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on Transition Economics |
| By: | Peter M. Morrow; Loren Brandt |
| Abstract: | This paper examines the impact of China's falling import tariffs on the organization of exports between ordinary and processing trade. These trade forms differ in terms of tariff treatment and the ability of firms to sell on the domestic market. At the industry level, we find that falling input tariffs are the source of 90 percent of the average increase in the share of exports occurring through ordinary trade, most of which occurs on the extensive margin through new entry. The choice of trade is also tied to the size of the domestic market, which processing firms cannot access. Consistent with the literature, we also document that the domestic content share of ordinary exports is 30 percentage points higher than for processing. Our back of the envelope calculations imply an increase in demand for local factors of production of 12-21 billion U.S. dollars in 2006 associated with the change in the composition of trade from processing to ordinary exports resulting from tariff cuts between 2000-2006. |
| Keywords: | China, Processing Trade, Domestic Content, Taris |
| JEL: | F14 F16 |
| Date: | 2013–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-491&r=tra |
| By: | Baylis, Kathy; Fan, Linlin; Nogueira, Lia |
| Abstract: | China underwent tremendous agricultural market reforms in the 1990s prior to its accession to the WTO, drastically decreasing domestic market distortions. We ask whether these reforms have led to agricultural commercialization and have improved the welfare of rural Chinese households measured by household average share of calories from non-staples. We identify the effect of liberalization by calculating the degree to which local markets reflect world prices. We find that both undernourished and nourished rural households have increased their agricultural and off-farm income in response to market liberalization. Income increases households' nutrition at a diminishing marginal rate, especially the off-farm income. |
| Keywords: | market liberalization, household food security, rural China, Community/Rural/Urban Development, Consumer/Household Economics, Food Security and Poverty, International Development, I32, O12, O24, Q18, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:150203&r=tra |
| By: | Ken Davies |
| Abstract: | This working paper examines China’s investment policy since the publication of the 2008 OECD Investment Policy Review of China. China remains the largest recipient of FDI among developing countries and FDI continues to play a disproportionately large role in promoting China’s trade, investment and tax revenue generation, albeit not as large as before. A number of structural changes occurred in recent years, including a slight revival of equity joint ventures, faster growth in services-sector FDI than in manufacturing, and a reorientation of FDI from the Eastern Region to the Central and Western Regions. In addition, China has been rapidly becoming an important source of outward foreign direct investment (OFDI), a trend that was reinforced by the global financial and economic crisis. While foreign investor confidence is maintained by China’s economic strength, it is being undermined by rising labour costs and shortages of skilled labour and by greater competition (especially from Chinese companies). In addition, there are fears that an investment protectionist trend may be emerging in China, as evidenced by, for example, perceived discrimination against foreign-owned companies in government procurement. The Chinese government has taken a number of measures to streamline and decentralise FDI administration and strengthen enforcement. The emphasis has been on aligning inward FDI flows more closely with national priorities, including upgrading industrial sophistication, supporting innovation, setting up outsourcing industries and developing poorer hinterland regions. The most important change is the three-fold raising of the ceiling on provincial examination and approval authority over foreign investment projects in the “permitted catalogue”. Merger notification discrimination against foreign investors has been removed and a national security review process for cross-border M&As has been announced. The Chinese government should continue its efforts to liberalise and increase the transparency and predictability of the framework for both inward and outward FDI. |
| Keywords: | China, foreign investment, international investment, state-owned enterprises, international investment agreements, level playing field, investment treaties, bilateral investment treaties |
| JEL: | F02 F21 F23 F52 G34 L21 L32 |
| Date: | 2013–05–29 |
| URL: | http://d.repec.org/n?u=RePEc:oec:dafaaa:2013/1-en&r=tra |
| By: | Feng, Juan; Lichtenberg, Erik; Ding, Chengri |
| Abstract: | We examine how the system of “federalism, Chinese style” functions in the context of land allocation. China’s land laws give provision of land a central role in local officials’ growth promotion strategies. Requisitions of farmland by local authorities have engendered significant rural unrest. In response, the central government has attempted to re-establish control over the pace of urban land expansion by enacting regulations limiting conversion of rural land to urban uses. We derive theoretically the conditions under which non-compliance with such regulations is optimal. An econometric investigation shows that legal restrictions on farmland conversion had no effect on rates of farmland loss but did limit urban spatial growth rates in some regions. Our econometric evidence suggests very limited enforcement of those legal limits on farmland conversion. |
| Keywords: | China, urbanization, land development, farmland conversion, land use, decentralization, fiscal federalism, Community/Rural/Urban Development, International Development, Land Economics/Use, Public Economics, R52, R14, Q15, H77, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:149669&r=tra |
| By: | Tony Andréani (Université Paris VIII); Rémy Herrera (Centre d'Economie de la Sorbonne) |
| Abstract: | This article was written for a collective book published by the Éditions Delga, gathering together contributions on contemporary China, in particular those presented during a conference organized at the French National Assembly in March 2013. It proposes critical comments on the book La Voie chinoise by Michel Aglietta and Guo Bai. After having presented the interpretation of the Chinese “sui generis capitalism” given by the authors, then our own interpretation, we discuss some of the themes examined in this book, among others: the analysis of the imbalances of the Chinese economy, the issues of the allocation of factors and their prices, those of the management of natural resources and of access to land, the rules to be applied to the bond and stock markets, the internationalization of the currency and monetary sovereignty, the specificities of the state owned enterprises, the conception of the public services, strategic planning, the question of power and “Chinese-type socialism”. |
| Keywords: | China, development, capitalism, market socialism. |
| JEL: | L51 N15 O11 P33 P34 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:13051&r=tra |
| By: | Douglas Almond; Hongbin Li; Shuang Zhang |
| Abstract: | Following the death of Mao in 1976, abandonment of collective farming lifted millions from poverty and heralded sweeping pro-market policies. How did China’s excess in male births respond to rural land reform? In newly-available data from over 1,000 counties, a second child following a daughter was 5.5 percent more likely to be a boy after land reform, doubling the prevailing rate of sex selection. Mothers with higher levels of education were substantially more likely to select sons than were less educated mothers. The One Child Policy was implemented over the same time period and is frequently blamed for increased sex ratios during the early 1980s. Our results point to China’s watershed economic liberalization as a more likely culprit. |
| JEL: | I15 I25 I32 J13 K11 N35 P26 Q18 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19153&r=tra |
| By: | Wang, Miao; Goldsmith, Peter |
| Abstract: | Food processing has been widely recognized as a traditional, unskilled-labor intensive production. Yet rapid development in technology drives food processing into more sophisticated and technology-oriented industry. This paper utilizes a fixed effects model to test the hypothesis that the food processing industry is a high technology industry. The research employs a unique natural experiment where some provincial governments in China liberalized migration policies for highly educated/highly skilled (HEHS) workers. Theory holds that such labor liberalization policies will increase the level of industrial agglomeration by high technology firms facing a shortage of talent. The data are the 2001-2010 3-digit industrial and provincial level employment data from the China Labor Statistical Yearbook. This paper found strong evidence that the HEHS labor pool affected the location decision of food processing firms in China. The result supports recent literature that the food and agribusiness sector is increasingly dependent on knowledge workers and high technology. Other traditional determinants for industrial agglomeration; scale economies and proximity to markets are also found to promote industrial agglomeration in the food processing industry. |
| Keywords: | food processing, China, industrial agglomeration, high-educated/high-skilled labor, migration, fixed effects model, International Development, Labor and Human Capital, Research and Development/Tech Change/Emerging Technologies, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:150402&r=tra |
| By: | Zhang, Ruijuan; Wu, Laping; Carter, Colin; Sun, Dingqiang |
| Abstract: | This paper empirically addresses how inflation rates affect China’s private grain stocks.Storable grain is characterized as a capital asset. Farm households would choose either to store grain or to sell grain to get bank deposits. We first build a farm household model in which real interest rates can alter farmer’s grain storage behavior. Using household survey data collected in Hebei province, China from 2004-2009, we empirically test the theory. Our estimates show that inflation rates significantly and negatively affect private grain storage. This finding provides an alternative explanation for the decline in private grain stocks since 2004 in China. |
| Keywords: | Grain storage, inflation rate, Chinese Agriculture, Consumer/Household Economics, Crop Production/Industries, International Relations/Trade, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:150614&r=tra |
| By: | Chu, Xueling; Chen, Qihui; Fang, Xiangming |
| Abstract: | In 2003, China launched a new health insurance system - the New Cooperative Medicine Scheme (NCMS) in its rural areas, where more than 87 percent of China’ rural residents were not covered by any health insurance programs. By the end of 2009, the NCMS had expanded to cover 95 percent of China’s rural residents. Previous research has yielded conflicting results regarding the effects of the NCMS in rural China, but the conflicting results may be due to estimation biases. This paper uses a triple-difference method, which takes into account rural residents’ unobserved heterogeneity, to re-evaluate the impacts of the NCMS on rural residents’ health outcomes, including hypertension, diabetes, heart disease, apoplexy and born fracture. Using a longitudinal sample drawn from the China Health and Nutrition Survey, our tripledifference method indicates that the NCMS significantly reduces the incidence of diabetes, heart disease, apoplexy for rural residents over age 55. Our results also suggest that the commonlyadopted impact evaluation method, the double-difference method, is likely to underestimate the health impacts of the NCMS. |
| Keywords: | Rural China, New Cooperative Medical Scheme, Impact Evaluation, Triple- Difference, Community/Rural/Urban Development, Health Economics and Policy, International Development, International Relations/Trade, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:150488&r=tra |
| By: | Chen, Xuqi; Gao, Zhifeng; House, Lisa |
| Abstract: | The rapid income per capita of Chinese consumers and increasing demand for nearly all agricultural products have attracted western food industries to focus on this booming and huge market. This research investigated the perspectives of western food products in China's market, with focus on one representative western food-orange juice, by studying the Chinese consumer knowledge, perceptions, and willingness to pay (WTP) for different types of orange juice products. Though the Chinese consumers' willingness to pay for 100 % juice exceeded the 10% juice as expected, it would not have been persuasive to conclude meaningful to develop the 100 % juice market in China unless the WTP is around the actual market price. |
| Keywords: | Western food products, orange juice, demand, attitude, willingness to pay, Community/Rural/Urban Development, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, International Development, International Relations/Trade, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:150771&r=tra |
| By: | Knight, John |
| Abstract: | This paper provides an overview of research on income inequality in China over the period of economic reform. It presents the results of two main sources of evidence on income inequality and, assisted by various decompositions, explains the reasons income inequality has increased rapidly and the Gini coefficient is now almost 0.5. This paper evaluates the degree of income inequality from the perspectives of people's subjective well-being and government concerns. It poses the following question: has income inequality peaked? It also discusses the policy implications of the analysis. The concluding comments of this paper propose a research agenda and suggest possible lessons from China's experience that may be useful for other developing countries. |
| Keywords: | Rural Poverty Reduction,Inequality,Poverty Impact Evaluation,Services&Transfers to Poor,Labor Policies |
| Date: | 2013–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6482&r=tra |
| By: | Deininger, Klaus W.; Giles, John; Jin, Songqing; Wang, Hui |
| Keywords: | poverty, China, migration, household definition, Community/Rural/Urban Development, Consumer/Household Economics, International Development, |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:149700&r=tra |
| By: | Halvor Mehlum; Ragnar Torvik; Simone Valente |
| Abstract: | China’s growth is characterized by massive capital accumulation, made possible by high and increasing domestic savings. In this paper we develop a model with the aim of explaining why savings rates have been high and increasing,and we investigate the general equilibrium effects on capital accumulation and growth. We show that increased savings and capital accumulation stimulates further savings and capital accumulation, through an intergenerational distribution effect and an old-age requirement effect. We introduce what we term the savings multiplier, and we discuss why and how the one-child policy, and the dismantling of the cradle-to-grave social bene?ts provided through the state owned enterprises, have stimulated savings and capital accumulation. |
| Keywords: | China, One-child policy, Overlapping generations, Growth, Savings |
| JEL: | O11 D91 E21 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:bny:wpaper:0013&r=tra |
| By: | Wang, Donghui |
| Abstract: | This study investigates the rate of returns to private investment in education in urban China, focusing on gender differences. It shows that in general females have higher rates of returns to schooling than males after taking account of sample selection bias and the endogeneity of schooling, despite the fact that females usually have less schooling and lower income. However, the advances of females become less prominent after controlling for occupational choices. Furthermore, the sub samples of rural-to-urban migrant workers and urban-resident workers display different patterns: for urban residents, females have slightly higher rates of returns to schooling, while migrant workers show an opposite hierarchy of gender differences in returns to schooling, in the sense that males have higher returns to schooling than females. |
| Keywords: | Labor and Human Capital, Public Economics, |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:umapmt:150764&r=tra |
| By: | Zhang, Hongsong |
| Abstract: | The increasing mean wage-interest ratio and decreasing mean capital-labor ra- tio observed in some Chinese manufacturing industries suggest that technological change is factor-biased. In order to study the nature of technological change and its contribution to economic growth, this paper builds and estimates a structural model of fi rms' production decisions with biased technological change. This model allows me to identify and estimate the firm-time-specifi c factor-biased technology using micro data. The basic idea of the estimation is that the choice of inputs contains information about the unobserved productivities; therefore we can invert the inputs demand function to recover the unobserved productivities. I estimate the model from a firm-level data set of four Chinese Manufacturing industries. The empirical results provide fi rm-level evidence of biased technological change over time and biased technological dispersion across rms. The estimation results show that technological change contributes to the growth of gross output by 1.81%-3.10% annually and value added by 12.67%-21.16%, which is higher than the combined contribution of capital and labor. Capital efficiency grows much faster than la- bor efficiency in China, and the contribution of technological change to economic growth is mainly due to the change of capital efficiency. The results also show that large fi rms have a higher capital-labor efficiency ratio and that biased technological dispersion explains a large part of the dispersion of capital-labor ratio across fi rms. |
| Keywords: | Multidimensional Productivity, Technology Bias, Biased Techno- logical Change, Biased Technological Dispersion, Institutional and Behavioral Economics, Research and Development/Tech Change/Emerging Technologies, |
| Date: | 2013–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:150225&r=tra |
| By: | Rock, Michael T.; Toman, Michael; Cui, Yuanshang; Jiang, Kejun; Song, Yun; Wang, Yanjia |
| Abstract: | Since the onset of economic reforms in 1978, China has been remarkably successful in reducing the carbon dioxide intensities of gross domestic product and industrial production. Most analysts correctly attribute the rapid decline in the carbon dioxide intensity of industrial production to rising energy prices, increased openness to trade and investment, increased competition, and technological change. China's industrial and technology policies also have contributed to lower carbon dioxide intensities, by transforming industrial structure and improving enterprise level technological capabilities. Case studies of four energy intensive industries -- aluminum, cement, iron and steel, and paper -- show how the changes have put these industries on substantially lower carbon dioxide emissions trajectories. Although the changes have not led to absolute declines in carbon dioxide emissions, they have substantially weakened the link between industry growth and carbon dioxide emissions. |
| Keywords: | Energy Production and Transportation,Technology Industry,ICT Policy and Strategies,Environmental Economics&Policies,Energy and Environment |
| Date: | 2013–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6492&r=tra |
| By: | Ortega, David L.dlortega@msu.edu; Wang, H. Holly; Widmar, Nicole J. Olynk; Wu, Laping |
| Abstract: | The increasing share of imported food in developed countries, such as the US and European Union countries, poses new challenges for food safety and quality regulators. China as the world’s biggest food producer has the fastest growing share of fish and shellfish exports to these countries. While there have been an increasing number of studies conducted on consumer demand for various food product attributes, little research has been focused on producer behavior, and studies on Chinese food producers are especially absent in the literature. The objective of this study is to assess Chinese aquaculture producers’ willingness-to-change (WTC) and adopt certain production practices related to food safety. Producer preferences for enhanced food safety measures, and sustainable/eco-friendly production practices are assessed using a choice experiment. Primary data was collected in the leading aquaculture producing provinces of southern China. The average net income per farmer of our sample was 81,286 RMB/year of which approximately 72% originated from their aquaculture operation. Derived WTC estimates from a random parameters logit model suggest that the representative Chinese producer would require a 2.49 % premium per jin of fish to adopt enhanced food safety practices such as those required for China GAP, and No Public Harm voluntary certifications and they would accept a 3.22% discount before being indifferent between having an antibiotic-free facility and using antibiotics. WTC estimates of sustainable eco-friendly practices and verification by various entities were also assessed. A latent class model (LCM) is used to segregate producers into group with similar underlying characteristics to develop policies to improve producer practices and ultimately product safety and quality. |
| Keywords: | Agricultural and Food Policy, Farm Management, Institutional and Behavioral Economics, International Relations/Trade, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:150520&r=tra |
| By: | Arman Mazhikeyev (School of Business and Economics, Loughborough University, UK); T.Huw Edwards (School of Business and Economics, Loughborough University, UK) |
| Abstract: | By looking at post colonial trade relationships of the world countries for period of 1948-2006, Head and Mayer (HM [Head et al. (2010)]) conclude that a country's trade with the colonizer, typically, erodes by 60% after 30 years of independence. However, the CAR (Central Asian Republics(CAR) arehave been independent from itstheir colonizer, Russia for over 22 years, but their trade since 1995 has been is steady and increasing. As a highly-specific application of Head and Mayer's (HM[Head et al. (2010)]) study of post-colonial ties, CAR-Russia trade may appear to contradict the predictions or imply that there are interesting factors at work. We aimed to investigate what is explaining CAR-Russia trade based onn the CAR's' bilateral trade forin the Post-Soviet period under a gravity framework according to in terms of a combination of monadic (country-specific) effects, such as national GDP, and dyadic (bilateral) effects associated with relative trade costs. We find that (1) dyadic time-varying “RTA” and time-invariant “Landlockedness”, and monadic “importer's GDP” are highly significant in trade with the Central Asian Republics while “Tariffs” have low importance; (2) the CAR-Russia pair unobservable trade costs that are sensitive to global shocks had increased by 20%, their trade continued to be steady and increasing which is due to monadic effects (i.e., GDP growth, following the recovery in wWorld oil prices increase); (3) dynamics analysis of 185 country pairs trade show that 3/4 cases of observed changes in country pair trade is explained by country-specific features and 1/4 cases by bilateral trade relationships. Additionally, we find that country pair trade of the less liberal CARs (Uzbekistan and Turkmenistan) forwas 96% driven byexplained by a monadic effect, while for the more liberal CARs (Kyrgyzstan and Kazakhstan), trade for 50% is influenced by a dyadic effect. |
| Keywords: | Trade costs, Gravity, Transition, Trade Crisis |
| JEL: | F15 F54 P33 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:lbo:lbowps:2013_02&r=tra |
| By: | Liu, Jing; Shively, Gerald; Binkley, James |
| Abstract: | In the canonical consumer demand problem, an agent makes a decision about quantities to consume, under the assumption that all possible varieties are available and can be accessed at zero cost. Quantities of each budget item are adjusted to achieve maximum utility subject to the budget constraint. As a result, utility and expenditure reflect aggregations of quantity and, implicitly, variety. In reality, the cost of accessing variety may not be zero. In this paper we study the consumer’s choice problem using an endogenous variety approach, allowing variety access cost to influence consumption. We develop a conceptual framework for the problem and test its predictions empirically by comparing patterns of dietary diversity over time among a large sample of urban and rural Chinese consumers. We find that access costs, reflecting differences in infrastructure and household storage technologies, influence dietary diversity. |
| Keywords: | dietary diversity, rural-urban difference, variety access cost, Agricultural and Food Policy, Community/Rural/Urban Development, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, D12, D13, I10, Q18, R22, |
| Date: | 2013–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:149624&r=tra |
| By: | Chen, Shuai; Chen, Xiaoguang; Xu, Jintao |
| Abstract: | Using a unique county-level panel on crop yields and daily weather dataset over the past decade, we estimate the impact of climate change on corn and soybean yields in China. Our results suggest the existence of nonlinear and asymmetric relationships between corn and soybean yields and climate variables. We find that extreme high temperatures are always harmful for crop growth. Moreover, the rapid expansion of corn and soybean acreages at both intensive- and extensive margins had detrimental effects on corn and soybean yields. Using estimated coefficients, we estimate changing climate conditions over the study period has led to an economic loss of $220 million in 2009 alone in China’s corn and soybean sectors. Corn yields in China are predicted to decrease by 2-5% under the slowest warming scenario and by 5-15% under the fastest warming scenario by the end of the century. The reductions in soybean yields are found to be more pronounced, about 5-10% and 8-22%, respectively. |
| Keywords: | Climate change, Corn and soybean yields, China, Crop Production/Industries, Q54, Q10, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:149739&r=tra |
| By: | Zheng, Yuqing; Muth, Mary; Brophy, Jenna |
| Abstract: | In this paper, we empirically examine the relationship between food safety TPC on a country’s food exports to the United States using data for 2010. We developed a modified gravity model to account for the role TPC plays in facilitating international food trade. we found that a 10% increase in the number of sites/facilities certified to ISO 22000, GLOBALGAP, and BRC is associated with an increase of a country’s food exports to the United States in the ranges of 0 to 6.7%, 1.6 to 2.2%, and 2 to 3.3%, respectively. For the case of China, we found that each additional ISO, GLOBALGAP, and BRC certification in China can increase China’s exports to the United States up to $472,562, $2,907,451, and $1,927,383, respectively. |
| Keywords: | China, food exports, food safety, third-party certifications, international trade, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, International Relations/Trade, Q17, Q18, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:149926&r=tra |
| By: | Song, Yanqin; Berrah, Noureddine |
| Abstract: | With rapid development of wind power in China, the following three issues have become barriers for further scale-up: 1) concentration of wind farms in the Three-North region, which became significantly underutilized because of a limited capability of local power grids to off-take and consume wind-generated electricity and because of a lack of coordinated development of long-distance transmission lines to deliver electricity to load centers in the South and East regions; 2) increasing subsidies and, thus, a burden on final consumers; and 3) resistance of local authorities to develop new projects because the new value added tax policy reform. How to deal with these issues will have significant impact on the future development of wind in China. This note proposes a methodology to enhance a comprehensive approach by taking both generation and transmission into account in crafting the development plan and formulating the incentive policies, which may be useful in addressing these issues. |
| Keywords: | Energy Production and Transportation,Climate Change Mitigation and Green House Gases,Carbon Policy and Trading,Windpower,Science of Climate Change |
| Date: | 2013–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6486&r=tra |
| By: | Cheng, Lan |
| Abstract: | Abstract This paper studies the interaction between index insurance market and the rural credit market by investigating how the availability of index insurance affects borrowers' moral hazard behavior. Among different types of moral hazard problem in the credit market, we focuses on credit diversion, which occurs when borrowers violate loan contracts and use some or all of production loans for consumption purpose. We build a theoretical model to show that credit non-diverters are likely to benefit from and purchase index insurance, while credit diverters are not. For credit non-diverters, index insurance provides consumption smoothing and increases future income by preventing loan default. For credit diverters who are already implicitly insured by diverting credit from risky investments to consumption, index insurance increases their consumption risks and can even lower expected consumption level. The fundamental reason for the difference of the impact between credit diverters and non-diverters is that index insurance pays indemnities based on external indices rather than farmers' realized outcome. Therefore, the availability of index insurance encourages farmers to choose full investment of loans instead of credit diversion. To test these theoretical predictions empirically, we conducted a framed field experiment with 450 rural households in the north region of China. Coinciding with theoretical predictions, experimental results show that index insurance reduces the number of credit diverters by 75.8%. The treatment effect on credit diversion is heterogeneous across farmers depending on their risk preferences and ethical costs associated with violating loan contracts. The theoretical and empirical results have important policy implications for stimulating credit supply to agriculture and reducing credit rationing. They suggest that lenders can use index insurance as a signaling instrument to overcome information asymmetry in the credit market. Index insurance can be substituted for collateral requirements and lessen both quantity and risk rationing caused by collateral requirement. |
| Keywords: | Moral Hazard, Index Insurance, Credit Market, Credit Rationing, Agricultural Finance, Institutional and Behavioral Economics, International Development, Risk and Uncertainty, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:149670&r=tra |
| By: | Dalila Cervantes-Godoy; Shingo Kimura; Jesús Antón |
| Abstract: | This paper addresses various aspects of risk and risk management for smallholders in developing countries, and presents a quantitative assessment of farm-level risks and risk management strategies in three emerging economies: Brazil, China and Viet Nam. The analysis covers production, income, and poverty risks. Institutional and political settings in developing countries are frequently less developed and this contributes to a greater incidence of market imperfections in key areas such as credit and insurance, and which in turn lowers farmers’ access to risk management tools and strategies. The result is a widespread reliance on informal mechanisms and community strategies. The effects of risk and responses to risk are also different in developing countries, with smallholders often forced to rely on strategies that perpetuate poverty. When risk is an important consideration in a farm household’s decision on sector transition, insurance or safety-net mechanisms could assist these households to make that transition. The analysis of two regions in Viet Nam shows that those households able to successfully transit to the non-farm sector continued to maintain small plots of land for self-consumption, suggesting that agriculture remains a kind of safety net. |
| Keywords: | developing countries, agricultural policy, smallholders, agricultural risk, risk management strategies |
| JEL: | G21 G22 O13 Q10 Q11 Q12 Q13 R38 |
| Date: | 2013–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:oec:agraaa:61-en&r=tra |
| By: | Liu, Xianglin; Romero-Aguilar, Randall S.; Chen, Shu-Ling; Miranda, Mario J. |
| Abstract: | In this paper, we examine how China, the world’s largest rice producer and consumer, would affect the international rice market if it liberalized its trade in rice and became more fully integrated into the global rice market. The impacts of trade liberalization are estimated using a spatial-temporal rational expectations model of the world rice market characterized by four interdependent markets with stochastic production patterns, constant-elasticity demands, expected-profit maximizing private speculative storers, and government stockpiling authorities. The results show that full entry by China into the world rice market will substantially reduce and stabilize the world rice price, reducing the risk faced by major importers, particularly price spikes caused by restrictive trade policies implemented by major exporters. |
| Keywords: | world rice market, China’s integration, export bans, government stockpiling, Agricultural and Food Policy, Food Security and Poverty, International Relations/Trade, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:149965&r=tra |
| By: | Krzysztof Szczygielski; Wojciech Grabowski; Richard Woodward |
| Abstract: | Differences in the growth of firms remain a major topic in economics and strategy research.In this paper we investigated the link between innovation performance and employment growth. First we discuss the problem from the theoretical point of view and then we analyze the relationship between innovation performance and the dynamics of employment in the Polish service firms in 2004-2009. Firms that introduced new services or marketing techniques experienced stronger growth. Process innovations contributed to employment reduction. Tellingly, this effect could only be observed in 2008-2009, a subperiod which saw the lowest levels of aggregate demand. This conclusion yields support to the presumption formulated by Pianta (2005) that the impact of innovation on employment growth depends on the macroeconomic situation. |
| Keywords: | Technology Strategy, Poland, Services, Innovation |
| JEL: | L21 L8 O32 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:sec:cnstan:0454&r=tra |
| By: | Dang, Hai-Anh; Rogers, Halsey |
| Abstract: | During Vietnam's two decades of rapid economic growth, its fertility rate has fallen sharply at the same time that its educational attainment has risen rapidly -- macro trends that are consistent with the hypothesis of a quantity-quality tradeoff in child-rearing. This paper investigates whether the micro-level evidence supports the hypothesis that Vietnamese parents are in fact making a tradeoff between quantity and quality of children. The paper presents new measures of household investment in private tutoring, together with traditional measures of household investments in education. It analyzes data from the Vietnam Household Living Standards Surveys and instruments for family size using the distance to the nearest family planning center. The estimation results show that families do indeed invest less in the education of school-age children who have larger numbers of siblings. This effect holds for several indicators of educational investment -- including general education expenditure and various measures of private tutoring investment -- and is robust to various definitions of family size and model specifications that control for community characteristics as well as the distance to the city center. Finally, the results suggest that tutoring may be a better measure of quality-oriented household investments in education than traditional measures like enrollment, which are arguably less nuanced and household-driven. |
| Keywords: | Population Policies,Teaching and Learning,Primary Education,Population&Development,Education For All |
| Date: | 2013–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6487&r=tra |
| By: | Cook, Jonathan Aaron |
| Abstract: | The Chinese consumer price index slightly overstates the increase in the cost of living and thus understates the growth in real income. Over the period 1995 to 2002, we nd that the annual growth in median urban household income de ated by the cost of living was 7%, which is close to the growth in real GDP during this time. When de ated by ocial CPI, the median urban household sees only a 3% increase in real income. |
| Keywords: | Demand and Price Analysis, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:150571&r=tra |
| By: | Tran, Tuyen; Vu, Huong |
| Abstract: | The relationship between farmland loss, nonfarm diversification and inequality has been well-documented in the literature. However, no study has quantified this relationship. Using a dataset from a 2010 field survey involving 477 households, this study has contributed to the literature by providing the first econometricevidence about the impacts of farmland loss (due to urbanization and industrialization) onnonfarm diversification and income quality among households in Hanoi's peri-urban areas. Our results show that under the impact of farmland loss, households have actually diversified their income through various nonfarm activities,notably in informal wage work. In addition, while farmland loss has reduced the share of farm income, resulting in an increase in income inequality,it has also increased the share of informal wage income, leading to a decrease in income inequality |
| Keywords: | Farmland acquisition, formal wage income, fractional multinomial logit and Gini decomposition |
| JEL: | Q12 |
| Date: | 2013–06–14 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:47596&r=tra |
| By: | Govori, Arbiana |
| Abstract: | Economic development presumes not only the existence of formal institutions such as property rights and the rule of law under which behave economic agents, but also certain norms or social values that promote exchange, savings and investments. In this context, we discuss cultural dimension of economic behavior. In this paper we deal with the identification of key functions that has the managerial culture within organization, helping managers to better understand and use the features of this important organizational phenomenon. This results in strengthening and developing the organization and leads to balanced economic development at the level of the national economy. The same happens at the level of national economy, if viewed as a macro system of what we call organization. In this context we discuss the impact of the managerial culture on economic development of Kosovo |
| Keywords: | Managerial culture, organizational culture, impact, organization, economic development |
| JEL: | J24 J53 M12 M14 M51 M54 O10 O15 |
| Date: | 2013–06–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:47625&r=tra |
| By: | De Rosa, Donato; Iootty, Mariana; Pirlea, Ana Florina |
| Abstract: | Inappropriate regulation can influence productivity performance by affecting incentives to invest and adopt new technologies, as well as by directly curbing competitive pressures. Results of a labor productivity growth model for European countries suggest that improving the regulatory environment -- proxied by the Worldwide Governance Indicators regulatory quality indicator -- and boosting effective exposure to competition through increasing trade integration -- expressed as the ratio of exports plus imports to gross domestic product -- have positive effects on productivity growth. In Romania a 10 percent increase in openness to global trade over 1995-2010 would have boosted productivity growth by 9.7 percent per year. A 10 percent increase in openness to European Union trade, in particular, would have led to an annual increase in productivity of 7 percent. Realizing the benefits from trade integration depends to some extent on regulation. In this regard, the effects of regulation on productivity growth are found to be positive, regardless of the indicator used to measure regulation, and both through direct and indirect channels (by increasing the speed at which a country catches up with productivity leaders). Simulation results also show how countries with different levels of regulatory quality would benefit from a regulatory improvement: had Romania improved its regulatory environment to the same level as Denmark in 2010, its annual productivity growth would have been 14 percent higher over 1995-2010. |
| Keywords: | Environmental Economics&Policies,Economic Theory&Research,E-Business,Labor Policies,Transport Economics Policy&Planning |
| Date: | 2013–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6493&r=tra |
| By: | Aleksandra Hałka (National Bank of Poland, Economic Institute); Jacek Kotłowski (National Bank of Poland, Warsaw School of Economics) |
| Abstract: | In the paper we have investigated to what extent the behaviour of CPI inflation depends on changes in domestic economic activity in Polish economy which is usually described as a small open economy. We conducted a disaggregated analysis using price indices at the COICOP 4-digit level. We specified a small open economy Phillips curve for individual price indices. Additionally we investigated the exchange rate pass through at COICOP group levels. We found that more than 50 per cent of the categories react to the output gap. According to our expectations the categories which are mostly linked to the output gap are services but also non-durable goods. We identified that only small share of prices of durable and semi-durable goods react to domestic demand which can be explained to some extent by globalization process. We also found that more than one third of the price indices respond to exchange rate movements and/or foreign inflation. The impact of exchange rate is most substantial for durable and semi-durable goods which are to large extent perceived as tradable goods. Finally we aggregated the price indices for items sensitive to domestic economic activity and formed an index which, taking into account uncertainty and substantial lags in calculating output gap, may be used as an alternative measure of domestic inflationary pressure. |
| Keywords: | Inflation, monetary policy, Phillips curve, dissagregated price indices, output gap, exchange rate pass-through |
| JEL: | C53 E31 E37 E52 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:nbp:nbpmis:152&r=tra |
| By: | Nikolov, Dimitre; Radev, Teodor; Borisov, Petar |
| Abstract: | This research focuses on building a specific framework and to measure the contribution of landscape to the development of rural economy. The main issues are to be determined how CAP connected what the landscape and how it contributes to the competitiveness of rural economy. Analysis is made in key sectors of rural economy of Pazarjik district in Bulgaria. The empirical result indicates that there is demand of the following landscape services: food, raw materials, fresh water, climate and air quality, spiritual experience and sense of place. Based on cascade approach it was defined the influence of CAP on rural competitiveness. Following the analysis in the paper are presented recommendations and suggestions for the improvement of the common agricultural policy. |
| Keywords: | landscape, rural economy, competitiveness, CAP, International Relations/Trade, |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aiea13:150238&r=tra |