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AbstractConcerns about socially uneven progress and inequality have regained public attention (including that of many populist politicians). The purpose of this paper is to identify the economic policies as well as economic factors that facilitate inclusive development. This paper is a first attempt to empirically estimate the drivers of inclusive development. For our empirical assessments, we apply the Multidimensional Inclusiveness Index suggested by Dörffel and Schuhmann (2022) in a panel OLS regression setup with fixed effects (FE) and GMM estimations for up to 178 countries and a time frame ranging from 1980 to 2018. In FE regressions, we find robust associations with inflation as well as financial sector development in the short and long-run, trade/GDP in the long-run. The GMM results point only to inflation and trade as significant drivers in the long-run and investment in the short run. These results suggest that accessible and well-functioning financial markets paired with low rates of inflation and high trade openness take on a more critical role than government spending. Our results suggest that rudiments of the Washington consensus could still guide the promotion of inclusive development.

Concerns about socially uneven progress and inequality have regained public attention (including that of many populist politicians). The purpose of this paper is to identify the economic policies as well as economic factors that facilitate inclusive development. This paper is a first attempt to empirically estimate the drivers of inclusive development. For our empirical assessments, we apply the Multidimensional Inclusiveness Index suggested by Dörffel and Schuhmann (2020) in a panel OLS regression setup with fixed effects (FE) and GMM estimations for up to 178 countries and a time frame ranging from 1980 to 2018. In FE regressions, we find robust associations with inflation as well as financial sector development in the short and long-run, trade/GDP in the long-run. The GMM results point only to inflation and trade as significant drivers in the long-run and investment in the short run. These results suggest that accessible and well-functioning financial markets paired with low rates of inflation and high trade openness take on a more critical role than government spending. Our results suggest that rudiments of the Washington consensus could still provide guidance for the promotion of inclusive development.

AbstractEconomic globalization has increasingly affected countries across the world, through participation in global value chains (GVCs) and helping to lift over one billion human beings out of extreme poverty since 1990. However, there are still too many people living in poverty, even in rich countries, and so concerns over exclusion of certain groups from the gains of economic globalization are rising internationally. Using the concept of inclusiveness based on Amartya Sen's capability approach, we find that G20 countries perform better than non-G20 countries. We then review how economic theory contributes to understanding the causes of (missing) inclusiveness by reviewing the literature pertaining to five drivers: growth, technology, structural change, trade, and political economy. Overall, domestic policies tailored to specific national circumstances are the main instruments for promoting inclusiveness. The danger is that in pursuing these domestic policies, states may undermine international arrangements constituting the liberal economic order. We argue that the liberal economic order generates insufficient global governance because there is always a fraction of countries opposing global policy coordination as they believe it harms them, and that this group of countries is increasing propelled by the surge of populism. This dynamic implies that global governance focus will increasingly shift to "coalitions of the willing", rendering multilateralism an increasingly challenging, and a la carte, proposition.

We analyze the effect of 'milestones' on reaching a long-term target, which if missed implies dramatic payoff risks. In our experiment, a cumulative threshold public goods game, milestones are captured by intermediate contribution targets on the way to the final target. Missing the final target leads to a probabilistic total loss for all players, and missing intermediate targets may lead to the same consequences even earlier. The additional intermediate targets feature environmental protection as a process rather than a contest for reaching a final target. The regulating agency is Nature, although political agencies might implement a similar regulation. We test milestone effects by varying the size of milestones in addition to changing the marginal productivity of individual contributions and the payoff risk. Although we observe some milestone effects, additional regulation by milestones on its own does not guarantee that targets are reached. [Copyright Elsevier B.V.]

Monetary policy rules have been considered as fundamental protection against inflation. However, empirical evidence for a correlation between rules and inflation is relatively weak. In this paper, we first discuss likely causes for this weak link and present the argument that monetary commitment is not credible in itself. It can grant price stability best if it is backed by an adequate assignment of economic policy. An empirical assessment based on panel data covering five decades and 22 OECD countries confirms the crucial role of a credibly backed monetary commitment to price stability. ; Diese Arbeit untersucht den Einfluss der Glaubwürdigkeit von Geldpolitik auf die Preisstabilität. Eine regelgebundene Geldpolitik wird häufig als ein wichtiges Instrument zur Erreichung von Preisstabilität angesehen. In empirischen Studien ist der Zusammenhang zwischen einer regelgebundenen Geldpolitik und der Inflation jedoch häufig nur relativ schwach ausgeprägt. In der vorliegenden Arbeit werden daher zunächst Gründe für diesen schwachen Zusammenhang diskutiert und argumentiert, dass eine regelgebundene Geldpolitik nicht per se auch glaubwürdig ist und daher insbesondere dann Preisstabilität erzeugen kann, wenn sie in ein adäquates wirtschaftspolitisches und institutionelles Umfeld eingebettet ist. Im empirischen Teil der Arbeit wird auf Basis dieser Argumentation eine einfache Proxy-Variable für geldpolitische Glaubwürdigkeit definiert und in einer Panel-Analyse deren Einfluss auf die Inflationsperformance von 22 OECD-Ländern geschätzt. In der Analyse kann bestätigt werden, dass ein enger Zusammenhang zwischen geldpolitischer Glaubwürdigkeit und Preisstabilität besteht.

Monetary policy rules have been considered as fundamental protection against inflation. However, empirical evidence for a correlation between rules and inflation is relatively weak. In this paper, we first discuss likely causes for this weak link and present the argument that monetary commitment is not credible in itself. It can grant price stability best if it is backed by an adequate assignment of economic policy. An empirical assessment based on panel data covering five decades and 22 OECD countries confirms the crucial role of a credibly backed monetary commitment to price stability.

The countries comprising the Southern African Customs Union (SACU) are currently not very integrated into global value chains (GVCs), potentially missing out on important development opportunities. Accordingly, we explore high level options for promoting their integration. Given East Asia's spectacular success with integrating into GVCs, we first assess the probability that SACU can copy their flying geese pattern. That was initiated by Japanese multinational corporations (MNCs) investing in successive EastAsian countries thereby becoming the lead geese, to be joined subsequently by MNCs from other countries. We argue that the conditions for pursuing a flying geese approach are difficult to replicate in SACU. Therefore, we proffer and explore the proposition that South Africa could serve as the gateway for harnessing MNC geese flying from third countries into the SACU region, in time propelling regional development through knowledge and investment spillovers, and serving as a conduit into GVCs. However, there may be substantial obstacles to deepening this integration potential. Other African gateways are emerging as alternatives to South Africa. And some SACU governments would prefer to build regional value chains (RVCs) rather than prioritise GVC integration. We argue that RVCs are complements to GVCs. SACU countries, excluding South Africa, may not attract many world leading MNCs since their markets are small, but could attract smaller regional players from South Africa or elsewhere. Thus building RVCs in the short run could assist with integration into GVCs in the longer run. Overall, this requires harnessing South African and MNC geese to the South African gateway, in a mutually complementary strategy.

The countries comprising the Southern African Customs Union (SACU) are currently not very integrated into global value chains (GVCs), potentially missing out on important development opportunities. Accordingly, we explore high level options for promoting their integration. Given East Asia's spectacular success with integrating into GVCs, we first assess the probability that SACU can copy their flying geese pattern. That was initiated by Japanese multinational corporations (MNCs) investing in successive East Asian countries thereby becoming the lead geese, to be joined subsequently by MNCs from other countries. We argue that the conditions for pursuing a flying geese approach are difficult to replicate in SACU. Therefore, we proffer and explore the proposition that South Africa could serve as the gateway for harnessing MNC geese flying from third countries into the SACU region, in time propelling regional development through knowledge and investment spillovers, and serving as a conduit into GVCs. However, there may be substantial obstacles to deepening this integration potential. Other African gateways are emerging as alternatives to South Africa. And some SACU governments would prefer to build regional value chains (RVCs) rather than prioritize GVC integration. We argue that RVCs are complements to GVCs. SACU countries, excluding South Africa, may not attract many world leading MNCs since their markets are small, but could attract smaller regional players from South Africa or elsewhere. Thus building RVCs in the short run could assist with integration into GVCs in the longer run. Overall, this requires harnessing South African and MNC geese to the South African gateway, in a mutually complementary strategy.