nep-dev New Economics Papers
on Development
Issue of 2011‒07‒27
39 papers chosen by
Mark Lee
Towson University

  1. Accounting for the effects of AIDS on growth in Sub-Saharan Africa By Paul Cahu; Falilou Fall
  2. Population, land and growth By Claire Loupias; Bertrand Wigniolle
  3. How Gender Inequalities Hinder Development : Cross-Country Evidence By Gaëlle Ferrant
  4. Are Foreign Aid and Remittances a Hedge against Food Price Shocks in Developing Countries? By Jean-Louis Combes; Christian Ebeke; Mireille Ntsama Etoundi; Thierry Yogo
  5. Export Behaviour and Propensity to Innovate in a Developing Country: The Case of Tunisia By Mohieddine Rahmouni; Murat Yildizoglu; Mohamed Ayadi
  6. Child schooling, child health and rainfall shocks: evidence from rural Vietnam By Thuan Quang Thai; Evangelos M. Falaris
  7. Political Connections and Investment in Rural Vietnam By Finn Tarp; Thomas Markussen
  8. The Impact of the Food and Financial Crises on Child Mortality: The case of sub-Saharan Africa By Giovanni Andrea Cornia; Luca Tiberti; Stefano Rosignoli; UNICEF Innocenti Research Centre
  9. Institutions, Inequality and Growth: A review of theory and evidence on the institutional determinants of growth and inequality By Richard Bluhm; Adam Szirmai; UNICEF Innocenti Research Centre
  10. Divide and Rule or the Rule of the Divided? Evidence from Africa By Stelios Michalopoulos; Elias Papaioannou
  11. Socio-Economic Impact of Women Entrepreneurship in Sylhet City, Bangladesh By Chowdhury Abdullah Al-Hossienie
  12. Implementing Sustainable Urban Travel Policies in Mexico By Víctor Islas Rivera; Salvador Hernández G.; José A. Arroyo Osorno; Martha Lelis Zaragoza; J. Ignacio Ruvalcaba
  13. Implementing Sustainable Urban Travel Policies in China By Haixiao Pan
  14. Risk attitude and risk behavior: Comparing Thailand and Vietnam By Gloede, Oliver; Menkhoff, Lukas; Waibel, Hermann
  15. Market imperfections and child labor By Dumas, Christelle
  16. Collateral and its Determinants: Evidence from Vietnam By Heinz, Christa; Dinh, Thanh; Kleimeier, Stefanie
  17. The Double African Paradox: What does selective mortality tell us? By Rouanet, Léa
  18. Long-run consequences of natural disasters: Evidence from Tangshan By Xu, Guo
  19. Bullet Proof? Program Evaluation in Conflict Areas: Evidence from Rural Colombia By Wald, Nina; Bozzoli, Carlos
  20. Acute Multidimensional Poverty: A New Index for Developing Countries By Alkire, Sabina; Santos, Maria Emma
  21. FDI and the labor share in developing countries: A theory and some evidence By Maarek, Paul; Decreuse, Bruno
  22. Is the Informal Sector Constrained from the Demand Side? Evidence for Six West African Capitals By Thiele, Rainer; Böhme, Marcus
  23. Education spillovers in farm productivity: empirical evidence in rural India By Gille, Véronique
  24. HIV/AIDS as a Fiscal Liability By Haacker, Markus
  25. Intergenerational transmission of self-employed status in the informal sector: a constrained choice or better income prospects? Evidence from seven West-African countries By Pasquier-Doumer, Laure
  26. Politics and the geographic allocation of public funds in a semi-democracy: The case of Ghana, 1996-2004. By André, Pierre; Mesplé-Somps, Sandrine
  27. Trade Liberalization and Poverty: A Macro-Micro Analysis in Ethiopia By Kebede, Sindu; Fekadu, Belay; Aredo, Dejene
  28. Deadly Cities? A Note on Spatial Inequalities in Mortality in Sub-Saharan Africa By Harttgen, Kenneth; Günther, Isabel
  29. Employment and the Financial Crisis: Evidence from Tajikistan By Kröger, Antje; Meier, Kristina
  30. Can political reservations affect political equilibria in the long-term? Evidence from local elections in rural India By Nagarajan, Hari K.; Deininger, Klaus; Jin, Songqing
  31. Are Remittances a 'Catalyst' for Financial Access? Evidence from Mexico By Ambrosius, Christian
  32. Does the Rotten Child Spoil His Companion? Spatial Peer Effects Among Children in Rural India By Helmers, Christian; Patnam, Manasa
  33. Finding Quality Employment through Rural Urban Migration: a case study from Thailand By Amare, Mulubrhan; Hohfeld, Lena; Waibel, Hermann
  34. The Spread of Anti-Trafficking Policies - Evidence from a New Index By Cho, Seo-Young; Dreher, Axel; Neumayer, Eric
  35. Child Costs and the Causal Effect of Fertility on Female Labor Supply: An investigation for Indonesia 1993-2008 By Priebe, Jan
  36. Does seasonal vulnerability to poverty matter? A case study from the Hadejia-Nguru Wetlands in Nigeria By Chiwaula, Levison; Waibel, Hermann
  37. Who Suffers the Penalty? A Panel Data Analysis of Earnings Gaps in Vietnam By Nordman, Christophe J.; Nguyen, Huu Chi; Roubaud, François
  38. Impact of the business environment on output and productivity in Africa By Bah, El-hadj M.; Fang, Lei
  39. Growth, Colonization, and Institutional Development: In and Out of Africa By Bertocchi, Graziella

  1. By: Paul Cahu (The World Bank - The World Bank); Falilou Fall (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: In this paper, we first, perform a quantitative assessment of the impact of the HIV/AIDS epidemic on growth. Second, we precisely account for the effects of the epidemic on income per capita through human and physical capital accumulations, population and labor force. That is, we disentangle the effect on the different sources of short and long run growth. Using a dynamic panel of 46 Sub-Saharan African countries over the period 1981-2007, we show that HIV/AIDS has negative, significant and long-lasting effects on demography and growth. According to the estimates presented, GDP per working age population will be 12% lower in the long-run for the average African country than it should be if the epidemic had not spread out. However, the impact is huge for the countries experiencing a high prevalence rate. To tackle the endogeneity issue of HIV/AIDS, we provide a new series of HIV prevalence rate build from the estimation of the propagation dynamic of the epidemic.
    Keywords: Health, AIDS epidemic, human capital, growth, Sub-Saharan Africa.
    Date: 2011–01
  2. By: Claire Loupias (EPEE - Centre d'Etudes des Politiques Economiques - Université d'Evry-Val d'Essonne, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales); Bertrand Wigniolle (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: This paper suggests a new explanation for changes in economic and population growth with a long run perspective, emphasizing the role of land in the development process. Starting from a pre-industrialization state called the "Malthusian regime&qot;, land and labor are the main production factors. The size of population is limited by the quantity of land available for households and by incomes. Technical progress driven by a "Boserupian effect" may push the economy towards a take-off regime. In this regime, capital accumulation begins and a "learning-by-doing" effect in production takes over from the "Boserupian effect". If this effect is strong enough, the economy can reach an "ultimate growth regime". In the different phases, land plays a crucial role.
    Keywords: Endogenous fertility, land, endogenous growth.
    Date: 2011–02
  3. By: Gaëlle Ferrant (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: This paper assumes that gender inequality hinders economic and human development : a one standard deviation change in the Gender Inequality Index (GII) will increase long term income per capita by 9,1% and Human Development Index (HDI) by 4%. Gender inequality may be a explanation of economic development differences : 16% of the long term income difference between South Asia and East Asia & Pacific can be accounted for by the difference in gender inequality. Moreover, this paper provides evidence of a vicious circle between gender inequality and long term income. The multi-dimensional concept of gender inequality is measured by a composite index with endogenous weightings : the Gender Inequality Index (GII). To correct endogeneity and simultaneity problems, the two-stage and three-stage least square methods are used separately. In this way, the steady state per capita income and the human development levels are estimated for 109 developing countries.
    Keywords: Growth, Gender inequality, development economics.
    Date: 2011–02
  4. By: Jean-Louis Combes (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Christian Ebeke (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Mireille Ntsama Etoundi (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Thierry Yogo (Université de Yaoundé II - Université de Yaoundé II)
    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: 2011–07–12
  5. By: Mohieddine Rahmouni (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - CNRS : UMR5113 - Université Montesquieu - Bordeaux IV); Murat Yildizoglu (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579); Mohamed Ayadi (ISG - Institut supérieur de gestion - Université de Tunis, Ecole Supérieure des Sciences Economiques et Commerciales de Tunis - Université de Tunis)
    Abstract: The relation between export behaviour and the propensity to innovate is an important question for a developing economy. This article dedicated to this question through the analysis of the first innovation survey of Tunisian firms. We analyze the relationship between the export behaviour and the innovation propensity of the firms as it can be qualified using econometric estimations (mainly probit models) and non-parametrical regression trees on the results of the first community innovation survey in Tunisia. Our results show that firms that address both the domestic and foreign demands (partial- exporters) have the highest propensity to innovate, and they better benefit from external knowledge sources, as well as a diversified demand. We find that external knowledge sources, internal R&D efforts and some types of cooperative agreements are complementary for product innovations, but the first play an essential role, in the sense that firms must benefit from at least one external knowledge source to attain a significant innovation propensity. We show that innovation behaviour of three subsets of firms are strongly contrasted: pure exporters who only address the foreign demand, pure domestic firms, and partial exporters.
    Keywords: Innovation; exports; openness; development; absorptive capacity
    Date: 2011–07–12
  6. By: Thuan Quang Thai (Max Planck Institute for Demographic Research, Rostock, Germany); Evangelos M. Falaris
    Abstract: We study the effect of early life conditions, proxied by rainfall shocks, on schooling and height in rural Vietnam. Our measure of rainfall shock is defined as deviations from the long-run average. Vietnamese rural dwellers engage in rain-fed crop production, mostly irrigated paddy rice. Sufficient annual rainfall could play an important role in the harvest and thus, the household income. Nutritional deficiencies resulting from the household's income shocks may have negative consequences on health. We find that negative rainfall shocks during gestation delays school entry and slows progress through school. In addition, negative rainfall shocks in the third year of life affects adversely both schooling and height. The effects differ by region in ways that reflect differing constraints on families that are shaped by regional economic heterogeneity. We predict that policies that help rural families smooth income shocks will result in increases in human capital and in substantial cumulative returns in productivity over the life course.
    Keywords: Vietnam, child nutrition, early childhood, school enrolment
    JEL: J1 Z0
    Date: 2011–07
  7. By: Finn Tarp; Thomas Markussen
    Abstract: This paper uses household panel data from rural Vietnam to explore the effects of having a relative in a position of political or bureaucratic power on farmers. agricultural investment decisions. Our main result is that households significantly increase their investment in land improvement as a result of relatives moving into public office. Connections to office holders appear to be important for investment because they strengthen de facto land property rights and improve access to off-farm employment and to informal loans. The findings underline the importance of informal networks for economic behaviour in environments with developing institutions and markets. They also suggest the presence of an untapped potential for economic development: if households without connections could obtain equally strong property rights and accessto credit and insurance as the well-connected households, investment levels would risesubstantially.
    Keywords: political connections, informal networks, land property rights, investment,credit, Vietnam
    Date: 2011
  8. By: Giovanni Andrea Cornia; Luca Tiberti; Stefano Rosignoli; UNICEF Innocenti Research Centre
    Abstract: The years 2000-2007 witnessed an average decline in U5MR in sub-Saharan Africa (SSA) faster than that recorded during the prior two decades, including in countries with high HIV prevalence rates due to the spread of preventative and curative measures. Despite their gravity, a comprehensive analysis of the impact of the 2008-2009 crises on child mortality is still lacking, and estimates of the number of additional child deaths caused by the crises in SSA vary enormously.
    Keywords: economic crisis; food shortage; infant mortality;
    JEL: C1
    Date: 2011
  9. By: Richard Bluhm; Adam Szirmai; UNICEF Innocenti Research Centre
    Abstract: The difference in the development experiences between the most developed countries and the least developed countries of today is vast. Luxembourg’s per capita income is 200 times larger than Liberia’s. Even within the developing world, growth is very unequal. East Asia and parts of Latin America are growing at impressive rates, while many other countries - especially in Sub-Saharan Africa - struggle with sluggish and volatile growth. This study discusses the theoretical challenge posed in identifying the mechanisms that link institutions and equitable economic growth at various levels of aggregation. The relationship between governance modes and institutions on the one hand, and economic growth and development on the other hand, may take very different forms. This relates to the question of whether a single and unique combination of institutions and governance modes is optimal for (equitable) growth, or whether different governance modes and institutions may lead to good or equitable growth performance in different locations and historical contexts.
    Keywords: development administration; growth policy; institutional framework;
    JEL: H1
    Date: 2011
  10. By: Stelios Michalopoulos (Tufts University and the Institute for Advanced Study); Elias Papaioannou (Dartmouth College, NBER and CEPR)
    Abstract: We investigate jointly the importance of contemporary country-level institutional structures and local ethnic-specific pre-colonial institutions in shaping comparative regional development in Africa. We utilize information on the spatial distribution of African ethnicities before colonization and regional variation in contemporary economic performance, as proxied by satellite light density at night. We exploit the fact that political boundaries across the African landscape partitioned ethnic groups in different countries subjecting identical cultures to different country-level institutions. Our regression discontinuity estimates reveal that differences in countrywide institutional arrangements across the border do not explain differences in economic performance within ethnic groups. In contrast, we document a strong association between pre-colonial ethnic institutional traits and contemporary regional development. While this correlation does not necessarily identify a causal relationship, this result obtains conditional on country fixed-effects, controlling for other ethnic traits and when we focus on pairs of contiguous ethnic homelands.
    Keywords: Africa, Borders, Ethnicities, Development, Institutions, Regression Discontinuity
    JEL: O10 O40 O43 N17 Z10
    Date: 2011–06
  11. By: Chowdhury Abdullah Al-Hossienie (Shahjalal University of Science and Technology)
    Abstract: This paper focuses on exploring the socio-economic impact of women entrepreneurship. Based on primary and secondary sources, it is found that nearly three quarters of the women entrepreneurs in Sylhet city are married and that they are mainly involved in tailoring and beauty parlor businesses. About half of the women entrepreneurs use their income for family purposes and most of them do not need permission of their husbands in using their income. Women entrepreneurship typically brings a positive change in attitude and behavior of family members and society towards them. Women?s involvement in economic activities is greatly needed, not only for their own development but also for the overall economic growth of the country. Though the Bangladeshi government has taken significant initiatives through different ministries to enhance women entrepreneurship, these initiatives are not always effective. This paper provides also some recommendations for policy makers to undertake suitable and effective policies towards women development.
    Keywords: Women Entrepreneurship, Development, Sylhet City, Bangladesh
    Date: 2011–07
  12. By: Víctor Islas Rivera; Salvador Hernández G.; José A. Arroyo Osorno; Martha Lelis Zaragoza; J. Ignacio Ruvalcaba
    Abstract: This report describes the main challenges to urban travel in Mexico. We focus on some of the basic causes of urban transport problems, and we analyze some urban travel policies that could be considered good practices towards sustainable urban development. Mexico City is the emblematic case.
    Date: 2011–05
  13. By: Haixiao Pan
    Abstract: Urban transport will have a great impact on sustainable development. China is now the leading producer of motorized vehicles, and people have gradually realized that we cannot sustain endless motorization. China has adopted a sustainable development policy for many years, promoting public transport in successive five-year plans.
    Date: 2011–05
  14. By: Gloede, Oliver; Menkhoff, Lukas; Waibel, Hermann
    Abstract: Are responses to a simple survey item sufficiently reliable in eliciting risk attitudes? Our angle in examining reliability is to conduct comparative research across Thailand and Vietnam. We find, first, that the survey item is informative about individual risk attitude because it is plausibly related to socio-demographic characteristics (including vulnerability), it is experimentally validated and has some predictive power. Second, however, we find major differences between both countries: whereas explained variances of regressions are tentatively higher in Vietnam, the predictive value of the survey item is much lower than in Thailand. Therefore, the survey item cannot be implemented across countries in an unreflected way. --
    Keywords: risk attitude,socio-economic survey,household behavior,field experiment
    JEL: O1 R2 C93 D81
    Date: 2011
  15. By: Dumas, Christelle
    Abstract: There is some indirect evidence that child labor is affected by market imperfections. This paper provides a theoretical model to discuss the effect of improvements on the labor market, when households cannot rely on neither the land nor the credit markets. The predictions differ by land ownership: landless or large landowners should decrease child labor when labor market imperfections decrease. Households who had chosen not to supply any labor on the wage market (households with intermediate-upper land levels) remain unaffected and households who combine farm work with wage work (households with intermediate-lower land levels) may either increase or decrease their child labor use. We use Malagasy data to estimate the relation between child labor and various measures of markets imperfections. We match those data with a municipality census so as to control for a large set of village characteristics. We find that on average market imperfections (labor but also land and credit) do indeed increase child labor and obtain heterogenous effects by land ownership that are consistent with the theoretical model. The results point to the fact that an improvement of markets competitiveness should decrease child labor (and even the more so for labor markets), which provides an alternative policy to fight against child labor. --
    Keywords: Child labor,Market imperfections,Land,Labor,Credit,Madagascar
    JEL: O12 O13 O15 J13 J43
    Date: 2011
  16. By: Heinz, Christa; Dinh, Thanh; Kleimeier, Stefanie
    Abstract: This paper analyses the determinants of collateral in loans granted to entrepreneurs and consumers. We use cross-sectional data on more than 39,000 bank loans raised by Vietnamese borrowers between 2006 and 2009. Our data set is unique because it contains information about the bank's assessment of the borrower's ex ante risk and the borrowers' wealth including pledged as well as unpledged assets. We find that observationally riskier borrowers, as measured by the bank through the ex ante risk score, are more likely to pledge collateral. At the same time, wealthier borrowers are more likely to pledge collateral in order to benefit from a reduction in their interest costs. We also present evidence on other determinants of collateral such as borrower-lender relationship, credit market competition, and institutions. --
    Keywords: Collateral,retail lending,observed risk hypothesis,loan pricing,emerging markets
    JEL: G21
    Date: 2011
  17. By: Rouanet, Léa
    Abstract: We study the relationship between height stature and child mortality in West Africa. This is motivated by two things: understanding the determinants of height, widely used health indicator, and explaining the « double African paradox ». This paradox comes from the fact that Africans are relatively tall in spite of extremely unfavorable income and disease environments; this the level paradox. The second paradox is that African height stature decreased in recent years, despite better health conditions and lower child mortality; this is the trend paradox. These stylized facts are surprising as both child mortality and height stature are viewed as health indicators, so that we expect a negative correlation between the two. To study this paradox, we focus on West African countries only, where child mortality levels are very high. For Benin, Burkina Faso, Côte d'Ivoire, Ghana, Mali, Nigeria and Senegal, we use DHS (Demographic and Health Surveys) data to measure child mortality (before 5) at the region X period level using the retrospective birth history of mothers. We want to test to what extent the paradox can be explained by selective child mortality. More generally, there is a need to understand how much child mortality levels and trends affect the study of height stature in Africa. Instrumentation can not be used in our context as we would need an event that increases or decreases mortality without affecting nutrition and regardless the distribution of heights. Consequently, we build a statistical model that we estimate linearly and nonlinearly. We first show that the correlation between adult height and mortality within region is not significantly negative in our setting. By estimating a nonlinear relationship between height and child mortality, we show that in high mortality contexts, when child mortality decreases selective mortality decreases as well, so that more short people survive. We are able to explain some differences in height levels between African countries and countries where selective mortality is lower. We also manage to explain why height stature did not increase as much as expected in Africa compared to the decrease in child mortality rates in the second half of the 20th century. --
    Keywords: Height,Child Mortality,Selection,West Africa
    JEL: I1 I3 J1 O1
    Date: 2011
  18. By: Xu, Guo
    Abstract: Exploiting Tangshan 1976 - the deadliest earthquake in the 20th century - as a source of exogenous variation, we estimate the cohort-specific effects of a historical shock on contemporary socio-economic outcomes. While cohorts born after the earthquake were considerably larger, the adverse post-disaster conditions did not translate into lasting impacts on schooling and labour market outcomes. Cohorts at schooling age during the earthquake, however, exhibit considerably lower education levels today, particularly among the female. Despite lower education, there is no evidence for adverse labour market outcomes. We conduct extensive robustness checks and argue that the effect is causal. --
    Keywords: Environmental shock,earthquake,natural disaster,education,fertility
    JEL: I20 J00 O18
    Date: 2011
  19. By: Wald, Nina; Bozzoli, Carlos
    Abstract: Recently, Conditional Cash Transfer Programs (CCT) became increasingly popular in developing countries due to their positive outcomes on health and education. In this paper, we are particularly interested in testing if children participating in CCT (treated) in conflict affected regions benefit more (or less) than their counterparts in peaceful areas. To test this, we combine longitudinal CCT data from Colombia with a conflict event dataset. This allows us to use standard techniques in treatment evaluation, but it augments the testing equations by adding interactions between dummies identifying different groups and indicators of violence. We find that the CCT program had an extra benefit in conflict areas concerning enrolment. However, grade progression is similar for treated children in low and high conflict regions. Results suggest that the program may work in attracting children to school, but in high conflict regions children tend to do less homework and miss more days in school. --
    Keywords: Conditional Cash Transfer Program,Education,Conflict,Colombia,Panel Data,Treatment Effects
    JEL: C23 D74 I21 I38 O54
    Date: 2011
  20. By: Alkire, Sabina; Santos, Maria Emma
    Abstract: This paper presents a new Multidimensional Poverty Index (MPI) for 104 developing countries. It is the first time multidimensional poverty is estimated using micro datasets (household surveys) for such a large number of countries which cover about 78 percent of the world's population. The MPI has the mathematical structure of one of the Alkire and Foster poverty multidimensional measures and it is composed of ten indicators corresponding to same three dimensions as the Human Development Index: Education, Health and Standard of Living. The MPI captures a set of direct deprivations that batter a person at the same time. This tool could be used to target the poorest, track the Millennium Development Goals, and design policies that directly address the interlocking deprivations poor people experience. This paper presents the methodology and components in the MPI, describes main results, and shares basic robustness tests. --
    Keywords: Poverty Measurement,Multidimensional Poverty,Capability Approach,Multidimensional Welfare,Human Development,HDI,HPI
    JEL: I3 I32 D63 O1
    Date: 2011
  21. By: Maarek, Paul; Decreuse, Bruno
    Abstract: We address the effects of FDI on the labor share in developing countries. Our theory relies on the impacts of FDI on productive heterogeneity in a frictional labor market. FDI have two opposite effects: a negative force originated by technological advance, and a positive force due to increased labor market competition between …firms. We test this theory on aggregate panel data through …fixed effects and system-GMM estimations. We …find a U-shaped relationship between the labor share in the manufacturing sector and the ratio of FDI stock to GDP. Most countries are stuck in the decreasing part of the curve. --
    Keywords: FDI,Matching frictions,Firm heterogeneity,Technological advance
    JEL: E25 F16 F21
    Date: 2011
  22. By: Thiele, Rainer; Böhme, Marcus
    Abstract: Employing a unique dataset that covers households from six West African capitals, this paper provides new evidence on the demand for informal sector products and services. We first investigate whether demand linkages exist between formal and informal products and distribution channels, and whether there is an overlapping customer base, which would imply that both formal sector wage earners and informal workers buy both formal and informal products using both formal and informal distribution channels. In a second step, we estimate demand elasticities based on Engel curves. We find a strongly overlapping customer base and strong demand-side linkages between the formal and informal sector, with the exception that informal goods are hardly bought through formal distribution channels. The estimated demand elasticities tend to show that rising incomes are associated with a lower propensity to consume informal sector goods and to use informal distribution channels. We therefore conclude that the informal sector in West Africa is likely to be constrained from the demand side. --
    Keywords: Informal sector,formal-informal linkages,Engel curve estimates,West Africa
    JEL: D12 O17
    Date: 2011
  23. By: Gille, Véronique
    Abstract: Empirical evidence of education spillovers in developing countries and rural contexts is scarce and focuses on specific channels. This paper provides evidence of such spillovers in rural India, by evaluating the overall impact of education of neighbors on farm productivity. We use cross-sectional data from the India Human Development Survey of 2005. Spatial econometric tools are used to take into account social distance between neighbors. To be sure that our definition of the neighborhood does not drive our results, we test three different definitions of neighbors. Our results show that education spillovers are substantial: one additional year in the mean level of education of neighbors increases households' farm productivity by 3%. These findings are robust to changes in specification and open the way to further research. In particular, the paper does not explore the channels through which this spillover effect happens. This paper confirms the choice of improving education in developing countries: giving a child education will certainly provide him greater revenues but it may also provide his neighbors greater revenues. It also shows the importance for policy makers of taking into account education spillovers and policies' complementarity when facing political trade-offs. This paper is one of the few to underline that education externalities do not only exist in urban contexts and that education spillovers do not only occur between workers of the manufacturing and service sectors. There are also spillovers in sectors considered as more traditional such as agriculture. --
    Keywords: Education externalities,Rural India,Farm productivity
    JEL: D13 O12 Q12
    Date: 2011
  24. By: Haacker, Markus
    Abstract: The costs of HIV/AIDS programs are significant from a macroeconomic or fiscal perspective in a number of countries. Assessing the fiscal implications is complicated by the long lags between infection and the need for HIV/AIDS-related services, and the long duration over which these services (notably treatment) are required. The paper interprets the fiscal costs of HIV/AIDS programs as quasi-liabilities, which are incurred by HIV infections and are paid off as HIV/AIDS-related services are delivered. On the microeconomic level, the analysis yields estimates of the costs incurred by single HIV infections, which - together with other criteria - can be used in assessing the effectiveness of HIV/AIDS program allocations. On the macroeconomic level, the analysis highlights the large magnitude of the HIV/AIDS quasi-liability (according to criteria for the sustainability of public debt), and quantifies the fiscal savings achieved or projected as a consequence of declining HIV incidence. --
    Keywords: HIV/AIDS,health shocks,health expenditures,social expenditures,fiscal space,debt sustainability,quasi?liabilities,Africa,Botswana,South Africa,Swaziland,Uganda
    JEL: H5 H6 I1
    Date: 2011
  25. By: Pasquier-Doumer, Laure
    Abstract: Abstract Social reproduction is the highest for self-employed as shown by an extensive literature from developed and developing countries. Very few studies however document the reason for this high intergenerational correlation of the self-employed status. The rare studies that have been done concern the US and show that children of self-employed benefit from an advantage when they are themselves self-employed. The purpose of this paper is to test in the African context if the second-generation of self-employed has an advantage related to the first-generation. It aims at highlighting the debate between two visions: the first of informal sector as the less-advantaged sector of a dualistic labour market, and the second as a sector of personal choice and dynamic entrepreneurship. Using 1-2-3 surveys collected in the commercial capitals of seven West African countries in 2001-2002, this paper shows that the second-generation of informal self-employed does not have better outcomes than the first one, except when they choose a familial tradition in the same sector of activity. Thus, in the African context, having a self-employed father does not provide any advantage in terms of profit or sales and is not sufficient for the transmission of a valuable informal human capital. On the other hand, informal entrepreneurs who have chosen a specific enterprise based on familial tradition have a comparative advantage. Their comparative advantage is partly explained by the transmission of enterprise-specific human capital, acquired thanks to experiences in the same type of activity and by the transmission of social capital that guarantees a better clientele and a reputation. --
    Keywords: informal sector,entrepreneurship,intergenerational link
    JEL: L26 J24 J62
    Date: 2011
  26. By: André, Pierre; Mesplé-Somps, Sandrine
    Abstract: The body of literature on purely democratic countries can sometimes fail to explain the behavior of government in semi-democratic African countries. Empirical and theoretical political economic papers and that public funds target ruling party supporters and swing districts. Our results, however, suggest that the opposite was true of Ghana. We observe that pro-government districts received less public investment when the NDC was in power. We posit that this nding is partially driven by the government's will to curry favor with opposition politicians. Indeed, in addition to pursuing its electoral objectives, the government of an emerging democracy may fear political instability and keep the lid on potential unrest by bargaining with opposition leaders. Our analysis also shows that, when controlling for votes and other covariates (including wealth, urbanization and density), public goods allocation is not driven by ethnic group targeting either. --
    Keywords: Public goods,Elections,Politics,Ghana
    JEL: D72 O55 R53
    Date: 2011
  27. By: Kebede, Sindu; Fekadu, Belay; Aredo, Dejene
    Abstract: Using a CGE model, this study analyses the impact of trade liberalization on poverty at the household level taking Ethiopia as a case. Two scenarios (complete tariff cut and uniform tariff scheme) suggest that further liberalization of trade has little short-run effect on the overall economy. However, the agriculture-based manufacturing sector (in particular, textile and leather) is likely to be strongly affected by further tariff reduction. Reductions in import prices of textiles and leather products increase imports of these goods implying that trade liberalization is likely to dampen domestic production of textile and leather products. Poverty shows a slight increase in both scenarios. At the national level, a complete tariff cut results in an increase in poverty by 2.8 percent, while a uniform tariff scheme raises poverty by 2.3 percent. Similarly, it is found that poverty gap and poverty severity indices show a slight increase. Comparing the effect of trade reform on different household groups, i.e. farm households, wage earner households and entrepreneur households, poverty in entrepreneur households increases by a higher percentage change (3.2 percent) in the complete tariff cut scenario. Poverty incidence increases by 1.7 and 1.5 percent for farm households and wage earners, respectively, under the complete tariff cut scenario. This comparison holds consistently when looking at the more realistic uniform tariff scheme. Entrepreneur households are at a disadvantage due to trade liberalization shown in the poverty gap and poverty severity indices. This is consistent with the theoretical argument that previously protected infant industries are highly affected by trade liberalization. --
    Keywords: trade liberalization,poverty,CGE,import duties,macro-micro simulation
    Date: 2011
  28. By: Harttgen, Kenneth; Günther, Isabel
    Abstract: In this paper we analyze if an 'urban mortality penalty' exists for today's developing countries, repeating the history of industrialized nations during the 19th century. We analyze the Demographic and Health Survey (DHS) of 19 Sub-Saharan African countries for differences in child and adult mortality between rural and urban areas. Our findings indicate that child mortality is higher in rural areas for almost all countries. On average child mortality rates are 13.6 percent in rural areas and 'only' 10.8 percent in urban areas. In contrast, average urban adult mortality rates (on average 14.5 percent) have indeed exceeded rural adult mortality rates (on average 12.8 percent) in many of our sample countries in the 2000s. For many countries high child mortality pockets do, however, exist in slum areas within cities. Child mortality rates in slum areas are on average 1.65 times higher than in the formal settlements of cities, but still lower than in rural areas. --
    Keywords: mortality,urban,slum,inequality
    JEL: I10 I30 J10 R00
    Date: 2011
  29. By: Kröger, Antje; Meier, Kristina
    Abstract: The financial crisis in 2008/2009 had a presumably substantial influence on the everyday social and economic life of many Tajik people, including their behavior in the labor market. In our paper, we aim to study the impact of the economic crisis on individual labor market decisions. This is the first study investigating the impact of the financial crisis in a transition country using a unique panel data set from Tajikistan. We find that the global financial crisis had a strong impact on employment and migration patterns in Tajikistan. Our results show that regular wage employment and self-employment with hired labor decreased while piece-based wage employment and unpaid family work increased during the crisis. Further, households are more likely to send a family member abroad suggesting that the dependency on sending migrants abroad grows in times of economic turmoil. In combination with increased migration risk our results show that the Tajik labor market has largely been affected by the global financial crisis. --
    Keywords: financial crisis,wage employment,migration,Tajikistan
    JEL: C23 J24 J16 O10
    Date: 2011
  30. By: Nagarajan, Hari K.; Deininger, Klaus; Jin, Songqing
    Abstract: While many studies explored impacts of political quotas for females, often with ambiguous results, underlying mechanisms and long-term effects have received relatively little attention. Nation-wide data from India spanning a 15-year period allow us to explore how reservations affect leader qualifications, service delivery, political participation, local accountability, and individuals' willingness to contribute to public goods. Although leader quality declines and impacts on service quality are ambiguous, gender quotas are shown to increase political processes and participation, the willingness to contribute to public goods, and perceived ability to hold leaders to account. Key effects persist beyond the reserved period and impacts on females often materialize only with a lag. --
    Keywords: Public goods,reservations,India,discrimination,political economy
    JEL: O10 H11 H70
    Date: 2011
  31. By: Ambrosius, Christian
    Abstract: In policy discussions, it has frequently been claimed that migrants' remittances could function as a 'catalyst' for financial access among receiving households. This paper provides empirical evidence on this hypothesis from Mexico, a main receiver of remittances worldwide. Using the Mexican Family Life Survey panel (MxFLS) for 2002 and 2005, the results from the treatment-effect-model at household level show that a change in remittance status has an important impact on ownership of savings accounts and the availability of borrowing options. This effect is significant for rural, but not for urban households and important for microfinance institutions, but not for traditional banks. --
    Keywords: Remittances,Mexico,Financial Access,Microfinance
    JEL: G21 O16 F24
    Date: 2011
  32. By: Helmers, Christian; Patnam, Manasa
    Abstract: This paper identifies the effect of neighborhood peer groups on childhood skill acquisition using observational data. We incorporate spatial peer interaction, defined as a child's nearest geographical neighbors, into a production function of child cognitive development in Andhra Pradesh, India. Our peer group definition takes the form of networks, whose structure allows us to separately identify endogenous peer effects and contextual effects. We exploit variation over time to avoid confounding correlated with social effects. Our results suggest that spatial peer and neighborhood effects are strongly positively associated with a child's cognitive skill formation. Further, we find that the presence of peer groups helps provide insurance against the negative impact of idiosyncratic shocks to child learning. We show that peer effects are robust to different specifications of peer interactions and investigate the sensitivity of our estimates to potential mis-specification of the network structure using Monte Carlo experiments. --
    Keywords: Children,peer effects,cognitive skills,India
    JEL: C21 O15 R23
    Date: 2011
  33. By: Amare, Mulubrhan; Hohfeld, Lena; Waibel, Hermann
    Abstract: This study investigates the effects of rural urban migration on economic development in Thailand. It draws upon a panel data base of some 2000 rural households collected from 2007 to 2010 in three provinces from Northeast Thailand and migrant survey of some 650 migrants in the Greater Bangkok area conducted in 2010. The study offers some new findings on migration in Thailand. First there is evidence that the widely praised social protection policies for the rural poor in Thailand may be less effective for urban migrants. Second, the study shows that migration has benefits for income growth of rural households but is less effective in reducing inequality and relative poverty in rural areas. Generally the less favored rural households tend to have migrants who are more educated albeit at an overall low education level of the rural population in Thailand. The overall message which emerges from this paper is that poor rural households tend to produce poor migrants which could be one of the reasons for the continuous existence of a wide rural urban divide in welfare. The crucial importance of education for migration success calls for more investment in secondary education in rural areas. --
    Keywords: Rural Urban Migration,Thailand,Employment Quality
    JEL: O15 O53 I3 J81
    Date: 2011
  34. By: Cho, Seo-Young; Dreher, Axel; Neumayer, Eric
    Abstract: We analyze the spread of policies dealing with international trafficking in human beings. Arguing that countries are unlikely to make independent choices, we identify pressure, externalities and learning or emulation as plausible diffusion mechanisms for spatial dependence in anti-trafficking policies. We develop a new index measuring governments' overall anti-trafficking policies for 177 countries over the 2000-2009 period. We also assess a country's level of compliance in the three main constituent dimensions of anti-trafficking policies - prosecution, protection and prevention. Employing a spatial autoregressive model, we find that, with the exception of victim protection measures, anti-trafficking policies diffuse across contiguous countries and main trading partners due to externality effects. We find evidence for learning or emulation effects in all policy domains, with countries looking toward peers with similar political views or cultural values. Surprisingly, major destination countries do not seem to exert pressure on relevant main countries of origin or transit to ratchet up their policies. --
    Keywords: human trafficking,human rights,spatial dependence of policies
    JEL: O15 F22 P41
    Date: 2011
  35. By: Priebe, Jan
    Abstract: Over the last two decades Indonesia has experienced a significant decline in fertility rates and substantial increases in the level of education of women. Despite this development female labor force participation rates have remained roughly constant throughout this period. This paper explores the causes for the seeming unresponsiveness of female labor supply to changes in fertility. The empirical analysis is performed using annual data from the national household survey Susenas for the period 1993-2008. The final sample comprises about 850,000 woman aged 21 to 35 with at least two children. Identification of causal effects builds upon the empirical strategy as outlined in Angrist and Evans (1998). The results suggest that a considerable share of women in Indonesia works in the labor market in order to finance basic expenditures on their children. Therefore, reductions in fertility rates seem to have led to two opposing effects that contributed to aggregate levels of female labor supply being constant. While some women were more likely to participate in the labor market due to a lower number of children, others might now lack the need to engage in the labor market due to a relaxation in their budget constraint. --
    Keywords: Causality,Child Costs,Indonesia,Labor Supply,LATE
    JEL: C21 D01 J13 J20
    Date: 2011
  36. By: Chiwaula, Levison; Waibel, Hermann
    Abstract: Applying research on vulnerability to seasonal data, we assess seasonal vulnerability to poverty using panel data from the Hadejia-Nguru Wetlands in Nigeria involving 260. We find that both observed poverty and vulnerability to poverty vary seasonally and that these variations are related to household livelihood strategies. Basing on our findings policy interventions should aim at increasing crop productivity (both food and cash crops) and returns to crop sales as well as promoting income diversification to off-farm activities. Safety net programs should be implemented only after productivity-enhancing interventions have been implemented. Further research is proposed to particularly assess the influence of seasonal variation on household livelihood choices. --
    Keywords: Vulnerability to poverty,Seasonality,Social protection,Nigeria
    Date: 2011
  37. By: Nordman, Christophe J.; Nguyen, Huu Chi; Roubaud, François
    Abstract: In spite of its predominant economic weight in developing countries, little is known about informal sector income dynamics vis-à-vis the formal sector. Some works have been done in this field using household surveys, but they only consider some emerging Latin American countries and a few African countries. As a matter of consequence, there is still no way to generalize the (diverging) results to other part of the developing world. Taking advantage of the rich VHLSS dataset in Vietnam, in particular its three waves panel data (2002, 2004, 2006), we assess the magnitude of various formal/informal earnings gaps while addressing heterogeneity issues at three different levels: the worker, the job (wage employment vs. selfemployment) and the earnings distribution.We estimate fixed effects and quantile regressions to control for unobserved individual characteristics. Our results suggest that the informal sector earnings gap highly depends on the workers' job status and on their relative position in the earnings distribution. Penalties may in some cases turn into premiums. By comparing our results with studies in other developing countries, we draw conclusions highlighting the Vietnam's labour market specificity. --
    Keywords: informal employment,earnings gap,transition matrix,quantile regressions,panel data,Vietnam
    JEL: J21 J23 J24 J31 O17
    Date: 2011
  38. By: Bah, El-hadj M.; Fang, Lei
    Abstract: Africa is the poorest part of the world and it has the worst environment for long term business success by most standards. Empirical works normally find a negative correlation between income per worker and measures for poor business environment. This paper develops a general equilibrium model to assess the quantitative effects of the business environment, including access to finance, regulation, crime, corruption and infrastructure, on output and TFP for 30 Sub-Saharan African countries. We find that the quantitative effects of these areas of the business environment are large. They together can explain about 67% of the variation in income per capita relative to the US. Improving these dimensions of the business environment will be key for the long term development of the continent.
    Keywords: Business environment; Investment Climate; African Development; Productivity
    JEL: O47 L23 O16
    Date: 2011–07–12
  39. By: Bertocchi, Graziella
    Abstract: This essay investigates the determinants of the growth performance of Africa. I start by illustrating a broader research agenda which accounts not only for basic economic and demographic factors, but also for the role of history and institutional development. After reporting results from standard growth regressions, I analyze the role of Africa’s peculiar history, which has been marked by its colonization experience. Next I discuss the potential growth impact of state fragility, a concept which reflects multiple facets of the dysfunctions that plague the continent. The last topic I address is the influence, in and out of Africa, of the slave trades. The essay ends with critical conclusions and suggestions for further research.
    Keywords: Africa; colonization; Growth; history; institutions; slavery; state fragility
    JEL: H11 N17 O43
    Date: 2011–07

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