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31. Pro-Poor Growth: The Asian Experience

Author:
Hyun H. Son and 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, and Poverty
Political Geography:
Asia, Vietnam, Korea, and Thailand

32. The Corporate Debt Market: A Firm-Level Panel Study for India

Author:
Basudeb Guha-Khasnobis and 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 and Markets
Political Geography:
India and Asia

33. 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

34. Economic Development Strategy, Openness and Rural Poverty: A Framework and China's Experiences

Author:
Justin Yifu Lin and 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, and Poverty
Political Geography:
China and Asia

35. Globalization and the Urban Poor in China

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

36. Vulnerability to Globalization in India: Relative Rankings of States Using Fuzzy Models

Author:
Brinda Viswanathan and 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, and Globalization
Political Geography:
India and Asia

37. International Finance and the Developing World: The Next Twenty Years

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, and International Trade and Finance
Political Geography:
United States, China, and Asia

38. Fiscal Policy for Poverty Reduction, Reconstruction, and Growth

Author:
Matthew Smith, Alan Roe, and Tony Addison
Publication Date:
06-2006
Content Type:
Policy Brief
Institution:
United Nations University
Abstract:
An effective state is able to mobilize revenue and spend it on infrastructure, services, and public goods that both enhance human capital and the well-being of communities (especially the poor), as well as stimulating investment and employment creation by the private sector. An effective state also manages public finance to ensure that macroeconomic balance is maintained—with policy neither too restrictive to discourage private investment and growth, nor too accommodative to create high inflation and crowd out private investment. Fiscal issues are therefore at the heart of the state's role in the development process and failure in this policy area—whether it is in taxation, public expenditures, or in managing the fiscal deficit and public debt—can quickly undermine growth and poverty reduction. Fiscal weakness can also be fatal to social peace when one or more ethnic, religious, or regional groups are taxed unfairly—or receives too little in the allocation of public spending.
Topic:
Debt, Development, Economics, and Poverty
Political Geography:
Africa and Asia

39. Why Do Poverty Rates Differ From Region to Region? The Case of Urban China

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

40. Transforming Conflict with an Economic Dividend: The Sri Lankan Experience

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, and Peace Studies
Political Geography:
Asia and Sri Lanka