Tuesday, January 27, 2015

29 January 2015: The Effect of Privatization on Economic Performance in Transitional Economies

S. Numura
Osaka School of International Public Policy, Osaka University

Many eastern European countries have reformed their economic systems from a planned economy to a market economy and some of them succeed, and the others fail. It seems that there are two ways to secure the transition. The one is to execute large-scale privatization as quickly as possible. The other is to advance privatization gradually. The gradualists emphasize the importance of institutions such as legal system and financial infrastructure, and they would think that without the institutional infrastructure, privatization might lead to asset stripping rather than wealth creation.
How privatization could affect economic growth depends not only on its scale as well as speed, but also on economic policy adopted by countries and how much a given political regime has a wide range of options. Countries in Central and Eastern Europe and the former Soviet republics don’t have much a viable option, judging from recorded inflation levels and output losses. Given a severe breakdown in the central planning apparatus, they might not able to afford to postpone adjustment. In this case, it seems that rapid reform would be preferable to slow reform.
In our paper, we consider which approaches are best to secure the transition. We examine all the factors such as economic policies, initial conditions and quality of governance in our estimation. We believe our paper has made some advances over earlier literature untangling the various factors affecting success in transition.

Date: January 29, 2015
Time: 04:00 P.M.

NIPFP Auditorium, Ground Floor, Old Building
National Institute of Public Finance and Policy,
18/2 Satsang Vihar Marg, Special Institutional Area,
New Delhi-110067(INDIA)


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29 January 2015: India as a creditor: sterling balances, 1940-1956

Marcelo Abreu
Catholic Pontifical University of Rio de Janeiro

The British war effort during World War II depended on Lend Lease provided by the United States and the accumulation of sterling balances by neutrals and the Empire. Of the total sterling balances of £3,355 million outstanding in mid-1945 about 40% had been accumulated by India.

The paper seeks to evaluate comprehensively the costs incurred by India in the process of reducing the balances from independence until 1953 when releases of remaining balances were agreed within the scope of the Colombo Plan. The sources of accumulation of balances between 1939 and 1946 are examined. The use of the balances to repatriate Indian sterling debt until 1943 is described. The issue of a possible British “counterclaim” entailing a partial cancellation of Indian balances is analyzed. The complex Anglo-Indian sterling balance negotiations, which dragged between 1947 and 1953, are considered, including the disposal of balances through releases, transfer of assets to Pakistan resulting from the partition, settlement of pensions, purchase of military stores and British gold sales. The possible contribution of British divestment to reduce outstanding Indian sterling balances is assessed. The link between sterling balances accumulation and war time inflation in India, especially in 1942-43, and the claims of British “repudiationists” on the rise of prices affecting British military procurement in Indian are considered. The core of the paper centers on the evaluation of costs involved in the adoption of the measures agreed on the remuneration and disposal of Indian sterling balances. This will include comparisons with the cases of other sterling balance holders such as Portugal, Brazil and Argentina.

Date: January 29, 2015
Time: 03:00 P.M.

Seminar Room (First Floor)
Department of Economics,
Delhi School of Economics,
New Delhi-110007(INDIA)


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Friday, January 16, 2015

16 January 2015: Taxes: Price of Civilisation or Payment to Leviathan?

Lant Pritchett
Harvard Kennedy School and Centre for Global Development and
Yamini Aiyar
Accountability Initiative and CPR

There are two dominant narratives about taxation.  One view is taxes are the “price we pay for a civilised society” (Oliver Wendell Holmes Jr.).  In this view taxes are not a necessary evil (as in the pairing of “death and taxes”) but a positive good as more taxes buys more “civilisation.” The other view is that taxes are tribute to Leviathan—a pure involuntary extraction from those engaged in economic production to those who control power producing no reciprocal benefit.  In this view taxes are a bane of the civilised.   We consider the question of taxes as price versus tribute for contemporary India and we make three points.  First, most discussions of government budgets focus on allocations across sectors and activities and discuss the accounting cost of services provided.  But if the accounting cost exceeds the economic cost (the minimum at which the good or service could have been provided) then the difference can be considered “tribute.”  Second, the extent to which government engages in activities which would not have otherwise been carried out at all but which citizens value then the “price of civilisation” is maximised but when government budgets produced goods valued at zero (at whatever cost) then most taxpayers consider this tribute.  Third, the structure of social spending between “insurance” like programs which benefit all individuals at various states or stages of life and sharply targeted transfer programs determines whether most taxpayers consider taxes to fund these expenditures a price or tribute.  The notion of a “compulsory purchase” versus “tax” helps elucidate this difference and sharp targeting is seen as raising the price to any given individual of a given degree of individual benefit.  Taken together we argue India needs more taxes as price of civilisation but less taxes as tribute, which currently dominate.  There is a currently a sharp contradiction between the needs for greater revenue mobilisation for India to continue its progress and provide the increasingly sophisticated “civilisation” that is demanded with higher productivity and incomes and the perception of the “middle class” that most taxes are tribute.  This contradiction is created by a costly and yet ineffective state the solution to which cannot be a weaker state but a better state.

Date: January 16, 2015
Time: 12:45 P.M.

Conference Hall II
Centre for Policy Research,
Dharma Marg, Chanakyapuri,
New Delhi–110021(INDIA)


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