the basic macro economics of oil economies focussing on the rentier aspects of an oil economy where the rent accrues in foreign exchange this paper constructs a simple keynesian model of a typical oil economy increases in oil financed government expenditures in the short run are shown to raise the general price level and the relative price of non tradables sustained increases in oil financed government expenditures are shown to result in an economy whose structure resembles that of the present day oil economies

a feasible reform for the electricity supply industry in hong kong with the current scheme of control regulation for the hong kong electricity supply industry expiring in 2008 the government has sent out a consultation paper seeking views from the general public on its reform and possible future development this paper investigates the characteristics of the current agreement and the rationale for feasible reform of the hong kong esi it leads to a discussion on a proposed feasible reform using performance based regulation approach modeling and the associated implementation issues related to price capping risk analysis performance indices quality monitoring and governance

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

absorbing a windfall of foreign exchange dutch disease dynamics abstract the permanent income rule is seldom the optimal response to a windfall of foreign exchange such as that from a resource discovery absorptive capacity constraints require domestic investment and investment in structures requires non traded inputs the supply of which is constrained by the initial capital stock this particularly when combined with intra sectoral capital immobility delays adjustment and creates short run dutch disease symptoms as the real exchange rate sharply appreciates and overshoots its long run value optimal revenue management requires investing in the domestic non traded goods sector and a slow build up of consumption accumulation of foreign assets adjusts to accommodate the time paths of domestic consumption and investment

traditional production communal land tenure and policies for environmental preservation in the south pacific abstract instead of maximizing the expected monetary return of land usage pacific islanders manage land so that it renders an optimal mix of cash income and non monetary cultural goods evidence from cropping patterns in fiji suggests that the production of these cultural goods is linked to traditional agriculture which produces less ecological deterioration than its commercial counterpart the capacity for village land to support traditional activities is highest under a regime of communal land tenure where decision making is centralized a regime of private land tenure lowers this capacity because decentralized decision making raises the coordination costs of preserving special areas of land for traditional purposes this means that if development planners rush to replace traditional regimes of communal land tenure with modern systems of private land ownership they might also observe a correlated increase in land degradation even if new codes of private property are perfectly enforceable a two sector growth model can be used to show that the welfare neutral bribe required from the government to increase the amount of village land preserved in the steady state is lower under a regime of communal land tenure one counterintuitive result is that a high subjective discount rate does not always imply a high level of environmental degradation observations from the south pacific have application for environmental policy in other developing countries

sustaining china s electricity market development abstract china s 12th five year plan addresses new challenges and sets new goals in the country s power sector the structure of power generation development is to be optimised to properly balance coal transportation and power transmission the controversy over the direction of grid transmission and distribution is also to be reconciled the plan puts forward specific requirements for energy conservation developing clean energy optimising the production of coal fired electricity rationalising the allocation of peak power developing distributed energy and constructing a strong smart grid it also strongly advocates renewable and other forms of clean energy resources considering all the above goals and requirements it is necessary for china to adjust its blueprint for electricity market development by fine tuning the original market oriented reform momentum this paper aims to design a policy framework for this and discusses how china should develop policies and strategies to meet these requirements and achieve these goals examples of compatible international experiences illustrate how china can secure a sustainable energy future

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

post disaster informal risk sharing against illness summary using original household survey data collected in rural fiji this paper demonstrates how informal risk sharing institutions upon which poor people heavily rely in times of illness are vulnerable to natural disasters household private cash and inkind transfers do not serve as insurance against illness in the relief phase they do so only after pooled resources are recovered in the reconstruction phase i e resource effect risk sharing arrangements are dependent on the history of labor time transfers corresponding to housing damage i e reciprocity effect only disaster non victims are insured against illness because victims have already received labor help for their rehabilitation from non victims

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

reform of china s electric power industry challenges facing the government abstract china s electrical power industry requires substantial reform if the country s economic growth is to be sustained the 1997 electricity law the creation of a state power company and the abolition of the ministry of electric power are important first steps on the path of reform but it seems that a clear plan is lacking objectives of the reform should include increasing the capacity to deliver power constraining the costs of the power industry increasing end user efficiency and minimising environmental damage efforts should be directed at restructuring the industry in such a way that fair competition may be introduced at least in power generation and at establishing a viable regulatory agency both tasks have the potential to be thwarted by a range of vested interests at different levels of government and industry

the dutch disease a disease after all many third world oil producers are encountering serious problems in building up a diversified export base while west european oil and gas producers netherlands united kingdom are suffering a decline in their traded goods manufacturing sector induced by real wage pressures it is becoming increasingly clear that high but temporary oil revenues may be somewhat ora mixed blessing the quip of the economist notwithstanding the mechanism behind this unbalance is clear enough part of the oil revenues is spent on non traded goods which leads to a real appreciation i e a rise in the relative price of non traded goods in terms of traded goods this in turn draws resources out of the non oil traded sector into the non traded goods producing sector corden and neary 1982 van wijnbergen 1980 one may say that this is an efficient response to the increase in income from oil production the united kingdom mexico egypt simply should move into oil derived industries and non traded goods and forget about their manufacturing sector until oil reserves are exhausted however many developing countries are hesitant to take this advice after all the post world war ii success stories in economic development involve without exception countries that promoted their traded goods sector aggressively moreover it is a well established stylised fact that technological progress is faster in the traded non sheltered sectors of an economy than in the non traded sector balassa 1964 is an early reference considering the hypothesis that technological progress rather than taking place exogenously with the passage of time is a function of accumulated experience the concern of countries like egypt mexico or indonesia is much easier to understand since solow 1957 and denison 1962 it is known that capital accumulation explain only a small part of economic growth if most of economic growth is caused by learning by doing induced technologica

a model of aid impact in some south pacific microstates abstract this paper investigates the impact of foreign aid on the economic structure of the recipient economy using a two sector general equilibrium model underlying assumptions are designed to mirror a number of stylized facts about a group of south pacific microstates known as mirab countries two variants of the model are constructed to reflect these countries unequal access to overseas labor markets qualitative results reveal the likelihood of a structural transformation of the economy akin to that known as dutch disease namely the relative contraction of the tradables sector quantitative results confirm the plausibility of this outcome

estimating remittance functions for pacific island migrants there is concern that pacific island economies dependent on remittances of migrants will endure foreign exchange shortages and declining living standards as remittance levels drop due to lower migration rates and the belief that migrants willingness to remit decreases over time the empirical validity of the remittance decay hypothesis has never been tested from survey data on tongan and western samoan migrants in sydney this paper estimates remittance functions using tobit regression analysis it is found that the remittance decay hypothesis has no empirical validity and migrants are motivated by factors other than altruistic family support including asset accumulation and investment back home c 1997 elsevier science ltd

sustainable development in small island developing states agricultural intensification economic development and freshwater resources management on the coral atoll of tongatapu small island developing states sids are vulnerable due to their small size in both biophysical and socio economic senses they are increasingly confronted with the environmental consequences through utilisation of their fragile natural resources for economic development here we illustrate the dilemmas experienced by sids associated with sustainable economic development our focus is the main island of the kingdom of tonga tongatapu located in the south pacific ocean we analyse the intensification of agriculture and the attendant pressures on the islands freshwater resources we combine environmental and economic data tongatapu 256 km 2 is a raised coral atoll and the freshwater resources exist as lenses that float on top of denser salt water underneath the island since 1987 tonga has exported squash pumpkin solely to japan over the last 10 years these exports have accounted for more then 40 of total export earnings and represent 60 to 70 of gdp derived from agricultural export this increase in exports is matched by an abrupt increase in the import and usage of agricultural chemicals the island s freshwater lenses are increasingly under pressure from agricultural intensification in the economic decision process environmental impacts are not taken into account this is partly because of overlapping institutional responsibilities of water management and opaque institutional structures which are highlighted in the paper the environmental consequences experienced by sids in terms of primary production stresses the need of taking natural capital into account when the benefits from international trade are evaluated at the same time pollution will result in irrecoverable losses in terms of tourist potential improved agricultural practices have to be implemented through educational tools to ensure continuing economic prosperity derived from agricultural exports economic development of sids should also focus on the maintenance of kin relationships overseas securing rent incomes and regional cooperative development efforts c 2006 elsevier b v all rights reserved

electricity regulation and electricity market reforms in china the electricity industry of china has been in a process of reforms since the 1980s this paper gives a review on the three main stages of reforms in china so as to trace out key features of various reform measures including those for power investment financing the separation between government and power enterprises and the division between power generation firms and power grids the findings suggest that further regulatory change in china s electricity market reform is necessary when integration of the electricity markets and increased competition are paving the way ahead for a market oriented structure prospective electricity regulation in the form of a strong legal system and effective institutions that protect market competition and promote appropriate incentives for efficiency are suggested in the paper

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

cost monotonicity consistency and minimum cost spanning tree games abstract we propose a new cost allocation rule for minimum cost spanning tree games the new rule is a core selection and also satisfies cost monotonicity we also give characterisation theorems for the new rule as well as the much studied bird allocation we show that the principal difference between these two rules is in terms of their consistency properties

the erosion of agriculture in an oil economy the case of export crop production in trinidad abstract this paper examines the pressures upon export agriculture in trinidad that have led to dramatic declines in sugar cocoa copra and citrus production over the past two decades data drawn from official publications and primary surveys reveal the financial strains on the industry and highlight the adverse impact of the oil economy the latter is manifested through inflationary pressures on wage rates the funding of major capital projects offering alternative employment opportunities the uncontrolled expansion of recurrent expenditure on politically motivated job creation schemes that have aided withdrawal of labor from socially and financially less rewarding agricultural employment and an escalation in land values which has diminished the need for agricultural improvement particular concern for the decline is expressed as efficiency and future viability of the new power based manufacturing developments have yet to be proved

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

the varieties of resource experience natural resource export structures and the political economy of economic growth many oil mineral and plantation crop based economies experienced a substantial deceleration in growth following the commodity boom and bust of the 1970s and early 1980s this article illustrates how countries dependent on point source natural resources those extracted from a narrow geographic or economic base such as oil and minerals and plantation crops are predisposed to heightened economic and social divisions and weakened institutional capacity this in turn impedes their ability to respond effectively to shocks which previous studies have shown to be essential for sustaining rising levels of prosperity analysis of data on classifications of export structure controlling for a wide array of other potential determinants of governance shows that point source and coffee and cocoa exporting countries do relatively poorly across an array of governance indicators these governance effects are not associated simply with being a natural resource exporter countries with natural resource exports that are diffuse relying primarily on livestock and agricultural produce from small family farms do not show the same strong effects and have had more robust growth recoveries

commodity currencies and the real exchange rate abstract this paper shows that a change in the terms of trade of a commodity exporting country could cause the relative price of nontraded goods to rise or fall depending on the strength of income and substitution effects

axiomatization of the shapley value on minimum cost spanning tree games abstract this paper axiomatizes the shapley value on minimum cost spanning tree games by using axioms which are different from those used in network games journal of economic literature classification numbers c71 a14

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

do the commons help augment mutual insurance among the poor summary poor people rely on local commons not only for self insurance as commonly found but also for mutual insurance depending on resources and shocks this paper demonstrates that this conjecture holds among cyclone victims in the pacific islands on one hand households increase coastal fishing and handicraft selling but not forest product gathering to smooth income against own crop damage on the other hand households with undamaged housing intensify fishing to help other kin group members with damaged housing these distinct patterns of using commons as insurance are explained by distinct forms of risk sharing against these two shocks

subsistence economies and unsustainable development and trade some simple theory three possible development patterns for subsistence economies with a restricted range of resources are explored in this paper the models may be particularly relevant to small island countries for example in the pacific ocean in the first model it is shown that neither international trade nor an advanced sector is sustainable in the long run in the type of subsistence economy envisaged both international trade and advanced sectors eventually disappear as population levels increase in the second model the possibility is explored that export opportunities may foster unsustainable development it may sustain population levels that cannot be maintained should the demand for exported goods collapse there is a high risk of such a collapse in small subsistence economies with their restricted resource basis the third case which has similarities with the previous one except that collapse comes about by exhaustion of supply rather than deterioration in demand is development made possible by the export

comparative effects of migrants remittances on composition of recipient household income in two small island economies we use unique household survey data from fiji and tonga to estimate and compare the combined impact of migration and remittances on the composition of household income a two step methodology is followed employing a migration prediction model followed by the estimation of a three stage least squares 3sls remittances and income equation system we find that remittances contribute to growth in productive capital and entrepreneurial activity in the longer established migrant economy but have yet to impact on business activity in the more recently remittances oriented economy despite it having a more developed market economy in the latter case remittances seem more linked to supporting consumption through supplementing low wage income these findings suggest that the duration and intensity of remittance driven migration and the structure of economic activity within a community are important in understanding the influences of migration and remittances on household resource allocation and production dec

project appraisal the environment and sustainability for small islands the paper discusses problems of project appraisal for small island less developed nations taking account of alternative approaches to assessment knowledge problems shortages of indigenous analytical skills in evaluation and motivational issues this raises the question of the value of natural environments of small island countries to the rest of the world the view is rejected that the environments of small island countries are relatively unimportant to the rest of the world sustainability considerations have become important in project appraisal and development planning project appraisal is discussed with particular reference to small island economies taking account of alternative concepts of sustainable development and the method suggested by pearce and others to integrate sustainability into cost benefit analysis responses of aid organizations such as aidab to this new emphasis on sustainable development are discussed some projects of particular relevance to small island nations are examined from the point of view of their environmental sustainability these include motorization of fishing boats in the maldives the mariculture of giant clams in the pacific and tourist developments

minimum cost arborescences in this paper we analyze the cost allocation problem when a group of agents or nodes have to be connected to a source and where the cost matrix describing the cost of connecting each pair of agents is not necessarily symmetric thus extending the well studied problem of minimum cost spanning tree games where the costs are assumed to be symmetric the focus is on rules which satisfy axioms representing incentive and fairness properties we show that while some results are similar there are also signifcant differences between the frameworks corresponding to symmetric and asymmetric cost matrices

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

macroeconomic policy in an oil exporting economy with foreign exchange controls the sudden and sharp increases in oil prices during the past decade and the discovery and extraction of oil in the north sea have recently contributed to a renewal of interest in the macroeconomic problems of oil exporting countries in general and those of industrialized and semi industrialized oilexporting countries such as the uk and mexico in particular the economic implications of the north sea oil revenues for the british economy have been hotly debated by forsyth and kay 1980 1981 worswick 1980 barker 1981 corden 1981 and byatt et al 1982 the effects of oil and gas revenues on the economies of canada mexico the netherlands norway and the uk have also been the subject of analysis and discussion in barker and brailovsky 1981 despite their important contribution these studies fall short of formulating a comprehensive theoretical framework for the study of macroeconomic policy in oil exporting countries in general the resurgence of interest in the macroeconomics of oil exporting economies and the lack of a satisfactory theoretical framework emphasize the need for the explicit introduction of an oil sector into macroeconomic models of the open economy the more recent studies by buiter and purvis 1983 eastwood and venables 1982 corden and neary 1982 and neary and purvis 1982 have gone some way towards meeting this need but they are better suited to the study of macroeconomic policy in developed oil exporting countries such as the united kingdom where highly developed financial markets already exist 1 without exception all these studies assume that the economy under consideration operates with a floating exchange rate and that the private capital is internationally mobile they also invariably ignore the short term and the long term financial repercussions of changes in oil income that operate via the government budget constraint and the asset position of the private sector these assumptions are however inappropriate for most oil exporting countries in the middle east africa and latin america the purpose of this paper is to examine the short run and long run macroeconomic consequences of an increase in oil revenues in an oil exporting country characterized by strict foreign exchange controls on private capital flows we attempt to do this in the context of a keynesian underemployment model of the type analysed for example by turnovsky and kaspura 1974 branson 1976 and argy and salop 1979 but with domestic prices set according to a mark up rule along the lines advocated for example by fetherston and godley 1978 1981 unlike argy and salop but in line with other recent contributions to the macroeconomic theory of open economies the present paper explicitly allows for the existence of the government budget constraint and analyses the macroeconomic effects of changes in oil revenues both in the short run when

sustainable development differing perspectives of ecologists and economists and relevance to ldcs abstract the claim is now widely that it is desirable to aim for a sustainable society for sustainable economic development and for sustainable productive systems this reflects the outlook of ecologists rather than the majority of economists although a small group of economists does see particular virtue in sustainability the outlook of ecologists is illustrated by conway s criteria for assessing the desirability of agricultural systems this approach is shown to involve several unresolved conceptual issues this leads to a discussion of the policy of a safe minimum standard as proposed by some economists and the critique of expected utility and risk benefit analysis by page and maclean and whether this might provide a bridge between the views of economists and ecologists a basis is established for considering whether sustainability of productive systems is likely to be a more important goal in less developed countries than in developed countries further examples of the stress of ecologists on the production sustainability goal are given and additional policy prescriptions for instance involving nomadism and transhumance are discussed