nep-dev New Economics Papers
on Development
Issue of 2009‒03‒07
fourteen papers chosen by
Jeong-Joon Lee
Towson University

  1. Project Finance as a Driver of Economic Growth in Low-Income Countries By Kleimeier Stefanie; Versteeg Roald
  2. The Health Penalty of China's Rapid Urbanization By E. Van de Poel; O. O'Donnell; E. Van Doorslaer
  3. Can Foreign Aid Buy Investment? Appropriation Through Conflict By David M. Bruner; Robert J. Oxoby
  4. Public Capital, Health Persistence and Poverty Traps By P R Agénor
  5. Gender differentials in agricultural productivity: evidence from Nepalese household data By Thapa, Sridhar
  6. Determinants of international emergency aid - humanitarian need only ? By Fink, Guenther; Redaelli, Silvia
  7. Connecting lagging and leading regions : the role of labor mobility By Lall, Somik V.; Timmins, Christopher; Yu, Shouyue
  8. Valuing mortality and morbidity in the context of disaster risks By L. Cropper, Maureen; Sahin, Sebnem
  9. Local financial development and growth By Kendall, Jake
  10. Determinants of Schooling Outcomes: Empirical Evidence from Rural Ethiopia By Subha Mani; John Hoddinott; John Strauss
  11. Remittances and Temporary Migration By Christian Dustmann; Josep Mestres
  12. Poor household participation in payments for environmental services in Nicaragua and Colombia By Rios, Ana R.; Pagiola, Stefano
  13. International Labor Standards and the Political Economy of Child Labor Regulation By Doepke, Matthias; Zilibotti, Fabrizio
  14. History without Evidence: Latin American Inequality since 1491 By Jeffrey G. Williamson

  1. By: Kleimeier Stefanie; Versteeg Roald (METEOR)
    Abstract: This study investigates the role of project finance as a driver of economic growth. We hypothesize that project finance is beneficial to the least developed economies as it compensates for any lack of domestic financial development. The contractual structure unique to project finance should lead to better investment management and governance. Investigating 90 countries from 1991 to 2005, we find support for our hypothesis. Project finance indeed fosters economic growth and this effect is strongest in low-income countries, where financial development and governance is weak.
    Keywords: financial economics and financial management ;
    Date: 2009
  2. By: E. Van de Poel (Erasmus School of Economics, Erasmus University Rotterdam); O. O'Donnell (University of Macedonia, Thessaloniki, Greece); E. Van Doorslaer (Erasmus School of Economics, Erasmus University Rotterdam)
    Abstract: Rapid urbanization could have positive and negative health effects, such that the net impact on population health is not obvious. It is, however, highly pertinent to the human welfare consequences of development. This paper uses community and individual level longitudinal data from the China Health and Nutrition Survey to estimate the net health impact of China’s unprecedented urbanization. We construct an index of urbanicity from a broad set of community characteristics and define urbanization in terms of movements across the distribution of this index. We use difference-in-differences estimators to identify the treatment effect of urbanization on the self-assessed health of individuals. The results reveal important, and robust, negative causal effects of urbanization on health. Urbanization increases the probability of reporting fair or poor health by 5 to 15 percentage points, with a greater degree of urbanization having larger health effects. While people in more urbanized areas are, on average, in better health than their rural counterparts, the process of urbanization is damaging to health. Our measure of self-assessed health is highly correlated with subsequent mortality and the causal harmful effect of urbanization on health is confirmed using more objective (but also more specific) health indicators, such as physical impairments, disease symptoms and hypertension.
    Keywords: urbanization; health; China; treatment effects; difference-in-differences
    JEL: I12 I18 O18
    Date: 2009–02–19
  3. By: David M. Bruner; Robert J. Oxoby
    Abstract: The failure of foreign aid to promote growth in the developing world has received significant attention as evidence suggests that foreign aid does not translate into investment. This research has demonstrated that poor institutions in these developing economies (particularly with respect to property rights) results in an inability to fully appropriate the return to one’s investment, thereby serving as a prominent disincentive to investment. This paper presents an experimental test of a a 2-player, one-shot game of conflict in which we vary the strength of property rights. Our results suggest that stronger property rights reduce conflict and increase investment. In addition, we test the conventional wisdom that technological progress can increase the effectiveness of aid in stimulating investment. Contrary to intuition, we find technological progress has practically no effect on investment and that this failure to stimulate investment is largely due to deficiencies in property right institutions. Key Words: Property Rights; Conflict; Investment; Foreign Aid; Experiments
    JEL: C72 C91 F35 O12 O43 P48
    Date: 2009
  4. By: P R Agénor
    Abstract: Growth dynamics and health outcomes are studied in a three period overlapping generations model with public capital. Reproductive agents face a non-zero probability of death in both childhood and adulthood. In addition to working, adults allocate time to their own health and child rearing. Health status in adulthood depends on health in childhood. With partial persistence in health, pure stagnation may occur. With full persistence, a stagnating equilibrium with low growth and high fertility may result from poor access to public capital. With threshold effects in health status, multiple growth regimes may emerge. A reallocation of public spending toward health or infrastructure may shift the economy from a low-growth equilibrium to a high-growth, low-fertility steady state.
    Date: 2009
  5. By: Thapa, Sridhar
    Abstract: This study analyzes productivity differentials between men and women in the peasant agriculture in Nepal. Both Cobb-Douglas and translog production functions are estimated using data from the Nepal Living Standard Survey 2003/04. Evidence is found for higher value of marginal product of adult family male than adult female, while marginal products of other inputs are found to be relatively higher than the prevailing market wages and prices, implying that these inputs have become gradually a binding constraint in production. Male managed farms produce more output per hectare with higher command in market input use, obtaining credit, and receiving agricultural extension services than female managed farms. In contrast, the result does not clearly support the hypothesis of separability or aggregation of male and female labour, but there is little justification of weak separability. Moreover, head’s sex as proxy for farm manager does not show any difference between male and female managed farms. However, the coefficients of location and household characteristics show significant variations in farm output among ethnic and caste groups residing in different ecological belts of Nepal. Overall, adult male labour is found to contribute more in production process than adult female labour.
    Keywords: gender differentials; agriculture; production functions; marginal products; Nepal
    JEL: J24 Q12 J16
    Date: 2008–12
  6. By: Fink, Guenther; Redaelli, Silvia
    Abstract: The authors use an original data set covering more than 400 recent natural disasters to analyze the determinants of international emergency aid. Although humanitarian need is a major determinant of emergency relief payments, the results imply that political and strategic factors play a crucial role in the emergency aid allocation. On average, donor governments favor smaller, geographically closer, and oil exporting countries, and display significant biases in favor of politically less aligned countries as well as toward their former colonies. The authors also test and reject the independence of donors'aid decisions, finding strong evidence for bandwagon effects in humanitarian assistance.
    Keywords: Hazard Risk Management,Natural Disasters,Disaster Management,Gender and Health,Development Economics&Aid Effectiveness
    Date: 2009–02–01
  7. By: Lall, Somik V.; Timmins, Christopher; Yu, Shouyue
    Abstract: How can policies improve the welfare of people in economically lagging regions of countries? Should policies help jobs follow people? Or should they enable people to follow jobs? In most countries, market forces have encouraged the geographic concentration of people and economic activities - policies that try to offset these forces to encourage balanced economic growth have largely been unsuccessful. However, policies that help people get closer to economic density have improved individual welfare. In this paper, the authors examine the migration decisions of working-age Brazilians and find that the pull of higher wages in leading regions has a strong influence on the decision to migrate. However, many people are also"pushed"to migrate, starved of access to basic public services such as clean water and sanitation in their hometowns. Although migration is welfare-improving for these individuals, the economy may end up worse off as these migrants are more likely to add to congestion costs in cities than to contribute to agglomeration benefits. Encouraging human capital formation can stimulate labor mobility for economic gain; and improving access to and quality of basic services in lagging regions will directly improve welfare as well as reduce the type of migration motivated by the search for life-supporting basic services.
    Keywords: Transport Economics Policy&Planning,Population Policies,Banks&Banking Reform,Labor Policies,Access to Finance
    Date: 2009–02–01
  8. By: L. Cropper, Maureen; Sahin, Sebnem
    Abstract: Benefit-cost analyses of disaster risk reduction (DRR) projects are an important tool for evaluating the efficiency of such projects, and an important input into decision making. These analyses, however, often fail to monetize the benefits of reduced death and injury. The authors review the literature on valuing reduced death and injury, and suggest methods for calculating order-of-magnitude estimates of these benefits. Because few empirical estimates of the Value of a Statistical Life (VSL) are available for developing countries, methods for transferring estimates from high income to middle and low income countries are reviewed. The authors suggest using the range of values implied by an income elasticity of 1.0 and an elasticity of 1.5. With regard to injury valuation they discuss arguments for and against monetizing Quality Adjusted Life Years, and provide shortcuts to valuing injuries that may be used to assess their importance in DRR benefit-cost analyses.
    Keywords: Health Monitoring&Evaluation,Transport Economics Policy&Planning,Economic Theory&Research,Hazard Risk Management,Environmental Economics&Policies
    Date: 2009–02–01
  9. By: Kendall, Jake
    Abstract: Using a unique sample of net domestic product data for districts in India, I investigate the connection between banking sector development, human capital, and economic growth at the sub-national level. Using disaggregate data avoids many of the omitted variable problems that plague cross-country studies of the finance-growth connection and facilitates an instrumentation strategy. The findings show that the growth of many districts in India is financially constrained due to lack of banking sector development, and that the relationship between finance and growth may be non-linear. For the districts in the sample, moving from the 75th percentile of credit/net domestic product to the 25th percentile implies an average loss of 4 percent in growth over the 1990s. This indicates that the gains from increased banking sector outreach may be large. The analysis shows that human capital deepening can reduce the effect of the financial constraint and help decouple growth from financial development. In a district at the 25th literacy percentile, the implied growth loss due to a constrained banking sector is twice as large as in a district at the 75th literacy percentile. Thus, higher levels of human capital may activate alternative growth and production channels that are less finance intensive.
    Keywords: Banks&Banking Reform,Access to Finance,,Economic Theory&Research,Debt Markets
    Date: 2009–02–01
  10. By: Subha Mani (Fordham University, Department of Economics); John Hoddinott (International Food Policy Research Institute); John Strauss (University of Southern California, Department of Economics)
    Abstract: This paper examines the determinants of schooling outcomes - current enrollment status and relative grade attainment - among primary school children in rural Ethiopia. We use repeated cross-sectional data from 15 rural villages in Ethiopia to capture the impact of the changing socioeconomic environment on these outcomes between 1994 and 2004. We find that parental schooling is positively associated with schooling enrollment but its estimated effects declines over time. We observe a similar decline in the estimated impact of father’s schooling on relative grade attainment, while the impact of mother’s schooling increased during this period. OLS estimates of the impact of household income are biased downwards relative to IV results. Community characteristics are not associated with schooling enrollment. However, the provision of electricity is positively, and distance to primary school negatively, associated with relative grade attainment. These findings suggest that policies that address both supply and demand side constraints have the potential to improve the low levels of schooling attainments found in Ethiopia and elsewhere.
    Date: 2009
  11. By: Christian Dustmann (Centre for Research and Analysis of Migration, Department of Economics, University College London); Josep Mestres (Centre for Research and Analysis of Migration, Department of Economics, University College London)
    Abstract: In this paper we study the remittance behavior of immigrants and how it relates to temporary versus permanent migration plans. We use a unique data source that provides unusual detail on remittances and return plans, and follows the same household over time. Our data allows us also to distinguish between different purposes of remittances. We analyze the association between individual and household characteristics and the geographic location of the family as well as return plans, and remittances. The panel nature of our data allows us to condition on household fixed effects. To address measurement error and reverse causality, we use an instrumental variable estimator. Our results show that changes in return plans are related to large changes in remittance flows.
    Date: 2009–02
  12. By: Rios, Ana R.; Pagiola, Stefano
    Abstract: We evaluate the extent to which poor households are able to participate in Payments for Environmental Services (PES) scheme using data from a PES scheme implemented at two sites in Latin America. This allows us to compare environmental and livelihood impacts of PES across regions with different agronomic and socio-economic characteristics. In particular, one of our sites is composed almost entirely of poor or extremely poor households, while the other has households ranging from extremely poor to very well off. The results show that poorer households are in fact able to participate—indeed, by some measures they participated to a greater extent than better-off households. Moreover, their participation was not limited to the simpler, least expensive options. Extremely poor households had a somewhat greater difficulty in participating, but even in their case the difference is solely a relative one. Transaction costs may be greater obstacles to the participation of poorer households than household-specific constraints.
    Keywords: Payments for environmental services; PES; poverty; silvopastoral
    JEL: I39 Q57
    Date: 2009–02–12
  13. By: Doepke, Matthias; Zilibotti, Fabrizio
    Abstract: Child labor is a persistent phenomenon in many developing countries. In recent years, support has been growing among rich-country governments and consumer groups for the use of trade policies, such as product boycotts and the imposition of international labor standards, to reduce child labor in poor countries. In this paper, we discuss research on the long-run implications of such policies. In particular, we demonstrate that such measures may have the unintended side effect of lowering domestic support for banning child labor within developing countries, and thus may contribute to the persistence of the child-labor problem.
    JEL: J20
    Date: 2009–03
  14. By: Jeffrey G. Williamson
    Abstract: Most analysts of the modern Latin American economy hold to a pessimistic belief in historical persistence -- they believe that Latin America has always had very high levels of inequality, suggesting it will be hard for modern social policy to create a more egalitarian society. This paper argues that this conclusion is not supported by what little evidence we have. The persistence view is based on an historical literature which has made little or no effort to be comparative. Modern analysts see a more unequal Latin America compared with Asia and the rich post-industrial nations and then assume that this must always have been true. Indeed, some have argued that high inequality appeared very early in the post-conquest Americas, and that this fact supported rent-seeking and anti-growth institutions which help explain the disappointing growth performance we observe there even today. This paper argues to the contrary. Compared with the rest of the world, inequality was not high in pre-conquest 1491, nor was it high in the postconquest decades following 1492. Indeed, it was not even high in the mid-19th century just prior Latin America’s belle époque. It only became high thereafter. Historical persistence in Latin American inequality is a myth.
    JEL: D3 N16 N36 O15
    Date: 2009–03

This nep-dev issue is ©2009 by Jeong-Joon Lee. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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