Savings investment correlations and capital mobility in developing countries

The author estimates savings and investment correlations for 58 developing countries to assess the capital mobility (in the Feldstein-Horioka sense) in these countries. Using a new estimation technique (fully modified ordinary least squares) - which simultaneously corrects for serial correlation, endogeneity, and sample bias (asymptotically) - the author finds that many developing countries are financially integrated in the long run. More important, the estimates from this robust estimation technique indicate that savings-investment correlations are lower for middle-income than for lower-income countries. The author also provides evidence of capital mobility for several of these countries in the short run.Economic Theory&Research,Banks&Banking Reform,Macroeconomic Management,Statistical&Mathematical Sciences,Scientific Research&Science Parks

Enterprise and Sustainable Development: Role, Challenges and Opportunities

This paper critically reviews the role, challenges and opportunities of business enterprises in the context of sustainable development (SD) with some emphasis on the Caribbean. Using the literature, observations, and judgment, the paper reiterates the triple role of a typical or ideal business enterprise in SD: contributor to economic growth, contributor to job creation and contributor to environmental protection or conservation. Naturally, the attainment of these goals is affected by how business enterprises deal with challenges and take advantage of opportunities. The paper examines these challenges and opportunities. Except for some singularities, the Caribbean is not too different from the rest of the world. The paper uncovers five gaps in the literature and makes recommendations for business enterprises' effectiveness in the pursuit of SD. Keywords: Enterprise, Sustainable development, Challenges, Climate change, The Caribbea

Are Barbados Crime Rate Fluctuations Transitory or Permanent

Using a model selection framework, this exploratory paper attempts to answer the fundamental question of whether Barbados crime rate fluctuations are transitory or permanent.  Although not clear-cut, Barbados crime rate series follows a trend-stationary process. It means that in Barbados an unexpected change in the crime rate should not substantially alter one's forecast of the latter in the long run. Put differently, in the long run the crime rate in Barbados should return to its natural rate. Keywords: crime, model selection, structural break, stationarity, Barbados

How prices and macroeconomic policies affect agricultural supply and the environment

The author studies the literature on how agricultural prices and macroeconomic policies affect agricultural supply and how that supply affects the environment. He addresses the question of how effective agricultural incentives are in boosting the agricultural supply, particularly in sub-Saharan Africa. The literature generalizes that farmers are rational. They increase their output in response to an increase in real output prices. The agricultural supply response is inelastic in the short run, but elasticities for individual crops are generally higher that those for aggregate output. Elasticities are higher in the long run that in the short. In theory, if farmers are rational, if output responds to price increases, measures should be taken to eliminate price distortion. There are four potential sources of bias in the estimates: a) disregard for the simultaneity of variables; b) the ommission of key variables; c) improper pooling of data from different countries; and d) in most time series studies, the aggregate supply response is treated as reversible, but, according to fixed assets theory, the supply response is irreversible. There is clearly a link between agricultural incentives and the environment. But quantitative data on relative aspects of the subject are very inadequate.Labor Policies,Economic Theory&Research,Environmental Economics&Policies,Markets and Market Access,Fiscal&Monetary Policy,Markets and Market Access,Agricultural Knowledge&Information Systems,Environmental Economics&Policies,Economic Theory&Research,Access to Markets

Pesticide traders'perception of health risks : evidence from Bangladesh

As pesticide traders are important sources of information about the health impacts of pesticides, a crucial understanding of their perception is necessary toguide further pesticide information dissemination efforts through this channel. To this end, a 2003 survey of 110 Bangladeshi pesticide traders was conducted with questions on the pesticides in stock, knowledge and training in pesticide use and handling, sources of information, protective measures, and health effects. A two-equation bivariate probit model was initially estimated for health impairment and trader perception with health effects as an endogenous regressor in the perception equation. Results indicate that pesticide toxicity, exposure in terms of number of years spent in the pesticide business, trader's age (experience), and the interaction between the most harmful pesticides and training received in pesticide use and handling were the significant determinants of health impairment status. Risk perception was determined by actual health impairment status, pesticide toxicity, the average number of hours spent in the shop per day, training, and the interaction term between highly toxic substances and training. The evidence suggests that the current information content may not be effective, and thus training programs should be revised with a greater emphasis on health hazards and averting behavior.Health Monitoring&Evaluation,Fertilizers,Fertilizers&Agricultural Chemicals Industry,Agricultural Knowledge&Information Systems,Rural Development Knowledge&Information Systems

Capital markets responses to environmental performance in developing countries

Firms in developing countries are often said to have no incentives to invest in pollution control because they typically face weak monitoring and enforcement of environmental regulations. But the inability of formal institutions to control pollution through fines and penalties may not be as serious an impediment to pollution control as is generally argued, contend the authors. Capital markets may react negatively to news of adverse environmental incidents (such as spills or violations of permits) as well as positively to the announcement that a firm is using cleaner technologies. The authors assess whether capital markets in Argentina, Chile, Mexico, and the Philippines react to the announcement of firm-specific environmental news. They show that: I) Capital markets react positively ( the firms'market value increases) to the announcement of rewards and explicit recognition of superior environmental performance. ii) They react negatively (the firms'value decreases) to citizens'complaints. Environmental regulators in developing countries could 1) harness market forces by introducing structured programs to release firm-specific information about environmental performance, and 2) empower communities and stakeholders through environmental education programs.Microfinance,Water and Industry,Small and Medium Size Enterprises,Environmental Economics&Policies,Small Scale Enterprise,Water and Industry,Agricultural Research,Small Scale Enterprise,Private Participation in Infrastructure,Environmental Economics&Policies

Population Growth and Economic Growth/Development: An Empirical Investigation for Barbados

This paper examines the nature of the relationship between population growth and economic growth/development in a small developing country, Barbados, in the period 1980-2010. Using the  autoregressive distributed lag approach to cointegration, the paper yields the following main results: (i) population growth and population density positively and significantly affect economic growth; (ii) economic growth negatively and significantly affects population growth; (iii) natural increase rate positively and significantly affects population growth; (iv) net international migration negatively and significantly impacts population growth. These results have policy implications. Keywords:population growth,economic growth, economic development, ARDL, cointegration, Barbados

Equity and bond flows to Asia and Latin America : the role of global and country factors

The authors investigate what has motivated the large portfolio flows to several developing countries in recent years. Using monthly data on U.S. capital flows to nine Latin American and nine Asian countries (instead of monthly reserves data), they analyze the behavior of bond and equity flows to those countries. Using panel data, they find that global factors - such as a drop in U.S. interest rates and the slowdown in U.S. industrial production - are important in explaining capital inflows. But country developments are at least as important in determining those flows, especially for Asia. They also find that equity flows are more sensitive than bond flows to global factors, but that bond flows are generally more sensitive to a country's credit rating and to the secondary market price of debt.Economic Theory&Research,Banks&Banking Reform,Financial Intermediation,Environmental Economics&Policies,Macroeconomic Management

Disclosure of environmental violations and the stock market in the Republic of Korea

For almost 20 years, the Ministry of Environment of the Republic of Korea has published on a monthly basis a list of enterprises that fail to comply with national environmental laws and regulations. In this paper, the authors examine the reaction of investors to the publication of these lists and show that enterprises appearing on these lists have experienced a significant decline in their market valuation. Firms in developing countries are often said to have no incentives to invest in pollution control because they typically face weak monitoring and enforcement of environmental regulations. The findings of the authors, however, indicate that the inability of formal institutions to control pollution through fines and penalties may not be as serious an impediment to pollution control as is generally argued. Environmental regulators in developing countries could harness market forces by introducing structured programs to release firm-specific information about environmental performance.Pollution Management&Control,Health Economics&Finance,Environmental Economics&Policies,Water and Industry,Decentralization,Environmental Economics&Policies,Energy and Environment,Health Economics&Finance,Access to Markets,Markets and Market Access

Labor Market Regulation and Employment in the Caribbean

This research project focuses on the demand side of the labor market by examining the impact which labor market regulations have had on employment creation in the English-speaking Caribbean countries of Barbados, Jamaica and Trinidad and Tobago. Although a recent IADB report on labor market reform in Latin America and the Caribbean indicates that the English-speaking Caribbean countries have a lower level of labor market inflexibility than Latin American countries, the regulatory environment in both the labor and commodity markets has had some adverse impact on employment creation in the region (IADB, 1996). Results from a study of the operations of the labor market in the Caribbean Group for Cooperation in Economic Development (CGCED) suggest that these regulatory measures do have some effect on the operation of businesses in the region (see Abt Associates, 1998).