nep-dev New Economics Papers
on Development
Issue of 2010‒04‒17
78 papers chosen by
Mark Lee
Towson University

  1. Economic and Productivity Growth Decomposition: An Application to Post-reform China By Kui-Wai Li; Tung Liu
  2. Can Micro Health Insurance Reduce Poverty? Evidence from Bangladesh By Syed Abdul Hammid; Jennifer Roberts; Paul Mosley
  3. The Global Financial Crisis: An Update on the Effects on Bolivia By Luis Carlos Jemio; Osvaldo Nina
  4. Is Corruption Really Bad for Inequality? Evidence from Latin America By Carlyn Dobson; Antonio Rodríguez
  5. With Exhaustible Resources, Can A Developing Country Escape From The Poverty Trap? By Cuong Le Van; Katheline Schubert; Tu-Anh Nguyen
  6. New Technology, Human Capital and Growth in a Developing Country By Cuong Le Van; Tu-Anh Nguyen; Manh-Hung Nguyen; Thai Bao Luong
  7. Efficiency and Productivity of Microfinance: Incorporating the Role of Subsidies By Ahmad Nawaz
  8. Performance of Microfinance: The Role of Subsidies By Ahmad Nawaz
  9. Reviewing PPP Performance in Developing Economies By Argentino Pessoa
  10. Intergenerational Transmission of Abilities and Self Selection of Mexican Immigrants By Vincenzo Caponi
  11. Female participation in African agricultural research and higher education: New insights By Beintema, Nienke M.; Di Marcantonio, Federica
  12. Short- and long-term effects of the 1998 Bangladesh flood on rural wages By Mueller, Valerie; Quisumbing, Agnes
  13. Agricultural growth and investment options for poverty reduction in Nigeria By Diao, Xinshen; Nwafor, Manson; Alpuerto, Vida; Akramov, Kamiljon; Salau, Sheu
  14. Inter-Industry Wage Differentials: An Increasingly Important Contributor to Urban China Income Inequality By Zhao Chen; Ming Lu; Guanghua Wan
  15. Identity, Inequality, and Happiness: Evidence from Urban China By Shiqing Jiang; Ming Lu; Hiroshi Sato
  16. Role of Governance in Explaining Domestic Investment in Nigeria By Olusegun Ayodele Akanbi
  17. The Composition of Foreign Capital Stocks in South Africa: The Role of Institutions, Domestic Risk and Neighbourhood Effects By Farayi Gwenhamo; Johannes Fedderke
  18. A Note on Remittances in El Salvador and Ecuador: An Analysis of Household Survey Data By Jessica Audrey Clayton; Thierry Warin
  19. Introducing Unemployment Insurance to Developing Countries By Vodopivec, Milan
  20. Explaining Rising Returns to Education in Urban China in the 1990s By Liu, Xuejun; Park, Albert; Zhao, Yaohui
  21. Selection Policy and Immigrants' Remittance Behaviour By Mahuteau, Stéphane; Piracha, Matloob; Tani, Massimiliano
  22. Unvravelling the impact of the global financial crisis on the South African labour market By Sher Verick
  23. The Dynamics of Cooperation in Group Lending - A Microfinance Experiment By Peter Werner
  24. Foreign Aid, Fertility and Population Growth:Evidence from Africa By Leonid V. Azarnert
  25. Time-to-build obsolescence and the technological paradox By Fabrizio Patriarca
  26. Remittances and Investment By Bjuggren, Per-Olof; Dzansi, James; Shukur, Ghazi
  27. Sustainability and organizational design in informal groups, with some evidence from Kenyan Roscas By Anderson, Siwan; Baland, Jean-Marie; Moene, Karl O.
  28. Occupational segregation and gender wage differences: evidence from Urban Colombia By Jairo Gillermo Isaza Castro
  29. Financial liberalisation and industrial development in Malawi By Grant P. Kabango; Alberto Paloni
  30. Growth, History, or Institutions? What Explains State Fragility in Sub-Saharan Africa By Graziella Bertocchi; Andrea Guerzoni
  31. Private Sector Industrialization in China: Evidence from Wenzhou By John Strauss; Dong Liu; Edward Y. Qian; Mehdi Majbouri; Minggao Shen; Qi Sun; Qianfan Ying; Yi Zhu
  32. The short-term impact of higher food prices on poverty in Uganda By Simler, Kenneth R.
  33. The remitting patterns of African migrants in the OECD By Bollard, Albert; McKenzie, David; Morten, Melanie
  34. The offshore services value chain : developing countries and the crisis By Gereffi, Gary; Fernandez-Stark, Karina
  35. Incomplete markets and fertilizer use : evidence from Ethiopia By Zerfu, Daniel; Larson, Donald F.
  36. To what extent are Bangladesh's recent gains in poverty reduction different from the past? By Kotikula, Aphichoke; Narayan, Ambar; Zaman, Hassan
  37. Do labor statistics depend on how and to whom the questions are asked ? results from a survey experiment in Tanzania By Bardasi, Elena; Beegle, Kathleen; Dillon, Andrew; Serneels, Pieter
  38. Skills, exports, and the wages of five million Latin American workers By Brambilla, Irene; Carneiro, Rafael Dix; Lederman, Daniel; Porto, Guido
  39. Development strategies : integrating governance and growth By Levy, Brian; Fukuyama, Francis
  40. Quantitative value chain analysis : an application to Malawi By Tchale, Hardwick; Keyser, John
  41. Aid for trade, infrastructure, and the growth effects of trade reform : issues and implications for Caribbean countries By Moreira, Emmanuel Pinto
  42. The economics of renewable energy expansion in rural Sub-Saharan Africa By Deichmann, Uwe; Meisner, Craig; Murray, Siobhan; Wheeler, David
  43. What are the links between aid volatility and growth ? By Markandya, Anil; Ponczek Vladimir; Yi, Soonhwa
  44. Trade openness reduces growth volatility when countries are well diversified By Haddad, Mona E.; Lim, Jamus Jerome; Saborowski, Christian
  45. Till geography do us part ? prolegomena to an economic and monetary union between the Dominican Republic and Haiti By Moreira, Emmanuel Pinto
  46. New structural economics : a framework for rethinking development By Lin, Justin Yifu
  47. The ethnicity distraction ? political credibility and partisan preferences in Africa By Keefer, Philip
  48. Son Preference, Sex Selection and the Problem of Missing Women in India By Deepankar Basu
  49. Does Trade Liberalization Affect the Composition of Government Spending in Developing Nations? By Michael O. Moore; Maurizio Zanardi
  50. Remittances and Life Cycle Deficits in Latin America By Ricardo Bebczuk; Diego Battistón
  51. Welfare Programs and Labor Supply in Developing Countries. Experimental Evidence from Latin America By María Laura Alzúa; Guillermo Cruces; Laura Ripani
  52. Remittances in Asia: Implications for the Fight against Poverty and the Pursuit of Economic Growth By Vargas-Silva, Carlos; Jha, Shikha; Sugiyarto, Guntur
  53. The Global Crisis and the Impact on Remittances to Developing Asia By Jha, Shikha; Sugiyarto, Guntur; Vargas-Silva, Carlos
  54. Explaining Filipino Households’ Declining Saving Rate By Terada-Hagiwara, Akiko
  55. Public Goods Access and Juvenile Sex Ratios in Rural India: Evidence from the 1991 and 2001 Village Census Data By B. Deolalikar, Anil; Hasan, Rana; Somanathan, Rohini
  56. How Has Asia Fared in the Global Crisis? A Tale of Three Countries: Republic of Korea, Philippines, and Thailand By H. Son, Hyun; A. San Andres, Emmanuel
  57. Informal Employment in Indonesia By Cuevas, Sining; Mina, Christian; Barcenas, Marissa; Rosario, Aleli
  58. Poverty Impact of the Economic Slowdown in Developing Asia: Some Scenarios By Hasan, Rana; Magsombol, Maria Rhoda; Cain, J. Salcedo
  59. Financial Sector Development, Economic Growth, and Poverty Reduction: A Literature Review By Zhuang, Juzhong; Gunatilake, Herath; Niimi, Yoko; Ehsan Khan, Muhammad; Jiang, Yi; Hasan, Rana; Khor, Niny; S. Lagman-Martin, Anneli; Bracey, Pamela; Huang, Biao
  60. Equity in Health and Health Care in the Philippines By Son, Hyun
  61. Fiscal Decentralization, Fiscal Incentives, and Pro-Poor Outcomes: Evidence from Viet Nam By Bjornestad, Liv
  62. Determinants of Structural Changes of Food Exports from Developing Countries By Jongwanich, Juthathip; Magtibay-Ramos, Nedelyn
  63. Gender Equality and Inclusive Growth in Developing Asia By Niimi, Yoko
  64. Saving in Asia: Issues for Rebalancing Growth By Jha, Shikha; Prasad, Eswar; Terada-Hagiwara, Akiko
  65. Saving, Investment, and Current Account Surplus in Developing Asia By Park, Donghyun; Shin, Kwanho
  66. Purchasing Power Parity and the European Single Currency: Some New Evidence By Maria Christidou; Theodore Panagiotidis
  67. On the Role of Productivity and Factor Accumulation in Economic Development in Latin America and the Caribbean By Christian Daude; Eduardo Fernandez-Arias
  68. The Political Economy of Productivity. The Case of Chile By Cristobal Aninat; Jose Miguel Benavente; Ignacio Briones; Nicolas Eyzaguirre; Patricio Navia; Jocelyn Olivari
  69. The Political Economy of Fiscal Reform in Brazil: The Rationale for the Suboptimal Equilibrum By Marcus Melo; Carlos Pereira; Saulo Souza
  70. Migration, violence and welfare programmes in rural Colombia By Alice Mesnard
  71. Remittances and competitiveness: the case of the Philippines By Veronica Bayangos; Karel Jansen
  72. Child labor, agricultural shocks and labor sharing in rural Ethiopia By Zelalem Yilma Debebe
  73. An assessment of the effects of the 2002 food crisis on children's health in Malawi By Renate Hartwig; Michael Grimm
  74. Evaluating India's national rural employment guarantee scheme: the case of Birbhum districts, West Bengal By Subhasish Dey
  75. Vulnerability and Coping to Disasters: A Study of Household Behaviour in Flood Prone Region of India By Patnaik, Unmesh; Narayanan, K
  76. Female Employment and Fertility in Rural China By Hai Fang; Karen N. Eggleston; John A. Rizzo; Richard J. Zeckhauser
  77. Understanding the mechanisms of economic development By Angus S. Deaton
  78. Quantifying the Impact of Financial Development on Economic Development By Jeremy Greenwood; Juan M. Sanchez; Cheng Wang

  1. By: Kui-Wai Li (City University of Hong Kong, Hong Kong SAR); Tung Liu (Department of Economics, Ball State University)
    Abstract: This paper examines and applies the theoretical foundation of the decomposition of economic and productivity growth to the thirty provinces in China’s post-reform economy. The four attributes of economic growth are input growth, adjusted scale effect, technical progress, and efficiency growth. A stochastic frontier model with a translog production and incorporated with human capital is used to estimate the growth attributes in China. The empirical results show that input growth is the major contributor to economic growth and human capital is inadequate even though it has a positive and significant effect on growth. Technical progress is the main contributor to productivity growth and the scale effect has become important in recent years. The impact of technical inefficiency is statistical insignificant in the sample period. The relevant policy implication for a sustainable post-reform China economy is the need to promote human capital accumulation and improvement in technical efficiency.
    Keywords: technical progress, technical efficiency, economies of scale, human capital, China economy
    JEL: C2 D24 O4 O53
    Date: 2009–09
  2. By: Syed Abdul Hammid (Department of Economics, The University of Sheffield); Jennifer Roberts (Department of Economics, The University of Sheffield Author-Person=pro228); Paul Mosley (Department of Economics, The University of Sheffield)
    Abstract: This paper examines the impact of micro health insurance on poverty reduction in rural areas of Bangladesh. The research is based on household level primary data collected from the operating areas of the Grameen Bank during 2006. A number of outcome measures relating to poverty status are considered; these include household income, stability of household income via food sufficiency and ownership of non-land assets, and also the probability of being above or below the poverty line. The results show that micro health insurance has a positive association with all of these indicators, and this is statistically significant and quantitatively important for food sufficiency.
    Keywords: Microcredit, Micro Health Insurance, Poverty, Grameen Bank
    JEL: O12
    Date: 2010–01
  3. By: Luis Carlos Jemio (Institute for Advanced Development Studies); Osvaldo Nina (Institute for Advanced Development Studies)
    Abstract: The global financial crisis (GFC) has had a negative effect on the Bolivian economy. The outbreak of the GFC has caused a drop in export commodity prices such as mining and hydrocarbons, and a reduction in remittances. Bolivia however, was in a relatively good position to deal with the negative effects of the GFC. The country has experienced in recent years an important commodity price boom, which significantly increased external revenues, public and private incomes and consumption levels. Although the GFC has had a mild effect on the Bolivian economy so far, there are important structural factors that could put at risk the long term sustainability of policies and of the macroeconomic equilibriums. Among these factors are: i) a low investment rates, which could risk growth prospects and employment creation; ii) a large dependency of Bolivia fiscal sector on the hydrocarbon rent, which makes the long term sustainability of macroeconomic policies and of the current economic situation questionable; iii) the lack of a favourable investment climate required to increase growth and employment, which depends among other factors of the rule of law, property rights, judicial security, clearer and more stable rules of the game, macroeconomic stability, etc. iv) lack of a clearer strategy in relation to the country external insertion is also necessary. Access to larger markets, with higher incomes and purchasing power, is necessary to promote sustainable growth and employment creation, and to reduce the vulnerability of the Bolivian economy to shocks. Trade agreements with the USA, European Union and other regions of the world are necessary to promote investment, growth and employment creation.
    Keywords: Financial crisis, Bolivia
  4. By: Carlyn Dobson (Nothingam Business School); Antonio Rodríguez (School of Public Health, Department of Health Services Research, University of Aarhus)
    Abstract: This paper presents new evidence on the relationship between corruption and income inequality. Using a panel data methodology, we find that lower corruption is associated with higher income inequality in Latin America. This result is in contrast to other empirical studies but it makes sense in Latin America for a number of reasons. The finding of an inverse relationship between inequality and corruption suggests that institutional reform policies by themselves may be misguided.
    Keywords: Corruption, Inequality, Latin America
    JEL: D73 O15 O43
    Date: 2010–03
  5. By: Cuong Le Van (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, University of Exeter Business School - University of Exeter Business School); Katheline Schubert (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Tu-Anh Nguyen (Central Insitute of Economic Management - Central Insitute of Economic Management)
    Abstract: This paper studies the optimal growth of a developing non-renewable natural resource producer. It extracts the resource from its soil, and produces a single consumption good with man-made capital. More- over, it can sell the extracted resource abroad and use the revenues to buy an imported good, which is a perfect substitute of the domes- tic consumption good. The domestic technology is convex-concave, so that the economy may be locked into a poverty trap. We show that the extent to which the country will escape from the poverty trap depends, besides the interactions between its technology and its impatience, on the characteristics of the resource revenue function, on the level of its initial stock of capital, and on the abundance of the natural resource.
    Keywords: optimal growth, non-renewable resource, convex-concave technology, poverty trap, resource curse.
    Date: 2010
  6. By: Cuong Le Van (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, University of Exeter Business School - University of Exeter Business School); Tu-Anh Nguyen (Central Insitute of Economic Management - Central Insitute of Economic Management); Manh-Hung Nguyen (LERNA - INRA); Thai Bao Luong (National Economics University - National Economics University)
    Abstract: In a developing country with three sectors: consumption goods, new tech- nology, and education, the productivity of the consumption goods depends on a new technology and skilled labor used to produce this new technol- ogy. There can be three stages of economic growth. In the …rst stage the country concentrates on the production of consumption goods; in the second the country must import both physical capital and new technology capital to produce consumption goods and new technology; in the third the country must import capital and invest in the training and education of high skilled labor.
    Keywords: Optimal growth model; New technology capital; Human Capital; Developing country.
    Date: 2010
  7. By: Ahmad Nawaz (Pakistan Institute of Development Economics.)
    Abstract: The social nature of MFIs is mainly financed by subsidies from donors. Therefore, the role of subsidies cannot be under estimated in MFIs efficiency and productivity analysis. This paper is a first attempt to measure the financial efficiency and productivity of Microfinance Institutions (MFIs) worldwide taking into account the subsidies received by MFIs by using the non-parametric Data Envelopment Analysis (DEA). Towards this aim, a three-stage analysis is carried out. Firstly, technical and pure efficiency scores are calculated by splitting subsidies into input and output and entered into the DEA framework specifications depending on whether they are generating benifits (negative subsidies) or cost (positive subsidies) to the society. Secondly DEA-based Malmquist indices are calculated to analyze the intertemporal productivity change. Thirdly, Tobit Regression analysis are carried out to test a series of hypotheses concerning the relationship between financial efficiency and other indicators related to MFIs productivity, organization, outreach, sustainability and social impact. Overall subsidies contribute to financial efficiency of MFIs albeit marginally. Results uphold the tradeoff between outreach to the poor and financial efficiency. Thus MFIs which cater to the poor tend to bemore inefficient than those with clients relatively well off. Also evident is the fact that lending to women is efficient only in the presence of subsidies. MFIs in South Asia and Middle East & North Africa tend to be less efficient than the others.
    Keywords: Microfinance, Subsidies, Efficiency, Non-paprametric analysis
    JEL: G21 H2 H21 C14
    Date: 2010–02
  8. By: Ahmad Nawaz (Pakistan Institute of Development Economics.)
    Abstract: Unlike conventional finance institutions, Microfinance institutions (MFIs) strive for financial sustainability but also empowerment of the poor. This social nature of MFIs is mainly financed by subsidies from donors. This paper measures the extent of subsidization in MF sector for the years 2005 and 2006 using Yaron’s Subsidy Dependence Index (SDI) which measures the social cost of subsidized MFIs in a short time frame. This latest data set has been generated from the audit reports of the 204 MFIs with 23 million borrowers in 54 Countries worldwide constituting a significant part of the microfinance outreach worldwide. Based on our subsidy calculations, for the year 2005, 153 MFIs out of 204 are subsidy dependent while for year 2006 it is 122 out of 179 MFIs. A with & without subsidy analysis of conventional financial ratios confirm the fact that MFIs financial performance declines substantially with-out subsidies. Based on the evidence, the paper also highlights the factors which contribute and dec rease the sustainability of microfinance
    Keywords: Microfinance institutions, Subsidies, Sustainability
    JEL: G21 H2 D02
    Date: 2010–02
  9. By: Argentino Pessoa (Faculdade de Economia, Universidade do Porto)
    Abstract: The current wave of PPPs in developing economies was not determined by an endogenous process; on the contrary, it was due to a coincidence of interests between international organizations that shared the view of the Washington Consensus and a set of countries that have considered divestiture the best way to alleviate the public deficit constraints. After the euphoria of the middle 1990s, some disenchantment about the capacity of PPI policy to overcome the existent big gaps between high-income countries and developing economies appeared. Although a high interconnection between foreign companies and domestic firms has resulted from PPI policy, and this interrelationship has allowed an expansion and upgrading of some domestic firms in developing economies; these economies go on being characterized by a lack of institutional capacity, weak governance systems, and unclear or unsuitable rules and regulations, all of which increase transaction costs and risks, making PPI arrangements more ineffective in practice than in theory. In the meanwhile, poor people in poorer countries caught in poverty traps need to be served and the rationale underling the PPI approach cannot give a positive answer to these people. Here, the government and the ODA must play a more extensive role than they have played since the emergence of the PPP fashion.
    Keywords: Developing economies, infrastructure, PPI, public-private partnership
    JEL: H41 H42 L33 O12
    Date: 2010–02
  10. By: Vincenzo Caponi (Department of Economics, Ryerson University, Toronto, Canada)
    Abstract: This paper presents an intergenerational self selection model of migration and education that is capable of explaining the evolution of earnings and education across three generations of immigrants. By structurally estimating the model it is possible to quantify the human capital level of Mexicans in light of the self-sacrifice made by the first generation of Mexican immigrants. The results suggest that there is a significant one time loss of human capital faced by immigrants upon migration that is not transmitted to their children. Also parents with larger amounts of human capital tend to migrate more and tend to choose to remain high school educated. However, given the better educational opportunities offered in the US, they migrate with the expectation of their children becoming college educated. Therefore, measures that rely on the earnings performance and educational attainment of immigrants underestimate the amount of human capital they bring into the host country.
    Keywords: International Migration; Mexico.
    JEL: F22 J24 J61
    Date: 2009–10
  11. By: Beintema, Nienke M.; Di Marcantonio, Federica
    Abstract: Female farmers play a vital role in African agriculture, accounting for the majority of the agricultural workforce. However, agricultural research and higher education are disproportionately led by men. There is an urgent need for greater representation of women in the field of agricultural science and technology (S&T) in Sub-Saharan Africa. Female scientists, professors, and senior managers offer different insights and perspectives to help research institutes to more fully address the unique and pressing challenges of both female and male farmers in the region. Gender-disaggregated data on S&T capacity are scarce, often lack sufficient detail, and focus more generally on S&T rather than on agriculture specifically. Data are not always comparable due to different methodologies and coverage. The Agricultural Science and Technology Indicators (ASTI) initiative and the CGIAR Gender & Diversity (G&D) Program partnered together to address this information gap. This report presents the results of an in-depth benchmarking survey on gender-disaggregated capacity indicators, covering 125 agricultural research and higher education agencies in 15 countries in Sub-Saharan Africa. This is the first study of its kind to present detailed human resources data on female participation in agricultural science, the main findings of which include the following: • Total capacity in terms of the professional staff employed at the agricultural research and higher education agencies included in this study increased by 20 percent between 2000/01 and 2007/08, and women constituted almost half of this capacity increase. The female population of professional staff grew by eight percent per year on average, which is four times higher than the comparable rate of increase for the male population, indicating that the gender gap in African agricultural sciences is closing. • The proportion of female professional staff employed at the sample agricultural research and higher education agencies increased from 18 percent in 2000/01 to 24 percent in 2007/08, but fewer women have advanced degrees compared to their male colleagues. In 2007/08, for example, 27 percent of the sample’s professional women held PhD degrees compared with 37 percent of the sample’s professional men. • Of concern, about two-thirds of the overall (female and male) capacity increase comprised staff holding only BSc degrees, indicating that the overall quality of capacity in agricultural research and higher education is declining in some Sub-Saharan African countries. Notably, the total number of male professional staff trained to the MSc level declined between 2000/01 and 2007/08; however, more in-depth analysis is needed to explain the underlying causes of these shifts and to what degree they represent structural changes. • Levels of female participation in agricultural research and higher education among the sample agencies were particularly low in Ethiopia (6 percent), Togo (9 percent), Niger (10 percent), and Burkina Faso (12 percent). Shares of female professional staff were much higher in South Africa, Mozambique, and Botswana (32, 35, and 41 percent, respectively). • The female share of students enrolled in higher agricultural education was higher than the female shares of professional staff employed at the agricultural research and higher education agencies in most cases, but a significant proportion of the female students concerned were undertaking only BSc-level studies (83 percent). • Only 14 percent of the management positions were held by women, which is considerably lower than the share of female professional staff employed at the sample’s agricultural research and higher education agencies (24 percent). • The pool of female staff is much younger on average than the pool of male staff. • The prevalence of female professional staff is comparatively higher in fields related to life and social sciences, and comparatively lower in fields involving areas traditionally thought of as “hard science”, such as engineering.
    Keywords: agricultural R&D, Sub-Saharan Africa, female participation, S&T capacity, agricultural higher education,
    Date: 2010
  12. By: Mueller, Valerie; Quisumbing, Agnes
    Abstract: Natural disasters have particularly devastating impacts on economic growth in developing countries because they impede the accumulation of capital. The resilience of labor markets is crucial especially for the poor who rely only on labor to diversify their income portfolio and buffer against risk. Such a risk management strategy may become more challenging as global climate change increases the frequency of natural disasters. We use the Bangladesh Flood Impact panel household survey to evaluate how the 1998 “flood of the century” affected wages in Bangladesh. We find long-term declines in wages where nonagricultural labor markets are more severely affected. We also evaluate how soil quality and proximity to auxiliary labor markets cushion labor markets against the disaster. The most compelling evidence shows that workers in areas further from centers of economic activity are more vulnerable to flood-induced wage losses. Our findings suggest that future emergency relief and climate change programs should consider the protection of labor markets by improving infrastructure to facilitate job searches in alternative locations or reduce migration costs.
    Keywords: accumulation of capital, Climate change, Disasters, economic growth, flood, labor markets, migration costs, Risk management, Soil quality, Wages,
    Date: 2010
  13. By: Diao, Xinshen; Nwafor, Manson; Alpuerto, Vida; Akramov, Kamiljon; Salau, Sheu
    Abstract: This study uses an economy-wide, dynamic computable general equilibrium (DCGE) model to analyze the ability of growth in various agricultural subsectors to accelerate overall economic growth and reduce poverty in Nigeria over the next years (2009-17). In addition, econometric methods are used to assess growth requirements in agricultural public spending and the relationship between public services and farmers’ use of modern technology. The DCGE model results show that if certain agricultural subsectors can reach the growth targets set by the Nigerian government, the country will see 9.5 percent annual growth in agriculture and 8.0 percent growth of GDP over the next years. The national poverty rate will fall to 30.8 percent by 2017, more than halving the 1996 poverty rate of 65.6 percent and thereby accomplishing the first Millennium Development Goal (MDG1). This report emphasizes that in designing an agricultural strategy and prioritizing growth, it is important to consider the following four factors at the subsectoral level: (i) the size of a given subsector in the economy; (ii) the growth-multiplier effects occurring through linkages of the subsector with the rest of the economy; (iii) the subsector-led poverty reduction-growth elasticity; and (iv) the market opportunities and price effects for individual agricultural products. In analyzing the public investments that would be required to support a 9.5 percent annual growth in agriculture, this study first estimates the growth elasticity of public investments using historical spending and agricultural total factor productivity (TFP) growth data. The results show that a 1 percent increase in agricultural spending is associated with a 0.24 percent annual increase in agricultural TFP. With such low elasticity, agricultural investments must grow at 23.8 percent annually to support a 9.5 percent increase in agriculture. However, if the spending efficiency can be improved by 70 percent, the required agricultural investment growth becomes 13.6 percent per year. The study also finds that investments outside agriculture benefit growth in the agricultural sector. Thus, assessments of required growth in agricultural spending should include the indirect effects of nonagricultural investments and emphasize the importance of improving the efficiency of agricultural investments. To further show that efficiency in agricultural spending is critically important to agricultural growth, this study utilizes household-level data to empirically show that access to agricultural services has a significantly positive effect on the use of modern agricultural inputs.
    Keywords: Agricultural growth, agricultural investments, agricultural services, Development strategies, Dynamic Computable General Equilibrium (DCGE), low elasticity, market opportunities, Millennium Development Goals (MDG), modern agricultural inputs, nonagricultural investments, Poverty reduction, Public investments, Total factor productivity (TFP),
    Date: 2010
  14. By: Zhao Chen; Ming Lu; Guanghua Wan
    Abstract: How significantly inter-industry wage differentials contribute to rising income inequality is an essential policy issue for transitional economies. Using regression-based inequality decomposition, this paper finds that inter-industrial wage differentials contributed increasingly to income inequality in urban China through 1988, 1995, and 2002, mainly due to rapid income growth in monopolistic industries. Factors such as region, education, ownership, occupation, and holding a second job also contribute increasingly to income inequality, while being employed the whole year and age have decreasing contributions. If China seeks to reduce urban income inequality, removing entry barriers in the labor market and breaking monopoly power in the goods market are essential policy prescriptions.
    Keywords: Inter-industry wage differntials, Income ineqality, Regression-based decomposition
    Date: 2010–03
  15. By: Shiqing Jiang; Ming Lu; Hiroshi Sato
    Abstract: This paper presents the impact of income inequality on the subjective wellbeing of three different social groups in urban China. We classify urban social groups according to their hukou status: rural migrants, gbornh urban residents, and gacquiredh urban residents who had changed their hukou identity from rural to urban. We focus on how the income disparity between migrants and urban residents affects individual happiness. The main results are as follows. People feel unhappy if inequality is related to their hukou identity, irrespective of whether they are urban residents with or without hukou. However, when identity-related inequality and other individual- and city-level characteristics are controlled, inequality measured by city-level Gini increases happiness. We also find that among urban residents who own hukou, mostly the gacquiredh urban residents are unhappy with hukou-related inequality. This implies that identity is formed by both policy and personal experience. gBornh urban residents have lower happiness scores when they are old. Communist Party members strongly dislike the identity-related inequality.
    Keywords: Inequality, Hukou identity, Happiness, Migration, Social integration
    JEL: I31 O15 R23
    Date: 2010–03
  16. By: Olusegun Ayodele Akanbi
    Abstract: This study empirically examines the pattern of domestic investment that is consistent with a neoclassical supply-side model of the Nigerian economy. The estimations are carried out with time-series data from 1970 to 2006 using the Johansen estimation techniques. The results conform to the findings of existing literature that real output, user cost of capital, and the level of financial development are significant determinants of domestic investment in Nigeria. The distinctive feature of the study is the significant role played by governance in explaining the long-term pattern of domestic investment in Nigeria. The results from the long-run estimation and the impulse responses revealed that a well-structured and stable socio-economic environment will boost domestic investment over the long run. Therefore, in modelling domestic investment for Nigeria, it is imperative to incorporate the significant role played by governance.
    Keywords: Investment; Governance; Nigeria
    JEL: E22 E21 G39
    Date: 2010
  17. By: Farayi Gwenhamo; Johannes Fedderke
    Abstract: This paper investigates the determinants of the absolute volumes and composition of foreign capital stocks in South Africa, focusing on the role played by institutional quality (property rights), domestic risk and neighbourhood effects as potential determinants. The empirical findings show that secure property rights and low risk in the host country positively affect the absolute volumes of both long-term and short-term foreign capital, but tilt the composition of foreign capital in favour of long-term foreign capital. The empirical results also demonstrate the existence of neighbourhood effects where the institutional environment in Zimbabwe has a significant impact on South Africa's foreign capital in.ows. It is shown that weak property rights in Zimbabwe lead to an increase in South Africa's foreign direct investment (FDI), but a reduction in South Africa's portfolio investment. This suggests that Zimbabwe and South Africa compete for foreign direct investment in similar sectors, and present two alternative investment destinations to foreign investors. As such, when property rights in Zimbabwe worsen, FDI appears to switch to South Africa as an alternative. By contrast, poor property rights in Zimbabwe appear to raise the perceived risk for portfolio investment in South Africa.
    Keywords: Foreign capital stocks, Composition, FDI, Portfolio Investment and South Africa
    JEL: F21
    Date: 2010
  18. By: Jessica Audrey Clayton; Thierry Warin
    Abstract: This study analyzes the impact of remittances as seen in household survey data from three small rural communities. OLS and multivariate anova regressions were used to analyze household survey data collected in Cumbe and Gualaceo (Ecuador) and in Ciudad Romero (El Salvador). The results contradict the findings of some studies concluding that in many countries remittances acted as “compensation for poor economic performance” rather than capital promoting economic development. <P>Ce papier a pour objectif de proposer une étude de cas sur l’impact des transferts de fonds individuels des émigrés vers leur village d’origine. L’étude repose sur des données collectées dans le cadre d’entretiens individuels réalisés dans trois villages : Cumbe et Gualaceo (Equateur) et Ciudad Romero (El Salvador). Les résultats contredisent, dans le cadre de ces villages, certaines études précédentes qui concluaient en l’absence d’impacts de long-terme des fonds transférés. En utilisant un modèle simple fondé sur la méthode des moindres carrés ordinaires complété par une analyse de variance multi-variée, cette étude montre un impact positif des transferts de fonds sur l’investissement, en plus d’être un soutien financier pour les produits de première nécessité.
    Keywords: remittances, Latin America, development, human capital, foreign aid , transferts de fonds, Amérique latine, développement économique, capital humain, aide internationale
    JEL: F22 F24 I32 R23 R51
    Date: 2010–03–01
  19. By: Vodopivec, Milan (World Bank)
    Abstract: The paper identifies key labor market and institutional differences between developed and developing countries, analyzes how these differences affect the working of the standard, OECD-style unemployment insurance (UI) program, and derives a desirable design of unemployment benefit program in developing countries. It argues that these countries – faced by large informal sector, weak administrative capacity, large political risk, and environment prone to corruption – should tailor the OECD-style UI program to suit their circumstances. To minimize employment disincentives, to ensure affordability, and to minimize administration cots, such adaptations include: (i) relying on self-insurance (via unemployment insurance savings accounts – UISAs) as a main source of financing and complementing it by solidarity funding; (ii) simplifying monitoring of job-search behavior and labor market status, and even eliminating personal monitoring of continuing eligibility requirements in the early phases; (iii) keeping modest benefits both in terms of the replacement rate and potential benefit duration; (iv) drawing on employers’ and workers’ contributions as sources of financing; and (v) piggybacking on existing networks to administer benefits. Particularly attractive is the UISAs-cum-borrowing version that uses pension wealth as collateral, making the system proof to moral hazard and strategic behavior, and allowing it to be rapidly deployed, such as in response to the currently emerging global economic crises.
    Keywords: unemployment, unemployment insurance, unemployment insurance savings accounts
    JEL: J65 J68
    Date: 2009–04
  20. By: Liu, Xuejun (Beijing Normal University); Park, Albert (University of Oxford); Zhao, Yaohui (Peking University)
    Abstract: Although theory predicts that international trade will decrease the relative demand for skilled workers in relatively skill-deficit countries, in recent decades many developing countries have experienced rising wage premiums for skilled workers. We examines this puzzle by quantifying the relative importance of different supply and demand factors in explaining the rapid increase in the returns to education experienced by China during the 1990s. Analyzing Chinese urban household survey and census data for six provinces, we find that although changes in the structure of demand did reduce the demand for skilled workers, consistent with trade theory, the magnitude of the effect was modest and more than offset by institutional reforms and technological changes that increased the relative demand for skill.
    Keywords: education, earnings, inequality, China
    JEL: F16 J24 J31 P23
    Date: 2010–04
  21. By: Mahuteau, Stéphane (Macquarie University, Sydney); Piracha, Matloob (University of Kent); Tani, Massimiliano (Macquarie University, Sydney)
    Abstract: This paper analyses the impact of a change in Australia's immigration policy, introduced in the mid-1990s, on migrants' remittance behaviour. More precisely, we compare the remittance behaviour of two cohorts who entered Australia before and after the policy change, which consists of stricter entry requirements. The results indicate that those who entered under more stringent conditions – the second cohort – have a lower probability to remit but, if remitting, they tend to remit, on average, a higher amount than those in the first cohort. We also find significant time and region effects. Contrary to some existing evidence, time spent in Australia positively affects the probability to remit while in terms of regional effects, South Asians remit the highest amount. We discuss intuitions for the results in the paper.
    Keywords: remittances, immigration, selection policy
    JEL: F22 F24 J61
    Date: 2010–04
  22. By: Sher Verick (International Labour Office, Economic and Labour Market Analysis Department)
    Abstract: The global financial crisis of 2008-2009 has deeply impacted South Africa due to its financial and trade links with the rest of the world. As a consequence, Africa’s largest economy fell into recession late in 2008. Although almost 900,000 jobs have since been lost, the results presented in this paper show that the contraction did not initially translate into a surge in official unemployment. Rather, the main effect of the downturn in South Africa has been a rise in the number of discouraged individuals, from 1.08 million in the second quarter of 2008 to 1.63 million in the third quarter of 2009. Drawing on the micro estimates, discouragement has increased more for vulnerable segments of the population, namely, uneducated black South Africans (especially males). The findings presented in this paper highlight the need to look at the impact of the crisis on all labour force states, not just unemployment, and of analysing the role of socio-economic characteristics in driving vulnerability in the labour market using micro-data. Though the economy has now registered positive growth in the third quarter of 2009, South African policymakers are still confronted with the challenge of formulating and implementing policies that encourage job search and self-employment among the low-skilled. Over the longer term, education and training for the low-skilled and an appropriate industrial policy should remain key priorities for the Government of South Africa.
    Keywords: labour market / employment status / economic recession / South Africa
    Date: 2010
  23. By: Peter Werner
    Abstract: We investigate the dynamics of borrower behavior in a microfinance experiment in which subjects are jointly responsible for credit repayment. Although cooperation levels are generally high, moral hazard problems persist among borrowers. Moreover, the path dependency of decisions mitigates the insurance effect of joint liability. We compare two conversion mechanisms from joint to individual liability. First, an active choice of the joint liability contract does not systematically increase cooperation. Second, conversion based on repayment success tends to have a detrimental impact on cooperation among the remaining joint liability borrowers.
    Keywords: microfinance, group lending, individual lending, social preferences
    JEL: O16 G21 C92 H41
    Date: 2010–03–11
  24. By: Leonid V. Azarnert (Bar Ilan University)
    Abstract: This article investigates the relationship between foreign aid and population growth in sub-Saharan Africa. The work considers population growth rate and a directly related to fertility demographic indicator – total fertility rate. Using a panel of 43 African countries over the last four decades of the 20th century, it demonstrates the positive association between foreign aid and population growth and suggests that foreign aid affects population growth primarily through its effect on fertility. These findings suggest that the appreciation of the demographic effect of foreign aid can have important implications for the design of policies regarding to foreign aid for presently developing countries, particularly in sub-Saharan Africa.
    Keywords: Foreign aid, Fertility, Population growth
    JEL: F35 J11 O11
    Date: 2009–04
  25. By: Fabrizio Patriarca (Department of Economics, Sapienza University of Rome)
    Abstract: The paper focusses on the technological paradox. To analyze the possible temporary negative eect of an innovation, we make use of a ow representation of production. Our aim is to show that such phenomenon can be justied by a simple property of the production process: in real time costs strictly come before proceeds.Moving in the same direction of Amendola (1974), we analyze the obsolescence effect induced by a rise in the interest rate. Furthermore, we analyze the role of capital market stickiness on the timing of the technological paradox and on the distribution of the obsolescence eect among the different stages of a vertical integrated production system.
    Keywords: Technological paradox, technology adoption, time-to-build, obsolescence.
    JEL: O3
    Date: 2010
  26. By: Bjuggren, Per-Olof (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Dzansi, James (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Shukur, Ghazi (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper studies the impact of remittances on investment. Workers’ remittances to developing countries have grown to be an important source of financing, amounting to around $300 billion a year. The funds are used for both consumption and investment in the home countries of the migrants. The importance of financial and institutional framework in the receiving countries and how they interact with remittances is stressed. Data on remittance flow to 79 developing countries during 1995-2005 is used. Dynamic panel data approach is applied for this purpose. The results reveal that remittances, high quality institutional framework and well developed credit market increase investment. However, it is also found that the marginal importance of remittances as a financial source for investment decreases with improved institutional framework and a more developed credit market.
    Keywords: Remittances; Investment; Institutions; Financial Development; Dynamic Panel Data
    JEL: C23 E22 F24 G21 I38 O16 O17
    Date: 2010–02–11
  27. By: Anderson, Siwan (Department of Economics, University of British Columbia); Baland, Jean-Marie (CRED, University of Namur); Moene, Karl O. (Dept. of Economics, University of Oslo)
    Abstract: Informal groups cannot rely on external enforcement to insure that members abide by their obligations. It is generally assumed that these problems are solved by "social sanctions" and reputational effects. The present paper focuses on roscas, one of the most commonly found informal financial institutions in the developing world. We first show that, in the absence of an external (social) sanctioning mechanism, roscas are never sustainable, even if the defecting member is excluded from all future roscas. We then argue that the organizational structure of the rosca itself can be designed so as to reduce the severity of enforcement issues. The implications of our analysis are tested against first-hand evidence from rosca groups in a Kenyan slum.
    Keywords: Roscas; informal financial institutions; developing world
    JEL: G20
    Date: 2010–02–05
  28. By: Jairo Gillermo Isaza Castro
    Abstract: This paper assesses the effects of occupational segregation on the gender wage gap in urban Colombia between 1986 and 2000. The empirical methodology involves a two-step procedure whereby the occupational distributions of workers by gender are modelled using a multinomial logit model in the first stage. In the second stage, the multinomial logit estimates are used not only to derive a counterfactual occupational distribution of women in the absence of workplace discrimination but also to correct for selectivity bias in the wage equations for each occupational category using the procedure suggested by Lee (1983). Besides the explained and unexplained components in conventional decompositions of the gender wage gap, this methodology differentiates between the justified and unjustified effects of the gender allocation of workers across occupational categories. The results for urban Colombia indicate that controlling for selectivity bias at the occupational category level is found to be relevant in all years reviewed in this study. They also suggest that a changing composition of the female labour supply in terms of unobservables (i.e., ability and motivation) is playing a role in the dramatic reduction of the observed wage gap.
    Date: 2010–04–09
  29. By: Grant P. Kabango; Alberto Paloni
    Abstract: It has been suggested that financial liberalisation may be a key policy to promote industrialisation as it removes the credit access constraint on firms, especially small and medium ones. We investigate the effect of credit expansion in the wake of liberalisation on the structure of the industrial sectors in Malawi and find that, in contrast to the hypothesis above, it resulted in an increase in industrial concentration and a decrease in net firm entry, especially in sectors that are more finance dependent. The case of Malawi is interesting because financial liberalisation has been justified precisely as a means for industrial development and because the implementation of the policy has been regarded as relatively successful.
    JEL: O16 O55 G20
    Date: 2010–03
  30. By: Graziella Bertocchi; Andrea Guerzoni
    Abstract: We explore the determinants of state fragility in sub-Saharan Africa. Controlling for a wide range of economic, demographic, geographic and istitutional regressors, we find that institutions, and in particular the civil liberties index and the number of revolutions, are the main determinants of fragility, even taking into account their potential endogeneity. Economic factors such as income growth and investment display a non robust impact after controlling for omitted variables and reverse causality. Colonial variables reflecting the history of the region display a marginal impact on fragility once institutions are accounted for.
    Keywords: State fragility, Africa, institutions, colonial history
    JEL: O43 H11 N17
    Date: 2010–03
  31. By: John Strauss; Dong Liu; Edward Y. Qian; Mehdi Majbouri; Minggao Shen; Qi Sun; Qianfan Ying; Yi Zhu
    Abstract: The purpose of this study to help shed light on the entrepreneurship, entrepreneurs and enterprise growth in Wenzhou. The study is done by relying on a probabilistic firm survey that we carried out in Wenzhou in early 2006 for three industries: shoes, eyeglasses and general equipment. Not a field-based formal survey, but also informal questions which helps us to enrich the story. The survey was focused on getting detailed firm histories to learn about how the firms started and grew. The study was done by focusing on the origins of the firms, including prior firms that may have been antecedents. Information was collected on whom the founders were, how many, their relationships with each other, and their background in terms of experience and other human capital. Detailed information was collected on how they financed their start, and how they financed their expansion. Detailed information on the sources of technology into the firms, particularly whether it was Chinese or imported and whether the firms were getting technical instructions from foreign firms they may have been exporting to. Detailed information on markets, especially how markets and how export markets were found. Information was also collected about explicit assistance that came from governments, local and/or central. Workers at each firm: managers, skilled workers such as designers, and production workers were interviewed.
    Keywords: industrialization, workers, technology, firms, local resources, pro-capitalist, infrastructure,industrialization, entrepreneurship, entrepreneurs, growth, Wenzhou, china, firm survey, survey, china,
    Date: 2010
  32. By: Simler, Kenneth R.
    Abstract: World prices for staple foods increased between 2006 and 2008, and accelerated sharply in 2008. Initial analysis indicated that the adverse effects of higher food prices in Uganda were likely to be small because of the diversity of its staple foods, high level of food self-sufficiency, and weak links with world markets. This paper extends the previous analyses, disaggregating by regions and individual food items, using more recent price data, and estimating the impact on consumption poverty. The analysis finds that poor households in Uganda tend to be net buyers of food staples, and therefore suffer welfare losses when food prices increase. This is most pronounced in urban areas, but holds true for most rural households as well. The diversity of staple foods has not been an effective buffer because of price increases across a range of staple foods. The paper estimates that both the incidence and depth of poverty have increased -- at least in the short run -- as a result of higher food prices in 2008, increasing by 2.6 and 2.2 percentage points, respectively. The increase in poverty is highest in the Northern region, which is already the poorest in Uganda. The need for mitigating social protection measures appears to be greater than previously recognized. Not only are the negative impacts larger, but they are also much more widespread geographically. This suggests the need for continued close monitoring of the situation, including monitoring the adequacy of existing safety nets and feeding programs.
    Keywords: Food&Beverage Industry,Rural Poverty Reduction,Regional Economic Development,Markets and Market Access
    Date: 2010–02–01
  33. By: Bollard, Albert; McKenzie, David; Morten, Melanie
    Abstract: Recorded remittances to Africa have grown dramatically over the past decade. Yet data limitations still mean relatively little is known about which migrants remit, how much they remit, and how their remitting behavior varies with gender, education, income levels, and duration abroad. This paper constructs the most comprehensive remittance database on immigrants in the OECD currently available, containing microdata on more than 12,000 African immigrants. Using this microdata the authors establish several basic facts about the remitting patterns of Africans, and then explore how key characteristics of policy interest relate to remittance behavior. Africans are found to remit twice as much on average as migrants from other developing countries, and those from poorer African countries are more likely to remit than those from richer African countries. Male migrants remit more than female migrants, particularly among those with a spouse remaining in the home country; more-educated migrants remit more than less educated migrants; and although the amount remitted increases with income earned, the gradient is quite flat over a large range of income. Finally, there is little evidence that the amount remitted decays with time spent abroad, with reductions in the likelihood of remitting offset by increases in the amount remitted conditional on remitting.
    Keywords: Population Policies,Remittances,Gender and Development,Debt Markets,International Migration
    Date: 2010–04–01
  34. By: Gereffi, Gary; Fernandez-Stark, Karina
    Abstract: This paper analyzes the recent evolution and impact of the global economic crisis on the offshore services industry. Using a global value chains framework, the authors classify the offshore services sector in a comprehensive set of general and industry-specific activities that correspond to different segments and stages in the value-adding process for services. Through an analysis of the impact of the economic crisis on the industry, a small decline in demand was found; however this did not cause any structural changes in the market. The crisis has created two opposing effects: general contraction of demand by existing customers due to the recession; and, at the same time, a substitution effect by which new services are being moved from developed countries to emerging economies in search of cost reduction. The paper concludes that the offshore services industry will continue to offer growth opportunities for developing countries not only among existing market players, but also a range of new countries. The industry has the potential to become an important source for employment and economic growth around the globe.
    Keywords: ICT Policy and Strategies,E-Business,Water and Industry,Housing&Human Habitats,Public Sector Corruption&Anticorruption Measures
    Date: 2010–04–01
  35. By: Zerfu, Daniel; Larson, Donald F.
    Abstract: While the economic returns to using chemical fertilizer in Africa can be large, application rates are low. This study explores whether this is due to missing and imperfect markets. Results based on a panel survey of Ethiopian farmers suggest that while fertilizer markets are not altogether missing in rural Ethiopia, high transport costs, unfavorable climate, price risk, and illiteracy present formidable hurdles to farmer participation. Moreover, the combination of factors that promote or impede effective fertilizer markets differs among locations, making it difficult to find a single production technology that is uniformly profitable -- perhaps explaining the inconsistency between field studies finding large returns to fertilizer use in Ethiopia and survey-based studies finding fertilizer use to be uneconomic. The results suggest that households with greater stores of wealth, human capital and authority can overcome these hurdles. The finding offers some encouragement, but also implies a self-enforcing link between low agricultural productivity and poverty, since low-asset households are less able to overcome these problems. The study suggests that the provision of extension services can be effective and that lowering transport costs can raise the intensity of fertilizer use by lowering the cost of fertilizer and boosting the farmgate value of output.
    Keywords: Climate Change and Agriculture,Fertilizers,Crops&Crop Management Systems,Access to Finance,Fertilizers&Agricultural Chemicals Industry
    Date: 2010–03–01
  36. By: Kotikula, Aphichoke; Narayan, Ambar; Zaman, Hassan
    Abstract: The poor in Bangladesh are more likely to belong to households with a larger number of dependents and lower education among household members, be engaged in daily wage labor, own little land, and be less likely to receive remittances. This poverty profile for 2005 is similar to the profile in the mid-1980s and hence at first glance it would appear that little has changed over time. A closer look at national household survey data suggests a more nuanced story. This paper uses the latest two rounds of the Bangladesh Household Income and Expenditure Survey to decompose the micro-determinants of poverty reduction between 2000 and 2005, closely following a similar analysis using five earlier rounds of the Survey. The comparison of results shows that the spatial distribution of poverty seen in earlier decades has changed with time and the drivers of poverty reduction are different in several respects.
    Keywords: Rural Poverty Reduction,Regional Economic Development,Access to Finance,Small Area Estimation Poverty Mapping
    Date: 2010–02–01
  37. By: Bardasi, Elena; Beegle, Kathleen; Dillon, Andrew; Serneels, Pieter
    Abstract: Labor market statistics are critical for assessing and understanding economic development. In practice, widespread variation exists in how labor statistics are measured in household surveys in low-income countries. Little is known whether these differences have an effect on the labor statistics they produce. This paper analyzes these effects by implementing a survey experiment in Tanzania that varied two key dimensions: the level of detail of the questions and the type of respondent. Significant differences are observed across survey designs with respect to different labor statistics. Labor force participation rates, for example, vary by as much as 10 percentage points across the four survey assignments. Using a short labor module without screening questions on employment generates lower female labor force participation and lower rates of wage employment for both men and women. Response by proxy rather than self-report yields lower male labor force participation, lower female working hours, and lower employment in agriculture for men. The differences between proxy and self reporting seem to come from information imperfections within the household, especially with the distance in age between respondent and subject playing an important role, while gender and educational differences seem less important.
    Keywords: Labor Markets,Labor Policies,Work&Working Conditions,Social Analysis,Housing&Human Habitats
    Date: 2010–01–01
  38. By: Brambilla, Irene; Carneiro, Rafael Dix; Lederman, Daniel; Porto, Guido
    Abstract: The returns to schooling or the skill premium is a key parameter in various literatures, including globalization and inequality and international migration. This paper explores the skill premium and its link to exports in Latin America, thus linking the skill premium to the emerging literature on the structure of trade and development. Using data on employment and wages for over five million workers in sixteen Latin American economies, the authors estimate national and industry-specific skill premiums and study some of their determinants. The evidence suggests that both country and industry characteristics are important in explaining skill premiums. The analysis also suggests that the incidence of exports within industries, the average income per capita within countries, and the relative abundance of skilled workers are related to the underlying industry and country characteristics that explain skill premiums. In particular, higher sectoral exports are positively linked with the skill premium at the industry level, a result that supports recent trade models linking exports with wages and the demand for skills.
    Keywords: Labor Markets,Water and Industry,Tertiary Education,Labor Policies,Inequality
    Date: 2010–03–01
  39. By: Levy, Brian; Fukuyama, Francis
    Abstract: A frontier challenge for development strategy is to move beyond prescribing optimal economic policies, and instead – taking a broad view of the interactions between economic, political and social constraints and dynamics -- to identify entry points capable of breaking a low-growth logjam, and initiating a virtuous spiral of cumulative change. The paper lays out four distinctive sequences via which the different dimensions might interact and evolve over time, and provides country-specific illustrations of each. Each sequence is defined by the principal focus of its initial step: 1) State capacity building provides a platform for accelerated growth via improved public sector performance and enhanced credibility for investors; strengthened political institutions and civil society come onto the agenda only over the longer term; 2) Transformational governance has as its entry point the reshaping of a country’s political institutions. Accelerated growth could follow, insofar as institutional changes enhance accountability, and reduce the potential for arbitrary discretionary action -- and thereby shift expectations in a positive direction; 3) For'just enough governance', the initial focus is on growth itself, with the aim of addressing specific capacity and institutional constraints as and when they become binding -- not seeking to anticipate and address in advance all possible institutional constraints; 4) Bottom-up development engages civil society as an entry point for seeking stronger state capacity, lower corruption, better public services, improvements in political institutions more broadly -- and a subsequent unlocking of constraints on growth. The sequences should not be viewed as a technocratic toolkit from which a putative reformer is free to choose. Recognizing that choice is constrained by history, the paper concludes by suggesting an approach for exploring what might the scope for identifying practical ways forward in specific country settings.
    Keywords: Governance Indicators,National Governance,Parliamentary Government,Public Sector Corruption&Anticorruption Measures,Political Economy
    Date: 2010–01–01
  40. By: Tchale, Hardwick; Keyser, John
    Abstract: The Government of Malawi has since 2005 been pursuing a growth strategy mainly based on increasing the volume of agricultural exports. This entails that Malawi should endeavor to improve the competitiveness of its agricultural commodities so as to gain an increasing share of the regional and international markets. This paper analyzes the competitiveness of the country's key agricultural commodities -- tobacco, maize, cotton, and rice -- using prices that prevailed in the 2007/08 agricultural season. The paper employs a quantitative value chain methodology to assess the country's prospects for competitiveness and suggest weak links along the value chain that require attention in order to improve trade competitiveness. The results indicate that Malawi has some competitive advantage in the production and exportation of tobacco and cotton, and that this mostly derives from its low labor cost advantage. However, the results indicate that based on 2007/08 prices and costs, Malawi does not have competitive edge in maize and rice production for export. As such, Malawi would better pursue an import substitution strategy in these cereals, and perhaps only aim at the export market when regional market opportunities arise. Key factors that underpin Malawi's narrow competitiveness include the high cost of inorganic fertilizer and other inputs, low productivity, and the higher trader margins and intermediation costs along the value chains. Furthermore, farm gate prices in Malawi are higher than in other countries, and this undercuts its trade competitiveness.
    Keywords: Transport Economics Policy&Planning,Crops&Crop Management Systems,Economic Theory&Research,Markets and Market Access,Climate Change and Agriculture
    Date: 2010–03–01
  41. By: Moreira, Emmanuel Pinto
    Abstract: This paper examines how aid-for-trade programs can help to magnify the growth benefits that developing countries can reap from trade reform and global integration, with a special emphasis on the Caribbean region. The first part discusses various rationales for trade-related aid, viewed both as a compensatory scheme (aimed at cushioning the impact of revenue cuts and adjustment costs) and a promotion scheme (aimed at alleviating supply-side constraints). In the latter case, particular attention is paid to the role of infrastructure as a constraining factor on trade expansion. The second part discusses the relevance of aid-for-trade arguments for Caribbean countries and identifies a number of specific issues for the region. The third part illustrates the potential growth effects of aid-for-trade programs with simulation results for the Dominican Republic -- a country where infrastructure indicators remain relatively weak. The results illustrate the potentially large growth benefits that a temporary and well-targeted aid-for-trade program can provide to countries of the region.
    Keywords: Environmental Economics&Policies,Economic Theory&Research,Emerging Markets,Free Trade,Debt Markets
    Date: 2010–04–01
  42. By: Deichmann, Uwe; Meisner, Craig; Murray, Siobhan; Wheeler, David
    Abstract: Accelerating development in Sub-Saharan Africa will require massive expansion of access to electricity -- currently reaching only about one-third of households. This paper explores how essential economic development might be reconciled with the need to keep carbon emissions in check. The authors develop a geographically explicit framework and use spatial modeling and cost estimates from recent engineering studies to determine where stand-alone renewable energy generation is a cost effective alternative to centralized grid supply. The results suggest that decentralized renewable energy will likely play an important role in expanding rural energy access. But it will be the lowest cost option for a minority of households in Africa, even when likely cost reductions over the next 20 years are considered. Decentralized renewables are competitive mostly in remote and rural areas, while grid connected supply dominates denser areas where the majority of households reside. These findings underscore the need to de-carbonize the fuel mix for centralized power generation as it expands in Africa.
    Keywords: Energy Production and Transportation,Climate Change Mitigation and Green House Gases,Transport Economics Policy&Planning,Power&Energy Conversion,Carbon Policy and Trading
    Date: 2010–01–01
  43. By: Markandya, Anil; Ponczek Vladimir; Yi, Soonhwa
    Abstract: This paper adds to aid volatility literature in three ways: First it tests the validity of the aid volatility and growth relationship from various aspects: across different time horizons, by sources of aid, and by aid volatility interactions with country characteristics. Second, it investigates the relationship by the level of aid absorption and spending. Third, when examining the relationship between International Development Association aid volatility and growth, it isolates International Development Association aid volatility due to the recipient country's performance from that due to other sources. The findings suggest that, in the long run, on average, aid volatility is negatively correlated with real economic growth. But the relationship is not even. It is stronger for Sub-Saharan African countries than for other regions and it is not present in middle-income countries or countries with strong institutions. For economies where aid is fully absorbed, aid volatility matters for long-run growth; economies with full aid spending also bear a negative impact of aid volatility on long-run growth. Where aid is not fully absorbed, or where it is not fully spent, the aid volatility relationship is not significant. Looking at International Development Association aid separately, the volatility arising from the recipient country's International Development Association performance does not have a causal relationship with growth. In policy terms, the results suggest that low- income countries with weak institutions, especially in Sub-Saharan Africa, could benefit from reduced aid volatility or from being better prepared for the volatility that is there.
    Keywords: Economic Conditions and Volatility,Development Economics&Aid Effectiveness,Emerging Markets,Gender and Health,Achieving Shared Growth
    Date: 2010–02–01
  44. By: Haddad, Mona E.; Lim, Jamus Jerome; Saborowski, Christian
    Abstract: This paper addresses the mechanisms by which trade openness affects growth volatility. Using a diverse set of export diversification indicators, it presents strong evidence pointing to an important role for export diversification in reducing the effect of trade openness on growth volatility. The authors also identify positive thresholds for product diversification at which the effect of openness on volatility changes sign. The effect is shown to be positive only for a minority of countries with highly concentrated export baskets. This result is shown to be robust to both explicit accounting for endogeneity as well as the inclusion of a host of additional controls.
    Keywords: Economic Conditions and Volatility,Achieving Shared Growth,Markets and Market Access,Free Trade,Emerging Markets
    Date: 2010–02–01
  45. By: Moreira, Emmanuel Pinto
    Abstract: This paper offers a preliminary assessment of the potential benefits and costs of an economic and monetary union (EMU) between the Dominican Republic and Haiti -- two countries sharing the same island but whose history is one of conflict and divergent economic prospects in recent decades. After a brief review of the historical context, it examines the nature of these potential benefits and costs. It then conducts a preliminary analysis (using basic statistical techniques) of some key criteria for the formation of an economic and monetary union between the two countries. A more formal analysis of business cycle synchronization, based on basic and extended integrated vector auto-regression models with exogenous variables (VARX), is developed next. Overall, the analysis suggests that at this stage several economic criteria are not satisfied for the two countries to fully benefit from an economic and monetary union. At the same time, however, the endogeneity of most of these criteria (including the degree of business cycle synchronization) militates in favor of an aggressive medium-term agenda for integration between them.
    Keywords: Currencies and Exchange Rates,Emerging Markets,Economic Theory&Research,Debt Markets,Economic Stabilization
    Date: 2010–03–01
  46. By: Lin, Justin Yifu
    Abstract: As strategies for achieving sustainable growth in developing countries are re-examined in light of the financial crisis, it is critical to take into account structural change and its corollary, industrial upgrading. Economic literature has devoted a great deal of attention to the analysis of technological innovation, but not enough to these equally important issues. The new structural economics outlined in this paper suggests a framework to complement previous approaches in the search for sustainable growth strategies. It takes the following into consideration: First, an economy's structure of factor endowments evolves from one stage of development to another. Therefore, the optimal industrial structure of a given economy will be different at different stages of development. Each industrial structure requires corresponding infrastructure (both"hard"and"soft") to facilitate its operations and transactions. Second, each stage of economic development is a point along the continuum from a low-income agrarian economy to a high-income industrialized economy, not a dichotomy of two economic development stages ("poor"versus"rich"or"developing"versus"industrialized"). Industrial upgrading and infrastructure improvement targets in developing countries should not necessarily draw from those that exist in high-income countries. Third, at each given stage of development, the market is the basic mechanism for effective resource allocation. However, economic development as a dynamic process requires industrial upgrading and corresponding improvements in"hard"and"soft"infrastructure at each stage. Such upgrading entails large externalities to firms'transaction costs and returns to capital investment. Thus, in addition to an effective market mechanism, the government should play an active role in facilitating industrial upgrading and infrastructure improvements.
    Keywords: Economic Theory&Research,Debt Markets,Banks&Banking Reform,Emerging Markets,Achieving Shared Growth
    Date: 2010–02–01
  47. By: Keefer, Philip
    Abstract: Much of the research on ethnicity, development and conflict implicitly assumes that ethnic groups act collectively in pursuit of their interests. Collective political action is typically facilitated by political parties able to make credible commitments to pursue group interests. Other work, however, emphasizes the lack of political credibility as a source of adverse development outcomes. Evidence presented here uses partisan preferences across 16 Sub-Saharan African countries to distinguish these positions. The evidence is inconsistent with the credibility of party commitments to pursue collective ethnic interests: ethnic clustering of political support is less widespread than expected; members of clustered ethnic groups exhibit high rates of partisan disinterest and are only slightly more likely to express a partisan preference; and partisan preferences are more affected by factors, such as gift-giving, often associated with low political credibility. These findings emphasize the importance of looking beyond ethnicity in analyses of economic development.
    Keywords: Parliamentary Government,Educational Sciences,Social Inclusion&Institutions,Population Policies,Education and Society
    Date: 2010–03–01
  48. By: Deepankar Basu (University of Massachusetts Amherst)
    Abstract: This paper empirically tests for two competing explanations of the increasing sex ratio at birth (SRB) in India: hepatitis B and human intervention. Estimating a male- preferring stopping rule with data from three rounds of the National Family Health Survey in India (1992, 1998 and 2005), I find that the probability of a male birth varies significantly across birth parities. Using a novel proxy for hepatitis B in India - tribal status - I also find that hepatitis B has no impact on the probability of male birth. I conclude that human intervention explains the increasing SRB in India. JEL Categories: J1, J7.
    Keywords: son preference, sex selective abortion.
    Date: 2009–06
  49. By: Michael O. Moore; Maurizio Zanardi
    Abstract: Many skeptics of trade liberalization in the developing world argue that lowering trade taxes can cause significant fiscal pressures in countries particularly reliant on these taxes and result in a reallocation of resources away from important development goals. This research evaluates whether there is evidence that central governments systematically change the composition of spending priorities in the wake of lowered trade tax revenues as a share of total government revenues. We find very little evidence for this concern in a sample of 51 developing countries for the 1990 through 2005 period.
    Keywords: Government expenditure, tariff revenue, trade liberalization.
    JEL: H7 F13
    Date: 2010
  50. By: Ricardo Bebczuk (Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) - Universidad Nacional de La Plata); Diego Battistón (Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) - Universidad Nacional de La Plata)
    Abstract: The paper investigates the effect of remittances on the coverage of financial deficits arising during youth and retirement years and their influence on some household behaviors. To this end, household survey information is used from Ecuador, Honduras, Mexico and Nicaragua to perform a number of econometric tests exploring the linkage between remittances and a battery of health, education and work outcomes dealing with young and elderly household members. The main overall finding is that, with variations across countries and regression specifications, remittances generally appear to exert a positive and robust impact. In particular, with few exceptions, remittances (a) respond to the lack of pensions and especially to overall household financial deficits; (b) encourage co-residence of the elderly with younger relatives; (c) facilitate elderly’s retirement; (d) increase household expenditures in health and education; (e) foster public and private school attendance, inhibits child labor, and improve anthropometric measures.
    Keywords: Latin America, remittances, life cycle, retirement
    Date: 2010–02
  51. By: María Laura Alzúa (Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) - Universidad Nacional de La Plata); Guillermo Cruces (Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) - Universidad Nacional de La Plata and CONICET); Laura Ripani (Inter-American Development Bank)
    Abstract: This paper studies the effect of welfare programs on work incentives and the labor supply of adults in developing countries. The document builds on the experimental evaluations of three programs implemented in rural areas: Mexico’s PROGRESA, Nicaragua’s Red de Protección Social (RPS) and Honduras’ Programa de Asignación Familiar (PRAF). The impact of welfare on labor supply has been widely studied in developed countries, where most recent initiatives attempt to mitigate negative effects on work incentives. The programs under study are conditional cash transfers (CCT), which combine monetary benefits with incentives for curbing child labor and fostering the accumulation of human capital. Unlike their counterparts in developed economies, however, they do not account for potential impacts on the labor supply of adults, and there is little systematic evidence on this aspect despite a wealth of empirical studies on their intended outcomes. Comparable results for the three countries indicate mostly negative but small and non-significant effects of the programs on the employment of adults, no reallocation of labor between agricultural and other sectors, and a reduction in hours worked by adults in eligible households in RPS. Moreover, PROGRESA had a positive effect on beneficiaries’ wages. The programs did not imply major disincentives to work, despite substantial transfers, but they had some effects on local labor markets. This mechanism is related to recent findings on the indirect impact of CCTs on ineligible households, and implies that future evaluation studies and designs should account for the equilibrium effects of the interventions.
    Keywords: welfare programs, income support, labor supply, adult work incentives, conditional cash transfers, randomized control trials, developing countries.
    JEL: J08 J22 I38
    Date: 2010–03
  52. By: Vargas-Silva, Carlos (International Migration Institute); Jha, Shikha (Asian Development Bank); Sugiyarto, Guntur (Asian Development Bank)
    Abstract: This study examines the potential of remittances for promoting economic growth and reducing poverty in Asian countries using data for more than 20 countries in the region for 1988–2007. The results indicate that remittances positively affect home country real gross domestic product (GDP) per capita growth. A 10% increase in remittances as a share of GDP leads to a 0.9–1.2% increase in GDP growth. The findings also show that remittances only have a negligible effect on the overall poverty rate, but they tend to decrease the poverty gap and thereby ameliorate the depth of poverty. The estimates suggest that a 10% increase in remittances decreases the poverty gap by about 0.7–1.4%. The paper also explores the robustness of the key results by using 5-year average data and addresses potential endogeneity issues through instrumental variable estimation.
    Keywords: Migration; Remittances; Poverty; Economic Growth; Impacts
    Date: 2009–12
  53. By: Jha, Shikha (Asian Development Bank); Sugiyarto, Guntur (Asian Development Bank); Vargas-Silva, Carlos (International Migration Institute)
    Abstract: Remittances to Asia plunged during the 1997 Asian financial crisis, but the drop was temporary as the flows were increasing once again after just 1 year. The current crisis, however, is fundamentally different in that even the countries that send remittances have been adversely affected. The global nature of this crisis raises several questions such as whether it will also last for a short time or developing Asia should prepare for a long period of remittance stagnation. This study examines remittances data to several Asian countries to shed light on such issues. The results suggest that while remittance flows to key recipients in the region have slowed down in the current year, there has not been a sharp drop. Furthermore, there is no indication that the remittance flows will slow down further, suggesting that the flows should be back on a higher growth path in a few years. It is unlikely, however, to see the same growth rates of the past, given that an important share of that growth during the last two decades was due to better recording of remittances and an increased use of wire transfers on the part of migrants.
    Keywords: Global Crisis; Remittances; Asia
    Date: 2009–12
  54. By: Terada-Hagiwara, Akiko (Asian Development Bank)
    Abstract: From 1994 to 2006, the average household saving rate in the Philippines declined by 5.2 percentage points to about a mere 5% of disposable income. Using data from income and expenditure survey at the household level, this paper explains why households’ consumption growth had been higher than income growth during this period. Tracing cohorts shows that saving declined across all demographic groups. A simple test that provides the strength of the precautionary saving motive yields a plausible explanation that households are financially constrained and less prudent in the recent years. This paper argues that these patterns are best explained by the extended coverage of social security system during the 1990s in the Philippines. Less prudent behavior may have been amplified by the severe financial constraint leading to the sharp fall in the saving rate.
    Date: 2009–11
  55. By: B. Deolalikar, Anil (University of California, Riverside); Hasan, Rana (Asian Development Bank); Somanathan, Rohini (Delhi School of Economics)
    Abstract: We use village level data from the 1991 and 2001 Indian Censuses to examine how the availability of health facilities and safe drinking water at the village level affect juvenile sex ratios. In addition to controlling for village fixed effects in our estimating equation of the juvenile sex ratio, we also allow villages to be heterogeneous in terms of how their juvenile sex ratios respond to the availability of health facilities and safe drinking water. A key result we obtain is that although the presence of public health facilities does not exert a positive, significant effect on juvenile sex ratios on average, they do so in villages where the problem of discrimination against girls is most acute, i.e., in villages at the 0.10 and 0.25 quantiles of the conditional juvenile sex ratio distribution. Thus public policy can be an effective tool in improving gender balance in cases where it is most needed.
    Date: 2009–07
  56. By: H. Son, Hyun (Asian Development Bank); A. San Andres, Emmanuel (Asian Development Bank)
    Abstract: The global economic crisis in 2008–2009 had varying impacts on economies in Asia and the Pacific. This paper studies the impacts of the global crisis, with emphasis on the labor market, on three Asian countries: Republic of Korea (Korea), Philippines, and Thailand. It develops a crisis index that measures the impacts of the crisis by comparing actual values of economic indicators during the crisis period (2008–2009) with counterfactual indicators derived from each country’s pre-crisis (2001–2007) long-term trends. The study finds that all three countries were significantly affected by the crisis, but the severity and channels of these impacts varied widely: Thailand suffered the most in terms of reduced growth in gross domestic product, Korea suffered the worst in reduced employment, and Philippines’ output was affected only in 2009. In the labor market, the study finds that the crisis led to significant job losses in all three countries and highlighted underlying problems, particularly Korea’s problems with youth unemployment, and Philippines’ and Thailand’s vulnerable industrial sectors.
    Date: 2009–10
  57. By: Cuevas, Sining (Asian Development Bank); Mina, Christian (Asian Development Bank); Barcenas, Marissa (Asian Development Bank); Rosario, Aleli (Asian Development Bank)
    Abstract: The paper attempted to use the February 2007 round of Indonesia’s National Labor Force Survey (Sakernas) for a comparative analysis of wages and benefits of formal and informal workers. While Sakernas was not designed for this purpose, the study explored questions in the existing survey that can be used to distinguish formal and informal workers. Because of data limitation, workers were classified as employed informally or “mixed”—a category composed of workers who cannot be identified, with precision, to be engaged in either formal or informal employment. Given this constraint, informal employment was estimated at the minimum to be at 29.1% of total employment in Indonesia. Informal employment is also highly concentrated in rural areas and is prevalent in agriculture and construction sectors. More women are likely to be informally employed than men, and women generally receive lower pay and are mostly unpaid family workers. To the extent possible the study was able to examine informal employment in Indonesia and to identify the gaps in the Sakernas questionnaire that can be addressed in future rounds of the survey for a successful comparative analysis between formal and informal workers.
    Keywords: Indonesia; informal employment; informal sector; gender analysis; wage differentials
    Date: 2009–04
  58. By: Hasan, Rana (Asian Development Bank); Magsombol, Maria Rhoda (Asian Development Bank); Cain, J. Salcedo (Asian Development Bank)
    Abstract: This paper uses the empirical relationship between economic growth and poverty reduction observed between 1990 and 2005 and different scenarios for economic growth to get a sense of how the economic slowdown in the region will affect the incidence of poverty. Since most countries that we work with in this paper experience an increase in gross domestic product per capita even under our “low growth” scenario, poverty in developing Asia continues to decline in 2009 and 2010. What gets adversely affected, however, is the pace of poverty reduction. In particular, our estimates indicate that a reduction in growth of GDP per capita of 3 percentage points over growth registered in 2007—a year of high growth for many Asian developing countries—would result in almost 61 million additional $1.25/day poor in 2009 and 98 million additional poor in 2010 as compared to a baseline scenario of no economic slowdown.
    Date: 2009–04
  59. By: Zhuang, Juzhong (Asian Development Bank); Gunatilake, Herath (Asian Development Bank); Niimi, Yoko (Asian Development Bank); Ehsan Khan, Muhammad (Asian Development Bank); Jiang, Yi (Asian Development Bank); Hasan, Rana (Asian Development Bank); Khor, Niny (Asian Development Bank); S. Lagman-Martin, Anneli (Asian Development Bank); Bracey, Pamela (Asian Development Bank); Huang, Biao (Asian Development Bank)
    Abstract: This paper reviews the theoretical and empirical literature on the role of financial sector development, with a view to deepening understanding of the rationale of development assistance to the financial sector of developing countries. The review leads to the following broad conclusions: (i) there are convincing arguments that financial sector development plays a vital role in facilitating economic growth and poverty reduction, and these arguments are supported by overwhelming empirical evidence from both cross-country and countryspecific studies; (ii) there are however disagreements over how financial sector development should be sequenced in developing countries, particularly the relative importance of domestic banks and capital markets and, in developing the banking sector, the relative importance of large and small banks; (iii) while broadening the access to finance by microenterprises, small and medium-sized enterprises (SMEs), and vulnerable groups is recognized as critically important for poverty reduction, it is also widely believed that microfinance and SME credit programs need to be well designed and targeted to be effective. In particular, these programs need to be accompanied by other support services such as provision of training and capacity building, assistance in accessing markets and technologies, and addressing other market failures; and (iv) financial sector development and innovation will bring risks, and it is therefore essential to maintain sound macroeconomic management, put in place effective regulatory and supervisory mechanisms, and carry out structural reforms in developing the financial sector. The paper argues that these conclusions provide a strong justification for development assistance to target financial sector development as a priority area, and that, like any public sector intervention, such assistance should be designed to address market and nonmarket failures. The paper also highlights several areas where more research is urgently needed, in particular, how to sequence financial sector development, how to balance the need for financial innovation and that for economic and financial stability, and how to make microfinance and SME credit programs work better to reduce poverty.
    Date: 2009–10
  60. By: Son, Hyun (Asian Development Bank)
    Abstract: Equity is an abstract concept covering philosophical issues such as fairness and social justice, making its definition and measurement very complex. This study attempts to define and measure equity in health status and health care utilization using the equity index of opportunity. The study introduces a methodology to explain equity in terms of between- and within-group equity. While the between-group equity implies equal treatment for equal needs, the within-group equity implies that individuals with unequal needs should be treated unequally according to their different needs. The proposed methodology can be applied to any socioeconomic and demographic group. Empirical analysis is carried out using Demographic and Health Surveys and Annual Poverty Indicator Surveys conducted in the Philippines.
    Date: 2009–09
  61. By: Bjornestad, Liv (Asian Development Bank)
    Abstract: This paper provides an in-depth analysis of the relationship between fiscal decentralization and pro-poor outcomes based on the role of fiscal incentives. The literature on the relationship between fiscal decentralization and pro-poor outcomes is not well established in this area. A conceptual model is developed to explore in more detail this relationship, while endeavoring to illuminate the complexity of the issues involved for policy makers in developing countries. Four types of fiscal incentives are explored: namely, resources, responsibility, autonomy, and accountability. The paper then assesses the effectiveness of the Vietnamese system of fiscal decentralization for achieving pro-poor outcomes through a devolved system of fiscal incentives. The paper suggests that evidence from the Vietnamese case indicates that fiscal decentralization may contribute to poverty reduction outcomes, but does not provide evidence that fiscal decentralization is in and of itself inherently pro-poor. Rather, the lesson from Viet Nam is that if poverty reduction is an explicit objective for government, the system of fiscal decentralization should target pro-poor outcomes through an appropriate system of fiscal incentives. Since 2002, budgetary reallocation and income redistribution linked to poverty outcomes has been more strongly associated with equalizing fiscal transfers than with devolved finances in general. This represents a broadly correct approach to target poverty outcomes in a territorially unbalanced country like Viet Nam. Targeted transfers contribute to pro-poor outcomes by increasing the level of resources available to finance poverty spending. However, increasing the level of fiscal transfers for poverty spending will not ensure that fiscal transfers are then spent efficiently. In order to better realize these efficiency objectives, the government can promote greater fiscal and administrative decentralization of resources and responsibility to district- and commune-level governments. Further gains in this area must also be supported by greater levels of fiscal autonomy and fiscal accountability at the local government level.
    Date: 2009–07
  62. By: Jongwanich, Juthathip (Asian Development Bank); Magtibay-Ramos, Nedelyn (Asian Development Bank)
    Abstract: Over the past three decades, there has been a rapid expansion of processed food exports in developing countries, replacing traditional agriculture exports such as coffee and tea. However, this development and its policy implications have received little attention in the literature. This paper aims to redress this oversight by providing an overview of key characteristics and growth patterns of processed food exports in developing countries. The determinants of structural changes toward processed food exports in developing countries are examined using panel data econometric analysis. The results suggests that trade policy openness, large domestic market, good macroeconomic management especially in terms of price stability, as well as adequate financial support and infrastructure are the key factors that influence the structural changes toward processed food products.
    Keywords: Food Safety Standards; Processed food trade; developing countries
    JEL: L66
    Date: 2009–07
  63. By: Niimi, Yoko (Asian Development Bank)
    Abstract: This paper reviews the recent progress toward gender equality in developing Asia by examining a number of indicators proposed under the Millennium Development Goal 3 plus approach, focusing on gender inequalities in education and health outcomes (capability) and in labor market and political participation (access to resources and opportunities). Despite the improvement observed in education and, to a lesser extent, in health, the paper finds that women’s improved capabilities do not seem to have been translated into an equal participation between men and women in economic and political activities. Further, it finds that gender gaps in almost all aspects reviewed remain significant, particularly in South Asia with some exceptions. A survey of empirical literature suggests that prevalence and persistence of gender inequality are often caused and reinforced by interlinked cultural, social, and economic factors. Empirical evidence also suggests that gender inequality is greater when a country’s economic opportunities are more limited or households are in greater economic hardship. In conclusion, the paper argues that along with efforts in removing cultural, social, and institutional obstacles by educating the public and introducing/enforcing antidiscrimination legislations, promoting economic development to generate economic opportunities and improving women’s capabilities and access to the opportunities are the key ingredients of a policy package for greater progress toward gender equality and inclusive growth in developing Asia.
    Keywords: gender equality; inclusive growth; Millennium Development Goals; Asia and the Pacific
    Date: 2009–12
  64. By: Jha, Shikha (Asian Development Bank); Prasad, Eswar (Cornell University); Terada-Hagiwara, Akiko (Asian Development Bank)
    Abstract: This paper assesses the role of consumption and saving in Asia’s growth. It examines the composition of national saving, analyzes what forces drive saving rates, and draws policy conclusions from the analysis that are relevant for the economies in the region and which might play an important part in rebalancing global growth. The paper identifies a number of issues. A rapid rise in the profitability of state-owned and private enterprises together with distorted dividend policies and underdeveloped financial markets in the People’s Republic of China (PRC) seem to have contributed to the corporate sector saving spiral. Rising corporate saving rates in India can be attributed to lower corporate tax rates, customs duty, and interest rates along with restructuring of firms. Channeling corporate saving into investment will require elimination of policy distortions and financial sector development including availability of better saving instruments and improved business and investment climates. At the household level, demographic trends, financial development, and precautionary saving are revealed to be important for Asian savers. Two case studies from the PRC and Philippines suggest that these factors are interrelated and complement one another. The surge in urban households’ saving in the PRC has two main drivers. First, younger households lack access to credit and accumulate savings in order to purchase durable goods such as televisions, white goods, and automobiles. Second, most urban households undertake precautionary saving as a hedge against risks of illness or other healthcare expenses and in order to finance educational expenses. Hence policies that develop financial markets enabling borrowing against future income, and that rationalize public spending to increase social transfers, reform pension systems, and provide universal health care insurance and education, appear top priorities. These policies would moderate household saving rates and help in rebalancing growth toward consumption.
    Date: 2009–05
  65. By: Park, Donghyun (Asian Development Bank); Shin, Kwanho (Asian Development Bank)
    Abstract: An integral part of global current account imbalances is the large and persistent current account surplus developing Asia has run since the 1997–1998 Asian crisis. A country’s current account surplus is, by definition, equal to its net saving. The central objective of this paper is to investigate the extent to which the saving and investment rate of Asian countries can be explained by the underlying fundamental determinants of saving and investment such as gross domestic product growth and demographic factors. Our empirical analysis yields two key findings. First, we find stronger evidence of oversaving than underinvestment in the region. Second, we find stronger evidence of overinvestment prior to the Asian crisis than underinvestment after the Asian crisis. This suggests that the key to rebalancing Asian growth toward domestic sources lies in promoting consumption rather than investment.
    Keywords: Saving; investment; current account balance; global imbalance; Asia
    JEL: E21 E22 F32
    Date: 2009–04
  66. By: Maria Christidou (Department of Economics, University of Macedonia); Theodore Panagiotidis (Department of Economics, University of Macedonia)
    Abstract: The effect of the single currency on the Purchasing Power Parity (PPP) hypothesis is examined in this study for the 15 EU countries, vis a vis the US dollar, before and after the advent of the euro. Standard as well as nonlinear unit root tests are employed on the time series dimension. Unit root tests reject PPP and the highest half-lives are observed after the introduction of the single currency. Panel unit root (Pesaran, 2007) and stationarity tests (Hadri and Kurozumi, 2008) that take into account cross-sectional dependence are also estimated. The results remain inconclusive as panel stationarity tests fail to support PPP whereas panel unit root tests fail to reject PPP for the whole sample and for the period before the introduction of the single currency.
    Keywords: Purchasing Power Parity, half-life, nonlinear unit roots, panel unit roots, heterogeneity, cross-section dependence
    JEL: F31 F33 G15
    Date: 2010–04
  67. By: Christian Daude; Eduardo Fernandez-Arias
    Abstract: This paper combines development and growth accounting exercises with economic theory to estimate the relative importance of total factor productivity and the accumulation of factors of production in the economic development performance of Latin America. The region’s development performance is assessed by contrast with various alternative benchmarks, both advanced countries and peer countries in other regions. The paper finds that total factor productivity is the predominant factor: low productivity and slow productivity growth, as opposed to impediments to factor accumulation, are the key to understanding Latin America’s low income relative to developed economies and its stagnation relative to other developing countries. While policies easing factor accumulation would help somewhat in improving productivity, for the most part, closing the productivity gap requires productivity-specific policies.
    Keywords: Economic growth, Total factor productivity, Development
    JEL: O11 O47
    Date: 2010–02
  68. By: Cristobal Aninat; Jose Miguel Benavente; Ignacio Briones; Nicolas Eyzaguirre; Patricio Navia; Jocelyn Olivari
    Abstract: This paper analyzes the political economy of productivity-related policymaking in Chile following a political transaction cost model (Spiller and Tommasi, 2003; Murillo et al., 2008). The main findings indicate that i) the Chilean policymaking process (PMP) was successful in the 1990s in implementing productivityenhancing policies, but as the country moved to a higher stage of development, the PMP grew less adept at generating the more complex set of policies needed to increase productivity at this stage; and ii) the Chilean PMP is less transparent than previously thought (Aninat et al., 2008), thus allowing political actors to favor private interests without being punished by the electorate. This has become apparent as the more sophisticated reforms needed at this stage of development require a deeper and more consolidated democracy.
    Keywords: Economic policy, Institutional reforms, Productivity, Pensions, Education, Innovation, State modernization, Competitiveness, Chile
    JEL: L52 O25 O40
    Date: 2010–04
  69. By: Marcus Melo; Carlos Pereira; Saulo Souza
    Abstract: This project examines fiscal reforms in Brazil since the 1990s, particularly in taxation, budgeting, and fiscal federalism. While recentralizing fiscal authority and massively expanding the extractive capacity of the state, policymakers chose not to revamp an inefficient tax system that has nonetheless proven capable of generating high levels of revenue. In budgeting, the economic crises of the mid-1990s prompted the government to rein in subnational fiscal imbalances but discouraged policymakers from introducing major changes in the tax system. As the executive derives utility from fiscal stability and inflation control because of electoral incentives and credibility gains in international markets, reform initiatives can generate political benefits for incumbent politicians. The paper finally argues that the Achilles’ heel of the sustainability of the Fiscal Responsibility Law is its enforcement technology: the Tribunais de Contas.
    Keywords: Fiscal responsibility laws, Fiscal federalism, Brazil, Political institutions
    JEL: H3 H77 H83 H71
    Date: 2010–02
  70. By: Alice Mesnard (Institute for Fiscal Studies)
    Abstract: <p>This paper studies migration decisions of very poor households in an environment with a high level of violence. By matching detailed retrospective data on violence levels in Colombian rural municipalities with a household survey collected for the evaluation of the "Familias en Acción" welfare programme, the empirical analysis takes into account possible selection problems of the sample and the key issue of endogeneity of violence. The main results show that high levels of violence encourage households to leave their municipality of residence but that welfare programmes may mitigate these flows, provided that the incidence of violence is not unduly high. This is consistent with the fact that the households under study are liquidity constrained: when violence is high, cash transfers may enable them to leave their municipality of residence, whereas, in more normal circumstances, receiving cash transfers increases the benefits to stay where they are registered. Further evidence using household shocks and wealth confirm that liquidity constraints play a large role in explaining such heterogeneous impacts of the programme along violence levels. Other important determinants of migration are the type of property rights and the health insurance rural households can benefit from.</p></p></p>
    Keywords: migration, welfare programme, violence, displacement, Colombia
    Date: 2009–09
  71. By: Veronica Bayangos; Karel Jansen
    Abstract: The paper looks at the impact of workers’ remittances on the competitiveness of the receiving economy. It extends existing research that concentrated on the exchange rate effects of remittances, the so-called Dutch disease effect, by adding labour market effects. The results show that the labour market effects of emigration and remittances have a significant impact on competitiveness that goes beyond the traditional exchange rate effect.
    Keywords: remittances, Dutch disease, competitiveness, exchange rate, monetary policy, Philippines
    Date: 2010
  72. By: Zelalem Yilma Debebe
    Abstract: The author studies the effect of an agricultural shock and a labor sharing arrangement (informal social network) on child labor. Albeit bad parental preference to child labor (as the strand of literature claims), poor households face compelling situations to send their child to work. This is, especially, true when they are hit by an income shock and face a binding adult labor constraint. The author used panel data from the ERHS and employed a fixed effects model to pin down causal relation between shocks, membership in a labor sharing arrangement and child labor. It was found that child labor is, indeed, a buffer stock. Though a labor sharing arrangement doesn’t affect child labor at normal times, it helps households to lessen the pressure to rely on it when hit by idiosyncratic shocks. While almost the whole effect of these shocks is offset by participation in a labor sharing arrangement, the covariate shock is not. Even if this may well affect a child’s academic performance, school attendance doesn’t decrease. This differential effect of shocks on child labor in participant households might be because of the extra adult labor made available or due to mutual support that comes with these social networks. This paper is indicative of the importance of considering social networks in smoothing out consumption. Further, it highlights the difficulty to cope up with covariate shocks and hence, calls for development interventions that are particularly meant to address their impact.
    Keywords: child labor, shocks, labor sharing, social networks, Ethiopia
    Date: 2010
  73. By: Renate Hartwig; Michael Grimm
    Abstract: In 2002 Malawi experienced a serious shortage of cereals due to adverse climatic conditions. The World Food Programme assumed that about 2.1 to 3.2 million people were threatened of starvation at that time. However, not much research has been undertaken to investigate the actual consequences of this crisis. In particular, little is known about how the crisis affected the health status of children. Obviously, quantifying the health impact of such a crisis is a serious task given the lack of data and the more general problem of relating outcomes to specific shocks and policies. In this paper a difference-in-difference estimator is used to quantify the impact of the food crisis on the health status of children. The findings suggest that at least in the short run, there was neither a significant impact on child mortality nor on malnutrition. This would suggest that the shock might have been less severe than initially assumed and that the various policy interventions undertaken at the time have been effective or at least sufficient to counteract the immediate effects of the crisis.
    Keywords: child mortality, malnutrition, food crisis, Malawi
    Date: 2010
  74. By: Subhasish Dey
    Abstract: The world’s biggest Employment Guarantee Programme, India’s National Rural Employment Guarantee Scheme (NREGS) has been in operation in rural India since February 2006. In principle, the scheme is a self-targeted programme designed to provide 100 days of employment to rural households and to serve as a safety net. More broadly its aim is to reduce rural poverty through the creation of sustainable rural infrastructure which is expected to foster rural economic growth. This study looks at the performance of the NREGS from three perspectives - it examines the targeting aspect of the programme, the efficiency of the implementing PRI bodies and the impact of the program on various outcomes at household level. The study is based on primary data collected from 500 randomly selected households, 2249 individuals and 70 schemes located in 13 Gram Panchayats in Birbhum District of West Bengal, India. On the basis of this primary data, the study reveals that at least in Birbhum District the programme is far more likely to be accessed by poorer households (defined in terms of land holding, monthly per-capita income and other household related characteristics). At the same time there is a clear and substantial impact of left political inclination in terms of enabling access to a greater number of days of work under the scheme. In terms of the efficiency impact, the analysis reveals a clear violation of the formal clauses and the spirit of the NREG Act and thereby undermining the potential of the programme in terms of providing a safety net. In terms of the impact, the study finds no statistically significant impact on economic outcomes at household level but does find a statistically significant and substantial relation between reduction of stress related to joblessness and access to the NREGS. The estimates suggest that while the NREGS may not be creating any new employment, and may indeed be substituting for existing employment opportunities, the scheme is still considered valuable as it offers better working conditions.
    Keywords: NREGS, targeting, efficiency, impact, labour-substitution, Birbhum, West Bengal
    Date: 2010
  75. By: Patnaik, Unmesh; Narayanan, K
    Abstract: Disaster risk is a major concern in a developing country like India as people living in disaster prone regions of the country are subject to variety of risks concerning their livelihoods. Preliminary assessments reveal that the severity and intensity of floods in various parts of India might increase due to climate change. This paper attempts to understand the various risks faced by households living in disaster prone regions of rural India and specifically examine the effectiveness of coping mechanisms adopted by households living in these areas to hedge against the risks. The study area (districts of eastern Uttar Pradesh, India) is highly susceptible to floods with a major flood occurring every ten years and smaller ones happening every one-two years. The data is drawn from primary household surveys undertaken in the study area for flood affected households. The analysis is carried out using a risk sharing and self insurance framework and econometric modeling is carried out using binary outcomes and multivariate probit estimation through GHK (Geweke- Hajivassiliou- Keane) estimator. Based on the empirical analysis, and subject to the assumptions and the usual limitations of data used, the findings of the study suggest that: (i) overall the impacts of disasters on the consumption level of the household exhibit an inverse relationship, (ii) consumption smoothening behaviour is not exhibited by the households and (iii) household specific characteristics along with the geographical location of the households have no significant role to play with respect to the changes in consumption in the flood prone districts of eastern Uttar Pradesh.
    Keywords: Vulnerability; Coping; Disasters; Flood; Household Behaviour
    JEL: C12 C81 D1 Q54 C2 C01
    Date: 2010–03
  76. By: Hai Fang; Karen N. Eggleston; John A. Rizzo; Richard J. Zeckhauser
    Abstract: Data on 2,288 married women from the 2006 China Health and Nutrition Survey are deployed to study how off-farm female employment affects fertility. Such employment reduces a married woman’s actual number of children by 0.64, her preferred number by 0.48, and her probability of having more than one child by 54.8 percent. Causality flows in both directions; hence, we use well validated instrumental variables to estimate employment status. China has deep concerns with both female employment and population size. Moreover, female employment is growing quickly. Hence, its implications for fertility must be understood. Ramifications for China’s one-child policy are discussed.
    JEL: J13 J18 O15
    Date: 2010–04
  77. By: Angus S. Deaton
    Abstract: I argue that progress in understanding economic development (as in other branches of economics) must come from the investigation of mechanisms; the associated empirical analysis can usefully employ a wide range of experimental and non-experimental methods. I discuss three different areas of research: the life-cycle saving hypothesis and its implication that economic growth drives higher rates of national saving, the theory of speculative commodity storage and its implications for the time-series behavior of commodity prices, and the relationship between economic growth and nutritional improvement. None of these projects has yet been entirely successful in offering a coherent account of the evidence, but all illustrate a process of trial and error, in which although mechanisms are often rejected, unlikely theoretical propositions are sometimes surprisingly verified, while in all cases there is a process of learning about and subsequently modifying our understanding of the underlying mechanisms
    JEL: C01 E21 O1 O15 O16 O4
    Date: 2010–04
  78. By: Jeremy Greenwood; Juan M. Sanchez; Cheng Wang
    Abstract: How important is financial development for economic development? A costly state verification model of financial intermediation is presented to address this question. The model is calibrated to match facts about the U.S. economy, such as intermediation spreads and the firm-size distribution for the years 1974 and 2004. It is then used to study the international data, using cross-country interest-rate spreads and per-capita GDP. The analysis suggests a country like Uganda could increase its output by 140 to 180% if it could adopt the world's best practice in the financial sector. Still, this amounts to only 34 to 40% of the gap between Uganda's potential and actual output.
    JEL: E13 O11 O16 O4
    Date: 2010–04

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.