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Begin New Search Topic Development Political Geography Asia Content Type Working Paper Publishing Institution United Nations University

51. Income Inequality in Rural China: Regression-based Decomposition Using Household Data

Author:
Guanghua Wan and 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, and Economics
Political Geography:
China and Asia

52. Fifty Years of Regional Inequality in China: A Journey through Central Planning, Reform, and Openness

Author:
Ravi Kanbur and 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, and Political Economy
Political Geography:
China and Asia

53. A Development-focused Allocation of the Special Drawing Rights

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, and International Trade and Finance
Political Geography:
Asia

54. Externalities in Rural Development: Evidence for China

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 and Economics
Political Geography:
China and Asia

55. One Third of the World's Growth and Inequality

Author:
Danny Quah
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper studies growth and inequality in China and India—two economies that account for a third of the world's population. By modelling growth and inequality as components in a joint stochastic process, the paper calibrates the impact each has on different welfare indicators and on the personal income distribution across the joint population of the two countries. For personal income inequalities in a China-India universe, the forces assuming first-order importance are macroeconomic: Growing average incomes dominate all else. The relation between aggregate economic growth and within-country in- equality is insignificant for inequality dynamics.
Topic:
Development and Economics
Political Geography:
China, South Asia, India, and Asia

56. How Optimal are the Extremes? Latin American Exchange Rate Policies During the Asian Crisis

Author:
Ricardo Ffrench-Davis and Guillermo Larraín
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
During the Asian crisis, intermediate exchange rate regimes vanished. It has been argued that those regimes were no longer useful and only the extremes remained valid. The paper analyses three foreign exchange regimes: Argentina (pegged), Chile (band) and Mexico (float). The Argentinean currency board delivered low financial volatility while it was credible, but even then it displayed high real volatility. Mexican float performed well in periods of instability isolating the real sector. The Chilean band delivered a mixed outcome as compared to Argentina and Mexico. This is linked apparently to a loss in the band's credibility, associated to policy mismanagement and an over-appreciation in the biennium before the crisis. Optimal exchange rate regimes vary across time and the conjuncture. Exit strategies are part of the election of the optimal system, including a flexible policy package rather than a single rigid policy tool.
Topic:
Development and International Trade and Finance
Political Geography:
Asia, Argentina, South America, Latin America, Mexico, and Chile

57. 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

58. Household Income Dynamics in Rural China

Author:
Martin Ravallion and Jyotsna Jalan
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
It is well known in theory that certain forms of non-linear dynamics in household incomes can yield poverty traps and distribution-dependent growth. The potential implications for policy are dramatic: effective social protection from transient poverty will be an investment with lasting benefits, and pro-poor redistribution will promote aggregate economic growth. We test for non-linearity in the dynamics of household expenditures and incomes using panel data for rural south-west China. While we find evidence of non-linearity, there is no sign of a dynamic poverty trap. Existing private and social arrangements in this setting appear to protect vulnerable households from the risk of destitution. However, the concavity we find in the recursion diagram does imply that the speed of recovery from an income shock is lower for the poor, and that current inequality reduces growth in mean incomes.
Topic:
Development and Economics
Political Geography:
China and Asia

59. Ratings since the Asian Crisis

Author:
Helmut Reisen
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The increased importance of rating agencies for emerging-market finance has brought their work to the attention of a wider group of observers - and under criticism. This paper evaluates whether the importance of ratings for developing-country finance has changed since the Asian Crisis and whether rating agencies have modified the determinants for their rating decisions. It also provides an analysis on recent suggestions by the Basel Committee on Banking Supervision, as these are very important for gauging the future role of sovereign ratings for foreign debt finance in developing countries. While the explanatory power of conventional rating determinants has declined since the Asian crisis, recent rating performance for Argentina and Turkey can still be qualified as lagging the markets, as variables of financial-sector strength and the endogenous effects of capital flows on macroeconomic variables seem to remain underemphasized in rating assessments. The market impact of sovereign ratings is predicted to decline as agencies have started to modify their country ceiling policy and as market participants try to exploit bond trading opportunities arising from the lagged nature of ratings. The paper presents theory and evidence to suggest that the Basel II Accord will destabilise private capital flows to the developing countries, if the current proposal to link regulatory bank capital to sovereign ratings is maintained: Assigning fixed minimum capital to bank assets whose risk weights are in turn determined by market-lagging cyclically determined ratings will reinforce the tendency of the capital ratio to work in a pro-cyclical way.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
Turkey, Asia, and Argentina