nep-dev New Economics Papers
on Development
Issue of 2010‒01‒30
fourteen papers chosen by
Mark Lee
Towson University

  1. Trends in South African Income Distribution and Poverty since the Fall of Apartheid By Murray Leibbrandt; Ingrid Woolard; Arden Finn; Jonathan Argent
  2. The Impact of the Credit Crisis on Poor Developing Countries and the Role of China in Pulling and Crowding Us Out By Ziesemer, Thomas
  3. China: Does Government Health and Education Spending Boost Consumption? By Ray Brooks; Steven Barnett
  4. Poverty and Vulnerability in rural China: Effects of Taxation By Katsushi S Imai
  5. Can Global De-Carbonization Inhibit Developing Country Industrialization? By Aaditya Mattoo
  6. Important Lessons from Studying the Chinese Economy By Gregory C. Chow
  7. Development and economic growth: the effectiveness of traditional policies By Gabriella Berloffa; Giuseppe Folloni; Ilaria Schnyder
  8. Workers' Remittances and Growth in MENA Labor Exporting Countries By Sufian Eltayeb Mohamed
  9. Analysis of the Impact of Changes in the Prices of Rice and Fuel on Poverty in the Philippines By Celia M. Reyes; Alellie B. Sobrevinas; Joel Bancolita; Jeremy de Jesus
  10. Destined for Destitution- Intergenerational Poverty Persistence in Indonesia By Yus Medina Pakpahan; Daniel Suryadarma; Asep Suryahadi
  11. Deficit, Seigniorage and the Growth Laffer Curve in developing countries By Hélène EHRHART; Alexandru MINEA; P. VILLIEU
  12. Assessing the relationship between democracy and domestic taxes in developing countries By Hélène EHRHART
  13. Labor Market and Immigration Behavior of Middle-Aged and Elderly Mexicans By Emma Aguila; Julie Zissimopoulos
  14. Detecting Hidden Violence: The Spatial Distribution of Excess Mortality in Rwanda By Marijke verpoorten

  1. By: Murray Leibbrandt; Ingrid Woolard; Arden Finn; Jonathan Argent
    Abstract: This report presents a detailed analysis of changes in both poverty and inequality since the fall of Apartheid, and the potential drivers of such developments. Use is made of national survey data from 1993, 2000 and 2008. These data show that South Africa’s high aggregate level of income inequality increased between 1993 and 2008. The same is true of inequality within each of South Africa’s four major racial groups. Income poverty has fallen slightly in the aggregate but it persists at acute levels for the African and Coloured racial groups. Poverty in urban areas has increased. There have been continual improvements in non-monetary well-being (for example, access to piped water, electricity and formal housing) over the entire post-Apartheid period up to 2008. From a policy point of view it is important to flag the fact that intra-African inequality and poverty trends increasingly dominate aggregate inequality and poverty in South Africa. Race-based redistribution may become less effective over time relative to policies addressing increasing inequality within each racial group and especially within the African group. Rising inequality within the labourmarket – due both to rising unemployment and rising earnings inequality – lies behind rising levels of aggregate inequality. These labour market trends have prevented the labour market from playing a positive role in poverty alleviation. Social assistance grants (mainly the child support grant, the disability grant and the old-age pension) alter the levels of inequality only marginally but have been crucial in reducing poverty among the poorest households. There are still a large number of families that are ineligible for grants because of the lack of appropriate documents. This suggests that there is an important role for the Department of Home Affairs in easing the process of vital registration.<BR>Ce rapport présente une analyse détaillée de l’évolution de la pauvreté et des inégalités depuis la fin de l’Apartheid et des facteurs susceptibles de l’expliquer. Les comparaisons ont été effectuées sur la base des dernières micro-données comparables sur les ménages de 1993, 2000 et 2008. Ces données montrent que le niveau global des inégalités de revenu de l’Afrique du Sud a continué d’augmenter entre 1993 et 2008. Cette même réalité des inégalités se retrouvent également dans chacun des quatre groupes ethniques d’Afrique du Sud. La pauvreté a légèrement chuté dans sa globalité, mais persiste gravement parmi les groupes ethniques africains et interraciaux. La pauvreté en zone urbaine a augmenté. L’amélioration du bien-être non monétaire (accès à l’eau courante, à l’électricité, à un logement formel etc.) s’est poursuivie jusqu’en 2008. D’un point de vue de politique publique, il est important de signaler que les inégalités et la pauvreté au sein de la population africaine ont et auront de plus en plus un poids prépondérant dans les inégalités et la pauvreté globales du pays. L’augmentation des inégalités au sein du marché du travail – due à la fois à la hausse du chômage et à l’augmentation des inégalités de salaires –, provient de l’augmentation du niveau global des inégalités. Ces tendances ont empêché le marché du travail de jouer son rôle positif en termes de réduction de la pauvreté. Les prestations d’aide sociale (essentiellement l’allocation pour enfant à charge et les pensions d’invalidité et de vieillesse) n’ont qu’une incidence marginale sur les inégalités et la pauvreté. Toutefois, ces transferts réduisent réellement l’écart de pauvreté, en particulier parmi les ménages les plus pauvres. Un grand nombre de familles qui pourraient prétendre aux allocations familiales ne font pas valoir leurs droits parce qu’elles ne disposent pas des pièces justificatives requises. Par conséquent, le ministère des Affaires intérieures (Department of Home Affairs) a un rôle important à jouer en ce sens qu’il peut faciliter le processus d’enregistrement à l’état civil pour que tous les enfants puissent accéder aux prestations d’aide sociale auxquelles ils ont droit.
    JEL: D31 I32 I38
    Date: 2010–01–20
  2. By: Ziesemer, Thomas (UNU-MERIT, and Maastricht University)
    Abstract: We show that the credit crisis of OECD countries has a negative impact on the growth of the world economy according to an error correction model including China and Australia. This causes negative growth effects in poor developing countries. The reduced growth has a direct or indirect impact on the convergence issue, aid, remittances, labour force growth, investment and savings, net foreign debt, migration, tax revenues, public expenditure on education and literacy. We estimate dynamic equations of all these variables using dynamic panel data methods for a panel of countries with per capita income below $1200 (2000). The estimated equations are then integrated to a dynamic system of thirteen equations for thirteen variables that allows for highly non-linear baseline simulations for these open economies. Then we analyze the effects of transitional shocks as predicted by the international organizations for the OECD and world growth for 2008 and 2009. Whereas growth rates return to the baseline scenario until 2013 with overshooting for China and Australia, the level of the GDP per capita shows permanent effects, which are positive only for China. In the poor countries, investment, remittances, savings, tax revenues, public expenditure on education, all as a share of GDP as well as literacy and the GDP per capita, are reduced compared to the baseline until 2087 where our analysis ends. Investment, emigration and labour force growth start returning to baseline values between 2013 and 2017. GDP per capita and tax revenues start returning to baseline around 2040. Education variables do not return to baseline without additional effort. Significantly positive short-run effects (the lagged growth rates) show that China has an impact on Australia, which has an impact on the OECD, which in turn affects the rest of the world. ROW has a significantly positive feedback effect on China.
    Keywords: crisis, migration, remittances, accumulation, developing countries, economic growth.
    JEL: F22 O15 J61
    Date: 2010
  3. By: Ray Brooks; Steven Barnett
    Abstract: Consumption in China is unusually low and has continued to decline as a share of GDP over the past decade. A key policy question is how to reverse this trend, and rebalance growth away from reliance on exports and investment and toward consumption. This paper investigates whether the sizable increase in government social spending in recent years lowered precautionary saving and increased consumption. The main findings are that spending on health, but not education, had an impact on household behavior. The impact, moreover, is large. A one yuan increase in government health spending is associated with a two yuan increase in urban household consumption.
    Date: 2010–01–15
  4. By: Katsushi S Imai
    Abstract: This paper studies the impact of taxation on poverty and ex ante vulnerability of households in rural China based on national household survey data in 1988, 1995 and 2002. [CPRC working paper 156].
    Keywords: poverty, vulnerability, taxation, rural China, inequality, household, survey data,
    Date: 2010
  5. By: Aaditya Mattoo
    Abstract: In this paper, we seek to make a twofold contribution. On outcomes, we focus on manufacturing exports as well as on manufacturing output both in the aggregate and in selected sectors. On policy, the impact of three distinct actions—emissions reductions per se; emissions tradability; and transfers are isolated. [WP No. 188].
    Keywords: manufacturing, India, exports, industrialization, developing country, output, tradability, climate change, development, public private transfers, growth externalities, financial globalization
    Date: 2010
  6. By: Gregory C. Chow (Princeton University)
    Abstract: In 1979 the United States and China established normal diplomatic relations, allowing me to visit China and study the Chinese economy. After doing so for thirty years since and advising the government of Taiwan in the 1960s and the 1970s and the government of the People’s Republic of China in the 1980s and the 1990s this is an opportune moment for me to summarize the important lessons that I have learned. The lessons will be summarized in four parts: on economic science, on formulating economic policy and providing economic advice, on the special characteristics of the Chinese economy and on the experience of China’s economic reform. At the beginning I should comment on the quality of Chinese official data on which almost all quantitative studies referred to in this article were based. Chow (2006(a)) has presented the view that by and large the official data are useful and fairly accurate. The main justification is that every time I tested an economic hypothesis or estimated an economic relation using the official data the result confirmed the well-established economic theory. It would be a miracle if I had the power to make the Chinese official statisticians fabricate data to support my hypotheses. Even if I had had the power, most of the data had already been published for years before I conceived the ideas of the studies reported in this article.
    Keywords: China, Chinese economy, Taiwan, economic reforms, data
    JEL: C01 E01 H00 N25 O53
    Date: 2009–12
  7. By: Gabriella Berloffa; Giuseppe Folloni; Ilaria Schnyder
    Abstract: The empirical evidence of low effectiveness for growth of investment in physical and human capital policies based on international aid is analyzed and discussed (§ 1 and 2). Reasons are linked both to limits of analytical and econometric methods (§ 4) and the existence of strong complementarities between different dimensions of macroeconomic, social and institutional context (§ 3). We critically discuss the new strategies proposed to gain effectiveness in development projects and policies.
    Keywords: Aid Effectiveness, Growth Policies, Institutions, Development
    Date: 2009
  8. By: Sufian Eltayeb Mohamed (Aristotle University of Thessaloniki)
    Abstract: This paper presents an empirical examination of effects of workers’ remittance on economic growth in a sample of 7 remittance-receiving MENA countries. In order to empirically analyze the impact of remittances we estimate growth equations using a set of 7 MENA labor exporting countries during the period 1975-2006. A standard growth models are estimated using both fixed-effects and random effects models. The empirical results show the support of the fixed –effects method as the random effects model is rejected in statistical tests. The results show the support for the view that remittances have a positive impact on growth both directly and indirectly through their interactions with financial and institutional channels.
    Keywords: Remittances, Economic Growth, Panel Data, Fixed effects, MENA Countries
    JEL: C3 F3 F22
    Date: 2009
  9. By: Celia M. Reyes; Alellie B. Sobrevinas; Joel Bancolita; Jeremy de Jesus (Philippine Institute for Development Studies)
    Abstract: The study aims to assess the impact of rising prices of rice and fuel on poverty in the Philippines. In particular, the variations in the potential effects among different group of households were analyzed using household level data. Results of the study confirm that the impact of increasing prices of rice and fuel vary across different groups of households depending on the sector of employment, level of urbanity, income group and geographical location. In fact, there are losers and gainers from the recent increases in the prices of rice and fuel. In response to higher prices, households adopted different coping mechanisms, some of which are damaging and counter-productive in the medium- and long-run. The Philippine government has also responded by implementing programs that would mitigate the negative impact of soaring prices. It is recommended that household level data for all households in the community, such as those being generated by the community-based monitoring system (CBMS) being implemented by local government units, be used to identify eligible beneficiaries through some proxy means test model. This would help reduce leakage of program benefits to the non-poor as well as ensure that the poor benefit from these programs.
    Keywords: poverty, community-based monitoring system, impact analysis, prices, rice, fuel, coping mechanisms, pass-through rates, net benefit ratio
    JEL: I32 I38 E31
    Date: 2010–01
  10. By: Yus Medina Pakpahan; Daniel Suryadarma; Asep Suryahadi (SMERU Research Institute)
    Abstract: We estimate intergenerational poverty persistence in Indonesia using a panel dataset. To the best of our knowledge, this is the first such study looking at the issue in the Indonesian context. Different from the majority of studies on this issue, we include controls for several household and individual characteristics, including for living arrangements. Moreover, to circumvent data issues that plague earnings data in developing countries, we use chronic poverty status as a long-term parental welfare measure. We find there is a substantial intergenerational mobility away from poverty among children from poor households. However, the risk of continuing to live in poverty as adults is 35 percentage points higher for children from chronically poor households than for children from households which are not chronically poor.
    Keywords: chronic poverty, intergenerational mobility, children, welfare, Indonesia
    JEL: I32 J62
    Date: 2010–01
  11. By: Hélène EHRHART; Alexandru MINEA (Centre d'Etudes et de Recherches sur le Développement International); P. VILLIEU
    Abstract: The endogenous growth literature has established the existence of an inverted-U curve between taxes and economic growth, namely a Growth Laffer Curve (GLC). We develop a growth model with public investment as the engine of perpetual growth, and look for the effect of deficit, tax and money financing on economic growth. We study in particular the way fiscal and monetary policies (through deficit and seigniorage respectively) deform the GLC. An empirical section based on a panel of developing countries provides GMM-system estimators that support our theoretical conclusions.
    Keywords: GMM, Growth Laffer Curve, deficit, developing countries, panel data, seigniorage
    Date: 2009
  12. By: Hélène EHRHART
    Abstract: To what extent differences across developing countries in their domestic tax mobilization can be explained, in addition to the traditional determinants, by political economy factors and particularly by the political regime? Using a panel of 66 developing countries over the period 1990-2005, this paper provides econometric evidence that democracy matters for achieving higher domestic tax revenues which are much needed to finance public goods. It is especially the level of constraints on the executive which is of importance to counter the government's propensity to cave in for special interests and to be insufficiently welfare minded. We found that high levels of democracy are specifically needed in natural resource rich countries to make natural resource rents contribute to higher domestic tax revenues and no longer be an impediment to a sustained tax system.
    Keywords: Tax Revenues, democracy, developing countries
    Date: 2009
  13. By: Emma Aguila; Julie Zissimopoulos
    Abstract: This study analyzed the retirement behavior of Mexicans with migration spells to the United States that returned to Mexico and non-migrants. The analysis is based on rich panel data from the Mexican Health and Aging Study (MHAS). Approximately 9 percent of MHAS respondents age 50 and older reported having lived or worked in the United States. These return migrants were more likely to be working at older ages than non-migrants. Consistent with much of the prior research on retirement in the United States and other developed countries, Mexican non-migrants and return migrants were responsive to institutional incentives. Both groups were more likely to retire if they had publicly provided health insurance and pensions. In addition, receipt of U.S. Social Security benefits increased retirement rates among return migrants. Return migrants were more likely to report being in poor health and this also increased the likelihood of retiring. The 2004 draft of an Agreement on Social Security would coordinate benefits across United States and Mexico boundaries to protect the benefits of persons who have worked in foreign countries. The agreement would likely increase the number of authorized and unauthorized Mexican workers and family member eligible for Social Security benefits. The responsiveness of current, older Mexican return migrants to pension benefits, suggests that an agreement would affect the retirement behavior of Mexican migrants.
    JEL: J14 J21 J61
    Date: 2009–12
  14. By: Marijke verpoorten
    Abstract: Rwanda experienced several forms of internal violence, including civil war,genocide, reprisal killings and (counter-)insurgency. While these events all occurred in 1990-1998, their geographic location within Rwanda differred, with the genocide especially severe in the South of the country, the civil war and reprisal killings mostly taking place in the North and East, and the (counter-)insurgency concentrated in the Northwest. In order to assess the relative impact of the different forms of violence, this article derives a detailed spatial pattern of excess mortality from the population census. In line with previous evidence on the death toll of armed conflict in Rwanda, we find significant high-high excess mortality clusters in the southern province of Butare, in and around Kigali City, and in the eastern province Kibungo. Furthermore, we present the first quantitative evidence to date of high excess mortality in the northwestern porvince Gisenyi, indicating that the 1995-1998 (counter-)insurgency inflicted a much higher death toll on the population than presently acknowledged by the Rwandan government, the UN and large western donors.
    Keywords: armed conflict, genocide, excess mortality, Rwanda
    JEL: J11 J15 Y80
    Date: 2010

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