nep-dev New Economics Papers
on Development
Issue of 2010‒10‒30
25 papers chosen by
Mark Lee
Towson University

  1. The Role of Primary Commodities in Economic Development: Sub-Saharan Africa versus Rest of the World By Carmignani, Fabrizio; Chowdhury, Abdur
  2. How to Increase the Growth Rate in South Africa? By Saten Kumar; Gail Pacheco; Stephanié Rossouw
  3. Is There Surplus Labor in Rural India? By Mark R. Rosenzweig; Andrew D. Foster
  4. Free Primary Education in Kenya: An Impact Evaluation Using Propensity Score Methods By Milu Muyanga; John Olwande; Esther Mueni; Stella Wambugu
  5. Supporting Women Entrepreneurs in Tunisia By Drine, Imed; Grach, Mouna
  6. New Light on China's Rural Elites By Gustafsson, Bjorn; Sai, Ding
  7. Lessons from Post-colonial Malaysian Economic Development By K. S., Jomo; Chong Hui, Wee
  8. Poverty in the Eyes of Brazilian Elites By Reis, Elisa P.
  9. Mozambique’s Elite – Finding its Way in a Globalized World and Returning to Old Development Models By Hanlon, Joseph; Mosse,, Marcelo
  10. Modernization of Agriculture and Long-Term Growth By Yang, Dennis; Zhu, Xiaodong
  11. Effects of Credit Constraints on Productivity and Rural Household Income in China By Fengxia Dong; Jing Lu; Allen Featherstone
  12. Anemia and Child Education: The Case of Colombia By Alejandro Gaviria; Alejandro Hoyos
  13. Resource Abundance and Resource Dependence in China By Ji, K.; Magnus, J.R.; Wang, W.
  14. Comprehensive wealth, intangible capital, and development By Ferreira, Susana; Hamilton, Kirk
  15. Subnational taxation in developing countries : a review of the literature By Bird, Richard M.
  16. The Merits of Ability in Developing and Developed Countries By Daniel Suryadarma
  17. Labor Market Returns, Marriage Opportunities, or the Education System? Explaining Gender Differences in Numeracy in Indonesia By Daniel Suryadarma
  18. A Theory of Economic Development with Endogenous By Ceyhun Elgin
  19. Can Sustained Economic Growth and Declining Population Coexist? Barro-Becker Children Meet Lucas By Ceyhun Elgin; Semih Tumen
  20. Cyclicality of Fiscal Policy and the Shadow Economy By Deniz Cicek; Ceyhun Elgin
  21. Akin to my teacher: Does caste, religious or gender distance between student and teacher matter? Some evidence from India By Shenila Rawal; Geeta Kingdon
  22. Nigeria: A Prime Example of the Resource Curse? Revisiting the Oil-Violence Link in the Niger Delta By Daniel Flemes; Thorsten Wojczewski
  23. "Time and Poverty from a Developing Country Perspective" By Rania Antonopoulos; Emel Memis
  24. Consumption, Income Distribution, and State Ownership in the People’s Republic of China By Yuqing Xing
  25. The Decline and Rise of Agricultural Productivity in Sub-Saharan Africa Since 1961 By Steven Block

  1. By: Carmignani, Fabrizio (School of Economics The University of Queensland); Chowdhury, Abdur (Department of Economics Marquette University)
    Abstract: We study the nexus between natural resources and growth in Sub-Saharan Africa (SSA) and find that SSA is indeed special: resources dependence retards growth in SSA, but not elsewhere. The natural resources curse is thus specific to SSA. We then show that this specificity does not depend on the type of primary commodities on which SSA specializes. Instead, the SSA specificity appears to arise from the interaction between institutions and natural resources.
    Keywords: primary commodities, growth, institutions, Economics
    JEL: O13 O40 Q00 F43
    Date: 2010–09
  2. By: Saten Kumar; Gail Pacheco; Stephanié Rossouw
    Abstract: Given the concern about the low growth rates in African countries, this paper deals with the issue of how to increase the said growth rates by using South Africa as a case study. This paper attempts to answer this question by examining the determinants of total factor productivity (TFP) and productivity growth. We utilise the theoretical insights from the Solow (1956) growth model and its extension by Mankiw, Romer and Weil (1992). Our empirical methodology is based on the London School of Economics Hendry’s General to Specific Instrumental Variable method and Gregory and Hansen’s (1996a; 1996b) structural break technique. Our findings imply that variables like human capital, trade openness, foreign direct investment, financial efficiency, democracy and financial reforms improves TFP and productivity growth in South Africa. Importantly, the key determinants appear to be democracy and financial liberalisation.
    Keywords: Solow model; total factor productivity; productivity growth.
    JEL: O10 O15
    Date: 2010–10–11
  3. By: Mark R. Rosenzweig (Department of Economics, Yale University); Andrew D. Foster (Department of Economics, Brown University)
    Abstract: We show empirically using panel data at the plot and farm level and based on a model incorporating supervision costs, risk, credit-market imperfections and scale-economies associated with mechanization that small-scale farming is inefficient in India. Larger farms are more profitable per acre, more mechanized, less constrained in input use after bad shocks, and employ less per-acre labor than small farms. Based on our structural estimates of the effects of farm size on labor use and the distribution of Indian landholdings, we estimate that over 20% of the Indian agricultural labor force is surplus if minimum farm scale is 20 acres.
    Keywords: agriculture, India, scale, profits, labor, tractors
    JEL: O13 O16 O53
    Date: 2010–10
  4. By: Milu Muyanga; John Olwande; Esther Mueni; Stella Wambugu
    Abstract: This paper attempts to evaluate the impact of the free primary education programme in Kenya, which is based on the premise that government intervention can lead to enhanced access to education especially by children from poor parental backgrounds. Primary education system in Kenya has been characterised by high wastage in form of low enrolment, high dropout rates, grade repetition as well as poor transition from primary to secondary schools. This scenario was attributed to high cost of primary education. To reverse these poor trends in educational achievements, the government initiated free primary education programme in January 2003. This paper therefore analyzes the impact of the FPE programme using panel data. Results indicate primary school enrolment rate has improved especially for children hailing from higher income categories; an indication that factors that prevent children from poor backgrounds from attending primary school go beyond the inability to pay school fees. Grade progression in primary schools has slightly dwindled. The results also indicate that there still exist constraints hindering children from poorer households from transiting to secondary school. The free primary education programme was found to be progressive, with the relatively poorer households drawing more benefits from the subsidy.
    Keywords: Primary education, Programme evaluation, Propensity score, benefit incidence analysis, Kenya
    JEL: I20 I21 I22
    Date: 2010
  5. By: Drine, Imed; Grach, Mouna
    Abstract: Whether policy support should be designed differently for women entrepreneurs is a particularly relevant question. To answer this, and to inform the design of policies to provide appropriate support for women entrepreneurs, the paper compares male and female perceptions of typical entrepreneurship support services, such as government provision of information, training and funding. The focus is on Tunisia, a developing country characterized by high level of unemployment, particularly of women. Based on a survey of 50 men and 50 women entrepreneurs in the regions of Sfax, Sousse and Tunis, our results suggest that existing support services are inadequate for promoting female entrepreneurship. Accordingly we discuss support measures specifically designed for women entrepreneurs.
    Keywords: entrepreneurship, gender, women entrepreneurs, Africa
    Date: 2010
  6. By: Gustafsson, Bjorn; Sai, Ding
    Abstract: This paper analyses political elites, economic elites, hybrid elite households and non-elite households in rural China using household data for 1995 and 2002. We seek to understand the determinants of belonging to each of the three elite categories. We find that education and military experience positively affect the probability of being a political elite. The probability of becoming an economic elite is linked to the age of the head of household and to the income level of the county, indicating that opportunities to become an economic elite have increased over time, but in a spatially uneven way. We also investigate disparities in household per capita income as well as in household per capita wealth. Asia Market Transition Theory, we find that the relationship between education and the household’s economic status became stronger from 1995 to 2002. This theory also predicts that payoffs from belonging to the political elite decrease during transition towards market economy. Our results show that in the richest counties in 2002, the economic gain from being a political elite household was higher than elsewhere and higher than in high-income counties observed in 1995. We also found that although elite households on average have a better economic situation than non-elite households, income inequality and household wealth inequality in rural China would decrease only marginally if such disparities were to vanish. In contrast the spatial dimension is much more important for income inequality and for wealth inequality in rural China.
    Keywords: China, elties, cadre, entrepreneur
    Date: 2010
  7. By: K. S., Jomo; Chong Hui, Wee
    Abstract: Malaysian economic development has been shaped by public policy in response to changing national and external conditions. Public investments peaked in the 1970s and early 1980s, until the policy reversals driven by sovereign debt concerns and new policy ideology fads. Foreign investments continued to be favoured after independence for ethnic political reasons. Thus, foreign investments continued to be very significant in financial services as well as manufacturing growth, both for import substitution from the 1960s and for export from the 1970s. Private investments were attracted by government provision of infrastructure, cheap but schooled labour, tax incentives, lax environmental regulations and an undervalued currency. Poverty reduction and ownership redistribution by ethnicity were most successful during the 1970s and early 1980s, although it is unclear how much these improved inter-ethnic relations. Economic liberalization and the growing influence of business interests and political elites have undermined the government’s developmental role, culminating in the 1997–8 financial crisis and lacklustre growth since. Malaysian industrialization could only have been achieved with appropriate incentives for investments and technical progress through key policy interventions.
    Keywords: Malaysia, development strategies, liberalization, intervention
    Date: 2010
  8. By: Reis, Elisa P.
    Abstract: This paper discusses data from a survey and in-depth interviews on elite perceptions of poverty in Brazil. De Swaan tried to identify the circumstances under which elites are willing to mobilize resources in order to promote poverty reduction. This paper questions if de Swaan’s analysis applies to Brazil. The main finding is that two parts of de Swaan’s thesis do apply: that poverty is a problem for the rich in the sense that it generates negative externalities that they would like to reduce; and that the elite believe that there are effective remedies. What is missing for Brazilian elites is the third element, namely that the elite see poverty as their responsibility to do something about it.
    Keywords: elites, poverty, economic sociology, political culture
    Date: 2010
  9. By: Hanlon, Joseph; Mosse,, Marcelo
    Abstract: What makes elites developmental instead of predatory? We argue that Mozambique’s elite was developmental at independence 35 years ago. With pressure and encouragement from international forces, it became predatory. It has now partly returned to its developmental roots and is trying to use the state to promote the creation of business groups that could be large enough and dynamic enough to follow a development model with some similarities to the Asian Tigers, industrial development in Latin America, or Volkskapitalisme in apartheid South Africa. But Mozambique’s elite has also returned to two other traditions – that development is done by the elite and by foreigners. There is little support for development of local SMEs and agricultural development has been left to foreign-owned plantations.
    Keywords: Mozambique, elite, corruption, development, Guebuza, national capital
    Date: 2010
  10. By: Yang, Dennis (Chinese University of Hong Kong); Zhu, Xiaodong (University of Toronto)
    Abstract: This paper develops a two-sector model that illuminates the role played by agricultural modernization in the transition from stagnation to growth. When agriculture relies on traditional technology, industrial development reduces the relative price of industrial products, but has a limited effect on per capita income because most labor has to remain in farming. Growth is not sustainable until this relative price drops below a certain threshold, thus inducing farmers to adopt modern technology that employs industry-supplied inputs. Once agricultural modernization begins, per capita income emerges from stasis and accelerates toward modern growth. Our calibrated model is largely consistent with the set of historical data we have compiled on the English economy, accounting well for the growth experience of England encompassing the Industrial Revolution.
    Keywords: long-term growth, transition mechanisms, relative price, agricultural modernization, structural transformation, Industrial Revolution, England
    JEL: O41 O33 N13
    Date: 2010–10
  11. By: Fengxia Dong (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Jing Lu; Allen Featherstone
    Abstract: Agricultural production is strongly conditioned by the fact that inputs are transformed into outputs with considerable time lags, causing the rural household to balance its budget during the season when there are high expenditures for input purchases and consumption and few revenues. With limited access to credit, the budget balance within the year can become a constraint to agricultural production. As is the case in many developing countries, Chinese rural households have been suffering from a lack of access to capital. While China is one of the biggest countries in terms of rural areas and agricultural production, few studies have focused on the impact of credit on agriculture in China. Using survey data, this study aims to examine how credit constraints currently affect agricultural productivity and rural household income in China. The study findings suggest that under credit constraints, production inputs, along with farmers’ capabilities and education, cannot be fully employed. By removing credit constraints, agricultural productivity and rural household income can be improved.
    Keywords: credit constraint, household income, productivity, rural China.
    Date: 2010–10
  12. By: Alejandro Gaviria; Alejandro Hoyos
    Abstract: Welfare programs in Colombia have been focused on reducing malnutrition and hunger and on increasing school attendance rates. However, there is not much evidence on the hypothesized relationship between nutrition and education. Using the National Survey of Nutritional Status in Colombia – 2005 (ENSIN) and the Demographic and Health Survey –2005 (DHS), this paper estimates the impact of nutrition on schooling outcomes. The results suggest that anemic children have a higher probability of lagging behind in school. Malnutrition, defined by anthropometric measures, does not have an impact on schooling lags. School attendance seems to be unrelated to nutrition measures. The results are consistent under different specifications.
    Date: 2010–09–26
  13. By: Ji, K.; Magnus, J.R.; Wang, W. (Tilburg University, Center for Economic Research)
    Abstract: This paper reconsiders the ‘curse of resources’ hypothesis for the case of China, and distinguishes between resource abundance, resource rents, and resource dependence. Resource abundance and resource rents are shown to be approximately equivalent, and their association with resource dependence varies with institutional quality. Resource abundance/rents has a positive impact on economic growth, while resource dependence has a negative impact. The impact of the ‘West China Development Drive’ policy, started in 2000, is substantial, and this is investigated through a comparative analysis based on cross-section samples, and through a panel-data timevarying coefficient approach for West and East provinces. Resource effects do change after the policy shock.
    Keywords: Natural resource curse;Economic growth;China;Institutional quality;Resource abundance;Resource dependence;Regional differences;Policy change.
    JEL: O11 O13 O53 C21 Q0 Q33
    Date: 2010
  14. By: Ferreira, Susana; Hamilton, Kirk
    Abstract: Existing wealth estimates show that in most countries intangible capital is the largest share of total wealth. Intangible capital is calculated as the difference between total wealth and tangible (produced and natural) capital. This paper uses new estimates of total wealth, natural capital, and physical capital for a panel of countries to shed light on the constituents of the intangible capital residual. In a development-accounting framework, the authors show that factors of production are very successful in explaining the variation in output per worker when they use intangible capital instead of human capital as a factor of production. This suggests that intangible capital captures a broad range of assets typically included in the total factor productivity residual. Human capital is an important factor, both in statistical and economic terms, in regressions decomposing intangible capital.
    Keywords: Economic Theory&Research,Banks&Banking Reform,Debt Markets,Investment and Investment Climate,Emerging Markets
    Date: 2010–10–01
  15. By: Bird, Richard M.
    Abstract: This paper reviews the literature on tax assignment in decentralized countries. Ideally, own-source revenues should be sufficient to enable at least the richest subnational governments to finance from their own resources all locally-provided services that primarily benefit local residents. Subnational taxes should also not unduly distort the allocation of resources. Most importantly, to the extent possible subnational governments should be accountable at the margin for financing the expenditures for which they are responsible. Although reality in most countries inevitably falls far short of these ideals, nonetheless there are several taxes that subnational governments in developing countries could use to help ensure that decentralization yields more of the benefits it appears to promise in theory. At the local level, such taxes include property taxes and, especially for larger cities, perhaps also a limited and well-designed local business tax. At the regional level, in addition to taxes on vehicles, governments in some countries may be able to utilize any or all of the following -- a payroll tax; a simple surcharge on the central personal income tax; and a sales tax, in some cases perhaps taking the form of a well-designed regional value-added tax. The"best"package for any particular country or subnational government is likely to be not only context-specific and path-dependent, but also highly sensitive to the balance struck between different political and economic factors and interests.
    Keywords: Subnational Economic Development,Public Sector Economics,Taxation&Subsidies,Debt Markets,Public&Municipal Finance
    Date: 2010–10–01
  16. By: Daniel Suryadarma
    Abstract: Different economic characteristics between developing and developed countries may require worker with different skills, resulting in different returns to the same ability. Moreover, it is also possible that different countries require different skills depending on their economic fundamentals. This paper provides evidence of the hypotheses above by comparing the labour market returns to numeracy and cognitive ability in Indonesia and the United States. In Indonesia, I find that numeracy has no significant effect on income, while general cognitive ability positively affects income. In the United States, meanwhile, I find that only mathematics ability is significant. Looking at the returns by sex, I find that the benefits of higher cognitive skills only pertain to males in Indonesia, while females have higher returns to numeracy than males in the United States. These results are robust to different specifications. Overall, these differences in returns to ability between Indonesia and the United States indicate that different economic structures indeed demand different sets of skills.
    Keywords: income, ability, mathematics, cognitive, Indonesia, United States
    JEL: I20 J31
    Date: 2010–10
  17. By: Daniel Suryadarma
    Abstract: This paper measures the evolution of the gender differences in numeracy among school age children using a longitudinal dataset from Indonesia. A unique feature of the dataset is that it uses an identical test for two survey rounds, which implies that any changes in the gender gap are caused by actual changes in numeracy. To my knowledge, this is the first study that is able to distinguish actual changes in numeracy from changes in the difficulty of the tests. I find that girls outperform boys by 0.09 standard deviations when the sample was around 11 years old. Seven years later, the gap has increased to 0.19 standard deviations. This gap is equivalent to around 18 months of schooling. I find evidence for two explanations for the widening gap. The first is that households invest more resources in girls relative to boys. This behavior appears to be rational, driven by the higher labor market returns to numeracy for girls than for boys. In contrast, I find no marriage market returns to numeracy for either gender. The second explanation is that the Indonesian education system appears to play some role in promoting the gender gap. A particular source of this appears to be the teachers, as the gender gap in numeracy only occurs in schools where more than half of the teachers are female.
    Keywords: numeracy, gender gap, education, Indonesia
    JEL: I21 J16 O15
    Date: 2010–10
  18. By: Ceyhun Elgin
    Date: 2010–06
  19. By: Ceyhun Elgin; Semih Tumen
    Date: 2010–11
  20. By: Deniz Cicek; Ceyhun Elgin
    Date: 2010–09
  21. By: Shenila Rawal (Institute of Education, University of London, 20 Bedford Way, London WC1H 0AL.); Geeta Kingdon (Institute of Education, University of London, 20 Bedford Way, London WC1H 0AL.)
    Abstract: This paper uses a unique data set from 5028 primary school children in rural India to examine whether the demographic interactions between students and teachers influence student outcomes and whether social distance between student and teacher exacerbates gender, caste and religious gaps in children's achievement. One would expect this to be the case if discrimination and/or role model effects persist in the classroom. School and individual fixed effects methodology are used. In the pupil fixed effects model, across subject variation is used to test whether having a teacher whose gender, caste and religion are the same as that of the student improves student test scores. We find statistically significant positive effects of matching student and teacher characteristics. We find that a student's achievement in a subject in which the teacher shares the same gender, caste and religion as the child is, on average, nearly a quarter of a SD higher than the same child's achievement in a subject taught by a teacher who does not share the child's gender, caste or religion. Policy implications are considered.
    Keywords: education, religion, gender
    JEL: I2 I21
    Date: 2010–10–21
  22. By: Daniel Flemes (GIGA German Institute of Global and Area Studies); Thorsten Wojczewski (GIGA German Institute of Global and Area Studies)
    Abstract: Given the importance of the assertion or prevention of regional leadership for the future global order, this paper examines the strategies and resources being used to assert regional leadership as well as the reactions of other states within and outside the respective regions. Secondary powers play a key role in the regional acceptance of a leadership claim. In this article we identify the factors motivating secondary powers to accept or contest this claim. Three regional dyads, marked by different degrees of “contested leadership,” are analyzed: Brazil vs. Venezuela, India vs. Pakistan, and South Africa vs. Nigeria. The research outcomes demonstrate that the strategies of regional powers and the reactions of secondary powers result from the distribution of material capabilities and their application, the regional powers’ ability to project ideational resources, the respective national interests of regional and secondary powers, and the regional impact of external powers.
    Keywords: Brazil, India, South Africa, regional powers, regional and global order, leadership
    Date: 2010–02
  23. By: Rania Antonopoulos; Emel Memis
    Abstract: This study is concerned with the measurement of poverty in the context of developing countries. We argue that poverty rankings must take into account time use dimensions of paid and unpaid work jointly. Reviewing the current state of the literature on this topic, our methodology introduces a critical but missing analytical distinction between time poverty and time deprivation. On this basis, we proceed to provide empirical evidence by using South African time use survey data compiled in 2000. Our findings show that existing methods that work well for advanced countries require modification when adopted in the case of a developing country. The results identify a group of adults who previously were inadvertently missing, as they were considered "time wealthy."
    Keywords: Time Poverty Measurement; Time Use; Poverty; Policy
    JEL: J22 J16 I32
    Date: 2010–05
  24. By: Yuqing Xing (National Graduate Institute for Policy Studies)
    Abstract: It is income rather than the peculiar saving behavior of Chinese households that constrains consumption in the People’s Republic of China. The low share of consumption in gross domestic product (GDP) is consistent with the reduced share of GDP of wage earnings—a major source of household income. Corporate savings, which accounted for 23% of national income in 2007, contributed most to the significant increase in the gross national saving rate. The surging corporate savings was mainly due to the bias of income distribution toward capital. The profits of state-owned enterprises (SOEs) made with monopolistic power and government support comprises a substantial part of corporate savings. A series of enterprise reforms have made SOEs leaner and bigger, and transformed a handful central SOEs into monopolies in highly profitable industries. Retained profits by SOEs only benefit managers and employees in these firms, not the general public who are their true owners. The empirical analysis indicates that high levels of compensation by SOEs contributed to rising inter-industry income disparity. To boost domestic demand, it is essential that the government address the bias in distribution between SOEs and households. Collecting dividends from SOEs to fund social welfare systems or direct income transfers to low-income families will reduce the gross national saving rate, boost consumption, and more importantly, mitigate social inequality.
    Keywords: China, Saving, Income Disparity and State Ownership
    Date: 2010–10
  25. By: Steven Block
    Abstract: Agricultural productivity growth in sub-Saharan Africa has been a qualified success. Total factor productivity growth has increased rapidly since the early 1980s. By the early 2000s, average annual TFP growth was roughly four times faster than it had been 25 years earlier. This period of accelerated growth, however, followed nearly 20 years of declining rates of TFP growth subsequent to independence in the early 1960s. Average agricultural TFP growth for sub-Saharan Africa was 0.14% per year during 1960 – 84, and increased to 1.24% per year from 1985 – 2002. The average over this period was approximately 0.6% per year, which accounts for 36% of the increase in total crop output over this period. These highly aggregated results conceal substantial regional and country-level variation. Expenditures on agricultural R&D, along with the reform of macroeconomic and sectoral policies shaping agricultural incentives, have played a substantial role in explaining both the decline and the rise in agricultural productivity. The case study of Ghana clearly reflects these broader findings.
    JEL: O13 O4 Q16
    Date: 2010–10

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