More evidence on income distribution and growth

Inequality is often regarded as a necessary evil that has to be tolerated to allow growth, says the author. The view that inequality is necessary for the accumulation of wealth, and contains the seeds of eventual increases in everyone's income, is evident in trickle down economic theories, where societal acceptance of inequality allows the rich to earn a greater rate of return on their assets. Others argue that inequality slows growth - because increased inequality causes more conflict over distributional issues, thereby encouraging greater economic intervention and higher taxes. According to the author, the empirical evidence shows that: Inequality is negatively, and robustly, correlated with growth. This result is robust to many different assumptions about the exact form of the cross-country growth regression. Although statistically significant, the magnitude of the relationship between inequality and growth is relatively small. Decreasing inequality from one standard deviation above to one standard deviation below the mean increases the long-term growth rate by about 1.3 percentage points a year. Inequality has a similar effect in democracies and non-democracies. When an interaction term between the type of regime and inequality is included in the base regression, it is insignificant at conventional significance levels. The cross-country data on inequality follows Kuznets'inverted-U shape. Care should be taken in interpreting these results. Although inequality is negatively correlated with growth, this does not necessarily imply that soak-the-rich policies will improve long-term growth. First, theoretical work on inequality and growth stresses thatthis negative correlation is caused by high levels of inequality provoking high levels of government economic intervention. Soak-the-rich policies may be less necessary where there is less inequality. Second, although the partial correlation is robust, the direction of causality has not been determined and the effects of specific income distribution policies have not been tested. Finally, if policies designed to decrease inequality result in greater government consumption and the cost of increased government consumptions outweighs the benefits of greater equality, long-term growth may be harmed. But for certain: inequity is not a prerequisite for growth.Inequality,Governance Indicators,Poverty Impact Evaluation,Achieving Shared Growth,Economic Theory&Research

Do government policies that promote competition encourage or discourage new product and process development in low and middle-income countries?

Previous work has shown that firms in low and middle-income countries in Eastern Europe and Central Asia that feel greater pressure to innovate from their competitors are more likely to introduce new products and services than firms that donot feel pressure (Carlin and others 2001; World Bank 2004). However, competition also appears to affect innovation in other ways. In particular, firms in these countries that face greater price competition appear to be less likely to innovate than other firms (Carlin and others 2001). The author assesses how competition and trade policy affect these different aspects of competition and, consequently, assesses their net impact on innovation. He finds that reducing tariffs and enacting and enforcing competition laws modestly increases both the pressure that firms feel regarding innovation and the level of price competition in the domestic economy. The net impact that lower tariffs have on new product and process development appears to be negative but small-for the most part the opposing effects cancel out. In contrast, stricter competition laws and better enforcement of those laws appear to increase the likelihood of new product and process development, especially when competition is treated as endogenous to innovation.Environmental Economics&Policies,Markets and Market Access,Labor Policies,ICT Policy and Strategies,Economic Theory&Research,Environmental Economics&Policies,ICT Policy and Strategies,Economic Theory&Research,Markets and Market Access,Access to Markets

Bank privatization in Argentina : a model of political constraints and differential outcomes

Based on results from country case studies, many researchers have claimed that political constraints affect bank privatization transactions, which in turn affect the post-privatization performance of the banking sector. But no study has either econometrically tested how political constraints affect bank privatization transactions or theretically modeled the privatization transaction. The authors present a simple theoretical framework that models the inherent tradeoffs faced by governments and potential buyers in privatization transactions involving banks. The potential buyer is concerned about the probability that the bank will remain solvent, about the profits it will earn after privatization, and about the price paid for the assets and liabilities. The government is concerned about the price received for the assets, about layoffs, and about service coverage after privatization. The evidence from bank privatization transactions in Argentina in the 1990s supports several of their theoretical predictions. In particular, provinces with highfiscal deficits were willing to accept layoffs and to guarantee a larger part of the privatized banks'portfolio in return for a higher price. The tequila crisis (Mexico's economic crisis in 1994-95) meant that politicians could protect fewer jobs and had to assume a greater share of their public banks'assets. Evidence of better performance at banks privatized after Mexico's crisis suggests that, by tying politicians'hands, the crisis may have brought unforeseen benefits. This conjecture awaits further empirical validation, but the authors hope that by explicitly incorporating the incentives politicians face, analysis can begin to address the question of why some privatizations succeed more than others.Economic Theory&Research,International Terrorism&Counterterrorism,Banks&Banking Reform,Municipal Financial Management,Financial Crisis Management&Restructuring,Banks&Banking Reform,Municipal Financial Management,Economic Theory&Research,Financial Crisis Management&Restructuring,International Terrorism&Counterterrorism

Periodic photometric variability of the brown dwarf Kelu-1

We have detected a strong periodicity of 1.80+/-0.05 hours in photometric observations of the brown dwarf Kelu-1. The peak-to-peak amplitude of the variation is ~1.1% (11.9+/-0.8 mmag) in a 41nm wide filter centred on 857nm and including the dust/temperature sensitive TiO & CrH bands. We have identified two plausible causes of variability: surface features rotating into- and out-of-view and so modulating the light curve at the rotation period; or, elliposidal variability caused by an orbiting companion. In the first scenario, we combine the observed vsin(i) of Kelu-1 and standard model radius to determine that the axis of rotation is inclined at 65+/-12 degrees to the line of sight.Comment: 7 pages, 9 figures. Accepted for publication in MNRA

Standardized field testing of assistant robots in a Mars-like environment

Controlled testing on standard tasks and within standard environments can provide meaningful performance comparisons between robots of heterogeneous design. But because they must perform practical tasks in unstructured, and therefore non-standard, environments, the benefits of this approach have barely begun to accrue for field robots. This work describes a desert trial of six student prototypes of astronaut-support robots using a set of standardized engineering tests developed by the US National Institute of Standards and Technology (NIST), along with three operational tests in natural Mars-like terrain. The results suggest that standards developed for emergency response robots are also applicable to the astronaut support domain, yielding useful insights into the differences in capabilities between robots and real design improvements. The exercise shows the value of combining repeatable engineering tests with task-specific application-testing in the field

Telecommunications reform in Malawi

In 1998 the Government of Malawi decided to reform its telecommunications sector. Although the reform was ambitious in some ways, it was modest when compared with the most ambitious reforms adopted elsewhere in Sub-Saharan Africa. The two main accomplishments were splitting the incumbent fixed line monopoly, the Malawi Post and Telecommunications Corporation, into two companies-Malawi Telecommunications Limited (MTL) and Malawi Post Corporation (MPC)-and issuing two new cellular licenses to two new private entrants. In addition, the Government also established a new regulator which was separate from, but heavily dependent on, the Ministry of Information and liberalized entry in value-added and Internet services. However, the Government had neither privatized the fixed-line telecommunications operator nor introduced competition in fixed-line services by the end of 2002. Clarke, Gebreab, and Mgombelo discuss sector performance before reform, details of the reform, the political motivation for reform, and events in the five years following the reform. The reform yielded mixed results. Although cellular penetration and Internet use expanded dramatically following reform, prices increased, especially for cellular calls, and fixed-line penetration remains low by regional standards.Public Sector Economics&Finance,Rural Communications,Telecommunications Infrastructure,ICT Policy and Strategies,Knowledge Economy,ICT Policy and Strategies,Rural Communications,Education for the Knowledge Economy,Knowledge Economy,Public Sector Economics&Finance

Has private participation in water and sewerage improved coverage? - empirical evidence from Latin America

Introducing private sector participation (PSP) into the water and sewerage sectors in developing countries is difficult and controversial. Empirical studies on its effects are scant and generally inconclusive. Case studies tend to find improvements in the sector following privatization, but they suffer from selection bias, and it is difficult to generalize from their results. To explore empirically the effects of PSP on coverage, we assemble a new dataset of connections to water and sewerage services at the city, and province level, based on household surveys in Argentina, Bolivia, and Brazil. The household surveys, conducted over a number of years, allow us to compile data, before and after the introduction of PSP, as well as from similar (control) regions that never privatized at all. Our analysis reveals that, in general, connection rates to piped water and sewerage, improved following the introduction of PSP, consistent with the case study literature. We also find, however, that connection rates similarly improved in the control regions, suggesting that PSP, per se, may not have been responsible for those improvements. On the other hand, connection rates for the poorest households also tended to increase in the regions with PSP, and in the control regions, suggesting that-in terms of connections at least-PSP did not harm the poor.Environmental Economics&Policies,Decentralization,Health Economics&Finance,Water Conservation,Water and Industry,Town Water Supply and Sanitation,Health Economics&Finance,Environmental Economics&Policies,Water Supply and Sanitation Governance and Institutions,Water and Industry

Reply to the comment by Carmelo Anile on the paper "Complexity analysis of the cerebrospinal fluid pulse waveform during infusion studies"

Veterinary technology is an emerging profession within the veterinary and allied animal health fields in Australia and affords graduates the opportunity to contribute to the small but growing body of literature within this discipline. This study describes the introduction of a contextualised assessment task to develop students’ research capability, competence and confidence in professional writing, and to engage them with the academic publishing process. Students worked in self-selected dyads to author a scientific case report, of publishable standard, based on authentic cases from their clinical practicum. Intrinsic to the task, students attended a series of workshops that explored topics such as critiquing the literature, professional writing styles and oral presentation skills. Assessment was multi-staged with progressive feedback, including peer review, and culminated with students presenting their abstracts at a mock conference. Students reported the task to be an enjoyable and valuable learning experience which improved their competence and confidence in scientific writing; supported by a comparison of previously submitted work. Linking scientific writing skills to clinical practice experiences enhanced learning outcomes and may foster the professionalisation of students within this emerging discipline

Finance and Income Inequality: What Do the Data Tell Us?

Although there are distinct conjectures about the relationship between finance and income inequality, little empirical research compares their explanatory power. We examine the relationship between finance and income inequality for 83 countries between 1960 and 1995. Because financial development might be endogenous, we use instruments from the literature on law, finance, and growth to control for this. Our results suggest that, in the long run, inequality is less when financial development is greater, consistent with Galor and Zeira (1993) and Banerjee and Newman (1993). Although the results also suggest that inequality might increase as financial sector development increases at very low levels of financial sector development, as suggested by Greenwood and Jovanovic (1990), this result is not robust. We reject the hypothesis that financial development benefits only the rich. Our results thus suggest that in addition to improving growth, financial development also reduces inequality.