nep-dev New Economics Papers
on Development
Issue of 2008‒03‒01
25 papers chosen by
Jeong-Joon Lee
Towson University

  1. Malthusian Population Dynamics: Theory and Evidence By Quamrul Ashraf; Oded Galor
  2. Knowledge-based productivity in low-tech industries: evidence from firms in developing countries. By Goedhuys, Micheline; Janz, Norbert; Mohnen, Pierre
  3. Is Foreign Direct Investment Good for Growth? Evidence from Sectoral Analysis of China and Vietnam By Tam B. Vu; Byron Gangnes; Ilan Noy
  4. Does inequality make us rebel? A revisited theoretical model applied to South Mexico By Jean-François Maystadt
  5. Why Focus on Spending Needs Factors? The Political Economy of Fiscal Transfer Reforms in Mexico By Ben Lockwood; Mercedes Garcia-Escribano; Giorgio Brosio; José Antonio González Anaya; Ernesto Revilla; Ehtisham Ahmad
  6. The Impact of Trade Liberalization on the Trade Balance in Developing Countries By Yi Wu; Li Zeng
  7. Trade Restrictiveness in the CEMAC Region. The Case of Congo By Maria-Angels Oliva
  8. Evaluating Alternative Approaches to Poverty Alleviation: Rice Tariffs versus Targeted Transfers in Madagascar By David Coady; Paul A. Dorosh; Bart Minten
  9. "Financial Flows and International Imbalances-- The Role of Catching-up by Late Industrializing Developing Countries" By Jan Kregel
  10. How does Vietnam ' s accession to the World Trade Organization change the spatial incidence of poverty? By Roland-Holst, David; Fujii, Tomoki
  11. Achieving accelerated and shared growth in Ghana : a MAMS-based analysis of costs and opportunities By Medvedev, Denis; Bussolo, Maurizio; Bogetic, Zeljko
  12. The effectiveness of policies to control a human influenza pandemic : a literature review By Dutta, Arin
  13. Migrant opportunity and the educational attainment of youth in rural China By Giles, John; de Brauw, Alan
  14. An empirical analysis of Mexican merger policy By De Hoyos, Rafael E.; Avalos, Marcos
  15. The Impact of Remittances on Economic Growth and Development in Africa. By Bichaka Fayissa; Christian Nsiah
  16. How Remittances impact national accounts – A macro analysis By Laurent Gheeraert; Ritha Sukadi
  17. Empowering women via microfinance in fragile states. By Beatriz Armendariz; Nigel Roome
  18. Corporate Governance in Microfinance : Credit Unions By Marc Labie; Anaïs Périleux
  19. Informal Insurance and Income Inequality By Laczó, Sarolta
  20. From Revolution to Evolution: Charting the Main Features of Microfinance 2.0 By Ronald Mendoza; Brandon Vick
  21. Oil Wealth and Economic Growth in Oil Exporting African Countries By Olomola Philip Akanni
  22. Relative Price Variability and Inflation: Evidence from the Agricultural Sector in Nigeria By Obasi O. Ukoha
  23. Sources of Technical Efficiency among Smallholder Maize Farmers in Southern Malawi By Ephraim W. Chirwa
  24. Foreign Direct Investment, human capital and non-linearities in economic growth By Constantina Kottaridi; Thanasis Stengos

  1. By: Quamrul Ashraf; Oded Galor
    Abstract: This paper empirically tests the existence of Malthusian population dynamics in the pre-Industrial Revolution era. The theory suggests that, during the agricultural stage of development, resource surpluses beyond the maintenance of subsistence consumption were channeled primarily into population growth. In particular, societies naturally blessed by higher land productivity would have supported larger populations, given the level of socioeconomic development. Moreover, given land productivity, societies in more advanced stages of development, as reflected by their cumulative experience with the agricultural technological paradigm since the Neolithic Revolution, would have sustained higher population densities. Using exogenous cross-country variations in the natural productivity of land and in the timing of the Neolithic Revolution, the analysis demonstrates that, in accordance with the Malthusian theory, societies that were characterized by higher land productivity and an earlier onset of agriculture had a higher population density in the time period 1-1500 CE.
    Keywords: Growth; Technological Progress; Population Dynamics; Land Productivity; Neolithic Revolution; Malthusian Stagnation
    Date: 2008
  2. By: Goedhuys, Micheline (UNU-MERIT and University of Antwerpen); Janz, Norbert (UNU-MERIT and Aachen University of Applied Sciences); Mohnen, Pierre (UNU-MERIT and University of Maastricht)
    Abstract: Using firm level data from five countries - Brazil, Ecuador, South Africa, Tanzania and Bangladesh - this paper examines the knowledge-based determinants of productivity of firms active in food processing, textiles, and garments and leather products. In particular, it seeks to investigate the importance of various sources of knowledge in explaining productivity in the different industries. The knowledge sources driving productivity performance are very different across sectors. In food processing, firm productivity is most strongly affected by quality of management and foreign ownership linkages. In textiles, firms raise productivity levels by importing new machinery and through research and development. In garments and leather products, R&D and design activities, high quality management and licensing technology from foreign firms are significant productivity determinants. Firms' productivity levels are further depressed by regulatory and financial constraints.
    Keywords: Productivity, Knowledge, R&D, Developing Countries, Food Processing, Textiles, Garments, Leather
    JEL: D24 L66 L67 O14 O31
    Date: 2008
  3. By: Tam B. Vu (College of Business and Economics, University of Hawaii at Hilo); Byron Gangnes (Department of Economics, University of Hawaii at Manoa); Ilan Noy (Department of Economics, University of Hawaii at Manoa)
    Abstract: We estimate the impact of FDI on growth using sectoral data for FDI inflows to China and Vietnam. Previous empirical studies, using either cross-country growth regressions or firm-level micro-econometric analysis, fail to reach a consensus. Our paper is the first to use sectoral FDI inflow data to evaluate the sector-specific impact of FDI on growth. Our results show that, for the two developing-transition economies we examine, FDI has a statistically-significant positive effect on economic growth operating directly and through its interaction with labor. Intriguingly, we find the effects seem to be very different across economic sectors, with almost all the beneficial impact limited to industrial sector. Other sectors appear to gain very little growth benefit from sector-specific FDI.
    Date: 2007–07–01
  4. By: Jean-François Maystadt (Université Catholique de Louvain)
    Abstract: Since Collier and Hoeffler (1998, 2004), it has been supported that inequality, measured at national level, does not affect the risk of conflict. Such a result has been much debated in the literature. Based on a revisited theoretical framework, the purpose of the paper is to explore the role of inequality in localized conflicts. We argue that previous findings might be biased by the myopic nature of cross-country analysis. Consistently with the model, Probit estimations indicate that income inequality measured at municipal level was significant in motivating people to support the rebellion in South Mexico. At this geographical level, we also find an increase in income per capita could exacerbate the risk of conflict in a situation where the rebel leader would have greater incentives to loot the local production compared to the opportunity cost associated with fighting for the worker.
    Keywords: Rebellion, Inequality, Income, Mexico
    JEL: O18 O54 C35
    Date: 2008–02
  5. By: Ben Lockwood; Mercedes Garcia-Escribano; Giorgio Brosio; José Antonio González Anaya; Ernesto Revilla; Ehtisham Ahmad
    Abstract: An equalization system ensures that subnational governments can provide similar level of public services at a comparable level of own tax-effort. This paper focuses on the importance of spending needs factors in the design of equalization transfers as well as special purpose transfers-and the role that this could have in setting the agenda for better accountability for recipient governments, illustrating both design and implementation questions with examples from Mexico. The paper also takes into account the difficult political economy constraints to reforming any system of transfers.
    Keywords: Working Paper , Fiscal policy , Mexico , Government expenditures , Public sector , Economic reforms , Political economy ,
    Date: 2007–10–30
  6. By: Yi Wu; Li Zeng
    Abstract: Using two recently constructed measures of trade liberalization dates, this research studies the impact of trade liberalization on imports, exports, and overall trade balance for a large sample of developing countries. We find strong and consistent evidence that trade liberalization leads to higher imports and exports. However, in contrast Santos-Paulino and Thirwall (2004) who find a robustly negative impact of trade liberalization on the overall trade balance, we only find mixed evidence of such a negative impact. In particular, we find little evidence of a statistically significant negative impact using our first measure of liberalization dates which extends Li (2004). Using a second measure of liberalization dates compiled by Wacziarg and Welch (2003), we find some evidence that liberalization worsens the trade balance, but the evidence is not robust across different estimation specifications, and the estimated impact is smaller than that reported by Santos-Paulino and Thirwall (2004).
    Keywords: Trade liberalization , Balance of trade , Developing countries ,
    Date: 2008–01–30
  7. By: Maria-Angels Oliva
    Abstract: Congo's vital dependence on trade for development stands in contradiction with its trade policy. As a member of the CEMAC, Congo's tariff scheme at least formally is guided by CEMAC's 1994 trade regime agreement. This paper shows CEMAC's customs code is restrictive relative to that of comparable regional integration groups. The paper also discusses a number of quantitative and qualitative barriers to trade applied by Congo that render its current regime complex, nontransparent, and relatively unpredictable, compromising efforts to develop the non-oil sector and the country's export base. Moreover, Congo's high tariffs and other taxes have not led to higher fiscal revenues, as the number of exemptions granted in recent years has surged and customs administration remains weak.
    Keywords: Trade restrictions , Congo, Republic of , Revenues , Trade policy ,
    Date: 2008–01–30
  8. By: David Coady; Paul A. Dorosh; Bart Minten
    Abstract: This paper uses a partial equilibrium framework to evaluate the relative efficiency, distributional and revenue implications of rice tariffs and targeted transfers in Madagascar, especially in the context of identifying their respective roles for poverty alleviation. Although there are likely to be substantial efficiency gains from tariff reductions, these accrue mainly to higher income households. In addition, poor net rice sellers will lose from lower tariffs. Developing a system of well designed and implemented targeted direct transfers to poor households is thus likely to be a substantially more costeffective approach to poverty alleviation. Such an approach should be financed by switching revenue raising from rice tariffs to more efficient tax instruments. These policy conclusions are likely to be robust to the incorporation of general equilibrium considerations.
    Keywords: Poverty , Madagascar , Tariffs , Rice , Revenues ,
    Date: 2008–01–24
  9. By: Jan Kregel
    Abstract: While the traditional approach to the adjustment of international imbalances assumes industrialized countries at a similar level of development and with similar production structures, such imbalances have historically been the result of a process of catching up by late-industrializing developing countries. This may call for an alternative approach that assesses how they can be managed in order to support developing countries' efforts to achieve successful industrialization and integration into the global trade and financial system. In this light, the paper presents an alternative explanation of the existence and persistence of the currently high levels of imbalances and suggests reasons why they may persist in the medium term.
    Date: 2008–02
  10. By: Roland-Holst, David; Fujii, Tomoki
    Abstract: Trade policies can promote aggregate efficiency, but the ensuing structural adjustments generally create both winners and losers. From an incomes perspective, trade liberalization can raise gross domestic product per capita, but rates of emergence from poverty depend on individual household characteristics of economic participation and asset holding. To fully realize the growth potential of trade, while limiting the risk of rising inequality, policies need to better account for microeconomic heterogeneity. One approach to this is geographic targeting that shifts resources to poor areas. This study combines an integrated microsimulation-computable general equilibrium model with small area estimation to evaluate the spatial incidence of Vietnam ' s accession to the World Trade Organization. Provincial-level poverty reduction after full liberalization was heterogeneous, ranging from 2.2 percent to 14.3 percent. Full liberalization will benefit the poor on a national basis, but the northwestern area of Vietnam is likely to lag behind. Furthermore, poverty can be shown to increase under comparable scenarios.
    Keywords: Rural Poverty Reduction,Population Policies,Economic Theory & Research,Achieving Shared Growth
    Date: 2008–02–01
  11. By: Medvedev, Denis; Bussolo, Maurizio; Bogetic, Zeljko
    Abstract: This paper relies on the recently developed Maquette for Millennium Development Goals Simulations (MAMS) model to assess the consistency of alternative scaling-up and policy packages for growth and achievement of the Millennium Development Goals in Ghana. In the baseline scenario, Ghana ' s strong near and medium-term growth outlook puts it in a good posit ion to achieve the poverty Millennium Development Goal ahead of schedule, but other goals are likely to remain elusive before 2015. In the accelerated growth scenario-which addresses the major gaps in water and sanitation and other infrastructure-even more rapid growth and poverty reduction are possible, but important targets in the areas of education, health, and environment remain unattainable. Although growth is complementary to achievement of the Millennium Development Goals, the authors also find important growth-human development trade-offs in the near term. The estimates show that the resource requirements for achieving the key Millennium Development Goals by 2015 are large, reaching US$82 per capita in an illustrative foreign-grant financed scenario. Increased intake and retention of students contribute to rising scarcity of unskilled labor, buttressing unskilled wages, while high demand for skills from the sectors related to the Millennium Development Goals raises the returns to human capital. These developments lead to improvements in the welfare of the poorest members of Ghanaian society and contribute to a small reduction in overall inequality.
    Keywords: Population Policies,Achieving Shared Growth,,Public Sector Expenditure Analysis & Management,Economic Theory & Research
    Date: 2008–02–01
  12. By: Dutta, Arin
    Abstract: The studies reviewed in this paper indicate that with adequate preparedness planning and execution it is possible to contain pandemic influenza outbreaks where they occur, for viral strains of moderate infectiousness. For viral strains of higher infectiousness, containment may be difficult, but it may be possible to mitigate the effects of the spread of pandemic influenza within a country and/or internationally with a combination of policies suited to the origins and nature of the initial outbreak. These results indicate the likelihood of containment success in ' frontline risk ' countries, given specific resource availability and level of infectiousness; as well as mitigation success in ' secondary ' risk countries, given the assumption of inevitable international transmission through air travel networks. However, from the analysis of the m odeling results on interventions in the U.S. and U.K. after a global pandemic starts, there is a basis for arguing that the emphasis in the secondary risk countries could shift from mitigation towards containment. This follows since a mitigation-focused strategy in such developed countries presupposes that initial outbreak containment in these countries will necessarily fail. This is paradoxical if containment success at similar infectiousness of the virus is likely in developing countries with lower public health resources, based on results using similar modeling methodologies. Such a shift in emphasis could have major implications for global risk management for diseases of international concern such as pandemic influenza or a SARS-like disease.
    Keywords: Avian Flu,Disease Control & Prevention,Health Monitoring & Evaluation,Population Policies,HIV AIDS
    Date: 2008–02–01
  13. By: Giles, John; de Brauw, Alan
    Abstract: This paper investigates how reductions of barriers to migration affect the decision of middle school graduates to attend high school in rural China. Change in the cost of migration is identified using exogenous variation across counties in the timing of national identity card distribution, which made it easier for rural migrants to register as temporary residents in urban destinations. The analysis first shows that timing of identification card distribution is unrelated to local rainfall shocks affecting migration decisions, and that timing is not related to proxies reflecting time-varying changes in village policy or administrative capacity. The findings show a robust negative relationship between migrant opportunity and high school enrollment. The mechanisms behind the negative relationship are suggested by observed increases in subsequent local and migrant non-agricultural employment of high school age young adults as the size of the current village migr ant network increases.
    Keywords: Access to Finance,Population Policies,Education For All,Tertiary Education,Secondary Education
    Date: 2008–02–01
  14. By: De Hoyos, Rafael E.; Avalos, Marcos
    Abstract: A newly created dataset including 239 decisions made by the Mexican Federal Competition Commission on horizontal mergers between 1997 and 2001 is used to estimate the different factors affecting the Commission ' s resolution. The paper approximates the decision making process using two different discrete choice models. The results indicate that, contrary to the Commission ' s objective, the presence of efficiency gains increases the probability of a case being issued. The findings also show that factors different from the ones explici tly mentioned by the Commission have a significant effect on the Commission ' s final decision. In particular, the presence of a foreign company among the would-be merger firms significantly increases the likelihood of observing an allowed merger.
    Keywords: Microfinance,Economic Theory & Research,Labor Policies,Bankruptcy and Resolution of Financial Distress,Corporate Law
    Date: 2008–02–01
  15. By: Bichaka Fayissa; Christian Nsiah
    Abstract: For more than half a century, there have been heated debates on the sources of economic growth in developing economies. The perceived factors of economic growth have ranged from surplus labor to capital investment and technological change, foreign aid, foreign direct investment, investment in human capital, increasing returns from investment in new ideas and research and development. The positive or negative impacts of the above listed traditional sources of economic growth have been well documented in literature. Other researchers have also considered the importance of institutional factors such as the role of political freedom, political instability, voice and accountability on economic growth and development. Despite the increasing importance of remittances in total international capital flows, however, the direct or indirect relationship between remittances and economic growth has not been adequately studied. This study explores the aggregate impact of remittances on economic growth within the conventional neoclassical growth framework using an unbalanced panel data spanning from1980 to 2004 for 37 African countries. We find that remittances boost growth in countries where the financial systems are less developed by providing an alternative way to finance investment and helping overcome liquidity constraints.
    Keywords: Workers’ Remittances, Economic Growth, Panel Data, Fixed-Effects, Random-Effects,Arellano-Bond, Quantile Regression
    JEL: E21 F21 G22 J61 O16
    Date: 2008–02
  16. By: Laurent Gheeraert (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels.); Ritha Sukadi (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels.)
    Abstract: Recorded remittances flows have experienced an important growth over the last decade (from 68 billion $ in 1995, to an estimated 297 billion $ in 2006). For developing countries globally, these flows are today – in annual volume – even the second source of external financing, after foreign direct investments and before official direct aid. This has raised interest among policy makers and researchers, who increasingly recognize the potential of remittances as a tool for development. Micro-studies have shed light on potential uses of remittance flows. However, at macro-level, some unanswered questions remain regarding the relative importance of these uses, and the mechanisms through which remittances impact the economics of recipient countries. In order to assess the implications of remittances on long-term growth, we first need to better understand how remittances interact with the key components of long-term growth, such as investment or international commerce. Therefore, we conduct a global empirial study, to show how the effect of received remittances split between investment, consumption and the trade balance in the home country and to examine which local conditions are relevant predictors of remittance uses. We use data covering over 140 countries over the 1970-2005 period, from international statistical agencies (e.g., Worldbank, IMF, UN), and apply panel-data methodologies, following Giuliano and Ruiz-Arranz (2005) and Bosworth and Collins (1999). Early results indicate that, on the global sample, and after controlling for traditional macro-economic variables, more than 75% of remittances are used for consumption purposes, whereas investment uses only concern about 10% of received remittances (the rest of the impact being mainly on the trade balance). However, we also find important cross-country variations, according to a series of factors, such as the volume of received remittance flows, the level of development, or the level of financial sector development.
    Keywords: remittances, consumption, investment, growth
    JEL: F24 O16 G2
    Date: 2007–12
  17. By: Beatriz Armendariz (CERMi, Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels and Harvard University.); Nigel Roome (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels and TiasNimbas Business School, Tilburg Campus, The Netherlands.)
    Abstract: Ever since microfinance was popularized in the mid-1970s in Bangladesh one of its salient features has been the overwhelming representation of women, mostly in fragile states. Institutional structures and social norms in such states are very rigid. Nevertheless, the trend has increased steadily, particularly during the 1980s. According to 2006 Microcredit Summit Campaign Report, seven out of ten microfinance clients are women. Millions of these women are married or live with a partner, and many have children. Relative to initial lending practices by the Grameen Bank in Bangladesh, the bias in favor of loans to women in microfinance has been accompanied by an increasing trend to exclude men from microfinance services, particularly in the context of loans to those with very low income levels. The practice of exclusion might however prove to be counterproductive for it can generate frictions within households, as men feel increasingly threatened in their role as primary breadwinners within the household. In this essay we argue that the promotion of women in microfinance initiatives and the bias against men is taking place in the absence of solid empirical evidence on the effects of this approach on the balance of power in households and on the health, education and well-being of all household members. We hold to these to be key aspects of development. We further argue that this issue deserves research attention given the possibility of unforeseen outcomes and adverse consequences that run counter to the goal to encourage microfinance initiatives as a means to promote development. To clarify the central issues, on the one hand, higher household income in the hands of women might increase health and education for women and their household members –we call this the women-empowerment effect. On the other hand, the exclusion of men from access to subsidized finance might create frictions, and rebound effects that diminish the supportive role women play for their spouses and wider household members in the production of health and education – we call this the women-disempowering effect. In the event that the latter effect dominates over the former, then subsidized microfinance for women might have no overall positive impact, or even worse, a negative impact on health and education at the household level and the women in households. An even more challenging issue is to better understand what influence social and institutional conditions exercise on the empowerment and disempowerment effects experienced by women in microfinance initiatives and the subsequent outcomes in terms of development. This issue matters because microfinance initiatives are specifically directed at household level, and, yet prevailing social and institutional norms are determined at community or societal level. In the circumstances where social and institutional conditions dominate the effects of microfinance initiatives it would imply that microfinance projects might lead to better outcomes when they are accompanied by measures for institutional capacity building that promote the rights and role of women in society. This essay is structured as follows. First, it provides an overview of what we currently know about microfinance, gender, health and education in the context of Bangladesh, where most research has been conducted. Second, some anecdotal evidence from Bangladesh and Africa on the notion of microfinance empowerment is presented and discussed. This raises questions about the influence of institutional structures and norms on the enhanced capacity of women to assert their role as the main providers of health and education, mainly arising from the fact that the empowerment of women generates frictions with their partners, which in turn leads to a potential disempowerment effects. It also suggests that institutional structures and norms serve to constrain the outcomes of microfinance initiatives. Third, anecdotal evidence from Chiapas, in southern Mexico, is outlined which provided the basis for empirical research on new approaches to microfinance now being undertaken in the region. Fourth, the essay outlines this experimental intervention in southern Mexico, where the women borrowers in a microfinance initiative can invite their spouses to be part of women-only solidarity groups as borrowers, in order to see whether potential frictions could be eliminated as a way better to enhance women empowerment and provide for improved access to health and education at the household level. The main challenges of implementing this type of intervention as revealed through the experience to date in the South Mexican experiment are described. Finally, a fifth section spells out some concluding remarks.
    Date: 2008–01
  18. By: Marc Labie (Center for European Research in Microfinance, Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels.); Anaïs Périleux (Center for European Research in Microfinance, Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels.)
    Abstract: As part of the tremendous development experienced by microfinance over the last few years, one type of institution has not generated all the attention that it could : credit unions. This can be explained by the frequent corporate governance weaknesses of this type of institution, which have been identified as a major limit and constraint to their development. This paper tries to deal with this issue by tackling the reasons why corporate governance of credit unions is so difficult to deal with, and by presenting various mechanisms and research areas which could play a role in solving this problem.
    Keywords: microfinance, savings and credit cooperatives, credit unions, corporate governance, growth, development.
    JEL: G21 G3 L2 L3 O16 O17
    Date: 2008–02
  19. 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
  20. By: Ronald Mendoza (United Nations Development Programme, Office of Development Studies); Brandon Vick (Fordham University, Department of Economics)
    Abstract: The past thirty years or so has seen microfinance take off from small group-based lending experiments to several thousand financial service providers (FSPs) serving a growing portion of the developing world today. Nevertheless, the challenge to improve broadbased access to financial services—going beyond credit and into other products such as savings, insurance and money transfer services—remains. Where is the microfinance industry headed? This essay reviews the available evidence, and argues that both the public and private spheres are crucial to the continued dynamism and expansion of the microfinance industry—the private sector as a continued source of product and process innovations; and the public sector taking on a strong market enabling and development role.
    Keywords: Microfinance, market failures, information, innovation
    JEL: D52 O31 Q13
    Date: 2008
  21. By: Olomola Philip Akanni
    Abstract: This study analyses the effect of oil rents on economic growth in oil exporting African countries. It also attempts to provide both theoretical and empirical analysis of the channels of transmission of resource curse of natural resources on growth in these countries. It adopts a panel data regression analysis for the period 1970 to 2000 for 47 oil exporting countries including Africa, and 13 non-oil exporting countries. The major findings are that there was evidence of resource curse in oil exporting countries, including oil exporting African countries, exchange rate and the Dutch disease syndrome do not explain the resource curse in these countries, including Africa, the absence of democracy in oil exporting countries hinders economic growth, and the despicable state of institutions in oil exporting countries encourage grabbing of public resources and oil rents through rent seeking hence retarding economic growth. The basic conclusion from this study is that for oil exporting African countries, as for other oil exporting countries, oil rents have failed to promote growth.
    Date: 2007–09
  22. By: Obasi O. Ukoha
    Abstract: The main objective of this study is to establish quantitative relationships among the relative price volatility of agricultural commodities, inflation and agricultural polices in Nigeria. The data for the study, covering the period 1970–2003, were obtained from publications of the Central Bank of Nigeria, Federal Office of Statistics, and Federal Ministry of Agriculture and Rural Development. Our results show that the effect of inflation on relative price variability among agricultural commodities in Nigeria is non-neutral. Inflation has a significant positive impact on relative price variability in both the long run and the short run. The findings suggest the need for policies that will buffer the agricultural sector from the effects of inflation in the short run, and in addition the crops subsector from the long-run effect of inflation. Similarly, policies that reduce the rate of inflation will minimize relative price variability among agricultural commodities and consequently reduce inefficiency, distortions and misallocation of resources in agriculture that might be caused by inflation. No data points in the study period showed negative inflation. As a result of this, the data could not provide evidence for the effect of deflation on relative price variability. Policies like the Green Revolution and structural adjustment programmes and post-SAP policies increased relative price variability among cash crops in the long run, but influenced food crop prices only in the short run. In addition to this, the Operation Feed the Nation project (OFN) had a significant positive short-run effect on food prices. Thus the agricultural policies under SAP, post-SAP and Green Revolution caused price changes that led to efficient reallocation of resources among cash crops in the long run and food crops in the short run. The policies should be considered in planning for the agricultural sector. On the other hand, the price control policy brought about a reduction in relative price variability among cash crops and consequently led to a misallocation of resources in the sector. Cash crop prices should be allowed to be determined by market forces of demand and supply, and no attempts should be made to fix prices administratively.
    Date: 2007–10
  23. By: Ephraim W. Chirwa
    Abstract: The agricultural sector in Malawi is vital to the economy for incomes and food security. The sector accounts for 35% of national income, generates 90% of foreign exchange, and provides paid and self-employment to 92% of the rural population. One constraint in achieving food security has been the small size and fragmented nature of land holdings among a large proportion of households in Malawi. Nonetheless, since independence there have been several attempts by the government to improve the productivity of food crops on small farms, particularly for maize, including the development of high yielding maize varieties, subsidization of farm inputs, provision of credit facilities, and the liberalization of both farm produce prices and farm produce marketing. While there have been several studies on food production in Malawi, the focus has mainly been on technology development and adoption, production constraints, the impact of structural adjustment policies, and the impact of price and marketing liberalization. This paper estimates technical efficiency among smallholder maize farmers in Malawi and identifies sources of inefficiency using plot-level data. We find that smallholder maize farmers in Malawi are inefficient; the average efficiency score is 46.23% and 79% of the plots have efficiency scores below 70%. The results of the study reveal that inefficiency declines on plots planted with hybrid seeds and for those controlled by farmers who belong to households with membership in a farmers club or association.
    Date: 2007–11
  24. By: Constantina Kottaridi; Thanasis Stengos
    Abstract: This paper examines the effect of FDI on the process of economic growth by allowing the impact to differ both across each country and also across each time period. We apply non-parametric techniques taking into account the previously documented nonlinear effects of initial income and human capital on economic growth. We use a wide range of countries, both developed and developing in order to be able to distinguish potential differential effects between the two groups. Our findings suggest that FDI inflows have a moderately nonlinear effect on growth and that the human capital nonlinear effect in the presence of FDI inflows is similar to the one found elsewhere in the relevant literature.
    Keywords: FDI, human capital, semi-parametric additive model
    Date: 2008
  25. By: Roberto León-González (Centre for Health Economics. University of York (United Kingdom)); Daniel Montolio () Departament d’Hisenda Pública. Universitat de Barcelona. Department of Economics. University of York (United Kingdom). Institut d’Economia de Barcelona (IEB))
    Abstract: The aim of this paper is twofold. Firstly, we study the determinants of growth among a wide set of potential variables for the Spanish provinces (NUTS3). We include several types of private, public and human capital in the group of growth factors. Moreover, we analyse whether Spanish provinces have converged in economic terms in the past decades. The second objective is to overcome the problems of model uncertainty and robustness of estimated parameters in growth regressions using cross-section and panel data techniques. For this purpose, we use a Bayesian Model Averaging (BMA) approach. The Bayesian methodology constructs parameter estimates as a weighted average of linear regression estimates for every possible combination of included variables. The weight of each regression estimates is given by the posterior probability of each model. This technique allows us to obtain parameter estimates that are robust to model specification.
    Keywords: Growth, Convergence, Public Investment, Bayesian Model Averaging

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