nep-dev New Economics Papers
on Development
Issue of 2010‒05‒02
38 papers chosen by
Mark Lee
Towson University

  1. Migration and Human Development in India By Priya Deshingkar; Shaheen Akter
  2. Migration and Educational Outcomes of Children By Kristina A. Schapiro
  3. Processes of Migration in Latin America and the Caribbean (1950-2008) By Jorge Durand
  4. Revisiting the Migration-Development Nexus: A Gravity Model Approach By Emmanuel Letouzé; Mark Purser; Francisco Rodríguez; Matthew Cummins
  5. Global Economic Prospects for Increasing Developing Country Migration into Developed Countries By Dominique van der Mensbrugghe; David Roland-Holst
  6. Xenophobia, International Migration and Human Development By Jonathan Crush; Sujata Ramachandran
  7. Migrating Away from a Seasonal Famine: A Randomized Intervention in Bangladesh By Shyamal Chowdhury; Ahmed Mushfiq Mobarak; Gharad Bryan
  8. Internal Migration, Selection Bias and Human Development: Evidence from Indonesia and Mexico By Partha Deb; Papa Seck
  9. Assessment of National Migration Policies: An emerging picture on admissions, treatment and enforcement in developing and developed countries By Jeni Klugman; Isabel Medalho Pereira
  10. Individual Ability and Selection into Migration in Kenya By Edward Miguel; Joan Hamory
  11. Inequality and Internal Migration in China: Evidence from Village Panel Data By Wei Ha; Junjian Yi; Junsen Zhang
  12. Brain Drain, Brain Gain and Economic Growth in China By Wei Ha; Junjian Yi; Junsen Zhang
  13. Migration, Poverty Reduction Strategies and Human Development By Richard Black; Jon Sward
  14. The Moving Middle: Migration, Place Premiums and Human Development in Bolivia By George Gray Molina; Ernesto Yañez
  15. Migration in the Asia-Pacific Region: Trends, factors, impacts By Philip Martin
  16. Return migrants : The rise of new entrepreneurs in rural China By Sylvie Demurger; Hui Xu
  17. Capital Controls and Monetary Policy in Developing Countries By Juan Antonio Montecino; Jose Antonio Cordero
  18. Patterns of Force: System Strength, Terrorism and Civil War By Andreas Freytag; Daniel Meierrieks; Angela Münch; Friedrich Schneider
  19. Source Country Characteristics and Immigrants' Migration Duration and Saving Decisions By Kirdar, Murat G.
  20. Decrease in the healthcare demand in rural China: A side effect of the industrialization process? By Carine Milcent; Feng Jim
  27. IS CHINA DIFFERENT? A META-ANALYSIS OF EXPORT-LED GROWTH By Gustavsson Tingvall, Patrik; Ljungwall, Christer
  28. Foreign Ownership and Employment Growth in Indonesian Manufacturing By Sjöholm, Fredrik; Lipsey, Robert E.; Sun, Jing
  29. Education and household inequality change: a decomposition analysis for India By Pieters, Janneke
  30. Microfinance and Household Poverty Reduction: New evidence from India By Katsushi Imai; Thankom Arun; Samuel Kobina Annim
  31. Capital Flight: China's Experience By Yin-Wong Cheung; XingWang Qian
  33. Quantifying the impact of financial development on economic development By Jeremy Greenwood; Juan M. Sanchez; Cheng Wang
  34. Does a Leapfrogging Growth Strategy Raise Growth Rate? Some International Evidence By Wang, Zhi; Wei, Shang-Jin; Wong, Anna
  35. The Effects of Financial Development on Income Inequality and Poverty By Vivien Kappel
  36. Factor Endowment, Structural Change, and Economic Growth By Che, Natasha Xingyuan
  37. Colonial Institutions, Slavery, Inequality, and Development: Evidence from São Paulo, Brazil By Summerhill, William
  38. Innovative Approaches to Developmental Microfinance in India By Kasat, Puja; Suneja, Vivek

  1. By: Priya Deshingkar (Overseas Development Institute, London); Shaheen Akter (Overseas Development Institute, London)
    Abstract: The paper discusses how gaps in both the data on migration and the understanding of the role of migration in livelihood strategies and economic growth in India, have led to inaccurate policy prescriptions and a lack of political commitment to improving the living and working conditions of migrants. Field evidence from major migrant employing sectors is synthesised to show that circular migration is the dominant form of economic mobility for the poor; especially the lower castes and tribes. The authors argue that the human costs of migration are high due to faulty implementation of protective legislation and loopholes in the law and not due to migration per se. The paper discusses child labour in specific migration streams in detail stressing that this issue needs to be addressed in parallel. It also highlights the non-economic drivers and outcomes of migration that need to be considered when understanding its impacts. The authors calculate that there are roughly 100 million circular migrants in India contributing 10% to the national GDP. New vulnerabilities created by the economic recession are discussed. Detailed analysis of village resurveys in Madhya Pradesh and Andhra Pradesh are also presented and these show conclusively that migration is an important route out of poverty.
    Keywords: India; circular migration; caste; tribe; child labour; human development
    JEL: Z1 O1 O15
    Date: 2009–04
  2. By: Kristina A. Schapiro (Monitor Group, London)
    Abstract: This paper examines the impact of migration on educational outcomes of children. It looks at the outcomes of internationally as well as internally migrating children and identifies the specific barriers they face in access to quality schooling. It discusses the various channels through which migration affects the education and wellbeing of non-migrant children in migrant households. It subsequently examines the variations in educational attainment of second-generation migrant children. To conclude, the paper recognizes the policy challenges surrounding the migration-education linkage and considers some of the strategies that have been implemented to improve the schooling outcomes of children affected by migration.
    Keywords: Migration, children, education, human capital, human development, policy
    JEL: O1 O15 F22 F2
    Date: 2009–10
  3. By: Jorge Durand (University of Guadalajara and Centro de Investigación y Docencia Económica (CIDE))
    Abstract: The main characteristic of the Latin American migration on the 20th century was the change of flow. Until the 1950s, Latin America received migrants from Europe and the Middle East. As a result of economic change, political instability, and economic crisis, Latin America started exporting migrant workers. Now, Latin American migrants mainly go to the U.S., and in less extend to Europe (i.e. Spain, Italy, and Portugal), and in some cases to Japan as it is the case of Peru and Brazil. Several migrant patterns follow this process, which is characteristic to the massive emigration at the dawn of the 21st century.
    Keywords: Latin America, immigration, emigration, United States, Europe
    JEL: O1 O15 Z1 F22
    Date: 2009–07
  4. By: Emmanuel Letouzé (Human Development Report Office (HDRO), United Nations Development Programme); Mark Purser (Human Development Report Office (HDRO), United Nations Development Programme); Francisco Rodríguez (Human Development Report Office (HDRO), United Nations Development Programme); Matthew Cummins (Human Development Report Office (HDRO), United Nations Development Programme)
    Abstract: This paper presents empirical estimates of a gravity model of bilateral migration that properly accounts for non-linearities and tackles causality issues through an instrumental variables approach. In contrast to the existing literature, which is limited to OECD data, we have estimated our model using a matrix of bilateral migration stocks for 127 countries. We find that the inverted-U relationship between income at origin and migration found by other authors survives the more demanding bilateral specification but does not survive both instrumentation and introduction of controls for the geographical and cultural proximity between country pairs. We also evaluate the effect of migration on origin and destination country income using the geographically determined component of migration as a source of exogenous variation and fail to find a significant effect of migration on origin or destination income.
    Keywords: human development, human mobility, migration, poverty
    JEL: F16 F22 O15 O19 O57
    Date: 2009–10
  5. By: Dominique van der Mensbrugghe (Development Prospects Group (DECPG) at the World Bank); David Roland-Holst (University of California, Berkeley)
    Abstract: Global labor markets have evolved dramatically in the last several decades and will continue to so for some time to come, driven by changing population demographics, economic globalization, dramatic changes in transportation technology, and accelerating institutional change. All these characteristics of migration make it an essential policy issue for the human development agenda. The United Nations Human Development Report for 2009 intends to provide a forward-looking assessment of global labor market dynamics, with particular reference to the effects of increased labor mobility on global patterns of employment and output. To date, the most rigorous analysis of this subject is the World Bank Global Prospect Group’s forecasts with their Global Economic Prospects Linkage model. This report describes how an update of the GEP model captures more detailed information on global labor movements and heterogeneity, and reports new projections on global migration patterns. These results suggest complex market interactions between migrants and resident workers, whether native or migrant, and between labor and other factors of production. For example reducing migration raises the premium on migrant labor in the destination countries, while lowering the relative return to capital. The first effect makes for higher real income, consumption, and remittances for migrants of both types. For native populations in high income countries, the negative capital income effect dominates the wage effect of reduced competition from migrants. It is perhaps ironic that reducing labor competition is more beneficial to migrants, who lack the capital income and thereby gain absolutely from rising relative wages. Of course one of the primary demand drivers for migrants is the desire to profit from using capital resources more fully within high income economies. In OECD economies, pension schemes guarantee that a significant part of these profits accrue indirectly to native workers. Taken together, these results strongly support the argument that migration has beneficial growth effects on global real economic activity, improving the efficiency of international resource allocation for the benefit of both sending and receiving countries. However, these reassuring aggregate results mask more complex interactions in domestic labor markets, and there will inevitably be both winners and losers from the ensuing structural adjustments. Having said this, the existence of substantial aggregate gains, particularly new fiscal resources for the public sector, suggests the prospect of adjustment assistance to offset adverse impacts.
    Keywords: Migration, globalization, North-South
    JEL: O1 O15 F1 F16 J01 F22
    Date: 2009–10
  6. By: Jonathan Crush (Southern African Migration Project (SAMP) and Southern African Research Centre (Queen’s University)); Sujata Ramachandran (Southern African Migration Project (SAMP))
    Abstract: In the continuing discussion on migration and development, the vulnerability of all migrant groups to exploitation and mistreatment in host countries has been highlighted along with an emphasis on protecting their rights. However, xenophobia has not yet received explicit attention although anti-migrant sentiments and practices are clearly on the rise even in receiving countries in developing regions. Despite gaps in existing empirical work, research and anecdotal evidence exposes pervasive forms of discrimination, hostility, and violence experienced by migrant communities, with the latter becoming easy scapegoats for various social problems in host countries. This study attempts to insert xenophobia in this debate on migration and development by examining the growth of this phenomenon in host countries in the South. It provides short accounts of xenophobia witnessed in recent times in five countries including South Africa, India, Malaysia, Libya, and Thailand. The ambiguity surrounding the concept is discussed and crucial features that define xenophobia are outlined. A variety of methods to study it are likewise identified. Using a wide range of examples from diverse contexts, the paper explores possible reasons for the intensification of xenophobia. The final sections of the paper briefly outline the developmental consequences of rampant xenophobia for migrant and host populations while examining policy options to tackle it.
    Keywords: Xenophobia; anti-immigrant prejudice; violence; intolerance; social exclusion; discrimination; migrant vulnerability; policy; South Africa, India, Libya, Thailand, Malaysia
    JEL: O1 O15 Z1 F22
    Date: 2009–09
  7. By: Shyamal Chowdhury (University of Sydney); Ahmed Mushfiq Mobarak (School of Management at Yale University); Gharad Bryan (Yale University)
    Abstract: The rural northwestern districts of Bangladesh, home to 10 million people, experience a preharvest seasonal famine, locally known as Monga, with disturbing regularity. Surprisingly, outmigration from the Monga-prone districts is not all that common. This research tests whether migration could play any role in Monga mitigation. We implemented a randomized intervention that provided monetary incentives to individuals in Monga-prone regions to seasonally outmigrate during the pre-harvest season. We experimentally varied the conditionalities attached to the incentives, such as a requirement to form a group and migrate jointly (as opposed to migrating individually), sometimes assigning migration partners and the destination, and varying group size. This paper reports just the first stage results of this randomized intervention project, where we focus on household responsiveness to our incentive offers in terms of their decision to migrate. Our cash and credit incentives had a very large effect on migration propensity: over 40% of those receiving an incentive choose to migrate, whereas only 13% of control households do. This large effect is consistent with the presence of savings or borrowing constraints for these households, since providing information on wages and employment conditions at destinations only has a negligible 2 percentage point impact on the propensity to migrate relative to the control group.
    Keywords: Monga, famine, Bangladesh, migration
    JEL: O1 O15 R2 R23 F22
    Date: 2009–09
  8. By: Partha Deb (Department of Economics, Hunter College and the Graduate Center, City University of New York); Papa Seck (Human Development Report Office, United Nations Development Programme)
    Abstract: The aim of this paper is to measure the returns to migration using non-experimental data taking both observed and unobserved characteristics into account. A significant challenge related to migration research and the issues of unobserved heterogeneity is that the standard 2stage least squares estimator (2SLS) is strictly only applicable to situations with linear and continuous treatment and outcomes, both of which are not appropriate for models of migration and many outcomes of interest. Furthermore, migration is not always a binary process given that people migrate to city or non-city locations and some migrants do return. Introducing these multinomial treatment effects means that one cannot rely on standard 2SLS methods. Using panel data from Indonesia (Indonesia Family Life Survey—IFLS) and Mexico (Mexican Family Life Survey— MxFLS) and applying non-linear instrumental variable (Heckman’s treatment effects model) and maximum simulated likelihood models, we measure the impacts of migration on a broad range of variables that include socio economic outcomes such as consumption, nutrition, health status and emotional well-being for adult household members and health and schooling outcomes for children. We find consistent results for both countries that point to significant trade-offs related to migration. We found that migration can greatly improve socio-economic status through increases in income or consumption but can also be detrimental to the health status and emotional well-being of migrants and/or their extended families.
    Keywords: Migration, selection, non-linear instrumental variables, consumption, socio-economic mobility, health, education
    JEL: O1 O15 C3 C8 F22
    Date: 2009–07
  9. By: Jeni Klugman (Human Development Report Office of the United Nations Development Programme); Isabel Medalho Pereira (Human Development Report Office of the United Nations Development Programme)
    Abstract: This paper presents an internationally comparable assessment of several dimensions of migration policies as of early 2009. For a selected set of 28 countries, both developed and developing, we analyse the admission criteria, policies on integration and treatment of migrants, and efforts to enforce those policies. Irregular migration is a particular area of focus. The analysis distinguishes between different entry regimes, namely: labour migrants (high or low skilled, with a permanent or a temporary permit), those who move with a family-related visa, humanitarian migrants (asylum seekers and refugees), international visitors and international students. The data is drawn from an assessment by country experts as well as by desk-research of HDRO staff.
    Keywords: Migration policies, admission, treatment, enforcement
    JEL: O1 O15 J0 F22
    Date: 2009–10
  10. By: Edward Miguel (Center of Evaluation for Global Action, University of California, Berkeley); Joan Hamory (Centre of Evaluation for Global Action, University of California)
    Abstract: This study exploits a new longitudinal dataset to examine selective migration among 1,500 Kenyan youth originally living in rural areas. We examine whether migration rates are related to individual “ability”, broadly defined to include cognitive aptitude as well as health, and then use these estimates to determine how much of the urban-rural wage gap in Kenya is due to selection versus actual productivity differences. Whereas previous empirical work has focused on schooling attainment as a proxy for cognitive ability, we employ an arguably preferable measure, a pre-migration primary school academic test score. Pre-migration randomized assignment to a deworming treatment program provides variation in health status. We find a positive relationship between both measures of human capital (cognitive ability and deworming) and subsequent migration, though only the former is robust at standard statistical significance levels. Specifically, an increase of two standard deviations in academic test score increases the likelihood of rural-urban migration by 17%. Accounting for migration selection due to both cognitive ability and schooling attainment does not explain more than a small fraction of the sizeable urban-rural wage gap in Kenya, suggesting that productivity differences across sectors remain large.
    Keywords: Migration, selection, human capital, ability, urban-rural wage gap, productivity
    JEL: O1 O15 C3 C33 F22
    Date: 2009–09
  11. By: Wei Ha (Policy Specialist at the Human Development Report Office, UNDP); Junjian Yi (Economics Department of the Chinese University of Hong Kong); Junsen Zhang (Economics Department of the Chinese University of Hong Kong)
    Abstract: This paper analyzes the impact of rural-to-urban migration on income inequality and gender wage gap in source regions using a newly constructed panel dataset for around 100 villages over a ten-year period from 1997 to 2006 in China. Since income inequality is time-persisting, we use a system GMM framework to control for the lagged income inequality, in which contemporary emigration is also validly instrumented. We found a Kuznets (inverse U-shaped) pattern between migration and income inequality in the sending communities. Specifically, contemporary emigration increases income inequality, while lagged emigration has strong income inequalityreducing effect in the sending villages. A 50-percent increase in the lagged emigration rate translates into one-sixth to one-seventh standard deviation reduction in inequality. These effects are robust to the different specifications and different measures of inequality. More interestingly, the estimated relationship between emigration and the gender wage gap also has an inverse Ushaped pattern. Emigration tends to increase the gender wage gap initially, and then tends to decrease it in the sending villages.
    Keywords: Internal Migration; Inequality; System GMM
    JEL: O15 J61 D31 C33
    Date: 2009–07
  12. By: Wei Ha (Policy Specialist at the Human Development Report Office, UNDP); Junjian Yi (Economics Department of the Chinese University of Hong Kong); Junsen Zhang (Economics Department of the Chinese University of Hong Kong)
    Abstract: This paper examines the effects of both permanent and temporary emigration on human capital formation and economic growth of the source regions. To achieve this end, this paper explores the Chinese provincial panel data from 1980 to 2005. First, the fixed effects model is employed to estimate the effect of emigration on school enrollment rates in the source regions. Relative to this aspect, we find that the magnitude (scale) of permanent emigrants (measured by the permanent emigration ratio) is conducive to the improvement of both middle and high schools enrollments. In contrast, the magnitude of temporary emigrants has a significantly positive effect on middle school enrollment but does not have a significant effect on high school enrollment. More interestingly, different educational attainments of temporary emigrants have different effects on school enrollment. Specifically, the share of temporary emigrants with high school education positively affects middle school enrollment, while the share of temporary emigrants with middle school education negatively affects high school enrollment. Second, the instrumental variable method is applied to estimate the effect of emigration on economic growth within the framework of system Generalized Method of Moments (GMM). The estimation results suggest that both permanent and temporary emigrations have a detrimental effect on the economic growth of the source regions. Our empirical tests provide some new evidence to the "brain drain" debate, which has recently received increasing attention.
    Keywords: Brain drain, human capital, emigration, economic growth
    JEL: J22 J24 O12 O15 F22
    Date: 2009–08
  13. By: Richard Black (Development Research Centre on Migration, Globalisation and Poverty and Sussex Centre for Migration Research, University of Sussex); Jon Sward (Development Research Centre on Migration)
    Abstract: This paper focuses on the specific question of how Poverty Reduction Strategy Papers (PRSPs) address migration and its potential to enhance human development at the national level. Based on a review of PRSPs completed since 1999, it argues that migration often remains poorly recognised or analysed in poorer countries in terms of its impacts on poverty reduction, whilst attitudes towards migration in these countries are often highly negative and/or based on limited evidence, especially in relation to internal migration. Analysis of how both internal and international migration are treated in PRSPs is also placed in the context of a broader understanding of the purpose of, and constraints faced by the PRS process. The paper goes on to highlight the extent to which in Sub-Saharan African countries, successive drafts of PRSPs have shown increasing attention to migration. It also considers how analysis of the problems and opportunities associated with different types of migration are converted into policy initiatives, highlighting the lack of good practice in terms of the incorporation of migration into human development policy.
    Keywords: Poverty Reduction Strategy Papers (PRSPs), internal migration, international migration, sub-Saharan Africa, analysis of migration
    JEL: O1 O15 F22
    Date: 2009–08
  14. By: George Gray Molina (Human Development Report Office, United Nations Development Programme); Ernesto Yañez (Central Bank of Bolivia)
    Abstract: Over half of Bolivian heads of household are lifetime migrants. This paper looks at the long term impact of internal migration over human development in Bolivia. Three issues frame these effects. First, twenty five years of rural to urban migration have transformed the demographic profile of Bolivian society. The new middle third is younger, more bilingual and better educated, with more access to social services than in the past. The poorest of the poor, however, did not migrate to the extent of the non-poor. Second, urban workers make approximately four times as much wages as identical workers in rural areas, controlling for age, ethnicity, and years of schooling. Two caveats dampen this place premium effect: schooling quality and informal insurance mechanisms that make migration more costly. Third, increases in human development can be associated to an “urbanization dividend” that made social services more accessible to first and second generation migrants over a twenty-five year period. Future increases in human development, however, are likely to depend on providing quality services and expanding socials services to the rural poor, rather on gains from urbanization. The key policy challenges of the future include both an expansion of services to the poorest of the poor in rural areas and breaking down discrimination barriers against women and indigenous people in urban labor markets.
    Keywords: Migration, human development, poverty, employment, schooling
    JEL: J11 O15 I32 F22
    Date: 2009–09
  15. By: Philip Martin (Department of Agricultural and Resource Economics, University of California, Davis)
    Abstract: This paper provides a comprehensive assessment of international migration in the Asia-Pacific region and reviews internal migration in China. After putting Asia-Pacific migration in a global context, it reviews trends in migration and the impacts of migrants in the major migrantreceiving countries, patterns of migration and their development impacts in migrant-sending countries, the human development impacts of migration, and three policy issues, viz, new seasonal worker programs for Pacific Islanders in New Zealand and Australia, required local sponsorship of foreigners in the Gulf countries, and the economic effects of migrants in the US and Thailand. Recent trends in internal migration in China, which shares attributes of international migration because of the hukou (household registration) system, are also assessed.
    Keywords: International labor migration, migrant workers, guest workers, Asia
    JEL: O1 O15 J0 F22
    Date: 2009–08
  16. By: Sylvie Demurger (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines); Hui Xu (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines)
    Abstract: This paper analyzes return migrants' occupational choice upon their return to their home village, by using an original rural household survey conducted in Wuwei county (Anhui province, China) in 2008. We apply two complementary approaches : a horizontal comparative analysis of occupational choice between non-migrants and return migrants, and a vertical investigation of the impact of migration experience on returnees only. Two main findings are drawn up from the estimation of probit models which account for potential selection bias and endogeneity. First, return migrants are more likely to be self-employed and to opt for higher ability jobs than non-migrants. Second, both return savings and the frequency of job changes during migration increase the likelihood for return migrants to become self-employed. These findings suggest that (a) working experience during migration enhances individual's human capital and entrepreneurial ability, and (b) repatriated migration experience is a key stimulating factor in promoting rural entrepreneur activity.
    Keywords: Return migrants ; occupational change ; entrepreneurship ; Asia ; China
    Date: 2010
  17. By: Juan Antonio Montecino; Jose Antonio Cordero
    Abstract: This paper looks at both the theoretical and empirical literature on capital controls and finds that capital controls can play an important role in developing countries by helping to insulate them from some of the harmful effects of volatile and short-term capital flows. The authors look at controls on capital inflows in Malaysia (1989-1995); Colombia (1993-1998); Chile (1989-1998); and Brazil (1992-1998), and also consider the case of Malaysia’s controls on outflows in 1998-2001. They conclude that there is sufficient backing in both economic theory and empirical evidence to consider more widespread adoption of capital controls in order to address some of the macroeconomic problems associated with short-term capital flows, to enable certain development strategies, and to allow policy makers more flexibility with regard to crucial monetary and exchange rate policies.
    Keywords: capital controls, capital flows
    JEL: O O1 O16 O2 O23 O24 O5 O55 F F2 F20 F21 F3 F32
    Date: 2010–04
  18. By: Andreas Freytag (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Daniel Meierrieks (University of Paderborn); Angela Münch (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Friedrich Schneider (JKU Linz)
    Abstract: We jointly analyze the genesis of terrorism and civil war, providing a simple conceptual framework to explain why violent opposition groups choose distinct forms of violence (i.e., terrorism and open rebellion). We argue that the distinct modes of violent opposition are chosen by violent opposition groups in response to the strengths and weaknesses of the system they challenge. An empirical test of this hypothesis for 103 countries for the period of 1992 to 2004 indeed shows that the socio-economic strength and stability of a system is positively related to the likelihood of terrorism but negatively to incidences of more violent forms of violent opposition. We also show that poor conflict management (as a system weakness) positively impacts the likelihood incidences of more violent modes of violent opposition more likely. Furthermore, we find that system size is positively associated with all analyzed modes of violent opposition.
    Keywords: terrorism, civil conflict, system strength
    JEL: O1 I3
    Date: 2010–04–26
  19. By: Kirdar, Murat G. (Middle East Technical University)
    Abstract: This paper examines how immigrants' migration duration and saving decisions in the host country respond to the purchasing power parity (ppp) and the wage ratio between the host and source countries. It is shown that in theory immigrants may stay longer in the host country as a result of an increase in ppp, in particular those with a high willingness to substitute consumption intertemporally. However, the empirical results from immigrants in Germany reveal that optimal migration duration decreases in ppp. Holding individual immigrant characteristics constant, immigrants from poorer source countries have shorter migration duration than immigrants from wealthier source countries. The empirical results also reveal that saving rate increases in ppp.
    Keywords: international migration, immigrant workers
    JEL: F22 J61
    Date: 2010–04
  20. By: Carine Milcent; Feng Jim
    Abstract: In China, with the economic reforms leading to the raise in agricultural productivity, the rural healthcare organisation has been weakened. In a 1991-2006 database, a decrease in the healthcare demand is observed. If many papers study the effect of the insurance system (NCMS) on the healthcare demand, other factors explaining the healthcare demand have not received much research attention yet. We use a matching and difference in difference model to correct for the selection bias on insurance effect. If the income level and insurance enrollment plays a major role on the healthcare demand, we shed light on the peer effect of the industrialization process and the changes affecting healthcare facilities. In a context of healthcare price widely increasing, the change in villagers working activity leads to an increase in the inequality of healthcare access (due to inequality of wage, mobility, and private insurance). The result is a reduction and sometimes worse, an exclusion from the healthcare access for the poorest. A public policy has to be conducted to support farmers, in particular in areas where a significant part of the village inhabitants have an industrial activity.
    Date: 2010
  21. By: Nicolas Berman and Philippe Martin
    Abstract: In the early stage of the 2008-2009 financial crisis, the conventional wisdom was that financial under-development of sub Saharan African economies may have been a bless-ing in disguise because it insulated them from the direct effects of the crisis. This paper argues that this may also make African exporters, dangerously more dependent on the health of financial institutions in countries where they export. In the 2008-2009 financial crisis, we find that African exports to the US have been hit more than other countries. On past financial crises (1976-2002), we find that African exporters are more vulnerable to recessions in partner countries. Hence, African countries seem more affected by the income effect of financial crises. In addition to this income effect, we find that, for the average exporter, the disruption effect due to a financial crisis in the partner country is moderate (a deviation from the gravity predicted trade of around 2 to 8%) and long lasting (around 7 years). We find however that the disruption effect is much larger for African exporters as the fall in trade (relative to gravity) is at least 20% more than for other countries in the aftermath of the crisis. Only a part of the vulnerability of African exports comes from a composition effect as primary exports are hit more than manufac-turing exports. We also provide evidence that African countries more dependent on trade finance are hit more badly
    Keywords: International trade, financial crises, trade collapse, Africa
    Date: 2010–01–29
  22. By: Kenneth Harttgen and Stephan Klasen
    Abstract: While progress in developing countries as a whole, in terms of growth, poverty reduc-tion, and several MDGs, has been quite good in recent years, fragile states lag behind in levels of MDG achievement. To understand the link between fragility and MDG progress, and also to identify the most effective policy interventions to achieve the MDGs, it is es-sential that fragile states are appropriately defined and classified. While the amount of literature on how to engage with fragile states is rapidly accumulating, only very limited analysis exists that investigates to what extent the levels and trends in the MDGs differ significantly between different definitions of fragile and non-fragile states. The purpose of this paper is to investigate the usefulness of the fragile state concept in tracking the levels and progress of the MDGs. In doing so, this paper applies several definitions of fragility in order to study the MDG progress between 1990 and 2006. It compares aver-age performance in levels and trends of MDG progress between fragile and non-fragile countries and also compares within-group heterogeneity. The paper shows that fragile countries are, indeed, performing worse in terms of MDG levels. In terms of MDG pro-gress, progress is not necessarily slower in fragile states. Only a rather small number of countries suffering from compound disadvantages are doing significantly worse in terms of MDG progress. Lastly, the heterogeneity of MDG performance among fragile states is so large that it is not very useful to treat them as a group; the problems they face, as well as the solutions required, differ greatly and have to be developed and treated sui generis.
    Keywords: Fragile States, Millennium Development Goals, Heterogeneity.
    Date: 2010–01–29
  23. By: Alina Rocha Menocal
    Abstract: This paper is intended to analyse two leading approaches that have guided international efforts to promote peace and development in conflict-afflicted fragile states since the 1990s, namely peace-building and state-building. In a relatively recent development, a growing number of donors has sought to bring these two closer together, based upon the perception that the challenges posed by (post-) conflict fragile states need to be ad-dressed through an approach that combines both - "state-building for peace", as the UNDP has put it. The paper thus seeks to explore how the processes of building peace are related to the processes of building more resilient, effective, and responsive states in (post-) conflict settings. The paper provides an overview of the evolution of these two concepts and analyses key complementarities between peace-building and state-building. It also explores the challenges that arise for both on the basis of these com-plementarities. The paper goes on to examine some of the most significant tensions that arise between the two, and what these tensions may imply for the international assis-tance community. By way of a conclusion, the paper offers a few key lessons that emerge from the analysis for improved donor policy and practice in state-building for peace efforts.
    Keywords: state-building; peace-building; legitimacy; political settlement; international development..
    Date: 2010–01–29
  24. By: Andrew Mold and Annalisa Prizzon
    Abstract: Sub-Saharan Africa's export performance over recent decades has typically been por-trayed as poor compared to other regions in developing countries. This paper takes a new look at the record, using data on the volume rather than the value of African ex-ports. When analysed in volume terms a different picture of African export performance emerges. Despite being confronted by sharply declining prices, between 1995-2001 Afri-can exports expanded by an average of 5.9 percent annually. The picture changes quite significantly during the post-2002 commodity price boom period, with increases of 5.2 per cent per annum in average volumes. By using a dynamic panel of 36 Sub-Saharan countries, the aim of this paper is to analyse this apparent paradox, using data available from UNCTAD. Specifically, we investigate the price-elasticity response of African ex-porters in the light of dramatically shifting unit prices. In the context of the EDR project, we also specifically look at the question of whether countries classified as ´fragile states´ have been especially disadvantaged in terms of their export performance.
    Keywords: export determinants, Sub-Saharan Africa, export performance, commodity prices
    Date: 2010–01–29
  25. By: Janvier D. Nkurunziza
    Abstract: The financial sector in Burundi has had a very limited effect on the country's development. High political and economic risks have prevented banks from engaging in long-term lending, constraining long-term investment. Moreover, the industrial organisation of the financial sector is not conducive for development lending because the sector is used more as a source of rents than development finance. As a result, the financial sector has been unable to address the needs of the core drivers of growth in Burundi, namely, agriculture and industry. Therefore, increasing the financial sector's participation in Burundi's economic development will require an improvement in political and macro-economic stability, as well as an increase of financial institutions' long-term re-sources. Most particularly, development banking should play its role of fostering the development of agriculture and the rural economy. In addition, more competition in the financial sector should be encouraged with the aim of diversifying financial services and pushing the sector's boundaries beyond the traditional urban market to embrace the rural economy where most economic activities take place.
    Keywords: financial sector, Burundi, development
    Date: 2010–01–29
  26. By: Wim Naudé
    Abstract: It is increasingly apparent that, despite earlier hopes, the global economic crisis will have a significant impact on the economies of Sub-Saharan Africa. In order to co-ordinate and craft the most appropriate responses for African economies to withstand and recover from the crisis, it is necessary to identify the degree to which the continent, as well as the individual African countries, is at risk of being negatively impacted. This depends on both vulnerability to trade and financial shocks, as well as the resilience of countries to cope with these shocks. Accordingly, vulnerability and resilience indices are constructed for the continent and individual countries. It is shown that, of all developing regions, Africa is the most at risk from the crisis: it has higher vulnerability to trade and financial shocks, and it has the least resilience of all regions. Based upon a vulnerability-resilience matrix, the African countries most at risk are the Democratic Republic of the Congo, Burundi, Côte D'Ivoire, Liberia, Angola, the Sudan, Chad, Guinea-Bissau, Guinea, Zimbabwe, Somalia, Kenya, Mali, Nigeria, Ghana, Cape Verde and Mauritania. With a few notable exceptions, such as Kenya and Ghana, these are all 'fragile states'. Based upon the distinction between vulnerability and resilience, an action guide is proposed. This makes a distinction between short-term and longer-term actions, in particular be-tween actions aimed at mitigating the impact of the external shocks, assisting countries to cope, and actions aimed at reducing risk.
    Keywords: Global financial crisis, Africa, vulnerability, resilience, fragile states. .
    Date: 2010–01–29
  27. By: Gustavsson Tingvall, Patrik (China Economic Research Center); Ljungwall, Christer (China Economic Research Center)
    Abstract: Whether China has benefited more from exports than other countries has produced intensive debate. We analyze this question by performing a meta-analysis on a sample of 68 country-specific studies analyzing the link between exports and economic growth. The results show that exports have been more significant for growth in China than in other countries, even when China is compared to other transition/emerging economies.
    Keywords: Meta-analysis; Exports; Economic growth; China
    JEL: F21 F43 O11 O53
    Date: 2010–04–01
  28. By: Sjöholm, Fredrik (Research Institute of Industrial Economics (IFN)); Lipsey, Robert E. (NBER); Sun, Jing (City University of New York)
    Abstract: Many developing countries would like to increase the share of modern or formal sectors in their employment. One way to accomplish this goal may be to encourage the entrance of foreign firms. They are typically relatively large, with high productivity and good access to foreign markets, and might therefore be better at creating jobs than domestic firms are. However, previous research on the issue has been limited by the paucity of long data sets for firm operations. We examine employment growth in Indonesia in a large panel of plants between 1975 and 2005, and especially in plants taken over by foreign owners from domestic ones. Employment growth is relatively high in foreign-owned establishments, although foreign firms own relatively large domestic plants, which in general grow more slowly than smaller plants. For plants that change the nationality of ownership during our period, we find a strong effect of shifts from domestic to foreign ownership in raising the growth rate of employment, but no significant effects of shifts from foreign to domestic ownership. The faster growth of employment in the foreign-owned plants in general is concentrated in the takeovers, especially in the year of acquisition. Foreign takeover of a domestically-owned plant, on average, brings a large immediate expansion of employment.
    Keywords: Foreign Direct Investment; Employment; Indonesia; Acquisitions
    JEL: F23 J21 J23
    Date: 2010–04–26
  29. By: Pieters, Janneke (Groningen University)
    Abstract: Previous studies show that rising returns to education have lead to higher wage inequality in developing countries. However, given the importance of non-wage employment and indirect effects of education through labour supply and fertility choices, a similar relationship does not necessarily hold for inequality between households. Based on a decomposition analysis for India, we find counteracting impacts of education on household expenditure inequality. Declining returns to education of household heads reduced inequality, driven by the self-employed. In contrast, rising returns to spouses? education increased inequality in urban areas. We also find that changes in education levels increased rural and urban inequality, due to persistently high illiteracy. Finally, the indirect effect on fertility had a small equalizing impact in urban areas, but slightly increased inequality in rural areas.
    Date: 2010
  30. By: Katsushi Imai; Thankom Arun; Samuel Kobina Annim
    Date: 2010
  31. By: Yin-Wong Cheung (University of California, Santa Cruz ,Hong Kong Institute for Monetary Research); XingWang Qian (SUNY, Buffalo State College)
    Abstract: We study the empirical determinants of China's capital flight. In addition to the covered interest differential, our empirical exercise includes a rather exhaustive list of macroeconomic variables and a few institutional factors. Overall, our regression exercise shows that China's capital flight is quite well explained by its own history and covered interest differentials. The other possible determinants offer relatively small additional explanatory power. It is also found that China's capital flight responds differently to the components of covered interest differentials and to the positive and negative components of these variables. The response pattern, however, depends on the choice of data frequency. The general impression is that the monthly results are more intuitive than the quarterly ones.
    Keywords: Covered Interest Differential, Forward Premium, Expected Depreciation, Asymmetric Response, Macro Determinants
    JEL: F3 F32 G15
    Date: 2010–03
  32. By: James B. Ang; Jakob B. Madsen
    Abstract: Using data for six Asian miracle economies over the period from 1953 to 2006, this paper examines the extent to which growth has been driven by R&D and tests which second-generation endogenous growth model is most consistent with the data. The results give strong support to Schumpeterian growth theory but only limited support to semi-endogenous growth theory. Furthermore, it is shown that R&D has played a key role for growth in the Asian miracle economies.
    JEL: O30 O40
    Date: 2010–02
  33. 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 percent if it could adopt the world's best practice in the financial sector. Still, this amounts to only 34 to 40 percent of the gap between Uganda's potential and actual output.
    Date: 2010
  34. By: Wang, Zhi (United States International Trade Commission (USITC)); Wei, Shang-Jin (Columbia University); Wong, Anna (University of Chicago)
    Abstract: While openness to trade is a well-recognized hallmark of the Asian growth model, another component of the model is a leapfrogging strategy—the use of policies to guide industrial structural transformation ahead of a country's factor endowment. Does the leapfrogging strategy work? Opinions vary but the evidence is scarce in part because it is more difficult to measure the degree of leapfrogging than the extent of trade openness. We undertake a systematic look at the evidence both across countries and subregions within a large regional Asian economy to assess the efficacy of such a strategy. We conclude that there is no strong and robust evidence that this strategy works reliably.
    Keywords: growth; trade openness; leapfrogging
    JEL: O20 O40
    Date: 2010–04–01
  35. By: Vivien Kappel (CER-ETH - Center of Economic Research at ETH Zurich, Switzerland)
    Abstract: This paper examines the effects of financial development on income inequality and poverty. The results of both cross-country and panel data regressions suggest that inequality and poverty are reduced not only through enhanced loan markets, but also through more developed stock markets. We show that ethnic diversity and the distribution of land are significant and robust determinants of both income inequality and poverty. Finally, we find evidence that government spending leads to a reduction in income inequality in high income countries. In low income countries, however, we find no significant effect.
    Keywords: Financial development, inequality, poverty
    JEL: O16 G20
    Date: 2010–03
  36. By: Che, Natasha Xingyuan
    Abstract: This paper aims (1) to test the endowment-based structural change theory proposed by recent studies such as Acemoglu & Guerrieri (2008) and Ju, Lin & Wang (2009); and (2) to explore the linkage between structural coherence and economic growth. By structural coherence, I refer to the degree that a country’s industrial structure optimally reflects its factor endowment fundamentals. Using data from 27 industries across 15 countries, I examine whether higher capital endowment is associated with larger sizes in capital intensive industries for overall fixed capital as well as for three detailed categories of capital – information and communication technology capital (ICT), non-residential structure, and machinery. For the overall capital, I found that the real and nominal output share and employment share of capital intensive industries were significantly bigger with higher initial capital endowment and with faster capital accumulation. This result also applies to ICT capital and partially applies to machinery and structure capital. In addition, the labor income share of capital intensive industries is found to be negatively associated with capital endowment and capital accumulation in most types of capital, which provides one way to understand the relationship between structural change and the decline of labor income share in many sample countries during recent decades. Finally, I test whether a higher level of coherence between capital endowment and industrial structure is related to better economic growth performance. The result shows a significantly positive relationship between a country’s aggregate output growth and the degree of structural coherence in all types of capital. Quantitatively, the structural coherence with respect to the overall capital explains about 35% of the growth differential among sample countries. The results of the paper are mostly robust to alternative measure of capital intensity, to controls for other industry characteristics such as human capital and degree of value-added, and to controls for other determinants of structural change on both demand side and supply side.
    Keywords: capital endowment; structural change; economic growth; capital intensity; structural coherence;
    JEL: O11 E2 O14
    Date: 2010–04–15
  37. By: Summerhill, William
    Abstract: Brazil is frequently portrayed as exhibiting persistent and structural economic inequality that is rooted in the early colonial experience, and is believed to undermine development in the long run. I construct original measures of agricultural inequality for 1905 in what is today Brazil’s largest state, using farm-level micro data for some 50,000 farms. Using these measures of inequality, along with contemporary covariates and other historical variables I assess the impact of colonial institutions, slavery, farm inequality, and political inequality on long-term development in São Paulo. The principal findings are: (1) a potentially coercive colonial institution, the aldeamento, is positively correlated with income per capita at the end of the twentieth century; (2) measures of the intensity of slavery have little if any independent impact on income in 2000; (3) farm inequality was not persistent in São Paulo at the county level over the twentieth century; (4) in both OLS and IV estimates, no negative effect can be found for 1905 inequality on long-term development; (5) political inequality in the early twentieth century, measured by the extent of the franchise, is unrelated to contemporary farm inequality, and also unrelated to long-term economic growth; and (6) the provision of local public goods in the early twentieth century, measured by local public education outlays, has a positive impact on long-term development, but was not related to contemporary economic or political inequality. Overall, neither the intensity of slavery nor the pattern of inequality had any discernable negative economic impact in the long run.
    Keywords: Inequality; economic development; wealth; agriculture; regional analysis; growth; slavery; underdevelopment; municipalities; Latin America; public finance
    JEL: O1 N9 O13
    Date: 2010–04–14
  38. By: Kasat, Puja; Suneja, Vivek
    Abstract: Though microfinance in India has grown phenomenally in the last decade, there has been a problem with increasing the geographical reach and impact of the same. The reasons for less reach are multifold but primarily, lack of continuous capital and little state & regulatory support to the sector. To address the problem of capital, the first part of this study focuses on which funding source suits the industry the most given its mission to alleviate poverty, in order to create commercially sound and sustainable organizations. The second part of this study focuses on increasing the impact which microfinance can create on the lives of the poor, by innovatively using the channel of microfinance to provide increased access to education to the poor. Empowerment through education will be a key in any efforts to improve the quality of rural life and the welfare of the next generation in developing countries.
    Keywords: Microfinance; education; integrate; equity
    JEL: G21
    Date: 2010–03

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