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In this paper we analyse why an understanding of the global 'non-system', in which we now live, took so long to arrive after the Bretton Woods system collapsed in 1971. We first describe how knowledge of how an inflation-targeting regime would operate—what we call 'Taylor-rule macroeconomics'—was only gradually created during the 1970s, 1980s, and 1990s. We then describe how, subsequent to this, an awareness emerged, also gradually, of how the international non-system might work, depending, as it does, on Taylor-rule macroeconomics being already in place. We then discuss the Great Moderation, making clear that a well-functioning global non-system would require not just inflation targeting and floating exchange rates in each country, but also adequate fiscal discipline, and a satisfactory form of financial regulation. We describe how a well-functioning version of this global non-system would actually fit together. We then discuss how this non-system has responded to two enormous challenges of the last 15 years, namely the Global Financial Crisis and the Covid pandemic. This discussion of what has happened in the recent past provides the background to a discussion, in the companion paper by Subacchi and Vines in this issue of the Oxford Review of Economic Policy , of the challenges that the global non-system will face in the future. [ABSTRACT FROM AUTHOR]

This paper introduces and summarizes this issue of the Oxford Review of Economic Policy , on management practices. We outline key concepts in the empirical study of structured management practices, then summarize each of the eight papers that follows. We conclude by speculating on future directions for research and policy development in this area. [ABSTRACT FROM AUTHOR]

This issue of the Oxford Review of Economic Policy addresses whether and how to tax the rich more, drawing on the expertise of 16 author teams, most of whom are economists but also spanning legal scholarship and political science. The papers in this issue ask a range of research and policy questions about the way governments tax the rich. How can we measure the effective tax rates on the incomes and/or wealth of the rich? How do governments tax specific sources of income that the rich earn, and is there need for reform? Who bears the burden of different types of taxes, and do potential gains from reducing the tax burden on the rich 'trickle down'? How do the rich respond to the taxes imposed on them? [ABSTRACT FROM AUTHOR]

An enduring idea in economics and management sciences is that successful business strategies exploit complementarities across management practices within a firm. From this complementarity perspective, the success of business strategy requires utilizing a variety of interdependencies across management practices. Navigating large arrays of possible interdependencies implies that strategic decision-making is often conducted under high complexity and uncertainty. This paper provides an introduction to the conceptual foundations of complementarities in business strategy, and its implications for strategic decision-making and managerial learning. Against this backdrop, I outline issues of measurement and data collection for strategy practices, drawing on recent measurement efforts by academic researchers as well as national statistical agencies. The last part of the paper discusses how increased large-scale data collection on firm activity complementarities and strategy practices can inform a variety of policy areas, such as antitrust policy and merger review, industrial and innovation policy, tax policy, and public–private partnerships. [ABSTRACT FROM AUTHOR]

This paper presents a summary of this issue of the Oxford Review of Economic Policy , on microfinance. The paper explores the evolving landscape of microfinance, with particular emphasis on its broadening scope. It summarizes the four parts of this journal issue, focusing on: (i) microfinance and its providers; (ii) the challenges of taking microfinance to scale; (iii) microfinance and digital credit; and (iv) microfinance and repayment flexibility. [ABSTRACT FROM AUTHOR]

Thanks to the rapid advance in technology, the arrival of artificial intelligence, and easy digital connectivity across nations, the ground beneath the global economy is shifting. This has given rise to new social and political problems and challenges for market capitalism. The paper argues the need for original work in economic theory to capture and understand the essence of markets in this new, digital age; and goes on to speculate about what shape this may take. The paper discusses the need to think out of the box in terms of economic policy, arguing that the reach of antitrust law is inadequate for our digital-platform-based economy, and we have to think of new forms of regulation. [ABSTRACT FROM AUTHOR]

This paper examines the relationship between ethics and market design. It argues that market design should not rely wholly on preference utilitarianism in order to make ethical judgements. It exposits an alternative normative framework—informed neutrality between reasonable ethical positions. [ABSTRACT FROM AUTHOR]

In this double issue of the Oxford Review of Economic Policy we publish a set of papers concerned with the mobilization of domestic and foreign capital in support of the United Nations' Sustainable Development Goals that were launched in September 2015. The papers were originally presented at a conference on 'Financing for Development' organized by the International Monetary Fund and the Centre for Finance and Development at the Graduate Institute in Geneva in April 2015. [ABSTRACT FROM AUTHOR]

This paper gives an overview of current thinking by economists about the consequences of ongoing technological progress for labour markets, and discusses policy implications. In economics, the impact of technological progress on labour markets is understood by the following two channels: (i) the nature of interactions between differently skilled workers and new technologies affecting labour demand and (ii) the equilibrium effects of technological progress through consequent changes in labour supply and product markets. The paper explains how the ongoing Digital Revolution is characterized by a complex interplay between worker skills and digital capital in the workplace, and consequent changes in job mobility for workers and in output prices affecting consumer demand for goods and services. In particular, it explains how current worker–technology interactions and the equilibrium effects they entail combine to create economy-wide job polarization with winners and losers from ongoing technological progress. The paper therefore concludes by discussing a set of policy interventions to ensure that the benefits of the Digital Revolution are broadly shared. [ABSTRACT FROM AUTHOR]

This issue of the Oxford Review of Economic Policy explores the origins of the US-led liberal multilateral economic order in the post-war world and the threats which that order now faces, drawing on contributions from two different groups of people—academic international relations (IR) scholars and international economists. This introductory essay attempts to weave the various strands of this intellectual collaboration together. First, it provides a narrative history of how economic collaboration emerged in the aftermath of the Second World War. Second, it describes the nature of the global economic governance that emerged and provides a new formal framework for analysing it, making use of the idea of 'concerted unilateralism'. Third, it explores how contemporary challenges—a broadening of policy requirements, the rise of economic nationalism, and the rise of China as a new hegemon—mean that the global economic order is now in flux. And finally, it concludes with a general observation that runs through the paper: that IR scholars are inclined to analyse international economic regimes, economists to study particular policy proposals, and that these two perspectives can—and should—complement one another. [ABSTRACT FROM AUTHOR]

This special issue of the Oxford Review of Economic Policy , based on papers presented at a Bank of England conference, explores the impact of artificial intelligence (AI) on financial services. This opening article provides an overview of AI and its increased use in the financial sector; considers the implications for consumers and competition in the sector; looks at the consequences for central bankers and regulators; and reflects on a more distant world where AI is far more advanced than today. In short, the effect of AI on financial services is likely to be transformative, but that impact remains complex and uncertain. [ABSTRACT FROM AUTHOR]

Market design seeks to translate economic theory and analysis into practical solutions to real-world problems. By redesigning both the rules that guide market transactions and the infrastructure that enables those transactions to take place, market designers can address a broad range of market failures. In this paper, we illustrate the process and power of market design through three examples: the design of medical residency matching programmes; a scrip system to allocate food donations to food banks; and the recent ‘Incentive Auction' that reallocated wireless spectrum from television broadcasters to telecoms. Our lead examples show how effective market design can encourage participation, reduce gaming, and aggregate information, in order to improve liquidity, efficiency, and equity in markets. We also discuss a number of fruitful applications of market design in other areas of economic and public policy. [ABSTRACT FROM AUTHOR]

The COVID-19 pandemic has created both a medical crisis and an economic crisis. As others have noted, we face challenges just as big as those in the Spanish Flu Pandemic and the Great Depression—all at once. The tasks facing policy-makers are extraordinary. Many new kinds of intervention are urgently required. This issue of the Oxford Review of Economic Policy has two objectives. The first is to explore these new interventions: evaluating their use, suggesting how they might be improved, and proposing alternatives. The second is to show that the challenges facing us are global and will require international cooperation if they are to be dealt with effectively. This short introductory essay positions the papers in the issue within an overall conceptual framework, with the aim of telling an overarching story about the pandemic. [ABSTRACT FROM AUTHOR]

In this paper, we show how to combine data on input–output tables and recent insights from the theory of production networks in order to inform policy. We first describe the information contained in input–output tables compiled by statistical agencies, and show how to derive relevant statistics of production networks. We then discuss the implications of production networks for policy intervention in a series of domains, such as fiscal policy, industrial policy, or, finance. Finally, we present a quantitative exercise applied to French data in order to illustrate that production networks shape the overall impact of competition policy on the economy. [ABSTRACT FROM AUTHOR]

This paper shows that the quest for sovereignty in Quebec is explained by its role as the abode for a French-speaking minority in North America. It notes that there was no commonly agreed legal framework for the 1980 or 1995 referendums and that the attempt to impose one in 2000 has been rejected by Quebec. Using results from existing papers and original research, the paper shows that the quest for sovereignty can have an impact on the cost of financing the public debt of the entity doing this. It also shows that labour flows can be affected by the existence of a sovereignty movement. This GDP would be higher if the secessionist threat had not had an impact on the size of the labour force since the early 1970s. [ABSTRACT FROM AUTHOR]

This paper aims to shed light on the role of the 'ideology' of political parties in shaping the evolution of the welfare state in 18 developed democracies, by providing empirical findings on the determinants of social-programme entitlements and social spending over the period 1981-99. The paper shows that structural change is a major determinant of the extent of social protection. Our results suggest that overall spending is driven up by structural change. On the other hand, strong structural change has a negative influence on welfare entitlements measured by the net rate of sickness insurance. Partisan influence plays an important role in the dynamics of the welfare state. Left-wing governments strengthen the positive effect of shocks on aggregate social expenditure, while right-wing governments undertake even stronger cutbacks in replacement rates as a reaction to structural change. [ABSTRACT FROM AUTHOR]

This paper examines the evolution of Australian fiscal policy and the fiscal policy framework over the past quarter-century. Following the early 1980s recession, a sustained fiscal consolidation saw the general government budget balance (for all levels of government) move from a deficit of 3 1/2 per cent of GDP in 1983/4 to a surplus of 1 3/4 per cent 5 years later in 1988/9. A severe recession in the early 1990s interrupted this process, and the budget returned to sizeable deficits which peaked at 4 3/4 per cent of GDP in 1992/3. The second half of the 1990s saw a repeat of the experience a decade earlier, with the budget returning to surplus in 1997/8. In contrast to the 1980s experience, however, the general government sector (for all levels of government) has recorded surpluses for the subsequent 8 years to the present. The paper outlines Australia's macroeconomic experience over this time and argues that there have been two significant medium-term factors motivating the extended periods of fiscal consolidation. The first factor, relevant since the mid-1980s. has been the large Australian current-account deficits since that time, and the associated build-up of net foreign liabilities. The second factor, which entered the public debate more recently, is a desire to provide fiscal policy flexibility to respond to the ageing of the population and the projected rising public cost of health services--both influences that are likely to be of increasing importance over the next generation or so. The paper discusses the introduction and evolution of Australia's medium-term fiscal framework which has been put in place to respond to these challenges. [ABSTRACT FROM AUTHOR]

This paper studies the interactions of fiscal policy and monetary policy when they stabilize a single economy against shocks in a dynamic setting, If both policy-makers are benevolent, then, in our model the best outcome is achieved when monetary policy does nearly all of the stabilization. If the monetary authorities are benevolent, but the fiscal authority discounts the future, or aims for an excessive level of output, then a Nash equilibrium will result in large welfare losses: after an inflation shock there will be excessively tight monetary policy, excessive fiscal expansion, and a rapid accumulation of public debt. However, if, in these circumstances, there is a regime of fiscal leadership, then the outcome will be very nearly as good as when both policy-makers are benevolent. [ABSTRACT FROM AUTHOR]

The paper contributes to a symposium of the Oxford Review of Economic Policy on 'Capitalism: What has Gone Wrong, What Needs to Change, and How can it be Fixed?'. The analysis starts from the observation that, in the United States, the United Kingdom, and continental Europe, widespread discontent has become an important political force. I attribute this discontent to a sense of unfairness in developments of the past few decades. I relate this sense of unfairness to: (i) negative effects of structural change, including joblessness and regional decline, (ii) the observation of extraordinary growth in executive remuneration and financial-sector remuneration, coupled with government bailouts in the global financial crisis, and (iii) changes in public policy and public discourse, with a retrenchment of public services and public investment, except for bailouts and a focus on 'efficiency', the meaning of which is driven by the perceptions of corporate executives rather than standard welfare economics. To capture these developments, one needs to think about 'capitalism' in the sense of French capitalisme or German Kapitalismus , with a focus on the symbiosis of wealth and power, including the elimination of competition, rather than merely another term for the market economy. [ABSTRACT FROM AUTHOR]

In this assessment we discuss the issues raised by the papers in this issue of the Oxford Review of Economic Policy in the context of economic models of household consumption and saving. We also provide a discussion of what we consider to be some important areas in the current debate surrounding theories and evidence regarding saving behaviour. We highlight the differences that arise from considering partial, as opposed to general, equilibrium models, and in looking at developed, as opposed to developing countries. We also discuss current policy issues relating both to the adequacy of household saving and to the distribution of saving across households, or across asset types, as well as the need for more microdata on saving and asset holding. [ABSTRACT FROM PUBLISHER]

Markets are being populated with new generations of pricing algorithms, powered with artificial intelligence (AI), that have the ability to autonomously learn to operate. This ability can be both a source of efficiency and cause of concern for the risk that algorithms autonomously and tacitly learn to collude. In this paper we explore recent developments in the economic literature and discuss implications for policy. [ABSTRACT FROM AUTHOR]

Field experiments represent a relatively new area in economics to understand the causal links from one variable to another. They have been used by academics to help answer interesting and policy-relevant questions in the developed world relating to educational attainment, tax avoidance, consumer finance, negative externalities, charitable giving, and labour market contracts. In this paper we bring together the key ideas behind the different variants of field experiments, how field experiments have been used to test theory, their limitations, and the new areas currently being opened up by field experiments. [ABSTRACT FROM AUTHOR]

Africa is rapidly urbanizing: it is the most important structural transformation under way in the region. By 2050, almost regardless of government policies, its urban population will have tripled. But the consequences are critically dependent upon policy choices: successful urbanization requires active and far-sighted government. At its best, urbanization can be the essential motor of economic development, rapidly lifting societies out of mass poverty. At its worst, it results in concentrations of squalor and disaffection which ferment political fragility. To date, African urbanization has been dysfunctional, the key indication being that cities have not generated enough productive jobs. If urban policies remain unchanged, future urbanization is likely to result in similar outcomes. This paper sets out how changed policies can unlock the potential of urbanization for prosperity. Primarily, it sets out the economic forces underlying this potential, and the specific policy actions they require. But policy actions do not just happen: they are generated by political processes that confer authority and capacity on public institutions. The paper concludes with a discussion of how politically urban policy-making might be improved. [ABSTRACT FROM AUTHOR]

Economic theory justifies policy when there are concrete market failures. The article shows how in the case of innovation, successful policies that have led to radical innovations have been more about market shaping and creating through direct and pervasive public financing, rather than market fixing. The paper reviews and discusses evidence for this in three key areas: (i) the presence of finance from public sources across the entire innovation chain; (ii) the concept of 'mission-oriented' policies that have created new technological and industrial landscapes; and (iii) the entrepreneurial and lead investor role of public actors, willing and able to take on extreme risks, independent of the business cycle. We further illustrate these three characteristics for the case of clean technology, and discuss how a market-creating and -shaping perspective may be useful for understanding the financing of transformative innovation needed for confronting contemporary societal challenges. [ABSTRACT FROM AUTHOR]

As the firm is the central mechanism for converting innovation into economic action, this paper argues that economists and economic policy-makers need to understand how and why firms innovate. This is challenging because innovation manifests itself in a wide range of forms and results from diverse organizational processes. The paper discusses a number of the practices supporting innovation in firms, including positioning, connecting, protecting, organizing, and measuring. A number of theories explaining innovation in firms are discussed. The paper concludes that the determination of the most effective policy levers for encouraging innovation requires staying abreast of current and emerging innovation practices in firms. [ABSTRACT FROM AUTHOR]

This paper describes the history of the UK balance of payments since 1950, and contains an informal discussion of future prospects. It documents the huge shifts that have occurred in the composition of trade, in particular the rise of the City of London and knowledge-intensive services (communications, consultancy, R&D, media, other business services, etc.), the rise and fall of North Sea oil, and the transformation of the UK from a leading net exporter of manufactured goods to a major net importer. Domestic oil production is now in decline, net income from overseas investment has fallen, and the City of London is under threat. The UK also has a current account deficit equal to 4 per cent of GDP. These recent developments have led to widespread calls for rebalancing the economy so as to improve the trade performance of the manufacturing sector. This paper supports this objective. It calls for industrial and other policies to improve UK trade performance, above all in manufacturing, but also in knowledge-intensive services. It also points out the need to safeguard London’s role as a global financial centre. [ABSTRACT FROM PUBLISHER]

The paper examines the nature, rationale, and logic of the reforms to EU Cohesion Policy. A particular focus of the paper is on the concept of smart specialization and the use of this concept to help facilitate a results-oriented policy agenda. On the one hand, the arguments underpinning the reforms in part relate to modern thinking regarding the role of industrial policy. On the other hand, they also partly relate to advances in our understanding of the relationships between economic geography, technology, and institutions. At the same time, the specific features of the EU context also heavily influence the nature and logic of the changes, whereby legal and institutional matters linking Cohesion Policy to other EU policies all play an important role. [ABSTRACT FROM PUBLISHER]

The aim of this paper is to analyse the consequences of some structural reforms on the institutional coherence of OECD countries. particularly in Continental Europe, and on their economic performance, particularly as regards employment. Because institutions in developed political economies are interrelated through a complex network of complementarities, institutional change has consequences beyond the area concerned in a reform. This also implies that there are complementarity effects in reforms themselves. A challenge of reform programmes is therefore to achieve a new type of complementarity between reformed institutions. The paper presents empirical evidence questioning the compatibility of the ongoing structural reforms in product and labour markets with the existing institutional structures in some OECD countries. The coherence of the flexicurity strategy, i.e. a combination of labour-market flexibility and a generous welfare state, is also questiones, from the point of view of both economic efficiency and political economy. [ABSTRACT FROM AUTHOR]

Although their paper stresses the potential merits of a particular financial innovation--a form of shared-ownership indexed contract--Miles and Pillonca surprisingly neglect the role of differential surges of financial innovation in explaining cross-country differences in house-price inflation. The risk-reducing potential of their favoured instrument deserves further analysis, not least because of the sizeable political risk involved: the experience of several other countries that have used indexed mortgage contracts shows their limited robustness to macroeconomic shocks. [ABSTRACT FROM AUTHOR]

A preface for the Volume 23, Number 1, 2007 issue of the journal "Oxford Review of Economic Policy" is presented.

This paper describes the ways in which changing consumption patterns and production technologies have altered the boundaries between agriculture and food. Increasing income and urbanization have driven a steady increase in the demand for prepared and processed foods, reducing the need for in-home preparation. But this well-documented transition has in turn led to a shift in the structure of the food industry, with manufacturers and processors playing an ever-larger role relative to farmers-- most prominently in the US and European countries, but also in the developing world. The shift is evident in employment patterns and trade patterns as well as in production and value addition. We argue that regulatory systems and policies still tend to equate food with farming, reflecting the realities of the last century more than the policy challenges of today. [ABSTRACT FROM AUTHOR]

This paper explains how and why entrepreneurship has emerged as a key component of economic policy to enhance the economic growth performance. Understanding the linkages between entrepreneurship and economic growth requires drawing upon four disparate literatures: international trade and growth, innovation, entrepreneurship, and economic geography. Integrating the key insights from these literatures provides a framework highlighting the important role played by entrepreneurship in economic policy knowledge to enhance the economic growth performance, particularly at the local and regional levels. [ABSTRACT FROM AUTHOR]

We start with the premise that the greater use of field experiments in policy would lead to the more efficient use of scarce resources. This paper asks why field experiments are not used as widely as they could be and considers what can be done to increase their use. We review the most commonly encountered hurdles in getting field experiments to be taken seriously by policy-makers. We begin with some common misconceptions about ethics and logistics and then illustrate two advances--the integration of field experiments with cost-effectiveness analysis and wellbeing measures--that can be highlighted in order to get policy-makers excited about the idea of rolling out field experiments. We provide a hands-on roadmap of the points at which key concepts and practical solutions should be introduced in order to get a field experiment up and running for policy purposes. [ABSTRACT FROM AUTHOR]

Green growth requires green technologies: production techniques that economize on exhaustible resources and emit fewer greenhouse gases. The availability of green technologies both lowers social costs in the transition to a green growth path and helps achieve a satisfactory rate of material progress under that path. The theoretical case in favour of using industrial policy to facilitate green growth is quite strong. Economists’ traditional scepticism on industrial policy is grounded instead on pragmatic considerations having to do with the difficulty of achieving well-targeted and effective interventions in practice. While these objections deserve serious attention, I argue that they are not insurmountable. A key objective of this paper is to show how the practice of industrial policy can be improved by designing institutional frameworks that counter both informational and political risks. [ABSTRACT FROM AUTHOR]

Scotland is holding a referendum on independence in 2014, which implies that the Scottish government would become responsible for migration policy in the event of a ‘Yes’ vote. Control over labour migration could be a vital policy tool for the Scottish government, influencing long-run economic growth rates and demographic change. This paper explores migration policy in the context of alternative constitutional outcomes for Scotland. It asks what scope a small economy that is intimately linked to a neighbouring larger economy has in shaping immigration policy. It finds that the level of international migration to Scotland is relatively low and that there are some significant differences in migrant characteristics compared to the rest of the UK (RUK). It also considers the political economy aspects of labour immigration through analysis of recent survey data. Whatever the outcome of the referendum, we would argue that Scotland would benefit from a more nuanced approach to immigration policies rather than the current ‘one size fits all’ UK-wide model. [ABSTRACT FROM AUTHOR]

This paper sets out theory and measurement of how intangible investment might capture innovation and what data on intangibles look like for the EU, Japan, and the US. We also look at complementarities between information and communications technology (ICT) and intangibles, spillovers from intangibles to growth, and policy implications. [ABSTRACT FROM PUBLISHER]

Since the financial crisis of 2008, policy-makers in developed countries have shown a renewed interest in the sectoral composition of their national economies, in particular whether their manufacturing sector is too small or their financial sector too large. These concerns have been described as ‘imbalances’ and the remedy as ‘rebalancing’, and they have been widely covered in the media. But many economists are sceptical, arguing that the concept of sectoral balance is not meaningful, or that sectoral imbalance is nothing to worry about, or that, even if it is, policy-makers can do little about it. This paper explores the concept of sectoral rebalancing, considers the evidence for sectoral imbalance in the economies of rich countries, and examines the arguments why rebalancing might be a good thing. It finds that while arguments for interventions to restrict the risk and growth of the financial services sector have considerable evidence to support them, arguments that manufacturing output is especially desirable and should be promoted more than other sectors are less well evidenced. Finally, the paper considers recent policies that have been introduced to change the sectoral structures of economies, and sets out some principles for would-be rebalancers to follow. [ABSTRACT FROM PUBLISHER]

This paper considers the appropriate spatial scale for industrial policy. Should policy focus on particular places, targeting clusters of firms that are spatially concentrated? Or should it, instead, be ‘space neutral’, refusing to discriminate between different areas unless absolutely necessary? We provide an overview of the literature and identify two waves of literature that argue strongly in favour of a cluster approach. We argue that this approach rests on shaky theoretical and empirical foundations. In contrast, we suggest that more attention should be paid to the appropriate spatial scale for horizontal interventions. What can policy do to make cities work better, in ways that help firms to grow? That is, what is the appropriate role for ‘agglomeration’ rather than ‘cluster’ policy? Finally, we consider the possibility that some horizontal industrial policy objectives may be better served by specifically targeting particular places or from decentralized design or delivery. [ABSTRACT FROM PUBLISHER]

This paper examines the record of the 1997–2010 Labour administration on health and healthcare. It begins by outlining the policies adopted by the administration with respect to the delivery of healthcare services and population health. It then presents a two-part assessment. In the first part we examine the performance of the administration with respect to improvements in healthcare and population health. In the second part, we examine the healthcare policy record. [ABSTRACT FROM AUTHOR]

The global economic crisis of 2008–9 followed by the euro area sovereign debt crisis of 2011–12 has revealed the need for global rebalancing. Economies with current account surpluses need to increase domestic demand, while deficit countries need to reduce their deficits by boosting exports through productivity gains. India falls within the deficit category, having suffered both current account and fiscal deficits that have persisted over recent years. A dearth of adequate structural reform underlies India’s macroeconomic imbalances. Analysis reveals that current account surplus economies tend to experience comparative advantage in their goods sector while deficit countries have comparative advantage in the services sector. The question posed is whether liberalizing the services sector would reap dynamic benefits by enhancing services exports and containing India’s deficit. Opening up the services sector could, however, have opposing effects. On the one hand, it would support greater export of services, thereby reducing the current account deficit. On the other, the probable rise in foreign participation would translate to an increase in imports. The paper argues that the former effect is likely to prevail since structural reform in the services sector has the potential to reduce inefficiencies created by trade and capital flow restrictions. Reform would improve resource allocation, increase investment opportunities and enhance economic growth. Further, while the initial phase of foreign entrants would imply increased imports, in the medium term, successful joint ventures are likely to spread out internationally with positive ramifications for exports. Solutions in India are to be found in liberalizing, among others, the financial—including banking and insurance—sector, as well as retail trade, though its achievement will not be easy. [ABSTRACT FROM PUBLISHER]

During the crisis era, while considerable attention was given to Chinese management of its currency’s exchange rate with the US dollar, the frequent alteration of rebates on value-added taxes (VAT) paid by exporters on the inputs they have imported has been overlooked. In this paper the relevant Chinese policy changes are documented and evidence presented to gauge the relative importance of what turns out to be a systematic form of export management. Given the relatively high shares of imported content used in Chinese exports and the low profit margins of Chinese exporters, an increase in the VAT rebate of a single per cent is estimated to increase the profitability of beneficiary exporters by 12 per cent for the typical Chinese exporter, and by 18 per cent for those Chinese exporters operating in export processing zones. [ABSTRACT FROM PUBLISHER]

Biodiversity is crucial for the production of a range of marketed and non-marketed ecosystem goods and services. This paper reviews the empirical evidence for the role of terrestrial biodiversity and biodiversity conservation in economic development and poverty, at both the macro (e.g. country) and micro (e.g. farm) scales. It first examines general relationships between biodiversity and economic development before showing how biodiversity influences ecosystem services. Second, future scenarios and challenges for biodiversity and development are examined, given projections for further changes in global population, economic growth, and consumption. Third, the relationship between biodiversity protection and incomes is investigated. Two specific policies, protected areas and bioprospecting, are reviewed with respect to their impacts on the welfare of the resource-dependent poor. In conclusion, improvements in policy design and implementation could help minimize the possibility of earth’s sixth mass extinction event, at least within a few generations, while ensuring that the poor are not made worse off as a result of policy implementation. [ABSTRACT FROM PUBLISHER]

This paper considers price movements in the oil markets between 2003 and 2010 and seeks to explain the significant trends in this period. It notes that the oil market is by its very nature inherently volatile because of the nature of oil as a storable and exhaustible resource and the influence of geopolitical factors on price. It concludes that fundamentals continue to anchor the market, but that speculative investment flows may bring about temporary departures from equilibrium. It is proposed that the type of volatility that matters most macroeconomically is medium-term price trends. The paper then discusses possible policy actions that could prevent or mitigate such trends, concluding that proposals solely related to the operation of the financial markets will not address the fundamental drivers of instability. It may, however, be useful to consider policies aimed at stabilizing the market, but these must be rooted in developed consumer–producer dialogue. [ABSTRACT FROM AUTHOR]

Partly a reflection of the increasing volume and hence political influence of the older population, recent reforms of long-term care (LTC) systems across developed countries have sought to expand the coverage of the services provided, and have defined increasingly universal levels of state support for people with social-care needs. At the same time, some of the factors leading to the expansion of the objectives and ambitions of the care system, such as the ageing of the population, pose significant challenges to its long-term financial sustainability. In this context, the paper first reviews the main factors likely to contribute to the growth in LTC demand and expenditure, and reflects on the policy priorities associated with state-backed funding systems in the area. Using results from a bespoke dynamic micro-simulation model, it then illustrates the discussion through a quantitative analysis of the equity and efficiency implications of alternative funding models discussed in the context of the ongoing reforms of the LTC system in England. [ABSTRACT FROM AUTHOR]

By international standards, unemployment in Sweden remained remarkably low throughout the 1970s and the 1980s. In the early 1990s, however, the unemployment rate increased sharply and hit double-digit levels. The paper argues that the steep rise in unemployment was mainly the result of a series of adverse macroeconomic shocks, partly self-inflicted by bad policies, and partly caused by unfavourable international developments. The extremely contractionary monetary policy in 1992 appears to have had strong and long-lasting effects on unemployment. Institutional factors do not appear as convincing explanations of the steep rise in unemployment in the early 1990s. [ABSTRACT FROM AUTHOR]

There is no or limited consensus on the quantitative impact of institutions on unemployment, which has led some to question the case for structural reforms. Recent studies suggest also that institutions interact with each other and cannot be analysed in isolation. In this paper, we estimate a standard reduced-form model to explore the institutional determinants of unemployment and assess its robustness using a large battery of robustness checks. We show that, although the impact of each individual policy varies across countries owing to policy interactions, the simple linear model can be used to draw inferences for countries with an average mix of institutions. The model is then extended to encompass systemic interactions, in which individual policies interact with the overall institutional framework. We find relatively robust evidence of broad reform complementarities. [ABSTRACT FROM AUTHOR]

This paper surveys the recent theoretical and empirical literature that explores the relations between aid and trade and asks about the complementarity or substitution effects at work. We distinguish between the effects of aid on trade flows and on trade policies, of the donor as well as the recipient countries. Special focus is given on trade facilitation, or 'aid for trade'. [ABSTRACT FROM AUTHOR]