nep-dev New Economics Papers
on Development
Issue of 2008‒02‒16
eighteen papers chosen by
Jeong-Joon Lee
Towson University

  1. Religion and Childhood Death in India By Sonia Bhalotra; Christine Valente; Arthur van Soest
  2. Childhood Mortality and Economic Growth By Sonia Bhalotra
  3. Primary Education in India: Prospects of meeting the MDG Target By Sonia Bhalotra; Bernarda Zamora
  4. Access of Poor Households to Primary Education in Rural India By Dholakia Ravindra H.;
  5. More Coffee, More Cigarettes? Coffee Market Liberalisation, Gender, and Bargaining in Uganda By Jennifer Golan; Jann Lay
  6. Does Foreign Aid Increase Foreign Direct Investment? By Pablo Selaya; Eva R. Sunesen
  7. Child Survival, Poverty and Policy Options from DHS Surveys in Kenya: 1993-2003 By Jane Kabubo-Mariara; Margaret M. Karienyeh; Francis K. Mwangi
  8. Public Investment and Growth: The Role of Corruption' By M. Emranul Haque; Richard Kneller
  9. Internal Debt Crises and Sovereign Defaults By Cristina Arellano; Narayana R. Kocherlakota
  10. Social interactions and student achievement in a developing country : An instrumental variables approach By Chaudhury, Nazmul; Asadullah, Mohammad Niaz
  11. Poisoning the mind : arsenic contamination and cognitive achievement of children By Chaudhury, Nazmul; Asadullah, Mohammad Niaz
  12. Madrasas and NGOs : complements or substitutes ? non-state providers and growth in female education in Bangladesh By Chaudhury, Nazmul; Asadullah, Mohammad Niaz
  13. Does participation in productive associations signal trust and creditworthiness ? evidence for Nicaragua By Molina, Ezequiel; Angel-Urdinola, Diego F.
  14. Brazil within Brazil : testing the poverty map methodology in Minas Gerais By Leite, Phillippe George; Lanjouw, Peter; Ebers, Chris
  15. Business Cycle Accounting for the Chinese Economy By Gao, Xu
  16. Human Capital, Aggregation, and Growth By Growiec, Jakub
  17. SELLING OUR WAY INTO POVERTY: The Commercialisation of Poverty in Malawi By Bokosi, Fanwell Kenala
  18. Income, Public Social Services, and Capability Development: A Cross-district Analysis of Pakistan By Rizwana Siddiqui

  1. By: Sonia Bhalotra; Christine Valente; Arthur van Soest
    Abstract: Muslim children in India face substantially lower mortality risks than Hindu children. This is surprising because one would have expected just the opposite: Muslims have, on average, lower socio-economic status, higher fertility, shorter birth-spacing, and are a minority group in India that may be expected to live in areas that have relatively poor public provision. Although higher fertility amongst Muslims as compared with Hindus has excited considerable political and academic attention in India, higher mortality amongst Hindus has gone largely unnoticed. This paper considers this seeming puzzle in depth.
    Keywords: religion, child mortality, Muslim, Hindu, India
    JEL: I12 O12 J13
    Date: 2008–01
  2. By: Sonia Bhalotra
    Abstract: This paper investigates the extent to which the decline in childhood mortality over the last three decades can be attributed to economic growth. In doing this, it exploits the considerable variation in growth over this period, across states and over time. The analysis is able to condition upon a number of economic and demographic variables. The estimates are used to produce a crude estimate of the rate of economic growth that would be necessary to achieve the Millennium Development Goal of reducing the under-5 mortality by two thirds, from its level in 1990, by the year 2015. The main conclusion is that, while growth does have a significant impact on mortality risk, growth alone cannot be relied upon to achieve the goal.
    Keywords: childhood mortality, economic growth, MDGs, India
    JEL: O12 I12 I18 J13
    Date: 2008–01
  3. By: Sonia Bhalotra; Bernarda Zamora
    Abstract: This paper uses two large repeated cross-sections, one for the early 1990’s, and one for the late 1990’s, to describe growth in school enrolment and completion rates for boys and girls in India, and to explore the extent to which enrolment and completion rates have grown over time. It decomposes this growth into components due to change in the characteristics that determine schooling, and another associated with changes in the responsiveness of schooling to given characteristics. Our results caution against the common practice of using current data to make future projections on the assumption that the model parameters are stable. The analysis nevertheless performs illustrative simulations relevant to the question of whether India will be able to achieve the Millennium Development Goal of realising universal primary education by the year 2015. The simulations suggest that India will achieve universal attendance, but that primary school completion rates will not exhibit much progress.
    Keywords: Millennium Development Goals, primary schooling, attendance, completion rates, gender, India, decomposition
    JEL: I21 I28 O12 J18
    Date: 2008–01
  4. By: Dholakia Ravindra H.;
    Abstract: The Planning Commission’s premise that the growth in India has bypassed the weaker sections due to their ineffective access to the basic services like primary education needs to be tested against the evidence. Traditionally identified weaker section on social criteria (SC and ST population) seems to have a similar or relatively better access to the primary education. However, there is no direct evidence available for the weaker section on the economic criteria or the population living below poverty line (BPL). The present paper attempts to provide an empirical evidence for the premise of the Planning Commission from the household survey of BPL families in five states of India including the survey of primary schools for the same states and localities. Our findings suggest that there is a problem of access of the poor (BPL) households to the primary education services in rural areas. Primary enrolment ratios among the children of poor households are considerably lower than the respective state average and also the aggregate enrolment ratio of the country. Our findings also reveal that the incentives such as mid-day meals, free textbooks and cash subsidies given by government schools to the poor children do actually reach them. The problem of insufficient effective access of the poor to primary education still persists. It calls for a change in the policy level thinking. Qualitative aspects like school infrastructural deficiencies and functioning of teachers having a direct bearing on the quality and access of education in the rural areas need urgent attention.
    Keywords: Poor households, Primary education, Rural India.
    Date: 2008–02–11
  5. By: Jennifer Golan; Jann Lay
    Abstract: Focusing on intra-household allocation, we investigate the effects of coffee market liberalisation in Uganda. As coffee has traditionally been a male domain, higher income from this activity might increase gender disparities. In addition, gender-related inefficiency in household production might undermine the positive impact of improved incentives. Using data from three household surveys conducted between 1992 and 2006, we estimate Engel curves, coffee yield and labour input equations incorporating bargaining proxies. We find that income from coffee is increasingly pooled and therefore shared more equally among household members. Yet, we can only detect partial improvements in production efficiency: bargaining still appears to constraint output efficiency and the distribution of household resources continues to follow gendered lines. Moreover, female-headed households are deterred from entry into coffee farming mainly because of discrimination in access to land.
    Keywords: Coffee, Market liberalisation, Gender, Bargaining, Intra-household allocation, Sub-Saharan Africa, Uganda
    JEL: D13 D61 J16 O12 O13 O24
    Date: 2008–02
  6. By: Pablo Selaya (Department of Economics, University of Copenhagen); Eva R. Sunesen (Department of Economics, University of Copenhagen)
    Abstract: The notion that foreign aid and foreign direct investment (FDI) are complementary sources of capital is conventional among governments and internationalcooperation agencies. This paper argues that the notion is incomplete. Within the framework of an open economy Solow model we show that the theoretical relationship between foreign aid and FDI is indeterminate. Aid may raise the marginal productivity of capital by financing complementary inputs, such as public infrastructure projects and human capital investment. However, aid may also crowd out productive private investments if it comes in the shape of physical capital transfers. We therefore turn to an empirical analysis of the relationship between FDI and disaggregated aid flows. Our results strongly support the hypotheses that aid invested in complementary inputs draws in foreign capital while aid invested in physical capital crowds out FDI. The combined effect of these two types of aid is small but on average positive.
    Keywords: foreign aid; foreign direct investment (FDI); open economy Solow model
    JEL: F21 F35 H40 O19
    Date: 2008–02
  7. By: Jane Kabubo-Mariara; Margaret M. Karienyeh; Francis K. Mwangi
    Abstract: This paper analyses multidimensional aspects of child poverty in Kenya. We carry out poverty and inequality comparisons for child survival and also use the parametric survival model to explain childhood mortality using DHS data. The results of poverty comparisons show that: children with the lowest probability of survival are from households with the lowest level of assets; and poverty orderings for child survival by assets are robust to the choice of the poverty line and to the measure of wellbeing. Inequality analysis suggests that there is less mortality inequality among children facing mortality than children who are better off. The survival model results show that child and maternal characteristics, and household assets are important correlates of childhood mortality. The results further show that health care services are crucial for child survival. Policy simulations suggest that there is potential for making some progress in reducing mortality, but the ERS and MDG targets cannot be achieved.
    Keywords: Child survival, multidimensional poverty, inequality, stochastic dominance, childhood mortality, asset index, Kenya
    JEL: J13 I12 I32 I38 D63
    Date: 2008
  8. By: M. Emranul Haque; Richard Kneller
    Abstract: In this paper, we examine the growth effects of public investment in the presence of corruption. Our methodology improves on previous research on this topic by explicitly recognizing the role of simultaneity between public investment, corruption and growth and the possible biases arising from omission of correlated variables from the single reduced form equation based analysis. We use three-stage least squares method in a panel set up for a system of four equations on growth, public investment, corruption and private investment. Our primary results are twofold. First, corruption increases public investment. Second, corruption reduces the returns to public investment and makes it ineffective in raising economic growth.
    Date: 2008
  9. By: Cristina Arellano; Narayana R. Kocherlakota
    Abstract: In this paper, we use data from developing countries to argue that sovereign defaults are often caused by fiscal pressures generated by large-scale domestic defaults. We argue that these systemic domestic defaults are caused by shocks best interpreted as being non-fundamental. We construct a model that is consistent with these observations. The key ingredient of the model is that it is impossible to liquidate large amounts of entrepreneurial assets. This restriction generates the possibility of a domestic coordinated default crisis, in which domestic borrowers find it optimal to default because all other borrowers are also defaulting. We conclude that avoiding sovereign defaults requires better internal institutions, not better external ones.
    JEL: F34 G33
    Date: 2008–02
  10. By: Chaudhury, Nazmul; Asadullah, Mohammad Niaz
    Abstract: This paper identifies endogenous social effects in mathematics test performance for eighth graders in rural Bangladesh using information on arsenic contamination of water wells at home as an instrument. In other words, the identification relies on variation in test scores among peers owing to exogenous exposure to arsenic contaminated water wells at home. The results suggest that the peer effect is significant, and school selection plays little role in biasing peer effects estimates.
    Keywords: Tertiary Education,Education For All,Teaching and Learning,Primary Education,Secondary Education
    Date: 2008–02–01
  11. By: Chaudhury, Nazmul; Asadullah, Mohammad Niaz
    Abstract: Bangladesh has experienced the largest mass poisoning of a population in history owing to contamination of groundwater with naturally occurring inorganic arsenic. Continuous drinking of such metal-contaminated water is highly cancerous; prolonged drinking of such water risks developing diseases in a span of just 5-10 years. Arsenicosis-intake of arsenic-contaminated drinking water-has implications for children ' s cognitive and psychological development. This study examines the effect of arsenicosis at school and at home on cognitive achievement of children in rural Bangladesh using recent nationally representative school survey data on students. Information on arsenic poisoning of the primary source of drinking water-tube wells-is used to ascertain arsenic exposure. The findings show an unambiguously negative and statistically significant correlation between mathematics score and arsenicosis at home, net of exposure at school. Split-sample analysis reveals that the effect is only specific to boys; for girls, the effect is negative but insignificant. Similar correlations are found for cognitive and non-cognitive outcomes such as subjective well-being, that is, a self-reported measure of life satisfaction (also a direct proxy for health status) of students and their performance in primary-standard mathematics. These correlations remain robust to controlling for school-level exposure.
    Keywords: Education For All,Health Monitoring & Evaluation,Environmental Economics & Policies,Tertiary Education,Urban Solid Waste Management
    Date: 2008–02–01
  12. By: Chaudhury, Nazmul; Asadullah, Mohammad Niaz
    Abstract: There has been a proliferation of non-state providers of education services in the developing world. In Bangladesh, for instance, Bangladesh Rural Advancement Committee runs more than 40,000 non-formal schools that cater to school-drop outs from poor families or operate in villages where there ' s little provision for formal schools. This paper presents a rationale for supporting these schools on the basis of their spillover effects on fema le enrollment in secondary (registered) madrasa schools (Islamic faith schools). Most madrasa high schools in Bangladesh are financed by the sate and include a modern curriculum alongside traditional religious subjects. Using an establishment-level dataset on student enrollment in secondary schools and madrasas, the authors demonstrate that the presence of madrasas is positively associated with secondary female enrollment growth. Such feminization of madrasas is therefore unique and merits careful analysis. The authors test the effects of the Bangladesh Rural Advancement Committee primary schools on growth in female enrollment in madrasas. The analysis deals with potential endoegeneity by using data on number of the number of school branches and female members in the sub-district. The findings show that madrasas that are located in regions with a greater number of Bangladesh Rural Advancement Committee schools have higher growth in female enrollment. This relationship is further strengthened by the finding that there is, however, no effect of these schools on female enrollment growth in secular schools.
    Keywords: Primary Education,Tertiary Education,Education For All,Gender and Education,Teaching and Learning
    Date: 2008–02–01
  13. By: Molina, Ezequiel; Angel-Urdinola, Diego F.
    Abstract: This article studies the extent to which participation in productive associations in Nicaragua contributes to increase individuals ' access to social programs and credit services. By participating in productive associations, individuals give a good signal to firms and are rewarded with better transactions and more access to the services they provide, ceteris paribus. Estimates using 2005 data indicate that househol ds that participate in productive associations display higher access to credit and to social programs that promote investment. Additionally, participation in productive associations is weakly associated to more favorable credit outcomes among those households that receive loans, such as lower interest rates and a lower probability of wanting more credit than what was accessible to them.
    Keywords: Access to Finance,,Corporate Law,Labor Policies,Debt Markets
    Date: 2008–02–01
  14. By: Leite, Phillippe George; Lanjouw, Peter; Ebers, Chris
    Abstract: The small-area estimation technique developed for producing poverty maps has been applied in a large number of developing countries. Opportunities to formally test the validity of this approach remain rare due to lack of appropriately detailed data. This paper compares a set of predicted welfare estimates based on this methodology against their true values, in a setting where these true values are known. A recent study draws on Monte Carlo evidence to warn that the small-area estimation methodology could significantly over-state the precision of local-level estimates of poverty, if underlying assumptions of spatial homogeneity do not hold. Despite these concerns, the findings in this paper for the state of Minas Gerais, Brazil, indicate that the small-area estimation approach is able to produce estimates of welfare that line up quite closely to their true values. Although the setting considered here would seem, a priori, unlikely to meet the homogeneity conditions that have been argued to be essential for the method, confidence intervals for the poverty estimates also appear to be appropriate. However, this latter conclusion holds only after carefully controlling for community-level factors that are correlated with household level welfare.
    Keywords: Statistical & Mathematical Sciences,Population Policies,Science Education,Scientific Research & Science Parks,Small Area Estimation Poverty Mapping
    Date: 2008–02–01
  15. By: Gao, Xu
    Abstract: We evaluate sources of business cycle fluctuations in China after 1978 with business cycle accounting method developed by Chari, Kehoe, and McGrattan (2007). We find that efficiency wedge, which represents institutional change and technology advance, was the main source of economic fluctuations in 1978 - 2006. The amplitude of it fluctuation declined after 1992, which resulted in moderation of business cycle fluctuations. We also find that distortions manifest themselves as taxes on investment, which represents frictions in the capital market, became another economic fluctuation source after 1992, which is different from results of business cycle accounting on US and Japan data. Our results also show that government consumption and net exports played minor roles in generating business cycles. Our results point out several promising directions for future research on China’s business cycle.
    Keywords: Business cycle fluctuations; Business cycle accounting; Chinese economy
    JEL: O47 E32 O53 E37
    Date: 2007–11
  16. By: Growiec, Jakub
    Abstract: The famous Mincer equation regressing log earnings on years of schooling is derived from a linear human capital accumulation equation at the individual level. Even if the cross-sectional Mincer equation holds at the level of individuals, it does not hold at the macro level of countries because aggregation of human capital has to take into account its vintage structure: human capital is embodied in people of different generations whose lifespan is finite. Finiteness of people’s lives imposes also a limit on the potential of human capital accumulation to drive aggregate economic growth. Aggregate human capital accumulation may however become an engine of growth thanks to human capital externalities (knowledge spillovers). We use these findings to revisit the assumptions of the well-known Uzawa–Lucas growth model from an aggregation perspective.
    Keywords: human capital accumulation; Mincer equation; aggregation; vintage structure; balanced growth
    JEL: I20 J24 O40
    Date: 2007–07–04
  17. By: Bokosi, Fanwell Kenala
    Abstract: The aim of the article is to investigate the impact of commercialisation on household poverty in Malawi using the 1997/98 Integrated Household Survey data. The results indicate that overall those household who were more commercialised were better off than those who did not and thus commercialisation should be encouraged as a means of alleviating poverty. In terms of regional analysis the southern region and the central region results indicate that the more commercialised households were actually worse off. Furthermore, the livelihoods of the most vulnerable households (female headed and poor households) did not benefit from commercialisation. Therefore, in terms of policies, it is important that government should identify groups that are likely losers to commercialisation and hence the need for compensatory or socially protective policy design to socio-economic groups whose incomes have been reduced by commercialisation.
    Keywords: Commercialisation; Poverty; Propensity Score Matching; Household Model; Malawi.
    JEL: I31 C31 Q12
    Date: 2008–01–14
  18. By: Rizwana Siddiqui (Pakistan Institute of Development Economics, Islamabad)
    Abstract: Is household income enough for human development or should government direct resources towards the provision of social services to improve capabilities of individuals? The former is emphasised by the World Bank, and the latter by the United Nation Development Programme (UNDP). This paper tests both sides of the question by estimating a basic needs policy model for Pakistan, using cross-district data for the year 1998-99. The results are consistent with the view that government provision of social services affects human capabilities significantly. However, the ultimate constraints on the sustainable capability development are the availability of material resources.
    Keywords: Basic Needs, Capabilities and Income Poverty, Public Provision of Social Services and Household Income
    JEL: I31 I32 I38 D31
    Date: 2008

This nep-dev issue is ©2008 by Jeong-Joon Lee. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.