High-income OECD Countries Research Articles

The Pollution Haven Hypothesis: A Geographic Economy Model in a Comparative Study

Although based on theoretical foundations, the pollution haven hypothesis has never been clearly proven empirically. In this study, we re-examine this hypothesis by a fresh take on both its theoretical and empirical aspects. While applying a geographic economy model on French firm-level data, we confirm the hypothesis for the global sample. Through sensitivity analysis, we validate it for Central and Eastern European countries, emerging and high-income OECD countries, but not for the major part of the Commonwealth of Independent States countries. Finally, we show that the pollution haven hypothesis is confirmed in the strongest manner for emerging economies.

Migration and remittances factbook, 2008

This factbook for 2008 attempts to present numbers and facts behind the stories of international migration and remittances, drawing on authoritative, publicly available data. It provides a snapshot of statistics on immigration, emigration, skilled emigration, and remittance flows for 194 countries and 13 regional and income groups. Some interesting facts from the Factbook: Nearly 200 million people, or 3 percent of the world population, live outside their countries of birth. Current migration flows, relative to population, are weaker than those of the last decades of the nineteenth century. The volume of South-South migration is almost as large as that of South-North migration. International migration is dominated by voluntary migration, which is driven by economic factors. In 2005, refugees numbered only 13.5 million, or just over 7 percent of international migrants. The share of refugees in the population of lowincome countries was more than five times larger than the share in high-income OECD countries. Worldwide remittance flows are estimated to have exceeded $318 billion in 2007, of which developing countries received $240 billion. The true size, including unrecorded flows through formal and informal channels, is believed to be signifi cantly larger.

Shadow Economies and Corruption All Over the World: Revised Estimates for 120 Countries

AbstractEstimations of the shadow economies for 120 countries, including developing, Eastern Europe and Central Asian and high income OECD countries over 1999 to 2006 are presented. The average size of the shadow economy (as a percent of “official” GDP) in 2004/05 in 76 developing countries is 35.5%, in 19 Eastern and Central Asian countries 36.7% and in 25 high income OECD countries 15.5%. An increased burden of taxation and social security contributions, combined with labour market regulations are the driving forces of the shadow economy. Furthermore, the results show that the shadow economy reduces corruption in high income countries, but increases corruption in low income countries. Finally, the various estimation methods are discussed and critically evaluated.

Does Offshoring Reduce Industry Employment?

This paper looks at the implications of offshoring for industry employment whilst explicitly accounting for the scale and technology effects of offshoring. The effects of offshoring on employment are analysed using industry-level data for 17 high income OECD countries. Our findings indicate that offshoring has no effect or a slight positive effect on sectoral employment. Offshoring within the same industry (intra-industry offshoring) reduces the labour-intensity of production, but does not affect overall industry employment. Inter-industry offshoring does not affect labour-intensity, but may have a positive effect on overall industry employment. These findings suggest that the productivity gains from offshoring are sufficiently large that the jobs created by higher sales completely offset the jobs lost by relocating certain production stages to foreign production sites.

Does Offshoring Reduce Industry Employment?

This paper looks at the implications of offshoring for industry employment whilst explicitly accounting for the scale and technology effects of offshoring. The effects of offshoring on employment are analysed using industry-level data for 17 high income OECD countries. Our findings indicate that offshoring has no effect or a slight-positive effect on sectoral employment. Offshoring within the same industry (intra-industry offshoring) reduces the labour-intensity of production, but does not affect overall industry employment. Inter-industry offshoring does not affect labour-intensity, but may have a positive effect on overall industry employment. These finding suggest that the productivity gains from offshoring are sufficiently large that the jobs created by higher sales completely offset the jobs lost by relocating certain production stages to foreign production sites.

Financial Development and Economic Growth: New Evidence from Panel Data

This study provides new evidence on the role of financial development in accounting for economic growth. To derive feasible policy implications, we estimate not only unbalanced panel regressions with period fixed effects, but also variance decompositions of annual GDP growth rates to examine what proxy measures are most important in economic growth over time and how much they contribute to economic growth across geographic regions and income groups. We find strong linkages between financial development and economic growth in high-income OECD countries, but not in South Asian and Sub-Saharan African regions. Therefore, it may be necessary to make different efforts to achieve steady economic growth across geographic regions and income groups.

R&D, innovation and output: evidence from OECD and nonOECD countries

This article uses data from 41 OECD and nonOECD (Organisation for Economic Co-operation and Development) countries to examine the predictions of nonscale endogenous growth theories that an increase in the share of researchers in labour force leads to an increase in innovation and innovation raises per capita output. The results show that an increase in the share of researchers in labour force increases innovation only in the large market OECD countries. Moreover, an increase in innovation raises per labour GDP (Gross Domestic Product) in all nonOECD countries except for low income countries, while raising it only in the high-income OECD countries. These findings suggest that though the large market OECD countries are the world leader in innovation, nonOECD countries benefit more from it in promoting their growth.

Financial Sector Reform and Economic Growth in Morocco: An Empirical Analysis

This study analyzes the impact of financial sector reforms from the early 1990s on, promoting economic growth in Morocco. To derive feasible policy implications, we estimate not only pooled regressions, but also variance decompositions of GDP growth rates to examine what proxy measures of financial development are most important in economic growth over time and how much they contribute to economic growth across geographic regions and income groups. We find strong linkages between financial development and economic growth in high-income OECD countries, but not in East Asian & Pacific, South Asian, and Sub-Saharan African regions, in the short run. Therefore, it may be necessary for Morocco to make different policy efforts to achieve steady economic growth in the long run.

DOES CHINA SAVE TOO MUCH?

This paper, through simulating an open economy model of China, investigates whether the current rate of saving in China is excessive. The model incorporates the major factors that influence optimal saving, namely demographic change, the catch-up of total factor productivity in China to the level of high-income OECD countries, and an endogenous world rate of interest. The paper finds that the rate of time preference that would imply the current rate of saving is optimal is very low; in fact, it is negative. Thus, to justify China's current rate of saving, the social planner would have to put a higher weight on the economic welfare of future generations relative to the current generation, indeed up to 19 times the weight. This suggests that the current rate of saving in China is excessive.

Electricity intensity backstop level to meet sustainable backstop supply technologies

The concept of a backstop level of electricity intensity 1 1 Intensity (kWh/GDP) and efficiency (kWh/activity) are related by the identity “Intensity=Structure×Efficiency” with structure being activity/GDP. Intensity can be observed statistically, but efficiency is difficult to observe and to measure. For a cross-section of wealthy OECD nations, Verbruggen and Couder (2004) show that most of the variability in electricity intensity is explained by a varying degree in implementing efficient solutions. This article focuses on “intensity”, but most of the results are valid for “efficiency” too. is introduced and illustrated for the highest income economies of the world. The backstop level corresponds with the intensity that would be triggered by applying end-use electricity prices equal to the cost price of a fully sustainable electricity supply. Section 1 of the paper discusses the issue of electricity (also energy) intensity of economies. It is argued that identifying a “demand for electricity intensity” bridges the gap between the high willingness to pay for electricity services on the one hand and the disinterested attitude of consumers regarding the invisible and impalpable product electricity on the other hand. Assessment of the demand curve for electricity intensity in a cross section of high income OECD countries comes to a long-run price elasticity of almost −1. Section 2 revives Nordhaus’ concept of backstop supply technologies for weighing three power sources (fossil, nuclear, and renewable sources) in meeting today's criteria of sustainable backstop technology. Only renewable sources meet the main sustainability criteria, but the economic cost of a fully sustainable electricity supply will be elevated. The closing question of Section 3, that is, whether the countries can afford the high cost of backstop electricity supplies, is answered by indicating what reductions in intensity are required to keep the electricity bills stable. The targeted intensity level is called the backstop level, and provides a fixed point for electricity efficiency policies. The analysis supports the call for comprehensive and enduring tax reform policies.

Unmarried Parenthood and Redistributive Politics

Political survey data for nine West European countries show that women have become increasingly left-wing compared to men, and that this trend is positively correlated with the rise of nonmarriage in these countries. This pattern is mirrored in German longitudinal data (GSOEP), where transitions out of marriage make women, but not men, significantly more left-leaning. Analysis of public spending data for high-income OECD countries (1980–1998) suggests that the political impact of nonmarriage extends to the allocation of State resources with increases in nonmarriage first reducing, and then increasing, State redistribution towards children. (JEL: H31, H42, J12, J13)

Solutions to Japan's Banking Problems: What Might Work and What Definitely Will Fail

We study the longstanding banking problems in Japan. By examining both the past policies in Japan that have failed, and the successful policies in other high income OECD countries that have overcome banking crises, we develop a roadmap for resolving the problems. We distill the problems into four basic troubles. The first is that most of the banks are severely under-capitalized when their condition is properly evaluated. The second is that the banks are not currently allocating credit efficiently, and instead are directing many loans to borrowers that will not be able to repay them. The third is that the banking sector is too large (in terms of assets) to make adequate returns. The final problem is that the banks' lack of profitability is partly related to their inability to offer the high margin products that are commonplace amongst their foreign competitors. We then explore the implications of these observations for the long-run condition of the industry. In particular, a natural way to define the end of the problems is when the banking sector has shrunk to a level where it can profitably operate and the banks are once again adequately capitalized and no-longer ever-greening loans to deadbeat borrowers. Recognizing this constellation of conditions as the eventual equilibrium for the industry is helpful because it identifies the set of problems that a successful policy must confront. Our description of the equilibrium also helps to show why past policies have failed to end the problems. The evidence from other countries, however, shows that the problems are not insurmountable. We describe how the successful policies used elsewhere could be applied in Japan. We outline alternative transition strategies that could take us from the current conditions to the equilibrium. Finally, we illustrate the alternatives by analyzing the Resona Bank rescue and the Mitsubishi Tokyo Financial Group and UFJ merger.

Patterns of historical CO 2 intensity transitions among high and low-income countries

This article examines the long-term relationship between CO 2 emissions and economic development for various high-income OECD countries that, in turn, are compared with pattern for developing countries. A majority of high-income countries have experienced environmental Kuznets curve types of transitions with respect to CO 2 intensity (emissions per GDP), while the these patterns are absent in the poorer countries. Moreover, the overall historical pattern is one of convergence with respect to intensities. These observations are consistent with an explanation that takes into account includes time-specific, or vintage technology.

Fiscal Decentralisation and Economic Growth in High‐Income OECD Countries

AbstractAmong the majority of high–income OECD countries, the degree of fiscal decentralisation has converged over the last 30 years towards an intermediate level. The theoretical arguments for and against fiscal decentralisation point to explanations for this tendency, because both extreme decentralisation and extreme centralisation are associated with disadvantages for economic growth. Hence, the observed trend of convergence would be growth–promoting. The paper analyses the long–run empirical relationship between per capita economic growth, capital formation and total factor productivity growth, and fiscal decentralisation for the high–income OECD countries. The evidence supports the view that the relationship is positive when fiscal decentralisation is increasing from low levels, but then reaches a peak and turns negative. A policy implication is that policy–makers in several countries with relatively low degrees of fiscal decentralisation could possibly mobilise growth reserves by increasing it.

Human capital and returns to scale

Models of endogenous economic growth typically assume that aggregate production is characterised by increasing returns to scale, often as a result of the accumulation of physical and human capital. In this paper, an international data‐set on formal educational attainments is used to disaggregate total employment in order to estimate a Cobb‐Douglas aggregate production function. The function is estimated, using a pooled cross‐section time‐series model, for a selection of high income OECD countries for five years in the period 1960‐85. The estimation results suggest that increasing returns to scale prevailed.