nep-dev New Economics Papers
on Development
Issue of 2012‒06‒13
eleven papers chosen by
Mark Lee
Towson University

  1. Microfinance and its role in household poverty reduction: findings from Pakistan By Asad K. Ghalib; Issam Malki; Katsushi S. Imai
  2. Crop returns, prices, credit and poverty in Lao-PDR By Samuel Annim; Raghav Gaiha
  3. Long-Run Costs of Piecemeal Reform: Wage Inequality and Returns to Education in Vietnam By Phan, Diep; Coxhead, Ian
  4. Corruption By Banerjee, Abhijit; Hanna, Rema; Mullainathan, Sendhil
  5. Education, Risk and Efficiency in Human Capital Investment By David Mayston; Juan Yang
  6. The concept of structural economic vulnerability and its relevance for the identification of the Least Developed Countries and other purposes By Patrick Guillaumont
  7. International Migration and Development: A review in light of the crisis By Jose Antonio Alonso
  8. Strengthening smooth transition from the least developed country category By Secretariat of the Committee for Development Policy
  9. Conflict and the identification of the Least Developed Countries: Theoretical and statistical considerations By Ana Luiza Cortez; Namsuk Kim
  10. How Deep Are the Roots of Economic Development? By Enrico Spolaore; Romain Wacziarg
  11. Does Microcredit Create Over-indebtedness? By Sk. Mahmudul Alam, Mahmud

  1. By: Asad K. Ghalib; Issam Malki; Katsushi S. Imai
    Abstract: Abstract This study examines whether household access to microfinance reduces poverty, and if so, to what extent and across which dimensions of wellbeing. The study draws on first-hand observations and empirical data gathered from interviews of 1,132 households across 11 districts in the rural areas of the province of Punjab in Pakistan. It employs a quasi-experimental research design and makes use of data collected by interviewing both borrower (treatment) and non-borrower (control) households. Sample selection biases are controlled by matching propensity scores. Findings reveal that although borrowers seem to fare better than non-borrowers across around 70 percent of the indicators, a majority of these are not statistically significant. This suggests that despite producing some degree of positive impact, microfinance institutions still have to make sustained efforts to bring about real difference to the livelihoods of the poor.
    Date: 2012
  2. By: Samuel Annim; Raghav Gaiha
    Abstract: Abstract With Lao PDR’s macroeconomic performance currently booming, we investigate the country’s poverty situation by examining the drivers of household poverty. This paper tests four major hypotheses: (1) Whether higher returns on all crops harvested per capita reduce consumption expenditure, food expenditure and the World Bank’s US$1.25/day (PPP, 2005) poverty cut-offs? (2) Whether higher returns on glutinous rice harvested per capita also reduce poverty? (3) Whether higher crop prices lower poverty? (4) Whether easier access to credit contributes to poverty reduction? Data on 5,031 households from the fourth round of the Laos Expenditure and Consumption Survey (LECS IV) are used to estimate Probit and instrumental variable Probit equations. Potential endogeneity of some of these variables (e.g. returns to crops harvested) is addressed through appropriate instrument variables. Briefly, returns on crops harvested reduce different measures of poverty (e.g. food poverty, dollar poverty), as do higher producer prices and easier access to credit. An important policy conclusion in light of Millennium Development Goal 1 is the imperative of higher returns on rice and glutinous rice, more remunerative prices for farmers and easier access to credit. These areas of policy concern assume greater importance as Laos prepares for its accession to the World Trade Organization (WTO). An accelerated market-orientation of agriculture may induce not just greater efficiency but also more equitable outcomes.
    Date: 2012
  3. By: Phan, Diep (Beloit College); Coxhead, Ian (University of WI)
    Abstract: "Shock therapy" transitions in Eastern Europe facilitated movement of skilled workers into privatized industries offering high wage premia relative to state industries. Other transitional economies (notably China and Vietnam) have been slower to relinquish control over key industries and factor markets. Some costs of this piecemeal approach are now becoming apparent. We examine the spillover of continuing capital market distortions into the market for a complementary factor, skilled labor. Using Vietnamese data we find that capital market segmentation creates a two-track market for skills, in which state sector workers earn high salaries while non-state workers face lower demand and lower compensation. Growth is reduced directly by diminished allocative efficiency and incentives to acquire education, and indirectly by higher wage inequality and rents for workers with access to state jobs.
    JEL: F16 J31 P23
    Date: 2012–05
  4. By: Banerjee, Abhijit (MIT); Hanna, Rema (Harvard University); Mullainathan, Sendhil (Harvard University)
    Abstract: In this paper, we provide a new framework for analyzing corruption in public bureaucracies. The standard way to model corruption is as an example of moral hazard, which then leads to a focus on better monitoring and stricter penalties with the eradication of corruption as the final goal. We propose an alternative approach which emphasizes why corruption arises in the first place. Corruption is modeled as a consequence of the interaction between the underlying task being performed by bureaucrat, the bureaucrat's private incentives and what the principal can observe and control. This allows us to study not just corruption but also other distortions that arise simultaneously with corruption, such as red-tape and ultimately, the quality and efficiency of the public services provided, and how these outcomes vary depending on the specific features of this task. We then review the growing empirical literature on corruption through this perspective and provide guidance for future empirical research.
    Date: 2012–05
  5. By: David Mayston; Juan Yang
    Abstract: University of York Beijing Normal University The efficiency of the process of investment in human capital through education is of considerable importance both to the individuals involved and to the wider economy. The paper develops an analytical framework in which issues of the efficiency of such investment can be considered alongside its interface with the operations of the labour market, and in which the risks posed by such educational investments when the labour market is less than fully efficient can be analysed. These issues are of particular relevance in the context of the major expansions in higher education which have taken place in recent years, not least in China, which is now second in its share of all 25 – 64 year olds internationally with tertiary education. The paper therefore complements its theoretical analysis with an empirical investigation of the risk factors which impact on the efficiency of this large-scale educational investment for individual graduates and for the wider economy
    Keywords: Human capital investment, higher education, graduate overeducation, risk factors, educational expansion in China.
    JEL: I21 I25 I28 J24 J31
    Date: 2012–05
  6. By: Patrick Guillaumont
    Abstract: This paper was prepared by Professor Patrick Guillaumont, as a contribution to the expert group meeting of the Committee for Development Policy on climate change, conflict and other issues related to the review of the criteria for the identification of least developed countries (LDCs) which took place in New York, 2-3 February 2011. Structural economic vulnerability is a major obstacle for the development of LDCs. The paper discusses the conceptual, methodological and empirical issues related to the economic vulnerability index (EVI) developed and used by the Committee for Development Policy (CDP) in the identification of LDCs. The note also addresses the relation between physical and economic vulnerability to climate change as well as the role of the EVI in allocating official development aid and as tool for development research.
    Keywords: Conflict, economic vulnerability, least-developed countries, climate change
    JEL: F5 O1 Q54
    Date: 2011–09
  7. By: Jose Antonio Alonso
    Abstract: Increasing international migratory flows in the last four decades is one of the most visible manifestations of the globalization process. In spite of its potential positive effect on global efficiency and well-being, little progress has been made in designing and promoting a normative and institutional framework to allow a better global governance of international migration. The current crisis has added new concerns in relation to migrant situation particularly in the countries more affected by the recession. It is likely that migratory pressures continue beyond the crisis, as international asymmetries that promote international migration have not been overcome.
    Keywords: international migration, labour markets, mobility of labour, development, migrants?remittances, human capital, brain drain, immigration policy
    JEL: F22 F24 J61 J83 K31 O15
    Date: 2011–12
  8. By: Secretariat of the Committee for Development Policy
    Abstract: This report makes some preliminary suggestions for actions to be taken by the international development community and the graduating countries to strengthen the process of preparing for graduation from the least developed country (LDC) category.The report also offers concrete proposals for addressing in a systematic manner, the current concerns among LDCs about the ad-hoc nature of the extension and phasing out of measures provided by certain development and trading partners.
    Keywords: least-developed countries, smooth transition, official development aid, trade preferences, special and differential treatment
    JEL: F13 F35 O19
    Date: 2012–02
  9. By: Ana Luiza Cortez; Namsuk Kim
    Abstract: This paper reviews conflict as one of potential factors that could be incorporated in the identification of least developed countries (LDCs). It is not clear whether conflict can be considered as a structurally predetermined handicap as those identified in LDC criteria. More importantly, even if countries may be caught in a conflict trap, adding conflict indicators to the LDC criteria does not provide additional insights to enhance our understanding of the category . And adding conflict indicators is unlikely to introduce changes in country classification. Many of the factors associated with conflict are already incorporated in the indicators used to identify LDCs, and, therefore, the inclusion of an explicit conflict indicator ? to capture the risk of falling into conflict.
    Keywords: Conflict, Least Developed Countries, Country classification
    JEL: O19 D74 F35
    Date: 2012–02
  10. By: Enrico Spolaore; Romain Wacziarg
    Abstract: The empirical literature on economic growth and development has moved from the study of proximate determinants to the analysis of ever deeper, more fundamental factors, rooted in long-term history. A growing body of new empirical work focuses on the measurment and estimation of the effects of historical variables on contemporary income by explicitly taking into account the ancestral composition of current populations. The evidence suggests that economic development is affected by traits that have been transmitted across generations over the very long run. This article surveys this new literature and provides a framework to discuss different channels through which intergenerationally transmitted characteristics may impact economic development, biologically (via genetic or epigenetic transmission) and culturally (via behavioral or symbolic transmission). An important issue is whether historically transmitted traits have affected development through their direct impact on productivity, or have operated indirectly as barriers to the diffusion of productivity-enhancing innovations across populations.
    Date: 2012
  11. By: Sk. Mahmudul Alam, Mahmud
    Abstract: In the context of the present crisis of microfinance, it is quite common to use the term over-indebtedness among the poor. Coming up with a precise definition of over-indebtedness for research or regulatory purposes is surprisingly a complex challenge. Few of researchers took attempt to define and measure over-indebtedness among microfinance borrowers. Among them Maurer and Pytkowska (2010); Spannuth & Pytkowska (2011) and Schicks (2011) are notable. But their definition and measurement process of over-indebtedness are not unique. Maurer and Pytkowska showed that by taking microcredit, 17% borrowers are over-indebted and 11% borrowers are at risk of becoming over-indebted in Bosnia and Herzegovina. Spannuth & Pytkowska demonstrated that 7% borrowers are insolvent, 4% borrowers are in critical position and 14% are at risk of becoming over-indebted in Kosovo. Schicks displayed that 30% borrowers are over-indebted in Ghana. The endeavor of this paper is to show the real fact whether microcredit creates over-indebtedness among its borrowers or not.
    Keywords: Microcredit; Borrowers; Over-indebtedness
    JEL: H63 G21
    Date: 2012–05–30

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