nep-dev New Economics Papers
on Development
Issue of 2007‒08‒08
58 papers chosen by
Jeong-Joon Lee
Towson University

  1. Demographic Influences on Saving-Investment Balances in Developing and Developed Economies By Ralph C. Bryant; ; ;
  2. Credit for What? : Informal Credit as a Coping Strategy of Market Women in Northern Ghana By Kati Schindler
  3. Expanding Credit Access: Using Randomized Supply Decisions to Estimate the Impacts By Jonathan Zinman
  4. Aid Proliferation and Economic Growth: A Cross-Country Analysis By KIMURA Hidemi; SAWADA Yasuyuki; MORI Yuko
  5. On the Role of Technical Cooperation in International Technology Transfers By SAWADA Yasuyuki; MATSUDA Ayako; KIMURA Hidemi
  6. Intertemporal Distribution of Foreign Aid By TAKASE Koichi
  7. Measuring the Effect of Foreign Aid on Growth and Poverty Reduction or The Pitfalls of Interaction Variables By Joydeep Roy; Catherine A. Pattillo; J. J. Polak
  8. Schooling in Developing Countries: The Roles of Supply, Demand and Government Policy By Orazem, Peter; King, Elizabeth M
  9. Why Is Child Labor Illegal? By Sylvain Dessy; John Knowles
  10. Openness and Technological Innovations in Developing Countries: Evidence from Firm-Level Surveys By Rita Almeida; Ana Margarida Fernandes
  11. Trade, Quality Upgrading and Wage Inequality in the Mexican Manufacturing Sector By Eric A. Verhoogen
  12. Spending to Save? State Health Expenditure and Infant Mortality in India By Sonia Bhalotra
  13. Interprovincial Migration in China: The Effects of Investment and Migrant Networks By Shuming Bao; Örn B. Bodvarsson; Jack W. Hou; Yaohui Zhao
  14. Returns to Capital in Microenterprises: Evidence from a Field Experiment By Suresh de Mel; David McKenzie; Christopher Woodruff
  15. Social Attitudes and Economic Development: An Epidemiological Approach By Yann Algan; Pierre Cahuc
  16. A Profile of the World's Young Developing Country Migrants By David J. McKenzie
  17. Occupational Choice and the Spirit of Capitalism By Matthias Doepke; Fabrizio Zilibotti
  18. On the Impact of Foreign Aid in Education on Growth: How Relevant is the Heterogeneity of Aid Flows and the Heterogeneity of Aid Recipients? By Elizabeth Asiedu; Boaz Nandwa
  19. The Effect of the Liberalization of Investment Policies on Employment and Investment of Multinational Corporations in Africa By Elizabeth Asiedu; Kwabena Gyimah-Brempong
  20. Is the World Flat? Differential Regulation of Domestic and Foreign-Owned Firms By Elizabeth Asiedu; Hadi Salehi Esfahani
  21. The Impact of Pro-Competitive Reforms on Trade in Developing Countries By Sébastien Miroudot; Enrico Pinali; Nicolas Sauter
  22. Efficiency, Depth and Growth: Quantitative Implications of Finance and Growth Theory By Alex William Trew
  23. Institutions, Geography and Trade: A Panel Data Study By Jeffry Jacob; Thomas Osang
  24. "Economic Development, Income Inequality and Social Stability in Prewar Japan: A Prefecture-level Analysis" By Tetsuji Okazaki
  25. Child labour and Education for All By L.Guarcello; S.Lyon; F.Rosati
  26. Non-formal education approaches for child laborers: an issue paper. By S.Lyon; F.Rosati
  27. Impact of school quality on child labor and school attendance: the case of CONAFE Compensatory Education Program in Mexico By F.Rosati; M. Rossi
  28. Tackling child labour. Policy options for achieving sustainable reductions in children at work By S. Lyon; F.Rosati
  29. School to work transition in Georgia: a preliminary analysis based on household budget survey data By L. Guarcello; S. Lyon; F.Rosati; C.Valdivia
  30. Social security privatization and labor market reforms: how did they affect poverty and income distribution in Chile? By Azzurra Rinaldi
  31. Finance and growth - a macroeconomic assessment of the evidence from a European angle By Elias Papaioannou
  32. The employment effects of mergers in a declining industry: the case of South African gold mining By Alberto Behar; James Hodge
  33. Brain drain and Human Capital Formation in Developing Countries. Are there Really Winners? By José Luis Groizard; Joan Llull
  34. The Role of Customary Institutions in Managing Conflict on Grazing Land - A Case Study from Mieso District, Eastern Ethiopia By Fekadu Beyene
  35. Growth, employment and poverty: An analysis of the vital nexus based on some recent UNDP and ILO/SIDA studies By Azizur Rahman Khan
  36. Macroeconomics and Growth Policies By Shari Spiegel
  37. Macroeconomics and Growth Policies By Jayati Ghosh
  38. Financial Policies By Chandru P. Chandrasekhar
  39. State-Owned Enterprise Reform By Ha-Joon Chang
  40. Investment and Technology Policies By Mushtaq H. Khan
  41. Social Policy By Isabel Ortiz
  42. Trade Policy By Murray Gibbs
  43. The education bias of 'trade liberalization' and wage inequality in developing countries By Mamoon, Dawood; Murshed, S. Mansoob
  44. The Engine of Growth By Federico Etro
  45. Inter-country Comparisons of Poverty Based on a Capability Approach: An Empirical Exercise By Sanjay G. Reddy; Sujata Visaria; Muhammad Asali
  46. Global Estimates of Pro-Poor Growth By Hyun H. Son; Nanak Kakwani
  47. The Post-Apartheid Evolution of Earnings Inequality in South Africa, 1995-2004 By Phillippe G. Leite; Terry McKinley; Rafael Guerreiro Osório
  48. Gender Inequalities in Allocating Time to Paid and Unpaid Work: Evidence from Bolivia By Marcelo Medeiros; Rafael Guerreiro Osório; Joana Costa
  49. Conditional Cash Transfers in Brazil, Chile and Mexico: Impacts upon Inequality By Sergei Suarez Dillon Soares; Rafael Guerreiro Osório; Fabio Veras Soares; Marcelo Medeiros; Eduardo Zepeda
  50. Distinguishing Chronic Poverty from Transient Poverty in Brazil: Developing a Model for Pseudo-Panel Data By Rafael Perez Ribas; Ana Flávia Machado
  51. Conditional cash transfers in African countries By Nanak Kakwani; Fabio Veras Soares; Hyun H. Son
  52. Rural Poverty in China: Problem and Policy By Gregory C. Chow
  53. An Economic Analysis of Health Care in China By Gregory C. Chow
  54. Global patterns of income and health: facts, interpretations, and policies By Angus Deaton
  55. Health and wellbeing in Udaipur and South Africa By Anne Case; Angus Deaton
  56. The Determinants of Mortality By David Cutler; Angus Deaton; Adriana Lleras-Muney
  57. Visual Culture and Visual Piety in Little Haiti: The Sea, the Tree, and the Refugee By Terry Rey; Alex Stepick
  58. The determinants of economic growth in emerging economies: a comparative analysis By Pasquale Tridico

  1. By: Ralph C. Bryant; (Brookings Institution); ;
    Abstract: This paper studies demographic differences between lower-income, less developed countries (the “South”) and higher-income developed countries (the “North”). It analyzes the implications of heterogeneous demographic evolutions for aggregate saving-investment imbalances, exchange rates, and the resulting net capital flows between North and South. An optimistic perspective suggests that the North can run a current-account surplus sizable in relation to the Northern economy, thereby transferring large net amounts of financial capital to the South. This paper argues that an optimistic perspective is a plausible characterization of demographic influences on North-South capital flows in the historical period between 1950 and the mid-1970s. For historical decades after the 1970s and for the initial decades of the 21st century, however, a less optimistic perspective is appropriate. Demographic forces considered by themselves are likely to diminish rather than augment the flow of Northern saving to the South as a fraction of the Southern economy. The fundamental causes of these effects are shifts in relative demographics between the South and the North. The qualitative conclusion holds regardless of whether the demographic transition in Southern economies is somewhat faster and sooner or somewhat slower and delayed, regardless of whether growth in Southern total factor productivity is vigorous or weak, and regardless of whether cross-border goods substitutability is modest or strong. Public policy concerned with demographic trends in higher-income Northern nations should recognize that demographic asymmetries with lower-income Southern economies are unlikely, by themselves, to ease resolution of Northern macroeconomic difficulties caused by population aging.
    Keywords: demographic evolutions, trends, changes, capital flows, exchange rates, North, South, cross-border goods, asymmetries
    Date: 2007–04
  2. By: Kati Schindler
    Abstract: This paper analyzes the use of informal credit as a strategy to cope with risk by market women in the city of Tamale, northern Ghana. Based on qualitative research techniques, the analysis reveals that the intra-household structure determines these market-based coping strategies. Market women invest a considerable amount of time in maintaining complex credit networks to insure against a loss of trading capital and labor. As a policy implication, this research suggests providing market women with access to formal, reliable and long-term microfinance, both to minimize their exposure to risks and to enhance their ability to cope with risks.
    Keywords: Africa, Ghana, informal finance, coping strategies, intra-household allocation, women
    JEL: O12 O17 D13
    Date: 2007
  3. By: Jonathan Zinman (Dartmouth College)
    Abstract: Expanding credit access is a key ingredient of development strategies worldwide. Microfinance practitioners, policymakers, and donors have ambitious goals for expanding access, and seek efficient methods for implementing and evaluating expansion. There is less consensus on the role of consumer credit in expansion initiatives. Some microfinance institutions are moving beyond entrepreneurial credit and offering consumer loans. But many practitioners and policymakers are skeptical about “unproductive” lending. These concerns are fueled by academic work highlighting behavioral biases that may induce consumers to over borrow. We estimate the impacts of a consumer credit supply expansion using a field experiment and follow-up data collection. A South African lender relaxed its risk assessment criteria by encouraging its loan officers to approve randomly selected marginal rejected applications. We estimate the resulting impacts using new survey data on applicant households and administrative data on loan repayment, as well as public credit reports one and two years later. We find that the marginal loans produced significant benefits for borrowers across a wide range economic and well-being outcomes. We also find some evidence that the marginal loans were profitable for the Lender. The results suggest that consumer credit expansions can be welfare-improving.
    Keywords: Microfinance, credit impact, consumer credit
    JEL: D1 D9 J2 J6 O1
    Date: 2007–07
  4. By: KIMURA Hidemi; SAWADA Yasuyuki; MORI Yuko
    Abstract: In this paper, we examine whether aid proliferation hinders aid effectiveness in promoting economic growth. We employ a wide variety of specifications of the standard aid-growth regression using Roodman's (2007a) dataset. Specifically, we include a donor-concentration index as a proxy for donor proliferation and the interaction term between aid and a donor-concentration index as additional independent variables. Our best empirical results are in favor of a hypothesis that aid proliferation involves a negative effect on economic growth of the recipient countries with proper correction for possible biases arising from omitted variable and endogeneity problems.
    Date: 2007–07
  5. By: SAWADA Yasuyuki; MATSUDA Ayako; KIMURA Hidemi
    Abstract: We investigate whether and how technical cooperation aid (TC) facilitates technological diffusion from developed to developing countries, comparing it with foreign direct investment (FDI) and external openness. Extending the model of Benhabib and Spiegel (2005), we estimate the degree to which these three channels contribute to countries’ total factor productivity (TFP) growth rates. Our econometric model also allows us to identify whether a country will catch up to or diverge from the technological leader nation over time. Two sets of robust findings emerge. First, TC, FDI and openness all contribute to facilitate international technology transfers. Yet, among these three channels, openness seems to contribute the most, followed by TC. Also, TC seems to compensate for the lack of sufficient human capital in developing countries. Second, around 6 to 17 countries out of 85 in our sample fail to catch up to the technological leader over the 36 years. These results suggest that TC can play an important role in facilitating the technological catch up of developing countries.
    Date: 2007–07
  6. By: TAKASE Koichi
    Abstract: We analyze the dynamic effects of foreign aid on the economic growth and welfare of a recipient countries. Based on an overlapping generations model with a productive capital, foreign aid is characterized by its uses: whether it takes a form of income compensation (income aid) or capital stock (capital aid), and by its recipients: which generation(s) or institution hold(s) its ownership. We found some different results from those of the traditional wisdom of foreign aid. First, foreign aid tends to be less efficient without any condition to the recipient. Second, capital aid can be more efficient than income aid, and its efficiency could be even higher when capital aid is loaned in stead of being granted. Third, a stable relationship between the donors and the recipient may harm the efficiency of foreign aid.
    Date: 2007–08
  7. By: Joydeep Roy; Catherine A. Pattillo; J. J. Polak
    Abstract: Regressions in a number of recent papers written by staff members of the World Bank and the IMF rely on an interaction variable (IAV) to establish the effects of foreign aid on economic growth or the reduction of poverty. The common assumption in these papers is that if the coefficient of this IAV is statistically significant, then both of its components have a significant effect on the dependent variable. That assumption is not justified in its generality, and this paper develops two techniques that show a high probability that in at least two of the three studies analyzed one of the components of the IAV may not have a significant effect.
    Date: 2007–06–28
  8. By: Orazem, Peter; King, Elizabeth M
    Abstract: In developing countries, rising incomes, increased demand for more skilled labor, and government investments of considerable resources on building and equipping schools and paying teachers have contributed to global convergence in enrollment rates and completed years of schooling. Nevertheless, in many countries substantial education gaps persist between rich and poor, between rural and urban households and between males and females. To address these gaps, some governments have introduced school vouchers or cash transfers programs that are targeted to disadvantaged children. Others have initiated programs to attract or retain students by expanding school access or by setting higher teacher eligibility requirements or increasing the number of textbooks per student. While enrollments have increased, there has not been a commensurate improvement in knowledge and skills of students. Establishing the impact of these policies and programs requires an understanding of the incentives and constraints faced by all parties involved, the school providers, the parents and the children. The chapter reviews the economic literature on the determinants of schooling outcomes and schooling gaps with a focus on static and dynamic household responses to specific policy initiatives, perceived economic returns and other incentives. It discusses measurement and estimation issues involved with empirically testing these models and reviews findings. Governments have increasingly adopted the practice of experimentation and evaluation before taking steps to expand new policies. Often pilot programs are initiated in settings that are atypically appropriate for the program, so that the results overstate the likely impact of expanding the program to other settings. Program expansion can also result in general equilibrium feedback effects that do not apply to isolated pilots. These behavioral models provide a useful context within which to frame the likely outcomes of such expansion.
    Keywords: Education, household demand for education, education policy
    JEL: I2
    Date: 2007–07–31
  9. By: Sylvain Dessy (Université Laval); John Knowles (University of Pennsylvania and IZA)
    Abstract: We present a theory of the emergence of laws restricting child labor or imposing mandatory education that is consistent with the fact that poor parents tend to oppose such laws. We find that if altruistic parents are unable to commit to educating their children, child-labor laws can increase the welfare of higher-income parents in an ex ante sense. On the basis of an empirical analysis of Latin-American household surveys, we demonstrate that per capita income in the country of residence has the predicted effect on child labor supply, even after controlling for other household characteristics.
    Keywords: macroeconomic analyses of economic development, labor force composition
    JEL: J82 O11
    Date: 2007–07
  10. By: Rita Almeida (World Bank and IZA); Ana Margarida Fernandes (World Bank)
    Abstract: This paper examines international technology transfers using firm-level data across 43 developing countries. Our findings show that exporting and importing activities are important channels for the transfer of technology. Majority foreign-owned firms are less likely to engage in technological innovations than minority foreign-owned firms or domestic firms. We interpret this finding as evidence that the technology transferred from multinational parents to majorityowned subsidiaries is more mature than that transferred to minority-owned subsidiaries. Our findings also suggest that foreign-owned subsidiaries rely mostly on the direct transfer of technology from their parents and that firms that import intermediate inputs are more likely to acquire new technology from their machinery suppliers.
    Keywords: innovation, technology adoption, exports, imports, foreign ownership, firm level data
    JEL: F1 F2 O3
    Date: 2007–07
  11. By: Eric A. Verhoogen (Columbia University, BREAD, CEPR and IZA)
    Abstract: This paper proposes a new mechanism linking trade and wage inequality in developing countries - the quality-upgrading mechanism - and investigates its empirical implications in panel data on Mexican manufacturing plants. In a model with heterogeneous plants and quality-differentiated goods, only the most productive plants in a country like Mexico enter the export market, they produce higher-quality goods to appeal to richer Northern consumers, and they pay high wages to attract and motivate a high-quality workforce. An exchange-rate devaluation leads initially more-productive, higher-wage plants to increase exports, upgrade quality, and raise wages relative to initially less-productive, lower-wage plants within each industry. Using the late-1994 peso crisis as a source of variation and a variety of proxies for plant productivity, I find that initially more-productive plants increased the export share of sales, white-collar wages, blue-collar wages, the relative wage of white-collar workers, and ISO 9000 certification more than initially less-productive plants during the peso crisis period, and that these differential changes were greater than in periods without devaluations before and after the crisis period. A factor-analytic strategy that relies more heavily on the theoretical structure and avoids the need to construct proxies finds similar results. These findings support the hypothesis that differential quality upgrading induced by the exchange rate shock tended to increase within-industry wage inequality.
    Keywords: trade and wage inequality, quality upgrading, exchange-rate shock
    JEL: F16 J31 O12 L11
    Date: 2007–07
  12. By: Sonia Bhalotra (University of Bristol, CMPO and IZA)
    Abstract: There are severe inequalities in health in the world, poor health being concentrated amongst poor people in poor countries. Poor countries spend a much smaller share of national income on health expenditure than do richer countries. What potential lies in political or growth processes that raise this share? This depends upon how effective government health spending in developing countries is. Existing research presents little evidence of an impact on childhood mortality. Using specifications similar to those in the existing literature, this paper finds a similar result for India, which is that state health spending saves no lives. However, upon allowing lagged effects, controlling in a flexible way for trended unobservables and restricting the sample to rural households, a significant effect of health expenditure on infant mortality emerges, the long run elasticity being about -0.24. There are striking differences in the impact by social group. Slicing the data by gender, birth-order, religion, maternal and paternal education and maternal age at birth, I find the weakest effects in the most vulnerable groups (with the exception of a large effect for scheduled tribes).
    Keywords: public spending, health, poverty, infant mortality, India
    JEL: I18 I38 O15 O12
    Date: 2007–07
  13. By: Shuming Bao (University of Michigan); Örn B. Bodvarsson (St. Cloud State University and IZA); Jack W. Hou (California State University, Long Beach); Yaohui Zhao (Beijing University)
    Abstract: Since the 1980s, China’s government has eased restrictions on internal migration. This easing, along with rapid growth of the Chinese economy and substantial increases in foreign and domestic investments, has greatly stimulated internal migration. Earlier studies have established that migration patterns were responsive to spatial differences in labor markets in China, especially during the 1990s. However, other important economic and socio-political determinants of interprovincial migration flows have not been considered. These include the size of the migrant community in the destination, foreign direct and domestic fixed asset investments, industry and ethnic mixes and geographic biases in migration patterns. We estimate a modified gravity model of interprovincial migration in China that includes as explanatory variables: migrant networks in the destination province, provincial economic conditions, provincial human capital endowments, domestic and foreign investments made in the province, industry and ethnic mixes in the province, provincial amenities and regional controls, using province-level data obtained from the National Census and China Statistical Press for the 1980s and 1990s. We find strong evidence that migration rates rise with the size of the destination province’s migrant community. Foreign and domestic investments influence migration patterns, but sometimes in unexpected ways. We find that as economic reforms in China deepened in the 1990s, the structure of internal migration did not change as much as earlier studies have suggested. Consequently, our results raise new questions about the World’s largest-scale test case of internal migration and strongly suggest a need for further research.
    Keywords: internal migration, investment, migrant networks
    JEL: J61
    Date: 2007–07
  14. By: Suresh de Mel (University of Peradeniya); David McKenzie (World Bank and IZA); Christopher Woodruff (University of California, San Diego)
    Abstract: Small and informal firms account for a large share of employment in developing countries. The rapid expansion of microfinance services is based on the belief that these firms have productive investment opportunities and can enjoy high returns to capital if given the opportunity. However, measuring the return to capital is complicated by unobserved factors such as entrepreneurial ability and demand shocks, which are likely to be correlated with capital stock. We use a randomized experiment to overcome this problem, and to measure the return to capital for the average microenterprise in our sample, regardless of whether or not they apply for credit. We accomplish this by providing cash and equipment grants to small firms in Sri Lanka, and measuring the increase in profits arising from this exogenous (positive) shock to capital stock. After controlling for possible spillover effects, we find the average real return to capital to be 5.7 percent per month, substantially higher than the market interest rate. We then examine the heterogeneity of treatment effects to explore whether missing credit markets or missing insurance markets are the most likely cause of the high returns. Returns are found to vary with entrepreneurial ability and with measures of other sources of cash within the household, but not to vary with risk aversion or uncertainty.
    Keywords: microenterprises, returns to capital, self-employment
    JEL: O12 O17
    Date: 2007–07
  15. By: Yann Algan (Université Marne la Vallée, CEPREMAP and IZA); Pierre Cahuc (University Paris 1, CREST-INSEE, CEPR and IZA)
    Abstract: In this paper we develop a new empirical approach to uncovering the impact of social attitudes on economic development. We first show that trust of second-generation Americans is significantly influenced by the country of origin of their forebears. In the spirit of the epidemiology literature, we interpret this phenomenon as the consequence of inherited social attitudes. We show that trust inherited by second-generation Americans from their country of origins has changed over time. This result allows us to use the inherited trust of secondgeneration Americans as a time-varying instrument to track back the evolution of trust in the home country of their parents. This strategy enables us to identify the specific impact of inherited trust on economic development relative to other traditional candidates, such as institutions and geography, by controlling for country fixed effects. We find that inherited trust has explained a substantial share of economic development on a sample of 30 countries during the post-war period, by improving total factor productivity and the accumulation of human and physical capital.
    Keywords: social capital, trust, economic development, growth
    JEL: O10 F10 P10 N13
    Date: 2007–07
  16. By: David J. McKenzie (World Bank and IZA)
    Abstract: Individual level census and household survey data are used to present a rich profile of the young developing migrants around the world. Youth are found to comprise a large share of all migrants, particularly in migration to other developing countries, with the probability of migration peaking in the late teens or early twenties. The paper examines in detail the age and gender composition of migrants, whether or not young migrants move alone or with a parent or spouse, their participation in schooling and work in the destination country, the types of jobs they do, and the age of return migration. The results suggest a high degree of commonality in the youth migrant experience across a number of destination countries. In particular, developing country youth tend to work in similar occupations all around the world, and are more concentrated in these occupations than older migrants or native youth. Nevertheless, there is also considerable heterogeneity amongst youth migrants: 29 percent of 18 to 24 year olds are attending school in their destination country, but another 29 percent are not working or in school. This illustrates both the potential of migration for building human capital, and the fear that lack of integration prevents it from being used.
    Keywords: international migration, youth
    JEL: O12 O15
    Date: 2007–07
  17. By: Matthias Doepke (University of California, Los Angeles, CEPR, NBER, and IZA); Fabrizio Zilibotti (University of Zurich, IIES Stockholm and CEPR)
    Abstract: The British Industrial Revolution triggered a reversal in the social order whereby the landed elite was replaced by industrial capitalists rising from the middle classes as the economically dominant group. Many observers have linked this transformation to the contrast in values between a hard-working and thrifty middle class and an upper class imbued with disdain for work. We propose an economic theory of preference formation in which both the divergence of attitudes across social classes and the ensuing reversal of economic fortunes are equilibrium outcomes. In our theory, parents shape their children’s preferences in response to economic incentives. If financial markets are imperfect, this results in the stratification of society along occupational lines. Middle-class families in occupations that require effort, skill, and experience develop patience and work ethic, whereas upper-class families relying on rental income cultivate a refined taste for leisure. These class-specific attitudes, which are rooted in the nature of pre-industrial professions, become key determinants of success once industrialization transforms the economic landscape.
    Keywords: occupational choice, endogenous preferences, social classes, industrial revolution
    JEL: J24 N2 N3 O11 O15 O40
    Date: 2007–07
  18. By: Elizabeth Asiedu (Department of Economics, The University of Kansas); Boaz Nandwa (Economic Growth Center, Yale University)
    Abstract: This paper examines whether foreign aid in education has a significant effect on growth. We take into consideration the heterogeneous nature of aid as well as the heterogeneity of aid recipients—we disaggregate the aid data into primary, secondary and higher education, and run separate regressions for low income and middle income countries. We find that the effect of aid varies by income as well as by the type of aid. Thus our results underscore the importance of the heterogeneity of aid flows as well as the heterogeneity of recipient countries when analyzing the effect of aid on growth.
    Keywords: Education, Foreign Aid, Growth.
    JEL: F34 F35 I20 O19
    Date: 2007–07
  19. By: Elizabeth Asiedu (Department of Economics, The University of Kansas); Kwabena Gyimah-Brempong (Department of Economics, University of South Florida)
    Abstract: There has been a remarkable shift in the attitudes towards globalization. Specifically, the discussion among academics and policymakers has shifted from whether globalization should be encouraged to how countries can position themselves to benefit from globalization. This paper focuses on one aspect of globalization – the liberalization of investment policies – and analyzes its impact on employment and investments by multinational corporations in Africa. We use data for 33 countries over the period 1984-2003 and we employ a dynamic panel estimator for our analysis. There are two major findings. First, liberalization has a significant and positive effect on investment. Second, liberalization does not have a direct impact on multinational employment – the effect is indirect: liberalization stimulates multinational investments which in turn increases multinational employment. By increasing investment and employment from multinational firms, these liberalization programs contribute to poverty alleviation.
    Keywords: Africa, employment, foreign direct investment, U.S. multinationals.
    JEL: F23 O55
    Date: 2007–07
  20. By: Elizabeth Asiedu (Department of Economics, The University of Kansas); Hadi Salehi Esfahani (Department of Economics, University of Illinois, Urbana-Champaign)
    Abstract: This paper examines the determinants of differential employment restrictions applied to foreign vs. domestic firms. We develop a model of employment regulation and test its implications using data from the World Bank's World Business Environment Survey, conducted in 1999/2000. We find that while democratic accountability, corruption, and British legal origin reduce the extent of government intervention in firms' employment decision, they give greater advantage to domestic relative to foreign investors. Rule of law, on the other hand, has a more even effect. Better investment opportunities in the country enhance the government's bargaining power vis-à-vis investors and increase employment intervention, especially in foreign firms engaged in less tradable sectors. We also identify a host of other factors that influence employment restrictions, though none of them entail a differential impact on foreign investors. We find that after controlling for other factors, foreign investors in Latin America face a greater regulatory disadvantage vis-à-vis locals compared to other regions of the world, though this is partly counterbalanced by other effects captured in the model.
    Keywords: Employment Regulation, Foreign Direct Investment, Political Economy.
    JEL: L5 F23 O2
    Date: 2007–07
  21. By: Sébastien Miroudot; Enrico Pinali; Nicolas Sauter
    Abstract: This report proposes an analysis of the mutually reinforcing relationship between trade, investment and competition policies and how together they impact trade in developing countries. An index of pro-competitive reforms is provided for 82 countries over the period 2001-2005. The index synthesises 13 indicators of the policy stance of countries with regard to trade, investment and competition. It is then used in quantitative analysis to determine the impact of barriers to competitive markets on trade. The results shows that there are substantial gains for developing countries in market and regulatory reforms in terms of higher trade flows and higher income per capita. Moreover, the paper further examines pro-competitive reforms in key services sectors and the extent to which trade agreements can promote them through the experience of the WTO telecoms Reference Paper. The analysis highlights that countries achieved a high degree of liberalisation in the telecoms sector and that regulatory principles of the Reference Paper were useful in promoting sound policies under domestic regulatory reforms of the sector.
    Keywords: telecommunications, regulatory reforms, indicators, trade liberalisation, trade and competition, trade and investment, pro-competitive reforms, gravity, reference paper, telecoms, gains
    JEL: F12 F14 L50 L96
    Date: 2007–06–15
  22. By: Alex William Trew
    Abstract: We develop a parsimonious finance and endogenous growth model with microeconomic frictions in entrepreneurship and a role for credit constraints. We demonstrate that though an efficiency-growth relation will always exist, the efficiency-depth-growth relation may not. This has implications for the connection between the theory and empirics of finance and growth. We go on to ask whether the model can account for some historical trends in growth, financial depth and financial efficiency for the UK over the period 1850--1913. The best model of finance and growth is one that departs from the standard depth-growth link.
    Keywords: finance and growth, endogenous growth, economic history.
    JEL: O11 O16 O40 N13 N23
    Date: 2007–07
  23. By: Jeffry Jacob (Bethel University); Thomas Osang (SMU)
    Abstract: A number of recent papers study the impact of institutions, trade and geography known as “deep determinants” of economic development using cross-section data. This paper instead employs a panel data approach to examine the impact of these three determinants on per capita income. Our approach enables us to account for unobserved heterogeneity across countries, an issue that cannot be addressed in a cross-section framework. Moreover, employing the Hausman and Taylor (1981) approach allows us to obtain direct parameter estimates of the time invariant explanatory variables like geography or some institutional measures, making our results comparable to the existing cross-section iterature. Also, by using lagged explanatory variables whenever possible we can account for contemporaneous correlation between these variables and the idiosyncratic error term. We find that the quality of institutions and openness to trade both have positive and statistically significant coefficient estimates throughout most specifications, while geography, captured by malaria ecology measure, has negative estimates that are often, but not always statistically significant. In terms of their economic impact, institutional measures appear to have the strongest impact, followed by openness to trade measures. In comparison, geography measures have rather small elasticity estimates.
    Keywords: Development, Institutions, Openness, Geography, panel data
    JEL: O1 N1 H1 F1
  24. By: Tetsuji Okazaki (Faculty of Economics, University of Tokyo)
    Abstract: This paper addresses the relationship between economic development, income inequality and social stability, using the data of prewar Japan. We have made prefecture-level income inequality index, based on tax and wage statistics with respect to four data points, 1888, 1896, 1921 and 1935. Regression analyses of the prefecture-level panel data confirmed that there was an inverse-U shaped relationship between economic development and income inequality. At the same time thorough analyses of the data on thefts and suicides, we found that income inequality gave a negative impact on social stability.
    Date: 2007–06
  25. By: L.Guarcello; S.Lyon; F.Rosati
    Abstract: Education is a key element in the prevention of child labour; at the same time, child labour is one of the main obstacles to Education for All (EFA). Understanding the interplay between education and child labour is therefore critical to achieving both EFA and child labour elimination goals. This paper forms part of UCW broader efforts towards improving this understanding of education-child labour links, providing a brief overview of relevant research and key knowledge gaps. The study largely confirm the conventional wisdom that child labour harms children's ability to enter and survive in the school system, and makes it more difficult for children to derive educational benefit from schooling once in the system. The evidence also suggested that these negative effects are not limited to economic activity but also extend to household chores, and that the intensity of work (in economic activity or household chores) is particularly important in determining the impact of work on schooling. As regards the link between education provision and child labour, it pointed to the important role of inadequate schooling in keeping children out of the classroom and into work. This evidence indicated that both the school quality and school access can play an important role in household decisions concerning whether children study or work.
    Date: 2006–11
  26. By: S.Lyon; F.Rosati
    Abstract: Worldwide, an estimated 104 million children are working. Many of them have never attended school or have dropped out very early. About two-thirds of them are girls. Considering that most if not all of these children missing out on primary education are child laborers, efforts to achieve EFA must go hand in hand with efforts to eliminate child labor. Child labor also affects the academic achievement of the considerable number of children who combine school and work, contributing to the early drop-out and entry into full-time work. To these figures one should also add the large number of youth that enter the labor market without or with very limited schooling. The twin challenges posed by out-of-school children and child laborers therefore remain daunting. The paper examines the role of non-formal education (NFE) in helping to meet these challenges. It first reviews international program experience in the areas of NFE and working children and key lessons learned from this experience. Building on this review, it then examines additional research needed to identify where non formal education should fit in the broader effort towards Education For All and child labor elimination.
    Date: 2006–11
  27. By: F.Rosati; M. Rossi
    Abstract: This paper focuses on the impact that two different types of policy interventions, namely enhancing school quality and contingent cash transfers , have on child labour and school attendance in Mexico. While there are many studies on the impact of Oportunidades on schooling outcomes, little evidence is available on whether school quality programs such as CONAFE also reduce child labour and help keep children in school. To carry out the analysis, we merge the Oportunidades panel dataset for the years 1997 to 2000 to the CONAFE dataset containing detailed information on the school quality program components. The econometric strategy involves a bivariate probit model for child labor and schooling, both for primary school aged children and adolescents. In this way, we are able to control whether the impact of the program on schooling differs according to the age of the targeted child. Our findings suggest that school quality programs are not only effective in increasing school attendance, but also act as deterrents to child labor, especially for children of secondary school age.
    Date: 2007–02
  28. By: S. Lyon; F.Rosati
    Abstract: This paper aims to identify the appropriate policy response to substantially reduce child labour and review key policy options. Key policy options fall with the broad categories of prevention, second chances education and direct action. The main burden for a sustainable reduction of child labour and increase in human capital investment rests on prevention. “Second chance” policies targeting children already exposed to child labor although likely less significant in resource terms, should not be neglected. “Direct action” is needed to identify and rescue laborers in forms of child labor that pose a direct threat to their health and safety or that violate fundamental human rights.
    Date: 2006–09
  29. By: L. Guarcello; S. Lyon; F.Rosati; C.Valdivia
    Abstract: In Georgia, the lack of employment opportunities and with it, the loss of positive motivation and hope in a better future, is among the critical challenges facing the current generation of young people. Many of the employment problems of Georgian young people are rooted in the critical period of transition from education to working life. Yet the routes that young people take from education to employment are poorly understood, and data relating to this transition period are scarce. There is therefore limited empirical basis for formulating policies and programmes promoting youth employment and successful school to work transitions. This paper constitutes a starting point for more detailed analysis on youth labour market status in the Georgian context and it study is aimed at contributing to fill the lack of information about the transition from education to working life. It therefore analyses a set of youth education and employment indicators based on 2002 Georgia Household Budget Survey. Particular emphasis is placed on measuring the initial transition from school to work for different groups of young people, and on identifying the factors affecting this transition.
    Date: 2005–11
  30. By: Azzurra Rinaldi
    Abstract: The aim of this paper is to analyze the trend of poverty and income distribution in Chile in the last seventeen years, that is since 1989, when elections allowed a coalition named Concertaci� and driven by Patricio Aylwin to guide the country and to put an end to Augusto Pinochets government, which lasted 16 years, from 1973 to 1989. The reforms that Pinochets government brought about on the basis of the liberalist theories and realized with the aim to accelerate the countrys modernization process, certainly helped the economic growth, but even caused some persistent repercussions on both income distribution and poverty. The very nature of the fields of these reforms suggests the hypothesis that they could have affected the income distribution structure and, consequently, the poverty rate of population. The paper is structured on three sections: in the first, introductory, one, we briefly showed the main aspects of the social security system and the labour market reforms that Pinochets government carried out; in the second one, we presented an analysis of the trends of population and employment, to verify the basic conditions on which the governments of the Concertaci� intervened since 1989; and in the last one, we examined the poverty and income distribution trends.
    Date: 2006–12
  31. By: Elias Papaioannou (Dartmouth College, Economics Department, Hanover, NH 03755, USA.)
    Abstract: This paper reviews the literature on the finance-growth nexus within a neoclassical growth framework, placing an emphasis on the policy implications in the current European environment, that has placed financial reforms high on the policy Agenda. While more research is needed to establish causality and verify the theoretical channels linking access to finance and growth, firm-level, industry-level, macro, and country-specific studies all tend to show a significant correlation between financial efficiency and economic performance. The empirical evidence hint that in underdeveloped and emerging countries financial development fosters aggregate growth mainly by lowering the cost of capital, while in advanced economies by raising total-factor-productivity. JEL Classification: G00, O00.
    Keywords: Finance, Financial Institutions, Development, Growth Decomposition, Financial Intermediation, Europe, Productivity.
    Date: 2007–07
  32. By: Alberto Behar; James Hodge
    Abstract: An industry in decline provides an appropriate setting for the theory that mergers and acquisitions destroy implicit contracts and allow for the shedding of excess labour. We test this theory using provincial data from the South African gold mining industry, which has been in decline over the last two decades. Our data clearly portray rises in real wages and falling employment after the end of apartheid and our econometric results are remarkably consistent with standard labour demand theory. We find evidence of a significant negative effect of mergers/acquisitions on employment of a magnitude similar to that found for Continental Europe. This supports the view that negative employment effects are more likely in rigid labour markets.
    Keywords: Labour Demand, Mergers, Gold Industry
    JEL: G34 J23 L72
    Date: 2007
  33. By: José Luis Groizard (Universitat de les Illes Balears); Joan Llull (CEMFI)
    Abstract: We examine the empirical relationship between the migration rate of skilled workers and human capital formation in developing countries. In particular, we revisit Beine, Docquier and Rapoport (2007), who find evidence of an incentive effect. Our results suggest that an incentive effect is weak if not absent, since positive correlation among brain drain and human capital ex-ante is not robust to small changes in the specification.
    Keywords: brain drain, migration, education, incentives
    JEL: F22 J24 O15
    Date: 2007
  34. By: Fekadu Beyene (Humboldt University of Berlin, Institute of Agricultural Economics and Social Sciences Division of Resource Economics, Luisenstr. 56, 10099, Berlin)
    Abstract: This paper examines interethnic conflict on grazing land previously accessed as common property. The study was undertaken in Mieso District of eastern Ethiopia where two ethnic groups experience different production systems – pastoral and agropastoral. Game theoretic approach and analytic narratives have been used as analytical tools. Results show that the historical change in land use by one of the ethnic groups, resource scarcity, violation of customary norms, power asymmetry and livestock raids are some of the factors that have contributed to the recurrence of the conflict. The role of raids in triggering conflict and restricting access to grazing area becomes particularly important. Socio-economic and political factors are responsible for power asymmetry and increasing scale of raids. The joint effect of an increase in trend of violence and a decline in capacity of customary authority in conflict management advances state role in establishing enforceable property rights institutions. This would be successful only if policies and intervention efforts are redirected at: 1) suppressing incentives for violence, 2) establishing new institutional structures, in consultation with clan elders of both parties and 3) building internal capacity to monitor conflict-escalating events.
    Keywords: Property rights, conflict, grazing land, power asymmetry, access rights, customary institutions, Mieso, Ethiopia, Africa
    JEL: O17 Z13 Q15
    Date: 2007–03
  35. By: Azizur Rahman Khan
    Abstract: This Working Paper explores the role of employment growth in determining the effect of a given rate of economic growth on the rate of change in poverty. It is based on the findings of 16 country case studies recently carried out by the United Nations Development Programme and the International Labour Organization. The principal finding of the paper is that the rate of poverty reduction has invariably been lower than what it potentially should have been and the main reason for this is both the low employment intensity of growth and, with few exceptions, low overall growth itself.
    Keywords: employment, poverty
    JEL: O1
    Date: 2007–07
  36. By: Shari Spiegel
    Abstract: This United Nations Policy Note on Macroeconomics and Growth provides practical guidance on how to operationalize alternative equitable and employment-generating macroeconomics and growth policies in National Development Strategies. This Policy Note has been developed in cooperation with UN agencies, and has been officially reviewed by distinguished academics/ development specialists such as Jose Antonio Ocampo, Jomo K.S. and Nobel Laureate Joseph Stiglitz.
    Keywords: macroeconomics, growth, development planning
    JEL: O1 O2 E0 H0
    Date: 2007–07
  37. By: Jayati Ghosh
    Abstract: This United Nations Background Note on Macroeconomics and Growth provides practical guidance on how to operationalize alternative equitable and employment-generating macroeconomic and growth policies in National Development Strategies. This Policy Note has been developed in cooperation with UN agencies, and has been officially reviewed by distinguished academics/ development specialists such as Jose Antonio Ocampo, Jomo K.S. and Nobel Laureate Joseph Stiglitz.
    Keywords: macroeconomics, growth, development planning
    JEL: O1 O2 E0 H0
    Date: 2007–07
  38. By: Chandru P. Chandrasekhar
    Abstract: This United Nations Policy Note on Financial Policies provides practical guidance on how to operationalize alternative equitable and employment-generating financial policies in National Development Strategies. This Policy Note has been developed in cooperation with UN agencies, and has been officially reviewed by distinguished academics/ development specialists such as Jose Antonio Ocampo, Jomo K.S. and Nobel Laureate Joseph Stiglitz.
    Keywords: financial policies, development planning
    JEL: O1 O2 G0
    Date: 2007–07
  39. By: Ha-Joon Chang
    Abstract: This United Nations Policy Note on State-Owned Enterprise Reform provides practical guidance on alternative policies to reform SOEs and manage natural resource rents. This Policy Note has been developed in cooperation with UN agencies, and has been officially reviewed by distinguished academics/ development specialists such as Jose Antonio Ocampo, Jomo K.S. and Nobel Laureate Joseph Stiglitz.
    Keywords: state-owned enterprises, management natural resource rents, development planning
    JEL: O1 O2 L5
    Date: 2007–07
  40. By: Mushtaq H. Khan
    Abstract: This United Nations Policy Note on Investment and Technology provides practical guidance on how to operationalize alternative equitable and employment-generating investment and technology policies in National Development Strategies. This Policy Note has been developed in cooperation with UN agencies, and has been officially reviewed by distinguished academics/ development specialists such as Jose Antonio Ocampo, Jomo K.S. and Nobel Laureate Joseph Stiglitz.
    Keywords: investment and technology policies, development planning
    JEL: O0 O1 O2
    Date: 2007–07
  41. By: Isabel Ortiz
    Abstract: This United Nations Policy Note on Social Policy provides practical guidance on how to operationalize alternative equitable and employment-generating social policies in National Development Strategies. This Policy Note has been developed in cooperation with UN agencies, and has been officially reviewed by distinguished academics/ development specialists such as Jose Antonio Ocampo, Jomo K.S. and Nobel Laureate Joseph Stiglitz.
    Keywords: social policy, employment, welfare, development planning
    JEL: O1 O2 J0 I0
    Date: 2007–07
  42. By: Murray Gibbs
    Abstract: This United Nations Policy Note on Trade Policy provides practical guidance on how to operationalize alternative equitable and employment-generating trade policies in National Development Strategies. This Policy Note has been developed in cooperation with UN agencies, and has been officially reviewed by distinguished academics/ development specialists such as Jose Antonio Ocampo, Jomo K.S. and Nobel Laureate Joseph Stiglitz.
    Keywords: trade policy, poverty, development planning
    JEL: O1 O2 F1
    Date: 2007–07
  43. By: Mamoon, Dawood; Murshed, S. Mansoob
    Abstract: The aim of this paper is to examine the impact of increased trade on wage inequality in developing countries, and whether a higher human capital stock moderates this effect. We look at the skilled-unskilled wage differential. High initial endowments of human capital imply a more egalitarian society. When more equal societies open up their economies further, increased trade is likely to induce less inequality on impact because the supply of skills better matches demand. But greater international exposure also brings about technological diffusion, further raising skilled labour demand. This may raise wage inequality, in contrast to the initial egalitarian level effect of human capital. We attempt to measure these two opposing forces. We also employ a broad set of openness indicators to measure trade liberalization policies as well as general openness, which is an outcome, and not a policy variable. We further examine what type of education most reduces inequality. Our findings suggest that countries with a higher level of initial human capital do well on the inequality front, but human capital which accrues through the trade liberalization channel has inegalitarian effects. One explanation could be that governments in developing countries invest more in higher education at the expense of primary education in order to gain immediate benefits from globalization; thus becoming prone to wage inequality after increased international trade. Our results also have implications for the speed at which trade policies are liberalized, the implication being that better educated nations should liberalize faster.
    Keywords: trade liberalization, wages, economic disparity, skills development, education, human resources
    JEL: F15 I3
  44. By: Federico Etro (Department of Economics, University of Milan-Bicocca)
    Abstract: I develop a Schumpeterian model where the engine of growth is in the microeconomic structure of the patent races and derive new results on the determinants of growth. Under decreasing marginal productivity in the R&D sector, the equilibrium is characterized by small firms investing too little and the growth process is dynamically ine?cient; the optimal policy for innovation always implies R&D subsidies. When the incumbent monopolists are leaders in the patent races, they engage in large R&D investment and their persistent leadership enhances growth. Other sources of growth may reduce investment inducing a paradoxical negative correlation between growth and R&D spending even if innovations are the main engine of growth. In the open economy, growth is driven by the largest country and increases with its relative size and openness. In a monetary economy, price stickiness induces an inverted U relation between inflation and long run growth.
    Keywords: Growth, Innovation
    JEL: O3 O4 F4
    Date: 2006–10
  45. By: Sanjay G. Reddy (Dept. of Economics, Barnard College, Columbia University); Sujata Visaria (Dept. of Economics, Boston University); Muhammad Asali (Dept. of Economics, Columbia University)
    Abstract: We argue that inter-country comparisons of income poverty based on poverty lines uniformly reflecting the costs of the basic requirements of human beings are superior to the existing money-metric approaches. In this exercise, we implement a uniform approach to poverty assessment based on basic human capabilities for three countries: Nicaragua, Tanzania, and Vietnam. We compute standard errors of the resulting poverty estimates and compare the incidence of poverty across these three countries. The choice of approach affects both cardinal estimates and ordinal rankings of poverty across countries and over time. Meaningful and coherent inter-country poverty comparisons can be advanced through international co-ordination in survey design and in the construction of income poverty lines that uniformly reflect the costs of the basic requirements of human beings.
    Keywords: Poverty, Inter-Country comparisons, Capability approach
    JEL: I32 D31
    Date: 2006–08
  46. By: Hyun H. Son (International Poverty Centre); Nanak Kakwani (International Poverty Centre)
    Abstract: The main objective of the present paper is to present a cross-country analysis of pro-poor growth in 80 countries in 237 growth spells during the period 1984-2001. To achieve this objective, the paper proposes a new measure of pro-poor growth that captures gains and losses of growth rates due to changes in the distribution of consumption. The gains imply pro-poor growth, while the losses imply anti-poor growth. The statistical test carried out in the paper shows that regional location of countries has a significant association with the pro-poorness of growth. The paper also attempts to test for the association between growth patterns and certain variables that the literature has identified as significant determinants of growth and inequality. Out of many variables, the paper focuses on four, namely, inflation, the share of agriculture in GDP, openness to trade, and the rule of law.
    Keywords: Pro-Poor Growth, Growth, Poverty, Global estimates
    JEL: O40 I32 D31 O53 O57
    Date: 2006–10
  47. By: Phillippe G. Leite (World Bank Research Department and Previous Research and Consultant for the International Poverty Centre, UNDP); Terry McKinley (International Poverty Centre); Rafael Guerreiro Osório (International Poverty Centre)
    Abstract: This paper examines the trend in post-Apartheid earnings inequality in South Africa. By combining data sets, the paper is able to analyze the trend for the whole period 1995-2004. Earnings inequality rose sharply during 1995-1999 and then declined marginally, but remained high, during 2000-2004. A dramatic rise in unemployment was the driving force in exacerbating earnings inequality in the 1990s. Unemployment began to level off in the 2000s but remained at a high rate. An unprecedented influx of new entrants into the formal labour market in the 1990s put downward pressure on average real wages, affecting workers both in the middle of the distribution and toward the bottom. The growth of the South African economy has been neither rapid enough nor employment-intensive enough to absorb such a large influx of workers. Moreover, the economy?s greater openness to trade and financial flows appears to have left many workers behind, especially Africans, workers in low-skilled occupations, residents of rural areas in general and poor regions in particular. Earnings inequality remains high across groupings of workers differentiated by race, education and occupation although occupation has become a more important factor than the other two in the 2000s. Differentials across the mean earnings of workers classified by rural and urban residence and by province have also intensified. In the 1990s, inequalities within groupings of worker rose sharply and then moderated by the 2000s. While earnings differentials by race and the rural-urban divide also exacerbated inequality in the 1990s, they have been in modest decline since then. These changes in the dynamics of earnings inequality between the 1990s and 2000s pose new challenges for South African policymakers in their efforts to substantially reduce the Apartheid legacy of high inequality and poverty.
    Keywords: South Africa, Income distribution, Earnings distribution, Inequality
    JEL: I32 D31 N36 O15
    Date: 2006–10
  48. By: Marcelo Medeiros (International Poverty Centre); Rafael Guerreiro Osório (International Poverty Centre); Joana Costa (International Poverty Centre)
    Abstract: This Working Paper analyzes paid and unpaid work-time inequalities among Bolivian urban adults using time use data from a 2001 household survey. We identified a gender-based division of labor characterized not so much by who does which type of work but by how much work of each type they do. There is a partial trade-off between paid and unpaid work, but such a substitution is only partial: women?s entry into the labor market tends to result in a double work shift of paid and unpaid work. We also find very high levels of within-group inequality in the distributions of paid and unpaid work-time for men and women, a sign that beyond the sexual division of labor, subgroup differentiation is also important. Using decompositions of the inequality in the distribution of total time spent at work, we show that gender is an important variable to explain how much paid and unpaid work is done by individuals, but not so important to explain why some people have a higher total workload than others.
    Keywords: Gender, Inequalities, poor, Bolivia
    JEL: J16 J22
    Date: 2007–04
  49. By: Sergei Suarez Dillon Soares (Institute of Applied Economic Research (IPEA)); Rafael Guerreiro Osório (International Poverty Centre); Fabio Veras Soares (International Poverty Centre); Marcelo Medeiros (International Poverty Centre); Eduardo Zepeda (International Poverty Centre)
    Abstract: This Working Paper decomposes changes in the Gini coefficient in order to investigate whether Conditional Cash Transfers (CCT) have had an inequality reducing effect in three Latin American countries: Brazil, Mexico and Chile. Its technique is the decomposition of the Gini coefficient by factor components. Its main finding is that CCT programmes helped reduce inequality between the mid-1990s and roughly the mid-2000s. The share of total income represented by the CCTs has been very small: about 0.5 per cent in Mexico and Brazil and a very small 0.01 per cent in Chile. But since their targeting has been outstanding, their equalizing impact was responsible for about 21 per cent of the fall in both the Brazilian and the Mexican Gini index, each of which fell by approximately 2.7 points during the period that this paper reviewed. In Chile the effect was responsible for a 15 per cent reduction in inequality, although the total reduction in inequality was very modest: a mere 0.1 Gini point. The difference was due to the small size of the Chilean programme relative to the larger Mexican and Brazilian programmes.
    Keywords: Distribution, Conditional Cash Transfers, Brazil, Chile, Mexico
    JEL: D31
    Date: 2007–04
  50. By: Rafael Perez Ribas (International Poverty Centre); Ana Flávia Machado (Center for Development and Regional Planning (Cedeplar), UFMG)
    Abstract: Although many studies have addressed poverty in Brazil, very few of them have analyzed the dynamic nature of this phenomenon. In order to fill this gap, this Working Paper seeks to identify the features that determine the permanence of poverty and the downward mobility into poverty of adults in urban areas. Due to the scarcity of Brazilian panel surveys, we use a ?pseudo-panel? obtained from PNAD, a cross-sectional National Household Survey. The probabilities of staying in states (poor or non-poor) and changing states (such as from poor to non-poor) are estimated with a bivariate probit for grouped data. Our analysis distinguishes between persistent and observed components that can condition the probability of being poor and helps identify the groups that are particularly affected by either transient or chronic poverty. We find that between 1995 and 2003, 73 per cent of urban relative poverty in Brazil was chronic and most of this level was due to an initial persistent condition of poverty. In other words, most poor people are subject to poverty mainly because of their past persistent condition of poverty. These findings suggest that an effective policy of reducing poverty should involve not only a systematic multi-sectoral approach, such as improving human capital and the access to public services, but also an extensive programme of income redistribution.
    Keywords: Chronic Poverty and Transient,State Persistence and State Transition, Endogenous Switching Probit Model, Pseudo-panel, Brazil
    JEL: C35 C51 L32
    Date: 2007–04
  51. By: Nanak Kakwani (International Poverty Centre); Fabio Veras Soares (International Poverty Centre); Hyun H. Son (International Poverty Centre)
    Abstract: Poverty affects a large proportion of the population in Sub-Saharan Africa and, far from decreasing, the proportion and numbers of poor people in Sub-Saharan Africa have actually increased over the last ten years. Policies to reduce poverty in Sub-Saharan Africa (SSA) and elsewhere are defying conventional wisdom. Single-focus solutions have proved ineffective. There is an urgent need to learn from both successful and failed experiences that have been tried elsewhere. This study provides an ex-ante assessment of the implementation of a cash transfer programme conditional on school attendance in 15 Sub-Saharan African countries. Conditional cash transfer (CCT) programmes have been tried in other regions, notably Latin America, with relative success. The two key characteristics of CCT programmes are that they simultaneously act upon the short and long term dimensions of poverty. Therefore we investigate here both the impact of a cash transfer on current poverty and the impact of conditioning the transfer upon school attendance.
    Keywords: Conditional Cash Transfers, Poverty, Africa, Developing Countries
    JEL: F16 J31
    Date: 2005–11
  52. By: Gregory C. Chow (Princeton University)
    Abstract: This paper describes the economic conditions of rural China regarding poverty. By dividing the problem of rural poverty into three components it explains why rural poverty is China’s No. 1 economic problem in spite of the significant improvement in the living standard of the rural population. After discussing the solution proposed by the Chinese government it raises two policy questions, one concerning a proposal to eliminate the operational functions of township governments in the streamlining of the local government structure and the second on the possibility of controlling the abuse of power by local party officials that infringes on the rights of the farmers. A comparison with the conditions in India is provided.
    Date: 2006–09
  53. By: Gregory C. Chow (Princeton University)
    Abstract: After describing the institutions for health care in China as they evolved since 1949, this paper presents statistical demand functions for health care. It applies the demand functions to explain the rapid increase in health care demand and the resulting rapid increase in price when supply failed to increase. The failure in increase in supply was traced to the system of public supply of healthcare in China. The reform experience of Suqian city in the privatization of healthcare is reported to demonstrate the positive effect of privatization on supply. The government’s health care program for the urban and rural population is described and an evaluation of it is provided.
    Date: 2006–08
  54. By: Angus Deaton (Princeton University)
    Abstract: People in poor countries live shorter lives than people in rich countries so that, if we scale income by some index of health, there is more inequality in the world than if we consider income alone. Such international inequalities in life expectancy decreased for many years after 1945, and the strong correlation between income and life-expectancy might lead us to hope that economic growth will improve people’s health as well as their material living conditions. I argue that the apparent convergence in life expectancies is not as beneficial as might appear, and that, while economic growth is the key to poverty reduction, there is no evidence that it will deliver automatic health improvements in the absence of appropriate conditions. The strong negative correlation between economic growth on the one hand and the proportionate rate of decline of infant and child mortality on the other vanishes altogether if we look at the relationship between growth and the absolute rate of decline in infant and child mortality. In effect, the correlation is between the level of infant mortality and the growth of real incomes, most likely reflecting the importance of factors such as education and the quality of institutions that affect both health and growth.
    Date: 2006–10
  55. By: Anne Case (Princeton University); Angus Deaton (Princeton University)
    Abstract: This paper presents a descriptive account of health and economic status in India and South Africa – countries in very different positions in the international hierarchy of life expectancy and income. The paper emphasizes the lack of any simple and reliable relationship between health and wealth between and within our sites in rural Rajasthan, in a shack township outside of Cape Town, and in a rural South African site that, until 1994, was part of a Bantustan. Income levels across our sites are roughly in the ratio of 4:2:1, with urban South Africa richest and rural Rajasthan poorest, while ownership of durable goods, often used as a short-cut measure or check of living standards, are in the ratio of 3:2:1. These differences in economic status are reflected in respondents’ own reports of financial status. People know that they are poor, but appear to adapt their expectations to local conditions, at least to some extent. The South Africans are taller and heavier than the Indians—although their children are no taller at the same age. South African self-assessed physical and mental health is no better, and South Africans are more likely to report that they have to miss meals for lack of money. In spite of differences in incomes across the three sites, South Africans and Indians report a very similar list of symptoms of ill-health. Although they have much lower incomes, urban women in South Africa have fully caught up with black American women in the prevalence of obesity, and are catching up in terms of hypertension. These women have the misfortune to be experiencing many of the diseases of affluence without experiencing affluence itself.
    Date: 2006–01
  56. By: David Cutler (Harvard University); Angus Deaton (Princeton University); Adriana Lleras-Muney (Princeton University)
    Abstract: Mortality rates have fallen dramatically over time, starting in a few countries in the 18th century, and continuing to fall today. In just the past century, life expectancy has increased by over 30 years. At the same time, mortality rates remain much higher in poor countries, with a difference in life expectancy between rich and poor countries of also about 30 years. This difference persists despite the remarkable progress in health improvement in the last half century, at least until the HIV/AIDS pandemic. In both the time-series and the cross-section data, there is a strong correlation between income per capita and mortality rates, a correlation that also exists within countries, where richer, better-educated people live longer. We review the determinants of these patterns: over history, over countries, and across groups within countries. While there is no consensus about the causal mechanisms, we tentatively identify the application of scientific advance and technical progress (some of which is induced by income and facilitated by education) as the ultimate determinant of health. Such an explanation allows a consistent interpretation of the historical, cross-country, and within-country evidence. We downplay direct causal mechanisms running from income to health.
    Date: 2005–12
  57. By: Terry Rey (Temple University); Alex Stepick (Florida International University)
    Abstract: Religious images, especially the Virgin Mary and Saint James the Greater, dominate the resplendent visual culture of Haiti and its diaspora.1 Whether in the mountains of Haiti or the streets of Miami’s Little Haiti, however, their meanings vary and are contested among Haitian believers. For Catholics, the Virgin Mary and Saint James the Greater are, respectively, Christ’s mother and one of his apostles. For practitioners of Vodou, they might represent instead Ezili and Ogun, spirits originally from the Africa of their enslaved ancestors. And for Protestants, , they might represent the idolatry causing Haiti’s many and grave social ills. For all religious Haitians these images are deeply invested with meaning, however divergent their interpretations may be.
    Date: 2006–06
  58. By: Pasquale Tridico
    Abstract: Abstract. Over the past decade, most emerging and transition economies are experiencing fast growth, which is above the world average, and a consistent institutional change. The aim of this paper is twofold. First of all, a cross-country analysis of a group of emerging and transition economies in the period 1999-2005 will be carried out in order to understand what determines such growth among these countries. Secondly, a comparative analysis will be carried out. The countries will be classified according to their socio-economic models and institutional variables. Countries will be classified by taking their financial structures and ownership control over firms into consideration (Levine and Kunt, 1999; La Porta et. al., 1999), and we will investigate whether institutions and the type of socio-economic model may have an impact on growth. The central hypothesis of the paper is that explaining economic growth is a complex issue which needs positive interaction of several socio-economic and institutional factors. My analysis suggests that countries can grow with their own “style of capitalism” and economic model, and the determinants of economic growth seem to be the ability of each country to associate appropriate governance and institutions with education level, export activity and non-income dimensions of human development (life expectancy growth and infant mortality reduction). In fact, countries which experienced an increase in non-income dimensions of human development during 1970-2000,as a consequence of appropriate institutions, have sustained economic growth.
    Keywords: economic growth, institutions, human development
    JEL: F43 O43 G32 I31
    Date: 2007–06

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