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The paper addresses mainly three questions. One, do workers tend to be employed by employers of the same ethnic group; two, what is the structure of the equilibrium wage contract; and three, do more ethnically homogeneous labor markets tend to have different labor contracts than more ethnically diversified ones. The answer to the first question is in the affirmative – in equilibrium all employers offer the same wage contract and workers are hired by employers of the closest ethnic affiliation. In terms of the equilibrium wage contract, its nature depends on the attitude toward risk of both sides of the market. Finally, the answer to the third question is also in the affirmative since the more homogenous the labor market, the more deterministic is the wage.

The 1980s and 1990s constituted a boom period for foreign direct investment. The opening of dozens of new nations to foreign direct investment and the associated confidence in these countries' long-term growth potential led more multinational firms from more countries to undertake investment of greater magnitude in more countries than in any previous historical period. In his 1983 Harvard Business Review article “The Globalization of Markets,” Theodore Levitt (1983) famously advised companies that if they wished to survive, they should expand quickly to global scale. More recently, Thomas Friedman (2005) reinforced Levitt's conclusion in his book “The World Is Flat: Distance is dead. Markets have now converged.” Governments were helpless in the face of the power of global finance. The question posed to managers of multinational corporations was not where to invest globally but rather how fast. During this period, the United Nations reports that the magnitude of global foreign direct investment surged in real terms from $89 billion to $471 billion (constant 2,000 USD) or from 0.5% to 4.4% of global output. The percentage of those flows destined for developing and transition economies soared from 13.9% to a peak of 41.4%.

The post-Soviet space, consisting of the countries of the former USSR and the Warsaw Pact, is a good testing ground for the dynamics of growth. Motivated by the mixed evidence on economic convergence in the region, this paper explores why countries have performed differently, focusing on institutional strength and its determinants. It proposes the hypothesis that, in the region, Russian influence plays a negative role in institutional development, both through opaque business practices that come with it, and through the isolation from European Union influence it entails. The paper uses recent panel data to test this hypothesis, concluding that there is some evidence supporting a negative effect of Russian influence on post-Soviet states’ institutions, but that more rigorous analysis is needed to confirm this link.

While climatic conditions are believed to have some influence on triggering conflicts, the existing empirical results on the nature and statistical significance of their explanatory role are not conclusive. We construct a dataset for a sample of 139 countries which records the occurrence of an armed conflict, the annual average temperature and precipitation levels, as well as the relevant socioeconomic, demographic, and geographic measures over the 1961–2011 period. Using this dataset and controlling for the effect of relevant nonclimate variables, our comprehensive econometric analyses support the influencing role of climatic factors. Our results are robust and consistent with the hypothesis that climate warming is instrumental in raising the probability of onset of internal armed conflicts and suggests that, along with regulating population size and promoting political stability, controlling climate change is an effective factor for inducing peace by way of curtailing the onset of armed conflicts.

This chapter reviews the nuances of colonialism, exploring the role of Arab expansion, the inter-African slave trade system, the Christianity position on slavery, similar slavery systems in Asia and Europe, and the impact of colonization after 1400. Using the historical examples of African colonization and its growth into international trade through time, I will examine the scars of colonialism.

The aim of the chapter is twofold: (i) to propose a methodology to compute the growth rate volatility of an economy and (ii) to investigate the relationship between growth volatility and economic development through the lenses of the structural characteristics of an economy. We study a large cross-section of countries in the period 1970–2009, controlling for the stability of the estimates in two subperiods: 1970:1989 (Period I) and 1990:2009 (Period II). Our main findings are (i) the degree of trade openness has a destabilizing effect, while the degree of financial openness has not a significant effect; (ii) the size of the public sector displays a U-shaped relationship with growth volatility, but only in Period II; and (iii) the level of financial development has a negative effect on growth volatility, but only in Period I. Therefore, the dominant policy orientations in the recent decades contained emphasis on potential sources of instability, for example, on the increase in openness and on the reduction of the size of the public sector.