Export instability: An alternative analysis of causes

Numerous studies into the causes of the export instability experienced by developing countries have failed to establish any significant relationships. This paper suggests that the widely‐used technique of cross‐country regression analysis is inappropriate and that the typical explanatory variable set is inadequately specified. Accordingly, analysis is shifted to a time‐series basis at the level of individual countries, and explanatory variables are developed which correspond more closely to the supply and demand determinants of instability. Applying this alternative model to data for a sample of developing countries produces results which suggest that this approach has considerable explanatory power.     

The civil unrest as an obstacle toward financial development in Georgia, 1991–2007

Georgia has been experiencing robust GDP growth since the Rose Revolution despite its formal financial system remaining critically underdeveloped. This goes against a strongly supported proposition that a country’s economic development is followed by a well-developed and efficient financial system. In this paper we first explain the shallow financial deepening in Georgia and show that the economic growth in Georgia has been driven by such determinants as public spending and construction works mainly supported by foreign debt and FDI inflow. This paper further argues that prolonged civil conflict is one of the critical obstacles toward financial development in Georgia. Bank lending activity is associated with high level of uncertainty stemming from recurrent civil war. Newly privatized commercial banks are excessively cautious in expanding their loan assets to private non-financial corporations due mainly to the banks’ inability to precisely assess borrower’s risk involving not only with individual financial soundness but also with political uncertainty.     

Foreign direct investment,financial development and economic growth

This article argues that the development of the financial system of the recipient country is an important precondition for FDI to have a positive impact on economic growth. A more developed financial system positively contributes to the process of technological diffusion associated with FDI. The article empirically investigates the role the development of the financial system plays in enhancing the positive relationship between FDI and economic growth. The empirical investigation presented in the article strongly suggests that this is the case. Of the 67 countries in data set, 37 have a sufficiently developed financial system in order to let FDI contribute positively to economic growth. Most of these countries are in Latin America and Asia.     

The effects of hierarchy,centralization and formalization on municipal fiscal health: An empirical test of the bureaucratic ideal

This research examines the effects of three defining features of bureaucratic organizations – hierarchy, centralization of decision‐making, and the formalization of administrative procedures and rules – on the fiscal health of city governments in the US. It utilizes data from a national survey of top appointed city officials in the US to measure the bureaucratic features of city governments, and assesses budgetary solvency using actual financial data from audited financial reports. Using factor analysis to develop a composite bureaucracy index, and addressing unobserved heterogeneity and possible simultaneity bias through least squares dummy variable regression and instrumental variable regression, the empirical analysis shows that excessive bureaucracy leads to poorer fiscal health. Analysing the effects of the individual components of the index, the results indicate that centralization and formalization exert a statistically significant and negative effect on city budgetary solvency.     

Exports,growth and threshold effects in Africa

Abstract

The relationship between openness and growth remains a controversial issue in development economics with many studies focusing on the export–growth relationship. This paper examines whether the relationship between exports and growth found in large cross-section studies also holds in the context of African economies. The paper employs threshold regression techniques to examine whether African countries benefit more from exports when they reach a certain level of development or openness. Our results suggest that there is indeed a positive relationship between exports and growth in Africa. The threshold regression analysis also suggests that it is not necessary for a country to reach a certain level of development or to have an existing export base for this relationship to hold, though it is found that the relationship is stronger for countries that experience higher rates of export growth.     

Collaborative leadership and financial sustainability in local government

This research examines whether collaborative leadership significantly influences the financial sustainability of local government. Unlike other studies on financial sustainability, ours examined collaborative leadership’s effect on both subjective and objective financial sustainability by controlling for socio-demographic and economic factors (i.e., population size, population density, population aged over 65 years, unemployment rate, and gross domestic regional product) that influence the financial sustainability of local government. Ordinary least squares (OLS) regression analysis of data collected from local revenue officers as well as secondary data from local governments in South Korea revealed that collaborative leadership has a positive effect on the subjective perception of financial sustainability and a negative effect on the objective financial sustainability (net debt) of local government. These findings underscore the necessity of collaborative leadership for financial sustainability as well as the strategies needed for its development in local government.     

The measurement of development effort—A suggestion

A notable shortcoming of development economics has been a failure to design an objective indicator allowing for an evaluation of the effort made in particular developing countries. Own‐country effort has been noted in the literature to be an important ingredient in the illusive recipe of development‐success; and so the above problem is of considerable interest, both theoretical and practical. This paper analyses the interrelationships between three groups of commonly used ‘effort‐indicators’ ; and in addition studies the relationships between each and growth of per capita income of a sample of developing countries. The findings suggest that at the present time, effective development efforts tend to lie less in the area of belt‐tightening and mobilisation of domestic savings, and more in the area of explicit export promotion.     

Crises and unpredictability in developing countries

Developing countries have suffered most of the financial crises in the context of the process of economic and financial globalisation. Both current and previous crises have revealed that unpredictability is a feature common to all the episodes which occurred during the process of globalisation. Although certain alarms went off, any of those external financial crises were actually predicted by the advanced methods in use for prediction and country risk analysis. Taking into consideration the information above, the aim of this paper is to check the ability to foresee external financial crises in developing countries of both the country risk index published by Euromoney and the Credit Ratings variable included therein. We have focused on the external financial crises that took place between 1992 and 2011, that is, in a full globalisation era. The results are negative. It appears that neither the index nor the sovereign ratings are able to reflect early enough the vulnerabilities that arise previously to the setting off the crisis episodes. This leads us to conclude that the existing models of country risk have limits. Thus, it would necessary to develop new instruments to measure this risk, considering uncertainty as an essential feature of the current economic and financial environment.     

Tariffs and economic development: Some theoretical issues 1

There is evidence to suggest that in Brazil import substituting industrialization has brought an increased dependence on the foreign sector. Further growth is highly dependent upon the ability to increase exports, and economic policy exercises an important function in such export expansion. In an attempt to analyse the behaviour of manufactured exports, a regression model, complemented with in‐depth interviews with individual firms, is posited and tested with Brazilian data. In analysing policy variables and other determining factors in terms of their effects on manufactured export performance, it is found that exchange rate policy, tax incentives, LAFTA, and a recession‐boom effect have all played important roles in shaping Brazilian industrial export growth.     

Does Decentralization Reform Always Increase Economic Growth?: A Cross Country Comparison of the Performance

This study aims to test the impact of decentralization on the economic growth of a country. Based on the longitudinal data set of 63 countries with a time series spanning 1960 to 2007, the test result reveals that there is a negative relationship both between fiscal decentralization and GDP growth and between political decentralization and GDP growth. In order to examine the different impacts of decentralization, the same analysis was applied to subsets of countries categorized into three groups according to the economic stage of the country. This further analysis found that there is a negative relationship between political decentralization and growth in developing countries, between fiscal decentralization and growth in semi-developed countries, but no relationship in developed countries. These results show that decentralization is not always instrumental in economic growth, which means that the time variable, or more precisely the stage of economic development of a country, is an important factor when introducing decentralization reforms.     

Globalisation and Developing Countries – a Shrinking Tax Base?

This paper evaluates the impact of globalisation on tax bases of countries at varying stages of development. We see globalisation as a process that induces countries to embrace greater trade and financial integration. This in turn should shift their tax revenue from ‘easy to collect’ taxes (tariffs and seigniorage) towards ‘hard to collect’ taxes (value added and income taxes). We find that trade and financial openness have a positive association with the ‘hard to collect’ taxes, and a negative association with the easy to collect taxes.     

Minority entrepreneurs and firm performance in sub‐Saharan Africa

This study focuses on the role of entrepreneurs in the private sector in sub‐Saharan Africa. Using data from the Regional Program on Enterprise Development (RPED) and controlling for various factors, our analysis compares growth rates of indigenously owned African firms with firms owned by entrepreneurs of Asian or European descent, in Kenya, Zambia, Zimbabwe, and Tanzania. We find that after controlling for firm size and age, various entrepreneurial characteristics, and sector and country differences, minority (or non‐indigenous) entrepreneur firms start out larger and grow significantly faster than indigenously‐owned African firms. Our results are consistent with theories that argue that informational and financial networks created by minority entrepreneurs provide access to credit, information, and technology for members of these networks. We also find that within indigenously‐owned African firms, entrepreneurs with secondary and/or university education realise a higher rate of growth; access to education presumably enables indigenous African entrepreneurs to develop managerial skills that serve as a substitute for the informational and financial networks created by minority entrepreneurs.     

The political economy of Indian planning

Peruvian statistics were examined to see if construction remained labour‐intensive during 1955–67. Data on output, employment, capital, and materials consumption were either lacking or had defects that made a direct comparison of trends impossible. But conclusions could be drawn from relative price and wage trends. If materials and capital had not been substituted for labour, average construction costs would have risen substantially more than they did. Our estimate was that by 1967 they would have been 25 per cent higher.

Evidence from a sample of firms, however, suggested that adoption of labour‐saving techniques cannot be tied simply to changes in wages compared with other costs. All eleven innovations studied, it is true, were markedly labour‐saving; but the rate of adoption did not closely follow wage changes. Adoption came most often during those less tense years when builders were neither overstrained with orders nor lacking credit and clients. One must conclude that both rising wages and innovations can limit employment expansion in relatively poor countries.

Since both agriculture and manufacturing have been unable to absorb the growing labour force of poor countries, economists have turned their attention to other sectors for supplementary employment expansion. One of these is construction. The construction sector creates not only jobs but builds capital goods with a desirable low import content. In association with carefully structured financial institutions, it may even generate savings. How much employment a given expansion of construction will provide depends on the production functions of the sector: their slopes and their potential shifts. One must find the changes in labour productivity that go with likely changes in volume, capital accumulation, trends in material supplies, and alternate technologies.

All these questions will get imprecise answers without good statistics on output, labour, capital, and materials, both unit prices and volume. If output varies in composition and in the relative quality of components, problems of weighting and aggregating arise. Because of the sector's ? instability and footloose nature, data on construction remain inferior compared with other sectors even in the most advanced and statistics‐rich countries. Can one make anything of the sorts of data available in poor countries where the sector must play its most crucial role?

In this article, using rather limited data, we note with considerable alarm that steady labour intensity and corresponding employment expansion cannot be taken for granted. Where daily wages are but a fraction of hourly American wages, and where interest rates are a multiple of American rates, the more lavish use of materials and machinery compared with labour can nevertheless begin early.

Peru is the country selected for our study. During 1955–67 Peru had a relatively high national output growth rate of 5.6 per cent together with a moderate rate of inflation of about 9 per cent. Except for the devaluation years of 1958 and 1967, flourishing exports of fishmeal, copper, cotton, and sugar helped carry this rate of growth. Lima was one of the continent's fastest‐growing cities in population and building, particularly in squatter barriadas. But in the 1960s commercial conduction also grew at more than a 15 per cent compound rate, measured in square metres built, according to some estimates.1 During 1964–68, construction had high priority under President Fernando Belaunde, a professional architect. More U.S. foreign aid for housing (direct and guaranteed private loans) went to Peru in absolute terms during this period than to any other country. We shall analyse the consequences by examining (1) trends in relative costs, (2) relative output and import trends, and (3) data about receptivity to innovations in a sample of firms.     

An application of the stone model to the Turkish financial accounts

The study presented in this paper consists of the application of two models of financial accounting to Turkish data. Detailed financial accounts are available for 1950–63 [Yaser, 1967], accounts for 1964–67 are incomplete [Aysan, 1967 and State Institute of Statistics, 1968], and none exist for 1968–70. Even if detailed accounts could be prepared somewhat more rapidly they would still not be up to date; a considerable lag in preparation of the basic data, e.g. company balance sheets, etc., exists in Turkey, as in most underdeveloped countries. For this reason, methods of estimating financial accounts with the use of models requiring limited and speedily available current data have been explored.

The aims of the analysis are estimation and prediction. Explanation of the changes in the financial variables has not been attempted here. The bivariate least‐squares regressions run to estimate linear time trends in all the financial proportions used in the models are not explanatory. Durbin‐Watson tests suggest that other factors were significant over the period.¹ This lends support to the conclusion that even for a financial system such as Turkey's which might on a priori grounds be thought particularly well suited to analysis by the Stone model, the non‐substitutability hypothesis embodied in it must be rejected.

The reasons for believing that the Turkish financial structure might lend itself well to analysis by the Stone model are outlined below. They appear so convincing that the negative results of the model's application are surprising. Indeed, they raise a number of interesting questions about financial structures of underdeveloped countries which are beyond the scope of this paper.     

REGULATORY OPPORTUNISM: CROSS‐NATIONAL PATTERNS IN NATIONAL BANKING REGULATORY RESPONSES FOLLOWING THE GLOBAL FINANCIAL CRISIS

The variation in national regulatory responses to the recent global financial crisis has been considerable. This article explores this variation using new data on conditions in 30 different OECD countries between 2009 and 2012. Using a mixed‐method approach which employs both fuzzy‐set qualitative comparative analysis and logistic regression, we test a number of hypotheses regarding regulatory response patterns in the banking sector. Our findings suggest that while state intervention during the financial crisis was a necessary condition for a significant regulatory response, ‘financialization’, operationalized here as the structural dominance of the financial sector in the economy, plays a more important role. We show that financialization is both a sufficient condition and a good predictor of a significant regulatory response, and point to possible causal explanations for this surprising pattern.     

Well Begun,but Aiming Higher: A Review of Vietnam’s Education Trends in the past 20 Years and Emerging Challenges

Given its modest position as a lower-middle-income country, Vietnam stands out from the rest of the world with its remarkable performance on standardised test scores, school enrolment, and completed years of schooling. We provide an overview of the factors behind this exemplary performance both from an institutional viewpoint and by analysing several different data sources, some of which have rarely been used. Some of the highlights are universal primary school enrolment, higher girls’ net enrolment rates, and the role of within-commune individual factors. We further discuss a host of challenges for the country – most of which have received insufficient attention to date.     

The International Finance Corporation and the emerging market funds industry

Linking the world’s core equity markets with semi-peripheral and peripheral equity markets has been a fundamentally different process from linking core markets with each other. International financial institutions have played a larger role in core‐periphery equity market integration, and issues of corporate governance assume greater importance in the core‐periphery cases. Illustrating these differences, this article considers the creation of the Korea fund, one of the early country funds in an emerging market promoted by the International Finance Corporation (IFC). The case shows that increasingly sophisticated financial instruments, like country funds, alter the structure of the international financial system in such a way as to reposition governments in developing market economies with respect to their domestic financial systems; allow for some international capital inflows without loss of corporate control; and make diversification possible for a transnational class of investors. Moreover, the article proposes that international financial institutions like the IFC can alter the structural context of a particular market within which various financial actors later strike deals. In the light of the process of coalition building elaborated here, the article reserves a role for considerations of both multilateralism and a state’s position in the world system in a body of literature heavily concentrated on state-level political activity.     

Country size and economic growth and development

This paper attempts to provide limited empirical evidence on the nature of the relationship between country size and rates of economic growth and levels of economic development, and on the possible effects of trade concentration and dependence on trade on this relationship. It suggests that there is no discernible association between country size and economic development, nor between country size and economic growth, and that neither the dependence on trade of small countries nor their commodity and geographic export concentration are necessarily important factors in economic growth and economic development.     

The development of an interorganizational network in state government: Improved performance through action research

In unstable, changing environments we have seen that organizations become more interdependent and seek to form interorganizational relationships. This is especially true in public sector agencies where financial and human resources are becoming more scarce and unpredictable. In an attempt to develop an interorganizational system in Florida state government, the authors used an action research approach to design and implement a network of individuals from six agencies seeking to improve individual and organizational performance. The program of research and development involved 30 participants and occurred in three distinct phases: 1) the identification phase; 2) the action learning phase; and 3) the evaluation and planning phase. Findings from the project have shown improved effectiveness and personal growth for program participants. Network interaction analysis and other data sources show a viable interorganizational network emerging with the potential for improving performance in the agencies and the state government as a whole.     

The Impact of AIDS on the Botswana Civil Service: A Case Study of the Police and Prison Services

That HIV/AIDS has had an enormous impact on southern Africa in general, and in Botswana in particular, is not in doubt. Numerous studies have documented certain aspects of the problem—high HIV prevalence rates, increasing numbers of orphans and vulnerable children, declining average life expectancy, and a high number of deaths among adults during their most productive years. Scholars have engaged in speculation about the possible impacts that this disease might have on social relationships, economic growth and development, and governance in both the near and the long terms. But these studies are only forecasts of possible futures, not data driven analyses. This study closely examines data available from two agencies in the Botswana civil service, the police and prisons services in an effort to assess, albeit indirectly, any impact that the HIV/AIDS crisis may have had on the workforce. Although the AIDS epidemic in the country as a whole was reflected in the experience of these services, neither agency suffered the devastating effects some feared.