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on Development |
| By: | Eduardo Haddad; Jaime Bonet Moron; Geoffrey Hewings; Fernando Perobelli |
| Abstract: | This paper offers some preliminary steps in the marriage of some of the theoretical foundations of the new economic geography with spatial computable general equilibrium models. Modeling the spatial economy of Colombia using the traditional assumptions of CGE models makes little sense when one territorial unit, Bogotá, accounts for over one fourth of GDP and where transportation costs are high and accessibility low, compared to European or North American standards. Hence, handling market imperfections becomes imperative as does the need to address internal spatial issues from the perspective of Colombia’s increasing involvement with external markets. The paper builds on the CEER Model, a spatial CGE model of the Colombian economy; non-constant returns and non-iceberg transportation costs are introduced and some simulation exercises are carried out. The results confirm the asymmetric impacts that trade liberalization has on a spatial economy in which one region, Bogotá, is able to more fully exploit scale economies vis-à-vis the rest of Colombia. The analysis also reveals the importance of different hypotheses on factor mobility and the role of price effects to better understand the consequences of trade opening in a developing economy. |
| Date: | 2008–05–21 |
| URL: | http://d.repec.org/n?u=RePEc:col:000094:004690&r=dev |
| By: | van der Ploeg, Frederick |
| Abstract: | Many resource-rich countries have poor economic performance and suffer from negative genuine saving rates, especially if they have many rival factions and badly functioning legal systems. We attempt to shed light on these stylized facts by analyzing a power struggle about the control of natural resources where competing factions in society have a private stock of financial assets and a common stock of natural resources. We solve a dynamic common-pool problem and obtain political economy variants of the Hotelling rule for resource depletion and the Hartwick saving rule necessary to sustain constant consumption in an economy with exhaustible natural resources. The rate of increase in the price of natural resources and resource depletion are faster than demanded by the Hotelling rule. As a result, the country substitutes away from resources to capital so that it saves and invests more than a homogenous society. The power struggle boosts output. Nevertheless, fractionalization depresses aggregate consumption and social welfare and leads to negative genuine saving if properly corrected for common-pool externalities. Fractionalization induces, however, positive genuine saving as measured by the World Bank. |
| Keywords: | capital; common pool; Exhaustible natural resources; fractionalization; genuine saving; Hartwick rule; Hotelling resource rents; rapacious rent seeking; sustainable consumption; voracity |
| JEL: | E20 F32 O13 Q01 Q32 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6831&r=dev |
| By: | Thi Quynh Trang Do (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Gérard Duchêne (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I) |
| Abstract: | The determinants of self-employment are widely studied in the economic literature in recent twenty years. However, in the case of Vietnam where self-employed population takes an important proportion in workforce, it remains an under researched area. By using the data from the Vietnam Household Living Standard Survey 2004 (VHLSS2004), this paper aims to provide clearer insights into this area. We use the Heckman method to determine the level and identify the factors that affect the workers' choice between self-employment and wage employment in Vietnam. We emphasize the role of expected earnings differential in workers' decision making. Comparisons between female and male workers are made. Our empirical results show that there exist a number of determinants that permit to construct the pattern of self-employed as well a salary workers in Vietnam. Regardless of educational attainment, experiences and familial background, perspective of having higher earnings plays an important role in choice behavior of workers. |
| Keywords: | Occupational choice, earnings, self-employment, entrepreneurship, informal sector, Vietnam. |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00281588_v1&r=dev |
| By: | David De La Croix (CORE - Department of Economics - Université Catholique de Louvain); Clara Delavallade (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I) |
| Abstract: | Corruption is thought to prevent poor countries from catching up with richer ones. We analyze one channel through which corruption hampers growth : public investment can be distorted in favor of specific types of spending for which rent-seeking is easier and better concealed. To study this distorsion, we propose a dynamic model where households vote for the composition of public spending, subject to an incentive constraint reflecting individuals' choice between productive activity and rent-seeking. In equilibrium, the structure of public investment is determined by the predatory technology and the distribution of political power. Among different regimes, the model shows a possible scenario of distortion without corruption in which there is no effective corruption but the possibility of corruption still distorts the allocation of public investment. We test the implications of the model on a set of countries using a two-stage least squares estimation. We find that developing countries with high predatory technology invest more in housing and physical capital in comparison with health and education. The reverse is true for developed countries. |
| Keywords: | Public investment, optimal growth, corruption, political power. |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00129741_v2&r=dev |
| By: | Greenwood, Jeremy (University of Pennsylvania); Guner, Nezih (Universidad Carlos III, Madrid) |
| Abstract: | A society is characterized by the common attitudes and behavior of its members. Such behavior reflects purposive decision making by individuals, given the environment they live in. Thus, as technology changes, so might social norms. There were big changes in social norms during the 20th century, especially in sexual mores. In 1900 only six percent of unwed females engaged in premarital sex. Now, three quarters do. It is argued here that this was the result of technological improvement in contraceptives, which lowered the cost of premarital sex. The evolution from an abstinent to a promiscuous society is studied using an equilibrium matching model. |
| Keywords: | social change, sexual revolution, technological progress in contraceptives, bilateral search |
| JEL: | E1 J1 O3 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3485&r=dev |
| By: | Yélé Maweki Batana; Jean-Yves Duclos |
| Abstract: | This paper tests for robust multidimensional poverty comparisons across six countries of the West African Economic and Monetary Union (WAEMU). Two dimensions are considered, nutritional status and assets. The estimation of the asset index is based on two factorial analysis methods. The first method uses Multiple Correspondence Analysis; the second is based on the maximization of a likelihood function and on bayesian analysis. Using Demographic and Health Surveys (DHS), pivotal bootstrap tests lead to statistically significant dominance relationships between 12 of the 15 possible pairs of the six WAEMU countries. Multidimensional poverty is also inferred to be more prevalent in rural than in urban areas. These results tend to support those derived from more restrictive unidimensional dominance tests. |
| Keywords: | Stochastic dominance, factorial analysis, bayesian analysis, multidimensional poverty, empirical likelihood function, bootstrap tests |
| JEL: | C10 C11 C12 C30 C39 I32 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:0808&r=dev |
| By: | Seema Jayachandran |
| Abstract: | Smoke from massive wildfires blanketed Indonesia in late 1997. This paper examines the impact this air pollution (particulate matter) had on fetal, infant, and child mortality. Exploiting the sharp timing and spatial patterns of the pollution and inferring deaths from "missing children" in the 2000 Indonesian Census, I find that the pollution led to 15,600 missing children in Indonesia (1.2% of the affected birth cohorts). Prenatal exposure to pollution largely drives the result. The effect size is much larger in poorer areas, suggesting that differential effects of pollution contribute to the socioeconomic gradient in health. |
| JEL: | I12 O1 Q52 Q53 Q56 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14011&r=dev |
| By: | Hany Besada; Yang Wang; John Whalley |
| Abstract: | Trade between the whole of Africa and China (imports and exports summed) grew from $10.6 billion to $73.3 billion between 2000 and 2007, and between Sub-Saharan Africa and China from $7 billion to $59 billion over the same period. China is now Africa's third largest trading partner behind the EU and the US. The Chinese FDI stock in Africa has grown from $49 million in 1990 to $2.6 billion in 2006. On the basis of these data, one frequently hears the claim that China is now a dominant influence in Africa. Here we both evaluate such claims, and assess what factors underlay this phenomenon. We suggest that while the annual growth rates of trade and investment flows are high (around 30% per year sine the late 1990's), the levels are still considerably smaller than such claims might suggest. China in 2006 accounted for only $520 million of inward FDI compared to a total from all sources of $36 billion, around 1.4% of total FDI inflows to Africa; and only 8.6% of African exports and 9.6% of African imports. African interdependence with China thus remains proportionally smaller than that for most other geographical areas, but is growing rapidly. Factors behind this growth are discussed in the text. |
| JEL: | F13 F59 O53 O55 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14024&r=dev |
| By: | Léonce Ndikumana (University of Massachusetts, Amherst, and UNECA, Addis Ababa); Mina Baliamoune-Lutz (University of North Florida) |
| Abstract: | This study investigates the impact of corruption on public and private investment in African countries as a way of exploring one channel through which corruption undermines growth. The empirical results indicate that corruption affects economic growth directly and through its impact on investment. We find that corruption has a negative and significant effect on domestic investment and that corruption affects public and private investment differently. The results indicate that corruption has a positive effect on public investment while it has a negative effect on private investment. The positive association between public investment and corruption supports the view that corrupt bureaucrats seek to increase capital expenditure (over maintenance expenditures) to maximize private gains (rent-seeking). In contrast, the results confirm that corruption discourages private investment, suggesting that corruption increases the costs of doing business while raising uncertainty over expected returns to capital. The results support the view that corruption hampers growth and call for institutional reforms to improve the quality of governance as a prerequisite for achieving investment-led growth. JEL Categories: |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2008-08&r=dev |
| By: | Esther K. Ishengoma (Faculty of Commerce and Management, University of Dar es Salaam, Tanzania); Robert Kappel (GIGA German Institute of Global and Area Studies) |
| Abstract: | Ugandan micro- and small enterprises (MSEs) still perform poorly. The paper utilizes data collected in Uganda in March and April 2003 to analyze the business constraints faced by these MSEs. Using a stratified random sampling, a sample of 265 MSEs were interviewed. The study focuses on the 105 manufacturing firms that responded to all questions. It examines the extent to which the growth of MSEs is associated with business constraints, while also controlling for owners’ attributes and firms’ characteristics. The results reveal that MSEs’ growth potential is negatively affected by limited access to productive resources (finance and business services), by high taxes, and by lack of market access. |
| Keywords: | small enterprises, informal sector, growth, manufacturing, Uganda, productivity, business services |
| JEL: | D21 E26 G38 H25 L25 L26 L6 O12 O14 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:gig:wpaper:78&r=dev |
| By: | Andreas Irmen (University of Heidelberg, Department of Economics); Johanna Kühnel (University of Heidelberg, Department of Economics) |
| Abstract: | We provide a comprehensive survey of the recent literature on the link between productive government expenditure and economic growth. Starting with the seminal paper of Robert Barro (1990) we show that an understanding of the core results of the ensuing contributions can be gained from the study of their respective Euler equations. We argue that the existing literature incorporates many relevant aspects, however, policy recommen- dations tend to hinge on several knife-edge assumptions. Therefore, future research ought to focus more on idea-based endogenous growth models to check the robustness of policy recommendations. Moreover, the inclusion of hitherto unexplored types of government expenditure, e. g., on the "rule of law", would be desirable. |
| Keywords: | Economic Growth, Government Expenditure, Public Goods, Fiscal Policy |
| JEL: | E62 H10 H21 H41 H54 O41 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0464&r=dev |
| By: | Tingsong Jiang; Warwick McKibbin |
| Abstract: | A Free Trade Area of the Asia-Pacific (FTAAP) has been proposed as a long-term prospect by the Asia-Pacific Economic Cooperation (APEC). This paper examines the impact of the FTAAP on the national and regional economies in China using a suite of general equilibrium models: APG-Cubed, a dynamic global model; GTAP, a static global model; and CERD, a static China model with regional dimension. The impact on the Chinese economy of the APFTA is also compared with those of other forms of FTAs such as the ASEAN-China FTA (ACFTA) and the East Asia FTA (EAFTA). China benefits from all three FTAs, and the eastern region gains the most. It is also found that China's benefit increases along with the increase in coverage of the FTAs, that is, the APFTA has the biggest positive impact on the Chinese economy, among the three FTAs considered in this study. Sector-wise, textile, clothing and footwear sector gains the most from the FTAAP, while motor vehicle and parts sector loses the most. |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:acb:camaaa:2008-10&r=dev |