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1. China's Economic Growth: Trajectories and Evolving Institutions

Author:
Jun Zhang
Publication Date:
04-2008
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper investigates the institutional reason underlying the change in the trajectory of economic growth in post-reform China, and argues that the trajectory of growth was much more normal during the period of 1978-89 than in the post-1989 era. In the former period, growth was largely induced by equality-generating institutional change in agriculture and the emergence of non-state industrial sector. In the latter period, growth was triggered by the acceleration of capital investments under authoritarian decentralized hierarchy within self-contained regions. Such a growth trajectory accelerates capital deepening, deteriorating total factor productivity and leads to rising regional imbalance. This paper further argues that the change in the trajectory of growth is the outcome of changes in political and inter-governmental fiscal institutions following the 1989 political crisis.
Topic:
Economics, Government, Industrial Policy, and Political Economy
Political Geography:
China and Asia

2. Governance through Civil Society Engagement in Asia

Author:
Vesselin Popovski, G Shabbir Cheema, Cameron Lowry, and Mark Notaras
Publication Date:
07-2008
Content Type:
Policy Brief
Institution:
United Nations University
Abstract:
Scholars and development practitioners recognize the centrality of governance capacity to achieve sustainable peace and development objectives, including the eradication of extreme poverty, access to services and livelihoods, promotion of economic growth, environmental protection and gender equality among others. With these in view, developing countries are emphasizing the need to improve governance systems and processes to promote people-centered sustainability. The United Nations, development banks, bilateral donors and private sector foundations have been supporting these efforts through governance assistance programs.
Topic:
Civil Society, Government, and Political Theory
Political Geography:
Asia

3. Growth Oriented Macroeconomic Policies for Small Islands Economies: Lessons from Singapore

Author:
Anis Chowdhury
Publication Date:
04-2008
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Most small island economies or 'microstates' have distinctly different characteristics from larger developing economies. They are more open and vulnerable to external and environmental shocks, resulting in high output volatility. Most of them also suffer from locational disadvantages. Although a few small island economies have succeeded in generating sustained rapid growth and reducing poverty, most have dismal growth performance, resulting in high unemployment and poverty. Although macroeconomic policies play an important role in growth and poverty reduction, there has been very little work on the issue for small island economies or microstates. Most work follows the conventional framework and finds no or very little effectiveness of macroeconomic policies in stabilization. They also concentrate on short-run macroeconomic management with a focus almost entirely on either price stability or external balance. The presumption is that price stability and external balance are prerequisite for sustained rapid growth. This paper aims to provide a critical survey of the extant literature on macroeconomic policies for small island economies in light of the available evidence on their growth performance. Given the high output volatility and its impact on poverty, this paper will argue for a balance between price and output stabilization goals of macroeconomic policy mix. Drawing on the highly successful experience of Singapore, it will also outline a framework for growth promoting, pro-poor macroeconomic policies for small island economies/microstates.
Topic:
Development, Economics, and Government
Political Geography:
Asia, Australia/Pacific, Caribbean, and Singapore

4. Innovation Capacity and Economic Development: China and India

Author:
Peilei Fan
Publication Date:
03-2008
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Both China and India, the emerging giants in Asia, have achieved significant economic development in recent years. China has enjoyed a high annual GDP growth rate of 10 per cent and India has achieved an annual GDP growth rate of 6 per cent since 1981. Decomposing China and India's GDP growth from 1981 to 2004 into the three factors' contribution reveals that technology has contributed significantly to both countries' GDP growth, especially in the 1990s. R outputs (high-tech exports, service exports, and certified patents from USPTO) and inputs (R expenditure and human resources) further indicate that both countries have been very committed to R and their output is quite efficient.
Topic:
Government
Political Geography:
China, India, and Asia

5. Reconstruction from Breakdown in Northeastern India: Building State Capability

Author:
M. Sajjad Hassan
Publication Date:
07-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The northeast region of India remains fraught with severe violence, poor growth and acute frustration among its youth. Success of policies to resolve the region's crisis has proved less than encouraging. What could be the way out of the violence–poor growth trap? This paper argues that a key determinant of the instability in the region is the absence of the effective role of the state: to provide security and opportunities for social and economic wellbeing equitably to all sections of society; and to uphold the rule of law. For reconstruction to work the state must act to provide key political goods to all its citizens, and restore its legitimate authority by implementing policies and enforcing laws cleanly and transparently. Political leaders can contribute to this endeavour by organizing politics inclusively.
Topic:
Conflict Resolution, Development, and Government
Political Geography:
India and Asia

6. Development of Financial Intermediation and the Dynamics of Rural-Urban Inequality: China, 1978-98

Author:
Qi Zhang, Mingxing Liu, and Yiu Por Chen
Publication Date:
06-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Using China as a test case, this paper empirically investigates how the development of financial intermediation affects rural-urban income disparity (RUID). Using 20-year province level panel data, we find that the level of financial development is positively correlated with RUID. Examining two subperiods, 1978-88 and 1989-98, we test several competing hypotheses that may affect RUID. We find that the increase of RUID may be explained by fiscal policy during the first period and financial intermediates during the second period. In addition, we show that the direction of the Kuznets effect on RUID is sensitive to changes in government development policies. The rural development policies during the first period may have enhanced the rural development and reduced RUID. However, the financial intermediary policy during the second period focused on urban development and increased both urban growth and intra-urban inequalities, thus leading to an increase in RUID. Finally, we show that RUID is insensitive to the provincial industrial structure (the share of primary industry in GDP). These results are consistent with the traditional urban-bias hypothesis and are robust to the inclusion of controls for endogeneity issues. This study adds to the economic inequality literature by clarifying the effects of government policies on the underlying dynamics on convergent and divergent effects on rural-urban inequality.
Topic:
Development, Economics, and Government
Political Geography:
China and Asia

7. Development Strategy, Viability, and Economic Institutions: The Case of China

Author:
Mingxing Liu, Pengfei Zhang, Shiyuan Pan, and Justin Yifu Lin
Publication Date:
05-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper explores the politically determined development objectives and the intrinsic logic of government intervention policies in east developed countries. It is argued that the distorted institutional structure in China and in many least developed countries, after the Second World War, can be largely explained by government adoption of inappropriate development strategies. Motivated by nation building, most least-developed countries, including the socialist countries, adopted a comparative advantage defying strategy to accelerate the growth of capital-intensive, advanced sectors in their countries. In the paper we also statistically measure the evolution of government development strategies and the economic institutions in China from 1950s to 1980s to show the co-existence and coevolution of government adoption of comparative advantage defying strategy and the trinity system.
Topic:
Development, Economics, and Government
Political Geography:
China and Asia

8. The Burden of Government Debt in the Indian States: Implications for the MDG Poverty Target

Author:
Indranil Dutta
Publication Date:
04-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
In this paper we explore what impact, if any, government debts have on achieving the Millennium Development Goals for the Indian states. To fulfill the goals, national governments, especially in the developing world, have to undertake major investments in the social sector; but how much they will really be able to do so will depend on the conditions of their finances. For the Indian states we find that government investment in the social sector is extremely important to reduce poverty, but the government's debt burden is actually stopping several states from attaining the MDG targets. Although, in the medium term the impact of the debt on poverty is not very harmful, in the longer run it has a significant negative impact. Therefore for policy purposes reduction in debt should be given a priority.
Topic:
Debt, Government, and Poverty
Political Geography:
India and Asia

9. From the Grabbing Hand to the Helping Hand: A Rent Seeking Model of China's Township-Village Enterprises

Author:
Jiahua Che
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
I present a study of ownership of firms under government rent seeking. Using its control of regulated inputs, a government agency extracts rents from a manager who undertakes an investment. Such a government rent seeking activity leads to a typical hold-up problem. Government ownership is shown to serve as a second best commitment mechanism through which the government agency will restrain itself from the rent seeking activity and even offer the manager support and favor such as tax breaks and subsidies. This mechanism works at a cost as government ownership compromises ex post managerial incentives and creates distortion in resource allocation. Nevertheless, government ownership may Pareto dominate private ownership under certain conditions. These conditions correspond to a host of stylized empirical observations concerning local government-owned firms (township-village enterprises) during China's transition to a market economy.
Topic:
Development, Emerging Markets, and Government
Political Geography:
China and Asia