Tied aid, unemployment and welfare

The effect of foreign aid on the welfare levels of both the recipient and the donor country has been a much analysed topic for research in both the theory of international trade and development economics. In the development economics literature, concerns have been raised since the 1960s on the possible adverse effect of foreign aid on domestic savings and growth.1 The trade theory literature in this respect is much older and dates back to the 1920s when Professors Keynes and Ohlin debated on the effect of foreign aid on international terms of trade.2 Ever since, the terms of trade effect has been the cornerstone in the analysis of the welfare effect of foreign aid in the trade theory literature.3 After some early confusion, it is now well established that in a Walrasian stable world economy with two countries, a necessary condition for foreign aid to have perverse effects is that there is some distortion in either of the two countries.4 It is also known that, under normality and substitutability of goods, untied aid cannot be strictly Pareto-improving in a tariff distorted world.5

Welfare effects of aid under quantitative trade restrictions

The paper examines the effects of tied-aid on the welfare of both the donor and the recipient countries. We depart from the previous literature by assuming preexistence of quantitative trade distortions. To mitigate these distortions the donor country provides aid that is tied to the rationed good. Conditions for the presence of the transfer paradox and of the enrichment of both countries are derived and interpreted under the stability of the system. Furthermore, we show that whereas untied aid cannot increase global welfare, tied-aid unambiguously does so.

The ghost in the city industrial complex: Le Corbusier and the fascist theory of Urbanisme

Le Corbusier participated in an urban dialogue with the first group in France to call itself fascist: the journalist Georges Valois’s militant Faisceau des Combattants et Producteurs (1925-1927), the “Blue Shirts,” inspired by the Italian “Fasci” of Mussolini. Le Corbusier’s portrait photograph materialised on the front cover of the January 1927 issue of the Faisceau League’s newspaper Le Nouveau Siècle edited by the former anarcho-syndicalist journalist Georges Valois, its leader, who fashioned himself as the French Mussolini. Le Corbusier was described in the Revue as one of les animateurs (the “organisers”) of the Party1 – meaning a member of the technical elite who would drive the Faisceau’s plans. On 1 May 1927, the Nouveau Siècle printed a full-page feature “Le Plan Voisin” on Le Corbusier’s 1922 redesign of Paris : the architect’s single-point perspective sketch appeared below an extract lifted from the architect’s original polemic Le Centre de Paris on the pages of Le Corbusier’s second book Urbanisme published two years earlier, a treatise on urbanism.2 Three weeks later, Le Corbusier presented a slide show of his urban plans at a fascist rally for the inauguration of the Faisceau’s new headquarters on the rue du faubourg Poissonniere, thereby crystalising the architect’s hallowed status in the league...

Urban growth dilemmas and solutions in China: Looking forward to 2030

China’s urbanization and industrialization are occupying farmland in large amounts, which is strongly driven by land finance regime. This is due to the intensified regional/local competition for manufacturing investment opportunities that push local governments to expropriate farmland at low prices while lease land at high market value to property developers. The additional revenue obtained in this way, termed financial increment in land values, can drive local economic growth, and provide associated infrastructure and other public services. At the same time, however, a floating population of large numbers of inadequately compensated land-lost farmers, although unable to become citizens, have to migrate into the urban areas for work, causing overheated employment and housing markets, with rocketing unaffordable housing prices. This, together with various micro factors relating to the party/state’s promotion/evaluation system play an essential role leading to some serious economic, environment and social consequences, e.g., on migrant welfare, the displacement of peasants and the loss of land resources that requires immediate attention. Our question is: whether such type of urbanization is sustainable? What are the mechanisms behind such a phenomenal urbanization process? From the perspective of institutionalism, this paper aims to investigate the institutional background of the urban growth dilemma and solutions in urban China and to introduce further an inter-regional game theoretical framework to indicate why the present urbanization pattern is unsustainable. Looking forward to 2030, paradigm policy changes are made from the triple consideration of floating population, social security and urban environmental pressures. This involves: (1) changing land increment based finance regime into land stock finance system; (2) the citizenization of migrant workers with affordable housing, and; (3) creating a more enlightened local government officer appraisal system to better take into account societal issues such as welfare and beyond.