nep-dev New Economics Papers
on Development
Issue of 2011‒03‒12
fifteen papers chosen by
Mark Lee
Towson University

  1. Human Development in East and Southeast Asian Economies: 1990-2010 By Minquan Liu; Yimeng Yin
  2. Optimal growth and the golden rule in a two-sector model of capital accumulation By Mehdi Senouci
  3. The methodological challenge of monitoring living conditions. Insights from a tracking experience in Madagascar. By Julia Vaillant
  4. Infectious Diseases and Economic Growth By Aditya Goenka; Lin Liu; Manh-Hung Nguyen
  5. Present and Future of the Chinese Labour Market By Michele Bruni; Claudio Tabacchi
  6. China’s New Demographic Challenge: From Unlimited Supply of Labour to Structural Lack of Labour Supply. Labour market and demographic scenarios: 2008-2048 By Michele Bruni
  7. Risk-coping through sexual networks : evidence from client transfers in Kenya By Robinson, Jonathan; Yeh, Ethan
  8. Gender and finance in Sub-Saharan Africa : are women disadvantaged ? By Aterido, Reyes; Beck, Thorsten; Iacovone, Leonardo
  9. What drives the development of the insurance sector ? an empirical analysis based on a panel of developed and developing countries By Feyen, Erik; Lester, Rodney; Rocha, Roberto
  10. Labour Quality and Inward FDI: A Firm-level Empirical Study in China By Faqin Lin
  11. Globalization and development in sub-Saharan Africa By Jomo Kwame Sundaram; Oliver Schwank; Rudiger von Arnim
  12. Autonomy or Efficiency. An experiment on household decisions in two regions of India. By Alistair Munro; Bereket Kebede; Marcela Tarazona-Gomez; Arjan Verschoor
  13. Corruption and Social Interaction: Evidence from China By Bin Dong; Benno Torgler
  14. Democracy, Property Rights, Income Equalilty, and Corruption By Bin Dong; Benno Torgler
  15. How Beliefs about HIV Status Affect Risky Behaviors: Evidence from Malawi, Sixth Version By Aureo de Paula; Gil Shapira; Petra E. Todd

  1. By: Minquan Liu (Center for Human and Economic Development Studies, Peking University); Yimeng Yin (Center for Human and Economic Development Studies, Peking University)
    Abstract: This report reviews patterns and trends in human development (HD) in East and Southeast Asia (ESA) since 1990, analyzes causes and consequences of this development, highlighting both structural and institutional factors, and identifies the basic principles for durable enhancements in HD. The basic arguments are that most ESA economies have experienced rapid socioeconomic structural changes through industrialization and urbanization in the last two decades. From a HD perspective, these processes offer enormous room for expanding people's capabilities. However, to successfully seize such opportunities, appropriate institutions and public policies are needed, and so is public participation in policy making and implementation. Public policies are also important for equitable distribution of the expanded opportunities, which in turn contribute to the legitimacy of institutions and social cohesion. And while industrialization does often cause more environmental pollution, technological advances also offer the means to reduce such pollution, so long as appropriate environmental policies are implemented to ensure the use of such cleaner technologies. Subject to such appropriate public policies, in net terms industrialization and urbanization should expand people's capabilities and ensure sustainable HD. Six principles are critical to a successful HD strategy-agricultural and rural development to facilitate structural transformation and to increase employment; human capital accumulation to promote continued economic and income growth; inclusive urbanization to reduce dualism and enhance social integration; cleaner industrialization to ensure sustainability; people's participation and empowerment to improve decision making and governance; closer regional and international cooperation to ensure a better future for all on our fragile planet.
    Keywords: Human Development, Structural Factors, Public Policy, East and Southeast Asia
    JEL: O15 H11 O53
    Date: 2010–07
  2. By: Mehdi Senouci (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: We contribute to the literature on optimal growth in two-sector models by solving a Ram- sey problem with a concave utility function. The unique possible steady-state is independent of initial conditions and of the instantaneous utility function, but not of the discount rate, and is characterized by a wage-rental ratio depending solely on the technology of the capital sector. For an initially low-capital economy, we show that the wage-rental ratio increasingly converges to its balanced value during transition. If the consumption sector is relatively capital-intensive, the relative price of capital increases during transition. If the investment sector is relatively more capital-intensive, it decreases. We also prove that a negative shock on the subjective rate of impatience, that makes the social planner more patient, leads to an immediate positive jump in asset prices.
    Keywords: capital accumulation ; optimal growth ; golden rule ; two-sector models
    Date: 2011–02
  3. By: Julia Vaillant (Université Paris Dauphine, LEDa UMR 225 DIAL, IRD)
    Abstract: (english) Most longitudinal surveys recontact households only if they are still living in the same dwelling, producing very high attrition rates, especially in developing countries where rural-urban migration is prevalent. In this paper, we discuss the implications of the various follow-up rules used in longitudinal surveys in the light of an original tracking survey from Madagascar. This survey attempted in 2005 to search and interview all individuals who were living in the village of Bepako in 1995, the baseline year of a yearly survey, the Rural Observatories. The tracking survey yielded an individual recontact rate of 78.8%, more than halving attrition compared to a standard dwelling-based follow-up rule. The tracking reveals a very high rate of out-migration (38.8%) and household break-ups, as three quarters of recontacted households had divided between 1995 and 2005. The average income growth of the sample over the period increases by 28 percentage points when follow-up is extended to those who moved out of their household or village, suggesting that dwelling-based panels give a partial view of the welfare dynamics of the baseline sample. A higher baseline income per capita is associated with a higher probability of staying in Bepako and of being found in the tracking if one moved out. The hardest people to find are the poorest and most isolated. Special attention should be paid to collecting data that enable the identification and follow-up of individuals without which attrition is likely to remain a source of bias even after a tracking procedure is carried out. _________________________________ (français) La plupart des enquêtes en panel ne recontactent les ménages enquêtés que s'ils vivent toujours dans le même logement, ce qui créé des taux d'attrition très élevés, en particulier dans les pays en développement où la migration vers les villes est importante. Dans cet article, nous discutons les implications des différentes règles de suivi utilisées dans les enquêtes longitudinales à la lumière d'une enquête tracking originale réalisées à Madagascar. Cet enquête a tenté, en 2005, de chercher et enquêter tous les individus originaires de Bepako, où une enquête annuelle est réalisée depuis 1995 (Observatoires Ruraux). Ce dispositif a permis de recontacter 78.8% des individus, réduisant ainsi de plus de moitié l'attrition par rapport à un suivi des individus basé sur le logement. Le tracking révèle un taux de migration très élevé (38.8%) et d'importantes recompositions et divisions de ménages, puisque les trois quarts des ménages recontactés s'étaient divisés entre 1995 et 2005. La croissance du revenu moyenne dans l'échantillon sur la période augmente de 28 points de pourcentage lorsque le suivi est étendu à ceux ayant changé de ménage ou de lieu de résidence, suggérant que les panels basés sur le lieu de résidence génèrent une vue partielle de la dynamique des revenus de l'échantillon initial. Un revenu par tête initial plus élevé est associé à une probabilité plus forte de rester à Bepako ou d'être retrouvé lors du tracking. Les personnes les plus difficiles à retrouver sont les plus pauvres et isolées. Une attention particulière doit être portée à la collecte d'information permettant d'identifier et de réenquêter les individus, sans laquelle il est probable que l'attrition restera une source de biais, même après avoir réalisé une enquête tracking.
    Keywords: Panel data, tracking surveys, attrition, mobility.
    JEL: C81 I32 O12 O15
    Date: 2010–12
  4. By: Aditya Goenka; Lin Liu; Manh-Hung Nguyen
    Date: 2011–02
  5. By: Michele Bruni; Claudio Tabacchi
    Abstract: The paper aims to provide a representation, as rich and complete as possible, of the Chinese labour market, both in terms of stock and flow, despite the fact that the statistical information is still rather poor and often inconsistent. It does then document the increasing differences in the level and trends of the main labour market variables at the provincial level. In order to reach a deeper comprehension of the dynamic of the Chinese labour market, the paper analyses two other extremely relevant phenomena: the so called “floating population” and the labour shortages that are more and more frequently affecting the coastal regions. After having provided a demographic background to the Lewis model of development with unlimited supply of labour, the paper shows in which periods China has been obliged to accumulate a large labour surplus, mainly in the agricultural sector, and in which periods and through which mechanisms, including ageing and internal migration, the process of deaccumulation has taken place. More specifically, the paper shows how up to now internal migrations have provided urban areas and coastal regions with an unlimited supply of labour, a factor that has played a major role in boosting the Chinese economic development and determining its typology. In order to reach this result, simple demographic tools have been utilized to estimate the net migration balance of each province and in each province of rural and urban areas, and therefore to define areas of departures and areas of arrival, information not provided by the literature on the floating population. Finally the paper provides a rough estimate of the disguised unemployment in agriculture and of its geographical distribution. After assessing which percentage can represent a possible supply of labour for the modern sector, it will be maintained that China not only is very close to the Lewis turning point (a situation that has already been reached in many coastal areas), but is going to become the world biggest importer of labour. In order to provide its population with living standards comparable to that of the western world, in a reasonable time interval, China needs to continue to grow at an extremely high rate. This will require the capacity to deal with a series of structural problems. Limiting our concerns to the labour market, that is characterized by increasing complexity and regional differentiation, high priority should be given to improve the collection, analysis and dissemination of labour market data; to abolish the one child policy that is totally obsolete in a situation that will be soon characterized by a structural lack of labour supply; to give to the Chinese citizens the right to freely move and change residence, while rapidly regularizing the existing floating population; to raise the legal age of retirement; to plan and implement a structure of t entries in vocational courses and higher educational paths coherent with the expected structure of the labour demand in terms of flows by occupation; to strengthen the Employment service system in order to improve skills matching at the local level, and facilitate the correct allocation of human resources over the national territory, in order to minimize the human and economic costs of future unavoidable internal migrations.
    Keywords: China; labour market; stock and flow; demography; internal migration; Lewis turning point
    Date: 2011–02
  6. By: Michele Bruni
    Abstract: The paper focuses on the demographic and labour market consequences of the dramatic decline in fertility that has characterized China starting at the beginning of the ‘50s. It is shared opinion that a sustained decline in fertility below replacement level will provoke a decline in Total population, an even more pronounced decline in Working age population and very relevant ageing phenomena. I have recently shown that, on the contrary and coherently with empirical evidence, a decline in fertility provokes a structural lack of labour supply that determines positive migration balances and, finally, positive demographic trends. The paper applies the same approach to China with similar results. The decline in fertility, determined by the process of economic development and its impact on education and urbanization, but promoted also trough the one-child policy, will provoke a relevant and growing structural lack of labour supply, even in the hypothesis that Chinese employment growth should sharply decline. The implication is that in order to continue its road to economic growth and social development, China will have to rely on large and growing migration flows that will determine a demographic expansion. In conclusion, the decline in fertility, actively pursued to set a ceiling to population growth, will end up provoking the opposite result. The uncertainty about the age structure of the Chinese population makes it impossible to determine in which year China will start to be affected by serious labour shortages. Our scenarios do however clearly show that China will reach the Lewis turning point in the next few years and before the middle of the century will become the world largest importer of labour. Our analysis does therefore clearly suggest that any legal restriction to fertility and territorial mobility is totally unwarranted, and that China should start to consider educational and labour policies aimed to mitigate labour shortages. It also indicates the necessity to start an in depth discussion of which immigration and social integration policies could better serve the interests of China, on the light both of the experiences of other countries, and of the role that China wants to play in the international arena.
    Keywords: Demography; Labour market; Demographic and labour market scenarios; Migrations; Lewis turning point; China
    JEL: J11 F22
    Date: 2011–02
  7. By: Robinson, Jonathan; Yeh, Ethan
    Abstract: Why do women engage in transactional sex? While much of the explanation is that sex-for-money pays more than other jobs, this paper uses a unique panel dataset constructed from 192 self-reported diaries of sex workers in Western Kenya to show that women who supply transactional sex develop relationships with regular clients, and that these clients send transfers in response to negative income shocks. Regular clients are the primary source of inter-person insurance that women receive, and women report in a separate survey that client transfers are an important reason that they participate in the market.
    Keywords: Population Policies,Gender and Law,Adolescent Health,Gender and Health,Population&Development
    Date: 2011–02–01
  8. By: Aterido, Reyes; Beck, Thorsten; Iacovone, Leonardo
    Abstract: This paper assesses whether there is a gender gap in the use of financial services by businesses and individuals in Sub-Saharan Africa. The authors do not find evidence of gender discrimination or lower inherent demand for financial services by enterprises with female ownership participation or by female individuals when key characteristics of the enterprises or individuals are taken into account. In the case of enterprises, they explain this finding with selection bias -- females are less likely to run sole proprietorships than men, and firms with female ownership participation are smaller, but more likely to innovate. In the case of individuals, the lower use of formal financial services by women can be explained by gender gaps in other dimensions related to the use of financial services, such as their lower level of income and education, and by their household and employment status.
    Keywords: Access to Finance,Banks&Banking Reform,Emerging Markets,Housing&Human Habitats,Gender and Law
    Date: 2011–02–01
  9. By: Feyen, Erik; Lester, Rodney; Rocha, Roberto
    Abstract: The insurance sector can play a critical role in financial and economic development. By reducing uncertainty and the impact of large losses, the sector can encourage new investments, innovation, and competition. As financial intermediaries with long investment horizons, insurance companies can contribute to the provision of long-term instruments to finance corporate investment and housing. There is evidence of a causal relationship between insurance sector development and economic growth. However, there have been few studies examining the factors that drive the development of the insurance industry. This paper contributes to the literature by examining the determinants of insurance premiums (both life and non-life premiums) and total assets for a panel of about 90 countries during the period 2000-08. The results show that life sector premiums are driven by per capita income, population size and density, demographic structures, income distribution, the size of the public pension system, state ownership of insurance companies, the availability of private credit, and religion. The non-life sector is affected by these and other variables. While some of these drivers are structural, the results also show that the development of the insurance sector can be influenced by a number of policy variables.
    Keywords: Debt Markets,Insurance Law,Emerging Markets,Insurance&Risk Mitigation,Economic Theory&Research
    Date: 2011–02–01
  10. By: Faqin Lin (School of Economics, University of Adelaide)
    Abstract: This paper uses a large sample of Chinese cross-section firm-level data with comprehensive information about labour quality to investigate the relationship between labour quality and FDI distribution in China. Using parametric, IV-GMM and non-parametric techniques, the author finds that labour quality measured by education level plays an important role on deciding the distribution of FDI but labour quality measured by working certificates lose their significance. The author also finds that labour quality has a more significant impact on other foreign investments than HMT invested firms and the impacts of labour quality on FDI is strongly uneven across industries and provinces.
    Keywords: education, foreign direct investment, labour quality
    JEL: F21 O18 O53
    Date: 2011–03
  11. By: Jomo Kwame Sundaram; Oliver Schwank; Rudiger von Arnim
    Abstract: This paper critically reviews the impact of globalization on sub-Saharan Africa (SSA) since the early 1980s. The large gains expected from opening up to international economic forces have, to date, been limited, and there have been significant adverse consequences. Foreign direct investment in SSA has been largely confined to resource—especially mineral—extraction, even as continuing capital flight has reduced financial resources available for productive investments. Premature trade liberalization has further undermined prospects for the economic development of SSA as productive capacities in many sectors are not sufficiently competitive to take advantage of any improvements in market access.
    Keywords: Africa, Agriculture, Aid, Bretton Woods institutions, Development, FDI, Finance, Industry, Structural Adjustment, Trade
    JEL: O1 O2 O55
    Date: 2011–02
  12. By: Alistair Munro (National Graduate Institute for Policy Studies); Bereket Kebede; Marcela Tarazona-Gomez; Arjan Verschoor
    Abstract: Dyson and Moore (1983) posit that women in South India enjoy relatively more agency than in the North. Their conclusions have become part of the standard picture of Indian rural society. In this paper, we examine using experimental data the implications of the regional contrast in female autonomy for the efficiency of family decision-making. We take a sample of 1200 couples from one rural and one urban area in the north of India (Uttar Pradesh) and one area in the south (Tamil Nadu) that are often taken to exemplify differences in the autonomy of women and the nature of marital relationships. Generally, we find large-scale and robust evidence of inefficiency and the hiding of assets when this is possible. Men invest more and are more generous to their partners. Women are more willing to invest in a common pool when their income is earned through working and when assets are publicly observable. Regarding the focus of our paper, we find continuing significant differences between North and South and we find relatively little evidence that urban living is associated with changes in the nature of marital behaviour. There are some differences between response to treatment but the key and striking difference between the North and the South is that in both rural and urban sites in the former region household efficiency is considerably greater than in the latter, which does on the face of it suggest a tradeoff between autonomy and efficiency.
    Date: 2011–03
  13. By: Bin Dong (QUT); Benno Torgler (QUT)
    Abstract: We explore theoretically and empirically whether social interaction, including local and global interaction, influences the incidence of corruption. We first present an interaction-based model on corruption that predicts that the level of corruption is positively associated with social interaction. Then we empirically verify the theoretical prediction using within-country evidence at the province-level in China during 1998 to 2007. Panel data evidence clearly indicates that social interaction has a statistically significantly positive effect on the corruption rate in China. Our findings, therefore, underscore the relevance of social interaction in understanding corruption.
    Keywords: corruption, social interaction, China
    JEL: K42 D72 D64 O17 J24
    Date: 2010–11–26
  14. By: Bin Dong (QUT); Benno Torgler (QUT)
    Abstract: This paper presents theoretical and empirical evidence on the nexus between corruption and democracy. We establish a political economy model where the effect of democracy on corruption is conditional on income distribution and property rights protection. Our empirical analysis with cross-national panel data provides evidence that is consistent with the theoretical prediction. Moreover, the effect of democratization on corruption depends on the protection of property rights and income equality which shows that corruption is a nonlinear function of these variables. The results indicate that democracy will work better as a control of corruption if the property right system works and there is a low level of income inequality. On the other hand if property rights are not secured and there is strong income inequality, democracy may even lead to an increase of corruption. In addition, property rights protection and the mitigation of income inequality contribute in a strong manner to the reduction of corruption.
    Keywords: Corruption; Democracy; Income inequality; Property rights
    JEL: D73 H11 P16
    Date: 2010–11–26
  15. By: Aureo de Paula (Department of Economics, University of Pennsylvania); Gil Shapira (Department of Economics, University of Pennsylvania); Petra E. Todd (Department of Economics, University of Pennsylvania)
    Abstract: This paper examines how beliefs about own HIV status affect decisions to engage in risky sexual behavior (as measured by extramarital affairs) and analyzes the potential for interventions that influence beliefs, such as HIV testing and informational campaigns, to reduce transmission rates. The empirical analysis is based on a panel survey of married males for years 2006 and 2008 from the Malawi Diffusion and Ideational Change Project (MDICP). In the data, beliefs about HIV status vary significantly geographically and over time, in part because of newly available testing opportunities and because of cultural differences. We estimate the effect of beliefs on risky behavior using Arellano and Carrasco’s (2003) semiparametric panel data estimator, which accommodates unobserved heterogeneity and belief endogeneity. Results show that changes in the belief of being HIV positive induce changes in risky behavior. Downward revisions in beliefs increase risky behavior and upward revisions decrease it. We modify Arellano and Carrasco’s (2003) estimator to allow for underreporting of extramarital affairs and find the estimates to be robust. Using the estimates and a prototypical epidemiological model of disease transmission, we show that better informing people about their HIV status on net reduces the population HIV transmission rate.
    Keywords: Malawi,HIV,beliefs
    JEL: I12
    Date: 2010–07–26

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