nep-dev New Economics Papers
on Development
Issue of 2021‒10‒11
thirteen papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Co-Financing Community-Driven Development Through Informal Taxation: Experimental Evidence from South-Central Somalia By van den Boogaard, Vanessa; Santoro, Fabrizio
  2. Misallocation in Indian Agriculture By Marijn Bolhuis; Swapnika Rachapalli; Diego Restuccia
  3. Local Economic Growth and Infant Mortality By Andreas Kammerlander; Günther G. Schulze
  4. Sanitation and Marriage Markets in India: Evidence from the Total Sanitation Campaign By Gautam, S; Augsburg, B; Baquero, J. P; Rodriguez, P
  5. The Impacts of Weather Shocks on Employment Outcomes: Evidence from South Africa By Harriet Brookes Gray; Vis Taraz; Simon D. Halliday
  6. Explaining Informal Taxation and Revenue Generation: Evidence from south-central Somalia By van den Boogaard, Vanessa; Santoro, Fabrizio
  7. Inequality in Electricity Consumption and Economic Growth: Evidence from a Small Area Estimation Study By Nguyen, Cuong Viet; Nguyen, Khuong Duc; Tran, Tuyen Quang
  8. Ethnofederalism and Ethnic Voting By Richard Bluhm; Roland Hodler; Paul Schaudt
  9. The Finance-Growth Nexus in Latin America and the Caribbean: A Meta-Analytic Perspective By Iwasaki, Ichiro
  10. Development aid and illicit capital flight: Evidence from Nepal By Sven Steinkamp; Frank Westermann
  11. Inversión Perdida: Conflicto Civil y Crédito Agrícola en Colombia By Nicolás de Roux; Luis Martínez
  12. Changes in the educational gradient of fertility not driven by changes in preferences By Daniel Ciganda; Angelo Lorenti; Lars Dommermuth
  13. The Macroeconomic Impact of Recent Political Conflicts in Africa: Generalized Synthetic Counterfactual Evidence By Samba Diop; Simplice A. Asongu; Vanessa S. Tchamyou

  1. By: van den Boogaard, Vanessa; Santoro, Fabrizio
    Abstract: Community contributions are often required as part of community-driven development (CDD) programmes, with payment encouraged through matching grants. However, little remains known about the impact of matching grants, or the implications of requiring community contributions in order for communities to receive development funding. This paper describes research where we partner with two non-governmental organisations (NGOs) – one international and one Somali – and undertake a randomised control trial of a CDD matching grant programme designed to incentivise informal contributions for local public goods in Gedo region in south-central Somalia. We rely on household survey data collected from 1,297 respondents in 31 treatment and 31 control communities, as well as surveys of village leaders and data on informal contributions from the mobile money platform used by community leaders to collect revenue. Two key findings emerge. First, our research shows that working with communities and incentivising informal revenue generation can be an effective way to deliver public goods and to support citizens and communities. Second, building on research exploring the potential for development interventions to spur virtuous or adverse cycles of governance, we show that development partners may work directly with community leaders and informal taxing institutions without necessarily undermining – and indeed perhaps strengthening – state legitimacy and related ongoing processes of statebuilding in the country. Indeed, despite playing no direct role in the matching grant programme, taxpayer perceptions of the legitimacy of the local government improved as a result of the programme. These findings deepen our understanding of how community contributions may be incentivised through matching grant programmes, and how they may contribute to CDD and public goods provision in a context of weak institutional capacity.
    Keywords: Development Policy, Finance,
    Date: 2021
  2. By: Marijn Bolhuis; Swapnika Rachapalli; Diego Restuccia
    Abstract: We exploit substantial variation in land-market institutions across Indian states and detailed micro household-level panel data to assess the effect of distortions in land rental markets on agricultural productivity. We provide empirical evidence that states with more rental-market activity feature less misallocation and reallocate land more efficiently over time. We develop a model of heterogeneous farms and land rentals to estimate land-market distortions in each state. Land rentals have substantial positive effects on agricultural productivity: an efficient reallocation of land increases agricultural productivity by 38 percent on average and by more than 50 percent in states with highly distorted rental markets. Both farm and state-level land market distortions are quantitatively important, with state-level wedges accounting for a significant fraction of rental market participation differences across states. Land market distortions contribute about one-third to the large differences in agricultural total factor productivity across Indian states.
    Keywords: Productivity, agriculture, distortions, land rentals, states, India.
    JEL: O4 O5 O11 O14 E01 E13
    Date: 2021–10–05
  3. By: Andreas Kammerlander; Günther G. Schulze
    Abstract: We show, for the first time, a causal effect of local economic growth on infant mortality. We use geo-referenced data for non-migrating mothers from 46 developing countries and 128 DHS survey rounds and combine it with nighttime luminosity data at a granular level. Using mother fixed effects we show that an increase in local economic activity significantly reduces the probability that the same mother loses a further child before its first birthday.
    Keywords: local economic growth, child mortality, nighttime lights
    JEL: I15 O18
    Date: 2021
  4. By: Gautam, S; Augsburg, B; Baquero, J. P; Rodriguez, P
    Abstract: This paper analyses the marriage decisions of men and women, focusing on the added attractiveness of sanitation within the living arrangement, in rural India. We exploit district and time variation from the Total Sanitation Campaign (TSC) which increased sanitation by 6.6 percent among households with marriage eligible children and generated an exogenous increase in the composition of households with sanitation. Using data from the Indian Human Development household survey (IHDS) and district level census, we show that exposure to TSC increased the probability of marriage for men and women, from poorer households, by 3.8 pp and 6.5 pp respectively. The reduced form estimates incorporate both general equilibrium effects and heterogeneous program effects – two important components of equilibrium marital behavior. To decompose the overall policy impact on marriage market equilibrium we formulate a simple matching model where men and women match on observed and unobserved characteristics. Through model simulations, we show that cohorts within TSC exposed markets experienced a shift in marital gains both across matches but also within a given match. Specifically, the resultant sorting patterns display a marked gender asymmetry with an increase in marital surplus among matches where men are wealthier than their spouse, and a decrease in surplus where the wife is wealthier. Moreover, the increased access to sanitation for TSC exposed women implied a decline in their expected control over resources within the marriage.
    Keywords: Empirical matching, Marriage markets, Sanitation, Sorting
    JEL: C78 D13 J12 O18
    Date: 2021–09–26
  5. By: Harriet Brookes Gray; Vis Taraz; Simon D. Halliday
    Abstract: As climate change accelerates, the frequency of extreme weather conditions will increase. We assess the impact of rising temperatures and drought on the employment outcomes of working–age individuals in South Africa between 2008 and 2017. We merge high-resolution weather data with panel survey data that contains individual labor market outcomes and estimate causal impacts using a fixed effects framework. We find that drought conditions decrease the likelihood that an individual is employed by approximately 3.2 percentage points. These effects are concentrated in the service sector and in provinces that are more reliant on tourism. The employment outcomes of women, part-time workers, and workers without a high school diploma appear to especially sensitive to drought. Taken together, our results suggest that the impacts of climate change will be felt unequally by South Africa’s workers
    Date: 2021–09–07
  6. By: van den Boogaard, Vanessa; Santoro, Fabrizio
    Abstract: Most people in low-income countries contribute substantially to the financing of local public goods through informal revenue generation (IRG). However, very little is known about how IRG works in practice. We produce novel evidence on the magnitude and regressivity of IRG and its relationship with the state in a fragile context, Somalia. We rely on original data from surveys with over 2,300 households and 117 community leaders in Gedo region, as well as on extensive qualitative research. We first show that IRG is prevalent. Over 70 per cent of households report paying at least one informal tax or fee in the previous year, representing on average 9.5 per cent of annual income. We also find that, among households that contribute, poorer ones contribute larger amounts than richer ones, with higher incidence in relation to their income. Further, in line with theory and expectations, informal payments have inequitable community-level effects, with individuals in wealthier communities making more informal payments than in poorer ones and, correspondingly, having access to a greater number of public goods. We then consider four explanations for the prevalence of IRG. First, IRG clearly fills gaps left by weak state capacity. Relatedly, we show that IRG can bolster perceptions and legitimacy of the state, indicating that sub-national governments may actually benefit from informal taxation. Second, informal taxing authorities are more effective tax collectors than the state, with informal taxing authorities having greater legitimacy and taxpayers perceiving informal payments to be fairer than those levied by the state. Third, dispelling the possibility that informal payments should be classified as user fees, taxpayers overwhelmingly expect nothing in return for their contributions. Fourth, in contrast to hypotheses that informal payments may be voluntary, taxpayers associate informal payments with punishment and informal institutions of enforcement. Our research reinforces the importance of IRG to public goods provision in weak formal institutional contexts, to everyday citizens, and to policymakers attempting to extend the influence of the federal state in south-central Somalia. Foremost, informal tax institutions need to be incorporated within analyses of taxation, service delivery, social protection, and equity. At the same time, our findings of the complementary nature of IRG and district-level governance and of the relative efficiency of revenue generation by local leaders have important implications for understanding statebuilding processes from below. Indeed, our findings suggest that governments may have little incentive to extend their taxing authority in some fragile contexts.
    Keywords: Economic Development, Governance,
    Date: 2021
  7. By: Nguyen, Cuong Viet; Nguyen, Khuong Duc; Tran, Tuyen Quang
    Abstract: Our study uses a small area estimation method to estimate the average and inequality of per capita kWh consumption for small areas in Vietnam. It shows evidence of a large spatial heterogeneity in the electric power consumption between districts and provinces in Vietnam. Households in the mountains and highlands consumed remarkably less electricity than those in the delta and coastal areas. Notably, we find a U-shaped relationship between the inequality of electricity consumption and economic levels in Vietnam. In poor districts and provinces, there is very high inequality in electricity consumption. Inequality is lower in middle-income districts and provinces.
    Keywords: Electricity consumption,Energy inequality,Economic growth,Small area estimation,Vietnam
    JEL: O13 Q43 D63
    Date: 2021
  8. By: Richard Bluhm; Roland Hodler; Paul Schaudt
    Abstract: We investigate how changes in the administrative-territorial structure affect ethnic voting. We present an event study design that exploits the 2010 constitutional reform in Kenya, which substantially increased the number of primary administrative regions. We find (i) strong evidence for a reduction in ethnic voting when administrative regions become less ethnically diverse and (ii) weak evidence for such a reduction when ethnic groups become less fragmented across regions. These results suggest that ‘ethnofederal’ reforms (leading to administrative borders that more closely follow ethnic boundaries) can mitigate ethnic politics in diverse countries.
    Keywords: ethnofederalism, decentralization, territorial structure, ethnic divisions, ethnic voting, ethnic politics, Kenya
    JEL: D02 D72 H77 J15 O55
    Date: 2021
  9. By: Iwasaki, Ichiro
    Abstract: This paper performs a meta-analysis of the effect of financial development and liberalization on macroeconomic growth in Latin America and the Caribbean using a total of 233 estimates collected from 21 previous works. Meta-synthesis of the collected estimates demonstrates that it is probable that financial development and liberalization enhance economic growth in the region, and these policy measures have the potential to have a meaningful impact on the real economy. The synthesis results also reveal that the choice of financial variables significantly affects reported estimates in the literature. Meta-regression analysis of literature heterogeneity and test for publication selection bias produce findings that are compatible with the synthesis results. The test results of publication selection bias also confirm that the existing literature contains genuine empirical evidence of the growth-promoting effect of finance in the region.
    Keywords: financial development and liberalization, economic growth, meta-analysis, publication selection bias, Latin America and the Caribbean
    JEL: E44 G10 O11 O16 O54
    Date: 2021–10
  10. By: Sven Steinkamp (Osnabrück University, D-49069 Osnabrück, Germany); Frank Westermann (Osnabrück University, D-49069 Osnabrück, Germany)
    Abstract: While illicit capital flight is a major concern of policy makers in developing countries, there is only little research on the possible link between capital flight and development aid. In this paper, we address the issue for Nepal, a stereotypical financially-closed developing economy that is highly dependent on resources from abroad. Distinguishing features of our approach are the use of a narrowly defined proxy of capital flight, based on trade-cost adjusted mirror trade statistics, and the focus on the foreign-exchange cash component of development aid. We document a robust partial correlation between aid and outward capital flight that is economically and statistically significant. Interestingly, this positive correlation is not observable for remittances, an alternative form of foreign-exchange inflows where the capital flight motivation is absent. Furthermore, it is visible in the the FX-cash component but not in broader aid definitions that include in-kind transfers, or in multilateral and IMF loans. Finally, when comparing the subcomponents of export underinvoicing and import overinvoicing, only the latter is driving our results.
    Keywords: Capital Flight; Development Aid; Remittances; Trade Misinvoicing
    JEL: F24 F32 F35
    Date: 2021–09–28
  11. By: Nicolás de Roux; Luis Martínez
    Abstract: ¿Renuncian los productores agrícolas a inversiones rentables debido al conflicto civil? La respuesta a esta pregunta es fundamental para entender los costos de la violencia, pero requiere poder medir la voluntad de inversión de los agricultores y acceder a una fuente de variación exógena en la intensidad del conflicto. En este artículo, superamos estos obstáculos usando datos administrativos del banco agropecuario más grande de Colombia y el acuerdo de desmovilización entre el gobierno colombiano y el grupo insurgente FARC del 2016. Un análisis de diferencias-en-diferencias arroja tres resultados principales. Primero, el crédito a los pequeños productores aumenta después del acuerdo en municipios expuestos a las FARC (17% sobre la media de la muestra). Este aumento es explicado por un mayor número de aplicaciones, sin cambio alguno en variables relacionadas con la oferta. Segundo, un modelo teórico sencillo combinado con información detallada de las características de los aplicantes a créditos y de los proyectos productivos (incluyendo scores crediticios y comportamiento de los préstamos) sugiere que cambios en los retornos de los proyectos, más no en su riesgo, explican el aumento de la demanda de crédito. Tercero, el conflicto no es el obstáculo principal para la inversión en áreas con poco acceso a mercados. La combinación de mayor inversión, tasas de mora constantes y evidencia adicional de un aumento en la luminosidad nocturna sugieren un impacto económico positivo del final del conflicto.
    Keywords: Conflicto, Inversión, Crédito, Agricultura, FARC;
    JEL: D74 G21 O13 O16
    Date: 2021–09–22
  12. By: Daniel Ciganda (Max Planck Institute for Demographic Research, Rostock, Germany); Angelo Lorenti (Max Planck Institute for Demographic Research, Rostock, Germany); Lars Dommermuth
    Abstract: Fertility levels have historically been negatively correlated with the amount of information and material resources available to individuals and families. The recent reversal of this trend has been interpreted as a fundamental change in preferences, a return to large families led by more educated individuals. Our analysis shows, however, that the recently documented changes in fertility can be reproduced in the context of declining family size preferences across educational levels, and without assuming any transformation of the underlying behavioral mechanisms that link resources and fertility across cohorts. We demonstrate this point by replicating the stylized facts reported in previous studies using a simulated dataset. We generate this dataset from a model that assumes continuity in the way education shapes reproductive intentions over time. In our simulated population, the reversal in the relationship between education and fertility emerges as a result of the transition from a natural to a regulated fertility regime, as the share of unplanned births decreases over time, and the mechanisms that positively connect educational attainment with \textit{desired} fertility become dominant. We conclude, thus, that the explanation for the weakening educational gradient of fertility lies primarily in the decline of unintended fertility, instead of in changes in fertility preferences.
    JEL: J1 Z0
    Date: 2021
  13. By: Samba Diop (Alioune Diop University, Bambey, Senegal); Simplice A. Asongu (Yaoundé, Cameroon); Vanessa S. Tchamyou (Yaoundé, Cameroon)
    Abstract: This paper measures the macroeconomic impact of recent political crisis, protest and uprisings in Africa with the generalized synthetic control method and evaluates the role played by natural resource dependence on the modulation of the impact. We find that political crisis, protests and uprisings have a significant and negative impact on economic growth while the impact is positive on investment and price level. For economic growth, the deviation of the actual series from the counterfactual is negative, instantaneous, persistent and highly significant; indicating non-negligible costs of the shock. Indeed, dependence on natural resources amplifies the negative effect of political crisis, protests and uprisings on GDP. Finally, the more the treated country depends on natural resources, the more it becomes resilient from the investment losses caused by political crisis.
    Keywords: political conflicts; economic growth; Africa
    JEL: F52 K42 O17 O55 P16
    Date: 2021–01

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