nep-dev New Economics Papers
on Development
Issue of 2009‒05‒02
thirty-two papers chosen by
Jeong-Joon Lee
Towson University

  1. Colonial Experience and Postcolonial Underdevelopment in Africa By Nobuhiro Mizuno; Ryosuke Okazawa
  2. Evaluating Africa’s comparative advantage in travel service exports By Johan Fourie
  3. Heckle and Chide: Results of a Randomized Road Safety Intervention in Kenya By James Habyarimana; William Jack
  4. Coping with Rising Food Prices: Policy Dilemmas in the Developing World By Nora Lustig
  5. AIDS Treatment in South Asia: Equity and Efficiency Arguments for Shouldering the Fiscal Burden When Prevalence Rates are Low By Mead Over
  6. Civil War: A Review of 50 Years of Research By Christopher Blattman; Edward Miguel
  7. Schooling Inequality, Crises, and Financial Liberalization in Latin America By Jere R. Behrman; Nancy Birdsall; Gunilla Pettersson
  8. What is Poverty Reduction? By Owen Barder
  9. The dynamics of spatial agglomeration in China: an empirical assessment By Ana Isabel Moreno-Monroy
  10. Measuring Changes in Competitiveness in Chinese Manufacturing Industries Across Regions in 1995-2004: an Unit Labor Cost Approach By Vivian W. Chen; Harry X. Wu; Bart van Ark
  11. Capital Inflows: Macroeconomic Implications and Policy Responses By M. Ayhan Kose; Selim Elekdag; Roberto Cardarelli
  12. Targeting Social Transfers to the Poor in Mexico By David Coady; Susan Parker
  13. Industrial structure, appropriate technology and economic growth in less developed countries By Lin, Justin Yifu; Zhang, Pengfei
  14. Development strategy, viability, and economic distortions in developing countries By Lin, Justin Yifu; Li, Feiyue
  15. Frame-of-reference bias in subjective welfare regressions By Beegle, Kathleen; Himelein, Kristen; Ravallion, Martin
  16. Services in Doha : what's on the table ? By Gootiiz, Batshur; Mattoo, Aaditya
  17. China's exchange rate policy and Asian trade By Alicia García-Herrero; Tuuli Koivu
  18. An Empirical Evaluation of New Socialist Countryside Development in China By Guo, X.; Yu, Z.; Schmit, Todd; Henehan, Brian M.; Li, D.
  19. Poverty and Distribution: Twenty Years Ago and Now By Kanbur, Ravi
  20. Does the Participation in the Microcredit Programs Contribute to the Development of Women Entrepreneurship at the Household Level? Experience from Bangladesh By Chowdhury, M. Jahangir Alam
  21. Wealth, Living Standards and Perceptions in a Cotton Economy: Evidence from the Cotton Reform in Burkina Faso By Kaminski, Jonathan
  22. Changing Incentives to Sow Cotton for African Farmers: Evidence from the Burkina Faso Reform By Kaminski, Jonathan
  23. Entrepreneurship and Income Inequality in Southern Ethiopia By Kimhi, Ayal
  24. The Economic Effects of Land Reform in Central Asia: The Case of Tajikistan By Lerman, Zvi; Sedik, David
  25. Revitalizing and Modernizing Smallholder Agriculture for Food Security, Rural Development and Demobilization in a Post-War Country: The Case of the Aldeia Nova Project in Angola By Kimhi, Ayal
  26. Bringing Growth Theory "Down to Earth" By Lopez, Ramon; Stocking, Andrew
  27. Natural Resources, Social Conflict and Poverty Trap By Davide Fiaschi
  28. Health Human Capital, Height and Wages in China By Wenshu Gao; Russell Smyth
  29. Threshold Effect and Financial Intermediation in Economic Development By SOEDARMONO, Wahyoe; AUGIER, Laurent
  30. Electoral Accountability and Corruption: Evidence from the Audits of Local Governments By Claudio Ferraz; Frederico Finan
  31. Trade Reforms and Market Selection: Evidence from Manufacturing Plants in Colombia By Marcela Eslava; John C. Haltiwanger; Adriana D. Kugler; Maurice Kugler
  32. Firms' Exporting Behavior under Quality Constraints By Juan Carlos Hallak; Jagadeesh Sivadasan

  1. By: Nobuhiro Mizuno (Graduate School of Economics, Kyoto University); Ryosuke Okazawa (Graduate School of Economics, Kyoto University)
    Abstract: IIn this paper, we analyze the connection between the history of colonial rule and postcolonial development in Africa. We focus on the fact that many African colonies were governed by indirect rule. Under indirect rule, indigenous people are divided into two groups: a privileged ruling group and an unprivileged ruled group. Our model assumes that the ruled group cannot observe how their deprived resources are divided between the metropolitan ruler and the ruling group. In this economy, a large level of exploitation by the metropolitan ruler yields distrust among indigenous groups and creates a negative effect on postcolonial economic and political development.
    Keywords: Africa, colonialism, indirect rule, colonial legacies, ethnic conflict
    JEL: D74 N47 O10
    Date: 2009–04
  2. By: Johan Fourie (Department of Economics, University of Stellenbosch)
    Abstract: This paper tests the hypothesis that African countries reveal a comparative advantage in travel service exports empirically. The UNCTAD 2007 Handbook of Statistics (2008) is used to calculate revealed comparative advantage for 186 countries over 10 tradable service sectors using three different measures of the Balassa index. The results indicate that many African countries reveal a strong comparative advantage in travel service exports. Particularly, a band of countries with a vertical axis from South Africa to Ethiopia and a band of countries with a horizontal axis in the Sahel reveal promising results. If African countries are to benefit from the growth in world service exports, researchers and policy makers should note the massive potential for African travel exports, especially in the smaller destinations. Policies – including regional initiatives – to promote sustained growth in travel service exports are therefore of critical importance.
    Keywords: Tourism, international trade, revealed comparative advantage, sub-Saharan Africa
    JEL: L83 F14 N77
    Date: 2009
  3. By: James Habyarimana; William Jack
    Abstract: In economies with weak enforcement of traffic regulations, drivers who adopt excessively risky behavior impose externalities on other vehicles, and on their own passengers. In light of the difficulties of correcting inter-vehicle externalities associated with weak third-party enforcement, this paper evaluates an intervention that aims instead to correct the intra-vehicle externality between a driver and his passengers, who face a collective action problem when deciding whether to exert social pressure on the driver if their safety is compromised. We report the results of a field experiment aimed at solving this collective action problem, which empowers passengers to take action. Evocative messages encouraging passengers to speak up were placed inside a random sample of over 1,000 long-distance Kenyan minibuses, or matatus, serving both as a focal point for, and to reduce the cost of, passenger action. Independent insurance claims data were collected for the treatment group and a control group before and after the intervention. Our results indicate that insurance claims fell by a half to two-thirds, from an annual rate of about 10 percent without the intervention, and that claims involving injury or death fell by at least 50 percent. Results of a driver survey eight months into the intervention suggest passenger heckling was a contributing factor to the improvement in safety.
    Keywords: Kenya, traffic, driving regulations, matatus, safety
    Date: 2009–04
  4. By: Nora Lustig
    Abstract: Rising food prices cause considerable policy dilemmas for developing country governments. Letting domestic prices adjust to reflect the full change in international prices generates inflationary pressures and causes severe hardship for poor households lacking access to social safety nets. Alternatively, governments can use food subsidies or export restrictions to stabilize domestic prices, yet this exacerbates global food price increases and undermines a rules-based trading system. The recent episode shows that many countries chose to shift the burden of adjustment back to international markets. The use of corn and oilseed for the production of biofuel will result in a recurrence of such episodes in the foreseeable future.
    Keywords: Food Prices, Inflation, Poverty, Africa, Asia, Latin America and the Caribbean
    Date: 2009–03
  5. By: Mead Over
    Abstract: The slower spread of AIDS in South Asian countries, combined with the fact that most South Asian countries have higher per capita incomes than the most severely affected countries of other regions imply that the various impacts of the disease will be smaller in South Asia than in the worst affected countries in other regions. While justified with respect to the impact of the disease on economic output, on poverty, or on orphanhood, this conclusion does not follow with respect to the health sector, where the relatively minor public role in health care delivery and the entrepreneurial and heterogeneous private health and pharmaceutical sectors combine to magnify the potential impact of the epidemic. This paper uses recent epidemiological data on the extent and rate of spread of HIV/AIDS in South Asian countries and alternative scenarios regarding future government efforts to expand access to AIDS treatment in order to estimate the future need for antiretroviral treatment in South Asian countries and the fiscal burden that their governments will shoulder if they decide to provide or finance all of the needed care. Since AIDS treatment cannot be presumed to slow HIV transmission and may speed it, the usual argument for paying for such treatment with public funds is on equity grounds—that it will prevent poverty and orphanhood. Indeed this paper estimates that public financing of AIDS treatment might avert poverty for about three percent of the Indian population, for example. However, data on the quality of private health care in India suggests that another effect of publicly produced AIDS treatment would be to crowd out lower-quality private AIDS treatment, thereby preventing some of the negative spillovers of poor quality private treatment. The paper closes by arguing on efficiency grounds that the government role in AIDS treatment should encompass both regulation of the private sector and support for quality “structured” AIDS treatment in the public sector.
    Keywords: AIDS, HIV, South Asia
    Date: 2009–02
  6. By: Christopher Blattman; Edward Miguel
    Abstract: Most nations have experienced an internal armed conflict since 1960. The past decade has witnessed an explosion of research into the causes and consequences of civil wars, belatedly bringing the topic into the economics mainstream. This article critically reviews this interdisciplinary literature and charts productive paths forward. Formal theory has focused on a central puzzle: why do civil wars occur at all when, given the high costs of war, groups have every incentive to reach an agreement that avoids fighting? Explanations have focused on information asymmetries and the inability to sign binding contracts in the absence of the rule of law. Economic theory has made less progress, however, on the thornier (but equally important) problems of why armed groups form and cohere, and why individuals decide to fight. Likewise, the actual behavior of armed organizations and their leaders is poorly understood. On the empirical side, a vast cross-country econometric literature has aimed to identify the causes of civil war. While most work is plagued by econometric identification problems, low per capita incomes, slow economic growth and geographic conditions favoring insurgency are the factors most robustly linked to civil war. We argue that micro-level analysis and data are needed to truly decipher war’s causes, and understand the recruitment, organization, and conduct of armed groups. Recent advances in this area are highlighted. Finally, turning to the economic legacies of war, we frame the literature in terms of neoclassical economic growth theory. Emerging stylized facts include the ability of some economies to experience rapid macroeconomic recoveries, while certain human capital impacts appear more persistent. Yet econometric identification has not been adequately addressed, and there is little consensus on the most effective policies to avert conflicts or promote postwar recovery. The evidence is weakest where it is arguably most important: in understanding civil wars’ effects on institutions, technology, and social norms.
    Keywords: Civil war, violence, economic development, growth
    JEL: H56 O10 O40 C80
    Date: 2009–03
  7. By: Jere R. Behrman; Nancy Birdsall; Gunilla Pettersson
    Abstract: Latin America is characterized by high and persistent schooling, land, and income inequalities and extreme income concentration. In a highly unequal setting, powerful interests are more likely to dominate politics, pushing for policies that protect privileges rather than foster competition and growth. As a result, changes in policies that political elites resist may be postponed in high-inequality countries to the detriment of overall economic performance. This paper examines the relationship between structural, high inequality—measured by high levels of schooling inequality—and liberalization of the financial sector for a sample of 37 developing and developed countries for the period 1975 to 2000. Liberalization of the financial sector can be broadly thought of in the Latin American pre-2000 context as opening credit markets that earlier were largely restricted, including by ending directed credit. For our measure of structural inequality we use data on schooling Gini coefficients that have not previously been used in this context. In our sample, we find that increases in financial liberalization were associated with bank crises and other domestic and external shocks, and that higher schooling inequality reduces the impetus for liberalization brought on by bank crises.
    Keywords: Latin America, education, inequality, financial liberalization
    Date: 2009–03
  8. By: Owen Barder
    Abstract: There is a healthy debate about how to achieve poverty reduction in developing countries, but not enough discussion of what we mean by “poverty reduction.” “Poverty reduction” is often used as a short-hand for promoting economic growth that will permanently lift as many people as possible over a poverty line. But there are many different objectives that are consistent with “poverty reduction,” and we have to make choices between them. There are trade-offs between tackling current and future poverty, between helping as many poor people as possible and focusing on those in chronic poverty, and between measures that tackle the causes of poverty and those which deal with the symptoms. Because donors focus on just one dimension of poverty reduction (growth) they marginalise other legitimate objectives such as reducing chronic poverty or providing social services in countries that cannot otherwise afford them. Because donor agencies do not recognize these different objectives explicitly, there are important negative consequences for the choice and management of individual aid programmes, and for donors’ ability to make transparent and evidence-based decisions about the composition of their portfolio. Aid could be more effective if there were greater recognition of the different dimensions of poverty reduction and if this was recognized in the objectives for and incentives in aid agencies. There is an ethical case for a global system of social justice that provides long-term, redistributional transfers of resources to the world’s poor, to enable them to lead better lives while their country is developing, even if there is no expectation that these transfers will accelerate economic development. Reasonable people can disagree about whether this is desirable but the existing hegemonic definition of poverty reduction does not sufficiently acknowledge this as a legitimate goal or permit a meaningful discourse about how it might be achieved.
    Keywords: poverty reduction, growth, donors
    Date: 2009–04
  9. By: Ana Isabel Moreno-Monroy (University of Groningen)
    Abstract: In this paper, I complement the application of New Economic Geography "NEG" models for the explanation of wage disparities in China by estimating the Helpman Hason model, which focuses on the role of consumer markets as an attraction force and housing prices as a dispersion force for economic agglomeration. I estimate the structural parameters of the model for 2000 and 2005 and devote special attention to the multiple estimation problems of the Helpman-Hanson equation. I find that the market potential is slightly lower for 2005 than for 2000, as a direct product of a higher value of the elasticity of substitution for the last year. I also find that the share of income spent on manufactures increases between the two periods, and that transport costs decrease. I show how these effects may cause dispersion or agglomeration of economic activity according to the original Helpman (1998) model. An application of income shock experiments on different economic centers across China shows that spatial externalities are not homogeneous across prefectures, so that income shocks may have different effects across the country. Based on these results, I argue that the size of existent agglomerations will increase in the near future, but with marked differences across regions. As China moves to a market economy, prices should reflect more the forces pulling for dispersion, which not only include housing and land prices, but also congestion, pollution and many other problems that come along with urbanization.
    Date: 2008–12
  10. By: Vivian W. Chen (The Conference Board); Harry X. Wu (The Hong Kong Polytechnic University); Bart van Ark (The Conference Board and University of Groningen)
    Abstract: Using an industry-by-region data set, based on China’s Third Industrial Census for 1995 and First Economic Census for 2004, and covering 28 industries and 30 provinces, this paper examines the trend of labor compensation (ALC), labor productivity (ALP) and unit labor cost (ULC) by manufacturing industry across regions (provinces or groups of provinces). At the aggregate level, it shows that productivity growth was generally faster than that of labor compensation and hence resulted in a significant decline in unit labor cost for all regions in China. Furthermore, compared to more developed regions, less developed regions exhibited even stronger productivity growth relative to compensation, thus leading to a convergence across regions over this period. However, we observe a substantial variation in growth rates and convergence trends across regions for individual industries. Logit regression shows that labor intensive industries are more likely to converge in productivity, compensation and unit labor cost while skill intensive industries tend to increase inequality in unit labor cost. This is confirmed by estimating a growth regression, which shows that in provinces characterized by higher skill levels of the labor force, skill intensive industries experienced faster decline in ULC.
    Keywords: Labor productivity, average labor compensation, unit labor cost, and regional convergence
    JEL: J30
    Date: 2008–06
  11. By: M. Ayhan Kose; Selim Elekdag; Roberto Cardarelli
    Abstract: This paper examines the macroeconomic implications of, and policy responses to surges in private capital inflows across a large group of emerging and advanced economies. In particular, we identify 109 episodes of large net private capital inflows to 52 countries over 1987-2007. Episodes of large capital inflows are often associated with real exchange rate appreciations and deteriorating current account balances. More importantly, such episodes tend to be accompanied by an acceleration of GDP growth, but afterwards growth has often dropped significantly. A comprehensive assessment of various policy responses to the large inflow episodes leads to three major conclusions. First, keeping public expenditure growth steady during episodes can help limit real currency appreciation and foster better growth outcomes in their aftermath. Second, resisting nominal exchange rate appreciation through sterilized intervention is likely to be ineffective when the influx of capital is persistent. Third, tightening capital controls has not in general been associated with better outcomes.
    Keywords: Capital inflows , Emerging markets , Current account deficits , Exchange rate policy , Fiscal policy , Capital controls , Cross country analysis ,
    Date: 2009–03–17
  12. By: David Coady; Susan Parker
    Abstract: Mexico’s main social support program, Oportunidades, combines two methods to target cash to poor households: an initial self-selection by households who acquire knowledge about the program and apply for benefits, followed by an administrative determination of eligibility based on a means test. Self-selection improves targeting by excluding high-income households, while administrative targeting does so mainly by excluding middle-income households. The two methods are complementary: expanding program knowledge across households substantially increases applications from non-poor households, thus reinforcing the importance of administrative targeting. The paper shows that targeting can be further improved through redesigning the means test and differentiating transfers according to demographic characteristics.
    Keywords: Transfer of real resources , Mexico , Social policy , Social safety nets , Data analysis ,
    Date: 2009–03–19
  13. By: Lin, Justin Yifu; Zhang, Pengfei
    Abstract: The authors develop an endogenous growth model that combines structural change with repeated product improvement. That is, the technologies in one sector of the model become not only increasingly capital-intensive, but also progressively productive over time. Application of the basic model to less developed economies shows that the (optimal) industrial structure and the (most) appropriate technologies in less developed economies are endogenously determined by their factor endowments. A firm in a less developed country that enters a capital-intensive, advanced industry in a developed country would be nonviable owing to the relative scarcity of capital in the factor endowments of less developed countries.
    Keywords: Economic Theory&Research,Political Economy,Technology Industry,Economic Growth,Inequality
    Date: 2009–04–01
  14. By: Lin, Justin Yifu; Li, Feiyue
    Abstract: This paper presents a three-sector static model to explore the rationale for a series of institutional distortions in developing countries. The authors argue that, after World War II, motivated by a belief in the development of state-of-the-art industries as a means for nation building, the majority of developing country governments attempted to accelerate the growth of advanced capital-intensive industries. However, since developing countries are relatively rich in labor or natural resource endowments but not in capital endowment, advanced capital-intensive industries were not adapted to the endowment structures of these developing countries at the time. Enterprises in those industries were non-viable in open, competitive markets and could not survive without government subsidization or protection. The model shows that, in order to mobilize resources into the capital-intensive, advanced sectors, it is necessary for governments to use distortionary policies such as taxes and subsidies, distortions of factor prices, directive allocation of resources, and nationalization of enterprises. Such distortions enable developing countries to set up advanced, capital-intensive industries in the early stage of their development. However, they also tend to suppress incentives, misallocate resources, and make the economy inefficient.
    Keywords: Economic Theory&Research,Debt Markets,Emerging Markets,Public Sector Corruption&Anticorruption Measures,Currencies and Exchange Rates
    Date: 2009–04–01
  15. By: Beegle, Kathleen; Himelein, Kristen; Ravallion, Martin
    Abstract: Past research has found that subjective questions about an individuals'economic status do not correspond closely to measures of economic welfare based on household income or consumption. Survey respondents undoubtedly hold diverse ideas about what it means to be"poor"or"rich."Further, this heterogeneity may be correlated with other characteristics, including welfare, leading to frame-of-reference bias. To test for this bias, vignettes were added to a nationally representative survey of Tajikistan, in which survey respondents rank the economic status of the theoretical vignette households, as well as their own. The vignette rankings are used to reveal the respondent's own scale. The findings indicate that respondents hold diverse scales in assessing their welfare, but that there is little bias in either the economic gradient of subjective welfare or most other coefficients on covariates of interest. These results provide a firmer foundation for standard survey methods and regression specifications for subjective welfare data.
    Keywords: Access to Finance,Rural Poverty Reduction,,Housing&Human Habitats,Poverty Lines
    Date: 2009–04–01
  16. By: Gootiiz, Batshur; Mattoo, Aaditya
    Abstract: Services trade reform matters, but what is Doha doing about it? It has been hard to judge, because of the opaqueness of services policies and the opaqueness of the request-offer negotiating process. This paper attempts to assess what is on the table. It presents the results of the first survey of applied trade policies in the major services sectors of 56 industrial and developing countries. These policies are then compared with these countries'Uruguay Round commitments in services and the best offers that they have made in the current Doha negotiations. The paper finds that at this stage, Doha promises greater security of access to markets but not any additional liberalization. Uruguay Round commitments are on average 2.3 times more restrictive than current policies. The best offers submitted so far as part of the Doha negotiations improve on Uruguay Round commitments by about 13 percent but remain on average 1.9 times more restrictive than actual policies. The World Trade Organization's Hong Kong Ministerial had set out ambitious goals for services but the analysis here shows that much remains to be done to achieve them.
    Keywords: Transport Economics Policy&Planning,Public Sector Corruption&Anticorruption Measures,Corruption&Anitcorruption Law,Trade and Services,Emerging Markets
    Date: 2009–04–01
  17. By: Alicia García-Herrero; Tuuli Koivu
    Abstract: This paper shows empirically that China's trade balance is sensitive to fluctuations in the real effective exchange rate of the renminbi. However, the current size of the trade surplus is such that exchange rate policy alone will probably not be able to address the imbalance. The potential reduction in the trade surplus resulting from an increase in the renminbi exchange rate is limited mainly because Chinese imports do not react as expected to a renminbi appreciation - they tend to fall rather than increase. By estimating bilateral import equations for China and its major trade partners, we find that the reaction for imports is generally confirmed for China's trade with Southeast Asian countries. That result might be attributable to Asia's vertical integration, as a large share of Chinese imports from Southeast Asia are re-exported. We also find that total exports from a number of Asian countries react negatively to a renminbi appreciation, which points to a dependence of Asian countries' exports on those of China.
    Keywords: China, trade, exports, real exchange rate
    Date: 2009–04
  18. By: Guo, X.; Yu, Z.; Schmit, Todd; Henehan, Brian M.; Li, D.
    Abstract: China prioritized a New Socialist Countryside reform policy in 2005 to address the growing disparities in incomes and living standards between rural and urban populations. These policies are evaluated to provide a base line index of reform concerning farmer, agricultural, and rural economic development. Aggregate index scores are computed to rank provincial progress. Rankings indicate the progression of rural economic reform is moderate, at best, and mostly isolated to well-developed eastern provinces. Reform growth is also uneven across similarly, rural provinces indicating a need for continued attention in these poorer areas. More importantly, as reform efforts continue, the empirical framework established can be used to track relative performance over time.
    Keywords: China, Factor Analysis, New Socialist Countryside, Policy Evaluatino, International Development, Political Economy, Public Economics,
    Date: 2009–04–15
  19. By: Kanbur, Ravi
    Abstract: This paper adopts the âRip Van Winkleâ stratagem, of asking what differences would be noticed, in the domain of poverty and distribution, by someone who fell asleep in 1987 (the year I published my paper on poverty in the IMF Staff Papers, and woke up only in 2007 (the year I visited the IMF to work on the present paper). I highlight, somewhat idiosyncratically, ten such differences under three broad headings: Facts and Empirics, Concepts and Theory, and Policies and Interventions.
    Keywords: Poverty, Income Distribution, Development, Community/Rural/Urban Development, International Development, D31, D63, I32, I38, O15,
    Date: 2009–01–26
  20. By: Chowdhury, M. Jahangir Alam
    Keywords: Microcredit, Women Entrepreneurship Development, Bangladesh, Consumer/Household Economics,
    Date: 2008–07–15
  21. By: Kaminski, Jonathan
    Abstract: The cotton economy of Burkina Faso has been characterized by a changing rural environment for farmers since late nineties, which has come with the cotton reform and the resulting cotton boost. There have been slight improvements in living standards and rural householdsâ income while the subjective feeling of wealth has significantly increased. In this paper, I explore the channels through which the elements of the changing rural environment can bridge the wedge between subjective and objective measures of wealth. In addition to the basic determinants of subjective welfare that can be found in the happiness economics literature, namely absolute and relative income measures, health and social status (and expectations of future incomes), I investigate the empirical validity of institutional and technological change as well as the perceptions about the reform. I propose a bivariate ordered Probit model to deal with endogenous covariant perceptions in the assessment of subjective wealth. I find that the significantly positive evolution of subjective wealth has been driven by the relative measure of income, the feeling of progress through institutional and technological improvements and by enthusiastic perceptions about the reformâs effects on poverty alleviation and welfare. This evolution has been altered by the beliefs about a larger input access and better agricultural abilities resulting from the reform (comparison effect).
    Keywords: subjective wealth, Burkina Faso's cotton, rural development, agricultural policy, perceptions, I32, O13, Q16, Q18,
    Date: 2008–12
  22. By: Kaminski, Jonathan
    Abstract: Over the last 10 years, Burkina Faso has experienced a reform of its cotton sector, and is now the largest African cotton producer and exporter. The cotton âboomâ consisted of a rapid expansion of cotton areas through the growth of land shares allocated to cotton (and new producers), together with an overall increase in total cultivated land. In this paper, we present an empirical framework to determine the contribution of total farmland changes in the increase of land dedicated to cotton, where both processes are represented by ordered endogenous variables. We then analyze data that we collected in rural Burkina Faso in March 2006 within this framework. From measurable indicators of farmer behavior and variables that measure farmer statements for the reasons of this behavior, we are able to identify both direct and indirect effects of the cotton reform on the extensive growth of cotton seed production. They are namely mechanization and technical assistance, labor intensification, enhanced managerial abilities (learning by doing and better environment for farmers), production incentives arising from the new local organizations of producers, guarantees and confidence stemming from the sector and an easier access to agricultural inputs.
    Keywords: parastatal, Burkina Fasoâs cotton, land extension, privatization,
    Date: 2008–12
  23. By: Kimhi, Ayal
    Abstract: This paper uses inequality decomposition techniques in order to analyze the consequences of entrepreneurial activities to household income inequality in Southern Ethiopia. A uniform increase in entrepreneurial income reduces per capita household income inequality. This implies that encouraging rural entrepreneurship may be favorable for both income growth and income distribution. Such policies could be particularly successful if directed at the low-income, low-wealth, and relatively uneducated segments of the society.
    Date: 2009–02
  24. By: Lerman, Zvi; Sedik, David
    Date: 2008–11
  25. By: Kimhi, Ayal
    Abstract: The Aldeia Nova project aimed at demobilizing ex-combatants to remote areas and settling them in modern agricultural communities. Three years since the first settlers arrived at the Waku-Kungu valley, 600 families are using modern agricultural technology to produce milk, eggs and vegetables which are marketed in the urban centers of Angola. These families earn a decent living and provide employment to hundreds of others. The entire area was revitalized with thousands of families pouring in to enjoy the benefits of the booming local economy. This paper presents the concept of the Aldeia Nova project, describes its evolution, and discusses its strengths and weaknesses. It concludes that the benefits of the project go far beyond its measureable economic impact, and that its ambitious goals are not beyond the reach of the Angolan people.
    Keywords: Smallholder agriculture, Rural development, Food security, Technology adoption, Cooperation, Demobilization, Reconciliation, Angola., Food Security and Poverty,
    Date: 2009
  26. By: Lopez, Ramon; Stocking, Andrew
    Abstract: Explicitly accounting for certain basic physical laws governing the âearthâ sector dramatically enriches our ability to explain a high degree of diversity in observed patterns of economic growth. We provide a theoretical explanation of why some countries have been able to sustain a more or less constant and positive rate of economic growth for many decades while so many others have failed to do so. The analysis predicts that countries that have an over abundance of physical capital (a concept that is precisely defined in the text) may be unable to sustain a positive rate of economic growth over the long run. Too much physical capital may affect the dynamics of the economy ultimately leading to stagnation. The plausibility of the growth model introduced here is demonstrated by its ability to predict some important stylized facts for which standard endogenous growth models generally cannot account.
    Keywords: endogenous growth theory, unbalanced growth, structural change, stagnation, Environmental Economics and Policy, International Development, Labor and Human Capital, Political Economy, E22, Q01, O41,
    Date: 2009
  27. By: Davide Fiaschi
    Abstract: The paper analyses a model where the fight for the appropriation of rents from natural resources between two groups leads to multiple equilibria. The possibility to be trapped into the low-income equilibrium, characterized by strong social conflict (civil war) and stagnation of income, increases with the weakness of political institutions, the population growth rate, the amount of rents from natural resources and the rate of depletion of natural resources and decreases with the level of per capita income, the investment rate and the length of life expectancy of individuals. The size of minority has an ambiguous effect, widening the range of income leading to low-income equilibrium, but also raising incentives to reach an agreement, i.e. a social contract, without any social conflict. Empirical evidence appears to support these findings.
    Keywords: natural resources, social conflict, poverty trap, institutions,civil war
    JEL: O11 O43 Q34 D74
    Date: 2009–04–20
  28. By: Wenshu Gao; Russell Smyth
    Abstract: We estimate the returns to height using data from 12 Chinese cities. We present both ordinary least squares (OLS) and two-stage least squares (TSLS) estimates. In the latter height is instrumented using proxies for health human capital accumulated in childhood and adolescence, which influence adult height. The OLS estimates suggest that an additional centimetre of adult height is associated with wages being 1.1 per cent higher for males and 0.9 per cent higher for females. The TSLS estimates suggest each additional centimetre of adult height is associated with wages being 4.8 per cent higher for males and 10.8 per cent for females. The difference reflects the fact that the OLS estimates are predominantly determined by the random genetic factors influencing height, while the TSLS estimates also take into account returns from investment in health human capital during childhood and adolescence. These results imply considerable returns to investment in health human capital.
    Keywords: China, health, height, wages
    JEL: I10 J15 J31 J71
    Date: 2009–04
  29. By: SOEDARMONO, Wahyoe; AUGIER, Laurent
    Abstract: This paper analyzes the importance of financial intermediation on economic growth. Using the Neoclassical growth framework, we raise a new issue where our model has multiple stationary states with threshold effect. We further confirm that financial intermediation is better than self-financing system in order to ensure the existence and uniqueness of long-run steady state equilibrium of capital stock, as well as to decrease threshold level. The presence of threshold effect is an important finding in studying the finance-growth nexus, since it prevents the economy to raise sufficient initial capital.
    Keywords: Threshold Effect; Financial Intermediation; Economic Growth; Developing Countries
    JEL: O16 C61 C62
    Date: 2009–04–28
  30. By: Claudio Ferraz; Frederico Finan
    Abstract: Political institutions can affect corruption. We use audit reports from an anti-corruption program in Brazil to construct new measures of political corruption in local governments and test whether electoral accountability affects the corruption practices of incumbent politicians. We find significantly less corruption in municipalities where mayors can get reelected. Mayors with re-election incentives misappropriate 27 percent fewer resources than mayors without re-election incentives. These effects are more pronounced among municipalities with less access to information and where the likelihood of judicial punishment is lower. Overall our findings suggest that electoral rules that enhance political accountability play a crucial role in constraining politician’s corrupt behavior.
    JEL: D72 D78 H41 O17
    Date: 2009–04
  31. By: Marcela Eslava; John C. Haltiwanger; Adriana D. Kugler; Maurice Kugler
    Abstract: We use plant output and input prices to decompose the profit margin into four parts: productivity, demand shocks, mark-ups and input costs. We find that each of these market fundamentals are important in explaining plant exit. We then use variation across sectors in tariff changes after the Colombian trade reform to assess whether the impact of market fundamentals on plant exit changed with increased international competition. We find that greater international competition magnifies the impact of productivity, and other market fundamentals, on plant exit. A dynamic simulation that compares the distribution of productivity with and without the trade reform shows that improvements in market selection from trade reform help to weed out the least productive plants and increase average productivity. In addition, we find that trade liberalization increases productivity of incumbent plants and improves the allocation of activity within industries.
    JEL: F43 L25 O47
    Date: 2009–04
  32. By: Juan Carlos Hallak; Jagadeesh Sivadasan
    Abstract: We develop a model of international trade with export quality requirements and two dimensions of firm heterogeneity. In addition to "productivity", firms are also heterogeneous in their "caliber" -- the ability to produce quality using fewer fixed inputs. Compared to single-attribute models of firm heterogeneity emphasizing either productivity or the ability to produce quality, our model provides a more nuanced characterization of firms' exporting behavior. In particular, it explains the empirical fact that firm size is not monotonically related with export status: there are small firms that export and large firms that only operate in the domestic market. The model also delivers novel testable predictions. Conditional on size, exporters are predicted to sell products of higher quality and at higher prices, pay higher wages and use capital more intensively. These predictions, although apparently intuitive, cannot be derived from single-attribute models of firm heterogeneity as they imply no variation in export status after size is controlled for. We find strong support for the predictions of our model in manufacturing establishment datasets for India, the U.S., Chile, and Colombia.
    JEL: F10 F12 F14
    Date: 2009–04

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