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171. Fragile States Index 2018 – Annual Report

Author:
J. J. Messner, Nate Haken, Patricia Taft, Ignatius Onyekwere, Hannah Blyth, Charles Fiertz, Christina Murphy, Amanda Quinn, and McKenzie Horwitz
Publication Date:
04-2018
Content Type:
Special Report
Institution:
The Fund for Peace
Abstract:
The Fragile States Index, produced by The Fund for Peace, is a critical tool in highlighting not only the normal pressures that all states experience, but also in identifying when those pressures are pushing a state towards the brink of failure. By highlighting pertinent issues in weak and failing states, The Fragile States Index—and the social science framework and software application upon which it is built—makes political risk assessment and early warning of conflict accessible to policy-makers and the public at large.
Topic:
Oil, Sovereignty, Natural Resources, Authoritarianism, Counter-terrorism, Democracy, Fragile States, Economy, Domestic Politics, Conflict, Resilience, Regional Politics, and Illiberalism
Political Geography:
Africa, Europe, Middle East, Poland, South America, Hungary, Spain, Venezuela, Mexico, Catalonia, Qatar, Central Europe, Sahel, Global Focus, United States of America, and Gambia

172. Bringing Home the Gold? A Review of the Economic Impact of Hosting Mega-Events

Author:
Douglas Barrios, Stuart Russell, and Matt Andrews
Publication Date:
07-2016
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
There is perhaps no larger sports policy decision than the decision to host or bid to host a mega-event like the FIFA World Cup or the Summer Olympics. Hosts and bidders usually justify their decisions by touting their potential impact. Many organizers and promoters either fund or widely disseminate ex-ante studies that tend to highlight the positive effects of the event. For instance, the consultancy firm Ernst & Young produced a 2010 report prior to the 2014 World Cup in Brazil that painted an optimistic picture of the event’s potential legacy. It estimated that an additional R$ 142.39 billion (4.91% of 2010 GDP) would flow through the Brazilian economy over the 2010-2014 period, generating 3.63 million jobs per year, R$ 63.48 billion (2.17% of 2010 GDP) of income for the population and additional tax collection of R$ 18.13 billion (0.62% of 2010 GDP) for the local, state and federal governments. Ernst & Young estimated that during the same period 2.98 million additional visitors would travel to Brazil, increasing the international tourist inflow up to 79%. Such results, if true, would clearly attractive for governments considering a bid, but these expected impacts don’t always materialize. Moreover, hosting mega-events requires significant investments - and the cost of these investments is rising. Zimbalist notes emerging economies like China, Brazil, and South Africa have increasingly perceived "mega-events as a sort of coming-out party signaling that [they are] now a modernized economy, ready to make [their] presence felt in world trade and politics" (Zimbalist 2015). Their intentions may be noble, but the intention of using mega-events as a "coming-out party" means developing countries hoping to host them need to make massive investments. They are confronted by significant obstacles in that they lack sufficient stadiums, accommodations, transportation systems, and other sports-related infrastructure. As a result, each of the mega-events hosted by emerging economies has been exorbitantly expensive. The 2014 World Cup cost Brazil between USD 15 billion and USD 20 billion, while Beijing reportedly spent USD 40 billion prior to the 2008 Summer Olympic (Zimbalist 2015). Additionally, as the debt-ridden 1976 Summer Olympics in Montreal demonstrates, expensive mega-events are not limited to emerging economies alone. Flyvbjerg and Stewart have even shown that every Olympics since 1960 has gone over budget (Flyvbjerg and Stewart 2012). Such incredible figures, in terms of both costs and benefits, beget the question: are mega-events worth it? Which type of reports should governments focus their attention on? What economic consequences should a government reasonably expect? With such high stakes, policymakers need to choose wisely. We attempt to answer these questions and aid the decisions of policymakers by providing a concise review of the rich academic literature on mega-events. For the purposes of this paper, we mainly focus on the Summer Olympic Games and the FIFA World Cup as mega-events. However, we also leverage information regarding events like the Winter Olympic Games, the UEFA football championships, and the Commonwealth Games. These events are organized on a smaller scale than the previous two, but they might provide some insights on how to best understand mega-events. We focus on claims surrounding the direct or indirect mechanisms that facilitate the impact that ex-ante studies predict. We provide a review of these claims and their validity according to the existing literature. Section 1 focuses on the argument that mega-events lead to increased economic activity in the host economy. Specifically, we evaluate whether or not mega-events leads to access to previously inaccessible funds and increased investments. These investments could theoretically come from supranational organizations, private stakeholders, or public stakeholders. We also consider whether or not these new expenditures and investments have the multiplicative effect that many ex-ante studies assume they have. We finally investigate if the economic activity surrounding mega-events leads to increased revenues and tax collection for host governments. Overall, the existing academic literature suggests that any increased economic activity resulting from the event is routinely dwarfed by additional public budgetary commitments. Moreover, the arguments regarding multiplicative effects and increased revenues also tend to be exaggerated. Section 2 shifts the focus to the potential impact of mega-events on a specific industry: tourism. We explore the effect of mega-events on the number of tourists visiting the host region and their spending habits. We explore this channel both for analyses specific to a single mega-event and for cross-country evaluations incorporating many events. Next, we consider the impact of a mega-event on a region’s brand and image in the international community with the idea of testing if hosting the competition will impact future tourism. Finally, we consider if mega-events lead to increases in the capacity of a city or country to welcome future tourists as a result of improved airport infrastructure, accommodations, and/or transportation systems. As was true in Section 1, the academic literature suggests that the claims of many ex-ante studies are misleading. Our review finds that there is some evidence for increases in tourist arrivals to certain events, but those increases are far smaller than what is generally predicted beforehand. These effects are also usually dependent on factors, such as the timing of the competition, that are specific to the host region and the event itself. Section 3 briefly discusses other potential qualitative and social impacts of mega-events such as international business relations, crime reduction, and the "feel-good effect." In the penultimate section, Section 4, we discuss how these conclusions should impact the decision-making of policymakers. Finally, in a short conclusion, we summarize the findings of our review.
Topic:
Infrastructure, Sports, Economy, Olympics, and World Cup
Political Geography:
China, South Africa, Brazil, and Global Focus

173. Classifying Exchange Rate Regimes: 15 Years Later

Author:
Eduardo Levy-Yeyati and Federico Sturzenegger
Publication Date:
06-2016
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Levy Yeyati and Sturzenegger (2001, 2003, 2005) proposed an exchange rate regime classification based on cluster analysis to group countries according to the relative volatility of exchange rates and reserves, thereby shifting the focus from a de jure to de facto approach in the empirical analysis of exchange rate policy. This note extends the classification through 2014 and broadens the country sample, increasing the number of classified country-year observations from 3335 to 5616. Based on this extension, the note documents the main stylized facts in the 2000s, including the behavior of exchange rate policy around the global financial crisis, and the prevalence of floating regimes.
Topic:
Economy, Global Political Economy, Global Financial Crisis, and Exchange Rate Policy
Political Geography:
Global Focus and Global Markets

174. The New Economic Case for Migration Restrictions

Author:
Michael Clemens and Lant Pritchett
Publication Date:
02-2016
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
For decades, migration economics has stressed the effects of migration restrictions on income distribution in the host country. Recently the literature has taken a new direction by estimating the costs of migration restrictions to global economic efficiency. In contrast, a new strand of research posits that migration restrictions could be not only desirably redistributive, but in fact globally efficient. This is the new economic case for migration restrictions. The case rests on the possibility that without tight restrictions on migration, migrants from poor countries could transmit low productivity ("A" or Total Factor Productivity) to rich countries—offsetting efficiency gains from the spatial reallocation of labor from low to high-productivity places. We provide a novel assessment, proposing a simple model of dynamically efficient migration under productivity transmission and calibrating it with new macro and micro data. In this model, the case for efficiency-enhancing migration barriers rests on three parameters: transmission, the degree to which origin-country total factor productivity is embodied in migrants; assimilation, the degree to which migrants’ productivity determinants become like natives’ over time in the host country; and congestion, the degree to which transmission and assimilation change at higher migrant stocks. On current evidence about the magnitudes of these parameters, dynamically efficient policy would not imply open borders but would imply relaxations on current restrictions. That is, the new efficiency case for some migration restrictions is empirically a case against the stringency of current restrictions.
Topic:
Economics, Migration, Labor Issues, and Economy
Political Geography:
Global Focus

175. Off Pitch: Football’s financial integrity weaknesses, and how to strengthen them

Author:
Matt Andrews and Peter Harrington
Publication Date:
01-2016
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Men’s professional football is the biggest sport in the world, producing (by our estimate) US $33 billion a year. All is not well in the sector, however, with regular scandals raising questions about the role of money in the sport. The 2015 turmoil around FIFA is obviously the most well known example, creating a crisis in confidence in the sector. This study examines these questions, and the financial integrity weaknesses they reveal; it also offers ideas to strengthen the weaknesses. The study argues that football’s financial integrity weaknesses extend far beyond FIFA. These weaknesses have emerged largely because the sector is dominated by a small elite of clubs, players and owners centered in Europe’s top leagues. The thousands of clubs beyond this elite have very little resources, constituting a vast base of ‘have-nots’ in football’s financial pyramid. This pyramid developed in recent decades, fuelled by concentrated growth in new revenue sources (like sponsorships, and broadcasting). The growth has also led to increasingly complex transactions—in player transfers, club ownership and financing (and more)—and an expansion in opportunities for illicit practices like match-fixing, money laundering and human trafficking. We argue that football’s governing bodies – including FIFA – helped establish this pyramid. We explore the structural weaknesses of this pyramid by looking at five pillars of financial integrity (using data drawn from UEFA, FIFA, clubs, primary research, and interviews). In the first pillar of Financial Transparency and Literacy we find that a vast majority of the world’s clubs and governing bodies publish no financial data, leaving a vast dark space with no transparency. In the second pillar of Financial Sustainability we estimate that a majority of global clubs and governing bodies are at ‘medium to high risk’ of financial failure. We find, additionally, that European tax debts have grown despite Financial Fair Play, and confederations and FIFA contribute to a pattern of weak Fiscal Responsibility. We then create a new metric of Financial Concentration and find that the football sector is at ‘high risk’ of over-concentration, which poses existential questions for many clubs and even leagues. In the final pillar of Social Responsibility and Moral Reputation, we find that football’s governing bodies face a crisis of legitimacy stemming from a failure to tackle moral turpitude, set standards and regulate effectively. We suggest a set of reforms to re-structure FIFA in particular, separating its functions and stressing its regulatory role.
Topic:
Crime, Sports, Economy, and World Cup
Political Geography:
Europe, Global Focus, and European Union

176. On the social appropriateness of discrimination

Author:
Abigail Barr, Tom Lane, and Daniele Nosenzo
Publication Date:
05-2016
Content Type:
Working Paper
Institution:
Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP)
Abstract:
We experimentally investigate the relationship between discriminatory behaviour and the perceived social appropriateness of discrimination. We test the framework of Akerlof and Kranton (2000,2005), which suggests discrimination will be stronger when social norms favour it. Our results support this prediction. Using a Krupka-Weber social norm elicitation task, we find participants perceive it to be more socially appropriate to discriminate on the basis of social identities artificially induced, using a trivial minimal group technique, than on the basis of nationality. Correspondingly, we find that participants discriminate more in the artificial identity setting. Our results suggest norms and the preference to comply with them affect discriminatory decisions and that the social inappropriateness of discrimination can be a moderator of discriminatory behaviour.
Topic:
Politics, Economy, Discrimination, Norms, and Society
Political Geography:
Global Focus

177. Breaking the Link Between Housing Cycles, Banking Crises, and Recession

Author:
Avinash Persaud
Publication Date:
03-2016
Content Type:
Working Paper
Institution:
City Political Economy Research Centre (CITYPERC), University of London
Abstract:
The housing market lies at the center of the biggest banking crises across the world. The recessions that follow these banking crises are generally deeper and longer than others. The collapse of housing prices amid rising unemployment is a major source of inequality. This working paper explains how the nexus between housing, banking, and the economy can be broken. It shows that two modest regulatory changes would result in life insurers and pension funds providing mortgage finance, which would better insulate the economy and homeowners from the housing cycle than financing from banks or markets can.
Topic:
Global Recession, Inequality, Economy, Housing, and Banking
Political Geography:
Global Focus

178. Privateers! Their History and Future

Author:
Alexander Tabarrok and Alex Nowrasteh
Publication Date:
01-2015
Content Type:
Journal Article
Journal:
Fletcher Security Review
Institution:
The Fletcher School, Tufts University
Abstract:
Government employment of private military firms is not a new phenomenon. During the Age of Sail, naval powers issued privateering licenses to shipowners, allowing and encouraging them to raid enemy commerce and attack foreign navies during times of war – a system that bears several similarities to modern military contracting. But private enterprise did not go to war in a legal vacuum. How do countries make the incentives for private security firms align with national policy in the 21st century?
Topic:
History, Maritime Commerce, Economy, and Trade
Political Geography:
Britain, Global Focus, United States of America, and Oceans

179. Michael Fakhri. Sugar and the Making of International Trade Law

Author:
Anna Chadwick
Publication Date:
07-2015
Content Type:
Journal Article
Abstract:
Michael Fakhri in his book Sugar and the Making of International Law takes inspiration from Antony Anghie, a scholar who famously disrupted prevalent conceptions of public international law. Using sugar as a ‘trace element’, Fakhri follows Anghie’s lead in retracing the historical origins of international trade law in order to challenge pervasive perceptions about this legal regime. What he is keen to demonstrate is that free trade, like state sovereignty, is not something that international institutions are merely officiating. Rather, the meaning of this concept has shifted over time as it has been applied by different institutions and actors within the international legal order to differential effect. It has been both conditioned by, and received the conditioning of, broader political, economic and social forces. Critically, it is as much the product of international institutions governing trade as it is their purpose.
Topic:
Agriculture, Imperialism, International Law, International Trade and Finance, History, World Trade Organization, and Economy
Political Geography:
Britain, Europe, and Global Focus

180. Using discrete choice experiments to regulate the provision of water services: Do status quo choices reflect preferences?

Author:
Bruno Lanz and Allan Provins
Publication Date:
02-2015
Content Type:
Working Paper
Institution:
Centre for International Environmental Studies, The Graduate Institute (IHEID)
Abstract:
Discrete choice experiments (DCE) are increasingly used to quantify the demand for improvements to services provided by regulated utility companies and inform price controls. This form of preference elicitation, however, often reveals a high frequency of status quo (SQ) choices. This may signal an unwillingness of respondents to evaluate the proposed trade-offs in service levels, questioning the welfare theoretic interpretation of observed choices and the validity of the approach for regulatory purposes. Using the methodology for DCE in the regulation of water and sewerage services in England and Wales, our paper contributes to the understanding of SQ choices in several novel dimensions. First, we control for the perception of the SQ and the importance of attributes in day-to-day activities. Second, we use a split sample design to vary both the description of the SQ and the survey administration mode (online vs. in-person). Third, the service attributes can both improve or deteriorate, so that the SQ is not necessarily the least-cost option. Fourth, we examine SQ choices in individual choice tasks and across all tasks so as to identify the determinants of serial SQ choices. Our results suggest that individual SQ choices mostly reflect preferences and thus represent important information for the regulator. However, serial SQ choices are mainly driven by cognitive and/or contextual factors, and these responses should be analysed as part of standard validity tests.
Topic:
Regulation, Economy, Decision-Making, Utilities, Cost-Benefit Analysis, and Status Quo
Political Geography:
Global Focus