nep-dev New Economics Papers
on Development
Issue of 2008‒02‒23
thirty-two papers chosen by
Jeong-Joon Lee
Towson University

  1. Economic Geography, Spatial Dependence and Income Inequality in China By Laura Hering; Sandra Poncet
  2. Testing the Finance-Growth Link: is There a Difference Between Developed and Developing Countries? By Gilles Dufrenot; Valerie Mignon; Anne Peguin-Feissolle
  3. What explains the Rural-Urban Gap in Infant Mortality — Household or Community Characteristics? By Ellen van de Poel; Owen O'Donnell; Eddy Van Doorslaer
  4. HIV/AIDS, Risk Aversion and Intertemporal Choice By Judith Lammers; Sweder van Wijnbergen
  5. Sustainable Nations: What do Aggregate Indicators tell us? By J. Ram Pillarisetti; Jeroen C.J.M. van den Bergh
  6. Trade-Induced Changes in Economic Inequality: Assessment Issues and Policy Implications for Developing Countries By Sylvain Chabe-Ferret; Author-Name: Julien Gourdon; Mohamed Ali Marouani; Tancrède Voituriez
  7. What Explains the International Location of the Clothing Industry? By Tengstam, Sven
  8. The Opec Boys and the political economy of smuggling in northern Uganda By Els Lecoutere; Kristof Titeca
  9. The Links between Violence and Institutional Change in Hila, Eastern Indonesia By Jeroen Adam
  10. Borders of everyday life: Congolese young people's political identification in contexts of conflict-induced displacement By Christina R. Clark
  11. The formality in property rights: determinant in the military strategy of armed actors By Andrea P. Velásquez Guijo
  12. On-Site Costs and Benefits of Soil Conservation Among Hillside Farmers in El Salvador. By Boris Bravo; Horacio Cocchi
  13. National Rural Employment Guarantee Programme in India - A Review By Raghbendra Jha; Raghav Gaiha; Shylashri Shankar
  15. Monitoring the Realization of the Right to Food: Adaptation and Validation of the U.S. Department of Agriculture Food Insecurity Module to Rural Senegal By Susan Randolph; Ibrahima Gaye; Ibrahima Hathie; Rafael Perez-Escamilla
  16. Impact of school quality on child labor and school: the case of CONAFE Compensatory Education Program in Mexico By F. Rosati; M. Rossi
  17. Children's non-market activities and child labour measurement: A discussion based on household survey data By L. Guarcello; S. Lyon; F. C. Rosati; C. A. Valdivia
  18. Child labour as a response to shocks: evidence from Cambodian villages By L. Guarcello; I. Kovrova; F. C. Rosati
  19. Child labour in Angola: an overview By F. Blanco
  20. Competition and demographics By Amin, Mohammad
  21. Remittances, consumption and investment in Ghana By Page, John; Cuecuecha, Alfredo; Adams, Jr., Richard H.
  22. Accessibility and affordability of tertiary education in Brazil, Colombia, Mexico and Peru within a global context By Blom, Andreas; Murakami, Yuki
  23. Is Africa ' s economy at a turning point? By Page, John; Go, Delfin S.; Arbache, Jorge
  24. New Thinking on Poverty: Implications for Globalisation and Poverty Reduction Strategies By Paul Shaffer
  25. Informal Insurance and Income Inequality By Laczó, Sarolta
  26. Reconciling the Chinese Financial Development with its Economic Growth: A Discursive Essay By Maswana, Jean-Claude
  27. Foreign direct investment in Vietnam: Is there any evidence of technological spillover effects By Nguyen, Anh Ngoc; Nguyen, Thang; Le, Dang Trung; Pham, Quang Ngoc; Nguyen, Dinh Chuc; Nguyen, Duc Nhat
  28. Banking Sector Reforms and Co-operative Credit Institutions in India By Shah, Deepak
  29. Institutional Credit through Cooperatives in Maharashtra: A Region-wise Analysis By Shah, Deepak
  31. Labour Market Effects of Payroll Taxes in Developing Countries: Evidence from Colombia By A. Kugler, M. Kugler
  32. The General Equilibrium Effects of a Productivity Increase on the Economy and Gender in South Africa By Godbertha Kinyondo; Margaret Mabugu

  1. By: Laura Hering; Sandra Poncet
    Abstract: This paper contributes to the analysis of growing income disparities within China. Based on a structural model of economic geography using data on per capita income, we evaluate the extent to which market proximity and spatial dependence can explain growing income inequality between Chinese cities. We rely on a data set of 195 Chinese cities between 1995 and 2002. Our econometric specification incorporates an explicit consideration of spatial dependence effects in the form of spatially lagged per capita income. We provide evidence that the geography of access to markets is statistically significant in explaining variation in per capita income in China, especially so in provinces with low migration inflows which is coherent with NEG theory.
    Keywords: Income inequality; economic geography; spatial dependence; China
    JEL: E1 O1 O5 R1
    Date: 2007–12
  2. By: Gilles Dufrenot; Valerie Mignon; Anne Peguin-Feissolle
    Abstract: We revisit the evidence of the existence of a long-run link between financial intermediation and economic growth, by testing of cointegration between the growth rate of real GDP, control variables and three series reflecting financial intermediation. We consider a model with a factor structure that allows us to determine whether the finance-growth link is due to cross countries dependence and/or whether it characterises countries with strong heterogeneities. We employ techniques recently proposed in the panel data literature, such as PANIC analysis and cointegration in common factor models. Our results show differences between the developed and developing countries. We run a comparative regression analysis on the 1980-2006 period and find that financial intermediation is a positive determinant of growth in developed countries, while it acts negatively on the economic growth of developing countries.
    Keywords: Financial intermediation; growth; common factor; panel data; PANIC analysis
    JEL: C5 G2 O5
    Date: 2007–12
  3. By: Ellen van de Poel (Erasmus University Rotterdam); Owen O'Donnell (University of Macedonia, Thessaloniki, Greece); Eddy Van Doorslaer (Erasmus University Rotterdam)
    Abstract: The rural-urban gap in infant mortality rates is explained using a new decomposition method that permits identification of the ontribution of unobserved heterogeneity at the household and the community level. Using Demographic and Health Survey data for six Francophone countries in Western Sub-Saharan Africa, we find that differences in the distributions of factors that determine mortality – not differences in their effects – explain almost the entire gap. Higher infant mortality rates in rural areas mainly derive from the rural disadvantage in household level characteristics; both observed and unobserved, which explain three-quarters of the gap. Among the observed characteristics, household environmental factors—potable water, electricity and quality of housing materials—are the most important contributors explaining 38% of the gap. Unobserved household level determinants explain 10% of the gap. Community level determinants explain 13% of the gap, including 3% that is due to unobservable community level heterogeneity.
    Keywords: Sub-Saharan Africa; rural-urban inequality; infant mortality; decomposition; unobserved heterogeneity
    JEL: I12 I31 O53
    Date: 2007–08–28
  4. By: Judith Lammers (Tilburg University); Sweder van Wijnbergen (University of Amsterdam)
    Abstract: This study analyses the relation between perceived health status and intertemporal choice. We use data from experiments with real monetary rewards conduEted among students in South Africa to estimate risk and time preferences. These experimental data, based on muitiple price lists developed by Coller & Williams (1999), Holt & Laury (2002), and Harrison et al. (2002, 2005), show that HIV+ agents and participants that perceive to have a high HIV contraction risk are less risk-averse. Although the latter group displays higher discount rates, HP positive agents seem to have substantially lower discount rates, indicating longer time horizons in spite of their lowered life expectancy. However, we show that direct estimates of discount rates can be seriously biased estimators of the pure rate of time preference when other factors than just the pure rate of time preference are not considered simultaneously. We correct for differential mortality risk, risk aversion and differences in anticipated future marginal utility increases and price in these factors when calculating pure rates of time preference from observed discount rates. Once these factors are taken into account, HIV+ agents’ time preferences conform to expectations.
    Keywords: discount rate; risk aversion; perceived HIV infection risk; mortality; time preferences; marginal utility; hyperbolic discounting
    JEL: D81 D91 I18
    Date: 2007–12–18
  5. By: J. Ram Pillarisetti (University of Brunei Darussalam); Jeroen C.J.M. van den Bergh (Autonomous University of Barcelona, ICREA, and VU University Amsterdam)
    Abstract: What is a 'sustainable nation’ and how can we identify and rank ‘sustainable nations’? Are nations producing and consuming in a sustainable way? Aggregate indicators have been proposed to answer these questions. This paper quantitatively compares three aggregate indicators of sustainability: the World Bank’s ‘Genuine Savings’ measure, the ‘Ecological Footprint’ and the ‘Environmental Sustainability Index’. It is concluded that rankings of sustainable nations vary significantly among these indicators. Implications of this disagreement for analysis and policy are suggested.
    Keywords: Adjusted Net Savings; Ecological Debt; Ecological Footprint; Environmental Sustainability Index; Genuine Savings; Sustainability
    JEL: O1 Q2 Q28 F0
    Date: 2008–01–24
  6. By: Sylvain Chabe-Ferret (CERDI, Clermont-Ferrand); Author-Name: Julien Gourdon (CERDI, Clermont-Ferrand); Mohamed Ali Marouani (Université Paris1-Sorbonne/IEDES, DIAL et ERF); Tancrède Voituriez (CIRAD et IDDRI)
    Abstract: (english) The starting point of this paper is given by country situations where trade liberalization is expected to be poverty and inequality alleviating in the long run while inducing a short run increase in poverty or in inequality. The question we ask is what are the distributive aspects of trade which are worth documenting to better help governments integrate trade policies within a global policy framework so as to enhance growth and reduce poverty and inequality. The method followed is a literature review, organized according to three different acceptations of fairness implied by the “Development” objective of world trade liberalization agenda. A “pro-development” trade liberalization agenda should first correct past unfairness in trade regime, which raises the broad issue of country level trade liberalization’s ex post impact assessment. It should equally reduce poverty, which points toward household level assessment. Last, because development is basically a dynamic process, the distributive-dynamic effects of trade liberalization are also considered. Across all these three definitions of fairness, the development objective of the Doha round proves to be an objective which trade liberalization cannot systematically achieve. A synthesis of our ten main results concludes the paper. _________________________________ (français) Nous dressons dans ce papier un bilan de la littérature sur le lien empirique entre libéralisation commerciale et développement selon trois acceptions différentes du « développement » et de l’impératif de justice que ce terme sous-entend dans les négociations à l’OMC. Rebaptisé « cycle du développement », le cycle de Doha a la première ambition de corriger des injustices passées en matière d’accès au marché, dont ont pâti les pays en développement. Les évaluations ex post et transversales de la libéralisation sur ces pays sont mobilisées pour documenter ce grief. Le cycle de Doha doit également contribuer à réduire la pauvreté des ménages. Les évaluations au niveau des ménages sont ici mobilisées et leurs résultats saillants recensés. Enfin, parce que le « développement » est avant tout un processus, les effets dynamiques de la libéralisation sur les inégalités intertemporelles sont passés en revue. Il ressort de ces trois grandes définitions qu’aucun effet systématique de la libéralisation ne s’observe sur le développement. Ce résultat pourrait expliquer, en partie, la difficulté que rencontrent les négociations à l’OMC dans un cycle au nom chargé de promesses intenables si l’on se restreint à l’état de la connaissance économique sur la question.
    Keywords: International Trade, Income Distribution, Poverty, libéralisation, OMC, commerce, inégalités, pauvreté.
    JEL: F11 F16 D3 D5
    Date: 2007–12
  7. By: Tengstam, Sven (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: The clothing sector has been a driver of diversification and growth for countries that have graduated into middle income. Using a partial adjustment panel data model, this study tries to explain the international location of clothing production based on a combination of variables suggested by the Heckscher-Ohlin theory and by New Economic Geography theory. Our Blundell-Bond system estimator results show that closeness to intermediates such as low-cost labor and textile production has a positive effect on clothing production. Factor endowment and closeness to the world market have inversed U-shaped effects. This is expected, because above a certain level several other sectors benefit even more from closeness and factor endowments, driving resources away from the clothing industry.<p>
    Keywords: Clothing Industry; New Economic Geography; Comparative Advantages; Industrial Agglomeration.
    JEL: F12 F13 L13 L67 R12 R30
    Date: 2008–02–21
  8. By: Els Lecoutere (Ghent University); Kristof Titeca (Ghent University)
    Abstract: In this article, we unearth the institution for enforcement of the agreement between the Opec Boys, fuel smugglers and ex-rebels, and a politician, who allows them to conduct illegal smuggling. Rather than the Opec Boys’ threat of rebellion, their promise of political support and refraining from civil disorder matters to inflict cooperation. A repeated play mechanism where the players punish each other for defection but return to cooperation makes up the ‘rules of the game’. Uncovering this endogenously emerged institution for contract enforcement explicitly reveals the importance of political alliances in the second economy in a fragile state environment.
    Date: 2007–11
  9. By: Jeroen Adam (Ghent University)
    Date: 2008–01
  10. By: Christina R. Clark (St Paul University)
    Abstract: Ethnicity and citizenship issues have been among the contributing causes of conflict in the Democratic Republic of Congo (DRC) over the past decades. These identity issues are exacerbated by the large-scale migration of people to and from the DRC and neighbouring Rwanda, Burundi and Uganda, both historically and in the context of recent political violence. Using ethnographic data collected over a 15-month period, this paper explores Congolese young people’s self-identification vis-à-vis ethnicity and citizenship discourses in Kampala and Kyaka II refugee settlement, Uganda. In particular, research findings highlight the conceptual and practical implications of the territorialisation of ‘tribe’ and citizenship for migrants; the consequent conflation of ethnicity and nationality in migration contexts; a reinforced notion and assertion of ‘Congoleseness’ among refugee populations, even when this creates conflict with Ugandans; and, migrants’ limited opportunities for formal political participation. Understanding this political context from which Congolese refugees have fled, and to which they are returning and will return, is important in anticipating the peace and conflict implications of current Congolese migrations.
    Date: 2008–01
  11. By: Andrea P. Velásquez Guijo (Universidad de los Andes)
    Abstract: The causes of internal conflicts are not easy to identify, and in order to understand its dynamics it is important to determine the factors that influence its persistence. The appropriation of economic resources has been identified as a cause of the conflict; however, asset appropriation may not be the main motivation for armed groups. On the contrary, it may be seen as a means of financing, which influences the conflict’s persistence. In Colombia, land appropriation has been a recurrent strategy for illegal armed groups in order to increase their territorial control and the institutional weakness when defining property rights may facilitate illegal appropriation of these assets. The hypothesis presented in this work is that the informality of property rights positively influences the armed groups’ decision of attacking and, therefore, influences the conflict’s intensity. In order to prove this hypothesis, an econometric model is proposed, which explains the conflict’s intensity through economic, social and institutional indicators at a municipal level. The results suggest that with a greater formality in property rights, the conflict’s intensity decreases.
    Keywords: Institutions, armed conflict, property rights, possession and use of land
    JEL: D02 D74 O17 P14 P37 Q15
    Date: 2008–01
  12. By: Boris Bravo (Office of International Affairs and Department Of Agriculture and Resource Economics, University of Connecticut Storrs,CT,USA.); Horacio Cocchi (Office of International Affairs, University of Connecticut, Storrs,CT,USA.)
    Abstract: This study analyses the relationships between farm income, adoption of conservation technologies and output diversification among PAES participants by comparing their performance at two points in time, 2002 and 2005, and against non-participants (control group) in 2005. An endogeneity test confirms that conservation adoption and diversification are endogenous. Therefore, the diversification and adoption equations are estimated first and the predicted values of both endogenous variables are used in a second step as additional explanatory variables in the farm income equation where the latter is estimated using the Tobit technique. The Tobit results are then used to generate the net present value (NPV) and internal rate of return (IRR) of the soil conservation and agroforestry component of PAES between 1998 and 2005. Crop diversification and soil conservation practices exhibit a strong positive association with the length of farmers’ involvement with PAES and their participation in social organizations. Soil conservation practices and crop diversification, measured by an entropy index, significantly increase farm income, which highlights the strategic role of diversification in fighting rural poverty. The positive association between conservation practices and income contrasts with the effects of conservation structures, which is negative but non-significant. A substantial body of literature increasingly recognizes that structures are expensive to build and maintain whereas they add little to the land productivity in the short run. Such drawbacks may clearly affect the profitability of these conservation technologies.Then we compare cost and benefit figures over the life-span of PAES (1998-2005) to compute the IRR and NPV. Average income gains per family per year amount to $280, while the NPV is $13,674,100 at a 12% discount rate with an IRR of 48.45%. These indicators clearly reveal that the soil conservation and agroforestry component of PAES has been highly profitable, which is in line with similar evaluations of natural resource management programs in Central America and elsewhere. Finally, the estimates of NPV and IRR are robust, according to diverse scenarios generated using bootstrapping and sensitivity analysis.
    Date: 2007–11
  13. By: Raghbendra Jha; Raghav Gaiha; Shylashri Shankar
    Abstract: This paper presents results on the participation of rural workers in the National Rural Employment Guarantee Program based on a pilot survey of three villages in Udaipur district, Rajasthan, India. Three villages (Dhundiya, Karanpur and Prithvisingh Ji Ka Khera) were covered. Total number of households interviewed in December, 2007, was 340. Here the focus is on participation in NREG of different socio-economic groups and the determinants of the participation of these groups. It is discovered that the mean participation was 59 days and that targeting was efficient with other labour, self employed in agriculture, SC and ST as well as those with smaller landholdings benefiting the most from the program. Thus the performance of the National Rural Employment Guarantee program has been far from dismal.
    Keywords: National Rural Employment Guarantee Program
    JEL: C25 C81 D69 I38
    Date: 2008
  14. By: Argentino Pessoa (Faculdade de Economia da Universidade do Porto, Portugal)
    Abstract: The developing world needs far more financing for infrastructure than can be provided by domestic public finances alone and through ODA (Official Development Aid). Around middle 1980s a new strategy based on the use of public-private agreements, relying on ODA to enhance the quality of projects, reduce risks and raise profitability was gradually implemented for the provision of infrastructures and public utilities. This paper evaluates the more typical forms of private sector involvement and its actual importance (by type of public utility and by region), and shows that the new strategy has failed in improving the provision of infrastructures in the developing world.
    Keywords: infrastructures, ODA, outsourcing, public-private partnership, public utilities, regulation
    JEL: H4 H54 I18 I28 L33
    Date: 2008–02
  15. By: Susan Randolph (University of Connecticut); Ibrahima Gaye (ENEA); Ibrahima Hathie (ENEA); Rafael Perez-Escamilla (University of Connecticut)
    Abstract: The Universal Declaration of Human Rights first formally recognized food security as a human right. This right was subsequently codified into international law in 1976 when the International Covenant of Economic, Social and Cultural Rights, ICESCR, entered into the force of law. The ICESCR obligates states to respect, protect, and fulfill the right to food, but in the absence of reliable measures of food security, simply monitoring progress towards the realization of the right to food is problematic. Moreover, if duty bearers are to design effective policies and programs to fulfill the right to food, it is essential to have reliable information on who is food insecure. This paper assesses the validity of an adaptation of the United States Department of Agriculture's (USDA) Food Insecurity Survey Instrument to the rural Senegalese context. The advantage of this instrument is that it is simple and inexpensive to administer, identifies the food security status of individual adults as well as children, and assesses the certainty, quality, and quantity aspects of food access. The USDA Food Insecurity Instrument has been successfully adapted to other developed countries and several developing countries as well. Adaptation to the Sub-Saharan context poses particular challenges given the complex household structure, the more limited reach of markets, the myriad of languages spoken within a limited geographic area, and the influence of seasonality on food access. Despite these challenges, this study demonstrates the validity of a reasonably straightforward adaptation of the USDA food insecurity instrument for rural Kaolack, Senegal, attesting to the promise of this approach for measuring food insecurity in developing countries in general and Sub-Saharan African countries in particular.
    JEL: D6 I1 I3 K33 O1 O55
    Date: 2007–10
  16. By: F. Rosati; M. Rossi
    Abstract: This paper focuses on the impact that two different types of policy interventions, namely enhancing school quality and contingent cash transfers , have on child labour and school attendance in Mexico. While there are many studies on the impact of Oportunidades on schooling outcomes, little evidence is available on whether school quality programs such as CONAFE also reduce child labour and help keep children in school. To carry out the analysis, we merge the Oportunidades panel dataset for the years 1997 to 2000 to the CONAFE dataset containing detailed information on the school quality program components. The econometric strategy involves a bivariate probit model for child labor and schooling, both for primary school aged children and adolescents. In this way, we are able to control whether the impact of the program on schooling differs according to the age of the targeted child. Our findings suggest that school quality programs are not only effective in increasing school attendance, but also act as derrents to child labor, especially for children of secondary school age.
    Date: 2007–09
  17. By: L. Guarcello; S. Lyon; F. C. Rosati; C. A. Valdivia
    Abstract: The UN Convention on the Rights of the Child and ILO Convention No. 182, two of the main international legal instruments relating to child labour, both recognise children’s right to be protected from forms of work that adversely affect their health and development, regardless of whether this activity is economic or non-economic, market or non-market, in nature. But these norms have not been translated into a universally-accepted statistical definition of child labour. Widely differing positions prevail among researchers about what kind of activities performed by children should be classified as children’s work, and progressively, as child labour. The current study forms part of a broader research effort directed towards arriving eventually at an internationally acceptable consensus on the statistical definition of child labour. It looks specifically at children’s non-market activity, its classification (i.e., economic or non- economic), its impact on health and education outcomes, and at some of the issues linked to the inclusion of non-market activity in the definition of child labour. The study should be seen as an initial contribution to the discussion, aimed at raising key measurement questions requiring further investigation and deliberation.
    Date: 2007–03
  18. By: L. Guarcello; I. Kovrova; F. C. Rosati
    Abstract: The paper analyzes the effect of different shocks on household decisions concerning children’s involvement in work and school in rural Cambodia. We assess the differential impact of three different types of shocks using propensity score matching and double difference estimates extended to the case of multiple treatments. The findings indicate that household responses to shocks depend considerably on the specific type of shock encounterered. Of the three shocks considered, crop failure is the most damaging in terms of school attendance and child labour in the Cambodian context. Droughts appear far less relevant, while flooding does not seem to have any significant impact on children’s work and school attendance. The findings argue for the targeting of risk management policies to the specific types of shocks most damaging to children.
    Date: 2007–06
  19. By: F. Blanco
    Abstract: This report provides an overview of the child labour phenomenon in Angola, its extent, characteristics and determinants. It is based on the analysis of UNICEF Multiple Cluster Indicators Survey (MICS) 2001.
    Date: 2007–12
  20. By: Amin, Mohammad
    Abstract: Mainstream economics views demographic changes in the structure of households as of little relevance for the behavior of firms or the functioning of markets. The present paper dispels this view by arguing that changes in the number of non-workers could affect the intensity with which consumers search for best prices and therefore the level of competition. The author also analyzes the relationship between income and competition, which some studies suggest is negative. The author argues that the negative relationship is most likely due to the demographic factors discussed.
    Keywords: Markets and Market Access,Education for Development (superceded),Economic Theory & Research,Labor Policies,Emerging Markets
    Date: 2008–02–01
  21. By: Page, John; Cuecuecha, Alfredo; Adams, Jr., Richard H.
    Abstract: This paper uses a new, nationally-representative household survey from Ghana to analyze wit hin a rigorous econometric framework how the receipt of internal remittances (from within Ghana) and international remittances (from African or other countries) affects the marginal spending behavior of households on a broad range of consumption and investment goods, including food, education and housing. Contrary to other studies, which find that remittances are spent disproportionately on consumption (food and consumer goods/durables) or investment goods (education and housing), the findings show that households receiving remittances in Ghana do not spend more at the margin on food, education and housing than households with similar income levels and characteristics that do not receive remittances. When the analysis controls for endogeneity and selection bias, the findings show that any differences in the marginal spending behavior between remittance-receiving and non-receiving households are explained completely by the observed and unobserved characteristics of households. Households in Ghana treat remittances just like any other source of income, and there are no changes in marginal spending patterns for households with the receipt of remittance income.
    Keywords: Population Policies,Access to Finance,Debt Markets,Remittances,
    Date: 2008–02–01
  22. By: Blom, Andreas; Murakami, Yuki
    Abstract: This paper examines the financing of tertiary education in Brazil, Colombia, Mexico and Peru, comparing the affordability and accessibility of ter tiary education with that in high-income countries. To measure affordability, the authors estimate education costs, living costs, grants, and loans. Further, they compute the participation rate, attainment rate, and socio-economic equity index in education and the gender equity index as indicators of accessibility. This is the first study attempting to estimate affordability of tertiary education in Latin America within a global context. The analysis combines information from household surveys, expenditure surveys, and administrative and institutional databases. The findings show that families in Latin America have to pay 60 percent of per-capita income for tertiary education per student per year compared with 19 percent in high-income countries. Living costs are significant, at 29 percent of gross domestic product per capita in Latin America (19 percent in high-income countries). Student assistance through grants and loans plays a marginal role in improving affordability. Moreover, the paper confirms previous findings of low access to tertiary education in the region. One policy implication of the findings is that Latin American governments could take steps to make tertiary education more affordable through student assistance.
    Keywords: Tertiary Education,,Access & Equity in Basic Education,Access to Finance,Teaching and Learning
    Date: 2008–02–01
  23. By: Page, John; Go, Delfin S.; Arbache, Jorge
    Abstract: In this paper, Arbache, Go, and Page examine the recent acceleration of growth in Africa. Unlike the past, the performance is now registered broadly across several types of countries-particularly the oil-exporting and resource-intensive countries and, in more recent years, the large- and middle-income economies, as well as coastal and low-income countries. The analysis confirms a trend break in the mid-1990s, identifying a growth acceleration that is due not only to favorable terms of trade and greater aid, but also to better policy. Indeed, the growth diagnostics show that more and more African countries have been able to avoid mistakes with better macropolicy, better governance, and fewer conflicts; as a result, the likelihood of growth decelerations has declined significantly. Nonetheless, the sustainability of that growth is fragile, because economic fundamentals, such as savings, investment, productivity, and export diversification, remain stagnant. The good news in the story is that African economies appear to have learned how to avoid the mistakes that led to the frequent growth collapses between 1975 and 1995. The bad news is that much less is known about the recipes for long-term success in development, such as developing the right institutions and the policies to raise savings and diversify exports, than about how to avoid economic bad times.
    Keywords: Economic Conditions and Volatility,Governance Indicators,Achieving Shared Growth,Economic Theory & Research,Emerging Markets
    Date: 2008–02–01
  24. By: Paul Shaffer
    Abstract: Three main changes in thinking about poverty have gained increasing currency over the past decade. First, the concept of poverty has broadened, with increasing attention to issues of vulnerability, inequality and human rights. Second, the causal structure has broadened to include causal variables, such as social, political, cultural, coercive and environmental capital. Third, the causal structure has deepened to focus on flows of individuals into and out of poverty, rather than on changes in the stock of poverty, and on strategies of social protection versus poverty reduction. The paper reviews these changes and their implications for globalisation and policy.
    Keywords: globalisation, poverty, vulnerability, inequality, poverty reduction strategies; social protection
    JEL: I32 O10 O15 O19
    Date: 2008–02
  25. By: Laczó, Sarolta
    Abstract: This paper examines the effects of income inequality in a risk sharing model with limited commitment, that is, when insurance agreements have to be self-enforcing. In this context, numerical dynamic programming is used to examine three questions. First, I consider heterogeneity in mean income, and study the welfare effects when inequality together with aggregate income increases. Second, subsistence consumption is introduced to see how it affects consumption smoothing. Finally, income is endogenized by allowing households to choose between two production technologies, to look at the importance of consumption insurance for income smoothing.
    Keywords: risk sharing, limited commitment, inequality, technology choice, developing countries
    JEL: I30 D80 O12
    Date: 2008–02
  26. By: Maswana, Jean-Claude
    Abstract: China‘s strong economic performance and its financial development outcomes are extremely difficult to reconcile with the dominant verdict that its financial system is seriously inefficient. Using an evolutionary perspective as a metaphor, this essay offered suggestions that adaptive efficiency criteria may help solve the apparent puzzle. An adaptive efficiency criterion offers conceptual as well as methodological approaches to resolving this puzzle and contradiction. The essay‘s discussions reveal that much of what critics cite as intermediation inefficiencies –non performing loans, directed credit allocation– are, in fact, a dissipative energy generating required spillovers fuelling the entire system. From this perspective, the essay argues that the relevant evaluation criterion for the Chinese financial system would be ―adaptive efficiency, instead of the conventional allocative one. This arises since China is an emerging economic system characterized primarily by state-owned financial institutions and whose goals are developmental.
    Keywords: Financial Development; China; Adaptive Efficiency; Co-evolutionary Perspective
    JEL: O1 P20 O4
    Date: 2005–03
  27. By: Nguyen, Anh Ngoc; Nguyen, Thang; Le, Dang Trung; Pham, Quang Ngoc; Nguyen, Dinh Chuc; Nguyen, Duc Nhat
    Abstract: In the context of integrating more deeply into the world economy the Vietnamese policy makers have undertaken several measures to attract foreign direct investment to the country, with the culmination of FDI inflows in 2007 reaching over USD 20 billion, an increase of 69% over 2006. The policy has been taken on the ground that the FDI inflows will create employment and bring along the much needed technological advances, which will spill over to domestic firms. In this paper, we use a firm-level panel data constructed from the Census 2000-2005 to investigate not only the horizontal spillovers but also the backward and forward linkages. Adding to the current literature which focused mainly on the spillovers in the manufacturing sector, our paper provide the first estimates of the spillover effects in the service sector (at least in the context of developing countries). We also distinguish between the horizontal output spillovers (which capture demonstration effects and competition effects) and the horizontal employment spillover (which captures the labour mobility effect). The results obtained from our regression models are mixed. Different channels of spillovers are at work for the manufacturing and the service sectors. We find evidence of the positive backward technological spillovers for the manufacturing and positive horizontal spillovers for the service sector.
    Keywords: Foreign Direct Investment; Vietnam; technological spillovers;
    JEL: F15 F23 D24
    Date: 2008–01–01
  28. By: Shah, Deepak
    Abstract: The credit cooperatives in Maharashtra have shown slower growth in their membership and institutional financing. On the other hand, a faster growth has been observed in outstanding against loan advances. A lackadaisical approach of Primary Agriculture Cooperative Credit Societies (PACS) has been observed towards SC/ST members, particularly in terms of their coverage, pattern of loan advances to them and recovery pattern. The study has identified several issues that need to be taken cognizance of to revitalize the rural credit delivery system through the cooperatives. One of these is wide variations in total and crop loan advances across various districts and regions of Maharashtra. A decline in the loan advances with rise in GCA in the Konkan region is another issue, but the most important one among all is the mounting overdues and nonperforming assets (NPAs) of the cooperatives operating in both forward and backward regions of Maharashtra. The viability of two central level credit institutions, viz. Sangli District Central Cooperative Bank and Buldana District Central Cooperative Bank, has been estimated. In order to rejuvenate the rural credit delivery system through cooperatives, the major problems facing the system, viz. high transaction cost, poor repayment performance, mounting NPAs, distributional aspect of credit, low coverage of SC/ST members, etc. need to be tackled with more fiscal jurisprudence reserving exemplary punishment for willful defaults, particularly by the large farmers.
    Keywords: Banking Sector Reforms Cooperative Credit Institutions
    JEL: G00
    Date: 2008
  29. By: Shah, Deepak
    Abstract: In the era of financial sector reforms, sustainability, viability and operational efficiency of rural financial institutions (RFIs) are the major issues that need to be taken cognizance of in ensuring effective rural credit delivery system. However, the major problems plaguing the efficiency of rural credit delivery system are the mounting overdue and Non Performing Assets (NPAs) of RFIs. In the state of Maharashtra, the credit cooperatives have not only shown slower growth in their institutional finance coupled with much slower growth in their membership but also faster growth in outstanding loans as against their loan advances during the reform period. The reason for this dismal scenario can be associated with adverse environment created by the financial sector reforms, which have reduced the entire rural credit delivery through cooperatives to a moribund state. The financial sector reforms have accorded greater flexibility to cooperatives to invest in non-target avenues like shares and debentures of corporates, units of mutual funds, bonds of public sector undertakings, etc. This has affected credit flow from these major institutions operating in rural Maharashtra as most of their loans meant for farm finance are diverted to investments. The estimates of this study also show not only wide variation in total and crop loan advances of PACS but also their outstanding loans, overdue and per member borrowing across different regions of Maharashtra. The outstanding loan of PACS based on per hectare GCA is seen to have exceeded loan advances with a comfortable margin in all the regions of the state. Although increase in outstanding loan with rise in loan advances and GCA is another issue, the most important one among all is the mounting overdue and NPAs of cooperatives that sets a path where from there is no return and, which ultimately leads to inefficiency in cooperative credit delivery. In order to rejuvenate rural credit delivery system through cooperatives, the major problems facing the system, viz., high transaction cost, poor repayment performance, mounting NPAs, distributional aspect of credit, coverage of various social groups, etc., need to be tackled with more fiscal jurisprudence reserving exemplary punishment for willful defaults, particularly large farmers. In fact, insofar as the rural credit delivery system is concerned, the focus should be on strategies that are required for tackling issues such as sustainability and viability, operational efficiency, recovery performance, small farmer coverage and balanced sectoral development.
    Keywords: Cooperative Credit Region-wise Analysis
    JEL: G00
    Date: 2008
  30. By: Shah, Deepak
    Abstract: Despite constraints like rearing of livestock under sub optimal conditions due to low economic status of livestock owners, India has now become the largest producer of milk in the world. The development of Indian dairy sector is an unprecedented success story as it is based on millions of small producers. Government of India is making concerted efforts to raise the per capita availability of milk through increase in productivity of milch animals. In order to achieve this ambitious goal, assistance is being provided to the State Governments for controlling animal diseases, scientific management and upgradation of genetic resources, increasing availability of nutritious feeds and fodder, etc. In the present milieu, when production of dairy products to match international standards has become necessary to compete in international market of milk and milk products, steps need to be initiated to improve quality of Indian milk products with a view to boost export trade of these products in free trade regime and earn valuable foreign exchange as well as provide clean and quality milk to domestic population for their better health.
    Keywords: Export Potential Livestock Sector India
    JEL: Q17
    Date: 2008
  31. By: A. Kugler, M. Kugler (Wilfird Laurier University)
    Abstract: We use a panel of manufacturing plants from Colombia to analyze how the rise in payroll tax rates over the 1980s and 1990s affected the labor market. Our estimates indicate that formal wages fall by between 1.4% and 2.3% as a result of a 10% rise in payroll taxes. This “less-than-full-shifting” is likely to be the result of weak linkages between benefits and taxes and the presence of downward wage rigidities in Colombia. Because the costs of taxation are only partly shifted from employers to employees, employment also falls. Our results indicate that a 10% increase in payroll taxes lowered formal employment by between 4% and 5%. In addition, we find some evidence of less shifting and larger disemployment effects for production than for non-production workers. These results suggest that policies aimed at boosting the relative demand of less-skill workers by reducing social security taxes may be effective in Latin American countries, where minimum wages bind and benefits are often not directly linked to contributions.
    Keywords: Payroll Taxes, Shifting, Wage Rigidities, Minimum Wages
    JEL: J31 J32 H23
    Date: 2008
  32. By: Godbertha Kinyondo (Department of Economics, University of Pretoria); Margaret Mabugu (Department of Economics, University of Pretoria)
    Abstract: This study utilises a computable general equilibrium (CGE) model to examine the effects of economy-wide (SIM 1) and partial (SIM 2) productivity increases on the economy, gender employment, wages, income and welfare in South Africa. The model has 49 sectors, 14 household categories, and 2 primary inputs. SIM 1 results in ‘output’ led employment demand and increased earnings for all skill types of men and women. Skilled men benefits more than others in most sectors. Under SIM 2, productivity has negative employment impact of all skills mostly in labour-intensive sectors. Some displaced labour relocates to expanded export-orientation and service sectors resulting in increased economy-wide jobs and earnings. Unskilled women earnings, however, decline because they are concentrated in low-paying positions. In addition, productivity improves household’s welfare due to reduced commodity prices and improved earnings.
    Keywords: CGE, FDI, South Africa, Gender, Productivity
    JEL: D24 F11 F14 F21 J16
    Date: 2008–02

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