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on Development |
| By: | Bingqin Li |
| Abstract: | This paper demonstrates that urban social exclusion in China does not only include restricted participation by the ¿underclass¿ in urban life, but also the deprivation of certain political, social and economic rights. In addition, the paper describes how the character of urban social exclusion has changed over time. The author also examines the social exclusion of rural workers living and working in urban areas. The paper concludes by arguing that urban social exclusion in China needs coordinated reforms that target the whole set of problems in the urban ¿underclass¿ lacking political rights, social protection and economic opportunities. |
| Keywords: | social exclusion, urban China, rural to urban migrants |
| JEL: | J43 R23 I30 |
| Date: | 2004–03 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sticas:82&r=dev |
| By: | Bingqin Li; David Piachaud |
| Abstract: | Despite prolonged economic growth, poverty has become a more notable and noted feature of Chinese society. The paper examines three phases of development since the foundation of the People's Republic: the central planning era (1949 -1978); the pro-urban growth model (1978 - 1999); and more recent changes (1999 - 2004). For each phase the nature of the economic and social policies are described and the effects on poverty and inequality are examined. The limitations of a social policy that is subservient to the economic strategy are considered. The alternative of a model of social development based on the livelihood approach is analysed and its potential to reduce poverty and inequality are considered. |
| Keywords: | poverty, inequality, social policy, China, livelihoods, social development |
| JEL: | I3 |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sticas:87&r=dev |
| By: | Berta Esteve-Volart |
| Abstract: | Gender inequality is an acute and persistent problem, especially in developing countries. This paper argues that gender discrimination is an inefficient practice. We model gender discrimination as the complete exclusion of females from the labor market or as the exclusion of females from managerial positions. The distortions in the allocation of talent between managerial and unskilled positions, and in human capital investment, are analyzed. It is found that both types of discrimination lower economic growth; and that the former also implies a reduction in per capita GDP, while the latter distorts the allocation of talent. Both types of discrimination imply lower female-to-male schooling ratios. We discuss the sustainability of social norms or stigma that can generate discrimination in the form described in this paper. We present evidence based on panel-data regressions across Indian states over 1961-1991 that is consistent with the model¿s predictions. |
| Keywords: | Growth, gender discrimination, labor market, allocation of talent, India. |
| Date: | 2004–01 |
| URL: | http://d.repec.org/n?u=RePEc:cep:stidep:42&r=dev |
| By: | Elise S. Brezis; François Crouzet |
| Abstract: | The aim of this paper is to examine the evolution of recruitment of elites and to investigate the nature of the links between recruitment of elites and economic growth. The main change that occurred in the way the Western world trained its elites is that meritocracy became the basis for their recruitment. Although meritocratic selection should result in the best being chosen, we show that meritocratic recruitment actually leads to class stratification and auto-recruitment. We analyze the consequences of stratification resulting from meritocratic selection for the development of a country, and show that these consequences are dependent upon the type of technological changes occurring in the country. |
| Keywords: | economic growth, education, elites, meritocracy, recruitment, social mobility, stratification |
| JEL: | I21 O15 O40 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1360&r=dev |
| By: | Rodrigo Fuentes; Mauricio Larraín; Klaus Schmidt-Hebbel |
| Abstract: | The purpose of this paper is to provide a decomposition of economic growth in Chile, based on the contribution of capital, labor, and total factor productivity (TFP) and to study the determinants of TFP behavior in Chile since 1960 to date. Our results indicate that the contribution of TFP to growth differs significantly from one period to another. During 1961-1973 the contribution of capital dominates,labor takes over in 1974-1989, and TFP in 1990-2003. Evidence on TFP determinants suggests that,besides cyclical factors, TFP growth reflects the impact of macroeconomic stabilization and structural reforms. The interaction of both factors in TFP behavior is worth noting. Evidence suggests also that, under conditions of high macroeconomic instability, the effects of a structural reform on TFP are smaller, and vice versa. An analogous situation can be expected from macroeconomic stabilization efforts. |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:chb:bcchwp:287&r=dev |
| By: | Andrea Tokman |
| Abstract: | Human Capital, or more precisely education, plays an important role in economic growth. Chile's structural reforms in this front have contributed with more than one percentage point of higher growth during the nineties. If we continue in the same human capital trend growth, or even better, if we achieve radical changes that puts us at the standards for developed nations, we could benefit from substantially higher growth rates. This paper critically reviews the Chilean education system and identifies quality as its mayor problem. We study the reforms and their effects on quantity and quality of education and propose further changes that will generate substantial improvements and potential benefits in increased future growth. |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:chb:bcchwp:289&r=dev |
| By: | Leonardo Hernández; Fernando Parro |
| Abstract: | This paper presents a brief overview of the current state of financial development in Chile, comparing it with other countries. After providing a short summary of the most important financial reforms of past decades, we highlight the main strengths and weaknesses of Chile’s financial markets. Next, we focus on some of the currently most pressing issues, namely, stock market liquidity, financial derivatives and venture capital, and discuss whether or not recent reforms and proposed ones properly address them. |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:chb:bcchwp:291&r=dev |
| By: | César Calderón; Norman Loayza; Klaus Schmidt-Hebbel |
| Abstract: | This paper provides an empirical evaluation of the influence of external conditions and international integration on growth performance, using panel methods for a large cross-country data set. Controlling for domestic conditions, the paper examines the growth effects of trade and financial integration as well as four types of foreign shocks: terms of trade changes, trading partners' GDP growth, changes in international real interest rates, and net regional capital inflows. We analyze the possibility of nonlinearities by allowing the growth effects of openness to vary with the general level of economic development and by letting the effects of foreign shocks to depend on the degree of trade and financial integration. The findings point toward non-monotonic effects of openness, in the sense that the growth effects of trade and financial openness increase with the level of development, tapering off for high levels of income. In addition, the paper finds that trade openness tends to dampen the growth effect of trade-related shocks while amplifying the shocks related to financial markets. Interestingly, financial openness tends to have the opposite effect. |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:chb:bcchwp:292&r=dev |
| By: | Kalwij,A.S.; Verschoor,A. (Tilburg University, Center for Economic Research) |
| Abstract: | Using panel data of 58 developing countries for the period 1980-1998, this study shows that the responsiveness of the $2 a day poverty headcount measure to changes in mean income and inequality significantly decreases with initial inequality and the ratio poverty line over mean income - taken as proxies for the initial density of income near the poverty line. Variations in these proxies account for the large crossregional differences in the income elasticity of poverty during the 1980s and 1990s. We find that the income elasticity of poverty in the mid 1990s equals -1.31 on average and ranges from -0.71 for Sub-Saharan Africa to -2.27 for the Middle East and North Africa, and that the Gini elasticity of poverty equals 0.80 on average and ranges from 0.01 in South Asia to 1.73 in Latin America. While variation in income growth accounts for most of the variation in poverty reduction across regions, the impact of variations in inequality and in elasticities of poverty is almost always too large to be ignored, and in particular in Eastern Europe and Central Asia. |
| JEL: | C23 I32 O15 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2004115&r=dev |
| By: | Michael M. Hutchison (University of California, Santa Cruz) |
| Abstract: | Questions over the role of the IMF in the economic development and adjustment in developing countries have been the topic of intensive research and debate in recent years. Although most studies find that participation in an IMF program helps facilitate balance of payments adjustment, research in this area almost uniformly finds that growth is reduced at the same time (e.g. Bordo and Schwartz, 2000; Przeworski and Vreeland, 2000). In this paper we emphasize that the evaluation of the benefits and costs of participating in IMF-sponsored stabilization programs is complicated by the fact that countries typically enter into an agreement with the IMF only when facing dire economic problems. We argue that the sample selection bias is mainly responsible for the common perception that real output growth declines because countries choose to participate in IMF programs. This article uses four recently developed “matching” statistical methods (e.g. Heckman et al., 1997 and 1998; Rubin and Thomas, 1992; and others), based on the “selection on observables” bias, to estimate the growth effects of IMF program participation. In contrast with the extant literature, none of the matching method results (nearest neighbor, strata, radius and regression-adjusted) find an adverse growth effect. Rather, there is some evidence of a positive impulse to economic growth when countries entering IMF programs are compared to the appropriate counter-factual (i.e. non-participating countries with similar characteristics). |
| JEL: | E63 F34 F41 O19 |
| Date: | 2004–06 |
| URL: | http://d.repec.org/n?u=RePEc:kud:epruwp:04-15&r=dev |
| By: | Anne Epaulard; Aude Pommeret |
| Abstract: | The aim of the paper is to evaluate the welfare gains from financial integration for developing and emerging economies. To do so, we build a stochastic endogenous growth model for a small open economy that can (i) borrow from the rest of the world, (ii) invest in foreign assets, and (iii) receive FDI. The model is calibrated on 32 emerging and developing economies for which we evaluate the upper bound for the welfare gain from financial integration. For plausible values of preference parameters and actual levels of financial integration, the mean welfare gain from financial integration is about 10 percent of the existing wealth. Compared to financial autarky, actual levels of financial integration translate into slightly higher annual growth rates (around 0.4 percentage points per year.) |
| Keywords: | financial integration; risk-sharing; endogenous growth; stochastic growth |
| JEL: | E13 F20 F36 F3 F43 O41 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:lau:crdeep:04.18&r=dev |
| By: | Harold L. Cole; Lee E. Ohanian; Alvaro Riascos; James A. Schmitz, Jr. |
| Abstract: | Latin American countries are the only Western countries that are poor and that aren't gaining ground on the United States. This paper evaluates why Latin America has not replicated Western economic success. We find that this failure is primarily due to TFP differences. Latin America's TFP gap is not plausibly accounted for by human capital differences, but rather reflects inefficient production. We argue that competitive barriers are a promising channel for understanding low Latin TFP. We document that Latin America has many more international and domestic competitive barriers than do Western and successful East Asian countries. We also document a number of microeconomic cases in Latin America in which large reductions in competitive barriers increase productivity to Western levels. |
| JEL: | O1 O4 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11008&r=dev |
| By: | Peter J. Klenow; Andres Rodriguez-Clare |
| Abstract: | Externalities play a central role in most theories of economic growth. We argue that international externalities, in particular, are essential for explaining a number of empirical regularities about growth and development. Foremost among these is that many countries appear to share a common long run growth rate despite persistently different rates of investment in physical capital, human capital, and research. With this motivation, we construct a hybrid of some prominent growth models that have international knowledge externalities. When calibrated, the hybrid model does a surprisingly good job of generating realistic dispersion of income levels with modest barriers to technology adoption. Human capital and physical capital contribute to income differences both directly (as usual), and indirectly by boosting resources devoted to technology adoption. The model implies that most of income above subsistence is made possible by international diffusion of knowledge. |
| JEL: | O11 O33 O40 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11009&r=dev |
| By: | Simon Guttmann (Reserve Bank of Australia); Anthony Richards (Reserve Bank of Australia) |
| Abstract: | Australia’s external trade is relatively low compared with the size of its economy. Indeed, Australia’s openness ratio (exports plus imports as a proportion of GDP) in 2002 was the third-lowest among the 30 OECD countries. This paper seeks to understand Australia’s low openness by analysing the empirical determinants of aggregate country trade. We begin by estimating a standard gravity model of bilateral trade. Although the model appears to fit the bilateral data very well, it does a relatively poor job at fitting countries’ aggregate trade levels, with different methodologies sometimes providing highly conflicting results. The focus of the paper is an equation for country openness. Our equation explains a substantial amount of the variation in how much countries trade using a small number of explanatory variables. We find that the most important determinants of openness are population and a measure of distance to potential trade partners. Countries with larger populations trade less, as do countries that are relatively more remote. Furthermore, after controlling for trade policy there is little evidence of a positive correlation between openness and economic development. While gravity models suggest Australia trades much more than expected, the openness equation suggests that its level of trade is relatively close to what would be expected. The most important factors in explaining Australia’s low openness ratio are its distance to the rest of the world, and to a lesser extent its large geographic size. |
| Keywords: | trade, outward orientation, economic geography, trade liberalisation |
| JEL: | F10 F13 O1 |
| URL: | http://d.repec.org/n?u=RePEc:rba:rbardp:rdp2004-11&r=dev |
| By: | Pol, Eduardo (University of Wollongong); Carroll, Peter |
| Abstract: | Schumpeterian growth models revolve around two tacit assumptions that are at odds with the empirical evidence, namely: all innovations are equally important for economic growth (equipollent innovation) and all innovations occur in one sector only (confined innovation). The present paper shows that it is possible to dispose of both implicit assumptions by disaggregating the "ideas production function" without altering the gist of the theoretical framework. The paper refers briefly to the concepts of macro and microinventions, and introduces the concept of "innovatory discontinuity". The extended theoretical framework developed here throws light on the ongoing controversy between neoclassical and evolutionary theorizing. |
| Keywords: | Innovation heterogeneity, ideas production function, scale effects problem, innovatory discontinuity, neoclassical and evolutionary theorizing |
| JEL: | O31 O32 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:uow:depec1:wp04-21&r=dev |
| By: | Eric Bartelsman; John C. Haltiwanger; Stefano Scarpetta |
| Abstract: | Bartelsman, Haltiwanger, and Scarpetta provide an analysis of the process of creative destruction across 24 countries and 2-digit industries over the past decade. They rely on a newly assembled dataset that draws from different micro data sources (business registers, census, or representative enterprise surveys). The novelty of their approach is in the harmonization of firm-level data across countries, which enables international comparisons and the identification of country-specific factors as opposed to sector and time effects. All countries display a massive reallocation of resources, with the entry and exit of many firms in all markets, the failure of many newcomers, and the expansion of successful ones. This process of creative destruction affects productivity directly by reallocating resources toward more productive uses, but also indirectly through the effects of increased market contestability. There are also large differences across groups of countries. While entry and exit rates are fairly similar across industrial countries, post-entry performance differs markedly between Europe and the United States, a potential indication of the importance of barriers to firm growth as opposed to barriers to entry. Transition economies show an even more impressive process of creative destruction and those that have progressed the most toward a market economy show better outcomes from this process. Finally, Mexico shows large firm dynamics with many new firms entering the battle but also many failing rapidly, while Argentina resembles Continental Europe with smaller flows and less impressive post-entry growth of successful firms. This paper—a product of the Social Protection Team, Human Development Network—is part of a larger effort in the network to understand the process of creative destruction. |
| Keywords: | Labor & Employment |
| Date: | 2004–12–30 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3464&r=dev |
| By: | Anthony J. Venables |
| Abstract: | Spatial inequality in developing countries is due to the natural advantages of some regionsrelative to others and to the presence of agglomeration forces, leading to clustering ofactivity. This paper reviews and develops some simple models that capture these first andsecond nature economic geographies. The presence of increasing returns to scale in citiesleads to urban structures that are not optimally sized. This depresses the return to jobcreation, possibly retarding development. Looking at the wider regional structure,development can be associated with large shifts in the location of activity as industry goesfrom being inward looking to being export oriented. |
| Keywords: | cities, spatial disparities, urbanisation, developing countries |
| JEL: | R1 R12 O18 |
| Date: | 2003–11 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0593&r=dev |
| By: | Jun Koo; Somik V. Lall (World Bank) |
| Abstract: | Economic geography has become a mantra for many economists, geographers, and regional scientists. Previous studies have tested the importance of economic geography for production activities and found a significant association between them. Most of these studies, however, have not taken into account that economic geography influences location decisions at the firm level. Koo and Lall show a potential bias that can arise when firm location choices are not considered in estimating the contribution of economic geography to industry performance. Their analysis using microdata of Indian manufacturing firms shows there is an upward bias in the contribution of economic geography to productivity when firm location choices are not considered in the analysis. This paper—a product of the Infrastructure and Environment Team, Development Research Group—is part of a larger effort in the group to examine industry location decisions. The study was partly funded by the Bank’s Research Support Budget under the research project "Urbanization and the Quality of Life.” |
| Keywords: | Infrastructure; Industry |
| Date: | 2004–12–30 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3465&r=dev |
| By: | Cecilia Briceno; Antonio Estache; Nemat T. Shafik |
| Abstract: | Briceño, Estache, and Shafik review the evidence on the state of infrastructure in the developing world, emphasizing the investment needs and the emerging policy issues. While their assessment is seriously constrained by data gaps, they provide useful insights on the main challenges ahead, emphasizing that, in addition to the widely discussed access problems, the poorest also face major affordability and service quality issues which were not well addressed by the reforms of the 1990s. The authors make a case for a stronger commitment of the international community to generate the information needed to assess and monitor infrastructure needs and policies. This paper—a product of the Office of the Vice President, Infrastructure Network—is part of a larger effort in the network to upgrade economic and policy work in infrastructure. |
| Keywords: | Infrastructure; Poverty |
| Date: | 2004–12–30 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3468&r=dev |
| By: | Peter W Jones (Economic Development Institute-Jamaica) |
| Abstract: | Lifelong learning is education for the knowledge economy. In order for Jamaica to transition from a Developing Country to a Developed Country whether it be a Jamaica Labour Party Administration or a Peoples National Party administration it will be highly necessary to create a Knowledge based society, the inability to seriously overcome this challenge will mean we will be in transition to a developed country for an infinite number of years. |
| Keywords: | Education,Jamaica Jamaica Education,Jamaica,Jamaica |
| JEL: | O P |
| Date: | 2004–12–24 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpdc:0412015&r=dev |
| By: | Berhanu Abegaz (Department of Economics, College of William and Mary) |
| Abstract: | The paradox of EthiopiaÕs agrarian economy is that, despite underwriting a world civilization, the transition to an industrial economy has eluded it. Using a model of AfroAsiatic tributarism, we attribute this outcome to endemic extractive contests between a predominantly landed peasantry and a titled, prebendary overlord class. The latterÕs strategy of political accumulation inevitably engendered immiserization of overlord and peasant alike by privileging diversion over production. The surplus was then dissipated on unproductive consumption, national defence, and internecine strife. Lacking a strong state to mitigate predation and political instability, the Ethiopian peasant rationally ÔchoseÕ to be efficiently, albeit self-sufficiently, poor. |
| Keywords: | Ethiopia, feudalism, tributarism, overlordship, landlordship, gebbar system |
| JEL: | N57 O55 P52 |
| Date: | 2004–10–15 |
| URL: | http://d.repec.org/n?u=RePEc:cwm:wpaper:6&r=dev |
| By: | Thomas Reardon; Valerie Kelly; Eric Crawford; Thomas Jayne; Kimseyinga Savadogo; Daniel Clay |
| URL: | http://d.repec.org/n?u=RePEc:msu:polbrf:0022&r=dev |
| By: | Valerie Kelly; Jane Hopkins; Thomas Reardon; Eric Crawford |
| URL: | http://d.repec.org/n?u=RePEc:msu:polbrf:004&r=dev |
| By: | T.S. Jayne; Lawrence Rubey; David Tschirley; Mulinge Mukumbu; Munhamo Chisvo; Ana Paula Santos; Michael T. Weber; Patrick Diskin |
| URL: | http://d.repec.org/n?u=RePEc:msu:polbrf:005&r=dev |
| By: | Yochanan Shachmurove (The City College of The City University of New York and the University of Pennsylvania) |
| Abstract: | The economic and financial development are examined in Algeria, Egypt, Iran, Israel, Jordan, Kuwait, Lebanon, Morocco, Oman, Saudi Arabia, Syria, Tunisia, Turkey, United Arab Emirates, and Yemen, representing the Middle East and North Africa region. Lengthy bureaucratic procedures, unclear regulations, corruption, and heavy reliance on oil exports pose major obstacles to economic development and integration into global markets. These controlled economies directly affect foreign and domestic investments that are measured by five factors: Starting a Business, Hiring and Firing Workers, Enforcing Contracts, Getting Credit, and Closing a Business. This paper demonstrates that improvements in the standard of living will only be attained with fiscal and political reforms. |
| Keywords: | Middle East and North Africa (MENA, Algeria, Arab Republic of Egypt, Islamic Republic of Iran, Israel, Jordan, Kuwait, Lebanon, Morocco, Oman, Saudi Arabia, Syrian Arab Republic, Tunisia, Turkey, United Arab Emirates, the Republic of Yemen, Economic Indicators, Foreign Direct Investment |
| JEL: | E0 E1 F3 F4 N2 O4 O5 |
| Date: | 2004–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:04-022&r=dev |
| By: | Pham Hoang Van (Department of Economics, University of Missouri-Columbia) |
| Abstract: | This paper argues that technical change in the East Asian countries was sector-specific, took the form of learning-by-doing and was induced by relative factor prices. Usual growth accounting exercises do not account for this in the structure of the assumed aggregate production function and therefore miss these technical gains. Assumed or estimated elasticities of substitution are too high in these studies. Our calculations of elasticities using factor prices are more consistent with localized technical gains in Korea, Singapore and Taiwan. We find evidence that the technical change may have been induced by policy and macroeconomic shocks affecting relative factor prices. Plant-level TFP growth calculations using the Korean Industrial Census further support our hypothesis. |
| Keywords: | Total Factor Productivity, Induced Technical Gain, Economic Growth, East Asia |
| JEL: | O47 O53 O31 |
| Date: | 2004–12–23 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:0403&r=dev |
| By: | Ting Gao (University of Missouri-Columbia); Yuwei Wang |
| Abstract: | In this paper we study the effects of openness on regional income and growth in China. We first construct exogenous components of openness to foreign direct investment (FDI) and trade based on geographic and cultural attributes of Chinese provinces, and then use them to obtain the instrumental variables estimates of the effects of FDI and trade on income and growth. We find positive effects of FDI on both income and growth, which are in most cases precisely estimated and economically large. |
| JEL: | F43 O18 O53 R11 |
| Date: | 2004–12–27 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:0310&r=dev |
| By: | Rachel Ngai; Christopher A. Pissarides |
| Abstract: | We study a multi-sector model of growth with differences in TFP growth rates across sectorsand derive sufficient conditions for the coexistence of a balanced aggregate growth path, withall aggregates growing at the same rate, and structural change, characterized by sectoral laborreallocation. The conditions needed are weak restrictions on the utility and productionfunctions: goods should be poor substitutes and the intertemporal elasticity of substitutionshould be one. We present evidence from US and UK sectors, that is consistent with ourconclusions and successfully calibrate the shift from agriculture to manufacturing andservices in the United States. |
| Keywords: | structural change, balanced growth, total factor productivity |
| JEL: | O41 O14 |
| Date: | 2004–04 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0627&r=dev |
| By: | Nicholas Oulton |
| Abstract: | To analyse the consequences of the changing economic structure of the UK, we need aset of statistics broken down by industry that are consistent with the whole economymeasures available from the national accounts. The theory of growth accounting thenprovides a framework in which the contribution of each industry to the national economycan be measured and assessed. This paper identifies the obstacles currently facing aresearcher trying to implement this approach. It makes a number of recommendations forthe improvement of official statistics. |
| Keywords: | National accounts, growth accounting, productivity |
| JEL: | C82 O47 Q01 |
| Date: | 2004–04 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0629&r=dev |