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on Development |
| By: | Rizwana Siddiqui (Pakistan Institute of Development Economics, Islamabad) |
| Abstract: | This study estimates a small simultaneous equation model using panel data from sixty-four countries for the years 1996 and 2004. The model is estimated by various techniques—OLS, TSLS, dummy variable approach introducing variation at the regional level, and fixed and random effect approaches introducing variation at the individual country level. The objective is to identify the importance of basic needs in human development strategies in Asia, Africa, and the rest of the world (ROW). The results show that income per capita has priority over basic needs expenditure in development strategies of all regions despite being quantitatively different. However, the importance of basic needs expenditure cannot be denied in terms of capabilities development (improvement in health) that ultimately increases productivity. |
| Keywords: | Human Capital, Physical Capital, Income Per Capita, Basic Needs Expenditures, Human Development |
| JEL: | J24 E22 P24 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2009:51&r=dev |
| By: | Rashida Haq (Pakistan Institute of Development Economics, Islamabad); Uzma Zia (Pakistan Institute of Development Economics, Islamabad) |
| Abstract: | Economic growth is a driving force in reducing poverty, but experience has shown that good governance and pro-poor choices are vitally important in the process of alleviating poverty. This paper explores linkages between governance and pro-poor growth in Pakistan for the period 1996 to 2005. The analysis indicates that governance indicators have low scores and rank at the lowest percentile as compared to other countries. The dimensions of pro-poor growth, which include poverty, inequality, and growth, demonstrate that the poor do not benefit proportionately from economic growth. It is found that poverty and inequality have worsened and the share in income and expenditure for the bottom 20 percent has also decreased, while inflation for this lowestincome group is high as compared to the highest-income group. It is also observed that approximately 25 percent households reported that their economic status was worse than in the previous year, 2004-05. The results of the study show that a strong link exists between governance indicators and pro-poor growth in the country. Econometric analysis shows that there is a strong relationship between good governance and reduction in poverty and inequality. It is concluded that greater voice and accountability, political stability, regulatory quality, and rule of law can control corruption and the pro-poor policies, which ultimately reduce poverty and inequality in the long run. To face the challenge of good governance, Pakistan needs to formulate, and implement effectively, its governance policies to improve the governance dimensions, taking account of both higher growth and the aim of achieving the Millennium Development Goals, which require halving poverty by 2015. |
| Keywords: | Governance Indicators, Pro-poor Growth, Poverty, Inequality |
| JEL: | I30 I32 O10 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2009:52&r=dev |
| By: | Nadia Zakir (Pakistan Institute of Development Economics, Islamabad); Muhammad Idrees (Quaid-i-Azam Univesity, Islamabad) |
| Abstract: | The present study investigates the trends in inequality, welfare, and growth based on per capita household income/consumption in Pakistan, both its rural and urban areas, from 1963-64 to 2004-05. It employs Gini coefficient to measure inequalities and the Sen welfare index to estimate welfare. Real per capita mean incomes/consumption are worked out to analyse growth. The study finds fluctuating trends in inequality, and rising trends in both welfare and growth. In general, inequality, welfare, and growth remain higher in the urban areas. The study finds income inequality to be more severe as compared to consumption inequality. |
| Keywords: | Income Distribution, Welfare, Per Capita Income, Gini Coefficient, Pakistan |
| JEL: | D31 D63 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2009:53&r=dev |
| By: | Mohammad Irfan (International Islamic University, Islamabad) |
| Abstract: | This paper attempts to document changes in the wage levels of different categories of workers employed in various segments of the labour market during the period 1990-91–2006-07, according to the information given in the labour force surveys. Wage structure can be analysed from different angles. Here we look at the levels and trends in the broad categories of industry. Further subdivided along the demarcation of formal/informal, and by worker characteristics such as age, sex, education, and occupational categories. Largescale Manufacturing Industries, Banking Sector, and Civil Servants’ salary structure are subjected to investigation for disuring wage trends in the formal sector. The impact of unionism and of the labour and wage policies of various regimes and upon wage outcome is also assessed. There appears to be a consonance between money wage growth at the aggregate level of the economy and GDP growth. The former registered a positive growth, with the exception of the 1999-2002 period, when the latter had low growth. Time trend of average wage works out to 7.6 percent, which, adjusted for inflation, yields a 0.7 percent trend growth rate in real wages for the 1990-07 period. Real wage growth rate at the aggregative level is characterised by substantial diversity. One finds an inverse relationship between the level of wage rate and real wage growth. Thus workers in the informal sector and commodity producing sectors like Agriculture and Manufacturing suffered a real wage decline during the period under study. That the real wage gains were denied to the majority of the workers (60 percent or so) lying at the lower rung of the wage distribution rendered the wage structure iniquitous wherein duality further accentuated. The character of the regime tends to have its mark. During the 1990s, the political leadership notwithstanding, low GDP growth and Pressler Amendment appeared to have sympathetic attitude towards labour, which was visible in the virulence of trade unions as well as announcement of the Minimum Wage Policy during early 1990s. However, in the context of labour supply pressure and subdued economic performance, stagnation and decline in real wage could not be avoided. In contrast, there hardly has been any sizeable positive impact on the real wages of the informal sector workers since the turnaround of the economy in 2003. The governmental attitude was reflective of the follow-up of the imperatives of globalisation, weakening of trade unions, and introduction of the changes in the procedures governing the tripartite mechanism and formulation of labour and wage policy. The need to have a fresh look at the labour and wage policy to ensure sustenance and to address inequality issues can hardly be overemphasised. |
| Keywords: | Wages; Wage Structure; Pakistan |
| JEL: | J3 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2009:54&r=dev |
| By: | M. Idrees Khawaja (Pakistan Institute of Development Economics, Islamabad); Sajawal Khan (State Bank of Pakistan, Karachi) |
| Abstract: | No society is devoid of institutions but many live with poor institutions. Institutions promote growth. This is a view now held firmly and widely. The task then is to ‘engineer’ growth-promoting institutions. Endogeneity characterises institutions; for example, groups enjoying political power influence economic institutions, but political power itself is a function of wealth. Given endogeneity, if the task is to design institutional reforms, the question then arises, as to what to reform first. We use the theories of institutional evolution put forth by Douglas North, Darron Acemoglu and Dani Rodrik and the historical experiences of different countries in the context of development (or non-development) of institutions, to determine the starting-point of institutional reforms, if the objective is to design institutional reforms. We argue that in Pakistan, neither large commercial interest nor fiscal constraints can force the de jure power to reform institutions. Typically, large commercial interests in Pakistan have thrived on favours from de jure power, and therefore do not have teeth. Given strategic interests of foreign powers, foreign aid will alleviate the fiscal constraint and the ruler-citizens bargain—though reforming institution in exchange for tax revenue will remain a dream. The country does not seem ready for a revolution either; the thought process that typically precedes revolutions seems to have barely begun. The alternative, that remains, then is the gradualist approach preferred by North, Acemoglu, and Rodrik. Institutional reforms in Pakistan should begin with reform of the educational system—the introduction of a common educational system for all and sundry up to a certain level. Two reasons make us chose the educational system as the candidate to start the process of institutional reform. First, a common educational system will produce a shared value system which, in turn, will reduce the heterogeneity in the society. Lesser heterogeneity in society will then facilitate an agreement over the minimal set of institutional reforms. Second, politicians being myopic, the de jure power is more likely to concede to the demand for reform of the educational system as compared to the demand to, say, put an end to rent-seeking. The former will affect the de jure power a generation hence, while the latter will affect them today. |
| Keywords: | Institutional Evolution, Institutional Change, Human Behaviour |
| JEL: | D02 P16 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2009:50&r=dev |
| By: | John Knight; Sai Ding |
| Abstract: | China has had a remarkably high ratio of investment to output throughout the period of economic reform, surpassing almost all other economies, whether developed or developing. The high investment rate is in turn an important proximate determinant of China’s high rate of economic growth. This survey paper gathers together the available evidence to explain why investment is so high. It considers factors both on the demand and on the supply side, and in the latter case the availability both of resources and of funds. It analyses the rate of return on capital and its movement over time, and the factors which have kept it up. It draws on the literature to explain the high saving rate, and considers why the imperfect capital market and institutional deficiencies have not constrained investment. The state-owned and the private sectors are treated separately on account of their different objectives and behaviour and their differential access to funds. |
| Keywords: | China, Financial market, Credit constraint, Investment, Rate of profit, Saving |
| JEL: | E2 F1 O5 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:441&r=dev |
| By: | Baliamoune-Lutz, Mina |
| Abstract: | We examine how institutional and policy reforms affect the relationship between entrepreneurship and growth. We perform Arellano-Bond GMM estimations on annual data (over the period 1990-2002) from a large group of developing countries and focus in particular on the interplay between policy and institutional reforms and entrepreneurship. We find that the joint effect of trade reform and entrepreneurship on growth is negative, suggesting that trade reform diminishes the positive effects of entrepreneurial ability on growth, while the joint effect of financial sector reform and entrepreneurship has a non-linear impact on growth. Financial sector reforms enhance the growth effect of entrepreneurship at initial levels and diminish it at high levels of reform. In addition, we find that the interplay of institutional reform and entrepreneurship does not seem to matter for the growth effects of entrepreneurship. |
| Keywords: | growth, entrepreneurship, institutions, policy reform |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2009-04&r=dev |
| By: | Desai, Sameeksha |
| Abstract: | This paper discusses the difficulties associated with measuring entrepreneurship in developing countries. Three important dichotomies in the research on entrepreneurship are discussed: formal-informal, legal-illegal, and necessity-opportunity. Several common measures of entrepreneurship are outlined along with their relevance to developing countries, including self-employment, Global Entrepreneurship Monitor data, World Bank Group Entrepreneurship Survey data and OECD data. The implications of the current understanding of entrepreneurship are discussed with respect to institutions and economic development. |
| Keywords: | entrepreneurship, economic development, data, institutions |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2009-10&r=dev |
| By: | Atieno, Rosemary |
| Abstract: | Micro- and small-scale enterprises (MSEs) have become important players in the Kenyan economy, but at the same time they continue to face constraints that limit their development. Lack of access to financial services is one of the main constraints, and a number of factors have been identified to explain this problem. These include the segmented and incomplete nature of financial markets, which increases transaction costs associated with financial services. On the supply side, most formal financial institutions consider MSEs uncreditworthy, thus denying them credit. Lack of access to financial resources has been seen as one of the reasons for the slow growth of firms. Literature from the new institutional economics, however, shows that institutional arrangements, like linkages and networks between firms, provide an important avenue through which firms can overcome some of these constraints. |
| Keywords: | linkages, finance, enterprise performance |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2009-06&r=dev |
| By: | Naude, Wim; Rossouw, Stephanie |
| Abstract: | We use data on 3,948 Chinese firms obtained from the World Bank.s Investment Climate Private Enterprise Survey to investigate early international entrepreneurship (international new ventures) in China. The extent of early international entrepreneurship in China is significant: 65 per cent of the exporting firms start export operations within three years. Foreign shareholders within the firm and an entrepreneur with previous exporting experience are noted to significantly increase the probability that a firm internationalizes early. However, we find marked differences in the behaviour of indigenous and foreign-invested firms. Thus, while business networks are significant for firms wishing to export indirectly and for older indigenous firms, it is noted to delay the internationalization process of indigenous firms. Also, for an indigenous firm, the greater the foreign experience of its entrepreneur, the less likely it is to start exporting early. |
| Keywords: | entrepreneurship, internationalization, international new ventures, exports, China |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2009-16&r=dev |
| By: | Robinson, James A. |
| Abstract: | I argue that the economic success of Botswana can be explained by the historical development of its institutions which is related to the trajectory of the Tswana states over the past 200 years. These institutions created a much more stable and accountable government than elsewhere in Africa after independence with the desire and incentive to adopt good economic policies. There are two main lessons from this experience. The first is how successful an African economy can become using simple orthodox well-understood policies. The second is that successful development in Africa will be helped by a focus on the development of state institutions. Though Botswana inherited different institutions from elsewhere, it also built on these, in particular trying to create a national identity and to continually modernize and adapt institutions. There are many lessons for other African countries from these policy choices. |
| Keywords: | governance, patrimonialism, state formation |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2009-40&r=dev |
| By: | Kakwani, Nanak; Neri, Marcelo; Son, Hyun H. |
| Abstract: | This paper analyses the relationship between growth patterns, poverty, and inequality in Brazil during its globalization process, focusing on the role played by the labour market and social programmes. Methodologically, the paper makes two contributions to the literature. One is the proposal of a new measure of pro-poor growth, which links growth rates in mean income and in income inequality. The other contribution is a decomposition methodology that explores linkages between three dimensions: growth patterns, labour market performances, and social policies. The proposed methodologies are then applied to the Brazilian National Household Survey covering the period 1995.2004. |
| Keywords: | inequality, poverty, growth, pro-poor growth, labour market, social policy |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2009-26&r=dev |
| By: | Singh, Nirvikar |
| Abstract: | This paper examines India.s development strategy, and to what extent it may be considered a success. It provides a brief history of why and how the strategy was adopted, as well as of its implementation, including the role of initial conditions, such as human capital, geographical location, and infrastructure. It analyses the extent and reasons for success of the strategy, including policy, political economy, timing, and linkage of the strategy to economy-wide development. Particular attention is given to the relative roles of domestic and international actors, including the part played by foreign investment, trade, and other dimensions of openness. The paper considers the extent to which the strategy remains viable for the future, the challenges still faced, and what other strategies might be required. It concludes with possible lessons for |
| Keywords: | Development strategy, industrial policy, political economy, economic development |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2009-31&r=dev |
| By: | Subramanian, Arvind |
| Abstract: | This paper examines different explanations.initial conditions, openness to trade and FDI, and institutions.of the Mauritian growth experience since the mid-1970s. We show that arguments based on openness to trade and FDI are either misleading or incomplete. Even when correctly articulated, openness appears to be a proximate rather than an underlying explanation for the Mauritian experience. The institution-based explanation offers greater promise. Ultimately, however, the econometric results indicate that existing explanations may be incomplete. Some idiosyncratic factors, particularly Mauritian diversity and the responses to managing it, may provide the missing pieces in the story of Mauritius.s success. |
| Keywords: | Mauritius; growth; institutions, openness |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2009-36&r=dev |
| By: | Skoufias, Emmanuel; Lindert, Kathy; Shapiro, Joseph |
| Abstract: | This paper focuses on measuring the extent to which publicly subsidized transfers in Latin America and the Caribbean redistribute income. The redi$ |
| Keywords: | social protection, insurance, redistribution, targeting, poverty, inequality, welfare |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:2009-02&r=dev |
| By: | Kimura, Fukunari |
| Abstract: | Japan was the first non-western country to accomplish successful industrialization, and the dominant perception of its .industrial policy. had over-emphasized specific characteristics of Japan. However, from the perspective of today.s development thinking, Japan.s economic history shared a wide range of common factors in usual economic development: macroeconomic stability, human resource development, and economic infrastructure. Industrial policy in Japan sometimes worked well and sometimes did not, depending on how effectively it counteracted market failure and took advantage of market dynamism. We must note, however, that the external conditions faced by Japan were widely different from what today.s |
| Keywords: | industrial policy, industrialization, trade liberalization, macroeconomic stability, economic infrastructure |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2009-22&r=dev |
| By: | Kimhi, Ayal |
| Abstract: | This paper uses inequality decomposition techniques in order to analyse 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 favourable 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. |
| Keywords: | entrepreneurship, income inequality, redistribution, Ethiopia, Africa |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2009-05&r=dev |
| By: | Goedhuys, Micheline; Sleuwaegen, Leo |
| Abstract: | This paper studies the growth performance of a large set of entrepreneurial firms in ten manufacturing sectors of eleven Sub-Saharan African countries. The focus of the paper is on identifying those entrepreneurs. attributes and firm characteristics that tend to generate a significant number of high-growth firms in these countries. To this end, we use a quantile regression, which provides a more complete estimation of the growth distribution of firms conditional on different attributes. The results indicate that especially firms that engage in product innovation, have their own transport means and are connected to the internet through their own website are characterized by higher growth rates and display a more skewed distribution to the right, hosting a higher number of high-growth firms. The effect of the last two variables, which relate to distance-bridging modes of infrastructure, points to the self-reinforcing growth effects. |
| Keywords: | quantile regression, high-growth firms, firm growth, Africa |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2009-11&r=dev |
| By: | Baliamoune-Lutz, Mina |
| Abstract: | Tunisia.s recent growth and development performance relative to countries in its region, and relative to countries at similar levels of development in other parts of the world, particularly in Sub-Saharan Africa, have been notable. An analysis of Tunisia.s path to development reveals that the country.s development strategy relied primarily on diversifying its production and trade and enhancing its human capital with emphasis on women.s empowerment. Family planning programmes that have caused fertility to decline significantly are a hallmark of Tunisia.s development strategy. This paper reviews Tunisia.s experience, identifies the major challenges and threats to the viability of its development strategy, and pinpoints lessons |
| Keywords: | Development, politics of co-optation, trade openness, fertility, human capital, wonmen's empowerment, Tunisia |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2009-32&r=dev |
| By: | Yao, Yang |
| Abstract: | In the last 30 years, China has achieved high economic growth and successfully transformed its economy from a planned economy to a market-based system. The country, to a large extent, has attained success through the recommendations proposed by standard economic theory. However, the role of political economy has been omitted from the literature: how did China adopt the right economic policies and the appropriate road to reform? This paper attempts to answer this question. The central assumption of the paper is that China achieved success because the Chinese government has been a disinterested party, i.e., a government that does not favour any particular sections of the population and prioritizes the long-term welfare of the whole society. In this paper, we first define and analyse the concept of disinterested governments, and then proceed to provide several examples to demonstrate that China has been characterized by a disinterested government. Based on a theoretical model, we also discuss the reasons of the |
| Keywords: | Disinterested governments, the China miracle, econimic reform |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2009-33&r=dev |
| By: | Rooks, Gerrit; Szirmai, Adam; Sserwanga, Arthur |
| Abstract: | This paper discusses the characteristics and determinants of entrepreneurial behaviour in Uganda. It is based on a recent survey of urban and rural entrepreneurs, executed in May 2008. The main dependent variables are business success, gestation activities and innovative performance. The paper focuses in particular on the interplay of human and social capital in determining entrepreneurial performance. A prominent question in the literature is whether human capital and social capital act as complements or substitutes in furthering entrepreneurial dynamism.We find that Ugandan enterprises are predominantly very small and not very dynamic. Most enterprises are young, with little or no growth of employment since start-up. Only a very small subset of sample entrepreneurs could be classified as entrepreneur in the dynamic |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2009-09&r=dev |
| By: | Bennett, John |
| Abstract: | We analyse potential dynamic benefits for a firm from having the option of adopting informal status. Informality may be a stepping stone, without which formality might never be achieved. This result obtains for a broad range of realistic parameter values, suggesting a potential dynamic case for government support of informal firms. Informality may alternatively play a converse role as a consolation prize, a firm only entering an industry (formally) because it recognizes that if profitability is disappointing, it can switch to informality. However, this result obtains for a range of parameter values so narrow to be of no practical significance. |
| Keywords: | informality; entrepreneurship |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2009-19&r=dev |
| By: | Thoburn, John |
| Abstract: | Vietnam.s development performance since the early 1990s has been one of the strongest in the world, following the introduction of its doi moi (.renovation.) economic reform programme in 1986. The core of Vietnam.s economic strategy has been rapid integration into the world economy, with a diversified portfolio of exports and the attraction of direct foreign investment. This open approach has been combined with successful domestic agricultural growth and a strong, continued role for state-owned enterprises while encouraging growth of the private sector. Following an .East Asian. model, Vietnam has opened its domestic market only slowly while encouraging export growth. |
| Keywords: | Vietnam, globalization, trade, poverty, economic reform, development |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2009-30&r=dev |
| By: | Fosu, Augustin Kwasi; Naude, Wim |
| Abstract: | This paper outlines the impact of the global economic crisis on Africa. Recovery requires coordinated and consistent efforts to assist individual countries in mitigating (reducing) the risk, coping with the impact, and reducing risk over the longer term. Care should be exercised to maintain and improve good governance, which is essential for African countries to avoid introducing various .anti-growth policy syndromes. into their economies. These could arise if responses to the crisis result in (i) further boom-bust cycles and flaming the historically high volatility of African growth, including inflation, (ii) another debt crisis, (iii) household engaging in adverse coping strategies with lasting impacts; (iv) reversal of gains made in opening up African economies and re-introducing crippling state controls; and (v) entrenchment of inequities and inefficiencies in the global financial and aid architecture. |
| Keywords: | Africa, least developed countries, global economic crisis, financial crisis, governance |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:dp2009&r=dev |
| By: | Prasad, Eswar (Cornell University) |
| Abstract: | Rebalancing growth patterns of Asian economies is an important component of the overall rebalancing effort that will be required in the world economy. In this paper, I provide an empirical characterization of the composition of GDP levels and growth rates for the key emerging markets and other developing economies in Asia. China has by far the lowest share of private consumption to GDP in Asia and, during this decade, has recorded the lowest rate of employment growth relative to GDP growth. Investment growth has dominated GDP growth in China during this decade but is also important in the cases of India and Vietnam. To examine the global implications of domestic growth patterns in Asia, I analyze saving-investment balances, the composition of national savings, and the determinants of the evolution of household saving rates. During 2000-08, household saving rates (relative to household income) have risen gradually in China and India but fallen sharply in Korea. Corporate savings have surged across Asia during this period, becoming the main component of gross national savings in the region. In terms of sheer magnitudes, China's national savings and current account surpluses dominate the region's saving-investment balances. China accounts for just under half of GDP in Asia ex-Japan, but accounts for 60 percent of total gross national savings and nearly 90 percent of the current account surplus of the region. Finally, I discuss some policy implications that come out of the analysis on how to shift the patterns of growth, especially in China, from a welfare-enhancing perspective. |
| Keywords: | growth contributions, national savings and investment, current account balance, welfare consequences of growth |
| JEL: | E2 F3 F4 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4298&r=dev |
| By: | Mouhamadou Sy; Hamidreza Tabarraei |
| Abstract: | In this paper, the link between capital inflows and real exchange rate movements in LDC is revisited theoretically and empirically. Theoretically by representing a simple model to show that the real exchange rate depends mainly on real fundamentals as the term of trade or gross domestic product per capita and empirically by taking into account the heterogeneity of the sample, the dynamic of the RER and the non stationary nature of the data. Capital inflows can be the oil revenues, foreign aid or FDI. Empirically, it is also shown that these real fundamentals are the main driving forces of real exchange movements in these countries comparing to capital inflows. The TOT by itself account for 40% of the RER variations while capital inflows account only for 12% of RER variations. The Dutch disease theory is not rejected but its size on RER movements in LDC is not very big. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pse:psecon:2009-26&r=dev |
| By: | Philippe Abbott |
| Abstract: | Measures were taken by many developing country governments to mitigate consequences of high international agricultural commodity prices from mid 2006 until mid 2008, and to block their transmission to domestic markets, with varying degrees of success and cost. A significant international response has focused on emergency relief and renewed efforts to invest in agricultural development. This paper describes and contrasts the approaches taken by national governments versus international organizations and donors to respond to this food crisis, and their consequences. It also explores approaches already underway to enhance aid effectiveness and achieve more rapid agricultural development for smallholder farmers, identifying potential and past roadblocks. |
| Keywords: | agricultural trade policy, emergency relief, food inflation, international commodity prices, price transmission, safety nets, agricultural development, aid effectiveness |
| JEL: | O13 Q17 Q18 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:oec:agraaa:15-en&r=dev |
| By: | Alex William Trew |
| Abstract: | We follow Acemoglu and Johnson (2005) in disentangling the effects of contracting and property rights institutions on average growth rates over the period 1985--2004 in addition to the log level of per capita income in 1995. On the basis of 2SLS results, we find a robust, positive link between the quality of some contracting institutions and the rate of economic growth and a robust, negative link between contracting institutions and the level of output. We interpret these conflicting results as evidence for a trade-off in the effect of contracting institutions on growth and income levels. We look to rationalize this apparent trade-off in terms of a framework where transactions costs are endogenous to investments made in contracting technologies. |
| Keywords: | Economic growth, institutions. |
| JEL: | O11 O40 O43 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:san:cdmawp:0904&r=dev |
| By: | Ferreira, Francisco H. G.; Filmer, Deon; Schady, Norbert |
| Abstract: | Conditional cash transfers have been adopted by a large number of countries in the past decade. Although the impacts of these programs have been studied extensively, understanding of the economic mechanisms through which cash and conditions affect household decisions remains incomplete. This paper uses evidence from a program in Cambodia, where eligibility varied substantially among siblings in the same household, to illustrate these effects. A model of schooling decisions highlights three different effects of a child-specific conditional cash transfer: an income effect, a substitution effect, and a displacement effect. The model predicts that such a conditional cash transfer will increase enrollment for eligible children - due to all three effects - but have an ambiguous effect on ineligible siblings. The ambiguity arises from the interaction of a positive income effect with a negative displacement effect. These predictions are shown to be consistent with evidence from Cambodia, where the child-specific program makes modest transfers, conditional on school enrollment for children of middle-school age. Scholarship recipients were more than 20 percentage points more likely to be enrolled in school and 10 percentage points less likely to work for pay. However, the school enrollment and work of ineligible siblings was largely unaffected by the program. |
| Keywords: | Access to Finance,Primary Education,Education For All,Tertiary Education,Youth and Governance |
| Date: | 2009–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5001&r=dev |
| By: | Boonperm, Jirawan; Haughton, Jonathan; Khandker, Shahidur R. |
| Abstract: | This paper evaluates the impact of the Thailand Village and Urban Revolving Fund on household expenditure, income, and assets. The revolving fund was launched in 2001 when the Government of Thailand promised to provide a million baht (about $22,500) to every village and urban community in Thailand as working capital for locally-run rotating credit associations. The money – about $2 billion in total – was quickly disbursed to locally-run committees in almost all of Thailand’s 74,000 villages and more than 4,500 urban (including military) communities. By May 2005, the committees had lent a total of about $8 billion, with an average loan of $466. Using data from the Thailand Socioeconomic Surveys of 2002 and 2004, each of which surveys almost 35,000 households, the authors find that the borrowers were disproportionately poor and agricultural. A propensity score matching model finds that Fund borrowing in 2004 was associated with, on average, 1.9 percent more income, 3.3 percent more expenditure, and about 5 percent more ownership of durable goods. These results are broadly consistent with the results from instrumental variables models (where the identifying instrument was the inverse of village size), which however show a smaller (marginal) effect. Households that borrowed both from the revolving fund and from the Bank of Agriculture and Agricultural Cooperatives gained substantially more in terms of higher income than those who borrowed from either one or the other or from neither. |
| Keywords: | Access to Finance,,Debt Markets,Economic Theory&Research,Rural Poverty Reduction |
| Date: | 2009–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5011&r=dev |
| By: | Filmer, Deon; Schady, Norbert |
| Abstract: | There is a strong association between schooling attained and test scores in many settings. If this association is causal, one might expect that programs that increase school enrollment and attainment would also improve test scores. However, if there is self-selection into school based on expected gains, marginal children brought into school by such programs may be drawn disproportionately from the left-hand side of the ability distribution, which could limit the extent to which additional schooling translates into more learning. To test this proposition, this paper uses data from Cambodia. The results show that a program that provides scholarships to poor students had a large effect on school enrollment and attendance, which increased by approximately 25 percentage points. However, there is no evidence that, 18 months after the scholarships were awarded, recipient children did any better on mathematics and vocabulary tests than they would have in the absence of the program. The paper discusses results that suggest that the self-selection of lower-ability students into school in response to the program is an important part of the explanation. The analysis also shows minimal program effects on other outcomes, including knowledge of health practices, expectations about the future, and adolescent mental health. |
| Keywords: | Tertiary Education,Education For All,Primary Education,Teaching and Learning,Secondary Education |
| Date: | 2009–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4998&r=dev |
| By: | Dethier, Jean-Jacques |
| Abstract: | The World Bank is a leading intellectual institution on development. It is a world leader in analytical studies in areas including poverty measurement, delivery of social services, impact evaluation, measurement of development outcomes, international trade and migration. It is also a leader in development data, including the Living Standard Measurement Surveys; the enterprise surveys, and the International Price Comparison Project. World Bank research is resolutely empirical and policy oriented. By both learning from past policies and operations and thinking critically about future policies, research plays a critical role in the formulation of policy advice to developing countries. This paper reviews the intellectual and institutional forces that have shaped research at the World Bank since the latter started lending to developing countries in the early 1950s. It provides an overview of the shifts in development economics that have influenced Bank research and briefly surveys the changes in research organization, structure and approach. The first section, after a short introduction, examines the shifts in positive and normative views about development during the past half century that have influenced Bank thinking. The Bank itself has been an active participant in the rise and fall of long-lived development dogmas about the nature of development; the most appropriate policies and actions for achieving it; and the respective roles of government and markets. The second section examines how the World Bank has adapted its organization to keep abreast of emerging issues and produce relevant policy research of good quality. On the one hand, the Bank has experienced several reorganizations that have affected the research unit(s) as well as its relationship with operational units. On the other hand, the Bank’s research units themselves have been reorganized at several junctures, leading to new priorities and new means of achieving them. |
| Keywords: | Banks&Banking Reform,ICT Policy and Strategies,Science Education,Scientific Research&Science Parks,Poverty Monitoring&Analysis |
| Date: | 2009–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5000&r=dev |
| By: | Filmer, Deon; Schady, Norbert |
| Abstract: | There is increasing evidence that conditional cash transfer programs can have large impacts on school enrollment, including in very poor countries. However, little is known about which features of program design -- including the amount of the cash that is transferred, how frequently conditions are monitored, whether non-complying households are penalized, and the identity or gender of the cash recipients -- account for the observed outcomes. This paper analyzes the impact of one feature of program design -- namely, the magnitude of the transfer. The analysis uses data from a program in Cambodia that deliberately altered the transfer amounts received by otherwise comparable households. The findings show clear evidence of diminishing marginal returns to transfer size despite the fact that even the larger transfers represented on average only 3 percent of the consumption of the median recipient households. If applicable to other settings, these results have important implications for other programs that transfer cash with the explicit aim of increasing school enrollment levels in developing countries. |
| Keywords: | Tertiary Education,Access to Finance,Education For All,,Primary Education |
| Date: | 2009–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4999&r=dev |
| By: | Knack, Stephen; Eubank, Nicholas |
| Abstract: | The 2005 Paris Declaration on Aid Effectiveness sets targets for increased use by donors of recipient country systems for managing aid. A consensus view holds that country systems are strengthened when donors trust recipients to manage aid funds, but undermined when donors manage aid through their own separate parallel systems. This paper provides an analytical framework for understanding donors’ decisions to trust in country systems or instead to micro-manage aid using their own systems and procedures. Where country systems are sufficiently weak, the development impact of aid is reduced by donors’ reliance on them. Trust in country systems will be sub-optimal, however, if donors have multiple objectives in aid provision rather than a sole objective of maximizing development outcomes. Empirical tests are conducted using data from an OECD survey designed to monitor progress toward Paris Declaration goals. Trust in country systems is measured in three ways: use of the recipient’s public financial management systems, use of direct budget support, and use of program-based approaches. The authors show using fixed effects regression that a donor’s trust in recipient country systems is positively related to (1) trustworthiness or quality of those systems, (2) tolerance for risk on the part of the donor’s constituents, as measured by public support for providing aid, and (3) the donor’s ability to internalize more of the benefits of investing in country systems, as measured by the donor’s share of all aid provided to a recipient. |
| Keywords: | Gender and Health,Development Economics&Aid Effectiveness,Economic Theory&Research,Disability,Microfinance |
| Date: | 2009–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5005&r=dev |
| By: | Moura, Mauricio |
| Abstract: | Secure property rights are considered a key determinant of economic development. However, evaluation of the causal effects of land titling is a difficult task. Since 2004, the Brazilian government, through a program called"Papel Passado,"has issued titles to more than 85,000 families and has the goal to reach 750,000. Another topic in public policy that is crucial for developing economies is child labor force participation. In Brazil, about 5.4 million children and teenagers between 5 and 17 years old are working full time. This paper examines the direct impact of securing a property title on child labor force participation. In order to isolate the causal role of ownership security, this study uses a comparison between two close and similar communities in the City of Osasco case (a town with 650,000 people in the São Paulo metropolitan area). The key point of this case is that some units participate in the program and others do not. One of them, Jardim Canaã, received land titles in 2007; the other, Jardim DR, given fiscal constraints, will not be part of the program until 2012, and for that reason became the control group. Estimates, generated using the difference-in-difference econometric technique suggest that titling results in a substantial decrease in child labor force participation for the families that received the title compared with the others. These findings are relevant for future policy tools for dealing with informality and how it affects economic growth. |
| Keywords: | Labor Policies,Access to Finance,,Debt Markets,Gender and Law |
| Date: | 2009–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5010&r=dev |
| By: | Schwartz, Jordan Z.; Andres, Luis A.; Dragoiu, Georgeta |
| Abstract: | Infrastructure investment is a central part of the stimulus plans of the Latin American and the Caribbean (LAC) region as it confronts the growing financial crisis. This paper estimates the potential effects on direct, indirect, and induced employment for different types of infrastructure projects with LAC-specific variables. The analysis finds that the direct and indirect short-term employment generation potential of infrastructure capital investment projects may be considerable - averaging around 40,000 annual jobs per US$1billion in LAC, depending upon such variables as the mix of subsectors in the investment program; the technologies deployed; local wages for skilled and unskilled labor; and the degrees of leakages to imported inputs. While these numbers do not account for substitution effect, they are built around an assumed"basket"of investments that crosses infrastructure sectors most of which are not employment-maximizing. Albeit limited in scope, rural road maintenance projects may employ 200,000 to 500,000 annualized direct jobs for every US$1billion spent. The paper also describes the potential risks to effective infrastructure investment in an environment of crisis including sorting and planning contradictions, delayed implementation and impact, affordability, and corruption. |
| Keywords: | Transport Economics Policy&Planning,,Banks&Banking Reform,Non Bank Financial Institutions,Debt Markets |
| Date: | 2009–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5009&r=dev |
| By: | Francisco Gallego (Instituto de Economía. Pontificia Universidad Católica de Chile.); Andrés Hernando |
| Abstract: | How do parents choose among schools when they are allowed to do so? In this paper, we analyze detailed information of 70,000 fourth-graders attending about 1,200 publicly subsidized schools in the context of the Chilean voucher system. We model the school choice of a household as a discrete choice of a single school, based on the random utility model developed by McFadden (1974) and the specification of Berry, Levinsohn, and Pakes (1995), which includes choice-specific unobservable characteristics and deals with potential endogeneity. Our results imply that households value some attributes of schools, with the two most important dimensions being test scores and distance to school. Interestingly, at the same time, our results suggest there is a lot of heterogeneity in preferences because the valuation of most school attributes depend on household characteristics. In particular, we find that while proximity to school is an inferior attribute, test scores is a normal attribute. We present evidence that our results are mainly driven by self-selection and not by school-side selection. As a nal check, we compute the average enrollment elasticity with respect to all school attributes and find that higher elasticities are correlated with higher supply of the attribute, especially in the case of test scores-enrollment elasticities for private schools. |
| Keywords: | School choice, Chile, Vouchers, Structural Estimates, Parental Preferences. |
| JEL: | I20 I21 I22 I28 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ioe:doctra:356&r=dev |
| By: | Eichengreen, Barry; Gullapalli, Rachita; Panizza, Ugo |
| Abstract: | This paper synthesizes previous studies analyzing the effects of capital account liberalization on industry growth while controlling for financial crises, domestic financial development and the strength of institutions. We find reasonably strong evidence that financial openness has positive effects on the growth of financially-dependent industries, although these growth-enhancing effects evaporate during financial crises. Further analysis indicates that the positive effects of capital account liberalization are limited to countries with relatively well-developed financial systems, good accounting standards, strong creditor rights and rule of law. It suggests that countries must reach a certain threshold in terms of institutional and economic development before they can expect to benefit from capital account liberalization. |
| Keywords: | Capital account liberalization, Financial development, External dependence |
| JEL: | F34 F36 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:uca:ucapdv:128&r=dev |
| By: | Mughal, Mazhar |
| Abstract: | We study the effects of FDI inflows on the Pakistani economy over the period 1961-2005 using the Johansen co-integration technique and the Vector Error Correction Model. We determine that FDI does have a positive effect on the economy, particularly in the short term. Foreign investment is found to have a less important role than domestic investment. However, FDI impacts negatively on human capital. We can thus say that FDI has neither been an absolute boon nor a downright bane for Pakistan. On étudie l'impacte des IDE sur l'économie Pakistanaise pendant la période 1961-2005 en utilisant la technique de cointégration de Johansen et le VECM. On trouve que les IDE ont un effet positif sur l'économie particulièrement à court terme. Les investissements étrangers ont un rôle moins important que celui des investissements domestiques. En revanche, l'impacte sur le capital humain est négatif. Par conséquent, on peut conclure que les IDE ont été ni bénéfiques, ni néfastes. |
| Keywords: | Foreign direct investment; Economic growth; Pakistan; Human capital; Domestic investment. |
| JEL: | F21 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:16468&r=dev |
| By: | MOHSEN MEHRARA*, MOHSEN; ALHOSSEINI, SEYEDMOHAMMADSADEGH; BAHRAMIRAD, DUMAN |
| Abstract: | The examination of the relationship between oil resources and economic growth reveals that oil curse in oil countries is not reliable and these countries can be divided into countries with poor and rich institutions. In the first group, oil revenues have a negative and significant effect on the economic growth; in the second group, oil revenues have a positive and significant effect on economic growth. In other words, what causes curse or blessing of oil resources is the institution qualities of the countries; the lower the institution quality, the more negative effect of the oil revenues on the economic growth. In this article we derive the kink point of institutional index whereby oil revenues effect on the economic growth changes from positive to negative. |
| Keywords: | economic growth, institutions, oil resources |
| JEL: | O13 O50 Q30 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:16456&r=dev |
| By: | Backiny-Yetna, Prospere; Wodon, Quentin |
| Abstract: | This paper uses recent household survey data for Cameroon to measure the cost for households of the education services that their children receive and assess how this cost varies according to the type of service provider. Contrary to what has been observed in some other countries, the data suggest that faith-based schools in Cameroon serve primarily better-off children, with public schools serving the poor more. Faith-based schools are also more expensive for households than private schools (possibly due to lower levels of public funding). This may be one of the reasons why the poor tend to go to public schools more than to faith-based schools. |
| Keywords: | Education; cost of schooling; faith-based schools; public schools; Cameroon |
| JEL: | Z12 H11 I21 L33 H44 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:16464&r=dev |
| By: | Cristina Arellano; Yan Bai; Jing Zhang |
| Abstract: | This paper studies the impact of cross-country variation in financial market development on firms' financing choices and growth rates using comprehensive firm-level datasets. We document that in less financially developed economies, small firms grow faster and have lower debt to asset ratios than large firms. We then develop a quantitative model where financial frictions drive firm growth and debt financing through the availability of credit and default risk. We parameterize the model to the firms' financial structure in the data and show that financial restrictions can account for the majority of the difference in growth rates between firms of different sizes across countries. |
| JEL: | E22 F2 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15193&r=dev |
| By: | Mark Aguiar; Manuel Amador |
| Abstract: | In this paper, we propose a tractable variant of the open economy neoclassical growth model that emphasizes political economy and contracting frictions. The political economy frictions involve disagreement and political turnover, while the contracting friction is a lack of commitment regarding foreign debt and expropriation. We show that the political economy frictions induce growth dynamics in a limited-commitment environment that would otherwise move immediately to the steady state. In particular, greater political disagreement corresponds to a high tax rate on investment, which declines slowly over time, generating slow convergence to the steady state. While in the standard neoclassical growth model capital’s share in production plays an important role in determining the speed of convergence, this parameter is replaced by political disagreement in our open economy reformulation. Moreover, while political frictions shorten the horizon of the government, the government may still pursue a path of tax rates in which the first best investment is achieved in the long run, although the transition may be slow. The model rationalizes why openness has different implications for growth depending on the political environment, why institutions such as respect for property rights evolve over time, why governments in open countries that grow rapidly tend to accumulate net foreign assets rather than liabilities, and why foreign aid may not affect growth. |
| JEL: | F21 F43 O23 P16 P45 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15194&r=dev |
| By: | Mariana Spatareanu; Vlad Manole |
| Abstract: | This study uses a new, innovative measure of trade protection and finds that less trade protection is associated with higher income per capita, using data from 131 developed and developing countries. |
| Keywords: | trade restrictiveness, tariff aggregators, income per capita |
| JEL: | F10 F13 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:lic:licosd:24309&r=dev |