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on Development |
| By: | Robert C. Feenstra (University of California at Davis) |
| Abstract: | This is the text of Professor Robert Feenstra's 'Global Economy Lecture' which he delivered in February 2007. It is part of a lecture series organized jointly by the Vienna Institute for International Economic Studies (wiiw) and the Austrian National Bank (OeNB). In this lecture, Professor Feenstra covers a wide range of issues related to the ongoing discussion of the impact of global economic integration upon labour markets: the impact of outsourcing upon wage structures and upon productivity, the effects of NAFTA upon the US, Mexican and Canadian economies, the issue of outsourcing in services, the impact of international migration flows, etc. |
| Keywords: | globalization and labour markets, outsourcing, trade vs. technology, outsourcing in services, migration, production-nonproduction workers |
| JEL: | F16 F21 F22 F15 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:wii:wpaper:44&r=dev |
| By: | Charles R. Hulten; Anders Isaksson |
| Abstract: | Average income per capita in the countries of the OECD was more than 20 times larger in 2000 than that of the poorest countries of sub-Sahara Africa and elsewhere, and many of the latter are not only falling behind the world leaders, but have even regressed in recent years. At the same time, other low-income countries have shown the capacity to make dramatic improvements in income per capita. Two general explanations have been offered to account for the observed patterns of growth. One view stresses differences in the efficiency of production are the main source of the observed gap in output per worker. A competing explanation reverses this conclusion and gives primary importance to capital formation. We examine the relative importance of these two factors as an explanation of the gap using 112 countries over the period 1970-2000. We find that differences in the efficiency of production, as measured by relative levels of total factor productivity, are the dominant factor accounting for the difference in development levels. We also find that the gap between rich and most poor nations is likely to persist under prevailing rates of saving and productivity change. To check the robustness of these conclusions, we employ different models of the growth process and different assumptions about the underlying data. Although different models of growth produce different relative contributions of capital formation and TFP, we conclude that the latter is the dominant source of gap. This conclusion must, however, be qualified by the poor quality of data for many developing countries. |
| JEL: | O11 O47 O57 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13469&r=dev |
| By: | Alessandra Bonfiglioli; Gino Gancia |
| Abstract: | In a world where poor countries provide weak protection for intellectual property rights (IPRs), market integration shifts technical change in favor of rich nations. Through this channel, free trade may amplify international income differences. At the same time, integration with countries where IPRs are weakly protected can slow down the world growth rate. An important implication of these results is that protection of intellectual property is most beneficial in open countries. This prediction, which is novel in the literature, is consistent with evidence from a panel of 53 countries observed in the years 1965-1990. The paper also provides empirical support for the mechanism linking North-South trade to the direction of technical change: an increase in import penetration from low-wage, low-IPRs, countries is followed by a sharp fall in R&D investment in a panel of US manufacturing sectors. |
| Keywords: | Economic Growth, North-South Trade, Directed Technical Change, Intellectual Property Rights, Cross-Country Income Differences. |
| JEL: | F14 F43 O33 O34 O41 |
| Date: | 2007–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:aub:autbar:713.07&r=dev |
| By: | Laura Alfaro; Andrew Charlton |
| Abstract: | We use a new firm level data set that establishes the location, ownership, and activity of 650,000 multinational subsidiaries -- close to a comprehensive picture of global multinational activity. A number of patterns emerge from the data. Most foreign direct investment (FDI) occurs between rich countries. The share of vertical FDI (subsidiaries which provide inputs to their parent firms) is larger than commonly thought, even within developed countries. More than half of all vertical subsidiaries are only observable at the four-digit level because the inputs they are supplying are so proximate to their parent firms' final good that they appear identical at the two-digit level. We call these proximate subsidiaries 'intra-industry' vertical FDI and find that their location and activity are significantly different to the inter-industry vertical FDI visible at the two-digit level. These subsidiaries are not readily explained by the comparative advantage considerations in traditional models, where firms locate their low skill production stages abroad in low skill countries to take advantage of factor cost differences. We find that overwhelmingly, multinationals tend to own the stages of production proximate to their final production giving rise to a class of high-skill intra-industry vertical FDI. |
| JEL: | F2 F23 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13447&r=dev |
| By: | Lee Branstetter; C. Fritz Foley |
| Abstract: | Despite the rapid expansion of U.S.-China trade ties, the increase in U.S. FDI in China, and the expanding amount of economic research exploring these developments, a number of misconceptions distort the popular understanding of U.S. multinationals in China. In this paper, we seek to correct four common misunderstandings by providing a statistical portrait of several aspects of U.S. affiliate activity in the country and placing this activity in its appropriate economic context. |
| JEL: | F14 F23 O19 O32 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13470&r=dev |
| By: | Rodrik, Dani |
| Abstract: | The new conventional wisdom on globalization emphasizes that reaping the benefits of trade and financial integration is not automatic, and requires better domestic institutions, essentially improved safety nets in rich countries and improved governance in the poor countries. The prevailing strategy is predicated on the presumption that insufficiently open markets continue to pose an important constraint on the world economy. In reality, lack of openness is no longer the binding constraint for the global economy. The gains to be reaped by further liberalization of markets are meager for poor and rich countries alike. An alternative approach to globalization would focus on enhancing policy space rather than market access, and on devising the rules of the game to better manage the interface between national regulatory and social regimes. It is possible to envisage such rules without slipping back into protectionism. |
| Keywords: | globalization; policy space |
| JEL: | F02 F15 F33 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6494&r=dev |
| By: | Xavier Giné; Robert Townsend; James Vickery |
| Abstract: | This paper describes the contract design and institutional features of an innovative rainfall insurance policy offered to smallholder farmers in rural India and presents preliminary evidence on the determinants of insurance participation. Insurance take-up is found to be decreasing in basis risk between insurance payouts and income fluctuations, higher among wealthy households, and lower among households that are credit constrained. These results match predictions of a simple neoclassical model appended with borrowing constraints. Other patterns are less consistent with the benchmark model. Namely, participation in village networks and measures of familiarity with the insurance vendor are strongly correlated with insurance take-up decisions, and risk averse households are found to be less, not more, likely to purchase insurance. We present evidence suggesting that these results reflect uncertainty about the product itself, given households' limited experience with it. |
| Keywords: | Insurance, Casualty ; Insurance, Disaster ; Households ; Rural areas ; Human behavior |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:302&r=dev |
| By: | Claudio A. Agostini; Philip Brown; |
| Abstract: | Despite rapid economic growth and poverty reduction, inequality in Chile has remained high and remarkably constant over the last 20 years, prompting academic and public interest in the subject. Due to data limitations, however, research on inequality in Chile has concentrated on the national and regional levels. The impact of cash subsidies to poor households on local inequality is thus not well understood. Using povertymapping methods to asses this impact, we find heterogeneity in the effectiveness of regional and municipal governments in reducing inequality via poverty-reduction transfers, suggesting that alternative targeting regimes may complement current practice in aiding the poor. |
| Keywords: | Inequality; Poverty Mapping; Subsidies; Targeting; Chile |
| JEL: | H53 I38 O54 |
| Date: | 2007–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2007-872&r=dev |
| By: | Larrain B., Felipe; Tavares, José |
| Abstract: | The economics literature provides ample evidence that higher corruption discourages FDI inflows. In this paper we address, for the first time in the literature in a systematic way, the exact reverse link, i.e., the empirical effect of FDI inflows on corruption. We present a simple model that illustrates the two-way relationship between foreign direct investment and corruption, identifying exactly the direction of causality that we address: how do “exogenous“ variations in FDI affect the degree of corruption in the host country. Our dataset covers a wide group of countries for the period 1981 – 2000, and we confront the issue of causality by constructing an original set of instrumental variables relying on geographical and cultural distance between FDI source and host countries to measure exogenous time-varying changes in FDI inflows. We find that FDI inflows (as a share of GDP) significantly decrease corruption in the host country. The quantitative impact of FDI inflows on corruption is stronger than the impact of trade openness and tariff rates on corruption and is validated by the use of instrumental variables. The results are robust to the inclusion of several determinants of openness, in addition to trade intensity and the average tariff level, including dependence on natural resources, ethnic fractionalization, size of the economy and government expenditure. Quantitatively, the impact of FDI inflows on corruption is of the same order of magnitude as the impact of per capita income on corruption. |
| Keywords: | Corruption; Foreign Direct Investment; Instrumental Variables; International Trade; Tariffs |
| JEL: | E5 F10 F13 F30 H10 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6488&r=dev |
| By: | Pekka Virtanen (University of Tampere, Finland); Dag Ehrenpreis (International Poverty Centre) |
| Abstract: | Mozambique has experienced more than a decade of sustained economic growth based on two sectors, agriculture and industry. Absolute poverty has fallen rapidly. The main factor in the reduction of poverty since the mid 1990s has been increased production in agriculture, the main source by far of livelihoods in the country. However, this growth represents only a ?bounce-back? to pre-war levels of agricultural production, without any substantial improvement in productivity, which remains very low even when compared regionally. Growth in industrial production has been the main driving force behind Mozambique?s rapidly growing exports. Based on a few mega-projects, this growth has, however, created few jobs while its contribution to public revenue has been marginal when compared to its value of production. Due to the enclave character of such projects, the spillover effect in terms of technology transfer or skills development has been minimal. External aid provides a major part of all foreign exchange available to Mozambique, and it has thus far had a positive effect on growth without major negative impact on the real exchange rate. Aid must be allocated now to crucial services for creating globally competitive agricultural production capacity, including rural infrastructure, in order to promote sustainable livelihoods and enhance labour productivity. |
| Keywords: | Growth; Poverty; Inequality; Mozambique |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:ipc:cstudy:10&r=dev |
| By: | Cally Ardington; Anne Case; Victoria Hosegood |
| Abstract: | The South African old-age social pension has been much studied by both researchers and policy makers, in part for the larger lessons that might be learned about behavioral responses to cash transfers in developing countries. In this paper, we quantify the labor supply responses of prime-aged individuals to changes in the presence of old-age pensioners in their households, using longitudinal data recently collected in northern KwaZulu-Natal. Our ability to compare households and individuals before and after pension receipt, and pension loss, allows us to control for a host of unobservable household and individual characteristics that may determine labor market behavior. We find that large cash transfers to elderly South Africans lead to increased employment among prime-aged members of their households. Perhaps more importantly, pension receipt influences where this employment takes place. We find large, significant effects on labor migration among prime-aged members upon pension arrival. The pension's impact is attributable both to the increase in household resources it represents, which can be used to stake migrants until they become self-sufficient, and to the presence of pensioners who can care for small children, which allows prime-aged adults to look for work elsewhere. |
| JEL: | H31 J20 O12 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13442&r=dev |
| By: | Antonio Navas-Ruiz; Davide Sala |
| Abstract: | The reallocation of output across plants and the productivity growth at individual plants are both important sources of productivity growth at the industry level. Recent evidence has shown that trade liberalization is related to both effects. While a trade model with firm heterogeneity can account for the first effect, it can not explain the second effect. We add to this model the option for firms to costly adopt more productive technologies and show that plant productivity actually rises in response to lower trade costs. Following trade liberalization, selection into exporting raises the market share only for some exporters. Therefore, a greater scale of operation amplifies their return from costly productivity-enhancement investments and leads a greater proportion of them to implement a more innovative technology. |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:we076737&r=dev |
| By: | Rajashri Chakrabarti; Joydeep Roy |
| Abstract: | This paper analyzes the effect of a redrawing of political boundaries on voting patterns and investigates whether it leads to closer conformity of an electorate's voting patterns with its political preferences. We study these issues in the context of a reorganization of states in India. In 2000, Madhya Pradesh, the biggest state in India before the reorganization, was subdivided into Madhya Pradesh and Chhattisgarh, the latter accounting for less than one-fourth of the electorate of undivided Madhya Pradesh. Using socioeconomic composition and traditional voting patterns, we argue that there are differences in political preferences between Madhya Pradesh and Chhattisgarh. Next, in the context of a theoretical model that captures some of the basic features of the electoral scenario of the two regions, we predict that before reorganization, the smaller region would vote strategically to elect representatives with preferences more closely aligned to those of the bigger region. Once Chhattisgarh became a separate state, however, this motive would no longer operate, and the voting distributions of the two regions would differ. Using detailed data on state elections in Madhya Pradesh and Chhattisgarh in 1993, 1998, and 2003 as well as a difference-in-differences estimation strategy, we find that voting patterns in the two regions were indeed very similar before reorganization but strikingly different afterwards, with a relative shift in Chhattisgarh toward its inherent political preferences. These findings are reasonably robust in that they continue to hold after controlling for other confounding factors and survive several sensitivity tests. |
| Keywords: | Political science ; Developing countries |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:301&r=dev |
| By: | Wang, Zhi; Gehlhar, Mark; Yao, Shunli |
| Abstract: | This paper develops a mathematical programming model to simultaneously estimate re-export markups and reconcile bilateral trade statistics between China, Hong Kong, and their trading partners. The model is applied to sector level trade flows to resolve discrepant reporting in an efficient manner. Adjustments in trade flows are based upon statistical reporters' reliability information. The program is implemented in GAMS and retains many desirable theoretical and empirical properties. Estimates are used for generating trade flows and markups for Hong Kong's re-exports used in the forthcoming version 7 GTAP database. The model's flexibility has potential for expanded use in other regions where re-exports and associated markup cause discrepant trade flows. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:gta:techpp:2517&r=dev |
| By: | James Roumasset (Department of Economics, University of Hawaii at Manoa); Kimberly Burnett (Department of Economics, University of Puget Sound); Hua Wang (World Bank) |
| Abstract: | A central pillar of the sustainability movement is the call to include environmental accounting in standard measures of economic performance. This increased transparency would, in principle, mitigate the temptation of economic managers and policy makers to increase growth in material consumption at the expense of the environment. Moreover, as Repetto (1989) and others have argued, deducting depreciation of produced capital from NNP but not deducting depreciation of natural capital is inconsistent and debases NNP as a possible indicator of welfare. Based on the evidence available, it appears that while GNNP is substantially less than NNP, these adjustments do not adversely compromise existing estimates of economic growth for China. |
| Keywords: | sustainable development, China, genuine saving, SOx, NOx, TSP, resource depletion, natural capital, Environmental Kuznets Curve, green net national product |
| JEL: | O13 Q01 Q2 Q3 Q4 Q5 |
| Date: | 2007–09–23 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:200723&r=dev |
| By: | Agustinus Prasetyantoko (GATE - Groupe d'analyse et de théorie économique - [CNRS : UMR5824] - [Université Lumière - Lyon II] - [Ecole Normale Supérieure Lettres et Sciences Humaines]) |
| Abstract: | This paper deals with the sensitivity relation between firm investment and internal liquidity by splitting samples into two different groups of firm, namely the tradable (T) and non-tradable (N) sectors. This paper finds that during boom periods, there is no significant financial constraint on the T and N sectors. In post-crisis periods, it seems that both sectors also have no significant important problem in their internal finance. Both sectors basically move comparably. The main finding is relatively different with several theoretical predictions, especially Tornell and Westermann (2002a, 2004), in which the T-sector would be predicted as experiencing less financial constraint in burst period. However, we find that debt is important variable for sustaining investment in Indonesia. By employing panel data analysis, the findings of this study can shed light on the financing behavior of listed companies in Indonesia, as well as on their investment behavior in the midst of financing constraints and credit market imperfections. The study’s sample contains 147 companies listed on the Jakarta Stock exchange for at least 5 five consecutive years between 1994 – 2004. |
| Keywords: | asymmetric financing opportunities; financial crisis; financing constraint; firm investmen |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00174435_v1&r=dev |
| By: | Lindbeck, Assar (Research Institute of Industrial Economics (IFN)) |
| Abstract: | This paper analyzes economic-social interaction in China in connection with the country’s change of economic system. I define an economic system in terms of a multidimensional vector of broad institutional characteristics, and I emphasize that important features of the social development are closely related to specific changes in these various dimensions. I classify China’s options for future social improvements into three broad categories: policies that improve the stability and distribution of factor income; government-created wedges between factor income and disposable income; and improvements in the quantity, quality and distribution of human services, such as education and health care. |
| Keywords: | China; Economic transition; Typology of economic systems; Social reforms |
| JEL: | H00 I00 P20 |
| Date: | 2007–09–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0720&r=dev |
| By: | John Micklewright (S3RI, University of Southampton and IZA); Sylke V. Schnepf (S3RI, University of Southampton and IZA) |
| Abstract: | Individuals’ donations to overseas charities are an important source of funding for development assistance from rich industrialised countries. But little is known about the nature of these charitable donations. The literature on giving focuses on total donations to all causes and does not identify separately the pattern or the determinants of giving to any particular cause. We investigate giving to overseas causes using UK survey microdata that record individuals’ donations to different types of charity. We establish a picture of overseas giving, comparing this with giving to other causes. Socio-economic correlates of both types of giving are analysed, including gender, marital status, occupation, education and, especially, income. We also investigate the relationship between individuals' overseas giving and their attitudes towards poverty in developing countries. |
| Keywords: | charitable donations, overseas development, NGOs |
| JEL: | D12 D64 F35 L31 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3057&r=dev |
| By: | Wendy Carlin (University College London and CEPR); Mark Schaffer (Heriot-Watt University, CEPR and IZA); Paul Seabright (Toulouse School of Economics and CEPR) |
| Abstract: | We use data from over 20,000 firms in 60 countries to identify constraints on the growth of firms. We interpret managers’ answers to survey questions on the extent to which various aspects of their external environment inhibit the performance of their firm as measuring the shadow cost of constraints to their activities, not as direct measures of the constraints. These costs can vary with firm characteristics as well as with the magnitude of the constraints themselves. Our model reveals that, contrary to common practice, the importance of an obstacle to performance is not, except under very restrictive assumptions, measured by the coefficient on the reported level of the obstacle in a performance regression. We test the predictions of the model on the large firm-level dataset and show how the importance of different constraints varies across countries and how the cost of a constraint depends on the characteristics of the firm. We find that telecoms are less important, and taxes more important, as constraints on performance than the literature has previously identified. |
| Keywords: | public goods, constraints on growth, infrastructure, finance, institutions, subjective data |
| JEL: | H41 O12 O16 O57 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3059&r=dev |
| By: | Matthieu Chemin |
| Abstract: | This paper investigates the impact of judiciaries on firms' contracting behaviour and economic performance. In 2002, the Code of Civil Procedure Amendment Act was enacted in India to facilitate speedy disposal of civil suits. Some State High Courts hal already enacted some of the amendments contained in this reform a long time ago. This spatial variation in the reform's implementation is used to identify the effect of judicial quality on firm's behavior. Using small informal firm data, I find that the reform led to fewer breaches of contract, encouraged investment, facilitated access to finance, and expanded rental markets. |
| Keywords: | Law and economics, Institutions, Courts, Contracts, Industrial Organisation, Economic Growth, Industrial Performance |
| JEL: | K10 K12 K40 K42 O12 O17 L14 D23 C72 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:0725&r=dev |
| By: | Matthieu Chemin |
| Abstract: | This paper attempts to measure the causal impact of the speed of judiciaries on economic activity by using two novel instrumental variables measuring judicial procedural ambiguity and complexity. First, I find that temporally exogenous conflicting judicial decisions taken in India due to the Code of Civil Procedure's ambiguity lead to higher expected trial duration as judges are required to spend considerable time in choosing between several conflicting views. Second, I find that Inidan High Court amendments complicating procedures to treat a case are related to higher trial duration. By using spatial and temporal variations in the occurrence of conflicting decisions and enactment of amendments as instrumental variables, I am able to measure the impact of judicial speed on credit markets, agricultural development and manufacturing performance. |
| Keywords: | Law and economics, Institutions, Courts, Economic Growth, Industrial Performance |
| JEL: | K10 K12 K40 K42 O12 O17 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:0726&r=dev |
| By: | Matthieu Chemin |
| Abstract: | A key element of government is to uphold law and order. This paper will evaluate the impact of slow judiciaries on entrepreneurship. In 2002 a judicial reform was implemented in 6 of Pakistan's 117 districts to facilitate rapid case disposal. Drawing on a panel dataset of 875 district judges' performance between 2001 and 2003, a difference-in-differences analysis shows that judges disposed of 25 percent more cases thanks to the reform. Three rounds of the Labour Force Surveys will be then used to show that the reform improved security of property rights, encouraged people to seek loans, fostered entrepreneurship and was associated with increased transition from unemployment and paid employment to entrepreneurship. |
| Keywords: | Legal System, Entrepreneurship |
| JEL: | H11 H41 K42 O12 L26 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:0727&r=dev |
| By: | Alain Desdoigts (Centre d'Economie de la Sorbonne); Fernando Jaramillo (Universidad del Rosario) |
| Abstract: | Will the integration of BRIC (Brazil, Russia, India and China) into the global economy provide the biggest boost to the world economy since the industrial revolution ? In this paper, we investigate international demand spillovers brought about by an emerging global middle class and their impact on the international structure of production. We put forth a many-industry and two-country trade model featuring international competition, non-homothetic preferences and country-specific asymmetries in income distribution, productivity and population size. Its key characteristic is the introduction of demand complementarities propagating increasing returns across industries and national boundaries, which eventually translate into a global profit-multiplier. |
| Keywords: | Horizontal complementarities, hierarchic preferences, world middle class, deindustrialization, trade. |
| JEL: | F10 O11 O14 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:mse:wpsorb:v06014a&r=dev |
| By: | Kalie Pauw; Liberty Mncube (Development Policy Research Unit, University of Cape Town) |
| Abstract: | Abstract: For a large proportion of the South African population social welfare grants are an important source of income. Rapid increases in government expenditure on social security between 2000 and 2006 has further increased poor households’ reliance on welfare grants and has been important in the fi ght against poverty. Given these apparent successes, many are calling for further expansions in social security provisioning, with the idea of developing conditional cash transfer schemes surfacing in policy circles from time to time. However, as we argue in this paper, various constraints to such expansions of the welfare net exist. Whereas in the past much of the increased expenditure on social security provisioning could be fi nanced out of government revenue overruns, it is likely that further increases will only be possible through a reallocation of government expenditure. Already there is evidence of a substitution taking place within the social budget: expenditure on education and health seems to have declined in favour of increased welfare transfer expenditure. This, we argue, is untenable and may harm the already weak education and health services in South Africa. Conditional grants linked to school attendance and visits to health clinics will only put further pressure on health and education services, as well as the agency responsible for disbursing and monitoring welfare payments in the country. We argue, therefore, that budgetary and service delivery constraints, at the present moment, present a strong argument against any expansion of the social welfare system in the immediate future. |
| Keywords: | social security net, social welfare, welfare grants, South Africa |
| JEL: | A1 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:ctw:wpaper:96103&r=dev |
| By: | Lawanson, Akanni O; Peter Lawater (Department of Economics,University of Ibadan,Nigeria) |
| Abstract: | This study provides measures of real capital flight from Nigeria based on the residual method adjusted for exchange rate fluctuations and trade misinvoicing. The portfolio choice approach is explored, in which the flow of capital is accumulated into stock and expressed as ratios of private stock of real wealth. Econometric analysis of capital flight, based on a portfolio choice framework, was conducted using the ordinary least squares (OLS) method of analysis. The results of the econometric analysis reveal that a number of factors systematically explain the portfolio behaviour of private wealth holders in Nigeria. These factors are consistent with earlier studies and include real GDP growth, real interest rate differential, parallel market exchange rate premium, inflows of debtcapital, domestic debt, fiscal deficit and change in inflation rate. |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:aer:rpaper:rp_166&r=dev |