Short-run and Long-run Dynamics of Growth,Inequality and Poverty in the Developing World

Growth, inequality, and poverty are central elements of the development process. However the mutual effects and directions of causality have been, and remain, one of the most controversial issues. After introducing a simple theoretical framework we derive some fundamental relations between growth, inequality and poverty. In the empirical part we test for unit roots and coin- tegration and apply GMM techniques on an error correction model (ECM) to estimate the pairwise short-run and long-run dynamics for income growth and changes in inequality and poverty in a panel of 114 developing countries and six regional subpanels for 1981 to 2005. The results confirm the relations of the theoretical framework; the evidence shows that in nearly all cases the vari- ables exhibit a short-run and long-run relationship. The findings reveal positive bidirectional causality between growth and inequality as well as between in- equality and poverty, and negative bidirectional causality between growth and poverty. Furthermore, the evidence shows that the level of development affects the poverty-reducing effect of growth, and that growth has benefited the poor regions far less. In summary, we show that growth, income distribution and poverty reduction are strongly inter-related, so a sucessful development strat- egy requires effective, country-specific combinations of growth and distribution policies.poverty, inequality, growth and development, panel cointegration, panel causality

International Integration and Regional Development in China

Concerns about the duration of China?s growth and hence the question of a permanent significant contribution of China to world economic growth relate, amongst other things, to the problem of reducing regional disparity in China. While China?s high average growth is driven by a small number of rapidly developing provinces, the majority of provinces have experienced more moderate development. To obtain broad continous growth it is important to identify the determinants of provincial growth. Therefore, we introduce a stylized model of regional development which is characterized by two pillars: (i) International integration indicated by FDI and/or trade lead to imitation of international technologies, technology spill overs and temporary dynamic scale economies, and (ii) domestic factors indicated by human and real capital available through interregional factor mobility. Using panel data analysis and GMM estimates our empirical analysis supports the predictions from our theoretical model of regional development. Positive and significant coefficients for FDI and trade support the importance of international integration and technology imitation. A negative and significant lagged GDP per capita indicates a catching up, non steady state process across China?s provinces.Highly significant human and real capital identifies the importance of these domestic growth restricting factors. However, other potentially important factors like labor or government expenditures are (surprisingly) insignificant or even negative. Further, in contrast to implications from NEG models indicators for urbanization and agglomeration do not contribute significantly.international integration, regional development, FDI, China

Providing aid to repressive terrorist source countries does not make the U.S. any safer

The terrorist attacks of September 11th, 2001 drew worldwide attention to the phenomenon of anti-American transnational terrorism. Given the frequency of and dangers associated with anti-American terrorism, the U.S. government tries to protect itself by giving foreign assistance to countries from which anti-American aggression originates. Studying the nexus between U.S. economic and military aid, local human rights conditions and the emergence of anti-American transnational terrorism in aid-receiving countries, Thomas Gries, Daniel Meierrieks and Margarete Redlin, however, find no evidence that the U.S. is made any safer by providing assistance. Rather, they find that economic and military aid—even if given to local regimes that are highly repressive in their fight against terrorism—results in more anti-American terrorism originating from aid-receiving countries

Anthropogenic climate change: the impact of the global carbon budget

Using time series data for the period 1959–2015, our empirical analysis examines the simultaneous effects of the individual components of the global carbon budget on temperature. Specifically, we explore the possible effects of carbon emissions caused by fossil fuel combustion, cement production, land-use change emissions, and carbon sinks (here in terms of land sink and ocean sink) on climate change. The simultaneous inclusion of carbon emissions and carbon sinks allows us to look at the coexistent and opposing effects of the individual components of the carbon budget and thus provides a holistic perspective from which to explore the relationship between the global carbon budget and global warming. The results reveal a significant positive effect of carbon emissions on temperature for both fossil fuels emissions and emissions from land-use change, confirming previous results concerning carbon dioxide and temperature. Further, while ocean sink does not seem to have a significant effect, we identify a temperature-decreasing effect for land sink