World Economics

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Employment, Under-employment and Unemployment in Africa
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World Economics, October 2019
Africa’s fast-growing markets should be producing far more commercial opportunities for its businesses and yielding far more jobs for its people, but they are not. If there is genuine economic growth occurring in Africa’s major cities then current data and the view from the street are not reflecting it. Jobless growth haunts the cities of Africa.
The Financial Crisis and Gender: Assessing Changes in Workforce Participation for Rural India
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Siddhartha K. Rastogi & Pradyun Rame Mehrotra, World Economics, March 2018
Labour market data in India shows female participation declining as GDP has increased, a phenomenon found in other East Asian economies over past two decades. This contradicts empirical observations, which argue over the feminization of the work force due to participation in global export markets, primarily driven by wage efficiency of female labour. The impact of the global financial crisis on female participation rates in rural India in 2009-10 is studied with a cross-state analysis to test theories about female unemployment in a downturn. One of the major findings is that as the formal wage difference between men and women decreases, the female participation gap increases, but more data is needed to identify critical causal factors.
Commercial Real Estate Data - New Demands, Old Challenges
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David Rees, World Economics, March 2018
The global financial crisis, followed by a global portfolio shift towards commercial real estate, has reinforced the demand for timely, consistent and transparent valuation metrics and transactions data. Current initiatives at global, country and market level are addressing shortcomings in this area; nevertheless commercial real estate markets pose unique data collection and presentation challenges. While users of these data should be aware of the difficulties and qualifications inherent in the collection and compilation process, enforcing uniformity of processes and definitions across markets and sub-sectors may come at a cost. Propositions that more data are always better than less and that market transparency is always better than opacity are fruitful topics for debate in the context of commercial real estate markets.
Trade Data: Use with Care
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Brian Sturgess, World Economics, December 2017
Politicians focus on trade deficits and surpluses between countries and threaten trade wars and retaliatory actions, but the conventional international trade statistics used by many commentators are inaccurate. World exports and imports do not balance, but asymmetries are also found in the balance of trade statistics between countries and regions and these discrepancies can be very large in emerging markets. The ‘Rotterdam effect’ distorts the measurement of trade flows and balances where goods are recorded as imports into one country, which subsequently re-exports them to third countries without taking note of the country of origin. The Apple ‘Made in China’ question, or the existence of global value chains where much trade is in intermediate inputs, indicates that conventional trade statistics involve double-counting and misallocated trade balances.
Measuring the Success of Industrial Policy in Australia
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Andrew Marks, World Economics, December 2016
Industry policy in the context of trade liberalization has played a critical reinforcing role in re-orienting production in the Australian manufacturing sector from the domestic to international market. In the textile, clothing, footwear and motor vehicle industries this has promoted sustainable output and employment growth. This policy has also been instrumental in improving the structure of manufacturing exports from simple to elaborately transformed manufacturing products. The niche capital and knowledge intensive nature of elaborately transformed manufacturing products is of particular importance because they exhibit a comparative advantage in international markets. This has helped to offset the competitive advantage provided by industry policy in stimulating manufacturing exports in the countries of the South East Asian region which constitute Australia’s major export markets. Pressure is also being applied on other countries to implement industrial policy in order to remain competitive on the international market and in particular in this rapidly growing region of the world.
Offshoring and the Labour Share in Germany and US
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Deborah Winkler & William Milberg, World Economics, December 2015
Despite broad public concern with the effect of offshoring on inequality, there is scant research. The authors shift the focus to the effect of offshoring on the labour share in value added. Regression analysis for a sample of 14 OECD countries in 21 manufacturing sectors covering the period 1995 to 2008 reveals that the effects of offshoring on the labour share are negative. They also show that different policy regimes with regard to labour markets, education and innovation, and trade liberalisation mediate these effects whilst contrasting the experiences of Germany and the U.S. where the manufacturing labour share decline was particularly strong.
Data on Singapore’s Sovereign Wealth Fund is Flawed
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Christopher Balding, World Economics, September 2015
This paper undertakes a critique of the quality of Singapore’s public economic data in the context of the claim that one of the island’s sovereign wealth funds, Temasek Holdings, reports that it has earned since inception in 1974 an average annualized rate of return of 16%. Over a similar time period the Singapore stock market earned 4.99% implying that Temasek on average outperformed the local stock market in which it was heavily invested, by a factor of more than three times every year. The paper replicates Temasek’s portfolio and analyses Singapore’s public finances and finds that irregularities may exist within Temasek financials. It concludes that if there are as of yet unknown financial weaknesses within Singaporean public finances that have yet to be realized then given the importance of the island in Asia’s financial markets, this should raise concerns over the quality of financial statements produced by government linked corporations and the public sector.
New Data on Global Differences in Family Offices
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Robert Eigenheer, World Economics, March 2014
A family office is not a specifically-defined institution per se. Rather, the family office is a broad concept to cover all financial needs of one or more wealthy families. While in the United States the first family offices were established in the nineteenth century, interest in the family office concept has recently been growing in emerging markets around the globe due to the increasing number of ultra-wealthy individuals and families in those regions. Nowadays, family offices are set up all over the world. This fact inevitably leads to the question: Are there regional differences among the structures of family offices, their services, their investment strategies, and their operational costs?
Bias in the ‘Proportionality Assumption’ Used in the Measurement of Offshoring
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Deborah Winkler & William Milberg, World Economics, December 2012
Most studies of offshoring rely on a ‘proportionality assumption’ where every sector is assumed to import each material and service input in the same proportion as its economy-wide use. We assess the bias resulting from this assumption. Since Germany collects imported inputs directly, we are able to compare the direct and proxy measures, where the proxy is constructed with the proportionality assumption. The proxy fails to accurately capture the variation in services offshoring intensity because – as a result of the proportionality assumption – it is strongly influenced by the variation in demand for domestic inputs. Estimation of the effect of offshoring on labour demand for 35 manufacturing sectors in Germany over 1995–2006 shows that the direct and proxy-based measures of services offshoring give very different results. The implication goes beyond the case of Germany: researchers must be cautious about drawing policy conclusions from estimates using the proxy of offshoring.
Editorial: The Scandalous State of State Accounting
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Brian Sturgess, World Economics, March 2012
There is no summary available for this paper.
Government Accounting
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Ian Ball & Gary Pflugrath, World Economics, March 2012
As the current sovereign debt crisis engulfing Europe broadens and threatens to bring down more governments and lead the world into another, potentially very serious, economic slowdown, minimal commentary and public debate has focused on a fundamental problem, and the need to address it. That problem is the deficient – and sometimes fraudulent – accounting practices employed by many governments around the world. A major shortcoming of many governments has been highlighted by the crisis – that is, the poor quality of public financial management and the lack of public accountability. And, while robust public-sector financial management would not alone solve the crisis, it is clear that the problems presented by the crisis will not be solved without it. Shareholders, debt providers and regulators of publicly listed companies would not tolerate for a minute the poor levels of reporting and disclosure evidenced by governments. Yet while governments recognise the need to impose stringent regulations on companies accessing funds from the public, many – indeed most – make little or no effort to meet such high standards in their own reporting. This is despite the fact that governments seek to raise hundreds of billions – indeed trillions – of dollars from the public. Improved financial reporting, disclosure and financial management of the public sector cannot be achieved until there is recognition that the incentives faced by politicians promote decision-making that works contrary to the public interest and appropriate institutional reforms are implemented.
Currency Valuation and Purchasing Power Parity
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Jamal Ibrahim Haidar, World Economics, September 2011
This paper aims to highlight key limitations of The Economist magazine’s Big Mac Index (BMI). The Economist markets the BMI as a tool to determine valuation of currencies. This paper shows that the BMI is a misleading measure of currency valuation for economies whose markets are structurally different from the benchmark currency countries.
Some Proposed Methodological Developments for the UK Retail Prices Index
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Mick Silver, World Economics, March 2003
The Retail Prices Index (RPI) is one of the UK’s most important macroeconomic indicators, as well as being used for indexation/adjustments for inflation to wages and benefits. This paper argues that the dynamic changes in product markets and consumers’ responses to price changes need to be incorporated into the RPI if it is to effectively measure changes in the cost of living. The quite positive and innovative work undertaken by the Office for National Statistics (ONS) is acknowledged. However, the basis of the RPI, in measuring the price changes of a matched, fixed basket of goods, is considered inappropriate to modern markets. Some proposals are made.
Measuring Global Drug Markets
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Peter Reuter & Victoria Greenfield , World Economics, December 2001
The continuing demand for measures of the size of global drug revenues has produced a supply of numbers that consistently overstate international financial flows. This paper shows that, rather than $500 billion, the annual figure in trade terms may be about $25 billion. As with many refined agricultural products, most of the revenues go to distributors rather than to primary producing countries. The authors explore the need for estimates of the global drug markets, address the difficulties of obtaining ‘good’ numbers, and describe opportunities for developing better estimates of flows and revenues. There are at least three reasons for caring about the numbers: they can help to improve understanding of the drug production and consumption problem and identify appropriate policy responses.
A Multi-coloured GDP -or No New GDP at All?
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Horst Zimmermann, World Economics, September 2000
This is a reply to Giles Atkinson’s article ‘Re-thinking Economic Progress’ that appeared in the first issue of World Economics (Vol. 1, No. 1, January – March 2000). Atkinson discussed proposals for the construction of ‘green’ alternatives to Gross Domestic Product (GDP). In the same issue, Amanda Rowlatt in her article ‘Extending the UK National Accounts’, discussed the role of ‘satellite accounts’, including measures of effects on the environment. Professor Zimmermann’s contention is that the concept of a ‘green GDP’ would lead to a one-sided measure which cannot be used for the many purposes for which normal GDP as a comprehensive measure can be used. A GDP corrected for depletion of environmental stocks would have to be supplemented by one corrected for changes in human capital, another one dealing with health capital, etc. Completing the set leads to the older concept of Net Economic Welfare or something similar. Only this would again be a comprehensive measure and could replace GDP.
From Big Macs to iMacs
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Jonathan Haskel & Holger Wolf, World Economics, June 2000
The authors review recent international price comparisons to examine the veracity of claims about “rip-off Britain”. They reach three conclusions. First, methodologically, the data requirements for a meaningful price comparison are very demanding and most of the evidence does not meet these standards. Second, price differences within countries seem, in many cases, to be just as high if not higher than price differences between countries. Third, for most goods, the difference between the UK and the rest of the EU seems to be minor relative to the difference between the EU and the United States. The real puzzle is the comparatively high prices in the EU.
Re-thinking Economic Progress
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Giles Atkinson, World Economics, March 2000
Most national governments have pledged a commitment to sustainable development. The transformation of these pledges into policy is a formidable challenge. Of particular interest are proposals for the construction of green alternatives to Gross Domestic Product (GDP), which it is hoped will provide policy-makers with a consistent and summary signal of "true" trends in the economy both now and into the future. This paper reviews the green accounting debate over the past decade. the author argues that, while initial expectations have, at times, been overstated, there are encouraging signs for policy-makers attempting to make sense of their commitments to sustainable development. One such indication is the increasing emphasis on improved measures of saving, providing a better link between actions in the present and their implications for the future.

False Perspective: The UNDP View of the World
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David Henderson, World Economics, March 2000
Despite some searching and unanswered criticisms of its treatment of statistical evidence, the UNDP Human Development Report has become established as a widely-quoted and influential survey of the world scene. The 1999 Report, reviewed here, focuses on ‘globalization’. This is described as a dominant influence on the recent economic fortunes of developing countries in particular, and as a primary cause of continuing poverty and growing inequality in the world. The author argues that the Report provides neither argument nor evidence in support of this thesis; that it takes no account of other factors that have strongly influenced economic performance; that its main prescription for the world, of reforms in ‘global governance’, is largely beside the point; and that its whole approach is crudely anti-liberal. The author concludes by placing the Report, as also the economists who have aligned themselves with it, in the wider context of anti-liberalism today.

Displaying: 1-18 of 18