Modelling of regulatory factor and managerial impact assessment in the regional economy sectors: a case-study of the Kaliningrad region (Russia)

This article discusses the methodology of developing tools for assessing regulatory factors and managerial impacts on the regional economy and individual sectors and businesses. The potential of projection models is investigated, including balance models, convergence of regional and sectoral projection and compiling reliable and representative data sets capable of describing the current economic situation. An attempt was made to develop a series of models for several regional economies; to that end, the modelling of managerial and regulatory impact assessment was used in combination with the well-known value chain approach. In the interests of effective public administration, one of the requirements is to create sectoral model formats compatible with the regional projection models. Results of pilot modelling managerial and regulatory impacts on Kaliningrad region’s economies are presented through examples of agribusiness, transport, industry, tourism and recreation. Implementation of regulatory impact modelling in the framework of the suggested approach is proved for other regions. The main advantage of the developed models for the regional management is their ability to reduce uncertainty in decision-making due to obtaining estimates of the impact of the decisions on the changing situation and the conditions for the development of sectors and industries

The macroeconomics of a financial Dutch disease

We describe the medium-run macroeconomic effects and long-run development consequences of a financial Dutch disease that may take place in a small developing country with abundant natural resources. The first move is in financial markets. An initial surge in foreign direct investment targeting natural resources sets in motion a perverse cycle between exchange rate appreciation and mounting short- and medium-term capital flows. Such a spiral easily leads to exchange rate volatility, capital reversals, and sharp macroeconomic instability. In the long run, macroeconomic instability and overdependence on natural resource exports dampen the development of nontraditional tradable goods sectors and curtail labor productivity dynamics. We advise the introduction of constraints to short- and medium-term capital flows to tame exchange rate/capital flows boom-and-bust cycles. We support the implementation of a developmentalist monetary policy targeting competitive nominal and real exchange rates in order to encourage product and export diversification

Worker remittances and the global preconditions of ‘smart development’

With the growing environmental crisis affecting our globe, ideas to weigh economic or social progress by the ‘energy input’ necessary to achieve it are increasingly gaining acceptance. This question is intriguing and is being dealt with by a growing number of studies, focusing on the environmental price of human progress. Even more intriguing, however, is the question of which factors of social organization contribute to a responsible use of the resources of our planet to achieve a given social result (‘smart development’). In this essay, we present the first systematic study on how migration – or rather, more concretely, received worker remittances per GDP – helps the nations of our globe to enjoy social and economic progress at a relatively small environmental price. We look at the effects of migration on the balance sheets of societal accounting, based on the ‘ecological price’ of the combined performance of democracy, economic growth, gender equality, human development, research and development, and social cohesion. Feminism in power, economic freedom, population density, the UNDP education index as well as the receipt of worker remittances all significantly contribute towards a ‘smart overall development’, while high military expenditures and a high world economic openness are a bottleneck for ‘smart overall development’

Warfare, Fiscal Capacity, and Performance

We exploit differences in casualties sustained in pre-modern wars to estimate the impact of fiscal capacity on economic performance. In the past, states fought different amounts of external conflicts, of various lengths and magnitudes. To raise the revenues to wage wars, states made fiscal innovations, which persisted and helped to shape current fiscal institutions. Economic historians claim that greater fiscal capacity was the key long-run institutional change brought about by historical conflicts. Using casualties sustained in pre-modern wars to instrument for current fiscal institutions, we estimate substantial impacts of fiscal capacity on GDP per worker. The results are robust to a broad range of specifications, controls, and sub-samples

Bad governance:How privatization increases corruption in the developing world

International organizations have become key actors in the fight against corruption. Among these organizations, the International Monetary Fund (IMF) maintains a powerful position over borrowing countries in its ability to mandate far‐ranging policy reforms – so‐called “conditionalities” – in exchange for access to financial assistance. While IMF pressure can force the implementation of anti‐corruption policies, potentially reducing corruption, other IMF policy measures, such as the privatization of state‐owned enterprises, can create rent‐extraction opportunities and limit the capacity of state institutions to limit corrupt behavior. To test these mechanisms, we conduct instrumental‐variable regression analysis using an original dataset on IMF conditionality for up to 141 developing countries from 1982 to 2014. We find that conditions to privatize state‐owned enterprises exert significant detrimental effects on corruption control. Conversely, other areas of IMF intervention are not consistently related to corruption abatement. These findings offer policy lessons regarding the design of conditionality, which should avoid large‐scale privatization, especially under conditions of weak accountability

Aspects of the political economy of development and synthetic biology

What implications might synthetic biology’s potential as a wholly new method of production have for the world economy, particularly developing countries? Theories of political economy predict that synthetic biology can shift terms of trade and displace producers in developing countries. Governments, however, retain the ability to mitigate negative changes through social safety nets and to foster adaptation to some changes through research, education and investment. We consider the effects the synthetic production of otherwise naturally derived molecules are likely to have on trade and investment, particularly in developing countries. Both rubber in Malaysia and indigo dyes in India provide historical examples of natural molecules that faced market dislocations from synthetic competitors. Natural rubber was able to maintain significant market share, while natural indigo vanished from world markets. These cases demonstrate the two extremes of the impact synthetic biology might have on naturally derived products. If developing countries can cushion the pain of technological changes by providing producers support as they retool or exit, the harmful effects of synthetic biology can be mitigated while its benefits can still be captured