Hitting the Great Wall: Structural change and China's growth slowdown

China is facing slowing growth rates, slowing rates of rural to urban migration and resistance to reforms that would liberalize internal migration restrictions (Hukou). We use a two sector Ramsey growth model and show that, allowing for endogenous capital accumulation, labour reallocation has accounted for approximately one fifth of China's per capita GDP growth over the last 30 years, and that Hukou reform could generate a significant boost to China's per capita GDP growth over the next decade. Our results contrast with conclusions drawn from the traditional growth accounting literature on labour reallocation effects in China because our simulation method allows for endogenous capital accumulation dynamics.     

Exchange-Rate Policies in Emerging Countries: Eleven Empirical Regularities From Latin America and East Asia

In this paper I discuss some of the most important lessons on exchange-rate policies in emerging markets during the last 35 years. The analysis is undertaken from the perspective of both the Latin American and East Asian nations. Some of the topics addressed include: the relationship between exchange-rate regimes and growth, the costs of currency crises, the merits of “dollarization,” the relationship between exchange rates and macroeconomic stability, monetary independence under alternative exchange-rate arrangements, and the effects of the recent global “currency wars” on exchange rates in commodity exporters.     

Business,Governments and Political Risk in South Asia and Latin America since 1970

This article examines how businesses perceived political risk in South Asia and Latin America over the last half century. Employing data from an oral history database at Harvard Business School, the article identifies five major sources of political risk: macroeconomic and policy turbulence, excessive bureaucracy, political instability, corruption, and violence. Marked regional differences were identified in perceptions and responses to risks. Macroeconomic and policy turbulence was the biggest perceived source of risk in Latin America. Excessive bureaucracy was the biggest source of perceived risk in South Asia. South Asian businesses often avoided bureaucracies, while Latin Americans worked with them.     

China has reached the Lewis turning point

In the past several years, labor shortage in China has become an emerging issue. However, there is heated debate on whether China has passed the Lewis turning point and entered a new era of labor shortage from a period of unlimited labor supply. Most empirical studies on this topic focus on the estimation of total labor supply and demand. Yet the poor quality of labor statistics leaves the debate open. In this paper, China's position along the Lewis continuum is examined though primary surveys of wage rates, a more reliable statistic than employment data. Our results show a clear rising trend of real wages rate since 2003. The acceleration of real wages even in slack seasons indicates that the era of surplus labor is over. This finding has important policy implications for China's future development model.     

Achieving greater financial independence for Latin America: A proposal

Financial intermediation development in Latin America illustrates the various ways in which the financial system may influence growth, efficiency, and welfare. Though the financial repression of earlier years has begun to be alleviated, much of the resulting growth of finance in Latin America has been concentrated within the countries or between them and the now-developed regions. Intraregional financial flows have been largely overlooked as an avenue for the increase of financial savings and of regional control over the mobilization and allocation of financial resources. This paper proposes the creation of new instruments designed to further the development of financial intermediation on a regional basis. A Latin American Development Bond programme is suggested which would increase the level of voluntary financial savings for regional development purposes and would reduce the present triangulation of credit flows through financial intermediaries outside of Latin America.     

Competition among developing countries for foreign investment in the eighties — Whom did OECD investors prefer?

Conclusions Developing countries including the NIEs failed to maintain their shares in total foreign investment of all major OECD countries in the eighties. Shares were generally lower by 1988 than ten years ago. This negative trend can be observed for investment in manufacturing in particular, but also for non-manufacturing. Middle East and SubSaharan African countries came down to negligible shares, while shifts in shares mainly occurred between Latin America as a losing region and the Asian NIEs as winners. In absolute terms, however, Latin America remained a major host area. Within the regions, trends towards concentrating investment on few countries proliferated from Latin America where such concentration was traditionally high, to Asia with Singapore, Malaysia, Indonesia, and partly Hong Kong, in the lead. Against this background, home countries widely continued to maintain their traditionally preferred strongholds as did Japan in Southeast Asia, West Germany in Brazil and Argentina, the US in Latin America in general, and the UK in Commonwealth countries. Such patterns remained stable over time, but differed from each other.     

Modalities of Microfinance Delivery in Asia and Latin America： Lessons for China

I. Introduction Microfinance, the provision of small size loans and other financial services to low income households, is often seen as the key innovation of the last 25 years in terms of means of reaching out to the poor and vulnerable. There is extensive experience in microfinanceprovision in both Asia and Latin America, but as yet relatively little use of the approach in China. In Section, this paper assesses different approaches to microfinance delivery using a simple threefold distincti…     

中国刘易斯拐点的异象、人口红利与经济增长

中国经济由二元模式向一元模式转变过程中必然会面临刘易斯拐点问题.文章对中国的刘易斯拐点异象给出了一个理论说明,解释了“民工荒”与农村大量剩余劳动力并存现象的一个重要原因是劳动生产率的人力资本差异.本文还指出中国三十多年来之所以能通过高投资驱动经济增长主要是得益于充裕的人口红利,近几年,“民工荒”使得从表面上看人口红利行将消失,但是实际上农村大量剩余劳动力是潜在的巨额人口红利,应最大限度地加以利用,本文提出了一系列有利于将潜在人口红利转化为现实人口红利的措施,并指出短期内在无法实现经济增长方式根本性转变的条件下,充分利用人口红利的重要意义.     

Purchasing Power Parity in South East Asian Countries Economies: A Cointegration Approach

This paper presents findings from a study of the long-run purchasing power parity (PPP) conditions in five Asian economies. The cointegration tests using exchange rates and price indices from end-of-quarter observations over the last twenty years reject the PPP proposition for all countries. The absolute version of the PPP hypothesis is tested next by using lower frequency, that is, semi-annual and annual, data. In general these tests also failed to support the long-run PPP hypothesis. Further analysis using the Johansen-Juselius (1990) multivariate approach also failed to support the hypothesis.     

Using principal components to produce an economic and social development index: An application to Latin America and the U.S.

This paper presents a principal components methodology for determining the weights for a set of indicators in a composite index of development. The procedure is applied to a 36-variable data set consisting of 1990 data for 19 Latin American countries and corresponding 1960 and 1990 data for the individual U.S. states. This paper compares the results with other well-known indices and uses the combined data set to better understand the level and scope of development in each region and over time. The general results are that the level of development of Latin American countries in 1990 are roughly distributed over the U.S. states in 1960 (though with a larger range), and the structure of development in Latin America is similar to the U.S.     

The Impact of Regulation on Utilities’ Investments: A Survey and New Evidence from the Energy Industry

Over the last 30 years, regulated sectors have undergone deep reforms in their institutional configuration, tools and goals. This paper reviews the impact of this evolution on energy firms’ investments. First, we survey the existing evidence on the effects of the presence of independent regulatory agencies on utilities’ investment rates in Europe in the MENA countries, and in Latin America, focussing on the role of de facto independence and the institutional framework. Second, we discuss the impact of incentive- versus rate-of-return regulation on firms’ incentives to invest and the interaction with firm private/public ownership. In this regard, we provide new econometric evidence of the recent developments of regulation, using a sample of European energy utilities tracked from 1997 to 2013. Our results confirm previous findings that investment is higher under incentive regulation than under rate of return regulation. However, differently from the earlier results, we find that investments seem to be driven more by the weighted average cost of capital than by the X-factor. The paper concludes reviewing recent evidence on service quality regulation on firm investment specifically on the impact of reward/penalty schemes on capital and operational expenditures.     

Unemployment in Latin America and the Caribbean

This study constructs a new data set on unemployment rates in Latin America and the Caribbean and then explores the determinants of unemployment. We compare different countries, finding that unemployment is influenced by the size of the rural population and that the effects of government regulations are generally weak. We also examine large, persistent increases in unemployment over time, finding that they are caused by contractions in aggregate demand. These demand contractions result from either disinflationary monetary policy or the defense of an exchange-rate peg in the face of capital flight. Our evidence supports hysteresis theories in which short-run changes in unemployment influence the natural rate.     

The Savings Rate Debate: Does the Dependency Hypothesis Hold for Australia and Canada?

Australia and Canada have both experienced a long-run increase in aggregate savings rates over the past century from below 10 per cent to rates exceeding 20 per cent. Two recent studies have concluded that demographic change played the predominant role in driving this long-run trend for both nations, one of which implies that a declining child dependency burden caused savings rates to increase over time. New results obtained by using a cointegration approach show that savings rates were driven by increases in real income in the long run. In the short run, increases in the working-age population in Canada increased the savings rate. In Australia, baby booms and busts occurred simultaneously with savings booms and busts. Contrary to recent work, there is no significant evidence to support a child dependency burden on savings for Australia or Canada over the last century.     

Scenario Prediction of Dynamics of Interest Rates and Internal Credit Volume in Russia for 2018−2022

This article proposes a model of internal credit driven by variations in interest rates of loans for end borrowers. The variations in internal credit after the interest rate crises that have taken place around the world in recent years are analyzed by international panel comparison, and the median elasticity is evaluated. A prediction of internal credit variations in Russia in the near future is given in light of various scenarios of interest rate fluctuations.     

Convergence and divergence of numeracy: the development of age heaping in Latin America from the seventeenth to the twentieth century1

This study makes the first systematic attempt to trace the long‐term development of Latin American numeracy, a phenomenon of great interest to economic historians in that it serves as an accurate gauge of human capital development. In order to approximate basic numeracy we use age‐heaping techniques. We find that Latin America was on a path of convergence with western Europe during the early eighteenth century. During the early nineteenth century, not only did numeracy development stagnate in some Latin American countries but differences among some of them actually increased. While numeracy rates in Argentina, Uruguay, and to a lesser extent Brazil, along with Europe, underwent a significant increase in the late nineteenth century, they declined in Mexico, Ecuador, and Colombia. By performing a regression analysis, we find that, even when we control for investment in education, mass immigration contributed to human capital formation.     

Wage-Setting and Inflation Targets in EMU

Although the operation of national coordinated wage-bargainingsystems in EMU has produced low inflation rates, EMU-wide inflationhas been above the ECB target rate for the last 3 years. Bycontrast, under the ERM, inflation rates declined steadily after1992 to below 2 per cent in both the last 2 years of the regime.It is argued that this was the consequence of two low-inflationincentives under ERM: (i) the Maastricht inflation conditionfor EMU entry; and (ii) the combination of the Bundesbank threatto raise interest rates if German wage and price inflation roseabove acceptable limits, linked to the need for other ERM membersto follow low German inflation to stay within the exchange-ratebands. These incentives no longer operate under EMU, where individualeconomies do not have an incentive to contribute to low EMU-wideinflation. We suggest that inflation coordination between thelarge EMU member states might contribute to a solution whilepermitting the continuation of real exchange-rate adjustmentsof smaller economies.     

The impact of public investment on private investment spending in Latin America: 1980–95

This paper investigates the theoretical and empirical links between key economic variables and private spending in Latin America during 1980 to 1995. The empirical findings of this paper directly address the complementarity hypothesis which suggests that increases in public investment spending raise the marginal productivity of private capital, thereby inducing higher rates of private investment spending. This paper also addresses the issue of whether changes in the real exchange rate (expenditure-switching policies) have a deflationary effect on the economics of Latin America. The findings in this paper make an important contribution to the ongoing debate about which policies need to be promoted to raise and sustain the rate of private capital formation in Latin America—the region's future source of employment and income creation.     

On the Sources of Inflation in Kenya: A Model‐Based Approach

We develop a semi‐structural new‐Keynesian open‐economy model – with separate food and non‐food inflation dynamics to study the sources of inflation in Kenya in recent years. To do so, we filter international and Kenyan data (on output, inflation and its components, exchange rates and interest rates) through the model to recover a model‐based decomposition of most variables into trends (or potential values) and temporary movements (or gaps) – including for the international and domestic relative price of food. We use the filtration exercise to recover the sequence of domestic and foreign macroeconomic shocks that account for business cycle dynamics in Kenya over the last few years, with a special emphasis on the various factors (international food prices, monetary policy) driving inflation. We find that while imported food price shocks have been an important source of inflation, both in 2008 and more recently, accommodating monetary policy has also played a role, most notably through its effect on the nominal exchange rate. We also discuss the implications of this exercise for the use of model‐based monetary policy analysis in sub‐Saharan African countries.     

A Tale of Two Countries and Two Stages: South Africa,China and the Lewis Model

The paper compares the economic progress of two countries, South Africa and China, in relation to the Lewis model. These economies are chosen because they have interesting similarities and also interesting differences. At the start of economic reform in China and with the advent of democracy in South Africa, both countries had surplus labour: they were at the first, labour-surplus, stage of the Lewis model. It is shown that, since then, South Africa has continued to experience surplus labour: the unemployment rate has risen. By contrast, China’s labour market is shown to have tightened, and there is evidence that China has entered the second, labour-scarce, stage of the Lewis model. The difference lies in their growth rates. There are sections explaining why the South African economy has grown slowly and why the Chinese economy has grown rapidly, in relation to the growth of their labour forces. The Lewis model provides an enlightening framework for explaining how widely the fruits of economic development can be shared.     

论中国改革的成就、特点及展望

中国改革已过去30年了,改革给中国大地带来了举世瞩目的巨大成就,市场经济体制初步建立,对外开放取得长足进步,经济快速发展,人民生活水平大幅提高。中国30年改革具有以下基本特征:以解放思想为先导,以渐进步骤为顺序,以系统推进为路径,以社会合力为动力,以对外开放为视野。展望改革的发展路向,要在继续坚持经济市场化、政治民主化、文化文明化和社会和谐化的基础上加大改革的力度和深度。