nep-dev New Economics Papers
on Development
Issue of 2007‒02‒03
twelve papers chosen by
Jeong-Joon Lee
Towson University

  1. Overall Specialization and Income: Countries Diversify By Luca De Benedictis; Marco Gallegati; Massimo Tamberi
  2. Credit Elasticities in Less-Developed Economies: Implications for Microfinance By Karlan, Dean S.; Zinman, Jonathan
  3. Malthus Revisited: Fertility Decision Making based on Quasi-Linear Preferences By Jacob L. Weisdorf
  4. Trade, Standards, and Poverty: Evidence from Senegal By Miet Maertens; Jo F.M. Swinnen
  5. Sources of Investment Inefficiency: The Case of Fixed-Asset Investment in China By Duo Qin; Haiyan Song
  6. What is happening to the impact of financial deepening on economic growth? By Paul Wachtel; Peter L. Rousseau
  7. Does Microfinance Form a Distinctive Asset Class? Preliminary Evidence By Ingo Walter; Nicolas Krauss
  8. Does Aid for Education Educate Children? Evidence from Panel Data By Axel Dreher; Peter Nunnenkamp; Rainer Thiele
  9. Microfinance in post-disaster and post-conflict situations: Turning victims into shareholders By Marek Hudon; Hans Dieter Seibel
  10. Economic development capitalizing on brand agriculture : turning development strategy on its head By Fujita, Masahisa
  11. Outward FDI from and intraregional FDI in ASEAN : trends and drivers By Hiratsuka, Daisuke
  12. Is Learning by Migrating to a Megalopolis Really Important? Evidence from Thailand By Machikita, Tomohiro

  1. By: Luca De Benedictis (DIEF - University of Macerata - Italy); Marco Gallegati (DEA - Università Politecnica delle Marche - Italy); Massimo Tamberi (DEA - Università Politecnica delle Marche - Italy)
    Abstract: This paper gives evidence to a stylized fact often disregarded in international trade empirics: countries' diversification. In the last fifteen years, the growth of world trade coexisted with the tendency of countries to reduce the specialization of their export composition along the development path. On average, countries do not specialize, they diversify. Our semiparametric empirical analysis shows how this result is robust to the use of different statistical indexes used to measure trade specialization to the level of sectoral aggregation and to the level of smoothing in the nonparametric term associated to income per capita. Using a General Additive Model (GAM) with country-specific fixed-effect, we show that, controlling for countries heterogeneity, sectoral export diversification increases with income.
    Keywords: International Trade, Specialization, Development, Generalized Additive Models
    JEL: C14 E32 F10
  2. By: Karlan, Dean S.; Zinman, Jonathan
    Abstract: Policymakers often prescribe that microfinance institutions increase interest rates to eliminate reliance on subsidies. This strategy makes sense if the poor are rate insensitive: then microlenders increase profitability (or achieve sustainability) without reducing the poor’s access to credit. We test the assumption of price inelastic demand using randomized trials conducted by a consumer lender in South Africa. The demand curves are downward-sloping, and steep for price increases relative to the lender’s standard rates. We also find that loan size is far more responsive to changes in loan maturity than to changes in interest rates, which is consistent with binding liquidity constraints.
    Keywords: microfinance
    JEL: G2
    Date: 2007–01
  3. By: Jacob L. Weisdorf (Department of Economics, University of Copenhagen)
    Abstract: Malthus’ (1798) population hypothesis is inconsistent with the demographic transition and the concurrent massive expansion of incomes observed among industrialised countries. This study shows that eliminating the income-effect on the demand for children from the Malthusian model makes it harmonise well with industrial development.
    Keywords: demographic transition; fertility; Malthus
    JEL: J13 N30 O10
    Date: 2007–01
  4. By: Miet Maertens; Jo F.M. Swinnen
    Abstract: An emerging literature on standards, global supply chains, and development argues that enhanced quality and safety standards are major trade barriers for developing country exports and cause the marginalization of small businesses and poor households in developing countries. This paper is the first to quantify income and poverty effects of such high-standards trade and to integrate labor market effects, by using company and household survey data from the vegetable export chain in Senegal. First, horticultural exports from Senegal to the EU have grown sharply over the past decade, despite strongly increasing food standards in the EU. Second, these exports have strong positive effects on poor households’ income. We estimate that these exports reduced regional poverty by around 12 percentage points and reduced extreme poverty by half. Third, tightening food standards induced structural changes in the supply chain including a shift from smallholder contract-based farming to large-scale integrated estate production. However, these changes mainly altered the mechanism through which poor households benefit: through labor markets instead of product markets. Moreover, the impact on poverty reduction is stronger as the poorest benefit relatively more from working on large-scale farms than from contract farming. These findings challenge several basic arguments in this research field.
    Date: 2006
  5. By: Duo Qin (Queen Mary, University of London); Haiyan Song (Hong Kong Polytechnic University)
    Abstract: This study attempts to measure the inefficiency associated with aggregate investment in a transitional economy. The inefficiency is decomposed into allocative and production inefficiency based on standard production theory. Allocative inefficiency is measured by disequilibrium investment demand. Institutional factors are then taken into consideration as possible explanatory variables of the disequilibrium. The resulting model is applied to Chinese provincial panel data. The main findings are: Chinese investment demand is strongly receptive to expansionary fiscal policies and inter-provincial network effects; and although there are signs of increasing allocative efficiency, the tendency of over-investment remains, even with improvements in production efficiency.
    Keywords: Over-investment, Efficiency, Disequilibrium, Soft-budget constraint
    JEL: E22 E62 H74 P3 C23
    Date: 2007–01
  6. By: Paul Wachtel; Peter L. Rousseau
    Date: 2006
  7. By: Ingo Walter; Nicolas Krauss
    Date: 2006
  8. By: Axel Dreher (Department of Management, Technology, and Economics, ETH Zurich); Peter Nunnenkamp (The Kiel Institute for the World Economy); Rainer Thiele (The Kiel Institute for the World Economy)
    Abstract: This paper empirically analyzes the impact of aid on education for about 100 countries over the period 1970-2005. We estimate a system of equations to test whether and to what extent the impact of sector-specific aid on educational attainment depends on (i) the extent to which aid adds to overall educational expenditure of the recipient government, (ii) the strength of the link between government expenditure and education, (iii) the quality of institutions in the recipient country, and (iv) whether aid encourages institutional reforms. According to our results, aid significantly increases primary school enrolment. This result is robust to the method of estimation, employing instruments to control for the endogeneity of aid, and the measure of institutional quality employed. The degree of institutional quality, however, has no robust impact on this relationship.
    Keywords: Aid effectiveness, Education, Sector-specific aid
    JEL: F35 O11 H52 I22
    Date: 2006–08
  9. By: Marek Hudon (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels and Harvard University, Boston.); Hans Dieter Seibel (University of Cologne)
    Abstract: In recent years, large numbers of developing and transitional countries have ex¬peri¬enced situations of crisis, following political, economic or natural disasters, or total crisis, triggered by war or totalitarian oppression. The goal of this article is to study the role of member-owned institutions (MOIs) in the provision of the reparations for victims of human rights abuses or reconstruction in post-conflict and post-disaster situations. We argue that grants usually awarded for reconstruction in post-conflict areas or for reparations payments in post-disaster areas could be best turned into equity and deposits to foster MOIs. MOIs are found to be an appropriate institutional framework, to make the benefits of one-off payments more sustainable and also reinforce the financial sector.
    Keywords: microfinance, conflict, disaster, repayment, human right.
    JEL: L31 M54 O16 Q14
    Date: 2007–01
  10. By: Fujita, Masahisa
    Abstract: This paper explores the possibilities of two unique Japanese concepts – the One Village One Product Movement (OVOP) and Michino Eki (or Roadside Stations) – as potential tools for bridging the gap between cities and rural areas through community-driven development. From the viewpoint of spatial economics and endogenous growth theory, this paper considers both OVOP and Michino Eki as rural development strategies of a broader nature based on “brand agriculture.†Here, brand agriculture represents a general strategy for community-based rural development that identifies, cultivates and fully utilizes local resources for the development of products or services unique to a certain "village." Selected examples of OVOP and Michino Eki from Japan and developing countries are introduced.
    Keywords: Japan, Rural development, Brand agriculture, Agricultural products, One village one product movement (OVOP), Michino eki
    JEL: O13 Q10 Q16
    Date: 2006–11
  11. By: Hiratsuka, Daisuke
    Abstract: Developing-country transnational corporations (TNCs) are increasing in importance in the global economy. Outward FDI from developing countries is a proxy indicator to measure how much of an important role enterprises of developing countries have played in the world market and how they benefit from globalization where border barriers are reduced. This study finds that ASEAN enterprises have extended their business activities within ASEAN, East Asia, and then to the world, as both regional and global players.
    Keywords: Economic integration, International economic integration, FDI, Southeast Asia, Foreign investments, ASEAN
    JEL: F15 F23 O53
    Date: 2006–11
  12. By: Machikita, Tomohiro
    Abstract: We examine the effects of learning by migrating on the productivity of migrants who move to a “megalopolis†from rural areas using the Thailand Labor Force Survey. The main contribution is to the development a simple framework to test for self-selection on migration decisions and learning by migrating into the urban labor market, focusing on experimental evidence in the observational data. The role of the urban labor market is examined. In conclusion, we find significant evidence for sorting: the self-selection effects test (1) is positive among new entrants from rural areas to the urban labor market; and (2) is negative among new exits that move to rural areas from the urban labor market. Further, estimated effects of learning by migrating into a “megalopolis†have a less significant impact. These results suggest the existence of a natural selection (i.e. survival of the fittest) mechanism in the urban labor market in a developing economy.
    Keywords: Self-selection, Learning by migrating, Survival of the fittest, Exits, Thailand, Population movement, Labor market
    JEL: D83 J61 R23
    Date: 2007–01

This nep-dev issue is ©2007 by Jeong-Joon Lee. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.