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on Development |
| By: | Sabina Alkire |
| Abstract: | The aim of this paper is to draw attention to ‘missing dimensions’ of poverty data – dimensions that are of value to poor people, but for which we have scant or no data. Amartya Sen frames development as the process of expanding the freedoms that people value and have reason to value. Although the most widely-known measure of human development includes income, longevity, and education, many have argued that people’s values, and consequently multidimensional poverty, extends beyond these domains. In order to advance these multiple areas, it is at times necessary to conduct empirical studies using individual or household-level data on multiple dimensions of poverty. A critical barrier for international analyses of multidimensional poverty is that few or no high-quality indicators are available across countries in key domains that are deeply important to poor people and of potentially critical instrumental importance. |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:qeh:ophiwp:ophiwp001&r=dev |
| By: | Vijaya Ramachandran; Manju Kedia Shah; Gaiv Tata |
| Abstract: | Prior research has emphasized that the high costs and risks arising from a poor investment climate—lack of clear property rights, macro-instability, the burden of regulation and taxation, poor infrastructure, lack of finance, and lack of human capital—have impeded the development of the private sector in sub-Saharan Africa, despite adoption of structural adjustment and liberalization policies. Given the resulting wide differentials in productivity, it is not surprising that most of the African manufacturing sector has not been competitive in exports. However, trade liberalization should have had greater impact on domestic markets for manufactured goods in Africa, leading to either a rapid decline in the size of the manufacturing sector due to import competition, or to a rapid increase in productivity of surviving enterprises. In fact, neither has happened to any significant degree over the last 20 years. Based on data from enterprise surveys conducted by the Regional Program for Enterprise Development at the World Bank, this paper argues that some African manufacturing enterprises have continued to retain their market leadership in domestic markets by investing in relationships with governments, thereby maintaining high barriers to entry and a reduced degree of competition. This influence is particularly severe in some countries in Africa and is often driven by relatively few enterprises. In particular, Zambia and Kenya seem to suffer a high degree of influence-peddling, while Mali and Senegal are at the low end of the scale. Comparisons with selected countries in Asia show that lobbying in East Africa is different than in Asia—larger enterprises, and enterprises with higher market share lobby in Africa, as compared to Asia where market share is not a significant determinant of lobbying activity. The results imply that attempts to improve the productivity of the African private sector through focusing only on the removal of trade barriers, improvements in the investment climate, and private sector capacity building will at most be partially successful. In order to escape from the current low-level equilibrium trap, future reforms will need to explicitly consider political economy issues. From this perspective, the role of regional integration as a tool of competition policy will need to be given greater consideration. |
| Keywords: | Africa, economic reform, influence-peddling |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:127&r=dev |
| By: | Nancy Birdsall |
| Abstract: | In this working paper I define inclusive growth as growth conducive to increasing the size and economic command of the middle class. I suggest a definition of the middle class based on absolute and relative measures of country-based income distributions, and present evidence of change in the size of the “middle class” for selected developing countries. I then review how macroeconomic policies shape the environment and incentives for inclusive growth, focusing on three areas: fiscal discipline, the more rule-based the better; a fair tax and redistribution system; and a business friendly exchange rate. The adoption of macro policies that favor the middle class lays the foundation for more economically and politically sustainable development. While on the whole sound macro policy that is good for the middle class is also likely to be pro-poor, tradeoffs may exist with respect to tax, expenditure and transfer programs and responses to economic shocks. Governments should consider the weighted welfare outcomes of alternative approaches to macro policy, rather than un-weighted growth or overly weighted poverty outcomes. |
| Keywords: | macroeconomics, sustainable development, middle class |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:130&r=dev |
| By: | Steve Radelet |
| Abstract: | Liberia was decimated by 25 years of gross economic mismanagement and 14 years of brutal civil war. GDP fell by over 90% in less than two decades, one of the largest economic collapses in the world since World War II. This paper explores the challenges in reinvigorating rapid, inclusive, and sustained economic growth in the post-war environment. It stresses the importance of not just re-igniting growth, but rebuilding the economy in a way that avoids the substantial income concentration of the past and creates significant economic opportunities to groups that were marginalized and excluded in the past. It examines the new government’s progress so far, including the major steps it has taken in its first 18 months and the unique way that it has organized government-donor relations. The paper traces the extent of Liberia’s collapse compared to other African countries, and examines the patterns of post-conflict recovery in several other African cases as a basis for examining the potential for renewed growth in Liberia. It suggests that Liberia’s recovery is likely to proceed in three phases (i) an immediate phase driven by donor flows and a rebound in urban services, (ii) the renewal of traditional natural resource-based activities, and (iii) medium-term development of downstream processed products, other manufactures, and services that can compete on global markets. The paper argues that the single highest priority for the economy is rebuilding infrastructure, and especially roads, which are crucial to nearly every aspect of Liberia’s recovery: maintaining security, connecting farmers to markets, creating jobs, opening concession areas, reducing costs for manufacturing, and effectively delivering basic health and education services. Financing road construction is a major challenge, however, since most donors provide relatively little financing for roads compared to other activities. Other key issues are effectively managing natural resource production in order to gain the key benefits and avoid some problems that other countries have faced, improve the business climate, and invest in education and training programs to improve the skills of Liberian workers over time. |
| Keywords: | Liberia, post-conflict development |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:133&r=dev |
| By: | David Roodman |
| Abstract: | Like many public policy debates, that over whether foreign aid works carries on in two worlds. Within the research world, it plays out in the form of papers full of technical language, formulas, and numbers. Outside, the arguments are plainer and the audience broader, but those academic studies remain a touchstone. While avoiding jargon, this paper reviews recent, contending studies of how much foreign aid affects country-level outcomes such as economic growth and school attendance rates. This particular kind of study is ambitious: it is far easier to evaluate a school-building project, say, on whether the school was built and children filled its seats than to determine whether all aid, or large subcomponents of it, made the economy grow faster. Because of its ambition, this literature has attracted attention from those hoping for clear answers on whether aid "works.' On balance, the quantitative approach to exploring grand questions about aid effectiveness, which began 40 years ago, was worth trying and is probably worth pursuing somewhat further. But the literature will probably continue to disappoint as often as it offers hope. Perhaps the biggest challenge is going beyond documenting correlations to demonstrating causation—not just that aid went hand-in-hand with economic growth, but caused it. Aid has eradicated diseases, prevented famines, and done many other good things. But given the limited and noisy data available, its effects on growth in particular probably cannot be detected. |
| Keywords: | foreign aid, economic growth, data mining |
| JEL: | B40 F35 O11 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:135&r=dev |
| By: | Paul Hubbard |
| Abstract: | One of the popular stories told (and taught) in development circles is how corruption was slashed in Uganda simply by publishing the amount of monthly grants to schools. This paper takes a deeper look at the facts behind the Uganda story and finds that while information did indeed play a critical role, the story is much more complicated than we have been led to believe. A dramatic drop did occur in the percentage of funds being diverted from Uganda’s capitation grant. But to attribute this leakage solely to the monthly release of grant data by the government risks ignoring the major funding in which this transparency campaign was imbedded. |
| Keywords: | education, Uganda, corruption, transparency |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:136&r=dev |
| By: | Christopher Blattman |
| Abstract: | What is the political legacy of violent conflict? This paper presents evidence for a link between war, violence and increased individual political participation and leadership among former combatants and victims of violence, and uses this link to understand the deeper determinants of individual political behavior. The setting is northern Uganda, where rebel recruitment methods generated quasi-experimental variation in who became a rebel conscript and who did not. Original survey data shows that the exogenous element of conscription (by abduction) leads to significantly greater political participation later in life. The principal determinant of this increased political participation, moreover, appears to be war violence experienced. Meanwhile, abduction and violence do not appear to affect multiple non-political types of community participation. I show that these patterns are not easily explained by models of participation based on simple rational preferences, social preferences, mobilization by elites, or information availability. Only ‘expressive’ theories of participation appear consistent with the patterns observed, whereby exposure to violence augments the value a person places on the act of political expression itself. The mplications for general theories of political participation are discussed. |
| Keywords: | violence, political participation, Uganda |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:138&r=dev |
| By: | Devesh Kapur and; Megan Crowley |
| Abstract: | This paper analyzes a relatively neglected facet of the complex debate regarding human capital – higher (or tertiary) education. It addresses five broad questions examining higher education in developing countries. One, are the economic effects of higher education on developing countries different from those in industrialized countries, with its links with labor markets of lesser importance than its impact on institutional development? Two, how does the impact of higher education depend on the type of education and its beneficiaries? Three, with the state unable to meet growing demand pressures, what should be the proper role of the state to ensure not just quality but also equity and access? Four, how should countries rethink the provision of higher education in an “open economy” from seeking education abroad or encouraging foreign providers into the country or simply linking domestic institutions with foreign quality assurance mechanisms? And five, do new technologies offer developing countries a new paradigm to expand the provision of high quality but low cost higher education? The aim is not to provide categorical answers to these complex questions, but rather highlight the analytical and empirical lacuna with regard to each of these questions. |
| Keywords: | higher education, human capital |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:139&r=dev |
| By: | Brambila Macias, Jose |
| Abstract: | This paper uses annual data for the period 1970-2006 in order to estimate and investigate the evolution of the Mexican informal economy. In order to do so, we model the informal economy as a latent variable and try to explain it through relationships between possible cause and indicator variables using structural equation modeling (SEM). Our results indicate that the Mexican informal sector at the beginning of the 1970’s initially accounted for 40 percent of GDP while slightly decreasing to stabilize around 30percent of GDP in the late 1980’s until our days. The model uses tax burden, salary levels, inflation, unemployment and excessive regulation as potential incentives or deterrents for the informal economy. The results confirm in particular the importance of salaries and excessive regulation as causes of the informal economy in Mexico and confirm a positive relation between informality and GDP. |
| Keywords: | Informal Economy; Economic Growth; Structural Equations |
| JEL: | C39 O17 E26 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:8504&r=dev |