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1. Responding to Economic and Ecological Deficits

Author:
Jonathan M. Harris
Publication Date:
04-2019
Content Type:
Working Paper
Institution:
Global Development and Environment Institute at Tufts University
Abstract:
Macroeconomic theory was shaken up in the wake of the financial crisis, with neoclassical approaches proving inadequate to analyze or respond to the need for policy action. Despite efforts to return to more conventional macro perspectives, a continuing re-evaluation of economic theory has important implications both for traditional economic concerns such as employment and inflation, and for ecological issues and the climate crisis. An emerging “green Keynesian” approach combines a radical Keynesian analysis with ecological priorities such as drastic carbon emissions reduction. One important aspect of this reorientation of theory is the analysis of economic and ecological deficits. In the years since the financial crisis, both economic and ecological deficits have increased. This poses a challenge for “green Keynesian” policy. It is therefore necessary to have effective analyses to measure and respond to ecological deficits, as well as policy measures to deal with economic deficits. This paper proposes a new approach to measuring ecological deficits, and a new perspective on economic deficits and debt. Since there is no single unitary measure for depletion or degradation of different kinds of resources, it is necessary to measure different kinds of deficit for different resources, with a goal of reducing all of these to zero or replacing them with surpluses. The analysis involves exploring the specific economic implications of reducing both ecological and economic deficits, which involves re-conceptualizing economic growth and "degrowth", and provides an alternative to current U.S. policies under the Trump administration, which are contributing to widening both deficits.
Topic:
Climate Change, Debt, Financial Crisis, and Macroeconomics
Political Geography:
Global Focus

2. Do Patents Lead to Market Concentration and Excess Profits?

Author:
Padmashree Gehl Sampath and Walter Park
Publication Date:
04-2019
Content Type:
Working Paper
Institution:
Global Development and Environment Institute at Tufts University
Abstract:
Market concentration in technology intensive industries has been a subject of interest to both scholars and policy analysts. This paper provides a first empirical assessment on how the patenting system contributes to market concentration and the generation of economic rents in three key sectors – pharmaceuticals, chemicals and ICTs. Using data for US multinationals and their foreign affiliates on the one hand, and locally registered private and public companies in Brazil, India and China, we conclude that the concentration of patent ownership is found significantly to relate to market concentration in the USA. In developing countries such as Brazil, India, and China, a strengthening of patent rights has contributed to greater returns for affiliates of U.S. companies but has not stimulated their R&D intensity. The affiliates of U.S. multinationals have enjoyed greater profitability relative to their local competitors in Brazil, India, and China. The paper draws implications for the setting of intellectual property policy and offers suggestions on the role of competition policy in curbing market concentration and related effects on inequality and access.
Topic:
Markets, Inequality, and Patents
Political Geography:
Global Focus

3. The Rising Importance of Non-tariff Measures and their use in Free Trade Agreements Impact Assessments

Author:
Monica Hernandez
Publication Date:
06-2019
Content Type:
Working Paper
Institution:
Global Development and Environment Institute at Tufts University
Abstract:
This research examines non-tariff measures (NTMs) and their use in impact assessments of free trade agreements (FTAs) based on computable general equilibrium models (CGE) as well as its implications. We show that projected gains related to FTAs tend to rely on removing ‘actionable’ NTMs and that, usually, impact assessments and empirical studies that provide this recommendation lack case-specific explanations behind actionability as well as of the channels and the way NTM elimination is supposed to improve welfare. We also find that the estimated economic gains from FTAs based on CGE models tend to be small and based on a high percentage of NTM elimination, which underestimates the social significance of these measures. Since NTMs comprise measures that target not only economic aspects but also social and environmental ones, indiscriminate NTM elimination suggests that small gains may come at a high cost.
Topic:
International Cooperation, Tax Systems, Free Trade, and Non-Tariff Measures
Political Geography:
Global Focus

4. Financialization, Trade, and Investment Agreements: Through the Looking Glass or Through the Realities of Income Distribution and Government Policy?

Author:
Alex Izurieta, Pierre Kohler, and Juan Pizarro
Publication Date:
09-2018
Content Type:
Working Paper
Institution:
Global Development and Environment Institute at Tufts University
Abstract:
This paper assesses the effects of trade and investment agreements on income distribution and government policy. The critical process underpinning these effects is the rise of ‘financialization’. Global patterns of greater financialization and of worsening functional income distribution as well as tighter fiscal stances are identified in the data. Tests are conducted by combining financial statistics with databases of bilateral investment agreements and free trade agreements, as well as data generated by the UN Global Policy Model that encompasses several fiscal policy instruments. The empirical validation of these relationships brings to the fore the policy-oriented debate about the purported benefits of modern-era ‘comprehensive’ trade and investment agreements such as TTIP, TTP and CETA. The authors corroborate the findings of their respective earlier studies of these agreements and reiterate their call for caution. To preserve policy space and to avert increases of inequality, policy-makers should resist pressures to get their economies locked in such agreements and should look instead for sustainable forms of international policy coordination.
Topic:
International Cooperation, United Nations, Investment, and Trade
Political Geography:
Global Focus

5. Do Trade and Investment (Agreements) Foster Development or Inequality?

Author:
Pierre Kohler and Francis Cripps
Publication Date:
10-2018
Content Type:
Working Paper
Institution:
Global Development and Environment Institute at Tufts University
Abstract:
This paper proposes to revisit the debate on trade and investment agreements (TIAs), development and inequality, looking at the role of Global Value Chains (GVCs) and trans- national corporations (TNCs). It first presents stylized facts about trade and investment (agreements), declining global economic growth and rising inequality under the latest round of globalization. It then provides a long-run perspective on the mixed blessings of external opening, summarizing some key contributions of the mainstream literature, which are converging with long-standing research findings of more heterodox economists, and the eroding consensus today. Based on this stock-taking, it takes a fresh critical look at the TIAs-GVCs-TNCs nexus and their impact. Using data on value-added in trade and new firm-level data from the consolidated financial statements of the top 2000 TNCs going back to 1995, it examines whether the fragmentation of production along GVCs led to positive structural change or rather stimulated unsustainable trends in extractive and FIRE sectors. It then turns to the role of TNC-driven GVCs as a vehicle for economic concentration. Finally, it presents evidence linking TIAs and their correlates to rising inequality. Key findings include the fact that the ratio of top 2000 TNCs profits over revenues increased by 58 percent between 1995 and 2015. Moreover, the rise in top 2000 TNCs profits accounts for 69 percent of the 2.5 percentage points decline in the global labour income share between 1995 and 2015, with the correlation coefficient between annual changes in both variables as high as 0.82. The paper concludes by calling for a less ideological policy debate on TIAs, which acknowledges the mixed blessings of external financial and trade opening, especially their negative distributional impact and destabilizing macro-financial feedback effects, which both call for policy intervention. As an alternative to short-sighted protectionism, it further discusses possible options for anticipating undesirable effects arising from TIAs (e.g. rising carbon emissions, economic instability, inequality, etc.) and addressing those in TIAs themselves.
Topic:
Inequality, Investment, Trade, and transnationalism
Political Geography:
Global Focus

6. Industrial Policy 4.0 Promoting Transformation in the Digital Economy

Author:
Padmashree Gehl Sampath
Publication Date:
12-2018
Content Type:
Working Paper
Institution:
Global Development and Environment Institute at Tufts University
Abstract:
The rise of the fourth industrial revolution (IR) is deeply embedded in a wider context of privatization of knowledge, rising costs of innovation and uneven distribution of capacity between countries. But debates on a ‘balanced’ policy framework to tackle these issues have until now floundered to address some of the fundamental dilemmas of our times. Will the fourth IR render the manufacturing-led model of economic development a thing of the past? Are there new boundaries for innovation and industry in the fourth IR? What should policy do in such an uncertain technological era? This paper addresses these crucial questions and makes a case for comprehensive digital industrial policies that are differentiated and rooted in the broader reality of development and globalization in the fourth IR. The paper maps the new boundaries for innovation and industrialization, after which, it elaborates in detail the market and institution failures in the platform economy that arise from the highly complex nature of technological change and a lack of effective policy oversight. It offers evidence to the effect that although manufacturing as we knew it – with its effects on low and unskilled labour and employment creation - might not continue to exist, it will continue to thrive using high technology skills and R&D, within a new model of industrialization where the knowledge-component of all sectors – agriculture, manufacturing and services – will be on the rise. Countries therefore, need a more nuanced and differentiated industrial policy 4.0 framework that can: (a) sustain overall industrial performance, (b) in a way that helps close the gap to the frontier in a constantly evolving technological landscape, (c) while mitigating the adverse consequences for society, in terms of employment, privacy and latent social fabric. The paper proposes the components of such an industrial policy 4.0 in detail in its concluding section.
Topic:
Industrial Policy, Science and Technology, Employment, and Digital Economy
Political Geography:
Global Focus

7. Missing from the Mainstream: The Biophysical Basis of Production and the Public Economy

Author:
June Sekera
Publication Date:
05-2017
Content Type:
Working Paper
Institution:
Global Development and Environment Institute at Tufts University
Abstract:
Just as mainstream economics neglects the biophysical basis of production and disregards energy as the most fundamental input, it likewise ignores the existence of the public economy. Both types of denialism threaten the ability of societies to develop energy solutions that can meet the needs of the polity. This article calls for a new theory of the public economy and it outlines elements of such a theory. Both a biophysical economics and a new public economics are needed to address the energy challenges confronting modern societies.
Topic:
Energy Policy, Economic Theory, and Public Sector
Political Geography:
Global Focus

8. Core Support for the New Economy

Author:
Neva Goodwin
Publication Date:
06-2016
Content Type:
Working Paper
Institution:
Global Development and Environment Institute at Tufts University
Abstract:
This paper proposes an income guarantee that would be defined as compensation for household activities such as childcare, food preparation, care of elderly or ill persons in the home, maintenance of the home and of household vehicles and appliances, and household-based transportation. I will call it Core Support, or CS. The Core Support proposal is put forth as a way to achieve a number of important goals, including reduction of poverty and inequality, increased fairness and better old-age security, and improved possibilities for good child care and education. It could replace much of the burdensome and expensive apparatus of welfare and some other government programs. Rather than providing a handout, it would expressly reward and enable some of the unpaid work on which every society depends, validating these activities as legitimate labor. As described in this proposal, it could have a significant impact in healthy redefinition of gender norms. In addition, the proposed program would reduce the requirement for all members of society to take paid work, thus rebalancing power between employers and employees. By reducing the pressure to create jobs, regardless of their quality or their impact, it would make it easier to cease production of socially or environmentally harmful goods and services. However, it would create a not inconsiderable amount of new work in managing the program. Depending on whether there is too much, or too little, demand for labor in the macroeconomy, this could be desirable, or not. This idea builds on literature on Basic Income Guarantees (BIG), as well as on some work in feminist economics. The latter tends to be skeptical of BIG proposals. It is hoped that the CS proposal, by addressing intra-household allocations – a topic normally absent from BIG proposals – can respond to this skepticism by showing how a basic income system can be designed so as to promote deep cultural changes in gender norms and widen respect for those who do the essential core work of a society. If it is assumed that the CS funds depend on taxable income, then it would be necessary for the economy in which it is implemented to have a preexisting flow of money from the sale of privately produced goods and services; thus it would appear that this approach would not be feasible in poor countries. Hence, given a focus on the U.S. context, some attention will be paid to the question of how “wealthy” this country will be in coming decades. It is possible to imagine macroeconomic conditions in which people are “poor” because they lack money to buy needed goods and services that are in fact being produced in the economy. In this case the central bank could create money to be distributed in amounts that would enable local trade, benefiting both producers and households, and possibly leading to higher levels of output.
Topic:
Gender Issues, Poverty, Women, Inequality, and Economic Inequality
Political Geography:
Global Focus

9. Economics and the Near-Death Experience of Democratic Governance

Author:
June Sekera
Publication Date:
05-2015
Content Type:
Working Paper
Institution:
Global Development and Environment Institute at Tufts University
Abstract:
Non-market public production makes up a quarter to a half or more of all economic activity in advanced democratic nation-states. Yet here in the United States the public economy’s ability to function productively on behalf of the citizenry is seriously imperiled. In this paper I trace the connection between mainstream, market-centric economics and what James Galbraith has called “the collapse of the public governing capacity.” Marketization and its confederate, privatization, have led, sometimes intentionally, to the evisceration of governmental capacity, the downsizing of democracy and the dismantling of traditions of responsible public administration that are grounded in law and the Constitution. Over the last decades, apostles of the market have intruded upon government a pseudo-market with outcomes ranging from the unfortunate to the disastrous. So-called “New Public Management” –“a child of neoclassical economics,” – has colonized and weakened every level of public administration. Hollowed out through the cathartic of a “competition prescription,” the public sector time and again seems to fail us, so systems of performance measurement transplanted from profit-driven business models are being imposed across government, ostensibly to improve results and better supply what the populace wants and needs, but instead often leaving harm in their wake. We find our most basic public services and rights in jeopardy: from clean air and water to unencumbered judicial due process. While government “reinventors” boast about shrinking government, in reality a “submerged state” mushrooms through an explosion of private profit- making contractors and behind the hidden hand of tax expenditures. Yet, as I argue in this paper, there is no viable explanatory theory of the public non-market economy or of production within it, nor any consensus about how to measure public purpose or assess results in the public domain. Instead, a market-centric economics prevails in textbooks, university teaching and public policy, while private, market-mimicking motivations and values displace public purpose in measurement schemes.
Topic:
Governance, Democracy, Public Sector, Private Sector, and Non-Market Economy
Political Geography:
Global Focus