POPULATION GROWTH AND JOB CREATION IN TIMOR-LESTE

Timor-Leste began its independence as one of the poorest nations in the world. Substantial progress has been made thereafter but the challenges for future development are numerous. High population growth and modest growth of GDP means that per capita income is declining and that the extent of poverty is increasing. For this situation to change, income opportunities other than those provided by subsistence agriculture are needed. Considering the low level of education and the keen competition for skilled personnel this, however, is difficult. So far, it seems that most skilled workers are being absorbed by the public sector and that this is pushing up the already high skilled wage level. That, in turn, affects the competitiveness of the private sector negatively and acts as an obstacle to the creation of employment opportunities outside agriculture.Timor-Leste; Job Creation; Development; Industry

BIRTH OF A NATION: POVERTY AND DEVELOPMENT IN TIMOR-LESTE

Timor-Leste is among the world’s poorest countries and poverty reduction is high on the country’s policy agenda. The National Development Plan emphasizes a poverty reduction strategy based on economic growth and a focus on improvements in the health and education sector. This paper describes and analyses poverty and development in Timor-Leste. We find that progress has taken place but the situation remains troublesome with high poverty, low levels of education and large remaining problems in the health sector. Hence, further efforts are needed to improve upon the situation. Economic growth is fragile and too low to generate the necessary resources for such policies. However, unexpected oil revenues seem to be invested wisely and might provide the required means for sustainable poverty alleviationTimor-Leste; Economic Development; Poverty; Education; Health

THE OIL RESOURCES OF TIMOR-LESTE: CURSE OR BLESSING?

Timor-Leste is among the youngest nations in the world. It started its independence under difficult circumstances: poverty is widespread, education is poor, the industrial sector is non-existent, and political turbulence is on the rise. On the positive side, future oil revenues are predicted to be substantial, which could potentially be of large help in Timor-Leste’s strive for development. This paper examines critically the possibility for Timor-Leste to use oil revenues to achieve economic development. It describes how difficult it is to estimate the future revenues because of volatile prices, territorial disputes, and insufficient seismological mapping. It continues with a discussion of the “resource curse”: the difficulty of combining natural resources with economic development. Moreover, the particular challenges for Timor Leste’s development are dealt with at some length, as are possible ways to avoid the resource curse.Timor-Leste; Oil; Resource Curse; Economic Development

Towards a factor proportions approach to economic history: Population, precious metals and prices from the Black Death to the price revolution

In the history of economic doctrine the name of Bertil Ohlin is inseparable from that of Eli Heckscher. The origin of the famous Heckscher-Ohlin theorem is the seminal article by Heckscher (1919) in the special 1919 David Davidson Festschrift issue of Ekonomisk Tidskrift, later developed by Ohlin in his doctoral dissertation (1924) and his monumental Interregional and International Trade (1933). Together, these three works established the factor proportions approach to international trade

Freedom, Servitude and Voluntary Labor

We present an economic framework to revisit and reframe some important debates over the nature of free versus unfree labor and the economic consequences of emancipation. We use a simple general equilibrium model in which labor can be either free or coerced and where land and labor will be exchanged on markets that can be competitive or manipulated or via other non-market collusive arrangements. By working with variants of the same basic model under different assumptions about initial economy-wide factor endowments and asset ownership we can compare equilibrium distributional outcomes under different institutional and contractual arrangements including markets with free labor and free tenancy, slavery, and tenancy arrangements with tied labor-service obligations. Analysis of these different contractual and organizational forms yields insights that accord with common sense, but that are often overlooked or downplayed in academic debates, particularly amongst economists