nep-dev New Economics Papers
on Development
Issue of 2010‒06‒26
eighteen papers chosen by
Mark Lee
Towson University

  1. Global Governance and Human Development: Promoting Democratic Accountability and Institutional Experimentation By Arjun Jayadev
  2. Human Development in Africa By Augustin Kwasi Fosu and Germano Mwabu
  3. Capitalism, the state, and the underlying drivers of human development By Michael Walton
  4. Curse or Blessing? Natural Resources and Human Development By José Pineda and Francisco Rodríguez
  5. Inequality in Vietnamese Urban-Rural Living Standards, 1993-2006 By Le, Huong Thu; Booth, Alison L.
  6. Beyond Cash: Assessing Externality and Behaviour Effects of Non-Experimental Cash Transfers By Rafael Perez Ribas; Fabio Veras Soares; Clarissa Gondim Teixeira; Elydia Silva; Guilherme Issamu Hirata
  7. Pro-Poor Growth, Poverty and Inequality in Rural Vietnam By Woojin Kang; Katsushi Imai
  8. The microfoundations of dual economy models By Xiaobing Wang; Jenifer Piesse
  9. Quantity-Quality and the One Child Policy: The Only-Child Disadvantage in School Enrollment in Rural China By Nancy Qian
  10. Dependency Ratio and the Economic Growth Puzzle in Sub-Saharan Africa. By Bichaka Fayissa; Paulos Gutema
  11. Child Undernutrition in India By Raghav Gaiha; Raghbendra Jha; Vani S. Kulkarni
  12. Inequality in the Utilization of Maternal Care and the Impact of a Macroeconomic Policy: Evidence from Bangladesh By Hossain, M. I.
  13. Catastrophic Natural Disasters and Economic Growth By Eduardo Cavallo; Sebastian Galiani; Ilan Noy; Juan Pantano
  14. The Discovery of New Export Products in Ecuador By Ivan Hernandez; Nathalie Cely; Francisco Gonzalez; Ernesto Munoz; Ivan Prieto
  15. The Persistent Gender Earnings Gap in Colombia, 1994-2006 By Alejandro Hoyos; Hugo Nopo; Ximena Pena
  17. School Proximity and Child Labor: Evidence from Rural Tanzania By Kondylis, Florence; Manacorda, Marco
  18. Minimum Wages and Earnings Inequality in Urban Mexico By Bosch, Mariano; Manacorda, Marco

  1. By: Arjun Jayadev (University of Massachusetts Boston)
    Abstract: This paper seeks to critically examine recent debates on global governance, albeit from a human development perspective. In doing so it identifies and describes two important principles for building institutions for the advancing of human development: what may be termed the imperative of democratic accountability (most closely associated with the work of Amartya Sen) and the imperative of institutional experimentation (which has been theorized most extensively by Roberto Unger). The paper discusses these two principles in light of some of the major challenges that can and do affect the international community as a whole. It reviews some of the decentralized forms of governance which are evolving as developing countries assert themselves in debates on institutional organization. It then focuses more extensively on the global financial crisis as a case study in the inadequacies of current global governance. Finally, it uses the two imperatives mentioned to review the lessons that the crisis has provided, before describing specific proposals to redesign systems of global economic governance. Chief among these are the reforms advocated by the Commission of Experts of the President of the United Nations General Assembly on Reforms of the International Monetary and Financial System.
    Keywords: Human Development, Economic Development, Inequality, Human Rights, Capabilities, Health, Governance
    JEL: O10 O15 O16 O19 O20
    Date: 2010–06
  2. By: Augustin Kwasi Fosu and Germano Mwabu (World Institute for Development Economics Research, United Nations University; University of Nairobi, Kenya)
    Abstract: Human development (HD), a process designed to enhance human lives directly, is contrasted with economic development, which entails the expansion of material things intended to fulfill human needs. Human development empowers people to participate in the improvement of their own well-being. The paper looks at the record of HD in Africa over the period 1970-2005, using half-decadal data derived from United Nations sources and national statistical bureaus. It is found that over the period analyzed, the human development index improved in all African countries except in Zambia, where it declined, due to unfavorable terms of trade and to persistent health and governance problems, among challenges. Nonetheless, despite this progress, African countries continue to lag behind other regions of the world in HD. There has been little advance on the economic development front, where growth plummeted in most African countries, impoverishing nearly 50 per cent of the population. Towards the end of the 1990s, however, African economies began to recover due mainly to reforms in governance and distributive systems, and in mechanisms to protect people against downside risks, including disease pandemics, political instabilities, droughts and adverse terms of trade. The paper argues for a continuation of reforms in order to further improve economic and human development outcomes on the continent.
    Keywords: Human development, poverty, political and economic governance, Africa
    JEL: I30 I0 O10 F13 Y1
    Date: 2010–06
  3. By: Michael Walton (Harvard University and the Centre for Policy Research, New Delhi)
    Abstract: What are the underlying drivers of human development? This essay argues that long-term human development, in incomes, social conditions, security and so on, is fundamentally driven by capitalist dynamics and state functioning. The big issue is not state versus market, or growth versus equity, or dynamism versus security. It is the jointly determined functioning of both capitalism and the state. It is in particular a consequence of the extent to which both capitalist and state behaviour is oligarchic, extractive, exploitative and divisive as opposed to being inclusive, innovative, accountable, responsive and effective at mediating distributional conflict. This can be conceptualized, at a point of time, in terms of the nature of the political equilibrium, or, alternatively, the way in which social contracts work. This is a product of the historically shaped interaction between political and economic elites, and between these and various social groups. Specific policy designs of course matter, whether in terms of market-related policy, regulation, designs for social provisioning. But the ways in policy and institutional choices work, and indeed the choices societies make, is intimately linked to the nature and functioning of the underlying social contracts that in turn shape capitalist dynamics and state behaviour.
    Keywords: capitalism, growth, poverty, human development
    JEL: I00 O10 P10 P16
    Date: 2010–06
  4. By: José Pineda and Francisco Rodríguez (Human Development Report Office, UNDP; Human Development Report Office, UNDP)
    Abstract: This paper argues against a natural resource curse for human development. We find evidence that changes in human development from 1970 to 2005, proxied by changes in the Human Development Index, are positively and significantly correlated with natural resource abundance. While our results are consistent with those of other authors who have recently argued that natural resources do not adversely affect growth, we find strong evidence that natural resources have a positive effect on human development and particularly on its non-income dimensions. However, results from Latin America interactions show that the positive impact of natural resources in this region is significantly smaller than in the rest of the world. These results contribute to a broader discussion about the “resource curse” by showing that natural resources may be a blessing rather than a curse for human development, primarily through its effects on education and health rather than income.
    Keywords: Natural resources, Growth, Development
    JEL: O1 O13 O5
    Date: 2010–06
  5. By: Le, Huong Thu (Australian National University); Booth, Alison L. (University of Essex)
    Abstract: Using data from five waves of the Vietnam Household Living Standard Survey, we find evidence of significant urban-rural expenditure inequality. Urban-rural inequality in Vietnam increased dramatically from 1993 to 1998, and peaked in 2002 before reducing slightly in 2004, and significantly in 2006. The urban-rural gap also monotonically increases across the expenditure distribution. We use a variant of the Oaxaca-Blinder decomposition method, applied to the unconditional quantile regression method of Firpo, Fortin and Lemieux (2009), to explain the components of the per capita expenditure differentials between urban and rural households at selected quantiles of the distribution. We also compare these estimates with those at mean obtained by OLS. Our results show a number of factors contributing significantly to the high urban-rural gap. These include inter-group differences in education, household demographic structure, industrial structure and their related returns. Adjusting the average characteristics of rural households to those of urban households will reduce about a half of the overall urban-rural expenditure gap. A significant part of the remaining unexplained component lies in the intercept differences; that is, the inter-group differences in other factors not captured in the model that favor urban households.
    Keywords: urban-rural inequality, Vietnam, unconditional quantile regression, Oaxaca decomposition
    JEL: O18 O53 C13
    Date: 2010–06
  6. By: Rafael Perez Ribas (International Poverty Centre); Fabio Veras Soares (International Poverty Centre); Clarissa Gondim Teixeira (International Policy Centre for Inclusive Growth); Elydia Silva (International Poverty Centre); Guilherme Issamu Hirata (International Poverty Centre)
    Abstract: In this paper we propose a method to estimate externality effects in cash transfer programmes, even in cases when the benefit is not randomly assigned. Externality is assessed through the decomposition of the average treatment effect on the treated (ATT) into participation (direct) effect and externality (indirect) effect. We also suggest a non parametric decomposition to investigate whether changes in household outcomes are caused by the income transfer itself or by the other non-monetary components of the programme, such as conditionalities and family support services. We apply all these decompositions on the effect of a conditional cash transfer (CCT) programme on household consumption and savings in Paraguay. This was possible because of the presence of two distinct comparison groups, one within the village and potentially exposed to the externality, and another in a different village not affected by the programme. Furthermore, the evaluation survey collected information on both income and consumption. The results indicate that the programme has a small impact on consumption and a considerable impact on savings. In the absence of externality, however, the programme would have a higher effect on consumption, mostly associated with the cash transfer, and a lower effect on savings. Moreover, the impact on the pattern of consumption is significantly related to a substitution effect and is not related to the increase in income. (...)
    Keywords: Beyond Cash: Assessing Externality and Behaviour Effects of Non-Experimental Cash Transfers
    Date: 2010–06
  7. By: Woojin Kang; Katsushi Imai
    Date: 2010
  8. By: Xiaobing Wang; Jenifer Piesse
    Date: 2010
  9. By: Nancy Qian
    Abstract: Many believe that increasing the quantity of children will lead to a decrease in their quality. This paper exploits plausibly exogenous changes in family size caused by relax- actions in China's One Child Policy to estimate the causal effect of family size on school enrollment of the …first child. The results show that for one-child families, an additional child signi…ficantly increased school enrollment of …first-born children by approximately 16 percentage-points. The effect is larger for households where the children are of the same sex, which is consistent with the existence of economies of scale in schooling costs.[Working Paper No. 228]
    Keywords: Education, Development, Family Planning
    Date: 2010
  10. By: Bichaka Fayissa; Paulos Gutema
    Abstract: Conventional growth theories in the literature explain the poor economic performance of African economies by stressing the inadequacy of savings, human capital, and poor institutional quality. However, the key question is how to enhance savings for the accumulation of both physical and human capital in order to spur growth. A common thread that runs through the existing models is that the dependency ratio, not only remains constant over time, but has no long-run negative impact on economic growth. By relaxing this rigid assumption, this paper constructs a growth estimating equation which accommodates this demographic factor. The analytic results from the modified model suggest that economies with high dependency ratio face their stable equilibrium at lower levels of their income per capita. Moreover, econometric results from analysis of panel data drawn from Sub-Saharan Africa economies suggest that the growth puzzle can be well explained in terms of the demographic factors, especially the level and dynamics of dependency ratio of the region.
    Keywords: Sub-Saharan Africa, growth model, dependency ratio, steady state, panel data, fixed-effects model, random-effects model
    JEL: R11 N3 F43
    Date: 2010–06
  11. By: Raghav Gaiha; Raghbendra Jha; Vani S. Kulkarni
    Abstract: We have constructed a composite indicator of anthropometric failure (CIAF) that refines the Waterlow-3 tier classification, using a recent nation-wide household survey. The CIAF and its disaggregation into subcategories of undernourished 5 years old children reveal a grimmer story of child undernutrition than conventional anthropometric indicators do. Besides, simultaneous occurrence of anthropometric failures (e.g. stunting and underweight, and stunting, wasting and underweight) is pervasive. Our analysis of determinants of CIAF yields some new insights-specifically, the important role of food prices. Investigation of the links between different anthropometric failures and prevalence of infectious diseases (viz. Diarrhoea and acute respiratory infection), however, offers some justification for the disaggregated classification of undernourished children used here. Specifically, those with more than one failure were worse-off in this respect than children with no failure. There is a strong case for income growth together with food price stabilisation in curbing child undernutrition. Education has the desired effect but it is less strong than expected. Improvement in the quality of home environment makes a difference too but it is not conditional on income or wealth alone.
    Keywords: stunting, wasting, underweight, poverty, infectious diseases, and mortality
    JEL: D12 D60 I10 I31
    Date: 2010
  12. By: Hossain, M. I.
    Abstract: In this paper we focus on the inequalities in utilization of maternal care and the associations between a macroeconomic policy and the use of maternal health care services in Bangladesh. We use four waves of a repeated cross-section dataset: the Bangladesh Demographic and Health Survey 1997, 2000, 2004 and 2007. We specify the utilization of maternal health care services as a set of three binary variables representing utilization of antenatal care, skilled attendance at birth and giving birth in a health facility. Although the use of maternal care services increased over time, less than one-quarter of mothers used a skilled attendant or gave birth in a health facility in the most recent period. We find that the circumstance factors of respondents, for example, their religion, location, education and household asset had significant associations with their choice of utilization. We observe that horizontal inequity in utilization decreased over time; yet, inequalities in the utilization of maternal care remained large in the most recent period. In addition to these issues, we assess the impacts of the Rights-Based Comprehensive Maternal Care Policy which was implemented in 2001, in response to the Millennium Development Goals in the health sector. We measure the impacts of the policy using the simple difference-in-differences method and inequality indices based difference-in-weighted-differences method. Both approaches find that the policy was effective in promoting utilization of maternal health care services in rural Bangladesh. We find that, in a developing country like Bangladesh, a well-designed health policy that is focused on key circumstance factors of the target group that they cannot control for can increase the use of health care greatly.
    Keywords: Difference-in-differences; Prenatal care; Horizontal inequity; Difference-in-weighteddifferences
    Date: 2010–06
  13. By: Eduardo Cavallo; Sebastian Galiani; Ilan Noy; Juan Pantano
    Abstract: This paper examines the short and long-run average causal impact of catastrophic natural disasters on economic growth by combining information from comparative case studies. The counterfactual of the cases studied is assessed by constructing synthetic control groups, taking advantage of the fact that the timing of large sudden natural disasters is an exogenous event. It is found that only extremely large disasters have a negative effect on output, both in the short and long run. However, this result appears in two events where radical political revolutions followed the natural disasters. Once these political changes are controlled for, even extremely large disasters do not display any significant effect on economic growth. It is also found that smaller, but still very large natural disasters, have no discernible effect on output.
    Keywords: Natural Disasters, Political Change, Economic Growth and Causal Effects
    JEL: O40 O47
    Date: 2010–06
  14. By: Ivan Hernandez; Nathalie Cely; Francisco Gonzalez; Ernesto Munoz; Ivan Prieto
    Abstract: This paper examines export diversification in Ecuador in the cases of fresh cut flowers, canned tuna, palm heart, broccoli and mangoes, using the theoretical framework on “pioneers” and “discoveries” developed by Hausmann and Rodrik(2003), as well as work by Sánchez and Butler (2006) on export costs and related uncertainties. It is found that the discoveries were mainly of traditional competitive advantage, with various degrees of technology adoption. The following policy implications are derived: i) innovative mechanisms to share the costs of new discoveries must be found and intellectual property rights strengthened; ii) cooperation among industry experts needs to improve; iii) deeper collective action to promote public-private partnerships should be undertaken; iv) relevant information and knowledge should be made available to all interested parties; and v) a national-level agenda should be undertaken to increase private investment in promising sectors while promoting the creation of public goods and minimizing rent-seeking behavior.
    Keywords: Export diversification, Ecuador
    JEL: O13 O25
    Date: 2010–06
  15. By: Alejandro Hoyos; Hugo Nopo; Ximena Pena
    Abstract: This paper surveys gender wage gaps in Colombia from 1994 to 2006, using matching comparisons to examine the extent to which individuals with similar human capital characteristics earn different wages. Three sub-periods are considered: 1994-1998; 2000- 2001; and 2002- 2006. The gaps dropped from the first to the second period but remained almost unchanged between the second and the third. The gender wage gap remains largely unexplained after controlling for different combinations of socio-demographics and job-related characteristics, reaching between 13 and 23 percent of average female wages. That gap is lower at the middle of the wage distributions than the extremes, possibly due to a gender-equalizing effect of the minimum wage. Moreover, the gap is more pronounced for low-productivity workers and those who need flexibility to participate in labor markets. This suggests that policy interventions in the form of labor market regulations may have little impact on reducing gender wage gaps.
    Keywords: Gender, Ethnicity, Wage gaps, Latin America, Colombia, Matching
    JEL: C14 D31 J16 O54
    Date: 2010–05
  16. By: Sonia Laszlo; Franque Grimard
    Abstract: We investigate the long term effects of Peru's internal conflict on women's outcomes. According to Peru's Truth and Reconciliation Commission (CVR), the conflict was responsible for over 69,000 deaths and disappearances from 1980-2000 and between 500,000 to 1 million internally displaced persons. This conflict affected households' ability to generate income because of the death or disappearance of income earners and loss of productive assets. Using data from Peru's Demographic and Health Surveys and district-level conflict data published by the CVR, we find long-term effects of the conflict on some indicators of women's health, particularly on height and anemia.
    JEL: D74 I12 J12 J16 O12 O15
    Date: 2010–05
  17. By: Kondylis, Florence; Manacorda, Marco
    Abstract: Is improved school accessibility an effective policy tool for reducing child labor in developing countries? We address this question using micro data from rural Tanzania and a regression strategy that attempts to control for non-random location of households around schools as well as classical and nonclassical measurement error in self-reported distance to school. Consistent with a simple model of child labor supply, but contrary to what appears to be a widespread perception, our analysis shows that school proximity leads to a rise in school attendance but no fall in child labor.
    Keywords: child labor; distance to school; school enrollment
    JEL: J22 J82 O12 O55
    Date: 2010–06
  18. By: Bosch, Mariano; Manacorda, Marco
    Abstract: This paper analyzes the contribution of the minimum wage to the well documented rise in earnings inequality in Mexico between the late 1980s and the early 2000s. We find that a substantial part of the growth in inequality, and essentially all the growth in inequality in the bottom end, is due to the steep decline in the real value of the minimum wage.
    Keywords: Mexico; Minimum Wage; Wage Inequality
    JEL: J31 J38 O15 O17 O24
    Date: 2010–06

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