nep-gro New Economics Papers
on Economic Growth
Issue of 2016‒05‒21
eight papers chosen by
Marc Klemp
Brown University

  1. “Cursed is the ground because of you”: Religion, Ethnicity, and the Adoption of Fertilizers in Rural Ethiopia By Guerzoni, Marco; Jordan, Alexander
  2. Take what you can: property rights, contestability and conflict By Thiemo Fetzer; Samuel Marden
  3. Access to Power, Political Institutions and Ethnic Favoritism By Hannes Mueller; Agustin Tapsoba
  4. More than an Urban Legend: The long-term socioeconomic effects of unplanned fertility shocks By Fetzer, Thiemo; Pardo, Oliver; Shanghavi, Amar
  5. Temperature and US Economic Activity: Evidence from Disaggregated Data By Du, Ding; Zhao, Xiaobing
  6. Economic Growth and Human Development in Indian States after two decades of Economic Reforms By Saksena, Shalini; Deb, Moumita
  7. Rent-seeking, Government Size and Economic Growth By Wadho, Waqar Ahmed; Ayaz, Umair
  8. Heterogeneous Structural Transformation and Growth Incidence across the Income Distribution: the Kuznets Curve Revisited By Paul, Saumik

  1. By: Guerzoni, Marco; Jordan, Alexander (University of Turin)
    Abstract: This paper analyses culture as a determinant of technology adoption in a developing country. While the literature extensively discusses the influence of culture upon economic growth, little attention has been paid to the mechanisms that can explain this link at the micro level. In this paper, we postulate that culture may play a crucial role in hindering or fostering the adoption and diffusion of innovation, a key trigger of the engine of growth. We thus borrow from the literature on the economics of innovation, and we model the impact of culture upon households’ decision to adopt innovation. We focus on developing countries and specifically on the adoption of fertilizer in Ethiopian rural areas. This empirical study uses the Ethiopia Rural Household Survey† to attempt to differentiate between individual cultural traits, namely, ethnicity and religion, and the cultural homogeneity of the environment as co-determinants of fertilizer adoption. We thus apply a multivariate survival model for clustered and correlated observations and find a positive effect on the diffusion of fertilizer. Firstly, habits and social norms, proxied by ethnicity, provide a better explanation for the role of culture, than religious beliefs, as usually posited in the literature. Secondly, the cultural environment plays a decisive role. While a homogeneous ethnic environment accelerates the diffusion of fertilizer, a diverse religious background in a community creates an environment conducive to initial adoption. While the direct contribution of this paper relates to technology adoption at the micro level, we believe it represents a first step in gaining a better understanding of the relation between culture and growth at the micro level.
    Date: 2016–04
  2. By: Thiemo Fetzer; Samuel Marden
    Abstract: Weak property rights are strongly associated with underdevelopment, low state capacity and civil conflict. In economic models of conflict, outbreaks of violence require two things: the prize must be both valuable and contestable. This paper exploits spatial and temporal variation in contestability of land title to explore the relation between (in)secure property rights and conflict in the Brazilian Amazon. Our estimates suggest that, at the local level, assignment of secure property rights eliminates substantively all land related conflict, even without changes in enforcement. Changes in land use are also consistent with reductions in land related conflict.
    Keywords: property rights; land titling; conflict; deforestation
    JEL: J1 N0
    Date: 2016–04
  3. By: Hannes Mueller; Agustin Tapsoba
    Abstract: We use a dataset which codes executive power for 564 ethnic groups in 130 countries on a seven-point scale to show that ethnic groups that gain political power benefit economically. This effect holds for groups that enter government, the extensive margin, and for groups that concentrate more power onto themselves, the intensive margin. Both these effects disappear in the presence of strong political constraints on executive power. Institutional constraints are even effective in preventing favoritism when groups concentrate all power in the executive onto themselves.
    Keywords: favoritism, political institutions, night light data, ethnic conflict, executive constraints
    JEL: O43 D72 R11
    Date: 2016–04
  4. By: Fetzer, Thiemo (University of Warwick); Pardo, Oliver (Universidad Icesi); Shanghavi, Amar (London School of Economics)
    Abstract: This paper exploits a nearly year-long period of power rationing that took place in Colombia in 1992, to shed light on three interrelated questions. First, we show that power shortages can lead to higher fertility, causing mini baby booms. Second, we show that the increase in fertility had not been offset by having fewer children over the following 12 years. Third, we show that the fertility shock caused mothers worse socioeconomic outcomes 12 years later. Taken together, the results suggest that there are significant indirect social costs to poor public infrastructure.
    Keywords: fertility, infrastructure, blackouts, unplanned parenthood. JEL Classification: J13, J16, O18, H41
    Date: 2016
  5. By: Du, Ding; Zhao, Xiaobing
    Abstract: We use sub-national data to examine the relationship between temperature and growth within the US and the European Union. Different from previous studies based on the country-level data, we find that the optimal temperature is much lower. Because most of production takes place in regions with temperatures above the optimal temperature, even modest temperature increases (e.g., 1 °C warming) have statistically and economically significant (negative) impact on the GDP growth of the US and the European Union. Our results suggest more proactive climate policy.
    Keywords: Climate Change, GDP Growth, Sub-national data, Environmental Economics and Policy, Q54, O44,
    Date: 2016
  6. By: Saksena, Shalini; Deb, Moumita
    Abstract: This paper examines the relative performance of 28 major Indian states over the two decades (1990-2010) on economic growth and human development indicators by empirically confirming the two-way nexus between economic growth (EG) and human development (HD) and identifying other important links in the relationship from cross-sectional growth regressions. The paper finds a strong and consistent convergence in indicators of human development across states even as incomes have diverged over the two decades. Further, the classification of the states into vicious, virtuous, HD-lopsided and EG-lopsided categories and the shifts across categories of different states over the two decades reveal the importance of the requirement of simultaneous thrust on EG and HD in order to escape the vicious cycle.
    Keywords: Human Development, Economic Growth, Indian States
    JEL: O11 O15
    Date: 2016–02–05
  7. By: Wadho, Waqar Ahmed; Ayaz, Umair
    Abstract: We explore the relationship between government size and economic growth in an endogenous growth model with human capital and unproductive social capital. We show that with endogenous discounting, growth outcome is history dependent and is function of initial endowment of human capital. With low endowment, government intervention of any size is growth depressing. With high endowment, government intervention is not associated with any depressing effect. For intermediate levels, there are multiple equilibria. Furthermore, countries with identical endowment and government size can be in different equilibrium, and can have different growth rates within same equilibrium if they differ in institutional quality.
    Keywords: Government size, Rent-seeking, Economic Growth, Human capital, Discounting
    JEL: D72 D90 H11 J24 O41 O43
    Date: 2015–02–22
  8. By: Paul, Saumik
    Abstract: In 1955, in an influential study Kuznets (1955) predicted an inverted-U relationship between development and inequality, mainly through structural transformation. Since then a large body of research has empirically tested the Kuznets hypothesis, but consensus is far less evident. In this paper, I argue that a heterogeneous process of structural transformation across the income distribution may explain such empirical irregularities. I specifically link the heterogeneity in growth incidence resulting from a shrinking agriculture sector across income quantiles to inequality measures. Empirical evidence drawn from the Cote d’Ivoire household survey data supports this theoretical prediction. However, the decomposition results indicate a relatively small contribution of structural transformation to total changes in inequality.
    Keywords: Structural Change, Inequality
    JEL: J3 J5
    Date: 2016–04

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