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71. Istanbul Journal of Economics: Volume 73 Issue 2

Author:
Gökhan Karabulut
Publication Date:
12-2023
Content Type:
Journal Article
Journal:
Istanbul Journal of Economics
Institution:
Istanbul University Faculty of Economics
Abstract:
Istanbul Journal of Economics-İstanbul İktisat Dergisi is an open access, peer-reviewed, scholarly journal published two times a year in June and December. It has been an official publication of Istanbul University Faculty of Economics since 1939. The manuscripts submitted for publication in the journal must be scientific and original work in Turkish or English. Being one of the earliest peer-reviewed academic journals in Turkey in the area of economics, Istanbul Journal of Economics-İstanbul İktisat Dergisi aims to provide a forum for exploring issues in basicly economics and publish both disciplinary and multidisciplinary articles. Economics is the main scope of the journal. However, multidisciplinary and comparative approaches are encouraged as well and articles from various social science areas such as sociology of economics, history, social policy, international relations, financial studies are welcomed in this regard. The target group of the journal consists of academicians, researchers, professionals, students, related professional and academic bodies and institutions.
Topic:
Debt, Economics, Globalization, Tourism, Capitalism, Finance, Ethics, Economic Growth, Tax Systems, Macroeconomics, and Unemployment
Political Geography:
Turkey and Middle East

72. Growth Through Inclusion in South Africa

Author:
Ricardo Hausmann, Tim O'Brien, Andrés Fortunato, Alexia Lochmann, and Kishan Shah
Publication Date:
11-2023
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
It is painfully clear that South Africa is performing poorly, exacerbating problems such as inequality and exclusion. The economy’s ability to create jobs is slowing, worsening South Africa’s extreme levels of unemployment and inequality. South Africans are deeply disappointed with social progress and dislike the direction where the country seems to be heading. Despite its enviable productive capabilities, the national economy is losing international competitiveness. As the economy staggers, South Africa faces deteriorating social indicators and declining levels of public satisfaction with the status quo. After 15 years, attempts to stimulate the economy through fiscal policy and to address exclusion through social grants have failed to achieve their goals. Instead, they have sacrificed the country's investment grade, increasing the cost of capital to the whole economy, with little social progress to show for it. The underlying capabilities to achieve sustained growth by leveraging the full capability of its people, companies, assets, and knowhow remain underutilized. Three decades after the end of apartheid, the economy is defined by stagnation and exclusion, and current strategies are not achieving inclusion and empowerment in practice. This report asks the question of why. Why is the economy growing far slower than any reasonable comparator countries? Why is exclusion so extraordinarily high, even after decades of various policies that have aimed to support socio-economic transformation? What would it take for South Africa to include more of its people, capabilities, assets, and ideas in the functioning of the economy, and why aren’t such actions being undertaken already? The Growth Lab has completed a deep diagnostic of potential causes of South Africa’s prolonged underperformance over a two-year research project. Building on the findings of nine papers and widespread collaboration with government, academics, business and NGOs, this report documents the project’s central findings. Bluntly speaking, the report finds that South Africa is not accomplishing its goals of inclusion, empowerment and transformation, and new strategies and instruments will be needed to do so. We found two broad classes of problems that undermine inclusive growth in the Rainbow Nation: collapsing state capacity and spatial exclusion.
Topic:
Inequality, Economic Growth, Unemployment, and Inclusion
Political Geography:
Africa and South Africa

73. A Growth Perspective on Wyoming

Author:
Thảo-Nguyên Bùi, Tim Freeman, Farah Kaddah, Lucas Lamby, and Yang Li
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
This report sets out to understand if the economy of the State of Wyoming is positioned to grow into the future. To do this, the report begins by investigating the past. To know where the state economy could be headed, and how that direction may be improved, it is critical to understand how the state developed the economic structure and drivers that it has today. Thus, Wyoming’s economic trajectory is explored over the long, medium, and short term. From this investigation, we find that Wyoming faces an overall growth problem, but we also find a high degree of variation in economic engines and growth prospects across the state. The problem that this report identifies is that the composition of economic activities is not positioned to sustain a high quality of life across all parts of the state. “Across all parts of the state” is an essential part of the problem statement for Wyoming. While some local and regional economies in the state are growing and bumping up against identifiable constraints, other local and regional economies are experiencing sustained contractions and will require new sources of growth in order to retain (or expand) population and high quality of life. Since economic dynamics vary significantly across the state, analysis is conducted in as much geographic detail as possible. By combining historical and geographic dimensions of growth, this report aims to inform pathways for sustained and inclusive prosperity across the of Wyoming.
Topic:
Economy, Economic Growth, Telework, and Green Economy
Political Geography:
North America and United States of America

74. Seeing the Forest for More than the Trees: A Policy Strategy to Curb Deforestation and Advance Shared Prosperity in the Colombian Amazon

Author:
Timothy Cheston, Patricio Goldstein, Timothy Freeman, Alejandro Rueda-Sanz, and Ricardo Hausmann
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Does economic prosperity in the Colombian Amazon require sacrificing the forest? This research compendium of a series of studies on the Colombian Amazon finds the answer to this question is no: the perceived trade-off between economic growth and forest protection is a false dichotomy. The drivers of deforestation and prosperity are distinct – as they happen in different places. Deforestation occurs at the agricultural frontier, in destroying some of the world’s most complex biodiversity by some of the least economically complex activities, particularly cattle-ranching. By contrast, the economic drivers in the Amazon are its urban areas often located far from the forest edge, including in non-forested piedmont regions. These cities offer greater economic complexity by accessing a wider range of productive capabilities in higher-income activities with little presence of those activities driving deforestation. Perhaps the most underappreciated facet of life in each of the three Amazonian regions studied, Caquetá, Guaviare, and Putumayo, is that the majority of people live in urban areas. This is a telling fact of economic geography: that even in the remote parts of the Amazon, people want to come together to live in densely populated areas. This corroborates the findings of our global research over the past two decades that prosperity results from expanding the productive capabilities available locally to diversify production to do more, and more complex, activities.
Topic:
Economic Growth, Deforestation, and Green Economy
Political Geography:
Colombia, South America, Latin America, and Amazon Basin

75. A Growth Diagnostic of Kazakhstan

Author:
Ricardo Hausmann, Nikita Taniparti, Clement Brenot, Douglas Barrios, and Can Soylu
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
This Growth Diagnostic Report was generated as part of a research engagement between the Growth Lab at Harvard University and the Astana International Financial Centre (AIFC) between June 2021 and December 2022. The purpose of the engagement was to formulate evidence-based policy options to address critical issues facing the economy of Kazakhstan through innovative frameworks such as growth diagnostics and economic complexity. This report is accompanied by the Economic Complexity Report that applies findings from this report on economy-wide challenges to growth and diversification in order to formulate attractive and feasible opportunities for diversification. Kazakhstan faces multifaceted challenges to sustainable and inclusive growth: macroeconomic uncertainty, an uneven economic playing field, and difficulties in acquiring productive capabilities, agglomerating them locally, and accessing export markets. Underlying Kazakhstan’s transformational growth in the last two decades—during which real GDP per capita multiplied by 2.5x—are two periods that underscore how Kazakhstan’s growth trajectory has been correlated with oil and gas dynamics. The early and mid-2000s characterized by the global commodity supercycle led to an expansion of the economy upwards of 8% annually, with a mild slowdown during the global financial crisis. In 2014, Kazakhstan’s growth slowed with the collapse of commodity prices, and alternative engines of growth have not been strong enough to fend against volatility since. These trends, along with growing uncertainty in the long-run demand of oil and gas, continue to highlight the limitations of relying on natural resources to drive development. As in the experience of other major oil producers, diversification of Kazakhstan’s non-oil economy is a critical pathway to drive a new era of sustainable and inclusive growth and mitigate the impacts of commodity price shocks on the country’s economy. Kazakhstan’s growth trajectory demonstrates that the country has enough oil to suffer symptoms of Dutch disease, but not enough to position it as a reliable engine of growth in the future. Development of non-oil activities has been a policy objective of the government of Kazakhstan for some time, but previous efforts for target sectors have failed to generate sufficient exports and investments to produce alternative engines of growth. This report characterizes the relationship between growth, industrial policy, and the constraints to diversification in Kazakhstan. It utilizes the growth diagnostics framework to understand why efforts to diversify into non-oil tradables has been challenging. The report proposes a growth syndrome to explain the constraints preventing Kazakhstan from achieving productive diversification and sustainable growth. This report is organized in six sections, including a brief introduction. Section 2 provides an overview of the methodological approach to the Growth Diagnostics analysis. Section 3 describes Kazakhstan’s growth trajectory and macroeconomic performance, as well as the motivations behind pursuing a diversification strategy to strengthen the non-oil economy. Section 4 summarizes three features of the country that manifest in a set of economy-wide constraints to growth and diversification. Section 5 analyzes each of the identified constraints in detail, describing their dynamics and breaking down the aspects that appear to be binding. Section 6 concludes by suggesting potential policy guidelines towards alleviation of the identified constraints.
Topic:
Economic Growth, Diversification, Sustainability, and Inclusion
Political Geography:
Central Asia and Kazakhstan

76. The Economic Complexity of Kazakhstan: A Roadmap for Sustainable and Inclusive Growth

Author:
Ricardo Hausmann, Douglas Barrios, Clement Brenot, Nikita Taniparti, Eric Protzer, and Sophia Henn
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Since the end of the 1990s, Kazakhstan has relied on oil and gas as the main drivers of economic growth. While this has led to rapid development of the country, especially during years of high oil prices, it has also subjected the economy to more severe downturns during oil shocks, bouts of currency overvaluation, and procyclicality in growth and public spending. Stronger economic diversification has the potential to drive a new era of sustainable growth by supporting new sources of value added and export revenue, creating new and better jobs, and making the economy more resistant to fluctuations in oil dynamics. However, repeated efforts to stimulate alternative, non-oil engines of growth have so far been inconclusive. This report introduces a new framework to identify opportunities for economic diversification in Kazakhstan. This framework attempts to improve upon previous methods, notably by building country and region-specific challenges to the development of the non-oil economy directly into the framework to identify feasible and attractive opportunities. These challenges are presented in detail in the Growth Diagnostic of Kazakhstan and are summarized along three high-level constraints: (i) an uneven economic playing field dominated by government-related public and private-entities; (ii) difficulties in acquiring productive capabilities, agglomerating them locally, and accessing export markets; and (iii) ongoing macroeconomic factors lowering external competitiveness lower and making the economy less stable. Our approach applies the economic complexity paradigm to identify what specific products and industries are most feasible for diversification, based on the existing productive capabilities demonstrated in the economy. We examine Kazakhstan's economic complexity at the national but also subnational levels, highlighting the heterogeneity of export baskets across regions that makes an analysis of opportunities at the subnational level essential.
Topic:
Economic Growth, Economic Complexity, Sustainability, and Inclusion
Political Geography:
Central Asia and Kazakhstan

77. The Fate of Flat Tax in the EU countries

Author:
Krassen Stanchev
Publication Date:
12-2023
Content Type:
Working Paper
Institution:
Center for Social and Economic Research - CASE
Abstract:
Since 1989, flat tax (FT) reforms have been attempted in Europe and the EU only by ex-communist countries and Iceland. In the 1990s all ex-communist countries lowered and simplified their income taxes, often starting with corporate taxes. In the late 1990s and early 2000s they also reformed their social security systems. In many respects the tax reforms have never stopped, but with regard to income taxation they are less radical than in the 1990s and at the turn of this century. Even when there were reforms re-establishing progressive taxation, they have almost never returned to complex sets of nominal rates and a steep vertical ladder of progressive thresholds. This report attempts to reconstruct the reasons why EU countries moved to introduce proportional taxation on either corporate or personal income, or both, as well as the reasons behind five of them returning to progressive taxation. These reforms happened in different political and economic contexts. It would be difficult to identify unequivocal causality between flattening taxes and economic performance. However, the report compares the dynamics of economic growth and factors related to competitiveness for periods before and after the reforms were launched. The same effort has been made for indicators of wealth and disposable income. The analysis allows for a discussion of lessons learnt and of the prospects for further reforms. The report concludes that it seems impossible to prove that FT systems have been a key contributor to higher economic growth. However, it does seem that, if the social security contributions remain relatively stable and are financed by other tax revenues, they have a positive impact on fiscal performance and general welfare.
Topic:
Reform, European Union, Economic Growth, Tax Systems, Corporate Tax, and Flat Tax
Political Geography:
Europe and Post-Soviet Europe

78. Cooperative Federalism in India: Resetting the Fiscal Architecture: Lessons for India

Author:
Kandarp Patel and Anoop Singh
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
Centre for Policy Research, India
Abstract:
The COVID-19 pandemic brought significant challenges to public finances, raising global debt to record-high levels and necessitating the suspension of fiscal rules across the globe. As we approach the aftermath of the pandemic, the challenge is to reset the pillars of the fiscal architecture and better manage public finances across all levels of government—as the lynchpin of any successful growth strategy in a post-pandemic world. This situation offers an opportunity to rethink fiscal rules and make fiscal policy more agile in responding to crises, without undermining fiscal sustainability. A risk-based medium-term fiscal framework that combines standards, rules, and strengthened institutions would strike a better balance between flexibility and credibility. Overall, for India to achieve its full potential for economic growth and development, it needs to improve the quality and efficiency of public spending and financial management across all levels of government. In doing this, India should consider moving toward a new principle-based fiscal strategy, complemented with public financial management reforms and setting up an independent fiscal institution. This process will need to be undertaken in close collaboration with the States.
Topic:
Finance, Economic Growth, COVID-19, and Public Debt
Political Geography:
South Asia and India

79. What Growth Strategies Do Citizens Want? Evidence from a New Survey

Author:
Lucio Baccaro, Bjorn Bremer, and Erik Neimanns
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
While research on the economic characteristics of growth models across countries is now extensive, research on the politics of growth models is still in its infancy, even though governments routinely pursue different strategies to generate growth. In particular, we lack evidence on (1) whether citizens have coherent preferences towards growth strategies, (2) what growth strategies citizens prefer, and (3) what shapes their preferences. We address these questions through a new survey of public opinion in Germany, Italy, Sweden, and the United Kingdom, which exemplify different models. We find that preferences for growth strategies are consistent with other policy preferences and are meaningfully structured by class and retirement status, and to a lesser extent by sector of employment. At the same time, differences across class and sector are small, and a large majority of respondents across countries favor wage-led growth. This suggests there is a “representation gap,” since this particular growth strategy is in crisis everywhere.
Topic:
Public Opinion, Economic Growth, Representation, Macroeconomics, Comparative Capitalism, and Growth Models
Political Geography:
United Kingdom, Europe, Germany, Italy, and Sweden

80. Climate Adaptation and Job Creation: Addressing the Climate and Livelihoods Crises in India

Author:
Anjana Thampi
Publication Date:
11-2023
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
India was seventh in a list of the ten most affected countries due to extreme weather events in 2019. A sharp increase in the frequency and intensity of such events in the country by the end of the twenty-first century is projected. At the same time, relatively high economic growth rates have not resulted in secure and sustainable employment opportunities in the Indian economy. The loss of millions of jobs due to climate hazards in the country is also projected. In this context, I raise two key questions. First, are livelihoods in certain regions within India more vulnerable to climatic changes? The priority regions for adaptation planning and intervention are identified by constructing a livelihoods vulnerability index. Second, can institutional climate adaptation activities simultaneously address the climate and livelihoods crises in the country? The job creation estimates through five representative adaptation activities support the need for increased spending in a climate adaptation programme. Spending 1.5 percent of the GDP on a climate adaptation programme could create jobs to the extent of 1.3 percent of the labour force as of 2017-18. Investing 3 percent of the GDP on a combined climate adaptation and mitigation programme over the same amount spent instead on a fossil fuel-based programme would lead to net employment gains of around 2 percent of the labour force. This paper argues that investing in climate adaptation activities can secure livelihoods while improving mechanisms to build resilience to climate hazards. Such activities, if planned and implemented in accordance with the geographies, vulnerabilities, and socio-economic patterns of each region, could be transformational.
Topic:
Climate Change, Economic Growth, Job Creation, Adaptation, and Livelihoods
Political Geography:
South Asia and India