The KwaZulu-Natal Income Dynamics Study (KIDS) third wave: methods,first findings and an agenda for future research

The panel study known as the KwaZulu-Natal Income Dynamics Study (KIDS) has been extended by a new wave of data collection conducted in 2004. This third wave of the study interviewed 865 households containing core adult members from 760 of the households contacted in 1993. It also conducted interviews in next-generation households that have split off from the parental households and in the current households of children who have been fostered out. The study finds that the proportion of people aged 20–44 dying between the second and third waves was nearly three times the proportion dying between the first two waves. The pattern of income distribution is one of increasing poverty and inequality since 1993, although the partial reversal of these trends in the post-1998 period is hopeful, as are signs of relative prosperity among those who established independent next-generation households. In addition, access to services has improved.     

Preferential Rules of Origin and the Multilateral Trading System: Pro-Development Policy Options

With the proliferation of regional trade agreements since the late 1980s and early 1990s, preferential rules of origin have also proliferated. The discussion on these rules has gradually shifted from a purely technical discussion (“how to establish the origin of goods not wholly obtained in one country”, and hence, “how to apply trade preferences in these cases”) to a wider discussion also touching upon the transaction costs caused by having a “spaghetti bowl” of rules, and the actual or presumed neo-protectionist use that is being made of them. In the context of the discussion on possible policy options for developing countries simultaneously involved in (or negotiating) regional and multilateral trade agreements, this article will first give a brief overview of the findings of the recent empirical literature. Some indications are then presented as to what such policy options could look like. This paper was first presented at the Ad-hoc Expert Group Meeting on The Development Interface between the Multilateral Trading System and Regional Trade Agreements, Session III Regulatory Provisions in RTAs, Palais des Nations, Geneva, 15-16 March 2007. It is partly based on P. De Lombaerde, L. J. Garay : Preferential Rules of Origin: EU and NAFTA Regulatory Models and the WTO, in: The Journal of World Investment & Trade, Vol. 6, No. 6, 2005, pp. 953-994; and L. J. Garay, P. De Lombaerde: Preferential Rules of Origin: Models and Levels of Rulemaking, in: S. Woolcock (ed.): Trade and Investment Rulemaking: The Role of Regional and Bilateral Agreements, Tokyo 2006, UNU Press, pp. 78-106.     

Are Ethical Banks Different? A Comparative Analysis Using the Radical Affinity Index

This article studies the differences between traditional financial intermediaries (commercial banks, savings banks and cooperative banks) and ethical banks based on property rights, in which the owner decides the ideology, principles, standards and objectives of the organisation. In ethical banking, affinity centres on positive social and ethical values. The article consequently focuses on an index proposed both to differentiate ethical banks from other types of banks, and also to pinpoint the differences between the various ethical banks themselves. This is the Radical Affinity Index (RAI), which groups banks together in terms of their stance on ethical commitment, concentrating on ethical ideology and principles (information transparency, placement of assets, guarantees and participation) and using a sample of 114 European banks. The evidence shows that transparency of information and placement of assets are factors that differentiate ethical banks from other financial intermediaries. Guarantees and participation are characteristics specific to ethical banks; these variables, however, do not offer clear evidence to our analysis.     

Regulatory design and incentives for renewable energy

Increasing electric power production from renewable energy sources is currently one of the major objectives of energy policy. The intermittent nature of renewables, such as wind and solar, necessarily imposes complex trade-offs for regulatory objectives, such as resource adequacy (and system reliability) versus reductions in green house gas emissions. We develop a highly stylized model of investments in order to derive insights regarding the workings of regulatory incentives for increased renewable energy. We first show that incentives are indeed needed when there are significant economies of scale in the form of “learning by doing” or alternatively, when there is excess capacity in conventional technology due to legacy investments. We analyze two different regulatory schemes (feed-in tariffs and renewable portafolio standards) aimed at increasing investment in renewable capacity. We show that neither scheme is capable of inducing the socially optimal level of investment in renewable capacity. A single feed-in tariff fails to induce optimal investment as a feed-in tariff exceeding marginal costs of conventional technology incentivizes over-development of the most attractive sites which preempts investment in less attractive, yet socially valuable sites. A renewable portfolio standard that promotes increased investment in renewable technology induces under-investment in the conventional technology. These results suggest that a “clinical” regulatory design, that is, one that promotes the right amount of renewable capacity without affecting conventional capacity is a challenging proposition.