Aid, Conditionality, and War Economies

When natural resource revenues provide an important motive and/or means for armed conflict, the transition from war peace faces three challenges: (i) ensuring that the benefits and costs of natural resource exploitation are distributed so as to ease rather than exacerbate social tensions; (ii) channeling revenues to peaceful and productive purposes; and (iii) promoting accountability and transparency in natural resource management. Aid conditionality can help to address these challenges provided that three prerequisites are met: (i) there are domestic parties with sufficient authority and legitimacy to strike and implement aid-for-peace bargains; (ii) donor governments and agencies make peace their top priority, putting this ahead of other geopolitical, commercial, and institutional goals; and (iii) the aid 'carrot' is substantial enough to provide an incentive for pro-peace policies. Case studies of Cambodia, Angola, and Afghanistan illustrate both the scope and limitations of peace conditionality in such settings.war; natural resources; foreign aid; conditionality

Public finance, aid and post-conflict recovery

In the wake of violent conflict, a key element of building a durable peace is building a state with the ability to collect and manage public resources. To implement peace accords and provide public services, the government must be able to collect revenue, allocate resources, and manage expenditure in a manner that is regarded by its citizens as effective and equitable. This paper addresses eight key issues related to this challenge. The first four pertain to resource mobilization: (i) How should distributional impacts enter into revenue policies? (ii) How can postwar external assistance do more to prime the pump of domestic revenue capacity? (iii) Should macroeconomic strictures prescribed for economic stabilization be relaxed to foster political stabilization? (iv) How should the benefits of external resources be weighed against their costs? The second four issues relate to the expenditure side of public finance: (i) How should the dynamics of conflict be factored into public spending policies? (ii) Can the pathologies of a ‘dual public sector’ – one funded and managed by the government, the other by the aid donors – be surmounted by channeling external resources through the government, with dual-control oversight mechanisms to reduce corruption? (iii) How should long-term fiscal sustainability enter into short-term expenditure decisions? (iv) Lastly, is there scope for more innovative solutions to postwar legacies of external debts?peacebuilding; revenue mobilization; external assistance; foreign aid; post-conflict transitions; public expenditure; horizontal equity; odious debt.

Public Debts and Private Assets: Explaining Capital Flight from Sub-Saharan African Countries

We investigate the determinants of capital flight from 30 sub-Saharan African countries, including 24 countries classified as severely indebted low-income countries, for the period 1970-1996. The econometric analysis reveals that external borrowing is positively and significantly related to capital flight, suggesting that to a large extent capital flight is debt-fueled. We estimate that for every dollar of external borrowing in the region, roughly 80 cents flowed back as capital flight in the same year. Capital flight also exhibits a high degree of persistence in the sense that past capital flight is correlated with current and future capital flight. The growth rate differential between the African country and its OECD trading partners is negatively related to capital flight. We also explore the effects of several other factors - inflation, fiscal policy indicators, the interest rate differential, exchange rate appreciation, financial development, and indicators of the political environment and governance. We discuss the implications of the results for debt relief and for policies aimed at preventing capital flight and attracting private capital held abroad.capital flight; debt; sub-Saharan Africa; debt relief; capital control

Capital Flight from the Philippines, 1962-1986

This paper presents quantitative measures of the annual flow and cumulative stock of capital flight from the Philippines from 1962-1986. Results indicate a substantial capital flight during the period of investigation, amounting to almost four-fifths of the country’s external debt outstanding at the end of 1986.inflows, capital outflows, public debt, capital account

Measuring Corporate Environmental Justice Performance

Measures of corporate environmental justice performance can be a valuable tool in efforts to promote corporate social responsibility and to document systematic patterns of environmental injustice. This paper develops such a measure based on the extent to which toxic air emissions from industrial facilities disproportionately impact racial and ethnic minorities and low-income people. Applying the measure to 100 major corporate air polluters in the United States, we find wide variation in the extent of disproportional exposures. In a number of cases, minorities bear more than half of the total human health impacts from the firm's industrial air pollution.Corporate social responsibility; corporate environmental performance; environmental justice; air pollution

Distributional Issues in Climate Policy: Air Quality Co-benefits and Carbon Rent

The case for climate policy typically is made on grounds of inter-generational equity, with a presumed tradeoff between the environmental interests of future generations and the economic interests of the present generation. This framing of the problem neglects the scope for designing policies that not only mitigate climate change but also yield net benefits for all or most people who are alive today. This chapter considers two avenues by which climate policy can bring substantial immediate gains to the present generation, via (i) air quality co-benefits from reduced use of fossil fuels; and (ii) recycling of rent created by carbon pricing. Both avenues pose important issues of equity within the present generation