nep-dev New Economics Papers
on Development
Issue of 2007‒08‒14
47 papers chosen by
Jeong-Joon Lee
Towson University

  1. A Dual Elasticity of Substitution Production Function with an Application to Cross Country Inequality By Juergen Antony
  2. PEMPLOYMENT AND POVERTY IN INDIA-- 2000-2005 By K. Sundaram
  3. ChinAfrica : How can the Sino-African cooperation be beneficial for Africa ? By Luca, MARCHIORI
  4. Silled migration : the perspectives of developing countries By FrŽdŽric, DOCQUIER; Hillel, RAPOPORT
  5. The Millennium Development Goals and Aid Allocation: Which donors give high-quality aid? By KASUGA Hidefumi
  6. Government Policy in the Formal and Informal Sectors By Prado, Jr., Jose Mauricio
  7. Trade and the Diffusion of the Industrial Revolution By Robert E. Lucas, Jr.
  8. Misallocation and Manufacturing TFP in China and India By Chang-Tai Hsieh; Peter J. Klenow
  9. Many Children Left Behind? Textbooks and Test Scores in Kenya By Paul Glewwe; Michael Kremer; Sylvie Moulin
  10. The Power of TV: Cable Television and Women's Status in India By Robert Jensen; Emily Oster
  11. Wage and Productivity Premiums in Sub-Saharan Africa By Johannes Van Biesebroeck
  12. The Aftermath of Civil War By Siyan Chen; Norman V. Loayza; Marta Reynal-Querol
  13. Are Financial Development and Corruption Control Substitutes in Promoting Growth? By Christian Ahlin; Jiaren Pang
  14. Are cash transfers made to women spent like other sources of income? By Schady, Norbert; Rosero, Jose
  15. Customer market power and the provision of trade credit : evidence from Eastern Europe and Central Asia By Van Horen, Neeltje
  16. Poverty analysis using an international cross-country demand system By Cranfield, J. A. L.; Preckel, Paul V.; Hertel Thomas W.
  17. Institutional effects as determinants of learning outcomes : exploring state variations in Mexico By Alvarez, Jesus; Moreno, Vicente Garcia; Patrinos, Harry Anthony
  18. A cross-country analysis of public debt management strategies By Melecky, Martin
  19. Actual crop water use in project countries : a synthesis at the regional level By Wahaj, Robina; Maraux, Florent; Munoz, Giovanni
  20. Sensitivity of cropping patterns in Africa to transient climate change By Lotsch, Alexander
  21. The impacts of climate change on regional water resources and agriculture in Africa By Strzepek, Kenneth; McCluskey, Alyssa
  22. An empirical economic assessment of impacts of climate change on agriculture in Zambia By Jain, Suman
  23. Assessment of the economic impacts of climate change on agriculture in Zimbabwe : a ricardian approach By Mano, Reneth; Nhemachena, Charles
  24. Assessing the economic impacts of climate change on agriculture in Egypt : a ricardian approach By Eid, Helmy M.; El-Marsafawy, Samia M.; Ouda, Samiha A.
  25. Scarperation : an empirical inquiry into the role of scarcity in fostering cooperation between international river riparians By Dinar, Shlomi; Dinar, Ariel; Kurukulasuriya, Pradeep
  26. Economic benefit of Tuberculosis control By Laxminarayan, Ramanan; Klein, Eili; Dye, Christopher; Floyd, Katherine; Darley, Sarah; Adeyi, Olusoji
  27. Big dragon, little dragons : China ' s challenge to the machinery exports of southeast Asia By Rahardja, Sjamsu
  28. Yield impact of irrigation management transfer : story from the Philippines By Bandyopadhyay, Sushenjit; Shyamsundar, Priya; Xie, Mei
  29. Balancing expenditures on mitigation of and adaptation to climate change : an exploration of Issues relevant to developing countries By Lecocq, Franck; Shalizi, Zmarak
  30. Country stakes in climate change negotiations : two dimensions of vulnerability By Buys, Piet; Deichmann, Uwe; Meisner, Craig; Ton-That, Thao; Wheeler, David
  31. India ' s journey toward an effective patent By Abramson, Bruce
  32. Geographic inequity in a decentralized anti-poverty program : a case study of China By Ravallion, Martin
  33. China, India, and the future of the world economy : fierce competition or shared growth? By Dimaranan, Betina; Ianchovichina, Elena; Martin, Will
  34. A ricardian analysis of the impact of climate change on African cropland By Kurukulasuriya, Pradeep; Mendelsohn, Robert
  35. The impact of climate change on African agriculture : a ricardian approach By Maddison, David; Manley, Marita; Kurukulasuriya, Pradeep
  36. Crop selection : adapting to climage change in Africa By Kurukulasuriya, Pradeep; Mendelsohn, Robert
  37. The perception of and adaptation to climate change in Africa By Maddison, David
  38. Gender Roles and Technological Progress By Stefania Albanesi; Claudia Olivetti
  39. Informal Payments in Developing Countries' Public Health Sectors By Ting Liu; Monic Jiayin Sun
  40. Catching Up or Falling Behind? Income Distribution of Chinese Cities By Chun-Yu Ho; Dan Li
  41. Is there a Link between Quality of Employment and Indebtedness? The Case of Urban Low-income Households in Ecuador. By Maria Floro; John Messier
  42. Mid-day Meal Program and Incidence of Child Labour in a Developing Economy By Chaudhuri, Sarbajit
  43. Investing in Indonesia’s Education: Allocation, Equity, and Efficiency of Public Expenditures By Arze del Granado, Javier; Fengler, Wolfgang; Ragatz, Andrew; Yavuz, Elif
  44. The role of household income and public provision of social services in satisfaction of basic needs in Pakistan: A cross district analysis By Siddiqui, Rizwana
  45. CHINA'S REAL EXCHANGE RATE PUZZLE By Rod Tyers; Jane Golley; Iain Bain
  46. China’s Real Exchange Rate By Rod Tyers; Jane Golley
  47. Microfinance Games By Xavier Gine; Pamela Jakiela; Dean Karlan; Jonathan Morduch

  1. By: Juergen Antony (University of Augsburg, Department of Economics)
    Abstract: This paper develops a production function which two separate elasticities of substitution between two input factors. One of these elasticities is obtained if the factor intensity equals a particular baseline value. The second part of the paper gives an economic application and shows the theoretical properties of this production function regarding the development of relative capital intensities and relative production per efficiency unit of labor. Inequality across countries widens in transition to the steady state. Panel data on the development of these relative figures seem to support the implications of the above production function.
    Keywords: capital and labor substitution, cross country inequality
    JEL: O11 O33 E23
    Date: 2007–08
  2. By: K. Sundaram (Delhi School of Economics)
    Abstract: This paper is principally focused on the changes in the size and structure of work force and the changes in labour productivity, wages and poverty in India in the first quinquennuim of the 21st century. The period between 2000 and 2005 saw a sharp acceleration in work force growth, and, on the obverse side, a slow-down in the rate of growth of labour productivity across most sectors and in the economy as a whole, and, a slow-down (a decline) in real wage growth in rural (urban) India. On a comparable basis, the reduction in poverty over this period is shown to be substantially smaller than indicated by other recent analyses. Consistent with the trends in labour productivity and real wages, relative to the 1994-2000 period, the pace of poverty reduction between 2000 and 2005 shows, at best, a marginal acceleration (or a marginal deceleration, depending on the choice of poverty lines) in rural India and a clear slow-down in urban India. This period also saw a small rise in the number of working poor and a substantial rise in the number of self-employed and regular wage/salary workers in ‘above poverty line’ or APL-households.
    Keywords: Employment Growth, Employment Structure, Labour Productivity, Real Wages, Poverty, Working Poor and Employment Quality.
    JEL: J21 J23
    Date: 2007–06
  3. By: Luca, MARCHIORI
    Abstract: In this paper, different scenarios of increased cooperation between China and African countries are simulated. Recent intensification of political and economic ties between China and Sub-Saharan Afreican countries may give hope that an economic improvement in Sub-Saharan Africa (SSA) is possible. Three channels may lead to a catching-up for Africa with China : a reduction in AfricaÕs investment risk, an increase in its total factor productivity (TFP) and an improvement of its worker skills. A computable general equilibrium model of the world economy is used, that shares the world in 10 regions, among which Sub-Saharan Africa and China. Three scenarios are considered in which, by 2100, Africa will have reduced simultaneously its gaps in investment risk, TFP and eduction to China by either 20% (scenario 1), 40% (scenario2) or 60% (scenario3). The effects on the Sub-Saharan African economy are very promising. The results show that, already in 2050, Africa will have increased its per capita Gross Domestic Product (GDP) by 50% with scenario1, 80% with scenario 2 and by 125% with scenario 3.
    Keywords: OLG-CGE Model, Catching-up, sSmulations, Africa, China
    JEL: E27 J11 O47 O55 O57
    Date: 2007–04–24
  4. By: FrŽdŽric, DOCQUIER (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics); Hillel, RAPOPORT
    Abstract: This chapter focuses on the effects of skilled migration on developing countries. We first present new evidence on the magnitude of the Òbrain drainÓ at the international level. Using a stylized model of education investment in a contest of migration, we then survey the theoretical and empirical brain drain literature in a unified framework. Finally we use a particular specification of the model to discuss a number of policy issues from the perspective of developing countries
    Date: 2007–07–27
  5. By: KASUGA Hidefumi
    Abstract: This paper evaluates donor performance by using data on aid for 10 sectors that are closely related to the Millennium Development Goals (MDGs). We utilize the MDGs indicators to measure the recipient’s need for aid in each sector and investigate whether donors designate aid for specific sectors in the countries that need it most. Our results suggest that the majority of donors are selective in all the sectors. Not only the Nordic countries but also other large donors are selective and have a clear tendency to allocate more assistance to poor countries.
    Date: 2007–08
  6. By: Prado, Jr., Jose Mauricio (Institute for International Economic Studies, Stockholm University)
    Abstract: The paper quantitatively investigates, in general equilibrium, the interaction between the firms' choice to operate in the formal or the informal sector and government policy on taxation and enforcement, given a level of regulation. A static version of Ghironi and Melitz’s (2005) industry model is used to show that firms with lower productivity endogenously choose to operate in the informal sector. I use cross-country data on taxes, measures of informality, and measures of regulation (entry and compliance costs, red tape, etc) to back out how high the enforcement levels must be country by country to make the theory match the data. Welfare gains from policy reforms can be fairly large. I find also that welfare gains from reducing regulation are almost twice those computed for the policy reform. Finally, distortions associated with informality account for a factor of 1.5 of the output per capita difference between the richest and the poorest countries.
    Keywords: Informal economy; General equilibrium; Regulation
    JEL: E61 H30
    Date: 2007–08–06
  7. By: Robert E. Lucas, Jr.
    Abstract: A model is proposed to describe the evolution of real GDPs in the world economy that is intended to apply to all open economies. The five parameters of the model are calibrated using the Sachs-Warner definition of openness and time-series and cross-section data on incomes and other variables from the 19th and 20th centuries. The model predicts convergence of income levels and growth rates and has strong but reasonable implications for transition dynamics.
    JEL: O0 O1 O19
    Date: 2007–08
  8. By: Chang-Tai Hsieh; Peter J. Klenow
    Abstract: Resource misallocation can lower aggregate total factor productivity (TFP). We use micro data on manufacturing establishments to quantify the extent of this misallocation in China and India compared to the U.S. in recent years. Compared to the U.S., we measure sizable gaps in marginal products of labor and capital across plants within narrowly-defined industries in China and India. When capital and labor are hypothetically reallocated to equalize marginal products to the extent observed in the U.S., we calculate manufacturing TFP gains of 25-40% in China and 50-60% in India.
    JEL: O11 O47 O53
    Date: 2007–08
  9. By: Paul Glewwe; Michael Kremer; Sylvie Moulin
    Abstract: A randomized evaluation suggests that a program which provided official textbooks to randomly selected rural Kenyan primary schools did not increase test scores for the average student. In contrast, the previous literature suggests that textbook provision has a large impact on test scores. Disaggregating the results by students? initial academic achievement suggests a potential explanation for the lack of an overall impact. Textbooks increased scores for students with high initial academic achievement and increased the probability that the students who had made it to the selective final year of primary school would go on to secondary school. However, students with weaker academic backgrounds did not benefit from the textbooks. Many pupils could not read the textbooks, which are written in English, most students? third language. The results are consistent with the hypothesis that the Kenyan education system and curricular materials are oriented to the academically strongest students rather than to typical students. More generally, many students may be left behind in societies that combine 1) a centralized, unified education system; 2) the heterogeneity in student preparation associated with rapid expansion of education; and 3) disproportionate elite power.
    JEL: C93 I20 O15 P16
    Date: 2007–08
  10. By: Robert Jensen; Emily Oster
    Abstract: Cable and satellite television have grown rapidly throughout the developing world. The availability of cable and satellite television exposes viewers to new information about the outside world, which may affect individual attitudes and behaviors. This paper explores the effect of the introduction of cable television on gender attitudes in rural India. Using a three-year individual-level panel dataset, we find that the introduction of cable television is associated with improvements in women's status. We find significant increases in reported autonomy, decreases in the reported acceptability of beating and decreases in reported son preference. We also find increases in female school enrollment and decreases in fertility (primarily via increased birth spacing). The effects are large, equivalent in some cases to about five years of education in the cross section, and move gender attitudes of individuals in rural areas much closer to those in urban areas. We argue that the results are not driven by pre-existing differential trends. These results have important policy implications, as India and other countries attempt to decrease bias against women.
    JEL: J13 J16 O12 O33
    Date: 2007–08
  11. By: Johannes Van Biesebroeck
    Abstract: Using a matched employer-employee data set of manufacturing plants in three sub-Saharan countries, I compare the marginal productivity of different categories of workers with the wages they earn. A methodological contribution is to estimate the firm level production function jointly with the individual level wage equation using a feasible GLS estimator. The additional information of individual workers leads to more precise estimates, especially of the wage premiums, and to a more accurate test. The results indicate that equality holds strongly for the most developed country in the sample (Zimbabwe), but not at all for the least developed country (Tanzania). Moreover, the breakdown in correct remuneration in the two least developed countries follows a distinct pattern. On the one hand, wage premiums exceed productivity premiums for general human capital characteristics (experience and schooling). On the other hand, salaries hardly increase for more firm-specific human capital characteristics (tenure and training), even though these have a clear productivity effect.
    JEL: J31 O12
    Date: 2007–08
  12. By: Siyan Chen; Norman V. Loayza; Marta Reynal-Querol
    Abstract: Using an “event-study” methodology, this paper analyzes the aftermath of civil war in a cross-section of countries. It focuses on those experiences where the end of conflict marks the beginning of a relatively lasting peace. The paper considers 41 countries involved in internal wars in the period 1960-2003. In order to provide a comprehensive evaluation of the aftermath of war, the paper considers a host of social areas represented by basic indicators of economic performance, health and education, political development, demographic trends, and conflict and security issues. For each of these indicators, the paper first compares the post- and pre-war situations and then examines their dynamic trends during the post-conflict period. It conducts this analysis both in absolute and relative terms, the latter in relation to control groups of otherwise similar countries. The paper concludes that, even though war has devastating effects and its aftermath can be immensely difficult, when the end of war marks the beginning of lasting peace, recovery and improvement are indeed achieved.
    Keywords: Civil War
    JEL: O10 O57
    Date: 2007–07
  13. By: Christian Ahlin (Department of Economics, Vanderbilt University); Jiaren Pang (Washington University)
    Abstract: While financial development and corruption control have been studied extensively, their interaction has not. We develop a simple model in which low corruption and financial development both facilitate the undertaking of productive projects, but act as substitutes in doing so. The substitutability arises because corruption raises the need for liquidity and thus makes financial improvements more potent; conversely, financial underdevelopment makes increased corruption more onerous and thus raises the gains from reducing it. We test this substitutability by predicting growth, of countries and industries, using measures of financial development, lack of corruption, and a key interaction term. Both approaches point to positive effects from improving either factor, as well as to a substitutability between them. The growth gain associated with moving from the 25th to the 75th percentile in one factor is 0.63-1.68 percentage points higher if the second factor is at the 25th percentile rather than the 75th. The results show robustness to different measures of corruption and financial development and do not appear to be driven by outliers, omitted variables, or other theories of growth and convergence.
    Keywords: Financial development, growth, complementarity, corruption
    JEL: O16 O17 O40 O43
    Date: 2006–12
  14. By: Schady, Norbert; Rosero, Jose
    Abstract: How cash transfers made to women are used has important implications for models of household behavior and for the design of social programs. In this paper, the authors use the randomized introduction of an unconditional cash transfer to poor women in rural Ecuador to analyze the effect of transfers on the food Engel curve. There are two main findings. First, the authors show that households randomly assigned to receive Bono de Desarrollo Humano (BDH) transfers have a significantly higher food share in expenditures than those that were randomly assigned to the control group. Second, they show that the rising food share among BDH beneficiaries is found among households that have both adult males and females, but not among households that only have adult females. Bargaining power between men and women is likely to be important in mixed-adult households, but not among female-only households, where there are no men to bargain with. Finally, the authors show that within mixed-adult households, program effects are only significant in households in which the initial bargaining capacity of women was likely to be weak. This pattern of results is consistent with an increase in the bargaining power of women in households that received BDH transfers.
    Keywords: Rural Poverty Reduction,Small Area Estimation Poverty Mapping,Poverty Lines,Anthropology,Municipal Housing and Land
    Date: 2007–07–01
  15. By: Van Horen, Neeltje
    Abstract: Statistics show that the sale of goods on credit is widespread among firms even when they are capital constrained and thus face relatively high costs in providing trade credit. This study provides an explanation for this by arguing that customers who possess strong market power are able to increase their customer surplus by demanding to purchase the goods on credit. This gain in customer surplus increases with the degree of asymmetric information between buyer and seller with respect to product quality. Therefore, firms that are perceived as risky are especially subject to the market power of the customer and have to sell their goods on credit. Using detailed firm-level data from a large number of firms in Eastern Europe and Central Asia, this study finds evidence consistent with this hypothesis. It finds a strong positive correlation between customer market power and trade credit provision. Furthermore, this relationship is especially strong when the supplier is more risky and in countries with limited financial sector development or a weak legal system.
    Keywords: Economic Theory & Research,Markets and Market Access,Investment and Investment Climate,Financial Intermediation,Access to Markets
    Date: 2007–07–01
  16. By: Cranfield, J. A. L.; Preckel, Paul V.; Hertel Thomas W.
    Abstract: This paper proposes a new method for ex ante analysis of the poverty impacts arising from policy reforms. Three innovations underlie this approach. The first is the estimation of a global demand system using a combination of micro-data from household surveys and macro-data from the International Comparisons Project (ICP). Estimation is undertaken in a manner that reconciles these two sources of information, explicitly recognizing that per capita national demands are an aggregation of the disaggregated, individual household demands. The second innovation relates to a methodology for post-estimation calibration of the global demand system, giving rise to country-specific demand systems and an associated expenditure function which, when aggregated across the expenditure distribution, reproduce observed per capita budget shares exactly. This leads to the third innovation, which is the establishment of a unique poverty level of utility and an appropriately modified set of Foster-Greer-Thorbecke poverty measures. With these tools in hand, the authors are able to calculate the change in the head-count of poverty, poverty gap, and squared poverty gap arising from policy reforms, where the poverty measures are derived using a unique poverty level of utility, rather than an income or expenditure-based measure. They use these techniques with a demand system for food, other nondurables and services estimated using a combination of 1996 ICP data set and national expenditure distribution data. Calibration is demonstrated for three countries for which household survey expenditure data are used during estimation-Indonesia, the Philippines and Thailand. To show the usefulness of these calibrated models for policy analysis, the authors assess the effects of an assumed 5 percent food price rise as might be realized in the wake of a multilateral trade agreement. Results illustrate the important role of subsistence expenditures at lowest income levels, but of discretionary expenditure at high er income levels. The welfare analysis underscores the relatively large impact of the price hike on poorer households, while a modified Foster-Greer-Thorbecke poverty measure shows that the 5 percent price rise increases the incidence and intensity of poverty in all three cases, although the specific effects vary considerably by country.
    Keywords: Markets and Market Access,Economic Theory & Research,Population Policies,Rural Poverty Reduction,Poverty Lines
    Date: 2007–07–01
  17. By: Alvarez, Jesus; Moreno, Vicente Garcia; Patrinos, Harry Anthony
    Abstract: This paper uses the OECD ' s Program for International Student Assessment student-level achievement database for Mexico to estimate state education production functions, controlling for student characteristics, family background, home inputs, resources, and institutions. The authors take advantage of the state-level variation and representative sample to analyze the impact of institutional factors such as state accountability systems and the role of teachers ' unions in student achievement. They argue that accountability, through increased use of state assessments, will improve learning outcomes. The authors also cast ligh t on the role of teachers ' unions, namely their strength through appointments to the school and relations with state governments. The analysis shows the importance of good relations between states and unions. Furthermore, it demonstrates that accountability systems are cost-effective measures for improving outcomes.
    Keywords: Tertiary Education,Education For All,Teaching and Learning,Secondary Education,Primary Education
    Date: 2007–07–01
  18. By: Melecky, Martin
    Abstract: This paper analyzes results of a survey on debt management strategies conducted by the Banking and Debt Management Department of the World Bank. The analysis focuses on (1) whether a public debt management strategy exists in a given country, (2) whether it is made public, and (3) in which form it is imparted. The paper analyzes the distribution of the latter characteristics over different regions, income groups, and levels of indebtedness using graphical analysis. Using regression analysis, it investigates the extent to which basic economic f actors can explain the characteristics of public debt management strategies across countries.
    Keywords: External Debt,Debt Markets,,Public Sector Economics & Finance,Economic Theory & Research
    Date: 2007–07–01
  19. By: Wahaj, Robina; Maraux, Florent; Munoz, Giovanni
    Abstract: This report aims to synthesize the results of a crop water use study conducted by country teams of the GEF/World Bank project, Regional Climate, Water, and Agriculture: Impacts on and Adaptation of Agro-ecological Systems in Africa. It also presents the results of the second phase of the study based on climate change scenarios, conducted by the South Africa country team. The actual evapotranspiration of five commonly grown crops-maize, millet, sorghum, groundnuts, and beans-in t wo selected districts were analyzed by six country teams. In addition, two country teams also analyzed other crops grown in the districts. The regional analysis shows that the actual yield of the different crops-specifically of maize and groundnuts-improves with an increase in actual evapotranspiration, although the gap remains wide between actual and potential yield and actual and maximum evapotranspiration, especially for the rainfed crops. This highlights the importance of improved water management if agriculture is to play an important role as a source of food security and better livelihoods. The report highlights the vulnerability of maize to water stress and the increased risks to the viability of rainfed farming systems based on this crop. The results of the second phase of analysis show that a 2°C increase in the temperature and a doubling of carbon dioxide concentration in the atmosphere will shorten the growing period of maize, which will result in decreased crop water requirement and use. The authors recommend extending this type of analysis to other crops as well as to other countries to develop a clearer picture of the changing pattern in crop water use of the major crops grown in the project countries.
    Keywords: Water Supply and Sanitation Governance and Institutions,Crops & Crop Management Systems,Water Conservation,Water Supply and Systems,Town Water Supply and Sanitation
    Date: 2007–07–01
  20. By: Lotsch, Alexander
    Abstract: The detailed analysis of current cropping areas in Africa presented here reveals s ignificant climate sensitivities of cropland density and distribution across a variety of agro-ecosystems. Based on empirical climate-cropland relationships, cropland density responds positively to increases in precipitation in semi-arid and arid zones of the sub-tropics and warmer temperatures in higher elevations. As a result, marginal increases in seasonal precipitation lead to denser cropping areas in arid and semi-arid regions. Warmer temperatures, on the other hand, tend to decrease the probability of cropping in most parts of Africa (the opposite is true for increases in rainfall and decreases in temperatures relative to current conditions). Despite discrepancies and uncertainties in climate model output, the analysis suggests that cropland area in Africa is likely to decrease significantly in response to transient changes in climate. The continent is expected to have lost on average 4.1 percent of its cropland by 2039, and 18.4 percent is likely to have disappeared by the end of the century. In some regions of Africa the losses in cropland area are likely to occur at a much faster rate, with northern and eastern Africa losing up to 15 percent of their current cropland area within the next 30 years or so. Gains in cropland area in western and southern Africa due to projected increases in precipitation during the earlier portions of the century will be offset by losses later on. In conjunction with existing challenges in the agricultural sector in Africa, these findings demand sound policies to manage existing agricultural lands and the productivity of cropping systems.
    Keywords: Climate Change,Crops & Crop Management Systems,Global Environment Facility,Common Property Resource Development,Rural Poverty Reduction
    Date: 2007–07–01
  21. By: Strzepek, Kenneth; McCluskey, Alyssa
    Abstract: This paper summarizes the methods and findings of the hydrological assessment component of the project studying likely impacts of climate change on water resources and agriculture in Africa. The first phase of the study used a version of a conceptual rainfall-runoff model called WatBal (Water Balance) applied to gridded data to simulate changes in soil moisture and runoff across the whole continent of Africa rather than to any particular catchment or water resource system. The model inputs were the climate variables of the 1961-90 climatology and physiological parameters (such as soil properties and land use) derived from global datasets for each of the 0.5o latitude/longitude cells across the continent. The primary model output comprised a time series (monthly time step) of simulated runoff for all the grid cells for each of the districts in the countries of interest. The second phase of the study extended the hydrology analyses to update the above hydroclimatic series to the year 2000 using updated input data. To ascertain the possible impacts of climate change within the districts being investigated this study used synthetic or GCMbased clima te change scenarios as input to the WatBal model. The WatBal model was used to determine the impact of these different scenarios on runoff and actual evaporation and hence flow in the districts under study. The generated hydroclimatic series and scenario analyses were used as inputs into various Ricardian regressions in other analyses measuring likely impacts of climate change on the agricultural economies of Africa.
    Keywords: Wetlands,Climate Change,Water Supply and Systems,Global Environment Facility,Common Property Resource Development
    Date: 2007–07–01
  22. By: Jain, Suman
    Abstract: This report assesses the economic impacts of climate change on agriculture in Zambia, using the Ricardian method. A multiple linear regression model with net revenue per hectare as response variable has been fitted with climate, hydrological, soil, and socioeconomic variables as explanatory variables. There is one main cropping season in Zambia, lasting from November to April. Crop production in this period depends solely on rains. Considering crop progression in three stages-germination, growing, and maturing, which requi re different amounts of water and temperature-the climate variables included in the model are long-term averages of the temperature and wetness index for the periods November to December, January to February, and March to April. Assuming a nonlinear relationship of farm revenue with the climate variables, quadratic terms for climate variables were also included in the model. The results indicate that most socioeconomic variables are not significant, whereas some climate variables and the corresponding quadratic variables are significant in the model. Further findings are that an increase in the November-December mean temperature and a decrease in the January-February mean rainfall have negative impacts on net farm revenue, whereas an increase in the January-February mean temperature and mean annual runoff has a positive impact.
    Keywords: Climate Change,Crops & Crop Management Systems,Global Environment Facility,Common Property Resource Development,Economic Theory & Research
    Date: 2007–07–01
  23. By: Mano, Reneth; Nhemachena, Charles
    Abstract: This study uses the Ricardian approach to examine the economic impact of climate change on agriculture in Zimbabwe. Net farm revenue is regressed against various climate, soil, hydrological and socio-economic variables to help determine the factors that influence variability in net farm revenues. The study is based on data from a survey of 700 smallholder farming households interviewed across the country. The empirical results show that climatic variables (temperature and precipitation) have significant effects on net farm revenues in Zimbabwe. In addition to the analysis of all farms, the study also analyzes the effects on dryland farms and farms with irrigation. The analysis indicates that net farm revenues are affected negatively by increases in temperature and positively by increases in precipitation. The results from sensitivity analysis suggest that agricultural production in Zimbabwe ' s smallholder farming system is significantly constrained by climatic factors (high temperature and low rainfall). The elasticity results show that the changes in net revenue are high for dryland farming compared to farms with irrigation. The results show that farms with irrigation are more resistant to changes in climate, indicating that irrigation is an important adaptation option to help reduce the impact of further changes in climate. An overview of farmer adaptation to changing climate indicates that farmers are already using some adaptation strategies-such as dry and early planting, growing drought resistant crops, changing planting dates, and using irrigation-to cushion themselves against further anticipated adverse climatic conditions. An important policy message from the empirical findings is that there is a need to provide adequate extension information services to ensure that farmers receive up-to-date information about rainfall patterns in the forthcoming season so that they make well-informed decisions on their planting dates. Policies that increase farmer training and access to credit and aid facilities and help farmers acquire livestock and other important farm assets can help improve net farm performance. Ensuring the availability and accessibility of fertilizers and crop seeds before the onset of the next cropping season can also significantly improve net farm performance across households.
    Keywords: Climate Change,Environmental Economics & Policies,Crops & Crop Management Systems,Agriculture & Farming Systems,Rural Development Knowledge & Information Systems
    Date: 2007–07–01
  24. By: Eid, Helmy M.; El-Marsafawy, Samia M.; Ouda, Samiha A.
    Abstract: This study employed the Ricardian approach to measure the economic impacts of climate change on farm net revenue in Egypt. Farm net revenue were regressed against climate, soil, socioeconomic and hydrological variables to determine which factors influence the variability of farm net revenues. 900 households from 20 governorates were interviewed. The standard Ricardian model was applied, in addition to three other models, each representing an adaptation option that could be used to reduce the harmful effects of temperature stress. A further adaptation strategy was tested: raising livestock on the farm to cope with the harmful effects of climate change. Besides this, the effects of two climate change scenarios (using MAGICC/SCENGEN and GCMs-General Circulation Models) were considered. The results from the two climate change scenarios showed that high temperatures will constrain agricultural production in Egypt. Irrigation and technology are therefore the recommended adaptation options. However, warming may also affect water resources and that would pose another problem for agricultural production. A policy should be developed to cope with the adverse effects of climate change on agriculture. It should focus on three areas: crop management, water management, and land management. The favored option for adapting to increased temperatures is irrigation. Some farmers adjust their crop sowing dates to avoid the expected high temperatures. To adjust to shortages in rainfall, farmers use crop varieties with high water use efficiency and early maturing varieties.
    Keywords: Climate Change,Environmental Economics & Policies,Crops & Crop Management Systems,Rural Development Knowledge & Information Systems,Water Supply a nd Sanitation Governance and Institutions
    Date: 2007–07–01
  25. By: Dinar, Shlomi; Dinar, Ariel; Kurukulasuriya, Pradeep
    Abstract: The environment and security literature has argued that freshwater scarcity often leads to inter-state conflict, and possibly acute violence. The contention, however, ignores the long history of hydro-political cooperation exemplified by hundreds of documented agreements. Building on a theory that considers the relationship between scarcity and hydro-political cooperation, this paper empirically investigates why treaties are negotiated for some rivers and between some riparians, and not others. The paper suggests that long-term water scarcity has a significant influence on levels of cooperation. Additional variables considered include trade, level of governance among the riparian states, and the geography of the river. Findings confirm that cooperation and scarcity embody a concave (inverted U curve) relationship. Governance has a positive impact on cooperation. In addition, riparians may either arrange the use of their scarce water resources via a treaty or trade (and indirectly exchange [virtual ] water). Scarcity, governance, and trade were found to be most salient in explaining levels of cooperation while geography is significant in some of the estimates.
    Keywords: Water and Industry,Water Supply and Sanitation Governance and Institutions,Environmental Economics & Policies,Town Water Suppl y and Sanitation,Water Conservation
    Date: 2007–07–01
  26. By: Laxminarayan, Ramanan; Klein, Eili; Dye, Christopher; Floyd, Katherine; Darley, Sarah; Adeyi, Olusoji
    Abstract: Tuberculosis is the most important infectious cause of adult deaths after HIV/AIDS in low- and middle-income countries. This paper evaluates the economic benefits of extending the World Health Organization ' s DOTS Strategy (a multi-component approach that includes directly observed treatment, short course chemoth erapy and several other components) as proposed in the Global Plan to Stop TB, 2006-2015. The authors use a model-based approach that combines epidemiological projections of averted mortality and economic benefits measured using value of statistical life for the Sub-Saharan Africa region and the 22 high-burden, tuberculosis-endemic countries in the world. The analysis finds that the economic benefits between 2006 and 2015 of sustaining DOTS at current levels relative to having no DOTS coverage are significantly greater than the costs in the 22 high-burden, tuberculosis-endemic countries and the Africa region. The marginal benefits of implementing the Global Plan to Stop TB relative to a no-DOTS scenario exceed the marginal costs by a factor of 15 in the 22 high-burden endemic countries, a factor of 9 (95% CI, 8-9) in the Africa region, and a factor of 9 (95% CI, 9-10) in the nine high-burden African countries. Uncertainty analysis shows that benefit-cost ratios of the Global Plan strategy relative to sustained DOTS were unambiguously greater than one in all nine high-burden countries in Africa and in Afghanistan, Pakistan, and Russia. Although HIV curtails the effect of the tuberculosis programs by lowering the life expectancy of those receiving treatment, the benefits of the Global Plan are greatest in African countries with high levels of HIV.
    Keywords: Health Monitoring & Evaluation,Disease Control & Prevention,Population Policies,Health Systems Development & Reform,Poverty and Health
    Date: 2007–08–01
  27. By: Rahardja, Sjamsu
    Abstract: This paper investigates the extent of China ' s export boom in machinery and analyzes trade in components and finished machinery between China and Southeast Asia. China has increased its world market share in machinery exports. The median relative unit value of its finished machinery exports has also risen. Yet the author finds no evidence that China ' s expansion in the world machinery market has squeezed the market shares of Southeast Asian machinery exports. Instead, components made by Southeast Asian countries are increasing in unit value and gaining market share in China.
    Keywords: Markets and Market Access,Economic Theory & Research,Free Trade,General Manufacturing,Debt Markets
    Date: 2007–08–01
  28. By: Bandyopadhyay, Sushenjit; Shyamsundar, Priya; Xie, Mei
    Abstract: Irrigation management transfer is an important strategy among donors and governments to strengthen farmer control over water and irrigation infrastructure. This study seeks to understand whether irrigation management transfer is meeting the promise of its commitments. The authors use data from a survey of 68 irrigator associations and 1,020 farm households in the Philippines to estimate the impact of irrigation management transfer on irrigation association performance and on rice yields. They also estimate a stochastic frontier production function to assess contributions to technical efficiency. There are three main results. First, the presence of irrigation management transfer is associated with an increase in maintenance activities undertaken by irrigation associations. Second, by increasing local control over water delivery, the presence of irrigation management transfer is associated with a 2-6 percent increase in farm yields. Rice production in irrigation management transfer areas is greater even after controlling for various differences among rice farmers in transfer and non-transfer areas. Third, irrigation management transfer is, at a minimum, poverty-neutral, and may even give the asset-poor a small boost in terms of rice yields. The authors speculate that this boost may be a result of increased timeliness of water delivery and better resolution of conflicts related to illegal use.
    Keywords: Irrigation and Drainage,Water Supply and Systems,Agricultural Irrigation and Drainage,Water Use,Rural Poverty Reduction
    Date: 2007–08–01
  29. By: Lecocq, Franck; Shalizi, Zmarak
    Abstract: Although climate policies have been so far mostly focused on mitigation, adaptation to climate change is a growing concern in developed and developing countries. This paper discusses how adaptation fits into the global climate strategy, at the global and national levels. To do so, a partial equilibrium optimization model of climate policies-which includ es mitigation, proactive adaptation (ex ante), and reactive adaptation (ex post)-is solved without and with uncertainty. Mitigation, proactive adaptation, and reactive adaptation are found to be generally jointly determined. Uncertainty on the location of damages reduces the benefits of " targeted " proactive adaptation with regard to mitigation and reactive adaptation. However, no single country controls global mitigation policies, and budget constraints might make it difficult for developing countries to finance reactive adaptation, especially if climate shocks affect the fiscal base. Rainy-day funds are identified as a supplemental instrument that can alleviate future budget constraints while avoiding the risk of misallocating resources when the location of damages is uncertain.
    Keywords: Environmental Economics & Policies,Economic Theory & Research,Educational Sciences,Disability,Social Inclusion & Institutions
    Date: 2007–08–01
  30. By: Buys, Piet; Deichmann, Uwe; Meisner, Craig; Ton-That, Thao; Wheeler, David
    Abstract: Using a comprehensive geo-referenced database of indicators relating to global change and energy, the paper assesses countries ' likely attitudes with respect to international treaties that regulate carbon emissions. The authors distinguish between source and impact vulnerability and classify countries according to these dimensions. The findings show clear differences in the factors that determine likely negotiating positions. This analysis and the resulting detailed, country level information help to explain the incentives required to make the establishment of such agreements more likely.
    Keywords: Energy Production and Transportation,Energy and Environment,Environment and Energy Efficiency,Climate Change,Transport and Environment
    Date: 2007–08–01
  31. By: Abramson, Bruce
    Abstract: The decade following India ' s accession to the World Trade Organization ' s Trade-Related Aspects of Intellectual Property ushered in numerous changes to the country ' s patent system, culminating in a series of amendments in 2005. But a functioning patent system is more than a statute. This paper discusses the steps that India must still take to develop an effective, functioning patent system capable of attracting foreign direct investment, motivating domestic innovation and education, and filtering its benefits to all elements of Indian society, including the poor and the possessors of traditional knowledge. The analysis combines data studies of historical and recent patenting activity in India and by Indians, interviews with Indian government officials, intellectual property attorneys, industrialists, and researchers, and lessons gleaned from patent systems abroad. It identifies critical needs and concrete steps to meet them. Improving public awareness of the revenue-generating potential of patents will enhance incentives for the participation of individuals and small and medium enterprises in the patent system. Formalizing guidelines for patents derived through government research funds-coupled with needed changes in institutional governance-will enhance prospects for technology transfer from laboratories to commercial markets. Compensation schemes for traditional knowledge will extend the benefits of intellectual property rights to the poorest members of society. This paper ' s recommendations would help India achieve both a fully functioning patent system and a mechanism for ensuring that poor people living traditional lifestyles receive their share of the social gains that a working innovation system can confer.
    Keywords: E-Business,Technology Industry,Labor Policies,Real & Intellectual Property Law,Knowledge Economy
    Date: 2007–08–01
  32. By: Ravallion, Martin
    Abstract: The central governments of many developing countries have chosen to decentralize their anti-poverty programs, in the expectation that local a gents are better informed about local needs. The paper shows that this potential advantage of decentralized eligibility criteria can come at a large cost, to the extent that the induced geographic inequities undermine performance in reaching the income- poor nationally. These issues are studied empirically for (probably) the largest transfer-based poverty program in the world, namely China ' s Di Bao program, which aims to assure a minimum income through means-tested transfers. Poor municipalities are found to adopt systematically lower eligibility thresholds, reducing the program ' s ability to reach poor areas, and generating considerable horizontal inequity.
    Keywords: Inequality,Services & Transfers to Poor,Poverty Monitoring & Analysis,,Economic Theory & Research
    Date: 2007–08–01
  33. By: Dimaranan, Betina; Ianchovichina, Elena; Martin, Will
    Abstract: Although both China and India are labor-abundant and dependant on manufactures, their export mixes are very different. Only one product-refined petroleum-appears in the top 25 products for both countries, and services exports are roughly twice as important for India as for China, which is much better integrated into global production networks. Even assuming India also begins to integrate into global production chains and expands exports of manufactures, there seems to be opportunity for rapid growth in both countries. Accelerated growth through efficiency improvements in China and India, especially in their high-tech industries, will intensify competition in global markets leading to contraction of the manufacturing sectors in many countries. Improvement in the range and quality of exports from China and India has the potential to create substantial welfare benefits for the world, and for China and India, and to act as a powerful offset to the terms-of-trade losses otherwise associated with rapid export growth. However, without efforts to keep up with China and India, some countries may see further erosio n of their export shares and high-tech manufacturing sectors.
    Keywords: Economic Theory & Research,Trade Policy,Free Trade,Emerging Markets,Currencies and Exchange Rates
    Date: 2007–08–01
  34. By: Kurukulasuriya, Pradeep; Mendelsohn, Robert
    Abstract: This study examines the impact of climate change on cropland in Africa. It is based on a survey of more than 9,000 farmers in 11 countries: Burkina Faso, Cameroon, Egypt, Ethiopia, Ghana, Kenya, Niger, Senegal, South Africa, Zambia, and Zimbabwe. The study uses a Ricardian cross-sectional approach in which net revenue is regressed on climate, water flow, soil, and economic variables. The results show that net revenues fall as precipitation falls or as temperatures warm across all the surveyed farms. In addition to examining all farms together, the study examined dryland and irrigated farms separately. Dryland farms are especially climate sensitive. Irrigated farms have a positive immediate response to warming because they are located in relatively cool parts of Africa. The study also examined some simple climate scenarios to see how Africa would respond to climate change. These uniform scenarios assume that only one aspect of climate changes and the change is uniform across all of Africa. In addition, the study examined three climate change scenarios from Atmospheric Oceanic General Circulation Models. These scenarios predicted changes in climate in each country over time. Not all countries are equally vulnerable to climate change. First, the climate scenarios predict different temperature and precipitation changes in each country. Second, it is also important whether a country is already hot and dry. Third, the extent to which farms are irrigated is also important.
    Keywords: Climate Change,Environmental Economics & Policies,Global Environment Facility,Common Property Resource Development,Crops & Crop Management Systems
    Date: 2007–08–01
  35. By: Maddison, David; Manley, Marita; Kurukulasuriya, Pradeep
    Abstract: This paper uses the Ricardian approach to examine how farmers in 11 countries in Africa have adapted to existing climatic conditions. It then estimates the effects of predicted changes in climate while accounting for whatever farmer adaptation might occur. This study differs from earlier ones by using farmers ' own perceptions of the value of their land. Previous research, by contrast, has relied on either observed sale prices or net revenues, sometimes aggregated over geographically large tracts of terrain. The study also makes use of high resolution data describing soil quality and runoff. Furthermore, it tackles the challenges involved in modeling the effect of climate on agriculture in a study that includes countries in the northern and southern hemispheres, as well as the tropics. The study confirms that African agriculture is particularly vulnerable to climate change. Even with perfect adaptation, regional climate change by 2050 is predicted to entail production losses of 19.9 percent for Burkina Faso and 30.5 percent for Niger. By contrast, countries such as Ethiopia and South Africa are hardly affected at all, suffering productivity losses of only 1.3 percent and 3 percent, respectively. The study also confirms the importance of water supplies as measured by runoff, which, being affected by both temperature and precipitation, may itself be highly sensitive to climate change.
    Keywords: Environmental Economics & Policies,Climate Change,Common Property Resource Development,Rural Development Knowledge & Information Systems,Global Environment Facility
    Date: 2007–08–01
  36. By: Kurukulasuriya, Pradeep; Mendelsohn, Robert
    Abstract: This paper examines whether the choice of crops is affected by climate in Africa. Using a multinomial logit model, the paper regresses crop choice on climate, soils, and other factors. The model is estimated using a sample of more than 7,000 farmers across 11 countries in Africa. The study finds that crop choice is very climate sensitive. For example, farmers select sorghum and maize-millet in the cooler regions of Africa; maize-beans, maize-groundnut, and maize in moderately warm regions ' and cowpea, cowpea-sorghum, and millet-groundnut in hot regions. Further, farmers choose sorghum, and millet-groundnut when conditions are dry; cowpea, cowpea-sorghum, maize-millet, and maize when medium wet; and maize-beans and maize-groundnut when wet. As temperatures warm, farmers will shift toward more heat tolerant cro ps. Depending on whether precipitation increases or decreases, farmers will also shift toward drought tolerant or water loving crops, respectively. There are several policy relevant conclusions to draw from this study. First, farmers will adapt to climate change by switching crops. Second, global warming impact studies cannot assume crop choice is exogenous. Third, this study only examines choices across current crops. Future farmers may well have more choices. There is an important role for agronomic research in developing new varieties more suited for higher temperatures. Future farmers may have even better adaptation alternatives with an expanded set of crop choices specifically targeted at higher temperatures.
    Keywords: Crops & Crop Management Systems,Climate Change,Agriculture & Farming Systems,Renewable Energy,Global Environment Facility
    Date: 2007–08–01
  37. By: Maddison, David
    Abstract: The objective of this paper is to determine the ability of farmers in Africa to detect climate change, and to ascertain how they have adapted to whatever climate change they believe has occurred. The paper also asks farmers whether they perceive any barriers to adaptation and attempts to determine the characteristics of those farmers who, despite claiming to have witnessed climate change, have not yet responded to it. The study is based on a large-scale survey of agriculturalists in 11 African countries. The survey reveals that significant numbers of farmers believe that temperatures have already increased and that precipitation has declined. Those with the greatest experience of farming are more likely to notice climate change. Further, neighboring farmers tell a consistent story. There are important differences in the propensity of farmers living in different locations to adapt and there may be institutional impediments to adaptation in some countries. Although large numbers of farmers perceive no barriers to adaptation, those that do perceive them tend to cite their poverty and inability to borrow. Few if any farmers mentioned lack of appropriate seed, security of tenure, or market accessibility as problems. Those farmers who perceive climate change but fail to respond may require particular incentives or assistance to do what is ultimately in their own best interests. Although experienced farmers are more likely to perceive climate change, it is educated farmers who are more likely to respond by making at least one adaptation.
    Keywords: Climate Change,Rural Poverty Reduction,Environmental Economics & Policies,Agricultural Knowledge & Information Systems,Rural Development Knowledge & Information Systems
    Date: 2007–08–01
  38. By: Stefania Albanesi (Columbia University, NBER, and CEPR); Claudia Olivetti (Boston University)
    Abstract: Until the early decades of the 20th century, women spent more than 60% of their prime- age years either pregnant or nursing. Since then, improved medical knowledge and obstetric practices reduced the time cost associated with women?s reproductive role. The introduction of infant formula also reduced women?s comparative advantage in infant care, by providing an e¤ective breast milk substitute. Our hypothesis is that these developments enabled married women to increase their participation in the labor force, thus providing the incentive to invest in market skills, potentially narrowing gender earnings di¤erentials. We document these changes and develop a quantitative model that aims to capture their impact. Our results suggest that progress in medical technologies related to motherhood was essential to generate the signi?cant rise in the participation of married women between 1920 and 1960, in particular those with children. By enabling women to reconcile work and motherhood, these medical advancements laid the ground for the revolutionary change in women?s economic role.
    Date: 2007–04
  39. By: Ting Liu (Department of Economics, Boston University); Monic Jiayin Sun (Department of Economics, Boston University)
    Abstract: A government or public organization would like to subsidize an indivisible good. Consumers’ valuations of the good vary according to their wealth and benefits from the good. Education, medical care, and housing are common examples. A regulator has access to either wealth or benefit information, but not both. We present a method to translate a wealth-based policy to a benefit-based policy, and vice versa. We give a necessary and sufficient condition for the wealth-based policy and translated benefit-based policy to implement the same assignment: consumers choose to purchase the good under the wealth-based policy if and only if they choose to do so under the translated benefit-based policy. General taxation allows equivalent wealth-based and benefit-based policies to generate the same revenue from consumers.
    Date: 2007–04
  40. By: Chun-Yu Ho (Department of Economics, Boston University); Dan Li (Department of Economics, Boston University)
    Abstract: This paper analyzes the evolution of Chinese urban income distribution across space and time in post-reform era. Our results suggest no evidence on income convergence across cities during the period 1984-2003. We find that cities with comparable income level are likely to be co-located in the same region; further, cities tend to mirror the mobility of their counterparts located in the same province, but not the same region. The divergence in urban income across the nation will continue if the current economic growth pattern persists in the future.
    Keywords: City Income Distribution; Convergence; Markov Process; Spatial Dependence; China
    JEL: O15 O18 R12 R58
    Date: 2007–03
  41. By: Maria Floro (Department of Economics, American University); John Messier
    Abstract: In recent decades, there has been a marked increase in the informalization of employment in developing countries. The risk and insecurity associated with a growing number of informal sector jobs have important consequences in inducing or maintaining vulnerability. This paper explores the incidence of high indebtedness or financial stress among urban, low-income households in Ecuador and demonstrates its interconnectedness with the quality of employment. The implications are non-trivial in the sense that high debt service burden, as with the lack of credit access, can undermine investment and maintain low productivity and earnings. It can also lead to higher probability of loan default and to increase in interest rates or termination of credit line. There are also longer term welfare consequences in terms of households’ ability to cope with future shocks such as illness. The analysis is based on a 2002 sample of men and women in urban, poor households in Ecuador. By means of tobit and regression analyses, the paper demonstrates that labor market informalization has led to higher incidence of indebtedness. Moreover, there are differentiated patterns of debt servicing among women and men in urban, poor households. The results provide a more nuanced yet illuminating picture of the interconnectedness of employment, financial stress and vulnerability. We argue that informalization of employment has consequences in other dimensions of vulnerability of households such as high debt servicing, and therefore requires rethinking of current economic and social policies in order to effectively reduce poverty.
    Date: 2007–07
  42. By: Chaudhuri, Sarbajit
    Abstract: The present paper purports to examine the consequence of mid-day meal program and/or cash stipend scheme on the incidence of child labour in a developing economy using a three-sector general equilibrium model. It has been found that the policy may be counterproductive as it lowers both the initial incomes of the working families and the return on education. Direct cash payments to the working families instead of mid-day meal program are likely to be effective in eradicating the problem of child labour.
    Keywords: Child labour; mid-day meal program; return on education; general equilibrium
    JEL: J10 J13
    Date: 2007–05–12
  43. By: Arze del Granado, Javier; Fengler, Wolfgang; Ragatz, Andrew; Yavuz, Elif
    Abstract: What is the current level and main characteristics of public education spending in Indonesia? Is education spending insufficient? Is education spending efficient and equitable? This study reports the first account of Indonesia’s aggregated (national and sub-national) spending on education, as well as the economic and sub-functional (by programs) composition of education expenditures. It presents estimations of the expected (average) level of education spending for a country with similar economic and social characteristics. It sheds light on efficiency and equity of education spending by presenting social rates of return by level of education, an assessment of the adequacy of current teacher earnings relative to other paid workers, the distribution of teachers across urban, rural, and remote regions, and the determinants of education enrollment. It concludes that the current challenges in Indonesia are not anymore defined by the need to increase spending on the supply side, but rather to improve the quality of education services, and to improve the efficiency of education expenditures by re-allocating teachers to undersupplied regions and re-adjusting the spending mix within and between education programs of future additional spending in the sector. The study finds that poverty and student-aged labor are also significant constraints to education enrollment, stressing the importance of policies aimed to address demand-side factors affecting education access in Indonesia.
    Keywords: education Indonesia; expenditures education Indonesia; Indonesia's education; quality education; efficiency of education expenditures; equity of education expenditures; rates of return; teacher wages indonesia; education 20% rule Indonesia
    JEL: H41 I28 I22
    Date: 2007–07
  44. By: Siddiqui, Rizwana
    Abstract: Is household income enough for human development or government should heed to direct provision of social services to improve capabilities of individual. The former emphasized by the World Bank and later by the UNDP. This paper tests the argument by estimating a basic need policy model for Pakistan using cross district data. The results are consistent with the view that government provision of social services affects human capabilities significantly. However, the ultimate constraints on the sustainable capability development are material resources.
    Keywords: Basic Needs; Public Services; Household Income; Poverty
    JEL: I31 I38 I32 D31
    Date: 2007
  45. By: Rod Tyers; Jane Golley; Iain Bain
    Abstract: International pressure to revalue China’s currency stems in part from the expectation that rapid economic growth should be associated with a real exchange rate appreciation. This hinges on the Balassa-Samuelson hypothesis under which economic growth, stemming from improvements in traded sector productivity, causes non-traded prices to rise. The puzzle is that, while evidence on China’s productivity and prices supports this hypothesis, its real exchange rate has shown no long run tendency to appreciate. Resolution requires extension of the hypothesis to allow for effects on the real exchange rate due to non-traded productivity improvements or, in association with failures of the law of one price for traded goods, labour supply growth and growth-related demand switches due to changes in financial capital flows and trade distortions. The sensitivity of China’s real exchange rate to these determinants is reviewed with the results confirming that financial and capital outflows are dominant depreciating forces in the short run. Along with WTO accession trade reforms, it is shown that the heretofore rising surplus of Chinese domestic saving over its investment has restrained the real exchange rate from appreciating since the late 1990s.
    JEL: C68 C53 E27 F21 F43 F47 O11
    Date: 2007–06
  46. By: Rod Tyers; Jane Golley
    Abstract: International pressure to revalue China’s currency stems in part from the expectation that rapid economic growth should be associated with a real exchange rate appreciation. This hinges on the Balassa-Samuelson hypothesis under which economic growth, stemming from improvements in traded sector productivity, causes non-traded prices to rise. More generally, real depreciations can stem from non-traded productivity improvements or, in association with failures of the law of one price for traded goods, labour supply growth and growth-related demand switches due to changes in the saving rate, trade distortions or investment risk premia. This chapter examines the sensitivity of China’s real exchange rate to these determinants. The results confirm that financial capital inflows are a dominant appreciating force in the short run, helping to explain why it is the surplus of Chinese domestic saving over its investment that has restrained the real exchange rate from appreciating during the past decade. In the long term, the appreciating effect of the inevitable fall in the saving rate is likely to be at least partially offset by the depreciating effects of skill acquisition and services productivity growth. Indeed, if future Chinese growth is propelled by these factors, a long term real depreciating trend could be in store.
    JEL: C68 C53 E27 F21 F43 F47 J11 J13 J26 O11
    Date: 2007–05
  47. By: Xavier Gine (World Bank); Pamela Jakiela (University of California, Berkeley); Dean Karlan (Yale University); Jonathan Morduch (New York University)
    Abstract: Microfinance has been heralded as an effective way to address imperfections in credit markets. From a theoretical perspective, however, the success of microfinance contracts has puzzling elements. In particular, the group-based mechanisms often employed are vulnerable to free-riding and collusion, although they can also reduce moral hazard and improve selection. We created an experimental economics laboratory in a large urban market in Lima, Peru and over seven months conducted eleven different games that allow us to unpack microfinance mechanisms in a systematic way. We find that risk-taking broadly conforms to predicted patterns, but that behavior is safer than optimal. The results help to explain why pioneering microfinance institutions have been moving away from group-based contracts. The work also provides an example of how to use framed field experiments as a methodological bridge between laboratory and field experiments.
    Keywords: microfinance, group lending, information asymmetries, contract theory, experimental economics
    JEL: O12 D92 D10 D21 D82 C93
    Date: 2006–09

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