nep-dev New Economics Papers
on Development
Issue of 2014‒06‒02
sixteen papers chosen by
Jacob A. Jordaan
Utrecht University

  1. Education and Household Welfare By Fafchamps, Marcel; Shilpi, Forhad
  2. Trade Liberalisation and Poverty: What have we learned in a decade? By Martuscelli, Antonio; Winters, L. Alan
  3. Housing and urbanization in Africa : unleashing a formal market process By Collier, Paul; Venables, Anthony J.
  4. Husbands and Wives. The powers and perils of participation in a microfinance cooperative for female entrepreneurs By Prof dr Erik Stam; Felix Meier zu Selhausen, MSc MA
  5. Evaluating Aid for Trade: A Survey of Recent Studies By Cadot, Olivier; de Melo, Jaime; Fernandes, Ana; Gourdon, Julien; Mattoo, Aaditya
  6. Long-Term Barriers to Economic Development By Spolaore, Enrico; Wacziarg, Romain
  7. Cash transfers and temptation goods : a review of global evidence By Evans, David K.; Popova, Anna
  8. "To Have and Have Not": Migration, Remittances, Poverty and Inequality in Algeria By David Margolis; Luis Miotti; El Mouhoub Mouhoud; Joël Oudinet
  9. Microcredit Impacts: Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco By Angelucci, Manuela; Karlan, Dean S.; Zinman, Jonathan
  10. China's Impact on Africa - the Role of Trade, FDI and Aid By Busse, Matthias; Erdogan, Ceren; Muehlen, Henning
  11. Return Migration, Self-Selection and Entrepreneurship in Mozambique By Batista, Catia; McIndoe Calder, Tara; Vicente, Pedro C.
  12. Community mobilization around social dilemmas: evidence from lab experiments in rural Mali By Maria Laura Alzua; Juan Camilo Cardenas; Habiba Djebbari
  13. Does Economic Growth Reduce Corruption? Theory and Evidence from Vietnam By Bai, Jie; Jayachandran, Seema; Malesky, Edmund J.; Olken, Benjamin
  14. Migration, Education and the Gender Gap in Labour Force Participation By Ilhom Abdulloev; Ira Gang; Myeong-Su Yun
  15. What a difference a state makes : health reform in Andhra Pradesh By Bergkvist, Sofi; Wagstaff, Adam; Katyal, Anuradha; Singh, Prabal V.; Samarth, Amit; Rao, Mala
  16. Informal economy and the World Bank By Benjamin, Nancy; Beegle, Kathleen; Recanatini, Francesca; Santini, Massimiliano

  1. By: Fafchamps, Marcel; Shilpi, Forhad
    Abstract: Using census data from Nepal we examine how the partial derivatives of predicted household welfare vary with parental education.We focus on fertility, child survival, schooling, and child labor. Female education is not as strongly associated with beneficial outcomes as is often assumed. Male education often matters more, and part of the association between female education and welfare is driven by marriage market matching with more educated men. Controlling for the average education of parental cohorts does not change this finding. But when we use educational rank to proxy for unobserved ability and family background, the positive association between female education and beneficial outcomes becomes weaker or is reversed. For women the association between educational rank and outcomes is strong: women who obtain more schooling than their peers in school have fewer children and educate them better. In contrast, for men the statistical association between education and household welfare remains strong even after we control for educational rank within their birth cohort.
    Keywords: child welfare; marriage market; Nepal; parental education; South Asia
    JEL: I25
    Date: 2013–11
  2. By: Martuscelli, Antonio; Winters, L. Alan
    Abstract: This paper reviews key recent literature on the effects of trade liberalisation on poverty in developing countries and asks whether our knowledge has changed significantly over a decade. The conclusion that liberalisation generally boosts income and thus reduces poverty has not changed; some suggest that this is not true for very poor countries, but this is not an established finding. On microeconomics, recent literature again confirms that liberalisation has very heterogeneous effects on poor households, depending, inter alia, on what trade policies are liberalised and how the household earns its living. Working in the export predicts gains and in the import-competing sector losses, a finding that is re-inforced by studies of the effects of liberalisation on wages. New research has suggested several ways in which intra-sectoral wage inequality is increased by trade, but this does not generally indicate that the poor actually lose. A fairly common finding is that female workers gain from trade liberalisation.
    Keywords: developing countries; growth; poverty; tariffs; trade liberalisation
    JEL: F13 F14 O19
    Date: 2014–04
  3. By: Collier, Paul; Venables, Anthony J.
    Abstract: The accumulation of decent housing matters both because of the difference it makes to living standards and because of its centrality to economic development. The consequences for living standards are far-reaching. In addition to directly conferring utility, decent housing improves health and enables children to do homework. It frees up women's time and enables them to participate in the labor market. More subtly, a home and its environs affect identity and self-respect. Commentary on the emergence of an African middle class has become common, but it is being defined in terms of discretionary spending and potential for consumer markets. A politically more salient definition of a middle class will be in terms of home ownership and the consequent stake in economic stability. This paper examines why such a process has not happened in Africa. The hypothesis is that the peculiarity of housing exposes it to multiple points of vulnerability not found together either in private consumer goods or in other capital goods. Each point of vulnerability can be addressed by appropriate government policies, but addressing only one or two of them has little payoff if the others remain unresolved. Further, the vulnerabilities faced by housing are the responsibility of distinct branches of government, with little natural collaboration. Unblocking multiple impediments to housing therefore requires coordination that can come only from the head of government: ministries of housing have neither the political weight nor the analytic capacity to play this role effectively. Yet in Africa, housing has never received such high political priority. This in turn is because the centrality of housing in well-being and of housing investment in development has not been sufficiently appreciated.
    Keywords: Housing&Human Habitats,Public Sector Economics,Debt Markets,Access to Finance,Urban Housing
    Date: 2014–05–01
  4. By: Prof dr Erik Stam; Felix Meier zu Selhausen, MSc MA (PhD Candidate, Utrecht University)
    Abstract: Participation in microfinance and in production cooperatives has been identified as a means to improve income and empower female entrepreneurs in developing economies. This study on female entrepreneurs in Western Uganda tests how participation of the husband in the same microfinance cooperative affects gender empowerment. Participation by female entrepreneurs in a microfinance cooperative turns out not to be an unconditional blessing: even though it does deliver higher household incomes, it also deteriorates the female’s household decision-making power when her husband participates in the same self-help group of the microfinance cooperative. This offers new insights for development policy and for entrepreneurship scholars to study the bright and dark sides of microfinance.
    Date: 2014–05
  5. By: Cadot, Olivier; de Melo, Jaime; Fernandes, Ana; Gourdon, Julien; Mattoo, Aaditya
    Abstract: The demand for accountability in “Aid-for-Trade” (AFT) is increasing but monitoring has focused on case-studies and impressionistic narratives. The paper reviews recent evidence from a wide range of studies, recognizing that a multiplicity of approaches is needed to learn what works and what does not. The review concludes that there is some support for the emphasis on reducing trade costs through investments in hard infrastructure (like ports and roads) and soft infrastructure (like customs). But failure to implement complementary reform – especially the introduction of competition in transport services – may erode the benefits of these investments. Direct support to exporters does seem to lead to diversification across products and destinations, but it is not yet clear that these benefits are durable. In general, it is difficult to rely on cross-country studies to direct AFT. More rigorous impact evaluation (IE) is an under-utilized alternative, but situations of “clinical interventions” in trade are rare and adverse incentives (due to agency problems) and costs (due to the small size of project) are a hurdle in implementation.
    Keywords: Aid for Trade (AFT); gravity; impact evaluation; trade performance
    JEL: F15 F35
    Date: 2013–10
  6. By: Spolaore, Enrico; Wacziarg, Romain
    Abstract: What obstacles prevent the most productive technologies from spreading to less developed economies from the world’'s technological frontier? In this paper, we seek to shed light on this question by quantifying the geographic and human barriers to the transmission of technologies. We argue that the intergenerational transmission of human traits, particularly culturally transmitted traits, has led to divergence between populations over the course of history. In turn, this divergence has introduced barriers to the diffusion of technologies across societies. We provide measures of historical and genealogical distances between populations, and document how such distances, relative to the world'’s technological frontier, act as barriers to the diffusion of development and of specific innovations. We provide an interpretation of these results in the context of an emerging literature seeking to understand variation in economic development as the result of factors rooted deep in history.
    Keywords: diffusion of innovations; genetic distance; intergenerational transmission; Long-run growth
    JEL: O11 O33 O40 O57
    Date: 2013–09
  7. By: Evans, David K.; Popova, Anna
    Abstract: Cash transfers have been demonstrated to improve education and health outcomes and alleviate poverty in various contexts. However, policy makers and others often express concern that poor households will use transfers to buy alcohol, tobacco, or other"temptation goods."The income effect of transfers will increase expenditures if alcohol and tobacco are normal goods, but this may be offset by other effects, including the substitution effect, the effect of social messaging about the appropriate use of transfers, and the effect of shifting dynamics in intra-household bargaining. The net effect is ambiguous. This paper reviews 19 studies with quantitative evidence on the impact of cash transfers on temptation goods, as well as 11 studies that surveyed the number of respondents who reported they used transfers for temptation goods. Almost without exception, studies find either no significant impact or a significant negative impact of transfers on temptation goods. In the only (two, non-experimental) studies with positive significant impacts, the magnitude is small. This result is supported by data from Latin America, Africa, and Asia. A growing number of studies from a range of contexts therefore indicate that concerns about the use of cash transfers for alcohol and tobacco consumption are unfounded.
    Keywords: Debt Markets,Rural Poverty Reduction,Services&Transfers to Poor,Economic Theory&Research,Poverty Impact Evaluation
    Date: 2014–05–01
  8. By: David Margolis (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, Paris School of Economics - Université Paris I - Panthéon-Sorbonne, IZA - Forschungsinstitut zur Zukunft der Arbeit (Institute for the Study of Labor) - Bonn Universität - University of Bonn); Luis Miotti (CEPN - Centre d'Economie de l'Université de Paris Nord (ancienne affiliation) - Université Paris XIII - Paris Nord - CNRS : UMR7115); El Mouhoub Mouhoud (UP9 - Université Paris 9, Dauphine - Université Paris IX - Paris Dauphine, LEDa - Laboratoire d'Economie de Dauphine - Université Paris IX - Paris Dauphine); Joël Oudinet (CEPN - Centre d'Economie de l'Université de Paris Nord (ancienne affiliation) - Université Paris XIII - Paris Nord - CNRS : UMR7115)
    Abstract: This article analyses the distributional impact of remittances across two regions of Algerian emigration (Nedroma and Idjeur) using an original survey we conducted of 1,200 households in 2011. Remittances and especially the role played by foreign pensions decrease the Gini index by nearly 4 % for the two Algerian regions, with the effect in Idjeur being twice as large as Nedroma. At the same time, they help reduce poverty by nearly 13 percentage points. Remittances have a strong positive impact on very poor families in Idjeur but much less in Nedroma, where poor families suffer from a "double loss" due to the absence of their migrants and the fact that the latter do not send money home.
    Keywords: Remittances; Migration; Poverty; Inequality; Algeria
    Date: 2013–11–06
  9. By: Angelucci, Manuela; Karlan, Dean S.; Zinman, Jonathan
    Abstract: Theory and evidence have raised concerns that microcredit does more harm than good, particularly when offered at high interest rates. We use a clustered randomized trial, and household surveys of eligible borrowers and their businesses, to estimate impacts from an expansion of group lending at 110% APR by the largest microlender in Mexico. Average effects on a rich set of outcomes measured 18-34 months postexpansion suggest no transformative impacts, but more positive than negative impacts.
    Keywords: Compartamos Banco; microcredit; microcredit impact; microentrepreneruship
    JEL: D12 D22 G21 O12
    Date: 2014–02
  10. By: Busse, Matthias; Erdogan, Ceren; Muehlen, Henning
    Abstract: We investigate the impact of Chinese activities in sub-Saharan African countries with respect to the growth performance of economies in that region. Using a Solow-type growth model and panel data for the period 1991 to 2011, we find that African economies that export natural resources have benefited from positive terms-of-trade effects. In addition, there is evidence for displacement effects of African firms due to competition from China. Chinese foreign investment and aid in Africa does not have an impact on growth.
    Keywords: China; Sub-Saharan Africa; Trade; FDI; Foreign aid; Economic growth; South-south cooperation
    JEL: F14 F23 F35 O47
    Date: 2014
  11. By: Batista, Catia (Universidade Nova de Lisboa); McIndoe Calder, Tara (Central Bank of Ireland); Vicente, Pedro C. (Universidade Nova de Lisboa)
    Abstract: Does return migration affect entrepreneurship? This question has important implications for the debate on the economic development effects of migration for origin countries. The existing literature has, however, not addressed how the estimation of the impact of return migration on entrepreneurship is affected by double unobservable migrant self-selection, both at the initial outward migration and at the final inward return migration stages. This paper uses a representative household survey conducted in Mozambique in order to address this research question. We exploit variation provided by displacement caused by civil war in Mozambique, as well as social unrest and other shocks in migrant destination countries. The results lend support to negative unobservable self-selection at both and each of the initial and return stages of migration, which results in an under-estimation of the effects of return migration on entrepreneurial outcomes when using a 'naïve' estimator not controlling for self-selection. Indeed, 'naïve' estimates point to a 13 pp increase in the probability of owning a business when there is a return migrant in the household relative to non-migrants only, whereas excluding the double effect of unobservable self-selection, this effect becomes significantly larger – between 24 pp and 29 pp, depending on the method of estimation and source of variation used.
    Keywords: international migration, return migration, entrepreneurship, self-selection, business ownership, migration effects in origin countries, household survey, Mozambique, sub-Saharan Africa
    JEL: F22 L26 O15
    Date: 2014–05
  12. By: Maria Laura Alzua (CEDLAS, Universidad Nacional de La Plata and Consejo Nacional de Ciencia y Tecnologia); Juan Camilo Cardenas (Universidad de Los Andes); Habiba Djebbari (Aix-Marseille University and Laval University)
    Abstract: Community mobilization is a key feature of community-based development projects. Community mobilization requires facilitating communication between village members and between leaders and the rest of the community. Is communication an effective device through which mobilization may foster collective action? Does informing the community on how to reach a better social outcome key? Should we expect the effectiveness of community-based programs to depend on the quality of leadership in the community? In rural communities of Mali, we find evidence of high levels of cooperation as measured by a standard public good game. Communication between players increases contributions to the public good. Passing of information through a random community member also improves cooperation, and leadership skills matter. We also find suggestive evidence that changes in behavior are mediated through changes in beliefs. The experiments are embedded in a larger randomized controlled trial designed to evaluate the impact of a community-based sanitation intervention. As such, our results are relevant for a large population. Finally, we find that the program help strengthen the capacity for collective action.
    JEL: D78 C93 H41
    Date: 2014–05
  13. By: Bai, Jie; Jayachandran, Seema; Malesky, Edmund J.; Olken, Benjamin
    Abstract: Government corruption is more prevalent in poor countries than in rich countries. This paper uses cross-industry heterogeneity in growth rates within Vietnam to test empirically whether growth leads to lower corruption. We find that it does. We begin by developing a model of government officials' choice of how much bribe money to extract from firms that is based on the notion of inter-regional tax competition, and consider how officials' choices change as the economy grows. We show that economic growth is predicted to decrease the rate of bribe extraction under plausible assumptions, with the benefit to officials of demanding a given share of revenue as bribes outweighed by the increased risk that firms will move elsewhere. This effect is dampened if firms are less mobile. Our empirical analysis uses survey data collected from over 13,000 Vietnamese firms between 2006 and 2010 and an instrumental variables strategy based on industry growth in other provinces. We find, first, that firm growth indeed causes a decrease in bribe extraction. Second, this pattern is particularly true for firms with strong land rights and those with operations in multiple provinces, consistent with these firms being more mobile. Our results suggest that as poor countries grow, corruption could subside
    Keywords: corruption; economic growth
    JEL: D73 O43
    Date: 2013–10
  14. By: Ilhom Abdulloev (Rutgers University-New Brunswick); Ira Gang (Rutgers University-New Brunswick); Myeong-Su Yun (Tulane University)
    Abstract: Women who want to work often face many more hurdles than men. This is true in Tajikistan where there is a large gender gap in labour force participation. We highlight the role of two factors – international migration and education – on the labour force participation decision and its gender gap. Using probit and decomposition analysis, our investigation shows that education and migration have a significant association with the gender gap in labour force participation in Tajikistan. International emigration from Tajikistan, in which approximately 93.5% of the participants are men, reduces labour force participation by men domestically; increased female education, especially at the university and vocational level, increases female participation. Both women acquiring greater access to education and men increasing their migration abroad contribute to reducing the gender gap.
    Keywords: migration, education, gender gap, labour force participation, Tajikistan
    JEL: J01 J16 O15
    Date: 2014–05
  15. By: Bergkvist, Sofi; Wagstaff, Adam; Katyal, Anuradha; Singh, Prabal V.; Samarth, Amit; Rao, Mala
    Abstract: In the mid-2000s, India began rolling out large-scale, publicly-financed health insurance schemes mostly targeting the poor. This paper describes and analyzes Andhra Pradesh's Aarogyasri scheme, which covers against the costs of around 900 high-cost procedures delivered in secondary and tertiary hospitals. Using a new household survey, the authors find that 80 percent of families are eligible, equal to about 68 million people, and 85 percent of these families know they are covered; only one-quarter, however, know that the benefit package is limited. The study finds that, contrary to the rules of the program, patients incur quite large out-of-pocket payments during inpatient episodes thought to be covered by Aarogyasri. In the absence of data and program design features that would allow for a rigorous impact evaluation, a comparison is made between Andhra Pradesh and neighboring Maharashtra over an eight-year period spanning the scheme's introduction. During this period, Maharashtra did not introduce any at-scale health initiative that was not also introduced in Andhra Pradesh. Andhra Pradesh other health initiatives were considerably less ambitious and costly than Aarogyasri. The paper finds that Andhra Pradesh recorded faster growth than Maharashtra (even after adjusting for confounders) in inpatient admissions per capita (for all income groups) and in surgery admissions (among the poor only), slower growth in out-of-pocket payments for inpatient care (in total and per admission, but only among the better off), and slower growth in transport and outpatient out-of-pocket costs. The paper argues that these results are consistent with Aarogyasri having the intended effects, but also with minor health initiatives in Andhra Pradesh (especially the ambulance program) playing a role.
    Keywords: Health Monitoring&Evaluation,Health Systems Development&Reform,Transport Economics Policy&Planning,Health Law,Disease Control&Prevention
    Date: 2014–05–01
  16. By: Benjamin, Nancy; Beegle, Kathleen; Recanatini, Francesca; Santini, Massimiliano
    Abstract: Many countries have expressed an interest in the size, performance and motivation of the informal sector, especially where the informal sector provides the livelihood and employment for a critical segment of the population. This essay reviews recent literature, methodologies, and relevant Bank studies as a way to share information with country teams interested in expanding their knowledge of the informal sector and related policy debates. Research in a number of regions points to four main areas where development policy can be improved by taking the informal sector into account. First, improvements should be made along a continuum; the heterogeneity among informal firms points to different policy approaches for different types of firms. Second, there should be public-private collaboration on mutual reforms. Many efforts to improve firm performance focus on elements of the production function (labor skills, credit) while treating government mainly as a cost (taxes, cost of compliance with regulations). Yet research reveals that many characteristics of the public regime strongly influence the decisions of firms regarding informality. Third, research indicates a strong relation between basic skills and labor outcomes, particularly in the informal sector, despite the sector's lower average returns. Research also indicates the benefits of targeted training programs. Business services programs have a decidedly mixed record, yet ongoing research is refining results on what works best. Fourth, informal trade is pervasive in developing countries and the networks developed in informal trade -- wholesalers, credit suppliers and money-changers, transporters -- are a strong presence in the informal sector. Yet these kinds of complex and nontransparent trading systems can be discouraging to foreign investors and can otherwise undermine trade policy and the international competitiveness of developing countries. The paper concludes with recommendations.
    Keywords: Labor Markets,Banks&Banking Reform,Microfinance,Economic Theory&Research,E-Business
    Date: 2014–04–01

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