nep-dev New Economics Papers
on Development
Issue of 2008‒12‒21
thirteen papers chosen by
Jeong-Joon Lee
Towson University

  1. Tracking, Attrition and Data Quality in the Kenyan Life Panel Survey Round 1 (KLPS-1) By Sarah Baird; Joan Hamory; Edward Miguel
  2. Effects of Trade Liberalization on Non-farm Household Enterprises in Vietnam By Tran Quoc Trung; Nguyen Thanh Tung
  3. Spatial Inequalities Explained - Evidence from Burkina Faso By Johannes Gräb; Michael Grimm
  4. Food Price Inflation and Children's Schooling By Michael Grimm
  5. Plant Level Evidence on Product Mix Changes in Chilean Manufacturing By Lucas Navarro
  6. The Effects of Labour Market Policies in an Economy with an Informal Sector By James Albrecht; Lucas Navarro; Susan Vroman
  7. Poverty Estimating Poverty for Indigenous Groups by Matching Census and Survey Data By Claudio Agostini; Phillip Brown; Andrei Roman
  8. Conflict, Disasters, and No Jobs: Reasons for International Migration from Sub-Saharan Africa Creation Date: 2008 By Naude, Wim
  9. Managing Agricultural Price Risk in Developing Countries By Julie Dana; Christopher L. Gilbert
  10. Dynamic Factor Price Equalization & International Convergence By Joseph Francois; Clinton R. Shiells
  11. Emerging Economies’ Multinationals: General Features and Specificities of the Brazilian and Chinese Cases By Andrea Goldstein; Fazia Pusterla
  12. Attracting Microfinance Investment Funds: Promoting Microfinance Growth through Increased Investments in Kenya By Matu, Jeffrey Ben
  13. The Unofficial Economy and Economic Development By Rafael La Porta; Andrei Shleifer

  1. By: Sarah Baird (UC San Diego); Joan Hamory (UC Berkeley); Edward Miguel (UC Berkeley and NBER)
    Abstract: Understanding the possible pitfalls of survey data is critical for empirical research. Among other things, poor data quality can lead to biased regression estimates, potentially resulting in incorrect interpretations that mislead researchers and policymakers alike. Common data problems include difficulties in tracking respondents and high survey attrition, enumerator error and bias, and respondent reporting error. This paper describes and analyzes these issues in Round 1 of the Kenyan Life Panel Survey (KLPS-1), collected in 2003-2005. The KLPS-1 is an innovative longitudinal dataset documenting a wide range of outcomes for Kenyan youths who had originally attended schools participating in a deworming treatment program starting in 1998. The careful design of this survey allows for examination of an array of data quality issues. First, we explore the existence and implications of sample attrition bias. Basic residential, educational, and mortality information was obtained for 88% of target respondents, and personal contact was made with 84%, an exceptionally high follow-up rate for a young adult population in a less developed country. Moreover, rates of sample attrition are nearly identical for respondents who were randomly assigned deworming treatment and for those who were not, a key factor in the validity of subsequent statistical analysis. One vital component of this success is the tracking of respondents both nationally and across international borders (in our case, into Uganda), thus we discuss in detail the costs and benefits of tracking movers. Finally, we study KLPS-1 data quality more broadly by examining enumerator error and bias, as well as survey response consistency. We conclude that the extent of enumerator error is low, with an average of less than one recording error per survey. Errors decrease over time as enumerator experience with the survey instrument increases, but increase over the course of multiple interviews within a single day, presumably due to fatigue. We do find some evidence that the enumerator-respondent match in terms of gender, ethnicity, and religion correlates with responses regarding trust of others and religious activities, suggesting some field officer bias on sensitive questions. Reporting reliability is analyzed using respondent re-surveys. These checks show high levels of consistency across survey/re-survey rounds for the respondent's own characteristics and personal history,with lower reliability rates on questions asked about others' characteristics. The steps taken in the design of KLPS-1 to avoid common errors in survey data collection greatly improved the quality of this panel dataset, and provide some valuable lessons for future field data collection projects.
    Keywords: survey data, enumerator error, longitudinal dataset, Kenya, deworming,
    Date: 2008–08–01
  2. By: Tran Quoc Trung (Ministry of Planning and Investment, 2 Hoang Van Thu, Ba Dinh, Vietnam); Nguyen Thanh Tung (International College of I.T and Management, 34B Han Thuyen, Hanoi, Vietnam)
    Abstract: This paper evaluates multiple indirect effects of trade liberalization on performance and business behaviours of NFHEs during the transition period in Vietnam based on the industry and enterprise panel data. The paper shows that NFHEs in the benefited industries from trade liberalization had more opportunities to expand their operations or start up and were more likely to survive. However, this is only applicable for NFHEs in labour intensive and unskilled industries and the expansion of NFHEs in these industries did not go together with the improvement of their efficiency. On the other hand, NFHEs in the almost negatively affected manufacturing industries from trade liberalization had to face with the fiercer competition and many of them had to shutdown their operations. Nevertheless, the survived NFHEs had better and high performance and had more chance to become formal SMEs. We also find that the more openness and the lower tariff increased the NFHE income in the industry but these effects were not the same for NFHEs in different industries. There are some concerns for the future role and development of NFHEs in the face of increasing international competition in the market.
    Keywords: Trade liberalization; Non-farm household enterprise; Panel data; Vietnam.
    JEL: C23 F14 O12 O14 O24 O53
    Date: 2008
  3. By: Johannes Gräb; Michael Grimm
    Abstract: Empirical evidence suggests that regional disparities in incomes are often very high, that these disparities do not necessarily disappear as economies grow and that these disparities are itself an important driver of growth. We use a novel approach based on multilevel modeling to decompose the sources of spatial disparities in incomes among households in Burkina Faso. We show that spatial disparities are not only driven by the spatial concentration of households with particular endowments but to a large extent also by disparities in community endowments. Climatic differences across regions due also matter, but to a much smaller extent.
    Keywords: Spatial inequality, poverty, multilevel modeling, decomposition, Sub-Saharan Africa
    JEL: C21 I32 O12 R12
    Date: 2008
  4. By: Michael Grimm
    Abstract: I analyze the impact of food price inflation on parental decisions to send their children to school. Moreover, I use the fact that food crop farmers and cotton farmers were exposed differently to that shock to estimate the income elasticity of school enrolment. The results suggest that the shock-induced loss in purchasing power had an immediate effect on enrolment rates. Instrumental variable estimates show that the effect of household income on children's school enrolment is much larger than a simple OLS regression would suggest. Hence, policies to expand education in Sub-Saharan Africa, should not neglect the demand side.
    Keywords: Education, Household Income, Inflation, Aggregate Shocks, Africa
    JEL: I21 O12 Q12
    Date: 2008
  5. By: Lucas Navarro (ILADES-Georgetown University, Universidad Alberto Hurtado)
    Abstract: This paper analyzes changes in the product mix by Chilean manufacturing plants in the period 1996-2003. Three-quarters of the surviving plants changed the set of products produced and more than three-quarters of the exporting plants changed the mix of products they exported during the sample period. Plants that changed their product mix contributed 85% of the aggregate growth in real sales of surviving plants between 1996 and 2003. Finally and in contrast to the US evidence, there is a negative correlation between revenue per product and the number of products. Apart from this, new evidence consistent with recent models of multi-product heterogeneous firms and trade is provided.
    Keywords: heterogeneous plants, multiple products, entry and exit, trade, development.
    JEL: D21 E23 F14 L11 O14 O54
    Date: 2008–11
  6. By: James Albrecht (Georgetown University and IZA); Lucas Navarro (ILADES-Georgetown University, Universidad Alberto Hurtado); Susan Vroman (Georgetown University and IZA)
    Abstract: In this paper, we build an equilibrium search and matching model of an economy with an informal sector. Our model extends Mortensen and Pissarides (1994) by allowing for ex ante worker heterogeneity with respect to formal-sector productivity. We use the model to analyze the effects of labour market policy on informal-sector and formal sector output, on the division of the workforce into unemployment, informal-sector employment and formal-sector employment, and on wages. Finally, we examine the distributional implications of labour market policy; specifically, we analyse how labour market policy affects the distributions of wages and productivities across formal-sector matches. Keywords: Informality and Labour Market Policy
    JEL: E26 J64 O17
    Date: 2008–09
  7. By: Claudio Agostini (ILADES-Georgetown University, Universidad Alberto Hurtado); Phillip Brown (Colby College, Waterville, Maine, United States and International Food Policy Research Institute, Washington, D.C., United States.); Andrei Roman (Colby College, Waterville, Maine, United States)
    Abstract: It is widely held that indigenous Chileans experience greater rates of poverty and indigence than non-indigenousChileans, yet the evidence to date has been based on surveys that are not representative by ethnicity. In this paper,we use poverty mapping methodologies that are typically applied to geography to develop statistically preciseestimates of poverty, indigence, poverty gaps, and indigence gaps for each of the eight indigenous groupsrecognized by Chilean law. We find that indigenous people experience higher rates of poverty and indigence andgreater depth of poverty and indigence than non-indigenous people. These results hold within individual regions,suggesting that the differential access to economic opportunities in different parts of the country cannot fully explainthe results. We also find that the burden of poverty is not shared equally across indigenous groups. Instead, theMapuche and Aymará experience disproportionately high poverty rates. We argue that including ethnicity incriteria for identifying poor households may help policy-makers to improve antipoverty targeting.
    Keywords: Poverty; Indigence; Ethnicity; Poverty Mapping; Chile
    JEL: I32 J15 D31 C53 O54
    Date: 2008–06
  8. By: Naude, Wim
    Abstract: Sub-Saharan Africa (SSA) has the highest growth rate in net international migration in the world. The reasons for this migration are investigated in this paper. First, a survey of the literature on the profile and determinants of international migration in SSA is given. Second, panel data on 45 countries spanning the period 1965 to 2005 are used to determine that the main reasons for international migration from SSA are armed conflict and lack of job opportunities. An additional year of conflict will raise net out-migration by 1.35 per 1,000 inhabitants and an additional 1 per cent growth will reduce net out-migration by 1.31 per 1,000. Demographic and environmental pressures have a less important direct impact, but a more pronounced indirect impact on migration through conflict and job opportunities. In particular, the frequency of natural disasters has a positive and significant effect on the probability that a country will experience an outbreak of armed conflict. Furthermore, there is no evidence of a ?migration hump? or of persistence in net migration rates in SSA, and no evidence that immigration is causing conflict in host countries.
    Keywords: international migration, conflict, natural disasters, environmental degradation, environmentally forced migration, Africa
  9. By: Julie Dana; Christopher L. Gilbert
    Abstract: We survey the experience of risk management in developing country agricultural supply chains. We focus on exposure, instruments, impediments to access and developing country futures markets. We draw on lessons from experience over the past two decades.
    Keywords: Commodities, Risk Management, Developing Countries
    JEL: Q13 Q14
    Date: 2008
  10. By: Joseph Francois; Clinton R. Shiells (International Monetary Fund & Joint Vienna Institute)
    Abstract: We offer a duality-based methodology for incorporating multi-sector effects of international trade into open economy macroeconomic models, developing the concepts of the dynamic factor price equalization set and the integrated intertemporal equilibrium. Under this approach, the aggregate production function depends on output prices and factor endowment stocks. It preserves all of the structure of a standard GDP function from the trade theory literature. In a two-country version of the model considered below, we examine the properties of the dynamic factor price equalization set. If the global economy is initially outside of this set, the equations of motion will pull the economy back into this set. Inside the dynamic FPE set, factor prices are equalized internationally, and with identical tastes and technology, the economy can be regarded as a fully integrated world equilibrium in a dynamic sense (the integrated intertemporal equilibrium). In this equilibrium, all of the standard properties of a closed economy one-sector neoclassical growth model hold, ruling out cycles and chaos, and allowing us to characterize the evolution of international inequality and the persistence of productivity and endowment shocks. Working from the integrated intertemporal equilibrium, we identify properties of persistence linked to inequality and real economic shocks. Cross-country differences in per capita incomes and wealth, and the factor content of trading patterns, may persist over time and even into the new steady state. This provides yet another reason why we might observe lack of income convergence internationally. In addition, real shocks in one country may be transmitted to the other country through factor markets and product prices, and may have persistent effects into the steady-state as well. The model can also generate an endogenous Balassa-Samuelson effect.
    Keywords: Neoclassical Models of Trade, Economic Growth of Open Economies, Cross- Country Output Convergence
    JEL: F41 O47 F11 F43
    Date: 2008–11
  11. By: Andrea Goldstein (OECD, Paris - France); Fazia Pusterla (IADB, Washington - USA)
    Abstract: The expansion of South-North and South-South FDI reflects the rise of cross-border capital flows, a distinguishing feature of the contemporary global economy, together with the increasing size and complexity of emerging market multinational corporations (EMNCs). Against this background, in emerging economies governments have become increasingly aware of the role outward FDI (OFDI) can play as an instrument to deepen the integration into the world economy. This paper analyzes recent trends in OFDI from Brazil and China. Using annual data for the period 1980 to 2006 for both countries, we test the well-known investment development path (IDP) theory, according to which the net outward investment position of a country depends on its level of development. Results show that both China and Brazil are moving towards the third stage of the path, where domestic firms have acquired ownership and other advantages to go abroad and become leading outward investors. The role of governments, institutions and the characteristics of domestic firms in both countries are considered to be crucial factors in determining the movement along the path.
    Keywords: foreign direct investment, emerging economies, investment development path.
    JEL: F23 O57
    Date: 2008–10
  12. By: Matu, Jeffrey Ben
    Abstract: Although microfinance has played a significant role in providing a wide range of financial products and services, many microfinance institutions (MFIs) in Kenya still face major challenges with efficiently and effectively delivering microfinance services in the country. As the demand for these services continues to grow, the limited sources of available capital have greatly undermined the capabilities of MFIs to efficiently operate their services and expand their various microfinance activities. This has led to a financial gap in the supply of microfinance services, and consequently has reduced the opportunities for the poor to access basic socio-economic benefits that could potentially improve their wellbeing. The widening financial gap in the microfinance sector has been attributed to self-governance issues, capacity building issues, non-compliance with reporting requirements, and a lack of appropriate performance criteria. These and other factors have jeopardized MFIs sustainability and have compromised the delivery of microfinance services in the country. There is a need for a policy that advocates for better access to capital sources and investment opportunities for microfinance sustainability, and also encourages MFIs to increase their accessibility, build capacity, be more transparent, adopt acceptable performance standards, and promote professionalism to enhance service delivery. This paper analyzes three policy alternatives which include: (i) maintaining the status quo; (ii) government regulation of all MFIs; and (iii) voluntarily self-regulating by member MFIs as alternatives for closing the financial gap in the supply of microfinance services. All the three alternatives are evaluated against the following criteria: efficiency, financial and political feasibility, and accessibility to determine the best policy option.
    Keywords: microfinance; investment funds; social responsible investing; Africa; Kenya; public policy; economics; finances; financial economics; public economics; Kenya microfinance Act
    JEL: G2 E58 E22 O2 F21 G20
    Date: 2008–04–18
  13. By: Rafael La Porta; Andrei Shleifer
    Abstract: In developing countries, informal firms (those that are not registered with the government) account for about half of all economic activity. We consider three broad views of the role of such firms in economic development. According to the romantic view, these firms would become the engine of economic growth if not stopped by government regulation. According to the parasite view, informal firms, by avoiding taxes and regulations, unfairly compete with the more efficient formal firms and, by taking away their market share, undermine economic progress. According to the dual view, informal firms are highly inefficient, do not pose much threat to the formal firms, but also do not contribute to economic growth, which is driven by the efficient formal firms. Using data from World Bank firm level surveys, we find that informal firms are small and extremely unproductive, compared even to the small formal firms, and especially relative to the larger formal firms. Compared to the informal firms, formal ones are run by much better educated managers. As a consequence, they use more capital, have different customers, market their products, and use more external finance. Hardly any formal firms had ever operated informally. This evidence is inconsistent with the romantic and parasite views, but supports the dual view. In this "Walmart" theory of economic development, growth comes from the creation of the highly productive formal firms. Informal firms keep millions of people alive, but disappear over time.
    JEL: O17
    Date: 2008–12

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