nep-dev New Economics Papers
on Development
Issue of 2023‒06‒12
eighteen papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Does Combating Corruption Reduce Clientelism? By Gustavo J. Bobonis; Paul J. Gertler; Marco Gonzalez-Navarro; Simeon Nichter
  2. Building Resilient Education Systems: Evidence from Large-Scale Randomized Trials in Five Countries By Noam Angrist; Micheal Ainomugisha; Sai Pramod Bathena; Peter Bergman; Colin Crossley; Claire Cullen; Thato Letsomo; Moitshepi Matsheng; Rene Marlon Panti; Shwetlena Sabarwal; Tim Sullivan
  3. Economic complexity, exports and natural resources in the Gulf Cooperation Council By Bandeira Morais, Margarida; Iammarino, Simona; Lee, Neil
  4. Internet use and agricultural productivity: Evidence from rural Vietnam By Thanh-Tung Nguyen; Trung Thanh Nguyen; Ulrike Grote
  5. Agricultural commercialization and asset growth for poverty reduction: Evidence from panel data for rural Vietnam By Oliver Schulte; Julian Mumber; Trung Thanh Nguyen
  6. Droughts and Malnutrition in Africa By Nora Fingado; Steven Poelhekke
  7. Households’ resilience and local commercialization in Thailand By Menglan Wang; Manh Hung Do
  8. British Colonialism and Women Empowerment in India By Nandwani, Bharti; Roychowdhury, Punarjit
  9. The Effects of Climate Change on Public Investment Efficiency in Resource-rich Countries : Evidence from Stochastic Frontier Analysis By Yacouba Coulibaly
  10. Global Trends in Intergenerational Income Inequality? By Gabriele Guaitoli; Roberto Pancrazi
  11. The distributional implications of short-term income mobility: evidence for Latin America By Martín Trombetta
  12. Bank presence and health By Cramer, Kim Fe
  13. Political Regimes and Firms' Decisions to Pay Bribes: Theory and Evidence from Firm-level Surveys By Shuichiro Nishioka; Sumi Sharma; Tuan Le
  14. Redistribution and Child Poverty: A Cross-National Comparison Between Brazil, Colombia, Panama, Peru, Russia, and South Africa By Marcela F. Gonz lez
  15. Storms, Early Education and Human Capital By Martino Pelli; Jeanne Tschopp
  16. Political institutions, financial liberalisation, and access to finance: firm-level empirical evidence By Olayinka Oyekola; Sofia Johan; Rilwan Sakariyahu; Oluwatoyin Esther Dosumu; Shima Amini
  17. Structural transformation and international trade: Evidence from the China shock By Clément Nedoncelle; Julien Wolfersberger
  18. Digital de-industrialization, global value chains, and structural transformation: Empirical evidence from low- and middle-income countries By Karishma Banga; Pankhury Harbansh; Surendar Singh

  1. By: Gustavo J. Bobonis; Paul J. Gertler; Marco Gonzalez-Navarro; Simeon Nichter
    Abstract: Does combating corruption reduce clientelism? We examine the impact of a prominent anti-corruption program on clientelism using a novel representative survey of rural Brazilians. Randomized audits reduce politicians’ provision of campaign handouts, decrease citizens’ demands for private goods, and reduce requests fulfilled by politicians. With regards to mechanisms, audits undermine clientelist relationships by reducing citizens’ interactions with politicians and their knowledge of incumbents. Furthermore, audits significantly deteriorate citizens’ perceptions of politician reciprocity in a hypothetical trust game. Results also offer novel insights into audits’ dynamic effects: they have more pronounced effects in the short run, especially during electoral periods.
    Keywords: political clientelism; audits; transparency
    JEL: D72 D73 H83
    Date: 2023–05–17
  2. By: Noam Angrist; Micheal Ainomugisha; Sai Pramod Bathena; Peter Bergman; Colin Crossley; Claire Cullen; Thato Letsomo; Moitshepi Matsheng; Rene Marlon Panti; Shwetlena Sabarwal; Tim Sullivan
    Abstract: Education systems need to withstand frequent shocks, including conflict, disease, natural disasters, and climate events, all of which routinely close schools. During these emergencies, alternative models are needed to deliver education. However, rigorous evaluation of effective educational approaches in these settings is challenging and rare, especially across multiple countries. We present results from large-scale randomized trials evaluating the provision of education in emergency settings across five countries: India, Kenya, Nepal, Philippines, and Uganda. We test multiple scalable models of remote instruction for primary school children during COVID-19, which disrupted education for over 1 billion schoolchildren worldwide. Despite heterogeneous contexts, results show that the effectiveness of phone call tutorials can scale across contexts. We find consistently large and robust effect sizes on learning, with average effects of 0.30-0.35 standard deviations. These effects are highly cost-effective, delivering up to four years of high-quality instruction per $100 spent, ranking in the top percentile of education programs and policies. In a subset of trials, we randomized whether the intervention was provided by NGO instructors or government teachers. Results show similar effects, indicating scalability within government systems. These results reveal it is possible to strengthen the resilience of education systems, enabling education provision amidst disruptions, and to deliver cost-effective learning gains across contexts and with governments.
    JEL: I20 I24 O15
    Date: 2023–05
  3. By: Bandeira Morais, Margarida; Iammarino, Simona; Lee, Neil
    Abstract: The concept of economic complexity, introduced by Hidalgo and Hausmann {2009), suggests that countries' knowledge and capabilities can be inferred through their ability to export a wide range of products relative to the rest of the world. The associated Economic Complexity Index {ECI) has since grown in popularity as a way of predicting countries' economic growth, income inequality, and human development, among other outcomes. However, the applicability of this concept across different contexts has remained unquestioned. We argue that the unique characteristics of natural resource dependent countries are largely disregarded. Using the ECI for 179 countries from 1995 to 2019, we focus on the case of the Gulf Cooperation Council countries {GCCs), generally considered as high- income economies heavily reliant on oil and natural gas exports. While we find that the link between the ECI and subsequent economic growth observed across countries holds for the GCC and other oil-dependent countries, our analysis exposes important ways in which the ECI is affected by the high dependence on oil and its price volatility. Contrary to existing literature, we found no association between economic complexity and economic growth within countries over time. Our analysis calls for more caution when relying on economic complexity measures for policy-making and highlights the need for additional and more granular analysis of different contexts, particularly those heavily reliant on natural resources.
    Keywords: Economic Complexity Index; economic growth; natural resources; oil-dependency; GCC
    JEL: J1
    Date: 2023–05–01
  4. By: Thanh-Tung Nguyen; Trung Thanh Nguyen; Ulrike Grote
    Abstract: The use of the internet is growing rapidly and has become an engine for economic development. However, few studies have examined the impact of internet use on agricultural production, and the results are not yet conclusive. Employing a dataset of more than 2, 000 observations in rural Vietnam, our study analyses the impact of internet use on agricultural productivity using the heteroskedasticity-based instrument approach suggested by Lewbel (2012) and examines the heterogeneity and distribution of the impact using quantile regressions. Our results show that internet use has significant and positive effects on agricultural productivity. However, these effects are heterogeneous across population groups. The positive effects of internet use are stronger for households with a lower level of education, with a young and female head, and from ethnic minorities. The benefits are also found to be skewed towards the group of farmers at the bottom of the productivity distribution. Therefore, we propose facilitating the diffusion of the internet, since it not only boosts agricultural productivity, but also reduces productivity inequality. In addition, we recommend promoting rural education, supporting local markets, investing more in irrigation systems, and facilitating farm mechanisation.
    Keywords: Rural household, Instrumental variable, Quantile regression, Vietnam
    JEL: Q11 D63 O30
    Date: 2023–03
  5. By: Oliver Schulte; Julian Mumber; Trung Thanh Nguyen
    Abstract: Poverty remains a substantial threat in rural areas of many developing countries, and solving this problem requires an in-depth understanding of the income generating capacity that determines poverty. This paper examines the impact of agricultural commercialization on the capability of rural households to accumulate assets and on structural and multidimensional poverty. A longitudinal dataset of around 2000 households with a total of 9781 observations from five rural surveys undertaken in the period 2008 - 2017 in Vietnam is used. Results from a fixed effects regression with an instrumental variable and a control function approach show that agricultural commercialization has a positive effect on the accumulation of assets and reduces multidimensional and structural poverty over time. However, the effect is not homogeneous and larger for households not mainly engaged in rice commercialization. This suggests that commercialization can be a path out of poverty, especially if policy makers move towards utilizing other crops instead of rice.
    Keywords: Asset growth, Asset-based income, Commercialization, Fixed effects, Instrumental variable, Control function
    JEL: C21 I32 Q12 Q13
    Date: 2023–04
  6. By: Nora Fingado; Steven Poelhekke
    Abstract: How costly are droughts to individuals’ nutrition in Africa? We measure severe droughts using a detailed satellite-based vegetation index observed bi-monthly for 0.08° grids between 1982 and 2015. Across 32 African countries, conditional on individual characteristics, timing relative to growing seasons, irrigation, climate, and country-year effects, we show that, unlike recurring droughts, a first-time exposure to a three-month severe drought reduces individuals’ body mass index by 2.5%. Droughts are worse for underweight and uneducated individuals. The uneducated are more likely to become unemployed during first-time droughts, whereas both labor reallocation across occupations and migration mitigate the effect of recurring droughts.
    Keywords: drought, nutrition, body-mass index, education, labor reallocation
    JEL: Q54 I10 I24 O13 J60
    Date: 2023
  7. By: Menglan Wang; Manh Hung Do
    Abstract: Understanding households’ resilience strategies under uncertainties is important in several domains including social protection, adaptation to climate change, minimizing disaster-related risks, and humanitarian aid. At the same time, food security is an important problem for developing countries, especially in places where are vulnerable to external shocks. We use the data of 1648 identical households from Thailand collected in 2010, 2013, and 2016 to examine the factors affecting households’ resilience capacities and the impacts of these capacities on household consumption and crop commercialization. We employ savings per capita as households’ absorptive capacity and income diversification index as households’ adaptive capacity. We take into account household consumption and crop commercialization as the indicators of local food systems. Our results show that the experience of shocks in previous years positively correlates with households’ saving per capita and income diversification. Further, a better absorptive capacity in the form of better savings and a better adaptive capacity in the form of higher income diversification have a significant and positive influence on household expenditure per capita and crop commercialization. Therefore, development policies and programs aiming to improve income, increase savings, and provide income diversification opportunities are strongly recommended.
    Keywords: Absorptive capacity, Adaptive capacity, Crop commercialization, Panel data, Instrumental variable
    JEL: C33 Q00 Q12
    Date: 2023–01
  8. By: Nandwani, Bharti; Roychowdhury, Punarjit
    Abstract: This paper examines the long-term link between British colonialism and women empowerment in India. We compare women's contemporary economic outcomes across areas that were under direct British colonial rule with areas that were under indirect colonial rule. Controlling for selective annexation using a specific policy, we find that women who live in areas that were under direct British rule, compared to their counterparts, are better off in terms of almost all measures of women empowerment including employment, within-household decision-making, mobility, etc. We also document positive impacts of British colonialism on several drivers of women empowerment including education, fertility, marital age, gender norms, etc. While our study of the underlying transmission channels is challenged by data limitations, we argue that legal and institutional changes brought in by the British in favor of women and the West-inspired social reformation movement of the 19th century may be relevant to explaining this long-term link.
    Keywords: Colonialism, Gender Inequality, India, Intimate Partner Violence, Women Empowerment
    JEL: J12 J16 N35 O12
    Date: 2023
  9. By: Yacouba Coulibaly (UO - Université d'Orléans, UCA - Université Clermont Auvergne)
    Abstract: Developing countries suffer disproportionately from the negative impacts of climate change and environmental degradation on economic development in terms of financial costs and loss of potential revenues. In this paper, we examine the impact of climate change on the efficiency of public investment in 34 developing countries, with a particular focus on resource-rich countries, over the period 2000-2013. Using stochastic frontier analysis (SFA) to determine efficiency scores, we find that developing countries could increase the capital stock by 29% on average without changing their public investment spending. In particular, resource-rich countries could increase the capital stock by 26% without changing their spending. In the second step, we then use the fractional regression model (FRM) to capture the impact of climate change on the investment efficiency values obtained in the first step. Our results show that climate change has a negative impact on public investment efficiency. However, when the climate change index is disaggregated for the regressions, we find that only precipitation has a negative effect, while a 1°C temperature increase in resource-rich countries leads to a 16.32% improvement in public investment efficiency of GDP. These results are also statistically and economically robust to different controls and specifications. The main findings of this paper suggest that policies to address climate change in general and heavy rainfall shocks in particular should include strong provisions for financing more resilient public investments to adapt to climatic conditions and modernise public infrastructures to mitigate the negative environmental impacts for developing countries, especially resource-rich countries.
    Keywords: H81, C12, Q54, Q01, Climate change, Public investment, Technical efficiency, Weather shocks, Environment, Stochastic frontier analysis O13
    Date: 2023–04–11
  10. By: Gabriele Guaitoli; Roberto Pancrazi
    Abstract: We document the evolution of intergenerational income (IGI) inequality, measured as the relative income between old and young individuals, using harmonised microdata from 42 countries at different stages of economic development. In the last 20 years, IGI inequality has increased (in favour of the old) in all rich countries, while it fell or remained constant in lower-income countries. We show that these diverging trends are due to different channels. In rich countries, the main contributor to the increased IGI inequality is the divergence in employment rates between young and old. Instead, in lower-income countries, we observe a strong counteracting force driven by a faster increase in labor income, conditional on being employed, of the young with respect to the old. We propose some possible explanations for the observed stylized facts, focusing on the role played by long-run trends in economic fundamentals. We find that changes in the differential in education achievement and high-skill occupation employment between young and old are strongly connected to the changes in income intergenerational inequalities but in non-obvious ways. In high-income countries, old individuals are catching up with younger ones in educational achievement: this share shift can explain half of the rise of the IGI inequality in the last two decades. Instead, the faster shift of young workers into better-paid occupations is at the centre of the fall of IGI inequality in lower-income countries, where it explains 40 percent of the average fall.
    JEL: E24 J31 O57
    Date: 2022–03
  11. By: Martín Trombetta (Universidad Nacional de General Sarmiento)
    Abstract: In recent years, a branch of the economic literature has analyzed household income movements in longitudinal datasets. Previous research has shown that household income is considerably more volatile in Latin America than in developed economies, though little is known so far about the distributional implications of such income changes. This paper exploits the unique database built in Beccaria et al. (2022) from Latin American household surveys for seven countries in 2002-2015 to analyze the impact of household income movements on income distribution. I combine the analysis from traditional indicators in the literature with a novel methodology that quantifies this precise phenomenon and allows for comparisons and rankings across population groups and countries. My results show that Latin American economies feature less equalizing mobilitythan developed countries, although variability between countries is considerable. Moreover, the mobility pattern observed benefitted essentially all households other than those in the right tail of the income distribution. Finally, I provide more specific results for population groups defined in terms of gender and educational attainment.
    Keywords: income mobility, income distribution, Great Gatsby curve, mobility curve.
    JEL: D31 O15 J60
    Date: 2023–05
  12. By: Cramer, Kim Fe
    Abstract: This paper demonstrates that increasing bank presence in underserved areas can substantially improve households’ health. I apply a regression discontinuity design to a policy of the Reserve Bank of India. Six years after the policy introduction, treatment districts have 19% more branches than control districts. Households’ probability of suffering from a non-chronic disease in a given month is 36% lower. I show evidence that two understudied aspects of banking play a role: banks provide health insurance to households and credit to hospitals. In equilibrium, I observe an increase in health care demand and supply.
    Keywords: financial development; banks; health; insurance; credit
    JEL: G21 O16 I10
    Date: 2023–04–19
  13. By: Shuichiro Nishioka (West Virginia University); Sumi Sharma (Independent researcher); Tuan Le (University of Findlay)
    Abstract: This paper makes the most of the observed actions of bribe takers and givers from the World Bank Enterprise Surveys and studies how a taker’s action influences a giver's decision to pay bribes. To motivate our empirical study, we consider Kaufmann and Wei's (1999) Stackelberg game between a tax authority and a firm that undergoes tax inspection. The model predicts that, when the authority can use its action as a credible threat for the firm's profitability, the authority disturbs the firm by inspecting more, and the firm is more likely to pay bribes. Consistent with the theoretical prediction, we find correlational evidence that the propensity to pay bribes increases with the number of inspection visits, particularly for non-democratic countries.
    Keywords: Corruption, Autocracy, Policy implementation times, World Bank Enterprise Surveys
    JEL: H22 H32 O25 O43
    Date: 2023–04
  14. By: Marcela F. Gonz lez
    Abstract: I propose a disaggregated analysis of the income that households receive to compare the redistributive capacity of the state taking child poverty as case of study. I use the LIS Database and cross-nationally compare six countries: Brazil, Colombia, Panama, Peru, Russia, and South Africa. I created an income package to include a variety of income definitions based on the different sources of income of households: market income, income from private transfers (MI plus PT), and income from government transfers or disposable income. I included these countries because the access to gross income allows to assess in each country to what extent taxes and government transfers reduce the child poverty generated by the market. I use the last three time series available at the LIS for the six countries, which coincide with the period post-crisis 2008: Wave VIII (2010), Wave XIX (2013) and Wave X (2016). I cross-nationally compare the relative child poverty at 40%, 50%, and 60% of the median income for each of the incomes included in the income package for the following ages: 0-17 years old, 0-5 years old, and 6-17 years old, and for the following types of family: biparental and monomarental. I also analyze the Gini coefficient and the relative rate of poverty for the total population.
    Date: 2022–04
  15. By: Martino Pelli; Jeanne Tschopp
    Abstract: This paper explores how school-age exposure to storms impacts the education and primary activity status of young adults in India. Using a cross-sectional cohort study based on wind exposure histories, we find evidence of a significant deskilling of areas vulnerable to climate change-related risks. Specifically, our results show a 2.4 percentage point increase in the probability of accruing educational delays, a 2 percentage point decline in post-secondary education achievement, and a 1.6 percentage point reduction in obtaining regular salaried jobs. Additionally, our study provides evidence that degraded school infrastructure and declining household income contribute to these findings. Cet article étudie l'impact de l'exposition aux tempêtes à l'âge scolaire sur l'éducation et le statut d'activité primaire des jeunes adultes en Inde. À l'aide d'une étude de cohorte transversale basée sur l'historique de l'exposition au vent, nous trouvons des preuves d'une déqualification significative des zones vulnérables aux risques liés au changement climatique. Plus précisément, nos résultats montrent une augmentation de 2, 4 points de pourcentage de la probabilité d'accumuler des retards dans l'éducation, une baisse de 2 points de pourcentage de la réussite dans l'enseignement post-secondaire et une réduction de 1, 6 point de pourcentage de l'obtention d'un emploi salarié régulier. En outre, notre étude montre que la dégradation des infrastructures scolaires et la baisse des revenus des ménages contribuent à ces résultats.
    Keywords: climate change, storms, education, human capital, changement climatique, tempêtes, éducation, capital humain
    JEL: Q54 I25 O12
    Date: 2023–05–08
  16. By: Olayinka Oyekola (Department of Economics, University of Exeter); Sofia Johan (College of Business, Florida Atlantic University); Rilwan Sakariyahu (Business School, Edinburgh Napier University); Oluwatoyin Esther Dosumu (Alliance Manchester Business School, University of Manchester); Shima Amini (Department of Finance, University of Leeds)
    Abstract: Worldwide, lack of access to finance has been identified by many firms as the most detrimental obstacle facing business entities. This article studies how political institutions and financial liberalisation alleviate or deepen financial constraints faced by firms. We hypothesise that a complementarity exists between political institutions and financial liberalisation in constructing barriers to firms securing bank financing. Evidence from an international sample of over 63, 000 firms in 75 countries, establishes that political institutions, proxied by democracy level in a country, and financial liberalisation, proxied by entry and participation of foreign banks, are significant factors in explaining cross-country disparities in firm-level credit accessibility. Importantly, we find a strong support for our proposition, documenting a remarkably significant and sizeable positive interaction effect between foreign bank presence and the level of democracy for access to finance. These results are robust against various forms of sensitivity checks. Overall, our study provides fresh insights into the financing effects of foreign bank activities interacted with democracy on firms. We conclude that these results may be of considerable benefit to policymakers, especially within developing, and emerging, economies, who are searching for economic growth, to re-evaluate what are the primary lending obstacles for their small and medium-sized enterprises.
    Keywords: financial liberalisation, foreign banks, political institutions, access to finance, credit constraints, firm-level data
    JEL: G21 G23 G32 O16
    Date: 2023–05–15
  17. By: Clément Nedoncelle; Julien Wolfersberger
    Abstract: How does international trade affect structural transformation in developing countries? We use data on sectoral allocation of labour and value-added in 46 developing economies over the period 1995-2017 and exploit for identification plausibly exogenous variation in manufacturing imports from China. We find that the so-called 'China shock' largely slows down the transformation of low- and middle-income economies out of agriculture. In our main specification industrialization decreases by 0.49 per cent on average for each additional per cent of manufacturing imports from China.
    Keywords: Developing countries, Industrialization, Structural transformation, Trade
    Date: 2023
  18. By: Karishma Banga; Pankhury Harbansh; Surendar Singh
    Abstract: Digitalization and shifting patterns of globalization are fast changing the rules of the game for countries embarking on a path of industrialization. In this study, we empirically examine the impact of digitalization and global value chains on structural transformation using a cross-country panel of 51 economies in the GGDC/UNU-WIDER Economic Transformation Database for the period 1990-2018.
    Keywords: Deindustrialization, Technology, Structural transformation, Global value chains, Industrialization
    Date: 2023

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