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The consequences of globalization for the world's poor are uncertain and fierce rhetoric is dividing its supporters and detractors. The channels of effect of essentially macroeconomic shocks on the microeconomic position of individuals and households in poor countries are many and various. This book addresses three core issues: 1) what are the main channels of effect? 2) what are the lessons to be learned from policy measures to alleviate negative poverty consequences? and 3) do the proposed analytical approaches assist in providing a monitoring capability? This volume assesses the more easily quantifiable effects resulting from price and quantity responses in the goods and labour markets. It includes studies of Colombia, Ghana, India, Nepal, Bangladesh and Vietnam. It uses key analytical approaches, most of which are based on numerical simulation methods employing models with different levels of complexity. These models capture the features of an economy, how it functions, and how it might respond to globalization shocks. The most important collective contribution of the authors is their establishment of directions and magnitudes of effect, based on empirical evidence.

The paper empirically explores the factors that could have accounted for the generally declining aid effort (defined as the generosity ratio, or the share of GDP given as aid) of bilateral donors over the last three decades. Annual panel data over 1970-2000 period for the 22 DAC members are used in a series of regressions. The findings suggest the existence of progressivity of aid in relation to donor income. There is also evidence of the economies of scale, in the sense that the share of aid in income decreases with growth in the size of donor country population. Domestic pro-poor tendency also appears to enhance donor generosity, and a positive 'peer pressure' effect is also observed. In addition, the extent of military adventurism of the donor is observed to have enhanced aid effort, just as also the size of government. But no discernible effect is detected for fiscal balance. On the political front, a greater number of checks and balances in the political system as well as the existence of polarization and fractionalization within the government are found to have enhanced aid effort while fractionalization within the opposition has the opposite effect. On the other hand, no discernible and consistent effect of ideological orientation of government is detected. Finally, the movement in the aid effort over time is found to differ between the G7 and non-G7 donors.

This paper discusses the channels of impact of an extractives activity on an economy by presenting a brief description supported by graphics of the different routes through which the direct economic and social impacts of these activities might be enhanced. These routes include those that often have the highest political profile, namely spending of government revenues. But the paper also discusses other routes and channels that arguably are far more important, such as the direct effects of corporate spend in local supply chains; the immediate 'multiplier' effects of these; the further multipliers that follows from significant wage growth in these supply chains as well as in the main extractive activity; the new downstream activities that may be built on the primary extractive activity; and the externalities that can accrue from the direct boost to skills training that a large extractive investment is likely to provide.

The paper empirically investigates, in the context of African countries, the determinants of income distribution and inequality, the effect of inequality on economic growth, and the channels through which inequality affects growth. Data for 35 countries over different periods in the last four decades were employed. Factors identified as having affected income distribution include the level of economic development attained, regional factors, size of government budget and the amount of it devoted to subsidies and transfers, phase of economic cycle, share of agricultural sector in total labour force, as well as human and land resources endowment. Some evidence that high inequality reduces growth is also found. The channels through which inequality affect growth are found to be through reduction in secondary and tertiary education investment, reduction in political stability, and increase in fertility rate. There is, however, no evidence that it affects private saving and investment or the size of government expenditure and taxation, contrary to what is contended in the theoretical literature.