nep-dev New Economics Papers
on Development
Issue of 2018‒10‒29
nine papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Financial Inclusion Under the Microscope By Sumit Agarwal; Thomas Kigabo; Camelia Minoiu; Andrea Presbitero; Andre Silva
  2. Resource Dependence and the Causes of Local Economic Growth: An Empirical Investigation By Rian Hilmawan; Jeremy Clark
  3. Analyzing Factors Affecting Financial Literacy and its Impact on Investment Behavior among Adults in India By Gangwar, Rachna; Singh, Ritvik
  4. Proxy Means Testing vulnerability to measurement errors? By Jules Gazeaud
  5. Ghana’s Planting for Food and Jobs Programme: A Look at the Role of Capability in Farmers’ Participation By Ansah, Isaac Gershon Kodwo; Lambongang, Munkaila; Donkoh, Samuel Arkoh
  6. Impact of Small-Scale Mining Activities on the Livelihoods Assets of Rural Households in the Bekwai Municipality, Ghana By Baffour-Kyei, Vasco; Mensah, Amos; Owusu, Victor
  7. Migration, remittances and educational levels of household members left behind: Evidence from rural Morocco By Jamal Bouoiyour; Amal Miftah
  8. Accounting for Intergenerational Social Mobility in Low- and Middle-Income Countries - Evidence from the Poorest in Ethiopia, India, Peru, and Vietnam By Könings, Fabian; Schwab, Jakob
  9. Explaining Income Inequalities in Developing Countries:the Role of Human Capital By Mazhar Yasin Mughal; Barassou Diawara

  1. By: Sumit Agarwal; Thomas Kigabo; Camelia Minoiu; Andrea Presbitero; Andre Silva
    Abstract: We examine the impact of a large-scale microcredit expansion program on access to finance and the transition of first-time borrowers from microfinance institutions to the formal banking sector. Using administrative micro-data covering the universe of loans to individuals from a developing country, we show that the program significantly increased access to credit, particularly in less developed areas. This effect is driven by the newly set-up credit cooperatives (U-SACCOs), which grant loans to previously unbanked individuals. About 10\% of first-time U-SACCO borrowers that need a second loan switch to the formal banking sector, with commercial banks cream-skimming less risky borrowers from U-SACCOs and granting them larger, cheaper, and longer-term loans. These borrowers are not riskier than similar individuals already in the formal banking sector and only initially receive smaller loans. Our results suggest that the microfinance sector, together with a well functioning credit reference bureau, help mitigate information frictions in credit markets.
    Date: 2018–09–28
  2. By: Rian Hilmawan; Jeremy Clark (University of Canterbury)
    Abstract: Previous research has found that in Indonesia, a resource giant in South East Asia, resource dependence is positively associated with economic growth, contrary to a 'resource curse' hypothesis. We test four potential causal mechanisms for this positive effect: spill overs to manufacturing, higher education provision, improvements in institutional quality, and investment in public capital. We follow 390 districts within Indonesia from 2006 to 2015, using four alternative measures of resource dependence, and instrumenting for their potential endogeneity. We first confirm a positive overall effect of resource dependence on real per capita Gross Regional Domestic Product. We then test the extent to which resource dependence positively affects manufacturing, education, public investment, and district institutional quality. We finally test the extent to which these factors contribute to growth. We find that resource dependence aids growth in part by raising measures of district institutional quality. Resource dependence also raises net high school enrolment rates, though we do not find that this in turn raises growth. Conversely, while higher capital spending by districts raises growth, we find no evidence that this share is affected by resource dependence. In auxiliary analysis, we find little support for the hypothesis that resource dependence benefits growth more (or only) for districts that begin with higher institutional quality.
    Keywords: Resource dependence, causal channels, economic growth, institutional quality
    JEL: Q32 Q33 Q38 O13 O43 O47
    Date: 2018–10–01
  3. By: Gangwar, Rachna; Singh, Ritvik
    Abstract: Financial literacy is essential for making key financial decisions related to saving, borrowing and investment. Although numerable studies have been conducted to find elements of financial literacy, most of them focus on developed countries. This study aims to determine characteristics that affect levels of financial literacy in India and the impact of financial literacy on investment behavior. Primary data from 309 respondents across India was collected for the purpose of the study and was analyzed using empirical methods such as ordinary least square (OLS) regression and t-test. It was found that financial literacy among respondents was low and significant differences existed based on sociodemographic and economic factors. Unexpectedly, financial literacy was found to have no effect on investment behavior. To the best of the authors’ knowledge, this study is among the first, if not the first, of its kind to be conducted in India. The findings have significant implications for financial education and public policy programs.
    Keywords: Financial Literacy,Investment Behavior,Household Finance,Socioeconomic Characteristics
    JEL: D14 D19 G11
    Date: 2018
  4. By: Jules Gazeaud (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Proxy Means Testing (PMT) is a popular method to target the poor in developing countries. PMT usually relies on survey-based consumption data and assumes they are measured with random errors – an assumption that has been challenged by recent literature. This paper brings causal evidence on the impact of non-random errors on PMT performances. Using a survey experiment conducted in Tanzania in which eight alternative consumption questionnaires were randomly distributed across households, I compare the performances of PMT relying on error-prone consumption data with those of a PMT using gold standard consumption data. Results show that non-random errors reduce the predictive performances of PMT by a magnitude ranging from 5 to 27 percent, which in turn induce a 10 to 34 percent increase in the incidence of targeting errors (using the typical PPP $1.25 poverty line). Impacts on the relative distribution of households are nonetheless small and non-significant.
    Keywords: Social protection,Targeting,Proxy Means Testing (PMT),Measurement errors.
    Date: 2018–10–04
  5. By: Ansah, Isaac Gershon Kodwo; Lambongang, Munkaila; Donkoh, Samuel Arkoh
    Abstract: An objective interpersonal comparison of wellbeing requires that people’s capabilities are considered. This paper operationalizes Sen’s capability concept in maize-based farming systems and assess how it influences farmers’ participation in the Planting for Food and Jobs programme in the Bunkpurugu-Yunyoo District of the Northern region, Ghana. We used data from 314 households through multi-stage sampling procedure. Capability was quantified using factor analysis, while its determinants were identified through multiple linear regression analysis. Afterwards, an instrumental variable probit model was used to examine the effect of capability on programme participation. The factor analysis results reveal two attributes of capability, which were labeled as human capability and institutional capability. These capability attributes are significantly enhanced by availability of markets and good roads. The probit model results provide substantial evidence that both attributes of capability influence farmers’ participation in the Planting for Food and Jobs programme. Specifically, a one standardized unit increase in institutional capability increases the probability of participation by 10.45%. The findings indicate that, for effective participation in agricultural interventions, farmers’ capabilities need to be enhanced. This could be achieved through the provision of, and/or improvement in infrastructure, including roads and markets in remote production centers.
    Keywords: Crop Production/Industries, Labor and Human Capital
    Date: 2018–08–09
  6. By: Baffour-Kyei, Vasco; Mensah, Amos; Owusu, Victor
    Abstract: The livelihood asset is a primary concern in support of household livelihoods, poverty elimination and enhancing sustainable development, particularly true for mining communities. Underpinned by this, the general objective of the study was to assess the impact of small-scale mining activities on the livelihood assets of households in the Bekwai Municipality, Ghana. The study areas included were mining (Kokotro and Koniyaw) and non-mining (Poano and Ntinanko) communities within Bekwai Municipality with 400 household sample size. The Propensity Score Matching (PSM) was used to generate propensity scores to estimate the average mining effect on the household assets. The results revealed that that the household financial assets were positively (3.15) impacted by the activities of Small-Scale Mining (SSM) activities while natural capital was negatively impacted (-4.15) followed by human capital (-3.78) and social capital (-3.25). Virtually, the negatively affected households do nothing (45%) as a coping strategy while others also relied on efforts by District Assembly Taskforce (27). It is recommended that the severe negative impact on the natural assets needs an urgent and strict supervision on mining concession sites and also calls for an alternative source of livelihood activities (cash crops, palm plantation and processing) which are prospects for the government’s policy of planting for food and agriculture and one district one factory.
    Keywords: Agricultural Finance, Community/Rural/Urban Development, Resource /Energy Economics and Policy
    Date: 2018–08–09
  7. By: Jamal Bouoiyour (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour); Amal Miftah (LEDa - DIAL - Laboratoire d'Economie de Dauphine - Economie de la mondialisation et du développement - Université Paris-Dauphine)
    Abstract: In this paper, we empirically investigate the relationship between international migration and education attainment levels. We ask whether rural children who live in households that experience migration or/and receiving remittances are more likely to complete school at a given age than children who live in non-migrant households. Higher secondary and higher education levels are examined separately. Our results clearly show that children in remittance-receiving households complete significantly more years of schooling. In particular, remittances increase the probability of a male child completing high school. However, the evidence suggests that the international migration lowers deeply the chances of children completing higher education. Evidence also indicates the utmost importance of households' socio-economic status in determining to what extent the household mitigates the possible detrimental effects of migration on their children's educational outcomes.
    Keywords: International migration,Education,Remittances,Morocco
    Date: 2018–09–24
  8. By: Könings, Fabian; Schwab, Jakob
    Abstract: This study investigates intergenerational social mobility and its particular transmission mechanisms in low- and middle-income countries. Using data from Ethiopia, India, Peru, and Vietnam, we estimate the degree to which socioeconomic status persists across generations. We then analyze through which channels this persistence is mediated. Thereby we also consider channels that are of particular relevance in developing countries, such as the need to work in child labor or the time to school. The results illustrate that having a poor instead of a middle-class family background decreases the chances for a child to obtain the highest schooling degree by 20 per cent in the countries under study. Besides transmission factors also identified as determining social mobility in developed countries such as cognitive ability, we find that the time poorer children spend in child labor and the number of additional children living in the household account for large parts of the immobility observed.
    Keywords: Intergenerational Social Mobility,Transmission Channels,Low- and Middle-Income Countries,Child Labor
    JEL: I24 J62 O15
    Date: 2018
  9. By: Mazhar Yasin Mughal (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour); Barassou Diawara
    Abstract: This paper investigates the relationship between human capital and economic inequality in the developing countries. The paper analyses an unbalanced panel of 64 countries for the period 1970-2005. The results show that primary, secondary and tertiary level education is negatively associated with inequality (primary being the strongest). Besides, average years of education and government expenditure on education are also found to be inequality reducing, both in the immediate and the medium run. Thus, to give citizens better and more equal opportunities, policy-makers in the developing countries and the development agencies need to give higher importance to primary education. Prenant en considération le manque de consensus dans la littérature sur le sujet, notre article étudie la relation entre le capital humain et les inégalités économiques, en abordant le cas particulier des pays en développement ou les inégalités sont flagrantes. Nous analysons un panel non-équilibré constitué de 64 pays pour la période 1970 à 2005. Les résultats montrent une liaison négative entre l'éducation primaire, ainsi que secondaire et tertiaire, et les inégalités économiques. Les autres indicateurs du capital humain contribuent également à la réduction des inégalités. Donc, afin de réduire les inégalités économiques effectivement pour fournir aux citoyens des opportunités égales, les gouvernements des pays en développement et la communauté internationale devraient se concentrer sur l'éducation primaire et supérieur.
    Keywords: Inequality,Developing countries,Human capital,Education
    Date: 2018–10–01

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