nep-dev New Economics Papers
on Development
Issue of 2008‒04‒15
28 papers chosen by
Jeong-Joon Lee
Towson University

  1. Earnings Differentials in the Rural Labour Market: Does Non-Agricultural Employment Pay Better? By Jonasson, Erik
  2. Has the Chinese economy become more sensitive to interest rates? Studying credit demand in China By Koivu, Tuuli
  3. What Effect Does Free Trade in Agriculture Have on Developing Country Populations Around the World? By Fabiosa, Jacinto F.
  4. Meta-Analysis of Empirical Evidence on the Labour Market Impacts of Immigration By Longhi, Simonetta; Nijkamp, Peter; Poot, Jacques
  5. The Transition of Corruption: From Poverty to Honesty By Erich Gundlach; Martin Paldam
  6. Educational Attainment, Growth and Poverty Reduction within the MDG Framework: Simulations and Costing for the Peruvian Case By Gustavo Yamada; Juan F. Castro; Arlette Beltran; Maria A. Cardenas
  7. Tariffs, Trains, and Trade: The Role of Institutions versus Technology in the Expansion of Markets By Wolfgang Keller; Carol H. Shiue
  8. Women's Liberation: What's in It for Men? By Matthias Doepke; Michèle Tertilt
  9. Effects of Learning-by-doing, technology-adoption costs and wage inequality By Rui Leite; Óscar Afonso
  10. Migrants as second-class workers in urban China? A decomposition analysis By Sylvie Démurger; Marc Gurgand; Li Shi; Yue Ximing
  11. Ethnic Coalitions of Convenience and Commitment: Political Parties and Party Systems in Kenya By Sebastian Elischer
  12. Measuring Party Institutionalization in Developing Countries: A New Research Instrument Applied to 28 African Political Parties By Matthias Basedau; Alexander Stroh
  13. The “Ambivalence of the Sacred” in Africa: The Impact of Religion on Peace and Conflict in Sub-Saharan Africa By Matthias Basedau; Alexander De Juan
  14. Growth and structural change in the Vietnamese economy 1996-2003: A CGE analysis By Tran Hoang Nhi; James A. Giesecke
  15. Financial infrastructure, technological shift, and inequality in economic development By Ryo, Horii; Kazuhiro, Yamamoto; Ryoji, Ohdoi
  16. Inverse Ramsey Problem of the Resource Misallocation Effect on Aggregate Productivity By Aoki, Shuhei
  17. The Effects of Foreign Direct Investment in Mexico since NAFTA By Waldkirch, Andreas
  18. Rural to Urban Migration: A District Level Analysis for India By Mitra, Arup; Murayama, Mayumi
  19. Manufacturing In China Today: Employment And Labor Compensation By Judith Banister
  20. The Contribution of Restructuring and Reallocation to China's Productivity and Growth By Haiyan Deng; Robert H. McGuckin; John C. Haltiwanger; Xu Jianyi; Liu Yaodong; Liu Yuqi
  21. Financial Liberalization and Domestic Resource Mobilization in Africa: an Assessment By John Serieux
  22. American and European Financial Shocks: Implications for Chinese Economic Performance By Rod Tyers; Iain Bain
  23. Promoting Biofuels: Implications for Developing Countries By Jörg Peters; Sascha Thielmann
  24. Balance Sheet Effects in Currency Crises: Evidence from Brazil By Marcio M. Janot; Márcio G. P. Garcia; Walter Novaes
  25. Is FDI into China Crowding Out the FDI into the European Union? By Laura Resmini; Iulia Siedschlag
  26. Private Returns to Education in Ghana: Implications for Investments in Schooling and Migration By Sackey
  27. Privatization and Enterprise Performance in Nigeria: Case Study of Some Privatized Enterprises By Afeikhena Jerome
  28. An Exploration of Technology Diffusion By Diego A. Comin; Bart Hobijn

  1. By: Jonasson, Erik (Department of Economics, Lund University)
    Abstract: Several paths out of rural poverty have been discussed in the literature on rural development. One of these is rural non-agricultural employment (RNAE), which is receiving growing attention due to its increasing share of rural household income and its seemingly better earnings potential than agriculture. A household model with a dualistic rural labour market is proposed in this paper to account for potential earnings differentials between agricultural and non-agricultural employment and assessed empirically for the case of Peru. Based on the Peruvian Living Standard Measurement Survey of 1994, the empirical findings suggest that there is an earnings premium ranging between 30 and 50 per cent of rural non-agricultural employment compared to agricultural employment. Lack of education does not seem to constitute an entry barrier to the RNA labour market. For positive returns to education, however, non-agricultural employment appears to be a prerequisite in rural Peru. Labour market segmentation combined with unobserved characteristics is likely to explain the earnings differential.
    Keywords: non-agricultural employment; income diversification; wage differentials; Peru; Latin America
    JEL: J24 J31 J43 O12 R23
    Date: 2008–02–29
  2. By: Koivu, Tuuli (BOFIT)
    Abstract: Chinese authorities have traditionally relied mainly on administrative and quantitative measures in conducting monetary policy, with interest rates playing a less prominent role. Additional support for this view resides in a number of earlier studies that have found that the impact of interest rates on the real economy has been miniscule. However, taking into account numerous reforms in the financial sector and more widely in the Chinese economy, interest rates may have gained some influence in the last few years. It is important to study the effectiveness of interest rates also in light of future reforms of the monetary policy tools in China. Whereas administrative policy measures were effective in guiding the behaviour of state-owned enterprises, the authorities may need to increase the use of more market-oriented monetary policy tools as the share of the economy in private and foreign ownership grows. We use a vector error correction model to study, within a credit demand framework, whether the impact of interest rates in China has become stronger over the last decade. Our results suggest that loan demand has indeed become more dependent on interest rates, albeit the channel from interest rate to the real economy is still weak.
    Keywords: China; monetary policy
    JEL: E52 P24
    Date: 2008–04–03
  3. By: Fabiosa, Jacinto F.
    Abstract: Highlighted in the “battle in Seattle” in 1999, anti-trade sentiments still persist, even with development considerations placed at the core of reform negotiations at the World Trade Organization, in which two-thirds of the members are developing countries. In this paper, the impact of agricultural trade liberalization on food consumption through changes in income and prices is considered. First, agricultural trade liberalization is estimated to raise economic growth by 0.43% and 0.46% in developing and industrialized countries, respectively. Since food consumption of households with lower income are more responsive to changes in income, their food consumption increases more under a trade liberalization regime. Second, trade liberalization is expected to raise world commodity prices in the range of 3% to 34%. Since, in general, border protection is much higher in developing countries and the level of their tariff rates are likely to exceed the rate of price increases, 87% to 99% of the 83 to 98 countries examined would have lower domestic prices under liberalization. Again, given that low-income countries are more responsive to changes in prices, food consumption in these countries would increase more. Finally, empirical evidence shows that if there is any harm on small net selling producers in a net importing country, it is neither large in scale nor widespread because the substitution effect dominates the net income effect from the lower domestic prices.
    Keywords: agricultural trade liberalization, income and price elasticity, income distribution, developing countries.
    Date: 2008–04–04
  4. By: Longhi, Simonetta (ISER, University of Essex); Nijkamp, Peter (Free University of Amsterdam); Poot, Jacques (University of Waikato)
    Abstract: The increasing proportion of immigrants in the population of many countries has raised concerns about the ‘absorption capacity’ of the labour market, and fuelled extensive empirical research in countries that attract migrants. In previous papers we synthesized the conclusions of this empirical literature by means of meta-analyses of the impact of immigration on wages and employment of native-born workers. While we have shown that the labour market impacts in terms of wages and employment are rather small, the sample of studies available to generate comparable effect sizes was severely limited by the heterogeneity in study approaches. In the present paper, we take an encompassing approach and consider a broad range of labour market outcomes: wages, employment, unemployment and labour force participation. We compare 45 primary studies published between 1982 and 2007 for a total of 1,572 effect sizes. We trichotomise the various labour market outcomes as benefiting, harming or not affecting the native born, and use an ordered probit model to assess the relationship between this observed impact and key study characteristics such as type of country, methodology, period of investigation and type of migrant.
    Keywords: immigration, labour market, factor substitution, comparative research, meta-analysis
    JEL: C51 F22 J31 J61
    Date: 2008–03
  5. By: Erich Gundlach; Martin Paldam
    Abstract: Measures of corruption and income are highly correlated across countries. We use prehistoric measures of biogeography as instruments for modern income levels to identify an exogenous long-run income effect. We find that our corruption-free incomes explain the cross-country pattern of corruption just as well as actual incomes. This result suggests that the long-run causality is exclusively from income to corruption. As countries get rich, corruption vanishes and there is a transition of corruption from poverty to honesty.
    Keywords: Long-run growth, Corruption, Biogeography
    JEL: B O1
    Date: 2008–03
  6. By: Gustavo Yamada; Juan F. Castro; Arlette Beltran; Maria A. Cardenas
    Abstract: We propose a model that accounts for the potential feedback between schooling performance, human capital accumulation and long run GDP growth, and links these results with poverty incidence. Our simulation exercise takes into account targets for education indicators and GDP growth itself (as arguments in our planner's loss function) and provides two conclusions: (i) with additional funds which amount to 1 percent of GDP each year, public intervention could, by year 2015, add an extra 0.89 and 1.80 percentage points in terms of long-run GDP growth and permanent reduction in poverty incidence, respectively; and (ii) in order to engineer an intervention in the educational sector so as to transfer households the necessary assets to attain a larger income generation potential in the long run, we need to extend the original set of MDG indicators to account for access to higher educational levels besides primary education.
    Keywords: Millennium development goals, education, human capital, GDP growth, poverty, Peru
    JEL: O41 I32 C25 C41 C61
    Date: 2008
  7. By: Wolfgang Keller; Carol H. Shiue
    Abstract: We study the relative importance of technology and institutions as factors determining the size of markets. The setting of 19th century Europe presents a unique opportunity to address this issue, since it witnessed fundamental change in both dimensions. First, Germany went from around 1,800 customs borders to none through the Zollverein customs treaties. Second, it moved from a situation of monetary disorder to currency unification. And third, the 19th century saw the introduction of steam trains, the key technology that revolutionized transportation between markets. Changes in market integration are studied in terms of the spatial dispersion of grain prices in 68 markets with more than 10,000 observations, located in five different countries and fifteen different German states. We find that the emergence of integrated commodity markets in 19th century Europe is in major part due to the transportation revolution in form of the railways. There is evidence that also customs liberalizations and, more so, currency agreements improved trade possibilities. However, the impact of trains was larger than the effect of these institutions: about three times larger over the long horizon, and around 50% larger for the relatively short time horizon of twenty-five years. These results suggest that as significant as institutional factors were for the expansion of markets, technology factors may have been even more important.
    JEL: F1 F3 N10 O24 O3
    Date: 2008–04
  8. By: Matthias Doepke; Michèle Tertilt
    Abstract: The nineteenth century witnessed dramatic improvements in the legal rights of married women. Given that these changes took place long before women gained the right to vote, they amounted to a voluntary renouncement of power by men. In this paper, we investigate men's incentives for sharing power with women. In our model, women's legal rights set the marital bargaining power of husbands and wives. We show that men face a tradeoff between the rights they want for their own wives (namely none) and the rights of other women in the economy. Men prefer other men's wives to have rights because men care about their own daughters and because an expansion of women's rights increases educational investments in children. We show that men may agree to relinquish some of their power once technological change increases the importance of human capital. We corroborate our argument with historical evidence on the expansion of women's rights in England and the United States.
    JEL: D13 E13 J16 N30 O43
    Date: 2008–04
  9. By: Rui Leite (Faculdade de Economia, Universidade do Porto, Portugal); Óscar Afonso (CEMPRE and Faculdade de Economia, Universidade do Porto, Portugal)
    Abstract: In the dominant literature, the technological-knowledge bias that drives wage inequality is determined by the market-size channel. We develop an endogenous growth model with two technologies in which: a specific quality of labour, low or high-skilled, is combined with a specific set of quality-adjusted intermediate goods; the market-size channel is practically removed; adoption costs and learning-by-doing are linked with labour endowments. By solving transitional dynamics numerically, we show that changes in the supply of labour affect learning-by-doing and technology-adoption costs, which, in turn, influence the technological-knowledge bias and thus wage inequality. The proposed mechanisms can accommodate facts not explained by the previous literature.
    Keywords: Learning-by-doing; Adoption costs; Technological-knowledge bias; Wage inequality; Numerical simulations
    JEL: C61 J31 O31 O33
    Date: 2008–04
  10. By: Sylvie Démurger; Marc Gurgand; Li Shi; Yue Ximing
    Abstract: In urban China, urban resident annual earnings are 1.3 times larger than long term rural migrant earnings as observed in a nationally representative sample in 2002. Using microsimulation, we decompose this difference into four sources, with particular attention to path dependence and statistical distribution of the estimated effects: (1) different allocation to sectors that pay different wages (sectoral effect); (2) hourly wage disparities across the two populations within sectors (wage effect); (3) different working times within sectors (hours effect); (4) different population structures (population effect). Although sector allocation is extremely contrasted, with very few migrants in the public sector and very few urban residents working as self-employed, this has no clear impact on differential earnings. Indeed, the sectoral effect is not robust to the path followed for the decomposition. We show that the migrant population has a comparative advantage in the private sector: increasing its participation into the public sector would not necessarily improve its average earnings. The second main finding is that the population effect is robust and significantly more important than wage or hours effects. This implies that the main source of disparity between the two populations is pre-market (education opportunities) rather than on-market.
    Date: 2008
  11. By: Sebastian Elischer (Jacobs University Bremen)
    Abstract: This paper analyzes the role of ethnicity in shaping the character of Kenya’s political parties and its party system since 1992. Drawing on a constructivist conception of ethnicity, it uses a framework of comparison derived from Donald Horowitz and distinguishes between three party types: the mono-ethnic party, the multi-ethnic alliance type and the multi-ethnic integrative type. It shows that although Kenyan parties have increasingly incorporated diverse communities, they have consistently failed to bridge the country’s dominant ethnic cleavages. Consequently, all of Kenya’s significant parties represent ethnic coalitions of convenience and commitment and, thus, ethnic parties. The paper further states that the country’s post-2007 political environment is a by-product of the omnipresence of this party type.
    Keywords: Social cleavages, ethnicity, political party identification, Kenya
    Date: 2008–02
  12. By: Matthias Basedau (GIGA Institute of African Affairs); Alexander Stroh (GIGA Institute of African Affairs)
    Abstract: The institutionalization of political parties is said to be important for democratic development, but its measurement has remained a neglected area of research. We understand the institutionalization of political organizations as progress in four dimensions: roots in society, level of organization, autonomy, and coherence. On this basis we construct an Index of the Institutionalization of Parties (IIP), which we apply to 28 African political parties. The IIP uses extensive GIGA survey and fieldwork data. Initial results reveal a more differentiated degree of institutionalization than is commonly assumed. In addition to illustrating overall deficits in party institutionalization, the IIP highlights an astonishing variance between individual parties and—to a lesser extent—between national aggregates. Further research on party institutionalization remains necessary, particularly regarding its causes and consequences.
    Keywords: Political parties, sub-Saharan Africa, institutionalization, stability, legitimacy
    Date: 2008–02
  13. By: Matthias Basedau (GIGA Institute of African Affairs); Alexander De Juan (University of Tübingen)
    Abstract: Given the widespread focus on socioeconomic factors, it comes as no surprise that religion is neglected in most theoretical explanations of African civil conflicts. While scholarly interest is increasing in light of the civil wars in Sudan, Nigeria, and northern Uganda, no systematic empirical analysis has been undertaken to date. Hence, this paper aims to provide a preliminary assessment of the role of religions in sub-Saharan civil conflicts. Quantitative and qualitative analysis based on a newly compiled database including 28 violent conflicts show that religion plays a role more frequently than is usually assumed and that the effects of religions are principally ambiguous. Religious actors and institutions have escalating effects in many cases, yet more often they become active for peace. Religious identities and ideas seem to have a particular impact on conflict. Even though religion seems secondary when compared to classical “risk factors,” the findings demonstrate that religious factors have to be taken seriously when analyzing civil conflicts in Africa.
    Keywords: Religion, Africa, ambivalence, civil war, violent conflict
    Date: 2008–03
  14. By: Tran Hoang Nhi; James A. Giesecke
    Abstract: We use MVN - a dynamic CGE model of the Vietnamese economy - to investigate the Vietnamese economy's rapid growth and structural change over the period 1996 to 2003. We do this in two steps. First, we estimate changes in variables representing production technologies, consumer preferences, government policy and other structural features of the economy. Movements in these structural and policy variables are then used to explain the recent history of Vietnam's rapid growth and structural change. We find the most important sources of growth and change to be technical improvements, favourable shifts in foreign preferences for Vietnamese goods and employment growth. Other important factors include movement in household preferences away from primary products and towards manufactures and services, expansion in agricultural land supply, and tax reform.
    Keywords: CGE model, Vietnam
    JEL: C68 D58 F14 O12
    Date: 2008–02
  15. By: Ryo, Horii; Kazuhiro, Yamamoto; Ryoji, Ohdoi
    Abstract: This paper presents an overlapping generations model with technology choice and imperfect financial markets, and examines the evolution of income distribution in economic development. The model shows that improvements in financial infrastructure facilitate economic development both by raising the aggregate capital-labor ratio and by causing a technological shift to more capital-intensive technologies. While a higher capital-labor ratio under a given technology reduces inequality, a technological shift can lead to a concentration of the economic rents among a smaller number of agents. We derive the condition under which an improvement in financial infrastructure actually decreases the average utility of agents.
    Keywords: Technological Shift; Income Distribution; Rents; Enforcement; Credit Rationing
    JEL: O16 O14
    Date: 2008–03–22
  16. By: Aoki, Shuhei
    Abstract: This paper examines the extent to and the conditions under which resource misallocation negatively affects aggregate productivity in a model of heterogeneous firms to the highest degree. I analytically derive the minimum aggregate total factor productivity (TFP) under resource misallocation, when frictions are modeled as the taxes levied on a firm's output, and the range of these taxes is provided. I find that the lower limit of the minimum aggregate TFP is the TFP under perfect substitute goods and constant returns to scale technology. Further, the minimum aggregate TFP is achieved when the proportion of firms in the lowest tax level is small or when the TFP level of these firms is low.
    Keywords: distortions; firm heterogeneity; misallocation; productivity; Ramsey problem
    JEL: O11 O41
    Date: 2008–03–26
  17. By: Waldkirch, Andreas
    Abstract: Foreign Direct Investment (FDI) into Mexico has increased dramatically since the inception of the North American Free Trade Agreement (NAFTA), raising questions about its effect on the Mexican economy. This paper studies the impact of FDI on industry productivity and wages over the first ten years of NAFTA, paying particular attention to the source country and destination industry of investments. It also offers a detailed description of the evolution of FDI, its components, sectoral composition, and sources from 1994-2005. There is evidence of a positive effect of FDI on productivity, particularly total factor productivity (TFP). The effect on wages is negative or zero at best, suggesting a divergence from productivity over this time period. The positive productivity effect stems largely from U.S. FDI into non-maquiladora industries, which receive over two thirds of manufacturing FDI. There is no evidence that more distant source countries have a differential effect. Consistent with theoretical expectations, FDI into maquiladoras benefits unskilled workers at the expense of skilled workers. This effect may be strong enough to dampen income inequality.
    Keywords: Foreign Direct Investment; Mexico; NAFTA; Productivity; Wages; Income Inequality
    JEL: F15 F23 O15 F21
    Date: 2008–03–28
  18. By: Mitra, Arup; Murayama, Mayumi
    Abstract: Based on the recent census data this paper analyses the district level rural to urban migration rates (both intra-state and the inter-state) among males and females separately. Both the rates are closely associated irrespective of whether the migrants originate from the rural areas within the state or outside the state. This would suggest that women usually migrate as accompanists of the males. Though many of the relatively poor and backward states actually show large population mobility, which is primarily in search of a livelihood, the mobility of male population is also seen to be prominent in the relatively advanced states like Maharashtra and Gujarat. Rapid migration of rural females within the boundaries of the states is, however, evident across most of the regions. The social networks, which play an important role in the context of migration are prevalent among the short distance migrants and tend to lose their significance with a rise in the distance between the place of origin and destination though there are some exceptions to this phenomenon. Besides the north-south divide in the Indian context is indeed a significant phenomenon with a few exceptions of metropolitan cities. As regards the effect of factors at the place of destination, prospects for better job opportunities are a major determinant of male migration. Low castes and minority groups tend to pull migration through network effects. Among females also these effects are evident though with the inclusion of the male migration rate they become less significant. Finally the paper brings out the policy implications.
    Keywords: Rural-to-urban migration, Poverty, India, 2001 census, Gender, Population movement
    JEL: J61 R23
    Date: 2008–03
  19. By: Judith Banister (The Conference Board)
    Abstract: China is now the global manufacturing workshop. There is strong interest throughout the world in understanding what makes China so competitive in manufacturing. Clearly one component of that competitiveness is the low cost of labor in China’s manufacturing sector. This report analyzes and evaluates the most complete recent data on China manufacturing employment and labor compensation, which come from China’s First National Economic Census.
    Date: 2007–10
  20. By: Haiyan Deng (The Conference Board); Robert H. McGuckin (The Conference Board); John C. Haltiwanger (University of Maryland); Xu Jianyi (NBS); Liu Yaodong (NBS); Liu Yuqi (NBS)
    Abstract: China has exhibited very rapid measured aggregate productivity growth. At the same time, the structure of its markets and the structure of businesses have been changing at an equally rapid rate. In this paper, we measure the extent of restructuring and the reallocation of resources (including the reallocation of jobs) and then quantify the contribution of the reallocation and restructuring to the aggregate productivity growth of China's industrial structure. Our gross job flow analysis illustrates that reallocation and restructuring took many forms including shedding of jobs by government controlled enterprises and the increasing share of employment for FDI joint ventures. However, the analysis shows that it is not just shifts between firm types that are important but also reallocation and restructuring within firm types. For example, we find a high pace of job reallocation within SOEs and FDI joint ventures over and above what is needed to accommodate the net changes for these firm types (as high as 28 and 22 percent, respectively). We find evidence that the restructuring and reallocation contributed significantly to the high productivity growth. For example, our analysis shows that more than half of the labor productivity growth in 2001 is due to reallocation and restructuring. In that year, the industrial sector exhibited a labor productivity growth rate of around 22 percent which in the absence of reallocation and restructuring would have been around 10 percent.
    Date: 2007–12
  21. By: John Serieux (Assistant Professor, Dept. of Economics, University of Manitoba)
    Abstract: Sub-Saharan Africa?s improving growth record in the first decade of the twenty-first century gives some hope that the potential for achieving the Millennium Development Goals will be enhanced by the improved economic conditions of the disadvantaged citizens of these countries. However, growth alone, even if it were much higher, would not be sufficient to ensure the achievement of the MDGs. The resources required for achieving them are beyond the capacity of most of these countries at present, and in the immediate future. Thus, for the region, the MDGs will be achievable only with substantial external resource inflows. In the immediate term, these resource inflows might also help to relieve the savings and foreign exchange constraints faced by most of these countries. However, movement to a higher growth and human development trajectory and eventual progress beyond such heavy dependence on external assistance require that these countries continue to develop their capacity for domestic resource mobilization. This is an area where progress is decidedly wanting for much of the region. Since 1980, Africa has had the weakest domestic resource mobilization record of any region (see Table 1 of the Appendix). On average, foreign savings have been necessary for funding more than 35 per cent of the region?s already low investment levels (see Table 2 of the Appendix). And, more to the point, these foreign resource inflows have come largely in the form of official development assistance rather than private capital flows. Given this record, if the region does not significantly improve domestic resource mobilization over the next decade, increased resource inflows pose a serious risk of entrenching (or institutionalizing) aid dependency?a situation in which high levels of external assistance perpetuate or exacerbate low savings rates. In this situation, countries lose the capacity to mobilize the resources necessary for generating even moderate growth in the absence of such aid. (...)
    Keywords: Financial Liberalization, Domestic Resource Mobilization in Africa: an Assessment
    Date: 2008–04
  22. By: Rod Tyers; Iain Bain
    Abstract: With exports almost half of its GDP and most of these directed to Europe and North America, negative financial shocks in those regions might be expected to retard China's growth. Yet mitigating factors include the temporary flight of North American and European savings into Chinese investment and some associated real exchange rate realignments. These issues are explored using a dynamic model of the global economy. A rise in American and European financial intermediation costs is shown to retard neither China's GDP nor its import growth in the short run. Should the Chinese government act to prevent the effects of the investment surge, through tighter inward capital controls or increased reserve accumulation, the associated losses would be compensated by a trade advantage since its real exchange rate would appreciate less against North America than those of other trading partners. The results therefore suggest that, so long as the financial shocks are restricted to North America and Western Europe, China's growth and the imports on which its trading partners rely are unlikely to be significantly hindered.
    JEL: C68 E17 F21 F17 F43 F47 O5
    Date: 2008–04
  23. By: Jörg Peters; Sascha Thielmann
    Abstract: Interest in biofuels is growing worldwide as concerns about the security of energy supply and climate change are moving into the focus of policy makers. With the exception of bioethanol from Brazil, however, production costs of biofuels are typically much higher than those of fossil fuels.As a result,promotion measures such as tax exemptions or blending quotas are indispensable for ascertaining substantial biofuel demand.With particular focus on developing countries, this paper discusses the economic justification of biofuel promotion instruments and investigates their implications. Based on data from India and Tanzania, we find that substantial biofuel usage induces significant financial costs. Furthermore, acreage availability is a binding natural limitation that could also lead to conflicts with food production.Yet, if carefully implemented under the appropriate conditions, biofuel programs might present opportunities for certain developing countries.
    Keywords: Renewable energy, environmental policy, government policy, economic development
    JEL: O38 Q42 Q56
    Date: 2008–01
  24. By: Marcio M. Janot; Márcio G. P. Garcia; Walter Novaes
    Abstract: "Third-generation currency crises models" argue that capital losses from exchange-rate depreciation propagate the crises to the productive sector. To test these models, we use a firm-level dataset that allows us to measure currency mismatches around the 2002 Brazilian currency crisis. We find that, between 2001 and 2003, firms that shortly before the crisis had large currency mismatches decreased their investment rates by 8.1 percentual points, relatively to other public firms. Moreover, we show that the currency depreciation implied large competitive gains for the exporters, and yet the investment of exporters with large currency mismatches fell by 12.5 percentual points, relatively to other exporters. The estimated falls in investment are economically very relevant, thereby corroborating the relevance of third generation models negative balance sheet effects.
    Date: 2008–04
  25. By: Laura Resmini (University of Valle d’Aosta, Aosta, and ISLA, University “Luigi Bocconi”, Milan, Italy); Iulia Siedschlag (Economic and Social Research Institute (ESRI))
    Abstract: We estimate an augmented gravity model to analyse the effects of FDI into China originating in OECD countries on FDI into EU and other countries over the period 1990-2004. Our results suggest that on average, ceteris paribus, over the analysed period, FDI inflows into China have been complementary to FDI inflows into EU15 countries but they have substituted FDI into the new EU countries in Central and Eastern Europe. In particular, small economies such as Bulgaria and the Baltic countries have been affected negatively by the surge in the FDI into China. This FDI diversion appears in the case of efficiency-seeking FDI.
    Keywords: Foreign direct investment, China, European Union
    Date: 2008–03
  26. By: Sackey
    Abstract: This study examines the determinants of school attendance and attainment in Ghana with a view to deriving implications for policy direction. Using micro-level data from the Ghana living standards surveys, our gender disaggregated probit models on current schoolattendance and attainment show that parental education and household resources are significant determinants of schooling. The effect of household resources on current schoolattendance is higher for daughters than it is for sons. It appears that for male and female children the impact of household resources on school attendance has reduced, statistically speaking. Father’s schooling effects on the education of female children decreased between 1992 and 1999. Mother’s schooling effects on school attendance of daughtersin 1992 were not significantly different from those realized in 1999. However, the effects of mother’s schooling levels on school attendance of male children appear to have reduced. Other significant determinants of children’s schooling are the age of children, school infrastructure, religion and urban residency. The paper concludes that education matters and has an intergenerational impact. Arguably, sustainable poverty reduction approaches cannot ignore the role of education and implications for employment, earnings and social development. Hence, gender sensitive policies to ensure educational equity are vital.
    Date: 2008–01
  27. By: Afeikhena Jerome
    Abstract: Despite an impressive level of privatization activity across Africa and the upsurge in research on the operating performance of privatized firms in both developed and developing economies, our empirical knowledge of the privatization programme in Africa is limited. This study appraises the post-privatization performance of some privatized enterprises in Nigeria. The specific indicators examined are profitability, productive efficiency, employment, capital investment, output, prices and taxes. The study measures the change in any given indicator of performance by comparing its average value five years before and five years after privatization. Data envelopment analysis (DEA) is also deployed to assess changes in the level of technical efficiency in the selected enterprises. The results, albeit mixed, show significant increases in these indicators. Privatization is also associated with increase in technical efficiency in the affected enterprises. Reduction of politically motivated resource allocation has unquestionably been the principal benefit of privatization in Nigeria.
    Date: 2008–02
  28. By: Diego A. Comin (Harvard Business School, Business, Government and the International Economy Unit); Bart Hobijn (Federal Reserve Bank of New York)
    Abstract: We develop a model that, at the aggregate level, is similar to the one sector neoclassical growth model, while, at the disaggregate level, has implications for the path of observable measures of technology adoption. We estimate our model using data on the diffusion of 15 technologies in 166 countries over the last two centuries. We evaluate the implications of our estimates for aggregate TFP and per capita income. Our results reveal that, on average, countries have adopted technologies 47 years after their invention. There is substantial variation across technologies and countries. Over the past two centuries, newer technologies have been adopted faster than old ones. The cross-country variation in the adoption of technologies accounts for at least a quarter of per capita income differences.
    Keywords: economic growth, technology adoption, cross-country studies.
    JEL: E13 O14 O33 O41
    Date: 2008–03

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