nep-dev New Economics Papers
on Development
Issue of 2005‒08‒13
forty-one papers chosen by
Jeong-Joon Lee
Towson University

  1. Trade and Development in a Labor Surplus Economy By Edward B. Barbier; Michael Rauscher
  2. On the Long-Run Evolution of Technological Knowledge By Hendrik Hakenes; Andreas Irmen
  3. Culture and Institutions: Economic Development in the Regions of Europe By Guido Tabellini
  4. Promotion of Trade and Investments between China and India: The Case of Southwest China and East and Northeast India By Biswanath Bhattacharyay; Prabir De
  5. Patience Capital and the Demise of the Aristocracy By Doepke, Matthias; Zilibotti, Fabrizio
  6. Democracy, Property Rights, Redistribution and Economic Growth By Gradstein, Mark
  7. Does External Trade Promote Financial Development? By Huang, Yongfu; Temple, Jonathan
  8. Rent-Seeking Bureaucracies in a Schumpeterian Endogenous Growth Model : Effects on Human Capital Accumulation, Inequality and Growth By Luca, SPINESI
  9. Endogenous Globalization and Income Divergence By Yoshiaki Sugimoto
  10. How Substitutable is Natural Capital? By Anil Markandya; S. Pedroso
  11. Determinants of fixed investment: A study of Indian private corporate manufacturing sector By V.R. Prabhakaran Nair
  12. Educational Attainment and Child Labor: Do Subsidies Work? By Subhayu Bandyopadhyay; Abhra Roy
  13. Can Democracy Educate a Society? By Hans Gersbach; Lars Siemers
  14. Mice Do Not Take Bribes By Thomas Barnebeck Andersen; John Rand
  15. When is Economic Growth Pro-Poor? Evidence from Tunisia By Sami Bibi
  16. Bank Supervision and Corruption in Lending By Thorsten Beck; Asli Demirgüç-Kunt; Ross Levine
  17. Aid and Growth: What Does the Cross-Country Evidence Really Show? By Raghuram G. Rajan; Arvind Subramanian
  18. The Anatomy of Start-Stop Growth By Benjamin F. Jones; Benjamin A. Olken
  19. Land, Violent Conflict and Development By Henri-Bernard Solignac Lecomte Henri-Bernard Solignac Lecomte Henri-Bernard Solignac Lecomte; Nicolas Pons-Vignon
  20. The Impact of Social Institutions on the Economic Role of Women in Developing Countries By Johannes Jütting; Christian Morrisson
  21. Decentralisation and Poverty in Developing Countries: Exploring the Impact By Johannes Jütting; Céline Kauffmann; Ida Mc Donnell; Holger Osterrieder; Nicolas Pinaud; Lucia Wegner
  22. Natural Disasters and Adaptive Capacity By Jeff Dayton-Johnson
  23. Public Opinion Polling and the Millennium Development Goals By Jude Fransman; Alphonse L. MacDonald; Ida Mc Donnell; Nicolas Pons-Vignon
  24. Extending Insurance? Funeral Associations in Ethiopia and Tanzania By Tessa Bold; Joachim De Weerdt; Stefan Dercon; Alula Pankhurst
  25. Macroeconomic Policies: New Issues of Interdependence By Martín Grandes; Nicolas Pinaud; Helmut Reisen
  26. Institutional Change and Its Impact on the Poor and Excluded: The Indian Decentralisation Experience By D. Narayana
  27. How Market Imperfections and Trade Barriers Shape Specialisation: South-America vs. OECD By Joaquim Oliveira-Martins; Tristan Price
  28. the Transition Process in China: A theoretic and empirical Study By Chen Pu; Hsiao Chihying
  29. NGOs in the Aid Community: Do Funding Source or Economic Conditioning Matter to Decisions of Country Involvement? By Suzanne McCoskey
  30. Institutions, Corruption and Tax Evasion in the Unofficial Economy By Douglas Hibbs; Violeta Piculescu
  31. Farm Productivity and Market Structure. Evidence From Cotton Reforms in Zambia By Irene Brambilla; Guido G. Porto
  32. Tying Odysseus to the Mast: Evidence from a Commitment Savings Product in the Philippines By Nava Ashraf; Dean S. Karlan; Wesley Yin
  33. The Gender Pay Gap and Trade Liberalisation: Evidence for India By Barry Reilly; Puja Vasudeva Dutta
  34. The Public Sector Pay Gap in Pakistan: A Quantile Regression Analysis By Asma Hyder; Barry Reilly
  35. Finance, Technology and Inequality in Economic Development By Ryo Horii; Ryoji Ohdoi; Kazuhiro Yamamoto
  36. Patent Citations and the Geography of Knowledge Spillovers: A Reassessment By Peter Thompson; Melanie Fox Kean
  37. Intersectoral Size Differences and Migration: Kuznets Revisited By Nejat Anbarci; Mehmet A. Ulubasoglu
  38. Patent Citations and the Geography of Knowledge Spillovers: Evidence from Inventor- and Examiner-Added Citations By Peter Thompson
  39. Economic Growth in a World of Ideas: Some Pleasant Arithmetic By Mihaela Pintea; Peter Thompson
  40. "Romes without Empires": Primate Cities, Political Competition, and Economic Growth By Cem Karayalcin

  1. By: Edward B. Barbier; Michael Rauscher
    Abstract: This paper looks at a model in which two countries trade agricultural and manufactured commodities. The manufactured-goods sector produces with increasing returns to scale under conditions of monopolistic competition. It is shown that an increase in land endowment (or an increase in agricultural productivity) can have negative welfare implications for both countries. This outcome can result under three different scenarios: asymmetries across countries, i.e. a North-South model, a neoclassical labor market in the home country's instead of a Lewisian market, and alternative utility functions.
    Keywords: international trade, labor surplus economy, land expansion, monopolistic competition, North-South model
    JEL: F12 J61 O15 O18
    Date: 2005
  2. By: Hendrik Hakenes; Andreas Irmen
    Abstract: This paper revisits the debate about the appropriate differential equation that governs the evolution of knowledge in models of endogenous growth. We argue that the assessment of the appropriateness of an equation of motion should not only be based on its implications for the future, but that it should also include its implications for the past. We maintain that the evolution of knowledge is plausible if it satisfies two asymptotic conditions: Looking forwards, infinite knowledge in finite time should be excluded, and looking backwards, knowledge should vanish towards the beginning of time (but not before). Our key results show that, generically, the behavior of the processes under scrutiny is either plausible in the future and implausible in the past or vice versa, or implausible at both ends of the time line.
    Keywords: endogenous technological change, Malthus, long-run growth
    JEL: O11 O31 O40
    Date: 2005
  3. By: Guido Tabellini
    Abstract: Does culture have a causal effect on economic development? The data on European regions suggest that it does. Culture is measured by indicators of individual values and beliefs, such as trust and respect for others, and confidence in individual self-determination. To isolate the exogenous variation in culture, I rely on two historical variables used as instruments: the literacy rate at the end of the XIXth century, and the political institutions in place over the past several centuries. The political and social history of Europe provides a rich source of variation in these two variables at a regional level. The exogenous component of culture due to history is strongly correlated with current regional economic development, after controlling for contemporaneous education, urbanization rates around 1850 and national effects. Moreover, the data do not reject the over-identifying assumption that the two historical variables used as instruments only influence regional development through culture. The indicators of culture used in this paper are also strongly correlated with economic development and with available measures of institutions in a cross-country setting.
    Keywords: culture, economic development, trust, literacy, institutions
    JEL: F10 N13 O10 P10
    Date: 2005
  4. By: Biswanath Bhattacharyay; Prabir De
    Abstract: Open regionalism and integration between the world’s two largest developing countries - the People’s Republic of China (China) and India - in trade, investments and infrastructure development can foster outward-oriented development and economic and social benefits that could result in poverty reduction. In view of the increasing trend toward regional integration, particularly the expanded European Union and North American integration, the opportunity costs of not moving toward greater economic integration between China and India involving common neighbouring countries could be increasing. This paper discusses the above subject in the context of possible areas of China - India economic cooperation and integration in the Eastern and Northeastern region of India and Southwestern provinces of China, including neighbouring countries like Bangladesh, Bhutan, Myanmar, and Nepal.
    Keywords: India, China, economic cooperation and integration, trade, investment and infrastructure development
    JEL: F10 F20 Q10 Q40 R40
    Date: 2005
  5. By: Doepke, Matthias; Zilibotti, Fabrizio
    Abstract: We model the decision problem of a parent who chooses an occupation and invests in the patience of her children. The two choices complement each other: patient individuals choose occupations with a steep income profile; a steep income profile, in turn, leads to a strong incentive to invest in patience. In equilibrium, society becomes stratified along occupational lines. The most patient people are those in occupations requiring the most education and experience. The theory can account for the demise of the British land-owning aristocracy in the nineteenth century, when rich landowners proved unable to profit from new opportunities arising with industrialization, and were thus surpassed by industrialists rising from the middle classes.
    Keywords: British aristocracy; capital accumulation; discount factor; income distribution; Industrial Revolution; patience
    JEL: N23 O14 O15 Z10
    Date: 2005–06
  6. By: Gradstein, Mark
    Abstract: Protection of property rights, as well as the burden of fiscal redistribution, have long been viewed as growth related factors. It is argued here that democratization may affect both. As the economy becomes more democratic, it creates high quality institutions such as public protection of property rights, but also becomes more responsive to fiscal demands. The analysis – which, we argue, is consistent with existing evidence - reveals that the net effect is likely to increase growth while at the same time reducing inequality. We also introduce the concept of a political bias and argue that its gradual reduction is the means to indirectly commit to high quality institutions. All this indicates, in particular, a strong link between democracy and institutional quality.
    Keywords: democracy; growth
    JEL: O11 P16
    Date: 2005–07
  7. By: Huang, Yongfu; Temple, Jonathan
    Abstract: Several recent papers have argued that trade and financial development may be linked, either for political economy reasons, or because foreign competition and exposure to shocks lead to changes in the demand for external finance. In this paper we use the cross-country and time-series variation in openness to study the relationship between trade and finance in more detail. Our results suggest that increases in goods market openness are typically followed by sustained increases in financial depth.
    Keywords: financial development; openness; trade
    JEL: F13 O16
    Date: 2005–07
  8. By: Luca, SPINESI
    Abstract: Some empirical works from the nineties have shown the existence of a negative relationship between inequality and growth. In this paper I show that the inefficiency of the Public Sector due to agency problems can be a new element that must e considered to explain the negative empirical relationship between inequality and growth. Considering a neo-Schumpeterian endogenous growth model, I envisage the relationship between rent-seeking bureaucracies and both the private market and political authority. I show that the inefficiency of the Public Sector can contribute to widening income inequality and reducing the per-capita output growth rate because of the skills waste in oversight of rent-seeking bureaucracies. Therefore bureaucratic quality can contribute to explaining the long-run negative relationship between inequality and growth. I show that these effects operates mostly in developed countries, where human capital accumulation and technological progress are fundamental engines for growth. Moreover, I show that more costly oversight reduces the consume of each existing product.
    Keywords: technological progress; inequality and growth; asymmetric information; rent-seeking bureaucracies
    JEL: D31 D82 H42 O30
    Date: 2005–02–15
  9. By: Yoshiaki Sugimoto
    Abstract: This paper develops a growth theory that accounts for the evolution of trade policy, underlying internal class conflicts, and global income divergence over the last few centuries. By analyzing political responses to the distributional effects of international trade, this paper finds a prominent interaction between trade policy and the pattern of economic development, and suggests that the nature of the interaction depends on a country's resource abundance and distribution. As shown by the example of Western Europe, land-scarce countries will reach a developed stage through a non-monotonic evolution of trade policy. In contrast, land-abundant countries, especially those with concentrated landownership, tend to fail to take o¤ because of landlords' opposition to industrialization.
    Keywords: Trade Policy, Growth, Class Conflict
    JEL: F10 F13 F43 O11 O40
    Date: 2005
  10. By: Anil Markandya (Fondazione Eni Enrico Mattei, World Bank and University of Bath); S. Pedroso (World Bank)
    Abstract: One of the recurring themes in the sustainability literature has been the legitimacy of using an economic framework to account for natural resources. This paper examines the potential for substituting between different inputs in the generation of income, where the inputs include natural resources such as land and energy resources. A nested CES production function is used to allow flexibility in the estimated elasticities of substitution. Also, with this specification, natural resources and other inputs are combined in different levels of the function, thus allowing for different levels of substitutability. Institutional and economic indicators are also incorporated in the production function estimated. Results show that the elasticities derived from functions involving land resources were generally around one or greater. Furthermore, changes in trade openness and private sector investment have a statistically significant and direct relationship with income generation. No statistically significant relationship between income and any of the institutional indicators was found.
    Keywords: Wealth accounting, Natural resources, Nested CES production function
    JEL: O47 Q24 Q32
    Date: 2005–06
  11. By: V.R. Prabhakaran Nair (Centre for Development Studies)
    Abstract: This paper analyses the determinants of fixed investment in the Indian Private Corporate Manufacturing sector for the period 1973-2002, using Annual Survey of Industries Data. It is argued that economic policy of a nation is crucial in determining the investment behaviour in developing countries rather than the traditional factors like output and profit. Against the background of the financial sector deregulation initiated in India since 1991, this study makes an attempt to analyse whether the traditional factors or the economic policy variables plays a major role in determining investment behaviour. A reduced form equation derived from the neoclassical investment theory is used for the empirical analysis. Financial Liberalisation Index is constructed for India for the analysis. The results show that, the traditional determinants like output and profit still plays a major role in determining corporate investment rather than the policy variables. Though aggregate financial liberalisation, and more prominently domestic financial liberalisation produced an environment conducive for investment, it could not succeed in creating a sustained increase in capital formation in the post reform period. In other words, firms consider the demand factor, internal liquidity position and past investment decisions etc as the major indicators for future investment. Only index shows strong positive association with corporate investment is index of money market liberalisation. It is also found that there is significant negative association between index of capital account liberalisation and corporate investment. The negative and significant relationship with index of capital account liberalisation and investment raises many concerns over the credibility of external (international) financial reforms.
    Keywords: Investment, Manufacturing
    JEL: E22 O14
    Date: 2005–03
  12. By: Subhayu Bandyopadhyay (West Virginia University and IZA Bonn); Abhra Roy (Kennesaw State University and IZA Bonn)
    Abstract: We analyze the role of education subsidies in affecting child labor where a family chooses the quantity of children, the level of educational attainment and the fraction of time an offspring spends on child labor. This is relevant because following the threat of trade sanctions and suspension of GSP privileges, many developing countries are aggressively pursuing educational policy to reduce the incidence of child labor. We find that education subsidies may increase (or reduce) the equilibrium level of education and child labor depending on the relative weight that a family attaches to quality. The latter depends on the educational attainment level. We find that subsidies that target fixed and those that target variable costs may lead to opposite effects on child labor. Given that established subsidy programs like PROGRESA have both variable and fixed components, this finding assumes special relevance. It is interesting to note that the empirical literature in this area has found that a rise in the cost of schooling decreases child labor in some countries while increasing it in others. Our findings suggest that there may be reasons for observing such apparent contradictions.
    Keywords: child labor, educational attainment, education subsidies
    JEL: J1 O1
    Date: 2005–07
  13. By: Hans Gersbach (University of Heidelberg, CEPR and IZA Bonn); Lars Siemers (University of Heidelberg)
    Abstract: We examine whether democratic societies can escape poverty traps. Unrestricted agenda setting with simple majority rules fail to educate a society, because education-enhancing redistribution will not occur. We show that a combination of suitable constitutional rules overcomes this impossibility result: rotating agenda setting and agenda repetition in combination with flexible majority rules or with a tax protection rule.
    Keywords: constitutional design, claims on deductions, flexible majority rules, agenda repetition, poverty traps, child labor
    JEL: D72 H20 H52 I20 O10 O40
    Date: 2005–07
  14. By: Thomas Barnebeck Andersen (Department of Economics, University of Copenhagen); John Rand (Department of Economics, University of Copenhagen)
    Abstract: This paper explores the empirical association between internet use, e-government and corruption in a large panel of countries covering the 1998-2003 period. We show that higher numbers of internet users and higher levels of e-government are associated with significantly lower levels of corruption. Controlling for most variables used in previous work on corruption and addressing the endogeneity issue, results are shown to be robust and to carry economic significance. This leads us to conclude that well-designed ICT policies are likely to bring substantial benefits in the fight against corruption.
    Keywords: corruption; ICT; internet; e-government
    JEL: D73 H11 O1 O57
    Date: 2005–07
  15. By: Sami Bibi
    Abstract: Many empirical studies have shown that economic growth generally leads to a drop in poverty. These studies have also pointed out that a given growth rate is compatible with a large range of outcomes in terms of poverty reduction. This means that growth is more pro-poor in certain cases than in others. Using complete and partial poverty orderings, this paper suggests a measure which captures the extent to which economic growth is pro-poor. This measure decomposes poverty changes into two components: the relative variation in the average income of the poor and the relative variation in the overall inequality within the poor. Evidence from Tunisia shows that economic growth was to a large extent pro-poor during the last two decades.
    Keywords: Poverty measurement, robustness analysis, economic growth, Tunisia
    JEL: D31 D63 I32 O40
    Date: 2005
  16. By: Thorsten Beck; Asli Demirgüç-Kunt; Ross Levine
    Abstract: Which commercial bank supervisory policies ease or intensify the degree to which bank corruption is an obstacle to firms raising external finance? Based on new data from more than 2,500 firms across 37 countries, this paper provides the first empirical assessment of the impact of different bank supervisory policies on firms’ financing obstacles. We find that the traditional approach to bank supervision, which involves empowering official supervisory agencies to directly monitor, discipline, and influence banks, does not improve the integrity of bank lending. Rather, we find that a supervisory strategy that focuses on empowering private monitoring of banks by forcing banks to disclose accurate information to the private sector tends to lower the degree to which corruption of bank officials is an obstacle to firms raising external finance. In extensions, we find that regulations that empower private monitoring exert a particularly beneficial effect on the integrity of bank lending in countries with sound legal institutions.
    JEL: G3 G28 L51 O16
    Date: 2005–08
  17. By: Raghuram G. Rajan; Arvind Subramanian
    Abstract: We examine the effects of aid on growth--in cross-sectional and panel data--after correcting for the bias that aid typically goes to poorer countries, or to countries after poor performance. Even after this correction, we find little robust evidence of a positive (or negative) relationship between aid inflows into a country and its economic growth. We also find no evidence that aid works better in better policy or geographical environments, or that certain forms of aid work better than others. Our findings, which relate to the past, do not imply that aid cannot be beneficial in the future. But they do suggest that for aid to be effective in the future, the aid apparatus will have to be rethought. Our findings raise the question: what aspects of aid offset what ought to be the indisputable growth enhancing effects of resource transfers? Thus, our findings support efforts under way at national and international levels to understand and improve aid effectiveness.
    Date: 2005–08
  18. By: Benjamin F. Jones; Benjamin A. Olken
    Abstract: This paper investigates the remarkable extremes of growth experiences within countries and examines the changes that occur when growth starts and stops. We find three main results. First, all but the very richest countries experience both growth miracles and failures over substantial periods. Second, growth accounting reveals that physical capital accumulation plays a negligible role in growth take-offs and a larger but still modest role in growth collapses. The implied role of productivity in these shifts is also directly reflected in employment reallocations and changes in trade. Third, growth accelerations and collapses are asymmetric phenomena. Collapses typically feature reduced manufacturing and investment amidst increasing price instability, whereas growth takeoffs are primarily associated with large and steady expansions in international trade. This asymmetry suggests that the roads into and out of rapid growth expansions may not be the same. The results stand in contrast to much growth theory and conventional wisdom: despite much talk of poverty traps, even very poor countries regularly grow rapidly, and the role of aggregate investment in growth accelerations is negligible.
    JEL: O47 O11
    Date: 2005–08
  19. By: Henri-Bernard Solignac Lecomte Henri-Bernard Solignac Lecomte Henri-Bernard Solignac Lecomte; Nicolas Pons-Vignon
    Abstract: <P>Land dynamics are context specific and rapidly changing, and conflicts related to them do not systematically escalate into violence. One way of framing the discussion is to consider change in the structures of power governing the management of resources in rural areas as necessary to achieve greater efficiency and equity. Since such change will be opposed by beneficiaries of the system in place, the transformation of agriculture is bound to be marred by conflicts of various intensity levels. At the heart of these conflicts lies land because of its very high material <I>and</I> symbolic values. Evidence shows that (a) whether they result from pre-existing agrarian tensions or not, conflict situations in rural societies deeply affect the politics of land, and (b) whether it is at the heart of a conflict or gets dragged into it, land requires a careful approach by policy makers because it is a central element in the evolution of societies. As a result, policies pertaining to land can ...</P> <P>Les dynamiques foncières sont en mutation permanente et s’inscrivent dans des contextes spécifiques. S’il est vrai qu’elles provoquent des conflits, ceux-ci ne deviennent pas systématiquement violents. Pour mieux comprendre les liens entre terre et conflit, on peut s’intéresser aux structures de pouvoir qui gouvernent la gestion des ressources naturelles : leur transformation est en effet une étape nécessaire à l’amélioration de l’efficacité économique de l’agriculture et à la réduction des inégalités. Parce qu’elle menace les intérêts dominants, une telle transformation provoque toujours des conflits d’intensité variable. Or la question foncière est au coeur de ces conflits, à cause des valeurs économique et symbolique attachées à la terre. A cet égard, deux enseignements peuvent être retenus : d’une part, quelle que soit leur origine, les conflits dans les sociétés rurales affectent profondément les systèmes fonciers ; d’autre part, qu’elles soient à l’origine du conflit ou ...</P>
    Date: 2004–02
  20. By: Johannes Jütting; Christian Morrisson
    Abstract: <P>Donor agencies and policy makers tend to agree that increased access of women to education, health, credit, formal legal rights and employment opportunities, in conjunction with economic growth, will substantially improve the socio-economic role of women in developing countries. This paper challenges that view. It argues that these measures might not be sufficient if the institutional framework within a country constrains women from participating in economic activities. It finds that social institutions — laws, norms, traditions and codes of conduct — constitute the most important single factor determining women’s freedom of choice in economic activities. They have not only a direct impact on the economic role of women but also an indirect one through women’s access to resources like education and health care. The findings suggest that an institutional framework that disadvantages half of the adult population hinders development. To address gender inequalities effectively, policy ...</P> <P>Les agences d’aide et les responsables politiques s’accordent en général sur l’idée suivante: un accès accru des femmes à l’éducation, à la santé, au crédit, aux droits reconnus par la loi et aux possibilités d’emploi, en conjonction avec la croissance économique, améliorera significativement le rôle des femmes dans la société et l’économie des pays en développement. Ce document conteste cette idée pour la raison suivante : ces mesures risquent de ne pas suffire aussi longtemps que le cadre institutionnel limite dans un pays la participation des femmes aux activités économiques. Il montre que les institutions sociales, c’est-à-dire les lois, les normes, les traditions et les codes de comportement dans une société représentent le facteur le plus important qui détermine la liberté de choix des femmes en matière d’activité économique. Les institutions sociales n’ont pas seulement un impact direct sur le rôle économique des femmes, mais elles ont aussi un impact indirect à cause de ...</P>
    Date: 2004–05
  21. By: Johannes Jütting; Céline Kauffmann; Ida Mc Donnell; Holger Osterrieder; Nicolas Pinaud; Lucia Wegner
    Abstract: <P>Decentralisation has been advocated by donors and development agencies as an important factor broadening citizen participation and improving local governance, thereby promoting poverty reduction from the bottom up. On the basis of a comprehensive review of 19 country case studies documented in the literature, this paper questions this assumption.</P><P>The authors find that an unambiguous link between decentralisation and poverty reduction cannot be established. In some of the poorest countries characterised by weak institutions and political conflicts, decentralisation could actually make matters worse. Interestingly, the poverty impact of decentralisation would appear to depend less on the physical country setting, for example a country’s size or quality of infrastructure, than on the capacity and willingness of policy makers to ensure a pro-poor devolution process. Two important policy lessons emerge from this study. First, in an environment where the central state is not fulfilling ...</P> <P>La décentralisation a été recommandée par les pays donateurs et les agences de développement comme un facteur important d’incitation à une plus large participation des citoyens et à une meilleure gouvernance locale, facilitant ainsi la réduction de la pauvreté en partant de la base. Ce document de travail reconsidère cette hypothèse, en passant en revue 19 études de cas par pays disponibles dans la documentation.</P><P>Les auteurs estiment impossible d’établir un lien incontestable entre décentralisation et réduction de la pauvreté. Dans certains des pays les plus pauvres, en butte à la faiblesse des institutions et à des conflits politiques, la décentralisation, dans le contexte actuel, peut empirer la situation. C’est un élément instructif, l’impact de la décentralisation sur la pauvreté parait moins dépendre des caractéristiques physiques d’un pays, telles que sa superficie ou la qualité de ses infrastructures, que de la capacité et de la volonté des décideurs politiques à engager un ...</P>
    Date: 2004–08
  22. By: Jeff Dayton-Johnson
    Abstract: <P>Natural disasters (droughts, earthquakes, epidemics, floods, wind storms) damage wellbeing, both in their immediate and long-term aftermath, and because the insecurity of exposure to disasters is in itself harmful to risk-averse people. As such, mitigating and coping with the risk of natural disasters is a pressing issue for economic development. This paper provides a conceptual framework for understanding natural disasters. Disasters, which imply tragic human costs, are distinguished from hazards, which are events like earthquakes or flooding: hazards only translate into disasters when societies are vulnerable to them. Consequently international development policy can play a role in reducing the costs of disasters by addressing vulnerability. A review of two recent disasters — the Turkish earthquakes of 1999, and Hurricane Mitch in 1998 — illustrates the importance of precarious urbanisation and environmental degradation for increased vulnerability to natural hazards. These cases ...</P> <P>Les catastrophes naturelles (sécheresses, tremblements de terre, épidémies, inondations, ouragans) sont nuisibles au bien-être, tant par leurs retombées immédiates et de long terme que par la nuisance provoquée par l’insécurité qui leur est associée chez les individus adverses au risque. Ainsi, la gestion des effets des catastrophes naturelles, de même que celle du risque de leur déclanchement, sont des questions urgentes pour le développement économique. Ce document fournit un cadre conceptuel pour mieux comprendre les catastrophes naturelles. Celles-ci impliquent des coûts humains tragiques et se distinguent des situations à risque, qui sont des événements tels que les tremblements de terre ou les inondations : les situations à risqué ne deviennent des catastrophes que lorsque les sociétés leur sont vulnérables. Par conséquent, les politiques publiques internationales pour le développement peuvent contribuer à réduire leur coût en visant sur la vulnérabilité. Un examen de deux ...</P>
    Date: 2004–08
  23. By: Jude Fransman; Alphonse L. MacDonald; Ida Mc Donnell; Nicolas Pons-Vignon
    Abstract: <P>Monitoring changes in public awareness and attitudes in rich countries towards aid and other international development policy issues is extremely difficult: due to lack of systematic polling or monitoring, there is no reliable, comparable data across DAC member countries. This paper suggests a way to address this problem: a common questionnaire for all DAC countries to use in their national surveys, centred on the Millennium Development Goals. It sums up the process that led to the setting up of this questionnaire, provides a short analysis of the main methodological issues and brings together three versions, respectively for face-to-face, phone or mail processing. These should allow information and communication professionals, as well as policy makers, to improve the comparability of public opinion surveys in OECD DAC member countries on development and the MDGs, especially if — as proposed by the European Commission’s Directorate General for Development — parts of the ...</P> <P>Il est particulièrement difficile de suivre avec précision l’évolution de l’opinion publique dans les pays riches au sujet de l’aide internationale et des autres politiques de développement : en l’absence d’enquêtes systématiques, il n’y a tout simplement aucune base de données fiables et comparables pour l’ensemble des pays membres du Comité d’Aide au Développement (CAD) de l’OCDE. Ce document propose une solution : un questionnaire commun destiné à tous les pays du CAD, prêt à l’emploi dans leurs enquêtes nationales, et centré sur les Objectifs de développement du millénaire (ODM). Il en synthétise le processus d’élaboration, analyse brièvement les principaux problèmes méthodologiques et rassemble en annexe les trois versions finales (face à face, par téléphone ou par courrier). Ce questionnaire devrait permettre aux professionnels de l’information et de la communication, ainsi qu’aux décideurs politiques, d’améliorer la comparabilité des enquêtes d’opinion dans les pays membres ...</P>
    Date: 2004–10
  24. By: Tessa Bold; Joachim De Weerdt; Stefan Dercon; Alula Pankhurst
    Abstract: <P>This paper studies the development of indigenous insurance institutions set up to help cover the high costs of funerals, using evidence from rural areas in Tanzania and Ethiopia. Many of these institutions tend to co-exist within the same community and are based on well-defined rules and regulations, often offering premium-based insurance for funeral expenses, as well as, in many cases, other forms of insurance and credit to help address hardship. The paper argues that the characteristics and inclusiveness of these institutions make them well placed as models to broaden insurance provision and other development activities in these communities. In Ethiopia, there is some encouraging experience with using these institutions, as reviewed in this paper. However, the paper argues that their fragility as institutions is well illustrated by current pressures related to HIV/AIDS, as well as by their apparent resistance to engage more broadly with NGOs and government agencies. As a ...</P> <P>A partir de données recueillies dans des zones rurales d’Éthiopie et de Tanzanie, ce document s’intéresse aux organismes locaux d’assurance qui ont fait leur apparition pour aider les familles à assumer les frais d’obsèques, souvent très lourds. Reposant sur une réglementation bien établie, la plupart d’entre eux coexistent au sein d’une même communauté. Ils proposent souvent une assurance « frais d’obsèques » fondée sur les primes ainsi que, dans de nombreux cas, d’autres produits d’assurance et de crédit permettant de faire face à d’éventuels revers. Les caractéristiques et l’ouverture totale de ces établissements en font des modèles intéressants pour la mise en place, dans ces communautés, d’autres services d’assurance ou d’autres activités de développement. En Éthiopie, leur utilisation a donné lieu à plusieurs expériences prometteuses dont ce document rend compte. Pour autant, les pressions exercées aujourd’hui par l’épidémie de sida et l’apparente réticence de ces ...</P>
    Date: 2004–12
  25. By: Martín Grandes; Nicolas Pinaud; Helmut Reisen
    Abstract: <P>Three novel macroeconomic policy challenges are discussed in this paper: the macroeconomic implications of China’s emergence; the implications of intensifying financial integration; and the interaction of Asia’s foreign exchange regime with monetary policy in the OECD area.</P><P>First, China may now be regarded as a price maker on some international commodity and energy markets. Its global impact nowadays stretches importantly not just into goods and commodity markets, but equally into world financial markets. The acquisition by the Chinese official sector of large amounts of foreign assets has raised the country’s global cyclical, financial and macroeconomic importance. Hence, China should not just be perceived as a producer of low-priced goods, but likewise of “cheap savings”. China as a swing exporter/importer could destabilise commodity markets, with important repercussions for developing countries. Variations in China’s output gap will have important repercussions on key global ...</P> <P>Ce document de travail s’intéresse à trois nouveaux défis de la politique macro-économique : les implications macro-économiques de l’émergence de la Chine ; les conséquences de l’intensification de l’intégration financière ; et l’interaction entre les régimes asiatiques de taux de change avec les politiques monétaires des pays de l’OCDE.</P><P>La Chine décide désormais du niveau des prix sur certains marchés internationaux des matières premières et de l’énergie. Son influence mondiale se fait nettement ressentir au-delà des marchés des biens et des matières premières, jusque sur les marchés financiers internationaux. L’acquisition par la banque centrale chinoise de larges quantités d’actifs étrangers a accru l’influence du pays sur les cycles économiques mondiaux et consolidé son importance d’un point de vue financier et macro-économique. La Chine ne doit donc plus seulement être perçue comme un pays producteur de biens à bas prix, mais aussi comme une source d’« épargne bon ...</P>
    Date: 2005–01
  26. By: D. Narayana
    Abstract: <P>This study analyses the impact of democratic decentralisation on the chances of socially excluded groups to participate in newly created local governance institutions – Panchayati Raj Institutions – in three Indian states. This institutional reform included a quota for the disadvantaged – women and lower castes – to ensure their effective participation. The comparative analysis on the determinants of participation of these groups and the poor vis-à-vis other groups across the states of Kerala, Tamil Nadu and Madhya Pradesh yields highly interesting results, relevant beyond the Indian context. First, the outcomes of decentralisation on participation are different across states and between different marginalised groups. While in Kerala socially disadvantaged groups and the poor are represented more than other groups at the Panchayat level, in Tamil Nadu and Madhya Pradesh the socially disadvantaged groups are as represented as the others whereas the poor continue to be largely ...</P> <P>A partir de l’expérience de trois États indiens, ce document étudie l’impact de la décentralisation démocratique sur les chances des groupes exclus de participer aux toutes nouvelles institutions locales de gouvernance – les Panchayati Raj. Cette réforme institutionnelle avait instauré un système de quotas afin de garantir la participation effective des personnes défavorisées – les femmes et les membres des castes inférieures. Une analyse comparée des déterminants de la participation des exclus et des pauvres par rapport aux autres groupes dans ces trois États – le Kerala, le Tamil Nadu et le Madhya Pradesh – parvient à des résultats tout à fait intéressants et pertinents pour d’autres pays. Tout d’abord, les effets de la décentralisation sur la participation ont été différents d’un État à l’autre et entre groupes marginalisés. Si les groupes socialement défavorisés et les pauvres du Kerala sont mieux représentés que les autres au niveau du Panchayat, les premiers parviennent au ...</P>
    Date: 2005–01
  27. By: Joaquim Oliveira-Martins; Tristan Price
    Abstract: <P>The paper set out four types of market structure clusters (based on an OECD benchmark) to assess different entry barriers, both endogenous and policy-induced that may affect the ability of enterprises in emerging countries to penetrate international markets. This framework is then applied to analyse the trade specialisation of Argentina, Brazil and Chile (ABC) compared to that of three OECD countries, Ireland, Korea and Mexico ...</P> <P>Comment les imperfections de marché et les barrières commerciales conditionnent la spécialisation: Amérique du Sud vs. OCDE <P>Cette étude propose quatre types de structure de marché (sur la base d'une sélection de pays de l'OCDE) pour évaluer les différentes barrières à l'entrée, à la fois endogènes et crées par des politiques économiques, qui peuvent affecter la capacité des entreprises dans les pays émergents de pénétrer les marchés internationaux. Ce cadre d'analyse est appliqué pour l'étude de la spécialisation de l'Argentine, du Brésil et du Chili (ABC) comparée avec celle de trois pays de l'OCDE, Irlande, Corée et Mexique ...</P>
    Keywords: market structure, structure de marché, specialisation, trade barriers, South America, spécialisation, barrières commerciales, Amérique du Sud
    JEL: F12 F14 L16 O14 O54
    Date: 2004–06–25
  28. By: Chen Pu (University Bielefeld); Hsiao Chihying (University Bielefeld)
    Abstract: In this paper we analyse the driving forces of the transition from plan to market in China. A two segments and two sectors model is constructed to take into account the particular economic situation in China during the transition process: a large agricultural sector and an industrial sector; a large centrally planned segment and a market segment. The transition from plan to market is described by the increasing share the market segment in the whole economy on the one hand and the forced adjustment of the behaviour of the planned segment to the market situation on the other. Thus this model provides a well structured way to understand the complex phenomenon during the transition process and to analysis the driving forces of the transition process.
    Keywords: Transition, Economic reform, Industrialization, Chinese economy
    JEL: O1 O14 P2
    Date: 2005–07–28
  29. By: Suzanne McCoskey (United States Naval Academy)
    Abstract: As the importance of NGOs is in the aid process increases, this research asks whether NGOs respond to criteria similar to the proposed economic factors important in the conditional aid literature. Data from US-based NGOs, specifically, is used to ask whether country involvement varies based on funding source (receiving versus not receiving US government contracts and grants) and economic criteria. Results indicate that NGOs overall do respond to low per capita incomes. NGOs receiving government funding are more “region neutral” while non- government funded NGOs tend to become involved with countries with higher levels of government consumption. Finally, while government funded NGOs are neutral to increases in population, the number of non- government funded NGOs increases with population.
    Keywords: NGOs, foreign aid
    JEL: O P
    Date: 2005–08–05
  30. By: Douglas Hibbs (Göteborg University); Violeta Piculescu (Göteborg University)
    Abstract: In this paper we propose a model of how institutional benefits, taxation and government regulations affect the productive activity of private enterprises. We consider an environment in which public officials enforcing tax and regulatory obligations are potentially corruptible, and markets for corruption may therefore arise that give firms the option of producing unofficially and evading taxes and regulations. By contrast to some previous studies that view corruption and bribery as forces driving firms out of official production into the underground economy, our model features the idea that the `grabbing hands' of corrupt bureaucrats may alternatively serve as `helping hands' allowing firms to exploit profitable opportunities in the unofficial sector. And contrary to a traditional view maintaining that high tax rates are intrinsically a major cause of large shadow economies, our model implies that incentives to evade taxation and produce underground depend on statutory tax rates relative to firm-specific thresholds of tax toleration. Tax toleration is determined, among other things, by firm-specific institutional benefits available to official producers and the costs of corruption required to produce unofficially. Some core predictions of the model concerning the determinants of tax toleration and the relative size of unofficial activity and tax evasion receive broad support from empirical analyses based on firm-level data from the World Business Environment Surveys sponsored by the World Bank.
    Keywords: institutions corruption tax evasion unofficial economy underground economy
    JEL: D21 H26 K42 O17
    Date: 2005–08–05
  31. By: Irene Brambilla (Economic Growth Center, Yale University); Guido G. Porto (The World Bank)
    Abstract: This paper investigates the impacts of cotton marketing reforms on farm productivity, a key element for poverty alleviation, in rural Zambia. The reforms comprised the elimination of the Zambian cotton marketing board that was in place since 1977. Following liberalization, the sector adopted an outgrower scheme, whereby firms provided extension services to farmers and sold inputs on loans that were repaid at the time of harvest. There are two distinctive phases of the reforms: a failure of the outgrower scheme, and a subsequent period of success of the scheme. Our findings indicate that the reforms led to interesting dynamics in cotton farming. During the phase of failure, farmers were pushed back into subsistence and productivity in cotton declined. With the improvement of the outgrower scheme of later years, farmers devoted larger shares of land to cash crops, and farm productivity significantly increased.
    Keywords: cotton marketing reforms, farm productivity
    JEL: O12 O13 Q12 Q18
  32. By: Nava Ashraf (Harvard University); Dean S. Karlan (Yale University, Economic Growth Center); Wesley Yin (Princeton University)
    Abstract: We designed a commitment savings product for a Philippine bank and implemented it using a randomized control methodology. The savings product was intended for individuals who want to commit now to restrict access to their savings, and who were sophisticated enough to engage in such a mechanism. We conducted a baseline survey on 1777 existing or former clients of a bank. One month later, we offered the commitment product to a randomly chosen subset of 710 clients; 202 (28.4 percent) accepted the offer and opened the account. In the baseline survey, we asked hypothetical time discounting questions. Women who exhibited a lower discount rate for future relative to current tradeoffs, and hence potentially have a preference for commitment, were indeed significantly more likely to open the commitment savings account. After twelve months, average savings balances increased by 81 percentage points for those clients assigned to the treatment group relative to those assigned to the control group. We conclude that the savings response represents a lasting change in savings, and not merely a short-term response to a new product.
    Keywords: Savings, commitment, hyperbolic preferences, microfinance, development economics, program evaluation, field experiment, self-control
    JEL: C93 D11 D12 D14 D81 D91 G11 O12
  33. By: Barry Reilly (Poverty Research Unit at Sussex, Department of Economics, University of Sussex); Puja Vasudeva Dutta (National Council of Applied Economic Research, New Delhi)
    Abstract: This paper uses nationally representative employment surveys to examine the magnitude of the gender pay gap in India and its relationship to a set of trade liberalisation measures. Separate wage equations, corrected for selection bias, are estimated for men and women in wage employment. Conventional index number procedures are used to decompose the gender pay gap into ‘endowment’ and ‘treatment’ components. The ‘treatment’ components comprise about one-third of the overall wage gap – a result in comport with the existing evidence for India. There is some evidence that the ‘treatment’ or residual components are declining over time but the point estimates for the differentials in these components between the initial and terminal years of our analysis are found to be imprecisely determined. A methodology suggested by Horrace and Oaxaca (2001) is used to compute industry specific gender pay gaps and their relationship with selected trade-related measures (e.g., tariff rates and trade ratios) is then examined econometrically within a GLS framework. We find little evidence that the trade-related measures are important determinants of the industry-level gender pay gap and appear to have exerted a relatively benign influence on the evolution of the industry gender pay gap in India over the last two decades.
    Keywords: gender pay gap, trade liberalisation, India
    JEL: J71 F16
    Date: 2005–07
  34. By: Asma Hyder (National Institute of Management Sciences, National University of Science & Technology, Pakistan); Barry Reilly (Poverty Research Unit at Sussex, Department of Economics, University of Sussex)
    Abstract: This paper examines the magnitude of public/private wage differentials in Pakistan using data drawn from the 2001/02 Labour Force Survey. As in many other countries, public sector workers in Pakistan tend both to have higher average pay and education levels compared to their private sector counterparts. In addition, the public sector in Pakistan has both a more compressed wage distribution and a smaller gender pay gap than that prevailing in the private sector. Our empirical analysis suggests that about two-fifths of the raw differential in average hourly wages between the two sectors is accounted by differentials in average characteristics. The estimated ceteris paribus public sector ‘mark-up’ is of the order of 49% and is substantial by the standards of developed economies. The quantile regression estimates suggest that the ‘mark-up’ was found to decline monotonically with movement up the conditional wage distribution. In particular, the premium at the 10th percentile was estimated at 92% compared to a more modest 20% at the 90th percentile.
    Date: 2005–07
  35. By: Ryo Horii (Graduate School of Economics, Osaka University); Ryoji Ohdoi (Graduate School of Economics, Osaka University); Kazuhiro Yamamoto (Graduate School of Economics, Osaka University)
    Abstract: This paper presents an overlapping generations model with technology choice and credit market imperfections, in order to investigate a possible source of underdevelopment. The model shows that a better financial infrastructure that provides stronger enforcement of contracts facilitates the development of financial markets, which, in turn, enables firms to switch to more productive and 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 infrastructure to the level at which the technological switch occurs, resulting in a development trap. A remedy is to facilitate small firmsf adoption of the currently used technology rather than the new one.
    Keywords: Enforcement; Technological Switch; Income Distribution; Credit Rationing; Development Trap; Institutions.
    JEL: O14 O16
    Date: 2005–04
  36. By: Peter Thompson (Department of Economics, Florida International University); Melanie Fox Kean (Department of Economics, University of Houston)
    Abstract: Jaffe, Trajtenberg and Henderson (Quarterly Journal of Economics, 108(3):577-98, 1993) developed a matching method to study the geography of knowledge spillovers using patent citations, and found that knowledge spillovers are strongly localized. Their method matches each citing patent to a non-citing patent intended to control for the pre-existing geographic concentration of production. We show how the method of selecting the control group may induce spurious evidence of localized spillovers. This paper reassesses their findings using control patents selected under different criteria. Doing so eliminates evidence of strong intranational localization effects at the state and metropolitan levels, but leaves largely unaffected evidence of international localization effects.
    Keywords: patent citations, knowledge spillovers, geography
    JEL: O31 O34
    Date: 2004–01
  37. By: Nejat Anbarci (Department of Economics, Florida International University); Mehmet A. Ulubasoglu (Department of Economics, Deakin University)
    Abstract: We offer a specific channel on Kuznets' hypothesis: intersectoral urban-rural size differences result in an intersectoral income inequality, increasing the national inequality; this, in turn, prompts an intersectoral migration, which works as an equilibriating mechanism, decreasing the inequality in due course. The theoretical predictions yield a recursive triangular system, in which we test, i) how the sectoral size differences influence the agricultural income, ii) how a change in agricultural income acts on migration, and iii) what happens to the income distribution as a result of migration. We find a very strong support for the theoretical predictions and the Kuznets hypothesis.
    Keywords: Kuznets hypothesis, intersectoral size differences, inequality, migration
    JEL: C51 O14 O15
    Date: 2005–05
  38. By: Peter Thompson (Department of Economics, Florida International University)
    Abstract: I report new evidence for localized knowledge spillovers identified by within-patent variations in the geographic matching rates of citations added by inventors and citations added by examiners. Evaluated at the mean citation lag, inventor citations are 20 percent more likely than examiner citations to match the country of origin of their citing patent, while US inventor citations are 25 percent more likely to match the state or metropolitan area of their citing patent. The localization of intranational knowledge spillovers declines with the passage of time, but international borders present a persistent barrier to spillovers.
    Keywords: Voting, patent citations, knowledge spillovers, geography
    JEL: O31 O34
    Date: 2004–03
  39. By: Mihaela Pintea (Department of Economics, Florida International University); Peter Thompson (Department of Economics, Florida International University)
    Abstract: Persistent trends in R&D intensity and educational attainment, in conjunction with the absence of any trend in per capita income growth, are inconsistent with the predictions of most growth models. Jones (American Economic Review, 92(1):220-39, 2002), has shown that the data are consistent with out-of-steady state predictions of his semi-endogenous growth model. This paper presents an alternative explanation: R&D intensity and educational attainment are rising because passive learning has become more difficult in the face of increasing technological complexity. We construct a model in which R&D and learning are substitutes and education facilitates on-the-job learning. The model presents an endogenous explanation for the observed increases in the inputs into knowledge creation, along with a rise in the skill premium. In contrast to Jones, our model does not predict that a dramatic decline in the growth rate of per capita income must follow the transition period.
    Keywords: Economic growth, technological change, learning, R&D, complexity
    JEL: O40
    Date: 2005–02
  40. By: Cem Karayalcin (Department of Economics, Florida International University)
    Abstract: Many developing economies are characterized by the dominance of a super metropolis. The coexistence of a primate city with a low level of economic development is not an accident, the former being symptomatic of the causes of the latter. Taking historical Rome as the archetype of a city that centralizes political power to extract resources from the rest of the country, we develop two models of rent-seeking and expropriation which illustrate different mechanisms that relate political competition to economic outcomes. The "voice" model shows that rent-seeking by di?erent interest groups (localized in different specialized cities/regions) will lead to low investment and growth when the number of these groups is low. Increased political competition in the form of more organized groups engaged in countervailing activity leads to more secure property rights and higher growth. The "exit" model allows political competition among those with political power (to tax or expropriate from citizens) over a footloose tax base. It shows that when this power is centralized, tax rates would be higher and growth rates lower. When political power is decentralized across different self-interested rulers in diverse jurisdictions, the competition over the mobile resources leads to lower tax/expropriation rates, raising the long-run rate of growth of the economy.
    Keywords: public goods, inequality, redistribution, political economy
    JEL: O4 P5
    Date: 2005–07
  41. By: Dorothée BOCCANFUSO (Université de Sherbrooke, Département d’économique – Faculté d’administration); Tambi Samuel KABORE (CEDRES, UFR-SEG-Université de Ouagadougou, 01 BP 6693 Ouaga 01)
    Abstract: Economic growth generally refers to GDP growth. The studies on the link between growth and poverty dynamic (Datt and Ravallion, 1992; Kakwani, 1997; Shorrocks, 1999) measure growth by mean household per capita expenditures. Furthermore, many countries experience at the same time economic growth and growing poverty. It is therefore important to establish a link between these two types of growth. This key link allows a formal shift from macroeconomic growth (GDP growth) to mean per capita household expenditure growth. The purpose of this paper is to discuss the link between macroeconomic growth and mean per capita household expenditure growth with the evidence drawn from Burkina Faso data. The paper also analyzes the impact of sectoral growth on poverty using Shapley value-based decomposition approach. National Accounts consumption - which is smaller - gives greater poverty incidences for 1994 and 1998 compared to the incidence from the surveys’ consumption. An annual 3.99% increase in real per capita consumption based on the survey gives a 13.37% decrease in poverty incidence, while a 6.59% annual growth in GDP yields only 6.59% decrease in poverty incidence. Agricultural sector growth accounts for at least 80% of the decline in poverty incidence, gap and severity.
    Keywords: Growth, Poverty decomposition, Shapley Value, Burkina Faso
    Date: 2004

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.