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January 2014

Jim Levinsohn on the scope for doing work with industrial organization and development

David McKenzie's picture
Late last year I posted several posts on why we don’t see more work combining industrial organization and development. I just received some thoughts on this question from Jim Levinsohn, Professor of Economics and Management at Yale, and a long-time leader in this area. He kindly agreed to let me share them here:
On why we don’t see more work

Deposit Insurance and the Global Financial Crisis

Asli Demirgüç-Kunt's picture

How does deposit insurance affect bank stability?  This is a question that has been around for a while but has come up again after the global financial crisis.  In response to the crisis, a number of countries substantially increased the coverage of their safety nets in order to restore market confidence and to avert potential contagious runs on their banking sectors.  Critiques worry that such actions are likely to further undermine market discipline, causing more instability down the line. My earlier research on this issue suggests that on average deposit insurance can exacerbate moral hazard problems in bank lending, making systems more fragile.  In other words, particularly in institutionally under-developed countries, banks have a tendency to exploit the availability of insured deposits and increase their risk, making the financial system more crises prone.  This is ironic since deposit insurance is supposed to make the systems more stable, not less.

But what if the impact of deposit insurance on stability varies depending on the economic conditions? Does deposit insurance help stabilize banking systems by enhancing depositor confidence during turbulent times?

Yemen: Looking beyond the National Dialogue

Wael Zakout's picture
Boy with Flag. Photo credit: Al Jazeera English

With the successful conclusion of the National Dialogue Conference (NDC), Yemen has demonstrated both to the region and the world that there is another way of dealing with conflict and grievances. One clear outcome of the NDC is a political transition  based on dialogue rather than confrontation. The challenge now will be to convert this outcome into meaningful results for the people of Yemen. 

More Formal Job Creation Should Be the Overriding Goal

Mariano Bosch's picture

 Construction works for the Panama Canal expansion project. Panama. Photo: Gerardo Pesantez / World Bank

In a recent blog entry — Universal Pension, Yes, Regressive Funding, No — David Robalino posed a number of very interesting questions about the proposal that we develop in our book Better Pensions, Better jobs (a new flagship report from the Inter-American Development Bank) and elaborate in an earlier blog, It's Time for Universal Pension Coverage in Latin America.

Migration & Remittances News, January 23, 2014

In Pictures: China's annual human migration
Shanghai, China - Hundreds of millions of people, including migrant workers and students, will crisscross the country to reunite with their families during the Chinese Lunar New Year Festival. For most of them, it's the only time of the year when they can see their loved ones. Some 3.5 billion journeys will be made in just over a month, exacerbating existing problems with inter-city transport in China.

Saudi Deports Quarter Million Migrants in 3 Months
Saudi Arabia says it has deported "more than a quarter million" foreign migrant workers from the kingdom over the past three months.

Helping Green Business in the Caribbean

Herbert Samuel's picture

Increased hurricane activity and rising sea levels are well-known effects of climate change, and they prompt solemn head-shaking when we read about them in reports. But in the Caribbean they are part of a terrifying reality that is happening now: This reality was demonstrated again by recent flooding and landslides in the Eastern Caribbean that left 20 dead and hundreds of millions of dollars in damage.

Prospects Daily: Developing-country currencies continue to tumble, Polish unemployment rate at seven-month high, Brazil’s consumer confidence falls to lowest level since June 2009

Global Macroeconomics Team's picture
Financial Markets…Developing-country currencies continued to tumble on Friday, extending their worst sell-off in five years, as growing concerns over Chinese growth sparked great anxiety about the prospect of developing countries’ economies, compounded by country-specific political and financial problems. Notably, the Turkish lira plunged to a fresh record low of 2.3360 per dollar even after the country’s central bank’s intervened directly in foreign exchange markets for the first time in more than two years.

‘Working for the Few’: Top New Report on the Links between Politics and Inequality

Duncan Green's picture

As the world’s self-appointed steering committee gathers in Davos, 2014 is already shaping up as a big year for inequality. The World Economic Forum’s ‘Outlook on the Global Agenda 2014’ ranks widening income disparities as the second greatest worldwide risk in the coming 12 to 18 months (Middle East and North Africa came top, since you ask).

So it’s great to see ‘Working for the Few’, a really excellent new Oxfam paper by Ricardo Fuentes and Nick Galasso, tackling an issue best summed up by US Supreme Court Justice Louis Brandeis in the aftermath of the Great Depression, ‘We may have democracy, or we may have wealth concentrated in the hands of the few, but we cannot have both.’ i.e. the politics of inequality and redistribution.

The Brandeis quote is particularly relevant because this time really is different. After the 2008 global meltdown, we have not seen anything like the New Deal, in terms of redistribution or reform. The paper argues that this is because political capture by a small economic elite is much more complete this time around.