Category Archive: Sources

  1. Dancers

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    OIL DISCOVERIES

    Exxon recently announced three oil discoveries off the coast of Guyana, increasing the company’s recoverable oil potential in the country to 11 billion barrels. These discoveries have added to the high likelihood of Guyana becoming a major global oil producer in the next decade. 

    In a 2021 paper, ARIF BULKAN and ALISSA TROTZ examine the political history of Exxon in Guyana, looking at the government’s negotiations with the company and its geopolitical implications. 

    From the paper: 

    “In 1999, the People’s Progressive Party/Civic government secretly awarded a contract including a ten-year petroleum prospecting license to Esso Exploration and Production Guyana Limited (EEPGL), a consortium including Exxon as oilfield operator. The license covered 6 million hectares, more than 11 times the legal limit, in water depths ranging from 200 to 3,000 meters. The ‘A Partnership for National Unity’ –’Alliance For Change’ (ANPU-AFC) coalition government, after taking over in 2015, continued its predecessor’s secretive approach. Only after sustained public pressure did the government publish the updated Production Sharing Agreement (PSA) it had signed with EEPGL 18 months earlier, in June 2016. Exxon holds 45%, Hess 30%, and China National Offshore Oil Company 25% of the shares in the consortium. Local environmental activists have characterized the PSA as the equivalent of handing a blank check to Exxon and its partners. Even the IMF has described its terms as ‘generous to the investor.’ Guyana is entitled to royalties of 2% of gross revenues and 50% of profit oil (what remains after recoverable costs are accounted for). But its position is undermined by provisions that enable Exxon to recoup 100% of its development costs (estimated at $960 million in 2019) as well as annual recoverable costs of up to 75% of revenues. The consortium and affiliated companies are also exempt from most taxes.

    To be sure, oil has placed Guyana firmly on the geopolitical map, given the size of the proven reserves and its long-running border dispute—which includes the offshore oil production sites—with Venezuela. That Guyana has become important for energy geopolitics was clearly signaled by the September 2020 arrival of US Secretary of State Mike Pompeo. It was the first visit to Guyana by a US secretary of state, and was part of a Venezuela-focused trip that also took Pompeo to Suriname, Brazil, and Colombia—on the eve of what would turn out to be his country’s own controversial election. At a joint press conference with Ali, Pompeo emphasized that they had discussed ‘the need for democracy in Venezuela and an end to the illegitimate Maduro regime.’ The message was clear: Guyana is now expected to be a compliant junior partner not only in multinational-led extractivism, but also in regional geopolitical projects.” 

    Link to the text.

    +  “Guyana willingly accepted inferior contractual terms in exchange for the prospect of bolstered security ties with the US.” Jim Krane compares foreign direct investment and geopolitical strategy in Guyana and Qatar. Link. 

    +  “The IMF predicts that Guyana’s projected real GDP will grow by the staggering amount of 85.6% in 2020.” From a 2020 essay by Aliyah Khan on Guyana’s ‘El Dorado’ moment. Link. And Luis Fernando Panelli on the challenges and opportunities presented by oil discoveries, including the possibility that Guyana will soon have the highest GDP per capita in South America. Link. 

    +  “Maduro has vowed to ‘reconquer’ the Essequibo, issuing decrees in 2015 and 2021 to establish Venezuelan maritime boundaries that encompass Guyana’s exclusive economic zone and repeatedly deploying military reinforcements to the disputed border.” Paul Angelo and Wazim Mowla argue that the Ukraine invasion will intensify conflict between Guyana and Venezuela over its oil fields. Link. 

    NEW RESEARCHERS

    Capital Investments in Public Libraries

    Peter Nencka is Assistant Professor in economics at Miami University. A 2021 paper co-authored with Gregory Gilpin and Ezra Karger looks at the effects of public library investment in the US. 

    From the paper:

    “In this paper, we analyze a ubiquitous yet understudied local institution: the public library. In 2018, there were 9,261 library systems across the United States with 15,427 branches. Libraries spent $12 billion on operating costs and patrons checked out over 2 billion items. This funding supports widespread library use: more than 50% of Americans visit public libraries each year. A particularly important focus of library services is child development. In 2018, children checked out more than 750 million library items and attended events more than 80 million times at libraries nationwide. We study how capital investment in public libraries affects library operations, patron usage, and local communities, with a focus on student achievement. We use detailed panel data on the near-universe of public libraries and school districts in the US to show that public library investment increases children’s attendance at library events by 18%, children’s checkouts of items by 21%, and library visits by 21%. Increases in library use translate into improved test scores in nearby school districts: a $1,000 or greater per-student capital investment in local public libraries increases reading test scores by 0.02 standard deviations and has no effects on math test scores.”


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

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

    + + +

    +   “If we are in a new era called Bretton Woods III, it is the most weaponized form of the global dollar system yet.” New on PW, Mona Ali on the evolution of dollar hierarchy. Link. 

    +   “By giving systemic direction to public and private investment, sectoral planning enables bold and rapid experimentation, and coherent and effective action—precisely what is required today.” Also new on PW, Max Krahé on planning the green transition. Link. 

    +   Phenomenal World is looking for a part-time editor with experience in editing or publishing to join our team. Apply here, and please share widely. JFI is also hiring for a strategy position and two research positions. See the job postings here. 

    +   “The implied cost per year of employment retained was $169,000 to $258,000, equal to 3.4 to 5.2 times median earnings.” An evalution of the Paycheck Protection Program (PPP). Link. 

    +   Theodore Kahn and Zack Zimbalist investigate how foreign direct investment influences Mexican state governments’ fiscal authority. Link. 

    +   On border securitization and the implementation of Aadhar, India’s biometric ID project, in the Northeastern state of Tripura, by Nafis Aziz Hasan. Link. 

    +   “We find that that non-college workers now effectively face a housing-inclusive urban wage penalty, while workers with college education continue to face a significant urban wage premium.” Philip G. Hoxie, Daniel Shoag, and Stan Veuger on workers in high-productivity cities. Link. 

    +   A new study finds unionized nursing homes saw lower resident mortality and worker Covid-19 infection rates than nonunionized nursing homes in the US. By Adam Dean, Jamie McCallum, Simeon D. Kimmel, and Atheendar S. Venkataramani. Link. 

    +   Douglas Irvin on the motivations for trade liberalization between 1985 and 1995. Link. 

    +   “We study whether the institution of indentured migration between 1860 and 1912, generated political and economic consequences within India. We find that districts with higher proportions of indentured migration were associated with higher voter turnout, a smaller margin of victory, and a lower probability of ‘running’ a candidate unopposed. Moreover, these outcomes were stronger in districts with higher caste fragmentation. Essentially, given two districts with the same share of indentured migrants, the district with higher caste fragmentation had more competitive elections. The 1920 franchise expansion differentially expanded the right to vote for the intermediate caste group relative to both the advanced castes (already benefitting from British patronage), and the backward castes, who did not qualify for the vote. The higher proportionate net-migration of intermediate castes was associated with greater political competition.” By Ashish Aggarwal, Ritam Chaurey, and Pavithra Suryanarayan. Link. 

  2. The Victorious

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    DOMINICAN REPUBLIC

    A top economic advisor in the Dominican Republic recently estimated that the loss of Russian and Ukranian visitors would cost the country $400 million in tourism revenue. With 9.5 percent of GDP traced back to tourism reciepts, the DR is the most tourism-dependent country in Latin America. 

    In a 2008 paper, AMALIA L. CABEZAS examines the history of the sector and its effects on the Dominican labor market. 

    From the paper: 

    “International tourism in the Dominican Republic grew slowly at the end of the 1960s as a way of generating development without making large investments in manufacturing and technology. Since tourism relies on the packaging of natural assets, it was considered to support economic growth by using existing resources, such as sandy beaches, a warm and sunny climate, ‘friendly people,’ and local arts and music. In 1968 the Plan Nacional de Desarrollo established the outline of a strategy for the tourism sector. In 1971 the Central Bank established a department for the promotion of tourism development to be financed by the World Bank. Through loans and with the technical expertise of the World Bank and Inter-American Development Bank, in the 1970s the Dominican Republic began to move away from state-led industrialization and sugar toward tourism and free-trade zones. The acceleration of its incorporation into the global economy was facilitated by structural adjustment programs that, for example, devalued the Dominican peso in 1987 to help the country compete for foreign investment. 

    Tourism rapidly displaced sugar as the main source of earnings, and by 1997 it was generating more than half of the country’s total foreign exchange. The government created generous tax concessions to stimulate foreign investment with the goals of producing employment, paying off the foreign debt, and generating revenue. In the long run, however, this approach failed to create sustainable development or to enhance the well-being of the majority of the population. National elites have benefited, as the increasing polarization of income indicates, but the majority of the population has been relegated to positions of servility in a competitive labor market that provides predominantly low-paid, seasonal, and unstable jobs.”

    Link to the text.

    +  Lauren Duffy, Garrett Stone, H Charles Chancellor, and Carol Kline conduct a survey of coastal households in the DR, finding widespread tourism dependence. Link. 

    +  Tamara Diana Wilson looks at the impacts of tourism across Latin America, including in Bolivia, Chile, Ecuador, and Peru. Link. And Wasiq Khan examines the divergence in industry between the DR and its neighbor, Haiti. Link. 

    +  “Particular factors that affected the economy at the time were the slowdown in tourism after the September 11th attacks on the USA, the reduced growth rate of the USA’s economy, and higher petroleum import prices.” Jose R. Sanchez-Fung on the links between tourism, dollarization, and the New Millenium banking crisis in the DR. Link. 

    NEW RESEARCHERS

    The History of RCTs

    Luciana de Souza Leão is Assistant Professor of Sociology at the University of Michigan. In a 2019 paper co-authored with Gil Eyal, she offers a historical perspective to the current wave of randomized control trials in development economics. 

    From the abstract:

    “We compare recent development RCTs with an earlier wave of development experiments dating from the 1960s and 1970s to investigate the links between the academic success of randomistas and historical changes in the development aid industry. We show how the recent privatization and fragmentation of the foreign aid sector enabled randomistas to bypass the political resistance to randomization among development workers and beneficiaries, which had bedeviled their predecessors. Comparing current development RCTs to earlier experiments, we find that they tend to be of shorter duration, smaller scope, and that they often limit themselves to evaluating only what can be easily measured. While this might be useful to cement the alliance between randomistas and global foundations interested in demonstrating the impact of their giving, we argue that the targeted interventions characteristic of the randomista movement obscure the harder task of addressing the complex mechanisms reproducing global poverty.”

    Link to the paper, link to de Souza Leão’s website. 

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

    + + +

    +   “Elite institutions are just as capable of cost deception—in fact, their prestigious status and undeserving rank shields them against detection.” A new report by Laura Beamer and Eduard Nilaj analyzes how elite private colleges underestimate college costs. Link. 

    +   Three on the IMF, sovereign debt, and climate: Kate Aronoff on the IMF’s “half measures” for debt relief around the world, Catherine Osborne on Ecuador’s inability to meet climate goals, and Lee Harris’ recent PW essay on IMF austerity & Pakistan’s renewables sector.  Link, link, and link. 

    +   Gregor Semieniuk on how industrial policy can advance the low-carbon transition. Link. 

    +   Chen Li and Huanhaun Zheng on the regulatory dilemma following China’s stock market crash of 2015. Link. 

    +   Ramaa Vasudevan on the Fed’s corporate bond-purchase program in 2008, and its implications for the Fed’s pandemic response. Link. 

    +   “We link satellite smoke plumes with labor market outcomes to estimate that an additional day of smoke exposure reduces quarterly earnings by about 0.1 percent.” Mark Borgschulte, David Molitor, and Eric Zou study the labor market effects of wildlife smoke in the US. Link. 

    +   Linda Yin-nor Tjia examines China’s joint projects in Kazakhstan over the past 30 years, linking them to the nation’s rising geopolitical importance and its oil-driven sovereign wealth funds. Link. 

    +   “The debate on whether managerial control was divorced from share ownership in early twentieth-century Britain exhibits an extreme lack of consensus. Here we substantially resolve these issues, relying on a source, the Investor’s year book. This directory itemizes shareholder numbers and the amount held by directors: fuller information than is available in the UK for the next eight decades. The results are striking: the level of board ownership in British companies was lower before the First World War than observed anywhere towards the end of the twentieth century. The conventional wisdom that the century experienced a revolutionary ‘divorce’ of ownership from control and the rise of a new ‘managerial’ capitalism is an urban myth.The evolution of managerial control in the UK was substantially complete before 1914.” By James Foreman-Peck and Leslie Hannah. Link. 

  3. The Getaway

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    NATIONAL SCHOOL LUNCH PROGRAM

    The latest version of the Omnibus spending bill ends the extension of child nutrition waivers, which expanded access to meals during the school year and summer. The move foreshadows challenges for school meal programs, a cornerstone of welfare policy since the establishment of the National School Lunch Program (NSLP) in 1946. The NSLP currently serves approximately 30 million children and is the nation’s second largest food program. 

    A 2014 article by JENNIFER GEIST RUTLEDGE examines the emergence of the NSLP amidst post-war politics of national security and agriculture. 

    From the piece:

    “It is unlikely that the path dependence of previous programmes and the positive feedback accrued to agricultural subsidies would have been strong enough to break the federal government’s natural reluctance to take on issues of family and child welfare. The Second World War created a connection between national fitness, security and child malnutrition in the United States in a way similar to that created by the Boer War in Great Britain 40 years earlier. In addition, a concern with women’s employment and their ability to provide meals for their children served to highlight attention on a school lunch programme. Thus, within a political and economic context of existing limited lunch programmes and existing agricultural subsidy programmes, teachers, women’s advocates, supporters of agriculture and children’s advocates reached out to use the language of security that was readily available due to the end of the Second World War. 

    Evidence for this framing comes from the way in which defenders of the programme spoke about it in various Committee hearings, including Wallace and Flanagan, who both flagged the importance of the school lunch programme as a guard against communism and Nazism, statements made in the public hearings which connected the lunch programme to national security, and President Truman’s statement when he signed the bill where he highlights the utility of the programme in strengthening the nation, as just a few examples. Further evidence comes from the language used in the bill itself, which highlights national security as one of the goals of the programme. Although agricultural interests were at stake, using the ideas of national security and the established connection between nutrition and fitness for national service, supporters of the national school lunch programme were able to make a compelling argument that did not focus only on Southern agricultural interests and had national resonance.” 

    Link to the text.

    +  “For the first 15 years of its existence, the NSLP served primarily as an outlet for surplus commodities and only secondarily as a nutrition program for children.” Susan Levine’s 2010 book traces the history of the program. Link. 

    +  “Schools already face a ‘trilemma’ involving the meal’s nutrition, student participation, and program cost.” A 2008 USDA report on the NSLP and its challenges in the 21st century. Link. 

    +  Petter Lundborg and Dan-Olof Rooth track lifetime income effects of Sweden’s free lunch program. Link. And Alka Mohan Chutani examines India’s school lunch program, which benefits approximately 140 million children. Link. 

    NEW RESEARCHERS

    High-Paying Firms & Amenities 

    In his job market paper, PhD candidate in economics at the University of Pennsylvania JASON SOCKIN examines wages and amenities offered by higher-paying firms in the United States. 

    From the abstract:

    “Do higher-paying firms offer more favorable work, or compensate for less favorable work? Using matched employee-employer data for the United States, this paper estimates the joint distribution of wages, amenities, and job satisfaction across firms. Forty-eight amenities are captured by applying topic modeling to workers’ free-response descriptions of their jobs. There are three main findings. First, high-paying firms are high-satisfaction firms because they offer better amenities: 81-92 percent of the rise in job satisfaction from moving to a higher-paying firm reflects improved non-wage aspects. Second, workers, especially high-earners, are willing to pay for job satisfaction, gaining in amenity value at least 54-101 percent of the average wage when moving from the worst- to the best-amenity firms. Third, since the elasticity of amenity value to wages across firms is positive (1.0-1.8), incorporating non-wage amenities nearly doubles the variance in total compensation across firms. Wages therefore understate firm-level inequality.”

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

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

    + + +

    +   “The result of the negotiations is that the IMF has reimposed loan conditions that directly contradict its own stated aims of upping the cost of carbon and fostering renewable energy.” New on PW, Lee Harris examines how IMF conditions are harming Pakistan’s green energy sector. Link. 

    +   “It’s only really since Iraq in the 1990s, which led to the Oil-for-Food Program, and then more recently, Iran and Venezuela, that the international community has tried to reduce commodity exports of countries to zero.” A transcript of last week’s event on the Russia sanctions and global commodity markets, hosted by Alex Yablon and featuring Javier Blas and Nicholas Mulder. Link to the transcript, link to the event recording. 

    +   “Both institutions are under pressure from their rich donor governments to sideline economic development and poverty reduction—and shift focus to reducing carbon emissions.” Vijaya Ramachandran and Arthur Baker on the IMF, the World Bank, and climate change. Link. 

    +   Qi Zhang and Linke Hou on ‘land fiscalization’ and local developmental states in China. Link. 

    +   Agnieszka Smoleńska and Jens van’t Klooster on the microprudential rulebook and EU initiatives to decarbonize the banking system. Link. 

    +   “In August 2021, a parliamentary standing committee report estimated that around 320 million children in India had not stepped into a classroom for more than a year and had lost a tenth of their schooling as a result.” Arghya Bhaskar and Ayushi Arora on the challenge of digital schooling in India. Link. 

    +   Garrett Anstreicher, Jason Fletcher, and Owen Thompson examine the long-term effects of school desegregation orders. Link. 

    +   The Political Economy Research Centre on the rise of ‘rentier nationalism’ and its main beneficiaries, including “asset-owning households, monetary elites, platforms, and outsourcing contractors.” Link. 

    +   “In early modern Venice, wine and money were intrinsically linked through the pawnbroking service that innkeepers and bastioneri, the managers of wine warehouses (bastioni), offered their customers. The loans that they supplied were generally small, officially interest-free, and frequent. Moreover, at least one-third of each was paid in wine, at that time considered a staple. Hence, innkeepers and bastioneri were central figures in Venice’s urban context, especially for the poor. Those individuals were the main actors in what might be termed a ‘handkerchief’ economy, named for one of its most pawned items. The Venetian public authorities did not simply tolerate or perfunctorily regulate this pawnbroking activity; they officially recognized and institutionalized it.” By Matteo Pompermaier. Link. 


  4. Alive in a Box

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    TRADE UNIONS

    Last week, the independent Amazon Labor Union won a NLRB election at a Staten Island warehouse, with around 55 percent of workers voting to join the union. Heralded as a watershed for new organizing opportunities for low-wage, service sector, and immigrant workers, the victory represents a break with organizing strategies that have been dominant since at least the 1990s. 

    In a 2004 edited volume, CAROLA FREGE and JOHN KELLY examine varying strategies for trade union revitalization in the UK, US, Germany, Italy, and Spain.

    From their chapter:

    “The position of unions hinges on the specific political, economic, and legal provisions that regulate union activity in the larger political and economic system. The differential focus of national union movements on these dimensions is also shaped by the nature of the crisis in which unions find themselves. But the dimensions of revitalization unions target are not entirely determined by their position in their respective industrial relations, political, or economic systems. These exogenous variables are influential and constraining, but not determinant. Unions, as organizations, have some leeway in deciding whether they want to focus their efforts and resources on gaining political or economic power or both, whether pursuing internal organizational or leadership changes is vital to their renewal efforts, and how crucial is the membership dimension. We thus introduce the element of strategic choice to our explanation of the variation in importance of revitalization dimensions.

    The most significant revitalization strategies we’ve identified are: organizing, partnership relations with employers, political action, union restructuring, coalition-building, and international solidarity. These six strategies embrace all major relations between the union and the other key actors within the economy, political system, and civil society, namely workers, employers, the state, social movements, and labour movements in other countries. How do we explain the different ways in which union movements choose among these strategies? It is the combination of institutions, state and employer strategies, union structures, and union identities that prove important in accounting for the choices made by unions.” 

    Link to the book.

    +  “Assessments about the future of labor movements are based—explicitly or implicitly—on a judgment about the historical novelty of the contemporary world.” From Beverly Silvers’ Forces of Labor. Link.

    +  “If every Walmart looks pretty much the same, the experience of working at Walmart varies considerably.” Adam Reich and Peter Bearman’s 2020 study of work relations, collective identity, and unionization efforts in the world’s largest company. Link.

    +  Inspired by the 1936 pamphlet used by ALU organizers, a 1994 comparison of trade union strategies in the UK and German steel industries, by Nicolas Bacon, Paul Blyton and Jonathan Morris. Link.

    +  “It will take a comprehensive strategy that combines an analysis of corporate vulnerabilities with an on-the-ground strategy of small successes to show workers that it’s worth risking their livelihood for a union.” From last year, our interview with Kim Voss. Link.

    NEW RESEARCHERS

    City Credit Ratings

    Davon Norris is a PhD Candidate in Sociology at The Ohio University. In a new paper, he investigates the effectiveness of transparent formal criteria in city credit ratings. 

    From the abstract:

    “Using original data on credit ratings for 109 US city governments from 2002 to 2009, I test whether a rating agency’s rating criteria is applied evenly across cities. Results provide evidence of a political double standard where liberal-leaning cities are evaluated according to a more strict application of rating criteria requiring these cities to have higher performance for similar ratings compared to their conservative counterparts. These findings highlight a mechanism producing inequality between cities and demonstrate how generating meritocratic and unbiased evaluations requires more than the existence and transparency of rating criteria.”

    Link to the paper, link to Norris’ website. 

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

    + + +

    +   On Friday, Phenomenal World hosted a discussion on economic war and the commodity shock, featuring Nicholas Mulder and Javier Blas, moderated by Alex Yablon. View the recording here. 

    +   “The problem is that pairing escalated sanctions with stabilization measures is harder than it seems.” Edoardo Saravalle on a “half-hearted” economic war. Link. And read Saravalle’s recent PW essay on the mechanics of the Russia sanctions. Link. 

    +   Zoltan Pozsar on the commodities trade and Bretton Woods III. Link. 

    +   On Brazil’s retail instant payment system, by Angelo Duarte, Jon Frost, Leonardo Gambacorta, Priscilla Koo Wilkens and Hyun Song Shin. Link. 

    +   Robert Huang and Matthew Kahn compare carbon emissions from public transit in the US and Europe. Link. 

    +   Giovanni Favara, Camelia Minoiu, and Ander Perez-Orive on zombie firms, highly levered firms with weak growth prospects. Link. 

    +   A September 2021 article by R. Ramakumar critiques Sri Lanka’s decision to ban the use and import of chemical fertilizer. Link. 

    +   Sameen A. Mohsin Ali and Rasul Bakhsh Rais on the roots of inequity in Pakistan’s health system. Link. 

    +   “How did the occupational structure of southern and northern Italy evolve in the decades and centuries before their unification (1861)? The conventional wisdom traces the origin of the north-south divide to the high middle ages (c. 1000-1300), when autonomous cities in the centre-north specialised in commerce and industry, while feudal monarchies in the south specialised in agriculture. Revisionist historians disagree: for them, in 1861 there was no difference in standards of living between northern and southern regions. We find that – consistent with the conventional wisdom and against the revisionist view – the agricultural occupational share in 1861 was in the order of 10 percentage points larger in the south than in the centre-north. We thus overturn the biased picture emerging from national censuses of southern Italy being more industrialized than the centre-north at the time of unification.” By David Chilosi and Carlo Ciccarelli. Link. 

  5. Carriers

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    STATE BANKS

    This week, approximately 50 million workers in India engaged in a national strike against what they see as the “anti-people policies” of Narendra Modi’s government. The public banking sector experienced one of the largest disruptions, with employees protesting government proposals for privatization. 

    India’s massive public banking sector is largely a result of Indira Gandhi’s 1969 bank nationalization policy. In a 2005 article, ROBIN BURGESS and ROHINI PANDE evaluate the effects of the public banking expansion on rural poverty. 

    From the text: 

    “Nationalization in 1969 brought the 14 largest commercial banks under the direct control of the Indian Central Bank. Following this, the Central Bank launched an ambitious branch expansion program, which sought both to expand the rural bank branch network and equalize individual access to banks across Indian states. To ensure that rural branch expansion translated into increased credit and savings opportunities for the rural population, the Central Bank regulated banks’ deposit-taking. Between 1969 and 1990, rural lending rates were kept below urban lending rates, with the opposite being true of savings rates. After bank nationalization, the Central Bank also mandated that banks’ lending portfolios meet lending targets with respect to ‘priority’ sectors. These included loans to small businesses and small-scale entrepreneurs, and to agriculture. Finally, to ensure that banks did not concentrate their lending in urban areas, the Central Bank required that every bank branch maintain a credit-deposit ratio of 60 percent within its geographical area of operation.

    Our focus is on examining the impact of the branch-expansion program on rural poverty.  Between 1961 and 2000, the number of branches opened in rural unbanked locations in our sample states increased from 105 to 29,109. Eighty percent of this expansion occurred between 1977 and 1990. After 1990, there was no further expansion into unbanked rural locations. Indian national household survey data document a dramatic rise in the importance of banks as a source of rural household credit. Between 1961 and 1991, bank borrowing as a share of total rural household debt increased from 0.3 percent to 29 percent. Evaluated at the sample mean, we find that rural branch expansion can explain a 14 to 17 percentage point decline in rural headcount—roughly half the overall fall across the period. Economic growth overall, and of nonagricultural output in particular, has been linked to rural poverty reduction over the period. Rural branch expansion promoted growth in sectors, which have been shown to affect rural poverty most strongly.” 

    Link to the paper.

    +  “The near total neglect of rural credit in the first phase of financial sector reforms is largely responsible for the current sorry state of the rural credit delivery system.” N.A. Majumdar on the 1991 banking sector reforms. Link. And M. G. Bhide, A. Prasad and Saibal Ghosh analyze the reforms’ effects on state bank performance and capitalization. Link.  

    +  A 1998 article by B. Sakunthala and K. Sainath Nemali examines collective bargaining in the Indian banking sector, with a particular focus on the All India Banks Employees Association and the National Confederation of Bank Employees, two of the main unions which participated in the recent national strike. Link. 

    +  “It seems that the 1967 electoral debacle convinced Mrs. Gandhi, who during her first term as Prime Minister had pursued a merely technocratic approach to the problems of the day, of the need for the party to take a leftist turn.” Michelguglielmo Torri on Indira Gandhi’s decision to pursue bank nationalization. Link. 

    NEW RESEARCHERS

    Long-Term Care & the Deficit Reduction Act of 2006

    In her job market paper, YINAN LIU, Assistant Professor at Renmin University of China, looks at Medicaid long-term care following a provision in the 2006 Deficit Reduction Act to restrict access based on home equity. 

    From the text:

    “In the last two decades, there has been a substantial increase in long-term care (LTC)
    expenditures in the United States. Total LTC expenditures rose from $125 billion in 1996 to $350 billion by 2016. This rapid growth of LTC spending is due to two reasons: high demand and huge cost. About 42% of adults aged 65 and above have reported functional limitations in 2017. Meanwhile, the cost of LTC is overwhelming compared to seniors’ income. Before 2006, the primary residence was a non-countable asset when determining eligibility for Medicaid LTC services, and therefore acts as a popular channel for sheltering assets. However, after the passage of the Deficit Reduction Act (DRA) in 2006, individuals with home equity above $500,000 were not able to receive payments for Medicaid LTC services. This is the largest change to Medicaid LTC eligibility since its enactment in 1965. I find that in response to the DRA, single elderly individuals reduced their home equity by $66.75K (12.1%), while increasing non-LTC consumption by $10.5K (22.5%). Using these findings and a two-stage budgeting model, I then estimate that seniors’ willingness to pay for Medicaid LTC is $1.2 per dollar of its net resource cost.” 

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

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

    + + +

    +   “Economic War and the Commodity Shock.” Join Phenomenal World on Friday, April 8 at 11 am ET for a conversation with Javier Blas and Nicholas Mulder on sanctions and commodity markets, moderated by Alex Yablon. Register here. 

    +   “Where I get off the boat with the Rawls-Nozick debate is that I am not talking about Country A and Country B in the abstract past, present or future. I am discussing the relations between the United States and Haiti.” New on PW, Lily Hu interviews Olúfẹ́mi Táíwò. Link. 

    +   Adriano do Vale on the doctrine of central bank independence in the 1920s. Link. And see Aditi Sahasrabuddhe’s PW essay on the history of CBI. Link. 

    +   “We document significant and persistent price dislocations in secured and unsecured wholesale dollar funding markets between US money market funds and highly-rated global banks.” By Iñaki Aldasoro, Torsten Ehlers, and Egemen Eren. Link. 

    +   Joseph Allchin on foreign investment and corruption in Bangladesh’s growing electricity sector. Link.  

    +   An analysis of 134 debt default and restructuring events in 52 countries between 1980 and 2018. By Aitor Erce, Enrico Mallucci, and Mattia Picarelli. Link. 

    +   “We find that SSI removal increases the number of criminal charges by a statistically significant 20% over the next two decades.” Manasi Deshpande and Michael G. Mueller-Smith examine long-term effects of changes ushered in by the 1996 welfare reform law. Link. 

    +   Betty Espinosa, Ana María Goetschel, and Fernando Carrasco on the reform of Ecuadorian universities under Rafael Correa and a regional move towards a globalized university system. Link. 

    +   “This paper assesses the long-run economic development of China by constructing a new estimate of male occupational structure during 1734-1898 by sector, sub-sector pattern, and region. This paper demonstrates that the national male occupational structure was nearly identical in 1761-70, 1821-30, 1881-90, suggesting a long-lasting structural stasis of the national economy, allowing for fluctuations between benchmark dates. Within agriculture, substantial regional differences in labor organization are found. Three distinct models are found: the Northern Regions model features a high usage of wage labor, the Yangtze Valley model presents a high level of tenancy development, and the Southern Regions model displays the highest share of landowners.” By Cheng Yang. Link. 


  6. Mangroves

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    PETROBRÁS

    Brazil’s nearly 70-year-old national oil company, Petrobrás, faces criticism from across the political spectrum for its simultaneous price hikes and record breaking annual profits.

    In a 2016 book chapter, TYLER PRIEST exposes the distinct tensions between means and ends which have characterized the company from its inception.

    From the text:

    “Political elites in Brazil had always believed the country possessed hidden oil riches. So certain were they that in 1953 they created a state-owned oil company, incubated under the slogan, ‘o petróleo é nosso’ (the oil is ours), even before there was any oil to claim. Like in many other nations, the Brazilian oil industry was born in a wave of nationalist fervor. But the objectives and results were different. Other state-owned oil companies (or national oil companies, NOCs), such as Mexico’s Pemex, Venezuela’s PDVSA, or Norway’s Statoil, were created to manage large oil reserves previously discovered by foreign companies, and to develop these reserves for export. Petrobrás, by contrast, started off with an overriding imperative to turn Brazil into an oil producer in order to meet rising consumption at home. The most apt comparison to Petrobrás, in this regard, is Shell Oil.

    By the early 1990s, Petrobrás had become an aggressive investor in offshore technology, and an internationally competitive state-owned enterprise. Petrobrás’s ability to discover and develop large offshore oil fields, however, depended on a constant infusion of outside geological, geophysical, and engineering expertise. I examine the largely unacknowledged role of multinational oil service companies, contractors, and consultants in the creation and maintenance of an otherwise nationally controlled oil sector. Once deepwater discoveries were made offshore Brazil, cooperative research and development through joint industry projects, involving many of the same contractors operating in both the deepwater Gulf of Mexico and Campos Basin, enabled Petrobrás to bring them on production. The creation of Brazilian industrial capacity to support upstream oil development thus came after discovering large reserves, not prior to it, and by participating in international technological networks, not operating independently from them.”

    Link to the chapter.

    +  “We analyze the relationship between the state, Petrobrás and industrial elites in light of Brazil’s renewed emphasis on sector specific industrial development.” A 2018 article by Eliza Massi and Jewellord Nem Singh reflect on the company’s development role in the aftermath of the Lava Jato scandal. Link.

    +  “In 2007, President Luiz Inacio Lula da Silva announced the discovery of the largest oil reserves found on the planet. In 2013, it was announced that the pre-salt field was to be handed over to an international consortium of oil companies.” Einar Braathen analyzes social movements against the auctioning of oil fields. Link.

    +  From 1993, Laura Randall examines Petrobrás’s “labor relations, the development of its suppliers of capital goods and research, and its impact on the economy and environment in Brazil.” Link.

    +  “After 1918, Brazilian governments became increasingly hostile to the foreign geologists who explored within national territory, and in 1927 a journalist called for legislation to ‘defend’ Brazil’s yet undiscovered oilfield.” From 1972, Peter Seaborn Smith offers an intricate look at early Brazilian energy politics. Link.

    NEW RESEARCHERS

    Chinese Firms and Investment Risks

    Assistant Professor at the University of Denver ALVIN CAMBA studies the political economy of development in Southeast Asia. In a 2021 paper, he compares how Chinese firms approach investment risk in the Philippines, Malaysia, and Indonesia. 

    From the abstract:

    “How do Chinese firms assess investment risk? I argue that major Chinese firms tend to invest in countries whose leaders they perceive as strong. However, their perception of a host country leader’s strength arises from a range of subjective and relational factors, including their party school socialization, Chinese state’s preferences for strong leaders, efforts by the host country regime to ‘sell’ the image of a strong leader, and information brokerage by Chinese think tanks. Thus, the path taken by Chinese firms cannot be fully explained by ‘objective’ measurable indicators such as policy bank financing or natural endowments; social relationships and norms are crucial too. There are also unintended consequences of investing in countries where they consider leaders to be strong. If the leader turns out to be weak, this ultimately increases the likelihood of cancellation of ongoing major Chinese projects. In contrast, if the leader is indeed strong, this strategy could result in pushback, leaving Chinese firms vulnerable to the leader’s whim to act against Chinese interests. To illustrate, I draw on elite interviews, contrasting Chinese investment in the Philippines under Arroyo (2001–2010) and Duterte (2016-), Malaysia under Najib (2009–2018), and Indonesia under Jokowi (2014-).”

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

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

    + + +

    +   “Piketty wants to say: you introduced progressive taxation before, you can do it again. But we cannot have the alignment of the early twentieth century today.” New on PW: Noam Maggor interviews historian Robin Einhorn on the origins of the American fiscal state. Link. 

    +   “Built upon a unique and complex history of state land ownership, this massive housing initiative has transformed the way of life for a historically rural, agriculture-driven nation.” In a new report in JFI’s Social Wealth portfolio, Naomi Zewde & Vivian Schwab examine a social housing program in Addis Ababa. Link. And view a recording of this week’s event on the report, urbanization, and high-density public housing here. 

    +   “Our estimates indicate that making that expansion permanent would cost $97 billion per year and generate social benefits with net present value of $982 billion per year.” A cost-benefit analysis of a US child allowance. Link. 

    +   Fabio Bulfone on comparative political economy and industrial policy. Link.

    +   Ryan Briggs on the failures of IRBs. Link. 

    +   “We use newly digitized records from the U.S. Post Office to study how strengthening state capacity affects public service delivery and innovation in over 2,800 cities between 1875-1905.” By Abhay Aneja & Guo Xu. Link. 

    +   Matthew Eagleton-Pierce on state capitalism and the City of London Corporation. Link. And see a recent PW Sources on the City of London. Link. 

    +   “Using sanctions against very large economies will simply not be possible without compensatory policies that support the sanctioners’ economies and the rest of the world.” Nicholas Mulder on the Russia sanctions and lessons from the 1930s. Link. And an interview with Thane Gustafson in n+1 on oil and gas after the sanctions. Link. 

    +   Sunil Kashyap examines the mobilizing forces of small caste- and religion-based senas and their role in the BJP’s victory in Uttar Pradesh, India. Link. 

    +   “Marriage strategies in the rural Basque country of the 19th century differed according to social background and gender. Propertied families helped some of their children to settle in local rural villages and others to emigrate to cities (women) or to America (men). Landless families, by contrast, continued to settle most of their children in local rural villages, others emigrating to America only later in the century, avoiding the cities at all cost. Men, no matter their social background, benefited the most from new economic opportunities because most of them married into families of equal or higher status. Women, by contrast, did not have equal opportunities because few married upward and outside their professional group. When women did not marry within their socio-professional group or remain single, they married into families of lower status (more often than men).” By Marie-Pierre Arrizabalaga. Link. 

  7. Cows Between the Palm Trees

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    STANDARDIZED TIME

    In December 1973, Richard Nixon announced the Emergency Daylight Saving Time Energy Conservation Act as a response to the oil crisis, arguing that making the time change permanent would reduce energy usage with “only a minimum of inconvenience.” Nearly fifty years later, the US Congress is again considering making daylight savings time permanent, with the measure passing in the Senate this week.

    Looking at the politics of standardized time throughout the nineteenth and twentieth centuries, a 1972 article by EVIATAR ZERUBAVEL probes how the expansion of US railways shaped standard time zones for the rest of the world.

    From the text: 

    “Given the tremendous power of the railroad companies in the United States, it should come as no surprise that the movement toward standardizing time originated in the railroad world. Soon after the railway system was introduced to the country, many communities adopted the time of their railroad station as their only valid standard of time. As becomes a rapidly secularizing and expanding society, the railroad station was clearly dethroning the church and the town hall as the nerve center of a standard temporal reference framework. However, while adopting the time of the railroad station was very useful for standardizing time reckoning at a local level, it could not help temporal coordination at the supralocal level, since each community still adhered to its own local time, which was not coordinated with those of other communities.  

    Each company came to agree on one standard of time (usually the local time of the city where its headquarters or main terminal were located) to be used on all its lines. Thus, the New York Central, for example, used New York time throughout its entire system, while the Pennsylvania used Philadelphia time. While things were relatively orderly at the level of each particular railroad company, the situation was quite chaotic at the level of each particular community. At the train station in Buffalo, for example, there were three different clocks indicating three different time. This involved serious practical difficulties in using the railway system effectively. A far more serious consequence than sheer inconvenience, however, was actual danger. Since terminal traffic was controlled by tight arrival and departure schedules, a difference of a minute or two could actually be the difference between a safe operation and a collision. Thus, in order to promote the effective use of a complex railway network as well as prevent accidents, it became necessary to standardize time reckoning at a level higher than that of the railroad company. The ground was set for a most ambitious project-—the standardization of time reckoning at the level of the entire North American continent. This also entailed the introduction of a new institution—the standard-time zone.”

    Link to the text.

    +  “Year-round daylight-saving time, or ‘war time,’ as it was named by Presi­dent Roosevelt, began on February 9. 1942. Its purpose was to help dissipate evening peaks in the consumption of electric power.” Ian R. Bartky and Elizabeth Harrison’s 1979 article on the adoption of daylight savings time in the US. Link. 

    +  “When daylight saving time was instituted in World War I, labor further resented the manipulation of what they saw as their customary day.” Charles Maier on the politics of time, wage labor, and the nation state. Link. “The continental United States should adopt “HBO time.'” In a 2020 post, Gabriel Mathy on how to fix US time zones. Link.

    +  “The protesters who clung to local Bombay time had harnessed the motivational
    forces of urban identity against British rule in India.” Vanessa Ogle compares resistance to standardized time in Bombay and Beirut. Link. And Geoff Gordon examines competing interests and the role of international governance in the establishment of Indian Standard Time. Link. 

    NEW RESEARCHERS

    ‘Ungreen’ Infrastructure in Indonesia

    PhD candidate at the Asia Research Center at Murdoch University, Australia, TRISSIA WIJAYA studies the political economy of infrastructure. In a 2021 paper, she scrutinizes the development of ultra supercritical (USC) coal power plants in Indonesia.

    From the text:

    “Since coming to power, the Joko Widodo (‘Jokowi’) government has promoted green infrastructure as a means to boost economic growth, level out decades of uneven developmental gains across the country, and to accelerate action transition to a low-carbon economy. In recent years, a number of large-scale power projects have indeed been developed through private sector – a fusion of foreign and domestic capital. However, rather than renewable projects, USC coal-fired power plants have so far dominated the FTP’s list. I examine the contradictory development of ‘green’ projects in Indonesia and specifically unpack: how transnational politico-economic forces have secured a stable sustainability fix for the USC and how they have tamed opposition forces and reshaped governance strategies for intensified accumulation. I attempt to empirically demonstrate how such process unfold through two case studies – Cirebon II developed by Japanese and Korean companies and the Java 7 project funded by China. Albeit each have different alliance formations and strategies, both cases demonstrate that the safeguarding of stable conditions for sustainability fixes of USC power plant development is primarily determined by contestation, conflicts, and compromises between socio-political forces – international fractions of capital, state apparatuses, Indonesia’s PLN and coal oligarchy as well as broader civil society actors. They reshape governing strategies that are ultimately organised through the Indonesian state and react to the selectivity of state strategies which privilege dominant forces.” 

    Link to the paper. 

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

    + + +

    +   Join JFI on Friday, March 25 at 10 am ET for a discussion on Ethiopia’s Integrated Housing Development Programme: a plan to build hundreds of thousands of state-subsidized condominiums to confront rapid urbanization in Addis Ababa. The discussion will center on a forthcoming report by Naomi Zewde and Vivian Schwab analyzing the scale and success of the project, and feature Emanuel Admassu, Brook Haileselassie, Miriam Hillawi, and Areej Al-Musalhi. Register here. 

    +   Swati Srivastava on the East India Company’s “company-state” and the development of modern state sovereignty. Link.

    +   “I have long argued that commodity traders don’t matter to the global economy in the same way that Lehman Brothers did: the collapse of one won’t trigger a global recession. And yet, they remain too big to be ignored — and a possible source of big trouble if left unattended.” Javier Blas on turmoil in commodity markets. Link.

    +   “This article puts together the first comprehensive account to date of what appears to be publicly knowable about the nature and scope of U.S. banking organizations’ physical commodities activities.” A 2012 paper by Saule Omaraova on financial firms and commodity trading. Link. And Adam Tooze’s Chartbook on the fallout of the Russia sanctions in commodity markets. Link.

    +   “Treaties may be interpreted in light of a State’s obligations concerning human rights, environmental protection, and Indigenous peoples, giving legal form to the pursuit of supply chain justice in the energy transition.” Oliver Hailes on international law in the lithium industry. Link.

    +   “The central bank freezes have irked him more than the announcement of European weapon deliveries to Ukraine.” Dominik Leusder on the Russia sanctions. Link. And, last week on PW, Edoardo Saravalle on the same. Link.

    +   Nathan S. Balke, Xin Jin and Mine Yücel quantify the impact of the shale revolution on oil markets. Link. 

    +   A study of a 2016 New York City intervention which randomly made 2,428 initial primary care appointments for undocumented immigrants found a 21% fall in emergency department use for participants. Link. 

    +   Morgan Ricks, John Crawford, and Lev Menand make the case for FedAccounts and central bank digital currency. Link. 

    +   “The end of the American Civil War brought the end of slavery, but it did not bring the end of the Southern planters. Using data from Texas, we show that former slave owners made up more than half of all state legislators until the late 1890s. Legislators with slave-owning backgrounds were more likely to be Democrats and voted more conservatively even conditional on party membership. A county’s propensity to elect former slave owners was positively correlated with cotton production, but negatively with Reconstruction-era progress of blacks. Counties that elected more slave owners also displayed worse educational outcomes for blacks in the early twentieth century.” By Luna Bellani, Anselm Hager, and Stephan E. Maurer. Link. 


  8. Spring Time Chaos

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    THE CITY OF LONDON

    Among the cities experiencing pronounced ripple effects from the Russian sanctions is London, whose financial institutions and luxury property market have long attracted Russian investment.

    A 2006 book by YOUSSEF CASSIS examines the city’s political history and its longstanding influence over European financial markets.

    From the text: 

    “At the end of the 1950s and the beginning of the 1960s, the emergence of Euromarkets gave a new impetus to capital flows and brought about a realignment of the hierarchy of international financial centres, from which the leading beneficiary was the City of London. They date back to the beginning of the 1950s, when, for various reasons, dollar deposits started to accumulate in European banks, especially in London. The cold war played a role in this process, the Soviet Union and the eastern European countries preferring to deposit their assets in American currency in Europe, for fear of having them frozen in the United States if tension in the international climate were to mount. The first deposit of this type was allegedly that made in Paris by the Banque commerciale pour l’Europe du Nord, a Russian bank whose telegraphic address was Eurobank—hence the name Eurodollars.

    London’s ‘Big Bang’ of 1986 was in some ways the culmination of these transformations. But it was the abolition of exchange control in 1979 that, by giving a new boost to capital exports and foreign issues denominated in sterling, formed its pivot. This resulted in far greater interaction between national and international activities in the City. By 1986, an agreement between the London Stock Exchange and the government abolished fixed commissions and  the separation between the functions of brokers and jobbers. It also permitted banks to buy member firms, hitherto banned. This brought about the disappearance of almost all the leading brokerage houses, which were simultaneously faced with soaring computing costs and tempted by extremely enticing offers. They were taken over by merchant banks, as well as by the main commercial banks, both British and foreign.”

    Link to the text.

    +  “The world’s leading financial center, the City of London, is run by the City of London Corporation (CLC), which handles rivalries over power and territory at the local, national, and international level.” A 2013 article by Vincent Piolet. Link.

    +  Leila Simona Talani analyzes how the City’s bankers, lawyers, accountants, company formation agents, tax advisors, fiduciaries, and other professionals contribute to its appeal for illicit assets. Link.

    +  Stuart Ross Thompstone’s 1991 dissertation on “the pivotal position of the City of London in financing Russia’s trade” before 1914. Link.

    NEW RESEARCHERS

    Patronage in the 2008 Sichuan Earthquake

    PhD candidate in economics at Boston University YIMING CAO studies development, political economy, and bureaucracy. In his job market paper, he looks to the 2008 earthquake in Sichuan Province, China to expose links between substandard construction, building collapse, and patronage ties. 

    From the paper:

    “The study is situated in the context of the 2008 Sichuan earthquake, one of the most devastating catastrophes in modern history. The earthquake occurred in Sichuan Province, China on May 12, 2008, killing a total of 87,587 people, making it the third deadliest earthquake of the 21st century, and the 18th of all time. Most of the deaths resulted from the collapse of buildings. Using an original dataset that covers 1,065 buildings in the quake-affected area, I find that buildings constructed when the county officials had connections to their superiors at the prefecture level (in terms of having the same hometown) are 13 percentage points (83 percent) more likely to collapse relative to the no-connection benchmark. I find suggestive evidence that the effects likely reflect a lack of building code enforcement due to shirking or rent-seeking by connected officials. Aggregated damage statistics at the county level suggest that one additional year of having a connected official is associated with an 8 percent increase in mortality and a 3 percent increase in direct economic loss from the earthquake. By associating building damage with patronage networks of past county officials when the buildings were constructed, I provide evidence that patronage created societal vulnerabilities that led to greater damage from the earthquake.” 

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

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

    + + +

    +   “The world-historical power of Treasury Department PDFs and FAQs is effective at ending business, but less so at restarting it. The overcompliance that defines the strength of sanctions at the start of a campaign can turn into a drag on the diplomacy phase.” New on PW, Edoardo Saravalle on the Russia sanctions. Link. 

    +   “Despite shaping many aspects of people’s lives, the effects of capitalism are not consciously conceptualized until the emergence of political economy in the 18th century.” Also new on the site, Maya Adereth and Neil Warner interview historian William Sewell. Link. 

    +   “What’s Next for Cash-Based Social Policies?” Join JFI and the Urban Institute on Monday, March 14 at 3 pm ET for a conversation on the expanded CTC campaign in Tulsa, Oklahoma. More information here, and register here. 

    +   “In the short run, a stop of Russian energy imports would lead to a GDP decline in range between 0.5% and 3%.” An EconTribute brief on the economic effects of a stopping Russian energy imports to Germany. Link. And the International Energy Agency’s 10-point plan to reduce the EU’s reliance on Russian natural gas. Link. 

    +   Esfandyar Batmanghelidj reviews Nicholas Mulder’s The Economic Weapon and Isabella Weber’s How China Escaped Shock Therapy, examining economic warfare in the West. Link. 

    +   “The closer one gets to the periphery of global capitalism, the more likely inflation is to be a product of monetary power.” Karina Patrício Ferreira Lima and John Hogan Morris on the core-periphery dynamics of inflation. Link. And see Patrício Ferreira Lima’s PW essay on debt crises in the periphery. Link. 

    +   “The cost of medicines in Bangladesh is among the lowest in the world.” Md Shahiduzzaman Sarkar and Jagjit Kaur Plahe on Bangladesh’s pharmaceutical industry and expected changes as a result of TRIPS compliance. Link. 

    +   Kris James Mitchener, Kim Oosterlinck, Marc D.Weidenmier, and Stephen Haber predict winners of civil wars using international financial markets. Link. 

    +   “Our analyses of real-world data suggest that the expanded CTC did not have negative short-term employment effects that offset its documented reductions in poverty and hardship.” A study of the expanded CTC from April to December 2021. Link. And see JFI’s analysis of the CTC’s poverty impacts. Link. 

    +   “Across the Eurasian continent, from England to Korea, silver suddenly became abundant in the late 13th century, only to become scarce again in the 1360s. The annual silver output from the London mint and the yearly silver rupee issued in Bengal moved virtually in tandem, arguably as a result of the Mongol empire lifting silver out of the lower tiers of the market and maintaining its flow along the highways of long-distance trade. In this first silver century, monetary usages formed multiple strata, and the circulation of silver remained in a high-level circuit in the hierarchy of monies. This contrasted with the second silver century, beginning in the 1570s, which ushered in a system of competition between territorial states, some of which vertically cemented the tiers of their domestic markets with credit, and created a space for compatible monies.” By Akinobu Kuroda. Link. 

  9. Inertia

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    WHEAT

    Russia and Ukraine account for nearly a quarter of the world’s wheat supply, leading to concern about the invasion’s impact on global wheat markets and food security. Global dependence on wheat is a relatively new phenomenon, emerging in the postwar period as developed nations rapidly increased wheat exports. 

    In a 1995 article, HARRIET FRIEDMANN looks at how dynamics of trade agreements and global food policy led to the massive rise of wheat consumption around the world. 

    From the piece: 

    “For the Third World, the wheat complex was the major source of food import dependency. When previously self-provisioning countries began to import food in the 1950s and 1960s, the food they imported most of all was wheat, no matter what the customary dietary staples. The average price per ton of wheat in 1959—61 was $66, 25% higher than maize and more than six times higher than rice. It was almost five times the price per ton of petroleum. Why should importers buy such expensive grain, particularly in those countries in which it was not a customary food? The answer is that much wheat trade was organised not through markets, but through other agreements. Third World countries, both colonies gaining independence and Latin American countries which had pursued import substitution policies in the 1930s and 1940s, had little foreign exchange, and that little had to buy whatever imports were necessary to build industries.

    Why did Third World countries import wheat instead of investing in national food supplies to support industrial and urban development, as European countries had done earlier? The answer is both material and ideological. First, the USA wanted to get rid of the surplus stocks of wheat it accumulated through domestic farm programs, and this conveniently coincided with a mix of foreign policy and humanitarian goals. The US government, through the Marshall Plan, had invented foreign aid as a mechanism to increase trade despite lack of dollars by prospective importers. In 1954 it adapted this mechanism to food aid through PL480. Second, Third World countries welcomed cheap food, that is, wheat imports subsidized by the US government, as an aid to creating an urban working class. The ideology of development focused on industrialization to the point of obsession.”

    Link to the text.

    +  “The major outcome of these surplus‐disposal schemes—notwithstanding their vague humanitarian goals—was that many developing countries became hooked on the most expensive grain.” Ángel Luis González‐Esteban revisits wheat in the second food regime. Link. 

    +  A report by Ghada Ahmed, Sona Nahapetyan, Danny Hamrick, and Jonathan Morgan examines the rise of Russian wheat production in the 1990s and its vulnerabilities in the global value chain, particularly for Middle Eastern consumers. Link. 

    +  In his dissertation, Shahram Azhar looks at wheat production and agrarian development in the Pakistani and Indian states of Punjab, which produce five percent of the world’s wheat supply. Link. 

    NEW RESEARCHERS

    Unemployment in Colombia, Mexico, and Brazil 

    In his job market paper, doctoral student at the University of Utah PEDRO CLAVIJO investigates the presence of hysteresis in unemployment rates in three Latin American countries.

    From the paper:

    “This document attempts to distinguish between the hypotheses of hysteresis and structural unemployment using Bayesian time-series methods. This study brings the case of three Latin American countries with different degrees of development; the medium industrialized Mexico and the more commodity-exporting Colombia, as extreme cases. In the middle, we have the-medium-industrialized-commodity-exporting Brazil. These three countries exhibit drastic differences in terms of the unemployment rate level. On the one hand, we have Mexico with a stable low unemployment rate, and, on the other, Colombia with a stubbornly high unemployment rate. Brazilian unemployment, for its part, has fluctuated constantly between high and low levels. The model selection exercise suggests that the unemployment rate in Colombia is merely structural, while we found substantial hysteresis effects in Brazil and Mexico. The most important finding that emerges from this study is that hysteresis effects found are varied in nature. In Mexico, demand drivers propelled hysteresis effects, and in Brazil, those effects are fostered by supply determinants.”

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

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

    + + +

    +   “I say that the Age of Empires is gone because you can no longer find the native clients to help you rule.” New on PW, Maya Adereth and Neil Warner interview sociologist Michael Mann on states, history, and warfare. Link. 

    +   “This year’s negotiated rulemaking underscores that the pipeline to student debt should be constrained through institutional mechanisms.” In a new report, JFI Lead Researcher of Higher Education Laura Beamer comments on the Department of Education’s ongoing regulatory negotiations. Link. 

    +   Three from Flexport on the Ukraine crisis and supply chain effects: logistics and manufacturing, airfreight, and commodities. Link, link, and link.

    +   “Sanctions are no longer scalpel-like instruments that exploit globalization. At their current scale, they are a tempest that will change the nature of globalization itself.” Nicholas Mulder in the Economist on the watershed moment for sanctions. Link. Elsewhere, Mulder looks back to the weaponization of sanctions in Italo-Ethiopian War. Link. In Foreign Affairs, a review of Mulder’s bookThe Economic Weapon, and on Tuesday, a launch event for the same.

    +   “We are at financial war. This is made all the more emphatic by the decision to apply the most draconian financial sanctions to a violator of international law not in retrospect but in the middle of an ongoing conflict in an attempt to cripple the aggressor-state.” Adam Tooze in the New Statesman. Link. 

    +   “Western sanctions, and a sinking ruble, will have devastating effects on the people of Central Asia.” Jennifer Brick Murtazashvili in the Washington Post. Link. 

    +   Devleena Ghosh, Gareth Bryant, and Priya Pillai examine investment and state policy around a solar energy project in Karnataka, India. Link. 

    +   New research on the geography of the Black Death, by A. Izdebski et al. Link. 

    +   Mateo Rossa and Raúl Delgado-Wise examine innovation and uneven development in the US and Mexican auto industries. Link. 

    +   “This article presents archival data on rebuilding costs and interest rates from the Corporation of London, 1666–83, to analyze how, in the absence of banking or capital market finance, the London Corporation funded the rebuilding of London after the Great Fire. Using a variety of archival sources of the Corporation of London, we have been able to reconstruct the building expenditures and to show how they were financed by the new sea-coal tax and borrowing from private citizens. The Corporation could borrow from citizens at much lower rates than financial historians have previously realized. We document, for the first time, the mechanics of how the deficits incurred during the reconstruction brought about the eventual default in 1683. We document the financial maneuvering of the Corporation that allowed it to defer default for a few years. The City’s default in 1683 was almost inevitable given the Orphans’ Fund situation, but the City may have benefited from the Crown’s default—the Great Stop of the Exchequer—in 1672.” By D’Maris Coffman, Judy Z. Stephenson, and Nathan Sussman. Link. 

  10. The Window

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    PIPELINES

    German Chancellor Olaf Scholz’s suspension of the Nord Stream 2 pipeline project has provoked numerous commentaries on potential geopolitical, growth-related, and inflationary ramifications.

    A 2012 book by JEFF MAKHOLM presents a comparative analysis of global pipeline development, focusing on institutional and political challenges specific to the industry.

    From the introduction:

    “Pipeline capital is land bound and immobile. Pipelines are built from one spot to a distant one. By far the most efficient method of inland fuel transport, pipelines serve particular oil and gas producers at one end and refineries, gas distributors, or power plants at the other—often a continent away. Uncertainty or commercial opportunism at either end of the pipe can strand facilities and wreck the value of invested capital.

    The pipeline industry is thus inherntly difficult to study. While all oil and gas pipelines perform similar physical functions, the institutions that surround them are stubbornly dissimilar from country to country. The institutions that shaped oil and gas pipelines in the United States arose more than a century ago in response to public disgust over industry practices that are now largely forgotten. The institutions surrounding the great investor owned pipeline systems in Europe, Australia, or South America are rather new by comparison, as they developed with the pipeline privatizations of the late twentieth century. The interlocking alliances that the pipeline industry requires are key to understanding institutional variation. Chief among them is vertical integration: oil and gas producers tend to use vertically integrated pipelines as weapons against nonintegrated rivals.” 

    Link to the text.

    +  “Russia’s oil sector has its roots in the organizations of the Soviet oil industry.” From 2013, Arild Moe and Valeriy A. Kryukov survey the recent history of Russian oil. Link. In a recent article, Valeriy Kryukov and Anatoliy Tokarev present a spatial analysis of patent activity in Siberia and the Arctic. Link.

    +  “The construction of large energy transport systems in the mid-Atlantic region between 1820 and 1930 was crucial to creating an energy-intensive world.” Christopher Jones explores the history of American canals, pipelines, and transmission wires. Link.

    +  John McKay on “Baku Oil and Transcaucasian Pipelines, 1883–1891.” And another article by Francois Cadieux considers “Western Technology and Early Russian Pipelines, 1877-1917.” Link and Link.

    NEW RESEARCHERS

    Global Urban Development & the Ford Foundation

    In a 2020 paper, SAM COLLINGS-WELLS, PhD candidate in American history at Cambridge, studies a series of Ford Foundation projects in the 1960s that sought similar strategies to address urban crisis in Delhi and the United States. 

    From the paper:

    “Between 1958 and 1966 the Ford Foundation embarked on a series of pilot projects of ‘urban community development’ in India and the United States. Thinking about the urban crisis through the prism of international development encouraged the Ford Foundation to cycle techniques freely between their programming at home and abroad. We can clearly see the extent to which crime prevention was baked into their developmental mission from the start; delinquency and crime were to be prevented through the participation and concomitant ‘modernization’ of deprived urban communities. Yet despite this emphasis on crime control, in practice urban community development proved far more combustible than its rural counterpart. After encouraging the participation of impoverished residents in the process of urban renewal, the Ford Foundation struggled to control the channels into which this discontent flowed. In both India and the United States, attempts to organize communities around relatively ‘non-political’ problems – garbage disposal, remedial education, women’s sewing classes – frequently ran up against the more radical demands of the residents, who wanted to organize instead around the fraught issues of policing, unresponsive municipal authorities, and tenant–landlord relations.”

    Link to the paper.

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

    + + +

    +   Adam Tooze on US sanctions on Russia, SWIFT, correspondent banking, and the major energy carveouts. Link. Also, shared recently: George Pearkes on “Ukraine and Dollar Weaponization” from last month, and Edoardo Saravalle on “The Watchful Eye of the US Dollar” from 2021. Link, and link.

    +   Robinson Meyer interviews Nikos Tsafos on natural gas and global energy security. Link.

    +   A collection of articles on public sector employment relations during Covid-19, introduced by Michael O’Donnell, Sue Williamson, and Michael Johnson. Link. 

    +   Two on unions: Henry S. Farber and Bruce Western chart a decline in private sector unionism around the PATCO strike. Link. Cyprien Batut, Ulysse Lojkine, Paolo Santini conduct a comparative study of union membership in Europe. Link. 

    +   Michael Ewens, Arpit Gupta, and Sabrina Howell on private equity ownership of local newspapers. Link. 

    +   “While much scholarly attention has been paid to the consequences of the 1994 reform that left localities with a tremendous fiscal gap, our findings show that Beijing in fact gave localities the green light to create new backdoor financing institutions that counteracted the impact of fiscal recentralization.” By Adam Y. Liu, Jean C. Oi, and Yi Zhang. Link. 

    +   Nicolás Grinberg compares import-substitution industrialization in Argentina, Brazil, Mexico and Colombia. Link.

    +   “31 of these farms (69 percent) were cultivating ‘good’ soils, which supported different crops and potentially greater income than the soils of their less fortunate neighbors. For example, 84 percent of the farms with ‘primary good’ soils cultivated Indian corn, whereas only 27 percent of the farms without good soil could do so. This same pattern held for wheat. The effect of these inter-soil differences on economic welfare parallel those found at the state level and, to a lesser extent, the county level. Farmers probably had the same reason for settling in Midland Country as they had for leaving there in relatively large numbers—the failure to support their families on mediocre soils. Of the 11 farmers without any good soil, 73 percent had left Midland farms by 1870; only 42 percent of those whose soils enjoyed a primary soil classification were absent from the 1870 agricultural census. Although these percentages are based on a small number of farmers, the relationships between soil and residential persistence is the same as that between soil, crops cultivated, and income from market garden sales.” Robert Mitchell on soil and farm settlement in the Old Northwest. Link.