nep-dev New Economics Papers
on Development
Issue of 2011‒12‒19
23 papers chosen by
Mark Lee
Towson University

  1. Socially Disadvantaged Groups and Microfinance in India By Jean-Marie Baland; Rohini Somanathan; Lore Vandewalle
  2. Public Good Provision in Indian Rural Areas: the Returns to Collective Action by Microfinance Groups By Paolo Casini; Lore Vandewalle
  3. Aid and Fertility: What Does the Cross-Country Evidence Show? By David Cuberes; Kevin Tsui
  4. Labor Markets and the Financial Crisis: Evidence from Tajikistan By Antje Kröger; Kristina Meier
  5. Impacts of an early education intervention on students' learning achievement: Evidence from the Philippines By Yamauchi, Futoshi; Liu, Yanyan
  6. Poverty reduction in a refugee-hosting economy: A natural experiment By Maystadt, Jean-Francois
  7. The renewed case for farmers' cooperatives: Diagnostics and implications from Ghana By Francesconi, Gian Nicola; Wouterse, Fleur
  8. Comprehension and risk elicitation in the field: Evidence from rural Senegal By Charness, Gary; Viceisza, Angelino
  9. How does ownership of farm implements affect investment in other farm implements when farmers' liquidity constraint is relaxed?: Insights from Nigeria By Takeshima, Hiroyuki; Salau, Sheu
  10. Who owns the land?: Perspectives from rural Ugandans and implications for land acquisitions By Bomuhangi, Allan; Doss, Cheryl; Meinzen-Dick, Ruth
  11. How prudent are rural households in developing transition economies: By Jin, Ling; Chen, Kevin Z.; Yu, Bingxin; Huang, Zuhui
  12. Using the regression discontinuity design with implicit partitions: The impacts of comunidades solidarias rurales on schooling in El Salvador By de Brauw, Alan; Gilligan, Daniel
  13. External shocks and policy alternatives in small open economies: The case of El Salvador By Morley, Samuel; Piñeiro, Valeria; Robinson, Sherman
  14. Changes in Job Structure and Rising Wage Inequality in Urban China, 1995-2007 By Xing, Chunbing
  15. Remittances and Children's Capabilities: New Evidence from Kyrgyzstan, 2005-2008 By Kathryn Anderson; Antje Kroeger
  16. Social Housing Policies in Latin America and Singapore: Lessons for China By Roger Sandilands
  17. Determinants of Public Health expenditures in Pakistan By Abbas, Faisal; Hiemenz, Ulrich
  18. Understanding the Pattern of Growth and Equity in the People’s Republic of China By Liu, Minquan
  19. Protecting Workers against Unemployment in Uruguay By Veronica Amarante; Rodrigo Arim; Andres Dean
  20. Does Contracting-Out Primary Care Services Work? The Case of Rural Guatemala By Julian Cristia; William Evans; Beomsoo Kim
  21. Low-Income Housing Finance in Colombia By Maria Angelica Arbelaez; Carolina Camacho; Deisy Johanna Fajardo
  22. Early Nutrition and Cognition in Peru By Ingo Outes-Leon; Catherine Porter; Alan Sanchez
  23. Corruption, Globalization, and Economic Growth: Theory and Evidence By Kunieda, Takuma; Okada, Keisuke; Shibata, Akihisa

  1. By: Jean-Marie Baland (Center for Research in the Economics of Development, University of Namur); Rohini Somanathan; Lore Vandewalle (Center for Research in the Economics of Development, University of Namur)
    Abstract: In this paper we provide an empirical analysis of the performance of microfinance groups, known as Self-Help groups, based on an original census we carried out in a poor area of Northern India. We examine whether traditionally disadvantaged villagers, such as members of lower castes or landless farmers, are less likely to have access to groups. We also analyze their performance in terms of access to bank loans, which is an important benefit of the groups. We nd evidence of the attrition process being selective against lower castes: they have a lower probability of becoming a permanent member of a group. The net effects in terms of their expected access to a bank loan remain however relatively limited. By contrast, even though landless farmers are more likely to fail or leave the groups, they tend to benet disproportionately. In expected terms, they receive more than two times the amounts of bank loans given to farmers owning more than one acre. Overall, the program therefore has positive and important distributional implications.
    Date: 2011–12
  2. By: Paolo Casini (LICOS, K.U.Leuven); Lore Vandewalle (Center for Research in the Economics of Development, University of Namur)
    Abstract: Self-Help Groups (SHGs) are the most common form of microfinance in India. We study the impact of collective actions undertaken by these groups, composed of women only, on the variety of public goods the elected local authorities deal with. We provide a simple model that suggests two hypotheses that we test and confirm using first hand data. The rst hypothesis states that local authorities provide a larger variety of public goods when SHGs undertake collective actions, compared to a situation with exclusive provision by the local authority. The second hypothesis states that local authorities begin or increase the provision of public goods preferred by SHGs and that these might include goods that exert a negative externality on other villagers. We provide evidence of an important non-financial benefit of microfinance: it provides a platform that allows socially disadvantaged women to meet regularly and discuss problems. When they undertake collective actions to solve those problems, these are recognized by the local authorities. Problems that are closer to the needs of women seem to find their way into the political agenda.
    Date: 2011–12
  3. By: David Cuberes; Kevin Tsui (Department of Economics, The University of Sheffield; The John E. Walker Department of Economics, Clemson University)
    Abstract: This paper examines the effects of foreign aid on fertility rates in recipient countries using Rajan and Subramanian’s (2008) cross-sectional and panel methods. Our cross-section results suggest that foreign aid has a positive effect on fertility. Interestingly, social sector aid (but not economic aid) is responsible for this demographic effect. The panel evidence confirms the positive effect of foreign aid on total fertility rates, and that social aid is more relevant than economic aid. Given that the literature has found no robust relationship between foreign aid and economic growth, our findings raise the possibility of an aid-induced population poverty trap.
    Keywords: foreign aid, population growth, Malthusian traps
    JEL: F35 I31 J11
    Date: 2011–12
  4. By: Antje Kröger; Kristina Meier
    Abstract: The financial crisis in 2008/2009 substantially influenced the everyday social and economic life of many Tajik people, including their behavior in the labor market. However, not much is known about the dynamics of the labor markets of the transition economies, especially in the context of the current financial crisis. Arguably, this is mainly due to paucity of panel data. In this paper, we aim to study the impact of the economic crisis on individual labor market outcomes in Tajikistan. This is the first study investigating the possible impact of the financial crisis in a transition country and uses a unique panel data set from Tajikistan. Although an impact evaluation in the true sense is impossible, due to the lack of a control group, comparing before and after-crisis outcomes can give insights as to how the crisis might have affected labor market outcomes. We do this by calculating transition probabilities between employment categories between 2007 and 2009, using a simple count method as well as predicted probabilities from multinomial probit regressions. Our results suggest an increased probability of moving into unemployment, inactivity or unpaid work during the crisis, with the self-employed being at more risk than the wage employed. This effect is more pronounced for females, as well as for very young and very old individuals. We also find that labor migration (predominantly to Russia) could be a mitigation strategy during the crisis.
    Keywords: Financial crisis, wage employment, migration, Tajikistan
    JEL: J24 J16 O10
    Date: 2011
  5. By: Yamauchi, Futoshi; Liu, Yanyan
    Abstract: This paper examines the impact of a large supply-side education intervention in the Philippines, the Third Elementary Education Project, on students' national achievement test scores. We find that the program significantly increased student test scores at grades 4 to 6. The estimate indicates that the six-year exposure to the program increases test scores by about 15 score points. Interestingly, the mathematics score is more responsive to this education reform than other subjects. We also find that textbooks, instructional training of teachers, and new classroom constructions particularly contributed to these outcomes. The empirical results also imply that early-stage investments improve student performance at later stages in the elementary school cycle, which suggests that social returns to such an investment are greater than what the current study demonstrates.
    Keywords: School quality, policy intervention, elementary schools, human capital formation,
    Date: 2011
  6. By: Maystadt, Jean-Francois
    Abstract: The role of migration in reducing poverty in developing countries has been investigated mainly from the perspective of migrants and their relatives. This paper exploits the time and spatial variations in the way households in the region of Kagera (Tanzania) traced between 1991 and 2004 have been affected by massive refugee inflows to assess how migration may affect poverty in the hosting communities. Large population inflows from Burundi and Rwanda have improved the welfare of the hosting population, particularly for the poor. Despite the process of structural transformation observed in the refugee-hosting economy, such pro-poor development is mainly explained by improved agricultural labor productivity and income diversification among the poor.
    Keywords: Migration, Poverty, Refugees, Structural transformation,
    Date: 2011
  7. By: Francesconi, Gian Nicola; Wouterse, Fleur
    Abstract: This study presents a stylized but insightful diagnostic of the problems limiting collective action in Ghanaian farmer-based organizations (FBOs). In our analysis, we use a structure-conduct-performance framework, econometrics, and new primary data for 500 FBOs collected through surveys and games. We find that most Ghanaian FBOs are inactive, failing to mobilize their members into any sort of collective action. To understand why this is so, we postulate that in rural Ghana, four typologies can be used to classify FBOs and to distinguish them on the basis of their membership structure and rules of conduct. We then show that FBOs fail to mobilize collective action whenever their structure and conduct are not aligned. In particular, misalignment leads mainly to problems of access to external credit and to a lesser extent to problems of internal cohesion. To maximize collective action, this study recommends the diversification of policy through recognizing the four different types of FBOs, each facing particular and to some extent opposing problems.
    Keywords: Collective action, Cooperatives, econometrics, games,
    Date: 2011
  8. By: Charness, Gary; Viceisza, Angelino
    Abstract: In the past decade, it has become increasingly common to use simple laboratory games and decision tasks as a device for measuring both the preferences and understanding of rural populations in the developing world. This is vitally important for policy implementation in a variety of areas. In this paper, we report the results observed using three distinct risk elicitation mechanisms, using samples drawn from the rural population in Senegal, West Africa. Whatever the intellectual merits of a particular elicitation strategy, there is little value in performing such tests if the respondents do not understand the questions involved. We test the understanding of and the level of meaningful responses to the typical Holt-Laury task, to a simple binary mechanism pioneered by Gneezy and Potters in 1997 and adapted by Charness and Gneezy in 2010, and to a nonincentivized willingness-to-risk scale à la Dohmen et al. We find a disturbingly low level of understanding with the Holt-Laury task and an unlikely-to-be-accurate pattern with the willingness-to-risk question. On the other hand, the simple binary mechanism produces results that closely match the patterns found in previous work, although the levels of risk-taking are lower than in previous studies. Our study is a cautionary note against utilizing either sophisticated risk-elicitation mechanisms at the possible cost of seriously diminished levels of comprehension or nonincentivized questions in the rural developing world.
    Keywords: comprehension, risk elicitation, laboratory experiments in the field, rural,
    Date: 2011
  9. By: Takeshima, Hiroyuki; Salau, Sheu
    Abstract: Mechanization is a key to agricultural productivity growth in developing countries. Farm implements, ranging from hand tools to draft animals to milling machines to power tillers and tractors, often play complementary roles with each other, and supporting adoption of certain farm implements may also speed up adoption of others. In the absence of credit, insurance, or information, however, such complementarity may be reduced. This study analyzes how the ownership of particular farm implements by Nigerian farmers affected their investment in other farm implements under a project that provided matching grants for the acquisition of various types of farm implements. We found that ownership of certain farm implements increased farmers' investment in the same implements but reduced their investment in other, potentially complementary, implements. We argue that these effects may be partly explained by high operating and maintenance costs associated with the use of farm equipment in these countries. Ownership of farm equipment may provide a good indicator of farmers' potential willingness to invest in the same of different farm equipment. At the same time, a public project supporting farmers' investment in farm equipment should provide financial support not only for the acquisition of farm implements but also for their operation and maintenance.
    Keywords: agricultural mechanization, average treatment effect, complementarity, liquidity constraint, operating cost,
    Date: 2011
  10. By: Bomuhangi, Allan; Doss, Cheryl; Meinzen-Dick, Ruth
    Abstract: Rapid growth of demand for agricultural land is putting pressure on property rights systems, particularly in Sub-Saharan Africa, where customary tenure systems have provided secure land access. Patterns of gradual, endogenous change toward formalization are being challenged by rapid and large-scale demands from outsiders. Little attention has focused on the gender dimensions of this transformation. Based on a study of land tenure in Uganda, this paper analyzes how different ways of defining landownership—based on household reports, existence of ownership documents, and rights over the land—provide very different indications of the gendered patterns of landownership and rights. Although many households report that husbands and wives jointly own the land, women are less likely to be listed on ownership documents, especially titles, and women have fewer land rights. A simplistic focus on title to land misses much of the reality regarding land tenure and could especially have an adverse impact on women's land rights.
    Keywords: Gender, land acquisitions, Land tenure, landownership, Property rights,
    Date: 2011
  11. By: Jin, Ling; Chen, Kevin Z.; Yu, Bingxin; Huang, Zuhui
    Abstract: Rural households in developing economies frequently use precautionary saving to cope with income risk. Such prudent behavior can be strengthened in transition economies where more risks are typically faced by households during and after reforms. This paper uses a rich panel of rural households in Zhejiang, China, to examine the correlation between income uncertainty and the target ratio of wealth to permanent income as suggested by the buffer-stock model. The empirical results suggest that Chinese rural households hold a significant level of wealth to mitigate the adverse impacts of income risk. Simulation results show that an increase in income risk leads to a sharp increase in household wealth and precautionary saving could drop substantially if income risk is eliminated. The high level of prudence of rural households under economic transition can help us better understand the developments in China, which will have policy implications for both developing and transition countries.
    Keywords: buffer-stock model, Income risk, precautionary saving,
    Date: 2011
  12. By: de Brauw, Alan; Gilligan, Daniel
    Abstract: Regression discontinuity design (RDD) is a useful tool for evaluating programs when a single variable is used to determine program eligibility. RDD has also been used to evaluate programs when eligibility is based on multiple variables that have been aggregated into a single index using explicit, often arbitrary, weights. In this paper, we show that under specific conditions, regression discontinuity can be used in instances when more than one variable is used to determine eligibility, without assigning explicit weights to map those variables into a single measure.
    Keywords: Regression discontinuity design, partitioned cluster analysis, Schooling, Impact evaluation,
    Date: 2011
  13. By: Morley, Samuel; Piñeiro, Valeria; Robinson, Sherman
    Abstract: In this paper we used a dynamic, regionalized computable general equilibrium (CGE) model to analyze the effect of various negative balance of payments shocks on output and employment and the effect of different alternative investment strategies on growth. The model shows clearly how sensitive El Salvador is to remittance or terms of trade shocks. Each 10 percent reduction in remittances lowers gross domestic product (GDP) by 0.2 percent and household consumption by 1.4 percent, with the cost rising as the shock intensifies. Any negative balance of payments shock forces a reduction in absorption, production, and employment and a real devaluation. Because El Salvador's economy is dollarized, that real devaluation can only come about through a fall in domestic prices brought about by recession. We show that the impact of the shock on output depends on how flexible wages are—the impact is smaller when real wages are flexible and greatest when they are fixed in dollars. We used the CGE model to analyze alternative investment strategies for increasing the growth rate. The investment share of GDP is low, and the model makes it clear that without some strategy for increasing investment, the economy's overall growth rate is likely to remain low. We hypothesized two alternative growth rates for investment, both associated with an increase in exogenous technical change. Both strategies require a marginal increase in the share of output devoted to investment. We also showed that if El Salvador can increase the investment share from 15.5 percent to just 16 percent over five years by producing a growth rate in investment of 8 percent per year, and if that increase produces a 1 percent increase in the rate of technical change in all sectors, then the growth rate of the economy will practically double, rising from 2.85 percent to 4.95 percent per year. There are equally favorable effects on employment for unskilled labor and on wages for skilled labor.
    Keywords: Development strategies, general equilibrium models, Regional development, Computable general equilibrium (CGE) modeling,
    Date: 2011
  14. By: Xing, Chunbing (Beijing Normal University)
    Abstract: We use household surveys from 1995, 2002, and 2007 to examine how changes in job structure contributed to China's rising urban wage inequality, considering three job characteristics: occupation, industry, and firm ownership. The explanatory power of job structure for wage inequality increased between 1995 and 2007. Both the change in relative number of jobs (composition effect) and the change in between-job and within-job wage gaps (price effect) contributed to rising wage inequality. Price effect was the major contributor, whereas composition effect played a larger role in the 1995-2002 period than in the 2002-2007 period, and at the lower-half distribution. Between-job inequality played a major role in the first period, and within-job inequality played a major role in the second period. Our results suggest that both technological change and institutional features influence job structure and wage inequality.
    Keywords: job structure, wage inequality, urban China, decomposition
    JEL: C21 J31 O15
    Date: 2011–12
  15. By: Kathryn Anderson; Antje Kroeger
    Abstract: The Kyrgyz Republic is one of the largest recipients of international remittances in the world; from a Balance of Payments measure of remittances, it ranked tenth in the world in 2008 in the ratio of remittances to GDP, a rapid increase from 30th place in 2004.Remittances can be used to maintain the household's standard of living by providing income to families with unemployed and underemployed adult members. Remittances can also be used to promote investment not only in businesses and communities but also in people. In this paper, we examine the role that remittances have played in the Kyrgyz Republic in promoting investments in children. Based on the capabilities approach to well-being initiated by Sen (2010), we look at the impact of remittances and domestic transfer payments primarily from internal migration on children's education and health. Our outcomes include enrollment in school and preschool, expenditures, stunting and wasting of preschool children, and health habits of older children. We use unique panel data from the Kyrgyz Republic for 2005-2008 and thus control for some of the biases inherent in cross-sectional studies of remittances and family outcomes. We find that overall remittances and domestic transfers have not promoted investments in the human capital of children. Specifically, preschool enrollments were higher in the urban north but secondary school enrollments were lower in other regions in remittance receiving households; expenditures were also negatively affected in the south and the mountain areas. These negative enrollment results were larger for girls than for boys. We also found evidence of stunting and wasting among young children and worse health habits among boys in remittance or transfer receiving households. In the long run, Kyrgyzstan needs human capital development for growth; our results suggest that remittances are not providing the boost needed in human capital to promote development in the future.
    Keywords: Children’s education and health, Remittances, Kyrgyzstan, Central Asia
    JEL: C23 F22 I21 O53 R23
    Date: 2011
  16. By: Roger Sandilands (Department of Economics, The University of Strathclyde)
    Abstract: This paper addresses the challenges facing China in accelerating the pace of rural-urban migration as part of its on-going economic development programme. It explains the push and pull influences on migration and in particular explains why a continuing focus on urbanisation is justified by the very large gap between rural and urban incomes and the relatively higher income elasticity of demand for urban-based goods and services. The provision of affordable housing is an integral part of this structural shift programme. The paper thus considers the most appropriate ways in which housing finance can be mobilised, and thence how both the quality and the affordability of the housing stock can be increased. Positive and negative lessons for China are offered from the different urbanisation experiences of Latin America (especially Colombia) and Singapore.
    Keywords: China, Colombia, Singapore, rural-urban migration, housing finance
    JEL: O16 O18 O57 R31 R52
    Date: 2011–11
  17. By: Abbas, Faisal; Hiemenz, Ulrich
    Abstract: This study describes the macroeconomic determinants of health care spending in a broad context using time series data from Pakistan on economic, demographic, social, and political variables. The data spans a period from 1972- 2006 and was analyzed using cointegration and error correction approaches. All variables were found to be first difference stationary and the results confirm the presence of one cointegrating vector. This proves the existence of a long-run relationship between public health care expenditures and the other variables used in the model. The income elasticity of public health care expenditures is estimated at 0.23. As this value is less than unity it suggests that, contrary to most of the Organization for Economic Co-operation and Development (OECD) countries health care qualifies as a necessity in Pakistan. Urbanization and unemployment are variables that have a negative effect on health care expenditures, with elasticity values of -1.29 and â0.32 respectively, implying that it is costly to provide health care to residents of remote rural areas of Pakistan.
    Keywords: Public Health Expenditures, Unemployment, Urbanization, Cointegration, time series, Pakistan, Health Economics and Policy,
    Date: 2011–11
  18. By: Liu, Minquan (Asian Development Bank Institute)
    Abstract: There are likely to be many factors which have together shaped the current pattern of growth and equity in the People’s Republic of China (PRC). Among them are the foundations laid in the pre-1978 era, especially in respect of land-related institutional reforms and social sector investments. These factors successfully complemented the subsequent export and foreign direct investment FDI promotion strategies the PRC followed in the post-1978 years. However, given the large size of the PRC, while these strategies have helped to kick-start its economic take-off, the long-run growth of the country cannot depend on it.
    Keywords: prc; income distribution; prc growth patterns; foreign direct investment; human capital
    JEL: F14 N35 O15 O53
    Date: 2011–12–08
  19. By: Veronica Amarante; Rodrigo Arim; Andres Dean
    Abstract: This paper considers the main institutional features of the Uruguayan labor market and its recent evolution, with a focus on unemployment. The main policies aimed at protecting workers against unemployment are analyzed. Using administrative data from social security records, the paper studies the dynamics of the labor market. Particularly examined are inflows and outflows from the formal labor market, as well as the effect, in terms of earnings loss, of episodes out of the formal labor market. Finally, an impact evaluation of recent changes in the unemployment insurance program is presented.
    JEL: J01 J08
    Date: 2011–10
  20. By: Julian Cristia; William Evans; Beomsoo Kim
    Abstract: This paper estimates the impact of a large-scale contracting-out program in Guatemala, using two waves of living standard measurement surveys which collected data before and after the expansion of the program and exploiting variation in the timing of the program to estimate treatment effects. Results indicate large program impacts on immunization rates for children and prenatal care provider choices. The program increases substantially the role of physician and nurses as prenatal care providers at the expense of traditional midwives. There is no evidence of effects in family planning outcomes. Taken together these results suggest a potential effective role of contracting-out in the provision of health care.
    JEL: I12 I18
    Date: 2011–11
  21. By: Maria Angelica Arbelaez; Carolina Camacho; Deisy Johanna Fajardo
    Abstract: This paper explores the role played by policy instruments in access to housing finance by low-income households. It also analyzes the impact of housing credit and subsidies on both the quality of life and the quality of dwelling of the beneficiaries. Using the Quality of Life Surveys conducted in Colombia in 2003 and 2008, the study finds that policy instruments aimed at easing access of low-income households to affordable housing such as subsidies and loan guarantees have played a modest role in increasing the use of mortgages as a source of funding. Despite this, subsidies were found to have had a significant impact on both the quality of dwelling and the quality of life. Therefore, this paper suggests promoting the use of both instruments by improving their design and targeting.
    JEL: D61 H81 I30 I31 I32 I38 O17 R20 R28 R31 R38
    Date: 2011–08
  22. By: Ingo Outes-Leon; Catherine Porter; Alan Sanchez
    Abstract: This paper examines the causal link between early childhood nutrition and cognition, applying instrumental variables to sibling-differences for a sample of pre-school aged Peruvian children. Child-specific shocks in the form of food price changes and household shocks during the critical developmental period of a child are used as instruments. The analysis shows significant and positive returns to early childhood nutritional investments. An increase in the Height-for-Age z-score of one standard deviation—keeping other factors constant—translates into increases in the Peabody Picture Vocabulary Test (PPVT) score of 17-21 percent of a standard deviation. The period of analysis includes the recent global food price crisis that also affected Peru between 2006 and 2008. This therefore is also a quantification of the nutritional and subsequent cognitive costs of food prices on the sample, which could be magnified in later years.
    JEL: I12 I20 J13
    Date: 2011–08
  23. By: Kunieda, Takuma; Okada, Keisuke; Shibata, Akihisa
    Abstract: We investigate, both theoretically and empirically, how the negative effects of government corruption on economic growth are magnified or reduced by capital account liberalization. Our model shows that highly corrupt countries impose higher tax rates than do less corrupt countries, thereby, magnifying the negative impacts of government corruption on economic growth in the highly corrupt countries and reducing the impacts in the less corrupt countries if capital account liberalization is enacted. Empirical evidence obtained from an analysis of the panel data collected from 111 countries supports our theoretical predictions. Our theoretical and empirical results contribute to the recent policy debates on the merits or demerits of capital account liberalization.
    Keywords: Economic growth; Government Corruption; Capital account liberalization; Two-country model
    JEL: O42 E62 F43 O40
    Date: 2011–11–24

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