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on Central and Western Asia |
|
Issue of 2010‒10‒02
twenty papers chosen by Bibhu Prasad Nayak Institute for Social and Economic Change |
| By: | Malika Pant; Martin Mühleisen; Alun H. Thomas |
| Abstract: | Global oil markets were roiled by sharp price swings in 2008, and economists are still divided over the reasons for the unusual volatility. Those emphasizing fundamentals point to inelastic supply and demand curves, others view the phenomenon mostly as a result of financial investors flocking into commodity markets. This paper attempts to infer the strength of these competing hypotheses, using a simultaneous equation model that enables us to undertake a separate analysis of supply and demand factors. The model broadly captures both the surge and subsequent fall in prices, with a particularly strong impact of demand factors. The model captures a strong effect of a measure for global liquidity but does not find support for a speculative motive. |
| Keywords: | Oil prices , Oil consumption , Commodity markets , Economic models , Demand , International capital markets , Supply , |
| Date: | 2010–08–05 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:10/186&r=cwa |
| By: | Francis Andrianarison; Victor A.B. Davies; Sylvain Dessy |
| Abstract: | Many poor countries are plagued with growth-impeding institutions. We develop a three-sector general equilibrium model linking economic stagnation in these countries to poor export terms of trade. We examine the extent to which changes in the terms of trade affect private agents’ incentive to coalesce to oppose the adoption of growth-promoting institutions. We show that under certain conditions, below a threshold terms of trade level, private agents gain from coalescing to oppose the adoption of growth-promoting institutions. Above this threshold, gains from coalescing disappear, fostering institutional change. |
| Keywords: | Terms of trade, primary commodities, institutions, general equilibrium |
| JEL: | F11 L12 O33 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:1036&r=cwa |
| By: | Emanuele Massetti (Fondazione Eni Enrico Mattei, Euro-Mediterranean Center for Climate Change); Fabio Sferra (Fondazione Eni Enrico Mattei) |
| Abstract: | We introduce endogenous investments for increasing conventional and non-conventional oil extraction capacity in the integrated assessment model WITCH. The international price of oil emerges as the Nash equilibrium of a non-cooperative game. When carbon emissions are not constrained, oil is used throughout the century, with unconventional oil taking over conventional oil from mid-century onward. When carbon emissions are constrained, oil consumption drops dramatically and the oil price is lower than in the BaU. Unconventional oil is not extracted. Regional imbalances in the distribution of stabilisation costs are magnified and the oil-exporting countries bear, on average, costs three times larger than in previous estimates. |
| Keywords: | Climate Policy, Integrated Assessment, Oil Production, Oil Revenues, Oil Trade |
| JEL: | E17 F17 Q32 Q43 Q54 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.113&r=cwa |
| By: | Jesus Felipe |
| Abstract: | The global crisis of 2007–09 affected developing Asia largely through a decline in exports to the developed countries and a slowdown in remittances. This happened very quickly, and by 2009 there were already signs of recovery (except on the employment front). This recovery was led by China’s impressive performance, aided by a large stimulus package and easy credit. But China needs to make efforts toward rebalancing its economy. Although private consumption has increased at a fast pace during the last decades, investment has done so at an even faster pace, with the consequence that the share of consumption in total output is very low. The risk is that the country may fall into an underconsumption crisis. Looking at the medium and long term, developing Asia’s future is mixed. There is one group of countries with a highly diversified export basket. These countries have an excellent opportunity to thrive if the right policies are implemented. However, there is another group of countries that relies heavily on natural resources. These countries face a serious challenge, since they must diversify. |
| Keywords: | Asia; China; Global Crisis; Open Forest |
| JEL: | E61 O11 O53 O57 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_619&r=cwa |
| By: | Newbery, D. |
| Abstract: | Concerns over future oil scarcity might not be so worrying but for the high carbon content of substitutes, and the limited capacity of the atmosphere to absorb additional CO2 from burning fuel. The paper argues that the tools of economics are helpful in understanding some of the key issues in pricing fossil fuels, the extent to which pricing can be left to markets, the need for, and design of, international agreements on corrective carbon pricing, and the potential prisoners’ dilemma in reaching such agreements, partly mitigated in the case of oil by current taxes and the likely incidence of carbon taxes on the oil price. The ‘Green Paradox’ in which carbon pricing exacerbates climate change is theoretically possible, but empirically unlikely. |
| Keywords: | exhaustible resources, climate change, carbon prices, prisoners’ dilemma, international agreement, Green Paradox |
| JEL: | Q32 Q54 H23 L71 |
| Date: | 2010–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1045&r=cwa |
| By: | Fofack, Hippolyte |
| Abstract: | Sub-Saharan Africa's dismal development outcomes -- growth collapse and declining real income -- are often used to highlight its sharp development contrast with other regions of the developing world. Drawing on a large cross-section analysis, this paper shows that Africa's underlying dismal records can also be largely accounted for by the skewed distribution of growth in the post-independence era. In particular, structurally low investment rates in a context of high political risk and uncertainty undermined growth prospects in the region. However, counterfactual simulations based on a variation of neoclassical growth models and under the hypothetical equalization of political risk profile alternative result in large economic returns, reflected in the significantly higher level of aggregate output and income in the subset of conflict-affected countries. Income gets even higher when the hypothetical reduction of political risks alternative is accompanied by sustained increases in capital accumulation. |
| Keywords: | Economic Theory&Research,Post Conflict Reconstruction,Achieving Shared Growth,Emerging Markets,Debt Markets |
| Date: | 2010–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5428&r=cwa |
| By: | Sonja S. Teelucksingh (Fondazione Eni Enrico Mattei and University of the West Indies); Paulo A.L.D. Nunes (Fondazione Eni Enrico Mattei and Ca’ Foscari University of Venice) |
| Abstract: | The Millennium Development Goals explicitly recognise “sustainable development” as a target. A step towards this is a greater understanding of the significant role of biodiversity in rural communities of developing countries who depend most on the ecosystem goods and services and who as a result may suffer most from its continued degradation. Understanding the input of biodiversity in developing countries to the provision of the ecosystem goods and services (EGS) that are essential to their human well-being is seen as a significant first step in sustainable development, and environmental valuation is a necessary tool for achieving this objective. However, valuing biodiversity in a developing country context can be an intricate affair. While economic valuation literature yields a range of tried and tested methodological techniques for measuring biodiversity, the question remains as to whether these generalised techniques are capable of revealing the complexities of local environmental use in developing countries. A heterogeneous group, “developing countries” can be characterised by a range of factors existing in different intensities that can (1) impact the ways in which local communities interact with their environmental resources (2) impact the efficacy of the methodological and data collection process (3) impact the values obtained from the application of valuation techniques and (4) impact the implementation, success and sustainability of policy and management prescriptions. This paper attempts to address these issues by discussing the main characteristics of developing countries that can impact the biodiversity valuation process and, with specific reference to Small Island Developing States (SIDS), discussing how knowledge of these characteristics can assist the valuation process to better reveal the complex interaction between biodiversity and human welfare in a developing country context. |
| Keywords: | Biodiversity, Developing Countries, Small Island Developing States |
| JEL: | Q01 Q57 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.111&r=cwa |
| By: | Jessica Schicks |
| Abstract: | The microfinance industry has been celebrated both for its social impact on poverty alleviation and for its profitability. With issues of over-indebtedness emerging among microfinance customers, both achievements are at risk. This paper contributes to the industry's understanding of the definition and causes of over-indebtedness. It reveals why the 5 myths of microfinance over-indebtedness erroneously oversimplify the reality of microfinance customers. The paper works with theoretical and empirical contributions from economics, psychology and sociology, and unites microfinance specific findings with the general consumer finance literature. In addition to external influences, it highlights the responsibility of lenders in driving microfinance customers into over-indebtedness. It also recognises the role that borrowers involuntarily play in over-indebting themselves. Enhancing our understanding of what microfinance over-indebtedness is and how it is caused, the paper provides the basis for tailoring over-indebtedness solutions to the root causes of the phenomenon and addressing the challenge at all suitable levels. |
| Keywords: | Microfinance; Microcredit; Over-Indebtedness; Debt; Customer Protection; Consumer Finance; Behavioural Economics |
| JEL: | O16 O50 G21 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:2013/64675&r=cwa |
| By: | Jaejoon Woo; Manmohan S. Kumar |
| Abstract: | This paper explores the impact of high public debt on long-run economic growth. The analysis, based on a panel of advanced and emerging economies over almost four decades, takes into account a broad range of determinants of growth as well as various estimation issues including reverse causality and endogeneity. In addition, threshold effects, nonlinearities, and differences between advanced and emerging market economies are examined. The empirical results suggest an inverse relationship between initial debt and subsequent growth, controlling for other determinants of growth: on average, a 10 percentage point increase in the initial debt-to-GDP ratio is associated with a slowdown in annual real per capita GDP growth of around 0.2 percentage points per year, with the impact being somewhat smaller in advanced economies. There is some evidence of nonlinearity with higher levels of initial debt having a proportionately larger negative effect on subsequent growth. Analysis of the components of growth suggests that the adverse effect largely reflects a slowdown in labor productivity growth mainly due to reduced investment and slower growth of capital stock. |
| Keywords: | Capital , Economic growth , Gross domestic product , Labor productivity , Low-income developing countries , Public debt , |
| Date: | 2010–07–28 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:10/174&r=cwa |
| By: | Bart Van Ark; Abdul Azeez Erumban; Utsav Kumar; Vivian Chen |
| Abstract: | This paper focuses on comparisons of productivity, (unit) labor cost and industry-level competitiveness for the manufacturing sector of China and India. They first provide a comparison between India and China using a broad international perspective. [ICRIER Working Paper No. 228] |
| Keywords: | cost competitiveness, manufacturing, India, China, labor productivity |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2882&r=cwa |
| By: | Gani Aldashev (University of Namur and CRED); Imane Chaara (University of Namur and CRED); Jean-Philippe Platteau (University of Namur and CRED); Zaki Wahhaj (University of Namur and CRED) |
| Abstract: | We build a simple model of legal dualism in which a pro-poor legal reform, under certain conditions, causes the conflicting custom to go some way toward producing the change intended by the legislator. It then acts as an "outside anchor" that exerts a "magnet effect" on the custom. We illustrate this insight using examples on inheritance, marriage, and divorce issues in Sub-Saharan Africa and India. We also characterize the conditions under which a moderate pro-poor reform is more effective than a radical reform. |
| Keywords: | Custom, Statutory Law, Inequality, Legal Reform |
| JEL: | K40 O17 D74 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.60&r=cwa |
| By: | Hutchison, Michael; Sengupta, Rajeswari; Singh, Nirvikar |
| Abstract: | A key challenge for macroeconomic policy in open economies is how to simultaneously manage exchange rates, interest rates and capital account openness—the trilemma. This paper calculates a trilemma index for India and investigates its evolution over time. We find that financial integration has increased markedly after the mid-2000s, with corresponding limitations on monetary independence and exchange rate stability. This tradeoff has been mitigated, however, with the rise of international reserves as a partially independent instrument of macroeconomic policy. In addition, we confirm that the weighted sum of the three indexes adds up to a constant, validating the notion that a rise in one trilemma variable should be traded-off with a drop of the weighted sum of the other two. Finally, we consider the implications of changes in the trilemma index for macroeconomic outcomes. We find some evidence that greater financial integration and corresponding loss of monetary autonomy and exchange rate stability has influenced inflation and inflation volatility, though not in a consistent manner. |
| Keywords: | Financial trilemma; Indian economy; International reserves; Foreign exchange intervention; Monetary policy |
| JEL: | F4 F3 E5 E4 |
| Date: | 2010–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:25327&r=cwa |
| By: | Rehman, Fahd |
| Abstract: | Reforms have begun in Pakistan to sustain the funded pension scheme for government-operated pension schemes such as the Employees Old Age Benefit Institution (EOBI). Presently, the EOBI operates its own fund and invests most of its assets in government-backed securities which are basically interest-bearing debt instruments. Although the returns on the EOBI’s fund have been high for a short period due to higher interest rates and minimum pension distributions, this trend is not likely to continue. Funded pension schemes depend heavily on portfolio performance because risk is transferred to contributors. Therefore, asset allocation becomes considerably important. The purpose of this study is to determine optimal asset allocation and the role of international diversification specifically for the EOBI’s funds and generally for newly created funded pension schemes in Pakistan. The article analyzes the potential benefits accrued through international investments based on historical returns over almost five decades with varying degrees of risk aversion coefficients. Varying degrees of risk may allow policymakers to incorporate their strategies for future asset behavior and take timely action to counter the potential threat of aging, demographic shifts, and liabilities and to ensure decent benefits for pensioners. |
| Keywords: | Asset allocation; international diversification; pension fund; Pakistan |
| JEL: | G11 G23 |
| Date: | 2010–07–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:25060&r=cwa |
| By: | Woolcock, Michael; Szreter, Simon; Rao, Vijayendra |
| Abstract: | The consensus among scholars and policymakers that"institutions matter"for development has led inexorably to a conclusion that"history matters,"since institutions clearlyform and evolve over time. Unfortunately, however, the next logical step has not yet been taken, which is to recognize that historians (and not only economic historians) might also have useful and distinctive insights to offer. This paper endeavors to open and sustain a constructive dialogue between history -- understood as both"the past"and"the discipline"-- and development policy by (a) clarifying what the craft of historical scholarship entails, especially as it pertains to understanding causal mechanisms, contexts, and complex processes of institutional change; (b) providing examples of historical research that support, qualify, or challenge the most influential research (by economists and economic historians) in contemporary development policy; and (c) offering some general principles and specific implications that historians, on the basis of the distinctive content and method of their research, bring to development policy debates. |
| Keywords: | Cultural Policy,Economic Theory&Research,Population Policies,Cultural Heritage&Preservation,Development Economics&Aid Effectiveness |
| Date: | 2010–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5425&r=cwa |
| By: | Azim, Tare Sayed Abdel |
| Abstract: | This exploratory study was conducted in order to investigate the impact of socio-demographic variables “age, sex, familial situation, qualification, profession, income per capita”, international tourism experience, and tourism experience in Egypt on the decision making process of travel under the effect of the risk factor “terrorist attacks of last April, 2006, in Sinai, Egypt». For this purpose, a two decision making process probabilities have been estimated by the ordinal logit model. |
| Keywords: | Risk; tourism experience; Decision making process of travel Socio-demographic variables; tourist behaviour |
| JEL: | O1 M1 L83 |
| Date: | 2009–10–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:25313&r=cwa |
| By: | Sylvain Dessy; Tiana Rambeloma |
| Abstract: | This paper reassesses the case for temporary emigration of unskilled workers as a solution to the child labor problem, based upon a general equilibrium model of migrant remittances, parental investment in child schooling, and intersectoral allocation of capital. Counterfactual simulations uncover a U-shape effect of temporary emigration on the incidence of child labor, suggesting that the case for temporary emigration as a solution to the child labor problem may be weak. |
| Keywords: | Migration, remittances, general equilibrium |
| JEL: | O11 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:1037&r=cwa |
| By: | Giordano Mion (National Bank of Belgium, Research Department; London School of Economics, Department of Geography and Environment); Hylke Vandenbussche (Université Catholique de Louvain; LICOS); Linke Zhu (Catholic University of Leuven; LICOS) |
| Abstract: | We use Belgian firm-level data over the period 1996-2007 to analyze the impact of imports from China and other low-wage countries on firm growth, exit, and skill upgrading in manufacturing. For this purpose we use both industry-level and firm-level imports by country of origin and distinguish between firm-level outsourcing of final versus intermediate goods. Results indicate that, both industry-level import competition and firm-level outsourcing to China reduce firm employment growth and induce skill upgrading. In contrast, industry-level imports have no effect on Belgian firm survival, while firm-level outsourcing of finished goods to China even increased firm's probability of survival. In terms of skill upgrading, the effect of Chinese imports is large. Industry import competition from China accounts for 42% (20%) of the within firm increase in the share of skilled workers (non-production workers) in Belgian manufacturing over the period of our analysis, but these effects, as well as the employment reducing effect, remain mainly in low-tech industries. Firm-level outsourcing to China further accounts for a small but significant increase in the share of nonproduction workers. This change in employment structure is in line with predictions of offshoring models and Schott's (2008) 'moving up the quality ladder' story. All these results are robust to IV estimation |
| Keywords: | import competition, outsourcing, China, skill upgrading |
| JEL: | F11 F14 F16 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:reswpp:201009-22&r=cwa |
| By: | C. Franco; E. Gerussi |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:bol:prinwp:015&r=cwa |
| By: | Valentina Bosetti (Fondazione Eni Enrico Mattei, CESifo and CMCC); Carlo Carraro (Fondazione Eni Enrico Mattei, University of Venice, CEPR, CESifo and CMCC); Massimo Tavoni (Fondazione Eni Enrico Mattei, Princeton University and CMCC) |
| Abstract: | This paper analyzes the economic and investment implications of a series of climate mitigation scenarios, characterized by different levels of ambition in terms of long term stabilization goals and the transition to attain them. In particular, the implications of fairly ambitious scenarios are investigated for the first time by means of the model WITCH. Although milder climate objectives can be achieved at moderate costs, our results show that stringent stabilization paths, compatible with the target of the European Union and the G8, might have important economic repercussions. The timing of mitigation action influences the cost of meeting a target as well the stringency of the targets we can aspire to. To contain costs it is crucial to rely on a wide mitigation portfolio. Strong reductions in energy consumption through enhanced energy efficiency and life style changes are needed to achieve stringent climate policies. The analysis carried out in the present paper contains several idealistic assumptions that could be violated in the real world where some technologies may not be fully available, technology transfers and diffusion are imperfect, some world regions may not accept to reduce their GHG emissions, trading might be limited to some sectors or to a fraction of the total abatement effort, etc. This would increase the challenge of climate protection and the costs of reducing GHG emissions. |
| Keywords: | Climate Policy, Stabilization Costs |
| JEL: | C72 H23 Q25 Q28 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.62&r=cwa |
| By: | Sheila M. Olmstead (chool of Forestry and Environmental Studies, Yale University, Resources for the Future); Robert N. Stavins (John F. Kennedy School of Government, Harvard University, Resources for the Future, National Bureau of Economic Research) |
| Abstract: | We describe three essential elements of an effective post-2012 international global climate policy architecture: a means to ensure that key industrialized and developing nations are involved in differentiated but meaningful ways; an emphasis on an extended time path of targets; and inclusion of flexible market-based policy instruments to keep costs down and facilitate international equity. This architecture is consistent with fundamental aspects of the science, economics, and politics of global climate change; addresses specific shortcomings of the Kyoto Protocol; and builds upon the foundation of the United Nations Framework Convention on Climate Change. |
| Keywords: | Global Climate Change, Global Warming, Policy Architecture, Kyoto Protocol |
| JEL: | Q54 Q58 Q48 Q39 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2010.97&r=cwa |