nep-dev New Economics Papers
on Development
Issue of 2011‒12‒13
nineteen papers chosen by
Mark Lee
Towson University

  1. Compliance with the Institutional Wage in Dualistic Models By Ana Paula Martins
  2. Technology and Human Development By Gustav Ranis
  3. A Robust Multi-Dimensional Poverty Profile for Uganda By Sebastian Levine; James Muwonge; Yele Maweki Batana
  4. Measuring Poverty in the Pacific By Matthew Morris
  5. Is Sex Like Driving? Risk Compensation Associated with Randomized Male Circumcision in Kisumu, Kenya By Nicholas Wilson; Wentao Xiong; Christine Mattson; Christine Mattson
  6. Education, Innovation, and Long-Run Growth By Katsuhiko Hori; Katsunori Yamada
  7. Learning from Asia’s Success Beyond Simplistic ‘Lesson-Making’ By Mike Hobday
  8. Globalization Crises, Trade,and Development in Vietnam By Philip Abbott; Finn Tarp
  9. Should Cash Transfers Be Confined to the Poor? Implications for Poverty and Inequality in Latin America By Acosta, Pablo A.; Leite, Phillippe; Rigolini, Jamele
  10. Religious Minorities and Provision of Public Goods: Evidence from Rural West Bengal By Kumar Das, Pranab; Kar, Saibal; Kayal, Madhumanti
  11. Average and Marginal Returns to Upper Secondary Schooling in Indonesia By Carneiro, Pedro; Lokshin, Michael; Ridao-Cano, Cristobal; Umapathi, Nithin
  12. Fiscal Prospects and Reforms in India By Richard Herd; Sam Hill; Vincent Koen
  13. China and the world trading system By Mattoo, Aaditya; Subramanian, Arvind
  14. How important is the efficiency of government investment ? The case of the Republic of Congo By Nielsen, Hannah; Lofgren, Hans
  15. Productivity growth and ownership change in China: 1998-2007 By Liu, Jing; Cao, Shutao
  16. International Human Trafficking: Theory and Solution By Mo, Pak Hung
  17. Determinants of internal migration in Kazakhstan By Aldashev, Alisher; Dietz, Barbara
  18. A Note on Schooling in Development Accounting By Caselli, Francesco; Ciccone, Antonio
  19. The Long-Run Effects of the Scramble for Africa By Stelios Michalopoulos; Elias Papaioannou

  1. By: Ana Paula Martins
    Abstract: This research extends simple two-sector models in order to inquire the impact of the extent of coverage or enforcement of minimum wage legislation in one of the sectors on the equilibrium outcome. Two versions of institutional wage avoidance are presented. They may be seen as representing different institutional detection rules: one working through worker complaint, the other through firm sampling inspection (and enforcement) by the legal system. Both cases are modelled as enlargements of two dualistic models: Harris-Todaro (the wage in the other sector is market determined) and Bhagwati-Hamada (the wage in the other sector is institutionally fixed and coverage is complete). Impact on population flows of changes in degree of coverage (compliance) is also confronted with the effect of a change in the institutional wage for each scenario.
    Keywords: Migration, Mobility, Minimum Wages, Segmented Labor Markets, Informal Sector, Regional Labor Markets, Dualistic Models, Coverage.
    JEL: O15 O17 O18 R23 J38 J42 J61 J62 F22 K42
    Date: 2011–11–15
  2. By: Gustav Ranis (Economic Growth Center, Yale University)
    Abstract: Human development, in combination with technology, yields economic growth which, in turn, is necessary to generate further advances in human development. This paper focuses on the first channel above and finds the relationship significant. Secondly, the paper tries to investigate what affects technology change, as represented by TFP. We examine the influence of openness, FDI, patents and R&D in a 22 country sample and also contrast Asian and Latin American experience.
    Keywords: Technology, Human Development
    JEL: F00 F16 J24 O10 O15 O30 O31 O32
    Date: 2011–09
  3. By: Sebastian Levine; James Muwonge; Yele Maweki Batana
    Abstract: In this paper we compute a multi-dimensional poverty index (MPI) for Uganda following the approach proposed by Alkire and Forster (2007). Using household survey data we show how the incidence of multi-dimensional poverty has fallen in recent years and we use the decomposability features of the index to explain the drivers of reduction in multi-dimensional poverty. We also compare the results from Uganda with other countries for which the MPI has been computed and we note some caveats in such a comparison. The robustness of our estimates is tested in a stochastic dominance framework and using statistical inference. Notably, we extend the one-dimensional analysis of stochastic dominance to take into account household size in a second dimension, which is particularly important as some of the MPI indicators are sensitive to the number of household members. By exploiting a unique subsample of the integrated household survey programme in Uganda, which has not previously been analysed, we are also able to match the data-set used for the MPI with data used to compute the conventional estimates of monetary poverty. This enables a more robust assessment of the complementarities of the two types of poverty measures than has been previously possible.
    Keywords: multidimensional poverty, counting approach, Uganda, household size, robustness analysis, international comparisons.
    JEL: C12 D31 D63 I3 I32 O10
    Date: 2011
  4. By: Matthew Morris
    Abstract: Measuring poverty in the Pacific is important to keep poor people on the policy agenda, to design effective policies and programs and to carry out rigorous evaluation so that we know what works and why. There are various definitions of poverty, ranging from a narrow focus on adequate calorie consumption through to broader concepts of capabilities. This paper takes a practical look at how to measure one conventional indicator of poverty: income (or consumption) poverty. In doing so, the paper highlights both the limitations of household datasets in the Pacific as well as opportunities to make better use of data for poverty analysis. Good progress is being made in improving the quality of household surveys, so the challenge now is to analyse these more fully to inform policies, program design and evaluation.
    Keywords: aid
    JEL: O19
    Date: 2011–11
  5. By: Nicholas Wilson (Williams College); Wentao Xiong (Williams College); Christine Mattson; Christine Mattson (University of Illinois at Chicago School of Public Health)
    Abstract: Mass adult male circumcision campaigns for HIV prevention are underway across much of Sub-Saharan Africa. However, concern remains about risk compensation associated with the reduction in the probability of HIV transmission per risky act. This paper examines the behavioral response to male circumcision using experimental data from Kisumu, Kenya. Contrary to the presumption of risk compensation, we find that the response due to the perceived reduction in HIV transmission appears to have been a reduction in risky sexual behavior. We suggest a mechanism for this finding: circumcision reduces fatalism about acquiring HIV and increases the salience of the tradeoff between engaging in additional risky behavior and living longer. We also find what appears to be a competing effect that does not operate through the circumcisioncrecipient's belief about the reduction in the risk of acquiring HIV.
    Keywords: HIV/AIDS, male circumcision, risk compensation, beliefs, Kenya
    JEL: D81 D84 I18
    Date: 2011–08
  6. By: Katsuhiko Hori (Institute of Economic Research, Kyoto University); Katsunori Yamada (Institute of Social and Economic Research, Osaka University)
    Abstract: This study augments a second-generation Schumpeterian growth model to employ human capital explicitly. We clarify the general-equilibrium interactions of subsidy policies to R&D and human capital accumulation in a unified framework. Despite a standard intuition that subsidizing these growth-enhancing activities is always mutually growth promoting, we find asymmetric effects for subsidies on R&D and those on education. Our theoretical result of asymmetric policy effects provides an important empirical caveat that empirical researchers may find false negative relationships between education subsidies and the output growth rate, if they merely rely on the standard human capital model.
    Keywords: Schumpeterian growth model; human capital accumulation; subsidies
    JEL: O15 O32 O41
    Date: 2011–11
  7. By: Mike Hobday
    Abstract: Many international organizations, governments and academics concerned with economic development look to Asia’s success, recommending that other poor countries follow similar models and paths of development. This study argues that such Asian ‘lesson-making’ is a grave mistake in policy-thinking—and in the historical understanding of the nature and process of development. In identifying what we can and cannot learn from the Asian experience, this study examines the various paths of successful growth in East and South East Asia and asks: what can other developing countries learn from Asia’s success, if anything? The study also examines the arguments of some of the great development thinkers of the past to ascertain what can be learned. Because technological and market circumstances facing today’s developing nations have changed it is a mistake to base any strategy on the achievements of past …
    Keywords: Asia, innovation, lessons, economic development
    Date: 2011
  8. By: Philip Abbott; Finn Tarp
    Abstract: Vietnam has been among the most successful East Asian economies, especially in weathering the external shocks of recent globalization crises—the 1997-98 Asian financial crisis and the 2008-09 great recession, financial crisis and collapse of global trade. Its success contradicts its characterization as an example of export-led growth and highlights the role of the state, particularly in maintaining and influencing investment. Examination of economic performance and policy responses shows rising dependence on foreign finance around each crisis, and actions by the government to counteract that dependence and bolster the domestic economy while continuing to restructure the economy toward greater emphasis on the private sector. Growth, employment and poverty alleviation have been maintained at the expense of renewed inflation, larger budget deficits, and currency depreciation. The ‘stop-go’ nature of present …
    Keywords: trade and development, trade liberalization, foreign direct investment, globalization, WTO accession, asian financial crisis, great recession, Vietnam
    Date: 2011
  9. By: Acosta, Pablo A. (World Bank); Leite, Phillippe (World Bank); Rigolini, Jamele (World Bank)
    Abstract: This paper compares for 13 Latin American countries the poverty and inequality impacts of cash transfer programs that are given to all children and the elderly (that is, "categorical" transfers), to programs of equal budget that are confined to the poor within each population group (that is, "poverty targeted" transfers). The analysis finds that both the incidence of poverty and the depth of the poverty gap are important factors affecting the relative effectiveness of categorical versus poverty targeted transfers. The comparison of transfers to children and the elderly also supports the view that choosing carefully categories of beneficiaries is almost as important as targeting the poor for achieving a high poverty and inequality impact. Overall, the findings suggest that although in the Latin American context poverty targeting tends to deliver higher poverty impacts, there are circumstances under which categorical targeting confined to geographical regions (sometimes called "geographic targeting") may be a valid option to consider. This is particularly the case in low-income countries with widespread pockets of poverty.
    Keywords: cash transfers, targeting, social assistance, poverty
    JEL: D6 H5 O1
    Date: 2011–11
  10. By: Kumar Das, Pranab (Centre for Studies in Social Sciences, Calcutta); Kar, Saibal (Centre for Studies in Social Sciences, Calcutta); Kayal, Madhumanti (Centre for Studies in Social Sciences, Calcutta)
    Abstract: Religious and ethnic minorities across the world face partisan treatment with regard to provision of public goods, either as outcome of discriminatory practices or due to historical antecedents, such as the caste and religious divides in India. In several districts of West Bengal in India concentration of religious minorities, namely Muslims is higher than state and country-level averages. We measures access to public goods in rural West Bengal for different strata of minority concentration. Using Least Square, Generalized Linear Models and Blinder-Oaxaca decomposition, we find evidence of strong horizontal inequality against Muslims in terms of access to public goods. Blinder-Oaxaca decomposition shows that Muslims in larger concentrations face poorer access to infrastructure, health and transport facilities.
    Keywords: religious minorities, public good, discrimination, welfare, West Bengal
    JEL: H41 H51 J15 J71 I31
    Date: 2011–11
  11. By: Carneiro, Pedro (University College London); Lokshin, Michael (World Bank); Ridao-Cano, Cristobal (World Bank); Umapathi, Nithin (World Bank)
    Abstract: This paper estimates average and marginal returns to schooling in Indonesia using a non-parametric selection model. Identification of the model is given by exogenous geographic variation in access to upper secondary schools. We find that the return to upper secondary schooling varies widely across individuals: it can be as high as 50 percent per year of schooling for those very likely to enroll in upper secondary schooling, or as low as -10 percent for those very unlikely to do so. Average returns for the student at the margin are well below those for the average student attending upper secondary schooling.
    Keywords: returns to schooling, marginal return, average return, marginal treatment effect
    JEL: J31
    Date: 2011–11
  12. By: Richard Herd; Sam Hill; Vincent Koen
    Abstract: Substantial fiscal consolidation was achieved under the aegis of the 2003 Fiscal Responsibility and Budget Management Act. While deficits widened anew in 2008 and 2009, against the backdrop of the global financial and economic crisis, efforts to reduce them have resumed since. To ensure continued progress, as well as stronger government finances in the longer term, the medium-term fiscal framework needs to be improved, notably by embedding the annual budget in a detailed three-year rolling programme. Expenditure needs to be controlled better, in particular as regards subsidies, which the central government has indeed been trying to rein in, though with difficulty in the face of rising world oil prices. Expenditure also needs to become more effective, in particular in the areas of health care, education and social assistance. On the revenue side, tax reforms have been tabled, both for direct taxes and for the complex and inefficient system of indirect taxes. Corporate income tax rates are being cut, though the headline rate remains high. Lower taxation for large special economic zones deserves to be maintained for some time. For the personal income tax, which only a fairly small proportion of the population pays, thresholds are set to be raised considerably. A goods and services tax is to be introduced, which should help reduce the segmentation of the national market for goods and services. Customs duties have been reduced on average but remain high for some categories of imports, implying scope for further reduction over time.<p>This Working Paper relates to the 2011 OECD Economic Survey of India (<P>Perspectives et réformes budgétaires en Inde<BR>La loi de 2003 sur la responsabilité et la gestion budgétaires a permis d’avancer sur la voie de l’assainissement des finances publiques. Certes, le déficit s’est de nouveau aggravé en 2008-2009, du fait de la crise financière et économique mondiale, mais de nouvelles mesures ont été prises ensuite pour le réduire. Afin d’assurer la poursuite des progrès en ce domaine et de consolider la situation à plus longue échéance, il faut améliorer le cadre budgétaire à moyen terme, notamment en intégrant la loi de finances annuelle à un programme glissant, détaillé, étalé sur trois exercices. Il faut aussi mieux maîtriser les dépenses, en particulier les subventions, que l'administration centrale a d’ailleurs tenté de freiner, quoique non sans difficultés face à la montée des cours mondiaux du pétrole. Enfin, il est nécessaire de renforcer l'efficience des dépenses, surtout dans les domaines de la santé, de l’éducation et de l’aide sociale. En matière de recettes, des réformes ont été présentées ; elles portent à la fois sur la fiscalité directe et sur le système, complexe et inefficient, des impôts indirects. Les autorités sont en train d’alléger l'impôt sur les sociétés, bien que son taux nominal demeure élevé. Il convient de conserver pendant un certain temps les allégements en faveur des grandes zones économiques spéciales. S’agissant de l’impôt sur le revenu des personnes physiques, qui n'est acquitté que par une faible proportion de la population, les seuils d’imposition devraient être sensiblement relevés. Une taxe sur les biens et les services doit être mise en place, ce qui devrait réduire la segmentation du marché national. Les droits de douane ont été abaissés en moyenne, mais restent élevés pour certaines catégories d’importations, ce qui laisse des marges de réduction à l'avenir.<p>Ce Document de travail se rapporte à l'Etude économique de l'OCDE de l’Inde 2011 (
    Keywords: taxation, transfers, fiscal policy, tariffs, subsidies, India, poverty, debt, saving, fiscal institution, expenditure, government budgets, transferts, politique budgétaire, pauvreté, subventions, dette, dépenses, Inde, taxation, épargne, institution budgétaire, budgets des gouvernements, tarifs
    JEL: E60 E61 E62 E65 E66 E69 H2 H50 H51 H53 H54 H55 H6 H70 H71 H72 H74 H81 H83 I18 I32 I38 O23 O53
    Date: 2011–12–02
  13. By: Mattoo, Aaditya; Subramanian, Arvind
    Abstract: The World Trade Organization has been until recently an effective framework for cooperation because it has continually adapted to changing economic realities. The current Doha Agenda is an aberration because it does not reflect one of the largest shifts in the international economic and trading system: the rise of China. Although China will have a stake in maintaining trade openness, an initiative that builds on but redefines the Doha Agenda would anchor China more fully in the multilateral trading system. Such an initiative would have two pillars. The first is a new negotiating agenda that would include the major issues of interest to China and its trading partners, and thus unleash the powerful reciprocal liberalization mechanism that has driven the World Trade Organization process to previous successes. The second is new restraints on bilateralism and regionalism that would help preserve incentives for maintaining the current broadly non-discriminatory trading order.
    Keywords: Emerging Markets,Economic Theory&Research,Free Trade,Debt Markets,Trade Law
    Date: 2011–12–01
  14. By: Nielsen, Hannah; Lofgren, Hans
    Abstract: The Republic of Congo, an oil rich country in Central Africa, has made substantial progress in the past decade in stabilizing the economy and achieving high growth rates. However, despite reaching middle-income country status in 2006, the economy is not diversified, poverty remains pervasive, and social indicators are well below the average for countries with a similar income level. This paper analyzes aspects of an ambitious investment program on which the government has embarked to improve the provision of basic services and promote private sector development. The success of this program, however, is questionable given the low absorptive capacity of the country and in particular the poor efficiency of public investment management. The analysis is based on simulations with an economy-wide model for analysis of development strategies and government policies, MAMS (Maquette for MDG Simulations). The results of the simulations show that slightly delaying large investment projects, while simultaneously improving the efficiency of the investment program, would lead to significantly higher growth rates and lower poverty levels. The analysis therefore confirms the importance of efficient public investment management for the optimal use of the country's resources.
    Keywords: Economic Theory&Research,Labor Policies,Debt Markets,Access to Finance,Non Bank Financial Institutions
    Date: 2011–12–01
  15. By: Liu, Jing; Cao, Shutao
    Abstract: This paper studies the industry productivity dynamics in China’s manufacturing sector from 1998 to 2007, and in particular, explores to what extent the privatization of state-owned enterprises (SOEs) contributes to the aggregate productivity growth. Our results show that, though non-SOEs on average are more productive than SOEs, the average productivity growth among SOEs is greater than the privately-owned firms. Industry concentration, taxation, and credit market all account for this difference in growth between SOEs and non-SOEs. In addition, industry productivity growth is mainly attributed to the growth of non-SOEs, entry of non-SOE firms, and the exit of SOEs. However, non-SOE firms that are transformed directly from SOEs make a small but negative contribution to industry productivity growth.
    Keywords: Productivity Growth, Industry Dynamics, Ownership Change, Reallocation
    JEL: E6 D24 O4
    Date: 2011–04–15
  16. By: Mo, Pak Hung
    Abstract: In this paper, we build a simple model to explain the choice of migration method and the root causes of international human trafficking (IHT). Our analyses result in several implications on the problems related to IHT. First, IHT is driven by poverty and international productivity/living quality disparities. Second, the existing humanitarian and/or suppressive approaches cannot solve the problem. Third, the best option for solving the problem is setting up the ‘reciprocal direct investment’ (RDI) scheme between leading and lagged economies.The RDI scheme can facilitate improvements in the quality of public governance in lagged economies and directly promote international competition, efficiency, trade liberalization and division of labor. The resulting convergence in global living quality at a higher level across nations will eliminate the root causes of illicit migrations.
    Keywords: human trafficking; global development; income disparities
    JEL: O4
    Date: 2011–11
  17. By: Aldashev, Alisher; Dietz, Barbara
    Abstract: In this paper we analyze the determinants of interregional migration in Kazakhstan using quarterly panel data on region to region migration in 2008–2010. To the best of our knowledge this is the first study on interregional population flows in Central Asia. We find that migration is determined by economic factors, first of all income: People are more likely to leave regions where incomes are low and more likely to move to regions with a higher income level. Furthermore, mobility is larger between more populated regions. Distance has a strong negative impact on migration, indicating high migration related costs and risks. Assuming that high migration costs are caused by poor infrastructure, investments in public and social infrastructure should facilitate regional income convergence in Kazakhstan and improve living standards in depressed regions.
    Keywords: Interregional migration; Kazakhstan; Gravity model
    JEL: P36 J61 R23
    Date: 2011–10
  18. By: Caselli, Francesco; Ciccone, Antonio
    Abstract: How much would output increase if underdeveloped economies were to increase their levels of schooling? We contribute to the development accounting literature by describing a non-parametric upper bound on the increase in output that can be generated by more schooling. The advantage of our approach is that the upper bound is valid for any number of schooling levels with arbitrary patterns of substitution/complementarity. We also quantify the upper bound for all economies with the necessary data, compare our results with the standard development accounting approach, and provide an update on the results using the standard approach for a large sample of countries.
    Keywords: Development accounting; imperfect substitution; schooling
    JEL: O10 O15
    Date: 2011–12
  19. By: Stelios Michalopoulos; Elias Papaioannou
    Abstract: We examine the long-run consequences of the scramble for Africa among European powers in the late 19th century and uncover the following empirical regularities. First, using information on the spatial distribution of African ethnicities before colonization, we show that borders were arbitrarily drawn. Apart from the land mass and water area of an ethnicity's historical homeland, no other geographic, ecological, historical, and ethnic-specific traits predict which ethnic groups have been partitioned by the national border. Second, using data on the location of civil conflicts after independence, we show that partitioned ethnic groups have suffered significantly more warfare; moreover, partitioned ethnicities have experienced more prolonged and more devastating civil wars. Third, we identify sizeable spillovers; civil conflict spreads from the homeland of partitioned ethnicities to nearby ethnic regions. These results are robust to a rich set of controls at a fine level and the inclusion of country fixed effects and ethnic-family fixed effects. The uncovered evidence thus identifies a sizable causal impact of the scramble for Africa on warfare.
    JEL: N17 N47 O10 Z10
    Date: 2011–11

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