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251. Should We Worry About Corporate Leverage?

Author:
Şebnem Kalemli-Özcan
Publication Date:
10-2019
Content Type:
Policy Brief
Institution:
Economics for Inclusive Prosperity (EfIP)
Abstract:
There has been a large increase in corporate leverage in many countries since the early 2000s. Figure 1 plots corporate debt to GDP since 2002 for different groups of countries. With the exception of the U.S., both advanced economies and emerging markets have corporate debt exceeding GDP since 2005. U.S. corporate debt is also on an increasing trend. The fastest growth in corporate debt has been observed in emerging markets. A closer look will reveal that China and other fast growing emerging countries in Asia drive most of the increase in corporate debt for the emerging markets.
Topic:
Debt, Economics, Markets, Regulation, Multinational Corporations, and Economic Policy
Political Geography:
United States and Global Focus

252. The Impact of Business Regulatory Quality on Private Sector Investment in Botswana

Author:
Kedibonye Sekakela
Publication Date:
03-2019
Content Type:
Working Paper
Institution:
Botswana Institute for Development Policy Analysis
Abstract:
A market-friendly regulatory environment is key for private sector investment. In this paper, we examine the impact of business regulatory quality on private sector investment in Botswana. The paper finds that the business regulatory environment stimulates private sector investment in the long term and this phenomenon occurs when the quality of bureaucracy improves, among other factors. Other critical factors affecting private sector investment examined in this paper include; corporate credit, output and public infrastructure investment. Private sector investment responds positively to increases in corporate credit in the short term but not responsive in the long term. Economic activities support private sector investment positively but weak. On the other hand, public infrastructure investment crowds in(out) investment in the short and long term respectively. Policy wise, Botswana should further deepen its efforts towards creating a market-friendly regulatory environment and also consider how business regulatory quality interact with other policy variables for better investment and growth outcomes.
Topic:
Economics, Developing World, Regulation, Business, Investment, and Economic Development
Political Geography:
Africa and Botswana

253. Environmental regulation in a transitional political system: delegation of regulation and perceived corruption in South Africa

Author:
Pedro Naso
Publication Date:
09-2019
Content Type:
Research Paper
Institution:
Centre for International Environmental Studies, The Graduate Institute (IHEID)
Abstract:
I study the economic motivations behind a reduction in the discretionary power of environmental regulators, and the impact that such reduction has on perceived corruption in South Africa. I examine the transition from the Air Pollution Protection Act of 1965 to the Air Quality Act of 2005, a change from full to partial delegation of regulation. By constructing a principal-agent model, I argue that this transition might have occurred because of an increase in the dispersion of rent-seeking motivations of public agents. This happens because, from the principal’s perspective, the possible harm— loose pollution control and misappropriation of environmental fines— generated by corrupt agents is greater than the potential benefits brought by diligent agents. In my empirical analysis, I use diff-indiffs models for a two-period panel with 191 South African firms to show that the regulatory change decreased treated firms’ perceived corruption, but did not improve other institutional quality measures.
Topic:
Climate Change, Economics, Environment, Regulation, and Pollution
Political Geography:
Africa and South Africa

254. Impacts of legal and regulatory institutions on economic development

Author:
Pedro Naso
Publication Date:
12-2019
Content Type:
Research Paper
Institution:
Centre for International Environmental Studies, The Graduate Institute (IHEID)
Abstract:
Since the second half of the 20th century, with the contributions of Coase, Williamson and North, the economic literature has emphasised the role of institutions in explaining differences in economic performance. According to the most diffused view, countries with good institutions will invest more in physical and human capital, will use productive factors in a more efficient way, and will achieve greater income level. But what are good institutions? And how should governments implement them? Answers to these questions have proven to be difficult mainly because of two characteristics of institutions: (i) institutional functioning is complex: the way institutions affect economic agents’ incentives is dependent on these agents’ individual preferences and the way they interact, which are difficult to predict; and (ii) they are context specific – the same institution in different contexts might result in a different economic outcome.
Topic:
Climate Change, Economics, Environment, Regulation, and Economic Policy
Political Geography:
Africa, South Africa, and Sierra Leone

255. Preventing Diversion: Comparing ATT and African Measures for Importing States

Author:
Paul Holtom and Benjamin Jongleux
Publication Date:
08-2019
Content Type:
Policy Brief
Institution:
Small Arms Survey
Abstract:
The diversion of conventional arms from licit to illicit entities can occur at any stage of the arms transfer chain. Preventing diversion therefore requires varied measures that effectively tackle the issue along the chain. The Arms Trade Treaty Working Group on Effective Treaty Implementation (WGETI) compiled a paper on such prevention measures, which relied heavily on the experiences of major exporting states. Several African sub-regional instruments contain measures to prevent and detect diversion for states that are not major exporters. This Small Arms Survey Briefing Paper compares diversion prevention measures for importing states as identified in the WGETI paper and African sub-regional measures. It finds that the African instruments lack articles on post-delivery cooperation with the exporting state, compliance with assurances on re-export or retransfer, in addition to measures to address identified cases of diversion. However, it also finds that these instruments contain prevention measures that are not in the WGETI paper, including provisions on modes of transport and official entry points. Incorporating experiences from ATT states parties from Africa can help inform discussions on the role of importing states to prevent diversion.
Topic:
Arms Control and Proliferation, Regulation, Trafficking, and Trade
Political Geography:
Africa

256. Labor Institutions and Development Under Globalization

Author:
Servaas Storm and Jeronim Capaldo
Publication Date:
07-2019
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Labor market regulation is a controversial area of public policy in both developed and developing countries. After decades of de-regulatory advice, international financial institutions have recently come to a less extreme position. But any concessions to labor regulation are based on concerns for social stability or for short-term support to aggregate demand, while regulation continues to be viewed as harmful to economic efficiency. In this paper we take a deeper look at the impact of labor institutions on economic development in two ways. First, we propose a macroeconomic model with balance-of-payments constraint for a “small” developing country open to trade and foreign capital. This helps us clarify the importance of a dynamic view of economic efficiency, as opposed to the static view embedded in mainstream policy advice. Secondly, we discuss the political economy of labor regulation. We argue that labor institutions promote economic development though positive effects on aggregate demand, labor productivity and technology.
Topic:
Economics, Labor Issues, Regulation, Labor Market, and Labor Cost
Political Geography:
Global Focus

257. The Impact of Business Regulatory Quality on Private Sector Investment in Botswana

Author:
Kedibonye Sekakela
Publication Date:
03-2019
Content Type:
Working Paper
Institution:
Botswana Institute for Development Policy Analysis
Abstract:
A market-friendly regulatory environment is key for private sector investment. In this paper, we examine the impact of business regulatory quality on private sector investment in Botswana. The paper finds that the business regulatory environment stimulates private sector investment in the long term and this phenomenon occurs when the quality of bureaucracy improves, among other factors. Other critical factors affecting private sector investment examined in this paper include; corporate credit, output and public infrastructure investment. Private sector investment responds positively to increases in corporate credit in the short term but not responsive in the long term. Economic activities support private sector investment positively but weak. On the other hand, public infrastructure investment crowds in(out) investment in the short and long term respectively. Policy wise, Botswana should further deepen its efforts towards creating a market-friendly regulatory environment and also consider how business regulatory quality interact with other policy variables for better investment and growth outcomes.
Topic:
Regulation, Business, Investment, and Private Sector
Political Geography:
Africa and Botswana

258. How Do Technical Barriers to Trade Affect Foreign Direct Investment?

Author:
Mahdi Ghodsi
Publication Date:
01-2019
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
Trade liberalisation and the EU enlargement in the past two decades allowed European multinational enterprises (MNEs) to benefit from production fragmentation in Central, East and Southeast Europe (CESEE). Recent studies show that market regulations and standards that are embedded within Technical Barriers to Trade (TBTs) might not necessarily hamper trade but improve the quality of products, production procedures, and market efficiencies. However, complying with the regulations embedded in the TBTs imposed by a host country might be costly enough to discourage MNEs from investing there. Furthermore, MNEs from countries that impose more regulations and standards might be more capable of investing abroad. This article analyses how TBTs imposed by both home and host countries affect inward FDI stocks in the CESEE countries during the period 1996-2016. The results suggest that Specific Trade Concerns (STCs) raised on trade-restrictive TBTs imposed by CESEE countries induce ‘tariff jumping’ motives of investment to these countries, while regular TBTs as indications of positive externalities and efficiency gains at home discourage outward FDI. Besides, FDI stocks by non-EU28 countries are found to be stimulated by regular quality TBTs imposed by the host economies.
Topic:
International Trade and Finance, Foreign Direct Investment, European Union, Regulation, and Tariffs
Political Geography:
Europe

259. Words that Hurt (2): National and International Perspectives on Hate Speech Regulation

Author:
Kyriaki Topidi
Publication Date:
09-2019
Content Type:
Research Paper
Institution:
European Centre for Minority Issues (ECMI)
Abstract:
Faced with a piecemeal approach to hate speech in Europe, leading to the reduced visibility of the phenomenon with often serious consequences, a variety of regional and international organisations have contributed legal documents and interpretative recommendations that attempt to guide states in their practice of combating hate speech. The present paper, following up on a previous one, will engage first with the international legal and regulatory framework of hate speech, placing emphasis on the European elements of the system in place. At a second stage, the paper will briefly survey twenty European national systems exposing the variety of regulatory patterns on the issue. Finally, the study will conclude with a list of common observations pertaining to the regulation of hate speech in the European continent, as they have emerged from the comparative analysis of the case-studies.
Topic:
Governance, Minorities, Regulation, Discrimination, Hate Speech, and Institutionalism
Political Geography:
Europe

260. Online Harms White Paper: Open Consultation Submission

Author:
Bradley Hanlon, Lindsay Gorman, and Bret Schafer
Publication Date:
06-2019
Content Type:
Policy Brief
Institution:
German Marshall Fund of the United States (GMFUS)
Abstract:
In April 2019, the United Kingdom’s Home Office published its Online Harms White Paper, which proposed a regulatory framework designed to address the prevalence of “illegal and harmful content online.” The Paper called for the establishment of a “duty of care” that would place greater responsibility on companies to ensure the safety of their users and address harm caused through the use of their services. It broadly defined the companies to which the framework would apply as those “that allow users to share or discover user-generated contact or interact with each other online” and included among its “online harms” threats ranging from disinformation and terrorist activity to cyberbullying and child exploitation and abuse. The Paper further advocated the establishment of an independent regulator to oversee compliance with the new regulations and enforce punishments for non-compliance. The UK government also solicited open consultation on the specifics of its proposals. To this end, ASD’s Brad Hanlon, Lindsay Gorman, and Bret Schafer submitted the following key recommendations to increase the effectiveness of the Online Harms White Paper’s response to online threats, which are drawn directly from their report: Lawmakers should reassess the broad scope of the “online harms” framework and consider the different legislative actions that may be necessary (or unnecessary) to combat varied challenges. They should also acknowledge the need for solutions that are tailored not only to specific threats, but that account for the nature, size, and capabilities of online platforms. Lawmakers should reassess whether an independent regulator is an effective method to combat the full range of “online harms” encompassed in the White Paper and consider other actions for countering threats that are difficult to define. If lawmakers proceed to establish an independent regulator, they should ensure that it is guided by a defined and proportionate enforcement structure and that it maintains credible independence from government. Lawmakers should construct a definition of “private communications” that includes encrypted messaging platforms and craft legislation that regulates “online harms” on these platforms without threatening democratic norms. As one of the first efforts to create a comprehensive framework to address threats to online safety, the regulations that the UK adopts will influence the approaches of other countries – including those with a weaker democratic record. By taking these steps, the UK can most effectively shape international norms surrounding online regulation.
Topic:
Regulation, Internet, Norms, and Cyberspace
Political Geography:
United Kingdom and Europe