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41. Innovations, High-Tech Trade and Industrial Development: Theory, Evidence and Policy

Author:
Lakhwinder Singh
Publication Date:
03-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Innovations spur science-based trade and industrial development in a fast changing pace of globalization. Knowledge accumulation and diffusion have been increasingly recognised as fundamental factors that play an important role in long-run economic growth. This paper focuses on the long-term innovation strategy of industrial and technological development in developing countries. Growth theory, empirical evidence and several indicators of innovation have been pressed into service to draw important lessons from historical experience of the developed and newly industrializing countries for the industrial development of the developing economies. Technology development and public technology policy experience of the East Asian countries have been examined to reinvent the role of public technology policy that can be adopted to develop national innovation system to nurture and build innovative capabilities in the developing economies in the dynamic global economy.
Topic:
Development, Economics, Industrial Policy, and International Trade and Finance
Political Geography:
East Asia

42. Institutions, Policies and Economic Development

Author:
Grzegorz W. Kolodko
Publication Date:
02-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Institutions are not only created and built, but al so, and especially, need to be learnt. It is a process which takes place in all economies, but acquires a special importance in less advanced countries. Not only theoretical arguments, but also the practical experience over the past 15 years demonstrates that faster economic growth, and hence also more broadly, socioeconomic development, is attained by those countries which take greater care to foster the institutional reinforcement of market economy. However, progress in market-economy institution building is not in itself sufficient to ensure sustained growth. Another indispensable component is an appropriately designed and implemented economic policy which must not confuse the means with the aims.
Topic:
Development, Economics, Globalization, and International Trade and Finance

43. Violence in Peace: Understanding Increased Violence in Early Post-Conflict Transitions and Its Implications for Development

Author:
Marcia Byrom Hartwell
Publication Date:
02-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
A key issue for development in the late twentieth and early twenty -first centuries has been an escalation of violence during post-conflict transitions. A long-term goal for international donor involvement is to assist in building legitimate and effective political, economic, and legal institutions. However, research and observation has revealed that increased violence is commonplace during peace processes and strongly influences the ways in which these institutions are formed. In turn post-conflict violence itself is strongly influenced and motivated by the way in which peace agreements have been negotiated. This study addresses some of the reasons for escalation of violence following peace agreements. It describes the underlying dynamics including the relationship between perceptions of justice as fairness, formation of post-conflict identity, political processes of forgiveness and revenge; and the policy implications for development particularly in relation to peace conditionality tied to aid.
Topic:
Conflict Prevention, Development, International Trade and Finance, and Peace Studies

44. Prolonged Use and Conditionality Failure: Investigating IMF Responsibility

Author:
Laura Sabani and Silvia Marchesi
Publication Date:
02-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Since the 1970s, prolonged use of resources by the IMF has consistently expanded, among both low- and middle-income countries. Overall, this phenomenon suggests a lack of effectiveness of Fund supported programmes. In the literature conditional lending failure has been explained by looking both at the characteristics of the borrowing countries (demand-side factors) and at the possible influence of IMF specific interests (supply-side factors). Among the latter it has been suggested that non- compliance with conditionality might be attributed to the lack of credibility of the IMF threat of interrupting financial assistance in case of policy slippages. In this paper we critically review this literature and we propose a novel explanation, according to which it is the repeated nature of the IMF involvement, together with the fact that the Fund acts simultaneously as a lender and as a monitor (and as an advisor) of economic reforms, that weakens the credibility of the IMF threat. Specifically, we argue that Since the 1970s, prolonged use of resources by the IMF has consistently expanded, among both low- and middle-income countries. Overall, this phenomenon suggests a lack of effectiveness of Fund supported programmes. In the literature conditional lending failure has been explained by looking both at the characteristics of the borrowing countries (demand-side factors) and at the possible influence of IMF specific interests (supply-side factors). Among the latter it has been suggested that non- compliance with conditionality might be attributed to the lack of credibility of the IMF threat of interrupting financial assistance in case of policy slippages. In this paper we critically review this literature and we propose a novel explanation, according to which it is the repeated nature of the IMF involvement, together with the fact that the Fund acts simultaneously as a lender and as a monitor (and as an advisor) of economic reforms, that weakens the credibility of the IMF threat. Specifically, we argue that the IMF desire to preserve its reputation as a good monitor/advisor may distort its lending decisions towards some laxity, which may be exacerbated by the length of the relationship between a country and the Fund. Therefore, we claim that prolonged use of IMF resources is not only a consequence of a lack of effectiveness of conditional lending but it might itself be a determinant of conditionality failure.
Topic:
Economics, International Organization, International Trade and Finance, and Markets

45. International Finance and the Developing World: The Next Twenty Years

Author:
Tony Addison
Publication Date:
02-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Much has changed in international finance in the twenty years since UNU-WIDER was founded. This paper identifies five broad contours of what we might expect in the next twenty years: the flow of capital from ageing societies to the more youthful economies of the South; the growth in the financial services industry in emerging economies and the consequences for their capital flows; the current strength in emerging market debt, and whether this represents a change in fundamentals or merely the effect of low global interest rates; the impact of globalization in goods markets in lowering inflation expectations, and therefore global bond yields; and the implications of the adjustment in global imbalances between Asia (in particular China) and the United States for emerging bond markets as a whole. The paper ends by noting the paradox that today we see ever larger amounts of capital flowing across the globe in search of superior investment returns, and yet the financing needs of the poorer countries are still largely unmet.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
United States, China, and Asia

46. Tax Policy Reforms in Nigeria

Author:
Ayodele Odusola
Publication Date:
01-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Nigeria is governed by a federal system, hence its fiscal operations also adhere to the same principle, a fact which has serious implications on how the tax system is managed. The country's tax system is lopsided, and dominated by oil revenue. It is also characterized by unnecessarily complex, distortionary and largely inequitable taxation laws that have limited application in the informal sector that dominates the economy. The primary objective of this paper is to prepare a case study on tax policy reforms in Nigeria, with the specific objectives of examining the main tax reforms in the country; highlighting tax revenue profile and composition; analysing possible distributional impacts on the poor; discussing major problems that could prevent effective tax implementation in the country; and offering suggestions for reforms.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
Africa and Nigeria

47. Foreign Direct Investment: Key Issues for Promotion Agencies

Author:
Sergey Filippov, Iornara Costa, and Mariana Zanatta
Publication Date:
10-2006
Content Type:
Policy Brief
Institution:
United Nations University
Abstract:
The growing importance attached to attracting foreign direct investment (FDI) is evidenced by the steady rise of investment promotion agencies (IPAs) worldwide, especially from the early 1990s. Since its launch in 1995, the World Association of Investment Promotion Agencies (WAIPA) has registered a growing number of members representing cities, regions, countries and free zones from all over the world: from 112 in 2002, 161 in 2004, rising to 191 members from 149 countries in 2006. According to the United Nations Conference on Trade and Development (UNCTAD) there were around 500 IPAs in more than 160 countries in 2004.
Topic:
Foreign Policy, Development, Economics, and International Trade and Finance
Political Geography:
United Nations

48. Does Financial Openness Promote Economic Integration? Some Evidence from Europe and the CIS

Author:
Fabrizio Carmignani and Abdur Chowdhury
Publication Date:
12-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
We study whether financial openness facilitates the economic integration of formerly centrally planned economies with the EU- 15. Two dimensions of economic integration are considered: cross-country convergence of per-capita incomes and bilateral trade in goods and services. We find that more financially open economies effectively catch-up faster and trade more with the EU-15. These integration-enhancing effects occur over and above any effect stemming from domestic financial deepening and other factors determining growth and trade.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
Europe

49. Does Financial Liberalization Influence Saving, Investment and Economic Growth? Evidence from 25 Emerging Market Economies, 1973-96

Author:
Robert Lensink and Niels Hermes
Publication Date:
12-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper aims to investigate the relationship between financial liberalization on the one hand and saving, investment and economic growth on the other hand, using a new dataset for measuring financial liberalization for a sample of 25 developing economies over the period 1973-96. We find no evidence that financial liberalization affects domestic saving and total investment (although there are some signs to believe that liberalization may actually reduce rather than increase domestic saving), whereas it is positively associated with private investment, as well as with per capita GDP growth. We find a negative relationship between financial liberalization and public investment. These results suggest that financial liberalization leads to a substitution from public to private investment, which may contribute to higher economic growth.
Topic:
Development, Economics, Emerging Markets, and International Trade and Finance

50. Financial Sector Development and Productivity Growth

Author:
George Mavrotas and Subal C. Kumbhakar
Publication Date:
12-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Recent years have witnessed important structural changes around the world as a result of the globalization process, the creation of new economic blocks and the liberalization of financial sector in many countries. Responding to these changes many sectors of the industrialized countries have gone through major deregulatory changes to acclimate themselves to new environments. At the same time, many countries have undertaken institutional reforms to build a market-orientated financial system in the hope that transition towards market economy will improve productivity. In the face of uncertainty resulting from changes in regulatory structure and the development of financial institutions to foster market economy, many countries may not be able to achieve their maximum growth potential. In other words, productivity growth is likely to depend on the development of financial institutions and the stage of economic development That is, a less developed country is likely to benefit more (in terms of output growth rate) from the development of financial institutions than a developed economy with well-developed financial system. In this paper we document this by using data covering 65 countries, varying substantially in term s of level of development and geographic location, and spanning the period 1960-1999. Empirical results obtained from the estimation of two different empirical models regarding the measurement of total factor productivity growth seem to confirm a priori expectations about the overall positive influence of financial systems on productivity in line with previous work on this front. Our results remain robust with respect to alternative definitions of financial sector development we tried.
Topic:
Development, Economics, Globalization, and International Trade and Finance