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61. Foreign Direct Investment and Labour Market Dynamics in a Developing Country: Evidence from Indonesian Plant-Level Data

Author:
Toshiyuki Matsuura and Hisamitsu Saito
Publication Date:
02-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This study examines the impact of inward foreign direct investment on the wages and employment of skilled and unskilled workers in Indonesian manufacturing plants. Entry of multinational enterprises affects local labour markets through spillovers as well as labour and product market competition. Our results show that spillovers increase the labour demand of local plants for unskilled workers, but increased wages due to severe labour market competition reduce the demand for skilled workers. We also find that product market competition causes resource reallocation from low- to high-productivity plants. Thus, attracting inward foreign direct investment effectively enhances aggregate productivity growth, but may retard the transition to skill-intensive production in Indonesian manufacturing.
Topic:
Development, Foreign Direct Investment, Manufacturing, and Labor Market
Political Geography:
Indonesia and Asia

62. Technology Imports and Employment in Developing Countries: Evidence from Viet Nam

Author:
Thu Thu Vu and Duc Anh Dang
Publication Date:
08-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Advanced machines and technology replace workers through automation. However, capital–labour substitution need not reduce aggregate labour demand, as it induces simultaneous contrasting effects within industries. To explore these effects, we examine the relationship between employment in Vietnamese manufacturing firms and imported capital goods in 2011–2017. To solve the problem of potential endogeneity and measurement errors, we used Association of Southeast Asian Nations (ASEAN) imported capital goods as an instrument variable for imported capital goods in Viet Nam. We found that imported capital goods do not displace employment and even increase employment and labour productivity. The impacts of imported advanced technology are more pronounced in large firms. More imported technology increases labour productivity in state-owned enterprises and the number of workers in large firms and firms in industrial zones. However, the increase in the level of employment is lower in industries and firms intensively using machines.
Topic:
Development, Science and Technology, Employment, and Imports
Political Geography:
Asia and Vietnam

63. The Effects of Financial Inclusion on Development Outcomes: New Insights from ASEAN and East Asian Countries

Author:
Rajabrata Banerjee, Ronald Donato, and Admasu Afsaw Maruta
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This study empirically examines the effects of financial inclusion on economic development, – economic growth, education, health, and income inequality – in 20 Asian countries in the period 2004-2015. The financial inclusion index at an aggregate level is constructed using a hybrid methodology (reported in the previous paper) and we empirically examine its relationship with particular development outcomes. We then disaggregate the index into the three dimensions of financial inclusions – access, usage, and quality – and further into the top two indicators from each dimension based on principal component analysis scores (reported in the previous paper), to examine whether specific dimensions or indicators are more strongly associated with particular development outcomes than with others. Our results show that aggregate financial inclusion has a strong positive effect on all development outcomes and this effect improves for countries with lower political risk. At the dimension level, while usage is the only dimension impacting on economic growth, and access is the only dimension impacting on health outcomes, both usage and access influence education and income inequality. Moreover, the top ranked indicators in each dimension exert a far greater positive influence on development outcomes than the second highest ranked indicators. Our findings show that adopting a single blanket policy may not be appropriate to realise the full potential of financial inclusion in a less developed country. Policy prescriptions should therefore target specific dimension and indicators of financial inclusion to maximise the positive effect on development outcomes.
Topic:
Development, Health, Finance, and Fiscal Policy
Political Geography:
Asia

64. The Role of Innovation in Skill Development: Evidence from Small and Medium-Sized Enterprises in Viet Nam

Author:
Duc Anh Dang and Vuong Ahn Dang
Publication Date:
12-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Using the Small and Medium Enterprise Survey in Vietnam and three proxies of innovation, we study the impact of firm innovation on on-the-job training in the manufacturing sector from 2007 through 2015. To address potential measurement errors and omitted variable problems, we use the average level of innovation in the same sector in other districts as an instrument for firms’ innovations. We find that firms provide additional training for existing workers when introducing new technology, and high-value-added firms provide additional training for existing workers. Moreover, government assistance may not be the main reason that encourages firms to provide training. The results also show that firms hire more skilled workers when implementing innovations.
Topic:
Development, Training, Innovation, and Skilled Labor
Political Geography:
Asia and Vietnam

65. America’s Use of Coercive Economic Statecraft

Author:
Elizabeth Rosenberg, Peter Harrell, Paula J. Dobriansky, and Adam Szubin
Publication Date:
12-2020
Content Type:
Special Report
Institution:
Center for a New American Security
Abstract:
U.S. policymakers will continue to intensively use a growing array of coercive economic tools, including tariffs, sanctions, trade controls, and investment restrictions. The growing use reflects a desire by policymakers to use coercive economic tools in support of a growing range of policy objectives. Diplomacy around these tools has long been challenging and can require hard choices. To use these tools effectively, policymakers should focus on articulating clear objectives and measuring effectiveness and costs. U.S.-China competition raises the stakes for getting the use of coercive economic statecraft right. Policymakers in the next presidential administration and Congress would be well-served to spend at least as much effort focusing on the positive tools of statecraft. These include domestic economic renewal, international finance and development incentives, and positive trade measures, among others.
Topic:
Development, Diplomacy, Sanctions, and Economy
Political Geography:
China, Asia, North America, and United States of America

66. African Union: Mbeki’s South Africa Policy for Africa

Author:
Luiza Bizzo Affonso and Vitor Ferreira Lengruber
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Brazilian Journal of African Studies
Institution:
Brazilian Journal of African Studies
Abstract:
Marked by tragedies that reinforce stereotypes about itself, especially those that portray it as dependent on developed countries and unable to solve its own dilemmas, the African continent still presents itself in the 21st century with challenges related to hunger and humanitarian calamities, more recurrent in some regions than others. The initiatives to deal with theses issues arise right at the beginning of the second millennium primarily from South Africa. In this sense, it is possible to ask the following question: what political and economic measures were adopted by the African continent in order to combat these problems? Based on the bibliographic review of qualitative secondary sources relevant to the theme and on the analysis of primary sources, such as speeches and official documents of the Organization of African Unity, the purpose of this article is to demonstrate changes in the political and economic dynamics. Those changes were materialized in the different principles incorporated by the Organization of African Unity (1963) and the African Union (2001), the two main organizations for political, economic and social cooperation at the continental level, which took place in Africa at the beginning of the 21st century. The specific objective of this article is to present the change of guidelines, politically and economically, adopted by the African Union at the time of the transition to the new millennium and the role of South Africa, during the administration of Thabo Mbeki (1999-2008) during the process. The historical period being analysed, therefore, dates from the mid-1990s to the end of Mbeki’s presidential term in September 2008.
Topic:
Development, Regional Cooperation, Economic growth, Regional Integration, and African Union
Political Geography:
Africa, South Africa, and Brazil

67. Brazil-Africa Relations: From the Slave Nexus to the Construction of Strategic Partnerships

Author:
Analúcia Danilevicz Pereira
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Brazilian Journal of African Studies
Institution:
Brazilian Journal of African Studies
Abstract:
ontinent overcame rhetoric and gained new force with the Luiz Inácio Lula da Silva government. The particular attention payed to these relations reflects an old aspiration of Brazil, that until then had not been pursued with determination. The historical bonds, the country’s large population of afro-descendants and the internal debate on racial equality, are elements in the Brazilian view regarding the need for rapprochement and cooperation. Even though Africa is a continent with alarming poverty indexes, it is not a stagnant one. The dynamism and development of “African” alternatives for its own problems define the stance of many of its leaderships.
Topic:
International Relations, Development, Diplomacy, History, Partnerships, and Alliance
Political Geography:
Africa and Brazil

68. Preparing for a Looming Water Crisis: Lessons Learned from COVID-19 in the Middle East and North Africa Countries

Author:
Jamal Saghir and Yasmina El Amine
Publication Date:
05-2020
Content Type:
Policy Brief
Institution:
Institute for the Study of International Development, McGill University
Abstract:
The challenge of water security is growing globally. Achieving and sustaining water security, in both developed and developing countries, is likely to increase in complexity and priority as climate change intensifies, but also as the demands of economic growth increase. For most MENA countries that were already facing water security and major social, health and economic challenges before COVID-19, this additional pressure is particularly excruciating. Like COVID-19 and climate change, water scarcity in MENA is a global problem that requires collective action. There is no more urgent time to address the MENA’s water crisis than now, when people are constantly being reminded to use water to combat the spread of the virus. The Arab world appears to have averted significant health impacts from COVID-19, possibly shielding to a certain extent its health sector, however other sectors are at risk of collapsing, as the region is on the brink of an even more devastating water crisis. Drawing on countries’ responses to the outbreak and on unique traits and issues typical to the region, this policy paper discusses COVID –19 and the MENA and explores lessons learnt from the pandemic, in light of the upcoming water crisis in the MENA. It examines the issues of inequality and regional cooperation. It argues that fostering innovation for resilience is crucial in the absence of strong institutional response or capacity of governments, while also tackling critical ways to address and prepare for increasing water scarcity in the region. Finally, the paper provides policy recommendations that represent fundamental requirements for sustainable water development in the MENA countries.
Topic:
Development, Water, Crisis Management, Sustainability, and COVID-19
Political Geography:
Middle East and North Africa

69. Key Issues in the Myanmar November 2020 Elections

Author:
Erik Martinez Kuhonta, Franque Grimard, and Kai Scott
Publication Date:
11-2020
Content Type:
Policy Brief
Institution:
Institute for the Study of International Development, McGill University
Abstract:
On 8 November 2020, Myanmar will hold its second election since the country’s gradual liberalization began. Despite presenting itself as a force for liberal democracy five years ago, the National League for Democracy (NLD) has demonstrated its unwillingness to commit itself to the protection of civil freedoms and the expansion of federal governance. It has fallen short of campaign promises by failing to enact meaningful constitutional change, improve economic performance, and address the protracted peace process. Notably, the government has created a climate that represses dissidents and undermines ethnic pluralism. Yet, the NLD’s support base remains strong, in part as a result of Aung San Suu Kyi’s continued ability to appeal to a Bamar-majority voter base by opposing the military cronyism of past and rooting herself in ethno-nationalist values, as witnessed in her decision to respond to charges of genocide at the International Court of Justice at the Hague. As a result, the NLD’s continued dominance over the Union Solidarity Development Party (USDP) is expected to continue. In the ethnic states, the situation is different—here, the ethnic political parties are expected to make gains on the NLD, as their recent merging place them well to take advantage of anti-NLD sentiment that has grown within ethnic minorities over the years because of the NLD’s perceived Bamar-centric governance. In addition, a lack of trust in the Union Elections Commission and complications due to covid-19 are significant sources of risk in the running of the 2020 election.
Topic:
Development, Government, Human Rights, Elections, and Domestic politics
Political Geography:
Asia, Southeast Asia, and Myanmar

70. Increasing Aid and Development Financing Volumes for the Advancement of Education in Lower-Middle-Income Countries

Author:
Christian Novak
Publication Date:
01-2020
Content Type:
Policy Brief
Institution:
Institute for the Study of International Development, McGill University
Abstract:
To advance education in lowermiddle-income countries, official donors and multilateral development banks must increase their financial support to address the financial gap. Specific recommendations: • Expand the use of innovative development financing solutions. • Expand the use of innovative aid solutions. • Multilateral development banks to increase financing volumes and to strengthen efforts to maximize financial additionality and private capital mobilization. • Review the classification of LICs and LMICs. • Increase domestic budget allocation. Implementing the recommendations require coordinated efforts of all stakeholders. In addition, it is paramount that lower-middleincome countries design and fully implement effective long-term education programs and systems. Benchmarking and feedback must be constant, prompting sustained improvement and the adoption of international best practices.
Topic:
Development, Education, United Nations, Foreign Aid, Finance, and Sustainable Development Goals
Political Geography:
Global Focus