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31. China and the Multilateral Trading System

Author:
Robert Z. Lawrence
Publication Date:
10-2006
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
This paper reviews China's multilateral and preferential trade policies. It reviews the demanding terms of China's WTO accession, its current tariff and trade regime and its participation in the Doha Round negotiations and the institution's regular activities. The analysis concludes that China's trade policies are broadly supportive of a rules based multilateral trading order and its behavior at the WTO is that of a status quo power rather than one seeking major systemic changes. The discussion then turns to China's regional trade initiatives. China has been extremely active in negotiating these and their implications remain uncertain. Concerns about an East Asian fortress, though, appear misplaced. Directly, and through their impact in inducing others to respond, these FTAs could provide a powerful impetus to the process of competitive global liberalization. Countries that do implement agreements with China will find it relatively easy to open their markets to other developing countries. There is also a risk however that the proliferation of FTAs will lead to web of overlapping agreements that could make the trading system unnecessarily complex.
Topic:
International Relations, Development, and International Trade and Finance
Political Geography:
China and Asia

32. Automating Public Financial Management in Developing Countries

Author:
Stephen Peterson
Publication Date:
10-2006
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
The principal recommendation to developing countries for automating their financial systems is to adopt off ‐ the ‐ shelf integrated financial information system s (IFMISs). The recommendation to adopt an IFMIS goes beyond a strategy of automation. IFMISs are often viewed as the driver of financial reform in developing countries. Experience shows that these systems usually fail or under perform yet research to date has not adequately explained their poor performance. This paper presents two frameworks and a case study from Ethiopia which illustrates an approach to automating financial systems that has worked. The first framework distinguishes between business process innovation (reengineering) and process change. Process innovation is a comprehensive change of procedures and organization driven by information technology. Process change is an incremental strategy driven by procedural reform and supported by information technology. Process change is far less risky than process innovation and is a more appropriate approach because the financial systems in most developing countries are relatively sound and thus provide a basis for improvement. The conventional off ‐ the ‐ shelf IFMIS reform is principally process innovation which exceeds the capacity of most public bureaucracies in developing countries. The second framework concerns the three factors of risk to an automation project: scope, schedule and budget. The availability of concessionary aid to many developing countries means there is not a hard budget constraint to automation projects and there is little discipline with schedule and scope. The virtual absence of a financial and social cost ‐ benefit analysis of these large and questionable investments is a serious failing in the use of development assistance and loans. The custom IFMIS developed to support the Ethiopian reform is presented as an example of a successful low risk strategy of automation in a difficult environment. The case illustrates the two frameworks as the reform focused on process change and the automation component was delivered on budget, ahead of schedule and beyond specification. The Ethiopian case demonstrates several lessons about automation in developing countries: the virtue of process change, the role of automation to support not drive financial reform, the virtue of 'optimal obscurity' of automation projects given that high level commitment cannot be assumed, and the value of an incremental development strategy of frequent operational upgrades of information systems.
Topic:
International Relations, Development, International Trade and Finance, and Third World
Political Geography:
Ethiopia

33. Understanding South Africa's Economic Puzzles

Author:
Dani Rodrik
Publication Date:
09-2006
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
South Africa has undergone a remarkable transformation since its democratic transition in 1994, but economic growth and employment generation have been disappointing. Most worryingly, unemployment is currently among the highest in the world. While the proximate cause of high unemployment is that prevailing wages levels are too high, the deeper cause lies elsewhere, and is intimately connected to the inability of the South African to generate much growth momentum in the past decade. High unemployment and low growth are both ultimately the result of the shrinkage of the non-mineral tradable sector since the early 1990s. The weakness in particular of export-oriented manufacturing has deprived South Africa from growth opportunities as well as from job creation at the relatively low end of the skill distribution. Econometric analysis identifies the decline in the relative profitability of manufacturing in the 1990s as the most important contributor to the lack of vitality in that sector.
Topic:
International Relations, Development, and International Trade and Finance
Political Geography:
Africa and South Africa

34. South Africa's Export Predicament

Author:
Bailey Klinger and Ricardo Hausmann
Publication Date:
09-2006
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
This paper explores export performance in South Africa over the past 50 years, and concludes that a lagging process of structural transformation is part of the explanation for stagnant exports per capita. Slow structural transformation in South Africa is found to be a consequence of the peripheral nature of South Africa's productive capabilities. We apply new tools to evaluate South Africa's future prospects for structural transformation, as well as to explore the sector al priorities of the DTI's draft industrial strategy. We then discuss policy conclusions, advocating an 'open-architecture' industrial policy where the methods applied herein are but one tool to screen private sector requests for sector-specific coordination and public goods.
Topic:
International Relations, Development, and International Trade and Finance
Political Geography:
Africa and South Africa

35. Crime, Justice, and Growth in South Africa: Toward a Plausible Contribution from Criminal Justice to Economic Growth

Author:
Christopher Stone
Publication Date:
09-2006
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Crime in South Africa is high and widely believed to restrain investment. Nevertheless, both the mechanisms through which crime constrains growth and the actions that might be taken to loosen its grip are poorly understood. In light of the limited knowledge in the field and the limited capacity of criminal justice institutions, this paper proposes focusing on two issues: (1) the costs of crime to business, especially household-based enterprises in low-income settlements, and (2) the perception of violent crime. In both cases, the paper proposes a cyclical process of iterative innovation in which government seeks to solve narrowly circumscribed crime problems, and then leverages each success to generate wider hope and confidence in the criminal justice system.
Topic:
International Relations, Crime, and Development
Political Geography:
Africa

36. Caste Embeddedness and Microfinance: Savings and Credit Cooperatives in Andhra Pradesh, India

Author:
Guy Stuart
Publication Date:
09-2006
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
This paper examines how the introduction of a new set of institutional practices through the creation of new organizations bump up against, but also build on, the existing social structure and practices of the setting in which they are introduced. In this case, the new practices were cooperative governance and financial accounting practices introduced through the medium of cooperative organizations into villages in Andhra Pradesh, by the Cooperative Development Foundation (CDF) during the 1990s. The paper demonstrates how the CDF both built on and challenged the existing social structure of the villages in which their cooperatives developed. In particular, the paper shows that the new institutional rules the cooperatives implemented interacted with the existing caste and gender structure in a variety of ways that included direct conflict, mutual support, and in difference.
Topic:
International Relations, Development, and International Political Economy
Political Geography:
India, Asia, and Andhra Pradesh