Governments Of Least Developed Countries Research Articles

Second-Hand-Clothing Imports in Least-Developed-Countries: The Collapse of Local Clothing Manufacturing and Remedial Measures

Considering the overwhelming global trend of second-hand clothing trade, domestic clothing manufacturing industries in many least developed countries (LDCs) have collapsed. Governments of many LDCs, therefore, have imposed tariff policies on the imports of second-hand clothing. Motivated by the real-world practices, we develop a two-stage Stackelberg supply chain gaming model to study the competition between the locally manufactured new clothing product and the imported second-hand clothing product. We first explore whether import tariff protection can help boost domestic clothing manufacturing industries in LDCs in the light of risk considerations and what the optimal import tariff structure is. We find that in the uncertain LDC market, imposing a high import tariff or a high value-added tax (VAT) on the imported second-hand product may not help local manufacturing. Instead, implementing a carrot-and-sticks (CaS) scheme, which includes an import tariff, a VAT, and an extra incentive, can help. The LDC governments are suggested to adjust the CaS scheme's structure based on factors like risk attitudes of supply chain members, the unit product supply costs, social health risk, and consumer acceptance level of the second-hand product. Finally, we extend our analyses to study the social welfare and the extended importer responsibility (EIR) legislation. We find that if the sterilization cost of the second-hand product is sufficiently low, imposing the EIR legislation in the uncertain LDC market is not beneficial to the domestic clothing manufacturing industry. Specific conditions under which imposing a higher import tariff is beneficial or harmful to the LDC society are identified.

Are Fiscal Deficits Really Inflationary? An Investigation Into Ethiopia’s Experience

Abstract This study establishes long-run relations between budget deficits and inflation, while controlling for money supply owing to the justified links between deficits and money supply especially for developing countries. We employed time series data with temporal coverage of 1980-2018. Augmented Dickey Fuller has tested nonstationary for all series, but with all stationary at first difference. The Engle-Granger (1981) methodology for Cointegration tested long-run relation between budget deficits, money supply and inflation. Due to Laney and Willet (1983), the conventional least squares regression was adopted to estimate parameters of long-run equation. The results evidenced that fiscal deficits and money supply have been at the root of galloping inflation in Ethiopia. Besides, budget deficits have been the root cause of money supply growth in Ethiopia; while giving empirical support to the hypothesis that, governments of least developed countries resort to monetize large portion of their deficits. There is a need to reform the fiscal aspect of the government, if the mounting rate of deficits has to be lessened. Budgetary imbalances can be rectified through enhancement of domestic capital market and setting limits on central bank borrowing. Besides, it could be vital to expand the tax base as well as intensify efficiency of the existing tax system in the country.

LDC Infrastructure Development in the Era of 'Nationalistic Rhetoric': Do International Investments Agreements Still Mitigate Sovereign Risk and If Not, Does It Matter?

Less Developed Countries (LDCs) provide enormous opportunities for companies involved in the development of infrastructure. LDCs couple significant need with often insufficient 'in country' capability or expertise, meaning that foreign companies willing to expand operations into LDCs can find interesting and profitable opportunities. International infrastructure development naturally brings with it the sovereign risks associated with contracting with the government of a LDC. During the last thirty years, governments of LDCs have actively sought the execution of International Investment Agreements (IIAs) with other nations in an attempt to mitigate the appearance of sovereign risk and encourage greater international investment. This has included encouraging foreign companies in the delivery of infrastructure projects. 
 
 In the last five years, however, worldwide political support for IIAs seems to be waning, as nationalism and populism threatens to replace globalism and multiculturalism as the dominant economic and political theories in the USA, Europe and Great Britain. In a global political landscape dominated by nationalistic rhetoric, we are unlikely to see continued popular support for the protection of foreign companies against national interests by way of IIAs. We are likely to see not only fewer new IIAs, but conceivably governments revoking their agreement to existing IIAs coupled with waning support for ICSID arbitrations. The author submits, however, that there will not necessarily be a marked increase in sovereign risk as a direct result, and that LDCs will continue to provide worthwhile markets and opportunities for infrastructure development.
 
 The author submits that IIAs never in any event provided complete protection, and that protection against sovereign risk remains available through the underlying contract and in many cases, through political risk insurance. Further, international participants should look at projects with shorter timeframes to secure the return on investment, and avoiding taking sole risk on project by operating in joint ventures.

COMPARATIVE ADVANTAGE DEFYING DEVELOPMENT STRATEGY AND CROSS COUNTRY POVERTY INCIDENCE

(ProQuest: ... denotes formulae omitted.)1.INTRODUCTIONPoverty is the main social and economic problem in most developing countries. Most economists also agree that economic performance and level of poverty in a country are determined, to a large degree, by the quality of its institutions (Acemoglu, 2007; Acemoglu et al., 2004; Commander and Nikoloski, 2010). A country's chosen development strategy matters in determining the quality of institutions and, hence, the level of poverty (Lin, 2009). Since the end of the Second World War, developing and developed economies around the world have determinedly sought to alleviate, and even eradicate, poverty. With the exception of a few successes in East Asia including Japan, South Korea, Singapore and Taiwan, such efforts have largely failed. Thus, living standards in most developing countries have not improved substantially and particularly for countries in Sub-Saharan Africa, very little have changed (ibid). Now the most important question becomes what was wrong with the development policies in most developing countries and whether it is possible to avoid these mistakes.Nevertheless, the eradication of poverty remains a high priority for world leaders, as reflected in Millennium Development Goal 1. There is a continuous debate about how to achieve poverty reduction in developing countries, but not enough discussion of why some countries are highly poverty prone and others do not have poverty and what we mean by poverty reduction. It is often understood as shorthand for promoting economic growth that will permanently lift as many people as possible over a poverty line. Thus, many political leaders viewed the development of capital intensive and technologically advanced heavy industries that prevailed in the developed countries as the symbols of modernization and an easy way of reducing poverty. We call this a Comparative Advantage Defying (CAD) strategy because the developing countries have mostly been capital-scarce economies and capital-intensive industries were not to their comparative advantages. Even many economic policymakers were not concerned whether this is really the correct policy measure to reduce poverty. Our motivation is to empirically explore the flawed policy statements taken by the most developing countries and suggest corrections in their development strategies. Thus, the hypothesis that will be tested in this paper is that over an extended period a country adopting a CAD development strategy will have a higher level of poverty.The most important channel through which the CAD strategy can affect the level of poverty is the channel of finance. Many governments of least developed countries (LDCs) which carry out a CAD strategy subsidize the firms in priority sectors by distorting funds prices, foreign exchange rates, and other inputs or input prices; and use administrative authorities to allocate price-distorted inputs to the firms. For example, immediately after independence in 1949, the Chinese government adopted CAD strategy and made a big push for the nationalization movement by increasing the share in the industrial output of State Owned Enterprises (SOEs) from around 40% in 1952 to 90% in 1958. The government suppressed the price of agricultural products to support priority industry - price premium of agricultural products at informal markets relative to state procurement price went negative at 10 points in the 1950s (Lin et al., 2006). During this time, Chinese government failed to reduce poverty until stopping such deviant behavior in 1978 (Lin, 2009).The methodology this paper uses is the Ordinary Least Square (OLS) estimation. But because of endogenous problems it uses the instrumental variable (IV) approach as well. We have found IV for both of our interested endogenous variables - CAD and financial development. Nevertheless, our dependent variable, poverty level, contains lots of zeroes due to lack of data on poverty based on our headcount definition of poverty. …

Developing countries in competition for foreign investment

This study analyzes the competition for foreign direct investment (FDI) among countries at different stages of development. It is assumed that domestic companies in a more-developed country use more capital in production and that wages in a less-developed country are lower. Countries can compete for FDI by increasing the supply of public inputs in the economy, in addition to (or instead of) offering subsidies or tax reliefs to foreign investors. The results reveal that if governments of competing countries are not allowed to discriminate between domestic and foreign firms, there may be situations in which a less-developed economy will attract FDI depending on the labor cost differential and the responsiveness of foreign investor's and domestic companies' output to changes in the supply of public inputs. If tax discrimination between domestic and foreign firms is permitted, both countries will optimally raise the supply of public inputs, but the more-developed country will always win the foreign investment despite higher labor costs. Thus, governments of less-developed countries may have an incentive to work on an international agreement to disallow tax discrimination.

Causes, Challenges and Prospects of Brain Drain: The Case of Eritrea

AbstractWhile there is little doubt that highly skilled workers in many Least Developed Countries (LDCs) are scarce, it is also true that many highly trained professionals have left LDCs to go and work in the developed world. The latter, known as the “brain drain,” or simply human capital flight, is not at all a new phenomenon; it has only become more pronounced in recent years. This paper delves into the causes, challenges, and prospects of the phenomenon of the “brain drain” in LDCs, by taking Eritrea as a case study. In so doing, it demonstrates that deteriorating economic conditions, lack of good governance and political instability are the root causes of the “brain drain” in LDCs such as Eritrea. The paper also highlights the impact of the “brain drain”, and suggests some of the measures that may be put in place by governments of LDCs in order to redress the situation.

The effectiveness of community-based animal health workers, for the poor, for communities and for public safety.

The development of community animal health (CAH) is an invaluable tool for addressing a series of challenges, particularly for the policy-maker, whose prime concern is public welfare. This paper examines three of the major challenges which confront governments, particularly the governments of less-developed countries, namely, the collapse of government services, the crucial issue of poverty reduction and the misuse of animal drugs. Although CAH is a potentially powerful tool for approaching all of these problems, the authors argue that CAH can only be fully exploited on a macroscopic level by developing strong institutions to support and regulate such community initiatives. In some countries, developing such institutions depends upon accepting the more fundamental and controversial principle of legalising non-professional animal health service providers who work within the private sector. In Section 1, the authors outline the three principal challenges which face governments, particularly in developing countries, and to which CAH offers a potential solution. Sections 2 to 4 investigate the evidence relating to each of these challenges in turn. Section 5 briefly draws on the lessons that have been generated by field experiences over the years, to propose how governments may develop CAH systems to their best advantage.

International Conservation Organizations and the Fate of Local Tropical Forest Conservation Initiatives

Several international conservation organizations (ICOs) created in the developed world to promote conservation in the tropics are now extremely outspoken and powerful, due in large measure to their access to capital. We acknowledge that ICOs have been critical stakeholders in shaping international environmental policies. We also recognize that there have been successful collaborations between ICOs, governments of less-developed countries, and local and regional nongovernmental organizations (NGOs). Our principal concern is that, given the asymmetric relationships that characterize most of the partnerships between ICOs and local institutions in less-developed countries, particularly in relation to their differential access to funds, there is a danger of treating societal assets in less-developed countries, more specifically tropical forests, as private assets, and therefore distorting the values of these resources. Furthermore, we believe that the preservationist agenda pushed by some ICOs and the associated processes through which decisions on tropical forests are made will abort local social processes that could contribute to conservation. We make a plea to ICOs to assist less-developed countries in the process of building policies affecting tropical forests that consider the full range of options for forest conservation rather

Can National Information Infrastructures Enhance Social Development in the Least Developed Countries? An Empirical Investigation

The need for national information infrastructures (NII) in the world’s least developed countries (LDCs) tends to be overshadowed by the nation’s severe deficiencies in physical infrastructure. Consequently NII may be inadequately addressed by governments and supporting agencies in their plans for stimulating social growth. The example of Singapore’s TradeNet and other lesser-developed countries developing national, electronic information infrastructures, suggests that information technology infrastructure may enable an LDC to develop at a particularly advanced rate. This paper studies the relationship of information infrastructure and social development. It establishes a clear correlation between 1) levels of information infrastructure and social development, and 2) growth rates of information infrastructure and social development. The findings suggest that governments of LDCs may enhance their countries’ growth by developing strategic plans for NII development.