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on Development |
| By: | Atsushi Kato (School of Business, Aoyama Gakuin University); Takahiro Sato (Research Institute for Economics and Business Administration, Kobe University) |
| Abstract: | We examine the effect of threats to property rights on the economic performance of the manufacturing sector of Indian states. We construct indices of the threats from data on crime against property rights. Our estimation results show that not only threats to private property, but also threats to contracts adversely affect the performance of India's manufacturing sector. |
| Keywords: | Property right, Contract, Gross value added, Capital labor ratio, TFP |
| JEL: | K00 O43 P14 P17 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:244&r=dev |
| By: | Thurlow, James; Morley, Samuel; Pratt, Alejandro Nin |
| Abstract: | "Despite the economic transformation of Peru's coastal economy, the country's inland region remains poor and underdeveloped. We herein examine the economic linkages between the two regions using a multi-regional computable general equilibrium model based on a regionalized social accounting matrix. The model results show that coastal growth undermines the inland economy by increasing import competition and internal migration. Peru, therefore, cannot rely solely on rapid national growth to generate broad-based poverty reduction. When we simulate policies aimed at curbing divergence, we find that reducing interregional transaction costs stimulates national economic growth, but widens divergence by shifting inland production towards agriculture and concentrating investment in coastal manufacturing. In contrast, conditional cash transfers reduce regional and rural-urban inequality, but do not stimulate national growth. Finally, investing in inland productivity (through extension services and improved rural roads) reduces regional divergence, but the resulting market constraints worsen rural-urban inequality. These findings suggest that isolated interventions may worsen inequality, and that complementarities exist between supply-side investments and policies aimed at stimulating demand and improving access to national markets." from authors' abstract |
| Keywords: | Regional development, Public investments, economic growth, Development strategies, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:898&r=dev |
| By: | Villoria, Nelson; Hertel, Thomas; Nin-Pratt, Alejandro |
| Abstract: | "The implications of China's growth for the development prospects of Sub-Saharan Africa have been the subject of recent attention. Interest in this topic is motivated by the increasing presence of China in the region and the growing bilateral trade links between China and Africa. Against this background, we herein explore whether China's growth has stimulated agricultural exports in selected countries of Southern Africa, namely, Malawi, Mozambique, Tanzania, the Southern African Custom Union (SACU), and Zambia. We find little complementarity between China's agricultural import demand and the export supply of the focus countries. We also explore whether China affects Southern African agricultural exports through the increases in world agricultural prices associated with China's growing demand for food. We find that although China has moderately increased agricultural prices (in an aggregated sense), Southern African exports do not seem to benefit from these price increases." from authors' abstract |
| Keywords: | Agriculture, Gravity model, trade, Development strategies, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:891&r=dev |
| By: | Fleisher, Belton; Hu, Dinghuan; McGuire, William; Zhang, Xiaobo |
| Abstract: | "We use two rounds of surveys, taken in 2000 and 2008 in the Zhili Township children's garment cluster in Zhejiang Province, to examine in depth the evolution of this industrial cluster. Firm size has grown on average in terms of output and employment, and increasing divergence in firm sizes has been associated with a significant rise in specialization and outsourcing among firms in the cluster. Although the investment amount needed to start a business has more than tripled, this amount remains low enough that formal bank loans remain an insignificant source of finance. Because of low entry barriers, the number of firms in the cluster has risen, driving down profits and bidding up wages, particularly since the year 2000. Facing severe competition, more firms have begun to upgrade their product quality. By the year 2007, nearly half of the sampled firms had established registered trademarks and nearly 20 percent had become International Office of Standardization (ISO) certified." from authors' abstract |
| Keywords: | Cluster, Industrialization, Growth, Development strategies, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:896&r=dev |
| By: | Svendsen, Mark; Ewing, Mandy; Msangi, Siwa |
| Abstract: | "The paper develops indicators to look at the performance of the irrigation sector in Sub-Saharan Africa, where demand for food is high and irrigation has a proven potential to boost levels of agricultural productivity. By looking at six indicator categories—institutional framework, water resource use, irrigation area, irrigation technology, agricultural productivity, and poverty and food security—we assess the potential for improving performance in the agricultural food security sector through increasing irrigation sector investments. The indicators on water resource use indicate ample room for further development of the resource. The share of cultivated area equipped for irrigation in Africa is about a third of the world average and just one-sixth of the value for Asia. The low coverage of irrigation technology and the slow rate of growth in coverage clearly represent a lost opportunity for Africa and a tremendous potential for future investment and policy effort. Finally, African countries produce 38 percent of their crops (by value) from approximately 7 percent of their cultivated land on which water is managed, which again suggests that additional investment in irrigation would pay large benefits. The disproportionate contribution to agricultural production of Africa's small irrigated area suggests that returns on additional investment in irrigation would be high, both in terms of greater food security for the continent and greater production of export-quality agricultural goods." from authors' abstract |
| Keywords: | Irrigation performance, Agricultural production, Water resources, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:894&r=dev |
| By: | Yamauchi, Futoshi; Muto, Megumi; Chowdhury, Shyamal; Dewina, Reno; Sumaryanto, Sony |
| Abstract: | "This paper uses household panel and village census data from Indonesia to examine the impact of spatial connectivity (road) development on household income growth and nonagricultural labor supply. The empirical results show that the impacts of improvements in local road quality (which positively correlate with transportation speed) on income growth and the transition to nonagricultural labor markets depend on the distance to economic centers and the household education level. In particular, postprimary education significantly increases the benefit from local spatial connectivity improvement in remote areas and promotes labor transition to nonagricultural sectors. Education and local road quality are complementary, mutually increasing income growth and nonagricultural labor income in remote areas. The gain from improvements in local connectivity (measured by average road quality) depends on village remoteness and initial household-level endowments." from authors' abstract |
| Keywords: | income growth, Spatial connectivity, Rural economy, Education, Social protection, Human capital, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:897&r=dev |
| By: | Manoel Bittencourt (Department of Economics, University of Pretoria) |
| Abstract: | We test for the populist view of state capture in Latin America be- tween 1970 and 2003. The empirical results-based on the relatively novel panel time-series data and analysis - confirm the prediction that recently-elected governments coming into power after periods of po- litical dictatorship, and which are faced with high economic inequal- ity and demand for redistribution, end up pursuing unfunded populist [re] distributive policies. These policies, in turn, lead to bursts of hyper- in?ation and therefore macroeconomic instability in the region. All in all, we suggest that the implementation of democracy as such requires not only the 'right political context'- or a constrained executive-to work well, but it also must come with certain economic institutions, (e.g. central bank independence and a credible and responsible fiscal authority), institutions which would raise the costs of pursuing populist policies in the first place. |
| Keywords: | Polarisation, populism, hyperinflation, Latin America |
| JEL: | E31 E65 N16 O23 O54 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:200921&r=dev |
| By: | Yoshinori Kurokawa |
| Abstract: | A rising skill premium in two countries can be explained by the Heckscher- Ohlin model assuming a "skill intensity reversal." This assumption, however, poses an empirical challenge since past research has found little evidence for the so-called "factor intensity reversal." We now show clear-cut evidence: U.S. net exports to Mexico of electronics products---relatively high-skill intensive within the U.S. but relatively low-skill intensive within Mexico---increased from 1994 to 2000. U.S. net imports from Mexico of non-electronics products---relatively low-skill intensive within the U.S. but relatively high-skill intensive within Mexico---increased as well. The skill premium also increased in both countries. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:tsu:tewpjp:2009-010&r=dev |
| By: | Yoshinori Kurokawa |
| Abstract: | The Stolper-Samuelson theorem predicts that the relative wage of high-skilled to low-skilled labor will increase in the high-skill abundant U.S. but decrease in low-skill abundant Mexico after trade liberalization, while it actually began to rise in both countries in the late 1980s. We present a simple resolution of this "trade-wage inequality anomaly" in a variety-trade model. Intra-industry trade increases the variety of intermediate goods used by the final good. If the varieties and high-skilled labor are complements, the skill premium rises in both countries. Our simulations show that small amounts of intra-industry trade can produce a significant increase in relative wage. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:tsu:tewpjp:2009-007&r=dev |
| By: | Yoshito Takasaki |
| Abstract: | This paper investigates targeting of cyclone relief within the village in Fiji. We focus on two issues, the link of relief allocation with informal risk sharing and elite capture, both of which are directly related to kinship. We find the following. First, food aid is first targeted toward kin groups according to their aggregate shocks and then shared among group members. Right after the cyclone when aid supply is scarce, households with housing damaged and greater crop damage are allocated less aid within the group. Our conjecture is that they receive greater net private transfers in other forms especially in labor sharing. Consistent patterns are found in village, cropping, and housing rehabilitations. Second, there is no elite capture of food aid in the kin group and traditional kin leaders rather share it for others; contrarily, non-kin-based community leaders capture aid when it is allocated across kin groups. Third, distinct from food aid demanded by all, tarpaulins demanded only by the needed are strongly targeted on individual housing damage at the village level --- not kin group --- independent of social status. Like food aid, victims with greater crop damage are less prioritized. Implications for relief policies are discussed. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:tsu:tewpjp:2009-004&r=dev |
| By: | Yoshito Takasaki |
| Abstract: | This paper demonstrates that the Fijian kava ritual emerges as insurance against cyclone risk, as women's production of ritual handicraft gifts is linked with risk sharing. The cyclone tightens female-heads' constraints on intra-household male labor allocation in the gendered Fijian society. This is because male labor sharing against dwelling damage emerges as a new gendered division of labor, and cyclone relief (food aid) crowds out risk sharing against crop damage, but not against dwelling damage. As a result, even though handicraft gift production is normally neutral to the household head's gender, only female-headed households intensify production against dwelling damage to receive more male labor help and reduce production against crop damage to facilitate intensification against dwelling damage. These gendered responses are caused by gendered constraints other than labor endowment, such as discrimination. The kava ritual protects women with limited coping capabilities, though it is not sufficient to fill the gender gap in dwelling rehabilitation. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:tsu:tewpjp:2009-009&r=dev |
| By: | Manoj Atolia; Yoshinori Kurokawa |
| Abstract: | It can be theoretically shown that variety trade can be a possible source of increased skill premium in wages. No past studies, however, have empirically quantified how much of the increase in skill premium can be accounted for by the increase in variety trade. This paper now formulates a static general equilibrium model and then calibrates it to the Mexican input-output matrix for 1987. In the calibrated model, our numerical experiments show that the increase in U.S.-Mexican variety trade can explain approximately 12 percent of the actual increase in skill premium in Mexico from 1987 to 2000. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:tsu:tewpjp:2009-006&r=dev |
| By: | Alan Gelb; Taye Mengistae; Vijaya Ramachandran; Manju Kedia Shah |
| Abstract: | Why do firms choose to locate in the informal sector? Researchers often argue that the high cost of regulation prevents informal firms from becoming formal and productive. Our results point to a more nuanced story. Using data from surveys of microenterprises in South Africa, Namibia, Botswana, Kenya, Uganda, Tanzania, and Rwanda, we find that the labor productivity of informal firms is virtually indistinguishable from that of formal firms in East Africa, but very different in Southern Africa. We provide a theoretical model to explain this result, based on the key assumption that firms may evade taxes subject to a cost (or concealment cost) that is increasing and convex in the firm’s employment size. Consequently, the productivity distributions reflect the differences in concealment costs and the opportunity cost of formality. Greater enforcement of laws and better provision of services such as finance and electricity to formally registered firms in Southern Africa means that firms are more likely to register; those that do not are likely to be operating as “survivalist” firms. But in East Africa, weak enforcement of tax payment and no significant difference in access to services between formal and informal firms means that these variables do not explain the allocation of firms across the informal-formal divide. We conclude that in countries with weak business environments, informal firms are just as likely as formal firms to increase their productivity as they grow. Thus, interventions to increase productivity and lower the cost of formality may be helpful. But in countries with strong business environments such as those in Southern Africa, owners of informal firms are likely to be better off entering the labor market as wage labor. In the latter case, investment in education or vocational training is probably more important. |
| Keywords: | microenterprise; informal sector; Southern Africa; East Africa; formalization; regulations |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:175&r=dev |
| By: | Frot, Emmanuel (Stockholm Institute of Transition Economics); Santiso, Javier (OECD Development Centre) |
| Abstract: | Although there exists a vast literature on aid efficiency (the effect of aid on GDP), and that aid allocation determinants have been estimated, little is known about the minute details of aid allocation. This article investigates empirically a claim repeatedly made in the past that aid donors herd. Building upon a methodology applied to financial markets, this article finds that aid donors herd similarly to portfolio funds on financial markets. It also estimates the causes of herding and finds that political transitions towards more autocratic regimes repel donors, but that transitions towards democracy have no effect. Finally, identified causes of herding explain little of its overall level, suggesting strategic motives play an important role. |
| Keywords: | aid; herding; volatility; fragmentation |
| JEL: | F34 F35 |
| Date: | 2009–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hasite:0005&r=dev |
| By: | Arora, Saurabh (School of Innovation Sciences, Eindhoven University of Technology); Sanditov, Bulat (UNU-MERIT, Maastricht University) |
| Abstract: | We examine three theories of caste and community using new data on social networks among residents of a south Indian village. The first theory treats individual caste groups as separated communities driven by the Brahmanical ideology of hierarchy based on purity and pollution. The second theory departs from the first by placing kings and landlords at the centre of rural (primeval) social structure. Here ritual giving by kings provides the glue that holds a community together by transferring inauspiciousness to gift-recipients and ensuring community welfare. The third theory, that may be treated as a corollary of the second, argues that powerful leaders in the religious and political domains act as patrons of people in their constituencies and forge a sense of community. The resulting community may be single or multi-caste. Using a community structure algorithm from social network analysis, we divide the network of the village into thirteen tight-knit clusters. We find that no cluster or community in the social network has exactly the same boundaries as a caste group in the village. Barring three exceptions, all clusters are multi-caste. Our results are most consistent with the third theory: each cluster has a patron/leader who represents the interests of his constituency at village-level fora and bridges caste and community divides. |
| Keywords: | Social networks, culture, caste, social change, community development, rural India |
| JEL: | Z13 O10 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2009037&r=dev |
| By: | Atal, Vidya (Cornell University); Basu, Kaushik (Cornell University); Gray, John (Cornell University); Lee, Travis (Cornell University) |
| Abstract: | Using a model of O-ring production function, the paper demonstrates how certain communities can get caught in a low-literacy trap in which each individual finds it not worthwhile investing in higher skills because others are not high-skilled. The model sheds light on educational policy. It is shown that policy for promoting human capital has to take the form of a mechanism for solving the coordination failure in people's choice of educational strategy. |
| JEL: | D20 I28 J31 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:corcae:09-05&r=dev |
| By: | Pritchett, Lant (Harvard University) |
| Abstract: | India is an emerging global superpower as its rapid growth has transformed its economy and has maintained itself as the world's largest democracy. But at the same time India lags in many dimensions--its malnutrition rate is one of the highest in the world, its immunization rates are lower than most African countries, and Bangladesh has a better infant mortality rate. I argue that this is in part because the India state is "flailing"--its very capable head is not longer reliably connected to the arms and legs of implementation. In the four-fold transition of economy, polity, administration, and society the administrative capability of the state is lagging. I use examples from services like health, education, and routine transactions like issuing driver's licenses to show that the agents of the state routinely do not implement the tasks they are assigned--causing a massive divergence between de jure and de facto reality. The paper concludes with speculations about the causes of flailing and possible future trajectories. |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp09-013&r=dev |
| By: | Norris, Pippa (Harvard University) |
| Abstract: | Why do Arab states lag behind the rest of the world in gender equality? Social structural, cultural, and institutional accounts offer alternative perspectives. This study critiques the 'petroleum patriarchy' thesis, presented in Michael Ross's "Oil, Islam and Women" (2008), which claims that the structure of oil-rich economies directly limit the role of women in the paid workforce and thus also (indirectly) restrict women's representation in parliament. In particular, Part I raises questions about the empirical evidence used by Ross, especially the selection of case-studies, the specification of the econometric models, and the lack of direct evidence for cultural values. Part II develops multilevel models demonstrating that religious traditions have a greater influence on attitudes towards gender equality and sexual liberalization than either labor force participation or oil rents. Part III then shows the impact of these cultural attitudes on the proportion of women in legislative and ministerial office. The conclusion summarizes the main findings and considers their implications. |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp09-020&r=dev |
| By: | Andrabi, Tahir (Pomona College); Das, Jishnu (World Bank and Center for Policy Research, New Delhi); Khwaja, Asim Ijaz (Harvard University and BREAD); Zajonc, Tristan (Harvard University) |
| Abstract: | Learning persistence plays a central role in models of skill formation, estimates of education production functions, and evaluations of educational programs. In non-experimental settings, estimated impacts of educational inputs can be highly sensitive to correctly specifying persistence when inputs are correlated with baseline achievement. While less of a concern in experimental settings, persistence still links short-run treatment effects to long-run impacts. We study learning persistence using dynamic panel methods that account for two key empirical challenges: unobserved student-level heterogeneity in learning and measurement error in test scores. Our estimates, based on detailed primary panel data from Pakistan, suggest that only a fifth to a half of achievement persists between grades. Using private schools as an example, we show that incorrectly assuming high persistence significantly understates and occasionally yields the wrong sign for private schools' impact on achievement. Towards an economic interpretation of low persistence, we use question-level exam responses as well as household expenditure and time-use data to explore whether psychometric testing issues, behavioral responses, or forgetting contribute to low persistence--causes that have different welfare implications. |
| JEL: | C23 H40 I21 J24 O12 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp09-001&r=dev |
| By: | Andrews, Matt (Harvard University) |
| Abstract: | Many reform results fall below expectations in the development arena, especially in the public sector. Do the reforms just need more time to work better, or should we adjust our expectations? In addressing this question, the current article draws from isomorphism to think about potential limits to reform in developing countries. The theory is considered appropriate for thinking about change processes in the developing world. It presents change as motivated more by the need for legitimacy than efficiency and, in identifying the mechanics of change, points to potential limits of such change: to organizational dimensions that are visible, peripheral and involves concentrated sets of professional agents. These limiting factors are applied to a study of public financial management reform in 31 African countries which shows that some dimensions do appear more limited to isomorphic influence than others. Isomorphic change may indeed face natural limits, something the development community should consider in thinking about how it goes about facilitating and motivating reform in its client countries. |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp09-012&r=dev |
| By: | Philippe Aghion (Harvard University) |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:0909&r=dev |
| By: | Surabhi Mittal |
| Abstract: | The study aims to identify issues relating to food security, the policy initiatives taken to tackle these issues, evaluate these policies and suggest measures to overcome identified constraints in order to improve the food security situation in the region. [ICRIER WP No. 240]. |
| Keywords: | policies, South Asia, Food Security, Safety Nets, Food Bank, SAARC, south asia, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2205&r=dev |
| By: | Indra Tudawe |
| Abstract: | The present study attempts to capture chronic poverty in Sri Lanka by examining general information on poverty and drawing conclusions on those who are likely to be among the chronic poor. Certain population groups that are likely to experience poverty over many years (or all their lives) are examined in this review. These include the internally displaced persons from the conflict, disabled, elderly, street children, employed children, female headed households and youth. Further, the poor are examined within the ‘livelihood’ framework in terms of their command over human, physical, natural, financial, social and political capital. [CPRC Working Paper No 9] |
| Keywords: | chronic, ETHNICITY, infrastructure, human, street children, female headed households, youth, livelihood, Sri Lanka, poverty, chronic poor, population, disabled, elderly, physical, natural, financial, social, political, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2213&r=dev |
| By: | Pranab Bardhan |
| Abstract: | This paper estimates respective roles of private investments in irrigation and local government programs (land reforms, extension services, and infrastructure investments) in the growth of farm productivity in West Bengal, India between 1981-95. A farm panel from a stratified random sample of farms from major agricultural districts of West Bengal is used. |
| Keywords: | productivity, west bengal, land reforms, tenancy, irrigation, agricultural development, public-private linkages, infrastructure investment, farm |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2209&r=dev |
| By: | Krishna Prasad Pant |
| Abstract: | The effects of indoor air pollution on respiratory health after adjusting for endogenous health behaviours are estimated. The study includes measurements on indoor air pollution and is based on detailed survey 600 households from Syangja and Chitwan districts of Nepal. Instrumental variable probit regressions to find the effects of pollution-reducing interventions on chronic bronchitis, asthma and acute respiratory infections are used. [SANDEE]. |
| Keywords: | endogenous, Indoor air pollution, Biogas, Chronic bronchitis, Asthma, Acute respiratory infections, Instrumental variable probit, regressions, health behaviours, Nepal, asthma, respiratory infections |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2214&r=dev |
| By: | Radhakrishna R |
| Abstract: | The paper reviews the trends over three decades in the consumption of cereals, calories and micronutrients and nutritional status based on anthropometric measures using the data sets of NSS, NNMB and NFHS. It provides an explanation for the slow growth of nutrient intake and slow reduction in malnutrition. |
| Keywords: | food consumption, malnutrition, micronutrients, anthropometric data, income, household, health, educational status, mothers, child, adutls, energy deficiency, cereal production, punjab, urban areas, nutritional status, child, water, health, India, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2210&r=dev |
| By: | Government of India Ministry of Women and Child Development |
| Abstract: | This handbook on child protection will help Panchayat Raj members to understand the actions they can take to protect children resulting in better convergence of programmes and increased allocation of resources to address child protection issues. It also spells out practical ways in which the local elected members, can endeavour to alleviate the suffering of millions of children in our country who are subjected to violence and exploitation. |
| Keywords: | boys, girls, health, childhood, prostitutes, HIV/AIDS, labour, sexual abuse, Panchayat, society, development, participation, environment, child protection, exploitation, women, Non-discrimination, political, social, cultural, economic rights, Panchayat Raj, children, elected members, violence, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2211&r=dev |
| By: | Hayakawa, Kazunobu; Matsuura, Toshiyuki |
| Abstract: | In this paper we statistically test the validity of the mechanics of complex VFDI in Japanese machinery FDI to East Asia; we do this by estimating a multiple-spatial lag model. From the theoretical point of view, in complex VFDI, the production activity of affiliates in a given country is positively related to that in neighboring countries which have large differences in factor prices with the given country. Our empirical results show that such mechanics of complex VFDI work in Japanese FDI to East Asia, and that they work more strongly in the MNEs with higher productivity. These results have an important implication for the policies of developing countries in attracting FDI. |
| Keywords: | Third-country Effects, Complex VFDI, Spatial Lag Model, East Asia, Foreign Investments |
| JEL: | F21 F23 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper211&r=dev |
| By: | Kumar, Rajiv (Indian Council for Research on International Economics Relations); Singh, Manjeeta (Indian Council for Research on International Economics Relations) |
| Abstract: | Recent developments in South Asian countries, especially the re-emergence of democratic governments, new growth momentum despite the global economic downturn and greater openness, warrant a fresh look at the region’s prospects for economic integration. On the basis of a thorough review of the literature on potential and prospects of regional integration in South Asia and after examining the trends in intra-SAARC trade and investment flows, this paper finds that the progress in regional cooperation has been far short of potential. The paper, therefore, focuses on the ‘real impediments’ to regional integration and on that basis makes a set of policy oriented recommendations for furthering deeper regional integration in South Asia. It also emphasizes that given its dominant size, human resources, and aspirations for a global role, India will have to take on a disproportionately larger responsibility for promoting regional cooperation in South Asia. However, regional integration will not be achieved by India’s unilateral actions alone. Neighboring governments will have to respond positively to Indian initiatives for successful regional integration in South Asia. |
| Keywords: | South Asia; economic integration; regional trade; foreign direct investment |
| JEL: | F15 |
| Date: | 2009–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbrei:0032&r=dev |
| By: | Claudio Ferraz (Department of Economics PUC-Rio); Frederico Finan (University of California, Berkeley); Diana Belo Moreira (World Bank) |
| Abstract: | While cross-country analysis suggests that corruption hinders economic growth, we have little evidence on the mechanisms that link corruption to long-run economic development. We provide micro-evidence on the consequences of corruption for the quality of education. We use data from the auditing of Brazil’s local governments to construct objective measures of corruption involving educational block grants transferred from the central government to municipalities. Using variation in the incidence of corruption across municipalities and controlling for students’, schools’ and municipal characteristics, we find that corruption significantly reduces the school performance of primary school students. Students residing in municipalities where corruption in education was detected score 0.35 standard deviations less on standardized tests, and have significantly higher dropout and failure rates. We also provide evidence on the mechanisms that link corruption and mismanagement to learning and school attainment. The results are consistent with corruption directly affecting economic growth through the reduction of human capital accumulation. JEL Codes: D73, I21, H72 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:rio:texdis:562&r=dev |
| By: | James B. Ang |
| Abstract: | This paper examines the impact of foreign aid on the process of economic development in India by controlling for the degree of financial liberalization. A composite index is constructed using the method of principal component analysis to capture the joint influence of various financial sector policies. The results show that while foreign aid exerts a direct negative influence on output expansion, its indirect effect via financial liberalization is positive. Therefore, an important implication of the findings in this paper is that adequate liberalization in the financial system of the host country is a crucial requirement for effective foreign aid. Our results are robust to a number of control variables and estimation techniques. |
| Keywords: | aid; financial liberalization; India. |
| JEL: | E44 O16 O53 |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:mos:druwps:2009-10&r=dev |
| By: | Kang Kook Lee; Md. Rabiul Islam |
| Abstract: | This paper examines the sensitivity of investment to available cash-stock, a measure for internal funds, for 192 listed non-financial firms of Bangladesh from 1992 to 2002. The empirical results show that smaller firms have greater financing constraints to investment than larger firms due to financial market imperfection and unequal access to external finance. We also find that financing constraints of investment by small firms are eased along with financial development. It is likely that financial development encourages efficiency of the financial market in Bangladesh, and hence decreases cash stock sensitivity of investment of small firms. Our finding demonstrates the importance of financial development for economic growth even in a developing country like Bangladesh. |
| Keywords: | financing constraints, financial development, investment, Bangladesh |
| JEL: | G31 G32 D92 |
| Date: | 2009–05–02 |
| URL: | http://d.repec.org/n?u=RePEc:mos:druwps:2009-09&r=dev |
| By: | Chiara Franco; Subash Sasidharan |
| Abstract: | The role of Foreign Direct Investments (FDI) in the process of economic development is of particular relevance since they bring in some specific technological assets that are not immediately available in the host country. The literature related to the microeconomic impact of FDI has been mainly concentrated in explaining the final effect on productivity, caused by the fact that Multinational Enterprises (MNEs) are not completely able to protect their superior assets from spilling over. However, there is a relatively unexplored effect that has recently been at the center of some studies that is the export spillover effect. Up to now, the literature has found out only mixed results with regard to the possibility that MNEs influence both export decision and export intensity of local firms. In the present paper, we provide some empirical evidence for that specific effect examining a case of an emerging economy, namely India for the period 1994-2006 by using a firm level dataset of more than 3000 firms belonging to manufacturing industries. In particular, we introduce the theoretical argument related to the MNEs heterogeneity which has not been properly investigated especially in empirical studies trying to understand whether, by using different measures characterizing MNEs behaviour, it is possible to distinguish between different impacts that MNEs have on export performance of local firms. We estimate the model through the Heckman selection technique after having built spillover variables that take into account five types of heterogeneity: the degree of involvement in trade networks, the level of embeddedness inside the innovation system of the host country, the asset seeking vs asset exploiting motivations(technological intensity), the type and amount of inputs sourced from abroad rather than from the host country and the percentage of the foreign equity stake. The second step of the analysis we perform is that of testing the relationship between the heterogeneity of MNEs with the heterogeneity of local firms splitting the sample according to the level of R&D intensity, the level of embeddness into the innovation system and the involvement in trade activities. Results confirm the hypothesis of different impacts caused by different MNEs behaviour especially with regard to the export intensity, while a greater impact on export decision is found when heterogeneity of local firms is accounted for. |
| Keywords: | Exports, spillover, MNCs |
| JEL: | F23 O14 O53 |
| Date: | 2009–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:mos:druwps:2009-06&r=dev |
| By: | Mita Bhattacharya; Paresh K. Narayan; Stephen Popp; Badri N. Rath |
| Abstract: | This paper investigates the long-run relationship between labour productivity and employment, and between labour productivity and real wages in the case of the Indian manufacturing sector. The panel data set consists of 17 two-digit manufacturing industries for the period 1973-74 to 1999-2001. We find that productivity-wages and productivity-employment are panel cointegrated for all industries. We find that both employment and real wages exert a positive effect on labour productivity. We argue that flexible labor market has a significant influence on manufacturing productivity, employment and real wages in case of Indian manufacturing. |
| Keywords: | Labour Productivity; Real Wages; Panel Unit Root Tests; Panel Cointegartion Tests; Manufacturing. |
| JEL: | O47 O30 O53 |
| Date: | 2009–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:mos:druwps:2009-07&r=dev |
| By: | Russell Smyth; Ingrid Nielsen; Qingguo Zhai; Tiemin Liu; Yin Liu; Chunyong Tang; Zhihong Wang; Zuxiang Wang; Juyong Zhang |
| Abstract: | We examine the relationship between atmospheric pollution, water pollution, traffic congestion, access to parkland and personal well-being using a survey administered across six Chinese cities in 2007. In contrast to existing studies of the determinants of well-being by economists, which have typically employed single item indicators to measure well-being, we use the Personal Well-Being Index (PWI). We also employ the Job Satisfaction Survey (JSS) to measure job satisfaction, which is one of the variables for which we control when examining the relationship between environmental surroundings and personal well-being. Previous research by psychologists has shown the PWI and JSS to have good psychometric properties in western and Chinese samples. A robust finding is that in cities with higher levels of atmospheric pollution and traffic congestion, respondents report lower levels of personal well-being ceteris paribus. Specifically, we find that a one standard deviation increase in suspended particles or sulphur dioxide emissions is roughly equivalent to a 12-13 per cent reduction in average monthly income in the six cities. |
| Keywords: | China, Environment, Pollution, Personal Well-Being. |
| JEL: | A13 D60 |
| Date: | 2009–06–02 |
| URL: | http://d.repec.org/n?u=RePEc:mos:druwps:2009-11&r=dev |
| By: | Russell Smyth; Ingrid Nielsen; Qingguo Zhai |
| Abstract: | This paper reports the findings of a survey administering the Personal Well-Being Index in six Chinese cities (N=3390) to ascertain the personal well-being of China's urban population.The specific aims of the study were: (a) ascertain whether Chinese urban residents are satisfied with their lives; (b) validate the PWI using an urban sample that is representative of the urban population and larger in size than that which has been utilized in existing studies for Mainland China; (c) compare the results to existing studies for Hong Kong, Macau, rural China and single city studies which have administered the PWI in Guangdong and Shandong; (d) examine whether the responses to the PWI from participants falls within the narrow range predicted by the ???Theory of Subjective Wellbeing Homeostasis??? and provide further evidence on whether this framework is applicable to Chinese samples; and (e) examine which participant characteristics predict personal well-being, examine whether own income and/or relative income predicts personal well-being and compare these results with previous studies for China and other countries. The data indicated a moderate level of personal well-being (PWI score = 67.1). The PWI demonstrated good psychometric performance in terms of its reliability, validity and sensitivity, consistent with previous published studies. The PWI was within the normative range for non-Western countries and was within the narrow band predicted by the ???Theory of Subjective Wellbeing Homeostasis???. Similar variables were found to predict personal well-being to those found in previous studies for China and elsewhere. |
| Keywords: | China, Personal Wellbeing Index, Subjective Wellbeing |
| Date: | 2009–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:mos:druwps:2009-01&r=dev |
| By: | Amit K Chattopadhyay; Graeme J Ackland; Sushanta K Mallick |
| Abstract: | We present a stochastic agent-based model for the distribution of personal incomes in a developing economy. We start with the assumption that incomes are determined both by individual labour and by stochastic effects of trading and investment. The income from personal effort alone is distributed about a mean, while the income from trade, which may be positive or negative, is proportional to the trader's income. These assumptions lead to a Langevin model with multiplicative noise, from which we derive a Fokker-Planck (FP) equation for the income probability density function (IPDF) and its variation in time. We find that high earners have a power-law income distribution while the low income groups have a Levy IPDF. Comparing our analysis with the Indian survey data (obtained from the world bank website) taken over many years we obtain a near-perfect data collapse onto our model's equilibrium IPDF. The theory quantifies the economic notion of ``given other things''. Using survey data to relate the IPDF to actual food consumption we define a poverty index, which is consistent with traditional indices, but independent of an arbitrarily chosen ``poverty line'' and therefore less susceptible to manipulation. |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:0905.3803&r=dev |
| By: | Rao, B. Bhaskara; Vadlamannati, Krishna Chaitanya |
| Abstract: | In the extended Solow growth model of Mankiw, Romer and Weil (1992) human capital has only permanent level and no growth effects. In the endogenous growth models human capital is a growth improving variable. Human capital may have both a permanent level and a permanent growth effect. We show, with data from India, that both the level and growth effects of human capital can be estimated with an extension to the Solow model. |
| Keywords: | Solow model; Level and growth effects of human capital and India |
| JEL: | O10 |
| Date: | 2009–09–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17480&r=dev |
| By: | Niño-Zarazúa, Miguel; Mosley, Paul |
| Abstract: | Improved household accessibility to credit is identified as a significant determinant of intra-household re-allocation of labour resources with important implications for productivity, income, and poverty status. However, credit accessibility could also have wider impacts on poverty if it leads to new hires outside the household. This paper contributes to the existing literature on microcredit in two important ways: first, it investigates the routes through which microcredit reaches those in poverty outside the household. We test whether, by lending to the vulnerable non-poor, microcredit programmes can indirectly benefit poor labourers through increased employment. Second, we conduct the study in the spatial dimension of urban poverty Mexico. This is relevant when considering that, unlike in rural areas, labour often represents the only source of livelihoods to the extreme poor. Our findings point to significant trickle-down effects of microcredit that benefit poor labourers; however, these effects are only observed after loan-supported enterprising households achieve earnings well above the poverty line. The paper concludes with reflections on the policy implications. |
| Keywords: | Mexico; microcredit; labour; poverty |
| JEL: | O18 J41 O16 C24 C31 C25 |
| Date: | 2009–09–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17462&r=dev |
| By: | Raquel Fernández |
| Abstract: | Why has the expansion of women's economic and political rights coincided with economic development? This paper investigates this question, focusing on a key economic right for women: property rights. The basic hypothesis is that the process of development (i.e., capital accumulation and declining fertility) exacerbated the tension in men's conflicting interests as husbands versus fathers, ultimately resolving them in favor of the latter. As husbands, men stood to gain from their privileged position in a patriarchal world whereas, as fathers, they were hurt by a system that afforded few rights to their daughters. The model predicts that declining fertility would hasten reform of women's property rights whereas legal systems that were initially more favorable to women would delay them. The theoretical relationship between capital and the relative attractiveness of reform is non-monotonic but growth inevitably leads to reform. I explore the empirical validity of the theoretical predictions by using cross-state variation in the US in the timing of married women obtaining property and earning rights between 1850 and 1920. |
| JEL: | J12 J16 N31 O15 O16 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15355&r=dev |