nep-dev New Economics Papers
on Development
Issue of 2010‒07‒31
thirteen papers chosen by
Mark Lee
Towson University

  1. Inequality and Growth: Uncovering the main conclusions from the empirics By Pedro Cunha Neves; Sandra Tavares Silva
  2. Sales location and supply response among semisubsistence farmers in Benin By Takeshima, Hiroyuki; Winter-Nelson, Alex
  3. A review of collective action in rural Ghana By Salifu, Adam; Francesconi, Gian Nicola; Kolavalli, Shashidhara
  4. What is the irrigation potential for Africa? By You, Liangzhi; Ringler, Claudia; Nelson, Gerald; Wood-Sichra, Ulrike; Robertson, Richard; Wood, Stanley; Guo, Zhe; Zhu, Tingju; Sun, Yan
  5. Understanding gender differences in agricultural productivity in Uganda and Nigeria By Peterman, Amber; Quisumbing, Agnes; Behrman, Julia; Nkonya, Ephraim
  6. Migratory responses to agricultural risk in Northern Nigeria By Dillon, Andrew; Mueller, Valerie; Salau, Sheu
  7. Innovations in rural and agriculture finance By Kloeppinger-Todd, Renate; Sharma, Manohar
  8. Vulnerability and poverty in Bangladesh By Md. Shafiul Azam; Katsushi S. Imai
  9. Are Trade Openness and Financial Development Complementary? By Ram Upendra Das; Meenakshi Rishi
  10. Aid and Universal Primary Education By Rohen D'AIGLEPIERRE; Laurent WAGNER
  11. Conflict, Ideology and Foreign Aid By Jean-Louis ARCAND; Adama BAH; Julien LABONNE
  12. Why Should 5000 Children Die in India Every Day? Major Causes and Managerial Challenges By Ramani K V; Mavalankar Dileep; Tapasvi Puwar; Joshi Sanjay; Kumar Harish; Malek Imran
  13. Crop Insurance in India By Gurdev Singh

  1. By: Pedro Cunha Neves (Faculdade de Economia, Universidade do Porto, Portugal); Sandra Tavares Silva (CEF.UP, Faculdade de Economia, Universidade do Porto, Portugal)
    Abstract: The theme of the relationship between inequality and economic growth has gained considerable attention among economists over the last two decades. In this paper, we analyse the effect of inequality on growth, whose related literature has been producing inconclusive results. After an exhaustive study of the major empirical works in this specific research area, we are able not only to advance with some potential explanations for the apparent lack of consensus on the empirical assessment of the inequality-growth relationship, but also to achieve a better understanding of the nature of this relationship and the forces underlying it. We conclude that the disparities found in the results of the estimation of the reduced-form relationship are most likely due to three dimensions: differences in the estimation techniques, the countries and the periods included in the sample, and the variable used to measure inequality. The last two aspects have particularly important implications. First, country/region specificities play a crucial role in the relationship between inequality and growth, so more emphasis should be put on the estimation of such a relationship on a national/regional basis, rather than trying to establish universal patterns. Second, the time horizon of the analysis should be carefully chosen, as different transmission channels from inequality to growth tend to operate differently in the short and in the long-run. Third, the fact that inequality in wealth distribution has a stronger negative effect on growth than inequality in income distribution may indicate that the channels through which inequality affects growth are not the same in both distributions. Therefore, we argue that in order to produce an accurate assessment of both the reduced-form relationship and the underlying transmission channels these aspects should be accordingly considered, which has not been the case in most of the empirical literature.
    Keywords: inequality, economic growth, transmission channels, income distribution, wealth distribution, taxation
    JEL: O4 D3 H2
    Date: 2010–07
  2. By: Takeshima, Hiroyuki; Winter-Nelson, Alex
    Abstract: In much of rural Africa, high transaction costs limit farmers’ market participation and thus their potential for income growth. Transaction costs can affect not only whether a farmer sells product but also whether sales occur at the farm gate on at a market. If production behavior is related to a chosen sales location, then analysis of interventions can be improved by explicit consideration of the decision of where to sell. This paper develops a double-selection model that explains consumption and production decisions by semi-subsistence farmers who first decide whether to be a seller and then whether to sell at the farm gate or at an off-farm location before deciding on production and consumption. The study tests the validity of this dual-criteria model against a single criterion model in which a grower first decides to be a seller and then decides production, consumption and sales location simultaneously. Dual-criteria and single-criterion models are compared while correcting inconsistency in estimations due to violation of homoskedasticity and normality assumptions in selection equations. The results suggest that the dual-criteria model provides more information than the single-criterion model using a sample of cassava producer in Benin.
    Keywords: agricultural supply response, Development strategies, dual-criteria, sales location, Transaction costs,
    Date: 2010
  3. By: Salifu, Adam; Francesconi, Gian Nicola; Kolavalli, Shashidhara
    Abstract: With the beginning of the new millennium and the increasing concerns with regard to wild privatization reforms, African governments, international donors and development scholars have been showing renewed interest in collective action. As a result, farmer-based organization (FBOs) and agricultural cooperatives (agri–coops) are back on the policy agenda for Africa as a preferential means to achieve a more equitable, inclusive and community-driven development of rural areas. The objective of this paper is to provide a snapshot of the patterns and determinants in the development of FBOs and agri–coops in Ghana. With the intention to fill knowledge gaps, harmonize perceptions, update and broaden public understanding of FBOs and agri–coops in Ghana, this review compiles and compares as much secondary evidence as possible and fills in missing evidence through focus group discussions and key informant interviews. The paper concludes with some implications for policy-making and for further and more empirical research.
    Keywords: agricultural cooperatives, Collective action, farmer-based organizations, reviews,
    Date: 2010
  4. By: You, Liangzhi; Ringler, Claudia; Nelson, Gerald; Wood-Sichra, Ulrike; Robertson, Richard; Wood, Stanley; Guo, Zhe; Zhu, Tingju; Sun, Yan
    Abstract: Although irrigation in Africa has the potential to boost agricultural productivities by at least 50 percent, food production on the continent is almost entirely rainfed. The area equipped for irrigation, currently slightly more than 13 million hectares, makes up just 6 percent of the total cultivated area. Eighty-five percent of Africa’s poor live in rural areas and mostly depend on agriculture for their livelihoods. As a result, agricultural development is key to ending poverty on the continent. Many development organizations have recently proposed to significantly increase investments in irrigation in the region. However, the potential for irrigation investments in Africa is highly dependent upon geographic, hydrologic, agronomic, and economic factors that need to be taken into account when assessing the long-term viability and sustainability of planned projects. This paper analyzes large, dam-based and small-scale irrigation investment needs in Africa based on agronomic, hydrologic, and economic factors. This type of analysis can guide country- and local-level assessment of irrigation potential, which will be important to agricultural and economic development in Africa.
    Keywords: internal rate of return, Investment, irrigation potential, large-scale irrigation, small-scale irrigation,
    Date: 2010
  5. By: Peterman, Amber; Quisumbing, Agnes; Behrman, Julia; Nkonya, Ephraim
    Abstract: We investigate gender differences in agricultural productivity using data collected in 2005 from Nigeria and in 2003 from Uganda. Results indicate that lower productivity is persistent from female-owned plots and female-headed households, accounting for a range of socioeconomic variables, agricultural inputs, and crop choices using multivariate Tobit models. These results are robust to the inclusion of household-level unobservables. However, productivity differences depend on the type of gender indicator used, crop-specific samples, agroecological region, and inclusion of biophysical characteristics. More nuanced gender data collection and analysis in agricultural research spanning diverse regions are encouraged to identify interventions that will increase productivity and program effectiveness for male and female farmers.
    Keywords: Agricultural productivity, Gender,
    Date: 2010
  6. By: Dillon, Andrew; Mueller, Valerie; Salau, Sheu
    Abstract: We investigate the extent in which northern Nigerian households engage in internal migration to insure against ex ante and ex post agricultural risk due to weather-related variability and shocks. We use data on the migration patterns of individuals over a 20-year period and temperature degree-days to identify agricultural risk. Controlling for ex ante and ex post risk, we find that households with higher ex ante risk are more likely to send migrants. Households facing hot shocks before the migrant’s move tend to keep their male migrants in closer proximity. These findings suggest that households use migration as a risk management strategy in response to both ex ante and ex post risk, but that migration responses are gender-specific. These findings have implications not only for understanding the insurance motives of households, but also potential policy responses tied to climatic warming.
    Keywords: Migration, Risk, temperature degree days,
    Date: 2010
  7. By: Kloeppinger-Todd, Renate; Sharma, Manohar
    Abstract: Most rural households lack access to reliable and affordable finance for agriculture and other livelihood activities. Many small farmers live in remote areas where retail banking is limited and production risks are high. The recent financial crisis has made the provision of credit even tighter and the need to explore innovative approaches to rural and agricultural finance even more urgent. This set of 14 briefs clearly points out the importance of business realities faced by small farmers, including low education levels, the dominance of subsistence farming, and the lack of access to modern financial instruments. These conditions mean that new and innovative institutions are required to reach small farmers. Emerging communication technologies provide new opportunities for rural banking by reducing business costs and alleviating information asymmetries. New financing instruments, such as weather index-based insurance and microinsurance, also have great potential for managing the risks faced by small farmers. In addition, bundling financial services with nonfinancial services like marketing and extension services offers new opportunities for small farmers to increase their productivity and incomes. Finally, an enabling policy environment and legal framework, enforcement of rules and regulations, and a supportive rural infrastructure all contribute immensely to making sustainable access to finance a reality. Table of Contents: •Innovations in rural and agriculture finance: Overview by Renate Kloeppinger-Todd and Manohar Sharma •Financial literacy by Monique Cohen •Community-based financial organizations: Access to Finance for the Poorest by Anne Ritchie •Rural banking in Africa: The Rabobank approach by Gerard van Empel •Rural banking: The case of rural and community banks in Ghana by Ajai Nair and Azeb Fissha •Rural leasing: An alternative to loans in financing income-producing assets by Ajai Nair •Determinants of microcredit repayment in federations of Indian self-help groups by Yanyan Liu and Klaus Deininger •M-PESA: Finding new ways to serve the unbanked in Kenya by Susie Lonie •Biometric technology in rural credit markets: The case of Malawi by Xavier Giné •Credit risk management in financing agriculture by Mark D. Wenner •New approaches for index insurance: ENSO insurance in Peru by Jerry R. Skees and Benjamin Collier •Microinsurance innovations in rural finance by Martina Wiedmaier-Pfister and Brigitte Klein •Combining extension services with agricultural credit: The experience of BASIX India by Vijay Mahajan and K. Vasumathi •Bundling development services with agricultural finance: The experience of DrumNet by Jonathan Campaigne and Tom Rausch
    Keywords: Agricultural innovations -- Developing countries, agriculture finance, Financial crisis, microinsurance, Poverty reduction, rural banking, Rural finance, Rural households, Small farmers,
    Date: 2010
  8. By: Md. Shafiul Azam; Katsushi S. Imai
    Abstract: This study estimates ex ante poverty and vulnerability of households in Bangladesh using Household Income and Expenditure Survey (HIES) data in 2005. Our results show that poverty is not same as vulnerability as a substantial share of those currently above the poverty line is highly vulnerable to poverty in the future. The study finds that agricultural households or those without education are likely to be the most vulnerable. The geographical diversity of vulnerability is considerable, for example, vulnerability in a coastal division, i.e., Chittagoan Division is almost double to that of Dhaka and almost four times higher than Khulna Division. It is suggested that ex ante measures to prevent households from becoming poor as well as ex post measures to alleviate those already in poverty should be combined in evaluating poverty. In designing policies one should take note of the diverse nature of poverty and vulnerability. For the chronically poor who lack economic assets, priority should be given to reduction of consumption fluctuations and building up assets through a combination of protective and promotional programmes. Access to financial services, for example, through micro credit programmes, might help poor households build up assets as it smoothes income and consumption, enables the purchase of inputs and productive assets, and provides protection against crises. On the other hand, the transient poor and high vulnerable non-poor households are most likely to benefit from combination of prevention, protection, and promotion which would give them a more secure base to diversify their activity into higher-return, higher risk activities. [Working Paper No. 141]
    Keywords: poverty dynamics vulnerability Bangladesh poverty risk
    Date: 2010
  9. By: Ram Upendra Das; Meenakshi Rishi (Research and Information System for Developing Countries)
    Abstract: Trade liberalization and financial deepening have assumed greater significance for a country’s economic growth performance in recent times. Several theoretical and empirical studies have devoted considerable attention to the association between economic performance and trade liberalization as well as to the connections between financial market development and economic growth. However, literature is sparse in terms of the direct linkages between trade openness and financial sector development. This paper finds that trade openness and financial development are complementary and econometrically tests this hypothesis for India over a period of time. However, two important policy implications of the analysis presented in this paper deserve attention. First, although financial deepening has emerged as an important aspect of the economic growth strategy in the Indian context, since the sources of such a deepening may be both domestic as well as external; the importance of a judicious policy mix cannot be neglected, especially in the wake of the current global financial meltdown. Second, as documented in the econometric analysis, the complementarities between trade openness and financial deepening appear to be less pronounced. However, this should be interpreted with some caution. While the Indian data suggest that trade and financial liberalization policies may possibly be pursued independent of each other, this by no means suggests that there are no reinforcing linkages between the two.
    Keywords: trade openess, financial liberalisation, India
    JEL: F13 F15 C01
    Date: 2010
  10. By: Rohen D'AIGLEPIERRE; Laurent WAGNER
    Abstract: Universal Primary Education (UPE) is one of the main objectives of development aid. However, very little empirical evidence of its effectiveness actually exists. Until very recently, the quality of available data was not sufficient to obtain robust results regarding the relationship between international aid and educational achievements. In this article, the latest, more disaggregated and more reliable data is used to study the relationship between aid to education and educational achievements. The focus here not only on educational variables in term of coverage, but also in term of equity and process. The year of Fast Track Initiative (FTI) endorsement is used as an original instrument to tackle the endogeneity problem of aid. Our results are very robust and indicate that aid to primary education has a strong effect on primary school enrollment and gender parity. A negative impact on repetitions rate is also indicated while no effect on the pupil teacher ratio can be observed. Diminishing return in the effectiveness of aid to primary education may also be highlighted. Finally, the governance variables do not appear to have an impact on this relationship.
    Keywords: aid effectiveness, education, Sector-specific aid
    JEL: O11 F35 I2
    Date: 2010
  11. By: Jean-Louis ARCAND; Adama BAH (Centre d'Etudes et de Recherches sur le Développement International); Julien LABONNE
    Abstract: In this paper, we present a rent-seeking model of conflict, which highlights the role of ideology in determining whether the government or the rebels take the initiative. We use the model to interpret the impact of a large-scale Community-Driven Development project on civil conflict in the Philippines. The country is characterized by the presence of two rebel groups, the New People's Army (NPA) and the Moro Islamic Liberation Front (MILF), with two distinct ideologies. We use a unique geo-referenced panel dataset on the occurrence of conflicts in 2003 and 2006 gathered from local newspapers that we match with nationally representative household survey and budget data on all municipalities in the country. Consistent with our model's predictions, using a variety of estimation strategies, we find robust evidence that the project leads to a decline in MILF-related events and to an increase in NPA-related events.
    Keywords: Civil Conflict, foreign aid, Rent Seeking, Community-Driven Development, philippines
    JEL: O53 O22 F35 D74 D72
    Date: 2010
  12. By: Ramani K V; Mavalankar Dileep; Tapasvi Puwar; Joshi Sanjay; Kumar Harish; Malek Imran
    Abstract: Globally, more than 10 million children under 5 years of age, die every year (20 children per minute), most from preventable causes, and almost all in poor countries. Major causes of child death include neonatal disorders (death within 28 days of birth), diarrhea, pneumonia, and measles. Malnutrition accounts for almost 35 % of childhood diseases. India alone accounts for almost 5000 child deaths under 5 years old (U5) every day. India.s child heath indicators are poor even compared with our Asian neighbors, namely Malaysia, Sri Lanka, Thailand, Vietnam, China, Nepal and Bangladesh. Within India, the states of Bihar, Madhya Pradesh, Orissa, Rajasthan and Uttar Pradesh account for almost 60 % of all child deaths India.s neonatal mortality, which accounts for almost 50 % of U5 deaths, is one of the highest in the world. India launched the Universal Immunization Program in 1985, but the status of full immunization in India has reached only 43.5 % by 2005-06. India started the Integrated Child Development Scheme (ICDS) in 1975 to provide supplementary nutrition to children, but 50 % of our children are still malnourished; nearly double that of Sub-Saharan Africa. The WHO/UNICEF training program on Integrated Management of Neonatal and Childhood Illnesses, known as IMNCI, started in India a few years ago, but the progress is very slow. What is unfortunate is the fact that most of these deaths are preventable through proven interventions: preventive interventions and/or treatment interventions, but the management of childhood illnesses is very poor. In this working paper, we bring out the nature and magnitude of child deaths in India (Chapter 1) and then share with you in Chapters 2, 3 and 4 our observations on the management of some of national programs of the government of India such as The Universal Immunization Program (UIP) The Integrated Child Development Scheme (ICDS) The Integrated Management of Neonatal and Child Illnesses (IMNCI) In the final chapter (Chapter 5), we highlight certain managerial challenges to satisfactorily address the child mortality and morbidity in our country.
    Date: 2010–02–02
  13. By: Gurdev Singh
    Abstract: This working paper discusses the dependence of Indian agriculture on uncertain rains. In addition the farmers experience other production risks as well as marketing risks related to different crop enterprises and for different agro-climatic regions and areas. It then argues on the need for crop insurance as an alternative to manage production risk. It then takes up the historical overview of crop insurance products and their performance. It is followed by the discussion on the currently available crop insurance products for specific crops and regions. It discusses at length the two important products, namely, National Agricultural Insurance Scheme and Weather Based Insurance Scheme. It also reflects on some deficiencies in these products.
    Date: 2010–06–29

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