development effectiveness what have we learnt we suggest that the poverty efficiency aid allocation is merely a benchmark guide if a donor lacks other information about the country and also the power to change or prevail over government preferences we argue that in most circumstances donors have only limited scope for the latter and that while high aid dependence may reduce the fungibility problem and the use of ngos can by pass it altogether such circumstances are not very common hence the main reasons for departing from the benchmark are when the donor has additional information about likely poverty impact or if poverty reduction is not the objective

media scrutiny and the quality of public officials i investigate whether attempts by the media to determine a candidate s fitness for office lowers the average quality of public officials what i call the media scrutiny paradox media scrutiny imperfectly signals heterogeneous candidates type but imposes privacy costs and reputational costs on politicians the quality of office holders falls if the selection effect is adverse and outweighs the screening effect a low quality information signal which could result if the media focus on irrelevant aspects of behavior makes the screening effect small and the media paradox more likely to hold individuals of good character might invest more in their reputation and have more at stake from being falsely identified as a rapscallion the actual malice standard established in new york times v sullivan likely increased relatively the cost of candidacy for good people and lowered the quality of officials

absorptive capacity and the effects of foreign direct investment and equity foreign portfolio investment on economic growth abstract this study examines the effects of foreign direct investment fdi and equity foreign portfolio investment efpi on economic growth using data on 80 countries from 1979 through 1998 the results largely suggest that lagged fdi and efpi do not have direct unmitigated positive effects on growth but some data are consistent with the view that the effects of fdi and efpi are contingent on the absorptive capacity of host countries with particular respect to financial or institutional development moreover extreme bound analysis eba of significant results indicates that the estimates are robust compared to other empirical studies on growth

the millennium challenge corporation organizational constraints on us foreign aid 2004 11 summary the millennium challenge corporation mcc was established in 2004 to channel billions of us foreign assistance dollars to various infrastructure projects within a select group of low income countries that could presumably help themselves when ruling justly investing in people and encouraging economic freedom were considered primary contributors to self sustaining economic growth through multi method analysis this study reveals that with its choice of assessment categories and accompanying indicators the mcc undermines its governing principles in aid candidate qualification

regulatory discretion and the unofficial economy johnson kaufmann and shleifer 1997 find that the share of the unofficial economy in gdp is determined by the extent of control rights held by politicians and bureaucrats in post communist economies exploring in more detail the role of bribes and using a broader data set from the oecd latin america and transition economies we find that the unofficial economy accounts for a larger share of gdp when there is more corruption and when the rule of law is weaker while these findings are consistent with the earlier results for transition economies in the larger country sample we find it is not necessarily the case that more regulation or higher taxes directly increases the size of the unofficial economy the problem appears to be not regulation or taxation per se but whether the state administrative system can operate without corruption a high level of regulatory discretion helps create the potential for corruption and drive firms into the unofficial economy

motivations for aid to developing countries abstract this paper attempts to identify the underlying principles of aid allocation and particularly the balance of motivations as between the needs of recipient countries and the interests of donor countries two alternative models are fitted by cross country regressions to bilateral and multilateral aid flows to some 80 developing countries in 1969 1970 and 1978 1980 the first recipient need model assumes that all aid is given to compensate for shortfalls in domestic resources this model provides a reasonable explanation for the distribution of multilateral aid but it is clearly not applicable for bilateral aid flows the second donor interest model assumes that all aid serves only donor interests defined to cover political security investment and trade interests this model gives generally good explanations of bilateral aid but is a poor fit for multilateral aid the relative importance of the various donor interests differs sharply among donors the paper ends with an analysis of the shift in the balance of aid over the 1970s towards the recipient need element and with a reference to the sharp change in policy in the 1980s towards increasing emphasis on donor interest aid

acting on climate finance pledges inter agency dynamics and relationships with aid in contributor states developed countries have relied heavily on aid budgets to fulfill their pledges to boost funding for addressing climate change in developing countries however little is known about how interaction between aid and other ministries has shaped contributors diverse approaches to climate finance this paper investigates intra governmental dynamics in decision making on climate finance in seven contributor countries australia denmark germany japan switzerland the uk and the us while aid agencies retained considerable control over implementation environment and finance ministries have played an influential and often contrasting role on key policy issues including distribution between mitigation and adaptation and among geographical regions

coding error or statistical embellishment the political economy of reporting climate aid to benefit from a wide spread public support for climate policy aid agencies strive to show the climate relevance of their development activities using project level aid data and country level political data for 21 dac donors from 1995 to 2007 we test whether this may lead to politically motivated misreporting through keyword search in individual project descriptions and complementary hand coding we assess all aid activities for their actual climate change related content and thereby construct our most relevant control variables econometric results reveal that indeed project coding is influenced systematically by the donor governments ideological orientation as well as by national voters environmental preferences

a comparative study of inequality and corruption this article argues that income inequality increases the level of corruption through material and normative mechanisms the wealthy have both greater motivation and more opportunity to engage in corruption whereas the poor are more vulnerable to extortion and less able to monitor and hold the rich and powerful accountable as inequality increases inequality also adversely affects social norms about corruption and people s beliefs about the legitimacy of rules and institutions thereby making it easier for them to tolerate corruption as acceptable behavior this comparative analysis of 129 countries using two stage least squares methods with a variety of instrumental variables supports the authors hypotheses using different measures of corruption the world bank s control of corruption index and the transparency international s corruption perceptions index the explanatory power of inequality is at least as important as conventionally accepted causes of corruption such as economic development the autho

migration and foreign aid when it comes to linkages between migration and the global allocation of foreign development assistance the size of the immigrant population from a recipient country residing in a donor country is an important determinant of dyadic aid commitments two complementary hypotheses probe this relationship first donors use foreign aid to achieve their broader immigration goals targeting migrant sending areas to increase development and decrease the demand for entry into the donor country second migrants already residing in the donor country mobilize to lobby for additional aid for their homeland empirical tests on a large sample of country pairs made up of twenty two donors and more than 150 recipients over the period 1993 to 2008 show robust support for these hypotheses

national institutions and global public goods are democracies more cooperative in climate change policy this article examines whether democracies contribute more to the pro vision of global public goods it thus contributes to the debate on the effects of domes tic institutions on international cooperation the focus is on human induced climate change in stern s words the biggest market failure the world has ever seen 1 using new data on climate change cooperation we study a cross section of 185 countries in 1990 2004 the results show that the effect of democracy on levels of political com mitment to climate change mitigation policy output is positive in contrast the effect on policy outcomes measured in terms of emission levels and trends is ambiguous these results demonstrate that up until now the democracy effect has not been able to override countervailing forces that emanate from the free rider problem discounting of future benefits of climate change mitigation and other factors that cut against efforts to reduce emissions even though democracies have had a slow start in moving from political and legal commitments policy output to emission reductions policy out comes particularly in the transportation sector we observe some encouraging signs the main implication of our findings for research on international politics is that greater efforts should be made to study policy output and outcome side by side this will help in identifying whether more democratic countries experience larger words deeds gaps also in other policy areas and whether there are systematic differences of this kind between domestic and international commitments and across different policy areas

reinventing foreign aid for inclusive and sustainable development kuznets piketty and the great policy reversal this survey essay reviews over 200 papers in arguing that in order to achieve sustainable and inclusive development foreign aid should not orient developing countries towards industrialisation in the perspective of kuznets but in the view of piketty abandoning the former s view that inequality will fall with progress in industrialisation and placing more emphasis on inequality in foreign aid policy will lead to more sustainable development outcomes inter alia mitigate short term poverty address concerns of burgeoning population growth train recipient governments on inclusive development fight corruption and mismanagement and avoid the shortfalls of celebrated kuznets conjectures we discuss how the essay addresses post 2015 development challenges and provide foreign aid policy instruments with which discussed objectives can be achieved in summary the essay provides useful policy measures to avoid past pitfalls output may be growing and yet the mass of the people may be becoming poorer lewis 1955 lewis led all developing countries to water proverbially speaking some african countries have so far chosen not to drink amavilah 2014 piketty 2014 has led all developing countries to the stream again and a challenging policy syndrome of our time is how foreign aid can help them to drink

are bilateral and multilateral aid for trade complementary using the first comprehensive estimates of ad valorem tariff equivalent bilateral trade costs spanning the time period 2002 10 we examine whether the aid for trade aft inflows reduce bilateral trade costs facing aid recipients if so we ask whether the trade costs reduction effects of aft from bilateral and multilateral sources are complementary by showing the extent to which the observed trade cost reduction effects of aft from bilateral multilateral sources correlate with the magnitudes of aft disbursements from multilateral bilateral sources we present plausible explanation for the cross country variations in the extent to which aft promotes trade flows our findings have thus important policy implications for shaping future discourses on the coordination of disbursements for enhancing the effectiveness of aft

choosing to target what types of countries get different types of world bank projects well governed countries are more likely to make use of foreign aid for the purposes of economic development and poverty alleviation therefore if aid agencies are providing funds for the sake of development these countries should receive more aid and categorically different types of aid as compared with poorly governed countries in poorly governed countries aid should be given in forms that allow for less discretion using an original data set of all world bank projects from 1996 to 2002 the author distinguishes programmatic projects from investment projects and national from subnational investment projects if the world bank allows more discretion in well governed countries then it will choose to provide programmatic and national aid for these recipients the author presents evidence that the world bank provides a larger proportion of national investment lending in better governed countries with regard to programmatic lending he finds mixed evidence among counties eligible for international development association ida aid good governance surprisingly is associated with a lower proportion of programmatic aid whereas for international bank for reconstruction and development ibrd borrowers good governance is associated with a higher proportion the author subjects these results to a number of robustness checks although he confirms the existing result in the literature that the world bank provides larger overall amounts of aid to better governed countries his examination of the disaggregated data leads to questioning whether both lending wings of the world bank are designing aid programs in the most prodevelopment way possible

the macroeconomic effects of fiscal policy we investigate the macroeconomic effects of fiscal policy using a bayesian structural vector autoregression b svar approach we identify fiscal policy shocks via a partial identification scheme but also i include the feedback from government debt ii look at the impact on the composition of output iii assess the effects on asset markets iv use quarterly data and v analyse empirical evidence from the us the uk germany and italy the results show that government spending shocks in general have a small effect on gross domestic product gdp lead to important crowding out effects have a varied impact on housing prices and generate a quick fall in stock prices government revenue shocks generate a mixed effect on housing prices and a small and positive effect on stock prices the empirical evidence also suggests that it is important to explicitly consider the government debt dynamics in the model

economic materials product chain models current status further development and an illustrative example abstract economic materials product m p chain models concentrate on modelling systems of competing final products rendering the same economic service an example of such a product would be window frames made out of different materials such as aluminium wood or plastic existing economic m p chain models make highly simplifying assumptions foreign trade for example is not taken into consideration and final products are seen as perfect substitutes for each other therefore existing approaches do not provide an adequate basis for an integrated economic ecological analysis of complex product systems it is the objective of this paper to discuss the current status of m p chain modelling and to show possibilities for further development it will be argued that the takayama judge price equilibrium activity model presents a good basis for m p chain modelling this quadratic programming qp approach permits the development of dynamic multi stages multi products models a transformation of the qp approach into linear complementarity programming lcp format leads to a flexible and high capacity tool for product system analysis the capability of the proposed approach is shown by an illustrative example the adapted real world m p chain of window frame production in germany

the productivity of trust this paper tests whether social trust affects total factor productivity tfp using both development and growth accounting we find strong evidence of a causal positive effect of social trust on the level and growth of tfp we moreover observe that the effect of social trust on tfp runs through economic judicial institutions but not through political institutions those findings resist a series of robustness checks

sustainability indicators policy and governance issues for ecological economics abstract ecological economics is a major forum for discussion of theoretical and analytical aspects of measuring sustainability the role of sustainability indicators as an evaluation method for sustainability within the emerging context of governance merits further analysis focusing on policy processes surrounding the production of sustainability indicators this paper addresses two questions what is the potential utility of indicators for policy and in what ways can indicators influence governance the former is addressed by exploring three disciplines with long histories of indicator application public administration studies urban studies and environmental sciences the latter is addressed by distilling key perspectives from public policy literature on knowledge utilisation and policy learning which become the foundation for clarifying the notion of policy resonant indicators this clarification is achieved by canvassing the spectrum of the influences on indicators and the mechanisms of their resonance in policy processes the final section of the paper brings these arguments together by exploring two major insights in terms of challenges for ecological economics strengthening indicator theory and practice by addressing four key ingredients and mobilisation of indicators through their active use within the context of governance

what determines un approval of greenhouse gas emission reduction projects in developing countries an analysis of decision making on the cdm executive board the clean development mechanism cdm established by the kyoto protocol can generate substantial rents for project participants via the sale of certified emission reductions for this reason supposedly technical decisions about the approval of cdm methodologies and about the registration of projects may be driven by benefits to specific countries or interest groups our econometric analysis of data for about 250 methodologies and about 1000 projects discussed by the cdm executive board eb so far suggests that indeed along with formal quality criteria political economic variables determine the final eb decision

an empirical analysis of dematerialisation application to metal policies in the netherlands abstract this paper presents a first empirical step in filling the gap between physical and economic models by combining a material flow model and an applied general equilibrium age model the goal of this paper is threefold firstly a new methodology is discussed for the integration of material and economic flow models secondly the new methodology is tested for its empirical applicability by simulation of material policies finally the analysis leads to the identification of major steps for filling the existing gap between physical and economic models further fiscal material policies are imposed to reduce the use of specific materials the material levy and the accompanying labour tax reduction shift the tax burden from labour to the use of materials the empirical illustration shows that the physical and economic flows can be made mutually compatible and that the combined model can be used for empirical analysis of material policies from this analysis of material policies in an economic model it may be concluded that the combination of an age model and a material flow model may produce an appropriate tool for analysing environmental sectoral and distributional effects of dematerialisation policies

aid and debt relief in africa have they been substitutes or complements summary much attention has been paid to helping economies in sub saharan africa ssa to achieve the millennium development goals mdgs the conventional instruments for providing assistance have been foreign aid disbursements and debt relief but have debt relief initiatives complemented or substituted for other aid has debt relief been additional this paper examines the evolving relationship between debt relief and other foreign aid in ssa using recently constructed and improved data estimating a model of aid allocation for 42 ssa countries using panel data for 1988 2006 it finds that the relationships between debt debt relief aid and resource transfers have changed over time this paper interprets how policy changes may have modified the underlying relationship between aid and debt relief

does foreign aid mitigate the adverse effect of expropriation risk on foreign direct investment abstract we construct a model of fdi risk and aid where a country loses access to fdi and aid if the country expropriates fdi we show that i the threat of expropriation leads to under investment ii the optimal level of fdi decreases as the risk of expropriation rises and iii aid mitigates the adverse effect of expropriation risk on fdi the empirical analysis employs data for 35 low income countries and 28 countries in sub saharan africa over the period 1983 2004 we find that risk has a negative effect on fdi and that aid mitigates but cannot eliminate the adverse effect of risk

foreign aid and domestic savings in less developed countries some tests for causality abstract the negative correlation between foreign aid and domestic savings rates in less developed countries is an accepted fact in the existing literature the direction of causality however remains a subject of dispute in this paper we use time series data to investigate causal relationships we conclude that causal relationships are not universal and it is suggested that in those countries where they do hold the direction of causality may depend upon the proportions of aid from bilateral and multilateral sources

some determinants of foreign aid to india 1960 1985 abstract using a unique data set of aid to india from all sources 1960 1985 we discuss the magnitude and composition of aid and present a principal components analysis of aid giving we then attempt to get at the underlying patterns and causes of aid giving using factor analytic techniques and explain the level of foreign aid by employing a partial adjustment model we find that latent motivations to classify the donor countries into four convenient groups each with different political and economic motivations we also find that the latent variables capturing the motivations of the united states western european countries eastern european countries as well as last year s aid and the balance of trade but not gdp growth are significant determinants of the level of aid

conservation of mass and instability in a dynamic economy environment system abstract this paper considers a variant of the neumann leontief sraffa general equilibrium models in the context of a jointly determined economy environment system subject to a conversation of mass condition it shows that the conservation of mass contradicts the free disposal free gifts and non innovation assumptions of such models that an expanding economy will be associated with continuous disequilibrating change in the material transformations of both economy and environment and that this change is uncontrollable through the price system

materials capital direct indirect substitution and mass balance production functions a foundation is provided for a correct and accurate analysis of the relationship between monetary values and physical dimensions in economic production a distinction is proposed between direct and indirect substitution linked to this a classification is offered of various types of substitutability and complementarity relationships between production factors it is argued that the neoclassical production function may be consistent with mass balance but is unsuitable for a detailed and accurate understanding of changes in production that influence materials use for this purpose general production functions satisfying mass balance are formulated drawing upon the proposed classifications

does the quality of institutions enhance savings the case of sub saharan africa over the last three decades there has been increasing disparity in savings across regions and income groupings globally in this paper we investigate whether the quality of institutions explains

the integration of natural capital into development policies in response to the united nations sustainable development goals there has been a rising awareness of the need to address simultaneously the preservation of natural capital stocks and poverty alleviation at multiple scales focusing on tropical forest rich developing countries the article overviews the extent to which natural capital considerations are integrated into existing development policies and interventions the review finds that the explicit consideration of natural resources is left out of many commonly applied development interventions leading to suboptimal and unsustainable outcomes the interventions that do tackle both development and conservation goals are often not coordinated and are implemented at a site by site basis without providing the socially efficient levels of natural capital stocks or ensuring the long term sustainability of the development and conservation impacts bringing in perspectives from development economics environmental economics and applied conservation this article makes the case for a better integration of development and conservation goals in interventions in developing countries and outlines the emerging frontiers for research and policy

can the world cut poverty in half how policy reform and effective aid can meet international development goals abstract poverty in the developing world will decline by about one half by 2015 if the trends of the 1990s persist most of this poverty reduction will occur in asia however while poverty will decline only slightly in africa effective aid could make a contribution to greater poverty reduction in lagging regions even more potent would be significant policy reform in these countries we develop a model of efficient aid in which flows respond to policy improvements that create a better environment for poverty reduction and effective aid we investigate scenarios of policy reform and efficient aid that point the way to how the world can cut poverty in half in every major region

do developing country wto members receive more aid for trade aft since the world trade organization wto doha development agenda dda negotiations started in 2001 the importance of aid for trade aft has been well recognised as a useful tool for facilitating trade economic growth and social development in developing countries at the wto hong kong ministerial conference in december 2005 the aft initiative was launched and many high income member countries pledged to increase their aft contributions particularly for the least developed member countries ldc this paper aims to assess whether and to what extent the wto s developing member countries have received more aft for this purpose a system generalised method of moments is applied to a sample of 118 recipient countries for the period 2001 10 we find evidence that while ldc wto members on average receive relatively more aft than other developing countries the difference has not increased since launch of the aft initiative among the three categories of aft the positive wto membership effect for ldc members increased for building productive capacity and for trade policy and regulation but declined for infrastructure

explaining global patterns of international aid for linked biodiversity conservation and development summary there is little systematic knowledge about the nature extent and trends of international aid for projects that link biodiversity conservation and development goals this study uses a new dataset to analyze spatial and temporal patterns of such aid globally over the past three decades results reveal significant donor selectivity in aid allocation though linked conservation and development aid comprised more than two thirds of all biodiversity related assistance biodiversity aid generally was directed to biodiversity rich well governed countries but countries able to exert greater political leverage secured more linked aid than aid targeted to conservation without a stated development objective

determinants of canadian bilateral aid allocations humanitarian commercial or political in this paper we examine the determinants of the allocation of canadian bilateral aid over the period 1984 2000 we draw on models of donor behaviour that allow us to incorporate humanitarian commercial and political considerations the trinity of mixed motives that affect canadian aid we find that allocations are moderately altruistic recipient country human rights and membership in the commonwealth and la francophonie also affect aid flows most strikingly our results suggest that canadian aid flows became less altruistic over this period and commercial motives became increasingly important jel classification h50 o10 les determinants des allocations de l aide humanitaire canadienne humanitaires commerciaux ou politiques ce memoire etudie les determinants de l allocation de l aide bilaterale canadienne dans la periode 1984 2000 on utilise des modeles de comportement de donateur qui permettent de prendre en considerations les motivations humanitaires commerciales et politiques la trinite de motifs mixtes qui affectent l aide canadienne on decouvre que les allocations sont moderement altruistes le fait pour un pays de defendre bien les droits de la personne et d etre membre du commonwealth et de la francophonie affecte les flux d aide plus important peut etre les resultats suggerent qu au cours de cette periode les flux d aide canadienne deviennent moins altruistes et les motifs commerciaux de plus en plus importants

does foreign aid target the poorest to examine the extent to which foreign aid reaches people at different levels of wealth in africa i use household surveys to measure the subnational distribution of a country s population by wealth quintiles and match this information to data on the location of aid projects from two multilateral donors within countries aid disproportionately flows to regions with more of the richest people aid does not favor regions with more of the poorest people these findings violate the stated preferences of the multilateral donors under study suggesting that the donors either cannot or are not willing to exercise control over the location of aid projects within countries the results also suggest that aid is not being allocated effectively to alleviate extreme poverty

can government purchases stimulate the economy this essay briefly reviews the state of knowledge about the government spending multiplier drawing on theoretical work aggregate empirical estimates from the united states as well as cross locality estimates i assess the likely range of multiplier values for the experiment most relevant to the stimulus package debate a temporary deficit financed increase in government purchases i conclude that the multiplier for this type of spending is probably between 0 8 and 1 5 jel e23 e62 h50

governance land and distribution a discussion on the political economy of community based conservation abstract the effectiveness of community based conservation cbc has been under discussion through the review of cbc initiatives in developing countries we contribute to the debate by analysing how players influence different factors that determine the outcomes of cbc we highlight several points first the promise of benefits has been overshadowed by constraints on the extraction of natural resources along with the use of governmental schemes to extract partially the rents from cbc which has left little to share inside the communities second cbc design and implementation has often overlooked the asymmetries of power within the community and at the individual level which has produced unequal access to the design decision making and outcomes of this activity third while the elites have had a determinant role in shaping the governance of cbc external agents promotion of cbc has tended to reproduce the existent negotiating power at the community local and national levels fourth land contestation plays a key role in the dynamics of relationship and conflict between the governments corporate interests and the communities finally cbc adaptation to new scenarios depends critically on the process of community empowerment and the building of networks with external agents

empirical results of aid motivations australia s bilateral aid program abstract this paper briefly surveys the existing literature on the motivations of overseas aid the emphasis is on the two competing models of recipient need and donor interest and the paper estimates these two models using data for australian bilateral aid both the recipient need model and the donor interest model are supported by the econometric analysis this is in stark contrast to the results of other studies for large states such as the united states and the united kingdom these prior studies show no support for the recipient need model whereas the donor interest model is supported the atypical result for the australian bilateral aid program requires further analysis in terms of non nested hypotheses

government effectiveness and regional variation in informal employment abstract this article analyses the role of government effectiveness in the determination of informal employment a theoretical model is developed in which local governance and worker skill level are assumed to influence the decision of the worker whether to seek employment in the formal or informal sectors the model is assessed empirically using data from brazil where almost half of the urban labour force is employed informally the empirical analysis supports the predictions of the model and suggests that the probability of a worker being employed informally is lower in regions with better governance and higher average education

domestic credit growth and international capital flows during the pre crisis period europe experienced substantial cross country variation in domestic credit growth and cross border capital flows we investigate the inter relations between domestic credit growth and international capital flows during the period 1993 2008 with a special focus on the boom period of 2003 2008 we establish that domestic credit growth in european countries is strongly related to net debt inflows but not to net equity inflows this pattern also holds for an extended sample of 54 advanced and emerging economies

fiscal crises and aggregate demand can high public debt reverse the effects of fiscal policy abstract this paper shows how the power of fiscal policy to affect consumption can vary depending on the level of public debt at moderate levels of debt fiscal policy has the traditional keynesian effects current generations of consumers discount future taxes because they may not be alive when taxes are raised or there will be a larger population available to pay the taxes but when debt reaches extreme values current generations of consumers know there is a high probability that they will have to pay extra taxes a fiscal deficit can have a contractionary effect in these situations

bilateral donors and the age of the national interest what prospects for challenge by development agencies summary foreign aid agencies represent and champion global development priorities within a donor nation increasingly however these agencies sit within donor governments that are strongly committed to upholding the national interest through their development commitments this paper is concerned with how bilateral aid agencies manage this tension and how they might continue to serve the altruistic aims of development the main research question asks if autonomy or a combination of autonomies can improve a development agency s ability to defend the humanitarian imperative of development against normative pressures privileging the national interest by drawing on theories of autonomy within public management literatures it is possible to identify points of leverage for development agencies where spaces for autonomous preferences and actions remain as well as sources of limitation where such opportunities are considerably reduced six types of autonomy are examined across three nations widely perceived as strong performers as donors norway the uk and sweden the paper suggests that while structural autonomy is critical for preserving humanitarian motivations there are also unexplored opportunities within other autonomous spheres a multi dimensional examination of autonomy highlights the varying capacity that development agencies have to resist pressures to strongly nationalize the global development project

what are the effects of fiscal policy shocks we propose and apply a new approach for analyzing the effects of fiscal policy using vector autoregressions specifically we use sign restrictions to identify a government revenue shock as well as a government spending shock while controlling for a generic business cycle shock and a monetary policy shock we explicitly allow for the possibility of announcement effects i e that a current fiscal policy shock changes fiscal policy variables in the future but not at present we construct the impulse responses to three linear combinations of these fiscal shocks corresponding to the three scenarios of deficit spending deficit financed tax cuts and a balanced budget spending expansion we apply the method to us quarterly data from 1955 to 2000 we find that deficit financed tax cuts work best among these three scenarios to improve gdp with a maximal present value multiplier of five dollars of total additional gdp per each dollar of the total cut in government revenue 5 years after the shock copyright 2009 john wiley sons ltd

material efficiency and economic environmental sustainability results of simulations for germany with the model panta rhei abstract based on empirical evidence the paper discusses the impact of a consulting and information program for the improvement of material productivity with regard to economic and environmental targets for germany the instrument used in the analysis is the integrated economic environmental model panta rhei which is parameterized econometrically the paper presents the model and shows in a baseline forecast that without policy changes sustainability will be violated in both the economic and the environmental dimensions this applies to the latter particularly with regard to land use and material consumption the alternative simulation that introduces a consulting and information program for the improvement of material productivity yields a win win result growth rates of gdp and employment are rising the public debt is reduced and material consumption is much lower than in the baseline and remains at the actual level which means that a decoupling of growth and material consumption is possible

environmental tax reform efficiency and political feasibility although market based environmental measures like uniform co2 taxes reach a given standard at minimal cost they do not prevail in real world policies an effciency oriented environmental policy fails as it involves a redistributen of pollution rights resulting in a strong and generally effective opposition of the groups that forego economic rents the present paper analyzes the tradoff between efficiency and political feasibility of several co2 tax and reimbursement schemes using a computable general equilibrium model of switzerland the simulation results indicate that a policy combining a uniform co2 tax with differentiated labor subsidies preventing intersectoral redistribution is a better solution for the tradeoff than the presently existing tax schemes in various countries

the political economy of conditionality an empirical analysis of world bank loan disbursements abstract traditional aid conditionality has been attacked as ineffective in part because aid agencies notably the world bank often fail to enforce conditions this pattern undermines the credibility of conditionality weakening incentives to implement policy reforms the standard critique attributes this time inconsistency to bureaucratic factors within the aid agency such as pressure to lend defensive lending or short sighted altruism pressure from powerful donors provides another potential explanation for lax enforcement this paper presents an empirical analysis of the political economy of conditionality in international organizations using the case of the world bank and the united states the analysis examines panel data on world bank disbursements to 97 countries receiving structural adjustment loans between 1984 and 2005 using un voting as an indicator of alignment with the u s the paper presents evidence that world bank structural adjustment loan disbursements are less dependent on macroeconomic performance in countries aligned with the united states

25 years of aid allocation practice whither selectivity the 4p framework poverty population policy and proximity is introduced as a way of understanding a donor s aid allocation we use the two part model and examine the period 1982 2006 the results indicate that recent conclusions of increasing selectivity are misplaced for the seven major donors analyzed who together represent the majority of development aid indeed the effect of each of the commonly mentioned time trends selectivity the end of the cold war and the commencement of the global war on terror is much smaller than the role of donor heterogeneity which appears sizeable and entrenched

a paradox of redistribution in international aid the determinants of poverty oriented development assistance summary donors differ in the amount of official development assistance dedicated to poverty reduction we investigate the causes of variation over time and donors by employing both a regression approach with aggregate data on bilateral aid and two short country studies on germany and the united kingdom we find that there is a trade off between the total amount of money given and the amount of money given to poor countries the trade off is similar to the paradox of redistribution of targeting vs redistribution in rich welfare states case study evidence illustrates how countries have managed this tradeoff

media freedom political knowledge and participation this paper examines the relationship between media freedom from government control and citizens political knowledge political participation and voter turnout to explore these connections i first examine media freedom and citizens political knowledge in thirteen central and eastern european countries with data from freedom house s freedom of the press report and the european commission s candidate countries eurobarometer survey next i consider media freedom and citizens political participation in 60 countries using data from the world values survey finally i investigate media freedom and voter turnout in these same 60 or so countries with data from the international institute for democracy and electoral assistance i find that where government owns a larger share of media outlets and infrastructure regulates the media industry more and does more to control the content of news citizens are more politically ignorant and apathetic where the media is less regulated and there is greater private ownership in the media industry citizens are more politically knowledgeable and active these results are robust to sample specification and alternative measures of media freedom

cross country evidence on determinants of fiscal policy effectiveness the role of trade and capital flows this article studies the determinants of size differentials between fiscal multipliers in countries around the world both advanced and developing economies we introduce variables not considered b

fiscal policy in good times and bad in the 1980s several countries with large government debt or deficit implemented substantial and in some cases drastic deficit cuts contrary to widespread expectations in many cases private consumption boomed rather than contracted this paper shows that in times of fiscal stress shocks to government revenues and especially expenditure have very different effects on private consumption than in normal times

institutional quality thresholds and the finance growth nexus using an innovative threshold estimation technique this study examines whether the growth effect of financial development in countries with distinct levels of institutional development differs the results demonstrate that there is a threshold effect in the finance growth relationship specifically we found that the impact of finance on growth is positive and significant only after a certain threshold level of institutional development has been attained until then the effect of finance on growth is nonexistent this finding suggests that the financial development growth nexus is contingent on the level of institutional quality thus supporting the idea that better finance i e financial markets embedded within a sound institutional framework is potent in delivering long run economic development

material accounting in a macroeconomic framework forecast of waste generated in manufacturing industries in norway this paper analyses the generation of waste inproduction processes using a technique based onthe physical law of conservation of mass according to this law mass going into aproduction process must equal the mass comingout of the same process the paper uses thismass balance perspective to refine a previouslydeveloped technique for forecasting wastequantities a macroeconomic model predicts theuse of intermediate inputs and production inmonetary units and by multiplying thesevariables with weight conversion factors weestimate physical amounts going into and out ofproduction the difference between input andoutput the residual consists of discharges toland water and air we predict a growth in theresiduals from manufacturing industries of 74 from 1993 to 2010 this growth is partly explained by an anticipated growth in material intensity

the worldwide governance indicators six one or none abstract aggregate indexes of the quality of governance covering large samples of countries have become popular in comparative political analysis few studies examine the validity or reliability of these indexes to partially fill this gap this study uses factor confirmatory factor and path analysis to test both measurement and causal models of the six worldwide governance indicators they purportedly measure distinct concepts of control of corruption rule of law government effectiveness rule quality political stability and voice and accountability rather than distinguishing among aspects of the quality of governance we find that they appear to be measuring the same broad concept

is trust the missing root of institutions education and development we report evidence that trust is the missing root relating education institutions and economic development we observe that more trust both increases education and improves legal and bureaucratic institutions which in turn spurs economic development we substantiate this intuition with a series of regressions that provide evidence that trust determines both education and the quality of institutions and that education and institutions in turn affect gdp per capita

global horse trading imf loans for votes in the united nations security council we investigate whether temporary members of the united nations security council receive favorable treatment from the international monetary fund imf using panel data for 197 countries over the period from 1951 to 2004 our results indicate a robust positive relationship between temporary security council membership and participation in imf programs even after accounting for economic political and country specific factors there is also evidence that security council membership reduces the number of conditions included in imf programs imf loans seem to be a mechanism by which the major shareholders of the fund can win favor with voting members of the security council

the effect of decentralized governance on timber extraction in european russia good governance is often promoted for economic growth but its impact on natural resource use in developing and transitional economies is not well understood for example many scholars promote improved governance as a means to slow resource use whereas others have found that better governance increases extractive resource activities in this paper we use within country variation in russia to test the impact of governance on timber harvesting using a reduced form fixed effects model and satellite based estimates of forest cover we find a statistically significant and non linear effect of governance on the area of timber harvested for a marginal improvement in governance timber harvesting increases but this effect decreases at high levels of governance these results are robust to alternative specifications and when instrumenting for economic growth governance could impact timber harvesting in russia through ownership risk i e tenure security through the costs of doing business i e bribes or both nonparametric regressions and qualitative evidence suggest that both factors are at play in russia this analysis provides additional evidence that improving governance may increase natural resource extraction this has important implications for policy prescriptions that suggest good governance will slow resource use in developing and transitional economies

a new approach to the allocation of aid among developing countries is the usa different from the rest summary this paper attempts to explain the factors that determine the geographical allocation of foreign aid its novelty is that it develops a rigorous theoretical model and conducts the corresponding empirical investigations based on a large panel dataset we run regressions for different major donors united states canada france italy japan united kingdom and multilateral organizations with the explicit objective of establishing whether the united states in light of its geopolitical hegemony behaves differently from others we find that all the donors respond to recipient need in their allocation of aid but that the united states puts less emphasis on this than the other donors with the exception of japan we also find that the united states puts more emphasis on donor recipient linkages than do the other donors suggesting that the united states attaches greater importance to issues of donor interest for example geopolitical commercial and other links with specific recipients

portfolio flows volatility and growth abstract we study the realized openness to portfolio flows of economically more developed and less developed countries as it affects future gdp growth outflows of a country s funds into u s securities are predictive of gdp growth suggesting that the benefits of openness outweigh local capital flight both inflows and outflows of funds via local equity securities are predictive of growth which is the evidence of the benefits of openness for less developed countries the effect of inflows is especially strong country specific volatility in flows does not detract from growth and volatility in world wide flows precedes growth overall the evidence is consistent with strong benefits of realized financial integration where the availability of u s markets for local portfolio investment along with equity investment from the outside enhances economic growth

politics and the effectiveness of foreign aid abstract critics of foreign aid programs have long argued that poverty reflects government failure in this paper i test predictions for aid effectiveness based on an analytical framework that relates aid effectiveness to political regimes i find that aid does not significantly increase investment nor benefit the poor as measured by improvements in human development indicators but it does increase the size of government the impact of aid does not vary according to whether recipient governments are liberal democratic or highly repressive but liberal political regimes and democracies ceteris paribus have on average 30 lower infant mortality than the least free regimes this may be due to greater empowerment of the poor under liberal regimes even though the political elite continues to receive the benefits of aid programs an implication is that short term aid targeted to support new liberal regimes may be a more successful means of reducing poverty than current programs

foreign aid responses to political liberalization this paper analyzes the impact of political liberalization on receipt of foreign aid it distinguishes different types of donors facing different constraints in rewarding democratization with foreign aid notably bilateral donors the world bank and the european commission based on a sample of 174 recipient countries from 1995 to 2009 the paper jointly examines short term dynamics and long term effects of sustained liberalization except for the world bank donors react to regime change bilateral donors are found to reward political liberalization in the second year after transition

do corrupt governments receive less foreign aid critics of foreign aid programs argue that these funds often support corrupt governments and inefficient bureaucracies supporters argue that foreign aid can be used to reward good governments this paper documents that there is no evidence that less corrupt governments receive more foreign aid on the contrary according to some measures of corruption more corrupt governments receive more aid also we could not find any evidence that an increase in foreign aid reduces corruption in summary the answer to the question posed in the title is no

more dollars than sense refining our knowledge of development finance using aiddata summary in this introductory essay to the special issue we introduce a new dataset of foreign assistance aiddata that covers more bilateral and multilateral donors and more types of aid than existing datasets while also improving project level information about the purposes and activities funded by aid we utilize that data to provide a brief overview of important trends in foreign aid contributors to this special issue draw on aiddata as well as other sources to analyze aid transparency new donors not previously described or analyzed aid allocation and aid effectiveness our recurring theme in this introductory essay is that aiddata and these initial academic projects refine rather than revolutionize our understanding of aid the database has added significant numbers of new projects dollar amounts donors and details about those projects though there is much more yet to add we worry that aid debates have been driven by too little information and that many claims are based on limited or very poor evidence rectifying these problems will not be instantaneous refining knowledge takes a lot of time and hard work the common feature of the papers in this special issue is their careful attention to nuance and detail in spite of what some recent authors have claimed aid is neither a simple solution nor a sufficient cause of most problems in developing countries its motivations distribution and effects are complex and shifting capturing this complexity requires detailed data careful thought and sophisticated methods that allow scholars to make conditional causal and descriptive inferences 2011 elsevier ltd all rights reserved

foreign aid and domestic politics voting in congress and the allocation of usaid contracts across congressional districts this paper investigates the relationship between congressional support for foreign aid and the distribution of united states agency for international development usaid contract spending across congressional districts within the united states the extent to which such a relationship matters has become increasingly important in recent years as the end of the cold war and the advent of the republican controlled congress have eroded the traditional base of support for foreign aid we develop a model to illustrate how the distribution of contract spending could be used to increase support for foreign aid but at the expense of development impact in effect trading quality for quantity data on domestic foreign aid contract spending and votes in the 104th congress house of representatives allow us to test whether the geographic distribution of usaid contract spending within the united states is consistent with a systematic attempt to build support for foreign aid in congress econometric results provide little evidence of such attempts apparently because voting on this issue is insensitive to the distribution of contract spending

the fungibility of u s military and non military assistance and the impacts on expenditures of major aid recipients abstract this paper examines the impact of u s military and non military assistance on the allocation of public and private sector spending for eight major recipients over the 1972 1987 period the model assumes that an aid recipient s effective post assistance budget constraint is a priori unknown and must be estimated two versions of the model are tested in version a the data is converted into real u s dollars using official exchange rates in version b the data is converted using purchasing power parity exchange rates provided by summers and heston 1991 major findings are the same for both versions u s aid is highly fungible with a significant portion channeled to the private sector where it finances current consumption relatively more than investment