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2961. Poverty and the Welfare Costs of Risk Associated with Globalization

Author:
Ethan Ligon
Publication Date:
09-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
'Globalization' implies change, and uncertainty over future change may affect household welfare. We use data on Lorenz curves over the last fifty years for a sample of 53 (mostly developing) countries. Treating each country-quintile-year as an observation, we first account for variation in consumption expenditures, finding that global shocks are of less importance than country -level shocks in explaining variation in country-quintile consumption growth. While poorer households experience more rapid consumption growth than do wealthier households, they also bear much more risk. However, we find no evidence that this greater risk is related to globalization.
Topic:
Development, Globalization, Human Welfare, and Poverty

2962. It Works; It Doesn't; It Can, But That Depends...: 50 Years of Controversy over the Macroeconomic Impact of Development Aid

Author:
Mark McGillivray, Simon Feeny, Robert Lensink, and Niels Hermes
Publication Date:
08-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper surveys 50 years of empirical research on the macroeconomic impact of aid, looking mainly at studies examining the link between aid and growth. It argues that studies dating until the late 1990s produced either contradictory or inconclusive results. Aid either worked, or it didn't, according to this research. The paper then highlights a major shift in the literature that coincided with the release of the World Bank's Assessing Aid: What Works, What Doesn't and Why. Practically all research published since that report agrees with its general finding that aid works, to the extent that in its absence growth would be lower. One controversy may therefore have been settled. Yet, we show, the report has set-off an intense de bate over the context in which aid works. That debate centres on whether the effectiveness of these inflows depends on the policy regime of recipient countries. Some possible avenues through which the heat might be taken out of this debate are considered.
Topic:
International Relations, Debt, Development, and Economics

2963. Explaining Threshold Effects of Globalization on Poverty: An Institutional Perspective

Author:
Alice Sindzingre
Publication Date:
08-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The paper focuses on the non-linearity of the transmission of the impact of globalization on poverty and the existence of threshold effects. Institutions constitute a critical factor for the creation of threshold effects in the impact of globalization on poverty. Institutions—their credibility, ability to be transformed by globalization, and the ways they give the poor access to the beneficial effects of globalization—determine whether the benefits of globalization are spread to the poor or are locked in by particular groups. They also determine whether or not the negative shocks associated with globalization are transmitted in an unfettered manner. The paper presents a theory of institutions that distinguishes several components, which evolve differently and explain the threshold effects that institutions generate upon the impact of globalization on the poor. The paper then shows that social institutions and norms have a critical role in the generation of these threshold effects. It finally examines the interactions between social institutions and state policies institutions, which may contribute to the formation of poverty traps.
Topic:
Development, Economics, Globalization, and Poverty

2964. 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

2965. The Political Economy of Postwar Reconstruction in Lebanon

Author:
Ghassan Dibeh
Publication Date:
07-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper studies the postwar economic and political reconstruction in Lebanon. The paper shows that the 'reconstruction boom' was short-lived. The economy experienced a growth trap early in the reconstruction period, and entered a cyclical crisis in 1998 which resulted from an ill-designed fiscal-monetary policy mix. The expansionary fiscal policy resulting from the high resource demands — due to economic and political reconstruction and from the needs of addressing horizontal inequality codified in the peace agreement known as the Taef Accords — led to a fiscal crisis of the state. The monetary and central bank policy was finance-biased with emphasis on financial and exchange rate stability and foreign capital inflows. Such a mix led to a real interest rate shock in the postwar period that played a role in the onset of the cyclical downturn. The finance-biased policy led to the rise of a rentier economy leading to deindustrialization during this period. The rise of a growth-impeding political economic structure resulting from the Taef Accords also played a role in intensifying the economic crisis through exerting pressures on public resources and through the engendering of a political crisis that brought to an end the era of postwar reconstruction.
Topic:
Development, Political Economy, and War
Political Geography:
Middle East and Lebanon

2966. Trade Openness and Vulnerability in Central and Eastern Europe

Author:
Pierluigi Montalbano, Alessandro Federici, Umberto Triulzi, and Carlo Pietrobelli
Publication Date:
06-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper offers a substantive contribution to the debate on the role of international trade on the development of emerging countries. The aim is to detect empirically the phenomenon of vulnerability induced by trade openness. The methodology adopts a forward-looking approach and tries to fill a missing link in the theory between trade shocks, volatility, and the wellbeing of countries, distinguishing between 'normal' and 'extreme' volatility.
Topic:
Development, Economics, Globalization, and International Trade and Finance
Political Geography:
Eastern Europe

2967. 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

2968. Economic Agendas in Civil Wars: What We Know, What We Need to Know

Author:
Heiko Nitzschke and David M. Malone
Publication Date:
07-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The political economy of civil wars has acquired unprecedented scholarly and policy attention. Among others, the International Peace Academy's programme on Economic Agendas in Civil Wars (EACW) has aimed to contribute to a better understanding of the complex dynamics of civil war economies and has identified areas for policy development critical for improved conflict prevention, conflict resolution, and postconflict peacebuilding. While much of the earlier debate on the economic dimensions has been polarized around the 'greed versus grievance' dichotomy, there is now a better understanding of how economic dynamics can influence the onset, character, and duration of armed conflicts. This paper discusses key research findings and their policy relevance, provides a preliminary assessment of policy efforts to address the economic dimensions of conflict and conflict transformation, and offers some issues for further research and policy action.
Topic:
Civil War, Development, Economics, and Political Economy

2969. A Macro Policy for Poverty Eradication through Structural Change

Author:
Rehman Sobhan
Publication Date:
03-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper argues that poverty originates in the structural injustices of a social order which incapacitates the poor from participating in the growth generating sectors of the economy and leaves them captives in the so called informal sector, characterized by low productivity and low earning capacity. In such a system the poor remain individualized and hence disempowered which compels them to interface with the market economy on highly inequitable terms which relegates them to the lowest tiers of the value addition chain. The need for a macro-policy designed to eliminate poverty is premised on the argument that poverty originates in the structural features of society which can only be addressed at the macro-level. Policy interventions, to redesign the structural sources of poverty, bring into consideration issues of social, political as well as economic reform.
Topic:
Foreign Policy, Development, Economics, and Poverty

2970. Controlling Foreigners, Passengers, Citizens : Surveillance and Counterterrorism

Author:
Valsamis Mitsilegas
Publication Date:
06-2005
Content Type:
Journal Article
Journal:
Cultures & Conflits
Institution:
Cultures & Conflits
Abstract:
Recent years witnessed calls for the intensification of surveillance and the monitoring of people globally. This article will examine this intensification of surveillance in the European Union, by analysing legislation requiring carriers to transmit to immigration authorities passenger data, an agreement between the Community and the US on the transfer of passenger name records (PNR) to US authorities, and EU plans to introduce biometrics in passports and visas and enhance the interoperability of EU databases (such as SIS and VIS). These developments, justified by a 'war on terror' discourse, widen the net of surveillance and raise a number of questions regarding legitimacy, democracy and the protection of fundamental rights in the EU. They also appear to be at odds with the concept of the EU as a borderless area. The article will address these issues by analysing the negotiations, content and implications of these initiatives. Ces dernières années les demandes d'intensification de la surveillance et des contrôles du mouvement des personnes au niveau mondial se sont développées. Cet article examine cette intensification de la surveillance au sein de l'UE en analysant la législation obligeant les transporteurs à fournir les données personnelles des passagers aux services d'immigration, un accord entre l'UE et les Etats-Unis sur le transfert des « passenger name records » (PNR) aux autorités américaines, et les plans européens d'introduction de données biométriques aux passeports et visas et d'amélioration de l'interopérabilité des bases de données européennes (SIS et VIS notamment). Ces développements, justifiés par un discours de « guerre au terrorisme », élargissent le réseau de la surveillance et soulèvent un certain nombre de questions sur la légitimité, la démocratie, et la protection des droits fondamentaux dans l'UE. Ils apparaissent également en décalage avec le concept de l'UE comme espace sans frontières. Ce texte abordera ces questions en analysant les négociations, le contenu et les implications de telles initiatives.
Topic:
Development
Political Geography:
Europe