nep-dev New Economics Papers
on Development
Issue of 2006‒11‒18
forty-six papers chosen by
Jeong-Joon Lee
Towson University

  1. Migration as a Safety Net and Effects of Remittances on Household Consumption: The Case of Colombia By Lina cardona Sosa; Carlos Medina
  2. Unequal Opportunities and Human Capital Formation By Daniel Mejía; Marc St-Pierre
  4. Who’s Afraid of Foreign Aid? The Donors’ Perspective By Alberto Chong; Mark Gradstein
  5. Decomposing the Effects of Financial Liberalization: Crises vs. Growth (March 2006) By Aaron Tornell
  6. Growth Takeoffs By Matthias Doepke
  7. What drives productivity in Tanzanian manufacturing firms: technology or institutions? By Goedhuys, Micheline; Janz, Norbert; Mohnen, Pierre
  8. Economics and Transitions: Lessons from Economic Sub-disciplines By Kemp, R.; van den Bergh, J.
  9. Colonisation and Development in the Former French West Africa: The Long-term Impact of the Colonial Public Policy By Elise Huillery
  10. Mortality and survivor's consumption By Michael Grimm
  11. The Effects of Education Quality on Income Growth and Mortality Decline By Eliot A. Jamison; Dean T. Jamison; Eric A. Hanushek
  12. Was the Wealth of Nations Determined in 1000 B.C.? By Diego Comin; William Easterly; Erick Gong
  13. Do External Interventions Work? The Case of Trade Reform Conditions in IMF Supported Programs By Shang-Jin Wei; Zhiwei Zhang
  14. World Technology Usage Lags By Diego A. Comin; Bart Hobijn; Emilie Rovito
  15. Health Shocks, Village Elections, and Long-Term Income: Evidence from Rural China By Li Gan; Lixin Colin Xu; Yang Yao
  16. An essay on economic reforms and social change in China By Lindbeck, Assar
  17. Learning through monitoring : lessons from a large-scale nutrition program in Madagascar By Galasso, Emanuela; Yau, Jeffrey
  18. The impact of policies to control motor vehicle emissions in Mumbai, India By Takeuchi, Akie; Cropper, Maureen; Bento, Antonio
  19. Distributional effects of WTO agricultural reforms in rich and poor countries By Hertel, Thomas W.; Keeney, Roman; Ivanic, Maros; Winters, L. Alan
  20. Access to financial services in Zambia By de Luna Martinez, Jose
  21. Growth before and after trade liberalization By Salinas, Gonzalo; Aksoy, Ataman
  22. Jointness in Bayesian variable selection with applications to growth regression By Ley, Eduardo; Steel, Mark F. J.
  23. Public infrastructure and growth : new channels and policy implications By Agenor, Pierre-Richard; Moreno-Dodson, Blanca
  24. Beyond trade : the impact of preferential trade agreements on foreign direct investment inflows By Medvedev, Denis
  25. A dime a day : the possibilities and limits of private schooling in Pakistan By Andrabi, Tahir; Das, Jishnu; Khwaja, Asim Ijaz
  26. Learning levels and gaps in Pakistan By Das, Jishnu; Pandey, Priyanka; Zajonc, Tristan
  27. Forests, biomass use, and poverty in Malawi By Bandyopadhyay, Sushenjit; Shyamsundar, Priya; Baccini, Alessandro
  28. Institutions and Institutional Change in Zambia By Sophia du Plessis
  29. The Coevolution of Economic and Political Development By Fali Huang
  30. The Transition from Relational to Legal Contract Enforcement By Fali Huang
  32. International Dimensions of China`s Long Boom: Trends, Prospects and Implications By Thomas Rawski; Loren Brandt; Xiaodong Zhu
  33. The Impact of United States Sanctions on the Myanmar Garment Industry By Kudo, Toshihiro
  34. Organizational Capability of Local Societies in Rural Development: A Comparative Study of Microfinance Organizations in Thailand and the Philippines By Shigetomi, Shinichi
  35. Migration and Wellbeing at the Lower Echelons of the Economy: A Study of Delhi Slums By Mitra, Arup; Tsujita, Yuko
  36. Trade Credits under Imperfect Enforcement: A Theory with a Test on Chinese Experience By Yanagawa, Noriyuki; Ito, Seiro; Watanabe, Mariko
  37. Executive Managers in Peru's Family Businesses By Shimizu, Tatsuya
  38. Is Group Lending A Good Enforcement Scheme for Achieving High Repayment Rates?: Evidence from Field Experiments in Vietnam By Kono, Hisaki
  39. The Garment Industry in Cambodia: Its Role in Poverty Reduction through Export-Oriented Development By Yamagata, Tatsufumi
  40. Agricultural Policies and Development of Myanmar's Agricultural Sector: An Overview By Fujita, Koichi; Okamoto, Ikuko
  41. Explaining the Persistence of State-ownership in China By Imai, Kenichi
  42. Myanmar's Economic Relations with China: Can China Support the Myanmar Economy? By Kudo, Toshihiro
  43. Export-Led Growth and Geographic Distribution of the Poultry Meat Industry in Brazil By Ueki, Yasushi
  44. Bringing Non-governmental Actors into the Policymaking Process: The Case of Local Development Policy in Thailand By Shigetomi, Shinichi
  45. Integration under 'One Country, Two Systems' - The Case of Mainland China and Hong Kong- By Takeuchi, Takayuki
  46. An Asian Triangle of Growth and Cluster-to-Cluster Linkages By Kuchiki, Akifumi

  1. By: Lina cardona Sosa; Carlos Medina
    Abstract: We assess whether international remittances affect Colombian household’s expenditure composition and demand of education. We exploit the migratory wave that took place on late 90s due to one of the deepest crises in Colombian history, along with institutional barriers to migration, to identify the effect of remittances on expenditure composition. The empirical exercises find a positive effect over education, beneficiary households expending about 10% of total expenditure more in education than non beneficiaries. In addition although no effect was found on enrollment rates, we found an important effect on the probability of attending a private, rather that a public, educational institution. Such effect is on average 24% for individuals 5-30 years old, 50% for those attending secondary education, and 40% for those attending higher education. On the other hand, effects over consumption, investment and health expenditure, are nil. Finally, we find important effects of remittances on living standards of beneficiary households.
    Keywords: International Remittances, International Migration, Safety Net, Consumption Composition Classification JEL: F22; I31; P36.
  2. By: Daniel Mejía; Marc St-Pierre
    Abstract: This paper develops a tractable, heterogeneous agents general equilibrium model where individuals have different endowments of the factors that complement the schooling process. The paper explores the relationship between inequality of opportunities, inequality of outcomes, and aggregate efficiency in human capital formation. Using numerical solutions we study how the endogenous variables of the model respond to two different interventions in the distribution of opportunities: a meanpreserving spread and a change in the support. The results suggest that a higher degree of inequality of opportunities is associated with lower average level of human capital, a lower fraction of individuals investing in human capital, higher inequality in the distribution of human capital, and higher wage inequality. In particular, the model does not predict a trade-off between aggregate efficiency in human capital formation (as measured by the average level of human capital in the economy) and equality of opportunity.
    Keywords: Human Capital, Inequality, Equity-Efficiency Trade-off. Classification JEL: J24; J31; O15; D33.
  3. By: A.Banerji (Delhi School of Economics); Gauri Khanna (Graduate Institute of International Studies, Geneva); J.V. Meenakshi (Delhi School of Economics, and International Food Policy Research Institute, Washington, D.C.)
    Abstract: This paper analyzes the institutions and markets that govern groundwater allocation in the sugarcane belt of Uttar Pradesh, India, using primary, plot-level data from a village which shares the typical features of this region. Electricity powers tubewell pumps, and its erratic supply translates into randomness in irrigation volumes. The paper finds that plots are water-rationed, owing to inadequate supply of power. A simple model shows that a combination of such rationing and the village-level mechanism of water sales can lead to great misallocation of water across plots, and result in large crop losses for plots that irrigate using purchased water. We infer the existence of a social contract that mitigates these potential losses in the study area to a remarkable extent; in its absence, average yields are estimated to be 18% lower. The finding that the water allocation is close to efficient (given the power supply) marks a sharp contrast with much of the existing literature. Notwithstanding the social contract, the random and inadequate supply of power, and therefore water, is inefficient. The dysfunctional power supply is part of a larger system of poor incentives to produce reliable and adequate power. In simulations we find that such reliability can improve yields by up to 10 %, and pay for a system of electricity pricing that gives incentives to the power supplier to actually provide adequate power. However, even at reasonably high power prices, irrigation volumes are large enough to continue to seriously deplete the water table. The problem is that traditional rights of water use do not take into account the shadow price of the groundwater. We provide a rough first analysis to suggest that a 15% markup on the economic unit cost of providing electricity would make for intertemporally efficient water use.
    Keywords: Water markets, water tables, water production function, water pricing.
    JEL: L1 Q1 Q2
    Date: 2006–11
  4. By: Alberto Chong; Mark Gradstein
    Abstract: With efforts across the industrial countries to increase the amount of foreign aid mounting, it is important to understand its determinants. This paper examines the factors affecting the support for foreign aid among voters in donor countries. A simple theoretical model, which considers an endogenous determination of official and private aid flows, relates individual income to aid support through the elasticity of substitution and also suggests that government efficiency is an important factor in this regard. The empirical analysis of individual attitudes, based on the World Values Surveys, reveals that satisfaction with own government performance and individual relative income are positively related to the willingness to provide foreign aid. Furthermore, when using donor country data we find that aid is adversely affected by government inefficiency and income inequality.
    Keywords: foreign aid, donors, perceptions, development, corruption
    JEL: H41 O10
    Date: 2006
  5. By: Aaron Tornell
  6. By: Matthias Doepke
  7. By: Goedhuys, Micheline (UNU-MERIT); Janz, Norbert (UNU-MERIT); Mohnen, Pierre (UNU-MERIT)
    Abstract: Using the rich micro data set of the World Bank Investment Climate Survey, this paper examines the determinants of productivity among manufacturing firms in the context of a least developed country, Tanzania. In particular it seeks to evaluate the importance of technological variables - such as R&D, education and training, innovation, foreign ownership, licensing and ISO certification - and institutional variables – such as access to credit, health of the workforce, regulation and business support services. Among the technological variables, R&D, and innovations in the form of new products or processes fail to produce any significant impact, and only foreign ownership, ISO certification and high education of the management appear to affect productivity. Some of the institutional variables on the contrary are highly significant and robust to different specifications of the model. As such, formal credit constraints, administrative burdens related to regulations and a lack of business support services seem to depress productivity, while membership of a business association produces the opposite effect. The results of a quantile regression further indicate that the educational level of the managers and access to formal credit are significant for the less productive firms only, whereas for the more productive firms it is having an ISO certification or being a member of a business association that are the significant determinants.
    Keywords: Development, Productivity, Innovation, Institutions
    JEL: O12 D24 C21
    Date: 2006
  8. By: Kemp, R. (UNU-MERIT); van den Bergh, J. (Faculty of Economics and Business Administration, Vrije Universiteit and Institute for Environmental Studies)
    Abstract: Currently, there is much interest in stimulating or 'speeding up' socio-technical transitions to sustainable systems, most notably in the sectors of energy, transport and agriculture. This essay attempts to assess whether and how 'transition' type problems and issues are being addressed in the various sub-disciplines and methodological approaches of economics. This allows us to identify concepts, ideas, theories and empirical methods in economics that are suitable for inclusion and elaboration in 'transition research'. Surprisingly, we find that many sub-disciplines of economics have in one way or another addressed problems similar to transitions. Our main conclusion therefore is that economics offers a rich palette of ideas that may be useful for transition research. Studies on development stages, long waves, technological path-dependency, conflict resolution, public investments, emergence of institutions and, transitions from communist to market-democracy systems seem especially relevant to the study of transition. Although mainstream economics conflicts in certain ways with the approach called for by many involved in transition research, we show that economics certainly has something to offer to the study of transitions.
    Keywords: Sustainable Development, Technological Change, Economic Development
    JEL: Q01 O13 O33
    Date: 2006
  9. By: Elise Huillery (Paris Jourdan Sciences Economiques (PSE), DIAL, Paris)
    Abstract: (english) To what extent did the colonial public policy influence the current regional inequalities in the Frenchspeaking West Africa? This paper uses the differences in development outcomes across the areas of the former French West Africa to show the existence of colonial long term effects on development paths. To correct from potential biases, I take carefully into account the geographical and pre-colonial characteristics of the districts and use the spatial discontinuities of the colonial public policy to control for unobservable districts’ characteristics. Results show that colonial history is a strong determinant of current development of the districts of the former French West Africa. First, the African chiefs’ association to the colonial administration played a discriminating role between districts but its effects are ambiguous, positive on educational performances and negative on the health performances. Secondly, the colonial public investments in education, health and public works explain much of the current regional development inequalities. The nature of the public investment also matters: each type of current performance has been specifically determined by the corresponding colonial investment. The colonial public policies had thus very persistent effects and played a strong spatial discriminating role. _________________________________ (français) Dans quelle mesure les inégalités spatiales en Afrique de l’Ouest francophone ont-elles été influencées par la politique publique menée par les Français pendant la période coloniale ? Ce papier utilise les différences de développement entre les cercles de l’ancienne Afrique Occidentale Française (AOF) pour mettre en évidence des effets de long terme de la colonisation sur les trajectoires de développement. Les caractéristiques géographiques ainsi que l’histoire précoloniale des cercles ont été prises en compte pour corriger l’éventuelle endogénéité de la politique coloniale. J’utilise ensuite les discontinuités spatiales de la politique coloniale pour contrôler également certaines caractéristiques inobservables des cercles. Les résultats montrent que l’histoire coloniale fut un déterminant important du développement des cercles de l’ancienne AOF. La première source de discrimination spatiale fut la politique d’association des chefs africains dans l’administration coloniale, mais son effet reste ambigu : elle a joué positivement sur les performances éducatives mais négativement sur les performances de santé. La deuxième source de discrimination entre les cercles, plus importante que la première, fut la politique d’investissement en biens publics (éducation, santé, infrastructures), qui explique une part importante des inégalités de développement actuelles entre les cercles. On observe enfin que la nature des investissements importe, même à long terme : les performances actuelles dans les domaines de l’éducation, de la santé et des infrastructures sont chacune spécifiquement expliquées par l’investissement colonial « correspondant ». La politique coloniale française a donc créé des discriminations spatiales très persistantes dont les marques sont encore nettement visibles aujourd’hui.
    Keywords: Colonisation, West Africa, Spatial inequalities, Development, Public goods,Public policy, Colonisation, Afrique de l’Ouest, Inégalités spatiales, Développement, Biens publics,Politique publique.
    JEL: I18 I28 N47 O11 O15 O18 P16 R12
    Date: 2006–07
  10. By: Michael Grimm (University of Göttingen, Department of Economics, DIW and DIAL)
    Abstract: The empirical evidence shows that in developing countries illness shocks can have a severe impact on household income. Few studies have so fare examined the effects of mortality. The major difference between illness and mortality shocks is that a death of a household member does not only induce direct costs such as medical and funeral costs and possibly a loss in income, but that also the number of consumption units in the household is reduced. Using data for Indonesia, I show that the economic costs related to the death of children and older persons seem to be fully compensated by the decrease of consumption units. In contrast, when prime-age adults die, survivors face additional costs and, in consequence, implement coping strategies. It is shown that these are quite efficient and it seems that in terms of consumption households even over-compensate their loss, although they may face a higher vulnerability in the longer term. The results suggest that the implementation of general formal safety nets can give priority to the insurance of other types of risks, such as unemployment, illness or natural disasters. _________________________________ Des études empiriques montrent que dans les pays en voie de développement des chocs sanitaires peuvent avoir des effets sévères sur le revenu des ménages. Peu d’analyses ont jusqu’à présent analysé l’impact de la mortalité. La différence majeure entre une période de maladie et la mortalité est qu’un décès d’un membre du ménage n’implique pas seulement des coûts directs comme des coûts funéraires et peut-être une perte de revenu, mais que le nombre des unités de consommation dans le ménage est également réduit. Utilisant des données de l’Indonésie, je montre que les coûts économiques reliés à un décès d’un enfant et d’une personne âgée semblent entièrement compensés par la réduction des unités de consommation. A l´inverse, si des adultes en âge d’activité décèdent, les survivants font face à des coûts supplémentaires et, en conséquence, instaurent des stratégies pour surmonter les difficultés engendrées par ces décès. Il est montré que ces stratégies sont très efficaces et il semble qu’en termes de consommation les ménages surcompensent eux-mêmes leur perte, il est cependant possible qu’ils fassent alors face à une plus forte vulnérabilité dans le long terme. Les résultats suggèrent que l’instauration des filets de sécurité peut donner priorité à l’assurance d’autres types de risques, comme le chômage, la maladie ou des catastrophes naturelles.
    Keywords: Mortality, consumption smoothing, risk, micro-model of consumption growth,Indonesia, Mortalité, lissage de consommation, risque, modèle micro-économique de la croissance de consommation, Indonésie.
    JEL: D12 I12 J12 O12
    Date: 2006–07
  11. By: Eliot A. Jamison; Dean T. Jamison; Eric A. Hanushek
    Abstract: Previous work shows that higher levels of education quality (as measured by international student achievement tests) increases growth rates of national income. This paper begins by confirming those findings in an analysis involving more countries over more time with additional controls. We then use the panel structure of our data to assess whether the mechanism by which education quality appears to improve per capita income levels is through shifting the level of the production function (probably not), through increasing the impact of an additional year of education (probably not), or through increasing a country's rate of technological progress (very likely). Mortality rates complement income levels as indicators of national well-being and we extend our panel models to show that improved education quality increases the rate of decline in infant mortality. Throughout the analysis, we find a stronger impact of education quality and of years of schooling in open than in closed economies.
    JEL: F4 I2 J0 J21 O4 I1
    Date: 2006–10
  12. By: Diego Comin; William Easterly; Erick Gong
    Abstract: We assemble a dataset on technology adoption in 1000 B.C., 0 A.D., and 1500 A.D. for the predecessors to today's nation states. We find that this very old history of technology adoption is surprisingly significant for today's national development outcomes. Although our strongest results are for 1500 A.D., we find that even technology as old as 1000 BC matters in some plausible specifications.
    JEL: N7 O3
    Date: 2006–10
  13. By: Shang-Jin Wei; Zhiwei Zhang
    Abstract: Trade reform conditions are common in IMF supported programs. Of the 99 countries that had IMF programs during 1993-2003, 77 had conditions on trade reforms in their programs. Since the WTO has not been found especially effective in promoting trade openness for most developing countries, it is of great interest to see if the IMF has been more effective as it combines carrots and sticks not available to the WTO. Yet, the effectiveness of trade conditions in IMF programs has not been systematically studied. Using a unique dataset, this paper provides such an assessment. It finds that trade conditions are associated with an increase in trade openness on average, but the effect comes mostly from countries that, by some measure, have a high degree of "willingness to reform."
    JEL: F10 F13 F33
    Date: 2006–11
  14. By: Diego A. Comin; Bart Hobijn; Emilie Rovito
    Abstract: We present evidence on the differences in the intensity with which ten technologies are used in 185 countries. To measure differences in technology use, we determine how long ago these technologies were used in the U.S. at the same intensity as they are used in the countries in our sample. We denote these time lags as technology usage lags and compare them with lags in real GDP per capita. We find that (i) many countries trail the U.S. in technology usage by several decades or more; (ii) usage lags are highly correlated with disparities in per-capita income; and (iii) usage lags are highly correlated across technologies.
    JEL: O33 O47 O57
    Date: 2006–11
  15. By: Li Gan; Lixin Colin Xu; Yang Yao
    Abstract: Using a sample of households in 48 Chinese villages for the period 1986-2002, this paper studies the dynamic effects of major health shocks on household income and the role played by village elections in mitigating these effects. Our results show that in the first 15 years after a shock, a shock-hit household on average falls short of its normal income trajectory by 11.8% and its recovery would take 19 years. Based on the premise that shock-hit families impose negative externalities on richer families by borrowing from them, our political economy model predicts that the outcome of village elections would differ from that of a standard median voter model in that the elected village leaders tend to adopt pro-poor policies. Our empirical study finds that villages are more likely to establish a healthcare plan after the election is introduced. In addition, village elections reduce the probability of a household to borrow by 16.7% when one of its working adults is seriously sick. As a result, they reduce more than half of the negative effect of a health shock on household income.
    JEL: I12 O15 Z13
    Date: 2006–11
  16. By: Lindbeck, Assar
    Abstract: The author applies a systems-oriented " holistic " approach to China ' s radical economic reforms during the past quarter of a century. He characterizes China ' s economic reforms in terms of a multidimensional classification of economic systems. When looking at the economic consequences of China ' s change of economic system, he deals with both the impressive growth performance and its economic costs. The author also studies the consequences of the economic reforms for the previous social arrangements in the country, which were tied to individual work units-agriculture communes, collective firms, and state-owned enterprises. He continues with the social development during the reform period, reflecting a complex mix of social advances, mainly in terms of poverty reduction, and regresses for large population groups in terms of income security and human services, such as education and, in particular, health care. Next, the author discusses China ' s future policy options in the social field, whereby he draws heavily on relevant experiences in industrial countries over the years. The future options are classified into three broad categories: policies influencing the level and distribution of factor income, income transfers including social insurance, and the provision of human services.
    Keywords: Economic Theory & Research,Banks & Banking Reform,Investment and Investment Climate,Privatization,Economic Systems
    Date: 2006–11–01
  17. By: Galasso, Emanuela; Yau, Jeffrey
    Abstract: Monitoring data are generally collected as a by-product of the process of monitoring program implementation. Yet this rich source of data have not been exploited to assess the effectiveness of the program. In this paper the authors use detailed administered data from a large-scale, community-based nutrition program in Madagascar to argue that this data can be used to estimate the differential effect of increased exposure to the program and study how these returns to exposure evolve over time. They find that the returns to exposure are positive: communities exposed for an additional one or two years display on average lower malnutrition rates of around 7-9 percentage points. And they find that the returns decrease as time and duration increase, although they do not dissipate to zero. These results are consistent with the hypothesis that the returns to the program reflect learning effects from the intervention. Finally, the results show higher differential returns to the program in poorer areas and areas more vulnerable to diseases. These findings have important implications for how such programs should be scaled-up within a country.
    Keywords: Poverty Monitoring & Analysis,Early Child and Children ' s Health,Nutrition,Rural Poverty Reduction,Primary Education
    Date: 2006–11–01
  18. By: Takeuchi, Akie; Cropper, Maureen; Bento, Antonio
    Abstract: This paper examines the impact of measures to reduce emissions from passenger transport, specifically buses, cars, and two-wheelers in Mumbai. These include converting diesel buses to compressed natural gas (CNG), as the Indian Supreme Court required in Delhi, which would necessitate an increase in bus fares to cover the cost of pollution controls. The authors model an increase in the price of gasoline, which should affect the ownership and use of cars and two-wheelers, as well as imposing a license fee on cars to retard growth in car ownership. The impact of each policy on emissions depends not only on how the policy affects the mode that is regulated, but on shifts to other modes. The results suggest that the most effective policy to reduce emissions from passenger vehicles-in terms of the total number of tons of PM10 (particulate matter that measure less than or equal to 10 micrometers in aerodynamic diameter) reduced-is to convert diesel buses to CNG. The conversion of 3,391 diesel buses to CNG would result in an emissions reduction of 663 tons of PM10 a year, 14 percent of total emissions from transport. The bus conversion program passes the cost-benefit test. In contrast, the results suggest the elasticities of emissions from transport with respect to a gasoline tax and a tax on vehicle ownership are -0.04 and -0.10 respectively. As a consequence, it would take substantial increases in the gasoline tax or vehicle ownership tax to produce reductions in emissions similar to the bus conversion program. These results, however, reflect the low shares of cars and two-wheelers in the Mumbai emissions inventory and need not apply to cities, such as Delhi, where these shares are higher.
    Keywords: Transport Economics Policy & Planning,Transport in Urban Areas,Transport and Environment,Roads & Highways,Urban Transport
    Date: 2006–11–01
  19. By: Hertel, Thomas W.; Keeney, Roman; Ivanic, Maros; Winters, L. Alan
    Abstract: Rich countries ' agricultural trade policies are the battleground on which the future of the WTO ' s troubled Doha Round will be determined. Subject to widespread criticism, they nonetheless appear to be almost immune to serious reform, and one of their most common defenses is that they protect poor farmers. The authors ' findings reject this claim. The analysis uses detailed data on farm incomes to show that major commodity programs are highly regressive in the United States, and that the only serious losses under trade reform are among large, wealthy farmers in a few heavily protected subsectors. In contrast, analysis using household data from 15 developing countries indicates that reforming rich countries ' agricultural trade policies would lift large numbers of developing country farm households out of poverty. In the majority of cases these gains are not outweighed by the poverty-increasing effects of higher food prices among other households. Agricultural reforms that appear feasible, even under an ambitious Doha Round, achieve only a fraction of the benefits for developing countries that full liberalization promises, but protect U.S. large farms from most of the rigors of adjustment. Finally, the analysis indicates that maximal trade-led poverty reductions occur when developing countries participate more fully in agricultural trade liberalization.
    Keywords: Rural Poverty Reduction,Economic Theory & Research,Population Policies,Pro-Poor Growth and Inequality
    Date: 2006–11–01
  20. By: de Luna Martinez, Jose
    Abstract: Despite the deep financial sector reforms undertaken in Zambia in the early 1990s, the expected benefits of establishing a market-based banking system has not materialized. In 2005 the banking system continued to be small and underdeveloped. Credit to the private sector by banks represented only 8 percent of GDP in 2005, which is slightly lower than the level registered in 1990. As in the early 1990s, only large corporations and a few small- and medium-size enterprises have access to credit in 2006. Moreover, less than 8 percent of Zambia ' s adult population had a bank account in 2005. And despite the open door policy to foreign financial institutions, which has been in place since Zambia ' s independence, only a few new banking products have been introduced by foreign banks to serve the needs of households and firms. This paper analyzes the factors that have prevented the development of a large and inclusive banking system in Zambia and highlights possible actions that may help improve access to finance in Zambia in both the short and long terms.
    Keywords: Banks & Banking Reform,Financial Intermediation,Financial Crisis Management & Restructuring,Corporate Law,Banking Law
    Date: 2006–11–01
  21. By: Salinas, Gonzalo; Aksoy, Ataman
    Abstract: The empirical study of the impact of trade liberalization has not convinced the skeptics about the economic gains after trade reforms. Some have even argued that trade reforms have led to economic collapse and to deindustrialization. Using a sample that excludes countries that were subject to major exogenous disruptions, the authors note that post-reform economic growth was 1.2 percentage points higher than before the reforms. This is remarkable considering that pre-reform periods were characterized by highly expansionary state policies and large external borrowing, and the crisis years that preceded trade liberalization in the comparisons are eliminated. Through multivariate fixed effects estimations the authors calculate that annual per capita GDP growth rates increased by up to 2.6 percentage points after the trade reforms, compared to a counterfactual that takes into consideration the evolution of several growth determinants. Moreover, trade liberalization has been followed by an acceleration of growth in investment, exports of goods and services, and manufacturing exports, and as opposed to common belief, outward orientation did not lead to significant deindustrialization and actually seems to have increased export diversification. Growth acceleration occurred irrespective of income per capita level and was quite significant in Sub-Saharan Africa. As expected, small countries benefited most from the reforms.
    Keywords: Economic Theory & Research,Free Trade,Pro-Poor Growth and Inequality,Trade Law,Trade Policy
    Date: 2006–11–01
  22. By: Ley, Eduardo; Steel, Mark F. J.
    Abstract: The authors present a measure of jointness to explore dependence among regressors in the context of Bayesian model selection. The jointness measure they propose equals the posterior odds ratio between those models that include a set of variables and the models that only include proper subsets. They show its application in cross-country growth regressions using two data-sets from the model-averaging growth literature.
    Keywords: Statistical & Mathematical Sciences,Climate Change,Educational Technology and Distance Education,Economic Theory & Research,Pro-Poor Growth and Inequality
    Date: 2006–11–01
  23. By: Agenor, Pierre-Richard; Moreno-Dodson, Blanca
    Abstract: This paper provides an overview of the various channels through which public infrastructure may affect growth. In addition to the conventional productivity, complementarity, and crowding-out effects typically emphasized in the literature, the impact of infrastructure on investment adjustment costs, the durability of private capital, and the production of health and education services are also highlighted. Effects on health and education are well documented in a number of microeconomic studies, but macroeconomists have only recently begun to study their implications for growth. Links between health, infrastructure, and growth are illustrated in an endogenous growth model with transitional dynamics, and the optimal allocation of public expenditure is discussed. The concluding section draws implications of the analysis for the design of strategies aimed at promoting growth and reducing poverty.
    Keywords: Transport Economics Policy & Planning,Health Monitoring & Evaluation,Economic Theory & Research,Public Sector Economics & Finance,Private Participation in Infrastructure
    Date: 2006–11–01
  24. By: Medvedev, Denis
    Abstract: The author investigates the effects of preferential trade agreements (PTAs) on the net foreign direct investment (FDI) inflows of member countries using a comprehensive database of PTAs in a panel setting. He finds that PTA membership is associated with a positive change in net FDI inflows, and the FDI gains are increasing in the market size of the PTA partners and their proximity to the host country. The author identifies several different channels through which preferential trade liberalization may affect FDI, and confirms that both threshold effects (signing the agreement) and market size effects (joining a larger and faster-growing common market) are important determinants of net FDI inflows, although the latter seem to dominate. The estimated relationship is largely driven by North-South PTAs, and is most pronounced in the late 1990s and early 2000s, the period when the majority of " deep integration " PTAs had been advanced.
    Keywords: Free Trade,Trade and Regional Integration,Trade Law,Foreign Direct Investment,Economic Theory & Research
    Date: 2006–11–01
  25. By: Andrabi, Tahir; Das, Jishnu; Khwaja, Asim Ijaz
    Abstract: This paper looks at the private schooling sector in Pakistan, a country that is seriously behind schedule in achieving the Millennium Development Goals. Using new data, the authors document the phenomenal rise of the private sector in Pakistan and show that an increasing segment of children enrolled in private schools are from rural areas and from middle-class and poorer families. The key element in their rise is their low fees-the average fee of a rural private school in Pakistan is less than a dime a day (Rs.6). They hire predominantly local, female, and moderately educated teachers who have limited alternative opportunities outside the village. Hiring these teachers at low cost allows the savings to be passed on to parents through low fees. This mechanism-the need to hire teachers with a certain demographic profile so that salary costs are minimized-defines the possibility of private schools: where they arise, fees are low. It also defines their limits. Private schools are horizontally constrained in that they arise in villages where there is a pool of secondary educated women. They are also vertically constrained in that they are unlikely to cater to the secondary levels in rural areas, at least until there is an increase in the supply of potential teachers with the required skills and educational levels.
    Keywords: Primary Education,Education For All,Tertiary Education,Secondary Education,Teaching and Learning
    Date: 2006–11–01
  26. By: Das, Jishnu; Pandey, Priyanka; Zajonc, Tristan
    Abstract: The authors report on a survey of primary public and private schools in rural Pakistan with a focus on student achievement as measured through test scores. Absolute learning is low compared with curricular standards and international norms. Tested at the end of the third grade, a bare majority had mastered the K-I mathematics curriculum and 31 percent could correctly form a sentence with the word " school " in the vernacular (Urdu). As in high-income countries, bivariate comparisons show that higher learning is associated with household wealth and parental literacy. In sharp contrast to high-income countries, these gaps decrease dramatically in a multivariate regression once differences between children in the same school are looked at. Consequently, the largest gaps are between schools. The gap in English test scores between government and private schools, for instance, is 12 times the gap between children from rich and poor families. To contextualize these results within a broader South Asian context, the authors use data from public schools in the state of Uttar Pradesh in India. Levels of learning and the structure of the educational gaps are similar in the two samples. As in Pakistan, absolute learning is low and the largest gaps are between schools: the gap between good and bad government schools, for instance, is 5 times the gap between children with literate and illiterate mothers.
    Keywords: Primary Education,Education For All,Tertiary Education,Secondary Education,Teaching and Learning
    Date: 2006–11–01
  27. By: Bandyopadhyay, Sushenjit; Shyamsundar, Priya; Baccini, Alessandro
    Abstract: In this paper, the authors seek to answer three questions about poverty and forests in Malawi: (1) What is the extent of biomass available for meeting the energy needs of the poor in Malawi and how is this distributed? (2) To what extent does fuelwood scarcity affect the welfare of the poor? (3) How do households cope with scarcity? In particular, do households spend more time in fuelwood collection and less time in agriculture in response to scarcity? The authors attempt to answer these questions using household and remote-sensing data. They find that 80 percent of rural poor households in Malawi are likely to benefit from an increase in biomass per hectare in their community. Rural women respond to biomass scarcity by increasing the time they spend on fuelwood collection. But the actual decrease in consumption expenditure and increase in time in fuelwood collection are small and biomass scarcity is not associated with a reduction in agricultural labor supply.
    Keywords: Renewable Energy,Crops & Crop Management Systems,Wildlife Resources,Climate Change,Ecosystems and Natural Habitats
    Date: 2006–11–01
  28. By: Sophia du Plessis (Department of Economics, University of Stellenbosch)
    Abstract: Research has shown a positive correlation between extractive colonisation and low post-colonial economic growth. This paper provides case study research to explore the possibility that post-colonial extractive institutions were already present in pre-colonial times. In Zambia’s case this is indeed true. Extractive institutions existed in Zambia before colonisation, and colonisation certainly did not improve on them. The question whether countries like Zambia are doomed for failure is also considered, and it is concluded that an environment that allows experimentation is supportive of economic growth and development. With an authoritative regime during the Second Republic, feedback on policy decisions was limited and may provide more of an answer to bad post-colonial economic performance than extractive colonisation.
    Keywords: Institutions, Institutional Change, Colonisation, Zambia
    JEL: N4 N9 O1 O2 O5
    Date: 2006
  29. By: Fali Huang (School of Economics and Social Sciences, Singapore Management University)
    Abstract: This paper establishes a simple model of long run economic and political development, which is driven by the inherent technical features of different production factors, and political conflicts among factor owners on how to divide the outputs. The main capital form in economy evolves from land to physical capital and then to human capital, which enables their respective owners (landlords, capitalists, and workers) to gain political powers in the same sequence, shaping the political development path from monarchy to elite ruling and finally to full suffrage. When it is too costly for any group of factor owners to repress others, political compromise is reached and economic progress is not blocked; otherwise, the political conflicts may lead to economic stagnation.
    Keywords: Economic Development, Political Development, Class Structure, Land, Physical Capital, Human Capital, Monarchy, Suffrage Extension.
    JEL: O10 O40 P16 N10
    Date: 2006–08
  30. By: Fali Huang (School of Economics and Social Sciences, Singapore Management University)
    Abstract: This paper studies the transition of contract enforcement institutions. The preva- lence of relational contracts, low legal quality, strong cultural preference for personalistic relationships, low social mobility, and highly unequal endowment form a cluster of mutually reinforcing institutions that hinder economic development. The cultural element per se does not necessarily reduce social welfare though it may slow down the legal development, while the real problem lies in endowment inequality and low social mobility. Thus a more equal distribution of resources may be the ultimate key to unravel the above interlocking institutions. These results are generally consistent with the empirical evidence.
    Keywords: relational contract, legal contract enforcement, institutions, endowment inequality, economic development
    JEL: O1 K49 C72
    Date: 2006–06
  31. By: Thomas Rawski
    Abstract: Recent years have brought major changes in many dimensions of China’s large and dynamic economy. Issues of employment and unemployment, labor compensation, wage differentials, working conditions, migration, job mobility, and employment security figure prominently in these developments. This essay reviews recent developments in the Chinese labor scene, focusing successively on demographics, employment, unemployment, migration, productivity, wages, and distribution. The paper concludes with speculation about possible policy responses to China’s growing problems of unemployment and excess labor supply.
    Date: 2005–06
  32. By: Thomas Rawski; Loren Brandt; Xiaodong Zhu
    Date: 2006–10
  33. By: Kudo, Toshihiro
    Abstract: The United States imposed trade sanctions against the military regime in Myanmar in July 2003. The import ban damaged the garment industry in particular. This industry exported nearly half of its products to the United States, and more than eighty percent of United States imports from Myanmar had been clothes. The garment industry was probably the main target of the sanctions. Nevertheless, the impact on the garment industry and its workers has not been accurately evaluated or closely examined. The purpose of this paper is to evaluate the impact of the sanctions and to further understand the present situation. This is done using several sources of information, including the author's field and questionnaire surveys. This paper also describes the process of selection and polarization underway in the garment industry, an industry that now has more severe competition fueled by the sanctions. Through such a process, the impact was inflicted disproportionately on small and medium-sized domestic firms and their workers.
    Keywords: Myanmar (Burma), United States, Sanction, Garment industry, Apparel industry, Economic sanctions
    JEL: F19 L60 O14
    Date: 2006–10
  34. By: Shigetomi, Shinichi
    Abstract: The importance of organizing local people for development work is widely recognized. Both governmental and non-governmental agencies have implemented various projects that have needed and encouraged collective action by people. Often, however, such projects malfunction after the outside agencies retreat from the project site, suggesting that making organizations is not the same as making a system of making organizations. The latter is essential to make rural organizations self-reliant and sustainable. This paper assumes that such a system exists in local societies and focuses on the capacity of local societies for creating and managing organizations for development. It reveals that (1) such capability differs according to the locality, (2) the difference depends on the structure of the organizations that coordinate people's social relations, and (3) the local administrative bodies define, at least partly, the organizational capability of local societies. We compare two rural societies, one in Thailand and the other in the Philippines, which show clear contrasts in both the form of microfinance organizations and the way of making these organizations.
    Keywords: Local organization, Rural society, Rural development, Microfinance, Local administration, Thailand, Philippines
    JEL: O18 O53 Q00 Z13
    Date: 2006–02
  35. By: Mitra, Arup; Tsujita, Yuko
    Keywords: Wellbeing, Migrant worker, Slums, Population movement, Quality of life, Household, Poverty, India
    JEL: I31 I32 J61 R23
    Date: 2006–03
  36. By: Yanagawa, Noriyuki; Ito, Seiro; Watanabe, Mariko
    Abstract: It is widely recognized that trade credit is an important financial mechanism, particularly in developing economies and transition economies where institutions are weak. This paper documents theoretical analysis and empirical accounts on what facilitates an effective supply of trade credit based on original surveys conducted in P.R. of China. Our theory predicts that trade volume and trade credit are increasing function of cash held by the buyer and enforcement technology of the seller. Furthermore, if the state sector’s enforcement technology is high, it has positive external effect to expand the volumes of trade credit and trades in the whole economy. From the data, we found that government made active commitment in enforcement of trade credit contract and the government owned firms are main supplier and receivers of trade credit, which suggest that enforcement by government and state sector were effective against presumptions in the previous literatures.
    Keywords: Law and finance, Economic growth, Incomplete contract, Enforcement, Trade policy, Credit, China
    JEL: G2 K0 O5 P31 Q5
    Date: 2006–06
  37. By: Shimizu, Tatsuya
    Abstract: As in many other developing countries, family businesses are major players in the Peruvian economy. Despite their growth into large-scale groups spanning a wide range of businesses, the owner families still have strong control over their ownership and management. However, Peru's liberal economic reforms in the 1990s brought intense competition into the national market. Not only have these family businesses been forced to compete against large-scale foreign capital that entered the national market through the privatization of state enterprises, but also against cheap goods imported from foreign countries. In order to compete, family businesses have had to move beyond the limited human resources available within the family. The advancement within owner families of new generations with better education and training together with the promotion to top managerial positions of professional salaried managers from outside the family are some of the measures owner families are taking to overcome their human resource limitations.
    Keywords: Family business, Ownership, Managers, Family concern, Business enterprises, Industrial management, Peru
    JEL: K29 M12 O54
    Date: 2006–04
  38. By: Kono, Hisaki
    Abstract: Microfinance institutions employ various kinds of incentive schemes but estimating the effect of each scheme is not easy due to endogeneity bias. We conducted field experiments in Vietnam to capture the role of joint liability, monitoring, cross-reporting, social sanctions, communication and group formation in borrowers’ repayment behavior. We find that joint liability contracts cause serious free-riding problems, inducing strategic default and lowering repayment rates. When group members observe each others’ investment returns, participants are more likely to choose strategic default. Even after introducing a cross-reporting system and/or penalties among borrowers, the default rates and the ratios of participants who chose strategic default under joint liability are still higher than those under individual lending. We also find that joint liability lending often failed to induce mutual insurance among borrowers. Those who had been helped or who had repaid a little in the previous round were more likely to default strategically and repay a little again in the current round and those who paid large amounts were always the same individuals.
    Keywords: Microfinance, Joint liability, Free-riding, Vietnam
    JEL: F15 O14 O30
    Date: 2006–05
  39. By: Yamagata, Tatsufumi
    Abstract: Cambodia’s export-oriented garment industry has contributed greatly to poverty reduction in the country through employment of the poor. This paper provides a statistical verification of this contribution based on firm-level data from 164 sampled companies collected in 2003. Its main conclusions confirm the substantial impact that employment in the garment industry has had on poverty reduction in Cambodia. Firstly, entry-level workers receive wages far above the poverty line. Secondly, females make up the predominant share of the main category jobs in the industry. Thirdly, barriers to employment and to promotions up to certain job categories are not high in terms of education and experience. Another important finding is that a typical sample firm exhibited high profitability, although there was wide variation in profitability among firms. This average of high profitability could be a good predictor of Cambodia’s viability in the intensified competition since the phase out of the Multi-Fiber Arrangement (MFA) at the beginning of 2005. A point of note is that Cambodia’s pattern of industrial development led by a labor-intensive industry is similar to that of neighboring countries in East Asia which earlier went through the initial stage of industrial development, except that Cambodia has lacked a strong government industrial promotion policy which characterized the earlier group.
    Keywords: Cambodia, Export-oriented industrialization, Garments, Poverty reduction, Apparel industry, Exports
    JEL: J30 J31 L67 O53
    Date: 2006–06
  40. By: Fujita, Koichi; Okamoto, Ikuko
    Abstract: This paper reviews the development of the agricultural sector in Myanmar after the transition to an open economy in 1988 and analyzes the nature as well as the performance of the agricultural sector. The avoidance of social unrest and the maintenance of control by the regime are identified as the two key factors that have determined the nature of agricultural policy after 1988. A major consequence of agricultural policy has been a clear difference in development paths among the major crops. Production of crops that had a potential for development showed sluggish growth due to policy constraints, whereas there has been a self-sustaining increase in the output of those crops that have fallen outside the remit of agricultural policy.
    Keywords: Agriculture, Transition, Myanmar, Agricultural policy, Agricultural development
    JEL: P20 Q11 Q17 Q18
    Date: 2006–06
  41. By: Imai, Kenichi
    Abstract: In the recent decade China witnessed an upsurge of privatization of small and medium state-owned enterprises (SOEs). In contrast to the consequent sharp reduction in the number of firms, however, the estimated share of broadly-defined SOEs that includes limited liabilities companies controlled by the State has shown virtually no sign of decline. We explain the backgrounds of this seemingly paradoxical persistence of state-ownership by looking into two distinctive types of large SOEs: traditional SOEs that remain dominant in oligopolistic industries and manager-controlled SOEs surviving in competitive industries. The two types exemplify several factors constraining further progress of SOE reform such as, financing the costs of restructuring, redefining the role of the State as the single dominant shareholder, and balancing the interests of the State and managers as entrepreneurs. Sorting these issues out will take time, which means that instabilities associated with state corporate ownership will remain in place in the foreseeable future in China.
    Keywords: State-owned enterprise, Corporate governance, China’s economic reform, Public enterprises, Small and medium-scale enterprises, Industrial management, China
    JEL: L29 L32 P26
    Date: 2006–06
  42. By: Kudo, Toshihiro
    Abstract: Against the background of closer diplomatic, political and security ties between Myanmar and China since 1988, their economic relations have also grown stronger throughout the 1990s and up to 2005. China is now a major supplier of consumer and capital goods to Myanmar, in particular through border trade. China also provides a large amount of economic cooperation in the areas of infrastructure, energy and state-owned economic enterprises. Nevertheless, Myanmar’s trade with China has failed to have a substantial impact on its broad-based economic and industrial development. China’s economic cooperation apparently supports the present regime, but its effects on the whole economy will be limited with an unfavorable macroeconomic environment and distorted incentives structure. As a conclusion, strengthened economic ties with China will be instrumental in regime survival, but will not be a powerful force affecting the process of economic development in Myanmar.
    Keywords: Myanmar (Burma), China, trade, border trade, economic cooperation, energy, oil and gas, International economic relations, International trade, International cooperation
    JEL: F14 P28 Q41
    Date: 2006–07
  43. By: Ueki, Yasushi
    Abstract: This paper includes an examination of the sustainability of recent high growth in the poultry meat industry in Brazil. In addition, an assessment is made of the impact of increased production of poultry meat products on the development of local industries. Comparative studies of leading companies in the United States, Mexico, and Brazil reveal competitive advantages in the low costs of feedstuff and labor as well as disadvantages in the scale of business and management efficiency in the Brazilian poultry sector. Increases in domestic and foreign demand for Brazilian poultry meat have promoted development of the Brazilian poultry sector in local areas. The formation of industrial clusters is observed using regional data related to the location of slaughterhouses and the number of chickens farmed. Statistical analyses support observations made in this paper.
    Keywords: Brazil, Poultry meat, Regional development, Clusters, ・
    JEL: C19 N56 O13 R12
    Date: 2006–08
  44. By: Shigetomi, Shinichi
    Abstract: During the past two decades in Thailand, non-governmental actors, such as NGOs, intellectuals, and people's organizations, have found widening opportunities to participate in policy formation and in the implementation of local development. The government has facilitated the formation of civil society forums, in the expectation of influencing local-level governance. The last two national five-year development plans were formulated after taking into account the voices of people in the provinces. Even though they may seem petty, some state funds are now transmitted through non-governmental institutions for policy implementation at the grassroots level. These changes have their origin in a reformation of rural development administration in early 1980s. This reformation in due course led to policies that have allowed the participation of non-governmental actors. Meanwhile, rural people have proved their ability to engage in participatory development by forming various local organizations, while NGOs have grown to be proficient facilitators of local development. This paper describes the process whereby three leading actors, namely the government, local people, and the NGOs, have interacted to bring about a more participatory system of local development administration.
    Keywords: Social movements, Local development, Thailand, NGOs, Non-governmental organizations, Civil society, Decision making, Rural development
    JEL: O20 R10
    Date: 2006–08
  45. By: Takeuchi, Takayuki
    Abstract: Ever since the handover of the territory in 1997, Hong Kong has had its own unique law and itsown economic system and international legal personality, and has not been integrated withMainland China. The Basic Law guarantees the uniqueness of the Hong Kong SAR until 2047. But close economic ties between Hong Kong and the Mainland will promote closer economic integration. The Basic Law limits only a customs union and the introduction of a single currency, but not the formation of a Free Trade Agreement (hereafter FTA) and monetary union. FTA has already been realized in the form of the Closer Economic Partnership Arrangement (hereafter CEPA). The Hong Kong SAR government, including the bureaucrat as well as the Chief Executive Tung Chee Hwa, was opposed to, and hesitant towards, the formation of a regional trade agreement with the Mainland, but the business community made them to adopt a positive attitude towards the CEPA. It is unclear how much integration can been deepened, but it can be argued that the current policy of the Hong Kong SAR is too supportive of business, and an excessive degree of economic integration may threaten the uniqueness of Hong Kong. But if Hong Kong achieves democracy and enjoys complete autonomy, it will be easy for economic integration to co-exist with the ‘One Country, Two Systems’ approach, in the interests of the business community and of the citizens of the SAR.
    Keywords: Hong Kong, China, Integration, Politic, FTA, Economic systems, Economic policy
    JEL: F15 H77 K00 N45 P16
    Date: 2006–08
  46. By: Kuchiki, Akifumi
    Abstract: It is expected that an Asian triangle of growth will be formed in the coming few decades. China, India and ASEAN surround the Asian triangle, which is home to many industrial clusters. Multinational corporations will link these clusters together. Regional integration will help them in this task by lowering the barriers of national borders. This paper explains the necessity of regional integration for cluster-to-cluster linkages in the Asian triangle of growth.
    Keywords: Asian Triangle of growth, Regional integration, Cluster-to-cluster linkages, Economic growth, International economic integration, Industrial policy, ASEAN, Asia, China, India, Southeast Asia
    JEL: F23 F59 R12 R58
    Date: 2006–08

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