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on Central and Western Asia |
| By: | Jahangir Aziz |
| Abstract: | In the spirit of what is known as business cycle accounting, this paper finds that the investment wedge-the gap between household's rate of intertemporal substitution and the marginal product of capital-is large and quantitatively significant in explaining China's and India's growth. Specific financial sector policies are shown to map well the size and changes in the investment wedge. In the case of China, nonperforming loans, borrowing constraints, and uncertainty over changes in government guidance in bank lending, have implied large transfers from households to firms that have kept capital cost low and encouraged investment. In the case of India, post-1992 financial sector reforms, particularly the reduction in the funds preempted by the government from the banking system, has played an important role in reducing the cost of capital. Simulations show that for rebalancing growth in China and sustaining high investment rate in India, further financial sector reforms could turn out to be key. |
| Keywords: | Working Paper , China, People's Republic of , India , |
| Date: | 2008–04–22 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:08/95&r=cwa |
| By: | John Armour; Priya Lele |
| Abstract: | The process of liberalisation of India's economy since 1991 has brought with it considerable development both of its financial markets and the legal institutions which support these. An influential body of recent economic work asserts that a country's 'legal origin'-as a civilian or common law jurisdiction-plays an important part in determining the development of its investor protection regulations, and consequently its financial development. An alternative theory claims that the determinants of investor protection are political, rather than legal. We use the case of India to test these theories. We find little support for the idea that India's legal heritage as a common law country has been influential in speeding the path of regulatory reforms and financial development. There is a complementarity between (i) India's relative success in services and software, (ii) the relative strength of its financial markets for outside equity, as opposed to outside debt, and (iii) the relative success of stock market regulation, as opposed to reforms of creditor rights. We conclude that political explanations have more traction in explaining the case of India than do theories based on 'legal origins'. |
| Keywords: | India, Law and Finance, Investor Protection, Economic structure and financial structure |
| JEL: | G28 G38 K22 K40 O16 P37 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp361&r=cwa |
| By: | Athreye, Suma (UNU-MERIT, and Brunel Business School); Kale, Dinar (Open University, and ESRC Innogen); Ramani, Shyama V. (Institut National de la Recherche Agronomique (INRA), and Ecole Polytechnique Paris) |
| Abstract: | This paper demonstrates that radical regulatory changes can be tantamount to technological revolutions by studying Indian pharmaceutical firms. It shows that radical regulatory changes such as the Indian Patent Act of 1970, the New Industrial Policy of 1991 and the signing of TRIPS (Trade Related Intellectual Property Rights System) in 1995 served to open up new economic opportunities and constraints in the wake of which the winners and losers were selected as a function of the dynamic firm capabilities most appropriate for the new market environment. |
| Keywords: | International Marketing, R&D Management, India, Pharmaceutical Sector, Corporate Strategy |
| JEL: | L11 L22 L51 L65 M31 O32 O34 O53 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2008041&r=cwa |
| By: | Gianna Claudia Giannelli; Francesca Francavilla; Leonardo Grilli |
| Abstract: | This paper investigates the determinants of school attendance of children and their mother’s working status when the mother decides how to allocate her time and that of her children. A multilevel random effects model is applied to study the mother’s participation and the schooling status of her children in a joint framework. Using the second National Family Health Survey (NFHS-2) for India, we find that, controlling for many covariates among which wealth is the most powerful predictor, children of working mothers have a lower probability of attending school. This, together with the result that only illiterate and poor mothers with unskilled or unemployed partners have a high probability of working, points to the need for decent labour market opportunities for females. An implication of our findings is that any policy aiming both at enhancing women’s empowerment through labour and increasing children’s welfare should also target improvements in women’s conditions in the labour market. |
| Keywords: | children’s schooling, women’s work, household allocation of time, random effects, India |
| JEL: | J13 J22 O15 O18 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:wpc:wplist:wp07_08&r=cwa |
| By: | Singh, Nirvikar |
| Abstract: | This paper examines the impact of transaction costs on economic welfare and development. We extend the static model of Romer (1994), in which transaction costs reduce welfare by the reducing the equilibrium number of intermediate goods, and estimate the welfare losses in the case of domestic transaction costs. The main analysis of the paper extends a dynamic model of Ciccone and Matsuyama (1996) to incorporate transaction costs. We show that high transaction costs reduce the long-run level of development, and may arrest development completely in the extreme case. We also discuss the role of information technology in reducing transaction costs, and offer some preliminary evidence from rural India to illustrate how these reductions may occur through the use of such technologies. |
| Keywords: | transaction costs; information technology; Internet; development; India |
| JEL: | P2 L31 O3 O12 |
| Date: | 2008–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:9095&r=cwa |
| By: | Pradumna B. Rana (Division of Economics, Nanyang Technological University, Singapore) |
| Abstract: | Recently, there has been growing interest in the evolving economic relationships between South Asia and East Asia. What could be the implications of the re-emergence of the two giant economies or hegemons – India and China - on the region and globally? Could these relationships be the second phase of Pan-Asian integration? Will Asia be as well-integrated as it was during the pre-colonial period? This paper finds that the level of economic integration between South Asia and East Asia, although increasing since 1990, started to surge after 2000, albeit from a low base, mainly because of growing interdependence between India and China. The level of integration is, however, low in relative terms. By calculating the usual indices, the paper finds that, although there are overlaps, there are also significant amounts of complementarities between the two regions on goods and service trade. The level of economic integration between the two regions is, therefore, bound to increase. The paper concludes by identifying a set of measures to enhance policy-led integration between the two regions including those seeking to reduce transportation costs. |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:nan:wpaper:0804&r=cwa |
| By: | Esfahani, H.S.; Pesaran, M.H. |
| Abstract: | This paper examines the economic transformation of Iran in a global context through the Twentieth Century. At the start of that century, the Iranian economy had long remained stagnant, poor, and largely agrarian, with a marginal role in the world economy. By the turn of 21st century, Iran had transformed into a complex and relatively large economy with a non-negligible impact on many parts of the world. While the initial conditions and the evolution of domestic institutions and resources played major roles in the pace and nature of that transformation, relations with the rest of the world had crucial influences as well. This paper focuses on the latter forces, while taking account of their interactions with domestic factors in shaping the particular form of economic development in Iran. We study the ways in which the development of the Iranian economy has been affected by international price movements and by the ebbs and flows of trade, investment, and economic growth in the rest of the world. In considering these effects, we also analyze the role of domestic political economy factors and policies in enhancing or hindering the ability of domestic producers to respond to external challenges and opportunities. |
| Keywords: | Development and Growth, Political Economy, Oil Prices and the Iranian Economy. |
| JEL: | N15 O11 O53 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0815&r=cwa |