nep-dev New Economics Papers
on Development
Issue of 2014‒07‒05
eleven papers chosen by
Jacob A. Jordaan
Utrecht University

  1. Social Networks as Contract Enforcement: Evidence from a Lab Experiment in the Field By Arun G. Chandrasekhar; Cynthia Kinnan; Horacio Larreguy
  2. The Price of Empowerment: Experimental Evidence on Land Titling in Tanzania By Daniel Ayalew Ali; Matthew Collin; Klaus Deininger; Stefan Dercon; Justin Sandefur; Andrew Zeitlin
  3. Corruption in Turbulent Times: a Response to Shocks? By Joël CARIOLLE
  4. Channeling Remittances to Education: A Field Experiment Among Migrants from El Salvador By Kate Ambler; Diego Aycinena; Dean Yang
  5. Can Workfare Programs Moderate Violence? Evidence from India By Thiemo Fetzer
  6. Exploring the Success of BRAC Tanzania’s Microcredit Programme By Dan Brockington; Nicola Banks
  7. Economic and political inclusion of human development conditional transfer programmes in Latin America? By Armando Barrientos; Juan Miguel Villa
  8. How do consumption patterns of foreign and domestic remittance recipients and non recipients compare? Evidence from Pakistan By Junaid Ahmed; Mazhar Mughal
  9. Growth Effect of FDI in Developing Economies: the Role of Institutional Quality By Cristina Jude; Grégory Levieuge
  10. Economic Growth and Poverty in Vietnam: Evidence from Elasticity Approach By Minh Son Le; Duc Tho Nguyen; Tarlok Singh
  11. Climate Change, Green Growth and Aid Allocation to Poor Countries By Stefan Dercon

  1. By: Arun G. Chandrasekhar; Cynthia Kinnan; Horacio Larreguy
    Abstract: Absence of well-functioning formal institutions leads to reliance on social networks to enforce informal contracts. Social ties may aid cooperation, but agents vary in network centrality, and this hierarchy may hinder cooperation. To assess the extent to which networks substitute for enforcement, we conducted high-stakes games across 34 Indian villages. We randomized subjects' partners and whether contracts were enforced to estimate how partners’ relative network position differentially matters across contracting environments. Socially close pairs cooperate even without enforcement; distant pairs do not. Pairs with unequal importance behave less cooperatively without enforcement. Thus capacity for cooperation depends on the underlying network.
    JEL: D03 D14 O16 Z13
    Date: 2014–06
  2. By: Daniel Ayalew Ali; Matthew Collin; Klaus Deininger; Stefan Dercon; Justin Sandefur; Andrew Zeitlin
    Abstract: We report on a randomized field experiment using price incentives to address both economic and gender inequality in land tenure formalization. During the 1990s and 2000s, nearly two dozen African countries proposed de jure land reforms extending access to formal, freehold land tenure to millions of poor households. Many of these reforms stalled. Titled land remains the de facto preserve of wealthy households and, within households, men. Beginning in 2010, we tested whether price instruments alone can generate greater inclusion by offering formal titles to residents of a low-income, unplanned settlement in Dar es Salaam at a range of subsidized prices, as well as additional price incentives to include women as owners or co-owners of household land. Estimated price elasticities of demand confirm that prices – rather than other implementation failures or features of the titling regime – are a key obstacle to broader inclusion in the land registry, and that some degree of pro-poor price discrimination is justified even from a narrow budgetary perspective. In terms of gender inequality, we find that even small price incentives for female co-titling achieve almost complete gender parity in land ownership with no reduction in demand.
    Keywords: land titling, formalization, gender, field experiment, Tanzania
    JEL: J16 K11 O12 O18 Q15
    Date: 2014
  3. By: Joël CARIOLLE (FERDI)
    Abstract: Economic instability may trigger ex ante and ex post corruption strategies, respectively resulting from the perception and experience of economic fluctuations. Using measures of export instability reflecting its ex ante and ex post effects, dynamic panel estimations are conducted with corruption perception data covering 62 developed and developing countries over 1985-2005; and cross-section estimations with aggregated data on 22,062 firms' bribe reports in 38 developing countries. Estimations support a positive ex post effect of both positive and adverse sharp export fluctuations on corruption, channeled by restricted credit access and weak democratic institutions. By contrast, a deterrent ex post effect of both positive and negative normal export fluctuations is found, channeled by facilitated credit access and effective democratic institutions. Estimations also support a positive ex ante effect of instability on corruption, especially when access to financial markets is restricted. Therefore, when institutions are dysfunctional, both favorable and adverse shocks may increase corruption prevalence.
    JEL: D10 O11 O12 O17
    Date: 2014–06
  4. By: Kate Ambler; Diego Aycinena; Dean Yang
    Abstract: We implement a randomized experiment offering Salvadoran migrants matching funds for educational remittances, which are channeled directly to a beneficiary student in El Salvador chosen by the migrant. The matches lead to increased educational expenditures, higher private school attendance, and lower labor supply of youths in El Salvador households connected to migrant study participants. We find substantial “crowd-in” of educational investments: for each $1 received by beneficiaries, educational expenditures increase by $3.72. We find no shifting of expenditures away from other students, and no effect on remittances.
    JEL: C93 F22 F24 H24 I22 J15 O15
    Date: 2014–06
  5. By: Thiemo Fetzer
    Abstract: Governments in conflict torn states scramble for effective policies to persistently reduce levels of violence. This paper provides evidence that a workfare program that functions as a social insurance, providing employment opportunities in times of need, may be an effective antidote to shut down an important mechanism that drives conflict. By mitigating adverse income shocks, the Indian National Rural Employment Guarantee scheme has been successful in removing the income dependence of insurgency violence and thus, contributes to persistently lower levels of violence.
    Keywords: social insurance, conflict, India, insurgency
    JEL: D74 Q34 J65
    Date: 2014–06
  6. By: Dan Brockington; Nicola Banks
    Abstract: Abstract This paper explores the growth of BRAC’s microcredit programme in Tanzania and some of the variety in and patterns of that growth. BRAC’s microfinance programme has grown dramatically and significantly within Tanzania and serves tens of thousands of women across large parts of the country. We examine quantitative data from April 2011 to April 2013, and use observation of groups and client and staff interviews from 2012-2013 to explore that success. We argue that the growth is based upon its effective marketing strategy and the fundamental usefulness of BRAC’s loans to its clients. But the findings also show that members were leaving at the time of the research. This could reflect a number of dissatisfactions that BRAC’s clients have with some aspects of BRAC’s microfinance products and the performance of its staff. The staff problems are confirmed by the staff themselves, both senior and junior. They are consistent with failings, across all of Tanzania, with respect to training and capacity in the finance and microfinance sectors generally. They also reflect the difficulties of cross-cultural adaptation, and learning to work in Tanzanian contexts (for Bangladeshi staff), and learning to work in a Bangladeshi organisation (for Tanzanian staff) that were current at the moment we conducted our observations. The interesting development, which has happened rapidly after this research concluded, is that BRAC’s staffing has changed significantly, with many more senior Tanzanian appointments. This may have considerable implications for the continued development of the organisation.
    Date: 2014
  7. By: Armando Barrientos; Juan Miguel Villa
    Abstract: Abstract Human development conditional transfer programmes have been adopted by a majority of countries in Latin America to address the intergenerational persistence of poverty. Typically, programmes provide regular and reliable transfers in cash to households in poverty, with transfers conditional on children attending school and on household members attending health clinics. Rigorous impact evaluations have established that, on the whole, programmes reach their explicit objectives, especially as regards nutrition, children’s schooling and improved health care utilisation. It is too early to say whether human development programmes will be successful in reducing the intergenerational persistence of poverty in the region. To certain degree, this will depend on whether they contribute to the economic and political inclusion of groups in poverty and extreme poverty. To the extent that improvements in children’s schooling and health state cannot guarantee a successful inclusion in the labour market, or that transfers reinforce longstanding clientelistic practices in the region; the fuller economic and political inclusion of these groups might not materialise. The paper aims to throw light on these issues by assessing existing knowledge on the longer term effects of participation in human development transfer programmes leads on productive capacity, employment and political participation. It finds a mixed picture.
    Date: 2014
  8. By: Junaid Ahmed (Georg-August-University Göttingen); Mazhar Mughal (Pau Business School)
    Abstract: This study analyzes the differential consumption patterns of foreign and domestic remittances to migrant households in Pakistan using Working-Leser framework and propensity score matching. Findings point to differing consumption behaviour across foreign and domestic recipients. Foreign remittances are considered as fungible and spent in the same way as other sources of income. In contrast, domestic remittances are considered a less permanent source of income and are spent more on improving the households’ human capital.
    Keywords: Expenditure; consumption patterns; foreign remittances; domestic remittances; Pakistan
    JEL: O12 O15 O53
    Date: 2014–06–30
  9. By: Cristina Jude (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR7322 - Université d'Orléans, Facultatea de Litere - Faculté des lettres - Universitatea Babeş-Bolyai, Cluj-Napoca); Grégory Levieuge (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR7322 - Université d'Orléans)
    Abstract: This paper investigates the effect of FDI on economic growth conditional on the institutional quality of host countries. We consider institutional heterogeneity to be an explanation for the mixed results of previous empirical studies and we develop several arguments to show that institutional quality modulates the intensity of FDI impact on growth. Using a comprehensive data set for institutional quality, we test this hypothesis on a sample of 94 developing countries over the period 1984-2009. The use of Panel Smooth Transition Regression (PSTR) allows us to identify both the heterogeneity and the threshold of institutional quality that influence the FDI growth effect. These results have significant implications for policy sequencing in developing countries. In order to benefit from FDI-led growth, the improvement of the institutional framework should precede FDI attraction policies. While some features of institutional quality have an immediate effect on fostering FDI-led growth, others need a consistent accumulation of efforts, therefore challenging the effectiveness of institutional reforms in developing countries.
    Keywords: FDI ; growth ; heterogeneity ; institutional quality ; PSTR ; Developing economies
    Date: 2014–06–25
  10. By: Minh Son Le; Duc Tho Nguyen; Tarlok Singh
    Keywords: Growth elasticity of poverty, economic growth, pro-poor growth, poverty, province, Vietnam.
    JEL: O10 O40 I30
    Date: 2014–01
  11. By: Stefan Dercon
    Abstract: With serious impacts of climate change looming in a few decades, but current poverty still high in the developing world, we ask how to spend development aid earmarked for the poor. Poverty reduction tends to be strongly linked to economic growth, but growth impacts the environment and increases CO2 emissions. So can greener growth that is more climate-resilient and less environmentally damaging deliver large scale poverty reduction? Can aid be used for effective poverty reduction now without affecting carbon emissions substantially? We argue that there are bound to be trade-offs between emissions reductions and a greener growth on the one hand, and growth that is most effective in poverty reduction. We argue that development aid, earmarked for the poorest countries, should only selectively pay attention to climate change, and remain focused on fighting current poverty reduction, including via economic growth, not least as future resilience of these countries and their population will depend on their ability to create wealth and build up human capital now. The only use for development aid within the poorest countries for explicit climate-related investment ought to be when the investments also contribute to poverty reduction now, including for increasing resilience to current impacts of environmental shocks, or when the investments done now have serious intertemporal ‘lock-in’ problems so that they have implications also for when climate change bites by 2050. In our conclusions, we offer a series of concrete principles to judge development spending.
    Keywords: Green growth, poverty, environmental externalities
    JEL: O44 Q01 Q54 F35
    Date: 2014

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