Content Type: Working Paper / Topic: Economics

401. Construction of an Extended Environmental and Economic Social Accounting Matrix from a Practitioner’s Perspective

Author:: Onil Banerjee, Martin Cicowiez, Renato Vargas, and Mark Horridge
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:: In 2014, the United Nations published the first International Standard for environmental economic statistics, known as the System of Environmental-Economic Accounting (SEEA).. As more countries adopt and implement the SEEA, the availability of consistent environmental and economic information increases the need for analytical tools that can use this data to respond to policy relevant questions. In this paper, we present a workflow to develop an environmentally extended social accounting matrix, which can serve as the basic database for the development of environmentally-extended computable general equilibrium models. To illustrate, and given its comprehensive implementation of the SEEA, we apply this workflow to the Guatemalan case and the Integrated Economic-Environmental Modeling (IEEM) Platform.
Topic:: Economics, United Nations, Basic Data, Accountability, Economic Policy, and Statistics
Political Geography:: South America, Latin America, Central America, Guatemala, and Global Focus

402. Demand-Driven Youth Training Programs: Experimental Evidence from Mongolia

Author:: José Galdo, Bayarmaa Dalkhjavd, Altantsetseg Batchuluun, Soyolmaa Batbekh, and Maria Laura Alzúa
Publication Date:: 08-2019
Content Type:: Working Paper
Institution:: Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:: Because of its high incidence and potential threat to social cohesion, youth unemployment is a global concern. This study uses a randomized controlled trial to analyze the effectiveness of a demand-driven vocational training program for disadvantaged youth in Mongolia. Mongolia, a transitional country whose economic structure shifted from a communist, centrally planned economy to a free-market economy over a relatively short period, offers a new setting in which to test the effectiveness of standard active labor market policies. This study reports positive and statistically significant short-term effects of vocational training on monthly earnings, skills matching, and self-employment. Substantial heterogeneity emerges as relatively older, richer, and better-educated individuals drive these positive effects. A second intervention that randomly assigns participants to receive repetitive weekly newsletters with information on market returns to vocational training shows positive impacts on the length of exposure to and successful completion of the program. These positive effects, however, are only observed at the intensive margin and do not lead to higher employment or earnings outcomes.
Topic:: Development, Economics, Industrial Policy, Labor Issues, Employment, Youth, and Labor Policies
Political Geography:: Mongolia and Asia

403. Living with the Neighbors: The Effect of Venezuelan Forced Migration on Wages in Colombia

Author:: Leonardo Peñaloza Pacheco
Publication Date:: 07-2019
Content Type:: Working Paper
Institution:: Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:: The aim of this paper is to estimate the causal effect of the migration of Venezuelans to Colombia on the Colombian real wage, since 2016. In the second semester of 2016, the borders between Colombia and Venezuela were reopened after a year of being closed due to a political crisis between the two countries; this re-opening is exploited as an identification strategy. Using data from the Unidad Administrativa Especial de Migraci´on Colombia and the Registro Administrativo de Migrantes Venezolanos in Colombia, it is estimated that the migratory flow of Venezuelans to Colombia increased the Economically Active Population of the border areas of La Guajira and Norte de Santander by approximately 10% and 15%, since its reopening. Differences-in-differences methodology and Synthetic Control Method are implemented and the results show that the increase in labor supply in these regions that resulted from the migratory flow generated a decline in real hourly wages of approximately 6%-9% on average. This decrease in real wages appears to be greater for men as compared to women. There is also evidence of a greater drop in real wages among people with lower levels of qualification and in conditions of informal employment.
Topic:: Economics, Migration, Political Economy, Labor Issues, Employment, and Income Inequality
Political Geography:: Colombia, Latin America, and Venezuela

404. Gender Gaps in Labor Informality: The Motherhood Effect

Author:: Mariana Marchionni, María Edo, Dolores de la Mata, Lucila Berniell, and Inés Berniell
Publication Date:: 06-2019
Content Type:: Working Paper
Institution:: Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:: Recent work has quantified the large negative effects of motherhood on female labor market outcomes in Europe and the US. But these results may not apply to developing countries, where labor markets work differently and informality is widespread. In less developed countries, informal jobs, which typically include microenterprises and self-employment, offer more time flexibility but poorer social protection and lower labor earnings. These characteristics affect the availability of key inputs in the technology to raise children, and therefore may affect the interplay between parenthood and labor market outcomes. Through an event-study approach we estimate short and long-run labor market impacts of children in Chile, an OECD developing country with a relatively large informal sector. We find that the birth of the first child has strong and long lasting effects on labor market outcomes of Chilean mothers, while fathers remain unaffected. Becoming a mother implies a sharp decline in mothers’ labor supply, both in the extensive and intensive margins, and in hourly wages. We also show that motherhood affects the occupational structure of employed mothers, as the share of jobs in the informal sector increases remarkably. In order to quantify what the motherhood effect would have been in the absence of an informal labor market, we build a quantitative model economy, that includes an informal sector which offers more flexible working hours at the expense of lower wages and weaker social protection, and a technology to produce child quality that combines time, material resources and the quality of social protection services. We perform a counterfactual experiment that indicates that the existence of the informal sector in Chile helps to reduce the drop in LFP after motherhood in about 35%. We conclude that mothers find in the informal sector the flexibility to cope with both family and labor responsibilities, although at the cost of resigning contributory social protection and reducing their labor market prospects.
Topic:: Economics, Gender Issues, Political Economy, and Women
Political Geography:: Latin America and Chile

405. Multiple Violations of Labor Market Regulations: Patterns in the Peruvian Labor Market and the Impact of Enforcement

Author:: Mariana Viollaz
Publication Date:: 04-2019
Content Type:: Working Paper
Institution:: Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:: This paper quantifies labor law violations and how the enforcement efforts impact on the compliance level by considering the possibility of different labor regulations being violated simultaneously. The findings for the Peruvian labor markets over the period 2004-2013 indicate that: (i) multiple violations of labor regulations are an important feature of Peruvian labor markets; (ii) young workers, workers with low level of education, indigenous workers, workers in micro firms and workers employed in the agricultural sector have higher chances of being deprived of several labor benefits simultaneously; (iii) the enforcement of labor regulations, captured through the number of labor inspections at the region level, is effective in detecting and penalizing extreme situations of multiple violations of the labor law, but the evidence also suggests that firms adjust only partially as an attempt to reduce the amount of a potential fine if discovered, and that laid off workers during the adjustment process moved to the informal sector where firms are not inspected. These findings are useful from a policy perspective indicating that there is space to improve firms’ incentives when facing an increase in the enforcement effort.
Topic:: Economics, Labor Issues, Law Enforcement, Law, Regulation, Labor Policies, and Economic Policy
Political Geography:: Latin America and Peru

406. Oh Mother: The Neglected Impact of School Disruptions

Author:: David Jaume and Alexander Willén
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:: Temporary school closures (TSC) represent a major challenge to policymakers across the globe due to their potential impact on instructional time and student achievement. A neglected but equally important question relates to how such closures affect the labor market behavior of parents. This paper provides novel evidence on the effect of temporary school closures on parental labor market behavior, exploiting the prevalence of primary school teacher strikes across time and provinces in Argentina. We find clear evidence that temporary school closures negatively impact the labor market participation of mothers, in particular lower-skilled mothers less attached to the labor force and mothers in dual-income households who face a lower opportunity cost of dropping out of the labor force. This effect translates into a statistically significant and economically meaningful reduction in labor earnings: the average mother whose child is exposed to ten days of TSCs suffers a decline in monthly labor earnings equivalent to 2.92% of the mean. While we do not find any effects among fathers in general, fathers with lower predicted earnings than their spouses also experience negative labor market effects. This suggests that the parental response to TSCs depend, at least in part, on the relative income of each parent. A back-of-the-envelope calculation suggest that the aggregate impact of TSCs on annual parental earnings is more than $113 million, and that the average mother would be willing to forego 1.6 months of labor earnings in order to ensure that there are no TSCs while her child is in primary school.
Topic:: Economics, Education, Markets, Political Economy, and Labor Issues
Political Geography:: United States

407. Intra-Household Inequality and Child Welfare in Argentina

Author:: Miriam Berges, Federico Perali, Martina Menon, and Lucía Echeverria
Publication Date:: 01-2019
Content Type:: Working Paper
Institution:: Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:: Are two parents and single parents allocating household resources to children in the same way? Which factors affect intra-household inequality? Do mothers re-distribute more income to children as they are more empowered? We focus on child welfare in the context of two parent and single parent families, which is relevant for policy recommendation. We model households behavior in a collective framework, which allows us to understand the rule governing the allocation process between adults and children. Using consumption data from Argentina from three consecutive expenditures surveys (1996, 2004 and 2012) we analyze intra-household behavior over three different socio-economic contexts. We estimate a collective quadratic demand system following a structural approach to identify the fraction of total household expenditure that is devoted to children and adults, exploiting the observability of assignable goods. We provide the first evidence of intra-household inequality and individual poverty levels for Argentina. Our results indicate that family structure matters in the intra-household distribution. We find a positive gender bias in expenditure when children are females for both types of families, and we document that children fare better when mothers have a higher bargaining power in the allocation process, measured by their employment status. Further, we find several features of intra-household behavior which are persistent in time.
Topic:: Economics, Political Economy, Children, Income Inequality, Child Poverty, and Family
Political Geography:: Argentina and Latin America

408. Formal Employment and Organized Crime: Regression Discontinuity Evidence from Colombia

Author:: Jorge Tamayo, Anant Nyshadham, Carlos Medina, and Gaurav Khanna
Publication Date:: 08-2019
Content Type:: Working Paper
Institution:: Empirical Studies of Conflict Project (ESOC)
Abstract:: Canonical models of crime emphasize economic incentives. Yet, causal evidence of sorting into criminal occupations in response to individual-level variation in incentives is limited. We link administrative socioeconomic microdata with the universe of arrests in Medellίn over a decade. We exploit exogenous variation in formal-sector employment around a socioeconomic-score cutoff, below which individuals receive benefits if not formally employed, to test whether a higher cost to formal-sector employment induces crime. Regression discontinuity estimates show this policy generated reductions in formal-sector employment and a corresponding spike in organized crime, but no effects on crimes of impulse or opportunity.
Topic:: Crime, Economics, Political Economy, and Labor Issues
Political Geography:: Colombia and Latin America

409. Regression Tree Analysis of soil Fertility and Agro-Economic Practices and the Effects on Yield in Tanzania

Author:: Jan Lietava and Risa Morimoto
Publication Date:: 02-2019
Content Type:: Working Paper
Institution:: School of Oriental and African Studies - University of London
Abstract:: Food security and yield production have been extensively studied in regard to fertiliser response in the context of Sub-Saharan Africa. Soil fertility gradients within farms interact with other complex factors such as plot management, alongside bio-physical as well as socio-economic constraints, to create extensive heterogeneity in yield production. Hence, blanket recommendations regarding increasing inputs may not just lead to limited or no change in productivity but may affect long term sustainability. To try and explore the relationships between these factors, Classification and Regression Tree (CART) analysis was used to simplify the effect of plot management decisions. Data was from the focal plots of the 2016 and 2017 Tanzanian Agronomy Panel Survey (TAPS 2017; n = 580) with a range of yields and socio-economic contexts (2.10tha-1 – 3.68tha-1). Results suggested that in low resource fields, management factors are subservient to extreme soil degradation while in high resource fields good management such as optimal planting are needed for maximum predicted yield (4.48tha-1; n = 51). Boundary line analysis was conducted, and maximum yield-nutrient response values calculated. The yield gap obtained suggested only up to 60% of locally obtainable yield is reached, highlighting the necessary balance between intensity of resource use and good management for sustainable and sufficient crop production, especially in the case of extreme soil degradation.
Topic:: Agriculture, Economics, Environment, Food, and Food Security
Political Geography:: Africa and Tanzania

410. Post-Truth: An Alumni Economist's Perspective

Author:: Ben Fine
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: School of Oriental and African Studies - University of London
Abstract:: Drawing upon fifty years as an academic economist, this lecture to alumni of SOAS’s Department of Economics reflects upon the continual “post-truth” aspects of mainstream economics, ranging over its substantive, if shifting, content, its methodology, and its treatment of methodology and interdisciplinarity. It draws upon a wide range of theory, empirical analysis, policy and anecdote to highlight both the need for alternatives and the continuing, even increased, failure of the mainstream to engage with criticism and alternatives.
Topic:: Economics, Imperialism, Economic Theory, and Economic Cooperation
Political Geography:: Global Focus

411. Labor Institutions and Development Under Globalization

Author:: Servaas Storm and Jeronim Capaldo
Publication Date:: 07-2019
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: Labor market regulation is a controversial area of public policy in both developed and developing countries. After decades of de-regulatory advice, international financial institutions have recently come to a less extreme position. But any concessions to labor regulation are based on concerns for social stability or for short-term support to aggregate demand, while regulation continues to be viewed as harmful to economic efficiency. In this paper we take a deeper look at the impact of labor institutions on economic development in two ways. First, we propose a macroeconomic model with balance-of-payments constraint for a “small” developing country open to trade and foreign capital. This helps us clarify the importance of a dynamic view of economic efficiency, as opposed to the static view embedded in mainstream policy advice. Secondly, we discuss the political economy of labor regulation. We argue that labor institutions promote economic development though positive effects on aggregate demand, labor productivity and technology.
Topic:: Economics, Labor Issues, Regulation, Labor Market, and Labor Cost
Political Geography:: Global Focus

412. Publishing and Promotion in Economics: The Tyranny of the Top Five

Author:: James J. Heckman and Sidharth Moktan
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: This paper examines the relationship between placement of publications in Top Five (T5) journals and receipt of tenure in academic economics departments. Analyzing the job histories of tenure-track economists hired by the top 35 U.S. economics departments, we find that T5 publications have a powerful influence on tenure decisions and rates of transition to tenure. A survey of the perceptions of young economists supports the formal statistical analysis. Pursuit of T5 publications has become the obsession of the next generation of economists. However, the T5 screen is far from reliable. A substantial share of influential publications appear in non-T5 outlets. Reliance on the T5 to screen talent incentivizes careerism over creativity.
Topic:: Economics, Academia, Publishing, Career, and Academic Journals
Political Geography:: North America and United States of America

413. No Data in the Void: Values and Distributional Conflicts in Empirical Policy Research and Artificial Intelligence

Author:: Maximilian Kasy
Publication Date:: 08-2019
Content Type:: Working Paper
Institution:: Economics for Inclusive Prosperity (EfIP)
Abstract:: Decision making based on data - whether by policymakers drawing on empirical research, or by algorithms using machine learning - is becoming ever more widespread. Any time such decisions are made, we need to carefully think about the goals we want to achieve, and the policies we might possibly use to achieve them. Data cannot absolve us of this responsibility. They do not allow us to avoid value judgements, and do not relieve us from taking sides in distributional conflicts. This essay introduces a general framework to clarify this point, and then discusses a series of settings in which the choice of objectives (goals) has far-reaching and maybe unexpected implications.
Topic:: Economics, Science and Technology, Labor Policies, Economic Policy, and Artificial Intelligence
Political Geography:: United States

414. The Impact of Macroeconomic Variables on Capital Market Development in Botswana’s Economy

Author:: Koketso Molefhi
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Botswana Institute for Development Policy Analysis
Abstract:: The study examines the impact of macroeconomic variables on stock and bond markets development in Botswana using Autoregressive Distributed Lag (ARDL)-Bounds Test. The results indicate that macroeconomic variables have an impact on capital market development in Botswana. In the short run, real output, money supply and inflation have a positive influence on the development of the stock market, while real exchange rate retards its development. Real output further supports the development of the stock market in the long run. For the bond market, only two variables, inflation rate and lending rate have positive and negative impact on the bond market in the long run respectively, while none of the variables influence the bond market in the short run. Policy implications include increased efforts by policy makers to increase money supply, gross domestic product for the development of stock market, while the bond market development requires a decrease in lending rates.
Topic:: Economics, Markets, Capital Flows, Macroeconomics, and Economic Development
Political Geography:: Africa and Botswana

415. Structural Transformation and Fiscal Policy in Botswana

Author:: Kelesego Mmolainyane
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Botswana Institute for Development Policy Analysis
Abstract:: This paper analyses impacts of fiscal policy on structural transformation in Botswana using structural vector autoregression (SVAR) model over the period of 1990 to 2015. The study uses an inclusive sustainable transformation (IST) index and government expenditure as proxies for structural transformation and fiscal policy respectively. Results show that prudent fiscal policy can be used as a major strategic tool for structural transformation in Botswana. Most evidently, IST index responds positively to government expenditure shocks over time. In addition, fiscal policy innovations dominantly account for movements in structural transformation in Botswana. Notwithstanding, Botswana has a lot of potential and opportunity to use its fiscal policy more effectively and efficiently to promote an inclusive structural transformation that leads to sustainable economic growth.
Topic:: Economics, Economic structure, Macroeconomics, and Fiscal Policy
Political Geography:: Africa and Botswana

416. Unemployment in the SADC Region

Author:: Johanne Motsatsi
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Botswana Institute for Development Policy Analysis
Abstract:: The objective of this study is to estimate the determinants of unemployment in the Southern African Development Community (SADC) region using annual data from 2000 to 2016. Given the characteristic of the data, the study adopts Fixed Effect (FE) estimation technique. For further analysis, the study also estimated the ARDL panel model to capture persistence effect of unemployment in the region. The FE results reveals that real GDP, foreign direct investment, consumer price index, credit to the private sector and interest rate are negatively related to unemployment. While trade openness, labour productivity and population have a positive sign. The results estimated with ARDL model are not very different from those of FE model, but we obtained a noticeably smaller estimates for ARDL model. Variables which have negative association with unemployment suggest that they are likely to reduce unemployment. Therefore, such indicators may be of interest to policy makers when formulating unemployment reduction strategies. In terms of policy advise, the study recommends the government of SADC member states to encourage the education system that can equip leaners with entrepreneurial skills and in-job practical skills, in order to promote high success rate of SMMEs as well as to provide skills needed in the labour market. It also recommended enforcement of free trade of goods and services in the region as a means of making the industrial sector an engine of economic growth in order to create much needed employment.
Topic:: Development, Economics, Labor Issues, Employment, Labor Policies, Macroeconomics, and Unemployment
Political Geography:: Africa and Botswana

417. Consumption Inequality in Botswana: The Decomposition of the Gini Coefficient of Consumer Expenditures

Author:: Lillian Mookodi
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Botswana Institute for Development Policy Analysis
Abstract:: This paper applies the Lerman and Yitzhaki (1985) inequality decomposition approach on food and non-food expenditures on the 2009/10 Botswana Core Welfare Indicator Survey; and the 2015/16 Multi Topic Indicator Survey datasets with an objective to see how overall inequality translates into inequality within each expenditure component. To test for a robustness of our results, we apply a simple bootstrap procedure to obtain the means, standard errors and confidence intervals for the component Gini coefficients estimates. The decomposition analysis results show that overall inequality based on the Gini coefficient of consumption expenditure within the groups has increased between the two periods from 0.498 to 0.533. These results suggest that this rise in overall expenditure inequality is due to the increased burden in the household budget of non-food spending, which tends to be more unequal than food spending. The consumption expenditure is very unequal on non-food items like recreation and hotels; health; education and transport. On one hand, lower Gini coefficients are observed for food; and clothing and footwear; these commodities are considered as necessities among others. This paper finally offers some possible policy measures to curb this consumption expenditure inequality.
Topic:: Economics, Developing World, Inequality, and Economic Inequality
Political Geography:: Africa and Botswana

418. The Impact of Infrastructure on Economic Growth in Botswana

Author:: Mpho Raboloko
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Botswana Institute for Development Policy Analysis
Abstract:: The study determines the impact of infrastructure on economic growth in Botswana. The study employs an Autoregressive Distributed Lag (ARDL) estimation technique to determine how infrastructure affects economic growth in Botswana. The empirical results show that healthcare infrastructure has a positive and significant impact on economic growth in Botswana in the long run. The results further reveal that electric power consumption has a positive and significant effect in influencing economic growth in the short run. The results imply that in order to achieve higher economic growth, policymakers should consider accelerating improvement of healthcare infrastructure.
Topic:: Agriculture, Economics, Infrastructure, Health Care Policy, Economic structure, Economic Growth, and Rural
Political Geography:: Africa and Botswana

419. The Impact of Business Regulatory Quality on Private Sector Investment in Botswana

Author:: Kedibonye Sekakela
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Botswana Institute for Development Policy Analysis
Abstract:: A market-friendly regulatory environment is key for private sector investment. In this paper, we examine the impact of business regulatory quality on private sector investment in Botswana. The paper finds that the business regulatory environment stimulates private sector investment in the long term and this phenomenon occurs when the quality of bureaucracy improves, among other factors. Other critical factors affecting private sector investment examined in this paper include; corporate credit, output and public infrastructure investment. Private sector investment responds positively to increases in corporate credit in the short term but not responsive in the long term. Economic activities support private sector investment positively but weak. On the other hand, public infrastructure investment crowds in(out) investment in the short and long term respectively. Policy wise, Botswana should further deepen its efforts towards creating a market-friendly regulatory environment and also consider how business regulatory quality interact with other policy variables for better investment and growth outcomes.
Topic:: Economics, Developing World, Regulation, Business, Investment, and Economic Development
Political Geography:: Africa and Botswana

420. Impacts of Access to ICTs on Employment Status in Botswana

Author:: Masedi K. Tshukudu
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Botswana Institute for Development Policy Analysis
Abstract:: It is clear that technology has brought about significant changes in the livelihoods of people, creating new forms of employment and advancing the traditional forms of employment for individuals. Many countries continue to invest in Information and Communication Technologies (ICTs) with the view to tackling some of the economic challenges such as unemployment. Botswana like other African countries has made annual budgetary allocations towards ICT Infrastructure. Despite, the Government’s efforts to invest and improve access to ICT, the country still faces a high unemployment rate, particularly for the youth. This study therefore, investigates the impact that access to ICTs has on the employment of individuals in Botswana. In order to provide a detailed analysis of the impact of ICTs on employment we apply a probit model for binary choice responses to being employed or not being employed, using the data from the 2014 Botswana Household Access and Individual use of Information Communication Technology Survey carried out by the Statistics Botswana. The empirical results provide evidence that access to ICTs collectively has a positive impact on employment in Botswana. However, disaggregating the ICTs forms presents slightly different results, e-skill training and access to the internet in Botswana are not significant in explaining an individual’s employment status, this may be associated with low uptake of internet and ICTs skills by individuals in Botswana. The policy message from this study is that there is a need for aggressive implementation of collective ICT. [In addition, there is need to improve collective ICTs infrastructure to create more employment].
Topic:: Development, Economics, Science and Technology, Communications, Information Age, and Economic Development
Political Geography:: Africa and Botswana

421. Financial Inclusion and its Impact on Employment Creation in Botswana

Author:: Koketso Molefhi
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Botswana Institute for Development Policy Analysis
Abstract:: The study examines the impact of financial inclusion on employment creation in Botswana using quarterly time series data for the period 2004-2016. Using Autoregressive Distributed Lag (ARDL) model, we find that availability of bank branches, ownership of bank account and borrowing from the commercial bank have a positive impact on employment creation in the short run. Similarly, in the long run, availability of bank branches, ownership of bank account has a positive relationship with employment creation in the long run. Depositors with commercial banks has a negative bearing on employment creation, both in the short run and in the long run. Therefore, policies should be aimed at ensuring easy access into the financial sector by way of reducing costs associated with account opening as well as creating affordable deposit and borrowing windows to the financially excluded groups.
Topic:: Economics, Labor Issues, Employment, Finance, Financial Markets, and Macroeconomics
Political Geography:: Africa and Botswana

422. Trade And Foreign Direct Investment Nexus In West Africa: Does Export Category Matter?

Author:: Chukwuka Onyekwena, Idris Adermuyiwa, and Eberechukwu Uneze
Publication Date:: 08-2019
Content Type:: Working Paper
Institution:: Centre for the Study of the Economies of Africa (CSEA)
Abstract:: This paper examines the effect of inward FDI in West Africa on exports to EU countries. It investigates from a host country perspective, the impact of FDI on different export categories: primary, intermediate, and final goods.
Topic:: Economics, Foreign Direct Investment, European Union, Exports, and Trade
Political Geography:: Africa and West Africa

423. Resource Sovereignty: The Agenda for Africa’s Exit from the State Plunder

Author:: Tricontinental: Institute for Social Research
Publication Date:: 05-2019
Content Type:: Working Paper
Institution:: Tricontinental: Institute for Social Research
Abstract:: The modern global economy, essentially guarantees the continued expatriation of profits and natural assets from resource-rich but capital-poor countries, facilitating the enrichment of the global economic elite and Multinational Corporations (MNC), at the expense of developing countries. To elaborate on the themes of corporate plunder, resource nationalism and people-centered forms of resource management, Tricontinental: Institute for Social Research spoke with Gyekye Tanoh, head of the Political Economy Unit at the Third World Network-Africa based in Accra (Ghana).
Topic:: Economics, Globalization, Natural Resources, Multinational Corporations, and Profit
Political Geography:: Global Focus

424. Economic Impact Analysis of Credit Guarantee Schemes in Eswatini: A Case of the Small Scale Enterprise Loan Guarantee Scheme (SSELGS)

Author:: Maqhawe Zwane
Publication Date:: 01-2019
Content Type:: Working Paper
Institution:: Eswatini Economic Policy Analysis and Research Centre (ESEPARC)
Abstract:: Using data from 315 beneficiaries of the Small Scale Enterprise Loan Guarantee Scheme, this study assesses the impact of the Small Scale Loan Guarantee Scheme. The study assessed both the financial and economic additionality of the scheme. The study used a structured questionnaire and face-to-face interviews to elicit data from beneficiaries whereas key informant interviews were used to elicit data from participating banks. The study also assessed visibility of the scheme as well as its efficiency in terms of loan approval period and claim processes. From the sampled beneficiaries, 174 SMEs would not have accessed credit if the scheme was non-existent. Collectively, these SMEs received E42, 918,616.00. On the other hand, 72 of the 174 started new businesses and at the time of the interview, they collectively employ 681 people. The study found that the default rate is high at 44.3 %. The approval period of loan application varies widely, with some respondents reporting a period of less than a month while others reported a period of up to four years. The study concludes that the scheme has made a positive impact in both financial and economic additionality. However, two factors (inefficiency in scheme’s operation and high default rate) threaten the scheme’s existence. It is therefore a recommended that scheme managers should put measures to curb the default rate and improve the efficiency and visibility of the scheme.
Topic:: Economics, Business, Credit, and Loans
Political Geography:: Africa and Eswatini

425. An Insight into Community-Based Ecotourism in Eswatini: Theory versus Practice

Author:: Tamika Du-Pont and Thabo Sacolo
Publication Date:: 01-2019
Content Type:: Working Paper
Institution:: Eswatini Economic Policy Analysis and Research Centre (ESEPARC)
Abstract:: The study provides a baseline of the performance of Community-based Ecotourism (CBET) ventures in Eswatini using primary data collected from 186 participants. The data was collected through face-to-face interviews amongst across five CBET sites. Descriptive and thematic analysis were used to identify; the benefits of CBET accrued to host communities, challenges communities experience in providing goods and services to CBET ventures, and the factors preventing broad based participation. Frequencies of responses were used to determine the perceptions and attitudes of host communities towards CBET. The study finds that many of the promises of CBET have not been fully met in Eswatini. Economic benefits have not been widespread and remain minimal, with approximately 42 jobs in total. Participants receive an average monthly income of E1457.40 ± 933.80, an indication of high disparities in monetary incentives amongst participants. The study finds that CBET has been a catalyst for infrastructural development within rural landscapes and provides participants with additional intangible benefits such as a sense of empowerment and belonging. Poor infrastructural maintenance, inadequate marketing and declining tourist visitations are major threats to the sustainability of CBET ventures. Efforts to augment the performance of CBET in Eswatini should focus on investment in research and monitoring of present and potential new CBET ventures. The study recommends integrated and inclusive policies that will promote and allow for expanded local production in the tourism supply chain, partnerships between host communities and industry experts, and local capacity enhancement to reignite CBET within the tourism sector as a serious contender for economic growth.
Topic:: Economics, Tourism, Employment, and Community
Political Geography:: Africa and Eswatini

426. Assessing the Relationship between Brain Drain and the Economy of Eswatini

Author:: Zamokuhle Manana
Publication Date:: 01-2019
Content Type:: Working Paper
Institution:: Eswatini Economic Policy Analysis and Research Centre (ESEPARC)
Abstract:: Eswatini has been experiencing the brain drain phenomenon since the early 90s. Previous studies on the phenomenon attribute the brain drain to high unemployment and the labour market’s inability to absorb emaSwati. With that said, there are still no studies have been conducted to quantify the impacts of brain drain on the economy of the country given its upward trajectory. It is on this premise, that this paper quantifies and assess the relationship between brain drain and economic growth in the short-run. To this end, the study employs secondary annual time series data from the World Bank Indicators for the period 1991 to 2017. The study employs the Bounds approach for co-integration and the short-run Autoregressive Distributed Lag (ARDL) model as estimation techniques. The bounds test found that there is no long-run equilibrium relationship between the variables. According to the ARDL short-run model the study found that all other things being equal, when brain drain increases by 1 percent at a given time period, Gross Domestic Product increase by E171 million the following year in the short-run. Furthermore, the Granger causality test reveals a unidirectional relationship running from Gross Domestic Product to brain drain at the 1% significance level, that is, past economic growth trends is an important predictor of future brain drain trends.
Topic:: Economics, Intelligence, GDP, and Unemployment
Political Geography:: Africa and Eswatini

427. Data Is a Development Issue

Author:: Susan Ariel Aaronson
Publication Date:: 07-2019
Content Type:: Working Paper
Institution:: Centre for International Governance Innovation
Abstract:: Many wealthy states are transitioning to a new economy built on data. Individuals and firms in these states have expertise in using data to create new goods and services as well as in how to use data to solve complex problems. Other states may be rich in data but do not yet see their citizens’ personal data or their public data as an asset. Most states are learning how to govern and maintain trust in the data-driven economy; however, many developing countries are not well positioned to govern data in a way that encourages development. Meanwhile, some 76 countries are developing rules and exceptions to the rules governing cross-border data flows as part of new negotiations on e-commerce. This paper uses a wide range of metrics to show that most developing and middle-income countries are not ready or able to provide an environment where their citizens’ personal data is protected and where public data is open and readily accessible. Not surprisingly, greater wealth is associated with better scores on all the metrics. Yet, many industrialized countries are also struggling to govern the many different types and uses of data. The paper argues that data governance will be essential to development, and that donor nations have a responsibility to work with developing countries to improve their data governance.
Topic:: Development, Economics, Governance, and Data
Political Geography:: Global Focus

428. Canada’s Arctic Agenda: Into the Vortex

Author:: Centre for International Governance Innovation
Publication Date:: 09-2019
Content Type:: Working Paper
Institution:: Centre for International Governance Innovation
Abstract:: Canada’s Arctic Agenda: Into the Vortex brings together leading Arctic thinkers to examine key elements of Canadian Arctic and Northern policy. These experts reflect on the progress that has been made in the past few years in Arctic policies and programs and consider the impact of powerful forces of change and division, both within Canada and abroad, which have produced a vortex of economic, security, environmental and identity challenges for the Canadian Arctic. Addressing the intense, if understated, debate on Canada’s Arctic agenda, this report’s contributors share the consistent message that Northerners must play a leadership role in creating and implementing the policies that affect them. The report also includes a collection of interviews with Jane Glassco Northern Fellows. These thoughtful Indigenous women from across the North in Canada share their perspectives and ideas on the policy issues that require urgent attention to ensure the prosperity of their Northern communities. The well-informed essays and interviews in this report will spark conversation about Canada’s Arctic policy priorities and provide concrete advice to inform the work of Canada’s policy makers moving forward.
Topic:: Security, Economics, Environment, and Identities
Political Geography:: Canada, North America, and Arctic

429. Emerging Countries in Global Financial Regulatory Standard Setting: What Is to Be Done?

Author:: Andrew Walter
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: Centre for International Governance Innovation
Abstract:: This paper explores the role of emerging-country members in the Basel process, a key aspect of the global financial standard-setting process. It argues that this process has been significantly more politically resilient than adjacent aspects of global economic governance, in part because major emerging countries obtain continuing “intra-club” benefits from participation within it. The most important of these are learning benefits, but status and sometimes influence over standard-setting outcomes can also be valuable. The paper outlines how these benefits could be enhanced to secure the ongoing resilience of global financial regulatory governance. It recommends some modest reforms to further improve the position of emerging countries in the process and to bolster its perceived legitimacy among members and non-member countries.
Topic:: Economics, International Trade and Finance, Governance, and Regulation
Political Geography:: Global Focus

430. Global Dimensions of US Monetary Policy

Author:: Maurice Obstfeld
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: This paper is a partial exploration of mechanisms through which global factors influence the tradeoffs that US monetary policy faces. It considers three main channels. The first is the determination of domestic inflation in a context where international prices and global competition play a role, alongside domestic slack and inflation expectations. The second channel is the determination of asset returns (including the natural real safe rate of interest) and financial conditions, given integration with global financial markets. The third channel, which is particular to the United States, is the potential spillback onto the US economy from the disproportionate impact of US monetary policy on the outside world. In themselves, global factors need not undermine a central bank’s ability to control the price level over the long term—after all, it is the monopoly issuer of the numeraire in which domestic prices are measured. Over shorter horizons, however, global factors do change the tradeoff between price-level control and other goals such as low unemployment and financial stability, thereby affecting the policy cost of attaining a given price path.
Topic:: Economics, Government, International Trade and Finance, and Monetary Policy
Political Geography:: North America and United States of America

431. WTO'ing a Resolution to the China Subsidy Problem

Author:: Chad P. Bown and Jennifer A. Hillman
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: The United States, the European Union, and Japan have begun a trilateral process to confront the Chinese economic model, including its use of industrial subsidies and deployment of state-owned enterprises. This paper seeks to identify the main areas of tension and to assess the legal-economic challenges to constructing new rules to address the underlying conflict. It first provides a brief history of subsidy disciplines in the General Agreement on Tariffs and Trade and the World Trade Organization (WTO) predating any concerns introduced by China. It then describes contemporary economic problems with China’s approach to subsidies, their impact, and the apparent ineffectiveness of the WTO’s Agreement on Subsidies and Countervailing Measures to address them. Finally, it calls for increased efforts to measure and pinpoint the source of the problems—in a manner analogous to how the Organization for Economic Cooperation and Development took on agricultural subsidies in the 1980s—before providing a legal-economic assessment of proposals for reforms to notifications, evidence, remedies, enforcement, and the definition of a subsidy.
Topic:: Economics, World Trade Organization, Tariffs, and Trade
Political Geography:: Japan, Europe, Asia, North America, United States of America, and European Union

432. Should Monetary Policy Take Inequality and Climate Change into Account?

Author:: Patrick Honohan
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: Should central banks take more account of ethical issues, notably the impact of monetary policy actions on the distribution of income and wealth and on efforts to combat climate change, in the design and implementation of the wider monetary policy toolkit they have been using in the past decade? Although the scope to influence a range of objectives is more limited than is often supposed, and while it is vital to not derail monetary policy from its core purposes, central bank mandates justify paying more attention to such broad issues, especially if policy choices have a significant potential impact. Carefully managed steps in this direction could actually strengthen central bank independence while making some contribution to improving the effectiveness of public policy on these issues.
Topic:: Climate Change, Economics, Monetary Policy, Inequality, and Central Bank
Political Geography:: North America, Global Focus, and United States of America

433. Creating a Euro Area Safe Asset without Mutualizing Risk (Much)

Author:: Alvaro Leandro and Jeromin Zettelmeyer
Publication Date:: 08-2019
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: This paper explains and evaluates three proposals to create “safe assets” for the euro area based on sovereign bonds, in which sovereign risk is limited through diversification and some form of seniority. These assets would be held by banks and other financial institutions, replacing concentrated exposures to their own sovereigns. The paper focuses on three ideas: (1) to create multitranche “sovereign bond-backed securities” (SBBS), of which the senior tranche would constitute a safe asset; (2) to create a senior, publicly owned financial intermediary that would issue a bond backed by a diversified portfolio of sovereign loans (“E-bonds”); and (3) to issue sovereign bonds in several tranches and induce banks to hold a diversified pool of senior sovereign bonds (“multitranche national bond issuance”). Public attention (including public criticism) has so far focused on the first idea; the other two have not yet been seriously debated. The authors find that none of the competing proposals entirely dominates the others. SBBS do not deserve most of the criticism to which they have been subjected. At the same time, E-bonds and multitranche national bond issuance have several interesting features—including inducing fiscal discipline—and warrant further exploration.
Topic:: Economics, Sovereign Wealth Funds, Banks, and Risk
Political Geography:: Europe and Global Focus

434. Measuring the Rise of Economic Nationalism

Author:: Monica de Bolle and Jeromin Zettelmeyer
Publication Date:: 08-2019
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: Since the mid-2000s, the platforms of major political parties in both advanced and emerging-market economies have increasingly emphasized policies that stress national sovereignty, reject multilateralism, and seek to advance national interests through measures that come at the expense of foreign interests. This paper documents this shift by evaluating the policy platforms of the largest political parties (about 55 in total) in the Group of Twenty (G-20) countries with regard to trade policy, foreign direct investment (FDI), immigration, and multilateral organizations. Preference shifts with respect to industrial policy, competition policy, and macroeconomic populism are also examined. In advanced economies, the biggest shifts were toward restrictions on immigration and trade and toward macroeconomic populism. In emerging-market economies, the largest preference shifts were toward industrial policies favoring specific sectors, macroeconomic populism, and industrial concentration. Trade protectionism and skepticism toward multilateral organizations and agreements have increased in both advanced and emerging-market economies. As of 2018, economic policy preferences in emerging-market economies were more nationalist and less liberal than in advanced countries, but the gap has narrowed. Right-wing parties tend to be more nationalist than left-wing parties in the areas of immigration restrictions, FDI restrictions, and antimultilateralism, but there is no significant difference with respect to trade protectionism.
Topic:: Economics, International Trade and Finance, Nationalism, Politics, Populism, and Macroeconomics
Political Geography:: Global Focus

435. Does Trade Reform Promote Economic Growth? A Review of Recent Evidence

Author:: Douglas A. Irwin
Publication Date:: 05-2019
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: Do trade reforms that significantly reduce import barriers lead to faster economic growth? In the two decades since the critical survey of empirical work on this question by Francesco Rodriguez and Dani Rodrik in 2000, new research has tried to overcome the various methodological problems that have plagued previous attempts to provide a convincing answer. This paper examines three strands of recent work on this issue: cross-country regressions focusing on within-country growth, synthetic control methods on specific reform episodes, and empirical country studies looking at the channels through which lower trade barriers may increase productivity. A consistent finding is that trade reforms that significantly reduce import barriers have a positive impact on economic growth, on average, although the effect differs across countries. Overall, these research findings should temper some of the previous agnosticism about the empirical link between trade reform and economic performance.
Topic:: Economics, Reform, Economic Growth, and Trade
Political Geography:: Global Focus

436. How to Restructure Sovereign Debt: Lessons from Four Decades

Author:: Lee Buchheit, Guillaume Chabert, Chanda DeLong, and Jeromin Zettelmeyer
Publication Date:: 05-2019
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: This paper attempts to provide a playbook for the sovereign debt restructuring process, drawing on the experience with sovereign debt restructuring since the 1980s. It begins with a discussion of the participating actors and their interests. It then describes the considerations that must be weighed in designing, negotiating, and concluding a debt restructuring, in light of two problems: asymmetric information between the debtor and the creditors, and creditor coordination problems, which can lead to free riding (the “holdout” problem). The paper focuses on how these problems, which can lead to inefficiently negotiated outcomes, can be managed and minimized in practice.
Topic:: Debt, Economics, Sovereignty, and Finance
Political Geography:: Global

437. The 2018 US-China Trade Conflict after 40 Years of Special Protection

Author:: Chad P. Bown
Publication Date:: 04-2019
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: In 2018, the United States suddenly increased tariffs on nearly 50 percent of its imports from China. China immediately retaliated with tariffs on more than 70 percent of imports from the United States. This paper assesses what happened in 2018 and attempts to explain why. It first constructs a new measure of special tariff protection to put the sheer scope and coverage of the 2018 actions into historical context. It then uses the lens provided by the 2018 special tariffs to explain the key sources of economic and policy friction between the two countries. This includes whether China’s state-owned enterprises and industrial subsidies, as well as China’s development strategy and system of forcibly acquiring foreign technology, were imposing increasingly large costs on trading partners. Finally, it also examines whether the US strategy to provoke a crisis—which may result in a severely weakened World Trade Organization—was deliberate and out of frustration with the institution itself.
Topic:: Economics, International Trade and Finance, World Trade Organization, Bilateral Relations, Trade Wars, Donald Trump, and Imports
Political Geography:: China, Asia, North America, and United States of America

438. Low Inflation Bends the Phillips Curve

Author:: Joseph E. Gagnon and Christopher G. Collins
Publication Date:: 04-2019
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: The Phillips curve, which traces out a negative relationship between inflation and unemployment, has undergone tremendous changes over more than 100 years. Some researchers argue that the slope of the curve in the United States fell substantially around 20 years ago so that unemployment now has little or no effect on inflation. This paper shows that another hypothesis is equally consistent with the data: The Phillips curve may be nonlinear when inflation is low, with the economy having operated in the flat region of the curve for most of the past 20 years. The next few years may be decisive in the debate between these hypotheses, as unemployment has returned to a range in which a nonlinear curve ought to display significant steepness. A flat Phillips curve implies little change in inflation going forward, but a nonlinear curve implies moderate increases in inflation over the next few years.
Topic:: Economics, Inflation, and Unemployment
Political Geography:: North America and United States of America

439. Brexit: Everyone Loses, but Britain Loses the Most

Author:: Maria C. Latorre, Zoryana Olekseyuk, Hidemichi Yonezawa, and Sherman Robinson
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: This paper examines 12 economic simulation models that estimate the impact of Brexit (Britain’s exit from the European Union). Most of the studies find adverse effects for the United Kingdom (UK) and the EU-27. The UK’s GDP losses from a hard Brexit (reversion to World Trade Organization rules due to a lack of UK-EU agreement) range from –1.2 to –4.5 percent in most of the models analyzed. A soft Brexit (e.g., Norway arrangement, which seems in line with the nonbinding text of the political declaration of November 14, 2018, on the future EU-UK relationship) has about half the negative impact of a hard Brexit. Only two of the models derive gains for the UK after Brexit because they are based on unrealistic assumptions. The authors analyze more deeply a computable general equilibrium model that includes productivity and firm selection effects within manufacturing sectors and operations of foreign multinationals in services. Based on this latest model, they explain the likely economic impact of Brexit on a wide range of macroeconomic variables, namely GDP, wages, private consumption, capital remuneration, aggregate exports, aggregate imports, and the consumer price index.
Topic:: Economics, World Trade Organization, Brexit, and Multinational Corporations
Political Geography:: Britain, Europe, and European Union

440. Coworking Spaces in La Paz, Bolivia: Urban Effects and Potential Creation of New Opportunities for Local Economic Development

Author:: Lucas DuPriest
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Institute for Advanced Development Studies (INESAD)
Abstract:: This paper investigates the location patterns of coworking spaces, the effects of coworking spaces on the local and urban context, and coworking spaces potential opportunities for the creation of local economic development, issues that have been neglected in a Bolivian context by the existing literature. The focus of this paper is on La Paz, Bolivia’s political capital and the city in Bolivia which host the largest number of coworking spaces. The paper addresses three main questions: (1) Where are the main locations of coworking spaces in La Paz? (2) to what extent do coworking spaces generate transformative effects on the local respectively the urban scale? (e.g. physical transformations, changes in practices, community building) (3) how do coworking spaces create potential opportunities for local economic development? Desk research demonstrated that location patterns of coworking spaces are concentrated to two main commercial areas of the city, as well as to the main infrastructural and transportation axes. Field research highlighted local and urban effects, such as local community initiatives and micro-urban transformations in both spaces and practices. Lastly, field research assessed coworking spaces role in the socio-economic ecosystem. Three main typologies have been identified: the first type of coworking spaces act as “social entrepreneurship and start-up incubators” with a supportive role and closer ties to social and urban issues, the second type of coworking spaces act as “coffee and cowork incubators” providing cafés with shared workspaces, the third type of coworking spaces act as “real estate business incubators” and are mainly a commercial product responding the demand for flexible office spaces. This paper, therefore, helps to fill the gap in the literature about the location patterns of these new working spaces and their effects at different scales both in terms of spaces and practices, as well as local economic development.
Topic:: Economics, Work Culture, Urban, Local, Innovation, Economic Development, and Social Capital
Political Geography:: Latin America and Bolivia

441. The Biological Standard of Living in Urban Bolivia, 1880s – 1920s: Stagnation and Persistent Inequality

Author:: Boris Branisa, José Peres-Cajías, and Nigel Caspa
Publication Date:: 06-2019
Content Type:: Working Paper
Institution:: Institute for Advanced Development Studies (INESAD)
Abstract:: Based on almost 5.000 direct observations on National Identification Cards, this paper offers the first estimation of the evolution of average heights in urban Bolivia for the decades 1880s-1920s. The analysis focuses on men aged 19-50 years registered in the city of La Paz. Despite city’s growing economic importance and modernization, average heights remained stagnant around 163 cm. This level is not so different to that found in the still disperse available evidence for rural Bolivia. Furthermore, there is evidence of inequalities throughout the period under study: those men who were indigenous, illiterate or worked in manual occupations were persistently shorter than non-indigenous, literates and non-manual workers, respectively. In coincidence with recent studies on Latin America, these findings suggest that the boost in exports and the regained dynamism of the economy that took place at the onset of the 20th century were not accompanied by improvements in biological standards of living.
Topic:: Economics, History, Urban, Welfare, Indigenous, and Modernization
Political Geography:: Latin America and Bolivia

442. Setting an example? Spillover effects of Peruvian Magnet Schools

Author:: Alejandro Herrera, Mariel Bedoya, Bruno Gonzaga, and Karen Espinoza
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Institute for Advanced Development Studies (INESAD)
Abstract:: In this paper we use a Multi-Cutoff Fuzzy Regression Discontinuity Design to evaluate spillover effects of students enrolled into Peruvian public magnet schools, Colegios de Alto Rendimiento (COAR), on educational outcomes of younger students in their schools of origin. Using administrative data from the Ministry of Education for 2016, we find that having at least one student admitted in a COAR school causes some negative spillover effects on math test scores of students from the following cohort. No evidence of statistically significant results is found for verbal and history test scores, nor for self-reported educational expectations. We discuss potential causes and reasons that may explain our results.
Topic:: Development, Economics, and Education
Political Geography:: Latin America and Peru

443. Economic Relations between Russia and South Korea in the New Northern Policy

Author:: Liudmila Zakharova
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Korea Economic Institute of America (KEI)
Abstract:: The New Northern Policy, proclaimed by the South Korean President Moon Jae-in in Vladivostok in September 2017, is designed to boost economic cooperation between Russia and South Korea. However, two years after a special presidential committee was created to plan and coordinate joint economic efforts, few results have been achieved. Bilateral trade has continued to increase with limited change to its structure: Russia mostly sends its mineral resources to South Korea and receives industrial products in return. New ROK investment in the Russian Far East has yet to occur, despite South Korea’s efforts to assist its businesses in finding profitable Russian projects. Seoul tried to convince Moscow that concluding a free trade agreement in the near future is necessary for intensified cooperation, but Russia prefers a more gradual approach to trade liberalization. InterKorean rapprochement in 2018 laid a foundation for further progress in the implementation of multilateral economic projects involving Russia if the international sanctions against North Korea were to be eased. Therefore, bilateral relations between Russia and the ROK can also be viewed from the perspective of promoting regional cooperation with North Korean participation.
Topic:: International Relations, Economics, and Bilateral Relations
Political Geography:: Russia, Asia, South Korea, North Korea, and Korea

444. Finding an Advocate: The Role of the Private Sector in Korea-Japan Relations

Author:: Jiwon Nam and Kristin Vekasi
Publication Date:: 06-2019
Content Type:: Working Paper
Institution:: Korea Economic Institute of America (KEI)
Abstract:: Tensions between South Korea and Japan are frustratingly persistent. Despite the shared interests of both countries, such as economic development in Southeast Asia, and keeping a robust alliance with the United States, South Korea and Japan maintain a bellicose relationship because of unresolved historical misunderstandings and territorial disputes. Inconsistent diplomatic policies and lack of strong leaders have made it difficult to prevent unnecessary hostility between South Korea and Japan. Fear of losing support has prevented politicians from pursuing friendly policies towards each other. Businesspeople, too, have been reluctant to pursue friendly policies towards each other, because of preconceived risks of being targeted for backlash. An examination of economic data shows these risks are minimal, and political tensions do not affect business or consumer behavior. Current efforts from both Korean and Japanese business organizations to improve cooperation include student exchange programs, recruitment processes, and public diplomacy. We urge the business community to advocate more to improve bilateral relations. Economic relations alone are insufficient to handle the task of improving a difficult relationship; there is also a need for leadership. In South Korea-Japan relations, the business community should step in and provide that role.
Topic:: Economics, Bilateral Relations, Business, and Private Sector
Political Geography:: Japan, Asia, South Korea, North America, Korea, and United States of America

445. From Failed Economic Interfaces to Political Levers: Assessing China-South Korea Competition and Cooperation Scenarios on North Korean Special Economic Zones

Author:: Théo Clément
Publication Date:: 06-2019
Content Type:: Working Paper
Institution:: Korea Economic Institute of America (KEI)
Abstract:: While North Korea has developed Special Economic Zones for several decades now, these zones have attracted little attention from foreign investors, due to a mix of lack of economic reforms in the DPRK, the tense geopolitical situation, and China’s peculiar economic engagement towards North Korea. With the denuclearization process and North-South dialogue moving forward, this situation could change as South Korea’s announced policy of economic engagement with the North could provide Pyongyang the opportunity to play Beijing against Seoul to maximize its interests and attract foreign investment in Special Economic Zones from partners keen to maintain close ties with the DPRK.
Topic:: Economics, Bilateral Relations, Investment, Trade, and Denuclearization
Political Geography:: Asia, South Korea, North Korea, and Korea

446. EU Trade Policy amid the China-US Clash: Caught in the Cross-Fire?

Author:: Felipe González and Nicolas Véron
Publication Date:: 08-2019
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: China's rapid rise and unique economic system and the increasingly aggressive and disruptive US trade policy are posing an unprecedented threat to the global rules-based trading and economic system. The European Union has critical interests at stake in the current escalation, even as it has so far been comparatively spared from US trade policy belligerence and China's reactions. In this context, the European Union should adopt an independent and proactive stance, building on recent efforts and going beyond them. The European Union, even more than the United States or China, has a strategic interest in the preservation of the global rules-based order embodied by the World Trade Organization (WTO). It must play a leading role in steering WTO reform and modernization, working closely with broadly aligned third countries such as Japan and other players. It should expand its outreach beyond its immediate negotiating counterparts in both the United States and China, and leading European officials at both the EU and member state levels should work at better understanding China. While strengthening its domestic policy instruments to address new challenges, such as the screening of foreign direct investment for security purposes, the European Union must also resist its own temptations of protectionism and economic nationalism. In support of these objectives, the European Union should prepare itself for difficult decisions, which may involve revising some of its current red lines in international trade negotiations. Conversely, the European Union should stand firm on principles such as refusing one-sided agreements and rejecting abusive recourse to national security arguments in trade policies. The European Parliament, in working with the European Council and the European Commission, will have a critical role to play in steering the European Union through these challenging times.
Topic:: International Relations, Economics, Trade Wars, and Trade Policy
Political Geography:: China, Europe, Asia, North America, United States of America, and European Union

447. Creating a Euro Area Safe Asset without Mutualizing Risk (Much)

Author:: Alvaro Leandro and Jeromin Zettelmeyer
Publication Date:: 08-2019
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: This paper explains and evaluates three proposals to create “safe assets” for the euro area based on sovereign bonds, in which sovereign risk is limited through diversification and some form of seniority. These assets would be held by banks and other financial institutions, replacing concentrated exposures to their own sovereigns. The paper focuses on three ideas: (1) to create multitranche “sovereign bond-backed securities” (SBBS), of which the senior tranche would constitute a safe asset; (2) to create a senior, publicly owned financial intermediary that would issue a bond backed by a diversified portfolio of sovereign loans (“E-bonds”); and (3) to issue sovereign bonds in several tranches and induce banks to hold a diversified pool of senior sovereign bonds (“multitranche national bond issuance”). Public attention (including public criticism) has so far focused on the first idea; the other two have not yet been seriously debated. The authors find that none of the competing proposals entirely dominates the others. SBBS do not deserve most of the criticism to which they have been subjected. At the same time, E-bonds and multitranche national bond issuance have several interesting features—including inducing fiscal discipline—and warrant further exploration.
Topic:: Economics, Regional Integration, Risk, and Fiscal Policy
Political Geography:: Europe

448. Protectionism under Trump: The China Shock, Intolerance, and the "First White President"

Author:: Marcus Noland
Publication Date:: 06-2019
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: In 2016, the United States elected an avowedly protectionist president. This paper uses US county-level electoral data to examine this outcome. The hypothesis that support for protectionism was purely a response to globalization is rejected. Exposure to trade competition encouraged a shift to the Republican candidate, but this effect is mediated by race, diversity, education, and age. If the turn toward protectionism is due to economic dislocation, then public policy interventions could mitigate the impact and support the reestablishment of a political consensus for open trade. If, however, the drivers are identity or cultural values, then the scope for constructive policy intervention is unclear.
Topic:: Economics, Politics, Donald Trump, and Protectionism
Political Geography:: China, Asia, North America, and United States of America

449. The Impact of Income Inequality on Household Indebtedness in Euro Area Countries

Author:: Stefan Jestl
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: This paper examines the impact of income inequality on consumption-related household indebtedness at the household level. Using the first wave of the Eurosystem Household Finance and Consumption Survey data, the analysis sheds light on heterogeneous effects across euro area countries. The results suggest a positive impact of income inequality on consumption-related household indebtedness in a small sample of countries. We further employ a multilevel regression model to also take country’s macroeconomic characteristics into account, such as credit market and welfare state design. In this setting, we find an overall positive impact of income inequality on consumption-related household indebtedness.
Topic:: Economics, Inequality, Economic Inequality, and Macroeconomics
Political Geography:: Europe

450. Public and Private Pension Systems and Macroeconomic Volatility in OECD Countries

Author:: Mario Holzner, Stefan Jestl, and David Pichler
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: This paper analyses the impact of public pension expenditures and pension funds’ assets as well as their benefits on economic volatility. To do so, we use panel data for 35 OECD countries for the period 1980-2018 and apply a set of state-of-the-art econometric estimators. Our results show weak evidence of a negative impact of public pension expenditures as well as weak evidence of a positive impact of pension funds’ benefits on volatility. Results were, however, found not to be very robust. In contrast, pension funds’ assets do not show any evidence of being associated with economic volatility. Unsystematic fiscal policy, banking crises and political (in)stability, however, are revealed to be somewhat more robust determinants of economic volatility.
Topic:: Economics, Public Sector, Econometrics, and Organisation for Economic Co-operation and Development
Political Geography:: Global Focus

451. Hybrid Institutions: Institutionalizing Practices in the Context of Extractive Expansion

Publication Date:: 01-2019
Content Type:: Working Paper
Institution:: Postgraduate Program on Sustainable Development and Social Inequalities in the Andean Region (trAndeS)
Abstract:: States face the challenge of developing institutions to govern the activities of social actors when an area under their control becomes the target of increased extractive activities. National and local public regulations safeguarding the environment, the assignment of extractive rights to individuals or companies, and handling of ensuing conflicts are developed in an institutional gray zone. This paper analyzes how informal institutions developed in early period become hybrid institutional entanglements that depend largely on configurations of power. It does so by looking at two cases in Peru: Water extraction in Ica, mostly by large companies and gold mining in Madre de Dios, mostly by small scale miners. Taken together, these cases show the institutions resulting from state governance of extractive activities depends heavily on the agency and political leverage of the state but also of other social actors.
Topic:: Development, Economics, Environment, Natural Resources, Water, Institutions, and Ecology
Political Geography:: Latin America and Peru

452. Fiscal Transfers and Inflation: Evidence from India

Author:: Girish Bahal and Anand Shrivastava
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Centre for Sustainable Employment, Azim Premji University
Abstract:: Controlling for monetary policy, government transfers are potentially inflationary. This, however, may not be true when the economy is demandconstrained. Using a panel data of 17 Indian states over 30 years, we show that government transfers via welfare programs do not lead to inflation. For identification, we use a narrative shock series of transfer spending that is based on the introduction of new welfare programs. We then look at a specific program, NREGA, which has been shown to increase rural wages, and show that its implementation did not increase inflation.
Topic:: Economics, Government, Labor Issues, Monetary Policy, Employment, Inflation, and Demand
Political Geography:: India

453. The Size Structure of India’s Enterprises: Not Just the Middle is Missing

Author:: Tuhinsubhra Giri and Santosh Mehrotra
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Centre for Sustainable Employment, Azim Premji University
Abstract:: Most international development economics and industrial organization literature emphasises the importance of SMEs (small and medium enterprises) as important to output, but especially to employment generation. Countries have different definitions for SMEs. In India the MSMEs (micro, small and medium enterprises) are defined in terms of investment in plant and machinery or equipment. The MSME Ministry (Annual Report, Government of India 2017–18) stated that the sector accounts for 45% of the manufacturing output and 40% of the total exports of the country; also that MSMEs accounted for 30.74% of GDP in 2014– 15. Not surprising, MSMEs are considered a driving force of the economy.
Topic:: Economics, Labor Issues, Employment, Manufacturing, and Economic Development
Political Geography:: India

454. Industrial Policies in India: Did They Work?

Author:: Raavi Aggarwal
Publication Date:: 11-2019
Content Type:: Working Paper
Institution:: Centre for Sustainable Employment, Azim Premji University
Abstract:: This article analyses relationships between the implementation of state-level industrial policies in India and manufacturing sector economic performance (employment and gross value added), utilising data from the Annual Survey of Industries conducted by the Government of India. I employ panel data fixed-effects regression models to evaluate the associations between the industrial policy and state-industry specific performance over the 2007-08 to 2014-15 period, incorporating potential effects of the state government's political alignment, infrastructure provision and educational expenditure in the state. The results provide evidence of a positive correlation between industrial policy implementation and firm output and employment, by around 12.6 - 14 per cent. However, subsequent introductions of an industrial policy are negatively associated with employment and are uncorrelated with industrial GVA. This analysis has implications for economic policy in light of the Central Government's plans to implement a revised industrial policy at the national scale.
Topic:: Economics, Industrial Policy, Employment, and Manufacturing
Political Geography:: India

455. India’s Employment Crisis: Rising Education Levels and Falling Non-agricultural Job Growth

Author:: Jajati Parida and Santosh Mehrotra
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: Centre for Sustainable Employment, Azim Premji University
Abstract:: Falling total employment is an unprecedented trend seen from 2011-12 to 2017-18. Due to a decline of employment in agriculture and manufacturing and slow growth of construction jobs, the process of structural transformation, which had gained momentum post-2004-5, has stalled since 2012. Mounting educated youth unemployment, and lack of quality non-farm jobs have resulted in an increase of the disheartened labour force. Though the share of regular and formal employment increased marginally due to growth of formal jobs in the private sectors, the share of informal jobs within government/public sector increased. A dominant share of jobs is still generated by micro and small units of the unorganized sectors without any formal or written job contract. In both government and private sectors the number of contract jobs (with less than a year’s contract) is on the rise post 2011-12. Not surprisingly, real wages have not increased in either rural or urban areas.
Topic:: Economics, Education, Labor Issues, Employment, Economic Growth, and Job Creation
Political Geography:: India

456. Inequalities in the Gendered Labour Market: What can be Done?

Author:: Santosh Mehrotra
Publication Date:: 07-2019
Content Type:: Working Paper
Institution:: Centre for Sustainable Employment, Azim Premji University
Abstract:: Globally, research has shown that, there is a high correlation between the level of per capita income and the rate of female labour force participation. At the same time the agency and autonomy of women in a country improve with the level of female labour force participation. Sen (2000) has argued that the autonomy and agency of women in a society and their empowerment is enabled by four conditions in their lives. First the higher the education level of women, the more empowered they are likely to feel. Second, if they are working outside the home, they are likely to feel a sense of autonomy and empowerment. Third, they should also have an independent source of income from that of the significant other in their household. Finally, their empowerment can be usually enhanced if they own assets and have access to them. One can see from this analysis that the first three requirements for women’s’ empowerment are related to each other and to some extent co-dependent. We will keep these considerations in mind as we analyse labour markets and how women engaged with them in different parts of the world.
Topic:: Development, Economics, Education, Gender Issues, Labor Issues, Women, Employment, and Inequality
Political Geography:: India

457. How Comparable are India’s Labour Market Surveys?: A comparison of NSS, Labour Bureau and CMIE Estimates

Author:: Anand Shrivastava and Rosa Abraham
Publication Date:: 05-2019
Content Type:: Working Paper
Institution:: Centre for Sustainable Employment, Azim Premji University
Abstract:: With the lack of official government data on unemployment and other labour market indicators, the most viable and recent source have been the regular household surveys conducted by the Centre for Monitoring the Indian Economy (CMIE). Given the differences in methods in data collection, it becomes exceedingly important to establish some comparability between the government and the CMIE datasets. This paper attempts to do that using two methods. First we fit a model of employment status on the CMIE data and see how well it predicts outcomes in the older Labour Bureau 2015-16 and NSS 2011-12 data. Then we compare state-level estimates of broad labour market indicators from CMIE 2016 and Labour Bureau 2015-16 datasets. The broad results are that despite differences in methodologies, the estimates for men are quite comparable between the surveys, while measures of women’s participation in the labour force seem particularly sensitive to the way questions are asked in surveys.
Topic:: Economics, Labor Issues, Work Culture, Labor Policies, and Participation
Political Geography:: India

458. Towards higher female work participation in India: what can be done?

Author:: Santosh Mehrotra and Sharmistha Sinha
Publication Date:: 01-2019
Content Type:: Working Paper
Institution:: Centre for Sustainable Employment, Azim Premji University
Abstract:: A continuous and sharp decline in the already depressed female labour force participation rate in India post 2005, particularly in the face of its rapid economic growth raises questions about the inclusiveness of the growth process. The paper recommends a set of policies based on the analysis of the nature and trends of female work participation and a brief analysis of the underlying reasons behind such trends. Women are moving out of the low productivity agricultural sector, which necessitates an increase in employment opportunities in the nonagricultural sector, particularly in rural and in semi-urban locations. Improving skills for employability, especially in manufacturing clusters (which is where the jobs are) located close to young girls’ rural homes, would help the females to join the labour force if non-agricultural jobs are growing. To release women from unpaid work in the household to join the paid labour force, it is essential to improve child care facilities and other basic service facilities, which again calls for raising the share of public expenditure in some sectors and specific facilities. For instance, increasing single working women’s housing, making public transport safer, and modifying public programmes to cater to women’s needs can pave the way for more women to engage and remain in the labour force, become active participants in the growth process, and thus achieve greater economic empowerment.
Topic:: Economics, Gender Issues, Labor Issues, Women, and Employment
Political Geography:: India

459. The Evolving Discourse on Job Quality- From Normative Frameworks to Measurement Indicators: The Indian Example

Author:: Divya Prakash and Sabina Dewan
Publication Date:: 01-2019
Content Type:: Working Paper
Institution:: Centre for Sustainable Employment, Azim Premji University
Abstract:: Indians are optimistic. According to the Pew Research Center’s 2017 Global Attitudes Survey, three out of four Indians believe that, “when children today in India grow up, they will be better off financially than their parents” (Pew Global Attitudes Survey, 2017). Families hinge their hopes on the ability of the next generation to work hard, earn a living, and be a source of financial support. For years now, the nation has done the same, pinning its economic ambitions to a demographic advantage, or youth bulge, that is set to continue only for the next two decades. Unless there are pathways to productive and high-quality employment, the nation’s youth will not be able to deliver on these expectations. How has India’s economy fared on job creation over the past decade? The country had just under 466 million people in the labour force1 in 2015, with a participation rate of 50.3 percent (Labour Bureau, 2015/16). An analysis of Labour Bureau data over a period of four years from 2012 to 2015 shows that on average, 4.75 million people were added to the labour force per year. According to the Labour Bureau’s Employment-Unemployment survey, between 2012 to 2015, the economy generated a total of 9 million jobs, based on Usual Principal Status -- the activity that an individual is engaged in for a major part of the reference year (Labour Bureau, 2011/12 to 2015/16).
Topic:: Economics, Labor Issues, Employment, Work Culture, and Job Creation
Political Geography:: India

460. The state of China-European Union economic relations

Author:: Uri Dadush, Marta Dominguez-Jimenez, and Tianlang Gao
Publication Date:: 11-2019
Content Type:: Working Paper
Institution:: Bruegel
Abstract:: China and the European Union have an extensive and growing economic relationship. The relationship is problematic because of the distortions caused by China’s state capitalist system and the diversity of interests within the EU’s incomplete federation. More can be done to capture the untapped trade and investment opportunities that exist between the parties. China’s size and dynamism, and its recent shift from an export-led to a domestic demand-led growth model, mean that these opportunities are likely to grow with time. As the Chinese economy matures, provided appropriate policy steps are taken, it is likely to become a less disruptive force in world markets than during its extraordinary breakout period.
Topic:: Economics, Governance, European Union, Investment, and Trade
Political Geography:: China, Europe, and Asia

461. How does China fare on the Russian market? Implications for the European Union

Author:: Alicia Garcia-Herrero and Jianwei Xu
Publication Date:: 11-2019
Content Type:: Working Paper
Institution:: Bruegel
Abstract:: China’s economic ties with Russia are deepening. Meanwhile, Europe remains Russia’s largest trading partner, lender and investor. An analysis of China’s ties with Russia, indicate that China seems to have become more of a competitor to the European Union on Russia’s market. Competition over investment and lending is more limited, but the situation could change rapidly with China and Russia giving clear signs of a stronger than ever strategic partnership.
Topic:: Economics, Markets, Bilateral Relations, Governance, Investment, and Exports
Political Geography:: Russia, China, Europe, Eurasia, and Asia

462. The economic impact of Boris Johnson’s Brexit proposals

Author:: Anand Menon
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: UK in a Changing Europe, King's College London
Abstract:: The Prime Minister has set out a means of escaping the Brexit stalemate, but his new Brexit proposals have, as yet, not managed to overcome the impasse. What, though, would the plan mean for the UK economy? That is the question we seek to answer in what follows. As ever, we have been lucky enough to be able to draw on the skills and expertise of some of the leading experts in the field. The bulk of the work was done by Hanwei Huang, Jonathan Portes and Thomas Sampson, with contributions from Matt Bevington and Jill Rutter. Hanwei and Thomas used the LSE’s Centre for Economic Performance trade model to carry out the modelling. We hope you find the report interesting and informative. Brexit is clearly about more than economics, but the economic impact of leaving the EU nevertheless merits careful scrutiny.
Topic:: Economics, Politics, European Union, Brexit, and Boris Johnson
Political Geography:: United Kingdom and Europe

463. An Overview of German New Economic Sociology and the Contribution of the Max Planck Institute for the Study of Societies

Author:: John Wilkinson
Publication Date:: 02-2019
Content Type:: Working Paper
Institution:: Max Planck Institute for the Study of Societies
Abstract:: New economic sociology (NES) in Germany has many similarities with economic sociology in the United States in its conscious efforts to institutionalize its presence within the broader sociology community, its promotion of a canon via handbooks, and its focus on the sociology of markets. At the same time, it differs in its stronger connections to the German classics, the greater vitality of a macrosociological tradition in Germany, the prior existence of a “bridging” generation of economic sociologists, and its later consolidation in a period of neo-liberal globalization, all of which have giv- en NES in the German-speaking world a distinctive character. In addition, it has been influenced by successive waves of French economic sociology – Bourdieu, convention, and actor-network theory – and its bilingual academic tradition has ensured its integration into English-speaking NES. In its contribution to the sociology of markets, the fact that NES emerged later in Germany than in the US led to a greater concern with quality markets rather than commodity markets, and a concomitantly greater attention to issues of value and price. These latter themes, in their turn, establish a continuity with German economic sociology’s enduring concern with understanding the role of money. Not surprisingly, therefore, German NES is now making key contributions to discussions on the sociol- ogy of money and is increasingly situating its analysis within the broader dynamic of capitalism and current processes of financialization.
Topic:: Economics, Globalization, Sociology, and Capitalism
Political Geography:: Europe, Germany, and Central Europe

464. Uncertain Futures Imaginaries, Narratives, and Calculative Technologies

Author:: Jens Beckert and Richard Bronk
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Max Planck Institute for the Study of Societies
Abstract:: Dynamic capitalist economies are characterised by relentless innovation and novelty and hence exhibit an indeterminacy that cannot be reduced to measurable risk. How then do economic actors form expectations and decide how to act despite this uncertainty? This pa per focuses on the role played by imaginaries, narratives, and calculative technologies, and argues that the market impact of shared calculation devices, social narratives, and contin gent imaginaries underlines the rationale for a new form of ‘narrative economics’ and a the ory of fictional (rather than rational) expectations. When expectations cannot be anchored in objective probability functions, the future belongs to those with the market, political, or rhetorical power to make their models or stories count. The paper also explores the dangers of analytical monocultures and the discourse of best practice in conditions of uncertainty, and considers the link between uncertainty and some aspects of populism.
Topic:: Economics, Science and Technology, Capitalism, and Innovation
Political Geography:: Global Focus

465. Insights into China’s Developing Country Status

Author:: Tao Ma
Publication Date:: 10-2019
Content Type:: Working Paper
Abstract:: As the international status of China as a rising power has been growing rapidly in the past 40 years, along with remarkable achievements in economic growth, China’s developing country status has been questioned by some Western developed countries. In January 2019, the US submitted to the WTO General Council the proposal An Undifferentiated WTO: Self-Declared Development Status Risks Institutional Irrelevance (WT/GC/W/757), presenting data arguing that China and some other developing countries had advanced to such an extent that they should be limited from being eligible for special and differential treatment and should give up their developing country status. During the WTO General Council meeting at the end of February, China and other developing countries hotly debated this issue with the US. China insisted that developing countries were confronted with mounting external tensions and their legitimate rights and interests in some international organizations and agreements had been constantly challenged. Against this background, it is critical to clarify China’s ongoing status as a developing country. Only after the real divide between China and developed countries has been clarified can China’s status as a developing country be secured.
Topic:: Development, Economics, and Trade
Political Geography:: China, Asia, and United States of America

466. Shooting Oneself in the Foot? Trade War and Global Value Chains

Author:: Cecilia Bellora and Lionel Fontagné
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: Despite the “Phase One Deal” agreed on mid-December 2019, bilateral tariffs between US and China remain at unprecedented high levels, which will have long-lasting effects. US tariffs remain very high on parts, components and other intermediate products; similarly, only the last wave of Chinese retaliatory tariffs has been half cut. We investigate in this paper how such tensions between highly interdependent economies will impact trade, income and jobs. We rely on a set-up featuring General Equilibrium, imperfect competition and importantly differentiating demand of goods according to their use, for final or intermediate consumption. This authorizes tracing the impact of protection along the value chains, on prices, value added and factor income. Additional tariffs from official lists are taken into account at the tariff line level, before being aggregated within sectors. Beyond the direct toll of sanctions, US exports to the world post a sizeable decrease as a result of reduced competitiveness led by vertical linkages along the value chains. Because of the tariffs in place as of February 2020, three quarters of the sectors decrease their value added in the US. Consistent with political economy determinants, these twists of value added are transmitted to production factors, leading to sizeable creation and destruction of jobs, and reallocation of capital to the benefit of protected sectors, mostly at the expense of their clients. Ultimately, this paper sheds light on the economic consequences of policies disrupting global value chains.
Topic:: Economics, International Political Economy, Bilateral Relations, Tariffs, Trade Wars, and Trade
Political Geography:: United States and China

467. Product-Level Trade Elasticities

Author:: Lionel Fontagné, Houssein Guimbard, and Gianluca Orefice
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: Trade elasticity is a crucial parameter in evaluating the welfare impacts of trade liberalization. We estimate trade elasticities at the product level (6-digit of the Harmonized System comprising more than 5,000 product categories) by exploiting the variation in bilateral applied tariffs for each product category for the universe of available country pairs. This is done by constructing a panel of bilateral applied tariffs and bilateral trade covering the period 2001 to 2016. We address potential endogeneity issues as well as heteroskedasticity and selection bias due to zero flows. The obtained trade elasticities are centered around -5. We finally highlight the differences in the gains from trade arising from considering heterogeneous rather than average trade elasticities. All product level elasticities are made publicly available for sake of scrutiny and use by other researchers.
Topic:: Economics, International Political Economy, Bilateral Relations, Tariffs, Trade Liberalization, and Trade
Political Geography:: Global Focus

468. Are Your Labor Shares Set in Beijing? The View through the Lens of Global Value Chains

Author:: Ariell Reshef and Gianluca Santoni
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: We study the evolution of labor shares in 1995-2014 while taking into account international trade based on value added concepts. On average, the decline in labor shares (starting around 1980) accelerates in 2001-2007, after which labor shares recover somewhat. In contrast, skilled labor shares consistently increase. The acceleration in the decline in labor shares is associated with increased intensity of intermediate input exporting; this manifests in a sharp increase in the foreign component in upstreamness of industries and countries in global value chains (GVCs). China's global integration accounts for much of this. Declines in the price of investment together with capital-skill complementarity can explain both the consistent increase in skilled labor shares and the reversal of trend in overall labor shares. Compared to shares in GDP, labor shares in gross national product (GNP) are higher in countries with positive net FDI positions; the uneven spread of multinational activity contributes to greater inequality through this channel.
Topic:: Economics, International Political Economy, International Trade and Finance, Labor Issues, Trade, Global Value Chains, and Skilled Labor
Political Geography:: China and Global Focus

469. Immigration and Preferences for Redistribution in Europe

Author:: Alberto Alesina, Elie Murard, and Hillel Rapoport
Publication Date:: 11-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: We examine the relationship between immigration and preferences for redistribution in Europe using a newly assembled data set of immigrant stocks for 140 regions in 16 Western European countries. Exploiting within-country variations in the share of immigrants at the regional level, we find that native respondents display lower support for redistribution when the share of immigrants in their residence region is higher. This negative association is driven by regions of countries with relatively large Welfare States and by respondents at the center or at the right of the political spectrum. The effects are also stronger when immigrants originate from Middle-Eastern or Eastern European countries, are less skilled than natives, and experience more residential segregation. These results are unlikely to be driven by immigrants' endogenous location choices, that is, by welfare magnet effects or by immigrants' sorting into regions with better economic opportunities. They are also robust to instrumenting immigration with a standard shiftshare approach or to controlling for regional growth prospects.
Topic:: Economics, International Political Economy, Immigration, Welfare, and Redistribution
Political Geography:: Western Europe

470. TBTs, Firm Organization and Labour Structure

Author:: Giorgio Barba Navaretti, Lionel Fontagné, Gianluca Orefice, Giovanni Pica, and Anna Cecilia Rosso
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: This paper investigates the effects on firms' occupational structure of shocks induced by the introduction of Technical Barriers to Trade (TBTs) in importing countries. We rely on the Specific Trade Concern (STC) data released by the WTO to identify trade-restrictive TBT measures, combined with matched employer-employee data for the population of French exporters over the period 1995-2010, and with information on the list of product-destinations served by each French exporter. Controlling for time-invariant firm/occupation effects and for time-varying sector/occupation shocks, IV estimates show that exporters respond to increased complexity associated with restrictive TBTs at destination by raising the share of managers at the expense of blue collars, white collars and professionals. This evidence is consistent with the growing literature exploring how firms organize their workforce composition in presence of exogenous (foreign) shocks; and it is also related to the well-beaten literature on the labour market effects of trade.
Topic:: Economics, International Political Economy, International Trade and Finance, Exports, Trade, Trade Policy, and WTO
Political Geography:: France

471. Migrant Inventors and the Technological Advantage of Nations

Author:: Hillel Rapoport, Prithwiraj Choudhury, and Dany Bahar
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: We investigate the relationship between the presence of migrant inventors and the dynamics of innovation in the migrants’ receiving countries. We find that countries are 25 to 50 percent more likely to gain advantage in patenting in certain technologies given a twofold increase in the number of foreign inventors from other nations that specialize in those same technologies. For the average country in our sample this number corresponds to only 25 inventors and a standard deviation of 135. We deal with endogeneity concerns by using historical migration networks to instrument for stocks of migrant inventors. Our results generalize the evidence of previous studies that show how migrant inventors "import" knowledge from their home countries which translate into higher patenting. We complement our results with micro-evidence showing that migrant inventors are more prevalent in the first bulk of patents of a country in a given technology, as compared to patents filed at later stages. We interpret these results as tangible evidence of migrants facilitating the technology-specific diffusion of knowledge across nations.
Topic:: Economics, International Political Economy, Migration, Science and Technology, Migrant Workers, and Knowledge Economy
Political Geography:: Global Focus

472. Migration and Post-Conflict Reconstruction: The Effect of Returning Refugees on Export Performance in the Former Yugoslavia

Author:: Dany Bahar, Hillel Rapoport, Cem Özgüzel, and Andreas Hauptmann
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: During the early 1990s Germany offered temporary protection to over 600,000 Yugoslavian refugees fleeing war. By 2000, many had been repatriated. We exploit this natural experiment to investigate the role of migrants in post-conflict reconstruction in the former Yugoslavia, using exports as outcome. Using confidential social security data to capture intensity of refugee workers to German industries –and exogenous allocation rules for asylum seekers within Germany as instrument– we find an elasticity of exports to return migration between 0.08 to 0.24. Our results are stronger in knowledge-intensive industries and for workers in occupations intensive in analytical and managerial skills.
Topic:: Conflict Resolution, Economics, International Political Economy, Migration, Refugee Issues, Refugees, and Exports
Political Geography:: Europe, Yugoslavia, and Germany

473. The Primary Cause of European Inflation in 1500-1700: Precious Metals or Population? The English Evidence

Author:: Anthony Edo and Jacques Melitz
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: We perform the first econometric test to date of the influences of inflows of precious metals and population growth on the “Great Inflation” in Europe following the discovery of the New World. The English evidence strongly supports the near-equivalent importance of both influences. For 1500-1700, silver is the only relevant precious metal in the estimates. The study controls for urbanization, government spending, mortality crises and climatic changes. The series for inflows of the precious metals into Europe from America and European mining are newly constructed based on the secondary sources.
Topic:: Economics, Government, International Political Economy, Urbanization, and Inflation
Political Geography:: Europe and England

474. Sectoral reallocations, Real estate shocks, and productivity divergence in Europe

Author:: Fabien Tripier, Jérôme Héricourt, and Thomas Grjebine
Publication Date:: 09-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: This paper investigates the role of sectoral reallocations in the divergence of productivity in Europe, based on a database for 33 sectors and 14 countries between 1995 and 2015. Using the contribution of sectoral productivity growth to Total Factor Productivity (TFP) at the country level, we highlight that variations in the relative size of sectors - less productive sectors growing relatively to more productive ones - have been at the origin of variable productivity losses in main European countries. Parallel to this divergence, European countries experienced heterogeneous real estate price dynamics, which took the form, in some economies, of massive boom-bust cycles. We investigate real estate shocks as a potential source of sectoral reallocations through a collateral mechanism. These shocks turn out to be a strong driver of productivity divergence between European countries.
Topic:: Economics, International Political Economy, Real Estate, and Productivity
Political Geography:: Europe

475. Exchange rate pass-through to import prices: Accounting for changes in the Eurozone trade structure

Author:: Valérie Mignon and Antonia Lopez-Villavicencio
Publication Date:: 06-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: This paper assesses whether the emergence of new trading partners (i.e., China and Eastern Europe) as suppliers reduces the exchange rate pass-through (ERPT) in Eurozone countries which differ regarding their external exposure. Using bilateral data on import prices at the two-digit sector level, we find that (i) pass-through is complete in many cases, (ii) ERPT from China is higher than from the United States, and (iii) there is no compelling evidence of a generalized link between ERPT and the increasing integration of some emerging markets in European imports. We also show that the launch of the single currency has not provoked a sufficient change in the part of trade exposed to exchange rate fluctuations and, therefore, has not affected the pass-through. Overall, the trend of liberalization in new players' markets has not altered the competitive environment such as to induce exporters of other countries to absorb exchange rate depreciations.
Topic:: Economics, International Political Economy, International Trade and Finance, Exchange Rate Policy, Eurozone, Trade, and Imports
Political Geography:: China, Europe, and Eastern Europe

476. The transmission channels of unconventional monetary policy: Evidence from a change in collateral requirements in France

Author:: Anne-Laure Delatte, Pranav Garg, and Jean Imbs
Publication Date:: 05-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: Using a bank-firm level credit registry combined with firm-level balance sheet data we establish the presence of heterogeneity in the effects of unconventional monetary policy transmission. We examine the consequences of a loosening in the collateral eligibility requirement for credit refinancing in France. The policy was designed to affect bank lending positively. We expect a linear increase in lending and an additional increase in loans to firms with newly acceptable rating. We find a large heterogeneity of the monetary policy transmission including the unexpected reduction of lending by the banks benefiting the most from the policy. These are small, risk-averse banks whose foremost concern after the recession was to strengthen their balance sheets. Banks least affected by the policy respond with a reduction in credit to low risk borrowers in reaction to the change in the market structure. Last we document heterogenous effects of the policy on firms depending on their size.
Topic:: Economics, International Political Economy, and Monetary Policy
Political Geography:: France

477. The Exorbitant Privilege of High Tax Countries

Author:: Vincent Vicard
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: The well documented US excess returns on its net foreign assets is no exception at the world level. Excess returns on foreign assets owe largely to yield differential within the FDI asset class and are correlated to the corporate tax rate for a large sample of countries, consistently with tax motivated profit shifting by multinational corporations. Using French firm level data on dividends and reinvested earnings from foreign affiliates, I provide evidence and quantify the impact of corporate tax avoidance on international asset returns. Profit shifting inflates the investment income balance and accounts for the average 2 percentage points return differential between French FDI assets and liabilities. Missing profts in France, estimated at €36 billions or 1.6% of GDP in 2015, are mostly shifted to EU countries.
Topic:: Economics, International Political Economy, European Union, GDP, Tax Systems, Profit, and Corporate Tax
Political Geography:: United States and France

478. Heterogeneity within the Euro Area: New Insights into an Old Story

Author:: Virginie Coudert, Cécile Couharde, Carl Grekou, and Valérie Mignon
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: We assess cross-country heterogeneity within the eurozone and its evolution over time by measuring the distances between the equilibrium exchange rates’ paths of member countries. These equilibrium paths are derived from the minimization of currency misalignments, by matching real exchange rates with their economic fundamentals. Using cluster and factor analyses, we identify two distinct groups of countries in the run-up to the European Monetary Union (EMU), Greece being clearly an outlier at that time. Comparing the results with more recent periods, we find evidence of rising dissimilarities between these two sets of countries, as well as within the groups themselves. Overall, our findings illustrate the building-up of macroeconomic imbalances within the eurozone before the 2008 crisis and the fragmentation between its member countries that followed.
Topic:: Economics, International Political Economy, Monetary Policy, and European Monetary Union
Political Geography:: Europe

479. Activism and Trade

Author:: Pamina Koenig and Sandra Poncet
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: This paper studies the effect of activism on the imports of consumer products, by focusing on an event which generated massive consumer mobilization against neglecting firms, namely the collapse of the Rana Plaza building affecting the textile industry in Bangladesh. We hypothesize that this episode was a main shock in the perceived quality of clothing producers sourcing in Bangladesh. Using detailed import flows on textile goods from OECD countries, we analyze whether the imports of consumer products were affected by the disclosure of information, in countries differently exposed to the collapse. To proxy the amount of information received by individuals in different countries, we use the nationality of the firms involved in the Rana Plaza building: soon after the disaster, NGOs and the media insisted on the origin countries of the neglecting companies, publishing the list of misbehaving firms by nationality. We use a difference-in-difference approach to compare the imports from Bangladesh of countries having been differently associated in the news to the Rana Plaza collapse. Results show a post-disaster decrease in imports for countries whose firms were directly involved in the Rana Plaza building. The effect has to be interpreted relatively to the evolution of imports of similar countries, however not linked to the collapsed Rana Plaza knitting factories. While aggregate imports from Bangladesh continue to increase during the whole period (2010-2016), there is a marked disruption that affects countries whose brands were named and shamed by activists and the media after the disaster. No such differential pattern is observed for non-textile goods. Our results are robust to a variety of checks.
Topic:: Economics, International Political Economy, International Trade and Finance, and Trade
Political Geography:: Bangladesh

480. International Business Cycles: Information Matters

Author:: Eleni Iliopulos, Erica Perego, and Thepthida Sopraseuth
Publication Date:: 02-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: We study the international transmission of shocks when agents form expectations under adaptive learning and imperfect information. To this aim we consider a two-country model featuring financial frictions, nominal rigidities, learning and Home information bias (as a source of information imperfection). We show that the more pronounced the Home information bias, the less agents track the international transmission of shocks, as it would otherwise be the case under rational expectations. The model succeeds in matching the low business cycle synchronization of consumption, while generating a positive output co-movement. In doing so, the model takes the theory closer to the data with respect to the output-consumption co-movement anomaly. The model also exhibits departure from the Uncovered Interest rate Parity.
Topic:: Economics, International Political Economy, International Business, Information Technology, and Informal Economy
Political Geography:: Global Focus

481. A Fistful of Dollars? Foreign Sales Platforms and Profit Shifting in Tax Havens

Author:: Sébastien Laffitte and Farid Toubal
Publication Date:: 01-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: Using public macro-level data on activities of multinationals, we document that U.S. firms geographically disconnect sales and production to avoid paying corporate taxes. We revisit both theoretically and empirically the location determinants of foreign platforms and show that market access motives are far less relevant when considering tax havens. We characterize these countries and shed light on the attractiveness of different tax havens for specific sectors of activity. Our quantification shows that profit shifting by foreign sales platforms in tax havens amounts to about $80bn in 2013. Our findings contribute to the recent policy debate on the reform of international taxation.
Topic:: Economics, International Political Economy, Global Political Economy, Multinational Corporations, Tax Systems, and Corporate Tax
Political Geography:: United States

482. Are global value chains receding? The jury is still out. Key findings from the analysis of deflated world trade in parts and components

Author:: Guillaume Gaulier, Aude Sztulman, and Deniz Ünal
Publication Date:: 01-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: In this article, we examine the dynamics of Global Value Chains (GVCs) since the 2000s. Did it show a marked expansion up to the Great Recession and did GVCs begin a downturn in the 2010s? To better understand the evolution of GVCs at the world level, we use very detailed trade data for 2000 to 2016, which distinguishes different production stages along the GVC. In particular, among intermediate goods, we focus on Parts and Components (P&C) rather than semi-finished products since the manufacture of P&C corresponds to activities more embedded in GVCs. We control, also, for the global business cycle and price effects using an original production stages deflator based on detailed bilateral trade unit-values. This new GVC indicator shows moderate growth over the study period with no trend reversal. In the electronics sector, where GVCs are particularly well-developed, we observe contrasting effects: the share in P&C trade for office machinery and computers has decreased, while it has increased in the case of telecommunications equipment, the flagship IT revolution industry. Also, counts of clients or suppliers by stages of production indicate higher and growing geographical diversity for P&C.
Topic:: Economics, International Political Economy, International Trade and Finance, and Global Value Chains
Political Geography:: Global Focus

483. Is Nigeria Experiencing a Learning Crisis: New Evidence from Curriculum-based Learning Assessment

Author:: Adedeji Adeniran, Joseph Ishaku, and Lateef Olawale Akanni
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: Centre for the Study of the Economies of Africa (CSEA)
Abstract:: The massive expansion of education access throughout the world in the past few decades signalled a positive progress for global development through human capital accumulation. However, this same growth highlighted the substantial deficiency in the learning that schools are unable to deliver to the children that pass through them. In short, massive expansion in schooling has not delivered quality education, a situation that United Nations Educational, Scientific and Cultural Organization (UNESCO, 2013) termed a global “learning crisis”. The disconnect between schooling and learning in the 21st Century also informed the global aspiration to improve learning outcomes, as captured in SDG 4. With the global attention now centered on SDG implementation, policymakers and researchers are focused on data for measuring learning outcomes. Measuring performance against SDG 4 entails assessing the extent to which targets set on inclusive and quality of education have been met. However, as the 2017 Goalkeepers Report shows, there is notable conceptual problem and data gap in measuring the quality of education (see also Unterhalter, 2019). On the conceptual level, there is lack of consensus on the appropriate indicator of quality education. Education quality is a multidimensional concept and encompasses educational inputs, processes and learning outcomes. This concern is apparent even in the SDG system, particularly, in the Tier Classification of Global SDG indicators developed by the Inter-agency and Expert Group on SDG Indicators (IAEG-SDGs). This means that additional work is needed to establish methodology and create an internationally comparable statistic (UN Statistical Commission, 2018).
Topic:: Economics, Education, and Children
Political Geography:: Africa and Nigeria

484. The Subnational Political Resource Curse: Allocations, Internally Generated Revenue and Spending Priorities in Nigeria

Author:: Toluwanimi Segun
Publication Date:: 09-2019
Content Type:: Working Paper
Institution:: Centre for the Study of the Economies of Africa (CSEA)
Abstract:: Oil wealth comes with a caveat-depend on it excessively and be buffeted by oil market volatility. The 2014 oil price crash revealed that Nigeria did not heed this warning. The country’s expenditure forecasts are based on an assumed oil price so that the government was caught flatfooted when the crash began around June. Under duress, public officials eventually revealed how financially irresponsible governance was during the years of plenty: after a tussle with the President, State Governors shared oil profits stowed in a “rainy day” account called the Excess Crude Account (ECA) amongst themselves; they allegedly also hindered the growth of the country’s Sovereign Wealth Fund. It does not seem like those hard-won funds were spent in the public’s interest-reports detailing several state governments’ inability to fund public investments and pay public servants’ salaries have continued to arise into 2018.
Topic:: Economics, International Political Economy, Oil, Natural Resources, Revenue Management, and Public Investment
Political Geography:: Africa and Nigeria

485. Sustainability Implications of Nigeria's Water Use Patterns

Author:: Anointing Ogie Momoh
Publication Date:: 07-2019
Content Type:: Working Paper
Institution:: Centre for the Study of the Economies of Africa (CSEA)
Abstract:: Nigeria has significant renewable water resources; however, the current reality is that most of it is poorly utilized and managed, thus raising important sustainability questions. There are several concerns associated with the water situation in the country such as pollution, flooding, poor drainage infrastructure, etc. All these have dire water-poverty, socio-economic, health and livelihood implications for Nigerians. This discussion paper identifies the absence of a properly functioning regulatory regime in Nigeria’s Water Resources sector – with the ensuing pattern of open-access water use in the country – as a fundamental issue that needs to be addressed. It briefly maps out some specifics of the current situation within Nigeria’s Water Resources sector. Utilising a simple steady-state economic framework that shows the implications of open access use of natural resources, it goes on to explain the sustainability implications of the current water resource use-patterns in Nigeria. Drawing on the points raised, the paper concludes with a few high-level recommendations for water sustainability in Nigeria.
Topic:: Economics, Natural Resources, Water, Renewable Energy, Sustainability, and Public Management
Political Geography:: Africa and Nigeria

486. Yellow Cards and Suspension by Choice: Determinants and Asymmetries

Author:: Wolfgang Maennig and Franziska K. Kruse
Publication Date:: 05-2019
Content Type:: Working Paper
Institution:: Chair for Economic Policy, University of Hamburg
Abstract:: This study demonstrates that psycho-economic determinants are significant in the awarding of yellow cards in a soccer match. This is the first multivariate analysis of the number of yellow cards given to a team in a match, and the study concludes that the characteristics of the referee, a home match effect, a derby match effect, and whether a team wins are crucial. The absolute point difference in relation to the current opponent can play a role as well. This is also the first work to analyze the probability of a team’s player collecting his fifth yellow card. We find that the probability is not determined by the characteristics of the referee but by whether a team wins, by whether a team plays at its home pitch and by the quality of the teams participating in the subsequent matches. Soccer players tend to collect their fifth yellow card and their suspension by choice when playing against a better opponent in the next match. For teams in the lower range, the opponent after next plays a role as well.
Topic:: Economics, Sports, and Psychology
Political Geography:: Global Focus

487. Approach to the Spanish External Image Applied to the Economic Intelligence / Aproximación a la imagen exterior española como herramienta de inteligencia económica

Author:: José Pablo Martínez Romera
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: International Security Studies Group (GESI) at the University of Granada
Abstract:: The measurements of external image carried out in recent years to guide the "country-brand" strategies could have the potential to be used as economic intelligence tools. This way, public authorities would be able to foresee variations in those variables linked to the preferences of foreign citizens, such as investments, exports, tourism or immigration; helping them to design politics in these fields.
Topic:: Economics and Intelligence
Political Geography:: Europe and Spain

488. The Secular Stagnation of Productivity Growth

Author:: Servaas Storm
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: The concern that an economy could experience persistent stagnation, caused by a structural weakness of aggregate demand, goes back to Alvin Hansen’s (1939) thesis of ‘secular stagnation’. Hansen’s thesis has been revived in recent times, when it became clear that productivity and potential growth in the OECD countries have been declining for decades. However, in line with deep-rooted theoretical beliefs, that inadequate demand can only affect growth in the short run, secular stagnation (of potential growth) is treated as an exclusively supply-side problem, the root of which is a worrying steady decline in productivity growth. This paper argues that it is a mistake to dismiss secular demand stagnation as main cause of declining potential growth in the OECD. We argue that the theoretical case for demand-caused secular stagnation is strong and empirical evidence that it has affected the U.S. economy after the mid-1970s is entirely convincing. Demand is leading supply, also in the long run. Hansen had it right, after all.
Topic:: Economics, Political Economy, Economic Growth, Macroeconomics, Demand, and Stagnation
Political Geography:: United States

489. How Market Sentiment Drives Forecasts of Stock Returns

Author:: Roman Frydman, Nicholas Mangee, and Josh Stillwagon
Publication Date:: 04-2019
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: We reveal a novel channel through which market participants’ sentiment influences how they forecast stock returns: their optimism (pessimism) affects the weights they assign to fundamentals. Our analysis yields four main findings. First, if good (bad) “news” about dividends and interest rates coincides with participants’ optimism (pessimism), the news about these fundamentals has a significant effect on participants’ forecasts of future returns and has the expected signs (positive for dividends and negative for interest rates). Second, in models without interactions, or when market sentiment is neutral or conflicts with news about dividends and/or interest rates, this news often does not have a significant effect on ex ante or ex post returns. Third, market sentiment is largely unrelated to the state of economic activity, indicating that it is driven by non-fundamental considerations. Moreover, market sentiment influences stock returns highly irregularly, in terms of both timing and magnitude. This finding supports recent theoretical approaches recognizing that economists and market participants alike face Knightian uncertainty about the correct model driving stock returns.
Topic:: Economics, Markets, Financial Markets, Econometrics, and Stock Markets
Political Geography:: United States

490. No Reason to Fear PA Economic Collapse

Author:: Efraim Inbar
Publication Date:: 05-2019
Content Type:: Working Paper
Institution:: Jerusalem Institute for Strategy and Security (JISS)
Abstract:: As dysfunctional as the Palestinian national movement has become, it has excelled in perpetuating the pork barrel born in Oslo.
Topic:: Economics, Territorial Disputes, Governance, Leadership, and Palestinian Authority
Political Geography:: Middle East, Israel, and Palestine

491. The Changing Role of Energy in the U.S. Economy

Author:: Sarah Ladislaw and Jesse Barnett
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Center for Strategic and International Studies
Abstract:: The CSIS Energy Program conducted research, commissioned papers, held a workshop, and developed this report on the changing role of energy in the U.S. economy. The purpose is twofold: (1) improve understanding of how energy impacts the U.S. economy at multiple levels; and (2) evaluate the performance of policies designed to create economic opportunity in the energy sector.
Topic:: Economics, Energy Policy, and Renewable Energy
Political Geography:: North America and United States of America

492. Building a Big Tent for Agricultural Transformation in Ethiopia

Author:: Getachew Diriba and Christian Man
Publication Date:: 04-2019
Content Type:: Working Paper
Institution:: Center for Strategic and International Studies
Abstract:: Ethiopian Prime Minister Abiy Ahmed has been widely hailed for his promises to open political space, usher in economic liberalization, and remake the country’s poor record on human rights. However, to truly transform his country, Dr. Abiy must first transform agriculture, which is the nucleus of the Ethiopian economy and by far the largest employer. Drawing on interviews and focus groups with seventy stakeholders, this report examines the past wins, current endeavors, and future challenges of Ethiopia’s Agricultural Transformation Agency (ATA), a federal entity established in 2010 to drive fundamental changes for the country’s 15 million smallholder farmers. It highlights the relationship between the ATA and the Ethiopian Ministry of Agriculture, the importance of innovation in agricultural transformation, and the role donors like the United States government can play in supporting such-efforts for country-led development.
Topic:: Agriculture, Development, Economics, and Human Rights
Political Geography:: Africa and Ethiopia

493. How do global supply chains exacerbate gender-based violence against women in the global south?

Author:: Garcia Isabella
Publication Date:: 09-2019
Content Type:: Working Paper
Institution:: Centre for Global Political Economy, University of Sussex
Abstract:: In 2018/2019 the CGPE launched an annual Gender & Global Political Economy Undergraduate Essay Prize competition, open to all undergraduate students within the School of Global Studies. The winner of the 2018/2019 competition is Isabella Garcia for the essay “How do global supply chains exacerbate gender-based violence against women in the Global South?” Isabella graduated with a BA in International Relations and Development in July and will join the MA cohort in our Global Political Economy programme for 2019/2020. Given the very strong field of submissions, the award committee further decided to award a second-place prize to Yume Tamiya for the essay “Does the rise of the middle class disguise existing inequalities in Brazil?”. Yume graduated with a BA in International Development with International Education and Development. We are delighted to publish both of these excellent essays in the CGPE Working Paper series.
Topic:: Economics, Gender Issues, Women, Gender Based Violence, and Global South
Political Geography:: Africa, Latin America, Mexico, and Democratic Republic of Congo

494. Does the rise of the middle class disguise existing inequalities in Brazil?

Author:: Yume Tamiya
Publication Date:: 09-2019
Content Type:: Working Paper
Institution:: Centre for Global Political Economy, University of Sussex
Abstract:: In 2018/2019 the CGPE launched an annual Gender & Global Political Economy Undergraduate Essay Prize competition, open to all undergraduate students within the School of Global Studies. The winner of the 2018/2019 competition is Isabella Garcia for the essay “How do global supply chains exacerbate gender-based violence against women in the Global South?” Isabella graduated with a BA in International Relations and Development in July and will join the MA cohort in our Global Political Economy programme for 2019/2020. Given the very strong field of submissions, the award committee further decided to award a second-place prize to Yume Tamiya for the essay “Does the rise of the middle class disguise existing inequalities in Brazil?”. Yume graduated with a BA in International Development with International Education and Development. We are delighted to publish both of these excellent essays in the CGPE Working Paper series.
Topic:: Development, Economics, Inequality, and Economic Growth
Political Geography:: Brazil and Latin America

495. Why does the IMF assign labor conditions? The Burden of Adjustment, Exchange Rate Regimes, and Labor Conditions

Author:: Saliha Metinsoy
Publication Date:: 09-2019
Content Type:: Working Paper
Institution:: Centre for Global Political Economy, University of Sussex
Abstract:: Why does the International Monetary Fund (IMF) assign more stringent labor conditions in some cases and not others? This paper argues that the Fund’s bureaucratic organizational culture and neoliberal economic beliefs dictate its interpretation of international economics and predict the stringency of labor conditions in its programs. Particularly, the Fund staff envisage that lower unit labor costs would indirectly increase competitiveness, boost exports, and contribute to the balance of payments in fixed exchange rate regimes, where currency depreciation is not possible. To this end, the Fund assigns more stringent labor conditions in fixed regimes compared to floating ones. To test this theory, the paper uses a mixed method. It firstly demonstrates the association between exchange rate regimes and the stringency of labor conditions in Fund programs in a global sample. It then complements this analysis by showing particular organizational habits and beliefs at work in two cases, namely in Latvia and Hungary in 2008 under their respective IMF programs. Furthermore, the paper shows that distribution of income away from labor groups (i.e. lowered wages) is in fact by design in IMF programs in an attempt to increase competitiveness in fixed regimes.
Topic:: Economics, International Monetary Fund, International Development, and Neoliberalism
Political Geography:: Europe, Eastern Europe, Hungary, and Latvia

496. The Battle for Northwestern Syria: Better Sooner than Later

Author:: Aiman Mansour
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Jerusalem Institute for Strategy and Security (JISS)
Abstract:: It is in Israel’s interest that Assad regain control of northwestern Syria. Aside from improving the economic situation in Syria, this may increase Israeli leverage in the campaign against Iran’s military entrenchment.
Topic:: Security, Economics, Military Strategy, Conflict, and Strategic Interests
Political Geography:: Middle East, Israel, and Syria

497. Through a Different Lens: The Mideast as Seen from Doha

Author:: Micky Aharonson
Publication Date:: 11-2019
Content Type:: Working Paper
Institution:: Jerusalem Institute for Strategy and Security (JISS)
Abstract:: At a recent conference on the Mideast economy in Doha, which included the participation of Israeli scholars, discussions highlighted changes in the regional balance of power. Acceptance of Assad’s rule in Syria is growing, but so are questions about how Syria’s rehabilitation will be financed. And some Iranians are signaling that Tehran is willing to make political compromises to alleviate economic pressures.
Topic:: Economics, Leadership, Political stability, Conflict, and Academia
Political Geography:: Iran, Middle East, and Syria

498. Uncertain Futures: Imaginaries, Narratives, and Calculative Technologies

Author:: Jens Beckert and Richard Bronk
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:: Dynamic capitalist economies are characterised by relentless innovation and novelty and hence exhibit an indeterminacy that cannot be reduced to measurable risk. How then do economic actors form expectations and decide how to act despite this uncertainty? This paper focuses on the role played by imaginaries, narratives, and calculative technologies, and argues that the market impact of shared calculation devices, social narratives, and contingent imaginaries underlines the rationale for a new form of ‘narrative economics’ and a theory of fictional (rather than rational) expectations. When expectations cannot be anchored in objective probability functions, the future belongs to those with the market, political, or rhetorical power to make their models or stories count. The paper also explores the dangers of analytical monocultures and the discourse of best practice in conditions of uncertainty, and considers the link between uncertainty and some aspects of populism.
Topic:: Economics, Markets, Capitalism, Innovation, Uncertainty, and Calculation
Political Geography:: Global Focus

499. An Overview of German New Economic Sociology and the Contribution of the Max Planck Institute for the Study of Societies

Author:: John Wilkinson
Publication Date:: 02-2019
Content Type:: Working Paper
Institution:: Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:: New economic sociology (NES) in Germany has many similarities with economic sociology in the United States in its conscious efforts to institutionalize its presence within the broader sociology community, its promotion of a canon via handbooks, and its focus on the sociology of markets. At the same time, it differs in its stronger connections to the German classics, the greater vitality of a macrosociological tradition in Germany, the prior existence of a “bridging” generation of economic sociologists, and its later consolidation in a period of neo-liberal globalization, all of which have given NES in the German-speaking world a distinctive character. In addition, it has been influenced by successive waves of French economic sociology – Bourdieu, convention, and actor-network theory – and its bilingual academic tradition has ensured its integration into English-speaking NES. In its contribution to the sociology of markets, the fact that NES emerged later in Germany than in the US led to a greater concern with quality markets rather than commodity markets, and a concomitantly greater attention to issues of value and price. These latter themes, in their turn, establish a continuity with German economic sociology’s enduring concern with understanding the role of money. Not surprisingly, therefore, German NES is now making key contributions to discussions on the sociology of money and is increasingly situating its analysis within the broader dynamic of capitalism and current processes of financialization.
Topic:: Economics, Markets, Sociology, and Discipline
Political Geography:: Europe and Germany

500. Global and Local Challenges in Argentina and Brazil

Author:: Guillermo Calvo
Publication Date:: 12-2018
Content Type:: Working Paper
Institution:: Center for Global Development
Abstract:: The last presidential elections in Argentina (2015) and in Brazil (2018), represent a change from populism towards more orthodox economic policies in two important countries in the region. This shift is not only economic but also reflects other fundamental changes in the electorate, in particular the growing dissatisfaction of the population with issues such as weak security and growing corruption in political institutions. In both countries, there are significant fiscal problems and adjustment is needed. But in modern democracies, the success or failure of economic policy is closely tied to political developments. Notably, both countries face their macroeconomic challenges under a parliamentary minority; a situation that is common to many countries in the region at present. Economies highly integrated into the international capital markets, with macroeconomic imbalances inherited from populist governments, face a particularly difficult challenge. On the one hand, the required fiscal tightening entails the execution of policies that may result in greater social unrest, thus encouraging a gradual approach. On the other hand, a gradual approach requires a greater funding stream of financial funds thus exposing the economy to higher financial risk. The dilemma of choosing between a shock adjustment and a gradual approach has been central to understanding what has happened in Argentina and is essential to assessing the options available to the next government in Brazil. The dilemma about the optimal speed of fiscal adjustment has been faced by other countries in the region in the past. In some successful cases of gradualism, the presence of a clear commitment mechanism over the fiscal path, including the implementation of goals agreed with the IMF, has played a decisive role in mitigating the credibility gap typically linked to gradual approaches. One question that the Committee puts forward throughout this statement is to what extent does Argentina's experience entail relevant lessons for Brazil? In order to thoroughly understand these possible lessons and the challenges that both countries face, it is important to consider the similarities and differences between Argentina and Brazil. There is no doubt that both countries are dealing with formidable fiscal challenges. In both countries, there is a primary fiscal deficit and public debt levels are high in relation to GDP. Also, both economies face low or negative growth rates, partly because of cyclical or temporary factors and partly because of low productivity levels due to complex regulatory regimes and tax systems that hinder investment. On the other hand, the realities of Argentina and Brazil are very different in some important aspects. Brazil has not had to cope with a currency crisis and external financing problems such as those of Argentina; the latter has had to reduce its hefty deficit in the current account of the balance of payments. In contrast, Brazil’s external public debt and external financing needs of the public sector are low. However, while the private sector’s foreign indebtedness is quite moderate in Argentina, it is relatively high in the case of Brazil. As regards to monetary policy and inflation, the situation in both countries is also very different. Whereas the inflation rate in Argentina has suffered a substantial increase throughout this year in the context of low credibility in its monetary policy, Brazil has kept a low and stable inflation rate and has significantly improved its central bank’s credibility. These similarities and differences require a differentiated discussion of each country, even if some challenges facing Argentina and Brazil are shared, and whether their experiences provide lessons for each other. The international context plays a fundamental role for both economies in determining the results of economic policy. Before embarking on a more detailed analysis of the challenges facing Argentina and Brazil during the next year, we will analyze how the international context has recently changed, in the next section.
Topic:: Economics, Globalization, Populism, and Local
Political Geography:: Brazil, Argentina, and South America

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COLUMBIA UNIVERSITY PRESS