economic growth and poverty reduction measurement issues using income and non income indicators summary this paper first reviews the debate on the definition of pro poor growth and argues that a relative definition has merits when defining the state of pro poor growth while an absolute definition is most suitable when analyzing the rate of pro poor growth the second contribution is to extend the pro poor growth toolbox to non income indicators the analysis applied to bolivia shows that this extension greatly improves our understanding of the distribution of change in non income indicators of the linkages between progress in income and non income dimensions of poverty and on the incidence of progress in non income outcomes along the income distribution

market forces and aircraft safety thecaseofthedc 10 the may 25th 1979 chicago dc 10 crash provides the opportunity to test an important proposition in the theory of consumer product safety can market forces provide safety when products are too complex to permit buyer prepurchase inspection this paper combines economic theory with modern finance theory to measure the cost of the crash to shareholders of the plane s manufacturer mcdonnell douglas the results indicate that the dc 10 crash resulted in a 200 million loss to mcdonnell douglas stockholders and that this amount exceeds any reasonable estimate of regulatory or liability costs

political determinants of electricity provision in small island developing states abstract this paper approaches provision of affordable and reliable electricity in small island developing states sids as a case of public good provision it aims to contribute to our understanding of how regime type and the quality of implementing institutions within political systems affect the prerequisites for successful electrification in sids more specifically we analyse the independent and interdependent effects of level of democracy and control of corruption on per capita household electricity consumption in sids using data from 34 sids over the period 1996 2009 the results show that although the independent effects of level of democracy and control of corruption are sensitive to model specification these two factors do have an interdependent impact on per capita household electricity consumption democratization has positive effects on provision of electricity to the general population only when there is a certain level of corruption control in place the results imply a that it is important for policy actors to acknowledge the interaction between regime type and the quality of implementing institutions and b when planning electrification projects in sids it is necessary to have information about the social and political context in order to design the most effective projects

credible spatial preemption it is often argued that incumbent firms may deter entry by preemptive investment in new goods we show that these conclusions are reversed when multiproduct incumbentfirms may exit in response to entry once entrants are in an industry an incumbent will often want to withdraw some goods to prevent competition with the entrant from reducing profits on other goods such a reaction makes entry more attractive to a potential entrant the equilibrium industry structure is less likely to be monopolistic as the goods are better substitutes as exit costs are low and as the competition between producers of the same good is more intense

sustainability aid and material welfare in small south pacific island economies 1900 1990 abstract the paper discusses the concept of sustainability and puts forward the argument that conventional notions of what constitutes economic development cannot be applied mechanistically to the very small island economies of the pacific in practice what matters is whether the entitlement of island communities to rent incomes remains sustainable this in turn requires that labor access to the modern capitalist economies of the region continues or is opened up and that the major regional powers continue to subsidize consumption levels in the small island countries unless or until those countries achieve a satisfactory level of rent income both of these conditions hinge upon the long run political commitment of aid donor governments to the welfare of island communities and on the skills of island politicians and officials in negotiating and maneuvering for access to aid funds from competing donors

demography growth and global income inequality global income inequality has been declining for several decades we argue that global income inequality will reach its lowest level around 2027 and then will rise again this development is the result of both economic and demographic forces by combining economic projections with demographic developments and by using gdp per worker instead of gdp per capita in projecting income levels we emphasize the role of demographics in income inequality especially in the long run after 2030 differences in population growth and population structure between countries in different stages of development are shown to increase global income inequality

market incentives for safe commercial airline operation using a sample of nearly all fatal u s airline accidents between 1960 and 1985 this paper attempts to quantify the costs that airlines incur due to crashes the potential costs include those due to loss of life and equipment tort liability increased regulatory oversight and loss of demand as consumers turn away from products perceived to be unsafe examination of the deviations from expected demand following accidents reveals little or no effect prior to airline deregulation and weak indication of a response to recent crashes these results are consistent with the changes in an airline s equity value following an accident which are statistically significant but quite small relative to the total social cost of the accident

a theory of remittances as an implicit family loan arrangement abstract the idea of an implicit and informal loan agreement between family members to explain migrants remittances is not new but its implications have not been fully explored in the theoretical literature many empirically testable propositions may be derived from this hypothesis when trying to explain why emigrants remit what the time profile of remittances is how it depends on the intent to stay on the expected length of stay and on interest rates what use people make of remittances and how the home family consumption behavior is affected by the economic prospects in the receiving country furthermore this theory yields many interesting policy prescriptions for less developed countries wishing to maximize the remittance flow from emigrants

foreign exchange reserve adequacy and exogenous shocks abstractone of the traditional benchmarks in international macroeconomics is that a country should maintain reserves that can cover at least 12 weeks of imports the notion of reserve adequacy however is not static and is intimately associated with the occurrence of financial crises as well as exogenous shocks with many observers using the reduction in reserves below this benchmark as a sign of fragility this article provides a benefit cost type approach to evaluating reserve adequacy the benefits of holding reserves are evaluated using a dynamic random effects probit model of financial crises while the cost of reserve holdings output loss due to an over investment in reserves is obtained from a panel growth equation using the methodology outlined above the study finds that in small states the optimal holding of foreign exchange reserves is approximately 25 weeks of imports approximately 13 weeks higher than the international rule of thumb this estimate of optimal reserve holdings is interrela

economic development in the south pacific promoting the private sector abstract over the past decade the economies of the independent island states of the south pacific have become sluggish to the point of stagnation despite substantial flows of overseas development assistance oda national economic managers have in the past failed to adopt policies which ensured increasing prosperity apologists for the poor performance of the islands have suggested a wide range of constraints such as small size but one of the major causes of slow growth has been the adoption by island governments of import substituting and domestic self sufficiency policies instead of an outward looking private sector which had to fight and be efficient in the international marketplace governments encouraged production for local needs behind tariff walls and licensing frameworks which supported inefficiency and a lack of entrepreneurial spirit the encouragement of the private sector requires the recognition by governments of industry needs this paper reviews some recommendations put forward by researchers scholars and business practitioners in this regard these recommendations include proposals for the adoption of macroeconomic policies which provide a stable economic environment the encouragement of niche industries which reflect the skills and capacity to perform of small isolated states the adoption of suitable legislation and the recognition that apart from taxation incentives the private sector takes into account law and order the availability of skilled or semi skilled workers common sense union practices and easy access to the incentives offered by governments

innovation and industry evolution the theoretical literature on innovation has been concerned with a single innovation produced by a number of identical agents by contrast we consider a market in which one firm is the current incumbent while the remaining firms are challengers moreover we consider a sequence of innovations so that success does not imply that the successful firm reaps monopoly profits forever after but only until the next better innovation is developed we begin with a fully optimizing behavioral model and derive the equivalent of the schumpeterian process of creative destruction that is a firm enjoys temporary monopoly power but is soon overthrown by a more inventive challenger the essential point to grasp is that in dealing with capitalism we are dealing with an evolutionary process the fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers goods the new methods of production or transportation the new markets the new forms of industrial organization that capitalist enterprise creates schumpeter 1942 pp 82 83

the implications of increasing globalization and regionalism for the economic growth of small island states abstract this paper provides an overview of the implications of globalization and increasing regionalism for small island states in the context of the critical determinants of their economic growth a brief outline of the globalization process is provided followed by a discussion of regionalism and the trend in subnational regional autonomy this is followed by an overview of the empirical literature on the critical factors determining the growth of small states next is an analysis of the implications for small island states of increasing globalization and regionalism in the context of the critical growth factors identified in the preceding section the paper concludes by proposing an agenda for further research into the implications for small island states of the impact of globalization on specific growth factors

the global distribution of income in 2050 summary several recent papers have explored the history of the global income distribution and point to some improvements a falling global gini coefficient a falling poverty rate and falling poverty headcounts this paper uses the simple accounting procedure sap discussed by bhalla bhalla s s 2002 imagine there s no country poverty inequality and growth in the era of globalization washington dc institute for international economics and the international futures model hughes b b hillebrand e e 2006 exploring and shaping international futures boulder co paradigm publishers to project the global distribution of income in 2015 and 2050 the results suggest that unless the oecd countries start growing more slowly than is now commonly assumed or broad swaths of the developing world substantially improve their economic performance beyond that experienced in the last 25 years the global income distribution will soon start to worsen again

power ownership and tourism in small islands evidence from indonesia this paper examines the political economy of tourism development in islands and uses gili trawangan indonesia as a case study a longitudinal study drawing from fieldwork contributes to the discussion of how different types of power shape community development and how the effects of hosting international tourism play an explicit role analysis using barnett and duvall s taxonomy of power model reveals the interplay between the types of power over time and its effects on different actors results raise questions for less developed countries and particularly islands concerning the social costs of using tourism for development

global interpersonal income inequality decline the role of china and india abstract while various methodologies have been used in the literature to estimate global interpersonal income inequality the accuracy of these methods has not so far been tested we compare the accuracy of four methods and find that the lorenz curve regression method is the most accurate and robust while the accuracy of the identical quantile income and the kernel density methods depends on the level of detail about income shares the simple two parameter distribution method is also very accurate when either the log normal or the weibull distribution is used using the two parameter distribution method we show that global income inequality among the citizens of 145 countries declined significantly between 1988 and 2015 largely because of the convergence of income per capita which was offset to a small degree by the increase in within country inequalities and the increased population share of poorer and more unequal countries regional income inequality declined in most parts of the world with the notable exception of developing asia where it has increased despite the large increases in within china and within india inequality income convergence of the two countries drove down global income inequality without china and india global interpersonal income inequality in 143 countries was higher in 2015 than in 1988 indicating that more than half of the world has not really become more equal

labor market adjustment in small open economies the case of micronesia abstract the paper uses the bertram poirine four sector framework to examine the labor market effects of a decline in external aid in a small open island economy it provides empirical evidence drawn from the federated states of micronesia to reject the notion that aid supported public expenditure crowds out opportunities for indigenous private sector development instead the paper argues that the future development of small island economies will depend on their access to overseas job markets and the continuation of aid inflows and remittances

uncovering industrial symbiosis potentials in a small island developing state the case study of mauritius small island developing states sids face a serious issue of sustainability as far as waste management within the industrial sector is concerned this paper makes an attempt at addressing the eventual practice of industrial ecology in sids with mauritius as a case study three major polluting industries namely the slaughterhouse edible oil refinery and the scrap metal recycling plant have been considered with a particular focus on the recycling of electric arc furnace slag as concrete aggregates along with the potential areas of applications for the different waste materials this research has also addressed the benefits barriers and factors for implementing industrial symbiosis projects within sids the most striking benefits are the preservation of the fauna and flora of the island and reduced dependency on developed countries for the importation of raw materials while the absence of a landfill disposal fee for non hazardous wastes and lack of awareness of industrial symbiosis projects have been identified as the main barriers to overcome these barriers a shift from manufacture consume dispose to manufacture consume recycle manufacture is recommended this study concludes that if a sustainable island is anticipated in the future a combination of recycling options along with all necessary factors such as technology funding from international organisations regulatory framework and involvement of stakeholders general public and non governmental organisations is required ultimately this would result in the establishment of networks among source and sink industries thus being in harmony with the environment

small island developing states and their economic vulnerabilities abstract many small island developing states sids face special disadvantages associated with small size insularity remoteness and proneness to natural disasters these factors render the economies of these states very vulnerable to forces outside their control a condition which sometimes threatens their very economic viability the gdp or gnp per capita of these states often conceals this reality in this paper the major vulnerabilities faced by sids are discussed and when possible quantified in the form of an index an attempt is also made to construct a composite index of vulnerability

the impact of political dependence on small island jurisdictions summary this paper examines the connection between political dependence and welfare and development of small island jurisdictions four possible advantages of political dependence are access to foreign aid foreign capital and external labor markets and gains in the tourism industry this study analyzes if political dependence is associated with these possible advantages and the relative importance of each on the welfare and development within the island it is shown that politically dependent islands have achieved significantly higher levels of welfare and development with some of the reasons being due to the large inflows in the form of tourism foreign direct investment labor and aid

the developing world s bulging but vulnerable middle class summary western notions of the middle class are of little obvious relevance to developing countries instead the middle class is identified here as those living above the median poverty line of developing countries even if still poor by rich country standards over 1990 2005 economic growth and global distributional shifts allowed an extra 1 2 billion people to join the developing world s middle class four fifths came from asia and half from china many of those in this new middle class remain fairly close to poverty only 100 million of the 1 2 billion would not be considered poor in any developing county economic growth typically came with an expanding middle class

growth inequality and poverty looking beyond averages the evidence is compelling that the poor in developing countries do typically share in the gains from rising aggregate affluence and in the losses from aggregate contraction but how much do poor people share in growth do they gain more in some settings than others do some gain while others lose does pro poor growth mean more or less aggregate growth recent theories and evidence suggest some answers but deeper microeconomic empirical work is needed on growth and distributed change only then will we have a firm basis for identifying the specific policies and programs needed to complement and possibly modify growth oriented policies

small country size and returns to scale in manufacturing abstract this paper tests the hypothesis that small country size is associated with constraints relating to economies of scale in manufacturing the study adopts a production function approach utilizing data from 43 differently sized countries the results confirming the hypothesis lend empirical support to the presumption that small countries face serious disadvantages in terms of production cost per unit in their manufacturing sectors suggesting that such countries are as a result seriously disadvantaged in terms of international competitiveness in manufacturing trade

the world distribution of income falling poverty and convergence period we estimate the world distribution of income by integrating individual income distributions for 138 countries between 1970 and 2000 country distributions are constructed by combining national accounts gdp per capita to anchor the mean with survey data to pin down the dispersion poverty rates and head counts are reported for four specific poverty lines rates in 2000 were between one third and one half of what they were in 1970 for all four lines there were between 250 and 500 million fewer poor in 2000 than in 1970 we estimate eight indexes of income inequality implied by our world distribution of income all of them show reductions in global inequality during the 1980s and 1990s

harmonization without representation small states the basel committee and the wto summary for many small states the experience with the basel committee and other standard setting bodies has not been favorable as they have been excluded from participation in the formulation of standards that negatively affect them this raises common concerns for small states including lack of representation non transparency discrimination and lack of sovereignty this paper argues that small states which cannot comply with basel standards are effectively placed at a competitive disadvantage and stand to lose potential domestic and international investors it argues that one possible way to address this problem is by formally strengthening the participatory role of small states in the wto

booming sector and de industrialisation in a small open economy this paper presents a theoretical analysis of the dutch disease the phenomenon whereby a boom in one traded goods sector squeezes porfitability in other traded goods sectors both by directly bi

globalization and global inequality assessing the impact of the rise of china and india 1980 20051 this article uses updated purchasing power parity measurements of countries income and a new strategy for approximating global inequality to examine how global income inequality as a combination of increasing average within country inequality and decreasing between country inequality changed in the period 1980 2005 in view of the overwhelming influence of china and india on trends in global inequality change the authors base their strategy on estimating the change in world average within country inequality from change in within country inequality of these two countries the authors find that global inequality decreased continuously throughout the period they also project that global inequality will likely rise again in the next 25 years unless the stellar economic performance of china and india spreads widely to other developing countries

accounting for the recent decline in global income inequality following nearly two centuries of growth global income inequality declined in the last decades of the 20th century to determine the causes of that historic decline we focus on income inequality across nations and find that the major equalizing force is faster than world average income growth in china and south asia industrializing regions where 40 of the world s people live apparently what matters most about economic globalization thus far is its role in the spread of industrialization throughout populous poor regions of the world if so then globalization most likely has reduced global income inequality this decline is anticipated to continue over the next few decades first because of the continued industrialization of poor regions and second because most of the growth in the world s working age population will occur in poor regions

a comparison of the economic performance of different micro states and between micro states and larger countries the economic performance of micro states and those sub national regions enjoying a high degree of autonomy is a generally under researched area this paper builds on earlier research armstrong and read 1995 by employing quantitative techniques to test 1 a the extent to which the economic performance of micro states differs by comparing their gnp per capita with that of the region in which they are located and with the countries to which they are adjacent 2 b whether some micro states perform better than others as a result of differences in their economic structure and 3 c whether the rates of growth of micro states have been faster or slower than those of larger countries considerable diversity among micro states is revealed although most exhibit strong economic performance

offshore pariahs small island economies tax havens and the re configuration of global finance the stock of wealth held offshore is estimated at us 6 trillion many small island economies sies host offshore finance centers and some sies are highly dependent upon offshore finance extreme examples have over 90 of government revenues derived from finance sector activities since 1998 a series of international initiatives have been launched to combat harmful tax practices money laundering and inadequate financial regulation these initiatives will transform the economies of many sies this paper explores the dependence of many sies upon offshore finance and the barriers to diversification arising from their smallness and unique political economies

information spillovers incumbency and conservatism abstract this paper studies the relationship between the existing ventures of a firm and its incentives to undertake new ventures we argue that whenever a firm undertakes a new venture it does so with the risk that information associated with that venture will reflect on all of the firm s products if the costs of bad news exceed the benefits of good news the firm will be less likely to undertake the venture this is the case in our model in which an incumbent risks losing monopoly status in an established market should its new venture fail thus incumbency can breed conservatism

assessing the economic vulnerability of small island developing states and the least developed countries macro vulnerability of the small island developing states sids as well as of least developed countries ldcs has been an increasing concern for the international community this has led to the design of an economic vulnerability index evi to assess the structural economic vulnerability resulting from natural or external shocks we first explain how vulnerability affects growth development and poverty reduction particularly in small developing countries we then examine how the evi has been designed and how it can be used to compare sids and ldcs we argue that evi is a relevant tool not only for identification of ldcs but also for geographical aid allocation to favour vulnerable countries including ldcs and sids even though not all sids qualify as ldcs

examining inequality who really benefits from global growth summary this paper analyzes global consumption distribution from 1993 to 2001 it demonstrates that half of the increase in global consumption in the 1990s benefited the developed world populations the other main beneficiary was china s population the number of chinese in extreme poverty fell and a new global middle class emerged elsewhere the per capita consumption of the poor rose at half the global average rate much less than one to one growth growth did help the poor but it was much better for the rich the analysis suggests that relying on growth to reduce poverty is rather inefficient more direct state interventions seem more effective these insights are poorly illustrated by global indices such as gini coefficients but are strikingly demonstrated by density curves the wider use of which could better inform debate in this area

market forces and commercial aircraft safety this paper investigates the wealth impact on aircraft manufacturers of crashes involving their aircraft the author attempts to separate out the regulatory tort law and endogenous market components of these costs using stock market data the results indicate that on average the manufacturer suffers a wealth loss of 21 3 million as the result of a fatal crash in which the structural integrity of the aircraft is at issue the analysis suggests that not all of this amount can be attributed to regulatory or tort law mechanisms and that market forces play a role in providing air travel safety copyright 1987 by blackwell publishing ltd

sustainable development in pacific micro economies abstract this paper argues that the central economic problem for a number of very small pacific island economies is the preservation and enhancement of their status as rentier societies and the relatively high living standards vis a vis other developing countries which go with the status the thrust of most development planning in the region with its focus on sustainable expansion of productive activity is misdirected in these small countries it is not productive activity but rent entitlements which must be sustained and reproduced over time aid philately and migrant remittances are not merely supplements to local incomes they are the foundations of the modern economy insofar as conventional development projects crowd out aid and remittance entitlements their impact is immiserizing criticism is offered of a recent argument for returning to sustainable subsistence economies

population ageing and inequality evidence from china population ageing has significant economic and social costs and this paper studies its impacts on inequality both theoretically and empirically first we build a two period overlapping generation model with uncertain lifetime and find that population ageing has the overall effect of increasing income and consumption inequality within the society for empirical analysis we use household data from china health and nutrition survey to assess the age effect on income and consumption inequality in china and confirm the results predicted by the theoretical model

on the evolution of the world income distribution the post world war ii period has seen substantial changes in the distribution of gdp per worker around the world in the upper half of the distribution a number of countries have exhibited large increases in income relative to the richest countries in the bottom half several countries have seen incomes fall relative to the richest countries the net result of these changes is a movement in the shape of the world income distribution from something that looks like a normal distribution in 1960 to a bi modal twin peaks distribution in 1988 projecting these changes into the future suggests a number of interesting ndings first it seems likely that the united states will lose its position as the country with the highest level of gdp per worker second growth miracles have been more common in recent decades than growth disasters if these dynamics continue the future income distribution will involve far more rich countries and far fewer poor countries than currently observed

the short run macroeconomic impact of foreign aid to small states an agnostic time series analysis abstract this paper investigates the short run macroeconomic impact of aid in small developing countries sdcs by using a vector auto regression var model to study the impact of aid on net import absorption and domestic demand spending we focus on average country effects within two country sub groups and find substantial differences between aid dependent sdcs and other sdcs that are more dependent on natural resources tourism or financial services in aid dependent sdcs aid absorption more or less equals spending although only half of the aid flow is absorbed and spent in the non aid dependent group aid does not seem to be absorbed or spent in any systematic fashion

terms of trade shocks and the current account in small island developing states abstract the paper investigates the dynamic relationship between external and internal shocks and the current account in selected small islands developing states external shocks defined as terms of trade fluctuations explain a significant proportion of the variation in the current account balances the external shocks have a temporary negative impact on the current account balances with a subsequent improvement generating a j curve type reaction in contrast real output shocks have a positive and significant effect on the current account

tiny poor and war torn development policy challenges for east timor abstract following its decisive vote for independence on 30 august 1999 east timor will soon become the world s newest country the country has a particularly tragic history centuries of portuguese colonialism and neglect 24 years of troubled occupation by indonesia and the horrific violence and massive destruction of infrastructure which occurred in the wake of the 1999 vote for independence the country will start from one of the lowest points conceivable on the scale of socioeconomic development extremely low income very limited bureaucratic capacities barely functioning institutions and potentially hostile elements in its giant neighbor the formidable development policy challenges facing this new country are the subject of this paper

rent emigration and unemployment in small islands the mirab model and the french overseas departments and territories abstract many small island economies depend heavily on rents coming from the outside international aid from foreign or metropolitan governments remittances from emigrants or fishing rights some small islands have massive emigration and almost no unemployment while others have no emigration or even immigration sometimes with high unemployment the four sector economic model proposed here tries to explain such differences in migration behavior and unemployment rates for islands with unlimited legal emigration outlets

inequality among world citizens 1820 1992 this paper investigates the distribution of well being among world citizens during the last two centuries the estimates show that inequality of world distribution of income worsened from the beginning of the 19th century to world war ii and after that seems to have stabilized or to have grown more slowly in the early 19th century most inequality was due to differences within countries later it was due to differences between countries inequality in longevity also increased during the 19th century but then was reversed in the second half of the 20th century perhaps mitigating the failure of income inequality to improve in the last decades jel d31 f0 n0 o0