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421. Assessing China’s Financial Reform: Changing Roles of the Repressive Financial Policies

Author:
Yiping Huang and Tingting Ge
Publication Date:
01-2019
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
When China began economic reform in 1978, it had only one financial institution, the People’s Bank of China (PBOC), which, at that time, served as both the central bank and a commercial bank and accounted for 93 percent of the country’s total financial assets. This was primarily because, in a centrally planned economy, transfer of funds was arranged by the state and there was little demand for financial intermediation. Once economic reform started, the authorities moved very quickly to establish a very large number of financial institutions and to create various financial markets. Forty years later, China is already an important player in the global financial system, including in the banking sector, direct investment, and bond and equity markets. However, government intervention in the financial system remains widespread and serious. The PBOC still guides commercial banks’ setting of deposit and lending rates through “window guidance,” although the final restriction on deposit rates was removed in 2015. Industry and other policies still play important roles influencing allocation of financial resources by banks and capital markets. The PBOC intervenes in the foreign exchange markets from time to time, through directly buying or selling foreign exchanges, setting the central parity, and determining the daily trading band. The regulators tightly manage cross-border capital flows, and the state still controls majority shares of most large financial institutions.
Topic:
Economics, Foreign Exchange, Reform, Financial Markets, and Banks
Political Geography:
China and Asia

422. Ethiopia: Economic Development in a Harsh Environment: Part 2

Author:
Paul Rivlin
Publication Date:
06-2019
Content Type:
Commentary and Analysis
Institution:
Moshe Dayan Center for Middle Eastern and African Studies
Abstract:
The second part of this review of Ethiopia’s economic development examines the strengths and weaknesses of the policies followed and the institutions established in recent years and compares them with the development policies adopted in East Asia.
Topic:
History, Reform, Economy, and Economic Development
Political Geography:
Africa and Ethiopia

423. Supply-side reform leads to economic resilience

Author:
Qiyuan Xu
Publication Date:
02-2019
Content Type:
Policy Brief
Abstract:
China's GDP grew 6.6 percent in 2018, according to National Bureau o ftatistics data. Despite the slight slowdown in the GDP growth rate, however, exports grew at a relatively high 9.9 percent year-on-year calculated in US dollars. And, not surprisingly, China's trade surplus with the United States expanded further. ...... Besides, the relative prosperity index of small and medium-sized enterprises has dropped to the second-lowest point in a decade, and the financial cost differentiation among various industries is growing. This may have a negative impact on not only short-term macroeconomic stability, but also the development space of relevant emerging industries and long-term growth momentum.
Topic:
Reform, GDP, Economy, Economic Growth, and Resilience
Political Geography:
China and Asia

424. Perceiving Truth and Ceasing Doubts: What Can We Learn from 40 Years of China’s Reform and Opening up?

Author:
Fang Cai
Publication Date:
05-2019
Content Type:
Working Paper
Abstract:
China’s reform, opening up and resultant economic growth in the past 40 years haveled to the accumulation of an immense array of experiences, which economists areobligated to look into, analyze and theorize upon. In fact, the rich literature in thisarea has positively assessed and documented China’s successful experiences. However,theories that were established in Western countries have been applied as doctrine tojudge China’s experiences. By adopting an analytical framework unifying historicallogic and theoretical logic, the purpose of this paper is to reveal the unique Chineseexperience and its relevance to the general laws of economic development. Based on theexperiences of and in reference to research findings about China, this paper chroniclesthe process of reform, opening up and economic growth, and analyzes the nexus betweenthem. The study demystifies how the incentive mechanism, the factor accumulation andallocation system, market development, and macro policy environment reforms havespurred China’s economic growth, structural changes and the increase in productivity.The changes in development stage are examined and policy implications for furtherreform are discussed.
Topic:
Reform, Economy, Economic Growth, and Trade Policy
Political Geography:
China and Asia

425. Emerging Political Reforms and the Future of Ethiopian Federalism: Policy Options for Stability, Peace, and Development

Author:
Asnake Kefale
Publication Date:
03-2019
Content Type:
Working Paper
Institution:
Social Science Research Council
Abstract:
This policy brief explores the prospects of deploying federalism as an instrument of peacebuilding in the context of emerging political reforms in Ethiopia. The ap- pointment of Abiy Ahmed as prime minister in April 2018 by the ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF) marks a watershed moment in Ethiopia’s political history. The agenda of political reform adopted by EPRDF was largely due to two interrelated factors. First, the need to overcome the ap- parent fissures and constant power struggles within the party, especially since the death of Prime Minister Meles Zenawi in 2012. Second, as a response to the youth-led mass anti-government protests which started in 2015, primarily in the two most populous regions of the country, Oromia and Amhara. While the ongoing reforms are generating some optimism, there are also wor- risome developments in parts of the country. More than 1.4 million people have been displaced from their homes. The causes of their displacement are inter- ethnic tensions and identity-based communal conflicts over issues such as the ownership of natural resources linked to people’s livelihoods and the location of territorial borders. Those hit hardest by internal displacement are communities living in Gedeo and West Guji in southern Ethiopia and in the border areas of the Oromia and Somali regions. There are also tensions between the Amhara and Tigray regions over the identity of Wolqait and Raya communities. Similarly, the Sidama ethnic group’s demand for regional status in southern Ethiopia has cre- ated tension in the area. Moreover, there are reports of a breakdown of law and order in parts of the Amhara and Oromia regions. A key issue in Ethiopia’s political reform is the future of federalism, in particu- lar, the strong emphasis placed on ethnicity and whether it will continue to be relevant. On the one hand, there are political forces (centrists) that see ethnic federalism as a root cause of the current crisis, while others contend that theproblems are due to non-adherence to the principles of true federalism. However, it is important to note that the federal system is crucial to Ethiopia’s stability, peace, and develop- ment. With the opening of political space, the future direc- tion of Ethiopian federalism is being hotly contested. There are political forces that aspire to remove the ethnic element from the federal system or change the system altogether from ethnic to geographic federalism. Such a course of ac- tion is fraught with danger. The reactions to the removal of the federal status of Eritrea in 1960 and the autonomy of South Sudan in 1983 demonstrate the inadvisability of re- versing regional or ethnic autonomy. In both countries, the rolling back of autonomous arrangements by central au- thorities was a key factor in the long-running conflicts that culminated in the secession of Eritrea and South Sudan, re- spectively. The government of Ethiopia (GoE) should, there- fore, consider the following policy recommendations.
Topic:
Development, Reform, Political stability, Peace, and Federalism
Political Geography:
Africa and Ethiopia

426. China’s economic ‘miracle’ in context

Author:
Derek Scissors
Publication Date:
08-2019
Content Type:
Special Report
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
Contrasting China at various stages of reform to Japan and Korea at analogous stages shows China as less successful. The payoff is personal income, where China’s growth in local currency terms is similar to Japan’s. But it is slower than Korea’s, and, in comparable dollar terms, China is far behind Korea and Japan 40 years into the respective “miracles.” In evaluating key contributors to income gains—agricultural productivity, labor quantity and quality, leveraging, and innovation—China failed to extend education in the first 25 years of reform. A recent failure is the explosion in leveraging in the past decade. Other indicators of success roughly match Japan but trail Korea. China’s size makes it important even with less development success. For example, Chinese research and development spending affects the world while being inadequate to offset aging and indebtedness. When projecting economic size, though, trend extension is misleading. Korea and Japan illuminate how innovation and other factors will alter China’s trajectory.
Topic:
Foreign Policy, Defense Policy, Economics, and Reform
Political Geography:
Japan, China, Asia, and Korea

427. Civilian Crisis Management: Assessing the Readiness of EU Member States and Institutions

Author:
Nicoletta Pirozzi and Francesco Musi
Publication Date:
12-2019
Content Type:
Commentary and Analysis
Institution:
Istituto Affari Internazionali
Abstract:
The civilian dimension of conflict prevention, conflict resolution and post-conflict stabilisation has long been prominent in EU crisis management missions. From 2000 onwards, the EU has developed its monitoring, capacity-building, strategic advice and training tools, deploying a total of 22 civilian missions beyond its borders. Currently, there are 11 active civilian missions, stretching from the Balkans (EULEX Kosovo) to the Middle East (EUBAM Rafah, EUPOL COPPS, EUAM Iraq), from Eastern Europe and Caucasus (EUAM Ukraine, EUMM Georgia) to Africa (EUBAM Libya, EUCAP Sahel Mali, EUCAP Sahel Niger, EUCAP Somalia). Their main tasks include policy reforms on the rule of law, the fight against organised crime and security sector reform.
Topic:
Politics, Reform, Budget, Crisis Management, and Institutions
Political Geography:
Europe and European Union

428. Breaking, Not Bending: Afghan Elections Require Institutional Reform

Author:
Scott Smith and Staffan Darnolf
Publication Date:
08-2019
Content Type:
Special Report
Institution:
United States Institute of Peace
Abstract:
Afghanistan’s presidential election is scheduled to take place on September 28. In planning the election, the Independent Election Commission (IEC) must overcome a number of practical challenges to avoid repeating the mistakes of the 2018 parliamentary elections—elections that undermined the legitimacy of the state and reduced Afghans’ confidence in democracy as a means for selecting their leaders. Based on a careful analysis of the IEC’s performance during the 2018 elections, this report offers recommendations for creating more resilient electoral institutions in Afghanistan and other postconflict countries.
Topic:
Politics, Reform, Elections, Democracy, Conflict, Institutions, and Peace
Political Geography:
Afghanistan, South Asia, and Central Asia

429. Ukrainian Activism for Transparency and Accountability: Two Steps Forward, One Step Back

Author:
Olena Tregub
Publication Date:
05-2019
Content Type:
Special Report
Institution:
United States Institute of Peace
Abstract:
In the wake of the Euromaidan protests that toppled the government of Viktor Yanukovych in 2014, Ukrainian activists and civil society organizations have pressed hard for anti-corruption reforms and greater openness and transparency in the public sector. Five years later, however, corruption remains a fixture of civic life—and a majority of Ukrainians believe the fight against corruption has been a failure. This new report reviews the changes that have taken place in the anti-corruption movement since the Euromaidan and identifies practical actions the international community can take to support reform efforts in Ukraine.
Topic:
Security, Corruption, Governance, Reform, Democracy, Rule of Law, Protests, Accountability, Transparency, and Justice
Political Geography:
Europe and Ukraine

430. Reforming Indian Agriculture

Author:
Ashok Gulati, Devesh Kapur, and Marshall M. Bouton
Publication Date:
08-2019
Content Type:
Working Paper
Institution:
Center for the Advanced Study of India
Abstract:
Following an overwhelming election victory, Prime Minister Narendra Modi’s new government has a golden opportunity to bring about historic reforms in the agricultural sector to improve farmer livelihoods and national food security. The sector affects the economic well-being of half the Indian population and the access to affordable and nutritious food for all Indians. Fundamental reforms can achieve sustainable and broadly distributed agricultural growth that will add to India’s GDP, increase export earnings, help conserve increasingly scarce resources of land and water, and enable the more orderly movement out of agriculture and into other productive sectors. Reforms in four areas should be the priority if Prime Minister Modi’s bold goal of doubling farmer incomes is to be accomplished in the coming years. First, the focus of agricultural policies must shift from production per se to farmers’ livelihoods. Second, policies to improve the allocation and efficiency of land and water are essential if the critical resources of water and land are to be conserved. Third, reforms are needed to help farmers cope with the growing risks of weather and price volatility. Fourth, agricultural markets must be opened to greater competition and provided with better infrastructure if farmers are to realize better returns for produce while ensuring nutritional security for low-income consumers. Agriculture is a state subject but where the Central government has had—and will continue to have—a large role. Reforms can only succeed if the Central and state governments work closely together in a spirit of “cooperative federalism.” Many of the important levers of change—water, power, irrigation, extension, agri-markets, etc.—are controlled by the states. Going forward, it would be helpful if the government created an Agri-Reforms Council on the lines of GST Council for a somewhat longer term than is currently done (for two months). The focus for the Government of India will need to be twofold: actions that it can unilaterally take to raise agricultural incomes; and second, actions to influence state government efforts to improve agriculture with its sustainability at the core. The steps listed should be thought of as a package, which will have an impact if most are implemented and not one or two in isolation.  Reduce cereal procurement and keep MSP price increases for rice and wheat below inflation, and not exceeding border prices, while encouraging the private sector to develop robust markets in less water intensive crops like pulses and oilseeds by removing controls on stocking, trading, exports, etc. This will also have a beneficial impact on depleting water tables in certain regions, notably in north-west and southern India.  Implement income transfers scheme for farmers in tandem with reductions in the subsidies for power, water, and fertilizer that distort incentives and hinder change. This will have large positive environmental effects and help toward better natural resource management. Keep the real prices of subsidized grains under the National Food Security Act, 2013 and link them to the MSP to incentivize the production and consumption of non-cereals.  Scrap the Essential Commodities Act and other laws designed fifty years ago for conditions of scarcity. Those conditions of scarcity have long since disappeared. India is trying to cope more with the problems of surfeit than scarcity.  Focus on income from livestock to help marginal farmers (<1 ha). Change laws and more importantly the political and social climate that have been so detrimental to the livestock sector lately.  Eliminate or reduce dramatically export restrictions and export taxes on agricultural products. Trade policies that have been arbitrarily and pro-cyclically imposed (increasing tariffs and import restrictions when world prices come down, and imposing export bans and taxes when domestic prices rise)—must become stable and predictable by setting “trigger levels” well in advance.  Accelerate the effort to create a single agricultural market by introducing assaying, grading, setting standards, bringing “Uber-type” logistical players on e-platforms to move goods from one region to another, and setting dispute settlement mechanisms so that farmers and farm organizations can transact with any buyer, anywhere in India, and at any time of their choosing.  Support the creation of public mandis as a viable alternative to private trade. Most importantly, across the board, increase marketing options available to farmers while subsidizing market infrastructure improvements.  End support for the rehabilitation of inefficient urea plants and create a plan for closing the most inefficient plants.  Incentivize the passing of state laws to allow easy leasing/renting of agricultural land and relax restrictions on conversion of agricultural land for other purposes. At present, these restrictions keep the value of agricultural land low and raise the barriers to exit from agriculture. Finally, even as these reforms are undertaken, it needs to be recognized that growth and employment opportunities outside agriculture are critical for long-term improvements in farmers’ incomes. Relentless population pressures have meant that most Indian farms are too small to provide viable incomes. The long-term future of Indian farmers fundamentally depends on getting many people out of farming. Ironically, that future will come about more reliably if policies to improve agricultural production and incomes are pursued today.
Topic:
Agriculture, Reform, Elections, and GDP
Political Geography:
South Asia, India, and Asia