nep-dev New Economics Papers
on Development
Issue of 2005‒02‒13
thirty-two papers chosen by
Jeong-Joon Lee
Towson University

  1. Economic Integration and Agglomeration in a Middle Product Economy By Peng, Shin-Kun; Thisse, Jacques-François; Wang, Ping
  2. Growth Accelerations By Hausmann, Ricardo; Pritchett, Lant; Rodrik, Dani
  3. Economic and Political Liberalizations By Giavazzi, Francesco; Tabellini, Guido
  4. From Stagnation to Growth: Unified Growth Theory By Galor, Oded
  5. Measurement Error in Education and Growth Regressions By Alessie, Rob; Portela, Miguel; Teulings, Coen N
  6. Rule of Law, Democracy, Openness and Income: Estimating the Interrelationships By Rigobon, Roberto; Rodrik, Dani
  7. Foreign Direct Investment and Spillovers: Gradualism May Be Better By Desmet, Klaus; Rojas, Juan A
  8. Do Firms Want to Borrow More? Testing Credit Constraints Using a Directed Lending Program By Banerjee, Abhijit; Duflo, Esther
  9. Dismantling Discrimination Against Developing Countries: Access, Rules and Differential Treatment By Hoekman, Bernard
  10. Accounting for Cross-Country Income Differences By Caselli, Francesco
  11. The Macroeconomics of Knowledge Management: Internal Hold-Up versus Technological Competition By Thoenig, Mathias; Verdier, Thierry
  12. Welfare Effects of Intellectual Property in a North-South Model of Endogenous Growth with Comparative Advantage By Saint-Paul, Gilles
  13. The Demographic Transition and the Emergence of Sustained Economic Growth By Galor, Oded
  14. Growth, History and Institutions By Bertocchi, Graziella
  15. Inequality and Institutions By Chong, Alberto; Gradstein, Mark
  16. Inequality, Technology and the Social Contract By Benabou, Roland
  17. Structural Change in a Multi-Sector Model of Growth By Ngai, Liwa Rachel; Pissarides, Christopher
  18. Industrial Policy for the Twenty-First Century By Rodrik, Dani
  19. Education and Growth with Endogenous Debt Constraints By David, DE LA CROIX
  20. The Role of Components of Demographic Change in Economic Development : Whither the Trend ? By Tapas K., MISHRA
  21. Endogenous Growth and Regional Dynamics in an OLG Model with Land By Lionel, ARTIGE
  22. On Dictatorship, Economic Development and Stability By Lionel, ARTIGE
  23. Prospects for growth and poverty reduction i n Zambia, 2001-2015 By Lofgren, Hans; Thurlow, James; Robinson, Sherman
  24. Road development, economic growth, and poverty reduction in China By Fan, Shenggen; Chan-Kang, Connie
  25. Strategic analysis and knowledge support systems for rural development strategies in Sub-Saharan Africa By Johnson, Michael; Resnick, Danielle
  26. Institutions and economic policies for pro-poor agricultural growth By Dorward, Andrew; Fan, Shenggen; Kydd, Jonathan; Lofgren, Hans; Morrison, Jamie; Poulton, Colin; Rao, Neetha; Smith, Laurence; Tchale, Hardwick; Thorat, Sukhadeo; Urey, Ian; Wobst, Peter
  27. The road to pro-poor growth in Zambia By Thurlow, James; Wobst, Peter
  28. Cross-country typologies and development strategies to end hunger in Africa By Zhang, Xiaobo; Johnson, Michael; Resnick, Danielle; Robinson, Sherman
  29. Linkages between poverty and land management in rural Uganda By Pender, John; Ssewanyana, Sarah; Edward, Kato; Nkonya, Ephraim
  30. Assets at marriage in rural Ethiopia By Fafchamps, Marcel; Quisumbing, Agnes R.
  31. Evidence and implications of non-tradability of food staples in Tanzania 1983-1998 By Delgado, Christopher; Minot, Nicholas; Tiongco, Marites
  32. Openness and growth in alternative trading regimes.Evidence from EEC and CMEA’s customs unions By Rosa Capolupo; Giuseppe Celi

  1. By: Peng, Shin-Kun; Thisse, Jacques-François; Wang, Ping
    Abstract: The Paper examines the interactions between economic integration and population agglomeration in a middle product economy displaying neoclassical growth. There are two vertically-integrated economies. Each consists of a large number of final good competitive firms operating plants in both regions, and a large number of intermediate goods monopolistically competitive firms operating each in only one region. While immobile workers are employed with intermediate goods to produce the final good, mobile workers are used to design the line of differentiated intermediate good inputs. Capital is immobile and the final good is non-traded, whereas the intermediate goods are traded. We find that employment agglomeration and output growth need not be positively related. Furthermore, trade is not necessarily beneficial to regional growth, whereas trade between the two regions need not be associated with a widened skilled-unskilled wage gap.
    Keywords: agglomeration; economic integration; growth; intermediate goods trade
    JEL: D90 F15 O41 R13
    Date: 2004–08
  2. By: Hausmann, Ricardo; Pritchett, Lant; Rodrik, Dani
    Abstract: Unlike most cross-country growth analyses, we focus on turning points in growth performance. We look for instances of rapid acceleration in economic growth that are sustained for at least eight years and identify more than 80 such episodes since the 1950s. Growth accelerations tend to be correlated with increases in investment and trade, and with real exchange rate depreciations. Political-regime changes are statistically significant predictors of growth accelerations. External shocks tend to produce growth accelerations that eventually fizzle out, while economic reform is a statistically significant predictor of growth accelerations that are sustained. Growth accelerations tend to be highly upredictable: the vast majority of growth accelerations are unrelated to standard determinants and most instances of economic reform do not produce growth accelerations.
    Keywords: economic growth; economic reform
    JEL: O0 O50
    Date: 2004–08
  3. By: Giavazzi, Francesco; Tabellini, Guido
    Abstract: This Paper studies empirically the effects of and the interactions amongst economic and political liberalizations. Economic liberalizations are measured by a widely used indicator that captures the scope of the market in the economy, and in particular of policies towards freer international trade (cf. Sachs and Werner, 1995; Wacziarg and Welch, 2003). Political liberalizations correspond to the event of becoming a democracy. Using a difference-in-difference estimation, we ask what are the effects of liberalizations on economic performance, on macroeconomic policy and on structural policies. The main results concern the quantitative relevance of the feedback and interaction effects between the two kinds of reforms. First, we find positive feedback effects between economic and political reforms. The timing of events indicates that causality is more likely to run from political to economic liberalizations, rather than vice versa, but we cannot rule out feedback effects in both directions. Second, the sequence of reforms matters. Countries that first liberalize and then become democracies do much better than countries that pursue the opposite sequence, in almost all dimensions.
    Keywords: democracy; development; economic reform; growth
    JEL: O10 O11
    Date: 2004–08
  4. By: Galor, Oded
    Abstract: This Paper examines the process of development from an epoch of Malthusian stagnation to a state of sustained economic growth. The analysis focuses on recently advanced unified growth theories that capture the intricate evolution of income per capita, technology, and population over the course of human history. Deciphering the underlying forces that triggered the transition from stagnation to growth and the associated phenomenon of the great divergence in income per capita across countries has been widely viewed as one of the most significant challenges facing researchers in the field of growth and development. The inconsistency of non-unified growth models with the main characteristics of the process of development across most of human history induced growth theorists to advance an alternative theory that captures in a single unified framework the epoch of Malthusian stagnation, the modern era of sustained economic growth, and the recent transition between these distinct regimes. Unified growth theory reveals the underlying micro foundations that are consistent with the growth process over the entire history of the human species, enhancing the confidence in the viability of the theory, its predictions and policy implications for the growth process of less developed economies.
    Keywords: class structure; demographic transition; evolution; growth; human capital; income distribution; Malthusian stagnation; natural selection; technological progress
    JEL: J11 J13 O11 O14 O33 O40
    Date: 2004–08
  5. By: Alessie, Rob; Portela, Miguel; Teulings, Coen N
    Abstract: The perpetual inventory method used for the construction of education data per country leads to systematic measurement error. This paper analyses the effect of this measurement error on GDP regressions. There is a systematic difference in the education level between census data and observations constructed from enrolment data. We discuss a methodology for correcting the measurement error. The standard attenuation bias suggests that using these corrected data would lead to a higher coefficient. Our regressions reveal the opposite. We discuss why the measurement error yields an overestimation. Our analysis contributes to an explanation of the difference between regressions based on 5 and on 10-year first-differences.
    Keywords: education; growth; measurement error
    JEL: I20 O40
    Date: 2004–09
  6. By: Rigobon, Roberto; Rodrik, Dani
    Abstract: We estimate the interrelationships among economic institutions, political institutions, openness, and income levels, using identification through heteroskedasticity (IH). We split our cross-national dataset into two sub-samples: (i) colonies versus non-colonies; and (ii) continents aligned on an East-West versus those aligned on a North-South axis. We exploit the difference in the structural variances in these two sub-samples to gain identification. We find that democracy and the rule of law are both good for economic performance, but the latter has a much stronger impact on incomes. Openness (trade/GDP) has a negative impact on income levels and democracy, but a positive effect on rule of law. Higher income produces greater openness and better institutions, but these effects are not very strong. Rule of law and democracy tend to be mutually reinforcing.
    Keywords: growth
    JEL: O10
    Date: 2004–10
  7. By: Desmet, Klaus; Rojas, Juan A
    Abstract: The standard argument says that in the presence of positive spillovers foreign direct investment should be promoted and subsidized. In contrast, this Paper claims that the very existence of such spillovers may require temporarily restricting and taxing inward FDI. Our argument in favour of gradual liberalization is based on two stylized features of spillovers: first, technology transfers – and subsequent spillovers – are limited by the economy’s absorptive capacity; and second, spillovers take time to materialize. By letting in capital more gradually, initial investment has the time to create spillovers – and upgrade the economy’s absorptive capacity – before further investment occurs. This allows subsequent capital inflows to benefit from greater technology transfers. As a result, the economy converges to a steady state with a superior technology and a greater capital stock.
    Keywords: absorptive capacity; big bang; foreign direct investment; gradualism; liberalization; spillovers; transition economies
    JEL: F20 O30 P20
    Date: 2004–10
  8. By: Banerjee, Abhijit; Duflo, Esther
    Abstract: We begin the Paper by laying out a simple methodology that allows us to determine whether firms are credit constrained, based on how they react to changes in directed lending programs. The basic idea is that while both constrained and unconstrained firms may be willing to absorb all the directed credit that they can get (because it may be cheaper than other sources of credit), constrained firms will use it to expand production, while unconstrained firms will primarily use it as a substitute for other borrowing. We then apply this methodology to firms in India that became eligible for directed credit as a result of a policy change in 1998, and lost eligibility as a result of the reversal of this reform in 2000. Using firms that were already getting this kind of credit before 1998, and retained eligibility in 2000 to control for time trends, we show that there is no evidence that directed credit is being used as a substitute for other forms of credit. Instead the credit was used to finance more production – there was significant acceleration in the rate of growth of sales and profits for these firms. We conclude that many of the firms must have been severely credit constrained.
    Keywords: banking; credit constraints; India
    JEL: G20 O16
    Date: 2004–10
  9. By: Hoekman, Bernard
    Abstract: This Paper discusses the challenges confronting developing countries seeking to overcome discrimination in world trade rules and policies. The major sources of discrimination in both developed and developing countries in the areas of market access opportunities and WTO disciplines are briefly summarized. Some of these reflect good intentions towards developing countries, but are bad economics. Many others reflect self-interest or successful capture of policy by interest groups in either the North and/or the South. Moving forward requires less discrimination on market access, but more differentiation when it comes to ‘non-core’ or resource-intensive global rules.
    Keywords: economic development; trade negotiations; trade policy; WTO
    JEL: F13 F35 O19
    Date: 2004–10
  10. By: Caselli, Francesco
    Abstract: Why are some countries so much richer than others? Development Accounting is a first-pass attempt at organizing the answer around two proximate determinants: factors of production and efficiency. It answers the question ‘how much of the cross-country income variance can be attributed to differences in (physical and human) capital, and how much to differences in the efficiency with which capital is used?’ Hence, it does for the cross-section what growth accounting does in the time series. The current consensus is that efficiency is at least as important as capital in explaining income differences. I survey the data and the basic methods that lead to this consensus, and explore several extensions. I argue that some of these extensions may lead to a reconsideration of the evidence.
    Keywords: development; factor supplies; technology
    JEL: E20 O10 O20 O30 O40 O50
    Date: 2004–10
  11. By: Thoenig, Mathias; Verdier, Thierry
    Abstract: This Paper investigates the links between the nature of contractual relationships within firms, the strength of information flows spreading between firms and the dynamics of technological competition. At the firm level, we focus on the corporate incentives to design Knowledge Management policies based on soft versus hard information flows. At the aggregate level, knowledge spillovers are endogenous and feedback effects on macroeconomic growth are investigated.
    Keywords: growth hold-up; hard-soft information; knowledge management; organizational design
    JEL: L16 L20 O30 O33
    Date: 2004–10
  12. By: Saint-Paul, Gilles
    Abstract: This Paper develops a model for analysing the costs and benefits of intellectual property enforcement in LDCs. The North is more productive than the South and is the only source of innovator. There are two types of goods, and each bloc has a comparative advantage in producing a specific type of good. If comparative advantage is strong enough, even under piracy there are goods that the South will not produce. Piracy will then lead to a reallocation of innovative activity in favour of these goods. That may harm consumers (including consumers in the South) to the extent that these goods have smaller dynamic learning externalities than the other goods, and that their share in consumption is small. Thus, whether or not piracy is in the interest of the South depends on how important are the goods for which it has a comparative advantage to its consumers, and what the growth potential of these goods is. While, all else equal, the North tends to lose more (or gain less) from piracy than the South, because monopoly profits eventually accrue to the North, the South may lose more than the North if there is a strong enough home bias in favour of the goods for which it has a comparative advantage.
    Keywords: comparative advantage; growth; innovation; intellectual property; piracy
    JEL: F12 F13 O30 O34
    Date: 2004–10
  13. By: Galor, Oded
    Abstract: The demographic transition that swept the world in the course of the last century has been identified as one of the prime forces in the transition from stagnation to growth. The unprecedented increase in population growth during the early stages of industrialization was ultimately reversed and the demographic transition brought about a significant reduction in fertility rates and population growth in various regions of the world, enabling economies to convert a larger share of the fruits of factor accumulation and technological progress into growth of income per capita. This Paper examines various mechanisms that have been proposed as possible triggers for the demographic transition, assessing their empirical validity, and their potential role in the transition from stagnation to growth.
    Keywords: demographic transition; evolution; growth; human capital; malthusian stagnation; technological progress
    JEL: J11 J13 O11 O14 O33 O40
    Date: 2004–10
  14. By: Bertocchi, Graziella
    Abstract: We illustrate the ongoing research line on Growth, History, and Institutions, which adds to economic growth analysis a historical and an institutional dimension, both at the theoretical and the empirical level. We present applications of this research strategy to the impact of colonization on growth, the extension of the franchise and the welfare state, the evolution of educational systems, the relationship between industrialization and democratization, and international migration. We propose a new standard, starting from 1870, as the future reference period for theoretical and empirical research on growth. We conclude with policy implications of the Growth, History, and Institutions research line.
    Keywords: growth; history; institutions
    JEL: H00 N00 O00
    Date: 2004–11
  15. By: Chong, Alberto; Gradstein, Mark
    Abstract: This Paper presents theory and evidence on the relationship between inequality and institutional quality. We exhibit a model in which the two dynamically reinforce each other and set to test this relationship with a broad array of institutional measures. We establish the double causality between institutional strength and a more equal distribution of income and show its robustness to different data sources that cover various time-spans and to changes in specification.
    Keywords: causality; governance; inequality; institutions
    JEL: D70 O15 O17
    Date: 2004–11
  16. By: Benabou, Roland
    Abstract: The distribution of human capital and income lies at the center of a nexus of forces that shape a country’s economic, institutional and technological structure. I develop here a unified model to analyse these interactions and their growth consequences. Five main issues are addressed. First, I identify the key factors that make both European-style ‘welfare state’ and US-style ‘laissez-faire’ social contracts sustainable; I also compare the growth rates of these two politico-economic steady states, which are not Pareto-rankable. Second, I examine how technological evolutions affect the set of redistributive institutions that can be durably sustained, showing in particular how skill-biased technical change may cause the welfare state to unravel. Third, I model the endogenous determination of technology or organizational form that results from firms’ tailoring the flexibility of their production processes to the distribution of workers’ skills. The greater is human capital heterogeneity, the more flexible and wage-disequalizing is the equilibrium technology. Moreover, firms’ choices tend to generate excessive flexibility, resulting in suboptimal growth or even self-sustaining technology-inequality traps. Fourth, I examine how institutions also shape the course of technology; thus, a worldwide shift in the technology frontier results in different evolutions of production processes and skill premia across countries with different social contracts. Finally, I ask what joint configurations of technology, inequality and redistributive policy are feasible in the long run, when all three are endogenous. I show in particular how the diffusion of technology leads to the ‘exporting’ of inequality across borders; and how this, in turn, generates spillovers between social contracts that make it more difficult for nations to maintain distinct institutions and social structures.
    Keywords: human capital; inequality; political economy; redistribution; skill bias; social contract; technical change; welfare state
    JEL: D31 H10 J30 O33
    Date: 2004–11
  17. By: Ngai, Liwa Rachel; Pissarides, Christopher
    Abstract: We study a multi-sector model of growth with differences in TFP growth rates across sectors and derive sufficient conditions for the coexistence of structural change, characterized by sectoral labour reallocation, and constant aggregate growth path. The conditions are weak restrictions on the utility and production functions commonly applied by macroeconomists. We present evidence from US two-digit industries that is consistent with our predictions about structural change and successfully calibrate the historical shift from agriculture to manufacturing and services. We show quantitatively that reasonable deviations from our conditions do not have a big impact on the properties of the model.
    Keywords: multi-sector growth; sectoral employment; structural change; unbalanced growth
    JEL: O14 O41
    Date: 2004–11
  18. By: Rodrik, Dani
    Abstract: Unlike what is commonly believed, the last two decades have not witnessed the twilight of industrial policy. Instead, incentives and subsidies have been refocused on exports and direct foreign investment, in the belief that these activities are the source of significant positive spillovers. The challenge in most developing countries is not to rediscover industrial policy, but to redeploy it in a more effective manner. This paper lays out an institutional framework for accomplishing this objective. A central argument is that the task of industrial policy is as much about eliciting information from the private sector on significant externalities and their remedies as it is about implementing appropriate policies. The right model for industrial policy is not that of an autonomous government applying Pigovian taxes or subsidies, but of strategic collaboration between the private sector and the government with the aim of uncovering where the most significant obstacles to restructuring lie and what type of interventions are most likely to remove them.
    Keywords: economic growth
    JEL: O10 O20
    Date: 2004–11
  19. By: David, DE LA CROIX (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES),Belgium and FNRS (Belgium))
    Abstract: When future human capital cannot be alienated, households are allowed to borrow up to the point where it is in their own interest not to default. In such a framework, endogenous borrowing limits arise as the outcome of individual rationality constraint. In a model where education is the engine of growth, we show that endogenous borrowing constraints imply global indeterminacy. Comparing outcomes across the various equilibria we show that the relation between growth and yields is hump-shaped. Maximum growth can arise in an equilibrium with binding borrowing constraints, specially if the elasticity if human capital to education spending is large. Deepening financial markets promotes long-run growth in the case of a poverty trap, but not necessarily otherwise.
    Keywords: Financial depth; borrowing constraints; indeterminacy; incentive compatibility
    JEL: O41 O16 J24 D31
    Date: 2004–10–19
  20. By: Tapas K., MISHRA (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: In this paper, we investigate the role of the components of demographic change on economic development. Population growth has both positive and negative effects on income growth. Kelley and Schmidt (1995) states that high birth rates are costly in terms of growth but this effect can be offset by a positive impact of mortality reductions. We study how the weight of each effect has changed over time considering a panel of countries over the last four decades. We find that there is little gain to expect from further reductions in mortality in developing countries, and that the effect of birth rates has become positive in developed countries. In contrast to the earlier study, where growth enhancing effect of population density is felt consistently for all decades, we find that the effect is limited only to the sixties.
    Keywords: Demographic components; endogenous growth; panel data
    JEL: J11 C33 O47
    Date: 2004–09–20
  21. By: Lionel, ARTIGE (Universitat Autonoma de Barcelona (Spain))
    Abstract: This paper examines the existence condition of a balanced growth path in an overlapping generations model in which production uses three inputs, physical capital, human capital and land, with increasing returns to scale. Human capital is the engine of economic growth. It is shown that, unlike standard economic geography models, increasing returns verifying balanced growth always lead to regional convergence. Physical capital mobility turns out to be an overwhelming convergence force.
    Keywords: Endogenous growth; human capital; land; overlapping generations; regional dynamics
    JEL: E13 O41 R11
    Date: 2004–10–14
  22. By: Lionel, ARTIGE (Universitat Autonoma de Barcelona (Spain))
    Abstract: This paper aims to account for varying economic performances and political stability under dictatorship. We argue that economic welfare and social order are the contemporary relevant factors of political regimes’ stability. Societies with low natural level of social order tend to tolerate predatory behavior from dictators in exchange of a provision of civil peace. The fear of anarchy may explain why populations are locked in the worst dictotorship. In contrast, in societies enjoying a relative natural civil peace, dictatorship is less likely to be predatory because low economic welfare may destabilize it.
    Keywords: Anarchy; dictatorship; economic development; predation; social order
    JEL: H1 H5 O1 P16
    Date: 2004–10–14
  23. By: Lofgren, Hans; Thurlow, James; Robinson, Sherman
    Abstract: "Zambia is one of the poorest countries in Africa. Despite substantial reform during the 1990s, the economy has remained heavily dependent on urban-based mining. Copper's long-standing dominance led to a strong bias against agriculture, which undermined the sector's growth and export potential. Consequently poverty has remained concentrated within marginalized rural areas. Recent volatility in copper exports and growing foreign debt indicate the need for further economic diversification and pro-poor growth. These needs have been clearly identified in the country's Poverty Reduction Strategy Paper (PRSP), which outlines a series of policy objectives aimed at combating HIV/AIDS, reversing the deterioration of education and rural infrastructure, and accelerating agricultural growth. This paper uses a computable general equilibrium (CGE) model to assess the potential impact on inequality and poverty of the key PRSP policies, as well as the effects of foreign debt forgiveness and changes in the copper sector. The findings suggest that, in the absence of very rapid growth, the pro-poor policies outlined in the PRSP will not enable Zambia to reach its Millennium Development Goal (MDG) of halving poverty by 2015. Achieving this goal will require gross domestic product (GDP) to grow at an annual rate of over ten percent. Reduction in poverty can however be achieved by addressing HIV/AIDS, which currently reduces annual GDP growth by one percent. Furthermore, substantial poverty-reduction can occur through the acceleration of agricultural growth, although limited market opportunities necessitates supporting investment in rural infrastructure. Overall, the potential of the agricultural sector depends on the government's commitment to reforms and the continued removal of the antiagricultural bias created by the dominant copper sector." Authors' Abstract
    Keywords: Copper mines and mining ,Computable general equilibrium (CGE) ,HIV/AIDS Economic aspects ,agricultural sector ,
    Date: 2004
  24. By: Fan, Shenggen; Chan-Kang, Connie
    Abstract: "Since 1978, China has adopted a series of economic reforms leading to rapid economic growth and poverty reduction. National Gross Domestic Product (GDP) grew at about 9 percent per annum from 1978 to 2002, while per capita income increased by 8 percent per annum. The post-reform period was also characterized by an unprecedented decline in poverty. However, income inequality has worsened between coastal and interior provinces as well as between rural and urban areas. A number of factors contributed to this widening disparity in regional development in China, including differences in natural resources endowments, and infrastructure and human capital development... The objective of this study is to assess the impact of public infrastructure on growth and poverty reduction in China, paying a particular attention to the contribution of roads. ...The most significant finding of this study is that low quality (mostly rural) roads have benefit/cost ratios for national GDP that are about four times larger than the benefit/cost ratios for high quality roads. Even in terms of urban GDP, the benefit/cost ratios for low quality roads are much greater than those for high quality roads." from Authors' Abstract
    Keywords: Human capital ,
    Date: 2004
  25. By: Johnson, Michael; Resnick, Danielle
    Abstract: "While greater growth in agriculture and the broader rural sector is crucial for ameliorating Africa's high levels of poverty and malnutrition, developing strategies to achieve these objectives is hindered by a number of factors, including the broad array of interventions needed, the lack of accurate data, and dearth of trained local policy analysts. As such, this paper proposes a Strategic Analysis Knowledge Support System (SAKSS) in which data, tools, and knowledge are compiled, analyzed, and disseminated for the purposes of identifying a set of priority investment and policy options to promote agricultural growth and rural development. These analyses can in turn help inform the broader process of designing, implementing, and monitoring and evaluating a country's rural development strategy. In order to be an influential and sustainable part of this process and become a genuine "knowledge system," SAKSS will need to be established with an awareness of each country s development priorities and unique political, social, and economic context. By institutionalizing SAKSS through a network structure that includes government ministries, research institutions, universities, regional organizations, non-governmental organizations, and donors, SAKSS can become not only more relevant and legitimate for its intended end-users but also help strengthen local analytical capacity to inform the policy debate on future development strategies and outcomes." Authors' Abstract
    Keywords: Agricultural growth ,Strategic analysis ,Development policies Africa, Sub-Saharan ,
    Date: 2004
  26. By: Dorward, Andrew; Fan, Shenggen; Kydd, Jonathan; Lofgren, Hans; Morrison, Jamie; Poulton, Colin; Rao, Neetha; Smith, Laurence; Tchale, Hardwick; Thorat, Sukhadeo; Urey, Ian; Wobst, Peter
    Abstract: "This paper draws together findings from different elements of a research project examining critical components of pro-poor agricultural growth and of policies that can promote such growth in poor rural economies in South Asia and Sub-Saharan Africa. Agricultural growth, a critical driver in poverty reducing growth in many poor agrarian economies in the past, faces many difficulties in today's poor rural areas in South Asia and Sub-Saharan Africa. Some of these difficulties are endogenous to these areas while others result from broader processes of global change. Active state interventions in 'kick starting' markets in 20th century green revolutions suggest that another major difficulty may be current policies which emphasize the benefits of liberalization and state withdrawal but fail to address critical institutional constraints to market and economic development in poor rural areas. This broad hypothesis was tested in an analysis of the returns (in agricultural growth and poverty reduction) to different government spending in India over the last forty years. The results reject the alternate hypothesis underlying much current policy, that fertilizer and credit subsidies, for example, depressed agricultural growth and poverty reduction in the early stages of agricultural transformation. The results show initially high but then declining impacts from fertilizer subsidies; high benefits from investment in roads, education and agricultural R&D during all periods and varying benefits from credit subsidies over four decades; low impacts from power subsidies; and intermediate impacts from irrigation investments. These findings demand a fundamental reassessment of policies espousing state withdrawal from markets in poor agrarian economies. Given widespread state failure in many poor agrarian economies today, particularly in Africa, new thinking is urgently needed to find alternative ways of 'kick starting' markets ways which reduce rent seeking opportunities, promote rather than crowd-out private sector investment, and allow the state to withdraw as economic growth proceeds. Authors' Abstract
    Keywords: Agricultural growth ,Poverty, Rural ,South Asia Rural poor ,Africa, Sub-Saharan ,Agrarian economies ,Globalization ,Green Revolution ,Poverty alleviation ,Government spending policy India ,
    Date: 2004
  27. By: Thurlow, James; Wobst, Peter
    Abstract: "Zambia is one of the poorest countries in Sub-Saharan Africa. Almost three-quarters of the population were considered poor at the start of the 1990s, with a vast majority of these people concentrated in rural and remote areas. This extreme poverty arose in spite of Zambia's seemingly promising prospects following independence. To better understand the failure of growth and poverty-reduction this paper first considers the relationship between the structure of growth and Zambia's evolving political economy. A strong urban-bias has shaped the country's growth path leading to an economy both artificially and unsustainably distorted in favor of manufacturing and mining at the expense of rural areas. For agriculture it was the maize-bias of public policies that undermined export and growth potential within this sector....Sustained investment and economic growth during recent years suggest a possible change of fortune for Zambia. In light of this renewed growth, the paper uses a dynamic and spatially-disaggregated economy-wide model linked to a household survey to examine the potential for future poverty-reduction....Although agricultural growth is essential for substantial poverty-reduction, the country's large poor urban population necessitates growth in non-agriculture. The findings suggest that returning to a copper-led growth path is not pro-poor and that non-mining urban growth, although undermined by foreign exchange shortages and inadequate private investment, is likely to be preferable for reducing poverty." Authors' Abstract
    Keywords: Copper mines and mining ,Poverty alleviation Africa Zambia ,Manufacturing industries ,Spatial analysis (Statistics) ,Household surveys ,
    Date: 2004
  28. By: Zhang, Xiaobo; Johnson, Michael; Resnick, Danielle; Robinson, Sherman
    Abstract: The key motivation behind this study is to explore the many patterns of interactions between economic and non-economic factors in sub-Saharan Africa (hereafter referred to as Africa) in order to map out a typology of different types of country situations and thus, corresponding future options to develop strategies to end hunger and poverty in the region. The study builds on the earlier work of Irma Adelman and Cynthia Morris who argued that economic development is a dynamic, multi-faceted, nonlinear, and malleable process, a process explained by the many complex interactions between social, economic, political and institutional changes. As in Adelman and Morris, we use factor analysis to reduce a large number of variables into a manageable set of key factors. Next, using the newly developed classification and regression tree technique (CART), we link the outcome variables, such as per capital GDP and the prevalence of child malnutrition, with this smaller set of factors. This overcomes the limitations of Adelman and Morris. work that mixed the outcome and explanatory variables in their analysis. The analysis helps identify the most important factors for each outcome indicator, which provides guidance for defining the development of a typology and exploring future strategy options associated with each country type.
    Date: 2004
  29. By: Pender, John; Ssewanyana, Sarah; Edward, Kato; Nkonya, Ephraim
    Abstract: "This study investigates the impacts of rural poverty on farmers' land management decisions, crop production and incomes, based upon analysis of data from the 1999/2000 Uganda National Household Survey. We find that the impacts of rural poverty on land management, crop production and income depend upon the type of poverty (i.e., what asset or access factor is constrained) and the type of land management considered... Our results suggest that improvement in smallholders' access to land, other assets, education, extension, market information, credit, roads, and off-farm opportunities can help to break the downward cycle of poverty and land degradation, and put farmers on a more sustainable development pathway. Access to land (area and quality), other assets, education and off-farm opportunities appear to be particularly important in addressing poverty directly, while other interventions are likely to have more indirect impacts, as they influence land management, crop choice, and other livelihood decisions. Given the importance of land as the major asset owned by poor rural households in Uganda, investing in land quality maintenance and improvement is a critical need. However, we found low marginal returns to investments in organic or inorganic fertilizer and other land management practices, suggesting that it will be difficult to get farmers to make such investments in the present environment. Improvements in the market environment as well as development of more profitable land management technologies appears essential to address this need." from Authors' Abstract
    Date: 2004
  30. By: Fafchamps, Marcel; Quisumbing, Agnes R.
    Abstract: "This paper contributes to the economic analysis of marriage and the family by examining and analyzing the relative importance of potential determinants of assets brought to marriages in rural Ethiopia. One potential determinant is assortative matching, whereby the rich marry the rich and the poor marry the poor, generating a positive correlation between assets brought to marriage by both spouses. Another determinant explored is compensating parental transfers at marriage, whereby parents reduce assets transferred to their marrying children if their spouses bring more. The third determinant analyzed is parents' strategic behavior to improve the marriage-market ranking of their children by transferring more assets to them at the time of marriage." from Text
    Keywords: Intrahousehold allocation ,Intergenerational transfers ,Marriage market ,Inheritance ,
    Date: 2004
  31. By: Delgado, Christopher; Minot, Nicholas; Tiongco, Marites
    Abstract: "Economic reform programs assume that major goods are tradable, such that depreciation of the real exchange rate raises the value of output compared to factor costs in domestic currency. In Tanzania, major food staples that account for most real income are non-tradables in at least one-quarter of the country. This is demonstrated and implications assessed for the constraints imposed on macroeconomic-led adjustment strategies." Author's Abstract
    Keywords: Food staples ,Food prices ,Tradable goods ,Non-tradable goods ,
    Date: 2004
  32. By: Rosa Capolupo; Giuseppe Celi
    Abstract: While common sense would indicate that trade and growth are positively correlated, it is not clear from a theoretical and empirical perspective whether or not trade is a proximate determinant of growth. The voluminous empirical efforts in this area show mixed findings. Trying to elucidate the ambiguities in the literature we study the nexus between trade flows and growth in three groups of countries: historical EEC, the extreme case of CMEA customs union and a group of transitional economies (TEs), most of which just recently added to the EU member states. The comparator group of former communist countries, in which trade-openness is not spurred by market incentives, should be very informative in explaining the impact of trade on growth. Our main finding, by applying different econometric methodologies, is that either for the EEC or CMEA the coefficient of real openness is negative for the former two samples and positive for the third. For the EEC the indicator of openness shows a positive sign solely when the rate of growth of trade share is considered. The findings prove to be robust to variations in the controlling set, to different econometric techniques, and for the last group of countries to changing in the empirical indicator of openness (inter and intra-industry trade indicators).

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