Tag: Research

The Impact of Technological Innovations and Economic Growth on Carbon Dioxide Emissions

Posted on April 8, 2024 | Policy Brief

Power plant emitting smoke, illustrating the economic impact of emissions on the environment.

This policy brief offers an examination of the interplay between economic growth, research, and development (R&D), and CO2 emissions in different countries. Analysing data for 83 countries over three decades, our research reveals varying impacts of economic and R&D activities on CO2 emissions depending on country income level. While increased economic growth often leads to higher emissions due to greater industrial activity, our model indicates that increased GDP levels, when interacted with enhanced investments in R&D, is associated with reduced CO2 emissions. Our approach also recognizes the diverse economic conditions of countries, allowing for a more tailored understanding of how to tackle environmental challenges effectively.

Technological Innovation and CO2 Emissions

Human activity has over the past few decades significantly contributed to environmental problems, in particular CO2 emissions. The consequences from increased CO2 emissions, such as global warming and climate change, have motivated extensive research focused on understanding their impact and finding potential solutions to associated issues.

Economic growth, and research and development (R&D) can serve as differentiating factors between countries when it comes to their pollution levels, specifically measured by CO2 emissions per capita. Higher levels of economic growth are associated with increased industrial activity and energy consumption, which may lead to increased CO2 emissions. At the same time, countries that invest more in R&D often focus on developing cleaner technologies and implementing sustainable practices, which may result in reduced CO2 emissions.

In this policy brief, we analyse CO2 emissions’ dependencies on technological innovation and economic growth. For our analysis we group the considered 83 countries into three wealth levels: High, Upper Middle, and Lower Middle income levels. This grouping facilitates a better understanding of the complex interplay between wealth, innovation and growth and their projection into emissions. Considering each wealth level group separately also allows us to account for varying economic and developmental contexts.

Data

Based on data availability, we analyse 83 countries, spanning from 1996 to 2019, inclusive. We follow current research trends and use R&D intensity as a proxy for technological innovation (see Chen & Lee, 2020; Petrović & Lobanov, 2020; Avenyo & Tregenna, 2022).

Data on energy use originate from Our World in Data. R&D data from after 2014 are based on figures from the UNESCO Institute for Statistics. All other indicators come from World Development Indicators (WDI).

Table 1 presents an overview of the variables considered in our empirical model. Our response variable is CO2 emissions per capita. We include several covariates (i.e. urban population, renewable energy, trade), found to be significant in previous studies where CO2 emissions was considered the dependent variable (Avenyo & Tregenna, 2022; Wang, Zeng & Liu, 2019; Petrović & Lobanov, 2020; Chen & Lee, 2020).

Table 1. Variable description.

Additionally, we include quadratic terms for GDP and R&D to account for nonlinearity and non-monotonicity. Also, we incorporate the interaction term between GDP and R&D (see Table 3). This allows us to evaluate whether the impact of technological innovations on CO2 emissions is dependent on the GDP level, or vice versa.

Wealth Level Classification

Existing literature highlights significant variation between countries in terms of economic growth and income levels, particularly in relation to R&D expenditure and CO2 emission levels (see Cheng et al., 2021; Chen & Lee, 2020; Petrović & Lobanov, 2020; Avenyo & Tregenna, 2022). Given this we deployed the Mclust method (Scrucca et al., 2016; Fraley & Raftery, 2002), and classified our considered countries into three distinct groups based on their median Gross National Income (GNI) over a specified range of years for each country. Following this methodology, we obtained three groups of countries: High, Upper Middle and Lower Middle. The list of countries categorized by their respective wealth level is presented in Table 2.

Table 2. Countries within each wealth group.

Low-income countries, (as categorized by the World Bank in 2022) were not included in the analysis as the study focuses on the impact of technological innovations on CO2 emissions, innovations which are less frequent in such economies. Limited infrastructure, financial resources, and access to technology often result in lower levels of R&D activities in low-income countries, which reduces the number of measurable innovations.

The Hybrid Model

Our leading hypothesis is that country income levels (measured by GDP) mediates the relationship between innovation (measured by R&D expenditures) and CO2 emissions. To test this, one could estimate this relationship for each group of countries separately. This policy brief instead estimates the relationship for the whole sample of countries accounting for group differences via interaction effects. Specifically, our estimation allows for interaction terms between some or all covariates and the wealth level. This approach, which we refer to as the hybrid model, thus combines elements of both pooled and separate models. It is a great alternative to separate models as it allows for estimation of both group-specific and sample-wide effects, and as it contrasts differential impacts across wealth level groups.

We test two versions of the hybrid model, one full and one reduced. The full model incorporates interactions with all covariates while the reduced model includes some indices without interactions, resulting in a relationship shared across all wealth levels. The reduced model assumes that the variables Renewable energy consumption, Energy use and Trade exhibit the same relationship with CO2 emissions across all wealth levels.

Both the reduced and full hybrid models have similar coefficients for the variables and interactions that they share. While the coefficients share signs in both the full and reduced hybrid models, they are smaller, in absolute values, in the reduced hybrid model. In Table 3 we present the estimates from the reduced hybrid model.

Table 3. Results from the reduced hybrid model with CO2 emissions as dependent variable, by wealth group level.

Note: The upper part of the table (denoted “interaction variables”) depicts the coefficients for the interaction term between the variable in the respective row and the income group in the respective column. * denotes a 0.05 significance level. ** denotes a 0.01 significance level. ***denotes a 0.001 significance level.

Several things are to be noted from Table 3. First, for High and Upper Middle wealth level countries there is a significant positive association between innovation (as proxied by R&D) and CO2 emissions. However, the significance levels of the interaction term for R&D and GDP reveal that the relationship between R&D and CO2 is not constant across wealth levels even within each group. Specifically, it appears that relatively high values of GDP and R&D are associated with a decrease in CO2 emissions in High and Upper Middle wealth level countries. This suggests that in wealthier countries, advancements in technology and efficient practices derived from R&D are likely contributing to reduced emission levels. Interestingly, GDP has no direct effect on emissions for countries in these two wealth groups. Rather, GDP only affects emissions through the interaction term with R&D.

In turn, for the Lower Middle wealth level countries, R&D has no impact on CO2 emissions, whether directly or via interaction with GDP. Instead, higher GDP leads to a significant increase in emissions. This suggests that for these countries economic growth entail CO2 emissions while R&D activities are too small to have a mediating effect.

Second, medium and high-technology industry value added manufacturing is only significant for countries within the Upper Middle wealth level. This is in line with previous literature (see Avenyo & Tregenna, 2022, Wang, Zeng & Liu, 2019). A higher proportion of medium and high-technology industry value added is often negatively associated with CO2 emissions due to the adoption of cleaner and more environmentally sustainable technologies and practices within these industries. Additionally, these industries are often subject to stringent environmental regulations. As a result, these industries can contribute to reduced emission levels, becoming key drivers of sustainable economic growth and environmental protection (Avenyo & Tregenna, 2022). Interestingly, in our estimation, this result is evident only for Upper Middle wealth level countries.

Third, urban population is only significantly increasing emissions for High wealth level countries. Such positive relationship can be attributed to several factors. There is often a higher concentration of industrial and manufacturing activities in urban areas, leading to increased emissions of pollutants as urbanization increases (Wang, Zeng & Liu, 2019). Additionally, urban areas tend to have higher energy consumption and transportation demands, further contributing to higher emission levels.

When it comes to the factors jointly estimated across wealth groups, the positive relationship between renewable energy consumption and CO2 emissions is well-documented within the literature (Chen & Lee, 2020) which emphasizes the need for sustainable energy practices and efficient resource management to mitigate adverse environmental impacts. In line with this, the significant negative relationship between renewable energy consumption and CO2 emissions suggests that an increase in renewable energy usage is associated with a reduction in CO2 emissions. This is in line with previous findings demonstrating that technological progress helps reduce CO2 emissions by bringing energy efficiency (Akram et al., 2020; Sharif et al., 2019).

Conclusion

This policy brief analyses the effects of GDP and technological innovations on CO2 emissions. The theoretical channels linking economic development (and technological innovations) and CO2 emissions are multifaceted, warranting the need for an econometric assessment. We study 83 countries between 1996 and 2020 in a setting that allows us to disentangle the effects across countries with different income levels.

Our findings underscore the importance of considering the various income levels of the considered countries and their interplay with R&D expenditures in environmental policy discussions. Countries with Lower Middle income levels exhibit insignificant effects from R&D expenditures on CO2 emissions, while for Upper Middle and High wealth level nations, increased R&D expenditures incurs higher emissions.

The moderating role of GDP adds complexity to this relationship. At sufficiently high wealth levels, GDP weakens the effect of R&D on emissions. This alleviating effect becomes stronger as GDP increases until reaching a turning point, at which the impact reverses and R&D expenditures instead decrease emissions.

Our results on the significant nonlinear relationship between R&D, GDP and CO2 emission levels highlights the complexity of addressing environmental challenges within the context of macroeconomics. It suggests that policies promoting both R&D and economic growth simultaneously can foster more sustainable development paths, where economic expansion is accompanied by a more efficient and cleaner use of resources, leading to lower CO2 emissions. This decoupling of economic growth from emissions is likely to be further enhanced by governments incentivising research and development focused on improved energy efficiency and emission reduction.

References

  • Akram, R., Chen, F., Khalid, F., Ye, Z., & Majeed, M. T. (2020). Heterogeneous effects of energy efficiency and renewable energy on carbon emissions: Evidence from developing countries. Journal of cleaner production, 247, 119122.
  • Avenyo, E. K., & Tregenna, F. (2022). Greening manufacturing: Technology intensity and carbon dioxide emissions in developing countries. Applied energy, 324, 119726.
  • Chen, Y., & Lee, C. C. (2020). Does technological innovation reduce CO2 emissions? Cross-country evidence. Journal of Cleaner Production, 263, 121550.
  • Cheng, C., Ren, X., Dong, K., Dong, X., & Wang, Z. (2021). How does technological innovation mitigate CO2 emissions in OECD countries? Heterogeneous analysis using panel quantile regression. Journal of Environmental Management, 280, 111818.
  • Fraley C. and Raftery A. E. (2002) Model-based clustering, discriminant analysis and density estimation. Journal of the American Statistical Association, 97/458, pp. 611-631.
  • Petrović, P., & Lobanov, M. M. (2020). The impact of R&D expenditures on CO2 emissions: evidence from sixteen OECD countries. Journal of Cleaner Production, 248, 119187.
  • Scrucca, L., Fop, M., Murphy, T. B., & Raftery, A. E. (2016). mclust 5: clustering, classification and density estimation using Gaussian finite mixture models. The R journal, 8(1), 289.
  • Sharif, A., Raza, S. A., Ozturk, I., & Afshan, S. (2019). The dynamic relationship of renewable and nonrenewable energy consumption with carbon emission: a global study with the application of heterogeneous panel estimations. Renewable energy, 133, 685-691.
  • Wang, S., Zeng, J., Liu, X., (2019). Examining the multiple impacts of technological progress on CO2 emissions in China: a panel quantile regression approach. Renew. Sustain. Energy Rev. 103, 140–150.

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Closing the Gender Data Gap

Posted on March 7, 2024 | FROGEE Brief, Policy Brief

20240306 Closing the Gender Data Gap Image 01

High-quality data plays a crucial role in enhancing our comprehension of evolving social phenomena, and in designing effective policies to address existing and future challenges. This particularly applies to the gender dimension of data, given the profound impact of the pervasive so-called “gender data gap”. In recent decades, data recovered from archives, high quality surveys, and census and administrative data, combined with innovative approaches to data analysis and identification, has become pivotal for the progress of documenting structural gender differences. Nonetheless, before we can close the gender gaps on the labour market, within households, in politics, academia and other areas, researchers and policy-makers must first ensure a closure of the gender data gap.

Policy Brief | EN langauge version

Policy Brief | GE language version

Introduction

Any progress in our understanding of social phenomena hinges on the availability of data, and there is no doubt that recent advances in economics and other social sciences would not have been possible without countless high quality data sources. As we argue in this policy brief, this applies also, and perhaps particularly, to the documentation of different dimensions of gender inequalities and the analysis to identify their causes. Over the last few decades innovative ways to document historical developments, combined with improvements in the access to existing data, as well as new approaches to data collection, have become cornerstones in the progress made in our understanding of the various expressions of gender inequality. In the economic sphere this has covered themes such as labor market status,  earning and income levels, wealth accumulation over the life course, education investments, pensions, as well as consumption patterns and time allocation – in particular caregiving and household work. Researchers have also been able to empirically study gender inequalities in politics, culture, crime, the justice system and in academia itself.

Groundbreaking studies in gender economics, including those by Claudia Goldin, the recent Nobel Prize laureate, would not have been possible without high quality data and innovative ways aimed at closing the “gender data gap”, a term coined by Caroline Criado Perez, in her bestseller “Invisible women” (Criado Perez, 2020). In the introduction to the book she notes that “(…) the chronicles of the past have left little space for women’s role in the evolution of humanity, whether cultural or biological. Instead, the lives of men have been taken to represent those of humans overall.” (p. XI). The gender data gap is the result of deficits of informative data sources on women, which has been augmented by frequent lack of differentiation of information by sex/gender in available sources. Closing the gender gaps along the dimensions already identified in existing studies will require a continuous monitoring of evidence, thus closing the gender data gap in the first place. New studies focused on greater equality and on the effectiveness of various implemented policies will continue to rely on good data. Thankfully, few new datasets currently ignore the gender of the respondents. However  as our understanding of the biological and cultural aspects of sex and gender grows, the way data is collected will need to be modified.

As we prepare for the new challenges ahead of those designing data collection efforts and examining the data, we believe it is important to give credit to the authors of some of the groundbreaking studies that paved the way to the current pool of evidence on gender inequality. Around the time of the International Women’s Day, we recall several empirical studies in gender economics that, in our opinion, merit special attention due to either their innovative approaches to data collection, their unique access to original data sources, or their methodological novelty. These studies bring valuable insights into specific dimensions of gender inequality. This short list is naturally a subjective choice, but we believe that all of these studies deserve credit not only among researchers within gender economics, but also among those more broadly interested in the recent progress in the understanding of different aspects of gender inequality.

From Data to Policy Recommendations

Over the last few decades substantial efforts have been made to provide empirical evidence concerning historical trends in inequalities between men and women on the labor market. Seminal work in this field was conducted by Claudia Goldin in the 1970s and 80s, culminating in the publication of the path-breaking book Understanding the Gender Gap: An Economic History of American Women (Goldin, 1990). The book fundamentally changed the view of women’s role in the labor market. Empirically Goldin shows that female labor force participation has been significantly higher in historical times than previously believed. Before Goldin, researchers mainly studied twentieth century data. Based on this it looked as if women’s participation in the labour market is positively correlated with economic growth. Goldin’s work showed instead that women were more likely to participate in the labour force prior to industrialization, and that early expansion of factories made it more difficult to combine work and family. Seen over the full 200 year period, from before industrialization to today, the pattern of women’s labour market participation is in fact U-shaped, pointing to the importance of various societal changes that alter incentives and possibilities for women’s work. Goldin’s contribution is however not just about getting the empirical picture right. At least equally important is the recognition of women as individual economic agents, who make forward looking decisions under various institutional constraints and limitations related to social norms about identity and family, as well as education opportunities and labor market options. While some decision can be modeled as taken by “the economic man”, others by households, it may seem surprising that studying women’s decisions was for so long neglected.

Institutional, cultural and economic factors behind historical trends have become the focus of much of the literature trying to identify the forces driving gender disparities. Some of the most original work considers the role that “chance” plays in determining individual decisions related to gender – how having a first-born son (e.g. Dahl and Moretti, 2008) or having twins (Angrist and Evans, 1998), both of which can be considered random, – affect choices related to partnership, future fertility and the labor market. Others examin the influence of gender imbalances caused by major historical events. Brainerd (2017) investigates the consequences of extremely unbalanced sex ratios in cohorts particularly affected by the massive loss of lives during World War II in the Soviet Union. By exploiting a unique historical data source derived from the first postwar census, combined with statistics registry records from archives, Brainerd provides evidence that the war-induced scarcity of men profoundly affected women’s outcomes on the marriage market. Women were more likely to never get married, give birth out of wedlock and get divorced. On top of that, unbalanced sex ratios affected married women’s intrahousehold bargaining power and resulted in lower fertility rates and a higher rate of marriages with a large age gap between spouses. The post-war institutional setup increased the cost of divorce and withdrew legal obligations to support children fathered out of wedlock, which exacerbated the consequences from the shortage of men by further reducing the rates of registered marriages and increasing marital instability.

The examples above highlight how conditions beyond individuals’ control can contribute to social gender imbalances, or shed light on existing gender biases. How these ‘exogenous’ circumstances translate into economic inequalities and what additional factors drive disparities has been the focus of much academic work on gender inequalities. One of the most challenging questions has been that of demonstrating that discrimination of women, rather than women’s characteristics or choices, are behind the growing body of evidence on economic gender inequality. In this respect Black and Strahan (2001) provide important convincing conclusions by using significant changes in the level of regulation in the US banking sector. Increasing competition between banks lowered banks’ profits, and led to a reduced ability of managers to ‘divide the spoils’, and thus to discriminate between different types of employees. The authors used information on wages within specific industries (including banking) from one of the oldest ongoing surveys in the world – the US Current Population Survey (CPS). By exploiting detailed individual data covering a period of several decades the authors show that higher levels of banking sector regulations (prior to deregulation) facilitated greater premia paid out to male compared to female employees. Thus, increased competition in the banking sector brought favorable changes to women’s pay conditions as well as their position in banks’ management.

While long running surveys such as the CPS continue to serve as invaluable sources of information on the relative conditions of men and women, the growing availability of administrative data has opened new opportunities for documentation of inequalities and identification of the reasons behind these. For instance, the ability to track individuals throughout their work history before and after the arrival of their first child has allowed researchers to compare the trajectories of women’s and men’s earnings, wages and working hours. This comparison has revealed the existence of the so-called “child penalty”, with women experiencing a drop in their labor market position relative to their male partners after the birth of their first child, and with the gap persisting for many years. Strikingly, this penalty has been estimated in some of the most gender-equal countries in the world, such as Sweden (Angelov et al., 2016) and Denmark (Kleven et al., 2019), two countries which have spearheaded collecting and making rich administrative data available to researchers.

Another area where individual register data has proven invaluable is in the study of the so-called “glass ceiling”, i.e., the sharply increasing differences between men and women when it comes to pay as well as representation in the very top of the income distribution. In a seminal study by Albrecht et al. (2003), individual earnings for men and women were compared and differences were found to be markedly higher (with men earning much more) when comparing men in the top of the male income distribution with women in the top of the female income distribution. Also making use of Swedish registry data, Boschini et al. (2020) study a related question, namely the evolution of the share of women in the top of the income distribution. In line with other glass-ceiling results, they demonstrate that the share of women in the top is small, and that it gets smaller the higher one looks, , although it has increased over time. Decomposing incomes into labor earnings and capital income they also show that while women seem to be catching up in the labor income distribution, they clearly lag in the capital income distribution. Also, the income profile of the partners of high-income men and high-income women are strikingly different. Most high-income women have high-income partners, while the opposite is not true for high-income men.

Differences in the economic position of men and women reflected in the above examples can have their origin much before the time individuals enter the labor market. They can be driven by differences in schooling opportunities, as well as other forms of early life investments, to the extent that even much of what is perceived as choices or preferences later in life are in fact results of these subtle early life disadvantages for women. While these have largely diminished in the global North, there is a growing number of studies documenting these differences in the global South. Jayachandran and Pande (2017) examine the impact of son preference, a widespread cultural practice for example in India, on child health and development. The study leverages a simple, standardized, and broadly available indicator – the height of children – which is measured at routine health checks and included in many population surveys, such as the Demographic and Health Surveys (DHS). Additionally, their use of a natural experiment, based on the birth order of children, helps to establish a causal relationship between eldest son preference and nutritional disparities that have long-term developmental consequences among subsequent children, not only for girls but for Indian children on average. Findings like these underscore the importance of gender equality not only as a fundamental value but also as a crucial factor in promoting growth and development at the societal level.

The social costs of gender inequality have also motivated the growing research interest in gender-based violence and crime. Given the specific challenges associated with these topics – such as the clandestine and underreported nature of these acts but also the consideration for victims’ confidentiality and safety – studies in this area has required researchers to develop and apply innovative tools and data collection methods. In this framework list experiments have emerged as a methodology allowing respondents to disclose sensitive or socially undesirable attitudes indirectly, reducing the likelihood of the so-called social desirability bias in survey reporting. In a list experiment, respondents are presented with a set of statements or behaviors and asked to indicate their agreement or engagement with these. Among listed items, one is considered “sensitive” and is included only for a randomly selected subset of respondents. By comparing the average number of items agreed with by the entire sample to a control group that did not get the sensitive item, researchers can estimate the proportion of respondents who agreed with or engaged in the sensitive behavior or opinion. Kuklinski et al. (1997) is one of the pioneering contributions in this area, estimating the proportion of voters who harbored racial prejudices but who may have been unwilling to admit it in a direct survey question. List experiments have since become a widely used tool in political science and economics and have helped in the advancement of our understanding of gender-based violence (Peterman et al., 2018). Given the strong assumptions underlying the analysis the method has not become the ”statistical truth serum” it was at some point considered to be. However, list experiments have broadened the analytical opportunities in an area plagued by significant informational and data challenges.

While worldwide gender gaps in economic opportunities and especially in education and health have rapidly declined (and sometimes reversed) in the last decades, larger differences remain in political empowerment (see e.g., WEF Gender Gap Report 2023). Another Nobel Prize laureate in economics, Esther Duflo, in her joint work with Raghabendra Chattopahyay (2004), have pioneered a highly prolific area of research on the impacts of women as policymakers. In their study, they leverage a unique policy experiment in India  that randomized the gender of the leader of Village Councils, and a detailed dataset based on extensive surveys administered to both Village Council leaders and villagers. The surveys allowed for estimation of the investments in different public goods in 265 Village Councils, as well as the preferences over each of these public goods among female and male villagers. Combining the randomization and this rich dataset, the authors establish that political leaders prioritize public goods that are more relevant to the needs of their own gender, suggesting that women’s under-representation in politics might result in women’s and men’s preferences being unequally represented in policy decisions.

Conclusions and Recommendations

The narrowing gender gap in political representation across various levels of government, the growing influence of women in other areas such as public institutions, administration etc., and the heightened awareness of the crucial role gender equality plays in socio-economic progress all bode well for improvements in access to high-quality gender-differentiated data sources. Before we can recognize and close gender gaps identified from high-quality data, the gender data gap needs to firstly be closed. Governments and public institutions should make their  increasing amounts of digitized information available for research purposes. Funding should be available to collect data through surveys, and these could in turn be combined with details available in administrative sources to take advantage of the breadth of survey data and the precision of official statistics. Information needs to be collected on a frequent and regular basis to make sure that the consequences of various major developments, such as legal changes, conflicts or natural disasters, can be identified. Innovative data sources, for instance information from mobile apps or social media, can provide additional useful insights into socio-economic trends, old and new dimensions of inequalities and regular timely updates on different aspects of gender disparities. These new data sources can become the basis for future innovative studies on gender inequalities, contributing to a better understanding of the mechanisms behind these inequalities, and providing evidence for policies and other efforts to effectively close the remaining gaps. Already now there is enough evidence to conclude that closing these gaps is not only just but that it also constitutes a fundamental basis for continued inclusive economic development.

Post Scriptum

Contributing to the existing pool of data sources we are happy to share a regional dataset with information on gender norms and gender-based violence: the FROGEE Survey 2021. The data was collected using the CATI method (phone interviews) in autumn 2021 in Belarus, Georgia, Latvia, Poland, Russia, Sweden and Ukraine. In each country interviews were conducted with between 925 and 1000 adults. The survey covered areas such as: basic demographics, material conditions, labor market status, gender norms, attitudes towards harassment and violence, awareness of violence against women and awareness of legal protection for gender violence victims.

The data collection was funded by the Swedish International Development Cooperation Agency (SIDA) as part of the FREE Network’s FROGEE project. The dataset and supporting materials are freely available for research purposes. For more information see: FROGEE Survey on Gender Equality.

References

  • Angrist, D. J., and Evans, N. W. (1998). Children and their parents’ labor supply: Evidence from exogenous variation in family size. American Economic Review, 88(2), 450-477.
  • Albrecht, J., Björklund, A., and Vroman, S. (2003). Is there a glass ceiling in Sweden? Journal of Labor Economics, 21(1), 145-177.
  • Angelov, N., Johansson, P., and Lindahl, E. (2016). Parenthood and the gender gap in pay. Journal of Labor Economics, 34(3), 545-579.
  • Black, S. E., and Strahan, P. E. (2001). The division of spoils: Rent-sharing and discrimination in a regulated industry. American Economic Review, 91(4), 814-831.
  • Boschini, A., Gunnarsson, K., and Roine, J. (2020). Women in top incomes: Evidence from Sweden 1971–2017. Journal of Public Economics, 181, 104-115.
  • Brainerd, E. (2017). The lasting effect of sex ratio imbalance on marriage and family: Evidence from World War II in Russia. The Review of Economics and Statistics, 99(2), 229-242.
  • Chattopadhyay, R., and Duflo, E. (2004). Women as policymakers: Evidence from a randomized policy experiment in India. Econometrica, 72(5), 1409-1443.
  • Criado Perez, C. (2020). Invisible women. Vintage, London.
  • Dahl, G. B., and Moretti, E. (2008). The demand for sons. Review of Economic Studies, 75(4), 1085-1120.
  • Goldin, C. (1990). Understanding the Gender Gap: An Economic History of American Women. Oxford University Press.
  • Kleven, H., Landais, C., and Søgaard, J. E. (2019). Children and gender inequality: Evidence from Denmark. American Economic Journal: Applied Economics, 11(4), 181-209.
  • Kuklinski, J. H., Sniderman, P. M., Knight, K., Piazza, T., Tetlock, P. E., Lawrence, G. R., & Mellers, B. (1997). Racial prejudice and attitudes toward affirmative action. American Journal of Political Science, 402-419.
  • Jayachandran, S., and Pande, R. (2017). Why are Indian children so short? The role of birth order and son preference. American Economic Review, 107(9), 2600-2629.
  • Peterman, A., Palermo, T. M., Handa, S., Seidenfeld, D., and Zambia Child Grant Program Evaluation Team (2018). List randomization for soliciting experience of intimate partner violence: Application to the evaluation of Zambia’s unconditional child grant program. Health Economics, 27(3), 622-628.

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Georgian Economy and One Year of Russia’s War in Ukraine: Trends and Risks

Posted on March 13, 2023 | News

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Russia’s invasion of Ukraine profoundly impacted the global economy, immediately sending shockwaves across the globe. The attack of a country that was once a major energy supplier to Europe on the country which was one of the top food exporters in the world, sent food and fuel prices spiralling, causing major energy shortages and the prospect of protracted recession in the United States and the European Union.

The unprovoked and brutal aggression resulted in nearly universal condemnation and widespread sanctions placed on Russia by the United States, the EU, and other Western allies. Financial sanctions were perhaps the most unexpected and significant with the potential for immediate impact on Russia’s neighbours, including those that did not formally join the sanctions regime. In addition to sanctions, the major consequence of the war was mass migration waves, particularly from Ukraine, but also from Russia and Belarus to neighbouring countries.

At the start of the war, it was expected that the Georgian economy would be severely and negatively impacted for the following reasons:

  • First, as a former Soviet republic, Georgia historically maintained close economic trade ties with both Russia and Ukraine. The ties with Russia have weakened considerably in the wake of the 2008 Russo-Georgian war but remained significant. Russia was the primary market for imports of staple foods into Georgia, such as wheat flour, maize, buckwheat, edible oils, etc. Russia and Ukraine were both important export markets for Georgia. Russia was absorbing about 60 percent of Georgian wine exports and 47 percent of mineral water exports, while Ukraine was one of the leading importers of alcohol and spirits from Georgia (46 percent of Georgia’s exports). Tourism and remittances are other areas where Georgia is significantly tied to Russia and somewhat weaker to Ukraine. Before the pandemic, in 2019 Russia accounted for 24 percent of all tourism revenues, while Ukraine for 6 percent. Remittances from Russia accounted for 16.5 percent of total incoming transfers in 2021.
  • Second, while the Georgian government chose to largely keep a neutral stance on the war (announcing at one point that they would not join or impose sanctions against Russia), the main financial and trade international sanctions were still in effect in Georgia due to international obligations and close business ties with the West. These factors were reinforced by strong support for Ukraine among the Georgian population, where the memory of the Russian invasion of Georgia in 2008 remains uppermost.
  • In addition, Georgia is a net energy importer, and while the dependence on energy imports from Russia is not significant, the rising prices would have affected Georgia profoundly.

Original publication: This policy paper was originally published in the ISET Policy Institute Policy Briefs section by Yaroslava Babych, Lead Economist of ISET Policy Institute. To read the full policy paper, please visit the website of ISET-PI. 

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Higher Education and Research in times of War and Peace: Key Insights from the 2022 FREE Network Conference

Posted on September 26, 2022 | Policy Brief

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More than thirty years after the collapse of the Soviet Union, Europe is struck with war following the Russian aggression on Ukraine. Russia’s war on Ukraine entails lost human capital, both in actual lives lost and due to major disruptions to key functions of the society, such as education and research. In light of this, the FREE Network, together with the Centre for Economic Analysis (CenEA) and the Stockholm Institute of Transition Economics (SITE), hosted the public conference “Higher Education and Research in War and Peace“ in Warsaw on the 10th of September 2022. This policy brief is based on the presentations and panel discussions held during the conference.

The large-scale Russian invasion of Ukraine has disrupted an entire society, including the education system, with Ukrainian schools just recently partially welcoming back students to the classrooms for the first time since the 25th of February 2022. Closing schools has severe impacts on a population, as highlighted by the recent Covid-19 pandemic. The lockdown and closure of schools around the world following the virus have had and will continue to have massively negative consequences globally, with severe losses in human capital due to lost years of education. This is especially in countries where access to online education is limited or of poor quality. Inequalities also rise following the closure of schools and girls return to school in fewer numbers than their male counterparts. The disruption to the Ukrainian education system will result in lost human capital and lowered levels of knowledge among the population. The war has further restricted access to relevant information for many Ukrainians but also for Russians, making people susceptible to the increased Russian propaganda and misinformation about the war on Ukraine depicted within and outside of Russia.

In light of this, the FREE Network gathered representatives from its affiliated institutions and other relevant actors in the region to discuss the relevance and necessity of continued support for higher education and research within social sciences in Ukraine, and more broadly in Eastern Europe and post-Soviet countries. The conference and the overarching theme related back not only to the original ambition of the FREE Network, namely to support outstanding academia within economics and relate it to policy work but also to the current situation in Europe and the existing threat from Russia to this objective.

This brief will initially cover the work carried out by the Kyiv School of Economics (KSE) in response to the Russian aggression, followed by thoughts on Russia’s role in the evolution of knowledge and human capital in the region. The brief continues by covering the benefits and positive outcomes of investments into education and research and lastly concludes with reflections on the role of the FREE Network.

The Kyiv School of Economics’ Response to the Russian Aggression

The war on Ukraine put the spotlight on the importance of high-quality academic institutions as a safety net for the government to maintain vital functions to society. The Vice President for Policy Research at KSE, Nataliia Shapoval, gave a brief overview of how KSE’s work has changed since the Russian war on Ukraine and its implications. Shapoval initially painted a picture of the disruption to the Ukrainian society caused by the Russian aggression, explaining how KSE stepped up during the first months of the war, in some areas doing the work of ministries. While the government has mainly taken back some duties, the KSE is still providing policy advice in areas related to the effects of sanctions, estimates of damages, and food security among others. KSE is also highly active within the areas of education and health, working with Ukrainian schools through the KSE Charitable Foundation (KSE CF) to ensure students can safely return to the classrooms.

Another important aspect of the work carried out by KSE concerns spreading knowledge about and shedding light on the situation in Ukraine. Through the various networks, by talking to colleagues within academia but also to the media, KSE is trying to explain what has happened and is still happening in Ukraine. According to Shapoval, there is a need for delivering correct information and to keep attention fixed on the situation in Ukraine such that people are kept aware of what is going on in the region.

Shapoval also regularly returned to the role of education and research for the present and future Ukraine. According to Shapoval, avoiding brain drain and ensuring Ukrainians are equipped with the necessary knowledge is key to rebuilding a future Ukraine founded on well-functioning democratic institutions. To facilitate this, the KSE is offering two programs, Memory and Conflict Studies (a multidisciplinary field concerned with how the past can be understood and remembered, and how it might impact the present transformation of societies) and Urban Studies, both aimed at covering the future need for competence within these fields. Further mentioned by Shapoval is the fact that, due to the war, many Ukrainians have left the country and are being educated elsewhere. While this partially ensures intellectual human capital is not lost, these students must be kept anchored to Ukraine through networks to ensure they will return back to help rebuild Ukraine. This is especially important in order to counter the ongoing evolution in Russia.

Thoughts on the Role of Russia in the Region

While the recent developments in Ukraine have of course disrupted education and research in more severe and tangible ways, the situation for independent researchers in Russia has also deteriorated. Torbjörn Becker, Director of SITE, emphasized how several Russian colleagues in exile still collaborate with the FREE Network on policy work and research. Becker also further stressed how they will be paramount once Ukraine wins the war, as will the role of partnerships for a future transformation of the Russian society. Acknowledging that there are many Russians (especially amongst academics in exile) who oppose the war, Shapoval however stressed the disturbing fact that many Russians do seem to support the Russian aggression and that the role of Russia as a destructive force in the region cannot be understated. This was seconded by Tamara Sulukhia, Director of the International School of Economics at Tbilisi State University (ISET). Sulukhia argued that Russian politics slow down and disturbs the free states within the region, and hampers organizations and countries from moving in the right direction in regard to democracy, economic evolution and integration toward Europe. Both Shapoval and Sulukhia reminded the audience that even with a Ukrainian victory, and this in a war which is defining the future of democracy in the region, Russia will persist. Russia has proven time and again, by effectively occupying 23 percent of Georgia as of 2008, with the occupation of Crimea in 2014 and with the most recent war on Ukraine, to be a real military threat to post-Soviet countries. Even though Russia losing the war would shift the power dynamics in the region, the ever-present threat of Russia is not only of a military character. Russia also attempts to impact education, research and knowledge more generally by promoting a Soviet-style education and by altering reality through propaganda and false information.

While discussing the current situation of higher education within economics in Belarus, Dzmitry Kruk, Deputy Academic Director of the Belarusian Economic Research and Outreach Center (BEROC), regularly came back to the negative impacts from Russia on the quality of education and research. Where the western style education is free but also differential, Soviet-style education is centred around learning how to fulfil instructions, according to Kruk. The Belarusian educational system is anchored to Russia and as a result Belarusians today have what Kruk referred to as a “spoilt mental map”. The necessity of free education and research outside the Russian alternative (which is mainly published in Russian and with a post-Marxist view of the world) is vital in order to equip people with the tools to respond to the new types of dictatorship evident in the region. Young people within academia who have experienced freedom and have had the opportunity of thinking for themselves will also be vital on the future path toward democracy. Kruk’s opinions were furthered by Shapoval stating how education must and should counter the risk of brainwashing in the region and in the world as a whole. Shapoval argued the necessity of countering propaganda with the help not only of education but also the legislation of media and social media and enforcement of international laws in general. The necessity of ensuring new values for intellectuals and students in times to come is of paramount value and, according to Shapoval, as important to halting the Russian imperialist visions today as it was some thirty years ago. Shapoval further argued that the threat from Russia’s ambitions should be met not only with education and research but also through installing a sense of hope and prosperity among young people.

Investments into Education and Research as a Safeguard and Development Driver

While countries within the turbulent region differ, not least in regard to overall political ambitions and structure, in most of them investments into education and research have been paying off. KSE’s expertise allowed it to work closely with the Ukrainian government, standing strong in their fight against Russia. The impact from investments into education and research in the region is also evident in both Georgia and Latvia.

Sulukhia argued ISET to be, and to have been, a key contributor to human capital among Georgians as well as others in the Caucasus region. Sulukhia argued this to be especially important when under occupation, mentioning how Georgia has, since the occupation of the two regions of Abkhazia and South Ossetia, in all ways possible tried to ensure that the human capital of internally displaced people is not lost. ISET have ten folded its intake of students and is today providing world-class education in the Georgian language, effectively counteracting brain drain. Post-graduates are working in major institutions providing relevant knowledge and competence in key areas of not only the Georgian society but also other countries in the Caucasus. A similar picture was painted by Anders Paalzow, Rector at Stockholm School of Economics in Riga (SSE Riga). Paalzow specifically pointed out how the investments in education made in Latvia in the 1990s have truly paid off, with graduates having been absorbed into relevant parts of the Latvian society and the Baltics for decades.

Having previous students in key positions in society to ensure sound policy work (such as good fiscal and audit control of the countries in question etc.) is however not the only benefit of investing in education and research within the region. As emphasized by Sulukhia, institutes within the FREE Network and other networks alike are strategically vital in the sense that they ensure knowledge and evidence for policy makers and as they convey evidence-based messages for the general public. This is especially important in a time when the message of the developmental direction for the countries within the region has to be reinforced in order to stand against Russian misinformation and propaganda as well as voices questioning the benefits of European integration. Sulukhia emphasized how it is of importance that the relevance of education and research is rooted among the people and not only within academia to evade the risk of preaching to the choir. Vlad Mykhnenko, Fellow at St. Peter’s College at the University of Oxford, further argued it is necessary for academia to be much more policy oriented than what is the reality today. Researchers should comment on political events and public policy to ensure the outreach of knowledge and information, not just to help the public have a greater understanding of complex issues but also to help inform experts. According to Myhnenko, other researchers are keen on getting context-relevant knowledge and insights from economists working within the region.

The necessity of communicating the outcomes from investments within economics education and research and more broadly within social sciences was a recurring theme during the conference. Presenting the University’s engagement in various programs such as Erasmus+, Horizon Europe, The European Strategy for Universities etc., Professor Agnieszka Chłoń-Domińczak from the Warsaw School of Economics (WSE) outlined the importance of funding from the EU. Chłoń-Domińczak highlighted how EU support has enabled greater partnerships and internationalization and pointed out that while the transfer of knowledge and internationalization of students and researchers are of the essence, there is a need for also ensuring capacity building among other staff when building sound institutions. Internationalization through the exchange as a hedge against brain drain and as a means of improving the quality of academia was further emphasized by Michal Myck, Director of CenEA.

Chłoń-Domińczak, alongside Paalzow and the Swedish Ambassador to Poland, Stefan Gullgren, further argued the necessity to bridge between business and academia. This, especially as investments in social sciences, as compared to investments in natural sciences or technology cannot be commercialized. Additionally, the former havs payoffs in the long run which lowers investment incentives for firms making it even more crucial to communicate the large benefits to society of investments into the sphere. Ensuring consistent and continued support requires not only a good connection to businesses but also proper legal structures in place. As argued by Gullgren, the Swedish model with private businesses funding about 70 percent of research and education in Sweden, is made possible largely thanks to the fact that many investments are funnelled through foundations that are exempt from taxation when set up to finance research grants and education. Thus, one should consider not only business, academia and investors when thinking about future funding for research and education, but the legislative framework as well, especially in contexts such as the future rebuild of Ukraine.

As for how the benefits from investments into social sciences best are communicated, opinions shifted among participants throughout the day. On the one hand, Becker’s argument of being visible not only in traditional media but on social media alike was met by Shapoval, highlighting the need for a regulatory framework for both platforms. On the other hand, Myhnenko’s argument for more policy oriented and outreaching research was met by Kruk claiming there is a risk of researchers within economics deviating too far from research within the field. Kruk also addressed the argument of being available on social media by countering that in his view, researchers should refrain from work based on what generates clicks or reads.

The Relevance of the FREE Network in times of War

Considering the evidence brought forth during the conference by colleagues within the FREE Network, be it the suppression of BEROC in their efforts of founding a School of Economics in Belarus, the effects on the KSE from the war on Ukraine, or the rise of anti-European expressions in Georgia, the necessity of the network was at the end of the day perhaps clearer than ever. As highlighted by virtually all speakers during the conference, internationalization through networks such as the FREE Network fosters open minds, allows for improvements within all aspects of academia, and enables the exchange of thoughts, ideas and experiences. Although the heterogeneity of the region should not be overlooked and investments made in accordance with this, the similarities between the countries within the FREE Network outnumber the differences. The immediate threat from Russia must be met with knowledge and fact-based information as well as high-quality education and research being made available among the population in the region as a whole. To ensure a continued transition within the region, the risk of brain drain must be evaded through continuous support to the social sciences, as these have the power to truly transform nations.

Concluding Remarks

The FREE Network public conference in Warsaw was the first in-person conference since the outbreak of the Covid-19 pandemic. The benefits of meeting in person were however overshadowed by the ongoing Russian aggression on Ukraine and ultimately on democratic ideals, including those of independent academia. We hope to welcome all FREE Network institutes to next year’s conference in Kyiv, to further discuss how outstanding education and research can help rebuild a sovereign Ukraine.

List of Participants

  • Torbjörn Becker, Director of SITE
  • Agnieszka Chłoń-Domińczak, Professor at WSE
  • Stefan Gullgren, Swedish Ambassador to Poland
  • Dzmitry Kruk, Deputy Academic Director, BEROC
  • Michal Myck, Director of CenEA
  • Vlad Mykhnenko, Fellow, St. Peter’s College, University of Oxford
  • Anders Paalzow, Rector SSE Riga
  • Nataliia Shapoval, Vice President for Policy Research at KSE
  • Tamara Sulukhia, Director of ISET

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.