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61. Path Dependence and Stagnation in a Classical Growth Model

Author:
Thomas R. Michl and Daniele Tavini
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
This paper embeds a technical progress function in a classical growth model and studies the effects of permanent changes in parameters and temporary shocks such as pandemics. Technical change is driven by dynamic economies of scale and responds to distributional forces: the wage share regulates labor-saving technical change and employment regulates its capital using bias. The model features path dependence in the employment-population rate and the output-capital ratio. Population growth and distribution can respond to the employment rate. Interpreted through the model, secular stagnation under neoliberal capitalism has been driven by a combination of diminished investment.
Topic:
Political Economy, Economic Growth, COVID-19, Wage Growth, Path Dependency, Kaldor-Verdoorn Law, and Hysteresis
Political Geography:
Global Focus

62. Water: A Key Driver for Sustainable Growth

Author:
Jamal Saghir
Publication Date:
12-2019
Content Type:
Policy Brief
Institution:
Institute for the Study of International Development, McGill University (ISID)
Abstract:
Why is water important in the MNA region? • It matters for people. MNA countries cover 10 percent of the world’s area and home to 6% of the world’s population but receive less than 2% of the world’s renewable water supply. With rapid population growth since the mid 1970s, this has caused dramatic contraction in per capita renewable water resources. The MNA region is now the world’s driest region in the World. • It matters for the economy. Over 60 percent of the population of MNA lives in area of high-water stress compared to some 35% for the rest of the World. Water stress in MNA will be severe in the next 20 years as freshwater per resources per capita is estimated to keep on declining steadily unless fundamental shift occurs. The MNA region has the greatest expected economic losses from climate-related water scarcity, estimated at 6–14 percent of GDP by 2050. The MNA region will have to learn to do more with less – no matter what. • It matters for the environment. wastewater, 82% of which is not being recycled in the region, compared to just 30% in highincome countries. This presents a major threat to human and environmental health but also a massive opportunity to better satisfy water demand. Wastewater is the only natural resource that increases, as cities and populations grow. • It matters for equality. Equality between men and women; between urban and rural and between nations. MNA countries need to comprehend water as a political, economic and security issue in the region that plays a profound role in the future of the region and its growth and development, and take more concerted actions now.
Topic:
Agriculture, Energy Policy, Natural Resources, Water, Economic Growth, and Sustainability
Political Geography:
Middle East, North Africa, and Global Focus

63. Working in Export Manufacturing: A Blessing or a Curse?

Author:
Francesco Amodio and Andreas Menzel
Publication Date:
12-2019
Content Type:
Policy Brief
Institution:
Institute for the Study of International Development, McGill University (ISID)
Abstract:
In popular opinion, manufacturing in developing countries is often associated with low wages, dangerous working conditions, lax regulation, and worker exploitation. Research has shown that factories producing for export or based on FDI pay wages equivalent to other sectors, have higher labour standards, and employ large numbers of female workers. However, there are reported adverse effects on well-being, and consequences for young workers. While skepticism remains on buyers’ ability and interest in improving labour standards, there is some evidence of improvement through safety councils and more skilled management. Fears of consequences for competitiveness have been largely unfounded.
Topic:
Labor Issues, Global Markets, Economic Growth, Exports, and Manufacturing
Political Geography:
Global Focus

64. Inclusive Urban Economic Development: A Framework For Action

Author:
Alaina Harkness
Publication Date:
05-2019
Content Type:
Special Report
Institution:
Chicago Council on Global Affairs
Abstract:
Cities are the world economy’s innovation hubs; with their dense concentrations of people, firms, talent, and other resources, they are the engines of economic growth and prosperity. Unfortunately, cities are also the home to severe economic inequality. As cities get larger, they tend to become more unequal; in all countries except for Canada, all metros with more than 500,000 people had levels of inequality well above the national average. Left unchecked, these growth patterns will deepen the global economic divide and could threaten the stability and vitality of both cities and nations. Can cities resolve these apparent (and seemingly fundamental) tensions between growth and inclusion?
Topic:
Development, Poverty, Economy, Economic Growth, Urban, and Innovation
Political Geography:
Canada and Global Focus

65. Exchange Rate Flexibility, Financial Market Openness and Economic Growth

Author:
Il Houng Lee, Eunjung Kang, and Kyunghun Kim
Publication Date:
04-2019
Content Type:
Working Paper
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
With global recovery not in sight, along with calls for stronger structural reform, international policy coordination is again under spotlight. Correcting global imbalance would contribute towards closing the demand gap. Emerging economies in particular should allow greater exchange rate flexibility and not intervene in the foreign exchange market to reflect fundamentals. Yet, the impact of greater exchange rate flexibility is unclear as they also struggle to keep their growth momentum alive and hedge against greater exposure to potential capital reversal than ever before. With the loss of monetary policy independence, emerging markets (EMs) are running out of policy options. Against this background, unless international policy coordination is fundamentally recast, a comprehensive review of all emerging market economies’ policy options are in order, including both macro policy instruments, micro measures, and global safety net aimed at attaining the best possible solution to escaping global recession.
Topic:
Markets, Finance, Economic Growth, and Exchange Rate Policy
Political Geography:
Global Focus

66. Inclusive Growth and Structural Reforms in APEC Member Economies

Author:
Moonsung Kang and Geunhyo Kim
Publication Date:
12-2019
Content Type:
Special Report
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This paper empirically analyses the simultaneous impacts of structural re-forms - trade liberalization, capital account liberalization, and financial liberal-ization - on inclusive growth using panel data for 17 APEC member econ-omies covering years from 1970 to 2016. The results show that capital ac-count liberalization and growth of market capitalization are positively associ-ated with inclusive growth of APEC member economies, especially non-high-income member economies. Trade liberalization has a negative impact on inclusive growth only of the whole income group. We further find the robust evidence that the expansion of domestic credits provided by financial sectors had a negative impact on inclusive growth. These results give implica-tions that governments of APEC member economies need to design trade policies in a way of expanding outcomes of trade liberalization in a more inclusive way and of increasing extensive margins of export sectors. In addi-tion, they need to design policies to increase access to the financial sector for the poor and socially marginalized people.
Topic:
Reform, Economies, Economic structure, Economic Growth, and Inclusion
Political Geography:
Global Focus

67. The Rule of Law: A Critical Building Block for Good Governance and Economic Growth

Author:
Conor M. Savoy
Publication Date:
06-2019
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies (CSIS)
Abstract:
The rule of law plays a critical role in the functioning of a well-governed, stable country. Not only does it help to provide transparent and accountable governance and protection of minority and human rights, it is also necessary to create the conditions for private sector-led growth, job creation, and attracting foreign investment. It should come as no surprise that five of the eleven indicators used by the World Bank in its annual Doing Business report are related to the strength of legal institutions; without strong, impartial legal institutions and respect for the rule of law, private sector actors—local and foreign—cannot make the investments needed to grow economies and create employment opportunities.1 Rule of law, though, remains an area of limited investment by donors. Part of this stems from an overall lack of attention on good governance, but it also comes from a sense that genuine reform requires significant involvement in local politics, which is something that many donors have traditionally sought to avoid. There does, however, seem to be a window of opportunity to reexamine good governance and, by extension, the rule of law. Since the adoption of the Sustainable Development Goals (SDGs) in 2015, there have been several shifts that have created such an opening. First, the SDGs included Goal 16: Peace and Security that explicitly endorsed the need for good governance, rule of law, and strong institutions. SDG 16 represents a strong commitment on the part of the international community to supporting the creation of transparent and accountable governing institutions. Second, the 2015 Financing for Development conference held in Addis Ababa elevated the importance of domestic resource mobilization and private sector investment in creating sustainable sources of development finance.2 While strong rule of law is not sufficient on its own to mobilize these two pools of capital, it is necessary to ensure that countries can effectively utilize their own resources and investors can commit private capital securely. Third, USAID has launched a new policy framework called the Journey to Self-Reliance, which seeks to move developing countries along a path toward sustainability and off foreign assistance.3 Critical to USAID’s Journey to Self-Reliance is a country’s commitment and capacity—two areas that will require significant strengthening of governance and rule of law.
Topic:
Human Rights, Governance, Economic Growth, and Rule of Law
Political Geography:
Global Focus

68. Investment Facilitation Revisited

Author:
Daniel F. Runde, Jake Cusack, and Matt Tilleard
Publication Date:
09-2019
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies (CSIS)
Abstract:
This report reflects research CSIS conducted on CrossBoundary and others, focusing on what has been learned through practical application of the Investment Facilitation model in the years since the 2013 report. It updates the critical barriers to investment and illustrates how Investment Facilitation continues to remain relevant. It also reflects on the implications of lessons learned in the field and makes suggestions for improvements to further optimize the impact of Investment Facilitation going forward.
Topic:
Infrastructure, Economic Growth, and Investment
Political Geography:
Global Focus

69. Volume 69 Issue 1

Author:
Muhittin Kaplan
Publication Date:
01-2019
Content Type:
Journal Article
Journal:
Istanbul Journal of Economics
Institution:
Istanbul University Faculty of Economics
Abstract:
Istanbul Journal of Economics-İstanbul İktisat Dergisi is an open access, peer-reviewed, scholarly journal published two times a year in June and December. It has been an official publication of Istanbul University Faculty of Economics since 1939. The manuscripts submitted for publication in the journal must be scientific and original work in Turkish or English. Being one of the earliest peer-reviewed academic journals in Turkey in the area of economics, Istanbul Journal of Economics-İstanbul İktisat Dergisi aims to provide a forum for exploring issues in basicly economics and publish both disciplinary and multidisciplinary articles. Economics is the main scope of the journal. However, multidisciplinary and comparative approaches are encouraged as well and articles from various social science areas such as sociology of economics, history, social policy, international relations, financial studies are welcomed in this regard. The target group of the journal consists of academicians, researchers, professionals, students, related professional and academic bodies and institutions.
Topic:
Economics, International Political Economy, Economic Growth, Political Science, and Capital Flows
Political Geography:
Russia, Turkey, and Global Focus

70. Is there a right way to accommodate rapid urban growth in developing countries?

Author:
Matthew Eldridge
Publication Date:
02-2019
Content Type:
Commentary and Analysis
Institution:
Urban Institute
Abstract:
The United Nations projects that by 2050, urban areas will swell in size by 2.5 billion people, with 90 percent of that growth occurring in Asia and Africa. Urbanization presents significant development benefits—boosting innovation, human capital accumulation, and access to opportunities—but it also strains existing physical infrastructure, social services, and public health systems. To manage the challenges and maximize the benefits of rapid growth, national and municipal governments, civil society, and development partners (among others) must weigh interrelated financial, political, cultural, economic, and technical considerations. For many, the big question is whether cities should build anew in urban peripheries or retrofit and reinvest in urban cores. At a recent event hosted by the Urban Institute, in partnership with the World Bank, experts considered this question through the lens of one rapidly growing city: Dhaka, Bangladesh, examined in a new World Bank report, Toward Greater Dhaka.
Topic:
Development, Economic Growth, and Urban
Political Geography:
Bangladesh and Global Focus