nep-dev New Economics Papers
on Development
Issue of 2012‒02‒08
seven papers chosen by
Mark Lee
Towson University

  1. From divergence to convergence: re-evaluating the history behind China’s economic boom By Brandt, Loren; Ma, Debin; Rawski, Thomas G.
  2. Foreign Direct Investments in Africa's Farmlands: Threat or Opportunity for Local Populations? By Sylvain Dessy; Gaston Gohou; Désiré Vencatachellum
  3. What Drives Remittance Inflows to Sub-Saharan Africa? A Dynamic Panel Approach By Francis Kemegue; Emmanuel Owusu-Sekyere; Renee van Eyden
  4. Caribbean Food Import Demand: Influence of the Changing Dynamics of the Caribbean Economy By Walters, Lurleen; Jones, Keithly
  5. Effects of Trade Openness on Economic Growth: The Case of African Countries By Yeboah, Osei; Naanwaab, Cephas; Saleem, Shaik; Akuffo, Akua
  6. Manufacturing firms in Africa: Some stylized facts about wages and productivity By Clarke, George
  7. Foreign direct investment in provinces: A spatial regression approach to FDI in Vietnam By Esiyok, Bulent; Ugur, Mehmet

  1. By: Brandt, Loren; Ma, Debin; Rawski, Thomas G.
    Abstract: China’s long-term economic dynamics pose a formidable challenge to economic historians. The Qing Empire (1644-1911), the world’s largest national economy prior to the 19th century, experienced a tripling of population during the 17th and 18th centuries with no signs of diminishing per capita income. In some regions, the standard of living may have matched levels recorded in advanced regions of Western Europe. However, with the Industrial Revolution a vast gap emerged between newly rich industrial nations and China’s lagging economy. Only with an unprecedented growth spurt beginning in the late 1970s has the gap separating China from the global leaders been substantially diminished, and China regained its former standing among the world’s largest economies. This essay develops an integrated framework for understanding this entire history, including both the long period of divergence and the more recent convergent trend. The analysis sets out to explain how deeply embedded political and economic institutions that had contributed to a long process of extensive growth subsequently prevented China from capturing the benefits associated with new technologies and information arising from the Industrial Revolution. During the 20th century, the gradual erosion of these historic constraints and of new obstacles created by socialist planning eventually opened the door to China’s current boom. Our analysis links China’s recent economic development to important elements of its past, while using the success of the last three decades to provide fresh perspectives on the critical obstacles undermining earlier modernization efforts, and their removal over the last century and a half.
    JEL: B1 O53 N0
    Date: 2012–01
  2. By: Sylvain Dessy; Gaston Gohou; Désiré Vencatachellum
    Abstract: We study the welfare effects of government-backed FDIs in Africa’s farmlands. We build an occupational choice model featuring four mechanisms driving these effects. First, local farming is subject to social arrangements prescribing that farmers share their crop surplus with kin. Second, proceeds from land investment deals are invested to make modern inputs affordable to local farmers. Third, these deals cause some farmers to shift to wage employment. Fourth, they also entrench export-oriented agriculture, at the expense of local markets. We show that three conditions are sufficient for such deals to make local people better off: (i) the state has a high capacity and willingness to negotiate deals that benefit local people; (ii) these deals create enough jobs; (iii) wage employment make displaced farmers better off. Fulfilling these three conditions, however, may conflict with the interests of profit-maximizing foreign investors.
    Keywords: FDIs in farmland, local populations, welfare
    JEL: O13 Q15 Q24 Q28
    Date: 2012
  3. By: Francis Kemegue (Department of Economics, University of Pretoria); Emmanuel Owusu-Sekyere (Department of Economics, University of Pretoria); Renee van Eyden (Department of Economics, University of Pretoria)
    Abstract: This paper investigates the factors that drive and constrain remittance inflows into SubSaharan Africa (SSA) using annual data for 35 SSA countries from 1980 to 2008, generalised method of moments by Arellano and Bover (1995) and LSDV with Driscoll and Kraay (1998) corrected standard errors. We find that when cross-sectional dependence of the error term and individual effects are controlled for, host country economic conditions override home country income in driving remittances to SSA The quality of financial service delivery and investment opportunities in the home country and exchange rate considerations are also significant to remittance inflows to SSA. This is more consistent with self interest motives for remittance inflows than altruism. However there are country level differences.
    Keywords: Migration, remittances, Sub-Saharan Africa
    JEL: F22 F24 O55
    Date: 2011–11
  4. By: Walters, Lurleen; Jones, Keithly
    Abstract: Using FAO data for 1961-2009, this study characterizes the trends in Caribbean food imports and uses the Central Bureau Statistics demand system to estimate import demand parameters. The findings and policy implications of the study are evaluated in the context of Caribbean food security concerns.
    Keywords: Caribbean, food imports, import demand parameters, Central Bureau Statistics demand system, food security, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, International Relations/Trade, Q17,
    Date: 2012
  5. By: Yeboah, Osei; Naanwaab, Cephas; Saleem, Shaik; Akuffo, Akua
    Abstract: The relationship between trade and productivity has not been established theoretically. Some researchers have indeed found some, if not complete, support for the view that increasing openness has a positive impact on productivity. This study used a Cobb-Douglas production function as in Miller and Upadhyay (2000) to estimate the impact of FDI, exchange rate, capital-labor ratio and trade openness on GDP for 38 African countries from 1980 to 2008. Data were transformed to natural logs and estimated using alternative panel models; which included one- or-two-way fixed or random effects models. The results found trade openness having a positive relationship with GDP; which is comparable to findings of Ahmed et al.; (2008).
    Keywords: Trade Openness, Productivity, Africa, Cobb Douglas Production Function., International Development, International Relations/Trade, Productivity Analysis,
    Date: 2012
  6. By: Clarke, George
    Abstract: Why have so few countries in Sub-Saharan Africa been successful in export-oriented manufacturing? This paper uses firm-level data from the World Bank’s Enterprise Surveys to discuss this. The paper shows that although firms in most African countries are relatively unproductive, they are more productive on average than firms in other countries at similar levels of development. Further, even though many Africans earn subsistence wages working for informal firms, formal firms have higher labor costs than firms in other low-income countries. The paper discusses several possible reasons for this including the effect of the poor institutional environment on profits and the effect of limited competition on productivity measurement.
    Keywords: Africa; Zambia; Productivity; Manufacturing; Wages; East Asia
    JEL: O25 O14 O12
    Date: 2012–01–21
  7. By: Esiyok, Bulent; Ugur, Mehmet
    Abstract: Foreign direct investment (FDI) flows into Vietnam have increased significantly in recent years, with unequal distribution between provinces and regions. We aim to contribute to the literature on locational determinants of FDI by accounting for spatial interdependence between 62 Vietnamese provinces from 2006-2009. For this purpose, we estimate a spatial lag model using maximum likelihood estimation method. We report existence of spatial dependence between provinces as well as spatial spill-over effects. The results are robust to different specifications for weight matrices and inclusion of different explanatory variables and/or proxies. We also report that conventional determinants of FDI such as market size, domestic investment, openness to trade, labour cost, education and governance, etc. are significant and remain robust to inclusion of spatial interdependence. The sign of the spatial dependence suggests that the distribution of FDI between provinces is subject to conglomeration effects.
    Keywords: Foreign direct investment; spatial dependence; conglomeration; Vietnam
    JEL: R12 F21 C31
    Date: 2011–12–20

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