nep-dev New Economics Papers
on Development
Issue of 2005‒11‒09
sixteen papers chosen by
Jeong-Joon Lee
Towson University

  1. Macroeconometric Modelling: Approaches and Experiences in Developing Countries By Valadkhani, Abbas
  2. Donor Influence in MDBs: the Case of the Asian Development Bank By Kilby, Christopher
  3. Integration brings convergence? The role of public and human capital By Maria Jesus Delgado Rodriguez; Inmaculada Alvarez Ayuso
  4. Do Migrants React to Infrastructure Difference between Urban and Rural Areas?:Development and Application of an Extended Harris-Todaro Model By Komei Sasaki; Ismail Issah; Tariq Khan
  5. Spatial effects on technical progress: growth, and convergence among countries By Fernando Barreiro-Pereira
  6. Spatial Patterns of Technology Diffusion: An Empirical Analysis Using TFP By Maria Abreu; Henride Groot; Raymond Florax
  7. Rural-Urban Economic Disparities among China’s Elderly By Maria Manuela Nêveda Da Costa; Jianjun Ji
  8. A note on poverty, inequality and growth By George Korres; Emmanuel Marmaras; George Tsobanoglou
  9. Historical Legacies: A Model Linking Africa's Past to its Current Underdevelopment By Nathan Nunn
  10. Inequality, Growth, and Overtaking By Yoshiaki Sugimoto
  11. Sectoral Shift, Wealth Distribution, and Development By Kazuhiro Yuki
  12. The Modern World: The effect of democracy, colonialism and war on economic growth 1820-2000 By Branko Milanovic
  13. Real Income Stagnation of Countries, 1960-2001 By Sanjay G. Reddy; Camelia Minoiu
  14. Has world poverty really fallen during the 1990s? By Sanjay G. Reddy; Camelia Minoiu
  15. Major Flaws in Conflict Prevention Policies towards Africa. The Conceptual Deficits of International Actors’ Approaches and How to Overcome Them By Andreas Mehler; Hans-Christian Mahnke
  16. Context Matters – Rethinking the Resource Curse in Sub-Saharan Africa By Matthias Basedau

  1. By: Valadkhani, Abbas (University of Wollongong)
    Abstract: This paper selectively reviews various approaches of macroeconometric modelling and highlights some important lessons from more than half a century of model-building particularly in the context of Asian countries. Addressing several issues discussed in this paper can improve the use of macroeconometric models (MEM) in forecasting and policy analysis in the foreseeable future. This survey shows that most MEMs in developing countries are either becoming smaller in size or not being subject to a thorough diagnostic investigation. In the specification of models one should consider the interplay among macroeconomic policies of different countries via international trade and global financial markets. It is argued that the Project Link and the Fair multi-country model are two initiatives in the right direction. It also appears that with advancement of econometric "know-how", the disparity of opinions between advocates and critics of macroeconometric modelling can be narrowed.
    Keywords: Macroeconometric modelling, Asian Developing Countries
    JEL: B23 C52 C51
    Date: 2005
  2. By: Kilby, Christopher (Vassar College Department of Economics)
    Abstract: This paper explores the influence of Japan and the United States over the geographic distribution of Asian Development Bank (ADB) funds. Although nominally an independent, multilateral organization, the ADB is widely regarded as bowing to the interests of its two most influential donors. Estimation using panel data for less developed Asian countries from 1968 to 2002 reveals significant donor influence with inconsistent weight placed on humanitarian criteria given limited funding for the region’s largest countries, China and India. Comparing the results with research on World Bank loan allocation suggests donor interests are more important in the ADB. This finding justifies the existence of regional development banks on political grounds but calls into question their relative merits on economic grounds.
    Date: 2005–08
  3. By: Maria Jesus Delgado Rodriguez; Inmaculada Alvarez Ayuso
    Abstract: This work decompose labor-productivity grotwh and convergence in EU into components attributable to technological change (shifts in the European production frontier), technological catch-up (movements toward or away from the frontier) and factor accumulation (movement toward or away from the frontier). This work extends previous researchs considering public capital and human capitas as additional productive inputs and analysing its separate constribution to convergence as components of factor accumulation. In the case of human capital, we also test its rate effect as determinant factor of technical change. With this purpose we applied the Malmquist index of total factor productivity to an European data base to provide evidence for the 15 EU State Members. The results show that growth is primarily driven by factor accumulation which contribution is fundamental for lagging countries. We do not find evidence of any significant convergence over the whole period studied related to integration with factor accumulation and efficiency change as important factors of convergence while technical change (encouraged by greater human capital) has worked against it. Key words: Human Capital, Malmquist Index, Source of Convergence. JEL Classification: O47 H54 D24
    Date: 2004–08
  4. By: Komei Sasaki; Ismail Issah; Tariq Khan
    Abstract: Developing an extended model of the basic Harris-Todaro model of rural-urban migration, we analyze the effects of infrastructure availability together with the time-tested income effects whilst accommodating government behaviour through the provision and financing of infrastructure. Both the theoretical and empirical analyses confirm the assertion that infrastructure presence can be a force to reckon with as far as migration decisions are concerned. Comparison with the basic Harris-Todaro model also reveals that while the Todaro paradox is absent in the basic model, it can be present in the extended model. Keywords: Rural-urban migration, Infrastructure effects, Income difference, Equilibrium utility, Todaro-paradox. JEL classification: O17, O18, R23
    Date: 2004–08
  5. By: Fernando Barreiro-Pereira
    Abstract: This paper analyses how several spatial variables coming from cities and transportation system can affect money market, specially the income velocity of circulation, assuming an unit-elastic aggregate demand function and considering money velocity as a variable. Fluctuations in velocity caused by some spatial variables, under certain conditions, can affect the aggregate demand curve. The specification of the main relation-ship has found in the Baumol-Tobin model for transaction money demand, and in Christaller-Lösch central place theory. The estimation of the model has been based on panel data techniques and applied across 61 countries during 14 years in the 1978-1991 period. Theoretical and econometric results indicates that seven spatial variables like the country’s first city population, the population density, the passengers-kilometer transported by railways, and several ratios referred to some geographical variables, can provokes fluctuations on aggregate demand curve in the short run. In the long run, the aggregate supply can be also affected by means of these variables. In order to checking this question, considering that these spatial variables are not product factor, we propose to observe if these variables can affect the technological progress coefficient, A, concerning to an aggregate production function, according to a neo-classical growth model. Results by means of the Mankiw, Romer and Weil method, and also by means of an endogenous growth model of technology diffusion, indicates that some spatial variables affect the speed of convergence relative to the real per head income, across these 61 countries. However, a certain amount in some of these variables generates a congestion process in some countries. For checking it, we utilize a Barro and Sala i Martin endogenous growth model which reflects government activities. The concluding remarks indicates that some of these spatial variables above mentioned increases the speed of convergence but generates congestion in some countries. These spatial variables also affect the aggregate supply, and hence the price and output levels. Key words: transportation, regional growth, convergence, congestion. JEL Class.: R41
    Date: 2004–08
  6. By: Maria Abreu; Henride Groot; Raymond Florax
    Abstract: We investigate the spatial distribution of TFP growth rates using exploratory spatial data analysis and other spatial econometric techniques. Our sample consists of 73 countries and covers the period 1960-2000. We identify significant positive spatial autocorrelation in TFP growth rates, indicating that high and low values tend to be clustered in space. We also find strong positive spatial autocorrelation in TFP levels, which has increased over the period 1960-2000. This result may be indicative of a tendency towards clustering over time, a conclusion reinforced by our finding of two clusters of high TFP growth rates (in Europe and South East Asia), and two clusters of low TFP growth rates (in the Andean region and Sub-Saharan Africa). We estimate the Nelson and Phelps (1966) model of technology diffusion while allowing for spatial dependence in the error term. Our estimation results suggest that both the growth rate and the level of human capital have an important effect on productivity growth rates. JEL:I2,O4,C21. Keywords: human capital, technology diffusion, spatial econometrics.
    Date: 2004–08
  7. By: Maria Manuela Nêveda Da Costa; Jianjun Ji
    Abstract: Some of the most controversial effects of China's post-1978 economic reforms have been on regional income disparities and on the divide between urban and rural development. How important are those income disparities? And how do they affect the elderly, who are perhaps the most vulnerable to the changes brought by China’s transition? What is the government’s role in providing income support? This paper examines the rural-urban disparities in income, expenditures, and government support among the elderly in China. We test for significant differences in levels and sources of income and in types of expenditures using a nationwide survey on rural and urban elderly conducted by China’s Elderly Scientific Research Center in 1992. This survey consists of two separate sets of responses, one for urban areas (9,889 respondents) and the other for rural areas (10,194 respondents), and provides demographic, socioeconomic, and health characteristics of the elderly. In addition, we propose to investigate the type and level of government income support programs at the local and state level. The findings are evaluated and policy implications discussed in the context of China’s transition to a market economy and choice of development strategies.
    Date: 2004–08
  8. By: George Korres; Emmanuel Marmaras; George Tsobanoglou
    Abstract: How inequality is generated and how it reproduces over time? This has been a major concern of social scientists for more than a century. The changes in aggregate or average income is a good measure for economic growth but is far from being the only one. There is an increasing “inequality” throughout the world. Over the period 1960-2000, the richest 5 % of the world’s nations averaged a per-capita income that was about twenty-nine times the corresponding figure for the poorest 5 %. Poverty also affects other forms of economic and social functioning. The measurement of poverty is based on the notion of poverty line, which is constructed from monetary estimates of minimum needs. Poverty is highly correlated with the lack of education, and there is an intimate connection between nutrition and poverty. The measurement of inequality is a highly controversial one. It is a field in which there are large differences in social judgments, which translate themselves into differences in social judgments, such as the measure of inequality or the choice of equivalence scale. Social and Economic indicators demonstrate the data for the population based measures on economic, social and health outcomes and answer the question about inequality and well being. This article attempts to examine the relationship between inequality and the process of socio-economic development and also to overview the theories of income inequality and to measure the income distribution and moreover to investigate the role and the effects on socio-economic growth. Keywords: Income distribution, inequality, poverty, convergence, growth.
    Date: 2004–08
  9. By: Nathan Nunn (University of British Columbia)
    Abstract: Recent studies have found evidence linking Africa’s current underdevelopment to colonial rule and the slave trade. Given that these events ended long ago, why do they continue to matter today? I develop a model, exhibiting path dependence, that explains how these past events could have lasting impacts. The model has multiple equilibria: one equilibrium with secure property rights and a high level of production and others with insecure property rights and low levels of production. I show that external extraction, when severe enough, causes a society initially in the high production equilibrium to move to a low production equilibrium. Because of the stability of low production equilibria, the society remains trapped in this suboptimal equilibrium even after the period of external extraction ends. The model provides one explanation why Africa’s past events continue to matter today.
    JEL: O P
    Date: 2005–08–22
  10. By: Yoshiaki Sugimoto (Graduate School of Economics, Kobe University)
    Abstract: This research develops a theory about the role of within-country income inequality leading to overtaking in economic performance among countries. The theory captures two opposing effects of inequality on factor accumulation and suggests that the qualitative change in their combined effect is a prime cause of overtaking. Due to the initial dominance of the positive effect of inequality, a less egalitarian economy follows a higher growth path in the short run, with a lower growth path in the long run. It is also shown that divergence or convergence may arise instead of overtaking, depending on the initial levels of development and inequality.
    Keywords: Income Distribution, Economic Growth, Overtaking, Divergence, Convergence.
    JEL: D31 O11 O15 O40
    Date: 2005–08–29
  11. By: Kazuhiro Yuki (Faculty of Economics, Kyoto University)
    Abstract: There are two phenomena widely observed when an economy departs from an underdeveloped state and starts rapid economic growth. One is the shift of production, employment, and consumption from the traditional sector to the modern sector, and the other is a large increase in educational levels of its population. The question is why some economies have succeeded in such ’structural change’, but others do not. In order to examine the question, an overlapping generations model that explicitly takes into account the sectoral change and human capital accumulation as sources of development is constructed and analyzed.
    Keywords: Economic development; Human capital; Sectoral shift; Wealth distribution
    JEL: O11 O15
    Date: 2005–09–02
  12. By: Branko Milanovic (World Bank)
    Abstract: The paper uses the recently available data on growth rates, democracy, protectionism, and wars over the period 1820 to 2000 to look at the determinants of economic growth over the long-term. It is motivated by the following questions: what is the effect of democracy on growth, was colonialism economically bad for colonies, does protectionism affect growth negatively, what is the effect of wars? We find that own democracy has a significant positive impact on growth which increases as country’s income goes up. (Overall level of democracy in the world however has no effect on growth.) The effect of colonialism is not statistically significant. Lower average level of protection in the world helps growth. Wars, whether civil or between the states, are strongly detrimental to economic growth.
    Keywords: growth,democracy,protectionism,war,colonialism,communism
    JEL: O P
    Date: 2005–09–06
  13. By: Sanjay G. Reddy (Department of Economics, Barnard College, Columbia University); Camelia Minoiu (Department of Economics, Columbia University)
    Abstract: This paper examines the phenomenon of real-income stagnation (in which real-income growth is negligible or negative for a sizable uninterrupted sequence of years). It analyzes data for four decades from a large cross-section of countries. Real income stagnation is a conceptually distinct phenomenon from low average growth and other features of the growth sequence that have been held to be of interest in the literature. We find that real income stagnation has affected a significant number of countries (103 out of 168), and resulted in substantial income loss. Countries that suffered spells of real income stagnation were more likely to be poor, in Latin America or sub-Saharan Africa, conflict ridden and dependent on primary commodity exports. Stagnation is also very likely to persist over time. Countries that were afflicted with stagnation in the 1960s had a likelihood of seventy-five percent of also being afflicted with stagnation in the 1990s.
    Keywords: real income stagnation, patterns of economic growth
    JEL: O10 O11 O47
    Date: 2005–09–07
  14. By: Sanjay G. Reddy (Department of Economics, Barnard College, Columbia University); Camelia Minoiu (Department of Economics, Columbia University)
    Abstract: We evaluate the claim that world consumption poverty has fallen during the 1990s in light of alternative assumptions about the extent of initial poverty and the rate of subsequent poverty reduction in China, India, and the rest of the developing world. We assess the extent of poverty using two indicators: the aggregate poverty headcount and the poverty headcount ratio, and consider two international poverty lines that are widely used ($1.08/day and $2.15/day 1993 PPP). We find that under some of the assumptions considered, world poverty has risen. We conclude that, because of uncertainties in relation to the extent and trend of poverty in China, India, and the rest of the developing world, world poverty may or may not have increased. The extent of the increase or decrease in world poverty is critically dependent on the assumptions made. Our conclusions suggest the importance of improving the quality of global poverty statistics.
    Keywords: world poverty, sensitivity analysis, China, India
    JEL: I32 I30 O53
    Date: 2005–09–07
  15. By: Andreas Mehler (Deutsches Übersee-Institut); Hans-Christian Mahnke (Institut für Auslandsbeziehungen)
    Abstract: Current thinking on African conflicts suffers from misinterpretations (oversimplification, lack of focus, lack of conceptual clarity, state- centrism and lack of vision). The paper analyses a variety of the dominant explanations of major international actors and donors, showing how these frequently do not distinguish with sufficient clarity between the ‘root causes’ of a conflict, its aggravating factors and its triggers. Specifically, a correct assessment of conflict prolonging (or sustaining) factors is of vital importance in Africa’s lingering confrontations. Broader approaches (e.g. “structural stability”) offer a better analytical framework than familiar one-dimensional explanations. Moreover, for explaining and dealing with violent conflicts a shift of attention from the nation-state towards the local and sub-regional level is needed.
    Keywords: Saharan Africa, Conflict Prevention, Conflict Factors, Root causes, Conflict Prolonging Factors, Escalation Patterns, Peace Order, Structural Stability
    JEL: N57
    Date: 2005–08–09
  16. By: Matthias Basedau (Deutsches Übersee-Institut)
    Abstract: Natural resources in sub-Saharan Africa suffer from a bad reputation. Oil and diamonds, particularly, have been blamed for a number of Africa’s illnesses such as poverty, corruption, dictatorship and war. This paper outlines the different areas and transmission channels of how this so-called “resource curse” is said to materialize. By assessing empirical evidence on sub-Saharan Africa it concludes that the resource curse theory fails to sufficiently explain why and how several countries have not or only partly been affected by the “curse”. Theoretically, the paper argues that whether or not natural resources are detrimental to a country’s socio-economic and political development depends on a number of contextual variables, divided into country-specific conditions and resource-specific conditions (type, degree/level of abundance and dependence, resource revenue management, involved companies etc.). Methodologically, a future research agenda needs to examine the complex interplay of these contextual variables by adding sophisticated comparative research designs, especially “small and medium N” comparisons, to the tool box which has been widely confined to the juxtaposition of “large N” and country case studies.
    Keywords: Sub-Saharan Africa; Natural Resources, Political Economy, Institutions, Violent Conflict, Socio-Economic Development; Democracy
    JEL: B25 N5 N57 O13
    Date: 2005–08–16

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