nep-dev New Economics Papers
on Development
Issue of 2009‒12‒11
forty papers chosen by
Mark Lee
Towson University

  1. Border Price Shocks, Spatial Price Variation, and their Impacts on Poverty in Uganda By Ole Boysen
  2. Rural households decisions towards income diversification : Evidence from a township in northern China By Sylvie Demurger; Martin Fournier; Weiyong Yang
  3. Why Corrupt Governments May Receive More Foreign Aid By David DE LA CROIX; Clara DELAVALLADE
  4. Financial constraints in China: firm-level evidence By Sandra PONCET; Walter STEINGRESS; Hylke VANDENBUSSCHE
  5. Improving diet quality and micronutrient nutrition: Homestead food production in Bangladesh By Iannotti, Lora; Cunningham, Kenda; Ruel, Marie
  6. Land-tenure policy reforms: Decollectivization and the Doi Moi system in Vietnam By Kirk, Michael; Tuan, Nguyen Do Anh
  7. Food and nutrition emergencies in East Africa: Political, economic and environmental associations By Oniang'o, Ruth
  8. Private sector responses to public investments and policy reforms: The case of fertilizer and maize market development in Kenya By Ariga, Joshua; Jayne, Thomas S.
  9. Rural and urban linkages: Operation flood's role in India's dairy development By Cunningham, Kenda
  10. Institutional reform in the Burkinabè cotton sector and its impacts on incomes and food security: 1996-2006 By Kaminski, Jonathan; Headey, Derek; Bernard, Tanguy
  11. How Do Ethnic Militias Perpetuate in Nigeria? A Micro-level Perspective on the Oodua People’s Congress By Yvan Guichaoua
  12. Is Informal Sector Work an Alternative to Workfare Benefits? The Case of Pre-Program Expansion and Economic Crisis By Khamis, Melanie
  13. When Supply Meets Demand: Wage Inequality in Portugal By Centeno, Mário; Novo, Álvaro A.
  14. Human Capital Spillovers, Productivity and Regional Convergence in Spain By Ramos, Raul; Surinach, Jordi; Artís, Manuel
  15. Schooling, Cognitive Skills, and the Latin American Growth Puzzle By Hanushek, Eric A.; Woessmann, Ludger
  16. Does Human Capital Protect Workers against Exogenous Shocks? South Africa in the 2008-2009 Crisis By Leung, Ron; Stampini, Marco; Vencatachellum, Désiré
  17. Dynamic Ethnic Fractionalization and Economic Growth in the Transition Economies from 1989 to 2007 By Campos, Nauro F.; Saleh, Ahmad; Kuzeyev, Vitaliy S.
  18. Financial Dependence, Formal Credit, and Informal Jobs: New Evidence from Brazilian Household Data By Catão, Luis A. V.; Pagés, Carmen; Rosales, Maria Fernanda
  19. The Role of Production Risk in Sustainable Land-Management Technology Adoption in the Ethiopian Highlands By Kassie, Menale; Yesuf, Mahmud; Köhlin, Gunnar
  20. Market Imperfections and Farm Technology Adoption Decisions - A Case Study from the Highlands of Ethiopia By Yesuf, Mahmud; Köhlin, Gunnar
  21. Risk Implications of Farm Technology Adoption in the Ethiopian Highlands By Yesuf, Mahmud; Kassie, Menale; Köhlin, Gunnar
  22. Crushed Aid: Fragmentation in Sectoral Aid By Frot, Emmanuel; Santiso, Javier
  23. Estimating income poverty and inequality from the Gallup World Poll. The case of Latin America and the Caribbean By Leonardo Gasparini; Pablo Gluzmann
  24. Informality and poverty: Are these processes dynamically interrelated? Evidence from Argentina By Francesco Devicienti; Fernando Groisman; Ambra Poggi
  25. The Economics of Natural Disasters - A Survey By Eduardo Cavallo; Ilan Noy
  26. Diversity of Communities and Economic Development: An Overview By Ranis, Gustav
  27. Expanding Microenterprise Credit Access: Randomized Supply Decisions to Estimate the Impacts in Manila By Karlan, Dean; Zinman, Jonathan
  28. Does Land Abundance Explain African Institutions? By Fenske, James
  29. Economics, Area Studies and Human Development By Ranis, Gustav
  30. Group versus Individual Liability: Long Term Evidence from Philippine Microcredit Lending Groups By Karlan, Dean; Gine, Xavier
  31. Trade, Technology and Inequality in a Developing Country: Theory and Evidence from China By Li, Muqun; Coxhead, Ian
  32. The relationship between health and growth:when Lucas meets Nelson-Phelps By Philippe Aghion; Peter Howitt; Fabrice Murtin
  33. VIllage Economics and the Structure of Extended Family Networks By Manuela Angelucci
  34. HIV Prevention in Vulnerable Indian States: Lessons from the chayan Project By CARE CARE
  35. Employment and Inequality of Outcomes in Brazil By Menezes, Naercio Filho; Scorzafave, Luiz
  36. The Production of Insecurity by African Security Forces: Insights from Liberia and the Central African Republic By Andreas Mehler
  37. Inequality, Human Capital and Development: Making the Theory Face the Facts By Papageorgiou, Chris; Razak, Nor Azam Abdul
  38. Distance, Trade, and Income – The 1967 to 1975 Closing of the Suez Canal as a Natural Experiment By James Feyrer
  39. On the Substitutability between Equal Opportunities and Income Redistribution By Enzo Valentini
  40. Lower Partial Moments as a measure of vulnerability to poverty in Cameroon By Witt, Rudolf; Waibel, Hermann

  1. By: Ole Boysen (Institute for International Integration Studies, Trinity College Dublin; Department of Economics, Trinity College Dublin)
    Abstract: How does an increase in food prices at the border impact poverty in Uganda given the strong spatial heterogeneity of the country and its limited domestic transportation and communication networks? Recently, a number of studies on the impact of international food prices on poverty in developing countries have been published. However, the role of spatial price transmission in this context remains largely unexplored. This paper targets that niche. We assess the spatial variability and transmission of prices through the analysis of time series and household data using descriptive statistics and regression methods. Subsequently, we apply the findings in a simulation experiment to determine the first-order poverty impacts of a hypothetical 50% increase in border prices for food under the assumption of imperfect spatial price transmission. The poverty results show impacts substantially different from those of a perfect price transmission scenario and also display strong regional differentiation.
    Keywords: Uganda, food prices, poverty, spatial price transmission
    JEL: D31 I32 Q18 Q55
    Date: 2009–11
  2. By: Sylvie Demurger (HIEBS - Hong Kong Institute of Economics and Business Strategy - The Hong Kong University); Martin Fournier (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines); Weiyong Yang (University of International Business and Economics (Beijing) - University of International Business and Economics (Beijing))
    Abstract: Economic reforms in rural China have brought opportunities to diversify both within-farm activities and off-farm activities. Participation in these activities plays an important role in increasing rural households' income. This paper analyzes the factors that drive rural households and individuals in their income-source diversification choices for ten villages in Northern China. At the household level, we distinguish three types of diversification as opposed to grain production only : within farm (non- grain production) activities, local off-farm activities, and migration. At the individual level, we analyze the determinants of participation in three different types of jobs as compared to agricultural work : local off-farm employment, local self-employment and migration. At the household level, we find that land and labor availability stimulates on-farm diversification. Local off-farm activities are mostly driven by household wealth and credit constraints, while migration decisions strongly depend on the household age and composition. At the individual level, we find a clear gender and age bias in access to off-farm activities that are mostly undertaken by male and by young people. More surprisingly, education is found to play a role for accessing local wage employment but not in migration decision. As at the household level, the household assets position is found to strongly affect participation in any off-farm activity.
    Keywords: income-source diversification; agricultural households; off-farm employment; China
    Date: 2009
  3. By: David DE LA CROIX (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and CORE); Clara DELAVALLADE (Abdul Latif Jameel Poverty Action Lab)
    Abstract: In this paper we argue that if the cross-country heterogeneity in productivity is more important than the heterogeneity in government quality, it can be optimal to give more foreign aid to more corrupt countries. We build a multi-country model of optimal aid in which we disentangle the correlation between aid and equilibrium corruption into two components: the first one reflects variations in the quality of institutions and the second encompasses variations in productivity levels. The data suggest that both components of the correlation are significant, however the effect of variations in productivity levels is stronger. This implies that most corrupt countries, since they are also the poorest, receive higher amounts of foreign aid.
    Keywords: Corruption, Aid, Government spending, Institutions
    JEL: O19
    Date: 2009–10–19
  4. By: Sandra PONCET (Centre dÕEconomie de la Sorbonne, Universite Paris 1 and CEPII,); Walter STEINGRESS (Boston College); Hylke VANDENBUSSCHE (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: This paper uses a unique micro-level data-set on Chinese firms to test for the existence of a "political-pecking order" in the allocation of credit. Our findings are threefold. Firstly, private Chinese firms are credit constrained while State-owned firms and foreign-owned firms in China are not; Secondly, the geographical and sectoral presence of foreign capital alleviates credit constraints faced by private Chinese firms. Thirdly, geographical and sectoral presence of state firms aggravates financial constraints for private Chinese firms (Òcrowding outÓ). Therefore it seems that ongoing restructuring of the state-owned sector and further liberalization of foreign capital inflows in China can help to circumvent financial constraints and can boost the investment of private firms.
    Keywords: Investment-cashflow sensitivity, China, firm level data, foreign direct investment
    JEL: E22 G32
    Date: 2009–09–14
  5. By: Iannotti, Lora; Cunningham, Kenda; Ruel, Marie
    Keywords: millions fed, food security, Homestead food production, HFP, Micronutrient, Homestead garden,
    Date: 2009
  6. By: Kirk, Michael; Tuan, Nguyen Do Anh
    Keywords: millions fed, food security, rice, Land tenure, Land reform, Doi Moi, Decollectivization,
    Date: 2009
  7. By: Oniang'o, Ruth
    Keywords: Food, Nutrition, Food emergencies, food security, Hunger, malnutrition, Disease, Risk assessment, HIV/AIDS,
    Date: 2009
  8. By: Ariga, Joshua; Jayne, Thomas S.
    Keywords: millions fed, food security, Fertilizer, maize, Liberalization market,
    Date: 2009
  9. By: Cunningham, Kenda
    Keywords: millions fed, food security, Operation flood, Dairy, NDDB, Dairy cooperatives,
    Date: 2009
  10. By: Kaminski, Jonathan; Headey, Derek; Bernard, Tanguy
    Keywords: millions fed, food security, Cotton, Burkinabe, Reform, SOFITEX, CFDT,
    Date: 2009
  11. By: Yvan Guichaoua (Queen Elizabeth House, University of Oxford)
    Abstract: The paper discusses the recently promoted view that organized insurgent violence should either be conducted by activists bonded together by social capital ties or self-interested quasi-mercenaries, depending on the type of financial resources available to the group. We contrast this perspective with the study of an ethnic Nigerian militia, the Oodua People’s Congress (OPC). It appears that the success of this militia over time was jointly sustained by important preexisting social connections and numerous opportunities for economic gains. The perpetuation of OPC, we argue, is ensured by a ‘moral economy’ whose members enjoy selfinsurance in an environment perceived as unsafe.
    Keywords: Militias, Violent Mobilization, Extra-legal Governance, Security, Africa, Nigeria
    Date: 2009
  12. By: Khamis, Melanie (IZA)
    Abstract: Limited availability of workfare programs and unemployment insurance and a large informal sector are features of the Argentine labor market at the outset of the 2001 economic crisis. This paper tests the hypothesis whether informal work is an alternative to workfare participation before a large-scale program expansion took place. Results from the propensity score matching indicate that observable characteristics of informal low-income workers and current workfare participants are significantly different. However, within these groups, it is possible to identify subgroups that exhibit similar observable characteristics. This indicates that only a subset of the individuals sees workfare and informal sector work as substitutable alternatives.
    Keywords: South America, Argentina, informal labor market, workfare program, propensity score matching
    JEL: J42 J48 O17
    Date: 2009–12
  13. By: Centeno, Mário (Banco de Portugal); Novo, Álvaro A. (Banco de Portugal)
    Abstract: Wage inequality in Portugal increased over the last quarter of century. The period from 1982 to 1995 witnessed strong increases in both upper- and lower-tail inequality. A shortage of skills combined with skill-biased technological changes are at the core of this evolution. Since 1995, lower-tail inequality decreased, while upper-tail inequality increased at a slower rate. The supply of high-skilled workers more than doubled during this period, contributing significantly to the slowdown. Polarization of employment demand is the more credible explanation for the more recent evolution. As in other developed economies, for instance Germany and the United States, we show that institutions played a minor role in shaping changes in inequality.
    Keywords: inequality, polarization, supply, demand, institutions
    JEL: J3 D3 O3
    Date: 2009–11
  14. By: Ramos, Raul (University of Barcelona); Surinach, Jordi (University of Barcelona); Artís, Manuel (University of Barcelona)
    Abstract: This paper analyses the differential impact of human capital, in terms of different levels of schooling, on regional productivity and convergence. The potential existence of geographical spillovers of human capital is also considered by applying spatial panel data techniques. The empirical analysis of Spanish provinces between 1980 and 2007 confirms the positive impact of human capital on regional productivity and convergence, but reveals no evidence of any positive geographical spillovers of human capital. In fact, in some specifications the spatial lag presented by tertiary studies has a negative effect on the variables under consideration.
    Keywords: regional convergence, productivity, human capital composition, geographical spillovers
    JEL: O18 O47 R23
    Date: 2009–11
  15. By: Hanushek, Eric A. (Stanford University); Woessmann, Ludger (Ifo Institute for Economic Research)
    Abstract: Economic development in Latin America has trailed most other world regions over the past four decades despite its relatively high initial development and school attainment levels. This puzzle can be resolved by considering the actual learning as expressed in tests of cognitive skills, on which Latin American countries consistently perform at the bottom. In growth models estimated across world regions, these low levels of cognitive skills can account for the poor growth performance of Latin America. Given the limitations of worldwide tests in discriminating performance at low levels, we also introduce measures from two regional tests designed to measure performance for all Latin American countries with internationally comparable income data. Our growth analysis using these data confirms the significant effects of cognitive skills on intra-regional variations. Splicing the new regional tests into the worldwide tests, we also confirm this effect in extended worldwide regressions, although it appears somewhat smaller in the regional Latin American data than in the worldwide data.
    Keywords: human capital, economic growth, cognitive skills, Latin America
    JEL: H4 I2 O4 N16
    Date: 2009–11
  16. By: Leung, Ron (African Development Bank); Stampini, Marco (African Development Bank); Vencatachellum, Désiré (African Development Bank)
    Abstract: The financial and economic crisis of 2008 and 2009 has taken its toll on the South African economy. The economy contracted for the first time since 1998, and entered recession during the fourth quarter of 2008. The GDP contraction was soon transmitted to the labor market. Between the second quarters of 2008 and 2009, employment fell by 3.8 percent. However, not all individuals were hit with the same intensity. Using labor force survey data unique in the African context, we find that human capital provided a buffer against the shock. After controlling for observable characteristics, education and experience showed the potential to entirely offset the effect of the recession on the likelihood of employment. This has important policy implications, as it strengthens the case for strategic investments in human capital, and helps identifying the unskilled as those with the highest need for social safety net interventions during the recession.
    Keywords: labor markets, South Africa, financial crisis, human capital, business cycle, emerging economies
    JEL: J2 E3
    Date: 2009–12
  17. By: Campos, Nauro F. (Brunel University); Saleh, Ahmad (Brunel University); Kuzeyev, Vitaliy S. (affiliation not available)
    Abstract: In their survey of the literature on ethnic fractionalization and economic performance, Alesina and La Ferrara (JEL 2005) identify two main directions for future research. One is to improve the measurement of diversity and the other to treat diversity as an endogenous variable. This paper tries to address these two issues: it investigates the effects of ethnic fractionalization on economic growth across countries using unique time-varying measures. We first replicate the finding of a weak effect of exogenous diversity on growth and then we show that accounting for how diversity changes over time and treating it as an endogenous variable makes a difference. Once diversity is instrumented (with lagged diversity and latitude), it shows a significant negative impact on economic growth which is robust to different specifications, polarization measures, econometric estimators, as well as to the use of an index of ethnic-religious-linguistic fractionalization.
    Keywords: ethnic diversity, fractionalization, polarization, growth
    JEL: O11 Z12 O55 H1
    Date: 2009–11
  18. By: Catão, Luis A. V. (Inter-American Development Bank); Pagés, Carmen (Inter-American Development Bank); Rosales, Maria Fernanda (University of Chicago)
    Abstract: This paper examines a much overlooked link between credit markets and formalization: since access to bank credit typically requires compliance with tax and employment legislation, firms are more likely to incur such formalization costs once bank credit is more widely available at lower cost; if so, well-functioning credit markets help foster formal employment at the expense of informal jobs. We gauge the relevance of this credit channel using the Rajan-Zingales measure of financial dependence and a difference-in-differences approach applied to household survey data from Brazil – a large emerging market where substantial changes in banking system depth and formalization ratios have taken place and for which consistent data exists. Our results show that formalization rates increase with financial deepening and the more so in sectors where firms are typically more dependent on external finance. We also decompose shifts in aggregate formalization into those within each firm size category and those associated with changes in firm size, and find that financial deepening significantly explains the former but not so much the latter.
    Keywords: credit markets, financial dependence, informality, Brazil
    JEL: E26 G21 O4 O16
    Date: 2009–12
  19. By: Kassie, Menale (Environmental Economics Policy Forum for Ethiopia, Ethiopian Development Research Institute); Yesuf, Mahmud (Environmental Economics Policy Forum for Ethiopia, Ethiopian Development Research Institute); Köhlin, Gunnar (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This paper provides empirical evidence of production risk impact on sustainable land- management technology adoption, using two years of cross-sectional plot-level data collected in the Ethiopian highlands. We used a moment-based approach, which allowed a flexible representation of the production risk (Antle 1983, 1987). Mundlak’s approach was used to capture the unobserved heterogeneity along with other regressors in the estimation of fertilizer and conservation adoption. The empirical results revealed that impact of production risk varied by technology type. Production risks (variance and crop failure as measured by second and third central moments, respectively) had significant impact on fertilizer adoption and extent of adoption. However, this impact was not observed in adoption of conservation technology. On the other hand, expected return (as measured by the first central moment) had a positive significant impact on both fertilizer (adoption and intensity) and conservation adoption. Economic instruments that hedge against risk exposure, including downside risk and increase productivity, are important to promote adoption of improved technology and reduce poverty in Ethiopia.<p>
    Keywords: Production risk; sustainable land management technology adoption; moment based estimation; Ethiopia
    JEL: C33 D13 D81 O33 Q24
    Date: 2009–11–30
  20. By: Yesuf, Mahmud (Environmental Economics Policy Forum for Ethiopia, Ethiopian Development Research Institute); Köhlin, Gunnar (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This paper investigates the impacts of market and institutional imperfections on technology adoption in a model that considers fertilizer use and soil conservation to be joint decisions. Controlling for plot characteristics and other factors, we found that a household’s decision to adopt fertilizer significantly and negatively depends on whether the same household adopts soil conservation. The reverse causality, however, was insignificant. We also found that outcomes of market imperfections, such as limited access to credit, plot size, risk considerations, and rates-of-time preference, were significant factors in explaining variations in farm technology adoption decisions. Relieving the existing market imperfections will most likely increase the adoption rate of farm technologies.<p>
    Keywords: Bivariate probit; fertilizer adoption; market imperfections; risk aversion; time preferences; soil conservation
    JEL: C35 D43 Q12 Q24
    Date: 2009–11–30
  21. By: Yesuf, Mahmud (Environment for Development-Kenya, Kenyan Institute for Public Policy Research and Analysis (KIPPRA)); Kassie, Menale (Department of Economics, School of Business, Economics and Law, Göteborg University); Köhlin, Gunnar (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: In countries where insurance and credit markets are thin or missing, production and consumption risks play a critical role in the choice and use of production inputs and adoption of new farm technologies. In this paper, we investigated impacts of chemical fertilizer and soil and water conservation technologies adoption on production risks, using a moment-based approach and two years of cross-sectional data. A pseudo-fixed-effect model was estimated to generate first, second, and third moments of farm production. Our results revealed that fertilizer adoption reduces yield variability, but increases the risk of crop failure. However, adopting soil and water conservation technology has no impact on yield variability, but reduces the downside risk of crop failure. The results underscore that the risk implications of farm technology adoption vary by technology type. Furthermore, policies that promote adoption of fertilizers should be complemented by desirable instruments that hedge against downside risk. In that respect, if properly implemented, the safety net program and the weather insurance programs currently piloted in some parts of Ethiopia are actions in the right direction.<p>
    Keywords: production risks; farm technology; moment-based approach; Ethiopia
    JEL: C33 D21 Q16 Q24
    Date: 2009–11–30
  22. By: Frot, Emmanuel (Stockholm Institute of Transition Economics); Santiso, Javier (OECD Development Centre)
    Abstract: This paper measures and compares fragmentation in aid sectors. Past studies focused on aggregate country data but a sector analysis provides a better picture of fragmentation. We start by counting the number of aid projects in the developing world and find that, in 2007, more than 90 000 projects were running simultaneously. Project proliferation is on a steep upward trend and will certainly be reinforced by the emergence of new donors. Developing countries with the largest numbers of aid projects have more than 2 000 in a single year. In parallel to this boom of aid projects, there has been a major shift towards social sectors and, as a consequence, these are the most fragmented. We quantify fragmentation in each aid sector for donors and recipients and identify which exhibit the highest fragmentation. While fragmentation is usually seen as an issue when it is excessive, we also show that some countries suffer from too little fragmentation. An original contribution of this paper is to develop a monopoly index that identifies countries where a donor enjoys monopoly power. Finally, we characterise countries with high fragmentation levels. Countries that are poor, democratic and have a large population get more fragmented aid. However, this is only because poor and democratic countries attract more donors. Once we control for the number of donors in a country-sector, democratic countries do not appear different from non-democratic ones in any sector and poor countries actually have a slightly less fragmented aid allocation.
    Keywords: Aid; Fragmentation
    JEL: F35
    Date: 2009–12–02
  23. By: Leonardo Gasparini (CEDLAS, Universidad de la Plata); Pablo Gluzmann (CEDLAS, Universidad de la Plata)
    Abstract: This paper takes advantage of a new source of information – the Gallup World Poll 2006 – to estimate and characterize income poverty and inequality in Latin America and the Caribbean (LAC) at the country level, and to compare LAC estimates to those in other regions of the world. The Gallup survey has the advantage of being conducted in over 130 nations with almost the same questionnaire in all countries, and then it stands as a complement to national household surveys for international comparison purposes.
    Keywords: Multidimensional poverty measurement, deprivation, counting approach, dimension adjusted headcount ratio, ordinal data
    JEL: D3 I3
    Date: 2009
  24. By: Francesco Devicienti (University of Torino and LABORatorio Revelli, Collegio Carlo Alberto); Fernando Groisman (CONICET and University of Buenos Aires); Ambra Poggi (University of Milan Bicocca and LABORatorio Revelli, Collegio Carlo Alberto)
    Abstract: Poverty and informal employment are often regarded as correlated phenomena. Many empirical studies have shown that informal employment has a causal impact on household poverty, mainly through low wages. Yet other studies focus on the reverse causality from poverty to informality, arising from a range of constraints that poverty poses to job holders. Only recently have empirical researchers tried to study the simultaneous two-way relationship between poverty and informality. However, existing studies have relied upon cross sectional data and static econometric models. This paper takes the next step and studies the dynamics of poverty and informality using longitudinal data. Our empirical analysis is based on a bivariate dynamic random effect probit model and recent panel data from Argentina. The results show that both poverty and informal employment are highly persistent processes at the individual level. Moreover, positive spillover effects are found from past poverty on current informal employment and from past informality to current poverty status, corroborating the view that the two processes are also shaped by interrelated dynamics.
    Keywords: poverty, informality, state dependence, dynamic bivariate probit model with random effects.
    JEL: C23 I30 J42
    Date: 2009
  25. By: Eduardo Cavallo (Research Department, Inter-American Development Bank); Ilan Noy (Department of Economics, University of Hawaii at Manoa)
    Abstract: Catastrophes caused by natural disasters are by no means new, yet our evolving understanding regarding their relevance to economic development and growth is still at its infancy. In order to facilitate further necessary research on this topic, we summarize the state of the economic literature that examines the aggregate impact of disasters. We review the main disaster data sources available, discuss the determinants of the direct effects of disasters, and distinguish between the short- and long-run indirect effects. After reviewing these literatures, we examine some of the relevant policy questions, and follow up with projections about the future likelihood of disasters, while paying particular attention to the projected climate change. We end by identifying several significant gaps in this literature.
    Date: 2009–11
  26. By: Ranis, Gustav (Yale University)
    Abstract: This paper reviews the literature on the impact of ethnic diversity on economic development. Ethnically polarized societies are less likely to agree on the provision of public goods and more likely to engage in rent seeking activities providing lower levels of social capital. Initial conditions are important determinants of adverse development outcomes. The role of decentralization, democracy and markets as potential remedies are discussed. The paper then presents a number of preliminary hypotheses on the relationship between diversity and instability in order to stimulate future research.
    JEL: O11 O40 O43 O55
    Date: 2009–09
  27. By: Karlan, Dean (Yale University and Innovations for Poverty Action); Zinman, Jonathan (Dartmouth College and Innovations for Poverty Action)
    Abstract: Microcredit seeks to promote business growth and improve well-being by expanding access to credit. We use a field experiment and follow-up survey to measure impacts of a credit expansion for microentrepreneurs in Manila. The effects are diffuse, heterogeneous, and surprising. Although there is some evidence that profits increase, the mechanism seems to be that businesses shrink by shedding unproductive workers. Overall, borrowing households substitute away from labor (in both family and outside businesses), and into education. We also find substitution away from formal insurance, along with increases in access to informal risk-sharing mechanisms. Our treatment effects are stronger for groups that are not typically targeted by microlenders: male and higher-income entrepreneurs. In all, our results suggest that microcredit works broadly through risk management and investment at the household level, rather than directly through the targeted businesses.
    JEL: D10 D20 G20 O10
    Date: 2009–07
  28. By: Fenske, James (Yale University)
    Abstract: I show how abundant land and scarce labor shaped African institutions before colonial rule. I present a model in which exogenous suitability of the land for agriculture and endogenously evolving population determine the existence of land rights, slavery, and polygyny. I then use cross-sectional data on pre-colonial African societies to demonstrate that, consistent with the model, the existence of land rights, slavery, and polygyny occurred in those parts of Africa that were the most suitable for agriculture, and in which population density was greatest. Next, I use the model to explain institutions among the Egba of southwestern Nigeria from 1830 to 1914. While many Egba institutions were typical of a land-abundant environment, they sold land and had disputes over it. These exceptions were the result of a period of land scarcity when the Egba first arrived at Abeokuta and of heterogeneity in the quality of land.
    JEL: N57 O10
    Date: 2009–11
  29. By: Ranis, Gustav (Yale University)
    Abstract: This paper suggests that area studies and economics have a better chance to be married successfully if we shift our attention from the exclusive emphasis on economic growth towards improvements in human development, especially the much broadened version of that concept. Different areas are shown to differ substantially in terms of the choices they make among the various independent dimensions of well-being and the various indicators within each dimension. The particular characteristics of each area play an important role in determining the choices societies make and the extent to which they are constrained by their initial conditions.
    JEL: O10 O20 O50
    Date: 2009–07
  30. By: Karlan, Dean (Yale University and Innovations for Poverty Action); Gine, Xavier (World Bank)
    Abstract: Group liability in microcredit purports to improve repayment rates through peer screening, monitoring, and enforcement. However, it may create excessive pressure, and discourage reliable clients from borrowing. Two randomized trials tested the overall effect, as well as specific mechanisms. The first removed group liability from pre-existing groups and the second randomly assigned villages to either group or individual liability loans. In both, groups still held weekly meetings. We find no increase in default and larger groups after three years in preexisting areas, and no change in default but fewer groups created after two years in the expansion areas.
    JEL: C93 D71 D82 D91 G21 O12 O16 O17
    Date: 2009–05
  31. By: Li, Muqun (Samsung Economic Research Institute, Beijing); Coxhead, Ian (University of Wisconsin, Madison)
    Abstract: Could globalization--specifically, increased international trade and openness to foreign investment--increase inequality in developing countries? Empirical studies in many such economies show that expanding trade and FDI are associated with higher inequality in wages and regional incomes. However, there is no agreement regarding the cause of such increases. We present a theoretical model showing how interactions between factor mobility restrictions and different rates of technical progress (due to trade and FDI) in a regionally heterogeneous economy can explain the evolution of inequality. As favored regions benefit more from trade, their growing demand for skills drains skilled workers from disadvantaged areas, and average incomes in favored regions grow faster than in less favored regions. Moreover, this unbalanced regional growth may be the source of rising inequality within each region, and even of falling per capita incomes in the less favored region. We test our predictions with data from China's coastal and inland provinces. The results confirm that different regional growth rates have increased both interregional and intraregional inequality. In addition, growth of skills-based export industries in coastal regions, other things equal, is associated with lower incomes for the poor in inland provinces.
    JEL: F16 O15 R10
    Date: 2009–07
  32. By: Philippe Aghion (Harvard University); Peter Howitt (Brown University); Fabrice Murtin (OECD)
    Date: 2009–11
  33. By: Manuela Angelucci
    Abstract: This paper documents how the structure of extended family networks in rural Mexico relates to the poverty and inequality of the village of residence. Using the Hispanic naming convention, we construct within-village extended family networks in 504 poor rural villages. Family networks are larger (both in the number of members and as a share of the village population) and out-migration is lower the poorer and the less unequal the village of residence.
    Keywords: extended family network, Hispanic naming convention, village marginality, residence, poverty, inequality, families, villages, rural, family, Mexico, residence, population, migration,
    Date: 2009
  34. By: CARE CARE
    Abstract: This document highlights the results and associated processes from Chayan’s implementation experience under the RACHNA program. The programmatic framework, designed for low-prevalence contexts in India, draws on standard targeted intervention approaches but is grounded in community-based methods unique to local contexts. The fi ndings from the Behavior Surveillance Survey (BSS) conducted by CARE in 2006 and the external review indicate encouraging results as compared to BSS in 2003. [CARE Wp no. 9].
    Keywords: behavior, India, HIV, prevention, community- based methods, local, NGO, mobilization, epidemic, AIDS, women, child development, girl's education, infrastructure, health, vulnerable states
    Date: 2009
  35. By: Menezes, Naercio Filho; Scorzafave, Luiz
    Date: 2009–10
  36. By: Andreas Mehler (GIGA Institute of Global and Area Studies)
    Abstract: Little attention has been paid to the factual effect of the state’s security forces on the security of African citizens. Reports about security forces’ contribution to widespread insecurity are frequent: the protectors become violators and their appearance causes fear, not security. In many African crisis countries the realization of better security forces appears to be an elusive goal, either because violent conflicts are not definitively settled and therefore do not allow for decent reform or because a lack of capacity as a result of material constraints is not easy to remedy. The self-help mechanisms used to compensate for the lack of state-sponsored security need more attention. However, it has to be acknowledged that the ideal of a neutral and effective force loyal to the state is shared by a great majority of the population. This contribution compares the experiences of Liberia and the Central African Republic, two extreme cases of strong and weak international involvement, respectively, in post-conflict security-sector reform.
    Keywords: Liberia, Central African Republic, security, armed forces, security-sector reform
    Date: 2009–11
  37. By: Papageorgiou, Chris; Razak, Nor Azam Abdul
    Abstract: Recent theoretical contributions assert that income inequality impacts negatively human capital accumulation, and consequently long-run growth. Galor and Zeira (1993) show that such a relationship works primarily through financial constraints, while de la Croix and Doepke (2003) demonstrate that the relationship could also work via differential fertility between poor and rich. In this paper, we first test the inequality-human capital-output hypothesis in a sample of 46 countries for the period 1970—2000. In the baseline estimation specification and various robustness checks, we obtain results that lend strong support to this relationship. Second, we examine which of the two mechanisms, finds more support in the data. and show evidence in favor of the differential fertility mechanism.
    Keywords: Income inequality; financial constraints; fertility differentials; human capital; economic growth
    JEL: O11 O15 O40
    Date: 2009–11–30
  38. By: James Feyrer
    Abstract: The negative effect of distance on bilateral trade is one of the most robust findings in international trade. However, the underlying causes of this negative relationship are less well understood. This paper exploits a temporary shock to distance, the closing of the Suez canal in 1967 and its reopening in 1975, to examine the effect of distance on trade and the effect of trade on income. Time series variation in sea distance allows for the inclusion of pair effects which account for static differences in tastes and culture between countries. The distance effects estimated in this paper are therefore more clearly about transportation costs in the trade of goods than typical gravity model estimates. Distance is found to have a significant impact on trade with an elasticity that is about half as large as estimates from typical cross sectional estimates. Since the shock to trade is exogenous for most countries, predicted trade volume from the shock can be used to identify the effect of trade on income. Trade is found to have a significant impact on income. The time series dimension allows for country fixed effects which control for all long run income differences. Because identification is through changes in sea distance, the effect is coming entirely through trade in goods and not through alternative channels such as technology transfer, tourism, or foreign direct investment.
    JEL: F1 F15 F43 O4 O47
    Date: 2009–12
  39. By: Enzo Valentini (Università di Macerata)
    Abstract: <div style="text-align: justify;">This paper investigates the supposed substitutability between equal opportunities and public redistribution. In the first part a theory which finds a substitutability between redistribution and equal chances in determining the extent of incomes inequality (Gini Index) is presented. This result is obtained including inequality of opportunities in the labor market, and preferences for leisure in the individual utility function. The model suggests that an optimal level of universalistic redistribution (maximizing average utility) exists, which is increasing with respect to inequality of opportunities. The subsequent empirical exercises offer a plausible measure of meritocracy, besides being a support for the validity of the theoretical model. Moreover, the empirical analysis suggests that there could be countries which should enhance redistribution and others which should reduce it, given their level of opportunities inequality.</div>
    Keywords: Universalism,Redistribution,Inequality,Meritocracy,Taxation
    JEL: O1 O11
    Date: 2009–11
  40. By: Witt, Rudolf; Waibel, Hermann
    Abstract: In this paper the class of Lower Partial Moments (LPMs) is used for measuring vulnerability as downside risk of household income in rural Cameroon. This class of established and coherent risk measures has been shown to meet a number of desirable properties. Among others, the LPMs fulfill the focus axiom, and for order greater than zero they are in harmony with expected utility theory under the weak assumption of risk aversion. Through combining the vulnerability measure with a portfolio approach it is possible to distinguish different livelihood systems for which the poverty and vulnerability measures are the explicit result of stochastic distributions of single activities in the households' portfolio and their covariance structure. In particular we consider the four major income generating activities in the study area: Sorghum, millet and rice production, and fishing. The results suggest that in the study area fishermen are less affected by adverse effects on income than other livelihood systems, while rice growers are the poorest and most vulnerable. It is also shown that rice and millet growers are suffering from chronic poverty, while transient poverty is more prevalent among the group of sorghum growers and fishermen. This implication is further confirmed by assuming a moving target equal to the mean portfolio income for the calculation of LPMs. The results of the scenario analysis suggest that policy interventions aiming at a reduction of the covariation structure between income flows from different activities are quite promising.
    Keywords: Vulnerability as expected poverty, Lower Partial Moments, portfolio theory, diversification, Sub Saharan Africa
    JEL: I32 O13 G11 G32
    Date: 2009–11

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