nep-dev New Economics Papers
on Development
Issue of 2012‒01‒18
seventeen papers chosen by
Mark Lee
Towson University

  1. Spatial inequality and household poverty in Ghana By S. Annim; S. Mariwah; J. Sebu
  2. The false promise of Aid for Trade By Mark Langan; James Scott
  3. Growth and Election Outcomes in a Developing Country. By Gupta, Poonam; Panagariya, Arvind
  4. Adjusting the Labor Supply to Mitigate Violent Shocks: Evidence from Rural Colombia By Ana María Ibáñez L.; Manuel Fernández; Ximena Peña
  5. Aid tying and donor fragmentation By Knack, Stephen; Smets, Lodewijk
  6. Mozambique Cashew reforms revisited By Aksoy, M. Ataman; Yagci, Fahrettin
  7. Analysis of Export and Import Processes of Seclected Products in Thailand By Somnuk Keretho; Saisamorn Naklada
  8. The rich keep getting richer in India! Says who? By Nilanjan Banik; Anurag Banerjee
  9. Impacts of the global economic crisis on foreign trade in lower-income economies in the Greater Mekong Sub-region and policy responses: the case of Vietnam and its implications for Lao PDR and Cambodia By Nguyen Manh Hung; Pham Sy An
  10. Working-Age Adult Mortality, Orphan Status, and Child Schooling in Rural Mozambique By Mather, David
  11. Poverty, AIDS, Orphanhood, Gender, and Child Schooling in Sub-Saharan Africa: A Review of the Evidence By Mather, David
  12. Perception of HIV risk and the quantity and quality of children: The case of rural Malawi By Rubén Castro; Jere Behrman; Hans-Peter Kohler
  13. Bringing It All Back Home Return migration and fertility choices By Francesca MARCHETTA; Simone BERTOLI
  14. Informal-formal Linkages and Informal Enterprise Performance in Urban West Africa By Marcus Böhme, Rainer Thiele
  15. Contractual Versus Non-Contractual Trade: The Role of Institutions in China By Robert C. Feenstra; Chang Hong; Hong Ma; Barbara J. Spencer
  16. Who Shrunk China? Puzzles in the Measurement of Real GDP By Robert C. Feenstra; Hong Ma; J. Peter Neary; D.S. Prasada Rao
  17. Adjusting to Really Big Changes: The Labor Market in China, 1989-2009 By Wei Chi; Richard B. Freeman; Hongbin Li

  1. By: S. Annim; S. Mariwah; J. Sebu
    Abstract: Abstract Over time, while some countries have experienced trends of poverty and inequality moving in the same direction, others have witnessed the two developmental issues panning out in opposite directions. The latter is observed in Ghana, where in the last two decades poverty has been reducing and consumption inequality is on the ascendency. Motivated by this observation, we address three objectives in this paper. First, we decompose inequality using administrative districts as the unit of analysis to examine within and between contributions to national inequality. Second, we examine trends of inequality in the only region (Eastern) of Ghana that experienced a reduction in inequality over the period 1991-2006; and, finally, we investigate the relationship between district-level inequality and household poverty. The last three rounds of the Ghana Living Standard Survey are used for our analysis. We observe that the contribution of within district inequality is higher than inequality between districts. This pattern is observed for other geographical classifications, such as rural-urban, ecological zone and regions. In the Eastern region of Ghana, where overall inequality reduced over the period 1998 to 2005, this was not the case for about 50 percent of the districts in the region. Finally, district-level inequality shows a significant effect on household poverty, but with varying signs, depending on the state of economic activity of the unit of analysis (district) and factors that affect both poverty and inequality. We recommend that districtlevel policy implementers should be tasked with the responsibility of minimising inequality within their district and therefore overall inequality in Ghana. Also, poverty reduction strategies should take into consideration district-level poverty and other factors, such as land size distribution, that jointly affect poverty and inequality.
    Date: 2012
  2. By: Mark Langan; James Scott
    Abstract: Abstract Aid for Trade (AfT) has gained prominence as an innovative form of donor support in the era of the ‘post’-Washington Consensus. Institutions such as the World Trade Organization (WTO), the US Agency for International Development (USAID), the European Commission, and the UK Department for International Development (DfID) have heralded AfT concessions as a means of creating a level economic playing field between industrialised nations and countries in the global South. Specifically, AfT mechanisms have been praised as a means of aligning trade liberalisation deals (whether in the Doha Round or within bilaterals) to poverty reduction objectives. Donor AfT assistance to low-income states’ trade capacity – including support to government ministries, private sector development, and local infrastructure – are understood to construct a more balanced global trade system conducive to the needs of ‘the poor’. This article, however, through critical analysis of AfT discourse within the ‘moral economies’ of multilateral WTO and bilateral EU-ACP (African, Caribbean and Pacific) negotiations, points to the strategic purposes of donor language in rationalising asymmetric North- South trade systems. Moreover, it questions the ‘development’ credentials of AfT assistance, given its disbursement to strategically significant middle-income states in relation to Western overseas interventions, private sector activities that have dubious consequences for supposed beneficiaries, and the tying of AfT disbursements to the implementation of inappropriate policies.
    Date: 2011
  3. By: Gupta, Poonam (National Institute of Public Finance and Policy); Panagariya, Arvind (Columbia University)
    Abstract: With the exception Brander and Drazen (2008), who use a comprehensive cross-country database consisting of both developed and developing countries, the hypothesis that rapid growth helps incumbents win elections has been tested exclusively for the developed countries (e.g., Ray Fair 1978). But since sustained rapid growth offers the prospect of pulling vast numbers of the voters out of poverty within a generation, such an effect is far more likely to be present in the developing rather than developed countries. In this paper, we offer the first test of the hypothesis on a large developing and poor country, India, which has seen its economy grow 8 to 9 percent recently. We first generalize the Fair model to allow for multiple candidates instead for just two and then test it using crossstate data. We find quantitatively large and statistically robust effect of growth on the prospects of the candidates of the state incumbent parties to win elections. Specifically, we use the data on 422 candidates in the 2009 parliamentary elections and show that the candidates of incumbent parties in high-growth states have much better prospects of victory than those in low-growth states.
    Date: 2011–10
  4. By: Ana María Ibáñez L.; Manuel Fernández; Ximena Peña
    Abstract: This paper studies the use of labor markets to mitigate the impact of violent shocks on households in rural areas in Colombia. It examines changes in the labor supply from on-farm to off-farm labor as a means of coping with the violent shock and the ensuing redistribution of time within households. It identifies the heterogeneous response by gender. Because the incidence of violent shocks is not exogenous, the analysis uses instrumental variables that capture several dimensions of the cost of exercising terror. As a response to the violent shocks, households decrease the time spent on on-farm work and increase their supply of labor to off-farm activities (non-agricultural ones). Men carry the bulk of the adjustment in the use of time inasmuch as they supply the most hours to off-farm non-agricultural work and formal labor markets. Labor markets do not fully absorb the additional labor supply. Women in particular are unable to find jobs in formal labor markets and men have increased time dedicated to leisure and household chores. Additional off-farm supply does not fully cover the decrease in consumption. The results suggest that in rural Colombia, labor markets are a limited alternative for coping with violent shocks. Thus, policies in conflict-affected countries should go beyond short-term relief and aim at preventing labor markets from collapsing and at supporting the recovery of agricultural production.
    Date: 2011–11–02
  5. By: Knack, Stephen; Smets, Lodewijk
    Abstract: This study tests two opposing hypotheses about the impact of aid fragmentation on the practice of aid tying. In one, when a small number of donors dominate the aid market in a country, they may exploit their monopoly power by tying more aid to purchases from contractors based in their own countries. Alternatively, when donors have a larger share of the aid market, they may have stronger incentives to maximize the development impact of their aid by tying less of it. Empirical tests strongly and consistently support the latter hypothesis. The key finding -- that higher donor aid shares are associated with less aid tying -- is robust to recipient controls, donor fixed effects and instrumental variables estimation. When recipient countries are grouped by their scores on corruption perception indexes, higher shares of aid are significantly related to lower aid tying only in the less-corrupt sub-sample. This finding is consistent with the argument that aid tying can be an efficient response by donors when losses from corruption may rival or exceed losses from tying aid. When aid tying is more costly, as proxied by donor country size and income, it is less prevalent. Aid tying is lower in the Least Developed Countries, consistent with the OECD Development Assistance Committee's recommendation to its members.
    Keywords: Gender and Health,Development Economics&Aid Effectiveness,Disability,School Health,Economic Theory&Research
    Date: 2012–01–01
  6. By: Aksoy, M. Ataman; Yagci, Fahrettin
    Abstract: Cashew policy reforms in Mozambique have been controversial. They are often invoked by critics as an illustration of how agricultural policy reforms supported by international financial institutions may fail to have their intended effects. This paper revisits the reforms and their outcomes almost two decades later. While the reforms resulted in higher producer prices and an increase in output, lack of consensus on the specifics of the reforms and associated non-price support arrangements created a situation in which the sector was not able to withstand international price shocks that ultimately led to a collapse of both the processing industry and cashew production. Non-price support by donors improved the efficiency of the processing industry but this was not complemented by an expansion in cashew nut supply as such support did not extend to smallholder cashew producers. For the reforms to have had their intended results, greater investment in -- and support to -- smallholder production was needed to increase yields and overall output. Such a more comprehensive approach to cashew policy reform would have required a greater focus on achieving consensus on the causes of the cashew sector's problems and agreement by all stakeholders on a common institutional framework for pricing and non-price support.
    Keywords: Markets and Market Access,Emerging Markets,Economic Theory&Research,Access to Markets,E-Business
    Date: 2012–01–01
  7. By: Somnuk Keretho; Saisamorn Naklada (Institute for Information Technology Innovation (INOVA), Kasetsart University.)
    Abstract: Administrative and procedural barriers to import and export processes may unnecessarily impede further participation in international trade. Business Process Analysis (BPA) is a powerful tool which can help to identify these barriers and suggest ways to streamline trade processes. As part of the ARTNeT Regional Study on Improving Regional Trade Procedures and Processes, a BPA was conducted on Thai exports of sugar to Bangladesh and auto-parts to India as well as imports of raw materials used to produce electronic goods.
    Keywords: Business process Analysis, Trade Facilitation, Thailand, single window, paperless, international supply chain
    JEL: F1
    Date: 2011–06
  8. By: Nilanjan Banik; Anurag Banerjee (Institute for Financial Management and Research)
    Abstract: This paper considers the dynamics of income distributional pattern in India. If reforms are pro-rich then would see emergence of twin peaks in the underlying income distribution function in India (i.e.clustering of the rich people, and clustering of the poor people). On the other hand, a uniform growth process at a pan-India level will lead to the disappearance of any such clusters.
    Keywords: Income distribution, India, economic reform, equity
    JEL: F1
    Date: 2011–09
  9. By: Nguyen Manh Hung; Pham Sy An (Institute of World Economics and Politics)
    Abstract: This research seeks to better understand the impacts of the global economic crisis on Vietnam’s foreign trade and policy responses, and from this, draw inferences for Lao PDR and Cambodia.
    Keywords: Global economic crisis, lower-income economices, GMS, CLMV
    JEL: F1
    Date: 2011–05
  10. By: Mather, David
    Abstract: Replaced with revised version January 11, 2012.
    Keywords: AIDS, Mozambique, adult mortality, Child Schooling, Food Security and Poverty,
    Date: 2011–11
  11. By: Mather, David
    Abstract: There is growing concern that the HIV/AIDS epidemic may reduce long-term human capital development through reductions in child schooling in SSA, thus severely limiting the longterm ability of orphans and their extended families to escape poverty. In response, some have called for targeted schooling subsidies for orphans and other children made vulnerable by HIV/AIDS, on the assumption that such children are under-enrolled. This paper provides an overview of the data sources used by existing empirical studies that test for orphan schooling deficits and the methodological challenges that they face. It then reviews the empirical evidence on the effects of orphan status or adult mortality on child schooling, as well as the prevalence of orphans in SSA and their living arrangements.
    Keywords: HIV/AIDS, child schooling, Poverty, Sub-Saharan Africa, Food Security and Poverty,
    Date: 2011–11
  12. By: Rubén Castro (Facultad de Economía y Empresa, Universidad Diego Portales); Jere Behrman (Department of Economics, University of Pennsylvania); Hans-Peter Kohler (Department of Sociology, University of Pennsylvania)
    Date: 2011–05
  13. By: Francesca MARCHETTA; Simone BERTOLI
    Abstract: Return migration exerts wide-ranging influence upon the countries of origin of the migrants. We analyze whether returnees adjust their fertility choices to match the norms which prevail in their previous countries of destinations, using Egyptian household-level data. Egyptians migrate predominantly towards other Arab countries characterized by higher fertility rates. Relying on a two-step instrumental variable approach to control for the endogeneity of the migration decisions, we show that return migration has a significant and positive influence on the total number of children. These results suggest that migration might not be an unmitigated blessing for Egypt, as it has contributed to slow down the process of demographic transition.
    Keywords: temporary migration; fertility; household-level data; North Africa; Egypt
    Date: 2012
  14. By: Marcus Böhme, Rainer Thiele
    Abstract: Employing a unique dataset that covers almost 6000 informal enterprises from six West African urban centers, this paper examines the backward and forward linkages of these enterprises to the formal sector. We first provide a descriptive analysis of the existing formal-informal linkages. It turns out that formal backward linkages are much more prevalent than formal forward linkages, and that linkages vary with the degree of informality, occurring less frequently if firms have no ties to the formal sector at all or low capital stocks. In the second step, we employ a Probit approach to identify major factors associated with the observed backward linkages. The Probit analysis corroborates the importance of the degree of informality for the existence of linkages and shows various enterprise characteristics to be significant determinants as well. Finally, we analyze whether backward linkages matter for enterprise performance using both OLS and IV estimations. We find a positive and robust impact of backward linkages, whereas the degree of informality of the enterprises in our sample seems to affect firm performance only indirectly through their linkages to the formal sector
    Keywords: Informal sector, formal-informal linkages, enterprise performance, West Africa
    JEL: D22 D40 O17
    Date: 2012–01
  15. By: Robert C. Feenstra; Chang Hong; Hong Ma; Barbara J. Spencer
    Abstract: Recent research has demonstrated the importance of institutional quality at the country level for both the volume of trade and the ability to trade in differentiated goods that rely on contract enforcement. This paper takes advantage of cross-provincial variation in institutional quality in China, and export data that distinguishes between foreign and domestic exporters and processing versus ordinary trade, to show that institutional quality is a significant factor in determining Chinese provincial export patterns. Institutions matter more for processing trade, and more for foreign firms, just as we would expect from a greater reliance on contracts in these cases.
    JEL: F13
    Date: 2012–01
  16. By: Robert C. Feenstra; Hong Ma; J. Peter Neary; D.S. Prasada Rao
    Abstract: The latest World Bank estimates of real GDP per capita for China are significantly lower than previous ones. We review possible sources of this puzzle and conclude that it reflects a combination of factors, including substitution bias in consumption, reliance on urban prices which we estimate are higher than rural ones, and the use of an expenditure-weighted rather than an output-weighted measure of GDP. Taking all these together, we estimate that real per-capita GDP in China was 50% higher relative to the U.S. in 2005 than the World Bank estimates.
    JEL: E01
    Date: 2012–01
  17. By: Wei Chi; Richard B. Freeman; Hongbin Li
    Abstract: China’s emerging labor market was buffeted by changes in demand and supply and institutional changes in the last two decades. Using the Chinese Urban Household Survey data from 1989 to 2009, our study shows that the market responded with substantial changes in the structure of wages and in employment and types of jobs that workers obtained that mirrors the adjustments found in labor markets in advanced economies. However, the one place where the Chinese labor market appears to diverge from the labor markets in advanced countries is the rapid convergence in earnings and occupational positions of cohorts who entered the job market under more or less favorable conditions. On this dimension, China’s labor market seems more flexible than those in other countries. Three related factors may explain this pattern: (1) the rapid growth of China’s economy; (2) the high rate of employee turnover; (3) the relative weakness of internal labor markets in China. Bottom line, the Chinese labor market has responded about as well as one could expect to the changes in the demand and supply factors and institutional shocks in this critical period in Chinese economic history.
    JEL: J3
    Date: 2012–01

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