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The Doha round of multilateral trade negotiations stalled in 2008 owing in no small degree to a lack of agreement on the terms of substantially reducing trade-distorting support for agricultural products and to what extent this will be beneficial to developing countries. Nicaragua presents an interesting case in point, being one of the poorest economies in Latin America with still a relatively large agricultural sector and high degrees of rural poverty. In 2005, the country signed a free trade agreement with the United States. This chapter provides a quantitative analysis addressing that question. It does so using a computable general equilibrium (CGE) model for Nicaragua coupled with a micro-simulation methodology. The first section provides background information on trade reform policies and macroeconomic trends in Nicaragua, with special reference to the agricultural sector and rural poverty. The section that follows describes the main features of the CGE model and the micro-simulation methodology used to assess the impact on poverty and inequality. The author then lay out the model scenarios considered, which include liberalizations of agricultural and all merchandise goods trade by the rest of the world and by Nicaragua itself. That is followed by a summary analysis of results. This analysis includes tests for the sensitivity of the results with respect to assumptions regarding the responsiveness of trade to price liberalization, as identified through the relevant trade elasticities. The final section provides conclusions and possible policy implications.

Agriculture --- Capital Flows --- Civil War --- Commodity Prices --- Consumers --- Customs Procedures --- Demographic Change --- Developing Countries --- Development Policy --- Economic theory & Research --- Exporters --- Financial Institutions --- Foreign Direct Investment --- Gdp --- Gross Domestic Product --- Human Capital --- Inequality --- Living Standards --- Macroeconomics and Economic Growth --- Monopolies --- Per Capita Income --- Poverty Reduction --- Private Investment --- Productivity --- Safeguard Measures --- Savings --- Skilled Workers --- Total Factor Productivity --- Trade Barriers --- Trade Liberalization --- Trade Policy --- Trade Preferences --- Trade Protection --- Trade Reform --- Unemployment --- Unskilled Workers --- Wages --- World Development Indicators

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This paper focuses on core aspects of the political economy of reform, drawing on case studies of three economies transitioning to stronger business environments (Hungary, the Republic of Korea, and Mexico) and three countries with well-developed business environments (Australia, Italy, and the United Kingdom). The purpose is threefold: first, to identify so-called drivers of reform among successfully reforming countries; second, to explore how a reform strategy can make optimal use of the opportunities provided by the drivers of change; and third; to suggest how these lessons can be proactively used by other reformers to design and guide reforms. The case study findings suggest that, regardless of the content of reform, success is influenced by an evolving mix of seven drivers of change: i) globalization or competitiveness; ii) crisis; iii) political leadership; iv) unfolding reform synergies; v) technocrats; vi) changes in civil society, and vii) external pressure. The case studies suggest that reformers can influence the direction and pace of change by mobilizing and exploiting drivers of it. Rather than a cause-and-effect scenario in which a single driver-such as a crisis-creates and defines the success of a body of reforms, what happens is an unfolding series of events in which various drivers become more and less important in defining phases of the reform process.

Accountability --- Bankruptcy --- Bureaucracy --- Capital Markets --- Consumer Protection --- Consumers --- Corruption --- Corruption & anticorruption Law --- Debt --- Deregulation --- Developed Countries --- Developing Countries --- Economic Development --- Economic Liberalization --- Economics --- Enterprise Development & Reform --- Financial Crisis --- Financial Sector --- Foreign Direct Investment --- Free Trade Agreements --- Globalization --- Good Governance --- Gross Domestic Product --- Investment Climate --- Job Creation --- Judiciary --- Labor Market --- Law and Development --- Leadership --- Low-Income Countries --- Macroeconomics --- Market Economy --- Marketing --- Monopolies --- Open Markets --- Political Economy --- Private Investment --- Private Sector Development --- Property Rights --- Public Debt --- Regulators --- Rent Seeking --- Rule of Law --- Small Businesses --- Trade Liberalization --- Transaction Costs --- Transparency --- Unemployment

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A solid financial armor could not protect Thailand against the impact of the global financial crisis on its real economy. Despite a sound banking system and low external vulnerabilities, the Thai economy contracted 5.7 percent between October 2008 and March 2009, as the magnitude and speed of the contraction in foreign demand, and resulting shock to the real economy, has been greater than anticipated. There continues to be little impact of the global financial crisis on Thailand's banks: liquidity remained adequate as financial institutions did not face solvency concerns given their adequate capitalization and lack of exposure to 'toxic' assets or risky derivative contracts. The combination of a sound financial sector, low external roll-over and balance-of-payment financing requirements, and, more recently, large current account surpluses, has led to capital inflows, build-up in reserves and an appreciation of the Baht relative to other currencies in the region. However, the impact of the global crisis on the real sector was far more severe than expected. Export volumes contracted by 8.9 percent in the fourth quarter of 2008, compared to the World Bank's forecast in December of a 3.0 percent expansion. Exports contracted a further 16 percent in the first quarter of 2009. The aggravation of Thailand's political crisis, which had been dampening investor and consumer confidence since 2006, compounded the shock to the real economy. As a result, real gross domestic product (GDP) contracted in the fourth quarter of 2008 and first quarter of 2009 after 38 quarters of growth, and is expected to contract for 2009 as a whole, the first annual contraction since the Asian financial crisis of 1997-1998.

Accounting --- Agricultural Cooperatives --- Agriculture --- Banking Sector --- Bankruptcy --- Capital Flows --- Commercial Banks --- Commodity Prices --- Communications Technology --- Consumers --- Credit Default Swaps --- Developing Countries --- Domestic Debt --- Economic Forecasting --- Economic Growth --- Elasticity of Demand --- Exchange Rates --- Expenditures --- Exporters --- Financial Crisis --- Financial Institutions --- Financial Sector --- Fiscal & Monetary Policy --- Fiscal Policy --- Free Trade Agreements --- Gdp --- Global Economy --- Governance --- Gross Domestic Product --- Income Inequality --- Inflation --- Insurance --- Local Government --- Macroeconomics and Economic Growth --- Monetary Policy --- Moneylenders --- Private Investment --- Public Debt --- Public Sector Development --- Public Sector Management and Reform --- Public Spending --- Purchasing Power --- Recession --- Remittances --- Savings --- Securities --- Social Development --- Social Safety Nets --- Trade Finance --- Unemployment --- Wages --- World Trade Organization

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This paper analyzes how investment incentives may or may not be used to foster private investment, particularly in developing countries. As practitioners and policymakers can attest, political economy exerts a powerful influence on incentives. Many incentives especially generous ones have persisted because of lobbying by special interests and politicians' need to curry favor. Yet little research has been done on how political economy affects incentive policy. Second, the paper sheds light on the role that political economy plays in the popularity of incentives and the related shortcomings. Incentives are sometimes used to dole out favors to investors, so investors who benefit from incentives resist attempts to eliminate them. This paper suggests a way to tackle such problems. Third, the paper compiles good practices on managing and administering incentives in developing countries, drawing on government and private sector experiences. Finally, the paper provides policymakers with a framework for analyzing the efficacy of investment incentives based on the sector and level of development involved, and suggests reforms for moving toward best practice.

Audits --- Business Development --- Business Environment --- Debt Markets --- Decision Making --- Developing Countries --- Economic theory & Research --- Emerging Markets --- Expenditures --- Exporters --- Finance and Financial Sector Development --- Fiscal Policy --- Foreign Direct Investment --- Fraud --- Gdp --- Host Countries --- Income Tax --- Inflation --- International Finance --- Job Creation --- Macroeconomics and Economic Growth --- Monetary Policy --- Multinational Corporations --- Natural Resources --- Outsourcing --- Per Capita Income --- Political Economy --- Private Investment --- Private Sector Development --- Public Finance --- Public-Private Partnerships --- Rent Seeking --- Rule of Law --- Savings --- Tax Administration --- Tax Evasion --- Tax Exemptions --- Tax Policy --- Taxation & Subsidies --- Technical Assistance --- Telecommunications --- Transparency --- Unemployment

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There is a strong economic rationale for close cooperation between the public and private sectors. This has resulted in a significant increase in the demand for the provision of public services through instruments combining public and private money such as public-private partnerships (PPPs or P3s). We describe these arrangements and explore how they can be analyzed using standard tools in economics (incentives and principal-agent theory). We discuss the implications of our approach in terms of identifying risks that are often overlooked before turining to the optimal risk-sharing between the public and private partners, in particular with respect to information asymmetries in risk perceptions. This allows us to propose a typology of the risks associated with PPPs, where both internal risks (the risks associated with the contract) and external risks (those associated with the project) are considered.

Management --- Business & Economics --- Industrial Management --- Public-private sector cooperation. --- Privatization. --- Risk management. --- Denationalization --- Privatisation --- Private-public partnerships --- Private-public sector cooperation --- Public-private partnerships --- Public-private sector collaboration --- Insurance --- Contracting out --- Corporatization --- Government ownership --- Cooperation --- Infrastructure --- Macroeconomics --- Public Finance --- Organizational Behavior --- Transaction Costs --- Property Rights --- Bureaucracy --- Administrative Processes in Public Organizations --- Corruption --- Asymmetric and Private Information --- National Government Expenditures and Related Policies: Infrastructures --- Other Public Investment and Capital Stock --- Marketing and Advertising: Government Policy and Regulation --- Transportation Systems: Government and Private Investment Analysis --- Public Enterprises --- Public-Private Enterprises --- Public Administration --- Public Sector Accounting and Audits --- Industry Studies: Transportation and Utilities: General --- Public finance & taxation --- Civil service & public sector --- Public investment and public-private partnerships (PPP) --- Public sector --- Risks of public-private partnership --- Transportation --- Expenditure --- Economic sectors --- Public financial management (PFM) --- National accounts --- Public-private sector cooperation --- Finance, Public --- Fiscal policy --- Saving and investment --- United States