Challenges associated with the BRI: a review of recent economics literature

Economic trade theory suggests that the Belt Road Initiative (BRI) can lead to more trade and increases in welfare. However, this can also lead to various challenges. In this paper, we use recent literature in economics to identify three such challenges. The first is that there is increasing evidence of malinvestment in previous Chinese infrastructure investments, rising corporate debt and corruption. If the BRI worsens this phenomena, the consequent financial and economic crisis in China is likely to have serious contagion effects with global ramifications. Second, trade brings about winners and losers within a country and unless there is adequate redistribution of the gains within an economy it can lead to increased inequality, poverty and structural unemployment. Finally, there are negative consequences to the environment that trade expansion may bring about unless effective legal, political and economic institutions are in place addressing the issue

Impact of future tsunamis from the Java trench on household welfare: Merging geophysics and economics through catastrophe modelling

This paper presents the first end-to-end example of a risk model for loss of assets in households due to possible future tsunamis. There is a significant need for Government to assess the generic risk to buildings, and the concrete impact on the full range of assets of households, including the ones that are key to livelihoods such as agricultural land, fishing boats, livestock and equipment. Our approach relies on the Oasis Loss Modelling Framework to integrate hazard and risk. We first generate 25 representative events of tsunamigenic earthquakes off the Southern coast of Java, Indonesia. We then create a new vulnerability function based upon the Indonesian household survey STAR1 of how much assets have been reduced in each household after the 2004 tsunami. We run a multinomial logit regression to precisely allocate the probabilistic impacts to bins that correspond with levels of financial reduction in assets. We focus on the town of Cilacap for which we build loss exceedance curves, which represent the financial losses that may be exceeded at a range of future timelines, using future tsunami inundations over a surveyed layout and value of assets over the city. Our loss calculations show that losses increase sharply, especially for events with return periods beyond 250 years. These series of computations will allow more accurate investigations of impacts on livelihoods and thus will help design mitigation strategies as well as policies to minimize suffering from tsunamis.Lloyd's Tercentenary Research Foundation; Lighthill Risk Network; Alan Turing Institute project "Uncertainty Quantification of multi-scale and multiphysics computer models: applications to hazard and climate models", EPSRC EP/N510129/1; Royal Society, the United Kingdom CHL/R1/180173

Intrahousehold allocation of education expenditure and returns to education: the case of Sri Lanka

This paper uses demand analysis to explore whether intrahousehold allocation of education expenditure differs between boys and girls in rural Sri Lanka. Contrary to most countries in South Asia a significant bias favouring girls is found in 1990/91 for the 5-9 and 17-19 age groups and in 1995/96 for the 5-9 and 14-16 age groups. The 5-9 age group captures the run-up to the Year 5 scholarship exams that are used to gain entry into better performing secondary schools. The 14-16 and 17-19 age groups capture those who read for important National level qualifications vital in the job market. The paper argues that these household level decisions are rational because wage returns to junior and senior secondary education have been higher for females than for males through the 1980s and 1990s

Education and household welfare in Sri Lanka from 1985 to 2006

This paper looks at the impact of education on household economic welfare in Sri Lanka over twenty years from 1985 to 2006 using five cross section household survey datasets. Applying quantile regression techniques the analysis finds that the incremental value to household welfare shows a distinct jump for an extra year of education at levels where important national examinations are completed. Moreover, higher quantiles systematically enjoy greater incremental welfare to education levels between Grade 8 to completed Advanced level examinations. Both these effects happen partly via the labour market, as labour market returns to employment display similar trends. The first finding suggests that credentials are important in the labour market. The second finding suggests that individuals in the upper quantiles probably have better quality education as well as social and analytical skills that complement formal education, enabling them to earn higher returns for their education

Why are boys falling behind? Explaining gender gaps in school attainment in Sri Lanka

An increasingly common trend in developed countries and middle income countries such as Thailand, South Africa, Malaysia, Indonesia and Sri Lanka is that females outperform males in terms of attainment at school and enrollment in higher education, on average. Surprisingly, in countries such as Sri Lanka and Thailand, households also seem to allocate significantly higher resources towards girls’ education rather than boys’ (Himaz, 2010; Wongmonta & Glewwe, 2017). This paper looks at attainment in mathematics among a sample of 12 year olds in Sri Lanka and uses decomposition analysis to see to what extent parental aspirations and teacher attitudes, inter alia, can explain gender differentials disfavoring boys. The paper finds that although teacher attitudes and parental aspirations are significantly lower for boys, these factors -as we measure them- do not sufficiently explain the attainment gap. Much of the gap remains ‘unexplained’ and is due to differences in returns to endowments. The paper argues that positive discrimination of men in the labor market and bottle necks in higher-education may be important in understanding the unexplained component. This emphasizes the need to look beyond school level interventions to address the issue of gender imbalances in attainment

Electoral effects of public sector Austerity efforts in the United Kingdom 1900-2015

This paper investigates empirically whether large expenditure cuts and revenue rises that were the result of deliberate political efforts towards being austere had an impact on electoral outcomes in the UK using data from 1900 to 2015. The main electoral outcomes considered are the change in ruling party ideology and the margin of victory faced by the incumbent at the general election, in terms of seats secured. The paper finds that large cuts in spending and large rises in revenue significantly increases the chance of a government changing. However, the loss in seats were significantly higher for the incumbent compared to the winning partly only when large spending cuts were pursued rather than revenue increases during the incumbent's tenure in office. We also find that voters are sensitive to particular types of spending cuts, such as cuts in social security. These results are contrary to those in Alesina et.al (2013) using OECD data for 19 countries from 1975-2008, and several other papers in the empirical literature that found no significant correlation between fiscal adjustment and electoral looses

Returns to education in Sri Lanka: a pseudo panel approach

This study employs the pseudo-panel approach to estimate returns to education among income earners in Sri Lanka. Pseudo-panel data are constructed from nine repreated cross-sections of Sri Lank