nep-dev New Economics Papers
on Development
Issue of 2015‒02‒16
eight papers chosen by
Jacob A. Jordaan
Universitiet Utrecht

  1. Managing risk with insurance and savings : experimental evidence for male and female farm managers in the Sahel By Delavallade, Clara; Dizon, Felipe; Hill, Ruth Vargas; Petraud, Jean Paul
  2. Can we measure resilience ? a proposed method and evidence from countries in the Sahel By Alfani, Federica; Dabalen, Andrew; Fisker, Peter; Molini, Vasco
  3. The Future in Mind: Aspirations and Forward-Looking Behaviour in Rural Ethiopia By Stefan Dercon; Tanguy Bernard; Kate Orkin; Alemayehu Seyoum Taffesse
  4. Can Adoption of Improved Maize Varieties Help Smallholder Farmers Adapt to Drought? Evidence from Malawi By Holden , Stein; Fischer, Monica
  5. Mobile Phone Coverage and Producer Markets: Evidence from West Africa By Marcel Fafchamps; Jenny C. Aker
  6. Emergence and evolution of learning gaps across countries: Linked panel evidence from Ethiopia, India, Peru and Vietnam By Abhijeet Singh
  7. Is Africa Different? Historical Conflict and State Development By James Fenske; Mark Dinecco; Massimiliano Gaetano Onorato
  8. Can capital grants help microenterprises reach the productivity level of SMEs? Evidence from an experiment in Sri Lanka By Laurin Janes

  1. By: Delavallade, Clara; Dizon, Felipe; Hill, Ruth Vargas; Petraud, Jean Paul
    Abstract: Although there is fast-growing policy interest in offering financial products to help rural households manage risk, the literature is still scant as to which products are the most effective. This paper uses a randomized field experiment in Senegal and Burkina Faso to compare male and female farmers who are offered index-based agricultural insurance with those who are offered a variety of savings instruments. The paper finds that female farm managers were less likely to purchase agricultural insurance and more likely to invest in savings for emergencies, even controlling for access to informal insurance and differences in crop choice. It is hypothesized that this finding results from the fact that, although men and women are equally exposed to yield risk, women face additional sources of lifecycle risk -- particularly health risks associated with fertility and childcare -- that men do not. In essence, the basis risk associated with agricultural insurance products is higher for women. Purchasing insurance increased input spending and use more than savings. Those who purchased more insurance realized higher average yields and were better able to manage food insecurity and shocks. This finding suggests that gender differences in demand for financial products can have an impact on productivity, resilience, and welfare.
    Keywords: Emerging Markets,Hazard Risk Management,Insurance&Risk Mitigation,Rural Poverty Reduction,Financial Intermediation
    Date: 2015–01–01
  2. By: Alfani, Federica; Dabalen, Andrew; Fisker, Peter; Molini, Vasco
    Abstract: Although resilience has become a popular concept in studies of poverty and vulnerability, it has been difficult to obtain a credible measure of resilience. This difficulty is because the data required to measure resilience, which involves observing household outcomes over time after every exposure to a shock, are usually unavailable in many contexts. This paper proposes a new method for measuring household resilience using readily available cross section data. Intuitively, a household is considered resilient if there is very little difference between the pre- and post-shock welfare. By obtaining counterfactual welfare for households before and after a shock, households are classified as chronically poor, non-resilient, and resilient. This method is applied to four countries in the Sahel. It is found that Niger, Burkina Faso, and Northern Nigeria have high percentages of chronically poor: respectively, 48, 34, and 27 percent. In Senegal, only 4 percent of the population is chronically poor. The middle group, the non-resilient, accounts for about 70 percent of the households in Senegal, while in the other countries it ranges between 34 and 38 percent. Resilient households account for about 33 percent in all countries except Niger, where the share is around 18 percent.
    Keywords: Access to Finance,Rural Poverty Reduction,Regional Economic Development,Economic Theory&Research,Population Policies
    Date: 2015–01–01
  3. By: Stefan Dercon; Tanguy Bernard; Kate Orkin; Alemayehu Seyoum Taffesse
    Abstract: Poor people often do not make investments, even when returns are high.  One possible explanation is that they have low aspirations and form mental models which ignore some options for investment.  This paper reports on findings of an innovative experiment to test this in rural Ethiopia.  Firstly, individuals were randomly invited to watch documentaries about people from similar communities who had succeeded in agriculture or small business, without help from government or NGOs.  A placebo group watched an Ethiopian entertainment programme and a control group were simply surveyed.  Secondly, the number of invitees was varied by village to assess the impotance of peer effects in the formation of aspirations.  Six months after the screening of the documentaries, aspirations had improved among treated individuals but did not change in the placebo or control groups.  Effects were larger for those with higher aspirations at baseline.  We also find evidence of treatment effects on savings and credit behaviour, children's school enrolment and investments in children's schooling, suggesting that changes in aspirations can translate into changes in forward-looking behaviour.  There are also positive treatment effects on a set of related measures from psychology and sociology, including a measure of locus of control, which theory predicts should behave in similar ways to aspirations.  We also find that peer effects result in further impact on educational spending and induce more work and less leisure.  That a one-house documentary shown six months earlier induces such actual behaviour change offers challenging and promising areas for further research and the design of poverty-related interventions.
    Keywords: aspirations, expectations, future-oriented behaviour, media interventions
    JEL: D03 I31
    Date: 2014–04–22
  4. By: Holden , Stein (Centre for Land Tenure Studies, Norwegian University of Life Sciences); Fischer, Monica (International Maize and Wheat Improvement Center – Ethiopia)
    Abstract: This study used a three-year panel dataset for 350 Malawian farm households to examine the potential for widespread adoption of drought tolerant (DT) maize varieties, a technology that holds considerable promise for helping smallholder farmers in SSA adapt to drought risk. Regression results revealed that DT maize cultivation increased substantially from 2006 to 2012, with the main driver being the Malawi Farm Input Subsidy Program. Some other key factors related to adoption were having recently experienced drought and farmer risk aversion. As far as yield performance, improved maize varieties performed significantly better than local maize during the 2011/12 drought year. However, DT maize did not perform significantly better than other improved maize varieties used in Malawi, which is in contradiction to results from on-station and on-farm trials (e.g., Magorokosho et al. 2010; Setimela et al., 2012). A plausible explanation is that farmers had inadequate training or experience to move towards the yield potentials of the DT maize varieties. Expansion of agricultural extension activities may be required to help farmers achieve the DT maize yield potentials and, subsequently, improve farmer resilience to drought.
    Keywords: Improved maize varieties; drought; drought tolerance; input subsidies; maize yields; agricultural adaptation; risk aversion
    JEL: Q12 Q18
    Date: 2015–02–04
  5. By: Marcel Fafchamps; Jenny C. Aker
    Abstract: Expansion in mobile phone coverage has improved access to information throughout the developing world, particularly within sub-Saharan Africa.  The existing evidence suggests that information technology has improved market efficiency and reduced consumer prices for certain commodities.  There are fewer studies assessing the impact of the technology on producers.  Using market-level data we estimate the impact of mobile phone coverage on producer prices in Niger.  We find that mobile phone coverage reduced the spatial dispersion of producer prices by 6 pecent for a semi-perishable commodity, cowpea.  These effects are strongest for remote markets and lowest at harvest time.  Mobile telephony, however, has no effect on price dispersion for millet and sorghum, two storable crops.  There is also no impact on the average producer price, but mobile phone coverage is associated with a reduction in the intra-annual price risk, primarily for cowpeas.  These findings are confirmed by data from a farmer-level survey: we find that farmers owning mobile phones obtain more price information but do not engage more in spatial arbitrage and hence do not receive higher prices - except for peanuts.  The additional evidence presented here helps understand how mobile phone coverage affects agricultural market efficiency in developing countries.  It suggests that the impact differs across agents - depending on whether they use the information for arbitrage or not - and across crops - depending on whether intertemporarl arbitrage is possible or not.
    Keywords: Africa, Information, Information Technology, Market Performance, Search Costs, Niger
    JEL: O1 O3 Q13
    Date: 2013–05–31
  6. By: Abhijeet Singh
    Abstract: There are substantial learning gaps across countries on standardized international assessments.  In this paper, I use unique child-level panel data from Ethiopia, India, Peru and Vietnam with identical tests administered across these countries to children at 5, 8, 12 and 15 years of age to ask at what ages do gaps between different populations emerge, how they increase or decline over time, and what the proximate determinants of this divergence are.  I document that a clear pattern of stochastic dominance is evident at the age of 5 years, prior to school enrolment, with children in Vietnam at the upper end, children in Ethiopia at the lower, and with Peru and India in between.  Differences between country samples grow in magnitude at later ages, preserving the country rankings noted at 5 years of age over the entire age range studied.  This divergence is only partly explained by home investments and child-specific endowments in a value-added production function approach.  The divergence in achievement between Vietnam and the other countries at primary school age is largely explained by the differential productivity of a year of schooling.  These findings are confirmed also using an IV approach, using discontinuities in grade competion arising between children born in adjacent months due to country-specific enrolment guidelines.
    Date: 2014–08–08
  7. By: James Fenske; Mark Dinecco; Massimiliano Gaetano Onorato
    Abstract: We show that the long-run consequences of historical warfare are different for Sub-Saharan Africa than for the rest of the Old World.  We identify the locations of over 1,750 conflicts in Africa, Asia, and Europe from 1400 to 1799.  We find that historical warfare predicts greater state capacity today across the Old World, including in Sub-Saharan Africa.  There is no significant correlation between historical warfare and current civil conflicts across the rest of the Old World.  However, this correlation is strong and positive in Sub-Saharan Africa.  Thus, while a history of conflict predicts higher per capita GDP for the rest of the Old World, its positive consequence is overturned for Sub-Saharan Africa.
    Date: 2014–12–14
  8. By: Laurin Janes
    Abstract: Using data from a randomized control trail in Sri Lanka, this paper explores whether cash and in-kind grants helped microenterprises approach the productivity level of SMEs.  The paper first estimates production functions and subsequently treatment effects on TFP levels.  Most significantly, more able and more risk-averse owners benefit from the larger in-kind grant.  Also, the larger in-kind grants allowed for increases in productivity to the least productive firms.  The paper then uses data from a representative sample of formal firms to put the TFP levels and treatment effects in the microenterprises into perspective.  The results suggest that the least productive firms were able to catch up with the average microenterprise and formal SMEs, while a gap remains with large firms.  This finding encourages a positive view of the potential for productivity growth in microenterprises.
    Keywords: Economic development, microenterprises, formal informal, total factor productivity, embodied technology
    JEL: L25 O12 O14 O17 O33
    Date: 2013–11–20

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