nep-dev New Economics Papers
on Development
Issue of 2012‒07‒14
thirteen papers chosen by
Mark Lee
Towson University

  1. International Spillovers in a World of Technology Clubs By Roman Stöllinger
  2. Impact of Rising World Rice Prices on Poverty and Inequality in Burkina Faso By Félix Badolo; Fousseini Traore
  3. Measuring Households' Vulnerability to Idiosyncratic and Covariate Shocks – the case of Bangladesh By Tatsuyoshi Miyakoshi; Laixun Zhao
  4. Inequality Traps and Human Capital Accumulation in South Africa By Miquel Pellicer; Vimal Ranchhod
  5. More relatively-poor people in a less absolutely-poor world By Chen, Shaohua; Ravallion, Martin
  6. Universal health care and informal labor markets : the case of Thailand By Wagstaff, Adam; Manachotphong, Wanwiphang
  7. Marry for What? Caste and Mate Selection in Modern India By Abhijit Banerjee; Esther Dufloi; Maitreesh Ghatak; Jeanne Lafortune
  8. China's Outward Direct Investment: Evidence from a New Micro Dataset By Wei Liao; Kevin K. Tsui
  9. Determinants of Labor-Intensive Exports by the Developing Countries: A Cross Country Analysis By Mottaleb Khondoker; Kaliappa Kalirajan
  10. Economic Growth and Crime: Does Uncertainty Matter? By Eleftherios Goulas; Athina Zervoyianni
  11. The Impact of Business Regulatory Reforms on Economic Growth. By Jamal Ibrahim Haidar
  12. Trade and productivity : self-selection or learning-by-exporting in India. By Jamal Ibrahim Haidar
  13. Constraints to the Growth of Small Firms in Northern Myanmar By Bah, El-hadj M.; Cooper, Geoff

  1. By: Roman Stöllinger (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Technology is a key element for long-term growth and economic development. Given the stark concentration of innovation activities in a few countries most countries have to rely on the international diffusion of newly developed technologies. Some countries may fail to successfully perform the task of technology adaption leading to a tripartite segmentation of countries into an innovation club, an imitation club whose members are capable of absorbing technologies developed by the former and a stagnation group that lack the capability to absorb foreign technologies. We test the role of the technology gap for growth as suggested by the technology club hypothesis in a threshold regression framework using human capital as the threshold variable. Using this approach, which is related to Benhabib-Spiegel type growth regressions, we are able to identify two distinct thresholds giving rise to three country groupings. As suggested by the theory of technology clubs we find the strongest effects from the catch-up term on economic growth for the intermediate group (imitation club).
    Keywords: technology clubs, threshold regressions, technology spillovers, Schumpeterian growth model, human capital
    JEL: O47 O41 I25 O33
    Date: 2012–05
  2. By: Félix Badolo (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Fousseini Traore (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: Between January 2006 and April 2008, the prices of most of the agricultural products considerably rose in international markets. Empirical studies show that this spike in world food prices has increased the number of poor households in developing countries, but the magnitude is not the same in all countries. This paper assesses the impact of rising rice price on poverty and income inequality in Burkina Faso. We use a methodology based on the concept of compensating variation combined with the net benefit ratio (NBR) developed by Deaton (1989) and living standard survey (QUIBB, 2003). The results show that higher rice prices have a negative impact on income and poverty in the regions with a large proportion of households who are net buyers of rice. The poverty rate increases by 2.2 to 2.9 percentage points depending on the assumptions. The increase in poverty increase is higher in urban areas than in rural areas. Rising rice prices also increase income inequality. Income inequality particularly increases in urban areas and in relatively rich regions, but it decreases in poor regions with an important proportion of rice producers.
    Keywords: Measuring and analysis of poverty;farm household;Price
    Date: 2012–06–29
  3. By: Tatsuyoshi Miyakoshi (Faculty of Science & Engineering, Hosei University, Japan); Laixun Zhao (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)
    Abstract: This paper examines multinational public goods provision under multilateral income transfers and productivity differences across countries. We assume the existence of a planner who uses linear approximation for utility maximization for all countries. The main findings are: (i) Country i becomes an income receiver when it has an advantage in producing public goods; (ii) the planner country can determine the values of transfers for all countries with an adjustment cost; (iii) even though any country can become a planner, all countries obtain the same utility level; (iv) a lowering of the adjustment cost under a particular planner country leads to a Pareto-improving outcome. All results are derived based on well-known information regarding the cost of producing the public goods and on income levels.
    Keywords: International public goods, Multilateral income transfers, Productivity difference, Planner, Adjustment cost, Welfare
    JEL: H41 F1
    Date: 2012–07
  4. By: Miquel Pellicer (SALDRU, School of Economics, University of Cape Town); Vimal Ranchhod (SALDRU, School of Economics, University of Cape Town)
    Abstract: We consider the interaction between human capital accumulation and inequality in South Africa. We start by discussing three alternative theoretical frameworks that relate inequality and investment decisions in post-secondary education; namely the 'perfect credit markets hypothesis', the 'imperfect credit markets hypothesis' and the 'social externalities hypothesis'. Each of these suggests different policy implications. We then consider which of these seems to have the most validity in the South African context, by presenting some original analysis as well as considering some of the related literature. Our findings suggest that South Africa is indeed in an 'inequality trap' situation and that credit markets do not work well. There is some evidence that social externalities compound the effects of the imperfect credit markets. We conclude with a discussion of possible policy directions. These include information on eligibility to tertiary institutes of education, awareness campaigns regarding public financing options, subsidization of application and registration fees and efforts to improve school quality at the primary and secondary levels.
    Keywords: Nids Data
    Date: 2012
  5. By: Chen, Shaohua; Ravallion, Martin
    Abstract: Relative deprivation, shame and social exclusion can matter to the welfare of people everywhere. The authors argue that such social effects on welfare call for a reconsideration of how we assess global poverty, but they do not support standard measures of relative poverty. The paper argues instead for using a weakly-relative measure as the upper-bound complement to the lower-bound provided by a standard absolute measure. New estimates of global poverty are presented, drawing on 850 household surveys spanning 125 countries over 1981-2008. The absolute line is $1.25 a day at 2005 prices, while the relative line rises with the mean, at a gradient of 1:2 above $1.25 a day. The authors show that these parameter choices are consistent with cross-country data on national poverty lines. The results indicate that the incidence of both absolute and weakly-relative poverty in the developing world has been falling since the 1990s, but more slowly for the relative measure. While the number of absolutely poor has fallen, the number of relatively poor has changed little since the 1990s, and is higher in 2008 than 1981.
    Keywords: Rural Poverty Reduction,Regional Economic Development,Achieving Shared Growth,Services&Transfers to Poor
    Date: 2012–07–01
  6. By: Wagstaff, Adam; Manachotphong, Wanwiphang
    Abstract: This paper explores the possibility that universal health coverage may inadvertently result in distorted labor market choices, with workers preferring informal employment over formal employment, leading to negative effects on investment and growth, as well as reduced protection against non-health risks and the income risks associated with ill health. It explores this hypothesis in the context of the Thai universal coverage scheme, which was rolled out in four waves over a 12-month period starting in April 2001. It identifies the effects of universal coverage through the staggered rollout, and gains statistical power by using no less than 68 consecutive labor force surveys, each containing an average of 62,000 respondents. The analysis finds that universal coverage appears to have encouraged employment especially among married women, to have reduced formal-sector employment among married men but not among other groups, and to have increased informal-sector employment especially among married women. The largest positive informal-sector employment effects are found in the agricultural sector.
    Keywords: Health Monitoring&Evaluation,Labor Markets,Population Policies,Labor Policies,Access to Finance
    Date: 2012–07–01
  7. By: Abhijit Banerjee; Esther Dufloi; Maitreesh Ghatak; Jeanne Lafortune
    Abstract: This paper analyzes how preferences for a non-economic characteristic, such as caste, can affect equilibrium patterns of matching in the marriage market, and empirically evaluates this in the context of arranged marriages among middle-class Indians. We develop a model that demonstrates how the equilibrium consequences of caste depend on whether we observe a bias towards one’s own group or if there is a preference for “marrying up”. We then estimate actual preferences for caste, education, beauty, and other attributes using a unique data set on individuals who placed matrimonial advertisements in a major newspaper, the responses they received, and how they ranked them. Our key empirical finding is the presence of a strong preference for in-caste marriage. We find that in equilibrium, as predicted by our theoretical framework, these preferences do little to alter the matching patterns on non-caste attributes, and so people do not have to sacrifice much to marry within caste. This suggests a reason whycaste remains a persistent feature of the Indian marriage market.
    Keywords: Caste, Marriage, Stable matching
    JEL: D10 J12 O12
    Date: 2012
  8. By: Wei Liao (Hong Kong Institute for Monetary Research); Kevin K. Tsui (Clemson University and Hong Kong Institute for Monetary Research)
    Abstract: More than seventy percent of China's outward direct investment (ODI), according to the Ministry of Commerce statistics, is invested in Hong Kong, the British Virgin Islands, and the Cayman Islands. Using a unique micro-level dataset collected by the Heritage Foundation that documents individual ODI transactions, we first show that the official statistics and the Heritage Foundation measure of China¡¦s ODI are correlated only in the sample of non-haven economies, because the official statistics treat tax havens as final destinations rather than transit points. On average, a dollar increase in the Heritage Foundation measure of ODI is associated with less than a fifteen cent increase in the official ODI among the non-haven economies, and the downward bias is even larger for investment in energy. We also document that the sharp increase in the official ODI to Hong Kong coincides with the rise in the Heritage Foundation measure of ODI to OECD countries since 2007. Finally, we show that some of the well-documented stylized facts about the pattern of China's ODI are artifacts of the mismeasurement of the official data. For instance, contrary to previous findings, we find no evidence that China's ODI is attracted to host countries with poor governance, and that neither cultural proximity nor geographical distance is a major determinant of China's ODI. Furthermore, the Heritage Foundation data suggest that the resource seeking motive of China's ODI is at least as strong as the market seeking motive.
    Keywords: Chinese Economy, Foreign Direct Investment, Tax Haven, Resource Seeking
    JEL: F21 F36 O53
    Date: 2012–06
  9. By: Mottaleb Khondoker; Kaliappa Kalirajan
    Abstract: While it is widely recognized that industrial development is imperative in developing countries to reduce poverty and to attain sustainable economic growth, there is no consensus on how to develop industries and where to start. Generally, the literature argues that developing countries should concentrate on promoting labour intensive industries and exports first due to their low capital stock and relatively abundant labor force. Though many developing countries are attempting to follow this path, the interesting observation is that not all developing countries are reaping the benefits of promoting labor intensive industries in terms of employment generation and sustaining economic growth. This raises an important question as to how it is possible for some developing countries to enjoy more benefits from labor intensive industries, while others are not able to do so. Using cross-country panel data in explaining heterogeneous performance in exporting labor intensive products by the developing countries, an attempt has been made in this paper to identify the important factors over and above the conventional factors such as low labor wages that contribute to the sustained growth of labor intensive exports from developing countries. The empirical findings of this paper emphasizes that even to initiate and sustain the growth of the low value added industries, such as garments, the developing countries should develop basic infrastructure and maintain a friendly business environment.
    Keywords: Developing Country, Garment and textile export, Infrastructure, Business environment, ASIA, Sub-Saharan Africa
    JEL: L67 F14 O14
    Date: 2012
  10. By: Eleftherios Goulas (Department of Economics, University of Patras, Greece); Athina Zervoyianni (Department of Economics, University of Patras, Greece)
    Abstract: This paper contributes to the crime literature by exploring how the crime-uncertainty interaction impacts on economic growth. Using a panel of 25 countries over the period 1991-2007, we find evidence suggesting that increased crime has an asymmetric effect on growth depending on the future prospects of the economy as reflected in the degree of macroeconomic uncertainty. In particular, our results indicate that higher-than-average macroeconomic uncertainty enhances the adverse impact of crime on growth implying that a 10% increase in the crime rate can reduce annual per-capita GDP-growth by between 0.49 and 0.62 percent.
    Keywords: growth, crime, uncertainty
    JEL: O40 K14 D80
    Date: 2012–07
  11. By: Jamal Ibrahim Haidar (Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: I investigate the link between business regulatory reforms and economic growth in 172 countries. I create a five year dataset on business regulatory reforms from the World Bank's Doing Business reports. Then, I test the hypothesis that business regulatory reforms increase economic growth, using data on micro-economic reforms. These data do not suffer the endogeneity issues associated with other datasets on changes in economic institutions. The results provide a robust support for the claim that business regulatory reforms are good for economic growth. The paper establishes that, on average, each business regulatory reform is associated with a 0.15 percent increase in growth rate of GDP.
    Keywords: Growth reform, development, regulations, doing business, institutions.
    JEL: O12 O17 O50 P48
    Date: 2012–05
  12. By: Jamal Ibrahim Haidar (Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: Recent literature tried to explain the Indian growth miracle in different ways, ranging from trade liberalization to industrial reforms. Using data on Indian manufacturing firms, this paper analyzes the relationship between firm's productivity and export market participation during 1991-2004. While it provide evidence of the self-selection hypothesis by showing that more productive firms become exporters, the results do not show that entry into export markets enhances productivity. The paper examines the explanation of self selection hypothesis for total factor productivity differences across 33,510 exporting and non-exporting firms. It uses propensity score matching to test the learning-by-exporting hypothesis. In line with the prediction of recent heterogeneous firm models of international trade, the main finding of the paper is : more productive firms become exporters but it is not the case that learning by exporting is a channel fuelling growth in Indian manufacturing.
    Keywords: Trade, learning-by-exporting hypothesis, self-selection hypothesis, total factor productivity, causality, heterogeneous firm model.
    JEL: C12 F10 F20 F40 L1 L2 L6
    Date: 2012–05
  13. By: Bah, El-hadj M.; Cooper, Geoff
    Abstract: This paper uses survey data collected from Kalaymyo, a small urban city in North West Myanmar, to characterize firms and analyze the constraints limiting their growth. The level of firm ownership is very high but most firms are small, informal, operated out of the home, earning low income and with no employees. The most binding constraints are related to financing constraints, especially lack of access to informal credit. This is followed by the high degree of competition as the majority of firms are small retailers selling non-differentiated goods. This lack of credit combined with an apparent aversion to debt, limits the ability of entrepreneurs to take advantage of the high returns available on investment. We find that firms that made a capital investment over the last three years are significantly more profitable than those that did not.
    Keywords: rural investment climate; enterprize development; poverty reduction; Myanmar
    JEL: O53 O10 L20
    Date: 2012–06

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