Twenty‐first Century Industrial Policy in a Small Developing Country: The Challenges of Reviving Manufacturing in Rwanda

The Rwandan government — widely lauded for its political commitment to development — has refocused its efforts on reviving growth in the manufacturing sector. This article examines how pressures from different levels — international, regional and domestic — have shaped the evolving political economy of two priority sectors (apparel and cement). To achieve its goals of manufacturing sector growth, the Rwandan government aims to access foreign markets (on preferential terms) and larger regional markets while developing effective state–business relationships with locally based firms. Despite the government's political commitment to reviving its manufacturing sector, its strategy has been both shaped and impeded by shifting pressures at the international level (through Rwanda's recent suspension from the African Growth and Opportunity Act), the regional level (through competition from regional firms) and the domestic level (through over‐reliance on single firms). Within the current industrial policy literature, there is limited reflection on how developing countries are dealing with the multi‐scalar challenges of enacting industrial policy in a much‐changed global trading environment. This article contributes to the industrial policy literature by addressing this lacuna.     

Observations on the Influence of High Oil Prices on Russia's GDP Growth

A noted economist and observer of post-Soviet affairs presents a study probing the influence of high oil prices on Russia's GDP growth. The paper analyzes the contributions to the country's GDP by sectors of origin and final use, and pays special attention to the influence of trade margins produced by oil and gas but recorded and placed by Goskomstat Rossii in Russia's trade sector. The author's interpretation of statistical data released by Goskomstat Rossii as well as by Russian customs authorities enables him to conclude that the present-day economic boom in Russia can be characterized as consumption-led growth fueled by oil and gas export revenues. Journal of Economic Literature, Classification Numbers: C67, C82, E23, L71, Q43. 2 figures, 10 tables, 20 references.     

Unravelling the Relationships between Used‐Clothing Imports and the Decline of African Clothing Industries

African clothing industries have declined since the implementation of economic liberalization policies in the early 1980s whilst used‐clothing imports to Africa have increased. The general effects of economic liberalization on African clothing industries are well documented, although little research has been conducted on the particular impact of increased imports of second‐hand clothes on the local manufacturing sectors. Whether these two processes are causally related is difficult to determine due to limitations in official data sets. In this article, the used‐clothing trade is explored in detail and a broad range of cultural and local economic processes are investigated. Trends such as declining local purchasing power and the opening of African markets to cheap new clothing imports, as well as imports of used‐clothing, are examined, along with the converse boost to African clothing export production resulting from preferential trade agreements in the 2000s. With respect to the differential legal and illegal imports of second‐hand clothing to selected African countries, it is demonstrated that official trade data sets often fail to capture the nuances of contemporary social and economic processes.     

Oil and the question of federalism in Iraq

The ‘oil question’ in Iraq has traditionally been viewed almost exclusively through the prism of ethno‐sectarianism. Disputes over the management and licensing of the hydrocarbon sector and over revenue distribution have been seen as a battle for power between Iraq's ethnic and sectarian communities, as if these were monolithic entities. This has led to a conviction—especially among US policy‐makers in post‐war Iraq—that solving the problem lies in a simple formula of apportioning control of the sector to decentralized authorities and dividing revenue proportionally. This view ignores the fact that disagreements over management of the sector and over revenue distribution reflect a deeper dispute that cuts across ethno‐sectarian lines. In reality, disputes are driven far more by the as‐yet‐unresolved issue of whether ultimate sovereign authority in Iraq lies with the central government or should be decentralized to regional and provincial governments. As the main source of revenue in Iraq, control over the oil and gas sector is critical to the success of these rival agendas. Consequently, compromise has been impossible to achieve, and neither side is willing to make concessions for fear of threatening their long‐term ambitions. Tactical maneuvering by different parties in the aftermath of the recent elections may provide some temporary respite to the oil and gas dispute, as Arab leaders in Baghdad seek to co‐opt the support of Kurdish parties to form a new coalition government. But an accommodation over the federalism question in Iraq still seems out of reach. This will not only hamper the legislative process and effective government in the coming years, but could also threaten stability, particularly along the fragile border that separates the Kurdistan Region from the rest of Iraq.     

Trade Liberalization and the Fiscal Squeeze: Implications for Public Investment

This article examines the impact of trade liberalization on the level and structure of government expenditures across countries, with particular emphasis on low income countries. It develops the argument that the policies employed during trade liberalization have resulted in a fiscal squeeze as a result of declining tax revenues and rising interest expenditures. To surmount this fiscal hurdle, expenditures on physical capital, which have negligible political ramifications, have been reduced. Other more politically sensitive expenditures, such as spending on social capital, have been financed by incurring additional debt. However, additional debt has exerted upward pressure on interest payments, further exacerbating the fiscal situation. The statistical analysis carried out to examine the evidence uses panel data for eighty developing and industrialized countries over the period 1970–98 and employs a fixed–effects regression framework to account for country–specific characteristics. The results indicate that trade liberalization has indeed resulted in declining revenues and higher interest expenditures and that these factors have contributed to the observed decline in infrastructure spending.     

Foreign Direct Investment and State Export Performance

Since the early 1980s, there has been widespread debate over the impacts of rising levels of inward foreign direct investment (FDI) on the U.S. economy. A frequently noted, but little studied, issue within the debate is the impact of FDI on U.S. foreign trade, and particularly, on the foreign trade of U.S. regions. This study assesses the effects of FDI on the manufacturing export performance of U.S. states during the period from 1980 to 1991. Results indicate that increased levels of FDI are positively related to future improvements in state manufacturing export performance.     

TNC Strategies and Variations in Intra-firm Trade: The Case of Foreign Manufacturing Affiliates in Sweden

The aim of this paper is to contribute to the understanding of the forms and determinants of intra-firm trade, i.e. international trade between different units under common TNC ownership, this being a major indication of 'deep economic integration' between developed countries in the 1990s. Theoretically, intra-firm trade can be explained by the existence of economies of common governance and are often found to be associated with R&D-intensive industries and economies of scale. In empirical studies, intra-firm trade is often found to consist of intermediate inputs goods, resulting in vertically integrated production chains. The study is based on detailed firm-level data from around 300 foreign majority-owned affiliates (MOFAs) in manufacturing, in Sweden in 1993. The results show that intra-firm sales by MOFAs in Sweden are as high as those found in studies of manufacturing affiliates of US TNCs. Almost all of MOFAs' intra-firm exports are finished products, while intra-firm imports consist of material inputs and finished products for resale. This suggests that these MOFAs are only marginal involved in vertically integrated production chains, especially in terms of exports. The results of a regression analysis complement earlier studies by showing that the level and composition of intra-firm trade is significantly affected by the international strategy applied by TNCs when operating foreign manufacturing affiliates. Intra-firm exports of finished products and material inputs are positively associated with efficiency-seeking FDI, e.g. affiliates engaged in rationalised production. Market-seeking FDI is associated with intra-firm imports of complementary finished products for resale. By contrast, resource-seeking and strategic asset-seeking FDI was negatively associated with intra-firm trade.     

The Great Russian Depression of the 1990s: Observations on Causes and Implications

A senior Japanese economist briefly examines the causes of Russia's great economic depression of the 1990s, highlighting the important role of the ruble exchange rate. The author argues that “liberalization” of exchange markets contributed substantially to the depression, because of the “dual” nature of the Russian economy (strong energy sector and weak manufacturing sector). Journal of Economic Literature, Classification Numbers: E50, E58, F31. 7 tables, 22 references.     

INFLATION, PROGRESSIVITY, AND STATE INCOME TAX REVENUES

The combination of progressive income tax structures and inflation has led to significant increases in state income tax revenues. While the federal government has de facto indexed the federal personal income tax, states have generated large relative and absolute increases in their income tax revenues. This paper shows that the ratio of income tax revenues to personal income has grown significantly more in states with progressive income tax structures than those with proportional tax structures. Almost half of such increases may be attributed to inflation. The increase in the relative share of income tax as a source of state revenues has recently run into resistance in some states which have installed income tax indexation measures. This may suggest that the marginal cost of raising revenue through inflation, relative to other means (taxes), is reaching its limits.     

Whose Wealth Is It Anyway? Mozambique's Outstanding Economic Growth with Worsening Rural Poverty

Despite rapid economic growth and massive inflows of aid, rural poverty in Mozambique is worsening. Agricultural production and productivity have not increased in the last decade. Use of chemical fertilizers and other modern technology is at a low level and decreasing. The present development model emphasizes that the role of government and donors is to provide human capital and infrastructure, while the private sector is responsible for economic development and ending poverty. The most recent national surveys confirm what is being seen elsewhere in Africa — that this non‐interventionist strategy does not raise agricultural productivity or reduce poverty. While 80 per cent of Mozambique's population is engaged in agriculture, this sector contributes only 20 per cent of GDP. This suggests that investments in agriculture are likely to generate pro‐poor growth, both to rural and urban dwellers. This policy failure is increasingly recognized, but donors and government have invested too much political capital in the current policy to change easily.     

Trade Liberalization and Export Performance in Bolivia

One of the anticipated gains from the trade liberalization policies adopted by many Latin American countries in recent years is improved export performance. In this article, the arguments on which this expectation is based are reviewed and the impact of trade liberalization on Bolivian manufactured exports analysed. The conclusion is that improved export performance is largely the result of a more realistic and more stable real exchange rate after 1985, while the trade policy reforms have had little impact. Certain deficiencies of Bolivia's export performance, such as the increased emphasis on primary and semi-processed products, and the lack of diversification in terms of both products and markets, are also noted.     

清季粤海关库款侵蚀案及其治理——兼论税务司制度对监督制度的影响

关库是清季粤海关常、洋两税的总汇之区。由于税款管理权限分散,奏销制度混乱,税司与监督间的账目不能互相稽核,库大使与库书之间也难以做到账实相符。财务监管缺失为库书提供了贪腐机会。光绪三十年粤海关库款侵蚀案的彻底爆出,并不是海关自身监管机制发挥了作用,而实在于分赃集团内部的利益分歧所导致。清末粤海关的改革并未借鉴税务司系统先进的财务管理经验。税务司系统对海关监督系统难以产生制度影响力,主要原因在于税务司内部的管理模式难以复制和清廷对客卿制度持有戒心。     

Nigerian Oil and Exchange Rates: Indicators of ‘Dutch Disease’

This article assesses the impact of expanding oil revenues on non-oil sectors of the Nigerian economy from 1960 to 1985/6. Emphasis is placed on the effects of exchange rate appreciation during the 1970s on the agricultural, manufacturing and non-traded goods sectors. The analysis is conducted within a Dutch disease context. Two main conclusions are that the decline of Nigerian agriculture during these years can be attributed to a combination of low real producer prices and insufficient government investment, as well as the overvalued Nigerian naira; and that the high real exchange rate may have benefited the manufacturing sector.     

伪满洲国初期的对外贸易

20世纪初至1930年,中国东北地区的对外贸易规模不断扩大。伪满洲国成立后,伪满政府倚仗日本关东军,强行侵占了我国东北各地海关。中国东北地区长期出超的局面在1933年反转,并且入超额出现扩大趋势。伪满政权极力促进所谓的“日满一体化”,使得东北地区的对外贸易更加向对日贸易集中。随着列强的经济利益争夺日趋白热化,伪满洲国逐渐步入统制贸易之途。     

Stabilizing neoliberalism in Bolivia: popular participation and privatization

Neoliberal theorists and development practitioners contend that economic liberalization and privatization lead to increased private sector productivity and decentralization accompanied by administrative reforms lead to greater democracy, more efficient public sector investment, and faster local development. Examination of the Bolivian case, which has been promoted as a global model for neoliberal restructuring, presents a different picture. There, economic restructuring and privatization have led to a decline in government revenues and a continuing economic crisis. Privatization of public services has led to rate hikes, which, in turn, have generated massive social protests. Political restructuring through decentralization has as often resulted in the entrenchment of local elites as in increases in truly democratic control of resources and social investments. This economic and political restructuring has also served to territorialize opposition to privatization and neoliberal economic policies and, in some areas, reinforce regional social movements. When examined together, it becomes clear how economic and administrative restructuring has sought to provide transnational firms both access to Bolivian natural resources as well as the social stability necessary in which to operate. As privatization through the Law of Capitalization further opened the country’s borders to global capital, the decentralization program through the Law of Popular Participation served to focus the attention of popular movements from national to local arenas. While foreign investment has increased, the lack of benefits for the majority of the country has led to mounting regional social protests in the face of reduced government spending on social programs and increased prices for basic services.     

Squeezed between external trade barriers and internal economic problems: Bulgaria’s trade with Denmark in the 1970s

ABSTRACT

This paper investigates Bulgaria’s trade strategy towards the European Economic Community (EEC) in the 1970s: a decade of intensified economic exchange between East and West thanks to détente and, simultaneously, of growing trade barriers due to the consolidation of the EEC’s Common Market. The successes and failures of Bulgaria’s endeavours are discussed through a study of economic cooperation with Denmark before and after its accession to the EEC in 1973. The main argument is that while Bulgarian economic policy focused on the rising regulatory impediments to trade with EEC members, it neglected the structural deficiencies of Bulgarian export production. Thereby, Bulgarian state officials strove to resolve foreign trade problems through diplomatic negotiations over customs regulations instead of advancing domestic economic reforms . This argument is supported by analysis of intergovernmental economic negotiations and trade deals between Bulgaria and Denmark during the 1970s. It highlights the different ways in which Bulgarian trade envoys in Copenhagen and top officials at home evaluated recurrent problems in accessing the Danish market and formulated solutions for these problems. Thus, instead of tackling internal structural problems, the blueprints for Bulgaria’s foreign trade focused on external foes, namely trade discrimination against socialist countries.     

Economic Policy in Post-Soviet St. Petersburg

The paper assesses the efforts of regional government officials in St. Petersburg, a city heavily dependent on the defense sector, to transform its economic base after the fall of communism. It describes how the strategy initially favored in the early 1990s (the development of St. Petersburg as an international business center based largely on foreign investment) fell well short of expectations. The author then examines the results thus far from an alternative strategy, following the election of a new mayor in 1996, that focuses on the revival of the city's industry and the promotion of trade. Journal of Economic Literature, Classification Numbers: F21, H71, L52, O20. 59 references.     

Neoliberalism and Suburban Employment: Western Sydney in the 1990s

During the past 15 years metropolitan planning strategies of the NSW state government have done little to address the spatial distribution of either employment or labour market equity within the metropolis. In the fast‐growing outer western suburbs, the government has focused on attracting business investment to increase the stock of local jobs and to improve employment ‘self‐sufficiency’— a dominantly neoliberal policy framework. This paper explores a widening gulf between the reality of outer urban change and this policy framework by considering changes in the location of jobs and in the employment experiences of residents in Greater Western Sydney (GWS). Evidence is drawn from census journey‐to‐work data (1991–2001). While holding a majority of manufacturing jobs in Sydney, GWS also experienced continued growth of jobs in service industries during the 1990s. Yet the relative importance of employment in the city's fast‐growth finance and business services sector still lags well behind that of inner and northern parts of the city. The focus on growing the regional stock of jobs has not addressed problems of labour market access faced by residents of particular localities and the goal of employment self‐sufficiency has not delivered greater equity to outer suburban labour markets. A focus on sufficiency of access to employment for residents of GWS draws attention not only to regional stocks of jobs but also to the provision of social infrastructure and state‐provided services to outer suburban populations as they continue to expand.     

Finance and Industrial Policy in Unsuccessful Developmental States: The Case of Pakistan

While a large body of research indicates that state‐directed finance worked for successful East Asian developers, the dominant assumption remains that countries with a weak state capacity, where corruption is rife, should not ‘try this at home’. In this article, that narrative is questioned through a case study of the role of the financial sector in Pakistan, which is widely considered to be a successful case of financial liberalization, contrasting the role of the publicly controlled financial system in the 1970s and 1980s with that of the liberalized financial system in the 2000s. Utilizing archival firm‐level and aggregate data, historic government documents, and interviews with policy makers, financial sector employees and industrialists, it is argued that in the Pakistani case, the withdrawal of state control over the financial sector led to a deterioration of outcomes. This resulted in the allocation of credit away from the productive sectors, namely industry and agriculture, towards unproductive sectors, for speculative purposes; and in the health of the financial sector not improving as expected, with non‐performing loans and corruption remaining a problem, and banks actually becoming a greater burden on government finances. This indicates that even states with weak capacity and flawed industrial policy may be better off with some degree of public control over finance.     

The Political Economy of Class Compromise: Trade Unions,Capital–Labour Relations and Development in North East Brazil1

Abstract: This article investigates how capital–labour relations (encompassing processes of class formation, representation, struggle and compromise) impact on emerging regions’ developmental trajectories. It does so because much of development studies portray labour simply as an input (human capital) subordinate to more fundamental processes such as capital investment and accumulation. The paper draws on and extends insights gained from the “new working class studies” and global commodity chains literatures in order to examine evolving capital–labour relations—from relatively militant struggles to class compromise—in an emerging sector of North East Brazilian export horticulture. It identifies sources of workers’ structural and associational power and uses these to explain significant gains achieved by the region's rural trade union during the formation of the export horticulture sector. It then asks, why, despite continuing structural power, the region's trade union has entered into a class compromise with the leading employers via (a) reducing its militancy and its strategy of striking against employers to win concessions, and (b) shifting its objectives in terms of concessions sought. It speculates on the impacts of these changing class relations on the region's developmental trajectory.