Tuesday, April 3, 2012

Links of Interest (2012-04-03)

Nepal clears China plan for $1.6 bn hydroelectric dam

A parliamentary panel cleared the way for a Chinese company to build a $1.6 billion hydroelectric plant in Nepal, the Himalayan republic's biggest foreign investment programme, Nepali officials said on Monday. Nepal's Maoist-led government signed an agreement with China's Three Gorges International Corp in February allowing the firm to construct the 750-megawatt West Seti dam in the northwest.The project, set to be completed in 2019, is expected to ease the crippling power shortage in Nepal whose economy is still emerging from a decade-long civil war - conflict that scared away investors and slowed infrastructure projects.

China boosts trade with Nepal

China will provide Nepal with technology and assistance to build a border land port that will boost trade and serve as a transit point on a proposed railway line, Chinese officials have said. […] Last year, China also opened a port of entry at Gyirong in TAR to make it a major passage for land trade with Nepal. China plans to make Gyirong a 44.5-sq.km. “cross-border free trade zone” with Nepal, according to Chinese media reports, with 1.2 billion yuan ($190 million) spent to upgrade its infrastructure. A five-year plan for TAR's development announced in January detailed measures to build highways and rail links to boost connectivity to border regions. Part of the plan is upgrade the 318 National Highway, also known as the “friendship highway”, that runs to Gyirong and to Zhangmu, a border town where much of the trade between China and Nepal takes place. […]Trade between China and Nepal grew by 61 per cent last year to $1.2 billion. Chinese officials say they see potential for supporting infrastructure and hydropower projects in Nepal with the country facing deficits in both areas.

Transport syndicates rule the roads in Nepal

Though the government has scrapped syndicate in transportation, Prithvi Highway Bus Entrepreneurs Committee (PHEBC) -- a syndicate of transporters operating along the Prithvi Highway -- on Monday foiled attempt to start direct tourist coach services between Pokhara and Chitwan. The Pokhara Chapter of Nepal Association of Tours and Travels Agents (NATTA) and Regional Hotel Association, Chitwan had announced the service to facilitate tourists traveling between the two tourist destinations. The service was scheduled to begin from Monday itself. Shankar Koirala, president of PHEBC, said they protested because the green-plated buses are meant to carry foreigners only. “Who will travel in our buses if green-plated buses started carrying Nepalis in the name of domestic tourists?” questioned Koirala. “As the green-plated vehicles enjoy tax exemption, they should carry only the foreigners.”

Another sad result on aid effectiveness: Herzer and Nunnenakamp argue that “foreign aid could help improve economic conditions of the poorest population segments and narrow income gaps. However, the data seems to indicate aid has actually widened the gap between the rich and the poor.”

Do sanctions work? van Bergeijk argue that “the sanction cases reveals that the probability of a sanction succeeding against a democracy is two times as high as that against an autocracy.” Three reasons why sanctions might work now:

First, globalisation has increased the importance of undisturbed international trade and investment for potential targets of economic sanctions: countries that three decades ago were more or less self-reliant can now be hit much harder by economic sanctions.

Second, the decision-making processes, especially in the United Nations, have been streamlined, increasing the speed of implementation.

Third, the world is much more democratic than during the Cold War.

Why is Haiti so poor?

Haiti was one of the most extractive colonies Europeans set up, with the majority of its population working as slaves in plantations for their French masters.

Low tax rates and economic growth

I believe this issue is of the utmost importance given the urgency with which many legislators and economists in various countries advocate tax cuts. This advocacy is regrettable because neither the theoretical nor the empirical grounds for it are sound. It may even be the case that low tax rates have unwanted harmful consequences instead of the assumed beneficial ones.

Cost of economic non-cooperation in South Asia

Here is a presentation from an event held in Kathmandu yesterday. It is basically a summary of this report prepared by CUTS International. Here is the draft report.

Note: I did not do the data analysis. So, the figures quoted in the presentation are not mine. Attribute them to CUTS International. Read the full paper here.