nep-dev New Economics Papers
on Development
Issue of 2020‒01‒20
fifteen papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Place-Based Policies: principles and developing country applications By Anthony Venables; Gilles Duranton
  2. Randomization and Social Policy Evaluation Revisited By James J. Heckman
  3. Secession with Natural Resources By Dhillon, Amrita; Krishnan, Pramila; Patnam, Manasa; Perroni, Carlo
  4. Is the Public Investment Multiplier Higher in Developing Countries? An Empirical Exploration By Alejandro Izquierdo; Ruy Lama; Juan Pablo Medina; Jorge Puig; Daniel Riera-Crichton; Carlos Vegh; Guillermo Javier Vuletin
  5. Mosquito-Borne Disease and Newborn Health By Afrouz Azadikhah Jahromi
  6. Arming opposition: Measuring the effect of arms transfers on internal conflict By Quentin Gallea
  7. Impact of Conditional Cash Transfers on Health and Nutrition By Bhagowalia, Priya
  8. Are African exports that weak ? A trade in value-added approach By NJIKE, ARNOLD
  9. Decentralized Targeting of Agricultural Credit Programs: Private versus Political Intermediaries By Maitra, Pushkar; Mitra, Sandip; Mookherjee, Dilip; Visaria, Sujata
  10. Inventory credit to enhance food security in Africa By Tristan Le Cotty; Elodie Maitre d'Hotel; Subervie Julie
  11. Adoption of Improved Seeds, Evidence from DRC By Tanguy Bernard; Sylvie Lambert; Karen Macours; Margaux Vinez
  12. IFAD RESEARCH SERIES 41 The demography of rural youth in developing countries By Stecklov, Guy; Menashe-Oren, Ashira
  13. State History and State Fragility: Evidence from Sub-Saharan Africa By Kodila-Tedika, Oasis; Khalifa, Sherif
  14. The evolution of wealth-income ratios in India 1860-2012 By Kumar, Rishabh
  15. Local ambassadors promote mobile banking in Northern Peru By Marcos Agurto; Habiba Djebbari; Sudipta Sarangi; Brenda Silupu; Carolina Trivelli; Javier Torres

  1. By: Anthony Venables; Gilles Duranton
    Abstract: Many development policies, such as placement of infrastructure or local economic development schemes, are “place-based.†Such policies are generally intended to stimulate private sector investment and economic growth in the treated place, and as such they are difficult to appraise and evaluate. This paper sets the rationale for place-based policies and a framework for analyzing their effects and assessing their social value. It then reviews the literature on place-based policies in the contexts of special economic zones, transport policy, lagging regions, and local economic development policies.
    Keywords: Place-based policies, spatial, economic corridors, lagging regions
    JEL: O10 O18 R10 R11 R13
    Date: 2019–12–18
  2. By: James J. Heckman (University of Chicago)
    Abstract: This paper examines the case for randomized controlled trials in economics. I revisit my previous paper--"Randomization and Social Policy Evaluation"--and update its message. I present a brief summary of the history of randomization in economics. I identify two waves of enthusiasm for the method as "Two Awakenings" because of the near-religious zeal associated with each wave. The First Wave substantially contributed to the development of microeconometrics because of the flawed nature of the experimental evidence. The Second Wave has improved experimental designs to avoid some of the technical statistical issues identified by econometricians in the wake of the First Wave. However, the deep conceptual issues about parameters estimated, and the economic interpretation and the policy relevance of the experimental results have not been addressed in the Second Wave.
    Keywords: field experiments, randomized control trials
    JEL: C93
    Date: 2020–01
  3. By: Dhillon, Amrita (Kings College, London); Krishnan, Pramila (University of Oxford); Patnam, Manasa (CREST-ENSAE); Perroni, Carlo (University of Warwick)
    Abstract: We look at the formation of new Indian states in 2001 to uncover the effects of political secession on the comparative economic performance of natural resource rich and natural resource poor areas. Resource rich constituencies fared comparatively worse within new states that inherited a relatively larger proportion of natural resources. We argue that these patterns reflect how political reorganisation affected the quality of state governance of natural resources. We describe a model of collusion between state politicians and resource rent recipients that can account for the relationships we see in the data between natural resource abundance and post-breakup local outcomes.
    Keywords: Natural Resources and Economic Performance, Political Secession, Fiscal Federalism JEL Classification: D72, H77, O13
    Date: 2020
  4. By: Alejandro Izquierdo; Ruy Lama; Juan Pablo Medina; Jorge Puig; Daniel Riera-Crichton; Carlos Vegh; Guillermo Javier Vuletin
    Abstract: Over the last decade, empirical studies analyzing macroeconomic conditions that may affect the size of government spending multipliers have flourished. Yet, in spite of their obvious public policy importance, little is known about public investment multipliers. In particular, the clear theoretical implication that public investment multipliers should be higher (lower) the lower (higher) is the initial stock of public capital has not, to the best of our knowledge, been tested. This paper tackles this empirical challenge and finds robust evidence in favor of the above hypothesis: countries with a low initial stock of public capital (as a proportion of GDP) have significantly higher public investment multipliers than countries with a high initial stock of public capital. This key finding seems robust to the sample (European countries, U.S. states, and Argentine provinces) and to the identification method (Blanchard-Perotti, forecast errors, and instrumental variables). Our results thus suggest that public investment in developing countries would carry high returns.
    Date: 2019–12–20
  5. By: Afrouz Azadikhah Jahromi (Department of Economics, Temple University)
    Abstract: While mosquito-borne diseases are currently most prevalent in mid-latitude countries, rising global temperatures are expanding their range. This paper investigates whether one such disease, dengue, harms newborns. Health at birth has been shown to impact economic outcomes throughout life. The empirical design exploits variation in lagged dengue rates in a town's closest neighbors and largest trading partner. The underlying source of exogeneity in this variation comes from two components: the uneven allocation, across municipalities, of funding to combat the mosquito vector and random weather patterns. Past disease rates in adjacent areas are used as instruments for the dengue rate in a newborn's municipality of residence. Using administrative individual data from birth records in Brazil, I find that a one standard deviation increase in the incidence of dengue in the third trimester of gestation reduces birth weight by 0.75 grams on average. The effect is more pronounced for baby girls and for children of more educated mothers. Moreover, there seems to exist a positive effect of dengue exposure during the early stages of gestation among children of mothers that do not receive scheduled prenatal care. The likely channel is that these women access pregnancy resources as a consequence of seeking medical treatment for dengue.
    Keywords: Birth, Dengue, Municipality, Weather, Weight
    JEL: J13 I14 I18 Q54
    Date: 2020–01
  6. By: Quentin Gallea
    Abstract: The main contribution of this paper is to provide the first causal estimation of the effect of weapons imports on confl icts in the recipient country for a global set of suppliers. The second main contribution is to suggest a novel approach to correct the errors with a Shift-Share (Bartik) instrument using arbitrary clustering and its implementation in STATA using the command acreg. Using small arms and light weapons country-year transfers data from 1992 to 2011, I estimate the effect of arms import on the con flict life-cycle (onset, duration, intensity and termination) and number of refugees from the recipient country. To address endogeneity issues, I am using supply shortages generated by suppliers' war involvement outside the recipient country's continent (Shift-Share instrumental variable) as exogenous negatives shocks on arms import. The two-stage least squares estimation shows that arms imports increase the onset of internal con flict, the number of internal con flicts, the percentage of battle-related deaths and the number of refugees fleeing the country. The 2SLS model predicts as well that if Europe would stop sending weapons to Africa for a year, it would reduce the number of refugees by 500,000.
    Keywords: Instrumental Variables (IV) Estimation, Internal Con ict, Migration, Rebellion, Arms imports
    JEL: C26 D74 F22 H56 O10 O19
    Date: 2019–12
  7. By: Bhagowalia, Priya
    Abstract: This study examines the impact of conditional cash transfers (CCTs) for on sex ratios, health and nutrition of children. The main hypothesis is that CCTs may alter the perceived economic value of girls relative to boys, leading to more favorable sex ratios and better nutrition. Several studies have tried to explain the puzzling persistence of malnutrition inspite of rapid increases in economic growth and the reasons range from decreases in physical activity (Deaton and Dreze 2009) to the “South Asian Enigma” (Ramalingaswami, et al, 1997). The “South Asian enigma” underscores gender disparities as the main reason for the poor nutritional status despite high growth (Smith et al, 2003). We use data from the National Family Health Surveys (NFHS 2005-06 and 2015-16) to explore if cash transfer schemes for education make a positive and significant difference to sex ratios, nutrition and health seeking behavior. Our results suggest that cash transfer schemes have a positive but moderate impact on nutrition among eligible and non-eligible households, a positive impact on health seeking behaviors and that there are regional variations related to the implementation of the scheme
    Keywords: Conditional Cash transfer, health, nutrition
    JEL: I15 O1
    Date: 2020
    Abstract: African countries are known to export less than any other group of countries in the world. Numerous studies have pointed out the high level of transport costs related to the lousy quality of transport infrastructures in the African continent to be the main explanation of this situation. We first show that depending on the estimator used, African countries on aggregate do not trade necessary less than the average country in the world when it comes to gross exports, even if they underperform clearly as regards final goods exports. We also formulate a model for trade in value-added by adapting the Anderson and Van Wincoop’s gravity equation to take into account the structure of value-added exports. The proposed model highlights the importance of indirect trade costs, which are trade costs of third countries through which the exported value-added of the origin country passes to reach its final destination. When we control for these indirect trade costs, it appears that the penalty on the direct trade costs between African countries’ and their partners is at least two times lower for value-added exports than what is predicted for gross exports and even six times lower in comparison to final goods exports.
    Keywords: Global value chains, Gravity model, trade costs, African trade
    JEL: F1
    Date: 2019–09–02
  9. By: Maitra, Pushkar; Mitra, Sandip; Mookherjee, Dilip; Visaria, Sujata
    Abstract: We compare two different methods of appointing a local commission agent as an intermediary for a credit program. In the Trader-Agent Intermediated Lending Scheme (TRAIL), the agent was a randomly selected established private trader, while in the Gram Panchayat-Agent Intermediated-Lending Scheme (GRAIL), he was randomly chosen from nominations by the elected village council. More TRAIL loans were taken up, but repayment rates were similar, and TRAIL loans had larger average impacts on borrowers’ farm incomes. The majority of this difference in impacts is due to differences in treatment effects conditional on farmer productivity, rather than differences in borrower selection patterns. The findings can be explained by a model where TRAIL agents increased their middleman profits by helping more able treated borrowers reduce their unit costs and increase output. In contrast, for political reasons GRAIL agents monitored the less able treated borrowers and reduced their default risk.
    Keywords: Targeting, Intermediation, Decentralization, Community Driven Development, Agricultural Credit, Networks
    JEL: H42 I38 O13 O16 O17
    Date: 2020–01
  10. By: Tristan Le Cotty (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique); Elodie Maitre d'Hotel (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - INRA - Institut National de la Recherche Agronomique - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Subervie Julie (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)
    Abstract: In many African countries, rural households typically sell their output immediately after harvest and then have to face the lean season in often dramatic conditions. This paper explores whether alleviating both credit and storage constraints through an inventory credit (or warrantage) program in Burkina Faso is associated with improvements in household food insecurity and dietary diversity. We partnered with a rural bank and a nation-wide organization of farmers to evaluate a warrantage system with seventeen villages in the western region of Burkina Faso. In randomly chosen treatment villages, the households were offered a loan in exchange for storing a portion of their harvest as a physical guarantee in one of the newly-built warehouses of the project. We show that, after three seasons, the warrantage program has extended users' self-subsistence period by an average of seventeen days, increased the average size of the farmby one and a half hectares (one additional hectare of cotton and one additional half hectare of maize) and increased dietary diversity significantly, with more fish, fruit and oil consumed weekly.
    Keywords: inventory credit,warrantage,savings,storage,intertemporal price fluctuations
    Date: 2019
  11. By: Tanguy Bernard (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique, IFPRI - International Food Policy Research Institute); Sylvie Lambert (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Karen Macours (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Margaux Vinez (The World Bank - The World Bank - The World Bank)
    Abstract: Agricultural input subsidies are often considered key instruments to increase adoption of new technologies in developing countries. Using unique experimental data from Equa- teur province in DRC, we document the e_ectiveness of such interventions in increasing households adoption of modern seed varieties (MVs). High subsidy levels increase adop- tion, in particular when other access constraints were also relieved. Demand is highly price sensitive, but demand curves do not display strong discontinuity at low prices. We _nd very limited spillover e_ects on adoption by non-voucher recipients. Adoption persists to some extent in the season that follows voucher distribution.
    Keywords: agricultural policies,technology adoption,input subsidies,Sub- Saharan Africa,Democratic Republic of Congo,JEL Codes: Keywords: agricultural policies
    Date: 2019–12
  12. By: Stecklov, Guy; Menashe-Oren, Ashira
    Abstract: Rural youth populations shift over time and help shape future demographic patterns while impacting the options for states to achieve demographic dividends and reduce gender inequalities. Building on United Nations data, our analysis shows how past growth of the youth population (15 to 24-year-olds) was dramatic in Asia and the Pacific, while projections suggest a sharp rise in the youth population of sub-Saharan Africa (SSA) until 2050. These variable trajectories across regions are further accentuated by diverging rural and urban populations – shaped both by differential fertility rates and by rural-to-urban migration. Youth sex ratios vary acutely between rural and urban sectors, driven largely by sex-specific migration. In some regions, male rural-to-urban migration leaves rural areas with higher numbers of women. Efforts to involve women in key roles in agriculture and to increase female productivity should be a primary concern to raise the demographic dividend. Indeed, large proportions of rural youth, of both sexes, lower dependency ratios and raise the urgency of accumulating human capital to increase their productivity. Of course, growing cohorts of potential workers require a labour market with sufficient capacity to absorb them – and this requires particular attention as rural transformation pushes youth to seek alternative employment outside of agriculture
    Keywords: Community/Rural/Urban Development
    Date: 2019
  13. By: Kodila-Tedika, Oasis; Khalifa, Sherif
    Abstract: This paper examines the association between the length of experience with statehood, or state history, on the likelihood of state fragility. The argument is that the accumulation of knowledge by state personnel, and the build up of experience within state institutions, allows the state to avoid the exposure to recurrent crises, which is considered a symptom of weakness. The paper focuses on sub-Saharan African countries and uses Probit estimation techniques. The analysis shows that state history has a negative and statistically significant effect on the state fragility index. This result is robust after the inclusion of a variety of economic, political, institutional and historical variables. We also use extreme fragility as our dependent variable. The Probit and Relogit estimations also show a statistically significant negative effect of state history on extreme fragility. This is the case even after the inclusion of control variables
    Keywords: history, institutions, fragility, Africa
    JEL: N00 O55 P5
    Date: 2019–12–30
  14. By: Kumar, Rishabh (California State University (San Bernardino))
    Abstract: This article is about the metamorphoses of aggregate Indian wealth over fifteen politically transformative decades. Based on a comprehensive new database, I find that wealth-income ratios have fluctuated by large margins in the twentieth century. In emerging India of the twenty first century, wealth is steadily approaching the same disproportionate size (relative to national income) that was seen during sharp economic downturns in interwar colonial India. The long run 1939-2012 U shaped trajectories of wealth-income ratios are reasonably explained by a mid century asset price slowdown and the return of high land shares in national wealth. These results corroborate the secular increase of wealth-income ratios in most large economies since the 1980s. The manifestation of this phenomena appears to be independent of the stage of development.
    Date: 2019–03–29
  15. By: Marcos Agurto (Universidad de Piura); Habiba Djebbari (Aix-Mareseille Universite); Sudipta Sarangi (Virginia Tech); Brenda Silupu (Universidad de Piura); Carolina Trivelli (Instituto de Estudios Peruanos); Javier Torres (Universidad del Pacifico)
    Abstract: We experiment with a novel way to boost information acquisition that exploits existing social ties between the promoter of a new financial technology and community members. We offer information and training workshops on a new mobile-money platform in periurban and rural areas in Peru. In the treatment group, workshops are led by promoters who are personally known to the invited participants. In the control group, comparable individuals are invited to attend similar workshops, but the workshops are led by agents external to the community. Our findings suggest that lack of information impedes product adoption, which is itself limited by lack of trust in the individual who provides the information.
    Keywords: Financial inclusion, social networks, information transmission, trust
    JEL: D91 G23 I22 I31 O33
    Date: 2020–01

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