nep-dev New Economics Papers
on Development
Issue of 2007‒10‒13
37 papers chosen by
Jeong-Joon Lee
Towson University

  1. Welfare Gains from Financial Liberalization By Robert M. Townsend; Kenichi Ueda
  2. Governance indicators : where are we, where should we be going ? By Kraay, Aart; Kaufmann, Daniel
  3. The role of China in Asia: engine, conduit, or steamroller? By Jane T. Haltmaier; Shaghil Ahmed; Brahima Coulibaly; Ross Knippenberg; Sylvain Leduc; Mario Marazzi; Beth Anne Wilson
  4. Trade Openness and Growth: Pursuing Empirical Glasnost By Andreas Billmeier; Tommaso Nannicini
  5. Marriage, schooling, and excess mortality in prime-age adults: evidence from South Africa By Yamauchi, Futoshi
  6. Mortality, mobility, and schooling outcomes among orphans: evidence from Malawi By Ueyama, Mika
  7. Optimal Technology and Development By Hernan J. Moscoso Boedo
  8. Public Debt Markets in Central America, Panama, and the Dominican Republic By Laura Valderrama; Hemant Shah; Andreas Jobst; Ivan Guerra
  9. What Drives China's Growing Role in Africa? By Jian-Ye Wang
  10. Sector Switching: An Unexplored Dimension of Firm Dynamics in Developing Countries By Carol Newman; John Rand; Finn Tarp
  11. Agricultural growth and investment options for poverty reduction in Rwanda: By Diao, Xinshen; Fan, Shenggen; Yu, Bingxin; Kanyarukiga, Sam
  12. Is food insecurity more severe in South Asia or Sub-Saharan Africa?: a comparative analysis using household expenditure survey data By Smith, Lisa C.; Wiesmann, Doris
  13. Economic policy and institutional change: a contex-specific model for explaining the economic reforms failure in 1970’s Colombia By Angela Milena Rojas
  14. Internationalization of NGOs and Competition on Markets for Development Donations By Aldashev, Gani; Verdier, Thierry
  15. Renegotiating the Food Aid Convention: background, context, and issues By Hoddinott, John; Cohen, Marc J.
  16. Regional disparities in Ghana: policy options and public investment implications By Al-Hassan, Ramatu M.; Diao, Xinshen
  17. Supermarket purchases and the dietary patterns of households in Guatemala: By Asfaw, Abay
  18. Agricultural growth linkages in Ethiopia: estimates using fixed and flexible price models By Diao, Xinshen; Fekadu, Belay; Haggblade, Steven; Seyoum Taffesse, Alemayehu; Wamisho, Kassu; Yu, Bingxin
  19. Is HIV/AIDS undermining Botswana's ‘success story'? implications for development strategy: By Thurlow, James
  20. Cost implications of agricultural land degradation in Ghana: By Diao, Xinshen; Sarpong, Daniel B.
  21. Building public–private partnerships for agricultural innovation in Latin America: lessons from capacity strengthening By Hartwich, Frank; Gottret, Maria Veronica; Babu, Suresh Chandra; Tola, Jaime
  22. Integrated management of the Blue Nile Basin in Ethiopia: hydropower and irrigation modeling By Block, Paul J.
  23. The bang for the birr: public expenditures and rural welfare in Ethiopia By Mogues, Tewodaj; Ayele, Gezahegn; Paulos, Zelekawork
  24. The power mapping tool: a method for the empirical research of power relations By Schiffer, Eva
  25. The economics of GM food labels: an evaluation of mandatory labeling proposals in India By Bansal, Sangeeta; Ramaswami, Bharat
  26. The role of clustering in rural industrialization: A Case Study of the Footwear Industry in Wenzhou By Huang, Zuhui; Zhang, Xiaobo; Zhu, Yunwei
  27. Policies to promote cereal intensification in Ethiopia: a review of evidence and experience By Byerlee,Derek; Spielman,David J.; Alemu,Dawit; Gautam,Madhur
  28. Agricultural technology choices for poor farmers in less-favored areas of South and East Asia: By Pender, John
  29. Managing conflict over natural resources in greater Kordofan, Sudan: some recurrent patterns and governance implications By Siddig, El Fatih Ali; El-Harizi, Khalid; Prato, Bettina
  30. Foreign Direct Investment and Economic Growth: Empirical Evidence from Sectoral Data in Indonesia By Ilan Noy
  31. Should Bank Supervisors in Developing Countries Exercise More or Less Forbearance? By Patrick Honohan
  32. The Common Monetary Area in Southern Africa: Shocks, Adjustment, and Policy Challenges By Iyabo Masha; Kazuko Shirono; Leighton Harris; Jian-Ye Wang
  33. Why has Unemployment in Algeria been higher than in MENA and Transition Countries By Kangni Kpodar
  34. The Historical Roots Of India’s Service-Led Development : A Sectoral Analysis Of Anglo-Indian Productivity Differences, 1870-2000 By Broadberry, Stephen; Gupta, Bishnupriya
  35. Recent Developments In The Theory Of Very Long Run Growth : A Historical Appraisal By Broadberry, Stephen
  36. Lessons learnt from SACMEQII: South African student performance in regional context By Servaas van der Berg; Megan Louw
  37. Impact of Land Certification on Land Rental Market Participation in Tigray Region, Northern Ethiopia By Holden, Stein T.; Deininger, Klaus; Ghebru, Hosaena

  1. By: Robert M. Townsend; Kenichi Ueda
    Abstract: Financial liberalization has been a controversial issue as there is little empirical evidence for its positive effects on economic growth. However, we find sizable welfare gains, 1 to 28 percent of permanent consumption though, consistent with the literature, the gain in the economic growth is ambiguous, -0.2 to 0.7 percent. We apply a canonical growth model with endogenous financial deepening to Thailand, 1976-96. As effective bank transaction costs decline, more people take advantage of financial services. We estimate the gains by comparing model simulations under the historical episode of financial liberalization to those under a hypothetical continuation of financial repression.
    Keywords: Working Paper , Financial sector , Financial systems , Economic growth , Economic models , Thailand ,
    Date: 2007–07–12
  2. By: Kraay, Aart; Kaufmann, Daniel
    Abstract: Scholars, policymakers, aid donors, and aid recipients acknowledge the importance of good governance for development. This understanding has spurred an intense interest in more refined, nuanced, and policy-relevant indicators of governance. In this paper we review progress to date in the area of measuring governance, using a simple framework of analysis focusing on two key questions: (i) what do we measure? and, (ii) whose views do we rely on? For the former question, we distinguish between indicators measuring formal laws or rules ' on the books ' , and indicators that measure the practical application or outcomes of these rules ' on the ground ' , calling attention to the strengths and weaknesses of both types of indicators as well as the complementarities between them. For the latter question, we distinguish between experts and survey respondents on whose views governance assessments are based, again highlighting their advantages, disadvantages, and complementarities. We also review the merits of aggregate as opposed to individual governance indicators. We conclude with some simple principles to guide the refinement of existing governance indicators and the development of future indicators. We emphasize the need to: transparently disclose and account for the margins of error in all indicators; draw from a diversity of indicators and exploit complementarities among them; submit all indicators to rigorous public and academic scrutiny; and, in light of the lessons of over a decade of existing indicators, to be realistic in the expectations of future indicators.
    Keywords: Governance Indicators,National Governance,Public Sector Corruption & Anticorruption Measures,Economic Policy, Institutions and Governance,Banks & Banking Reform
    Date: 2007–10–01
  3. By: Jane T. Haltmaier; Shaghil Ahmed; Brahima Coulibaly; Ross Knippenberg; Sylvain Leduc; Mario Marazzi; Beth Anne Wilson
    Abstract: This paper assesses China's role in Asia as an independent engine of growth, as a conduit of demand from the industrial countries, and as a competitor for export markets. We provide both macroeconomic and microeconomic evidence. The macroeconomic analysis focuses on the impact of U.S. and Chinese demand on the output of the Asian economies by estimating growth comovements and VARs. The results suggest an increasing role of China as an independent source of growth. The microeconomic analysis decomposes trade into basic products, parts and components, and finished goods. We find a large role for parts and components trade consistent with China playing an important and increasing role as a conduit. We also estimate some regressions that show that China's increasing presence in export markets has had a negative effect on exports of some products for some other Asian economies, but not for other products, including those of the important electronic high-technology industry.
    Date: 2007
  4. By: Andreas Billmeier; Tommaso Nannicini
    Abstract: Studies of the impact of trade openness on growth are based either on cross-country analysis-which lacks transparency-or case studies-which lack statistical rigor. We apply transparent econometric methods drawn from the treatment evaluation literature to make the comparison between treated (i.e., open) and control (i.e., closed) countries explicit while remaining within a unified statistical framework. First, matching estimators highlight the rather far-fetched country comparisons underlying common cross-country results. When appropriately restricting the sample, we confirm a positive and significant effect of openness on growth. Second, we apply synthetic control methods-which account for endogeneity due to unobservable heterogeneity-to countries that liberalized their trade regime and we show that trade liberalization has often had a positive effect on growth.
    Keywords: Working Paper , Trade policy , International trade , Economic growth , Economic models ,
    Date: 2007–07–13
  5. By: Yamauchi, Futoshi
    Abstract: "The institution of marriage plays some role in determining one's risk of exposure to HIV. Since the transmission of HIV in the population is mainly through sexual activity, avoiding infection depends on risk-avoiding behavior. Consistently, empirical results show that excess mortality is concentrated in not-yet married adults aged 20-39 among both men and women. Therefore, the choice of when and who to marry appears to be related to risk of exposure. The objective of this paper is to determine the effect that schooling has on HIV/AIDS excess mortality, using panel data from South Africa. This paper tests the hypothesis that schooling affects when and who one marries and thus impacts the risk of mortality from HIV/AIDS. The effect could be negative or positive. On the one hand, since educated agents have incentives to secure returns to their human capital in the future, more education implies earlier marriage, given that the marriage institution effectively decreases the HIV-related mortality risk. On the other hand, education increases the opportunity costs of marriage especially for women, who need to increase their time spent in the household. Thus, schooling may increase mortality risks due to the increased risk of HIV infection... Results show that schooling increases excess mortality among women, but not among men... In sum, schooling increases the opportunity cost of marriage for women, which delays marriage and increases their mortality risks in high HIV-prevalence societies, but has the opposite effect on men. Our analysis demonstrated the need to integrate our understandings of the marriage market, the labor market, schooling investments, and youth behavior to identify the determinants of AIDS-related excess mortality." from Authors' Abstract
    Keywords: Marriage, Schooling, Excess mortality, HIV/AIDS, Gender,
    Date: 2007
  6. By: Ueyama, Mika
    Abstract: "A tremendous increase in the number of orphans associated with a sharp rise in prime-age adult mortality due to AIDS has become a serious problem in Sub-Saharan Africa. In fact, more than 30 percent of school-aged children have lost at least one parent in Malawi. Lack of investments in human capital and adverse conditions during childhood are often associated with lower living standards in the future. Therefore, if orphans face an increased risk of poverty, exploitation, malnutrition, and poorer access to health care and schooling, early intervention is critical so as to avoid the potential poverty trap. The purpose of this study is to investigate the impacts of orphanhood/parental death on children's mortality risks, migration behaviors, and schooling outcomes, by using household panel data from Malawi, which has the eighth-highest HIV prevalence rates in the world. A number of studies have analyzed the relationship between parental death and children's school enrollment, but very few have considered mortality and mobility of orphans. This study uses the Malawi Complementary Panel Survey (CPS) conducted by the International Food Policy Research Institute (IFPRI) and another institution between January 2000 and July 2004. Since these panel data do not track individuals that move to other households, we take into account sample attritions of children. This study uses three estimation methodologies to explore different aspects of impacts. First, we analyze regression models with controls for various sets of household and child characteristics and for village fixed effects to examine heterogeneous impacts of orphanhood across different types of households. Second, we employ household fixed-effect models to test the differential effects of orphanhood on welfare outcomes among different types of orphans living in the same household. Third, we examine the impact of recent parental death—parental death between 2000 and 2004—on schooling outcomes. Empirical results show that maternal orphans, as well as double orphans, tend to face higher mortality risks and lower schooling outcomes than paternal and non-orphans do. This is especially so for boys. Similarly, maternal and double orphans tend to move to other households more frequently. Compared to adolescent orphans, the impact on younger orphans who enrolled in school after the introduction of universal free primary education in 1994 is more muted, suggesting that free primary education policies may have mitigated adverse shocks from parental death. More interestingly, the impacts of orphanhood on schooling outcomes are significantly gender-dependent: boys face severer negative impacts of being orphans than girls do. These empirical results are robust to sample attrition due to mortality and mobility." from Authors' Abstract
    Keywords: Orphans, Mortality, HIV/AIDS, Mobility, Sample attrition, Education,
    Date: 2007
  7. By: Hernan J. Moscoso Boedo
    Abstract: Skill intensive technologies seem to be adopted by rich countries rather than poor ones. Related to that observation, the ratio of wages of skilled to unskilled workers - the skill premium - shows two important features over time and across countries. In the US the skill premium decreased during the first half of the 20th century and it increased after 1950, evolving according to a U shaped pattern. On the other hand, the same measure across countries around 1990 is hump shaped when countries are ordered by GDP per worker. By modeling the decisions for factor accumulation and technology adoption, this paper gives a systematic explanation as to why we see ever more skill intensive technologies being adopted both over time in the US and across countries. The model developed here endogenously generates predictions for the skill premium that are consistent with both the US and international observations under the same set of parameter values
    Keywords: skill biased technological change; skill premium,endogenous technology; inequality
    JEL: E25 J24 N32 O33 O57
    Date: 2007–04
  8. By: Laura Valderrama; Hemant Shah; Andreas Jobst; Ivan Guerra
    Abstract: This paper-consisting of a regional study and seven country studies-reviews the state of domestic public debt markets in Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and Panama as at end-2005. Although they account for the lion's share of capital markets, regional public debt markets remain underdeveloped for a variety of reasons. The problems of small scale, dollarization, and weak public finances in many countries are compounded by poor structure and composition of debt (with sizeable nonstandard and non-tradable components), fragmentation of public debt between central banks and the sovereigns and across instruments, poor debt management practices, weaknesses in securities market, and small investor bases all of which result in high transaction costs and a lack of liquid benchmarks. The paper also briefly discusses efforts towards and impediments to regional integration of public debt markets. The authorities recognize these problems and the paper takes note of the regional efforts to harmonize debt standards and improve issuance practices. It offers several recommendations to improve strategic debt management, issuance mechanics, and secondary trading.
    Keywords: Public debt , Central America , Costa Rica , El Salvador , Honduras , Guatemala , Dominican Republic , Nicaragua , Panama , Capital markets , Debt management , Financial integration , Working Paper ,
    Date: 2007–07–05
  9. By: Jian-Ye Wang
    Abstract: What role does China play in Africa's development? What drives China's increasing economic involvement in the continent? This paper attempts to provide a quantified assessment of China's multifaceted influence as market, donor, financer and investor, and contractor and builder. Though in the past official development aid predominated, the paper argues that government policies, markets for each other's exports, Africa's demand for infrastructure, and differences in China's approach to financing have together moved commercial activities-trade and investment-to the center of China-Africa economic relations. While China's public sector, state financial institutions in particular, has been instrumental in the process, the influence of its private sector is increasing. Implications for the future of China-Africa economic relations are briefly noted.
    Keywords: Trade , China , Africa , Development assistance , Capital flows , Working Paper ,
    Date: 2007–08–30
  10. By: Carol Newman (Trinity College Dublin); John Rand (Department of Economics, University of Copenhagen); Finn Tarp (Department of Economics, University of Copenhagen)
    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.
    Keywords: firm dynamics; sector switching; efficiency; Vietnam
    JEL: D21 L6 O14
    Date: 2007–09
  11. By: Diao, Xinshen; Fan, Shenggen; Yu, Bingxin; Kanyarukiga, Sam
    Abstract: "An economywide, multimarket (EMM) model was developed for Rwanda to analyze the linkages and trade-offs between growth and poverty reduction goals at both macro- and micro-economic levels. The model includes 30 agricultural commodities or commodity groups from eight broad agricultural subsectors, along with two aggregated nonagricultural sectors. The analysis compares the economic, income, and poverty effects of a variety of growth scenarios based on existing national subsector growth targets. The analysis shows 6 percent of CAADP's agricultural GDP growth target is achievable if growth reaches its target at the agricultural subsectoral level. But it is not enough for the country to achieve the MDG One, although the national poverty rate in 2015 will be 17 percent lower than that in 2005. Moreover, the household groups with the smallest landholding size, female-headed, or with few opportunities to participate cash crop production seem to benefit less from such growth. The study also examines the different growth-poverty linkages at agricultural subsector level, and shows that growth driven by productivity increases in staple crops and livestock production can reduce the poverty more than in the case where growth is driven by export crops or by the nonagricultural sector. The analysis also shows that to achieve growth required by CAADP and MDG One, the country needs to substantially beef up its public investment in agriculture. The share of agricultural spending in total government spending is required to increase from the current level of 5 percent to 10-35 percent in 2015." Authors' Abstract
    Keywords: Agricultural growth, Poverty reduction, Growth dynamics, Public investment,
    Date: 2007
  12. By: Smith, Lisa C.; Wiesmann, Doris
    Abstract: "This paper uses data from national household expenditure surveys to explore whether food insecurity is more severe in South Asia or Sub-Saharan Africa. It employs two indicators of the diet quantity dimension of food insecurity, or the inability to access sufficient food: the prevalence of food energy deficiency and the prevalence of severe food energy deficiency. It also employs two indicators of the diet quality dimension, indicating lack of access to nutritious food: the prevalence of low diet diversity and the percent of energy from staple foods. It finds the regions' food energy deficiency prevalences to be quite close (51 percent in South Asia, 57 percent in Sub-Saharan Africa). However, the prevalence of severe food energy deficiency, which is more life threatening, is higher in Sub-Saharan Africa (51 percent versus 35 percent in South Asia). From a diet quality standpoint, the regions appear to suffer from a comparable and high reliance on staple foods in the diet to the neglect of foods rich in protein and micronutrients, but that Sub-Saharan Africa may be doing worse, as reflected in less diverse diets. The results confirm that both regions suffer from deep food insecurity problems but point to Sub-Saharan Africa as the region with the more severe problem, particularly when it comes to the diet quantity dimension of food insecurity. In deciding which region should be given greater emphasis in the international allocation of scarce development resources, the fact that the numbers of people affected by food insecurity are higher in South Asia should be taken into consideration." from Authors' Abstract
    Keywords: food security, Food energy deficiency, Diet quality,
    Date: 2007
  13. By: Angela Milena Rojas
    Abstract: This paper develops a context-specific model (Greif, 1997) to analyze the case of failed market-oriented reform in Colombia during 1974-78. The methodology keeps the contextual specificity at a manageable level, which is no more than the institutional structure under consideration, while it tries to maintain a parsimonious model. The theoretical framework is inscribed in the rational choice approach and game theory. This paper raises a standard question in economic reforms literature: why did the reforms fail? More comprehensively, what impeded progressive institutional change in this case? The answer is based on modelling theoretically and historically the strategic dilemmas brought about by the reforms and internacional shocks. Government appears here as an inflexible agenda setter poorly endowed; Coffee as the dominant player whose short-run interests won through, and Industry as the weak player who openly opposed to policies that the G-Cs coalition set out with the 1976 coffee boom. Ultimately the reforms failed because of Government’s poor understanding of and limited autonomy for solving the dilemmas “economic reforms vs. coffee boom”, “Non-coffee sectors vs. Coffee sector”, and “Short-run vs. Long-run economic growth”.
    Date: 2006–11–05
  14. By: Aldashev, Gani; Verdier, Thierry
    Abstract: What are the effects of the integration of markets for private donations for development on NGOs’ performance? How is the welfare of donors and beneficiaries affected? To answer these questions, we build a model of a market for development donations with horizontally differentiated NGOs competing by fundraising effort. We compare three regimes: autarky, full integration, and the regime of multinational NGOs (in which NGOs have to establish foreign affiliates to raise funds abroad). The welfare impact of market integration depends on the interplay between three factors: returns to scale in the NGO production technology, donors’ "taste for variety", and the effectiveness of aggregate fundraising in motivating new donors.
    Keywords: internationalization; monopolistic competition; NGOs; non-distribution constraint
    JEL: F12 F23 L31
    Date: 2007–10
  15. By: Hoddinott, John; Cohen, Marc J.
    Abstract: "The current global agreement governing food aid—the Food Aid Convention (FAC)—will expire in 2007. It has come under heavy criticism as has the diffuse set of broader food aid governance institutions that has emerged in the last 50 years. These institutions are characterized by overlapping mandates, differing degrees of authority and legitimacy, varied levels of transparency in decisionmaking, and problematic representation of the major stakeholders. A number of issues are likely to arise during the course of negotiations over a new FAC. These include its objectives; the nature of commitments—whether to express them in tonnage, value, or nutritional terms; the level of commitments and their distribution among donor countries; monitoring and enforcement of commitments; representation on the FAC governing body among food aid donor- and recipient-country governments and civil society organizations; and the institutional “home” of the FAC. More specifically, there is debate over such questions as whether the new FAC should have an “instrument focus”—food aid—or a “problem focus” such as “food security” or “hunger.” If the focus is on addressing hunger, should food aid under the FAC be restricted to emergencies only or should it pertain to broader food security issues? Should the FAC be a low-key forum for exchange of information or should it have some meaningful ways of monitoring commitments and encouraging compliance by both donors and recipients? Debates such as these will reflect views on the purposes of food aid itself. Conversely, debates regarding these broader questions carry consequences for the formation of views on the issues involved in the FAC negotiations. This paper's purpose is solely to outline issues and options; hence it does not advocate for particular positions." Authors' Abstract
    Keywords: Food aid, International agreements, International organizations, Humanitarian assistance, Human rights, Local purchase, Triangular transaction, Development assistance, Trade agreements, Grain trade, Code of conduct, Needs assessment,
    Date: 2007
  16. By: Al-Hassan, Ramatu M.; Diao, Xinshen
    Abstract: "The development pattern in Ghana is characterised by a north-south divide in which the north lags far behind the south... This paper sets out to identify avenues for pro-poor growth in Ghana, focussing on agricultural opportunities, particularly in northern Ghana. Using an economywide, multimarket model and based on time series production data between 1991 and 2000 and Ghana Living Standards Survey data of 1991/92 and 1998/99, this paper analyzes the possible poverty reduction trends up to 2015 by assuming different patterns of growth. The results show that agriculture-led growth has a larger poverty reducing effect than nonagriculture-led growth... A review of the literature shows that while the north generally is a net migration area, the rewards of migration have been limited because people who migrate have no skills and are, therefore, limited to entering the informal job market where wages are low. The implication is to enhance this labour with education and skills. Ultimately, the regions must attract production investment to boost economic activity and generate local growth. The state must play a leading role in investing in productive and social infrastructure as a way of facilitating the environment for private sector operators.: from Authors' Abstract
    Keywords: Pro-poor growth, Regional inequality, Poverty reduction, Agricultural growth, Economywide modeling, Public investment,
    Date: 2007
  17. By: Asfaw, Abay
    Abstract: "Very limited empirical analyses are done on evaluating how changes in the retail environment affect diet and health status of consumers, especially in developing countries. The major objective of this study is to shed some light on some of these neglected but crucial issues. The study examines the impact of supermarket purchases on dietary practices (defined as the calorie share of different food groups) of Guatemalan households using the 2000 Guatemalan household survey. I use an instrumental variable method to take into account the potential endogeneity of the supermarket-purchase variable in the calorie share equations.... The results of the study reveal that supermarket purchases increase the share that highly and partially processed food items, such as pastries, cookies, crackers, chocolate, ice cream, and so forth, make of total calories, at the expense of staple food items such as corn and beans. Since most processed foods contain disproportionately high amounts of added fat, sugar, and salt, and since supermarkets are expanding rapidly, different policy measures should be developed to ensure that supermarkets have a "healthier" impact on diets." from Authors' Abstract
    Keywords: Supermarkets, Health and nutrition, Calorie share, Diet quality, Staple foods, Household behavior, Processed foods, Energy dense foods, Energy dilute foods, Instrumental variable method,
    Date: 2007
  18. By: Diao, Xinshen; Fekadu, Belay; Haggblade, Steven; Seyoum Taffesse, Alemayehu; Wamisho, Kassu; Yu, Bingxin
    Abstract: "Accelerating growth and poverty reduction, and the ultimate achievement of structural transformation, are the critical policy challenges in present day Ethiopia. This paper examines relevant growth options in terms of their impact on overall growth and poverty reduction in the country. It deploys a fixed-price semi-input-output model and a flexible-price economy-wide multi-market model for that purpose. The paper finds that agricultural growth can induce higher overall growth and faster poverty reduction than non-agricultural growth, although the latter can also have large growth effects in some cases. Among sub-sectors within agriculture, staple crops have stronger growth linkages. Decomposition of these effects also reveals that consumption linkages are much stronger than production linkages, i.e., the impact of increased consumption demand due to growth (agricultural and non-agricultural) is much larger than that of the corresponding expansion in input demand. Moreover, non-agricultural sectors have to grow in order to match growing supply of agricultural products and increasing demand for non-agricultural products. Otherwise, falling relative prices of agricultural products may dampen the realized gains in growth and poverty reduction." from Authors' Abstract
    Keywords: Poverty reduction, Agricultural growth, Linkages, Staple food crops, non-agricultural sector, agricultural products, Prices,
    Date: 2007
  19. By: Thurlow, James
    Abstract: "Despite its strong growth record, Botswana faces two prominent development challenges: the onslaught of HIV/AIDS and the slowdown in diamond mining. This study estimates the growth and distributional impact of the HIV/AIDS pandemic and considers its implications for the country's development prospects, using a dynamic computable general equilibrium and microsimulation model that accounts for the cost of treatment. The results of this analysis indicate that HIV/AIDS reduces GDP growth by 1.6 percent, increases the absolute poverty headcount by 1.5 percentage points and disproportionately hurts labor-intensive manufacturing. Therefore, while mining has dominated the recent slowdown in Botswana's growth, the present findings suggest that HIV/AIDS is undermining economic diversification. Although providing treatment is projected to reclaim a quarter of the lost growth and a third of the poverty caused by the pandemic, the fiscal burden of treatment will constrain diversification, thus underscoring Botswana's need for development assistance. Furthermore, focusing resources toward treatment may worsen inequality, since the primary beneficiaries will be middle-income and urban households. Therefore, while HIV/AIDS is undermining Botswana's success story, both unemployment and a stagnant rural economy will remain binding constraints against further pro-poor development." from Author's Abstract
    Keywords: Growth, Poverty, Economic development, HIV/AIDS,
    Date: 2007
  20. By: Diao, Xinshen; Sarpong, Daniel B.
    Abstract: "An economywide, multimarket model is constructed for Ghana and the effects of agricultural soil erosion on crop yields are explicitly modeled at the subnational regional level for eight main staple crops. The model is used to evaluate the aggregate economic costs of soil erosion by taking into account economywide linkages between production and consumption, across sectors and agricultural subsectors. To fill a gap in the literature regarding economic cost analysis of soil erosion, this paper also analyzes the poverty implications of land degradation. The model predicts that land degradation reduces agricultural income in Ghana by a total of US$4.2 billion over the period 2006–2015, which is approximately five percent of total agricultural GDP in these ten years. The effect of soil loss on poverty is also significant at the national level, equivalent to a 5.4 percentage point increase in the poverty rate in 2015 compared to the case of no soil loss. Moreover, soil loss causes a slowing of poverty reduction over time in the three northern regions, which currently have the highest poverty rates in the country. Sustainable land management (SLM) is the key to reducing agricultural soil loss. The present findings indicate that through the adoption of conventional SLM practices, the declining trend in land productivity can be reversed, and that use of a combination of conventional and modern SLM practices would generate an aggregate economic benefit of US$6.4 billion over the period 2006–2015. SLM practices would therefore significantly reduce poverty in Ghana, particularly in the three northern regions." Authors' Abstract
    Keywords: Land degradation, Costs, Agricultural soil loss, Economywide modeling, Modeling cost of land degradation,
    Date: 2007
  21. By: Hartwich, Frank; Gottret, Maria Veronica; Babu, Suresh Chandra; Tola, Jaime
    Abstract: "The International Service for National Agricultural Research¾on its own from 2002 until 2003, and as a division of the International Food Policy Research Institute thereafter has studied 124 public–private partnerships in agriculture in nine Latin American countries through its initiative on public–private partnerships for Agro-Industrial Research in Latin America...This paper cases of public–private partnership building in which private- sector companies, producer associations, and research organizations engage in collaboration for the purpose of developing innovations in agricultural production and value chains. The paper considers different points of entry to partnership building, emulating best practices. The paper describes (a) how common interests among multiple stakeholders have been identified; (b) how partners have been motivated to participate in partnerships; (c) how the roles of different brokers within or outside the partnerships have fostered partnership development; and (d) how the contributions of partners have been negotiated to ensure that partnership arrangements are in alignment with the interests of the partners, their capacities, and the prevailing technological and market opportunities. The paper targets policymakers and administrators in agricultural development, and collaborators in research and innovation projects who are interested in issues of how best to build partnerships among public and private agents. from Authors' Abstract
    Keywords: Public-private partnerships, Agricultural innovations, Capacity strengthening, Agricultural research,
    Date: 2007
  22. By: Block, Paul J.
    Abstract: "Ethiopia is at a critical crossroads with a large and increasing population, a depressed national economy, insufficient agricultural production, and a low number of developed energy sources. The upper Blue Nile basin harbors considerable untapped potential for irrigation and hydropower development and expansion. Numerous hydrologic models have been developed to assess hydropower and agricultural irrigation potential within the basin, yet often fail to adequately address critical aspects, including the transient stages of large-scale reservoirs, relevant flow retention policies and associated downstream ramifications, and the implications of stochastic modeling of variable climate and climate change. A hydrologic model with dynamic climate capabilities is constructed to assess these aspects. The model indicates that large-scale development typically produces benefit-cost ratios from 1.2-1.8 under historical climate regimes for the projects specified. Climate change scenarios indicate potential for small benefit-cost increases, but reflect possible significant decreases. Stochastic modeling of scenarios representing a doubling of the historical frequency of El Niño events indicates benefit-cost ratios as low as 1.0 due to a lack of timely water. An evaluation of expected energy growth rates reinforces the need for significant economic planning and the necessity of securing energy trade contracts prior to extensive development. A Ramsey growth model for energy development specifies project multipliers on total GDP over the 100-year simulation ranging from 1.7-5.2, for various climatologic conditions." Author's Abstract
    Keywords: Water resources development, Hydrologic model, Energy, Climate variability, Climate change, Irrigation,
    Date: 2007
  23. By: Mogues, Tewodaj; Ayele, Gezahegn; Paulos, Zelekawork
    Abstract: "This paper explores and compares the impact of different types of public spending on rural household welfare in Ethiopia. The analysis of public financial and household-level data reveals that returns to road investments are significantly higher than returns to other spending, but are much more variable across regions. This regional variability in returns to road investment suggests that the government should carefully consider region-differentiated investment priorities. Some evidence suggests that the returns to road spending are increasing over time, with higher returns to road investments seen in areas with better-developed road networks. Among the other types of public spending, the household expenditure impacts of per capita public expenditure in agriculture and education are smaller, but these effects are also less variable across regions than the effects of road infrastructure spending. The largest effects of agricultural expenditures on rural households are observed in the most urbanized regions, pointing to the potentially important impact of market proximity on returns to public interventions in agriculture. Despite the importance of agriculture to the economy of Ethiopia we found that returns to agricultural spending were fairly low, suggesting the need for further research into the drivers of efficiency and effectiveness of public investments in this important sector." from Authors' Abstract
    Keywords: Public investments, Public spending, Rural welfare,
    Date: 2007
  24. By: Schiffer, Eva
    Abstract: "This paper presents an innovative participatory method to visualize, discuss and analyze the power of different actors in a given governance field. The Power Mapping Tool was first used to analyze the governance effects of Community-Based Natural Resource Management (CBNRM) in Namibia. This example is presented as a case study to show how the method works: The actors involved are represented by board game figures that are characterized through “range-of-action-cards” and put on wooden “power towers” to show their power in the governance field. The result is a three dimensional sketch that provides quantitative data and guides the qualitative discussion about reasons for and effects of the power of different actors. In the case of Namibian CBNRM Power Mapping helped to understand how power indeed had been devolved from the national to the local level. However, on the community level elite-capture was seen as a serious problem. In this research the Power Mapping Tool proved to be easy to use with a very diverse mix of interview partners and provided not only a wealth of data but also increased the interviewees' understanding of their own situation." from Authors' Abstract
    Keywords: Governance, Participatory methods, Decentralization, Natural resource management, Political power,
    Date: 2007
  25. By: Bansal, Sangeeta; Ramaswami, Bharat
    Abstract: "Labeling of genetically modified (GM) foods is a contentious issue and internationally, there is sharp division whether such labeling ought to be mandatory. This debate has reached India where the government has proposed mandatory labeling. In this context, this paper evaluates the optimal regulatory approach to GM food labels. Mandatory labeling aims to provide greater information and correspondingly more informed consumer choice. However, even without such laws, markets have incentives to supply labeling. So can mandatory labeling achieve outcomes different from voluntary labeling? The paper shows that this is not the case in most situations. The paper goes on to explore the special set of circumstances, where mandatory labeling makes a difference to outcomes. If these outcomes are intended, mandatory labeling is justified; otherwise not." from Authors' Abstract
    Keywords: Biotechnology Economic aspects, Genetically modified food Developing countries, Biosafety, Food labelling,
    Date: 2007
  26. By: Huang, Zuhui; Zhang, Xiaobo; Zhu, Yunwei
    Abstract: "Wenzhou used to be one of the poorest regions in eastern China. With limited arable land, poor road access to major cities, and little support from the upper level governments, this region seemed to lack all the conditions necessary for economic growth. However, over the past several decades Wenzhou has developed the most dynamic private sector in China, and has accordingly achieved one of the fastest growth rates. In particular, the footwear industry in Wenzhou has grown from a negligible market share to the largest in China. Here, we report a survey of 140 Wenzhou-based footwear enterprises of various scales, and use this information to examine the driving forces behind the dramatic rural industrial growth seen in this region. Our results show that clustering deepens the division of labor in the production process and makes it possible for small entrepreneurial firms to enter the industry by focusing on a narrowly defined stage of production. Therefore, Wenzhou represents an example of how clustering plays a significant role in helping fledgling rural industries overcome the growth constraints of capital and technology in the incipient stage of industrialization." from Authors' Abstract
    Keywords: Cluster analysis, Industrialization, Finance, Economic development, Nonfarm economy,
    Date: 2007
  27. By: Byerlee,Derek; Spielman,David J.; Alemu,Dawit; Gautam,Madhur
    Abstract: "Despite more than a decade of policies placing high priority on cereal intensification, backed by one of the highest rates of public expenditures on agricultural in Africa, Ethiopia has yet to see payoffs in terms of higher and more stable cereal yields, reduced dependency on food aid, improved food security, and lower consumer prices for staples. There is understandable concern about the performance, efficiency and sustainability of the agricultural sector, specifically in terms of the current systems for providing extension services, improved seed, fertilizer, and credit. This paper aims to illuminate possible solutions available to improving the prospects for cereal intensification in Ethiopia. The paper traces the largely state-led policies that have been put in place to stimulate increased cereal productivity and examines the extent to which these policies have had their intended impacts. This review indicates that although Ethiopia has an admirable and sustained record of supporting seed-fertilizer technological intensification in cereals, the related state-led policies have outlived their usefulness, suggesting the need for a rethinking of approaches." - from authors' abstract.
    Keywords: Cereal crops, Agricultural development, Agricultural extension work, Fertilizers, Seed industry and trade Developing countries,
    Date: 2007
  28. By: Pender, John
    Abstract: "During the past several decades dramatic improvement has occurred in agricultural productivity and livelihoods in South and East Asia, stimulated by the Green Revolution and supported by several other factors. Nevertheless, hundreds of millions of rural people in less-favored environments of this region still live in poverty and received limited benefit from the Green Revolution. To address these problems, alternative technological approaches to the conventional Green Revolution technologies are being advocated to address the problems of poor farmers in less-favored areas of Asia, including low external input and sustainable agricultural approaches, organic agriculture and biotechnology. This paper reviews the literature on agricultural technology options in South and East Asia, drawing conclusions concerning technology strategies to reduce poverty among poor farmers in less-favored areas of this region. Among the main conclusions of the review are the following: 1. There is no technology approach that will work in all of the diverse circumstances of South and East Asia. 2. It is difficult, but not impossible, to identify and promote technologies that will substantially improve the livelihoods of poor people in less-favored areas. 3. Key requirements for technologies to be taken up by farmers and to have a substantial impact on reducing poverty are that the technology is profitable in a relatively short period of time; does not substantially increase risks; and is consistent with farmers' endowments of knowledge, management skill, land, labor, and other assets. 4. New technologies, by themselves, are not sufficient to bring about sustainable rural development and elimination of rural poverty, although they can have a major impact. Effective institutions and a stable and supportive policy environment are also critical. 5. Effective farmers' organizations accountable to poor farmers are a critical need for the success of all technologies in reaching the poor. Such organizations are needed to reduce the costs and improve the effectiveness of technical assistance efforts for all technologies, and are particularly important for technologies that require effective collective action and for increasing smallholders' access to markets for organic and other high value products. 6. Improved methods of technology dissemination are needed to reach poor farmers in less-favored areas. Top down technology transfer approaches that worked well with simple technology packages do not work as well with complex technologies that have to be adapted to local circumstances based on agro-ecological principles and local conditions. These lessons should give pause to advocates one particular technological approach as the solution for poor farmers in less favored environments of Asia and elsewhere. What farmers need are not technology dogmas but options that can work in their context, combining what is useful from different approaches. This requires a pragmatic approach to learning what works well where and why. In pursuit of such pragmatic options for farmers, research and development programs should not ignore the potentials of traditional farming practices or intensive Green Revolution type technologies, which are well suited to farmers' needs in many contexts." - from authors' abstract.
    Keywords: Agricultural technology, Low-external input agriculture, Organic farming, biotechnology, Sustainable agriculture, Less favored areas, Rural poverty, Land resources, Poverty reduction,
    Date: 2007
  29. By: Siddig, El Fatih Ali; El-Harizi, Khalid; Prato, Bettina
    Abstract: "Despite the 2005 Comprehensive Peace Agreement, which brought to an end 20 years of civil war in the Sudan, this country continues to experience smaller-scale conflicts, particularly around access to and control of natural resources. Some observers lay the blame for this on ethnopolitical or tribal divisions. However, this paper argues that there are a variety of factors at play behind these conflicts, notably the combination of resource scarcity with a crisis of governance that is particularly evident in transitional areas like the Kordofan region. To gain a sense of the range of conflicts around natural resources in Kordofan, the authors reviewed existing records such as government archives; conducted interviews with politicians, federal and state government officials, farmers, pastoralists, and Native Administration leaders; and investigated findings in the field. Interviews also served to examine people's knowledge about government natural resource policies and their perceptions of the roles played by government and the Native Administration in conflict management and resolution. The paper presents 20 cases of stalemate competition or open conflict over natural resources in Kordofan. The cases center on (1) conflicts between farmers and herders over stock routes, gum arabic forests, gardens, watering points, and the use of dars (tribal homelands); (2) conflicts between herders and small farmers and government agents or large private investors over mechanized farming areas, oil infrastructure, and other private investments. In their analysis of natural resource governance in Sudan, the authors find that natural resources policies have often been weak foundations for sustainable resource use, and in some cases they have actually contributed to conflict. In addition, the volatile path of government devolution efforts concerning natural resources has undermined governance of these resources. While conflicts between farmers and herders were managed relatively successful in the past through customary land tenure systems, this is less and less the case today as a result of larger herds, reduced water and pasture, instability and prejudices stirred up by the war, and a proliferation of arms among herders. In addition, patron–client politics, weak natural resource management and development policies, and top-down government institutions have encouraged ethnic polarization and social divisions. The authors find that measures are needed to reform the process of natural resource management, making land use planning more comprehensive, building on local livelihood systems, and increasing public spending on infrastructure. In addition, sustainable property rights on farmland and on mobile resources should be redefined, and informal conflict management mechanisms restored to the extent that this is possible." Authors' Abstract
    Keywords: Conflict management, Natural resource management, Small farmers, Land use, Livelihoods, Public spending, infrastructure, Property rights, Governance, Sustainability,
    Date: 2007
  30. By: Ilan Noy (Department of Economics, University of Hawaii at Manoa)
    Abstract: The paper investigates the impact of foreign direct investment (FDI) on economic growth using detailed sectoral data for FDI inflows to Indonesia over the period 1997-2006. In the aggregate level, FDI is observed to have a positive effect on economic growth. However, when accounting for the different average growth performance across sectors, the beneficial impact of FDI is no longer apparent. When examining different impacts across sectors, estimation results show that the composition of FDI matters for its effect on economic growth with very few sectors showing positive impact of FDI and one sector even showing a robust negative impact of FDI inflows (mining and quarrying). The sectors examined are: farm food crops, livestock product, forestry, fishery, mining and quarrying, non-oil and gas industry, electricity, gas and water, construction, retail and wholesale trade, hotels and restaurant, transport and communications, and other private and services sectors.
    Keywords: Foreign direct investment, economic growth, Indonesia
    JEL: F21 F23
    Date: 2007–10–01
  31. By: Patrick Honohan
    Abstract: Although forbearance has been associated with more costly financial crises, a triggerhappy approach to closing weak banks could also precipitate an avoidable systemic collapse. In sophisticated regulatory environments, there can be net benefits from at least occasional acts of forbearance. But we argue that three key structural weaknesses in developing countries suggest that their regulators should have less forbearance discretion. This is because financial systems in developing countries tend to have worse information, less interdependence and greater agency problems.
    Date: 2007–10–02
  32. By: Iyabo Masha; Kazuko Shirono; Leighton Harris; Jian-Ye Wang
    Abstract: This study assesses the experience of the Common Monetary Area (CMA) based on available empirical evidence over the last two decades. It pays particular attention to member countries' adjustment to economic shocks in recent years and the inter-country linkages, including the spillover effects of policies. The paper draws the main lessons from the CMA experience, identifies key policy challenges, and discusses the issues facing the member countries in their efforts to achieve sustained growth. Implications for further economic integration in a broader regional context are also noted.
    Keywords: Working Paper , Monetary unions , Economic policy , Adjustment process , Financial integration , Financial sector ,
    Date: 2007–07–13
  33. By: Kangni Kpodar
    Abstract: This paper analyzes the determinants of labor market performance in Algeria. When the model is estimated with panel data on a sample of MENA and transition countries for 1995- 2005, the results suggest that lower growth in labor productivity in Algeria is associated with higher unemployment than the sample average, though recent positive terms of trade shocks have helped Algeria reduce the differential. Labor market rigidities and labor taxation do not seem to explain why unemployment is higher in Algeria than in other countries. The results are robust to various panel econometric methods and instrumental variable estimates.
    Keywords: Unemployment , Algeria , Labor markets , Taxation , Working Paper ,
    Date: 2007–08–30
  34. By: Broadberry, Stephen (Department of Economics, University of Warwick); Gupta, Bishnupriya (Department of Economics, University of Warwick)
    Abstract: Overall labour productivity in India was already only around 15 per cent of the UK level between the early 1870s and the late 1920s. Between 1929 and 1950 India fell further behind and remained at around 10 per cent of the UK level until the 1970s. India has been catching-up since the 1970s, but by the end of the twentieth century was still further behind than in the late nineteenth century. Agriculture has played an important role in India’s relative decline to 1950 and subsequent delay in catching up, since comparative India/UK labour productivity in this sector has declined continuously and agriculture still accounts for around two-thirds of employment in India. Comparative India/UK labour productivity in industry has fluctuated around a level of around 15 per cent. The only sector to exhibit trend improvement in comparative India/UK labour productivity over the long run is services, rising from around 15 per cent to around 30%. India’s recent emergence as a dynamic service-led economy appears to have long historical roots.
    Keywords: Labour productivity ; sectoral disaggregation ; international comparison
    JEL: N10 N30 O47 O57
    Date: 2007
  35. By: Broadberry, Stephen (Department of Economics, University of Warwick)
    Abstract: This paper offers a historical appraisal of recent developments in the theory of very long run growth, focusing on three main areas: (1) linkages between wages, population and human capital (2) interactions between institutions, markets and technology and (3) sustaining the process of economic growth once it has started. Historians as well as economists have recently begun to break away from the traditional practice of using different methods to analyse the world before and after the industrial revolution. However, tensions remain between the theoretical and historical literatures, particularly over the unit of analysis (the world or particular countries) and the role of historical contingency
    Date: 2007
  36. By: Servaas van der Berg (Department of Economics, Stellenbosch University); Megan Louw (Department of Economics, Stellenbosch University)
    Abstract: In regional context, South African students benefit from above average levels of public and private education resources. However, their performance on international tests – including SACMEQII (Southern African Consortium for Monitoring Educational Quality, 2000) – is extremely weak. The first part of the paper positions South Africa within southern and eastern Africa on the basis of SACMEQII Grade 6 mathematics test scores. Hierarchical linear modelling techniques are then employed to model the relationship between socio-economic status (SES) and schooling in this highly unequal country. Three important drivers of inequity in test scores emerge: principal concern with monitoring student progress, teacher absenteeism and teacher quality. These interact with SES to give richer students a strong advantage.
    Keywords: education quality, inequality, South Africa, Southern Africa, Hierarchical Linear Modelling
    JEL: I21
    Date: 2007
  37. By: Holden, Stein T.; Deininger, Klaus; Ghebru, Hosaena
    Abstract: There is a renewed interest in whether land reforms can contribute to market development in Africa and whether land reforms can be pro-poor. This paper uses unique household panel data from Tigray region in Ethiopia to assess the impact of the 1998 low-cost land registration and certification reform on land rental market participation over a period of eight years after the reform, using random effects probit and tobit panel data models for land leased out and leased in, while correcting for unobservable heterogeneity and endogeneity of having certificate. The analysis revealed that the land reform contributed to increased land rental market participation. Female-headed households became more willing to rent out land and making land available for more efficient producers. Average areas leased out and leased in increased after certification. The land rental market remained characterised with significant and non-convex transaction costs also after the reform as evidenced by significant state dependence, a low response to own holding size and a high share of non-participation in the land market, leaving room for further improvement.
    Keywords: Land certification; land rental market; panel data analysis; unobserved heterogeneity; household response; female-headed households
    JEL: Q15 Q24 O13
    Date: 2007–10–10

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