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on Development |
| By: | Mauricio Armellini; Parantap Basu |
| Abstract: | An optimal education subsidy formula is derived using an overlapping generations model with parental altruism. The model predicts that public education subsidy is greater in economies with lesser parental altruism because a benevolent government has to compensate for the shortfall in private education spending of less altruistic parents with a finite life. On the other hand, growth is higher in economies with greater parental altruism. Cross-country regressions using the World Values Survey for altruism lend support to our model predictions. The model provides insights about the reasons for higher education subsidy in richer countries. |
| Keywords: | Altrusim, Education Subsidy, Human Capital, Growth. |
| JEL: | D9 |
| Date: | 2010–08–21 |
| URL: | http://d.repec.org/n?u=RePEc:eei:rpaper:eeri_rp_2010_21&r=dev |
| By: | Saten Kumar; Gail Pacheco |
| Abstract: | Lifting the long run growth rate is, arguably, the pursuit of every economy. What should Kenya do to enhance its long run growth rate? This paper attempts to answer this question by examining the determinants of total factor productivity (TFP) in Kenya. We utilized the theoretical insights from the Solow (1956) growth model and its extension by Mankiw, Romer and Weil (1992) and followed Senhadji’s (2000) growth accounting procedure. We find that growth in Kenya, until the 1990s was mainly due to factor accumulation. Since then, TFP has made a small contribution to growth. Our findings imply that while variables like overseas development aid, foreign direct investment and progress of financial sector improves TFP, trade openness is the key determinant. Consequently, policy makers should focus on policies that improve trade openness if long run growth rate is to be raised. |
| Keywords: | Solow model, growth accounting, total factor productivity. |
| JEL: | O10 O15 |
| Date: | 2010–08–16 |
| URL: | http://d.repec.org/n?u=RePEc:eei:rpaper:eeri_rp_2010_16&r=dev |
| By: | Quamrul Ashraf (Williams College); Oded Galor (Brown University) |
| Abstract: | This research argues that deep-rooted factors, determined tens of thousands of years ago, had a significant effect on the course of economic development from the dawn of human civilization to the contemporary era. It advances and empirically establishes the hypothesis that, in the course of the exodus of Homo sapiens out of Africa, variation in migratory distance from the cradle of humankind to various settlements across the globe affected genetic diversity and has had a long-lasting effect on the pattern of comparative economic development that is not captured by geographical, institutional, and cultural factors. In particular, the level of genetic diversity within a society is found to have a hump-shaped effect on development outcomes in both the pre-colonial and the modern era, reflecting the trade-off between the beneficial and the detrimental effects of diversity on productivity. While the intermediate level of genetic diversity prevalent among Asian and European populations has been conducive for development, the high degree of diversity among African populations and the low degree of diversity among Native American populations have been a detrimental force in the development of these regions. Further, the optimal level of diversity has increased in the process of industrialization, as the beneficial forces associated with greater diversity have intensified in an environment characterized by more rapid technological progress. |
| Keywords: | The "Out of Africa" hypothesis, Human genetic diversity, Comparative development, Income per capita, Population density, Neolithic Revolution, Land productivity |
| JEL: | N10 N30 N50 O10 O50 Z10 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:wil:wileco:2010-05&r=dev |
| By: | Seth R. Gitter (Department of Economics, Towson University); Jeremy G. Weber (University of Wisconsin-Madison); Bradford L. Barham (University of Wisconsin-Madison); Mercedez Callenes (Grupo de Analisis para el Desarrollo (GRADE), Peru); Jessa M. Lewis (University of Wisconsin-Madison) |
| Abstract: | From 1995 to 2005 educational attainment of youth in rural Southern Mexico rose dramatically. Three distinct trends emerged in the region that could explain the rise in education. First, thousands of coffee-producing households joined cooperatives that have entered Fair Trade relationships and/or began adopting organic practices. Then, beginning in approximately 2000, US migration took off, while intra-Mexico migration steadily increased, providing remittance income and more lucrative alternatives in labor markets outside of coffee production. Third, Progresa/Oportunidades, a conditional cash transfer program aimed at promoting education, became available to families in the region in 1998 and 1999. Using survey data from 845 coffee farming households in Oaxaca and Chiapas, Mexico, this paper explores how participation in Fair Trade-organic cooperatives coffee price premiums, migration, and Progresa/Oportunidades shape education attainment for young adults (16-25). Results from a household fixed-effects model show that participating in a Fair Trade-organic cooperative contributed to a one-half year increase in schooling for girls over the study period. The impacts of US migration opportunities appear to have even stronger positive impacts on years of schooling for females, while for males increased migration opportunities tend to diminish the positive effects of being in a Fair Trade- organic cooperative on educational attainment. |
| Keywords: | Latin America, Mexico, Fair Trade, Organic, Migration, Education. |
| JEL: | N56 I20 F22 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:tow:wpaper:2010-14&r=dev |
| By: | Wong, Sam |
| Abstract: | Community-based development has been criticized for its inadequate understanding of power relationships at the local level, which thus leaves room for elite capture. This paper compares and contrasts two case studies, both of which take power seriously in their institutional designs. The solar home system in Bangladesh, represents the ‘counter-elite’ approach and explicitly excludes local elites from the decision-making process. The trans-boundary water governance project in Ghana, in contrast, adopts the ‘co-opt-elite’ approach and deliberately absorbs local elites into the water committee. This paper suggests that, while the ‘counter-elite’ approach is not necessarily effective in challenging elite domination, because of the structural asset dependence of poor people on the elites, the ‘co-opt-elite’ approach risks legitimizing the authority of the elites and worsening poverty by implementing ‘anti-poor’ policies. This paper concludes that the success of dealing with elite capture lies in the flexible use of the ‘counter-elite’ and ‘co-opt-elite’ approaches together with the need to secure alternative livelihoods and to achieve empowerment with the poor. |
| Keywords: | elite capture, power, poverty, community development, water management, solar lighting |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2010-82&r=dev |
| By: | Zang, Xiaowei |
| Abstract: | Rapid economic development in China in the post-1978 era has been considered ‘intriguing’ and ‘puzzling’ since it occurred under the dominance of the Chinese Communist Party – the fusion of politics and economics is supposed to be a powerful impediment to market growth. Scholars have proposed different accounts to explain this paradox, with particular emphasis on the role of the political elite in economic progress. This paper contributes to this literature by studying why the political elite are motivated to promote economic development in China. It argues that like politicians in other types of political regimes, autocratic leaders are interested in high growth rates. It also studies the historical development of China’s developmental elites to understand their motivations for economic growth in the reform era. To better understand whether or not elites in developing countries promote economic growth, scholars should focus on factors such as historical experience, political stability, leadership turnover, or elite perceptions about the impact of growth on their hold on power rather than the differences between autocracy and democracy. |
| Keywords: | China, democracy, autocracy, development, growth, elites |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2010-84&r=dev |
| By: | Vermaark, Claire |
| Abstract: | South African household surveys typically contain coarsened earnings data, which consist of a mixture of missing earnings values, point responses and interval-censored responses. This paper uses sequential regression multivariate imputation to impute missing and interval-censored values in the 2000 and 2006 Labour Force Surveys, and compares poverty estimates obtained under several different methods of reconciling coarsened earnings data. Estimates of poverty amongst the employed are found not to be sensitive to the use of the multiple imputation approach, but are sensitive to the treatment of workers reporting zero earnings. Multiple imputing earnings for all workers with missing, interval-censored or reported zero earnings, the proportion of workers earning less than R500 per month falls by almost a third between 2000 and 2006. |
| Keywords: | coarsened data, multiple imputation, poverty, wage distribution, working poor |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2010-86&r=dev |
| By: | Lelio Iapadre; Francesca Luchetti |
| Abstract: | The intensity of trade among countries belonging to the same region depends not only on the existence and effectiveness of a regional integration agreement, but also on other factors, which include the overall trade policy orientation and the relative level of geo-graphic and economic barriers affecting intra- and extra-regional trade. After presenting a set of indicators aimed at measuring correctly the intensity of bi-lateral trade preferences, this paper shows that most African countries tend to trade more intensely with partners belonging to the same region than with the rest of the world. However, this is not so much the result of the weak regional integration agreements that are in force in Africa, as a consequence of the manifold barriers limiting the degree of international openness of African countries. Under this perspective, a relatively high level of intra-regional trade, far from revealing the success of preferential integration policies, confirms that Africa’s participation in the process of globalisation is still very limited. |
| Keywords: | Regional integration, Trade, Africa, Statistical indicators, Network analysis |
| Date: | 2010–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2010/54&r=dev |
| By: | Jesse McConnell |
| Abstract: | The challenge of institution building in African countries remains a major threat to the establishment of peace and justice, and the entrenchment of sustainable social and economic development. This may be attributed largely to the dynamic and complex social landscape of most African countries. While single borders bring political definition to post-independent countries, such countries often struggle to find a single national identity that transcends numerous tribal, ethnic or historic identities. The role of central government in creating an effective structure of governance is crucial in the steps towards postconflict nation-building. However, national institution building is not necessarily the right answer, especially in contexts difficult to govern, such as vast geographic areas or complex social and ethnic realities. It is in this sense that this paper – and the initial states of this research – seeks to find an alternative to ‘institution building’ as a way forward in good governance practices, suggesting rather a decentralised and localised approach. The case study that will be brought to be bear as an example of this is Rwanda and a recent governance mechanism – Imihigo – as an approach that has helped create a new national identity while instilling a culture of service delivery and accountability amongst its public servants and political leadership. What this paper will seek to argue – in looking at the approach by Rwanda in decentralising its government – is that institution building is not necessarily the way forward in Africa’s ‘good governance’ discourse. Instead, this paper – and the broader borders of what my research is seeking to explore and understand – seeks to present a reformed approach to good governance in Africa, especially contexts that have been divided along complex lines such as ethnicity, geography, national identity, or the competition for natural resources. Though it will be beyond the scope of this research paper specifically, intended environments that this research is hoped to be applicable – and will therefore involve further research around the applicability of such – include the Democratic Republic of Congo, Cote d’Ivoire, Burundi and Sudan. |
| Keywords: | governance; decentralisation; institution; service delivery; Rwanda |
| Date: | 2010–05–17 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2010/39&r=dev |
| By: | Thierry Verdier |
| Abstract: | The purpose of this paper is to discuss how regional integration processes may contribute to statebuilding and promote exit from fragility for countries characterised by weak state institutions. After presenting a simple conceptual framework to discuss the effects of external and regional integration on fragile states, we analyse the policy trade-offs that may arise in such contexts. The paper then reviews the specific regional experiences of Sub-Saharan countries and their inter-actions with fragility issues. Finally, we discuss policy implications for the EU in the context of its regional trade and development policies with African fragile countries. The central conclusions of the analysis are the following: I) a two-tier approach to regional integration, which combines both top-down and bottom-up processes, is necessary; 2) the EU approach to regional integration in Africa should promote “Building-Blocks” and not “Stumbling-Blocks”; and 3) specific considerations should be given to make the trade integration strategy “fragility responsive”. |
| Date: | 2010–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2010/38&r=dev |
| By: | Yaw Nyarko |
| Abstract: | Brain Circulation between the European Union (EU) and Sub-Saharan Africa is a crucial ingredient in Human Capital formation in the latter. A major constraint to African development is the very low base of skilled and highly educated workers and professionals. The production of skilled workers has been low, and only recently has seen a dramatic increase. Recent papers by many authors have indicated that a channel for human capital growth has been, paradoxically, the possibility of the brain drain which serves as both an incentive mechanism and which results in higher human capital when the drainers return. After a review of some of the literature, these insights are applied to the debates raging today on European Union migration policy: the Blue Card, Migration Con-tracts, anti-Brain Drain legislation, etc. This paper argues that a careful calibration of the EU policies may enable faster Human Capital growth in Africa, while, at the same time, being beneficial to the EU by supplying critically needed skills into the EU economy. By carefully planning the production of human capital and the consequent flow of skilled migrants into Europe, the EU can assist in the development of vitally needed numbers of trained or skilled workers in Africa. |
| Keywords: | Brain Drain, Immigration, Migration, Human Capital, Economic Development |
| Date: | 2010–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2010/30&r=dev |
| By: | Abena D. Oduro |
| Abstract: | This paper presents evidence on the wide range of adverse shocks reported by African households. The current financial and economic crisis adds another layer of risk to al-ready vulnerable households and firms. In responding to an adverse shock, households are involved in a balancing act that is aimed at maintaining consumption and/or assets above critical levels. Households mainly use coping mechanisms that depend on family and other networks and self-insurance. There is limited recourse to public social protection and formal credit and insurance markets. The paper examines some informal financial arrangements. Some of these are not designed to smooth consumption when there is an adverse shock. These informal mechanisms have the potential to be the platform to expand access and utilisation of formal finance particularly in rural communities. There is a clear role for publicly provided interventions. This is because informal risk sharing mechanisms do not cover all shocks. The premium paid may not be adequate to cover the entire financial implications of the shock. Finally, the design of the risk-sharing institutions can result in the very poor being excluded. |
| Keywords: | shocks, coping strategies, financial institutions |
| Date: | 2010–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2010/31&r=dev |
| By: | Necla Tschirgi |
| Abstract: | How can development policy support weak, dysfunctional or fragile states? What constitutes state fragility and what are the appropriate instruments for state-building? After reviewing two recent quantitative indexes (The Index of State Weakness in the Developing World and The Ibrahim Index of African Governance), this paper cautions against the current tendency to categorise a large number of countries as weak, fragile or failing states. Drawing upon country case studies on Namibia, Somalia and Guinea-Bissau, the paper argues that state-building is fundamentally a political process and external “state-builders” need to develop greater understanding of the internal dynamics of individual societies in order to provide appropriate support to address state fragility. Current strategies for statebuilding are heavily weighted in favour of technical, institutional and formal arrangements. Moreover, since 9/11, the international state-building agenda has increasingly focused on state weakness as a challenge for international peace and security, rather than as an issue of national governance. As a result, many preferred policy prescriptions risk weakening the very states that they hope to strengthen. |
| Keywords: | security development nexus, statebuilding, state formation, state fragility, state failure, weak states, governance |
| Date: | 2010–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2010/35&r=dev |
| By: | Cabral, Manuel Heredia Caldeira; Veiga, Paula |
| Abstract: | This paper studies the political and economic factors that determine successful export diversification (ED) and export sophistication (ES) strategies in the Sub-Saharan African (SSA) countries and also the way in which successful ED and sophistication strategies contribute to explain the improving in some of the millennium development goals (MDG). We run separate regressions for the determinants of ES and ED, using disaggregated data of the 48 SSA countries, from 1960 to 2005. The results suggest that better governance is an important determinant for the success of diversification and sophistication strategies in SSA. In particular the level of corruption, transparency and accountability are important factors in limiting or promoting the scope of diversification and the level of sophistication of the exports. The results also suggest that increases in human capital in SSA countries promote both ED and ES, showing that the level of education of the workforce is positively related with ES and ED, with higher levels of education (tertiary) playing a more important role in explaining ES, while lower levels of education (primary) being more important as determinants of ED. In the second part we explore the links between ED and ES and growth presenting evidence that ED and ES are linked to growth stability in SSA. This study also suggests that the Sub-Saharan countries that were more successful in achieving ED and ES tend to be more successful in improving the living conditions of their population. Using different variables of Infant Mortality (one of the MDG) and life expectancy as dependent variables, we present evidence that suggests that in SSA higher ED and ES are associated with lower infant mortality and higher life expectancy. We show that this result is robust, presenting positive and significant results even when a large number of different control variables are introduced, or when fixed effects and instrumental variables are considered. The evidence suggests that ED and ES are part of the solution for a successful development of SSA. JEL codes: |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:unl:unlfep:wp550&r=dev |
| By: | David Abler |
| Abstract: | This report prepared by a consultant, Dr. David Abler of Penn State University in the United States, examines structural changes in the demand for agricultural products arising from economic growth in a number of large developing and emerging economies comprising primarily the BRIIC group of countries (Brazil, Russia, India, Indonesia and China). It reviews and evaluates a number of studies made of the effects of economic growth in large developing and emerging economies on agricultural product demand and the structure of demand. In particular, the report seeks to evaluate the effects of economic growth and rising incomes on the composition of agricultural product demand across product categories (e.g. cereals vs. meat), within product categories (e.g. lower-quality cereals vs. higher-quality cereals) and on the evolution of price and income elasticities of demand for agricultural products - that is, how rapidly are they moving toward the low elasticities seen in many OECD countries. The report also utilises the results of these studies to draw out the possible implications for agricultural commodity demand, commodity prices, and possible price volatility. |
| Keywords: | economic growth, agricultural food demand, price and income elasticities of demand, food quality, demand attributes, agricultural commodity prices, price volatility |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:oec:agraaa:29-en&r=dev |
| By: | Claus C Pörtner (University of Washington) |
| Abstract: | Previous research on sex selective abortions has ignored the interactions between fertility, birth spacing and sex selection. This paper presents a novel approach that jointly estimates the determinants of sex selective abortions, fertility and birth spacing, using data from India's National Family and Health Surveys. For well educated Indian women the predicted number of abortions during childbearing is six percent higher after sex selection became illegal than before while their predicted fertility is eleven percent lower and around replacement level. Women with less education have substantially higher fertility and do not appear to use sex selection. |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:udb:wpaper:uwec-2010-04-r&r=dev |
| By: | Marek Jarociński (European Central Bank, DG-Research, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.) |
| Abstract: | The number of variables related to long-run economic growth is large compared with the number of countries. Bayesian model averaging is often used to impose parsimony in the cross-country growth regression. The underlying prior is that many of the considered variables need to be excluded from the model. This paper, instead, advocates priors that impose parsimony without excluding variables. The resulting models fit the data better and are more robust to revisions of income data. The positive relationship between measures of trade openness and growth is much stronger than found in the literature. JEL Classification: C20, C52, O40, O47. |
| Keywords: | Economic Growth, Bayesian Model Averaging, Adaptive Ridge Regression, Measurement Error. |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20101234&r=dev |
| By: | Duvendack, Maren |
| Abstract: | Microfinance has been on the development agenda for more than 30 years, heralded as the wondrous tool that reduces poverty and empowers women (Hulme and Mosley, 1996; Rutherford, 2001; Morduch and Haley, 2002; Khandker, 1998). Doubts, however, have recently been raised about the success of microfinance (Dichter and Harper, 2007; Banerjee et al, 2009; Roodman and Morduch, 2009; Karlan and Zinman, 2009; Bateman and Chang, 2009). Given this context, this paper re-examines the microfinance impact evaluation of SEWA Bank conducted by the United States Agency for International Development (USAID) in India in 1998 and 2000. The USAID panel and a new cross-section data set are analysed using propensity score matching (PSM) and panel data techniques to address selection bias. Sensitivity analysis of the matching results is used to explore their reliability. Various sub-group comparisons between borrowers, savers and controls are also conducted to shed some light on the impact of savings versus credit. The paper concludes that doubts remain about the quality of the impact estimates obtained through advanced econometric techniques. Direct observation and the outcome of sensitivity analysis of the PSM analysis suggest that the application of PSM and differences-in-differences (DID) to these observational data were probably unable to account for selection on unobservables. |
| Keywords: | Impact evaluation; evaluation methods; selection bias; microfinance; India |
| JEL: | O1 O16 C01 |
| Date: | 2010–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:24511&r=dev |
| By: | Baafi Antwi, Joseph; Oppong Kwakye, Francis |
| Abstract: | Globalization is described as a process by which regional economics, societies and cultures have become integrated through a global network of communication, transportation and trade. Different researchers have argued both in favour of and against globalization. Bhagwati claims that globalization has created a direct link to economic fortunes for the poor rural folks in developing countries who are often farmers. He argues that increase in information and information technology has loosened the control of exploitative middlemen whose activities reduce the returns rural farmer receive for their produce. Prystay (2005) provided evidence to this argument. Another argument comes from factor endowment. Argument against globalization is the fact that it has produced unprecedentedly high levels of inequality or hardships to the poor. Evidence from both China and India have reviled that globalization has propelled both countries economically; increase in economic growth from 6.15 to 9.37 percent in the case of China and information technology in the case of India, but the issue of inequality is still important and need to be addressed by individual government. |
| Keywords: | Globalization; Inequality; Growth |
| JEL: | F01 |
| Date: | 2010–08–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:24608&r=dev |