Emanuel Ornelas, Marcos Ritel, 08 November 2018

Generalised System of Preferences programmes, a form of nonreciprocal tariff cuts, have proliferated since the 1970s. Using a well-documented dataset of international trade agreements, this column studies the effectiveness of the system on beneficiaries’ aggregate exports. It finds that nonreciprocal tariff preferences can have a strong positive effect on the exports of least-developed countries, provided that they are WTO members. Conversely, other developing economies enjoying nonreciprocal preferences are able to increase exports only if they are not WTO members. 

Pedro Bento, Diego Restuccia, 22 October 2018

One way to adjudicate among existing productivity theories for why productivity varies across countries is to examine differences in average establishment size. Using new data covering firms in both manufacturing and services in 127 countries, this column shows that average establishment size increases with the level of development across countries, but the ratio of size between manufacturing and services does not vary systematically with income per capita. Misallocation is therefore an important driver of establishment size and aggregate productivity differences between rich and poor countries.

Thorsten Beck, Emily Jones , Peter Knaack, 15 October 2018

In today’s world of globalised finance, regulators in developing countries have to weigh up the international ramifications of their decisions. This column presents the results of a research project which combines cross-country panel analysis and in-depth case studies of the political economy of the adoption of Basel II/III in the developing world. It finds that regulators in developing countries do not merely adopt Basel II/III because these standards provide the optimal technical solution to financial stability risks in their jurisdictions; concerns about reputation and competition are also important. 

Caroline Freund, Michael Ferrantino, Maryla Maliszewska, Michele Ruta, 24 July 2018

Woori Lee, 30 June 2018

Participation in global value chains is a key element of the industrialisation strategies of developing nations. To date, most research has focused on goods and the manufacturing sector. This column explores the role of services in global value chains. Trade agreements that liberalise services are found to foster global value chain trade, especially for developing country exporters and those that allow service exports without local presence.

Oya Celasun, Bertrand Gruss, 25 May 2018

The manufacturing sector is believed to play a unique role as a catalyst for productivity growth and income convergence, and as a provider of well-paid jobs for less-skilled workers. This column argues, however, that the declining share of manufacturing employment over the past decades need not hurt the income convergence prospects of developing economies and that the loss of manufacturing jobs can only explain a small fraction of the rise in inequality in advanced economies. That said, getting the policies right is key to help countries make the most out of structural transformation. 

Valentin Lang, Marina Mendes Tavares, 27 April 2018

Globalisation stirs a diverse range of sentiments and views: some credit globalisation for boosting economic well-being while others blame it for worsening inequality. This column examines the effect of globalisation on income among and within countries, and shows that globalisation is associated with income convergence across countries and income divergence within countries. Targeted redistributive policies and investments in education are needed to ensure that the benefits of globalisation are enjoyed by all.

Paul Collier, Anthony Venables, 01 May 2017

Cities are key drivers of economic growth. In this video Paul Collier and Anthony Venables discuss how public policy should create effective cities that work. This video was recorded at the International Growth Centre in March 2017.

Emanuel Ornelas, 14 May 2016

For over half a century, one pillar of the world trading system has been the principle of ‘special and differential treatment’ (SDT) for developing countries. This column explores how SDT has impacted trade policy around the world. Although this strategy aims to help developing countries, in design and practice it seems to be biased against them. While there is no support for SDT as a growth-promoting strategy, there is a clear need for further research that explicitly tackles the empirical challenges that it presents. 

Eva Arceo, Rema Hanna, Paulina Oliva, 16 April 2016

Pollution levels are orders of magnitude higher in lower-income countries than in the developed world. This means that studies of the health effects of pollution based on data from the latter will not necessarily be relevant to the former. This column reports on the effect of air pollution on infant mortality in Mexico City. Significant effects are found that are much larger than found in earlier work based on US data. These findings highlight the potential pitfalls of naively extrapolating findings from high-income to developing countries.

Takanori Ago, Tadashi Morita, Takatoshi Tabuchi, Kazuhiro Yamamoto, 04 January 2016

There are common geographical differences in working hours between countries and regions. Working hours are longer in developing countries, as well as in more urbanised regions compared to rural ones. This column explains these differences with two key factors: production technology and urban agglomeration. Technological progress leads to a decrease in working hours, whereas urban agglomeration leads to an increase.

Leandro de la Escosura, 20 November 2015

Human development provides a long-run view of well-being. This column presents a new historical index of human development covering 157 countries from the mid-19th century. The index gives a comprehensive view on human development on the global scale, and stresses the health and knowledge dimensions of well-being.

Axel Dreher, Vera Eichenauer, Kai Gehring, Sarah Langlotz, Steffen Lohmann, 18 October 2015

There is no consensus on whether foreign aid is effective in boosting the economy of the recipient country. This column suggests that there is no evidence that aid affects growth. This finding does not imply that aid is necessarily ineffective. Much of the aid is not given to affect growth in the first place, but as humanitarian aid following disasters, to fight terror, please political allies, or influence decisions in important international organisations. Such aid should thus be evaluated with its own goals in mind.

David McKenzie, Christopher Woodruff, 21 September 2015

Better management practices are associated with better firm performance, and the quality of management practices is also associated with per capita income. This column explores the effect of business practices on small firms in developing countries. The findings indicate that better business practices are correlated with higher productivity, higher firm profits, and higher rates of survival. Poor business practices are holding back small firms in developing countries.

Michael Callen, Suresh De Mel, Craig McIntosh, Christopher Woodruff, 03 February 2015

Recent findings in development economics indicate that microloans are likely to perform best when accompanied by financial education, insurance, and savings products. This column presents evidence from a natural experiment in Sri Lanka, which involved door-to-door collection services among rural households. The evidence suggests that the programme increased both savings and income. In order to build up savings in the initial period, participants increased the hours worked. The treatment also triggered exit from self-employment. Financial service innovation can, therefore, have a major effect on the incentives to exit poverty.

David Coady, Baoping Shang, 13 January 2015

The adverse effects of energy subsidies have been widely documented. While recent decreases in international oil prices have provided a welcome respite, past experience has highlighted the need for caution. This column argues that to make this respite a permanent gain will require the removal of government discretion in determining domestic energy prices. Adoption of an automatic energy pricing mechanism, possibly with in-built short-term price smoothing, can help prevent the return of subsidies and prepare the way for eventual price deregulation.

Janine Aron, John Muellbauer, 14 September 2014

Due to the adoption of inflation targeting and floating exchange rates, and the elimination of capital controls, exchange rate pass-through – the transmission of exchange rate movements to changes in the domestic price level – has become an increasingly important issue in developing and emerging market economies. This column discusses recent research on this topic, and highlights the frequent misspecifications that produce unreliable empirical estimates.

Eric Neumayer, Peter Nunnenkamp, Martin Roy, 01 August 2014

Hoping to attract more FDI, developing countries are increasingly entering stricter investment agreements. But there is no conclusive evidence that such agreements serve them well. This column argues that contagion may help explain this trend. Competition between developing countries for FDI from developed ones could drive the diffusion of international investment agreements.

Jie Bai, Seema Jayachandran, Edmund Malesky, Benjamin Olken, 22 November 2013

Eliminating corruption is a central policy goal of policymakers around the globe. It is known that corruption is a barrier to economic development because it increases the costs and risk of business activity, and deters investment. This column discusses a new study analysing the opposite causal relationship – the effect of economic growth on corruption. Both theoretical and empirical evidence show that economic growth causes the amount of corruption to fall.

Carlos Vegh, Guillermo Vuletin, 01 October 2013

Government spending is procyclical in developing countries, exacerbating the business cycle. However, an analysis of tax policy is also required in order to properly assess the overall stance of fiscal policy. This column presents recent research showing that tax policy tends to be procyclical in developing countries and acyclical in developed countries. Although some developing countries have managed to escape the procyclical fiscal policy trap, some developed nations – notably Eurozone members – are falling into it.

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