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122. Strengthen the Millennium Challenge Corporation: Better Results are Possible
- Author:
- Lex Rieffel and James W. Fox
- Publication Date:
- 12-2008
- Content Type:
- Policy Brief
- Institution:
- The Brookings Institution
- Abstract:
- The Millennium Challenge Corporation (MCC) is one of the outstanding innovations of the eight-year presidency of George W. Bush. No other aid agency-foreign or domestic-can match its purposeful mandate, its operational flexibility and its potential muscle.
- Topic:
- Development, Government, Humanitarian Aid, and International Affairs
- Political Geography:
- United States
123. Global Governance Breakthrough: The G20 Summit and the Future Agenda
- Author:
- Johannes F. Linn, Colin I. Bradford, and Paul Martin
- Publication Date:
- 12-2008
- Content Type:
- Policy Brief
- Institution:
- The Brookings Institution
- Abstract:
- At the invitation of President George W. Bush, the G20 leaders met on November 15, 2008, in Washington, DC, in response to the worldwide financial and economic crisis. With this summit meeting the reality of global governance shifted surprisingly quickly. Previously, major global economic, social and environmental issues were debated in the small, increasingly unrepresentative and often times ineffectual circle of G8 leaders. Now, there is a larger, much more legitimate summit group which can speak for over two-thirds of the world's population and controls 90% of the world's economy.
- Topic:
- Environment, Globalization, Government, International Cooperation, International Political Economy, and International Affairs
124. Why Are Saving Rates of Urban Households in China Rising?
- Author:
- Eswar Prasad and Marcos Chamon
- Publication Date:
- 12-2008
- Content Type:
- Working Paper
- Institution:
- The Brookings Institution
- Abstract:
- From 1995 to 2005, the average urban household saving rate in China rose by 7 percentage points, to about one quarter of disposable income. We use household-level data to explain why households are postponing consumption despite rapid income growth. Tracing cohorts over time indicates a virtual absence of consumption smoothing over the life cycle. Saving rates have increased across all demographic groups although the age profile of savings has an unusual pattern in recent years, with younger and older households having relatively high saving rates. We argue that these patterns are best explained by the rising private burden of expenditures on housing, education, and health care. These effects and precautionary motives may have been amplified by financial underdevelopment, as reflected in constraints on borrowing against future income and low returns on financial assets.
- Topic:
- Economics, Education, Emerging Markets, and Health
- Political Geography:
- China and Israel
125. The Diversification Challenge in Africa's Resource-Rich Economies
- Author:
- John Page
- Publication Date:
- 12-2008
- Content Type:
- Working Paper
- Institution:
- The Brookings Institution
- Abstract:
- For a growing number of countries in Africa the current commodity boom is a huge opportunity. But if the economic history of resource-rich, poor countries-especially in Africa-is any guide, rather than bringing prosperity, the resource boom may drive them into what Paul Collier (2007) in his influential book The Bottom Billion terms the "Natural Resources Trap." In Africa, countries dependent on oil, gas, and mining have tended to have weaker long-run growth, higher rates of poverty, and higher inequality than Non mineral-dependent economies at similar levels of income.
- Topic:
- Development, Economics, Political Economy, and Poverty
- Political Geography:
- Africa
126. Can the West Save Africa?
- Author:
- William Easterly
- Publication Date:
- 10-2008
- Content Type:
- Working Paper
- Institution:
- The Brookings Institution
- Abstract:
- The last few years have seen unprecedented attention to an attempt by Western governments to rapidly develop Africa. British Prime Minister Tony Blair called at the World Economic Forum in Davos in January 2005 for "a big, big push forward" in Africa to end poverty, financed by an increase in foreign aid. Tony Blair commissioned a Report on Africa, which released its findings in March 2005, likewise calling for a "big push." Gordon Brown and Tony Blair put the cause of ending poverty in Africa at the top of the agenda of the G-8 Summit in Gleneagles, Scotland in July 2005. In the 2005 summit at Gleneagles, Scotland, the G-8 agreed to double foreign aid to Africa, from $25 billion a year to $50 billion to finance the big push, as well as to forgive the African aid loans contracted during previous attempts at a "big push." Two years later, Germany again made Africa an important item on the agenda of the G-8 summit it hosted in Heiligendamm in June 2007. There, the G-8 again reiterated the promises made in 2005. Japan pledged to double its own aid to Africa in May 2008 over the next five years. Most recently, the G8 Summit in Japan in July 2008 agreed: "We are firmly committed to working to fulfill our commitments on Official Development Assistance made at Gleneagles, and reaffirmed at Heiligendamm, including increasing...ODA to Africa by US$ 25 billion a year by 2010."
- Topic:
- Development and Emerging Markets
- Political Geography:
- Africa, Japan, United Kingdom, and Germany
127. Expecting the Unexpected: Macroeconomic Volatility and Climate Policy
- Author:
- Warwick J. McKibbin, Adele Morris, and Peter J. Wilcoxen
- Publication Date:
- 11-2008
- Content Type:
- Working Paper
- Institution:
- The Brookings Institution
- Abstract:
- To estimate the emissions reductions and costs of a climate policy, analysts usually compare a policy scenario with a baseline scenario of future economic conditions without the policy. Both scenarios require assumptions about the future course of numerous factors such as population growth, technical change, and non-climate policies like taxes. The results are only reliable to the extent that the future turns out to be reasonably close to the assumptions that went into the model.
- Topic:
- Climate Change, Development, Economics, and Energy Policy
128. Technological Scarcity, Compliance Flexibility and the Optimal Time Path of Emissions Abatement
- Author:
- Bryan K. Mignone
- Publication Date:
- 11-2008
- Content Type:
- Working Paper
- Institution:
- The Brookings Institution
- Abstract:
- The overall economic efficiency of a quantity-based approach to greenhouse gas mitigation depends strongly on the extent to which such a program provides opportunities for compliance flexibility, particularly with regard to the timing of emissions abatement. Here I consider a program in which annual targets are determined by choosing the optimal time path of reductions consistent with an exogenously prescribed cumulative reduction target and fixed technology set. I then show that if the availability of low-carbon technology is initially more constrained than anticipated, the optimal reduction path shifts abatement toward later compliance periods. For this reason, a rigid policy in which fixed annual targets are strictly enforced in every year yields a cumulative environmental outcome identical to the optimal policy but an economic outcome worse than the optimal policy. On the other hand, a policy that aligns actual prices (or equivalently, costs) with expected prices by simply imposing an explicit price ceiling (often referred to as a "safety valve") yields the opposite result. Comparison among these multiple scenarios implies that there are significant gains to realizing the optimal path but that further refinement of the actual regulatory instrument will be necessary to achieve that goal in a real cap-and-trade system.
- Topic:
- Climate Change, Economics, and Environment
129. Prices in Emissions Permit Markets: The Role of Investor Foresight and Capital Durability
- Author:
- Bryan K. Mignone
- Publication Date:
- 11-2008
- Content Type:
- Working Paper
- Institution:
- The Brookings Institution
- Abstract:
- Of the many regulatory responses to climate change, cap-and-trade is the only one currently endorsed by large segments of the scientific, economic and political establishments. Under this type of system, regulators set the overall path of carbon dioxide (CO2) reductions, allocate or auction the appropriate number of emissions allowances to regulated entities and – through trading – allow the market to converge upon the least expensive set of abatement opportunities. As a result, the trading price of allowances is not set by the regulator as it would be under a tax system, but instead evolves over time to reflect the underlying supply and demand for allowances. In this paper, I develop a simple theory that relates the initial clearing price of CO2 allowances to the marginal cost premium of carbon-free technology, the maximum rate of energy capital replacement and the market interest rate. This theory suggests that the initial clearing price may be lower than the canonical range of CO2 prices found in static technology assessments. Consequently, these results have broad implications for the design of a comprehensive regulatory solution to the climate problem, providing, for example, some intuition about the proper value of a possible CO2 price trigger in a future cap-and-trade system.
- Topic:
- Climate Change, Economics, Environment, and Markets
130. The Experience with Regional Economic Cooperation Organizations: Lessons for Central Asia
- Author:
- Johannes F. Linn and Oksana Pidufala
- Publication Date:
- 10-2008
- Content Type:
- Working Paper
- Institution:
- The Brookings Institution
- Abstract:
- Since the collapse of the Soviet Union, Central Asia has witnessed repeated efforts to strengthen regional integration through cooperation with the establishment of a number of regional organizations with Central Asian participation. In this paper, we review the experience with regional cooperation initiatives and organizations in Central Asia and the rest of the world. Using a typology of regional organizations that we have developed for this paper, we review the functions and performance of selected regional organizations and compile evidence more generally on the experience with regional cooperation around the globe. Based on this we draw some lessons to help Central Asian countries, their partners and their regional organizations respond effectively to the opportunities and challenges of regional cooperation and integration. Central Asian countries need to realize that effective cooperation is not easy. It takes time and requires a flexible, constructive approach of all major partners. It also requires effective leadership by key countries, institutions and individuals and a careful selectivity for membership and for the mandate of the organization. Where multiple regional organizations overlap in membership and mandate, it is essential to address the risk of costly duplication. The paper concludes with an assessment of the specific implications for the Central Asia Regional Economic Cooperation Program.
- Topic:
- Development and Regional Cooperation
- Political Geography:
- Central Asia, Asia, and Soviet Union