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122. Economic Growth with Unlimited Supplies of Foreign Labor
- Author:
- Tarek Coury and Mohamed Lahouel
- Publication Date:
- 01-2011
- Content Type:
- Working Paper
- Institution:
- Belfer Center for Science and International Affairs, Harvard University
- Abstract:
- We develop a modified version of the standard Solow and Ramsey growth models suited for countries with high proportions of foreign workers: firms hire foreign workers who are assumed to send a proportion of their wages as remittances. The paper shows that as the (foreign) supply of labor becomes more elastic, per capita income growth along the transitional dynamics converges to zero, the effect of TFP growth on per capita growth gradually disappears and growth in overall output converges to an AK-style model of growth. The model yields several testable predictions: Empirically, we consider the case of the states comprising the Gulf Cooperation Council and show that growth experiences of these countries are consistent with the predictions of this modified growth model. The model sheds light on certain causes of the natural resource curse as they apply to these countries and helps in explaining growth experiences of countries with high proportions of foreign workers.
- Topic:
- Globalization, Industrial Policy, Migration, Political Economy, Labor Issues, and Immigration
123. Foreign Manufacturing Multinationals and the Transformation of the Chinese Economy: New Measurements, New Perspectives
- Author:
- Theodore H. Moran
- Publication Date:
- 04-2011
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- What is the relationship between foreign manufacturing multinational corporations (MNCs) and the expansion of indigenous technological and managerial technological capabilities among Chinese firms? China has been remarkably successful in designing industrial policies, joint venture requirements, and technology transfer pressures to use FDI to create indigenous national champions in a handful of prominent sectors: high speed rail transport, information technology, auto assembly, and an emerging civil aviation sector. But what is striking in the aggregate data is how relatively thin the layer of horizontal and vertical spillovers from foreign manufacturing multinationals to indigenous Chinese firms has proven to be. Despite the large size of manufacturing FDI inflows, the impact of multinational corporate investment in China has been largely confined to building plants that incorporate capital, technology, and managerial expertise controlled by the foreigner. As the skill-intensity of exports increases, the percentage of the value of the final product that derives from imported components rises sharply. China has remained a low value-added assembler of more sophisticated inputs imported from abroad—a “workbench” economy. Where do the gains from FDI in China end up? While manufacturing MNCs may build plants in China, the largest impact from deployment of worldwide earnings is to bolster production, employment, R, and local purchases in their home markets. For the United States the most recent data show that US-headquartered MNCs have 70 percent of their operations, make 89 percent of their purchases, spend 87 percent of their R dollars, and locate more than half of their workforce within the US economy—this is where most of the earnings from FDI in China are delivered.
- Topic:
- Economics, Industrial Policy, International Trade and Finance, and Science and Technology
- Political Geography:
- United States, China, and Israel
124. Engaging in productive sector development: Comparisons between Mozambique and Ghana
- Author:
- Lars Buur and Lindsay Whitfield
- Publication Date:
- 10-2011
- Content Type:
- Working Paper
- Institution:
- Danish Institute for International Studies
- Abstract:
- Through a comparison of sector cases in Mozambique and Ghana, the paper analyzes why and how African states engage in developing productive sectors and with what success. It argues that successful state interventions depend on four factors: (1) sustained political support by the government leadership; (2) the existence of an embedded and mediating bureaucracy; (3) changing the 'rules of the game' which govern the distribution of economic benefits and resources; and (4) the organisation of industry actors and institutionalised interaction between industry actors and state actors.
- Topic:
- Economics and Industrial Policy
- Political Geography:
- Africa and Ghana
125. Going Global: Chinese Oil and Mining Companies and the Governance of Resource Wealth
- Author:
- Jill Shankleman
- Publication Date:
- 11-2011
- Content Type:
- Working Paper
- Institution:
- The Wilson Center
- Abstract:
- This report is the result of a six-month research project undertaken at the Woodrow Wilson International Center for Scholars in Washington, D.C. The focus of the work is on the impact of China's oil and mining companies' recent overseas expansion on the governance of resource wealth. The paper covers four topics: The structure of the Chinese oil and mining industries, focusing on overseas operations; the emergence over the last ten years within the large-scale, OECD-based extractive industry, of a “new model” for resource extraction focusing on minimizing negative social and environmental impacts and on resource revenue transparency; the development of corporate social responsibility concepts in China, and the extent to which this is leading Chinese oil and mining companies to apply the “new model” for resource extraction, and the role of Chinese infrastructure loans to resource-rich developing countries in resource wealth governance.
- Topic:
- Economics, Government, Industrial Policy, and Oil
- Political Geography:
- China and Washington
126. Who Should Bear the Cost of China's Carbon Emissions Embodied in Goods for Exports?
- Author:
- ZhongXiang Zhang
- Publication Date:
- 11-2011
- Content Type:
- Working Paper
- Institution:
- East-West Center
- Abstract:
- China's capital-intensive, export-oriented, spectacular economic growth since launching its open-door policy and economic reforms in late 1978 not only has created jobs and has lifted millions of the Chinese people out of poverty, but also has given rise to unprecedented environmental pollution and CO2 emissions. While estimates of the embedded CO2 emissions in China's trade differ, both single country studies for China and global studies show a hefty chunk of China's CO2 emissions embedded in trade. This portion of CO2 emissions had helped to turn China into the world's largest carbon emitter, and is further widening its gap with the second largest emitter. This raises the issue of who should be responsible for this portion of emissions and bearing the carbon cost of exports. China certainly wants importers to cover some, if not all, of that costs. While China's stance is understandable, this paper has argued from a broad and balanced perspective that if this is pushed too far, it will not help to find solutions to this issue. On the contrary it can be to China's disadvantage for a number of reasons. However, aligning this responsibility with China does not necessarily suggest the sole reliance on domestic actions. In that context, the paper recommends specific actions that need to be taken internationally as well as domestically in order to effectively control the embedded CO2 emissions in China's trade.
- Topic:
- Climate Change, Economics, Industrial Policy, and International Trade and Finance
- Political Geography:
- China
127. Korea's Growth Performance: Past and Future
- Author:
- Marcus Noland
- Publication Date:
- 11-2011
- Content Type:
- Working Paper
- Institution:
- East-West Center
- Abstract:
- South Korea is arguably the premier development success story of the last half century. For 47 years starting in 1963, the economy averaged 7 percent real growth annually, and experienced only two years of economic contraction: 1980 after the second oil shock and the assassination of President Park Chung-hee, and 1998 at the nadir of the Asian financial crisis. At the start of that period South Korea had a per capita income lower than that of Mozambique or Bolivia; today it is richer than Spain or New Zealand, and was the first Asian and first non-G7 country to host a summit of the G20, the unofficial steering committee of the world economy.
- Topic:
- Demographics, Development, Economics, Industrial Policy, International Trade and Finance, and Political Economy
- Political Geography:
- Israel, Asia, South Korea, Spain, Mozambique, New Zealand, and Bolivia
128. Rent(s) Asunder: Sectoral Rent Extraction Possibilities and Bribery by Multinational Corporations
- Author:
- Nathan Jensen, Edmund Malesky, and Dimitar Gueorgiev
- Publication Date:
- 11-2011
- Content Type:
- Working Paper
- Institution:
- East-West Center
- Abstract:
- We argue that openness to foreign investment can have differential effects on corruption, even within the same country and under the exact same domestic institutions over time. Our theoretical approach departs from standard political economy by attributing corruption motives to firms as well as officials. Rather than interpreting bribes solely as a coercive “tax” imposed on business activities, we allow for the possibility that firms may be complicit in using bribes to enter protected sectors. Thus, we expect variation in bribe propensity across sectors according to expected profitability which we proxy with investment restrictions. Specifically, we argue that foreign investment will not be associated with corruption in sectors with fewer restrictions and more competition, but will increase dramatically as firms seek to enter restricted and uncompetitive sectors that offer higher rents. We test this effect using a list experiment, a technique drawn from applied psychology, embedded in a nationally representative survey of 10,000 foreign and domestic businesses in Vietnam. Our findings show that the impact of domestic reforms and economic openness on corruption is conditional on polices that restrict competition by limiting entry into the sector.
- Topic:
- Development, Industrial Policy, International Trade and Finance, Political Economy, and Foreign Direct Investment
- Political Geography:
- Israel and Vietnam
129. Tunisia's Economic Challenges
- Author:
- Lahcen Achy
- Publication Date:
- 11-2011
- Content Type:
- Working Paper
- Institution:
- Carnegie Endowment for International Peace
- Abstract:
- As Tunisia moves away from its former regime, policymakers need to seize this historic opportunity to pursue an innovative economic strategy to overcome four key challenges: high rates of youth unemployment, a large number of marginal jobs, increasing income inequality, and substantial regional disparities.
- Topic:
- Agriculture, Development, Industrial Policy, and Labor Issues
- Political Geography:
- Arabia, North Africa, and Tunisia
130. A China Round of Multilateral Trade Negotiations
- Author:
- Arvind Subramanian and Aaditya Mattoo
- Publication Date:
- 12-2011
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Until recently, the World Trade Organization (WTO) has been an effective framework for cooperation because it has continually adapted to changing economic realities. The current Doha Agenda is an aberration because it does not reflect one of the biggest shifts in the international economic and trading system: the rise of China. Even though China will have a stake in maintaining trade openness, an initiative that builds on but redefines the Doha Agenda would anchor China more fully in the multilateral trading system. Such an initiative would have two pillars. First, a new negotiating agenda that would include the major issues of interest to China and its trading partners, and thus unleash the powerful reciprocal liberalization mechanism that has driven the WTO process to previous successes. Second, new restraints on bilateralism and regionalism that would help preserve incentives for maintaining the current broad non-discriminatory trading order.
- Topic:
- Economics, Industrial Policy, and International Trade and Finance
- Political Geography:
- China, Israel, and Asia