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31. Does Openness To International Financial Flows Raise Productivity Growth?

Author:
Marco E. Terrones, Eswar Prasad, and Ayhan Kose
Publication Date:
01-2009
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Economic theory has identified a number of channels through which openness to international financial flows could raise productivity growth. However, while there is a vast empirical literature analyzing the impact of financial openness on output growth, far less attention has been paid to its effects on productivity growth. This paper provides a comprehensive analysis of the relationship between financial openness and total factor productivity (TFP) growth using an extensive dataset that includes various measures of productivity and financial openness for a large sample of countries. We find that de jure capital account openness has a robust positive effect on TFP growth. The effect of de facto financial integration on TFP growth is less clear, but this masks an important and novel result. We find strong evidence that FDI and portfolio equity liabilities boost TFP growth while external debt is actually negatively correlated with TFP growth. The negative relationship between external debt liabilities and TFP growth is attenuated in economies with higher levels of financial development and better institutions.
Topic:
Debt, Development, Economics, and Foreign Direct Investment

32. Financial Globalization and Economic Policies

Author:
Eswar Prasad, Kenneth Rogoff, M. Ayhan Kose, and Shang-Jin Wei
Publication Date:
04-2009
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
We review the large literature on various economic policies that could help developing economies effectively manage the process of financial globalization. Our central findings indicate that policies promoting financial sector development, institutional quality and trade openness appear to help developing countries derive the benefits of globalization. Similarly, sound macroeconomic policies are an important prerequisite for ensuring that financial integration is beneficial. However, our analysis also suggests that the relationship between financial integration and economic policies is a complex one and that there are unavoidable tensions inherent in evaluating the risks and benefits associated with financial globalization. In light of these tensions, structural and macroeconomic policies often need to be tailored to take into account country specific circumstances to improve the risk-benefit tradeoffs of financial integration. Ultimately, it is essential to see financial integration not just as an isolated policy goal but as part of a broader package of reforms and supportive macroeconomic policies.
Topic:
Development, Economics, Globalization, and International Trade and Finance
Political Geography:
Global Focus

33. Strengthen the Millennium Challenge Corporation: Better Results are Possible

Author:
Lex Rieffel and James W. Fox
Publication Date:
12-2008
Content Type:
Policy Brief
Institution:
The Brookings Institution
Abstract:
The Millennium Challenge Corporation (MCC) is one of the outstanding innovations of the eight-year presidency of George W. Bush. No other aid agency-foreign or domestic-can match its purposeful mandate, its operational flexibility and its potential muscle.
Topic:
Development, Government, Humanitarian Aid, and International Affairs
Political Geography:
United States

34. The Diversification Challenge in Africa's Resource-Rich Economies

Author:
John Page
Publication Date:
12-2008
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
For a growing number of countries in Africa the current commodity boom is a huge opportunity. But if the economic history of resource-rich, poor countries-especially in Africa-is any guide, rather than bringing prosperity, the resource boom may drive them into what Paul Collier (2007) in his influential book The Bottom Billion terms the "Natural Resources Trap." In Africa, countries dependent on oil, gas, and mining have tended to have weaker long-run growth, higher rates of poverty, and higher inequality than Non mineral-dependent economies at similar levels of income.
Topic:
Development, Economics, Political Economy, and Poverty
Political Geography:
Africa

35. Can the West Save Africa?

Author:
William Easterly
Publication Date:
10-2008
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
The last few years have seen unprecedented attention to an attempt by Western governments to rapidly develop Africa. British Prime Minister Tony Blair called at the World Economic Forum in Davos in January 2005 for "a big, big push forward" in Africa to end poverty, financed by an increase in foreign aid. Tony Blair commissioned a Report on Africa, which released its findings in March 2005, likewise calling for a "big push." Gordon Brown and Tony Blair put the cause of ending poverty in Africa at the top of the agenda of the G-8 Summit in Gleneagles, Scotland in July 2005. In the 2005 summit at Gleneagles, Scotland, the G-8 agreed to double foreign aid to Africa, from $25 billion a year to $50 billion to finance the big push, as well as to forgive the African aid loans contracted during previous attempts at a "big push." Two years later, Germany again made Africa an important item on the agenda of the G-8 summit it hosted in Heiligendamm in June 2007. There, the G-8 again reiterated the promises made in 2005. Japan pledged to double its own aid to Africa in May 2008 over the next five years. Most recently, the G8 Summit in Japan in July 2008 agreed: "We are firmly committed to working to fulfill our commitments on Official Development Assistance made at Gleneagles, and reaffirmed at Heiligendamm, including increasing...ODA to Africa by US$ 25 billion a year by 2010."
Topic:
Development and Emerging Markets
Political Geography:
Africa, Japan, United Kingdom, and Germany

36. Expecting the Unexpected: Macroeconomic Volatility and Climate Policy

Author:
Warwick J. McKibbin, Adele Morris, and Peter J. Wilcoxen
Publication Date:
11-2008
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
To estimate the emissions reductions and costs of a climate policy, analysts usually compare a policy scenario with a baseline scenario of future economic conditions without the policy. Both scenarios require assumptions about the future course of numerous factors such as population growth, technical change, and non-climate policies like taxes. The results are only reliable to the extent that the future turns out to be reasonably close to the assumptions that went into the model.
Topic:
Climate Change, Development, Economics, and Energy Policy

37. The Experience with Regional Economic Cooperation Organizations: Lessons for Central Asia

Author:
Johannes F. Linn and Oksana Pidufala
Publication Date:
10-2008
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Since the collapse of the Soviet Union, Central Asia has witnessed repeated efforts to strengthen regional integration through cooperation with the establishment of a number of regional organizations with Central Asian participation. In this paper, we review the experience with regional cooperation initiatives and organizations in Central Asia and the rest of the world. Using a typology of regional organizations that we have developed for this paper, we review the functions and performance of selected regional organizations and compile evidence more generally on the experience with regional cooperation around the globe. Based on this we draw some lessons to help Central Asian countries, their partners and their regional organizations respond effectively to the opportunities and challenges of regional cooperation and integration. Central Asian countries need to realize that effective cooperation is not easy. It takes time and requires a flexible, constructive approach of all major partners. It also requires effective leadership by key countries, institutions and individuals and a careful selectivity for membership and for the mandate of the organization. Where multiple regional organizations overlap in membership and mandate, it is essential to address the risk of costly duplication. The paper concludes with an assessment of the specific implications for the Central Asia Regional Economic Cooperation Program.
Topic:
Development and Regional Cooperation
Political Geography:
Central Asia, Asia, and Soviet Union

38. Post-Tsunami Aid Effectiveness in Aceh: Proliferation and Coordination in Reconstruction

Author:
Harry Masyrafah and Jock MJA McKeon
Publication Date:
11-2008
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
On December 26, 2004, an earthquake measuring 9.0 on the Richter scale struck off the northeast coast of Nanggroe Aceh Darussalam (Aceh) on the island of Sumatra, Indonesia. In the subsequent tsunami that followed, over 150,000 people lost their lives, while an estimated 700,000 people were displaced. The scale of the damage to the local economy, infrastructure and administration was unprecedented. The magnitude of these events triggered a huge outpouring of compassion and generosity from around the world. The influx of aid and assistance into the province of Aceh in the weeks and months that followed was unprecedented and surpassed all expectations. This paper seeks to provide some insight into the effects of such an influx whilst also exploring some of the coordination mechanisms put in place to manage what was the largest reconstruction program in the developing world at the time.
Topic:
Development, Government, Human Welfare, Humanitarian Aid, and International Cooperation
Political Geography:
Indonesia

39. A Bridge to Somewhere: Rethinking American Transportation for the 21st Century

Author:
Robert Puentes
Publication Date:
06-2008
Content Type:
Policy Brief
Institution:
The Brookings Institution
Abstract:
In the past, strategic investments in our nation's transportation infrastructure—the railroads in the 19th century, the interstates in the 20th—turbocharged growth and transformed the country. But more recently, America's transportation infrastructure has not kept pace with the growth and evolution of its economy. At the precise time when the nation desperately needs to prioritize its limited investments and resources, the federal transportation program has lost focus.
Topic:
Development, Environment, and Government
Political Geography:
United States and America

40. Making Poverty History? How Activists, Philanthropists, and the Public Are Changing Global Development

Author:
Lael Brainard and Vinca LaFleur
Publication Date:
02-2008
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
The international development community as we have known it for sixty years is undergoing an extreme makeover. If its roots go back to the Marshall Plan and the founding of the Bretton Woods institutions, its modern incarnation has branched both up and out— dramatically altering the landscape of humanity's efforts to alleviate poverty.
Topic:
International Relations, Development, and Poverty
Political Geography:
United States