nep-dev New Economics Papers
on Development
Issue of 2007‒09‒24
twenty-six papers chosen by
Jeong-Joon Lee
Towson University

  1. Sovereign natural disaster insurance for developing countries : a paradigm shift in catastrophe risk financing By Mahul, Olivier; Ghesquiere, Francis
  2. On the Welfare Implications of Financial Globalization without Financial Development By Enrique G. Mendoza; Vincenzo Quadrini; José-Victor Ríos-Rull
  3. Gender equality, poverty and economic growth By Sinha, Nistha; Raju, Dhushyanth; Morrison, Andrew
  4. The Effect of Emigration on Child Labor By Gil S. Epstein; Nava Kahana
  5. The Challenges of El Salvador?s Conditional Cash Transfer Programme, Red Solidaria By Tatiana Britto
  6. Migration, Remittances and Public Transfers: Evidence from South Africa By Alex Sienaert
  7. Human Capital Quality and Economic Growth By Nadir Altinok
  8. The long-run impact of orphanhood By Dercon, Stefan; De Weerdt, Joachim; Beegle, Kathleen
  9. DOES MICROFINANCE EMPOWER WOMEN? Evidence from Self Help Groups in India By Bali Swain, Ranjula; Wallentin, Fan Yang
  10. Can We Rehabilitate the Guilds? A Sceptical Re-Appraisal By Ogilvie, S.
  11. Institutions and Behavior: Experimental Evidence on the Effects of Democracy By Pedro Dal Bo; Andrew Foster; Louis Putterman
  12. Decentralization, corruption, and political accountability in developing countries By Oskar Nupia
  13. Property Rights and Economic Growth: Evidence from a Natural Experiment By Brunt, Liam
  14. Cultural Assimilation, Cultural Diffusion and the Origin of the Wealth of Nations By Ashraf, Quamrul; Galor, Oded
  15. The Simplest Unified Growth Theory By Strulik, Holger; Weisdorf, Jacob
  16. Sector Switching: An Unexplored Dimension of Firm Dynamics in Developing Countries By Carol Newman; John Rand; Finn Tarp
  17. The Quantity-Quality Tradeoff of Children in a Developing Country: Identification Using Chinese Twins By Hongbin Li; Junsen Zhang; Yi Zhu
  18. Is Child Labor Harmful? The Impact of Working Earlier in Life on Adult Earnings By Patrick M. Emerson; André Portela Souza
  19. Brain Drain or Brain Gain? Micro Evidence from an African Success Story By Cátia Batista; Aitor Lacuesta; Pedro C. Vicente
  20. Household Coping in war- and peacetime: cattle sales in Rwanda, 1991-2001 By Marijke Verpoorten
  21. Clothing and export diversification : still a route to growth for low-income countries ? By Hoppe, Mombert; Brenton, Paul
  22. Infant mortality over the business cycle in the developing world By Schady, Norbert; Friedman, Jed; Baird, Sarah
  23. Non-traditional crops, traditional constraints : the adoption and diffusion of export crops among guatemalan smallholders By Davis, Benjamin; Winters, Paul; Kirk, Angeli; Carletto, Calogero
  24. The growth in government domestic debt : changing burdens and risks By Hanson, James A.
  25. Leakage of public resources in the health sector : an empirical investigation of Chad By Wane, Waly; Gauthier, Bernard
  26. Seeking Opportunities: Migration as an Income Diversification Strategy of Households in Kakamega District in Kenya By Lena Giesbert

  1. By: Mahul, Olivier; Ghesquiere, Francis
    Abstract: Economic theory suggests that countries should ignore uncertainty for public investment and behave as if indifferent to risk because they can pool risks to a much greater extent than private investors can. This paper discusses the general economic theory in the case of developing countries. The analysis identifies several cases where the government ' s risk-neutral assumption does not hold, thus making rational the use of ex ante risk financing instruments, including sovereign insurance. The paper discusses the optimal level of sovereign insurance. It argues that, because sovereign insurance is usually more expensive than post-disaster financing, it should mainly cover immediate needs, while long-term expenditures should be financed through post-disaster financing (including ex post borrowing and tax increases). In other words, sovereign insurance should not aim at financing the long-term resource gap, but only the short-term liquidity need.
    Keywords: Debt Markets,Hazard Risk Management,Banks & Banking Reform,Insurance & Risk Mitigation,Natural Disasters
    Date: 2007–09–01
  2. By: Enrique G. Mendoza; Vincenzo Quadrini; José-Victor Ríos-Rull
    Abstract: It is widely argued that countries can reap large gains from liberalizing their capital accounts if financial globalization is accompanied by the development of domestic institutions and financial markets. However, if liberalization does not lead to financial development, globalization can result in adverse effects on social welfare and the distribution of wealth. We use a multi-country model with non-insurable idiosyncratic risk to show that, if countries differ in the degree of asset market incompleteness, financial globalization hurts the poor in countries with less developed financial markets. This is because in these countries liberalization leads to an increase in the cost of borrowing, which is harmful for those heavily leveraged, i.e. the poor. Quantitative analysis shows that the welfare effects are sizable and may justify policy intervention.
    JEL: E2 E44 F32 F36 F4
    Date: 2007–09
  3. By: Sinha, Nistha; Raju, Dhushyanth; Morrison, Andrew
    Abstract: This paper reviews empirical findings from economic analyses of the role of gender equality and women ' s empowerment in reducing poverty and stimulating growth. Going beyond the large literature documenting the impact of female education on a range of development outcomes, the paper presents evidence on the impact of women ' s access to markets (labor, land, and credit) and women ' s decision-making power within households on poverty reduction and productivity at the individual and household level. The paper also summarizes evidence from studies examining the relationship between gender equality and poverty reduction and growth at the macro level. Although micro level effects of gender equality on individual productivity and human development outcomes have been well documented and have important ramifications for aggregate economic performance, establishing an empirical relationship between gender equality and poverty reduction and growth at the macro level has proven to be more challenging. The paper concludes by identifying priority areas for future research.
    Keywords: Access to Finance,Population Policies,Gender and Law,Gender and Development,Rural Development Knowledge & Information Systems
    Date: 2007–09–01
  4. By: Gil S. Epstein (Bar-Ilan University, CReAM and IZA); Nava Kahana (Bar-Ilan University and IZA)
    Abstract: We present a general model of child labor that incorporates the various components presented in the literature as explanations for its existence. Our proposal is to mitigate the phenomenon by encouraging temporary emigration. It emerges that the remittances sent by the emigrating parents might enable not only their children, but also others, to stop working. We show how this equilibrium can be sustained even upon the return of the emigrant parents to their home country.
    Keywords: child labor, temporary emigration
    JEL: D62 F22 I30 J13 J20 J24 O15
    Date: 2007–08
  5. By: Tatiana Britto (Visiting researcher, IPC)
    Abstract: In the context of the increasing prominence of conditional cash transfers (CCTs) in the development agenda of many developing countries, this Country Study provides an analytic overview of the challenges faced by El Salvador?s CCT programme, Red Solidaria, (Solidarity Network). The purpose is to generate an information base for comparative studies on the prospects and potential difficulties of implementing CCTs in country settings different from those of the pioneer programmes, such as in Brazil and Mexico. The study describes Red Solidaria´s origins and components and discusses major aspects of its design and implementation. A particular emphasis is placed on the programme?s co-responsibilities, exit rules and targeting strategy. The study also covers the topics of institutional structures, intersectoral coordination and political support for such programmes. The conclusion is that Red Solidaria is an informative example of how a small country with limited resources can successfully set up a complex CCT programme. Still, the study notes that there are pending issues and remaining challenges for the programme. These relate, in particular, to strengthening mechanisms of local participation; coordinating the CCTs with other dimensions of Red Solidaria, such as productive projects; lengthening the duration of benefits for meeting human-capital objectives; clarifying eligibility requirements and how changes in family conditions can affect such requirements; and distinguishing conditionalities from ordinary programme co-responsibilities. An issue of overriding importance is to develop a broader long-term social protection strategy for El Salvador, with which CCTs would be integrated instead of being regarded as a stand-along programme.
    Keywords: El Salvador; Conditional Cash Transfer Programme; CCT, Red Solidaria
    Date: 2007–09
  6. By: Alex Sienaert
    Abstract: What drives migration and remittance behaviour in South Africa, and what are the implications for public policy? This paper evaluates existing empirical evidence, posits a simple theoretical model and undertakes a fresh evaluation using longitudinal data spanning 1993 to 2004 from KwaZula-Natal province. Findings generally accord with expectations if migration is a family income-optimising strategy, with remittances sustained by migrant altruism. The key policy-relevant result is that receipt of public transfer income raises the likelihood of migration (most likely because migration is costly and households face liquidity constraints) and hence crowds in private transfers on average.
    Keywords: South Africa, Migration, Remittances, Public Pensions
    JEL: J4 J61 H31 H55
    Date: 2007
  7. By: Nadir Altinok (IREDU - Institut de recherche sur l'éducation : Sociologie et Economie de l'Education - [CNRS : UMR5225] - [Université de Bourgogne])
    Abstract: The estimation of the relationship between education and economic growth is marked by contradictions. These contradictions underline the lack of precision characterizing indicators of human capital. This paper constructs new indicators based on a pool of international surveys concerning pupil assessment. Thus, our new database, which includes 105 countries, makes it possible to confirm or not the positive relationship between education and growth. Taking into account the endogeneity of education, we measure a positive effect of qualitative indicators of human capital and the growth of countries between 1960 and 2000. The contribution of education to growth therefore appears significant, both from a quantitative and a qualitative point of view.
    Keywords: Education quality ; Human capital ; Growth ; Development
    Date: 2007–09–17
  8. By: Dercon, Stefan; De Weerdt, Joachim; Beegle, Kathleen
    Abstract: This paper presents unique evidence that orphanhood matters in the long run for health and education outcomes, in a region of Northwestern Tanzania. The paper studies a sample of 718 non-orphaned children surveyed in 1991-94, who were traced and re-interviewed as adults in 2004. A large proportion, 19 percent, lost one or more parents before the age of 15 in this period, allowing the authors to assess the permanent health and education impacts of orphanhood. The analysis controls for a wide range of child and adult characteristics before orphanhood, as well as community fixed effects. The findings show that maternal orphanhood has a permanent adverse impact of 2 cm of final height attainment and one year of educational attainment. Expressing welfare in terms of consumption expenditure, the result is a gap of 8.5 percent compared with similar children whose mother survived till at least their 15th birthday.
    Keywords: Health Monitoring & Evaluation,Street Children,Youth and Governance,Primary Education,Population Policies
    Date: 2007–09–01
  9. By: Bali Swain, Ranjula (Department of Economics); Wallentin, Fan Yang (Department of Information Science, Statistics)
    Abstract: Microfinance programs like the Self Help Bank Linkage Program in India have been increasingly promoted for their positive economic impact and the belief that they empower women. However, only a few studies rigorously examine the link between microfinance and women’s empowerment. This paper contributes by arguing that women empowerment takes place when women challenge the existing social norms and culture, to effectively improve their well being. It empirically validates this hypothesis by using quasi-experimental household sample data collected for five states in India for 2000 and 2003. A general structural model is estimated by employing appropriate techniques to treat the ordinal variables in order to estimate the impact of the Self Help Group (SHG) on women empowerment for 2000 and 2003. The results strongly demonstrate that on average, there is a significant increase in the women empowerment of the SHG members group. No such significant change is observed however, for the members of the control group. The elegance of the result lies in the fact that the group of SHG participants show clear evidence of a significant and higher empowerment, while allowing for the possibility that some members might have been more empowered than others.
    Keywords: Microfinance; Women empowerment; Ordinal variables; General structural model and Robust maximum likelihood estimation.
    JEL: C33 G21 J16
    Date: 2007–08–24
  10. By: Ogilvie, S.
    Abstract: This paper examines recent attempts to rehabilitate pre-modern craft guilds as efficient economic institutions. Contrary to rehabilitation views, craft guilds adversely affected quality, skills, and innovation. Guild rent-seeking imposed deadweight losses on the economy and generated no demonstrable positive externalities. Industry flourished where guilds decayed. Despite impairing efficiency, guilds persisted because they redistributed resources to powerful groups. The ‘rehabilitation’ view of guilds, it concludes, is theoretically contradictory and empirically untenable. Key words: Institutions; guilds; rent-seeking; monopoly; craft; industry; quality; human capital; training; technology; innovation; economic history; methodology; local studies; case studies.
    JEL: N01 N43 O17 O43 P48
    Date: 2007–09
  11. By: Pedro Dal Bo; Andrew Foster; Louis Putterman
    Date: 2007
  12. By: Oskar Nupia
    Abstract: Powerful local elites are quite common in developing countries. Thus, whether decentralization reduces or not the level of corruption in the presence of these elites is a relevant issue for these economies. We motivate this paper with some empirical evidence. Using cross-country information we find that the negative average effect of decentralization on corruption documented in the literature is absent for developing countries. Then, we build an imperfect information model of corruption and political accountability to study if the influence local elites may have on the allocation of public resources can explain this outcome. We find that not only the power of the elites but also other unexpected factors matter. In particular, both the existence of regions with a relatively weak accountability sector and the design of decentralization and grants can also explain the lack of success of decentralization in combating corruption in these economies.
    Date: 2007–09–09
  13. By: Brunt, Liam
    Abstract: In 1795 the British took control of the Cape colony (South Africa) from the Dutch; and in 1843 they exogenously changed the legal basis of landholding, giving more secure property rights to landholders. Since endowments and other factors were held constant, these changes offer clean tests of the effects on economic growth of colonial identity and secure property rights. The effects of both changes were immediate, positive and large. Other legal and institutional changes, such as the move to a common law system in 1827, had no such effects on economic growth.
    Keywords: Economic growth; Legal origins; Property rights
    JEL: N47 O43
    Date: 2007–09
  14. By: Ashraf, Quamrul; Galor, Oded
    Abstract: This research argues that variations in the interplay between cultural assimilation and cultural diffusion have played a significant role in giving rise to differential patterns of economic development across the globe. Societies that were geographically less vulnerable to cultural diffusion, benefited from enhanced assimilation, lower cultural diversity and, thus, more intense accumulation of society-specific human capital, enabling them to flourish in the technological paradigm that characterized the agricultural stage of development. The lack of cultural diffusion and its manifestation in cultural rigidity, however, diminished the ability of these societies to adapt to a new technological paradigm, which delayed their industrialization and, thereby, their take-off to a state of sustained economic growth. The theory contributes to the understanding of the advent of divergence and overtaking in the process of long-run development, attributing the dominance of some societies within a given technological regime to a superior operation of cultural assimilation, while the success of others in the switch between technological regimes to a higher frequency of cultural diffusion and the beneficial effect of diversity on the adaptability of society to a changing technological environment. Thus, in contrast to the cultural and institutional hypotheses, which posit a hierarchy of cultural and institutional attributes in terms of their conduciveness to innovation and their ability in fostering industrialization, the proposed theory suggests that the desirable degree of the relative prevalence of cultural assimilation versus cultural diffusion varies according to the stage of development. Enhanced cultural assimilation is optimal within a given stage of development, but is detrimental for the transition between technological regimes. Therefore, while cultural traits themselves do not necessarily have a differential effect on the process of development, it is the variation in the relative strengths of the forces of cultural assimilation and cultural diffusion, which together determine the heterogeneity of these traits, that is instrumental for comparative economic development.
    Keywords: cultural assimilation; cultural diffusion; cultural diversity; geography
    JEL: O11 O13 O14 O31 O33 O41 O43
    Date: 2007–08
  15. By: Strulik, Holger; Weisdorf, Jacob
    Abstract: This paper provides a unified growth theory, i.e. a model that explains the very long-run economic and demographic development path of industrialized economies, stretching from the pre-industrial era to present-day and beyond. Making strict use of Malthus' (1798) so-called preventive check hypothesis - that fertility rates vary inversely with the price of food - the current study offers a new and straightforward explanation for the demographic transition and the break with the Malthusian era. The current framework lends support to existing unified growth theories and is well in tune with historical evidence about structural transformation.
    Keywords: Economic Growth, Population Growth, Structural Change, Industrial Revolution
    JEL: O11 O14 J10 J13
    Date: 2007–09
  16. By: Carol Newman; John Rand; Finn Tarp
    Abstract: Much of the literature on industry evolution has found firm dynamics to be an important source of sector-level productivity growth. In this paper, we ask whether the delineation of entry and exit firms matters in assessing the impact of firm turnover. Using detailed firm level data from Vietnam, it emerges that efficiency differences between sector switchers and exit/entry firms exist. Distinguishing between switchers and firm entry/exit is crucial for understanding the contribution of firm turnover to overall productivity growth. Moreover, we uncover distinct and illuminating firm and sector-level determinants of firm exit and switching, which need to be carefully considered in the search for effective policy.
    Date: 2007–09–13
  17. By: Hongbin Li (Chinese University of Hong Kong and Tsinghua University); Junsen Zhang (Chinese University of Hong Kong and IZA); Yi Zhu (Michigan State University)
    Abstract: Testing the tradeoff between child quantity and quality within a family is complicated by the endogeneity of family size. Using data from the Chinese Population Census, this paper examines the effect of family size on child educational attainment in China. We find a negative correlation between family size and child outcome, even after we control for the birth order effect. We then instrument family size by the exogenous variation that is induced by a twin birth, and find a negative effect of family size on children’s education. We also find that the effect of family size is more evident in rural China, where the public education system is poor. Given that our estimates of the effect of twinning on non-twins at least provide the lower bound of the true effect of family size (Rosenzweig and Zhang, 2006), these findings suggest a quantity-quality tradeoff of children in developing countries.
    Keywords: quantity-quality tradeoff, twins, China
    JEL: J13 J18 J24 O10
    Date: 2007–08
  18. By: Patrick M. Emerson (Oregon State University and IZA); André Portela Souza (São Paulo School of Economics, Fundação Getulio Vargas)
    Abstract: This paper explores the question: is working as a child harmful to an individual in terms of adult outcomes in earnings? Though an extremely important question, little is known about the effect of child labor on adult outcomes. Estimations of an instrumental variables earnings model on data from Brazil show that child labor has a large negative impact on adult earnings for male children even when controlling for schooling and that the negative impact of starting to work as a child reverses at around ages 12-14.
    Keywords: child labor, Brazil, adult outcomes
    JEL: J31 O12 O54
    Date: 2007–08
  19. By: Cátia Batista (University of Oxford and IZA); Aitor Lacuesta (Bank of Spain); Pedro C. Vicente (University of Oxford)
    Abstract: Does emigration really drain human capital accumulation in origin countries? This paper explores a unique household survey purposely designed and conducted to answer this specific question for the case of Cape Verde - the African country with the largest fraction of tertiary educated population living abroad, despite also having a fast-growing stock of human capital. Unlike previous literature, our tailored survey allows us to adjust existing inflated "brain drain" numbers for educational upgrading of emigrants after migration. We do so by combining our survey data on current, return and non-migrants with information from censuses of the destination countries. Our micro data also enables us to propose a novel, explicit test of "brain gain" arguments according to which the possibility of own future emigration positively impacts educational attainment in the origin country. Crucially, the innovative empirical strategy we propose hinges on the ideal characteristics of our survey, namely on full histories of migrants and on a new set of exclusion restrictions to control for unobserved heterogeneity of emigrants. Our results point to a very substantial impact of the "brain gain" channel on the educational attainment of those left behind. Alternative channels (namely remittances, family disruption, and general equilibrium effects at the local level) are also considered, but these do not seem to play an important role. Overall, we find that there may be substantial human capital gains from allowing free migration and encouraging return migration.
    Keywords: brain drain, brain gain, brain circulation, international migration, human capital, effects of emigration in origin countries, household survey, Cape Verde, sub-Saharan Africa
    JEL: F22 J24 O15 O55
    Date: 2007–08
  20. By: Marijke Verpoorten
    Abstract: The economic literature has given due attention to household coping strategies in peacetime. In contrast, little is known about such strategies in wartime. This paper studies the use of cattle as a buffer stock by Rwandan households during 1991-2001, a period characterized by civil war and genocide. It is found that the probability of selling cattle increases upon the occurrence of both peacetime and wartime covariant adverse income shocks. The peacetime cattle sales are largely explained by shifts in the household asset portfolio. In contrast, in 1994, the year of the genocide, almost half of the cattle sales were motivated by the need to buy food. However, we argue that the effectiveness of this coping strategy was severely reduced due to the wartime conditions. First, during the year of ethnic violence, cattle prices plummeted to less than half of their pre-genocide value. Second, we find that households most targeted in the violence did not sell cattle. We discuss several explanations for this latter finding.
    Keywords: Coping Strategies, Buffer Stock Model, Cattle, Violent Conflict, Rwanda
    JEL: D12 D91 O12
    Date: 2007
  21. By: Hoppe, Mombert; Brenton, Paul
    Abstract: Can the clothing sector be a driver of export diversification and growth for today ' s low-income countries as it was in the past for countries that have graduated into middle income? This paper assesses this issue taking into account key changes to the market for clothing: the emergence of India and especially China as exporting countries; the rise of global production chains; the removal of quotas from the global trading regime but t he continued presence of high tariffs and substantial trade preferences; the increasing importance of large buyers in developed countries and their concerns regarding risk and reputation; and the increasing importance of time in defining sourcing decisions. To assess the importance of the factors shaping the global clothing market, the authors estimate a gravity model to explain jointly the propensity to export clothing and the magnitude of exports from developing countries to the E U and US markets. This analysis identifies the quality of governance as an important determinant of sourcing decisions and that there appears to be a general bias against sourcing apparel from African countries, which is only partially overcome by trade preferences.
    Keywords: Economic Theory & Research,Free Trade,Trade Policy,Emerging Markets,Transport Economics Policy & Planning
    Date: 2007–09–01
  22. By: Schady, Norbert; Friedman, Jed; Baird, Sarah
    Abstract: The diffusion of cost-effective life saving technologies has reduced infant mortality in much of the developing world. Income gains may also play a direct, protective role in ensuring child survival, although the empirical findings to date on this issue have been mixed. This paper assembles data from Demographic and Health Surveys (DHS) in 59 countries to analyze the relationship between changes in per capita GDP and infant mortality. The authors show that there is a strong, negative association between changes in per capita GDP and infant mortality- in a first-differenced specification the implied elasticity of infant mortality with respect to per capita GDP is approximately -0.56. In addition to this central result, two findings are noteworthy. First, although there is some evidence of changes in the composition of women giving birth during economic upturns and downturns, the observed changes in infant mortality are not a result of mothers with protective characteristics timing fertility to correspond with the business cycle. Second, the association between infant mortality and per capita GDP is particularly pronounced for periods of large contractions in GDP, suggesting the inability of developing country households or health systems (or both) to smooth resources. Simple back-of-the-envelope calculations using the estimates suggest that there may have been more than 1 million " excess " deaths in the developing world since 1980 as a result of large, negative contractions in per capita GDP.
    Keywords: Population Policies,Health Monitoring & Evaluation,Early Child and Children ' s Health,Health Systems Development & Reform,Early Childhood Development
    Date: 2007–09–01
  23. By: Davis, Benjamin; Winters, Paul; Kirk, Angeli; Carletto, Calogero
    Abstract: This paper uses a duration analysis based on adoption data spanning more than 25 years from six communities in the Central Highlands of Guatemala. The analysis explores how household characteristics and external trends play into both the adoption and diffusion processes of non-traditional exports among smallholders. Adoption was initially widespread and rapid, which led nontraditional exports to be hailed as a pro-poor success, reaching all but the smallest landholders. However, over time more than two-thirds of adopters eventually dropped out of production of nontraditional exports. Based on the analysis, production of nontraditional exports appears to have delivered less prosperity to adopters than initially promised. Although smallholders may be enticed into entering into nontraditional exports markets when conditions are favorable, they may lack the capacity to overcome the difficulties that inevitably arise in complex types of cultivations and in highly variable global agricultural markets. Governmental and non-governmental organizations can attempt to mitigate these difficulties, but market forces may overwhelm their efforts, with some adopters still unable to compete in global markets.
    Keywords: Access to Finance,Rural Development Knowledge & Information Systems,Economic Theory & Research,Markets and Market Access,Rural Poverty Reduction
    Date: 2007–09–01
  24. By: Hanson, James A.
    Abstract: This paper analyzes the recent growth of government domestic debt, including central bank debt, using a new data base on government domestic debt in developing countries with large, open financial systems. On average, government domestic debt grew much faster than GDP between 1994 and 2004 and became larger than foreign debt. The rapid growth of domestic debt reflects financial crises, the growth of central bank debt and the greater attractiveness to governments of issuing domestic debt as well as the recent increase in demands for it. Both its attractiveness and the increased demands for it reflect the current benign international environment to some degree. The main risk of government debt, domestic or foreign, remains its overall size relative to a country ' s fiscal, financial, and political institutions. While government domestic debt can help the domestic private capital market, large domestic debt, like large external debt, has risks. For example, there can be " sudden stops " in the demand for domestic debt as well as in foreign lending. Governments need to be aware o f the risks and burdens in domestic debt issue-crowding out small borrowers, transferring risks to banks when issuing longer maturity, fixed-interest domestic debt and reducing returns, and imposing risks on holders of pensions, annuities, and life insurance policies. Growth of central bank debt can divert central banks from pursuit of the objective of price stability.
    Keywords: Debt Markets,Banks & Banking Reform,External Debt,,Emerging Markets
    Date: 2007–09–01
  25. By: Wane, Waly; Gauthier, Bernard
    Abstract: In the public sector in developing countries, leakage of public resources could prove detrimental to users and affect the well-being of the population. This paper empirically examines the importance of leakage of government resources in the health sector in Chad, and its effects on the prices of drugs. The analysis uses data collected in Chad as part of a Health Facilities Survey organized by the World Bank in 2004. The survey covered 281 primary health care centers and contained information on the provision of medical material, financial resources, and medicines allocated by the Ministry of Health to the regional administration and primary health centers. Although the regional administration is officially allocated 60 percent of the ministry ' s non-wage recurrent expenditures, the share of the resources that actually reach the regions is estimated to be only 18 percent. The health centers, which are the frontline providers and the entry point for the population, receive less than 1 percent of the ministry ' s non-wage recurrent expenditures. Accounting for the endogeneity of the level of competition among health centers, the leakage of government resources has a significant and negative impact on the price mark-up that health centers charge patients for drugs.
    Keywords: Health Monitoring & Evaluation,Health Systems Development & Reform,Public Sector Expenditure Analysis & Management,Health Economics & Finance,Population Policies
    Date: 2007–09–01
  26. By: Lena Giesbert (GIGA Institute of African Affairs)
    Abstract: Migration and remittances are widely seen as major components of diversification strategies aimed at coping with risky environments in developing countries. The debate in the literature mainly concentrates on effects of and access to the strategy of migration. Against this background, the paper investigates patterns, determinants and the impact of internal migration on households based on data from a densely populated rural area in Western Kenya. The motivation behind migration is largely economic in kind. Accordingly, remittances account for a substantial share of household incomes. Results derived from a probit model estimation indicate that the likelihood of migration is independent from the wealth position of households. Instead, demographic household factors, education-related variables and migrant networks are of central importance. Migration and remittances are obviously more easily accessible than other opportunities of income diversification beyond farming for households across all levels of wealth, including the poorest households.
    Keywords: Migration, remittances, income diversification, coping strategies, sub-Saharan Africa, Kenya.
    JEL: R23 Q12 D13
    Date: 2007–09

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