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22. Stunted Growth: Why Don't African Firms Create More Jobs?
- Author:
- Vijaya Ramachandran, Leonardo Iacovone, and Martin Schmidt
- Publication Date:
- 02-2014
- Content Type:
- Working Paper
- Institution:
- Center for Global Development (CGD)
- Abstract:
- Many countries in Africa suffer high rates of underemployment or low rates of productive employment; many also anticipate large numbers of people to enter the workforce in the near future. This paper asks the question: Are African firms creating fewer jobs than those located elsewhere? And, if so, why? One reason may be that weak business environments slow the growth of firms and distort the allocation of resources away from better-performing firms, hence reducing their potential for job creation.
- Topic:
- Economics, Industrial Policy, International Trade and Finance, Markets, and Fragile/Failed State
- Political Geography:
- Africa and Israel
23. Rethinking the Financial Design of the World Bank
- Author:
- Devesh Kapur and Arjun Raychaudhuri
- Publication Date:
- 01-2014
- Content Type:
- Working Paper
- Institution:
- Center for Global Development (CGD)
- Abstract:
- Since their inception, through 2012, the institutions comprising the World Bank group have been involved in lending nearly a trillion dollars. In this paper, we focus on the IBRD, which is the core of the World Bank. The IBRD has the potential to continue to grow and be an important player in official financial flows, supporting critical long-term development projects with large social returns, in sectors ranging from infrastructure, social sectors, or environment.
- Topic:
- Development, Economics, Environment, Foreign Aid, Infrastructure, and World Bank
- Political Geography:
- Europe
24. Estimating Illicit Flows of Capital via Trade Mispricing: A Forensic Analysis of Data on Switzerland
- Author:
- Alex Cobham, Petr Janský, and Alex Prats
- Publication Date:
- 01-2014
- Content Type:
- Working Paper
- Institution:
- Center for Global Development (CGD)
- Abstract:
- This paper assesses the role of Switzerland as the leading hub for global commodities trading, in terms of the patterns of prices received by original exporting countries and subsequently by Switzerland and other jurisdictions. We find support for the hypotheses that (i) the average prices for commodity exports from developing countries to Switzerland are lower than those to other jurisdictions; and that (ii) Switzerland declares higher (re-)export prices for those commodities than do other jurisdictions. This pattern implies a potential capital loss for commodity exporting developing countries and we provide a range of estimates of that loss - each of which suggests the scale is substantial (the most conservative is around $8 billion a year) and that the issue merits greater research and policy attention. An important first step would be a Swiss commitment to meet international norms of trade transparency.
- Topic:
- Economics, Industrial Policy, International Trade and Finance, Markets, and Developing World
- Political Geography:
- Europe and Switzerland
25. Scarcity without Leviathan: The Violent Effects of Cocaine Supply Shortages in the Mexican Drug War
- Author:
- Juan Camilo Castillo, Daniel Mejia, and Pascual Restrepo
- Publication Date:
- 02-2014
- Content Type:
- Working Paper
- Institution:
- Center for Global Development (CGD)
- Abstract:
- Using the case of the cocaine trade in Mexico as a relevant and salient example, this paper shows that scarcity leads to violence in markets without third party enforcement. We construct a model in which supply shortages increase total revenue when demand is inelastic. If property rights over revenues are not well defined because of the lack of reliable third party enforcement, the incentives to prey on others and avoid predation by exercising violence increase with scarcity, thus increasing violence. We test our model and the proposed channel using data for the cocaine trade in Mexico. We found that exogenous supply shocks originated in changes in the amount of cocaine seized in Colombia (Mexico's main cocaine supplier) create scarcity and increase drug-related violence in Mexico.
- Topic:
- Crime, Economics, War on Drugs, Narcotics Trafficking, and Law Enforcement
- Political Geography:
- Colombia, Latin America, and Mexico
26. Development as Diffusion: Manufacturing Productivity and Sub-Saharan Africa's Missing Middle
- Author:
- Vijaya Ramachandran, Alan Gelb, and Christian J. Meyer
- Publication Date:
- 02-2014
- Content Type:
- Working Paper
- Institution:
- Center for Global Development (CGD)
- Abstract:
- We consider economic development of Sub-Saharan Africa from the perspective of slow convergence of productivity, both across sectors and across firms within sectors. Why have "productivity enclaves", islands of high productivity in a sea of smaller low-productivity firms, not diffused more rapidly? We summarize and analyze three sets of factors: First, the poor business climate, which constrains the allocation of production factors between sectors and firms. Second, the complex political economy of business-government relations in Africa's small economies. Third, the distribution of firm capabilities. The roots of these factors lie in Africa's geography and its distinctive history, including the legacy of its colonial period on state formation and market structure.
- Topic:
- Development, Economics, Industrial Policy, and Markets
- Political Geography:
- Africa
27. From Maize to Haze: Agricultural Shocks and the Growth of the Mexican Drug Sector
- Author:
- Oeindrila Dube, Omar Garcia-Ponce, and Kevin Thom
- Publication Date:
- 02-2014
- Content Type:
- Working Paper
- Institution:
- Center for Global Development (CGD)
- Abstract:
- We examine how commodity price shocks experienced by rural producers affect the drug trade in Mexico. Our analysis exploits exogenous movements in the Mexican maize price stemming from weather conditions in U.S. maize-growing regions, as well as export flows of other major maize producers. Using data on over 2,200 municipios spanning 1990-2010, we show that lower prices differentially increased the cultivation of both marijuana and opium poppies in municipios more climatically suited to growing maize. This increase was accompanied by differentially lower rural wages, suggesting that households planted more drug crops in response to the decreased income generating potential of maize farming.
- Topic:
- Agriculture, Economics, Poverty, War on Drugs, and Narcotics Trafficking
- Political Geography:
- Latin America and Mexico
28. Migration as a Strategy for Household Finance: A Research Agenda on Remittances, Payments, and Development
- Author:
- Michael Clemens and Timothy N. Ogden
- Publication Date:
- 02-2014
- Content Type:
- Working Paper
- Institution:
- Center for Global Development (CGD)
- Abstract:
- It is time to fundamentally reframe the research agenda on remittances, payments, and development. We describe many of the research questions that now dominate the literature and why they lead us to uninformative answers. We propose reasons why these questions dominate, the most important of which is that researchers tend to view remittances as states do (as windfall income) rather than as families do (as returns on investment). Migration is, among other things, a strategy for financial management in poor households: location is an asset, migration an investment. This shift of perspective leads to much more fruitful research questions that have been relatively neglected. We suggest 12 such questions.
- Topic:
- Economics, Migration, Political Economy, Poverty, Labor Issues, and Immigration
29. What Drives Deforestation and What Stops It? A Meta-Analysis of Spatially Explicit Econometric Studies
- Author:
- Jonah Busch and Kalifi Ferretti-Gallon
- Publication Date:
- 04-2014
- Content Type:
- Working Paper
- Institution:
- Center for Global Development (CGD)
- Abstract:
- We have constructed a comprehensive database of 117 spatially explicit econometric studies of deforestation published in peer-reviewed academic journals from 1996-2013. We present a metaanalysis of what drives deforestation and what stops it, based on the signs and significance of 5909 coefficients in 554 multivariate analyses. We find that forests are more likely to be cleared where economic returns to agriculture and pasture are higher, either due to more favorable climatological and topographic conditions, or due to lower costs of clearing forest and transporting products to market. Timber activity, land tenure security, and community demographics do not show a consistent association with either higher or lower deforestation. Population is consistently associated with greater deforestation, and poverty is consistently associated with lower deforestation, but in both cases endogeneity makes a causal link difficult to infer. Promising approaches for stopping deforestation include reducing the intrusion of road networks into remote forested areas; targeting protected areas to regions where forests face higher threat; tying rural income support to the maintenance of forest resources through payments for ecosystem services; and insulating the forest frontier from the price effects of demand for agricultural commodities.
- Topic:
- Development, Economics, Environment, and Industrial Policy
- Political Geography:
- United Nations
30. Comparing the Incidence of Taxes and Social Spending in Brazil and the United States
- Author:
- Nora Lustig, Timothy Smeeding, Sean Higgins, and Whitney Ruble
- Publication Date:
- 03-2014
- Content Type:
- Working Paper
- Institution:
- Center for Global Development (CGD)
- Abstract:
- We perform the first comprehensive fiscal incidence analyses in Brazil and the US, including direct cash and food transfers, targeted housing and heating subsidies, public spending on education and health, and personal income, payroll, corporate income, property, and expenditure taxes. In both countries, primary spending is close to 40 percent of GDP. The US achieves higher redistribution through direct taxes and transfers, primarily due to underutilization of the personal income tax in Brazil and the fact that Brazil's highly progressive cash and food transfer programs are small while larger transfer programs are less progressive. However, when health and non-tertiary education spending are added to income using the government cost approach, the two countries achieve similar levels of redistribution. This result may be a reflection of better-off households in Brazil opting out of public services due to quality concerns rather than a result of government effort to make spending more equitable.
- Topic:
- Economics, Political Economy, Monetary Policy, and Food
- Political Geography:
- United States and Brazil