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This paper examines the relationship between openness and within-country regional inequality across 28 countries over the period 1975-2005, paying special attention to whether increases in global trade affect the developed and developing world differently. Using a combination of static and dynamic panel data analysis, we find that while increases in trade per se do not lead to greater territorial polarization, in combination with certain country-specific conditions, trade has a positive and significant association with regional inequality. In particular, states with higher inter-regional differences in sector endowments, a lower share of government expenditure, and a combination of high internal transaction costs with a higher degree of coincidence between the regional income distribution and regional foreign market access positions have experienced the greatest rise in territorial inequality when exposed to greater trade flows. This means that changes in trade regimes have had a more polarizing effect in low and middle-income countries, whose structural features tend to potentiate the trade effect and whose levels of internal spatial inequality are, on average, significantly higher than in high-income countries.

Agriculture --- Comparative advantage --- Comparative advantages --- Competitiveness --- Dynamic analysis --- Econometric analysis --- Economic geography --- Economic growth --- Economic integration --- Economic Theory & Research --- Emerging Markets --- Exports --- Free Trade --- GDP --- GDP per capita --- Human capital --- Income --- International Economics and Trade --- International trade --- Macroeconomic policies --- Macroeconomics and Economic Growth --- Middle income countries --- Private Sector Development --- Purchasing power --- Real GDP --- Regional Economic Development --- Rent seeking --- Trade Policy

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• Reference Manager
• EndNote
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This paper examines the relationship between openness and within-country regional inequality across 28 countries over the period 1975-2005, paying special attention to whether increases in global trade affect the developed and developing world differently. Using a combination of static and dynamic panel data analysis, we find that while increases in trade per se do not lead to greater territorial polarization, in combination with certain country-specific conditions, trade has a positive and significant association with regional inequality. In particular, states with higher inter-regional differences in sector endowments, a lower share of government expenditure, and a combination of high internal transaction costs with a higher degree of coincidence between the regional income distribution and regional foreign market access positions have experienced the greatest rise in territorial inequality when exposed to greater trade flows. This means that changes in trade regimes have had a more polarizing effect in low and middle-income countries, whose structural features tend to potentiate the trade effect and whose levels of internal spatial inequality are, on average, significantly higher than in high-income countries.

Agriculture --- Comparative advantage --- Comparative advantages --- Competitiveness --- Dynamic analysis --- Econometric analysis --- Economic geography --- Economic growth --- Economic integration --- Economic Theory & Research --- Emerging Markets --- Exports --- Free Trade --- GDP --- GDP per capita --- Human capital --- Income --- International Economics and Trade --- International trade --- Macroeconomic policies --- Macroeconomics and Economic Growth --- Middle income countries --- Private Sector Development --- Purchasing power --- Real GDP --- Regional Economic Development --- Rent seeking --- Trade Policy

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A notable contrast in modern economic history has been the rapid economic growth of China and the slower and volatile economic growth in Sub-Saharan Africa. As the engagement between the two continues to grows, there will be a greater cross-fertilization of experiences. Total factor productivity comparisons suggest that capital accumulation in China coupled with more efficient factor usage explains the differential with Africa. Although the two have similar populations and patterns of inequality, their growth trajectories have been divergent. What can Africa learn from China? Although the lessons vary depending on country location and resource endowment, seven basic lessons are visible. First, the political economy of Chinese reforms and the shared gains between political elites and the private sector can be partially transplanted to the African context. Second, the Chinese used diaspora capital and knowledge in the early reform years. Third, rural reforms in China helped accelerate economic takeoff through a restructuring of property rights and a boost to both savings rates and output. Fourth, Chinese growth has taken place in the context of a competitive exchange rate. Five, port governance in China has been exemplary, and African landlocked economies can benefit significantly from port reform in the coastal countries. Six, China has experimented with a degree of decentralization that could yield benefits for many Sub-Saharan African countries. Seventh, Africa can learn from China's policies toward autonomous areas and ethnic minorities to stave off conflict. Africa can learn from China's experiences and conduct developmental experiments for poverty alleviation goals.

Access to Finance --- Agriculture --- Banks & Banking Reform --- Centrally planned economy --- Debt Markets --- Decentralization --- Development strategy --- Economic expansion --- Economic growth --- Economic history --- Economic takeoff --- Economic Theory & Research --- Emerging Markets --- Exports --- Finance and Financial Sector Development --- GDP --- GDP per capita --- Growth rate --- International trade --- Living standards --- Macroeconomics and Economic Growth --- Natural resources --- Political economy --- Private Sector Development --- Property rights --- Real GDP --- Savings --- Total factor productivity

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Public debt has surged during the current global economic crisis and is expected to increase further. This development has raised concerns whether public debt is starting to hit levels where it might negatively affect economic growth. Does such a tipping point in public debt exist? How severe would the impact of public debt be on growth beyond this threshold? What happens if debt stays above this threshold for an extended period of time? The present study addresses these questions with the help of threshold estimations based on a yearly dataset of 101 developing and developed economies spanning a time period from 1980 to 2008. The estimations establish a threshold of 77 percent public debt-to-GDP ratio. If debt is above this threshold, each additional percentage point of debt costs 0.017 percentage points of annual real growth. The effect is even more pronounced in emerging markets where the threshold is 64 percent debt-to-GDP ratio. In these countries, the loss in annual real growth with each additional percentage point in public debt amounts to 0.02 percentage points. The cumulative effect on real GDP could be substantial. Importantly, the estimations control for other variables that might impact growth, such as the initial level of per-capita-GDP.

Capital flow --- Central banks --- Debt explosions --- Debt intolerance --- Debt management --- Debt Markets --- Debt overhang --- Debt problem --- Debt ratio --- Debt ratios --- Debt threshold --- Debt thresholds --- Deficits --- Domestic financial markets --- Economic Theory & Research --- Emerging Markets --- External Debt --- Finance and Financial Sector Development --- Financial crisis --- GDP --- Government debt --- International Economics and Trade --- Macroeconomics and Economic Growth --- Private Sector Development --- Public debt --- Public Sector Development --- Public Sector Economics --- Real GDP --- Sovereign debt