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5151. Household Income Dynamics in Rural China

Author:
Martin Ravallion and Jyotsna Jalan
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
It is well known in theory that certain forms of non-linear dynamics in household incomes can yield poverty traps and distribution-dependent growth. The potential implications for policy are dramatic: effective social protection from transient poverty will be an investment with lasting benefits, and pro-poor redistribution will promote aggregate economic growth. We test for non-linearity in the dynamics of household expenditures and incomes using panel data for rural south-west China. While we find evidence of non-linearity, there is no sign of a dynamic poverty trap. Existing private and social arrangements in this setting appear to protect vulnerable households from the risk of destitution. However, the concavity we find in the recursion diagram does imply that the speed of recovery from an income shock is lower for the poor, and that current inequality reduces growth in mean incomes.
Topic:
Development and Economics
Political Geography:
China and Asia

5152. Institutional Investors, Corporate Ownership, and Corporate Governance: Global Perspectives

Author:
Stuart L. Gillan and Laura T. Starks
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
We examine the role of institutional investors in financial markets and in corporate governance. In many countries, institutional investors have become the predominant players in financial markets and their influence worldwide is growing, chiefly due to the privatization and development of pension fund systems. Moreover, foreign institutional investors are becoming a significant presence, bringing their trading habits and corporate governance preferences to international markets. In fact, we argue that the primary actors prompting change in many corporate governance systems are institutional investors, often foreign institutional investors. In other countries the role of institutional investors is limited. Instead, large blockholders, often in the form of individuals, family groups, other corporations, or lending institutions are the dominant players. We present the theoretical arguments for the involvement of investors in shareholder monitoring and a brief history of institutional ownership and activism in the United States and other countries. We also discuss studies of the efficacy of such activism.
Topic:
Economics, Government, and International Trade and Finance
Political Geography:
United States

5153. Inequality and Risk

Author:
Marcel Fafchamps
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
There has been a lot of interest in the risk coping strategies of the poor in the recent literature but little work on the relationship between these strategies and inequality (Fafchamps 1999). Some have begun to suspect that certain risk coping strategies further impoverish the poor (e.g. Dasgupta 1993, Sen 1981). Labor bonding and debt peonage are examples that have been discussed in the literature (e.e. Srinivasan 1989, de Janvry 1981). Patronage, that is, the protection of the poor by the rich in exchange for labor and services, is also suspected of perpetuating poverty (e.g. Platteau 1995, Platteau 1995, Fafchamps and Quisumbing 1999).
Topic:
Development, Economics, and Poverty

5154. Do Public Transfers Crowd Out Private Transfers? Evidence from a Randomized Experiment in Mexico

Author:
Pedro Albarran and Orazio P. Attanasio
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The paper will use the data from the PROGRESA evaluation to show the extent to which such a programme crowds out private transfers. An interesting aspect of the paper is the fact that it can use the randomization (one-third of the villages in the sample were randomized in the programme for evaluation purposes).
Topic:
Development and Economics
Political Geography:
Latin America, North America, and Mexico

5155. Redistribution Does Matter Growth and Redistribution for Poverty Reduction

Author:
Hulya Dagdeviren, Rolph van der Hoeven, and John Weeks
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Recent development literature has placed priority on poverty reduction, and on possible growth enhancement from a more equal distribution of assets and income. At the same time, empirical work consistently shows that economic growth is no more than distribution neutral. In that context, this paper explores the relationship among growth, inequality and poverty, and demonstrates the following general conclusions: 1) a redistributive growth path is always likely to be superior to a distribution neutral path ('trickle down') for reducing poverty; 2) a redistributive growth path is always superior if a country's per capita income and inequality are relatively high; and 3) a static redistribution from the rich to the poor is superior to a redistributive growth path in its effect on poverty for most countries, but not for all. The paper then considers policy that might be used to make growth more equitable.
Topic:
Development, Economics, Government, and Poverty

5156. Proposals for Curbing the Boom-Bust Cycle in the Supply of Capital to Emerging Markets

Author:
John Williamson
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper examines what might be done to limit the boom-bust cycle in the flow of capital to emerging markets. Although the paper accepts that some types of capital flow (notably foreign direct investment) are much less problematic in this respect than others (notably short-term bank loans), it argues that influencing the mix would have to be done by capital controls by capital-importing countries rather than supply-side policies. Where supply-side reforms might help is in making some types of flow less unstable: for example, the Buiter/Sibert proposal for a Universal Debt Rollover Option (which needs amendment to alter the term for which rollover might apply); allowing investors with fiduciary responsibilities to hold (though not to buy) bonds of sub-investment grade; penalizing put options in bond contracts and inserting collective action clauses; requiring foreign loans to be denominated in domestic currency; and modifying the remuneration practices of portfolio managers.
Topic:
Economics, Emerging Markets, and International Trade and Finance

5157. Ratings since the Asian Crisis

Author:
Helmut Reisen
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The increased importance of rating agencies for emerging-market finance has brought their work to the attention of a wider group of observers - and under criticism. This paper evaluates whether the importance of ratings for developing-country finance has changed since the Asian Crisis and whether rating agencies have modified the determinants for their rating decisions. It also provides an analysis on recent suggestions by the Basel Committee on Banking Supervision, as these are very important for gauging the future role of sovereign ratings for foreign debt finance in developing countries. While the explanatory power of conventional rating determinants has declined since the Asian crisis, recent rating performance for Argentina and Turkey can still be qualified as lagging the markets, as variables of financial-sector strength and the endogenous effects of capital flows on macroeconomic variables seem to remain underemphasized in rating assessments. The market impact of sovereign ratings is predicted to decline as agencies have started to modify their country ceiling policy and as market participants try to exploit bond trading opportunities arising from the lagged nature of ratings. The paper presents theory and evidence to suggest that the Basel II Accord will destabilise private capital flows to the developing countries, if the current proposal to link regulatory bank capital to sovereign ratings is maintained: Assigning fixed minimum capital to bank assets whose risk weights are in turn determined by market-lagging cyclically determined ratings will reinforce the tendency of the capital ratio to work in a pro-cyclical way.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
Turkey, Asia, and Argentina

5158. Performance of Microfinance Institutions in Burkina Faso

Author:
Youssoufou Congo
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This study tests the performance of microfinance institutions (MFIs) in Burkina Faso using indicators such as the sustainable interest rate and the subsidy dependence index. The results indicate that MFIs outreach performance remains very low compared with potential demand, and the factors responsible appear to be both the refusal of most MFIs to mobilize local savings and the high costs of supply of microfinancial services. The results also show that MFIs are not viable and sustainable. Their interest rates are kept low and do not allow them to cover all the costs. In addition, the results indicate that MFIs are dependent on subsidies. However, the oldest MFIs and/or institutions providing deposit services have the lowest subsidy dependence index. It is suggested that more attention should be placed on savings mobilization and ceilings on interest rates should be removed in order to allow MFIs to charge sustainable interest rates.
Topic:
Development and Economics
Political Geography:
Africa

5159. Turkey's Elections and the United States

Author:
Philip H. Gordon and Henri J. Barkey
Publication Date:
11-2002
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
The landslide victory of an Islamic party in a Turkish election would hardly seem to be good news for Americans at anytime. Butwithwarlooming inIraq,Turkeytrying torecoverfromits worst financial crisis ever, emerging questions about European defense and NATO, Cyprus talks at a critical stage, and Ankara's application for membershipinthe EuropeanUnioninthe balance, the November3electoralvictory oftheJusticeand DevelopmentParty(AKP)probably struck many U.S. observers as the wrong outcome at the wrong time.
Topic:
NATO, Economics, and Politics
Political Geography:
United States, Europe, and Middle East

5160. Euro-Focus, After The German Electoral Storm: Mending Bridges, Rebuilding Confidence

Author:
Simon Serfaty and Christina Balis
Publication Date:
09-2002
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
This past summer began with predictions of the return of a new conservative government in Germany and the alleged demise of Europe's left. The consecutive victories of leftwing parties in Sweden and Germany this month proved the fallacy of both predictions, while raising serious questions in Europe and the United States about the future course of German policies.
Topic:
Economics and Politics
Political Geography:
United States, Europe, Germany, and Sweden