nep-dev New Economics Papers
on Development
Issue of 2013‒06‒09
twenty papers chosen by
Mark Lee
Towson University

  1. The Middle-Income Trap : Issues for Members of the Association of Southeast Asian Nations By Tran Van Tho
  2. School Fees, Parental Participation and Accountability: Evidence from Madagascar By Frédéric LESNE
  3. Determinants of Internal Migration among Senegalese Youth By Catalina HERRERA; David Sahn
  4. Income and Population Growth By Brückner, Markus; Schwandt, Hannes
  5. Remittances, Growth and Poverty: New Evidence from Asian Countries By Katsushi Imai; Raghav Gaiha; Abdilahi Ali; Nidhi Kaicker
  6. Trade Openness and Cross-country Income Differences By Hepenstrick, Christian; Tarasov, Alexander
  7. How Important is Exports and FDI for China's Economic Growth? By Yuqing Xing; Manisha Pradhananga
  8. China's Savings Multiplier By Halvor Mehlum; Ragnar Torvik; Simone Valente
  9. Labour and Health in Colonial Nigeria By Vellore Arthi; James Fenske
  10. Global Value Chains and Developing Country Employment: A Literature Review By Ben Shepherd
  11. Economic Effects of Domestic and Neighbouring Countries’ Cultural Diversity By Erkan Gören
  12. How ethnic diversity affects economic Development? By Erkan Gören
  13. Labor Market Effects of Social Programs: Evidence from India's Employment Guarantee By Clement Imbert; John Papp
  14. Scaling-up What Works: Experimental Evidence on External Validity in Kenyan Education By Tessa Bold; Mwangi Kimenyi; Germano Mwabu; Alice Ng'ang'a; Justin Sandefur
  15. Intra-National Protectionism in China: Evidence from the Public Disclosure of 'Illegal' Drug Advertising By Markus Eberhardt; Zheng Wang; Zhihong Yu
  16. War, Resilience and Political Engagement in Africa By James Fenske; Achyuta Adhvaryu
  17. Fiscal transfers and gerrymandering under decentralization in the Philippines By Joseph J. Capuno
  18. Inter-linkage between Foreign Direct Investment and Foreign Trade in Pakistan: Are they Complements or Substitute? By Unbreen Qayyum; Zafar Mahmood
  19. Health Consequences of Child Labour in Bangladesh By Ahmed, Salma; Ray, Ranjan
  20. Culture and the Gender Gap in Competitive Inclination: Evidence from the Communist Experiment in China By Zhang, Y. Jane

  1. By: Tran Van Tho (Asian Development Bank Institute (ADBI))
    Abstract: The problem faced by many of the economies making up the Association of Southeast Asian Nations (ASEAN) is whether they can avoid the middle-income trap and advance to the high-income level. What is needed for them to avoid the middle-income trap? This paper attempts to answer this question by building an analytical framework based on the factors that determine each development stage of an economy, and by comparing the current situation of four ASEAN middle-income countries with the experience of the Republic of Korea, a country that managed to overcome the middle-income trap and reach the high-income level in the late 1990s. The paper concludes that for ASEAN middle-income countries (Indonesia, Malaysia, the Philippines, and Thailand) to avoid the trap, they should strengthen research and development capability, emphasize the quality and appropriateness of human resources, and improve the institutional system for nourishing a dynamic private sector. These efforts can be expected to result in dynamic changes in the structure of comparative advantage toward higher skill and more innovation-intensive contents of products. For a low middle-income country such as Viet Nam, reforms and policies to increase the productivity of capital, land, and other resources are essential to avoid the early appearance of the trap.
    Keywords: ASEAN, middle-income trap, Comparative Advantage, productivity
    JEL: O10 O11 O40 O43 O53
    Date: 2013–05
  2. By: Frédéric LESNE (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: The role of school fees in achieving both allocative and productive efficiency in the delivery of primary education has been a subject of intense debate. Building on a simple model that makes explicit the role of school fees in determining the optimal level of parental participation to school governance, this paper contributes to the debate by evaluating empirically the relationship between fees, participation and the accountability framework in public primary schools in Madagascar. The results show evidence that schools requiring parents to pay more fees experience a higher degree of parental participation. While results are consistent with the theoretical model, the empirical analysis provides evidence that school fees increase participation beyond their effect on the power relationship between the community and the school authorities. The model hypothesis that school fees modify the accountability framework, which leads to more productive participation efforts, is challenged by alternative explanations. One of them is that participation aims not to increase education quality but rather to decrease the amount of fees requested by the school.
    Keywords: education;school governance;accountability;school fees
    Date: 2013–05–23
  3. By: Catalina HERRERA (Cornell University - Cornell University - Cornell University); David Sahn (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: We analyze the socio-economic determinants of youth decision to internally migrate in Senegal. Young people undertake mostly rural-to-rural and urban-to-urban migrations and over half of them are temporary migrants. Using multinomial logit models, we estimate the role of household and community characteristics during childhood in later youth migration decisions. We find that these determinants are heterogeneous by gender and destination. The higher the fathers' education the more (less) likely are their daughters to move to urban (rural) areas. Young individuals, who spend their childhood in better off households, are more likely to move to urban areas. Also, the presence of younger siblings increases the propensity of moving to rural areas. Access to primary schools during childhood decreases the likelihood of migrating to urban areas for both men and women.
    Keywords: Internal migration;senegal;youth;multinomial logit
    Date: 2013–05–28
  4. By: Brückner, Markus (National University of Singapore); Schwandt, Hannes (Princeton University)
    Abstract: Do populations grow as countries become richer? In this paper we estimate the effects on population growth of shocks to national income that are plausibly exogenous and unlikely to be driven by technological change. For a panel of over 139 countries spanning the period 1960-2007 we interact changes in international oil prices with countries' average net oil export shares in GDP. Controlling for country and time fixed effects, we find that this measure of oil price induced income growth is positively associated with population growth. The IV estimates indicate that a one percentage point increase in GDP per capita growth over a ten year period increases countries' population growth by around 0.1 percentage points. Further, we find that this population effect results from both a positive effect on fertility and a negative effect on infant and child mortality.
    Keywords: economic development, population growth
    JEL: O1 Q56
    Date: 2013–05
  5. By: Katsushi Imai (Economics, School of Social Sciences, University of Manchester (UK) and RIEB, Kobe University (Japan)); Raghav Gaiha (Faculty of Management Studies, University of Delhi, India); Abdilahi Ali (School of Social Sciences, University of Manchester, UK); Nidhi Kaicker (Faculty of Management Studies, University of Delhi, India)
    Abstract: The present study re-examines the effects of remittances on growth of GDP per capita using annual panel data for 24 Asia and Pacific countries. The results generally confirm that remittance flows have been beneficial to economic growth. However, our analysis also shows that the volatility of capital inflows such as remittances and FDI is harmful to economic growth. This means that, while remittances contribute to better economic performance, they are also a source of output shocks. Finally, remittances contribute to poverty reduction – especially through their direct effects. Migration and remittances are thus potentially a valuable complement to broad-based development efforts.
    Keywords: remittances, economic growth, volatility, poverty, Asia
    JEL: C23 F24 I32 O15 O47 O53
    Date: 2013–05
  6. By: Hepenstrick, Christian; Tarasov, Alexander
    Abstract: Development accounting literature usually attributes the observed cross-country variation in per capita income to differences in countries' factor endowments and total factor productivity (the Solow residual). While the former can be relatively straightforward interpreted and measured, the latter remains at least partly a black box. In this paper, we provide a structural interpretation for differences in total factor productivity across countries and quantitatively explore the role of trade barriers in explaining cross-country income differences. In particular, we find that giving all countries the same market entry costs or giving all country-pairs the same variable trade costs reduces inequality by around 13%.
    Keywords: General equilibrium; market access costs; development accounting; experiments
    JEL: F11 F12 O10 O40
    Date: 2013–05–29
  7. By: Yuqing Xing (National Graduate Institute for Policy Studies; Asian Development Bank Institute); Manisha Pradhananga (Asian Development Bank Institute; University of Massachusetts Amherst)
    Abstract: The Global Financial Crisis and the recent slowdown of China’s growth have led to questions about the sustainability of China’s growth. The argument is that, China is too dependent on external demand and that it needs to “rebalance” its economy toward domestic consumption. However, conventional measures of external: net exports-over-GDP and exports-over-GDP are biased and do not accurately measure the contribution of external demand to GDP growth. In this paper, we propose two measures that are simple modifications of the conventional measures. We argue that our proposed measures provide a more accurate estimate of the vulnerability of China’s economy to external shocks, in the form of exports and FDI. Our estimates show that in 2001, exports and FDI accounted for 18.2% of GDP growth and by 2004 the share rose to 49 percent. During 2005-2007, the contribution of exports and FDI to growth remained in the range of 38-40 percent. Our estimates also show that the impressive recovery of the Chinese economy in the post-crisis period owed at least 53% of its growth to exports and FDI. Based on these results, we conclude that the Chinese economy remains highly dependent on external demand in the form of exports and FDI, and re-balancing the economy towards domestic demand has not been achieved yet.
    Date: 2013–05
  8. By: Halvor Mehlum (Department of Economics, University of Oslo); Ragnar Torvik (Department of Economics, Norwegian University of Science and Technology); Simone Valente (Department of Economics, Norwegian University of Science and Technology)
    Abstract: China's growth is characterized by massive capital accumulation, made possible by high and increasing domestic savings. In this paper we develop a model with the aim of explaining why savings rates have been high and increasing, and we investigate the general equilibrium effects on capital accumulation and growth. We show that increased savings and capital accumulation stimulates further savings and capital accumulation, through an intergenerational distribution effect and an old-age requirement effect. We introduce what we term the savings multiplier, and we discuss why and how the one-child policy, and the dismantling of the cradle-to-grave social benefits provided through the state owned enterprises, have stimulated savings and capital accumulation.
    Keywords: China, One-child policy, Overlapping generations, Growth, Savings
    JEL: O11 D91 E21
    Date: 2013–06–06
  9. By: Vellore Arthi (University of Oxford); James Fenske (University of Oxford)
    Abstract: We examine the determinants of time allocation and child labour in a year-long panel of time-use data from colonial Nigeria. Using quantitative and ethnographic approaches, we show that health shocks imposed time costs on individuals. Whether individuals could recruit substitutes depended on social standing, urgency of work, and type of illness. Child labour did not systematically respond to temporary parental illness, but could replace a permanently disabled adult. Child labour was coordinated with parental work, aided childcare, and allowed children to build skills and resources. These decisions can be understood within an endogenous bargaining power framework with labour complementarities.
    Date: 2013–05–01
  10. By: Ben Shepherd
    Abstract: This paper provides a review of the available literature on global value chains (GVCs) and employment markets in developing countries. Due to the difficulty of observing intra-GVC transactions, there is very little direct empirical work on GVCs and labour markets. However, it is possible to extrapolate from the extensive empirical work already undertaken on firm internationalisation and labour markets to draw inferences as to the likely impacts of GVCs. The review therefore focuses on the labour market impacts of three processes that lie at the core of GVC development: importing, exporting, and foreign direct investment (FDI). It examines their impact on labour demand and wages, and disaggregates the effects whenever possible by skill level. The available empirical evidence strongly suggests that the type of activities undertaken by GVC participants influence labour market outcomes. For instance, many GVC firms are vectors of technological upgrading that in turn increases the relative demand for skilled labour. In these cases, GVC participation is linked to higher relative wages for skilled workers, but also greater wage inequality between skilled and unskilled workers. The evidence on outcomes is more mixed as regards pure processing trade (assembly), however: the limited data available on firms engaged purely in these activities suggests that they do not systematically pay higher wages than domestic firms, which is the reverse of the finding for foreign-owned firms, exporters, and importers in general. The labour market effects of GVCs in developing countries are therefore likely to be broadly positive, but highly case specific. The review therefore concludes with two case studies—electronics in Asia and services in Chile—that demonstrate the complexity of the issues involved, and the role of complementary policies in areas such as human capital development.
    Keywords: trade, labour markets, foreign direct investment, developing countries, global value chains
    JEL: F16 F21 F23 O24
    Date: 2013–05–14
  11. By: Erkan Gören (University of Oldenburg, Department of Economics)
    Abstract: This paper investigates the economic growth impact of cultural diversity, both domestically and in neighbouring countries, in a balanced panel of 94 countries covering the period 1970 to 2004. The measures of cultural diversity used in this article were derived from a recently developed computer algorithm intended primarily to measure linguistic distances in an automated fashion. The empirical analysis suggests that the degree of cultural diversity in contiguous neighbouring countries has substantial positive effects on domestic per capita income growth, even controlling for a broad set of regional, institutional, religious and other proximate factors of economic growth. The conclusion is that culturally homogeneous countries gain a strategic advantage over their culturally diverse neighbours.
    Keywords: cultural diversity; ethnic diversity; economic growth
    JEL: O11 O5
    Date: 2013–03
  12. By: Erkan Gören (University of Oldenburg, Department of Economics)
    Abstract: This paper investigates the empirical relationship between the two concepts of ethnicity and economic growth. Ethnicity is assumed to affect economic growth through a number of possible transmission channels that are generally included in cross-country growth regressions by proposing an extended econometric system of equations to describe growth incorporates new channel variables for the potential indirect effects of ethnicity that are important in the process of economic development. The results, based on a sample of 95 countries for the period 1960-1999, suggest that the concept of ethnic fractionalization is a strong predictive measure for the direct effect of ethnicity on growth, whereas the concept of ethnic polarization has non-negligible indirect economic effects through the specified channel variables.
    Keywords: ethnic diversity; fractionalization; polarization; transmission channels; economic growth
    JEL: O11 O5
    Date: 2012–10
  13. By: Clement Imbert; John Papp
    Abstract: Using the gradual roll out of a large rural workfare program in India, we estimate its effect on private employment and wages by comparing districts that received the program earlier relative to those that received it later.  Our results suggest that public sector hiring crowds out private sector work and increases private sector wages.  We compute the implied welfare gains of the program by consumption quintile.  Our calculations show that the welfare gains to the poor from the equilibrium increase in private sector wages are large in absolute terms and large relative to the gains received solely by program participants.
    Date: 2013–02–04
  14. By: Tessa Bold; Mwangi Kimenyi; Germano Mwabu; Alice Ng'ang'a; Justin Sandefur
    Abstract: The recent wave of randomized trials in development economics has provoked criticisms regarding external validity.  We investigate two concerns - heterogeneity across beneficiaries and implementers - in a randomized trial of contract teachers in Kenyan schools.  The intervention, previously shown to raise test scores in NGO-led trials in Western Kenya and parts of India, was replicated across all Kenyan provinces by an NGO and the government.  Strong effects of short-term contracts produced in controlled experimental settings are lost in weak public institutions: NGO implementation produces a positive effect on test scores across diverse contexts, while government implementation yields zero effect.  The data suggests that the stark contrast in success between the government and NGO arm can be traced back to implementation constraints and political economy forces put in motion as the program went to scale.
    Date: 2013–03–12
  15. By: Markus Eberhardt; Zheng Wang; Zhihong Yu
    Abstract: This paper provides micro-level evidence that drug advertising regulations and inspections in China are used by local governments to discriminate against firms from outside the province.  Furthermore, the degree of discrimination varies across firms in that drug manufacturers which have closer ties with rival provinces are more likely to be targeted.  These findings demonstrate that giving provincial governments strong incentives to compete with each other may exacerbate the market distortions inherent in a partially reformed economy such as China.
    Keywords: China, intra-national protectionism, drug advertising
    JEL: F15 P26 L25
    Date: 2013–04–17
  16. By: James Fenske; Achyuta Adhvaryu
    Abstract: We test whether early-life war exposure influences later-life political engagement in Africa.  We combine data on the location and intensity of conflicts since 1954 with nationally representative data on political attitudes and behaviors from 17 sub-Saharan African countries.  Exposure from ages 0 to 14 has a very small (standardized) impact on later attitudes and behaviors.  Our results are robust to migration, and hold across several definitions, specifications, and sources of data.  Our results are consistent with recent studies demonstrating that, on average, individuals and localities recover quickly from the destructive effects of conflict, though those most exposed experience large and prolonged effects.
    Date: 2013–05–22
  17. By: Joseph J. Capuno (School of Economics, University of the Philippines Diliman)
    Abstract: While gerrymandering in developing countries is often pushed by local authorities to secure political advantages, fiscal grants systems under decentralization may also have result in the same. We investigate this issue to identify the correlates of the growth in the number of cities in the Philippines in 2001-2010. Using a panel of municipal-level data, incremental fiscal transfers are found to drive cityhood. Also, political payoffs -- like the incumbent mayor's re-election or having another member of the same political clan elected to the same position -- motivate the creation of new cities. Reforms in the country's fiscal transfer program are suggested.
    Keywords: Gerrymandering, fiscal grants, decentralization
    JEL: H11 H73 H77
    Date: 2013–06
  18. By: Unbreen Qayyum (Pakistan Institute of Development Economics, Islamabad); Zafar Mahmood (Pakistan Institute of Development Economics, Islamabad)
    Abstract: This study tries to investigate the inter-linkage between foreign trade and Foreign Direct Investment (FDI) in case of Pakistan. Annual data for the period 1985–2010 have been considered for eight major trading partners—Canada, France, Germany, Hong Kong, Japan, Saudi Arabia, UK and USA. The Johansen Fisher Panel Cointegration Test and Vector Error Correction Mechanism (VECM) have been applied to examine whether the FDI and foreign trade are complements or substitutes. The analysis gives evidence in favour of complementarity of FDI and foreign trade i.e., FDI promotes Pakistan’s foreign trade with its trading partners.
    Date: 2013
  19. By: Ahmed, Salma; Ray, Ranjan
    Abstract: This paper examines the effect of child labour on child health outcomes in Bangladesh. We use self-reported injury or illness due to work as a general measure of health status. Using the Bangladesh National Child Labour Survey data for 2002-2003, the results reveal that child labour is positively and significantly associated with the probability of being injured or becoming ill once the endogenous relationship between these factors is accounted for. These findings remain robust when we consider child labour hours and restrict our analysis to rural areas. Moreover, the intensity of injury or illness is significantly higher in construction and manufacturing sectors than in other sectors. Investigating the effect of child labour on subjective health across age groups, we find that health disadvantages for different age groups are not essentially parallel.
    Keywords: Child labour, health, Injury, Bangladesh
    JEL: I12 J13 J22
    Date: 2012–07–12
  20. By: Zhang, Y. Jane
    Abstract: Radical communist reforms propelled traditionally secluded Han Chinese women into the labor force but exempted ethnic minorities. Using an economic experiment, this study compares the gender gap in competitive inclination across three ethnic groups in one county. The Han Chinese have no statistically significant gender gap while the patrilineal Yi women are significantly less competitively inclined than Yi men and than Han Chinese women. The matrilineal Mosuo women are as competitively inclined as the Han Chinese women. The findings affirm that culture matters for competitive inclination and suggests the hypothesis that institutional changes can narrow the gender gap in competitive inclination.
    Keywords: competition, culture, gender, communism
    JEL: C91 C93 J15 J16 O15 P3
    Date: 2013–05

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