Is China’s Development Finance a Challenge to the International Order?

China is a major funder of developing country infrastructure, lending $40 billion annually through policy banks. Lending does not favor the belt and road above other regions. China’s lending is indifferent to risk, that is, it is uncorrelated with indices of political stability and rule of law. Some major borrowers with poor governance are beginning to have debt sustainability problems, while other borrowers are in good fiscal shape. Chinese banks have been reluctant to follow global environmental norms but seem to be evolving in that direction. Chinese actions seem more a revision of the global system than a challenge to it.     

Does high‐speed rail connection really promote local economy? Evidence from China’s Yangtze River Delta

High‐speed rail (HSR) has led to a transportation revolution in China. This paper uses the county‐level panel data of China’s Yangtze River Delta to investigate the effect of HSR connection on local economy. To address the issue of endogenous HSR route placement, we use a straight‐line strategy to construct potential HSR connection variables as instrumental variables of the actual HSR connection. Both the difference‐in‐differences and instrumental variable methods show that HSR connection impedes local economy, especially in peripheral regions. The impediment effect is channeled through population reallocation from peripheral to core areas and the restructuring of industries.     

How does historical trauma affect political participation? Evidence from the send‐down movement in China

Taking advantage of China's send‐down movement as a natural experiment, we investigate how experiencing a political movement during adolescence affects political participation decades later. Using data from the China Family Panel Survey and the regression discontinuity design, we find that the send‐down experience significantly reduces individuals’ political participation, measured by their participation in community committee elections, time spent on community service activities and how much they care about public news. Further analysis suggests that the send‐down experience negatively affects political participation through poorer mental health and less trust in local government.     

How do school ‘report cards’ affect school choice decisions?

Abstract. We estimate the effect of information about school achievement that is disseminated to the public through websites and school ‘report cards’ on school choice decisions. We find that students are more likely to leave their school when public information reveals poor school‐level performance. Some parents’ school choice decisions respond to information soon after it becomes available. Others, including non‐English‐speaking parents, alter their school choice decisions only in response to information that has been disseminated widely and discussed in the media. Parents in low‐income neighbourhoods are most likely to alter their school choice decisions in response to new information. JEL classification: I21, D83     

How does immigration affect modes of foreign market access: trade and FDI?

This article presents a study of the effects of immigration on trade and FDI. Our analysis is distinct from previous work because it systematically examines the interactions between immigration, trade and FDI. Previous studies treated FDI–immigration relationships as being independent of the modes of foreign market access. Using bilateral data of Japan and 28 other economies for the period 1996–2011, our analysis shows that FDI inflows become more dominant compared to imports when skilled immigration flows increase and less dominant when unskilled immigration flows increase. The results suggest that the relevant policy instruments as regards the promotion of trade, FDI and immigration should vary depending on economic goals, such as current account balances and labour shortages.     

Middle school or junior high? How grade‐level configurations affect academic achievement

Does the grade‐level configuration of a school affect academic achievement? This research examines the effect of attending a middle/junior high school on academic outcomes in British Columbia, Canada, relative to attending a school from kindergarten through grade 8. Using an OLS strategy, I find that attending a middle/junior high school reduces grades 4 to 7 achievement gains in math and reading by 0.125–0.187 and 0.055–0.108, respectively. Similar‐sized estimates are found for math using a 2SLS strategy. Finally, large negative effects on grade 10 and grade 12 English exams are also found.     

How does knowledge network affect a firm’s explorative innovation? The contingent role of R&D collaborations

Innovation is a process of knowledge recombination [Fleming, L. 2001. “Recombinant Uncertainty in Technological Search.” Management Science 47: 119 p]. Extant literature highlights the importance of a firm’s knowledge base for innovation, while little is known about the structure of a firm’s knowledge base and how it affects the firm’s explorative innovation. Based upon the perspective of network analysis, we portray a firm’s knowledge base as an intra-organisational knowledge network and examine the effects of two structural features of the network – density and centralisation – on the firms’ exploratory innovation. Using a manual collected dataset of 738 Chinese automobile manufacturers, we find that a firm explores fewer new knowledge elements when the firm holds a dense knowledge network or a centralised knowledge network. More importantly, with the increase of a firm’s R&D collaborations with external actors, the negative effect of density is mitigated while the negative effect of centralisation is reinforced. Both theoretical and practical implications are discussed.     

Does women’s participation in agricultural technology adoption decisions affect the adoption of climate‐smart agriculture? Insights from Indo‐Gangetic Plains of India

Increased participation of women in the agricultural technology adoption decision by farm households is one of the key indicators of gender empowerment in the agricultural sector. This study examines whether women’s participation in the household decision to adopt agricultural technology affects the adoption of climate‐smart agriculture (CSA), using data collected from 1,267 farm households from two Indian states of Bihar and Haryana. When we considered the sex of the household head (using a dummy variable for male‐headed vs female‐headed household) as a basis of analyzing the role of gender in the adoption of CSA, we found that women in Haryana had no role in the adoption of CSA. On the contrary, when we considered women’s participation in technology adoption decisions as a basis of gender analysis, we found that women’s participation in technology adoption decisions in Haryana is much higher as compared to Bihar. Consequently, the likelihood to adopt CSA is higher in Haryana than in Bihar. We also found that wealth, training, and access to extension and market positively influenced CSA adoption. Qualitative analysis shows that women farmers prioritize family food security rather than farm income, and therefore, they are more likely to focus on CSA to ensure food security.     

How does entry regulation influence entry into self‐employment and occupational mobility?1

We analyse how an entry regulation that imposes a mandatory educational standard affects entry into self‐employment and occupational mobility. We exploit German reunification as a natural experiment and identify regulatory effects by comparing differences between regulated and unregulated occupations in East Germany with the corresponding differences in West Germany after reunification. Consistent with our expectations, we find that entry regulation reduces entry into self‐employment and occupational mobility after reunification more in regulated occupations in East Germany than in West Germany. Our findings are relevant for transition or emerging economies as well as for mature market economies requiring large structural changes after unforeseen economic shocks.     

Canada’s dependence on natural capital wealth: Was Innis wrong?

Canada has abundant natural resources—its stock of natural capital wealth. A recurring debate in the literature is whether resource rich countries benefit in the form of higher sustained growth rates or not from the export of their natural resources. Canada's Harold Innis wrote extensively on this subject over 80 years ago and argued for the “no” side in the debate. Was he was right or wrong? I begin with the foundations of natural resource theory then turn to empirical work in recent decades. I agree with the literature that Canada overall has benefited from the export of its natural resources, but question whether that can continue given the focus on short term growth and the failure to account for the social costs of resource extraction and use—the environmental externalities that degrade and reduce stocks of natural capital. These externalities increasingly threaten our water and land resources and without more effective policy, the ability of resources to sustain growth and well‐being is questionable. Was Innis wrong? Yes in that the evidence supports the counter argument—resources have helped Canada become a developed economy with relatively high incomes and sustained growth rates. Innis was right that the uneven distribution of resources causes different impacts regionally especially during booms and busts and recognized the need to find substitutes for declining and degrading resource stocks. But Innis, like many after him, focused more on the intrinsic features of natural resources than policy to address the social costs of their development, a legacy that leaves us in a precarious position today.     

Default of Systemically Important Financial Intermediaries: Short‐term Stability versus Incentive Compatibility?

Financial integration and globalization have acted as a major stimulus in the development of large, internationally operating banks, which not only provide cross‐border services but also have a local presence. While these banks are themselves drivers of economic integration, they can pose serious threats to financial stability. Their size, interconnectedness and importance as providers of specific services mean that financial institutions can be too‐systemic‐to‐fail (TSTF). Since the entry and exit of market participants is a crucial feature of well‐functioning markets, the absence of any credible possibility of failure leads to serious distortions. This analysis gives an overview of the TSTF problem and discusses the challenges to be faced in establishing credible resolution regimes.     

How far does evolution take us? Comment on Elinor Ostrom’s: do institutions for collective action evolve?

Elinor Ostrom’s article in this issue suggests that institutions for collective action evolve, highlights parallels between biological and institutional evolution, and describes an hypothetical example of institutional evolution related to an irrigation system. The article is provocative but not definitive in that it does not demonstrate that evolution is more than a metaphor for institutional change and that institutions actually evolve. This commentary unpacks the concept of evolutionary change and evaluates how well various aspects of institutional change fit within this model of change. The analysis supports Ostrom’s contention that evolution is not just a metaphor for institutional change, but also suggests that not all institutional change can be classified as evolutionary. The commentary highlights the need for further conceptual and theoretical development to delineate various forms and processes of institutional change, distinguish between evolutionary and non-evolutionary change, and draw out the consequences of various forms of change.     

Measuring lnequality in the Middle East 1990–2016: The World’s Most Unequal Region?

In this paper we combine household surveys, national accounts, income tax data and wealth data in order to estimate income concentration in the Middle East for the period 1990–2016. According to our benchmark series, the Middle East appears to be the most unequal region in the world, with a top decile income share as large as 64 percent, compared to 37 percent in Western Europe, 47 percent in the US and 55 percent in Brazil (see Alvaredo et al. 2018). This is due both to enormous inequality between countries (particularly between oil‐rich and population‐rich countries) and to large inequality within countries (which we probably under‐estimate, given the limited access to proper fiscal data). We stress the importance of increasing transparency on income and wealth in the Middle East, as well as the need to develop mechanisms of regional redistribution and investment.     

A Short‐Cut Method of Estimating Capital Stocks: When Can It be Used and How Well Does It Work?

Relatively few countries currently publish estimates of capital stocks because of the difficulty of applying the Perpetual Inventory Method. A short‐cut method which we term the Steady Growth Model (SGM) can produce plausible capital stock estimates provided certain conditions are met. Starting with a database covering 146 countries we conclude that the SGM can legitimately be used to calculate capital stocks for 53 of them. The 53 include equal numbers of high‐income and low‐income countries. The SGM requires only data on gross fixed capital formation for the base year, information about past growth rates of real GFCF, and assumptions about rates of depreciation. Despite its apparent simplicity, we show that our SGM stock estimates compare well with official stock estimates generated by the PIM. Other tests on capital–output ratios and capital‐stocks per head confirm the plausibility of stock estimates generated by SGM.