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on Development |
| By: | Ali Abdel Gadir Ali |
| URL: | http://d.repec.org/n?u=RePEc:api:apiwps:0501&r=dev |
| By: | Arvind Virmani (Indian Council for Research on International Economic Rela; Indian Council for Research on International Economic Rela) |
| Abstract: | Economic policy and policy reform over the last few decades has been motivated by the need to accelerate growth or equivalently to reverse a decline in growth rate. The economic literature on the determinants of growth has burgeoned and disagreement has followed consensus on the policy prescriptions that need to befollowed to achieve this purpose. Sometimes the disagreement is exaggerated by the titans of the profession, so as to distinguish themselves from those constituting the conventional wisdom. The present paper moves the focus from this "macro"debate to concrete issues of policy formulation and policy change and explores the links between policy and institutions in the context of economic reforms. Thus successful introduction of new policies may require new institutions and the degree of success in changing policies may depend on the degree to which existing institutions are modified. The literature on Institutions and Development has dealt with questions of grand design such as the Constitution, the rule of law (personal safety), property rights and informal rules embodied in culture. These are matters that happen on a timescale of a quarter/half century or more and can be thought of as the "superstructure" of institutions. The quantitative work on institutions and growth has explored the linkage between these institutional issues and economic growth. In the current paper we focus on what may be called the "microstructure" of institutions, a smaller scale at which change can occur over a time frame of decades (or half decades). Among the issues that a rise in this context are how changing institutions requirechanges in policies. |
| Keywords: | Economic Reforms, India, Policy, Institutions |
| JEL: | O1 P41 |
| Date: | 2004–01 |
| URL: | http://d.repec.org/n?u=RePEc:ind:icrier:121&r=dev |
| By: | Arvind Virmani (Indian Council for Research on International Economic Rela) |
| Abstract: | Paper reviews India's growth performance since independence. Phrases suchas "Hindu Rate of Growth," sometimes make a telling comment and expose obscureeconomic data to a wider audience, but they can just as readily obscure reality byfocussing attention on the wrong issue. There is nothing in the literature that suggeststhat this period of the "Hindu Rate of Growth" had anything to do with Hinduism per se.This paper shows that had a lot to do with the Indian version of Socialism. The 30-yearperiod from 1950-51 to 1979-80 is therefore better described as the "Indian-socialist" orperhaps "Hindu-socialist" period. The paper also identifies a truly disastrous 15-yearsub-period within this Indian-socialist period, the negative lessons of which have still notbeen fully understood or absorbed by academics, policy makers and political parties.One of the innovations in this paper is to take explicit account of rainfallvariations that play a very important role in the Indian economy. This allows us todetermine whether the Indian economy has become less dependent on the monsoons(`drought proof'). It also allows a statistically more accurate determination of thedifferent phases of Indian economic growth. The paper confirms that, what the authorhas earlier dubbed, the "Bharatiya Rate of Growth" phase began around 1980-81. Thepaper fills out the sector details of the various phases of development and the role thatgovernment and government monopoly has played in different sectors. The paper alsoexplores some of the growth puzzles in our economic history. |
| Keywords: | Indian Economy, Economic Growth, Development, Phases of Growth,Socialism, Government Monopoly, Bharatiya Rate of Growth |
| JEL: | N1 O1 O4 O5 P0 |
| Date: | 2004–01 |
| URL: | http://d.repec.org/n?u=RePEc:ind:icrier:122&r=dev |
| By: | Christelle Dumas; Sylvie Lambert |
| Abstract: | This paper aims at studying the relationship between schooling and family background characteristics. The econometric analysis uses an original survey conducted in 2003 in Senegal that, uniquely, provides instruments permitting to deal with the endogeneity of background variables. The estimated effect of father’s education more than doubles when its endogeneity is accounted for. We also present results suggesting that family background has as much impact after entry at school than at younger ages, and that parental education affects children schooling through its contribution to parental preferences (and not only through higher efficiency in the production of human capital). |
| Keywords: | schooling mobility, education demand |
| JEL: | D12 I21 O12 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:lea:leawpi:0503&r=dev |
| By: | Rania Antonopoulos; Maria Sagrario Floro |
| Abstract: | Gender differences have long been documented in earnings, employment opportunities, and time spent within the unpaid care economy. This paper joins the recent efforts in the economics literature on gender differences in asset ownership. Specifically, it investigates whether a gender-specific composition in asset ownership between heads of households and spouses can be detected among low-income, urban households in Bangkok, Thailand. The present case study explores this issue empirically, using a sample of 134 couples from a 2002 survey that collected data at the level of the individual respondent on accumulated physical and financial assets. Both husband and wife were interviewed separately and the data gathered from the interviews include pertinent household and individual information on employment, credit and household decision-making issues. The findings suggest that asset composition varies by gender, indicating that further investigation is warranted on this topic. Tobit and Probit tests are used to examine the factors that may affect this gendered pattern. |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp418&r=dev |
| By: | Marin, Dalia; Koman, Reinhard |
| Abstract: | In an influential paper Mankiw, Romer, and Weil (1992) argue that the evidence on the international disparity in levels of per capita income and rates of growth is consistent with a standard Solow model, once it has been augmented to include human capital as an accumulable factor. In a study on Austria and Germany we augment the Solow model to allow for the accumulation of human capital. Based on a perpetual inventory estimation procedure we construct an aggregate measure of the stock of human capital of Austria and Germany by weighting workers of different schooling levels with their respective wage income. We obtain an estimate of the wage income of workers with different schooling from a Mincer type wage equation which quantifies how wages change with years of schooling. We find that the time series evidence on Austria and Germany is not consistent with a human capital augmented Solow model. Factor accumulation (broadly defined to include human capital) appears to be less (and not more) able to account for the cross-country growth performance of Austria and Germany when human capital accumulation is included in the analysis. Our results indicate that differences in technology are a driving factor in understanding cross country growth between these two neighboring countries with similar political and institutional background. |
| JEL: | O4 O3 O1 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:569&r=dev |
| By: | Hadi Soesastro (Department of Economics, Centre for Strategic and International Studies) |
| Abstract: | This paper examines the role of foreign aid or development assistance in helping sustain East Asia’s economic dynamism. The first section discusses the changing landscape of development assistance and examines the place of East Asia in it. The second section focuses on the recent evolution of Japan’s development assistance policy. Japan is singled out as it has been the most important donor for countries in East Asia and is likely to remain so for many years to come. The third section looks at Japan’s ODA (official development assistance) from the perspective of selected East Asian countries and highlights the issues, lessons and the recommendations that have emerged in the region on how aid could work to help meet the challenges faced by the region. |
| Keywords: | foreign aid, development assistance, East Asia, Japan, official development assistance (ODA) |
| Date: | 2004–05 |
| URL: | http://d.repec.org/n?u=RePEc:eab:develo:76&r=dev |
| By: | Milenko Popovic (INSTITUTE OF ECONOMIC SCIENCES, Belgrade, Serbia & Montenegro) |
| Abstract: | In this paper an effort has been made to unveil some hidden and implicit assumptions that has been used in different models dealing with analysis and measurement of contribution of human capital to economic growth. In order to do it we started from the general production function with heterogeneous labor input and general production function with heterogeneous human and physical capital. By introducing different assumptions regarding the partial elasticity of substitution between different factors of production we derived different models for human capital contribution. Apart from making hidden assumptions of existing models explicit we also derived several others models that can be used for the same purposes. |
| Keywords: | Economic Growth, Growth Accounting, Human Capital, Capital of Education, Partial Elasticity of Sustitution |
| JEL: | O P |
| Date: | 2005–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpdc:0502002&r=dev |
| By: | Voxi Heinrich Amavilah (REEPS & Glendale College) |
| Abstract: | I outline four, and calculate two, broad indices of the diversity of technical capability of 14 African countries based on nine common descriptors of technical capability. I find technical capability to be heterogenous, and conclude that performance policies that ignore technical diversity of capability are potentially misleading, ineffective, and perhaps even damaging. |
| Keywords: | diversity indices, technical capability, diversity technical capability |
| JEL: | O55 O49 C63 P52 |
| Date: | 2005–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpdc:0502004&r=dev |
| By: | Paul A. David (Stanford University); Dominique Foray (Stanford University) |
| Abstract: | This article provides an introduction to fundamental issues in the development of new knowledge-based economies. After placing their emergence in historical perspective and proposing a theoretical framework that distinguishes knowledge from information, the authors characterize the specific nature of such economies. They go on to deal with some of the major issues concerning the new skills and abilities required for integration into the knowledge-based economy; the new geography that is taking shape (where physical distance ceases to be such an influential constraint); the conditions governing access to both information and knowledge, not least for developing countries; the uneven development of scientific, technological (including organizational) knowledge across different sectors of activity; problems concerning intellectual property rights and the privatization of knowledge; and the issues of trust, memory and the fragmentation of knowledge. This monograph is concerned with the nature of the process of macroeconomic growth that has characterized the U. S. experience, and manifested itself in the changing pace and sources of the continuing rise real output per capita over the course of the past two hundred years. A key observation that emerges from the long-term quantitative economic record is that the proximate sources of increases in real GDP per head in the century between 1889 and 1999 were quite different from those which obtained during the first hundred years of American national experience. Baldly put, the economy's ascent to a position of twentieth century global industrial leadership entailed a transition from growth based upon the interdependent development and extensive exploitation of its natural resources and the substitution of tangible capital for labor, towards a the maintenance of an productivity leadership through rising rates of intangible investment in the formation and exploitation of technological and organizational knowledge. |
| JEL: | O P |
| Date: | 2005–02–10 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpdc:0502008&r=dev |
| By: | Takashi Yamano (Foundation for Advanced Studies on International Development); Thomas S. Jayne (Michigan State University) |
| Abstract: | The rapid increase in adult mortality due to the AIDS epidemic in sub- Saharan Africa raises great concern about its impact on child welfare. This article estimates the impact of AIDS-related adult mortality on primary school attendance in rural Kenya using a panel of 1,266 households surveyed in 1997, 2000, and 2002. We find a strong correlation between working-age adult mortality and lagged HIV- prevalence rates at nearby sentinel survey sites. School attendance, especially for children in relatively poor households, is negatively correlated with lagged provincial HIV-prevalence rates. Children, especially girls in relatively poor households, are less likely to be in school directly prior to the death of an adult member than children in unafflicted households. By contrast, boys in relatively poor households are less likely to be in school after an adult death. The evidence indicates that rising adult mortality in rural Kenya is adversely affecting primary school attendance especially among the poor. However, these results measure only short-term impacts. Over the longer run, whether school attendance in afflicted household rebounds or deteriorates further is unknown. |
| Keywords: | HIV/AIDS, Education, Kenya |
| JEL: | O12 O15 J10 Q12 |
| Date: | 2005–02–21 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpdc:0502017&r=dev |
| By: | Xiang Ao (University of Nebraska); Lilyan E. Fulginiti (University of Nebraska) |
| Abstract: | Young (1995) estimated Total Factor Productivity (TFP) growth for Hong Kong, Taiwan, Singapore and South Korea. He reported moderate growth rates for these four regions. This means that rapid growth of GDP in these four economies is due mainly to fast increase of inputs. Young (2000) also estimated the TFP growth rate of China to be 1.4% per year during the period of 1978 to 1998. Similar to his claim for the four 'Asian Tigers', he concluded that 'the productivity performance of the non-agricultural economy (of China) during the reform period is respectable, but not outstanding.' China's real GDP grew at about 9% every year during that period. Is this extraordinary growth rate only due to factor accumulation? Or is it to a large degree due to improved efficiency and innovations? To answer this question, this study uses a panel dataset of real GDP, capital stock, and labor force for 30 provinces for 1978 to 1998 to estimate the TFP for the Chinese economy. Two approaches are used to estimate the aggregate production technology: a fixed-effects model and a stochastic frontier model. Our results are consistent across models indicating a TFP growth rate of 4.9% and 3.3% respectively. Both estimates are higher than Young's 1.9%. Our estimates also indicate that national average of TFP's contribution to GDP growth amount to 41.3% and 38.7%, respectively. Other results of interest indicate that capital has contributed more than labor to GDP growth and that technological change has been labor using. |
| Keywords: | Productivity growth, China, provinces, stochastic frontier, TFP, technical change, efficiency change |
| JEL: | O47 O53 |
| Date: | 2005–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpdc:0502024&r=dev |
| By: | Oded Galor (Brown University) |
| Abstract: | This chapter 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 entire course of human history. 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 its policy implications for the growth process of less developed economies. |
| Keywords: | Growth, Technological Progress, Demographic Transition, Income Distribution, Human Capital, Evolution, Natural Selection, Malthusian Stagnation, Class Structure. |
| JEL: | O11 O14 O33 O40 J11 J13 |
| Date: | 2005–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpdc:0504001&r=dev |
| By: | Ryo Horii (Osaka University); Ryoji Ohdoi (Osaka University); Kazuhiro Yamamoto (Osaka University) |
| Abstract: | This paper develops an overlapping generations model with technology choice and imperfect credit market, in order to investigate a possible source of underdevelopment. Consistent with empirical observations in the literature, the model shows that better financial institutions that provide stronger enforceability of contracts facilitate the development of financial markets, which in turn enables firms to switch to more capital intensive technologies, thereby promoting economic development. In the presence of credit rationing, however, this technological switch widens inequality. Therefore, risk-averse agents would not be willing to improve the financial institutions to the level at which the technological switch occurs, resulting in a development trap. A remedy is to facilitate small firms' adoption of existing technology, rather than the new one. |
| Keywords: | Enforceability of Contracts, Technological Switch, Income Distribution, Credit Rationing, Development Trap. |
| JEL: | O14 O16 |
| Date: | 2005–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpdc:0504004&r=dev |
| By: | Akiomi Kitagawa (Tohoku University); Ryo Horii (Osaka University); Koichi Futagami (Osaka University) |
| Abstract: | This paper examines the economic growth effects of limited availability of higher education in a simple endogenous growth model with overlapping generations. With limited availability, the scarcity of human capital keeps its price high and distributes a larger share of the aggregate output to young households. Under certain conditions, it leads to greater aggregate savings in each period, thereby enabling the economy to grow faster than without any limitation. In such cases, an excessive expansion in the availability causes a temporary boom followed by a serious deficiency in investible funds, resulting in a substantial slowdown in economic growth. |
| Keywords: | Endogenous Growth; Human Capital; Slowdown; Intergenerational Income Distribution |
| JEL: | O41 |
| Date: | 2005–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpdc:0504005&r=dev |
| By: | Ryo Horii (Osaka University) |
| Abstract: | This paper develops a demand-pull theory of growth cycles based on variety-expansion models of endogenous growth. In the process of economic growth, cycles are generated by the interaction between consumers' desire to satisfy an indefinite range of wants and firms' incentive to utilize knowledge from past production experiences. Accumulated knowledge induces firms to agglomerate with each other in the technology space, but when the demand for unsatisfied wants reaches a threshold, firms start to adopt new technologies, causing sporadic emergence of new industries. Although emerging industries temporarily decelerates economic growth, they are indispensable parts of sustained long-term growth. |
| Keywords: | demand-pull growth, growth cycles, wants, knowledge, emergence of industries. |
| JEL: | O31 O33 O41 |
| Date: | 2005–04–13 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpdc:0504007&r=dev |
| By: | Maya Federman (Pitzer College); David I. Levine (Haas School of Business, UC Berkeley) |
| Abstract: | On average, infant mortality rates are lower in more industrialized nations, yet health and mortality worsened during early industrialization in some nations. This study examines the effects of growing manufacturing employment on infant mortality across 274 Indonesian districts from 1985 to 1995, a time of rapid industrialization. Compared with cross-national studies we have a larger sample size of regions, more consistent data definitions, and better checks for causality and specification. We can also explore the causal mechanisms underlying our correlations. Overall the results suggest manufacturing employment raised living standards, housing quality, and reduced cooking with wood and coal, which helped reduce infant mortality. At the same time, pollution from factories appears quite harmful to infants. The overall effect was slightly higher infant mortality in regions that experienced greater industrialization. |
| Keywords: | Industrialization, infant mortality, Indonesia, pollution, indoor air pollution |
| JEL: | O11 O14 O18 O19 I12 |
| Date: | 2005–04–14 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpdc:0504008&r=dev |
| By: | Taiji Harashima (University of Tsukuba & Cabinet Office of Japan) |
| Abstract: | The paper explores the impacts of heterogeneity in degree of relative risk aversion on the balance on current account in a two-country endogenous growth model. It concludes that, like the heterogeneity of demographic changes, the heterogeneity in degree of relative risk aversion generates persisting current account deficits. The deficit continues permanently, but its ratio to output stabilizes. With evidence that the degree of relative risk aversion in Japan is relatively higher than that in the U.S., there is a possibility that the persisting bilateral trade deficit of the U.S. with Japan is partially generated by this mechanism. |
| Keywords: | Current account; Trade deficits; Capital flows; Endogenous growth; Risk aversion |
| JEL: | F41 F21 F43 O40 E10 |
| Date: | 2005–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpit:0502001&r=dev |
| By: | Edgar L. Feige (University of Wisconsin-Madison) |
| Abstract: | This paper examines the contribution of Hernando De Soto’s “The Other Path” in the context of the literature on “underground economies”. Various types of “underground economies” are described and are shown to arise from different causes and to have different consequences. The underground economies of the Western World are compared to those in Socialist countries and those most likely to be found in developing nations. Reference: The World and I, June 1989 |
| Keywords: | Underground, informal, unreported, unrecorded,De Soto, |
| JEL: | O17 H26 |
| Date: | 2005–02–03 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpma:0502010&r=dev |
| By: | Edgar L. Feige (University of Wisconsin-Madison) |
| Abstract: | This paper examines the available evidence on the size the UK’s underground (unobserved) economy and presents preliminary evidence on the size and growth of the unobserved economy for the period 1960-1980 based on Feige’s transaction approach. Reference: Journal of Economic Affairs, Vol.1 No.4 July, 1981, pp. 205-212. |
| Keywords: | UNDERGROUND ECONOMY, UNOBSERVED ECONOMY, TRANSACTIONS METHOD, DISCREPANCY MEASURES. |
| JEL: | E1 H26 O17 |
| Date: | 2005–02–04 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpma:0502012&r=dev |
| By: | Edgar L. Feige (University of Wisconsin-Madison); Robert T. McGee (University of Wisconsin-Madison) |
| Abstract: | Recent research on the unobserved economy suggests that the phenomenon has important implications for both macroeconomic policy and public finance. Attention is focused on the public finance implications by examining a macro-model model from which it is possible to derive a family of Laffer curves. The model reveals that the final shape and position of the Laffer curve depends upon the strength of supply side effects, the progressivity of the tax system and the size of the unobserved economy. Using alternative parameterizations of each of these effects, we obtain rough empirical estimates of the Laffer curve for the UK. Reference: Journal of Economic Affairs, Vol. 3, No.1, October, 1982, pp.36-42. |
| Keywords: | UNOBSERVED ECONOMY, UNDERGROUND ECONOMY, LAFFER CURVE, SUPPLY SIDE, |
| JEL: | E1 E6 H26 O17 |
| Date: | 2005–02–04 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpma:0502013&r=dev |
| By: | Areendam Chanda (Louisiana State University) |
| Abstract: | This paper explores the consequences of rising returns to human capital investment on the personal savings rate. Over the past two decades, the return to college education has increased relative to high school education leading economists to argue the presence of 'skill biased technological progress'. The literature explaining household savings has also burgeoned considerably, motivated by its declining rate in the US over the past couple of decades. Stylized facts suggest a negative relationship between returns to education and savings rates across most of the past century and also a negative relationship between education spending and savings rates across OECD countries. In this paper, we present a model where a declining savings rate emerges as an outcome of an exogenously driven increase in the return to education. The link between the two is attributed to optimizing behavior of altruistic households. The results of our model are robust to the inclusion of life cycle savings and unintentional bequests. Some of the interesting results of our model are (i) a rise in the return to education raises education spending ratio by less than what it reduces the aggregate savings rate (ii) for some parameter values it actually reduces both the education spending rate and the aggregate savings rate and finally, (iii) it also raises the return to capital due to physical capital-human capital complementarity. |
| Keywords: | Skill Biased Technological Change, Savings, Education, Economic Growth |
| JEL: | D91 E21 O33 |
| Date: | 2005–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpma:0502034&r=dev |
| By: | Axel Dreher (Konstanz University); Christos Kotsogiannis (Exeter University); Steve McCorriston (Exeter University) |
| Abstract: | This paper analyzes a simple model that captures the relationship between institutional quality, the shadow economy and corruption. It shows that an improvement in institutional quality reduces the shadow economy and affects the corruption market. The exact relationship between corruption and institutional quality is, however, ambiguous and depends on the relative effectiveness of the institutional quality in the shadow and corruption markets. The predictions of the model are empirically tested - by means of Structural Equation Modelling that treats the shadow economy and the corruption market as latent variables - using data from OECD countries. The results show that an improvement in institutional quality reduces the shadow economy directly and corruption both directly and indirectly (through its effect on the shadow market). |
| Keywords: | Corruption, Shadow Economies, OECD countries, Latent Variables, Structural Equation Modelling |
| JEL: | H10 O1 K49 C39 |
| Date: | 2005–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwppe:0502012&r=dev |
| By: | Marie Godquin (TEAM); Manohar Sharma (IFPRI) |
| Abstract: | This paper provides a new approach to analyzing credit constraints by differentiating which of the household's production and consumption decisions are affected by credit constraints. It also provides a first attempt to estimate of the extent and determinants of credit constraints in the Philippines. Based on direct questions on households' experiences in credit markets, we estimate the percentage of credit-constrained households at 65%. The lack of credit constrained the level of agricultural production of 37% of the farming households; it also constrained the level of family business production of 31% of the households operating such businesses. Credit constraints also limited consumption choices of 21% of the sample households. We found that the presence of credit programs operating in the village and proximity to commercial banks and rural banks reduced the probability of credit constraints in production decisions. Further, some types of households are more likely to experience credit constraints. These are the households with little education, households that own little or no titled land and sugar-producing households. |
| Keywords: | Credit constraints, Philippines, Asia. |
| JEL: | O12 O16 |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:mse:wpsorb:bla05008&r=dev |
| By: | Rana Hasan (Asian Development Bank, Manila, Philippines); M.G. Quibria (Operations Evaluation Department, Asian Development Bank, Manila, Philippines); Yangseon Kim (Visiting Scholar, East-West Center) |
| Abstract: | This paper explores the empirical relationship between poverty and economic freedom. In doing so, it estimates the levels of absolute poverty for a panel of over forty developing countries and then utilizes fixed effects and GMM-IV estimators to derive the empirical relationships. The principal empirical results that emerge from this exercise indicate that important indicators of economic freedom such as openness to trade and small size of the government are robustly associated with poverty reduction. Labor market flexibility, which reflects an important dimension of economic freedom, does not have a significant effect on poverty on average. However, there is some evidence that trade's beneficial impact on poverty has been smaller in economies with more regulated labor markets. Finally, civil liberties that encompass various types of important economic freedom such as poverty rights, rule of law, etc., also contribute significantly to poverty reduction. This result contrasts with that for political liberties, which have seemingly no impact on poverty reduction. All these suggest that economic freedom is as much important for economic growth as for poverty reduction. |
| Date: | 2003–09 |
| URL: | http://d.repec.org/n?u=RePEc:ewc:wpaper:wp60&r=dev |