nep-dev New Economics Papers
on Development
Issue of 2012‒03‒21
thirty papers chosen by
Mark Lee
Towson University

  1. The Effects of Natural Disasters on Human Capital Accumulation By Thomas K.J. McDermott
  2. The African Political Business Cycle: Varieties of Experience By Paul Mosley; Blessing Chiripanhura
  3. Politics, Public Expenditure and the Evolution of Poverty in Africa 1920-2009 By Sue Bowden; Paul Mosley
  4. Earthquakes and Economic Growth By Peter Simonsen
  5. Developing economies in the current climate regime : new prospects for resilience and sustainability ? The case of CDM projects in Asia By Pauline Lacour; Jean-Christophe Simon
  6. High development and fertility: fertility at older reproductive ages and gender equality explain the positive link By Mikko Myrskyla; Hans-Peter Kohler; Francesco C. Billari
  7. Economic Growth, Comparative Advantage, and Gender Differences in Schooling Outcomes: Evidence from the Birthweight Differences of Chinese Twins By Junsen Zhang; Mark Rosenzweig
  8. Selling Formal Insurance to the Informally Insured By Ahmed Mushfiq Mobarak; Mark Rosenzweig
  9. Chinese Foreign Direct Investment in Africa By Carike Claassen; Elsabé Loots; Henri Bezuidenhout
  10. What drives remittance inflows to Sub-Saharan Africa: A Dynamic Panel Approach By Francis M. Kemegue; Emmanuel Owusu-Sekyere; Reneé van Eyden
  11. Food Price Volatility over the Last Decade in Niger and Malawi: Extent, Sources and Impact on Child Malnutrition By Giovanni Andrea Cornia; Laura Deotti; Maria Sassi
  12. Transitional Justice and Aid By Hellsten, Sirkku K.
  13. Corruption and the Efficiency of Capital Investment in Developing Countries By Conor M. O’Toole; Tarp, Finn
  14. Inequality Trends and their Determinants: Latin America over 1990-2011 By Cornia, Giovanni Andrea
  15. Did Trade Openness Affect Income Distribution in Latin America? Evidence for the years 1980â..2010 By Szekely, Miguel
  16. Aid and Government Fiscal Behaviour: What Does the Evidence Say? By Morrissey, Oliver
  17. Contested Relationships: Womenâ..s Economic and Social Empowerment, Insights from the Transfer of Material Assets in Bangladesh By Scott, Lucy
  18. Impact of Foreign Aid on Economic Growth in Sierra Leone: Empirical Analysis By Kargbo, Philip Michael
  19. The Rise and Fall of Income Inequality in Mexico, 1989â..2010 By Campos, Raymundo; Lustig, Nora
  20. Measuring the child mortality impact of official aid for fighting infectious diseases, 2000-2010 By Roberto Burguet; Marcelo Soto
  21. Self-Employment, Wage Employment and Informality in a Developing Economy By Bennett, John; Rablen, Matthew D.
  22. Macroeconomic Determinants of Exit from Aid-Dependence By Degol Hailu; Admasu Shiferaw
  23. Inclusive Growth, Institutions, and the Underground Economy By Sonali Jain-Chandra; Adil Mohommad; Anoop Singh
  24. Sexual behavior change intentions and actions in the context of a randomized trial of a conditional cash transfer for HIV prevention in Tanzania By Packel, Laura; Dow, William H.; de Walque, Damien; Isdahl, Zachary; Majura, Albert
  25. Gender, Agricultural Commercialization, and Collective Action in Kenya By Fischer, Elisabeth; Qaim, Matin
  26. Globalization and Productivity in the Developing World By Foellmi, Reto; Oechslin, Manuel
  27. The Global Financial Crisis : Countercyclical Fiscal Policy Issues and Challenges in Malaysia, Indonesia, the Philippines, and Singapore By Anita Doraisami
  28. Understanding the Impact of the Economic Crisis on Child and Maternal Health among the Poor : Opportunities for South Asia By Azra Abdul Cader; Lakwimashi Perera
  29. Global burden of disease and economic growth By Alassane DRABO; Pascale COMBES MOTEL; Martine AUDIBERT
  30. The Macroeconomics of Microfinance By Francisco J. Buera; Joseph P. Kaboski; Yongseok Shin

  1. By: Thomas K.J. McDermott (School of Business and Institute for International Integration Studies, Trinity College Dublin)
    Abstract: In this paper I investigate the effects of disasters on human capital accumulation using an extensive panel dataset on natural disasters, covering 170 countries over a 25 year period (1980-2004). My analysis shows that disasters have both a direct, contemporaneous effect and a long-term, indirect effect on human capital. While the direct effects - primarily related to injury, illness and death suffered as a result of the disaster - are relatively straightforward, the indirect effects will depend on household decision-making in the aftermath of the disaster. Treating human capital as a long-term investment decision, it is clear that access to finance is likely to be a crucial factor in household decisions about whether or not to invest in children's health and education. Indeed, my results show that aid flows are effective in mitigating the long-term impacts of disasters on health outcomes. However, for school enrollment rates, the longer-term effects of disasters are dependent on the availability of credit. These findings could have important policy implications. The indirect effects are unlikely to have been identified in previous analyses that focus on the short-term impacts of natural disasters. Given the importance of human capital in the process of economic development, the results presented here suggest that natural disasters represent a significant threat to the development prospects of relatively poor countries.
    Keywords: natural disasters, epidemics, human capital, credit markets, development
    JEL: O11 O15 Q54 Q56
    Date: 2011–11
  2. By: Paul Mosley (Department of Economics, The University of Sheffield); Blessing Chiripanhura
    Abstract: We seek to understand both the incidence and the impact of the African political business cycle in the light of a literature which has argued that, with major extensions of democracy since the 1990s, the cycle has both become more intense and has made African political systems more fragile. With the help of country-case studies, we argue, first, that the African political business cycle is not homogeneous, and is rarely encountered in so-called ‘dominant-party systems’ where a pre-election stimulus confers little political advantage. Secondly, we show that, in those countries where a political cycle does occur, it does not necessarily cause institutional damage. Whether it does or not depends not so much on whether there is an electoral cycle as on whether this calms or exacerbates fears of an unjust allocation of resources. In other words, the composition of the pre-election stimulus, in terms of its allocation between different categories of voter, is as important as its size.
    Keywords: business cycles, public expenditure, politics, Africa
    JEL: O10 H50
    Date: 2012–01
  3. By: Sue Bowden; Paul Mosley (Department of Economics, The University of Sheffield)
    Abstract: We investigate the historical roots of poverty, with particular reference to the experience of Africa during the twentieth century. Like the recent studies by Acemoglu et al (2001, etc) we find that institutional inheritance is an important influence on current underdevelopment; but in addition, we argue that the influence of policies on institutions is highly significant, and that in Africa at least, a high representation of European settlers in land ownership and policy-making was a source of weakness, and not of strength. We argue this thesis, using mortality rates as a proxy for poverty levels, with reference to two settler colonies – Zimbabwe and Kenya – and two peasant export colonies – Uganda and Ghana. Our findings suggest that in Africa, settler-type political systems tended to produce highly unequal income distributions and, as a consequence, patterns of public expenditure and investment in human and infrastructural capital which were strongly biased against smallholder agriculture and thence against poverty reduction, whereas peasant-export type political systems produced more equal income distributions whose policy structures and, consequently, production functions were less biased against the poor. As a consequence, liberalisation during the 1980s and 90s produced asymmetric results, with poverty falling sharply in the ‘peasant export’ and rising in settler economies. These contrasts in the evolution of poverty in the late twentieth and early twenty-first centuries, we argue, can only be understood by reference to differences between the settler and peasant export economies whose roots lie in political decisions taken a hundred years previously.
    Keywords: Africa, economic history, settler economies, peasant export economies
    JEL: O10 N0
    Date: 2012–01
  4. By: Peter Simonsen (Institute for Advanced Development Studies)
    Abstract: This study explores the economic consequences of earthquakes. In particular, it is investigated how exposure to earthquakes aects economic growth both across and within countries. The key result of the empirical analysis is that while there are no observable eects at the country level, earthquake exposure signicantly decreases 5-year economic growth at the local level. Areas at lower stages of economic development suer harder in terms of economic growth than richer areas. In addition, the analysis proposes an explanation to the paradox that there is a pronounced negative eect at the regional level while no eect appears at the country level. To this end, the eects of earthquake exposure is investigated not only for the impact zones, but also for areas with an average distance to the epicenter of around 100 km. The results indicate that the decrease in production in one part of a country is (partially) o-set by an increase in production in the surrounding regions.
    Keywords: Economic growth,naturaldisasters,spatial distribution
    JEL: O11 O49 R11 R12
    Date: 2012–01
  5. By: Pauline Lacour (CREG - Centre de recherche en économie de Grenoble - Université Pierre Mendès-France - Grenoble II : EA4625); Jean-Christophe Simon (LEPII - Laboratoire d'Économie de la Production et de l'Intégration Internationale - CNRS : FRE3389 - Université Pierre Mendès-France - Grenoble II)
    Abstract: This paper offers a review of the current position of developing countries in the climate regime and international negotiations based primarily on the analysis of implementation of Clean Development Mechanism (CDM). The paper will place emphasis on changes in national policies to accommodate CDM projects, focussing on the scope and rationale for bottom-up policies and measures as part of development strategies favouring more resilience and sustainability. Two issues are addressed more specifically: firstly regional specificity among developing areas and notably the pre-eminence of projects located in Asia, and secondly the relevance of CDM projects for both sustained growth and effective mitigation strategies. Regarding the latter, we consider that CDM project multiplication does question the relevance of national policies and the diversity of actors/stakeholders to foster upgraded domestic well targeted development strategies. Our research considers differences between developing countries and regions regarding selection and implementation of climate mitigation projects- with reference to their GHG emissions and national energy profiles (calculation from Enerdata source and IEA). It refers to selected cases of projects in East Asia - focus on China and Asean countries - showing particular sector selection patterns (differing between semi industrial economies and less developed countries) and diversification of stakeholders for development (role of regional actors within Asia). The analysis is based on international data base of CDM projects (United Nations) and secondary data from IGES (Japan) and Enerdata. The conclusion will examine prospects for CDM in a post 2012 climate régime for developing economies and the future relevance of CDM projects in the framework of Nationally Appropriate Mitigation Actions.
    Keywords: emerging countries ; development policy ; climate regime ; mitigation ; Clean Development Mechanism Projects ; sustainability ; national climate strategies ; South East Asia
    Date: 2011–09–19
  6. By: Mikko Myrskyla; Hans-Peter Kohler; Francesco C. Billari
    Abstract: A fundamental switch in the fertility—development relationship has occurred so that among highly developed countries, further socioeconomic development may reverse the declining fertility trend. Here we shed light on the mechanisms underlying this reversal by analyzing the links between development and age and cohort patterns of fertility, as well as the role of gender equality. Using data from 1975 to 2008 for over 100 countries, we show that the reversal exists both in a period and a cohort perspective and is mainly driven by increasing older reproductive-age fertility. We also show that the positive impact of development on fertility in high-development countries is conditional on gender equality: countries ranking high in development as measured by health, income, and education but low in gender equality continue to experience declining fertility. Our findings suggest that gender equality is crucial for countries wishing to reap the fertility dividend of high development.
    Keywords: low fertility; socioeconomic development; Human Development Index; gender equality
    Date: 2011–10
  7. By: Junsen Zhang (Chinese University of Hong Kong); Mark Rosenzweig (Economic Growth Center, Yale University)
    Abstract: Data from two surveys of twins in China are used to contribute to an improved understanding of the role of economic development in affecting gender differences in the trends in, levels of, and returns to schooling observed in China and in many developing countries in recent decades. In particular, we explore the hypothesis that these phenomena reflect differences in comparative advantage with respect to skill and brawn between men and women in the context of changes in incomes, returns to skill, and/or nutritional improvements that are the result of economic development and growth.
    Keywords: schooling, gender, twins, China
    JEL: J24 J16 I15 I25 O15
    Date: 2012–02
  8. By: Ahmed Mushfiq Mobarak (Economic Growth Center, Yale University); Mark Rosenzweig (Economic Growth Center, Yale University)
    Abstract: Unpredictable rainfall is an important risk for agricultural activity, and farmers in developing countries often receive incomplete insurance from informal risk-sharing networks. We study the demand for, and effects of, offering formal index-based rainfall insurance through a randomized experiment in an environment where the informal risk sharing network can be readily identified and richly characterized: sub-castes in rural India. A model allowing for both idiosyncratic and aggregate risk shows that informal networks lower the demand for formal insurance only if the network indemnifies against aggregate risk, but not if its primary role is to insure against farmer-specific losses. When formal insurance carries basis risk (mismatches between payouts and actual losses due to the remote location of the rainfall gauge), informal risk sharing that covers idiosyncratic losses enhance the benefits of index insurance. Formal index insurance enables households to take more risk even in the presence of informal insurance. We find substantial empirical support of these nuanced predictions of the model by conducting the experiment (randomizing both index insurance offers, and the locations of rainfall gauges) on castes for whom we have a rich history of group responsiveness to household and aggregate rainfall shocks.
    Keywords: index insurance, risk sharing, basis risk
    JEL: O17 O13 O16
    Date: 2012–02
  9. By: Carike Claassen; Elsabé Loots; Henri Bezuidenhout
    Abstract: The eyes of the world have, in recent years, been steadfastly focused on China’s economic progress. As China has in recent years emerged as a major player on the world economic stage, its growing relations with other developing regions received much attention. Of particular note is the way in which Sino-African relations have increased since 2000. This paper aims to put Chinese FDI in Africa into perspective and provide some answers on the nature and possible impact of these flows to the continent. The research discloses that China’s outward FDI to Africa is concentrated in diversified, medium growth economic performers, with Southern Africa being the most popular regions for Chinese outward FDI. A literature survey on Chinese investment deals concluded in Africa demonstrates a definite Chinese interest in mining, oil and infrastructure in Africa. The empirical analysis of Chinese FDI in Africa reveals that agricultural land, market size and oil are important determinants of Chinese FDI. Though agricultural land and oil conform to the general notion of resource-driven Chinese FDI in Africa, the fact that market size is important indicates that Chinese investment is not solely resource-driven. As regards the possibility that Chinese FDI could positively contribute towards economic growth in Africa, causality tests conclude that the relationship between African GDP and Chinese FDI is bi-directional, while uni-directional relationships were established between Chinese FDI and African infrastructure and corruption, respectively.
    JEL: F21 O16
    Date: 2011
  10. By: Francis M. Kemegue; Emmanuel Owusu-Sekyere; Reneé van Eyden
    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. By: Giovanni Andrea Cornia (Università degli Studi di Firenze, Dipartimento di Scienze Economiche); Laura Deotti; Maria Sassi (Universita' degli Studi di Pavia)
    Abstract: Recently, considerable attention has rightly been paid to the nutritional impact of the sharp hikes in international food prices which took place in 2007-8 and, again, in 2010-11. While sacrosanct, this growing focus has somewhat obscured the effect of other factors which do affect malnutrition in the Sub-Saharan Africa context, i.e. the long term impact of agricultural policies, huge and persistent seasonal variation in domestic food prices, and the impact of famines which still regularly stalk the continent. This paper focuses on the relative weight of these factors in explaining child malnutrition (proxied by the number of child admissions to feeding centers) in Malawi and Niger, two prototypical countries in the region. The analysis shows that the drivers of domestic food staple prices and of the ensuing child malnutrition have to be found not only – or not primarily – in the changes of international food prices but mainly in the impact of agricultural policies on food production, the persistence of a strong food price seasonality, and recurrent and often poorly attended famines. Indeed, even during years of declines in international food prices, these factors often exert a huge upward pressures on domestic food prices and child malnutrition.
    Keywords: Food prices, Famines, Seasonality, Food Policy, Child malnutrition, Niger, Malawi
    JEL: I38 Q13 Q18
    Date: 2012
  12. By: Hellsten, Sirkku K.
    Date: 2012
  13. By: Conor M. O’Toole; Tarp, Finn
    Abstract: This paper considers the effect of corruption on the effciency of capital investment. Using firm-level level data from the World Bank enterprise surveys, covering 90 developing and transition economies, we consider whether the cost of informal bribe payments distorts the efficient allocation of capital by reducing the marginal return per unit investment. Using country estimates of fractionalization and legal origin as instruments, and controlling for censoring, we find that bribery decreases investment efficiency, as measured using both absolute and relative metrics of investment returns. The negative effect is strongest for domestic small and medium-sized enterprises while there is no significant effect on foreign and large domestic firms. We conclude that reducing the level and incidence of bribery by public officials would facilitate a more efficient allocation of capital. This in turn would support economic growth and development, particularly for small and medium-sized enterprises.
    Keywords: corruption, efficiency, rent-seeking, capital investmen
    Date: 2012
  14. By: Cornia, Giovanni Andrea
    Abstract: The paper reviews the steady and widespread decline in income inequality which has taken place in most of Latin America over 2002-10 and whichâ..â..if continued for another 2-3 yearsâ..â..would reduce the average regional income inequality to pre-liberalization levels. The paper then focuses on the factors, which may explain such inequality decline. A review of the literature and an econometric test indicate that a few complementary factors played an important role in this regard, including a drop in the skill premium following a rapid expansion of secondary education, and the adoption of a new development model by a growing number of left-of-centre governments which emphasizes fiscally-prudent but more equitable macroeconomic, tax, social expenditure and labour policies. For the region as a whole, improvements in terms of trade, migrant remittances, FDI and world growth playeda less important role than expected although their impact was perceptible in countries where such transactions were sizeable.
    Keywords: income inequality, human capital inequality, policy regimes, external conditions, Latin America
    Date: 2012
  15. By: Szekely, Miguel
    Abstract: This paper offers a medium-term perspective for analysing the trade opennessâ..inequality relationship in Latin America. We present three contributions. The first is that we assemble a database on income distribution indicators systematically estimated from household surveys with emphasis on within-country consistency of methodology, definitions, and coverage for the years 1980-2010. This 30-year database allows observing clearly that the increases in inequality throughout the 1980s and 1990s decades have been almost totally counteracted by the improvements during the first 10 years of the twenty-first century: 75 per cent of the deterioration in income distribution was reversed in the first decade of 2000. The second is an estimation of the association between trade openness and income distribution over the 30-year period. Our central conclusion in this regard is that greater trade openness is associated with contemporaneous increases in inequality in the region. The third is that trade openness contributedâ..â..together with other factorsâ..â the increase in inequality during the 1980s and 1990s, but once fully implemented, it did not lead to further rises in inequality, and did not represent a permanent obstacle to improvements in income distribution triggered by other factors such as greater education levels across the population.
    Keywords: inequality, education, trade
    Date: 2012
  16. By: Morrissey, Oliver
    Abstract: Donors are concerned about how their aid is used, especially how it affects fiscal behaviour by recipient governments. This study reviews the recent evidence on the effects of aid on government spending and tax effort in recipient countries, concluding with a discussion of when (general) budget support is a fiscally efficient aid modality. Severe data limitations restrict inferences on the relationship between aid and spending, especially as the government is not aware of all the aid available to finance the provision of public goods. Three generalizations are permitted by the evidence: aid finances government spending; the extent to which aid is fungible is over-stated and even where it is fungible this does not appear to make the aid less effective; and there is no systematic effect of aid on tax effort. Beyond these conclusions the fiscal effects of aid are country-specific.
    Keywords: Aid, fiscal effects, fungibility, government spending, taxation
    Date: 2012
  17. By: Scott, Lucy
    Abstract: This article examines the relationship between womenâ..s economic and social empowerment in the context of extreme poverty. It is based on the findings of primary fieldwork on the char islands of north-west Bangladesh, investigating the processes resulting from the implementation of the Chars Livelihoods Programme (CLP). The first phase of the CLP, funded by the UK governmentâ..s Department for International Development (DFID), operated from 2004-2010. Its central activity was the transfer of approximately £100sâ.. worth of investment capital to targeted extremely poor households. This investment capital was given specifically to a woman within that household and the majority of these female beneficiaries used it to purchase cattle. This article argues that interventions which adopt primarily an economic entry point can contribute to womenâ..s empowerment beyond the economic realm, including in terms of changing intra-household relationships and increasing womenâ..s self-esteem. Clearly interventions beyond the economic sphere are needed to ensure that this empowerment is sustainable and can contribute to changing social norms. However, the contribution which practical gender needs make in providing a basis for extremely poor women to achieve their future strategic gender needs should not be underestimated.
    Keywords: extreme poverty, asset transfer, female empowerment, Bangladesh
    Date: 2012
  18. By: Kargbo, Philip Michael
    Abstract: This paper examines the impact of foreign aid on economic growth in Sierra Leone, a country where an empirical econometric study on aid effectiveness is yet to exist. Using a triangulation of approaches involving the ARDL bounds test approach and the Johansen maximum likelihood approach to cointegration for the period 1970-2007, we find that foreign aid has a significant contribution in promoting economic growth in the country. This finding is found to be robust across approaches and specifications. Whilst aid may have been associated with improvement in economic growth in the country, its impact during the period of war is found to be either weak or non-existent. Further, aid during the pre-war period is found to be marginally more effective than aid during the post-war period. The latter results suggest that the impact of aid may change with time.
    Keywords: growth, foreign aid, cointegration, Sierra Leone, ARDL, post-war
    Date: 2012
  19. By: Campos, Raymundo; Lustig, Nora
    Abstract: Inequality in Mexico rose between 1989 and 1994 and declined between 1994 and 2010. We examine the role of market forces (demand and supply of labour by skill), institutional factors (minimum wages and unionization rate), and public policy (cash transfers) in explaining changes in inequality. We apply the â influence functionâ.. method to decompose changes in hourly wages into characteristics and returns. The main driver is changes in returns. Returns rose (1989-94) due to institutional factors and labour demand. Returns declined (1994-2006) due to changes in supply and, to a lesser extent, in demand; institutional factors were not relevant. Government transfers contributed to the decline in inequality, especially after 2000.
    Keywords: inequality, wages, disposable income, labour markets, Mexico
    Date: 2012
  20. By: Roberto Burguet; Marcelo Soto
    Abstract: Aid for fighting infectious and parasitic diseases have had a statistically significant role in the under-five mortality reduction in the last decade. Point estimates indicate a country average reduction of 1.4 deaths per thousand under fives live-born attributable to aid at its average level in 2000-2010. The effect would be an average drop of 3.3 in the under-five mortality rate at the aid levels of 2010. By components, a dollar per capita spent in fighting malaria has caused the largest average impact, statistically higher than a dollar per capita spent in STD/HIV control. We do not find statistically significant effects of other infectious disease aid, including aid for the control of tuberculosis.
    Date: 2012–03–05
  21. By: Bennett, John (Brunel University); Rablen, Matthew D. (Brunel University)
    Abstract: We construct a simple model incorporating various urban labour market phenomena obtaining in developing economies. Our initial formulation assumes an integrated labour market and allows for entrepreneurship, self-employment and wage employment. We then introduce labour market segmentation. In equilibrium voluntary and involuntary self-employment, formal and informal wage employment, and formal and informal entrepreneurship may all coexist. We illustrate the model by an example calibrated on Latin American data, examining individual labour market transitions and implications of education/training and labour market policies. To diminish informality, cutting the costs of formality is more effective than raising those of informality.
    Keywords: self-employment, wage employment, informality
    JEL: O17 J23
    Date: 2012–03
  22. By: Degol Hailu (UNDP SURF); Admasu Shiferaw (College of William and Mary)
    Abstract: This paper analyses macroeconomic aspects of exit from aid-dependence. By ?exit from aid?, we mean substantial and enduring decline over time in Official Development Assistance (ODA) as a share of Gross Domestic Product (GDP). The relevant macroeconomic variables are identified by systematically comparing two groups of countries. These are countries that initially had similar and very high degrees of dependence on international aid but followed dramatically different trajectories of aid-dependence afterwards. This comparison was carried out over five decades since the 1960s using both non-parametric and parametric approaches. We find that the likelihood of exit from aid increases significantly with macroeconomic stability in the sense of maintaining moderate inflation, the rate of investment; aggressive effort at domestic resource mobilisation; and structural change in favour of a growing industrial sector, particularly manufacturing. We conclude that if donors and recipients were to coordinate their aid efforts to support the above-mentioned policy objectives, aid could still be a development tool with diminishing importance. (?)
    Keywords: Macroeconomic Determinants of Exit from Aid-Dependence
    Date: 2012–02
  23. By: Sonali Jain-Chandra; Adil Mohommad; Anoop Singh
    Abstract: Worldwide protests against the perceived lack of economic opportunity and failure of governance have refocused attention on the need for inclusive growth and strong institutions. In developing countries, large informal economies limit state capacity to deliver governance and strong institutions, which in turn discourages participation in and expansion of the formal economy. This paper analyzes the determinants of the underground economy, with particular emphasis on the role of institutions and the rule of law. We find that when businesses are faced with onerous regulation, inconsistent enforcement and corruption, they have an incentive to hide their activities in the underground economy. Empirical analysis suggests that institutions are a more important determinant of the size of the underground economy than tax rates.
    Keywords: Developing countries , Economic growth , Financial sector , Fund role , Governance , Shadow economy ,
    Date: 2012–02–09
  24. By: Packel, Laura; Dow, William H.; de Walque, Damien; Isdahl, Zachary; Majura, Albert
    Abstract: Information, education, communication and interventions based on behavioral-change communication have had success in increasing the awareness of HIV. But these strategies alone have been less successful in changing risky sexual behavior. This paper addresses this issue by exploring the link between action and the intention to change behaviors. In Africa, uncertainty in the lives of those at risk for HIV may affect how intentions are formed. Characterize this uncertainty by understanding the reasons for discrepancies between intentions and actions may help improve the design of HIV-prevention interventions. Based on an incentives-based HIV prevention trial in Tanzania, the longitudinal dataset in this paper allows the exploration of intended strategies for changing sexual behaviors and their results. The authors find that gender, intervention groups and new positive diagnoses of sexually transmitted infections can significantly predict the link between intent and action. The paper examines potential mediators of these relationships.
    Keywords: Population Policies,HIV AIDS,Adolescent Health,Health Monitoring&Evaluation,Gender and Health
    Date: 2012–03–01
  25. By: Fischer, Elisabeth; Qaim, Matin
    Abstract: With the commercialization of agriculture, women are increasingly disadvantaged because of persistent gender-disparities in access to productive resources. Farmer collective action that intends to improve smallholder access to markets and technology could potentially accelerate this trend. Here, we use survey data of small-scale banana producers in Kenya to investigate the gender implications of recently established farmer groups. Traditionally, banana has been a women’s crop in Kenya. Our results confirm that the groups contribute to increasing male control over banana. While male control over banana revenues does not affect household food security, it has a negative marginal effect on dietary quality. We demonstrate that the negative gender implications of farmer groups can be reduced or avoided when women are group members themselves. In the poorest income segments, group membership even seems to have a positive effect on female-controlled income share. Some policy implications towards gender mainstreaming of farmer collective action are discussed.
    Keywords: gender, collective action, market access, agricultural technology, household food security and nutrition, Kenya, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Institutional and Behavioral Economics, International Development, Research and Development/Tech Change/Emerging Technologies, D71, J16, O12, O13, O31, Q13,
    Date: 2012–02
  26. By: Foellmi, Reto; Oechslin, Manuel
    Abstract: We explore the productivity impact of international trade in a monopolistically competitive economy with endogenous mark-ups due to credit market frictions. We show that reducing trade barriers in such an environment (i) may - but not necessarily must – have a negative impact on productivity and output; (ii) is bound to increase the polarization of the income distribution. The reason is that the pro-competitive effects of trade reduce mark-ups and hence the borrowing capacity of less affluent entrepreneurs. As a result, smaller firms may no longer be able to make the investments required to operate the high-productivity technology. Our findings are consistent with evidence from developing countries which (i) does not suggest a clear-cut impact of trade on economic performance; (ii) hints at an inequality-increasing effect of globalization.
    Keywords: International trade, credit market frictions, productivity, inequality
    JEL: O11 F13 O16
    Date: 2012–02
  27. By: Anita Doraisami (Asian Development Bank Institute (ADBI))
    Abstract: Several countries have employed countercyclical fiscal policy to ameliorate the impact of the global financial crisis. This study identifies some of the issues and policy implications associated with this policy response in developing countries. Included are case studies of four developing countries in the Asian region—Malaysia, Indonesia, the Philippines, and Singapore. The findings point to a rich diversity in both the size and composition of fiscal stimulus and the challenges which are confronted. This study suggests several steps that countries might take to improve the impact of expansionary fiscal policy in response to future downturns. These include (i) embedding automatic stabilizing impulses through the provision of social safety nets; (ii) increasing tax revenues collected from personal and corporate taxes, by reducing labor market informality through improvements in the business environment; (iii) safeguarding fiscal sustainability; (iv) rebalancing growth by strengthening other sectors of the economy; (v) reducing expenditures on subsidies; and (vi) ensuring smooth and efficient budget execution.
    Keywords: global financial crisis, Countercyclical Fiscal Policy, Malaysia, the the Philippines, and Singapore
    JEL: E60 E61 E62 E63
    Date: 2011–06
  28. By: Azra Abdul Cader (Asian Development Bank Institute (ADBI)); Lakwimashi Perera
    Abstract: The economic crisis hit many countries in 2007 and the effects are still being felt, especially in poorer developing nations. Much of the debate surrounding the economic crisis and its impacts has focused on the financial and economic aspects—import/export impacts, economic growth losses, labor force cutbacks, and fiscal imbalances. The social impact, especially on poor and vulnerable groups, has received less mention. Yet, if countries are to address the overall impacts of the economic crisis, it is vital that they also consider investing time and money to deal with social impacts more effectively. There are fears, however, that a reduction in spending on vital sectors (including the healthcare sector) to ensure economic recovery could affect poor and vulnerable populations and, in turn, erase the progress that has been made thus far. The decision to reduce such spending could also come from donors, who tend to favor a market-led recovery process in economic crises, thereby neglecting vital social service sectors that cater to the needs of poor populations. This spending can supplement government services or fill resource gaps and as a result reductions could have negative impacts on beneficiary populations, particularly the poor and vulnerable. Addressing child and maternal health issues within the context of the economic crisis is one key area to consider given its short, medium, and long-term effects on populations in developing countries. In South Asian countries, child and maternal health-related indicators tend to be disturbing despite the rapid growth rates in many of these countries. The number of infant deaths is still quite high, nutrition of children and women continues to be problematic, and maternal health and pre/post natal care remains poor. This paper presents an overview of child and maternal health in the South Asia region, but also recommends that interventions take into account a series of factors if the impacts of the economic crisis are to be minimized : There is a need for more information and research on the impacts of the crisis; Investing in social protection and safety nets is imperative; Food security should be integrated into social protection; Vulnerable households require support to cope with the crisis despite their own efforts and coping strategies; State investments that support vulnerable populations should be protected in times of crisis.
    Keywords: economic crisis, impact assessment, Child and maternal health, the poor, South Asia
    JEL: I10 Y20
    Date: 2011–07
  29. By: Alassane DRABO; Pascale COMBES MOTEL (Centre d'Etudes et de Recherches sur le Développement International); Martine AUDIBERT (Centre d'Etudes et de Recherches sur le Développement International)
    Abstract: Relationships between health and economic prosperity or economic growth are difficult to assess. The direction of the causality is often questioned and the subject of a vigorous debate. For some authors, diseases or poor health had contributed to poor growth performances especially in low-income countries. For other authors, the effect of health on growth is relatively small, even if one considers that human capital accumulation needs also health investments. It is argued in this paper that commonly used health indicators in macroeconomic studies (e. g. life expectancy, infant mortality or prevalence rates for specific diseases such as malaria or HIV/AIDS) imperfectly represent the global health status of population. Health is rather a complex notion and includes several dimensions which concern fatal (deaths) and non-fatal issues (prevalence and severity of cases) of illness. The reported effects of health on economic growth vary accordingly with health indicators and countries included in existing analyses. The purpose of the paper is to assess the effect of health on growth, by using a global health indicator, the so-called disability-adjusted life year (DALY) that was proposed by the World Bank and the WHO in 1993. Growth convergence equations are run on 159 countries over the 1999-2004's period, where the potential endogeneity of the health indicator is dealt for. The negative effect of poor health on economic growth is not rejected thus reinforcing the importance of achieving MDGs.
    Keywords: Disease Global Burden, DALYs, economic growth, macroeconomic health impact, cross-country analysis
    JEL: O47 I18 I19 E24 E22
    Date: 2012
  30. By: Francisco J. Buera; Joseph P. Kaboski; Yongseok Shin
    Abstract: We provide a quantitative evaluation of the aggregate and distributional impact of microfinance or credit programs targeted toward small businesses. We find that the redistributive impact of microfinance is stronger in general equilibrium than in partial equilibrium, but the impact on aggregate output and capital is smaller in general equilibrium. Aggregate total factor productivity (TFP) increases with microfinance in general equilibrium but decreases in partial equilibrium. When general equilibrium effects are accounted for, scaling up the microfinance program will have only a small impact on per-capita income, because the increase in TFP is counterbalanced by lower capital accumulation resulting from the redistribution of income from high-savers to low-savers. Nevertheless, the vast majority of the population will be positively affected by microfinance through the increase in equilibrium wages.
    JEL: D91 D92 E44 O11
    Date: 2012–03

This nep-dev issue is ©2012 by Mark Lee. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.