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731. Labor Regulations and European Industrial Specialization: Evidence from Private Equity Investments

Author:
Ant Bozkaya and William R. Kerr
Publication Date:
05-2008
Content Type:
Working Paper
Institution:
Belfer Center for Science and International Affairs, Harvard University
Abstract:
European nations empirically substitute between employment protection regulations and labor market expenditures like unemployment insurance benefits in the provision of labor market insurance to workers. While perhaps substitutes from a worker's perspective, employment regulations more directly tax .firms making frequent labor force adjustments. These labor adjustments are especially important for the portfolio companies of both venture capital and buy-out investors. European nations providing worker insurance through labor market expenditures developed stronger domestic private equity markets over the 1990-2004 period than those nations favoring employment protection. These patterns are further evident in US-sourced private equity investments into Europe. Moreover, tests for industry specialization suggest that countries with more flexible labor markets tend to specialize in sectors characterized by high labor volatility. These results are relevant to the literatures examining the impact of labor market regulations on entrepreneurship and productivity growth due to reallocations across .firms and sectors.
Topic:
Economics, Industrial Policy, and Markets
Political Geography:
United States and Europe

732. Canada and the European Union: Prospects for a Free Trade Agreement

Author:
Selen Sarisoy Guerin and Chris Napoli
Publication Date:
07-2008
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
This paper argues that there are significant potential economic gains to be obtained from an EU-Canada Free Trade Agreement. The evolution of trade between the US and Canada following the signing of CUSFTA in 1989 offers a good illustration of how trade might increase after an EU-Canada FTA, as the patterns and levels of protection between the EU and Canada today are very similar to the protection that existed between the US and Canada in 1989. Although many empirical studies fail to find support for 'trade diversion' created by NAFTA (or CUSFTA) at the expense of the EU and to the benefit of the US, there is some evidence of trade diversion when detailed regional trade is examined. If indeed trade diversion has occurred due to NAFTA, then an EU-Canada FTA is welfare-enhancing for Canada. For the EU, a potential FTA can level the playing field with the US and increase the competitiveness of European firms in the Canadian market.
Topic:
International Trade and Finance and Markets
Political Geography:
United States, Europe, and Canada

733. From Public-Private Partnership to Market [Working Paper No. 10]

Author:
Gudrun Benecke, Lars Friberg, Markus Lederer, and Miriam Schröder
Publication Date:
04-2008
Content Type:
Working Paper
Institution:
Collaborative Research Center (SFB) 700
Abstract:
Tackling climate change is by now recognised as a policy challenge of utmost importance. The Kyoto Protocol is the most advanced multilateral effort to tackle climate change. One of the most interesting and innovative building blocks of the Kyoto Protocol climate regime is the Clean Development Mechanism (CDM). Since its inception this so-called flexible mechanism has been key in establishing a volatile and booming market for carbon emission reductions (CERs), which are the first internationally traded commodity created by an international environmental agreement. Within the process of market establishment and function, private actors such as companies, project verifiers, carbon funds and traders have become leading actors in the global carbon market. The market continues to be intimately policy dependent as demand derives from the stringency of emission allocations and future nation state commitments for greenhouse gas reductions. This article investigates the transformation of a market that has been initiated by public actors, kick-started by public-private partnerships (PPPs) and that has evolved into a market in which governments are withdrawing and private actors are increasingly taking up their governance function. It furthermore evaluates the status quo of the CDM and finishes with open questions for research.
Topic:
Environment, International Organization, Markets, and Non-Governmental Organization

734. Central banks and capital flows

Author:
Stephen Grenville
Publication Date:
02-2008
Content Type:
Working Paper
Institution:
Lowy Institute for International Policy
Abstract:
Sudden capital outflows were at the heart of the 1997-8 Asian Crisis. Ten years later, capital flows are back on the policy agenda, but in a very different context. The countries of East Asia are now getting more inflows than they can effectively absorb and the upward pressure on exchange rates is unwelcome.
Topic:
Economics, International Trade and Finance, and Markets
Political Geography:
Israel and Asia

735. Crossroads at Mmamabula: Will the World Bank Choose the Clean Energy Path?

Author:
David Wheeler
Publication Date:
02-2008
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
At the recent UN climate change conference in Bali, UN Secretary General Ban Ki-moon called for a revolutionary change in the world's energy mix to minimize the risk of catastrophic global heating. This paper explores the implications for the World Bank and other donor institutions, employing proposed Bank financing of the Mmamabula coal-fired power project in Botswana as an illustrative case. Using the latest estimates of generating costs for coal-fired and low-carbon power options, I compute the CO2 accounting charges that would promote switching to the low-carbon options. In all cases, I find that that the switching charges are at the low end of the range that is compatible with safe atmospheric limits on carbon loading. Among the low-carbon options that I have considered for Botswana, solar thermal power seems to dominate carbon capture and storage.
Topic:
Energy Policy, Environment, Markets, and United Nations
Political Geography:
Africa

736. Currency Undervaluation and Sovereign Wealth Funds: A New Role for the World Trade Organization

Author:
Arvind Subramanian and Aaditya Mattoo
Publication Date:
02-2008
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Two aspects of global imbalances—undervalued exchange rates and sovereign wealth funds (SWFs)—require a multilateral response. For reasons of inadequate leverage and eroding legitimacy, the International Monetary Fund (IMF) has not been effective in dealing with undervalued exchange rates. We propose new rules in the World Trade Organization (WTO) to discipline cases of significant undervaluation that are clearly attributable to government action. The rationale for WTO involvement is that there are large trade consequences of undervalued exchange rates, which act as both import tariffs and export subsidies, and that the WTO's enforcement mechanism is credible and effective. The WTO would not be involved in exchange rate management, and our proposals do not entail the WTO displacing the IMF: Rather, they would harness the comparative advantage of the two institutions, with the IMF providing the essential technical expertise in the WTO enforcement process. On SWFs, there is a bargain to be struck between countries with SWFs, which want secure and liberal access for their capital, and capital-importing countries that have concerns about the objectives and operations of SWFs. The WTO is the natural place to strike this bargain. Its services agreement, the General Agreement on Trade in Services (GATS), already covers investments by SWFs, and other agreements offer a precedent for designing disciplines for SWFs. Placing exchange rates and SWFs on the trade negotiating agenda may help revive the Doha Round by rekindling the interest of a wide variety of groups, many of whom are currently disengaged from the round.
Topic:
Foreign Exchange, International Organization, International Trade and Finance, and Markets

737. From bear to bull? Sub-Saharan Africa and Global Capital Markets

Author:
Sam Jones
Publication Date:
01-2008
Content Type:
Policy Brief
Institution:
Danish Institute for International Studies
Abstract:
The current boom in global commodity prices and the expansion of Chinese interests in sub-Saharan Africa are part of a general warming of external investors to the region. This policy brief examines trends in commercial financial instruments such as equities, bonds and commercial bank lending and their impact on economic development. It reviews the nature and behaviour of these instruments in developing countries compared with more traditional development finance, such as foreign aid. This provides a foundation for analysing past and present trends in sub-Saharan Africa. It is argued that, like many other low income countries in the past, sub-Saharan Africa has received negligible inflows of external commercial financing. If anything, the region has been additionally excluded from these flows due to very weak levels of financial sector development even compared to other low income countries. At the same time, recent changes in global and domestic conditions mean that the situation is evolving rapidly. There is mounting evidence to show that many economies in sub-Saharan Africa are enjoying significantly expanded access to commercial external capital flows. Given good prospects that this trend will continue, the playing field for traditional donors is likely to alter significantly. The brief concludes by reflecting on how donors might respond to these emerging policy challenges.
Topic:
Development, Markets, and Non-Governmental Organization
Political Geography:
Africa and China

738. Trade-offs in European energy policy: On choice, losses, gains, and how to have a go on both the swings and the roundabouts

Author:
Svend Aage Christensen
Publication Date:
01-2008
Content Type:
Policy Brief
Institution:
Danish Institute for International Studies
Abstract:
In the spring of 2007, a trio of researchers put forward five proposals for optimising the EU's energy policy. The European Commission had published its framework for an energy policy in January 2007, and now, in the autumn of 2007, the European Commission has been presenting its proposals in more detail. The stage is set for heated discussions. The research trio believe, amongst other things, that existing policies for the internal market and competition regulations provide an immediately accessible framework for an energy market on a European scale, and should be implemented in full. In other words, they are opposed to the trends towards re-nationalisation and protectionism that characterise parts of the debate.
Topic:
Energy Policy, Environment, and Markets
Political Geography:
Europe

739. Organised labour and the social regulation of global value chains

Author:
Lone Riisgaard and Nikolaus Hammer
Publication Date:
04-2008
Content Type:
Working Paper
Institution:
Danish Institute for International Studies
Abstract:
Since the 1980s, various processes of economic globalisation have eroded established foundations of organised labour. The increased mobility of goods and capital, compared to labour's relative immobility, has made it more difficult for labour to advance its objectives through traditional local industrial action or tripartite social contracts. In this paper, we are concerned with the social regulation of global value chains (GVCs) and more specifically the room for manoeuvre that organised labour has for advancing social regulation in different GVCs via Private Social Standards and/ or International Framework Agreements. We argue, that the governance structure (and restructuring) of GVCs frame key elements of the terrain that enables and constrains labour's strategic opportunities for advancing the social regulation of GVCs.
Topic:
Globalization, International Trade and Finance, Markets, and Non-Governmental Organization

740. A Blueprint for Sovereign Wealth Fund Best Practices

Author:
Edwin M. Truman
Publication Date:
04-2008
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Over the past year, sovereign wealth funds (SWFs) have leapt from the back pages in business sections of financial newspapers to lead stories on the Internet. Defenders of SWFs argue that they are benign, long-term investors that provide needed capital transfusions to hard-pressed private financial institutions. At the same time, political controversy surrounds SWFs in many countries including their own. Moderate voices have called for agreement on a set of best practices for SWFs.
Topic:
International Relations, Economics, International Political Economy, Markets, and Sovereignty