nep-dev New Economics Papers
on Development
Issue of 2009‒02‒14
sixty-nine papers chosen by
Jeong-Joon Lee
Towson University

  1. On analysing the world distribution of income By Anthony B. Atkinson; Andrea Brandolini
  2. Can Demand from China Shield East Asian Economies from Global Slowdown? By Zhiwei Zhang
  3. The "V-Factor": Distribution, Timing and Correlates of the Great Indian Growth Turnaround By Chetan Ghate; Stephen Wright
  4. Human Capital, Economic Growth, and Regional Inequality in China By Belton Fleisher; Haizheng Li; Min-Qiang Zhao
  5. A Distributional Analysis of Social Group Inequality in Rural India By Azam, Mehtabul
  6. India's Increasing Skill Premium: Role of Demand and Supply By Azam, Mehtabul
  7. Who would eat more with a Food Voucher Programme in South Africa? By Jan van Heerden
  8. Sibling-Linked Data in the Demographic and Health Surveys By Sonia Bhalotra
  9. Religion and Childhood Death in India By Sonia Bhalotra; Christine Valente; Arthur van Soest
  10. Long-Run GDP Growth Framework and Scenarios for the World Economy By Romain Duval; Christine de la Maisonneuve
  11. Enhancing Market Openness through Regulatory Reform in the People's Republic of China By Malory Greene; Charles Tsai
  12. The effects of inequality on growth: a survey of the theoretical and empirical literature By Christophe Ehrhart
  13. Child labour and consumer responsibility: an impact study By Leonardo Becchetti; Stefano Castriota; Melania Michetti
  14. Keeping up with revolutions: evolution of higher education in Uzbekist an By Majidov, Toshtemir; Ghosh, Dipak; Ruziev, Kobil
  15. The Developing World's Bulging (but Vulnerable) "Middle Class" By Ravallion, Martin
  16. Drivers and Obstacles to Banking SMEs: The Role of Competition and the Institutional Framework By de la Torre, Augusto; Soledad Martinez Peria, Maria; Schmukler, Sergio L.
  17. Migration and Economic Mobility in Tanzania: Evidence from a Tracking Survey By Beegle, Kathleen; De Weerdt, Joachim; Dercon, Stefan
  18. China's Integration with the World: Development as a Process of Learning and Industrial Upgrading By Yifu, Justin; Wang, Yan
  19. Public Participation, Teacher Accountability, and School Outcomes:Findings from Baseline Surveys in Three Indian States By Pandey, Priyanka; Goya, Sangeeta; Sundararaman, Venkatesh
  20. Political Institutions and Human Development Does Democracy Fulfill its 'Constructive' and 'Instrumental' Role? By Vollmer, Sebastian; Ziegler, Maria
  22. Progress in Participation in Tertiary Education in India from 1983 to 2004 By Azam, Mehtabul Azam; Blom, Andreas
  24. Migration and Education Decisions in a Dynamic General Equilibrium Framework By Dessus, Sebastien; Nahas, Charbel
  25. Are All the Sacred Cows Dead? Implications of the Financial Crisis for Macro and Financial Policies By Demirguc-Kunt, Asli; Serven, Luis
  26. Trade Policy, Trade Costs, and Developing Country Trade By Hoekman , Bernard; Nicita, Alessandro
  27. The Impacts of Cash and In-Kind Transfers on Consumption and Labor Supply: Experimental Evidence from Rural Mexico By Skoufias, Emmanuel; Gonzalez-Cossio, Teresa
  28. Banking in Brazil: Structure, Performance, Drivers, and Policy Implications By Urdapilleta, Eduardo; Stephanou, Constantinos
  29. North-South Trade-related Technology Diffusion, Brain Drain and Productivity Growth: Are Small States Different? By Schiff, Maurice; Wang, Yanling
  30. Reform and Inequality during the Transition: An Analysis Using Panel Household Survey Data, 1990-2005 By Milanovic, Branko; Ersado, Lire
  31. Can the Introduction of a Minimum Wage in FYR Macedonia Decrease the Gender Wage Gap? By F. Angel-Urdinola, Diego
  32. The Political Economy of Village Sanitation in South India: Capture or Poor Information? By Ban, Radu; Das Gupta, Monica; Rao, Vijayendra
  33. Endogenous Institution Formation under a Catching-up Strategy in Developing Countries1 By Yifu Lin, Justin; Li, Zhiyun
  34. Low-Income Countries' Access to Private Debt Markets By Hostland, Doug
  35. Almost Random: Evaluating a Large-Scale Randomized Nutrition Program in the Presence of Crossover By Linnemayr, Sebastian; Alderman, Harold
  36. Modeling Services Liberalization: The Case of Tanzania By Jensen, Jesper; F. Rutherford , Thomas; G. Tarr, David
  37. Explaining Enterprise Performance in Developing Countries with Business Climate Survey Data By Dethier, Jean-Jacques; Hirn, Maximilian; Straub, Stephane
  38. Centralization, Decentralization, and Conflict in the Middle East and North Africa By Tosun, Mehmet Serkan; Yilmaz, Serdar
  39. Grand Corruption in Utilities By Kenny, Charles; Soreide, Tina
  40. A Curse of Comparison? Evidence on Reference Groups for Relative Income Concerns By Kuegler, Alice
  41. Sources of Welfare Disparities across and within Regions of Brazil: Evidence from the 2002-03 Household Budget Survey By Skoufias, Emmanuel; Katayama, Roy
  42. Vocational Schooling, Labor Market Outcomes, and College Entry By Chen, Dandan
  43. Determinants of Economic Growth: A Bayesian Panel Data Approach By Moral-Benito, Enrique
  44. Community Participation in Public Schools: The Impact of Information Campaigns in Three Indian States By Pandey, Priyanka; Goya, Sangeeta; Sundararaman, Venkatesh
  45. Fungibility and the Impact of Development Assistance: Evidence from Vietnam's Health Sector By Wagstaff, Adam
  46. Lessons from World Bank Research on Financial Crises By Research Group, Development
  47. Measuring beginner reading skills: An empirical evaluation of alternative instruments and their potential use for policymaking and accountability in Peru By Kudo, Ines; Bazan, Jorge
  48. Can Maquila Booms Reduce Poverty? Evidence from Honduras By E. de Hoyos, Rafael; Bussolo, Maurizio; Nunez, Oscar
  49. Month of Birth and Children's Health in India By Lokshin , Michael; Radyakin, Sergiy
  50. Public Finance, Security, and Development: A Framework and an Application to Afghanistan By Byrd, William; Guimbert, Stephane
  51. Global Food Price Inflation: Implications for South Asia, Policy Reactions, and Future Challenges By Ahmed, Sadiq
  52. Leveling the Intra-household Playing Field: Compensation and Specialization in Child Labor Allocation By V. Del Carpio, Ximena; Macours, Karen
  54. Wealth: Crucial but Not Sufficient Evidence from Pakistan on Economic Growth, Child Labor, and Schooling By Hou, Xiaohui
  55. Measuring Subjective Expectations in Developing Countries: A Critical Review and New Evidence By Delavande, Adeline; Gine, Xavier; McKenzie, David
  56. Expanding Trade within Africa: The Impact of Trade Facilitation By Njinkeu, Dominique; S. Wilson, John; Powo Fosso, Bruno
  57. China's Impact on Foreign Trade and Investment in other Asian Countries By Prema-chandra Athukorala
  58. Unravelling the Complex Motivations behind China's FDI By Yi Zhang
  59. The Evolutionary Chain of International Financial Centers By Michele Fratianni
  60. Growth and Inequality Tradeoffs in a Small Open Economy By Yu-chin Chen; Stephen J. Turnovsky
  61. Brain drain, remittances, and fertility model By Luca Marchiori; Patrice Pieretti; Benteng Zou
  62. Migration and human capital in an endogenous fertility model By Luca Marchiori; Patrice Pieretti; Benteng Zou
  63. Output Collapses and Productivity Destruction By Juan Blyde; Christian Daude; Eduardo Fernandez-Arias
  64. The Optimal Transfer of Capital and Embodied Technologies to Developing Countries By Michael Hübler; Thomas S. Lontzek
  65. Avoiding the Trap: The Dynamic Interaction of North-South Capital Mobility and Technology Diffusion By Michael Hübler
  66. Multiplier Decomposition, Poverty and Inequality in Income Distribution in a SAM Framework: the Vietnamese Case By Pansini, Rosaria Vega
  67. Growth, Fiscal Policy and the Informal Sector in an Informal Economy By Pedro, de Mendonça
  68. The Impact of Skill Mismatch among Migrants on Remittance Behaviour By James Ted McDonald; M. Rebecca Valenzuela
  69. The Effect of Infrastructure Access and Quality on Non-Farm Enterprises in Rural Indonesia By John Gibson; Susan Olivia

  1. By: Anthony B. Atkinson (Nuffield College, Oxford); Andrea Brandolini (Bank of Italy)
    Abstract: This paper argues that consideration of world inequality should cause us to re-examine the key concepts underlying the welfare approach to the measurement of income inequality and the inter-relation between the measurement of inequality and the measurement of poverty. There are three reasons why we feel that a re-examination is necessary: (i) the extent of global income differences means that we cannot simply carry over the methods used at a national level; we need a more flexible measure; (ii) we have to reconcile measures of world inequality and world poverty; and (iii) we need to explore more fully the different ways in which measures may be relative or absolute. This leads us to propose a new measure, which (a) combines poverty and inequality, including provision for those who are concerned only with poverty, (b) incorporates different approaches to the measurement of inequality; and (c) allows the cost of inequality to be expressed in different ways. Applied to the world distribution for the period 1820-1992, the new measure provides different perspectives on the evolution of global inequality.
    Keywords: global income inequality, absolute vs. relative inequality, poverty, world citizens
    JEL: D31 C80
    Date: 2009–01
  2. By: Zhiwei Zhang (Research Department, Hong Kong Monetary Authority)
    Abstract: This paper quantifies how much of exports from eight East Asian economies were consumed by consumers in China, US, Japan, other developed economies, and the rest of the world. We control for the indirect exports through China, i.e., the parts and components that East Asian economies exported to China and subsequently re-exported to other countries. A unique firm-level database is utilised to get an accurate measure for such indirect exports. The main findings are: (i) US consumers still account for more exports from East Asian economies than Chinese consumers do, and the total gross exports from East Asian economies to China overstate the importance of final demand from China; and (ii) the share of exports from East Asia that were consumed by the US, Japan, other OECD countries, and China did not change drastically from 2000 to 2006. Chinese consumers did become more important, noticeably for Japan and Korea, but even in these two countries, the magnitude of change is only about 5-6 percentage of their total exports. These findings indicate that the final demand side of trade in East Asia has changed only moderately since 2002.
    Keywords: vertical integration; intra-Asia trade
    JEL: F13 F43 O24 O11
    Date: 2008–12
  3. By: Chetan Ghate (Indian Statistical Institute); Stephen Wright (University of London)
    Abstract: Following Bai (2004) and Bai and Ng (2004) we estimate a common factor representation of a panel of output series for India, disaggregated by 15 states and 14 broad industry groups. We find that a single common "V-Factor" accounts for a large part of the significant shift in the cross-sectional distribution of state-sectoral output growth rates since the mid -1980s. The time profile of the V-Factor appears to be closely related to trade liberalization.
    Keywords: Economic Growth, Factor Models, Principal Components, Convergence, Divergence, Indian States
    JEL: O10 O40 O53 O47
    Date: 2009–02–01
  4. By: Belton Fleisher (Department of Economics, Ohio State University); Haizheng Li (School of Economics, Georgia Institute of Technology); Min-Qiang Zhao (Department of Economics, Ohio State University)
    Abstract: We show how regional growth patterns in China depend on physical,, human, and infrastructure capital; foreign direct investment (FDI); and market reforms, especially the reforms that followed Deng Xiaoping’s South Trip in 1992 those that resulted from serious hardening of budget constraints of state enterprises around 1997. We find that FDI had a much larger effect on TFP growth before 1994 than after, and we attribute this to the encouragement of and increasing success of private and quasi-private enterprises. We find that human capital positively affects output per worker and productivity growth in our cross-provincial study. Moreover, we find both direct and indirect effects of human capital on TFP growth. The direct effect is hypothesized to come from domestic innovation activities, while the indirect impact is a spillover effect of human capital on TFP growth. We conduct cost-benefit analysis of hypothetical investments in human capital and infrastructure. We find that, while investment in infrastructure generates higher returns in the developed, eastern regions than in the interior, investing in human capital generates slightly higher or comparable returns in the interior regions. We conclude that human capital investment in less-developed areas can improve economic efficiency, neither investment strategy is a magic bullet for reducing China’s regional income disparities.
    JEL: O15 O18 O47 O53
    Date: 2008–08
  5. By: Azam, Mehtabul (Southern Methodist University)
    Abstract: This paper examines the differences in welfare, as measured by per capita expenditure (PCE), between social groups in rural India across the entire welfare distribution. The paper establishes that the disadvantage suffered by two historically disadvantaged groups – Scheduled Castes (SCs) and Scheduled Tribes (STs) – is underestimated when the comparison group is Non-SCs/STs rather than general category (mostly higher castes). The ST households are the most disadvantaged followed by the SC and the Other Backward Caste households with respect to general category households, and the disadvantage exists across the entire distribution. Better covariates and better returns to those covariates contribute to the advantage of the general category households. The findings suggest that the policies to raise the human capital and strengthening the other productive assets of the SC and the ST households must remain a focus of attention besides promoting a more active labor market in rural India.
    Keywords: India, social groups, inequality, quantile regression decomposition
    JEL: C15 D63
    Date: 2009–01
  6. By: Azam, Mehtabul (Southern Methodist University)
    Abstract: The tertiary-secondary (college-high school) wage premium has been increasing in India over the past decade, but the increase differs across age groups. The increase in wage premium has been driven mostly by younger age groups, while older age groups have not experienced any significant increase. This paper uses the demand and supply model with imperfect substitution across age groups developed in Card and Lemieux (2001) to explain the uneven increase in the wage premium across age groups in India. The findings of this paper are that the increase in the wage premium has come mostly from demand shifts in favor of workers with a tertiary education. More importantly, the demand shifts occurred in both the 1980s and 1990s. Relative supply has played an important role not only determining the extent of increase in wage premium, but also its timing. The increase in relative supply of tertiary workers during 1983-1993 offset the demand shift, limiting the wage premium increase. But during 1993-1999, the growth rate of the relative supply of tertiary workers decelerated, while relative supply was virtually stagnant during 1999-2004. Both of these periods saw an increase in the wage premium as the countervailing supply shift was weak.
    Keywords: India, wage premium, tertiary (college), secondary (high school)
    JEL: J20 J23 J31
    Date: 2009–01
  7. By: Jan van Heerden (Department of Economics, University of Pretoria)
    Abstract: A Computable General Equilibrium model is used to find the effects of a food voucher scheme on the economy in South Africa. If firms consider the issuing of vouchers as increased remuneration, they will hire fewer labourers. The higher labour cost increases the total cost of production and lowers supply. Real Gross Domestic Product decreases and the economy becomes worse off. However, depending on the size of the government's involvement in such a scheme as well as the tax policies that are used to fund it, a food voucher scheme could benefit the poor, and improve the distribution of wealth in the country.
    Date: 2008–12
  8. By: Sonia Bhalotra
    Abstract: This paper highlights an aspect of the enormous and little-exploited potential of the Demographic and Health Surveys, namely the use of data on siblings. Such data can be used to control for family-level unobserved heterogeneity that might confound the relationship of interest and to study correlations in sibling outcomes. These uses are illustrated with examples. The paper ends with a discussion of potential problems associated with the sibling data being derived from retrospective fertility histories of mothers.
    Keywords: siblings, unobserved heterogeneity, retrospective fertility histories, state dependence, DHS, India.
    JEL: I12 O12 J10 C23 H31
    Date: 2008–10
  9. By: Sonia Bhalotra; Christine Valente; Arthur van Soest
    Abstract: Muslim children in India face substantially lower mortality risks than Hindu children. This is surprising because one would have expected just the opposite: Muslims have, on average, lower socio-economic status, higher fertility, shorter birth-spacing, and are a minority group in India that may be expected to live in areas that have relatively poor public provision. Although higher fertility amongst Muslims as compared with Hindus has excited considerable political and academic attention in India, higher mortality amongst Hindus has gone largely unnoticed. This paper considers this seeming puzzle in depth.
    Keywords: religion, child mortality, Muslim, Hindu, India
    JEL: I12 O12 J13
    Date: 2008–01
  10. By: Romain Duval; Christine de la Maisonneuve
    Abstract: This paper develops and applies a simple “conditional growth” framework to make long-term GDP projections for the world economy, taking as a starting point recent empirical evidence about the importance of total factor productivity and human capital in explaining current cross-country disparities in GDP per capita levels. Other distinct features of the projection framework include human capital projections by cohorts and implicit allowance for the impact of ageing and potential labour market and pension reforms on future growth in employment levels. In the baseline projection, world GDP would grow in PPP terms by about 3 ¾ % per year on average over the period 2005-2050. When expressed in constant market exchange rates, taking into account future Balassa-Samuelson effects, this projection falls roughly in the middle of the range of long-run scenarios recently developed in the context of greenhouse gas emission projections. The sensitivity of the projection to total factor productivity and population growth assumptions is significant, however, and compounds with deeper sources of uncertainty such as model and parameter uncertainty.<P>Un cadre d’analyse et des scénarios de long terme pour l’économie mondiale<BR>Cet article développe et applique un cadre d’analyse simple fondé sur la « convergence conditionnelle » pour produire des projections de long terme du PIB mondial, prenant pour point de départ l’évidence empirique récente concernant l’importance de la productivité multifactorielle et du capital humain dans l’explication des disparités actuelles de niveaux de PIB par habitant entre pays. Les autres traits distinctifs du cadre d’analyse incluent des projections de capital humain par cohortes, ainsi que la prise en compte implicite de l’impact du vieillissement et des réformes du marché du travail et des régimes de retraite sur la croissance future de l’emploi. Dans la projection centrale, le PIB mondial exprimé en PPA croîtrait à un rythme annuel d’environ 3 ¾ % en moyenne au cours de la période 2006-2050. Exprimé en taux de change de marché constants, en prenant en compte les effets Balassa-Samuelson futurs, cette projection se situe dans le milieu de la fourchette des scénarios de long terme développés récemment dans le contexte des projections d’émissions de gaz à effet de serre. Cependant, la sensibilité de la projection aux hypothèses de taux de croissance de la productivité multifactorielle et de la population est forte, et se combine à des sources d’incertitude plus profondes relatives au modèle et à la valeur des paramètres.
    Keywords: growth, human capital, croissance, capital humain, projections, projections, long run, long terme, cohorts, cohortes
    JEL: O11 O43 O47 O57 Q43 Q54
    Date: 2009–02–03
  11. By: Malory Greene; Charles Tsai
    Abstract: This study analyses the People’s Republic of China’s trade policy environment with a focus on trade-related regulations and their role in supporting China’s market openness. It examines in particular to what extent China’s trade regulations comply with the principles of transparency and non-discrimination and facilitate foreign trade operations and international competition. The report proposes a series of policy recommendations to make China’s regulatory framework more market-oriented and trade-and-investment friendly. The study is complemented with a business survey of OECD member country enterprises and Chinese firms. The survey assesses government influence on the investment climate through the impact of their policies on the costs, risks and barriers to competition facing firms. The main report and the business survey conclude that transparency plays a critical role in the development of a healthy business environment by reducing regulatory impediments.
    Keywords: investment, trade policy, regulatory reforms, transparency, intellectual property rights, standards, market openness, non-discrimination, China, conformity assessment, trade restrictiveness index, trade reform
    Date: 2008–12–18
  12. By: Christophe Ehrhart (CRESS-Lessor, Université Rennes 2 - Haute Bretagne)
    Abstract: Basically, the extensive theoretical and empirical literature on the interactions between growth/development and distribution can be divided into two main approaches. The first one examines the impact of economic development on income distribution in a long run perspective. The second one focuses on the inverse causality between inequality and growth. This paper aims at reviewing this second view about the effects of initial inequality of income and wealth on future growth rate. The theoretical literature suggests several channels through which inequality might be harmful for growth, namely three economic explanations (the channel of the capital market imperfections, the approach of endogenous fertility, the argument relating to the domestic market size) and two politico-economic arguments (the approach of endogenous fiscal policy and the political instability channel). The following conclusions can be drawn from our survey of the empirical studies regarding the relationship between inequality and growth: first, only the endogenous fertility approach and the explanation based on political instability receive convincing support from the data. Second, initial inequality of assets has a negative and significant effect on subsequent growth. As a result, wealth redistribution is likely to enhance future growth.
    Keywords: Inequality; Growth
    JEL: O15 O40
    Date: 2009
  13. By: Leonardo Becchetti (University of Rome Tor Vergata); Stefano Castriota (University of Trento); Melania Michetti (Fondazione Enrico Mattei)
    Abstract: We evaluate the impact of fair trade (FT) affiliation on child labour on a sample of Chilean honey producers with a retrospective panel data approach. From a theoretical point of view we argue that, in the short run, FT acts, on both adult and child wages, as a pure income effect to which a productivity effect adds up in the medium run. The direction of the impact is therefore uncertain and requires empirical testing. Our econometric findings document a significant impact of affiliation years on child schooling after controlling for endogeneity and the heterogeneity between treatment and control sample.
    Keywords: Fair Trade, child labor.
    JEL: O19 O22 D64
    Date: 2008
  14. By: Majidov, Toshtemir; Ghosh, Dipak; Ruziev, Kobil
    Abstract: Uzbekistan's higher education system has undergone some dramatic changes in the past century, evolving from largely traditional religious colleges to fully state-funded communist-atheist institutions. Since the end of the communist administration and subsequent market-oriented reforms, the institutions of higher education (IHE) in Uzbekistan have had to reinvent and reform themselves again, as the demand for different kind of education increased. This paper puts the current changes and trends in IHEs into an historical perspective and highlights some important effects of the market reforms on the educational scene.
    Keywords: Education; Higher; Uzbekistan; Reforms; Transition
    Date: 2009–01
  15. By: Ravallion, Martin (The World Bank)
    Abstract: The "developing world's middle class" is defined here as those who are not poor when judged by the median poverty line of developing countries, but are still poor by US standards. The "Western middle class" is defined as those who are not poor by US standards. Although barely 80 million people in the developing world entered the Western middle class over 1990-2002, economic growth and distributional shifts allowed an extra 1.2 billion people to join the developing world's middle class. Four-fifths came from Asia, and half from China. Most of the new entrants remained fairly close to poverty, with incomes now bunched up just above $2 a day. The vulnerability of this new middle class to aggregate economic contractions is evident in the fact that one in six people in the developing world live between $2 and $3 per day. Over time, the developing world has become more sharply divided between countries with a large middle class and those with a relatively small one, with Africa prominent in the latter group. Poor people in countries with smaller middle classes may well be more exposed to slowing economic growth.
    Keywords: Poverty; middle class; polarization; economic growth
    JEL: D31 I32 O15
    Date: 2009–02–03
  16. By: de la Torre, Augusto (The World Bank); Soledad Martinez Peria, Maria (The World Bank); Schmukler, Sergio L. (The World Bank)
    Abstract: This paper studies the factors banks perceive as drivers and obstacles to financing small and medium enterprises (SMEs), focusing on the role of competition and the institutional framework. Using a survey of banks in Argentina and Chile, the paper shows that, despite alleged differences in the countries' environments regarding rules, regulations, and ease of doing business, SMEs have become a strategic segment for most banks in both countries. In particular, banks have begun to target SMEs due to the significant competition in the corporate and retail sectors. They perceive the SMEs market as highly profitable, large, and with good prospects. Moreover, banks are developing coping mechanisms to overcome the particular institutional obstacles present in each country and to compete for SMEs. Banks' interest in SMEs is not based on government programs, yet policy action might help reduce the cost of providing financing, especially long-term lending.
    Keywords: small and medium enterprises; bank finance; financial constraints; banking market structure; institutional factors; regulation; competition
    JEL: G21 G28 L25 O12 O16
    Date: 2008–12–01
  17. By: Beegle, Kathleen (The World Bank); De Weerdt, Joachim (EDI); Dercon, Stefan (Oxford University)
    Abstract: This study explores the extent to which migration has contributed to improved living standards of individuals in Tanzania. Using longitudinal data on individuals, the authors estimate the impact of migration on consumption growth between 1991 and 2004. The analysis addresses concerns about heterogeneity and unobservable factors correlated with both income changes and the decision to migrate. The findings show that migration adds 36 percentage points to consumption growth, during a period of considerable growth in consumption. These results are robust to numerous tests and alternative specifications. Unpacking the findings, the analysis finds that moving out of agriculture is correlated with much higher growth than staying in agriculture, although growth is always higher in any sector if one physically moves. Economic mobility is strongly linked to geographic mobility. The puzzle is why more people do not move if returns to geographic mobility are high. The evidence is consistent with models in which exit barriers are set by home communities (through social and family norms) that prevent migration of certain categories of people.
    Keywords: adult mortality; agricultural activities; agricultural produce; AIDS epidemic; basic needs; Business Ownership; Change in Consumption; consumption aggregate; consumption data; consumption expenditure
    Date: 2008–12–01
  18. By: Yifu, Justin (The World Bank); Wang, Yan (The World Bank)
    Abstract: The process of development is full of uncertainties, especially if it is a process of transition from a planned economy to a market oriented one. Because of uncertainties and country specificity, development must be a process of learning, selective adaptation, and industrial upgrading. This paper attempts to distill lessons from China's reform and opening up process, and investigate the underlying reasons behind China's success in trade expansion and economic growth. From its beginnings with home-grown and second-best institutions, China has embarked on a long journey of reform, experimentation, and learning by doing. It is moving from a comparative advantage-defying strategy to a comparative advantage-following strategy. The country is catching up quickly through augmenting its factor endowments and upgrading industries; but this has been only partially successful. Although China is facing several difficult challenges -- including rising inequality, an industrial structure that is overly capital and energy intensive, and related environmental degradation -- it is better positioned to tackle them now than it was 30 years ago. This paper reviews the drivers behind China's learning and trade integration and provides both positive and negative lessons for developing countries with diverse natural endowments, especially those in Sub-Saharan Africa.
    Keywords: patterns of trade; learning; innovation and growth
    JEL: F13 F14 O50 O53
    Date: 2009–02–02
  19. By: Pandey, Priyanka (The World Bank); Goya, Sangeeta (The World Bank); Sundararaman, Venkatesh (The World Bank)
    Abstract: This paper presents findings from baseline surveys on student learning achievement, teacher effort and community participation in three Indian states, Karnataka, Madhya Pradesh and Uttar Pradesh. Results indicate low teacher attendance and poor student learning. Parents and school committees are neither aware of their oversight roles nor participating in school management. However, there is substantial heterogeneity in outcomes across states. Karnataka has better student and teacher outcomes as well as higher levels of community awareness and participation than the other two states. We find substantial variation in teacher effort within schools, but most observable teacher characteristics are not associated with teacher effort. One reason for low teacher effort may be lack of accountability. Regression analysis suggests low rates of teacher attendance are only part of the problem of low student achievement. The gains in test scores associated with higher rates of attendance and engagement in teaching are small in the states of Madhya Pradesh and Uttar Pradesh, suggesting teachers themselves may not be effective. Ineffective teaching may result from lack of accountability as well as poor professional development of teachers. Further research is needed to examine not only issues of accountability but also professional development of teachers.
    Keywords: Academic Achievement; annual grants; average class size; basic competencies; basic education; basic services; blackboards; call; civil service; civil service teachers; class size; class sizes
    Date: 2008–11–01
  20. By: Vollmer, Sebastian (University of GAottingen); Ziegler, Maria (University of GAottingen)
    Abstract: Institutions are a major field of interest in the study of development processes. The authors contribute to this discussion concentrating our research on political institutions and their effect on the non-income dimensions of human development. First, they elaborate a theoretical argument why and under what conditions democracies compared to autocratic political systems might perform better with regards to the provision of public goods. Due to higher redistributive concerns matched to the needs of the population democracies should show a higher level of human development. In the following they analyze whether our theoretical expectations are supported by empirical facts. The authors perform a static panel analysis over the period of 1970 to 2003. The model confirms that living in a democratic system positively affects human development measured by life expectancy and literacy rates even controlling for GDP. By analyzing interaction effects they find that the performance of democracy is rather independent of the circumstances. However, democracy leads to more redistribution in favor of health provision in more unequal societies.
    Keywords: human development; democracy; political institutions; life expectancy; literacy; panel analysis
    JEL: H11 I10 I20
    Date: 2009–01–01
  21. By: KENNY, CHARLES (The World Bank)
    Abstract: Every year, around 60,000 people die worldwide in natural disasters. The majority of the deaths are caused by building collapse in earthquakes, and the great majority occurs in the developing world. This is despite the fact that engineering solutions exist that can almost completely eliminate the risk of such deaths. Why is this? The engineering solutions are both expensive and technically demanding, so that the benefit-cost ratio of such solutions is often unfavorable compared with other interventions designed to save lives in developing countries. Nonetheless, a range of public disaster risk-reduction interventions (including construction activities) are highly cost effective. The fact that such interventions often remain unimplemented or ineffectively executed points to a role for issues of political economy. Building regulations in developing countries appear to have limited impact in many cases, perhaps because of limited capacity and the impact of corruption. Public construction is often of low quality--perhaps for similar reasons. This suggests approaches that emphasize simple and limited disaster risk regulation covering only the most at-risk structures and that (preferably) can be monitored by non-experts. It also suggests a range of transparency and oversight mechanisms for public construction projects.
    Keywords: access to information; accidents; aged; AIDS epidemic; Building Code; building codes; catastrophic events; causes of death; child health; child mortality; child mortality rate; child mortality rates
    Date: 2009–01–01
  22. By: Azam, Mehtabul Azam (Southern Methodist University); Blom, Andreas (The World Bank)
    Abstract: Using nationally representative household surveys, this paper examines the trends in attainment, enrollment, and access to tertiary (higher) education in India from 1983 to 2005. The findings suggest that there has been considerable progress in attainment and participation; however, they remain low. Important gaps exist in enrollment between rich and poor, rural and urban areas, men and women, disadvantaged groups and the general population, and states. Analysis of transition rates from secondary education to tertiary education and regression analysis indicate that inequality in tertiary education between disadvantaged groups and the general population is explained by low completion rates of secondary education. Inequality in tertiary education related to income, gender, rural residence, and between states is explained by: (i) differences in completion rates of secondary education, and (ii) differences in the probability of transitioning from secondary education to tertiary education. In particular, the importance of household income has grown markedly. Equitable expansion of secondary education is therefore critical for improving the equity of tertiary education. There is also a need to help qualified youth from low-income families and rural backgrounds to attend tertiary education, in particular the technical and engineering streams, in which participation is lower.
    Keywords: access to higher education; access to tertiary education; age cohort; age group; age groups; colleges; competition for entry; completion rate; completion rates degree courses; degrees
    Date: 2008–12–01
  23. By: Iarossi, Giuseppe (The World Bank)
    Abstract: In this paper, the author attempts to identify the characteristics of the business climate in India that can help explain the different performance of individual states in terms of investment and growth. The paper develops a new Investment Climate Index aimed at summarizing the aspects of the business environment that entrepreneurs consider when deciding whether to invest. Using this index, the author explores the investment climate in several typologies of Indian states and identify the key features of a poor business environment in India. The analysis shows that infrastructure and institutions remain the main bottlenecks in the country's private sector development. More specifically, power, transportation, corruption, tax regulations, and theft are major factors explaining the poor business environment in some Indian states. Infrastructure appears to be the single most important constraint, as it is particularly binding in states that show low levels of domestic investment and GDP growth.
    Keywords: affiliated organizations; bank financing; bottlenecks; business climate; business environment; business regulations; collateral; Cost of finance; data availability; domestic investment;
    Date: 2009–01–01
  24. By: Dessus, Sebastien (The World Bank); Nahas, Charbel (The World Bank)
    Abstract: With growing international skilled labor mobility, education and migration decisions have become increasingly inter-related, and potentially have a large impact on the growth trajectories of source countries, through their effects on labor supply, savings, or the cost of education. The authors develop a generic dynamic general equilibrium model to analyze the education-migration nexus in a consistent framework. They use the model as a laboratory to test empirical conditions for the existence of net brain gain, that is, greater domestic accumulation of human capital (in per capita terms) with greater migration of skilled workers. The results suggest that although some structural parameters can favor simultaneously greater human capital accumulation and greater skilled migration --such as high ratio of remittances over domestic incomes, high dependency ratios in migrant households, low dependency ratios in source countries, increasing returns to scale in the education sector, technological transfers and export market access with Diasporas, and efficient financial markets -- this does not necessarily mean that greater migration encourages the constitution of greater stocks of human capital in source countries.
    Keywords: Migration; Education; Brain Gain; Brain Drain; General Equilibrium Models
    JEL: C68 P36 R23
    Date: 2008–11–01
  25. By: Demirguc-Kunt, Asli (The World Bank); Serven, Luis (The World Bank)
    Abstract: The recent global financial crisis has shaken the confidence of developed and developing countries alike in the very blueprint of financial and macro policies that underlie the western capitalist systems. In an effort to contain the crisis from spreading, the authorities in the US and many European governments have taken unprecedented steps of providing extensive liquidity, giving assurances to bank depositors and creditors that include blanket guarantees, and structuring bail-out programs that include taking large ownership stakes in financial institutions, in addition to establishing programs for direct provision of credit to non-financial institutions. Emphasizing the importance of incentives and tensions between short term and longer term policy responses to crisis management, this paper draws on a large body of research evidence and country experiences to discuss the implications of the current crisis for financial and macroeconomic policies going forward.
    Keywords: Financial crisis; Regulation and Supervision; Safety Nets; Role of State in Finance; Monetary Policy; Asset Bubbles; Capital Controls
    JEL: E52 E58 F32 G21 G28 G32
    Date: 2009–02–01
  26. By: Hoekman , Bernard (The World Bank); Nicita, Alessandro (UNCTAD)
    Abstract: This paper briefly reviews new indices of trade restrictiveness and trade facilitation that have been developed at the World Bank. The paper also compares the trade impact of different types of trade restrictions applied at the border with the effects of domestic policies that affect trade costs. Based on a gravity regression framework, the analysis suggests that tariffs and non-tariff measures continue to be a significant source of trade restrictiveness for low-income countries despite preferential access programs. This is because the value of trade preferences is quite limited: a new measure of the relative preference margin developed in the paper reveals that this is very low for most country-pairs. Most countries with very good (duty-free) access to a market generally have competitors that have the same degree of access. The empirical analysis suggests that measures to improve logistics performance and facilitate trade are likely to have the greatest positive effects in expanding developing country trade, increasing the trade impacts of lowering remaining border barriers by a factor of two or more.
    Keywords: Tariffs; nontariff measures; trade facilitation; logistics; economic development; Doha Round
    JEL: F13
    Date: 2008–12–01
  27. By: Skoufias, Emmanuel (The World Bank); Gonzalez-Cossio, Teresa (The World Bank)
    Abstract: The authors use the unique experimental design of the Food Support Program (Programa Apoyo Alimentario) to analyze in-kind and cash transfers in the poor rural areas of southern states of Mexico. They compare the impacts of monthly in-kind and cash transfers of equivalent value (mean share 11.5 percent of pre-program consumption) on household welfare as measured by food and total consumption, adult labor supply, and poverty. The results show that approximately two years later the transfer has a large and positive impact on total and food consumption. There are no differences in the size of the effect of transfer in cash versus transfers in-kind on consumption. The transfer, irrespective of type, does not affect overall participation in labor market activities but induces beneficiary households to switch their labor allocation from agricultural to nonagricultural activities. The analysis finds that the program leads to a significant reduction in poverty. Overall, the findings suggest that the Food Support Program intervention is able to relax the binding liquidity constraints faced by poor agricultural households, and thus increases both equity and efficiency.
    Keywords: Adult Work Incentives; Cash Transfers; Consumption; Difference-in-Differences; In-Kind Transfers; Mexico; Poverty Measures; PAL; Randomized design.
    JEL: C21 J22 O12
    Date: 2008–11–01
  28. By: Urdapilleta, Eduardo (The World Bank); Stephanou, Constantinos (The World Bank)
    Abstract: he objective of this paper is to analyze the industry structure of banking services in Brazil in order to shed light on financial performance and its drivers at a disaggregated level. The study illustrates how differences across market segments -- which tend to be averaged out in aggregate analysis -- need to be taken into account when analyzing performance and designing public policy for the banking sector. In particular, retail banking is found to be less sensitive to price competition and to exhibit considerably higher returns than corporate banking. The authors identify and discuss the factors underlying revenues, costs, and risks in each market segment, and conclude with policy implications.
    Keywords: Brazil; banking; competition; industry structure; performance
    Date: 2009–01–01
  29. By: Schiff, Maurice (The World Bank); Wang, Yanling (Carleton Universit)
    Abstract: The economies of small developing states tend to be more fragile than those of large ones. This paper examines this issue in a dynamic context by focusing on the impact of the brain drain on North-South trade-related technology diffusion and total factor productivity growth in small and large states in the South. There are three main findings. First, productivity growth increases with North-South trade-related technology diffusion and education and the interaction between the two, and decreases with the brain drain. Second, the impact of North-South trade-related technology diffusion, education, and their interaction on productivity growth in small states is more than three times that for large countries, with the negative impact of the brain drain thus more than three times greater in small than in large states. And third, the greater loss in productivity growth in small states has two brain drain-related causes: a substantially greater sensitivity of productivity growth to the brain drain, and brain drain levels that are more than five times greater in small than in large states.
    Keywords: brain drain; technology diffusion; trade; productivity growth
    JEL: F22 J61
    Date: 2009–01–01
  30. By: Milanovic, Branko (The World Bank); Ersado, Lire (The World Bank)
    Abstract: Using for the first time household survey data from 26 post-Communist countries, covering the period 1990-2005, this paper examines correlates of unprecedented increases in inequality registered by most of the economies. The analysis shows, after controlling for country fixed effects and type of survey used, that economic reform is strongly negatively associated with the income share of the bottom decile, and positively with the income shares of the top two deciles. However, breaking economic reform into its component parts, the picture is more nuanced. Large-scale privatization and infrastructure reform (mostly consisting of privatization and higher fees) are responsible for the pro-inequality effect; small-scale privatization tends to raise the income shares of the bottom deciles. Acceleration in growth is also pro-rich. But democratization is strongly pro-poor, as is lower inflation. Somewhat surprisingly, the analysis finds no evidence that greater government spending as share of gross domestic income reduces inequality.
    Keywords: Inequality; transition; economic policy
    JEL: D31
    Date: 2008–11–01
  31. By: F. Angel-Urdinola, Diego (The World Bank)
    Abstract: This paper relies on a simple framework to understand the gender wage gap in Macedonia, and simulates how the gender wage gap would behave after the introduction of a minimum wage. First, it presents a newâÃÂÃÂalbeit simpleâÃÂÃÂdecomposition of the wage gap into three factors: (i) a wage level factor, which measures the extent to which the gender gap is driven by differences in wage levels among low-skilled workers of opposite sex; (ii) a skills endowment factor, which quantifies the extent to which the gender wage gap is driven by the difference in the share of high-skilled workers by gender; and (iii) returns to education, which measures the extent to which the gender gap is driven by differences by gender in returns to education. Second, the paper presents simple set of simulations that indicate that the introduction of a minimum wage in Macedonia could contribute to decrease the gender wage gap by up to 23 percent. Nevertheless, in order to significantly improve the wage gap, a rather high minimum wage may be required, which may contribute to reductions in employment.
    Keywords: Minimum wages; Gender Gap; Wage Differentials; Macedonia
    JEL: I32 J23 J38 J71
    Date: 2008–12–01
  32. By: Ban, Radu (The World Bank); Das Gupta, Monica (The World Bank); Rao, Vijayendra (The World Bank)
    Abstract: Despite efforts to mandate and finance local governments' provision of environmental sanitation services, outcomes remain poor in the villages surveyed in the four South Indian states. The analysis indicates some key issues that appear to hinder improvements in sanitation. Local politicians tend to capture sanitary infrastructure and cleaning services for themselves, while also keeping major village roads reasonably well-served. Their decisions suggest, however, that they neither understand the health benefits of sanitation, nor the negative externalities to their own health if surrounding areas are poorly served. Our findings suggest that improving sanitary outcomes requires disseminating information on the public goods nature of their health benefits, as well as on the local government's responsibilities. It also requires putting public health regulations in place, along with measures to enable accountability in service provision.
    Keywords: access to services; accountability; Accounting; affiliates; agricultural output; agriculture; air; air freight; air transport; Backbone; bank loans; Bank of Tanzania; Banking sector
    Date: 2008–12–01
  33. By: Yifu Lin, Justin (The World Bank); Li, Zhiyun (University of Oxford)
    Abstract: This paper explores endogenous institution formation under a catching-up strategy in developing countries. Since the catching-up strategy is normally against the compartive advantages of the developing countries, it can not be implemented through laissez-faire market mechanisms, and a government needs to establish non-market institutions to implement the strategy. In a simple two-sector model, the authors show that an institutional complex of price distortion, output control, and a directive allocation system is sufficient to implement the best allocation for the catching-up strategy. Furthermore, removing any of the three components will make it no longer implementable. The analysis also compares the best allocation and prices under the catching-up strategy with their counterparts under no distortions. The results of this paper provide important implications for understanding the institution formation in the developing countries that were pursuing a catching-up strategy after World War II.
    Keywords: development strategy; institution; price distortion; output control; directive allocation system
    JEL: D02 O17 O20 P41
    Date: 2008–12–01
  34. By: Hostland, Doug (The World Bank)
    Abstract: Private debt flows to developing countries surged to record levels over the period 2003-07. A few low-income countries have gained access to the international bond market but the bulk of the flows have continued to go to just a few large middle-income countries. Most low-income countries still heavily depend on concessional loans and grants from the official sector to meet their financing needs. The paper provides an overview of low-income countries' access to cross-border bank lending and bond issuance in the international market over the past few decades. It highlights some stylized facts that characterize salient features of low-income countries' experience in external borrowing from the private sector and discusses the various factors that influence governments' and corporations' decisions to seek external financing along with creditors' decisions to provide the financing. The paper concludes by assessing the prospects for low-income countries' access to private debt markets over the medium term.
    Keywords: accounting; asset class; asymmetric information; availability of credit; average debt; balance of payments; bank lending; bank loan; bank loans; basis points; binding constraint; bond indexes
    JEL: F21 F32 F34 G15
    Date: 2009–02–04
  35. By: Linnemayr, Sebastian (Harvard University); Alderman, Harold (The World Bank)
    Abstract: Large-scale randomized interventions have the potential to uncover the causal effect of programs applying to a large population, thereby improving on the insights gained from currently dominant smaller randomized studies. However, the external validity gained through larger interventions typically implies less supervision and often comes at the cost of some deviation from the randomization plan. This paper investigates the impact of the Nutrition Enhancement Program, which aims to improve child nutrition in Senegal based on a large-scale randomized community intervention. The analysis explicitly deals with deviation from the planned treatment and suggests approaches for combining ex-post adjustments such as propensity score matching with the randomized treatment plan. The authors do not detect a strong overall program impact on the outcome measure of weight-for-age based on planned treatment status, but do find an impact on the youngest children. Moreover, the project impact is clearer when the analysis considers treatment crossover using alternative estimators of two-stage least-squares and propensity score matching. The findings underscore the importance of addressing the shortcomings of large-scale randomization interventions in a systematic manner in order to understand the selection process that can guide further implementation of such projects, as well as to expose the true, causal effect of such programs.
    Keywords: Nutrition; Impact evaluation
    JEL: I12 O12
    Date: 2008–11–01
  36. By: Jensen, Jesper (Teca Training); F. Rutherford , Thomas (Swiss Federal Institute of Technology); G. Tarr, David (The World Bank)
    Abstract: This paper employs a 52-sector, small, open-economy computable general equilibrium model of the Tanzanian economy to assess the impact of the liberalization of regulatory barriers against foreign and domestic business service providers in Tanzania. The model incorporates productivity effects in both goods and services markets endogenously, through a Dixit-Stiglitz framework. It summarizes policy notes on the key business service sectors that were prepared for this work, and estimates the ad valorem equivalent of barriers to foreign direct investment based on these policy notes and detailed questionnaires completed by specialists in Tanzania. The authors estimate that Tanzania will gain about 5.3 percent of the value of Tanzanian consumption in the medium run (or about 4.8 percent of gross domestic product) from a full reform package that also includes uniform tariffs. The estimated gains increase to about 16 percent of consumption in the long-run, steady-state model, where the impact on the accumulation of capital from an improvement in the productivity of capital is taken into account. Decomposition exercises reveal that the largest gains to Tanzania will derive from liberalization of costly regulatory barriers that are non-discriminatory in their impacts between Tanzanian and multinational service providers.
    Keywords: accounting; accurate estimate; aged; allocation; amount of money; baseline scenario; beneficiaries; beneficiary; Breast Cancer; budget constraint; calculation; central government; child care
    Date: 2008–12–01
  37. By: Dethier, Jean-Jacques (The World Bank); Hirn, Maximilian (The World Bank); Straub, Stephane (Arqade, Toulouse School of Economics)
    Abstract: This paper surveys the recent literature which examines the impact of business climate variables on productivity and growth in developing countries using enterprise surveys. Comparable enterprise surveys today cover some 70,000 firms in over 100 countries around the world. The literature that has analyzed this data provides evidence that a good business climate drives growth by encouraging investment and higher productivity. Various infrastructure, finance, security, competition and regulation variables have been shown to significantly impact firm performance. Section 1 of this paper outlines the theoretical framework that underpins the investment climate literature. Section 2 describes the available datasets and surveys the key findings of the empirical literature, first macroeconomic and then microeconomic studies. Particular attention is paid to the robustness of the reported results. Section 3 highlights important econometric issues common to this literature and suggests a research agenda and possible improvements in survey design.
    Keywords: Investment Climate; Growth and Productivity; Economic Development
    JEL: L50 O12 O40
    Date: 2008–12–01
  38. By: Tosun, Mehmet Serkan (University of Nevada-Reno); Yilmaz, Serdar (The World Bank)
    Abstract: This paper examines broadly the intergovernmental structure in the Middle East and North Africa region, which has one of the most centralized government structures in the world. The authors address the reasons behind this centralized structure by looking first at the history behind the tax systems of the region. They review the Ottoman taxation system, which has been predominantly influential as a model, and discuss its impact on current government structure. They also discuss the current intergovernmental structure by examining the type and degree of decentralization in five countries representative of the region: Egypt, Iran, West Bank/Gaza, Tunisia, and Yemen. Cross-country regression analysis using panel data for a broader set of countries leads to better understanding of the factors behind heavy centralization in the region. The findings show that external conflicts constitute a major roadblock to decentralization in the region.
    Keywords: Fiscal decentralization; intergovernmental relations; Middle East and North Africa
    JEL: H77 H87 N45 O53
    Date: 2008–11–01
  39. By: Kenny, Charles (The World Bank); Soreide, Tina (The World Bank)
    Abstract: This paper discusses mechanisms of grand corruption in private sector utility provision in developing countries. By the term "grand corruption," the authors abstract from the petty corruption that consumers experience -- for example, when firms and individuals pay bribes to get water delivery or an electricity connection. The paper focuses on decisions made at the government level involving private sector management, ownership, and provision of utility services. Corruption at that level may influence the pace and nature of private sector involvement and competition in utilities, as well as the level and form of investments, subsidies, and prices. On the basis of a literature review and interviews with firms and regulating authorities in two countries, Tanzania and the Philippines, this paper discusses the levels and determinants of grand corruption in utilities. The paper concludes by discussing a research program to extend this knowledge through a cross-country survey instrument.
    Keywords: abuse; access to capital; access to finance; Access to information; accessibility; accountability; anti-corruption; Asian Development Bank; assets; asymmetric information; authority;
    Date: 2008–12–01
  40. By: Kuegler, Alice (The World Bank)
    Abstract: This paper proposes that individuals care about the relative income of proximate reference groups. Making use of self-reported life satisfaction as a proxy for unobservable utility, the relative income of siblings is tested for relevance as a reference point for new sample data from Venezuela. Having greater perceived income than one's siblings is found to be positively linked to individual life satisfaction. This evidence supplements the scarce economic research on reference groups, supporting the hypothesis that individuals with proximate characteristics and resembling opportunities in life serve as points of comparison.
    Keywords: reference groups; relative income; life satisfaction
    JEL: D01 D12 D31
    Date: 2009–01–01
  41. By: Skoufias, Emmanuel (The World Bank); Katayama, Roy (The World Bank)
    Abstract: Brazil's inequalities in welfare and poverty across and within regions can be accounted for by differences in household attributes and returns to those attributes. This paper uses Oaxaca-Blinder decompositions at the mean as well as at different quantiles of welfare distributions on regionally representative household survey data (2002-03 Household Budget Survey). The analysis finds that household attributes account for most of the welfare differences between urban and rural areas within regions. However, comparing the lagging Northeast region with the leading Southeast region, differences in returns to attributes account for a large part of the welfare disparities, in particular in metropolitan areas, supporting the presence of agglomeration effects in booming areas.
    Keywords: Brazil; Leading and Lagging Regions; Welfare; Poverty; Oaxaca-Blinder decompositions
    JEL: I31 O15 O18 R10 R23 R58
    Date: 2009–02–02
  42. By: Chen, Dandan (The World Bank)
    Abstract: This paper examines the differentiated outcomes of vocational and general secondary academic education, particularly in terms of employment opportunities, labor market earnings, and access to tertiary education in Indonesia. With data from a panel of two waves of the Indonesia Family Life Survey in 1997 and 2000, the paper tracks a cohort of high school students in 1997 to examine their schooling and employment status in 2000. The findings demonstrate that: (1) attendance at vocational secondary schools results in neither market advantage nor disadvantage in terms of employment opportunities and/or earnings premium; (2) attendance at vocational schools leads to significantly lower academic achievement as measured by national test scores; and (3) There is no stigma attached to attendance at vocational schools that results in a disadvantage in access to tertiary education; rather, it is the lower academic achievement associated with attendance at vocational school that lowers the likelihood of entering college. The empirical approach of this paper addresses two limitations of the existing literature in this area. First, it takes into account the observation censoring issue due to college entry when evaluating labor market outcomes of secondary school graduates. Second, using an instrumental variable approach, the paper also treats endogeneity of household choice of vocational versus academic track of secondary education, teasing out the net effect of secondary school choice on labor market and schooling outcomes.
    Keywords: academic achievement; academic attainment; academic content; academic education; academic schools; access to higher education; access to tertiary education; catholic schools; classroom; classroom time
    Date: 2009–01–01
  43. By: Moral-Benito, Enrique (CEMFI)
    Abstract: Model uncertainty hampers consensus on the key determinants of economic growth. Some recent cross-country, cross-sectional analyses have employed Bayesian Model Averaging to address the issue of model uncertainty. This paper extends that approach to panel data models with country-specific fixed effects. The empirical results show that the most robust growth determinants are the price of investment goods, distance to major world cities, and political rights. This suggests that growth-promoting policy strategies should aim to reduce taxes and distortions that raise the prices of investment goods; improve access to international markets; and promote democracy-enhancing institutional reforms. Moreover, the empirical results are robust to different prior assumptions on expected model size.
    Keywords: accounting; Average growth; Average growth rate; benchmark; calculations; capital accumulation; civil liberties; conditional convergence; Contribution; convergence parameter; country regressions
    Date: 2009–01–01
  44. By: Pandey, Priyanka (The World Bank); Goya, Sangeeta (The World Bank); Sundararaman, Venkatesh (The World Bank)
    Abstract: This study evaluates the impact of a community-based information campaign on school performance from a cluster randomized control trial. The campaign consisted of eight to nine public meetings in each of 340 treatment villages across three Indian states to disseminate information to the community about its state mandated roles and responsibilities in school management. The findings from the first follow-up 2-4 months after the campaign show that providing information through a structured campaign to communities had a positive impact in all three states. In two states there was a significant and positive impact on reading (14-27 percent) in one of the three grades tested; in the third state there was a significant impact on writing in one grade (15 percent) and on mathematics in the other grade tested (27 percent). The intervention is associated with improvement in teacher effort in two states. Some improvements occurred in the delivery of certain benefits entitled to students (stipend, uniform, and mid day meal) and in process variables such as community participation in each of the three states. Follow-up research needs to examine whether there is a systematic increase in learning when the impact is measured over a longer time period and whether a campaign sustained over a longer time is able to generate greater impact on school outcomes.
    Keywords: annual grants; attendance requirements; average treatment effect; basic education; blackboards; call; civil service; civil service teachers; classroom; Community Participation; competencies
    Date: 2008–11–01
  45. By: Wagstaff, Adam (The World Bank)
    Abstract: How can the impact of aid be estimated in the presence of fungibility? And how far does fungibility reduce its benefits? These questions are analyzed in a context where a donor wants to target its efforts on a specific sector and specific geographic areas. A traditional differences-in-differences method comparing the change in outcomes between the target and nontarget areas before and after the project risks misestimating the project's benefits. The paper develops an alternative estimation method in which intersectoral fungibility reduces project benefits insofar as government spending has a smaller impact in the sector to which the funds leak than in the target sector, while intrasectoral fungibility reduces benefits insofar as the donor is able to leverage productivity increases in government spending in the target areas. The methods are applied to two contemporaneous World Bank health projects that set out to target assistance on approximately one-half of Vietnam's provinces. Aid is not apparently fungible between Vietnam's health sector and other sectors, but is fungible across provinces within the health sector. Differences-in-differences yield an insignificant impact on infant mortality, while the use of the new method yields a statistically significant impact of around 4 per 1000 live births. The results, however, are ambiguous on the costs associated with intrasectoral fungibility.
    Keywords: foreign aid; fungibility; impact evaluation; child mortality
    Date: 2008–12–01
  46. By: Research Group, Development (The World Bank)
    Abstract: The benefits of financial development and globalization have come with continuing fragility in financial sectors. Periodic crises have had real but heterogeneous welfare impacts and not just for poor people; indeed, some of the conditions that foster deep and persistent poverty, such as lack of connectivity to markets, have provided a degree of protection for the poor. Past crises have also had longer-term impacts for some of those affected, most notably through the nutrition and schooling of children in poor families. As in other areas of policy, effective responses to a crisis require sound data and must take account of incentives and behavior. An important lesson from past experience is that the short-term responses to a crisis -- macroeconomic stabilization, trade policies, financial sector policies and social -- cannot ignore longer-term implications for both economic development and vulnerability to future crises.
    Keywords: Financial crisis; macroeconomic response; social protection; poverty; safety nets
    JEL: H53 I38
    Date: 2008–12–01
  47. By: Kudo, Ines (The World Bank); Bazan, Jorge (Pontifical Catholic University of Peru)
    Abstract: Based on analysis of reading performance data from 475 third-graders in Peru, this study makes recommendations on improving reading tests, choice of reading standards, and how to present the results at the school and individual levels. The paper reviews the literature on using reading skills measurement in the early grades to guide policymaking, strengthen accountability, and improve education quality. It uses data generated from the same students using two common approaches to measuring reading skills: an individually-administered oral fluency test, and a group-administered written comprehension test designed by the Ministry of Education for the 2006 universal standard test of second grade reading comprehension. These two approaches have sometimes been presented as competing alternatives, but the paper shows that it is better if they are used together, as complements. Based on psychometric analysis, the paper shows that both the oral and written tests adequately measured studentsâÃÂàreading abilities. The results show that reading fluency and comprehension are correlated: fluent readers are more likely to understand what they read than non-fluent readers. The strength of the fluency-comprehension relationship depends on the level of fluency, the difficulty of the questions, and social characteristics of the school. The paper recommends using improved versions of both tests to evaluate early grade reading skills, as a central element of a system of accountability for results. It proposes a model for reporting test results desgned to highlight the importance of reading standards, mobilize the education community to reach them, track progress, and identify students in need of extra support.
    Keywords: academic performance; access to education; access to preschool; access to preschool education; Achievement; achievements; addition; adults; Assessment of Literacy; average score; Basic Skills;
    Date: 2009–01–01
  48. By: E. de Hoyos, Rafael (SEMS); Bussolo, Maurizio (The World Bank); Nunez, Oscar (The World Bank)
    Abstract: This paper identifies and estimates the strength of the reduction in poverty linked to improved opportunities for women in the expanding maquila sector. A simulation exercise shows that, at a given point in time, poverty in Honduras would have been 1.5 percentage points higher had the maquila sector not existed. Of this increase in poverty, 0.35 percentage points is attributable to the wage premium paid to maquila workers, 0.1 percentage points to the wage premium received by women in the maquila sector, and 1 percentage point to employment creation. Given that female maquila workers represent only 1.1 percent of the active population in Honduras, this contribution to poverty reduction is significant.
    Keywords: Trade liberalization; maquila; poverty; gender wage gap; Honduras
    JEL: F16 I32 J24 J31
    Date: 2008–12–01
  49. By: Lokshin , Michael (The World Bank); Radyakin, Sergiy (The World Bank)
    Abstract: The authors use data from three waves of the India National Family Health Survey to explore the relationship between the month of birth and the health outcomes of young children in India. They find that children born during the monsoon months have lower anthropometric scores compared with children born during the fall and winter months. The authors propose and test four hypotheses that could explain such a correlation. The results emphasize the importance of seasonal variations in affecting environmental conditions at the time of birth and determining the health outcomes of young children in India. Policy interventions that affect these conditions could effectively impact the health and achievement of these children, in a manner similar to nutrition and micronutrient supplementation programs.
    Keywords: Nutrition; anthropometry; child health; seasonality; poverty; India
    JEL: I32 J12 O12
    Date: 2009–01–01
  50. By: Byrd, William (The World Bank); Guimbert, Stephane (The World Bank)
    Abstract: Security is increasingly viewed as a key condition for economic growth and development. The authors argue that the work and impact of all development partners would be enhanced if the multiple linkages between public finance, security, and development were explicitly taken into account. At the extreme, in some cases better public finance management could have more impact on security than would more troops. The paper first outlines three core linkages between security and development--through the investment climate, human and social capital, and institutions. The authors then propose three complementary tools to analyze the security sector from the point of view of public finance management, service delivery, and governance. This conceptual framework is applied to the case of Afghanistan. The paper closes by drawing some conclusions about possible entry points for dialogue in this difficult area.
    Keywords: access to education; access to employment; access to information; access to resources; accountability; accounting; adverse consequences; adverse effects; affordability; Aid Effectiveness;
    Date: 2009–01–02
  51. By: Ahmed, Sadiq (The World Bank)
    Abstract: The surge in global commodity prices of the past few years has presented a tremendous development challenge for South Asian countries. The large loss of income from the terms of trade shock has worsened macroeconomic balances, fueled rapid inflation, and hurt growth. Although commodity prices have come down recently, the benefits are being clouded by the emergence of a severe global financial crisis. The adverse consequences of the food price hike for the poor are large; the global financial crisis could further worsen the situation due to falling economic opportunities and government revenues. South Asian countries need to accelerate reforms to avoid facing a serious downturn in economic activity, investment, exports, and income. Governments in South Asia have responded by stabilizing domestic food prices through a number of short-term measures, tightened monetary policy to reduce inflation, and increased spending on a range of safety net programs for the poor. Some of the policies employed, such as export bans, are not consistent with the long-term welfare of the country or the region. Safety net interventions need to be made consistent with a longer-term poverty reduction strategy and fiscal sustainability. Most importantly, policy attention now needs to shift toward efforts to increase farm productivity, improve rural infrastructure, and lower the vulnerability of the poor.
    Keywords: adverse consequences; adverse effect; Adverse Effects; Agricultural Productivity; Agriculture; average price; average prices; average productivity; basic needs; binding constraint; buffer stocks
    Date: 2008–12–01
  52. By: V. Del Carpio, Ximena (The World Bank); Macours, Karen (Johns Hopkins University)
    Abstract: This paper analyzes changes in the allocation of child labor within the household in reaction to exogenous shocks created by a social program in Nicaragua. The paper shows that households that randomly received a conditional cash transfer compensated for some of the intra-household differences, as they reduced child labor more for older boys who used to work more and for boys who were further behind in school. The results also show that households that randomly received a productive investment grant, in addition to the basic conditional cash transfer benefits, both targeted at women, show an increased specialization of older girls in nonagricultural and domestic work, but no overall increase in girls' child labor. The findings suggest that time allocation and specialization patterns in child labor within the household are important factors to understand the impact of a social program.
    Keywords: Child labor; intra-household; human capital; impact evaluation; gender
    JEL: D13 J16 J22 J24 O12
    Date: 2009–02–04
  53. By: Cull, Robert (The World Bank); P. Spreng, Connor (The World Bank)
    Abstract: Profitability improvements after the privatization of a large state-owned bank might come at the expense of reduced access to financial services for some groups, especially the rural poor. The privatization of Tanzania's National Bank of Commerce provides a unique episode for studying this issue. The bank was split into the "new" National Bank of Commerce, a commercial bank that assumed most of the original bank's assets and liabilities, and the National Microfinance Bank, which assumed most of the branch network and the mandate to foster access to financial services. The new National Bank of Commerce's profitability and portfolio quality improved although credit growth was slow, in line with privatization experiences in other developing countries. Finding a buyer for the National Microfinance Bank proved very difficult, although after years under contract management by private banking consultants, Rabobank of the Netherlands emerged as a purchaser. Profitability has since improved and lending has slowly grown, while the share of non-performing loans remains low.
    Keywords: access to banking; access to banking services; access to financial services; access to services; Accounting; Agricultural Bank; asset allocation; asset portfolio; ATMs
    Date: 2008–12–01
  54. By: Hou, Xiaohui (The World Bank)
    Abstract: The relationship between wealth and child labor has been widely examined. This paper uses three rounds of time-series, cross-sectional data to examine the relationship between wealth and child labor and schooling. The paper finds that wealth is crucial in determining a child's activities, but that this factor is far from being a sufficient condition to enroll a child in school. This is particularly the case for rural girls. Nonparametric analysis shows a universal increase in school enrollment for rural girls from 1998 to 2006. This increase is independent of wealth (measured by per capita expenditure). Multinomial logit regression further shows that wealth is insignificant in determining rural girls' activity decisions. Thus, interventions to increase school enrollment should incorporate broad-targeted, demand-side interventions as well as supply-side interventions.
    Keywords: Child labor; Education; Poverty
    JEL: D01 J13 O12
    Date: 2009–02–02
  55. By: Delavande, Adeline (RAND); Gine, Xavier (The World Bank); McKenzie, David (The World Bank)
    Abstract: The majority of economic decisions taken by individuals are forward looking and thus involve their expectations of future outcomes. Understanding the expectations that individuals have is thus of crucial importance to designing and evaluating policies in health, education, finance, migration, social protection, and many other areas. However, the majority of developing country surveys are static in nature and do not contain information on the subjective expectations of individuals. Possible reasons given for not collecting this information include fears that poor, illiterate individuals do not understand probability concepts, that it takes far too much time to ask such questions, or that the answers add little value. This paper provides a critical review and new analysis of subjective expectations data from developing countries and refutes each of these concerns. The authors find that people in developing countries can generally understand and answer probabilistic questions, such questions are not prohibitive in time to ask, and the expectations are useful predictors of future behavior and economic decisions. The paper discusses the different methods being tried for eliciting such information, the key methodological issues involved, and the open research questions. The available evidence suggests that collecting expectations data is both feasible and valuable, suggesting that it should be incorporated into more developing country surveys.
    Keywords: Subjective Expectations; Survey Methodology; Development.
    JEL: C81 D84 O12
    Date: 2009–01–01
  56. By: Njinkeu, Dominique (International Lawyers and Economists Against Poverty (ILEAP)); S. Wilson, John (The World Bank); Powo Fosso, Bruno (Human Resources and Social Development Canada (HRSDC))
    Abstract: This paper examines the impact of trade facilitation on intra-African trade. The authors examine the role of trade facilitation reforms, such as increased port efficiency, improved customs, and regulatory environments, and upgrading services infrastructure on trade between African countries. They also consider how regional trade agreements relate to intra-African trade flows. Using trade data from 2003 to 2004, they find that improvement in ports and services infrastructure promise relatively more expansion in intra-African trade than other measures. They also show that, almost all regional trade agreements have a positive effect on trade flows
    Keywords: Trade; Africa; Regional Integration; Trade Facilitation
    JEL: F10 F15
    Date: 2008–12–01
  57. By: Prema-chandra Athukorala
    Abstract: This paper examines how China’s emergence as a major player in the global economy is affecting export performance of and FDI flows to its East Asian neighbours against the backdrop of the ongoing process of global production sharing. The findings indicate that the ‘China threat’ has been vastly exaggerated in the contemporary policy debate. China’s rapid market penetration in traditional labour intensive manufactured goods has occurred mostly at the expense of the high-wage East Asian countries, without crowding out export opportunities of low-wage countries in the region. More importantly, China’s emergence as a major assembly centre within global production networks has created new opportunities for the other East Asian countries to engage in various segments of the production chian in line with their comparative advantage in international production. FDI flows to the other Asian countries seem to be stimulated, rather than crowded out by FDI flows to China.
    Keywords: China, East Asia, exports, global production sharing
    JEL: F14 F23 O53
    Date: 2009
  58. By: Yi Zhang
    Abstract: We empirically investigate the factors that drive China's outward FDI using dynamic panel methods for 27 countries from 1995 to 2002. Based on the literature review we test three hypotheses: comparative advantages in low wage countries, vertical integration towards resource and human capital abundant countries, and the transaction-enforcing FDI to complement exports. Our results provide strong support for the transaction-enforcing motive: China's FDI follows exports. Next, only in the presence of exports, low income per capita is important arguably because low-income countries have a preference for Chinese low-cost exports. Finally, though this series we find no evidence of FDI to skill-abundant countries and no evidence that host market resources or governance matters.
    Keywords: China, transaction-enforcing FDI, locational determinants
    JEL: F21 F23 O16 O19 O53
    Date: 2009–02
  59. By: Michele Fratianni (Indiana University, Kelly School of Business, Bloomington US, Univ. Plitecnica Marche - Dept of Economics, MoFiR)
    Abstract: Financial products are unstandardized and subject to a great deal of uncertainty. They tend to concentrate geographically because of the reduction in information costs resulting from close contacts. Concentration leads to economies of scale and encourages external economies. Great financial centers enjoy a high degree of persistence but are not immune from decline and eventual demise. Yet, their achievements are passed along in a an evolutionary manner. In revisiting the historical record of seven international financial centers –Florence, Venice, Genoa, Antwerp, Amsterdam, London and New Yorku' the paper finds evidence of a long evolutionary chain of banking and finance. As to the present and the future, the forces of integration are likely to give an additional boost to the persistence of international financial centers.
    Keywords: Amsterdam, Antwerp, Banking, Evolution, Finance, Florence, Genoa, London, Money, New York, Venice
    JEL: G15 G21 H63 N20
    Date: 2008–10
  60. By: Yu-chin Chen (University of Washington); Stephen J. Turnovsky (University of Washington)
    Abstract: This paper analyzes the growth and inequality tradeoff for a small open economy where agents differ in their initial endowments of capital stock and international bond-holdings. Our analysis focuses on the distributional impacts of different structural shocks through their effects on agents’ relative wealth and their labor supply decisions. Supplementing the theoretical analysis with numerical simulations, we demonstrate that openness – access to an international capital market – has important consequences on the growth-inequality tradeoff. Specifically, the growth and distributional consequences of structural shocks depend crucially on whether the underlying heterogeneity originates with the initial endowment of domestic capital or foreign bonds.
    Date: 2008–09
  61. By: Luca Marchiori (IRES, Université catholique de Louvain); Patrice Pieretti (CREA, Université du Luxembourg); Benteng Zou (CREA, Université du Luxembourg)
    Abstract: How do high and low skilled migration affect fertility and human capital in migrants’ origin countries? This question is analyzed within an overlapping generations model where parents choose the number of high and low skilled children they would like to have. Individuals migrate with a certain probability and remit to their parents. It is shown that a brain drain induces parents to have more high and less low educated children. Under certain conditions fertility may either rise or decline due to a brain drain. Low skilled emigration leads to reversed results, while the overall impact on human capital of either type of migration remains ambiguous. Subsequently, the model is calibrated on a developing economy. It is found that increased high skilled emigration reduces fertility and fosters human capital accumulation, while low skilled emigration induces higher population growth and a lower level of education.
    Keywords: Skilled emigration, remittances, fertility, human capital
    JEL: F22 F24 J13 J24
    Date: 2008–11
  62. By: Luca Marchiori (IRES, Université catholique de Louvain); Patrice Pieretti (CREA, Université du Luxembourg); Benteng Zou (CREA, Université du Luxembourg)
    Abstract: How do high and low skilled migration affect fertility and human capital in migrants’ origin countries? This question is analyzed within an overlapping generations model where parents choose the number of high and low skilled children they would like to have. Individuals migrate with a certain probability and remit to their parents. It is shown that a brain drain induces parents to have more high and less low educated children. Under certain conditions fertility may either rise or decline due to a brain drain. Low skilled emigration leads to reversed results, while the overall impact on human capital of either type of migration remains ambiguous. Subsequently, the model is calibrated on a developing economy. It is found that increased high skilled emigration reduces fertility and fosters human capital accumulation, while low skilled emigration induces higher population growth and a lower level of education.
    Keywords: migration, human capital, fertility
    JEL: F22 J13 J24
    Date: 2008–12
  63. By: Juan Blyde; Christian Daude; Eduardo Fernandez-Arias
    Abstract: This paper analyzes the long-run relationship between output collapses—defined defined as GDP falling substantially below trend—and total factor productivity (TFP), using a panel of 71 developed and developing countries during the period 1960-2003 to identify episodes of output collapse and estimate counterfactual post-collapse TFP trends. Collapses are concentrated in developing countries, especially African and Latin American, and were particularly widespread in the 1980s in Latin America. Overall, output collapses are systematically associated with long-lasting declines in TFP. The paper explores the conditions under which collapses are least or most damaging, as well as the type of shocks that make collapses more likely or severe, and additionally quantifies the welfare cost associated with output collapses.
    Keywords: Growth, recessions, productivity, recovery
    JEL: F43 O40
    Date: 2009–01
  64. By: Michael Hübler; Thomas S. Lontzek
    Abstract: We study the North-South diffusion of technologies embodied in internationally mobile capital in a framework of intertemporal global welfare maximization. Convergence of the growth rates of technical change in the North and South always occurs in the long-run. However, the degree to which the North-South technology gap can be narrowed depends crucially on the level of the absorptive capacity (human capital, infrastructure, legal framework, etc.) in the South. Performing own innovations in the South narrows the technology gap only in the short-run. An optimal development policy requires more capital to be allocated to the South in earlier stages of development. Allowing for optimal investment into the absorptive capacity, the absorptive capacity rises steadily with the aim to close the technology gap completely. Our results show that an optimal development policy requires FDI to be matched by investment into the absorptive capacity
    Keywords: Technology diffusion, technology transfer, capital mobility, FDI, human capital, absorptive capacity
    JEL: F21 O11 O33 O47
    Date: 2009–01
  65. By: Michael Hübler
    Abstract: This paper analyzes a stylized model of international capital mobility and diffusion of embodied technologies from North to South. The South can fall behind in terms of technologies or get trapped in a situation, in which it is unable to attract foreign capital and embodied technologies, if its absorptive capacity is too low. The paper reconciles the view that technological catching up is stronger, the larger the technology gap with the alternative view that technological catching up is strongest at a medium technology gap. The closer the South is to the technology frontier, the more beneficial is a higher income share of foreign capital. The speed of technology diffusion is higher in small economic regions with high population densities
    Keywords: Technology diffusion, technology transfer, capital mobility, FDI, human capital, absorptive capacity
    JEL: F21 O11 O33 O47
    Date: 2009–01
  66. By: Pansini, Rosaria Vega
    Abstract: The aim of this paper is to show how and why is possible to assess both direct and indirect effects of exogenous income injections on mean income of different household groups using a new approach based on the decomposition of SAM-based multipliers. The approach we propose in this paper allows analyzing the level of inequality in the distribution of income linking the formation of individual/family income to the features of each country’s productive structure and it can be used both for structural analysis and for simulations of redistributive and antipoverty policies. The first step in order to link changes in the level of poverty and inequality to policy measures will be to derive the “accounting price multipliers matrix”, which allows considering the effects of policies affecting the labour market, thus changing the level of wages for different workers ‘categories. Using the traditional Pyatt and Round’s multiplicative decomposition method, we will be then able to disentangle the transfer, the open-loop and the closed-loop effects of a change in the income of exogenous SAM’s accounts. The second step will be to use a new technique introduced by Pyatt and Round (2006) to further decompose each element of the total multiplier matrix in order to enlighten in “microscopic detail” the linkages between each household group’s income of and other accounts whose income has been exogenously injected (i.e. Activities account and Factors account). Moreover, this new approach allows assessing the linkages between each household endowment in terms of factors and the features of the productive system and shading light on the most powerful links among different components of the economic system affecting the distribution of income. The empirical results obtained using the Vietnamese SAM for year 2000 show that the highest direct effects are related to exogenous injections to the agricultural sector and to less skilled labour force and that these effects involved not only on rural male headed but also other household groups. At the same time, the new type of multiplier decomposition shows which are the sectors and factors of production whose increase in income will have the greater indirect effects, increasing also the level of income of all household types. For example, investing in the sector of food processing and on female labour force will benefit the most all household groups, thus representing a policy option good for aggregate growth and for improving the distribution of income.
    Keywords: Income distribution; social accounting matrix; multiplier decomposition; growth; labour market; structure of production
    JEL: D31 D33 D57 O43 O15
    Date: 2008–10
  67. By: Pedro, de Mendonça
    Abstract: We discuss the implications of informality on growth and fiscal policy by considering an informal sector based on low tech firms, in an open economy model of endogenous growth, where labour supply is elastic and increasing returns arise from public spending. We allow for both labour and capital to allocate between sectors and examine the dynamic and policy issues that arise in an economy, where long run outcomes are still dominated by formal activities, but long macroeconomic transitions arise as a result of informal microeconomic activities, which take advantage of both government taxation and limited fiscalization.
    Keywords: Endogenous Growth Theory; Optimal Fiscal Policy; Informal Sector; Public Capital
    JEL: E62 O41 O17 C61 F43
    Date: 2009–02–05
  68. By: James Ted McDonald; M. Rebecca Valenzuela
    Abstract: This paper considers the issue of skill mismatch among immigrants and its impact on their remittance behaviour using cross-sectional data from two linked surveys in the Philippines: the Survey on Overseas Filipinos (SOF) and the Family Income and Expenditure Survey (FIES) for the years 1997, 2000, and 2003. Our main hypothesis is that skills mismatch - broadly defined here as the over-qualification of migrants in terms of educational attainment relative to occupation in their destination country - is prevalent among skilled migrants and exerts a downward pressure on the level of international remittances received by the sending economies. Accordingly, a high incidence of skill mismatch implies that the remittances expatriated would be significantly less compared to conditions of no skills mismatch. We find evidence of substantial skill mismatch, particularly among highly educated women, but there is also systematic variation in the incidence of skill mismatch by family characteristics and host country. In terms of remittances, we find that for women, higher education levels are associated with lower incidence of remittances but larger amounts remitted. However, negative skill mismatch leads to men and women both being more likely to remit money, but for women the amount is significantly less than it otherwise would have been.
    Keywords: remittances, immigrants, education mismatch
    JEL: J24 J61 O15
    Date: 2009–01
  69. By: John Gibson (University of Waikato); Susan Olivia (University of California, Davis)
    Abstract: There is growing interest in the rural non-farm sector in developing countries as a contributor to economic growth, employment generation, livelihood diversification and poverty reduction. Access to infrastructure is identified in some studies as a factor that affects non-farm rural employment and income but less attention has been paid to the constraints imposed by poor quality infrastructure. In this paper we use data from 4000 households in rural Indonesia to show that the quality of two key types of infrastructure – roads and electricity – affects both employment in and income from non-farm enterprises. It appears that there would be gains from development strategies that improve both the access to and the quality of rural infrastructure.
    Keywords: infrastructure; non-farm rural economy; Indonesia
    JEL: H54 O17
    Date: 2008–12–31

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