nep-dev New Economics Papers
on Development
Issue of 2007‒03‒31
29 papers chosen by
Jeong-Joon Lee
Towson University

  1. Economics and Politics of Alternative Institutional Reforms By Francesco Caselli; Nicola Gennaioli
  4. Growth, public investment and corruption with failing institutions By David, DE LA CROIX; Clara, DELAVALLADE
  5. Remittances and inequality : A dynamic migration model By FrŽdŽric, DOCQUIER; Hillel, RAPOPORT; I-Leng Shen
  6. Brain drain in developing countries By FrŽdŽric, DOCQUIER; Olivier, LOHEST; Abdeslam, MARFOUK
  7. How Should We Measure Poverty in a Changing World? Methodological Issues and Chinese Case Study By Lars Osberg; Kuan Xu
  8. The Macroeconomic Consequences of Disasters By Ilan Noy
  9. Family Planning as an Investment in Development: Evaluation of a Program’s Consequences in Matlab, Bangladesh By Shareen Joshi; T. Paul Schultz
  10. Developing Country Multinationals: South-South Investment Comes of Age By Dilek Aykut; Andrea Goldstein
  11. Are price-based capital account regulations effective in developing countries ? By David, Antonio C.
  12. Enterprises, workers, and skills in Urban Timor-Leste By Das, Maitreyi Bordia; O ' Keefe, Philip
  13. School drop-out and push-out factors in Brazil : the role of early parenthood, child labor, and poverty By Cardoso, Ana Rute; Verner, Dorte
  14. Identifying supply-side constraints to export performance in Ecuador : an exercise with Investment Climate Survey data By Correa, Paulo; Dayoub, Mariam; Francisco, Manuela
  15. The role of services in rural income : the case of Vietnam By Aksoy, M. Ataman; Isik-Dikmelik, Aylin
  16. Problems of Categorizing and Explaining Party Systems in Africa By Gero Erdmann; Matthias Basedau
  17. Securing Household Income among Small-scale Farmers in Kakamega District: Possibilities and Limitations of Diversification By Henriette Dose
  18. Crafting Political Institutions in Africa. Electoral Systems and Systems of Government in Rwanda and Zambia Compared By Alexander Stroh
  19. Political Party and Party System Institutionalisation in Southeast Asia: A Comparison of Indonesia, the Philippines, and Thailand By Andreas Ufen
  20. Ethnicity, Voter Alignment and Political Party Affiliation – an African Case: Zambia By Gero Erdmann
  21. The Role of Southern Actors in Global Governance: The Fight against HIV/AIDS By Sonja Bartsch; Lars Kohlmorgen
  22. Dynamics Downunder: Australian Economic Strategy and Performance from the Palaeolithic to the Twenty-first Century By Graeme Donald Snooks
  23. Top Incomes in Indonesia, 1920-2004 By Andrew Leigh; Pierre van der Eng
  24. The impact of credit on income poverty in urban Mexico. An endogeneity-corrected estimation By Niño-Zarazúa, Miguel
  25. Good Governance, Trade and Agglomeration By Candau, Fabien
  26. Estimates of the steady state growth rates for selected Asian countries with an endogenous growth framework By Rao, B. Bhaskara
  27. Long-Run Growth and the Evolution of Technological Knowledge By Hendrik Hakenes; Andreas Irmen
  28. Analysing and Achieving Pro-Poor Growth By Dag Ehrenpreis
  29. Poverty Rates In Venezuela: Getting the Numbers Right By Mark Weisbrot; Luis Sandoval; David Rosnick

  1. By: Francesco Caselli; Nicola Gennaioli
    Abstract: We compare the economic consequences and political feasibility of reforms aimed at reducingbarriers to entry (deregulation) and improving contractual enforcement (legal reform). Deregulationfosters entry, thereby increasing the number of firms (entrepreneurship) and the average quality ofmanagement (meritocracy). Legal reform also reduces financial constraints on entry, but in addition itfacilitates transfers of control of incumbent firms, from untalented to talented managers. Since whenincumbent firms are better run entry by new firms is less profitable, in general equilibrium legalreform may improve meritocracy at the expense of entrepreneurship. As a result, legal reformencounters less political opposition than deregulation, as it preserves incumbents' rents, while at thesame time allowing the less efficient among them to transfer control and capture (part of) the resultingefficiency gains. Using this insight, we show that there may be dynamic complementarities in thereform path, whereby reformers can skillfully use legal reform in the short run to create a constituencysupporting future deregulations. Generally speaking, our model suggests that "Coasian" reformsimproving the scope of private contracting are likely to mobilize greater political support because —rather than undermining the rents of incumbents — they allow for an endogenous compensation oflosers. Some preliminary empirical evidence supports the view that the market for control ofincumbent firms plays an important role in an industry's response to legal reform.
    Keywords: financial economics, deregulation, meritocracy
    JEL: G34 O11 O16
    Date: 2007–01
  2. By: Ramón Castaño; Andrés Zambrano
    Abstract: Financial protection is one of the objectives of health systems, which protects poor households from falling into poverty as a result of health care related expenses. Expanding prepayment schemes to the poor is difficult in developing countries because labor is largely informal. Providing health care free-at-point-of-service does not adequately target spending on the poorest, but occupation- or community-based schemes have also inherent limitations to achieve universal coverage. Colombia adopted a government-subsidized health insurance scheme (SHI) strategy. The political debate about increasing SHI enrollment needs evidence about the effectiveness of this scheme regarding financial protection. This study runs a four-part model to estimate the effect of SHI on out-of-pocket expenses by the poor that are currently uninsured, if they were enrolled in the SHI. The results show a 43% and 50% reduction in expenses at Bogotá and national level respectively, which confirms the effectiveness of SHI as a financial protection tool.
    Date: 2007–03–01
  3. By: Hernando Zuleta; Santiago Alberico
    Abstract: We consider a model of factor saving innovations and study the effects of exogenous changes in labor supply. In a biased innovations setting, as economies accumulate capital, labor becomes relatively scarce and expensive. As a consequence, incentives for labor saving and capital using innovations appear. By the same token, exogenous changes in labor supply affect factor prices. In general, a reduction in labor supply decreases current output and generates incentives for labor saving innovations. Therefore, the effect that a change in the supply of labor has on factor prices is mitigated and, depending on the initial conditions, it may be contrasted by the effect of the technological bias. Finally, the movements of the factor prices affect the saving decisions and consequently the dynamics of economic growth. We explore the consequences of an exogenous decrease in labor supply in two different settings: a homogenous agents model with infinite horizon and an overlapping generations model.
    Date: 2007–03–01
    Abstract: Corruption is thought to prevent poor countries from catching-up. We analyze one channel through which corruption hampers growth : public investment can be distorted in favor of specific types of spending for which rent-seeking is easier and better concealed. To study this distortion, we propose an optimal growth model where households vote for the composition of public spending subject to an incentive constraint reflecting individualsÕ choice between productive activity and rent-seeking. At equilibrium, the intensity of corruption and the structure of public investment are determined by the predatory technology and the distribution of political power. Among different regimes, the model shows a possible scenario of distortion without corruption in which there is no effective corruption yet still the possibility of corruption distorts the allocation of public investment, thus hampering growth. We test the implications of the model on a panel of countries estimating a system of equations which instrumental variables. We find that countries with a high predatory technology invest more in housing and physical capital in comparison with health and education. For equal initial conditions, such countries grow slower and have higher corruption, in particular when political power is concentrated
    Keywords: Public investment, Optimal growth, Corruption, Political power
    JEL: H50 D73
    Date: 2006–10–26
  5. By: FrŽdŽric, DOCQUIER (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics); Hillel, RAPOPORT; I-Leng Shen
    Abstract: We develop a model to study the effects of migration and remittances on inequality in the origin communities. While wealth inequality is shown to be monotonically reduced along the time-span, the short-and the long-run impacts on income inequality may be of opposite signs, suggesting that the dynamic relationship between migration/remittances and inequality may well be characterized by an inverse U-shaped pattern. This is consistent with the findings of the empirical literature, yet offers a different interpretation from the usually assumed migration network effects. With no need to endogenize migration costs through the role of migration networks, we generate the same result via intergenerational wealth accumulation
    Keywords: Migrations, remittances, inequality
    JEL: O11 O15 J61 D31
    Date: 2007–01–15
  6. By: FrŽdŽric, DOCQUIER (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics); Olivier, LOHEST; Abdeslam, MARFOUK
    Abstract: Relying on an original data set on international migration by educational attainment for 1990 and 2000, we analyze the determinants of the brain drain from developing countries. We start from a simple decomposition of the brain drain in two multiplicative components, the degree of openess of sending countries (as measured by their average emigration rate) and the schooling gap (as measured by the relative education level of emigrants compared to natives). Using various regression models, we put forward the determinants of the components and explain cross-country differences in skilled migration. unsurprisingly, the brain drain is strong in small countries which are not too distant from the major OECD regions, which share colonial links with OECD countries and which send most of their migrants to host countries where quality-selective immigration programs exist. More interestingly, the brain drain increases with political instability and the degree of fractionalization at origin; it globally decreases with nativesÕhuman capital.
    Keywords: International migration, Brain drain, Human capital, Developping countries
    JEL: F22 O15 J24
    Date: 2007–03–15
  7. By: Lars Osberg; Kuan Xu (Department of Economics, Dalhousie University)
    Keywords: development; poverty, measurement, China, growth
    Date: 2007–02–23
  8. By: Ilan Noy (Department of Economics, University of Hawaii at Manoa)
    Abstract: The aim of this study is to describe the macroeconomic dynamics of natural disasters and their determinants in a large sample of disaster events, the first such attempt we are aware of. Our research shows that natural disasters have a statistically observable adverse impact on the macroeconomy in the short-run. Not surprisingly, costlier events cause more pronounced slowdowns in production. Yet, interestingly, developing countries, and smaller economies, face much larger output declines following a disaster of similar relative magnitude than do developed countries or bigger economies. A close study of the determinants of these adverse macroeconomic output costs reveals several interesting patterns. Countries with a higher literacy rate, better institutions, higher per capita income, higher degree of openness to trade, and higher levels of government spending are better able to withstand the initial disaster shock and prevent further spillovers into the macroeconomy. These all suggest an increased ability to mobilize resources for reconstruction. Financial conditions also seem to be of importance; countries with more foreign exchange reserves, and higher levels of domestic credit, but with less-open capital accounts appear more robust and better able to endure natural disasters, with less adverse spillover into domestic production.
    Keywords: Natural disasters, growth
    JEL: Q54
    Date: 2007–02
  9. By: Shareen Joshi (University of Chicago); T. Paul Schultz (Yale University and IZA)
    Abstract: The paper analyzes 141 villages in Matlab, Bangladesh from 1974 to 1996, in which half the villages received from 1977 to 1996 a door-to-door outreach family planning and maternalchild health program. Village and individual data confirm a decline in fertility of about 15 percent in the program villages compared with the control villages by 1982, as others have noted, which persists until 1996. The consequences of the program on a series of long run family welfare outcomes are then estimated in addition to fertility: women’s health, earnings and household assets, use of preventive health inputs, and finally the inter-generational effects on the health and schooling of the woman’s children. Within two decades many of these indicators of the welfare of women and their children improve significantly in conjunction with the program-induced decline in fertility and child mortality. This suggests social returns to this reproductive health program in rural South Asia have many facets beyond fertility reduction, which do not appear to dissipate over two decades.
    Keywords: fertility, family planning, gender and development, program evaluation, Bangladesh
    JEL: O12 J13 I12 J16
    Date: 2007–02
  10. By: Dilek Aykut; Andrea Goldstein
    Abstract: Large Western corporations have long invested overseas to penetrate markets, seek resources, and increase efficiency. After the explosion of inward FDI to the South in the 1990s, it is now the turn of the largest companies from emerging and transition economies, including the so-called BRICs, to intensify their outward FDI through mergers and acquisitions as well as greenfield investments. The contours of this emerging phenomenon are described in this paper, with a focus on the quantification of the weight of South-South FDI flows and their developmental consequences. <BR>Les grandes sociétés des pays de l’OCDE ont longtemps investi à l’étranger pour pénétrer les marchés, s’approvisionner des ressources, et augmenter leur efficacité. Après l'explosion des investissements directs étrangers (IDE) vers les pays du Sud dans les années 90, c'est maintenant au tour des plus grandes compagnies des économies d'émergence et de transition, y compris celles des pays dits BRIC, d'intensifier leurs IDE extérieurs à travers les fusions et acquisitions, aussi bien que par des investissements greenfield. Cet article analyse ce phénomène naissant, avec une focalisation sur la quantification du poids des flux d’IDE Sud-Sud et sur leurs conséquences en matière de développement.
    JEL: F02 F23 L21
    Date: 2006–12
  11. By: David, Antonio C.
    Abstract: The author evaluates the effectiveness of policy measures adopted by Chile and Colombia, aiming to mitigate the deleterious effects of pro-cyclical capital flows. In the case of Chile, according to his Generalized Method of Moments (GMM) analysis, capital controls succeeded in reducing net short-term capital flows but did not affect long-term flows. As far as Colombia is concerned, the regulations were capable of affecting total flows and a lso long-term ones. In addition, the co-integration models indicate that the regulations did not have a direct effect on the real exchange rate in the Chilean case. Nonetheless, the model used for Colombia did detect a direct impact of the capital controls on the real exchange rate. Therefore, the results do not seem to support the idea that those regulations were easily evaded.
    Keywords: Macroeconomic Management,Capital Flows,Economic Theory & Research,Economic Stabilization,Financial Economics
    Date: 2007–03–01
  12. By: Das, Maitreyi Bordia; O ' Keefe, Philip
    Abstract: Like many low-income countries, Timor-Leste faces challenges in providing employment for and increasing the skills of its labor force-challenges made more acute by high fertility rates, a very young population, and the capacity constraints of a new nation. However, there is limited information for policymakers to formulate appropriate policies. The paper presents findings of the first urban enterprise survey in independent Timor-Leste. It explores several aspects of the Timorese urban labor market, including the profile of formal and informal enterprises, their behavior in terms of employment and wage-setting practices, and constraints on firm growth. It also presents findings on the skills and training needs of urban employers, and constraints faced in overcoming skills shortages. It finds a highly informal urban enterprise scene, where even " formal " enterprises are largely micro-enterprises. While there has been considerable action in terms of new firm creation since independence, there is already surprisingly low job creation or destruction. This is driven by a number of constraints inside and outside the labor market. With respect to wages, the impacts of the informal minimum wage policy inherited from the interim international administration suggest the need for caution in future wage policy development. While employers identify many skills gaps, basic literacy, numeracy, and language skill needs dominate, and employers appear to value short courses and less formal modes of skills training to address their needs. The paper concludes with suggestions for addressing the key constraints identified.
    Keywords: Labor Markets,Population Policies,Small and Medium Size Enterprises,Microfinance,Small Scale Enterprise
    Date: 2007–03–01
  13. By: Cardoso, Ana Rute; Verner, Dorte
    Abstract: This paper aims to identify the major drop-out and push-out factors that lead to school abandonment in an urban surrounding-the shantytowns of Fortaleza, Northeast Brazil. The authors use an extensive survey addressing risk factors faced by the population in these neighborhoods, which cover both in-school and out-of-school youth of both genders. They focus on the role of early parenthood, child labor, and poverty in pushing teenagers out of school. The potential endogeneity of some of the determinants is dealt with in the empirical analysis. The authors take advantage of the rich set of variables available and apply an instrumental variables approach. Early parenthood is instrumented with the age declared by the youngsters as the ideal age to start having sexual relationships. Work is instrumented using the declared reservation wage (minimum salary acceptable to work). Results indicate that early parenthood has a strong impact of driving teenagers out of school. Extreme poverty is another factor lowering school attendance, as children who have suffered hunger at some point in their lives are less likely to attend school. In this particular urban context, working does not necessarily have a detrimental effect on school attendance, which could be linked to the fact that dropping out of school leads most often to inactivity and not to work.
    Keywords: Education For All,Youth and Governance,Population Policies,Tertiary Education,Street Children
    Date: 2007–03–01
  14. By: Correa, Paulo; Dayoub, Mariam; Francisco, Manuela
    Abstract: The authors apply a Heckman selection model to the 2003 Investment Climate Survey (ICS) to investigate supply-side constraints to export performance at the firm level in Ecuador. To correct for the non-random truncation problems, they use the Heckman selection model to estimate the probability of exporting (export propensity) and the share of total sales that are exported (export intensity) by Ecuadorian firms. They develop a baseline model with 12 independent variables divided into three categories-idiosyncratic characteristics, technology, and business environment. The authors develop three other models with the addition of variables related to trade integration, business environment, and infrastructure. Results corroborate with the hypothesis implicit in the Heckman model, which considers both decisions made by a firm-whether to export, and how much of its sales to export-to be interdependent. In the Ecuadorian case, they find three important results for the firm ' s export performance: technology matters; infrastructure does not; and trade orientation is significant, with specialized firms tending to have smaller export intensity when their main trade partners are countries of the Andean Community, and the opposite happening if the United States is their main trade partner. The authors find a robust and stable relationship for export propensity and intensity with size, import of inputs, labor regulations, in-house research and development, quality certification, web-use, and foreign ownership. Also, capacity utilization and trade with the United States positively affect export intensity, while trade within the Andean Community has the opposite effect in the outcome variable. But they find no significant relationship for the infrastructure variables.
    Keywords: Free Trade,Private Participation in Infrastructure,Microfinance,Small Scale Enterprise,Markets and Market Access
    Date: 2007–03–01
  15. By: Aksoy, M. Ataman; Isik-Dikmelik, Aylin
    Abstract: This paper investigates the role of services in the household response to trade reforms in Vietnam. The relative response of the households and income growth after a major trade liberalization in rice are analyzed aiming to answer the following questions: What type of households, in which locations, having access to what type of services, benefited more from the reforms? It focuses on services that have an impact on transaction costs (roads or quality of roads, public transportation, access to credit, extension services, and availability of markets in communication services) because transaction costs are often cited as a barrier to rural households in responding to the price changes and increased incentives offered by trade and other policy reforms. The results suggest that availability of production related services contributes positively to the impact of trade reforms. Although most of the service variables have a positive and significant effect on growth in income, some that are expected to have an impact are not significant. This may be explained by the exceptional coverage of infrastructure services in Vietnam even before the reforms. When service availability is very similar across different localities, household characteristics become more important in determining the response.
    Keywords: Transport Economics Policy & Planning,Rural Poverty Reduction,Economic Theory & Research,Housing & Human Habitats
    Date: 2007–03–01
  16. By: Gero Erdmann (GIGA Institute of African Affairs); Matthias Basedau (GIGA Institute of African Affairs)
    Abstract: Starting from controversial findings about the relationship between party systems and the prospects of democratic consolidation, this article argues that problems can only be properly addressed on the basis of a differentiated typology of party systems. Contradictory research results do not pose an ‘African puzzle’ but can be explained by different and inadequate approaches. We argue that a modified version of Sartori's typology of party systems provides an appropriate method for classifying African party systems. Based on Sartori's framework, a preponderance of predominant and dominant party systems is identified. This can partly be explained by the prevailing authoritarian nature of many multiparty regimes in Africa as well as by the ethnic plurality of African societies. High ethnic fragmentation is not transformed into highly fragmented party systems. This phenomenon can be attributed to the most frequent ‘ethnic congress party’ which is based on an ethnic elite coalition.
    Keywords: Africa, South of Sahara, party systems, conceptual analysis, democratisation,electoral system, social cleavage, ethnicity
  17. By: Henriette Dose (Institute of African Studies, University of Leipzig)
    Abstract: In the debate of sustainable rural livelihoods, diversification is seen as a way to secure incomes and to increase food security. On the basis of a data set on income security, this paper analyses to what extent this applies to small-scale farmers in Kakamega District, Kenya. Using the sustainable rural livelihoods approach, this paper draws the conclusion, that (1) diversification in agricultural production is not sufficient for securing rural livelihoods in Kakamega District; (2) a sufficient income diversification depends heavily on requirements like access to education, infrastructure, as well as investment capital; and (3) small-scale farmers in Kakamega District in most cases lack these requirements, therefore not being able to achieve secure household incomes or increased food security.
    Keywords: agriculture, income security, small-scale farmers, Kenya, sustainable rural livelihoods (SRL), diversification
  18. By: Alexander Stroh (GIGA Institute of African Affairs)
    Abstract: Scholars of institutional design attribute large importance to the choice of new institutions. The comparative analysis of how Rwanda and Zambia crafted their new electoral systems and the systems of government regards procedural, structural and rational choice variables which may influence the option for particular solutions. External influences and the type of transition are determinants that can decide which actors make their interests prevail. The degree of innovation or conservatism of new institutions is mainly a result of the speed of the process and the kind of actors involved. However, rational reflections on how to produce legitimacy and minimize personal risks which take into consideration the state of conflict in the country decide on the speed and on innovative outcomes. The structured analysis of only two cases uncovers already that it is rather difficult to realise the transfer of design recommendations into reality.
    Keywords: institutions, institutional design, transition, electoral system, Rwanda, Zambia
  19. By: Andreas Ufen (GIGA Institute of Asian Studies)
    Abstract: It is generally acknowledged that a higher degree of party and party system institutionali-sation is positively correlated with the consolidation of democracy. It is, thus, useful to compare different levels and types of institutionalisation. In this article the distinction made by Levitsky (‘value infusion’ vs. ‘behavioural routinisation’) with reference to party institutionalisation will be employed. Moreover, institutionalised party systems are char-acterized, according to Mainwaring and Torcal, by ‘stability of interparty competition’. The empirical research of this paper finds that the early organisational consolidation of so-cial cleavages, such as in Indonesia, enhances institutionalisation. Furthermore, the rela-tion between central and local elites appears to be essential: strong bosses or cliques un-dermine institutionalisation in the Philippines and in Thailand respectively. Most Indone-sian parties are better institutionalised than those in the Philippines and Thailand with reference to ‘value infusion’. In addition, the party system in Indonesia is better institu-tionalised in terms of ‘stability of interparty competition’.
    Keywords: political party institutionalisation, party system institutionalisation, South-east Asia, Indonesia, Philippines, Thailand
  20. By: Gero Erdmann (GIGA Institute of African Affairs)
    Abstract: Conventional wisdom holds that ethnicity provides the social cleavage for voting behav-iour and party affiliation in Africa. Because this is usually inferred from aggregate data of national election results, it might prove to be an ecological fallacy. The evidence based on individual data from an opinion survey in Zambia suggests that ethnicity matters for voter alignment and even more so for party affiliation, but it is certainly not the only factor. The analysis also points to a number of qualifications which are partly methodology-related. One is that the degree of ethnic voting can differ from one ethno-political group to the other depending on various degrees of ethnic mobilisation. Another is that if smaller eth-nic groups or subgroups do not identify with one particular party, it is difficult to find a significant statistical correlation between party affiliation and ethnicity – but that does not prove that they do not affiliate along ethnic lines.
    Keywords: Social cleavages, ethnicity, voting behaviour, political party identification, political party affiliation, Zambia
  21. By: Sonja Bartsch (GIGA German Institute of Global and Area Studies); Lars Kohlmorgen (GIGA German Institute of Global and Area Studies)
    Abstract: This paper analyses the role of actors from developing countries in global processes of pol-icy making and governance. To systematically examine the channels of influence of South-ern actors and the interactions in global governance it develops the concept of interfaces. It differentiates between organisational, discoursive, legal and resource-transfer interfaces in global governance. This approach is exemplified in the analysis of a specific field of global governance, the global fight against HIV/AIDS. The paper examines the role of Southern governments and non-state actors in the central organisations of global health, their influ-ence in debates and discourses on strategies to fight HIV/AIDS, and the financing mecha-nisms that were introduced to fight HIV/AIDS in the developing world. It shows that al-beit actors from Northern countries dominate global governance in general, in particular areas the current institutional setting of global governance provides significant opportuni-ties for rather weak actors such as civil society organisations and governments from the South to influence strategies and policies.
    Keywords: North-South relations, global governance, HIV/AIDS, global health, civil society, power relations, interfaces
  22. By: Graeme Donald Snooks
    Abstract: This essay attempts to quantify and explain the economic performance of the Great South Land – later called Australia – from the first migrations some 60,000 years ago to the present, and beyond. A general dynamic theory – the ‘dynamic-strategy’ theory – has been employed to provide a new interpretation of ‘dynamics Downunder’. It is shown, among other things, that the bold attempt from the 1910s to the 1960s to turn aside from the traditional development policy of exogenously driven natural-resource exploitation in order to embark on an endogenously determined dynamic process, has broken down during the course of the present generation. This was mainly due to a failure of ‘strategic leadership’ on the part of recent Australian governments that have, quite rightly, dismantled the framework of protection, but have failed to replace it with the infrastructure of strategically relevant technological ideas. Once again Australia’s economic prosperity depends heavily on the fluctuating fortunes of the global economy. While in the nineteenth century this took the form of reliance on the prosperity of Britain, today it centres on the continuing growth of Japan and China. This critical problem has been exacerbated by misconceived monetary policies that are damaging the central endogenous dynamic mechanism. What then of the future? It all depends on whether strategic leadership can ever be rediscovered.
    Keywords: long-run dynamics, dynamic-strategy theory, inflation targeting, strategic leadership, strategic demand.
    Date: 2006–12
  23. By: Andrew Leigh; Pierre van der Eng
    Abstract: Using taxation and household survey data, this paper estimates top income shares for Indonesia during 1920-2004. Our results suggest that top income shares grew during the 1920s and 1930s, but fell in the post-war era. In more recent decades, we observe a sharp rise in top income shares during the late-1990s, coincident with the economic downturn, and some evidence that top income shares fell in the early-2000s. For pre-war Indonesia, we decompose top income shares by income source, and find that for groups below the top 0.5 percent, a majority of income was derived from wages. Throughout the twentieth century, top income shares in Indonesia have been higher than in India, broadly comparable to Japan, and somewhat lower than levels prevailing in the United States.
    Keywords: inequality, top incomes, personal income taxation, Indonesia
    JEL: H24 N35 O15
    Date: 2007–03
  24. By: Niño-Zarazúa, Miguel
    Abstract: In recent years, an important number of impact studies have attempted to examine the effect of credit on income poverty; however, many of these studies have not paid sufficient attention to the problems of endogeneity and selection bias. The few exceptional cases have employed econometric techniques that work at the village level. The problem is that the concept of village is inappropriate in the urban context where a large percentage of microfinance organisations in the developing world actually operate. This paper presents an econometric approach which controls for endogeneity and self-selection using data from a quasi-experiment designed at the household level, and conducted in three urban settlements in the surroundings of the Metropolitan area of Mexico City. The paper provides an estimation of the impact of credit, employing different equivalence scales in order to measure the sensitivity of the poverty impact to the intra-household distribution of welfare. We find a link between poverty impacts and lending technology. Group-based lending programmes are more effective in reducing the poverty gap but in doing so, they achieve insignificant impacts on the poverty incidence. By contrast, individual lending programmes reported significant and small impacts at the upper limits of deprivation but insignificant impacts on the poverty gap.
    Keywords: endogeneity; selection bias; microfinance; credit; income poverty; impact analysis; Mexico.
    JEL: O19 O18 O17 C81 O16 C24
    Date: 2007–03–23
  25. By: Candau, Fabien
    Abstract: We develop a model for developing countries that investigates the factors behind agglomeration of activities in urban giants. Firstly we show that relatively easier market access to external demand provided by the urban giant tends to attract entrepreneurs to this place. Secondly we find that the attractive power of the urban giant can be linked to a lack of democracy. Indeed we demonstrate that democracy acts as a dispersive force in the sense that by reversing the cost of living effect, it allows to reduce the spatial inequality and then the tendency of agglomeration. Lastly we analyse how the funds embezzled by a bad government vary according to internal and external trade liberalisation. We show that a decrease in the disadvantage of the periphery to trade with the external market can limit the funds embezzled by a Leviathan.
    Keywords: Economic geography; Cities; Trade; Corruption.
    JEL: R12 H25
    Date: 2006–05–31
  26. By: Rao, B. Bhaskara
    Abstract: This paper develops an endogenous growth ramework with externalities due to learning by doing and trade openness to show that these externalities are significant for 6 Asian countries. The estimated parameters of the augmented production functions are used to compute the steady state growth rates for Singapore, Malaysia, Thailand, Hong Kong, Korea and the Philippines. A few broad policies to improve these steady state growth rate are suggested.
    Keywords: Endogenous Growth; Learning by Doing Trade Openness; Steady State Growth Rate; Newly Developing Asian Countries.
    JEL: O53 O40 O29 O33 O30 O39 O38 O10
    Date: 2007–03–27
  27. By: Hendrik Hakenes (Max Planck Institute for Research on Collective Goods, Bonn); Andreas Irmen (University of Heidelberg, Department of Economics)
    Abstract: The long-run evolution of per-capita income exhibits a structural break often associated with the Industrial Revolution. We follow Mokyr (2002) and embed the idea that this structural break reflects a regime switch in the evolution of technological knowledge into a dynamic framework, using Airy differential equations to describe this evolution. We show that under a non-monotonous income-population equation, the economy evolves from a Malthusian to a Post-Malthusian Regime, with rising per-capita income and a growing population. The switch is brought about by an acceleration in the growth of technological knowledge. The demographic transition marks the switch into the Modern Growth Regime, with higher levels of per-capita income and declining population growth.
    Keywords: crisis Industrial Revolution, Technological Change, Malthus, Demographic Transition
    JEL: J11 O11 O33 O40
    Date: 2007–03
  28. By: Dag Ehrenpreis (International Poverty Centre)
    Keywords: Poverty, Pro-Poor Growth, measures
    JEL: B41 D11 D12 E31 I32 O54
    Date: 2007–03
  29. By: Mark Weisbrot; Luis Sandoval; David Rosnick
    Abstract: This report examines data on poverty in Venezuela, and corrects misreporting which claimed that poverty increased during the seven years of the Chavez administration.
    Date: 2006–05

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