In November 2013, the World Economic Forum released its ‘Outlook on the Global Agenda 2014’ in which it ranked widening income disparities as the second greatest worldwide risk in the coming 12 to 18 months. Based on those surveyed, inequality is ‘impacting social stability within countries and threatening security on a global scale.’ Oxfam shares its analysis, and wants to see the 2014 World Economic Forum make the commitments needed to counter the growing tide of inequality.
Some economic inequality is essential to drive growth and progress, rewarding those with talent, hard earned skills, and the ambition to innovate and take entrepreneurial risks. However, the extreme levels of wealth concentration occurring today threaten to exclude hundreds of millions of people from realizing the benefits of their talents and hard work.

Barry Z. Cynamon (Federal Reserve Bank of St. Louis) and Steven M. Fazzari (Washington University in St. Louis) - January 2014
Rising inequality reduced income growth for the bottom 95 percent of the income distribution beginning about 1980, but that group’s consumption growth did not fall proportionally. Instead, lower saving led to increasing balance sheet fragility for the bottom 95 percent, eventually triggering the Great Recession. We decompose consumption and saving across income groups. The consumption/income ratio of the bottom 95 percent fell sharply in the recession, consistent with tighter borrowing constraints. The top 5 percent ratio rose, consistent with consumption smoothing. The inability of the bottom 95 percent to generate adequate demand helps explain the slow recovery.

Otaviano Canuto and Swati Ghosh (editors)
The 2008 financial crisis highlighted the challenges associated with global financial integration, emphasized the importance of macro financial linkages and challenged pre-crisis financial stability regimes. Policies in both the macroeconomic and financial sector arenas are now being debated and reviewed, but the debate is currently taking place largely, if not exclusively, in the context of the advanced industrial countries. This is unfortunate, as emerging markets not only face different conditions and have key structural features that can have a bearing on the relevance and efficacy of these policies, but also have had greater experiences with policies aimed at ensuring financial stability.
This volume provides a thorough overview of the evolving macroeconomic and financial stability framework, and the policy options that exist within it. In particular, the volume aims to contribute to a deeper understanding of macro prudential tools, which address systemic risk. This is done in the context of advanced economies as well as emerging markets.

By Christopher Lakner and Branko Milanovic
The paper presents a newly compiled and improved database of national household surveys between 1988 and 2008. In 2008, the global Gini index is around 70.5 percent having declined by approximately 2 Gini points over this twenty year period. When it is adjusted for the likely under-reporting of top incomes in surveys by using the gap between national accounts consumption and survey means in combination with a Pareto-type imputation of the upper tail, the estimate is a much higher global Gini of almost 76 percent. With such an adjustment the downward trend in the Gini almost disappears. Tracking the evolution of individual countrydeciles shows the underlying elements that drive the changes in the global distribution: China has graduated from the bottom ranks, modifying the overall shape of the global income distribution in the process and creating an important global “median” class that has transformed a twin-peaked 1988 global distribution into an almost single-peaked one now. The “winners” were country-deciles that in 1988 were around the median of the global income distribution, 90 percent of whom in terms of population are from Asia. The “losers” were the country-deciles that in 1988 were around the 85th percentile of the global income distribution, almost 90 percent of whom in terms of population are from mature economies.

How has the meaning of economic development changed during the twenty years of WIDER’s existence? Two markers are Dudley Seers, “The Meaning of Development” (1967, 1979), for the earlier period and Amartya Sen, Development as Freedom (1999), for the later. Here the meaning of development also encompasses measures and strategies of development and approaches to its study. Moreover, I examine works beyond these markers to provide more detail of the two men’s views.
Both men were critical of the development literature of their times. For Seers, neoclassical economics had a flawed paradigm and dependency theory a lack of policy realism. After the fall of state socialism in 1989-1991, the ideological struggles among economists diminished. Neoclassicism’s Washington Consensus of the World Bank, IMF, and the U.S. government reigned (Williamson 1993, pp. 1329-1336; 1994, pp. 26- 28). Sen did not focus on ideological issues but, according to the Nobel prize committee, “restored an ethical dimension to the discussion of economic problems” such as development.

The paper compares perspectives on the meaning of development in the late 1970s and early 1980s to the contemporary period, with a focus on the works of Dudley Seers and Amartya Sen. Both men were critical of the development literature of their times. Seers was especially critical of neoclassicism’s universal claims and economic growth as the prime objective. For Sen, development involves reducing deprivation or broadening choice. One challenge for future work is for development economists, similar to Seers and Sen, to be more holistic, integrating economic development, human rights, and conflict reduction.
**This study is a revised version of the paper presented at the 17-18 June 2005 UNU-WIDER anniversary conference, ‘WIDER Thinking Ahead: The Future of Development Economics’, directed by George Mavrotas and Anthony Shorrocks.

Since 1978, the World Bank’s annual World Development Report (WDR) has provided in-depth analysis and policy recommendations on a specific and important aspect of international development from agriculture, the role of the state, economic growth, and labor to infrastructure, health, the environment, and poverty. In the process, it has become a highly influential publication that is consulted by international organizations, national governments, scholars, and civil society networks to inform their decision-making processes.
In this essay, Shahid Yusuf examines the last 30 years of development economics, viewed through the WDRs. The essay begins with a brief background on the circumstances of newly independent developing countries and summarizes some of the main strands of the emerging field of development economics. It then provides a sweeping examination of the coverage of the WDRs, reflecting on the key development themes synthesized by these reports and assessing how the research they present has contributed to policy making and development thought. The book then looks ahead and points to some of the big challenges that the World Bank may explore through future WDRs. The essay is followed by five commentaries, each written by a distinguished economist or development practitioner, which further explore this terrain from different perspectives.
Together, the contents of this volume provide an extraordinary and remarkably compact tour of development economics through, around, and beyond the WDR. It will be invaluable to anyone interested in the evolution of development economics over the past three decades as well as for students, scholars, and policy makers in the field of development.

"The lesson of the 20th century is that successful development requires markets underpinned by solid public institutions-institutions that protect property rights, regulate market participants, maintain macroeconomic stability, provide social insurance, and manage conflict. A variety of institutional setups could serve these functions, but any imported blueprints should be filtered through local practice and needs. International rules and the loan conditionality imposed by international financial institutions ought to leave room for development policies to diverge from the dominant orthodoxies. Today's advanced industrial countries owe their success to having developed their own workable models of a mixed economy. Developing nations need to fashion their own brands. Economic development will ultimately derive from homegrown strategies, not imitation of U.S.-style capitalism..."

An elementary definition of energy is "capacity of producing work". A rough definition of money is "the ability to make other people work". Money and its equivalents are the motive power of human action. This is admittedly cheap philosophy, but it works.
I believe in the usefulness of intuitive ideas in entering the tracks of precise concepts. In this paper I try to associate the ideas of classical, bona fide economists of the last two centuries, with the concepts of Thermodynamics.
In our material world we deal with fluxes of matter and energy, which are shaped by human action into economic phenomena. The economic phenomenon arises whenever we deal with finite resources. But what is infinite on this planet? And for the time being we have to deal only with this unique abode. The original endowment of Earth is in the form of reserves of matter and energy.
The transformable part of the reserves, duly identified, forms the resources. Part of these is transformable into consumable goods, which have a value. The value of things is conditioned by a complex of social, cultural and conceptual realities. It is beyond the scope of this review to consider the world as a whole.

By Paul Krugman – 1994 This is not exactly a paper about Albert Hirschman. In the first place, I am unqualified to write such a paper. My acquaintance with Hirschman's works is very limited. In essence, the Hirschman I know is the author of The Strategy of Economic Development and little else.
So I am in no position to write about his larger vision. Furthermore, while I am a great admirer of The Strategy of Economic Development, I do not think that it was helpful to development economics. That may sound paradoxical, but I'll try to explain what I mean as I go along. To put it briefly, however, I regard the intellectual strategy that Hirschman adopted in writing that book as an understandable but wrong response to what had become a crisis in the field of economic development.
Perversely, the very brilliance and persuasiveness of the book made it all the more destructive.
If this paper is not about Hirschman, what is it about? It is some reflections on two intertwined themes. One is the strange history of development economics, or more specifically the linked set of ideas that I have elsewhere (Krugman 1993) called "high development theory". This set of ideas was and is highly persuasive as at least a partial explanation of what development is about, and for a stretch of about 15 years in the 1940s and 1950s it was deeply influential among both economists and policymakers. Yet in the late 1950s high development theory rapidly unravelled, to the point where by the time I studied economics in the 1970s it seemed not so much wrong as incomprehensible. Only in the 1980s and 1990s were economists able to look at high development theory with a fresh eye and see that it really does make a lot of sense, after all...

This paper analyses a number of the challenges confronting developing countries seeking to use the WTO Doha negotiations to promote their economic growth and performance. A precondition for success is to have clear objectives and to take a proactive stance. But a key necessary condition for success will be to recognize the political economy of reform – both at home and in partner countries. Little progress will be made on key issues unless there are major stakeholders within countries that perceive the overall package to be beneficial. A number of possible focal points that could be used both as targets and as benchmarks for reciprocal negotiations are discussed, as is the need for mechanisms to increase the domestic ‘ownership’ of WTO agreements.

In this paper, we review the theoretical and empirical literature on capital flight. First, we discuss the measurement of capital flight. Next, we provide information on the magnitude as well as the ‘burden’ of capital flight for a selected set of developing countries in four regions of the world (South Asia, East Asia, Sub-Saharan Africa and Latin America). Moreover, we review the literature on the determinants of capital flight and provide an overview of empirical studies that have analysed the determinants of capital flight. In the light of the discussion of these determinants, we assess the prospects for flight capital reversal. We conclude by proposing some policy measures to stem continued capital flight and induce capital flight reversal.

Despite the fast catching-up in ICT diffusion experienced by most EU countries in the last few years, information technologies have so far delivered little productivity gains in Europe. In the second half of the past decade, growth contributions from ICT capital rose in six EU countries only (the UK, Denmark, Finland, Sweden, Ireland and Greece). Quite unlike the United States, this has not generally been associated to higher labour or total factor productivity growth rates, the only exceptions being Ireland and Greece. Particularly worrisome, the large countries in continental Europe (Germany, France, Italy and Spain) showed stagnating or mildly declining growth contributions from ICT capital, together with definite declines in TFP growth compared to the first half of the 1990s. It looks like that the celebrated ‘Solow paradox’ on the lack of correlation between ICT investment and productivity growth has fled the US to migrate to Europe.

> The world lottery market now amounts to at least US$126 billion in sales. World market sales for all gaming products (public, charitable and commercial) total some US$1 trillion, of which Internet gambling accounts for US$32 billion. This paper assesses the prospects for harnessing this large and growing market for the purposes of development finance by means of a global lottery and a global premium bond (with the successful UK scheme providing a model for the latter). Each has different strengths: the global lottery can add to the supply of grant finance for development, while the global premium bond could be an attractive savings instrument for ethical investors. The paper concludes that global versions of both a lottery and a premium bond are viable and complementary in mobilizing more development finance.