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This paper uses a case study of Costa Rica to identify the reasons why democracy is conducive for development. By the mid-twentieth century, Costa Rica had begun to depart from the all-too-common mixture of political instability and economic stagnation characteristic of much of the developing world. This paper claims that this country has benefited from better-than-average public policies, a conclusion based upon an original assessment of policy effectiveness and a major comparative ranking of state policies. It largely rejects the interpretation that uncommon development performance stems from institutions created during the colonial period and instead emphasizes how unending political stalemates gradually made the struggle for power more democratic. A central conclusion of this paper is that political competition-as well as steady economic growth rates and development, more generally-interact with and reinforce each other so that the exercise of power foments rather than retards economic growth.

The theoretical case for industrial policy is a strong one. The market failures that industrial policies target in markets for credit, labor, products, and knowledge have long been at the core of what development economists study. The conventional case against industrial policy rests on practical difficulties with its implementation. Even though the issues could in principle be settled by empirical evidence, the evidence to date remains uninformative. Moreover, the conceptual difficulties involved in statistical inference in this area are so great that it is hard to see how statistical evidence could ever yield a convincing verdict. A review of industrial policy in three non-Asian settings El Salvador, Uruguay, and South Africa highlights the extensive amount of industrial policy that is already being carried out and frames the need for industrial policy in the specific circumstances of individual countries. The traditional informational and bureaucratic constraints on the exercise of industrial policy are not givens; they can be molded and rendered less binding through appropriate institutional design. Three key design attributes that industrial policy must possess are embeddedness, carrots-and-sticks, and accountability.

Bangladesh has in recent decades achieved reasonably rapid economic growth and significant progress in social development indicators despite many impediments: the desperate initial conditions after gaining independence, lack of resources, natural disasters, widespread corruption, and a record of systemic governance failure. By identifying the sources of growth stimulus and the drivers of social transformation, the paper addresses what it calls Bangladesh's development surprise. The policy-making process is analyzed as the outcome of incentives created by patronage politics as opposed to the compulsion for the government to play an effective developmental role. The paper examines the governance-growth nexus as affecting the pace and quality of growth and its inclusiveness. If the governance environment has been barely adequate to cope with an economy breaking out of stagnation and extreme poverty, it increasingly may prove a barrier to putting the economy firmly on a path of modernization and global integration. Bangladesh's experience also shows that it is possible to make rapid initial progress in many social development indicators by creating awareness through successful social mobilization campaigns and by reaping the gains from affordable low-cost solutions. Further progress, however, will require increased public social spending and improved quality of public service delivery.

The operations policy on Development Policy Lending (DPL), approved by the Board in August 2004, requires that the Bank systematically analyze whether specific country policies supported by an operation are likely to have "significant effects" on the country's environment, forests, and other natural resources. The implicit objective behind this requirement is to ensure that there is adequate capacity in the country to deal with adverse effects on the environment, forests, and other natural resources that the policies could trigger, even at the program design stage. DPL operations are associated with a whole array of policies such as macro policy reforms, fiscal policies, and specific sectoral policies, particularly in key sectors such as agriculture, health and education, energy, etc. In some cases, the operation may deal directly with reforms in certain environmentally sensitive sectors such as energy, transport, water and sanitation, agriculture, and forestry. In these cases, there is an obvious need for careful analysis of environmental, natural resource, and forestry impacts. In other cases, such as public sector reform and governance, there is less potential for likely significant impacts on the natural environment and natural resources. The toolkit is designed to be concise and user-friendly. It consists of three specific modules. The first module identifies relevant transmission channels through which the proposed reform would have a likely effect on the identified environmental, forest, and other natural resource priorities. The second module provides assistance in identifying key environmental issues in the country, regions, or sectors likely to be influenced by the DPL program. The third module presents different tools and methodologies for rapid assessment of the likely significant effects of each reform.

In this paper authors argue that the main determinants of differences in prosperity across countries are differences in economic institutions. To solve the problem of development will entail reforming these institutions. Unfortunately, this is difficult because economic institutions are collective choices that are the outcome of a political process. The economic institutions of a society depend on the nature of political institutions and the distribution of political power in society. As yet, authors only have a highly preliminary understanding of the factors that lead a society into a political equilibrium which supports good economic institutions. However, it is clear that it is the political nature of an institutional equilibrium that makes it very difficult to reform economic institutions. The authors illustrate this with a series of pitfalls of institutional reforms. The author's analysis reveals challenges for those who would wish to solve the problem of development and poverty. That such challenges exist is hardly surprising and believe that the main reason for such challenges is the forces authors have outlined in this paper. Better development policy will only come when authors recognize this and understand these forces better. Nevertheless, some countries do undergo political transitions, reform their institutions, and move onto more successful paths of economic development.

Bangladesh stands out as the shining new example in South Asia of a poor country achieving impressive gains in gender equality. Between 1971 and 2004, Bangladesh halved its fertility rates. In much of the country today, girls' secondary school attendance exceeds that of boys. The gender gap in infant mortality has been closed. The scholarly work that came out of the micro credit revolution is based on large and unique data sets and high quality ethnographic work and has set a high bar for evidence-based policy proposals. Beyond a doubt, Bangladesh has made great progress in achieving gender equality and enhancing the status of women. Its success in girls' education, reducing fertility and mortality and the famed microcredit revolution are some of the gains that set it apart from its neighbors and other countries of its income level. When young women and their families were asked what this meant for them and how their lives were different from their mothers', the unexpectedly common theme was "finding a voice" or "being able to speak" or "being listened to".

In the last two decades, across a range of countries high growth rates have reduced poverty but have been accompanied by rising inequality. This paper is motivated by this stylized fact, and by the strong distributional concerns that persist among populations and policy makers alike, despite the poverty reduction observed in official statistics where growth has been sufficiently high. This seeming disconnects frames the questions posed in this paper. Why the disconnect, and what to do about it? It is argued that official poverty statistics may be missing key elements of the ground level reality of distributional evolution, of which rising inequality may be an indirect indicator. Heterogeneity of population means that there may be significant numbers of poor losers from technical change, economic reform and global integration, even when overall measured poverty falls. In terms of actions, attention is drawn to the role of safety nets as generalized compensation mechanisms, to address the ethical and political economy dimensions of such a pattern of distributional evolution. Addressing structural inequalities is also a long term answer with payoffs in terms of equitable growth. In terms of future analysis, diminishing returns have set in to the inequality-growth cross-country regressions literature. Further work to help policy makers should focus on: (i) new information to illuminate the disconnect; (ii) analysis and assessment of safety nets as generalized compensation mechanisms; and (iii) addressing specific forms of structural inequality related to assets, gender, and social groupings like caste or ethnicity.

Agriculture in Western Europe enjoys a degree of diversity that reflects a wide variety of soils and climatic conditions ranging from the arid Mediterranean regions to the Arctic Circle. Superimposed on this natural diversity is the complexity of different social, economic and political conditions in the eighteen countries that are the subject of this chapter. History has played a major part in creating this patchwork, particularly the different paths that countries took from feudalism to independent farming units and the inheritance laws that influenced the extent to which land ownership was transmitted from generation to generation. Average farm size varies considerably in the countries of Western Europe, in turn reflecting the relative political and social importance of landowners and small farmers. By the late nineteenth century, these various factors had determined a structure of farming in the Western European region that is still visible today. Productivity growth in Western Europe's agricultural sector compared favorably with that in the manufacturing sector in the immediate post-war period. Over the period 1949 to 1959, by which time the economy had largely recovered from the war-time disruptions, output per person in agriculture had increased by more than that in manufacturing in most of the countries in Western Europe. The productivity growth was a combination of output increases as a result of mechanization and modernization, and the outflow of labor as other sectors absorbed rural workers.

Chile could well have space to increase its growth potential by 2 percentage points of Gross Domestic Product (GDP) per year. To do this, it would need to pay more attention to new sources of growth in natural resources, manufacturing, and services. In an increasingly globalized world, first-mover advantages have become more numerous and larger. Chile risks losing out, as a few recent high-profile cases suggest. Chile's total factor productivity growth can be raised by driving within-firm technological change closer to the global best-practice frontier more rapidly, especially in manufacturing. This would encourage the diversification of exports and boost Chile's supply response to global demand changes. Chile confronts obstacles in its processes of innovation, human capital accumulation, and investment. To overcome them, deep institutional changes are needed to develop a national innovation system, stronger and more equitable educational achievement, more flexible labor markets, and focused public investments that crowd in private business. Such an inclusive growth strategy is likely to yield better social outcomes than a strategy that attempts to confront social inequities head-on through more equitable access to public services without paying adequate attention to the demand for labor and generation of income. Chile could also try a new policy towards innovation, but it would need to be bolder in terms of the institutional design to maximize the chances of success.

This paper provides an extensive case study of the Turkish automotive and the consumer electronics industries. Despite a macroeconomic environment that inhibits investment and growth, both industries have achieved remarkable output and productivity growth since the early 1990s. Although there are similarities between the performances of the two industries, there are significant differences between their structures, links with domestic suppliers, technological orientation, and modes of integration with the global economy. The automobile industry is dominated by multinational companies, has a strong domestic supplier base, and has seized the opportunities opened up by the Customs Union by investing in new product and process technology and learning. The consumer electronics industry is dominated by a few, large, domestic firms, and has become competitive in the European market thanks to its geographical proximity, productive domestic labor, and focus on a protected and technologically mature segment of the market, which also helps explain the recent decline in industry's fortunes. These industries could have performed even better had more responsive macroeconomic policies been adopted. It is certain that governments could be more responsive only if far-reaching political/institutional reforms are undertaken by changing the constitution and current political party and election laws in order to establish public control over the political elites.

This review of public expenditures on Social Protection (SP) in Nicaragua is based on the analytical framework of Social Risk Management (SRM) developed by the World Bank. The concept of managing social risk comes from the notion that certain groups in society are vulnerable to unexpected shocks which threaten their livelihood and/or survival. Social protection focuses on the poor since they are more vulnerable to the risks and normally do not have the instruments to handle these risks. This prevents the poor from taking more risky activities that usually yield higher returns and that could help them overcome gradually their poverty situation. Social risk management involves policies and programs aimed at reducing key risks, breaking inter-generational cycle of poverty and vulnerability. Risk management consists in the choice of appropriate risk prevention, mitigation and coping strategies to minimize the adverse impact of social risks. Social protection under SRM is defined as public interventions to assist individuals, households and communities to better manage risk and provide support to the critically poor. Thus Social protection should provide: a safety net, particularly for the poor that are likely to fall in the cracks of established programs; and a springboard for the poor to bounce out of poverty.

The world faces unprecedented opportunities to reduce global poverty and improve human welfare. Strong global growth and better economic policies in recent years have substantially reduced poverty in many developing countries. However, with the recent financial turmoil in the United States and rising prices for food, oil, and other commodities, the world economy faces heightened risks and volatility. Policymakers around the world face the challenge of maintaining momentum in growth, as well as of improving the quality of growth. This concern over quality is reflected in the highly uneven reduction in poverty, rising inequality in numerous countries, and widening environmental degradation during the past decade, a period of unprecedented high economic growth in developing countries. Unless these issues are confronted, gains from growth are likely to be undermined and the pace of growth, itself, will not be sustained. Growth is clearly linked to reductions in poverty. But the strength of this relationship depends on the quality or nature of growth. Various studies show that some growth patterns systematically reduce poverty and inequality, but others do not. And some growth patterns lead to underinvestment in human capital, overexploitation of natural resources, and degradation of the environment, patterns inimical to the sustainability of growth.

Inhaltsangabe:Abstract: This working paper shall investigate the trade integration between Turkey and the EU. The plan of this book is as follows. At first the historical background of the development concerning the trade relations between the two parties is conveyed. This includes the period from first association to implementing a customs union (CU) between Turkey and the European Union (EU) and to deeper integration abolishing barriers of trade until today. Subsequently an evaluation of the influence of the customs union follows in chapter 3 which constitutes the main part of the paper. Hereby the analysis is divided into the short-term static and long-term dynamic effects of the CU with the EU that Turkey entered on 1st January 1996. To analyze the static effects this paper adopts Viner's traditional approach, by comparing the trade creation effects with the trade diversion effects resulting from the removal of trade restrictions for Turkey and the EU as a whole. Thus, the predominant economical theory applied in this paper is the neoclassical customs union theory. This theory was chosen because it still is the predominant and widely recognized theory in analyzing trade data providing a variety of tools. Within the neoclassical theory Ricardo as well as Heckscher-Ohlin play an important role as a tool of analysis. In the relevant passages in the text the most important theoretical principles will be explained with the help of the Turkish example. At the limits of the neoclassical theories the new trade theory is supposed to help out especially where the assumptions of the neoclassical theory limit further analysis. It is the purpose of this paper to analyze the question how the trade liberalization in form of the CU between Turkey and the EU influences the development of Turkish welfare, specialization in different sectors, economies of scale, competitiveness, technological transfer and direct foreign investment. In some parts of the paper the analysis also refers to some effects for the EU, but main emphasis shall clearly be laid upon the effects on the Turkish economy. For the analysis foreign trade data is used which was compiled by the Turkish Undersecretariat of the Prime Ministry for Foreign Trade, the Prime Ministry Undersecretariat of Treasury, the Turkish Statistical Institute and Eurostat. Finding the adequate data created difficulties because of different time spans available and data from different sources being not comparable. This is why the time spans observed are sometimes not optimal. Therefore the analysis concentrates on the development within the last years, because not many studies were written in the 21st century or using data from this period. Thus, where long time spans were not available, the findings from old studies are compared with the new findings based on data from the last years. Especially within chapter 3.3 dealing with the dynamic effects this approach is reasonable since it shows the long term effects of the CU. The last subitem within chapter 3 allows a glance at the possibility of further integration taking monetary integration as an example. Last but not least chapter 4 will summarize the findings of the previous sections which will lead to a final estimation of the effects of the CU on Turkey and the EU.Inhaltsverzeichnis:Table of Contents: LIST OF ABBREVIATIONSIII LIST OF FIGURESIV APPENDICES INDEXV 1.INTRODUCTION1 2.HISTORICAL OVERVIEW ABOUT THE RELATIONS BETWEEN TURKEY AND THE EU2 2.1GENERAL OVERVIEW2 2.2FROM THE ASSOCIATION AGREEMENT UNTIL TODAY THE HISTORY OF THE CU3 2.3FROM PROTECTIONISM TO MORE TRADE LIBERALISATION6 2.4THE ABOLITION OF BARRIERS TO TRADE8 2.4.1Tariff barriers8 2.4.2Non-tariff barriers9 3.THE CUSTOMS UNION AS A FORM OF TRADE INTEGRATION - IMPLICATIONS FOR TURKEY AND THE EU13 3.1GENERAL ANALYSIS13 3.2THE STATIC EFFECTS OF THE CUSTOMS UNION18 3.3DYNAMIC EFFECTS25 3.3.1The specialization effect25 3.3.1.1Inter-industry trade25 3.3.1.1.1Theoretical background Neoclassic25 3.3.1.1.2Turkey's comparative advantage27 3.3.1.2Intra-industry trade32 3.3.2Economies of scale35 3.3.3Competitiveness38 3.3.4Technological transfer40 3.3.5Direct foreign investment44 3.3.5.1Theoretic implementation44 3.3.5.2Direct foreign investment inflows by countries46 3.3.5.3Direct foreign investment volume47 3.3.5.4Direct foreign investment by sectors48 3.3.5.5Prospects50 3.4EXCHANGE RATES EXCURSUS: FREE FLOATING OR PEGGING TO THE EURO52 3.4.1Gains and losses from pegging to the euro52 3.4.2Recommendation55 4.CONCLUSIONS59 BIBLIOGRAPHY62 INTERNET SOURCES67 APPENDICES71Textprobe:Text Sample: Chapter 3.3.4 Technological transfer: According to the theory of catching up underdeveloped countries may close a technology gap by free trade. The more a country's productivity and technology is backward the higher is its growth potential and its growth rates in case of free trade. Trade also causes a technology transfer, and underdeveloped nations may use new technologies without spending a lot on invention. This is also connected with the product cycle hypothesis. The high developed industrial countries are the producers of new products realising export monopolies at the beginning of the product cycle. If the product reaches its maturing stage less developed countries may foster development through imitation. In the standardization period, it is possible to produce with standardised techniques and low-qualified labour, which makes it possible for developing countries to specialise on these goods due to their lower costs of production and low wage rates. This is also often thanks to direct foreign investment (DFI), giving the ability to develop competitive products. Rising commercial contacts between countries causes an accumulation of knowledge. This leads to a catching-up, while producing low technology goods under protection causes falling behind. Producing standardised low-technology goods may end in the so called Heckscher-Ohlin trap. That means that there is no remarkable technical progress because of lacking human capital accumulation in the production. There is no significant technology transfer because DFI is also going into branches with less human capital. Without technical progress the country will fall behind. Low-technology goods in the exporting sector will suffer from rising competition in the world market. Convergence is evoked mainly by the 2 factors technological progress and capital accumulation. Faster implementation of technological innovations can lead to a higher rate of technological change. As an industrializing country, Turkey needs advanced technologies to speed up its industrialization process. There is a natural alliance between the new trade theory, with its emphasis on increasing returns and imperfect competition, and the view that technological change is a key factor driving international specialization. Technological development is normally an increasing returns process carried out in imperfectly competitive industries, and the most important sources of increasing returns in practice probably lie in dynamic economies of learning and research and development. If bigger sales markets and increased competition initiate innovations and growth processes, which excite technologic dynamics, then those positive effects can be carried over to other companies or even to other sectors by spill-over effects, learning effects and income effects. Technological gaps are also explainable with the traditional trade theory. The H–O model would predict that technologically advanced countries have a comparative advantage in technology-intensive goods. Innovation, by increasing the range of products, represents an increase in real world productivity. Technology transfer then since it is allowing a wider range of goods in Turkey, also represents a gain from a global point of view. Innovation as well as technology transfer increase world output. Hereby innovation disproportionately benefits the EU, the more innovative area, while technological transfer supports Turkey. The high protection rates of the Turkish industry before the CU lead to a relatively underdeveloped level of technology in its production. It shall be considered how this situation changed under the CU. The whole level of technology itself is not measurable; however technology-input can be measured with the expenses for education, research and development or the employment of scientists and engineers. The following graphic gives an overview about the employment of research and development (RD) personnel including scientists and technicians. As it can be seen the number of people employed within RD increased significantly during the regarded period. The comparison between Turkey and other chosen countries in Appendix N with respect to the education expenses as a percentage of GDP confirms Turkey's high technology input. In 2002 Turkey spend 7.26% on education being 1.36 percentage points higher than the OECD average. Unfortunately there are no time series evidences available in this matter. Yet, the different factors indicating Turkey's technology input show positive results. Technology-output is measured by the number of patent applications. If this number increases within the time period of the CU it can be interpreted as a positive sign for the catching-up process of Turkey. Alternatively the percentage of innovative firms can give an impression about the technology output. In the following graphic the development during the years 1997-2004 is shown. The percentage of innovative firms increased being a sign on the one hand of more investment in RD and on the other hand of possible spillover effects due to the closer integration with Europe. The overall estimation for Turkey's technology change is a positive one although Turkey still needs to increase its transfer of technology to overcome the shortcomings of their trade balance. Another possibility would be to attract more DFI which is the topic of the next chapter. Direct foreign investment: Positive growth effects can occur when the CU leads to an increase in investments. Reasons like high competition plead for such a positive relation. The CU had influence on the location and volume of real investment which is analysed in more detail in this chapter. Theoretic implementation: "Direct foreign investment is defined as an investment in which the investor acquires a substantial controlling interest in a foreign firm or sets up a subsidiary in a foreign country. DFI involves ownership or control of a business enterprise abroad." Thus the distinctive feature of DFI is that it involves not only a transfer of resources but also the acquisition of control. The subsidiary is part of the same organizational structure. In case of a plant the transfer of resources and production capabilities, and therefore DFI, contribute to the industrial base of the host country Turkey. DFI is one important pillar of convergence theories, in which it is assumed that capital flows into the region with lower wages and higher interest rates. In the "catching up" theory it is the source of technology and know-how because every investment from developed countries will cause a technology transfer, and the production will have external effects via learning-by-doing and spill-over to other industries. Increasing intra-industry trade is a sign of catching up while DFI flows may be an indicator of technology transfer. The growth in investments is one important requirement to catch up with the development level of the EU. There are a lot of factors determining investment decisions, among others: In developing countries there often exists a lack of savings and capital accumulation which is needed to realize additional profitable investments. Hence investment opportunities which promise high profits are realised by foreign entrepreneurs especially if the domestic demand in the invested sector offers good growth prospects. Another advantage is the relatively cheap quality and surplus of the labour force in developing countries. By shifting the assembly industries to these countries they can reduce their costs and increase their ability to compete in the world market. Moreover the geographical position of the country and suitable connections to different foreign markets are a determining factor for choosing the country of investment. In this way Turkey could be used as an export base to the Middle Eastern and Islamic countries. Susanne Voigt, Studium an der Berufsakademie Berlin in der Fachrichtung Bank, Abschluss 2004 als Diplom-Betriebswirtin (BA), Aufbaustudium an der Europa Universität Viadrina in Frankfurt/Oder, Abschluss 2007 als Master of Arts (European Studies).

Export diversification can lead to higher growth. Developing countries should diversify their exports since this can, for example, help them to overcome export instability or the negative impact of terms of trade in primary products. The process of economic development is typically a process of structural transformation where countries move from producing "poor-country goods" to "rich-country goods." Export diversification does play an important role in this process. The author also provides robust empirical evidence of a positive effect of export diversification on per capita income growth. This effect is potentially nonlinear with developing countries benefiting from diversifying their exports in contrast to the most advanced countries that perform better with export specialization.

There is much in common between the agricultural sectors of the United States and Canada. This chapter begins with a brief background on the two sectors, then reviews their histories of farm policy developments before reporting new estimates of rates of assistance to their farmers and their consequences for taxpayers and consumers. This is followed by an explanation of the politics behind the evolution and gyrations in farm policies in the two countries, and some speculation on the prospect for reform. Since the policy histories and their effects in the two countries are somewhat different, they are discussed sequentially in those sections.