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581. One Third of the World's Growth and Inequality

Author:
Danny Quah
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper studies growth and inequality in China and India—two economies that account for a third of the world's population. By modelling growth and inequality as components in a joint stochastic process, the paper calibrates the impact each has on different welfare indicators and on the personal income distribution across the joint population of the two countries. For personal income inequalities in a China-India universe, the forces assuming first-order importance are macroeconomic: Growing average incomes dominate all else. The relation between aggregate economic growth and within-country in- equality is insignificant for inequality dynamics.
Topic:
Development and Economics
Political Geography:
China, South Asia, India, and Asia

582. How Optimal are the Extremes? Latin American Exchange Rate Policies During the Asian Crisis

Author:
Ricardo Ffrench-Davis and Guillermo Larraín
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
During the Asian crisis, intermediate exchange rate regimes vanished. It has been argued that those regimes were no longer useful and only the extremes remained valid. The paper analyses three foreign exchange regimes: Argentina (pegged), Chile (band) and Mexico (float). The Argentinean currency board delivered low financial volatility while it was credible, but even then it displayed high real volatility. Mexican float performed well in periods of instability isolating the real sector. The Chilean band delivered a mixed outcome as compared to Argentina and Mexico. This is linked apparently to a loss in the band's credibility, associated to policy mismanagement and an over-appreciation in the biennium before the crisis. Optimal exchange rate regimes vary across time and the conjuncture. Exit strategies are part of the election of the optimal system, including a flexible policy package rather than a single rigid policy tool.
Topic:
Development and International Trade and Finance
Political Geography:
Asia, Argentina, South America, Latin America, Mexico, and Chile

583. From the Grabbing Hand to the Helping Hand: A Rent Seeking Model of China's Township-Village Enterprises

Author:
Jiahua Che
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
I present a study of ownership of firms under government rent seeking. Using its control of regulated inputs, a government agency extracts rents from a manager who undertakes an investment. Such a government rent seeking activity leads to a typical hold-up problem. Government ownership is shown to serve as a second best commitment mechanism through which the government agency will restrain itself from the rent seeking activity and even offer the manager support and favor such as tax breaks and subsidies. This mechanism works at a cost as government ownership compromises ex post managerial incentives and creates distortion in resource allocation. Nevertheless, government ownership may Pareto dominate private ownership under certain conditions. These conditions correspond to a host of stylized empirical observations concerning local government-owned firms (township-village enterprises) during China's transition to a market economy.
Topic:
Development, Emerging Markets, and Government
Political Geography:
China and Asia

584. Household Income Dynamics in Rural China

Author:
Martin Ravallion and Jyotsna Jalan
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
It is well known in theory that certain forms of non-linear dynamics in household incomes can yield poverty traps and distribution-dependent growth. The potential implications for policy are dramatic: effective social protection from transient poverty will be an investment with lasting benefits, and pro-poor redistribution will promote aggregate economic growth. We test for non-linearity in the dynamics of household expenditures and incomes using panel data for rural south-west China. While we find evidence of non-linearity, there is no sign of a dynamic poverty trap. Existing private and social arrangements in this setting appear to protect vulnerable households from the risk of destitution. However, the concavity we find in the recursion diagram does imply that the speed of recovery from an income shock is lower for the poor, and that current inequality reduces growth in mean incomes.
Topic:
Development and Economics
Political Geography:
China and Asia

585. Ratings since the Asian Crisis

Author:
Helmut Reisen
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The increased importance of rating agencies for emerging-market finance has brought their work to the attention of a wider group of observers - and under criticism. This paper evaluates whether the importance of ratings for developing-country finance has changed since the Asian Crisis and whether rating agencies have modified the determinants for their rating decisions. It also provides an analysis on recent suggestions by the Basel Committee on Banking Supervision, as these are very important for gauging the future role of sovereign ratings for foreign debt finance in developing countries. While the explanatory power of conventional rating determinants has declined since the Asian crisis, recent rating performance for Argentina and Turkey can still be qualified as lagging the markets, as variables of financial-sector strength and the endogenous effects of capital flows on macroeconomic variables seem to remain underemphasized in rating assessments. The market impact of sovereign ratings is predicted to decline as agencies have started to modify their country ceiling policy and as market participants try to exploit bond trading opportunities arising from the lagged nature of ratings. The paper presents theory and evidence to suggest that the Basel II Accord will destabilise private capital flows to the developing countries, if the current proposal to link regulatory bank capital to sovereign ratings is maintained: Assigning fixed minimum capital to bank assets whose risk weights are in turn determined by market-lagging cyclically determined ratings will reinforce the tendency of the capital ratio to work in a pro-cyclical way.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
Turkey, Asia, and Argentina

586. The Twain Shall Meet: The Prospect for Russia - West Relations

Author:
Charles Grant, Christopher J. Makins, Sergey Rogov, Christoph Bertram, and Robert Nurick
Publication Date:
09-2002
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
The integration of Russia into the West will be one of the most important, and most difficult, tasks facing the United States and Europe during the next decade. Yet a closer relationship with the West will be key to the development of Russian prosperity, democracy, and stability – achievements that will benefit the West as well as Russia. The attacks on September 11 and the resulting campaign against terrorism have given a decisive push to this effort, providing the political will for closer cooperation between Russia and the West.
Topic:
Development
Political Geography:
Russia, United States, Europe, and Asia

587. Will Hu Really Govern China?

Author:
Jing-dong Yuan and Phillip C. Saunders
Publication Date:
05-2002
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
Chinese Vice President Hu Jintao's first visit to the United States this week has put the spotlight on the upcoming Chinese leadership transition. But will the changeover be a true transfer of power?
Topic:
Security, Democratization, and Development
Political Geography:
Israel and Asia

588. Pyongyang Gets a Second Chance

Author:
Brent Won-ki Choi and Ray Yep
Publication Date:
03-2002
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
The "Dear Leader" is flirting with Russia these days. For the past few weeks, there have been reports of various engagements between high officials of Pyongyang and Moscow. They range from trifles like Chairman Kim Jong-il's joining Russian officials to celebrate Russia's Maslenitsa festival to seemingly endless dialogue on economic cooperation. In addition to friendly gestures such as inviting a Russian orchestra to the North's prestigious Mansudae Assembly Hall to perform, Konstantin Pulikovski, representative of Russia's Far East, came to discuss a series of economic cooperation projects with the North. Some reports even suggest Chairman Kim is making a habit of visiting Russian Ambassador Andrei Karlov once a week. The latest highlight is the North's proposal that Russia establish a joint nuclear reactor, which Moscow said it would "consider."
Topic:
Security, Democratization, and Development
Political Geography:
Israel, Asia, and Moscow

589. Corruption and Globalization

Author:
Shang-Jin Wei
Publication Date:
04-2001
Content Type:
Policy Brief
Institution:
The Brookings Institution
Abstract:
At least since the Asian financial crisis, the International Monetary Fund (IMF) has, from time to time, included transparency and anti-corruption measures as part of the conditions for countries to borrow its funds. Because of this, it has been criticized as having overstepped its mandate, or even having made crises worse in countries the IMF is supposed to help.
Topic:
Development, Economics, Globalization, and Third World
Political Geography:
Asia

590. The Russian Press in the Post-Soviet Era: A Case Study of Izvestia

Author:
Adam Jones
Publication Date:
07-2001
Content Type:
Working Paper
Institution:
Centro de Investigación y Docencia Económicas
Abstract:
The progress of the Russian press in the late Soviet and post-Soviet eras can be described (with apologies to Vladimir Lenin) as "two steps forward, on step back." The flowering of glasnost (openness) under Mikhail Gorbachev le to a "golden age" of Soviet journalism, including an explosion of new publications and a lifting of nearly all state restrictions on journalists' professional activities. However, the collapse of the USSR and the onset of material crisis in 1991-92 quickly produced a winnowing of the press and a retrenchment on the part of surviving publications. At the same time, powerful new forces - especially oligarchs and regional and leaders - arose to vie with the state for influence over post-Soviet media. This paper explores the trajectory of one of the leading newspapers of the Soviet and post-Soviet period, Izvestia, in the light of those broader trends. While Izvestia emerged from the ashes of Soviet communism with formal control over its material plant and journalistic collective, it was soon subjected to a tug-of-war between powerful actors determined to control its destiny - first the Communist-dominated Duma (parliament), and then large corporations and business oligarchs. The struggle led, in 1997, to the dismissal of the paper's editor. Oleg Golembiovsky, and the departure of many staff to form Novye Izvestia (New Izvestia) - though this publication too, was also unwilling or unable to avoid the temptations of a close alliance with one of the leading oligarchs, Boris Berezovsky. The findings are place in the broader comparative context of the press in transition, based on the author's research into process of media liberalization and transition worldwide.
Topic:
Cold War, Development, and Government
Political Geography:
Russia, Europe, and Asia