SHELTER STRATEGIES FOR THE URBAN POOR IN DEVELOPING COUNTRIES

Rapid growth in many developing-country cities is strainingthe capacity of their shelter delivery systems. Governmentshave chosen a variety of implicit and explicit policies to amelioratethese strains. However, these policies are not always consistentwith their objectives, often because of a lack of knowledgeof how housing markets actually work and how policies affectand are constrained by market behavior. This paper reviews recentresearch on housing market behavior in developing countries,including the demand for housing and the pattern of housinginvestment across countries, the financing of housing by low-incomehouseholds, and the willingness to pay for secure tenure. Commonhousing policies are then examined, including public housing,sites and services projects, and slum clearance versus upgrading.Rent controls, measures to improve the supply of finance andinfrastructure, and building codes and standards are also discussed.      

SILICON VALLEY'S HIGH-VELOCITY LABOR MARKET

The remarkable growth of Silicon Valley has often been linked to its high-velocity labor market, as characterized by short-term hiring and frequent employee departures to competitors or start-ups. Such employee mobility is said to contribute to economic growth by facilitating rapid diffusion of information among firms. Law, nearly everywhere, is a potential obstacle to Silicon Valley-style growth. In nearly all European countries, the problem is labor laws that discourage the creation of short-term employment relations and saddle employers with significant obligations when jobs are eliminated. In America, the legal obstacle to the creation of high-velocity labor markets is the law of covenants not to compete and trade secrets. California law, however, does not permit effective enforcement of either covenants not to compete or trade secret agreements. California companies that have sued departing employees have usually lost the suits, suffered damage to their reputations in their industry, and had difficulty recruiting employees. After showing how this result has been achieved by the California legal system, this article goes on to explain why a labor market in which employees have information that is valuable to employers, and in which long-term contracting is not feasible, may be economically efficient (in spite of a potentially dampening effect on corporate R & D). A high-velocity labor market functions more like an information market than like the traditional labor markets analyzed by economists; by spreading information more rapidly, it eliminates much wasteful duplication of effort and achieves more rapid “convergence” on solutions to technological problems—which in turn creates more growth opportunities and start-ups. In making this argument, the author draws on Paul Romer's model of economic growth in which growth rests on “increasing returns” to information. Following Romer, the author suggests that the economic benefits of information diffusion achieved by labor mobility are likely to outweigh the risks that companies will underinvest in research because of their reduced ability to protect trade secrets.     

HOW DO MARKET FAILURES JUSTIFY INTERVENTIONS IN RURAL CREDIT MARKETS?

Understanding of the economic causes and consequences of marketfailure in credit markets has progressed a great deal in recentyears. This article draws on these developments to appraisethe case for government intervention in rural financial marketsin developing countries and to discover whether the theoreticalfindings can be used to identify directives for policy. Before debating the when and how of intervention, the articledefines market failure, emphasizing the need to consider thefull array of constraints that combine to make a market workimperfectly. The various reasons for market failure are discussedand set in the context in which credit markets function in developingcountries. The article then looks at recurrent problems thatmay be cited as failures of the market justifying intervention.Among these problems are enforcement; imperfect information,especially adverse selection and moral hazard; the risk of bankruns; and the need for safeguards against the monopoly powerof some lenders. The review concludes with a discussion of interventions,focusing on the learning process that must take place for financialmarkets to operate effectively.      

Why Most Developing Countries Should Not Try New Zealand's Reforms

During the past decade New Zealand has introduced far-reachingreforms in the structure and operation of government departmentsand agencies. This model has attracted interest in developingcountries because it promises significant gains in operationalefficiency. But developing countries, which are dominated byinformal markets, are risky candidates for applying the NewZealand model. The author suggests that basic reforms to strengthenrule-based government and pave the way for robust markets shouldbe undertaken first.      

Rural Poverty: Old Challenges in New Contexts

Poverty is still a predominantly rural phenomenon. However,the context of rural poverty has been changing across the world,with high growth in some economies and stagnation in others.Furthermore, increased openness in many economies has affectedthe specific role of agricultural growth for rural poverty reduction.This paper revisits an ‘old’ question: how doesgrowth and poverty reduction come about if most of the poorlive in rural areas and are dependent on agriculture? What isthe role of agricultural and rural development in this respect?Focusing on Sub-Saharan Africa, and using economic theory andthe available evidence, the author comes to the conclusion thatchanging contexts has meant that agricultural growth is onlycrucial as an engine for growth in particular settings, morespecifically in landlocked, resource-poor countries, which areoften also characterized by relatively low potential for agriculture.However, extensive market failures in key factor markets andlikely spatial effects give a remaining crucial role for ruraldevelopment policies, including focusing on agriculture, toassist the inclusion of the rural poor in growth and development.How to overcome these market failures remains a key issue forfurther research. JEL codes: O41, Q10, O55     

Policies on Managing Risk in Agricultural Markets

Over the past dozen years, policymakers have largely abandonedlong-standing popular approaches for addressing risk in agriculturewithout fully resolving the question of how best to manage thenegative consequences of volatile agricultural markets. Thearticle reviews the transition from past policies and describescurrent approaches that distinguish between the trade-relatedfiscal consequences of commodity market volatility and the consequencesof price and production risks for vulnerable rural householdsand communities. Current policies rely more heavily on markets,even though markets for risk are incomplete in numerous ways.The benefits and limitations of market-based instruments areexamined in the context of risk management strategies, and innovativeapproaches to extend the reach of risk markets are discussed.      

Using International Institutions to Improve Public Procurement

The World Trade Organization's voluntary rules on governmentprocurement are a useful mechanism for ensuring that publicprocurement procedures are efficient. They also provide an opportunityto reduce the uncertainty of participants by increasing transparencyand accountability. Yet most developing countries have chosennot to subject their procurement policies to international disciiplinesand multilateral surveillance. Their reasons may include anunfamiliarity with the government procurement agreement (GPA);a perception that the potential payoffs are small; a desireto discriminate in favor of domestic firms; or the successfulopposition of groups that benefit from the current regimes.Although the economic rationales for abstaining from the GPAare not compelling, a quid pro quo for accession may be neededto overcome opposition by special interests. Developing countryprocurement markets are large enough that governments may beable to make accession to the GPA conditional on temporary exceptionsto multilateral disczplines or on better access to export markets.      

Formal Water Markets: Why, When, and How to Introduce Tradable Water Rights

In most countries the state owns the water resources and thehydraulic infrastructure, and public officials decide who getsthe water, how it is to be used, and how much will be chargedfor it. But costly inefficiencies in the supply and use of watersupport a shift from government provision to a market-basedapproach that is more effective and less wasteful. Markets can allow rapid changes in allocation in response tochanging demands for water and can stimulate investment andemployment as investors are assured of access to secure suppliesof water. Because of water's unique characteristics, such marketsdo not work everywhere; nor do they resolve all water-relatedissues. By designing appropriate water laws and regulationsand by strengthening private and public institutions to administerthem, formal water markets can effectively address rising demandsfor groundwater and for water found in rivers, lakes, and canals.Lessons from Chile's experience demonstrate that formal watermarkets can improve the economic efficiency of water use andstimulate investment.      

Bank liquidity,stock market participation,and economic growth

We develop a growth model with banks and markets to reconcile the observed decreasing trend in the relative liquidity of many financial systems around the world with the increasing household participation in direct market trades. At low levels of economic development, the presence of fixed entry costs prevents the agents from accessing the market, and pushes them towards the banks, which provide high relative liquidity. We characterize the threshold after which the agents are rich enough to access the market, where the relative liquidity is lower, and show that the relative liquidity of the whole financial system (banks and markets) drops because of the increasing market participation. We provide some evidence consistent with this theoretical prediction: a one-unit increase in an index of securities market liberalization leads to a drop in the relative liquidity of between 17 and 27 per cent.     

THE INTERWAR DEBT CRISIS AND ITS AFTERMATH

This article analyzes the sovereign defaults of the 1930s andreports nine major findings. (1) There is little evidence thatfinancial markets of the 1930s were unsophisticated or thatbanks have a comparative advantage over the bond market in processinginformation. (2) Debt default in the 1930s depended on a combinationof factors, including the magnitude of the external shock, thelevel of debt, and the economic policy response, as well ason a range of non-economic considerations. (3) Countries thatinterrupted service recovered more quickly from the Great Depressionthan did countries that resisted default. (4) There is littleevidence that countries that defaulted in the 1930s later sufferedinferior access to the capital market. (5) The readjustmentof defaulted debts was protracted: the analogy with corporatebankruptcy proceedings is not applicable. (6) Although defaultled in some cases to a substantial reduction of transfers fromdebtors to creditors, on balance returns on sovereign loanscompared favorably with returns on domestic investments. (7)Creditor governments in the 1930s did act to accelerate thesettlement process. (8) Global schemes analogous to the Bakerplan were widely proposed but never implemented. (9) In contrast,debt buybacks played a useful role in the resolution of thecrisis.      

FISCAL DEFICITS AND MACROECONOMIC PERFORMANCE IN DEVELOPING COUNTRIES

Although fiscal adjustment was urged on developing countriesduring the 1980s to lead them out of economic malaise, considerableuncertainty remains about the relations between fiscal policyand macroeconomic performance. To illustrate how financial markets,private spending, and the external sector react to fiscal policies,the behavior of holdings of money and public debt, private consumptionand investment, the trade balance, and the real exchange rateis modeled for a sample of ten developing countries. The studiesfind strong evidence that over the medium term, money financingof the deficit leads to higher inflation, while debt financingleads to higher real interest rates or increased repressionof financial markets, with the fiscal gains coming at increasinglyunfavorable terms. Consumers respond differently to conventionaltaxes, unconventional taxes (through inflation or interest andcredit controls), and debt financing, in ways that make fiscaladjustment the most effective means of increasing national saving.Private investment—but not private consumption—issensitive to the real interest rate, which rises under domesticborrowing to finance the deficit. Contrary to the popular presumption,in some countries private investment increases when public investmentdecreases. There is strong evidence that fiscal deficits spillover into external deficits, leading to appreciation of thereal exchange rate. Fiscal deficits and growth are self-reinforcing:good fiscal management preserves access to foreign lending andavoids the crowding out of private investment, while growthstabilizes the budget and improves the fiscal position. Thevirtuous circle of growth and good fiscal management is oneof the strongest arguments for a policy of low and stable fiscaldeficits.      

THE COMMON AGRICULTURAL POLICY: A Review of Its Operation and Effects on Developing Countries

Policy changes in the European Community (EC)—the world'slargest importer and, since 1986, exporter of agricultural commodities—mayhave significant effects on world markets and developing countries.This article investigates the EC's Common Agricultural Policy(CAP), its history, mode of operation, and the prospects andpossibilities for change, to bring out the implications of thepolicy for developing country exporters and importers. The hypothesisthat evolves differs from that of many studies in proposingthat an agricultural liberalization in the EC is unlikely toeffect any great change in world market prices over the firstfew years. Developing countries' principal gain from a liberalizationof the CAP would derive from increased stability of world marketprices, improved access to export markets, and a reduction inthe uncertainty currently caused by discretionary measures inthe EC.      

劳动杠杆的定价效力:来自中国A股市场的证据

本文选取中国沪深A股2002年至2018年的季度数据,从公司层面考察了劳动杠杆(由劳动力成本粘性特征导致的企业利润变化率大于产出变化率的经济现象,可理解为不考虑固定成本时经营杠杆的特殊表现形式)对股票截面收益率的定价效力。结果发现:(1)劳动杠杆对截面收益率具有显著负向影响,具体表现为高劳动杠杆公司的收益率低于低劳动杠杆公司的收益率;(2)该影响在控制了公司特征后依然显著存在;(3)该影响在不同经济周期下表现不同:在经济下行期,负向定价效力更为明显。进一步地,本文通过生产率冲击和工资冲击这两个风险来源探究了劳动杠杆的作用机制。结果表明,劳动杠杆一方面通过生产率冲击产生显著正向影响,另一方面通过工资冲击产生显著负向影响。但后者的影响程度显著强于前者,两者的相对重要性取决于上市公司的技术水平。相关结果能够为公司应对劳动力成本上升、理解劳动杠杆的定价机制及相关投资策略的制定和风险管理等提供经验支持。     

东北老工业基地人口城市化的就业效应分析

在东北老工业基地经济振兴中,人口城市化与就业是相互影响的两个重大问题,对人口城市化进程中产生的就业效应进行理性的分析,意义尤为重大.本文在经济学分析框架下纳入人口学与统计学的研究方法,采用城乡增长率差法客观预测了东北地区未来城市化发展趋势,并以此为基础对劳动力需求趋势进行了科学的预测,得出的主要结论是城市化水平的提高在一定程度上会加剧城镇劳动力市场的供求矛盾,但与此同时也促进了经济增长,带来了经济的繁荣和就业水平的提高,二者之间并非完全对立关系,存在协调发展的可能.     

LESSONS FROM THE SOUTHERN CONE POLICY REFORMS

This article assesses the design of stabilization and liberalizationprograms in the Abstract Southern Cone countries of Argentina,Chile, and Uruguay. With the exception of Chile, the reformswere not as widespread as some believed. Little trade liberalizationtook place in Argentina and Uruguay, although some of the antiexportbias was reduced by eliminating taxes on traditional exports.In all three countries, labor markets remained fairly highlyregulated, though it was easier to dismiss labor. In general,liberalization was gradual: even Chile's trade liberalizationspanned five years. The article also shows that the collapse of the three economiesin the early 1980s cannot be ascribed mainly to terms of tradeand interest rate shocks. The main causes of failure were poorlydesigned programs and poor implementation. These errors includedrestrictive wage legislation (Chile) or political instabilitycombined with a preoccupation with keeping unemployment as lowas possible (Argentina). Monetary policy to deal with growingfiscal deficits was inconsistent with the accompanying exchangerate policy (Argentina throughout its reform period and Uruguaytoward the end of its reforms). Financial deregulation was notmatched by appropriate supervision of the financial institutions. The article suggests several policy lessons for countries attemptingto resume growth and restore external balance through a combinationof liberalization and stabilization policies. First, it findsevidence that reductions in distortions produced efficiencygains in Chile and Uruguay even though Uruguay's reforms wereshort-lived. Second, the article shows that policy inconsistenciesundermined the credibility of the later stages of reform inall three countries, eventually producing a crisis. Third, itpresents data that call into question the use of exchange rate-basedstabilization, because of the slow convergence of domestic pricesand interest rates to international levels, which in turn canproduce unsustainably large capital movements. Fourth, the articlestresses the need for caution in financial deregulation.      

The Impact of Financial Crises on Labor Markets, Household Incomes, and Poverty: A Review of Evidence

The 1990s have witnessed several financial crises, of whichthe East Asia and Mexico tequila crises are perhaps the mostwell known. What impact have these crises had on labor markets,household incomes, and poverty? Total employment fell by muchless than production declines and even increased in some cases.However, these aggregates mask considerable churning in employmentacross sectors, employment status, and location. Economies thatexperienced the sharpest currency depreciations suffered thedeepest cuts in real wages, though deeper cuts in real wagesrelative to GDP were associated with smaller rises in unemployment.To some extent, families smoothed their incomes through increasedlabor force participation and private transfers, though thelimited evidence available suggests that wealthier familieswere better able to smooth consumption. The initial impact ofthe crises was on the urban corporate sector, but rural householdswere affected as well and in some instances suffered deeperlosses than did urban families. School enrollment declined,especially among poorer families, as did use of health facilities,but he impact on children's nutrition levels appears to vary.Crises have typically proved short-lived, but whether householdsplunged into poverty during a crisis are able to recover asthe economy does remains an open question.      

Choosing a System of Unemployment Income Support: Guidelines for Developing and Transition Countries

Mounting evidence suggests that excessive job protection reducesemployment and labor market flows, hinders technological innovations,pushes workers into the informal sector, and hurts vulnerablegroups by depriving them of job opportunities. Flexible labormarkets stimulate job creation, investment, and growth, butthey create job insecurity and displace some workers. How canthe costs of such insecurity and displacements be minimizedwhile ensuring that the labor market remains flexible? Eachof the main unemployment income support systems (unemploymentinsurance, unemployment assistance, unemployment insurance savingsaccounts, severance pay, and public works) has strengths andweaknesses. Country-specific conditions—chief among themlabor market and other institutions, the capacity to administereach type of system, and the size of the informal sector—determinewhich system is best suited to developing and transition countries.      

The Informational Efficiency of the Equity Market As Compared to the Syndicated Bank Loan Market

The loan market is a hybrid between a public and a private market, comprised of financial institutions with access to private information about borrowing firms. We test whether this is reflected in informationally efficient price formation in the loan market vis-a-vis the equity markets, and reject this private information hypothesis. We also reject a liquidity hypothesis which suggests that equity markets always lead loan markets, despite bank lenders' access to private information, because of greater liquidity in equity markets. We further test, and reject, an asymmetric price reaction hypothesis that states that loan returns are more sensitive to negative information whereas equity returns respond symmetrically to both positive and negative information. We find evidence most consistent with an integrated markets hypothesis that suggests that both the equity and syndicated bank loan markets are highly integrated such that information flows freely across markets. This is particularly true when the equity market makers are also loan syndicate members.      

中国资本产出、资本回报与资本流向之谜--基于劳动力价格扭曲视角北大核心

本文通过建立生产部门的要素买方垄断市场均衡模型,利用1996-2016年中国省级面板数据测算中国劳动力价格扭曲程度,并使用固定效应模型(FE)及面板固定效应的工具变量(IV)估计方法加以分析,从劳动力价格扭曲视角解答了中国资本产出、资本回报与资本流向之谜,即中国经济如何在赶超阶段面临资本深化不断加剧和TFP增长乏力的情况下,依靠劳动力价格扭曲实现低资本产出与高资本回报水平共存,从而维持长期高速资本积累以及优质的资本流向结构。实证研究表明:劳动力价格扭曲降低了资本产出效率,但这并不能掩盖由劳动力向资本方转移的垄断利润对资本回报的直接补贴,因此劳动力价格扭曲对中国维持高资本回报水平起到了重要的支撑作用,并通过高资本回报水平实现了地区资本快速积累,劳动力价格扭曲对资本流向的积极作用还体现在抑制资本"脱实向虚"及吸引外资流入。因此,应正视劳动力价格扭曲在赶超阶段的特殊作用,在矫正扭曲的过程中循序渐进,更积极采取措施规避其对资本回报和资本流向可能产生的不利影响。     

ORGANIZED LABOR, POLITICS, AND LABOR MARKET FLEXIBILITY IN DEVELOPING COUNTRIES

Organized labor is usually viewed as an obstacle to labor marketadjustment. But unions' responses to adjustment programs infact range from militant opposition to acquiescence or evenexplicit cooperation. Three sets of variables shape these responses:the strength and characteristics of the union movement itself;economic cycles; and political institutions and their ties tounions. •Strength of the labor movement: In industrial democracies,an aggressive stance on wages tends to be associated with moderatelystrong unions. Small or weak unions are less militant, as mightbe expected; more surprisingly, large and powerful unions alsotend to be more moderate, primarily because of their greaterparticipation in consultation and decisionmaking at the nationallevel. The experience in developing countries is somewhat different:only a few of these have strong labor movements, and among these,militancy is common. The large share of wage labor in the publicsector complicates comparisons with industrial nations, sincegovernments as employers clearly behave differently from privateemployers, particularly in hard times. •Economic cycles: Depression almost invariably reducesmilitancy in developing as well as industrial nations. •Political institutions: The nature of the political regime—democraticor authoritarian—is only roughly associated with how governmentshandle labor relations, and correspondingly with the optionsavailable to unions. More important in shaping unions' behaviorare the nature of the political party system and how unionsare connected with parties. The conditions needed to gain workers'cooperation are analogous to those which encourage businessto invest: political stability, a voice in policy that affectstheir interests, and arising from these, the confidence thatcurrent sacrifices will ultimately yield a fair share of futurebenefits.