nep-dev New Economics Papers
on Development
Issue of 2007‒11‒03
twenty-six papers chosen by
Jeong-Joon Lee
Towson University

  1. Determinants of Economic Growth: Will Data Tell? By Ciccone, Antonio; Jarocinski, Marek
  2. Scale and access issues affecting smallholder hog producers in an expanding peri-urban market: Southern Luzon, Philippines By Costales, Achilles; Delgado, Christopher; Catelo, Maria Angeles; Lapar, Ma. Lucila; Tiongco, Marites; Ehui, Simeon; Bautista, Anne Zillah
  3. Agricultural producer support estimates for developing countries: measurement issues and evidence from India, Indonesia, China, and Vietnam By Orden, David; Cheng, Fuzhi; Nguyen, Hoa; Grote, Ulrike; Thomas, Marcelle; Mullen, Kathleen; Sun, Dongsheng
  4. The role of agriculture in development: implications for Sub-Saharan Africa By Diao, Xinshen; Hazell, Peter; Resnick, Danielle; Thurlow, James
  5. FDI and Job Creation in China By Karlsson, Sune; Lundin, Nannan; Sjöholm, Fredrik; He, Ping
  6. Ethnic Diversity, Democracy, and Corruption By Etienne B. Yehoue
  7. Political Budget Cycles in Papua New Guinea By Ebrima Faal
  8. The Role of Fiscal Transparency in Sustaining Stability and Growth in Latin America By Taryn Parry
  9. India: Asset Prices and the Macroeconomy By Catriona Purfield
  10. Fiscal Management of Scaled-Up Aid By Richard Allen; Isabell Adenauer; Kevin Fletcher; Sanjeev Gupta; Duncan Last; Gerd Schwartz; Shamsuddin Tareq
  11. Wild or Tamed?: India's Potential Growth By Hiroko Oura
  12. Sri Lanka's Sources of Growth By Nombulelo Duma
  13. Tax Reform, Income Distribution and Poverty in Brazil: an Applied General Equilibrium Analysis By Joaquim Bento de Souza Ferreira Filho; Carliton Vieira dos Santos; Sandra Maria do Prado Lima
  14. Rent Seeking and the Unveiling of 'De Facto' Institutions: Development and Colonial Heritage within Brazil By Joana Naritomi; Rodrigo R. Soares; Juliano J. Assunção
  15. Measuring Ancient Inequality By Branko Milanovic; Peter H. Lindert; Jeffrey G. Williamson
  16. China's Exports and Employment By Robert C. Feenstra; Chang Hong
  17. Development Aid and International Politics: Does membership on the UN Security Council influence World Bank decisions? By Axel Dreher; Jan-Egbert Sturm; James Raymond Vreeland
  18. How Cash Transfers Boost Work and Economic Security By Guy Standing
  19. Dietary Changes, Calorie Intake and Undernourishment: A Comparative Study of India and Vietnam By Ray, Ranjan
  20. Implications of Rainfall Shocks for Household Income and Consumption in Uganda By John Bosco Asiimwe; Paul Mpuga
  21. The distribution of expenditure tax burden before and after tax reform: The case of Cameroon By Tabi Atemnkeng Johannes; Atabongawung Joseph Nju; Afeanyi Azia Theresia
  22. Macroeconomic and distributional consequences of energy supply shocks in Nigeria By Adeola F. Adenikinju; Niyi Falobi
  23. Analysis of factors affecting the technical efficiency of arabica coffee producers in Cameroon By Amadou Nchare
  24. Fiscal policy and poverty alleviation: Some policy options for Nigeria By Benneth O. Obi
  25. FDI and Economic Growth: Evidence from Nigeria By Adeolu B. Ayanwale
  26. Extent and Determinants of Child Labour in Uganda By Tom Mwebaze

  1. By: Ciccone, Antonio; Jarocinski, Marek
    Abstract: Many factors inhibiting and facilitating economic growth have been suggested. Will international income data tell which matter when all are treated symmetrically a priori? We find that growth determinants emerging from agnostic Bayesian model averaging and classical model selection procedures are sensitive to income differences across datasets. For example, many of the 1975-1996 growth determinants according to World Bank income data turn out to be irrelevant when using Penn World Table data instead (the WB adjusts for purchasing power using a slightly different methodology). And each revision of the 1960-1996 PWT income data brings substantial changes regarding growth determinants. We show that research based on stronger priors about potential growth determinants is more robust to imperfect international income data.
    Keywords: growth regressions; robust growth determinants
    JEL: E01 O47
    Date: 2007–10
  2. By: Costales, Achilles; Delgado, Christopher; Catelo, Maria Angeles; Lapar, Ma. Lucila; Tiongco, Marites; Ehui, Simeon; Bautista, Anne Zillah
    Keywords: Pork industry and trade, Swine breeders, Agriculture and state, small farms, Peri-urban areas, Market access,
    Date: 2007
  3. By: Orden, David; Cheng, Fuzhi; Nguyen, Hoa; Grote, Ulrike; Thomas, Marcelle; Mullen, Kathleen; Sun, Dongsheng
    Abstract: "This study analyzes the evolution of agricultural policies from 1985 to 2002 in India, Indonesia, China, and Vietnam and provides empirical estimates of the degree of protection or disprotection to agriculture in these four countries, both by key commodities and in aggregate... Taken together the reported measures of support and disprotection of specific crops and agriculture in total provide a reasonable basis for assessing the stance of agricultural policies of India, Indonesia, China, and Vietnam. Attention to measurement issues provides a sensitivity analysis. The results reported are indicative of the range of outcomes likely to be found more broadly among developing countries. From regimes of heavy intervention in agricultural markets, each of the four countries in the study has undergone a substantial reform process." from text
    Keywords: Agricultural support, Agricultural policies, Reform,
    Date: 2007
  4. By: Diao, Xinshen; Hazell, Peter; Resnick, Danielle; Thurlow, James
    Abstract: "This report provides a nuanced perspective on debates about the potential for Africa's smallholder agriculture to stimulate growth and alleviate poverty in an increasingly integrated world. In particular, the paper synthesizes both the traditional theoretical literature on agriculture's role in the development process and discusses more recent literature that remains skeptical about agriculture's development potential for Africa. In order to examine in greater detail the relevance for Africa of both the “old” and “new” literatures on agriculture, the paper provides a typology of African countries based on their stage of development, agricultural conditions, natural resources, and geographic location... More broadly, the paper demonstrates that conventional theory on the role of agriculture in the early stage of development remains relevant to Africa. While the continent does face new and different challenges than those encountered by Asian and Latin American countries during their successful transformations, most African countries cannot significantly reduce poverty, increase per capita incomes, and transform into modern economies without focusing on agricultural development." from Authors' Abstract
    Keywords: Growth-poverty linkages, Smallholders, Poverty alleviation, Agricultural development Africa, Agriculture Economic aspects, Ethiopia, Ghana, Rwanda, Uganda, Zambia,
    Date: 2007
  5. By: Karlsson, Sune (Örebro University); Lundin, Nannan (Research Institute of Industrial Economics (IFN)); Sjöholm, Fredrik (Research Institute of Industrial Economics (IFN)); He, Ping (National Bureau of Statistics of China)
    Abstract: This paper examines the effect of FDI on job creation in the Chinese manufacturing sector. As one of the world’s largest recipients of FDI, China has arguably benefited from foreign multinational enterprises in various respects. However, one of the main challenges for China, and other developing countries, is job-creation, and the effect of FDI on job creation is uncertain. The effect depends on the amount of jobs created within foreign firms as well as the effect of FDI on job creation in domestic firms. We analyze FDI and job creation in China using a large sample of manufacturing firms for the period 1998-2004. Our results show that FDI has positive effects on employment growth. The positive effect of job creation in foreign firms is associated with their firm characteristics and, in particular, their access to export markets. There also seems to be a positive indirect effect on job creation in domestically owned firms, presumably caused by spillovers.
    Keywords: China; Employment; Foreign Direct Investment; Job Creation
    JEL: F23 J21 J23
    Date: 2007–10–24
  6. By: Etienne B. Yehoue
    Abstract: I study the link between ethnic diversity, democracy, and corruption. In a static model, I show that contrary to conventional wisdom, corruption might emerge as a negative externality of democracy. This occurs through ethnicity, which appears as a rent-extracting technology in a democratic society. Extending the model into a dynamic framework, I find that this technology of extraction operates only at the early stage of democracy. Its impact tends to phase out as democracy matures. In other words, the model predicts that democracy exhibits a threshold effect on corruption.
    Keywords: Working Paper , Corruption , Governance , Economic models ,
    Date: 2007–09–17
  7. By: Ebrima Faal
    Abstract: This paper assesses the presence of opportunistic electoral budget cycles in Papua New Guinea. Using quarterly time series data, a clear pattern emerges of pre-election manipulations of fiscal policy by incumbent governments, mainly in the form of increased development spending and overall primary expenditure, followed in some cases by retrenchment in post-election periods. These findings are consistent with the predictions of rational opportunistic political business cycle theory. It is noteworthy that revenue was not statistically significantly related to elections, either in the pre- or post-election period. In this regard, electoral swings in fiscal deficits reflect a preference for influencing expenditures rather than taxation.
    Keywords: Working Paper , Government expenditures , Papua New Guinea , Budget deficits , Business cycles , Political economy ,
    Date: 2007–09–17
  8. By: Taryn Parry
    Abstract: Latin America has experienced a resurgence in growth in recent years. However, it is also a region that has been prone to crises while growth has not delivered a significant reduction in poverty and inequality. Maintaining a strong and stable macroeconomic performance in Latin America will depend on further cuts in public debt, identification and reduction of fiscal vulnerabilities and improvements in the quality of public spending. Improvements in governance and the business environment will also aid in attracting investment. This paper draws on assessments of fiscal transparency in twelve countries in Latin America to highlight good fiscal management and improvements in fiscal transparency that might enhance the prospect for sound fiscal performance and a more favorable investment environment. This would be an important step toward sustaining stable, higher quality growth in the region.
    Keywords: Working Paper , Latin America , Fiscal transparency , Fiscal management , Economic stabilization , Economic growth ,
    Date: 2007–09–18
  9. By: Catriona Purfield
    Abstract: This paper examines rising asset prices in India. For the most part, asset prices in India reflect structural factors but the risk of a correction cannot be ruled out. However, at this juncture monetary policy may not be the most effective tool to safeguard financial stability because (i) India's economy is undergoing rapid structural change making it difficult to identify price misalignments; (ii) the macroeconomic impact of an asset price correction is likely to be small; and (iii) the relationship between monetary policy and asset prices is also weak. Targeted changes in financial regulations are better tools to address potential risks.
    Keywords: Working Paper , India , Asset prices , Monetary policy ,
    Date: 2007–09–18
  10. By: Richard Allen; Isabell Adenauer; Kevin Fletcher; Sanjeev Gupta; Duncan Last; Gerd Schwartz; Shamsuddin Tareq
    Abstract: This paper discusses the role of fiscal policy and fiscal institutions in managing scaled-up aid. In an environment of volatile scaled-up aid, fiscal policy formulation should be anchored in medium-term frameworks, incorporating a longer-term view of potential resource availability and spending plans. There is merit in smoothing expenditures over time so that all programs are adequately funded. The paper argues that wage-bill ceilings should be used in Fund-supported programs only in exceptional cases. The paper also discusses basic reforms for strengthening public financial management systems for effective utilization of scaled-up aid flows.
    Keywords: Working Paper , Development assistance , Fiscal policy , Public finance , Government expenditures , Fund policies ,
    Date: 2007–09–19
  11. By: Hiroko Oura
    Abstract: With India's GDP expanding at a rate above 8 percent in recent years, the debate about whether India is overheating revolves mainly about whether growth is above potential-that is, whether the economy is exceeding its "speed limit." This paper attempts to shed light on this debate by providing up-to-date projections of India's potential growth, including by clarifying differences in underlying assumptions used by various researchers that lead to a range of estimates. Estimates of potential growth on this basis range from 7.4 percent to 8.1 percent for 2006/07, and about 8 percent for the medium term. The medium-term potential estimates have risks on both sides: productivity gains and investment could be volatile, but determined reforms could sustain strong productivity growth.
    Keywords: Working Paper , Economic growth , India , Economic forecasting , Gross domestic product , Economic reforms , Productivity ,
    Date: 2007–09–21
  12. By: Nombulelo Duma
    Abstract: This paper uses the growth accounting framework to assess Sri Lanka's sources of growth. It finds that while labor was the dominant factor contributing to growth in the 1980s, labor's contribution declined over time and was overtaken, to a large extent, by total factor productivity (TFP) and, to a lower extent, by physical and human capital accumulation. A higher growth path over the medium term will depend on securing a stable political and macroeconomic environment; implementing structural reforms necessary to improve productivity and efficiency of investment; attaining fiscal consolidation; and creating space for the private sector.
    Keywords: Working Paper , Economic growth , Sri Lanka , Productivity , Capital accumulation ,
    Date: 2007–09–21
  13. By: Joaquim Bento de Souza Ferreira Filho; Carliton Vieira dos Santos; Sandra Maria do Prado Lima
    Abstract: This paper analyses the impacts of three different indirect tax policies on the Brazilian economy: reduction of indirect taxes over the main household consumption products: reduction of indirect taxes over the main inputs used in agriculture; and the reduction of indirect taxes over all products in a specific region (Sao Paulo State) in Brazil. The analysis was carried out with the aid of an inter-regional static general equilibrium model of the country that was linked to a micro-simulation model used for poverty and income distribution analysis. The first two simulations showed that the policies have potential to improve income distribution, mainly benefiting the lower income families in the poorest regions. The reduction of indirect taxes over goods and services in Sao Paulo state shows that this state would benefit more compared to the other states, an example of the so called "fiscal war". This policy also points to some regressive effects of the tax policies on income distribution, since it disproportionately benefits the higher income groups located in the Sao Paulo state. The strong fall significant drop in tax collection should be taken as a sign for restraining policy implementation.
    Keywords: Poverty, Income Distribution, General Equilibrium Models, Micro-simulation, Indirect Tax, Fiscal Policy, Brazil
    JEL: C68 H23 I32
    Date: 2007
  14. By: Joana Naritomi; Rodrigo R. Soares; Juliano J. Assunção
    Abstract: This paper analyzes the roots of variation in de facto institutions, within a constant de jure institutional setting. We explore the role of rent-seeking episodes in colonial Brazil as determinants of the quality of current local institutions, and argue that this variation reveals a de facto dimension of institutional quality. We show that municipalities with origins tracing back to the sugar-cane colonial cycle -- characterized by a polarized and oligarchic socioeconomic structure -- display today more inequality in the distribution of land. Municipalities with origins tracing back to the gold colonial cycle -- characterized by an over-bureaucratic and heavily intervening presence of the Portuguese state -- display today worse governance practices and less access to justice. The colonial rent-seeking episodes are also correlated with lower provision of public goods and lower income per capita today, and the latter correlation seems to work partly through worse institutional quality at the local level.
    JEL: N26 O17 O40 P14 P28
    Date: 2007–10
  15. By: Branko Milanovic; Peter H. Lindert; Jeffrey G. Williamson
    Abstract: Is inequality largely the result of the Industrial Revolution? Or, were pre-industrial incomes and life expectancies as unequal as they are today? For want of sufficient data, these questions have not yet been answered. This paper infers inequality for 14 ancient, pre-industrial societies using what are known as social tables, stretching from the Roman Empire 14 AD, to Byzantium in 1000, to England in 1688, to Nueva España around 1790, to China in 1880 and to British India in 1947. It applies two new concepts in making those assessments -- what we call the inequality possibility frontier and the inequality extraction ratio. Rather than simply offering measures of actual inequality, we compare the latter with the maximum feasible inequality (or surplus) that could have been extracted by the elite. The results, especially when compared with modern poor countries, give new insights in to the connection between inequality and economic development in the very long run.
    JEL: D3 N3 O1
    Date: 2007–10
  16. By: Robert C. Feenstra; Chang Hong
    Abstract: Dooley et al (2003, 2004a,b,c) argue that China seeks to raise urban employment by 10-12 million persons per year, with about 30% of that coming from export growth. In fact, total employment increased by 7.5-8 million per year over 1997-2005. We estimate that export growth over 1997-2002 contributed at most 2.5 million jobs per year, with most of the employment gains coming from non-traded goods like construction. Exports grew much faster over the 2000-2005 period, which could in principal explain the entire increase in employment. However, the growth in domestic demand led to three-times more employment gains than did exports over 2000-2005, while productivity growth subtracted the same amount again from employment. We conclude that exports have become increasingly important in stimulating employment in China, but that the same gains could be obtained from growth in domestic demand, especially for tradable goods, which has been stagnant until at least 2002.
    JEL: F1 O1 R15
    Date: 2007–10
  17. By: Axel Dreher (KOF Swiss Economic Institute, ETH Zurich); Jan-Egbert Sturm (KOF Swiss Economic Institute, ETH Zurich); James Raymond Vreeland (Yale University, Department of Political Science, USA)
    Abstract: We investigate whether temporary members of the UN Security Council receive favorable treatment from the World Bank, using panel data for 157 countries over the period 1970-2004. Our results indicate a robust positive relationship between temporary UN Security Council membership and the number of World Bank projects a country receives, even after accounting for economic and political factors, as well as regional and country effects. The size of World Bank loans, however, is not affected by UN Security Council membership.
    Keywords: World Bank, UN Security Council, Voting, Aid
    JEL: O19 O11 F35
    Date: 2007–07
  18. By: Guy Standing
    Abstract: There has long been a minority view that providing people with cash is an effective way of combating poverty and economic insecurity while promoting livelihoods and work. The mainstream view has been that giving people money, without conditions or obligations, promotes idleness and dependency, while being unnecessarily costly. Better, they contend, would be to allocate the available money to schemes that create jobs and/or human capital and that produce infrastructure. This paper reviews recent evidence on various types of scheme and on several pilot cash transfer schemes, assessing them by reference to principles of social justice.
    Keywords: Food aid, vouchers, cash transfers, economic security, public works, social pensions, disability grants, social policy
    JEL: H55 J08 O1
    Date: 2007–10
  19. By: Ray, Ranjan (School of Economics and Finance, University of Tasmania)
    Abstract: This paper examines the changes in the nature and quantity of Food consumption in India during the reforms decade of the 1990s, and analyses their implications for calorie intake and undernourishment. The study documents the decline in cereal consumption, especially in the urban areas, and provides evidence that suggests an increase in the prevalence of undernourishment over the period, 1987/88 – 2001/2002. The results also point to a significant number of households, even in the top expenditure decile, suffering from under nourishment. This calls for a reassessment of the current strategy of directing the Targetted Public Distribution System (TPDS) exclusively at households below the poverty line (BPL). This study shows that, both as a source of subsidised calories and as a poverty reducing instrument, the PDS is of much greater importance to the female headed households than it is to the rest of the population. Another important result is that, notwithstanding the sharp decline in their expenditure share during the 1990s, Rice and Wheat continue to provide the dominant share of calories, especially for the rural poor. The Indian experience is in sharp contrast to that in Vietnam which witnessed a large increase in calorie intake and, consequently, a decrease in the prevalence of ndernourishment in the late 1990s. The Vietnamese diet displayed increased diversification during the 1990s with a greater role for protein rich animal products and a more balanced diet of nutrients than in India.
    Keywords: Calorie Intake, Prevalence of Undernourishment, Calorie Price Inflation, Public Distribution System, Backward Classes, Female headed Households.
    Date: 2007–07
  20. By: John Bosco Asiimwe; Paul Mpuga
    Abstract: Much of Uganda’s agricultural production activities are rain-fed, meaning that changes in weather conditions have important implications for households’ total agricultural production and wellbeing. This study uses a basic model of household production to assess the impact of rainfall shocks (using rainfall variability) on farm income and consumption expenditure and the response of households to such shocks. Pooled cross sectional data of farm households are derived from the Uganda National Household Surveys for 1992/93, 1999/2000 and 2002/03, which provide a rich source of information on individual and household characteristics (size, age, sex, education, employment, etc.), household income, expenditure, and exposure to risk/shocks. Rainfall statistics are obtained from various issues of the Statistical Abstracts and the Background to the Budget. We show that rainfall shocks have important implications for both income and consumption of households, with strong policy implications towards cushioning agricultural households. Higher than average rainfall in the first planting and first harvest seasons is found to result in lower incomes and consumption. Given that about 40% of Uganda’s total output is obtained from rain-fed agriculture, the impact of rainfall variability on household welfare has important implications for national income. It is also noted that other factors such as ownership of land, education of the household head and household size are important in the determination of household welfare. Community characteristics such as access to electricity, markets and infrastructure in general play a very important role in the welfare of agricultural households. Programmes to protect households against rainfall shocks such as irrigation schemes, storage facilities for dry produce, staggered planting and crop diversification can provide helpful avenues to reduce income variability among agricultural households. In order to reduce welfare variability and poverty in general, it is necessary to continue the focus on education and targeting of poor and vulnerable households in terms of access to education, health care and other welfare programmes. Access to land has strong implications for both income and consumption - households with access to larger land areas are likely to have higher incomes and higher consumption expenditures - suggesting that land policies to improve access are needed so as to enhance incomes of agricultural households.
    Date: 2007–07
  21. By: Tabi Atemnkeng Johannes; Atabongawung Joseph Nju; Afeanyi Azia Theresia
    Abstract: This paper examines the incidence of indirect taxation in Cameroon in 1983, 1996 and 2001. Using household surveys for these three years, the paper looks into which consumption taxes are progressive and determines if changes in tax policy influenced the welfare of the poor. The paper suggests that the incidence of expenditure taxes changes with the changing economic environment and reveals that the indirect tax reforms of 1994 and 1999 have been generally pro-poor. In the aggregate, consumption taxes became more progressive than before, partly due to changing consumption patterns following the introduction of new taxes or replacement of old ones.
    Date: 2006–11
  22. By: Adeola F. Adenikinju; Niyi Falobi
    Abstract: In spite of its vast oil endowments, Nigeria continues to experience sporadic domestic oil supply shortages. These oil shortages manifest in regular queues at fuel stations that are often empty and in thriving parallel markets that sprout all over the country. The shortages have resulted in huge economic and non-economic costs to the economy. This study investigates the causes of the shortages and provides quantitative estimates of the economic costs to the Nigerian economy using a survey and a computable general equilibrium (CGE) model. The findings from this study show very clearly that oil sector supply shocks are costly both directly and indirectly. Oil supply shocks result in lower real GDP, higher average prices and greater balance of payment deficits. Other macroeconomic variables such as private consumption, investment, government revenue and employment also decline. In addition, the distributional impact of the quantitative energy supply shocks is higher for poor households than rich households. We also find that the sectoral impacts are mixed, often depending on the oil intensity of the sector. Finally, our survey results show that many economic agents on the demand side are willing to pay higher prices if that will guarantee a stable oil supply. Few players in the market chain benefit from supply disruptions, while consumers and the poor bear the main burden of these shocks.
    Date: 2006–12
  23. By: Amadou Nchare
    Abstract: This study analyses the factors influencing the technical efficiency of arabica coffee farmers in Cameroon. To carry out this analysis, a translog stochastic production frontier function, in which technical inefficiency effects are specified to be functions of socioeconomic variables, is estimated using the maximum-likelihood method. The data used were collected from a sample of 140 farmers during the 2004 crop year. The results obtained show some increasing returns to scale in coffee production. The mean technical efficiency index is estimated at 0.896, and 32% of the farmers surveyed have technical efficiency indexes of less than 0.91. The analysis also reveals that the educational level of the farmer and access to credit are the major socioeconomic variables influencing the farmers’ technical efficiency. Finally, the findings prove that further productivity gains linked to the improvement of technical efficiency may still be realized in coffee production in Cameroon.
    Keywords: Technical efficiency, stochastic production frontier, arabica coffee, Cameroon
    JEL: O13 Q18 C21 R30
    Date: 2007–01
  24. By: Benneth O. Obi
    Abstract: The rise in fiscal policy as a tool of macroeconomic management and the pervasive and widespread inequality in terms of income disparity has renewed interest in the use of fiscal policy in the alleviation of poverty and the reduction of income disparity. This study sets out to examine the potency of fiscal policy as a tool for poverty alleviation. The study uses a static real-side computable general equilibrium model as the framework. Three counterfactual scenarios were examined. These are transfers to the poor household, targeting of government expenditure and import tariff adjustment. The study observed that targeting of government expenditure seems to be the most potent tool for effective poverty reduction. Moreover, tariff adjustment tends to aggravate income disparity/poverty amongst households. In this light, the study proposes that in the quest for poverty reduction in Nigeria, fiscal policy should be designed so that government expenditure is properly focused to ensure that goods required by poor households are provided through public means.
    Date: 2007–02
  25. By: Adeolu B. Ayanwale
    Abstract: Most countries strive to attract foreign direct investment (FDI) because of its acknowledged advantages as a tool of economic development. Africa – and Nigeria in particular – joined the rest of the world in seeking FDI as evidenced by the formation of the New Partnership for Africa’s Development (NEPAD), which has the attraction of foreign investment to Africa as a major component. This study investigated the empirical relationship between non-extractive FDI and economic growth in Nigeria and examined the determinants of FDI into the Nigerian economy. Secondary data were sourced from the Central Bank of Nigeria, International Monetary Fund and the Federal Office of Statistics. The period of analysis was 1970–2002. An augmented growth model was estimated via the ordinary least squares and the 2SLS method to ascertain the relationship between the FDI, its components and economic growth. Results suggest that the determinants of FDI in Nigeria are market size, infrastructure development and stable macroeconomic policy. Openness to trade and available human capital, however, are not FDI inducing. FDI in Nigeria contributes positively to economic growth. Although the overall effect of FDI on economic growth may not be significant, the components of FDI do have a positive impact. The FDI in the communication sector has the highest potential to grow the economy and is in multiples of that of the oil sector. The manufacturing sector FDI negatively affects the economy, reflecting the poor business environment in the country. The level of available human capital is low and there is need for more emphasis on training to enhance its potential to contribute to economic growth.
    Date: 2007–04
  26. By: Tom Mwebaze
    Abstract: Despite the prevalence and the many dangers associated with child labour, the phenomenon has received the attention of researchers, academicians and policy makers only recently, and not until International Labour Organization (ILO) estimates showed a large and increasing number of working children worldwide. It is now recognized that in order to combat child labour effectively, policies should be grounded in an informed understanding of its causes, roles and implications. This study uses data from the 1992, 1999 and 2002 Uganda National Household Surveys to explore the extent, determinants and forms of child labour in a poor but growing economy. Of note here is that over this period Uganda introduced universal and compulsory primary education. The study highlights the extent, characteristics and determinants of child labour in Uganda and their evolution over the decade. The theoretical framework is a standard household production model that analyses the allocation of time within the household. Using probit and tobit models, we estimate the determinants of child labour for the individual child worker. The results indicate that child labour is still common, widespread and starts at an early age in Uganda, although it has reduced significantly over the years. Education and formal employment of the household head significantly decrease the probability that a child will work. Household welfare is another indicator of child labour, as poor households are more likely to have working children. A comparison of the three data sets reveals an increase in the percentage of children combining work and study over time. Nevertheless, the likelihood of child labour increases with the age of the child. The findings provide important results for informing policies to reduce, and possibly eliminate, child labour in the country.
    Date: 2007–06

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