Category: Macroeconomics

Premature Deindustrialization and its Consequences for Human Welfare

jpellg5 Comments

Seagate_Wuxi_China_Factory_Tour.jpegRecent research suggests that late industrializers have not been following previously observed patterns in terms of sectoral change and employment, but the effect of these changing structural patterns on well-being and the distribution of gains from growth has not yet been systematically examined. There is a global shift towards both lower employment in industry at all levels of income per capita and de-industrialization, the shift from manufacturing to service employment, taking place at significantly lower levels of income (See work by Timmer, de Vries, and de Vries; Subramanian; and Rodrik here, here, here and here).

Deindustrialization, Employment Generation, and the “Precarization” of Global Labor
There are many reasons why these new patterns may have negative effects on inclusive development; some recent research emphasizes the important role that periods of high levels of manufacturing employment have played in now wealthy countries, and the dearth of wealthy countries that have skipped such a phase; there are concerns about the effects of lower levels of manufacturing output on both growth and employment generation ( See again Timmer, de Vries, and de Vries and Rodrik).Read More »

The Trouble with Sub-Saharan African Debt

Ingrid Harvold Kvangraven2 Comments

By Aleksandr V. Gevorkyan and Ingrid Harvold Kvangraven

Over the past decade, the Sub-Saharan African countries’ ability to draw on new debt in international capital markets has become a central characteristic of their development experience. Yet, the determinants of their borrowing costs are driven by external factors where investor perception plays a key role. This raises concerns over the sustainability of the current development model.

In the mid-2000s, 30 African countries received substantial debt reduction through the International Monetary Fund (IMF) and World Bank’s Heavily-Indebted Poor Country (HIPC) Initiative. Only a decade later, many of the same countries are again facing debt distress. The African Development Bank recently warned its members of the dangers of rising debt obligations, while the IMF has called for an “urgent need to reset” the region’s growth policies.

In our new paper entitled “Assessing Recent Determinants of Borrowing Costs in Sub-Saharan Africa” in the November 2016 issue of the Review of Development Economics, we trace the latest round of borrowing back to 2006 with Seychelles as the first sub-Saharan African (SSA) country to issue a sovereign bond, with the exception of South Africa, in 30 years. Since then, DR Congo, Gabon, Ghana, Côte d’Ivoire, Senegal, Angola, Nigeria, Tanzania, Namibia, Rwanda, Kenya, Ethiopia and Zambia have all followed suit, accumulating over $25 billion worth of bonds, with a principal amount of more than $35 billion (see Figure 1 for totals by country).Read More »

Can Latin America Learn from Europe’s Mistakes? Divergence in Regional Economic Integration

collinconstantine1 Comment
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By Collin Constantine (Kingston University) and Johanna Renz (University of Oxford)

A powerful core and a powerless periphery – these are features of the European Monetary Union (EMU). The union has gone much further than Latin America and the Caribbean (LAC) in its integration efforts and has suffered from a severe economic crisis. Since LAC’s economic integration is still ongoing, it can and should learn from the EMU’s mistakes before it is too late.

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