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251. Structural Change Reversed: A Comparative Analysis Pre- and Post-2015

Author:
Santosh Mehrotra
Publication Date:
11-2023
Content Type:
Special Report
Institution:
India International Centre (IIC)
Abstract:
Since the well-known research of Simon Kuznets (Nobel Prize Winner in Economics), the structural transformation of all economies is characterised by two simultaneous phenomena. The first is that there is a structural shift in terms of the contribution of the three main sectors—agriculture, industry, and services—to the gross domestic product in favour of non-farm sectors; the second involves total employment in the economy—with a shift away from agriculture towards the other two main sectors of economic activity—first towards industry, followed by services. This paper is motivated by some major developments that have occurred in the macro-economy in India, and their implications for the labour market. It is an attempt to understand these significant changes to the labour market in agriculture in particular, which accounted for around two-fifths of India’s total workforce of 520 million in 2021. This paper is organised in three sections. Section 1 shows that structural transformation, which had been relatively slow for a significant part of the last century, gathered momentum during the first decade of the current century. It has been rather stalled for the last six years and has been reversed by poor economic policies and management. Section 2 examines how workers in agriculture have had to respond to the changed economic conditions and nonfarm labour market trends. The changes have only served to increase rural distress. In other words, far from farmers’ income having doubled between 2015 and 2022, as the Union government had attempted, the quality of work in agriculture has worsened, wages have fallen, and women (and men) who had exited agriculture have been forced to rejoin it. This is a form of disguised unemployment, with workers surviving merely on account of safety nets like Mahatma Gandhi National Rural Employment Guarantee Act, 2005 (MGNREGA) or cash transfer (PM Kisan) or Public Distribution System (PDS) rations (Pradhan Mantri Garib Kalyan Yojna [PMGKY] was free during the pandemic). Section 3 examines the reasons for the emergence of these worsening labour market conditions. The concluding section summarises the findings.
Topic:
Agriculture, Economics, Employment, Macroeconomics, and Labor Market
Political Geography:
South Asia and India

252. Latin America and the ‘New Caucasus’: Linking Points Between Brazil and Azerbaijan

Author:
Roberto Rodolfo Georg Uebel
Publication Date:
10-2023
Content Type:
Journal Article
Journal:
Baku Dialogues
Institution:
ADA University
Abstract:
For those arriving in Baku, the capital of Azerbaijan, after crossing the Atlantic Ocean and flying over war-torn Europe, in addition to the modern buildings along the Caspian Sea coast and the unique hospitality of its people, what stands out the most is the emerging ‘New Caucasus’ on the horizon. It is a region no longer constrained by the geopolitical, geoeconomic, and cultural ties to the old Eastern Europe and no longer overshadowed by historical hegemons like Russia (most recently) and Iran (previously). When I visited in 2022, I discovered a country, and a region, that masterfully coordinates a pragmatic foreign policy without relinquishing its Caucasian and Caspian values and roots, creating a unique political identity that, to some extent, resembles our Latin American political identity, of course bearing in mind the appropriate hemispheric and historical proportions. My observation is that Azerbaijan is emerging as a strategic actor in the Caspian Sea region as well as in the relations between Central Asia, the Caucasus, the European Union, and the Middle East.
Topic:
International Relations, Foreign Policy, Economics, and Geopolitics
Political Geography:
Brazil, Azerbaijan, Latin America, and South Caucasus

253. When the Economic Road Ends: Is Another Great Depression on the Horizon?

Author:
Tuomas Malinen
Publication Date:
08-2023
Content Type:
Journal Article
Journal:
Baku Dialogues
Institution:
ADA University
Abstract:
We begin with a quintessential American expression: “uh oh.” Those words very likely embody the thoughts of the chief examiner of the U.S.-based Silicon Valley Bank (SVB) on 10 March 2023, the day when that bank faced a cataclysmic run on its deposits. In just two days, SVB customers tried to pull an astonishing 87% of deposits from the bank. It is obvious that no bank can survive such an onslaught. SVB was destined to fail. And so, it did—on that very day, in fact. Jonathan Rose, a historian and Senior Economist at the Federal Reserve Bank of Chicago, has published an eye-opening inquiry into the historical parallels of the runs on Silicon Valley Bank, Silvergate, Signature Bank, and First Republic in a recent article in the academic journal Economic Synopses. His research paints a startling picture on the scope of those runs, placing them in the context of the history of the largest depositor runs in the U.S. banking system between 1934 and 2021. Rose found that the most destructive bank runs in the period following the Great Depression of the 1930s and before 2022 have been the runs on Continental Illinois and Trust (which commenced on 7 May 1984), Washington Mutual (8 September 2008) and Wachovia (15 September 2008). They saw a deposit outflows of 30%, 10.1%, and 4.4% of total deposits, respectively. To note, the run on Continental Illinois in 1984 was already a largely electronic one due to automated wire transfers, and thus “lightning fast.” The outflow from Silvergate was 52% (during Q4 2022); on SVB it was 87% (10 March 2023 + expected during the next day); on Signature it was 29% (10 March 2023 + expected next day); and on First Republic it was 57% (approx. between 10-24 March). These are truly historical figures, matching those seen during the Great Depression. Many authorities and analysts are currently pondering what this all means for banks, their deposits, and countries in general, and where we could be heading. In this essay, I will explain why authorities have caused the ongoing crisis, why is it likely to get much worse, and what this implies for the world. I will conclude with a bit of unsolicited advice on how a certain category of countries, which includes Azerbaijan, can prepare and even benefit from its effects.
Topic:
Economics, Great Depression, Banking, and Economic Crisis
Political Geography:
Azerbaijan and Global Focus

254. Unpacking ‘One Nation, Two States’: The Panoptic Aliyev-Demirel Fraternity

Author:
Ayça Ergun
Publication Date:
04-2023
Content Type:
Journal Article
Journal:
Baku Dialogues
Institution:
ADA University
Abstract:
The exceptional, privileged, and special relationship between Azerbaijan and Türkiye is well known. The two countries are not only friendly allies but also strategic partners whose foreign policy priorities and strategic and economic interests overlap. The leaders of both countries enjoy their partnership as statespersons and friends dating back to when President Heydar Aliyev led Azerbaijan and President Süleyman Demirel led Türkiye. Both they and their respective successors have frequently referred to their brotherhood in the eyes of their respective publics and when addressing other audiences around the world. Thus, the same pattern has also been embraced by the current presidents of the two states, Recep Tayyip Erdogan and Ilham Aliyev, who both underline and highlight the motto of “one nation, two states” on almost all occasions related to foreign policy, peace, and security building in the Silk Road region, fostering economic ties, and constructing an energy and transportation hub and connectivity network in the region. This motto is not only a reflection of the policies and priorities of the two states but is also a result of the societal perceptions, popular support, and meanings attributed to each other by their respective public opinions. The social dimension of bilateral relations constitutes the backbone of the preferences and priorities of the leaders of both countries. Linguistic and cultural affinity facilitates communication between ordinary citizens, who greet each other with a warm welcome, resulting in “feeling like at home” in each other’s countries. Simply put, traveling to Türkiye for an ordinary Azerbaijani citizen does not really feel like going abroad: from the early years of restored independence, there was a pre-assumption of kinship with Anatolian Turks. For an ordinary citizen of Türkiye, who was much less literate on Azerbaijani culture and its people than his/her typical Azerbaijani counterpart, it was a sweet surprise to meet with people who speak (more or less) the same language. It was even more surprising to see how he/ she was treated like “one of their own” in Azerbaijan, regardless of the occasion—whether due to a government visit, business trip, or to engage in trade (since Azerbaijan was not, until recently, a tourist destination for an ordinary citizen of Türkiye). Indeed, various types of social encounters have made both ordinary Azerbaijanis and ordinary Turks see how similar they are to each other. In the more than thirty years since Azerbaijan regained its independence in 1991, societal interaction and peopleto-people contact have increased extensively through official visits, commercial relations, educational programs, civil societal initiatives, and intermarriages. One can thus argue that the framework adopted by Demirel and Heydar Aliyev has been significantly filled-in, adopted, reconstructed, and fortified by numerous groups and initiatives originating in the two societies themselves.
Topic:
Foreign Policy, Economics, and Bilateral Relations
Political Geography:
Turkey, Middle East, Azerbaijan, and South Caucasus

255. Using Real-Time Google Search Activity to Target Emergency Fiscal Stimulus

Author:
John Kearns
Publication Date:
05-2023
Content Type:
Journal Article
Journal:
Journal of Public and International Affairs (JPIA)
Institution:
School of Public and International Affairs (SPIA), Princeton University
Abstract:
In the aftermath of the COVID-19 pandemic, the U.S. Congress transferred nearly $1 trillion USD to state and local governments between April 2020 and March 2021 to support vaccination efforts, keep schools open, and sustain economic recovery. As of March 2023, much of this money remained unspent, raising questions about the underlying process of determining the size and distribution of aid. This paper explores how Google search data and machine learning models can work in real-time to assist policy makers in evaluating fiscal policy proposals. These results are among the first pieces of evidence that economic models can feasibly integrate alternative sources of data to provide real-time estimates of economic activity at the state level. The author’s models provide reliable and accurate estimates of state and local fiscal need and indicate the states that need relief the most months ahead of official estimates. The more tailored models presented in this paper could lead to more equitable and effective outcomes at a fraction of the cost to taxpayers when used to inform emergency fiscal stimulus distribution in the future.
Topic:
Economics, Public Policy, Fiscal Policy, and COVID-19
Political Geography:
North America and United States of America

256. How does the level of success of a transition of power impact Foreign Direct Investment in African countries?

Author:
Maria Fossas, Jack Moore, and Alexandra Tomlinson
Publication Date:
05-2023
Content Type:
Journal Article
Journal:
Journal of Public and International Affairs (JPIA)
Institution:
School of Public and International Affairs (SPIA), Princeton University
Abstract:
Transitions of power mark an inflection point in any society. They come about in all forms—elections, successions, coups, and conflicts—but in each case, it is an instance of a country embarking on a new path. In the field of development economics, it is thus essential to understand how the level of success of these power transitions impact the development of the nation. Specifically, the authors of this paper set out to determine to what extent change in foreign direct investment flows can be explained by the level of success of a transition of power. We conclude that maintaining or increasing good governance practices during a transition of power is a significant explanatory factor for changes in Foreign Direct Investment (FDI) and discuss the potential policy implications.
Topic:
Development, Economics, Foreign Direct Investment, Governance, and Transition of Power
Political Geography:
Africa

257. Income shocks, political support and voting behaviour

Author:
Richard Upward and Peter Wright
Publication Date:
12-2023
Content Type:
Working Paper
Institution:
Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP)
Abstract:
We provide new evidence on the effects of economic shocks on political support, voting behaviour and political opinions over the last 25 years. We exploit a sudden, large and long-lasting shock in the form of job loss and trace out its impact on individual political outcomes for up to 10 years after the event. The availability of detailed information on households before and after the job loss event allows us to reweight a comparison group to closely mimic the job losers in terms of their observable characteristics, pre-existing political support and voting behaviour. We find consistent, long-lasting but quantitatively small effects on support and votes for the incumbent party, and short-lived effects on political engagement. We find limited impact on the support for fringe or populist parties. In the context of Brexit, opposition to the EU was much higher amongst those who lost their jobs, but this was largely due to pre-existing differences which were not exacerbated by the job loss event itself.
Topic:
Economics, Politics, European Union, Brexit, Income, and Voting Behavior
Political Geography:
United Kingdom and Europe

258. Can competition reduce conflict?

Author:
Teevrat Garg, Caterina Gennaioli, Stefania Lovo, and Gregor Singer
Publication Date:
07-2023
Content Type:
Working Paper
Institution:
Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP)
Abstract:
We examine the effect of inter-group fiscal competition on within-group violent conflict. Using a triple difference design, we exploit exogenous variation in the degree to which villages in sub-districts compete for public funds. We find that higher competition between villages reduces conflict but only up to moderate levels of competition. The conflict-reducing effects of competition are largest in the most ethnically fractionalized and segregated villages and exist regardless of the eventual outcome of the competition. Our results are consistent with external competition favoring coordination within otherwise divided communities and boosting village identity relative to ethnic identity.
Topic:
Economics, Armed Conflict, Identity, Public Finance, Competition, and Fiscal Competition
Political Geography:
Global Focus

259. Garbling an evaluation to retain an advantage

Author:
Ascencion Andina-Diaz and Jose A. Garcia-Martinez
Publication Date:
07-2023
Content Type:
Working Paper
Institution:
Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP)
Abstract:
We study the effects of introducing interpersonal comparisons on the decisions made by career concerned experts. We consider competition between two experts who may differ in their initial reputation. We obtain that whereas full transmission of experts' private information is an equilibrium when experts have the same initial reputation, this is not necessarily the case when they are heterogenous. In this case, we identify an incentive for the stronger expert to deliberately misreport her signal, aiming at garbling the evaluation of the principal to retain her advantage. In equilibrium, this expert may even completely contradict her signal and the other experts' decision. We discuss the implications of our results to different contexts, such as reaching consenses in a society, competition for attention, and misconception of the market's evaluation system.
Topic:
Economics, Markets, Experts, Career, Reputation, and Competition
Political Geography:
Global Focus

260. Starr Forum: Rebuilding Ukraine While Under Fire

Author:
Oleg Ustenko and Simon Johnson
Publication Date:
09-2023
Content Type:
Video
Institution:
MIT Center for International Studies
Abstract:
A discussion with experts--including Oleg Ustenko, the economic advisor to President Zelensky--on rebuilding Ukraine in the midst of the ongoing war. Joining Ustenko is Simon Johnson, professor at MIT Sloan and former chief economist at the International Monetary Fund.
Topic:
Economics, Reconstruction, Armed Conflict, and Russia-Ukraine War
Political Geography:
Russia, Europe, and Ukraine