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1. Financing Water in Africa

Author:
Kate Bayliss
Publication Date:
08-2013
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
Despite repeated policy initiatives from donors and governments, the human and economic cost of continued lack of access to safe water and sanitation in sub‐Saharan Africa remains high. This paper shows that a radical reorientation of policy is needed to achieve a significant increase in investment finance in order to raise access levels. Rather than continuing to pursue policies that have failed for the past two decades, such as bringing in the private sector and raising prices to cost recovery levels, attention needs to shift to wider aspects of domestic revenue mobilization to support public investment.
Topic:
Privatization, Water, Inequality, Investment, and Private Sector
Political Geography:
Africa

2. Capital Flows to Emerging Markets: An alternative Theoretical Framework

Author:
Bruno Bonizzi
Publication Date:
11-2013
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
This paper represents a theoretical contribution to the analysis of international capital flows. It outlines an alternative theoretical framework based on Post-Keynesian monetary theory, and in particular on Hyman Minsky’s Wall Street paradigm and concept of Money-manager capitalism and Jan Toporowski’s theory of capital market inflation. The key aspects of such an approach are, firstly, that in a monetary analysis capital flows need to be understood as “flows of funds”, as opposed to the traditional understanding of capital flows based on “real” decision, such as saving and investment. A consequence of this is the need of focusing on gross rather than net capital flows. Secondly, when considering emerging markets, the asymmetric nature of the international monetary system must be stressed. Thirdly, it is important to understand the specific forms that capital flows take: in today’s world, pension funds and other institutional investors — alongside banks — are key players in the financial markets, and their role in shaping capital flows to emerging markets must be explicitly recognised. This paper synthesises these elements by understanding capital flows as the result of institutional investors portfolio choice. Along the lines of Minsky and Toporowski, portfolio choice by institutional investors need to be assessed in relation to their balance sheet structure, beside risk/return trade-offs and general state of risk aversion
Topic:
Emerging Markets, Capital Flows, Investment, and Economic Theory
Political Geography:
Global Focus

3. Corporate Liquidity and Financial Fragility: The Role of Investment, Debt and Interest

Author:
Jan Toporowski
Publication Date:
03-2012
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
The paper addresses the issue of how debt deflation may arise in a capitalist economy with a sophisticated credit system. It argues that the standard argument of debt deflationists, that debt-financed investment causes a build-up of unsustainable investment, fails to recognise that debt is back by credit. A corollary of this is that the rate of interest is not a factor in investment decisions. Financial fragility is caused by heterogeneity of balance sheets, debt financed operations in financial markets and insufficient debt-financed investment, rather than too much such investment.
Topic:
Debt, Markets, Investment, and Credit
Political Geography:
Global Focus

4. Functional Distribution of Income and Economic Growth in the Chinese Economy, 1978-2007

Author:
Ricardo Molero Simarro
Publication Date:
02-2011
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
This paper seeks to analyse the relationship between functional distribution of income, aggregate demand and growth in Chinese reform economy. For this purpose the Bhaduri-Marglin Model is used, stating the theoretical possibility of both profit-led and wage- led growth regimes. Subsequently, the principal literature on the evolution of factor‟s shares in China is reviewed. The statistical series for the period 1978-2007 are reconstructed in order to carry out our analysis of the relations between capital‟s share and investment, on one hand; and labour‟s share and consumption, on the other. Supported by the Model‟s preliminary estimations, it is argued that Chinese growth has been largely profit-driven. Finally, the implications are presented vis-a-vis concerning Chinese economic prospects.
Topic:
Development, Economics, Reform, and Investment
Political Geography:
China and Asia

5. Continental Drift: China and the Global Economic Crisis

Author:
Sangaralingam Ramesh
Publication Date:
01-2010
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
The economic prosperity associated with the Coastal regions of China has not ‘trickled’ down to the Western and Central regions sufficiently enough to eliminate the disparities in income between the regions. Indeed, the disparities between China’s Coastal regions and its other regions continue to deepen. In the Mao period, central planners held the mistaken belief that investment in the railways and development of heavy industry in the interior parts of China would bring prosperity. In the reform period and beyond, the focus of economic development in China has been to take advantage of China’s low labour costs. In the earlier part of the reform era the focus of economic reforms centred on the development of Special Economic Zones (SEZ’s) .In the second phase of reform policies were centred on the High Technology Development Zones [NHTIDZ’s].A characteristic feature of both SEZ’s and NHTIDZ’s is that they represent a concentration of infrastructure within a predefined spatial area. The current global economic crisis has presented China with a unique opportunity to deepen the economic transformation of the coastal regions by shifting the focus of economic development to its interior regions. Indeed, the government’s efforts to stave off the effects of the global crisis on the Chinese economy by attempting to maintain economic growth above 8% by utilising an expansive fiscal stimulus has had the effect of initiating the transformation of the interior Chinese economy. This then represents China’s third stage of economic development since 1949. This paper will examine the factors leading to China’s third stage of economic development which has resulted from the global economic crisis – the Continental drift of the economic development of China.
Topic:
Infrastructure, Global Financial Crisis, Investment, Stimulus, and Prosperity
Political Geography:
China and Asia

6. A Theory of Capital Rationing

Author:
Jan Toporowski
Publication Date:
09-2010
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
This paper revisits some of the issues originally put forward by the author as the theory of capital market inflation, in the book The End of Finance (Toporowski 2000). The paper makes much clearer the key assumptions and relationships between the operations of the capital market dominated by institutional investors, and the balance sheets of companies. In this way, it presents a theory of how macroeconomic dynamics may be affected by disequilibrium in the capital market. The first part of the paper examines the demand for new equity issues by institutional investors, namely insurance companies and pension funds. In the second part of the paper it is argued that the tendency of pension funds to mature may be a factor in forcing companies into debt and thus discouraging their investment and restricting their cash flow. The tendency towards forced indebtedness may be reinforced by an inelastic demand for capital by banks. The third part of the paper argues that the inelastic supply of capital in the capital market gives rise to processes of capital market inflation or deflation. The first of these may make banks more fragile. The second may contribute to deflationary processes in the macroeconomy. A fourth section argues that further instability is added by international capital market integration.
Topic:
Debt, Markets, Banks, and Investment
Political Geography:
Global Focus

7. On the Current Links Capital Markets and Investment in MENA Countries

Author:
Randa Alami
Publication Date:
03-2009
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
This paper considers the current status of some Middle Eastern markets (Arab countries excluding the Gulf countries). These markets have matured significantly over the last six years, and this helped the concurrent strong economic and investment growth. Evidence gathered here indicates the markets have become a minor source of corporate investment, mobilising both domestic and foreign investors. It allowed them to capture both part of the surge in intra-regional capital flows, and part of rising Foreign Direct Investment. A more enhanced economic impact is constrained by their nascent nature, their volatility and illiquidity, and by what remain poor governance structures. Moreover, these Arab stock markets are still the realm of very large corporations: they have only began to address the needs of smaller entreprises, with venture capital and private equity funds at an embryonic stage. They also support a limited number of economic sectors, while governments and top income elites continue to dominate shareholding. They cannot and should not be relied upon to fulfil all the financing needs of the private sector. This message has been reinforced by the current world crisis, which ended the euphoric but unrealistic expectations that regional capital markets will continue to expand as rapidly as they did between 2002 and 2008.
Topic:
Markets, Foreign Direct Investment, Capitalism, Economic growth, Investment, and Corporations
Political Geography:
Middle East