nep-dev New Economics Papers
on Development
Issue of 2013‒09‒25
six papers chosen by
Jacob A. Jordaan
Utrecht University

  1. After Apartheid: The Effects of ANC Power By Poulsen, Jonas
  2. Is the war on drugs working? Examining the Colombian case using micro data By Marcela Ibanez
  3. The quantitative importance of openness in development By Wenbiao Cai; B. Ravikumar; Raymond Riezman
  4. Trade Openness and Income: A Tale of Two Regions By Mariam Camarero; Inmaculada Martínez-Zarzoso; Felicitas Nowak-Lehmenn D.; Cecilio Tamarit
  5. Can area measurement error explain the inverse farm size productivity relationship? By Holden, Stein; Fisher, Monica
  6. Twin Transitions By Aksan, Anna-Maria; Chakraborty, Shankha

  1. By: Poulsen, Jonas (Department of Economics)
    Abstract: The African National Congress (ANC) can look back on eighty years of struggle which resulted in the liberation of black Africans, the creation of a democratic constitution and free elections. However, the last twenty years of ANC rule has been criticized for the failure to bring higher living standards for the formerly oppressed. With the party's dominance and the challanges facing South Africa in mind, I estimate the effect of ANC power in municipalities on economic, social and budgetary outcomes. To estimate the causal effect of the party, this paper uses an instrumental variable approach developed by Freier & Odendahl (2012) and a regression discontinuity design. Taken together, the results point to an adverse effect of the party: less is spent on repairs and water provision which in turn may explain why ANC power seems to lower the share of individuals who have access to piped water and electricity. Further, more resources are used on municipal employees and the councillors themselves, while I find suggestive evidence of an increase in the poverty rate due to the party. Lastly, although being their major political support, we cannot conclude that the ANC affects black African's living standards. From the IV analysis, I find indications that oppositional parties many times have a more positive impact on outcomes as they gain power at the expence of the ANC.
    Keywords: ANC; party effects; instrumental variable; regression discontinuity; South Africa
    JEL: H11 N47 O12
    Date: 2013–09–17
  2. By: Marcela Ibanez (Georg-August University Göttingen)
    Abstract: The intense debate on the effectiveness of the war on drugs contrasts with the lack of empirical evidence on its impacts. To evaluate the effectiveness of control-supply policies, we use micro data from an original survey with farmers living in a coca growing area in Colombia. We find that while eradication and alternative development decrease coca supply, the elasticity of supply of these policies is rather low. The efficiency of anti-drug policies could be increased by investing more in alternative development and less in eradication. Our analysis suggests that changing people's attitudes toward coca can be a promising alternative in the fight against drugs.
    Keywords: Coca; Colombia; War on Drugs; Morality
    JEL: D81 G11 K42 Z12 Z13
    Date: 2013–09–16
  3. By: Wenbiao Cai; B. Ravikumar; Raymond Riezman
    Abstract: This paper deals with a classic development question: how can the process of economic development – transition from stagnation in a traditional technology to industrialization and prosperity with a modern technology – be accelerated? Lewis (1954) and Rostow (1956) argue that the pace of industrialization is limited by the rate of capital formation which in turn is limited by the savings rate of workers close to subsistence. We argue that access to capital goods in the world market can be quantitatively important in speeding up the transition. We develop a parsimonious open-economy model where traditional and modern technologies coexist (a dual economy in the sense of Lewis (1954)). We show that a decline in the world price of capital goods in an open economy increases the rate of capital formation and speeds up the pace of industrialization relative to a closed economy that lacks access to cheaper capital goods. In the long run, the investment rate in the open economy is twice as high as in the closed economy and the per capita income is 23 percent higher.
    Keywords: Economic development ; Economic conditions
    Date: 2013
  4. By: Mariam Camarero (Universitat Jaume I de Castelló / Spain); Inmaculada Martínez-Zarzoso (Ibero-America Institute for Economic Research, Goettingen / Germany); Felicitas Nowak-Lehmenn D. (Ibero-America Institute for Economic Research, Goettingen / Germany); Cecilio Tamarit (Universidad de Valencia / Spain)
    Abstract: In this article we present evidence of the long-run effect of trade openness on income per worker for two regions that have followed different liberalization strategies, namely Asia and Latin America. A model that re-examines these questions is estimated for two panels of Asian and Latin American countries over the 1980-2008 period using a novel empirical approach that accounts for endogeneity as well as for the time series properties of the variables involved. From an econometric point of view, we apply recent panel cointegration techniques based on factor models that account for two additional elements usually neglected in previous empirical literature: cross-dependence and structural breaks. The results point to a positive impact of trade openness in both Asia and Latin America although the size is smaller in the second region. We associate this finding with the degree to which trade was managed in both regions of the developing world.
    Keywords: GDP per worker, trade openness, panel cointegration, structural breaks, crosssection dependence, Asia, Latin America
    JEL: F15 F43 C22 O40
    Date: 2013–09–05
  5. By: Holden, Stein (Centre for Land Tenure Studies, Norwegian University of Life Sciences); Fisher, Monica (International Maize and Wheat Improvement Center)
    Abstract: The existence of an inverse relationship (IR) between farm size and productivity in tropical agriculture remains a debated issue with policy relevance. Poor agricultural statistical data, including data on farm sizes and farm plot sizes that typically are self-reported by farmers, can lead to biased results and wrong policy conclusions. This study combines self-reported and GPS-measured farm plot and farm sizes to assess how measurement error affects the IR using three rounds of farm plot and household data from Malawi. The results show that measurement error covers up more than 60% of the IR for the total sample but leads to an upward bias in the IR on farms less than one ha. Land and labor market imperfections in combination with food self-sufficiency motives appear to explain most of the IR and lead to a strong IR on farms below one ha.
    Keywords: Inverse farm size – productivity relationship; Measurement error; Land and labor market imperfections; Land quality; Malawi.
    JEL: J43 O13 Q12
    Date: 2013–09–20
  6. By: Aksan, Anna-Maria; Chakraborty, Shankha
    Abstract: We provide a new explanation for sub-Saharan Africa’s slow demographic and economic change. In a model where children die from infectious disease, childhood health affects human capital and noninfectious-disease related adult mortality. When child mortality falls from lower prevalence, as in western Europe, labor productivity improves, fertility falls and the economy prospers. When it falls mainly from better cures, as in sub-Saharan Africa, survivors are less healthy and there is little economic payoff. The model quantitatively explains sub-Saharan Africa’s experience. More generally it shows that life expectancy at birth is a poor indicator of population health unless morbidity falls with mortality.
    Keywords: Demographic Transition, Epidemiological Transition, Mortality, Morbidity, Fertility
    JEL: I10 I12 J13 O40
    Date: 2013–05–27

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