In Bernhard Ebbinghaus and Philip Manow eds., Comparing Welfare Capitalism: Social Policy and Political Economy in Europe, Japan and the USA (London/New York: Routledge, 2001)
To the extent that the literature on the varieties of capitalism has taken notice of welfare state arrangements, it has done so by focusing upon the impact of such arrangements on employment relations (Esping–Andersen 1990; Estevez–Abe et al. 1999; Manow 1997a,b; Mares 1997; Huber and Stephens 1997; Wood 1997). In the literature, however, employment relations constitute just one of the features that define a specific model of capitalism (Aoki and Dore 1994; Berger and Dore 1996; Crouch and Streeck 1997; Hall 1986; Hal and Soskice, forthcoming; Boyer 1989; Hollingsworth and Boyer 1997; Kitschelt et al. 1999). The nature of financial markets and the relations between firms and suppliers of capital are every bit as important. The ability of corporations to form long–term commitments, such as lifetime employment, depends on the availability of patient, far–sighted capital. The longer the time horizon of capital suppliers, the greater the autonomy of corporate managers. The time horizon of capital is, in short, one of the most significant determinants of variation between different types of capitalism.
This paper responds to findings by Acemoglu, Johnson and Robinson (2000) that suggest weak institutions, but not physical geography and correlates like disease burden, explain current variation in levels of economic development across former colonies. Using similar data and expanding the sample of countries analyzed, our regression analysis shows that both institutions and geographically–related variables such as malaria incidence or life expectancy at birth are strongly linked to gross national product per capita. We argue that the evidence presented in Acemoglu, Johnson and Robinson is likely limited by the inherently small sample of ex–colonies and the limited geographic dispersion of those countries.
The central claim in this paper is that by explicitly introducing costs of international trade (narrowly, transport costs but more broadly, tariffs, nontariff barriers and other trade costs), one can go far toward explaining a great number of the main empirical puzzles that international macroeconomists have struggled with over twenty–five years. Our approach elucidates J. McCallum's home bias in trade puzzle, the Feldstein–Horioka saving–investment puzzle, the French–Poterba equity home bias puzzle, and the Backus–Kehoe– Kydland consumption correlations puzzle. That one simple alteration to an otherwise canonical international macroeconomic model can help substantially to explain such a broad arrange of empirical puzzles, including some that previously seemed intractable, suggests a rich area for future research. We also address a variety of international pricing puzzles, including the purchasing power parity puzzle emphasized by Rogoff, and what we term the exchange–rate disconnect puzzle.' The latter category of riddles includes both the Meese–Rogoff exchange rate forecasting puzzle and the Baxter–Stockman neutrality of exchange rate regime puzzle. Here although many elements need to be added to our extremely simple model, we can still show that trade costs play an essential role.
Most recent cross–country analyses of economic growth have neglected the importance of physical geography. This paper reviews the distinctive development challenges faced by economies situated in tropical climates. Using geographic information system (GIS) mapping, the paper presents evidence that production technology in the tropics has lagged behind temperate zone technology in the two critical areas of agriculture and health, and this in turn opened a substantial income gap between climate zones. The difficulty of mobilizing energy resources in tropical economies is emphasized as another significant contributor to the income gap. These factors have been amplified by geopolitical power imbalances and by the difficulty of applying temperate–zone technological advances in the tropical setting. The income gap has also been amplified because poor public health and weak agricultural technology in the tropics have combined to slow the demographic transition from high fertility and mortality rates to low fertility and mortality rates. The analysis suggests that economic development in tropical ecozones would benefit from a concerted international effort to develop health and agricultural technologies specific to the needs of the tropical economies.
The new agenda of global integration is built on shaky empirical ground and is seriously distorting policy makers? priorities. Making compliance with it the first order of business diverts human resources, administrative capabilities, and political capital away from more urgent development priorities such as education, public health, industrial capacity, and social cohesion. It undermines nascent democratic institutions by removing the choice of development strategy from public debate. World markets are a source of technology and capital; it would be silly for the developing world not to exploit these opportunities. But globalization is not a short cut to development.
Malaysia recovered from the Asian financial crisis swiftly after the imposition of capital controls in September 1998. The fact that Korea and Thailand recovered in parallel has been interpreted as suggesting that capital controls did not play a significant role in facilitating Malaysia?s rebound. However, the financial crisis was deepening in Malaysia in the summer of 1998, while it had significantly eased up in Korea and Thailand. We employ a time–shifted differences–in–differences technique to exploit the differences in the timing of the crises. Compared to IMF programs, we find that the Malaysian policies produced faster economic recovery, smaller declines in employment and real wages, and more rapid turnaround in the stock market.
This paper develops an explicitly stochastic new open economy macroeconomics' model, which can potentially be used to explore the qualitative and quantitative welfare differences between alternative exchange rate regimes. A crucial feature is that we do not simplify by assuming certainty equivalence for producer price setting behavior. Our framework also provides a sticky–price alternative to Lucas's (1982) exchage rate risk premium model. We show that the level risk premium' in the exchage rate is potentially quite large and may be an important missing fundamental in empirical exchange rate equations. As a byproduct analysis also suggests an intriguing possible explanation of the forward premium puzzle.
It appears likely that the number of currencies in the world, having proliferated along with the number of countries over the past fifty years, will decline sharply over the next two decades. The question I plan to pose here is, where, from an economic point of view, should we aim for this process to stop? Should there be a single world currency, as Richard Cooper (1984) boldly envisioned? Should there remain multiple major currencies but with a much stricter arrangement among them for stabilizing exchange rates, as say Ronald McKinnon (1984) or John Williamson (1985) recommended? Building on Maurice Obstfeld and Kenneth Rogoff (2000b,d), I will argue here that the status quo arrangement among the dollar, yen and the euro (which I take to be benign neglect) is not far from optimal, not only for now but well into the new century. And it would remain a good system even if political obstacles to achieving greater monetary policy coordination – or even a common world currency — could be overcome. Again, this is not a paper on, say, the pros and cons of dollarization for small and medium–sized economies, but rather on arrangements among the core currencies.
According to WHO, while 50 percent of global health research and development (R&D) in 1992 was undertaken by private industry, less than 5 percent of that was spent on diseases specific to less developed countries (LDCs).1,2 Despite this, private industry has produced major drug discoveries and developments for serious LDC disease threats, including malaria, TB, hepatitis B, river blindness, meningitis, leprosy, sleeping sickness and trachoma. Moreover, the development of globally–applicable drugs and vaccines has led to important advances in public health in developing countries. At the same time, the simple fact is that every company in the biopharmaceutical industry has a limited number of research and development programmes in their portfolio. These projects are regularly reviewed against each other using a variety of analytical tools. Fundamentally the process tends to favour those projects with a higher probability of success and which, if successful, would serve markets with a larger value. As a result, there is underinvestment in and comparative neglect of some diseases concentrated in LDCs, such as tuberculosis and malaria, despite their high global disease burden. It is therefore generally agreed that new mechanisms and incentives are needed to encourage industrial R&D in such diseases. In this paper, we summarize some recent thinking about ways to stimulate industrial R&D for neglected infectious diseases, and we argue that enlarging the value of the market for drugs and vaccines for these diseases is a critical step toward stimulating R&D.
This paper reports some preliminary cost–effectiveness estimates for vaccine purchase commitments. Besides assessing the merit of a purchase program, this analysis can be used to examine the cost–effectiveness of purchasing vaccines with different characteristics, and thus to help establish eligibility requirements and identify prices at which vaccines with different characteristics might be purchased.
This article starts from a very simple (and unoriginal) premise: actors who enter into a social interaction rarely emerge the same. For mainstream international relations theories this is at one and the same time an uncontroversial statement and a rather radical one. It is uncontroversial because mainstream IR accepts that social interaction can change behavior through the imposition of exogenous constraints created by this interaction. Thus, for instance, neorealists claim that the imperatives of maximizing security in anarchical environment tends to compel most states most of the time to balance against rising power. Contractual institutionalists also accept that social interaction inside institutions can change behavior (strategies) in cooperative directions by altering cost–benefit analyses as different institutional rules act on fixed preferences.
This book reports the results of our research on the role of special interest groups in the process of trade policy formation. However, there is little that is unique about this particular type of policy. The methods that interest groups use to affect trade outcomes are the same as the ones they use to influence a myriad of other policy decisions, including both economic issues and issues outside of the economic realm.
In an initial attempt to fill the previous void in the economic literature, this paper summarizes a series of studies, undertaken as part of a larger project sponsored by the Inter–American Development Bank, on the role of political economy factors in the making of exchange rate policy. While these factors are, of course, examined in conjunction with economic and macroeconomic variables, they have previously received little attention in their own. These political economy factors most notably include the role of interest groups, electoral competition, and election timing. This paper presents some simple analytical arguments, then summarizes evidence contained in other papers in this project.
The structure of international monetary relations has gained increasing prominence over the past two decades. Both national exchange rate policy and the character of the international monetary system require explanation. At the national level, the choice of exchange rate regime and the desired level of the exchange rate involve distributionally relevant tradeoffs. Interest group and partisan pressures, the structure of political institutions, and the electoral incentives of politicians therefore influence exchange rate regime and level decisions. At the international level, the character of the international monetary system depends importantly on strategic interaction among governments, driven by their national concerns and constrained by the international environment. A global or regional fixed–rate currency regime, in particular, requires at least coordination and often explicit cooperation among national governments.