Macroeconomics

China’s Importance in International Commerce

HAZ CLIC AQUÍ para leer en español.

China’s strong growth has been extensively reported and debated due to its significant impacts on the prices and volumes of commercial flows during the last few decades. The economic behavior of China is fundamental given that it has one of the highest Gross Domestic Products (GDP) in the world (second only to the United States) and that it has a population that makes up approximately 15 percent of the world’s total.

The 2012 ECLAC document ‘Panorama of the International Insertion of Latin America and the Caribbean’ contains information that allows an analysis of China’s influence on international commerce to be performed. The data are presented in the following table. Read More »

Guest Roast: Good Governance and Development – Which causes which?

By Edvin Arnby Machata

The international development community has for almost two decades focused on improving governance as a strategic priority for aiding economic growth. This article points to the historical record and argues that 1) growth does not require good governance, 2) good governance and representative institutions are products of economic development – not the other way around, and that 3) the configuration of national institutions determine whether a political order will produce developmental outcomes or not.

‘Good governance’ has been a mainstay component in most donor-funded development programmes during the last two decades. What exactly constitutes good governance is empirically problematic, but while implementations vary, demands for good governance generally include provisions to minimize graft and increase respect for human rights.

Read More »

Graphics: The New Political Economy of Resources

Chatham House, a London based international affairs think tank and home of the Royal Institute of International Affairs, has developed Resource Futures, an excellent and evidence-loaded infographic that illustrates the new political economy of global resources.
Visitors to the interactive site are invited to visually explore resource use around the world and are enlightened to the mapping of current trends. Starting with trends in consumption, data is graphed onto a world map and a navigation tool at the bottom of the screen allows one to switch seamlessly between statistics for different crops, fish and meat, timber, fossil fuels and metals: Read More »

Opinion: Why happiness does not matter for the problem of poverty.

As shown in our post “Is there more to life than money? Mapping happiness of people and planet”, several attempts have been made to measure happiness and wellbeing globally. However, consensus proved elusive since different studies brought very diverse results. That is because happiness is a very hard thing to define – if it had a clear, objective definition, our lives would be a lot easier, wouldn’t they? Still, there are several working definitions, and most of them can be grouped in either of the following two categories. On one hand, there is a happiness that relates to one’s satisfaction with their lives. That often involves a feeling of having achieved one’s goals in life, having an option not to work in an extremely degrading job, having good relationships, etc. On the other hand, there is a more emotional happiness. That is much more momentary, it is the “state of mind of feeling good”. According to the latter definition, one’s happiness would be measured by how often, how intensely, and for how long one “feels good”.  Read More »

Graphics: Inheriting Poverty – Learned Helplessness and Empowerment in Development

All this month Development Roast has looked at different psychological issues involved in poverty. Today we ask: Does a population’s mentality affect a nation’s development? More specifically, is it possible that when many inhabitants of a country are children of multiple generations of poverty that they can suffer from what could be described as “learned helplessness”, which, as the name suggests, is a feeling of utter disempowerment and uselessness (see graphic). 

This idea was first outlined by American educator and author Ruby Payne in her 2005 book “A framework for understanding poverty”. From her studies of the Urban American class system she concludes that one aspect of generational poverty is a learned helplessness that is passed down from parents to children. This mental attitude means that, unlike the middle and upper classes, many poor people do not foresee a future that is free of poverty and therefore do not have the motivation to even try to escape it. Read More »

Guest Roast: Is Poverty a State of Mind?

By Erin Taylor

What is the psychology of poverty? This question has been a contentious one in anthropology, particularly during the last half a century. In La Vida (1966), a study of poor Puerto Rican families, Oscar Lewis argued that poverty produces certain psychological traits and social behaviours that become enculturated. His ideas caused an uproar because they were widely interpreted to imply that so-called poor people are not capable of escaping poverty. Critics lamented that his book was being misappropriated by the U.S. Government to implement paternalistic, “blame the victim” policies among poor African-American communities that stripped them of their agency, treating them like hopeless cases that needed to be disciplined rather than assisted.

Since then, a plethora of research in poor communities around the world has overturned the idea of a global culture of poverty. Read More »

Graphics: Why investing in girls and women is key to development

What exactly leads to development is a topic of great debate in academic and practical circles. Proposed cures for underdevelopment vary from providing infrastructure to enacting large-scale macro-economic reforms. Yet, often, there is little conclusive evidence of many solutions’ consistently marked effects on different countries’ economic prosperity or social and environmental cohesion. One factor that does stand out, which is frequently promoted in reports by the likes of the World Bank, United Nations (UN), the OECD, ActionaAid and even Forbes Magazine as the key to achieving all Millennium Development Goals, is investment in the health, education and equality of women.

Read More »

Graphics: How Corporations Get Out of Paying Taxes

Everyone knows that corporations dodge taxes. If a regulation loop hole exists, they are likely to try and exploit it, inventing a new practice, tool or mechanism for the purpose, with a new, jargon-laden name that gives it an air of legitimacy. Whereas much past evasion of taxes would happen in the corporation’s own country, with the rapid globalization of businesses over the last few decades it now spreads across nations and continents. For example, a huge relatively new field of transfer pricing has mushroomed within the financial accounting realm, with whole teams, even departments, charged with it. What does it mean? In the most basic terms, a parent company sells or trades to its own subsidiary in a different country some goods, services or labor, often at an obscenely low or high price, in order to move income or expenditure of their balance sheet around to make them fit into lower tax brackets and less regulated jurisdictions. In essence, it transfers the price somewhere else that reduces its tax liability, hence the name transfer pricing. All of this is done “for tax purposes,” with tax professionals involved engaging in what they call “tax planning,” evidenced by the fact that transfer pricing is often and increasingly an offshoot of tax departments in companies and accounting firms. Translated, it means legal tax dodging. Read this useful summary by the Tax Justice Network for a closer look.

This is of course but just one example and understanding what fully occurs behind closed doors can be clouded by the terminology. Today, Development Roast brings you an infographic published by The Online MBA that attempts to explain exactly How Corporations Get Out of Paying Taxes in more visual terms. Read More »

The end of growth?

“Growth for the sake of growth is the ideology of the cancer cell.”
Edward Abbey

During most of the history of mankind, average incomes across the globe amounted to somewhere between $1 and $2 per day and income growth was only marginally above zero, averaging about 0.033 percent per year from year 0 to year 1868 (and probably even less during the preceding millennia). In the hundred year period from 1868 to 1968, however, real per capita income growth suddenly increased forty-fold to about 1.43 percent per year, and when I was born average per capita income in the world had reached about $10 a day. During my life-time, income growth has averaged 1.96 percent, implying that average per capita GDP in the world is now above $20/day. Growth rates have kept increasing steadily, reaching an average of about 2.94 percent per year in the first decade of this century. Such growth rates are unprecedented in the history of our species (1).

The big question is: Will growth continue at these high, and perhaps even accelerating, rates? Or is the growth spurt experienced over the last 150 years just an anomaly, which is about to come to an end?

Read More »

Live Research Bulletin: The opposite poles of environmental accounts of Canada and the United States

“I’m not in this race to slow the rise of the oceans or to heal the planet.” Republican Presidential Candidate Governor Mitt Romney, an interview on “Meet the Press”, September, 2012.

This month, Development Roast has published several posts offering insights into different principles and practices of green accounting. After our overview of European experience with environmental accounting, we now turn to North America. Excluding Mexico (which will be discussed next week in the Latin America update), the two remaining countries show us quite different experiences with greening the national accounts. While Canada has shown to be an example of comprehensive implementation, the United States suspended its national project for environmental accounting in 1995 and hasn’t made large attempts to develop these accounts since. Read More »

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