nep-dev New Economics Papers
on Development
Issue of 2007‒06‒18
twenty-six papers chosen by
Jeong-Joon Lee
Towson University

  1. Using Household Panel Data to Understand the Intergenerational Transmission of Poverty By Stephen P. Jenkins; Thomas Siedler
  2. Life and Death of Roscas : If Power Corrupts, Does Powerlessness Make One Blameless ? By Olivier Dagnelie
  3. Productivity of Rural Credit: A Review of Issues and Some Recent Literature By Sriram M.S.
  4. TRENDS IN AGRICULTURAL AND RURAL DEVELOPMENT INDICATORS IN ZAMBIA. By T.S. Jayne; J. Govereh; P. Chilonda; N. Mason; A. Chapoto; H. Haantuba
  5. Why Has Unemployment Risen in the New South Africa By Abhijit Banerjee; Sebastian Galiani; Jim Levinsohn; Zoë McLaren; Ingrid Woolard
  6. Development Through Synergistic Reform By James E. Rauch
  7. Business Groups and the Big Push: Meiji Japan's Mass Privatization and Subsequent Growth By Randall Morck; Masao Nakamura
  8. Democracy, Technology, and Growth By Philippe Aghion; Alberto Alesina; Francesco Trebbi
  9. Pension Reform in China: Progress and Prospects By Felix Salditt; Peter Whiteford; Willem Adema
  10. Optimal Sovereign Debt Write-downs By Sayantan Ghosal; Kannika Thampanishvong
  11. What is the impact of international remittances on poverty and inequality in Latin America ? By Lopez, Humberto; Fajnzylber, Pablo; Calderon, Cesar; Acosta, Pablo
  12. Economic information and finance : more information means more credit, fewer bad loans, and less corruption By Islam, Roumeen
  13. The living conditions of children By Patrinos, Harry Anthony
  14. About urban mega regions : knowns and unknowns By Yusuf, Shahid
  15. Poverty, inequality, and social disparities during China ' s economic reform By Dollar, David
  16. Imported Equipment, Human Capital and Economic Growth in Developing Countries By Uwe Dulleck; Neil Foster
  17. Constraints to achieving the MDGs through domestic resource mobilization By Rob Vos; Marco V Sanchez; Keiji Inoue
  18. A counter-cyclical framework for a development-friendly international financial architecture By José Antonio Ocampo; Stephany Griffith-Jones
  19. Foreign direct investment in Vietnam: An overview and analysis the determinants of spatial distribution across provinces By Nguyen, Ngoc Anh; Nguyen, Thang
  20. The effects of technology-as-knowledge on the economic performance of developing countries: An econometric analysis using annual publications data for Botswana, Namibia, and South Africa, 1976-2004 By Amavilah, Voxi Heinrich
  21. A Note on Human Development Indices with Income Equalities By Mishra, SK
  22. Glass Ceiling or Sticky Floor? Examining the Gender Pay Gap across the Wage Distribution in Urban China, 1987-2004 By Chi, Wei; Li, Bo
  23. Gender-bias in Education Opportunities for Population Aged 12-18 in Mexico: 1992-2004 By Aguayo, Ernesto; Chapa, Joana; Rangel, Erick; Treviño, Lourdes; Valero-Gil, Jorge
  24. Democracy and globalisation By Barry Eichengreen; David Leblang
  25. Economic reforms and exchange rate pass-through to domestic prices in India By Jeevan K Khundrakpam
  26. Growth dynamics: the myth of economic recovery By Valerie Cerra; Sweta Chaman Saxena

  1. By: Stephen P. Jenkins; Thomas Siedler
    Abstract: This paper discusses how household panel surveys can be informative about the intergenerational transmission of poverty. We consider issues both of data and of the statistical methods that may be applied to those data. Although the data focus is on panel surveys from developed countries, we also briefly consider data availability in developing countries. We set out a list of survey data requirements for intergenerational analysis, and then discuss how the main household panel surveys in developed countries meet the criteria. In order to highlight the advantages and disadvantages of household panel surveys, the section also compares them with other types of longitudinal studies. Next, we review the estimation methods that have been used to examine the intergenerational transmission of poverty when using household panel surveys. Finally, we provide three examples of household panel surveys in developing countries (Indonesia, Malaysia and Mexico) that meet the data requirements for analysis of the intergenerational transmission of poverty.
    Keywords: Demographic change, Consumption structure, Consumption of the elderly
    Date: 2007
  2. By: Olivier Dagnelie (CRED - Centre de Recherche en Economie du Développement - [Facultés Universitaires Notre Dame de la Paix])
    Abstract: We have very few ideas as to what factors can influence the duration of roscas and reduce their failure risk. In this research, we bring new light on these empirical questions using an original data set containing information on living and dead roscas from Cotonou, Benin. We notice that the groups run by a president alone are more likely to fall apart. We also present evidence that individuals attracted to this type of groups have a lower social capital and therefore might be more likely to default.
    Keywords: ROSCA ; Survival Analysis ; Governance structure ; Benin
    Date: 2007–06–10
  3. By: Sriram M.S.
    Abstract: The policy intervention in agriculture has been credit driven. This is even more pronounced in the recent interventions made by the State, in doubling agricultural credit, providing subvention and putting an upper cap on interest rates for agricultural loans, the package announced for distressed farmers. We use existing literature and data to argue that the causality of agricultural output with increased doses of credit cannot be clearly established. We argue that Indian agriculture is undergoing fundamental change wherein the technology and inputs are moving out of the hands of the farmers to external suppliers. This, over a period of time may have resulted in the de-skilling of farmers and without adequate public investments in support services and without appropriate risk mitigation products has created a near-crisis in agriculture. Thus, we argue that policy interventions have to be necessarily patient and holistic. Looking specifically at the rural financial markets, using some primary data we argue that it is necessary to understand the rural financial markets from the demand side. We conclude the paper by identifying some directions in which the policy intervention could move, keeping the overall rural economy in view rather than being unifocal about agriculture.
    Date: 2007–06–07
  4. By: T.S. Jayne; J. Govereh; P. Chilonda; N. Mason; A. Chapoto; H. Haantuba
    Abstract: Effective agricultural and food security policies in Africa need to be based on a solid empirical foundation. In Zambia, it is widely perceived that poverty rates are increasing, agricultural growth is stagnant, and real food prices are higher as food production declines. This study examines these trends and finds that all of these perceptions are wrong. Rural poverty rates have declined substantially in rural Zambia since the early 1990s, although they are still unacceptably high. Real staple food prices for consumers have declined by 20% over the past decade, thanks to major reductions in maize milling and retailing margins. And there is evidence of impressive production growth for some crops that are becoming increasingly important sources of income and food security for Zambian farmers, despite evidence of stagnant production for other key crops. This paper examines the relationship between trends in agricultural sector performance and rural poverty in Zambia, the likely factors driving these trends, and the future implications for agricultural policy and investment strategies.
    Keywords: food security, policy, development, indicators, Zambia., Africa
    JEL: Q18
    Date: 2007
  5. By: Abhijit Banerjee; Sebastian Galiani; Jim Levinsohn; Zoë McLaren; Ingrid Woolard
    Abstract: We document the rise in unemployment in South Africa since the transition in 1994. We describe the likely causes of this increase and analyze whether the increase in unemployment is due to structural changes in the economy (resulting in a new equilibrium unemployment rate) or to negative shocks (that temporarily have increased unemployment). We conclude the former are more important. Our analysis includes a multinomial logit approach to understanding transitions in individual-level changes in labor market status using the first nationally representative panel in South Africa. Our analysis highlights several key constraints to addressing unemployment in South Africa.
    JEL: J18
    Date: 2007–06
  6. By: James E. Rauch
    Abstract: Several studies suggest that production of high-quality output is a precondition for firms in less developed countries to participate in the export market. Institutional deficiencies that raise the costs of entry into high-quality production therefore limit the positive impact that trade liberalization can have on income or growth. Institutional reform that reduces the costs of entry into high-quality production and trade reform therefore have synergistic effects on income and, possibly, growth. In contrast, institutional reform that reduces the costs of entry into low-quality production (e.g., reforms targeted at small businesses) interferes with the impact of trade reform. The model that yields these results is also used to analyze impacts of foreign direct investment and of subsidies to entrepreneurship in the presence of unemployment.
    JEL: F43 O24 O43
    Date: 2007–06
  7. By: Randall Morck; Masao Nakamura
    Abstract: Rosenstein-Rodan (1943) and others posit that rapid development requires a 'big push' - the coordinated rapid growth of diverse complementary industries, and suggests a role for government in providing such coordination. We argue that Japan's zaibatsu, or pyramidal business groups, provided this coordination after the Meiji government failed at the task. We propose that pyramidal business groups are private sector mechanisms for coordinating and financing 'big push' growth, and that unique historical circumstances aided their success in prewar Japan. Specifically, Japan uniquely marginalized its feudal elite; withdrew its hand with a propitious mass privatization that rallied the private sector; marginalized an otherwise entrenched first generation of wealthy industrialists; and remained open to foreign trade and capital.
    JEL: G3 L23 L25 N15 N25 O14 O16 O19 O2 O21 O25 O38 O53 P1 P11 P12
    Date: 2007–06
  8. By: Philippe Aghion; Alberto Alesina; Francesco Trebbi
    Abstract: We explore the question of how political institutions and particularly democracy affect economic growth. Although empirical evidence of a positive effect of democracy on economic performance in the aggregate is weak, we provide evidence that democracy influences productivity growth in different sectors differently and that this differential effect may be one of the reasons of the ambiguity of the aggregate results. We provide evidence that political rights are conducive to growth in more advanced sectors of an economy, while they do not matter or have a negative effect on growth in sectors far away from the technological frontier. One channel of explanation goes through the beneficial effects of democracy and political rights on the freedom of entry in markets. Overall, democracies tend to have much lower entry barriers than autocracies, because political accountability reduces the protection of vested interests, and entry in turn is known to be generally more growth-enhancing in sectors that are closer to the technological frontier. We present empirical evidence that supports this entry explanation.
    JEL: H7
    Date: 2007–06
  9. By: Felix Salditt; Peter Whiteford; Willem Adema
    Abstract: China is currently in the process of developing the largest pension system in the world, and it is doing this at a time of unparalleled economic and demographic transition. The central government has followed a step-by-step approach to develop a system that can accommodate a rapidly aging society within a rapidly growing, but still largely underdeveloped economy. This paper analyses how far the process of creating a national old age insurance system had proceeded by the end of 2006. It provides a detailed description of this system and an assessment of to what degree it has so far achieved ?its primary goal of social security for more people? (Chinese Government, September 2006)... <BR>La Chine est en train de mettre en place le plus grand système de retraite au monde, ceci à une époque de transition économique et démographique sans précédent. Le gouvernement central a suivi une approche graduelle pour créer un système qui puisse faire face à une société vieillissante dans une économie galopante et encore pour une bonne part sous-développée. Ce document montre jusqu'où le processus de création d'un système d'assurance national pour les personnes âgées a pu aller jusqu'à la fin de 2006. Il présente une description détaillée de ce système et évalue dans quelle mesure il a atteint au jour d'aujourd'hui « son objectif premier qui est la sécurité sociale pour plus de personnes » (Gouvernement chinois, septembre 2006)...
    JEL: H55 J11 P36
    Date: 2007–06–07
  10. By: Sayantan Ghosal; Kannika Thampanishvong
    Abstract: At present, the enhanced HIPC initiative and the Gleneagles Proposal for debt write-downs by the G8 are the main mechanisms used to reduce indebtedness of low-income countries. In these countries where poor governance is a key issue, it is naïve to believe that the Millennium Development Goals can be achieved if the current debt relief mechanisms fail to address such problem. In this paper, we develop a model of sovereign debt write-downs, where governance problems reflect domestic distributive conflict between two classes in the society and intertemporal conflict. The main policy issue is how to design the optimal form of debt write-downs and the conditionality requirements attached to it with such governance problems in mind. To deal with the domestic distributive conflict, it is crucial that the conditionality requirements target both provision of public goods and private consumption level of the poor citizens. Addressing the intertemporal conflict problem requires the use of long-run conditionality requirements. Against such a benchmark, we then evaluate the efficacy of the current debt relief initiatives and discuss some policy implications.
    Keywords: Debt Relief, Conditionality, HIPC Initiative.
    JEL: O19 O11 F34 F35 I38
    Date: 2007–06
  11. By: Lopez, Humberto; Fajnzylber, Pablo; Calderon, Cesar; Acosta, Pablo
    Abstract: Workers ' remittances have become a major source of income for developing countries. However, little is still known about their impact on poverty and inequality. Using a large cross-country panel dataset, the authors find that remittances in Latin American and Caribbean (LAC) countries have increased growth and reduced inequality and poverty. These results are robust to the use of different instruments that attempt to correct for the potential endogeneity of remittances. Household survey-based estimates for 10 LAC countries confirm that remittances have negative albeit relatively small inequality and poverty-reducing effects, even after imputations for the potential home earnings of migrants.
    Keywords: Population Policies,Remittances,Inequality,Pro-Poor Growth and Inequality,Poverty Impact Evaluation
    Date: 2007–06–01
  12. By: Islam, Roumeen
    Abstract: This paper builds on recent work that shows how financial sector outcomes are affected by the provision of information by financial and other entities. In particular, it shows that an indicator of economic transparency is positively related to higher levels of private credit and a lower share of nonperforming loans even after accounting for factors commonly believed to influence financial sector development in cross-country empirical estimation. Timely access to economic data allows investors to make better decisions on investments and to better monitor banks ' financial health. Greater economic transparency raises accountability and lowers corruption in bank lending.
    Keywords: Banks & Banking Reform,Financial Intermediation,Economic Theory & Research,Insurance & Risk Mitigation,Investment and Investment Climate
    Date: 2007–06–01
  13. By: Patrinos, Harry Anthony
    Abstract: This paper summarizes the socioeconomic conditions of children around the world. It explores solutions to the main problems, along with a summary of the costs and benefits of some of the solutions. Emphasis is on the results from rigorous studies, impact evaluations, and randomized experiments. Although the cost-evidence literature is scarce, a good case for early interventions and key quality-enhancing education interventions exists.
    Keywords: Primary Education,Education For All,Teaching and Learning,Population Policies,Health Monitoring & Evaluation
    Date: 2007–06–01
  14. By: Yusuf, Shahid
    Abstract: Mega urban regions are not a passing phenomenon. They are likely to persist and to enlarge their economic footprints because they benefit from the advantages of market scale, agglomeration economies, location, and the increasing concentration of talented workers. Metropolitan regions which are polycentric, relatively well managed, and have invested heavily in transport infrastructure are able to contain some of the problems attendant upon a concentration of people and industry. Moreover, with energy and water resources becoming relatively scarce and many countries anxious to pre serve arable land for farming, the economic advantages of densely populated urban areas are on the rise because they have a lower resource utilization quotient. During the next 15 years, mega urban economies could coalesce in three Southeast Asian locations: Bangkok, Jakarta, and the Singapore-Iskander Development Region (IDR, South Johor). The Bangkok and Jakarta (Jabotabek) metropolitan regions have passed the threshold at least in terms of population size but they have yet to approach the industrial diversity, dynamism, and growth rates of a Shanghai or a Shenzhen-Hong Kong region. Singapore, if coupled with IDR, has the potential but it is still far from being an integrated urban region. This paper examines the gains from closer economic integration and the issues to be settled before it could occur. The paper notes that a tightening of localized economic links between two sovereign nations through the formation of an urban region would involve a readiness to make long-term political commitments based on a widely perceived sense of substantial spillovers and equitably shared benefits. Delineating these benefits convincingly will be essential to winning political support and a precondition for a successful economic flowering.
    Keywords: Transport Economics Policy & Planning,ICT Policy and Strategies,Population Policies,Tertiary Education,Agricultural Knowledge & Information Systems
    Date: 2007–06–01
  15. By: Dollar, David
    Abstract: China has been the most rapidly growing economy in the world over the past 25 years. This growth has fueled a remarkable increase in per capita income and a decline in the poverty rate from 64 percent at the beginning of reform to 10 percent in 2004. At the same time, however, different kinds of disparities have increased. Income inequality has risen, propelled by the rural-urban income gap and by the growing disparity between highly educated urban professionals and the urban working class. There have also been increases in inequality of health and education outcomes. Some rise in inequality was inevitable as China introduced a market system, but inequality may have been exacerbated rather than mitigated by a number of policy features. Restrictions on rural-urban migration have limited opportunities for the relatively poor rural population. The inability to sell or mortgage rural land has further reduced opportunities. China has a uniquely decentralized fiscal system that has relied on local government to fund basic health and education. The result has been that poor villages could not afford to provide good services, and poor households could not afford the high private costs of basic public services. Ironically, the large trade surplus that China has built up in recent years is a further problem, in that it stimulates an urban industrial sector that no longer creates many jobs while restricting the government ' s ability to increase spending to improve services and address disparities. The government ' s recent policy shift to encourage migration, fund education and health for poor areas and poor households, and r ebalance the economy away from investment and exports toward domestic consumption and public services should help reduce social disparities.
    Keywords: Population Policies,Rural Poverty Reduction,Pro-Poor Growth and Inequality,Inequality,Health Monitoring & Evaluation
    Date: 2007–06–01
  16. By: Uwe Dulleck; Neil Foster
    Abstract: De Long and Summers (1991) began a literature examining the impact of equipment investment on growth. In this paper we examine such a relationship for developing countries by considering imports of equipment from advanced countries as our measure of equipment investment for a sample of 55 developing countries. We examine whether the level of human capital in a country affects its ability to benefit from such investment. We find a complex interrelationship between imported equipment and human capital. Generally, the relationship between imported equipment and growth is lowest, and often negative, for countries with low levels of human capital, highest for countries within an intermediate range and somewhat in between for countries with the highest level of human capital.
    Keywords: Capital Goods Imports, Human Capital, Developing Countries, Technology Diffusion
    JEL: F43 O15 O40
    Date: 2007–05–25
  17. By: Rob Vos; Marco V Sanchez; Keiji Inoue
    Abstract: The present paper focuses on the role of domestic resource mobilization for financing poverty reduction strategies. Policy makers should be aware of important macroeconomic trade-offs associated with MDG strategies financed from tax increases or domestic borrowing. The trade-offs are largely intertemporal: can poor and middle-income countries absorb the initial financing costs in order to achieve expected gains in productivity and human development over time? This calls for a dynamic economy-wide framework to identify the importance of such trade-offs. The paper presents such a framework and illustrates its usefulness in applications for Costa Rica and Ecuador.
    Keywords: computable general equilibrium models; distribution; welfare and poverty; foreign aid; macroeconomic analyses of economic development.
    JEL: C68 I3 F35 O11
    Date: 2007–05
  18. By: José Antonio Ocampo; Stephany Griffith-Jones
    Abstract: The major task of a development-friendly international financial architecture is to mitigate pro-cyclical effects of financial markets and open “policy space” for counter-cyclical macroeconomic policies in the developing world. This paper explores a series of policy instruments for this purpose: counter-cyclical prudential regulatory and supervisory frameworks; market mechanisms that better distribute the risk faced by developing countries through the business cycle; multilateral instruments that encourage more stable private flows; and better provision of counter-cyclical official liquidity. It also suggests that regional macroeconomic consultation, and common reserve funds or swap arrangements among developing countries can play a role in this regard.
    Keywords: volatility, contagion, financial crises, counter-cyclical macroeconomic policies, counter­cyclical prudential regulation, GDP-indexed and local currency bonds, regional macroeconomic cooperation.
    JEL: F3 F32 F4 F42
    Date: 2007–07
  19. By: Nguyen, Ngoc Anh; Nguyen, Thang
    Abstract: Vietnam has been quite sucessful in attracting FDI inflows since the inception of economic reform in 1986. The inflow of FDI has contributed significantly to the economic development of Vietnam. Still, the determinants of FDI inflow and its impacts on the economy of Vietnam are under-researched. In this paper we provide an overview of foreign direct investment (FDI) in Vietnam and attempt to review of the current status of economic research on the determinants of FDI and its impacts on the economy of Vietnam. Our regression analysis of the determinants of FDI spatial distribution across provinces points to the importance of market, labour and infrastructure in attracting FDI. Government policy as measured by the Provincial Competiveness Index (PCI), however, does not seem to be a significant factor at the provincial level. Foreign investors from differenct source countries seem to behave differently in chosing the location of investment.
    Keywords: Foreign Direct Investment; Vietnam; multinationals; spatial distribution;
    JEL: F23 F2
    Date: 2007–06–10
  20. By: Amavilah, Voxi Heinrich
    Abstract: Extant literature indicates that technology, and by implication its underlying knowledge base, determines long-run economic performance. Absent from the literature with respect to developing countries are quantitative assessments of the nexus between technology as knowledge and economic performance. This paper imposes a simple production function on annual pooled observations on Botswana, Namibia, and South Africa over the 1976-2004 period to estimate the marginal impacts of technology as knowledge on economic performance. It finds that capital (k), openness to trade (τ), and even the share of government expenditure of GDP (G) among other factors, influence economic performance. However, the economic performance of countries like Botswana, Namibia, and South Africa depends largely on technology, technological change, and the basic knowledge that forms the foundation for both. For instance, measured as a homogenous “manna from heaven”, technology is the strongest determinant of real per capita income of the three nations. The strength of technology as a determinant of performance depends on the knowledge underpinnings of technology measured as the number of publications (Q, q). Both Q and q are strongly correlated with the countries’ performance. This suggests that the “social capability” and “technological congruence” of these countries are improving, and that developing countries like Botswana, Namibia, and South Africa gain from increased investment in knowledge-building activities including publishing. Obviously there is room for strengthening results, but this analysis has succeeded in producing a testable hypothesis.
    Keywords: knowledge; technology; economic performance
    JEL: D80 O55 C51 O41 D83 C22 O47 O33 C33 I29
    Date: 2007–06–10
  21. By: Mishra, SK
    Abstract: Human Development Index (HDI) is a composite index obtained by a weighted aggregation of other three indices, each measuring one aspect, namely life expectancy, education and real per capita income. Intra-country equality in income distribution, however, is very important with regard to quality of life and, thus, human development. This paper is concerned with the question that if the measure of income equality also were included in construction of the HDI, then what would be the relative weights of different indices. One method could be to assign equal weights to all the four, but it is too pragmatic. Alternatively, the principal component analysis (PCA) may be applied to derive weights. But, again, the PCA is an overly elitist method that undermines the poorly correlated set of variables, which might be very important in their own right, in favor of highly correlated set of variables. We propose an alternative method that maximizes the sum of absolute coefficients of correlation of the composite index with the constituent indices. Such an index is inclusive in nature and gives proper representation to weakly correlated variables also. The method has been applied to data of 125 countries and the HDI so constructed has been compared with the PCA HDI and HDR (UNDP) HDI. We find substantial ups and downs in the HDI ranks of different countries.
    Keywords: Human development index; International comparison; HDI; income distribution; equality; relative weights; representation; inclusive; elitist; principal component; alternative method; UNDP; correlation; absolute
    JEL: D63 C43 O57
    Date: 2007–06–11
  22. By: Chi, Wei; Li, Bo
    Abstract: Using 1987, 1996, and 2004 data, we show that the gender pay gap in the Chinese urban labor market has increased across the wage distribution, and the increase was greater at the lower quantiles. We interpret this as evidence of the “sticky floor” effect.We use the reweighting and recentered influence function projection method proposed by Firpo, Fortin, Lemieux (2005) to decompose gender pay differentials across the wage distribution. We find that the gender differences in the return to labor market characteristics, also known as the “discrimination effect” or “unexplained gender pay gap”, contribute most to the increase in the overall gender pay gap. The Firpo, Fortin, and Lemieux method allows us to further decompose the gender pay gap into the contribution of each individual variable. We find that the “sticky floor” effect may be associated with a particularly low paid group of female production workers with relatively less education working in non-state owned enterprises.
    Keywords: glass ceiling; sticky floor; gender pay gap; wage distribution; Influence Function
    JEL: J3
    Date: 2007–05
  23. By: Aguayo, Ernesto; Chapa, Joana; Rangel, Erick; Treviño, Lourdes; Valero-Gil, Jorge
    Abstract: There is considerable evidence that resources are not allocated randomly within households, and that resources are unequally distributed within the family in many developing countries. Such an unequal distribution of goods usually takes the form of a bias against females. For example, girls lag markedly behind boys in schooling in many developing countries even though this gender gap has been declining in recent years. Using an OLS-Robust model and a ML-Random Effects model for the years 1992, 1998 and 2004 of ENIGH, we did not find enough statistical evidence to support the idea that poor families, nether in rural nor in urban areas, provide more education to their 12 to 18 years old sons or daughters. In fact, contrary to the common belief, we found that non-poor families, invest more in the education of their daughters, especially in the urban areas. However, this education discrimination against male children has been decreasing over the years. It is also found that female head of households are more likely to have children with higher levels of schooling and that children having both parents at home or having older brothers or sisters present higher levels of educational attainment.
    Keywords: Gender-bias; discrimination; Poverty; Mexican studies; intra-household allocation;
    JEL: I39 I29 O54
    Date: 2007–05–07
  24. By: Barry Eichengreen (University of California, Berkeley - Department of Economics); David Leblang
    Abstract: The relationship between democracy and globalisation has been the focus of substantial policy and academic debate. Some argue that democracy and globalisation go hand in hand suggesting that unrestricted international transactions leads to increased political accountability and transparency. And, politically free societies are likely to have minimal restrictions on the mobility of goods and services across national borders. Others argue that the causal relationship should be reversed: democracies are more likely to have closed markets and vice versa. We examine these relationships between political democracy and trade and financial globalisation over the period 1870-2000 and treat both democracy and globalisation as both cause and effect. Our empirical strategy uses instrumental variables and estimates relationships using the Generalised Method of Moments framework. Our general findings support the hypothesis of a positive two-way relationship between democracy and globalisation.
    Keywords: Democracy, globalisation
    JEL: D72 F02 F41 N10 P51
    Date: 2006–12
  25. By: Jeevan K Khundrakpam
    Abstract: This paper examines the behaviour of exchange rate pass-through to domestic prices in India during the post-economic reforms initiated since the major devaluation of July 1991. It observes that there is no clear-cut evidence of a fall in exchange rate pass-through to domestic prices. Further, there is asymmetry in pass-through between appreciation and depreciation, and between sizes of the exchange rate change. Based on the empirical evidence provided in the literature, the paper conjectures that reductions in import tariffs, the removal of trade restrictions, the increased import penetration ratio and openness of the economy and the change in the composition of imports following the economic liberalisation could have transitorily negated the impact of lower inflation on pass-through. Part of the non-decline in long-run pass-through is due to a rise in inflation persistence. This could follow from the dismantling of price controls in an environment of periodic spurts in inflation around a non-declining inflationary trend, combined with a rise in the government deficit, which has a nexus with inflation in India.
    Keywords: pass-through, prices, exchange rate
    JEL: E31 E52 F41
    Date: 2007–02
  26. By: Valerie Cerra; Sweta Chaman Saxena
    Abstract: Using panel data for a large number of countries, we find that economic contractions are not followed by offsetting fast recoveries. Trend output lost is not regained, on average. Wars, crises, and other negative shocks lead to absolute divergence and lower long-run growth, whereas we find absolute convergence in expansions. The output costs of political and financial crises are permanent on average, and long-term growth is negatively linked to volatility. These results also imply that panel data studies can help identify the sources of growth and that economic models should be capable of explaining growth and fluctuations within the same framework.
    Keywords: growth, output loss, recessions, crises, wars, business cycles, recovery
    JEL: C23 E32 F43 O40
    Date: 2007–03

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.