scenario based forecast for the electricity demand in qatar and the role of energy efficiency improvements abstract we model the electricity consumption in the market segment that compose the qatari electricity market we link electricity consumption to gdp growth and population growth building on the estimated model we develop long range forecasts of electricity consumption from 2017 to 2030 over different scenarios for the economic drivers in addition we proxy for electricity efficiency improvements by reducing the long run elasticity of electricity consumption to gdp and population we show that electricity efficiency has a crucial role in controlling the future development of electricity consumption energy policies should consider this aspect and support both electricity efficiency improvement programs as well as a price reform

aid for the poorest some early lessons of uk experience the paper presents an interim review of recent attempts to reach the poorest people in developing countries through aid policy from the viewpoint of one donor the united kingdom it concludes that the uk has achieved a modest increase in the proportion of aid aimed at the poorest between 1974 and 1979 that poverty focused projects are in general more local cost intensive and have lower rates of return than others and that the principal difficulties in the way of successful implementation of poverty focused projects are excessive size an over rapid rate of disbursement inadequate local cost provisions and failure to specify the target group or the repayment strategy with sufficient precision it is argued that there are political obstacles to removing the second and third of these obstacles in donor countries and to removing the fourth in recipient countries also

do elites benefit from democracy and foreign aid in developing countries abstract a popular argument for the absence of any beneficial effects of foreign aid is that it is skimmed by political elites in recipient countries however studies also suggest that aid may be more effective in relatively democratic developing countries by exploring data on income quintiles derived from the world income inequality database for 88 developing countries a set of results indicate that foreign aid and democracy in conjunction are associated with a higher share of income held by the upper quintile it thus appears that foreign aid contrary to popular beliefs leads to a more skewed income distribution in democratic developing countries while the effects are negligible in autocratic countries the paper closes with a discussion of potential mechanisms generating this perverse effect

foreign aid and fiscal governance in melanesia summary recent research suggests that foreign aid is effective at spurring economic growth in recipient countries but its effectiveness is likely to depend upon a number of factors arguably the most important factor determining aid effectiveness is how recipient governments mediate foreign aid inflows this paper investigates this issue for the melanesian countries of fiji papua new guinea the solomon islands and vanuatu for the period 1989 2002 results suggest that foreign aid has led to increases in developmental expenditures and to falls in tax revenues and borrowing results also suggest a very different response to aid grants versus loans

the economics of development a survey i the subject our definition of the subject will be the use of economic analysis to understand the economies of poor or developing countries this includes in particular how standards of living in the population are determined and how they change over time and further how policy can or should be used in the influence of these processes the definition contains in principle much or most of analytical methods in economics insofar as they can be put to use in the examination of the issues of interest this is as it should be but it poses a problem for a survey in a journal a comprehensive treatment is infeasible so we shall follow a different route the survey will focus on what i take to be the major themes and approaches which characterise the productive aspects of the subject there is therefore no pretence at being exhaustive the purpose is rather to highlight some of the advances many of these have been of real substance there are a number of possible purposes for a survey and it is important to be clear at the outset for whom it is intended what it is and what it is not this survey is addressed to economists and students of economics who know the tools of their trade but not necessarily how they have been applied to and fashioned for the analysis of the economics of developing countries it is a description of the ways in which problems can be productively formulated and approached in terms of examples chosen for their intrinsic importance and interest the vastness of the subject means that we have to be highly selective it does not seek to provide a summary evaluation of the current view of the appropriate response to immediate policy questions it is not a history of thought nor a research manifesto nor an attempt to adjudicate or settle the major debates where they arise naturally from the major purpose some judgements on these subjects will be offered but they do not themselves constitute the primary intent of this survey there are three lines of enquiry or sets of questions which have i suggest been distinctive of the most fruitful work in development economics they will

effects of stabex on acps economic growth further evidence the paper deals with the economic growth of the open and small developing countries which signed the lome convention henceforth acps results showing that earnings instability damages their economic performance can be used to support the eu policy of guaranteeing financial aid to those countries suffering reductions in export proceeds the second section of the paper analysing the workings of stabex however highlights certain weaknesses in the effectiveness of stabex transfers when their impact on economic growth is considered the general conclusion is that if the current eu acp negotiations for lome v are to be successful then some aspects of the scheme eligibility criteria and use of funds will have to be radically changed

lowering saudi arabia s fuel consumption and energy system costs without increasing end consumer prices using a multi sector equilibrium model of the saudi energy system that handles administered prices in a mixed complementarity formulation we present results from a set of policy scenarios that lower oil consumption in the country some of these scenarios are the solutions to mathematical programs subject to equilibrium constraints mpecs that maximize the net economic gain for the saudi economy the policies examined have the potential to generate economic gains exceeding 23 billion usd in 2011 or about 4 of saudi arabia s gdp this economic gain comes mainly from inter sectoral fuel pricing policies that incent shifting the mix in technologies that generate electricity and produce water from energy intensive technologies to more efficient ones we show that when complemented by credits for investments in solar and nuclear power generation capacities a modest increase in the transfer prices of fuels among sectors is sufficient to produce economic gains close to those achieved by deregulating transfer prices the approach we develop here is an alternative to the classic recommendation of deregulating inter sectoral fuel prices in situations where the conditions for successful liberalized markets do not exist it is a template for introducing the notions of incentivizing behavior using prices into countries that rely more on administrative procedures than markets leading to a deeper understanding of how markets can lead to economic gain

introduction aid and development the debate on the impact of aid on the economies of developing countries is a rapidly evolving one early studies by e g papanek 1972 reported a positive impact of aid on growth within a multiple regression context this conclusion allowed policy makers to entertain the possibility that poverty across the world could be largely eradicated that countries could be moved out of poverty through the allocation of aid and that the following of successful policies would allow them to generate increased prosperity from their own resources unfortunately after some thirty years the poor are still with us poverty shows relatively little signs of disappearing and until recently enthusiasm for aid amongst donors had declined the papers in this symposium examine the effectiveness of aid in the past and its potential in the future a number of economic studies help explain this apparent failure mosley et al 1987 found it impossible to establish any significant relationship between aid and the growth rate of developing countries they suggested that this might be because of the possibility of leakages into non productive expenditure in the public sector and the transmission of negative price effects to the private sector they also argued for the targeting of aid i e its allocation to countries where it would be used most effectively boone 1996 concluded that aid does not significantly increase growth nor benefit the poor it did however increase the size of the government but again the message was not entirely negative in terms of what aid could achieve and argued for the targeting of aid this time at liberal democratic regimes as they appeared more effective in for example reducing infant mortality hence until recently the dominant view within economics had become pessimistic with respect to the past effectiveness of aid but somewhat optimistically perhaps held out the hope for improvement on the basis of aid targeting more recently however work by burnside and dollar 2000 was to put forward a more optimistic view of the former they concluded that aid had a positive impact on growth for developing countries with good fiscal monetary and trade policies in place but had little impact for those countries who were following poor policies this therefore partially at least provided an explanation of why aid had been found to have little positive impact on growth in previous empirical work it also provided specific criteria for targeting aid this was then built upon by collier and dollar 2001 2002 who calculated a poverty efficient allocation of aid which focused on those countries with a combination of most poverty and best policies they suggested that targeting of aid in this manner would almost double its effectiveness in reducing poverty this work has had an extraordinary impact upon policy and easterly 2003 as well as dalgaard hansen and tarp dht in this symposium document how it

foreign aid and economic growth an econometric study of bangladesh bangladesh is one of the poorest countries in the world since independence in 1971 bangladesh has received a large inflow of foreign capital from various countries for rapid economic progress bangladesh thus provides a test case for examining the effectiveness of foreign capital in promoting economic growth focussing on the supply side of the economy an econometric model is developed to quantify the effects of foreign aid and its various components on economic growth the model is tested using available time series data on bangladesh from 1972 to 1988 keeping data limitations measurement problems and other econometric problems in mind the empirical results indicate the domestic resources exert a stronger impact on growth than foreign resources foreign resources in its highly aggregative form do not show any significant contribution to growth however its decomposition into various components show that loans are more effective than grants and food aid is more effective than commodity or period

the within distribution business cycle dynamics of german firms in this article we analyse stylized facts for germany s business cycle at the firm level based on longitudinal firm level data from the bundesbank s balance sheet statistics covering on average 55 000 firms per year from 1971 to 1998 we estimate transition probabilities of a firm in a certain real sales growth regime switching to another regime in the next period e g whether a firm that has witnessed a high growth rate is likely to stay in a regime of high growth or is bound to switch to a regime of low growth in the subsequent period we find that these probabilities depend on the business cycle position

a panel data analysis of the fungibility of foreign aid the donor community has been increasingly concerned that development assistance intended for crucial social and economic sectors might be used directly or indirectly to fund unproductive military and other expenditures the link between foreign aid and public spending is not straightforward because some aid may be fungible this article empirically examines the impact of foreign aid on the recipient s public expenditures using cross country samples of annual observations for 1971 90 for the base sample of 14 developing countries it finds that aid is not fungible at the aggregate level and there is no associated tax relief increasing the number of countries however makes aid fungible moreover results based on the main sample indicate that aid is fungible in three out of five sectors examined developing country governments receiving earmarked concessionary loans for agriculture education and energy reduce their own resources going to these sectors and use them elsewhere only loans to the transport and communication sector are fully spent on the purposes intended by donors because most aid appears to be fungible the rate of return on a specific donor funded project tells little about the impact of that assistance a better approach may be to tie foreign aid to an overall public expenditure program that provides adequate resources to crucial sectors

the effects of health aid on child health promotion in developing countries cross country evidence although epidemiological knowledge in relation to child health has improved in the last few decades around 3 million children die each year in developing countries from preventable diseases the international development community views increased immunization coverage for children as an important step in eliminating or reducing these deaths many developing countries have very limited resources to tackle major health problems and have to rely on external finance this article examines the impact of foreign aid devoted to the health sector on child health promotion in developing countries two proxies for child health promotion are used a immunization against measles and b immunization against diphtheria pertussis tetanus dpt a range of model specifications and panel data econometric techniques are applied to data covering the period 1990 to 2005 this article finds a positive and statistically significant link between health aid and the measures of child health promotion

how relevant are specifications of behavioral relations on the micro level for modelling the time path of population aggregates abstract this paper shows that the specification of behavioural relations at the individual level does not play a dominant role in determining the sort of relation among aggregates discussed more important are certain invariant features of the distribution of household characteristics and attributes these invariants allow one to derive an aggregate consumption relation it is shown that some of the coefficients of a first order approximation of that relation describing the effect of changing income dispersion the effect of the growth of mean income and the effect of changes in the distribution of household attributes can be estimated from cross section data without any need to specify a model of micro behaviour

foreign aid taxes and public investment a further comment abstract the paper in this journal by gang and khan 1991 employed heller s 1975 fiscal response model to demonstrate that aid to india has all been used to finance government investment this conclusion is shown to be a misinterpretation of the model s results which actually suggest that aid has had no impact on government investment at all however the reported parameters are determined by the estimation procedure adopted by gang and khan and not by the indian government s fiscal behaviour

riskiness endogenous productivity dispersion and business cycles abstract in the data cross sectional productivity dispersion is countercyclical at both the plant level and the firm level see e g bloom 2009 i incorporate a firm s choice of risk level into a model of firm dynamics with real business cycle features to explain this empirical finding both qualitatively and quantitatively in the model in every period each firm chooses the investment amount and the risk level associated with a production project every period all projects available to each firm have the same expected flow return determined by the aggregate and idiosyncratic shocks to the firm s productivity and differ from one another only in their risk the endogenous option of exiting the market and the limited funding for new investment jointly play an important role in motivating firms risk taking behavior the model predicts that in each period relatively small firms are more likely to take risk and hence exhibit a higher exit rate and that the cross sectional productivity dispersion measured as the standard deviation of the realized individual component of productivity is larger in recessions

foreign aid and economic growth in cameroon cameroon is classified as a lower middle income country since it became a unified and independent country in 1961 cameroon has received significant amounts of foreign aid most of it from france and the european economic community since the 1960s economic growth in the country has been quite significant between 1965 and 1980 the gross domestic product grew at an average annual rate of 5 1 and at a rate of 2 3 between 1980 and 1990 cameroon seems a good test case for determining the effects of foreign aid on economic growth in developing countries an econometric model based on the neoclassical production function is developed and used to test the relationship between foreign aid and eonomic growth the model is tested using time series datd on the country from 1971 to 1990 the results show that domestic resources have a stronger impact on economic growth in cameroon than foreign resources these results however must be taken with the understanding that the data suffer from measurement probl

the relationship between firm growth size and age estimates for 100 manufacturing industries this study uses a sample of all firms operating in 100 manufacturing industries to examine some aspects of firm dynamics it finds that firm growth the variability of firm growth and the probability that a firm will fail decrease with firm age it also finds that firm growth decreases at a diminishing rate with firm size even after controlling for the exit of slow growing firms from the sample gibrat s law therefore fails although the severity of the failure decreases with firm size copyright 1987 by blackwell publishing ltd

macroeconomic pathways of the saudi economy the challenge of global mitigation action versus the opportunity of national energy reforms abstract we analyse the mid term macroeconomic challenge to saudi arabia of a global low carbon transition reducing oil revenues versus the opportunity of national energy reforms we calibrate a compact dynamic recursive model of saudi arabia on original energy economy data to explore scenarios we first assess the consequences of oil prices declining from their levels in the new policies scenario nps of the iea to their levels in its sustainable development scenario sds by 2030 the saudi economy loses 1 4 gdp points 1 6 employment points and usd 504 billion trade surplus accumulation its cumulated public deficit rises to 92 8 of gdp national reforms gradually aligning saudi energy prices on international prices and inducing structural change of saudi activity away from energy intensive industries mitigate these costs if a share of the public income from energy price deregulation is directed to investment however they reduce the cumulated trade surplus and fail to control public deficit accumulation sensitivity analysis confirms the capacity of national energy reforms to mitigate the activity cost of global mitigation action but aggravates the threat of an escalating public deficit these results underline the importance of broader economic and fiscal reforms as part of the ambitious vision 2030 saudi initiative

age size growth and survival uk companies in the 1980s this paper examines growth and survival amongst quoted and unquoted u k companies in the period 1975 85 and compares the results with earlier u k and u s studies an examination of death rates shows that smaller companies had higher death rates but the largest and smallest companies were least vulnerable to takeover careful attention is therefore paid to problems of sample selection bias it is shown that smaller companies grew faster than larger companies that gibrat s law does not hold amongst smaller firms that age is negatively related to growth and that these results are not an artifact of sample selection bias copyright 1994 by blackwell publishing ltd

does foreign aid promote the expansion of government building on the literature on public finance i seek to advance our understanding of variations in government size by exploring the impact of official development assistance on fiscal policy i hypothesize that foreign aid operates in accordance with the flypaper effect systematically generating incentives and opportunities for the expansion of government spending results from a time series cross sectional regression analysis of growth in government spending over the 1970 99 time period are consistent with the hypothesis for middle and lower income nations aid represents an important determinant of government expansion looking at the tax and revenue side of the equation however reveals a more perverse pattern of response aid promotes not only increased spending but also reduced revenue generation the results have important implications from both a theoretical and policy perspective inter alia they point to the potentially self defeating nature of efforts to promote market oriented programs of state retrenchment via development assistance as well as to the importance of incorporating international transfers into future research on government spending

fiscal composition and aid effectiveness a political economy model summary in the long run tax effort we argue determines the effectiveness of aid and this relationship operates simultaneously with the negative link in the opposite direction observed by brautigam and knack 2004 and others tax effort and the ability of the state to diversify its taxation structure we find are significantly linked to growth and poverty indicators the key message for policy is that a broadening of the tax structure in low income countries is crucial in order to enable those countries to escape from the weak state low tax trap and to make aid effective

corporate growth and profitability this paper argues that current period corporate growth rates reflect changes in current expectations about the long run profitability of a firm this means that growth rates are likely to vary randomly over time using data from 271 large quoted uk firms over the period 1976 1982 we report the existence of a positive statistically significant and robust correlation between current period growth rates and a natural measure of changes in current expectations about long run profitability namely changes in the stock market valuation of the firm nevertheless we find that variations in corporate growth rates are difficult to predict

the cross sectional dynamics of the us business cycle 1950 1999 abstract modern interest in business cycles has focussed on the co movements and correlations in the major macroeconomic aggregates in this paper we offer another dimension to business cycle analysis which looks at the time series of cross sectional distributions of the growth rates of sales by us quoted companies from 1950 to 1999 we detect correlations between aggregate business cycle fluctuations and the higher moments of the cross sectional distribution we find a significant negative correlation between the rate of growth of gdp and the cross sectional variance and skewness of growth rates of sales on the other hand there is positive correlation at business cycle frequencies with kurtosis in order to explore this further we turn to the dynamic evolution of firms and analyse the sensitivity of growth rates to aggregate shocks conditioning on firm size the results suggest that despite considerable heterogeneity macroeconomic shocks have pervasive effects that are however more pronounced for firms in the middle range of growth this has implications for both macro and industrial economics

aid growth nexus empirical evidence from fiji foreign aid to the island economies is a major source for foreign exchange and resource needs this paper presents an empirical analysis of the relationship between foreign aid and economic growth in the case of fiji a neoclassical production function is applied to estimate the aid growth nexus since the data employed are time series for the period 1968 to 1996 the autoregressive distributed lag approach to cointegration is utilized to estimate the models components of total aid such as grant aid loan aid technical cooperation bilateral and multilateral aid flows are also utilized to estimate a disaggregated short run and long run relationship between foreign aid and economic growth the results show that total aid flows and its various forms i e bilateral aid grant aid and technical cooperation grant aid has a significant impact on economic growth in fiji as for domestic resources only exports and private investments in two equations show positive contribution to growth

impacts of official development assistance on agricultural growth savings and agricultural imports abstract this paper explores the links between development assistance agricultural output growth and imports in 56 developing economies over the period 1974 1990 the empirical model treats agricultural growth and imports savings and aid as endogenous the analysis also accounts for differences in macroeconomic policies the results show that aid had a positive impact on agricultural growth a robust relationship exits between aid and agricultural imports consistent with the argument that aid helps industrialized countries through market expansion and strengthened trade ties

does foreign aid distort incentives and hurt growth theory and evidence from 75 aid recipient countries foreign aid transfers can distort individual incentives and hence hurt growth by encouraging rent seeking as opposed to productive activities we construct a model of a growing small open economy that distinguishes two effects from foreign transfers i a direct positive effect as higher transfers allow the financing of infrastructure ii an indirect negative effect as higher transfers induce rent seeking competition by self interested individuals in this framework the growth impact of aid is examined jointly with the determination of rent seeking behavior we test the main predictions of the model for a cross section of 75 aid recipient countries there is evidence that aid has a direct positive effect on growth which is however significantly mitigated by the adverse indirect effects of associated rent seeking activities this is especially the case in recipient countries with relatively large public sectors

funding self sustaining development the role of aid fdi and government in economic success this article challenges a long held development policy assumption that aid and foreign direct investment fdi serve as substitutes or complements in accelerating the development of the world s poorer countries we show both theoretically and empirically that aid and fdi affect development differently aid contributes powerfully to both economic growth and human development and the higher the level of human capital in a country the more aid contributes by contrast fdi at best has no effect on economic growth and actually slows the rate of human development in less developed countries we find no evidence that the degree of democratic responsiveness in government conditions the effectiveness of either aid or fdi although we do find that democracy independently increases human development in all but the most developed countries our results demonstrate that fdi and aid are not and cannot be substitutes in the development of the world s poorer countries nor even can they be thought of as complements certainly not at mid to low levels of development in the end poor countries need democracy and aid not fdi we are extremely grateful to susan rose ackerman gustav ranis frances rosenbluth kenneth scheve and participants at the leitner political economy seminar at yale university in december 2003 for very helpful comments we also received valuable suggestions from two anonymous reviewers stephen kosack would like to thank the national science foundation for the support of a graduate research fellowship

gibrat s law and quantile regressions an application to firm growth abstract the nexus between firm growth size and age in u s manufacturing is examined through the lens of quantile regression models this methodology allows us to overcome serious shortcomings entailed by linear regression models employed by much of the existing literature unveiling a number of important properties size pushes both low and high performing firms towards the median rate of growth while age is never advantageous and more so as firms are relatively small and grow faster these findings support theoretical generalizations of gibrat s law that allow size to affect the variance of the growth process but not its mean cordoba 2008

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

aid poverty reduction and the new conditionality the paper examines the effect of aid on poverty rather than on economic growth we devise a pro poor public expenditure index and present evidence that together with inequality and corruption this is a key determinant of the aid s poverty leverage after presenting empirical evidence which suggests a positive leverage of aid donors on pro poor expenditure we argue for the development of conditionality in a new form which gives greater flexibility to donors in punishing slippage on previous commitments and keys aid disbursements to performance in respect of policy variables which governments can influence in a pro poor direction

aid policies and growth the authors of this paper use a new database on foreign aid to examine the relationships among foreign aid economic policies and growth of per capita gdp in panel growth regressions for 56 developing countries and 6 four year periods 1970 93 they find that the policies that have a great effect on growth are those related to fiscal surplus inflation and trade openness they construct an index for those three policies and have that index interact with foreign aid they have instruments for both aid and aid interacting with policies they find that aid has a positive impact on growth in developing countries with good fiscal monetary and trade policies in the presence of poor policies aid has no positive effect on growth this result is robust in a variety of specifications which include or exclude middle income countries include or exclude outliers and treat policies as exogenous or endogenous they examine the determinants of policy and find no evidence that aid has systematically affected policies either for good or for ill they estimate an aid allocation equation and show that any tendency for aid to reward good policies has been overwhelmed by donors pursuit of their own strategic interests in a counterfactual they reallocate aid reduce the role of donor interests and increasing the importance of policy such a reallocation would have a large positive effect on developing countries growth rates

the effectiveness of aid on savings and investment in sub saharan africa do volatility and institutional quality matter abstractthe effectiveness of aid is somewhat subject to its volatility this study investigates the impact of aid volatility especially on savings and investment with a particular focus on the role of institutional quality in 45 sub saharan african ssa countries over the period from 1990 to 2013 we used the generalized method of moments gmm technique combined with a measure of volatility namely an averaged data method involving six 4 year sub periods our results suggest that while aid is positively associated with savings and investment its volatility is harmful to savings and investment however when higher quality institutions exist the volatility of aid has a less negative impact on savings and investment the policy implications are diverse first donors and ssa aid dependent countries need to take into account the diversity of shocks to which aid can respond in mitigating its unpredictability secondly ssa countries should be encouraged to establish the conditions for better quality inst

aid the public sector and the market in less developed countries a reply the article in this journal by mosley et al i987 concludes its analysis of aid effectiveness as demonstrating inability of development aid over more than twenty years to provide a net increment to overall growth in the third world p 636 this note purports to show that this conclusion which is ostensibly distressing as the authors claim is not warranted the section of the study which is the basis of the conclusion cited and the subject of this note is a cross section regression analysis full details of which are shown in mosley et al table 3 the note is concerned with the relation between the dependent variable specified as the growth rate of real gdp per cent per annum hereafter gdp and aid specified as a percentage of gdp hereafter aid the aid results with only two significant positive coefficients in one subsample certainly give no basis for claiming aid effectiveness in terms of gdp growth the intention in this note is to interpret the results which are assumed to be valid this is made possible by the fact that the authors have helpfully provided the full input set of mean values derived from the raw data from this it is possible to calculate the gdp aid relationship for each country for the second and third period the procedure for deriving these relationships is as follows for each country the mean values of the time series of gdp and aid are extracted from the data for i 960 70 and for i 970 80 using i 960 70 as the base the signs of the change in the levels of the gdp and aid mean values between periods are recorded this is repeated for i980 4 with i970 80 mean values as the base the relationship between the two signs is an indication of the effect of aid on gdp in the period in which the change in levels is effected thus in the case of an increase in aid being combined with a decrease in gdp the latter must have fallen relatively to the former and aid effectiveness is negative mutatis mutandis for the other three sign combinations thus generating the appropriate gdp aid relationship for each country in each period a frequency distribution of the four sign combinations relating to the full sample is presented in table i since the signs of the changes in the levels of gdp and aid are derived by making explicit the arithmetic relationship implicit in the data they form a valid base from which to draw conclusions without requiring any test of

jointly reforming the prices of industrial fuels and residential electricity in saudi arabia abstract the saudi electricity sector currently buys fuel and sells electricity at prices administered by the government in this analysis we illustratively explore combining the reform of the fuel prices used in power plants with the implementation of alternative electricity pricing schemes for the households compared to the scenario replicating the year 2015 we find the aggregate gain to the energy system could reach nearly 12 billion per year by raising both electricity prices to households and industrial fuels to reflect the cost of supply or international markets households would pay an additional 3 billion in electricity costs without any mitigation for the low income households however lifeline prices would halve this burden while maintaining greater gains than deregulating fuel prices alone the average electricity price paid under the lifeline scenario would be a more manageable 4 0 cents kwh versus an average marginal cost price of 7 1 cents kwh in the alternative electricity pricing scenarios we study natural gas usage by the power utilities falls allowing gas to flow to other industries which would consume it to reduce their costs we find the marginal values of natural gas falling at higher electricity prices indicating that the supply of gas is becoming less constraining

growth acquisition activity and firm size evidence from the united kingdom this paper provides new empirical evidence on the relationship between size growth and acquisition activity of quoted companies in the united kingdom the evidence is based on some two thousand companies and covers the period i960 76 there has been no detailed systematic study for this period the results suggest some revisions to generally accepted views in the area and they have certain implications for industrial and competition policy pursued in the u k and the factors affecting aggregate concentration the paper is arranged as follows section i considers the broader economic context for the study whilst section ii notes some a priori expectations regarding the relationship between size and growth and size and acquisition activity sections iii v present empirical evidence and the last section provides a summary and policy implications of the results

energy price reform in saudi arabia modeling the economic and environmental impacts and understanding the demand response abstract saudi arabia has regulated domestic energy prices for decades setting them below international market levels energy subsidies in saudi arabia are generally implicit because they lead to foregone revenues for the government low energy prices also encourage rapid energy demand growth and wasteful consumption while limiting incentives to invest in energy efficiency saudi arabia recently started to reform energy prices leading to large increases in gasoline and residential electricity prices in 2018 to measure the economic and environmental impacts of energy price reform we econometrically model gasoline and residential electricity demand using harvey s 1990 structural time series model our estimated equations reveal that gasoline demand and residential electricity demand in saudi arabia are strongly price and income inelastic despite the major reforms that were recently implemented our welfare analysis also shows that the energy price reforms in 2018 in gasoline and residential electricity respectively delivered welfare gains of 8 8 and 3 8 billion sar annually 2 3 and 1 0 billion us additionally our decomposition analysis reveals that these energy price reforms were the largest contributors to the observed decreases in gasoline and residential electricity consumption in 2018

german aid and trade versus namibian gdp and labour productivity this paper examines the effects of german foreign aid to and net trade with namibia on namibia s recent 1985 95 economic performance the analysis suggests significant benefits for namibia from trade with and assistance from germany however domestic capital is found to determine namibian economic growth more than net trade with germany and german foreign aid to namibia while the effect of german capital tends be larger than that of german aid a need for direct foreign investment from germany to namibia is inferred two types of further investigations are required a joint determination of economic growth aid trade and capital formation and a disaggregation of german aid to namibia with an analysis of its individual impacts compared with similar effects of aid from other donors

aid nontraded goods and the transfer paradox in small countries this paper constructs a model of the transfer paradox for a small open economy with nontraded goods it demonstrates that increased production of nontraded goods can change their domestic price so as to offset the otherwise beneficial effect of aid and under certain conditions to create a transfer paradox even in a small country the model is estimated with time series data for 44 aid dependent countries for the period 1970 90 the results support the model and show that the nontraded goods expansion effect is more likely to cause immiserization than harry g johnson s 1967 tariff distorting export displacement effect

foreign aid and the question of fungibility this paper analyzes whether the foreign assistance provided for specific categories of expenditure is shifted among them contrary to the wishes of donors it also considers whether aid reduces the tax effort of recipient governments econometric results are presented for the dominican republic that show that the fungibility of aid has resulted in a thwarting of the intentions of donors an attempt is made to account for the observed differences in behavior of individual countries in altering expenditures copyright 1993 by mit press

effective aid how democracy allows development aid to improve the quality of life abstract research into foreign aid has mostly focused on its ability to affect economic i e gdp per capita growth conclusions have been mixed i consider aid s effectiveness differently by its ability to improve quality of life i find that though aid does not affect quality of life in the aggregate it is effective when combined with democracy and ineffective and possibly harmful in autocracies the results suggest that aid would be more effective if it were combined with efforts to encourage democratization

a fallacy of composition the representative agent framework has endowed macroeconomists with powerful microeconomic tools unfortunately it has also blurred the distinction between statements that are valid at the individual level and those that apply to the aggregate in this paper the author argues that probability theory puts strong restrictions on the joint behavior of a large number of units that are less than fully synchronized many fallacies arise from disregarding these restrictions for example asymmetric factor adjustment costs at the firm level need not imply asymmetric responses of aggregate employment flows to positive and negative shocks copyright 1992 by american economic association

the business cycle macroeconomic shocks and the cross section the growth of uk quoted companies we bring to light a significant aspect of firm level heterogeneity over the business cycle analysing the responsiveness of firm growth quoted uk companies to aggregate shocks we find that the effects of aggregate shocks are more pronounced for firms in the middle range of growth rapidly growing and rapidly declining firms are less sensitive to aggregate shocks than firms in the interior of the growth range this is consistent with the fact that the higher moments of the distribution of firm growth rates have significant cyclical patterns these findings throw new light on growth of firms as well as on business cycle dynamics

microeconomic adjustment hazards and aggregate dynamics the basic premise of this paper is that understanding aggregate dynamics requires considering that agents are heterogeneous and that they do not adjust continuously to the shocks they perceive we provide a general characterization of lumpy behavior at the microeconomic level in terms of an adjustment hazard function which relates the probability that a unit adjusts to the deviation of its state variable from its moving target we characterize rich cross sectionally dependent aggregate dynamics generated by nonconstant hazards we present an example based on u s manufacturing employment and job flows and find that increasinghazard models outperform constant hazard partial adjustment models in describing aggregate employment dynamics

surprise surprise measuring firm level investment innovations abstract using the ifo investment survey for the german manufacturing sector we construct a forty year panel of firm level investment innovations surprises we document the cross sectional and time series properties of this panel and our main findings are the cross sectional dispersion of investment surprises is countercyclical as is their average within firm time series volatility and both are highly correlated this justifies in part strategies in the literature to use cross sectional moments for the calibration of heteroscedasticity at the same time the cross sectional dispersion of investment is procyclical suggesting a nonsmooth capital adjustment friction at the micro level there is substantial dispersion in within firm volatility a feature consistent with a recent literature on information frictions at the firm level finally the aforementioned second moments of investment innovations are granger caused by recessions but not vice versa rendering simple exogenous uncertainty shocks less plausible as drivers of business cycles

production inflexibilities and the cost channel of monetary policy this article shows how the existence of production inflexibilities in the form of capacity utilization constraints conditions the magnitude of the response of macroeconomic variables to a money supply stimulus capacity is modeled under explicit microfoundations where the existence of idiosyncratic demand uncertainty generates variable utilization rates across firms in this context money has real effects due to non fisherian effects stemming from limitations in households access to the financial market firms capacity constraints generate a convex aggregate supply curve which is a feature of the economy that has important implications for the conduct of monetary policy

economic growth export and external debt causality the case of african countries empirical investigation of the export driven economic growth hypothesis has provided mixed results in a bivariate causality framework the problem with such bivariate causality analysis is that there can be an omitted variable which could adversely affect the results this paper looks at the trivariate causality analysis of african countries by introducing external deby servicing as a third variable in the export economic growth analysis the results indicate that there is a feedback or bidirectional causality between external debt servicing economic growth and exports evidence of the 1983 90 subperiod is consistent with the argument that the structural adjustment programmes which were designed to remove economic distortions promote exports and encourage external debt management increased growth in the countries involved

firm size and firm growth rate distributions the case of denmark there has been a recent renewed interest in the study of firm size distributions and firm growth rate distributions gibrat s law assumes firm growth rates are independent and identically distributed and that size is determined by a firstorder integrated process leaving the size distribution log normal this article analyzes these distribution patterns in an empirical context questioning the foundation of this model in a cross section analysis of four industries using danish data we show that the foundation and the outcome of gibrat s law are empirically far fetched in particular significant deviations from normality are found

aid policies and growth comment in an extraordinarily influential paper craig burnside and david dollar 2000 p 847 find that aid has a positive impact on growth in developing countries with good fiscal monetary and trade policies but has little effect in the presence of poor policies this finding has enormous policy implications the burnside and dollar 2000 henceforth bd result provides a role and strategy for foreign aid if aid stimulates growth only in countries with good policies this suggests that 1 aid can promote economic growth and 2 it is crucial that foreign aid be distributed selectively to countries that have adopted sound policies international aid agencies public policy makers and the press quickly recognized the importance of the bd findings this paper reassesses the links between aid policy and growth using more data the bd data end in 1993 we reconstruct the bd database from original sources and thus 1 add additional countries and observations to the bd data set because new information has become available since they conducted their analyses and 2 extend the data through 1997 thus using the bd methodology we reexamine whether aid influences growth in the presence of good policies given our focus on retesting bd we do not summarize the vast pre bd literature on aid and growth we just note that there was a long and inconclusive literature that was hampered by limited data availability debates about the mechanisms through which aid would affect growth and disagreements over econometric specification see gustav f papanek 1972 robert cassen 1986 paul mosley et al 1987 peter boone 1994 1996 and henrik hansen and finn tarp s 2000 review since bd found that aid boosts growth in good policy environments there have been a number of other papers reacting to their results including paul collier and jan dehn 2001 carljohan dalgaard and hansen 2001 patrick guillaumont and lisa chauvet 2001 hansen and tarp 2001 robert lensink and howard white 2001 and collier and dollar 2002 these papers conduct useful variations and extensions some of which had already figured in the pre bd literature such as introducing additional control variables using nonlinear specifications etc some of these papers confirm the message that aid only works in a good policy environment while others drive out the aid policy interaction term with other variables this literature has the usual limitations of choosing a specification without clear guidance from theory which often means there are more plausible specifications than there are data points in the sample we differentiate our paper from these others by not deviating from the bd specification thus we do not test the robustness of the results to an unlimited number of variations but instead maintain the bd methodology this paper conducts a very simple robustness check by adding new data that were unavailable to bd thus we expand the sample used over their time period and extend the data from 1993 to 1997 easterly department of economics new york university 269 mercer street new york ny 10003 center for global development and national bureau of economic research e mail william easterly nyu edu levine department of finance carlson school of management university of minnesota 321 19th avenue south minneapolis mn 55455 and national bureau of economic research e mail rlevine csom umn edu roodman center for global development 1776 massachusetts avenue nw washington dc 20036 e mail droodman cgdev org we are grateful to craig burnside for supplying data and assisting in the reconstruction of previous results without holding him responsible in any way for the work in this paper thanks also to francis ng and prarthna dayal for generous assistance with updating the sachs warner openness variable and to three anonymous referees craig burnside and henrik hansen for helpful comments 1 see for instance the world bank 1994 2001 2002 the u k department for international development 2000 president george w bush s speech march 16 2002 the announcement by the white house on creating the millennium challenge corporation white house 2002 as well as a washington post editorial february 9 2002 a financial times column by alan beattie march 11 2002 and the economist march 16 2002

growth in africa does the source of investment financing matter this paper examines empirical evidence for 11 sub saharan african countries on the relationship between economic growth and three principal sources of investment funds foreign aid foreign direct investment and domestic saving in light of the shortcomings of traditional cross section analyses the time series approach is used instead modern time series methods are rigorously applied beginning with unit root tests and followed by model specifications that reflect the revealed temporal behaviours of the variables in each of the 11 countries domestic saving seems to play a somewhat more important role in generating economic growth than foreign direct investment or foreign aid however the mixture of results across the 11 countries implies that in general it is not possible to rank one source of investment financing ahead of any other

computing market equilibria with price regulations using mathematical programming one approach to modeling and solving for economic equilibria relies on mathematical programming these models solve for competitive equilibria however policy analysis often requires measuring the impacts of government price regulations that differ from the competitive equilibrium in this paper we provide a unified framework for computing market equilibrium in mathematical programming models in the presence of government price regulations the iterative procedure that we use is essentially a gauss seidel algorithmic strategy the paper concludes by showing how to represent tax rebate programs average cost pricing and price ceilings

employment and smes during crises the persistent increasing duration of unemployment has become an issue during economic crises although lay offs at large firms normally make headlines during crises we still know little about the potential impact of firm size on adjustment behavior in a crisis we studied effects of firm size on employment growth during economic slowdowns using a rich microeconomic database for the 1988 2007 period in portuguese manufacturing industry the results show that economic downturns affect firm growth negatively this negative effect is found to be higher for larger firms both during and immediately following crisis periods small and medium sized enterprises smes emerge as potential stabilizers in downturn periods however larger firms seem to be able to quickly recover from downturn periods our results contribute to the scarce literature and to the understanding of the portuguese case where many smes secure most jobs these first results may be useful because smes play a determinant role in other european union economies

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

the impact of foreign aid on economic growth in papua new guinea this article investigates the impact of foreign aid on economic growth in papua new guinea png using time series data for the period 1965 to 1999 following the most recent literature the article examines whether aid effectiveness is conditional on levels of economic policy and governance an empirical model is estimated using the autoregressive distributed lag ardl approach to cointegration proposed by pesaran and shin 1995 results provide little evidence that aid and its various components have contributed to economic growth in png there is some evidence that aid is more effective during periods when the country has undertaken a world bank structural adjustment program sap an alternative interpretation is that a sap may be more effective at spurring growth when supported by foreign aid

is foreign aid fungible the case of indonesia this paper considers whether foreign aid given for specific categories of expenditure is fungible among them and whether aid reduces tax effort by the recipient government models developed to analyze the fiscal relations among different levels of government in the united states are applied to analysis of the impact of foreign aid econometric analysis of data for indonesia reveals that aid is largely spent as the donors intended that aid does not lead to a reduction in tax effort and that aid is not diverted to nondevelopment current expenditures copyright 1990 by royal economic society

cyclical changes in firm volatility we estimate changes in the volatility of firm level sales earnings and employment growth of us firms our method differs from existing measures for firm level sales and employment volatility in that it not only captures longer run changes in volatility but also measures cyclical changes in firm volatility we detect substantial cyclical variation in firm specific volatility around trend firm specific volatility was low in the early 1990s rose in the mid and late 1990s and was high around 2000 our results are consistent with the hypothesis deduced from models with financial frictions that rising idiosyncratic volatility before 2001 contributed to the coincident rise in the external finance premium and to the 2001 recession endogenous pricing models imply that price adjustment is less frequent and disinflation more costly when firm specific volatility is low consistent with endogenous pricing models we find that the output cost of disinflation was three times larger in the early 1990s than in the early 2000s

aid growth and devolution summary this paper examines whether the degree of fiscal decentralization in aid receiving countries matters in explaining aid effectiveness the decentralization theorem predicts that the devolution of powers should increase aid effectiveness since local decision makers are better informed about local needs thereby decentralization may also have reverse effects e g through coordination problems excessive regulation administrative costs and local capture we use panel data for up to 60 countries and find that aid contributes to economic growth in centralized developing economies whereas it is less effective or even harmful in decentralized countries the cases of indonesia the philippines and uganda support our findings our results imply that donor countries should carefully consider how the two development instruments foreign aid and decentralization interact

aid and growth regressions this paper examines the relationship between foreign aid and growth in real gdp per capita as it emerges from simple augmentations of popular cross country growth specifications it is shown that aid in all likelihood increases the growth rate and this result is not conditional on good policy there are however decreasing returns to aid and the estimated effectiveness of aid is highly sensitive to the choice of estimator and the set of control variables when investment and human capital are controlled for no positive effect of aid is found yet aid continues to impact on growth via investment we conclude by stressing the need for more theoretical work before this kind of cross country regressions are used for policy purposes

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

efficient industrial energy use the first step in transitioning saudi arabia s energy mix abstract in saudi arabia industrial fuel prices are administered below international prices and firms make decisions based on low energy prices increasing domestic energy demand this analysis explores alternative policies designed to induce a transition to a more efficient energy system by immediately deregulating industrial fuel prices gradually deregulating fuel prices and introducing investment credits or feed in tariffs it uses a dynamic multi sector mixed complementarity model continuing existing policies results in a power system still fueled completely by hydrocarbons the alternative policies result in a transition to a more efficient energy system where nuclear and renewable technologies become cost effective and produce 70 of the electricity in 2032 introducing the alternative policies can reduce the consumption of oil and natural gas by up to 2 million barrels of oil equivalent per day in 2032 with cumulative savings between 6 3 and 9 6 billion barrels of oil equivalent the energy system sees a net economic gain up to half a trillion 2014 usd from increased oil exports even with investments in nuclear and renewables the results are robust to alternative assumptions regarding the value of oil saved and the growth in end use energy demand