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261. Digitizing Services: What Stays Where and Why

Author:
Rafiq Dossani and Martin Kenney
Publication Date:
06-2006
Content Type:
Working Paper
Institution:
Berkeley Roundtable on the International Economy
Abstract:
The spatial extension and deepening of capitalism has been a topic of interest to geographers, other social scientists, and activists since, at least, Lenin. This topic has reappeared on the public agenda recently under the rubric of “globalization.” Once again, the spatial redistribution of economic activities is sparking enormous controversy and opinions from nearly every philosophical position. This paper considers two dimensions of this enormous topic and argues that neither dimension has received sufficient attention from geographers. The first dimension is the role of technological advancement in transportation and communication technologies in a capitalist system. The second dimension is the development of a global division of labor in service provision.
Topic:
Emerging Markets, Globalization, and International Political Economy

262. Reforming Personal Income Tax

Publication Date:
03-2006
Content Type:
Policy Brief
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
Many OECD countries have reformed their personal income tax system over the last two decades. Yet no clear consensus has emerged on what is the ideal personal income tax. These reforms have tried to create a competitive fiscal environment, which encourages investment, risk taking and entrepreneurship and provides increased work incentives. At the same time, fairness and simplicity have become the byword of reformers. Fairness requires that taxpayers in similar circumstances pay similar amounts of tax and that the tax burden is appropriately shared. Simplicity requires that paying your taxes becomes as painless as possible and that the costs of collecting taxes are kept at a minimum.
Topic:
Development, Economics, Emerging Markets, and International Trade and Finance

263. Stock Market Development and Economic Growth

Author:
Salvatore Capasso
Publication Date:
09-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Since the 1990s economists have devoted considerable attention to the study of the relationship between financial markets development and economic growth. In particular, the emergence of stock markets with economic development is an intriguing and interesting aspect of such a relationship, and yet relatively unexplored. This paper examines the most recent findings in the theoretical and empirical literature trying to determine the rationale behind the development of stock markets along the path of growth and the nature of the interrelationship between real and financial variables.
Topic:
Development, Economics, Emerging Markets, and Markets

264. Estimating the Balance Sheet of the Personal Sector in an Emerging Market Country: South Africa 1975-2003

Author:
Johan Prinsloo, John Muellbauer, and Janine Aron
Publication Date:
09-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Official balance sheet estimates for the household sector are not currently available in South Africa, yet, with the country's well developed financial sector and deep capital markets, asset market channels are likely to be important determinants of aggregate consumer spending and saving, consumer demand for credit and their broad money holdings. The current paper aims to produce comprehensive estimates of household balance sheets for South Africa. The paper draws, where feasible, on best practice from the Office of National Statistics of the UK and assesses the quality of the data sources and suggests areas where additional surveys or improvements in data collection procedures would be helpful to further improve the quality of the balance sheet estimates. Furthermore, quarterly balance sheet measures to 2003 are provided, and linked to quarterly measures. The main balance sheet categories are liquid assets, household debt and various categories of illiquid financial and tangible assets, including pension wealth, directly held shares and bonds, and housing. Revised debt estimates and new estimates of tangible assets for households and unincorporated businesses are provided. The paper describes the trends of the estimates of the household sector's balance sheets and of total net wealth. The paucity of data for developing and emerging market countries is illustrated by means of a survey, and lessons are drawn from the South African research for the compilation of household sector balance sheets.
Topic:
Development, Emerging Markets, and Third World
Political Geography:
Africa, United Kingdom, and South Africa

265. International Risk Tolerance, Capital Market Failure and Capital Flows to Emerging Markets

Author:
Valpy FitzGerald
Publication Date:
04-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The level, tenor and instability of capital flows from global financial markets towards developing countries are a major source of concern for macroeconomic managers, while their causes remain largely unexplained by economic theory. Country 'fundamentals' (such as economic growth, monetary stability and institutional capacity) as sources of default risk have been the main focus of economic research and policy prescriptions. However, recent empirical research on the determinants of capital flows and the roots of market failure indicate that much of the explanation lies in the nature of the home (that is, the developed country) demand for emerging market assets. In this paper, the microeconomic roots of home bias and demand instability are explained in terms of investor risk perception and credit rationing, exacerbated by traders' behaviour. The consequences for host country macroeconomic balances and income distribution of varying investor risk tolerance are then demonstrated. Although the net impact also depends upon the host policy response, this transmission mechanism means that host 'fundamentals' are themselves strongly affected by capital flows and thus cannot be considered as to be independent of home asset demand. The paper concludes by examining the implications of these findings for the future of development economics in general and for policy response in particular.
Topic:
Development, Emerging Markets, Markets, and Third World

266. XBRL and U.S. Financial Market Leadership

Author:
Peter J. Wallison
Publication Date:
03-2006
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
In December, the London Stock Exchange celebrated a record year for foreign company new issues, with 129 new listings by companies from twenty-nine different countries. In contrast, the New York Stock Exchange registered a net gain of six foreign listings (a gain of nineteen and a loss of thirteen) in 2005, and NASDAQ gained a net of fourteen. According to a press report by the London Stock Exchange on its success, “about 38 per cent of the international companies surveyed said they had considered floating in the United States. Of those, 90 per cent said the onerous demands of the new Sarbanes-Oxley corporate governance law had made London listing more attractive.” By now, it is well-known what harm Sarbanes-Oxley has done to the attractiveness of the U.S. securities markets, but what is not well- known is that the lack of resources available to a relatively obscure accounting group—engaged in the development of a technical-sounding disclosure system called XBRL—may also threaten not only the current primacy of the U.S. financial markets, but also the future competitiveness of U.S. companies.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
United States, New York, and London

267. Will Emerging Markets Escape the Next Big Systemic Financial Crisis?

Author:
Kenneth Rogoff
Publication Date:
07-2006
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
For the past four centuries, emerging market debt crises have broken out like clockwork. In the early period, it was the European countries—the emerging markets of that era—that did the defaulting, with France reneging on its external debt eight times and Spain, the all-time record holder, 13 times (see Reinhart, Rogoff, and Savastano 2003). Over the last two centuries, it is today’s emerging markets, with countries like Brazil and Mexico having defaulted eight times, and Turkey six times. Venezuela leads them all with nine defaults. Defaults were relatively unknown in Asia until the 1990s, though in large part because most of these countries had been too poor until recently to become major borrowers on the world scene. Another factor, of course, is that they have achieved independence only this century. Today, the world seems very different, with credit risk premia on emerging market debt near record lows, and most countries in a position to borrow liberally on international capital markets. Indeed, the idea that emerging market countries cannot borrow in their own currency, which Eichenbaum and Hausman (2002) term “original sin,” seems like a distant memory, with many governments having issued large pools of internal market-based debt, with foreigners freely entering these markets. Even countries like Brazil, which has experienced two hyperinflations in the past 20 years, have succeeded in issuing domestic currency bonds sold directly to international investors. Now some people are even asking if European countries like Italy may soon face higher spreads than today’s emerging markets. Has the world been turned upside down? In this article, I will consider some rather sharply opposing perspectives on the admittedly complex current situation.
Topic:
Debt, Emerging Markets, and Financial Crisis
Political Geography:
Global Focus

268. Egypt after the Multi-Fiber Arrangement: Global Apparel and Textile Supply Chains as a Route for Industrial Upgrading

Author:
Dan Magder and Dan Magder
Publication Date:
08-2005
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Exporting through international supply chains was a successful way for East Asian countries to develop their textile and apparel industries in the 1970s and 1980s, but it is a less clear route for countries like Egypt trying to compete today. The challenge is particularly acute given the strength of competitors like China, and even more so in the post-MFA era. Some analysts suggest that "lean retailing" increases the importance of geography in exporting in the world of rapidly changing apparel fashion, in a way that could benefit a country like Egypt with its proximity to European end markets. Using a supply chain model, this paper suggests that shortening lead times can indeed have an impact on profits, but that the effect is not tremendous, being in the range of a 0.3 percent to 0.9 percent increase in profits for every week of improvement in lead times. The study also finds that the business environment in Egypt lags key comparator countries in several areas that help the firms compete in global apparel chains, although recent reforms by the Egyptian government are working to address several of these aspects. It concludes by exploring to what extent geography, trade preferences, and local production factors may help Egypt's textile and apparel industry carve out a role for itself in global supply chains, and provide an engine to drive industrial upgrading throughout the country.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
Europe, East Asia, North Africa, and Egypt

269. What Might the Next Emerging-Market Financial Crisis Look Like?

Author:
Morris Goldstein and Anna Wong
Publication Date:
07-2005
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
This paper addresses the following question: If a financial crisis affecting a group of emerging economies were to take place sometime over the next three years, where would the crisis likely originate, how could it be transmitted to other economies, and which economies would be most affected by particular transmission or contagion mechanisms? A set of indicators is presented to gauge the vulnerability of individual emerging economies to various shocks, including a slowdown in import demand in both China and the United States, a fall in primary commodity prices, increased costs and lower availability of external financing, alternative patterns of exchange rate changes, and pressures operating on monetary and fiscal policies in emerging economies.
Topic:
Economics, Emerging Markets, Globalization, and International Trade and Finance
Political Geography:
United States and China

270. South Korea's Experience with International Capital Flows

Author:
Marcus Noland
Publication Date:
06-2005
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
South Korea's experience is unparalleled in its combination of sustained prosperity, capital controls, and financial crisis. Over several decades South Korea experienced rapid sustained growth in the presence of capital controls. These controls and the delinking of domestic and international financial markets were an essential component of the country's state-led development strategy. As the country developed, opportunities for easy technological catch-up eroded, requiring more sophisticated corporate and financial sector decision making. But decades of financial repression had bequeathed a bureaucratized financial system and a formidable constellation of incumbent stakeholders opposed to transition to a more market-oriented development model. Liberalization undertaken in the 1990s was less a product of textbook economic analysis than of parochial politicking. The capital account liberalization program affected the timing, magnitude, and particulars of the 1997-98 crisis. Despite considerable reforms undertaken since the crisis, concerns remain about both South Korea's lending culture and its authorities' capacity to successfully regulate the more complex financial system. The main lesson of the South Korean case appears to be that while the state-led model may deliver impressive initial gains, transitioning out of this approach presents an exceedingly complex political-economy challenge.
Topic:
International Relations, Economics, and Emerging Markets
Political Geography:
Asia and South Korea