nep-dev New Economics Papers
on Development
Issue of 2012‒01‒25
forty-six papers chosen by
Mark Lee
Towson University

  1. Contribution of Services Sector in the Economy of Pakistan By Ayaz Ahmed; Henna Ahsan
  2. Remittances and Poverty Linkages in Pakistan: Evidence and Some Suggestions for Further Analysis By Mohammad Irfan
  3. Estimating the Middle Class in Pakistan By Durr-e-Nayab
  4. Poverty Dynamics of Female-headed Households in Pakistan: Evidence from PIHS 2000-01 and PSLM 2004-05 By Umer Khalid; Sajjad Akhtar
  5. Is caste destiny? Occupational diversification among Dalits in rural India By Ira Gang; Kunal Sen; Myeong-Su Yun
  6. The impact of high and volatile commodity prices on public finances: Evidence from developing countries By Hélène Ehrhart; Samuel Guerineau
  7. Bringing It All Back Home Return migration and fertility choices By Simone BERTOLI; Francesca Marchetta
  8. Causal links between trade, foreign direct investment and economic growth for Bangladesh By Syed Imran Ali Meerza
  9. Common-pool resources, livelihoods, and resilience: Critical challenges for governance in Cambodia By Ratner, Blake D.
  10. Income shocks and HIV in Sub-Saharan Africa: By Burke, Marshall; Gong, Erick; Jones, Kelly
  11. Responding to land degradation in the highlands of Tigray, Northern Ethiopia: By Kumasi, Tyhra Carolyn; Asenso-Okyere, Kwadwo
  12. Girls take over: Long-term impacts of an early stage education intervention in the Philippines By Yamauchi, Futoshi; Liu, Yanyan
  13. Resource-rich yet malnourished: Analysis of the demand for food nutrients in the Democratic Republic of Congo By Ulimwengu, John; Roberts, Cleo; Randriamamonjy, Josee
  14. Evaluating the Mexico city policy: How US foreign policy affects fertility outcomes and child health in Ghana By Jones, Kelly M.
  15. Household preferences and governance of water services: A hedonic analysis from rural Guatemala By Vásquez, William F.
  16. Peer effects, risk pooling, and status seeking: What explains gift spending escalation in rural China? By Chen, Xi; Kanbur, Ravi; Zhang, Xiaobo
  17. Putting gender on the map: Methods for mapping gendered farm management systems in Sub-Saharan Africa By Meinzen-Dick, Ruth; van Koppen, Barbara; Behrman, Julia; Karelina, Zhenya; Akamandisa, Vincent; Hope, Lesley; Wielgosz, Ben
  18. Legalizing Bribes By Martin Dufwenberg; Giancarlo Spagnolo
  19. How Large Is the Private Sector in Africa? Evidence from National Accounts and Labor Markets By Stampini, Marco; Leung, Ron; Diarra, Setou M.; Pla, Lauréline
  20. Altruism, Cooperation, and Efficiency: Agricultural Production in Polygynous Households By Akresh, Richard; Chen, Joyce J.; Moore, Charity
  21. Analysis of Gender Wage Differential in China's Urban Labor Market By Su, Biwei; Heshmati, Almas
  22. Development and Sources of Labor Productivity in Chinese Provinces By Su, Biwei; Heshmati, Almas
  23. Are All Migrants Really Worse Off in Urban Labour Markets? New Empirical Evidence from China By Gagnon, Jason; Xenogiani, Theodora; Xing, Chunbing
  24. Living Arrangements of the Elderly in China: Evidence from CHARLS By Lei, Xiaoyan; Strauss, John; Tian, Meng; Zhao, Yaohui
  25. Labour Market Changes, Labour Disputes and Social Cohesion in China By Fang Cai; Meiyan Wang
  26. Mobile Banking: The Impact of M-Pesa in Kenya By Isaac Mbiti; David N. Weil
  27. The Effect of Interventions to Reduce Fertility on Economic Growth By Quamrul H. Ashraf; David N. Weil; Joshua Wilde
  28. Optimal food price stabilization in a small open developing country By Gouel, Christophe; Jean, Sebastien
  29. Moving off the farm: Land institutions to facilitate structural transformation and agricultural productivity growth in China By Deininger, Klaus; Jin, Songqing; Xia, Fang
  30. Services reform and manufacturing performance : evidence from India By Arnold, Jens Matthias; Javorcik, Beata; Lipscomb, Molly; Mattoo, Aaditya
  31. The Effect of Childhood Measles Vaccination on School Enrollment in Matlab, Bangladesh By Julia Driessen; Abdur Razzaque; Damian Walker; David Canning
  32. EDUCATION AND LABOUR MARKET OUTCOMES: EVIDENCE FROM INDIA By Geraint Johnes; A Aggarwal; R Freguglia; G Spricigo
  33. The development of inequality and poverty in Indonesia, 1932-1999 By Bas van Leeuwen
  34. Demasking the impact of microfinance By Helke Waelde
  35. Estimating the Incidences of the Recent Pension Reform in China.Evidence from 100,000 Manufacturers By Zhigang Li; Minqin Wu
  36. The Global Financial Crisis and its Impact on India’s External Sector By SREENILAYAM, DR JOMON MATHEW
  37. Towards effective emerging infectious disease surveillance: Cambodia, Indonesia, and NAMRU-2 By Ear, Sophal
  38. The Diffusion of Microfinance By Abhijit Banerjee; Arun G. Chandrasekhar; Esther Duflo; Matthew O. Jackson
  39. Demand and Reimbursement Effects of Healthcare Reform: Health Care Utilization and Infant Mortality in Thailand By Jonathan Gruber; Nathaniel Hendren; Robert Townsend
  40. How Will Energy Demand Develop in the Developing World? By Catherine Wolfram; Orie Shelef; Paul J. Gertler
  41. Shanghai’s Trade, China’s Growth: Continuity, Recovery, and Change since the Opium War By Wolfgang Keller; Ben Li; Carol H. Shiue
  43. Foreign Aid for Innovation: The Missing Ingredient in Private Sector Development? By Wim Naudé
  44. Barriers to Internationalisation: Firm-Level Evidence from South Africa By Marianne Matthee; Waldo Krugell
  45. Economic Development in Sub-Saharan Africa: The Case of the Big Four By Wim Naudé
  46. Health Impacts of Power-Exporting Plants in Northern Mexico By Blackman, Allen; Chandru, Santosh; Mendoza-Domínguez, Alberto; Russell, A.G.

  1. By: Ayaz Ahmed (Pakistan Institute of Development Economics, Islamabad.); Henna Ahsan (Pakistan Institute of Development Economics, Islamabad.)
    Abstract: The services sector has provided steady support to Pakistan’s economic growth. It share in GDP now stands a more than 50 percent. The paper analyses its continuation in the growth of the economy in general and the development of trade and genera tion of employment in particular. The study identifies the bottlenecks in its growth and suggest measures to remove them. A set of policy reforms has been suggested to make the sector more effective in the growth of the national economy.
    Keywords: Services Sector, Industry, Employment, Financial Institutions and Pakistan’s Economy
    Date: 2011
  2. By: Mohammad Irfan (Pakistan Institute of Development Economics, Islamabad.)
    Abstract: Global remittances experienced a dramatic increase over the years, particularly since 1990 wherein the developing world emerged to be the major beneficiary accounting for 60 percent of the total amount. Because of the sheer volume, and magnitude of the remittances, and pre-eminence of these flows compared to the FDIs, development assistance and in some cases the trade related transactions, the development practitioners tended to focus and investigate the importance of remittances which are generally regarded as a dependable source for growth, improved welfare and poverty alleviation in the developing world. Given the fact that remittances flows entail wide ranging ramifications both for sending as well as receiving countries, difficult to be generalised, hence empirical evidence has been mounted though lack of consensus is visible.
    Date: 2011
  3. By: Durr-e-Nayab (Pakistan Institute of Development Economics, Islamabad.)
    Abstract: The concept ‘middle class’ is one of the most commonly used terms in the social sciences, including economics, sociology and political science. Despite its frequent use there is, however, no consensus on what the term exactly implies and its meaning remains ambiguous depending primarily on the context in which it is used. It is viewed as the class that is between, and separates, the lower and the upper classes, that is the rich and the poor, but there is no agreement on the exact boundaries that separates them. Most of the definitions and measurements of the middle class continue to be somewhat arbitrary and vague.
    Date: 2011
  4. By: Umer Khalid (Pakistan Microfinance Network, Islamabad); Sajjad Akhtar (Centre for Research on Poverty Reduction and Income Distribution, Islamabad)
    Abstract: The paper attempts to empirically test a naïve version of what is rather stylistically termed as “feminisation of poverty”, using the sub-sample of female -headed households (FHHs) from two household surveys in Pakistan. Although, the database is constrained by quality factors and small sample size, the following findings add to the richness of current research in this area: (a) The numerical incidence of poverty among households headed by females is less than that for all households in the country, at the national, urban and rural level for both the years. This can be traced to the finding that more than 70 percent of households headed by females receive remittances, (b) The incidence of poverty among FHHs during the period 2000-01 to 2004-05 did not decline as fast as it did for mixed households, nationwide. In urban areas, it did not decline at all, (c) Among the determinants of poverty of FHHs, illiteracy, dependency and rural residence exacerbate poverty, while remittances domestic and/ or foreign reduce poverty, (d) The dynamics of incidence of poverty among FHHs during the period indicated that Illiteracy as the factor exacerbating poverty became less important in 2004-05. Moreover, residence in rural areas was also a weaker factor in determining the incidence of poverty. By far the most notable contribution in reducing the incidence of poverty was self-employment in agriculture in 2004-05.
    Date: 2011
  5. By: Ira Gang; Kunal Sen; Myeong-Su Yun
    Abstract: Abstract The caste system – a system of elaborately stratified social hierarchy – distinguishes India from most other societies. Among the most distinctive factors of the caste system is the close link between castes and occupations, especially in rural India, with Dalits or Scheduled Castes (SC) clustered in occupations that were the least well paid and most degrading in terms of manual labour. Along with the Scheduled Tribes (STs), the SCs have the highest incidence of poverty in India, with poverty rates that are much higher than the rest of the population. Since independence, the Indian government has enacted affirmative action policies in educational institutions and public sector employment for SCs and STs. In addition, there has been an emergence of political parties that are strongly pro-SC in their orientation in the more populous states of India. We use five rounds of all-India employment data from the National Sample Survey quinquennial surveys from 1983 to 2004 to assess whether these political and social changes have led to a weakening of the relationship between low caste status and occupational segregation that has existed historically in India. We find evidence that the occupational structure of the SC households is converging to that of the non-scheduled households. However, we do not find evidence of a similar occupational convergence for ST households.
    Date: 2012
  6. By: Hélène Ehrhart (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Samuel Guerineau (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: The recent boom and bust in commodity prices has renewed the policymakers' interest in three complementary issues: i) characteristics and determinants of commodity price instability, ii) its macroeconomic effects and, iii) the optimal policy responses to this instability. This work falls within the scope of studies dedicated to the macroeconomic effects of commodity price instability, but focuses on the impact on public finance, while existing works were concentrated on growth. This paper also differs from the few previous studies on two aspects. First, we test the impact of commodity price volatility rather than focusing only on price levels. Second, we use disaggregated data on tax revenues (income tax, consumption tax and international trade tax) and on commodity prices (agricultural products, minerals and energy) in order to identify transmission channels between world prices and public finance variables. Our empirical analysis is carried out on 90 developing countries over 1980-2008. We compute an index which measures the volatility of the international price of 41 commodities in the sectors of agriculture, minerals and energy. We find robust evidence that tax revenues in developing countries increase with the rise of commodity prices but that they are hurt by the volatility of these prices. More specifically, increased prices on imported commodities, lead to increased trade taxes and (to a smaller extent) consumption taxes being collected. Export prices are also positively associated with tax revenue collection but the channel is through income taxes and non-tax revenues rather than international trade taxes and consumption taxes. However, the volatility of commodity prices, both of imported and exported commodities, is robustly negatively affecting tax revenues. These findings point at the detrimental effect of commodity price volatility on developing countries public finances and highlight further the importance of finding ways to limit this price volatility and to implement policy measures to mitigate its adverse effects.
    Keywords: Price Volatility;Public Finance;Primary Commodities
    Date: 2012–01–10
  7. By: Simone BERTOLI (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Francesca Marchetta (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    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: 2012–01–13
  8. By: Syed Imran Ali Meerza (Graduate Research Assistant, Department of Economics, South Dakota State University)
    Abstract: This study investigates empirically the causal relationship between trade, foreign direct investment (FDI) and economic growth of Bangladesh for the period of 1973 to 2008. To analyze this Johansen cointegration test and Granger causality test are used. The cointegration analysis suggests that there is a long run equilibrium relationship among the variables. The results of Granger causality test identifies that there is a causal relationship among the mentioned variables. According to the study, economic growth of Bangladesh leads both FDI and export growth and there is a unidirectional causal relationship between FDI and export with direction from export to FDI.
    Keywords: gross domestic product, foreign direct investment, export, Johansen cointegration test and Granger causality
    Date: 2012–01
  9. By: Ratner, Blake D.
    Abstract: Common-pool resource management is a critical element in the interlocked challenges of food security, nutrition, poverty reduction, and environmental sustainability. This paper examines strategic policy choices and governance challenges facing Cambodia's forests and fisheries, the most economically important subsectors of agriculture that rely on common-pool resources. It then outlines policy priorities for institutional development to achieve improvements in implementing these goals. The core argument is that (1) policy support for community-based management in forestry and fisheries requires explicit prioritization to protect against threats from other types of private- and public-sector investment; and (2) the success of these initiatives depends on more systemic governance reforms that address issues of stakeholder representation, mechanisms of accountability, and institutional capacity.
    Keywords: Development policy, environmental security, Fisheries, food security, forestry, Governance, Natural resources, social-ecological resilience,
    Date: 2011
  10. By: Burke, Marshall; Gong, Erick; Jones, Kelly
    Abstract: Poverty is commonly cited as a key driver of the HIV/AIDS epidemic, yet little causal evidence exists linking economic conditions to actual disease outcomes. Using data on more than 200,000 individuals across 19 Sub-Saharan African countries, we present evidence that negative income shocks can lead to substantial increases in HIV prevalence, particularly for women in rural areas. Building on recent work showing that income shortfalls can induce some women to engage in higher-risk sex, we match data on individuals' HIV status from the Demographic and Health Surveys to data on recent variation in local rainfall, a primary (and exogenous) source of variation in income for rural households in Africa. We find that infection rates for women (men) in HIV-endemic rural areas increase significantly by 14 percent (11 percent) for every drought event experienced in the previous 10 years. Further analysis suggests that women most affected by the shocks (that is, those engaged in agriculture) are driving the women's results; these women are partnering with men least affected (those employed outside agriculture). Our findings suggest a role for formal insurance and social safety nets in tackling the HIV/AIDS epidemic.
    Keywords: HIV/AIDS, Income shocks,
    Date: 2011
  11. By: Kumasi, Tyhra Carolyn; Asenso-Okyere, Kwadwo
    Abstract: Improving the long-term sustainability and resilience of smallholder agriculture in Africa is highly dependent on conserving or improving the quality of the natural resource. Conservation agriculture is conceived around more integrated and effective management strategies for provisioning both food and other ecosystem services. If unattended to, land degradation would reduce agricultural productivity and increase pressure on marginal environments in the Tigray highlands of Ethiopia, adversely affecting food security and livelihoods of smallholder farmers. This paper answers some pertinent questions about mass mobilization of free compulsory labor for ecological restoration in Tigray. It details perception of changes in climate; the process of collective decisionmaking; resistance, documentation, and enforcement of rules; methods of conflict resolution; knowledge and information networks; arrangements for benefit sharing of communal resources; and the role of gender in mass mobilization for communal work. We analyzed data collected from 20 villages in 3 districts in the Tigray region through a household survey using a structured questionnaire, focus group discussions, and personal observations. The results reveal that the people are motivated to provide their free labor to restore the ecology to increase agricultural productivity and production to avoid food insecurity and improve their general livelihood. Availability of institutions in terms of grassroots organizations and rules and regulations was a major factor in the positive response to the call for action. The commitment of the government at both the national and local levels (through sensitization and mobilization for group formation and provision of tools and construction materials); the ethnic homogeneity of the population; and the existence of the Orthodox Church, where most of the people were members, were major factors for the success of the community mobilization for collective action in Tigray. Social networking with neighbors, the clergy, and leaders of grassroots organizations provided the knowledge and information on climate variability and solutions required to conserve the ecology and improve human livelihood. We also observed that there were no differences in gender division of labor except that women worked half the workload of men in a day; the women also did the cooking and cleaned up the surroundings after eating at the site. Both men and women played active roles in leadership with regard to mobilization of people, communal work planning and scheduling, conflict resolution, and sharing of community products. An impact assessment of the ecological conservation in Tigray on agricultural productivity and production and food security would be useful. It will be interesting to replicate the study in other areas in Ethiopia and other countries where the societies may not be homogenous to find out the level of commitment of the people to communal work.
    Keywords: Collective action, ecological restoration, free labor, Land degradation,
    Date: 2011
  12. By: Yamauchi, Futoshi; Liu, Yanyan
    Abstract: This paper examines the long-term impacts of improved school quality at the elementary school stage on subsequent schooling investments and labor market outcomes using unique data from a recent survey that tracked students in the Philippines. Empirical results, based on a comparison of students who graduated from treatment and control schools before and after a school intervention, show significant differences in subsequent schooling investments, migration, and labor market earnings between females and males. That is, females study more (relative to males) and tend to migrate and earn more if they receive high-quality educational investments at an early stage. The above results are consistent with females' greater incentives to study, driven by their higher returns to schooling, especially after high school completion, observed in the labor market.
    Keywords: Gender, labor markets, School quality, tracking survey,
    Date: 2011
  13. By: Ulimwengu, John; Roberts, Cleo; Randriamamonjy, Josee
    Abstract: Endowed with 80 million hectares of arable land (of which only 10 percent are used), diverse climatic conditions, and abundant water resources, the Democratic Republic of Congo (DRC) has the potential to become the breadbasket of the entire African continent. Instead, the country is one of the most affected by malnutrition. The DRC has the highest number of undernourished persons in Africa and the highest prevalence of malnutrition in the world. As a result, child stunting and infant mortality rates in the DRC are also among the highest in the world. Overall, at least 50 percent of the population is deficient in vitamin B12, calories, riboflavin, iron, vitamin E, folate, and zinc; vitamins A, C, and B6, for which palm oil and cassava are the main sources, are generally consumed in sufficient quantities. Across provinces, there is significant heterogeneity. All nutrients exhibit positive expenditure elasticities in both rural and urban areas; however, as expected, the expenditure elasticities of all nutrients are higher in urban areas than in rural areas. In rural areas, strategies to improve nutrition will need to use instruments that attack malnutrition directly rather than relying simply on rising incomes. With respect to prices, an increase in own price is expected to have a nonpositive effect on all nutrients. Our results also suggest significant substitution effects. Overall, our results highlight the paradox of the DRC, a country with huge potential for agricultural development but incapable of feeding itself in terms of both quantity and quality of nutrients.
    Keywords: Nutrients, elasticity, Poverty, demand, expenditure, price,
    Date: 2012
  14. By: Jones, Kelly M.
    Abstract: US development assistance represents a significant source of funding for many population programs in poor countries. The Mexico City policy, known derisively as the global gag rule, restricts activities of foreign nongovernmental organizations (NGOs) that receive such assistance. The intent of the policy is to reduce the use of abortion in developing countries—a policy that is born entirely of US domestic politics and that turns on and off depending on the political party in power. I examine here whether the policy achieves its aim, and how the policy affects reproductive outcomes for women in Ghana. Employing a woman-by-month panel of pregnancies and woman fixed effects, I estimate whether a given woman is less likely to abort a pregnancy during two policy periods versus two nonpolicy periods. I find no evidence that any demographic group reduces the use of abortion as a result of the policy. On the contrary, rural women significantly increase abortions. This effect seems to arise from their increased rate of conception during these times. The policy-induced budget shortfalls reportedly forced NGOs to cut rural outreach services, reducing the availability of contraceptives in rural areas. The lack of contraceptives likely caused the observed 12 percent increase in rural pregnancies, ultimately resulting in about 200,000 additional abortions and between 500,000 and 750,000 additional unintended births. I find that these additional unwanted children have significantly reduced height and weight for age, relative to their siblings. Rather than reducing abortion, this policy increased pregnancy, abortion, and unintended births, resulting in more than a half-million children of significantly reduced nutritional status.
    Keywords: abortion, child health, fertility, Foreign aid,
    Date: 2011
  15. By: Vásquez, William F.
    Abstract: This paper estimates hedonic models of rental prices to investigate household preferences regarding water services in rural Guatemala. Estimated values for water services are compared across municipal, private, and community-managed water utilities. Findings indicate that rural households value municipal water services but are indifferent between not having piped water and being connected to a private system. Moreover, the estimated value of community-managed services is negative, which suggests that rural households have an aversion to services managed at the community level. It is argued that the value households assign to water services reflects institutional costs imposed by the forms of service governance here analyzed.
    Keywords: hedonic analysis, household preferences, service governance, Water,
    Date: 2011
  16. By: Chen, Xi; Kanbur, Ravi; Zhang, Xiaobo
    Abstract: It has been widely documented that the poor spend a significant proportion of their income on gifts even at the expense of basic consumption. We test three competing explanations of this phenomenon—peer effect, status concern, and risk pooling—based on a census-type primary household survey in three natural villages in rural China and on detailed household records of gifts received on major occasions. We show that gift-giving behavior is largely influenced by peers in reference groups. Status concern is another key motive for keeping up with the Joneses in extending gifts. In particular, poor families with sons spend more on gift giving in proportion to their income than their rich counterparts, in response to the tightening marriage market. In contrast, risk pooling does not seem to be a key driver of the observed gift-giving patterns. However, we show that large windfall income triggers the escalation of competitive gift-giving behavior.
    Keywords: ceremony, gift giving, Peer effect, risk pooling, social network, status seeking,
    Date: 2011
  17. By: Meinzen-Dick, Ruth; van Koppen, Barbara; Behrman, Julia; Karelina, Zhenya; Akamandisa, Vincent; Hope, Lesley; Wielgosz, Ben
    Abstract: Although the different roles of men and women in agriculture in different parts of Sub-Saharan Africa have been widely acknowledged, there have not been consistent efforts to collect data on these patterns. This paper presents a way of classifying gendered farm management systems and then describes pilots of four different approaches to collecting and georeferencing information on the dominant pattern in each area. Case studies from existing literature provided valuable insights but represent a time-consuming method, limited in spatial coverage and often leaving gaps because the original study authors did not report on all of the aspects of interest for a gendered farm management systems analysis. Expert consultations conducted in Ghana and Zambia allowed for dialogue among participants during map development, permitting them to explore nuances and dynamics. However, this technique may be restricted in scale to one country at a time, limiting cross-national comparison. An open online survey, or crowdsourcing, of the information tapped into a wide range of expertise, providing difficult-to-obtain widespread coverage, but had inconsistent data quality. Mapping of georeferenced information from nationally representative data could potentially provide widespread and relatively accurate data, but thus far the relevant underlying data have not been consistently included in large-scale surveys. Gender mapping offers an important step toward greater awareness of the diverse gender roles in agricultural farm management systems, but gaps remain between field reality and the understanding of gender relations in research, on the one hand, and between the researchers‘ understanding and what can be displayed on a map, on the other. Addressing these gaps requires developing a consensus on the key variables that characterize gendered farming systems, collecting these data systematically, and then linking the data to other spatial information for use in planning and prioritizing development interventions.
    Keywords: farm management systems, Gender, georeferencing,
    Date: 2012
  18. By: Martin Dufwenberg (University of Arizona, University of Gothenburg, and the CESifo Network); Giancarlo Spagnolo (SITE - Stockholm School of Economics, EIEF, Tor Vergata and CEPR)
    Abstract: Harassment bribes - payments people give in order not to be denied what they are legally entitled to - are common in for example India. Kaushik Basu recently made a radical proposal to reduce its occurrence: Legalize the act of giving the bribe and double the fine for accepting the bribe! We develop a formal model and delineate circumstances under which Basu's proposal works well or poorly. We discuss a modified scheme where immunity is conditional on reporting that we argue addresses the main issues raised against the proposal. We highlight complementarities between these schemes and other policies aimed at improving the accountability and performance of the public sector, and of law enforcement agencies in particular. We conclude discussing the implications for the fight of more harmful forms of corruption.
    Date: 2011
  19. By: Stampini, Marco (Inter-American Development Bank); Leung, Ron (African Development Bank); Diarra, Setou M. (Université Laval); Pla, Lauréline (African Development Bank)
    Abstract: In recent years, the private sector has been recognized as a key engine of Africa's economic development. Yet, the most simple and fundamental question remains unanswered: how large is the African private sector? We present novel estimates of the size of the private sector in 50 African countries derived from the analysis of national accounts and labor market data. Our results point to a relatively large size of the African private sector. National account data shows that this accounts for about 2/3 of total investments, 4/5 of total consumption and 3/4 of total credit. In relative terms, large private sector countries are concentrated in Western Africa (Cote d'Ivoire, Guinea, Niger, Senegal and Togo), Central Africa (Cameroun, Republic of Congo) and Eastern Africa (Kenya, Sudan, Uganda and Tanzania), with the addition of Mauritius. Countries with small private sectors include a sample of oil-exporters (Algeria, Angola, Equatorial Guinea, Libya and Nigeria), some of the poorest countries in the continent (Burundi, Burkina Faso, Guinea Bissau, Mali and Sao Tome e Principe), Zambia and Botswana. Over the last ten years, the size of the private sector has been contracting significantly in oil exporting countries, although the variation in its size does not appear to be significantly correlated with growth performance. Labor market data reinforces the idea of a large private sector, which provides about 90% of total employment opportunities. However, most of this labor is informal and characterized by low productivity: permanent wage jobs in the private sector account on average for only 10% of total employment (a share similar to that provided by public administration and state owned enterprises). South Africa is the notable exception, with formal wage employment in the private sector representing 46% of total employment. Finally, we find evidence of negative private sector earning premiums, suggesting that market distortions abound. These are likely to prevent the efficient allocation of human resources, and to reduce the overall productivity of the African economies.
    Keywords: private sector size, private sector development, private consumption, private investment, national accounts, private sector employment, private sector earnings, labor markets, Africa
    JEL: H10 J21 O10 O55 P17 Y10
    Date: 2011–12
  20. By: Akresh, Richard (University of Illinois at Urbana-Champaign); Chen, Joyce J. (Ohio State University); Moore, Charity (Ohio State University)
    Abstract: Altruism among family members can, in some cases, inhibit cooperation by increasing the utility that players expect to receive in a non-cooperative equilibrium. To test this, we examine agricultural productivity in polygynous households in West Africa. We find that cooperation is greater – production is more efficient – among co-wives than among husbands and wives because co-wives are less altruistic towards each other. The results are not driven by scale effects or self-selection into polygyny. Nor can they be explained by greater propensity for cooperation among women generally or by the household head acting as an enforcement mechanism for others' cooperative agreements.
    Keywords: altruism, non-cooperative behavior, household bargaining, polygyny, Africa
    JEL: D13 D70 J12 O13 O55
    Date: 2011–12
  21. By: Su, Biwei (Korea University); Heshmati, Almas (Korea University)
    Abstract: This paper estimates the gender wage gap and its composition in China's urban labor market using the 2009 survey data from the Chinese Family Panel Studies. Several estimation and decomposition methods have been used and compared. First, we examine the gender wage gap using ordinary least square regression method with a gender dummy variable. Then, we apply Oaxaca (1973) decomposition method with different weighting systems to analyze the logarithmic wage differential. To be more specific, we prove the existence of sample selection bias caused by the female's labor force participation. We eliminate it by using the Heckman's two-step procedure. Empirical results reveal that male workers generally receive a higher wage than female workers, and a great deal of this difference is unexplained. Meanwhile, this unexplained part, which is usually referred to as discrimination turns out to be higher when the adjustment is made for the selection bias. A further breakdown of the wage gap shows that among all the individual characteristics, occupations explain the largest share of the wage gap, followed by their working experience. On the other hand, education acts as a contributor for discrimination in the labor market.
    Keywords: discrimination, wage gap, decomposition, gender, Chinese labor market
    JEL: J70 J31 J16 J78
    Date: 2011–12
  22. By: Su, Biwei (Korea University); Heshmati, Almas (Korea University)
    Abstract: As China exhibited unprecedented rapid economic growth ever since its reform and openness, the development and sources of labor productivity has gradually come to the forefront. This paper studies the development and the source of labor productivity in 31 Chinese provinces during the period of 2000-2009. The labor productivity is investigated through an examination at both the levels and the growth rate. Particularly, we first look at the production function relationship, to see the contribution of labor and other production factors to the gross domestic product. Then, a number of possible determinants are defined. They are regressed on the level and the growth rate of labor productivity to shed light on their relationships. Controlled for unobserved time-specific and province-specific effects, the fixed effects model with heteroskedasticity robust adjustments have been used for the estimation of three functions. Regional breakdown shows severe disparity in the economy where three municipal cities have the highest labor productivity among other regions. Subsequently, we summarize the different sources and their contributions to labor productivity and provide several policy suggestions.
    Keywords: development, labor productivity, labor productivity growth, provinces, China
    JEL: C23 J24 R23 O15
    Date: 2011–12
  23. By: Gagnon, Jason (OECD); Xenogiani, Theodora (OECD); Xing, Chunbing (Beijing Normal University)
    Abstract: The rapid and massive increase of rural-to-urban migration in China has drawn attention to the welfare of migrant workers, particularly to their working conditions and pay. This paper uses data from a random draw of the 2005 Chinese national census survey to investigate discrimination in urban labour markets against rural migrants, by comparing their earnings and the sector (formal vs. informal) they work in with those of urban residents and urban migrants. Exploiting differences in their status in the Chinese residential registration system (hukou) we find no earnings discrimination against rural migrants compared with urban residents, contrary to popular belief. In contrast, we find that urban migrants in fact gain a large wage premium by migrating. However, both rural and urban migrants are found to be discriminated out of the formal sector, working in informal jobs and lacking adequate social protection.
    Keywords: migration, China, discrimination, informal employment
    JEL: O15 R23 J24 J71
    Date: 2011–12
  24. By: Lei, Xiaoyan (Peking University); Strauss, John (University of Southern California); Tian, Meng (Peking University); Zhao, Yaohui (Peking University)
    Abstract: Recent increases in Chinese elderly living alone or only with a spouse has raised concerns about elderly support, especially when public support is inadequate. However, using rich information from the China Health and Retirement Longitudinal Study, we find that the increasing trend in living alone is accompanied with a rise in living close to each other. This type of living arrangement solves the conflicts between privacy/independence and family support. This is confirmed in further investigation: children living close by visit their parents more frequently. We also find that children who live far away provide a larger amount of net transfers to their parents, a result consistent with responsibility sharing among siblings. Having more children is associated with living with a child or having a child nearby, while investing more in a child's schooling is associated with greater net transfers to parents.
    Keywords: living arrangement, coresidence, proximity of children, CHARLS
    JEL: J12 J14
    Date: 2011–12
  25. By: Fang Cai; Meiyan Wang
    Abstract: Jobs are important in maintaining social cohesion. Employment provides income, but also a sense of self-worth and a meeting place for social interactions that weave the social fabric. With over 200 million unemployed globally, the number of jobs created has taken centre stage, especially in countries hit hard by the economic crisis. And yet, labour relations have become tense in many parts of the world, including those still experiencing economic growth. In 2010, China witnessed a marked increase in strikes, labour disputes and even suicides in the workplace. Understanding the economic and institutional determinants of good labour relations matters for designing and implementing better labour market policies.<p>The increase in labour disputes in China coincided with the end of the era of surplus labour. While labour was abundant in rural hinterlands, manufacturing firms could rely on cheap labour as migrant workers would still be better off than if they stayed at home. As it became increasingly difficult for manufacturing firms in urban centres and the coastal provinces to recruit labour, wages were bid up throughout the economy. This process however, was all but smooth, as the increase in labour disputes shows. What is needed is a set of labour market institutions that help the transition in labour markets to be not only efficient, but also peaceful and equitable.<p>This paper by Cai Fan and Wang Meiyan, from the Institute of Population and Labour Economics of the Chinese Academy of Social Sciences, documents the increase in labour disputes in China and seeks to understand their determinants. The main finding is that the increase in disputes is linked to a change in regime in the labour market with the end of surplus labour. The paper therefore calls for further advances in establishing labour market institutions to adapt to the new labour market situation. The paper finds that disputes result from a better awareness of rights on the part of workers and that they are more common in thriving and export-oriented areas. The authors go on to discuss the Chinese government’s responses to the growing problem, from pro-active labour market policy to increasing the importance of collective contracts. In doing so, this paper provides an important building block in the understanding of the role of labour market institutions for social cohesion.
    Date: 2012–01–05
  26. By: Isaac Mbiti; David N. Weil
    Abstract: We are grateful to Taryn Dinkelman, John Driscoll, Frederik Eijkman, James Habyarimana, Stephen Mwaura, Benno Ndulu, Pauline Vaughn, Dean Yang and seminar participants at Tulane University and the NBER Africa Success Conference for helpful comments and suggestions. Emilio Depetris Chauvin, Federico Droller, Richard Amwayi Namolo, Angeline Nguyen, Scott Weiner and Jingjing Ye provided superb research assistance. We are grateful to the Financial Sector Deepening (FSD) Trust of Kenya and Pep Intermedius for providing us with data. Financial support for this research was graciously provided by the NBER Africa Success Project. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
    Keywords: #
    Date: 2011
  27. By: Quamrul H. Ashraf; David N. Weil; Joshua Wilde
    Abstract: We assess quantitatively the effect of exogenous reductions in fertility on output per capita. Our simulation model allows for effects that run through schooling, the size and age structure of the population, capital accumulation, parental time input into child-rearing, and crowding of fixed natural resources. The model is parameterized using a combination of microeconomic estimates, data on demographics and natural resource income in developing countries, and standard components of quantitative macroeconomic theory. We apply the model to examine the effect of an intervention that immediately reduces TFR by 1.0, using current Nigerian vital rates as a baseline. For a base case set of parameters, we find that an immediate decline in the TFR of 1.0 will raise output per capita by approximately 13.2 percent at a horizon of 20 years, and by 25.4 percent at a horizon of 50 years.
    Keywords: #
    Date: 2011
  28. By: Gouel, Christophe; Jean, Sebastien
    Abstract: In poor countries, most governments implement policies aiming to stabilize the prices of staple foods, which often include storage and trade measures insulating their domestic market from the world market. It is of crucial importance to understand the precise motivations and efficiency of those interventions, because they can have consequences worldwide. This paper addresses those issues by analyzing the case of a small, open developing country confronted by shocks to both the crop yield and foreign price. In this model, government interventions may be justified by the lack of an insurance market for food prices. Considering this market imperfection, the authors design optimal public interventions through trade and storage policies. They show that an optimal trade policy largely consists of subsidizing imports and taxing exports, which benefits consumers at the expense of producers. Import subsidies alleviate the non-negativity of food storage. In other words, when stocks are exhausted, subsidizing imports prevents domestic price spikes. One striking result: an optimal storage policy on its own is detrimental to consumers, since its stabilizing benefits leak into the world market and it raises the average domestic price. By contrast, an optimal combination of storage and trade policies results in a powerful stabilizing effect for domestic food prices.
    Keywords: Markets and Market Access,Economic Theory&Research,Emerging Markets,Access to Markets,Trade Policy
    Date: 2012–01–01
  29. By: Deininger, Klaus; Jin, Songqing; Xia, Fang
    Abstract: Agriculture has made major contributions to China's economic growth and poverty reduction, but the literature has rarely focused on the institutional factors that might underpin such structural transformation and productivity. This paper aims to fill that gap. Drawing on an 8-year panel of 1,200 households in six key provinces, it explores the impact of government land reallocations and formal land-use certificates on agricultural productivity growth, as well as the likelihood of households to exit from agriculture or send family members to the non-farm sector. It finds that land tenure insecurity, measured by the history of past land reallocations, discourages households from quitting agriculture. The recognitionof land rights through formal certificates encourages the temporary migration of rural labor. Both factors have a large impact on productivity (at about 30 percent each), mainly by encouraging market-based land transfers. A sustained increase in non-agricultural opportunities will likely reinforce the importance of secure land tenure, which is a precondition for successful structural transformation and continued economic attractiveness of rural areas.
    Keywords: Labor Policies,Rural Development Knowledge&Information Systems,Economic Theory&Research,Economic Growth,Rural Poverty Reduction
    Date: 2012–01–01
  30. By: Arnold, Jens Matthias; Javorcik, Beata; Lipscomb, Molly; Mattoo, Aaditya
    Abstract: The growth of India's manufacturing sector since 1991 has been attributed mostly to trade liberalization and more permissive industrial licensing. This paper demonstrates the significant impact of a neglected factor: India's policy reforms in services. The authors examine the link between those reforms and the productivity of manufacturing firms using panel data for about 4,000 Indian firms from1993 to 2005. They find that banking, telecommunications, insurance and transport reforms all had significant, positive effects on the productivity of manufacturing firms. Services reforms benefited both foreign and locally-owned manufacturing firms, but the effects on foreign firms tended to be stronger. A one-standard-deviation increase in the aggregate index of services liberalization resulted in a productivity increase of 11.7 percent for domestic firms and 13.2 percent for foreign enterprises.
    Keywords: Transport Economics Policy&Planning,Banks&Banking Reform,Emerging Markets,E-Business,Economic Theory&Research
    Date: 2012–01–01
  31. By: Julia Driessen (University of Pittsburgh); Abdur Razzaque (International Center for Diarrhoeal Disease Research, Dhaka, Bangladesh); Damian Walker (Johns Hopkins University); David Canning (Harvard School of Public Health)
    Abstract: There is increasing evidence that early childhood health interventions have long term effects on cognitive development, educational achievement, and adult productivity. We examine the effect of measles vaccination on the school enrollment of children in Matlab, Bangladesh. An intensive measles vaccination program was introduced in two areas of Matlab in 1982, and extended to two more areas in 1985. Using this staggered rollout as an instrument for vaccination, we find that age appropriate vaccination raises the probability that a boy has enrolled in school by 9.5 percentage points but appears to have no effect on girls' enrollment.
    Keywords: health, measles vaccination, school enrollment, Matlab
    Date: 2011–11
  32. By: Geraint Johnes; A Aggarwal; R Freguglia; G Spricigo
    Abstract: The impact of education on labour market outcomes is analysed using data from various rounds of the National Sample Survey of India. Occupational destination is examined using both multinomial logit analyses and structural dynamic discrete choice modelling. The latter approach involves the use of a novel approach to constructing a pseudo-panel from repeated cross-section data, and is particularly useful as a means of evaluating policy impacts over time. We find that policy to expand educational provision leads initially to an increased takeup of education, and in the longer term leads to an increased propensity for workers to enter non-manual employment.
    Date: 2011
  33. By: Bas van Leeuwen
    Abstract: In this paper we estimate inequality in Indonesia between 1932 and 1999. There was an increase in inequality at the start of this period but then a sharp decline from the 1960s. A shift from domestic to export agriculture over the period up to the Great Depression accounts for the increase in inequality. During the 1930s, as the price of export crops declined, the income of rich farmers suffered a blow. Yet, this was counterbalanced by increasing gap between expenditure in the urban and rural sectors, causing an over-all rise in inequality. As for the second half of the century, we find that the employment shift towards manufacturing and services, combined with an increase in labour productivity in agriculture, accounts for the decline in inequality. These inequality trends had an effect on poverty as well, but prior to the 1940s the negative impact of the rise in inequality was offset by an increase in per capita GDP. Between 1950 and 1980 a decline in inequality, combined with increased per capita GDP rapidly raised a large portion of the population above the poverty line.
    Keywords: Indonesia, inequality, poverty, economic development
    Date: 2012–01
  34. By: Helke Waelde (KfW Entwicklungsbank, Frankfurt am Main, Germany)
    Abstract: We reconsider data from a randomized control trial study in India. The data reveal the impact of a microloan program. We extend the often used randomized impact evaluation and di¤erence-in-di¤erence approach by quantile regression and the consideration of the quantile treatment effects. The use of additional, more advanced, evaluation methods allows a more detailed consideration of borrowers at the lower and at the upper end of the wealth distribution. We find a strong negative and signi.cant time-trend. Furthermore, we observe a negative impact of the provi- sion of microfinance loans such that the overall impact is even more negative. This is particularly well seen for entrepreneurs in the lower and in the higher quantiles. As we learn that poor entrepreneurs use microloans for consumption, we doubt that micro.nance is the right instrument for them. The data suggest that providing microloans for average entrepreneurs, who can hire very poor entrepreneurs, might be an effective solution for that dilemma.
    JEL: E43 E52 E58 D44
    Date: 2011–11–09
  35. By: Zhigang Li; Minqin Wu
    Abstract: An ongoing reform in China mandates employers to contribute significant amounts to employee pension funds. The current study estimates the impact of this reform on the wage, employment and performance of firms using data from over 140,000 medium and large manufacturers in China during 2004 and 2006. We find that the nominal wages of employees were rigid but their real wages may have declined due to the pension reform. In addition, we find an interesting dichotomy in the incidences of pension reform. In localities with high agglomeration levels, firms' profits declined because the pension burden could not be fully transferred to employees. In less agglomerated jurisdictions, firms responded positively to pension reform, possibly because local governments over-subsidized the pension costs as a way to attract investment.
    Keywords: Incidence, Pension, China
    JEL: H32 H55 J2
    Date: 2011–12
    Abstract: The term financial crisis refers to the loss of confidence in a country's currency or other financial assets causing international investors to withdraw their funds from the country. The financial crisis and associated recession originated in the US in early 2008 and then spread to Europe has by now engulfed most of the economies in both developed and developing world. There is every possibility of direct as well as indirect implications of the crisis on all the economies of the world. The crisis has affected the entire global economies in one way or other. The present study makes an attempt to identify the immediate impact of the financial crisis on major world economies especially Indian economy in terms of selected economic indicators. The study examines the trends in export, import, foreign remittances, earnings from business services, overall Balance of Payment position, GDP growth rates etc in the context of Indian economy against the background of global financial crisis and subsequent global recession. India is considered to be highly vulnerable to a crisis like this because of its greater integration with the rest of the world. The study shows that there are some reasons to believe that the financial crisis affected Indian economy adversely by slowing foreign remittances, foreign investment, adverse BoP position etc. However, Indian economy shows the symptoms of rapid recovery from the sudden set back it had to undergo during 2008-09.
    Keywords: Financial crisis; Great Depression; Emerging Market Economies; Foreign Direct Investment; Foreign Institutional Investment; Balance off Payments; GDP
    JEL: G01
    Date: 2012–01–16
  37. By: Ear, Sophal
    Abstract: Emerging infectious diseases (EIDs) pose international security threats because of their potential to inflict harm upon humans, crops, livestock, health infrastructure, and economies. The following questions stimulated the research described in this report: What infrastructure is necessary to enable EID surveillance in developing countries? What are the cultural, political, and economic challenges that are faced? Are there generalizations that may be made to inform engagement with developing countries and support EID surveillance infrastructure? Using the U.S. Naval Area Medical Research Unit No. 2 (NAMRU-2) as a common denominator, this report compares barriers to EID surveillance in Cambodia and in Indonesia and presents key factors—uncovered through extensive interviews—that constrain disease surveillance systems. In Cambodia, the key factors that emerged were low salaries, poor staff and human resources management and the effect of patronage networks, a culture of donor dependence, contrasting priorities between the government and international donors, and the lack of compensation for animal culling. Cambodian authorities have resisted a compensation scheme thus far, with speculation suggesting that the reason for this is the government’s concern that the possibility for corruption among poultry-holders is too great a risk. The Cambodian military has also played a part. The government ceased a merit-based salary supplement scheme for civil servants (including laboratory employees funded by the Global Fund to Fight Aids, Tuberculosis and Malaria) after the military is alleged to have demanded similar pay incentives which donors had no interest in funding. In Indonesia, the key issues emerging as barriers to effective surveillance include poor host-donor relationships, including differing host-donor priorities and a misunderstanding of NAMRU-2 by Indonesian Authorities; low salaries; a decline in the qualifications of personnel in the Ministry of Health; poor compensation for culling; and difficulties incentivizing local-level reporting in an era of decentralization. Conflict between external and host actors was given the greatest emphasis, with “viral sovereignty” the primary problem. The Indonesian government perceived unfair treatment when it was asked to pay millions of dollars for a vaccine developed from a sample it originally provided for diagnostic purposes to the U.S. government through NAMRU-2. A poor host-donor relationship is a major barrier in Indonesia, which exhibits greater political and financial autonomy than Cambodia and other less-developed countries. Ultimately these differences are symptomatic of Cambodia’s and Indonesia’s different levels of development and their roles within the international community. This context demonstrates the primary difference in existing barriers to surveillance between the countries. Thus, it is reasonable to hypothesize that other developing countries face similar barriers along a continuum from one extreme (Cambodia, where a genocide resulted in the death of a quarter of the population) to another (Indonesia, where state-of-the-art-labs can be run by Indonesians educated in countries such as France and Australia with some donor funds). Scientists are fully capable of fixing technical problems in surveillance systems, but non-technical barriers have been more difficult to confront. Not surprisingly, the primary challenges impeding surveillance are observed on the human resources side of the equation. When it comes to viral sovereignty, technology transfer has been proposed as a possible solution to enable resource-constrained countries to produce their own vaccines. Yet this is easier said than done; international development has tried for more than six decades to raise living standards with limited success. What is certain is that Indonesia’s human resources are already capable of producing some vaccines given sufficient technology, while Cambodia will require a decade or more to develop such a capability. It is clear that in Cambodia, technology transfer is necessary but not sufficient. Many of the key factors emerging from interviews with in-country practitioners are the direct result of the existing level of development and, as such, are perhaps beyond the scope of health and scientific agencies at this point. Nevertheless, greater understanding is a critical first step in mitigating negative outcomes.
    Keywords: Cambodia; Indonesia; Namru-2; Avian Influenza; H5N1; Political Economy
    JEL: K32 N35 H51 I18
    Date: 2011–10–08
  38. By: Abhijit Banerjee; Arun G. Chandrasekhar; Esther Duflo; Matthew O. Jackson
    Abstract: We examine how participation in a microfinance program diffuses through social networks. We collected detailed demographic and social network data in 43 villages in South India before microfinance was introduced in those villages and then tracked eventual participation. We exploit exogenous variation in the importance (in a network sense) of the people who were first informed about the program, "the injection points". Microfinance participation is higher when the injection points have higher eigenvector centrality. We estimate structural models of diffusion that allow us to (i) determine the relative roles of basic information transmission versus other forms of peer influence, and (ii) distinguish information passing by participants and non-participants. We find that participants are significantly more likely to pass information on to friends and acquaintances than informed non-participants, but that information passing by non-participants is still substantial and significant, accounting for roughly a third of informedness and participation. We also find that, conditioned on being informed, an individual's decision is not significantly affected by the participation of her acquaintances.
    JEL: D13 D85 G21 L14 O12 O16 Z13
    Date: 2012–01
  39. By: Jonathan Gruber; Nathaniel Hendren; Robert Townsend
    Abstract: The Thai 30 Baht program was one of the largest health system reforms ever undertaken by a low-middle income country. In addition to lowering the cost of care for the previously uninsured in public facilities, it also entailed a fourfold increase in funding provided to hospitals to care for the poorest 30% of the population (who were already publicly insured). For the previously uninsured, we find that the 30 Baht program led to increased health care utilization, as well as a shift from private to public sources of care. But, we find a larger increase for the poor who were previously publicly insured, especially amongst infants and women of childbearing age. Using vital statistics records, we find that the increased access to healthcare by the publicly insured poor led to a reduction in their infant mortality of at least 6.5 per 1,000 births. This suggests significant improvements in infant mortality rates can be achieved through increased access to healthcare services for the poor and marginalized groups.
    JEL: I0 I1
    Date: 2012–01
  40. By: Catherine Wolfram; Orie Shelef; Paul J. Gertler
    Abstract: Most of the medium-run growth in energy demand is forecast to come from the developing world, which consumed more total units of energy than the developed world in 2007. We argue that the main driver of the growth is likely to be increased incomes among the poor and near-poor. We document that as households come out of poverty and join the middle class, they acquire appliances, such as refrigerators, and vehicles for the first time. These new goods require energy to use and energy to manufacture. The current forecasts for energy demand in the developing world may be understated because they do not accurately capture the dramatic increase in demand associated with poverty reduction.
    JEL: O13 Q47
    Date: 2012–01
  41. By: Wolfgang Keller; Ben Li; Carol H. Shiue
    Abstract: In this paper, we provide aggregate trends in China’s trade performance from the 1840s to the present. Based on historical benchmarks, we argue that China’s recent gains are not exclusively due to the reforms since 1978. Rather, foreign economic activity can be understood by developments that were set in motion in the 19th century. We turn our focus to Shanghai, currently the world’s largest port. Shanghai began direct trade relations with western nations starting in 1843. By 1853, Shanghai already accounted for more than half of China’s foreign trade. In tracking the levels and growth rates of the city’s net and gross imports and exports, foreign direct investment, and foreign residents over more than a century, we find that Shanghai’s level of bilateral trade today with the United States, the United Kingdom, or Japan, for example, are by no means high given Shanghai’s 19th century experience. This paper argues that a regional approach that embeds national trading destinations within an international trading system provides a meaningful approach to understanding the history of China’s trade.
    JEL: F10 F22 F23 N81 N83 N85 N95 O43
    Date: 2012–01
  42. By: André de Waal (Associate professor Strategic Management at the Maastricht School of Management, the Netherlands, and academic director of the research organisation Center for Organisational Performance, the Netherlands.); Miriam Frijns (Miriam Frijns is lecturer at the Maastricht School of Management, the Netherlands, and director of the training advice centre Nihil Admiraria.)
    Abstract: In the past seventeen years Rwanda has been in the process of recovering from the 1994 genocide. The country is currently rebuilding itself, with considerable success. One of the main components of the post-genocide reconstruction of Rwanda is the government’s development plan called Vision2020. This programme aims at overcoming poverty and division by initiating a wide range of improvement programmes for good governance and economic development. In practice, however, the roll-out of Vision2020 seems to be missing a coordinating framework to provide direction to and align the improvement initiatives of the various, often independently operating, governmental agencies. Such a framework could not only provide direction but also help to set priorities and offer an evaluation mechanism to monitor progress on improvement initiatives. This article describes exploratory research into the question whether the High Performance Organisations Framework could function as this coordinating framework. It was assumed that the empirically validated HPO Framework could be used in the Rwandan context as it had earlier been successfully applied in neighbouring country Tanzania. After a first application of the HPO framework at the Rwandan Ministry of Local Governance and Social Affairs (MINALOC), it was concluded that this framework could indeed be used to assess the status of a Rwandan governmental agency and that in addition it also shed light on possible improvement points for MINALOC. By strengthening its internal organisation, the HPO framework will help Rwanda’s MINALOC to focus on what is really important to improve and thereby it can advance the improvement process and the realisation of Vision 2020.
    JEL: M12 M14
    Date: 2011–11
  43. By: Wim Naudé (Maastricht School of Management, Maastricht Graduate School of Governance, University of Maastricht, and United Nations University (UNU-MERIT), Maastricht, The Netherlands, e-mail:
    Abstract: Adoption and adaptation of foreign technology is an important catch-up mechanism for developing countries and can contribute towards the achievement of the millennium development goals. Despite this until now very little foreign aid has been specifically targeting innovation in developing countries - more substantial aid has been promoting ‘private sector development’ (PSD) – or entrepreneurship – so that one can see PSD initiatives to have been the major channel through which donors have been promoting innovation in developing countries. Whether this has been an appropriate channel, with appropriate instruments, is the first of two main questions that will be addressed in this paper. The second main question is how PSD initiatives should be adapted or fine-tuned to provide greater and more effective support for appropriate innovation activities in developing countries – and by implication make foreign aid more effective. In this regard two aspects that will receive particular attention are the entrepreneurship-government relationship, and the innovation policy-stage of development dimension.
    JEL: O32 O38 F35
    Date: 2011–12
  44. By: Marianne Matthee (School of Economics, North-West University, Potchefstroom, South Africa); Waldo Krugell (School of Economics, North-West University, Potchefstroom, South Africa)
    Abstract: The internal resource barriers that firms experience influence their capability to export. This in turn influences the export performance of the country and the extent to which exports contribute to economic growth. The aim of this paper is to analyse the impact of resource barriers, more specifically firm size, productivity, firm-specific capital and labour market constraints, on South African firms' decision to internationalise. The literature on South African exporting firms presents some interesting glimpses of the exporting behaviour of firms in South Africa. However, these were cross-sectional studies focusing on earlier NES data and the 2003 ICA data. This paper tries to provide another dimension in terms of data, by taking the 2007 ICA data into account and by constructing a unique panel from the World Bank Enterprise Survey data for 2003 and 2007. Using panel data allows for better understanding of South African firms in that it enables one to consider the dynamic nature of firms over time. Also, the earlier South African contributions examined the export behaviour of South African firms, but did not control for unobserved heterogeneity. This paper takes the analysis a step further by estimating a panel data two-step Heckman selection model of the predictors of firms’ export propensities and intensities. From the overall results of the model, it is clear that the unobserved factors that make export more likely tend to be associated with lower levels of exports. The main findings are that firm size, productivity and finance matter for exports. Also, barriers to doing business, such as electricity, customs delays and transportation and the use of imported inputs influence exporting firms’ supply-side capabilities.
    JEL: F14 F23 O55 D21
    Date: 2011–07
  45. By: Wim Naudé (Maastricht School of Management, Maastricht Graduate School of Governance, University of Maastricht, and United Nations University (UNU-MERIT), Maastricht, The Netherlands, e-mail:
    Abstract: In Sub-Sahara Africa, Botswana, Ghana, Mauritius and South Africa can be considered the “Big Four” economies in terms of economic development and growth. How successful has these countries been in terms of economic development, and can they be considered role models for other Sub-Saharan African countries? And what are the commonalities and differences in their economic development experiences? This paper argues that only Botswana and Mauritius are unqualified development success stories. The jury is still out on Ghana, and South Africa (after 1994) is at most a mixed success. Generally, Botswana, Mauritius and South Africa escaped the factors which caused economic stagnation in much of Sub-Saharan Africa, such as poor policies, poor trade performance, and weak institutions. Geography and history (initial conditions) are also shown to be important in the case of the Big Four, but to have more complex interactions with policies and subsequent outcomes. In Botswana and Mauritius good growth followed from (or even due to) adverse initial conditions. But not all initial conditions were unfavorable: Botswana and Mauritius, as well as South Africa avoided the worst negative impacts of colonialism and slavery, as well as the potential adverse effects of natural resource abundance. The paper finally remarks on two factors which are often overlooked in the economic literature in explaining country performance: good leadership and good luck.
    JEL: O55 O43 O11
    Date: 2011–11
  46. By: Blackman, Allen (Resources for the Future); Chandru, Santosh; Mendoza-Domínguez, Alberto; Russell, A.G.
    Abstract: In the past two decades, rapid population and economic growth on the U.S.–Mexico border has spurred a dramatic increase in electricity demand. In response, American energy multinationals have built power plants just south of the border that export most of their electricity to the United States. This development has stirred considerable controversy because these plants effectively skirt U.S. environmental air pollution regulations in a severely degraded international airshed. Yet to our knowledge, this concern has not been subjected to rigorous scrutiny. This paper uses a suite of air dispersion, health impacts, and valuation models to assess the human health damages in the United States and Mexico caused by air emissions from two power-exporting plants in Mexicali, Baja California. We find that these emissions have limited but nontrivial health impacts, mostly by exacerbating particulate pollution in the United States, and we value these damages at more than half a million dollars per year. These findings demonstrate that power-exporting plants can have cross-border health effects and bolster the case for systematically evaluating their environmental impacts.
    Keywords: electricity, air pollution, Mexico
    JEL: Q48 Q51 Q53
    Date: 2012–01–09

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