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on Africa |
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Issue of 2005‒09‒11
two papers chosen by Suzanne McCoskey Foreign Service Institute, US Department of State |
| By: | Carlsson, Fredrik (Department of Economics, School of Economics and Commercial Law, Göteborg University); Köhlin, Gunnar (Department of Economics, School of Economics and Commercial Law, Göteborg University); Mekonnen, Alemu (Department of Economics, Addis Ababa University, Ethiopia; and Environmental Economics Policy Forum); Yesuf, Mahmud (Environmental Economics Policy Forum, Ethiopian Development Research Institute, Ethiopia) |
| Abstract: | There is an evident dichotomy in many rural development policies in the world between extension driven adoption of modern inputs and community driven local public goods. However, the target populations of these policies seldom have the possibility to express their preference between these two policies. In this paper we report the results of a stated preference survey in the highlands of Ethiopia where the farmers are given a choice between an agricultural extension package and a local public good - health care or protected spring. The study finds that a majority of people prefers the public good. However, when the extension package is combined with insurance in terms of no payback of the credit in case of crop loss, then we find a significant increase in the choice of the extension package. The study thus sheds light on why Ethiopia’s major development strategy has had limited success and gives evidence of how stated preference methodologies can be utilized for development policy design. <p> |
| Keywords: | Agricultural extension; choice experiment; local public goods; Ethiopia; Africa |
| JEL: | D13 H41 H43 O13 |
| Date: | 2005–08–17 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0172&r=afr |
| By: | Jeffrey A. Frankel |
| Abstract: | To update a famous old statistic: a political leader in a developing country is almost twice as likely to lose office in the 6 months following a currency crash as otherwise. This difference, which is highly significant statistically, holds regardless whether the devaluation takes place in the context of an IMF program. Why are devaluations so costly? Many of the currency crises of the last ten years have been associated with output loss. Is this, as alleged, because of excessive reliance on raising the interest rate as a policy response? More likely it is because of contractionary effects of devaluation. There are various possible contractionary effects of devaluation, but it is appropriate that the balance sheet effect receives the most emphasis. Passthrough from exchange rate changes to import prices in developing countries is not the problem: this coefficient fell in the 1990s, as a look at some narrowly defined products shows. Rather, balance sheets are the problem. How can countries mitigate the fall in output resulting from the balance sheet effect in crises? In the shorter term, adjusting promptly after inflows cease is better than procrastinating by shifting to short-term dollar debt, which raises the costliness of the devaluation when it finally comes. In the longer term, greater openness to trade reduces vulnerability to both sudden stops and currency crashes. |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11508&r=afr |