Behind the Modern Malaise

By Brigitte Granville* – Project Syndicate

Re-blogged

For decades, workers have been missing out on many of the gains of economic growth, and countless analyses have been published to explain why. Though the problem is fundamentally economic, it cannot be understood without also accounting for technology, politics, and culture.

LONDON – In describing recent economic history as “the inglorious years,” French economist Daniel Cohen’s title refers primarily to a problem that is also examined in the economist Jan Eeckhout’s book, The Profit Paradox. That problem, as Eeckhout puts it, is “wage stagnation and extreme wage inequality.” Over the past half-century, the situation for workers in most rich countries has deteriorated on average, setting this era apart from the 30 glorious years (les trente glorieuses) after World War II, when West Europeans, Canadians, and Americans enjoyed a near-miraculous period of sustained growth, including broad-based growth in real wages and higher living standards.

What can these authors add to the mountain of analyses churned out in recent years……

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*Brigitte Granville is Professor of International Economics and Economic Policy at the School of Business and Management, Queen Mary, University of London, and the author of What Ails France

Do we need the term BAME?

By Sanghamitra Bandyopadhyay* – Economics Observatory

Re-blogged

The acronym BAME lumps together black, Asian and minority ethnic groups as disadvantaged. Yet not all these groups and certainly not all individuals within them can be characterised as disadvantaged. There are better methods for identifying disadvantaged communities and designing appropriate policy.

One of the recommendations in the recent report of the Commission of Race and Ethnic Disparities (the Sewell report) is to discontinue the use of the term BAME (black, Asian and minority ethnic) as a catch-all to describe ethnic groups who are disadvantaged in the UK. It was introduced as a collective term in the 1960s and 1970s for administrative convenience to identify ‘black communities’ and was eventually expanded to encompass other, mostly non-white, ethnic minorities.

The term has received a lot of criticism in recent years, ……

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*About the author: Sanghamitra Bandyopadhyay is Deputy Director of the Centre for Globalisation Research and Reader in Economics. She is also the lead for the UK-wide research group, Research Circle for the Study of Inequality and Poverty.

Yes, there is a relationship between inequality and terrorism, but not a big one.

by Abdullah Ijaz* and Sanghamitra Bandyopadhyay**

Inequality is well established in the social sciences to be detrimental to societal well-being and for its long standing association with social and political instability. One of the most pressing concerns of the effects of inequality is increased violence, conflict and terrorism. A growing literature concludes that higher levels of income inequality are associated with terrorism. The literature, though, is not clear whether the association stands with home grown (or domestic) terrorism, or whether it is tied to international political rifts which give rise to transnational terrorism.  Domestic terrorism is often found to be associated with poverty, while the causes underpinning transnational terrorism are governed by highly complex international political dynamics. Violence and terrorism have direct and indirect economic costs for both developed and developing countries. Terrorism may occur in many different forms, especially in the presence of weak institutional structures and religious conflict.

The current empirical literature suggests that this relationship is positive but is inconclusive on the nature of the relationship. In order to investigate the nature of the relationship, in our paper we examine the relationship between income inequality and terrorism using a semi-parametric approach to specifically identify non-linearities in the relationship.

Using a sample of 139 countries, including 104 developing and middle-income group countries, we use top income percentile shares as a measure of inequality to provide robust evidence that inequality is weakly and positively associated with terrorism. We use several top income percentile shares as our principal inequality measure, obtained from the World Inequality Database, and estimate our model using the top 1% and top 10% income shares. We also use the Gini measure for robustness, obtained from the World Income Inequality Database. Our principal dependent variable is the total number of terrorist incidents per country-year. We also estimate our model using domestic terrorism, due to it being more frequently observed than transnational terrorism. In order to investigate for the nature of the relationship, we estimate our model using semi-parametric methods specifically designed to identify non-linearities in the inequality and terrorism relationship.

Figure 1. Non-parametric component of the effect of top 1% income shares on total and domestic terrorism incidents for all countries

Strikingly, we observe that inequality has different non-linear associations with terrorism for developed, middle-income and developing countries. Figure 1 highlights that after controlling for explanations of terrorism other than inequality, the positive relationship between inequality and terrorism discussed in the existing empirical literature is very weakly evident for both total (domestic and transnational combined) and domestic terrorism.

In addition, we find that countries with large rural populations have a lower incidence of terrorism. This highlights the importance of developing countries in the sample being associated with low levels of terrorism. We also find consumption expenditure is negatively associated with all definitions of terrorism, again indicating that terrorism is characteristic of low income/consumption expenditure countries. The two results combined suggest that the observed relationship between inequality and terrorism is a characteristic of emerging or middle income countries, which have both large rural populations and low levels of consumption expenditures, compared with rich countries.

Our findings thus highlight two new salient empirical features of the relationship between income inequality and terrorism. Using recently recommended measures of inequality, i.e., top percentile income shares, we fail to confirm previous evidence of a positive relationship between inequality and terrorism. It is, at best, weakly observed, in particular for developing and middle-income group countries. We also find that the relationship is nonlinear, suggesting no particular functional form, and thus deserves future research to identify the mechanisms which govern this relationship.

* Abdullah Ijaz is a doctoral candidate at the School of Business and Management and the Centre for Globalisation Research, specialising on poverty, entrepreneurship and terrorism.

** Sanghamitra Bandyopadhyay is Deputy Director of the Centre for Globalisation Research and Reader in Economics. She is also the lead for the UK-wide research group, Research Circle for the Study of Inequality and Poverty.

A withering, reasoned call to renew France

Economist Brigitte Granville* outlines the country’s dysfunction and seeks to scrap the single currency

By Ben Hall – Financial Times

Re-blogged

In little less than a year French voters will go to the polls to decide whether to give Emmanuel Macron another five years in the Elysée Palace. So it is time to weigh up his achievements and shortcomings. In What Ails France, Brigitte Granville, a French-born economist, finds few of the former and many of the latter. Her assessment is withering, visceral even. The official photograph of the young Olympian president “with his fixed and icy gaze gives me cold sweats every time I set eyes on it in the mayor’s office of my small village in northern Burgundy”. She has written, she concedes, an “at times indignant tract”. The Macron story is one of lost illusions. He rose to power promising ……..

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*Brigitte Granville is Professor of International Economics and Economic Policy at the School of Business and Management, Queen Mary, University of London, and the author of What Ails France

CGR Annual Globalisation Seminar and Workshop on Political Economy and Economic Development

On 29th of June the Centre for Globalisation Research (CGR) of the School of Business and Management, Queen Mary University of London is hosting the annual Globalisation Seminar and workshop on Political Economy and Economic Development organised by Dr. Caterina Gennaioli (CGR Director). The special theme of this year’s event is “Climate policy and environmental co-operation”.

The Globalisation Seminar Series is a prestigious annual series offering a platform to prominent academics and policy-makers to discuss the latest debate in economics and economic policy. The Series has attracted world leading scholars such as Esther Duflo (MIT), Jeffrey Sachs (Columbia), Alberto Alesina (Harvard), Paul Collier (Oxford) and Ekaterina Zhuravskaya (Paris School of Economics and EHESS).

The speaker of the Globalisation seminar this year is Professor Scott Barrett (Vice Dean, School of International and Public Affairs; Lenfest-Earth Institute Professor of Natural Resource Economics, Columbia University) who is a leading scholar on transnational and global challenges, ranging from climate change to disease eradication. His research focuses on how institutions like customary law and treaties can be used to promote international cooperation. Professor Barrett will give the talk: “The Promise and Peril of Linking Cooperation on Trade to Cooperation on Climate Change“.

The event will start at 12.45 with a workshop in political economy and economic development where leading scholars in the field will present their most recent research on climate policy and environmental cooperation. The agenda of the event can be found here.

Attendance to this event is by registration only.

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Suggested hashtag for this event for Twitter users: #SBMglobalisation , #CGRblog
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Inflation might well keep rising in 2021 – but what happens after that?

By Brigitte Granville* – The Conversation

Re-blogged

The US Federal Reserve has just reassured the markets that it doesn’t expect inflation to get out of hand in the coming months. It comes as concerns about serious inflation damaging the global economy have reached fever pitch, particularly since recent Labor Department data showed that American inflation rose 4.2% over the 12 months ended April – the highest since the global financial crisis of 2007-09. In the euro area, inflation seems certain during the rest of this year to break out above the European Central Bank target of “close to but below 2%”.

Central bankers on both sides of the Atlantic say that these price rises are a temporary consequence of the whiplash effect of the COVID-19 pandemic on demand. Supply chains in everything from commodities to semiconductors have been disturbed ……

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*Brigitte Granville is Professor of International Economics and Economic Policy at the School of Business and Management, Queen Mary, University of London, and the author of What Ails France

FRANCE’S CULTURE WAR INTENSIFIES

By Brigitte Granville* – Project Syndicate

Re-blogged

With his speech commemorating the 200th anniversary of Napoleon Bonaparte’s death, President Emmanuel Macron apparently is seeking to confront all aspects of the emperor’s divisive legacy. How he manages that characteristic balancing act could reveal much about his ability to keep France’s simmering culture war from boiling over.

LONDON – By laying a wreath on Napoleon Bonaparte’s tomb on the 200th anniversary of his death, French President Emmanuel Macron has stepped further into the fray of the country’s escalating culture war. Can France’s rifts be healed, or is the country really headed, as some predict, toward “deadly civil war”?

Napoleon’s legacy has long been divisive. His admirers laud……

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*Brigitte Granville is Professor of International Economics and Economic Policy at the School of Business and Management, Queen Mary, University of London, and the author of What Ails France

Officials’ ecological assessment, regional environmental regulation and corporate green innovation

by Qiuyue Yang*

Introducing research projects of CGR PhD members.

The environmental pollution problems are still prominent in China. In recent years, the central government has tried to guide local governments to reshape their ecological management system by establishing the Central Environmental Inspection System and River Chief System, improving Carbon Emission Rights Trading Market, and implementing Eco-compensation Program. However, these “carrot and stick” policies have poor effects, and the ecological imbalance problems have not been fundamentally solved. Some scholars believed that China’s special government performance evaluation system and irregular officials flow mechanism are important reasons for the long-term ineffective pollution control (Huang et al., 2019). Specifically, Chinese officials’ promotion and turnover can be regarded as a performance-based tournament in which the promotion of local officials is highly linked with the economic growth of their jurisdictions (Li et al., 2019). This creates a strong linkage between local officials’ private interests and regional economic development (Li and Zhou, 2005), so local officials compete over targets for short-term economic growth at the expense of ecological environment to gain career promotion (Liu and Jin, 2015). Therefore, the key to promote the reform of Chinese environmental governance system is to establish an effective officials’ ecological assessment system, to solve information asymmetry problems regarding environmental governance, and to incentivise corporate green innovation.

Against this background, Chinese central government explores ways to implement natural resource audits when leading officials leave their positions, and in 2014 officially launched the pilot project Accountability Audit of Natural Resource (AANR). During the period from 2015 to 2017, the pilot work of AANR was implemented in stages and steps. In 2018, the regular officials’ ecological assessment system was formally established. The central government implements AANR policy, which directly acts on local officials rather than firms, and local officials further transmit their pressure on environmental governance to industrial enterprises. In detail, the AANR policy links the territorial responsibility of environmental protection to officials’ promotion, which encourages officials to strengthen environmental governance, incentivising enterprises to invest in green innovation activities.

Figure 1 AANR policy.
Source: image from http://epaper.hyqss.cn/html/2017-11/30/content_7_17.htm

Local officials may take punitive and environmental governance measures to improve corporate green innovation capability, including the (1) “Strong supervision strategy” (command-and-control) and, (2) the “Flexible regulation strategy” (market-based). According to the former strategy, local officials may implement stricter environmental regulation by administrative orders to transmit environmental governance pressure to industrial enterprises, such as strengthening the supervision of firms’ pollutant discharge, raising pollution discharge standards, and imposing stricter punishment on polluters. In this case, enterprises may improve productivity and green innovation capacity to reach the environmental standards, namely the driving effect. According to the latter strategy, local officials may increase environmental subsidies to give support for corporate green innovation. Companies in green sectors may receive more environmental subsidies. Government environmental subsidies compensate for insufficient corporate resources, reduce environmental protection costs, lower environmental investment risks, and enhance the enthusiasm of enterprises for environmental protection, thereby motivating enterprises to invest in green innovation activities, namely the incentive effect.

Figure 2 Logical diagram of AANR policy and corporate green innovation. (Source: compiled by the author)

The existing literature aims to explore the impact of formal environmental regulations on firms’ green innovation, but few studies include officials’ ecological assessment into research scope. The AANR is an innovative policy of officials’ ecological assessment proposed by China, and the relevant research only focuses on the basic concept, main framework and implementation strategy of this policy (Chen, 2014; Huang, 2016; Liu and Wang, 2017). The empirical research on the policy effect mainly includes three aspects: environmental quality (Huang et al., 2019), corporate environmental investments (Sun, 2019), and financial management behavior (Liu and Xie, 2018), lacking analysis and evaluation on the green innovation effect of officials’ ecological assessment system.

My research aims to study the impact of officials’ ecological assessment on corporate green innovation, and clarify whether officials’ ecological assessment influences corporate green innovation through strengthening environmental governance. Methodologically, I treat AANR policy as a quasi-natural experiment and evaluate its effect on green innovation by using detailed data on green patent applications of China’s A-share listed industrial enterprises. More importantly, I try to examine whether under the AANR policy, local officials choose “strong supervision strategy” or “flexible regulation strategy” and their effects on green corporate innovation.

* Qiuyue Yang is a PhD student from School of Economics, Huazhong University of Science and Technology, visiting Queen Mary University under the supervision of Dr. Caterina Gennaioli.

References:

Chen, X. D. (2014). Thinking about carrying out accountability audit of natural resource. Auditing Research. 5, pp. 15-19.

Sun, Y. P. (2019). Policy effect research of Accountability Audit of Natural Resource: Theoretical analysis and empirical evidence. Dongbei University of Finance & Economics

Huang, R. B. (2016). Research on accountability audit of natural resource based on PSR model. Accounting Research. 7, pp. 89-95.

Huang, R. B., Zhao, Q. (2019). Wang, L. Y. Accountability Audit of Natural Resource and air pollution control: Harmony tournament of environmental protection qualification tournament. China Industrial Economics. 10, pp. 23-41.

Li, H. and Zhou, L. A. (2005). Political turnover and economic performance: The incentive role of personnel control in china. Journal of Public Economics. 89(9), pp. 1743-1762.

Li, X., Liu, C., Weng, X., Zhou, L. A. (2019). Target setting in tournaments: Theory and evidence from China. The Economic Journal, 129(623), pp. 2888-2915.

Liu, R. B., Wang, H. B. (2017). Analysis of audit of outgoing leading officials’ natural resources accountability. Auding Research. 4, pp. 32-38.

Liu, W. J., Xie, B. S. (2018). Does local governors’ Accountability Audit of Natural Resource affect earnings management for listed companies? Journal of Zhongnan University of Economics and Law. 1, pp. 13-23.

EUROPE’S COMPLACENCY TRAP

By Brigitte Granville* – Project Syndicate

Re-blogged

Members of the EU establishment should not read too much into failures of “populist” governance. Until the bloc can devise institutional arrangements that allow for consistent, equitable growth, crises will keep coming – and so will anti-establishment challengers.

LONDON – COVID-19 has wounded almost every developed country, but the truth is that living standards in many of them had been stagnating or declining for years. Many metrics highlight this trend, but perhaps the most telling comes from the OECD, which reports a 4% decline in household median net wealth across its member countries since 2010.

No wonder advanced economies have experienced periodic explosions of anger…….

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*Brigitte Granville is Professor of International Economics and Economic Policy at the School of Business and Management, Queen Mary, University of London, and the author of What Ails France

Implementing the SDGs in India: Poverty, Hunger and Gender

By Stella Ladi

Re-blogged

The overall context regarding the SDGs

The 17 Sustainable Development Goals (SDGs) and associated 169 targets were adopted by the UN General Assembly in September 2015. Though not legally binding, the SDGs have become de facto international obligations with the potential to reorient the domestic priorities of countries during the subsequent fifteen years. Countries are expected to take ownership and establish national frameworks for achieving these goals. In the context of sustainable development and the 2030 Agenda, a successful implementation of the SDGs in India would mark significant progress for their achievement worldwide, because the country’s more than 1.3 billion people constitute about one-sixth of humanity.

The Indian SDG implementation framework

This article draws on the results of the project “Implementing the SDGs in India: Poverty, Hunger and Gender”, which has been supported by Queen Mary University of London and brought together a group of partners from India and Europe. The overall aim…..

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