nep-dev New Economics Papers
on Development
Issue of 2011‒11‒28
thirty-two papers chosen by
Mark Lee
Towson University

  1. An Empirical Investigation of the Relationship between Food Insecurity, Landlessness, and Violent Conflict in Pakistan By Sadia Mariam Malik
  2. The Persistence and Transition of Rural Poverty in Pakistan: 1998-2004 By G. M. Arif; Nasir Iqbal; Shujaat Farooq
  3. Foreign Aid and Growth Nexus in Pakistan: The Role of Macroeconomic Policies By Muhammad Javid; Abdul Qayyum
  4. Wealth, Credit Conditions and Consumption: Evidence from South Africa By Janine Aron; John Muellbauer
  5. Remittances, Growth and Poverty: New Evidence from Asian Countries By Katsushi S. Imai; Raghav Gaiha; Abdilahi Ali; Nidhi Kaicker
  6. Health outcomes for children born to teen mothers in Cape Town, South Africa By Nicola Branson; Cally Ardington; Murray Leibbrandt
  7. Re-weighting South African National Household Survey Data to create a consistent series over time: A cross entropy estimation approach By Nicola Branson; Martin Wittenberg
  8. Early childbearing, human capital attainment and mortality risk By Cally Ardington; Alicia Menendez; Tinofa Mutevedzi
  9. The Policies for Reducing Income Inequality and Poverty in South Africa By Murray Leibbrandt; Eva Wegner; Arden Finn
  10. Ethnic Solidarity and the Individual Determinants of Ethnic Identification By Thomas Bossuroy
  11. Estimating the effect of adolescent fertility on educational attainment in Cape Town using a propensity score weighted regression By Vimal Ranchhod; David Lam; Murray Leibbrandt; Leticia Marteleto
  12. What Drives Corruption? Evidence from North African Firms By Clara Delavallade
  13. The fate of Zimbabwe's children: Insights from changes in nutrition outcomes, 1999-2006 By Obert Pimhidzai
  14. Inequality Traps in South Africa: An overview and research agenda By Miquel Pellicer; Vimal Ranchhod; Mare Sarr; Eva Wegner
  15. How not to present poverty research results: The South African case By Charles Meth
  16. Xenophobic Attacks, Migration Intentions and Networks: Evidence from the South of Africa By Guido Friebel; Juan Miguel Gallego; Mariapia Mendola
  17. Borders that Divide: Education and Religion in Ghana and Togo since Colonial Times By Denis Cogneau; Alexander Moradi
  18. Unemployment insurance and informality in developing countries By Bardey, David; Jaramillo, Fernando
  19. Coping with Fuel Wood Scarcity: Household Responses in Rural Ethiopia By Abebe Damte; Steven F. Koch; Alemu Mekonnen
  20. Do Remittances Reduce Aid Dependency? By Kangni Kpodar; Maelan Le Goff
  21. Determinants of Development Financing Flows from Brazil, Russia, India, and China to Low-Income Countries By Nkunde Mwase
  22. Global Poverty Estimates: A Sensitivity Analysis By Camelia Minoiu; Shatakshee Dhongde
  23. Optimal Precautionary Reserves for Low-Income Countries: A Cost-Benefit Analysis By Jun Il Kim; Kazuko Shirono; Era Dabla-Norris
  24. Global Rebalancing: Implications for Low-Income Countries By Yongzheng Yang
  25. Remittances, Growth and Poverty: New Evidence from Asian Countries By Katsushi Imai; Raghav Gaiha; Abdilahi Ali; Nidhi Kaicker
  26. Migration and Remittances in Kazakhstan: First Evidence from a Household Survey By Barbara Dietz; Kseniia Gatskova; Achim Schmillen
  27. Mozambique's infrastructure : a continental perspective By Dominguez-Torres, Carolina; Briceno-Garmendia, Cecilia
  28. Avoiding the fragility trap in Africa By Andrimihaja, Noro Aina; Cinyabuguma, Matthias; Devarajan, Shantayanan
  29. Export platform FDI and firm heterogeneity By Hayakawa, Kazunobu; Tanaka, Kiyoyasu
  30. Land, Poverty and Human Development in Kenya By Mwangi wa Githinji
  31. Small and as Productive : Female Headed Households and the Inverse Relationship between Land Size and Output in Kenya By Mwangi wa Githinji; Charalampos Konstantinidis; Andrew Barenberg
  32. Whole-household Migration, Inequality and Poverty in Rural Mexiko By Aslihan Arslan; J. Edward Taylor

  1. By: Sadia Mariam Malik (Pakistan Institute of Development Economics, Islamabad.)
    Abstract: This study is an attempt to examine empirically the association between socio-economic measures of deprivation—such as food insecurity, landlessness, unemployment, and human under-development—and the incidence of violent conflict as measured by the number of violent attacks across districts in Pakistan. The study uses a linear probability model in which the dependent variable is defined on the basis of the presence or absence of violent attacks in a particular district. The results of the study indicate that in addition to the provincial-level fixed characteristics, landlessness and food insecurity are positively and robustly associated with the probability of violent attacks across districts in Pakistan. Quite contrary to the general impression held, the number of madrassahs (religious seminaries), employment rate, and literacy rate appear to be statistically irrelevant, on average, in terms of determining the probability of the presence of violent conflict across districts in Pakistan. While emphasising the need to collect better data on the intensity of violent conflict— to take into account both the incidence as well as the origin of violent attacks across districts in Pakistan—the study raises some important questions regarding the role of landlessness and food insecurity that need to be investigated further in future studies on socio-economic drivers of violent conflict in Pakistan.
    Keywords: Violent Conflict, Militancy, Food Insecurity, Landlessness, Pakistan
    JEL: O29 D63 D74 F52
    Date: 2011
  2. By: G. M. Arif (Pakistan Institute of Development Economics, Islamabad.); Nasir Iqbal (Pakistan Institute of Development Economics, Islamabad.); Shujaat Farooq (Pakistan Institute of Development Economics, Islamabad.)
    Abstract: This study has used two rounds of the two panel data sets to examine the poverty dynamics in rural Pakistan (Sindh and Punjab). The Pakistan Socio- Economic Survey (PSES ) covers two periods, 1998 and 2000, while the Pakistan Rural Household Survey (PRHS) covers the 2001 and 2004 period. More than one-fifth of the households were chronically poor in the PSES rounds , and 11 percent in the PRHS rounds. Further, both chronic and transitory poverty are higher in Sindh and southern Punjab than in centra l and northern Punjab. Illiteracy, household size, dependency ratio, lack of livestock, landlessness, lack of ownership of dwellings, and health expenditure are the factors responsible for aggravating long-term poverty. The higher incidence of transitory poverty in rural Sindh and southern Punjab indicates the impact of large investments made in the public sector to raise the living standards there to the level of the better-off regions.
    Keywords: Poverty, Chronic Poverty, Household Panel Datasets, Rural Pakistan
    JEL: I3 I32
    Date: 2011
  3. By: Muhammad Javid (Pakistan Institute of Development Economics, Islamabad.); Abdul Qayyum (Pakistan Institute of Development Economics, Islamabad.)
    Abstract: Despite receiving large quantities of foreign aid, Pakistan, like many other developing countries, has remained stagnant and become more aiddependent. This grim reality has provoke d a vigorous debate on the effectiveness of aid. This study examines the effectiveness of aid, focusing on the ongoing debate on the interactive effect of aid and policy on sustainable economic growth. The empirical analysis is based on the ARDL cointegration approach, using the data for the period 1960 to 2008. The empirical findings are that foreign aid and real GDP have a negative relationship, while the aid-policy interactive term and real GDP growth have a positive and significant relationship. Interesting results emerge when aid-GDP alone is introduced into the growth equation and has an insignificant positive coefficient in the long run and a negative and weakly significant coefficient in the short run, while the aidpolicy interactive term has a positive and significant coefficient both in the short run and the long run. When we disaggregate aid in terms of the bilateral and multilateral components, bilateral aid is significantly positive in the short run and multilateral aid is insignificant, while the aid interactive term is positive in both cases. The results strongly support the view that foreign aid does have a positive impact on economic growth in Pakistan, though conditionally so, i.e., if based on sound macroeconomic policies.
    Keywords: Foreign Aid, Macroeconomic policies, Economic Growth, Pakistan, ARDL
    JEL: O1 O2 O4 C23
    Date: 2011
  4. By: Janine Aron; John Muellbauer
    Abstract: There is widespread disagreement about the role of housing wealth in explaining consumption. This paper exploits liquid and illiquid wealth time series from household balance sheet data for South Africa, previously constructed by the authors, to explain fluctuations in the ratios of consumption and household debt to income in South Africa, from 1971 to 2005. The paper emphasizes the role of substantial credit liberalization and of wealth, treating credit conditions as a latent variable with key interactions with drivers of consumption and debt. Credit conditions are proxied by a spline function entering jointly estimated consumption, debt and income expectations equations in a ‘latent interactive variable equation system’ (LIVES). The empirical results corroborate the theory in the paper, confirming that consumption relative to income is driven by credit liberalization, fluctuations in a range of asset values and asset accumulation, uncertainty and income expectations, inter alia. The paper confirms a collateral interpretation of housing wealth on consumption as opposed to a life-cycle interpretation. The paper also throws important light on the monetary policy transmission mechanism in South Africa.
    Keywords: Consumption, Household debt, Credit market liberalization, Credit conditions, Liquid and illiquid wealth, Housing collateral and housing wealth
    JEL: C52 E21 E27 E32 E44 E51 E52 E58
    Date: 2011
  5. By: Katsushi S. Imai (Department of Economics, School of Social Sciences, University of Manchester, UK); Raghav Gaiha (Faculty of Management Studies, University of Delhi, India); Abdilahi Ali (School of Social Sciences, University of Manchester, UK); Nidhi Kaicker (Faculty of Management Studies, University of Delhi, India)
    Abstract: The present study re-examines the effects of remittances on growth of GDP per capita using annual panel data for 24 Asia and Pacific countries. The results generally confirm that remittance flows have been beneficial to economic growth. However, our analysis also shows that the volatility of capital inflows such as remittances and FDI is harmful to economic growth. This means that, while remittances contribute to better economic performance, they are also a source of output shocks. Finally, remittances contribute to poverty reduction – especially through their direct effects. Migration and remittances are thus potentially a valuable complement to broad-based development efforts.
    Keywords: remittance, economic growth, volatility, poverty, Asia
    JEL: C23 F24 I32 O15 O47 O53
    Date: 2011–11
  6. By: Nicola Branson (SALDRU, School of Economics, University of Cape Town); Cally Ardington (SALDRU, School of Economics, University of Cape Town); Murray Leibbrandt (SALDRU, School of Economics, University of Cape Town)
    Abstract: This paper analyzes the effect of being born to a teen mother on child health outcomes in South Africa using propensity score reweighting. Exploiting the longitudinal nature of the Cape Area Panel Study, we estimate the probability of being a teen mother conditional on pre-childbirth characteristics. We use this score to construct a weighted counterfactual group of children born to mothers over nineteen whose pre-childbirth characteristics are very similar to the teen mother sample except for their age at the birth of their first child. Our reweighted regressions indicate that being born to a teen mother has some significant adverse effects on child health, especially among Coloured children. In particular, children born to teens are more likely to be underweight at birth and to be stunted with the negative effect being double the size for Coloureds than Africans. No negative impact of teenage childbearing is found on head circumference at birth or the incidence of incomplete first year immunizations. These results remain robust even when we simulate influential unobservable effects in both the reweighting equation and the outcome equation.
    Date: 2011–03
  7. By: Nicola Branson (SALDRU, School of Economics, University of Cape Town); Martin Wittenberg (SALDRU, School of Economics, University of Cape Town)
    Abstract: In the absence of established longitudinal panel surveys in South African, national cross-sectional household survey data are frequently used to analyse change. When these data are stacked side-byside, however, inconsistencies both in time trends and between household and person level data are found. This study uses a new set of weights calibrated to the ASSA 2003 model totals using a cross entropy estimation approach. This approach is favoured because the calculated weights are similar to the initial sample weights (and hence retain the survey design benefits) but match to a series of age-sex-race and province marginal totals that are consistent over time. The weights are publicly available for a fourteen year period between 1994 and 2007. This is a SALDRU/DataFirst Working Paper
    Date: 2011–02
  8. By: Cally Ardington (SALDRU, School of Economics, University of Cape Town); Alicia Menendez (Harris School, University of Chicago); Tinofa Mutevedzi (Africa Centre for Health and Population Studies)
    Abstract: This paper uses a rich longitudinal dataset to examine the relationship between teen fertility and both subsequent educational outcomes and mortality risk in rural South Africa. Human capital deficits among teen mothers are large and significant, with earlier births associated with greater deficits. In contrast to many other studies, we find no clear evidence of selectivity into teen childbearing in either schooling trajectories or pre-fertility household characteristics. Enrolment rates among teen mothers only begin to drop in the period immediately preceding the birth and future teen mothers are not behind in their schooling relative to other girls. Older teen mothers and those further ahead in school for their age pre-birth are more likely to continue schooling after the birth. Following women over a six year period we document a higher mortality risk before the age of 30 for teen mothers that cannot be explained by household characteristics in early adulthood.
    Date: 2011–03
  9. By: Murray Leibbrandt (SALDRU, School of Economics, University of Cape Town); Eva Wegner (SALDRU, School of Economics, University of Cape Town); Arden Finn (NIDS-SALDRU, School of Economics, University of Cape Town)
    Abstract: Trends in inequality, poverty, and redistribution in post-apartheid South Africa have received intense attention especially in terms of measuring inequality and poverty levels and the proximate causes of these levels. We review this literature and find a set of established trends. Inequality levels have increased but the face of inequality has changed with present-day inequality displaying a lessened racial make-up than under apartheid. In contrast, poverty has decreased but is still bears the strong racial makers of apartheid. The labour market continues to drive inequality. A related literature has concentrated on fiscal redistribution in South Africa after the transition, arguing that social policies are well targeted towards the poor with social grants being central in lifting people out of poverty. At the same time, these policies have not succeeded in reversing inequality trends and in providing equal opportunities for all South Africans. To bulk of paper probes this further. We use fiscal incidence analysis to show that redistribution increased slightly since 1993, that this redistribution is higher than in Latin America but far below European levels. Second, looking at spending for all social services we find a mixed picture. There has been an increase in spending since the end of apartheid on social policy and for a number of social policy items in the progressivity of this spending. At the same time, spending has not increased as a percentage of GDP and has become less progressive for social grants. Finally, we examine education policy in more detail. We find that the importance of tertiary education, as a predictor of income has increased considerably whereas individuals with low or incomplete secondary education were worse off in 2008, compared to 1993. Second, we find that state spending on education has increased since the early 1990s. The spending gap between rich and poor provinces has become much narrower but spending equality has not been reached. The academic achievements of students display high inequality, compared to international standards and there is also evidence that the capabilities of students have decreased, rather than increased, suggesting that increased spending has not translated into an increase in the quality of education provision.
    Date: 2011–09
  10. By: Thomas Bossuroy (SALDRU, School of Economics, University of Cape Town)
    Abstract: This paper examines the individual determinants of ethnic identification using large sample surveys (about 30,000 respondents) representative of seven capitals of West-African countries. A small model that relates ethnic identification to an investment in ethnic capital suggests that individuals initially deprived of social or human capital resort to ethnicity to get socially inserted, and do even more so if their ethnic group itself is well inserted. Empirical results are consistent with this simple theory. First, education lowers ethnic salience. Second, ethnic identification is higher for uneducated unemployed or informal workers who seek a new or better job, and is further raised by the share of the individual’s ethnic group integrated on the job market. Third, ethnic identification is higher among migrants, and raised by the share of the migrant’s ethnic group that is employed. Group solidarity makes ethnic identity more salient for individuals deprived of other means for upward mobility.
    Keywords: Ethnicity, Identity, Social capital, Networks, Africa.
    JEL: A13 A14 D74 O17
    Date: 2011–11
  11. By: Vimal Ranchhod (School of Economics, University of Cape Town); David Lam (University of Michigan); Murray Leibbrandt (SALDRU, School of Economics, University of Cape Town); Leticia Marteleto (University of Texas at Austin.)
    Abstract: We estimate the effect of a teenage birth on the educational attainment of young mothers in Cape Town, South Africa. Longitudinal and retrospective data on youth from the CAPS dataset are used. We control for a number of early life and pre-fertility characteristics. We also reweight our data using a propensity score matching process to generate a more appropriate counterfactual group. Accounting for respondent characteristics reduces estimates of the effect of a teen birth on dropping out of school, successfully completing secondary school, and years of schooling attained. Our best estimates of the effect of a teen birth on high school graduation by ages 20 and 22 are -5.9 and -2.7 percentage points respectively. The former is significant at the 5% level,while the latter is not statistically significant. Thus, there appears to be some `catching up' in educational attainment by teen mothers. We find only limited support for the hypothesis that there is heterogeneity in the effect of a teen birth, depending on the actual age of the first birth. By age 22, none of the estimates for high school graduation or years of schooling are statistically significant, regardless of the specific age at which the teen birth occurred. Despite this, we do find evidence that a teen birth does correlate with reduced educational expectations. The proportion of teen mothers who report an expected final educational attainment of high school graduation or greater is about 15 percentage points lower than the matched set of non-teen mothers, but this is not manifest amongst the girls whom we know will subsequently become teen mothers at some point after these expectations are measured.
    Date: 2011–03
  12. By: Clara Delavallade (SALDRU, School of Economics, University of Cape Town)
    Abstract: We estimate the effect of the child support grant on mothers' labour supply in South Africa. Identification is based on the use of specific samples, such as black mothers, aged 20 to 45, whose youngest child is aged within 2 years of the age eligibility cut-off, and unanticipated variation over the years in the age eligibility cut-off. Balancing tests across the age cut-o s are used to show that there are no signi cant di erences between mothers of eligible and ineligible children in the samples used, over the years. Different techniques are used to estimate the effect of the child support grant from many angles, including simple OLS as a bench mark, a difference in difference estimator, using appropriately constructed treatment and control groups, instrumental variables estimates, and descriptive analysis. The effect of having an age eligible child is large. Mothers who become recipients in their twenties see an average increase in employment probability of 15%, and in labour force participation of 9%. Many robustness and specification checks are used, including placebo regressions in the pre-treatment years, to ensure the estimated effect is not due to age or another variable.
    Keywords: Supply of Corruption, Administrative Corruption, State Capture, Tax Evasion, Competitiveness, North Africa
    JEL: C2 D73 O17 H32
    Date: 2011–09
  13. By: Obert Pimhidzai (World Bank)
    Abstract: The economic situation in Zimbabwe deteriorated significantly between 2000 and 2009. However, little empirical effort has been directed towards analysing changes in outcomes at micro levels during this challenging period. This paper therefore investigates changes in welfare during this period, with specific reference to child health outcomes. In addition to using height and weight for age as proxies for welfare, the analysis further overcomes the absence of consumption data expenditure by using a food variety score to proxy for access to food and an asset index based on principal component analysis to provide an alternative for economic ranking. Results from a comparative analysis of the 1999 and 2005/6 DHS data show that average height and weight for age z-scores for children aged 5 years or under worsened by 19% and 16% respectively while food consumption declined by 34%. These declines were across the entire wealth distribution but were more pronounced among children in middle quartile and the poorest households, but least for the rich. Multivariate regressions of height and weight for age show that a large part of their decline between 1999 and 2005/06 is explained by the deterioration in access to food over this period. Oaxaca-Blinder decompositions show that deterioration in access to food explains half the overall decline in mean height for age.
    Keywords: Zimbabwe, Africa, Nutrition, Stunting, Food Variety Score, Diet Diversity Score, Height for age, Weight for age
    Date: 2011–09
  14. By: Miquel Pellicer (SALDRU, School of Economics, University of Cape Town); Vimal Ranchhod (School of Economics, University of Cape Town); Mare Sarr (School of Economics, University of Cape Town); Eva Wegner (SALDRU, School of Economics, University of Cape Town)
    Abstract: There has been considerable eort in ascertaining with condence the trends in income inequality in South Africa. South Africa has traditionally been among the most unequal countries in the world and continues to be so. Surprisingly, levels of inequality have not decreased despite the transition to democratic rule in the 1990s; if any, they seem to have increased. There has also been considerable work on the proximate causes of these high levels of inequality on the basis of inequality decompositions (See Leibbrandt, Levinsohn and McCrary 2010, Leibbrandt. Woolard, Finn and Argent 2010, and Bhorat et al. 2009 for recent analyses). However, much less is known about the underlying causes of this high level of inequality and of its persistence.
    Date: 2011–03
  15. By: Charles Meth (SALDRU, School of Economics, University of Cape Town)
    Abstract: Because of their vital role in charting progress (or the lack thereof) in the pursuit of the povert y reduction, statistics are of obvious importance. In South Africa, these leave much to be desired.Disagreements among academics on the severity of poverty, the result of the failure of Statistics South Africa to conduct the appropriate surveys, are the inevitable result. Far from losing money (or sleep) as a result, some in the profession resort to further research, some of it quite highly paid, to squeeze new results out of old, often unreliable data. This could have serious consequences for the poor – policy failure caused by faulty monitoring can easily damage the vulnerable. Regardless of the reliability or otherwise of their findings, it is argued in the present paper that researchers would do well to offer them in a way that minimises the possibility of their being misinterpreted and/or misrepresented, and that maximises the likelihood that the non-specialist reader will be able to understand them. It is common practice to give poverty estimates in the form of the (FGT) ratios suggested by Foster, Greer and Thorbecke (1984), often without accompanying estimates of the absolute magnitudes involved. This, the present paper claims, allows overly optimistic conclusions to be drawn, making possible the concealment of rising misery behind a veil of aggregate improvement. Commencing with a glance in the abstract at the FGT ratios, the paper concludes that in order for poverty statistics not to convey a misleading impression of changes in the phenomenon they seek to represent, the ratios have to be augmented with sufficient information of concurrent changes in the income distribution. Most poverty studies look at changes in inequality. Often, however, the inequality results are not linked directly to the changes in poverty. As far as income poverty is concerned, the present piece of research suggests that doing so is the only appropriate way to present results. Having sketched a conceptual foundation, the paper looks at the regurgitation by government, without comment, of poverty statistics that directly contradict each other. After that, the strange case of an undeserved accolade government awards its anti-poverty policies, is found to be based upon a misinterpretation of their own findings by the authors of a recent poverty and inequality study (Bhorat and van der Westhuizen, 2008). A new set of poverty and inequality estimates (Leibbrandt et al, 2010), although it does not conform to the mode of presentation suggested above as necessary, points (as do the Bhorat and van der Westhuizen findings) to the strong likelihood that although the poverty headcount ratio may have fallen since the advent of democracy in the country, the poverty headcount is likely to have risen by several million between 1993 and 2008. An appendix at the end of the paper offers a little speculation on what poverty levels might have been had the AIDS epidemic not killed so many people.
    Date: 2011–06
  16. By: Guido Friebel; Juan Miguel Gallego; Mariapia Mendola
    Abstract: We investigate how emigration flows from a developing region are affected by xenophobic violence at destination. Our empirical analysis is based on a unique survey among more than 1000 households collected in Mozambique in summe 2008, a few months after a series of xenophobic attacks in South Africa killed dozens and displaced thousands of immigrants from neighbouring countries. We estimate migration intentions of Mozambicans before and after the attacks, controlling for the characteristics of households and previous migration behaviour. Using a placebo period, we show that other things equal, the migration intention of household heads decreases from 37 to 33 percent. The sensitivity of migration intentions to violence is larger for household heads with many children younger than 15 years, decreasing the migration intention by 11 percentage points. Most importantly, the sensitivity of migration intentions is highest for those household heads with many young children whose families have no access to social networks. For these household heads, the intention falls by 15 percentage points. Social networks provide insurance against the consequences young children suffer in case the household head would be harmed by xenophobic violence and consequently could not provide for the family.
    Keywords: violence, risk, migration, household behaviour, Mozambique
    JEL: O1 R2 J6 D1
    Date: 2011–11
  17. By: Denis Cogneau (Paris School of Economics); Alexander Moradi (Department of Economics, University of Sussex)
    Abstract: When European powers partitioned Africa, individuals of otherwise homogeneous communities were divided and found themselves randomly assigned to one coloniser. This provides for a natural experiment: applying a border discontinuity analysis to Ghana and Togo, we test what impact coloniser’s policies really made. Using a new data set of men recruited to the Ghana colonial army 1908-1955, we find literacy and religious beliefs to diverge between British and French mandated part of Togoland as early as in the 1920s. We attribute this to the different policies towards missionary schools. The British administration pursued a ”grant-in-aid” policy of missionary schools, whereas the French restricted missionary activities. The divergence is only visible in the Southern part. In the North, as well as at the border between Ghana and Burkina Faso (former French Upper Volta), educational and evangelization efforts were weak on both sides and hence, did not produce any marked differences. Using contemporary survey data we find that border effects originated at colonial times still persist today.
    Keywords: Economic History, Africa, Colonization, Education.
    JEL: O12 R12 P52
    Date: 2011–11
  18. By: Bardey, David; Jaramillo, Fernando
    Abstract: We analyze whether the introduction of unemployment insurance (UI hereafter) benefits in developing countries would reduce the effort made by unemployed to secure a new job in the formal sector. We show that one shot UI benefits unambiguously increase the effort to secure a new job in the formal sector. The relative strength of income/substitution effects only determine how leisure and informal activities are affected. Consequently, our (partial equilibrium) analysis reveals that short term UI benefits in developing countries do not reduce incentives to secure a new formal job and therefore cannot be interpreted as a subsidy to the informal sector.
    Keywords: Unemployment insurance, informal sector, income effects, developing countries.
    JEL: H55 I38 J65
    Date: 2011–09
  19. By: Abebe Damte (Department of Economics, University of Pretoria); Steven F. Koch (Department of Economics, University of Pretoria); Alemu Mekonnen (School of Economics, Addis Ababa University)
    Abstract: This study examines the coping mechanisms applied by rural households in the face of fuel wood scarcity by using survey data from randomly selected rural households in Ethiopia. The determinants of collection of other biomass energy sources were also examined. The results of the empirical analysis show that rural households residing in forest-degraded areas respond to fuel wood shortages by increasing their labour input to fuel wood collection. However, for households in high forest cover regions, forest stock and forest access may be more important factors than scarcity of fuel wood in determining household’s labour input to fuel wood collection. The study also finds that there is limited evidence of substitution between fuel wood and dung or fuel wood and crop residues. Therefore, supply-side strategies alone may not be effective in addressing the problem of forest degradation and biodiversity loss. Any policy on natural resource management, especially related to rural energy, should make a distinction between regions with different levels of forest degradation.
    Keywords: Fuel wood, labor allocation, biomass, rural Ethiopia
    Date: 2011–11
  20. By: Kangni Kpodar; Maelan Le Goff
    Abstract: Aid has been for decades an important source of financing for developing countries, but more recently remittance flows have increased rapidly and are beginning to dwarf aid flows. This paper investigates how remittances affect aid flows, and how this relationship varies depending on the channel of transmission from remittances to aid. Buoyant remittances could reduce aid needs when human capital improves and private investment takes off. Absent these, aid flows could still drop as remittances may dampen donors’ incentive to scale up aid. Concurrently, remittances could be positively associated with aid if migrants can influence aid policy in donor countries. Using an instrumental variable approach with panel data for a sample of developing countries from 1975-2005, the baseline results show that remittances actually increase aid dependency. However, a refined model controlling for the channels of transmission from remittances to aid reveals that remittances lead to lower aid dependency when they are invested in human and physical capital rather than consumed.
    Keywords: Aid flows , Capital accumulation , Developing countries , Development assistance , Economic models , Human capital , Workers remittances ,
    Date: 2011–10–26
  21. By: Nkunde Mwase
    Abstract: BRICs development financing flows have increased significantly and are expected to become more prominent in the post-crisis era. We investigate the potential implications on the country-allocation of loan commitments and the degree of concessionality using a panel vector autoregression model and single equation dynamic panel estimation.We find that BRICs lend more to LICs with weaker institutions. Land-locked, resource-scarce LICs receive significantly less financing than other resource-rich LICs. The degree of concessionality is negatively correlated with the amount of loans and positively correlated with better institutional indicators suggesting that the higher the risks, the higher the required returns that BRICs expect.
    Date: 2011–11–04
  22. By: Camelia Minoiu; Shatakshee Dhongde
    Abstract: Current estimates of global poverty vary substantially across studies. In this paper we undertake a novel sensitivity analysis to highlight the importance of methodological choices in estimating global poverty. We measure global poverty using different data sources, parametric and nonparametric estimation methods, and multiple poverty lines. Our results indicate that estimates of global poverty vary significantly when they are based alternately on data from household surveys versus national accounts but are relatively consistent across different estimation methods. The decline in poverty over the past decade is found to be robust across methodological choices.
    Keywords: Developing countries , Income distribution , Poverty , Cross country analysis ,
    Date: 2011–10–06
  23. By: Jun Il Kim; Kazuko Shirono; Era Dabla-Norris
    Abstract: This paper develops a cost-benefit approach that helps to quantify the optimal level of international reserves in low-income countries, focusing on the role of reserves in preventing and mitigating absorption drops triggered by large external shocks. The approach is applied to a sample of 49 LICs over the period 1980-2008 to yield estimates of the likelihood and severity of a crisis. The calibration results suggest that the standard metric of three months of imports is inadequate for countries with fixed exchange rate regimes. The results also highlight the role of overall policy frameworks and availability of Fund-support in determining optimal reserve levels, raising questions about the uniform applicability of standard rules of thumb across countries.
    Keywords: Economic models , External shocks , Financial crisis , Low-income developing countries , Reserves , Reserves adequacy ,
    Date: 2011–10–27
  24. By: Yongzheng Yang
    Abstract: While global rebalancing will mainly involve structural realignment among major advanced and emerging market economies, it could have significant impact on low-income countries (LICs). Simulations using a global general equilibrium model show that a more balanced global economy would tend to improve the current account balance in LICs with limited impact on domestic output. However, there could be adverse terms of trade effects on some LICs as the prices of manufactured goods rise. On the other hand, such prices increases could provide an impetus to export diversification in many LICs, raising growth in the long run. The output and terms of trade effects would be significantly amplified if structural adjustment is impeded by factor immobility and other rigidities.
    Keywords: Consumer goods , Current account balances , Demand , Export competitiveness , Export growth , Low-income developing countries , Manufacturing , Price increases , Terms of trade ,
    Date: 2011–10–19
  25. By: Katsushi Imai; Raghav Gaiha; Abdilahi Ali; Nidhi Kaicker
    Date: 2011
  26. By: Barbara Dietz (Osteuropa-Institut, Regensburg (Institut for East European Studies)); Kseniia Gatskova (Osteuropa-Institut, Regensburg (Institut for East European Studies)); Achim Schmillen (Osteuropa-Institut, Regensburg (Institut for East European Studies))
    Abstract: Internal migration flows in Kazakhstan are of high social and political relevance but political and public attention has primarily been devoted to external movements. This paper presents the main descriptive results of a new household survey on migration and remittances in Kazakhstan which was conducted in four cities (Almaty, Astana, Karaganda and Pavlodar) between October and December 2010. It summarizes the survey’s methodology, gives an overview over the basic characteristics of respondents, illustrates migration experiences on the individual and the household level and compares migrants and non-migrants. Furthermore, the prevalence of remittances and attitudes towards migration are discussed.
    Keywords: Kazakhstan, data analysis, regional migration, remittances
    JEL: C81 F24 R23
    Date: 2011–11
  27. By: Dominguez-Torres, Carolina; Briceno-Garmendia, Cecilia
    Abstract: In the last 10 years, Mozambique's economy has grown steadily at an impressive rate of 7.7 percent per year, driven by the service sector, light industry, and agriculture. This pace is expected to continue or even increase with the massive influx of already-planned investment on the order of $15-20 billion. Mozambique's infrastructure is well developed in some sectors, including its east-west transport infrastructure, power grid, and water and sanitation networks. But the nation still faces critical challenges in these and other areas, including developing north-south transport connections, properly managing the water system, and expanding hydroelectric generation to meet potential. Mozambique spent about $664 million per year on infrastructure during the late 2000s, with as much as $204 million lost annually to inefficiencies. Comparing spending needs with existing spending and potential efficiency gains leaves an annual funding gap of $822 million per year. Mozambique could reduce inefficiency losses by positioning itself as a key power exporter. The country could reach infrastructure targets in 20 years through a combination of increased finance, improved efficiency, and cost-reducing innovations.
    Keywords: Transport Economics Policy&Planning,Infrastructure Economics,Town Water Supply and Sanitation,Energy Production and Transportation,Water Supply and Systems
    Date: 2011–11–01
  28. By: Andrimihaja, Noro Aina; Cinyabuguma, Matthias; Devarajan, Shantayanan
    Abstract: Not only do Africa's fragile states grow more slowly than non-fragile states, but they seem to be caught in a"fragility trap". For instance, the probability that a fragile state in 2001 was still fragile in 2009 was 0.95. This paper presents an economic model where three features -- political instability and violence, insecure property rights and unenforceable contracts, and corruption -- conspire to create a slow-growth-poor-governance equilibrium trap into which these fragile states can fall. The analysis shows that, by addressing the three problems, fragile countries can emerge from the fragility trap and enjoy a level of sustained economic growth. But addressing these issues requires resources, which are scarce because external aid is often tailored to the country's performance and cut back when there is instability, insecurity, and corruption. The implication is that, even if aid is seemingly unproductive in these weak-governance environments, it could be hugely beneficial if it is invested in such a way that it helps these countries tackle the root causes of instability, insecurity, and corruption. Empirical estimations corroborate the postulated relationships of the model, supporting the notion that it is possible for African fragile countries to avoid the fragility trap.
    Keywords: Economic Theory&Research,Debt Markets,Emerging Markets,Inequality,Achieving Shared Growth
    Date: 2011–11–01
  29. By: Hayakawa, Kazunobu; Tanaka, Kiyoyasu
    Abstract: This paper investigates theoretically and empirically firms' productivity ranking among traditional horizontal foreign direct investment (HFDI), pure platform FDI (PFDI), and complex platform FDI (CFDI). Using data on Japanese outward FDI, we define firms conducting HFDI or PFDI as those Japanese firms that maintain production affiliates only in the U.S. or Mexico, respectively. The firms for CFDI are defined as having production affiliates in both the U.S. and Mexico. The theoretical illustration shows that the CFDI firms should have the highest productivity when trade costs between the U.S. and Mexico are low. By carefully disentangling firms' self-selection effects from learning-by-investing effects, we find some evidence consistent with this hypothesis for a period of relatively low trade costs. Our results indicate the importance of trade costs in developing countries with neighboring markets in attracting foreign investment by highly productive multinational firms.
    Keywords: Mexico, Japan, United States, Foreign investments, Foreign affiliated firm, Exports, Costs, Export platform, FDI, Firm heterogeneity, Trade costs
    JEL: F21 F23
    Date: 2011–10
  30. By: Mwangi wa Githinji (University of Massachusetts Amherst)
    Abstract: The question of poverty has become central to the work of development economists in the last decade and a half. The 2000 World Development Report was entitled Attacking Poverty and the UN held a series of World Conferences in the 1990s, all of which addressed in some form or fashion the problem of poverty. Despite this and because of limited data there has been relatively little empirical work at the household level on determinants of poverty in Africa generally and Kenya specifically. In the few econometric studies that have been done for Kenya land has not been a significant determinant of poverty. This is a surprising result for a country where 80 per cent of the population depends on agriculture. Further the little that has been done has not incorporated the role of human development in the determination of poverty. Via an examination of a nationwide sample this paper will examine the role that land and social capital play in determining households poverty status in rural Kenya in addition to the standard theorized determinants. JEL Categories: O150, Q150
    Keywords: Poverty, Rural, Land, Kenya, Africa, Human Development
    Date: 2011–11
  31. By: Mwangi wa Githinji (University of Massachusetts Amherst); Charalampos Konstantinidis (University of Massachusetts Amherst); Andrew Barenberg (University of Massachusetts-Amherst)
    Abstract: Access to land and particularly its distribution has reemerged as an important part of both academic and policy discussions in the last decade, leading to the resuscitation of the debate on the relationship between size of holdings and output per land unit. Across the world, studies have suggested the existence of a decreasing relationship between land size and output per unit of land. The most-widely accepted explanation for this relationship is that households with smaller holdings tend to be labor rich relative to land, and therefore can achieve higher output through the increased application of labor. Despite the rich literature on this topic there has been little work on whether this relationship is valid for female-headed households, particularly in the case of African countries. Past African studies have found female-headed households to be smaller by close to one adult in comparison to male-headed households. Given this difference one would expect there to be a difference in the outcome of land redistribution for different types of households, ceteris paribus. Additionally, the aggregate impact in African countries could be substantial, as female-headed households comprise in several cases up to 30 percent of the rural households. In this paper we will examine empirically whether the inverse size and output relationship is different between female and male headed households in the case of Kenya, using the Kenya Integrated Household Budget and Expenditure Survey of 2006, which includes modules on agricultural holdings and agricultural output in addition to the standard demographic characteristics. By controlling for the endogeneity of crop choice and fertilizer use we are able to find that cash crop production and human capital, and not differences in household size, determines the differences in male and female headed land productivity. Hence, our study goes beyond the simple discussion of the inverse relationship between land size and output per unit and the potential impact of redistribution. Specifically we will be able to address the kind of broad rural development policies in addition to land redistribution that would allow female headed households to do at least as well as (if not better than) male headed households. JEL Categories: J16, O13, Q15
    Keywords: Agriculture, Gender, Kenya, Africa, Crop Choice, Land Productivity
    Date: 2011–11
  32. By: Aslihan Arslan; J. Edward Taylor
    Abstract: Whole-household migration potentially can alter the results of studies on income inequality based on panel data if it selects on household income. We model whole-household migration and its impacts on income inequality and poverty using a unique, nationally representative household panel data set from rural Mexico. Households that participate in whole-household migration and those who do not differ significantly in terms of observable characteristics; however, analyses of income and poverty based on the remaining sample are not necessarily biased. This finding is similar to those in previous research on the effects of attrition on panel data studies. We also analyze the changes in inequality and poverty due to whole-household migration and over time correcting for the effects of attrition. Our results support the migration diffusion hypothesis and underline the importance of paying attention to selective attrition in panel data studies on income distribution and poverty – especially in countries and regions with high migration rates
    Keywords: Attrition, panel data, income inequality, poverty, joint migration, Mexico
    JEL: C23 O15
    Date: 2011–11

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