China has experienced unprecedented economic growth over the past 20 years, with some reports estimating that China’s per capita GDP and consumption each increased by a factor of four between 1990 and 2010. Surveys of Chinese citizens suggest, however, that the quality of life in China has not increased by the same magnitude as the country’s economy.
It is a commonplace that bribery seems rife in the developing world. In richer countries, however, legal lobbying is the preferred method of operation for those trying to overcome rules. As a country’s industry advances, the preferred mode of transaction might naturally switch to lobbying. So why does corruption seem more stubbornly persistent in the developing world, despite economic progress?
One theory for how to best help developing countries is to increase their inward flow of foreign direct investment (FDI). However, identifying the conditions that best attract such investment flow is difficult, since foreign investment varies greatly across countries and over time. Knowing what has influenced these decisions and the resulting trends in outcomes can be helpful for governments, non-governmental organizations, businesses, and private donors looking to invest in developing countries.
A number of criteria have been developed to measure countries’ degree of “good government”; these can include the capacity to receive aid, manage foreign direct investment or initiate trade agreements. Many of these criteria have a fixed model of what constitutes “good” and “bad” government, and the judgments that follow can have real-world consequences.
Research has shown that fair-trade transactions — in which relatively wealthy global consumers purchase goods produced by less affluent producers — appeal to consumers’ ethical and altruistic impulses and can provide much-needed resources to producers. Inquiry has been limited, though, on the extent to which overall living standards among producers are truly improved. Marketing claims about the purported benefits of fair trade and its contribution to “ethical globalization” rest on related premises.
Over the two decades prior to the onset of the global financial crisis, real disposable household incomes increased an average of 1.7% a year in the 34 countries represented by the Organisation for Economic Co-operation and Development. As this rise in earnings occurred, however, so too did a rise in income inequality — a pattern that raises questions about imbalances in growth around the world.
