nep-dev New Economics Papers
on Development
Issue of 2011‒01‒23
seven papers chosen by
Mark Lee
Towson University

  1. Reconciling top-down and bottom-up development policies By Riccardo Crescenzi; Andrés Rodríguez-Pose
  2. The Long-Run Effects of Mortality Decline in Developing Countries By Lehmijoki, Ulla; Palokangas, Tapio K.
  3. Institution building with limited resources: Establishing a supreme audit institution in Rwanda By Isaksson, Ann-Sofie; Bigsten, Arne
  4. Is there a metropolitan bias? The inverse relationship between poverty and city size in selected developing countries By Céline Ferré; Francisco H.G. Ferreira; Peter Lanjouw
  5. Productivity and Wage Differentials between Private and Public Sector in the Developing Countries By Arzu Yavuz
  6. On the Simultaneity Problem in the Aid and Growth Debate By Markus Brückner
  7. Contract Enforcement, Litigation, and Economic Development By Massenot Baptiste

  1. By: Riccardo Crescenzi (London School of Economics); Andrés Rodríguez-Pose (IMDEA Social Sciences Institute)
    Abstract: Top-down and bottom up development policies have been generally sold as two irreconcilable ends of the development intervention spectrum. Top-down policies, solidly based in micro- and macroeconomic theories, but lacking the adequate flexibility and ‘place-awareness’ to respond to local complexity; bottom-up approaches much more responsive to diverse territorial needs, but devoid of a clear conceptual framework. In this paper we aim to show that this division need not remain still and that the foundations of top-down and bottom-up development policies can be reconciled in a joint 'meso-level' conceptual framework which can serve simultaneously as a deductive justification for bottom-up local and regional development policies and as a coordination device between different policies.
    Keywords: development policies; top-down; bottom-up; integrated framework
    Date: 2011–01–05
  2. By: Lehmijoki, Ulla (University of Helsinki); Palokangas, Tapio K. (University of Helsinki)
    Abstract: Since World War II, mortality has declined in the developing world. This paper examines the effects of this mortality decline on demographic and economic growth by a family-optimization model, in which fertility is endogenous and wealth yields utility through its status. The decline in mortality stimulates investment and generates an income stream which promotes population growth, but the desire of status hampers fertility and prevents capital-diluting demographic expansion. If status-seeking is strong, then the decline of mortality decreases population growth below its original level.
    Keywords: mortality, population growth, economic growth
    JEL: O41 J13 J10 O10
    Date: 2011–01
  3. By: Isaksson, Ann-Sofie (Department of Economics, School of Business, Economics and Law, Göteborg University); Bigsten, Arne (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This study is about institution building with limited resources. Through a case study of the establishment of a supreme audit institution (SAI) in Rwanda, we examine the tensions between institutional first-best benchmarks and local operational constraints in a developing country institution-building process. More specifically, our aim is to investigate the potential tradeoffs between the programmatic ideal of SAI independence and operational constraints in terms of staff capacity in the development of a supreme audit oversight function in Rwanda. Drawing on data from document studies and key informant interviews, the empirical results suggest that capacity constraints – within the institution as well as among its major stakeholders – negatively affect important aspects of SAI functional independence, but also that there are arguments for compromising the programmatic ideal of SAI independence in order to effectively tackle operational constraints in terms of staff capacity.<p>
    Keywords: Institution building; Capacity constraints; Supreme audit institution; Rwanda
    JEL: D02 H83 O16 O55
    Date: 2011–01–12
  4. By: Céline Ferré (World Bank); Francisco H.G. Ferreira (World Bank); Peter Lanjouw (World Bank)
    Abstract: This paper provides evidence from eight developing countries of an inverse relationship between poverty and city size. Poverty is both more widespread and deeper in very small and small towns than in large or very large cities. This basic pattern is generally robust to choice of poverty line. The paper shows, further, that for all eight countries, a majority of the urban poor live in medium, small, or very small towns. Moreover, it is shown that the greater incidence and severity of consumption poverty in smaller towns is generally compounded by similarly greater deprivation in terms of access to basic infrastructure services, such as electricity, heating gas, sewerage, and solid waste disposal. The authors illustrate for one country—Morocco—that inequality within large cities is not driven by a severe dichotomy between slum dwellers and others. The notion of a single cleavage between slum residents and well-to-do burghers as the driver of urban inequality in the developing world thus appears to be unsubstantiated—at least in this case. Robustness checks are performed to assess whether the findings in the paper are driven by price variation across city-size categories, by the reliance on an income-based concept of well-being, and by the application of small area estimation techniques for estimating poverty rates at the town and city level.
    Keywords: poverty and city size, urban poverty, slums.
    JEL: I32 O18 R20
    Date: 2011
  5. By: Arzu Yavuz
    Date: 2011
  6. By: Markus Brückner (School of Economics, University of Adelaide)
    Abstract: This paper shows that foreign aid has a signicant positive average effect on real per capita GPD growth if, and only if, the quantitatively large negative reverse causal effect of per capita GDP growth on foreign aid is adjusted for in the growth regression. Instrumental variables estimates yield that a 1 percentage point increase in GDP per capita growth decreased foreign aid by over 4 percent. Adjusting for this quantitatively large, negative reverse causal eect of economic growth on foreign aid yields that a 1 percent increase in foreign aid increased real per capita GDP growth by around 0.1 percentage points.
    Keywords: aid allocation, aid effectiveness, economic growth, simultaneity
    JEL: O1 O2 O4
    Date: 2011–01
  7. By: Massenot Baptiste
    Abstract: This paper introduces a model of litigation in a growth framework. Investors use litigation to enforce their financial contracts with entrepreneurs. A contest ensues in which both agents hire lawyers to increase their probability of winning the trial. The issue and the cost of the contest determine how much investors are willing to lend. More lawyers are hired when judicial efficiency is lower and damages are higher. Higher judicial efficiency and tighter restrictions on the supply of lawyers benefit the economy, while the impact of higher damages is ambiguous. Some empirical evidence is also presented.
    Keywords: contract enforcement; litigation; lawyers; economic development
    JEL: K41 O16
    Date: 2010–12

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