nep-dev New Economics Papers
on Development
Issue of 2006‒06‒03
twenty-six papers chosen by
Jeong-Joon Lee
Towson University

  1. Rethinking the Concept of Long-Run Economic Growth By Christian Groth; Karl-Josef Koch; Thomas Steger
  2. China’s Exchange Rate and International Adjustment in Wages, Prices, and Interest Rates: Japan Déjà Vu? By Ronald Ian McKinnon; Gunther Schnabl
  3. Policy options for increasing crop productivity and reducing soil nutrient depletion and poverty in Uganda By Nkonya, Ephraim M.; Pender, John; Kaizzi, Crammer; Edward, Kato; Mugarura, Samuel
  4. Agricultural policies in India By Mullen, Kathleen; Orden, David; Gulati, Ashok
  5. Population Growth, (Per Capita) Economic Growth, and Poverty Reduction in Uganda: Theory and Evidence By Stephan Klasen
  6. Some Key Issues in Policy, Pricing, Regulation, and Financing of Irrigation Development in India Today By Morris Sebastian
  7. China%u2019s FDI and Non-FDI Economies and the Sustainability of Future High Chinese Growth By John Whalley; Xian Xin
  8. Financial Systems and Economic Growth: An Evaluation Framework for Policy By Iris Claus; Veronica Jacobsen; Brock Jera
  9. Institutions, Firms and Economic Growth By Jane Frances
  10. Economic Rights, Human Development Effort and Institutions By Mwangi S. Kimenyi
  12. Productivity matters for trade policy : theory and evidence By Karacaovali, Baybars
  13. The rise and fall of training and visit extension : an Asian mini-drama with an African epilogue By Ganguly, Sushma; Feder, Gershon; Anderson, Jock R.
  14. The Risk Aversion of Banks in Emerging Credit markets: Evidence from India By Sumon Kumar Bhaumik; Jenifer Piesse;
  15. Can Vietnam Achieve One of its Millennium Development Goals? An analysis of schooling dropouts of children By Vo Tri Thanh; Trinh Quang Long;
  16. Does the World Bank have any impact on human development of the poorest countries? Some preliminary evidence from Africa By Sumon Kumar Bhaumik; ;
  17. Economic Reform and Changing Patterns of Labor Force Participation in Urban and Rural China By Margaret Maurer-Fazio; James Hughes; Dandan Zhang
  18. Regional Inequality, Poverty and Economic Integration in Brazil. By Joaquim Bento de Souza Ferreira Filho; Mark Horridge
  19. Social capital, social cohesion, and economic growth By Jesus Clemente; Carmina Marcuello; Antonio Montañes; Fernando Pueyo
  20. Economic reform programmes, labour market institutions, employment and the role of the social partners in Namibia By Bruno Venditto; Dirk Hanshom; John Ashipala
  21. Absolute and Conditional Convergence: Its Speed for Selected Countries for 1961--2001 By Somesh Kumar Mathur
  22. The Political Economy of US Aid to Pakistan By Mumtaz Anwar; Katharina Michaelowa
  23. The Impact of Structural Adjustment Policies (SAPs) on Manufacturing Growth in Malawi By Thomas Munthali
  24. The Role of Social Capital in Early Childhood Development: Evidence from Rural India By Wendy Janssens; Jacques van der Gaag; Jan-Willem Gunning
  25. Human capital, the structure of production, and growth By Antonio Ciccone; Elias Papaioannou
  26. Interlocking Transactions : Do they Restrain the Emergence of Rice Producers' organizations in Cambodia ? By Lemeilleur, S.; Codron, J.M.; Fares, M.

  1. By: Christian Groth; Karl-Josef Koch; Thomas Steger
    Abstract: This paper argues that growth theory needs a more general “regularity” concept than that of exponential growth. This offers the possibility of considering a richer set of parameter combinations than in standard growth models. Allowing zero population growth in the Jones (1995) model serves as our illustration of the usefulness of a general concept of “regular growth”.
    Keywords: exponential growth, arithmetic growth, regular growth, semi-endogenous growth, knife-edge restrictions
    JEL: O31 O40 O41
    Date: 2006
  2. By: Ronald Ian McKinnon; Gunther Schnabl
    Abstract: China keeps its exchange rate tightly fixed to the dollar. Its productivity growth and trade surplus have been high, and it continues to accumulate large dollar reserves. Many observers take this as evidence that the renminbi is undervalued and should be appreciated to reduce the Chinese trade surplus. We argue that an appreciation of the renminbi need not reduce China’s trade surplus but could cause serious deflation in China. To show this, we consider international adjustment between China and the United States from both an asset-market and a labor-market perspective, and compare this to Japan’s unsuccessful appreciation of the yen.
    Keywords: China, exchange rate, adjustment, assets markets, labour markets
    JEL: F15 F31 F33
    Date: 2006
  3. By: Nkonya, Ephraim M.; Pender, John; Kaizzi, Crammer; Edward, Kato; Mugarura, Samuel
    Abstract: "This study was conducted with the main objective of determining the linkages between poverty and land management practices in Uganda. The study used the 2002/03 Uganda National Household Survey (UNHS) and more focused data collected from a sub-sample of 851 households of the 2002/03 UNHS sample households. We found that farmers in Uganda deplete about 1.2 percent of the nutrient stock stored in the topsoil per year, which leads to a predicted 0.31 percent reduction in crop productivity. The value of replacing the depleted nutrients using the cheapest inorganic fertilizers is equivalent to about 20 percent of household income obtained from agricultural production. Econometric analysis of the survey results provides evidence of linkages between poverty and land management practices. Land investments increase agricultural productivity and income and conserve natural resources. Many inputs and land management practices increase crop production per acre. We observed an inverse farm size – crop productivity relationship but a negative association of farm size and per capita income. Education of female household members has generally a limited impact on land management, while male education is associated with greater use of inorganic fertilizer. Both female post-secondary and male primary and secondary education are associated with higher crop productivity. Larger families use more erosive practices but realize higher value of crop production per acre but have lower per capita income. Access to financial capital, markets and roads has limited effect on land management. However, access to financial capital and non-farm opportunities increase crop productivity and per capita household income and access to roads contributes to higher per capita household income and less soil nutrient depletion. These results support the Uganda government poverty reduction strategy through building rural roads, and increasing access to financial capital and non-farm opportunities. Both the traditional and the new agricultural extension program increase use of fertilizer and crop productivity, suggesting that investment in extension services could significantly contribute to agricultural modernization and poverty reduction. The results suggest the need to give incentives for technical assistance programs to operate in remote areas, where access to extension services is limited. Perennial crop producers deplete soil nutrients more rapidly, implying the need to promote measures to restore soil nutrients in perennial (especially banana) production areas. We find no significant differences in crop productivity or income per capita associated with differences in land tenure systems. Our findings suggest that customary land tenure, which is the most common form of tenure, is not a constraint to improvements in land productivity or use of sustainable land management. Overall, our results provide general support for the hypothesis that promotion of poverty reduction and agricultural modernization through technical assistance programs and investments in infrastructure and education can improve agricultural productivity and help reduce poverty. However, they also show that some of these investments do not necessarily reduce land degradation, and may contribute to worsening land degradation in the near term. Thus, investing in poverty reduction and agricultural modernization is not sufficient to address the problem of land degradation in Uganda, and must be complemented by greater efforts to address this problem." Authors' Abstract
    Date: 2005
  4. By: Mullen, Kathleen; Orden, David; Gulati, Ashok
    Abstract: "Since the early 1990s, India has undergone substantial economic policy reform and economic growth. Though reforms in agricultural policy have lagged those in other sectors, they have nonetheless created a somewhat more open economic orientation. In this study, we evaluate the protection and support versus disprotection of agriculture in India. Our methodology involves examining market price support (MPS) for eleven crops, the expenditures on input subsidies benefiting farmers (for fertilizer, electricity and irrigation), and product-specific and total producer support estimates (PSEs) over the period 1985-2002. We draw on the extensive price-comparison and subsidy-measurement data sets and analysis developed earlier by Gulati and his co-authors, often using disaggregated analysis for representative surplus and deficit states. This allows us to explore how key cost adjustments impact the results. Overall, our results indicate that support for agriculture in India has been counter-cyclical. Support for agriculture has been rising when world prices are low (as in the mid 1980s and 1998-2002) and falling when world prices are high (as in the early and mid 1990s). Our results demonstrate the increased importance of budgetary payments for input subsidies in agriculture in recent years. Yet, in the aggregate for both price support and budgetary expenditures over the period 1985-2002 the counter-cyclical dimension of agricultural policy dominates a clear trend of movement from disprotection towards protection. Using different variants of MPS and PSE measurment we have extended earlier analysis to demonstrate the impact of key assumptions on the calculations. These assumptions we argue are important to consider. For example, in the standard approach, the MPS for the covered commodities is “scaled up” based on the share of the covered commodities in the total value of production. If the commodity coverage is less than complete, as is often the case, the scaling up procedure leads to a total MPS of greater absolute value than the MPS for the covered commodities. This can result in PSEs of different sign than the non-scaled up version but is inappropriate unless market price support for the commodities not covered is similar to that of the covered commodities. Furthermore, we find that the standard procedure of computing the MPS through a comparison of the domestic price to an adjusted reference price based on observed imports or exports can be problematic. This happens when trade volumes are relatively small. In such a scenario a reference price based on observed imports or exports can lead to misleading conclusions. To address the reference price issue, we follow Byerlee and Morris (1993). Essentially the approach adopted is to compute the level of protection or disprotection based on a counterfactual reference price chosen on economic criteria i.e. the adjusted reference price that would exist in the country if the policy interventions were removed. The relevant price can either be the autarky equilibrium price or the import or export adjusted reference price depending on the relationship among these prices. We apply this modified procedure for six crops (wheat, rice, corn, sorghum, sugar and groundnuts). The choice of the crops is dictated by the fact that India has been near self-sufficiency and there have been changes in the direction of trade over the period of analysis. The magnitudes of estimated support for agriculture obtained in this paper are important for several reasons. The estimates confirm that high levels of subsidies were required for India to export wheat or rice in recent years, a conclusion reached by several other studies. However, we report less disprotection of Indian agriculture in the 1990s than in earlier studies. Partly this difference is explained by the modified procedure for choice of a reference price. A large component of this difference can be accounted for by whether or not the scaling up procedure is invoked. There are also fertile areas for future research. Estimates of adjustment costs used in domestic-to-border price comparisons, such as transportation and processing costs or marketing margins, are crucial variables in the analysis and merit being re-examined and further updated. Resolving what are the most reasonable assumptions about reference prices, or extending the analysis to additional crops and livestock to reduce uncertainty in future assessments will also contribute to fuller understanding of the net stance of policy toward agriculture and how it has evolved over time" Authors' Abstract
    Keywords: South Asia ,South Asia and Central Asia ,Agricultural policy ,Producer Support Estimates (PSEs) ,Agricultural support ,Agricultural production ,Scaling up ,
    Date: 2005
  5. By: Stephan Klasen (University of Goettingen)
    Abstract: This paper examines the link between population and per capita economic growth in Uganda. After showing that Uganda has one of the highest population growth rates in the world which, due to the inherent demographic momentum, will persist for some time to come, it then considers the impact of population growth on per capita economic growth. It finds that both theoretical considerations as well as strong empirical evidence suggest that the currently high population growth puts a considerable break on per capita growth prospects in Uganda. Moreover, it contributes significantly to low achievements in education, health, and poverty reduction and will make improvements in these areas very difficult. It may also be an important factor in the increase of inequality. If Uganda began a period of sustained fertility decline, the estimates reviewed here would suggest that this could boost medium term per capita growth rates by between 0.5-0.6 percentage points per year; considering the favourable age structure dynamics such a fertility decline would generate, per capita growth could increase by between 1.5 and 3 percentage points. It could also significantly contribute to improvements in poverty, inequality, education, and health outcomes. The note emphasizes the importance of a concerted effort to promote female education (including progression, completion, and secondary education), female formal sector employment, investments in reproductive and child health as well as family planning services, and government political leadership to promote smaller families.
    Keywords: poverty, inequality, population growth, Mozambique
    JEL: J1 I32 O15
    Date: 2005–05–01
  6. By: Morris Sebastian
    Abstract: In this paper we discuss the stylised problems relating to water and irrigation in India and argue that most of the inefficiencies, misuse and environmental damage have their roots in the mispricing of water and electricity. Since the only kind of subsidies thus far used are price based input subsidies they end up distorting the allocative prices, from which the other distortions follow. The problems of the sector can be overcome by changing the method of subsidisation. Converting price based or tariff subsidies to direct subsidies and endowments with improved tradability would solve most of the problems in the water and electricity sectors. Administrative and managerial initiatives by themselves would not succeed without this crucial tariff and subsidy reform. Such reform would also result in political capital for its initiators, and should make private and public financing of water (and electricity) projects possible. The issues related to pricing, water rights, subsidies and financing are deeply interlinked, and the correct pricing would necessarily have to recognise the financing dimension. Water being a scarce commodity with major composition and coordination economies in its use, its pricing cannot be discussed without a consideration of the rights (implicit or otherwise). This study, unlike many previous diagnostic studies, has been led by the need to find solutions to a fast deteriorating situation: rising implicit subsidies, movement away from optimal use in a major way, huge distortions and resulting social costs in the use and misuse of water, and as much as 30% of the irrigation water supplied being wasted. The environmental effects of such inappropriate use and waste increase by the day. Our approach to the problem calls for a strategic shift in so far as we argue that reform is not possible if the present approach to work around major policy and design infirmities rather than remove them in the first place continues. This is because the distortions have been so deep rooted as to have fed back into the governance and institutional structure of water management in the country. We also argue for solutions that are incentive compatible in the sense that the designs for pricing & regulation and financing (within the appropriate policy and rights framework) are internally consistent and would work without depending continually upon political commitment, administrative initiatives and managerial energies. Incentive compatible policies are those which by design meet the criteria that the actors, civil servants, proposed water companies and cooperatives, electricity companies, farmers have the correct incentives to do what is right for efficient production, management, allocation and consumption of the resource without administrative direction or urging or demanding the presence of persons with exceptional morals, or leadership qualities. Key elements of our recommendations are: The right to water of a state to the rivers and other water bodies should include the right to trade i.e. to sell the water. This would be consistent with the fact that the bulk of he water is for commercial use today. A formal, perhaps constitutional basis of sharing the waters of interstate rivers rather than national level optimal use being pursued weakly through agreements as is the case today is important. The irrigation sector at all levels is opened to the private sector through frameworks for various kinds of private finance initiatives including the DBF /DBFO type initiatives. Rather than cost plus, it would be far more useful to institute regulation which is incentive in approach and price cap in form, though uniform caps across the country would not be possible nor desirable. Price caps could be the same across fairly large regions. All subsidies whether for electricity or water would have to be direct subsidies delivered to the farmer. An identification exercise carried out once that allows the endowments of a farmer to be fixed, so that he can be issued electricity coupons and water coupons periodically, is necessary. This ensures the political commitment of the farmer since now he has nothing to lose but a lot to gain. Without such commitment and certainly with their hostility as the current agenda to eliminate or reduce subsidies implies, no reform is possible. With all subsidies going direct, there need not be restraints on commercial behaviour and orientation of all participants in the market. The productive organisations – bulk water companies, retail companies and distributors including (WUAs), and farmers can all relate to the regulated bulk, and retail market prices. Current subsidies in irrigation are converted to endowments in units of water and provided to the farmer in the form of coupons with which (as also with cash) he can buy water, and even sell the same subject to certain restraints. Thereby prices are allowed to perform their function of ensuring allocative and use efficiency. Since water supplies may be limited (because of natural factors, and because of limited existing capacity to produce /store) bulk water rates ought to be regulated, with only small opportunity for water companies (bulk and distribution) to gain out of the (high) retail water market prices. Regulated prices could be long run marginal cost (LRMC), in which case the difference between the commercial viability prices and the LRMC prices is made up for the private /commercial bulk water producer through annuities in an appropriate private finance initiative (PFI) deal. The benefit of the difference between the regulated retail prices at which water is supplied to the farmer and the retail water market prices in the command area/ayacut is to the account of the farmer. Since the farmer is able to internalise this benefit with reference to the price, there are strong incentives for judicious use, and optimal trade. In water scare regions it would restore and enhance the incentives for even investments in water saving technologies. A little of the same benefits is designed to be internalised by the water distribution entity so that it has strong incentives to save water in distribution, recover losses, and make investments for repairs, rehabilitation and augmentation Tradability across an entire command is a desirable objective, which can be introduced as experience is gained of the system. Cross command tradability should also slowly emerge subject to certain safeguards against the monopolisation of access rights to water. Water distribution companies are ideally structured as WUAs i.e., cooperatives but with some allowed asymmetry in shareholding. But they ought not to be limited to WUAs or even to farmers’ companies. Bidding for distribution business should be open to entirely private companies too, so that the process of decentralised distribution does not necessarily have to be constrained by the ‘free rider’ problem in cooperation. For entirely new projects requiring construction of new distribution assets, the access rights can be sold at prefixed prices/market prices but strictly limited to farmers with operational/own holdings of land in the command area/ayacut, to raise the capital to construct the distribution system. This can be done separately for each of the distribution areas, since the bid prices are likely to vary depending upon such factors as the alternative supplies including from ground water available. Such purchase of the rights to water would lead to much flow of finance into the sector, and in a way that is functional and entirely incentive compatible. Banks and rural development finance institutions without any subsidy could then support the participation of farmers in the equity of distribution companies. Tanks systems would also require a certain recasting with formally defined rights and prices for use of ground water and surface irrigation. The need here is to minimise the free-rider problem that is inherently a barrier in the management and judicious use of tank irrigation (a common resource in many ways). Herein the key to reform is to lead the system to an explicit relative valuation of the direct and indirect output of the tank (canal water and ground water) through bids restricted to farmers from within the ayacut. A prior fixation of the shares of each farmer in the ‘tank’ business that includes already existing use of wells is the key. Tradability among members of such ‘rights water’ would ensure its judicious use, and the expansion /savings in supplies would follow from the large profits that farmer would make in avoiding leakages and siltation.
    Keywords: India, Irrigation, Electricity, Reform, Subsidy, distortion, Privatisation, commercialisation, Water-users-Association, water-rights, pricing, financing, public-private-partnership
    JEL: H4
    Date: 2005–11–22
  7. By: John Whalley; Xian Xin
    Abstract: This paper presents assesses of the contribution of inward FDI to China’s recent rapid economic growth using a two stage growth accounting approach. Recent econometric literature focuses on testing whether Chinese growth depends on inward FDI rather than measuring the contribution. Foreign Invested Enterprises (FIEs), often (but not exclusively) are joint ventures between foreign companies and Chinese enterprises, and can be thought of as forming a distinctive subpart of the Chinese economy. These enterprises account for over 50% of China’s exports and 60% of China’s imports. Their share in Chinese GDP has been over 20% in the last two years, but they employ only 3% of the workforce, since their average labor productivity exceeds that of Non-FIEs by around 9:1. Their production is more heavily for export rather than the domestic market because FIEs provide access to both distribution systems abroad and product design for export markets. Our decomposition results indicate that China’s FIEs may have contributed over 40% of China’s economic growth in 2003 and 2004, and without this inward FDI, China’s overall GDP growth rate could have been around 3.4 percentage points lower. We suggest that the sustainability of both China’ export and overall economic growth may be questionable if inward FDI plateaus in the future.
    JEL: F43 O40
    Date: 2006–05
  8. By: Iris Claus; Veronica Jacobsen; Brock Jera (New Zealand Treasury)
    Abstract: The purpose of this paper is to develop an analytical framework for discussing the link between financial systems and economic growth. Financial systems help overcome an information asymmetry between borrowers and lenders. If they do not function well, economic growth will be negatively affected. Three policy implications follow. First, the analysis underscores the importance of maintaining solid legal foundations because the financial system relies on these. Second, it demonstrates the necessity for reforming tax policy as it applies to investment, as this is demonstrated to significantly affect the operation of the financial system. Finally, given the importance of financial development for economic growth, a more in-depth review of New Zealand’s financial system in the context of financial regulation and supervision would be valuable.
    Keywords: Economic growth; financial development; financial systems; financial regulation; legal system; institutions; tax
    JEL: G10 G20 G38 H25 K20 K34 O16
    Date: 2004–09
  9. By: Jane Frances (New Zealand Treasury)
    Abstract: This paper reviews the literature on institutions and explores the ways in which institutions can influence economic growth, with a particular focus on how institutions affect the use that firms make of human capital to improve their productivity. It discusses the influence of underlying institutions, such as law and order and secure property rights, on the general environment within which the economic activities of production and exchange takes place. It also explores the influence of activity-specific institutions, such as labour market institutions, on firm decisions about resource use and innovation and through these on economic activity and economic growth.
    Keywords: institutions; human capital; regulation; norms; firms; economic growth; New Zealand
    JEL: D00 D20 J24 K00 L51 O40 P00 Z13
    Date: 2004–09
  10. By: Mwangi S. Kimenyi (University of Connecticut)
    Abstract: This paper focuses on the link between economic rights and institutions. Simple analysis of data is used to demonstrate countries' human development effort in advancing economics rights of the citizens. A country's human development effort is evaluated on the basis of the well-being of the poorest members of the society. An analysis of data reveals that there is a wide variation in countries' pro-poor stance. While it is accepted that positive rights are pro-poor, this paper argues that so too are negative economic rights and in fact the two are complements rather than substitutes. Classifying countries into human development income deficit and human development effort deficit, it is demonstrated that a large number of countries could achieve higher welfare levels for the poor if they improved on bother positive and negative economic rights. The paper attempts to explain variations in the observed commitment to economic rights by focusing on pro-poor institutions. The basic thesis advanced in the paper is that pro-poor policies are more likely to be implemented and sustained in those institutions where power is sufficiently diffused such that even the poor have leverage over policy outcomes. The paper focuses on how institutions impact on power diffusion and therefore the adoption of pro-poor growth and policies. The failure of countries to adopt pro-poor growth and policies is attributed to institutional failures manifested in concentration of power. The policy recommendations emanating from the analysis focus on institutional reforms to enhance power diffusion. These policies include enlarging the political space through democratization, strengthening institutions and capacity to fight corruption and improve transparency, and bringing the government closer to the people through appropriate design and implementation of decentralization schemes. Some recent examples of improvements in economic rights following power diffusion are provided.
    JEL: O15 I30 I31
    Date: 2005–10
    Abstract: The paper analyses economic performance of a sample of developing countries that have undertaken trade liberalization and structural reforms since the early 1980s with the objective of expansion of exports and diversification in favour of manufacturing sector. The results obtained are varied. Forty per cent of the sample countries experienced rapid expansion of exports of manufactured goods. In a minority of these countries, mostly East Asian, rapid export growth was also accompanied with fast expansion of industrial supply capacity and upgrading. By contrast, the experience of the majority of the sample countries, mostly in Africa and Latin America, has not been satisfactory. In fact, half of the sample, most of them low income countries, have faced de-industrialization. Even in some cases where manufactured exports grew extremely fast, e.g. Mexico, MVA did not accelerate and upgrading of the industrial base did not take place. Slow growth of exports and deindustrialization has also been accompanied by increased vulnerability of the economy, particularly the manufacturing sector, to external factors particularly as far as reliance on imports are concerned. Generally speaking, in the case of the majority group, trade liberalization has led to the development and re-orientation of the industrial sector in accordance with static comparative advantage, with the exception of industries that were near maturity. For example, in Latin America the expansion of exports has taken place mainly in resource based industries, the labour intensive stage of production, i.e. assembly operations, and in a few cases in the automobile industry. A number of industries which had been dynamic during the import substitution era continued, however, to be dynamic in terms of production, exports and investment. The industries which were near maturity when the reform started, such as aerospace in Brazil, benefited from liberalization as the competitive pressure that emerged made them more efficient. The reform programmes designed by IFIs also failed to encourage private investment, particularly in the manufacturing sector; the I/GDP ratio fell even where the inflow of FDI was considerable – e.g. in the case of Latin America. Trade liberalization changed the structure of incentives in favour of exports, but the balance between risks and return changed against the manufacturing sector. A major difference between the “minority” and the “majority” groups is that in the case of the former, i.e. East Asian NIEs, at least until recently economic reform, particularly trade liberalization, has taken place gradually and selectively as part of a long-term industrial policy, after they had reached a certain level of industrialization and development. By contrast, the “majority group” embarked, in the main, on a process of rapid structural reform including uniform and across-the-board liberalization. The author argues that no doubt trade liberalization is essential when an industry reaches a certain level of maturity, provided it is undertaken selectively and gradually. Nevertheless, the way it is recommended under the Washington Consensus, it is more likely to lead to the destruction of the existing industries, particularly of those that are at their early stages of infancy without necessarily leading to the emergence of new ones. Further, any new industry that emerges would be in line with static, rather than dynamic, comparative advantage. The low income countries, in particular, will be locked in production and exports of primary commodities, simple processing and at best assembly operation or other labour intensive ones with little prospect for upgrading.
    Date: 2005
  12. By: Karacaovali, Baybars
    Abstract: There is a growing literature that investigates the effect of trade liberalization on productivity. Nearly all such studies assume that trade policy is determined independently of productivity, hence it is exogenous. The author shows that this assumption is not valid in general, both theoretically and empirically, and that researchers may be underestimating the positive effect of liberalization on productivity when they do not account for the endogeneity bias. On the theory side, he demonstrates that under a standard political economy model of trade protection, productivity directly influences tariffs. Moreover, this productivity-tariff relationship partly determines the extent of liberalization across sectors even in the presence of a large exogenous unilateral liberalization shock that affects all sectors. The link between productivity and tariffs is maintained after the author includes in his political economy model a learning-by-doing motive of protection, which also serves as the source of liberalization. On the empirical side, he examines total factor productivity (TFP) estimates obtained at the firm level for Colombia between 1983 and 1998, and finds that more productive sectors receive more protection within this period. In estimating the effect of productivity on tariffs, he controls for the endogeneity of the two main right-hand-side variables-the inverse import penetration to import demand elasticity ratio and productivity-by using materials prices, the capital to output ratio, a measure of scale economies, and the TFP of the upstream industries as robust instruments. The author also accounts for the large trade liberalization between 1990 and 1992, and finds that the sectors with a higher productivity gain are liberalized less. Finally, he illustrates a system of equations estimation and shows that the positive impact of liberalization on productivity grows stronger when corrected for the endogeneity bias.
    Keywords: Economic Theory & Research,Free Trade,Political Economy,Trade Policy,Trade Law
    Date: 2006–05–01
  13. By: Ganguly, Sushma; Feder, Gershon; Anderson, Jock R.
    Abstract: The paper reviews the origins and evolution of the Training and Visit (T & V) extension system, which was promoted by the World Bank in 1975-98 in over 50 developing countries. The discussion seeks to clarify the context within which the approach was implemented, and to analyze the causes for its lack of sustainability and its ultimate abandonment. The paper identifies some of the challenges faced by the T & V approach as being typical of a large public extension system, where issues of scale, interaction with the agricultural research systems, inability to attribute benefits, weak accountability, and lack of political support tend to lead to incentive problems among staff and managers of extension, and limited budgetary resources. The different incentives and outlook of domestic stakeholders and external donor agencies are also reviewed. The main cause of the T & V system ' s disappearance is attributed to the incompatibility of its high recurrent costs with the limited budgets available domestically, leading to fiscal unsustainability. The paper concludes with some lessons that apply to donor-driven public extension initiatives, and more generally to rural development fads. The role of timely, independent, and rigorous evaluative studies is specifically highlighted.
    Keywords: Agricultural Knowledge & Information Systems,Rural Development Knowledge & Information Systems,Rural Poverty Reduction,ICT Policy and Strategies,Banks & Banking Reform
    Date: 2006–05–01
  14. By: Sumon Kumar Bhaumik; Jenifer Piesse;
    Abstract: Using bank-level data from India, for nine years (1995-96 to 2003-04), we examine banks’ behavior in the context of emerging credit markets. Our results indicate that the credit market behavior of banks in emerging markets is determined by past trends, the diversity of the potential pool of borrowers to whom a bank can lend, and regulations regarding treatment of NPA and lending restrictions imposed by the Reserve Bank of India. Finally, we find evidence that suggest that credit disbursal by banks can be facilitated by regulatory and institutional changes that help banks mitigate the problems associated with enforcement of debt covenants and treatment of NPA on the balance sheets. On the basis of these results, we speculate on some possible policy recommendations.
    Keywords: Indian banking, Development, Credit-to-deposit ratio, Risk aversion
    JEL: G21 O16
    Date: 2005–08–01
  15. By: Vo Tri Thanh; Trinh Quang Long;
    Abstract: The objectives of this study are to identify the underlying determinants of the schooling dropout in Vietnam and to project its trend in the future up to 2015. Our examination is largely based on the three Vietnam’s Living Standard Surveys conducted in 1992/93, 1997/98 and 2001/02 and the conventional framework of educational investment at the household level. The major determinants of the schooling dropout choice by households are found to be variables of child’s characteristics (such as age, working time, primary education, and number of siblings) and household economic situation (such as parental education, household’s per capita expenditure, and cost of schooling). In general, the effects of these determinants on the schooling dropout probability are statistically significant. In particular, the schooling dropout probability has been very sensitive to the changes in the household’s per capita expenditure and the direct costs of schooling, whereas recently the other determinants have had only minor impacts. In terms of schooling, girls have benefited more than boys did from their household's per capita expenditure increase, while they have suffered more than boys did from an increase in the direct cost of schooling. These differences, however, recently have narrowed substantially. The dropout situation is also regional specific and hence, a comprehensive approach is needed to deal with it. Moreover, at present the low quality of education is serious problem. Together with the parents' incorrect perception of and the community’s attitude to education values, this may increase the possibility of children’s schooling dropout. The dropout situation is also very much dependent on the public funding for education, which is still not effective in reducing the household current excessive financial burden and still biased against the poor regions. The projection outcomes of the schooling dropout probability of children in the future up to 2015 is very much depending on the assumptions of the changes in the household’s per capita expenditure and the cost of schooling. When the growth rate of the cost of schooling is much higher (for example, by 1.2 percentage points) than that of the household’s per capita expenditure, the dropout rate would first decrease and increase again after 2010. The tentative assessments suggest that in these cases, there is a chance for Vietnam to achieve the national targets of the primary and lower secondary net enrolment rates in 2010. However, Vietnam could very hardly to achieve the MDG on the universal completion of primary education in 2015 and moreover, the achievements recorded by 2010 would be deteriorated. Regarding the scenarios, where the pace of changes in the cost of schooling is lower than that of the household’s per capita expenditure, the projections seem to provide a rather bright picture in terms of achieving the national education targets in 2010 and the MDG on education in 2015. The projections also show that there is a reason to be more optimistic about the elimination of the gender gap in education by 2010.
    Keywords: Vietnam, education, MDGs
    JEL: D10 I20 I29 C31
    Date: 2005–06–01
  16. By: Sumon Kumar Bhaumik; ;
    Abstract: In an attempt to better understand the impact of the World Bank on human development in poor countries, we use cross-country data on African countries, for the 1990-2002 period, to examine this relationship. The coefficient estimates of our parsimonious fixed-effects models indicate that while loans and grants of the Bank have had a positive impact on some relatively short-term indicators of health and education in an average African country, there is little evidence to suggest that such loans and grants have helped these countries to consolidate on the short-term gains.
    Keywords: Development, Health, Education, World Bank, Africa
    JEL: O15 O19 O55 P45
    Date: 2005–08–01
  17. By: Margaret Maurer-Fazio; James Hughes; Dandan Zhang
    Abstract: In this project, we employ data from the Chinese population censuses of 1982, 1990, and 2000 to examine reform-era changes in the patterns of male and female labor force participation and in the distribution of men’s and women’s occupational attainment. Very marked patterns of change in labor force participation emerge when we disaggregate the data by age cohort, marital status, sex, and rural/urban location. Women have decreased their labor force participation more than men, and urban women much more than rural women. Single young people in urban areas have decreased their labor force participation to stay in school to a much greater extent than single young people in rural areas. The urban elderly have decreased their rates of labor force participation while the rural elderly have increased theirs. We also find evidence of the feminization of agriculture.
    Keywords: China, labor force participation, economic reform, occupational attainment, population censuses
    JEL: J0 J16 J21 J62 O15 O53
    Date: 2005–08–01
  18. By: Joaquim Bento de Souza Ferreira Filho; Mark Horridge
    Abstract: Gains and losses from trade liberalization are often unevenly distributed inside a country. For example, if budget shares vary according to household income, changes in commodity prices will redistribute an overall welfare change between household types. Household incomes will also be differentially affected. Sectoral differences in factor-intensity mean that changes in industrial structure cause redistribution of income between primary factors. Particular primary factors (such as capital, or less skilled labour) may contribute disproportionately to the incomes of certain household types. The fortunes of such households indirectly depend on the prospects of particular sectors. We emphasize these distributive issues, especially those arising from the income side. At the same time we distinguish households by regions (within the country). The regional distinction sharpens the contrast between groups of households. Particular regions have their own patterns of economic activity and so are differently affected by changes in the industrial protection structure. Since regional household incomes depend closely on value-added from local industries, economic change will tend to redistribute income between regional households. If the regional concentration of poverty is more than we could predict by regional primary factor endowments and industry structure, the addition of a regional dimension will add power to our analysis of income distribution beyond the mere addition of interesting regional detail. The paper deals with these issues more fully. We extend previous regional modeling of Brazil to include the intra-household dimension, addressing poverty and income distribution issues that may be caused by trade integration. An applied general equilibrium (AGE) inter-regional model of Brazil underlies our analysis, with a detailed specification of households. The model is static and solved with GEMPACK. The Representative Household (RH) hypothesis is abandoned; instead a micro-simulation (MS) model is used to track changes in household income and expenditure patterns. This micro-simulation model is built upon two Brazilian household studies: (1) the Household Budget Survey (POF, IBGE, 1999) covers detailed expenditure patterns for 16,013 households and 11 regions in Brazil in 1996; (2) the National Household Sample Survey (PNAD, IBGE, 1997) is a yearly survey that includes detailed information about household employment and income sources, with 331,263 observations. We integrate the two data sources to produce a detailed mapping of expenditure and income sources for 250,000 Brazilian households, distinguishing 50 activities, 80 commodities, and 27 regions. We link the AGE and MS models together, solving them iteratively to get consistency between results. After a shock the AGE model communicates changes in wages and employment by industry and labour type to the MS model that individually simulates the changes in employment, income and expenditure patterns for each household. The new expenditure pattern is then communicated to the AGE model, and the process is repeated until the two models converge. The final results from the MS model enable us to estimate changes in poverty and income distribution measures, both nationally and for regions within Brazil. We use the model to analyze poverty and income distribution impacts of the Free Trade Area of Americas formation upon the Brazilian economy. In the particular simulation we examine, freer trade leads to increased employment, especially for lower-paid workers. Poor households, which contain more enemployed adults, benefit most. This leads to a reduction in poverty in all 27 Brazilian states.
    Date: 2004–08
  19. By: Jesus Clemente; Carmina Marcuello; Antonio Montañes; Fernando Pueyo
    Abstract: The study of determinants of economic growth and development is a special interest area to the economists. Theoretical investigation in this topic is characterized by a growing complexity and empirical work has not obtained satisfactory results. The incorporation of human capital and technical progress with endogenous character have not obtained the appropriate results to explain with clarity the key mechanisms of this economic phenomenon. In the last years, the researchers have focused part of their efforts in a new factor, namely social capital. The underlying idea is that the physical factor (productive capital) and the human (human capital) are not sufficient to explain the economic growth and economic development. Recent work suggests that previous studies omit a relevant dimension: social character of the economic activity (social capital), as is emphasized in Temple and Johnson (1998) and in Knaff and Keefer (1997), among others. Nevertheless, the discussion on definition and mechanisms through social capital is created, disappears, is accumulated or influences on the economic activity is still opened. Although, many studies are discussing the social capital definition and measurement from interdisciplinary point of view (Paldman, 2000). Paldman examines different indicators of social capital, most of them related to the nonprofit organizations or associational activity of a country and expectations and trustworthiness in which economic agents operate. Our paper contributes to this line of research in order to advance in the discussion of these aspects: social capital definition, relationship between social capital and other socio-economics factors, role of social capital in economic growth –as productivity factor or thecnology–; the consideration of convenient data base set and the use of appropriate econometric thecniques. The final objective is to provide theoretical and empirical evidence on the relationship between social capital and economic growth. As well as, between the social capital and the traditional factors considerated, that is to say, human capital and physical capital. This general objective will proceed as follows. In the first section we approach the social capital definition. Social capital can be constituted in a variety of ways. It is a particular situation that requires a meticulous revision of the literature in order to adopt a methodological position that in our case will be fundamentally functional and is focused on the importance of the nonprofit sector as component of social capital . In second section, we analyze the relationship between social capital and physical capital and, mainly, with the human capital and the public sector. Social capital is a complex resource and we can observe that there are others factors, for example the educational level that is affected by social capital, but is itself an influence on social capital. We argue that there is a strong interaction between sanitary policy, fiscal policy, cultural context and social capital. In third section we examine theoretically the mechanisms of relationship between social capital, as capacity of working jointly, and economic growth. In the discussion is fundamental the arguments established by Paldman and Svendsen (2000). The authors pointed out two mechanisms: (a) social capital as productive factor -that is to say, nonprofit organizations, associational activiy indicates the work capacity in equipment and, consequently, it supposes an productive factor; b) social capital as technology: that is to say, indicates the capacity of a society to generate the mechanisms that reduce the transaction and control costs within productive system. In fourth section, we observe the problems derived to use data of different countries. These studies supposed the presence of a same behavior at aggregate level for heterogeneous countries, and we consider that, the empirical results are biased because they use non appropriate econometric techniques. Thus, we propose that the analysis at regional level improves the results obtained because of allows to reduce some of these limitations, owing to exist an evident homogeneity concerning educational level, tax system, culture, etc. Finally, we develop an empirical analysis for the Spanish case where it is considered to establish if the social capital is relevant to explain the economic growth of the Spanish regions. We use as indicator of social capital some proxies as the density of associational activity, composition of these associations, inequality index, etc. The paper concludes with the main results.
    Date: 2004–08
  20. By: Bruno Venditto (ISSM); Dirk Hanshom (NEPRU); John Ashipala (NEPRU)
    Abstract: Namibia does not represent a case of structural adjustment, that is, a kind of economic reform in a situation of crisis with a high leverage of external actors (IMF, World Bank). Rather, the agenda for economic reform is set by the government, and addresses the problems of the high poverty and extreme inequality of a dualistic economy which emanate from a mineral-based enclave economy and from a past policy of racial segregation (apartheid), which restricted the benefits of education and other social services to the privileged. Government policy is aimed at promoting growth and employment and reducing poverty and inequality. Key instruments for achieving these aims are high expenditures on education, health, a universal pension system, and other social services. Further to this, measures have been taken to create employment and to redress inequities on the labour market. At the same time, the Namibian Government follows a market-oriented and open economic policy, based on acknowledgement of the fact that the problems of poverty and inequality can only be overcome in the context of economic growth. The aims of the government include a balanced budget, a conservative approach to foreign debt, and public sector reform. However, progress in the achievement of these remains limited. Namibia’s economic record since independence in 1990 compares favourably to both the pre-independence decade and the sub-Saharan African (SSA) average, but remains inadequate to the task of significantly raising per capita incomes - in fact, since 1994 per capita incomes have been stagnating. Independent Namibia inherited a highly segmented labour market, where every defined ‘ethnic group’ had differentiated access to employment and to wages, with a major underlying factor being unequal access to education. Figures do not exist for tracing the record in social development precisely, but it is clear that poverty and inequality remain a major problem. Unemployment has increased, as the declining importance of agricultural employment has not been compensated by commensurate increases in employment in the industrial and services sectors. Namibia’s formal sector is characterised by its large size and high incomes. Sheltered by the high tariffs of the Southern African Customs Union (SACU), these are increasing and outstripping productivity increases. They also reflect the high degree of unionisation and the scarcity of skills. Then there are the small non-agricultural informal sector and agriculture, with low, market-determined incomes. Poverty is concentrated among the rural population (subsistence farmers, agricultural and other workers). Significant progress has been made when one compares the present to the inequitable situation of the past. However, despite high expenditures in the social sectors, the outcome remains limited, due to inefficiencies. Confrontational labour relations were inherited and have not yet been overcome, despite a policy of reconciliation and collective bargaining, and are identified as a key problem by investors. A related problem is that the trade unions represent mainly the predominantly non-poor urban workers and employees. The involvement of labour market institutions in the process of economic reform is limited, due to two principal factors. Firstly, the institutions do not yet represent the social partners in their totality, and secondly, this capacity of economic policy analysis is itself limited. Measures to augment the role of social partners in the formulation of economic policy reform include the following: • strengthening the voice of presently underrepresented groups (low-paid workers, especially in the informal sector; informal sector operators) • strengthening the capacity of the social partners in economic policy analysis • strengthening institutionalised tripartite mechanisms • providing better information to the general public (e.g. capacity- building of economic policy journalists) • providing timely and comprehensive economic information (statistics) to facilitate an informed debate).
    Keywords: Development Cooperation , Southern Africa, Labour market Economic Reforms
    JEL: O P
    Date: 2004–08–09
  21. By: Somesh Kumar Mathur (Jamia Millia Islamia)
    Abstract: The study gives the theoretical justification for the per capita growth equations using Solovian model(1956) and its factor accumulation assumptions. The different forms of the per capita growth equation is used to test for 'absolute convergence' and 'conditional convergence' hypotheses and also work out the speed of absolute and conditional convergence for selected countries from 1961-2001.We use cross sectional data of GDP per capita levels and growth rates of European countries EU16(EU15 +United Kingdom), South Asian Countries (5), some East Asian (8) and CIS Countries (15) to test for 'absolute convergence' hypothesis for four different periods 1961-2001,1970-2001,1980-2001,1990-2001.Only EU and East Asian countries together have shown uniform evidence of absolute convergence in all periods. While EU as a region has shown significant evidence of absolute convergence in two periods, 1961-2001 and 1970-2001, there is no convincing statistical evidence in favor of absolute convergence in the last two periods: 1980-2001 and 1990- 2001.This latter evidence with declining rate of economic growth for EU since 1961 points to a challenge for designing EUs regional policies which also have to cope up with many East European and Baltic nations who joined EU recently. The speed of absolute convergence in the four periods range between 0.99-2.56 % p.a. (2% for the EU was worked out by Barro and Xavier Sala-i-Martin, 1995, for European regions) for EU while it ranges between 0.57-1.16 % p.a. for the countries in East Asia and EU regions together. However, there is no evidence of convergence among the South Asian countries in all periods and some major CIS republics since 1966.There is however tendency for absolute convergence among countries of South Asia, East Asia and European Union together particularly after the 1980s. Conditional convergence is prevalent among almost all pairs of regions in our sample except East Asian and South Asian nations together.Speed of conditional convergence ranges from 0.2 % in an year to 22%.In the European nations, the speed of conditional convergence works out be nearly 20 % unlike the speed of absolute convergence which hovered around 2 %.Such results would mean that countries in Europe are converging very quickly to their own potential level of incomes per capita but not so quickly to a common potential level of income per capita.The elasticity of output which is also estimated ranges from 0.54 to 0.91 implying that capital is to be interpreted as broad capital inclusive of human capital stock.It seems that human capital not only affects technological progress but affects output levels directly by increasing capital stock levels implying that the assumption of including human capital stock in the production function were appropriate in Mankiw,Romer and Weil(1992). The results for the speed of conditional convergence favors use of an extended Solovian model inclusive of human capital.Conditional beta convergence seems to be a better empirical exercise(as evident from our theoretical model and empirical results ) because it reflects the convergence of countries after we control for differences in steady states .Conditional convergence is simply a confirmation of a result predicted by the neoclassical growth model:that countries with similar steady states exhibit convergence.It does not mean that all countries in the world are converging to the same steady state,only that they are converging to their own steady states
    Keywords: Growth equation, absolute convergence, conditional convergence, speed of absolute and conditional convergence, elasticity of output with respect to capital, half life of convergence
    JEL: C6 D5 D9
    Date: 2005–03–13
  22. By: Mumtaz Anwar (University of the Punjab, Lahore Pakistan & Hamburg Institute of International Economics HWWA); Katharina Michaelowa (Hamburg Institute of International Economics)
    Abstract: Variations of bilateral aid flows are difficult to explain on the basis of official development objectives or recipient need. At the example of US aid to Pakistan, this paper suggests alternative political economic explanations, notably the relevance of ethnic lobbying and the relevance of US business interests. Time series regressions for the period from 1980 to 2002 and logistic regressions based on votes for the Pressler and the Brown Amendment confirm the significance of these political economic determinants. While in case of the Pressler Amendment, the direct influence of population groups of Indian and Pakistani origins seems to have played a predominant role, the role of ethnic business lobbies appears to have dominated in the context of the Brown Amendment. Time series analysis also provides some evidence for the impact of US business interests based on FDI and exports, but these effects appear to be comparatively small.
    Keywords: Public Choice, ethnic lobbying, foreign aid
    JEL: D70 F35
    Date: 2004–11–26
  23. By: Thomas Munthali (Leeds University Business School)
    Abstract: Malawi has been implementing structural adjustment reforms since 1981 in search of a way to revive its declining economic growth triggered by the oil shocks and general world economic recession of the mid and late 1970’s. These structural reforms were meant to liberalise the economy, broaden and diversify the production base towards non-primary products and allocate resources more productively. Since the theory of Structural Adjustment Programmes (SAPs) has industrial growth, manufacturing in particular, at the centre of its argument for reviving economic growth, this paper primarily aims at establishing whether or not the claim that structural adjustments lead to manufacturing growth has been applicable to Malawi. By comparing the before (1960-1980) and after SAP (1981-1998) manufacturing industry’s growth levels, this study has found out that SAPs have assisted in improving manufacturing growth in Malawi though dismally. This dismal performance is evidenced by manufacturing growth volatilities and low average annual growth rates of 2.8% during the SAP implementation period compared to an average of 1.9% per annum before SAPs. However, despite this dismal growth of the manufacturing sector, there has been a production shift in the economy though not much from agriculture to industry as was the thrust of the structural adjustment. The manufacturing sector’s share of GDP has been rising over the SAP implementation period while that of agriculture especially the agricultural tradable sector has been declining giving hope for a structural move towards industry. This is evidenced by increased share of manufacturing in GDP from 16% before SAPs to 23% in the SAP period while decreasing the share of agriculture from 46% to 41% during similar periods. Despite this economy shift towards the industrial sector, however, GDP growth has been both volatile and declining averaging only 2.5% per annum during the entire SAP implementation period unlike the vibrant 6% per annum before SAPs. This only shows how much little effect the SAPs have had in reversing the declining economic growth trend of the Malawi economy with much of the growth still largely dependent on the agricultural sector. Malawi has continued to produce more and more volumes of agricultural produce for exports and yet due to declining terms of trade, the export values have been very small to assist in bringing the economy back on track. The study further reveals that despite the SAPs having assisted in improving manufacturing growth in Malawi, the sector’s growth has been characterised with incessant volatilities especially in the later part of the 1990’s when Malawi’s traditional donors were withholding economic reform funds due to the government’s failure to meet key economic stabilisation targets of low inflation, low interest rates and prudential spending. Malawi, being an agrarian economy dependent on external factors like climatic changes and international terms of trade, already faces volatilities in the availability of foreign exchange at various times of the year. This has in turn led to volatilities in the exchange rates, inflation levels, interest rates and GDP growth rates making sustainable manufacturing industry growth difficult. The study then, amongst others, recommends that Malawi needs to continue to fully implement economic reforms that are aimed at macroeconomic stability and promotion of industrial sector such as the formulation of an industrial policy separate from the Trade policy which can help to shape the course and pace of industrialisation in Malawi. Further, in order to draw meaningful government interventions and sound implementation of SAPs, it is important to conduct a micro-level study on manufacturing firms so as to find out how SAPs have so far impacted on manufacturing firm’s technical efficiency, capacity utilisation, allocative efficiency, market attaining distributive efficiency, and labour efficiency. Such a study would help in identifying if SAPs have been on the right track in helping to achieve their other main purpose of economic efficiency in the manufacturing sector.
    Keywords: Manufacuring, growth, SAPs, economic reforms, malawi
    JEL: E
    Date: 2004–10–14
  24. By: Wendy Janssens (Amsterdam Institute for International Development); Jacques van der Gaag (Amsterdam Institute for International Development); Jan-Willem Gunning (Amsterdam Institute for International Development)
    Abstract: The literature on social capital clearly shows the significant relationship between social capital and individual outcomes such as educational attainment. However, there is little evidence so far on outcomes of very young children. This report studies the role of social capital in enhancing child outcomes. It investigates two potential sources of social capital. At the individual level, the authors consider social capital as the resources and information residing in the social networks of a child's parents. At the community level, we analyze social capital as the willingness of a community to cooperate and engage in collective action. We study the Mahila Samakhya programme in rural Bihar (India), a women's empowerment programme that emphasizes female education. The findings strongly suggest that the programme is successful in increasing parental awareness on the value of preschool and primary education. In other words, the programme seems to increase the informational resources of parents on education, a social capital effect. Moreover, the results indicate that programme members are significantly more likely than non- participants in their village to participate in school management and school activities, and to contribute to the construction of schools and preschools. That is, the results are highly suggestive of increased collective action as well. A second main finding is that these results do not remain limited to programme participants. We find that non-participating women in programme villages are significantly more aware of the importance of (preschool) education than women in control villages. In addition, non- participating households in programme villages are also significantly more likely to participate in school management and activities, and to contribute to school construction. These results suggest that the programme not only increases social capital among its members, but has potentially strong spillover effects to other community members as well. The programme seems to increase individual and community social capital throughout the wider community. Next, we study the relationship between the Mahila Samakhya programme and preschool and primary school enrolment. Controlling for child, household and community characteristics, we find that children in programme villages are significantly more likely to be enrolled in preschool. The number of preschools, itself strongly correlated with the presence of the programme, is highly predictive of enrolment. We also find a significant and additional relationship between individual participation in the programme and preschool enrolment. Finally, the evidence suggests that children living in programme villages, whose mothers do not participate themselves, are significantly more likely to be enrolled as well. In short, the programme seems to have a direct relationship with preschool enrolment For primary school the findings are approximately similar. The main difference is that the spillovers of the programme are much less visible. Only girls and children from the lowest castes seem to benefit of the presence of the programme regardless of whether their mother participates herself. A similar analysis of immunization coverage again shows the large spillovers of the programme: children in programme villages are significantly more likely to be immunized against tuberculosis, diphtheria and measles, regardless of the active participation in the programme. Surprisingly, this result is stronger than for individual membership. The differences in immunization coverage between the member households and non-member households are insignificant (except for measles). Note that the programme does not have any correlation with the immunization against polio. The impact of the recent mass polio campaigns organized by the government may obscure any programme effects. Finally, the report analyses the relationship of the programme with health indicators. In particular, it studies the partial correlations of programme village and programme membership on the prevalence of diarrhea. However, the logistic estimation does not confirm any significant relationship. In contrast, participants in the programme do have better knowledge on how to treat diarrhea once it occurs than control households. Again, this relationship is also significant for non-participants although its size is smaller. In summary, the evidence is strongly suggestive of the positive relationship between the Mahila Samakhya programme and increased individual and community social capital. In addition, the findings strongly suggest a positive relationship with pre- and primary school enrolment. Not only on members, but on non-members as well. We find similar results for immunization and the treatment of diarrhea, a proxy for health practices.
    Keywords: social capital early childhood development education immunization health india evaluation
    JEL: P Q Z
    Date: 2005–03–21
  25. By: Antonio Ciccone (ICREA and Universitat Pompeu Fabra, Department of Economics and Business, Ramon Trias Fargas 25-27, 08005 Barcelona, Spain.); Elias Papaioannou (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.)
    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-labor 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-capitalintensive industries.
    Keywords: Human Capital, growth, structure of production.
    JEL: E13 F11 O11
    Date: 2006–05
  26. By: Lemeilleur, S.; Codron, J.M.; Fares, M.
    Abstract: Formal credit institutions in Cambodia have largely failed to provide access to farm credit to small and medium-scale paddy producers. The paper describes interlinked transactions between commercial rice millers and paddy producers in the paddy market that facilitate the provision of credit. Moreover, interlinked transactions are also used as an incentive device for producers who can only be imperfectly monitored. This kind of interlinked transaction, which tends to be dominant, may emerge as the best governance structure to minimize production and transaction costs. However, we show that in the context of producers' vulnerability to weather damage to crops, perverse risks may also cause indebtedness among producers. Thus, interlocking transactions could lead to unequal relations of economic power, often at the cost of delaying agrarian growth. These dependency relationships may explain, in part, why development institutions fail to promote producers' organizations with rice marketing capabilities. ...French Abstract : Au Cambodge, la défaillance du marché financier rural reste un des freins déterminants au développement des petites et moyennes exploitations agricoles. Cet article décrit les contratsliés entre riziers commerciaux et producteurs de riz paddy facilitant l'octroi de crédit pour ces derniers. Par ailleurs, les contrats-liés sont utilisés par le rizier comme mécanisme d'incitation à l'effort des producteurs, qui ne peut être qu'imparfaitement contrôlé. Les contrats-liés qui tendent à être la forme dominante dans les relations entre riziers et producteurs, semble émerger comme meilleure structure de gouvernance pour réduire les coûts de production et de transaction. Cependant, nous montrons que dans un contexte de forte vulnérabilité des producteurs aux aléas climatiques, le risque d'endettement peut être important pour de nombreux producteurs. Ainsi, les contrats-liés peuvent mener à des relations de pouvoir entre acteurs, générant un manque l'efficacité globale sur le marché du riz. Ces rapports de dépendance pourraient alors expliquer, en partie, les difficultés rencontrées par les institutions de développement dans la promotion des organisations de producteurs à vocation économique.
    JEL: L14 L22 Q13
    Date: 2006

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