RA5a: Structure,environment and staffing policy
There are three broad categories within which most research activity for this unit of assessment can be classified: international economics, development economics, and the economics of human resources. These three areas also represent the concentration of our graduate teaching programmes – two of which have ESRC research training recognition. All our postgraduate programmes are underpinned by the development of a solid analytical foundation and have a strong policy-orientation, reflecting the research strengths of economists at Sussex.
The Research Environment
The University’s mission stresses the importance of inter-disciplinarity and internationalism and this is reflected in the economics research focus at Sussex. The presence at the University of a variety of inter-disciplinary institutes with broad interests in the area of economics enhances this research. The most notable is the Institute of Development Studies (IDS), and Winters and Litchfield are currently engaged in collaborative research projects with a number of IDS Fellows. The Science and Technology Policy Research Unit (SPRU) provides similar opportunities for economists with an interest in industry, technology and science policy, and until recently Dyker held a part-time research post there. Reilly maintains links with The Institute for Employment Studies and is currently engaged on a research project exploring the determinants of students’ university choices. The Sussex European Institute (SEI) supports social science research within a European dimension and has been the base for several major ESRC and EU-funded projects on which economists have worked.
As foreseen in RAE 1996, international economics continues to be an area of great strength at Sussex. The strategy at that time was to build on the international reputations of Professors Smith and Wood, and was reflected in the recruitment of Professors Rollo and Winters in 1999. However, Smith became Senior Pro-Vice Chancellor early in the period and ultimately Vice-Chancellor in 1998 (although he has continued to be an active member of the research group), while Wood left to become Chief Economist at DfID in September 2000. The recruitment of Rollo, formerly Chief Economist at the Foreign Office, and Winters, formerly Research Manager in the World Bank, illustrates the University’s strong commitment to researching policy issues and its almost unrivalled links with high-level policy-making (see RAE 6). It also maintains the University’s engagement in international-standard research in this subject area and provides experienced leadership, which is already stimulating work with other colleagues.
One of the principal thrusts of research over the review period was on the labour-market and distributional effects of international trade. Wood continued his pioneering work on developing country dimensions of this, publishing, inter alia, in the Economic Journal, Journal of Development Studies, Oxford Economic Papers, World Development and World Bank Economic Review. Smith has published on the labour-market impact of international trade in Europe, using a variety of approaches, including CGE modelling, focussing particularly on the labour market impact of vertically–differentiated intra–industry trade* (topics thus marked feature in RA2). Gasiorek has explored the distributional effects of trade liberalisation under imperfect competition*. More recently this stream of research has continued with work on the links between trade and developing country poverty, on which Winters has been one of the leaders world-wide. This is described in detail in the next section.
A recent major research task has been the appraisal of the WTO's first years, during which its popularity and political esteem have sunk dramatically. Sussex researchers are widely regarded as leaders in this field (see RAE 6). Holmes initiated important work on the interaction between domestic and external regulatory regimes (e.g., in the telecommunications sector*). His work on international trade and competition policy* was supported by the ESRC and by several UK, European and official international bodies, often with links to the highest levels (e.g., the EU Commissioner for External Affairs). His current work, with Rollo and supported by the EU Commission, explores the intrusion of international trade liberalisation into areas such as risk and product safety. Rollo and Winters have also researched these issues in the context of environmental and labour standards* (funded by the World Bank). All this research indicates that the WTO is poorly equipped to deal with many of the new issues that are suggested for it, and that their pursuit runs the danger of undermining its proven ability in the area of trade liberalisation per se.
Winters has written extensively on the WTO and developing countries, including the most comprehensive quantitative assessment of the outcome of the Uruguay Round, an analysis of Africa’s position in that Round, a dissection of calls for greater ‘coherence’ between the WTO and the World Bank, and an influential analysis of what developing countries might need in any future Round. The latter has underpinned policy advice to, inter alia, the EU, the British government and the World Bank.
A third important issue taken up by economists at Sussex is the theory and empirics of regional trading arrangements. Winters published twenty articles and chapters in this area over the assessment period, with others forthcoming (e.g., Journal of International Economics, 2001). These include path-breaking empirical work on the role of transport costs in regionalism in Latin America (Journal of Economic Integration) and on the way in which regionalism tends to reduce the prices of excluded countries’ exports to trade blocs* with $Chang ($ hereafter denotes external author), theoretical work on regionalism as a diplomatic tool (with $Schiff)*, and the leading synthesis of academic analysis on ‘regionalism vs. multilateralism’*. Winters managed a major World Bank study that produced over fifty published papers, a research report entitled Trade Blocs (2000), and a forthcoming book. Holmes and Rollo have researched regionalism in Southern Africa and Asia* respectively.
As in RAE 1996, the major area for the study of regionalism has been Europe. Much of this research has been conducted in the Sussex European Institute, whose large interdisciplinary research community and many specialised resources have given the work a perspective and link to practical policy making that is unrivalled in the UK. On Western Europe, Gasiorek and Smith contributed a major study assessing the effects of the Single Market Programme*, Gasiorek has explored the EU–Mediterranean agreements, and Gasiorek, Smith and $Venables have brought modern analytical tools to bear on the consequences of UK accession to the EEC*. Holmes has written on regulatory aspects of the EU, Winters on trade policy, Gasiorek (with $Venables) on the effects of infrastructure improvements in trading economies, while Smith and Gasiorek have analysed regional disparities and cohesion in the EU (funded by the European Commission). Holmes co-authored a report with colleagues at SPRU on the cohesion effects of ESPRIT. At the macro-level, Rollo has worked on the Euro, and Gasiorek and Winters on price convergence resulting from the EMS and prospectively from EMU (funded by the European Commission). Sumner has challenged the German leadership hypothesis in the ERM, emphasising the distinction between ex ante influence through expected inflation and ex post effects through a disequilibrium real exchange rate, and argues that a plausible case for the hypothesis is restricted to the Netherlands.
Sussex scholars have also examined the EU’s relations with Eastern Europe and enlargement issues. Dyker has investigated technology transfer within Europe* (funded by ESRC), the development of indigenous hi-tech sectors and the growth of local knowledge*, and the importance of FDI in stimulating technological ‘catch-up’. He has also investigated economic performance in Eastern Europe and the origins of the Russian crisis. The question of whether the enlargement of the EU should be accompanied by more regulatory diversity (i.e., more subsidiarity) has been the subject of inter-disciplinary research undertaken in the SEI by Holmes, Rollo and Smith* with Wallace from the Politics Subject Group. There have also been important contributions on labour markets (Smith), political economy* (Rollo) and competition* (Holmes).
As anticipated in RAE 1996, Dyker has also explored the general role of FDI as a mechanism for technology transfer, in conjunction with SPRU. Gasiorek is also developing work on the theory of FDI. Sumner (with $Kikuchi) has examined the effect of exchange-rate changes on Japanese export prices. In contrast to much of the existing literature they find that the direct effect on yen-denominated prices is transitory, and attributable to the widespread use of the dollar as contract currency rather than strategic behaviour. Long-run effects are found to operate only through imported materials prices.
International economics will continue to be a major area of research activity in Sussex, led by Rollo and Winters. In fact several projects are already negotiated or underway – e.g., on trade and the location of British and European industry (funded by ESRC), trade and poverty (DfID), the brain-drain (DfID/LBS), the temporary movement of labour and the costs of trading and production in very small states (both The Commonwealth Secretariat). In addition, a vibrant group of doctoral students will continue to work on topics such as ‘fair trade’, European labour market integration, APEC, Mercosur, Poland’s integration with the EU, and trade and poverty.
The primary focus of research in this area is the analysis of poverty and inequality. The University’s commitment to this field was demonstrated by the creation of the Poverty Research Unit at Sussex (PRUS) in 1995. Directed initially by Lipton and since 1999 by Litchfield, it has developed an international reputation and secured funding for a range of projects from the World Bank, IFAD, the EU, DfID, ESCOR, ILO, UNDP among other sources.
Litchfield’s own work includes both cross-section and time-series studies of income distribution and poverty in a number of LDCs, including Brazil, Chile, Vietnam, China and Zambia. As well as presenting conventional decompositions using household attributes to account for the structure of inequality, she has identified macroeconomic correlates of changes in inequality, notably inflation in Brazil*. She has also conducted more methodologically oriented investigations concerned with robustness in regard to data contamination and estimation methods for the UK and other European economies. Litchfield contributed a methodological paper on the measurement of inequality to the World Bank Poverty website (Inequality, Methods and Tools, March 1999) and is currently undertaking collaborative research with Winters, Lipton, and associates at the IDS and STICERD.
Winters developed a framework for analysing the links between trade liberalisation and poverty in developing countries. This provided input into the World Development Report 2000/1 (World Bank), generated many conference presentations and media discussions, led to an invitation to prepare an article for the Journal of Economic Literature, and underpinned policy advice to, inter alia, the WTO, the World Bank and DfID. Most importantly, it has led to research grants exceeding £250,000 from DfID (a) to analyse the current trade agenda’s implications for poverty with White, and (b) to conduct detailed research on the links in China, Vietnam and Zambia with Litchfield. The latter research is located in PRUS and directed by Litchfield. It involves, for the first time, combining household survey, trade, price and macroeconomic data to model the connections between trade policy and household and personal welfare. It draws in equal measure on poverty and trade expertise at Sussex.
Eastwood (with Lipton) has explored the links from demography to poverty in a cross-section of LDCs, finding that a high birth rate is associated with both lower subsequent growth, attributed to lower savings, and a more unequal distribution, attributed to Malthusian effects on real wages; these two effects on poverty are of the same order of magnitude*. Other joint work examines the relative contributions of rural-urban, intra-rural and intra-urban inequality to trends in national inequality; any expectations that liberalisation and adjustment would reduce urban bias are shown to be unfounded. Eastwood has also continued his work (with $Kohli) on credit constraints on the investment behaviour of a panel of small manufacturing firms in India; the implication of the results is that the policy of directing banks to lend a specified proportion of their funds to such firms had a substantial effect on their investment expenditure.
White also works on poverty and distributional issues, especially the evaluation of World Bank poverty assessments of African economies*. He is the co-author of the recently completed World Bank evaluation of social fund projects. His main field of study, to which he has made methodological as well as empirical contributions, is the macroeconomic impact of foreign aid and the effects of conditionality*. His two most recent research projects, funded by DfID to run over the next three years, are contributing to a study of child poverty including the first round of a longitudinal survey of children born in the year 2000 in five developing countries, and an analysis of rural labour markets in Africa with fieldwork in Zambia.
Al-Samarrai has recently been appointed to a Research Fellowship in Education at the IDS and has just submitted his doctoral thesis, which was co-supervised by Reilly. His primary research interest is concerned with human resource development in Africa. He recently published work on rural-urban differences in primary enrolments in Tanzania* (with Reilly), and is currently investigating the gender gap in academic achievement in secondary schooling in the same country. He is about to embark on a DfID-funded project on the relationship between public expenditure and educational outcomes in the Sub-Saharan countries, and will continue his collaborative work with Reilly on a project examining the effects on primary enrolments of the abolition of school fees in Malawi.
Researchers in other specialisms have also made significant contributions to research in development economics. Newell (with $Pandya and $Symons) has worked on productivity in Indian agriculture*. Reilly has completed work on the determinants of remittances by Chinese migrant workers (with $Liu), and has an ongoing project modelling the seasonal component of industrial production in Uganda (with $Kempaka).
Economics of Human Resources
This category comprises our research activity in the areas of health, education and labour. The research undertaken in this field also has a strong policy orientation and the reputation of Sussex faculty in these fields is evidenced by a significant number of projects undertaken for a range of national and international organizations including the ESRC, the World Bank, UNICEF, DfID, and the European Commission.
Wagstaff remains in the forefront of international research in health economics as demonstrated by a forthcoming co-authored chapter in the Handbook of Health Economics. He continues to focus his research on the empirical measurement of inequalities and inequities in the health sector in industrialised economies but more recently the emphasis has shifted to developing economies. He has helped devise for the World Bank a conceptual and econometric framework for analysing and identifying the causes of health inequalities (e.g., inequalities in infant mortality). This approach has already been applied to a number of countries and has enabled the impact of specific health programmes and policies on health inequalities to be assessed.
Barrow’s research continues in the area of local government finance with a particular emphasis on education. Over the period covered by the review, he has participated in an ESRC-funded research programme on the finance of local government (with research colleagues at the University of York, UCL, and the Institute for Fiscal Studies), and contributed to a background paper that informed part of the content of the 5th UNICEF Regional Monitoring Report on the transitional economies entitled ‘Education for All’.
Since the last review, the University has recruited Feinstein and this has strengthened our research profile in the economics of education field. His research is largely a development of issues investigated in his recently completed doctorate and brings together aspects of education, psychology and economics. The research themes explored include an investigation of the differences between socio-economic groups in the formation of human capital and their implications for inequality in labour market outcomes in adulthood*. Feinstein is currently participating on an ESRC project on the future of the family.
Newell’s research under this category has been largely concentrated in the study of wages and employment in the transition countries. He has established an international reputation in this area and has made significant contributions to the last three UNICEF Regional Monitoring Reports on the transitional economies. In collaboration with Reilly, work on the gender pay gap for a range of transitional countries has just been completed, and this follows earlier research that documented the evolution of returns to education in many of the same countries*. Some of this research was originally undertaken as part of World Bank and UNICEF projects. Much of his other research on transition focuses on investigating wage, employment and unemployment outcomes in the Polish labour market* and this has been undertaken with a number of research colleagues based at institutions in Poland and Italy.
Reilly’s main independent research activity in this category has also focused on labour market phenomena in the transitional countries but with a specific emphasis on Russia and Yugoslavia. In terms of the former, the work has concentrated on investigating the evolution of the gender pay gap during the transitional era*. Reilly has strong research links with the Economics Institute in Belgrade and participated in a DfID-funded project on the informal labour market in Yugoslavia. He is currently engaged in a follow-up survey, partly funded by the Soros Foundation, which intends to explore the evolution of the informal labour market in Serbia over the last few years.
Harkness represents a new and young appointment to the Group. Her research is largely concerned with the status and progress of women in the labour market, and some of the work has an international comparative dimension. She has undertaken extensive research on the relationship between gender and labour market outcomes and made an important contribution to quantifying the gender pay gap in Great Britain*. She is currently researching the impact of changes in the distribution of working hours across individuals and families on household income inequality and has secured funding from the Nuffield foundation to undertake a pilot study in this area. She maintains strong research links with colleagues at the CEP and UCL, and has undertaken significant collaborative work with $Waldfogel and $Machin. She has already developed an international reputation in this area and in the last few years has been invited to present her research at six international conferences. She is a member of the Women’s Budget Group and is an active contributor to the Women’s Unit at the Cabinet Office.
The Group’s research cannot all be classified under the main headings adopted above. Sumner continues to work mainly on domestic macroeconomic issues, with particular reference to the corporate sector. Topics recently examined include the impact of corporate retentions on consumers’ expenditure and its interpretation, the (vanishing) capitalisation of tax changes in equipment prices, the effects of fiscal investment incentives on the volume of investment in the long run* and on the seasonal pattern of investment in the short-run*. The properties of seasonality were also exploited, for the purposes of identification, in a demand for money study*. Reilly (with $Witt) has investigated the asymmetrical effects on retail petrol prices of changes in crude oil prices, and the links between crime, deterrence measures and unemployment*. Barrow and Holmes were part of a team on a World Bank project to review investment grants within the EU. Barrow is currently working on the relationships between asset markets, and on public-private partnerships. Holmes’ continuing interest in the consequences of imperfect information for the operation of markets is currently expressed in work on intellectual property rights and particularly the patentability of software. Newell maintains his longstanding research interest in economic history and recently completed empirical work on poverty in Britain at the turn of the twentieth century* with Gazeley from the History Subject Group.
Copyright 2002 - HEFCE, SHEFC, ELWa, DEL
Last updated 17 October 2003