nep-dev New Economics Papers
on Development
Issue of 2010‒07‒10
nine papers chosen by
Mark Lee
Towson University

  1. The controversial effects of microfinance on child schooling: A retrospective approach By Leonardo Becchetti; Pierluigi Conzo
  2. The Question of Land and Infrastructure Development in India: Urgently Required Reforms for Fairness and Infrastructural Development By Sebastian Morris; Ajay Pandey
  3. The global financial crisis and development thinking By Rogers, F. Halsey
  4. Exchange rate policies, patterns of specialization and economic development: theory and evidence in developing countries By Gala, Paulo; Libanio, Gilberto
  5. Insecure Land Rights and Share Tenancy in Madagascar By Bellemare, Marc F.
  6. Spatial Comparisons of Poverty and Inequality in Living Standards in Malawi By Mussa, Richard
  7. Shadow Economy and Poverty By Nikopour , Hesam; Shah Habibullah, Muzafar
  8. Some Unexplored Economics of Roaming Child Workers By Amit , Kundu; Anwesha, Das
  9. Business Cycles, Consumption and Risk-Sharing: How Different Is China? By Chadwick C. Curtis; Nelson Mark

  1. By: Leonardo Becchetti (University of Rome “Tor Vergata”); Pierluigi Conzo (University of Rome “Tor Vergata”)
    Abstract: Two crucial problems when research agencies or donors need to asses empirically the microfinance/children education nexus on already operating organizations are lack of availability of panel data and selection bias. We propose an original approach which tackles these problems by combining retrospective panel data, fixed effects and comparison between pre and post-treatment trends. The relative advantage of our approach vis-à-vis standard cross-sectional estimates (and even panels with just two observations repeated in time) is that it allows to analyse the progressive effects of microfinance on borrowers. With this respect our paper gives an answer to the widespread demand of impact methodologies required by regulators or by funding agencies which need to evaluate the current and past performance of existing institutions. We apply our approach to a sample of microfinance borrowers coming from two districts of Buenos Aires with different average income levels. By controlling for survivorship bias and heterogeneity in time invariant and time varying characteristics of respondents we find that years of credit history have a positive and significant effect on child schooling conditional to the borrower’s standard of living and distance from school.
    Keywords: child schooling, microfinance, retrospective data, impact evaluation.
    JEL: D13 G20 I21 J22 J24 O12 O16 O18 O54
    Date: 2010
  2. By: Sebastian Morris; Ajay Pandey
    Abstract: In this paper an analytical critique of the law and restrictions as also of the framework of urban planning and a justification for why major change is required in the approach to land markets, land acquisition and urban planning is provided. They also provide the key elements of a reformed approach that can create a win-win framework for development. Also their suggestions on how the proposed Amendment to the Land Acquisition Act can be changed to make the Act functional and remove the residual perversities therein is being presented.[W.P. No. 2010-03-02]
    Keywords: analytical critique,law,restrictions,framework, urban planning, land markets, land acquisitionl, win-win framework
    Date: 2010
  3. By: Rogers, F. Halsey
    Abstract: The global financial crisis has not only dealt a major blow to the global economy, but also shaken confidence in economic management in the developed world and the economic models that guide it. The crisis has revealed major market failures, especially in the housing bubble and its transmission to the financial system, but also glaring state failures that propagated and exacerbated the crisis. Will the events of the past two years lead to major shifts in thinking about development economics, and should they? This paper assesses that question for several key domains of development thinking, including the market-state balance, macroeconomic management, globalization, development financing, and public spending. On the one hand, changed global circumstances and new awareness of vulnerability should lead to some policy changes, as developing countries take steps to reduce and buffer risks, including risks generated in developed countries. At the same time, the crisis should largely reinforce the Post-Washington Consensus on development that has emerged over the past decade -- a world view that aims to achieve private sector-driven growth but sees a facilitating role for the state, promotes engaging with the global economy in ways that advance development, and values pragmatism, experimentation, and evidence-based policymaking over ideology.
    Keywords: Debt Markets,Economic Theory&Research,Banks&Banking Reform,Climate Change Economics,Emerging Markets
    Date: 2010–06–01
  4. By: Gala, Paulo; Libanio, Gilberto
    Abstract: The objectives of this paper are twofold. First, it intends to provide theoretical elements toanalyze the relation between real exchange rates and economic development. Our mainhypothesis is very much in line with the Dutch disease literature, and states that competitivecurrencies contribute to the existence and maintenance of the manufacturing sector in theeconomy. This, in turn, brings about higher growth rates in the long run, given the existenceof increasing returns in the industrial sector, and its importance in generating technologicalchange and increasing productivity in the overall economy. The second objective of this paperis empirical. It intends to analyze examples of successful exchange rate policies, such as Chileand Indonesia in the eighties, as a benchmark for comparison with countries where currencyovervaluation has taken place, such as Brazil. In the latter case, the local currency is beinginflated by large capital inflows, due to high domestic interest rates and to a boom in demandand prices of commodities in the international markets. It will be argued that the industrialsector bears most of the burden when the currency appreciates, and that Brazil risks at deindustrializationif there are no changes in the exchange rate regime.
    Date: 2010–07–02
  5. By: Bellemare, Marc F.
    Abstract: While most studies looking at the consequences of tenurial insecurity on land markets in developing countries focus on the effects of tenurial insecurity on the investment behavior of landowners, this paper studies the hitherto unexplored relationship between tenurial insecurity and contract choice in land tenancy. Based on a distinct feature of the interaction between formal law and customary rights in Madagascar, this paper augments the canonical model of share tenancy by making the strength of the landlord’s property right increasing in the amount of risk she chooses to bear within the contract. Sharecropping may thus emerge as the optimal contract even when the tenant is risk-neutral. Using data on landlords’ subjective perceptions of tenurial insecurity in a rural area of Madagascar, empirical tests strongly support the hypothesis that insecure property rights drive contract choice while offering little support in favor of the canonical hypothesis that risk sharing considerations drive contract choice.
    Keywords: Sharecropping; Property Rights; Tenurial Insecurity; Subjective Expectations
    JEL: D86 O13 Q15 K11 O12
    Date: 2010–07–03
  6. By: Mussa, Richard
    Abstract: The paper looks at poverty and inequality across areas in Malawi. The focus is on both monetary (consumption) and non monetary (health and education) dimensions of well being. Stochastic poverty dominance tests show that rural areas are poorer in the three dimensions regardless of poverty line chosen. Stochastic inequality dominance tests find that the north and south dominate the centre in health inequality, and there is no dominance between the north and south. With respect to education inequality, dominance is declared for the south-centre pair only. A sub group decomposition analysis finds that the south contributes the most to consumption and education poverty while the centre is the largest contributor to health poverty. We establish that within area inequalities (vertical inequalities) rather than between area inequalities (horizontal inequalities) are the major driver of consumption, health, and education inequality in Malawi.
    Keywords: Poverty; inequality; stochastic dominance; decomposition; Malawi.
    JEL: D30
    Date: 2010–06–26
  7. By: Nikopour , Hesam; Shah Habibullah, Muzafar
    Abstract: This study attempts to investigate the relationship between shadow economy and poverty by explaining the mechanism through which shadow economy affects poverty via its impact on government size and economic growth, and using the human poverty index (HPI) for developing and developed countries. In order to achieve this objective, the three-way interaction model is utilized using data of 139 developing and 23 developed countries separately during 1999-2007. For developing countries the dynamic panel system GMM and for developed countries, the fixed and random effects method of estimation is used. The results suggest that increasing the shadow economy leads to increase poverty in developing countries while it decreases poverty in developed countries.
    Keywords: Shadow economy; Poverty; Panel data analysis
    JEL: O17 C23 I3
    Date: 2010–06–05
  8. By: Amit , Kundu; Anwesha, Das
    Abstract: Within the net of child labour, there is a section of children who live their lives on the streets, without any kind of attachment with their family and maintain their livelihood through working as informal child workers. This study is based on these children who are termed here as ‘Roaming child workers’. It came out that apart from poverty of the parents there are other socio-economic reasons which force a child to come out from the family and work as child worker in the urban areas. It also came out from field survey that after leaving home a good number of children are economically better off and even able to keep themselves above the poverty line. But still they are very vulnerable. Through this study, effort has been made to prove that average monthly expenditure on substances of these ‘Roaming working children’ increases at a decreasing rate with their average monthly income, whereas, average monthly expenditure on entertainment shares a linear relationship with average monthly income.
    Keywords: Child Labour; Poverty and Consumption Pattern
    JEL: I31 I32
    Date: 2010–01–07
  9. By: Chadwick C. Curtis; Nelson Mark
    Abstract: Can standard business-cycle methodology be applied to China? In this chapter, we address this question by examining the macroeconomic time series and identifying dimensions in which China differs from economies (such as Canada and the U.S.) that are typically the subject of business-cycle research. We show that naively applying the standard business-cycle tools to China is no more ridiculous than applying it to Canada, although the dimensions along which the model struggles is different. For China, the model cannot account for the low level of consumption (or high saving) as a proportion of income observed in the data. An examination of provincial level consumption data suggests that the absence of channels for intranational consumption risk sharing may be an important reason why the business-cycle model has trouble accounting for Chinese consumption and saving behavior.
    JEL: E21 E32 F41
    Date: 2010–07

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