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  • Author: Peter Warr
  • Publication Date: 01-2011
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Thailand's development strategy has been strongly market-oriented and open to trade and investment flows with the rest of the world. Since the late 1950s, its growth performance has been outstanding. Poverty incidence has declined dramatically, but economic inequality has increased. Economic progress has been reflected in very significant improvement in non-economic indicators of well-being such as life expectancy, infant and maternal morality, and literacy. Nevertheless, the performance of the education system is chronically poor. Environmental problems and institutional failures in resource management are ongoing. Reform is needed in several areas, including political and corporate governance, regulation of industry, and in the education and health systems.
  • Topic: Development, Economics, Education, Emerging Markets, Poverty, Foreign Direct Investment
  • Political Geography: Asia, Southeast Asia
  • Author: Philip Abbott, Finn Tarp
  • Publication Date: 03-2011
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Vietnam has been among the most successful East Asian economies, especially in weathering the external shocks of recent globalization crises—the 1997-98 Asian financial crisis and the 2008-09 great recession, financial crisis and collapse of global trade. Its success contradicts its characterization as an example of export-led growth and highlights the role of the state, particularly in maintaining and influencing investment. Examination of economic performance and policy responses shows rising dependence on foreign finance around each crisis, and actions by the government to counteract that dependence and bolster the domestic economy while continuing to restructure the economy toward greater emphasis on the private sector. Growth, employment and poverty alleviation have been maintained at the expense of renewed inflation, larger budget deficits, and currency depreciation. The 'stop-go' nature of present …
  • Topic: Development, Economics, Globalization, International Trade and Finance
  • Political Geography: Asia
  • Author: Fang Cai
  • Publication Date: 02-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: With the aid of an analytical framework of the Lewis model revised to reflect the experience of China, this paper examines the country's dualistic economic development and its unique characteristics. The paper outlines the major effects of China's growth as achieved during the course of economic reform and the opening-up of the country: the exploitation of the demographic dividend, the realization of comparative advantage, the improvement of total factor productivity, and participation in economic globalization. By predicting the long-term relationship between the labour force demand and supply, the paper reviews the approaching turning point in China's economic development and examines a host of challenges facing the country in sustaining growth.
  • Topic: Development, Economics
  • Political Geography: China, Asia
  • Author: Jarko Fidrmuc, Ivana Bátorová
  • Publication Date: 01-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: We analyse the business cycles in China and in selected OECD countries between 1992 and 2006. We show that, although negative correlation dominate s for nearly all countries, we can also see large differences for various frequencies of cyclical developments. On the one hand, nearly all OE CD countries show positive correlations of the very short-run developments that may correspond to intensive supplier linkages. On the other hand, business cycle frequencies (cycles with periods between 1.5 and 8 years) are typically negative. Nevertheless, countries facing a comparably longer history of intensive trading links tend to show also slightly higher correlations of business cycles with China.
  • Topic: Economics, International Trade and Finance
  • Political Geography: China, Asia
  • 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, Political Economy
  • Political Geography: China, Asia
  • Author: Amelia U. Santos-Paulino
  • Publication Date: 03-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper analyses the patterns of export productivity and trade specialization profiles in the China, Brazil, India and South Africa, and in other regional groupings. In doing so, the investigation calculates a time varying export productivity measure using highly disaggregated product categories. The findings indicate that export productivity is mainly determined by real income and human capital endowments. Importantly, the study reveals significant differences in the export productivity and specialization patterns of countries with comparable per capita income levels. For instance, China's export productivity and implied export sophistication is in line with that of countries with higher per capita incomes, including some OECD industrial economies.
  • Topic: Economics, International Trade and Finance
  • Political Geography: Africa, China, India, Asia, South Africa, Brazil, South America
  • Author: Anushree Sinha, Haider Khan
  • Publication Date: 06-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The main purpose of this paper is to look at the incorporation of gender and the informal sector within a general equilibrium framework for India. Moreover, we clarify some important links between a gender aware informal sector based social accounting matrix (SAM) and general equilibrium models such as the computable general equilibrium (CGE) models including as a special case the fixed price multiplier (FPM) models. In particular, economy wide modelling of gender and the informal sector is facilitated by the use of national level data and constructing the base data set as an SAM. Another important strategy is to conceptualize the economy within gender structures, entailing the recognition of gender relations as an intervening variable in all economic activities.
  • Topic: Economics, Gender Issues
  • Political Geography: India, Asia
  • Author: Dominique van der Mensbrugghe, Maurizio Bussolo, Rafael E. De Hoyos, Denis Medvedev
  • Publication Date: 03-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Over the past 20 years, aggregate measures of global inequality have changed little even if significant structural changes have been observed. High growth rates of China and India lifted millions out of poverty, while the stagnation in many African countries caused them to fall behind. Using the World Bank's LINKAGE global general equilibrium model and the newly developed Global Income Distribution Dynamics (GIDD) tool, this paper assesses the distribution and poverty effects of a scenario where these trends continue in the future. Even by anticipating a deceleration, growth in China and India is a key force behind the expected convergence of per capita incomes at the global level. Millions of Chinese and Indian consumers will enter into a rapidly emerging global middle class—a group of people who can afford, and demand access to, the standards of living previously reserved mainly for the residents of developed countries. Notwithstanding these positive developments, fast growth is often characterized by high urbanization and growing demand for skills, both of which result in a widening of income distribution within countries. These opposing distributional effects highlight the importance of analysing global disparities by taking into account—as the GIDD does—income dynamics between and within countries.
  • Topic: Development, Economics, Poverty
  • Political Geography: Africa, China, India, Asia
  • 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, Government
  • Political Geography: Asia, Australia/Pacific, Caribbean, Singapore
  • Author: Sudhir K. Thakur
  • Publication Date: 05-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This study provides an understanding of the Indian regional economy utilizing the fundamental economic structure (FES) approach. The FES construct implies that selected characteristics of an economy will vary predictably with region size, as measured by net state domestic product, population, and total gross output. The big question addressed in this study is if identifiable patterns of relations between various macro aggregates and economic transactions can be revealed via regional input-output tables. Jensen et al. (1988) discuss the tiered, partitioned, and temporal approaches to the identification of FES using input-output tables. This research addresses the following four questions: (1) Does a regional FES exist for the Indian economy during the period 1965? (2) What proportions of the cells are predictable? (3) Can the 1965 regional FES predict 1983-84 table for Punjab economy? (4) Does regional FES manifest an enhanced understanding of the Indian regional structure? Regression analyses are used to identify the FES and non-FES cells for the Indian regional economy. The regional input-output tables for 21 States and Union Territories provide data for the analysis. Analysis reveals regional FES includes primary and secondary sectors as components of FES. This research has extended the notion of FES to include: weak, moderate and strong FES cells.
  • Topic: Economics
  • Political Geography: India, Asia, Punjab
  • Author: Ligang Song, Yu Sheng
  • Publication Date: 02-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The study decomposes the sources of Chinese growth by first making a distinction between technological progress and technical efficiency in the growth accounting framework, and then identifying a series of reform programmes, such as urbanization, structural change, privatization, liberalization, banking and fiscal system reforms as the key components in institutional innovation which facilitate the improvement of technical efficiency and through which economic growth. These components are then incorporated into the model specification, which is estimated based on a panel dataset by applying the principal component analysis (PCA) to eliminate the multicollinearity problem. The results show that urbanization, liberalization and structural change in the form of industrialization are the most important components in contributing to the improvement of technical efficiency and hence growth, highlighting the importance of government policies aimed at enhancing further urbanization, openness to trade and industrial structural adjustments to sustain the growth momentum in China. The study also found that the potential for further enhancing growth through technical efficiency in China is considerable, which can be realized by deepening state-owned enterprises (SOEs) restructuring, and banking and fiscal system reform.
  • Topic: Economics
  • Political Geography: China, Asia
  • Author: Raghav Gaiha, Katsushi Imai
  • Publication Date: 04-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper measures the vulnerability of households in rural India, based upon the ICRISAT panel survey. We employ both ex ante and ex post measures of vulnerability. The latter are decomposed into aggregate and idiosyncratic risks and poverty components. Our decomposition shows that idiosyncratic risks account for the largest share, followed by poverty and aggregate risks. Despite some degree of risk-sharing, the landless or small farmers are vulnerable to idiosyncratic risks, forcing them to reduce consumption. Income-augmenting policies therefore must be combined with those that not only reduce aggregate and idiosyncratic risks but also build resilience against them.
  • Topic: Demographics, Development, Economics, Poverty
  • Political Geography: India, Asia
  • Author: Shujie Yao, Zhongwei Han, Genfu Feng
  • Publication Date: 04-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Since China joined the WTO in 2001, the pressure for bank reforms has mounted as China ought to fully open up its financial market to foreign competition by 2006. Efficiency is key for domestic banks to survive in a liberalised environment, but it appears that the last hope for raising bank efficiency is through ownership reform. Whether ownership reform and foreign competition can solve China's banking problem remains to be tested. This paper aims to answer this question through using a non-parametric approach to analyse the efficiency changes of 15 large commercial banks during 1998-2005. We find that ownership reform and foreign competition have forced the Chinese commercial banks to improve performance, as their total factor productivity rose by 5.6 per cent per annum. This coincides with the recent bullish Chinese stock markets led by three listed state-owned commercial banks. Despite such encouraging results, we remain cautious about the future of the Chinese banks, as the good results may have been artificially created with massive government support and the fundamentals of the banks may be still weak.
  • Topic: Economics, International Trade and Finance
  • Political Geography: China, Asia
  • Author: Calum G. Turvey, Rong Kong
  • Publication Date: 05-2008
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper investigates the economic conditions of rural households in China. Historical survey data indicate that over 80 per cent of rural households earn less than 4,500 yuan in net disposable income each year, that for the vast majority of rural households disposable income is insufficient to meet food consumption needs, and that in terms of economic growth rural households are receiving an ever decreasing percentage of China's growing economy with rural household incomes being only 31 per cent of urban household income in 2004.
  • Topic: Economics, Poverty
  • Political Geography: China, Asia
  • Author: Renwei Zhao, Shi Li
  • Publication Date: 01-2007
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper investigates some major changes in the wealth distribution in China using the data from two national household surveys conducted in 1995 and 2002. The surveys collected rich information on household wealth and its components, enabling a detailed analysis of changes in wealth distribution among Chinese households. Our analysis indicates that the wealth distribution in China as a whole became much more unequal in 2002 than it was in 1995. The housing reform, in which public apartments were sold to urban households at extremely low prices, has accelerated the accumulation of wealth among urban households on the one hand, and widened the wealth gap between urban and rural areas on the other.
  • Topic: Demographics, Development, Economics
  • Political Geography: China, Asia
  • Author: Guanghua Wan
  • Publication Date: 01-2007
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper depicts the trend of regional inequality in rural China for the period 1985- 2002. The total inequality is decomposed into the so-called within- and between components when China is divided into three regional belts (east, central and west). A regression-based accounting framework is then used to explore root sources of the rising inequality. Policy implications are discussed.
  • Topic: Demographics, Development, Economics
  • Political Geography: China, Asia
  • Author: Guanghua Wan, Yin Zhang
  • Publication Date: 12-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Applying the Shapley decomposition to unit-record household survey data, this paper investigates the trends and causes of poverty in China in the 1990s. The changes in poverty trends are attributed to two proximate causes; income growth and shifts in relative income distribution. The Foster-Greer-Thorbecke measures are computed and decomposed, with different datasets and alternative assumptions about poverty lines and equivalence. Among the robust results are: (i) both income growth and favourable distributional changes can explain China's remarkable achievement in combating poverty in rural areas in the first half of the 1990s; (2) in the second half of the 1990s, both rural and urban China suffered from rapidly rising inequality and stagnant income growth, leading to a slow-down in poverty reduction, even reversal of poverty trend.
  • Topic: Development, Economics, Poverty
  • Political Geography: China, Asia
  • Author: Yin Ge
  • Publication Date: 09-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: How do foreign trade and foreign direct investment affect regional inequality? Foreign trade and investment may affect internal economic geography, and the resulting industry agglomeration may contribute to regional inequality. This paper provides empirical evidence supporting this linkage. The results indicate that the increasing regional inequality in China has been accompanied by an increase in the degree of regional specialization and industry agglomeration. Foreign trade and foreign investment are closely related to industry agglomeration in China. Industries dependent on foreign trade and FDI are more likely to locate in regions with easy access to foreign markets, and exporting industries have a higher degree of agglomeration.
  • Topic: Economics, Industrial Policy, International Trade and Finance
  • Political Geography: China, Asia
  • Author: Zhicheng Liang
  • Publication Date: 09-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Financial development can exert a significant influence on the distribution of income. In this paper, using Chinese provincial data over the period of 1991-2000 and applying the generalized method of moment (GMM) techniques, we investigate the relationship between finance and inequality in rural China by testing alternative existing theories concerning the finance-inequality nexus. A negative and linear relationship between finance and inequality is found in our estimations. The empirical results show that financial development significantly reduces income inequality in post-reform rural China.
  • Topic: Demographics, Development, Economics
  • Political Geography: China, Asia
  • Author: Xiaobo Zhang
  • Publication Date: 09-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: China's current fiscal system is largely decentralized while its governance structure is rather centralized with strong top-down mandates and a homogenous governance structure. Due to large differences in initial economic structures and revenue bases, the implicit tax rate and fiscal burdens to support the functioning of local government vary significantly across jurisdictions. Regions initially endowed with a broader nonfarm tax base do not need to rely heavily on preexisting or new firms to finance public goods provision, thereby creating a healthy investment environment for the nonfarm sector to grow. In contrast, regions with agriculture as the major economic activity have little resources left for public investment after paying the expenses of bureaucracy. Consequently, differences in economic structures and fiscal burdens may translate into a widening regional gap.
  • Topic: Development, Economics, Politics
  • Political Geography: China, Asia
  • Author: Zhicheng Liang
  • Publication Date: 08-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Deepening financial development and rapid economic growth in China have been accompanied by widening income disparity between the coastal and inland regions. In this paper, by employing panel dataset for 29 Chinese provinces over the period of 1990-2001 and applying the generalized method of moment (GMM) techniques, we examine the impacts of financial development on China's growth performance. Our empirical results show that financial development significantly promotes economic growth in coastal regions but not in the inland regions; the weak finance-growth nexus in inland provinces may aggravate China's regional disparities.
  • Topic: Conflict Resolution, Development, Economics
  • Political Geography: China, Asia
  • Author: Geoffrey J.D. Hewings, Dong Guo, Patricio Aroca
  • Publication Date: 08-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The purpose of this paper is to examine the convergence process in China by taking into account the spatial interaction between factors. The paper shows that there has been a dramatic increase in the spatial dependence of China's per capita GDP in the last 20 years. The consequence of space plays an important role, which is reflected in the influence of a neighbour's condition on the mobility of a province's income distribution from one category to another. The dynamics of the process showed evidence that China's distribution has gone from one of convergence to stratification, and from stratification to polarization.
  • Topic: Demographics, Development, Economics
  • Political Geography: China, Asia
  • Author: Mingming Zhou, Iftekhar Hasan
  • Publication Date: 08-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper documents the financial and institutional developments of China during the past two decades, when China was successfully transformed from a rigid centralplanning economy to a dynamic market economy following its unique path. We empirically examine the relationship between financial development and economic growth in China by employing a panel sample covering 31 Chinese provinces during the important transition period 1986-2002. Our evidence suggests that the development of financial markets, institutions, and instruments have been robustly associated with economic growth in China.
  • Topic: Development, Economics, International Trade and Finance
  • Political Geography: China, Asia
  • Author: Bassam A. Fattouh, Panicos O. Demetriades
  • Publication Date: 08-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: We provide a novel empirical analysis of the South Korean credit market that reveals large volumes of excess credit since the late 1970s, indicating that a sizeable proportion of total credit was being used to refinance unprofitable projects. Our findings are consistent with theoretical literature that suggests that soft budget constraints and overborrowing were significant factors behind the Korean financial crisis of 1997-98.
  • Topic: Economics, International Trade and Finance, Markets
  • Political Geography: Asia, South Korea, Korea
  • Author: Qi Zhang, Mingxing Liu, 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, Government
  • Political Geography: China, Asia
  • Author: Guanghua Wan
  • Publication Date: 06-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The purpose of this paper is to develop two poverty decomposition frameworks and to illustrate their applicability. A given level of poverty is broadly decomposed into an overall inequality component and an overall endowment component in terms of income or consumption determinants or input factors. These components are further decomposed into finer components associated with individual inputs. Also, a change in poverty is decomposed into components attributable to the growth and redistributions of factor inputs. An empirical illustration using Chinese data highlights the importance of factor redistributions in determining poverty levels and poverty changes in rural China.
  • Topic: Development, Economics, Poverty
  • Political Geography: China, Asia
  • Author: Terutomo Ozawa
  • Publication Date: 06-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The notion of 'shared growth' was introduced by the World Bank in recognition of East Asia's rapid growth accompanied by poverty reduction. It emphasizes the criticality of pro-poor policies and institutional setups in the fast-developing East Asian economies. The efforts of these individual countries are, however, a necessary but not sufficient condition (explanation). There is a more essential, underlying region-wide mechanism that simultaneously promotes regionalized growth and specifically favours Asia's working mass of unskilled labour. Such an efficacious mechanism is posited in the 'flying-geese paradigm of comparative advantage recycling in labour-intensive goods'. The paper argues that a number of favourable factors have fortuitously coalesced to engender a considerably favourable condition for Asia's rapid catch-up growth in which unskilled labour (the poor) can participate as their countries' most vital input in labour-driven development.
  • Topic: Development, Economics, Poverty
  • Political Geography: East Asia, Asia
  • Author: Zhicheng Liang
  • Publication Date: 06-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: China has experienced rapid integration into the global economy and achieved remarkable progress in poverty reduction over the last two decades. In this paper, by employing panel data covering twenty-five Chinese provinces over the period of 1986- 2002, and applying the endogenous threshold regression techniques, we empirically investigate the globalization-poverty nexus in China, paying particular attention to the nonlinearity of the impact of globalization on the poor. Estimation results provide strong evidence to suggest that there exists a threshold in the relationship between globalization and poverty: globalization is good for the poor only after the economy has reached a certain threshold level of globalization.
  • Topic: Economics, Globalization, Poverty
  • Political Geography: China, Asia
  • Author: Hyun H. Son, Nanak Kakwani
  • Publication Date: 06-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper looks into the interrelation between economic growth, inequality, and poverty. Using the notion of pro-poor growth, this study examines to what extent the poor benefit from economic growth. First, various approaches to defining and measuring pro-poor growth are scrutinized using a variety of criteria. It is argued that the satisfaction of a monotonicity axiom is a key criterion for measuring pro-poor growth. The monotonicity axiom sets out a condition that the proportional reduction in poverty is monotonically an increasing function of the pro-poor growth measure. This paper proposes a pro-poor growth measure that satisfies the monotonicity criterion. This measure is called the 'poverty equivalent growth rate', which takes into account both the magnitude of growth and how the benefits of the growth are distributed to the poor and the non-poor. As the new measure satisfies the criterion of monotonicity, it is indicative that to achieve a rapid poverty reduction, the poverty equivalent growth rate ought to be maximized rather than the actual growth rate. The methodology developed in the paper is then applied to Asian countries, including the Republic of Korea, Thailand, and Vietnam.
  • Topic: Development, Economics, Poverty
  • Political Geography: Asia, Vietnam, Korea, Thailand
  • Author: Basudeb Guha-Khasnobis, Saibal Kar
  • Publication Date: 05-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Traditionally, firms in India have shown a low preference towards debt financing, despite its advantages. Using panel data from 450 firms during 1992-93 and 2003-04, we attempt to identify factors which could explain the pattern of financing of manufacturing firms in India and the key determinants of their debt structure. We examine the roles of age of the firm, long term borrowing and net sales in affecting its debt structure.
  • Topic: Economics, Markets
  • Political Geography: India, Asia
  • Author: Mingxing Liu, Pengfei Zhang, Shiyuan Pan, 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, Government
  • Political Geography: China, Asia
  • Author: Justin Yifu Lin, Peilin Liu
  • Publication Date: 04-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper argues that both openness and poverty in a country are endogenously determined by the country's long-term economic development strategy. Development strategies can be broadly divided into two mutually exclusive groups: (i) the comparative advantage-defying (CAD) strategy, which attempts to encourage firms to deviate from the economy's existing comparative advantages in their entry into an industry or choice of technology; and (ii) the comparative advantage-following (CAF) strategy, which attempts to facilitate the firms' entry into an industry or choice of technology according to the economy's existing comparative advantages.
  • Topic: Development, Economics, Poverty
  • Political Geography: China, Asia
  • Author: Guanghua Wan, Yin Zhang
  • Publication Date: 04-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper examines the distributional impact of globalization on the poor in urban China. Employing the kernel density estimation technique, we recovered from irregularly grouped household survey data the income distribution for 29 Chinese provinces for 1988-2001. Panels of the income shares of the poorest 20, 10 and 5 per cent of the urban residents were then compiled. In a fixed-effect model, two of the central conclusions of Dollar and Kraay (2002)—that 'the incomes of the poor rise equi-proportionately with average income' and that trade openness has little distributional effect on poverty—were revisited. Our results lend little support to either of the Dollar-Kraay conclusions, but instead indicate that average income growth is associated with worsening income distribution while globalization in general, and trade openness in particular, raises the income shares of the poor. It is also found that openness to trade and openness to FDI have differential distributional effects. The beneficial effect of trade was not restricted to the coastal provinces only, but also weakened significantly after 1992. These findings are robust to allow for nonlinearity in the effect of globalization and to control for the influence of several other variables.
  • Topic: Economics, Globalization, Poverty
  • Political Geography: China, Asia
  • Author: Brinda Viswanathan, S. Kavi Kumar
  • Publication Date: 04-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The net impact of globalization on developing countries, and more specifically on the poorer sections of population in these countries, is complex and context dependent, and hence needs to be analysed empirically. This study in the context of globalization attempts to develop regional level indices of vulnerability with respect to welfare loss in India using a methodology based on fuzzy inference systems. The vulnerability of an entity is conceptualized (following the practice in global climate change literature) as a function of its exposure, sensitivity and adaptive capacity. Empirical analysis based on such multidimensional conceptualization demands use of indicator-based approach which is attempted in this study and uses fuzzy models that adequately capture vagueness inherent in such approaches.
  • Topic: Development, Economics, Globalization
  • Political Geography: India, Asia
  • Author: Tony Addison
  • Publication Date: 02-2006
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Much has changed in international finance in the twenty years since UNU-WIDER was founded. This paper identifies five broad contours of what we might expect in the next twenty years: the flow of capital from ageing societies to the more youthful economies of the South; the growth in the financial services industry in emerging economies and the consequences for their capital flows; the current strength in emerging market debt, and whether this represents a change in fundamentals or merely the effect of low global interest rates; the impact of globalization in goods markets in lowering inflation expectations, and therefore global bond yields; and the implications of the adjustment in global imbalances between Asia (in particular China) and the United States for emerging bond markets as a whole. The paper ends by noting the paradox that today we see ever larger amounts of capital flowing across the globe in search of superior investment returns, and yet the financing needs of the poorer countries are still largely unmet.
  • Topic: Development, Economics, International Trade and Finance
  • Political Geography: United States, China, Asia
  • Author: Guanghua Wan, Yin Zhang
  • Publication Date: 08-2005
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper proposes a semi-parametric method for poverty decomposition, which combines the data-generating procedure of Shorrocks and Wan (2004) with the Shapley value framework of Shorrocks (1999). Compared with the popular method of Datt and Ravallion (1992), our method is more robust to misspecification errors, does not require the predetermination of functional forms, provides better fit to the underlying Lorenz curve and incorporates the residual term in a rigorous way. The method is applied to decomposing variations of urban poverty across the Chinese provinces into three components – contributions by the differences in average nominal income, inequality and poverty line. The results foreground average income as the key determinant of poverty incidence, but also attach importance to the influence of distribution. The regional pattern of the decomposition suggests provincial groupings based not entirely on geographical locations.
  • Topic: Demographics, Economics, Poverty
  • Political Geography: China, Asia
  • Author: Saman Kelegama
  • Publication Date: 08-2005
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Peace can generate an economic dividend, which can be further increased by appropriate economic reform. This dividend can in turn be used to raise popular support for conflict resolution measures along the road to achieving a final political settlement, a strategy that characterizes the recent period in Sri Lanka. However, despite an increase in economic growth following the cessation of hostilities between the Liberation Tigers of Tamil Eelam (LTTE) and the government, no substantial dividend materialized for either government supporters in the South or LTTE supporters in the war-torn Northeast. The causes of this failure include delays in disbursing aid which would have eased adjustment to economic reforms—resulting in cuts to public spending that affected Southern households—and weak institutions that impeded the effective use of aid in the Northeast. The Sri Lankan experience highlights some important lessons for both government and donors on making use of an economic lever for consolidating a peace process and conflict resolution. It also highlights some of the dangers in relying too much on economic levers to consolidate a peace process when levels of mistrust are very high.
  • Topic: Conflict Resolution, Economics, Peace Studies
  • Political Geography: Asia, Sri Lanka
  • Author: Guanghua Wan, Zhao Chen, Ming Lu
  • Publication Date: 11-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: China's recent accession to the WTO is expected to accelerate its integration into the world economy, which aggravates concerns over the impact of globalization on the already rising inter-region income inequality in China. This paper discusses China's globalization process and estimates an income generating function, incorporating trade and FDI variables. It then applies the newly developed Shapley value decomposition technique to quantify the contributions of globalization, along with other variables, to regional inequality. It is found that (a) globalization constitutes a positive and substantial share to regional inequality and the share rises over time; (b) capital is one of the largest and increasingly important contributor to regional inequality; (c) economic reform characterized by privatization exerts a significant impact on regional inequality; and (d) the relative contributions of education, location, urbanization and dependency ratio to regional inequality have been declining.
  • Topic: Economics, Globalization
  • Political Geography: China, Asia
  • Author: Guanghua Wan, Yin Zhang
  • Publication Date: 08-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The Chinese economy underwent cyclical fluctuations in growth and inflation in the reform period. Contrasting views exist on the role of money in such fluctuations. This paper assesses these views employing structural VEC models based on the exchange equation. It is found that in the long run money accommodates, rather than causes, changes in output and prices. In the short run, price fluctuations are mostly attributable to shocks that have permanent effects on prices and money but not on real output. These shocks also account for a large proportion of fluctuations in money, and strongly influence the movements of output.
  • Topic: Economics, Emerging Markets, International Trade and Finance
  • Political Geography: China, Asia
  • Author: Guanghua Wan, Yin Zhang
  • Publication Date: 08-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper proposes a structural VAR model which extends the frameworks of Hoffmaister and Roldós (2001) and Prasad (1999). The model is then used to analyse the sources of China's trade balance fluctuations in the period of 1985–2000. Efforts are made to distinguish the forces which underlie the long-run trend in trade balance from those with transitory impacts. The effects of four types of shock are examined—the foreign supply shock, the domestic supply shock, the relative demand shock, and the nominal shock. Among other findings, two emerge as important. First, the movements in China's trade are largely the result of real shocks. Second, the Renminbi is undervalued, yet changes in the exchange rate bear little on the trade balance. Therefore, monetary measures would not suffice to redress China's trade 'imbalance'.
  • Topic: Economics, Emerging Markets, International Trade and Finance
  • Political Geography: China, Asia
  • Author: Shatakshee Dhongde
  • Publication Date: 08-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Over the last decade, India has been one of the fastest growing economies, and has experienced considerable decline in overall income poverty. However, in a vast country like India, poverty levels vary significantly across the different states. In this paper, we analyze the differences between poverty at the state and national level, separately for the rural and urban sector, in the year 1999-2000. Instead of following the usual practice of decomposing the changes in poverty over time, we decompose the changes in poverty across regions. Such decomposition reveals that differences in state and national poverty levels were largely explained by differences in the state and national mean income levels. Differences in the state and national distributions of income were less important in explaining spatial differences in poverty. An important policy implication of our results is that states with extremely high levels of poverty would have reduced poverty significantly by raising their mean income levels to the national mean income, instead of changing their distribution of income to match the national income distribution.
  • Topic: Demographics, Economics, Poverty
  • Political Geography: India, Asia
  • Author: John Knight, Li Shi, Zhao Renwei
  • Publication Date: 08-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Two precisely comparable national household surveys relating to 1988 and 1995 are used to analyse changes in the inequality of income in urban China. Over those seven years province mean income per capita grew rapidly but diverged across provinces, whereas intra-province income inequality grew rapidly but converged across provinces. The reasons for these trends are explored by means of various forms of decomposition analysis. Comparisons are also made between the coastal provinces and the inland provinces. The decompositions show the central role of wages, and within wages profitrelated bonuses, together with the immobility of labour across provinces, in explaining mean income divergence. The timing of economic reforms helps to explain the convergence of intra-province income inequality. Policy conclusions are drawn.
  • Topic: Demographics, Development, Economics
  • Political Geography: China, Asia
  • Author: Guanghua Wan, Zhangyue Zhou
  • Publication Date: 08-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: A considerable literature exists on the measurement of income inequality in China and its increasing trend. Much less is known, however, about the driving forces of this trend and their quantitative contributions. Conventional decompositions, by factor components or by population subgroups, only provide limited information on the determinants of income inequality. This paper represents an early attempt to apply the regression-based decomposition framework to the study of inequality accounting in rural China, using household level data. It is found that geography has been the dominant factor but is becoming less important in explaining total inequality. Capital input emerges as a most significant determinant of income inequality. Farming structure is more important than labour and other inputs in contributing to income inequality across households.
  • Topic: Demographics, Development, Economics
  • Political Geography: China, Asia
  • Author: Ravi Kanbur, Xiaobo Zhang
  • Publication Date: 08-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper constructs and analyses a long-run time-series for regional inequality in China from the Communist Revolution to the present. There have been three peaks of inequality in the last fifty years, coinciding with the Great Famine of the late 1950s, the Cultural Revolution of the late 1960s and 1970s, and finally the period of openness and global integration in the late 1990s. Econometric analysis establishes that regional inequality is explained in the different phases by three key policy variables; the ratio of heavy industry to gross output value, the degree of decentralization, and the degree of openness.
  • Topic: Development, Economics, Industrial Policy, Political Economy
  • Political Geography: China, Asia
  • Author: Ernest Aryeetey
  • Publication Date: 03-2004
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Efforts to realize the issue of development-focused Special Drawing Rights (SDR) by the International Monetary Fund (IMF) have been on-going for many years. Recently, however, the campaign first gained a new momentum immediately after the Asian financial crises with the new liquidity problems of developing nations following the collapse of private capital markets. Currently the search for financing options towards the achievement of the Millennium Development Goals drives the interest in development-focused SDRs. Extending the uses to which SDR can be put is derived from the growing demands on the international financial system to respond to the development finance needs of poor nations. Apart from the need to provide emergency funds in times of crises and the whole area of crisis prevention, increasingly the facilitation of development in poor countries and assistance to make the best policy decisions is considered crucial.
  • Topic: Development, Economics, International Political Economy, International Trade and Finance
  • Political Geography: Asia
  • Author: Anthony Shorrocks, Stanislav Kolenikov
  • Publication Date: 10-2003
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper applies a new decomposition technique to the study of variations in poverty across the regions of Russia. The procedure, which is based on the Shapley value in cooperative game theory, allows the deviation in regional poverty levels from the all- Russia average to be attributed to three proximate sources; mean income per capita, inequality, and local prices. Contrary to expectation, regional poverty variations turn out to be due more to differences in inequality across regions than to differences in real income per capita. However, when real income per capita is split into nominal income and price components, differences in nominal incomes emerge as more important than either inequality or price effects for the majority of regions.
  • Topic: Economics, Poverty
  • Political Geography: Russia, Europe, Asia
  • Author: Ruslan Yemtsov
  • Publication Date: 09-2003
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper analyses regional data on inequality and poverty in Russia during 1994-2000 using published series from the regionally representative Household Budget Survey. The paper finds that the share of inequality in Russia coming from the between-regions component is large (close to a third of the total inequality), growing, and accounts for most of the increase in national inequality over 1994-2000. The paper demonstrates an absence of interregional convergence in incomes across Russian regions using various techniques. On the other hand, the paper finds evidence of convergence in inequality within regions, trended towards an internationally high level. Based on these two findings, the paper projects dynamics of inequality and poverty in Russia over a ten-year time horizon. The projections show that if the observed trend continues, by 2010 the absolute majority of Russia's poor will be concentrated in a few permanently impoverished regions, while relatively more affluent regions will become virtually free of poverty. Finally, the paper relates fluctuations in inequality within regions to a set of factors classified into four broad categories: endowments and initial conditions, preferences, policies, and shocks. Among these factors short-run fluctuations of the unemployment rate are revealed as significant and strong signals of inequality.
  • Topic: Demographics, Economics, Poverty
  • Political Geography: Russia, Europe, Asia
  • Author: Martin Ravallion
  • Publication Date: 07-2003
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: The paper tests for external effects of local economic activity on consumption and income growth at the farm household level using panel data from four provinces of post-reform rural China. The tests allow for nonstationary fixed effects in the consumption growth process. Evidence is found of geographic externalities, stemming from spillover effects of the level and composition of local economic activity and private returns to local human and physical infrastructure endowments. The results suggest an explanation for rural underdevelopment arising from underinvestment in certain externality-generating activities, of which agricultural development emerges as the most important.
  • Topic: Development, Economics
  • Political Geography: China, Asia
  • Author: Svetlana Glinkina, Dorothy Rosenberg
  • Publication Date: 02-2003
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: We argue that the conflicts in the Caucasus are the result of the abrogation by the elite of the earlier, Soviet era, social contract. This process was accompanied by the collapse of the formal economy; evidenced by huge national income compression, falling public goods provision, and growing inequality and poverty. In the absence of state provision of basic amenities and governance, ordinary people are compelled to fall back on kinship ties. Declining standards of governance facilitate state-sponsored corruption and criminality in a setting where the shadow economic activity is increasingly important to individual survival strategies. Oil pipelines and the right to control the transit of goods both legal and illegal also underlie conflict in the region. Criminality has replaced ethnicity as the major motivation for conflict and conflict per se has become a lucrative source of income.
  • Topic: Economics, Ethnic Conflict, Poverty
  • Political Geography: Russia, Europe, Asia, Soviet Union
  • Author: John Hawkins
  • Publication Date: 04-2002
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: International bank lending is a major component of capital flows between advanced and emerging economies. However, in recent years these flows have been going the wrong way, like water flowing uphill. Even four years after the Asian crisis, there is a net flow of funds from emerging economies to banks in advanced economies. This paper looks at this phenomenon, starting by setting out the relevant data, and then looking at factors influencing these flows. These include both cyclical influences (both 'push' and 'pull') and structural changes within the banking industry. There is some evidence that international lenders are now discriminating more between the various emerging economies.
  • Topic: Economics, Emerging Markets, International Trade and Finance
  • Political Geography: Asia