nep-dev New Economics Papers
on Development
Issue of 2016‒02‒17
nine papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Aid on Demand: African Leaders and the Geography of China s Foreign Assistance By Fuchs, Andreas; Dreher, Axel; Hodler, Roland; Parks, Bradley C.; Raschky, Paul
  2. Aid and growth. New evidence using an excludable instrument By Langlotz, Sarah; Dreher, Axel
  3. Intrahousehold Bargaining, Domestic Violence and Child Health Outcomes in Ghana By Nuhu, Ahmed Salim
  4. What is driving the African Growth Miracle ? By Harttgen, Kenneth; McMillan, Margaret
  5. Impact of Weather Insurance on Small Scale Farmers: A Natural Experiment By Ibanez, Marcela; Dietrich, Stephan
  6. Aid, Infrastructure, and FDI: Assessing the Transmission Channel with a New Index of Infrastructure By Meyer, Birgit; Donaubauer, Julian; Nunnenkamp, Peter
  7. Aid for trade, foreign direct investment and export upgrading in recipient countries By Gnangnon, Sèna Kimm; Roberts, Michael
  8. Can Parental Migration Reduce Petty Corruption in Education? By Höckel, Lisa Sofie; Santos Silva, Manuel; Stöhr, Tobias
  9. When Do Gender Wage Differences Emerge? A Study of Azerbaijan's Labor Market By Pastore, Francesco; Sattar, Sarosh; Sinha, Nistha; Tiongson, Erwin R.

  1. By: Fuchs, Andreas; Dreher, Axel; Hodler, Roland; Parks, Bradley C.; Raschky, Paul
    Abstract: We investigate whether the political leaders of aid-receiving countries use foreign aid inflows to further their own political or personal interests. Aid allocation biased by leaders selfish interests arguably reduces the effectiveness of aid, negatively affecting development outcomes. We examine whether more Chinese aid is allocated to the political leaders birth regions and regions populated by the ethnic group to which the leader belongs, controlling for objective indicators of need. We have collected data on 117 African leaders birthplaces and ethnic groups and geocoded 1,955 Chinese development finance projects across 3,553 physical locations in Africa over the 2000-2012 period. The results from various fixed-effects regressions show that current political leaders birth regions receive substantially larger financial flows than other regions. We do not find evidence that leaders shift aid to regions populated by groups who share their ethnicity.
    JEL: D73 F35 P33
    Date: 2015
  2. By: Langlotz, Sarah; Dreher, Axel
    Abstract: We use an excludable instrument to test the effect of foreign aid on economic growth, in a sample of 73 countries over the 1966-2009 period. We interact donors legislature fractionalization with a recipient country s probability to receive aid. The results show fractionalization to increase donors aid budgets, representing the over-time variation of our instrument, while the probability to receive aid introduces variation across recipient countries. Controlling for country- and period-specific effects that absorb the levels of the interacted variables, the interaction provides a powerful and excludable instrument. Making use of this instrument, our results show that aid increases growth.
    JEL: O19 O11 F35
    Date: 2015
  3. By: Nuhu, Ahmed Salim
    Abstract: I explore a unique exogenous instrument to examine how the intra-familial position of women influence health outcomes of their children using micro data from Ghana Demographic and Health Survey, 2008. Using the 2 SLS-IV estimation technique, I build a model of household bargaining and child health development with perceptions of women regarding wife-beating and marital rape in the existence of domestic violence laws, in Ghana. Even though the initial OLS estimates suggest that women’s participation in decisions regarding purchases of household consumption goods help to improve child health outcomes, the IV estimates reveal that the presence of endogeneity underestimates the impact of women’s bargaining power on child health outcomes. Our Hausman test for endogeneity also confirms that health development of children is mediated through domestic violence laws, which protect women from physical and sexual abuse in the household.
    Keywords: Intrahousehold Bargaining,Domestic Violence,Child Health Investment,Child BMI
    JEL: J12 J13
    Date: 2015–12–20
  4. By: Harttgen, Kenneth; McMillan, Margaret
    Abstract: We show that much of Africa s recent growth and poverty reduction can be traced to a substantive decline in the share of the labor force engaged in agriculture. This decline has been accompanied by a systematic increase in the productivity of the labor force, as it has moved from low productivity agriculture to higher productivity manufacturing and services. These declines have been more rapid in countries where the initial share of the labor force engaged in agriculture is the highest and where commodity price increases have been accompanied by improvements in the quality of governance.
    JEL: O13 O40 Q16
    Date: 2015
  5. By: Ibanez, Marcela; Dietrich, Stephan
    Abstract: This paper explores the impacts of traditional agricultural insurance that offers protection against climatic shocks on small-scale tobacco farmers in Colombia after a period of substantial crop failures. Our identi cation strategy bene ts from a natural experimental setup of the form in which the insurance was launched. We fnd that tobacco producers with access to the insurance program were less likely to acquire informal loans, were less likely to use loans to repay debts, and had access to loans with lower interest rates and longer maturation periods. Moreover, access to this program was positively associated with increased savings and accumulation of liquid assets.
    JEL: G22 O13 O12
    Date: 2015
  6. By: Meyer, Birgit; Donaubauer, Julian; Nunnenkamp, Peter
    Abstract: We raise the hypothesis that aid specifically targeted at economic infrastructure helps developing countries attract higher FDI inflows through improving their endowment with infrastructure in transportation, communication, energy and finance. By performing 3SLS estimations we explicitly account for dependencies between three structural equations on the allocation of sector-specific aid, the determinants of infrastructure, and the determinants of FDI. We find fairly strong and robust evidence that targeted aid promotes FDI indirectly through the infrastructure channel. In addition, aid in infrastructure appears to have surprisingly strong direct effects on FDI.
    JEL: F21 F35 O18
    Date: 2015
  7. By: Gnangnon, Sèna Kimm; Roberts, Michael
    Abstract: This paper examines empirically whether Aid for Trade (AfT) programmes and Foreign Direct Investment (FDI) inflows affect export upgrading and, if so, whether their effects are complementary or substitutable. Export upgrading entails export diversification (including overall export diversification, as well as diversification at the intensive and at the extensive margins) and export quality improvement. The empirical analysis shows that total AfT flows have a strong positive impact on export upgrading, and that LDCs as compared to Non-LDCs, are the most important beneficiaries of this positive impact. While the impact of FDI inflows on export diversification in host economies is mixed, these flows do exert a strong positive impact on export quality upgrading. Furthermore, the impact of FDI on export diversification is higher in LDCs than in Non-LDCs. Incidentally, AfT and FDI inflows appear substitutes (in an economic theory sense) in achieving export diversification and complementary in their effect on the improvement of export quality in recipient countries, including LDCs. Results obtained on the impact of components of total AfT are inconclusive, as they suggest both complementarity and substitutability with respect to FDI inflows in affecting export upgrading in recipient countries. Overall, empirical results suggest that AfT and FDI inflows are effective in influencing export upgrading in recipient countries. However, the results also highlight the importance of the interplay between these two kinds of capital flows in affecting export development strategies and FDI policies of recipient countries, notably LDCs. We can infer from this study that AfT flows appear to play a particularly important role in ensuring that FDI inflows do not lead to further export concentration, by putting in place the necessary conditions for export diversification.
    Keywords: Aid for Trade,FDI,Export Upgrading
    JEL: O24 F21 O14
    Date: 2015
  8. By: Höckel, Lisa Sofie (RWI); Santos Silva, Manuel (University of Göttingen); Stöhr, Tobias (Kiel Institute for the World Economy)
    Abstract: Educational outcomes of children are highly dependent on household and school-level inputs. In poor countries remittances from migrants can provide additional funds for the education of the left behind. At the same time the absence of migrant parents can affect families' time allocation towards education. Previous work on education inputs often implicitly assumed that preferences for different kinds of education inputs remain unchanged when household members migrate. Using survey data and matched administrative school-level public expenditures from the World Bank's Open Budget Initiative (BOOST) from Moldova, one of the countries with the highest emigration rates in the world, and an instrumental variable approach we find that the strongest migration-related response in private education expenditure are substantially lower informal payments to public school teachers. This fact is at odds with a positive income effect due to migration. In addition we find that migration slightly increases caregivers' time spent on their children's education. We argue that our results are likely to be driven by changing preferences towards educational inputs induced by migration.
    Keywords: migration, emigration, corruption, education spending, social remittances, children left behind
    JEL: F22 I22 H52 D13
    Date: 2016–01
  9. By: Pastore, Francesco (University of Naples II); Sattar, Sarosh (World Bank); Sinha, Nistha (World Bank); Tiongson, Erwin R. (Georgetown University)
    Abstract: Building on recent analyses that find a sizeable, overall gender wage gap in Azerbaijan's workforce, this paper uses data on young workers in their early years in the labor market to understand how gender wage gaps evolve over time, if at all. Using a unique database from a survey of young people age 15-29 years old, we provide evidence that new labor market entrants begin with little or no gender differences in earnings, but a wage gap gradually emerges over time closer to the childbearing years. The gender wage gap grows from virtually zero, or even a small, positive gap in favor of women, until the age of 20 years to about 20% two years later and even more than 30% at the age of 29 years. The gap in labor supply rises from almost zero to about 20% during the years from 19 to 22, while the gap in hours worked falls from positive (up to 6 hours per week more than their male counterparts) to negative (up to -5 hours per week) over the same period in the life cycle. When decomposing the gap at different deciles of the wage distribution, it appears that most of it is at the lower and upper end of the distribution, among young adults and the prime-age workers. Selection of women into employment is strong and strongly skill-based: when controlling for sample selection bias, the gender gap becomes positive.
    Keywords: gender wage gap and dynamics, early labor market outcomes, school-to-work transitions, earnings equations, decomposition analysis
    JEL: I21 J13 J15 J16 J24 J31 J7 P30
    Date: 2016–01

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