nep-dev New Economics Papers
on Development
Issue of 2010‒04‒11
twenty-one papers chosen by
Mark Lee
Towson University

  1. Endogenous Growth: A Kaldorian Approach By Mark Setterfield
  2. Groups, Networks, and Hierarchy in Household Private Transfers: Evidence from Fiji By Yoshito Takasaki
  3. Gender, Wages, and Social Security in China’s Industrial Sector By Rickne, Johanna
  4. Cash or condition ? evidence from a randomized cash transfer program By Baird, Sarah; Mcintosh, Craig; Ozler, Berk
  5. Measuring financial access around the world By Kendall, Jake; Mylenko, Nataliya; Ponce, Alejandro
  6. Time allocation in rural households : the indirect effects of conditional cash transfer programs By Hasan, Amer
  7. Gender-targeted conditional cash transfers : enrollment, spillover effects and instructional quality By Hasan, Amer
  8. Natural Disasters in South Asia By Raghav Gaiha; Kenneth Hill; Ganesh Thapa
  9. Large Fluctuations in Consumption in Least Developed Countries By Kodama, Masahiro
  10. Conditional Cash Transfers to Improve Education and Health: An Ex ante Evaluation of Red de Proteccion Social, Nicaragua By Thomas R.
  11. Education Impact Study: The Global Recession and the Capacity of Colleges and Universities to Serve Vulnerable Populations in Asia By Postiglione, Gerard
  12. Trade and Investment Policies and Regional Economic Integration in East Asia By Chia, Siow Yue
  13. Political Institutions, Policymaking, and Economic Policy in Latin America By Martin Ardanaz; Carlos Scartascini; Mariano Tommasi
  14. The Determinants of Internal Migration in a Developing Country: Quantitative Evidence for Indonesia, 1930-200 By van Lottum, J.; Marks, D.
  15. Whose incentives? The evolution of inheritance practices, intergenerational conflict, and women’s control over land in rural Kenya By Linkow, Benjamin
  16. Internal Mobility and Likelihood of Skill Losses in Localities of Emigration: Theory and Preliminary Empirical Application to Some Developing Economies By Driouchi, Ahmed; Zouag, Nada
  17. Agriculture, Roads, and Economic Development in Uganda By Douglas Gollin; Richard Rogerson
  18. Civic Capital as the Missing Link By Luigi Guiso; Paola Sapienza; Luigi Zingales
  19. Surfing the Waves of Globalization: Asia and Financial Globalization in the Context of the Trilemma By Joshua Aizenman; Menzie D. Chinn; Hiro Ito
  20. The Natural Resource Curse: A Survey By Jeffrey A. Frankel
  21. Investments in Land Conservation in the Ethiopian Highlands: A Household Plot-Level Analysis of the Roles of Poverty, Tenure Security, and Market Inventives By Bekele, Genanew; Mekonnen, Alemu

  1. By: Mark Setterfield (Department of Economics, Trinity College)
    Abstract: This chapter explores the Kaldorian approach to endogenous growth theory. The central principles of this approach are explored, including the claims that growth is: (a) demandled, with trade playing a central role in aggregate demand formation; and (b) pathdependent. It is shown that both the actual and natural rates of growth are path dependent in the Kaldorian tradition. The implications of inequality between the actual and natural rates of growth are investigated, and it is shown that mechanisms exist within the Kaldorian tradition that are capable of reconciling these growth rates. This results in the sustainability (in principle) of any particular equilibrium value of the actual rate of growth.
    Keywords: endogenous growth, Kaldor, path dependence, demand-led growth, technical change, institutions, natural rate of growth
    JEL: O41 O43 O47 O31 E12
    Date: 2010–03
  2. By: Yoshito Takasaki
    Abstract: Although economists have extensively studied private transfers exchanged among households within a network, those exchanged directly with groups to which the household belongs – such as ritual gifts, communal work, and church donations --- have received very limited attention. Using original household survey data gathered in rural Fiji, this paper shows that extant studies on across-household private transfers are incomplete for two reasons. First, group-based transfers are much greater than networkbased transfers because of significant contributions to groups for their provision of local public goods. Second, group-based transfers significantly influence network-based transfers through the social hierarchy: A comparison of various groups (e.g., kin and church groups) and social ranks (e.g., gender, disability, elite kin, and religious elite) indicates that network-based transfers adjust to hierarchy bias in group-based transfers among fixed members depending on the physical and social connections of groups and networks.
    Date: 2010–03
  3. By: Rickne, Johanna (Research Institute of Industrial Economics (IFN))
    Abstract: This study compares average earnings and productivities for men and women employed in roughly 200,000 Chinese industrial enterprises. Women’s average wages lag behind men’s wages by 11%, and this result is robust to the inclusion of non-wage income in the form of social insurance payments. The gender-wage gap is wider among workers with more than 12 years of education (28%), mainly because of the higher relative wages received by skilled men in foreign-invested firms. Women’s average productivity falls behind men’s productivity by a larger margin than the gap in earnings, and the null-hypothesis of earnings discrimination is thereby rejected. Equal average wages between men and women are found among firms located in China’s Special Economic Zones, and also among some light industrial sectors with high shares of female employees. Market reform hence appears to have improved women’s relative incomes.
    Keywords: China; Gender Wage Gap; Non-wage Compensation
    JEL: I30 J16 J71 O10
    Date: 2010–03–30
  4. By: Baird, Sarah; Mcintosh, Craig; Ozler, Berk
    Abstract: Are the large enrollment effects of conditional cash transfer programs a result of the conditions or simply the cash? This paper presents the first experimental evidence on the effectiveness of conditionality in cash transfer programs for schooling. Using data from an intervention in Malawi that featured randomized conditional and unconditional treatment arms, the authors find that the program reduced the dropout rate by more than 40 percent and substantially increased regular school attendance among the target population of adolescent girls. However, they do not detect a higher impact in the conditional treatment group. This finding contrasts with previous non-experimental studies of conditional cash transfer programs, which found negligible"income"effects and strong"price"effects on schooling. The authors argue that their findings are consistent with the very low level of incomes and the high prevalence of teen marriage in the region. The results indicate that relatively small, unconditional cash transfers can be cost-effective in boosting school enrollment among adolescent girls in similar settings.
    Keywords: Education For All,Population Policies,Primary Education,Tertiary Education,Adolescent Health
    Date: 2010–03–01
  5. By: Kendall, Jake; Mylenko, Nataliya; Ponce, Alejandro
    Abstract: This paper introduces a new set of financial access indicators for 139 countries across the globe and describes the results of a preliminary analysis of this data set. The new data set builds on previous work using a similar methodology. The new data set features broader country coverage and greater disaggregation by type of financial product and by type of institution supplying the product -- commercial banks, specialized state run savings and development banks, banks with mutual ownership structure (such as cooperatives), and microfinance institutions. The authors use the data set to conduct a rough estimation of the number of bank accounts in the world (6.2 billion) as well as the number of banked and unbanked individuals. In developed countries, they estimate 3.2 accounts per adult and 81 percent of adults banked. By contrast, in developing countries, they estimate only 0.9 accounts per adult and 28 percent banked. In regression analysis, they find that measures of development and physical infrastructure are positively associated with the indicators of deposit account, loan, and branch penetration.
    Keywords: Access to Finance,Banks&Banking Reform,Debt Markets,Emerging Markets,E-Business
    Date: 2010–03–01
  6. By: Hasan, Amer
    Abstract: Conditional cash transfers are being heralded as effective tools against the intergenerational transmission of poverty. There is substantial evidence on the positive effects of these transfers. Analysts are only now beginning to investigate the indirect effects these programs generate. This paper examines the effect of a gender-targeted conditional cash transfer program on the time allocation of mothers in rural program-eligible households. Using a fixed effects difference-in-differences estimator, the author finds that program eligibility is associated with an increase of 120 minutes of housework per typical school day by mothers of eligible children in the stipend district when compared with mothers of eligible children in the non-stipend district. There is a 100-minute reduction in the amount of time mothers report spending on children’s needs. The intent-to-treat effect of the program suggests no change in the amount of time spent on paid work or sleep.
    Keywords: Primary Education,Education For All,Anthropology,Adolescent Health,Youth and Governance
    Date: 2010–03–01
  7. By: Hasan, Amer
    Abstract: This paper considers the effects of a gender-targeted conditional cash transfer program for girls in classes 6 to 8. It finds that the program is successful in increasing the enrollment of girls in classes 6 to 8 as intended. It also finds evidence to suggest that the program generated positive spillover effects on the enrollment of boys. This success does, however, appear to be poised to come at a cost. The student-teacher ratio in treated districts is also climbing. This suggests that in the absence of active steps to address these increasing student-teacher ratios, instructional quality is likely to suffer. The success of the program appears to be driven by enrollment increases in urban schools. This suggests the need for a reassessment of the targeting criteria in rural schools.
    Keywords: Primary Education,Tertiary Education,Education For All,Teaching and Learning,Education Reform and Management
    Date: 2010–03–01
  8. By: Raghav Gaiha; Kenneth Hill; Ganesh Thapa
    Abstract: Various types of natural disasters (e.g. extreme temperatures and floods) became more frequent in 1998-09, relative to 1985-97. However, the deadliness of earthquakes rose sharply and of extreme temperatures more than moderately while that of most others (droughts, floods, storms and wildfires) declined. While developing countries bear the brunt of disasters, ironically these are also the countries which have made fewer efforts to adapt their physical environments to mitigate the impact of such disasters and to insure themselves against disaster risks. If interventions do not go beyond short-term relief and shy away from rebuilding of livelihoods and reconstruction from a longerterm perspective, communities/regions highly vulnerable to natural hazards (e.g. low lying coastal areas are highly vulnerable to floods) are likely to fare worse with recurrent catastrophes. While our evidence points to growing vulnerability to natural disasters and their grave implications for human security, a challenge for development assistance is to combine speedy relief with durable reduction in vulnerability. If our analysis has any validity, there are indeed some grounds for optimism.
    Keywords: Disasters, Deaths, Geography, Institutions, Reconstruction, South Asia
    JEL: Q54 Q57 I12
    Date: 2010
  9. By: Kodama, Masahiro
    Abstract: The objective of this paper is to shed light on mechanism which increases fluctuation in consumption of least developed countries. In general large fluctuation in consumption makes consumers worse off. This fact suggests that accumulation of knowledge on the generating mechanism of the large consumption fluctuation very likely contributes to welfare improvement of the least developed countries, through policies stabilizing consumption. We specifically investigated the fluctuation in consumption, through the numerical analysis with a dynamic macroeconomic model.
    Keywords: Consumption, LDC, Developing countries
    JEL: E21 E32 F41
    Date: 2010–03
  10. By: Thomas R.
    Abstract: This paper uses baseline data from the randomized experiment of the conditional cash transfer program - Red de Proteccion Social, Nicaragua to conduct an ex ante evaluation and compares results to those of the experimental evaluation. Reduced form estimation of a behavioural model using a health production framework forms the basis of the evaluation. A Klein and Spady semi-parametric single index model is used to predict unobserved outcomes under the treatment. The sample consists of children aged 7-13 who have not completed grade 4. The evaluation shows that the ex ante approach closely matches the experimental outcomes in the case of girls and over predicts the impact for boys.
    Keywords: ex ante evaluation; conditional cash transfers; single index models; education; health production function;
    JEL: I38 I20 I12 O12
    Date: 2010–03
  11. By: Postiglione, Gerard (Asian Development Bank Institute)
    Abstract: This paper reviews the capacity of colleges and universities to serve poor and vulnerable populations during past and present economic shocks. The main argument is that the environment of the global recession-an Asia far more economically integrated than during past economic shocks, with more unified aspirations to be globally competitive and socially responsible-need not delay reforms in higher education. In fact, the global recession is an opportune time for higher education in the Asia and Pacific region to continue reforming governance and administration, access and equity, internal and external efficiency, and regional collaboration. This paper proposes a series of measures to increase the resilience of higher education systems in serving poor and vulnerable populations during the economic recession. These measures include: (i) tuition assistance, subsidies, and loans; (ii) information and guidance for first-generation college students on choosing appropriate programs of study; (iii) community-based vocational and technical higher education that provides jobs in a rapidly changing labor market; (iv) innovative forms of cost sharing between public and private institutions of higher education; (v) resource decisions made on the basis of performance-based objectives; (vi) intensification of philanthropic culture that provides scholarships for poor students; (vii) upgrading of research about problems confronting poor communities; and (viii) regional strategies across the Asia and Pacific region for closer instructional program collaboration among colleges and universities
    Keywords: colleges universities serve poor; education vulnerable economic shocks; education impact study
    JEL: I20 I20 I21 I22 I23 I28 I29
    Date: 2010–03–29
  12. By: Chia, Siow Yue (Asian Development Bank Institute)
    Abstract: The global economic crisis has affected the East Asian economies via trade and investment. The export-led model which had been responsible for the “East Asian Miracle” now must redirect the basis of growth from exports sent to the US and Europe to regional and domestic demand. Regional trade integration has been market-led through production networks and foreign direct investment (FDI). Since the proliferation of bilateral and plurilateral free trade agreements (FTA) and economic partnership agreements (EPA) has not resulted in an integrated regional market, it is important that East Asia seek an arrangement for a region-wide FTA/EPA. Currently, there are proposals for an ASEAN+3, an ASEAN+6, Pan-Asia, and Asia Pacific initiatives. While proponents of a region-wide FTA/EPA highlight its benefits, skeptics and critics point to the difficulties of reaching consensus in a region with widely varying political, economic, and social systems. Ultimately it will depend on a political-economic decision based on a cost-benefit analysis of liberalization, facilitation, and cooperation in a region-wide FTA.
    Keywords: east asia trade policy; east asia regional integration; free trade agreements
    JEL: F13 F14 F16 O24
    Date: 2010–04–05
  13. By: Martin Ardanaz; Carlos Scartascini; Mariano Tommasi
    Abstract: This paper surveys selected themes in the political economy of policymaking in Latin America, with an emphasis on recent research focusing on actual decision and implementation processes, and on the political institutions and state and social actors involved in those processes. In particular, the paper addresses how political rules work for or against intertemporal cooperation among political actors. The document shows that the extent to which polities obtain the key policy features that seem to determine development depends on the workings of political institutions, which define how the policymaking game is played, on the characteristics of the arenas of interaction, which define where the policymaking game is played, and on certain characteristics of key socioeconomic groups, which define who interacts with professionalpoliticians in pursuing different policy preferences.
    Keywords: Political institutions, Public policies, Economic policy, Government capabilities, Development, Latin America
    JEL: D72 D78 H10 H50 O10
    Date: 2010–03
  14. By: van Lottum, J.; Marks, D.
    Abstract: This study specifies and estimates a gravity model for inter-provincial migration in Indonesia. Using panel data for Indonesia’s 26 provinces for 5 survey years between 1930 and 2000 we show that throughout the twentieth century economic factors were more important in the explanation of inter-provincial migration patterns in Indonesia than planned migration policy aimed at the redistribution of the population. In addition, our regression analysis demonstrates that the urban primacy of Jakarta, Indonesia’s capital, had a strong effect on the direction and size of migration flows as well. Our findings thus suggest that the costly government-supported migration is not very successful and that a strongly centralized government induces migration flows to the capital. These findings have policy implications for other developing countries.
    Keywords: Internal Migration; Indonesia; Gravity Model; Policy; Development
    JEL: J61 J68 N15 O15
    Date: 2010–02–15
  15. By: Linkow, Benjamin
    Abstract: Land related investment decisions are shaped by both the formal and informal institutions governing land tenure and acquisition. In the case of agricultural Kikuyu households in Kenya, we show that the inheritance practice of uncertain allocation in conjunction with the principle of equal division among heirs reduces long-term investments in land among potential heirs. This apparent inefficiency is explained by intergenerational power dynamics within the household, as the inheritance practice allows parents to shift the investment incentives facing heirs in their favor. This analytical framework is also used to illustrate that despite legislation formalizing women’s rights to property, control over land continues to follow the informal traditional patrilineal system in important ways.
    Keywords: Inheritance; agriculture; Kenya
    JEL: D13 O10 D02 Q15 Q12 O12
    Date: 2010
  16. By: Driouchi, Ahmed; Zouag, Nada
    Abstract: Abstract: An economic model is introduced to discuss the impacts of rural migration on skills in source and destination localities and regions. Two versions of the model are used without and with risks. In this context, the model considers that rural migration is determined by the demand for education and urban rural wage differences. The optimal decision rules attained are tested against available aggregate data for series of developing countries. The preliminary empirical results show the existence of country variations of rural emigration with varied impacts on education with likely losses in localities of emigration. Economic and social policies are to account for these impacts mainly when emphasis is placed on regional and local development programs.
    Keywords: Rural migration; bias; education; skilled labor; local development
    JEL: J31
    Date: 2010–02–10
  17. By: Douglas Gollin; Richard Rogerson
    Abstract: A large fraction of Uganda's population continues to earn a living from quasi-subsistence agriculture. This paper uses a static general equilibrium model to explore the relationships between high transportation costs, low productivity, and the size of the quasi-subsistence sector. We parameterize the model to replicate some key features of the Ugandan data, and we then perform a series of quantitative experiments. Our results suggest that the population in quasi-subsistence agriculture is highly sensitive both to agricultural productivity levels and to transportation costs. The model also suggests positive complementarities between improvements in agricultural productivity and transportation.
    JEL: O1 O11 O13 O41 Q12
    Date: 2010–04
  18. By: Luigi Guiso; Paola Sapienza; Luigi Zingales
    Abstract: This chapter reviews the recent debate about the role of social capital in economics. We argue that all the difficulties this concept has encountered in economics are due to a vague and excessively broad definition. For this reason, we restrict social capital to the set of values and beliefs that help cooperation—which for clarity we label civic capital. We argue that this definition differentiates social capital from human capital and satisfies the properties of the standard notion of capital. We then argue that civic capital can explain why differences in economic performance persist over centuries and discuss how the effect of civic capital can be distinguished empirically from other variables that affect economic performance and its persistence, including institutions and geography.
    JEL: O43
    Date: 2010–03
  19. By: Joshua Aizenman; Menzie D. Chinn; Hiro Ito
    Abstract: Using the “trilemma indexes” developed by Aizenman et al. (2008) that measure the extent of achievement in each of the three policy goals in the trilemma—monetary independence, exchange rate stability, and financial openness—we examine how policy configurations affect macroeconomic performances, with focus on the Asian economies. We find that the three policy choices matter for output volatility and the medium-term level of inflation. Greater monetary independence is associated with lower output volatility while greater exchange rate stability implies greater output volatility, which can be mitigated if a country holds international reserves (IR) at a level higher than a threshold (about 20% of GDP). Greater monetary autonomy is associated with a higher level of inflation while greater exchange rate stability and greater financial openness could lower the inflation rate. We find that trilemma policy configurations and external finances affect output volatility through the investment or trade channel depending on the openness of the economies. While a higher degree of exchange rate stability could stabilize the real exchange rate movement, it could also make investment volatile, though the volatility-enhancing effect of exchange rate stability on investment can be offset by holding higher levels of IR. Our results indicate that policy makers in a more open economy would prefer pursuing greater exchange rate stability while holding a massive amount of IR. Asian emerging market economies are found to be equipped with macroeconomic policy configurations that help the economies to dampen the volatility of the real exchange rate. These economies’ sizeable amount of IR holding appears to enhance the stabilizing effect of the trilemma policy choices, and this may help explain the recent phenomenal buildup of IR in the region.
    JEL: F15 F21 F31 F36 F41 O24
    Date: 2010–04
  20. By: Jeffrey A. Frankel
    Abstract: It is striking how often countries with oil or other natural resource wealth have failed to grow more rapidly than those without. This is the phenomenon known as the Natural Resource Curse. The principle has been borne out in some econometric tests of the determinants of economic performance across a comprehensive sample of countries. This paper considers six aspects of commodity wealth, each of interest in its own right, but each also a channel that some have suggested could lead to sub-standard economic performance. They are: long-term trends in world commodity prices, volatility, crowding out of manufacturing, civil war, poor institutions, and the Dutch Disease. Skeptics have questioned the Natural Resource Curse, pointing to examples of commodity-exporting countries that have done well and arguing that resource endowments and booms are not exogenous. The paper concludes with a consideration of institutions and policies that some commodity-producers have tried, in efforts to overcome the pitfalls of the Curse. Ideas include indexation of oil contracts, hedging of export proceeds, denomination of debt in terms of oil, Chile-style fiscal rules, a monetary target that emphasizes product prices, transparent commodity funds, and lump-sum distribution.
    JEL: O1 Q0
    Date: 2010–03
  21. By: Bekele, Genanew; Mekonnen, Alemu
    Abstract: Land degradation is a major problem undermining land productivity in the highlands of Ethiopia. This study explores the factors that affect farm households’ decisions at the plot level to invest in land conservation and how much to invest, focusing on the roles of poverty, land tenure security, and market access. Unlike most other studies, we used a double-hurdle model in the analysis with panel data collected in a household survey of 6,408 plots in the Amhara region of Ethiopia. The results suggest that the decisions to adopt land conservation investment and how much to invest appear to be explained by different processes. Poverty-related factors seem to have a mixed effect on both the adoption and intensity decisions. While a farmer’s adoption decision is influenced by whether or not the plot is owner-operated (a measure of risk for the immediate period), intensity of conservation is determined by expectation of the certainty of cultivating the land for the next five years (a measure of risk for the longer term), farmer’s belief of land ownership, and distance from plot to home.
    Keywords: Ethiopia, land conservation, poverty, tenure security
    JEL: D1 Q12
    Date: 2010–03–29

This nep-dev issue is ©2010 by Mark Lee. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.