SUSTAINABLE PENSION REFORM IN INDIA: TOWARDS A MARKET-BASED SYSTEM

Market-based pensions are developing slowly in India because of distorting tax rules and draconian investment regulations. Recent reform proposals point in the right direction but fail to address the fundamental issues. Instead of creating large-scale pension policy blueprints, India needs to develop better tax rules, reduce regulation and let markets develop products to meet the needs of the people.     

REINVENTING FOREIGN AID FOR INCLUSIVE AND SUSTAINABLE DEVELOPMENT: KUZNETS,PIKETTY AND THE GREAT POLICY REVERSAL

This survey essay reviews close to 200 papers in arguing that in order to achieve sustainable and inclusive development, foreign aid should not orient developing countries toward industrialization in the perspective of Kuznets but in the view of Piketty. Abandoning the former's view that inequality will fall with progress in industrialization and placing more emphasis on inequality in foreign aid policy will lead to more sustainable development outcomes. Inter alia: mitigate short‐term poverty, address concerns of burgeoning population growth, train recipient governments on inclusive development, fight corruption and mismanagement and avoid the shortfalls of celebrated Kuznets’ conjectures. We discuss how the essay addresses post‐2015 development challenges and provide foreign aid policy instruments with which discussed objectives can be achieved. In summary, the essay provides useful policy measures to avoid past pitfalls. ‘Output may be growing, and yet the mass of the people may be becoming poorer’ (Lewis). ‘Lewis led all developing countries to water, proverbially speaking, some African countries have so far chosen not to drink’ (Amavilah). Piketty has led all developing countries to the stream again and a challenging policy syndrome of our time is how foreign aid can help them to drink.     

SOCIAL ACCOUNTING MATRIX FOR INDIA

This paper provides the latest Social Accounting Matrix (SAM) of the year 2003–2004 for the Indian economy with a wide variety of disaggregation for the Energy sector and the sectors that are relevant for environmental and climate policy evaluation. This SAM shows the interaction between production, income, consumption and capital accumulation. It can be used to provide an analysis of the interrelationship between the production structure of an economy and the distribution of incomes and expenditures of different household groups. In addition, it can be used for multiplier analysis to capture direct, indirect and induced impact on input use due to any exogenous changes in the economy. This SAM consists of 85 sectors of the economy, three factors of production and nine categories of occupational households. The Indian economy is becoming structurally biased towards capital intensive sectors, such as service and energy production. The energy production sector itself is the most energy intensive sector as of 2003–2004.     

SUBSTITUTABILITY BETWEEN MOBILE AND FIXED TELEPHONES: EVIDENCE AND IMPLICATIONS FOR INDIA

Substitutability between mobile and fixed phones has become an important consequence of telecom sector deregulation in India since 1991. This paper estimates the socio‐economic determinants of household demand for mobile and fixed phones, and tests for substitutability between mobile and fixed phones, based on a binary logit model and using a small sample survey data from the Karnataka State in South India. The results show that the nature and magnitude of determinants are different between mobile and fixed phones. Estimated cross price elasticity offers empirical evidence for substitutability rather than complementarity between fixed and mobile phone services. This evidence is symmetric in mobile and fixed phone models. The empirical results are shown to have implications for policy discussion on subsidization by the Access Deficit Charge and bases for Universal Service Obligation. In view of rapid changes in the telecom market, a periodic nationally representative survey may be necessary to generalize the conclusions and implications of this paper.     

LABORATORY EXPERIMENTS FOR ECONOMIC POLICY MAKING

Abstract In this paper, we assess the scope and the specific contribution of laboratory experiments for economic policy making. We review experiments which have addressed a specific problem, institution, mechanism design or tool relevant in economic policy. We have two research questions. What type of policy questions can be addressed in the laboratory? And what is the specific value added of economic experiments for policy making. The survey contains experiments on competition policy, auctions, regulated markets, and emission permits.     

LOW-INCOME HOUSING IN INDIAN CITIES: SOME CONSIDERATIONS FOR POLICY

Across cities in India, migrant groups, squatters and the urban poor residing in slums have played a crucial role in developing low-income housing. This form of housing is closely connected to the economic activity of the poor, which in turn contributes to the wider urban economy. It also enables the poor to consolidate their position in the city and make claims on the city administration for infrastructure. However, such housing has been bracketed as 'informal' and lacks legitimacy. Policies concerning low-income housing must address this issue while enabling the poor to further their economic and entrepreneurial initiatives.     

DECENTRALIZED PLANNING FOR SUSTAINABLE DEVELOPMENT: The Case of Indonesia*

The government of Indonesia frequently has stressed the need for decentralization to achieve effective regional development, but yet has hesitated to proceed because of fears that such action would undermine national unity and disrupt centrally defined national priorities. Furthermore, the entrenched bureaucratic hierarchy, reinforced by the persistence of patrimonialism, would have to surrender its planning and decision making authority to popularly constituted bodies. This paper examines this dilemma and argues that deconcentration of planning and implementation functions to lower administrative levels does not constitute decentralization. The analysis concludes by suggesting that collaboration between government and non-governmental organizations might be the appropriate means for encouraging popular participation for sustainable development.     

SUPPLY-USE FRAMEWORK FOR INTERNATIONAL ENVIRONMENTAL POLICY ANALYSIS

The technical variation between countries in the production of goods and services, in terms of not only input coefficients, but also emission coefficients, creates scope for international trade to reduce environmental pressures. For this purpose we extend the theory of trade and the environment as to accommodate technical variation between countries in production and emissions. We use and steer close to the extended input and output tables, which include emission data. By treating environmental standards analogous to capital and labor capacity constraints, the aggregation problem for economic and environmental measures gets the same format as the well-understood aggregation problem for labor and capital. In a pilot application we determine the gains to free trade in products and emission permits.     

PLANNING BY NEGOTIATION FOR SUSTAINABLE DEVELOPMENT: A TALE OF TWO HABITATS

In the December 2005 issue of Economic Affairs , a collection of authors considered alternative institutions for planning and managing urban affairs. Following up the idea of 'planning by contract', this paper reflects on the role of negotiation in securing gains from trade over contested local environmental resources. The idea of an obstructive classical planning game is contrasted with the concept of creative negotiation by reference to two case studies.     

COMPOSITE AREA LINKED SYSTEM FOR PROPERTY TAX REFORM IN INDIA*

In India, property tax is presently levied on the basis of the rent-based rateable valuation system. Various official Commissions and Committees and professional experts have, over the last four decades, commented upon the inadequacies of this system, which, among other things, are the absence of an open market in land and rental transactions, the non-availablility of professionally trained valuers and the subjective nature of assessments in a corruption-prone administrative environment. As to the direction of future reforms, there have been two schools of thought - one, advocating for amendment of current rent control laws; and the other, favoring a new system of local taxation, delinked both from the capital value and rental value systems which are difficult to administer in India. This paper highlights the findings of a policy-oriented research study commissioned by the Ministry of Urban Development for the design and evaluation of such a system.     

BOTTOM-UP APPROACH FOR SUSTAINABLE COMMUNITY DEVELOPMENT IN SRI LANKA

Low-income communities, whether in urban or rural areas, need certain basic facilities that are difficult or impossible to acquire either due to poverty or other constraints. Welfare-oriented governments have, therefore, attempted to provide these basic facilities, but not with great success. Recently new approaches have been adopted to improve the situation by encouraging people to become involved in community-level decision making with respect to their needs and to implement the construction of acceptable facilities. The communities would then shoulder a greater responsibility, leading to development with a higher degree of sustainability.     

NAVIGATING REFORMS: LESSONS FROM INDIA

In the 2008 Wincott Lecture, the author argues that huge obstacles stand in the way of desperately needed economic reforms in India. Liberalisation initiatives have been undermined by poor governance, ineffective institutions and powerful vested interests. Unless these problems are addressed, high rates of economic growth are unlikely to be sustained in the long term.     

ESTIMATING, EXPLAINING, AND TARGETING POVERTY IN BELIZE: IMPLICATIONS FOR POLICY

This paper focuses on estimating, explaining, and targeting poverty in Belize. The analysis is based on household-level data derived from a national income and expenditure survey conducted in 1990. The paper estimates that the incidence of poverty was about 23 percent at that time nationwide, although there were significant differences in the incidence of poverty across rural and urban areas and across districts and subdistricts of the country. The analysis shows that the household head's age and education level and the household's size, number of children, and location appear to be significant explanators of the incidence of poverty; and, on the other hand, the investigation demonstrates that the head's gender, migration status, worker type, and sector of employment do not seem to explain, to any significant degree, the existence of poverty. The paper also illustrates the importance of sound targeting procedures in keeping poverty reduction costs low as a greater number of beneficiaries are included in such anti-poverty programs. In addition, the analysis shows the clear tradeoff between undercoverage and leakage errors in program implementation. Finally, the paper suggests that poverty program geographic targeting errors would probably not be reduced substantially if subdistricts were used as targets instead of districts in Belize.     

JUSTIFYING A POLICY MIX FOR POLLUTION CONTROL: A REVIEW OF ECONOMIC LITERATURE

Abstract This paper provides a review of economic studies analysing the use of multiple policies – a so‐called policy mix – to cope with single pollution problems. To guide and structure the review, an analytical framework is developed and applied. The framework integrates transaction costs into the analysis of pollution problems and policies to overcome them. Moreover, it understands a pollution externality not only as a market failure but more generally as the failure of private governance structures. Based on this insight, two rationales for using a policy mix are identified. First, a policy mix may help to correct for multiple reinforcing failures of private governance structures, such as pollution externalities and technological spillovers. Second, a policy mix can be employed if the implementation of single first‐best policies brings about high transaction costs, e.g. when marginal pollution damages are heterogeneous or polluters are unlikely to comply with the policy. For each rationale, the relevant literature is presented. Based on the review, avenues for future research are identified.