nep-dev New Economics Papers
on Development
Issue of 2016‒01‒29
four papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Conflict, Economic Growth and Spillover Effects in Africa By John Paul Dunne and Nan Tian
  2. Private Wealth in a Developing Country: A South African Perspective on Piketty By Anna Orthofer
  3. Self-Selection into Credit Markets: Evidence from Agriculture in Mali - Working Paper 377 By Lori Beaman, Dean Karlan, Bram Thuysbaert, and Christopher Udry
  4. How to Generate and Sustain the Highest Income Inequality in Latin America – the Case of Colombia 2000-2010 By Melanie Hultsch

  1. By: John Paul Dunne and Nan Tian
    Abstract: While there is a large empirical literature on the determinants of conflict, much less attention has been given to its economic effects and even less to the spillover effects it can have on neighbours. This paper considers the economic effects of conflict for a panel of African countries and develops an approach to calculating the spillovers that moves beyond simply using geographical distance measures and incorporates economic and political differences. The initial empirical results suggest that conflict has a strong negative spillover effect on directly contiguous countries' growth, but no significant impacts were observed on non-contiguous countries. When economic and political factors are considered, this result remains, but the spillover effect is smaller. This implies that it is important to take such factors into account. While the impact of conflict remains devastating, studies that use only geographical distance measures may have been overestimating the impact on neighbours.
    Keywords: Conflict; Economic Growth; Spillovers
    JEL: C21 F21 H56 O11
    Date: 2015
  2. By: Anna Orthofer
    Abstract: The point of departure of Thomas Piketty’s influential Capital in the Twenty-First Century was the dramatic growth of private wealth-income ratios in the advanced economies between 1970 and 2010. Using official balance sheet data for South Africa—the first country to publish such data in the developing world—, this paper examines to what extent this reemergence of private wealth was also experienced in the developing-country context. First, we find that the South African current wealth-income ratio is very close to its level in 1975 (255 and 240 percent), and thus much lower than those of Piketty’s sample of advanced economies (where they increased from 200-300 to 400-700 percent). Second, we show that the discrepancy is explained not only by South Africa’s relatively low savings rates, but also by the reduction of wealth before and during the transition to democracy in the 1990s. Since the late 1990s, however, private wealth recovered significantly, indicating that South Africa might resemble the advanced economies more closely in the future.
    Keywords: saving, Wealth
    JEL: E01 E10 E21
    Date: 2015
  3. By: Lori Beaman, Dean Karlan, Bram Thuysbaert, and Christopher Udry
    Abstract: We partnered with a micro-lender in Mali to randomize credit offers at the village level. Then, in no-loan control villages, we gave cash grants to randomly selected households. These grants led to higher agricultural investments and profits, thus showing that liquidity constraints bind with respect to agricultural investment. In loan-villages, we gave grants to a random subset of farmers who (endogenously) did not borrow. These farmers have lower – in fact zero – marginal returns to the grants. Thus we find important heterogeneity in returns to investment and strong evidence that farmers with higher marginal returns to investment self-select into lending programs.
    Keywords: credit markets; agriculture; returns to capital
    JEL: D21 D92 O12 O16 Q12 Q14
    Date: 2014–09
  4. By: Melanie Hultsch
    Abstract: The main purpose of this paper was to identify the economic factors keeping income inequality high in Colombia, with a focus on the decade between 2000 and 2010. To this end, three determinants were analysed; two of them contributing primarily to income inequality (land concentration and functional income distribution) and one contributing secondarily (the fiscal system). Since income inequality is a measure of the degree of disparity or the gap between high and low income households in a country, the previous factors were evaluated from the perspective of how they affected the highest and lowest quintiles in the income distribution. The results of the analysis revealed that current income inequality is strongly rooted in land inequality, as it has perpetuated poverty, affected human capital accumulation and has led to an increased proportion of people in poverty and extreme poverty conditions. The functional income distribution shows a very unbalanced distribution among profit and wage shares in favour of profits, thus impacting the highest income quintile. The analysis also shows that fiscal policies led to a slight reduction of the Gini coefficient in the last decade with public expenditure benefiting the highest income quintile in Colombia. Together, the three elements discussed in this paper are determining factors when explaining the pattern of income inequality in Colombia in the last decade.
    Date: 2014–02

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