nep-dev New Economics Papers
on Development
Issue of 2021‒11‒01
ten papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Empowering Women through Microfinance in Djibouti By Mohamed Abdallah Ali; Mazhar Mughal; Dina Chhorn
  2. Foreign Aid and Intergenerational Mobility in Africa By Ali Compaore; Roukiatou Nikièma; Rasmané Ouédraogo
  3. Electricity Outages and Health Outcomes of Children: Empirical Evidence from Transition Economy By Yermone Sargsyan
  4. Public Debt - Economic Growth: Evidence of a Non-linear Relationship By Blessy Augustine; O.P.C. Muhammed Rafi
  5. The Impact of "Grow to Sell" Agricultural Extension on Smallholder Horticulture Farmers: Evidence from a Market- Oriented Approach in Kenya By Satoshi Shimizutani; Shimpei Taguchi; Eiji Yamada; Hiroyuki Yamada
  6. Price incentives and unmonitored deforestation: Evidence from Indonesian palm oil mills By Valentin GUYE; Sebastian KRAUS
  7. Proxy Means Testing Vulnerability to Measurement Errors ? By Jules Gazeaud
  8. Understanding the Dynamic of Digital Economy in the Context of Digital Literacy of Thai Households By Roongkiat Ratanabanchuen
  9. Rapid Consumption Method and Poverty and Inequality Estimation in South Sudan revisited By Shinya Takamatsu; Nobuo Yoshida; Rakesh Ramasubbaiah; Freeha Fatima
  10. Understanding a Less Developed Labor Market through the Lens of Social Security Data By Nada Wasi; Chinnawat Devahastin Na Ayudhya; Pucktada Treeratpituk; Chommanart Nittayo

  1. By: Mohamed Abdallah Ali (TREE - Transitions Energétiques et Environnementales - UPPA - Université de Pau et des Pays de l'Adour - CNRS - Centre National de la Recherche Scientifique, IRMAPE - Institut de Recherche en Management et Pays Emergents - ESC Pau); Mazhar Mughal (ESC Pau); Dina Chhorn (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Women's empowerment is crucial to improve their political, social, economic, health and sanitary situation. This paper estimates the effect of microfinance on women's empowerment in Djibouti. Using cross-sectional data of 692 households based in Djibouti's six major centres Djibouti-ville, Arta, Ali-Sabieh, Dikhil, Obock and Tadjourah, we construct original measures of women's empowerment index covering three dimensions (economic, social and interpersonal). We examine the extent to which access to microfinance, amount of loans obtained and their duration modifies women's status at home. Employing the instrumental variables (IV) estimations and a number of econometric techniques as robustness checks, we find a significantly positive association between microcredit and women's empowerment. Households with access to loans from MFIs are respectively 35.4%, 30.9% and 10.1% more likely to be economically, socially and interpersonally empowered. The effect of access to microfinance and the number of loans is also significant. However, women who took four or more loans from microfinance institutions are 27.7%, 23.5% and 6.8% less likely to be economically, socially and interpersonally empowered. The results of the study confirm generally positive socioeconomic effects of microfinance programmes.
    Keywords: Djibouti,Instrumental variables (IV),Microfinance,Women's empowerment
    Date: 2021–10–13
  2. By: Ali Compaore (UCA - Université Clermont Auvergne, CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne); Roukiatou Nikièma (Université Norbert ZONGO de Koudougou); Rasmané Ouédraogo (IMF - "Research Department International Monetary Fund (IMF)" - International Monetary Fund (IMF))
    Abstract: While there is extensive literature examining the growth and development effects of foreign aid, very little attention has been paid to its potential impact on social mobility. Thus, this paper provides the first empirical evidence on the effect of foreign aid on intergenerational educational mobility in Africa. Drawing on a sample of 28 countries over the period 1970-2010 and using the popular and wellknown probit estimator, we find strong evidence that foreign aid raises the likelihood of experiencing upward educational mobility in the region, while the probability of downward educational mobility tends to be lower in countries that receive a high level of foreign aid. These effects mainly operate through the increased financing for education, the improved education system, and policy, as well as improved education conditions. More interestingly, focusing on the sectoral decomposition of total aid receivedi.e., education sector versus the rest of the economy-, the study highlights that foreign aid to the education sector tends to increase the likelihood of upward educational mobility, contrary to aid allocated to the rest of the economy. Our finding suggests that foreign aid has contributed to improving social mobility in African countries.
    Keywords: F35,055,I24,C35,J62,Foreign Aid,Intergenerational Mobility,Africa
    Date: 2021–10–17
  3. By: Yermone Sargsyan (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: The electricity prices in developing countries are relatively low to recover its costs of generation and provision. This results in under-investment in infrastructure, which usually leads to frequent outages or rolling blackouts by the electricity suppliers. Outages may have an adverse impact on the household's welfare including the health of household members. Using household-level panel data "Life in Kyrgyzstan" (LIK), and a coarsened exact matching (cem) procedure this paper investigates whether there is a relationship between outages and the health of children. Specifically, I study the differences in the anthropometric outcomes of children aged 5 and below (given by the z-scores) living in households that experience frequent outages and those which do not. I find that the children living in the households with frequent outages have z-scores of height-for-age that are -0.334 units lower, and z-scores of weight-for-age that are -0.157 units lower than compared to the children living in the observationally identical households but without frequent outages.
    Keywords: electricity outages; child health; height-forage; weight-for-age; developing countries; transition economies
    JEL: I12 I14 J13 P36 Q53 Q41
    Date: 2021–10
  4. By: Blessy Augustine (CHRIST (Deemed to be University),Hosur Road, Bengaluru); O.P.C. Muhammed Rafi (BASE University, Bengaluru)
    Abstract: The impact of public debt on economic growth has been widely examined in the literature. The discussions shifted towards examining the possibility of a nonlinear relationship after the seminal work of Reinhart and Rogoff (2010) who proposed a threshold of 90 percent debt to GDP ratio beyond which debt is said to have a detrimental effect on economic growth. Many studies came thereafter found a common threshold for a group of countries and a negative impact of debt on growth beyond this threshold. In this context, we examine the presence of a threshold in the debt-growth nexus and the difference in the impact of debt on growth below and above this threshold in case of 39 emerging and developing economies for the period 1980 – 2019. Unlike most of the existing panel studies, we explore the debt growth relationship using country specific threshold regression models. Our findings show that in countries those confirmed a nonlinearity, the thresholds vary drastically, ranging between 24 and 116 percent. The results dismiss the possibility of a common threshold that fit for all countries and highlights the importance of finding country specific thresholds. Further, we could not find an inverted U-shape relationship between debt and growth in our sample. Apart from having different sets of countries with a positive impact below the threshold and a negative impact above, we could also find evidence for debt supporting growth beyond the threshold in case of ten countries. Also, there are countries in which the detrimental impact debt kicking in even below the threshold value of debt. Our result shows that the impact of public debt on economic growth is different across countries both below and above the threshold.
    Keywords: Public debt, Economic growth, Nonlinearity, Threshold
    Date: 2021–10
  5. By: Satoshi Shimizutani (JICA Ogata Sadako Research Institute for Peace and Development); Shimpei Taguchi (JICA Ogata Sadako Research Institute for Peace and Development); Eiji Yamada (JICA Ogata Sadako Research Institute for Peace and Development); Hiroyuki Yamada (Faculty of Economics, Keio University)
    Abstract: This paper evaluates the impact of a market-oriented agricultural extension program called Smallholder Horticulture Empowerment and Promotion (SHEP) in Kenya. The SHEP approach prioritizes practical training for farmers to act as producers in a market by encouraging decentralized decision-making. Using a cluster randomized controlled trial (RCT) over a two-year period, we find that, on average, SHEP increased horticultural income significantly by 70% and the positive effect was more pronounced in vulnerable households whose head of household is female, less educated or older. The effect is not relevant to horticultural experience prior to the intervention. Our findings suggest that a market-oriented agricultural extension can provide a pathway to improve the living standards of small-scale farmers through an increase in horticultural income.
    Keywords: Agricultural extension, Smallholder Horticulture Empowerment Promotion (SHEP), Kenya, Randomized controlled trial (RCT), Impact evaluation
    JEL: I23 J26
    Date: 2021–10–17
  6. By: Valentin GUYE (INRAE et Mercator Research Institute for Global Commons and Climate Change Berlin (MCC)); Sebastian KRAUS (MCC)
    Abstract: We create a novel, spatially explicit microeconomic panel of Indonesian palm oil mills, to provide the first estimates of deforestation price elasticities based on observations of the actual prices paid at mill gates. To identify the price elasticity, we spatially model how deforestation in upstream plantations is exposed to downstream, conditionally exogenous, shocks on mill-gate prices. We provide the first evidence that deforestation for smallholder plantations, and illegal deforestation, are price elastic. This implies that a price instrument can disincentivize deforestation where it is most difficult to monitor, and contain leakages from conservation regulations.
    Keywords: Deforestation, price elasticity, oil palm, Indonesia,
    JEL: Q5
    Date: 2021–07
  7. By: Jules Gazeaud (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)
    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 random measurement errors – an assumption that has been challenged by recent literature. Using a survey experiment conducted in Tanzania, this paper brings causal evidence on the impact of non-random errors on PMT performances. Results show that non-random errors bias the coefficients from PMT models, resulting in a 5 to 27 per cent reduction in PMT predictive performances. Moreover, non-random errors induce a 10 to 34 per cent increase in the incidence of targeting errors when poverty is defined in absolute terms. More reassuringly, impacts on the ranking of households are smaller and essentially non-significant. Taken together, these results indicate that PMT performances are quite vulnerable to non-random errors when the objective is to target absolutely poor households, but remain largely unaffected when the objective is to target a fixed share of the population.
    Keywords: Social protection,Targeting,Proxy Means Testing PMT,Measurement errors
    Date: 2020–11–01
  8. By: Roongkiat Ratanabanchuen
    Abstract: Digital economy has led to new business opportunities and growth potential especially for developing countries such as Thailand. However, one crucial factor that could create challenges is the readiness of households in adapting to the digital environment. This research proposes that digital literacy of households is the key indicator that helps policy makers to understand the digital divide situation. Digital literacy should be measured by 4 sub-dimensions, namely, 1) the access to digital technologies 2) the level of digital skills 3) the level of digital knowledge and 4) the digital information awareness. After using the principal component analysis (PCA) to develop the scoring system of digital literacy and using the cluster analysis to classify the sample into 3 levels of digital literacy, it is found that households in the illiterate group are mostly unemployed or work in the labor-intensive sector. When looking at how they use financial services, they appear to significantly use fewer banking services and have lower preference on the personalization of services than the digital fluency group. This evidence suggests that populations in the digital illiterate group may have already suffered from the digital divide which could intensify the problem of wealth inequality in the digital era. Consequently, policies that guarantee all households to have certain levels of digital literacy are needed.
    Keywords: Digital Literacy; Financial Services Industry; Digital Economy
    JEL: D1 I2 O3
    Date: 2021–02
  9. By: Shinya Takamatsu; Nobuo Yoshida; Rakesh Ramasubbaiah; Freeha Fatima
    Abstract: This paper presents updated poverty and inequality estimates from the South Sudan High Frequency Survey (HFS) consumption data. The HFS uses the Rapid Consumption Methodology (RCM), which skips part of consumption module, to save interview time due to the volatile security situation. The previous methodology adopted the Multivariate Normal Regression (MI-MVN) method to impute the skipped consumption data, but it produced improper consumption data like negative total consumption values for some households. Instead, the new methodology uses the Two-Part multiple imputation (MI) method, and improved the reliability of imputed consumption data, although there is still room for improvement. In addition, the new methodology adopts the latest consumer price index (CPI) and purchasing power parities (PPPs). Lastly, this paper updates the inequality estimates, which the previous method overestimated. As a result of all the above adjustments, South Sudan’s national poverty headcount rate in 2016-17 is 76.4 percent, which is 5.6 percentage points lower than the previous estimate of 82 percent. Inequality, as measured by the national Gini coefficient, is 44.1 percent, around 3 percentage points higher than the previous estimate of 41.0 percent.
    Date: 2021–10
  10. By: Nada Wasi; Chinnawat Devahastin Na Ayudhya; Pucktada Treeratpituk; Chommanart Nittayo
    Abstract: While understanding labor market dynamics is crucial for designing the country’s social protection programs, prohibitive longitudinal surveys are rarely available in less developed countries. We illustrate that employment history from Social Security records can provide several important insights by using data from a middle-income country, Thailand. First, in contrary to the traditional view, we find that the formal and informal sectors are quite connected. Our analysis of millions of individual histories by a machine learning technique shows that more than half of registered workers left the formal sector either seasonally or permanently long before their retirement age. This finding raises a question of whether the social protection schemes being separately designed for formal and informal workers are effective. Second, the semi-formal workers also had a much flatter wage-age profile compared to those always staying in the formal sector. This observation calls for effective redistributive tools to prevent earnings inequality to translate into disparities in old-age and transmit to the next generation. Lastly, on the employer size, we find that almost half of formally registered firms had fewer than five employees, the benchmark often used to define informal firms. This result suggests that the distributions of firm sizes differ across countries and the employer size alone is unlikely sufficient to define informal workers.
    Keywords: Employment; Work History; Social Security; K-means Clustering; Thailand
    JEL: J01 J08 J21 J60
    Date: 2021–01

This nep-dev issue is ©2021 by Jacob A. Jordaan. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.