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11. Quid Pro Quo, Knowledge Spillover and Industrial Upgrading

Author:
Jie Bai, Panle Barwick, Shengmao Cao, and Shanjun Li
Publication Date:
11-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Are quid pro quo (technology for market access) policies effective in facilitating knowledge spillover to developing countries? We study this question in the context of the Chinese automobile industry where foreign firms are required to set up joint ventures with domestic firms in return for market access. Using a unique dataset of detailed quality measures along multiple dimensions of vehicle performance, we document empirical patterns consistent with knowledge spillovers through both ownership affiliation and geographical proximity: joint ventures and Chinese domestic firms with ownership or location linkage tend to specialize in similar quality dimensions. The identification primarily relies on within-product variation across quality dimensions and the results are robust to a variety of specifications. The pattern is not driven by endogenous joint-venture network formation, overlapping customer base, or learning by doing considerations. Leveraging additional micro datasets on part suppliers and worker flow, we document that supplier network and labor mobility are important channels in mediating knowledge spillovers. However, these channels are not tied to ownership affiliations. Finally, we calibrate a simple learning model and conduct policy counterfactuals to examine the role of quid pro quo. Our findings show that ownership affiliation facilitates learning but quality improvement is primarily driven by the other mechanisms.
Topic:
International Trade and Finance, Science and Technology, and Developing World
Political Geography:
China and Asia

12. Tax Administration vs. Tax Rates: Evidence from Corporate Taxation in Indonesia

Author:
M. Chatib Basri, Mayara Felix, Rema Hanna, and Benjamin A. Olken
Publication Date:
10-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Developing countries collect a far lower share of GDP in taxes than richer countries. This paper asks whether changes in tax administration and tax rates can nevertheless raise substantial additional revenue – and if so, which approach is most effective. We study corporate taxation in Indonesia, where the government implemented two reforms that differentially affected firms. First, we show that increasing tax administration intensity by moving the top firms in each region into “Medium-Sized Taxpayer Offices,” with much higher staff-to-taxpayer ratios, more than doubled tax revenue from affected firms over six years, with increasing impacts over time. Second, using non-linear changes to the corporate income tax schedule, we estimate an elasticity of taxable income of 0.59, which implies that the revenue-maximizing rate is almost double the current rate. The increased revenue from improvements in tax administration is equivalent to raising the marginal corporate tax rate on affected firms by about 23 percentage points. We suggest one reason improved tax administration was so effective was that it flattened the relationship between firm size and enforcement, removing the additional “enforcement tax” on large firms. On net, our results suggest that improving tax administration can have significant returns for developing country governments.
Topic:
Governance, Developing World, Reform, Business, and Tax Systems
Political Geography:
Indonesia and Southeast Asia

13. Creative Destruction or Idiot Winds: Schumpeterian Theory Meets the Educational Sector in Developing Countries

Author:
Mark H. Moore
Publication Date:
08-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
This is one of a series of working papers from “RISE"—the large-scale education systems research programme supported by the UK’s Department for International Development (DFID), Australia’s Department of Foreign Affairs and Trade (DFAT), and the Bill and Melinda Gates Foundation.
Topic:
Development, Education, Governance, and Developing World
Political Geography:
Global Focus

14. Why Does Hirschmanian Development Remain Mired on the Margins? Because Implementation (and Reform) Really is 'a Long Voyage of Discovery'

Author:
Michael Woolcock
Publication Date:
02-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
A defining task of development is enhancing a state’s capability for policy implementation. In most low- income countries, alas, such capabilities seem to be stagnant or declining, in no small part because dominant reform strategies are ill-suited to addressing complex non-technical aspects. This has been recognized for at least six decades – indeed, it was a centerpiece of Albert Hirschman’s understanding of the development process – yet this critique, and the significance of its implications, remain on the margins of scholarship and policy. Why? I consider three options, concluding that, paradoxically, followers of Hirschman’s approach inadequately appreciated that gaining more operational traction for their approach was itself a type of problem requiring their ideas to embark on ‘a long voyage of discovery’, a task best accomplished, in this instance, by building – and tapping into the distinctive insights of – a diverse community of development practitioners.
Topic:
Development, Political Economy, Developing World, and International Development
Political Geography:
North America and United States of America

15. Who Wins in the World Economy and English Football?

Author:
Matt Andrews
Publication Date:
01-2019
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Globalization has fed significant economic gains across the world. The gains lead some policymakers in developing countries to believe in the potential of ‘catch up’—where they leverage the gains of an open world economy to foster rapid progress and compete with more developed nations. This belief is particularly evident in countries like Rwanda, where policymakers aspire to turn the country into ‘Africa’s Singapore’. This paper asks if such aspiration is realistic: Do developing countries really gain enough from globalization to catch up to more developed countries? The paper examines the world economy as a league in which countries compete for winnings (manifest in higher income and production). Wealthier countries are in the top tiers of this league and poorer countries are in the lower tiers. The paper asks if gains from the last generation of growth have been distributed in such a way to foster ‘catch up’ by lower tier countries, and if we see these countries ‘catching up’ by moving into higher tiers. This analysis of the world economy is compared with a study of English football, where over 90 clubs play in an multi-tier league system. Prominent examples of ‘catch up’ in this system include Leicester City’s rise from the third tier in 2008 to become first tier champion in 2015. The paper asks if such ‘catch up’ is common in English football, given the way winnings are distributed, and if ‘catch up’ is more common in this context than in the world economy more generally.
Topic:
Globalization, Developing World, Global Political Economy, and Economic growth
Political Geography:
Africa and Rwanda

16. The Revolution in Civil-Military Affairs

Author:
Anthony H. Cordesman
Publication Date:
02-2018
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies
Abstract:
The U.S. has learned many lessons in its wars in Afghanistan, Iraq, and Syria—most of them the hard way. It has had to adapt the strategies, tactics, and force structures designed to fight regular wars to conflicts dominated by non-state actors. It has had to deal with threats shaped by ideological extremism far more radical than the communist movements it struggled against in countries like Vietnam. It has found that the kind of “Revolution in Military Affairs,” or RMA, that helped the U.S. deter and encourage the collapses of the former Soviet Union does not win such conflicts against non-state actors, and that it faces a different mix of threats in each such war—such as in cases like Libya, Yemen, Somalia and a number of states in West Africa. The U.S. does have other strategic priorities: competition with China and Russia, and direct military threats from states like Iran and North Korea. At the same time, the U.S. is still seeking to find some form of stable civil solution to the conflicts in Afghanistan, Iraq, and Syria—as well as the conflicts Libya, Yemen, Somalia, Sudan and West Africa. Reporting by the UN, IMF, and World Bank also shows that the mix of demographic, political governance, and economic forces that created the extremist threats the U.S. and its strategic partners are now fighting have increased in much of the entire developing world since the attack on the World Trade Center and Pentagon in 2001, and the political upheavals in the Middle East and North Africa in 2011. The Burke Chair at CSIS has prepared a working paper that suggests the U.S. needs to build on the military lessons it has learned from its "long wars" in Afghanistan, Iraq, and other countries in order to carry out a new and different kind of “Revolution in Civil-Military Affairs,” or RCMA. This revolution involves very different kinds of warfighting and military efforts from the RMA. The U.S. must take full advantage of what it is learning about the need for different kinds of train and assist missions, the use of airpower, strategic communications, and ideological warfare. At the same time, the U.S. must integrate these military efforts with new civilian efforts that address the rise of extremist ideologies and internal civil conflicts. It must accept the reality that it is fighting "failed state" wars, where population pressures and unemployment, ethnic and sectarian differences, critical problems in politics and governance, and failures to meet basic economic needs are a key element of the conflict. In these elements of conflict, progress must be made in wartime to achieve any kind of victory, and that progress must continue if any stable form of resolution is to be successful.
Topic:
Civil Society, United Nations, Military Strategy, Governance, Military Affairs, and Developing World
Political Geography:
Africa, United States, Iraq, Middle East, West Africa, Somalia, and Sundan

17. Enhancing Public Health Outcomes in Developing Countries: From Good Policies and Best Practices to Better Implementation

Author:
Michael Woolcock
Publication Date:
02-2018
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
In rich and poor countries alike, a core challenge is building the state’s capability for policy implementation. Delivering high-quality public health and health care – affordably, reliably, at scale, for all – exemplifies this challenge, since doing so requires deftly integrating refined technical skills (surgery), broad logistics management (supply chains, facilities maintenance), adaptive problem solving (curative care) and resolving ideological differences (who pays? who provides?), even as the prevailing health problems themselves only become more diverse, complex and expensive as countries become more prosperous. The current state of state capability in developing countries, however, is demonstrably alarming, with the strains and demands only likely to intensify in the coming decades. Prevailing ‘best practice’ strategies for building implementation capability – copying and scaling putative successes from abroad – are too often part of the problem, while individual training (‘capacity building’) and technological upgrades (e.g., new management information systems) remain necessary but deeply insufficient. An alternative approach is outlined, one centered on building implementation capability by working iteratively to solve problems nominated and prioritized by local actors.
Topic:
Health, Developing World, State, Public Policy, and Policy Implementation
Political Geography:
Global Focus

18. What Holds African LDC Exports Back? Translating Global Trade Alert Data Into A Positive Trade Agenda For Africa

Author:
Pamela Anne Bayona, Vincent Martin Beyer, and Olayinka Oladeji
Publication Date:
01-2018
Content Type:
Working Paper
Institution:
Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:
Trade-Restrictive Measures (TRM) are an area of huge concern to importers and exporters in African Union Least Developed Countries (AU LDCs) located in Sub-Saharan Africa. This report identifies and analyses discriminatory government policies that adversely affect AU LDCs over the period 2009 to 2017 by using the Global Trade Alert database, a database that collects information on trade-discriminatory measures implemented by countries worldwide. The research by the students shows that the most frequently encountered TRM types are import tariff measures, tax-based export incentives, trade finance measures, public procurement localisation and export taxes. However, the Global Trade Alert excludes Technical Barriers to Trade and Sanitary and Phytosanitary measures that are formally justifiable as serving public interests, but are typically the most commonly cited as the biggest obstacles to trade. The report also provides policy recommendations and negotiation positions to the AU LDC Countries to move from a defensive trade agenda to an offensive one.
Topic:
Development, Economics, International Trade and Finance, Developing World, Global Political Economy, and Free Trade
Political Geography:
Africa and African Union

19. The Monitoring, Reporting, and Verification Mechanisms for Developing Countries under the UNFCCC: an analysis of the BASIC countries Biennial Update Reports

Author:
Alice Amorim
Publication Date:
11-2017
Content Type:
Policy Brief
Institution:
BRICS Policy Center
Abstract:
This Policy Brief has three main objectives: Firstly, to present the basic international policy framework for the MRV for developing country Parties under the UNFCCC; Secondly, to provide a short comparative analysis of the latest version of the BURs presented by the countries that belong to the BASIC bloc, with an emphasis on the national MRV component of the Reports; Thirdly and lastly, to provide a set of policy recommendations for the BASIC countries.
Topic:
Climate Change, Development, Developing World, Regulation, and Sustainability
Political Geography:
China, India, South Africa, and Brazil

20. Welcome Home in a Crisis: Effects of Return Migration on the Non-migrants' Wages and Employment

Author:
Ricardo Hausmann and Ljubica Nedelkoska
Publication Date:
01-2017
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Over the past few decades, migration from developing to developed countries was often viewed as 'brain drain', as talented workers were forced out of their home countries due to lack of competitive opportunities. The population that left these countries and settled in the more economically advanced parts of the world have, over time, acquired financial capital and built social networks within host countries. Hence, while the home countries were still suffering from the scarcity of knowhow, significant shares of their populations began to actively engage in more productive economies. It seems that, through migration, developing countries had unexpectedly created significant networks of human and financial capital abroad. But are these foreign networks transferring knowhow back to their home countries? It turns out that those same reasons that induced the economic migration in the first place, often make it difficult for migrants to engage afterwards. What would happen, however, if a large proportion of these diasporas was forced to return back to their home country - would that lead to knowhow transfer? Our study investigates the impact of such an abrupt return migration wave between Greece and Albania.
Topic:
Development, Migration, Labor Issues, Developing World, and Economy
Political Geography:
Europe, Eastern Europe, Greece, and Albania