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2781. Institutions Versus Policies: A Tale of Two Islands

Author:
Peter Blair Henry and Conrad Miller
Publication Date:
01-2009
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Recent work emphasizes the primacy of differences in countries' colonially-bequeathed property rights and legal systems for explaining differences in their subsequent economic development. Barbados and Jamaica provide a striking counter example to this long-run view of income determination. Both countries inherited property rights and legal institutions from their English colonial masters yet experienced starkly different growth trajectories in the aftermath of independence. From 1960 to 2002, Barbados' Gross Domestic Product (GDP) per capita grew roughly three times as fast as Jamaica's. Consequently, the income gap between Barbados and Jamaica is now almost five times larger than at the time of independence. Since their property rights and legal systems are virtually identical, recent theories of development cannot explain the divergence between Barbados and Jamaica. Differences in macroeconomic policy choices, not differences in institutions, account for the heterogeneous growth experiences of these two Caribbean nations.
Topic:
Development, Economics, International Trade and Finance, Political Economy, and Poverty
Political Geography:
Caribbean

2782. Does Openness To International Financial Flows Raise Productivity Growth?

Author:
Marco E. Terrones, Eswar Prasad, and Ayhan Kose
Publication Date:
01-2009
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Economic theory has identified a number of channels through which openness to international financial flows could raise productivity growth. However, while there is a vast empirical literature analyzing the impact of financial openness on output growth, far less attention has been paid to its effects on productivity growth. This paper provides a comprehensive analysis of the relationship between financial openness and total factor productivity (TFP) growth using an extensive dataset that includes various measures of productivity and financial openness for a large sample of countries. We find that de jure capital account openness has a robust positive effect on TFP growth. The effect of de facto financial integration on TFP growth is less clear, but this masks an important and novel result. We find strong evidence that FDI and portfolio equity liabilities boost TFP growth while external debt is actually negatively correlated with TFP growth. The negative relationship between external debt liabilities and TFP growth is attenuated in economies with higher levels of financial development and better institutions.
Topic:
Debt, Development, Economics, and Foreign Direct Investment

2783. Italy: the uneasy co-existence of different social models

Author:
Marino Regini and Sabrina Colombo
Publication Date:
01-2009
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
The “European social model” includes a welfare regime with generous social expenditure; high employment or income protection; a well-developed system of industrial relations; and involvement of social partners in policymaking. Within the Italian social model, however, one can find three major dividing lines. The first one stems from the coexistence of different models in different areas of the country. Second, an occupation-based principle in pensions and in unemployment benefits coexists with a citizenship-based one in health and education. Finally, core workers enjoy high job and income security, whereas outsiders are highly dependent on the market. These three dividing lines substantially endanger the legitimacy and social acceptance of the Italian social model: each of them profoundly affects the perceptions of workers and citizens, leading to widespread criticism of even those aspects that clearly benefit them and, at the same time, to fierce opposition to the several attempts at reforming it.
Topic:
Economics, Government, Political Economy, and Privatization
Political Geography:
Europe and Italy

2784. Haiti 2009: Stability at Risk

Publication Date:
03-2009
Content Type:
Policy Brief
Institution:
International Crisis Group
Abstract:
A series of crises in 2008 have increased the potential for serious trouble in Haiti this year. The politically motivated, violent April riots against high living costs caused widespread disruption and suffering, toppled the government of Prime Minister Jacques-Édouard Alexis and forced postponement of a donor conference. In August and September, four tropical storms and hurricanes killed 800, affected nearly one million, exacerbated food shortages and pushed yet more Haitians into poverty. Extensive damage was caused to infrastructure and agriculture. The global financial crisis is making it difficult for donors to meet commitments and reducing diaspora remittances. President René Préval and Prime Minister Michèle Pierre-Louis, who took office in September 2008, need to secure the support of donors and parliament quickly for a wide-ranging stabilisation strategy or risk political instability and violence. These are major challenges in a year in which parliamentary elections will be held and constitutional reform is on the agenda.
Topic:
Conflict Resolution, Political Violence, Development, Disaster Relief, Economics, Politics, Post Colonialism, and Poverty
Political Geography:
Caribbean and Haiti

2785. The Great Crash, 2008

Author:
Roger C. Altman
Publication Date:
01-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
The financial crisis has called into serious question the credibility of western governments and may precipitate an eastward shift of power.
Topic:
Economics and Government
Political Geography:
United States, Europe, and Washington

2786. From Doha to the Next Bretton Woods: A New Multilateral Trade Agenda

Author:
Aaditya Mattoo and Arvind Subramanian
Publication Date:
01-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
Trade problems are an underlying cause of the financial crisis. To truly revive the world economy, a new trade consensus is necessary.
Topic:
Economics

2787. A Balanced Strategy: Reprogramming the Pentagon for a New Age

Author:
Robert M. Gates
Publication Date:
01-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
The Pentagon has to do more than modernize its conventional forces; it must also focus on today's unconventional conflicts -- and tomorrow's.
Topic:
Development, Economics, and Governance
Political Geography:
Afghanistan, United States, and Iraq

2788. The Making of a Mess: Who Broke Global Finance, and Who Should Pay for It?

Author:
Harold James
Publication Date:
01-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
The current economic crisis may have one winner: the Chinese financial model, which -- together with the IMF -- holds the keys to fixing the problem.
Topic:
Economics and Globalization
Political Geography:
United States and Europe

2789. The Japan Fallacy: Today's U.S. Financial Crisis Is Not Like Tokyo's "Lost Decade"

Author:
Richard Katz
Publication Date:
03-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
The financial crisis of 2008 need not usher in a replay of Japan's "lost decade" of the 1990s. The current crisis is the result of correctable policy mistakes rather than deep structural flaws in the economy.
Topic:
Economics and Political Economy
Political Geography:
United States and Japan

2790. How Development Leads to Democracy: What We Know About Modernization

Author:
Ronald Inglehart and Christian Welzel
Publication Date:
03-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
Democratic institutions cannot be set up easily; they are likely to emerge only when certain social and cultural conditions exist. But economic development and modernization push those conditions in the right direction and make democracy increasingly likely.
Topic:
Development and Economics