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2231. Economic Dynamics and Forest Clearing: A Spatial Econometric Analysis for Indonesia

Author:
David Wheeler, Robin Kraft, Susmita Dasgupta, Dan Hammer, and Brian Blankespoor
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
This paper uses a large panel database to investigate the determinants of forest clearing in Indonesian kabupatens since 2005. Our study incorporates short-run changes in prices and demand for palm oil and wood products, as well as the exchange rate, the real interest rate, land-use zoning, forest protection, the estimated opportunity cost of forested land, the quality of local governance, the poverty rate, population density, the availability of communications infrastructure, transport cost, and local rainfall and terrain slope. Our econometric results highlight the role of dynamic economic factors in forest clearing. We find significant roles for lagged changes in all the short-run economic variables—product prices, demands, the exchange rate and the real interest rate—as well as communications infrastructure, some types of commercial zoning, rainfall, and terrain slope. We find no significance for the other variables, and the absence of impact for protected-area status is particularly notable. Our results strongly support the model of forest clearing as an investment that is highly sensitive to expectations about future forest product prices and demands, as well as changes in the cost of capital (indexed by the real interest rate), the relative cost of local inputs (indexed by the exchange rate), and the cost of land clearing (indexed by local precipitation). By implication, the opportunity cost of forested land fluctuates widely with changes in international markets and decisions by Indonesia's financial authorities about the exchange and interest rates. Our results suggest that forest conservation programs are unlikely to succeed if they ignore such powerful forces.
Topic:
Agriculture, Economics, Globalization, Markets, and Natural Resources
Political Geography:
Indonesia

2232. More Money or More Development: What Have the MDGs Achieved?

Author:
Charles Kenny and Andy Sumner
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
What have the MDGs achieved? And what might their achievements mean for any second generation of MDGs or MDGs 2.0? We argue that the MDGs may have played a role in increasing aid and that development policies beyond aid quantity have seen some limited improvement in rich countries (the evidence on policy change in poor countries is weaker). Further, there is some evidence of faster-than-expected progress improving quality of life in developing countries since the Millennium Declaration, but the contribution of the MDGs themselves in speeding that progress is—of course—difficult to demonstrate even assuming the MDGs induced policy changes after 2002. The paper concludes with reflections on what the experience of MDGs in terms of global goal setting has taught us and how things might be done differently if there were to be a new set of MDGs after 2015. Any MDGs 2.0 need targets that are set realistically and directly link aid flows to social policy change and to results.
Topic:
Development, Economics, Humanitarian Aid, Poverty, and Foreign Aid

2233. A China Round of Multilateral Trade Negotiations

Author:
Arvind Subramanian and Aaditya Mattoo
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Until recently, the World Trade Organization (WTO) has been an effective framework for cooperation because it has continually adapted to changing economic realities. The current Doha Agenda is an aberration because it does not reflect one of the biggest shifts in the international economic and trading system: the rise of China. Even though China will have a stake in maintaining trade openness, an initiative that builds on but redefines the Doha Agenda would anchor China more fully in the multilateral trading system. Such an initiative would have two pillars. First, a new negotiating agenda that would include the major issues of interest to China and its trading partners, and thus unleash the powerful reciprocal liberalization mechanism that has driven the WTO process to previous successes. Second, new restraints on bilateralism and regionalism that would help preserve incentives for maintaining the current broad non-discriminatory trading order.
Topic:
Economics, Industrial Policy, and International Trade and Finance
Political Geography:
China, Israel, and Asia

2234. Do Germans support the euro?

Author:
Daniel Gros and Felix Roth
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
This paper analyses public support for the euro in Germany. Drawing from the results of regular Eurobarometer surveys, it finds that the ongoing financial and sovereign debt crisis has reduced support for the euro among German citizens, but not dramatically so – at least not yet. In the 1990s, the German public was sceptical towards the euro. But since the introduction of euro banknotes and coins, a clear majority of citizens supports the euro – despite the financial and sovereign debt crisis. Moreover, on average, support for the euro is at a similar level in Germany as it is elsewhere in the euro area.
Topic:
Economics, Regional Cooperation, Monetary Policy, and Financial Crisis
Political Geography:
Europe and Germany

2235. The Enduring Popularity of the Euro throughout the Crisis

Author:
Felix Roth, Felicitas Nowak-Lehmann D., and Lars Jonung
Publication Date:
11-2011
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
This paper analyses the evolution of public support for the euro from 1990 to 2011, using a popularity function approach, focusing on the most recent period of the financial and sovereign debt crisis. Exploring a huge database of close to half a million observations covering the 12 original euro area member countries, we find that the ongoing crisis has only marginally reduced citizens' support for the euro – at least so far. This result is in stark contrast to the sharp fall in public trust in the European Central Bank. We conclude that the crisis has hardly dented popular support for the euro while the central bank supplying the single currency has lost sharply in public trust. Thus, the euro appears to have established a credibility of its own – separate from the institutional framework behind the euro.
Topic:
Economics, Regional Cooperation, and Financial Crisis
Political Geography:
Europe

2236. Education Policy and Welfare Regimes in OECD Countries: Social Stratification and Equal Opportunity in Education

Author:
Anna-Elisabeth Thum, Miroslav Beblavý, and Marcela Veselkova
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
In this Working Document we look at which OECD countries deliberately attempt to reproduce social stratification through educational policies, and which countries put greater emphasis on intervening in the stratification process. First, we examine the relationship between education and welfare policies as measures of intervention in this process: do countries intervene in both education and welfare – driven by a 'stratification culture'? Or is there a trade-off between intervention in education and welfare, with certain countries prioritising one over the other?
Topic:
Economics, Education, Poverty, and Social Stratification

2237. Social Partnerships and Development: Implications for the Caribbean

Author:
Indianna D. Minto-Coy
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
The effects of the ongoing global financial crisis have intensified the existing economic issues facing the Commonwealth Caribbean, including declining investment, productivity levels and employment opportunities for its citizens. Although the current crisis presents challenges for governments in the region, it also offers an opportunity for these countries to implement innovative solutions to contend with the short-term effects of the financial crisis, while addressing long-standing problems. A solution that has been successful in Botswana, Ireland and Barbados, is the use of social partnerships. Undertaken while these countries were facing economic and social crises, social partnership as a specific governance model allowed them to achieve levels of development and stability that other states yearn to attain.
Topic:
Development, Economics, Labor Issues, Foreign Direct Investment, Financial Crisis, and Governance
Political Geography:
Caribbean

2238. Fiscal Asymmetries and the Survival of the Euro Zone

Author:
Paul R. Masson
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
The independence of the European Central Bank (ECB), seemingly guaranteed by its statutes, is presently under attack. The ECB has been led to acquire large amounts of government debt of the weaker euro zone members, both to help contain their interest costs and to help protect the solvency of banks throughout the zone that hold their debt. This paper presents a model of a dependent central bank that internalizes the government's budget constraint. Using a Barro-Gordon framework, the model embodies both the desire to stimulate output and to provide monetary financing to governments. As a result of the inability to pre-commit to first-best policies, the central bank produces excess inflation — a tendency partially reduced in a monetary union. The model implies that not only shock asymmetries, but also fiscal asymmetries, are important in the membership calculus of desirable monetary unions. On the basis of this framework, calibrated to euro zone data, the current membership is shown not to be optimal: other members would benefit from the expulsion of several countries, notably Greece, Italy and France. A narrow monetary union centred around Germany is sometimes mooted as a preferable alternative, especially if it could guarantee central bank independence. However, simulation results suggest that such a narrow monetary union would not be in Germany's interest: though better than the euro zone with a dependent central bank, it would not internalize enough trade to make it more attractive than the resumption of monetary autonomy by Germany.
Topic:
Debt, Economics, Monetary Policy, and Governance
Political Geography:
Europe, Greece, France, Germany, and Italy

2239. Europe's declining role in the G-20: What role for the EU in the club of the most important powers?

Author:
Juha Jokela
Publication Date:
12-2011
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs
Abstract:
Europe and the EU have played an influential role in the development and decision-making of the Group of Twenty (G-20). Europe's influence in shaping the developments in the group and, more broadly, in global governance is, however, declining. The G-20 Summit in Cannes provided Europe with an opportunity to re-assert its leadership. Its aspirations were, however, overshadowed by internal divisions heightened by the deepening European sovereign debt crisis. Even prior to the current crisis, the increasing global competition and decrease in standing turned EU members inward-looking. Instead of a further Europeanization of foreign policy and external relations, many have observed a tendency to re-nationalize European policy-making. This tendency will make it increasingly difficult for Europe to secure its standing and adapt to the on going transition of the world's economic and political power. Europe should reinvigorate its commitment to a joint external action as a matter of priority. The key question for Europe is whether it will manage to Europeanize the G-20 and gear it towards the multilateral principles which lie at the heart of European integration; or whether we will see the opposite process, namely a 'G-ization' of the EU in the sense of major(European)powers dominating increasingly informal European and global decision-making. It is in Europe's interests to further institutionalize the G-20 and tie it to the formal multilateral architecture of the world economy and politics.
Topic:
Foreign Policy, Development, Economics, International Trade and Finance, and Governance
Political Geography:
Europe

2240. Sri Lanka: Women's Insecurity in the North and East

Publication Date:
12-2011
Content Type:
Working Paper
Institution:
International Crisis Group
Abstract:
Women in Sri Lanka's predominantly Tamil-speaking north and east are facing a desperate lack of security in the aftermath of the long civil war. Today many still live in fear of violence from various sources. Those who fall victim to it have little means of redress. Women's economic security is precarious, and their physical mobility is limited. The heavily militarised and centralised control of the north and east – with almost exclusively male, Sinhalese security forces – raises particular problems for women there in terms of their safety, sense of security and ability to access assistance. They have little control over their lives and no reliable institutions to turn to. The government has mostly dismissed women's security issues and exacerbated fears, especially in the north and east. The international community has failed to appreciate and respond effectively to the challenges faced by women and girls in the former war zone. A concerted and immediate effort to empower and protect them is needed.
Topic:
Security, Economics, and Gender Issues
Political Geography:
South Asia and Sri Lanka