Explaining Threshold Effects of Globalization on Poverty: An Institutional Perspective

institutions, poverty, globalization, social norms

The Rise of China in Sub-Saharan Africa: its Ambiguous Economic Impacts

The paper analyses the economic relationships between China and Sub-Saharan African countries, including original contractual relationships that link exports from Sub-Saharan Africa to China and investment by Chinese firms in Sub-Saharan Africa. Unlike the 'traditional' partners of Sub-Saharan African economies (European countries, USA), these relations inextricably combine trade, aid and investment, which may create 'lock-in' effects. China's trade and investment focus on the commodities that are produced by African countries, which are crucial inputs in China's growth, with the risk of a growing dependence of African economies on the exports of raw materials and the negative effects that are associated with such dependence, especially in oil-exporting countries. Chinese investment, however, increasingly involves other sectors, such as the manufacturing sector. In addition, Chinese investment and aid have positive effects, such as the improvement of infrastructure, the lack of which being one of the key factors of the stagnation of African economies. The rise of China in Sub-Saharan Africa also implies significant additional resources and a welcome increase in the number of 'players'. The article thus shows the ambivalence of the impacts of China, which moreover substantially vary according to countries' export structure and the nature of their political institutions.Sub-Saharan Africa; China; trade; investment; aid

Drivers of long-term growth? Assessing the impacts of emerging countries on Sub-Saharan african economies

After the ‘lost decades’ Sub-Saharan African economies have exhibited positive growth rates due to emerging countries. The paper shows the complexity of causalities, which depend on: i) channels (trade, investment); ii) the emerging country (especially China); and iii) African countries’ market structures. On the one hand, this growth relies on structural asymmetries and is generated by distorted export structures that are based on commodities. It falls if prices decline and increases the specialisation of African economies in commodities. On the other hand, emerging countries have positive impacts via their investments in infrastructure, which fosters industrialisation. Finally, developed countries’ aid, due to the detrimental effects of conditionality, induces far greater asymmetries than does the aid of emerging countries

"Policy externalisation" inherent failure : international financial institutions' conditionality in developing countries

Conditionalities – i.e. ‘exchanging finance for policy reform’ in an asymmetrical relationship between the ‘donor’ and the ‘recipient’ – are central mechanisms of the reform programmes of international financial institutions (IFIs). As they are imposed by outside entities, they can also be viewed as ‘policy externalisation’, which is paradoxically a massive intrusion in the shaping of a country’s domestic policies. The resilience of such devices is remarkable, however. Indeed, in the early 1980s, many developing countries were facing balance of payments difficulties and called upon these international financial institutions for financial relief. In exchange for this relief, they devised economic reforms (fiscal, financial, monetary), which were the conditions for their lending. These reforms were not associated with better economic performance, and this led the IFIs to devise in the 1990s different reforms, which this time targeted the functioning of the government and its ‘governance’, economic problems being explained by governments’ characteristics (e.g., rent-seekers). The paper demonstrates the limitations of the device of conditionality, which is a crucial theoretical and policy issue given its stability across time and countries. These limitations stem from: i) the concept of conditionality per se - the mechanism of exchanging finance for reform; ii) the contents of the prescribed reforms given developing countries economic structure (typically commodity-based export structures) and the weakness of the concept of ‘governance’ in view of these countries’ political economies; and iii) the intrinsic linkages between economic and political conditionalities, whose limitations thus retroact on each other, in particular regarding effectiveness and credibility

From Growth to Poverty Reduction: a New Conceptual Framework in Development Economics

Since the 1990s, poverty and the ways to reducing it have become a central paradigm in development economics, not only in academia but among the international financial institutions (the World Bank and the International Monetary Fund). Indeed, after WWII, thinking on development was focused on growth. A major shift occurred in the late 1990s, which has consisted in the replacement of 'growth' or 'development' as a goal of policymakers and international institutions and a central theme of research in development economics, by poverty and its reduction, together with an expansion of the meanings of the concept of poverty. The key points of the paper are that this shift represents a crucial turning point in the conceptual framework of economic thought regarding developing countries. It represents a narrowing of the agenda of governments vis-à-vis the previous one of growth and development, and the acceptance that development is no longer the priority goal of public policies, of governments and their citizens, and that the previous actions, policies and research elaborated over decades since the beginnings of development economics were in fine a failure. This shift is also an implicit substitution of difficult objectives with highly complex causal processes for concepts that can be measured and easier short-terms goals, such as lifting up specific groups of a population above a poverty line. These new objectives are also more consensual and attractive. The paper firstly presents key steps of the evolution of the thinking in development economics since WWII, then critically assesses the conceptual framework that has emerged at the end of the 20th century regarding poverty in developing countries, in particular its multidimensionality and the pre-eminence of measurement issues and quantification. It finally analyses the associated shift in policy-making as a result of reciprocal exchanges between academic research and policymakers and donors, which have helped to consolidate the new paradigm.Poverty; growth; development economics; international financial institutions

Better Policies and International Governance

Summary The World Development Report represents a welcome change from the World Bank's previous conceptions of the state and development. It is more nuanced, and recognises the intimate relationships between economics and other realms – notably politics – as well as the complexity of these links. The role of states and institutions in development is finally taken seriously, as is the necessity for their reinvigoration and for increasing their capabilities. However, the strictly political dimension of these states must be more deeply analysed, and more attention paid to international governance, which is particularly important for weak states in a globalised world. These issues are important if the World Bank itself is to be a more effective actor and more successfully promote reform