nep-dev 2005-08-28 papers

on Development

Issue of 2005‒08‒28
two papers chosen by
Jeong-Joon Lee
Towson University

Weak Scale Effects in Growth Models By Juergen Antony
Poverty and the Environment-Exploring the Relationship between Household Incomes, Private Assets and Natural Assets By Urvashi Narain; Shreekant Gupta; Klaas vant Veld

By:	Juergen Antony (University of Augsburg, Department of Economics)
Abstract:	Growth models of the second generation type, e.g. the Jones (1995) or Young (1998) model, all exhibit a so called weak scale effect in per capita production, i.e. larger economies should have a higher per capita production than smaller economies. However, in an open economy context the scale of the economy is less important because countries can participate in the scale of other countries through trade. This paper develops a simple open economy growth model of the second generation type which shows the relevance of the scale of the trading partners for per capita production. This model is empirically tested using time series for the G7 countries and alternatively a cross section of 80 countries for the year 2000. The scale of these economies is measured by their own scale as well as the scale of their major trading partners. The results show that there is a significant effect of the own scale and the scale of the trading partners on per capita production. Additionally the paper provides a theoretical model that shows the relevance of the weak scale effect in explaining wage inequality between different types of workers.
Keywords:	growth and scale effects, international trade
JEL:	O47 F43 F12
Date:	2005–08
URL:	http://d.repec.org/n?u=RePEc:aug:augsbe:0276&r=dev

Poverty and the Environment-Exploring the Relationship between Household Incomes, Private Assets and Natural Assets

By:	Urvashi Narain (Resources for the Future, Washington DC); Shreekant Gupta (Delhi School of Economics); Klaas vant Veld (University of Wyoming, Laramie)
Abstract:	Using purpose-collected survey data from 535 households in 60 different villages of the Jhabua district of India, this paper investigates the extent to which rural households depend on common-pool natural resources for their daily livelihood. Previous studies have found that resource dependence-- defined as the fraction of total income derived from common-pool resources--strongly decreases with income. Our study uncovers a more complex relationship. Firstly, for the subsample of households that use positive amounts of resources, we find that dependence follows a U-shaped relationship with income, declining at first but then increasing. Secondly, we find that the probability of being in the subsample of common-pool resource users follows an inverse U-shaped relationship with income - the poorest and richest households are less likely to collect resources than those with intermediate incomes. Resource use by the rich is therefore bimodal - either very high or--for the very rich households--zero. Thirdly, we find that resource dependence increases at all income levels with an increase in the level of common-pool biomass availability. The combination of these results suggests that the quality of natural resources matters to a larger share of the rural population than had previously been believed, common-pool resources contribute a significant fraction of the income not just of the desperately poor, but also of the relatively rich.
Keywords:	India, Madhya Pradesh, poverty, environment, common-pool natural resources,rural households
JEL:	Q2 D31 Q12 Q56 O13 I32
Date:	2005–04
URL:	http://d.repec.org/n?u=RePEc:cde:cdewps:134&r=dev

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