nep-dev New Economics Papers
on Development
Issue of 2011‒07‒21
nine papers chosen by
Mark Lee
Towson University

  1. On the interaction between risk-taking and risk-sharing under farm household wealth heterogeneity By DELPIERRE Matthieu; VERHEYDEN Bertrand; WEYNANTS Stéphanie
  2. Transportation Infrastructure and Development in Ghana By Rémi Jedwab; Alexandre Moradi
  3. Economic growth in low income countries: How the G20 can help to raise and sustain it By L. Alan Winters; Wonhyuk Lim; Lucia Hanmer; Sidney Augustin
  4. Whether to Hire Local Contract Teachers? Trade-off Between Skills and Preferences in India. By Sonja Fagernäs; Panu Pelkonen
  5. Trade as an Engine of Creative Destruction Mexico experience with Chinese competition By Leonardo Iacovone; Ferdinand Rauch; L. Alan Winters
  6. Economic Planning in China By Gregory C. Chow
  7. Nation-Building and Conflict in Modern Africa By Sanghamitra Bandyopadhyay; Elliott Green
  8. Self-employment of rural-to-urban migrants in China By Giulietti, Corrado; Ning, Guangjie; Zimmermann, Klaus F
  9. Are Foreign Aid and Remittances a Hedge against Food Price Shocks in Developing Countries? By Mireille NTSAMA ETOUNDI; Jean-Louis COMBES; Christian EBEKE; Thierry YOGO

  1. By: DELPIERRE Matthieu; VERHEYDEN Bertrand; WEYNANTS Stéphanie
    Abstract: Empirical evidence on developing countries shows on the one hand that rich farm-households are more keen to adopt new technologies and are higher risk takers than poor households. On the other hand, however, they are shown to be less vulnerable to income shocks than poor farmers. This paper provides a rationale for these observations. Risk averse agents, heterogeneously endowed with wealth, non-cooperatively decide on their level of subscription to risk-sharing and on the degree of individual production risk they take. Rich households take more risks and subscribe more to risk-sharing. Although risk-sharing allows all households to cope with idiosyncratic shocks, the risk-taking behavior of rich households increases the covariate component of poor households income variance through risk-sharing, deterring the participation of the poor. These poor households in turn opt for safer but less productive production plans.
    Keywords: Risk-taking; risk-sharing; technology adoption; farm household
    JEL: O12 O13 O17 O33
    Date: 2011–07
  2. By: Rémi Jedwab (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, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, LSE - London School of Economics and Political Science - LSE); Alexandre Moradi (Sussex University - Sussex University)
    Abstract: We study the impact of transportation infrastructure on agriculture and development in colonial Ghana. Two railway lines were built between 1901 and 1923 to connect the coast to mining areas and the large hinterland city of Kumasi. This unintendedly opened vast expanses of tropical forest to cocoa cultivation, allowing Ghana to become the world's largest producer. This attracted migrants to producing areas and the economic surplus drove urbanization. Using data at a very fine spatial level, we find a strong effect of railroad connectivity on cocoa production due to reduced transportation costs. We then show that the economic boom in cocoa-producing areas was associated with demographic growth and urbanization. We _nd no spurious effect from lines that were not built yet, and lines that were planned but never built. We show that our results are robust to considering nearest neighbor estimators. Lastly, railway construction has durably transformed the economic geography of Ghana, as railway districts are more developed today, despite thirty years of marked decline in rail transportation.
    Keywords: Railroads ; Trade Costs ; Urbanization ; Africa
    Date: 2011–07
  3. By: L. Alan Winters (Department of Economics, University of Sussex); Wonhyuk Lim (Center for International Development, Korea); Lucia Hanmer (Department for International Development, London); Sidney Augustin (Department for International Development, London)
    Abstract: This paper aims to operationalise the G20 commitment to ensure that the benefits of global growth are shared with Low Income Countries. Growth is central to poverty reduction and the achievement of MDGs, and in developing countries it is episodic and volatile. However, while the current LICs have poor growth histories, the countries that started off the 1960s as LICs have had virtually the same average growth rates as other country groups. We review the evidence connecting long-run growth and growth accelerations and collapses to six areas of policy: trade, skills development, macro-stability, financial development, infrastructure investment and human development. Growth strategies have to be developed and owned by LIC governments and societies and they need to be tailored to individual country needs. However, there are some things which the G20 can do to help. We group these actions under three headings: mitigating downturns, boosting underlying growth rates and developing institutions and knowledge. A final annex describes how Korea’s spectacular growth strategy can be viewed through these lenses.
    Keywords: growth, low income countries, G20
    JEL: O10 O11 O19
    Date: 2010–10
  4. By: Sonja Fagernäs (Department of Economics, University of Sussex); Panu Pelkonen (Department of Economics, University of Sussex)
    Abstract: Whether to hire teachers locally on a contract basis, or via competitive examinations and training as government officials, is a major policy question in developing countries. Recruitment practices can have implications for the competence, motivation and the cost of teachers. This study relies on a Discrete Choice Experiment to assess the job preferences of a sample of 700 future elementary school teachers in the state of Uttarakhand in India. The students have been selected using either district-wide competitive examination or from a pool of locally hired, experienced contract teachers (para-teachers). Skills in English, Arithmetic and Vocabulary are also tested. We find a trade-off between skills and preferences, as teacher students hired using competitive examination have higher skills, but prefer posts in less remote regions. Most of the differences in job preferences between the two groups can be explained by geographic origin of the teachers, skills, experience and education.
    Keywords: Education, Para-teachers, Discrete Choice Experiment, Skills, Preferences, India
    JEL: H75 I28 J24 J28 J41 J45
    Date: 2011–02
  5. By: Leonardo Iacovone (Development Research Group, World Bank); Ferdinand Rauch (Department of Economics, University of Vienna); L. Alan Winters (Department of Economics, University of Sussex)
    Abstract: This paper exploits the surge in Chinese exports from 1994 to 2004 as a natural experiment to evaluate the effects of a unilateral low wage trade and competition shock to producers in Mexico. We find that this shock causes selection at both firm and product levels as its impact is highly heterogeneous both on the intensive and extensive margins. Sales of smaller plants and more marginal products are compressed and are more likely to cease, while larger plants and products exhibit an opposite response. Similar results hold both for the domestic market and for competition facing Mexican exporters in a third market (i.e. the United States).
    Keywords: China, Mexico, multi-product-firm, trade shock
    JEL: F14 L11
    Date: 2010–09
  6. By: Gregory C. Chow (Princeton University)
    Abstract: This paper provides an up-to-date study of economic planning in China as it affects the economic development, growth and fluctuations of the Chinese economy. Although economic planning has been practiced in China since 1953 when the first Five-Year Plan began, its nature has changed after economic reform started in 1978. Market reform reduced the importance of central planning, but more recently the global economic recession and China’s active macro-economic policy interventions have increased the importance of economic planning. Our discussion is divided into the following sections: 1. Role of planning in the Chinese economy. 2. Scope of planning. 3. Numerical targets of the Plan and the degree to which the targets are met. 4. Organization of the NCDR. 5. How a plan is implemented. 6. Effects of planning on China’s economic development.
    Keywords: China, Chinese economy, growth, planning, five year plans, market reforms
    JEL: E21 E20 F14 N15 P20
    Date: 2011–06
  7. By: Sanghamitra Bandyopadhyay; Elliott Green
    Abstract: Nation-building has long been seen as an important focus for postcolonial African governments. However, up until now there has been no empirical analysis of either the origins or consequences of these policies. Here we compile an original dataset measuring nine different types of nation-building policies. Using Ordinary Least Squares regressions, we first show that nation-building policies are correlated with larger states and British colonialism. We then use logistic regressions to test the effect of such policies on civil wars using two different datasets of civil wars, and find no evidence that such policies have helped to prevent civil war.¬«À
    Keywords: conflict, nation building, Africa, Sub-Saharan AfricaS
    Date: 2011–06
  8. By: Giulietti, Corrado; Ning, Guangjie; Zimmermann, Klaus F
    Abstract: This paper focuses on the determinants of self-employment among rural to urban migrants in China. Two self-selection mechanisms are analysed: the first relates to the manner in which migrants choose self-employment or paid work based on the potential gains from either type of employment; the second takes into account that the determinants of the migration decision can be correlated with employment choices. Using data from the 2008 Rural-Urban Migration in China and Indonesia (RUMiCI) survey, a selection model with endogenous switching is estimated. Earnings estimates are then used to derive the wage differential, which in turn is used to model the employment choice. The procedure is extended to account for migration selectivity and to compare individuals with different migration background and employment histories. The results indicate that self-employed individuals are positively selected with respect to their unobserved characteristics. Furthermore, the wage differential is found to be an important driver of the self-employment choice.
    Keywords: European Union; rural to urban migration; selection bias magnets; self-employment; wages
    JEL: J23 J61 O15
    Date: 2011–07
  9. By: Mireille NTSAMA ETOUNDI; Jean-Louis COMBES (Centre d'Etudes et de Recherches sur le Développement International); Christian EBEKE; Thierry YOGO
    Abstract: This paper measures the effects of food price shocks on both the level of household consumption per capita and the instability of the household consumption per capita growth rate in developing countries. In this vein, the paper explores specifically the role of aid and remittance inflows in the mitigation of the effects of food price shocks in the recipient economies. Using a large sample of developing countries observed over the period 1980 – 2009 and mobilizing dynamic panel data specifications, the econometric results yield three important findings. First, food price shocks significantly affect both the level and the instability of household consumption in the highly vulnerable countries. Second, remittance and aid inflows significantly dampen the effect of food price shocks in the most vulnerable countries. Third, a lower remittance-to-GDP ratio is required to fully absorb the effects of the food price shocks compared to the corresponding aid-to-GDP ratio.
    Keywords: Household consumption, food price shocks, vulnerability, Aid, Remittances
    Date: 2011

This nep-dev issue is ©2011 by Mark Lee. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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