Jayant Menon, Thiam Hee Ng, 01 October 2015

Malaysia’s fortunes have taken a turn for the worse in recent years, both in manufacturing and across the economy in general. This column argues that the country is moving back to processing its agricultural and mineral resources, and that such ‘premature deindustrialisation’ is mostly policy driven. The biggest concern with such structural shifts is that they lead to low-productivity, low-wage manufacturing. Malaysia must address these issues and improve its business environment if it wants to realise its aspirations.

David McKenzie, Christopher Woodruff, 21 September 2015

Better management practices are associated with better firm performance, and the quality of management practices is also associated with per capita income. This column explores the effect of business practices on small firms in developing countries. The findings indicate that better business practices are correlated with higher productivity, higher firm profits, and higher rates of survival. Poor business practices are holding back small firms in developing countries.

Richard S J Tol, 17 September 2015

The international climate negotiations have moved away from targets such as keeping warming below 2°C in favour of more realistic goals. This column presents new evidence on the economic impacts of climate change. The initial impacts of climate change on welfare might be positive, but in the long run the negative effects dominate, and will be substantially higher in poor countries. Poverty reduction therefore complements greenhouse gas emissions reduction as a means to reduce the impacts of climate change.

Joram Mayshar, Omer Moav, Zvika Neeman, Luigi Pascali, 11 September 2015

Conventional theory suggests that hierarchy and state institutions emerged due to increased productivity following the Neolithic transition to farming. This column argues that these social developments were a result of an increase in the ability of both robbers and the emergent elite to appropriate crops. Hierarchy and state institutions developed, therefore, only in regions where appropriable cereal crops had sufficient productivity advantage over non-appropriable roots and tubers.

Eugenio Cerutti, Stijn Claessens, Damien Puy, 09 September 2015

Recent economic and financial events, such as the ‘taper tantrum’, have highlighted again the relevance of global factors in driving capital flows to emerging markets. This column suggests that capital flows to emerging markets move in part due to global push factors. However, sensitivity to these push factors differs greatly across types of flows and emerging markets. How much push factors affect individual emerging markets depends on their local liquidity and the composition of their foreign investor bases. Countries relying more on international funds and global banks are significantly more affected by changes in push factors.

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