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4531. The International Finance Facility: The UK HM Treasury-DFID Proposal to Increase External Finance to Developing Countries

Author:
George Mavrotas
Publication Date:
12-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The paper discusses the International Finance Facility (IFF), a joint HM Treasury-DFID proposal to increase development aid substantially for the Millennium Development Goals to be achieved by 2015. The main conclusion of the paper is that the proposed IFF is a promising, forward-looking and creative proposal for it implies a substantial increase in fresh, predictable and stable aid as well as a robust financial structure. However, there are a number of concerns about potential shortcomings of the proposal, namely its underlying assumptions about continuous commitment on behalf of the donor community towards the implementation of the IFF during the life of the Facility and most importantly its heavy reliance on political coordination among donor countries participating in the proposed scheme. Potential absorptive capacity constraints in IFF aid-recipient countries may be also relevant. Achieving its huge political task as well as alleviating the crucial constraints regarding its successful implementation seem to be the main challenges this innovative proposal needs to deal with in the near future.
Topic:
Development, International Cooperation, and International Trade and Finance
Political Geography:
United Kingdom and Europe

4532. Aid Effectiveness and Selectivity: Integrating Multiple Objectives into Aid Allocations

Author:
Mark McGillivray
Publication Date:
10-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper surveys recent research on aid and growth. It also provides an overview of research on inter-recipient aid allocation. The overall focus of the paper is on the relevance of these issues for poverty-efficient aid, defined as a pattern of inter-recipient aid allocation which maximises poverty reduction. It identifies a range of poverty- reducing criteria on which aid allocation or selectivity might be based, calling for a broader selectivity framework. The paper argues that this framework should be built on a recognition that the effectiveness of aid in increasing growth, and by implication in reducing poverty, is contingent on a range of factors in addition to the quality of recipient country policy regimes. These factors include political stability, democracy, post conflict reconstruction, and economic vulnerability.
Topic:
Development, Political Economy, and Poverty

4533. Measurement of a Multidimentional Index of Globalization and its Impact on Income Inequality

Author:
Almas Heshmati
Publication Date:
09-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
In this paper we present two composite indices of globalization. The first is based on the Kearney/Foreign Policy magazine and the second is obtained from principal component analysis. They indicate which countries have become most globalized and show how globalization has developed over time. The indices are composed of four components: economic integration, personal contact, technology and political engagement, each generated from a number of variables. A breakdown of the index into major components provides possibilities to identify sources of globalization and associate it with economic policy measures. The empirical results show that a low rank in the globalization process is due to political and personal factors with limited possibility for the developing countries to affect. The high ranked developed countries share similar patterns in distribution of various components. The indices were also used in a regression analysis to study the causal relationship between income inequality and globalization. Globalization indices explain only 7 to 11 per cent of the variations in income inequality among countries.
Topic:
Development, Economics, and Globalization

4534. Regional Poverty and Income Inequality in Central and Eastern Europe: Evidence from the Luxembourgh Income Study

Author:
Michael Förster, David Jesuit, and Timothy Smeeding
Publication Date:
09-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper reports levels of income inequality and poverty in four Central and Eastern European countries: the Czech Republic, Hungary, Poland and Russia. Unlike many previous researchers who examine transition economies, we aggregate the detailed individual-level income surveys made available through the efforts of the Luxembourg Income Study at the regional level of analysis. Although national-level investigations have contributed much to our understanding of the income distribution dynamics, these studies mask intracountry variance in levels of income inequality and thus may not capture the true distribution of household income and accurately reflect individual wellbeing. Accordingly, we compute summary measures of inequality and relative poverty rates, using both local and national relative poverty lines, for the most recent waves of data available. We offer comparisons between regional and national median incomes and assess levels of inter- and intraregional income inequality. In addition, we make comparisons to regions within Western European countries and find that, contrary to what is often asserted, interregional disparities in Central and Eastern Europe countries are not as large as those found in some Western European countries.
Topic:
Development and Poverty
Political Geography:
Russia, Europe, Eastern Europe, Poland, Hungary, Czech Republic, and Luxembourg

4535. Is the Brain Drain an Unmitigated Blessing?

Author:
Riccardo Faini
Publication Date:
09-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Increasingly, immigration policies tend to favour the entry of skilled workers, raising substantial concerns among sending countries. The 'revisionist' approach to the analysis of the brain drain holds that such concerns are largely unwarranted. First, sustained migratory flows may be associated with an equally large flow of remittances. Second, migrants may return home after having acquired a set of productive skills. Finally, the ability to migrate abroad may boost the incentive to acquire skills by home residents.
Topic:
Development, Education, and Migration

4536. Some Welfare Implications of 'Who Goes First?' in WTO Negotiations

Author:
Basudeb Guha-Khasnobis
Publication Date:
09-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
We envisage a logical framework to explain why some trade negotiations are delayed because parties differ on who should 'go first'. In our model, there are substantive welfare implications depending on which party sets tariff rates (or subsidies) first in a strategic optimization exercise. When knowledge about cost levels are incomplete or missing, and hence must be guessed with a probability, the chances of conflict regarding who goes first are extremely high in the situation modeled in this paper. As an institution with some power to set the rules of negotiations, the WTO should be able to anticipate such conflicts in upcoming negotiations. It can then set the rule (in this case, dictate who should go first) depending on whose interest it wants to protect. There is a wide range of choices for the WTO in this regard: OECD consumer's surplus, OECD producers' loss, net exports of developing countries, firm profits, or even, world welfare as the sum of all these components.
Topic:
Development, International Organization, International Political Economy, and International Trade and Finance

4537. Who Gains from Tariff Escalation?

Author:
Basudeb Guha-Khasnobis
Publication Date:
09-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
With the help of a simple model of production and trade, we examine the differential impact of tariff escalation on skilled and unskilled wages in an economy. Our findings provide a lobbying-based explanation of the prevalence of tariff escalation in developed countries. It also predicts the possible response of a developing country and shows how similar lobbying activity in that country can slow the pace of liberalization of service sector trade.
Topic:
Development, Economics, and International Trade and Finance

4538. Who Pays Indirect Taxes in Russia?

Author:
André Decoster and Inna Verbina
Publication Date:
08-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The interplay of a differentiated indirect tax structure and the variation in expenditure patterns across households, leads to a possibly unequal distribution of indirect tax liabilities across the population. This paper uses the ninth round of the RLMS survey to assess the distributional consequences of the two major components of the indirect tax system: VAT and excise taxes. The global indirect system can be considered to be progressive overall, according to the Kakwani index. Decomposition into constituent terms shows that this is due not only to a progressive VAT structure, but also to progressive excise taxes. This surprising result is mainly explained by the progressivity of the excise tax on car fuel, but might also be sensitive to peculiarities in the data about alcohol consumption.
Topic:
Development, Economics, and Government
Political Geography:
Russia

4539. Opening the Convergence Black Box: Measurement Problems and Demographic Aspects

Author:
Carlos Azzoni, Naercio Menezes-Filho, and Tatiane Menezes
Publication Date:
08-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
In this paper we address the issues involved with the use of microeconomic data, that is, household surveys, to compare the patterns of income growth among different regions instead of the commonly used aggregate data. In particular, we investigate the issues of aggregation of household income to regional income and the problem of demography. As returns to experience generally differ across regions, differences in the patterns of income growth across regions in the same time interval will differ across age groups, which means that convergence or divergence of aggregate income among regions will depend on the age structure of their population. We apply these concepts to the case of the states of Brazil, for which we have repeated cross sections from a rich household survey. We find that patterns of income growth vary a great deal across birth cohorts, depending on the economic returns to experience.
Topic:
Demographics, Development, and Economics
Political Geography:
Brazil

4540. Regional Output Differences in International Perspective

Author:
Alan Heston and Bettina Aten
Publication Date:
08-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Accurate regional estimates of output are desired as an indicator of level of development and as a variable used to explain internal migration, demand patterns, fertility and other aspects of behaviour. This chapter explores one often neglected aspect of regional income differences, namely that due to price differences or regional purchasing power parities. When nominal regional income measures are adjusted for these price level differences they are termed real regional incomes. The preferred method of estimating regional purchasing power parities by detailed price comparisons is discussed for Brazil, the United States and the European Union. The empirical thrust of the chapter is an investigation of different methods for estimating regional real incomes based on PPP data for 167 countries and nominal regional incomes and other data for about 870 administrative areas at the subnational level. Even in their present form we believe the real income estimates provided for the geographical units present opportunities for understanding the world economic structure.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
United States, Europe, and Brazil