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on Development |
| By: | Bigsten, Arne (Department of Economics, School of Business, Economics and Law, University of Gothenburg); Gebreeyesus, Mulu (Department of Economics, School of Business, Economics and Law, University of Gothenburg) |
| Abstract: | This paper examines the causal relationship between exporting and productivity using a ten years long plant-level panel data set from an annual census of Ethiopian manufacturing, rarely available in the sub-Saharan Africa. We exploited its length to trace the trajectory of TFP and other productivity measures of groups of firms classified by their export history. We then tested learning-by-exporting using a one-step system-GMM approach with the export-status included directly in the production function. We addressed potential endogeneity problems by using instrumental variables, and also applied a matching analysis to address potential selection bias. We found strong evidence of not only self-selection but also learning-by-exporting. Depending on the specification previous exporting appears to have shifted the production function by 15-32 %. Exporters had on average three times more employees, and paid 1.6 times higher average wage than those of non-exporters.<p> |
| Keywords: | Productivity; exports; Ethiopia; manufacturing |
| JEL: | D21 F14 L60 O14 |
| Date: | 2008–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0303&r=dev |
| By: | Yan-Leung Cheung; P. Raghavendra Rau; Aris Stouraitis |
| Abstract: | We analyze related party transactions between Chinese publicly listed firms and their stateowned enterprise (SOEs) shareholders to examine whether companies benefit from the presence of government shareholders and politically connected directors appointed by the government. We find that related party transactions between firms and their government shareholders seem to result in expropriation of the minority shareholders in firms controlled by local government SOEs or with a large proportion of local government affiliated directors on their board, and in provinces where local government bureaucrats are less likely to be prosecuted for misappropriation of state funds. On the other hand, firms controlled by the central government (or with a large proportion of central government affiliated directors) are benefited in their related party transactions with their central government SOEs. |
| Keywords: | Law and economics; Government ownership; China; State-Owned Enterprises (SOE); Related party transactions; Political connections |
| JEL: | G15 G34 K33 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hitcei:2008-11&r=dev |
| By: | Joseph P.H. Fan; Jun Huang; Felix Oberholzer-Gee; Mengxin Zhao |
| Abstract: | We examine the diversification patterns of almost all publicly listed non-financial companies in China during the 2001 to 2005 period. More than 70 percent of the firms in our sample are diversified. We document that patterns of diversification strongly depend on firms’ political connections. Former local bureaucrats are more likely than other CEOs to enter multiple industries. This effect is particularly pronounced in state-owned enterprises (SOEs) that operate in weak institutional environments. These companies are particularly prone to entering low-growth, low-profitability, and unrelated industries. Consequently, the performance effects of diversification differ sharply across SOEs and private firms. While the latter earn a premium from diversifying their operations, SOEs do not. Our results are consistent with the view that provincial and local governments push Chinese SOEs into unattractive sectors of the economy and that politically connected CEOs use their relationships to build corporate empires. |
| Keywords: | Corporate Diversification; Institutions; China |
| JEL: | D23 G32 G38 K42 P26 P31 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hitcei:2008-3&r=dev |
| By: | Manuela Goretti; Hans Weisfeld |
| Abstract: | This paper provides an overview of trade reform in the West African Economic and Monetary Union (WAEMU) since 1996 and a quantitative assessment of potential effects on trade patterns and tariff revenue of the current reform agenda. Despite evidence of significant trade complementarities within WAEMU, implementation of the union's current trade regime still suffers from persistent non-tariff barriers and administrative weaknesses. Based on an assessment of prospects for further trade integration, the paper also recommends strengthening the implementation of the present tariff union and supports the plan to extend it to all ECOWAS members. Finally, the paper stresses that an Economic Partnership Agreement with the EU could bring to the region the political momentum needed to address the weaknesses of the current trade regime, while also underlining the corresponding challenges in terms of trade diversion and tariff revenue losses. |
| Keywords: | West African Economic and Monetary Union , Trade , Tariffs , Tax revenues , |
| Date: | 2008–03–21 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:08/68&r=dev |
| By: | Hiroko Oura |
| Abstract: | This paper examines the efficiency of the different segments of India's financial system using firm-level data on corporate financing patterns. Firms are increasingly relying on external funds to finance their investment in most recent years. Empirical analyses indicate that (1) the financial system in India is not channeling funds into industries with higher external finance dependence; (2) the debt financing system does not allocate funds according to firms' external finance dependence, while equity financing system does; and (3) firms in an industry that are more dependent on external finance grow more slowly. |
| Date: | 2008–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:08/79&r=dev |
| By: | Baez, Javier E. (Syracuse University) |
| Abstract: | Exogenous variation in fertility from parental preferences for sex-mix among their children is used to identify the causal effect of family size on several measures associated with either the allocation of resources towards children within the household or the outcomes of these investments. Results using data from Colombia suggest that family size has negative effects on average child quality. Children from larger families have accumulated almost 1 year less of education, are less likely to enroll in school and about twice as likely to be held back in school. A larger family also increases the likelihood that oldest siblings share a room and reduces the chance that they have access to clean water and sanitary sewer facilities by approximately 15 percentage points, suggesting the existence of negative effects arising from limited household resources. Mothers in these households have less labor participation (over 27 percentage points) and their oldest children are also more likely to engage in labor activities or domestic chores. Children from larger families are also more likely to be physically or psychologically affected by domestic violence within the household. Other less robust but informative calculations using data on anthropometrics, morbidity and immunization records also fit well with the main results of the quasi-experimental research design. The evidence presented here is consistent with the tradeoff between the number and quality of children implied by the theoretical interdependence in their prices and is robust to different specifications, estimation methods and alternative sub-samples. |
| Keywords: | fertility, household behavior, children’s well-being, Colombia |
| JEL: | D1 J1 O1 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3472&r=dev |
| By: | Ari Van Assche; Chang Hong; Veerle Slootmaekers |
| Abstract: | In this paper we argue that export data are an inadequate tool to measure a country’s international competitiveness when external trade is dominated by export-processing trade. Export data do not necessarily reflect the value produced in an exporting country, but rather capture the gross value of the products that leave a country’s ports. We demonstrate that, in the case of China, this leads to an upward bias in both the perceived quantitative and qualitative threats to the Western economies. |
| Keywords: | China, export-processing trade, technological intensity, trade balance |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:lic:licosd:20508&r=dev |
| By: | Jikun Huang; Yu Liu; Will Martin; Scott Rozelle |
| Abstract: | Tariffs on agricultural products fell sharply in China both prior to, and as a consequence of, China's accession to the WTO. The paper examines the nature of agricultural trade reform in China since 1981, and finds that protection was quite strongly negative for most commodities, and particularly for exported goods, at the beginning of the reforms. Since then, the taxation of agriculture has declined sharply, with the abolition of production quotas and procurement pricing, and reductions in trade distortions for both imported and exported goods. Rural well-being has improved partly because of these reforms, and also because of strengthening of markets, public investment in infrastructure, research and development, health and education, and reductions in barriers to mobility of labor out of agriculture. Many challenges remain in improving rural incomes and reducing rural poverty. |
| JEL: | F1 O1 Q17 Q18 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13958&r=dev |
| By: | Gustavo Crespi; Chiara Criscuolo; Jonathan E. Haskel; Matthew Slaughter |
| Abstract: | This paper explores the role of knowledge flows and productivity growth by linking direct survey data on knowledge flows to firm-level data on TFP growth. Our data measure the information flows often considered important, especially by policy-makers, such as from within the firm and from suppliers, customers, and competitors. We examine (a) what are the empirically important sources of knowledge flows? (b) to what extent do such flows contribute to TFP growth? (c) do such flows constitute a spillover of free knowledge? (d) how do such flows correspond to suggested spillover sources, such as multinational or R&D presence? We find that: (a) the main sources of knowledge are competitors; suppliers; and plants that belong to the same business group ; (b) these three flows together account for about 50% of TFP growth; (c) the main "free" information flow spillover is from competitors; and (d) multinational presence contributes to this spillover. |
| JEL: | F23 O47 O57 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13959&r=dev |
| By: | Elizabeth Stanton |
| Abstract: | This article recounts the intellectual history of the UNDP’s Human Development Index. It begins with the early history of welfare economics and follows this field through three successive revolutions in thought, culminating in the theory of human development. The first section traces this history from the origins of economic “utility” theory to Amartya Sen’s human capabilities approach. The second section chronicles past and present measures of social welfare used in the fields of economics and development, including national income and a variety of composite measures, up to and including HDI. |
| Keywords: | human development; well-being; human development index; economic history of thought; social welfare measurement |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:uma:periwp:wp127&r=dev |
| By: | James Boyce; Léonce Ndikumana |
| Abstract: | Even as African countries became increasingly indebted from 1970 to 2004, they experienced large-scale capital flight. Some of this was legitimately acquired capital fleeing economic and political uncertainties; some was illegitimately acquired wealth spirited to safer havens abroad. This paper presents new estimates of the magnitude and timing of capital flight from 40 sub-Saharan African countries and analyzes its determinants, including linkages to external borrowing. Our results confirm that sub-Saharan <st1:place w:st="on">Africa</st1:place> is a <i>net creditor</i> to the rest of the world, in that the subcontinent’s private external assets exceed its public external liabilities: total capital flight amounted to $420 billion (in 2004 dollars), compared to the external debt of $227 billion. Econometric analysis indicates that for every dollar in external loans to <st1:place w:st="on">Africa</st1:place> in this period, roughly 60 cents flowed back out as capital flight in the same year, a finding that suggests the existence of widespread “debt-fueled” capital flight. The results also show a debt-overhang effect, as increases in the debt stock spur additional capital flight in later years. In addition to policies for recovery of looted wealth and repatriation of externally held assets, we discuss the need for policies to differentiate between legitimate and “odious” debts, both to ease current burdens and to improve international financial governance in the future. |
| Keywords: | capital flight; external indebtedness; stolen assets; odious debt |
| JEL: | F21 F33 F34 H26 O16 O24 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:uma:periwp:wp166&r=dev |
| By: | Timothy N. Cason; Lata Gangadharan; Pushkar Maitra |
| Abstract: | Most problems with formal sector credit lending to the poor in developing countries can be attributed to the lack of information and inadequate collateral. One common feature of successful credit mechanisms is group-lending, where the loan is advanced to an individual if he/she is a part of a group and members of the borrowing group can monitor each other. Since group members have better information about each other compared to lenders, peer monitoring is often less expensive than lender monitoring. Theoretically this leads to greater monitoring and greater rates of loan repayments. This paper reports the results from a laboratory experiment of group lending in the presence of moral hazard and (costly) peer monitoring. We compare peer monitoring treatments when credit is provided to members of the group sequentially and simultaneously, and individual lending with lender monitoring. The results depend on the relative cost of monitoring by the peer vis-à-vis the lender. In the more typical case where the cost of peer monitoring is lower than the cost of lender monitoring, our results suggest that peer monitoring results in higher loan frequencies, higher monitoring and higher repayment rates compared to lender monitoring. In the absence of monitoring cost differences, performance is mostly similar across group and individual lending schemes, although loan frequencies and monitoring rates are sometimes modestly greater with group lending. Within group lending, although the dynamic incentives provided by sequential leading generate the greatest equilibrium surplus, simultaneous group leading provides equivalent empirical performance. |
| Keywords: | Group Lending, Monitoring, Moral Hazard, Laboratory Experiment, Loans, Development |
| JEL: | G21 C92 O2 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:pur:prukra:1208&r=dev |
| By: | Jan K. Brueckner (Department of Economics, University of California-Irvine); Harris Selod (Paris School of Economics) |
| Abstract: | This paper offers a new theoretical approach to urban squatting, reflecting the view that squatters and formal residents compete for land within a city. The key implication of this view is that squatters ``squeeze" the formal market, raising the price paid by formal residents. The squatter organizer, however, ensures that this squeezing is not too severe, since otherwise the formal price will rise to a level that invites eviction by landowners (defensive expenditures by squatter households also help to forestall eviction). Because eviction is thus absent in equilibrium, the model differs crucially from previous analytical frameworks, where eviction occurs with some probability. |
| Keywords: | Squatting; Formalization |
| JEL: | R00 R31 O18 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:070816&r=dev |
| By: | Kasirye, Ibrahim |
| Abstract: | This paper uses a panel data set of 1309 households in Uganda to measure vulnerability to poverty between 1992/93 and 1999/2000 and to estimate the impact of household characteristics on vulnerability. The likelihood of future poverty is estimated based on the expected mean and variance of household consumption. Education, spatial characteristics, and access to community infrastructure are found to have important impacts on vulnerability. Specifically, the reduction in vulnerability to poverty increases with higher education attainment of the household head. Also households resident in northern Uganda are about 60 percent more vulnerable compared to their counterparts in central Uganda. The study also finds that causes of vulnerability in Uganda are similar to causes of poverty and therefore policies to raise the earning capacity of poor households would help both vulnerability and poverty. |
| Keywords: | Vulnerability;Poverty Dynamics; Uganda |
| JEL: | I32 |
| Date: | 2007–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:8557&r=dev |
| By: | Waldkirch, Andreas; Ofosu, Andra |
| Abstract: | This paper investigates the effect of foreign presence on the productivity of manufacturing industries in Ghana, using firm level panel data. We examine both labor and total factor productivity (TFP), which we compute using the Levinsohn and Petrin (2003) methodology. We control for a number of observed factors as well as unobserved heterogeneity in several dimensions. We find robust evidence that the presence of foreign firms in a sector has a negative effect on domestically owned, but a positive effect on most foreign owned firms. Unlike in recent work on China, it does not appear that the negative level effect is compensated for by a positive growth effect, at least not in any reasonable time period. This finding underscores that care must be exercised in extrapolating results from one country to others. We find no evidence of any wage effects. |
| Keywords: | Foreign Direct Investment; Productivity; Spillovers; Firm Level Data; Africa; Ghana |
| JEL: | O55 O24 F23 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:8577&r=dev |
| By: | Li, Lixing |
| Abstract: | This paper examines a distinctive mechanism of providing incentives to local governments – upgrading counties to "cities". In China, awarding city status to existing counties is the dominant way of creating new urban administrative units, during which the local government gets many benefits. Using a large panel data set covering all counties in China during 1993-2004, I investigate the determinants of upgrading. I find that the official minimum requirements for upgrading are not enforced in practice. Instead, economic growth rate plays a key role in obtaining city status. An empirical test is then conducted to distinguish between a principal-agent incentive mechanism and political bargaining. The findings are consistent with the hypothesis that the central government uses upgrading to reward local officials for high growth, as well as aligning local interests with those of the center. This paper highlights the importance of both fiscal and political incentives facing the local government. The comparison between incentive mechanism and bargaining sheds light on an important question about China’s politics of governance: where does power lie in China? |
| Keywords: | economic growth; incentive mechanism; bargaining; political centralization; fiscal decentralization; county-to-city upgrading; central-local relationship |
| JEL: | H77 H11 O40 R11 P26 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:8594&r=dev |
| By: | Tse-Ling Teh; Alan Martina |
| Abstract: | Poor developing countries, faced with high levels of covariant risk ideally should spread this risk into the international risk market. How might this best be done - given that through diversification this market will tend to gain from absorbing this risk? Conglomerates of intermediate financial institutions may need to be formed in developing countries to acquire risk-transfer financial instruments. The preferred instrument is subsidised catastrophe bonds and not reinsurance or lump-sum foreign disaster assistance. Numerical analysis is employed as part of the demonstration of this point. Disaster foreign aid also should take the form of subsidising the issuing of catastrophe bonds by developing countries. |
| JEL: | D92 G11 G15 G22 O16 O19 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:acb:cbeeco:2008-492&r=dev |