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.

Green and Brown? Globalization and the Environment

Globalization - viewed as a process of economic integration that embraces governance as well as markets - could lead to worldwide convergence toward higher or lower environmental quality, or to environmental polarization in which the 'greening' of the global North is accompanied by the 'browning' of the global South. The outcome will not be dictated by an inexorable logic. Rather it will depend on how the opportunities created by globalization alter balances of power within countries and among them.globalization; North-South trade; environment; governance

Environment for the People

Environment for the People, a joint publication of PERI and the Centre for Science and the Environment (CSE) in India, documents innovative strategies used by environmental activists around the world to build natural assets. In diverse landscapes, from Bangladesh's riverine delta to Somalia's arid uplands, ommunities are investing in ecological restoration. In 'extractive reserves' in the Amazon rainforest, the defense of sustainable livelihoods goes hand-in-hand with defense of bio-diversity. In the Peruvian Andes, indigenous communities are fighting to protect their lands and water from the ravages of the mining industry. And in cities around the world, from Los Angeles to New Delhi, communities are mobilizing to defend the right to clean air. These and other inspiring cases profiled in Environment for the People illustrate that humankind does not face an inexorable 'tradeoff' between protecting the natural environment and improving economic well-being. On the contrary, struggles for environmental protection and sustainable livelihoods are bound together

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

Political Economy of the Environment: A Look Back and Ahead

The political economy of the environment aims to deepen our understanding of the interplay among the economy, the environment, and human well-being. In contrast to neoclassical environmental economics, it pays attention not only to the net magnitude of costs and benefits but also to their distribution. In the realm of positive analysis – descriptions of how the world works – this means exploring the multiple ways in which the distribution of wealth and power affects environmental outcomes. In the realm of normative analysis – prescriptions for how the world should work – political economists advocate a range of criteria including not only cost effectiveness but also safety, sustainability, and environmental justice