nep-cwa New Economics Papers
on Central and Western Asia
Issue of 2007‒03‒24
fourteen papers chosen by
Nurdilek Hacialioglu
Open University

  1. Higher Education in India: The Need for Change By Pawan Agarwal
  2. Trade Adjustment and Human Capital Investments: Evidence from Indian Tariff Reform By Eric V. Edmonds; Nina Pavcnik; Petia Topalova
  3. The Dynamics of Reform of India’s Federal System By Singh, Nirvikar
  4. An Insight into the Growth of New Retail Formats in India By Sinha Piyush Kumar; Kar Sanjay Kumar
  5. Comparing the evolution of spatial inequality in China and India: a fifty-year perspective By Gajwani, Kiran; Kanbur, Ravi; Zhang, Xiaobo
  6. Indo-U.S. FTA: Prospects for Audiovisual Services By Arpita Mukherjee; Paramita Deb Gupta; Prerna Ahuja
  7. Brain Drain from Turkey: The Case of Professionals Abroad By Nil Demet Güngör; Aysit Tansel
  8. Policies, Enforcement, and Customs Evasion: Evidence from India By Petia Topalova; Prachi Mishra; Arvind Subramanian
  9. A NO CAP BUT TRADE PROPOSAL FOR GREENHOUS GAS EMISSION REDUCTION TARGETS FOR BRAZIL, CHINA AND INDIA By Katrin Rehdanz; Richard S.J. Tol
  10. Indo-US FTA: Prospects for the Telecommunication Sector By Arpita Mukherjee; Prerna Ahuja
  11. Asian century or multi-polar century ? By Dollar, David
  12. Management Capacity Assessment for National Health Programs: A study of RCH Program in Gujarat State By Ramani K.V.; Mavalankar Dileep V.
  13. Mid Day Meal Scheme: Understanding Critical Issues with Reference to Ahmedabad City By Deodhar Satish Y.; Mahandiratta Sweta; Ramani K.V.; Mavalankar Dileep; Ghosh Sandip & Vincent Braganza, S.J.
  14. Central bank intervention, sterilization and monetary independence: the case of Pakistan By Waheed, Muhammad

  1. By: Pawan Agarwal (Indian Council for Research on International Economic Relations)
    Keywords: India's higher education sector, reforms in education, financing of India's Education, Quality assurance in education, funding of higher education, regulating higher education
    JEL: I20 I21 I22 I28 O32 J44
    Date: 2006–06
    URL: http://d.repec.org/n?u=RePEc:ind:icrier:180&r=cwa
  2. By: Eric V. Edmonds (Dartmouth College NBER and IZA); Nina Pavcnik (Dartmouth College NBER and CEPR); Petia Topalova (International Monetary Fund)
    Abstract: Do the short and medium term adjustment costs associated with trade liberalization influence schooling and child labor decisions? We examine this question in the context of India's 1991 tariff reforms. Overall, in the 1990s, rural India experienced a dramatic increase in schooling and decline in child labor. However, communities that relied heavily on employment in protected industries before liberalization do not experience as large an increase in schooling or decline in child labor. The data suggest that this failure to follow the national trend of increasing schooling and diminishing work is associated with a failure to follow the national trend in poverty reduction. Schooling costs appear to play a large role in this relationship between poverty, schooling, and child labor. Extrapolating from our results, our estimates imply that roughly half of India's rise in schooling and a third of the fall in child labor during the 1990s can be explained by falling poverty and therefore improved capacity to afford schooling.
    Keywords: schooling, child labor, literacy, trade liberalization, India
    JEL: J24 O15 J22 J13
    Date: 2007–02
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp2611&r=cwa
  3. By: Singh, Nirvikar
    Abstract: This paper analyzes the process of reform of India’s federal system, with a focus on fiscal federalism. We first summarize the basic features of, and recent reforms in intergovernmental relations, including the role of political institutions, assignments of expenditure responsibility and revenue authority, the system of intergovernmental transfers, and institutions and mechanisms for government borrowing. We then discuss the institutional specifics of the reform process, to understand the dynamics of India’s federal system.
    Keywords: federalism; decentralization; intergovernmental relations; economic reform
    JEL: H7 H1 P26 P35
    Date: 2007–03
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:2282&r=cwa
  4. By: Sinha Piyush Kumar; Kar Sanjay Kumar
    Abstract: The Indian retail sector is going through a transformation and this emerging market is witnessing a significant change in its growth and investment pattern. Both existing and new players are experimenting with new retail formats. Currently two popular formats -hypermarkets and supermarkets are growing very fast. Apart from the brick -mortar formats, brick -click and click-click formats are also increasingly visible on the Indian retail landscape. Consumer dynamics in India is changing and the retailers need to take note of this and formulate their strategies and tactics to deliver value to the consumer. This paper investigates modern retail developments and growth of modern formats in this country. We also discuss the challenges and opportunities available to the retailers to succeed in this country.
    Date: 2007–03–20
    URL: http://d.repec.org/n?u=RePEc:iim:iimawp:2007-03-04&r=cwa
  5. By: Gajwani, Kiran; Kanbur, Ravi; Zhang, Xiaobo
    Abstract: "In the second half of the last century, both India and China have undergone major transitions and have moved to more liberalized economies. This paper relates the observed patterns in regional inequality to major events during this period. Because of China's institutional barriers to migration, regional inequality is much higher than in India. Also, China's decentralization and opening up are closely related to the observed regional inequality – particularly the inland-coastal disparity – since the reform period. From the Green Revolution age to the period of economic liberalization in India, the evolution of regional comparative advantage has shifted from the quality of land to the level of human capital as India integrates with the international market. Therefore, India's states have become clustered into two clubs: more educated and less educated ones." Authors' Abstract
    Keywords: Liberalization, Liberalized economies, Regional inequality, Migration, Decentralization, Green Revolution, Economic conditions, International economic relations, Human capital, Spatial inequality,
    Date: 2006
    URL: http://d.repec.org/n?u=RePEc:fpr:dsgddp:44&r=cwa
  6. By: Arpita Mukherjee (Indian Council for Research on International Economic Relations); Paramita Deb Gupta (Indian Council for Research on International Economic Relations); Prerna Ahuja (Indian Council for Research on International Economic Relations)
    Abstract: Many WTO (World Trade Organization) member countries, including India, are defensive about opening up of the audiovisual sector in the Doha Round due to reasons of cultural sensitivity. On the other hand, the United States is pushing for liberalizing trade in this sector - both in the WTO and in its bilateral FTAs (Free Trade Agreements). With the slow progress of the Doha Round, India and the United States are exploring the possibilities of entering into FTAs with like-minded trading partners. In this context, the present paper discusses the prospects of liberalizing audiovisual services under a possible Indo-U.S. FTA. The study found that India and the United States have significant trade complementarities in this sector which can be further enhanced under an FTA. It identifies areas such as co-production of films, digital content creation and broadband infrastructure in which companies from India and the United States can enter into mutually beneficial collaborations. It argues that India should enter into a media cooperation agreement with the U.S. to facilitate the inflow of technical know, finance and best management practices. It discusses regulatory and other reforms which would not only improve the productivity and global competitiveness of the Indian audiovisual sector but also enable it to gain from the FTA.
    Keywords: Indo-U.S. FTA, GATS, bilateral agreements, audiovisual, services
    JEL: F13 F14 L82
    Date: 2007–02
    URL: http://d.repec.org/n?u=RePEc:ind:icrier:192&r=cwa
  7. By: Nil Demet Güngör (Atilim University); Aysit Tansel (Middle East Technical University and IZA)
    Abstract: The paper presents research findings on the return intentions of Turkish professionals residing abroad. The study uses a descriptive framework to establish the validity of several proposed models of non-return. The results are based on an internet survey of Turkish professionals abroad. Correspondence analysis is used to examine the relationship between return intentions and various factors that may affect this intention. The results emphasize the importance of student non-return versus traditional brain and appear to complement the various theories of student non-return. The respondents appear to come from relatively wellto- do families with highly educated parents. Many have earned their degrees from universities that have foreign language instruction. The recent economic crises in Turkey have negatively affected return intentions. We verify that return intentions are indeed linked closely with initial return plans, and that this relationship weakens with stay duration. Specialized study and work experience in the host country also all appear to contribute to explaining the incidence of non-return. Return intentions are weaker for those working in an academic environment. These results lead to important policy implications, some of which include the training of individuals for academic positions at domestic institutions, supporting study abroad for shorter periods and improving academic facilities in Turkey’s newly established universities. The government may support public and private R&D centers to increase the employability of returnees, but also to improve the quality of the higher education system in order to both reduce the need for education abroad and to increase the attractiveness of universities as prospective employment places for those acquiring education and experience abroad.
    Keywords: skilled migration, brain drain, return migration, return intentions, higher education, Turkey
    JEL: F22 J61 O15
    Date: 2007–02
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp2617&r=cwa
  8. By: Petia Topalova; Prachi Mishra; Arvind Subramanian
    Abstract: We examine the effect of tariff policies on evasion of customs duties, in the context of the trade reform in India of the 1990s. We exploit the variation in tariff rates across time and products to identify the evasion elasticity, namely, the effect of tariffs on evasion, and relate this elasticity to factors related to customs enforcement or the quality of customs institutions. We find a positive and robust effect of tariffs on import tax evasion. We then show that the evasion elasticity is influenced by certain product characteristics that determine how easy it is to detect evasion (with more differentiated products exhibiting a higher evasion elasticity). This evasion elasticity, which we broadly interpret as reflecting the quality of customs administration, has not improved over the 1990s. Finally, our results suggest that the effectiveness of customs in addressing evasion may be better in India than China, although China appears to be catching up over time.
    Keywords: Customs evasion; tariffs; enforcement; institutions ,
    Date: 2007–03–15
    URL: http://d.repec.org/n?u=RePEc:imf:imfwpa:07/60&r=cwa
  9. By: Katrin Rehdanz; Richard S.J. Tol (Economic and Social Research Institute, Dublin)
    Abstract: One problem in international climate policy is the refusal of large developing countries to accept emission reduction targets. Brazil, China and India together account for about 20% of today’s CO2 emissions. We analyse the case in which there is no international agreement on emission reduction targets, but countries do have domestic targets, and trade permits across borders. We contrast two scenarios. In one scenario, Brazil, China and India adopt their business as usual emissions as their target. In this scenario, there are substantial exports of emission permits from developing to developed countries, and substantial economic gains for all. In the second scenario, Brazil, China and India reduce their emissions target so that they have no net economic gain from permit trade. Here, developing countries do not accept responsibility for climate change (as they bear no net costs), but they do contribute to emission reduction policy by refusing to make money out of it. Adopting such break-even targets can be done at minor cost to developed and developing countries (roughly $2 bln/year each in extra costs and foregone benefits), while developing countries are still slightly better off than in the case without international emissions trade. This result is robust to variations in scenarios and parameters. It contrasts with Stewart and Wiener (2003) who propose granting “hot air” to developing countries to seduce them to accept targets. In 2020, China and India could reduce their emissions by some 10% from the baseline without net economic costs.
    Keywords: climate policy, developing countries, emission permits, emission reduction targets
    JEL: Q54
    Date: 2005–07
    URL: http://d.repec.org/n?u=RePEc:sgc:wpaper:68&r=cwa
  10. By: Arpita Mukherjee (Indian Council for Research on International Economic Relations); Prerna Ahuja (Indian Council for Research on International Economic Relations)
    Abstract: Since telecommunication is one of the main drivers of economic growth and globalization, WTO (World Trade Organization) negotiations and New Age FTAs (Free Trade Agreements) have focused on liberalizing trade in this sector. The present paper analyses the possibilities of liberalizing trade in telecommunication services if India and its largest trading partner-the US-enter into a bilateral agreement. The study found that India and the US have trade complementarities in telecommunication services and that it should be a priority sector in the FTA negotiations. The study identified certain areas such as R&D related to telecommunication and broadband infrastructure where collaboration between companies of both countries would be mutually beneficial. The study found that telecommunication services have been significantly liberalized in the US FTAs-much beyond the scope of the GATS and the Reference Paper on Basic Telecommunications. While the current policy regime in India is consistent with some of the requests made by the US in its bilateral negotiations, for meeting others, the policy regime needs to be examined and, if required, reformed. The present paper suggests certain reforms which would enhance the productivity, efficiency and global competitiveness of the sector and enable the country to benefit from the bilateral liberalization.
    Keywords: Indo-US FTA, GATS, bilateral agreements, telecommunication, services
    JEL: F13 F14 L96
    Date: 2006–12
    URL: http://d.repec.org/n?u=RePEc:ind:icrier:190&r=cwa
  11. By: Dollar, David
    Abstract: The " rise of Asia " is something of a myth. During 1990-2005 China accounted for 28 percent of global growth, measured at purchasing power parity (PPP). India accounted for 9 percent. The rest of developing Asia, with nearly a billion people, accounted for only 7 percent, the same as Latin America. Hence there is no general success of Asian developing economies. China has grown better than its developing neighbors because it started its reform with a better base of human capital, has been more o pen to foreign trade and investment, and created good investment climates in coastal cities. China ' s success changes the equation going forward: its wages are now two to three times higher than in the populous Asian countries (Bangladesh, India, Indonesia, Pakistan, and Vietnam), and China will become an ever-larger importer of natural resource and labor-intensive products. Developing countries need to become more open and improve their investment climates to benefit from these opportunities. China itself faces new challenges that could hamper its further development: unsustainable trade imbalance with the United States, energy and water scarcity and unsustainable use of natural resources, and growing inequality and social tension. To address the first two of these challenges, good cooperation between China and the United States is essential. The author concludes that we are more likely to be facing a " multi-polar century, " than an Asian century.
    Keywords: Economic Theory & Research,Population Policies,Energy Production and Transportation,Pro-Poor Growth and Inequality,Trade and Regional Integration
    Date: 2007–03–01
    URL: http://d.repec.org/n?u=RePEc:wbk:wbrwps:4174&r=cwa
  12. By: Ramani K.V.; Mavalankar Dileep V.
    Abstract: The Ministry of Health and Family Welfare, Government of India administers a large number of national health programs such as Malaria control program, Blindness control program, National AIDS control program, Reproductive and Child Health (RCH) Program and so on. However, effective management of these programs has always come under scrutiny, as these programs consume a large amount of resources. As health is a state government subject in India, it is necessary to assess the management capacity of the department of Health and Family Welfare (H & FW) in each state. In this paper, we focus on the management capacity assessment for RCH program. Based on extensive literature survey, and discussions with senior officers in charge of RCH program at the centre and several states, we have developed a conceptual framework for management capacity assessment. Central to our conceptual framework are the following determinants of management capacity at the state dept of H & FW: (1) Capacity to formulate a clear statement of the state’s RCH Policy, Goals, and a Strategic Plan to achieve the Objectives, consistent with the resources available, (2) A well designed organizational structure for the H&FW department to provide the necessary support for achieving the policy goals, (3) Capacity of the H & FW department for effective management of RCH program, (4) Clear documentation of HR policies (qualifications, transfer, promotions, training etc) for RCH managers, (5) Role of External Stakeholders (6) Management Systems for Planning, Implementation and Monitoring RCH program, and (7) Institutional Processes and procedures For each of the above determinants, we have identified a set of indicators to assess the management capacity and designed a management capacity assessment tool to estimate these indicators. A pilot survey of our management capacity assessment tool in a few states helped us to refine certain instruments in our tool and finalize the same. Our management tool has been accepted by the Ministry of H & FW, Government of India and it has asked all the states and union territories to carry out a self assessment of their management capacity for RCH program. We have also recommended a suitable structure for effective management of RCH program for each state based on its population, the number of people in the reproductive age group, expected number of childbirths, and the current status of its H&FW department in delivering RCH services. This recommended structure can be used as a guideline by each state to identify its capacity gaps and take the necessary steps to augment its management capacity.
    Date: 2007–03–12
    URL: http://d.repec.org/n?u=RePEc:iim:iimawp:2007-03-02&r=cwa
  13. By: Deodhar Satish Y.; Mahandiratta Sweta; Ramani K.V.; Mavalankar Dileep; Ghosh Sandip & Vincent Braganza, S.J.
    Abstract: The concept of giving nutritional support to school children is not new in India. It dates back to 1925 when Madras Corporation developed a school lunch program. However, it was only in 1995 that such a scheme was launched at the national level in order to provide nutritional support to students in primary schools. The objective of this scheme was to give boost to universalization of primary education and to impact the nutrition of students in primary classes. The Mid Day Meal (MDM) scheme has been revised in 2004 and as per the Supreme Court directive it envisages provision of cooked, nutritious mid-day meal to primary and secondary school children. Importantly, it mentions about setting-up of an appropriate mechanism for quality checks. Despite these developments, over the decades, the problems of malnutrition, anaemia, vitamin-A and Iodine deficiency are very common among children in India. Today, ninety-four percent of children in the age group of 6 to 9 are mildly, moderately, or severely underweight. About 67.5 percent of children under 5 years, and 69 percent of adolescent girls suffer from anaemia due to iron and folic acid deficiency. The important thing to consider is that the expenditures on this programme have been huge. For example in 2003-04 the expenditure was Rs. 14 billion and recent 2007-2008 budget of the central government has allocated Rs. 73 billion for the MDM scheme. Gujarat started this scheme in 1984 and was the only State after Tamil Nadu to start it so early. The objective was to provide one meal a day to students studying in primary classes (I-VII). In the year 2005-06 a total of 31,152 schools (86% of the total primary schools in Gujarat) with 3.8 million beneficiaries (47% of the students enrolled) were covered under this scheme. The State budget allocated for the scheme in the year 2005-06 was Rs 2 billion (Rs 201.08 crores). Gujarat’s 7% (about 35 lakh) population belongs to Ahmedabad which has also been running the scheme since 1984. The Ahmedabad Municipal Corporation (AMC) is responsible for implementation of the scheme in the city. AMC covers 563 schools under 61 Mid Day Meal Centres. It caters to 1.2 million beneficiaries which is about one-third of the total number of beneficiaries in Gujarat. In the year 2005-06, about Rs 28 million were spent on the scheme. Therefore, it becomes imperative that a comprehensive evaluation of the programme be undertaken to judge the efficacy of this scheme. The broad objective of our AMC study has been to clearly identify some of the critical issues associated with the MDM scheme and to do an objective evaluation in terms of efficiency in delivery system and service quality (which includes food safety, food nutrition and sensory aspects). We addressed three critical aspects of the scheme: managerial, technical and school logistics issues. Managerial issues pertain to understanding the planning and administration of the scheme by the central, state and local governments. For technical issues we identified nutritional and food safety concerns. This involved understanding norms in terms of nutritional recommended daily allowances (RDA) for children; identifying food safety standards in terms of microbial, chemical and physical contamination; and comparing the standards with the tests conducted on food samples from schools. We also discuss possibility of evolving food quality systems such as Hazard Analysis and Critical Control Points (HACCP) for food delivery. Logistical issues which pertain to actual day-to-day running of the scheme in government schools, such as procurement, storage, preparation, and serving and disposal of food. Issues related to meal timings and consequential implications on teacher time were also considered. To address the above mentioned issues we collected secondary data and information on the working of the MDM scheme from various sources. This included the policy documents of the government and data available from the local and state administration. We also conducted field visits to some of the participating schools from different wards of Ahmedabad city. These included visits to 3 participating schools - in Gomtipur, Sabarmati and Ellisbridge areas – along with an NGO involved in preparation and distribution of meals. We documented our observations and collected food samples from these locations. The collected food samples were subjected to laboratory tests to analyze the nutrition content and food safety aspects of the meals. Our study suggests that the implementation of the MDM scheme may be wanting on the grounds of nutrition and food safety. The weekly menu shows a variety of meals offered, however, the condiments and seasonings being very similar each day, the sensory variety may be lacking. The study also indicates that in terms of calorific and nutritive intake, proportionate amounts of protein and iodine are not being provided through the meals. Calcium requirements are more than met by the mid day meal. Proportionate requirements of fat and iron are also met by the meals. However, it must be borne in mind that MDM scheme is mandated to provide a minimum of 300 calories, i.e., minimum of about 15% of the daily requirement of calories. There is no guarantee that the kids will get their rest of the 85% of calories at home, and, that their out-of-schools meals will have any significant amounts of nutrition. Hence, MDM scheme may want to provide much more than proportionate requirements of nutrition. We suggest certain changes to address the above mentioned issues. For example, nutrition bars (or perhaps a local version like chikki) and fruits like banana could be considered as one of the menus on a couple of days. This will add variety and assured nutrition to the kids. It may seem that providing nutrition bars, especially the branded ones, my turn out to be an expensive proposition. However, if these bars are supplied in large quantities, economies of scale may reduce costs. Moreover, branded nutrition bars (say of ITC) could be provided only a couple of times a week, complemented by locally made items such as chikki on some other days. Large FMCG companies, especially the food companies like ITC are already involved in social development projects. They could be requested to channel their corporate social responsibility through MDM scheme. The study also revealed traces of uric acid and Aflatoxins which if taken for a longer period of time could be carcinogenic for the children. Therefore, we suggest implementation of the HACCP system in preparation and serving of the meals. The food samples from the NGO were found to be good which are indicative of the fact that public private partnership could go a long way in making this scheme a success. However, our experience suggests that transportation of meals from the NGO kitchen to various schools was not hygienic and safe. Implementation of HACCP system can address such flaws. The visit to the schools revealed that cooking and serving food in the school premises leads to a significant if not substantive reduction in learning contact hours between the teachers and the students. A combination of warm meals on some days and pre-packed convenience foods on other days may reduce this loss of contact hours to some extent. There are many aspects the current study could not focus on. For example, we did not focus on collecting time series data and analysing whether or not student enrolment has increased due to MDM, ceteris paribus. Moreover, although we were able to fathom the magnitudes of financial and administrative data at the national, state and local level, the scope of this study could be expanded to ascertain administrative and financial efficiencies (or the lack of it) in much more detail. A separate and contextual study may be conducted to understand these aspects. In fact, a much larger study at the regional or national level could be conducted that not only includes aspects not covered in this study , but also widens the sample size of schools, cities, and meals to get a much broader and representative picture of India’s MDM scheme.
    Date: 2007–03–14
    URL: http://d.repec.org/n?u=RePEc:iim:iimawp:2007-03-03&r=cwa
  14. By: Waheed, Muhammad
    Abstract: This paper analyzes the response of the State bank of Pakistan—the central bank, to foreign exchange inflows for the period of 2001:1 to 2006:8. In this context, we estimated sterilization and offset coefficients using vector autoregression (VAR) model to account for the issue of endogeneity of domestic credit with the foreign exchange interventions. In addition, the paper also analyzes the role of foreign and domestic interest rate differentials in pulling in or pushing out of these foreign exchange flows. We found that the offset coefficient is very small and insignificant (0.16) implying that changes in credit resulted in very minimal offsetting reserve flows. The study found out that for the sample period, SBP only partially sterilized the inflows with magnitude of coefficient at (0.50) confirming the stylized facts. Results also indicate that inflows were neither pulled into the country due to high domestic interest rates due to some domestic policy nor they are pushed into Pakistan owing to low interest rates abroad.
    Keywords: Sterilization; Monetary independence; VAR
    JEL: E58 C32
    Date: 2007–03–16
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:2328&r=cwa

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