Tag: economics

Editor's Note: At the end of each week, one of the rotating editors for Future Development—Shanta Devarajan, Wolfgang Fengler, Indermit Gill, or Homi Kharas—provides recommended literature on a specific development topic. A case in point is the effect of trade opening on wage inequality, which, according to economics, could be ambiguous whereas the political rhetoric, especially in rich countries, is that it is always harmful. A recent paper in VoxDev reconciles this difference by showing that the initial effect of trade liberalization is increased wage inequality, but as firms’ input costs fall further, wage inequality begins to decline. In addition to deriving the result theoretically, they empirically corroborate it with data from Brazil. The implication here is that the people protesting trade liberalization may be capturing a longer-term effect than economists’ short-run models. They find that Kenyan workers will remain competitive for about 20 years, which gives low-income country governments a window of opportunity to prepare for the technological changes, especially if they focus on the less-automated sectors such as food and beverages, garments, metals, and paper. The messages resonate with an earlier study, entitled “Trouble in the Making,” by my World Bank colleagues, Mary Hallward-Driemeier and Gaurav Nayyar. Finally, the 2011 Arab Spring revolutions pose a puzzle for economists because most standard economic indicators, such as GDP growth, poverty, inequality, and access to basic services were improving in the first decade of this century. Hassan Hakimian at University of London provides an explanation, drawing on Aristotle’s famous quote, “In order to secure his power, a tyrant must keep the population in poverty, so that the preoccupation with daily bread leaves them no leisure to conspire against the tyrant.” Hassan suggests that the growing prosperity raised expectations, particularly of the middle class, which the current regimes were not able to fulfill. The hypothesis echoes Elena Ianchovichina’s and my paper, “A Broken Social Contract, Not High Inequality, Led to the Arab Spring.” Related

With time, the FCC’s program to move television band frequencies into mobile phone and data markets was scaled back and the timeline stretched out. In 2004 the FCC moved to relax L-Band rules, permitting deployment of a terrestrial mobile network. But in 2012 the FCC yanked LightSquared’s licenses. In reality, the costliest spectrum conflicts emanate from overprotecting old services at the expense of the new. Notably, it has lowered the power of its emissions and has volunteered to leave its frequencies neighboring the GPS band quiet. Yet regulatory impediments continue to block progress. To use radio spectrum, parties must stay in their lanes. The FCC should let Ligado use satellite licenses for cellular services. This would move radio spectrum out of oblivion and into the mobile broadband networks craved by consumers, innovators and the U.S. economy. Just like the National Broadband Plan called for in 2010.