New Public Management and Developing Countries

While N-PM gained higher popularity in many developed countries, such as New Zealand and Australia, the problem of its perfect transferability comes into agenda. This paper points out that the inappropriateness of NPM to developing countries lies in the internal inability such as informal public sectors （mainly focus on human resource perspective） and budget, and informal market economy; and finally concludes that NPM is not necessarily suitable for developing countries.     

Is Slow Economic Growth the ‘New Normal’ for Europe?

This paper considers future European growth prospects in the light of a new productivity paradox, namely, the co-existence of a productivity slowdown and exciting new technologies. Several potential explanations are reviewed. It is argued that while some are unpersuasive it is too soon to be sure which carry the most weight. This has the implication that while the slowdown is real, it is not necessarily permanent. A key, hotly disputed issue is the future economic impact of technological progress on which forecasts differ dramatically. Supply-side reform could have a strong positive effect, but this is not likely to happen.     

Why Are There Rich and Poor Countries? Symmetry Breaking in the World Economy: A Note

This paper extends K. Matsuyama (1996, Journal of the Japanese and International Economies, 10, 419–439) to allow for the presence of a fixed factor such as land. By assuming that agricultural production is more land-intensive than manufacturing production, we generalized Matsuyama's results on symmetry breaking in the world economy. That is, international trade by causing an agglomeration of economic activities in different countries of the world makes inevitable the coexistence of rich and poor. J. Japan. Int. Econ. June 1999, 13(2), pp. 140–149. Department of Economics, Tufts University, Medford, Massachusetts 02155. Copyright 1999 Academic Press.Journal of Economic Literature Classification Numbers: F12 and O12.     

Throwing Foreign Aid at HIV/AIDS in Developing Countries: Missing the Target?

We assess empirically whether foreign official development assistance (ODA) has been effective in alleviating HIV/AIDS epidemics, which figures prominently among the Millennium Development Goals. We employ a difference-in-difference-in-differences approach to identify the treatment effect of ODA specifically meant to fight sexually transmitted diseases on HIV/AIDS-related outcome variables. We do not find that ODA has prevented new infections. The results regarding the medical care of infected people are mixed: evidence on significant treatment effects on AIDS-related deaths exists for the major bilateral source of ODA, the United States, in sharp contrast to ODA from multilateral organizations.     

Choosing an Appropriate Exchange Rate System for Developing Countries

The developing countries emerging market crisis during the second half of 1990s has had a major impact on changing the views of academicians, policy designers and developing countries＇ authorities with respect to exchange rate policies, particularly after the Asian Financial Crisis in 1997. Although the Asian Financial Crisis has brought enormous damage to those hit countries, it left very precious lessons for the developing countries. Countries have to make a decision under uncertainty - they must choose an exchange-rate system and associated monetary policy without full information on the consequences of that choice. They must weigh the arguments and the costs of errors from adopting different exchange rates. They must evaluate the alleged benefits of each system and the opportunities for achieving those benefits through alternative, substitute means. They must also evaluate methods of reducing the potential costs of each system. It is true that no single exchange rate regime can. be prescribed as best for all, nor is the best choice of exchange rate regime always clears for all places in all times, even in light of their specific circumstances. There are no simple, universal answers. But under most circumstances and for most developing countries, one system of flexible exchange rate is better than others.     

An Assessment of the Singapore Skills Development System: Does it Constitute a Viable Model for Other Developing Countries?

In this paper, we briefly describe the institutional background of Singapore's successful national skills development model. We devise a tentative framework to evaluate national level skills development efforts, and we use it to assess the Singapore model. We argue that the model has the potential to move constantly toward higher skills equilibria. We question however, the long-term sustainability of the model, and whether it is transferable to other developing countries. We conclude with some principles that other countries might use in organizing their own skills development systems.     

Performance of Garch Models in Forecasting the Volatility of Exchange Rate for Developing Countries

This paper empirically investigates the performance of GARCH model in forecasting the volatility of exchange rate of some developing countries. We apply linear GARCH model and non-linear GARCH model. We fit these two models to some developing countries exchange rate index from January, 1998 to February, 2005. The return series of the developing countries＇ foreign exchange rate are leptokurtic, significantly skew, deviating from normality and volatile clustering as well. We find within-sample and out-of-sample evidence that conditional estimates of non-linear GARCH model outperform the conditional estimations of linear GARCH models. In our comparisons in most of the developing countries, the non-linear GARCH model produce better results than the linear GARCH model tor forecasting the volatility of exchange rate.     

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.     

Do Remittances Induce Inflation? Fresh Evidence from Developing Countries

The goal of this article is to examine the determinants of inflation in both the short run and the long run for 54 developing countries using a panel data set covering the 1995–2004 period. Apart from the commonly used economic determinants of inflation, we model the impact of remittances and institutional variables on inflation. Using the Arellano and Bond panel dynamic estimator and the Arellano and Bover and the Blundell and Bond system generalized method of moments estimator, we find evidence that in developing countries remittances generate inflation. The effect of remittances on inflation is more pronounced in the long run. Moreover, we find that openness, debt, current account deficits, the agricultural sector, and the short‐term U.S. interest rate have a positive effect on inflation. We also find that improvements in democracy reduce inflation.     

Does Aid Unpredictability Weaken Governance? Evidence from Developing Countries

This paper examines the effects of aid on governance from a different perspective by asserting that aid unpredictability can potentially increase corruption in recipient countries by providing incentives to risk‐averse and corrupt political leaders to engage in rent‐seeking activities. Analyses of data from 80 developing countries over the period 1984–2004 offer evidence that higher aid unpredictability is associated with more corruption as measured by a synthetic index. We also find further evidence that this latter impact is more severe in countries with weak initial institutional conditions. These findings are a supplementary advocacy for the need for better management and better predictability of aid flow in developing countries.     

Do Transition Economies and Developing Countries Have Similar Destinies?

This paper evaluates the potential of transition economies for achieving sustainable improvements in living standards vis-à-vis developing countries based on their productivity performance. The comparison is made using a bootstrapped Malmquist productivity index and its technological and efficiency change components. The results of estimation indicate that transition economies enjoy significantly higher increases in technical efficiency than developing countries with comparable rates of real GDP growth. Therefore, these results suggest that the former group of countries may have better growth prospects than the latter group, giving empirical support to Stern and Fries’ (Foreign Policy 111:164–165, 1998) optimism that transition economies are the “tiger” economies of tomorrow.

Does the Private Sector Help or Hurt the Environment? Evidence from Carbon Dioxide Pollution in Developing Countries

How does the nature of enterprise ownership affect the environment in an economy? Conventional wisdom and theoretical conjectures are split on this important question. In this paper we estimate a reduced-form, random-effects model using data from 44 developing countries over nine years (1987–95) to study for any systematic empirical relationship between the relative level of private sector involvement in an economy and the environmental performance of the economy in terms of its emission of industrial carbon dioxide. We control for both observed and unobserved crosscountry heterogeneity along various institutional and structural dimensions such as the scope of financial market, industrial sector composition and level of foreign direct investment. The regression results indicate that the higher the degree of private sector involvement in a developing economy, the lower is its environmental degradation. In addition, its environmental degradation is likely to be further reduced in presence of a well-functioning domestic capital market and through increased participation by developed economies in its private sector development.     

Global Imbalances: Is Germany the New China? A Skeptical View

In this paper we evaluate the current account patterns of China and Germany. We point out that China’s current account surplus as a share of global GDP in recent years resembles that of Germany’s. Yet, an important difference is that the Euro block’s current account inclusive of Germany has overall been balanced, whereas emerging Asia’s current account inclusive of China has mostly been characterized by sizable surpluses. We further find that both China and Germany’s current account surpluses seem to be accounted for by common factors. However we have reasons to doubt the long run viability of these current account trends in future decades. Demographic transitions in China and Germany are projected to reduce their surpluses, and this effect is stronger for Germany. We also discuss plausible reasons to doubt the extent to which the Euro block will move towards significant surplus in the coming years.     

What is the Right Import Price for a FICE

Foreign companies are starting to establish wholly-owned trading companies in China to import and distribute products to the domestic market. The trading company is called a Foreign Invested Commercial Enterprise (FICE) and has been gaining popularity sin…     

Human Development Potentials and Greenhouse Gas Emissions in the Developing World

This analysis suggests that the concept of human development potentials has two dimensions: the rights and limits to human development. This conceptual understanding is supported by results from the empirical examination of the relationship between the demands for carbon emissions and the other elements of human development. As human development in the rich countries is close to its potential     

The Asymmetric Loss Function and the Central Banks’ Ability in Developing Countries

Abstract

This paper seeks to develop a theoretical strand of research in monetary economics by modelling central bank ability in the loss function. Recently, many working papers issued by the International Monetary Fund (IMF) prove that some central banks, particularly from developing countries, are suffering from serious operational problems that might affect their abilities to control the economy. Simultaneously, a literature review shows that the movements are toward using asymmetric loss function. Therefore, we utilize this function in the standard monetary approach. The results proved that both central bank ability and preference in developing countries are fundamental to explain inflation bias and the movement of monetary policy instrument.     

How Can Developing Countries Benefit from Globalization: The Case of China

With the development of globalization and theemergence of the problems during the courseof globalization,the disputes on the benefits of global-ization are becoming more and more fierce.The dis-pute is focused on the question of whether developingcountries can benefit from globalization.The Latin     

Chinese Bilateral Intra-Industry Trade: A Panel Data Study for 50 Countries in the 1992–2001 Period

This study examines the features and determinants of Chinese intra-industry trade during the 1992–2001 transition period for 50 of China’s trade partners. We disentangle total intra-industry trade (TIIT) into vertical intra-industry trade (VIIT) vis-à-vis horizontal intra-industry trade (HIIT), using data at the four-digit SITC level. The findings indicate that Chinese bilateral intra-industry trade, particularly VIIT, increased significantly during this transition period. VIIT appears to be positively related to differences in consumer patterns. HIIT is negatively related to these differences. In addition, we find that FDI has played an important role in determining IIT, especially VIIT. Other significant intra-industry trade drivers are geographical distance, economic size, trade openness and trade composition. Finally, the impact of China’s liberalization policies and the special role of Hong Kong are demonstrated. We discuss a number of important business and political implications that can be drawn from our findings. JEL no. F14