nep-dev New Economics Papers
on Development
Issue of 2014‒03‒30
twelve papers chosen by
Jacob A. Jordaan
Utrecht University

  1. Growing through cities in developing countries By Duranton, Gilles
  2. Payments Infrastructure and the Performance of Public Programs: Evidence from Biometric Smartcards in India By Karthik Muralidharan; Paul Niehaus; Sandip Sukhtankar
  3. Dynamic effects of microcredit in Bangladesh By Khandker, Shahidur R.; Samad, Hussain A.
  4. Remittances and vulnerability in developing countries By Bettin, Giulia; Presbitero, Andrea F.; Spatafora, Nikola
  5. Aid and Economic Growth: A Robust Approach By Kwabena Gyimah-Brempong; Jeffrey S. Racine
  6. The Evolution of the (Likely to be) Future Poor:Primary School Non-Completion in Indonesia, 1991–2012 By Andy Sumner
  7. Poverty and natural disasters: A meta-analysis By Karim, Azreen; Noy, Ilan
  8. Wealth Gradients in Early Childhood Cognitive Development in Five Latin American Countries By Norbert Schady; Jere Behrman; Maria Caridad Araujo; Rodrigo Azuero; Raquel Bernal; David Bravo; Florencia López Bóo; Karen Macours; Daniela Marshall; Christina Paxson; Renos Vakis
  9. Do the Poor Pay More for Maize in Malawi? By Mussa, Richard
  10. Economic Growth in Developing Countries: Is Landlockedness Destiny? By Ramesh Chandra Paudel
  11. Income Distributions, Inequality, and Poverty in Asia, 1992–2010 By Chotikapanich, Duangkamon; Griffiths, William E.; Rao, D.S. Prasada; Karunarathne, Wasana
  12. Impact Evaluation of Health Insurance for Children: Evidence from a Developing Country By Nguyen Viet Cuong

  1. By: Duranton, Gilles
    Abstract: This paper examines the effects of urbanization on development and growth. It begins with a labor market perspective and emphasizes the importance of agglomeration economies, both static and dynamic. It then argues that more productive jobs in cities do not exist in a void and underscores the importance of job and firm dynamics. In turn, these dynamics are shaped by the broader characteristics of urban systems. A number of conclusions are drawn. First, agglomeration effects are quantitatively important and pervasive. Second, the productive advantage of large cities is constantly eroded and must be sustained by new job creation and innovation. Third, this process of creative destruction in cities, which is fundamental for aggregate growth, is determined in part by the characteristics of urban systems and broader institutional features. The paper highlights important differences between developing countries and more advanced economies. A major challenge for developing countries is to reinforce the role of their urban systems as drivers of economic growth.
    Keywords: City Development Strategies,Transport Economics Policy&Planning,Labor Policies,National Urban Development Policies&Strategies,Urban Housing and Land Settlements
    Date: 2014–03–01
  2. By: Karthik Muralidharan; Paul Niehaus; Sandip Sukhtankar
    Abstract: Anti-poverty programs in developing countries are often difficult to implement as intended; one common challenge is governments' limited capacity to deliver payments securely to targeted beneficiaries. We evaluate the impact of biometrically-authenticated payments infrastructure on public employment and pension programs in the Indian state of Andhra Pradesh, using a large-scale experiment that randomized the rollout of the new system over 158 sub-districts and 19 million people. We find that, while far from perfectly implemented, the new system delivered a faster, more predictable, and less corrupt payments process without adversely affecting program access. Distributions of key outcomes in treated areas first-order stochastically dominated those in control areas, and beneficiaries overwhelmingly favored the new payments system. The investment was cost-effective, as time savings to beneficiaries alone were equal to the cost of the intervention (in the case of the employment scheme). Overall the results suggest that investing in secure authentication and payments infrastructure can significantly add to "state capacity" to effectively implement social programs in developing countries.
    JEL: D73 H53 I38 O30 O31
    Date: 2014–03
  3. By: Khandker, Shahidur R.; Samad, Hussain A.
    Abstract: This paper uses long panel survey data spanning over 20 years to examine the dynamics of microcredit programs in Bangladesh. With the phenomenal growth of microfinance institutions representing 30 million members with over $2 billion of annual disbursement over the past two decades, it is important to understand the dynamics of microcredit expansion and its induced impact on household welfare. A dynamic panel model is used to address a number of issues, such as whether credit effects are declining over time, whether market saturation and village diseconomies are taking place, and whether multiple program membership, which is rising as a consequence of microcredit expansion, is harming or benefiting the borrowers. The paper's results confirm that microcredit programs have continued to benefit the poor by raising household welfare. The beneficial effects have also remained higher for female than male borrowers. There are diseconomies of scale caused by higher levels of village-level borrowing, especially for male members. Multiple program membership is also growing with competition from microfinance institutions, but this has rather helped raise assets and net worth more than it has contributed to indebtedness.
    Keywords: Banks&Banking Reform,Labor Policies,Economic Theory&Research,Debt Markets,Science Education
    Date: 2014–03–01
  4. By: Bettin, Giulia; Presbitero, Andrea F.; Spatafora, Nikola
    Abstract: This paper examines how international remittances are affected by structural characteristics, macroeconomic conditions, and adverse shocks in both source and recipient economies. The paper exploits a novel, rich panel data set, covering bilateral remittances from 103 Italian provinces to 87 developing countries over the period 2005-2011. Remittances are negatively correlated with the business cycle in recipient countries and increase especially strongly in response to adverse exogenous shocks, such as natural disasters or large terms-of-trade declines. Financial development in the source economy, which eases access to financial services for migrants and reduces transaction costs, is positively associated with remittances. Conversely, recipient-country financial development is negatively associated with remittances, suggesting that remittances help alleviate credit constraints.
    Keywords: Population Policies,Debt Markets,Remittances,Access to Finance,Economic Conditions and Volatility
    Date: 2014–03–01
  5. By: Kwabena Gyimah-Brempong; Jeffrey S. Racine
    Abstract: This paper uses panel data and the Local Linear Kernel Estimator (LLKE) to investigate the effects of aid on economic growth in developing countries. Specifically, we investigate the robustness of a popular parametric specification of the aid/economic growth relationship in Less Developed countries (LDCs). First, we find that aid has a significant impact on economic growth given the support of the sample data we use. However, the effect depends on how aid is measured. We find a positive growth eect when aid is measured as aidgni but no signicant growth effect when aid is measured as aidpercap. Second, we find some evidence of increasing returns to aidgni. Finally, we find that a "good" policy environment increases the effectiveness of aid in LDCs, all things equal. The impact of the policy environment on growth varies according to how the policy environment is measured. Our results generally support the popular quadratic parametric specification of the aid/growth relationship. Our results have implications for aid policy and for research on the effectiveness of aid.
    Keywords: aid, economic growth, investment, developing countries, robustness test, non-parametric regression, policy impacts
    JEL: F35 F43 O O1 O53 O54 O55
    Date: 2014–03
  6. By: Andy Sumner (King's International Development Institute, King's College London)
    Abstract: The non-completion of primary school and educational attainment in general in Indonesia has been associated with an increased likelihood of being or remaining poor. In light of this, this paper considers the evolution of primary school non-completion using six rounds of the Indonesia Demographic and Health Surveycovering the period 1991–2012. The paper presents new, consistent estimates of the evolution of the incidence of, disparities in, and total composition of, primary education non-completion in Indonesia over two decades by the characteristics of household heads. The paper argues that although such deprivations remain concentrated among households in rural areas and in households with heads not in work or employed in agriculture, counter-intuitively, as deprivations decline,there are growing and sizable proportions in urban and non-agriculture headed households meaning a policy focus largely on the ‘traditional’ characteristics of deprived households might risk missing substantial proportions of the remaining and likely future poor in Indonesia.
    Keywords: Indonesia; deprivation; education; inequality; economic development
    JEL: I32 D63
    Date: 2014–03
  7. By: Karim, Azreen; Noy, Ilan
    Abstract: We conduct a meta-regression analysis of the existing literature on the impacts of disasters on households, focusing on the poor and on poverty measures. We find much heterogeneity in these impacts, but several general patterns, often observed in individual case-studies, emerge. Incomes are clearly impacted adversely, with the impact observed specifically in per-capita measures (so it is not due to the mortality caused by the observed disaster). Consumption is also reduced, but to a lesser extent than incomes. Importantly, poor households appear to smooth their food consumption by reducing the consumption of non-food items; the most significant items in this category are spending on housing, health, and education. This suggests potentially long-term adverse consequences as consumption of these services is often better viewed as long-term investment. We do not find consistent patterns in long-term impacts; it appears the limits of the meta-regression methodology prevent us from observing patterns in the relatively few heterogeneous research projects that examine these long-term effects. The importance of addressing risk within the context of sustainable development and poverty alleviation is clear. The impact of disasters on the poor may be increasingly worrying considering the climate variations we anticipate.
    Keywords: Disaster, Natural, Poverty, Natural disasters,
    Date: 2014
  8. By: Norbert Schady (Inter-American Development Bank (IDB)); Jere Behrman (Department of Economics, University of Pennsylvania); Maria Caridad Araujo (World Bank Group; Inter-American Development Bank (IDB)); Rodrigo Azuero (Department of Economics, University of Pennsylvania); Raquel Bernal (Universidad de los Andes, Colombia - Department of Economics; Northwestern University - Department of Economics); David Bravo (Department of Economics, Universidad de Chile); Florencia López Bóo (Inter-American Development Bank (IDB); IZA); Karen Macours (Paris School of Economics); Daniela Marshall (Populations Study Center, University of Pennsylvania); Christina Paxson (Office of the Dean, Brown University); Renos Vakis (District of Columbia, Washington DC, The World Bank)
    Abstract: Research from the United States shows that gaps in early cognitive and non-cognitive ability appear early in the life cycle. Little is known about this important question for developing countries. This paper provides new evidence of sharp differences in cognitive development by socioeconomic status in early childhood for five Latin American countries. To help with comparability, we use the same measure of receptive language ability for all five countries. We find important differences in development in early childhood across countries, and steep socioeconomic gradients within every country. For the three countries where we can follow children over time, there are few substantive changes in scores once children enter school. Our results are robust to different ways of defining socioeconomic status, to different ways of standardizing outcomes, and to selective non-response on our measure of cognitive development.
    Keywords: early childhood, socioeconomic gaps, Latin-American
    JEL: J13 I38
    Date: 2014–01–16
  9. By: Mussa, Richard
    Abstract: The paper uses data from the Third Integrated Household Survey to examine whether or not the poor pay more for maize in Malawi. Two approaches are adopted; an indirect approach which is based on quantity discounting, and a direct approach which is based the relationship between an expensiveness variable and household consumption expenditure. The paper finds that the poor in rural and urban areas pay more for maize. This evidence of a poverty penalty in the maize market is not sensitive to method used. It is found that the poor pay more for maize irrespective of when the maize is purchased. Thus, seasonality does not seem to be behind the observed poverty penalty. The paper also finds that the poverty penalty varies with seasonality.The poverty penalty is significantly more pronounced in the postharvest period when maize is in abundance; it is however reduced in the lean season.
    Keywords: Poverty penalty; quantity discounting; Malawi
    JEL: D1
    Date: 2014–02–13
  10. By: Ramesh Chandra Paudel
    Abstract: This paper examines the determinants of economic growth in developing countries within the standard growth regression framework, with special attention being paid to the experience of landlocked countries. The results confirm the findings of previous studies that landlockedness hampers economic growth, but the magnitude of negative impact is sensitive to alternative estimation methods. However, the analysis suggests that good governance, trade-openness, and coordinating infrastructure development with neighbours explain the significant aspect of the inter-country differences in growth rates among landlocked developing countries (LLDCs). The results also suggest that African landlocked are not different from the other LLDCs. Contrary to the 'resource-curse' hypothesis, natural resources seem to contribute to economic growth of LLDCs.
    Keywords: Landlocked Countries, Economic Growth, Governance, Hausman-Taylor Estimation
    JEL: O50 F43 O43 C33
    Date: 2013
  11. By: Chotikapanich, Duangkamon (Asian Development Bank Institute); Griffiths, William E. (Asian Development Bank Institute); Rao, D.S. Prasada (Asian Development Bank Institute); Karunarathne, Wasana (Asian Development Bank Institute)
    Abstract: In this paper, income distributions for developing countries in Asia are modeled using beta-2 distributions, which are estimated by a method of moments procedure applied to grouped data. Estimated parameters of these distributions are used to calculate measures of inequality, poverty, and pro-poor growth in four time periods over 1992–2010. Changes in these measures are examined for 11 countries, with a major focus on the People’s Republic of China (PRC), India, and Indonesia, which are separated into rural and urban regions. We find that the PRC has grown rapidly with increasing inequality accompanying this growth. India has been relatively stagnant. Indonesia has grown rapidly after suffering an initial set back from the Asian financial crisis in 1997.
    Keywords: growth; inequality; poverty; income distribution
    JEL: C13 C16 D31
    Date: 2014–03–18
  12. By: Nguyen Viet Cuong
    Abstract: Although there are numerous studies on impact evaluation of overall health insurance, little is known on the impact of health insurance on health care utilization and out-of-pocket health care spending of children, especially in developing countries. This paper measures the impact of child health insurance on health care utilization and spending of children from 6 to 14 years old in Vietnam using two recent nationally representative surveys. Unlike previous empirical studies which found a positive effect of health insurance on health care utilization in Vietnam, we did not find a statistically significant effect of school health insurance as well as free health insurance for children on outpatient health care contacts. However, the school health insurance and free health insurance help the insured children decrease out-of-pocket spending per outpatient contact by around 14 and 26 percent, respectively.
    Keywords: Child health insurance, impact evaluation, health care utilization, out-of-pocket spending, Vietnam.
    JEL: I10 G22 H43
    Date: 2014–02–25

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