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on Development |
| By: | Olken, Benjamin |
| Abstract: | Accurate citizen perceptions of corruption are crucial for the political process to effectively restrain corrupt activity. This paper examines the accuracy of these perceptions by comparing Indonesian villagers' stated beliefs about corruption in a road-building project in their village with a more objective measure of `missing expenditures' in the project. I find that villagers' beliefs do contain real information, and that villagers are sophisticated enough to distinguish between corruption in a particular road project and general corruption in the village. The magnitude of their information, however, is small, in part because officials hide corruption where it is hardest for villagers to detect. I also find that there are biases in beliefs that may affect citizens' monitoring behaviour. For example, ethnically heterogeneous villages have higher perceived corruption levels and greater citizen monitoring, but lower actual levels of missing expenditures. The findings illustrate the limitations of relying solely on corruption perceptions, whether in designing anti-corruption policies or in conducting empirical research on corruption. |
| Keywords: | beliefs; corruption; perception |
| JEL: | D73 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6272&r=dev |
| By: | Pande, Rohini |
| Abstract: | Building on the large and growing empirical literature on the political behaviour of individuals in low income countries this chapter seeks to understand corruption through the lens of political economy -- particularly in terms of the political and economic differences between rich and poor countries. Our focus is on the political behaviour of individuals exposed to democratic political institutions. We review the existing literature on the determinants of individual political behaviour to ask whether we can understand the choice of political actors to be corrupt and, importantly, of other individuals to permit it, as a rational response to the social or the economic environment they inhabit. We also discuss the implications of this view of corruption for anti-corruption policies. |
| Keywords: | corruption; development |
| JEL: | O12 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6273&r=dev |
| By: | Hunt, Jennifer |
| Abstract: | In this paper, I examine the role of household income in determining who bribes and how much they bribe in health care in Peru and Uganda. I find that rich patients are more likely than other patients to bribe in public health care: doubling household consumption increases the bribery probability by 0.2-0.4 percentage points in Peru, compared to a bribery rate of 0.8%; doubling household expenditure in Uganda increases the bribery probability by 1.2 percentage points compared to a bribery rate of 17%. The income elasticity of the bribe amount cannot be precisely estimated in Peru, but is about 0.37 in Uganda. Bribes in the Ugandan public sector appear to be fees-for-service extorted from the richer patients amongst those exempted by government policy from paying the official fees. Bribes in the private sector appear to be flat-rate fees paid by patients who do not pay official fees. I do not find evidence that the public health care sector in either Peru or Uganda is able to price-discriminate less effectively than public institutions with less competition from the private sector. |
| Keywords: | bribery; corruption; governance; health care |
| JEL: | H4 K4 O1 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6274&r=dev |
| By: | Clara Delavallade (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I]) |
| Abstract: | This paper empirically analyzes the main microeconomic determinants of different forms of corruption supply. Our study is based on a new database of near 600 Algerian, Moroccan and Tunisian firms. We show that the undeclared part of firms' sales is a major factor of their involvement in administrative corruption. The latter increases with the part of the firm's informal activity as far as it is inferior to 55% of total sales, before slightly decreasing. State capture is rather strengthened by a failing enforcement of property and contract rights. Moreover, both forms of corruption help to compensate a loss of competitiveness, which contradicts previous results on this issue. Finally, we draw a comparison of the factors of corruption in North Africa, Uganda and transition countries and derive policy recommendations. |
| Keywords: | Supply of corruption, administrative corruption, state capture, informal activity, competitiveness, North Africa. |
| Date: | 2007–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00143412_v1&r=dev |
| By: | Giorgio Brosio; Maria Gonzalez; Ehtisham Ahmad |
| Abstract: | This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. A politically driven and ambitious decentralization program implemented by the authorities since the late 1990s has had mixed results in terms of enhancing service delivery. Paradoxically, concerns with the results of service delivery, partially driven by donors' requirements, have resulted in a deconcentrated system relying on conditional grants and unfunded mandates. This has reduced the incentives, responsibility, and ownership for local authorities to improve service delivery. Crucially, for functions where the local authorities have had full responsibility, better service quality has resulted than in those areas in which there are overlapping responsibilities between the center and the local authorities. |
| Keywords: | Fiscal policy , intergovernmental fiscal relations , |
| Date: | 2006–12–21 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/279&r=dev |
| By: | Martin Cerisola; Ricardo Adrogue; Gaston Gelos |
| Abstract: | This paper assesses Brazil's growth performance from a long-term perspective, using crosscountry and panel estimation techniques, building on the vast empirical literature on growth. The empirical evidence presented in this paper confirms that macroeconomic stability and several reforms have helped raise per capita growth in Brazil since the mid-1990s. The results also show that some long-standing structural weaknesses continue to weigh negatively on per capita growth. Reducing the high level of government consumption would help lower the overall consumption level in the economy and lower its intertemporal price-the real interest rate-thus helping to foster investment and growth. |
| Keywords: | Brazil; Per capita growth , cross country analysis , Economic growth , Brazil , Economic stabilization , Economic reforms , Economic models , |
| Date: | 2007–01–04 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/282&r=dev |
| By: | Lennart Erickson; Carl-Johan Dalgaard |
| Abstract: | The First Millennium Development Goal (MDG#1) is to cut the fraction of global population living on less than one dollar per day in half, by 2015. Foreign aid financed investments may contribute to the attainment of this goal. But how much can aid be reasonably expected to accomplish? A widespread calibration approach to answering this question is to employ the so-called development planning technique, which has the Harrod-Domar growth model at its base. Two particularly problematic assumptions in this sort of analysis are the absence of diminishing returns to capital input and an infinite speed of adjustment to steady state after a shock to the economy. We remove both of these assumptions by employing a Solow model as an organizing framework for an otherwise similar analysis. We find that in order to successfully meet the MDG#1 in the context of the currently proposed aid flows, these flows will have to be accompanied by either an acceleration in the underlying productivity growth rate or a major boost to domestic savings and investment in sub-Saharan Africa. In the absence of such changes in the economic environment, the MDG#1 is unlikely to be reached. |
| Keywords: | Foregin aid , Solow model , millennium development goals , Development assistance , Millennium Development Goals , Economic models , |
| Date: | 2007–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/284&r=dev |
| By: | Jahangir Aziz |
| Abstract: | This paper uses the standard one-sector neoclassical growth model to investigate why China's consumption has been low and investment high. It finds that the low cost of capital has been quantitatively an important factor. Theory predicts that the price of capital may have been significantly distorted in the 1990s and 2000s. The distortion could have been caused by nonperforming loans, borrowing constraints, and uncertainty over changes in government guidance in bank lending. If China is to rebalance growth towards relying more on consumption and less on exports and investment, banking sector reforms and financial market development could, therefore, turn out to be key. |
| Keywords: | Business cycle accounting , rebalancing growth , financial distortions , Economic growth , China , Economic policy , Bank reforms , Financial sector , Capital markets , Capital , Consumption , Investment , Exports , Economic models , |
| Date: | 2007–01–08 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/291&r=dev |
| By: | Ian Lienert |
| Abstract: | Several features of Tanzania's budget system find their roots in the arrangements inherited from the United Kingdom. These include a legal framework that emphasizes accountability; a cabinet of ministers with strong budget decision-making powers; a parliament with very limited budget powers; and a similar external audit organization. In both countries, budget execution is decentralized to individual ministries, with accounting officers responsible to a parliamentary accounts committee. These similarities are blended with contrasts, including in Tanzania: a presidential system of government, one dominant political party, a written constitution, and some fragmentation in central budget decision-making within the executive. |
| Keywords: | Budget , legislature , executive , constitution , law , Minister of Finance , Chancellor , Exchequer , Permanent Secretary , Accounting Officer , |
| Date: | 2007–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:07/78&r=dev |
| By: | Daniel Leigh; Stéphane Carcillo; Mauricio Villafuerte |
| Abstract: | In a number of oil producing countries, oil revenue accounts for the majority of government revenue, but is expected to be depleted in a relatively short time frame. Ensuring that fiscal policy is on a sustainable path is thus a high priority, but political and social adjustment costs create incentives to delay fiscal consolidation. This paper estimates how the permanently sustainable non-oil primary deficit (PSNOPD) depends on the speed of consolidation, using an optimization model with habit formation. Realism is added by allowing for negative growth-adjusted interest rates during a temporary period of catch-up growth. Applied to the Republic of Congo, this approach leads to the following conclusions: (i) the current fiscalpolicy stance is unsustainable; (ii) social adjustment costs justify spreading the bulk of the adjustment over five years; and (iii) the slower the adjustment, the lower the PSNOPD level. |
| Keywords: | Sustainable fiscal policy , habit formation , permanent-income hypothesis , catch-up growth , oil , Republic of Congo , |
| Date: | 2007–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:07/80&r=dev |
| By: | Hélène Poirson |
| Abstract: | India's planned pension reform will set up a proper regulatory framework for the pension industry and open up the sector to private fund managers. Drawing on international experiences, the paper highlights pre-conditions for the reform to kick-start financial development, including: (i) the buildup of critical mass; (ii) sufficiently flexible investment guidelines and regulations, including on investments abroad; and (iii) concurrent reforms in capital markets. Given the limited scale of the planned reform, the key challenge for India is to achieve sufficient critical mass early on. Options to address this challenge include granting permission for existing workers to switch to the new system or outsourcing all or part of the reserves of private sector provident funds to the new pension fund managers. |
| Keywords: | Asset prices , emerging markets , pension reforms , |
| Date: | 2007–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:07/85&r=dev |
| By: | Petia Topalova; Eric V. Edmonds; Nina Pavcnik |
| Abstract: | Do the short and medium term adjustment costs associated with trade liberalization influence schooling and child labor decisions? We examine this question in the context of India's 1991 tariff reforms. Overall, in the 1990s, rural India experienced a dramatic increase in schooling and decline in child labor. However, communities that relied heavily on employment in protected industries before liberalization do not experience as large an increase in schooling or decline in child labor. The data suggest that this failure to follow the national trend of increasing schooling and diminishing work is associated with a failure to follow the national trend in poverty reduction. Schooling costs appear to play a large role in this relationship between poverty, schooling, and child labor. Extrapolating from our results, our estimates imply that roughly half of India's rise in schooling and a third of the fall in child labor during the 1990s can be explained by falling poverty and therefore improved capacity to afford schooling. |
| Keywords: | Child labor , literacy , trade liberalization , India , |
| Date: | 2007–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:07/94&r=dev |
| By: | Katleen Van den Broeck (Department of Economics, University of Copenhagen); Stefan Dercon (University of Oxford) |
| Abstract: | This paper analyses whether agricultural information flows give rise to social learning effects in banana cultivation in Nyakatoke, a small Tanzanian village. Based on a village census, full information is available on socio-economic characteristics and banana production of farmer kinship members, neighbours and informal insurance group members. This allows a test for social learning within these groups and the identification of different types of social effects. Controlling for exogenous group characteristics, the effect of group behaviour on individual farmer output is studied. The results show that social effects are strongly dependent on the definition of the reference group. It emerges that no social effects are found in distance based groups, exogenous social effects linked to group education exist in informal insurance groups, and only kinship related groups generate the endogenous social effects that produce positive externalities in banana output. |
| Keywords: | social interactions; social learning; agricultural information networks |
| JEL: | O12 O13 O55 Q12 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:0708&r=dev |