nep-dev New Economics Papers
on Development
Issue of 2013‒02‒08
eleven papers chosen by
Mark Lee
Towson University

  1. Do Aid Donors Coordinate Within Recipient Countries? By Öhler, Hannes
  2. Evaluating Latin America’s Commodity Dependence on China By Matt Ferchen; Alicia Garcia-Herrero; Mario Nigrinis Ospina
  3. Latin American Commodity Export Concentration. Is There a China Effect By K.C. Fung; Alicia Garcia-Herrero; Mario Nigrinis Ospina
  4. State-Owned Enterprises, Exporting and Productivity in China: A Stochastic Dominance Approach By Robert Elliott; Ying Zhou
  5. Aid Allocation Rules By Patrick Carter
  6. China's Growth in Transition: Implications for the Thai Economy By Dr. Nasha Ananchotikul; Dr. Pornpinun Chantapacdepong; Chotima Sitthichaiviset
  7. How do OECD donor countries distribute foreign aid among developing countries during their fiscal episodes? By Sèna Kimm GNANGNON
  8. Taxation and Development By Timothy Besley; Torsten Persson
  9. The Origins of Social Contracts: Attitudes toward Taxation in Urban Nigeria. By Cristina Bodea; Adrienne LeBas
  10. Multidimensional Poverty in Colombia, 1997-2010 By Yadira, Diaz; Angulo, Roberto; Pardo, Renata
  11. Political Centralization in Pre-Colonial Africa By Philip Osafo-Kwaako; James A. Robinson

  1. By: Öhler, Hannes
    Abstract: Aid fragmentation and a lack of donor coordination have been widely recognized as principal problems impairing the effectiveness of aid. In particular, the importance of within-country division of labor has been highlighted in recent years. At the same time, rigorous quantitative analyses of within-country aid coordination are largely missing. Taking the whole donor pool(including NGOs) within an aid recipient country into account, we examine the coordination behavior of donors across regions and sectors. Our results indicate a modest degree of donor coordination within Cambodia, even after the 2005 Paris Declaration. In particular, the coordination efforts among bilateral donors seem rather limited, suggesting that their political and economic interests prevent closer coordination. With respect to the behavior of NGOs, we find them to be mainly active in the same regions and sectors as official donors, creating coordination problems between the two groups of donors. In addition, NGOs appear to cluster in the regional-sectoral space although there seems to be some sort of coordination among them.
    Keywords: donor coordination; bilateral donors; multilateral donors; international NGOs; national NGOs; Cambodia
    Date: 2013–01–24
  2. By: Matt Ferchen; Alicia Garcia-Herrero; Mario Nigrinis Ospina
    Abstract: During the last decade, China’s growing economic importance has been considered a blessing for South America, given their still relatively high dependence on the US and commodity exports. However, this positive sentiment is starting to change. Concerns are being raised about potential adverse effects of Chinese demand for raw materials and “excessive†imports of cheap manufactured goods as substitutes of domestic production. In other words, there is a growing fear about extreme export concentration and, in turn, de-industrialization. We explore to what extent South America has become “Sinodependent†and the implications of such dependency. To that end, we create a dependency index and then assess the implications of high Chinese GDP growth rates on South American performance over the last decade. We focus on four countries (Brazil, Argentina, Chile and Peru) and four commodities (iron ore, soy, copper, and ores of non-ferrous metals). We find that each of the countries analyzed has become more exposed to Chinese demand for the commodities in question. In fact, in the past ten years, exposure to Chinese demand measured by our weighted dependency index has risen. This is much more the case for some specific countries and products such as Argentinean soy, Brazilian iron ore and soy, and Chilean copper exports. Despite this increased exposure, we find that Chinese demand has added less than 1 percentage point to GDP growth rates in these four economies in the last years. Although this contribution may be considered bellow expectations, there are secondary effects from the production and export of these commodities not fully captured by the statistics. For any given commodity, there are likely to be spin-off effects in that for any given country, one or two commodities may function as an important engine driving the domestic economy. In turn, any downturn in demand, especially if tied directly to China, would have negative implications beyond the marginal effect on GDP growth that we have calculated here. The combination of hopes and anxieties tied to South America’s decade-long boom in economic relations with China is likely to persist. The honeymoon period of South America-China economic relations may or may not be over, but what is clear is that commodities will continue to underpin the relationship for better or for worse.
    Keywords: Commodity exports, Latin America, China, Dependence
    JEL: F14 F15 F41 F50
    Date: 2013–01
  3. By: K.C. Fung; Alicia Garcia-Herrero; Mario Nigrinis Ospina
    Abstract: Given that commodity export concentration is likely to be unhelpful for economic development, we then ask the question of whether Latin America has been experiencing a more pronounced concentration of such exports. We then use different indicators to measure such concentration. Our measurements show that there may be an increase of commodity concentration exports in the last few years of this decade. This phenomenon leads us to ask the question: is the rise of China partly responsible for such an increase? We then ran formal regressions trying to explain an index of commodity export concentration across countries and over time. We control for standard explanatory variables including the relative price index of commodities, the endowment of commodities, the income effects and the quality of infrastructure. We test our hypothesis for alternative periods and using different econometric methodologies. Our results seem to indicate that there is some evidence of the China effect, i.e. the growing importance of China is positively and significantly related to increased commodity export concentration.
    Keywords: Export concentration, China economic rise, Latin America de-industrialization
    JEL: F14 F43
    Date: 2013–01
  4. By: Robert Elliott; Ying Zhou
    Abstract: A popular explanation for China's rapid economic growth in recent years has been the dramatic increase in the number of private domestic and foreign-owned firms and a decline in the state-owned sector. However, recent evidence suggest that China's state-owned enterprise (SOEs) are in fact stronger than ever. In this paper we examine over 78,000 manufacturing firms between 2002 and 2006 to investigate the relationship between ownership structure and the degree of firm-level exposure to export markets and firm-level productivity. Using a conditional stochastic dominance approach we reveal that although our results largely adhere to prior expectations, the performance of state-owned enterprises differs markedly between those that export and those that supply the domestic market only. It appears that China's internationally focused SOEs have become formidable global competitors.
    Keywords: Productivity, China, firm-level, State-owned enterprise, heterogeneity, stochastic dominance
    JEL: L2 L3 P3 D2
    Date: 2013–01
  5. By: Patrick Carter
    Abstract: This paper studies the aid allocation rule used by major development agencies, and investigates optimal allocations when recipients are neoclassical economies undergoing transition dynamics. When recipients face aid absorption constraints, allocations that favor poorer recipients are not always optimal, contrary to what is assumed in assessments of donor performance. The most quantitatively significant determinants of the optimal sensitivity to recipient characteristics are the generosity of the aid budget and the extent of absorption constraints. In neoclassical recipients aid can only accelerate growth where there is already growth, so the optimal rule places little weight on growth and optimality is largely a matter of balancing recipient need against absorption constraints.
    Keywords: Foreign Aid, Allocation Rules, Economic Growth, Absorption Constraints
    JEL: F35 O4
    Date: 2012–10
  6. By: Dr. Nasha Ananchotikul (Bank of Thailand); Dr. Pornpinun Chantapacdepong (Bank of Thailand); Chotima Sitthichaiviset (Bank of Thailand)
    Abstract: China has rapidly emerged as a global economic superpower and is expected to remain the main growth driver in the next phase of the global economy. Questions often raised are: How long can China’s extraordinary growth be sustained? What direction the Chinese economy is heading towards and what does it imply about opportunities and risks for other countries, including Thailand from our point of interest? From a review of China’s growth pattern and an in-depth analysis of sources of growth, we put forward that, in the short to medium term, China’s potential output growth will remain strong driven mainly by continued capital deepening. In the longer term, however, factor market distortions, misallocation of resources, and the demographic shift in China will increasingly become the key bottlenecks to China’s sustainable growth. Realizing these growth limitations, the Chinese leaders have recently shifted the growth paradigm by resorting to technology leapfrogging in lifting productivity and moving up the value chain. This will significantly change the future pattern of production and exports in China. The Thai economy has greatly benefited from the rising of the Chinese economy through various trade channels. But in order for Thailand to continue to reap these benefits, a sole reliance on the same export pattern will not be enough. Thailand should learn from China’s success in productivity and industrial upgrading and technological advancement, as serious efforts in this direction are much needed for Thailand to escape the middle income trap.
    Keywords: consumption,China's Growth in Transition
    JEL: O14 O16 O25 O38 O43
    Date: 2012–10–21
  7. By: Sèna Kimm GNANGNON (CERDI)
    Abstract: In this paper, we investigate the effects of fiscal episodes in Organization for Economic Cooperation and Development (OECD) donor countries on the distribution of their aid expenditures towards developing countries. We use descriptive statistics provided by Alesina and Ardagna (2010) on fiscal episodes and regression models to perform this analysis. The results show evidence that the "aid expenditures variables" respond variably to the episodes of large changes in fiscal policy in OECD donor countries. In addition, European Union and Non-European Union countries behave differently in terms of aid expenditures distribution during their fiscal episodes.
    Keywords: foreign aid, Fiscal consolidation, Fiscal stimuli, OECD Countries
    JEL: F35 E62 H62
    Date: 2013
  8. By: Timothy Besley; Torsten Persson
    JEL: H11 H20 O17 O43
    Date: 2013–01
  9. By: Cristina Bodea; Adrienne LeBas
    Abstract: How do social contracts come into being? This paper argues that norm adoption plays an important and neglected role in this process. Using novel data from urban Nigeria, we examine why individuals adopt norms favoring a citizen obligation to pay tax where state enforcement is weak. We find that public goods delivery by the state produces the willingness to pay tax, but community characteristics also have a strong and independent effect on both social contract norms and actual tax payment. Individuals are less likely to adopt pro-tax norms if they have access to community provision of security and other services. In conflict-prone communities, where “self-help” provision of club goods is less effective, individuals are more likely to adopt social contract norms. Finally, we show that social contract norms substantially boost tax payment. This paper has broad implications for literatures on state formation, taxation, clientelism, and public goods provision.
    Date: 2013
  10. By: Yadira, Diaz; Angulo, Roberto; Pardo, Renata
    Abstract: This paper presents the Colombian Multidimensional Poverty Index (CMPI), an initiative of the National Planning Department based on the methodology of Alkire and Foster (2010). The proposed index for Colombia is composed of five dimensions: education of household members; childhood and youth conditions; health; employment; and access to household utilities and living conditions. A nested weighting structure was used, where each dimension is equally weighted, as is each indicator within each dimension. Analysis of the results demonstrates that multidimensional poverty in Colombia decreased between 1997 and 2010. Multidimensional poverty rates decreased in both urban and rural areas, but imbalances remain. As well as calculating the incidence of multidimensional poverty, we also calculate measures of the poverty gap and the severity of poverty. The reduction in severity is larger than the reduction in the gap, suggesting that the depth of poverty among the poorest has been reduced through targeting. In addition, this paper presents some public policy applications of the CMPI.
    Date: 2013–01–25
  11. By: Philip Osafo-Kwaako; James A. Robinson
    Abstract: In this paper we investigate the empirical correlates of political centralization using data from the Standard Cross-Cultural Sample. We specifically investigate the explanatory power of the standard models of Eurasian state formation which emphasize the importance of high population density, inter-state warfare and trade as factors leading to political centralization. We find that while in the whole world sample these factors are indeed positively correlated with political centralization, this is not so in the African sub-sample. Indeed, none of the variables are statistically related to political centralization. We also provide evidence that political centralization, where it took place, was indeed associated with better public goods and development outcomes. We conclude that the evidence is quite consistent with the intellectual tradition initiated in social anthropology by Evans-Pritchard and Fortes in the 1940s which denied the utility of Eurasian models in explaining patterns of political centralization in Africa.
    JEL: N17
    Date: 2013–02

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