Table Of ContentBeyond Macroeconomic Stability
Advances in Labour Studies
Advances in Labour Studies is a wide-ranging series of research titles from the
International Labour Office (ILO), offering in-depth analysis of labour issues
from a global perspective. The series has an interdisciplinary flavour that reflects
the unique nature of labour studies, where economics, law, social policy and
labour relations combine. Bringing together work from researchers from around
the world, the series contributes new and challenging research and ideas that aim
both to stimulate debate and inform policy.
Published in the series:
THE LABOUR MARKETS OF EMERGING ECONOMIES: HAS GROWTH
TRANSLATED INTO MORE AND BETTER JOBS? (by Sandrine Cazes and Sher
Verick)
BEYOND MACROECONOMIC STABILITY: STRUCTURAL TRANSFORMATION
AND INCLUSIVE DEVELOPMENT (edited by Iyanatul Islam and David Kucera)
WAGE-LED GROWTH: AN EQUITABLE STRATEGY FOR ECONOMIC RECOVERY
(edited by Marc Lavoie and Engelbert Stockhammer)
REGULATING FOR DECENT WORK: NEW DIRECTIONS IN LABOUR MARKET
REGULATION (edited by Sangheon Lee and Deirdre McCann)
SHAPING GLOBAL INDUSTRIAL RELATIONS: THE IMPACT OF INTERNATIONAL
FRAMEWORK AGREEMENTS (edited by Konstantinos Papadakis)
Forthcoming in the series:
CREATIVE LABOUR REGULATION: INDETERMINACY AND PROTECTION IN AN
UNCERTAIN WORLD (edited by Deirdre McCann, Sangheon Lee, Patrick Belser,
Colin Fenwick, John Howe and Malte Luebker)
TOWARDS BETTER WORK: UNDERSTANDING LABOUR IN APPAREL GLOBAL
VALUE CHAINS (edited by Arianna Rossi, Amy Luinstra and John Pickles)
Beyond Macroeconomic
Stability
Structural Transformation and
Inclusive Development
Edited by
Iyanatul Islam and David Kucera
© International Labour Organization 2013
Softcover reprint of the hardcover 1st edition 2013 978-1-137-37924-5
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ISBN 978-1-349-47866-8 ISBN 978-1-137-37925-2 (eBook)
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Contents
List of Tables and Figures vii
Acknowledgements xi
Notes on Contributors xii
Introduction 1
Iyanatul Islam and David Kucera
Part I Limits of the Conventional Macroeconomic
Policy Framework
1 Dispensing Macroeconomic Policy Advice to Developing
Countries: The IMF’s Article IV Consultations 31
Iyanatul Islam, Ishraq Ahmed, Rathin Roy and Raquel Ramos
2 Fiscal Consolidation: Issues and Evidence 72
Anis Chowdhury and Iyanatul Islam
3 Should Developing Countries Target Low, Single-Digit
Inflation to Promote Growth and Employment? 98
Sarah Anwar and Iyanatul Islam
Part II Structural Transformation and the
Development of Capabilities
4 Structure Matters: Sectoral Drivers of Growth and
the Labour Productivity–Employment Relationship 133
David Kucera and Leanne Roncolato
5 Creating Productive Capacities, Employment and Capabilities
for Development: The Case of Infrastructure Investment 198
Irmgard Nübler and Christoph Ernst
6 Investing in People: Extending Social Security through
National Social Protection Floors 228
Christina Behrendt
Part III Inequality, Wages and their Macroeconomic
Consequences
7 Wages and Growth in Open Economies: A Policy Dilemma? 263
Massimiliano La Marca and Sangheon Lee
v
vi Contents
8 Keeping up with the Joneses or Keeping One’s
Head above Water? Inequality and the Post-2007 Crisis 288
David Kucera, Rossana Galli and Fares Al-Hussami
Index 326
List of Tables and Figures
Tables
I.1 Effect of real exchange rate (RER) movements on
employment 1
1.1 Public debt and growth: revisiting the evidence 40
1.2 Nature of IMF advice on fiscal adjustment 42
1.3 Fiscal statistics and the countries in the Article IV
consultations 46
1.4 Tests of statistical significance (at 5 per cent level) of
different mean values of debts/deficits 46
1.5 Coefficient of variations (CV) to measure dispersion/
uniformity in projections 47
1.6 IMF on inflation projections in 27 countries 53
1.7 Nature of IMF advice on inflation targeting 54
1.8 Nature of employment analysis in the Article IVs:
some country-specific examples 60
1.9 Nature of poverty analysis in the Article IVs:
some country-specific examples 60
1.10 Financing needs for infrastructure 61
1.11 Financing needs for pro-poor spending 62
3.1 Inflation targeting countries (emerging and
developing countries) 101
3.2 IMF policy statements on inflation in 19 developing
countries: examples from the Article IV
consultation process 104
3.3 Cross-country threshold studies 106
3.4 Country-specific threshold studies 108
3.5 Median growth and inflation rates (2000–2007) 110
3.6 Inflation targeting developing country and
comparator country list 122
4.1 Specifications of studies in literature review 139
vii
viii List of Tables and Figures
4.2 Aggregate labour productivity, output and
employment growth by regional average (%) 149
4.3 Correlation coefficients (Pearson) between aggregate
labour productivity, output and employment growth 151
4.4 Aggregate employment, working age population and
labour force growth by country (%) 152
4.5 Covariance coefficients between sectoral contributions
to aggregate labour productivity growth and aggregate
labour productivity growth (%) 156
4.6 Industry-level contributions to aggregate labour
productivity and employment growth for
Asian countries (%) 158
4.7 Industry-level contributions to aggregate labour
productivity and employment growth for
Latin American and Caribbean countries (%) 161
4.8 Within-sector and employment reallocation effects
on aggregate labour productivity growth by regional
average (%) 167
4.9 Industry-specific labour intensity by regional average
(unweighted) 170
4.A.1 Industry-level contributions to aggregate labour
productivity and employment growth for countries
not in Asia or Latin America and the Caribbean (%) 178
4.A.2 Within-sector versus reallocation effects on aggregate
labour productivity growth by country 190
5.1 Impact of an improved road at the local level in Kenya 206
7.1 Profi t-led paradise – strategic form 275
7.2 Wage-led paradise – strategic form 277
7.3 No distributional effects – strategic form 278
7.4 Prisoner’s dilemma – strategic form 281
7.5 Pure coordination problem – strategic form 283
8.1 Changes in consumption shares in the United States by
household income quintiles from 1990–2009 311
Figures
I.1 Defining employment intensity 14
1.1 IMF policy recommendations for 50 countries 37
List of Tables and Figures ix
1.2 IMF policy recommendations on employment generation,
poverty reduction and social protection 59
2.1 Initial debt to GDP ratio (1981) and subsequent real GDP
growth (annual % change) average of 1981–2010 74
2.2 Median growth and debt to GDP ratios, 1981–2009 75
2.3 Highest and lowest median initial debt to GDP ratios and
median GDP growth, 1981–2009 76
2.4 Debt trend – number of countries with different debt
levels, 1981–2009 77
2.5 Debt and growth relationship (movement versus shift) 80
3.1 Long-run median inflation rates, recent inflation versus
median targeted inflation rate 102
3.2 Growth and inflation relationship (linear) 105
3.3 Growth and inflation relationship (nonlinear) 107
3.4 Inflation–growth relationship (1980–1989) 110
3.5 Inflation–growth relationship (1990–1999) 111
3.6 Inflation–growth relationship (2000–2007) 112
3.7 Inflation targeting countries and non-inflation
targeting countries: inflation rate 112
3.8 Inflation targeting countries: growth–inflation
relationship (2000–2007) 113
3.9 Non-inflation targeting countries: inflation–growth
relationship (2000–2007) 113
3.10 Co-movement of inflation and food price index 114
3.11 Inflation and poverty relationship 120
3.12 Change in median least developed country interest rates 121
3.13 Macro indicators (2000–2007) 123
3.14 Labour productivity 123
3.15 Labour market indicators (2000–2007) 124
5.1 Global product and technology space, capabilities
and capacities 201
5.2 Partial backward linkages of economic sectors,
Indonesia, 2010 208
6.1 Share of recipients of a contributory or non-contributory
pension and active contributors to a pension scheme,
regional estimates (weighted by population), latest
available year 234
