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292. Inequality, Corruption, and Competition in the Presence of Market Imperfections
- Author:
- Indranil Dutta and Ajit Mishra
- Publication Date:
- 08-2005
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- We analyze the relation between inequality, corruption and competition in a developing economy context where markets are imperfect. We consider an economy where different types of households (efficient and inefficient) choose to undertake production activities. For production, households borrow capital from the credit market. They also incur non-input costs which they could avoid by bribing inspectors. Due to information asymmetry and wealth inequality, the credit market fails to screen out the inefficient types. In addition to the imperfect screening, the inefficient type's entry is further facilitated by corruption. We analyze the market equilibrium and look at some of the implications. We show that a rise in inequality can lead to an increase in corruption along with greater competition.
- Topic:
- Development, Economics, Emerging Markets, and Human Welfare
293. Financial Sector Structure and Financial Crisis Burden: A Model Based on the Russian Default of 1998
- Author:
- George Mavrotas and Dmitri Vinogradov
- Publication Date:
- 06-2005
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- We consider an overlapping generations model with two production factors and two types of agents in the presence of financial intermediation and its application to the Russian default of August 1998. The paper focuses on the analysis of the consequences of a sudden negative repayments shock on financial intermediation capacity and consequently on the economy as a whole. The model exhibits a 'chain reaction' property, when a single macroeconomic shock can lead to the exhaustion of credit resources and to the subsequent collapse of the whole banking system. To maintain the capability of the system to recover, regulatory intervention is needed even in the presence of the state guarantees on agents' deposits in the banks (workout incentives). We compare the results for an intermediated economy with those derived under the assumption of a market economy, and draw some broad conclusions on the consequences of the crises, which are contingent on the financial sector structure.
- Topic:
- Development, Economics, Emerging Markets, and International Trade and Finance
- Political Geography:
- Russia
294. From Local to Global and Informal to Formal: Entering Mainstream Markets
- Author:
- Reema Nanavaty
- Publication Date:
- 02-2005
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- This is a brief sketch of the Self Employed Women's Association's (SEWA) three-decade-long journey from the local to global and informal to formal sector in search of finding work and income for now 720,000 women workers. Though SEWA remains a local and an informal economy workers' organization, its aim has always been to mainstream its issues, hopes, and achievements.
- Topic:
- International Relations, Economics, Emerging Markets, and International Trade and Finance
295. Unlocking Public Entrepreneurship and Public Economies
- Author:
- Elinor Ostrom
- Publication Date:
- 01-2005
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- Unlocking human potential requires a rich network of institutional arrangements in both private and public spheres. Opening the private sphere to entrepreneurship and complex market organization is well understood as a key to increasing the level and quality of private goods available to consumers. Opening the public sphere to entrepreneurship and innovation at local, regional, and international levels is also a key to increasing the level and quality of public goods – e.g., peace, safety, and health – available to citizens. This paper reviews studies of urban service delivery that have repeatedly found communities of individuals who have self-organized to provide and co-produce surprisingly good local services. In addition to unlocking individual freedom, we need to unlock the public sector from rigid, top-down, hierarchical organization.
- Topic:
- International Relations, Economics, Emerging Markets, and International Trade and Finance
296. The Fed: Pulling on a Rubber Band
- Author:
- John H. Makin
- Publication Date:
- 12-2005
- Content Type:
- Policy Brief
- Institution:
- American Enterprise Institute for Public Policy Research
- Abstract:
- On December 13 the Federal Reserve's Open Market Committee (FOMC) raised the federal funds rate, the principal tool for setting monetary policy, by 25 basis points to 4.25 percent. At the same time, the Federal Reserve Board of Governors greatly simplified what had been a tortured statement explaining the basis for their actions and the factors that will govern future actions. The statement was remarkably brief: Despite elevated energy prices and hurricanerelated disruptions, the expansion in economic activity appears solid. Core inflation has stayed relatively low in recent months and longer-term inflation expectations remain contained. Nevertheless, possible increases in resource utilization as well as elevated energy prices have the potential to add to inflation pressures. The Committee judges that some further measured policy firming is likely to be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives. (emphasis added).
- Topic:
- Economics, Emerging Markets, Government, and International Trade and Finance
297. Market Comrades
- Author:
- R. Glenn Hubbard
- Publication Date:
- 09-2005
- Content Type:
- Policy Brief
- Institution:
- American Enterprise Institute for Public Policy Research
- Abstract:
- Ceremonial gift-giving is an integral part of doing business in China. The value lies not so much in the gift (whose packaging is often more elaborate), but in the possibility of cementing a mutually beneficial relationship. And so it was a few weeks ago with the headline-grabbing announcement that China would revalue the yuan against the U.S. dollar. The modest gesture may make more possible a comprehensive economic dialogue between China and the United States in the interest of both nations. The announcement on July 21 by the People's Bank of China that it would revalue the yuan, abandoning the eleven-year-old peg of 8.28 yuan per U.S. dollar, caught financial markets by surprise. The jolt led market participants to gauge effects of current (and perhaps future) revaluations on currency values and interest rates. And, some U.S. political leaders claimed a victory in the campaign to blame Chinese “market manipulation” for external imbalances facing the United States.
- Topic:
- Economics, Emerging Markets, and International Trade and Finance
- Political Geography:
- United States, China, and Asia
298. The Great Shift to Specialty Drugs
- Author:
- Scott Gottlieb
- Publication Date:
- 06-2005
- Content Type:
- Policy Brief
- Institution:
- American Enterprise Institute for Public Policy Research
- Abstract:
- When drug maker GlaxoSmithKline held a showcase day for investors late last year, the company bragged about its burgeoning pipeline of new medicines, but also a fruitful restructuring it undertook a few years ago. Glaxo broke its sprawling research shop into smaller units focused on a dozen or so disease areas. In was an emphasis on major health problems, such as cancer, heart disease, and brain disorders like Alzheimer's dis- ease. Gone were the same concerted efforts to focus the majority of its research on more routine medical problems such as sniffles, sore muscles, and nicotine addiction. Like a lot of other drug makers, Glaxo is moving its research upstream into weighty maladies that have remained unsolved by modern medicine and away from primary-care problems.
- Topic:
- Civil Society, Economics, Emerging Markets, and Human Welfare
299. Can America Rebuild the Crumbling State of U.S.-Asia Relations?
- Author:
- Kishore Mahbubani
- Publication Date:
- 03-2005
- Content Type:
- Policy Brief
- Institution:
- Weatherhead East Asian Institute, Columbia University
- Abstract:
- Ambassador Mahbubani's address looked at previous American actions that built "reservoirs of good will" that ultimately assisted America in its ideological victory in the Cold War, especially in Asia: its sharing of the "American dream" with the world; its openness to foreign students; the international order built by the United States after 1945; and, finally, the stabilizing effects of its military presence in East Asia. However, the end of the Cold War has brought changes, and the gulf between America's self-perception and the way it is seen in the Islamic world, and China in particular, demonstrate the dwindling of those good will reservoirs.
- Topic:
- Foreign Policy, Defense Policy, Emerging Markets, International Trade and Finance, and Bilateral Relations
- Political Geography:
- United States, China, America, and East Asia
300. Transforming Competitiveness in European Transition Economies: The Role of Foreign Direct Investment
- Author:
- Jasminka Sohinger
- Publication Date:
- 05-2004
- Content Type:
- Working Paper
- Institution:
- Institute of European Studies (IES), UC Berkeley
- Abstract:
- Foreign direct investment (FDI) has become one of the main drivers of globalization and integration of the European transition economies into the world economy, especially the European Union. Its growth enhancing capacity has played a significant role in transforming their competitiveness, both locally and on international markets, and its propensity to stimulate institution buliding is changing both economic and political landscapes in the region. The economic conditionality of FDI and the EU access-driven reforms are working hand in hand in helping the goals of transition and the convergence process. The achievement of both goals is seen as the best guarantor of peace and security in the region.
- Topic:
- Security, Economics, Emerging Markets, Globalization, International Trade and Finance, and Foreign Direct Investment
- Political Geography:
- Europe