Content Type: Working Paper / Topic: Economics

401. The state of China-European Union economic relations

Author:: Uri Dadush, Marta Dominguez-Jimenez, and Tianlang Gao
Publication Date:: 11-2019
Content Type:: Working Paper
Institution:: Bruegel
Abstract:: China and the European Union have an extensive and growing economic relationship. The relationship is problematic because of the distortions caused by China’s state capitalist system and the diversity of interests within the EU’s incomplete federation. More can be done to capture the untapped trade and investment opportunities that exist between the parties. China’s size and dynamism, and its recent shift from an export-led to a domestic demand-led growth model, mean that these opportunities are likely to grow with time. As the Chinese economy matures, provided appropriate policy steps are taken, it is likely to become a less disruptive force in world markets than during its extraordinary breakout period.
Topic:: Economics, Governance, European Union, Investment, and Trade
Political Geography:: China, Europe, and Asia

402. How does China fare on the Russian market? Implications for the European Union

Author:: Alicia Garcia-Herrero and Jianwei Xu
Publication Date:: 11-2019
Content Type:: Working Paper
Institution:: Bruegel
Abstract:: China’s economic ties with Russia are deepening. Meanwhile, Europe remains Russia’s largest trading partner, lender and investor. An analysis of China’s ties with Russia, indicate that China seems to have become more of a competitor to the European Union on Russia’s market. Competition over investment and lending is more limited, but the situation could change rapidly with China and Russia giving clear signs of a stronger than ever strategic partnership.
Topic:: Economics, Markets, Bilateral Relations, Governance, Investment, and Exports
Political Geography:: Russia, China, Europe, Eurasia, and Asia

403. An Overview of German New Economic Sociology and the Contribution of the Max Planck Institute for the Study of Societies

Author:: John Wilkinson
Publication Date:: 02-2019
Content Type:: Working Paper
Institution:: Max Planck Institute for the Study of Societies
Abstract:: New economic sociology (NES) in Germany has many similarities with economic sociology in the United States in its conscious efforts to institutionalize its presence within the broader sociology community, its promotion of a canon via handbooks, and its focus on the sociology of markets. At the same time, it differs in its stronger connections to the German classics, the greater vitality of a macrosociological tradition in Germany, the prior existence of a “bridging” generation of economic sociologists, and its later consolidation in a period of neo-liberal globalization, all of which have giv- en NES in the German-speaking world a distinctive character. In addition, it has been influenced by successive waves of French economic sociology – Bourdieu, convention, and actor-network theory – and its bilingual academic tradition has ensured its integration into English-speaking NES. In its contribution to the sociology of markets, the fact that NES emerged later in Germany than in the US led to a greater concern with quality markets rather than commodity markets, and a concomitantly greater attention to issues of value and price. These latter themes, in their turn, establish a continuity with German economic sociology’s enduring concern with understanding the role of money. Not surprisingly, therefore, German NES is now making key contributions to discussions on the sociol- ogy of money and is increasingly situating its analysis within the broader dynamic of capitalism and current processes of financialization.
Topic:: Economics, Globalization, Sociology, and Capitalism
Political Geography:: Europe, Germany, and Central Europe

404. Uncertain Futures Imaginaries, Narratives, and Calculative Technologies

Author:: Jens Beckert and Richard Bronk
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Max Planck Institute for the Study of Societies
Abstract:: Dynamic capitalist economies are characterised by relentless innovation and novelty and hence exhibit an indeterminacy that cannot be reduced to measurable risk. How then do economic actors form expectations and decide how to act despite this uncertainty? This pa per focuses on the role played by imaginaries, narratives, and calculative technologies, and argues that the market impact of shared calculation devices, social narratives, and contin gent imaginaries underlines the rationale for a new form of ‘narrative economics’ and a the ory of fictional (rather than rational) expectations. When expectations cannot be anchored in objective probability functions, the future belongs to those with the market, political, or rhetorical power to make their models or stories count. The paper also explores the dangers of analytical monocultures and the discourse of best practice in conditions of uncertainty, and considers the link between uncertainty and some aspects of populism.
Topic:: Economics, Science and Technology, Capitalism, and Innovation
Political Geography:: Global Focus

405. Regression Tree Analysis of soil Fertility and Agro-Economic Practices and the Effects on Yield in Tanzania

Author:: Jan Lietava and Risa Morimoto
Publication Date:: 02-2019
Content Type:: Working Paper
Institution:: School of Oriental and African Studies - University of London
Abstract:: Food security and yield production have been extensively studied in regard to fertiliser response in the context of Sub-Saharan Africa. Soil fertility gradients within farms interact with other complex factors such as plot management, alongside bio-physical as well as socio-economic constraints, to create extensive heterogeneity in yield production. Hence, blanket recommendations regarding increasing inputs may not just lead to limited or no change in productivity but may affect long term sustainability. To try and explore the relationships between these factors, Classification and Regression Tree (CART) analysis was used to simplify the effect of plot management decisions. Data was from the focal plots of the 2016 and 2017 Tanzanian Agronomy Panel Survey (TAPS 2017; n = 580) with a range of yields and socio-economic contexts (2.10tha-1 – 3.68tha-1). Results suggested that in low resource fields, management factors are subservient to extreme soil degradation while in high resource fields good management such as optimal planting are needed for maximum predicted yield (4.48tha-1; n = 51). Boundary line analysis was conducted, and maximum yield-nutrient response values calculated. The yield gap obtained suggested only up to 60% of locally obtainable yield is reached, highlighting the necessary balance between intensity of resource use and good management for sustainable and sufficient crop production, especially in the case of extreme soil degradation.
Topic:: Agriculture, Economics, Environment, Food, and Food Security
Political Geography:: Africa and Tanzania

406. Post-Truth: An Alumni Economist's Perspective

Author:: Ben Fine
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: School of Oriental and African Studies - University of London
Abstract:: Drawing upon fifty years as an academic economist, this lecture to alumni of SOAS’s Department of Economics reflects upon the continual “post-truth” aspects of mainstream economics, ranging over its substantive, if shifting, content, its methodology, and its treatment of methodology and interdisciplinarity. It draws upon a wide range of theory, empirical analysis, policy and anecdote to highlight both the need for alternatives and the continuing, even increased, failure of the mainstream to engage with criticism and alternatives.
Topic:: Economics, Imperialism, Economic Theory, and Economic Cooperation
Political Geography:: Global Focus

407. Labor Institutions and Development Under Globalization

Author:: Servaas Storm and Jeronim Capaldo
Publication Date:: 07-2019
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: Labor market regulation is a controversial area of public policy in both developed and developing countries. After decades of de-regulatory advice, international financial institutions have recently come to a less extreme position. But any concessions to labor regulation are based on concerns for social stability or for short-term support to aggregate demand, while regulation continues to be viewed as harmful to economic efficiency. In this paper we take a deeper look at the impact of labor institutions on economic development in two ways. First, we propose a macroeconomic model with balance-of-payments constraint for a “small” developing country open to trade and foreign capital. This helps us clarify the importance of a dynamic view of economic efficiency, as opposed to the static view embedded in mainstream policy advice. Secondly, we discuss the political economy of labor regulation. We argue that labor institutions promote economic development though positive effects on aggregate demand, labor productivity and technology.
Topic:: Economics, Labor Issues, Regulation, Labor Market, and Labor Cost
Political Geography:: Global Focus

408. Publishing and Promotion in Economics: The Tyranny of the Top Five

Author:: James J. Heckman and Sidharth Moktan
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: This paper examines the relationship between placement of publications in Top Five (T5) journals and receipt of tenure in academic economics departments. Analyzing the job histories of tenure-track economists hired by the top 35 U.S. economics departments, we find that T5 publications have a powerful influence on tenure decisions and rates of transition to tenure. A survey of the perceptions of young economists supports the formal statistical analysis. Pursuit of T5 publications has become the obsession of the next generation of economists. However, the T5 screen is far from reliable. A substantial share of influential publications appear in non-T5 outlets. Reliance on the T5 to screen talent incentivizes careerism over creativity.
Topic:: Economics, Academia, Publishing, Career, and Academic Journals
Political Geography:: North America and United States of America

409. Driving Growth and Innovation in the Food Industry: Lessons from the Automobile Industry’s CAFE Standards

Author:: Hank Cardello
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Hudson Institute
Abstract:: Poor dietary patterns are the leading cause of noncommunicable disease in the U.S., and they are creating a significant burden on the economy and on quality of life. Diet-related disease is having a large impact on health outcomes among children and adults, leading to increasing healthcare costs, which has led to a focus on regulatory measures to curb the rising tide. Regulation has largely focused on the U.S. food system, as it provides low-cost, calorie-dense foods, which have been linked to a substantial increase in calories in the food supply and excessive calorie consumption. Substandard eating habits are linked to a number of health conditions, such as diabetes and obesity. Diabetes rates in the U.S. have more than tripled since 1970, and nearly 40 percent of adults are categorized as having obesity. The cost to the healthcare system is significant, and a myriad of health issues are linked to its pervasive spread in the country. Particularly concerning are increasing obesity rates among children, amidst continued public health interventions at the local, state, and national levels. Public health officials continue to advocate for additional regulation to shift dietary patterns. Policy efforts have ranged from voluntary commitments by the food industry to government-driven regulations such as taxes on sugar-sweetened beverages and package-labeling provisions. Most of the government regulatory approaches to date have been piecemeal, typically led by local government bodies and focusing on a specific type of food or beverage for taxation, or tending to address a particular component, such as food package labeling. For example, Berkeley, CA passed a sugar-sweetened beverage tax in 2014, and the FDA has mandated changes to food labels to increase transparency about calories and added sugars. This paper seeks to open the discussion on a broader policy approach to reduce excessive consumption of calories, sugars, saturated fats, and sodium, which are linked to conditions such as diabetes, obesity, cardiovascular disease, and certain cancers. It will do this by exploring Corporate Average Fuel Economy (CAFE) standards, an automobile industry “cap and trade” regulatory model.
Topic:: Economics, Food, Governance, Culture, Regulation, Economic Growth, Innovation, Public Health, Society, and Obesity
Political Geography:: North America and United States of America

410. Towards 2022: Options for paying back Zambia's Eurobond Debt

Author:: Mbewe Kalikeka, Shebo Nalishebo, and Florence Banda-Muleya
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Zambia Institute for Policy Analysis and Research (ZIPAR)
Abstract:: On 20th September 2022, Zambia’s first Eurobond will mature. The Government will be required to settle its principal payment amounting to US$750 million in full. Twenty months later in April 2024, the Government will have to settle the second Eurobond worth US$1 billion. The third US$1.25 billion Eurobond will be paid back in three instalments in July of 2025, 2026 and 2027. With less than three years before the first Eurobond matures, there is no clear indication of how and where the money to pay back these Eurobonds is going to come from. This paper considers several options that will mitigate the possibility of a default when the principal payments on the Eurobonds are due. The lack of a payment strategy has made the bondholders jittery about whether they will get their money back. Bondholders have communicated their consternations by dumping the Zambian bonds which are perceived to be risky. With increasing yield rates on the three Eurobonds, of about 17% by end-September 2019, the market seems to have already priced in a default – only nations already in default, such as Venezuela, have yields as high as Zambia’s1. The yield rate is the barometer used to assess the risk inherent in the bond. In general, higher yields mean the bond has higher risk and corresponds to a decline in the value of the bond. There have been efforts made towards establishing a Eurobond Redemption Strategy, but its contents are yet to be publicised. Also, the failure to release the 2020-2022 Medium Term Expenditure Framework by September 2019, and the absence of the 2020-2022 Medium Term Debt Strategy to show a clear borrowing plan have added to the market apprehension. By just about every measure, the Zambian economic fundamentals are fragile. Growth is ailing, prompting the authorities to revise their growth projection targets from 4% to 2% in 2019. Agriculture has been in recession for several quarters now. The 2019 mining fiscal regime that has significantly raised the tax burden on mining companies to unsustainable and uncompetitive levels, coupled with reduced ore grades, has resulted in 8.4% reduction in mining value added in the second quarter of 2019. The electricity load management which commenced in mid-2019 continues to have adverse economy-wide effects. This has implications on revenue targets. Tax revenues in September 2019 were 17% lower than projected, a trend likely to continue at least up to the end of the year. Further, the recent weakness of the Kwacha is not helping either as it has increased the cost of external borrowing and debt servicing, making it prohibitively more expensive to service foreign-currency denominated loans, which include the Eurobonds.
Topic:: Debt, Economics, Markets, Public Debt, and Eurobonds
Political Geography:: Africa and Zambia

411. Words and Their Silos: Commercial, Governmental, and Academic Support for Japanese Literature and Writing Overseas

Author:: Anne McKnight
Publication Date:: 08-2019
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper connects in a preliminary way realms of analysis and data regarding practices of disseminating Japanese literature and writing translated in English and Association of Southeast Asian Nations (ASEAN)–located languages since about 2000. The assumption is that translations from different languages have been consistently silo’ed – separated and allowed to accumulate and dynamically evolve. I outline a history of the de-linking of ‘writing’ from ‘literature’ as well as language study itself, which has led to both a withdrawal and an explosion of funding since about 1990. I note secondary effects of re-concentration in English and European languages, a flourishing of small-press activity and writing on food (Jonathan Gold) and self-help (Kondo Marie), and a focus on the ‘authorised translator’ model in both English and ASEAN languages following a tendency to standardise copyright law. Second, I introduce some histories and distinctive practices that could model support for translators. Last, I discuss economies of both money and prestige in different practices, and offer some suggestions based on interviews with an eye to supporting translators so that all languages have a hand in creative practice, and English-language–based translators can collaborate with translators in other languages.
Topic:: Economics, Culture, Literature, and Language
Political Geography:: Japan and Asia

412. trade, investment, globalisation, Thailand Economic Consequences of Globalisation: Case Study of Thailand 26 December 2019 The paper reviews empirical works examining the effect of globalisation in Thailand, beginning with a discussion of its integration into the economy. Three drivers of … Read More Malaysia, globalisation, trade Globalisation and Economic Development: Malaysia's Experience 23 December 2019 The economic development of Malaysia has been strongly driven and shaped by globalisation, from the pre-colonial to the post-independence period. The country has harnessed trade, … Read More Australia, economic integration, reform, productivity Economic Consequences of Globalisation: The Australian Framework for Reforms

Author:: Christopher Findlay, Kotas Mavromaras, and Zhang Wei
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: Australia has experienced significant reforms to policy affecting trade in goods and services, investment, and people. The contributions of these reforms to growth have been significant. However, the scope remains for significant further reform. The drivers of reforms since World War II are reviewed in this chapter. The consequences of globalisation in Australia and the slowdown in the pace of reform and its consequences, for productivity growth in particular, are also discussed. The Australian experience provides valuable insights for other economies, in relation to the scope and timing of reform and the role of supporting institutions.
Topic:: Economics, Globalization, Reform, and Trade
Political Geography:: Australia

413. Making Basel III Work for Emerging Markets and Developing Economies

Author:: Thorsten Beck and Liliana Rojas-Suarez
Publication Date:: 04-2019
Content Type:: Working Paper
Institution:: Center for Global Development
Abstract:: A sound financial regulatory framework is critical for minimizing the risk imposed by financial system fragility. In the world’s emerging markets and developing economies (EMDEs), such regulation is also essential to support economic development and poverty reduction. Meanwhile, it is increasingly recognized that global financial stability is a global public good: recent decades have seen the development of new international financial regulatory standards, to serve as benchmarks for gauging regulation across countries, facilitate cooperation among financial supervisors from different countries, and create a level playing field for financial institutions wherever they operate. For the worldwide banking industry, the international regulatory standards promulgated by the Basel Committee on Banking Supervision (BCBS) stand out for their wide-ranging scope and detail. Even though the latest Basel recommendations, adopted in late 2017 and known as Basel III, are, like their predecessors, calibrated primarily for advanced countries, many EMDEs are in the process of adopting and adapting them, and many others are considering it. They do so because they see it as in their long-term interest, but at the same time the new standards pose for them new risks and challenges. This report assesses the implications of Basel III for EMDEs and provides recommendations for both international and local policymakers to make Basel III work for these economies.
Topic:: Development, Economics, Emerging Markets, and Markets
Political Geography:: Global Focus

414. Automation and a Changing Economy: The Case for Action

Author:: Alastair Fitzpayne, Conor Mckay, and Ethan Pollack
Publication Date:: 04-2019
Content Type:: Working Paper
Institution:: Aspen Institute
Abstract:: Technology fuels our economy, captures our collective imaginations, and promises extraordinary possibilities. It permeates almost all aspects of our lives. From electrification and the internal combustion engine, to search engines and smartphones, technology has changed how we travel, access information, buy products, and communicate with each other. As technology changes our personal lives, it also changes work. For generations, economic change has replaced products, jobs, and industries with innovative new models. The American economy has transitioned from agrarian to industrial, service to digital, and with each evolution, America has prospered even as it grappled with the profound challenges of change. The American ideal embraces the promise that economic progress can create an inclusive society in which prosperity is broadly shared. Work is more than simply a way to earn a living. It gives structure, dignity, and purpose to our lives. For this reason, workers should not be treated as a cost of doing business but recognized for their productivity and creativity. For too many Americans, the promise of work is not being kept. New technologies are creating great wealth for some, but we are simultaneously experiencing historic income and wealth inequality. Without robust policies and strong institutions, new innovations risk exacerbating the economic insecurity and political and civil divides that we are experiencing today. Emerging technologies, including artificial intelligence, machine learning, and advanced robotics, have the potential to automate many tasks currently performed by workers. Historically, automation has been an important ingredient driving economic growth and progress. Automation has enabled us to feed a growing population while allowing workers to transition from subsistence farming to new forms of work. Automation helped move us from a craft system to mass production, from blue-collar to white-collar to “new-collar” work—with better work, higher wages, more jobs, and better living standards. Similar to past innovations, these new technologies offer the potential to help us meet human needs while supporting new jobs and industries never before imagined. However, automation can also have negative effects on individuals and communities. Those who lose their jobs suffer economic, social, and psychological hardship. Communities that relied on single industries that have been automated have struggled to recover. New jobs are being created, but their geographic distribution and skill requirements often make them inaccessible to the individuals and the communities where those whose jobs were lost. This dislocation has played a role in exacerbating America’s economic, political, geographic, and social divides. The answer to the dislocations that can result from automation should not be to stifle innovation. Policies and reforms should encourage both the development of new technologies and the promise of work. Workers need access to the opportunities technology creates. Policymakers and employers can help by providing access to skills training, ensuring the availability of good jobs, and improving the systems that are in place to help those who will transition from declining to growing occupations. While there are many unanswered questions about what the future holds, this report attempts to explain how automation impacts the labor market and how to better prepare American workers to benefit from the changes to come.
Topic:: Economics, Science and Technology, Labor Issues, Automation, and Job Creation
Political Geography:: Global Focus

415. The economic impact of Boris Johnson’s Brexit proposals

Author:: Anand Menon
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: UK in a Changing Europe, King's College London
Abstract:: The Prime Minister has set out a means of escaping the Brexit stalemate, but his new Brexit proposals have, as yet, not managed to overcome the impasse. What, though, would the plan mean for the UK economy? That is the question we seek to answer in what follows. As ever, we have been lucky enough to be able to draw on the skills and expertise of some of the leading experts in the field. The bulk of the work was done by Hanwei Huang, Jonathan Portes and Thomas Sampson, with contributions from Matt Bevington and Jill Rutter. Hanwei and Thomas used the LSE’s Centre for Economic Performance trade model to carry out the modelling. We hope you find the report interesting and informative. Brexit is clearly about more than economics, but the economic impact of leaving the EU nevertheless merits careful scrutiny.
Topic:: Economics, Politics, European Union, Brexit, and Boris Johnson
Political Geography:: United Kingdom and Europe

416. Trade And Foreign Direct Investment Nexus In West Africa: Does Export Category Matter?

Author:: Chukwuka Onyekwena, Idris Adermuyiwa, and Eberechukwu Uneze
Publication Date:: 08-2019
Content Type:: Working Paper
Institution:: Centre for the Study of the Economies of Africa (CSEA)
Abstract:: This paper examines the effect of inward FDI in West Africa on exports to EU countries. It investigates from a host country perspective, the impact of FDI on different export categories: primary, intermediate, and final goods.
Topic:: Economics, Foreign Direct Investment, European Union, Exports, and Trade
Political Geography:: Africa and West Africa

417. Resource Sovereignty: The Agenda for Africa’s Exit from the State Plunder

Author:: Tricontinental: Institute for Social Research
Publication Date:: 05-2019
Content Type:: Working Paper
Institution:: Tricontinental: Institute for Social Research
Abstract:: The modern global economy, essentially guarantees the continued expatriation of profits and natural assets from resource-rich but capital-poor countries, facilitating the enrichment of the global economic elite and Multinational Corporations (MNC), at the expense of developing countries. To elaborate on the themes of corporate plunder, resource nationalism and people-centered forms of resource management, Tricontinental: Institute for Social Research spoke with Gyekye Tanoh, head of the Political Economy Unit at the Third World Network-Africa based in Accra (Ghana).
Topic:: Economics, Globalization, Natural Resources, Multinational Corporations, and Profit
Political Geography:: Global Focus

418. Economic Impact Analysis of Credit Guarantee Schemes in Eswatini: A Case of the Small Scale Enterprise Loan Guarantee Scheme (SSELGS)

Author:: Maqhawe Zwane
Publication Date:: 01-2019
Content Type:: Working Paper
Institution:: Eswatini Economic Policy Analysis and Research Centre (ESEPARC)
Abstract:: Using data from 315 beneficiaries of the Small Scale Enterprise Loan Guarantee Scheme, this study assesses the impact of the Small Scale Loan Guarantee Scheme. The study assessed both the financial and economic additionality of the scheme. The study used a structured questionnaire and face-to-face interviews to elicit data from beneficiaries whereas key informant interviews were used to elicit data from participating banks. The study also assessed visibility of the scheme as well as its efficiency in terms of loan approval period and claim processes. From the sampled beneficiaries, 174 SMEs would not have accessed credit if the scheme was non-existent. Collectively, these SMEs received E42, 918,616.00. On the other hand, 72 of the 174 started new businesses and at the time of the interview, they collectively employ 681 people. The study found that the default rate is high at 44.3 %. The approval period of loan application varies widely, with some respondents reporting a period of less than a month while others reported a period of up to four years. The study concludes that the scheme has made a positive impact in both financial and economic additionality. However, two factors (inefficiency in scheme’s operation and high default rate) threaten the scheme’s existence. It is therefore a recommended that scheme managers should put measures to curb the default rate and improve the efficiency and visibility of the scheme.
Topic:: Economics, Business, Credit, and Loans
Political Geography:: Africa and Eswatini

419. An Insight into Community-Based Ecotourism in Eswatini: Theory versus Practice

Author:: Tamika Du-Pont and Thabo Sacolo
Publication Date:: 01-2019
Content Type:: Working Paper
Institution:: Eswatini Economic Policy Analysis and Research Centre (ESEPARC)
Abstract:: The study provides a baseline of the performance of Community-based Ecotourism (CBET) ventures in Eswatini using primary data collected from 186 participants. The data was collected through face-to-face interviews amongst across five CBET sites. Descriptive and thematic analysis were used to identify; the benefits of CBET accrued to host communities, challenges communities experience in providing goods and services to CBET ventures, and the factors preventing broad based participation. Frequencies of responses were used to determine the perceptions and attitudes of host communities towards CBET. The study finds that many of the promises of CBET have not been fully met in Eswatini. Economic benefits have not been widespread and remain minimal, with approximately 42 jobs in total. Participants receive an average monthly income of E1457.40 ± 933.80, an indication of high disparities in monetary incentives amongst participants. The study finds that CBET has been a catalyst for infrastructural development within rural landscapes and provides participants with additional intangible benefits such as a sense of empowerment and belonging. Poor infrastructural maintenance, inadequate marketing and declining tourist visitations are major threats to the sustainability of CBET ventures. Efforts to augment the performance of CBET in Eswatini should focus on investment in research and monitoring of present and potential new CBET ventures. The study recommends integrated and inclusive policies that will promote and allow for expanded local production in the tourism supply chain, partnerships between host communities and industry experts, and local capacity enhancement to reignite CBET within the tourism sector as a serious contender for economic growth.
Topic:: Economics, Tourism, Employment, and Community
Political Geography:: Africa and Eswatini

420. Assessing the Relationship between Brain Drain and the Economy of Eswatini

Author:: Zamokuhle Manana
Publication Date:: 01-2019
Content Type:: Working Paper
Institution:: Eswatini Economic Policy Analysis and Research Centre (ESEPARC)
Abstract:: Eswatini has been experiencing the brain drain phenomenon since the early 90s. Previous studies on the phenomenon attribute the brain drain to high unemployment and the labour market’s inability to absorb emaSwati. With that said, there are still no studies have been conducted to quantify the impacts of brain drain on the economy of the country given its upward trajectory. It is on this premise, that this paper quantifies and assess the relationship between brain drain and economic growth in the short-run. To this end, the study employs secondary annual time series data from the World Bank Indicators for the period 1991 to 2017. The study employs the Bounds approach for co-integration and the short-run Autoregressive Distributed Lag (ARDL) model as estimation techniques. The bounds test found that there is no long-run equilibrium relationship between the variables. According to the ARDL short-run model the study found that all other things being equal, when brain drain increases by 1 percent at a given time period, Gross Domestic Product increase by E171 million the following year in the short-run. Furthermore, the Granger causality test reveals a unidirectional relationship running from Gross Domestic Product to brain drain at the 1% significance level, that is, past economic growth trends is an important predictor of future brain drain trends.
Topic:: Economics, Intelligence, GDP, and Unemployment
Political Geography:: Africa and Eswatini

421. Yellow Cards and Suspension by Choice: Determinants and Asymmetries

Author:: Wolfgang Maennig and Franziska K. Kruse
Publication Date:: 05-2019
Content Type:: Working Paper
Institution:: Chair for Economic Policy, University of Hamburg
Abstract:: This study demonstrates that psycho-economic determinants are significant in the awarding of yellow cards in a soccer match. This is the first multivariate analysis of the number of yellow cards given to a team in a match, and the study concludes that the characteristics of the referee, a home match effect, a derby match effect, and whether a team wins are crucial. The absolute point difference in relation to the current opponent can play a role as well. This is also the first work to analyze the probability of a team’s player collecting his fifth yellow card. We find that the probability is not determined by the characteristics of the referee but by whether a team wins, by whether a team plays at its home pitch and by the quality of the teams participating in the subsequent matches. Soccer players tend to collect their fifth yellow card and their suspension by choice when playing against a better opponent in the next match. For teams in the lower range, the opponent after next plays a role as well.
Topic:: Economics, Sports, and Psychology
Political Geography:: Global Focus

422. The Secular Stagnation of Productivity Growth

Author:: Servaas Storm
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: The concern that an economy could experience persistent stagnation, caused by a structural weakness of aggregate demand, goes back to Alvin Hansen’s (1939) thesis of ‘secular stagnation’. Hansen’s thesis has been revived in recent times, when it became clear that productivity and potential growth in the OECD countries have been declining for decades. However, in line with deep-rooted theoretical beliefs, that inadequate demand can only affect growth in the short run, secular stagnation (of potential growth) is treated as an exclusively supply-side problem, the root of which is a worrying steady decline in productivity growth. This paper argues that it is a mistake to dismiss secular demand stagnation as main cause of declining potential growth in the OECD. We argue that the theoretical case for demand-caused secular stagnation is strong and empirical evidence that it has affected the U.S. economy after the mid-1970s is entirely convincing. Demand is leading supply, also in the long run. Hansen had it right, after all.
Topic:: Economics, Political Economy, Economic Growth, Macroeconomics, Demand, and Stagnation
Political Geography:: United States

423. How Market Sentiment Drives Forecasts of Stock Returns

Author:: Roman Frydman, Nicholas Mangee, and Josh Stillwagon
Publication Date:: 04-2019
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: We reveal a novel channel through which market participants’ sentiment influences how they forecast stock returns: their optimism (pessimism) affects the weights they assign to fundamentals. Our analysis yields four main findings. First, if good (bad) “news” about dividends and interest rates coincides with participants’ optimism (pessimism), the news about these fundamentals has a significant effect on participants’ forecasts of future returns and has the expected signs (positive for dividends and negative for interest rates). Second, in models without interactions, or when market sentiment is neutral or conflicts with news about dividends and/or interest rates, this news often does not have a significant effect on ex ante or ex post returns. Third, market sentiment is largely unrelated to the state of economic activity, indicating that it is driven by non-fundamental considerations. Moreover, market sentiment influences stock returns highly irregularly, in terms of both timing and magnitude. This finding supports recent theoretical approaches recognizing that economists and market participants alike face Knightian uncertainty about the correct model driving stock returns.
Topic:: Economics, Markets, Financial Markets, Econometrics, and Stock Markets
Political Geography:: United States

424. The Changing Role of Energy in the U.S. Economy

Author:: Sarah Ladislaw and Jesse Barnett
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Center for Strategic and International Studies
Abstract:: The CSIS Energy Program conducted research, commissioned papers, held a workshop, and developed this report on the changing role of energy in the U.S. economy. The purpose is twofold: (1) improve understanding of how energy impacts the U.S. economy at multiple levels; and (2) evaluate the performance of policies designed to create economic opportunity in the energy sector.
Topic:: Economics, Energy Policy, and Renewable Energy
Political Geography:: North America and United States of America

425. Building a Big Tent for Agricultural Transformation in Ethiopia

Author:: Getachew Diriba and Christian Man
Publication Date:: 04-2019
Content Type:: Working Paper
Institution:: Center for Strategic and International Studies
Abstract:: Ethiopian Prime Minister Abiy Ahmed has been widely hailed for his promises to open political space, usher in economic liberalization, and remake the country’s poor record on human rights. However, to truly transform his country, Dr. Abiy must first transform agriculture, which is the nucleus of the Ethiopian economy and by far the largest employer. Drawing on interviews and focus groups with seventy stakeholders, this report examines the past wins, current endeavors, and future challenges of Ethiopia’s Agricultural Transformation Agency (ATA), a federal entity established in 2010 to drive fundamental changes for the country’s 15 million smallholder farmers. It highlights the relationship between the ATA and the Ethiopian Ministry of Agriculture, the importance of innovation in agricultural transformation, and the role donors like the United States government can play in supporting such-efforts for country-led development.
Topic:: Agriculture, Development, Economics, and Human Rights
Political Geography:: Africa and Ethiopia

426. Shooting Oneself in the Foot? Trade War and Global Value Chains

Author:: Cecilia Bellora and Lionel Fontagné
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: Despite the “Phase One Deal” agreed on mid-December 2019, bilateral tariffs between US and China remain at unprecedented high levels, which will have long-lasting effects. US tariffs remain very high on parts, components and other intermediate products; similarly, only the last wave of Chinese retaliatory tariffs has been half cut. We investigate in this paper how such tensions between highly interdependent economies will impact trade, income and jobs. We rely on a set-up featuring General Equilibrium, imperfect competition and importantly differentiating demand of goods according to their use, for final or intermediate consumption. This authorizes tracing the impact of protection along the value chains, on prices, value added and factor income. Additional tariffs from official lists are taken into account at the tariff line level, before being aggregated within sectors. Beyond the direct toll of sanctions, US exports to the world post a sizeable decrease as a result of reduced competitiveness led by vertical linkages along the value chains. Because of the tariffs in place as of February 2020, three quarters of the sectors decrease their value added in the US. Consistent with political economy determinants, these twists of value added are transmitted to production factors, leading to sizeable creation and destruction of jobs, and reallocation of capital to the benefit of protected sectors, mostly at the expense of their clients. Ultimately, this paper sheds light on the economic consequences of policies disrupting global value chains.
Topic:: Economics, International Political Economy, Bilateral Relations, Tariffs, Trade Wars, and Trade
Political Geography:: United States and China

427. Product-Level Trade Elasticities

Author:: Lionel Fontagné, Houssein Guimbard, and Gianluca Orefice
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: Trade elasticity is a crucial parameter in evaluating the welfare impacts of trade liberalization. We estimate trade elasticities at the product level (6-digit of the Harmonized System comprising more than 5,000 product categories) by exploiting the variation in bilateral applied tariffs for each product category for the universe of available country pairs. This is done by constructing a panel of bilateral applied tariffs and bilateral trade covering the period 2001 to 2016. We address potential endogeneity issues as well as heteroskedasticity and selection bias due to zero flows. The obtained trade elasticities are centered around -5. We finally highlight the differences in the gains from trade arising from considering heterogeneous rather than average trade elasticities. All product level elasticities are made publicly available for sake of scrutiny and use by other researchers.
Topic:: Economics, International Political Economy, Bilateral Relations, Tariffs, Trade Liberalization, and Trade
Political Geography:: Global Focus

428. Are Your Labor Shares Set in Beijing? The View through the Lens of Global Value Chains

Author:: Ariell Reshef and Gianluca Santoni
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: We study the evolution of labor shares in 1995-2014 while taking into account international trade based on value added concepts. On average, the decline in labor shares (starting around 1980) accelerates in 2001-2007, after which labor shares recover somewhat. In contrast, skilled labor shares consistently increase. The acceleration in the decline in labor shares is associated with increased intensity of intermediate input exporting; this manifests in a sharp increase in the foreign component in upstreamness of industries and countries in global value chains (GVCs). China's global integration accounts for much of this. Declines in the price of investment together with capital-skill complementarity can explain both the consistent increase in skilled labor shares and the reversal of trend in overall labor shares. Compared to shares in GDP, labor shares in gross national product (GNP) are higher in countries with positive net FDI positions; the uneven spread of multinational activity contributes to greater inequality through this channel.
Topic:: Economics, International Political Economy, International Trade and Finance, Labor Issues, Trade, Global Value Chains, and Skilled Labor
Political Geography:: China and Global Focus

429. Immigration and Preferences for Redistribution in Europe

Author:: Alberto Alesina, Elie Murard, and Hillel Rapoport
Publication Date:: 11-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: We examine the relationship between immigration and preferences for redistribution in Europe using a newly assembled data set of immigrant stocks for 140 regions in 16 Western European countries. Exploiting within-country variations in the share of immigrants at the regional level, we find that native respondents display lower support for redistribution when the share of immigrants in their residence region is higher. This negative association is driven by regions of countries with relatively large Welfare States and by respondents at the center or at the right of the political spectrum. The effects are also stronger when immigrants originate from Middle-Eastern or Eastern European countries, are less skilled than natives, and experience more residential segregation. These results are unlikely to be driven by immigrants' endogenous location choices, that is, by welfare magnet effects or by immigrants' sorting into regions with better economic opportunities. They are also robust to instrumenting immigration with a standard shiftshare approach or to controlling for regional growth prospects.
Topic:: Economics, International Political Economy, Immigration, Welfare, and Redistribution
Political Geography:: Western Europe

430. TBTs, Firm Organization and Labour Structure

Author:: Giorgio Barba Navaretti, Lionel Fontagné, Gianluca Orefice, Giovanni Pica, and Anna Cecilia Rosso
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: This paper investigates the effects on firms' occupational structure of shocks induced by the introduction of Technical Barriers to Trade (TBTs) in importing countries. We rely on the Specific Trade Concern (STC) data released by the WTO to identify trade-restrictive TBT measures, combined with matched employer-employee data for the population of French exporters over the period 1995-2010, and with information on the list of product-destinations served by each French exporter. Controlling for time-invariant firm/occupation effects and for time-varying sector/occupation shocks, IV estimates show that exporters respond to increased complexity associated with restrictive TBTs at destination by raising the share of managers at the expense of blue collars, white collars and professionals. This evidence is consistent with the growing literature exploring how firms organize their workforce composition in presence of exogenous (foreign) shocks; and it is also related to the well-beaten literature on the labour market effects of trade.
Topic:: Economics, International Political Economy, International Trade and Finance, Exports, Trade, Trade Policy, and WTO
Political Geography:: France

431. Migrant Inventors and the Technological Advantage of Nations

Author:: Hillel Rapoport, Prithwiraj Choudhury, and Dany Bahar
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: We investigate the relationship between the presence of migrant inventors and the dynamics of innovation in the migrants’ receiving countries. We find that countries are 25 to 50 percent more likely to gain advantage in patenting in certain technologies given a twofold increase in the number of foreign inventors from other nations that specialize in those same technologies. For the average country in our sample this number corresponds to only 25 inventors and a standard deviation of 135. We deal with endogeneity concerns by using historical migration networks to instrument for stocks of migrant inventors. Our results generalize the evidence of previous studies that show how migrant inventors "import" knowledge from their home countries which translate into higher patenting. We complement our results with micro-evidence showing that migrant inventors are more prevalent in the first bulk of patents of a country in a given technology, as compared to patents filed at later stages. We interpret these results as tangible evidence of migrants facilitating the technology-specific diffusion of knowledge across nations.
Topic:: Economics, International Political Economy, Migration, Science and Technology, Migrant Workers, and Knowledge Economy
Political Geography:: Global Focus

432. Migration and Post-Conflict Reconstruction: The Effect of Returning Refugees on Export Performance in the Former Yugoslavia

Author:: Dany Bahar, Hillel Rapoport, Cem Özgüzel, and Andreas Hauptmann
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: During the early 1990s Germany offered temporary protection to over 600,000 Yugoslavian refugees fleeing war. By 2000, many had been repatriated. We exploit this natural experiment to investigate the role of migrants in post-conflict reconstruction in the former Yugoslavia, using exports as outcome. Using confidential social security data to capture intensity of refugee workers to German industries –and exogenous allocation rules for asylum seekers within Germany as instrument– we find an elasticity of exports to return migration between 0.08 to 0.24. Our results are stronger in knowledge-intensive industries and for workers in occupations intensive in analytical and managerial skills.
Topic:: Conflict Resolution, Economics, International Political Economy, Migration, Refugee Issues, Refugees, and Exports
Political Geography:: Europe, Yugoslavia, and Germany

433. The Primary Cause of European Inflation in 1500-1700: Precious Metals or Population? The English Evidence

Author:: Anthony Edo and Jacques Melitz
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: We perform the first econometric test to date of the influences of inflows of precious metals and population growth on the “Great Inflation” in Europe following the discovery of the New World. The English evidence strongly supports the near-equivalent importance of both influences. For 1500-1700, silver is the only relevant precious metal in the estimates. The study controls for urbanization, government spending, mortality crises and climatic changes. The series for inflows of the precious metals into Europe from America and European mining are newly constructed based on the secondary sources.
Topic:: Economics, Government, International Political Economy, Urbanization, and Inflation
Political Geography:: Europe and England

434. Sectoral reallocations, Real estate shocks, and productivity divergence in Europe

Author:: Fabien Tripier, Jérôme Héricourt, and Thomas Grjebine
Publication Date:: 09-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: This paper investigates the role of sectoral reallocations in the divergence of productivity in Europe, based on a database for 33 sectors and 14 countries between 1995 and 2015. Using the contribution of sectoral productivity growth to Total Factor Productivity (TFP) at the country level, we highlight that variations in the relative size of sectors - less productive sectors growing relatively to more productive ones - have been at the origin of variable productivity losses in main European countries. Parallel to this divergence, European countries experienced heterogeneous real estate price dynamics, which took the form, in some economies, of massive boom-bust cycles. We investigate real estate shocks as a potential source of sectoral reallocations through a collateral mechanism. These shocks turn out to be a strong driver of productivity divergence between European countries.
Topic:: Economics, International Political Economy, Real Estate, and Productivity
Political Geography:: Europe

435. Exchange rate pass-through to import prices: Accounting for changes in the Eurozone trade structure

Author:: Valérie Mignon and Antonia Lopez-Villavicencio
Publication Date:: 06-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: This paper assesses whether the emergence of new trading partners (i.e., China and Eastern Europe) as suppliers reduces the exchange rate pass-through (ERPT) in Eurozone countries which differ regarding their external exposure. Using bilateral data on import prices at the two-digit sector level, we find that (i) pass-through is complete in many cases, (ii) ERPT from China is higher than from the United States, and (iii) there is no compelling evidence of a generalized link between ERPT and the increasing integration of some emerging markets in European imports. We also show that the launch of the single currency has not provoked a sufficient change in the part of trade exposed to exchange rate fluctuations and, therefore, has not affected the pass-through. Overall, the trend of liberalization in new players' markets has not altered the competitive environment such as to induce exporters of other countries to absorb exchange rate depreciations.
Topic:: Economics, International Political Economy, International Trade and Finance, Exchange Rate Policy, Eurozone, Trade, and Imports
Political Geography:: China, Europe, and Eastern Europe

436. The transmission channels of unconventional monetary policy: Evidence from a change in collateral requirements in France

Author:: Anne-Laure Delatte, Pranav Garg, and Jean Imbs
Publication Date:: 05-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: Using a bank-firm level credit registry combined with firm-level balance sheet data we establish the presence of heterogeneity in the effects of unconventional monetary policy transmission. We examine the consequences of a loosening in the collateral eligibility requirement for credit refinancing in France. The policy was designed to affect bank lending positively. We expect a linear increase in lending and an additional increase in loans to firms with newly acceptable rating. We find a large heterogeneity of the monetary policy transmission including the unexpected reduction of lending by the banks benefiting the most from the policy. These are small, risk-averse banks whose foremost concern after the recession was to strengthen their balance sheets. Banks least affected by the policy respond with a reduction in credit to low risk borrowers in reaction to the change in the market structure. Last we document heterogenous effects of the policy on firms depending on their size.
Topic:: Economics, International Political Economy, and Monetary Policy
Political Geography:: France

437. The Exorbitant Privilege of High Tax Countries

Author:: Vincent Vicard
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: The well documented US excess returns on its net foreign assets is no exception at the world level. Excess returns on foreign assets owe largely to yield differential within the FDI asset class and are correlated to the corporate tax rate for a large sample of countries, consistently with tax motivated profit shifting by multinational corporations. Using French firm level data on dividends and reinvested earnings from foreign affiliates, I provide evidence and quantify the impact of corporate tax avoidance on international asset returns. Profit shifting inflates the investment income balance and accounts for the average 2 percentage points return differential between French FDI assets and liabilities. Missing profts in France, estimated at €36 billions or 1.6% of GDP in 2015, are mostly shifted to EU countries.
Topic:: Economics, International Political Economy, European Union, GDP, Tax Systems, Profit, and Corporate Tax
Political Geography:: United States and France

438. Heterogeneity within the Euro Area: New Insights into an Old Story

Author:: Virginie Coudert, Cécile Couharde, Carl Grekou, and Valérie Mignon
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: We assess cross-country heterogeneity within the eurozone and its evolution over time by measuring the distances between the equilibrium exchange rates’ paths of member countries. These equilibrium paths are derived from the minimization of currency misalignments, by matching real exchange rates with their economic fundamentals. Using cluster and factor analyses, we identify two distinct groups of countries in the run-up to the European Monetary Union (EMU), Greece being clearly an outlier at that time. Comparing the results with more recent periods, we find evidence of rising dissimilarities between these two sets of countries, as well as within the groups themselves. Overall, our findings illustrate the building-up of macroeconomic imbalances within the eurozone before the 2008 crisis and the fragmentation between its member countries that followed.
Topic:: Economics, International Political Economy, Monetary Policy, and European Monetary Union
Political Geography:: Europe

439. Activism and Trade

Author:: Pamina Koenig and Sandra Poncet
Publication Date:: 03-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: This paper studies the effect of activism on the imports of consumer products, by focusing on an event which generated massive consumer mobilization against neglecting firms, namely the collapse of the Rana Plaza building affecting the textile industry in Bangladesh. We hypothesize that this episode was a main shock in the perceived quality of clothing producers sourcing in Bangladesh. Using detailed import flows on textile goods from OECD countries, we analyze whether the imports of consumer products were affected by the disclosure of information, in countries differently exposed to the collapse. To proxy the amount of information received by individuals in different countries, we use the nationality of the firms involved in the Rana Plaza building: soon after the disaster, NGOs and the media insisted on the origin countries of the neglecting companies, publishing the list of misbehaving firms by nationality. We use a difference-in-difference approach to compare the imports from Bangladesh of countries having been differently associated in the news to the Rana Plaza collapse. Results show a post-disaster decrease in imports for countries whose firms were directly involved in the Rana Plaza building. The effect has to be interpreted relatively to the evolution of imports of similar countries, however not linked to the collapsed Rana Plaza knitting factories. While aggregate imports from Bangladesh continue to increase during the whole period (2010-2016), there is a marked disruption that affects countries whose brands were named and shamed by activists and the media after the disaster. No such differential pattern is observed for non-textile goods. Our results are robust to a variety of checks.
Topic:: Economics, International Political Economy, International Trade and Finance, and Trade
Political Geography:: Bangladesh

440. International Business Cycles: Information Matters

Author:: Eleni Iliopulos, Erica Perego, and Thepthida Sopraseuth
Publication Date:: 02-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: We study the international transmission of shocks when agents form expectations under adaptive learning and imperfect information. To this aim we consider a two-country model featuring financial frictions, nominal rigidities, learning and Home information bias (as a source of information imperfection). We show that the more pronounced the Home information bias, the less agents track the international transmission of shocks, as it would otherwise be the case under rational expectations. The model succeeds in matching the low business cycle synchronization of consumption, while generating a positive output co-movement. In doing so, the model takes the theory closer to the data with respect to the output-consumption co-movement anomaly. The model also exhibits departure from the Uncovered Interest rate Parity.
Topic:: Economics, International Political Economy, International Business, Information Technology, and Informal Economy
Political Geography:: Global Focus

441. A Fistful of Dollars? Foreign Sales Platforms and Profit Shifting in Tax Havens

Author:: Sébastien Laffitte and Farid Toubal
Publication Date:: 01-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: Using public macro-level data on activities of multinationals, we document that U.S. firms geographically disconnect sales and production to avoid paying corporate taxes. We revisit both theoretically and empirically the location determinants of foreign platforms and show that market access motives are far less relevant when considering tax havens. We characterize these countries and shed light on the attractiveness of different tax havens for specific sectors of activity. Our quantification shows that profit shifting by foreign sales platforms in tax havens amounts to about $80bn in 2013. Our findings contribute to the recent policy debate on the reform of international taxation.
Topic:: Economics, International Political Economy, Global Political Economy, Multinational Corporations, Tax Systems, and Corporate Tax
Political Geography:: United States

442. Are global value chains receding? The jury is still out. Key findings from the analysis of deflated world trade in parts and components

Author:: Guillaume Gaulier, Aude Sztulman, and Deniz Ünal
Publication Date:: 01-2019
Content Type:: Working Paper
Institution:: Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:: In this article, we examine the dynamics of Global Value Chains (GVCs) since the 2000s. Did it show a marked expansion up to the Great Recession and did GVCs begin a downturn in the 2010s? To better understand the evolution of GVCs at the world level, we use very detailed trade data for 2000 to 2016, which distinguishes different production stages along the GVC. In particular, among intermediate goods, we focus on Parts and Components (P&C) rather than semi-finished products since the manufacture of P&C corresponds to activities more embedded in GVCs. We control, also, for the global business cycle and price effects using an original production stages deflator based on detailed bilateral trade unit-values. This new GVC indicator shows moderate growth over the study period with no trend reversal. In the electronics sector, where GVCs are particularly well-developed, we observe contrasting effects: the share in P&C trade for office machinery and computers has decreased, while it has increased in the case of telecommunications equipment, the flagship IT revolution industry. Also, counts of clients or suppliers by stages of production indicate higher and growing geographical diversity for P&C.
Topic:: Economics, International Political Economy, International Trade and Finance, and Global Value Chains
Political Geography:: Global Focus

443. Insights into China’s Developing Country Status

Author:: Tao Ma
Publication Date:: 10-2019
Content Type:: Working Paper
Abstract:: As the international status of China as a rising power has been growing rapidly in the past 40 years, along with remarkable achievements in economic growth, China’s developing country status has been questioned by some Western developed countries. In January 2019, the US submitted to the WTO General Council the proposal An Undifferentiated WTO: Self-Declared Development Status Risks Institutional Irrelevance (WT/GC/W/757), presenting data arguing that China and some other developing countries had advanced to such an extent that they should be limited from being eligible for special and differential treatment and should give up their developing country status. During the WTO General Council meeting at the end of February, China and other developing countries hotly debated this issue with the US. China insisted that developing countries were confronted with mounting external tensions and their legitimate rights and interests in some international organizations and agreements had been constantly challenged. Against this background, it is critical to clarify China’s ongoing status as a developing country. Only after the real divide between China and developed countries has been clarified can China’s status as a developing country be secured.
Topic:: Development, Economics, and Trade
Political Geography:: China, Asia, and United States of America

444. Approach to the Spanish External Image Applied to the Economic Intelligence / Aproximación a la imagen exterior española como herramienta de inteligencia económica

Author:: José Pablo Martínez Romera
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: International Security Studies Group (GESI) at the University of Granada
Abstract:: The measurements of external image carried out in recent years to guide the "country-brand" strategies could have the potential to be used as economic intelligence tools. This way, public authorities would be able to foresee variations in those variables linked to the preferences of foreign citizens, such as investments, exports, tourism or immigration; helping them to design politics in these fields.
Topic:: Economics and Intelligence
Political Geography:: Europe and Spain

445. No Reason to Fear PA Economic Collapse

Author:: Efraim Inbar
Publication Date:: 05-2019
Content Type:: Working Paper
Institution:: Jerusalem Institute for Strategy and Security (JISS)
Abstract:: As dysfunctional as the Palestinian national movement has become, it has excelled in perpetuating the pork barrel born in Oslo.
Topic:: Economics, Territorial Disputes, Governance, Leadership, and Palestinian Authority
Political Geography:: Middle East, Israel, and Palestine

446. Is Nigeria Experiencing a Learning Crisis: New Evidence from Curriculum-based Learning Assessment

Author:: Adedeji Adeniran, Joseph Ishaku, and Lateef Olawale Akanni
Publication Date:: 10-2019
Content Type:: Working Paper
Institution:: Centre for the Study of the Economies of Africa (CSEA)
Abstract:: The massive expansion of education access throughout the world in the past few decades signalled a positive progress for global development through human capital accumulation. However, this same growth highlighted the substantial deficiency in the learning that schools are unable to deliver to the children that pass through them. In short, massive expansion in schooling has not delivered quality education, a situation that United Nations Educational, Scientific and Cultural Organization (UNESCO, 2013) termed a global “learning crisis”. The disconnect between schooling and learning in the 21st Century also informed the global aspiration to improve learning outcomes, as captured in SDG 4. With the global attention now centered on SDG implementation, policymakers and researchers are focused on data for measuring learning outcomes. Measuring performance against SDG 4 entails assessing the extent to which targets set on inclusive and quality of education have been met. However, as the 2017 Goalkeepers Report shows, there is notable conceptual problem and data gap in measuring the quality of education (see also Unterhalter, 2019). On the conceptual level, there is lack of consensus on the appropriate indicator of quality education. Education quality is a multidimensional concept and encompasses educational inputs, processes and learning outcomes. This concern is apparent even in the SDG system, particularly, in the Tier Classification of Global SDG indicators developed by the Inter-agency and Expert Group on SDG Indicators (IAEG-SDGs). This means that additional work is needed to establish methodology and create an internationally comparable statistic (UN Statistical Commission, 2018).
Topic:: Economics, Education, and Children
Political Geography:: Africa and Nigeria

447. The Subnational Political Resource Curse: Allocations, Internally Generated Revenue and Spending Priorities in Nigeria

Author:: Toluwanimi Segun
Publication Date:: 09-2019
Content Type:: Working Paper
Institution:: Centre for the Study of the Economies of Africa (CSEA)
Abstract:: Oil wealth comes with a caveat-depend on it excessively and be buffeted by oil market volatility. The 2014 oil price crash revealed that Nigeria did not heed this warning. The country’s expenditure forecasts are based on an assumed oil price so that the government was caught flatfooted when the crash began around June. Under duress, public officials eventually revealed how financially irresponsible governance was during the years of plenty: after a tussle with the President, State Governors shared oil profits stowed in a “rainy day” account called the Excess Crude Account (ECA) amongst themselves; they allegedly also hindered the growth of the country’s Sovereign Wealth Fund. It does not seem like those hard-won funds were spent in the public’s interest-reports detailing several state governments’ inability to fund public investments and pay public servants’ salaries have continued to arise into 2018.
Topic:: Economics, International Political Economy, Oil, Natural Resources, Revenue Management, and Public Investment
Political Geography:: Africa and Nigeria

448. Sustainability Implications of Nigeria's Water Use Patterns

Author:: Anointing Ogie Momoh
Publication Date:: 07-2019
Content Type:: Working Paper
Institution:: Centre for the Study of the Economies of Africa (CSEA)
Abstract:: Nigeria has significant renewable water resources; however, the current reality is that most of it is poorly utilized and managed, thus raising important sustainability questions. There are several concerns associated with the water situation in the country such as pollution, flooding, poor drainage infrastructure, etc. All these have dire water-poverty, socio-economic, health and livelihood implications for Nigerians. This discussion paper identifies the absence of a properly functioning regulatory regime in Nigeria’s Water Resources sector – with the ensuing pattern of open-access water use in the country – as a fundamental issue that needs to be addressed. It briefly maps out some specifics of the current situation within Nigeria’s Water Resources sector. Utilising a simple steady-state economic framework that shows the implications of open access use of natural resources, it goes on to explain the sustainability implications of the current water resource use-patterns in Nigeria. Drawing on the points raised, the paper concludes with a few high-level recommendations for water sustainability in Nigeria.
Topic:: Economics, Natural Resources, Water, Renewable Energy, Sustainability, and Public Management
Political Geography:: Africa and Nigeria

449. The Battle for Northwestern Syria: Better Sooner than Later

Author:: Aiman Mansour
Publication Date:: 12-2019
Content Type:: Working Paper
Institution:: Jerusalem Institute for Strategy and Security (JISS)
Abstract:: It is in Israel’s interest that Assad regain control of northwestern Syria. Aside from improving the economic situation in Syria, this may increase Israeli leverage in the campaign against Iran’s military entrenchment.
Topic:: Security, Economics, Military Strategy, Conflict, and Strategic Interests
Political Geography:: Middle East, Israel, and Syria

450. Through a Different Lens: The Mideast as Seen from Doha

Author:: Micky Aharonson
Publication Date:: 11-2019
Content Type:: Working Paper
Institution:: Jerusalem Institute for Strategy and Security (JISS)
Abstract:: At a recent conference on the Mideast economy in Doha, which included the participation of Israeli scholars, discussions highlighted changes in the regional balance of power. Acceptance of Assad’s rule in Syria is growing, but so are questions about how Syria’s rehabilitation will be financed. And some Iranians are signaling that Tehran is willing to make political compromises to alleviate economic pressures.
Topic:: Economics, Leadership, Political stability, Conflict, and Academia
Political Geography:: Iran, Middle East, and Syria

451. PeSCo – Anything There for European Defence?

Author:: Sandro Knezović
Publication Date:: 02-2018
Content Type:: Working Paper
Institution:: Institute for Development and International Relations (IRMO)
Abstract:: The European strategic landscape has changed dramatically over the course of the last decade. The post-Cold War mantra about the obsolescence of conventional threats in the wider European space proved to be short-sighted with developments at its eastern �lanks, while security dysfunctions in the MENA region and their immanent consequences for the safety of European citizens have loaded a heavy burden on compromise-building and decision-making in the �ield of the Common Security and Defence Policy (CSDP) of the EU. Furthermore, the approach of the new US administration to European security and the strategic consequences of Brexit have changed the wider framework in which security of 'the Old Continent' is to be determined, hence stimulating European leaders to rethink European security in a strive for strategic autonomy of their own. The very ambitiously phrased EU Global Strategy that came out in June 2016, served as both catalyst and umbrella document for such an endeavour. However, in order to achieve measurable progress in responding to contemporary security challenges, it was clear that the EU needs to develop a structural way for member states to do jointly what they were not capable of doing at the national level. This is so especially in the environment in which China, Russia and Saudi Arabia are championing the defence spending, right after the US, while European states are signi�icantly trailing behind. The fact that the EU collectively is the second largest military investor and yet far from being among the dominant military powers only emphasises the burning issue of ef�iciency of military spending and the level of interoperability among member states’ armies. High-level fragmentation of the European defence market and the fact that defence industries are kept in national clusters is clearly contributing to that. The reality on the ground is obviously challenging traditional methods of co-operation that operate mainly in ‘national boxes’ and calling for a paradigm change in the wider policy context of CSDP. However, it remains to be seen to which extent will this new security environment actually be able to push the European defence policy context over the strict national boundaries.
Topic:: Security, Economics, Military Strategy, and European Union
Political Geography:: United States, China, Europe, Middle East, Asia, and Saudi Arabia

452. Making Korea Grow Again: Rebalancing the Moon Jae-in Economic Agenda

Author:: Choong Yong Ahn
Publication Date:: 05-2018
Content Type:: Working Paper
Institution:: Korea Economic Institute of America (KEI)
Abstract:: The Moon Jae-in administration in South Korea has taken a two-pronged approach to ensure urgently needed job creation and inclusive growth. Although measures towards each set of economic policies have been implemented since Moon took office in May 2017, what’s often referred to as “incomeled growth” has been prioritized over innovative growth. The income-led growth model is largely driven by domestic consumption through pro-labor distributional policies including a wage hike to raise the disposable income of low- and middleincome individuals, thereby triggering equity with growth. Focused more on the supply side, the innovative growth model encourages startups to create jobs and innovate. It is a great challenge for Korea to pursue growth and equity through both sets of policies. After a year in office, the Moon administration’s economic agenda, often referred to as J-nomics, has not fully produced the intended policy objectives in terms of job creation and growth. To mitigate a declining potential growth rate and pursue robust and inclusive growth, the twin policies need to be rebalanced, reprioritized, and interconnected in a mutually reinforcing manner to empower the private sector to play a bigger role. As a mid-sized open economy, Korea requires global market competitiveness on the supply side to create decent jobs by buoying entrepreneurship and innovation. Structural reforms in the labor market combined with deregulations necessary for the advent of disruptive 4th-industrial-revolution technologies must be expedited. Furthermore, a new business ecosystem in which win-win collaborations between globally-oriented conglomerates and small businesses must be encouraged to replace a zero-sum business culture.
Topic:: Economics, Science and Technology, Global Markets, and Economic Growth
Political Geography:: Asia, South Korea, and Korea

453. The Economic Importance of the KORUS FTA: A Case Study of the Korean Beef Market After Renegotiations

Author:: Jin Kyo Suh
Publication Date:: 05-2018
Content Type:: Working Paper
Institution:: Korea Economic Institute of America (KEI)
Abstract:: Beef trade was a major sticking point between the United States and South Korea in ratifying the KORUS FTA. The outcome of the renegotiations that led to the March 2018 agreement in principle did not impact sections pertaining to beef in the agreement, though looking at how beef trade would have been affected should the talks have failed highlights the importance of the agreement to both countries, but particularly the United States. This paper estimates the demand for imported beef in South Korea by source and product by using the production version of the Rotterdam demand system and assesses what the potential impact of U.S. withdrawal from the KORUS FTA would have been on beef trade between the U.S. and South Korea. The results suggest U.S. withdrawal from the KORUS FTA would have resulted in a considerable increase in Australian beef exports to South Korea, largely at the expense of U.S. beef. This is because there is significant price competition between beef imports from the United States and Australia. Furthermore, Korean consumers substitute American beef for Australian beef when the relative price of U.S. beef rises.
Topic:: Economics, Treaties and Agreements, Exports, and Trade Policy
Political Geography:: Asia, South Korea, North America, Korea, and United States of America

454. How Social Inequalities Affect Sustainable Development: Five Causal Mechanisms Underlying the Nexus

Author:: Bettina Schorr
Publication Date:: 01-2018
Content Type:: Working Paper
Institution:: Postgraduate Program on Sustainable Development and Social Inequalities in the Andean Region (trAndeS)
Abstract:: Since the publication of the Brundtland Report in 1987, social inequality has been a topic of concern for the international development community. In the last decade, given the rise of global inequality the subject gained even more prominence as several international organizations (UNDP, World Bank, OECD) began emphasizing the negative impact of social inequality on human well-being. The Agenda 2030, the current development strategy adopted by the United Nations in 2015, elevated “reducing inequality” to one of the 17 Sustainable Development Goals (Goal No. 10). This paper connects with this growing concern over the impact of social inequalities on the opportunities for sustainable development. It proposes a research agenda for the social sciences to contribute to the debate by identifying the causal mechanisms that constitute the nexus between social inequalities and sustainable development. The focus on these intermediary steps is important in order to understand in more detail the barriers that social inequalities pose for more sustainable social, economic and ecological arrangements. This is especially necessary when it comes to designing or implementing strategies (political or technological) that aim to promote sustainable development, above all in highly unequal societies.
Topic:: Development, Economics, Inequality, Sustainable Development Goals, Sustainability, and Ecology
Political Geography:: Argentina, Latin America, and Chile

455. Long-Run Performance of the Organised Manufacturing Sector in India: Aggregate Trends and Industry-level Variation

Author:: Amay Narayan and Amit Basole
Publication Date:: 05-2018
Content Type:: Working Paper
Institution:: Centre for Sustainable Employment, Azim Premji University
Abstract:: Despite its weak performance in terms of job creation in recent years, the organised manufacture sector remains vital to employment policy. This paper investigates the aggregate trends in this sector, in employment, output, labour-capital ratio, as well as wage share and wage rates at the three-digit NIC level over a long period from 1983 to 2016 using the Annual Survey of Industries data. We show that three distinct sub-periods can be identified within the overall period. Further, using shift-share decomposition we show that most of the decline in the L/K ratio can be explained by within industry changes. Finally, we analyse industries with respect to their capacity to deliver job growth as well as wage growth.
Topic:: Economics, Employment, Economic Growth, and Manufacturing
Political Geography:: India

456. Changes in Production Regimes and Challenges to Collective Bargaining: A study of the Gurgaon Industrial Belt

Author:: Amit and Nayanjyoti
Publication Date:: 05-2018
Content Type:: Working Paper
Institution:: Centre for Sustainable Employment, Azim Premji University
Abstract:: This study focuses on the Gurgaon-Manesar-Dharuhera-Bawal-Tapukara-Neemrana industrial belt in Haryana and Rajasthan, which is an important ‘node’ or part of Delhi-Mumbai Industrial Corridor (DMIC) and a major destination of capital in the last few decades. The study is based on primary survey work of qualitative nature of over 6 months from September 2017 to March 2018. Primary respondents are workers of different segments, plant-level Trade Union leaders and Trade Union activists of the belt, with some inputs from secondary literature, workers magazine and data published by the companies and the government. The attempt to integrate Indian economy with global production networks (GPNs) in the postliberalization period seems partially successful here in this belt, particularly in capital and technologyintensive automobile sector, labour-intensive garment sector and service sector like IT/ITES. But along with industrial growth, this development story has its own underbelly – labour – with crises of jobs, poor working conditions, informalization of regular work, capital-labour conflicts (sometimes of irreconcilable nature) and dismantling of collective bargaining mechanism, pro-capital mediating institutions and labour law enforcement processes. For our study, our main focus has been the auto-belt, which incidentally has also been a prominent centre of most militant labour unrests of our country in last two decades. This study looks into the transformation of production and labour regime and the consequent challenges before the collective bargaining mechanism and institutions to explain the worsening employment conditions despite growth, and the root of industrial conflicts.
Topic:: Economics, Labor Issues, Employment, Unions, and Industrialization
Political Geography:: India

457. Labour Absorption in Indian Manufacturing: The Case of the Garment Industry

Author:: Chinju Johny and Jayan Jose Thomas
Publication Date:: 05-2018
Content Type:: Working Paper
Institution:: Centre for Sustainable Employment, Azim Premji University
Abstract:: A striking feature of the Indian economy has been the relatively small contribution made by the manufacturing sector to the country’s Gross Domestic Product (GDP) and, more importantly, to employment. In 2013, manufacturing accounted for only 16.5 per cent of India’s GDP, compared to 29.7 per cent of China’s.3 According to the National Sample Survey (NSS) on Employment and Unemployment, India’s manufacturing sector provided employment to 61.3 million in 2011-12, which was only 13 per cent of the country’s total workforce of 472.5 million in that year (Thomas 2015a).
Topic:: Economics, Labor Issues, GDP, Employment, and Manufacturing
Political Geography:: India

458. Global Debt Dynamics: What Has Gone Wrong

Author:: Andreas Antoniades and Stephany Griffith-Jones
Publication Date:: 01-2018
Content Type:: Working Paper
Institution:: Centre for Global Political Economy, University of Sussex
Abstract:: This paper analyses the nature and characteristics of global debt dynamics in the post global financial crisis (GFC) period. First, we attempt to map the ways in which debt has been moving from sector to sector, and from one group of countries to another within the global economy. By capturing this inter-sectorial, inter-national, inter-regional movements of global debt we aspire to contribute to a more comprehensive understanding of global debt and its mode of operation. Second, we attempt to analyse what is wrong with global debt dynamics, i.e. we examine the broken link between what global debt was supposed to do and what it does. Here, we point to three interrelated dynamics: the accumulation of unproductive debt, growing inequalities of income and wealth, and the increase in privately-created, interest-bearing money.
Topic:: Debt, Economics, Global Recession, Financial Crisis, and Global Political Economy
Political Geography:: United States, Global Focus, and Global Markets

459. The ebbing of the Pink Tide or permanent underdevelopment? Dependency theory meets uneven and combined development

Author:: Felipe Antunes de Oliveira
Publication Date:: 05-2018
Content Type:: Working Paper
Institution:: Centre for Global Political Economy, University of Sussex
Abstract:: Latin America is once again passing through a crisis. After initially showing promising results, the neodevelopmentalist strategy adopted in Brazil and Argentina has reached its limits. The attempt at 21st century socialism in Venezuela derailed, tearing the country apart. Finally, the neoliberal path dutifully followed by Mexico, Chile, Colombia and smaller countries perpetuated social inequalities, and is now menaced by President Trump's protectionist turn. The current Latin American crisis goes much beyond the reversion of the so-called "Pink Tide". It affects all ideological colours, raising again an old theoretical-political question that stood in the core of dependency theory: is development even possible in Latin America? The key to answer this question – a concept of development that captures non-converging transformation – was not available to Frank, Marini, Bambirra and Dos Santos, among other dependency theorists. Too easily conflating development with catching-up, they reached a dead end. Indeed, as they could see, Latin America was constantly changing, but not in the expected ways. In this paper, I suggest that the concept of uneven and combined development allows for a renewed engagement with dependency theory's core problem, by representing mixed forms of development as the norm, not the exception.
Topic:: Debt, Development, Economics, International Development, and Economic Growth
Political Geography:: Brazil, Colombia, Latin America, Venezuela, Mexico, and Chile

460. Place-specific Determinants of Income Gaps: New Sub-National Evidence from Chiapas, Mexico

Author:: Ricardo Hausmann, Carlo Pietrobelli, and Miguel Angel Santos
Publication Date:: 07-2018
Content Type:: Working Paper
Institution:: The John F. Kennedy School of Government at Harvard University
Abstract:: The literature on income gaps between Chiapas and the rest of Mexico revolves around individual factors, such as education and ethnicity. Yet, twenty years after the Zapatista rebellion, the schooling gap between Chiapas and the other Mexican entities has shrunk while the income gap has widened, and we find no evidence indicating that Chiapas indigenes are worse-off than their likes elsewhere in Mexico. We explore a different hypothesis. Based on census data, we calculate the economic complexity index, a measure of the knowledge agglomeration embedded in the economic activities at a municipal level in Mexico. Economic complexity explains a larger fraction of the income gap than any individual factor. Our results suggest that chiapanecos are not the problem, the problem is Chiapas. These results hold when we extend our analysis to Mexico’s thirty-one federal entities, suggesting that place-specific determinants that have been overlooked in both the literature and policy, have a key role in the determination of income gaps.
Topic:: Development, Economics, Migration, Political Economy, and Economic Inequality
Political Geography:: Central America, Mexico, and Chiapas

461. Busier than Ever? A Data-Driven Assessment and Forecast of WTO Caseload

Author:: Joost Pauwelyn and Weiwei Zhangb
Publication Date:: 04-2018
Content Type:: Working Paper
Institution:: Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:: Conventional wisdom has it that, in recent years, the legalized mechanism of dispute settlement before the World Trade Organization (WTO) has been “busier than ever”, “a victim of its own success”. This paper uses count data to assess the WTO’s current caseload and examines how it has evolved since the WTO’s creation in 1995. We also forecast panel and Appellate Body (AB) caseload ten years from now using different scenarios. WTO dispute settlement does, indeed, currently experience a peak in terms of the total number of cases pending before panels and the AB (as of 30 April 2018, respectively, 18 and 8). However, this is not due to an increase in new cases filed (new consultation requests markedly reduced, from a high of 50 in 1997 to “only” 17 in 2017), but rather because pending cases take much longer to conclude as they have become more complex and are often delayed for lack of human resources. In addition, fewer cases filed get formally settled (from 20% in the first five years of the WTO to almost zero after 2014), appeal rates remain very high (on average 68%), and the share of follow-up disputes over compliance (DSU Art. 21.5) has markedly increased, all three factors leading to more (pending) caseload without actually more (new) cases filed, or more panel or AB reports issued (the number of reports produced per year has actually gone down, dropping from a peak of 26 panel reports and 13 AB reports in 2000, to “only” 13 panel reports and 6 Appellate Body reports in 2017).
Topic:: Economics, International Trade and Finance, World Trade Organization, and Global Political Economy
Political Geography:: Switzerland and Global Focus

462. Customs unions in international law: from concept to practice

Author:: Michal Ovádek and Ines Willemynsa
Publication Date:: 05-2018
Content Type:: Working Paper
Institution:: Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:: Relative to the study of free trade agreements, customs unions (CUs) have been neglected in international law scholarship, despite the fact that by no means do they constitute a recent phenomenon. The present article aims to fill this gap by conducting a scoping analysis of the concept of customs union and identifying key issues in CU designs. The article problematizes what is understood by the concept of CU and what is entailed by the foremost definition of CUs, found in Article XXIV of the General Agreement on Tariffs and Trade (GATT). It further investigates how recurrent design issues are resolved in practice by different CUs considering the inherent tension between the enactment of common rules and institutions and state sovereignty. We find variety in the historical, economic and legal conceptualizations of CUs, flexibility and lacunas in Article XXIV GATT, and diversity of CU designs along with a discernible concern for the legal arrangements’ impact on state sovereignty.
Topic:: Economics, International Trade and Finance, Global Political Economy, and Unions
Political Geography:: Global Focus

463. Gender-inclusive governance for e-commerce

Author:: Amalie Giødesen Thystrup
Publication Date:: 07-2018
Content Type:: Working Paper
Institution:: Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:: United Nations' 2030 Sustainable Development Goals' SDG 5 places gender equality front and centre for sustainable development. The Joint Declaration on Trade and Women's Economic Empowerment on the Occasion of the WTO Ministerial Conference in Buenos Aires in December 2017 brings gender equality to the forefront of trade policy. In the intersection of trade policy and digital technologies, this paper examines how electronic commerce can work towards gender equality, filling a knowledge gap about gender-inclusive governance. Legal-empirical analysis of key regulatory and policy challenges facing women in e-commerce, and identification of vehicles for gender equality at the regional and multilateral level are followed by policy options for promoting women participation in e-commerce. The paper presents a framework for understanding the multiplicity of gender gaps as they manifest themselves in e-commerce models, suggesting potential but also concerns, and advances a multi-level approach to incorporating gender-inclusive e-commerce regulation into trade policy.
Topic:: Economics, Gender Issues, International Trade and Finance, Women, Digital Economy, and Sustainable Development Goals
Political Geography:: Global Focus

464. Global value chains and technology transfer: new evidence from developing countries

Author:: Davide Rigo
Publication Date:: 06-2018
Content Type:: Working Paper
Institution:: Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:: This paper uses the World Bank's Enterprise Surveys as a sample of 18 developing and emerging economies to investigate the causal relationship between global value chains and the transfer of technology to manufacturing firms in developing nations. It focuses on one specific channel for technology transfer, namely the licensing of foreign technology. By using a propensity score matching difference-in-differences technique, I show that there is a positive and causal impact of being involved in complex international activities (i.e. being a two-way trader) on the licensing of technology. Importantly, domestic firms becoming two-way traders are more likely to acquire foreign-licensed technology than domestic firms starting to either export or import. These findings suggest that the complexity associated with the trading activity determines whether or not foreign technology is licensed.
Topic:: Development, Economics, International Trade and Finance, Science and Technology, World Bank, and Global Political Economy
Political Geography:: Global Focus

465. Soft vs Hard Governance for Labour and Environmental Commitments in Trade Agreements: Comparing the US and EU Approaches

Author:: Vandana Gyanchandani
Publication Date:: 08-2018
Content Type:: Working Paper
Institution:: Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:: Three methodologies are used to enforce labour and environmental commitments in the US and EU trade agreements: cooperative, sanctions and composite. In-depth analysis of the scope of commitments, level of protection, institutional framework as well as types of informal and formal dispute processes elucidates the pros and cons of such methodologies. Sanctions approach weakens cooperation by misjudging the complexity of domestic policy adjustments through transnational governance. Cooperative mechanism within the NAAEC's composite design emerges as the best approach: Submission on Enforcement Matters (SEM). As it provides for an independent secretariat supported by civil society group and factual records as a sunshine remedy to review citizen submissions. However, the process is constrained by political clout, lack of managerial capacity and legal dilemmas around informal lawmaking (IN-LAW) procedures.
Topic:: Economics, Environment, International Cooperation, International Trade and Finance, Labor Issues, Sustainable Development Goals, and Global Political Economy
Political Geography:: United States, Europe, Global Focus, and European Union

466. The evolution of the EU law against criminal finance: the "hardening" of FATF standards within the EU

Author:: Leonardo Borlinia and Francesco Montanaro
Publication Date:: 03-2018
Content Type:: Working Paper
Institution:: Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:: This article examines the recent evolution of the EU anti-money-laundering (AML) and counter-terrorist financing (CTF) legislative framework, focusing on the relationship between the main international standards in the field and the newest EU legislation. It suggests that international soft law norms—in particular, the Financial Action Task Force (FATF) Recommendations—have had a decisive influence on the latest development of legislation at the EU level and within its member states. It further argues that mainly the preventive component of the AML/CTF legislation will be strengthened by the EU instruments adopted in mid-2015. However, this Article concludes that the adoption of global soft standards has posed significant challenges to the EU legislative framework. The arguments are developed in four parts. The Article first highlights the main regulatory prescriptions that stem from the study of the phenomenology and the economics of AML/CTF regulation and underpin the current international regulatory paradigm. Second, it explores the evolution of the main international instruments in the field with a special focus on the role played by the FATF Recommendations. It also illustrates the relation between these instruments and the adoption of the new EU AML/CTF legislation from two different, but complementary, angles: (1) noting that the current international AML/CTF framework has a multidisciplinary approach, the Article focuses on the framework's repressive component and assessing the limits of the EU criminal approach against money laundering and terrorist financing; and (2) examining the recent EU preventive legislation and addressing the main challenges posed to the EU legislative framework when attempting to accommodate global standards, especially regarding tensions with fundamental freedoms and human rights protected within the EU.
Topic:: Corruption, Crime, Economics, International Trade and Finance, Law, Finance, and Global Political Economy
Political Geography:: Global Focus

467. Trade linkages and firm value: evidence from the 2018 US-China "trade war"

Author:: Yi Huang, Chen Lin, Sibo Liu, and Heiwai Tang
Publication Date:: 04-2018
Content Type:: Working Paper
Institution:: Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:: On March 22, 2018, Trump proposed to impose tariffs on up to $50 billion of Chinese imports leading to a significant concern over the "Trade War" between the US and China. We evaluate the market responses to this event for firms in both countries, depending on their direct and indirect exposures to US-China trade. US firms that are more dependent on exports to and imports from China have lower stock and bond returns but higher default risks in the short time window around the announcement date. We also find that firms' indirect exposure to US-China trade through domestic input-output linkages affects their responses to the announcement. These findings suggest that the structure of US-China trade is much more complex than the simplistic view of global trade that engendered Trump's "Trade War" against China.
Topic:: Economics, International Cooperation, International Trade and Finance, Global Political Economy, Trade Wars, and Exports
Political Geography:: United States, China, and Asia

468. What Holds African LDC Exports Back? Translating Global Trade Alert Data Into A Positive Trade Agenda For Africa

Author:: Pamela Anne Bayona, Vincent Martin Beyer, and Olayinka Oladeji
Publication Date:: 01-2018
Content Type:: Working Paper
Institution:: Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:: Trade-Restrictive Measures (TRM) are an area of huge concern to importers and exporters in African Union Least Developed Countries (AU LDCs) located in Sub-Saharan Africa. This report identifies and analyses discriminatory government policies that adversely affect AU LDCs over the period 2009 to 2017 by using the Global Trade Alert database, a database that collects information on trade-discriminatory measures implemented by countries worldwide. The research by the students shows that the most frequently encountered TRM types are import tariff measures, tax-based export incentives, trade finance measures, public procurement localisation and export taxes. However, the Global Trade Alert excludes Technical Barriers to Trade and Sanitary and Phytosanitary measures that are formally justifiable as serving public interests, but are typically the most commonly cited as the biggest obstacles to trade. The report also provides policy recommendations and negotiation positions to the AU LDC Countries to move from a defensive trade agenda to an offensive one.
Topic:: Development, Economics, International Trade and Finance, Developing World, Global Political Economy, and Free Trade
Political Geography:: Africa and African Union

469. Exchange Rate, Petroleum Price and Price Determination in Sierra Leone

Author:: B.I.B. Kargbo
Publication Date:: 01-2018
Content Type:: Working Paper
Institution:: African Economic Research Consortium (AERC)
Abstract:: The Sierra Leone economy is a net importer with a chronic negative balance of trade. Imports as a percentage of GDP averaged 40.8% between 2001 and 2010. Imports of food, mineral fuels and lubricants accounted for 50.8% of the total value of imports within the same period. Also, the value of the leone depreciated from Le 920.75 in 1996 to Le 4,000 in 2010 while inflation averaged 12.6% for the same period. As a result of the interplay of these forces, fuel prices are most times adjusted upwards to compensate for the depreciation of the leone against the dollar or to match up with increases in the world price of crude oil. This study determines the effects of monetary environment as well as exchange rate movement and petroleum prices on domestic prices in Sierra Leone by estimating a hybrid model of inflation in which inflation responds to its own lags, lags of other variables, and a set of error-correction terms that represent short run disequilibria from the money market, external sector and output that feed into the inflation process.The empirical results from the parsimonious model show that petroleum product prices and exchange rate, as well as monetary factors determine inflation in Sierra Leone.What is also significant from the findings is that the contribution of petroleum prices to domestic price formation is unfounded in the long run, meaning that it is only a short-run phenomenon. The results also support the view that a fair portion of fluctuations in domestic prices is driven by its own shocks.
Topic:: Development, Economics, International Trade and Finance, Monetary Policy, Economic Growth, and Inflation
Political Geography:: Africa and Sierra Leone

470. Personal Income Tax Policy Choices of Spanish Autonomous Communities in 2016: A Comparison with Canada of the Rate Structure

Author:: François Vallancourt, Jesús Ruiz-Huerta, and Violeta Ruiz Almendral
Publication Date:: 01-2018
Content Type:: Working Paper
Institution:: Fundación Alternativas
Abstract:: Since 2009 Autonomous Communities have started to set their own Personal Income Tax rates for the first time. This is both the result of the 2009 rule change and the difficulties to get other public revenues during the years of the Great Recession. We will examine what the Autonomous Communitie s explicit choices have been and see how they compare to what Canadian Provinces have done. Before 2000, these provinces other than Québec were required to use a surtax approach that saw provinces collect personal income tax as a% of federal taxes (tax on tax) using the same number of brackets, boundaries of brackets and progressivity structure. Since 2000 they can and have chosen to use a tax on income approach as noted above. Thus they must make similar choices to those of Autonomous Communities for their Personal Income Tax since 2000.
Topic:: Economics, Global Recession, Tax Systems, and Recovery
Political Geography:: Europe, Canada, Spain, North America, and Western Europe

471. Monetary Policy in an Uncertain World: The Case for Rules

Author:: James A. Dorn
Publication Date:: 01-2018
Content Type:: Working Paper
Institution:: The Cato Institute
Abstract:: Since monetary policy operates in an uncertain world, discretionary policymaking relying on macroeconomic models of the economy is a weak reed upon which to base policy. The complexity of economic systems and constant changes in the underlying data mean errors may occur in a discretionary regime that can lead to monetary and financial instability.1 The 2008 financial crisis is a case in point: central bankers and their expert staffs failed to anticipate the crisis, and may have worsened it by keeping policy rates too low for too long (Taylor 2012). Moving to a rules‐based regime would not eliminate radical uncertainty, but it could decrease institutional uncertainty—or what Robert Higgs (1997) has called “regime uncertainty”—and thus reduce the frequency of policy errors. Higgs focused on the uncertainty caused by fiscal and regulatory policies that attenuated private property rights by decreasing expected returns on capital. A discretionary monetary regime increases uncertainty about the future purchasing power of money and thereby undermines an important property right.
Topic:: Economics, Monetary Policy, Economic structure, and Macroeconomics
Political Geography:: Global Focus

472. Revisiting the determinants of non-farm income in the Peruvian Andes in a context of intraseasonal climate variability and spatially widespread family networks

Author:: Carmen Ponce
Publication Date:: 07-2018
Content Type:: Working Paper
Institution:: Group for the Analysis of Development (GRADE)
Abstract:: Non-farm income sources are increasingly important in the developing world, representing up to 50 percent of average rural household income. Although there is a vast literature on the determinants of rural households’ strategies for income diversification, two factors associated with long-term transformations and common to many developing countries, have not yet been integrated into the analysis: (i) the role of intraseasonal climate variability (affected by climate change), and (ii) the role of family networks located in distant areas (increasingly important given population displacement due to the internal conflict and increasing connectivity via roads and communications). Whereas an increase in climate variability entails an increase in risk and vulnerability for farm activities, family networks located in distant regions(that do not share the local climate or market shocks) may become a key asset for managing risk and fostering income opportunities (as long as they convey information and opportunities that are not available through local networks). Given the market imperfections that are common in developing rural areas—especially those related to climate risk management—explicit consideration of both factors is key to understanding rural households’ diversification strategies. The study aims to contribute to this pending agenda, investigating the role of these two factors on a household’s income diversification into non-farm activities in the Peruvian Andes, a mountain region with large intraseasonal climate variability and limited but increasing spatial connectivity, where the rural population was severely affected by the internal conflict that took place in the country during the eighties and nineties.
Topic:: Agriculture, Climate Change, Economics, Rural, Industry, Ecology, and Farming
Political Geography:: Latin America and Peru

473. The drivers of household indebtedness re-considered: an empirical evaluation of competing macroeconomic arguments on the determinants of household indebtedness in OECD countries

Author:: Glenn Lauren Moore and Engelbert Stockhammer
Publication Date:: 02-2018
Content Type:: Working Paper
Institution:: School of Oriental and African Studies - University of London
Abstract:: Household debt is at a record high in most OECD countries and it played a crucial role in the recent financial crisis. Several arguments on the macroeconomic drivers of household debt have been put forward, and most have been empirically tested, albeit in isolation of each other. This paper empirically tests seven competing hypotheses on the macroeconomic determinants of household indebtedness together in one econometric study. Existing arguments suggest that residential house prices, upward movements in the prices of assets demanded by households, the income share of the top 1%, falling wages, the rolling back of the welfare state, the age structure of the population and the short-term interest rate drive household indebtedness. We formulate these arguments as hypotheses and test them for a panel of 13 OECD countries over the period 1993 - 2011 using error correction models. We also investigate whether effects differ in boom and bust phases of the debt and house price cycles. The results show that the most robust macroeconomic determinant of household debt is real residential house prices, and that the phase of the debt and house price cycles plays a role in household debt accumulation.
Topic:: Debt, Economics, Macroeconomics, Economic Cooperation, and Housing
Political Geography:: Global Focus

474. Energy in Economic Growth: Is Faster Growth Greener?

Author:: Gregor Semieniuk
Publication Date:: 04-2018
Content Type:: Working Paper
Institution:: School of Oriental and African Studies - University of London
Abstract:: An influential theoretical hypothesis holds that if aggregate productivity growth accelerates, then so does the decline in energy intensity. Whether faster growth is greener in this sense is crucial for modeling future growth and climate change mitigation, but empirical evidence is lacking. This paper characterizes the global, long-run historical relationship between changes in energy intensity and labor pro- ductivity growth rates. Basing estimates on an unbalanced panel of 180 countries for the period 1950-2014 and the world as a whole, it captures a significantly larger historical window than previous studies. The paper finds a stylized fact whereby the rate at which energy intensity changes is constant or even increases as labor productivity accelerates. Faster growth is not greener. This provides important new information for calibrating integrated assessment models, many of which make a green growth assumption in near term projections.
Topic:: Economics, Energy Policy, Economic Growth, Green Technology, and Renewable Energy
Political Geography:: Global Focus

475. The Mainstream Economics Interpretation of the Local State and Central-Local Relations in Post-Mao China: a Critical Review

Author:: Alexandre De Podesta Gomes
Publication Date:: 11-2018
Content Type:: Working Paper
Institution:: School of Oriental and African Studies - University of London
Abstract:: Decentralization and the role of local governments have long been touted as key factors in the Chinese economic miracle. This paper intends to critically assess the chief theories advanced by mainstream economics in its attempt to make sense of these aspects of China’s growth story. Firstly the theoretical underpinnings of fiscal federalism, new institutional economics, and market-preserving federalism approaches will be presented, as these theories offer the bedrock for most of the applied insights in which China is framed through the lenses of the central-local relations debate. Secondly, the idea of ‘market-preserving federalism, Chinese-style’ will be critically appraised, highlighting its shortcomings. Thirdly, the paper proceeds by bringing in the mainstream response to these problems, relying on the notion of political incentives and career concerns faced by local cadres. It will be argued that the continual adherence to some core tenets dear to the new institutional economics literature in all previous explanations prevents this broad camp of knowledge to properly grasp the complex dynamics of China’s decentralization drive and the role of local governments in the process. Finally, and in closing, an alternative approach will be offered.
Topic:: Economics, Local, Decentralization, and Federalism
Political Geography:: China and Asia

476. Industrial Structure and Party Competition in an Age of Hunger Games: Donald Trump and the 2016 Presidential Election

Author:: Thomas Ferguson, Paul Jorgensen, and Jie Chen
Publication Date:: 01-2018
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: The U.S. presidential election of 2016 featured frontal challenges to the political establishments of both parties and perhaps the most shocking election upset in American history. This paper analyzes patterns of industrial structure and party competition in both the major party primaries and the general election. It attempts to identify the genuinely new, historically specific factors that led to the upheavals, especially the steady growth of a “dual economy” that locks more and more Americans out of the middle class and into a life of unsteady, low wage employment and, all too often, steep debts. The paper draws extensively on a newly assembled, more comprehensive database of political contributions to identify the specific political forces that coalesced around each candidate. It considers in detail how different investor blocs related to the Republican Party and the Trump campaign as the campaign progressed and the role small contributors played in the various campaigns, especially that of Vermont Senator Bernie Sanders. It also critically evaluates claims about the final weeks of the election in the light of important overlooked evidence.
Topic:: Economics, Political Economy, Elections, Finance, Donald Trump, Political Parties, and Banking
Political Geography:: North America, Global Focus, and United States of America

477. Inequality in the 21st century: A critical analysis of Piketty’s work

Author:: Nadia Garbellini
Publication Date:: 01-2018
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: Thomas Piketty’s (2014) Capital in the XXI Century aims to analyze distributions of income and wealth and their determinants, in a set of developed countries from the nineteenth century to the present. The objective is a bold one, made even more so by the fact that Piketty pursues it not only from a theoretical, but also, from an empirical point of view. The task is particularly impressive not only because of the enormous effort required in collecting and organising data, but also because the work entails attaching a deterministic interpretation to facts and figures from radically different countries over a time span that covers almost two centuries, thereby forcing comparison between numbers coming from clearly incommensurable contexts. These difficulties are not lost to Piketty, who states that “[w]ithout precisely defined sources, methods, and concepts, it is possible to see everything and its opposite.” (Piketty, 2014, pp.2-3) This study argues that the empirical ‘methods and concepts’ adopted by Piketty are not always consistent with those coming from his reference theoretical framework, nor from National Accounts (United Nations, 2009).
Topic:: Economics, Inequality, Income Inequality, Economic Growth, and Capital
Political Geography:: Global Focus

478. Persistent Effects of Autonomous Demand Expansions

Author:: Daniele Girardi, Walter Paternesi Meloni, and Antonella Stirati
Publication Date:: 02-2018
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: The prevailing wisdom that aggregate demand shocks determine short-run cyclical fluctuations around a supply-determined equilibrium growth rate and an associated equilibrium unemployment rate (or NAIRU) has been called into question by various strands of literature over the last few decades. Specifically, a recently revived literature on hysteresis finds significant persistence in the effects of negative aggregate demand shocks (e.g. Blanchard et al. 2015; Fatás and Summers 2016; Martin et al. 2015). This paper aims to assess this tendency to return to a supply-determined potential output, independent of aggregate demand, after episodes of demand expansion. In line with the hysteresis literature, we assess the persistence of aggregate demand effects on key macroeconomic outcomes. However, in contrast with much of that literature, we assess whether persistence is detected also in instances of demand expansion. We study 94 episodes of demand expansion in 34 OECD countries between 1960 and 2015. We look at the sum of primary public expenditure and exports, a variable we call 'autonomous demand'. We define an expansion as a large yearly percentage increase in autonomous demand, ‘large’ meaning greater than a standard deviation above the country mean. We analyze the impact of these expansions on key macroeconomic outcomes in the subsequent decade, using various techniques to deal with endogeneity. We employ two main approaches: a dynamic two-way fixed-effects model, analogous to a standard difference-in-differences estimation; and a propensity score-based specification which explicitly models selection bias. We find a highly significant persistent effect on the GDP level: a one-off expansion in our autonomous demand variable by (an average of) 5% is associated 10 years later with a GDP level around 3% higher than in the control group, with no sign of mean reversion. We also document strong persistent effects on capital stock, employment and participation rates. Effects on productivity and the unemployment rate are also strong and quite persistent, but evidence regarding their permanence is more mixed. We do not find that expansions, on average, cause high or accelerating inflation. Our results lead us to ask whether hysteresis should be considered a distortion in the working of market economies that holds only in specific circumstances – as the mainstream literature has generally suggested – or whether it is, in fact, a pervasive phenomenon which holds most of the time.
Topic:: Economics, Inflation, Unemployment, and Capital Formation
Political Geography:: Global Focus

479. The Focus of Academic Economics: Before and After the Crisis

Author:: Ernest Aigner, Matthias Aistleitner, Florentin Glötzl, and Jakob Kapeller
Publication Date:: 05-2018
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: Has the global financial crisis of 2007ff had a visible impact on the economics profession? To answer this question we employ a bibliometric approach and compare the content and orientation of economic literature before and after the crisis with reference to two different samples: A large-scale sample consisting of more than 440,000 articles published between 1956 and 2016 and a smaller sample of 400 top-cited papers before and after the crisis. Our results suggest that – unlike the Great Depression of the 1930s – the current financial crisis did not lead to any major theoretical or methodological changes in contemporary economics, although the topic of financial instability received increased attention after the crisis.
Topic:: Economics, Academia, and Economic Crisis
Political Geography:: Global Focus

480. The Subversion of Shareholder Democracy and the Rise of Hedge-Fund Activism

Author:: Jang-Sup Shin
Publication Date:: 07-2018
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: This paper explains how hedge-fund activists are exerting power over corporate resource allocation far in excess of the actual voting power of their shareholdings. The power of these “minority-shareholding corporate raiders” derives from misguided regulatory “reforms” carried out in the 1980s and 1990s in the name of “shareholder democracy”. Sanctioned and overseen by the Department of Labor (DOL) and the Securities and Exchange Commission (SEC), these reforms include the introduction of compulsory voting by institutional investors and proxyvoting rule changes that greatly facilitated hedge-fund activists’ aggregation of the proxy votes of institutional investors. In addition, the introduction of the 1996 National Securities Markets Improvement Act (NSMIA) that allowed hedge funds to draw funds from institutional investors effectively with no limit also played an important role in the rise of hedge-fund activism. The paper concludes with policy proposals to rebalance value creation and value extraction by rebuilding the engagement and proxy voting system including (1) making it mandatory for shareholders to submit justifications in shareholder proposals on value creation or capital formation of corporations concerned; (2) removing voting as a fiduciary duty of institutional investors; (3) introducing differentiated voting rights that favor long-term shareholders; and (4) making it mandatory for both shareholders and management to reveal to the public what they discussed in engagement sessions.
Topic:: Economics, Regulation, Finance, Investment, Shareholder Democracy, Hedge Funds, and Value Extraction
Political Geography:: North America and United States of America

481. Social Stability and Resource Allocation within Business Groups

Author:: Haikun Zhu
Publication Date:: 08-2018
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: Using datasets on transactions within business groups and social sentiment in China, I show that state-owned enterprises (SOEs) use internal funds to address social unrest, complying with the government’s political goals. I use plausibly unexpected shocks to regional stability to analyze the response of SOEs to these events. I find that the government, as the controlling shareholder, adopts a carrot-and-stick approach. The government offers a “carrot” by injecting funds into SOEs located in the affected areas, which are then used to generate benefits to the public, such as larger labor payments and additional capital expenditures. However, if there are severe political conflicts that threaten its authority, the government applies a “stick” by withdrawing resources. The SOEs channel seems effective because local sentiment recovers around shocks when SOEs offer more benefits. Additional tests show that the SOEs channel is significant in economic magnitude compared to fiscal redistribution. As a result of the transfer, SOEs lose value after shocks, but firms in the region improve their performance later. This paper provides new evidence on how the intra-group allocation of resources incorporates political objectives, and has socioeconomic impact.
Topic:: Economics, Political Economy, Business, Capital, and Social Stability
Political Geography:: China and Asia

482. Race to the Bottom: Low Productivity, Market Power, and Lagging Wages

Author:: Lance Taylor and Özlem Ömer
Publication Date:: 08-2018
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: “Dualism” in the structure of production across sectors of the US economy, employment by sector, productivity levels and growth, real wages, and intersectoral terms-of trade increased markedly between1990 and 2016. The discussion focuses on 16 sectors. Seven were “stagnant” - - construction, education and health, other services, entertainment, accommodation and food, business services, and transportation and warehousing. They had low productivity levels, productivity growth rates hovering around zero, and low real wages. Their share of total employment rose from 47% in 1990 to 61% in 2016. The other “dynamic” sectors had higher and positively growing productivity while the terms-of- trade shifted against them. This bifurcation between industries is discussed in terms of a simple model. Increasing duality and secular stagnation are distinct possibilities.
Topic:: Economics, Employment, Economic structure, Industry, Productivity, and Wage Growth
Political Geography:: North America and United States of America

483. Citation Patterns in Economics and Beyond

Author:: Matthias Aistleitner, Jakob Kapeller, and Stefan Steinerberger
Publication Date:: 11-2018
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: In this paper we comparatively explore three claims concerning the disciplinary character of economics by means of citation analysis. The three claims under study are: (1) economics exhibits strong forms of institutional stratification and, as a byproduct, a rather pronounced internal hierarchy, (2) economists strongly conform to institutional incentives and (3) modern mainstream economics is a largely selfreferential intellectual project mostly inaccessible to disciplinary or paradigmatic outsiders. The validity of these claims is assessed by means of an interdisciplinary comparison of citation patterns aiming to identify peculiar characteristics of economic discourse. In doing so, we emphasize that citation data can always be interpreted in different ways, thereby focusing on the contrast between a ‘cognitive’ and an ‘evaluative’ approach towards citation data.
Topic:: Economics, Sociology, Academia, Citation, and Hierarchy
Political Geography:: Global Focus

484. Global and Local Challenges in Argentina and Brazil

Author:: Guillermo Calvo
Publication Date:: 12-2018
Content Type:: Working Paper
Institution:: Center for Global Development
Abstract:: The last presidential elections in Argentina (2015) and in Brazil (2018), represent a change from populism towards more orthodox economic policies in two important countries in the region. This shift is not only economic but also reflects other fundamental changes in the electorate, in particular the growing dissatisfaction of the population with issues such as weak security and growing corruption in political institutions. In both countries, there are significant fiscal problems and adjustment is needed. But in modern democracies, the success or failure of economic policy is closely tied to political developments. Notably, both countries face their macroeconomic challenges under a parliamentary minority; a situation that is common to many countries in the region at present. Economies highly integrated into the international capital markets, with macroeconomic imbalances inherited from populist governments, face a particularly difficult challenge. On the one hand, the required fiscal tightening entails the execution of policies that may result in greater social unrest, thus encouraging a gradual approach. On the other hand, a gradual approach requires a greater funding stream of financial funds thus exposing the economy to higher financial risk. The dilemma of choosing between a shock adjustment and a gradual approach has been central to understanding what has happened in Argentina and is essential to assessing the options available to the next government in Brazil. The dilemma about the optimal speed of fiscal adjustment has been faced by other countries in the region in the past. In some successful cases of gradualism, the presence of a clear commitment mechanism over the fiscal path, including the implementation of goals agreed with the IMF, has played a decisive role in mitigating the credibility gap typically linked to gradual approaches. One question that the Committee puts forward throughout this statement is to what extent does Argentina's experience entail relevant lessons for Brazil? In order to thoroughly understand these possible lessons and the challenges that both countries face, it is important to consider the similarities and differences between Argentina and Brazil. There is no doubt that both countries are dealing with formidable fiscal challenges. In both countries, there is a primary fiscal deficit and public debt levels are high in relation to GDP. Also, both economies face low or negative growth rates, partly because of cyclical or temporary factors and partly because of low productivity levels due to complex regulatory regimes and tax systems that hinder investment. On the other hand, the realities of Argentina and Brazil are very different in some important aspects. Brazil has not had to cope with a currency crisis and external financing problems such as those of Argentina; the latter has had to reduce its hefty deficit in the current account of the balance of payments. In contrast, Brazil’s external public debt and external financing needs of the public sector are low. However, while the private sector’s foreign indebtedness is quite moderate in Argentina, it is relatively high in the case of Brazil. As regards to monetary policy and inflation, the situation in both countries is also very different. Whereas the inflation rate in Argentina has suffered a substantial increase throughout this year in the context of low credibility in its monetary policy, Brazil has kept a low and stable inflation rate and has significantly improved its central bank’s credibility. These similarities and differences require a differentiated discussion of each country, even if some challenges facing Argentina and Brazil are shared, and whether their experiences provide lessons for each other. The international context plays a fundamental role for both economies in determining the results of economic policy. Before embarking on a more detailed analysis of the challenges facing Argentina and Brazil during the next year, we will analyze how the international context has recently changed, in the next section.
Topic:: Economics, Globalization, Populism, and Local
Political Geography:: Brazil, Argentina, and South America

485. White Paper: Achieving Latino Mobility

Author:: Scott Astrada and Gwyn Hicks
Publication Date:: 10-2018
Content Type:: Working Paper
Institution:: Aspen Institute
Abstract:: With the future of the United States directly tied to the economic well-being of nearly one-fifth of the population-Latino Americans-we all have a stake in ensuring their success and that every American has equal access to opportunity, regardless of race, skin color, economic status, address, or educational attainment. The ideas presented in this white paper come from discussions that took place at the 2018 America’s Future Summit: Unlocking Potential, Advancing Prosperity, on and off the stage, and as such represent the perspectives of informed speakers and participants.
Topic:: Economics, Race, Minorities, and Latino Issues
Political Geography:: North America and United States of America

486. Political and Economic Governance in the Balkans and Eastern Europe Compared

Author:: Michael Emerson and Gergana Noutcheva
Publication Date:: 07-2018
Content Type:: Working Paper
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: The not-yet EU member states of the Balkans and three states of Eastern Europe – Georgia, Moldova and Ukraine – have much in common: geographic proximity to the EU, political priority to become members of the EU, and similar struggles to improve their political and economic governance in line with EU standards and values. The EU’s main differentiation between the two groups is over the ‘membership perspective’, which has been offered to the Balkans but not to the East Europeans. Beyond this formal political stance, however, in practice the EU been extending virtually the same comprehensive array of economic and political instruments to both groups by signing Association Agreements with the three Eastern European states. This paper breaks new ground by comparing the record of both groups in terms of the quality of their political and economic governance. Using original material and existing sources, it finds that the two groups are comparable at two levels; it looks at both the frontrunners and laggards in each group. Most striking is that the East European frontrunner, Georgia, ranks even slightly ahead of the Balkan frontrunners. This leads into a case for reconsidering the EU’s present political doctrines over both its enlargement and neighbourhood policies, which are manifestly obsolescent. The paper concludes with three options for how the EU might adapt to these realities and make consequential policy changes.
Topic:: Economics, Politics, Governance, and Regional Politics
Political Geography:: Europe, Ukraine, Moldova, Eastern Europe, Balkans, and Georgia

487. Incomplete Hegemonies, Hybrid Neighbours: Identity games and policy tools in Eastern Partnership countries

Author:: Andrey Makarychev
Publication Date:: 02-2018
Content Type:: Working Paper
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: This paper applies the concepts of hegemony and hybridity as analytical tools to help understand the structural changes taking place within the Eastern Partnership (EaP) countries and beyond. The author points to the split identities of many post-Soviet societies and the growing appeal of solutions aimed at balancing Russia’s or the EU’s dominance as important factors shaping EaP dynamics. Against this background, he explores how the post-Soviet borderlands can find their place in a still hypothetical pan-European space, and free themselves from the tensions of their competing hegemons. The EaP is divided into those countries that signed Association Agreements with the EU and those preferring to maintain their loyalty to Eurasian integration. Bringing the two groups closer together, however, is not beyond policy imagination. The policy-oriented part of this analysis focuses on a set of ideas and schemes aimed at enhancing interaction and blurring divisions between these countries. The author proposes five scenarios that might shape the future of EaP countries’ relations with the EU and with Russia: 1) the conflictual status quo in which both hegemonic powers will seek to weaken the position of the other; 2) trilateralism (EU, Russia plus an EaP country), which has been tried and failed, but still is considered as a possible option by some policy analysts; 3) the Kazakhstan-Armenia model of diplomatic advancement towards the EU, with some potential leverage on Russia; 4) deeper engagement by the EU with the Eurasian Economic Union, which has some competences for tariffs and technical standards; and 5) the decoupling of security policies from economic projects, which is so far the most difficult option to foresee and implement in practice.
Topic:: Diplomacy, Economics, European Union, Partnerships, Identity, and Post-Soviet Space
Political Geography:: Russia, Europe, and Eastern Europe

488. The Political Economy of Exchange Rate Policy and Capital Control in Nigeria

Author:: Nathaniel E. Urama and Emeka Charles Iloh
Publication Date:: 01-2018
Content Type:: Working Paper
Institution:: African Heritage Institution (AfriHeritage)
Abstract:: This paper examines the primary cause of the exchange rate management failure in Nigeria by evaluating the motivating factor for these changes and reviewing the role of politics and interest group in the Nigerian exchange rate management. The findings show that politics, institutional incentives, and group interest mostly play a significant role in Nigeria’s exchange rate regime determination, as evidenced in the habit of changing the exchange rate system by almost all the political regimes that have existed in the country. More so, the changes are attributed to factors such as different parties and regimes having different macroeconomic preferences, incumbents’ efforts to increase their re-election prospects, and by interest groups that lobby for strong or weak currencies.
Topic:: Development, Economics, Political Economy, Exchange Rate Policy, Macroeconomics, Currency, and Capital Controls
Political Geography:: Africa and Nigeria

489. Dossier 10: Argentina Goes Back to the IMF

Author:: Tricontinental: Institute for Social Research
Publication Date:: 11-2018
Content Type:: Working Paper
Institution:: Tricontinental: Institute for Social Research
Abstract:: For six months, Argentina has been confronted with a new economic and social crisis on a massive scale. In the context the devaluation of local currency, rising inflation, and a deep recession, Mauricio Macri’s administration struck an agreement with the IMF, marking a major shift in the country’s future. The agreements slash public spending and prioritize the repayment of debt, among other measures. This dossier examines the different dimensions of the crisis, the open disputes, and the possibilities for the immediate future.
Topic:: Economics, International Cooperation, Neoliberalism, Protests, IMF, and Political Crisis
Political Geography:: Argentina and South America

490. On the Identification of Gross Output Production Functions

Author:: Amit Gandhi, Salvador Navarro, and David Rivers
Publication Date:: 05-2018
Content Type:: Working Paper
Institution:: Centre for Human Capital and Productivity (CHCP), Western University
Abstract:: We study the nonparametric identification of gross output production functions under the environment of the commonly employed proxy variable methods. We show that applying these methods to gross output requires additional sources of variation in the demand for flexible inputs (e.g., prices). Using a transformation of the firm’s first-order condition, we develop a new nonparametric identification strategy for gross output that can be employed even when additional sources of variation are not available. Monte Carlo evidence and estimates from Colombian and Chilean plant-level data show that our strategy performs well and is robust to deviations from the baseline setting.
Topic:: Economics, Human Capital, Econometrics, and Productivity
Political Geography:: Colombia, Latin America, and Chile

491. Parental Support, Savings and Student Loan Repayment

Author:: Lance Lochner, Todd Stinebrickner, and Utku Suleymanoglu
Publication Date:: 07-2018
Content Type:: Working Paper
Institution:: Centre for Human Capital and Productivity (CHCP), Western University
Abstract:: Using unique survey and administrative data from the Canada Student Loans Program, we document that parental support and personal savings substantially lower student loan repayment problems. We develop a theoretical model for studying student borrowing and repayment in the presence of risky labor market outcomes, moral hazard, and costly earnings verification. This framework demonstrates that non-monetary costs of applying for income-based repayment assistance are critical to understanding why resources other than earnings lead to greater repayment. We further show that eliminating these non-monetary costs may be inefficient and lead to undesirable redistribution. Empirically, we demonstrate that expanding Canada’s income-based Repayment Assistance Plan to automatically cover all borrowers would likely reduce program revenue by nearly one-half over early years of repayment. Finally, we show how student loan programs can be more efficiently designed to address heterogeneity in parental transfers in the presence of non-monetary earnings verification costs and moral hazard.
Topic:: Debt, Economics, Human Capital, Higher Education, Productivity, and Student Loans
Political Geography:: United States and Canada

492. Job Tasks and the Gender Wage Gap among College Graduates

Author:: Todd Stinebrickner, Ralph Stinebrickner, and Paul Sullivan
Publication Date:: 06-2018
Content Type:: Working Paper
Institution:: Centre for Human Capital and Productivity (CHCP), Western University
Abstract:: Gender differences in current and past job tasks may be crucial for understanding the gender wage gap. We use novel task data to address well-known measurement concerns, including that standard task measures assume away within-occupation gender differences in tasks. We find that unique measures of task-specific experience, in particular high-skilled information experience, are of particular importance for understanding the substantial widening of the wage gap early in the career. Highlighting the importance of these measures, traditional work-related proxies for gender differences in human capital accumulation are not informative because general work experience is similar by gender for our recent graduates.
Topic:: Economics, Gender Issues, Labor Issues, Human Capital, Higher Education, and Productivity
Political Geography:: United States and Canada

493. Time-Use and Academic Peer Effects in College

Author:: Nirav Mehta, Ralph Stinebrickner, and Todd Stinebrickner
Publication Date:: 06-2018
Content Type:: Working Paper
Institution:: Centre for Human Capital and Productivity (CHCP), Western University
Abstract:: This paper examines academic peer effects in college. Unique new data from the Berea Panel Study allow us to focus on a mechanism wherein a student’s peers affect her achievement by changing her study effort. Although the potential relevance of this mechanism has been recognized, data limitations have made it difficult to provide direct evidence about its importance. We find that a student’s freshman grade point average is affected by the amount her peers studied in high school, suggesting the importance of this mechanism. Using time diary information, we confirm that college study time is actually being affected.
Topic:: Economics, Human Capital, Higher Education, Students, and Productivity
Political Geography:: Global Focus

494. Uncertainty about Future Income: Initial Beliefs and Resolution During College

Author:: Yifan Gong, Todd Stinebrickner, and Ralph Stinebrickner
Publication Date:: 03-2018
Content Type:: Working Paper
Institution:: Centre for Human Capital and Productivity (CHCP), Western University
Abstract:: Uncertainty about future income plays a conceptually important role in college decisions. Unfortunately, characterizing how much earnings uncertainty is present for students at college entrance and how quickly this uncertainty is resolved has proven to be difficult. This paper takes advantage of unique expectations data from the Berea Panel Study to provide new evidence about this issue. We characterize initial uncertainty using survey questions that elicit the entire distribution describing one’s beliefs about future earnings at an ideal time - immediately before students began their first year courses. We characterize the amount of uncertainty that is resolved during college by taking advantage of the longitudinal nature of the expectations data. Taking advantage of a variety of additional survey questions, we provide evidence about how the resolution of income uncertainty is influenced by factors such as college GPA and college major, and also examine why much income uncertainty remains unresolved at the end of college.
Topic:: Economics, Income Inequality, Human Capital, Higher Education, and Productivity
Political Geography:: United States and Canada

495. Dynamics of Deterrence: A Macroeconomic Perspective on Punitive Justice Policy

Author:: Bulent Guler and Amanda Michaud
Publication Date:: 09-2018
Content Type:: Working Paper
Institution:: Centre for Human Capital and Productivity (CHCP), Western University
Abstract:: We argue that transitional dynamics play a critical role in the evaluation of punitive incarceration reform on crime, inequality and the macroeconomy. Individuals’ past choices related to crime and employment under old policies have persistent consequences that limit their future responses to policy changes. Novel cohort evidence is provided in support of this mechanism. A quantitative model of this theory calibrated using restricted administrative data predicts nuanced, non-monotone dynamics of crime and incarceration similar to the U.S. experience following a single permanent increase in punitive incarceration in the 1980s. Increased inequality and declining employment accompany these changes and are borne unequally across generations.
Topic:: Economics, Law, Human Capital, Macroeconomics, Mass Incarceration, Productivity, and Legal Sector
Political Geography:: United States

496. The Disability Option: Labor Market Dynamics with Macroeconomic and Health Risks

Author:: Amanda Michaud and David Wiczer
Publication Date:: 12-2018
Content Type:: Working Paper
Institution:: Centre for Human Capital and Productivity (CHCP), Western University
Abstract:: We evaluate the contribution of changing macroeconomic conditions and demographics to the increase in Social Security Disability Insurance (SSDI) over recent decades. Within our quantitative framework, multiple sectors differentially expose workers to health and economic risks, both of which affect individuals’ decisions to apply for SSDI. Over the transition, falling wages at the bottom of the distribution increased awards by 27% in the 1980s and 90s and aging demographics rose in importance thereafter. The model also implies two-thirds of the decline in working-age male employment from 1985 to 2013, three-fourths of which eventually goes on SSDI.
Topic:: Economics, Government, Health, Disability, Human Capital, Social Security, Insurance, Productivity, and Health Insurance
Political Geography:: United States

497. Economic Sanction Games among the US, the EU and Russia: Payoffs and Potential Effects

Author:: Dong Yan and Li Chunding
Publication Date:: 07-2018
Content Type:: Working Paper
Abstract:: Economic sanction of the US and EU on Russia because of Ukraine crisis in 2014 lasts for a long time and is still a hot policy topic. This paper uses a 16-country or region numerical general equilibrium model with trade cost and exogenous trade imbalance to explore this three-country economic sanction game payoffs, and simulate the effects of sanctions on individual countries. Our analysis find that all sanction involved countries will be hurt, but comparatively Russia will be hurt more, and the US and EU will be hurt less. Sanction measures of EU have larger impacts to Russia than the US measures, and meanwhile Russian counter-sanction measures will generate larger impacts on the EU than on the US. From the economic perspective, the optimal choice for US and EU is to give up sanction measures to Russia, and retaliation is Russia’s optimal choice when faced with sanction measures. Countries out of the sanction game will gain because of trade diversion effects.
Topic:: Economics, Sanctions, European Union, and Economy
Political Geography:: Russia, Europe, and United States of America

498. Who Can Win the Possible China-US Trade War?

Author:: Li Chunding
Publication Date:: 06-2018
Content Type:: Working Paper
Abstract:: This paper uses a multi-country global general equilibrium (GE) model to numerically simulate the effects of possible China-US trade wars. We introduce an endogenous trade imbalance structure with trade cost into the model which helps to explore both tariff and non-tariff trade war effects. Our simulation results show that China will be significantly hurt by the China-US trade war, but negative impacts are affordable. The US can gain under unilateral sanction measures to China, but will lose if China takes retaliation measures. Comparing the effects under mutual trade war, China will lose more than the US. Introducing non-tariff barrier trade wars will intensify the negative effects, and comparatively negative effects to China are larger than to the US. Mexico’s involvement in trade war with the US will strengthen the negative effects and comparatively hurt the US more. Under non-cooperative and cooperative Nash bargaining equilibrium, the US can gain more than China in trade war negotiation, which means the US has stronger bargaining power than China. Additionally, trade wars between China and the US will hurt most countries and the world especially in GDP and manufacturing employment, but benefit their welfare and trade.
Topic:: Economics, International Trade and Finance, Tariffs, and Trade Wars
Political Geography:: China, Asia, North America, and United States of America

499. Country-Risk Rating of Overseas Investment from China (2018)

Author:: CROIC-IWEP
Publication Date:: 01-2018
Content Type:: Working Paper
Abstract:: China's outbound direct investment hit a new high in 2016, reaching $196.15 billion, making the country the world's second-largest overseas investor. The volume of its outbound direct investment increased by 34.7% year-on-year in 2016 and accounted for 13.5% of the world's total — the first time it exceeded 10%. Since 2003, when the Ministry of Commerce joined hands with the National Bureau of Statistics and the State Administration of Foreign Exchange to start releasing authoritative investment data annually, China's outbound direct investment has kept increasing for 14 consecutive years. From 2002 to 2016, the annual average growth of its outbound direct investment reached 35.8%. In 2016, China's outbound direct investment once again exceeded the foreign direct investment it received, making it a net capital exporter for two consecutive years. Meanwhile, its outbound direct investment stock hit $1.35739 trillion at the end of 2016, the 6th largest in the world, two notches up compared with in 2015. In 2016, China had the most overseas M&A deals in history in terms of both number and value of M&A deals. In the future, China is expected to bring out more of its investment potentials and build a win-win cooperative relationship with other countries following its economic transition and upgrading, rising competitiveness of Chinese enterprises in overseas markets and steady advancement of the Belt and Road Initiative.
Topic:: Economics, Foreign Direct Investment, and Investment
Political Geography:: China and Asia

500. Competitiveness-of ACP Sugar Exports in Global Markets

Author:: Tebogo Seleka and Thula Dlamini
Publication Date:: 03-2018
Content Type:: Working Paper
Institution:: Botswana Institute for Development Policy Analysis
Abstract:: We employ the Normalized Revealed Comparative Advantage (NRCA) index on data for the period 1961-2013 to examine the competitiveness of the African, Caribbean and Pacific (ACP) countries in the global sugar market. Results indicate that the majority of the ACP states had comparative advantage in the global sugar market during the period 1961-2013. However, most of these countries also experienced declining comparative advantage, except for a few African countries that emerged from initial states of extreme comparative disadvantage to marginal comparative (dis)advantage. This occurred despite the fact that these countries enjoyed tariff free access to the highly protected EU market. Mauritius, followed by Fiji, Guyana and Jamaica, recorded the strongest comparative advantage among the ACP countries. However, it recorded weaker comparative advantage than the leading comparator non-ACP countries of Australia, Brazil and Thailand, which experienced considerable increases in comparative advantage over the considered period. Overall, there has been convergence in comparative advantage among ACP states since the signing of the Lomé convention in 1975.
Topic:: Development, Economics, Exports, Macroeconomics, and Economic Development
Political Geography:: Africa and Botswana

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COLUMBIA UNIVERSITY PRESS