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Recent Working Papers
DO CHOICE & SPEED OF REFORMS MATTER FOR HUMAN RIGHTS DURING TRANSITION?
Krishna Chaitanya Vadlamannati
WP No. 927
(July, 2008)
Abstract: Conventional wisdom posits absence of systematic relationship between economic reforms and human rights. Taking the case of transition economies, Vadlamannati & Soysa (2008) shows significant positive relationship between economic reforms and
various forms of human rights. This brings us to the next question on the impact of choice and speed of reforms on human rights performance. In other words, does speed and choice of reforms increase or decrease government respect for human rights in transition economies? This is the question our paper tries to address. The Anglo-Saxon perspective is that speed of reforms lead to growth and development which inturn generates respect for human rights. While skeptics contend that rushing towards a free market economy would always be destructive as development process tends to be exclusive creating exogenous shocks leading to social and economic unrest. This leads to
domestic violence and conflicts, allowing governments to resort to repressive measures. We use a new method to construct ‘speed of reforms’ variable for transition economies for the period 1993 – 2006 to estimate its impact on all forms of human rights. Further, using the methodology of Wolf (1999) on discrete groupings of choice of reforms of transition economies, we classify the countries under radical, gradual and laggard
reformer groups. We measure the impact of speed of reforms on human rights performance conditioned by choice of reforms.
Our findings show that speed of reforms significantly improves government respect for all forms of human rights, while volatility in reforms is associated with human rights abuses. But the interesting finding is that, controlling for the speed of reforms attained, the choice with which the country has reformed plays pivotal role in determining human rights performance. While radical reforming countries are associated with better human
rights performance, gradualists and laggards share poor human rights performance.
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Jel Codes: P0, P21, P30, P36, P48
Keywords: Speed & choice of economic Reforms; Human rights; Transition economies.
SOCIOECONOMIC, INSTITUTIONAL & POLITICAL DETERMINANTS OF HUMAN RIGHTS ABUSES:
Krishna Chaitanya Vadlamannati
WP No. 926
(July, 2008)
Abstract: We conduct an econometric analysis of socioeconomic, institutional and political factors determining government respect for human rights within India. Using time series crosssectional
data for 28 Indian states for the period 1993 – 2002, we find that internal threat poised by number of social violence events, presence of civil war and riot hit disturbed areas are strongly associated with human rights abuses. Amongst socioeconomic factors, ‘exclusive’ economic growth, ‘uneven’ development, poor social development spending, youth bulges and differential growth rates between minority religious groups explain the
likelihood of human rights violations. Capturing power at the state and central level by Hindu national parties’ viz., Bharatiya Janata Party (BJP) and Shiv Sena, further help understand the incidence of human rights violations within India. We also address the possible endogenity problem between human development and human rights. Using a system of simultaneous equation, we find that improvement in human development have positive impact on government respect for human rights within
India.
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Jel Codes: R10, R11, R50, Z12
Keywords: Human rights; civil war; socioeconomic conditions; sub national politics;Human development; India.
Does the Entry Mode of Foreign Banks Matter for Bank Efficiency? Evidence from the Czech Republic, Hungary, and Poland
Ngoc-Anh Vo Thi; Dev Vencappa
WP No. 925
(July, 2008)
Abstract: This paper investigates the impact of specific modes of entry of foreign banks, i.e. greenfield investment versus merger and acquisition, on bank performance in three transition economies – the Czech Republic, Hungary, and Poland. We use stochastic
frontier analysis to model and measure the cost efficiency of banks. We adopt a maximum likelihood approach to estimation in which the variance of the one-sided error term is modeled jointly with the cost frontier, thus enabling us to retrieve efficiency
scores, as well as estimating the various determinants of X-inefficiency. We first find that foreign banks are generally more cost efficient than their domestic counterparts, a result
that confirms those of the existing empirical literature. We then turn our focus to comparative performance of greenfield banks versus merger and acquisition banks (M&As), and of M&As versus domestic banks. The results show that on average, M&As are surpassed in terms of efficiency by greenfields banks, but no cost efficiency difference is apparent between M&As and domestic banks. However, we find a strong age effect with respect to M&As which suggests that the evolution of M&As’ efficiency follows an inverse U-shape, that means M&As tend to get more inefficient following the acquisition, but approximately 4 years and a haft later, their efficiency starts to improve.
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Jel Codes: F36, G21, C01
Keywords: Banking, Transition Economies, Foreign Bank Entry, Greenfield, Mergers and Acquisitions, Stochastic Frontier Analysis, Cost Efficiency
IMPACT OF ECONOMIC REFORMS ON POVERTY – INDIAN EXPERIENCE
Krishna Chaitanya Vadlamannati
WP No. 924
(July, 2008)
Abstract: The purpose of this study is to investigate the impact of economic reforms on poverty levels in India during the period 1975 - 2006. We construct a comprehensive measure of
economic reforms index made up of seven subcomponents and percentage of population living below poverty line is used as proxy for aggregate level of poverty levels. The empirical study is conducted within the frame work of unit root, cointegration and Vector Error Correction Method tests. The results display long run equilibrium relationship between the two and the direction of causality flowing from reforms to poverty. Further, it is interesting to find that the current level of economic reforms is having a positive effect on poverty levels. But, the past level of reforms (stock of reforms) has a significant negative effect on poverty levels. Meaning, the immediate adjustment cost of current level of economic reforms is counterbalanced by the negative effects by the level of past reforms during the study period.
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Jel Codes: C22, I30, I32, O10
Keywords: Poverty; Economic Reforms; Unit root; Cointegration
INDIA & SOUTH ASIA – INDIAN ECONOMIC REFORMS & DIRECT FOREIGN INVESTMENTS: HOW MUCH DIFFERENCE DO THEY MAKE TO NEIGHBORS?
Krishna Chaitanya Vadlamannati
WP No. 923
(July, 2008)
Abstract: The unprecedented emergence of a country as large as India in South Asian region raises the issue of how it will affect neighboring economies interms of attracting FDI inflows. Does huge FDI inflows of India lead to ‘investment creating effect’ or otherwise for its neighbors? If so, do FDI inflows in India exploit the economic reforms process and thereby affect other economies in the region?
In this paper, we explore these issues empirically using data for four South Asian economies (Pakistan, Sri Lanka, Bangladesh and Nepal) from 1975 to 2006 and control for other key determinants of FDI inflows. Using Chantasasawat (2004) and Mercereau (2005) approach, we develop five different methodologies to create ‘India effect’ and examine its impact on FDI inflows of its neighbors.
Using all the five methods, the results suggest that the India effect is positively related to the levels of FDI inflows of its neighbors. The volatility in FDI inflows of India is not the most important factor in having a detrimental affect on inflows of FDI in the region. Finally, there is a positive spillover effect of Indian economic reforms on FDI inflows of India, which inturn is leading to increase in attractiveness of FDI of its neighbors. Also found is the negative effect of cost of reversal of Indian reforms on neighbors FDI inflows.
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Jel Codes: F20, O53
Keywords: FDI inflows, India & South Asia