nep-dev New Economics Papers
on Development
Issue of 2012‒09‒03
sixteen papers chosen by
Mark Lee
Towson University

  1. Appropriate Technology, Human Capital and Development Accounting By Areendam Chanda; Beatrice Farkas
  2. Impact of climate related shocks on child's health in Burkina Faso By Catherine Araujo Bonjean; Stéphanie Brunelin; Catherine Simonet
  3. The impact of development aid on education and health: Survey and new evidence from dynamic models By Ziesemer, Thomas
  4. Determinants of the prevalence of diarrhoea in adolescents attending school: A case study of an Indian village school By Ramani, Shyama V.; Frühauf, Timothée; Dutta, Arijita; Meijers, Huub
  5. Heterogeneous returns to education in the labor market By Fasih, Tazeen; Kingdon, Geeta; Patrinos, Harry Anthony; Sakellariou, Chris; Soderbom, Mans
  6. How does India's rural roads program affect the grassroots ? findings from a survey in Orissa By Bell, Clive; van Dillen, Susanne
  7. Equity in tertiary education in Central America : an overview By Bashir, Sajitha; Luque, Javier
  8. Estimating the social profitability of India's rural roads program : a bumpy ride By Bell, Clive
  9. Conditional cash transfers and school enrollment : impact of the conditional cash transfer program in the Philippines By Chaudhury, Nazmul; Okamura, Yuko
  10. Brazil - Social policy, perceptions and the press : an analysis of the media's treatment of conditional cash transfers in Brazil By Lindert, Kathy; Vincensini, Vanina
  11. The determinants of household consumption and poverty in Fiji By Neelesh Gounder
  12. The Human Capital Roots of the Middle Income Trap: The Case of China By Zhang, Linxiu; Yi, Hongmei; Luo, Renfu; Liu, Changfang; Rozelle, Scott
  13. Ethnic Minorities in Northern Mountains of Vietnam: Poverty, Income and Assets By Nguyen Viet, Cuong
  14. Are Migrants in Large Cities Underpaid? Evidence from Vietnam By Nguyen, Viet Cuong; Pham, Minh Thai
  15. Credit Constraints, Quality, and Export Prices: Theory and Evidence from China By Fan, Haichao; Lai, Edwin L.-C.; Li, Yao Amber
  16. The Link between Agricultural Output and the States of Poverty in the Philippines: Evidence from Self-Rated Poverty Data By Mapa, Dennis S.; Lucagbo, Michael; Garcia , Heavenly Joy

  1. By: Areendam Chanda; Beatrice Farkas
    Abstract: Over the past decade, research explaining cross country income differences has increasingly pointed to the dominant role of total factor productivity (TFP) gaps as opposed to factor accumulation. Nevertheless, it is a widely held belief that a country's ability to absorb and implement technologies is tied to its human capital. In this paper, we implement this idea in a novel specification and explore its quantitative implications within a development accounting framework. In our model, intermediate goods production takes place over a range of industries, and human capital ratios in a country influence industry specific productivities asymmetrically. As a result, in human capital abundant countries, production is concentrated around industries with high TFP, while in low human capital countries, production is concentrated around industries with low TFP. Development accounting exercises for a range of parameter values suggest that this human capital-technology complementarity may account for eighteen to twenty five percent of differences in GDP per worker which is higher than the combined direct contribution of factors of production.
    Keywords: Development accounting, total factor productivity, technology-<br /> skill complementarity, appropriate technology, human capital
    JEL: O14 O3 O47
    Date: 2012
  2. By: Catherine Araujo Bonjean (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Stéphanie Brunelin (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Catherine Simonet (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: The aim of this paper is to estimate the impact of weather related income shocks on child health in rural Burkina Faso where rain fed agriculture is the dominant production system. We combine health data originating from the 2008 household survey with meteorological data to define shocks at the child level. We first estimate the marginal effect of rainfall at various ages on the child's health in order to identify the critical period during which deprivation has the most severe consequences. Then we look for a different impact of shocks on girls and boys that would reflect a gender bias in intra household resource allocation. We also assess the household ability to smooth consumption by testing for an asymmetric effect of rainfall shocks according to their size and by testing the impact of shocks according to household endowments. Results evidence a strong relationship between rainfall shocks during the prenatal period and child health. Households are not able to dampen small but negative rainfall shocks. Unexpectedly, girls are less severely affected by shocks than boys. The robustness of results is tested by using the sibling and difference-in-differences estimators as well as placebo regressions.
    Keywords: Child health;rainfall shock;burkina faso;sibling estimator;treatment-effect model
    Date: 2012–08–24
  3. By: Ziesemer, Thomas (UNU-MERIT/MGSoG, and School of Business and Economics, Maastricht University)
    Abstract: We investigate the impact of aggregate aid, earmarked aid, committed or disbursed, on social indicators in health and education. A literature review shows that for earmarked aid use of commitment data mostly leads to insignificant results; use of disbursement data mostly leads to significantly favourable results; panel data models including lagged dependent variables lead to significantly favourable results for at least one form of aid unless only commitment data are used. In our own analysis of effects of aggregate aid per capita on life expectancy and literacy we find from detailed analysis of lag structures that the data for literacy and life expectancy in dynamic panel data models should be taken in the form of growth rates. Growth rates of aid per capita are shown to have significantly favourable effects on the growth rates life expectancy. Growth rates or levels of aid per capita may reduce growth rates of illiteracy in system GMM estimates.
    Keywords: Development Aid, Education, Health, Dynamic Panel Data Model
    JEL: F35 I15 I25
    Date: 2012
  4. By: Ramani, Shyama V. (UNU-MERIT/MGSoG); Frühauf, Timothée (Johns Hopkins Bloomberg School of Public Health); Dutta, Arijita (Department of Economics, University of Calcutta); Meijers, Huub (UNU-MERIT/MGSoG, and School of Business and Economics, Maastricht University)
    Abstract: In developing countries, including India, diarrhoea is a leading killer throughout the age pyramid. However, most of the medical literature on the determinants of diarrhoea focuses only on young children or the elderly, with health policy mainly targeting the former. Thus, the present article attempts to contribute to a better understanding of the determinants of diarrhoea in adolescents - the understudied population. The paper develops a model using the medical literature, refines it to fit an Indian village context and tests the hypotheses identified through administering a questionnaire to 114 adolescents in an Indian village school. Results confirm the well known importance of household sanitation. In addition, the contribution of the present study is to assert that access to school toilets and usage of school toilets are also crucial. Furthermore, usage of toilets at school varies as a function of gender and the existence of a toilet in the student's household. Finally, the installation of toilets in schools is not enough, sustainable financial models must be found to maintain toilets and induce students to use them.
    Keywords: diarrhoea, adolescents, India, sanitation, school
    JEL: I15 I25 O29
    Date: 2012
  5. By: Fasih, Tazeen; Kingdon, Geeta; Patrinos, Harry Anthony; Sakellariou, Chris; Soderbom, Mans
    Abstract: Since the development of human capital theory, countless estimates of the economic benefits of investing in education for the individual have been published. While it is a universal fact that in all countries of the world the more education one has the higher his or her earnings, it is nevertheless important to know the empirical returns to schooling. However, simply knowing average returns is not useful in a world of heterogeneity. This paper finds increasing returns going from the lower to the higher end of the earnings distribution, but with some important differences across regions. The returns increase by quantile for Latin America. The returns decrease by quantile for most East Asian countries, producing an overall equalizing effect. India and Pakistan demonstrate opposite results. In Ghana, the returns across the distribution are flat, while for Kenya and Tanzania education is dis-equalizing.
    Keywords: Education For All,Access&Equity in Basic Education,Primary Education,Teaching and Learning,Debt Markets
    Date: 2012–08–01
  6. By: Bell, Clive; van Dillen, Susanne
    Abstract: This paper analyzes the effects of all-weather rural roads on households'net output prices, education and health in a poor, drought-prone region of India. Of 30 villages originally surveyed in 2001-02, when two had such roads, a further nine received them between January 2007 and December 2009 under the program Pradhan Mantri Gram Sadak Yojana. Cross-section comparisons involving all villages and'before and after'comparisons in the nine yielded these findings: (i) net output prices were 5 per cent or more higher; (ii) substantially fewer days of schooling were lost due to bad weather, largely because teachers had fewer absences; (iii) the acutely sick received more timely treatment and were more likely to be treated in a hospital than in the nearest primary health clinic; and (iv) the respondents ranked the resulting benefits in the domains of health and education at least as highly as the'commercial'ones.
    Keywords: Transport Economics Policy&Planning,Health Monitoring&Evaluation,Social Accountability,Housing&Human Habitats,Disease Control&Prevention
    Date: 2012–08–01
  7. By: Bashir, Sajitha; Luque, Javier
    Abstract: This paper analyzes the evolution in socio-economic and ethnic disparities in tertiary education attainment, participation, and completion and labor market outcomes in the six countries of Central America. There is evidence of differential progress, with Costa Rica, a middle-income country, and Nicaragua, a low-income country, having improved participation of low-income students in tertiary education, while this continues to be negligible in Guatemala, El Salvador, and Honduras. Wide differentials in salaries linked to socio-economic background can signal differences in the quality of tertiary education or prior educational experiences. The analysis distinguishes between long-term and short-term constraints and the key transitions in the education cycle that impede access to tertiary education. The main obstacle to accessing tertiary education for poor students is the failure to either start or complete secondary education, suggesting different priorities for different countries in addressing long-term constraints. However, problems also arise within tertiary education, as in all countries the average tertiary education completion rate is below 50 percent, with even lower rates for students from low-income families and indigenous backgrounds. The paper uses an OECD framework for public policies for promoting equity in tertiary education to assess policies in Central American countries and concludes that many of them currently lack the policies, instruments, and institutional mechanisms to promote greater equity in tertiary education. The paper highlights how valuable insights can be obtained from analysis of household survey data in the absence of comprehensive data on tertiary education which is typical of many developing countries.
    Keywords: Access&Equity in Basic Education,Tertiary Education,Teaching and Learning,Gender and Education,Education For All
    Date: 2012–08–01
  8. By: Bell, Clive
    Abstract: India's rural roads program, Pradhan Mantri Gram Sadak Yojana, aims to draw villagers into the mainstream by improving not only their terms of trade, but also their educational attainments and health. Treating each all-weather feeder road as an isolated element within the larger network, and using shadow prices to value the main components of costs and benefits, the paper demonstrates that further investments in the program are, with high probability, socially profitable, especially in poorer and more densely settled regions. Taking the entire set of new individual roads together, qualitative arguments suggest that their external and spill-over effects on the system as a whole probably generate some net additional benefits, but of very uncertain magnitude.
    Keywords: Transport Economics Policy&Planning,Economic Theory&Research,Environmental Economics&Policies,Health Monitoring&Evaluation,Rural Roads&Transport
    Date: 2012–08–01
  9. By: Chaudhury, Nazmul; Okamura, Yuko
    Abstract: Despite modest economic growth over the past decade, the Philippines have made little progress in reducing poverty. In this regard, the Philippines is an outlier in the region, seemingly unable to translate economic growth into meaningful poverty reduction. This underscores the fact that structural poverty remains a binding constraint to equitable growth. Furthermore, the Philippines remains highly vulnerable to climatic and other adverse shocks, making the task of poverty reduction even more challenging. To help meet short-term consumption needs while fostering investment in human capital to help break the intergenerational transmission of poverty, the Philippines launched a conditional cash transfer (CCT) program in early 2008. This study represents a first step toward rigorously documenting the causal impact of the CCT program, focusing on school enrollment from a small selective sample survey. Primarily for illustrative purposes, the study concentrated on areas where education outcomes were low before the intervention, to determine the impact on marginalized areas. The study compared school enrollment before and after CCT program implementation, using panel data of about 2,000 CCT and non-CCT children from 900 sample households in three regions of the country. The baseline data was collected in 2008 before program implementation, matched to the follow-up survey which was conducted in 2011. Under the CCT program, households receive cash transfers conditional on school enrollment and regular attendance of children aged 6-14, therefore the analysis used the sample of children aged 6-14 during the baseline (2008), and the same children aged 9-17 at the time of the follow-up survey (2011).
    Keywords: Youth and Governance,Street Children,Rural Poverty Reduction,Primary Education,Health Monitoring&Evaluation
    Date: 2012–07–01
  10. By: Lindert, Kathy; Vincensini, Vanina
    Abstract: This report analyzes perceptions about Conditional Cash Transfers (CCTs) as portrayed and debated in free and independent press in Brazil. The motives behind the study are to contribute to an understanding of the public debate about this type of social policy instrument, given its widespread popularity and potential to reduce poverty and inequality and the replication of this type of instrument in many countries around the world. It examines the tenor of this public debate at two levels: (a) the macro level, looking at overall press coverage and the tone of media articles towards CCTs in Brazil; and (b) the micro level, digging deeper into the media treatment of technical design and implementation features.
    Keywords: Information Security&Privacy,Population Policies,Public Sector Corruption&Anticorruption Measures,Technology Industry,Educational Technology and Distance Education
    Date: 2010–12–01
  11. By: Neelesh Gounder
    Keywords: Poverty, household consumption, multivariate analysis, South Pacific, Fiji
    JEL: D12 D31 I32
    Date: 2012–05
  12. By: Zhang, Linxiu; Yi, Hongmei; Luo, Renfu; Liu, Changfang; Rozelle, Scott
    Abstract: China, like other middle income countries, is facing the challenges of the next stage of development as its leaders seek to guide the nation into becoming a high income country. At this same point of development, however, other countries have faltered, raising the possibility of stagnation or collapse. The stagnation of growth after reaching a level of income high enough to be call “middle income” is a phenomenon which some observers call the Middle Income Trap. In this paper we explore one of the major challenges that nations, including China, must face in the transition from middle to high income: the management of inequality. In particular, we explore the possible roots of future inequality that is associated with a nation’s underinvestment in the human capital of broad segments of its population. To meet this goal we first look at several benchmarks of successful transitions from middle to high income (e.g., the case of South Korea) and not-so-successful transitions (Mexico). We then exam more systematically the characteristics of countries that have successfully transitioned (or graduated) from middle to high income (Graduates) and those that are attempting to do so now (Aspirees). With this background, we describe the challenges that China faces in the light of rising wage rates and highly unequal income distribution today. We also document the high levels of human capital inequality in China today, a harbinger of high future inequality. In discussing the sources of the human capital inequality, in addition to the structural and institutional barriers that are discouraging many students (and their parents) from staying in school to achieve the levels of learning that we believe are necessary for preparing individuals for employment in the coming decades, we also identify severe nutritional and health problems. We believe that these nutrition and health problems, unless addressed, are creating serious China’s human capital deficiencies in poor areas of rural China and locking in decades of hard-to-address inequality. The paper ends with a call for leaders in China (and countries at the same level of income of China) to launch immediately a war on poor education, health and nutrition as one step in helping such nations avoid the Middle Income Trap in the future.
    Keywords: Labor and Human Capital,
    Date: 2012–08
  13. By: Nguyen Viet, Cuong
    Abstract: This study examines the asset and income pattern of poor ethnic minorities in Northern Mountains of Vietnam using data from a 2010 Northern Mountain Baseline Survey (NMBS) of the Second Northern Mountains Poverty Reduction Project and Vietnam Household Living Standard Survey (VHLSS) 2010. The poor ethnic minorities in Northern Mountains have lower assets and income than ethnic minorities in other regions. Their income is mainly from crops and livestock. Compared with Kinh/Hoa and ethnic minorities in other regions, poor ethnic minorities in Northern Mountain have substantially lower income from wages and non-farm activities. The difference in the income gap between Northern Mountain ethnic minorities and other households is mainly explained by the gap in wages and non-farm income. Northern Mountain ethnic minorities spend less time on wages and non-farm employment. Compared with other households, their non-farm income per working hours and also farm income per working hours is substantially lower.
    Keywords: Ethnic minority; household income; poverty; decomposition; Vietnam
    JEL: I31 I32
    Date: 2012–02–20
  14. By: Nguyen, Viet Cuong; Pham, Minh Thai
    Abstract: This paper examine the difference in wages between migrants and non-migrants (native workers) in large cities in Vietnam. It is found that migrants receive substantially lower wages than non-migrants. The wage gap tends to be larger for older migrants. However, once observed demographic characteristics of workers are controlled, there is no difference in wages between migrants and non-migrants. The main difference in observed wages between migrants and non-migrants is explained by differences in age and education between migrants and non-migrants.
    Keywords: Migration; underpaid; decomposition; household survey; Vietnam
    JEL: E24 O15
    Date: 2012–05–16
  15. By: Fan, Haichao; Lai, Edwin L.-C.; Li, Yao Amber
    Abstract: This paper examines (i) the relationship between the credit constraints faced by a firm and the unit value prices of its exports, as well as (ii) the relationship between the export prices of a firm and its productivity. The paper extends Melitz's (2003) model of trade with heterogeneous firms by introducing endogenous quality, credit constraints and marketing costs. There are three key findings. First, there exists a positive relationship between firm productivity and export prices because the choice of higher-quality inputs is associated with higher productivity. Second, tighter credit constraints faced by a firm reduces its optimal prices as its choice of lower-quality inputs dominates the price distortion effect resulting from credit constraints. Third, if one adopts the alternative assumption that quality is exogenous across firms, then completely opposite results would be expected: there would be a negative relationship between prices and productivity; prices increase as firms face tighter credit constraints. An empirical analysis using Chinese bank loans data, Chinese firm-level data from the National Bureau of Statistics of China (NBSC), and Chinese customs data strongly supports the predictions of the endogenous-quality model, and confirms the existence of the quality adjustment effect: firms optimally choose lower quality when facing tighter credit constraints. Our finding of a significant impact of credit constraints on export prices indicates the prevalence of heterogeneity of product quality across firms.
    Keywords: credit constraints; credit access; credit needs; endogenous quality; export prices; quality; heterogeneous firms; productivity
    JEL: G2 D2 F1 L1
    Date: 2012–08–01
  16. By: Mapa, Dennis S.; Lucagbo, Michael; Garcia , Heavenly Joy
    Abstract: The high poverty incidence in the county is a concern that needs to be addressed by our policy makers. Official poverty statistics from the National Statistical Coordination Board (NSCB) shows that the reduction in poverty over the past two decades has been quite dismal from 38% in 1988 to 26% in 2009 or less than one percent reduction per year. Since poverty incidence has dynamic patterns, studies using official poverty data encounter difficulty because of limited number of data points. This study builds econometric models in analyzing the movement of poverty in the country using the quarterly self-rated poverty series of the Social Weather Stations. The first model uses Markov Switching to determine the states of poverty. It assumes two states: high and moderate states of poverty. A high 61% of the population considered themselves as poor when the country is in the state of high poverty. In times of moderate poverty, 49.5% of the population considered themselves as poor. The result shows that once the country is in the state of high poverty, it stays there for an average of 24 quarters, or six years, before moving out. The paper then builds a logistic regression model to show what determines the states of high poverty. The model shows that a one-percent increase in agricultural output in the previous quarter reduces the probability of being in the high state of poverty by about 8 percentage points, all things being the same. The study shows that poverty incidence in the country is dynamic and frequent monitoring through self-rated poverty surveys is important in order to assess the effectiveness of the government programs in reducing poverty. The self-rated poverty surveys can complement the official statistics on poverty incidence.
    Keywords: Markov Switching; Logistic Regression; Self-Rated Poverty
    JEL: C53 I38 C22 I32 Q10
    Date: 2012–08

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