Larson: We Are All Debtors

ABSTRACT:

For the last three decades, cities and towns across the United States have grappled with a severe reduction in public funding which has weakened municipalities’ ability to provide basic services. As a result, municipal governments are increasingly financed by debt. Public Authorities (PA), such as New York’s Empire State Development Corporation, are authorized to issue debt backed by tax dollars. There are tens of thousands of such entities across the United States, a “shadow government” not accountable to voters. PAs operate based on a corporate model in which overleveraged holdings are hidden in subsidiary corporations. Such entities have proved so profitable to the investor class that a new brand of PAs has been created for the sole purpose of issuing “phantom bonds,” money that never reaches the public but is instead siphoned off by investors and bond insurers. The transformation of PAs from vehicles of reform to tools of exploitation illustrates that the solution to the debt crisis is a new economy in which our debts are to our families and our communities, not Wall Street.

 

Available for download here.

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Van der Lecq, Rivera-Rozo & Steenbeek: National culture and the configuration of public pensions

ABSTRACT:

This paper explores the determinants of the configuration of public pension plans. It argues that that the cultural background of a country is related to the level of intragenerational redistribution in public pension plans. The level of intragenerational redistribution is measured by Krieger and Traub’s (2013) ‘Bismarckian factor’. Our research hypotheses are tested empirically using cultural dimensions as developed by Hofstede (2001) and data across 25 countries. While the sample is limited, the results are in line with our hypotheses. Uncertainty avoidance appears to have a significant, positive association with the Bismarckian factor (low intragenerational redistribution in public pensions), whereas the relationship with individualism is negative (high intragenerational redistribution). Moreover, a positive association is found between the Bismarckian factor and inflation shocks in the first half of the 20th century and financial markets losses during the Great Depression. The results are robust to the inclusion of different control variables, the use of alternative measures of the configuration of public pensions, and cultural dimensions.

 

Available for download here.

Shen & Mantzopoulos: China's “Going Out" Policy | Inception, Evolution, Implication

ABSTRACT:

China began its systemic transformation in 1979. In the external sector, the two primary engines that have helped propel China’s economy on to the world’s stage are foreign investment and foreign trade. Mao Zedong’s “close-door” policy (1949-1977) gave way to Deng Xiaoping’s controlled “open-door” policy in 1979. Controlled open-door policy invited capital and technology inflows while actively promoting export. Growing capital inflows since the early 1980s have helped transform China’s export industries. Liberalizing foreign investment and foreign trade has enabled China’s economy to grow at a rate that is historically unprecedented. By 2010, China replaced Japan as the world’s second largest economy. China’s foreign trade sector kept scoring mountain surpluses. Its foreign reserve correspondingly kept soaring. Instead of being focused primarily on inducing capital inflows, China also began looking outward for overseas foreign direct investment opportunities by the turn of the century. Its “going-out” policy was premised on four principle considerations: resource seeking, asset seeking, market seeking, and political gains. China’s systemic transformation that began three decades ago has radically transformed the “sleeping giant” into a world economic power. Its “going out” policy initiated a decade ago will likely impact world economic and political relations as well for the foreseeable decades to come.

Petcu & Siciu: State Capitalism and Economic Growth | The Case of South Korea

ABSTRACT:

The impressive growth of South Korean’s economy is today a reference model for many countries that aim to find a path of modernization and development for their economies. In this paper we intend to present the main socio-economical factors that led to this genuine economical miracle and to argue the aplicability of this model in today’s global world. The development of a country is related to many social, political and economic factors that cannot be thoroughly reproduced, but being aware of a certain type of economical logic can be an important lesson for many developing countries.

Available for download here

 

Sun, Li, Wang & Clark: China's Sovereign Wealth Fund Investments in overseas energy | The energy security perspective

ABSTRACT:

Sovereign Wealth Funds (SWFs) are state-owned investment funds that invest in real and financial assets. Since the global financial crisis in 2008, SWFs’ investments have resulted in national security concerns of host countries because SWFs continue to expand rapidly and have become increasingly active in real-time strategic transactions. Given this background, China, which has the biggest SWF in the world, is facing severe challenges of energy resources shortages while its plan is to accomplish social and economic development goals. Energy security is a key driving force of the energy investment policy of China’s SWFs. This makes the SWF investments more complicated and more politically sensitive. The combination of sovereign rights and the strategic importance of energy also makes geopolitics more complicated and brings more uncertainty to SWF investments. This article explores the relationship between energy security and energy investments of China’s SWFs. It is recognised that the energy investment of SWFs must follow a sustainable path to coordinate energy security, economic growth, return on investment and national security concerns. Government policymakers are urged to balance the financial and political returns on SWFs against potential negative effects. The conclusion presents insights for policymakers, energy scholars and SWF researchers.

 

Available for download here (paywall).

 

Baccini, Impullitti & Malesky: Trade Liberalization and State-Owned Enterprises | Evidence from Vietnam's Accession to the WTO

ABSTRACT:

The findings of the New New Trade Theory are compelling and elegant, and the predictions have been justifiably held up as a watershed event in international trade. Nevertheless, the simplifying assumptions necessary to generate the results obfuscate key differences in the strategic assets rms bring to bear in lobbying national governments. In this paper, we focus on critically important subset of these assets – firms that are owned by the government, state-owned enterprises (SOEs). To do this, we study trade liberalization in Vietnam, a country transitioning from central planning, after its accession to the World Trade Organization (WTO) in 2007. Using rm-level data, we show that the productivity and size of private firms have a positive effect on tariff  reduction pre and post-accession. These findings confirm the predictions of the Melitz (2003) model regarding rm preferences in international trade negotiations. The opposite is true for state-owned firms, however, whose productivity and size lead to small tariff reductions. Further we show that tax is the mechanism through which SOEs are able to capture the government. The findings demonstrate that previous trade work has overlooked the power of SOEs in emerging markets.

Available for download here.

Varcholova & Beslerova: Ownership Structure and Company Performance | Research and Literature Review

ABSTRACT:

The aim of this article is to summarize the results of published researches conducted in the area of influence of ownership forms on companies and financial performance and to highlight the specifics of these relations in the environment of transition economies. Several authors have documented greater efficiency of private companies compared to state-owned. According to different studies, an alternative option for transition economies is foreign ownership. Recent studies show that the effect of ownership forms on companies and financial performance is more significant in Eastern European countries compared to developed countries. However, study results are often contradictory, therefore they require additional research.

 

Available for download here.

Kossov: Can Corporate Governance Codes Be Effective in Emerging Markets? Insights from Turkey, India and Colombia

ABSTRACT:

The purpose of this report is to present background information to participants of the OECD Russia Corporate Governance Roundtable organised for 22 – 23 October 2013 in Moscow, Russian Federation. This report addresses the issue of the effectiveness of corporate governance codes in emerging markets. For this purpose, it adopts a case study approach and looks into the fate of corporate governance codes adopted in three emerging markets: Turkey, India and Colombia. Using a common framework of analysis, the report highlights the factors which determined the success or failure of these codes within the specific systems in which they were adopted. Evidence from the three case studies is used to extract lessons from the specific challenges and policy measures relevant for the implementation of codes
within emerging markets.

 

Available for download here.

Harvey, Bolton, Samama, Wilse-Samson & Li: Global Public Goods and Investment Obstacles | A Survey of the Long-Term Institutional Perceptions

ABSTRACT:

In an era of globalized governance, long-term investors are one of several actors who can provide global public goods.  It is thus important to understand what factors constrain cross-border investments, and whether long-term investing is associated with long-term public policy objectives.  To begin answering these questions, funds traditionally associated with long-term investing were surveyed.  Results indicate that foreign policy factors were most likely to decrease cross-border investment, and long-term investing was associated with intergenerational objectives.  These findings emphasize the importance of creating a facilitative policy environment and suggests that long-term investors can contribute to the provision of global public goods.

 

This is a very important piece of research.  Available for download here.

Tagliapietra: Financing the European Energy Infrastructure of the Future

ABSTRACT:

Europe is in need of massive infrastructure investments. Only in the energy sector, EUR 1.1 trillion will be needed by 2020 to finance an infrastructure able to match future demand for energy, to ensure security of supply and to comply with the decarbonisation targets. However, the EU infrastructure-funding model is congested by a mix of financial, regulatory and institutional constrains. Given the crucial role played by energy infrastructure in an economic system, this bottleneck could seriously undermine the recovery of the EU economy and its future prospects of growth. For this reason, it is necessary and urgent to find new ways to promote private sector financing of energy infrastructure projects, through innovative tools such as the Connecting Europe Facility and the Europe 2020 Project Bond Initiative.

 

Available for download here.