Working Papers 2009

 

Working Papers 2009 Abstract

Property Rights for Poverty Reduction?

  • Reference number: ST/ESA/2009/DWP/91
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This paper reviews the links between property rights and poverty reduction. Poor people not only lack current income, but also assets with which to generate incomes. Billions of poor people have access to land which may not be legally recognized. While legislation may provide more secure land tenure for the poor and thus reduce poverty, this outcome is not guaranteed. Policies that do not recognize the complexity of property rights have backfired, reducing poor people’s security of tenure. Finally, understanding legal pluralism can lead to more effective policies and interventions to strengthen poor people’s control over assets.

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Growth, Development Policy,Job Creation and Poverty Reduction

  • Reference number: ST/ESA/2009/DWP/90
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Policies seeking to directly help the poor have an important role to play. But without sustained growth in per capita output and significant job creation, they will not succeed. Policies promoting growth have been suggested, most notably by avoiding pro-cyclical responses to macroeconomic shocks (especially from abroad), steering macroeconomic prices, such as exchange and interest rates, to support developmental objectives, pursuing industrial and trade policies involving increasing returns, promoting financial development, and making productive use of foreign aid. Ensuring national economies have sufficient policy space to achieve sustained growth and structural change should be the over-riding policy concern.

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Microfinance as a Poverty Reduction Tool-A Critical Assessment

  • Reference number: ST/ESA/2009/DWP/89
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This paper attempts to provide a critical appraisal of the debate on the effectiveness of microfinance as a universal poverty reduction tool. It argues that while microfinance has developed some innovative management and business strategies, its impact on poverty reduction remains in doubt. Microfinance, however, certainly plays an important role in providing safety-net and consumption smoothening. The borrowers of microfinance possibly also benefit from learning-by-doing and from self-esteem. However, for any significant dent on poverty, the focus of public policy should be on growth-oriented and equity-enhancing programs, such as broad-based productive employment creation.

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The Terrible Simplifers: Common Origins of Financial Crises and Persistent Poverty in Economic Theory and the new ’1848 Moment’

  • Reference number: ST/ESA/2009/DWP/88
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One element explaining the financial crisis is what Hyman Minsky called ‘destabilizing stability’: long periods of stability lead to increasing vulnerability. This paper argues that similar mechanisms are at work inside economics: long periods of economic progress in the core countries lead to increasingly abstract and irrelevant economic theories (‘terrible simplifications’). This leads to turning points towards more relevant economic theories, referred to as ’1848 moments’. The paper further outlines the key variables that need to be re-introduced into economic theory in order to furnish poor countries with the type of productive structures that makes it possible to eliminate poverty.

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Globalization, Offshoring and Economic Insecurity in Industrialized Countries

  • Reference number: ST/ESA/2009/D/87
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This paper shows that a “new wave of globalization,” involving extensive offshoring, has raised both actual and perceived labor market insecurity in industrialized countries. The paper analyzes various channels through which this new wave of globalization leads to economic insecurity. It emphasises the key role of overall macroeconomic conditions in determining the outcome of offshoring. The paper points out the inadequacies of various policy responses that industrialized countries have come up with so far and advocates urgent steps toward formulation of policies and erection of institutional structure more appropriate to confront the challenges of the new of globalization.

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Mananging Financial Instability: Why Prudence is not Enough?

  • Reference number: ST/ESA/2009/D/86
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This paper argues that developing countries have limited arsenal at the national level to manage financial instability. The solutions have to be sought mainly at the multilateral level and these include: provision of adequate international liquidity at appropriate terms for current account financing to countries facing foreign exchange shortages as a result of trade and financial shocks; and orderly debt workout procedures designed to stem attacks on currencies, check capital outflows and involve the private sector in the resolution of crises. Multilateral policy surveillance and advice should also be used to help countries to manage surges in capital inflows.

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Insurance against Losses from Natural Disasters in Developing Countries

  • Reference number: ST/ESA/2009/D/85
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This paper examines the recent experience with insurance and other risk-financing instruments in developing countries in order to gain insights into their effectiveness in reducing economic insecurity. Insurance and other risk financing strategies are viewed as efforts to recover from negative income shocks through risk pooling and transfer. Specific examples of public-private insurance programs for households, business-firms, and governments are described, highlighting their limitations, especially in light of the post-Katrina experience in the United States. It examines arguments both in support of and in opposition to donor and public involvement in provision of subsidized insurance in developing countries.

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Assessing the success of microinsurance programmes in meeting the insurance needs of the poor

  • Reference number: ST/ESA/2009/D/84
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The paper reviews attempts to provide insurance against risks afflicting the poorest. It presents empirical evidence on the impact of different types of microinsurance, and recommends the idea of ‘quasi-insurance’—the provision of insurance functions through a non-insurance route—where institutional or regulatory constraints prevent insurance proper from being offered. The paper argues that microinsurance so far has been somewhat supply-driven rather than driven by effective demand, especially from the poorest, and thus the insurance products which would benefit the poorest are still at a limited stage of development. Institutional innovations and new insurance products therefore deserve promotion.

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Assessing the insurance role of microsavings

  • Reference number: ST/ESA/2009/D/83
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The paper contends that more attention should be paid to micro savings in view of multiple ways in which it can help poor to deal with economic insecurity. The paper presents information to show that while microsaving programs have spread, their full potential is far from being realized. It presents a detailed analysis on the basis of data from a selection of micro savings programs to show how savings help the poor to smooth consumption and undertake investment. The paper urges for a strong campaign to popularise micro saving programs.

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Can Microfinance Reduce Economic Insecurity and Poverty? By How Much and How?

  • Reference number: ST/ESA/2009/D/82
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The paper suggests that, rather than through its narrow, direct financial impact, microfinance may prove to be more potent in reducing insecurity and poverty through its indirect, broader impact conducing to a more egalitarian initial endowment distribution that is necessary for the ‘take-off’ of an equitable growth process. The paper begins by examining the distinctive roles of micro credit, micro savings, and micro insurance programs in dealing with poverty and insecurity, and highlights the complementariness that exists among these programs and how this complementariness can be used to overcome the weaknesses of the individual programs.

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Insurance, Credit and Safety Nets for the Poor in a World of Risk

  • Reference number: ST/ESA/2009/D/81
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This paper asks how insurance can be more effectively delivered to the poor, and what its role should be relative to other microfinance programmes, safety nets and informal insurance systems. We focus on the various interactions, including how insurance may crowd out credit and informal insurance, and implications for the design of insurance schemes. We argue that well-designed insurance schemes, building on existing informal systems, and focusing on catastrophic and serious covariate risks, could offer protection against risk and contribute to poverty reduction beyond the combined impact of microcredit programmes, safety nets and existing informal mutual support systems.

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The Bottom of the Pyramid Strategy for Reducing Poverty: A Failed Promise

  • Reference number: ST/ESA/2009/D/80
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The movement emphasizing free markets to reduce poverty has found strong expression in the ‘bottom of the pyramid’ approach in recent years. It views the poor as “resilient and creative entrepreneurs and value-conscious consumers”. This romanticized view of the poor harms the poor in two ways. First, it results in too little emphasis on legal, regulatory and social mechanisms to protect the poor who are vulnerable consumers. Second, it overemphasizes microcredit and underemphasizes fostering modern enterprises that would provide employment opportunities for the poor. More importantly, it grossly underemphasizes the critical role and responsibility of the state in poverty reduction.

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The Emperor’s New Suit: Global Poverty Estimates Reappraised

  • Reference number: ST/ESA/2009/D/79
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The recent revision of the World Bank’s global poverty estimates based on a new $1.25 (2005 PPP) poverty line underlines their unreliability and lack of meaningfulness. It is very difficult to justify various aspects of the Bank’s approach. In the short term, less weight should be given to the Bank’s poverty estimates in monitoring the first MDG. In the longer term, a solution to the observed problems requires adopting an altogether different method. Such an alternative exists but requires global institutional coordination. Until it is implemented, the crisis in the monitoring of global consumption poverty can be expected to intensify. Subsequent versions of this paper, correcting errors or extending the argument, will be made available on socialanalysis.org

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The Impact of Remittances on Economic Insecurity

  • Reference number: ST/ESA/2009/D/78
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This paper illustrates that cross-country generalizations about the impact of remittances on economic security are useful only up to a certain point; beyond that their effect can be influenced by the interplay of various factors relating to the motivations and characteristics of migrants, economic/social/political conditions in the country of origin, immigration policies and conditions in the host country, and the size and concentrations of the remittances. The policy implications outlined in the paper include the need for caution and retrospection in certain instances as well as action and international collaboration in other areas.

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Should Financial Flows Be Regulated? Yes

  • Reference number: ST/ESA/2009/D/77
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As the international financial crisis spreads, some governments are using ‘unconventional tools’ of monetary and financial policy to protect themselves. Should policies to control international capital flows be part of the government “toolkit” in these difficult times? This essay answers: YES. It describes the economic arguments for and against using capital controls, prudential regulations and other “capital management techniques” to manage international financial flows, presents empirical evidence on their impacts, and describes the variety of policies that many countries have successfully applied to enhance macroeconomic and financial stability, create policy space, and achieve other national development goals.

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Infrastructure finance in developing countries—the potential of sub-sovereign bonds

  • Reference number: ST/ESA/2009/D/76
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This paper sets out to explore the potential of sub-sovereign bonds in financing infrastructure in developing countries. Taking into account the historical experience of the US, it develops a supply and demand side framework for analysis of the market for sub-sovereign bonded debt in developing countries and applies this framework to Mexico, India and South Africa. Finally, it draws lessons for countries seeking to promote markets for sub-sovereign bonds. Evidence suggests that the regulatory environment, a diversified financial sector and increased capacity for debt support and management matter most for the development of the sub-sovereign bond market.

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Governance, Growth and Poverty Reduction

  • Reference number: ST/ESA/2009/D/75
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Poverty reduction is a function of economic growth, income distribution and distribution changes. Governance can impact both growth and income distribution. The dominant market-enhancing governance paradigm seeks to enhance the efficiency of markets through ‘good governance’ reforms, ostensibly to trigger or sustain growth. ‘Pro-poor’ good governance reforms purport to enhance the scale and efficiency of service delivery to the poor. The good governance approach to enhancing growth is disputed. Neither theory nor evidence strongly support the plausibility of significantly reducing poverty through the good governance agenda. Alternative governance approaches for addressing poverty are contrasted favourably with the currently dominant paradigm.

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Impact of the global crisis on the achievement of the MDGs in Latin America

  • Reference number: ST/ESA/2009/D/74
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Progress towards the MDGs is expected to slow as a consequence of the global economic downturn. This study applies an economy-wide framework to analyze the impact of the crisis on MDG achievement in six Latin American countries. It finds significant setbacks towards the goals and, in the case of the region’s low-income countries, the cost of achieving these would rise between 1.6 and 3.4 per cent of GDP per year between 2010 and 2015 as compared with a no-crisis scenario. The additional public spending would contribute to economic growth though not sufficiently for full recovery to pre-crisis growth.

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Climate Policy Integration: Towards Operationalization

  • Reference number: ST/ESA/2009/D/73
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The climate change debate raises the issue of often identified, but as yet little explored, requirement to incorporate climate policy into other policy sectors, often termed climate ‘mainstreaming’ or climate policy integration (CPI). This paper explores the imperative for CPI, the state of current understanding, and proposals for implementation at the crucial national policy scale. The paper draws on the longer-standing field of environmental policy integration, noting that literature’s scant coverage of climate issues but its greater focus on policy and administrative structures and processes, and concludes that more attention needs to be given to these implementation mechanisms for CPI.

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Role of media in curbing corruption: the case of Uganda under President Yoweri K. Museveni during the ‘no-party’ system

  • Reference number: ST/ESA/2009/D/72
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Free, independent and hard-hitting media can play an important role in curbing corruption. Media in Uganda has enjoyed considerable freedom in this regard since Museveni came to power in 1986. The evolving power structure and a changing media landscape, however, have presented both challenges and opportunities for media’s watchdog role on corruption. This paper will explore how this environment defined such role between 1986 and 2006 during Museveni’s ‘no-party’ rule. It argues that, although media won important battles to promote accountability in public offices, the regime’s complex power structure has consistently challenged their role as an instrument of public accountability.

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