Showing papers on "Purchasing power published in 2007"

The next 4 billion : market size and business strategy at the base of the pyramid

Abstract: Four billion low-income people, a majority of the world's population, constitute the base of the economic pyramid. New empirical measures of their behavior as consumers and their aggregate purchasing power suggest significant opportunities for market-based approaches to better meet their needs, increase their productivity and incomes, and empower their entry into the formal economy. The 4 billion people at the base of the economic pyramid-all those with incomes below $3,000 in local purchasing power-live in relative poverty. Their incomes in current U.S. dollars are less than $3.35 a day in Brazil, $2.11 in China, $1.89 in Ghana, and $1.56 in India.1 Yet together they have substantial purchasing power: the BOP constitutes a $5 trillion global consumer market.

The long march of history: Farm wages, population, and economic

Abstract: SUMMARY The article forms three series for English farm workers from 1209‐1869: nominal day wages, the implied marginal product of a day of farm labour, and the purchasing power of a day’s wage in terms of farm workers’ consumption. These series suggest that labour productivity in English agriculture was already high in the middle ages. Furthermore, they fit well with one method of estimating medieval population that suggests a peak English population c. 1300 of nearly 6 million. Lastly, they imply that both agricultural technology and the general efficiency of the economy were static from 1250 till 1600. Economic changes were in these years entirely a product of demographic shifts. From 1600 to 1800, technological advance in agriculture provided an alternative source of dynamism in the English economy. he wage and price history of pre-industrial England is uniquely well documented. England achieved substantial political stability by 1066. There was little of the internal strife that proved so destructive of documentary history in other countries. In addition, England’s island position and relative military success protected it from foreign invasion, except for the depredations of the Scots along the northern border. England further witnessed the early development of markets and monetary exchange. In particular, though surviving reports of privately paid wages exist only from 1209, the payment of money wages to workers was clearly already well established by that date. A large number of documents with such wages and prices survive from then on in the records of churches, monasteries, colleges, charities, and government. These documents have been the basis of many studies of pre-industrial wages and prices. But comparatively few of these studies have focused on the wages of the majority of workers in England before 1800, those in agriculture. And none of the farm wage studies give a consistent measure

Product and Market Development for Subsistence Marketplaces: Consumption and Entrepreneurship beyond Literacy and Resource Barriers

Abstract: In August 2006, 85 academicians and practitioners from industry and the nonprofit sector came together on the campus of the University of Illinois at Chicago for a conference unlike others in recent management research history. This conference focused on the subsistence marketplace and its constituents – the billions of individuals and families living in substandard housing, with limited or no education; having limited or no access to sanitation, potable water, and health care; and earning minimal incomes. Subsistence consumers and entrepreneurs have been largely ignored by contemporary marketing and management research and practice, but are poised to become a driving force in 21st century economic and business development. It is expected that as many as 1 billion new consumers wielding discretionary income will enter global markets before 2020. In addition, even among those consumers who lack discretionary income, it is expected that they will be much more active in the marketplace in the near future, because of expanded access to products and information through the Internet and wireless technologies (Davis & Stephenson, 2006). Moreover, the combined purchasing power of these consumers, already in the trillions of dollars, is likely to grow at higher rates than that of consumers in industrialized economies. These factors come together to suggest that consumer markets will need to adjust radically to the needs and demands of these emerging markets over the next 2 to 3 decades, even though companies and scholars across the business disciplines know very little about subsistence consumers. It was this need for knowledge about subsistence marketplaces that inspired the conference and the research presented here.

Mind the gap! International comparisons of productivity in services and goods production

Abstract: In this paper, we make a comparison of industry output, inputs and productivity growth and levels between seven advanced economies (Australia, Canada, France, Germany, the Netherlands, United Kingdom and United States). Our industry-level growth accounts make use of input data on labour quantity (hours) and composition (schooling levels), and distinguish between six different types of capital assets (including three information and communication technology (ICT) assets). The comparisons of levels rely on industry-specific purchasing power parities (PPPs) for output and inputs, within a consistent input-output framework for the year 1997. Our results show that differences in productivity growth and levels can be mainly traced to market services, not to goods-producing industries. Part or the strong productivity growth in market services in Anglo-Saxon countries, such as in Australia and Canada, may be related to relatively low productivity levels compared with the United States. In contrast, services productivity levels in continental European countries were on par with the United States in 1997, but growth in Europe was much weaker since then. In terms or factor input use, the United States is very different from all other countries, mostly because or the more intensive use of ICT capital in the United States.

Real and distributive effects of petroleum price liberalization: the case of indonesia

Abstract: The effect of higher petroleum prices on the aggregate price level, real growth, and income distribution is appraised within a multisector computable general equilibrium (CGE) model. A reduction in the government subsidy raises petroleum prices and production costs throughout the economy. Consumer demand, production, and income decline as output prices increase and consumer purchasing power decreases. The model is applied to and calibrated for Indonesia. The simulated results predict a slight increase in the price level and a slight decrease in output. An important result is that urban household groups will be the most significantly affected by the subsidy reduction.

Information sources used by older adults for decision making about tourist and travel destinations

Abstract: Over the past decade, the older market has emerged as an extremely important one because of its increased purchasing power for most consumer goods and services. The tourism and leisure industry is also targeting people aged 65 years and older, because many possess a relatively large share of discretionary money that they want to spend on travel. This has resulted in increasing attention by the mass media and the advertising industry in particular. This paper discusses the main types of information sources that are used by older adults when they make decisions about tourist and travel destinations, and particularly focuses on the importance of word-of-mouth sources and personal experiences. It also explores the influence of the mass media on trip decision making of older adults, and discusses the importance of brochures, magazines and television as information sources for older adults. Finally, it critiques the lack of senior models in advertising campaigns for travel products that are aimed at the older market.

Information technology investment and operational performance in purchasing: The mediating role of supply chain management practices and strategic integration of purchasing

Abstract: Purpose – The objective of this paper is to study the relationship between information technology (IT) investments and performance in the purchasing function. A study is made not only of whether this relationship exists, but also of the mediating role played by both purchasing practices and the strategic integration of purchasing.Design/methodology/approach – Statistical analyses of the data provided by 141 purchasing managers of medium and large Spanish companies in three industrial sectors.Findings – The analyses support the idea that IT investments exert a positive effect on purchasing operational performance. Nonetheless, the results show that this effect arises because IT allows companies to implement certain purchasing practices and, partially, because it facilitates greater strategic integration of the purchasing function.Originality/value – The results not only reveal the positive effect of IT at the functional level, but they also help us to understand how this effect is produced.

Patterns of Long Term Growth in Sub-Saharan Africa

Abstract: Using the most recent purchasing power parity data for 44 sub-Saharan African countries, this paper examines the characteristics of long run growth in Africa between 1975 and 2005. The authors investigate the following issues: cross-country income structure, income convergence, the country level distribution of income, growth and income persistence, and formation of convergence clubs.

The illusion of community participation: experience in the irregular settlements of Bogotá

Abstract: The study focuses on community participation among the poor of Bogota, Colombia. It explores the changing relationships between poor communities, local politicians and the city government before and after the institutional reforms and changing approach to development that occurred during the 1990s. The case studies were conducted in six irregular settlements, all developed in contravention of the city’s planning regulations. Data were collected using a sample household survey and in-depth interviews with community leaders, local inhabitants and the representatives of outside organisations. In the 1990s, clientelistic practices became less effective to push the regularisation process. City programmes toward irregular settlements became more holistic and benefited from better coordination between the different public entities. As a result, the inhabitants became more discriminating in identifying the most effective strategies for obtaining the services and infrastructure that they required. Competent government intervention was ultimately the most important factor in furthering the regularisation process. However, regularisation could not be achieved without community participation. Community involvement was important both before and after a settlement was recognised. The community had to find the money to put down a deposit before the service agencies would install services. This required not only a minimum level of economic resources but also firm community leadership. The study also shows that apparently contradictory decisions made by the different communities were highly rational. Whether the inhabitants were willing to pay for services depended on the benefit they expected in return. Their criteria changed through the consolidation process because their most urgent needs changed. Today, after the pricing system of public services changed, access to services depends mostly on users’ purchasing power and not on the collective negotiation led by the JAC leaders. In the 1990s, under the new constitution with its laws protecting citizen’s rights, ‘participation’ of citizens in the political arena as well as their right to obtain basic services was clearly recognised. Under this legal framework, community participation gives the poor a voice with which they can present claims as well as criticise the negligence of public administration. However, the protests of the inhabitants against increased public service charges show that the community-based organisations sometimes still have reason, and the ability, to mobilise the local people as a final resort.

Who Benefits from the Food-for-School Program and Tindahan Natin Program: Lessons in Targeting

Abstract: The prevalence of hunger in the Philippines prompted the government to launch its hunger mitigation initiative in November 2005. The initiative consisted of two programs: the Food-for-School Program (FSP) and the Tindahan Natin Program (TNP). The FSP belongs to a class of social safety nets called conditional cash or in-kind transfers. There is a growing interest on these instruments worldwide because of evidence that they have not only been useful in providing assistance to poor families but more so because they have been found effective in securing investments in human capital among the poor. On the other hand, the TNP is a targeted food price subsidy program. Like other food price subsidy programs, it operates by lowering the price of certain food items. The lower food price effectively results in increased purchasing power that translates into an increase in the real income of beneficiaries. The budget allocation for these programs has been increasing in recent years. One interesting question to ask now is: Who benefits from the government’s hunger mitigation program? The answer to this question has a large bearing on both the effectiveness and efficiency of the program. Given this perspective, the paper assesses the 1) distribution of the benefits from the FSP and TNP in 2006, and 2) implications on targeting of the use of public schools and day care centers as distribution points. In the process, it also draws some lessons in targeting.

Oil Shocks and Real U.S. Income

Abstract: The analysis explains how previous oil shocks have affected real U.S. income. Real income differs from aggregate economic output (GDP) because it includes the purchasing power losses associated with more expensive imported petroleum. Real income declines immediately during the same quarter as the oil price shock as opposed to the output effects, which are lagged over several quarters. These immediate losses can be significant, reaching as much as 1.7% of the baseline value in the same quarter, for a doubling of crude oil prices. Expanding coverage to include purchasing power losses allows policy analysts to evaluate a range of different policy instruments that can influence oil prices, such as the building and release of the strategic petroleum reserve.

Not Dutch Disease, it's China Syndrome

Abstract: This paper empirically investigates how the Canadian economy has evolved following the rise in commodity prices and appreciation of the Canadian dollar that began in 2003. The adjustment in the manufacturing industry has garnered the greatest attention because it has borne the brunt of job losses. However, the adjustment of the manufacturing industry has not been straightforward. Rather, a complex reallocation has been taking place within manufacturing that has been predominantly due to the integration of emerging nations into the global economy. The increased commodity prices and falling manufactured prices caused by this integration have affected durable and non-durable manufacturing industries differently. Non-durable manufacturers have tended to see their competitiveness eroded and their output has tended to fall. Durable manufacturers, on the other hand, have increased output in response to the resource boom and increased demand in general. The result has been stable manufacturing output overall, accompanied by a re-orientation of manufacturing output away from non-durables and toward durables. The appreciated dollar and higher commodity prices have also led to a more widespread industrial reallocation in Canada. The higher commodity prices have started a resource boom, particularly in Alberta. The boom has led to rising resource industry employment, while manufacturing employment declined, and to rising service-sector employment. It has contributed to inter-provincial migration, and has greatly increased the purchasing power of Canadian incomes as terms of trade have improved.

Notes About the Production and Supply-Demand of Fruit and Vegetables in the Countries of the European Union

Abstract: This study analyses the international fruit and vegetables trade, especially concentrating on the European Union. We will start with a rough description of the framework of growing, importing and exporting countries. Afterwards, we will take a closer look at the situation of these countries in order to identify suppliers and buyers. The most important conclusion to be drawn is that there is a strong concentration of commerce in areas with higher purchasing power, as a result of which the competition will increase and the traditional markets may be saturated.

Market Visions: Expenditure Surveys, Market Research, and Economic Planning in the New Deal

Abstract: Materialistic desire may be the engine of capitalism, but those seeking to redress eco nomic inequities in America have also found it valuable for building and strengthening unions, regulating production and retail practices, attacking monopolies and business collusion, and championing redistributive economic policies.1 Consumption is the uni versal virtue for capitalism; what better weapon to trim that system's excesses? But, prote an like capitalism itself, the tactics used to muster the reformist potential of consumption have also evolved. Thus prior to World War I, consumption-based calls for higher wages relied heavily on a mixture of ethical and loosely physiological claims as labor activists implicitly or explicitly defined an appropriate (and continually advancing) "American standard of living" and demanded wages sufficient to reach that level. As the 1920s pro gressed, union leaders and their liberal allies emphasized a different justification: rising industrial productivity would require increasing working-class "purchasing power" to provide an expanded market for the abundance of goods now rolling out of American factories. This shift in justifications benefited labor activists in multiple ways: It coun tered conservative arguments that a minimum "living wage" was economically unsound; it moved the debate from a moral grounding (which had often proved ineffective) to one of pragmatic business self-interest; and it helped labor representatives build alliances with moderate or liberal mass-producers and retailers who recognized a similar logic, such as the auto manufacturer Henry Ford, General Electric's chairman Owen D. Young, and the department store magnate Edward Filene.2 It also bound proponents more tightly to

Exploring online shoppers' e-trust in China

Abstract: B2C e-commerce in China is surprisingly not as prosperous as people expect in the current stage. The lacking of consumers’ trust is believed to be one of the major handicaps for further development and growth of B2C e-commerce in China. This study segmented online shoppers with different e-trust levels based on their past online purchasing experience and income. This study proves that online shoppers in China with higher e-trust levels are more likely to have higher purchasing power. It is suggested that the most effective marketing strategy for an e-commerce firm targeting the shoppers in China is to attract and promote their first online purchasing experience. Further, China’s middle class has proven to be major online purchasers. E-firms who could gain their trust eventually will be more profitable in the cyberspace.

Africa and natural resources : managing natural resources for sustainable growth

Abstract: After an overview of the stylised facts about Africa’s natural resources, we discuss the problems and challenges facing the management of natural resources in Africa. We highlight the paradox of plenty, which is that many resource-rich countries in Africa have bad growth performance. They typically also have low investment rates and high degrees of inequality. The curse is especially bad for point-source resources such as oil, gas and diamonds and less for diffuse resources. We point out on the basis of cross-country evidence that this paradox can be resolved if institutions are good, financial systems well developed and the economy open to international trade. We argue that the quintessential nature of the paradox of plenty arises from the very high volatility of commodity prices. This further strengthens the case for good financial systems. We subsequently focus on an analytical framework for the assessment of the management of natural resource wealth. We point out that rapacious rent seeking and the lack of effective mineral property rights has led to negative genuine saving rates and the gradual erosion of the wealth of many African countries. Although there may be a rationale for negative genuine saving if countries are investing heavily in new innovative exploration technology, this hardly seems the case for Africa. The challenge for policymakers in Africa is therefore how to get more incentive-compatible contracts and transparent accounts of mineral extraction. A key question is how to manage natural resource wealth and whether it should be used to save and invest or to boost purchasing power of the people. If it is spent, the challenge is to spend the resource revenues on productive purposes. We conclude with a discussion of the role of China and India in the new ‘scramble’ for Africa’s natural resources.

What type of inflation target

Abstract: For much of monetary history, inflation targeting was unnecessary. (1) There was no need to worry about constraining the central bank's inflationary proclivities because no central bank existed. The quantity of basic money was constrained by the mints' commitment to full-bodied gold and silver coinage (at least where the mint-owners lacked monopoly status or chose not to exploit that status through debasement). The quantity of bank-issued money was constrained by the commercial banks' commitment to gold- and silver-redeemability for banknotes and deposits. Together these commitments prevented excessive monetary expansion and thereby price inflation. (2) Today (since 1971) the commitments are gone, and a substitute is needed. Constraining Central-Bank Discretion Inflation targeting has been much discussed in recent years as a proposal for constraining the Federal Reserve's monetary policy-making. As proposed constaints on central banking go, it is relatively weak. Inflation targeting doesn't abolish the central bank, and--at least in the well-known version recommended by Bernanke et al. (1999)--doesn't even fasten a strict rule on it. In both the Bernanke version and in the versions actually practiced in other developed countries, the central bank authorizes inflation within a range of positive rates, typically 1 to 3 percent. At the midpoint rate of 2 percent, inflation is higher than experienced historically under commodity-standard regimes, and is too high to promote optimal money-holding. As David Laider (2006: 3) has recently pointed out, "A 2 percent inflation rate is a far cry from anyone's (or at least any retiree's) idea of price-level stability: this seemingly low rate in fact reduces the purchasing power of a fixed-money income at a noticeable pace ... over the duration of the current 'low inflation" regime [since 1991 Canada has had an inflation target of "under 2 percent" and an average inflation rate of 2 percent per year] the [Canadian] dollar has lost a quarter of its purchasing power." But, to emphasize the half-full part of the glass, 2 percent inflation is better than 10 percent inflation, and a predictable 1 to 3 percent is better than an unpredictable 2 to 20 percent. Even if, in Bernanke's language, inflation targeting is a "framework" for "constrained discretion" rather than a rule, it is nonetheless a small step toward a rule for constraining the central bank, and constraining the central bank is a step toward the first-best regime of doing without a central bank. I would characterize Bernanke-style inflation targeting as an overly timid step in the right direction. My fear is not that inflation targeting will "tie the Fed's hands" too tightly, but that it will perpetuate our long-standing failure to tie them tightly enough. Under the present discretionary regime, we don't know what monetary policy to expect. At his confirmation hearing, Ben Bernanke told the Senate Banking Committee: "With respect to monetary policy, I will make continuity with the policies and policy strategies of the Greenspan Fed a top priority." No doubt Bernanke meant to reassure us. Unfortunately, we never knew what Greenspan's policy strategy was, and in his confirmation hearing Bernanke didn't tell us. Given that Bernanke, in contrast to Greenspan, has been an outspoken advocate of explicit inflation targeting, it will be interesting to see whether Bernanke will actually move to implement inflation targeting. Skeptics may note that Greenspan in his younger days was an outspoken advocate of the gold standard, but as Fed chairman he never took any steps toward re-instituting it. On the other hand, Greenspan reportedly commented once in a Congressional hearing that he would have been the only member of the Board of Governors favoring a return to gold. (3) Bernanke doesn't have the problem of being in a minority of one, particularly since his co-author Frederic Mishkin has joined the Board and the last of the Clinton appointees has departed. …

Social Security Cost-of-Living Adjustments and the Consumer Price Index

Abstract: Social Security - Old-Age, Survivors, and Disability Insurance (OASDI) - benefits are indexed for inflation to protect beneficiaries from the loss of purchasing power implied by inflation. In the absence of such indexing, the purchasing power of Social Security benefits would be eroded as rising prices raise the cost of living. Recently, the consumer price index used to calculate the cost-of-living-adjustment (COLA) for Social Security (OASDI) benefits has come under increased scrutiny. Some argue that the current index does not accurately reflect the inflation experienced by seniors and that COLAs should be larger. Others argue that the measure of inflation underlying the COLA has technical limitations that cause it to overestimate changes in the cost of living and that COLAs should be smaller. This article discusses some of the issues involved with indexing Social Security benefits for inflation and examines the ramifications of potential changes to COLA calculations.

What Makes Cities Healthy

Abstract: The benefits of good health to individuals and to society are strongly positive and improving the health of the poor is a key Millennium Development Goal. A typical health strategy advocated by some is increased public spending on health targeted to favor the poor and backed by foreign assistance, as well as by an international effort to perfect drugs and vaccines to ameliorate infectious diseases bedeviling the developing nations. But if the objective is better health outcomes at the least cost and a reduction in urban health inequity, the authors' research suggests that the four most potent policy interventions are: water and sanitation systems; urban land use and transport planning; effective primary care and health programs aimed at influencing diets and lifestyles; and education. The payoff from these four in terms of health outcomes dwarf the returns from new drugs and curative hospital-based medicine, although these certainly have their place in a modern urban health system. And the authors find that the resource requirements for successful health care policies are likely to depend on an acceleration of economic growth rates which increase household purchasing power and enlarge the pool of resources available to national and subnational governments to invest in health-related infrastructure and services. Thus, an acceleration of growth rates may be necessary to sustain a viable urban health strategy which is equitable and to ensure steady gains in health outcomes.

Retail Energy Prices and Consumer Expenditures

Abstract: In the absence of a major disruption in spending by consumers and firms, the effects of energy price shocks on the economy will be small. In this paper, we quantify the direct effect on real consumption of (1) unanticipated changes in discretionary income, (2) shifts in precautionary savings, and (3) changes in the operating cost of energy-using durables. We also evaluate the evidence for asymmetries in the response of real consumption that would be expected, for example, if shifting expenditure patterns cause sectoral reallocations. Formal tests do not reveal compelling evidence for asymmetries in the response of consumer spending, aggregate unemployment, or consumer expectations. The absence of a reallocation effect in particular, despite a comparatively large effect of energy price shocks on the consumption of new domestically produced automobiles, is consistent with the small share of the U.S. auto industry in domestic real GDP and employment. It is also consistent with the symmetric behavior of real consumption in 1979 (when energy prices rose sharply) and in 1986 (when they fell equally sharply). This finding has important implications for theoretical models of the transmission of energy price shocks. Our analysis also sheds light on the declining importance of energy price shocks for the U.S. economy. We not only document the extent to which consumption aggregates have become less responsive to energy price shocks since the mid-1980s, but we trace the declining importance of energy price shocks relative to the 1970s to changes in the composition of U.S. automobile production and the declining overall importance of the U.S. automobile sector.

Consumer Price Inflation across the Income Distribution in South Africa

Abstract: By monitoring the price changes experienced by some representative household, consumer price indices provide an important measure of changing purchasing power within a given economy. Group price indices offer one method of more accurately reflecting the inflation experiences of specific types of households, such as poor households, elderly households or households with children, for example. This study uses expenditure data from the 2000 Income and Expenditure Survey and price indices from Statistics South Africa to calculate inflation rates for expenditure deciles for the period 1998 to 2006. As a result, price indices and inflation rates calculated on the basis of these weights can not accurately reflect the rates of inflation experienced by what would be viewed as the ‘average’ household.

Commercialization of Science in a Neoliberal World

Abstract: In a well-known passage of The Great Transformation Karl Polanyi wrote: But labor, land, and money are obviously not commodities; the postulate that anything that is bought and sold must have been produced for sale is emphatically untrue in regard to them. In other words, according to the empirical definition of a commodity they are not commodities. Labor is only another name for a human activity which goes with life itself, which in turn is not produced for sale but for entirely different reasons, nor can that activity be detached from the rest of life, be stored or mobilized; land is another name for nature, which is not produced by man; actual money, finally, is merely a token of purchasing power which, as a rule, is not produced at all, but comes into being through the mechanism of banking or state finance. None of them are produced for sale. The commodity description of labor, land, and money is entirely fictitious.1 Polanyi showed in detail that the self-regulating market economy that emerged in the nineteenth century was organized around the commodity fiction of labor, land, and money, which were the essential factors of production for industrial capitalism. Without that fiction, industrial capitalism could not have come about. He also argued that commodification of land, labor, and money would destroy the livelihood, society, and environment of human beings, as we know them.

World social health insurance: strengthening health systems in low-income countries.

Abstract: The paper by Ooms et al. [1] is very timely and stimulating. It launches the debate on how to finance globally the right to health care in low-income countries. This is a most welcome step, going beyond the usual aspirational rhetoric. I would like to contribute to the development of this idea. First: the name. I fear that “World Health Insurance” may create confusion. Health insurance can be a pure risk-sharing mechanism without built-in solidarity between rich and poor, healthy and less healthy, or between old and young. But the concept of social health insurance—as the statutory health insurance systems in much of continental Europe are usually referred to—is intrinsically based on such solidarity, which certainly is one of the values underpinning Ooms' proposal. I therefore propose the name “World Social Health Insurance.” Second: the contribution by low-income countries. Ooms et al. propose 15% of government budget as a fair contribution, the so-called Abuja target. I fear, however, that this target does not create the right incentive for governments in low-income countries, many of whom are reluctant or unable to tax their citizens, even the richer ones, and fail to create a decent tax basis. Consequently, some governments have extremely lean budgets, even below 20% of gross domestic product (GDP) [2], while the World Bank estimates that at least some 30% of GDP is needed to sustain a well-functioning state. I therefore think that calculating the contribution of low-income countries to their countries' health system as 4% or 5% of GDP would constitute a fairer burden sharing mechanism. Third: the contribution of high-income countries. Ooms et al. propose that rich countries adopt a burden sharing similar to their contribution to World Bank's IDA 14 (the 14th replenishment of the International Development Association). This normalizes the low commitment of donors such as the United States, contributing in absolute terms hardly more than the United Kingdom or Japan, while its total GDP is much larger. I therefore think that for high-income countries, a contribution linked to total GDP would be fairer: e.g., 0.15%, which would be a bit more than one-fifth of the 0.7% target that most OECD countries have committed to as total overseas development assistance. Alternatively, and more in line with the concept of social health insurance, high-income countries could dedicate a share of domestic health expenditure (e.g., 1%) to world social health insurance. With total health expenditure in the United States now reaching US$2,000 billion [3], this modest 1% would already come close to the total needs as estimated by Ooms. Lastly: operationalization. How to operationalize the massive scale-up of services proposed, given present human resource constraints and institutional capacities, is still a huge challenge. Whether it is best to take inspiration from the experience with rounds of competitive proposals, followed by performance-related disbursement, as the Global Fund uses, or whether the proposal of the Global Alliance for Vaccines and Immunisation (GAVI) to link disbursement to strategic government plans and sector-wide approaches would be more successful, remains to be explored. We sincerely hope that the idea launched by Ooms et al. catches on, so that health services in low-income countries can rapidly expand. This can be seen, as Garrett convincingly argues [4], as an expression of a moral duty, as a form of public diplomacy, or as an investment in self-protection. Whatever the drive, there are enough reasons to start preparing it backed by long-term reliable funding, fairly shared between all stakeholders, according to their purchasing power.

Social Security Cost-of-Living Adjustments and the Consumer Price Index

Abstract: OASDI benefits are indexed for inflation to protect beneficiaries from the loss of purchasing power implied by inflation. In the absence of such indexing, the purchasing power of Social Security benefits would be eroded as rising prices raise the cost of living. By statute, cost-of-living adjustments (COLAs) for Social Security benefits are calculated using the Bureau of Labor Statistics (BLS) Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Some argue that this index does not accurately reflect the inflation experienced by the elderly population and should be changed to an elderly-specific price index such as the Experimental Consumer Price Index for Americans 62 Years of Age and Older, often referred to as the Consumer Price Index for the Elderly (CPI-E). Others argue that the measure of inflation underlying the COLA is technically biased, causing it to overestimate changes in the cost of living. This argument implies that current COLAs tend to increase, rather than merely maintain, the purchasing power of benefits over time. Potential bias in the CPI as a cost-of-living index arises from a number of sources, including incomplete accounting for the ability of consumers to substitute goods or change purchasing outlets in response to relative price changes. The BLS has constructed a new index called the Chained Consumer Price Index for All Urban Consumers (C-CPI-U) that better accounts for those consumer adjustments. Price indexes are not true cost-of-living indexes, but approximations of cost-of-living indexes (COLI). The Bureau of Labor Statistics (2006a) explains the difference between the two: As it pertains to the CPI, the COLI for the current month is based on the answer to the following question: "What is the cost, at this month ' market prices, of achieving the standard of living actually attained in the base period?" This cost is a hypothetical expenditure-the lowest expenditure level necessary at this month's prices to achieve the base-period's living standard.... Unfortunately, because the cost of achieving a living standard cannot be observed directly, in operational terms, a COLI can only be approximated. Although the CPI cannot be said to equal a cost-of-living index, the concept of the COLI provides the CPI's measurement objective and the standard by which we define any bias in the CPI. While all versions of the CPI only approximate the actual changes in the cost of living, the CPI-E has several additional technical limitations. First, the CPI-E may better account for the goods and services typically purchased by the elderly, but the expenditure weights for the elderly are the only difference between the CPI-E and CPI-W. These weights are based on a much smaller sample than the other two indices, making it less precise. Second, the CPI-E does not account for differences in retail outlets frequented by the aged population or the prices they pay. Finally, the purchasing population measured in the CPI-E is not necessarily identical to the Social Security beneficiary population, where more than one-fifth of OASDI beneficiaries are under age 62. Likewise, over one-fifth of persons aged 62 or older are not beneficiaries, but they are included in the CPI-E population. Finally, changes in the index used to calculate COLAs directly affect the amount of benefits paid, and as a result, projected solvency of the Social Security program. A switch to the CPI-E for the December 2006 COLA (received in January 2007) would have resulted in an average monthly benefit $0.90 higher than that received. If the December 2006 COLA had been adjusted by the Chained CPI-U instead, the average monthly benefit would have been $4.70 less than with current indexing. Any changes to the COLA that would cause faster growth in individual benefits would make the projected date of insolvency sooner, while slower growth would delay insolvency. Hobijn and Lagakos (2003) estimated that switching to the CPI-E for COLAs would move projected insolvency sooner by 3-5 years. A projection by SSA's Office of the Chief Actuary estimated that annual COLAs based on the Chained C-CPI-U beginning in 2006 would delay the date of OASDI insolvency by 4 years.

Not Dutch Disease, It's China Syndrome

Abstract: This paper empirically investigates how the Canadian economy has evolved following the rise in commodity prices and appreciation of the Canadian dollar that began in 2003. The adjustment in the manufacturing industry has garnered the greatest attention because it has borne the brunt of job losses. However, the adjustment of the manufacturing industry has not been straightforward. Rather, a complex reallocation has been taking place within manufacturing that has been predominantly due to the integration of emerging nations into the global economy. The increased commodity prices and falling manufactured prices caused by this integration have affected durable and non-durable manufacturing industries differently. Non-durable manufacturers have tended to see their competitiveness eroded and their output has tended to fall. Durable manufacturers, on the other hand, have increased output in response to the resource boom and increased demand in general. The result has been stable manufacturing output overall, accompanied by a re-orientation of manufacturing output away from non-durables and toward durables. The appreciated dollar and higher commodity prices have also led to a more widespread industrial reallocation in Canada. The higher commodity prices have started a resource boom, particularly in Alberta. The boom has led to rising resource industry employment, while manufacturing employment declined, and to rising service-sector employment. It has contributed to inter-provincial migration, and has greatly increased the purchasing power of Canadian incomes as terms of trade have improved.

India and the Dutch Economy: Stylised Facts and Prospects

Abstract: India's impressive economic performance over the past few decades has had a positive net impact on the Dutch economy. Peculiar for India is its relatively strong position on the global markets for services. Imports of cheap Indian products have slightly improved Dutch households' purchasing power. Read also the accompanying press release . Increasing Indian exports did not have a noticeable impact on the pace of restructuring in the Netherlands. Nor did this development lead to a marked widening of Dutch wage differentials. Concerning global competition, Indian export products tend to be more complements than substitutes for Dutch export products. The large Indian market yields interesting investment opportunities for Dutch firms. Over the next few decades, the Indian economy is expected to continue its rapid expansion. Increasing trade with India will continue and is expected to enhance Dutch welfare in the upcoming years and will continue to be associated with modest increases in competition and continued restructuring on some markets.

Retail market prices of fonio reveal the demand for quality characteristics in Bamako, Mali

Abstract: African consumers' expectations concerning quality of food products are great. In spite of constrained budgets, we showed that market retailed prices revealed quality preferences of the consumers and not only production costs. In very poor countries like Mali, food innovation is limited by the very low purchasing power of the population. However, technological food product or process innovations are possible and sometimes valuable. Demand driven innovation may lead to open new markets, opportunities for small and medium scale enterprises and to improve consumers' welfare. Based on this assumption, technical research was done to provide new food products. In this paper, using both sensory test and a hedonic price approach, we estimated consumer demand for different characteristics of fonio, a West African cereal, and showed that poor consumers do have quality requirements and actually pay for it. We showed that the shadow or hedonic price paid for quality characteristics is small but significant. A comparison of sensory test and market study showed a convergence between what people say they prefer and what they really pay for. Results were consistent and showed directions for technological improvement of the product and its production process. The Partial Least Square method was used to estimate hedonic prices of the different modalities of fonio quality traits. This method was interesting since it solved the Ordinary Least Square method's colinearity problems.