lysandrou
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
City Political Economy Research Centre (CITYPERC), University of London
Abstract:
Recent decades have marked both the globalisation of capitalism following the collapse of communism and its financialisation following the rapid growth of the world's securities markets. These developments have impacted the core-periphery divide in capitalism. In the case of globalisation, the entry of the ex-communist countries into the world capitalist system has swelled the ranks of the emerging capitalist economies (ECEs) that are kept subordinate through the pressures from the advanced capitalist economies (ACEs). In the case of financialisation, the growth of the securities markets has led to a palpable change in the pressures that perpetuate subordination. Where previously the use of authority was the chief source of those pressures, it now plays a secondary role. Absent that authority, and the ECEs would still be held in a subordinate position in global capitalism through the gravitational pull of the ACEs' financial securities markets. The central purpose of this paper is to explain this gravitational pull.
Topic:
Markets, Political Economy, Capitalism, Finance, and Financial Globalization
Political Geography:
Global Focus

175. The Rise of a Rule-Based Transgressor Elite

Author:
Ronen Palan
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
City Political Economy Research Centre (CITYPERC), University of London
Abstract:
Transnationally organised, rule-based transgressor elites are the wealthiest and most powerful elites today. The core of this group comprises managers of large multinational corporations and related ‘born global’ corporations, such as Tesla, eBay and the like, large investment houses, such as Blackrock, Blackstone and Vanguard, leading international investment banks and elite legal, consultancy and accounting firms. This elite core is joined by several ancillary groups. Arguably the most significant of those are midsize corporate groups, many of which are privately held. Numbering in the hundreds of thousands, perhaps even millions, they employ tactics perfected by large corporations to arbitrage rules and ensure corporate and other forms of taxation, rules specifying personal or group liabilities or other regulations, including protection of shareholders and the like, are either partially or fully avoided. To these, Ricardo de Soares adds another group; he argues elites from development countries latch onto existing institutional and professional providers serving those other elites; once they achieve their goal of transferring capital out of their own countries, they participate actively in the process of wealth and power concentration described in this paper (Soares, 2021) .
Topic:
Political Economy, Multinational Corporations, Elites, and Capital Accumulation
Political Geography:
Global Focus

176. The Environmental Consequences of Inequality

Author:
James K. Boyce
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
Inequality has important consequences for the extent of pollution and natural resource depletion as well as for the distribution of the costs and benefits from environmental degradation. Inequalities in the distribution of purchasing power operate through the market, and inequalities in the distribution of political power operate through governance institutions, often with mutually reinforcing effects.
Topic:
Environment, Political Economy, Natural Resources, Inequality, Justice, and Pollution
Political Geography:
Global Focus

177. Considerations on Inflation, Economic Growth and the 2 Percent Inflation Target

Author:
Robert Pollin and Hanae Bouazza
Publication Date:
12-2022
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
This paper considers two basic questions with respect to inflation control, inflation targeting, and overall macroeconomic performance. The initial question is: what has been the justification in research for establishing an inflation target, and specifically a low inflation rate target of 2 – 3 percent, as the organizing principle and overarching goal of macroeconomic policy? The second question is: do we actually observe stronger macroeconomic performances—as measured in standard terms of GDP growth—when macro policy operates within the framework of such low inflation targets? Our answers to these questions are straightforward. First, no serious body of research has been produced that provides a clear justification for a 2 – 3 percent inflation target as the central goal of macroeconomic policy. Further, there is no body of evidence showing that economies at any level of development consistently experience stronger economic growth outcomes when inflation is maintained at less than 3 percent as opposed to higher inflation rates, certainly within a 4 – 5 percent inflation range and, in some circumstances, somewhat higher rates still. These findings are significant insofar as they open space for considering the set of measures other than contractionary monetary policies as viable inflation control tools. It is possible that these other measures do not operate as forcefully as contractionary monetary policy in bringing inflation down to a 2 – 3 percent target range. But our findings suggest that it is not typically necessary to force down inflation to such low levels, especially given that contractionary monetary policies succeed in controlling inflation primarily through the channel of raising mass unemployment and weakening workers’ bargaining power.
Topic:
Economic Growth, Inflation, and Macroeconomics
Political Geography:
Global Focus

178. Inconsistent Definitions of GDP: Implications for Estimates of Decoupling

Author:
Gregor Semieniuk
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
Efforts to assess the possibilities for decoupling economic growth from negative environmental impacts have examined their historical relationship, with varying and inconclusive results. Part of the problem is ambiguity about definitions of environmental impacts, e.g. whether to use territorial or consumption-based measures of environmental impact. This paper shows that ambiguities arising from definitional changes to GDP are sufficiently large to affect the outcomes. I review the history of structural revisions to GDP using the example of the United States, and on international comparisons of purchasing power parity, compare decoupling results using various historical definitions of GDP on the same environmental indicator, and demonstrate that changing the GDP data vintage does impact decoupling results in qualitatively important ways, with and without purchasing power parity. Inconsistencies in economic measurement introduce an additional layer of ambiguity into historical decoupling evidence and model projection into the future. To advance debate and be clear about scenario assumptions, rigorous reporting of GDP definitions used and the sharing of data vintage for subsequent comparison and replication are urgently needed.
Topic:
Environment, Political Economy, GDP, and Economic Growth
Political Geography:
Global Focus

179. The Price of Speculation: Cryptocurrencies and Climate Change

Author:
Izaura Solipa and Gerald Epstein
Publication Date:
08-2022
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
Cryptocurrencies are a form of digital currency whose popularity has rapidly increased over the past decade. What distinguishes them from other electronic currencies is their underlying technology known as the blockchain, a decentralized public ledger in which transactions among the network peers are accurately and securely recorded. The validation and mining process, where new coins are issued, is highly computationally intensive and thus requires vast amounts of energy. The literature estimates energy consumption levels of the cryptocurrency mining to be as high as those of countries such as Angola, Iceland or Cuba, and a corresponding emission of at least 3-15 million tons of CO2. We discuss these estimated impacts of Bitcoin and other cryptocurrencies on both energy levels and the environment, and then outline alternative applications that could promote climate change mitigation. We argue that despite the latter applications and the possible benefits from the technology, particularly in the energy sector, the financial uses of blockchain are creating significant environmental costs without any clear social or economic benefit stemming from this largely speculative activity.
Topic:
Climate Change, Science and Technology, Economy, Cryptocurrencies, Blockchain, Digital Currency, and Speculation
Political Geography:
Global Focus

180. Environmental Justice and Carbon Pricing

Author:
James K. Boyce, Michael Ash, and Brent Ranalli
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
Opposition to carbon pricing has come not only from the fossil fuel lobby, as might be expected, but also from environmental justice (EJ) advocates who seek to end the disproportionate environmental harms imposed upon people of color and low-income communities, and who fear that carbon pricing could reinforce rather than remedy pollution exposure disparities. This paper focuses on the objections to carbon pricing that EJ advocates have raised. They argue that carbon pricing (i) fails to reduce emissions significantly, (ii) fails to reduce the disproportionate impacts of hazardous co-pollutants on people of color and low-income communities; (iii) hits low-income households harder than richer households; and (iv) commodifies nature. This paper discusses how carbon pricing can be designed to address these very real concerns.
Topic:
Environment, Inequality, Justice, Fossil Fuels, and Carbon Emissions
Political Geography:
Global Focus

181. How to respond to nuclear blackmail

Author:
Yagil Henkin and Alexander Grinberg
Publication Date:
11-2022
Content Type:
Working Paper
Institution:
Jerusalem Institute for Strategy and Security (JISS)
Abstract:
Reliable deterrence is a vital interest of the West, and developing a strategy for reliable deterrence without escalation is also essential. The West could prevent escalation if it manages it carefully and with determination and credibility.
Topic:
Security, Defense Policy, Military Strategy, and Deterrence
Political Geography:
Global Focus

182. Measuring the intangible economy to address policy challenges

Author:
Marie Le Mouel
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
European economies exhibit the so-called ‘productivity puzzle, whereby investments’ in digital technologies and intangible assets have not delivered the hoped-for productivity gains. Explanations for this puzzle lie in the unequal ability of companies to make use of these technologies, and resulting patterns of market concentration, productivity divergence and dampened business dynamism. Access to firm-level data is essential to properly understand these rich dynamics. The purpose of the first work package of the MICROPROD project was to improve the firm-level data infrastructure, expand the measurement of intangible assets and enable cross-country analyses of these productivity trends. The MICROPROD researchers developed the Micro Data Infrastructure (MDI), a centralised platform that harmonises access to the firm-level data gathered by national statistical institutes. The data infrastructure developed through this work package offers valuable insights into the evolution of productivity across the European Union and into the effects of digitalisation and globalisation. It can thus generate important evidence for designing policies to support the European Commission’s policy objectives, especially for achieving the digital and green transitions. In addition, the research enabled by this data infrastructure and carried out within the context of MICROPROD can provide valuable lessons about the response of European economies to the COVID-19 pandemic and its aftermath.
Topic:
Infrastructure, European Union, Digital Economy, Economy, and COVID-19
Political Geography:
Europe and Global Focus

183. Knowledge flows and global value chains

Author:
Niclas Poitiers and Marta Bisztray
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
The organisation of global value chains via supplier links and within business groups shapes global trade and forms a major channel through which knowledge is disseminated between countries. Global value chains are also an important channel through which economic shocks propagate. At the same time, knowledge seeking and knowledge protection are important determinants for multinational companies when structuring their production processes. Contract enforcement in general, and intellectual property rights protection in particular, are key institutions in this regard. Hierarchical ownership structures within business groups tend to be organised in the shape of an inverted pyramid, with more complex tasks located closer to the headquarters in ownership terms, facilitating stronger control. Recently, ownership structures have become ‘flatter’, meaning business groups have pulled key operations closer to their headquarters. New supply-chain relationships with key business partners are often accompanied by process and product innovation, making long-term business relationships an important driver of productivity growth. Knowledge transmission through such links not only benefits participating companies, but also leads to spillover effects. Import competition from high-income countries leads to investment in R&D and productivity growth in countries that have comparative advantage in capital-intensive goods. This is not the case for import competition from low-income countries, which instead makes companies downsize. Import competition also makes firms focus on their core product. To improve our understanding of this key aspect of globalisation, comparable microlevel data is needed on firms and firm connections across multiple countries. Trade and industrial policy can support productivity growth through global value chains by providing the right legal environment that supports the formation of longterm business relationships.
Topic:
Industrial Policy, Business, Trade Policy, and Global Value Chains
Political Geography:
Global Focus

184. Is the workforce ready for the jobs of the future? Data-informed skills and training foresight

Author:
Fabian Stephany and Rosemary Luckin
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
For many newly emerging jobs, labour-market mismatches prevail as workers and firms are unable to apply precise occupation taxonomies and training lags behind workforce needs. We report on how data can enable useful foresight about skill requirements and training needs, even when that data has not been collected for this express purpose. First, we show how online generated freelance data can help monitor labour-market developments in the short run. Second, in the long run, we illustrate how data can shed light on development of workplace-ready aptitudes among students, even when these are not the direct focus of instruction. This combination of data-intensive activities can inform the immediate and long-term needs for education and training in order to help individuals develop the ability to learn, train and retrain as often and as much as needed.
Topic:
Business, Training, Data, Labor Market, Workforce, and Skills
Political Geography:
Europe and Global Focus

185. Measuring macroeconomic uncertainty during the euro’s lifetime

Author:
Monika Grzegorczyk and Francesco Papadia
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
It is a cliché in official economic institutions’ publications and their leaders’ speeches to lament exceptional uncertainty. The complaint does, however, ring true currently. A solid empirical basis should be given to this view by properly measuring macroeconomic uncertainty. To measure macroeconomic uncertainty, we start from observable forecasts of macroeconomic variables, which are transformations of underlying economic conditions. By observing how forecasts change over time, we measure the flow of macroeconomic surprises. The more intense the flow of surprises, the greater uncertainty can be said to be. Greater differences among forecasts are also evidence of uncertainty. We draw out four indicators of macroeconomic uncertainty, measured over the lifetime of the euro: How the macroeconomic forecasts of a given institution for the same time period change over time; How the macroeconomic forecasts of a given institution deviate from realised outcomes; How the macroeconomic forecasts of different institutions deviate from one other; How dispersed the forecasts of different professionals are. We also measure whether the ‘stag-‘ or the ‘-flationary’ component is stronger in the overall stagflationary shock caused by the Russian invasion of Ukraine.
Topic:
Economy, Institutions, Macroeconomics, Uncertainty, and Euro
Political Geography:
Europe and Global Focus

186. The role of competition in the transition to climate neutrality

Author:
Georg Zachmann
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
The transition to climate neutrality requires the reallocation of production factors from polluting activities to non-polluting activities. The main push for this reallocation will come from governmental decarbonisation targets that are translated into stringent climate policy tools, such as carbon pricing and emissions standards. But the complex process of recombining production factors will require the coordination of millions of individuals and firms. The efficiency of this recombination process will be a main driver of the cost of the transition. Based on a consistent analytical framework, I argue that much more political attention should be paid to the markets and regulators that guide the re-allocation of production factors, to bring them in line with a carbon-neutral economy at the best service of European consumers. Three main issues should be considered: 1. The transition will change the role and efficiency of markets in allocating resources; 2. Competitive markets can make the transition more efficient; 3. In some areas, a too-narrow focus on competition can be detrimental, and needs to be discussed. To improve the institutions for resource allocation in the transition, policymakers should revisit three levels of intervention: 1) competition rules and enforcement should be adjusted to meet the new challenges of the transition; 2) efficient markets that are central to a climate-neutral economy – such as for electricity, emission rights or circular logistics – need to be properly designed; 3) the advantages and disadvantages of more direct state control in specific sectors should be revisited in light of the challenges of the transition. In summary, policymakers need to get away from simplistic state-or-market narratives. The focus should be on developing politically feasible frameworks for leveraging the benefits of competition for efficient resource allocation in the transition. Institutions should not focus solely on static efficiency, but must forcefully encourage investments in new systems and innovation. The role of institutions that determine resource allocation in the transition is an underappreciated but crucial area for future research and policy action.
Topic:
Climate Change, Institutions, Pollution, Carbon Emissions, Neutrality, and Decarbonization
Political Geography:
Global Focus

187. Mapping banking centres globally since 1970

Author:
Emmanuel Mourlon-Druol
Publication Date:
07-2022
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Brexit and the rise of China as a leading international economic power have revived discussions about the geography of banking centres. This paper analyses the geographical evolution of banking centres since the 1970s, based on a database constructed from a ranking of the top banks in the world created by The Banker magazine, a UK-based monthly publication specialised in international financial affairs. We describe both how the database was created and the ways in which it can be used to inform policy on money and capital markets. We address why the data can be used to proxy the size of International Financial Centres (IFCs) and the methodological limitations it may present. We find that banking consolidations and the evolution of the legal framework are more central to the changing geography of banking centres than economic and financial crises. We also highlight that, despite major shifts in global economic power, leading banking centres are hard to replace.
Topic:
Economy, Brexit, History, Fiscal Policy, and Banking
Political Geography:
Global Focus

188. COVID-19 in the European Union: health impacts and effects on economic activity

Author:
Leonardo Cadamuro, Scott Marcus, and Francesco Papadia
Publication Date:
07-2022
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
This paper quantitatively describes different aspects of the COVID-19 pandemics: new cases, hospitalisations, intensive-care admissions and deaths, while illustrating their changing relationships over time. It then assesses how the different variables have affected relevant sectoral and macroeconomic indicators. Finally, it concludes that, from an economic perspective, what matters when it comes to managing the pandemic is to prevent intensive-care admissions and deaths arising from COVID-19. The success of vaccination should be measured in terms of its ability to prevent the most serious consequences, rather than its ability to prevent infections and hospitalisations.
Topic:
Health, European Union, Economy, Macroeconomics, and COVID-19
Political Geography:
Global Focus

189. The Instability of Preferences: Uncertain Futures and the Incommensurable and Intersubjective Nature of Value(s

Author:
Richard Bronk and Jens Beckert
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The default assumption of standard economics is to treat preferences as exogenously ‘given’, consistent with one another, ‘revealed’ by past choices, and context independent. There has been increased interest recently (within behavioural economics) in the impact of inconsis- tent or irrational preferences and (more broadly) in dynamic and endogenous preferences. This paper builds on these challenges to standard assumptions by analysing the pivotal role of three aspects of preference formation in explaining capitalist dynamics and market insta- bility. These are the constant creation of new preferences and the indeterminacy of choice sets in the context of widespread product innovation; the moral indeterminacy implied by conflicting and incommensurable social norms attaching to market goods where there is no single scale of value and hence no unique set of rational trade-offs; and, lastly, the con- tingent social and market construction of the product differentiation, quality attribution, and value assessments central to preference formation. The paper concludes by considering implications for economics as a discipline.
Topic:
Economics, Capitalism, Norms, and Social Order
Political Geography:
Global Focus

190. No Strings Attached: Corporate Welfare, State Intervention, and the Issue of Conditionality

Author:
Fabio Bulfone, Timur Ergen, and Manolis Kalaitzake
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
This paper contributes to Comparative Political Economy (CPE), developing an analytical concept of corporate welfare. Corporate welfare — the transfer of public funds and benefits to corporate actors with weak or no conditionality — is a prominent form of state-business relations that CPE scholarship regularly overlooks and misinterprets. Such transfers should be understood as a structural privilege of business in a globalized post-Fordist capitalism, and an increasingly common strategy through which states attempt to steward national economic dynamism within a highly constrained range of policy options. However, with- out a well-developed concept of corporate welfare – premised upon the key criterion of conditionality – studies that identify a “return” of the state in industrial planning misrepre- sent these transfers to business as a reassertion of state influence and control, rather than a reflection of state weakness and subordination. The paper provides the analytical building blocks to properly conceptualize transfers to business, works out the core challenges for em- pirical research, and provides empirical illustrations of this burgeoning phenomenon from the fields of unconventional monetary policy, privatization, and urban political economy.
Topic:
Industrial Policy, Political Economy, Privatization, Monetary Policy, Welfare, and Public-Private Partnership
Political Geography:
Global Focus

191. We Will Build the Future: A Plan to Save the Planet

Author:
Tricontinental: Institute for Social Research
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
Tricontinental: Institute for Social Research
Abstract:
Under the leadership of the Bolivarian Alliance for the Peoples of Our America – People’s Trade Treaty (ALBA-TCP), Tricontinental: Institute for Social Research partnered with 26 research institutes from around the world to draft A Plan to Save the Planet. This living, evolving document puts forward a vision for the present and the immediate future centred on twelve key themes: democracy and the world order, the environment, finance, health, housing, food, education, work, care, women, culture, and the digital world. Dossier no. 48 includes and elaborates on the Plan and lays out our orientation, principles, and horizon.
Topic:
Climate Change, Environment, Regional Cooperation, and Green Technology
Political Geography:
Global Focus

192. The Tenth NPT Review Conference: In the Shadow of Russian Aggression in Ukraine

Author:
Shimon Stein and Ephraim Asculai
Publication Date:
08-2022
Content Type:
Working Paper
Institution:
Institute for National Security Studies (INSS)
Abstract:
The 10th Non-Proliferation Treaty (NPT) Review Conference is underway in New York, against the background of the Russian invasion of Ukraine, in itself a gross violation of the treaty; Putin’s threat to resort to nuclear weapons; the deadlock in negotiations with Iran; and more. In these difficult circumstances, the participants will hopefully be able at the very least to issue a joint statement affirming the norms underlying the NPT
Topic:
Security, International Cooperation, Military Strategy, and Nonproliferation Treaty (NPT)
Political Geography:
Global Focus

193. Transportation and National Security

Author:
Yossi Daskal
Publication Date:
07-2022
Content Type:
Working Paper
Institution:
Institute for National Security Studies (INSS)
Abstract:
Congestion on the roads, traffic accidents, and rising levels of air pollution – transportation affects the health, economy, and well-being of the residents of Israeli Therefore, discussions of national security must include deliberations on improving transportation in Israel
Topic:
Security, Infrastructure, Public Policy, and Transportation
Political Geography:
Global Focus

194. High-Power Laser Applications on the Future Battlefield

Author:
Yehoshua Kalisky
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Institute for National Security Studies (INSS)
Abstract:
“Within a year we will operate a laser interception system” – Thus the Prime Minister Bennett declared at the yearly conference of the INSS. What are the differences between the various laser systems and what are the advantages and disadvantages of these types of air defense systems?
Topic:
Science and Technology, Military Strategy, Innovation, and Laser Technology
Political Geography:
Global Focus

195. Investigation of Russia's Crimes in Ukraine: A Turning Point for the International Criminal Court?

Author:
Ori Beeri and Pnina Sharvit Baruch
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Institute for National Security Studies (INSS)
Abstract:
The Chief Prosecutor at The Hague has already begun to investigate actions taken by Russia in the Ukrainian arena, while accelerating judicial proceedings and bureaucracy. This reflects a change of approach, which includes the prioritization of recent events, as part of an effort to strengthen the status of the Court. How will this affect the investigation of the war in Eastern Europe – and the investigation concerning Israel?
Topic:
Military Strategy, Conflict, International Crime, and Russia-Ukraine War
Political Geography:
Russia, Europe, Ukraine, and Global Focus

196. Does environmental policy uncertainty hinder investments towards a low-carbon economy?

Author:
Joëlle Noailly, Laura Nowzohour, and Matthias Van Den Heuvel
Publication Date:
08-2022
Content Type:
Working Paper
Institution:
Centre for International Environmental Studies, The Graduate Institute (IHEID)
Abstract:
We use machine learning algorithms to construct a novel news-based index of US environmental and climate policy uncertainty (EnvPU) available on a monthly basis over the 1990-2019 period. We find that the EnvPU index spikes during the environmental spending disputes of the 1995-1996 government shutdown, in the early 2010s due the failure of the national cap-and-trade climate bill and during the Trump presidency. We examine how elevated levels of environmental policy uncertainty relate to investments in the low-carbon economy. In firm-level estimations, we find that a rise in the EnvPU index is associated with a reduced probability for cleantech startups to receive venture capital (VC) funding. In financial markets, a rise in our EnvPU index is associated with higher stock volatility for firms with above-average green revenue shares. At the macro level, shocks in our index lead to declines in the number of cleantech VC deals and higher volatility of the main benchmark clean energy exchange-traded fund. Overall, our results are consistent with the notion that policy uncertainty has adverse effects on investments for the low-carbon economy hindering progress to address the urgency of climate action.
Topic:
Environment, Finance, Economy, Investment, Institutions, and Decarbonization
Political Geography:
Global Focus

197. World Economy Autumn 2022: Global growth falters

Author:
Klaus-Jurgen Gern, Ulrich Stolzenburg, Nils Sonnenberg, Stefan Kooths, and Jan Reents
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
In spring 2022, world economic growth came to a standstill amid high inflation, persistent supply bottlenecks and elevated uncertainty. In many countries real wages are declining significantly dampening private consumption even though extra savings accumulated during the pandemic are still available to mitigate the adverse impact to some extent. At the same time financial conditions have also deteriorated as central banks tightened their policies. In China, the strict zero-covid policy and problems in the real estate sector are slowing economic activity. Against this backdrop, the outlook for the global economy has deteriorated further. We have, again, lowered our forecast and are now expecting global output to increase by only 2.9 percent this year and 2.2 percent next year (calculated on a purchasing power parity basis). The forecast assumes that commodity prices will gradually decline in line with forward prices, which will over time reduce the upward pressure on prices and provides the foundations for an economic upturn in 2024. However, the pass-through of higher commodity prices into consumer prices is probably not yet complete and wage increases are likely to intensify in many countries. Consequently, underlying inflation is likely to remain higher than in the years before the Covid crisis and remain above central bank targets over the forecast horizon
Topic:
Economics, Globalization, Economic Growth, and COVID-19
Political Geography:
Global Focus

198. World economy in summer 2022: Inflation is curbing global growth

Author:
Klaus-Jurgen Gern, Ulrich Stolzenburg, Nils Sonnenberg, Stefan Kooths, and Jan Reents
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
In a situation with already elevated inflation, the war in Ukraine and the zero-covid policy in China have led to additional upward pressures on prices and reinforced the global supply chain problems. Real wages are declining in many countries, dampening personal consumption expenditures even though households are often able to draw from a substantial amount of extra savings accumulated during the pandemic. Given the widespread inflationary pressures, central banks have shifted towards a more restrictive monetary policy stance. Against this backdrop, the outlook for global growth has weakened. We forecast global growth of 3.0 percent in 2022 and 3.2 percent in 2023 (measured in terms of purchasing-power parities), representing a reduction by 0.5 and 0.4 percentage points for 2022 and 2023, respectively. The forecast is based on the assumption that commodity prices have peaked, which would reduce inflationary pressures considerably going forward. However, there is the risk that inflation proves to be more persistent than central banks expect. In such a case, central banks would need to step on the brakes more than assumed, with the risk of a recession in advanced economies and a pronounced deterioration in financial conditions in emerging markets
Topic:
Security, Economics, Inflation, COVID-19, and Russia-Ukraine War
Political Geography:
Global Focus

199. Do various innovation linkages enhance innovation? International evidence

Author:
Rajeev K. Goel
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Whereas various drivers of the international innovative activity have been studied in the literature, our understanding of the contributions of different innovation linkages to innovation deserves more attention. Are the different innovation linkages equally complementary to research inputs in fostering innovation? This paper addresses the contributions of different innovation linkages to innovation, across two different measures of innovation. We find that a broader index of innovation linkages shows positive and significant spillovers on innovation, while joint ventures and university-industry collaborations fail to exert a significant influence. These spillovers are reinforced by the positive and expected impacts of R&D spending. In other results, greater venture capital investments boost innovation in most cases, while more FDI boosts one type of innovation output. These findings are uniquely shown to be sensitive across least- and most innovative nations when a quantile regression is employed. Implications for technology policy are discussed.
Topic:
Development, Science and Technology, Innovation, and Research and Development
Political Geography:
Global Focus

200. Closing Pandora’s Box: How to Improve the Common Reporting Standard

Author:
Menusch Khadjavi and Marjolein Vertelman
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
The 2021 pandora papers show that many wealthy individuals and even politicians use shell companies to hide their fortunes. In order to fight international personal tax evasion, the Common Reporting Standard (CRS) was implemented and it helped governments to collect USD 85 billion already. USD 182 billion are still missing from the government budget because of personal tax evasion. The individual implementation strategies of CRS compliant countries can endanger the effectiveness of the Automatic Exchange of Information (AEOI). Several loopholes are used to circumvent the CRS. There are amendments possible which increase the effectiveness by improving the implementation strategies and closing the loopholes. The enforcement of the CRS should become stricter by removing financial institutions’ licenses to operate in cases of non-compliance. Beneficial ownership registers should increase transparency regarding investments and securities. Within the current momentum of international tax legislation, the CRS compliant countries may leverage the USA into signing the CRS as well. The USA could in turn demand a more effective CRS before signing it.
Topic:
Reform, Finance, Business, and Wealth
Political Geography:
Global Focus