Category Archive: Sources

  1. Magnolia Flower

    Comments Off on Magnolia Flower

    CHILE

    Last week, the referendum to overhaul Chile’s Pinochet-era constitution lost by more than 20%. The result was surprising: in 2020, nearly 80% of the population voted in favor of rewriting the constitution, and the country’s most recent elections brought progressive Gabriel Boric to power with more than 55% of the vote.

    With an 86% particiation rate, mobilization around the vote was unparalleled since the country’s transition to democracy in 1988. In a 1989 article, BARBARA STALLINGS reflects on the economic circumstances leading up to that monumental shift.
    From the paper: 

    “Why did a transition not occur in Chile during the difficult years of 1982-84? This question becomes especially intriguing from the vantage point of 1988. Leaving social questions aside, there were major problems with the type of growth that was occurring by the late 1970s. The most obvious issue was the current account deficit that reached some 15% of GDP in 1981. This gap was filled by a huge volume of foreign loans, most of which was spent on consumer imports and/or speculation. Productive activities were becoming unattractive, and industry in particular was in decline. By 1981, many firms were in bankruptcy, and the financial system was increasingly insolvent. The end of foreign lending the next year brought the ‘miracle to an abrupt halt.

    The crisis in Chile was part of the world-wide economic problems that emerged in the early 1980s. As recession hit the advanced industrial countries and interest rates rose, these trends were passed on to Latin America through balance-of-payments problems. At the same time, foreign loans that had stimulated growth in the 1970s were cut off as a result of the Mexican debt crisis. Despite being part of this international pattern, however, Chile’s crisis had some unique characteristics. Inflation more than doubled between 1981 and 1982, from 9.5% to 20.7%, while the fiscal balance went from a surplus to a deficit equivalent to 2.3% of GDP. Chile’s GDP fell by 14% in 1982, and open unemployment jumped to 22% of the labor force. Likewise, a balance-of-payments crisis manifested itself in a large loss of reserves, even though the trade balance moved into a small surplus. In addition, there was a domestic financial crisis of enormous proportions, involving the largest banks in the country as well as industrial firms. Allowing the crisis to run its course would have threatened the government’s very survival. To prevent such a scenario, Pinochet and his political advisors began to take a more active role in economic policy making. Over the next few years, they allowed or even encouraged policies that deviated substantially from the laissez-faire model of the Chicago Boys.”

    Link to the text.

    +  Miguel Ángel Fernandez and Eugenio Guzman analyze the outcome in light of geographic divisions, internet access, religious preferences, demographic factors, and more. Link.

    + In Bloomberg, Clara Fereira Marquez reflects on the referendum’s consequences for the country’s mining industry: “The world’s top copper-producing nation will remain stuck in a period of political turbulence certain to hamper investment at a time when it is sorely needed: pits are maturing, grades declining and the green boom is revving up demand for both the red stuff and the key battery ingredient lithium.” Link.

    +  “After the overthrow of the Spanish King by Napoleon’s forces and the arrest of Ferdinand vii, power was briefly devolved from the centre. Then again, in the 1820s, Ramón Freire resisted a Santiago dictatorship. Under Salvador Allende in the early 1970s, local assemblies once again emerged.” From May, an NLR interview with Camila Vergara explores Chile’s constitutional history. Link.

    NEW RESEARCHERS

    Chinese & Indian Railways 

    In a new paper, PhD candidate in sociology at Princeton University KYLE CHAN studies state capacity by comparing railway bureaucracies in China and India. 

    From the text: 

    “This article proposes an alternative typology of state organizational forms that better accounts for the important role of bureaucratic structure in shaping state capacity: nodal versus diffuse forms.To show how this typology works in practice, this article compares two paradigmatic empirical cases: the state railway bureaucracies of contemporary China and India. China’s railway bureaucracy is a paradigmatic example of the nodal form of organizational structure: decision-making power is concentrated in a limited set of key actors across the bureaucratic hierarchy. For most railway projects, a single nodal actor—the state-owned project corporation—is responsible for coordinating work and seeing the project through to completion. India’s railway bureaucracy is a paradigmatic example of the diffuse form: decision-making power is distributed widely across many overlapping authority structures, including regional bureaus, functional divisions, and informal tenure-based hierarchies. I [show] how the nodal structure of China’s railway bureaucracy facilitates the completion of railway projects by providing mechanisms for coordination and accountability while the diffuse structure of India’s railway bureaucracy hinders railway work by making these same processes more difficult. These findings suggest that the organizational structure of state bureaucracies plays an important yet under-studied role in shaping state capacity.”

    Link to the paper. 

    + + +

    +   “For the past thirty years, Italy’s perpetual state of emergency has periodically necessitated the formation of expert-led national-emergency governments.” New on PW, Lucio Baccaro on Italy’s upcoming elections. Link. 

    +   “Electric passenger cars made impressive gains between 2019 and 2021…but those numbers pale in comparison to the global fleet of electric two- and three-wheelers.” Erin Wong on EV scooters in Asia. Link. 

    +   “Soy production in Brazil has become a key part of food security policies and has contributed to China’s development and social stability since the early 2000s.” By Giorgio Romano Schutte and Reinaldo Campos. Link.

    +   “Embracing efficiency-oriented, ‘rational’ and ‘objective’ arguments offered an antidote to right-wing representations of liberalism as un-American.” Landon Storrs on Beth Popp Berman’s Thinking Like an Economist, in the LPE project’s symposium on the book. Link. And read Luke Herrine’s recent review of the book in PW here. 

    +   Sebastian Dellepiane-Avellaneda, Niamh Hardiman, and Jon Las Heras on construction-based bubbles and the “financial resource curse” in Spain and Ireland. Link.  

    +   “We predict the propensity to secede of 3,003 subnational regions in 173 countries.” On secession, identity, and income, by Klaus Desmet, Ignacio Ortuño-Ortín, and Ömer Özak. Link. 

    +   Suresh Kumar and Subhasis Mandal on India’s wheat export ban and its effects on farmer incomes. Link. 

    +   “In the 1980s, historical demography began a reorientation from reconstructing trends to studying socioeconomic differentials in demographic behaviors. The most important contributions of the earlier generation had been aggregate-level reconstructions of trends in population sizes, fertility, and mortality, which were often interpreted within a framework derived from Thomas Malthus and Demographic Transition Theory. The next generation of research paid much more attention to individual-level analysis presented in a statistical rather than a demographic framework. This work emphasized differences within societies due to socioeconomic status, ethnicity, and community and to life-course models highlighting the importance of gender and age. New methods took advantage of changes in computer technology, advances in multivariate statistical models, and the emergence of large data collections.” George Alter on European historical demography. Link. 

  2. Rust Series

    Comments Off on Rust Series

    HYDROPOWER

    The recent floods in Pakistan have brought attention to the viability of the country’s hydropower projects and the debated role of dams in flood management. 

    The last century has seen the growth of hydropower plants across the globe, with the support of international organizations and governments. In a 2017 paper, BENJAMIN K. SOVACOOL and GÖTZ WALTER assess the outcomes of these projects. 

    From the paper: 

    “In terms of poverty, from 1995 to 2004 and from 2005 to 2014, major hydropower states increased significantly their poverty gap and reduced significantly their GDP per capita. In addition, from 1995 to 2004 major hydropower states significantly increased external debt stocks and reduced significantly control of corruption. In sum, when looking at the significant effects only, the hydropower production rate per country was able to explain between 4% and 15% of the variance of the four dependent variables poverty gap, GDP per capita, external debt stocks and control of corruption, which at country-level is surprising indeed. The possible benefits of hydroelectricity—improved energy access, economic development, positive spillover effects, reduced carbon emissions—are real, but all too frequently, they are constrained. Although dams ostensibly are championed for their economies of scale and ability to bring about industrialization, our comparative assessment of different reference classes of countries suggest that major investments in hydropower do not result in gains greater than those made by OPEC and non-hydro countries. 

    However, our analysis suggests that hydroelectricity may not be necessarily as damaging as other sources of energy, notably fossil fuels. It may be that many of the single case studies from which we derived our hypotheses look at the very real consequences of dams in an absolute sense, detailing the incidence of their cost overruns or the severity and impacts of the increased poverty they impose on a population. These shortcomings of dams, though real, may pale in comparison to the deleterious effects of other policies, programs and investments. Countries and their planners may simultaneously be erecting many other types of infrastructure and embarking on scores of other industrial projects. These other projects may degrade and marginalize people to a greater degree than hydropower dams. Considerations of scale, scope and temporality must be considered. Our data suggest that current calls for substantial, global investment in hydropower installed capacity and generation, including those from major institutions such as the International Energy Agency, IRENA, IPCC and World Bank, must be closely scrutinized. The World Bank’s particular support in recent years for large-scale hydropower as an aid in international development may be founded on mistaken assumptions regarding the long-range costs of given projects.”

    +  “On the Mekong, nearly 20% of hydropower reservoirs were found to have higher emissions than other renewable energy sources and several of these reservoirs had emissions that equalled those from fossil fuels.” Jessica Williams on the “hydropower myth.” Link. 

    +  Viviana Martínez and O.L. Castillo examine the development of hydropower systems in Colombia—which provide the majority of the country’s domestic electricity supply—from 1980 to 2010. Link. 

    + On World Bank-supported hydropower development in Laos, Ethiopia, and Tanzania. Link, link, link.

    NEW RESEARCHERS

    Free Trade & Labor Laws

    In a recent paper co-authored with Cornelia Staritz, postdoctoral research at Roskilde University Kristoffer Marslev examines the negotiations around the EU-Vietnam Free Trade Agreement and Vietnam’s labor reforms. 

    From the abstract: 

    “The EU-Vietnam Free Trade Agreement (EVFTA) deviates from the poor track record of ‘trade and sustainable development’ chapters in EU FTAs. Ahead of ratification, Vietnam embarked upon pathbreaking reforms, culminating in a new labor code and accession to outstanding ILO core conventions. This article assesses the role of the EVFTA in these reforms. We argue that the ‘success’ of the EVFTA was the outcome of specific conjunctures of social forces in, and outside of, state institutions in the EU and Vietnam, and their mediation at the transnational level. Amid free trade skepticism in the EU, particular members of the Parliament and the Council wielded their veto powers to negotiate with Vietnam and pull the Commission into a stronger position. In Vietnam, the external pressure resonated with internal struggles and empowered reformists to drive forward labor reforms. Implementation, however, remains uncertain; and, context-dependent as it was, the EVFTA pre-ratification impact does not easily lend itself to replication in other FTAs.”

    + + +

    +   Sergio Rossi on the political benefits of ‘unconventional’ monetary policy. Link. And see Fathimath Musthaq’s recent PW essay on the subject here. 

    +   “We examine a potential differentiation effect in which patients perceive specialty hospitals as sufficiently distinct from other hospitals, so that specialty hospitals effectively compete in a separate market from general acute care hospitals.” Ian McCarthy and Mehul V. Raval on children’s hospitals. Link. 

    +   “Unionization increases the support for Democrats relative to Republicans not only among workers but also among managers.” By Johannes Matzat and Aiko Schmeißer. Link. 

    +   Malini Ranganathan on urban flooding and real estate corruption in Bangalore. Link. 

    +   “Since the 2003–2011 commodity boom, trading firms have become less financialized in terms of the source of their profits…However, they have become more financialized in terms of the destination of profits.” Joseph Baines and Sandy Brian Hager on commodity traders. Link. 

    +   “India should press the IMF to immediately increase access to its unconditional rapid financing facilities and temporarily suspend interest rate surcharges.” Avinash Persuad’s on India’s incoming role as G20 President. Link. 

    +   “The [international gold standard] relied on a few institutional aspects dealing with the acquisition and disposal of gold by Britain, not only as units of transactions but also to facilitate profitable investments overseas. India had a major role in providing gold flows, as political tributes, to meet the ‘Home Charges’ in the ruling country. Nationalist arguments in India on the ‘drain’ were centred on the legitimacy of using taxes in India to meet the overseas expenditure in Sterling. Further sources of financial transfers were not recognised by the nationalists. This paper provides an outline of the multiple channels of transfers used to expropriate gold from India. Those routes include India’s trade surpluses; ‘expenditure abroad’ as earmarked in the domestic budget; currency reserves; and the camouflaging of unproductive debts by Britain to justify the interest payments under Home Charges. This is a new interpretation of the mode and the magnitude of financial expropriations by Britain, supplementing the ‘Drain of Wealth’ narrative.” By Sunanda Sen. Link. 

  3. Landscape With A Calm

    Comments Off on Landscape With A Calm

    PERESTROIKA

    Mikhail Gorbachev’s death has prompted renewed reflections on his domestic, regional, and international legacy.This legacy is of particular interest in light of recent trajectory of the Russian economy.

    In his book, DAVID WOODRUFF situates the process of Russian statebuilding via the consolidation of its money markets since the Soviet Union’s fall.

    From the introduction: 

    “When the Soviet Union finally disappeared at the end of 1991, this was a fact of more historical than administrative significance. Russia’s leadership had already had time to survey its depressing inheritance: an ephemeral authority over the crumbling remnants of the Soviet command economy. Central control over the allocation of production had all but evaporated, replaced by decentralized barter and regional fragmentation. As nearly ninety provinces claimed control over local resources, it began to appear that the new Russia might only be a way station on the path to further disintegration. In these desperate circumstances, Russia’s leaders embarked on twin projects: to create a new basis for economic order and a new foundation for state power. These two projects met at a single point: money. In the new economic order, the desire to make money would set production in motion and ensure the livelihood of both individuals and society as a whole.

    Politicians assumed that making money work would be a simple matter that could be accomplished at a single stroke. On January 2, 1992, a sweeping price liberalization allowed most sellers to name the price of their goods. Freeing prices would promote voluntary, money-motivated, and decentralized transactions—but it was not a program for the devolution of political power. Seven years after the fateful August that spelled the end of the Soviet Union, the project of refounding the state on a new money-driven market economy was very far from accomplished. Initially, barter retreated rapidly. The ruble had achieved universal purchasing power in Russia within months after price liberalization. But its power to command resources never became exclusive. New forms of barter began to spread in the first half of 1994, even as inflation dropped with tighter fiscal and monetary policy. Thenceforth barter became ever more prevalent, taking on new and more ramified forms. Firms and local governments issued their own surrogate monies, closely linked to the barter trade. By 1996, on the order of 60% of local tax receipts and some 40% of federal tax receipts were in kind or in surrogate monies, and efforts to switch to exclusively monetary taxation in the subsequent two years were thoroughly unsuccessful. Russia’s experience provides an exceptional opportunity to investigate an important and yet little studied aspect of state building.”

    Link to the text.

    +  “Instead of the anticipated neoliberal revolutionary break with the past, or the neo-institutional evolutionary ascent to a future capitalism, Russia experienced what I call an involutionary degeneration, brought about by the expansion of the sphere of exchange at the expense of production.” Michael Burawoy’s 2001 article on the Russian transition. Link.

    + Katrina Vanden Heuvel and Stephen Cohen’s 1990 collection of interviews with leaders of the Gorbachev reforms. Link.

    +  On the impact of Soviet reform in Cuba, the Middle East, and Sub-Saharan Africa. Link, link, and link.

    NEW RESEARCHERS

    Hydropower and Droughts in Zambia

    PhD candidate at University College London IMAD UDDIN AHMED studies the political economy of energy. In his doctoral thesis, he examines World Bank-directed hydropower development and climate change in Zambia.  

    From the abstract: 

    “Zambia is one of at least 32 developing countries with a combined population of 1.4 billion people that are more than 25% dependent on hydropower for their grid electricity generation and which have experienced El Niño droughts. El Niño-induced droughts, projected to increase in frequency as average global temperatures rise, mark this reliance as climate vulnerability. Droughts in 2015, 2016, and 2019 rendered low hydropower reservoir levels in Zambia, constraining electricity generation capacity and resulting in unprecedented power outages. Notwithstanding these frailties, the national power utility ZESCO has subordinated the need to achieve system sustainability and diversify its energy supply assets to the path dependent pursuits of subsidising existing consumers and building more hydropower generation assets. The path dependent approach was locked-in by earlier macro-level investment decisions, over which the World Bank had significant influence. Like 17 other countries, Zambia received World Bank investments for hydropower in the 1950s-70s to support mining or industrialisation. Path dependence ultimately undermined the Zambian government and ZESCO’s attempts to enhance Zambians’ welfare. Through analysis of primary collected data, this research shows that the consequences of ZESCO’s path dependence, which resulted in power outages, have had an adverse impact on the driver of Zambia’s future industrialisation – its manufacturing sector. The research shows that ZESCO’s ‘least regret’ path going forward in terms of baseload power, climate impact, human health and financial lifecycle costs involves charging cost-recovery tariffs and diversifying its portfolio of generation assets.”

    Link to the paper. 

    Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

    + + +

    +   “Very few of those involved in making these internal critiques of the liberalism that came before predicted that they were clearing the way for a defeat of the liberal coalition.” New on PW, Luke Herrine reviews two recent books by Beth Popp Berman and Paul Sabin on neoliberalism in US policy. Link. 

    +   Nicholas Mulder on sanctions and climate policy. Link. 

    +   Katie Kedward, Josh Ryan-Collins, and Hugues Chenet on biodiversity-related financial risks. Link. 

    +   “Colleges and universities appear to use greater endowment wealth to increase spending and to become more selective, resulting in higher institutional rankings, but do not increase the size or diversity of their student bodies.” By George Bulman. Link. 

    +   Mark McQuinn and F.M.K. Sallah on unionization efforts in Ghana’s oil industry. Link. 

    +   “Without specific course corrections by policymakers, US industrial policy will be embedded in the existing corporate orientation toward shareholder primacy.” Lenore Palladino and Isabel Estevez advocate for “corporate guardrails” in US industrial policy. Link. 

    +   In the NLR, Pranab Bardhan’s study of today’s India. Link.  

    +   “We study the impact of the Panama Canal on the development of Canada’s manufacturing sector in the years from 1900 to 1939. Our reduced-form estimates show that lowered shipping costs led to greater market integration of marginally productive Canadian counties with key markets both inside and outside of Canada. This development permitted the reallocation of production activity to places whose production levels had been inefficiently low before the Canal opened. A shift from the 25th to the 75th percentile in terms of gains in market access brought about by the opening of the Canal led to a 9% increase in manufacturing revenues and input expenditures. Productivity rose by 13%. These effects persist when general equilibrium effects are considered: the closure of the Canal in 1939 would have resulted in economic losses equivalent to 1.86% of GDP, chiefly as a result of the restriction of the country’s access to international markets.” By Sebastian Galiani, Luis F. Jaramillo, and Mateo Uribe-Castro. Link. 

  4. Pharkamon

    Comments Off on Pharkamon

    DEVELOPMENT MIRACLE

    Last month, Bangladesh requested a $4.5 billion loan from the IMF in order to deal with its foreign exchange reserves alongside a crisis of rising food and energy prices. The nation’s concerns have drawn comparisons to emergencies in Pakistan and Sri Lanka, leading some to question its status as a “development miracle” in the Global South. 

    In her 2017 book, NAOMI HOSSAIN interrogates Bangladesh’s development model and achievements, focusing on its role as the “aid lab” for the international community. 

    From the introduction: 

    “The origins of Bangladesh’s innovative pro-poor public action can be traced to the devastating famine it suffered in 1974, only three years after independence: as many as 1.5 million people—2 percent of the total population—died in this catastrophe, having already been starved, displaced, terrorized, and otherwise harmed during the liberation war of 1971. The fallout from the famine reset the terms of the development project in Bangladesh, making gross failure too costly and too painful for the ruling elite and their allies in the aid complex to countenance. In the shadow of the 1974 famine, the agreement on development came to include, first, a ruling class consensus that their own survival depended on human development and basic social protection. This ensured that protection against national disasters and food shocks was institutionalized as a state priority. Second, a social contract between rulers and ruled committed the former to providing at least a basic minimum protection. This recognized the unusual degree of exposure faced by the rural landless masses to the elements, the volatilities of global markets, and the general vicissitudes of life.

    The third part of the agreement was to pursue broadly pro-market, pro-poor economic and human development strategies in return for recognition and resources from the international community. Because failure was not an option, pride in national self-determination—in a home-grown development ideology that resisted global economic integration—became an unaffordable luxury. The contending elites in the driving seat of development policy agreed their political (and actual) survival depended on making development work. This included accepting aid conditions and creating space for the non-governmental action for which Bangladesh is now so fêted. Bangladesh functions and has primary purpose as a colossal human experiment in development models. In providing resources, technical knowhow, and discipline, the international community has met its part of the development contract with the least developed country, and it largely satisfied with the result.”

    Link to the text.

    +  “Is Bangladesh’s development progress surprising, given its level of economic development?” M. Niaz Asadullah, Antonio Savoia, and Wahiduddin Mahmud investigate the causes of Bangladesh’s “human development surplus.” Link. And Arvind Subramanian on the “paradoxes of the Bangladesh miracle.” Link. 

    +  “With [the Bangladesh Accord’s] rolling out, Bangladesh reprised its role as a site of developmental experimentation, this time in the interests of ethical global production arrangements.” Dina Siddiqi on the Bangladeshi garment industry and working conditions after the 2013 Rana Plaza building collapse. Link. 

    +  From 1996: Debapriya Bhattacharya examines World Bank and IMF activity in Bangladesh from 1974 to 1994. And in a recent piece, Tobias Pforr argues that Bangladesh had been too cautious with its August 2021 IMF ‘Special Drawing Rights’ allocation. Link. 

    NEW RESEARCHERS

    Census Undercounting and Race in Labor Market Research

    Ariella Kahn-Lang Spitzer is a researcher at Mathematica whose work focuses on labor market inequality.

    In a 2018 paper, she examined the long and persistent under-counting of adult black men in the US Census, and the relationship between incarceration and reporting statistics. 

    From the paper: 

    “I analyze data from the Census, the Current Population Survey, and the Survey of Income and Program Participation and find that adult black men are systematically missing from all three widely used datasets. Omitted individuals have lower levels of education, wages, and employment. Therefore, estimates for black men which ignore the undercount will be overstated. Quantifying the bias in estimates using household based survey data requires two key inputs. First, I provide updated estimates of the undercount of prime-age black men that are robust to incomplete vital statistics data. Second, I demonstrate the undercount is primarily driven by non-reporting of the population at risk of incarceration. Disparities between blacks and whites in educational attainment, unemployment rates and annual earnings are understated due to omitting the non-reporting population.

    Link to the paper, link to Spitzer’s website. 

    Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

    + + +

    +   “Traditional justifications for central-bank independence, centering on the importance of monetary-policy autonomy and the lack of a clear distributional pattern, no longer hold in an age of unconventional monetary policy.” New on PW, Fathimath Musthaq on the persistence of central bank interventions post-2008. Link. 

    +   “Our original figures are an underestimate of the true extent of the Energy Charter Treaty’s protection of 1.5°C-incompatible oil and gas assets.” A new report from BU’s Global Development Policy Center on a potential $111.5 billion in assets protected by the ECT. Link. 

    +   “We find that an eviction order increases homelessness, and reduces earnings, durable consumption, and access to credit.” By Robert Collinson, John Eric Humphries, Nicholas S. Mader, Davin K. Reed, Daniel I. Tannenbaum, and Winnie van Dijk. Link. 

    +   Chukwuebuka Bernard Azolibe examines external debt accumulation and foreign direct investent in 25 Sub-Saharan African countries from 1970 to 2017. Link. 

    +   Kevin Young on peasant support for military conquest and attacks on labor in Bolivia during the 1960s and ’70s. Link.

    +   At Carbon Brief, a post by Michael Jakob and Jan Steckel on the global coal phaseout, based on a comparative study of fifteen high and low income coal producers. Link. (For more, see the relevant volume on the political economy of coal here.)

    +   “We find that states covered by Section 5 of the VRA experienced a differential increase in Black prison admissions relative to those that were not covered and that incarceration varied systematically in proportion to the electoral threat posed by Black voters.” Nicholas Eubank and Adriene Fresh study incarceration after the 1965 Voting Rights Act. Link. 

    +   “This paper investigates the impact of the abolition of the civil service exam on local governance in early twentieth-century China. Before the abolition, local elites collected surtaxes that financed local public goods, but they were supervised by the state and could lose candidacy for higher status if they engaged in corrupt behavior. This prospect of upward mobility gave them incentives to behave well, which the abolition of the exam removed. Using anti-elite protests as a proxy for the deterioration of local governance, we find that prefectures with a higher prospect of upward mobility experienced more incidents of anti-elite protests after the abolition.” Yu Hao, Zhengcheng Liu, Xi Weng, and Li-an Zhou on the abolition of Keju and the rise of the “bad gentry.” Link.

  5. Emergency Room

    Comments Off on Emergency Room

    STRIKE WAVES

    In recent months, the UK’s rising living costs and stagnant wages have given rise to a series of strikes across railways, hospitals, and Amazon warehouses.A 1995 article by BEVERLY SILVER considers the relationship between labor unrest and economic cycles, drawing on a database of global labor struggles from 1870 to 1990.From the piece: 

    “With regards to growth rates, the anomalies include: the strong positive annual growth rate in the late 19th century, the zero annual growth rate in the core for the postwar period, and the strong positive annual growth rate in non-core countries.

    We could try other statistical methods or play with changing the dating scheme in order to see if a clearer relationship between labor militancy and long waves can be elicited from the data. However, one look at the indices of world-scale struggle graphed over time makes clear that any such attempt would be misguided. The overwhelming influence on the series are the two world-wide waves of struggle that take place after each of the two world wards. Any relationship between economic cycles and labor unrest is buried beneath the far stronger relationship between world labor unrest and world wars.”

    Link to the text.

    +  More from Silver, on strikes and social turmoil: “The assumption that strike statistics will always reflect escalations in the forms of conflict beyond the strike seems unwarranted.” Link. And in a 1989 paper, Roberto Franzosi examines the deficiencies of official strike statistics. Link.

    +  “Forms of counter-mobilization almost invariably display remarkable heterogeneity even within a single country.” From John Kelly’s 2012 Rethinking Industrial Relations. Link.

    +  “The graph of the membership of virtually every trade-union movement looks like a series of sloping steps, or of broad valleys broken by sharp peaks, or a combination of both; very rarely is it a mere rising slope.” From 1952: Eric Hobsbawm on the fluctuations of social movements since 1800. Link.

    NEW RESEARCHERS

    Climate Shocks and Peasant Rebellions

    Safya Morshed is a PhD student in economic history at the London School of Economics. Her research examines the development of state capacity in Mughal India through the lens of social conflict.

    In a recent blogpost, she examines the empire’s political stability in light of changing weather patterns.

    From the text:

    “Mughals attributed famines to increased political instability after the 1650s, where the movement of troops could result in raids and crop destruction. But climate historians have noted abnormal weather patterns between 1600-1670, with especially poor weather around 1630. If peasant rebellions increased more in the 1630s than 1650s, then it is more plausible they did so because of climate.
    I developed datasets for peasant rebellions and famines. Using centralized, contemporary state histories, I recorded the number, size, type, and date of conflicts which from 1555 to 1680. The timeline suggests that the inhospitable climate of the seventeenth century initiated the spate of peasant rebellions, which prevented revenue collection for an economy quite dependent on agrarian taxes. Moreover, for a state that was increasingly engaged in larger conflicts with enormous armies, peasant flight made it difficult to feed soldiers during times of war. Famines also triggered peasant migrations, leading to structural changes in the economy.”

    Link to the piece, link to Morshed’s website.

    Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

    + + +

    +   From Boston University’s Global Development Policy Center: a new database “tracking loan commitments from Chinese policy and commercial banks, government entities, companies and other financiers, to African governments and state-owned enterprises.” Link.

    +   “We show that the largest increase in unemployment benefits in U.S. history had large spending impacts and small job-finding impacts.” Peter Ganong, Fiona Greig, Pascal Noel, Daniel Sulliva, and Joseph Vavra on the US pandemic unemployment benefits expansion. Link.

    +   “I situate the place of law in colonial South Asia through the formation of property law for coal at the end of the nineteenth century.” Matthew Shutzer on the legal impacts of the coal commodity boom of 1894. Link.

    +   “We empirically characterize how China is internationalizing the Renminbi by selectively opening up its domestic bond market to foreign investors and propose a dynamic reputation model to explain this internationalization strategy.” By Christopher Clayton, Amanda Dos Santos, Matteo Maggiori, and Jesse Schreger. Link.

    +   “This article shows how Milton Friedman’s negative income tax proposal hollowed out redistributive considerations from the hierarchies of needs, notions of duty, or conceptions of citizenship and replaced them with a monetary conception of poverty.” A new article by Daniel Zamora Vargas examines the New Deal origins of the NIT. Link. (h/t Luke H.)

    +   Leslie Hannah and Robert Bennett present “the first available—and near-complete—list of large UK manufacturers in 1881.” Link.

    +   “The emergence of early cities in the southern Mesopotamian alluvium must be understood in terms of the unique ecological conditions that existed across the region during the fourth millennium, and the enduring geographical framework of the area, which allowed for the efficient movement of commodities via water transport and facilitated interaction between diverse social units alongside natural and artificial river channels. By the final quarter of the fourth millennium the social and economic multiplier effects of trade patterns that had been in place for centuries had brought substantial increases in population agglomeration. Concurrent with these increases, and partly as a result of them, important socio-economic innovations started to appear: (1) new forms of labor organization delivering economies of scale in the production of subsistence and industrial commodities to southern societies, and (2) the creation of new forms of record-keeping in southern cities that were much more capable of conveying information across time and space than simpler reckoning systems used by contemporary polities elsewhere. These innovations help explain why complex regionally organized city-states emerged earlier in southern Iraq than elsewhere in the Near East, or the world.” Guillermo Algaze on “The Sumerian Takeoff.” Link.

  6. Digestion

    Comments Off on Digestion

    TAXES

    Last October, the US was instrumental in the signing of a landmark global tax agreement which mandated the imposition of a 15% corporate tax floor on multinational enterprises. The modified Inflation Reduction Act, however, introduces significant loopholes to this standard.

    The US is not the only country to struggle with the agreement’s implementation. A 2018 book chapter by RICHARD WOODWARD considers how the history of global tax policy shapes its contemporary limitations, beginning with WWI.

    From the text: 

    “Fully comprehending the international corporate tax regime’s trajectory and its intransigence requires an account of the role of states as well as private actors. Far from being mere subjects of the international corporate tax regime, private actors have been intrinsic to its development from the beginning. This constellation of state and private interests is the primary reason why only cosmetic changes to the international corporate tax regime have been made over the last 100 years. In contrast, during the same period, the nature of corporate activity has been revolutionized.

    Intensified globalization in the period prior to the First World War inspired the development of mechanisms to address the complications arising from cross-border commerce. By 1914, states, private and professional associations and powerful individuals had developed harmonized rules and standards for trade, transport, communications, intellectual property and units of measure. These issues became politically charged after the First World War. According to the newly installed League of Nations, removing economic barriers to trade and investment would ameliorate conflict by spreading wealth and promoting interdependence. Double taxation was branded a ‘serious impediment to world production, and therefore a threat to global peace.’ The pioneering League of Nations report made three propositions: First, the right to tax should be divided between source and residence countries. Second, although MNCs operate as single economic units, each subsidiary should be treated as a separate legal entity whose tax liability would be assessed by national fiscal authorities as a stand-alone company. Third, that these broad conventions should underpin states’ negotiations on more detailed bilateral treaties.”

    Link to the text.

    +  “Tax professionals are important and influential actors in the international tax regime, and their expertise and global networks have allowed them to gain more control as taxation has become increasingly transnational.” In a separate book chapter, Lyne Latulippe considers how accounting firms shape global tax policy. Link.

    +  “In a world in which international tax policy is no longer predominantly within the purview of the individual state, and the number of important international tax questions has grown dramatically, where is the locus of power?” From 2010, Diane Ring on the crucial role of international organizations. Link.

    +  “Analyses of initiatives against corporate tax avoidance typically focus on the mid-1990s. But contrary to the common perception, many contemporary policy responses had already been developed and discussed in the 1970s.” A 2014 UNCTAD report on the rise and fall of initiatives against tax avoidance. Link.

    NEW RESEARCHERS

    Railroad workers in the Mexican Revolution

    Hector Agredano is Assistant Professor of Geography at Pasadena City College. His PhD dissertation examines the role of railroads and railroad workers in shaping the trajectory of the Mexican Revolution.

    From the text:

    “The Mexican Revolution is usually thought of as a predominantly agrarian revolt where industrial labor remained at the margins. Nevertheless, ample evidence suggests that while campesinos may have played the most prominent role in the making of the revolution, industrial workers, especially railroad workers, were also central to the revolutionary process from its beginning. In this dissertation, I argue that railroad workers were able to intervene at crucial moments of the revolutionary process because of their close relationship to a critically important transportation network—prior to the revolution, their mobility enabled them to aid in the preparations for an armed uprising, and, once the revolution was underway, they provided important logistical support and even participated in battles. Thus, from the democratic revolution of Francisco I. Madero in 1910 to the military campaigns of Francisco Villa in 1914, railroads and their workers shifted the course of Mexican history.”

    Link to the piece, link to Agredano’s website. 

    Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

    + + +

    +   “The fact that unelected, unappointed, for-profit commercial organizations can put a price tag on electoral and policy choices in democracies around the world should give us pause.” On the blog, Zsófia Barta examines the resilience of sovereign credit ratings agencies. Link.

    +   Phenomenal World is hiring an editorial intern for the fall semester. This paid opportunity is open to all CUNY undergraduates. Applications should be submitted by August 12. Please share widely, and see further details on how to apply here.

    +   From REPEAT, preliminary modeling on the climate and energy impacts of the IRA. Link. (See also a thread from Jesse Jenkins of REPEAT on implications not captured in their model.) At CCCP, a report on the good, the bad, and the ugly in the IRA. Link. In the Washington Post, read this piece by Bentley Allen and Joanna Lewis on the industrial policy implications of the bill. See also this thread from the Roosevelt Institute’s Todd Tucker on industrial policy provisions of the bill. And link to a breakdown of investments from the IRA compiled by Ben Beachy of the Blue Green alliance.

    +   “The tendency to neglect the needs of the domestic productive sector has been the structural operation of finance in many parts of the Global South over the last 150 years.” A new paper by Kai Koddenbrock, Ingrid Harvold Kvangraven, and Ndongo Samba Sylla analyzes the finance-production nexus in Senegal and Ghana. Link.

    +   “In 2020, organized labor had $35.8 billion in assets, and $6.8 billion in liabilities, leaving approximately $29.1 billion in net assets.” In a new report, Chris Bohner analyzes the finances of organized labor. Link. And another new report by Vera Weghmann looks at independent trade unions in the UK. Link.

    +   “Insofar as legal scholarship has examined U.S. law within the historical context in which it arose, it has largely overlooked the role that laws and legal institutions played in facilitating the production of the two preeminent market commodities in the colonial and early Republic periods: expropriated lands and enslaved people.” K-Sue Park places US property law in historical context. Link.

    +   “This study estimates the effect of economic conditions on redistributive conflict. We examine land invasions in Brazil using a panel data set with over 50,000 municipality-year observations. Adverse economic shocks, instrumented by rainfall, cause the rural poor to invade and occupy large landholdings. This effect exhibits substantial heterogeneity by land inequality and land tenure systems, but not by other observable variables. In highly unequal municipalities, negative income shocks cause twice as many land invasions as in municipalities with average land inequality. Cross-sectional estimates using fine within-region variation also suggest the importance of land inequality in explaining redistributive conflict.” By Daniel Hidalgo, Suresh Naidu, Simeon Nichter, and Neal Richardson. Link.

  7. Sun and Lavender

    Comments Off on Sun and Lavender

    HEAT WAVES

    The past few months have seen record-breaking heat waves across the globe. In India, a deadly heat wave in May renewed questions around the nation’s health, safety, and economy. 

    In a new article, SOHINI SENGUPTA and MANISH K. JHA examine policy responses to India’s increasingly frequent heat waves, focusing on their implications for labor and national economic strategy.

    From the piece:

    “Increasing heat is described as detrimental to labour in recent policy reports. According to the IPCC 6th assessment report AR6, ‘heat stress conditions reduce outdoor labour productivity (farming and construction)’ since people who work outdoors may fall sick or die. Distress is related to work performed outdoors against work that can be performed indoors under special protection such as ‘cooling’. Framing risk and vulnerability as outdoors/indoors support problematic recommendations. First, advocacy for the structural transformation of national economies such that labour can be shifted from agriculture and construction to services. Second, reducing responsibility of the state from comprehensive social protection to warnings and advisories and health data collection and surveillance and monitoring of working and migrant populations. 

    A ‘heat’ report published by the ILO described heat related stress as affecting the ‘safety of workers’ and reducing their ‘productivity’. Productivity is defined as reduced work capacity and loss of working hours. In the context of heat, the generic workers described in this report apply ‘natural defence mechanism’ such as ‘slow down work’, ‘take more frequent and longer breaks’, ‘limit the number of working hours,’ thereby reducing productivity . Exposed to extreme heat, workers were not just susceptible to disease and death but also inefficient, suggests the above explanation. Drawing insights from the IPCC fifth report and Paris Agreement, the report finds the main consequence of heat stress would be economic costs through productivity loss. The report discusses the vulnerable status of agricultural and construction workers in developing and emerging countries through heat exposure. Such population groups would migrate in large numbers in the context of high informality and inadequate social security where heat stress will compound vulnerability and inequality. India is estimated to suffer maximum (productivity) losses due to a large population and dependence on the two most exposed sectors: agriculture and construction. One of the countries in the region that is presented as a good example of addressing heat stress related losses surprisingly is conflict-affected Myanmar where ‘rapid structural transformation from agriculture to services has taken place. A consistent focus on structural transformation and labour productivity, suggests that heat narratives in this case are less concerned with remedying the inadequate social protection of current workers.”


    Link to the text.

    +  “In the last two decades, an average of 228 billion hours (±27 billion hours/year) of heavy labor have been lost per year due to heat exposure in the 12-hour work day.” On the distribution of global labor losses. Link. And studies of heat and labor productivity in Europe, China, and India. Link, link, link. 

    +  A 2013 report by the National Resource Defense Council examines rising temperatures in Ahmedabad and its effects on construction workers. Link. And recommendations for the city’s heat action plan, the first of its kind in South Asia. Link. 

    +  “The National Action Plan on Heat-Related Illnesses does not focus on protecting people from heat exposure, but rather outlines relatively minor strategies for dealing with the consequences…That will do nothing for the 9 out of 10 employed people in India who are engaged in informal activities with no legal or social protection.” By Jayati Ghosh. Link. And Saudamini Das estimates that urban informal sector workers lose INR 195 per heat wave day. Link. 

    NEW RESEARCHERS

    Facial Recognition Technology & Elections

    FEYAAD ALLIE is a PhD candidate in political science at Stanford University. In a recent paper, he examines the effects of facial recognition technology on voter turnout in India. 

    From the paper: 

    “India piloted facial recognition technology (FRT) in polling stations in one municipality in Telangana state during local body elections in January 2020. I focus on the Telangana State Election Commission’s (TSEC) random assignment of FRT in Kompally municipality to study the effect of FRT on voter turnout. I find that polling stations with FRT had 6.7 percentage points lower turnout compared to those without. I outline three possible mechanisms that could play a role in driving this effect and provide suggestive evidence where possible. One piece of suggestive evidence indicates that the negative effect on turnout may have been stronger in polling stations with a greater share of Muslims. Indian Muslims are a marginalized group with heightened concerns about government surveillance and instant facial recognition especially in light of events in 2020 regarding India’s Citizenship Amendment Act (CAA) and the National Registry of Citizens (NRC).”


    Link to the text, link to Allie’s website.

    Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

    + + +

    +   “The most beautiful theoretical plans for inflation policies crumbled when confronted with the reality of the war economy.” In the latest installment of PW’s series on the price level, Isabella Weber investigates price controls during WWII. Link. See the rest of the series here. 

    +   Phenomenal World is hiring an editorial intern for the fall semester. This paid opportunity is open to all CUNY undergraduates. Applications should be submitted by August 12. Please share widely, and see further details on how to apply here.

    +   “Based on the CBO score, the legislation would reduce deficits by $305 billion through 2031.” The Inflation Reduction Act and the federal budget. Link. 

    +   Katie Kedward, Daniela Gabor, and Josh Ryan-Collins propose a green credit policy regime. Link. 

    +   “Returns of uninsured bonds fall slowly in the weeks following a disaster, by 0.31% on average, translating into investor losses of almost $10 billion.” On natural disasters and municipal bonds, by Jun Kyung Auh, Jaewon Choi, Tatyana Deryugina, and Tim Park. Link. 

    +   Marcelo Ridenti examines a Cold War-era program that recruited leftist Brazilian students for internships in the US. Link. 

    +   Devin Wiggs on the rise of the London Interbank Offered Rate (LIBOR) in global finance. Link. 

    +   “The ratio of mortality rates between ‘normal’ and plague years in the Issyk-Kul’ lake communities (in northern Kyrgyzstan) is not unlike that in Europe during the plague years 1348 to 1350. A proper appreciation of the pandemic outbreak requires setting its timing in a climatic context. After two pluvial episodes in the 1310s and 1320s, precipitation levels in Issyk-Kul’ during the 1330s underwent a sharp decline, thereby depriving sylvatic rodents of sufficient grass to sustain their high population density. Hence, the plague pathogen and its vectors needed an alternative host to maintain their activity.” By Philip Slavin. Link. 

  8. Polite Conversation

    Comments Off on Polite Conversation

    GAZPROM

    This week, Russia’s state-run energy company Gazprom drastically cut gas supplies— delivered via the Russia-Germany Nord Stream 1 pipeline—to Europe. The move amplified longstanding concerns around European dependence on Russian energy. 

    In his 2015 book, STEPHEN F. SZABO examines the expansion of Gazprom into Europe by looking at the company’s role in the evolving Germany-Russia relationship. 

    From the book: 

    “Gazprom’s European strategy is part of its larger international expansion strategy that has been centered around the goal articulated by Alexander Medvedev, director general of Gazprom Export, ‘to become the largest energy company in the world.’ Within Europe its strategy is to diversify its structure to control the distribution and sale of the gas to the European consumer. It has, consequently, diversified into the transportation, distribution, and power-generation industries, including acquiring storage facilities and distribution hubs. It does this through ownership of foreign subsidiaries or shell companies to invest overseas. The liberalization of energy markets in the EU offered an opportunity for Gazprom to expand in Europe, but EU legislation also requires notification of non-EU companies operating in European gas networks, a policy directed against an overdependence on Russian energy. In September 2011, European Commission investigators raided a number of Gazprom’s European offices, including Gazprom Germania in Berlin, with the purpose of investigating allegations that the companies had colluded to divide markets, hindered access to distribution networks and blocked efforts to widen sources of supply. This was part of a wider effort to liberalize European energy markets by making it easier for companies without distribution networks to gain market access through unbundling supply and infrastructure operations.

    Gazprom has tried to increase European energy dependence by attempting to work arrangements with Algeria to establish a cartel to limit Europe’s gas alternatives and to push the South Stream pipeline over over Nabucco, which was designed to limit European dependence on Russian energy. The decision to construct the Trans Adriatic Pipeline (TAP) effectively killed the Nabucco project in 2013. The Nord Stream pipeline is an important component of this strategy. Gazprom does all that it can to prevent a common EU energy policy and prefers bilateral relations and special deals with countries such as Germany and Italy. A common EU policy would foster diversification of sources and unbundle national utilities, in the process cutting profit margins and reducing Gazprom’s incentives to buy European companies. It would also weaken bilateral special relationships with Russia. Gazprom operates in Germany through its fully owned subsidiary, Gazprom Germania. About half the jobs created by Russian firms in Germany are due to Gazprom. These holdings give Gazprom control of 38 percent of the German gas market. The Nord Stream Pipeline is a joint venture in which Gazprom owns 51 percent and Wintershall Holding and E.ON Ruhrgas AG each with 15 percent.” 

    Link to the text.

    +  Jonathan Stern’s 2005 book looks at the history of Gazprom and the Soviet gas industry. Link. And Andreas Heinrich examines Gazprom’s activity in foreign markets in the 1990s and early 2000s. Link. 

    +  “Gazprom’s share of the domestic market decreased from 80 percent in 2008 to 66 percent in 2016, and fell to approximately half of all gas processed domestically in 2018.” Anna Mikulska on Gazprom’s domestic competition. Link.  

    +  Moniek de Jong and Thijs Van de Graaf on the Nord Stream 2 and the limits of EU power in the Germany-Russia gas relationship. Link. And in a recent Phenomenal World post, Nikhil Kalyanpur speaks to Helen Thompson about the geopolitics of energy. Link. 

    NEW RESEARCHERS

    Mortgages & Marriage

    In new paper, research economist at Danmarks Nationalbank ALINA KRISTIN BARTSCHER looks at the effects of the Equal Opportunity Act on homeownership and labor force participation among married couples. 


    From the abstract: 

    “Until the 1970s, U.S. mortgage lenders commonly discounted half of the wife’s income in couples’ joint mortgage applications. This changed with the introduction of antidiscrimination legislation in the 1970s, providing a natural experiment to study the relaxation of income-related borrowing constraints. I study the effects of the reform by estimating difference-in-differences regressions and solving a simple calibrated life cycle model. I find substantial positive effects of the reform on mortgage borrowing and homeownership rates of married couples with working wives. Moreover, I find a positive effect on married women’s labor force participation, which strongly amplifies the homeownership and borrowing effects.”

    Link to the text, link to Bartscher’s website. 

    Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

    + + +

    +   “Tortured constructs reflect a stubborn refusal to accept what Powell freely admits: monetary policy simply cannot reverse hyper-wealth concentration nor revive what Petrou calls ‘shared growth.’ ” New on PW, Melinda Cooper on the Fed, unconventional monetary policy, and Karen Petrou’s Engine of Inequality. Link. 

    +   “The cases of Iraq and Haiti illuminate the persisting importance of odious debt, from colonization to modern day warfare.” Also new on PW, Simon Hinrichsen on the lack of an odious debt doctrine. Link. 

    +   Phenomenal World is hiring an editorial intern for the fall semester. This paid opportunity is open to all CUNY undergraduates. Applications should be submitted by August 12. Please share widely, and see further details on how to apply here.

    +   “Just as outsiders once pillaged the Caribbean for wealth created by the hands of slaves, investors in those former imperial powers now squeezed former territories for their assets, for access to markets, for interest on loans.” In New York Times Magazine, Abrahm Lustgarten on Barbados, the IMF, and climate finance. Link.  

    +   Lee Harris on the absence of labor protections in the USICA. Link. 

    +   Gary D. Libecap and Ariel Dinar examine the impacts of climate change on water access and US agriculture. Link. 

    +   Severin Borenstein and Ryan Kellogg compare the emissions reductions of clean energy standards vs. carbon pricing. Link. 

    +   “The consensus around twenty-first century skills appears less epistemic in nature and more like an ideational echo chamber.” A new paper on the “core skills consensus” of international organizations and global management consulting firms. Link. 

    +   “Measuring within-household mortality allows us to understand patterns of quarantine enforcement in settlements across early modern Europe. Here the focus is restricted to three epidemics that occurred in Bristol – one of England’s most populous and prosperous cities. The analysis reveals household quarantine was enforced in 1603–4 with unprecedented vigour. The effects of quarantine are particularly pronounced in the affluent parishes where elite residence was highest. Greater evidence for enforcement is explained by greater elite oversight and control, as well as their desire to protect their own households. The scale of the impact is shocking. Household quarantine could double within household mortality.” By Charles Udale. Link. 


  9. Compositions in Green

    Comments Off on Compositions in Green

    LOCAL GOVERNMENT FINANCE VEHICLES

    This month China narrowly missed its growth targets, sparking speculation over the economic impacts of its zero-Covid policy. The contraction was heavily shaped by local governments, who, struggling to get loans from institutional bond investors, have begun to offer high interest rates to retail investors in return.

    A recent article by YI FENG, FULONG WU, and FANGZHU ZHANG considers the emergence of Local Government Financial Vehicles (LGFV) in China, and examines their operations through a study of Jiaxing.

    From the piece: 

    “To counteract the impacts of the 2008 financial crisis, China took a proactive strategy with extensive urbanization and infrastructure construction to absorb surplus workers. The strategy was centred  an investment package of four trillion Yuan in urban infrastructure. To implement the national strategy, the central government promised to provide 1.8 trillion Yuan, and it devolved the remaining 2.2 trillion Yuan as tasks to local governments. As local governments were not eligible to borrow externally according to the Budget Law before 2014, they were encouraged by the People’s Bank of China to use LGFVs to seek external finance. LGFVs are ‘entities established by the local governments through injection of land, equity and other types of capital and undertake financing functions for governmental investment projects.’ Moreover, ‘the local governments undertake the joint responsibilities for repayment’ (CBRC, 2011). Encouraged by the central government, China has witnessed a boom of LGFVs.

    The state-owned enterprises specialized in urban development are urban development and investment corporations (Chengtou hereafter). Chengtou constitute the majority of LGFVs. Their functions vary from mega-event projects and infrastructure to ordinary land development. We use a municipal level Chengtou called Jiaxing City Construction Investment Co. Ltd Corporation to investigate the operations of LGFVs. First, we find the insufficiency of land collateral or land premiums to offset previous cost, rendering the previous model of ‘land-leverage-infrastructure’ precarious. Second, we observe the effects of Chengtou regroupment—Jiaxing Chengtou regrouped with other LGFVs to form the Jiaxing Chengtou Group. By doing so, it has extensively developed its financial functions. It could also avoid supervision by exiting the monitor list. While it still undertakes urban projects including land development and infrastructure construction, it uses self-raised funds to finance these projects. Ultimately, Jiaxing Chengtou’s rising debt load was cleared by Jiaxing government bonds in 2016. This demonstrates how financial risks are transferred from local governments to LGFVs, and finally transferred back to governments.”

    Link to the text.

    + In a new article, the authors examine the Shanghai Municipal Investment Corporation: “The municipal government internalizes financial techniques to manage state assets, seek funding, and guide urban development projects.” Link.

    +  “A soaring debt burden and increasingly risky debt structures are not bad outcomes caused by dishonest and incompetent individuals. They are fundamental to the way the [Chinese] growth model works.” On Twitter, Michael Pettis responds. Link. And in an article from April, Pettis examines the sustainability of China’s debt. Link.

    +  A 2018 article by Zhonghua Huanga and Xuejun Du finds that “Local government financing vehicles overbid significantly in terms of land prices.” Link. And from May, Yanbing Han, Min Xiong, Shaoming Cheng and Hai (David) Guo examine “Inter-city competition and local government debts in China.” Link.

    NEW RESEARCHERS

    The World Bank & Resiliency in Dhaka

    Assistant Professor of International Political Economy at the University of Victoria SARAH E. SHARMA studies global environmental governance. In a 2021 paper, she looks at a World Bank-funded environmental resiliency project in Dhaka, Bangladesh. 

    From the paper:

    “In 2015, Dhaka’s Urban Resilience Project (URP) was launched. The URP is a USD 173 million World Bank funded venture. It is locally implemented in partnership with the Bangladeshi state and Dhaka’s northern municipal government, offering a ‘dynamic, coordinated approach to urban resilience.’ Aiming to enhance resilience via preparedness for natural hazards and sustainable growth, the URP is motivated by three factors: first, that Dhaka is overcrowded, polluted and unorganised, second, that the city faces a myriad of shocks, stresses and risks from earthquakes, flooding, heat waves and frequent fires, and third, that it is the central, rapidly growing economic hub in Bangladesh. I argue that resilience under the ambit of the URP depoliticises the problems and proposed solutions to increasing and intensifying environmental hazards in Dhaka. As an expression of the broader resilience policy framework espoused by the World Bank the URP relies on the achievement of development goals through economic and urban growth in Dhaka, combined with small-scale individualistic safety awareness measures that place the onus of environmental safety onto local residents. This approach obfuscates a wider regime of urban development in Dhaka premised upon expansion and densification that exacerbates negative outcomes from environmental hazards such as floods, earthquakes and fires, particularly for individuals living in informal settlements who already face ramifications from urban development including cyclical eviction and displacement.” 

    Link to the text, link to Sharma’s website.

    Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

    + + +

    +   “The long legacy of this fundamental dependency on foreign capital is that it constrains state action. But with that huge caveat, the most recent wave of Pink Tide nationalizations weren’t really hard nationalizations at all.” New on PW, a conversation on resource nationalism and the green transition, featuring Miguel Angel Marmolejo Cervantes, Martín Obaya, Thea Riofrancos, and Alex Yablon. Link. And see a recording of the PW event here. 

    +   “Anti-poverty policy in particular was a project that succeeded because it solved certain racial problems for the state.” Also new on PW, Luciana de Souza Leão interviews Beth Popp Berman on her new book, Thinking Like An Economist. Link.

    +   Reto Bürgisser and Donato Di Carlo on European integration and the pitfalls of tourism-led growth in in southern Europe. Link. 

    +   “We trace how ‘mineralized urbanization’ propels in-migration, rising localized purchasing power, and proliferating service sector and trade activities.” Gold and diamond mining in Ghana, Angola, and Tanzania. Link. 

    +   “If the ECB’s monetary policy instruments do not support the EU’s vision of the future, they will work against it.” Jens Van ‘T Klooster on ECB strategy, inflation, and the green transition. Link. 

    +   David Wallace-Wells on heat waves and lower-than-expected mortality rates in Pakistan and India, featuring PW author Tim Sahay. Link. 

    +   “We document a large racial gap in the UI that unemployed workers receive after filing a new claim.” By Daphné Skandalis, Ioana Marinescu, and Maxim N. Massenkoff. Link. 

    +   “In my research, I show that one coercive nation building policy—military conscription in Sicily in the 1860s—led to backlash in the form of organized crime. From its establishment in 1861, the Kingdom of Italy’s central government introduced a range of nation building policies, including conscription, to strengthen internal stability. Still, in 1863, a key episode deeply compromised the state’s legitimacy in Sicily: a repressive military campaign ordered by the government to curb widespread draft evasion on the island. I document a positive and significant effect of the 1863 repression on the emergence of the Sicilian mafia in 1875, which persists until 1900 when using a different proxy for mafia presence. The results also hold after controlling for other determinants of the early spread of the mafia in Sicily.” By Gianni Marciante. Link. 

  10. The Shoemaker

    Comments Off on The Shoemaker

    SEMICONDUCTORS

    In the midst of a global semiconductor shortage, the US Senate is considering a bill that would fund $52 billion in chip subsidies for domestic production. Today, the vast majority of semiconductors are produced in East Asia, and 90 percent of advanced chips are produced by the Taiwan Semiconductor Manufacturing Co.  
    In their 2000 book, JOHN A. MATHEWS and DONG-SUNG CHO examine the origins of Taiwan’s semiconductor industry, which grew from public investment and technology transfers with the US. 

    From the book: 

    “[Taiwan’s Electronics Research and Service Organization] scoured the world for knowledge of integrated circuit (IC) fabrication, emulating Japanese methods of study tours and knowledge leverage. In 1976 RCA was prevailed upon to transfer its obsolete IC fabrication technology to the fledgling ERSO. RCA was at this point thinking of getting out of semiconductors, and saw no harm in earning some royalties on its 7-micron technology, then severely behind the world LSI best of 2-micron circuit design. From ERSO’s perspective, the technology transfer from RCA offered a window into the secret world of advanced technology. A group of young and enthusiastic engineers spent the best part of a year in the US and at ERSO learning the technology of IC fabrication from RCA. It is out of this group that virtually the entire senior echelons of the subsequent semiconductor industry in Taiwan was formed. ERSO built its pilot IC fabrication plant under RCA guidance, and started producing its own experimental chips. ICs such as those needed in electronic watches were produced first, using RCA designs. Later the ERSO engineers were able to produce their own designs, and tweak their equipment to improve the yields, so much so that by 1978 or 1979 ERSO was securing better yields than RCA itself. The US firm started buying chips from its erstwhile pupil, albeit on a very small scale. 

    But Taiwan’s leaders were much more ambitious. Principal among these leaders was Dr K. T. Li. He served as Minister for Economic Affairs and went on from there to the Ministry of Finance. As ERSO was embarking on its semiconductor venture, Li retired from the Ministry of Finance, and looked around for ways to stimulate the country’s high-technology development. His first act was to call together the country’s scientific and technical elite to consider the country’s future. This conference, staged in 1978 and attended by 400 of the country’s best and brightest, proved to be a landmark event. The conference adopted a ‘Science and Technology Development Program’ which was subsequently endorsed by Cabinet. Most significantly, it called for the creation of specialist infrastructure needed to support advanced industries like semiconductors.”

    Link to the text.

    + “The history of the Korean semiconductor industry started with the foreign direct investment of US firms like Fairchild and Motorola in the mid 1960s, which were increasingly investing in low-wage countries in order to reduce their production costs.” A 1996 OECD report on the development of the Korean semiconductor industry, by S. Ran Kim. Link. 

    +  “By announcing an allocation of US$9.78 billion towards developing a full-stack semiconductor ecosystem, New Delhi made clear that industrial policies are its instruments of choice.” Pranay Kotasthane and Arjun Gargeyas argue that India should follow Taiwan’s path in semiconductor production. Link. 

    +  “Many of today’s chips will be obsolete in the time it takes Congress to pass legislation affecting them.” A report on semiconductors from the Foreign Policy Research Center. Link. And for some of the best analysis on semiconductors, see Employ America’s 2021 series on the topic. Link.

    NEW RESEARCHERS

    Wind Turbines & Land Control in Mexico

    Gerardo A. Torres Contreras is Research Fellow in Energy Justice and Transitions at the University of Sussex Business School. In a recent article, he examines the social and economic effects of wind farms in a Mexican ejido—a parcel of land distributed after the Mexican Revolution of 1910.

    From the paper:

    “In 1994, La Venta, Mexico became the first ejido to have a wind farm installed. Wind energy investment in the ejido has been so significant that, by 2020, they have extended to over 50 per cent of the land, occupying 3,221.8 hectares. Drawing on agricultural censuses on the ejido, discontinuous fieldwork in the region from 2017 to 2019, and 40 semi-structured oral history interviews focused on wind energy expansion and land use dynamics with current and former land authorities, activists and ejidatarios, this paper argues that wind investment has accelerated patterns of social differentiation among landowner subgroups, thereby exacerbating pre-existing land inequalities. In an ejido where land allocations were skewed towards a few hands at its foundation and land deals are regulated by the Agrarian Law, large landholders have capitalised on the wind industry by diversifying their income and differentiating their trajectories from those with less land. The socio-material arrangements brought about by wind energy in the ejido La Venta have allowed small landholders to sustain their livelihoods by relying on their petty agricultural productivity and using wind rents as a safety net. This suggests that, in the ejido land system, pauperisation rather than displacement is a likely outcome for this subgroup.” 


    Link to the text. 

    Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.

    + + +

    +   “Biden’s EV tax incentive and López Obrador’s lithium nationalization are evidence of nascent competition between the US and Mexico around billions in potential green investments in the automotive sector.” New on PW, Alejandra González Jiménez examines the history of Mexico’s automotive sector and the present-day politics of electric vehicle production. Link.

    +   “Abolishing Sri Lanka’s much-hated executive presidential system of government through a comprehensive package of political reforms will have to be a priority in the policy agenda of any new government.” Jayadeva Uyangoda on Rajapaksa’s resignation. Link. 

    +   Antonio Freitas and Alessandro Miebach compare racial inequality in Brazil and the US in the 21st century. Link. 

    +   Kate Bayliss, Elisa Van Waeyenberger, and Benjamin O. L. Bowles on private equity in England’s water sector. Link. 

    +   Su Yeone Jeon on trade policy and GM wheat in Argentina. Link.  

    +   “Real disposable income for the bottom 50% was 20% higher in 2021 than in 2019, but fell in the first half of 2022 as the expansion of the welfare state during the pandemic was rolled back.” Thomas Blanchet, Emmanuel Saez, and Gabriel Zucman construct “real-time” income distributions. Link. 

    +   Alisha C. Holland examines joint organizing efforts of unionized and contract workers in Peru and Chile. Link.  

    +   “After the Civil War a near-consensus did emerge in the United States regarding key goals that ought to guide U.S. relations with Latin America, and Mexico in particular—including creating new markets for American exports, expanding U.S. investment in Mexico’s mining and agricultural industries, and developing cross-border transportation networks to enable the movement of Mexican minerals and other raw materials into the United States. These aims elicited a considerable degree of unanimity in an otherwise deeply divided post–Civil War society. That fact was not lost on certain prominent editors, journalists, and political leaders who in the early 1870s began to call for a nationwide effort to extend U.S. financial and commercial influence south of the Rio Grande. A unifying mission of national aggrandizement abroad, they hoped, would help Americans forget the wartime resentments many of them still held toward one another.” By Alys Beverton. Link.