nep-dev New Economics Papers
on Development
Issue of 2023‒02‒13
thirteen papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Intergenerational Transmission of Education in a Developing Country: Evidence from A Mass Education Program in Vietnam By Trung Hoang; Ha Nguyen
  2. The Long-Run Effects of South Africa’s Forced Resettlements on Employment Outcomes By Alexia Lochmann; Nidhi Rao; Martin A. Rossi
  3. Nowcasting from Space: Impact of Tropical Cyclones on Fiji’s Agriculture By Noy, Ilan; Blanc, Elodie; Pundit, Madhavi; Uher, Tomas
  4. Community Matters: Heterogeneous Impacts of a Sanitation Intervention By Laura Abramovsky; Britta Augsburg; Melanie Lührmann; Francisco Oteiza; Juan Pablo Rud
  5. Irrigation and agricultural transformation in Ethiopia By Mekonnen, Dawit Kelemework; Abate, Gashaw Tadesse; Yimam, Seid
  6. Mineral resources and the salience of ethnic identities By Nicolas Berman; Mathieu Couttenier; Victoire Girard
  7. Rural income diversification in Ethiopia: Patterns, trends, and welfare impacts By Abate, Gashaw Tadesse; Bachewe, Fantu Nisrane; Regassa, Mekdim D.; Minot, Nicholas
  8. Climate Shocks and Domestic Conflicts in Africa By Rene Tapsoba; Yoro Diallo
  9. Identity conflict, ethnocentrism and social cohesion By Matteo Sestito
  10. Climate Change in Developing Countries: Global Warming Effects, Transmission Channels and Adaptation Policies By Olivier R de Bandt; Luc Jacolin; Thibault Lemaire
  11. Role of agricultural commercialization in the agricultural transformation of Ethiopia: Trends, drivers, and impact on well-being By Minot, Nicholas; Warner, James; Aredo, Samson Dejene; Zewdie, Tadiwos
  12. Distortionary Agricultural Policies: Their Productivity, Location and Climate Variability Implications for South Africa During the 20th Century By Greyling, Jan; Pardey, Philip G.; Senay, Senait
  13. Digital Money and Remittances Costs in Central America, Panama, and the Dominican Republic By Ms. Alina Carare; Mr. Yorbol Yakhshilikov; Metodij Hadzi-Vaskov; Dmitry Vasilyev; Lavinia Franco; Justin Lesniak

  1. By: Trung Hoang; Ha Nguyen
    Abstract: We study the long-run and multi-generational effects of a mass education program in Vietnam during the First Indochina War (1946-1954). Difference-in-difference estimations indicate that the children of mothers exposed to the education program had an average of 0.9 more years of education. We argue that the impact is via mother’s education. An additional year of maternal education increases children’s education by up to 0.65 years, a stronger effect than those found in the existing literature. Better household lifestyles and a stronger focus on education are possible transmission pathways.
    Keywords: mass education; human capital transmission; mother education; Vietnam; education program; ha Nguyen; household lifestyle; intergenerational transmission; Labor markets; Income; Women; Insurance; Global
    Date: 2022–12–09
  2. By: Alexia Lochmann (Center for International Development at Harvard University); Nidhi Rao; Martin A. Rossi
    Abstract: Can South Africa’s segregation policies explain, at least partially, its current poor employment outcomes? To explore this question, we study the long-term impact of the forced resettlement of around 3.5 million black South Africans from their communities to the so-called “homelands” or “Bantustans”, between 1960 and 1991. Our empirical strategy exploits the variability in the magnitude of resettlements between communities. Two main findings. First, the magnitude of outgoing internal migrations was largest for districts close to former homelands. Second, districts close to former homelands have higher rates of non-employed population in 2011. Together the evidence suggests that districts that experienced racial segregation policies most intensely, as measured by outgoing forced resettlements, have worse current employment outcomes.
    Keywords: Homelands; Employment; Apartheid; Segregation policies
    JEL: J15 J21 J61 J71 N37
    Date: 2023–01
  3. By: Noy, Ilan (School of Economics and Finance, Victoria University of Wellington); Blanc, Elodie (Motu Economic and Public Policy Research, Wellington); Pundit, Madhavi (Asian Development Bank); Uher, Tomas (School of Economics and Finance, Victoria University of Wellington)
    Abstract: The standard approach to ‘nowcast’ disaster impacts, which relies on risk models, does not typically account for the compounding impact of various hazard phenomena (e.g., wind and rainfall associated with tropical storms). The alternative, traditionally, has been a team of experts sent to the affected areas to conduct a ground survey, but this is time-consuming, difficult, and costly. Satellite imagery may provide an easily available and accurate data source to gauge disasters’ specific impacts, which is both cheap, fast, and can account for compound and cascading effects. If accurate enough, it can potentially replace components of ground surveys altogether. An approach that has been calibrated with remote sensing imagery can also be used as a component in a nowcasting tool, to assess the impact of a cyclone, based only on its known trajectory, and even before post-event satellite imagery is available. We use one example to investigate the feasibility of this approach for nowcasting, and for post-disaster damage assessment. We focus on Fiji and on its agriculture sector, and on tropical cyclones (TCs). We link remote sensing data with available household surveys and the agricultural census data to obtain an improved assessment of TC impacts. We show that remote sensing data, when combined with pre-event socioeconomic and demographic data, can be used for both nowcasting and post-disaster damage assessments.1
    Keywords: satellite; cyclone; damage; impact; disaster; nowcasting
    JEL: C80 Q10 Q54
    Date: 2023–01–20
  4. By: Laura Abramovsky (The Institute for Fiscal Studies); Britta Augsburg (The Institute for Fiscal Studies); Melanie Lührmann (Department of Economics, Royal Holloway, and IFS); Francisco Oteiza (Oslo Economics); Juan Pablo Rud (Department of Economics, Royal Holloway, and IFS)
    Abstract: Sanitation is at the heart of public health policies in most of the developing world, where around 85% of the population still lack access to safe sanitation. We study the effectiveness of a widely adopted participatory community-level information intervention aimed at improving sanitation. Results from a randomized controlled trial, implemented at scale in rural Nigeria, reveal stark heterogeneity in impacts: the intervention has immediate, strong and lasting effects on sanitation practices in less wealthy communities, realized through increased sanitation investments. In contrast, we find no evidence of impacts among wealthier communities. This suggests that a targetedimplementation of CLTS may increase its effectiveness in improving sanitation. Our findings can be replicated in other contexts, using microdata from evaluations of similar interventions.
    Keywords: sanitation, community intervention, randomized controlled trial, Nigeria
    JEL: O12 O18 O13 I12 I15 I18
    Date: 2023–01
  5. By: Mekonnen, Dawit Kelemework; Abate, Gashaw Tadesse; Yimam, Seid
    Abstract: Climate change forecasts for Ethiopia predict higher temperature and rainfall and increased variability in rainfall with periodic severe droughts and floods. The increased weather variability threatens the extent of Ethiopia’s agricultural transformation unless it is supported with improved agricultural water management such as irrigation to make smallholder farming resilient to adverse weather events. This study analyzes the role of irrigation on agricultural transformation in Ethiopia by systematically comparing households with irrigated and non-irrigated plots on key agricultural transformation and welfare indictors (i.e., intensification, commercialization, and consumption expenditures). The study used a representative data from the four main agriculturally important regions of the country and employed an endogenous switching regression approach that addresses potential biases from placement of irrigation schemes and the self-selection of farmers to adopt irrigation on their plots. This approach allows for counterfactual analysis on the effect of irrigation if it is adopted on plots or in households without current irrigation as well as the counterfactual realizations of outcome variables if irrigated plots were not irrigated or irrigating households were relying only on rainfed agriculture. The main results show a positive and significant effects of irrigation on intensification, commercialization, and household welfare. Specifically, the results show that farm households with irrigated plots (i) use more fertilizer and agrochemicals, (ii) sell sizable shares of their harvest, and (iii) spend more on food and non-food expenditures. The counterfactual analysis on what would have been the effect of irrigation on currently non-irrigated plots indicate a stronger result across our outcome indicators which further suggest the importance of expanding irrigation in accelerating agricultural transformation and welfare improvement in Ethiopia.
    Keywords: ETHIOPIA; EAST AFRICA; AFRICA SOUTH OF SAHARA; AFRICA; irrigation; agriculture; climate; climate change; weather hazards; extreme weather events; welfare; commercialization; input intensification
    Date: 2022
  6. By: Nicolas Berman (Aix-Marseille Univ, CNRS, EHESS, AMSE, Marseille, France.); Mathieu Couttenier (University of Lyon, ENS Lyon, GATE Lyon/St-Etienne and CEPR); Victoire Girard (NOVAFRICA, Nova School of Business and Economics, Universidade NOVA de Lisboa, and LEO, Univ. Orleans.)
    Abstract: This paper shows how ethnic identities may become more salient due to natural resources extraction. We combine individual data on the strength of ethnic-relative to national-identities with geo-localized information on the contours of ethnic homelands and on the timing and location of mineral resources exploitation in 25 African countries, from 2005 to 2015. Our strategy takes advantage of several dimensions of exposure to resources exploitation: time, spatial proximity, and ethnic proximity. We find that the strength of an ethnic group identity increases when mineral resource exploitation in that group's historical homeland intensifies. We argue that this result is at least partly rooted in feelings of relative deprivation associated with the exploitation of the resources. We show that such exploitation has limited positive economic spillovers, especially for members of the indigenous ethnic group; and that the link between mineral resources and the salience of ethnic identities is reinforced among members of powerless ethnic groups, and groups with strong baseline identity feelings or living in poorer areas, or areas with a history of conflict. Put together, these finding suggest a new dimension of the natural resource curse: the fragmentation of identities, between ethnic groups and nations.
    Keywords: identity, ethnicity, natural resources
    JEL: J15 N57 O12 O55 Q32
    Date: 2023–01
  7. By: Abate, Gashaw Tadesse; Bachewe, Fantu Nisrane; Regassa, Mekdim D.; Minot, Nicholas
    Abstract: Increased diversification of rural households into the rural non-farm economy is an important driver of economic growth and structural transformation in countries like Ethiopia where the vast majority of people live in rural areas and are largely dependent on seasonal agriculture. Some of the benefits of diversification include efficient utilization of asset endowments (e.g., labor during dry season) and reduction of risks. In this study we explore the: (i) patterns and trends of diversification, (ii) drivers of diversification including the association between rainfall risk/shocks and diversification, and (iii) welfare effects of diversification during the recent decade using three rounds of representative household data from the four main regions of Ethiopia. We used Cragg’s double-hurdle model, a method that considers the two-step decision making process in diversification (i.e., participation and extent of participation), to identify the determinants of diversification and a fixed-effect and instrumental variable (IV) approaches to understand the links between diversification and household welfare. The descriptive results show that rural households generally adopt a livelihood strategy dominated by farming and that the level of diversification has been stagnant over the period of analysis considered. More importantly, the vast majority of households continue to draw a substantial share of their income from crop production, followed by livestock. The income from non-farm activities accounts only between 17 percent and 23 percent of the total income. The econometrics results show that diversification is positively associated with credit access, membership in social insurance, ownership of mobile phone, relative measure of household wealth, and population density. Conversely, access to relatively large, fertile, and irrigable land discourages diversification into non-farm activities. The analysis on the association between rainfall risks and diversification indicates that rural households use income diversification both as risk mitigation and shock coping strategy. The results on the link between income diversification and household welfare indicate a positive association between diversification and household total consumption expenditure, dietary diversity score, and housing/roof quality. In sum, the results imply the need for a deliberate effort to expand the non-farm economy so as to tap its full potential for employment generation, income growth, and welfare improvements. A starting point could be for agricultural and rural development policies and investments to go beyond promotion of cereal crop production and facilitate participation in high value crop, livestock, aquaculture production. Incentivizing investments in value addition activities that can create and enrich upward and downward linkages in the midstream segment of agricultural value chains is another potential avenue to boost rural non-farm economy.
    Keywords: ETHIOPIA; EAST AFRICA; AFRICA SOUTH OF SAHARA; AFRICA; income; rural areas; welfare; diversification; risk; shock; nonfarm income; income diversification
    Date: 2022
  8. By: Rene Tapsoba; Yoro Diallo
    Abstract: This paper analyzes the interlinkages between climate shocks, domestic conflicts, and policy resilience in Africa. It builds on a Correlated Random Effect model to asess these interrelationships on a broad sample of 51 African countries over the 1990-2018 period. We find suggestive evidence that climate shocks, as captured through weather shocks, increase the likelihood of domestic conflicts, by as high as up to 38 percent. However, the effect holds only for intercommunal conflicts, not for government-involved conflicts. The effect is maginified in countries with more unequal income distribution and a stronger share of young male demographics. The results are robust to a wide set of sensitivity checks, including using various indicators of weather shocks and domestic conflicts, and alternative estimation techniques. The findings shed light on key policy resilience factors, including steadily improving domestic revenue mobilization, strengthening social protection and access to basic health care services, scaling up public investment in the agriculture sector, and stepping up anti-desertification efforts.
    Keywords: Weather shocks; Domestic conflicts; Demographics; Resilience; weather shock indicator; database weather shock; weather shock; baseline result; policy resilience; Natural disasters; Climate change; Natural resources; Africa; Global
    Date: 2022–12–16
  9. By: Matteo Sestito (Aix-Marseille Univ, CNRS, AMSE, Marseille, France.)
    Abstract: This paper uses a novel dataset on ethnic warfare to shed light on how conflict affects social identification and cohesion. A large body of anecdotal studies suggests that ethnic identities become more salient at times of conflict. Using data from eighteen sub-Saharan countries, I provide econometric evidence for such a claim. The effect of ethnic conflict on various measures of social cohesion is also investigated, uncovering a positive relationship between the two. The finding is understood as a result of the ethnocentric dynamics generated by conflict: as ethnic warfare increases ethnic identification, in-group cooperation follows suit. This parochial interpretation is further strengthened by the use of remote violence and the conditionality of conflict-induced pro-social behaviour on low levels of ethnic polarisation.
    Keywords: ethnic conflict, social cohesion, identity, Africa
    JEL: D74 N47 O55 Z13
    Date: 2023–01
  10. By: Olivier R de Bandt (Banque de France - Banque de France - Banque de France); Luc Jacolin (Banque de France - Banque de France - Banque de France); Thibault Lemaire (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, Banque de France - Banque de France - Banque de France)
    Abstract: Using panel data covering 126 low- and middle-income countries over 1960-2017, we find that sustained positive temperature deviations from their historical norms have a non-linear negative effect on economic growth and growth per capita. A sustained 1°C temperature increase lowers real GDP per capita annual growth by 0.74–1.52 percentage points, irrespective of levels of development. We also find that temperature rise affects the households' intertemporal trade-off between consumption and investment, since the share of private consumption in total value-added increases while the share of investment declines. A sectoral decomposition shows that the share of industrial value-added also declines. While the share of agricultural value-added increases, agricultural output and productivity declines. Taken together, our results suggest that global warming will reinforce development traps, hindering further adaptation to climate change, particularly in the countries with the lowest levels of income given their lower resilience and higher socioeconomic vulnerability.
    Keywords: Climate Change, Economic Growth, Adaptation, Developing Countries
    Date: 2021–07
  11. By: Minot, Nicholas; Warner, James; Aredo, Samson Dejene; Zewdie, Tadiwos
    Abstract: Agricultural transformation refers to a series of changes in agriculture that both reflect and drive rising income and economic development more broadly. While the macroeconomic patterns of agricultural transformation are relatively well documented, less is known about how it is manifested at the household level. Ethiopia makes an excellent case study as it has had one of the fastest growing economies in the world. This paper focuses on one aspect of this process: agricultural commercialization, that is, the process through which an increasing share of agricultural output is sold on the market rather than being consumed at home. The analysis uses three nationally representative rural household surveys carried out in 2012, 2016, and 2019, including a panel of 1, 900 households. The results show that the share of marketed agricultural output has increased significantly over the seven-year period. Somewhat surprisingly, this increase is not due to a shift in crop mix toward more commercial crops but rather an increase in the degree of commercialization of each crop. Using a correlated random effects model, we find marketed share to be significantly related to age of the head of household, farm size, wealth, distance to road, rainfall, rainfall variability, and region. Although endogeneity is a challenge, descriptive statistics and regression analysis further suggest that agricultural commercialization contributes to higher income, largely because commercial crops generate higher returns per hectare than staple grains. The results indicate that there is no clear line between “subsistence†and “commercial†farms. A large majority of farms have some crop sales, while virtually none of them sell all their output. Similarly, the contrast between subsistence crops and cash crops can be misleading. For example, the value of staple cereal sales in Ethiopia is almost three times greater than that of coffee, the main cash crop. We draw lessons from the results for the design of programs to raise rural incomes by facilitating market-oriented agricultural production.
    Keywords: ETHIOPIA; EAST AFRICA; AFRICA SOUTH OF SAHARA; AFRICA; agriculture; agricultural transformation; commercialization; cereal crops; crop yield; economic analysis; households; income; input output analysis; macroeconomic analysis; macroeconomics; precipitation regime; survey methods; rain; rainfall patterns; regression analysis; statistics; surveys; agricultural commercialization; endogeneity
    Date: 2022
  12. By: Greyling, Jan; Pardey, Philip G.; Senay, Senait
    Abstract: During the first half of the 20th century, the policy stance towards South African agriculture swung from suppression to support. More recently, the agricultural support policies were eliminated. Using newly constructed, long-run (1918-2015) data concerning maize production, yield and average price, we show these switching agricultural policy regimes had significant production, productivity, and climate risk implications for the maize sector. At its peak, this policy-induced movement reduced maize productivity by between 7.9 and 15.3 percent. The removal of the distortions coincided with a contraction in the total area planted to maize, but some spatial productivity perturbations still persist.
    Keywords: Agricultural and Food Policy, Crop Production/Industries
    Date: 2023–01–31
  13. By: Ms. Alina Carare; Mr. Yorbol Yakhshilikov; Metodij Hadzi-Vaskov; Dmitry Vasilyev; Lavinia Franco; Justin Lesniak
    Abstract: This paper investigates factors that predict variation in digital and non-digital remittance fees over time and across countries, exploring differences between CAPDR and other regions. The paper fills a void in the literature on how country- and corridor-specific factors relate to remittance fees at different levels of digitalization of the transaction mode. It also complements stylized facts and regression analysis with a survey analysis of the CAPDR authorities’ views on the latest developments, possibilities, and risks related to digital remittances with a view to gauging the authorities’ potential role in further reducing the cost of cross-border payments more generally and remittances fees in particular. The paper finds a clear trend of declining remittance fees across countries and at any level of digitalization, albeit they remain higher for CAPDR countries relative to non-CAPDR countries. More competition, financial and digital development in receiving countries—such as debit/credit card ownership or bank branch penetration—are associated with lower remittance fees, especially in CAPDR. The surveyed authorities actively explore the use of digital money to advance domestic payment systems, expedite financial inclusion, and lower remittances fees, yet see considerable risks, especially for preserving monetary sovereignty in CAPDR.
    Keywords: Digital money; cryptocurrency; stablecoin; remittances
    Date: 2022–12–02

This nep-dev issue is ©2023 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.