nep-dev New Economics Papers
on Development
Issue of 2005‒12‒09
28 papers chosen by
Jeong-Joon Lee
Towson University

  1. Income and Democracy By Acemoglu, Daron; Johnson, Simon; Robinson, James A; Yared, Pierre
  2. Developing Rotten Institutions By Kelly, Morgan
  3. Rural Windfall or a New Resource Curse? Coca, Income and Civil Conflict in Colombia By Angrist, Joshua; Kugler, Adriana D.
  4. Size Really Doesn't Matter: In Search of a National Scale Effect By Rose, Andrew K
  5. Human Capital, the Structure of Production, and Growth By Ciccone, Antonio; Papaioannou, Elias
  6. The Formation of Risk Sharing Networks By Marcel Fafchamps; Flore Gubert
  7. Does Subsidising the Cost of Capital Help the Poorest? An Analysis of Saving Opportunities in Group Lending By Kumar Aniket
  8. Migration Dynamics By Sergio Vergalli; Michele Moretto
  9. The Evolution of Enterprise Reform in Africa: From State-owned Enterprises to Private Participation in Infrastructure — and Back? By John Nellis
  10. Italy’s Privatization Process and Its Implications for China By Bernardo Bortolotti
  11. Privatization in Africa: What has happened? What is to be done? By John Nellis
  12. Institutional Explanations of Economic Development: the Role of Precious Metals By Elissaios Papyrakis; Reyer Gerlagh
  13. International Tourism and Economic Growth: a Panel Data Approach By Tiago Neves Sequeira; Carla Campos
  14. The Todaro Paradox Revisited By Yves Zenou
  15. International Capital Market Integration, Educational Choice and Economic Growth By Hartmut Egger; Peter Egger; Josef Falkinger; Volker Grossmann
  16. Migration, Household Composition and Child Welfare in Rural Northeast Thailand By Michael Cameron; Steven Lim
  17. Inequality-Driven Growth: Unveiling Aggregation Effects in Growth Equations By Pedro H. Albuquerque
  18. Shocks, Sensitivity and Resilience: Tracking the Economic Impacts of Environmental Disaster on Assets in Ethiopia and Honduras By Michael Carter; Peter Little; Tewodaj Mogues; Workneh Negatu
  19. Changing Natures of Rural Poverty and New Policy Orientations By Cai Fang; Du Yang
  20. Mapping Strategies for Efficient Rural Credit Delivery System through Cooperatives in Maharashtra By Deepak Shah
  21. Resurrection of Rural Credit Delivery System in Maharashtra, India By Deepak Shah
  23. Demographic transition: implications for growth By Cai Fang; Wang Dewen
  24. The Balassa-Samuelson Effect in 'East & West'. Differences and Similarities By Wagner, Martin
  25. On the evolution of employment structure in developing countries By Nomaan Majid
  26. On The Tyranny of Numbers: East Asian Miracles in World Perspective By Pedro Cavalcanti Ferreira; Samuel de Abreu Pessôa; Fernando A. Veloso
  27. The Evolution of International Output Differences (1960-2000): From Factors to Productivity By Pedro Cavalcanti Ferreira; Samuel de Abreu Pessôa; Fernando A. Veloso
  28. All types of inequality are not created equal: divergent impacts of inequality on economic growth By Stephanie Seguino

  1. By: Acemoglu, Daron; Johnson, Simon; Robinson, James A; Yared, Pierre
    Abstract: We revisit one of the central empirical findings of the political economy literature that higher income per capita causes democracy. Existing studies establish a strong cross-country correlation between income and democracy, but do not typically control for factors that simultaneously affect both variables. We show that controlling for such factors by including country fixed effects removes the statistical association between income per capita and various measures of democracy. We also present instrumental-variables estimates using two different strategies. These estimates also show no causal effect of income on democracy. Furthermore, we reconcile the positive cross-country correlation between income and democracy with the absence of a causal effect of income on democracy by showing that the long-run evolution of income and democracy is related to historical factors. Consistent with this, the positive correlation between income and democracy disappears, even without fixed effects, when we control for the historical determinants of economic and political development in a sample of former European colonies.
    Keywords: democracy; economic growth; institutions; political development
    JEL: O10 P16
    Date: 2005–10
  2. By: Kelly, Morgan
    Abstract: This paper models corruption as optimal parasitism in organizations where teams of agents are weakly restrained by principals. Each agent takes on part of the role of principal, choosing how much to invest in policing to repress corruption in others and how rapaciously to act when unpoliced opportunities arise. This simple model can incorporate many factors stressed in empirical analyses of corruption, and gives rise to a wide variety of equilibria. Allowing income to co-evolve with corruption, we show how adding corruption to a textbook exogenous growth model leads to a Lucas paradox. When income and corruption affect each other sufficiently strongly, economies converge to two corner equilibria despite diminishing returns to capital: a rich, clean corner and a poor, corrupt one; a pattern that appears to characterize international data.
    Keywords: corruption; growth
    JEL: O17 O40
    Date: 2005–10
  3. By: Angrist, Joshua; Kugler, Adriana D.
    Abstract: Natural and agricultural resources for which there is a substantial black market, such as coca, opium, and diamonds, appear especially likely to be exploited by the parties to a civil conflict. On the other hand, these resources may also provide one of the few reliable sources of income in the countryside. In this paper, we study the economic and social consequences of a major shift in the production of coca paste from Peru and Bolivia to Colombia, where most coca leaf is now harvested. This shift, which arose in response to the disruption of the 'air bridge' that previously ferried coca paste into Colombia, provided an exogenous boost in the demand for Colombian coca leaf. Our analysis shows this shift generated economic gains in rural areas, primarily in the form of increased self-employment earnings and increased labour supply by teenage boys. There is little evidence of widespread economic spillovers, however. The results also suggest that the rural areas which saw accelerated coca production subsequently became much more violent. Taken together, these findings support the view that the Colombian civil conflict is fuelled by the financial opportunities that coca provides. This is in line with a recent literature that attributes the extension of civil conflicts to economic rewards and an environment that favours insurgency more than to the persistence of economic or political grievances.
    Keywords: civil war; resource curse; rural development
    JEL: J20 J43 O13 O18 O54
    Date: 2005–10
  4. By: Rose, Andrew K
    Abstract: I search for a 'scale' effect in countries. I use a panel data set that includes 200 countries over forty years and link the population of a country to a host of economic and social phenomena. Using both graphical and statistical techniques, I search for an impact of size on the level of income, inflation, material well-being, health, education, the quality of a country's institutions, heterogeneity, and a number of different international indices and rankings. I have little success; small countries are more open to international trade than large countries, but are not systematically different otherwise.
    Keywords: big; country; cross-section; data; empirical; international; panel; population
    JEL: O57
    Date: 2005–11
  5. By: Ciccone, Antonio; Papaioannou, Elias
    Abstract: Do high levels of human capital foster economic growth by facilitating technology adoption? If so, countries with more human capital should have adopted more rapidly the skilled-labour augmenting technologies becoming available since the 1970's. High human capital levels should therefore have translated into fast growth in more compared to less human-capital-intensive industries in the 1980's. Theories of international specialization point to human capital accumulation as another important determinant of growth in human-capital-intensive industries. Using data for a large sample of countries, we find significant positive effects of human capital levels and human capital accumulation on output and employment growth in human-capital-intensive industries.
    Keywords: growth; human Capital; structure of production
    JEL: E13 F11 O11
    Date: 2005–11
  6. By: Marcel Fafchamps (Centre for the Studies of African Economies, University of Oxford); Flore Gubert (DIAL, IRD, Paris)
    Abstract: (English) This paper examines the endogenous formation of risk sharing networks in the rural Philippines. We show that geographic proximity is a major determinant of interpersonal relationships. We find little evidence that people form relationships to pool income risk. The existence of a pre-existing relationship between two individuals is a major determinant of subsequent gifts and informal loans between them, controlling for other proximity factors. From this we conclude that these transfers and informal loans are embedded in interpersonal relationships. These relationships are largely determined by proximity factors and are only weakly the result of purposeful diversification of income risk. There is, however, some evidence that the formation of risk sharing links is aimed at pooling health risk. The paper also makes a methodological contribution to the estimation of dyadic models. _________________________________ (français) Cet article examine la façon dont se forment les réseaux informels de partage des risques à partir de données collectées aux Philippines. Nous trouvons que les ménages enquêtés choisissent des partenaires potentiels d'entraide géographiquement proches d'eux mais non économiquement distants d'eux. Nous trouvons également que l'existence d'un lien ex ante est un déterminant important des dons et prêts informels observés entre ménages. Nous concluons de ces résultats empiriques que les transactions observées entre ménages s'inscrivent dans le cadre de relations de voisinage dont l'objectif premier n'est pas la diversification des risques de revenu. En revanche, un partage des risques liés à la santé semble être à l'oeuvre. L'article fait une contribution méthodologique à travers l'estimation de modèles dyadiques.
    Keywords: Network, risk-sharing, dyadic model, Philippines,réseau, partage du risque, modèle dyadique
    JEL: D85 O12 C49
    Date: 2005–11
  7. By: Kumar Aniket
    Abstract: This paper shows that subsidising the cost of capital restricts the ability of the poorest to participate in the group lending mechanisms that include saving opportunities. We document the group lending mechanism used by a typical microfinance lender in Haryana, India. Individuals can participate in the group either as a borrower or a saver. The lender requires that the borrower partly self-finance their project with their own cash wealth. Consequently, a borrower requires a minimum amount of cash wealth to borrow. The poorest participate in the group by co-financing the borrower's project with their meagre savings. In return, they obtain higher than market returns on their savings. Subsidising the cost of capital reduces the cash wealth required to participate in the group as a borrower. Conversely, it increases the cash wealth required to participate as a saver, thus curtailing the opportunity for the poorest to enrich themselves.
    Keywords: Group Lending, Microfinance, Savings, Outreach
    JEL: D82 G20 O12 O2
  8. By: Sergio Vergalli (University of Brescia); Michele Moretto (University of Brescia)
    Abstract: This paper tries to explain why most migration flows show some observable jumps in their processes, a phenomenon that seems to be sympathetic with the characteristic of irreversibility of migration. We present a real option model where the choice to migrate depends on both the differential wage between the host country and the country of origin, and on the probability of being fully integrated into the host country. The theoretical results show that the optimal migration decision of a single individual consists of waiting before migrating in a (coordinate) mass of individuals. The dimension of the migration flow depends on the behavioural characteristics of the ethnic groups: the more "sociable" they are, the larger the size of the wave and the lower the differential wage required. A second part of the paper is devoted to calibrating the model and simulating some migration flows to Italy in the last decade. The calibration is able to replicate the observable migration jumps in the short term. In particular, the calibrated model is able to conjecture the induced labour demand elasticity level of the host country and the behavioural rationale of the migrants.
    Keywords: Migration, Real Option, Labour Market, Network Effect
    JEL: F22 O15 R23
    Date: 2005–09
  9. By: John Nellis (The Center for Global Development)
    Abstract: Many African state-owned enterprises (SOEs), particularly those in infrastructure, have a long history of poor performance. From the outset, SOE financial and economic performance generally failed to meet the expectations of their creators and funders. By the late 1970s, the situation was alarming, and by early 1980s, critical. The poor financial performance of SOEs became so burdensome to government budgets that it attracted the attention of the international financial institutions, or IFIs. In response, in the 1980s, the World Bank approved SOE reforms that could be summed up in the term “commercialization”. By the mid-1990s, however, the idea of making SOEs function efficiently and effectively under government management was largely abandoned by the IFIs and privatization and private participation in infrastructure, or PPI became the order of the day. Once more, however, the results were disappointing. PPI has not been as widely adopted as anticipated, nor has it generated the massive resources and changes hoped for, nor has it been widely accepted as beneficial by the African public. The findings of recent studies in Africa suggest that PPI should not be jettisoned, and that the more productive path is to recognize the limitations of the approach, and to work harder at creating the conditions needed to make it function effectively. This will entail, as many have recognized, an end to the view that public and private infrastructure provision is a dichotomy – a case of either-or, one or the other – and a better appreciation of the extent to which the performance of each is dependent on the competence of the other. In other words, for the private sector to perform well, public sector capacity must be enhanced. Moreover, proposed tactics of reform should fit more closely with the expectations and sentiments of the affected government, consumer base, and general population. This broader approach implies, probably, a reduction in the scope and, certainly, a reduction in the planned speed of operations. Improving infrastructure performance is a long-term matter.
    Keywords: Africa, Enterprise reform, State-owned enterprises, Privatization
    JEL: F3 L3 N17 N27 N47 N77 O55
    Date: 2005–09
  10. By: Bernardo Bortolotti (University of Turin and Fondazione Eni Enrico Mattei)
    Abstract: This report provides an overview of the causes and consequences of the Italian State-owned Enterprises (SOE) reform process. Particularly, it analyzes the symbiotic link between share issue privatization (SIP), i.e. privatization in public equity markets, and financial market development, and shows how the sustained policy of sales has jumpstarted the Italian domestic stock market. Based on the Italian and international experience, the report provides some possible guidelines and policy recommendations in order to achieve the same goal in the People’s Republic of China (PRC).
    Keywords: State-owned enterprises, Share issue privatization, Financial development, Italy, China
    JEL: L33 L30 O16 G14
    Date: 2005–09
  11. By: John Nellis (The Center for Global Development)
    Abstract: Sub-Saharan African states urgently need expanded and more dynamic private sectors, more efficient and effective infrastructure/utility provision, and increased investment from both domestic and foreign sources. Privatization is one way to address these problems. But African states have generally been slow and reluctant privatizers; a good percentage of industrial/manufacturing and most infrastructure still remains in state hands. Given prevailing public hostility towards privatization, and widespread institutional weaknesses, such caution is defensible, but nonetheless very costly. The long-run and difficult solution is the creation and reinforcement of the institutions that underpin and guide proper market operations. In the interim, African governments and donors have little choice but to continue to experiment with the use of externally supplied substitutes for gaps in local regulatory and legal systems.
    Keywords: Privatization, Sub-Saharan Africa
    JEL: F3 L3 N17 N27 N47 N77 O55
    Date: 2005–10
  12. By: Elissaios Papyrakis (IVM, Vrije Universiteit); Reyer Gerlagh (IVM, Vrije Universiteit)
    Abstract: Recent research has emphasized the influence of colonization on the institutional development and economic performance in former European colonies. Where European colonizers settled, they replicated the investment-conducive institutions found at home. It has been argued that a harsh disease environment and a highly urbanized native population worked against colonization. We show evidence for another significant element explaining the endogenous character of colonization strategies and the formation of institutions. We find the presence of precious metals, gold and silver, to imply an increase in settlements, and an improvement in institutional quality, even when correcting for settlements. Highly valued gold and silver reserves attracted Europeans in large numbers and resulted in an institutional upgrade of mineral-rich areas.
    Keywords: Precious metals, Institutions, Economic development
    JEL: O13 O17 Q33
    Date: 2005–10
  13. By: Tiago Neves Sequeira (Universidade da Beira Interior); Carla Campos (Universidade da Beira Interior)
    Abstract: On average, tourism-specialized countries grow more than others. This fact is inconsistent with economic theory as, in particular, endogenous growth theory suggests that economic growth is linked with: (1) sectors with high intensity in R&D and thus high productivity; (2) large scale. In this paper, we use panel data methods to go further in treating the endogeneity problem. In general and contrary to previous works, we conclude that tourism, on its own, cannot explain the higher growth rates of these countries.
    Keywords: Tourism, Economic growth, Panel data
    JEL: L83 O40 O50
    Date: 2005–11
  14. By: Yves Zenou (IUI, GAINS and IZA Bonn)
    Abstract: The Todaro Paradox states that policies aimed at reducing urban unemployment are bound to backfire: they will raise rather than reduce urban unemployment. The aim of this paper is to reexamine this paradox in the context of efficiency wage and search-matching models. For that, we study a policy that consists in decreasing the urban unemployment benefit. In an efficiency wage model, we find that there is no Todaro paradox while this is not always true in a search-matching model since a decrease in the urban unemployment benefit can increase both urban employment and unemployment.
    Keywords: efficiency wages, search-matching, rural-urban migration, policy
    JEL: D83 J41 J64 O15
    Date: 2005–11
  15. By: Hartmut Egger (University of Zurich, CESifo and GEP Nottingham); Peter Egger (Ifo Institute, University of Munich, CESifo and GEP Nottingham); Josef Falkinger (University of Zurich, CESifo and IZA Bonn); Volker Grossmann (University of Fribourg, CESifo and IZA Bonn)
    Abstract: This paper examines the impact of capital market integration (CMI) on higher education and economic growth. We take into account that participation in higher education is noncompulsory and depends on individual choice. Integration increases (decreases) the incentives to participate in higher education in capital-importing (-exporting) economies, all other things equal. Increased participation in higher education enhances productivity progress and is accompanied by rising wage inequality. From a national policy point of view, education expenditure should increase after integration of similar economies. Using foreign direct investment (FDI) as a measure for capital flows, we present empirical evidence which largely confirms our main hypothesis: An increase in net capital inflows in response to CMI raises participation in higher education and thereby fosters economic growth. We apply a structural estimation approach to fully track the endogenous mechanisms of the model.
    Keywords: capital mobility, capital-skill complementarity, educational choice, education policy, economic growth, wage income inequality
    JEL: F20 H52 J24 O10
    Date: 2005–11
  16. By: Michael Cameron (University of Waikato); Steven Lim
    Abstract: In many developing countries, the composition of rural households is influenced by the migration of adult household members to urban locations in search of employment. Children may be left in the care of their mother alone, or in the care of grandparents when both parents have migrated. Using representative data from a household survey conducted in rural Northeast Thailand in 2003, this paper investigates whether household composition has any effect on the welfare of children, as measured by anthropometric measurements including height-for-age, weight-for-age, and weight-for-height. Our findings suggest that household types other than nuclear families result in some significantly worse child nutritional outcomes. The implication is that governments should protect the welfare of the children of migrants, either through targeted programs or through increased opportunities for employment in rural areas.
    Keywords: migration; household composition; children; Thailand
    JEL: I12 O15 O18
    Date: 2005–12–01
  17. By: Pedro H. Albuquerque (Texas A&M International University)
    Abstract: It is well known from nonlinear aggregation theory that distributions play a central role in the determination of aggregate relations. This paper establishes a bridge between the aggregation and the inequality and growth literature by applying a log-linear aggregation method to a simple heterogeneous AK growth model. The aggregation effect is explicitly captured in the growth equation by the changes of the mean logarithmic deviation (MLD or Theil’s second measure) of the income, implying that increases in income inequality may be unambiguously associated with temporary increases in a country’s growth rate, in agreement with the empirical findings of Forbes (AER, 2000). Consequently, empirical studies of the long-run effects of income inequality may suffer from aggregation bias if the temporary effects of the MLD changes are not considered. The accelerated growth episodes observed in Brazil and China demonstrate that the increase in income inequality may have resulted in substantial temporary increases in the aggregate growth rates experienced by those countries.
    Keywords: Inequality, Growth, Income Distribution, Aggregation, Heterogeneity, AK Model, Brazil, China
    JEL: O15 O41 O50
    Date: 2005–11–26
  18. By: Michael Carter (University of Wisconsin); Peter Little (University of Kentucky); Tewodaj Mogues (International Food Policy Research Institute); Workneh Negatu (Addis Abeba University)
    Abstract: Droughts, hurricanes and other environmental shocks punctuate the lives of poor and vulnerable populations in many parts of the world. The direct impacts can be horrific, but what are the longer-term effects of such shocks on households and their livelihoods? Under what circumstances, and for what types of households, will shocks push households into poverty traps from which recovery is not possible? In an effort to answer these questions, this paper analyzes the asset dynamics of Ethiopian and Honduran households in the wake of severe environmental shocks. While the patterns are different across countries, both reveal worlds in which the poorest households struggle most with shocks, adopting coping strategies which are costly in terms of both short term and long term well-being. There is some evidence that shocks threaten long term poverty traps and that they tend to militate against any tendency of the poor to catch up with wealthier households. Policy implications are discussed in terms of access to markets and the design of government safety net programs.
    Keywords: Ethiopia; Honduras; Shocks; Drought; Hurricanes; Assets; Poverty traps; Asset smoothing; Social capital
    JEL: O P
    Date: 2005–11–29
  19. By: Cai Fang (CASS-IPLE); Du Yang (CASS-IPLE)
    JEL: O P
    Date: 2005–12–01
  20. By: Deepak Shah (Gokhale Institute of Politics & Economics, B.M.C.C. Road, Deccan Gymkhana, Pune 411004, Maharashtra, India)
    Abstract: This paper attempts to assess the performance of various credit cooperatives operating in different districts and regions of Maharashtra with the extension to evaluating the viability of these institutions in forward and backward regions of the state. In this study, the credit cooperatives operating in Maharashtra have not only shown slower growth in their institutional finance coupled with much slower growth in their membership but also faster growth in outstanding loans as against their loan advances during the reform period. The reason for this dismal scenario is traced in adverse environment created by the financial sector reforms, which have reduced the entire rural credit delivery through cooperatives to a moribund state. Since the financial sector reforms accorded greater flexibility to cooperatives to invest in non- target avenues like shares and debentures of corporates, units of mutual funds, bonds of public sector undertakings, etc., this has adversely affected credit flow from these major institutions operating in rural Maharashtra as most of their loans meant for farm finance are diverted to investments. The credit cooperatives in Maharashtra are also noticed to be beset with several other deficiencies, which mainly relate to their low operational efficiency, high incidence of overdue, low level of recovery, distributional aspects of their loan advances, coverage of SC/ST members, etc. The findings of this investigation clearly show lackadaisical approach of PACS towards SC/ST members, particularly in terms of their coverage, pattern of loan advances to them and recovery pattern. The deficiencies do not confine to this but extend to other concurrent issues. Wide variation in total and crop loan advances across various districts and regions is other important issue that need to be taken cognizance of in ensuring effective rural credit delivery through PACS operating in Maharashtra. Although decline in their loan advances with rise in GCA is another issue, the most important one among all is the mounting overdue and NPAs of cooperatives operating in both forward and backward regions of Maharashtra. Due to substantially high NPAs, while BDCCB operating in backward region has shown gross inefficiency in its functioning during the reform period, the SDCCB operating in forward region is marked with deterioration in its financial health during this period. In order to rejuvenate rural credit delivery system through cooperatives, the major problems facing the system, viz., high transaction cost, poor repayment performance, mounting NPAs, distributional aspect of credit, coverage of SC/ST members, etc., need to be tackled with more fiscal jurisprudence reserving exemplary punishment for willful defaults, particularly large farmers.
    Keywords: Strategies For Efficient Rural Credit Delivery
    JEL: G
    Date: 2005–12–02
  21. By: Deepak Shah (Gokhale Institute of Politics & Economics, B.M.C.C. Road, Deccan Gymkhana, Pune 411004, Maharashtra, India)
    Abstract: The RFIs operating in Maharashtra have not only shown slower growth in their loan advances and other operational indicators during the period between 1991 and 2000 but also poor performance thereafter. The credit cooperatives in particular have shown significantly high NPAs in Maharashtra. In Maharashtra, Vidarbha region not only shows very low magnitudes of credit flow through cooperatives but also decline in share of loan for cotton crop vis-à-vis other field crops. One of the adverse effects of slowing down in loan advances for cotton crop is seen on the farming community of this region where a significant number of cotton growers have committed suicide either due to lack of loan advances to them or because of pressure created by various financial institutions in terms of recovery of loan despite crop failure. With a view to revive the agricultural credit delivery system, there is need to tackle twin problems facing the system, viz., growing NPAs with falling CD ratios and poor recovery performance of RFIs, aside from adopting innovative approaches like linking of SHGs and NGOs with mainstream financial institutions. In brief, the focus of rural credit delivery system should be on strategies that are required for tackling issues such as sustainability and viability, operational efficiency, recovery performance, small farmer coverage and balanced sectoral development.
    Keywords: Resurrection of Credit Delivery in India
    JEL: G
    Date: 2005–12–02
  22. By: Deepak Shah (Gokhale Institute of Politics & Economics, B.M.C.C. Road, Deccan Gymkhana, Pune 411004, Maharashtra, India)
    Abstract: The rural lending institutions in Maharashtra not only encompass traditional formal sector credit but also new generation credit organizations. The present study specifically focuses on credit experiences of various categories of farmers, including landless households, with these lending institutions with the overall objective of suggesting policy measures relating to ensuring smooth flow of credit to them. The study provides two differing views insofar as the functioning of various lending institutions in Maharashtra is concerned. While new generation lending institutions such as SHGs have shown high rate of interest on loan advances, the traditional lending institutions such as cooperatives and commercial banks are seen to beset with other deficiencies, viz., absence of human capital investment and consumption loans, especially for illness, marriage, and other contingencies. These credit institutions have also shown high transaction cost and delay in delivery of credit, besides showing other deficiencies. The study has emphasized upon the need for both formal and informal credit agencies to have simplified loaning procedures with major focus on extension of credit facilities to poorer sections of the rural community, balanced sectoral development, sustainability and viability, operational efficiency and small farmer coverage. Other suggestions of this study encompass efficient use of ‘Kisan Credit Cards’, group lending through SHGs, etc. Further, as the credit delivery through commercial and cooperative banks invariably depended on ownership of land, the landless households are adversely affected in terms of access to credit and are noticed to be neglected section of rural community. It is, therefore, felt in this study that ownership of land as the criterion for the distribution of credit should be relaxed and group responsibility be introduced by formal credit institutions to safeguard the interest of overall rural community. Identification of poorer groups within the landholding categories is another suggestion of this study with a view to help them to rise above the poverty line by providing them access to credit.
    Keywords: Credit Delivery in India: Experiences with Formal and Informal Lenders
    JEL: G
    Date: 2005–12–02
  23. By: Cai Fang (CASS-IPLE); Wang Dewen (CASS-IPLE)
    JEL: J
    Date: 2005–12–01
  24. By: Wagner, Martin (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria)
    Abstract: Based on two detailed Balassa-Samuelson (BS) studies, Wagner and Hlouskova (2004) for eight Central Eastern European countries (CEECs) and Wagner and Doytchinov (2004) for ten Western European countries (WECs), this study assesses the differences and similarities of the BS effect between these two country groups. The econometric results show that the BS effect may have been overestimated in previous studies due to application of inappropriate first generation panel cointegration methods. When appropriately quantified, the BS effect itself explains RER movements respectively inflation differentials only to a small extent. However, extended BS relationships that include additional variables allow for an adequate modelling of inflation. Based on the comparative analysis we draw some conclusions for monetary policy in the future enlarged Euro Area.
    Keywords: Balassa-Samuelson effect, Central and Eastern Europe, Western Europe, Non-stationary panels, Inflation simulations
    JEL: F02 O40 P21 P27
    Date: 2005–11
  25. By: Nomaan Majid
    Abstract: This paper explores the idea of “employment” from two related angles. First, it examines, for the non-transition developing world, trends in the structure of employment in terms of sectors where employment obtains, and sub-categories of types of employment. Second, it examines employment from an income perspective. The paper shows that the process of change in employment structure in the last decades of the twentieth century in the developing world has been varied. However, despite the regional variation, the expectation of an increased preponderance of wage labour over time is valid, and in particular in the commerce and manufacturing sectors. The decline in unpaid family work is also a significant phenomenon in the developing world, particularly with respect to agriculture, which is in accordance with broad expectations. On the other hand, it is also found that employment growth is not led by manufacturing but by commerce, a sector which shows parallel growth tendencies of both increased wage work and family labour. The illustrations of broad changes in income-employment, which are for only the last decade of the twentieth century, suggest that the developing world has seen only a modest decline in the both the absolute and relative measures of working poor, especially the worst off working poor; and it has importantly seen a much more significant gain in the absolute and relative size of the working non-poor.
    Date: 2005–11
  26. By: Pedro Cavalcanti Ferreira (EPGE/FGV); Samuel de Abreu Pessôa (EPGE/FGV); Fernando A. Veloso (IBMEC Business School - Rio de Janeiro)
    Abstract: In a widely cited paper, Young (1995) showed that the East Asian miracles (Hong Kong, Korea, Singapore and Taiwan) grew mostly through input accumulation during the period 1966-1990. Using data for 83 countries taken from the Penn World Table, version 6.1, and Barro and Lee (2000), we use a common methodology in order to compare the growth performance of the East Asian miracles with the rest of the world. We find that, even though the TFP growth rates of the four East Asian miracles were not remarkable in absolute values, they were very high in relative terms. We argue that, since Young (1995) focused only on the four East Asian miracles, he did not notice that 1966-1990 was a period of particularly low TFP growth and particularly high factor accumulation in the world. Despite the fact that they had high rates of physical capital accumulation, the distinguishing feature of these miracles was their relative productivity growth performance.
    Keywords: East Asian miracles, TFP Growth, Growth Decomposition
    JEL: O11 O47 O41
    Date: 2005–11–30
  27. By: Pedro Cavalcanti Ferreira (EPGE/FGV); Samuel de Abreu Pessôa (EPGE/FGV); Fernando A. Veloso (IBMEC Business School - Rio de Janeiro)
    Abstract: This article presents a group of exercises of level and growth decomposition of output per worker using cross-country data from 1960 to 2000. It is shown that at least until 1975 factors of production (capital and education) were the main source of output dispersion across economies and that productivity variance was considerably smaller than in later years. Only after this date did the prominence of productivity start to show up in the data, as the majority of the literature has found. The growth decomposition exercises showed that the reversal of relative importance of productivity vis-a-vis factors is explained by the very good (bad) performance of productivity of fast- (slow-) growing economies. Although growth in the period, is on average, is mostly due to factor accumulation, its variance is explained by productivity.
    Keywords: Cross-Country Income Inequality, Development, Total Factor Productivity, Aggregate Production Function, Growth Decomposition
    JEL: O11 O47
    Date: 2005–11–30
  28. By: Stephanie Seguino (Department of Economics, University of Vermont)
    Abstract: Evidence of an increase in inequality since the 1970s has motivated research on its relationship to growth and development. The findings of that research are contradictory and inconclusive. One source of these divergent results is that researchers rely on different group measures of inequality. Inequality by gender, household, class, and ethnicity may produce divergent effects on growth since they operate on macroeconomic outcomes via alternative pathways. Further, even within groups, the effect of inequality on growth depends on the measure used. For example, inequalities in capabilities (such as education and health status) may operate differently on growth than inequality in wages and income. This paper explores the different conceptual approaches to measuring between-group and within-group inequality and delineates the sometimes-contradictory pathways by which these measures affect economic growth and development. The typology is applied to the case of East Asia and Latin America.
    Keywords: Gender, ethnicity, inequality, economic growth
    JEL: O4 E12 F16 J15 J16
    Date: 2005–07

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.