nep-dev New Economics Papers
on Development
Issue of 2022‒10‒10
thirteen papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Universal Basic Income, Taxes, and the Poor By Nora Lustig; Valentina Martinez Pabon
  2. NAFTA and Drug-Related Violence in Mexico By Eduardo Hidalgo; Erik Hornung; Pablo Selaya
  3. The (very) long-run impacts of cash grants during a crisis By Fiala, Nathan; Rose, Julian; Aryemo, Filder; Peters, Jörg
  4. Do IMF Programs Stimulate Private Sector Investment? By Rima Turk-Ariss; Pietro Bomprezzi; Silvia Marchesi
  5. The Impact of Maternal Education on Child Immunization: Evidence from Bangladesh By Shahjahan, Md; La Mattina, Giulia; Ayyagari, Padmaja
  6. Social Protection and Foundational Cognitive Skills during Adolescence: Evidence from a Large Public Works Programme By Freund, Richard; Favara, Marta; Porter, Catherine; Behrman, Jere R.
  7. Carbon Farming Training and Welfare: Evidence from Northern Ghana By Okyere, Charles Yaw; Kornher, Lukas
  8. Political Alignment and Inter-Jurisdictional Cooperation: Evidence from Crime in Mexico By Emilio Depetris-Chauvin; Ruben Durante; Emilio Gutierrez
  9. Is Education Neglected in Natural Resources-Rich Countries? An Intergenerational Approach in Africa By Rasmané Ouedraogo; Jean-Marc B. Atsebi; Regina S. Séri
  10. Explaining Household Expenditure On Cooking Fuel: Role Of Income And Socio-Economic Status By Salman Haider
  11. The Fiscal State in Africa: Evidence from a Century of Growth By Albers, Thilo N. H.; Jerven, Morten; Suesse, Marvin
  12. Estimating the Effects of Syrian Civil War By Aleksandar Keseljevic; Rok Spruk
  13. What Really Drives Economic Growth in Sub-Saharan Africa? Evidence from The Lasso Regularization and Inferential Techniques By Isaac K. Ofori; Camara K. Obeng; Simplice A. Asongu

  1. By: Nora Lustig (Tulane University); Valentina Martinez Pabon (Yale University)
    Abstract: A Universal Basic Income (UBI) is often seen as an attractive policy option to replace existing targeted transfer and subsidy programs. However, in a budget-neutral switch to a UBI there is a trade-off between the generosity of the universal transfer, and hence its poverty impact, and the implied increase in tax burden. We summarize our results for fourteen low- and middle-income countries. We find that, with the exception of Russia, a poverty reducing, budget-neutral UBI would entail a significant increase in the net tax burden of top deciles. The efficiency cost and political resistance for such a policy would likely be too high.
    Keywords: universal basic income, microsimulation, inequality, poverty, tax incidence
    JEL: D31 D63 H22 I32 I38
    Date: 2022–09
  2. By: Eduardo Hidalgo (University of Cologne, Albertus-Magnus-Platz, 50923 Cologne, Germany); Erik Hornung (University of Cologne, Albertus-Magnus-Platz, 50923 Cologne, Germany); Pablo Selaya (University of Copenhagen, Øster Farimagsgade 5, 26.2.25, 1353 Copenhagen, Denmark)
    Abstract: We study how NAFTA changed the geography of violence in Mexico. We propose that open borders increased trafficking profits of Mexican cartels and resulted in violent competition among them. We test this hypothesis by comparing changes in drug-related homicides after NAFTA's introduction in 1994 across municipalities with and without drug-trafficking routes. Routes are optimal paths connecting municipalities with a recent history of drug trafficking with U.S. ports of entry. On these routes, homicides increase by 27% relative to the pre-NAFTA mean. These results cannot be explained by changes in worker's opportunity costs of using violence resulting from the trade shock.
    Keywords: Violence, NAFTA, Free Trade, Mexico, Illegal Drug Trafficking, Conflict
    JEL: K42 F14 D74 O54
    Date: 2022–09
  3. By: Fiala, Nathan; Rose, Julian; Aryemo, Filder; Peters, Jörg
    Abstract: The economic consequences of COVID-19 lockdowns were significant for poor households in the Global South. In this crisis period, we investigate the very long-run impacts of a randomized cash grant in Uganda on three pre-specified outcomes, including a heterogeneity analysis by gender. In 2008, the program supported young adults through a one-time grant of 380 USD, labelled to invest in vocational training and tools to start a business. The program revealed considerable effects after four years, which vanished after nine years. We now find, 12 years after the intervention, during the COVID-19 pandemic, positive effects on income for the full sample, which are entirely driven by men. Treated men are also significantly more likely to be engaged in an income generating activity, though this does not translate into higher food security. We find no effects for women. Our findings of re-surfacing positive effects are important for the growing literature on long-run impacts of programming as we show that the timing of a follow-up matters. The presence of economic shocks should especially be taken into account when planning long-run follow-ups.
    Keywords: Cash transfers,long-run impacts,randomized controlled trials
    JEL: C93 J24 O12 H53 I38
    Date: 2022
  4. By: Rima Turk-Ariss; Pietro Bomprezzi; Silvia Marchesi
    Abstract: This paper provides new evidence on the role of IMF programs in stimulating private sector investments. Using detailed firm-level data on tangible fixed assets and a local projection methodology, we first estimate the dynamic response of firm investments to the approval of an IMF arrangement. We find that distinguishing between GRA and PRGT financing matters for the path of firm investment and its growth, and we also document the presence of two financial channels; the degree of firms’ external financial dependence and firms’ sectoral uncertainty. Exploiting these firm-level characteristics, we employ a difference-in-differences approach to understand the mechanisms through which the approval of an IMF arrangement propagates in the private sector. We find that the more firms rely on external finance and the more they are subject to uncertainty, the less binding these financial frictions become, and hence the more firms invest following a program approval. Finally, using ownership data, we find that private investments are stimulated more for domestic firms. The presence of a private investment transmission channel could help improve our understanding of what factors could affect the success and effectiveness of IMF programs.
    Keywords: IMF; Firm investment; Local Projection; Financial Frictions; Difference-in-Differences; IMF arrangement; IMF working papers; firm investment response; AIPW estimate; program approval; Private investment; Financial statements; Balance of payments need; Sub-Saharan Africa
    Date: 2022–07–29
  5. By: Shahjahan, Md (University of South Florida); La Mattina, Giulia (University of South Florida); Ayyagari, Padmaja (University of South Florida)
    Abstract: Vaccine-preventable diseases remain a significant public health concern in Bangladesh. We examine the role of maternal education in improving immunization rates among Bangladeshi children. We exploit the 1994 Female Secondary School Stipend Program (FSSSP), which significantly increased education among rural girls, to identify causal effects. Applying a difference-in-differences model based on differential exposure to FSSSP by birth cohort and rural residence, we find that full immunization rates increased by 5.5 percent among children of mothers eligible for a stipend for 5 years relative to children of mothers who were not eligible, but there were no significant effects for children of mothers eligible for a stipend for only 2 years. Results from event study specifications and placebo tests support a causal interpretation of the impact of maternal education on child immunization.
    Keywords: maternal education, school stipend program, child immunization, Bangladesh
    JEL: H52 I12 J13 O12
    Date: 2022–09
  6. By: Freund, Richard (University of Oxford); Favara, Marta (University of Oxford); Porter, Catherine (Lancaster University); Behrman, Jere R. (University of Pennsylvania)
    Abstract: Many low- and middle-income countries have introduced Public Works Programmes (PWPs) to fight poverty. PWPs provide temporary cash-for-work opportunities to boost poor households' incomes and to provide better infrastructure to local communities. While PWPs do not target children directly, the increased demand for adult labour may affect children's development through increasing households' incomes and changing household members' time uses. This paper expands on a multidimensional literature showing the relationship between early life circumstances and learning outcomes and provides the first evidence that children from families who benefit from PWPs show increased foundational cognitive skills (FCS). We focus on four child FCS: inhibitory control, working memory, long-term memory, and implicit learning. Our results, based on unique tablet-based data collected as part of a 20- year longitudinal survey, show positive associations of family participation in the Productive Safety Net Programme (PSNP) in Ethiopia during childhood on long-term memory and implicit learning, with weaker evidence for working memory. These associations appear to be strongest for children whose households were still PSNP participants in the year of data collection. We find suggestive evidence that, the association with implicit learning may be operating through children's time reallocation away from unpaid labour responsibilities, while the association with long-term memory may be due to the programme's success in remediating nutritional deficits caused by early life rainfall shocks. Our results suggest that policy interventions such as PWPs may be able to mitigate the effects of early poverty on cognitive skills formation and thereby improve children's potential future outcomes.
    Keywords: foundational cognitive skills, Ethiopia, public works programmes, PSNP, skills development
    JEL: J24 I2 I1
    Date: 2022–09
  7. By: Okyere, Charles Yaw; Kornher, Lukas
    Abstract: Carbon farming, particularly soil carbon climate strategies, has emerged as a popular tool in addressing climate change and variability in worldwide agriculture. Yet, there is a paucity of evidence on its application, and even more so, limited evidence exists on the welfare impacts in developing countries, where the negative impacts of climate change and variability remain disproportionately higher. This paper presents the results of a study on biochar and compost production training and its welfare effects on farm households in Northern Ghana using doubly robust estimators. We find that the intervention had statistically significant positive effects on agricultural productivity and welfare outcomes. The results show the prospect of using soil carbon climate strategies in improving the welfare of farm households in developing countries.
    Keywords: Agricultural and Food Policy, Environmental Economics and Policy, Farm Management
    Date: 2022–09–23
  8. By: Emilio Depetris-Chauvin (Pontificia Universidad Católica de Chile); Ruben Durante (ICREA, Universitat Pompeu Fabra); Emilio Gutierrez (TAM, Department of Economics)
    Abstract: We investigate the relationship between inter-jurisdictional cooperation and law enforcement in Mexico. Exploiting a Regression Discontinuity Design in close municipal elections, we study how improved opportunities for cooperation incrime prevention among neighboring municipalities, due to increased political alignment between mayors, may result in lower rates of violent crime. We find that municipalities in which the party in power in the neighboring jurisdictionsbarely wins tend to cooperate more with their neighbors and to experience lower homicide rates in the following years than those in which it barely lost. This effect is sizeable and robust, is increasing in the share of neighboring municipalities governed by the same party, is independent of which party governs the neighboring municipalities, and does not appear to be driven by improved cooperation with either federal or state authorities. Our findings suggest that, in the presence of geographical spillovers, favoring horizontal cooperation may be an effective way of improving the provision of local public goods.
    Date: 2022–09
  9. By: Rasmané Ouedraogo; Jean-Marc B. Atsebi; Regina S. Séri
    Abstract: The literature on the effects of natural resources on education is mixed and inconclusive. In this paper, we adopt an innovative approach by exploring the effects of mineral discoveries and productions on intergenerational educational mobility (IM), linking parents to the children education levels for more than 14 million individuals across 28 African countries and 2,890 districts. We find that mineral discoveries and productions positively affect educational IM for primary education in Africa for individuals exposed to the mineral sites and living in districts with discoveries. Specifically, the probability of upward primary IM increases by 2.7 percentage points (pp.) following mineral discoveries and 6.7 pp. following mineral productions. Downward primary IM decreases by 1.2 pp. following both mineral discoveries and productions. These positive effects are increasing for individuals born later after discoveries and productions, for males, and individuals living in the urban area. However, no significant effects are found for secondary and tertiary educational IM. Finally, we explore the income and returns to education channels through which mineral discoveries and productions affect educational IM.
    Keywords: Africa; Educational Intergenerational Mobility; Mineral Discoveries and Productions; Generalized Difference-in-differences; Natural Experiment; educational IM; mineral discovery; IM index; IM definition; stylized fact; Non-renewable resources; Mining sector; Natural resources; North Africa; East Africa; Southern Africa; Central Africa; upward mobility; mining production; tertiary IM
    Date: 2022–07–29
  10. By: Salman Haider (CDE and IEG, Delhi)
    Abstract: This study aims at analysing the determinant of cooking fuel expense at household level in Uttar Pradesh (UP). For this purpose, panel data from CPHS (CMIE) and the household fixed effect model have been used. As clean cooking fuel demands larger expenditure, it is expected that higher expenses on cooking fuel represent transition to clean cooking fuel. Cooking fuel expenses show positive elasticity with respect to per capita income. However, this elasticity is lower for the higher income (consumption) group than for the bottom income group. Looking at the caste angle, schedule tribe (STs) spend less while the general caste and schedule castes (SCs) spend more as compared to the other backward castes (OBCs). Households with less educational attainments show lower spending on cooking fuel, while households with better electricity access unravel a higher propensity. This suggests positive spill-over effects of modern energy services on clean cooking fuel. Finally, the present study has implications for designing policies to penetrate LPG as cooking fuel.
    Keywords: Cooking fuel expenditure, Energy cost burden, Sustainable development, India, Survey analysis.
    Date: 2022–07–01
  11. By: Albers, Thilo N. H. (HU Berlin and Lund University); Jerven, Morten (Norwegian University of Life Sciences); Suesse, Marvin (Trinity College Dublin)
    Abstract: What is the level of state capacity in developing countries today, and what have been its drivers over the past century? We construct a comprehensive new dataset of tax and revenue collection for 46 African polities from 1900 to 2015. Descriptive analysis shows that many polities in Africa have been characterized by strong growth in fiscal capacity. As a next step, we explain this growth using a fixed-effects long-run panel setting. The results show that canonical state-building factors such as democratic institutions and interstate warfare can increase revenue collection, while government turnover reduces it. Access to external credit and foreign aid are even more important, and both negatively affect fiscal capacity. In addition, access to external revenues, especially from commodity exports and debt, moderates the operation of canonical state-building factors such as democracy and conflict. These insights add important nuances to established theories of state building. Not only are states in Africa more capable than hitherto thought, but the international environment shapes their capacity, both directly and indirectly.
    Keywords: fiscal capacity; Africa; statehood; resources; external finance;
    Date: 2022–01–29
  12. By: Aleksandar Keseljevic; Rok Spruk
    Abstract: We examine the effect of civil war in Syria on economic growth, human development and institutional quality. Building on the synthetic control method, we estimate the missing counterfactual scenario in the hypothetical absence of the armed conflict that led to unprecedented humanitarian crisis and population displacement in modern history. By matching Syrian growth and development trajectories with the characteristics of the donor pool of 66 countries with no armed internal conflict in the period 1996-2021, we estimate a series of growth and development gaps attributed to civil war. Syrian civil war appears to have had a temporary negative effect on the trajectory of economic growth that almost disappeared before the onset of COVID19 pandemic. By contrast, the civil war led to unprecedented losses in human development, rising infant mortality and rampantly deteriorating institutional quality. Down to the present day, each year of the conflict led to 5,700 additional under-five child deaths with permanently derailed negative effect on longevity. The civil war led to unprecedent and permanent deterioration in institutional quality indicated by pervasive weakening of the rule of law and deleterious impacts on government effectiveness, civil liberties and widespread escalation of corruption. The estimated effects survive a battery of placebo checks.
    Date: 2022–09
  13. By: Isaac K. Ofori (University of Insubria, Varese, Italy); Camara K. Obeng (University of Cape Coast, Cape Coast, Ghana); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: The question of what really drives economic growth in sub-Saharan Africa (SSA) has been debated for many decades now. However, there is still a lack of clarity on variables crucial for driving growth as prior contributions have been executed at the backdrop of preferential selection of covariates in the midst several of potential drivers of economic growth. The main challenge with such contribution is that even tenuous variables may be deemed influential under some model specifications and assumptions. To address this and inform policy appropriately, we train algorithms for four machine learning regularization techniques— the Standard lasso, the Adaptive lasso, the Minimum Schwarz Bayesian information criterion lasso, and the Elasticnet to study patterns in a dataset containing 113 covariates and identify the key variables affecting growth in SSA. We find that only 7 covariates are key for driving growth in SSA. Estimates of these variables are provided by running the lasso inferential techniques of double-selection linear regression, partialing-out lasso linear regression, and partialing-out lasso instrumental variable regression. Policy recommendations are also provided in line with the AfCFTA and the green growth agenda of the region.
    Keywords: Economic growth; Elasticnet; Lasso; Machine learning; Partialing-out IV regression; sub-Saharan Africa
    JEL: C52 C53 C55 O11 O4 O55
    Date: 2022–01

This nep-dev issue is ©2022 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.