nep-dev New Economics Papers
on Development
Issue of 2005‒07‒18
eight papers chosen by
Jeong-Joon Lee
Towson University

  1. Brain Drain in Developing Regions (1990-2000) By Frédéric Docquier; Olivier Lohest; Abdeslam Marfouk
  2. Growth, Technological Interdependence and Spatial Externalities: Theory and Evidence. By ERTUR, Cem; KOCH, Wilfried
  3. The State of Village-Level Infrastructures and Public Services in Indonesia During the Economic Crisis By Jesse Darja; Daniel Suryadarma; Asep Suryahadi; Sudarno Sumarto
  4. A Reassessment of Inequality and Its Role in Poverty Reduction in Indonesia By Daniel Suryadarma; Rima Prama Artha; Asep Suryahadi; Sudarno Sumarto
  5. Direct and Indirect Causality Between Exports and Economic Output for Bangladesh and Sri Lanka: Horizon Matters By Judith A. Clarke; Mukesh Ralhan
  6. Trade And Structural Adjustment Policies In Selected Developing Countries By Jens Andersson; Federico Bonaglia; Kiichiro Fukasaku; Caroline Lesser
  7. Intelligence, Human Capital, and Economic Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach By Garett Jones; W. Joel Schneider
  8. The (Much Understated) Quantitative Role of Capital Accumulation and Saving By Genevieve Verdier

  1. By: Frédéric Docquier (University of Lille 2, World Bank, IWEPS and IZA Bonn); Olivier Lohest (IWEPS (Regional Govt. of Wallonia, Belgium)); Abdeslam Marfouk (Free University of Brussels and IWEPS)
    Abstract: In this paper, we analyze the distribution of the brain drain in the LAC region (Latin America and the Caribbean), Asia and Africa. We rely on an original data set on international migration by educational attainment for 1990 and 2000. Our analysis reveals that the brain drain is strong in Eastern, Middle and Western Africa, Central America and the Caribbean. However, the Kernel approach suggests that the dispersion and the intradistribution dynamics of skilled migration rates strongly differ across regions. We then tautologically disentangle the brain drain into two multiplicative components, the global migration rate and the selection bias. Among the most affected countries, LAC countries suffer from high migration rates whilst most African countries suffer from high selection biases. Finally, exploratory Moran’s tests reveal strong spatial, political and cultural autocorrelations in migration rates and selection biases. The latter result suggests that skilled workers react differently than unskilled workers to a large set of variables.
    JEL: F22 O15 J11 J24
    Date: 2005–07
  2. By: ERTUR, Cem (LEG - CNRS UMR 5118 - Université de Bourgogne); KOCH, Wilfried (LEG - CNRS UMR 5118 - Université de Bourgogne)
    Abstract: This paper presents a theoretical model, based on the neoclassical growth literature, which explicitly takes into account technological interdependence among economies and examines the impact of location and neighborhood effects in explaining growth. Technological interdependence is supposed working through spatial externalities. The magnitude of the physical capital externalities at steady state, which is usually not identified in the literature, is estimated using a spatial econometric specification explaining the steady state income level. This spatially augmented Solow model yields a conditional convergence equation which is characterized by parameter heterogeneity. A locally linear spatial autoregressive specification is then estimated.
    Keywords: Conditional convergence ; technological interdependence ; spatial externalities ; spatial autocorrelation ; parameter heterogeneity ; locally linear estimation
    JEL: C14 C31 O4
    Date: 2005–07
  3. By: Jesse Darja (SMERU Reasearch Centre); Daniel Suryadarma (SMERU Reasearch Centre); Asep Suryahadi (SMERU Reasearch Centre); Sudarno Sumarto (SMERU Reasearch Centre)
    Abstract: Infrastructures play a crucial role in economic development and poverty reduction. The economic crisis in 1997-98 severely curtailed the government’s capacity to maintain existing infrastructures, negatively impacted the prospects for future economic development and poverty reduction in the country. This study provides an overview of the changes in the availability of village-level infrastructures and public services during the economic crisis. The findings indicate that there were mixed trends in the availability of different types of infrastructures and public services. Furthermore, the changes in the availability of certain infrastructures or public services differ across urban and rural areas as well as between Java-Bali and the outer islands. In the era of regional autonomy, it is essential to involve regional governments in infrastructure development planning, management, and maintenance.
    Keywords: economic development, poverty reduction, economic crisis, village-level, infrastructure development, public services, Java-Bali, Indonesia
    JEL: H54 P43 P46
    Date: 2004–06
  4. By: Daniel Suryadarma (SMERU Reasearch Centre); Rima Prama Artha (SMERU Reasearch Centre); Asep Suryahadi (SMERU Reasearch Centre); Sudarno Sumarto (SMERU Reasearch Centre)
    Abstract: This study provides an overview of inequality in Indonesia for the period of 1984 to 2002 using several widely used measurements of inequality. Firstly, unlike previous studies, our paper uses real consumption expenditure that takes into account the high regional price disparity across regions in Indonesia. Secondly, we found that, although during the crisis all measures indicate a decrease in inequality, it actually increased for those below the poverty line. Finally, this study also provides an estimation of ‘distribution corrected’ growth elasticity of poverty for Indonesia. This proves to be an important explanation for the fact that the poverty rate decreased very rapidly between 1999 and 2002: because inequality during the peak of the economic crisis in 1999 was at its lowest level in 15 years.
    Keywords: inequality, Indonesia, real consumption expenditure, disparity, poverty, economic crisis, Indonesia
    JEL: P46 E31 E21
    Date: 2005–01
  5. By: Judith A. Clarke (Department of Economics, University of Victoria); Mukesh Ralhan (Department of Economics, University of Victoria)
    Abstract: The extensive body of research that examines for (Granger, 1969) causality from exports to output for developing countries, including Bangladesh and Sri Lanka, using vector autoregressions and/or vector error correction models, is limited in only examining for one-period ahead or direct causality; the exception is in bivariate systems. This (usually unrecognized) focus on one-period causality in multivariate systems has often led to conclusions that exports do not Granger-cause economic output. We show that moving to Granger-causality at longer horizons, in a commonly used multivariate system, leads to bidirectional causality between exports and output, even when there is not one-period causality; the longer horizon causality arises indirectly through one or more of the auxiliary variables.
    Keywords: Economic growth, Granger causality, export-led growth, vector autoregressions
    JEL: C32 O4
    Date: 2005–07–15
  6. By: Jens Andersson (Swedish Minsitry of Foreign Affairs); Federico Bonaglia (OECD Development Centre); Kiichiro Fukasaku (OECD Development Centre); Caroline Lesser (OECD Development Co-operation Directorate)
    Abstract: The experience of the five examined industries (agro-food in Chile, cut flowers in Kenya,garment in Lesotho and in Mauritius and seafood in Thailand) demonstrates that non-traditional industries can emerge and achieved strong growth rates in very diverse settings in terms of geography and initial economic and social conditions. In most of these cases, the government adopted a relatively export-oriented, business- friendly attitude and adapted its policies as the industries developed. Hence, a key factor for successful structural adjustment has been the pro-active role of government in establishing an enabling economic and policy environment that allows local firms to operate on a level-playing field and strengthen their competitive edge in international markets. This highlights the importance of implementing trade policies in the framework of comprehensive development strategies and establishing a consultative national policy-making process for ensuring a coherent approach to trade and structural adjustment. The case studies also underscore that countries (government and industry) are compelled to constantly adapt in light of new sources of competition, growing wage levels, environmental constraints, technological advances and demanding product and process standards. Policy-makers in most countries under review are aware of this challenge. As a consequence, some of them have taken the initiative to set up specific mechanisms or programmes for further enhancing the competitiveness of existing export sectors and/or promoting emerging non-traditional export industries.
    Keywords: Trade and structural adjustment, export diversification, trade capacity building
    JEL: O P
    Date: 2005–07–11
  7. By: Garett Jones (Southern Illinois University Edwardsville); W. Joel Schneider (Illinois State University)
    Abstract: Human capital plays an important role in the theory of economic growth, but it has been difficult to measure this abstract concept. We survey the psychological literature on cross-cultural IQ tests, and conclude that modern intelligence tests are well-suited for measuring an important form of a nation’s human capital. Using a new database compiled by Lynn and Vanhanen (2002) along with a Bayesian methodology derived from Sala-i-Martin, Doppelhofer, and Miller (AER, 2004), we show that national average IQ has a robust positive relationship with economic growth. In growth regressions that include only robust control variables, IQ is statistically significant in 99.8% of these 1330 regressions, and the IQ coefficient is always positive. A strong relationship persists even when OECD countries are excluded from the sample. A 1 point increase in a nation’s average IQ is associated with a persistent 0.11% annual increase in GDP per capita.
    Keywords: Economic Growth, Human Capital, Intelligence, IQ, Education
    JEL: O41 J24 I20
    Date: 2005–07–11
  8. By: Genevieve Verdier (Texas A&M University)
    Abstract: Can factor accumulation still help us understand differences in capital inflows and income across countries? This paper offers a quantitative evaluation of neoclassical models of growth with collateral constraints. Previous work has found evidence that supports the qualitative predictions of this class of models for the direction of capital flows - -- they are driven by domestic scarcity --- and the role of domestic savings --- they act as complements rather than substitutes to capital inflows. In this paper, I estimate the factor shares implied by the long-term dynamics of external debt observed in the data. I find that a model with constant-elasticity-of substitution technology and a collateral constraint can generate plausible capital shares and cross- country distributions of debt-to-GDP ratios. This suggests that capital accumulation may play a more important role than suggested by the recent literature on growth, even in a world with limited financial integration.
    Keywords: Credit constraints, net external debt, capital flows, savings, convergence, capital shares.
    JEL: F41 F43 O41 C63
    Date: 2005–07–14

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