The Expenditure Impacts of Individual Higher Education Institutions (HEIs) and their Students on the Scottish Economy under Devolution: Homogeneity or Heterogeneity?

Comparing each of the twenty Higher Education Institutions (HEIs) in Scotland as separate sectors in an Input-Output table suggests their expenditure patterns are homogenous and that the apparent heterogeneity of their impacts is primarily driven by scale. However, a disaggregation of their income by source reveals a disparity in their dependence upon funding from the devolved Scottish Government and their ability to draw in income/funding from external sources. Acknowledging the binding budget constraint of the Scottish Government and deriving balanced expenditure multipliers reveals large differences in the net-expenditure impact of HEIs upon the Scottish economy, with the source of variation being the origin of income. Applying a novel treatment of student expenditure impacts, identifying the amount of exogenous spending per student, modifies the heterogeneity of the overall expenditure impacts. On balance this suggests that the impacts of impending budget cut-backs will be quite different by institution depending on their sensitivity to public funding. However, predicting the outcome of budget cutbacks at the margin is problematic as we do not know whether public and external incomes are complements or substitutions (and indeed this may vary between individual HEIs).

The Expenditure Impacts of Individual Higher Education Institutions (HEIs) and their Students on the Welsh Economy: Homogeneity or Heterogeneity?

This paper replicates the analysis of Scottish HEIs in Hermannsson et al (2010a) for the case of Wales in order to provide a self-contained analysis that is readily accessible by those whose primary concern is with the regional impacts of Welsh HEIs. When we treat each of the twelve Higher Education Institutions (HEIs) that existed in Wales in 2006 as separate sectors in conventional input-output analysis, their expenditure impacts per unit of final demand appear rather homogenous, with the apparent heterogeneity of their overall impacts being primarily driven by scale. However, a disaggregation of their income by source reveals considerable variation in their dependence upon funding from the devolved Welsh Assembly Government and their ability to draw in income/funding from external sources. Acknowledging the binding budget constraint of the Welsh Assembly Government and deriving balanced expenditure multipliers reveals large differences in the net-expenditure impact of HEIs upon the Welsh economy, with the source of variation being the origin of income. Applying a novel treatment of student expenditure impacts, identifying the amount of exogenous spending per student, modifies the heterogeneity of the overall expenditure impacts. On balance this suggests that the impacts of impending budget cut-backs will be quite different by institution depending on their sensitivity to public funding. However, predicting the outcome of budget cutbacks at the margin is problematic for reasons that we identify.

International Aid to Tanzania – with some comparisons from Ghana and Uganda

This paper has three principal objectives. First, to review the level of Official Development Assistance (ODA) to Tanzania over the last two to three decades, and to place this into an economic context. This review includes some comparisons with the experience of Ghana and Uganda. Second, to discuss three major issues for the Tanzanian aid: the position of ODA as budget support, corruption, and alignment with the principles of the Paris Declaration on Aid Effectiveness. Third, to review the literature on the Tanzanian aid experience, including a range of official evaluation reports produced by the Tanzanian government and by the donor community. The conclusions, broadly, are that ODA has been at a sustained high level for most of the period reviewed, funding a significant amount of government development expenditure, and that economic growth has been strong, with poverty reduction ‘flat-lining’ in Tanzania but being significant in Ghana and Uganda. Experience with budget support in Tanzania has been mixed, corruption continues as a major concern, and improvements to public finance management have been difficult to achieve. In this context governance adjustments come slowly, requiring patience on the part of both recipient governments and the ODA donor community.

Using Effluent Charges in Promoting Investment in Water Pollution Control Technology: A Model of Coordination Failure among Firms

Untreated wastewater being directly discharged into rivers is a very harmful environmental hazard that needs to be tackled urgently in many countries. In order to safeguard the river ecosystem and reduce water pollution, it is important to have an effluent charge policy that promotes the investment of wastewater treatment technology by domestic firms. This paper considers the strategic interaction between the government and the domestic firms regarding the investment in the wastewater treatment technology and the design of optimal e­ffluent charge policy that should be implemented. In this model, the higher is the proportion of non-investing firms, the higher would be the probability of having to incur an e­ffluent charge and the higher would be that charge. On one hand the government needs to impose a sufficiently strict policy to ensure that firms have strong incentive to invest. On the other hand, it cannot be too strict that it drives out firms which cannot afford to invest in such expensive technology. The paper analyses the factors that affect the probability of investment in this technology. It also explains the difficulty of imposing a strict environment policy in countries that have too many small firms which cannot afford to invest unless subsidised.

The Committee on Climate Change: A policy analysis

Domestic action on climate change is increasingly important in the light of the difficulties with international agreements and requires a combination of solutions, in terms of institutions and policy instruments. One way of achieving government carbon policy goals may be the creation of an independent body to advise, set or monitor policy. This paper critically assesses the Committee on Climate Change (CCC), which was created in 2008 as an independent body to help move the UK towards a low carbon economy. We look at the motivation for its creation in terms of: information provision, advice, monitoring, or policy delegation. In particular we consider its ability to overcome a time inconsistency problem by comparing and contrasting it with another independent body, the Monetary Policy Committee of the Bank of England. In practice the Committee on Climate Change appears to be the ‘inverse’ of the Monetary Policy Committee, in that it advises on what the policy goal should be rather than being responsible for achieving it. The CCC incorporates both advisory and monitoring functions to inform government and achieve a credible carbon policy over a long time frame. This is a similar framework to that adopted by Stern (2006), but the CCC operates on a continuing basis. We therefore believe the CCC is best viewed as a "Rolling Stern plus" body. There are also concerns as to how binding the budgets actually are and how the budgets interact with other energy policy goals and instruments, such as Renewable Obligation Contracts and the EU Emissions Trading Scheme. The CCC could potentially be reformed to include: an explicit information provision role; consumption-based accounting of emissions and control of a policy instrument such as a balanced-budget carbon tax.