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Governments are resource and bandwidth constrained, and hence need to prioritize productivity-enhancing policies. To do so requires information on the nature and magnitude of market failures on the one hand, and government's capacity to redress them successfully on the other. The paper reviews perspectives on vertical (sectoral) and horizontal (factor markets, cluster) policies with an eye to both criteria. It first argues that the case for either cannot be made on the basis of the likelihood of successful implementation: for instance, educational and picking the winner types of policies both run the risks of capture and incompetent execution. However, the profession has been able to establish more convincing market failures for horizontal policies than for vertical policies. Most of the recent approaches to identifying failures around particular goods, the paper argues, are of limited help. Hence, for a given difficulty of execution, the former are generally to be preferred. A second critical message is that improving the quality of governance in terms of collecting information, coordination ability, and defending against capture is critical to successful implementation of productivity policies and should be central on the policy agenda.
Government Failures --- Industrial Policy --- Market Failures
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The world is constantly adapting and our way of consuming is changing. Our environment has become globalized over the last two centuries. Food production is mainly carried out using techniques that do not respect biodiversity and the health of the population, all managed by multinational companies. Indeed, we know less and less about the components of our plates. This leads to a loss of quality and confidence when buying food. Faced with these observations, some actors are becoming more and more aware that we must change our way of consuming and farming. Therefore, in recent years, some have decided to create alternative production methods and sell their products through a more direct marketing channel. By reducing intermediaries, these initiatives allow for greater transparency in both food and economic terms. Social and territorial ties are thus reconsidered. And above all, the added value goes directly to producers or farmers and no longer to large companies. It is in this context that this research is part of. It aims to understand why the current food market is not optimal and whether the theory of Market Failure can be fully validated by showing the interest of these short food supply chains initiatives. After further defining the concept of short food supply chains, we will show that they are the obstacles that exist for the population to embark on this food transition. We will discover what key factors need to be strengthened to encourage consumers to use these initiatives. Then, through a survey and observations over a month, this study aims to understand by which factors to engage the consumer in these short foods supply chains initiatives? What is their current purchasing behavior? What are their obstacles and motivations to consume locally? What would increase confidence in the purchase transaction? What effort should be made by these alternatives to encourage the citizen? Are they legitimate and sustainable concerning marketing?
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This essay is about an important area in which there has been major rethinking-industrial policy, by which the authors mean government policies directed at affecting the economic structure of the economy. The standard argument was that markets were efficient, so there was no need for government to intervene either in the allocation of resources across sectors or in the choices of technique. And even if markets were not efficient, governments were not likely to improve matters. But the 2008-2009 global financial crisis showed that markets were not necessarily efficient and, indeed, there was a broad consensus that without strong government intervention-which included providing lifelines to certain firms and certain industries-the market economies of the United States and Europe may have collapsed. Today, the relevance and pertinence of industrial policies are acknowledged by mainstream economists and political leaders from all sides of the ideological spectrum. But what exactly is industrial policy? Why has it raised so much controversy and confusion? What is the compelling new rationale that seems to bring mainstream economists to acknowledge the crucial importance of industrial policy and revisit some of the fundamental assumptions of economic theory and economic development? How can industrial policy be designed to avoid the pitfalls of some of the seeming past failures and to emulate some of the past successes? What are the contours of the emerging consensus and remaining issues and open questions? The paper addresses these questions.
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This paper examines constraints to adoption of new technologies in the context of hillside irrigation schemes in Rwanda. It leverages a plot-level spatial regression discontinuity design to produce 3 key results. First, irrigation enables dry season horticultural production, which boosts on-farm cash profits by 70 percent. Second, adoption is constrained: access to irrigation causes farmers to substitute labor and inputs away from their other plots. Eliminating this substitution would increase adoption by at least 21 percent. Third, this substitution is largest for smaller households and wealthier households. This result can be explained by labor market failures in a standard agricultural household model.
Agricultural Sector Economics --- Agriculture --- Horticulture --- Irrigation --- Irrigation and Drainage --- Labor Market --- Labor Markets --- Market Failures --- Social Protections and Labor --- Technology Adoption --- Water Resources
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This paper investigates how the permanent departure of the father from a household affects children's school enrollment and work participation in rural Colombia. The results indicate that the permanent departure of the father decreases children's school enrollment by approximately 5 percentage points and increases child labor by 3 percentage points. This paper explores the rollout of a conditional-cash-transfer program during the period of study and shows that this program counteracts these adverse effects. When coupled with other evidence, this finding strongly suggests that the channel through which the father's departure most affects children is by reducing the income of very poor households, which tightens their liquidity constraints. This finding also highlights the important safety-net role played by welfare programs with respect to disadvantaged households, particularly because these households are unlikely to have formal or informal mechanisms with which to insure themselves against such vagaries.
Child labor --- Conditional cash transfer --- Credit and insurance market failures --- Income loss --- Macroeconomics and Economic Growth --- Permanent absence --- Safety net --- Schooling
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After long suffering from benign neglect if not outright contempt, industrial policy is almost fashionable again. The global financial and economic crisis known as the Great Recession has forced researchers and policy makers to confront the reality that market forces alone generally do not lead to (constrained) Pareto-efficient outcomes. Many important national and global policy objectives (equality of opportunity for all citizens, financial stability and inclusion, environmental protection and pollution control, et cetera) are simply often not reflected in market prices and not achieved by markets on their own. In addition to traditional justification for industrial policies-dealing with externalities and coordination issues-economists and policy makers now acknowledge the need to foster learning at the level of each economic agent and throughout society and the ultimate responsibility that the state must bear in that crucial process. But converting the now widely accepted theoretical principles of industrial policy into practical frameworks for concrete government action is indeed a daunting task everywhere and perhaps more so in the African context where the institutional underpinnings of effective government are often not as strong as one might have hoped. This essay highlights the intellectual foundations and broad principles of good industrial policy, outlines the contours of the policy agenda, and fleshes out the lessons learned. It argues that there has been substantial progress on the understanding and acceptance of industrial policy and that Africa could benefit enormously from it and from the unprecedented new opportunities brought to light by a multipolar world.
Climate Change Economics --- Economic Theory & Research --- Environmental Economics & Policies --- Industrial Policy --- Learning Society --- Macroeconomics and Economic Growth --- Market Failures --- Policy Neutrality --- Population Policies --- Public Sector Corruption & Anticorruption Measures
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This paper uses data from a large survey of Chinese firms to investigate whether local government efforts to facilitate market development improve firm efficiency. Both government provision of information about products, markets, and innovation and government assistance in arranging loans are positively associated with firm efficiency. Those private firms with weak access to and knowledge of financial, input, and product markets benefit most from such assistance. These patterns are robust across multiple estimation approaches. Case studies of specific types of market facilitation by local governments are provided. The evidence is consistent with the notion that government facilitation can help some firms overcome market failures in the early stages of development. The paper argues that changing fiscal dynamics that forced local governments to become increasingly self-reliant in generating revenue and a government promotion system based on local economic performance compelled these efforts at market facilitation.
Access to Finance --- Banks & Banking Reform --- Debt Markets --- Economic Theory & Research --- Finance and Financial Sector Development --- Government Facilitation --- Labor Policies --- Local Government --- Market Failures --- Private Sector Development
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Over the last two centuries, the emergence of new technologies has profoundly changed the way food is produced, distributed and consumed. Shifting from an agricultural to an agribusiness status, the food system comprises nowadays a multitude of actors which are highly dependent on one another with farmers being the least fortunate. Upwards, the latter depend on a few multinational company owning the seeds and inputs essential to their production. Downwards, a few powerful processers and distributors put pressure on their prices and impose more and more constraints on them. But not only farmers suffer from this evolution. The opacity of the whole food supply chain leaves consumers unaware of the food they eat and conventional farming leads to the destruction of biodiversity and environment as a whole. Thus, a few actors decide to take actions to counter the undesirable effects generated by the food system. By opting for alternative production methods – such as organic farming – and by distributing food directly to final consumers, producers can free themselves from the companies upwards and recoup the added-value they had lost to the benefit of the powerful companies downwards. In a first phase, this thesis introduces the problems of the food sector explaining them through the concept of Market Failures. Then, the concept of Short Food Supply Chains is defined and the organizations falling within its scope are listed and classified. In a second phase, by carrying out a survey in the province of Liège (Belgium), this work seeks to appreciate the diversity of these organizations. What activities do they carry out? What forms do they take? What are the profiles of their creators and members? How do they finance themselves? Then, the link between the profile of the members and creators of these organizations, their motivations – the problems of the food sector they address – and their practices – the actions they take to tackle those problems – is examined. Finally, the consistency between the actions they take and the failures against which they claim to fight is reviewed.
Agriculture --- Agribusiness --- Market failures --- Power imbalance --- Food sovereignty --- Organic farming --- Agroecology --- Short food supply chains --- Social enterprise --- Belgium --- Sciences économiques & de gestion > Economie sociale --- Sciences du vivant > Agriculture & agronomie --- Sciences économiques & de gestion > Production, distribution & gestion de la chaîne logistique --- Sciences du vivant > Sciences des denrées alimentaires
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This paper uses firm level data from a cross-section of 57 countries to study how financial development affects innovation in small firms. The analysis finds that relative to large firms in the same industry, spending on research and development by small firms is more likely and sizable in countries at higher levels of financial development. The estimates imply that among firms doing research and development in a country like Romania, which is at the 20th percentile of financial development, a 1 standard deviation decrease in firm size is associated with a decrease of 0.7 standard deviations in research and development spending. In contrast, this decrease is only 0.2 standard deviations in a country like South Africa, which is at the 80th percentile of the distribution of financial development. Small firms also report producing more innovations per unit of research and development spending than large firms, and this gap is narrower in countries at higher levels of financial development. As a robustness check, the author shows that these patterns are stronger in industries inherently more reliant on external finance.
Access to Finance --- Debt Markets --- Education --- External finance --- Finance and Financial Sector Development --- Financial Development --- Financial market --- Financial systems --- Firm performance --- Informational asymmetries --- International Bank --- Lenders --- Market failures --- Microfinance --- Science and Technology Development --- Science Education --- Scientific Research and Science Parks --- Small loan
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The joint determination of aggregate economic growth and distributional change has been studied empirically from at least three different perspectives. A macroeconomic approach that relies on cross-country data on poverty, inequality, and growth rates has generated some interesting stylized facts about the correlations between these variables, but has not shed much light on the underlying determinants. "Meso-" and microeconomic approaches have fared somewhat better. The microeconomic approach, in particular, builds on the observation that growth, changes in poverty, and changes in inequality are simply different aggregations of information on the incidence of economic growth along the income distribution. This paper reviews the evolution of attempts to understand the nature of growth incidence curves, from the statistical decompositions associated with generalizations of the Oaxaca-Blinder method, to more recent efforts to generate "economically consistent" counterfactuals, drawing on structural, reduced-form, and computable general equilibrium models.
Achieving Shared Growth --- Counterfactual --- Distributional dynamics --- Economic growth --- Economic Theory & Research --- Higher inequality --- Household income --- Household survey --- Income --- Income distribution --- Income dynamics --- Income inequality --- Inequality --- Insurance --- Insurance markets --- Macroeconomics and Economic Growth --- Market failures --- Political economy --- Poor --- Poverty dynamics --- Poverty line --- Poverty measurement --- Poverty Reduction --- Public spending --- Rural Poverty Reduction --- Services & Transfers to Poor
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