Being poor often means being hurt twice: Kenny and Sandefur have a CGD commentary replicating CEQ analysis and showing that tax-transfer systems reduce inequality in the rich world, but often exacerbate poverty in the poorest countries. In 4 of the 5 Sub-Saharan African countries where CEQ data is available, the net effect of taxes and transfers was an increase the number of people living below the absolute poverty line. In Tanzania, poverty is nearly 20 percent higher due to taxes and transfers.
Small-scale entrepreneurship is widespread in developing countries, yet very few of these entrepreneurs are successful in growing their businesses beyond initial levels. Many constraints play a role, including financial, technical, and informational barriers. Yet, even when these barriers are lifted in experimental studies, we do not see the type of growth one would expect if these constraints were truly binding. In addition, many of the interventions studied, especially those targeting managerial and informational barriers, often suffer from low program take-up.
Blog reader: “Dan! The government is one big system. Why didn’t your blog on the latest research on the quality of governance take this into account?”
Dan (Rogger): “Well, typically frontier papers in the field don’t frame their work as ‘modeling the system’ [which do?] However, Martin Williams at the Blavatnik School of Government hosted a conference last week on ‘Systems of Public Service Delivery in Developing Countries’ that directly aims to discuss how research can take into account the systemic elements of governance.
In the first part of this blog, I went down memory lane and told you about my teenage years and how my parents had managed to make sure I abstained from tobacco by offering to pay for a high school graduation trip if I did not take up smoking.
“I like work, it fascinates me,” said Jerome K Jerome. “I can sit and look at it for hours.” We concur with the author of “Three Men in a Boat’, a novel which so fascinated Late Victorian England that, within a year of publication, the number of vessels on the River Thames had doubled.
We too love work and we anticipate that our devotion to it will result in Jeromesque adulation. The early signs are good; our report is still in draft stage but it has already been downloaded more than 20,000 times. You can discover for yourself why it’s proving so popular by clicking here.
As economists our fascination with work has nothing to do with Jerome’s mirthful quip (but just think how many enduring jobs were created as a result of his fictitious river journey) and everything to do with untangling a riddle that is embedded in the zeitgeist. Google ‘the future of work’ and, in 0.56 seconds, 115,000,000 results appear.
We are living through transformative, perhaps epochal times, when the only thing we can be sure of is persisting uncertainty. What will our children do for a living? Never mind the kids, what about us -will we make it to retirement? And how will we pay for it? Will the robots rise against us?
When I was a teenager in Belgium, my parents wanted to make sure that I wouldn’t become a smoker. At the age of 15, I had tried a few cigarettes with friends and they were worried I would pick up the habit. They could have organized a complicated system of surveillance and sanctions to monitor and prevent my smoking behavior. Instead, my dad offered me a very simple deal: “if you are not smoking by the time you graduate from high school, I will pay your trip to a destination of your choice in Europe during the summer before you start college”. My dad’s deal worked well: I took a great trip to Greece – my first flight – with a few friends and I have never smoked after those first cigarettes at 15.
Chart 1: Commodity prices are forecast to rise across the board
The energy price index is anticipated to rise 20 percent in 2018, largely on strengthening of oil prices. The increase is a 16-percentage point upward revision from October 2017. Metal prices are projected to increase 9 percent in 2018 due to a further pickup in demand. Agricultural prices are forecast to gain more than 2 percent.
Capital flows to emerging market economies are deemed volatile, driven more by external than domestic factors. Surges in capital flows often generate macroeconomic imbalances in emerging markets, resulting in rapid credit growth, asset price inflation, and economic overheating. Reversals are disruptive too, often causing financial volatility, economic slowdown, and in some cases distress in the banking and corporate sectors.
In 2017, a severe and prolonged drought had hit countries in Africa and the Middle East, bringing crop shortage, livestock death, water scarcity and disease. Food shortages escalated into near-famine conditions in countries with low resilience against shocks, such as Nigeria, Somalia, South Sudan and Yemen. In such a context, rapid quantitative data is required to respond to urgent developmental needs of the affected populations. Therefore, we designed and implemented the Rapid Emergency Response Survey (RERS).
How have oil exporters coped with these challenges, and what further trials will they face in coming years? This article provides some answers, with the benefit of insights.
- oil prices
In 2014, foreign investors invested more than one trillion U.S. dollars into emerging countries. Of those inflows, 90 billion U.S. dollars came in the form of equity financing. On aggregate, capital inflows have helped may developing countries invest and grow, even despite the associated volatility they might entail. But we still do not know how those inflows are transmitted within an economy once they arrive.
After a prolonged slowdown, investment growth in emerging markets and developing economies (EMDEs) picked up to 4.5 percent in 2017, and is projected to accelerate to 5.2 percent in 2018 and 2019 (investment refers to real gross fixed capital formation, public and private combined). Yet projected investment growth is below its long-term (1990–2017) average, inhibited by political uncertainty, trade risks, and expectations of rising interest rates. This will likely limit potential output growth and delay per-capita income convergence between EMDEs and advanced economies.
Non-energy prices advanced 1.8 percent while agricultural prices increased 1.7 percent on higher prices for wheat (up 11 percent), rice and cocoa (4 percent rises each), soybean meal and tea (4 percent gains each). Fertilizer prices decreased 0.7 percent, led by a 5 percent drop in urea.
Metals prices gained 2.3 percent, led by gains in aluminum (up 9 percent) and nickel (4 percent rise).
The Annual Bank Conference on Development Economics (ABCDE) is fast approaching. The theme of this year’s conference is "Political Incentives and Development Outcomes" and papers selected for this year’s ABCDE are now posted online.
Global inflation has been trending up over the last two years, but is still subdued despite a broad-based recovery in economic activity. The reasons for this include the lingering impact of the 2007-2009 financial crisis on price and wage formation in advanced economies, as well as downward pressures associated with rapid technological changes and foreign competition.