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111. Capability Traps? The Mechanisms of Persistent Implementation Failure

Author:
Lant Pritchett, Michael Woolcock, and Matt Andrews
Publication Date:
12-2010
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Many countries remain stuck in conditions of low productivity that many call “poverty traps.” Economic growth is only one aspect of development; another key dimension of development is the expansion of the administrative capability of the state, the capability of governments to affect the course of events by implementing policies and programs. We use a variety of empirical indicators of administrative capability to show that many countries remain in “state capability traps” in which the implementation capability of the state is both severely limited and improving (if at all) only very slowly. At their current pace of progress countries like Haiti or Afghanistan or Liberia would take hundreds (if not thousands) of years to reach the capability of a country like Singapore and decades to reach even a moderate capability country like India. We explore how this can be so. That is, we do not attempt to explain why countries remain in capability traps; this would require a historical, political and social analysis uniquely applied to each country. Rather, we focus on how countries manage to engage in the domestic and international logics of “development” and yet consistently fail to acquire capability. What are the techniques of failure? Two stand out. First, 'big development' encourages progress through importing standard responses to predetermined problems. This encourages isomorphic mimicry as a technique of failure: the adoption of the forms of other functional states and organizations which camouflages a persistent lack of function. Second, an inadequate theory of developmental change reinforces a fundamental mismatch between expectations and the actual capacity of prevailing administrative systems to implement even the most routine administrative tasks. This leads to premature load bearing, in which wishful thinking about the pace of progress and unrealistic expectations about the level and rate of improvement of capability lead to stresses and demands on systems that cause capability to weaken (if not collapse). We conclude with some suggestive directions for sabotaging these techniques of failure.
Topic:
Development, Economics, and Poverty
Political Geography:
Afghanistan, India, and Liberia

112. Criss-Crossing Globalization: Uphill Flows of Skill-Intensive Goods and Foreign Direct Investment

Author:
Arvind Subramanian and Aaditya Mattoo
Publication Date:
08-2009
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
This paper documents an unusual and possibly significant phenomenon: the export of skills, embodied in goods, services or capital from poorer to richer countries. We first present a set of stylized facts. Using a measure which combines the sophistication of a country's exports with the average income level of destination countries, we show that the performance of a number of developing countries, notably China, Mexico and South Africa, matches that of much more advanced countries, such as Japan, Spain and USA. Creating a new combined dataset on FDI (covering greenfield investment as well as mergers and acquisitions) we show that flows of FDI to OECD countries from developing countries like Brazil, India, Malaysia and South Africa as a share of their GDP, are as large as flows from countries like Japan, Korea and the US. Then, taking the work of Hausmann et al (2007) as a point of departure, we suggest that it is not just the composition of exports but their destination that matters. In both cross-sectional and panel regressions, with a range of controls, we find that a measure of uphill flows of sophisticated goods is significantly associated with better growth performance. These results suggest the need for a deeper analysis of whether development benefits might derive not from deifying comparative advantage but from defying it.
Topic:
Development, Economics, International Trade and Finance, and Foreign Direct Investment
Political Geography:
United States, Japan, Malaysia, India, South Africa, Brazil, Spain, and Korea

113. Can India catch up with China?

Publication Date:
09-2009
Content Type:
Working Paper
Institution:
Oxford Economics
Abstract:
Although it is only since 2000 that the growing economic power of the Chinese 'dragon' has emerged fully into the media spotlight, its GDP has in fact been growing at an average rate of close to 10% pa for the last 30 years. On a PPP basis, China is already the second largest economy in the world. The Indian 'elephant', on the other hand, has grown at a more sedate pace, but following a burst in the 2000s it now has the fourth largest GDP in the world on a PPP basis and has been close to emulating Chinese growth rates. With the global economy perhaps now starting to recover slowly from the deep recession, it is possible that India is better placed than China to benefit from what may prove to be a fairly slow period of growth in the developed economies in the years ahead, with the latter's huge exports of manufactured goods struggling to recapture the momentum of the last ten years. For China, net trade will probably be a significant drag on growth in the year ahead, while the stimulus from state-led investment may begin to peter out. In order to maintain earlier rapid growth, the Chinese economy will need to rely much more heavily on domestic demand than before, especially if global over-capacity appears in certain key industries. Despite the apparent resilience of the economy to the global recession, there are a number of question marks over whether this shift can be made quickly. India's fundamentals have become more favourable given the rise in its service sector and climbing FDI inflows (albeit both of these remain well below Chinese levels), and its lower reliance on trade will also mean that it is less exposed to what may be a lengthy period of sluggish world demand. But it also faces problems, including an inefficient agricultural sector, a still-burdensome bureaucracy and a cautious stance towards privatisation. Its fiscal position is also much weaker than China, which may be a long-term threat to greater foreign investment. India also has the benefit of being a democracy – although to date this has probably hampered rather than helped growth performance, it should facilitate faster growth in the longer term. China's authoritarian regime has enabled policies to be implemented more quickly and with little regard to public popularity, but this may be storing up socio-political problems for the longer term, especially if growth were to slow sharply. Demographic factors should also favour India, but again over the long term rather than the next decade. China's decision to start to reverse its one-child policy indicates mounting concern about its ageing population and labour shortages in the future. India on the other hand may be able to turn population growth trends to its advantage, as long as it can improve the skills base. In conclusion, although India's growth trend is forecast to pick-up to 7-8% over the next decade, this is not likely to be enough to overtake China's pace of expansion. But India's recent surge in growth was achieved with few reforms – if it can manage to implement further liberalisation measures, attract increasing FDI inflows and turn its more favourable demographics to its advantage, then the 'elephant' may begin to catch up with the 'dragon' after 2020, although by that time the gap will be even wider than it is now.
Topic:
Development, Economics, and Foreign Direct Investment
Political Geography:
China, South Asia, and India

114. Tourism in the Developing World

Author:
Raymond Gilpin and Martha Honey
Publication Date:
10-2009
Content Type:
Working Paper
Institution:
United States Institute of Peace
Abstract:
Although often underestimated, the tourism industry can help promote peace and stability in developing countries by providing jobs, generating income, diversifying the economy, protecting the environment, and promoting cross-cultural awareness. Tourism is the fourth-largest industry in the global economy.
Topic:
Climate Change, Development, Globalization, and Third World
Political Geography:
India and Nigeria

115. Can Global De-Carbonization Inhibit Developing-Country Industrialization?

Author:
Arvind Subramanian, Aaditya Mattoo, Dominique van der Mensbrugghe, and Jianwu He
Publication Date:
11-2009
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Most economic analyses of climate change have focused on the aggregate impact on countries of mitigation actions. We depart first in disaggregating the impact by sector, focusing particularly on manufacturing output and exports because of the potential growth consequences. Second, we decompose the impact of an agreement on emissions reductions into three components: the change in the price of carbon due to each country's emission cuts per se; the further change in this price due to emissions tradability; and the changes due to any international transfers (private and public). Manufacturing output and exports in low carbon intensity countries such as Brazil are not adversely affected. In contrast, in high carbon intensity countries, such as China and India, even a modest agreement depresses manufacturing output by 6-7 percent and manufacturing exports by 9-11 percent. The increase in the carbon price induced by emissions tradability hurts manufacturing output most while the Dutch disease effects of transfers hurt exports most. If the growth costs of these structural changes are judged to be substantial, the current policy consensus, which favors emissions tradability (on efficiency grounds) supplemented with financial transfers (on equity grounds), needs re-consideration.
Topic:
Climate Change, Development, and Economics
Political Geography:
China, India, and Brazil

116. Indian FDI falls in global economic crisis: Indian multinationals tread cautiously

Author:
Jaya Prakash Pradhan
Publication Date:
08-2009
Content Type:
Policy Brief
Institution:
Columbia Center on Sustainable Investment
Abstract:
Just over a year ago, outward foreign direct investment (OFDI) from India seemed to be on a path of rapid and sustained growth. Its annual average growth of 98% during 2004–07 had been unprecedented , much ahead of OFDI growth from other emerging markets like China (74%), Malaysia (70%), Russia (53%), and the Republic of Korea (51%), although from a much lower base. Much of this recent growth had been fuelled by large-scale overseas acquisitions, however, and it faltered when the global financial crisis that started in late 2007 made financing acquisitions harder.
Topic:
Development, Economics, Foreign Direct Investment, and Financial Crisis
Political Geography:
Russia, China, Malaysia, India, and Korea

117. A new geography of innovation – China and India rising

Author:
Gert Bruche
Publication Date:
04-2009
Content Type:
Policy Brief
Institution:
Columbia Center on Sustainable Investment
Abstract:
With some delay, the internationalization of business R is following the globalization of production. Starting on a small scale during the 1970s and 1980s, the emergence of globally distributed R networks of multinational enterprises (MNEs) accelerated rapidly in the 1990s. The “globalization of innovation” was facilitated and driven by a complex set of factors, including changes in trade and investment governance, improved intellectual property rights through TRIPS, the growing ease and falling cost of communicating and traveling around the globe, and the concomitant vertical industry specialization and unbundling of value chains. The growing and sustained level of cross-border M was one major direct driver, often having the effect that merged firms inherited multiple R sites in a number of countries.
Topic:
Development, Economics, and Foreign Direct Investment
Political Geography:
China, India, and Asia

118. U.S.-India and India-East Asia Relations

Author:
Satu Limaye
Publication Date:
01-2009
Content Type:
Journal Article
Journal:
Comparative Connections
Institution:
Center for Strategic and International Studies
Abstract:
India's relations with the U.S. and East Asia during 2008 took place amidst remarkable flux domestically, within the South Asian region, and around the world – all of which directly and indirectly influenced developments in bilateral relations. The two issues that dominated U.S.-India relations during 2008 were the civilian nuclear cooperation deal and, at the end of the year, the U.S.-India-Pakistan triangle including the issues of terrorism and Kashmir. India's relations with East Asia were quiescent during 2008. A notable development was the completion of an India-ASEAN free trade agreement, although its economic implications remain uncertain. India accentuated the positive with Myanmar as bilateral relations became more cordial while relations with China seemed to be on hold for most of the year as the border dispute remained unresolved and India responded cautiously to the Chinese handling of unrest in Tibet.
Topic:
International Relations, Development, and Terrorism
Political Geography:
Pakistan, United States, South Asia, India, and East Asia

119. Empowerment of Dalits and Adivasis Role of Education in the Emerging Economy

Author:
Narendra Jadhav
Publication Date:
11-2009
Content Type:
Working Paper
Institution:
Center for the Advanced Study of India
Abstract:
Well, ladies and gentlemen, I feel greatly honored to have been invited to deliver this inaugural keynote lecture in the Nand Jeet Khemka Distinguished Lecture series for this international conference on India's Dalits. I am indeed grateful to my friend Professor Devesh Kapur, Director of CASI, and his colleagues at the University of Pennsylvania for providing me this opportunity to participate in this conference on a theme that has been very close to my heart. I understand that the Nand Jeet Khemka Distinguished Lecture series comprises public lectures on contemporary India that will stimulate a dialogue on campus. Given this focus of the distinguished lecture series and the fact that this also happens to be the inaugural keynote lecture for this International Conference on India's Dalits, I have chosen to share some thoughts with you this evening on the theme of “Empowerment of Dalits and Adivasis: Role of Education in the Emerging Indian Economy.”
Topic:
Development, Economics, and Education
Political Geography:
India and Asia

120. Venture Capital Investment in the Greentech Industries: A Provocative Essay

Author:
Martin Kenney
Publication Date:
07-2009
Content Type:
Working Paper
Institution:
Berkeley Roundtable on the International Economy
Abstract:
In the first decade of the 21st Century there has been increasing awareness of environmental issues and recognition that these are now global in scope. This has occurred for many reasons and is perhaps best epitomized in the global warming discussion. The dramatic rise of China and India, in particular, has reoriented the debate about the sustainability of the current trajectory of fossil fuel usage and environmental degradation. Put quite simply, if the economic growth of China, initially, and then India were to follow the historical trajectory of fossil fuel energy usage and resource consumption that Japan, Taiwan, and Korea followed, the environmental impacts would be nothing short of monumental.
Topic:
Climate Change, Development, Energy Policy, and Environment
Political Geography:
China, India, Taiwan, and Korea