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’

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

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

Fiscal redistribution around elections when democracy is not "the only game in town"

This paper seeks to examine the implications of policy intervention around elections on income inequality and fiscal redistribution. We first develop a simplified theoretical framework that allows us to examine election-cycle fiscal redistribution programs in the presence of a revolutionary threat from some groups of agents, i.e., when democracy is not “the only game in town”. According to our theoretical analysis, when democracy is not “the only game in town”, incumbents implement redistributive policies not only as a means of improving their reelection prospects, but also in order to signal that “democracy works”, thereby preventing a reversion to an autocratic status quo ante at a time of the current regime’s extreme vulnerability. Subsequently, focusing on 65 developed and developing countries over the 1975–2010 period, we report robust empirical evidence of pre-electoral budgetary manipulation in new democracies. Consistent with our theory, this finding is driven by political instability that induces incumbents to redistribute income—through tax and spending policies—in a relatively broader coalition of voters with the aim of consolidating the vulnerable newly established democratic regime

Geography, institutions and development: a review ofthe long-run impacts of climate change

The links between climate change, economic growth and economic development have gained increasing attention over recent years in both the academic and policy literature. However, most of the existing literature has tended to focus on direct, short run effects of climate change on the economy, for example due to extreme weather events and changes in agricultural growing conditions. In this paper we review potential effects of climate change on the prospects for long-run economic development. These effects might operate directly, via the role of geography (including climate) as a fundamental determinant of relative prosperity, or indirectly by modifying the environmental context in which political and economic institutions evolve. We consider potential mechanisms from climate change to long-run economic development that have been relatively neglected to date, including, for instance, effects on the distribution of income and political power. We conclude with some suggestions for areas of future research

Feasible mitigation actions in developing countries

Energy use is not only crucial for economic development, but is also the main driver of greenhouse-gas emissions. Developing countries can reduce emissions and thrive only if economic growth is disentangled from energy-related emissions. Although possible in theory, the required energy-system transformation would impose considerable costs on developing nations. Developed countries could bear those costs fully, but policy design should avoid a possible 'climate rent curse', that is, a negative impact of financial inflows on recipients' economies. Mitigation measures could meet further resistance because of adverse distributional impacts as well as political economy reasons. Hence, drastically re-orienting development paths towards low-carbon growth in developing countries is not very realistic. Efforts should rather focus on 'feasible mitigation actions' such as fossil-fuel subsidy reform, decentralized modern energy and fuel switching in the power sector

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 Middle-Income Trap: Issues for Members of the Association of Southeast Asian Nations

The problem faced by many of the economies making up the Association of Southeast Asian Nations (ASEAN) is whether they can avoid the middle-income trap and advance to the high-income level. What is needed for them to avoid the middle-income trap? This paper attempts to answer this question by building an analytical framework based on the factors that determine each development stage of an economy, and by comparing the current situation of four ASEAN middle-income countries with the experience of the Republic of Korea, a country that managed to overcome the middle-income trap and reach the high-income level in the late 1990s. The paper concludes that for ASEAN middle-income countries (Indonesia, Malaysia, the Philippines, and Thailand) to avoid the trap, they should strengthen research and development capability, emphasize the quality and appropriateness of human resources, and improve the institutional system for nourishing a dynamic private sector. These efforts can be expected to result in dynamic changes in the structure of comparative advantage toward higher skill and more innovation-intensive contents of products. For a low middle-income country such as Viet Nam, reforms and policies to increase the productivity of capital, land, and other resources are essential to avoid the early appearance of the trap