nep-dev New Economics Papers
on Development
Issue of 2015‒05‒16
seven papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Education and Fertility: Panel Evidence from sub-Saharan Africa By Carolyn Chisadza; Manoel Bittencourt
  2. Global poverty goals and prices : how purchasing power parity matters By Jolliffe,Dean Mitchell; Prydz,Espen Beer
  3. Potential Impacts of Drought Tolerant Maize: New Evidence from Farm-trials in Eastern and Southern Africa By Kostandini, Genti; Abdoulaye, Tahirou; Erenstein, Olaf; Sonder, Kai; Gou, Zhe; Setimela, Peter; Menkir, Abebe
  4. Strategic links between borrowing behaviour and purpose of credit: Evidence from India By Padmavathi Koride; Anjula Gurtoo
  5. Is the PDS Already a Cash Transfer? Rethinking India’s Food Subsidy Policies By Sujata Balasubramanian
  6. Efficient and fair allocation of aid. By Patrick Guillaumont; Phu Nguyen-Van; Thi Kim Cuong Pham; Laurent Wagner
  7. Non-Food Expenditures and Consumption Inequality in India By Basole, Amit; Basu, Deepankar

  1. By: Carolyn Chisadza (Department of Economics, University of Pretoria); Manoel Bittencourt (Department of Economics, University of Pretoria)
    Abstract: We study the effects of different levels of education on fertility in 48 sub-Saharan African countries between 1970 and 2010. The results, based on panel data analysis with fi?xed effects and instrumental variables, show how that lower education levels do not have a significant effect on people?s fertility decisions. However, the results from the higher education levels suggest otherwise. They are indicative of a region that is transitioning from the Malthusian epoch to a modern growth regime in which people substitute quantity for quality of children. Lower fertility implies less strain on public expenditure, higher human capital and higher productivity which can lead to sustained economic growth as witnessed in most developed regions today.
    Keywords: education, fertility, sub-Saharan Africa
    JEL: O55 J13 I25
    Date: 2015–05
  2. By: Jolliffe,Dean Mitchell; Prydz,Espen Beer
    Abstract: With the recent release of the 2011 purchasing power parity (PPP) data from the International Comparison Program (ICP), analysts and institutions are confronted with the question of whether and how to use them for global poverty estimation. The previous round of PPP data from 2005 led to a large increase in the estimated number of poor in the world. The 2011 price data suggest that developing countries? incomes in PPP-adjusted dollars are significantly higher than indicated by the 2005 PPP data. This has created the anticipation that the new PPP data will decrease significantly the count of poor people in the world. This paper presents evidence that if the global poverty line is updated with the 2011 PPP data based on the same set of national poverty lines that define the $1.25 line in 2005 PPPs, and if the 2011 PPP conversion factors are used without adjustments to selected countries, the 2011 poverty rate is within half a percentage point of the current global estimate based on 2005 PPPs. The analysis also indicates that the goal of ?ending? extreme poverty by 2030 continues to be an ambitious one.
    Keywords: Rural Poverty Reduction,ICT Applications,Regional Economic Development,Pro-Poor Growth
    Date: 2015–05–05
  3. By: Kostandini, Genti; Abdoulaye, Tahirou; Erenstein, Olaf; Sonder, Kai; Gou, Zhe; Setimela, Peter; Menkir, Abebe
    Abstract: We estimate the impact of drought tolerant maize varieties in 13 countries in sub-Saharan Africa using geo referenced farm-trial data from 49 locations in eastern and southern Africa. Planting dates were matched with rainfall data in order to generate better drought risk zones in each country. Maize drought tolerant varieties perform better than popular commercial maize varieties grown in sub-Saharan Africa. Estimates are in the range of $132-$353 million to producers and consumer accruing in the 13 countries during the 2017-2016 period. Analysis of risk based on higher moments of yield distribution points out that there are drought tolerant varieties that have the same level of risk but offer higher overall gains compared to popular commercial varieties.
    Keywords: Drought Tolerant Maize, Risk benefits, Higher Moments, Crop Production/Industries, International Development, Q11, Q16,
    Date: 2015–04
  4. By: Padmavathi Koride (Indian Institute of Science); Anjula Gurtoo (Indian Institute of Science)
    Abstract: Microfinance bridges the credit gaps that formal financial institutions, like banks, are unable to meet for the rural populations. Micro Finance Institutions (MFIs) like Grameen Bank in Bangladesh, Bank Rakyat Indonesia and BancoSol in Bolivia have brought small credit, savings and other financial services within the reach of millions of financially excluded poor and uneducated.This paper explores the workings of this credit market and the underlying strategies in borrowing and repayment in India through a primary field survey of 829 rural borrowers in four districts of the Indian states of Andhra Pradesh and Telangana. The paper seeks to answer the following four questions, namely, Do rural borrowers plan their borrowings? Does the purpose of credit decide the source of credit? Is there a demand and supply elasticity in credit market? Would mortgage borrowing behave differently?Results, using regression models, show a link between borrowing behavior and the purpose of credit.•Source of credit does depend upon the purpose of borrowing. Agriculture and business investment loans are more likely to be sourced from formal sources, and education and health loans, from informal sources. Loans for agriculture might be sourced from banks only in part, or may not be supplied in time for cropping season, forcing borrowers to approach money lenders•The demand elasticity is minimal. Interest rates do not seem to impact borrowing, except for mortgage borrowing. More so for lifecycle needs like health and consumption, where all classes of borrowers borrow.•Mortgage borrowers drop their investment plans during time-lag between application and approval of loans, pointing to supply-side constraints•Small and marginal land-holders borrowing for mortgage, are likely to pay higher interest rate for money-lenders’ loans. This shows that lenders follow a price rationing of credit to low collateral borrowers. That farmers and business investors default on money-lenders’ loans shows that the latter, may have financed their investment in part. This shows that they do not get as much loan as applied for, from banks, pointing to size-rationing of credit.The results show a clear debt-trap where borrowers could be borrowing from one source to repay another, or may be resorting to multiple borrowings for the same purpose, as predicted by Jain and Mansuri (2008), who observe that moneylenders finance loan installments.
    Keywords: Credit; Purpose; Borrower; Behavior; India
    JEL: A14 C10
  5. By: Sujata Balasubramanian (Division of Social Science, Hong Kong University of Science and Technology; Institute for Emerging Market Studies, Hong Kong University of Science and Technology)
    Abstract: Critics argue that India’s mismanaged Public Distribution System (PDS), which sells subsidized cereals to poor families, should be replaced by cash transfers. Others fear cash may be misused. Using National Sample Survey data, this paper demonstrates that families treat additional PDS subsidies wholly as a source of cash - exactly like a cash transfer. More worryingly, cereal consumption has not increased, despite higher real subsidies. Moreover, neither the PDS nor cash transfers are likely to raise total food expenditure in poor families. Finally, therefore, the paper explores how higher food consumption and other objectives of PDS subsidies may be achieved
    Keywords: public distribution system, food subsidies, cash transfers, India
    JEL: H23 H53 H71 D61
    Date: 2015–03
  6. By: Patrick Guillaumont; Phu Nguyen-Van; Thi Kim Cuong Pham; Laurent Wagner
    Abstract: This paper proposes a model of aid allocating which aims to equalize the opportunity between recipient countries to reduce the poverty, in particular the millennium development goal of reducing the poverty by half. The model also takes into account the natural deficit which is defined by the gap between the growth rate required to reach this millennium goal and the actual growth rate observed in the recipient country. The resulting optimal aid allocation is computed using the estimation of the growth equation. The latter takes into account effects of aid and structural handicaps which are represented by the economic vulnerability index and lack of human capital. We also perform a simulation study which show a substantial difference between the aid allocation obtained with the Collier-Dollar (2002) criterion and that obtained with our model.
    Keywords: Efficiency, equity, development aid, growth deficit, vulnerability.
    JEL: D61 D63 F35 I30 O19
    Date: 2015
  7. By: Basole, Amit (University of Massachusetts, Boston); Basu, Deepankar (Department of Economics, University of Massachusetts, Amherst)
    Abstract: This paper contributes to the ongoing debate about economic inequality in India during the post-reform period. We analyze consumption inequality through the hitherto neglected lens of nonfood expenditure. Using household level consumption expenditure data from the quinquennial “thick” rounds of the NSS, we show that inequality within food and non-food groups has declined, even as overall expenditure inequality has increased over time. We suggest that the rise in overall expenditure inequality is due to the increased weight in the household budget of non-food spending, which tends to be more unequal than food spending. We also show that inequality is very different across broad non-food items. Durables, education, healthcare, and consumer services show the most rapid increases in real expenditure, and also display the highest levels of inequality. Finally, we offer some possible mechanisms for this phenomenon and suggest policy measures to deal with this form of inequality.
    Keywords: consumption inequality; household data; India
    JEL: O15 I31
    Date: 2015

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