CEP Conference: The Emergence of China and India in the Global Economy

Date: Thursday 3rd July - Saturday 5th July 2008

This three day conference debated all aspects of the impact of the emerging economic powers on Europe and the US and the changes within India and China itself.

A highlight of the conference was a policy panel consisting of:

Martin Wolf of the Financial Times
Alan Winters, former head of World Bank Research
Athar Hussain of LSE’s Asia Observatory
Peter Schott, Professor at Yale.

John Van Reenen, Director of CEP chaired a lively discussion. He kicked off by asking three questions about lessons for growth, the effect of globalisation on inequality and the death of the political coalition for Globalisation.

Download Policy Panel Questions (PDF)
Listen to Policy Panel audio file (WAV)

The panelists focused on the fact that the lessons to be learned from China's and India's development may be limited for other countries. A key factor was ceratinly an emphasis on exports, a degree of opening up of markets to imports and some liberalisation of the economy. But China has embarked on a more classical development path through manufacturinge exports, whereas India's growth has been startlingly service-driven: a very new mode of development.

There was a dispute over the role of trade in driving inequality in the rich countries. Martin Wolf argued for technology having the major role whereas the other panelists saw a greater role of trade. Van Reenen's paper actually showed that the two were inter-related: trade with China appeared to have stimulated faster technical progress in the West.

Although the panel agreed that the prospects for the Doha round were grim, Martin Wolf pointed to the fact that globalisation had created footlose multinationals with much less vested interest in protectionism in any one country. This by itself undermined one of the key lobbies against trade - vested domestic business interests.

For full details on the conference, including the programme and conference papers, please visit the event webpage at http://cep.lse.ac.uk/_new/events/event.asp?id=50

Shelling renewable energy

Shell, the oil company, announced today that it wants to sell its share in the ambitious London Array off-shore wind farm project. So far not much about the reasons for this are known publicly.

What is very clear however is the glaring gap in UK renewable energy policy between ambition and reality. Despite having one Europe's best locations for wind and ocean power the only statistic the UK is leading in this area is the difference between the government's target and actual renewable generation capacity (Figure 1).

So what is the problem with Britain's renewable support policy? Government ministers were quick to point out that the London Array project is receiving unprecedented amounts of government support in terms of investment subsidies and streamlined planning procedures. Renewable support policy is a jungle with governments everywhere employing a confusing mix of instruments to support it. A measure that is conspicuously absent (indeed expressively disliked by the government) from the current and planned UK policy mix are feed in tariffs, however.

Feed in tariffs seem like a neat instrument in theory. The government fixes a price markup on the current market price of renewable energy that has to be paid for by providers of dirty conventional energy. This is neat because it leaves to the market to decide which technologies and locations make economic sense. Effectively they are a tax on providers of dirty energy whose revenue is used to subsidise clean energy providers. Unlike other environmental taxes they are by design free of the suspicion to be just another excuse for the government to take more money from us as the government is not getting involved in the financial transfers. More than other policy instruments, feed in tariffs avoid uncertainty over future revenues for potential investors. This should particularly encourage entry of smaller investors (such as micro generators) and investors new to the energy market (such as farmers with land in windy areas) who have no vested interests and market power in conventional energy markets and technologies.

But who cares about theory? Does it work in practice? Figures 2 and 3 are intriguing. Figure 2 shows the share of wind energy and (new) renewables (wind, ocean and solar) in electricity generation across various OECD countries with some form of nationwide feed in tariff system. We see that not all countries with feed in tariffs have necessarily high levels of electricity generation from renewables.

However, no country that doesn’t have feed-in tariffs has a high share of renewables. This simple look at the figures would thus suggest that feed in tariffs are a necessary but not sufficient condition for the take up of renewable electricity generation.

Call for Papers: The Emergence of China and India in the Global Economy (Deadline for submission: 30 March 2008)

The Emergence of China and India in the Global Economy

4th-6th July 2008

Venue: Centre for Economic Performance, London School of Economics

Conference Sponsored by

• Centre for Economic Performance (CEP)
  
• Centre for International Governance Innovation (CIGI)
  
• Centre for Economic Studies (CESifo)
  

Organizers
Stephen Redding, John Van Reenen and John Whalley

Keynote Speakers
Chang-Tai Hsieh (Berkeley)
Peter Schott (Yale)

Papers are invited for a 3-day conference on the emergence of China and India in the Global Economy, to be held at the Centre for Economic Performance at the London School of Economics on 4th-6th July 2008. The general themes of the conference are the causes and consequences of the acceleration of economic development in China and India in recent decades, including the implications for other developing and developed countries around the world.

Topics of particular interest include: trade and financial liberalization, growth and inequality; structural change and economic development; institutions and economic performance; enterprise reform; international trade, foreign direct investment and outsourcing; intellectual property rights; trade and innovation; and the restructuring of production in developed countries.

One session will be specifically dedicated to Young Researchers (who received their Phd no more than 8 years ago).

Deadline for Paper Submission: 30th March 2008

Please submit papers electronically as pdf files to Jo Cantlay (j.m.cantlay@lse.ac.uk), indicating China-India Conference in the subject line of the e-mail.

All accommodation for accepted speakers will be covered by the conference and limited funds are available for travel. Please indicate with your submission whether you wish to apply for these funds.

SMOKING DURING PREGNANCY: A clarification of the findings of the recent study by Centre for Economic Performance researcher Emma Tominey

The findings of my publicly funded research on the effects of smoking during pregnancy on babies’ birth weighthave been widely misinterpreted.

To be absolutely clear, the study does not conclude that it is harmless for mothers to smoke during pregnancy.

On the contrary, I find that mothers who smoke during pregnancy will give birth to babies of poorer health. Mothers should therefore be encouraged to quit for the entire duration of their pregnancy.

My analysis of data on the lives of 6,500 children and their mothers indicates a negative impact of maternal smoking on babies’ health whatever the level of education a mother has attained. But smoking is especially damaging for mothers who leave school by the age of 16. These are also the mothers most likely to smoke during pregnancy.

This means that policy should be targeted towards these mothers, who need extra help to quit smoking. It does not mean that more educated"middle class" women are not at risk - it merely means that their risk is lower than that of less educated women.

And it is certainly not the case that mothers can smoke for the first five months of pregnancy, as smoking during pregnancy damages the health of the child.

The largest ill effects of smoking are experienced by babies born to mothers who smoke for the entire nine months of pregnancy. On the other hand, if mothers alter their lifestyle during the first five months, which includes quitting smoking, then they can improve the birth weight of their child.

One reason for this finding could be that babies gain most of their body weight during the last trimester of pregnancy. To understand how the harm accumulates during pregnancy, we would have to look at other outcomes as well as at birth weight, such as child asthma and sudden infant death syndrome, which other studies show to be driven by maternal smoking during pregnancy.

There are important policy messages to draw from this research. Smoking cessation policies alone are not enough; help is also needed for mothers to address many other issues including nutrition and alcohol avoidance. Lower educated mothers should be a particular focus.

Finally, it is important that mothers keep trying to quit smoking throughout their entire pregnancy, as there is more time to help smoking mothers quit than we thought.

Emma Tominey

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Notes

1. In brief: Smoking During Pregnancy (http://cep.lse.ac.uk/pubs/download/cp241.pdf) by Emma Tominey was published in CentrePiece Volume 12 Issue 3 Winter 2007/08. CentrePiece is the magazine of the Centre for Economic Performance. It is published three times a year. Cover price £5; subscription rates on application to +44 (0)20 7955 6963.
   
   
2. The Centre for Economic Performance is an independent ESRC funded research centre based at the London School of Economics. Its members are from the LSE and a wide range of universities within the UK and around the world.
   
   
3. For more information contact Emma Tominey on mobile number 07723363680; Email: e.p.tominey@lse.ac.uk; e.tominey@ucl.ac.uk or Helen Durrant on +44 (0)20 7955 7395; Email: h.durrant@lse.ac.uk.

CentrePiece Winter Edition 2007/2008 Out Now

The Psychology Of Savings
Volume 12 issue 3 available at http://cep.lse.ac.uk/centrepiece

Our schools are becoming more socially segregated. The life chances of children from poor families are lower nowadays. Immigrants are threatening the jobs of British-born workers. Blunt assertions of this kind are commonplace in the language of politicians and commentators from across the political spectrum. But how true are any of these claims? Which ones reflect reality and which are myths?

The answers can only come from taking a proper look at the evidence. Much of the work of researchers at the Centre for Economic Performance (CEP) aims to do just that, gathering data across a wide range of social phenomena and rigorously applying the tools of economic analysis to see what we can learn about such pressing policy concerns as education, inequality and immigration.

An underlying theme in this CentrePiece is the value of research evidence for informing public debate. For example, on whether high- and lowachieving children are being educated in separate schools, Stephen Gibbons and Shqiponja Telhaj find that there is strong segregation by ability but it does not appear to be increasing over time.

And Marco Manacorda and colleagues find that while immigration does have some labour market effects, they seem to be on the wages of earlier migrants.

On intergenerational mobility, a series of CEP studies has revealed that it has indeed fallen between the cohort of British children who grew up in the 1960s and early 1970s and those who grew up in the 1970s and 1980s. But we still know little about changes since then or what has happened in other countries. Here, Maia Güell and colleagues explain a new technique for measuring the importance of family background for people's outcomes in later life.

One area in which it is particularly common to hear bold statements unencumbered by evidence is the impact of computers. Information technology has led to the 'death of distance', various pundits have asserted. Computers may be in every workplace but they've failed to make us more productive, argue others. Three studies reported here touch on these issues. One uses patent citations to see if innovations are flowing more quickly between countries. Another examines whether the rise in inequality is linked to firms' use of new technology. And the third investigates whether computers have helped US police departments to fight crime. As always, your feedback on CentrePiece is welcome. And look out for other CEP efforts to summarise the latest research evidence in the policy analyses available on our website:
http://cep.lse.ac.uk/centrepiece

Romesh Vaitilingam
Editor
romesh@compuserve.com

8th February 2008: CEP Macro Conference: The Theory of Economic Growth

Date: Friday 8 February 2008

Time: 09.30am - 5.00pm

Venue: CEP Conference Room, R405, 4th Floor, LSE Research Laboratory, Portugal St, London WC2A 2HD. Link to map

Overview: This conference will present new results on the mechanics of the growth process, structural transformation, income volatility growth, capital flows to growing economies and other features of the growth process.

We are delighted to have as our honoured guest for this event, Professor Robert Lucas. Professor Lucas is the John Dewey Distinguished Service Professor in Economics at the University of Chicago and one of the world's leading authorities on monetary theory, growth and development. He was awarded the Nobel Prize for Economics in 1995. He will be giving the the 2008 Economica Phillips Lecture on Schooling and Growth on Thursday 7th February.

Full details of the lecture can be found on the LSE Events webpage.

Entry to the Macro Conference is by invitation only. For more information, or to register please contact Jo Cantlay at j.m.cantlay@lse.ac.uk or see the conference website at http://cep.lse.ac.uk/_new/events/event.asp?id=47

Immigration to the UK: The Evidence From Economic Research

A new policy analysis will be published on Wednesday 19 December 2007 by the Centre for Economic Performance (CEP).

Objective, brief and non-technical, CEP Policy Analyses are written by some of our expert researchers and draw on a range of our past and current research.

A summary of the new policy analysis, written by CEP senior research fellow Professor Jonathan Wadsworth, is below. The full report will be available online from Wednesday 19 December 2007 along with previous policy analyses at: http://cep.lse.ac.uk/briefings

In the meantime, to see the full report, please contact
Helen Durrant on 020-7955-7395 email: h.durrant@lse.ac.uk;
or
Romesh Vaitilingam on 07768-661095 email: romesh@compuserve.com.

Best wishes,
Romesh Vaitilingam

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CEP POLICY ANALYSIS:
Immigration to the UK: The Evidence From Economic Research

• Immigration to the UK has been rising since 1995. According to the Labour Force Survey, by 2007, 12.5% of the UK’s working age population was born abroad, up from around 8% in 1995. There are now 4.3 million adults of working age in the UK who were born abroad.
  
  
  
• The UK has a lower share of immigrants in its total population (9.3%), than Australia (23.6%), France (10%), Germany (13%) or the United States (12.8%).
  
  
  
• Immigrants are arriving from many more countries than in the past. Poland is now the country that contributes the biggest proportion of new arrivals (9%), followed by India (8%) and then South Africa (5%).
  
  
  
• Compared with people born in the UK, immigrants are, on average, younger, better educated and concentrated in London. New immigrants are more educated, on average, than immigrants who arrived in the past.
  
  
  
• Aside from arrivals from other members of the European Union, the number of new immigrants is controlled by the government through a work permit system, now based on a ‘points’ system.
  
  
  
• Immigrants from poorer and less democratic countries assimilate faster into a British identity. Part of this can be explained by a greater tendency to take up citizenship.
  
  
  
• There are potential economic benefits associated with migration, especially to fill gaps in the UK labour market – where there are shortages of workers, whether high skilled or low skilled. While there may be costs to particular groups, there is little evidence of an overall negative impact on jobs or wages.
  
  
  
• The rate at which the wage and employment prospects of immigrants converge, on average, to those of the UK-born population appears to have changed little over time.