Village Banking and Maternal and Child Health: Evidence from Ecuador and Honduras

Many microcredit institutions bundle credit with health, education, or other programs. This paper reviews arguments on such “tie-ins” and concludes that net benefits are possible but requires empirical testing. Quasi-experimental data from Project HOPE's “health banks” and credit-only village banks are then examined. The paper presents evidence that health practices do not improve automatically with greater wealth. In Honduras, results show that health bank participation is robustly associated with reduced subsequent conditional child diarrhea probability, but in no specification does credit-only bank participation have this effect. In Ecuador, results suggest a larger effect of credit-only banks. In both countries, health bank participation significantly raises subsequent healthcare over credit-only participation, and at least reduces the tendency to switch from breast-feeding to bottle-feeding as income rises. Effects on expenditures are ambiguous. There is no clear link between tie-ins and bank performance.     

The Korean Economy in Transition: In Search for a New Model

Abstract

Prior to the 1997 financial crisis, the Korean economy had based its growth policies on East Asia's economic catch-up model which was based mainly on the Japanese development experience. However, the events that lead to the 1997 crisis and the changes instituted in the Korean economy after the crisis have put to question whether the traditional East Asian growth model will continue to be viable. This paper examines two alternative models of development, namely the “Anglo-Saxon” and the “Continental European” models, and evaluates their relevance for Korea's future development challenges. Despite many common features these models share, they are also quite distinctive with regard to their treatment of the labor market system and the role of government. By focusing on the model's capacity to expand employment and to provide sustainable growth as the most important criteria, it is suggested that Korea should follow the “Anglo-Saxon model”, at least in the short- to medium-term. In comparing Korea's economy with other advanced economies when they were at the similar stage of development, it is found that Korea's growth potential lags behind that of countries such as Japan, Germany, Finland, and Ireland. The efficiency of Korea's investment is found to be only slightly better than Japan while it is inferior to all other advanced economies. Despite these challenges, Korea is apparently moving toward the “Continental European model”, with the Korean government increasing its own size and plans for further expenditures on social security and welfare. However, in order to ensure sustainable development with significant job creation, this paper argues that Korea should switch its direction and adopt the “Anglo-Saxon model” as soon as possible.     

A search for robust East Asian development models after the financial crisis: mutual learning from East Asian experiences

The purpose of this paper is to search for new robust East Asian economic development models following the financial crisis. Specifically, this paper addresses both robustness and sustainability of Korea’s Chaebol-led model, Taiwan’s SMEs-led model, and Malaysia’s FDI-led model, respectively. East Asia’s new development paradigm can be reformulated not only by adopting and learning advanced financial innovations of global standards in the framework of Gershenkron’s “advantages of backwardness,” but also in the concept of “mutual learning” from both strengths and weaknesses of development models of the three countries. East Asia has neglected too long some inherent wisdoms that are contained in its “miracle models,” yet it shows that their different paths to development may lead to a positive policy convergence.     

Dimensions of Human Development

If human development is “multidimensional” then perhaps we need to discuss what we mean by multidimensional: what is a dimension, and what are the multiple dimensions of interest? This paper develops an account of dimensions of human development, and shows its usefulness and its limitations—both in general and in relation to Amartya Sen's capability approach. The second half of the paper surveys other major “lists” of dimensions that have been published in poverty studies, crosscultural psychology, moral philosophy, quality of life indicators, participatory development, and basic needs, and compares and contrasts them with the account sketched here.     

Toward the diffusion of rural energy technologies: Some lessons from the Indian biogas program

India has committed substantial resources to construct several hundred thousand biogas plants. This program is reviewed within the context of the current status of biogas systems including technical, economic, manpower and training, and organizational issues. Experience with a dozen “village-scale” systems is analyzed in detail. Problems with the Indian biogas program show the importance of basing technology diffusion efforts on an intimate understanding of rural resource flows and the local political economy. The biogas experience illustrates a broader problem in development: an imbalance between “technology-focused” and “people-focused” development assistance. Some of the causes and implications of this imbalance are discussed and some suggestions are offered to help both developing countries and various donors increase the effectiveness of development efforts by stimulating the growth of local organizations.     

Credit Booms in Developing Countries: Are They Different from Those in Advanced and Emerging Market Countries?

While earlier studies focus on credit booms in advanced and emerging market countries, this paper examines the characteristics and determinants of credit booms in developing countries. The results find that credit booms in developing countries are less likely to be associated with systemic banking crises. Rather, they are more likely to be the result of financial deepening than of dangerous buildups of financial risks; the prevention of credit booms in developing countries may thus be associated with higher opportunity costs in terms of foregone growth opportunities. Random effect probit and tobit regressions find some evidence that credit booms are likely to start when the economy is expanding and if the financial sector is larger. Although monetary and fiscal policies do not help in preventing credit booms in developing countries, we find that prudential regulations and supervision can play a much more effective role in preventing “bad” booms, while incurring substantially lower costs. Although “bad” booms are hard to identify ahead of time, the duration and size of booms, as well as the level of credit aggregates, appear to be useful indicators in determining them.     

“Selective two-child” policy and household resource allocation

This paper estimates the effect of the “selective two-child” policy (The “selective two-child” policy allowed couples to have two children if one member of the couple was an only child (1-OC family)). on the resource allocation between generations amongst urban households in China by referring to the nationally representative China Household Finance Survey (CHFS). The results of propensity score matching (PSM) and difference-in-difference (DID) show that the total and per capita expenditures on children education are reduced significantly after the implementation of the “selective two-child” policy, testifying to the quantity-quality trade-off of children in Chinese families. Nevertheless, the financial support for the elderly not living in the household does not decrease, suggesting no intergenerational competition. Furthermore, the total and per capita expenditures for the qualified families decreased significantly, which indicates that the loosening of fertility policy may lead to new-oriented and unintended precautionary saving motives.     

Policy Analysis and Development Evaluation of Digital Trade: An International Comparison

As an extension of traditional trade, digital trade is a new type of trade in the era of the digital economy. In this paper, we first analyze the digital trade‐related strategies of eight leading economies through word clouds and dissect China's digital trade‐related policies using the word frequency method by sorting through the digital trade‐related policy documents of 26 economies and Chinese provinces. We then evaluate the status quo of digital trade development in 111 countries and Chinese provinces by building a digital trade index system to determine the development environment and market potential. The results show that all countries attach great importance to digital technology, data and government guidance in the development of digital trade. The results also reveal that “development,” “service” and “construction” are the three most frequently used words in various Chinese documents. The overall level of China's digital trade is at the global vanguard, but is characterized by uneven regional development. In the era of digital trade, traditional international trade theory is also in urgent need of breakthroughs and innovation.     

INTERNATIONAL PRODUCTION/DISTRIBUTION NETWORKS AND INDONESIA

This study examines the industrialization performance of Indonesia through a comparative evaluation with other East Asian economies. While neighboring countries actively formulated international production/distribution networks, Indonesia fell behind in utilizing the benefits of globalizing corporate activities. International production/distribution networks are supported by new economic thought such as fragmentation, agglomeration, and theories about corporate firm; and a policy package of development strategies should be designed to utilize such opportunities. The design of Indonesia's development strategies and “institutions”, however, does not conform to the globalizing world because the presence of network‐forming foreign companies is not large enough to make them influential “actors”. This author argues that the traditional comparative advantage argument for Indonesia's economic development is possibly misleading. Rather, Indonesia must learn the experience of its neighboring countries and introduce foreign companies as new actors to break the old “structure”.     

How rich countries became rich and why poor countries remain poor: It's the economic structure…duh!

Becoming a rich country requires being able to produce and export commodities that embody certain characteristics. We classify 779 commodities (exported) according to two dimensions: (1) sophistication (measured by the income content of the products exported) and (2) connectivity to other products (measured by how easy it is to ‘jump’ into other potential exports). We identify 88 “good” products (highly sophisticated and well connected products), 93 “bad” products (unsophisticated and poorly connected products), and 598 “middle” products. Then, we categorize 154 countries into four groups according to the export share of each of these three types of products. There are 21 countries whose export baskets contain at least 15% of “good” products; 41 countries with a significant share of relatively sophisticated and well connected products; 50 countries with a significant share of relatively unsophisticated and not well connected products; and 42 countries whose export basket contains at least 15% of “bad” products.     

Forty Years Development of China's Outward Foreign Direct Investment: Retrospect and the Challenges Ahead

Outward foreign direct investment (OFDI) has increasingly become an important method for China to integrate into the world economy. This paper comprehensively reviews and analyzes policy development and the changing pattern of China's OFDI over the past 40 years. We divide the development into “restricted” (1978–1999), “relaxed” (2000–2016) and “regulated” (2017 onwards) stages. This paper also reviews literature on the impact of Chinese OFDI on China and host countries. Despite its generally positive effects, large‐scale and unbalanced OFDI activities have alarmed Chinese policymakers. Both developing and developed host countries have expressed their concern over national security and the misbehavior of some Chinese overseas enterprises. Therefore, greater supervision and adjustment from quantity to quality growth is necessary for the future development of China's OFDI.     

中加双边贸易产品国际竞争力分析与比较

入世以来,中加双边贸易发展迅速,四年中双边贸易额增加1.6倍。中加双边贸易规模扩大潜力何在?本文对此进行了探讨。文内分别运用中加两方的统计数字,从“类”与“章”两个层次,对2002~2005年的贸易产品逐一进行贸易竞争力指数(TC)的测算。结论是两国间的国际分工主要建立在资源(要素)禀赋的基础上,主要体现的是作为资源大国的加拿大与作为劳动力资源丰富的中国之间的分工格局,加拿大作为技术大国的优势在双边贸易中并未充分体现。中加经贸规模要扩大,应重视发挥各自优势,扩展产业内的贸易分工,增加投资,扩大技术贸易与技术合作。     

Neo-liberal Korea and Still Developmentalist Japan: Myth or Reality?1

Abstract

In the “varieties of capitalism” debate, scholars have paid considerable attention to the question of whether Korea and Japan have left behind their interventionist political economy for neo-liberal reform. In this paper, we re-examine the scholarly consensus that Korea has become a neo-liberal state, while Japan has not changed much. On the basis of our comparison of the extent of the two countries’ neo-liberal reforms using the “business systems framework” developed by Witt, we demonstrate that neo-liberal reforms observed in Korea and Japan are not substantially different enough to warrant the view that the two countries have taken divergent paths of institutional development. With this finding, we call for further empirical study, including the development and use of more qualitative data. We suggest that the future direction research should take on this issue in order to make theoretical contributions to the existing literature on institutional change and continuity in “non-liberal” capitalist countries. We do this by offering some methods in which future researchers could identify necessary and sufficient causes of Korea's and Japan's neo-liberal (or non-neo-liberal) shift.     

The Long Gestation and Brief Triumph of Import-Substituting Industrialization

As a set of ideas and practices, import-substituting industrialization became the dominant development strategy after WWII. This article examines the highly diverse origins of what became a kind of consensus, one that was most explicitly articulated through the ECLA/CEPAL “school,” inspired by Raúl Prebisch. Explicit attention is paid to the congruence of economic strategy and political formations. As the “Washington Consensus” displaces the “ECLA Consensus,” one must ask how those developing countries that have not yet industrialized may do so in the absence of high levels of protection.     

Health Expenditures and Health Outcomes in Africa*

Abstract: This paper provides econometric evidence linking African countries’ per capita total as well as government health expenditures and per capita income to two health outcomes: infant mortality and under‐five mortality. This relationship is examined using data from 47 African countries between 1999 and 2004. Health expenditures have a statistically significant negative effect on infant and under‐five mortality rates. The magnitude of our elasticity estimates are in consonance to those reported in the literature. For African countries, our results imply that total health expenditures (as well as the public component) are certainly important contributors to health outcomes. In addition, we find that both infant and under‐five mortality are positively and significantly associated with sub‐Saharan Africa. The reverse is true for North Africa. While ethnolinguistic fractionalization and HIV prevalence positively and significantly affect the health outcomes, higher numbers of physicians and female literacy significantly reduce these health outcomes. These results have important implications for attaining the targets envisioned by the Millennium Development Goals. The data implications are also discussed.     

U.S. current account debate with Japan then,with China now

This paper examines two U.S. current account deficit episodes, one in the 1980s and the other in the current 2000s, in which Japan and China, respectively, are the current account surplus countries that are criticized for contributing to the deficits. In both periods, U.S. policy makers pointed out the underdeveloped and closed financial markets of the current account surplus countries and advocated for these countries to fix the deficiencies, a position akin to the current “saving glut” argument. In both episodes, the current account surplus countries have criticized the United States for its low saving, especially public saving (the “Twin Deficit” argument). This paper presents empirical findings that are consistent with the Twin Deficit hypothesis; A one percentage point increase in the budget balance raises the current account balance by 0.10–0.49 percentage point for industrialized countries. The saving glut argument seems to be applicable only for countries with highly developed legal systems and open financial markets. While the United States has been experiencing a savings drought in both episodes, the Japanese current account surplus was driven by underinvestment in the 1980s and by over-saving during the 2000s. Furthermore, although the current Chinese current account surplus is driven by its over-saving, there is no evidence of excess domestic saving in the Asian emerging market countries; rather, they seem to have suffered from depressed investment in the wake of the 1997 financial crises.     

Evaluating the Economic Effects of Flat Tax Reforms Using Synthetic Control Methods

Tax reforms are often motivated by their potential to improve economic performance. However, their actual impacts are difficult to quantify. We analyze the impact of flat tax reform on incomes using “synthetic control” methods. We identify the eight Eastern and Central European countries that adopted flat tax systems between 1994 and 2005, and then compare post‐reform GDP per capita of “treated” countries with a convex combination of similar but “untreated” countries, while accounting for the time‐varying impact of unobservable heterogeneity. We find positive impacts in all eight countries, with seven out of eight cases significant at the conventional level.     

Does financial development help to align growth opportunities with growth? Evidence from industry-level data

Financial institutions are expected to play a crucial role in reallocating resources in favor of industries facing greater global and local shocks to growth opportunities. Fisman and Love, in their paper entitled “Financial development and intersectoral allocation: A new approach”, argue that growth opportunities are unobservable and propose a new methodology to test the capital allocation hypothesis. The methodology is based on correlations in the patterns of intra-industry growth between two countries and similarities in the level of financial development and income. This paper extends their methodology by proposing direct and forward-looking measures of local and global growth opportunities, obtained by interacting the country’s patterns of industrial specialization with industry-level price-earnings ratios, as in the paper “Global growth opportunities and market integration” by Bekaert et al. The results, obtained in a cross-section framework including 37 developed and developing countries over the period 1992–2006, confirm the relevance of financial development to promote economic growth and to help industries in taking advantage of global and local growth opportunities. They also show that the methodology developed by Fisman and Love can be extended to include direct measures of growth opportunities.     

Performance-Based Conditionality: A European Perspective

The critique of conditionality has led to the recent emphasis on “ownership” by the recipient government. To promote ownership it has been suggested that traditional ex ante conditionality based on (promises) of policy changes be replaced by ex post conditionality in which aid is based on performance in terms of ultimate objectives. In this spirit, the European Commission has reformed its adjustment aid. This article reviews early experience with the EU initiative in four countries: Benin, Burkina Faso, Madagascar and Uganda. We find a shift toward intermediate indicators, which are too distant from the final impact of the policies.     

Trade Credit and Productive Efficiency in Developing Countries

In developing countries, credit shortages are often so severe as to impact a firm's day-to-day production decisions. Using firm-level data from five African countries, I show supplier credit is positively correlated with capacity utilization; the result continues to hold when credit access is instrumented using supplier characteristics. I claim that this is because firms lacking credit likely face inventory shortages, leading to lower rates of capacity utilization. This explanation yields several further predictions that are supported by the data: there is a positive relationship between supplier credit and inventory holdings; moreover, raw materials “stockouts” are positively correlated with capacity utilization, particularly in “inventory-intensive” industries.