War and socialism: why eastern Europe fell behind between 1950 and 1989†

This article reconsiders the relative growth performance of centrally planned economies in the broader context of postwar growth in Europe. It reports a new dataset of revised estimates for investment rates in eastern European countries between 1950 and 1989. Complemented with data on other growth determinants, this evidence is used to re‐evaluate the socialist growth record in a conditional convergence framework with a panel of 24 European countries. After controlling for relative backwardness, investment rates, and improvements in human capital, the findings show that centrally planned economies underperformed due to their relative inefficiency only after the postwar golden age. In the 1950s and 1960s, eastern Europe was falling behind mainly due to relatively low levels of investment and weak reconstruction dynamics. Both are explained, in part, by the lack of labour‐supply flexibility that, in turn, resulted from the comparatively much larger negative impact of the war on population growth in eastern Europe.     

新兴市场国家制成品出口技术构成的收敛趋势研究

新兴市场国家在国际市场上的贸易竞争日益加剧,其主要原因在于这些国家处于相同的经济发展阶段,出口产品的技术构成呈明显的收敛趋势,产品之间有较高的可替代性。对新兴市场国家与高收入国家出口产品技术结构的欧氏距离测算表明,大多数新兴市场国家出口技术结构正在向高收入国家靠近,特别是中国、印度等亚洲国家,而且这些国家之间的技术结构差距也在明显缩小,技术结构的高度化和同步化趋势十分明显。进一步对不同技术水平出口产品的收敛性分析表明,中高技术水平和中低技术水平的产品收敛速度最快,表明这一技术层次的产品出口竞争最为激烈。新兴市场国家之间应当建立积极的协调机制,避免技术结构上的同步效应带来的冲突和对抗,谋求政治和经济上的共生共赢。     

国际资本形成对我国经济产生的风险及对策

20世纪美国等发达国家进一步在全世界倡导金融自由化政策，新兴市场国家的金融自由化及信息技术的广泛应用使得国际资本以更大规模、更快速度在国际金融市场上自由流动，并对新兴市场经济体产生了深远影响。但是90年代后期，墨西哥、泰国、韩国、马来西亚、巴西等新兴市场经济体相继发生了金融危机，甚至引发犬规模的经济动荡，使得经济界重新审视、思考国际资本流动的影响。我国近几年成为国际资本流入的大国，那么国际资本形成在促进我国经济增长的同时，会给我们带来哪些方面的风险呢？文章重点分析了国际资本形成中所产生的风险，并提出防范风险的对策建议。     

Inequality and living standards under early communism: Anthropometric evidence from Czechoslovakia, 1946–1966

A sample of adolescent heights and weights from the Czechoslovak city of Liberec is analyzed to shed light on the changes in biological standard of living between 1946 and 1966, the early years of Communist rule in Czechoslovakia. The long-term trend in average height was upwards for all social groups but differences in stature between social groups were about as large as in Communist Czechoslovakia as in market economies, such as the UK. Sons of blue-collar fathers and of parents employed in agriculture were generally shorter than sons of clerks and professional employees (teachers, doctors, lawyers). The anthropometric record also suggests that in the immediately post-war years inequality was greater than in the late 1950s and early 1960s.     

Is there a yen optimum currency area? Evidence from 18 Asian and Pacific economies

This paper examines the macroeconomic costs and benefits of adopting a common currency (the yen) for 18 Asian and Pacific countries. Economic theory suggests that the main benefit is enhanced price stability, while the main cost is higher business-cycle volatility if the adopting country’s output is not sufficiently correlated with that of Japan. Using data from 1960–2001, the paper finds that the estimated cost and benefit measures exhibit substantial variability across the countries and are often positively correlated: countries (such as Bangladesh or Nepal) that have a lot to gain from adopting the yen, also have a lot to lose from it; while other economies (such as Singapore, Thailand, or Taiwan) that have little to lose by adopting the yen, have also little to gain by it. The empirical results can be also used to compare net benefits for individual countries, showing, for example, that Korea is a more promising candidate for adopting the yen than Pakistan or Malaysia.     

The Impact of the US Interest Rate Hike on Emerging Market Economies and the Belt and Road Initiative

Since the end of 2015, the US Federal Reserve has raised its benchmark interest rate nine times. This has led to capital outflows and asset depreciation in many emerging market economies. The present paper examines the factors that determine the financial volatility of emerging markets in the face of external shocks. By calculating the capital flows of 30 emerging markets from 1990 to 2018 and conducting panel regression, this paper finds that countries with good infrastructure facilities, a sound banking system and high economic growth have significantly lower cross‐border financial risks. An implication from the empirical analysis is that emerging countries would benefit greatly by actively taking part in the Belt and Road Initiative. The framework of the Belt and Road Initiative allows emerging countries better access to China's massive consumer market to promote trade and long‐term growth. Their quality of infrastructure can be improved through cooperation with China in infrastructure investment. They can also jointly establish a cooperative financial framework to enhance regional financial stability. These strategies will reduce systematic financial risks and counteract the negative impacts of US interest rate hikes.     

A COMPARATIVE ANALYSIS OF THE SYNCHRONISATION OF BUSINESS CYCLES FOR DEVELOPED AND DEVELOPING ECONOMIES WITH THE WORLD BUSINESS CYCLE

Globalisation brought about worldwide changes, including economic and financial integration between countries. The objective of this paper is to establish if there is synchronisation between developed and developing countries with the world cycle. Research results show that business cycles have become less volatile after globalisation, but there is not much consensus on whether business cycles have become less or more synchronised since globalisation. Little research has been done on co‐movement between emerging markets, such as South Africa, and the world business cycle. This paper derives common factors for developed and developing countries by applying principal component analysis (PCA) to output, consumption and investment data, which represents the countries' business cycles. The empirical analysis shows co‐movement between some countries and the world business cycle (G7 countries as proxy). The results suggest that there are idiosyncratic and globally common shocks, which play different roles over time in different countries. The paper goes on to suggest that there are clear differences in how developed and emerging markets co‐move with the world business cycle. A key finding is that the co‐movement between developing economies and the world business cycle has increased since globalisation. This research also confirms previous research that most economies follow the world business cycle when large shocks – such as the recent economic downturn – occur. This has implications for forecasting the business cycle, especially in times of economic turmoil.     

Surplus labour as a source of foreign exchange?

How far can labour-surplus economies, by exporting unskilled workers and/or by importing capital to employ unskilled workers in industries producing for the world market, use their surplus labour as a source of foreign exchange and as a springboard into self-sustaining development? This paper, using the framework of analysis first suggested by Lewis over 25 years ago, emphasizes the danger of expecting too much from such a strategy. Indeed in the gloomy context of the 1980s, with many labour-surplus economies driven towards closing rather than opening, the closed-economy surplus-labour analyses of the 1950s and 1960s may come into their own again.     

Has China Crowded out Foreign Direct Investment from Its Developing East Asian Neighbors？

This paper applies a gravity model to investigate the determinants of foreign direct investment (FDI) in East Asia. Economic fundamentals, such as market size, per capita income and country risk indicators, economic and cultural ties, exchange rate volatilities and information asymmetry are found to be important determinants for FDI. Globally, the inward FDI among high-income OECD economies declined significantly on average over the period of 1990-2003, whereas the inward FDI of the high-income OECD economies in emerging market economies gained substantially. In the East Asian region, the ASEAN-4 (Indonesia, Malaysia, the Philippines and Thailand) received above-average inward FDI from the high-income OECD economies after controlling for their economic fundamentals. By contrast, China's FDI from the high-income OECD economies is below average relative to its economic fundamentals. Therefore, it is difficult to establish that China has crowded out FDI from its developing ASEAN neighbors.     

Tariff‐jumping foreign direct investment in protectionist era Ireland

The Committee on Industrial Organisation was established in the early 1960s to evaluate the level of preparedness of Irish industry for the imminent dismantling of the country's protectionist trade barriers. The Committee's sectoral reports list the 900 or so manufacturing firms that it surveyed and that together accounted for more than half of Irish manufacturing employment. From a range of archival sources, this article identifies the nationality of ownership of most of these firms, alongside their date of establishment and level of employment in 1960. Industrial grants data are used to strip out export‐oriented businesses that began to arrive in the 1950s. This makes it possible to estimate the employment share and sectoral presence of tariff‐jumping foreign firms. The latter is analysed through the lens of modern perspectives on foreign direct investment. The article also enhances our understanding of the interest‐group politics of the trade liberalization process.     

Corruption,market quality,and entry deterrence in emerging economies

In many emerging economies incumbent firms often use dubious means to deter entry of other firms. We analyze this scenario in a three‐stage game of entry deterrence. The incumbent has incomplete information about the entrant's costs but can increase this cost by resorting to unfair means (e.g. bribing a politician who harms the entrant). We completely characterize the optimal bribe and show that this depends on the “fairness index” and the “differentiation” parameter. We also show that zero bribes need not maximize welfare and market quality. Our results seem to be compatible with anecdotal evidence from emerging economies such as India.     

Cross‐border Mergers and Acquisitions and Financial Development: Evidence from Emerging Asia

This paper examines the relationship between cross‐border mergers and acquisitions (M&A) and financial development in emerging Asian economies. Bilateral cross‐border M&A data for nine emerging Asian economies covering 2000–2009 are analyzed with a sample selection model and a panel data model. The estimation results show that although the banking sector still plays a crucial role in facilitating cross‐border M&A, the role of equity markets has increased in importance because, in addition to cash, the issuance of common stock and the exchange of stocks have become popular forms of payment for M&A deals. Because of the relatively thin market, the primary corporate bond market plays a limited role in supporting cross‐border M&A, which is in contrast to the primary public bond market. However, for the secondary market, the corporate bond market is more effective in facilitating cross‐border M&A. The results also show that financial development in terms of stock and bond markets in their home countries tends to become more important when the target firms reside in more developed countries. In addition to financial development, the paper shows that most cross‐border M&A are invested in technology‐related and resource‐based industries while cheap labor industries are relatively less attractive.     

Unlocking Productive Entrepreneurship in Africa's Least Developed Countries*

Abstract: In Africa's least developed countries (LDCs), escape from poverty and convergence to living standards of more advanced economies depends critically on structural transformation and the emergence of productive entrepreneurship that would accelerate growth and job creation. So far, however, subsistence agriculture has been the main source of employment in these countries, while a dynamic private sector in industry or high value‐added services has remained elusive. Utilizing the flow approach to labor markets, this paper complements the empirical literature and numerous surveys on small and medium enterprise (SME) constraints and develops a theoretical framework that examines the main obstacles to entrepreneurship in Africa's LDCs. The paper posits that given the persistent frictions in product and labor markets as well as skill shortages that characterize these economies, development of productive entrepreneurship cannot be left to markets alone. The policy analysis suggests that the state has an important role to play. Well‐targeted government interventions including training of potential entrepreneurs and workers can help to establish more modern and highly productive SME clusters that Africa's LDCs need.     

The East Asian model of economic development

Unlike existing models of the rapid growth of the East Asian economies that are based on stylised facts, this paper formulates a model by introducing an all‐encompassing (core) variable that explains the unique path to success in East Asia. Using three propositions, the model explains the transition from a backward economy to an industrial economy. Central to the model is policy‐augmented human capital (PAHC)—human capital with a road map for development—led by a capable leader. The model is unique in that it validates the critical role of human capital in a time of ‘high development theory’ when the emphasis was skewed towards the accumulation of physical capital, and the role of government at a time when interventionist policies were either failing elsewhere (in the 1950s and 1960s) or facing opposition (in the 1970s and 1980s). The success of the East Asian model provides evidence pointing to a preference for economic development over democracy.     

Pakistan and the socialist countries: Trade and aid

The economic relations between Pakistan and the socialist countries are examined against their political background. The sharp deterioration in Pakistan's political relations with the socialist countries in the 1950s was accompanied by a contraction in trade, which had almost been a one-way flow until the early 1960s, consisting of Pakistan's exports. The political rapprochement with the socialist countries following the 1962 Sino-Indian clash coincided with a tremendous spurt in trade, largely under the aegis of barter trade agreements. Trade turnover increased fivefold in the sixties and Pakistan became a recipient of socialist aid. An examination of the structure of trade reveals that Pakistan's exports to the socialist countries diversified considerably less than total exports, but that the terms of trade were more favourable. The quantity, kinds, and sources of socialist aid are also examined.     

The Tet offensive: A turning point in America's Asian policy

A series of financial crises in emerging market economies during the 1990s have been a catalyst for efforts to strengthen the international financial system. Indeed, much has been done to strengthen the architecture of the international financial system, both in terms of crisis prevention and crisis management. The powerful G‐7 countries have made it clear that the International Monetary Fund (IMF) plays a significant role in shaping the new global financial architecture. However, is the IMF up to the task? This paper argues that despite its many limitations, the IMF is an important institution that can strengthen the global financial system. The paper begins with a discussion of what the IMF is and what it is not This will help put in perspective the nature, mandate, and role of this much‐misunderstood global institution. The second section reviews some of the recent reforms the IMF has introduced to effectively carry out its new function. While these reforms are hardly revolutionary, they nevertheless, will significantly strengthen both the domestic and international financial system. The third section examines the Achilles heel of the IMF—that its policies promote moral hazard. How effectively have the IMF reforms addressed this? It is argued that although the problems associated with moral hazard can never be fully eliminated, the IMF reforms will greatly mitigate the problem. It is very likely that for the foreseeable future, the IMF will continue to serve as an informal international lender of last resort.     

The political economy of stabilization: Commitment,capacity, and public response

Political pressures are generally recognized as important in determining success or failure of economic stabilization and adjustment programs. But there has been little comparative analysis of the politics of stabilization. This study examines the factors affecting (i) political leaders' commitment to stabilization measures (often called ‘political will’); (ii) governmental ability to implement stabilization measures; and (iii) the responses of key interest groups and the public at large to those measures. The study also discusses political implications of the design of programs and the attempted speed of stabilization, and sketches the tactics available to governments to manage political risk, including partial compensation, persuasion, diversion or obfuscation, and containment of protest. The discussion is based on case studies of stabilization efforts in five fairly poor, small, highly trade-dependent countries; Ghana in the late 1960s and early 1970s, and Zambia, Kenya, Sri Lanka and Jamaica in the late 1970s and early 1980s. A subsidiary theme within the broader discussion is the ways in which the political economy of stabilization may differ in such countries, as compared to larger, semi-industrialized economies.     

Top incomes and earnings in Portugal 1936–2005

This paper analyzes income and earnings concentration in Portugal from a long-run perspective using personal income and wage tax statistics. The results suggest that income concentration was much higher during the 1930s and early 1940s than it is today. Top income shares estimated from reported incomes deteriorated during the Second World War, even if Portugal did not take active participation in the conflict. However, the magnitude of the drop was less important than in other European countries. The level of concentration between 1950 and 1970 remained relatively high compared to countries such as Spain, France, UK or the United States. The decrease in income concentration, started very moderately at the end of the 1960s and which accelerated after the revolution of 1974, began to be reversed during the first half of the 1980s. During the last 15 years top income shares have increased steadily. The rise in wage concentration contributed to this process in a significant way. The evidence since 1989 suggests that the level of marginal tax rate at the top has not been a primary determinant of the level of top reported incomes. Marginal rates have stayed constant in a context of growing top shares.     

Non‐Residential Capital Stock in Latin America, 1875–2008: New Estimates and International Comparisons

We use a homogeneous method to estimate non‐residential capital stock for Argentina, Brazil, Chile, and Mexico. Our estimates extend back to the late‐nineteenth century, 50 years earlier than the present available estimates. Our estimates use the gross fixed capital formation data base (1850–1950). These data are linked with existing standardised national accounts for the region, such as those of Economic Commission for Latin America and the Caribbean. Finally, we compare investment in Latin American countries to that of advanced economies, particularly focussing on the performance of two settler countries, Argentina and Australia.