Stephanie Schmitt-Grohe, Martín Uribe
After a period of widespread financial instability in the 1980s and 1990s, mostly concentrated among commodity exporters, only a handful of developing countries have been hit by systemic banking crises over the past two decades. Several factors have contributed to this state of affairs, including an extended period of sustained economic growth, financial deepening, and favourable external conditions, most notably a protracted period of stable and high commodity prices. Figure 1 shows that banking crises in low-income countries are clustered between the late 1980s and the early 1990s, when commodity prices declined and volatility increased, especially at the high end of the distribution. By contrast, crises have been almost absent in the 2000s, in correspondence with the commodity super-cycle. But since ‘graduation’ from banking crises has so far proven elusive (Reinhart et al. 2010), when the commodity super-cycle came to an end in the mid-
Silhouette of people with luggage walking in a row. Andrey Popov/Shutterstock.com
Globalization has facilitated physical mobility, enabling international migration to increase from 92 million in 1960 to 244 million in 2017. Traditionally, rising migration flows have been attributed to a lack of economic development in origin countries. Would-be migrants, the argument goes, decide to move primarily in search of higher wages and income abroad.
A competing hypothesis on the migration-development relation
The “migration transition hypothesis,” first set forth by Wilbur Zelinsky in his seminal paper on the subject (1971), provided a more nuanced picture. Out-migration (emigration) first increases with development in a country until a certain turning point, after which it gradually recedes. Several scholars found empirical evidence for this, using mainly cross-sectional data (De Haas, 2010; Clemens, 2014; Dao et al., 2018). This suggests that in low-income countries economic develo
Jaime de Melo, Alberto Portugal-Perez
Economists do not agree on whether preferential access to foreign markets can foster industrial development, particularly in Africa. Some see it as a more effective means than conventional infant industry protection “to transport a bit of the economic miracle from China to Africa” (Collier and Venables 2007). The benefits of preferential access are conditional on competing successfully in foreign markets, rather than in less contested domestic markets. In addition, prolonged privileged access cannot be taken for granted, creating stronger incentives to improve performance. In support of this view is evidence that privileged access to the US market under the African Growth and Opportunity Act (AGOA) initially spurred growth in African exports (e.g. Frazer and Van Biesebroeck 2010).
Richard Baldwin, Rikard Forslid
For decades, human capital research has relied on measures of schooling (Mincer 1984, Mankiw et al. 1992). But proxying human capital with schooling assumes that being in school translates into learning. Evidence suggests that this is often not the case (Pritchett 2013). Recent analysis reveals that six out of ten adolescents worldwide cannot meet basic proficiency levels in maths and reading (UNESCO 2017). This gap between schooling and learning is particularly acute in developing countries. In Kenya, Tanzania, and Uganda three quarters of grade 3 students cannot read a basic sentence such as “The name of the dog is Puppy”. In rural India, half of grade 3 students cannot solve a two-digit subtraction problem such as 46 minus 17 (World Bank 2018).
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