Band 2, Heft 2

Why has schooling not countered the pervasive rises in wage inequality driven by skill-biased technical change? Using data and a model of directed technical change in which developing countries acquire technology licenses from abroad, we show technological change is skill-biased in the South simply because it is in the North. This causes permanently rising wage inequality in the South. We model expanded schooling access as producing relatively educated new cohorts of labor market entrants. This makes the market for skill-biased technologies more attractive, which generates accelerated skill-biased technical change, which leads to higher wage inequality and possibly stagnant unskilled wages.

Quality standards are rapidly gaining importance as a result of increasingly globalized trade. Rich country quality requirements are said to have detrimental effects on poor producers in developing countries because they would introduce new trade barriers, prevent small and poor producers from participating in high quality supply chains, and allow multinationals to extract rents. We analyze under which conditions the introduction of quality standards in global value chains may benefit poor producers in developing countries, taking explicitly into account key characteristics of these value chains. We investigate the effects of competition and development and discuss a series of policy implications.

Over the past two decades, global inequality changed little despite significant structural shifts. Sustained growth in China and India lifted millions out of poverty, while many African countries fell behind. This paper assesses the distribution effects of a continuation of these trends. Growth in China and India will still drive the convergence of per capita incomes at the global level. Millions of Chinese and Indian consumers will join the global middle class. However, these positive developments will be somewhat offset by widening income disparities within countries, as fast growth is often characterized by high urbanization and growing demand for skills.

Financial markets have become globally interdependent, yet their governance has remained national at the core. This friction encumbers crisis management and distorts incentives for crisis prevention. The Vienna Initiative, formed to manage the fallout from the global crisis in the countries of Central and Eastern Europe (CEE), offers an alternative coordinated, multi-stakeholder governance framework. A critical prerequisite for such a regime is a coordinating agent, or ‘anchor tenant’, that is deeply vested in the stability of transnational financial systems, but does not directly compete with market actors or regulators. Lessons for more effective governance of financial interdependence are discussed.

This paper examines the discovery process of a recent and extremely successful non-traditional export activity, namely, the Ethiopian flower industry. This industry emerged as a result of entrepreneurial experimentation, whereby private entrepreneurs formed an 'advocacy coalition' to address uncertainties and coordination problems during the start-up phases. As a result of their lobbying, the Ethiopian government launched a strategic coordination with the industry, identifying key areas for intervention and setting a five-year target for the sector's development. This study highlights the importance of a shared vision and good relations between the government and private sector for development of this new industry.

This paper presents the emergence of G20 summits from their roots in the G8 summit and G20 ministerial forum, along with the sequence of G20 summits through the Cannes Summit of November 2011. It explores the trajectory of these three key global forums, and the dynamics carrying forward the G20 summit as a major new mechanism of global governance. This history is in a continuing process of evolution, and is itself defining the issues and challenges facing the global economy and political leaders of G20 countries.