nep-dev New Economics Papers
on Development
Issue of 2018‒10‒15
eleven papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Migration, Political Institutions, and Social Networks By Batista, Catia; Seither, Julia; Vicente, Pedro C.
  2. Growth Accelerations, Structural Change and Poverty Reduction in Africa By Jean-Claude BERTHELEMY
  3. The impact of uncertainty in agriculture By GODEFROY, Raphaël; LEWIS, Joshua
  4. Remittances and Emigration Intentions: Evidence from Armenia By Aleksandr Grigoryan; Knar Khachatryan
  5. Does Fiscal Decentralization Enhance Citizens’ Access to Public Services and Reduce Poverty? Evidence from Côte d’Ivoire Municipalities in a Conflict Setting By Sanogo, Tiangboho
  6. Natural Hazards and Internal Migration: The Role of Transient versus Permanent Shocks By Tanvir Pavel; Syed Hasan; Naï¬ sa Halim; Pallab Mozumder
  7. Purchasing Power Parities Used in Global Poverty Measurement By Aziz Atamanov; Dean M. Jolliffe; Christoph Lakner; Espen Beer Prydz
  8. Heterogeneity in the effect of public health insurance on medical care utilization and financial risk protection: Evidence from Ghana By Lucia Fiestas Navarrete; Simone Ghislandi; David Stuckler; Fabrizio Tediosi
  9. Joint forces: the impact of intrahousehold cooperation on welfare in East African agricultural households By Lecoutere, Els; Van Campenhout, Bjorn
  10. Fair and unfair educational inequality in a developing country: The role of pupil’s effort By Niaz Asadullah; Alain Trannoy; Sandy Tubeuf; Gaston Yalonetzky
  11. The dynamics of finance-growth-inequality nexus: Theory and evidence for India By Pranab Kumar Das; Bhaswati Ganguli; Sugata Marjit; Sugata Sen Roy

  1. By: Batista, Catia (Universidade Nova de Lisboa); Seither, Julia (Universidade Nova de Lisboa); Vicente, Pedro C. (Universidade Nova de Lisboa)
    Abstract: What is the role of international migrants and, specifically, migrant networks in shaping political attitudes and behavior in migrant sending countries? Our theoretical framework proposes that migration might change individual social identities and thus stimulate intrinsic motivation for political participation, while it may also improve knowledge about better quality political institutions. Hence, international migration might increase political awareness and participation both by migrants and by other individuals in their networks. To test this hypothesis, we use detailed data on different migrant networks (geographic, kinship, and chatting networks), as well as several different measures of political participation and electoral knowledge (self-reports, behavioral, and actual voting measures). These data were purposely collected around the time of the 2009 elections in Mozambique, a country with substantial emigration to neighboring countries – especially South Africa - and with one of the lowest political participation rates in the region. The empirical results show that the number of migrants an individual is in close contact with via regular chatting significantly increases political participation of residents in that village – more so than family links to migrants. Our findings are consistent with both improved knowledge about political processes and increased intrinsic motivation for political participation being transmitted through migrant networks. These results are robust to controlling for self-selection into migration as well as endogenous network formation. Our work is relevant for the many contexts of South-South migration where both countries of origin and destination are recent democracies. It shows that even in this context there may be domestic gains arising from international emigration.
    Keywords: international migration, social networks, political participation, information, diffusion of political norms, governance
    JEL: D72 D83 F22 O15
    Date: 2018–08
  2. By: Jean-Claude BERTHELEMY (Université Paris I Panthéon-Sorbonne)
    Abstract: This paper proposes an assessment of African countries’ growth patterns through the identification of acceleration episodes. About two-thirds of African countries have experienced at least one growth acceleration episode since the 1950s. In some cases, accelerations hardly contributed to long-term growth, as they led or lagged a crisis episode, but in most cases, which we define as growth spike episodes, growth accelerations have directly determined the long-run pattern of growth. Hence studying these growth spike episodes specifically contributes to better understanding of African growth performance. We observe several cases of multiple growth spikes, similar to what has been observed in emerging economies. Growth spike episodes are generally associated with substantial total factor productivity gains. They are also associated with reduction of dualism through sectorial reallocation of labour from low-productivity sectors to high-productivity sectors. Growth spikes are additionally associated with poverty reduction, but we challenge the conventional wisdom that growth causes poverty reduction. In several cases, data on income distribution observed during the growth spike episodes are more consistent with the reverse causation, with poverty reduction causing economic growth. The paper concludes with a policy discussion that emphasizes the necessity of building a pro-poor and shared growth strategy.
    Date: 2018–06
  3. By: GODEFROY, Raphaël; LEWIS, Joshua
    Abstract: Income uncertainty in the rural economy is widely considered an important impediment to growth in poor countries. This paper uses a rich dataset on productivity, land use, and output for 17 different crops across 500,000 plots of land in 87 countries to study the impact of uncertainty in the agricultural sector. The analysis relies on historical variability in crop productivity driven by local climatic conditions to estimate the impact of uncertainty on farmers’ land allocation. Applying a standard portfolio framework, we estimate that the incentive to diversify led to large losses in agricultural revenue. We adopt a spatial regression discontinuity approach that compares how national institutions affected agricultural outcomes near the borders of former British and French colonies in Africa. We find that farmers in former British colonies, which tended to adopt pro-private sector policies, adopted more advanced input technologies and achieved higher crop-specific returns. In contrast, farmers in former French colonies, which tended to devote more public resources to the agricultural sector, tolerated higher levels of uncertainty and adopted more specialized crop portfolios. These offsetting effects suggest that both a well-functioning market system along with public investments that reduce risk may be necessary to foster rural economic development.
    Date: 2018
  4. By: Aleksandr Grigoryan; Knar Khachatryan
    Abstract: In this paper we analyze the recent migration wave in Armenia, using household level representative data from 2011. We identify determinants of emigration intentions by estimating a bivariate probit model with endogenous remittances. The key finding is that remittances help potential migrants to ease the migration process, serving as a resource rather than as a contractual tool between migrants and non-migrants. Spatial factors dominate in the set of (community level) instruments driving remittances. When distinguishing the destination country for potential migrants, Post-Soviet versus Western countries (EU countries or USA), we find that the instruments identified for remittances are more relevant for individuals targeting the Post-Soviet area (mainly Russia). Nevertheless, remittances remain a significant resource for migrating to Western countries. In this case, we control for endogeneity of remittances using Lewbel’s (2012) methodology. Our findings suggest that the two pools of potential migrants differ crucially in the main set of skill characteristics: high-skilled potential migrants opt for Western countries (brain drain), while the low-skilled prefer Post-Soviet countries as a destination. In particular, English language knowledge and computer literacy increase the likelihood for migrating to Western countries, and individuals with those skills are less likely to migrate to Post-Soviet countries. Education is significant for the Post-Soviet model only, with a negative impact on migration intentions.
    Keywords: migration; remittances; intentions; development; households;
    JEL: F22 J11 O12
    Date: 2018–10
  5. By: Sanogo, Tiangboho
    Abstract: Fiscal decentralization has been implemented in many countries with an explicit objective of improving public service delivery and reduce poverty. However, its effectiveness in achieving these goals are much debated and the empirical literature has mostly focused on poverty reduction using cross-country analysis. This paper analyses whether, and how, the devolution of revenue raising responsibilities to Côte d’Ivoire’ municipalities enhances access to public services and contributes to reducing poverty. Local revenue sources that reflect municipalities’ autonomy in decision-making are considered to measure revenue decentralization. An adjusted multidimensional poverty index for access to public services and a headcount poverty index are also calculated at the local level using the Household Living Standard Survey. The empirical analysis uses a grouped fixed effect approach, combined with a two-stage least squares methodology with panel corrected standard errors clustered by département to address both time-varying heterogeneity and local revenue endogeneity. Our study finds that increased local revenue positively affects access to public services and reduces poverty. However, there is evidence that revenue decentralization has a more robust effect on access to public service, than on poverty. This effect seems to work mainly through enhancing access to education more than access to health, water, and sanitation services. Interestingly, our results indicate that municipalities are more likely to improve access to public services in less ethnically diverse localities and in urban zones. The study shows that the conflict has compounded the existing problems of access to public services with no statistically significant effect on poverty.
    Date: 2018
  6. By: Tanvir Pavel (Department of Economics, Florida International University); Syed Hasan (School of Economics and Finance, Massey University, New Zealand); Naï¬ sa Halim (Department of Global Health, Boston University); Pallab Mozumder (Department of Earth and Environment and Department of Economics, Florida International University)
    Abstract: We analyse internal migration triggered by natural disasters in Bangladesh. We conducted a survey in nine coastal districts and two major cities in Bangladesh to investigate whether floods and cyclones, which can be considered as transient shocks, affect interregional migration differently compared to riverbank erosion that causes loss of lands and thus generates shocks that are permanent in nature. Our ï¬ ndings suggest that transient shocks induce households to move to nearby cities while permanent shocks push people to big cities with more opportunities. Comparing income and expenditure of migrants and non-migrant households, we ï¬ nd that the former group is better-off relative to their counterpart, indicating that welfare can be improved by facilitating migration. Rising exposure to climate change induced natural disasters around the world imply that our ï¬ ndings will be increasingly relevant for designing policies to address vulnerability, particularly for disaster prone countries with weak social safety nets.
    Keywords: Climate change, Natural disaster, Coastal area, Permanent shock, Transient shocks, Internal migration
    JEL: I38 Q54 Q56 R23
    Date: 2018–10
  7. By: Aziz Atamanov; Dean M. Jolliffe; Christoph Lakner; Espen Beer Prydz
    Abstract: Given substantial differences in price levels across countries, international spatial deflators are needed to compare welfare aggregates to a common international poverty line. This note describes the sources of the purchasing power parities that are used forevery country included in the World Bank's estimates of global poverty, published in PovcalNet. These exchange rates are used to express welfare aggregates in 2011 international dollars.
    Date: 2018–09
  8. By: Lucia Fiestas Navarrete; Simone Ghislandi; David Stuckler; Fabrizio Tediosi
    Abstract: Universal health coverage requires that families have access to quality health services appropriate to their needs without suffering financial catastrophe. In Ghana, the National Health Insurance Scheme (NHIS) aims to improve access to health services unconditioned by capacity to pay. Our study uses the Ghana Living Standards Survey collected in 2012-2013 to evaluate the impact of health insurance on medical care utilization and financial risk protection ten years after the introduction of the NHIS. Our findings reveal that health insurance improved medical care utilization at the individual-level while protecting from immiserizing and catastrophic health expenditure at the household-level. Participation in the NHIS increased the probability of meeting medical needs in the general population by 15%, decreased the burden of immiserizing out-of-pocket (OOP) payments on the precarious consumption of households below the poverty line by 31% and amounted to a 31% reduction of catastrophic OOP spending among households above the poverty line. Notwithstanding impressive progress, there are considerable opportunities for improvement, particularly with regards to ensuring that marginalized populations benefit equally from participating in the NHIS. Although NHIS coverage has substantially increased service utilization in the general population, our findings reveal significant effect heterogeneity across subpopulations. These findings support the UHC objective of the Ghanaian NHIS and offers valuable lessons to low- and middle-income countries with hard-to-serve rural populations seeking to broaden access to quality healthcare while lessening reliance on OOP payments.
    Date: 2018–10
  9. By: Lecoutere, Els; Van Campenhout, Bjorn
    Abstract: In developing countries, a lack of intrahousehold cooperation among members of smallholder agricultural households may result in the inefficient allocation of productive resources. This article estimates the impact of intrahousehold cooperation on household welfare and household public goods provision, using the random encouragement for an intervention intended to stimulate cooperation as an instrument, among smallholder coffee farming households in Uganda and Tanzania. We demonstrate that improved cooperation has substantial positive effects on household income per capita and on the likelihood of household food security. The likelihood of investing in agricultural production, an important public good in these households, is greatly increased by improved cooperation as well. The downside is that, even with an intensive coaching package, the gains in cooperation are not spectacular. We conclude that stimulating intrahousehold cooperation is a promising path to stimulate efficiency, welfare and the provision of household public goods in agricultural households; but we warn against presenting the promotion of cooperation versus strengthening women’s bargaining power as a strict policy choice as it may well be that women gain bargaining power in cooperation.
    Keywords: Uganda; Tanzania; intrahousehold cooperation
    Date: 2018–10
  10. By: Niaz Asadullah (University of Malaya, Malaysia); Alain Trannoy (Aix-Marseille University (AMSE), CNRS and EHESS, France); Sandy Tubeuf (Université Catholique de Louvain, Belgium); Gaston Yalonetzky (University of Leeds, UK)
    Abstract: Inequality of opportunity builds upon the distinction between fair inequality related to responsibility variables and unfair inequality related to circumstances. This distinction is meaningful as long as responsibility variables are not fully determined by circumstances. We attempt to check the magnitude of the correlation between child effort and family background when measuring inequalities of opportunity in education using a purposefully designed survey on secondary-school education in rural Bangladesh. The analysis comprises decomposition exercises of the predicted variance of school performance in mathematics and English by source and subgroup based on parametric estimates of educational production functions. Pupils’ effort, preferences, and talents contribute between a third and 40\% of the total predicted variances in performance scores. The correlation between overall effort and circumstances does not matter much since the contribution of overall effort only falls by 10\% when the correlation is taken into account. All in all, these results cast doubt on the common practice of reducing education to a circumstance when estimating inequality of opportunity in income attainment.
    Keywords: inequality of opportunity, education, effort, decomposition, school.
    JEL: C01 I24 O12
    Date: 2018–09
  11. By: Pranab Kumar Das; Bhaswati Ganguli; Sugata Marjit; Sugata Sen Roy
    Abstract: The paper critically inquires the ‘finance-growth-inequality’ nexus based on an econometric analysis of the IHDS Survey data for two rounds – 2005-06 and 2011-12. The study attempts to assess the co-evolution of finance-growth-inequality in an intertemporal framework. At the household level asset is still the most important determinant of bank loans inspite of several policy measures aimed at financial inclusion. However, the probability of receiving a bank loan increases if any member of the household is active participant of the local level government or caste association. The most important finding of the paper pertains to the econometric result that the household asset grows at the same rate independent of the source of loans - banks or informal moneylenders though the level effect (intercept) is higher if the loan is obtained from banks or lower if the household lives below poverty line. The same observation is also confirmed for per capita income of the households. The phenomenon is explained in a theoretical model of intertemporal choice of entrepreneur-investor to show that if there are both formal and informal sources of borrowing with a constraint on the formal sector borrowing and no constraint on the latter, then growth rates of asset and income are determined by the informal sector interest rate. This result can be generalised for any number of sources of borrowing. This questions the conventional wisdom regarding the policy aimed at financial inclusion. Inequality of income increases independent of the source of borrowing, though the households living below poverty line are worse off in general. If the major source of borrowing is bank for the business and industry then inequality increases more for the above poverty line households than if the major source is moneylenders or the households belong to the below poverty line category. Moneylenders as the source of borrowing is not as regressive as is believed. So the whole issue of financial inclusion needs a review in the light of the findings of the paper.
    Keywords: Financial development, Financial Inclusion Growth, Inequality, Bank, India, IHDS, Logit Model
    Date: 2018

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