nep-dev New Economics Papers
on Development
Issue of 2017‒02‒19
seventeen papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. The changing structure of Africa’s economies: By Diao, Xinshen; Harttgen, Kenneth; McMillan, Margaret S.
  2. Keepin' 'em Down on the Farm: Migration and Strategic Investment in Children's Schooling By Robert Jensen; Nolan H. Miller
  3. Farm size and effects of chemical fertilizer price on farm households: Insights from Nepal Terai: By Takeshima, Hiroyuki; Shivakoti, Sabnam; Bhattarai, Binod; Karkee, Madhab; Pokhrel, Suroj; Kumar, Anjani
  4. Gender Bias in Education During Conflict Evidence from Assam By Prakarsh Singh; Sutanuka Roy
  5. The effect of Fe y Alegria on school achievement: exploiting a school lottery selection as a natural experiment By Pablo Lavado; Santiago Cueto; Micaela Wensjoe; Gustavo Yamada
  6. Price hike of staple food, nutritional impact and consumption adjustment: Evidence from the 2005-2010 rice price increase in rural Bangladesh By Syed Abul Hasan
  7. Women's Property Rights and Outreach of Microfinance Institutions Targeting Women By Bailey, Rachel; Hartarska, Valentina
  8. The paradox of land reform, inequality and development in Colombia By Jean-Paul Faguet; Fabio Sánchez; Marta-Juanita Villaveces
  9. Debt Relief and Good Governance: New Evidence By Freytag , Andreas; Pettersson, Jonatan; Schmied, Julian
  10. Aid Volatility and Structural Economic Transformation in sub-Saharan Africa: Does Finance Matter? By Emmanuel Kumi; Muazu Ibrahim; Thomas Yeboah
  11. Does National Health Insurance Improve Children's Health ?National and Regional Evidence from Ghana By Lisa Bagnoli
  12. Agricultural Risk Management and Land Tenure By Schwerhoff, Gregor; Kalkuhl, Matthias; Waha, Katharina
  13. What drives diversification of national food supplies? A cross-country analysis: By Choudhury, Samira; Headey, Derek D.
  14. Migration in Kenya: beyond Harris-Todaro By Oyvat, Cem; wa Gĩthĩnji, Mwangi
  15. The role of agricultural trade and policy complementarities in poverty reduction in South Africa By Lubinga, Moses H.
  16. Fiscal Policy and Redistribution in the Dominican Republic By Jaime Aristy-Escuder; Maynor Cabrera; Blanca Moreno-Dodson; Miguel Sánchez-Martín
  17. Farmers’ perception on climate change-driven rice production loss in drought-prone and groundwater-depleted areas of Bangladesh: An ordered probit analysis By Zeenatul Islam; Mohammad Alauddin; Md. Abdur Rashid Sarker

  1. By: Diao, Xinshen; Harttgen, Kenneth; McMillan, Margaret S.
    Abstract: In recent years, some counties in Africa south of the Sahara (SSA) have experienced growth in their economies and improvements in living standards. Although there is some debate, it is clear that the share of the population living below the poverty line fell significantly over the past decade and a half; there has been a general decline in infant mortality rates and increased access to education; in some of the fastest-growing economies, average growth rates have been positive for the first time in decades; and since the early 1990s, real consumption in SSA has grown between 3.4 and 3.7 percent per year. The reasons behind this so-called “African growth miracle†are not well understood, and to our knowledge, this paper is the first to connect these improvements in living standards to important occupational changes. Using data from the Groningen Growth and Development Center’s Africa Sector Database and the Demographic and Health Surveys, we show that much of SSA’s recent growth and poverty reduction has been associated with a substantive decline in the share of the labor force engaged in agriculture. This decline is most pronounced for rural females over the age of 25 who have a primary education. This 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 services and manufacturing. We also show that although the employment share in manufacturing is not expanding rapidly, in most of the low-income SSA countries, the employment share in manufacturing has not peaked and is still expanding, albeit from very low levels. Although these patterns are encouraging, more work is needed to understand the implications of these shifts in employment shares for future growth and development in SSA.
    Keywords: labor, productivity, economic development, gender, women, employment,
    Date: 2017
  2. By: Robert Jensen; Nolan H. Miller
    Abstract: In rural areas of most developing countries, intergenerational coresidence is both widespread and an important determinant of well-being for the elderly. Most parents want at least one adult child to remain at home (e.g., so they can work on the family farm or provide care and assistance around the house). However, children themselves may prefer to migrate when they grow up, and parents cannot directly prevent them from doing so. We present a model where parents may strategically limit investments in some children's education so that they will not find it optimal to migrate when they reach maturity, and will thus voluntarily choose to remain home. We provide evidence for the model’s predictions using an intervention that provided recruiting services for the business process outsourcing industry in randomly selected rural Indian villages. Because awareness of these high-paying, high education, urban jobs was limited at baseline, the intervention increased the attractiveness of migration for educated children. Consistent with the model, in response to the treatment we find declines in school enrollment among children that parents reported wanting to remain home at baseline. Children that parents want to migrate have increased enrollment, and parents want more children to migrate.
    JEL: D1 I21 J14 O12 O15
    Date: 2017–02
  3. By: Takeshima, Hiroyuki; Shivakoti, Sabnam; Bhattarai, Binod; Karkee, Madhab; Pokhrel, Suroj; Kumar, Anjani
    Abstract: This research explores how inputs such as chemical fertilizer that are often complementary to labor can benefit smallholders in countries like Nepal. These and other inputs complement labor when a country experiences periods of increased labor scarcity due to rising wages in rural areas. The future of smallholders in Asian countries is vigorously debated in the policy and research arena. An increasing number of studies indicate that in the face of rising rural farm wages, growing mechanization is gradually shifting the advantages enjoyed by smallholders to slightly larger farms in many Asian countries, including Nepal. While the evidence is limited, earlier studies suggest that this trend may also be associated with a greater return to the use of chemical fertilizers by larger farms than by their smaller counterparts. In this paper, we further assess the relationship between the role of chemical fertilizer and farm size in lowland Nepal. In particular, we assess the different effects of chemical fertilizer price on large versus small farm households, depending on farm size. We use the 2003 and 2010 panel data from the Nepal Living Standard Survey. Results generally suggest that in Nepal Terai, lower chemical fertilizer price seems to increase the per capita incomes of farm households with larger landholdings more than it does those with smaller landholdings. The mechanism is somewhat complicated; typically, larger farms benefit through an increased supply of crops from sharecropped/rented farms, which leads to a potential increase in forage supply and increased revenues from livestock production. However, greater benefits for larger farms through this mechanism remains consistent with the greater return to chemical fertilizer among larger farms. This is contrary to the notion that chemical fertilizer is a land-saving input that benefits smaller farms relatively more than it does larger farms. We conclude that fertilizer policy in Nepal should be designed within the broader framework of longer-term agricultural-sector strategies that will impact the future of smallholder farmers.
    Keywords: fertilizers, inorganic fertilizers, farm inputs, farm size, farm structure, smallholders, households,
    Date: 2016
  4. By: Prakarsh Singh; Sutanuka Roy
    Abstract: Using a large-scale novel panel dataset (2005–14) on schools from the Indian state of Assam, we test for the impact of violent conflict on female students’ enrollment rates. We find that a doubling of average killings in a district-year leads to a 13 per cent drop in girls’ enrollment rate with school fixed effects. Additionally, results remain similar when using an alternative definition of conflict from a different dataset. Gender differential responses are more negative for lower grades, rural schools, poorer districts, and for schools run by local and private unaided bodies.
    Keywords: Conflict; Education; Gender Discrimination; Human Capital; India
    JEL: I2 J1 O1
    Date: 2016–05
  5. By: Pablo Lavado (Departamento de Economía, Universidad del Pacífico); Santiago Cueto (Group for the Analysis of Development); Micaela Wensjoe (Group for the Analysis of Development); Gustavo Yamada (Departamento de Economía, Universidad del Pacífico)
    Abstract: Fe y Alegria is an organization working in many developing countries as a public-private partnership. This study estimates the effect of one Fe y Alegria school in Peru on mathematics and reading comprehension among second grade primary pupils, between 2007 and 2012. The identification strategy is based on the fact that for this school Fe y Alegría conducted a lottery to determine which students would be accepted onto first grade. We could prepare our estimates only for one school where records for several years were available. The results show that this Fe y Alegria school generated substantial score gains for lottery winners, equivalent to 0.4 standard deviations. We also found that this effect has been increasing over time. In reading comprehension the effect was 0.17 s.d. in 2007 and 1.02 s.d. in 2012. In math, the effect was 0.29 s.d. in 2007 and 1.2 in 2012. These are promising results in a country where overall student achievement in standardized tests has been low, and where discussions on under what conditions may public partnerships result in better educational outcomes.
    Keywords: education, public-private partnerships, quality education, Fe y Alegría, math performance, private school, reading comprehension performance
    JEL: C13 C33 C93 I21 I22
    Date: 2017–02
  6. By: Syed Abul Hasan
    Abstract: This paper studies the nutritional impact and the adjustment in consumption as a result of the 2005-2010 rice price increase in rural Bangladesh. We compare the net rice buyers, who suffer from a negative income effect, with the self sufficient households. Our findings indicate that rural households in Bangladesh cope well with the surge in the domestic rice price as indicated by the absence of any effect on their calorie intake and food diversity. Income plays a crucial role in dietary diversity indicating the importance of effective income support programmes at the time of food price shocks.
    Keywords: Rice Price Increase; Difference-in-difference Estimation; Nutrition; Bangladesh
    JEL: D12 I32 O13 O53 Q12
    Date: 2017–02
  7. By: Bailey, Rachel; Hartarska, Valentina
    Abstract: The right to legally own and control property is vital to the ability of an individual to receive credit. Women in developing countries often lack property rights and are therefore at a disadvantage when applying for loans. In addition, even where women have been granted equal or near-equal rights as men, there is often a disconnect between what is codified as law and what occurs in practice. Therefore, I seek to examine how women’s property rights, both as codified and in enforcement, affect outreach activities of Microfinance Institutions (MFIs) serving women. I initially hypothesized that in MFIs targeting women, the breadth of outreach to women would be positively affected by both the legal strength and enforcement of women’s property rights. Results of a Heckman selection model and a Seemingly Unrelated Regression model both contradict that initial hypothesis, instead showing that MFIs give a far greater portion of their loan funds to women clients in countries with more discriminatory women’s property rights, and that enforcement of property rights does not show any significant effect on the ability of MFIs to reach women borrowers.
    Keywords: Microfinance, Microcredit, Financial Inclusions, Access to Credit, Property Rights, Land Rights, Customary Law, Gender, Women, Agricultural Finance, Financial Economics, International Development, Land Economics/Use, Political Economy, G21, J12, J16, K11, K36, K38, Q15,
    Date: 2017
  8. By: Jean-Paul Faguet; Fabio Sánchez; Marta-Juanita Villaveces
    Abstract: Over two centuries, Colombia transferred vast quantities of land, equivalent to the entire UK landmass, mainly to landless peasants. And yet Colombia retains one of the highest concentrations of land ownership in the world. Why? We show that land reform’s effects are highly bimodal. Most of Colombia’s 1100+ municipalities lack a landed elite. Here, rural properties grew larger, land inequality and dispersion fell, and development indicators improved. But in municipalities where such an elite does exist and landholding is highly concentrated, such positive effects are counteracted, resulting in smaller rural properties, greater dispersion, and lower levels of development. We show that all of these effects – positive and negative – flow through local policy, which elites distort to benefit themselves. Our evidence implies that land reform’s second-order effects, on the distribution of local power, are more important than its first-order effects on the distribution of land.
    Keywords: Land reform; inequality; development; latifundia; poverty; Colombia
    JEL: Q15
    Date: 2017–02
  9. By: Freytag , Andreas; Pettersson, Jonatan; Schmied, Julian
    Abstract: Debt relief has been an instrument of development cooperation for almost 50 years. Its track record is mixed at best, and its drivers were mainly political during its practice. However, in the early 2000s, the HIPC Initiative increased the economic rationality remarkably, because LDCs had to deliver before they were relieved from their debt. Since then, debt as well as its relief has fallen significantly. In addition, the recipient countries have changed, more fragile countries are among the top recipients. We discuss the hypothesis that debt relief has changed another time; it nowadays seems to be – at least partly – a diplomatic instrument. We find that there is no significant improvement of governance quality within our sample of developing countries. Our regression results show that improvements in governance quality lead to higher level of debt forgiveness in 2000-2004 but not in the subsequent periods. Instead, we find that debt relief is determined by governmental spending behavior of the creditor country, which in turn can be explained by the fractionalization of the government. The analysis uses data from 1995 to 2013 and applies a 2-Step-Heckman filter model and a panel model with fixed country and year effects.
    JEL: H53 O11 H63
    Date: 2016
  10. By: Emmanuel Kumi; Muazu Ibrahim; Thomas Yeboah
    Abstract: This paper departs from the traditional aid–economic growth studies through its examination of the impact of aid and its volatility on sectoral growth by relying on panel dataset of 37 sub-Saharan African (SSA) countries for the period 1980–2014. Findings from our system generalised methods of moments (GMM) show that, while foreign aid significantly drives economic transformation, aid volatility deteriorates sectoral value additions with huge impact on the non–tradable sector and a no apparent effect on the agricultural sector. However, the deleterious effect of aid volatility on structural economic transformation in SSA is weakened by a well–developed financial system with a large dampening impact on the tradable sector. Our evidence therefore provides unequivocal support for the notion that development of domestic financial markets enhances aid effectiveness.
    Keywords: Aid, Sectoral growth, Sub-Saharan Africa, volatility
    JEL: F35 O10 O14 O47 O55
    Date: 2017–01
  11. By: Lisa Bagnoli
    Abstract: This paper uses a propensity score matching approach to assess the impact of Ghana’s National Health Insurance Scheme (NHIS) on health utilization and health outcomes for children under five years old using a nationally representative Multiple Indicator Cluster Survey from 2011. The results show that even though health insurance is free for children, around half of them are not insured, with the probability of enrollment being significantly affected by many characteristics. Nationally, the insurance increases both health care utilization and the overall health status of children. Nevertheless, there are important discrepancies across regional results suggesting that the largest gains are found in the poorest regions, which correspond to those with the worse average health outcomes. However, some other regions present none or only very limited gains attributable to the insurance.
    Keywords: health insurance; health; health care utilization; children; Ghana; propensity score matching
    JEL: H51 I38 I10
    Date: 2017–02
  12. By: Schwerhoff, Gregor; Kalkuhl, Matthias; Waha, Katharina
    Abstract: Farmers under a sharecropping contract have been shown to exert less effort than farmers renting land due to lower incentives. They do not only choose their effort level, however, but also make investment decisions between projects of different risk-return profiles. We develop a small theoretical model that integrates the effort effect of sharecropping as well as the risk-reducing aspect of sharecropping which allows analyzing the implications for production, risk-management and risk-coping. In the empirical analysis, we combine a household survey taken in eleven African countries with data on climate risk to test the theoretical predictions. We find that sharecropping is endogenous to climate: it is more frequent in regions with low rainfall and higher weather variability. In a second step we test whether sharecropping can function as a substitute to other risk adaptation strategies. We find that sharecropping farmers are less likely to own livestock and more likely to use fertilizer. In economies where formal kinds of insurance are unavailable, sharecropping thus functions as a form of insurance and reduces the need for potentially harmful risk management strategies.
    JEL: O13 Q12 Q15
    Date: 2016
  13. By: Choudhury, Samira; Headey, Derek D.
    Abstract: Although the diversification of national food supplies (DFS) is a necessary (but not sufficient) condition for the diversification of diets and for reductions in undernutrition in poor countries, little previous research has analyzed how DFS varies across countries and regions, how rapidly it has changed over time, and what economic, social, and agroecological factors may be driving these observed patterns and trends in DFS. The study addresses those questions through a cross-country analysis. We first review economic theory and evidence on the diversification of production and diets in developing countries, particularly the importance of economic growth and other structural transformation processes, as well as the scope for agroecological factors to shape consumption outcomes in the presence of market imperfections, such as high transport costs. We then construct and analyze a rich cross-country dataset linking a simple DFS indicator—the share of calories supplied by nonstaple foods—with a wide range of economic, social, infrastructural, and agroecological indicators. Descriptive evidence and regression analyses show that several indicators of structural transformation (economic growth, urbanization, and demographic change) are strong predictors of DFS within countries. However, the results also suggest that time-invariant agroecological factors are significantly associated with DFS, such that some countries have exceptionally low or high DFS relative to their level of economic development. We discuss the implications of these findings for food and nutrition strategies, particularly the challenge of accelerating dietary diversification in the absence of sustained and very rapid economic growth and structural transformation, especially in countries where agroecological conditions additionally hinder access to a more diverse food basket.
    Keywords: nutrition, diet, food supply, diet preferences,
    Date: 2016
  14. By: Oyvat, Cem; wa Gĩthĩnji, Mwangi
    Abstract: This paper examines the impact of agrarian structures on the migration behavior and destination of rural household heads and individuals in Kenya. To explore the complexity of migration we extend the standard Harris-Todaro framework to account for land inequality and size as well as type of destination. Using logistic regressions, we show that Kenyan household heads born in districts with higher land inequality, smaller per capita land and lower per capita rural income are more likely to migrate. We show that for individuals whose incomes are squeezed by larger land inequality, migration from villages to suburban Nairobi, smaller cities, and villages in different districts could be a preferable strategy to migrating to Metro Nairobi. The impact of land inequality is more significant for male than female migration. Moreover, the level of education, age, marital status, gender, religion and distance to Nairobi play a role in migration behavior.
    Keywords: Migration; Distribution; Agrarian structures
    Date: 2017–01–25
  15. By: Lubinga, Moses H.
    Abstract: Although South Africa exhibits an increasing positive trend in agricultural exports, poverty still remains a considerable challenge in the country. This study sought to determine whether South Africa’s increasing trend in agricultural export performance translated into lower poverty levels between 1996 and 2014. Specifically, the study evaluated the effects of export intensity of agricultural goods disaggregated by end-use category on poverty outcomes with the help of the concept of ‘policy complementarities”. Rather than the commonly used poverty measures such as poverty head count ratio and poverty gap, relative poverty is used in this study. Export intensity is individually interacted with proxies of access to credit, educational and governance systems to capture the role of policy complementarities. To address the reverse causality problem associated with exports and poverty, a Two Stage Squares (2SLS) estimator was used. Results suggest that South Africa’s agricultural trade performance exhibits significant poverty reducing effects. In presence of supportive complementary domestic policies (e.g. increased access to credit), increasing exports of household consumption goods and intermediate goods reduces poverty outcomes by 21% and 15.2%, respectively. Results also suggest that imports of household consumables significantly reduce poverty levels by 9.5-22%, depending on the model used. Conclusively, South Africa’s good performance in agricultural trade translated into poverty reduction. Policy wise, there is need to further enhance the populace’s education levels, increase people’s confidence in public institutions of governance, as well as boost the depth of the financial sector. It is also necessary to promote importation of household consumables, particularly those that are not necessarily produced in the country.
    Keywords: Poverty, Access to credit, Global value chains, 2SLS estimator, Agricultural and Food Policy, Consumer/Household Economics, Food Security and Poverty, International Relations/Trade, Research Methods/ Statistical Methods, Resource /Energy Economics and Policy,
    Date: 2016
  16. By: Jaime Aristy-Escuder (INTEC Santo Domingo); Maynor Cabrera (FEDES); Blanca Moreno-Dodson (World Bank); Miguel Sánchez-Martín (World Bank)
    Abstract: This paper assesses whether limited redistributive effect of fiscal policy in the Dominican Republic has slowed improvements in poverty and inequality during a period of strong economic growth. Departing from the Commitment to Equity methodology for fiscal incidence analysis (Lustig and Higgins, 2013) this paper introduces new methodological considerations and addresses the time gap between the current fiscal structure (2013) and the latest available household survey (2007) by deflating public revenue and spending data to 2007 prices. Results show that fiscal policy in the Dominican Republic is overall progressive given that, compared to other countries, the fiscal system achieves intermediate levels of inequality reduction (5 Gini points) through direct and indirect taxes, transfers and subsidies, and it generates very little horizontal inequality. At the same time, the impact of direct transfers on poverty reduction is modest, due to the limited cash amounts granted, and there seems to be scope to boosting revenue and enhancing progressivity by revising tax exemptions and indirect electricity subsidies.
    Date: 2016–06
  17. By: Zeenatul Islam (Department of Economics, University of Rajshahi, Rajshahi); Mohammad Alauddin (School of Economics, The University of Queensland); Md. Abdur Rashid Sarker (Department of Economics, University of Rajshahi, Rajshahi)
    Abstract: The existing literature pays inadequate attention to any rigorous analysis of perceived severity of climate-driven crop losses, their determinants and implications. The present study fills this gap in three ways. It investigates farmers’ perception about the severity of loss for three rice crops, identifies their determinants and explores policy implications. In doing so, it employs an ordered probit model to data from 1,800 farm households from districts typifying drought- prone and groundwater depleted areas of Bangladesh. Perceived severity of rice production losses was not uniform for all rice crops being higher for the rain-fed crops and appeared broadly consistent with available evidence. Severity of perceived crop loss was associated with geophysical factors, household characteristics, institutional and market accessibility, and household adaptation strategy. Household resource endowment had no perceptible effect on production loss. The impact of these factors was specific to the crop and severity of perceived loss. This study has several policy implications involving market, R & D and institutional support based options. Strengthening support systems for institutional and market accessibility, and science driven adaptation strategy including generation and wider dissemination of drought tolerant rice varieties, and enhancing farmers’ capacity to change rice varieties on a regular basis constitute focal areas.
    Keywords: Loss severity; Ground water depletion; Drought severity; Ordered probit; Accessibility; Adaptation strategy
    JEL: O13 Q54 C35
    Date: 2017–01–09

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