nep-dev New Economics Papers
on Development
Issue of 2009‒09‒11
twelve papers chosen by
Mark Lee
Towson University

  1. The Impact of the Global Financial Crisis on The Economy of Sierra Leone By John Weeks
  2. How to Measure the Rule of Law By Stefan Voigt
  3. Inequality in developing economies: The role of institutional development By Joshy Easaw; Antonio Savoia
  4. Recent trends in income inequality in Latin America By Leonardo Gasparini; Guillermo Cruces; Leopoldo Tornarolli
  5. Horizontal inequity in access to health care in four South American cities By Ana I. Balsa; Máximo Rossi; Patricia Triunfo
  6. Do Remittances Impact the Economy? Some Empirical Evidences from A Developing Economy By Hrushikesh Mallick
  7. Developing Country Second-Mover Advantage in Competition Over Standards and Taxes By Valeska Groenert; Myrna Wooders; Ben Zissimos
  8. How much of South Korea's growth miracle can be explained by trade policy? By Michelle Connolly; Kei-Mu Yi
  9. The Remitting Patterns of African Migrants in the OECD By Albert Bollard; David McKenzie; Melanie Morten
  10. Determinants of Food Security in Rural Areas of Pakistan By Khan, Rana Ejaz Ali; Gill, Abid Rashid
  11. Trade as Aid: The Role of the EBA-Trade Preferences Regime in the Development Strategy By Katerina Gradeva; Inmaculada Martínez-Zarzoso
  12. Teacher Performance Pay: Experimental Evidence from India By Karthik Muralidharan; Venkatesh Sundararaman

  1. By: John Weeks (Professor Emeritus, School of Oriental and African Studies, University of London)
    Abstract: GLOBAL CRISIS AND POVERTY PREVENTION Most recent statistics indicate that the global financial crisis will cause a fall in export earnings in Sierra Leone of approximately fifteen percent in 2009 compared to 2008. A regression-based model estimates that this decline in exports earnings could result in a fall in national income of almost ten percent. Based on the income distribution in the 2003 household survey, a ten percent decline in national income would increase poverty by twelve percent of the population, or about 600,000 people. A fiscal stimulus of two percent of GDP could stabilise the economy at the level of 2008, preventing this disastrous increase in poverty. A stimulus package consisting of employment intensive public works programmes could be designed to return the economy to its pre-shock level with a reduction in poverty. (...)
    Keywords: The Impact of the Global Financial Crisis on The Economy of Sierra Leone
    Date: 2009–09
  2. By: Stefan Voigt (MACIE (Philipps University Marburg), Barfüßertor 2, 35032 Marburg, Germany; CESifo; ICER, Torino)
    Abstract: I argue that the rule of law consists of many dimensions and that much information is lost when variables proxying for these dimensions are simply aggregated. I draw on the most important innovations from various legal traditions to propose a concept of the rule of law likely to find general support. To make the concept measurable, an ideal approach is contrasted with a pragmatic one. The pragmatic approach consists of eight different dimensions. I show that the bivariate correlations between them are usually very low, evidence that more fine-grained indicators of the rule of law, rather than a single hard-to-interpret one, are necessary for its measurement. The paper presents a list of desirable variables that could improve the measurement of various aspects of the rule of law.
    Keywords: Rule of Law, Institutions, Governance, Measurement, Formal vs. Informal Institutions
    JEL: B41 H11 K00 O17 O43 O57
    Date: 2009
  3. By: Joshy Easaw (University of Bath); Antonio Savoia (University of Reading and Universitá di Salerno)
    Abstract: In the present paper we study the distributive impact of institutional change in developing countries. In such economies, economic institutions, such as property rights systems, may act to preserve the interests of a rich minority, but this depends crucially on the level of political equality. For example, dominant classes can control key-markets, access to assets and investment opportunities, especially if they enjoy disproportionate political power. We test this hypothesis using cross-section and panel data methods on a sample of low- and middle-income economies from Africa, Asia and Latin America. Results suggest that: (a) increasing the protection of property rights increases income inequality; (b) such an effect is larger in low-democracy environments; (c) a minority of countries have developed a set political institutions capable of counterbalancing this effect.
    Keywords: Inequality, developing economies, institutions, property rights, democracy
    JEL: O15 O17 D70
    Date: 2009
  4. By: Leonardo Gasparini (CEDLAS – Universidad Nacional de La Plata); Guillermo Cruces (CEDLAS – Universidad Nacional de La Plata); Leopoldo Tornarolli (CEDLAS – Universidad Nacional de La Plata)
    Abstract: This paper documents patterns and recent developments on income inequality in Latin America (LA). New comparative international evidence confirms that LA is a region of high inequality, although maybe not the highest in the world. Income inequality has fallen in the 2000s, suggesting a turning point from the substantial increases of the 1980s and 1990s. The fall in inequality is significant and widespread, but it does not seem to be based on strong fundamentals.
    Keywords: inequality, distribution, education, Latin America
    JEL: C15 D31 I21 J23 J31
    Date: 2009
  5. By: Ana I. Balsa (University of Miami); Máximo Rossi (Universidad de la República (Uruguay)); Patricia Triunfo (Universidad de la República (Uruguay))
    Abstract: This paper analyzes and compares socioeconomic inequalities in the use of healthcare services by the elderly in four South-American cities: Buenos Aires (Argentina), Santiago (Chile), Montevideo (Uruguay) and San Pablo (Brazil). We use data from SABE, a survey on Health, Well-being and Aging administered in several Latin American cities in 2000. After having accounted for socioeconomic inequalities in healthcare needs, we find socioeconomic inequities favoring the rich in the use of preventive services (mammograms, pap tests, breast examinations, and prostate exams) in all of the studied cities. We also find inequities in the likelihood of having a medical visit in Santiago and Montevideo, and in some measures of quality of access in Santiago, Sao Paulo, and Buenos Aires. Santiago depicts the highest inequities in medical visits and Uruguay the worse indicators in mammograms and pap scans tests. For all cities, inequities in preventive services at least double inequities in other services. We do not find evidence of a trade-off between levels of access and equity in access to healthcare services. The decomposition of healthcare inequalities suggests that inequities within each health system (public or private) are more important than between systems.
    Keywords: inequalities, healthcare, medical visit, preventive services.
    JEL: I1 I11 I12 I18
    Date: 2009
  6. By: Hrushikesh Mallick
    Abstract: The study attempts to examine the impact of remittances on macroeconomic activities (private consumption and investment) and its implications on economic growth in India for the period from 1966-67 to 2003-04. Estimating a general consumption model, the results indicate that remittances along with debt, money supply (net of bank demand deposits) and income, consistently have a positive influence on private consumption. [WP no. 407].
    Keywords: income, emigrant workers, economy, debt, money supply, bank, demand deposits, bank, bank demand deposits, Remittances, consumption, Investment, Growth, Interest Rates, Government Borrowings, Openness of the economy, macroeconomic activities, consumption, investment, private consumption,
    Date: 2009
  7. By: Valeska Groenert (Department of Economics, Vanderbilt University); Myrna Wooders (Department of Economics, Vanderbilt University); Ben Zissimos (Department of Economics, Vanderbilt University)
    Abstract: We show that, in competition between a developed country and a developing country over environmental standards and taxes, the developing country may have a 'second-mover advantage.' In our model, firms do not unanimously prefer lower environmental-standard levels. We introduce this feature to an otherwise familiar model of fiscal competition. Three distinct outcomes can be characterized by varying the cost to firms of 'standard mismatch': (1) the outcome may be efficient; (2) the developing country may be a 'pollution haven,' where some firms escape excessively high environmental standards in the developed country; (3) environmental standards may be set excessively high.
    Keywords: Environmental standards, fiscal competition, second-mover advantage, tax competition
    JEL: H2 H3 Q2
    Date: 2009–07
  8. By: Michelle Connolly; Kei-Mu Yi
    Abstract: South Korea's growth miracle has been well documented. A large set of institutional and policy reforms in the early 1960s is thought to have contributed to the country's extraordinary performance. In this paper, the authors assess the importance of one key set of policies, the trade policy reforms in Korea, as well as the concurrent GATT tariff reductions. They develop a model of neoclassical growth and trade that highlights two forces by which lower trade barriers can lead to increased per worker GDP: comparative advantage and specialization, and capital accumulation. The authors calibrate the model and simulate the effects of three sets of tariff reductions that occurred between the early 1962 and 1995. Their main finding is that the model can explain up to 32 percent of South Korea's catch-up to the G7 countries in output per worker in the manufacturing sector. The authors find that the effects of the tariff reductions taken together are about twice as large as the sum of each reduction applied individually.
    Keywords: Trade ; Tariff ; Economic policy
    Date: 2009
  9. By: Albert Bollard (Stanford University); David McKenzie (Development Research Group, World Bank); Melanie Morten (Yale University)
    Abstract: Recorded remittances to Africa have grown dramatically over the past decade. Yet data limitations still mean relatively little is known about which migrants remit, how much they remit, and how their remitting behavior varies with gender, education, income levels, and duration abroad. We construct the most comprehensive remittance database on immigrants in the OECD currently available, containing microdata on over 12,000 African immigrants. Using this microdata we establish several basic facts about remitting patterns of Africans, and then explore how key characteristics of policy interest relate to remittance behavior. Africans are found to remit twice as much on average as migrants from other developing countries, while those from poorer African countries are more likely to remit than those from richer African countries. We find male migrants remit more than female migrants, particularly among those with a spouse remaining in the home country; that more educated migrants remit more than less educated migrants; and that while the amount remitted increases with income earned, the gradient is quite flat over a large range of income. Finally, we find little evidence that the amount remitted decays with time spent abroad, with reductions in the likelihood in remitting offset by increases in the amount remitted conditional on remitting.
    Date: 2009–09
  10. By: Khan, Rana Ejaz Ali; Gill, Abid Rashid
    Abstract: Abstract: Out of 120 districts of Pakistan (for rural areas) only 40 are food secure while 80 (67 percent) are food insecure. Within these food insecure districts, 38 (46 percent) are extremely food insecure. The matter of food security in rural areas is of immense nature and needs to be probed. A number of factors are responsible for the situation. The current paper examines the determinants of three aspects of food security in rural areas of Pakistan, i.e. food availability, accessibility and absorption. For the purpose a series of models is applied on district level data of rural areas of Pakistan. The production of wheat, rice, maize, pulses, oilseeds, poultry meat and fish at the district level is found to affect food availability positively. All the district except of Sindh are more probable to be food insecure in availability. In the food accessibility electrification and adult literacy emerged as the factors having negative effect. Child immunization, safe drinking water and number of hospitals have shown positive effect on food absorption.
    Keywords: Food production; Rural areas; Pakistan; Food security; Devolution.
    JEL: Q1 Q15 Q18
    Date: 2009–02–16
  11. By: Katerina Gradeva; Inmaculada Martínez-Zarzoso (University of Göttingen / Germany)
    Abstract: This study focuses primarily on trade preferences offered by the European Union (EU) and in particular on the Everything But Arms (EBA) trade preferences regime, which is targeted exclusively on least developed countries (LDCs). Using the gravity model, an estimation of the influence of the EBA preferences on exports from the ACP LDCs to the EU-15 is presented. The model is applied to the time period 1995 to 2005 for the ACP countries’ exports to the EU-15 and estimated with the help of different econometric techniques. The core questions of the investigation are two: First, to examine the influence of the EBA preferences on the ACP LDCs’ export performance and second to compare the impact of the EBA scheme with the one of official development assistance. In addition to their separate effects the combined impact of EBA and aid flows is also analysed. The main results show a very poor performance of the EBA regime. However, the combined effect of the EBA and aid on exports is positive, indicating that the development strategy of the developed countries, in this case of the EU, needs to include both sorts of assistance, aid and trade preferences.
    Keywords: development aid; trade preferences; Everything But Arms; panel data
    JEL: O24 C23 F13 F35
    Date: 2009–08–18
  12. By: Karthik Muralidharan; Venkatesh Sundararaman
    Abstract: Performance pay for teachers is frequently suggested as a way of improving education outcomes in schools, but the theoretical predictions regarding its effectiveness are ambiguous and the empirical evidence to date is limited and mixed. We present results from a randomized evaluation of a teacher incentive program implemented across a large representative sample of government-run rural primary schools in the Indian state of Andhra Pradesh. The program provided bonus payments to teachers based on the average improvement of their students' test scores in independently administered learning assessments (with a mean bonus of 30% of monthly pay). At the end of two years of the program, students in incentive schools performed significantly better than those in control schools by 0.28 and 0.16 standard deviations in math and language tests respectively. They scored significantly higher on "conceptual" as well as "mechanical" components of the tests, suggesting that the gains in test scores represented an actual increase in learning outcomes. Incentive schools also performed better on subjects for which there were no incentives, suggesting positive spillovers. Group and individual incentive schools performed equally well in the first year of the program, but the individual incentive schools outperformed in the second year. Incentive schools performed significantly better than other randomly-chosen schools that received additional schooling inputs of a similar value.
    JEL: C93 I21 M52 O15
    Date: 2009–09

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