The paper poses an interesting and important question: Have post–1980 "globalizers" performed better than "non-globalizers"? The authors answer the question affirmatively, but only by applying a suitably arbitrary set of selection criteria to their sample of countries.
Whatever the ultimate verdict on that issue, the Malaysian experience with capital controls (not just the 1998 controls, but also the earlier restrictions on inflows in 1994) demonstrate two things: (a) capital controls can be made effective (in the sense of driving a wedge between onshore and offshore interest rates) with minimal corruption and rent-seeking; (b) capital controls on short-term flows can be implemented with minimal disruption to direct foreign investment (i.e., without scaring away the investors that one really cares about). This experience, I think, puts to rest several counter-arguments about controls: that markets can easily evade controls; that controls have to be so heavy-handed that they come with great costs to the real economy; that they are necessarily prone to corruption and rent-seeking; that it is impossible to segment short-term flows from direct foreign investment.
Should governments pursue economic growth first and foremost, or should they focus on poverty reduction? The recent debate on these questions has generated more heat than light, because it has become embroiled in a wider, political debate on globalization and the role of World Bank/IMF conditionality. As an empirical matter, it is clear that growth and poverty reduction go largely hand in hand. The real questions in this debate should be: What are the policies that yield these rewards, and would a poverty focus facilitate their adoption?
With the demise of the Soviet Union, the newly emerging countries of the Transcaucasus and Caspian regions were the objects of growing interest from the major Western powers and the international business community, neither of which had had access to the region since the early nineteenth century. The world?s greatest power, the United States, has never had a presence in this region, but it is now rapidly emerging as a major player in what is becoming a new classical balance of power game.
This paper focuses on two issue–areas that are characterized by relatively high levels of conflict between economic and social pressures, tourism and foreign direct investment (FDI). Tourism has been little studied by political scientists, but as an international economic activity it has tremendous importance for many states, and is often highly politicized. There is also a substantial secondary literature on tourism, mostly written by sociologists, and abundant (if at times unreliable) data. It thus is a good issue to study in this context, asking about the level at which tourism policy is made, and why. FDI has been taken more seriously by political scientists, although there has been surprisingly little written on this topic in the last decade or two. The literature on FDI from the 1970s leaves little doubt that economic and social pressures are often conflictual. We have also seen numerous attempts to shift the level of governance for FDI, and dramatic policy shifts. FDI therefore also promises to provide insights into how governments resolve tension between social and economic pressures for particular patterns of governance.
I address the issue principal–agent relationships in the IMF from the perspective of attempting to understand the IMF as an international institution. However, this issue is also vital in current policy debates about reform of the IMF. Participants in these debates seem torn between calling the IMF a "runaway agency" and a "U.S. pawn" (Sanger 1998). The Economist reports that "the institution is widely viewed as the handmaiden of America?s Treasury Department" (Economist, 29 July 2000, 66). The report of the U.S. IFI Advisory Commission argues that if "the G–7 finance ministers can agree on a policy that they wish to pursue, for whatever reason, they can use the IMF as the instrument of that policy." Jeffrey Sachs, one of the members of that commission and a supporter of its conclusions, argues that the IMF is the instrument of a few rich governments (Financial Times, 25 September 2000). But in his statements as part of the IFI Advisory Commission, Sachs repeatedly raised questions about the public scrutiny and democratic accountability of the Fund, implying that the Fund bureaucracy acts without adequate political oversight. Clearly, both viewpoints cannot be correct – the Fund cannot simultaneously be an out–of–control bureaucracy and slave to its political masters. Only careful consideration of actual principal–agent relationships will bring clarity to this debate.
Once a dream, soon a reality? Euro–defense has been a myth or a daydream – especially for the French – since the inception of a unified Europe. Again, it has become highly topical, since St Malo, Cologne and even more since Helsinki? Might it, in the end, shadow the paramount issue of NATO enlargement? This topic has had different titles over the past few years. Should we still speak of ESDI (European Security and Defense Identity)? This was the somewhat "psychological" term forged to express the European yearning for a visibility of their own inside the Alliance, but this introverted phase of awakening is now passé. The European goals have been set in broad strokes, the design has been written in ink into formal documents, the institutions and means of the new policy are being built up. Therefore, my choice of the alphabet–soup name for the topic is ESDP (European Security and Defense Policy). Let it be known, however, that the issue is no other than the future of European defense in both the European Union and the transatlantic contexts.
La primera revolución de la diplomacia fue la de su nacimiento como institución. En realidad, el arte u oficio de las relaciones internacionales existe desde que se produjeron los primeros contactos entre pueblos diferentes, durante la más remota Antigüedad. Se sabe que, ya en el siglo XIV a.C., había algún tipo de relación formal entre egipcios y habitantes de la Mesopotamia. Pero fue el contacto estrecho entre las ciudades–estado de la Grecia clásica lo que dio origen a la diplomacia institucionalizada. Heraldos y un cierto código de conducta le otorgaron carta de naturaleza. Las relaciones diplomáticas de esta primera época tenían carácter puntual. A partir de entonces, paulatinamente, el poder político se fue centralizando y la comunicación entre las distintas entidades que lo albergaban se fue intensificando.
American foreign policy toward the Democratic People?s Republic of Korea (DPRK or North Korea) faces the problem of how to engage peacefully with a country that wants economic "tribute" but prefers self–protective isolation to the ideological risks of wider involvement in the world community. While the DPRK has accepted U.N. World Food Program (WFP) famine aid and has agreed to the construction of the two nuclear power plants, it rejects reliance on foreign trade and investment as too intrusive. In the 1994 Agreed Framework with the U.S., the DPRK traded its graphite nuclear plant for construction of the two light water reactor (LWR) power plants in a remote and thinly populated coastal area. (The graphite nuclear plant as a by–product converts uranium into weapons grade plutonium, while the LWR nuclear plants convert uranium into a less–fissile form of plutonium.)
Lopez-de-Silanes, Florencio, Rafael LaPorta, Andrei Shleifer, and Simon Johnson. 2000. “Tunnelling”. Abstract
Tunnelling is defined as the transfer of assets and profits out of firms for the benefit of their controlling shareholders. We describe the various forms that tunnelling can take, and examine under what circumstances it is legal. We discuss two important legal principles — the duty of care and the duty of loyalty — which courts use to analyze cases involving tunnelling. Several important legal cases from France, Belgium, and Italy illustrate how and why the law accommodates tunnelling in civil law countries, and why certain kinds of tunnelling are less likely to pass legal scrutiny in common law countries.
This paper outlines and tests two agency models of dividends. According to the "outcome" model, dividends are the result of effective pressure by minority shareholders to force corporate insiders to disgorge cash. According to the "substitute" model, insiders interested in issuing equity in the future choose to pay dividends to establish a reputation for decent treatment of minority shareholders. The first model predicts that stronger minority shareholder rights should be associated with higher dividend payouts; the second model predicts the opposite. Tests on a cross–section of 4,000 companies from 33 countries with different levels of minority shareholder rights support the outcome agency model of dividends.
In this paper, we investigate a neglected aspect of financial systems of many countries around the world: government ownership of banks. We assemble data which establish four findings. First, government ownership of banks is large and pervasive around the world. Second, such ownership is greater in countries with low levels of per capita income, backward financial systems, interventionist and inefficient governments, and poor protection of property rights. Third, higher government ownership of banks in 1970 is associated with slower subsequent financial development. Finally, higher government ownership of banks in 1970 is associated with lower subsequent growth of per capita income, and in particular with lower growth of productivity rather than slower factor accumulation. This evidence is inconsistent with the optimistic "development" theories of government ownership of banks common in the 1960s, but supports the more recent "political" theories of the effects of government ownership of firms.
Este documento se aboca a las necesidades de apoyo que tiene el Presidente de la República en tanto legislador, un aspecto de sus funciones determinado por las relaciones que tiene con el Congreso, y lo que implica en cuanto a la organización de su oficina.
This paper compares retrospective and prospective analyses of the effect of flip charts on test scores in rural Kenyan schools. Retrospective estimates that focus on subjects for which flip charts are used suggest that flip charts raise test scores by up to 20 percent of a standard deviation. Controlling for other educational inputs does not reduce this estimate. In contrast, prospective estimators based on a study of 178 schools, half of which were randomly selected to receive charts, provide no evidence that flip charts increase test scores. One interpretation is that the retrospective results were subject to omitted variable bias despite the inclusion of control variables. If the direction of omitted variable bias were similar in other retrospective analyses of educational inputs in developing countries, the effects of inputs may be even more modest than retrospective studies suggest. Bias appears to be reduced by a differences–in–differences estimator that examines the impact of flip charts on the relative performance of students in flip chart and other subjects across schools with and without flip charts, but it is not clear that this approach is applicable more generally.
Today, the United States government spurs research mainly through direct funding and the granting of patents. Both methods are vitally important, but each causes serious problems–and each has proved inadequate in spurring the research needed to develop effective vaccines against HIV, tuberculosis and malaria.
This paper examines the effect of reduced transaction costs in the international trading of assets on the ability of governments to issue debt. We examine a model in which governments care about the welfare of their citizens, and thus are more inclined to default if a large proportion of their debt is held by foreigners. Reductions in transaction costs make it easier for domestic citizens to share risk by selling debt to foreigners. This may increase tendencies for governments to default, and thus raise their cost of credit and reduce welfare. We find that even in the absence of transaction costs, home bias in placement of government debt may persist, because in the presence of default risk the return on government debt is correlated with the tax burden required to pay the debt. Asset inequality may reduce this home bias, and by increasing foreign ownership, increase incentives for default. Finally, if foreign creditors are less risk averse than domestic creditors, there may be one equilibrium in which domestic creditors hold the asset and default risk is low, and another in which foreign creditors hold the asset and default risk is high.
Developing countries with highly unequal income distributions, such as Brazil or South Africa, face an uphill battle in reducing inequality. Educated workers in these countries have a much lower birthrate than uneducated workers. Assuming children of educated workers are more likely to become educated, this tends to increase the proportion of unskilled workers, reducing their wages, and thus their opportunity cost of having children, creating a vicious cycle. A model incorporating this effect generates multiple steady–state levels of inequality, suggesting that in some circumstances, temporarily increasing access to educational opportunities could permanently reduce inequality. Empirical evidence suggests that the fertility differential between the educated and uneducated is greater in less equal countries, consistent with the model.
In response to the widespread consensus on the importance of social capital, and to concerns about the scarcity of institutions giving voice to disadvantaged groups, some donors have begun programs designed to strengthen indigenous community organizations. We use a prospective, randomized evaluation to examine a development program explicitly targeted at building social capital among rural women's groups in western Kenya. The program increased turnover among group members. It increased entry into group membership and leadership by younger, more educated women, by women employed in the formal sector, and by men. The analysis suggests that providing development assistance to indigenous community organizations of the disadvantaged may change the very characteristics of these organizations that made them attractive to outside funders.