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Rethinking the Role of the State in Finance

Merrell Tuck-Primdahl's picture

Is the world ready for the advice that governments can better balance the need for credit and emergency support for banks with measures to promote transparency and competition when crises erupt? Governments want every viable tool possible in their arsenal to fight crises, but a bit of 'less is more' and a cautionary re-examination of the role of the state in finance may be in order. This is the thrust of the new Global Financial Development Report (GFDR) 2013: Rethinking the Role of the State in Finance, released Thursday September 13, just ahead of the fourth anniversary of the collapse of Lehman Brothers, which marked the full onset of the financial crisis. The GFDR analyzes four characteristics of banks in over 200 economies since the 1960s and comes with a useful treasure trove of online data.

Check out the GFDR website here.

Financial Globalization in Emerging Countries: Diversification vs. Offshoring

Sergio Schmukler's picture

Starting in the early 1990s many emerging economies have embraced financial sector reforms and liberalization. As a consequence, they have become more financial globalized, triggering an important debate about the pros and cons of this process and its relation to financial crises. Notwithstanding all the attention, there are different dimensions of globalization, which are many times not clearly defined and which might add noise to the discussion.

In a recent World Bank policy research working paper and VoxEU column, we argue that there are at least two interconnected, albeit essentially distinct facets of financial globalization. The first one is financial diversification, that is, the cross-country holdings of foreign assets and liabilities. The second one is financial offshoring, that is, the use of foreign jurisdictions to conduct financial transactions. While the former focuses on who holds the assets, the latter deals with where the assets are transacted.

Import protection update: Antidumping, safeguards, and temporary trade barriers through 2011

LTD Editors's picture

Is protectionism getting better or worse? Chad Bown, Senior Economist with the Trade and International Integration Team in the Development Research Group analyses recent World Bank data from 24 major economies suggesting that import protection through temporary trade barriers — such as antidumping, safeguards, and countervailing duties — has increased considerably for a handful of mostly emerging markets in the past year. But the news is not all bad – some countries have lowered their trade barriers.

Making Water Safe in Kenya Through A Low-Cost Solution To A Big Problem

LTD Editors's picture

Every year, 2 million children die of diarrheal diseases worldwide. Chronic diarrhea contributes to malnutrition, stunting, and cognitive impairment. In Kenya, the Development Impact Evaluation team led an impact evaluation that tested different strategies to find effective low cost solutions to improve water safety. Chlorine dispensers at community water collection points raised the number of households with detectable levels of chlorine in their drinking water from 5 to 60 percent, compared to communities that had to rely on store-bought chlorine for purification.

Can Direct Democracy Work in Rural Afghanistan?

Andrew Beath's picture

The paradigm of community-driven development (CDD) aims to increase program impact by involving communities in the selection, design, and implementation of local development projects. However, its effectiveness can be undermined when local elites capture or otherwise exploit the paradigm’s prescribed participatory processes. In such cases, the type of projects implemented, as well as the benefits they provide, may end up serve the interests of elites, rather than the targeted communities. Large local landholders, for instance, may be more interested in funding irrigation projects than digging deep wells, building schools, or funding local clinics that benefit the community at large.

Globalization and the Gender Earnings Gap in the Apparel Industry

Gladys Lopez-Acevedo's picture

The 2012 World Development Report, Gender Equality and Development, argues that gender equality “contributes to economic efficiency and the achievement of other key development outcomes.”  U.S. Secretary of State Hillary Clinton stated at the APEC Women and the Economy Summit that “the increase in employment of women in developed countries during the past decade has added more to global growth than China has, ” and argued that incorporating women into the formal workforce is critical for economic progress.  Understanding how major policy changes affect women’s employment and the gender wage gap is therefore critical for implementing future policies that may affect women’s status and opportunities.

Market Access: A Key Determinant of Economic Development in Sub-Saharan Africa

Harry Garretsen's picture

Sub-Saharan Africa (SSA) is home to the world’s poorest countries. The region’s geographical disadvantages are often viewed as an important deterrent to its economic development. A country’s geography directly affects economic development through its effect on disease burden, agricultural productivity or the availability of natural resources. However, the new economic geography (NEG) literature, initiated by Krugman (1991), highlights another mechanism through which geography affects prosperity.

Food price shocks and low-income countries

Hans Lofgren's picture

The current US drought and its emerging effects on food markets underscore the timeliness and importance of this year’s Global Monitoring Report (GMR), which focused on international food prices, nutrition, and MDGs. One key message of the report, which should be taken on board when the emerging crisis is assessed, is that the effects of changes in international food prices depend on the time frame and on country characteristics, most importantly on shares of domestic supply that are exported or imported and the related issue of the extent to which domestic and international markets are linked. While it is possible for governments to mitigate the effects of international price changes, this can be quite costly, requiring higher taxes, more borrowing, or less spending in other areas, giving rise to difficult trade-offs between various competing development objectives. However, for most countries, given that food trade represents a small share of food supplies and demands, domestic conditions determine to a large extent whether sufficient food is available at prices that are affordable also for the less fortunate – it depends on household incomes and the ability of the agricultural sector to ramp up production. It is important not to exaggerate the role of international markets, especially beyond the short run, when farmers have had the opportunity to respond to international price developments.

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