nep-dev New Economics Papers
on Development
Issue of 2005‒09‒29
35 papers chosen by
Jeong-Joon Lee
Towson University

  1. Jointness of Growth Determinants By Gernot Doppelhofer; Melvyn Weeks
  2. Cotton Textiles and the Great Divergence: Lancashire, India and Shifting Competitive Advantage, 1600-1850 By Broadberry, Stephen N; Gupta, Bishnupriya
  3. Land Reforms and Economic Development By Gersbach, Hans; Siemers, Lars
  4. Political Selection and the Quality of Government: Evidence from South India By Besley, Timothy; Pande, Rohini; Rao, Vijayendra
  5. Borders and Growth By Spolaore, Enrico; Wacziarg, Romain
  6. The Construction and Interpretation of Combined Cross-Section and Time-Series Inequality Datasets By Francois, Joseph; Rojas-Romagosa, Hugo
  7. Is China a Leviathan? By Zhu, Z.; Krug, B.
  8. Export-led growth hypothesis: Evidence for Chile By Boriss Siliverstovs; Dierk Herzer
  9. Removing the anonymity axiom in assessing pro-poor growth By Michael Grimm
  10. THE CAMBODIAN ECONOMY: READY FOR TAKE-OFF? By Sjöholm, Fredrik; Sjöberg, Örjan
  11. Can Africa Reduce Poverty by Half by 2015? The Case for a Pro-Poor Growth Strategy By Bigsten, Arne; Shimeles, Abebe
  12. Risk-Sharing Networks By Yann Bramoullé; Rachel Kranon
  13. The Welfare Implications of Growth Regressions By Donal O.Neill
  14. Trade Liberalization, Poverty, and Inequality: Evidence from Indian Districts By Petia Topalova
  15. Death and Development By Peter Lorentzen; John McMillan; Romain Wacziarg
  16. Habits in Consumption, Transactions Learning And Economic Growth. By Constantin Gurdgiev;
  17. Subcontracting and Vertical Integration in the Spanish Cotton Industry By Joan Ramon Rosés
  18. Horizontal Innovation in the Theory of Growth and Development By Gino Gancia; Fabrizio Zilibotti
  19. Globalization, Divergence and Stagnation By Gino Gancia
  20. Economic Growth with Bubbles By Jaume Ventura
  21. A Global View of Economic Growth By Jaume Ventura
  22. Productivity Growth and the Exchange Rate Regime: The Role of Financial Development By Philippe Aghion; Philippe Bacchetta; Romain Rancière; Kenneth Rogoff
  23. Wealth, Financial Intermediation and Growth By Alejandro Gaytan; Romain Rancière
  24. Systemic Crises and Growth By Romain Rancière; Aaron Tornell; Frank Westermann
  25. The Curse of Aid By Simeon Djankov; José Garcia Montalvo; Marta Reynal-Querol
  26. What Do Endogenous Growth Models Contribute? By David C. Maré
  27. Economic reform in the Agricultural sector of Nigeria: Merits and Demeits By Obayelu Abiodun Elijah; Okoruwa V.O
  28. Relationship between Income and Emergence of Democracy Reexamined, 1820-2000: A non-parametric approach By Branko Milanovic
  29. Prices, unit values and local measurement units in rural surveys: an econometric approach with an application to poverty measurement in Ethiopia By Bart Capéau; Stefan Dercon
  30. Land reform with human capital: A new analysis using the theory of economic growth and the theory of the firm By Miguel Rocha de Sousa
  31. Dams By Esther Duflo; Rohini Pande
  32. Informal sector versus informal contracts in Nairobi, Kenya By Philippe Bocquier
  33. Availability of Higher Education and Long-Term Economic Growth By Ryo Horii; Akiomi Kitagawa; Koichi Futagami
  34. "A Quantile Regression Analysis of Wages in Panama." By Evangelos M. Falaris
  35. "Institutional Quality and Economic Growth: Maintenance of the Rule of Law or Democratic Institutions, or Both?" By James Butkiewicz ; Halit Yanikkaya

  1. By: Gernot Doppelhofer; Melvyn Weeks
    Abstract: Model uncertainty arises from uncertainty about correct economic theories, data issues and empirical specification problems. This paper investigates mutual dependence or jointness among variables in explaining the dependent variable. Jointness departs from univariate measures of variable importance, while addressing model uncertainty and allowing for generally unknown forms of dependence. Positive jointness implies that regressors are complements, representing distinct, but interacting economic factors. Negative jointness implies that explanatory variables are substitutes and act as proxies for a similar underlying mechanism. In a cross-country dataset, we show that jointness among 67 determinants of growth is important, ffecting inference and economic policy.
    Keywords: Model Uncertainty, Dependencies among Regressors, Jointness, Determinants of Economic Growth
    JEL: C11 C52 O20 O50
    Date: 2005–09
  2. By: Broadberry, Stephen N; Gupta, Bishnupriya
    Abstract: The growth of cotton textile imports into Britain from India opened up new opportunities for import substitution as the new cloths, patterns and designs became increasingly fashionable. However, high silver wages in Britain as a result of high productivity in other tradable goods and services, meant that British producers of cotton textiles could not use labour-intensive Indian production methods. The growth in British labour productivity that resulted from the search for labour-saving technological progress meant that unit labour costs became lower than in India despite the much higher wages in Britain. However, the full effects of the rise in British productivity were delayed until after the Napoleonic Wars by increasing wage and raw cotton costs before supply adjusted to the major increase in demand for inputs. On balance, the effects of British protective measures were neutral.
    Keywords: competitive advantage; cotton; India; Lancashire; unit labour costs
    JEL: N60 N70 O14 O31
    Date: 2005–08
  3. By: Gersbach, Hans; Siemers, Lars
    Abstract: We demonstrate that there is a nexus between land transfers and human capital formation. A sequence of land redistributions enables the beneficiaries to educate their children and thus to escape from poverty and to overcome child labour. We find that open access to land markets should be prohibited for beneficiaries for some time. Moreover, a temporary state of inequality among the poor is unavoidable. Finally, a successful land reform allows for the transition of a society from an agriculture-based state of poverty to a human capital-based developed economy.
    Keywords: land market access; land reforms; migration; poverty; transition
    JEL: I28 I38 O11 O15 Q15
    Date: 2005–08
  4. By: Besley, Timothy; Pande, Rohini; Rao, Vijayendra
    Abstract: This paper uses household data from India to examine the economic and social status of village politicians, and how individual and village characteristics affect politician behaviour while in office. Education increases the chances of selection to public office and reduces the odds that a politician uses political power opportunistically. In contrast, land ownership and political connections enable selection but do not affect politician opportunism. At the village level, changes in the identity of the politically dominant group alter the group allocation of resources but not politician opportunism. Improved information flows in the village, however, reduce opportunism and improve resource allocation.
    Keywords: decentralization; India; political economy; public provision of private goods
    JEL: H11 H42 O12 O20
    Date: 2005–08
  5. By: Spolaore, Enrico; Wacziarg, Romain
    Abstract: This paper presents a framework to understand and measure the effects of political borders on economic growth and per capita income levels. In our model, political integration between two countries results in a positive country size effect and a negative effect through reduced openness vis-à-vis the rest of the world. Additional effects stem from possible changes in other growth determinants, besides country size and openness, when countries are merged. We estimate the growth effects that would have resulted from the hypothetical removal of national borders between pairs of adjacent countries under various scenarios. We identify country pairs where political integration would have been mutually beneficial. We find that full political integration would have slightly reduced an average country's growth rate, while most countries would benefit from a more limited form of merger, involving higher economic integration with their neighbours.
    Keywords: economic growth; economic integration; political unions
    JEL: F1 O5
    Date: 2005–08
  6. By: Francois, Joseph; Rojas-Romagosa, Hugo
    Abstract: The inequality dataset compiled in the 1990s by the World Bank and extended by the UN has been both widely used and strongly criticized. The criticisms raise questions about conclusions drawn from secondary inequality datasets in general. We develop techniques to deal with national and international comparability problems intrinsic to such datasets. The result is a new dataset of consistent inequality series, allowing us to explore problems of measurement error. In addition, the new data allow us to perform parametric non linear estimation of Lorenz curves from grouped data. This in turn allows us to estimate the entire income distribution, computing alternative inequality indexes and poverty estimates. Finally, we have used our broadly comparable dataset to examine international patterns of inequality and poverty.
    Keywords: income distribution datasets; inequality trends; Lorenz curve estimation; poverty estimation
    JEL: C80 D31 O15
    Date: 2005–09
  7. By: Zhu, Z.; Krug, B. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: To address the problem why China, as a communist country, moves in the opposite direction when the public sector has undergoing a continuous growth in most Western economies since the World War I, we offer a new approach that the de facto fiscal decentralization curtails government size in transition China according to Leviathan theory. Meanwhile, by combining time series and cross-section regression analysis and various variables used by previous empirical studies, this paper tests the Leviathan hypothesis for vertical decentralization, horizontal fragmentation and intergovernmental collusion at national and provincial level, respectively, based on the new data set of China. Our empirical results not only explain Chinese shrinking government size, but also lend support to Leviathan hypothesis, especially, under the condition of absence of traditional democratic electoral constraint.
    Keywords: Leviathan;Fiscal decentralization;China;Transition Economy;
    Date: 2005–05–10
  8. By: Boriss Siliverstovs (DIW, Berlin); Dierk Herzer (Universität Göttingen)
    Abstract: This study examines the export-led growth hypothesis using annual time series data from Chile. It addresses the problem of specification bias under which previous studies have suffered and focuses on the impact of manufactured and primary exports on the economic growth. In order to investigate if and how manufactured and mining exports affect economic growth via increases in productivity, the study uses the Toda and Yamamoto (1995) procedure for testing for Granger non-causality in Vector Autoregressive models that involve variables that are integrated of an arbitrary order and that are possibly cointegrated. The estimation results support the export-led growth hypothesis for Chile and at the same time point out to the differentiated impact of manufactured and primary exports on the economic growth.
    Keywords: Export-led growth, Chile, cointegration
    JEL: O47 F43 C32
    Date: 2005–07–14
  9. By: Michael Grimm (Universität Göttingen)
    Abstract: The recent focus on ‘pro-poor growth’ led also to an intense debate on how exactly to define and to measure pro-poor growth. However, all suggested measures, irrespective whether they use the absolute or the relative definition of pro-poor growth have in common that they are based on the anonymity axiom, i.e. they do not distinguish between changes in horizontal and vertical inequality. That means usual assessments of pro-poor growth look at distributional changes over time and ignore how specific groups or households moved. Such a perspective may provide a very incomplete picture given that the common objective of most studies investigating the pro-poorness of growth is to test whether specific policy reforms where beneficial to the initially poor or not. Using panel data from Indonesia and Peru, this paper analyzes and illustrates empirically the implications of removing the anonymity axiom from measurements of pro-poor growth. It is shown that postulating anonymity, when assessing pro-poor growth can lead to misleading conclusions on how a specific policy affected the incomes of the initially poor. For both countries, the analysis shows substantial convergence to the mean, which is, at least for the case of Indonesia, robust to measurement error in the expenditure data.
    Keywords: Anonymity axiom, pro-poor growth, income mobility, horizontal equity, inequality, decomposition
    JEL: D31 D63 O15
    Date: 2005–07–14
  10. By: Sjöholm, Fredrik (European Institute of Japanese Studies); Sjöberg, Örjan (European Institute of Japanese Studies)
    Abstract: Cambodia is facing the familiar problem of achieving sustained rates of economic growth that could help it alleviate widespread poverty. Against the background of some encouraging developments, and quite a few that are not equally reassuring, we argue that any push for development needs to consider both agriculture and industry. This is so as both labour absorption, primarily in secondary sector activities, and productivity growth in agriculture are necessary to lift large segments of the population out of the poverty associated with subsistence agriculture, landlessness and informal sector activities. Given that the major success story of the past decade, the garments and textile industry, is under threat, we conclude that Cambodia is yet to achieve an economic take off.
    Keywords: Cambodia; economic development; agriculture; industry
    JEL: O13 O14 O53
    Date: 2005–04–01
  11. By: Bigsten, Arne (Department of Economics, School of Economics and Commercial Law, Göteborg University); Shimeles, Abebe (Department of Economics, School of Economics and Commercial Law, Göteborg University)
    Abstract: This study uses simulations to explore the possibility of halving the percentage of people living in extreme poverty in Africa by 2015. A pro-poor growth-scenario and a constant-inequality scenario are compared. It is shown that initial levels of inequality and mean per capita income determine the cumulative growth and inequalityreduction required to achieve the target. The trade-off between growth and inequality varies greatly among countries and their policy-choices are thus quite different. In some cases small changes in income-distribution can have a large effect on poverty, while in others a strong focus on growth is the only viable option. <p>
    Keywords: Poverty; pro-poor growth; millennium development goals; Africa
    JEL: I32 O15
    Date: 2005–08–23
  12. By: Yann Bramoullé; Rachel Kranon
    Abstract: This paper considers the formation of risk-sharing networks. Following empirical findings, we build a model where risk-sharing takes place between pairs of individuals. We ask what structures emerge when pairs can agree to form links, but people cannot coordinate links across a population. We consider a benchmark model where identical individuals commit to share their monetary holdings equally with linked partners. We compare efficient networks to equilibrium networks. Efficient networks can (indirectly) connect all individuals and involve full insurance. However, equilibrium networks connect fewer individuals. There is an externality: when breaking a link individuals do not take into account the negative effect on others distant in the network. The network formation process can lead identical individuals to be in different positions and thus have different risk-sharing outcomes. These results may help explain empirical findings that risk-sharing is often not symmetric or complete.
    Keywords: Informal insurance, social networks
    JEL: O17 D85 Z13
    Date: 2005
  13. By: Donal O.Neill (Economics Dept., NUI Maynooth, Co. Kildare, Ireland)
    Abstract: Regressions relating the growth rate in income to initial income have been the source of much recent debate in growth economics. Recent research has emphasised the importance of allowing for non- linearities in these models when explaining the evolution of income over time. In this paper we argue these extended growth regressions are also useful in facilitating welfare comparisons across income dis- tributions, in a way that is not possible using alternative measures of convergence. To do this we exploit the similaritites between the in- come convergence literature and work on tax progressivity in the pub- lic .nance literature. We illustrate our approach using both regional data across the United States, Japan and Europe and countrywide comparisons.
    Keywords: Growth Regressions, Welfare,Equality of Opportunity,Progressivity
    JEL: O47
    Date: 2005–05
  14. By: Petia Topalova
    Abstract: Although it is commonly believed that trade liberalization results in higher GDP, little is known about its effects on poverty and inequality. This paper uses the sharp trade liberalization in India in 1991, spurred to a large extent by external factors, to measure the causal impact of trade liberalization on poverty and inequality in districts in India. Variation in pre-liberalization industrial composition across districts in India and the variation in the degree of liberalization across industries allow for a difference-in-difference approach, establishing whether certain areas benefited more from, or bore a disproportionate share of the burden of liberalization. In rural districts where industries more exposed to liberalization were concentrated, poverty incidence and depth decreased by less as a result of trade liberalization, a setback of about 15 percent of India's progress in poverty reduction over the 1990s. The results are robust to pre-reform trends, convergence and time-varying effects of initial district-specific characteristics. Inequality was unaffected in the sample of all Indian states in both urban and rural areas. The findings are related to the extremely limited mobility of factors across regions and industries in India. The findings, consistent with a specific factors model of trade, suggest that to minimize the social costs of inequality, additional policies may be needed to redistribute some of the gains of liberalization from winners to those who do not benefit as much.
    JEL: F1
    Date: 2005–09
  15. By: Peter Lorentzen; John McMillan; Romain Wacziarg
    Abstract: Analyzing a variety of cross-national and sub-national data, we argue that high adult mortality reduces economic growth by shortening time horizons. Higher adult mortality is associated with increased levels of risky behavior, higher fertility, and lower investment in physical and human capital. Furthermore, the feedback effect from economic prosperity to better health care implies that mortality could be the source of a poverty trap. In our regressions, adult mortality explains almost all of Africa's growth tragedy. Our analysis also underscores grim forecasts of the long-run economic costs of the ongoing AIDS epidemic.
    JEL: I10 J10 O10
    Date: 2005–09
  16. By: Constantin Gurdgiev; (Department of Economics, Trinity College)
    Abstract: This paper presents a model of endogenous growth in the presence of habit formation in consumption. We argue that in addition to the traditional disutility effects of habitual consumption, the past history of consumption represents a past record of transactions as well. As a result, the knowledge acquired in the process of past consumption leads to efficiency gains in allocating time to other activities. In particular, the investment technology in broad household capital can be seen as benefiting from the habitual consumption knowledge, while being subject to the costly new consumption pathways learning. These learning-by-consuming effects imply a faster speed of convergence to the steady state growth rate in consumption and a higher steady state ratio of capital to habits. Alternatively our model allows for the case where new consumption is associated with the accumulation of broad capital, as is consistent with the case where consumption goods can also be used in production. In this case convergence to steady state growth rate is slower.
    JEL: D13 E21 E22 O40
    Date: 2005–08
  17. By: Joan Ramon Rosés
    Abstract: This paper examines changes in the organization of the Spanish cotton industry from 1720 to 1860 in its core region of Catalonia. As the Spanish cotton industry adopted the most modern technology and experienced the transition to the factory system, cotton spinning and weaving mills became increasingly vertically integrated. Asset specificity more than other factors explained this tendency towards vertical integration. The probability for a firm of being vertically integrated was higher among firms located in districts with high concentration ratios and rose with size and the use of modern machinery. Simultaneously, subcontracting predominated in other phases of production and distribution where transaction costs appears to be less important.
    Keywords: transaction cost economics; European industrialization; factory system; organizational change; technological change; international competitiveness
    JEL: N63 L22 O33
    Date: 2005–03
  18. By: Gino Gancia; Fabrizio Zilibotti
    Abstract: We analyze recent contributions to growth theory based on the model of expanding variety of Romer (1990). In the first part, we present different versions of the benchmark linear model with imperfect competition. These include the “labequipment” model, labor-for-intermediates” and “directed technical change”. We review applications of the expanding variety framework to the analysis of international technology diffusion, trade, cross-country productivity differences, financial development and fluctuations. In many such applications, a key role is played by complementarities in the process of innovation.
    Keywords: appropriate technology, complementarity, cycles, convergence, directed technical change, endogenous growth, expanding variety, financial development,imperfect competition, integration, innovation
    JEL: D92 E32 F12 F15 F43 G22 O11 O16 O31 O33
    Date: 2005–01
  19. By: Gino Gancia
    Abstract: In a world where poor countries provide weak protection for intellectual property rights, market integration shifts technical change in favor of rich nations. Through this channel, free trade may amplify international income differences. At the same time, integration with countries where intellectual property rights are weakly protected can slow down the world growth rate. A crucial implication of these results is that protection of intellectual property is most beneficial in open countries. This prediction, which is novel in the literature, finds support in the data on a panel of 53 countries observed in the years 1965-1990.
    Keywords: Economic Growth, North-South Trade, Intellectual Property Rights, Cross-Country Income Differences
    JEL: F14 F43 O33 O34 O41
    Date: 2003–05
  20. By: Jaume Ventura
    Abstract: This paper presents a stylized model of economic growth with bubbles. This model views asset price bubbles as a market-generated device to moderate the effects of frictions in financial markets, improving the allocation of investments and raising the capital stock and welfare. The model illustrates various channels through which asset price bubbles affect the incentives for innovation and economic reforms, and therefore, the rate of economic growth. The model also offers a new perspective on the effects of financial development on asset price bubbles and economic growth.
    Keywords: Asset price bubbles, economic growth, financial frictions, innovations and reforms
    JEL: E32 O40 G10
    Date: 2003–11
  21. By: Jaume Ventura
    Abstract: This paper integrates in a unified and tractable framework some of the key insights of the field of international trade and economic growth. It examines a sequence of theoretical models that share a common description of technology and preferences but differ on their assumptions about trade frictions. By comparing the predictions of these models against each other, it is possible to identify a variety of channels through which trade affects the evolution of world income and its geographical distribution. By comparing the predictions of these models against the data, it is also possible to construct coherent explanations of income differences and long-run trends in economic growth.
    Keywords: Economic growth, international trade, globalization
    JEL: F10 F15 F40 F43 O11 O41
    Date: 2005–03
  22. By: Philippe Aghion; Philippe Bacchetta; Romain Rancière; Kenneth Rogoff
    Abstract: This paper offers empirical evidence that a country's choice of exchange rate regime can have a signifficant impact on its medium-term rate of productivity growth. Moreover, the impact depends critically on the country's level of financial development, its degree of market regulation, and its distance from the global technology frontier. We illustrate how each of these channels may operate in a simple stylized growth model in which real exchange rate uncertainty exacerbates the negative investment e¤ects of domestic credit market constraints. The empirical analysis is based on an 83 country data set spanning the years 1960-2000. Our approach delivers results that are in striking contrast to the vast existing empirical exchange rate literature, which largely finds the effects of exchange rate volatility on real activity to be relatively small and insignificant.
    Keywords: Productivity growth; exchange rate
    JEL: O42 F30 F31 F43
    Date: 2005–05
  23. By: Alejandro Gaytan; Romain Rancière
    Abstract: This paper presents empirical support for the existence of wealth effects in the contribution of financial intermediation to economic growth, and offers a theoretical explanation for these effects. Using GMM dynamic panel data techniques applied to study the growth-promoting effects of financial intermediation, we show that the exogenous contribution of financial development on economic growth has different effects for different levels of income per capita. We find that this contribution is generally increasing with the level of income per capita of the economy, up to a relatively high level of income. This contribution is consistently lower for poor countries; and for some low levels of income per capita it can be negative. We provide a model to account for these wealth effects. The model is a overlapping generations growth model where financial intermediaries implement liquidity risk sharing among depositors. We show that at early stages of economic development, a bank can increase welfare of its depositors only at the cost of lowering investment and growth. However, once the economy has crossed certain wealth threshold, the liquidity role of banks becomes unambiguously growth enhancing. As wealth increases, banks offer improving liquidity insurance, and higher growth; however, for high levels of wealth, growth generated by financial intermediation declines as the economy attains the optimal level of consumption risk sharing.
    Keywords: Financial development, economic growth, OLG growth models, liquidity, financial intermediation
    JEL: E44 G21 O16 O40
    Date: 2004–01
  24. By: Romain Rancière; Aaron Tornell; Frank Westermann
    Abstract: In this paper, we document the fact that countries that have experienced occasional financial crises have on average grown faster than countries with stable financial conditions. We measure the incidence of crisis with the skewness of credit growth, and find that it has a robust negative effect on GDP growth. This link coexists with the negative link between variance and growth typically found in the literature. To explain the link between crises and growth we present a model where weak institutions lead to severe financial constraints and low growth. Financial liberalization policies that facilitate risk-taking increase leverage and investment. This leads to higher growth, but also to a greater incidence of crises. Conditions are established under which the costs of crises are outweighed by the benefits of higher growth.
    Keywords: Financial constraints, growth and institutions, bailout guarantees, volatility, emerging markets
    JEL: F34 F36 F43 O41
    Date: 2002–05
  25. By: Simeon Djankov; José Garcia Montalvo; Marta Reynal-Querol
    Abstract: Foreign aid provides a windfall of resources to recipient countries and may result in the same rent seeking behavior as documented in the “curse of natural resources” literature. In this paper we discuss this effect and document its magnitude. Using data for 108 recipient countries in the period 1960 to 1999, we find that foreign aid has a negative impact on democracy. In particular, if the foreign aid over GDP that a country receives over a period of five years reaches the 75th percentile in the sample, then a 10-point index of democracy is reduced between 0.6 and one point, a large effect. For comparison, we also measure the effect of oil rents on political institutions. The fall in democracy if oil revenues reach the 75th percentile is smaller, (0.02). Aid is a bigger curse than oil.
    Keywords: Foreign aid, democracy, conditionality
    JEL: O11 O19 O16
    Date: 2005–04
  26. By: David C. Maré (Motu Economic & Public Policy Research)
    Abstract: Endogenous growth theory is one of the mainstream economics approaches to modelling economic growth. This paper provides a non-technical overview of some key strands of the endogenous growth theory (EGT) literature, providing references to key articles and texts. The intended audience is policy analysts who want to understand the intuition behind EGT models. The paper should be accessible to someone without much economics training.
    Keywords: Endogenous Growth, Innovation
    JEL: O31 O40
    Date: 2005–09–12
  27. By: Obayelu Abiodun Elijah (University of Ibadan, Ibadan Oyo State Nigeria); Okoruwa V.O (University of Ibadan Ibadan Oyo state, Nigeria)
    Abstract: The main objective of this working paper was to look at the economic reforms and there impacts in the Nigeria agricultural sector using some indicators such as the Gross domestic Products, prices of agricultural product,prices of agricultural inputs,effects on poverty, effects on both imports and export effect on quality of agricultural products etc.This was however done through extensive review of various forms of economic reform the sectors since the pre colonial era and comparing there effects both negative and positives on all the stakeholders: the farmers, consumers as well as the government and the economy as a whole.The result shows that The Nigerial economic reforms in the agricultural sector is the best option only if nigeria government is honest in the execution of the reform exercise. This will in know doubtenable the country to compete favourably with other countries of the world interm of provision of food to her citizenry as well as generation of foreign exchange in boosting the economy
    Keywords: Economic reform, agricultural sector, Nigeria, merits and demerits
    JEL: O P
    Date: 2005–09–14
  28. By: Branko Milanovic (World Bank)
    Abstract: The paper contrasts Lipset’s modernization hypothesis and Przeworski- Limongi hypothesis that entries into democracy are random with respect to income. We use data on income and democracy going back to 1820, multiple definitions of democracy, and non-parametric testing focusing on the distribution of entrants’ incomes. We find that income matters for entry into higher levels of democracy; but if we control for the previously achieved level of democracy, the income effect vanishes. This means that countries that enter into higher levels of democracy are not a random draw from the universe of all country incomes but are a random draw from the joint distribution of previous level of democracy and income. These results are compatible with the presence of a subgroup of (low) income and (low) democracy countries from which recruitment into democracy is seldom made. But for other countries, accession to higher levels of democracy is income-random. Income seems therefore both to matter (probably explaining why poor countries cannot improve their democracy levels) and not matter (explaining why for other countries improvements in democracy are income-random).
    Keywords: Democracy, income, modernization
    JEL: K
    Date: 2005–09–19
  29. By: Bart Capéau; Stefan Dercon
    Abstract: For many research problems in developing countries, some information on prices faced by households is required for the analysis, for example if subsistence consumption is a substantial part of consumption. These prices are not readily available from household surveys, nor is it straightforward to observe them. Furthermore, quantities consumed and produced are often in local units presenting further problems for the analysis. We provide an econometric approach to estimate prices and quantity conversion factors from household expenditure data. We use panel data from rural Ethiopia to illustrate the approach and to investigate the potential exogenous quality bias in the estimation of the prices. In an application, we show that the conclusions about poverty changes over time are significantly affected by using less appropriate strategies to convert local units and to value subsistence consumption. We find that mean unit values result in the overestimation of prices due to outliers and other sources of measurement error. Exogenous consumer price sources, often collected at larger markets outside the village, tend to be slightly lower than our estimates.
    Keywords: household surveys, unit values, subsistence consumption, local measurement units, poverty
    JEL: D4 I3 R2
    Date: 2004
  30. By: Miguel Rocha de Sousa
    Abstract: In section 1 we refer to a historical synopsis, section 2 classifies the different land reforms using KAWAGOE (1999) typology. Afterwards we link the concepts of human capital and land reform within the theory of economic growth. In section 3 a simplified formal dynamic model of land reform based on the neoclassical theory of economic growth is introduced, following SOLOW-SWAN models. In section 4 an endogenous growth model tries to evaluate land reform in the process of economic growth, based on the ROMER (1990) model. We further try to relate the notion of convergence with successful land reform. The main conclusion of these sections is that with the neoclassical exogenous framework there is convergence between small landholders and latifundia holders. This is a successful land reform: there is a finite time horizon that allows almost landless illiterate to catch up with rich literate farmers. In the case of endogenous growth there is never convergence thus the land reform process fails. Another conclusion in the endogenous framework is that, by reverse causality, failed land reforms result from perpetuating initial differential human capital stocks. In section 5, another approach is to extend ARROW (1962) learn by doing model to evaluate land reform as a structural break (or cut-off point). A condition for land reform viability is established, creating a Possibility Set of Recovery of Human Capital (PSRHC). In section 6 we simplify the theory of the firm JOVANOVIC´s (1982) model, applying it to agricultural firms to explain birth, life and death of latifundia. We establish the date and process of land reform, as a cut-off process, in which it arises from the failure of firms. Finally, in section 7, we conclude and present in section 8 the references.
    JEL: Q15 O0
    Date: 2005
  31. By: Esther Duflo (Massachusetts Institute of Technology); Rohini Pande (Economic Growth Center, Yale University)
    Abstract: The construction of large dams is one of the most costly and controversial forms of public infrastructure investment in developing countries, but little is known about their impact. This paper studies the productivity and distributional effects of large dams in India. To account for endogenous placement of dams we use GIS data and the fact that river gradient affects a district's suitability for dams to provide instrumental variable estimates of their impact. We find that, in a district where a dam is built, agricultural production does not increase but poverty does. In contrast, districts located downstream from the dam benefit from increased irrigation and see agricultural production increase and poverty fall. Overall, our estimates suggest that large dam construction in India is a marginally cost-effective investment with significant distributional implications, and has, in aggregate, increased poverty.
    Keywords: Dams, Development Planning, Program Evalluation, India
    JEL: O21 O12 H43 H23
    Date: 2005–08
  32. By: Philippe Bocquier (DIAL, IRD, Paris)
    Abstract: (english) From official records, it would appear that the labour market significantly shifted from the formal to the informal sector in Kenya. However, a careful examination of different data sources for Nairobi show that in the 1990s there has been no direct transfer of employment from the formal sector to supposedly flourishing informal enterprises, but rather an increasing number of employees informally contracted by formal enterprises to the expense of social and legal protection of employees. Seven out of eight jobs in Nairobi still depend on the formal sector, through either formal or informal contracts. Although migrants form more than three quarters of the active population in Nairobi, migration has not had a specific impact on the labour market structure and evolution. However, Nairobi became less attractive to active male migrants during the 1990s as unemployment and lack of opportunity in the formal sector deterred candidates from in-migrating. The Nairobi labour market also became more discriminative against women, whose chance to enter and to remain in the labour market reduced considerably. In the 1990s the combination of higher unemployment, lower female participation rate and reduced migration of males in active ages resulted in higher dependency on the workforce and in doubling the absolute poverty in Nairobi. _________________________________ (français) D’après les sources officielles, il pourrait sembler que le marché du travail au Kenya a basculé sensiblement du secteur formel vers le secteur informel. Cependant, un examen attentif des différentes sources de données sur Nairobi montre que dans les années 1990 il n’y a pas eu de transfert direct des emplois du secteur formel vers les entreprises informelles supposées en pleine expansion. Au contraire, un nombre croissant d’employés est informellement contracté par les entreprises formelles au détriment de la protection sociale et légale de ces employés. Sept emplois sur huit à Nairobi dépendent du secteur formel, au travers de contrats formels ou informels. Bien que les migrants forment les trois quarts de la population active à Nairobi, la migration n’a pas eu un impact spécifique sur la structure et l’évolution du marché de l’emploi. Cependant, Nairobi attire dans les années 1990 moins de jeunes hommes actifs, du fait que le chômage et le manque d’opportunités dans le secteur formel a dissuadé les candidats à l’immigration. Le marché de l’emploi à Nairobi est aussi devenu plus discriminatoire envers les femmes, dont les chances d’entrer et de se maintenir sur le marché de l’emploi se sont réduites considérablement. Dans les années 1990, la combinaison d’un chômage en hausse, d’un taux d’activité féminine plus bas et d’un ralentissement de la migration masculine aux âges actifs a eu pour résultat une augmentation du taux de dépendance et un doublement de la pauvreté absolue à Nairobi.
    Keywords: labour market, migration, unemployment, informal sector, gender discrimination, Nairobi,Kenya,marché du travail, migration, chômage, secteur informel, discrimination de genre
    JEL: J16 J21 J42 J61
    Date: 2005–09
  33. By: Ryo Horii (Graduate School of Economics, Osaka University); Akiomi Kitagawa (Graduate School of Economics and Management, Tohoku University); Koichi Futagami (Graduate School of Economics, 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: 2003–11
  34. By: Evangelos M. Falaris (Department of Economics,University of Delaware)
    Abstract: I investigate differences in the effects of worker characteristics on wages in Panama at different points of the conditional wage distribution. Public sector employment increases wages of men and of women relatively more at lower quantiles. Public sector employment increases wages of the median worker in that sector and reduces wage inequality within the sector. The existence of a labor union at a worker’s workplace increases relatively more wages of men at lower quantiles. Labor unions reduce male wage inequality within the union sector and increase average wages of union members. Unions do not increase women’s wages but reduce wage inequality within the union sector. Working for a large firm increases wages relatively more at lower quantiles. Rates of return to higher education and to experience are larger for men at higher quantiles. Experience and higher education increase men’s wage inequality. There are no differences across quantiles in rates of return to schooling and experience for women.
    Keywords: wages, Panama, quantile regression
    JEL: J31 O15
    Date: 2004
  35. By: James Butkiewicz  (Department of Economics,University of Delaware); Halit Yanikkaya (Department of Economics, Celal Bayar University)
    Abstract: Analysis of the factors determining rates of economic growth has found that country-specific characteristics have important effects on growth performance. Empirical evidence to date suggests that maintenance of the rule of law promotes growth, while adopting democratic institutions does not appear to improve growth performance. We find that these conclusions are very sensitive to sample selection and to estimation technique. When an identical sample of countries is used, we find that countries with democratic institutions do enjoy superior growth performance. The relationship between growth and democratic institutions is also sensitive to the estimation technique used. Estimates using instrumental variable techniques suggest that democratic institutions do experience better growth performance. These results are especially relevant for developing nations. Length pages: 25 pages
    Keywords: Rule of Law, Democracy, Economic Growth
    JEL: O40 P16
    Date: 2004

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