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1562. The Buoyant Billions: How "Middle Class" Are the New Middle Classes in Developing Countries? (And Why Does It Matter?)
- Author:
- Andy Sumner
- Publication Date:
- 10-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Middle-income countries (MICs) are now home to most of the world's extreme poor—the billion people living on less than $1.25 a day and a further billion people living on between $1.25 and $2. At the same time, many MICs are also home to a drastically expanding emerging middle or nonpolar group, called here the “buoyant billions.” This group includes those (mostly in MICs) living on between $2 and $4 a day and another billion people (also mostly in MICs) between $4 and $10 a day. Although they are above the average poverty line for developing countries, many people in these new “middle classes” may be insecure and at risk of falling into poverty. This paper outlines indicative data on trends relating to poverty and the nonpoor by different expenditure groups, and critically reviews the recent literature that contentiously labels such groups as “middle class.” The paper argues that such groups are neither extremely poor nor secure from poverty and that such groups are worthy of closer examination because their expansion may potentially have wider societal implications related, for example, to taxation, governance, and—ultimately—domestic politics.
- Topic:
- Development, Economics, Emerging Markets, and Poverty
1563. Declining Inequality in Latin America in the 2000s: The Cases of Argentina, Brazil, and Mexico.
- Author:
- Nora Lustig, Luis F. Lopez-Calva, and Eduardo Ortiz-Juarez
- Publication Date:
- 10-2012
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Between 2000 and 2010, the Gini coefficient declined in 13 of 17 Latin American countries. The decline was statistically significant and robust to changes in the time interval, inequality measures, and data sources. In-depth country studies for Argentina, Brazil, and Mexico suggest two main phenomena underlie this trend: a fall in the premium to skilled labor and more progressive government transfers. The fall in the premium to skills resulted from a combination of supply, demand, and institutional factors. Their relative importance depends on the country.
- Topic:
- Development, Economics, Emerging Markets, Globalization, International Trade and Finance, Poverty, and Social Stratification
- Political Geography:
- Brazil, Argentina, Latin America, and Mexico
1564. Commitment to Development Index 2012
- Author:
- David Roodman
- Publication Date:
- 10-2012
- Content Type:
- Policy Brief
- Institution:
- Center for Global Development
- Abstract:
- Why does the CDI matter? Because in an increasingly integrated world, the behavior of rich countries can profoundly affect the lives of people in poor countries and because poverty and weak institutions in developing countries can breed public health crises, security threats, and economic crises that know no borders. Committing to policies that promote develop- ment and well-being is a global imperative—no human being should be denied the chance to live free of poverty and oppression and to enjoy a basic standard of education and health. The CDI countries, all democracies, preach concern for human life and dignity within their own borders; the Index looks at whether rich countries' actions match their words.
- Topic:
- Development, Economics, Education, Health, and Poverty
1565. Political Budget Cycles and Intergovernmental Transfers in a Dominant Party Framework: Empirical Evidence from South Africa
- Author:
- Verena Kroth
- Publication Date:
- 11-2012
- Content Type:
- Working Paper
- Institution:
- Weatherhead Center for International Affairs, Harvard University
- Abstract:
- This paper tests the theory of context-conditional political budget cycles in South Africa's dominant party framework and demonstrates that the central government has both an incentive and the ability to implement PBCs on the subnational level. Using a unique panel dataset comprising South Africa's nine provinces over the period 1995–2010 generates two main results: First, provinces where the national ruling party faces greater electoral competition receive higher per capita transfers in the year before an election. Second, this increase is driven by the conditional grant, which is the nonformula-based component of total the intergovernmental transfer. The ability to implement political budget cycles is successfully constrained when it comes to the formula-based equitable share component of the total transfer for which no evidence of electorally-induced funding is found. Overall, the results suggest that even in a dominant party framework, political competition can function as an incentive to implement political budget cycles.
- Topic:
- Democratization, Economics, Government, and Governance
- Political Geography:
- Africa and South Africa
1566. Moral Hazard in an Economic Union: Politics, Economics, and Fiscal Gimmickry in Europe
- Author:
- James Alt, David Dreyer Lassen, and Joachim Wehner
- Publication Date:
- 07-2012
- Content Type:
- Working Paper
- Institution:
- Weatherhead Center for International Affairs, Harvard University
- Abstract:
- This paper examines empirically how transparency of the budget process affects fiscal rules and incentives for fiscal gimmickry or creative accounting in the European Union. Using stock-flow adjustment data for EU countries from 1990-2007, we show that pressure from a deficit limit rule as in the Stability and Growth Pact creates incentives for fiscal gimmicks, as does political pressure from the electoral cycle and economic pressure from negative shocks in the business cycle. However, we show that where institutional transparency is higher, these incentives are damped and largely disappear. We infer that fiscal rules do not work well when institutional transparency is low.
- Topic:
- Economics, International Trade and Finance, Monetary Policy, and Financial Crisis
- Political Geography:
- Europe
1567. Does the Sun Shine Really Shine on the Financial Markets?
- Author:
- Manfred Fruehwirth and Leopold Sögner
- Publication Date:
- 06-2012
- Content Type:
- Working Paper
- Institution:
- Weatherhead Center for International Affairs, Harvard University
- Abstract:
- After a series of papers has provided { partially ambiguous { results on the impact of weather variables on stock (index) returns, this article studies the impact of weather on a wide variety of financial market instruments, namely "risk-free" interest rates, the US corporate bond market, stock returns, stock index returns and the VIX volatility index. First, we construct a model that combines asset pricing and results from psychology to show how weather variables can affect asset prices in different market segments via mood. Second, in our empirical analysis we use several weather variables from the National Climatic Data Center (NCDC) and control variables motivated by economic theory. Applying various econometric techniques and using different market segments (motivated by differences in the risk level and institutional differences) allows to give a more detailed picture on the impact of weather on financial market prices. We demonstrate that on none of the market segments analyzed the weather has any significant impact.
- Topic:
- Economics, International Trade and Finance, Markets, Monetary Policy, and Financial Crisis
1568. The Imperial Peace in Colonial Africa and Africa's Underdevelopment
- Author:
- Robert H. Bates
- Publication Date:
- 12-2012
- Content Type:
- Book
- Institution:
- Weatherhead Center for International Affairs, Harvard University
- Abstract:
- When praised at all, imperialism is most often commended for the peace it bestowed. By demobilizing armies, deposing marauding princes and subduing war-like states, European powers fashioned a half-century of political order. The question nonetheless arises: Should they be lauded for that? In this chapter, I view Africa's history through the lens of comparative history and argue that the imperial peace may have retarded Africa's development.
- Topic:
- Development, Economics, Imperialism, Post Colonialism, and Natural Resources
- Political Geography:
- Africa and Europe
1569. Commission v. Gazprom: The antitrust clash of the decade?
- Author:
- Alan Riley
- Publication Date:
- 10-2012
- Content Type:
- Policy Brief
- Institution:
- Centre for European Policy Studies
- Abstract:
- It may well be that the Gazprom antitrust case launched by DG Competition on September 4th will turn out to be the landmark antitrust case of this decade, as Microsoft was of the last decade. The argument of this paper is that, for a host of political and economic reasons, this case is likely to be hard fought by both sides to a final prohibition decision and then onwards into the EU courts. In the process, the European gas market and the powers of DG Competition in the energy field are likely to be transformed.
- Topic:
- Economics, Markets, Natural Resources, and Law
- Political Geography:
- Europe
1570. Business Groups, Innovation and Institutional Voids in Latin America
- Author:
- Fulvio Castellacci
- Publication Date:
- 10-2012
- Content Type:
- Working Paper
- Institution:
- Norwegian Institute of International Affairs
- Abstract:
- The paper presents an empirical analysis of the innovative activities of business groups in Latin America. It compares the innovativeness of group-affiliated firms (GAFs) and standalone firms (SAFs), and it investigates how country-specific institutional factors – financial, legal, and labor market institutions – affect the group-innovation relationship. The empirical analysis is based on the most recent wave of the World Bank Enterprise Survey (period 2010-2011), and it focuses on a sample of 6500 manufacturing firms across 20 Latin American countries. The econometric results point out two major conclusions. First, GAFs are more innovative than SAFs: we estimate the innovation propensity of GAFs to be 9% higher than that of SAFs. Secondly, across countries, the innovativeness of GAFs is higher for national economies with a better institutional system than for countries with a less efficient institutional set up.
- Topic:
- Economics, Globalization, International Trade and Finance, and Markets
- Political Geography:
- Latin America