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3891. Excess Credit and the South Korean Crisis

Author:
Bassam A. Fattouh and Panicos O. Demetriades
Publication Date:
08-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
We provide a novel empirical analysis of the South Korean credit market that reveals large volumes of excess credit since the late 1970s, indicating that a sizeable proportion of total credit was being used to refinance unprofitable projects. Our findings are consistent with theoretical literature that suggests that soft budget constraints and overborrowing were significant factors behind the Korean financial crisis of 1997-98.
Topic:
Economics, International Trade and Finance, and Markets
Political Geography:
Asia, South Korea, and Korea

3892. The Rise and Halt of Economic Development in Brazil, 1945-2004: Industrial Catching-up, Institutional Innovation and Financial Fragility

Author:
Nelson H. Barbosa-Filho, José A.P. de Souza, and Leondardo Burlamaqui
Publication Date:
08-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper seeks to explain the dynamics of Brazilian industrial catch-up in the last 60 years by discussing its background institutional conditions as well as its main macroeconomic features. After a brief introduction, the second section describes how after the institutional innovations introduced during the Vargas' and Kubitschek's administrations, a Brazilian version of the Developmental State was created, releasing the growth potential of the economy during the 1950s. The third section analyses the inflationary crisis and institutional inertia of the mid-1960s, and its solution through the introduction of a new of wave of institutional innovations and conflict management devices, which lead to the Brazilian growth miracle, until the debt crisis of early 1980s signaled its end. The fourth section analyses why the financial crisis, coupled with ineffective institutional changes and unsuccessful macroeconomic stabilization plans lead growth to a halt. It also includes an analysis of the pro-market reforms from the early 1990s onwards. The fifth section concludes the paper offering a brief sketch on how the analytical narrative fits the conceptual framework within which it was performed.
Topic:
Conflict Resolution, Development, and Economics
Political Geography:
Brazil and South America

3893. Childhood Mortality and Economic Growth

Author:
Sonia Bhalotra
Publication Date:
07-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper investigates the extent to which the decline in child mortality over the last three decades can be attributed to economic growth. In doing this, it exploits the considerable variation in growth over this period, across states and over time. The analysis is able to condition upon a number of economic and demographic variables. The estimates are used to produce a crude estimate of the rate of economic growth that would be necessary to achieve the Millennium Development Goal of reducing the under-5 mortality by two-thirds, from its level in 1990, by the year 2015. The main conclusion is that, while growth does have a significant impact on mortality risk, growth alone cannot be relied upon to achieve the goal.
Topic:
Civil Society, Economics, and Human Welfare
Political Geography:
India

3894. Institutionalism Ancient, Old and New: A Historical Perspective on Institutions and Uneven Development

Author:
Eric S. Reinert
Publication Date:
07-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper argues for an 'ancient' institutional school, predating Thorstein Veblen's 'old' institutionalism. In this view, going back as far as the thirteenth century, institutions tended to be seen as specific to a mode of production. Here both institutions and development itself are context-specific and activity-specific. Much clearer than today the arrows of causality of economic development go from the mode of production to the institutional setting, not vice versa. In order to understand development, institutions can also usefully be divided into Hayekian institutions that facilitate equilibrium and Schumpeterian institutions that enable the dynamics of development and structural change.
Topic:
Development, Economics, and Education

3895. The Formation of a Mercantilist State and the Economic Growth of the United Kingdom 1453-1815

Author:
Patrick Karl O'Brien
Publication Date:
07-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
New institutional economics lacks a theory of state formation which could help us to deal with the mega question of why some states became more efficient than others at establishing and and sustaining institutions. Some kind of middle range theory could be formulated based upon historical case studies. This paper considers the case of Britain and as its title suggests degrades the myth of the United Kingdom as the paradigmn example of liberalism and laisser faire. In making its precocious transition to and industrial market economy the kingom's history is best represented as a case of successful mercantilism.
Topic:
Development, Economics, and Sovereignty
Political Geography:
Britain, United Kingdom, and Europe

3896. Institutions and Economic Performance in Africa: A Comparative Analysis of Mauritius

Author:
Julius Kiiza
Publication Date:
07-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper examines the relationship between institution building and economic performance in Mauritius, Botswana and Uganda. The rationale for comparing these cases is simple. While the three have been super-economic stars in their own right, they have achieved substantially different outcomes. Mauritius has achieved Asia-type rapid growth, backed by the structural transformation of the economy from colonial commodity production (sugar) to postcolonial higher value-added industrial and information outcomes. Botswana has delivered rapid and sustained growth with no structural economic transformation. Uganda has attained rapid growth for a shorter postcolonial period (since 1992) and with no structural transformation. This paper contends that these cross-national differences largely arise from the presence of developmental nationalism plus Weberian bureaucracies in Mauritius and Botswana, and their absence in Uganda.
Topic:
Development, Economics, and Nationalism
Political Geography:
Uganda, Africa, Mauritius, and Botswana

3897. Corporate Governance, Innovative Enterprise, and Economic Development

Author:
William Lazonick
Publication Date:
07-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The notion that good corporate governance means maximizing shareholder value derives from the neoclassical theory of the market economy. I explain why this perspective is highly problematic for understanding the operation and performance of the business corporation and hence the institutions that, for the sake of economic development, should govern it. The main problem is that the market-economy perspective cannot comprehend the process of innovation, including the role of the business corporation. I construct a theory of the innovating firm that, when embedded in comparative-historical analysis, provides a basis for analyzing the relation between corporate governance institutions and economic development.
Topic:
Development, Economics, Government, and Markets

3898. Food Security in the South Pacific Island Countries with Special Reference to the Fiji Islands

Author:
K.L. Sharma
Publication Date:
06-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper analyses the status of food security in selected South Pacific Island countries, namely Cook Islands, Fiji Islands, Papua New Guinea, Samoa, Solomon Islands, Tonga, and Vanuatu at the national and household levels during the period 1991-2002. Due to narrow resource base and production conditions, Pacific Islands concentrate on a few primary commodities for production and exports. During recent years import dependency for food items has increased mainly due to a decline in per capita food production and a rapid rate of rural-urban migration. Currently, export earnings can finance food imports but earnings could fall short of the requirements needed after the expiry of some commodity preferential price agreements with importing countries. National food security is dependent on the continuation of subsistence farming and tapping ocean resources in conjunction with the on-going commercial farming of those crops in which Pacific Islands have a comparative advantage. Increased productivity is crucial for improving agricultural performance through government investment in rural infrastructure, agricultural research and extension, irrigation and appropriate price incentives. This would also help alleviate poverty for improvement in economic accessibility of food by households. There is also a need to design appropriate disaster risk management programmes to minimize any adverse effects on the food supply.
Topic:
Economics, Human Welfare, and International Trade and Finance
Political Geography:
Australia/Pacific, Solomon Islands, Papua, Guinea, Cook Islands, Samoa, Tonga, Vanuatu, and Fiji

3899. Development of Financial Intermediation and the Dynamics of Rural-Urban Inequality: China, 1978-98

Author:
Qi Zhang, Mingxing Liu, and Yiu Por Chen
Publication Date:
06-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Using China as a test case, this paper empirically investigates how the development of financial intermediation affects rural-urban income disparity (RUID). Using 20-year province level panel data, we find that the level of financial development is positively correlated with RUID. Examining two subperiods, 1978-88 and 1989-98, we test several competing hypotheses that may affect RUID. We find that the increase of RUID may be explained by fiscal policy during the first period and financial intermediates during the second period. In addition, we show that the direction of the Kuznets effect on RUID is sensitive to changes in government development policies. The rural development policies during the first period may have enhanced the rural development and reduced RUID. However, the financial intermediary policy during the second period focused on urban development and increased both urban growth and intra-urban inequalities, thus leading to an increase in RUID. Finally, we show that RUID is insensitive to the provincial industrial structure (the share of primary industry in GDP). These results are consistent with the traditional urban-bias hypothesis and are robust to the inclusion of controls for endogeneity issues. This study adds to the economic inequality literature by clarifying the effects of government policies on the underlying dynamics on convergent and divergent effects on rural-urban inequality.
Topic:
Development, Economics, and Government
Political Geography:
China and Asia

3900. Poverty Accounting by Factor Components: With an Empirical Illustration Using Chinese Data

Author:
Guanghua Wan
Publication Date:
06-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The purpose of this paper is to develop two poverty decomposition frameworks and to illustrate their applicability. A given level of poverty is broadly decomposed into an overall inequality component and an overall endowment component in terms of income or consumption determinants or input factors. These components are further decomposed into finer components associated with individual inputs. Also, a change in poverty is decomposed into components attributable to the growth and redistributions of factor inputs. An empirical illustration using Chinese data highlights the importance of factor redistributions in determining poverty levels and poverty changes in rural China.
Topic:
Development, Economics, and Poverty
Political Geography:
China and Asia