nep-dev New Economics Papers
on Development
Issue of 2020‒02‒03
nine papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. The Value of Free Health Insurance Schemes in Developing Countries By Conti, Gabriella; Ginja, Rita; Narita, Renata
  2. Aid Effectiveness in Fragile States By Francesca G. Caselli; Andrea F. Presbitero
  3. Biotech Crops, Input Use and Landslides: The case of Genetically Modified Corn in the Philippine Highlands By Bequet, Ludovic
  4. Fair trade and wellbeing improvements - evidence from Sri Lanka By Hannah Holmes; Katsushi Imai
  5. Government transparency and political clientelism: Evidence from randomized anti-corruption audits in Brazil By Bobonis, Gustavo J.; Gertler, Paul J.; Gonzalez-Navarro, Marco; Nichter, Simeon
  6. Effect of a Health Shock on Working Hours and Health Care Usage: The role of Financial Inclusion By Paul Owusu Takyi; Roberto Leon-Gonzalez
  7. Does the Extractive Industries Transparency Initiative (EITI) help reduce corruption in Latin America? Evidence from Colombia, Guatemala, Honduras, Peru, and Trinidad and Tobago By López Cazar, I.M.
  8. Agricultural Transformation and Farmers' Expectations: Experimental Evidence from Uganda By Bonan, Jacopo; Kazianga, Harounan; Mendola, Mariapia
  9. Heterogeneous effects of marketing contracts and resource-providing contracts on household income By Ruml, Anette; Ragasa, Catherine; Qaim, Matin

  1. By: Conti, Gabriella; Ginja, Rita; Narita, Renata
    Abstract: Brazil began the implementation of SUS (Universal Health Insurance) in 1988. To the extent that SUS broke the link between employment contract and health insurance, it may have changed the incentives for individuals to participate in the labor market and in which sector to work (formal or informal). Our goal is to study the labor market impacts of SUS. We do so by structurally estimating a labor market model that allows us to address three main questions (i) How much of the increase in informality in Brazil is due to the introduction of non-contributory health insurance? (ii) How much do individuals value health insurance? And (iii) What are the welfare impacts of increases in the value of non-contributory health insurance? The model is fitted to Brazilian employment data and used to simulate changes in welfare, employment, informality and wages of different noncontributory health insurance policies.
    Keywords: Innovación social, Políticas públicas, Salud,
    Date: 2019
  2. By: Francesca G. Caselli (International Monetary Fund); Andrea F. Presbitero (International Monetary Fund)
    Abstract: Fragile states are highly dependent on foreign aid and are characterized by several features that impair their economic and social performance. After reviewing the literature on aid effectiveness, the chapter presents several stylized facts on aid flows to fragile states, and exploits detailed project-level data to provide novel evidence on aid effectiveness in fragile states. Comparing project success rate across fragile and other developing countries confirms that aid given to fragile states is less likely to be effective than elsewhere. Focusing on the conflict dimension of fragility, we can extend our analysis at the subnational level to strengthen the identification of the effect of fragility on project success. Our results indicate that a project implemented in a fragile state is up to 8 percentage points less likely to be successful than a similar project financed in another developing country. Our analysis does not imply that aid to fragile states should be reduced across the board, but points to several factors that could hamper the growth dividend of aid.
    Date: 2020–01
  3. By: Bequet, Ludovic
    Abstract: Improved seeds varieties have led to an increase in agricultural production as well as to a change in agricultural practices and input use. A side effect of these changes that has received little attention to date is the impact of those new technologies on environmental degradation. Using an original survey method of farming households on the Philippine island of Mindanao covering the past ten years, this paper finds a positive correlation between GM corn cultivation and landslide occurrence, which is robust to the inclusion of household fixed effects as well as to the use of matching and survival models. An endogenous allocation of crops on plots can be ruled out as a mechanism. Instead, more aggressive weed control via broad-spectrum herbicide appears to explain the results. Looking at the distribution of landslides as a function of wealth, landslides are found to increase socio-economic inequality as poorer farmers lose on average a significantly larger portion of their plots to landslides while for the top tail of the landholding distribution is less affected.
    Keywords: Agriculture; Environmental degradation; Landslides; Biotechnology
    JEL: O13 Q12 Q15 Q56
    Date: 2020–01
  4. By: Hannah Holmes; Katsushi Imai
    Abstract: This paper investigates whether and how Fair Trade certification improves the wellbeing of small-scale producers by drawing upon a field study carried out by the authors in 2009 in the Central Province of Sri Lanka. A point of departure from earlier studies is to use a mixed methods approach, combining qualitative and quantitative data to assess the impact of Fair Trade on a broader set of development indicators to capture both the monetary and non-monetary progress of farmers. Methodologically, to overcome the limitation of small sample sizes of non-experimental survey data, we propose the use of propensity-score weighted linear and non-linear regression models with and without instrumenting the farmers’ participation in Fair Trade. Here we have made treatment and control groups observationally comparable by applying propensity score matching (PSM) to match and weight the data, following Hirano and Imbens. We have found that Fair Trade certification increased farmers’ actual income from tea production significantly, with fewer hours of work per day and accelerated perceived improvement in overall household income, as well as empowering women in decision making. Our mixed methods approach led us to conclude that Fair Trade certification benefits Fair Trade tea farmers through increased tea income and risk reduction.
    Date: 2019
  5. By: Bobonis, Gustavo J.; Gertler, Paul J.; Gonzalez-Navarro, Marco; Nichter, Simeon
    Abstract: Political clientelism is considered a fundamental reason why politicians are not accountable and responsive to their constituencies. In this working paper, we study whether transparency initiatives – more specifically, top-down anti-corruption audits – can reduce the incidence of vote-buying and political clientelism in the context of Brazil’s municipal government anti-corruption program. This program selected municipalities at random to audit municipal finances, which allows for causal inference. We combine the audit program data for a sample of municipalities in the country’s Northeast region with a dedicated longitudinal survey we conducted in 2011-2013 of a large representative sample of impoverished rural households. This enables us to estimate short and long-term effects of the government anti corruption audits on subsequent levels of vote-buying and political clientelism.
    Keywords: Corrupción, Democracia, Fortalecimiento institucional, Gobernabilidad, Investigación socioeconómica, Sector público,
    Date: 2019
  6. By: Paul Owusu Takyi (National Graduate Institute for Policy Studies, Tokyo, Japan); Roberto Leon-Gonzalez (National Graduate Institute for Policy Studies, Tokyo, Japan)
    Abstract: This study explores the role of financial inclusion in the mitigation of the effects of a health shock at the household level. To that end, we examine empirically the effect of financial inclusion on household working hours and health care utilization, using round six of the Ghana Living Standard Survey data. We find that a health shock does decrease household working hours and increase the likelihood of health care utilization. This suggests that households in Ghana are not able to fully insure themselves against a health shock. However, we find that, faced with a health shock, households who are financially excluded see their working hours reduce more than those who enjoy full financial inclusion. Also, financial inclusion increases the likelihood of health care utilization when households experience a health shock. We find evidence that loan acquisition (borrowing) is one of the main mechanisms by which households can insure themselves against a health shock. Generally, our findings support the financial inclusion agenda of policymakers in Ghana and many other countries. Thus, efforts to ensure full financial inclusion will increase the probability of households using the financial sector as a means of insulating themselves against the effects of health shocks.
    Date: 2020–01
  7. By: López Cazar, I.M.
    Abstract: Vast revenues coming from mineral resources encourage rent-seeking activities that ham-per institutions and development. This phenomenon is captured in the ‘resource curse’ theory, meaning that mineral-rich countries perform worse in economic growth. Thus, the Extractive Industries Transparency Initiative (EITI), launched in 2002, was presented as an alternative to counter corruption through the disclosure of information and the involvement of different stakeholders in the extractive sector. Since then, the number of new EITI members increased progressively, as well as the studies to assess the initiative’s validity. There are several evaluations performed on the whole sample of EITI countries and few on individual case studies. However, there remains scarce evidence of analyses on individual cases within the same region. In this regard, this study uses a Synthetic Control Methodology (SCM) to measure the EITI’s impact on corruption in five Latin American countries: Colombia, Guatemala, Honduras, Peru, and Trinidad and Tobago. The method allows for seeing the EITI’s effect in each stage of its implementation. The results of this research are mixed. In most cases, there is not a decrease in corruption. Instead, there is a marginal increase in corruption. Several reasons could explain these findings, such as political scandals of corruption, civil conflicts, or weak involvement of the civil society. Hence, the latter explanations would suggest that the EITI in Latin America has been unsuccessful. This evidence improves our comprehension of the evolution of corruption in developing countries after an intervention of this nature.
    Keywords: Extractive Industries Transparency Initiative, EITI, corruption, transparency, governance, resource curse, Synthetic Control Methodology
    Date: 2020–01–27
  8. By: Bonan, Jacopo; Kazianga, Harounan; Mendola, Mariapia
    Abstract: Why adoption rate of potentially profitable agricultural technologies in Africa remains low is still puzzling. This paper uses a randomized control trial to study Ugandan subsistence smallholders' decisions to adopt cash crops. A unique way of eliciting farmers price and yield expectations allows us to investigate the role of farmers' ex-ante beliefs about crop profitability on adoption decisions. We find that the provision of extension services increases oilseeds adoption by 15%, and farmers who under-estimate oilseeds price at baseline are the most likely to adopt the new crops. The results suggest that changes in expectations drive agricultural technology take-up.
    Keywords: Technology Adoption,Commercial Farming,Randomized Controlled Trial,Uganda
    JEL: O13 O33 Q14 Q15 Q16
    Date: 2020
  9. By: Ruml, Anette; Ragasa, Catherine; Qaim, Matin
    Abstract: In the existing literature, the effects of contract farming on household welfare were examined with mixed results. Most studies looked at single contract types. This paper contributes to the literature by comparing two types of contracts – simple marketing contracts and resource- providing contracts – in the Ghanaian oil palm sector. We investigate the effects of both contracts on farm income, as well as spillovers on other household income sources. We use survey data collected with an innovative sampling design and a control function approach to address possible issues of endogeneity. Both contracts lead to large positive effects on total household income in a similar magnitude, yet through quite different mechanisms. Farmers under the marketing contract use the increase in oil palm profits to transition out of agricultural production and into off-farm employment. Farmers under the resource-providing contract have a stronger dependency on income from oil palm, which is considerably more profitable under the contract. The findings underline that contract characteristics matter for the effects and that disaggregated analysis of different income sources is important to understand the underlying mechanisms.
    Keywords: Agricultural and Food Policy, Community/Rural/Urban Development, Farm Management, Risk and Uncertainty
    Date: 2020–01

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