nep-dev New Economics Papers
on Development
Issue of 2005‒02‒06
ten papers chosen by
Jeong-Joon Lee
Towson University

  1. Healthy, Educated and Wealthy: Is the Welfare State Really Harmful for Growth? By Beraldo, S.; Montolio, D.; Turati, G.
  2. Unequal Opportunities and Human Capital Formation By Daniel Mejía; Marc St-Pierre
  3. The autocatalytic character of the growth of production knowledge: What role does human labor play? By Thomas Brenner; Christian Cordes
  4. Economic Development under Alternative Trade Regimes By CASTRO, Rui
  5. A Macroeconomic Framework for Quantifying Growth and Poverty Reduction Strategies in Niger By Emmanuel Pinto Moreira; Nihal Bayraktar
  6. The Political Economy of Health Services Provision and Access in Brazil By Ahmed Mushfiq Mobarak; Andrew Sunil Rajkumar; Maureen L. Cropper
  7. Measuring Empowerment in Practice: Structuring Analysis and Framing Indicators By Ruth Alsop; Nina Heinsohn
  8. Bank Privatization and Performance: Empirical Evidence from Nigeria By Thorsten Beck; Robert Cull; Afeikhena Jerome
  9. Finance Thy Growth: The Role of Occupational Choice By Ability-Heterogeneous Agents By Neville N. Jiang; Ping Wang; Haibin Wu
  10. A Pro-Market Agenda for El Salvador By Eduardo Engel

  1. By: Beraldo, S.; Montolio, D.; Turati, G. (Universitat de Barcelona)
    Abstract: In this paper, we study how public and private expenditures in health and education affect economic growth by their influence on people’s health, abilities, skills and knowledge. We consider a growth accounting framework in order to test whether welfare expenditures more than offset the efficiency losses caused by distortionary taxation, and whether the effects of public expenditure on economic growth differ from those of private expenditure. Our empirical analysis is based on a panel of 19 OECD countries observed between 1971 and 1998. The results are consistent with the hypothesis that the contribution of welfare expenditures more than compensates for the distortions caused by the tax system; and the estimated positive impact is stronger for health than for education. We also find some evidence that public expenditure influences GDP growth more than private expenditure.
    JEL: H51 H52 I38 O47
    Date: 2005
  2. By: Daniel Mejía; Marc St-Pierre
    Abstract: This paper develops a tractable, heterogeneous agents general equilibrium model where individuals have different endowments of the factors that complement the schooling process. The paper explores the relationship between inequality of opportunities, inequality of outcomes, and efficiency in human capital formation. Using numerical solutions we study how the endogenous variables of the model respond to two different interventions in the distribution of opportunities: a mean-preserving spread and a change in the support. The results suggest that a higher degree of inequality of opportunities is associated with lower average level of human capital, a lower fraction of individuals investing in human capital, higher inequality in the distribution of human capital, and higher wage inequality. In other words, the model does not predict a trade-off between efficiency and equality of opportunity in human capital formation.
    Keywords: human capital, inequality, equity-efficiency trade-off
    JEL: D33 J24 J31 O15
    Date: 2005
  3. By: Thomas Brenner; Christian Cordes
    Abstract: This paper analyzes how the qualitative change in human labor occurs in mutual dependence with the advancement of the epistemic base of technology. Historically, a recurrent pattern can be identified: humans learned to successively transfer labor qualities to machines. The subsequent release of parts of the workforce from performing this labor enabled them to spend this spare time in the search for further technical innovations, i.e., the generation and application of ever-more knowledge. A model examines the autocatalytic relationship between the production of commodities and knowledge. The driving forces of these processes and the mechanisms that limit them are analyzed.
    Keywords: technological change; long-term economic development; production; productivity growth; labor market
    JEL: E23 J24 N30 O30 O40
  4. By: CASTRO, Rui
    Abstract: How does openness affect economic development? This question is answered in the context of a dynamic general equilibrium model of the world economy, where countries have technological differences that are both sector-neutral and specific to the investment goods sector. Relative to a benchmark case of trade in credit markets only, consider (i) a complete restriction of trade, and (ii) a full liberalization of trade. The first change decreases the cross-sectional dispersion of incomes only slightly, and produces a relatively small welfare loss. The second change, instead, decreases dispersion by a significant amount, and produces a very large welfare gain.
    Keywords: Economic Develoent, International Trade, Investment-Scific Technology, Quantitative Dynamic General Equilibrium, Incomete Markets.
    JEL: E13 F43 O11 O30
    Date: 2005
  5. By: Emmanuel Pinto Moreira; Nihal Bayraktar
    Abstract: The authors apply the dynamic macroeconomic framework developed by Agénor, Bayraktar, and El Aynaoui (2004) to Niger. As in the original model, linkages between foreign aid, public investment (disaggregated into education, infrastructure, and health), and growth are explicitly captured. Although the nominal exchange rate is fixed, the relative price of domestic goods is endogenous, thereby allowing for potential Dutch disease effects associated with increases in aid. The authors assess the impact of policy shocks on poverty by using partial growth elasticities. They perform various policy experiments, including an increase in the level of foreign aid, a reallocation of public nvestment toward infrastructure, and neutral and non-neutral cuts in tariffs. The simulations show the dynamic tradeoffs that these policies entail with respect to growth and poverty reduction in Niger. This paper—a product of Poverty Reduction and Economic Management 3, Africa Technical Families—is part of a larger effort in the region to formulate country-specific growth strategies.
    Keywords: Macroecon & Growth
    Date: 2005–01–31
  6. By: Ahmed Mushfiq Mobarak; Andrew Sunil Rajkumar; Maureen L. Cropper
    Abstract: Mobarak, Rajkumar, and Cropper examine the impact of local politics and government structure on the allocation of publicly subsidized (SUS) health services across municipios (counties) in Brazil, and on the probability that uninsured individuals who require medical attention actually receive access to those health services. Using data from the 1998 PNAD survey they demonstrate that higher per capita levels of SUS doctors, nurses, and clinic rooms increase the probability that an uninsured individual gains access to health services when he or she seeks it. The authors find that an increase in income inequality, an increase in the percentage of the population that votes, and an increase in the percentage of votes going to left-leaning candidates are each associated with higher levels of public health services. The per capita provision of doctors, nurses, and clinics is also greater in counties with a popular local leader and in counties where the county mayor and state governor are politically aligned. Administrative decentralization of health services to the county decreases provision levels and reduces access to services by the uninsured unless it is accompanied by good local governance. This paper is a product of the Infrastructure and Environment Team, Development Research Group.
    Keywords: Health & Population; Public Sector Management
    Date: 2005–02–02
  7. By: Ruth Alsop; Nina Heinsohn
    Abstract: Alsop and Heinsohn present an analytic framework that can be used to measure and monitor empowerment processes and outcomes. The measuring empowerment framework, rooted in both conceptual discourse and measurement practice, illustrates how to gather data on empowerment and structure its analysis. The framework can be used to measure empowerment at both the intervention level and the country level, as a part of poverty or governance monitoring. The authors first provide a definition of empowerment and then explain how the concept can be reduced to measurable components. Empowerment is defined as a person’s capacity to make effective choices—that is, the capacity to transform choices into desired actions and outcomes. The extent or degree to which a person is empowered is influenced by personal agency (the capacity to make purposive choice) and opportunity structure (the institutional context in which choice is made). Asset endowments are used as indicators of agency. These assets may be psychological, informational, organizational, material, social, financial, or human. Opportunity structure is measured by the presence and operation of formal and informal institutions, including the laws, regulatory frameworks, and norms governing behavior. Degrees of empowerment are measured by the existence of choice, the use of choice, and the achievement of choice. Following the conceptual discussion and the presentation of the analytic framework, the authors show how the measuring empowerment framework can be applied using examples from four development interventions. Each example discusses how the framework guided analysis and development of empowerment indicators. They also present a draft module for measuring empowerment at the country level. The module can be used alone or be integrated into country-level poverty or governance monitoring systems that seek to add an empowerment dimension to their analysis. This paper—a product of the Poverty Reduction Group, Poverty Reduction and Economic Management Network—is part of a larger effort in the network to conceptualize, operationalize, and measure empowerment.
    Keywords: Governance; Poverty; Rural Development; Social Development
    Date: 2005–02–03
  8. By: Thorsten Beck (World Bank); Robert Cull (World Bank); Afeikhena Jerome
    Abstract: Beck, Cull, and Jerome assess the effect of privatization on performance in a panel of Nigerian banks for the period 1990–2001. They find evidence of performance improvement in nine banks that were privatized, which is remarkable given the inhospitable environment for true financial intermediation. Their results also suggest negative effects of the continuing minority government ownership on the performance of many Nigerian banks. The authors’ results complement aggregate indications of decreasing financial intermediation over the 1990s. Banks that focused on investment in government bonds and non-lending activities enjoyed a relatively higher performance. This paper—a product of the Finance Team, Development Research Group—is part of a larger effort in the group to study the effects of bank privatization in developing countries.
    Keywords: Domestic Finance
    Date: 2005–02–03
  9. By: Neville N. Jiang (Department of Economics, Vanderbilt University); Ping Wang (Department of Economics, Vanderbilt University, NBER); Haibin Wu (University of Alberta)
    Abstract: This paper develops an overlapping-generations model of finance and growth with intrinsic heterogeneity in loanable fund conversion ability, where agents make occupational choice between becoming entrepreneurs and becoming workers. For a given ability distribution, a decrease in the number of entrepreneurs may create an occupational choice effect, enhancing the rate of growth of the economy, as the average conversion ability of the remaining entrepreneurs is higher. A change in ability distribution parameters may generate a permanent growth effect. Due to the presence of an occupational choice effect, a scale effect and general-equilibrium wage adjustments, however, financial market thickness and income growth need not be positively correlated, in response to such distribution shifts. While both a reduction in the unit financial operation cost and an improvement in manufacturing productivity are growth enhancing, they have different effects on equilibrium prices and financial markup.
    Keywords: Occupational Choice, financial market, distribution and growth
    JEL: D90 G20 O4
    Date: 2002–04
  10. By: Eduardo Engel (
    Abstract: This paper argues that, despite important productivity gains, reforms have benefited consumers much less than expected in El Salvador. Antitrust legislation, consumer protection and an adequate regulation of privatized utilities are central ingredients of a successful market economy. Major reforms that are needed in each one of these areas in El Salvador are described.
    Keywords: Market reform, Antitrust legislation, Consumer protection, Privatization, Regulation of utilities
    JEL: D18 L40 L51 L94 L96 O12
    Date: 2005–01

This nep-dev issue is ©2005 by Jeong-Joon Lee. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.