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on Development |
| By: | Hongbin Li (Tsinghua University); Mark Rosenzweig (Yale University); Junsen Zhang (Chinese University of Hong Kong) |
| Abstract: | In this paper, we use new survey data on twins born in urban China, among whom many experienced the consequences of the forced mass rustication movement of the Chinese “cultural revolution,” to identify the distinct roles of altruism and guilt in affecting behavior within families. Based on a model depicting the choices of the allocation of parental time and transfers to multiple children incorporating favoritism, altruism and guilt, we show the conditions under which guilt and altruism can be separately identified by experimental variation in parental time with children. Based on within-twins estimates of affected cohorts, we find that parents selected children with lower endowments to be sent down; that parents behaved altruistically, providing more gifts to the sibling with lower earnings and schooling; but also exhibited guilt – given the current state variables of the two children, the child experiencing more years of rustication received significantly higher transfers. |
| Keywords: | guilt, altruism, China |
| JEL: | J12 J13 O12 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:egc:wpaper:965&r=dev |
| By: | Joost de Laat |
| Abstract: | This paper tests for the endogeneity of one of the main elements separating different models of intrahousehold allocations, namely the household information set. Based on unusually rich data, I find that split migrant couples in the Nairobi slums invest considerable resources into information acquisition through visits, sibling and child monitoring, budget submissions, and marital search. I also find potentially substantial welfare losses when information acquisition becomes costly, not only through reduced remittances but more importantly as families opt for family migration into the slums. That households invest in information when there are welfare gains complements a large and growing literature that seeks to explain intrahousehold allocations through more complex modes of decision-making. |
| Keywords: | Survey Methods, Household production and Intrahousehold Allocation, Marriage, Family Structure, Migration |
| JEL: | F12 F15 F17 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:0827&r=dev |
| By: | Joost de Laat; William Jack |
| Abstract: | This paper uses a newly collected dataset on Ethiopian physicians to shed light on the allocative efficiency of the physician labor market. We use a lottery mechanism by which medical school graduates are assigned to their first jobs to identify the long-term impact of being posted to a rural area instead of the capital, Addis Ababa. We find that physicians who are assigned to Addis are more satisfied with their initial and their current jobs. However, being assigned to the capital through the lottery does not appear to have significant long-run career benefits. This appears to be partly because relatively high ability physicians opt out of the lottery and find jobs in Addis, where they successfully compete with those assigned by the lottery for specialized training. We also find evidence of adverse selection in the market for physicians who initially participated in the lottery, compared with the market for physicians who did not. We rationalize these findings by suggesting that the lottery, by explicitly randomly assigning new graduates, obfuscates information about them that future employers would otherwise find valuable. High ability workers from the lottery do relatively worse later in their careers than their counterparts who did not take part in the lottery, and are more likely to exit the physician labor market in Ethiopia. Our results suggest that using a lottery to assign new physicians to jobs could compromise the future allocative efficiency of the labor market, and even contribute to the medical brain drain. This is not because the long-term impacts of getting a "bad" are negative, but because the lottery makes it difficult for good physicians to signal their quality. |
| Keywords: | Wage Level and Structure, Labor Contracts, Public Sector Labor Markets, Analysis of Health Care Markets |
| JEL: | I11 J45 O20 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:0828&r=dev |
| By: | Stephen Dobson; Carlyn Ramlogan |
| Abstract: | Numerous studies have examined the relationship between income inequality and trade openness. This paper departs from previous work by considering a possible non-linear relationship between trade openness and inequality. The evidence is consistent with the idea of a Kuznets curve: inequality increases until a critical level of openness is reached after which inequality begins to fall. The finding of a non-linear relationship between trade openness and inequality implies that governments in Latin America should introduce redistribution policies, alongside trade liberalisation measures, so as to ease the adverse effects of trade liberalisation. |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbs:wpaper:2008/10&r=dev |
| By: | Antonio Rodriguez Andres; Carlyn Ramlogan-Dobson |
| Abstract: | This paper presents new evidence on income inequality in Latin America over the period 1981-2000. Using a panel data methodology, we find that a reduction in corruption is associated with a rise in inequality. This counterintuitive result can be explained by privatisation. Privatisation removes industries from government influence (and corruption) and worsens income inequality as new owners strive for efficiency and profits. The paper argues that structural reform policies aimed primarily at achieving positive and increasing growth rates do not adequately address the income distribution problem. |
| Keywords: | Corruption, Latin America, Income inequality, Instrumental variables, Panel data, Privatisation. |
| JEL: | O15 O54 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbs:wpaper:2008/11&r=dev |
| By: | Ippei Fujiwara (Institute for Monetary and Economic Studies, Bank of Japan (E-mail: ippei.fujiwara@boj.or.jp)); Keisuke Otsu (Assistant Professor, Sophia University, Faculty of Liberal Arts and formerly, Economist, Institute for Monetary and Economic Studies (E-mail: k-otsu@sophia.ac.jp)); Masashi Saito (Economist, Research and Statistics Department, Bank of Japan (E-mail: masashi.saitou@boj.or.jp)) |
| Abstract: | Three decades have passed since China dramatically opened up to the global market and began to catch up rapidly with leading economies. In this paper we discuss the effects of Chinafs opening-up and rapid growth on the welfare of both China and the rest of the world (ROW). We find that the opening-up per se is welfare improving for China but has had little impact on the ROW given a balanced trade constraint. The opening-up of China is beneficial to the ROW if it leads to significant productivity growth in China. Also, Chinafs balanced trade policy after the opening-up has helped the ROW rather than China. |
| Keywords: | Productivity, Terms of Trade, Growth, Open Economy |
| JEL: | E13 F41 O47 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:ime:imedps:08-e-22&r=dev |
| By: | Qureshi, M.S.; Wan, Guanghua |
| Abstract: | By exploring the export performances and specialization patterns of China and India, we assess their trade competitiveness and complementarity vis-.-vis each other as well as with the rest of the world. Our analysis indicates that (i) India faces tough competition from China in the third markets especially in clothing, textile and leather products; (ii) there is a moderate potential for expanding trade between the two countries; (iii) China poses a challenge for the East Asian economies, the US, and most of the European countries especially in medium technology industries; (iv) India appears to be a competitor mainly for its neighbouring South Asian countries; and (v) complementarity exists between the imports of China and India, and the exports of the US, some European states and East Asian countries, especially Japan, Korea, Malaysia, Singapore and Thailand, implying opportunities for trade expansion; and finally (vi) the export structure of China is changing with the exports of skill intensive and high technology products increasing and those of labour-intensive products decreasing gradually. This suggests that challenges created by China in traditional labour-intensive products might reduce in the long run |
| Keywords: | international trade, export competition, China, India |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-08&r=dev |
| By: | Zhang, Jun |
| Abstract: | This paper investigates the institutional reason underlying the change in the trajectory of economic growth in post-reform China, and argues that the trajectory of growth was much more normal during the period of 1978-89 than in the post-1989 era. In the former period, growth was largely induced by equality-generating institutional change in agriculture and the emergence of non-state industrial sector. In the latter period, growth was triggered by the acceleration of capital investments under authoritarian decentralized hierarchy within self-contained regions. Such a growth trajectory accelerates capital deepening, deteriorating total factor productivity and leads to rising regional imbalance. This paper further argues that the change in the trajectory of growth is the outcome of changes in political and inter-governmental fiscal institutions following the 1989 political crisis. |
| Keywords: | economic growth, political institutions |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-33&r=dev |
| By: | Fan, Peilei |
| Abstract: | Both China and India, the emerging giants in Asia, have achieved significant economic development in recent years. China has enjoyed a high annual GDP growth rate of 10 per cent and India has achieved an annual GDP growth rate of 6 per cent since 1981. Decomposing China and India?s GDP growth from 1981 to 2004 into the three factors? contribution reveals that technology has contributed significantly to both countries? GDP growth, especially in the 1990s. R&D outputs (high-tech exports, service exports, and certified patents from USPTO) and inputs (R&D expenditure and human resources) further indicate that both countries have been very committed to R&D and their output is quite efficient. Both governments have played an essential role in transforming their national innovation systems so that they can be more adaptable to economic development. The main focus of their reforms has been to link the science sector with the business sector and to provide incentives for innovation activities. Balancing import of technology and indigenous R&D effort is another major theme. Innovation capability development has become more and more critical to the success of biofirms in India and China. Institutional factors have great influence on choice of innovation at the firm level, i.e., the decision at firm level in terms of indigenous R&D or import of technology. Nevertheless, limited financial resources and insufficiently qualified human resources remain two major challenges for domestic companies in both countries. |
| Keywords: | China, India, innovation capability, domestic companies, ICT, biotech |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-31&r=dev |
| By: | Henderson, Jeffrey |
| Abstract: | The rise of China as an economic and political ?driver? of the global economy is likely to be one of the defining moments of world history. Its dynamism and international expansion are on the verge of creating a ?critical disruption? in the global order that has held sway for over 60 years. As such, China is beginning to reshape the world, presaging a new phase of globalization: a ?global-Asian era?. This new era is likely to be distinct from any of the earlier phases of globalization and China?s global footprint, in terms of its business, economic and political actions and their geopolitical implications, is likely to be markedly different from what has gone before. This paper offers a framework by which we can begin to understand the coming global-Asian era (GAE) and some of its consequences, particularly as the latter are surfacing in the developing world. Having discussed the nature and dynamics of the GAE, the paper turns to sketch a series of vectors (trade, aid and energy security) along which the GAE is beginning to impact on developing countries. The paper argues that, at least for these vectors, the Chinese-driven GAE is providing opportunities as well as dangers for national development projects. It concludes by briefly speculating on the viability of the GAE. |
| Keywords: | China, globalization, developing world, trade, oil, aid, geopolitics |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-58&r=dev |
| By: | Martin, Marie-Claude |
| Abstract: | The interaction between available individual and collective resources in the determination of health is largely ignored in the literature on the relationship between poverty and health in developing countries. We analyse the role public resources play in the perception that rural women in Morocco have of their health. These resources are taken to contribute directly and indirectly to the improvement of individual health by, on the one hand, providing a health-promoting environment and, on the other, improving the individual?s ability to produce health. The empirical results of multilevel models confirm the expected associations between socioeconomic status, individual vulnerability factors and health. Furthermore, the random part of the model suggests that variation in state of health is also associated with the presence of collective resources. However, the higher the level of women?s individual wealth, the less the characteristics of the community in which they live seem to be associated with their health, and the less the potential vulnerability factors seem to constrain their ability to maintain or improve health. Our results suggest that collective investments derived from various areas of activity will be more favourable to improving health, insofar as they are adapted to the initial capacity of women to benefit from them. |
| Keywords: | health, poverty, rural, women, Morocco |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-21&r=dev |
| By: | Sayanak, Tejashree; Lahiri, Sajal |
| Abstract: | We develop a theoretical model of foreign aid to analyse a method of disbursement of aid which induces the recipient government to follow a more pro-poor policy than it otherwise would do. In our two-period model, aid is given in the second period and the volume of it depends on the level of wellbeing of the target group in the first period. We find that this way of designing aid does increase the welfare of the poor. We also consider the situations where the donor and the recipient governments act simultaneously as well as sequentially, and find that by moving first in a sequential game, the donor country can, under certain conditions, increase the welfare of the poor and its own compared to the case of simultaneous moves. |
| Keywords: | foreign aid, fungibility, governance, welfare, prize |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-63&r=dev |
| By: | Jenkins, Rhys |
| Abstract: | In recent years there has been a growing literature that analyses the threat which Chinese exports pose to the exports of other developing countries. The paper provides a critique of the standard measures of export similarity which have been used to estimate the threat from China in these studies. Two alternative indices, the static and the dynamic index of competitive threat, are developed and estimated for 18 developing countries and compared with estimates for the standard measures. It is shown that the latter tend to underestimate the extent to which countries are threatened by China. They also distort both the rankings of countries according to the extent to which they face competition from China and the direction of change in the competitive threat over time. |
| Keywords: | China, competition, export similarity, exports, trade |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-11&r=dev |
| By: | Aturupane, Harsha; Deolalikar, Anil B.; Gunewardena, Dileni |
| Abstract: | Reducing child malnutrition is a key goal of most developing countries. To combat child malnutrition with the right set of interventions, policymakers need to have a better understanding of its economic, social and policy determinants. While there is a large literature that investigates the determinants of child malnutrition, it focuses almost exclusively on mean effects of these determinants. However, socioeconomic background variables and policy interventions may affect child nutrition differently at different points of the conditional nutritional distribution. Using quantile regressions, this paper explores the effects of variables such as a child?s age, sex and birth order; household expenditure per capita; parental schooling; and infrastructure on child weight and height at different points of the conditional distributions of weight and height using data from Sri Lanka?s Demographic and Health Survey. Results indicate that OLS estimates can be misleading in predicting the effects of determinants at the lower end of the distributions of weight and height. For example, even though on average Sri Lankan girls are not nutritionally-disadvantaged relative to boys, among children at the highest risk of malnutrition girls are disadvantaged relative to boys. Likewise, although expenditure per capita is associated with strong nutritional improvement on average, it is not a significant determinant of child height or weight at the lower end of the distribution. Similarly, parental education, electricity access, and the availability of piped water have larger effects on child weight and height at the upper quantiles than at the lower quantiles. The policy implication is that general interventions?parental schooling, infrastructure and income growth?are not as effective for children in the lower tail of the conditional weight and height distributions. These children, who are at the highest risk of malnutrition, are likely to need specialized nutritional interventions. |
| Keywords: | child health, child nutrition, malnutrition, child weight, child height, quantile regression, Sri Lanka |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-53&r=dev |
| By: | Song, Ligang; Sheng, Yu |
| Abstract: | The study decomposes the sources of Chinese growth by first making a distinction between technological progress and technical efficiency in the growth accounting framework, and then identifying a series of reform programmes, such as urbanization, structural change, privatization, liberalization, banking and fiscal system reforms as the key components in institutional innovation which facilitate the improvement of technical efficiency and through which economic growth. These components are then incorporated into the model specification, which is estimated based on a panel dataset by applying the principal component analysis (PCA) to eliminate the multicollinearity problem. The results show that urbanization, liberalization and structural change in the form of industrialization are the most important components in contributing to the improvement of technical efficiency and hence growth, highlighting the importance of government policies aimed at enhancing further urbanization, openness to trade and industrial structural adjustments to sustain the growth momentum in China. The study also found that the potential for further enhancing growth through technical efficiency in China is considerable, which can be realized by deepening state-owned enterprises (SOEs) restructuring, and banking and fiscal system reform. |
| Keywords: | institutional reform, growth, technical efficiency, principal component analysis, stochastic frontier analysis |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-12&r=dev |
| By: | Santos-Paulino, Amelia U. |
| Abstract: | This paper analyses the patterns of export productivity and trade specialization profiles in the China, Brazil, India and South Africa, and in other regional groupings. In doing so, the investigation calculates a time varying export productivity measure using highly disaggregated product categories. The findings indicate that export productivity is mainly determined by real income and human capital endowments. Importantly, the study reveals significant differences in the export productivity and specialization patterns of countries with comparable per capita income levels. For instance, China?s export productivity and implied export sophistication is in line with that of countries with higher per capita incomes, including some OECD industrial economies. |
| Keywords: | export productivity, trade specialization, comparative advantage |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-28&r=dev |
| By: | Thakur, Sudhir K. |
| Abstract: | This study provides an understanding of the Indian regional economy utilizing the fundamental economic structure (FES) approach. The FES construct implies that selected characteristics of an economy will vary predictably with region size, as measured by net state domestic product, population, and total gross output. The big question addressed in this study is if identifiable patterns of relations between various macro aggregates and economic transactions can be revealed via regional input-output tables. Jensen et al. (1988) discuss the tiered, partitioned, and temporal approaches to the identification of FES using input-output tables. This research addresses the following four questions: (1) Does a regional FES exist for the Indian economy during the period 1965? (2) What proportions of the cells are predictable? (3) Can the 1965 regional FES predict 1983-84 table for Punjab economy? (4) Does regional FES manifest an enhanced understanding of the Indian regional structure? Regression analyses are used to identify the FES and non-FES cells for the Indian regional economy. The regional input-output tables for 21 States and Union Territories provide data for the analysis. Analysis reveals regional FES includes primary and secondary sectors as components of FES. This research has extended the notion of FES to include: weak, moderate and strong FES cells. |
| Keywords: | regions, economic structure, input-output, India |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-59&r=dev |
| By: | Gaiha, Raghav; Imai, Katsushi |
| Abstract: | This paper measures the vulnerability of households in rural India, based upon the ICRISAT panel survey. We employ both ex ante and ex post measures of vulnerability. The latter are decomposed into aggregate and idiosyncratic risks and poverty components. Our decomposition shows that idiosyncratic risks account for the largest share, followed by poverty and aggregate risks. Despite some degree of risk-sharing, the landless or small farmers are vulnerable to idiosyncratic risks, forcing them to reduce consumption. Income augmenting policies therefore must be combined with those that not only reduce aggregate and idiosyncratic risks but also build resilience against them. |
| Keywords: | aggregate risks, idiosyncratic risks, poverty, vulnerability, semi-arid conditions |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-40&r=dev |
| By: | Ivaschenko, Oleksiy; Mete, Cem |
| Abstract: | Tajikistan?s rural sector has witnessed substantial development since the country began to emerge from civil conflict in 1999. Gross agricultural output increased 64 per cent from 1999 to 2003, and there were significant developments in the agricultural reform agenda. This paper uses the panel component of two surveys conducted in Tajikistan at a one-year interval (2003 and 2004) to explore the major determinants of the transition out of/into poverty of rural households. Poverty status is measured in the asset space, thus indicating structural rather than transitory poverty movements. The empirical analysis reveals several interesting findings that are also important from a policy perspective: first, cotton farming seems to have no positive impact on poverty levels, nor on mobility out of poverty. Second, the rate of increase in the share of private farming at the district level had little impact on poverty levels and poverty mobility. Third, there is strong evidence of geographic poverty mobility traps in Tajikistan. Higher levels of poverty in a district appear to reduce significantly the chance of a household shedding poverty. Living in a region with overall slow economic growth is also found to undermine the odds of exiting poverty and to increase the risk of falling into poverty. Finally, several key household-level factors, such as the share of adults, education level, health status and participation in wage employment, also emerge as significant predictors of poverty mobility. |
| Keywords: | welfare, poverty, Tajikistan |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-26&r=dev |
| By: | de la Fuente, Alejandro |
| Abstract: | International remittances have been portrayed as the human face of globalization given their potential to alleviate poverty by directly increasing household income. Using a panel of rural households in Mexico from October 1998 to November 2000 this study assesses whether this is in fact the case. However, rather than examining whether transfers income would reduce future consumption poverty we asked if transfers are likely to reach people whose conditions are prone to worsen in the future. We used vulnerability to consumption poverty to quantify the extent to which risks and the more permanent disadvantages embedded in most rural livelihoods, can translate into future declines in well-being. We found, contrary to our expectations, a negative and statistically significant relationship between the remittance of transfers, including foreign remittances, and the threat to future poverty that rural households could experience. |
| Keywords: | globalization, risk, vulnerability, poverty, private transfers, Mexico |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-17&r=dev |
| By: | Bhargava, Alok |
| Abstract: | This paper estimated models for GDP growth rates, poverty levels, and inequality measures for the period 1990?2000 using data on 54 developing countries at five-yearly intervals. Issues of globalization were investigated by analysing the differential effects of the countries? exports and imports and by postulating trans-logarithmic models that allow for non-linear effects of literacy levels and measures of openness. The main findings were that literacy rates affected growth rates in a quadratic manner and countries with higher literacy were more likely to benefit from globalization. Second, the model for growth rates showed non-linear and differential effects of the export/GDP and import/GDP ratios. Third, the models indicated that population health indicators such as life expectancy were important predictors of GDP growth rates. Fourth, models for poverty measures showed that poverty was not directly affected by globalization indicators. Finally, the model for Gini coefficients indicated significant effects of ?medium? and ?high? skilled labour work force, with higher proportions of high-skilled labour implying greater inequality. |
| Keywords: | globalization, economic development, education, endogeneity, inequality, poverty, non-linearities, trade |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-04&r=dev |
| By: | Aguayo-Tellez, Ernesto; Muendler, Marc-Andreas; Poole, Jennifer Pamela |
| Abstract: | We use novel linked employer?employee data to study the relationship between globalization and formal sector interstate migration for Brazil. We estimate the worker?s multichoice migration problem and document that previously unobserved employer covariates are significant predictors associated with migration flows. Our results provide support for the idea that globalization acts on internal migration through the growth of employment opportunities at locations with a high concentration of foreign owned establishments and the stability of employment at exporting establishments. A 1 per cent increase in the concentration of foreign owned establishments at potential migration destinations is associated with a 0.2 percentage point increase in the migration rate, and a 1 per cent increase in exporter employment predicts a 0.2 percentage point reduced probability of migration. |
| Keywords: | migration, globalization, policy reforms, Brazil |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-22&r=dev |
| By: | Li, Yuefen; Zhang, Bin |
| Abstract: | The segmentation of global manufacturing and services provided China and subsequently India with a golden opportunity to make full use of their absolute advantage?low cost yet educated labour?to integrate into the world economy within a comparatively shorter period of time than some earlier industrialisers. Though international trade functioned as a vent of surplus in view of the narrowness of their domestic markets at the beginning of their economic catch-up, the label of export-led model may not reflect the real picture as imports underwent dramatic increases during their respective growth periods, in particular for China. Foreign direct investment has played a pivotal role in their economic growth and has major presence in international trade and investment in leading sectors of both countries, giving rise to certain special features and weak links for their economic expansion and sustainability of fast economic growth. To maintain more broad-based, fast and balanced growth, it seems that both countries have to redress sectoral imbalances, encourage technology upgrading and cope with future changes in demographic profiles which constituted a trigger to fast economic growth at the time of their respective economic reform. |
| Keywords: | China, India, development |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-37&r=dev |
| By: | Murshed, S. Mansoob; Verwimp, Philip |
| Abstract: | This paper models the instability of peace agreements, motivated by the empirical regularity with which peace agreements tend to break down following civil war. When war provides opportunities for profit to one side, or when other difficulties such as historical grievances exist, peace may become incentive incompatible. The party that has something to gain from surprise warfare may agree to peace, but will later renege on it. It is shown that the levels of conflict chosen by this group are an increasing function of both grievance and greed, but decreasing in the direct costs of war. Peace is achievable via externally devised mechanisms that enhance commitment to peace. Aid and direct military peacekeeping intervention (sanctions) can reduce or eliminate conflict. These sanctions, however, need to be credible. Finally, the independent provision and finance of international sanctions are considered. When these arrangements yield little benefit to financial sponsors, or are very costly to them, the bite of the sanctions can become ineffective. |
| Keywords: | commitment problems, peace treaties, commitment technologies, sanctions |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-45&r=dev |
| By: | Heger, Martin; Julca, Alex; Paddison, Oliver |
| Abstract: | This paper analyses the impact of natural disasters in the Caribbean. The economic impact of natural disasters in the region has been significant, resulting in widespread destruction of the productive economy. This paper presents the main macroeconomic impact of disasters, e.g., a deteriorating fiscal balance, a collapse of growth and a worsening external balance, as a consequence of damage resulting from the event. By making special reference to the small-island developing state nature of many countries in the region, valuable lessons of the impact of such disasters on the capital stock can be learnt, particularly as the interruption of production of goods and services can be particularly devastating in an environment where few large sectors (agriculture, tourism) dominate the economic landscape. |
| Keywords: | natural disasters, Caribbean, diversification, trade, environment |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-25&r=dev |
| By: | Turvey, Calum G.; Kong, Rong |
| Abstract: | This paper investigates the economic conditions of rural households in China. Historical survey data indicate that over 80 per cent of rural households earn less than 4,500 yuan in net disposable income each year, that for the vast majority of rural households disposable income is insufficient to meet food consumption needs, and that in terms of economic growth rural households are receiving an ever decreasing percentage of China?s growing economy with rural household incomes being only 31 per cent of urban household income in 2004. To reduce vulnerability and food insecurity, this paper investigates the role of microcredit in China. It is argued that in China the conventional wisdom is to provide credit using traditional means, but we provide a model that shows how a microcredit market based on trust can co-exist with a commercial collateral-based market. This model is developed in detail and certain propositions are supported using dominant strategies in a trust-honour game based on the prisoner?s dilemma. The theoretical model is then applied to the case of microlending in China. It explains why, in the absence of trust, rural credit corporations do not make loans to the very poor. Furthermore, the model explains how Central party policies on rural credit can actually crowd out micro finance institution (MFI) and NGO microlending in China, and also explains why moneylenders dominate in many of the poorer regions of the country. From a policy point of view, the theoretical model indicates that trust-based lending, coupled with certain incentives, can go far in supporting growth opportunities in rural China. It is argued that Chinese policy should be flexible enough to permit trust-based microlending to the poor, regardless of how counterintuitive this must appear to the conventional wisdom. Indeed, in the absence of flexible credit strategies, China?s rural poor will remain in a persistent food-insecure poverty gap. |
| Keywords: | equilibrium, game theory, rural, credit, China |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-52&r=dev |
| By: | Guariglia, Alessandra; Santos-Paulino, Amelia U. |
| Abstract: | Using a panel of 139 countries over the period 1992-2003, we analyse the links between export productivity, economic growth and financial development indicators. We then investigate whether the links observed in China, India and Brazil systematically differ from those observed in other countries in the sample. We find that both GDP per capita and investment generally exert a positive and significant effect on export productivity. Except for Brazil, financial development is not an important determinant of export productivity. Moreover, except for Brazil, export productivity plays a positive effect on growth, and so does financial development for both China and Brazil, but not for India. Finally, in both India and Brazil, FDI is negatively associated with growth |
| Keywords: | export productivity, financial development, FDI, growth |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-27&r=dev |
| By: | Bussolo, Maurizio; De Hoyos, Rafael E.; Medvedev, Denis; van der Mensbrugghe, Dominique |
| Abstract: | Over the past 20 years, aggregate measures of global inequality have changed little even if significant structural changes have been observed. High growth rates of China and India lifted millions out of poverty, while the stagnation in many African countries caused them to fall behind. Using the World Bank?s LINKAGE global general equilibrium model and the newly developed Global Income Distribution Dynamics (GIDD) tool, this paper assesses the distribution and poverty effects of a scenario where these trends continue in the future. Even by anticipating a deceleration, growth in China and India is a key force behind the expected convergence of per capita incomes at the global level. Millions of Chinese and Indian consumers will enter into a rapidly emerging global middle class?a group of people who can afford, and demand access to, the standards of living previously reserved mainly for the residents of developed countries. Notwithstanding these positive developments, fast growth is often characterized by high urbanization and growing demand for skills, both of which result in a widening of income distribution within countries. These opposing distributional effects highlight the importance of analysing global disparities by taking into account?as the GIDD does?income dynamics between and within countries. |
| Keywords: | China, India, global income distribution, middle class |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-29&r=dev |
| By: | Gries, Thomas; Redlin, Margarete |
| Abstract: | Concerns about the duration of China?s growth and hence the question of a permanent significant contribution of China to world economic growth relate, amongst other things, to the problem of reducing regional disparity in China. While China?s high average growth is driven by a small number of rapidly developing provinces, the majority of provinces have experienced more moderate development. To obtain broad continous growth it is important to identify the determinants of provincial growth. Therefore, we introduce a stylized model of regional development which is characterized by two pillars: (i) International integration indicated by FDI and/or trade lead to imitation of international technologies, technology spill overs and temporary dynamic scale economies, and (ii) domestic factors indicated by human and real capital available through interregional factor mobility. Using panel data analysis and GMM estimates our empirical analysis supports the predictions from our theoretical model of regional development. Positive and significant coefficients for FDI and trade support the importance of international integration and technology imitation. A negative and significant lagged GDP per capita indicates a catching up, non steady state process across China?s provinces.Highly significant human and real capital identifies the importance of these domestic growth restricting factors. However, other potentially important factors like labor or government expenditures are (surprisingly) insignificant or even negative. Further, in contrast to implications from NEG models indicators for urbanization and agglomeration do not contribute significantly. |
| Keywords: | international integration, regional development, FDI, China |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-66&r=dev |
| By: | Rojas, Mariano |
| Abstract: | This paper uses a subjective wellbeing approach to study the role of household arrangements on the health satisfaction of an individual. It also studies the impact of household arrangements on health satisfaction across different income groups, by contrasting two main theories of the family: the altruistic/communitarian theory, which emphasizes altruism within the family, implies that the within-the-household allocation of relevant health satisfaction resources leads towards an egalitarian distribution of health satisfaction, and second, the cooperative bargaining theory according to which the family emerges as the cooperative equilibrium outcome from the unilateral interests of each household member. Thus, each household member takes advantage of their bargaining power to attain an equilibrium that favours their personal interests. According to the latter approach, the intra-household allocation of relevant health satisfaction resources leads to a distribution of health satisfaction that closely follows the distribution of bargaining power. ... |
| Keywords: | health, health satisfaction, subjective wellbeing, intra-household arrangements, Mexico |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-57&r=dev |
| By: | Bittencourt, Manoel |
| Abstract: | We examine the impact of inflation on financial development in Brazil and the data available permit us to cover the period between 1985 and 2002. The results ? based initially on time-series and then on panel time-series data and analysis, and robust for different estimators and financial development measures ? suggest that inflation presented deleterious effects on financial development at the time. The main implication of the results is that poor macroeconomic performance has detrimental effects to financial development, a variable that is important for affecting, for example, economic growth and income inequality. Therefore, low and stable inflation, and all that it encompasses, is a necessary first step to achieve a deeper and more active financial sector with all its attached benefits. |
| Keywords: | financial development, inflation, Brazil |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-14&r=dev |
| By: | Macours, Karen; Vakis, Renos |
| Abstract: | This paper provides unique evidence of the positive consequences of seasonal migration for investments in early childhood development. We analyse migration in a poor shock-prone border region in rural Nicaragua where it offers one of the main household income diversification and risk coping strategies. IV estimates show, somewhat surprisingly, that mother?s migration has a positive effect on early cognitive development. We attribute these findings to changes in income and to the intra-household empowerment gains resulting from mother?s migration, which offset potential negative ECD effects from temporary lack of parenting. This paper, hence, illustrates how increased opportunities in seasonal migration due to higher South?South mobility might positively affect early childhood development and as such long term poverty reduction. |
| Keywords: | Nicaragua, migration, income, households |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-48&r=dev |
| By: | Henley, John; Kratzsch, Stefan; Kulur, Mithat; Tandogan, Tamer |
| Abstract: | The burgeoning literature on outward foreign direct investment from emerging markets has largely focused on analysing the motives of investors as reported by parent companies. This paper, instead, focuses on firm-level investments originating from China, India or South Africa in fifteen host countries in sub-Saharan Africa (SSA). The analysis is based on a sub-set of firms drawn from the overall sample of 1,216 foreign-owned firms participating in the UNIDO Africa Foreign Investor Survey, carried out in 2005. The sample of investments originating from China, India and South Africa is analysed in terms of firm characteristics, past and forecast performance in SSA over three years and management?s perception of ongoing business conditions. Comparisons are made with foreign investors from the North. The paper concludes that while investors in SSA from the three countries are primarily using their investment to target specific markets, they are largely operating in different sub-sectors. While there appear to be specific features that firms from a given country of origin share, there are no obvious operating-level features they all share apart from market seeking. |
| Keywords: | South-South FDI, market-seeking, sub-Saharan Africa, China, India, South Africa |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-24&r=dev |
| By: | Djajic, Slobodan |
| Abstract: | This paper examines the welfare implications of foreign aid within the framework of a two-period, two-country model of international trade. It is up to the donor country to decide what fraction of any given aid package is to be made available for the recipient?s immediate, period-one consumption, and what part should be allocated for investment in infrastructure that expands the recipient?s production possibilities in period two. The focus of the analysis is on the conditions under which both countries agree or disagree on the manner in which the aid funds should be divided between the two options. |
| Keywords: | foreign aid, trade, model, welfare |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-64&r=dev |
| By: | Guillaumont, Patrick; Korachais, Catherine; Subervie, Julie |
| Abstract: | The reduction of child mortality is one of the most universally accepted Millennium Goals. However, there is a significant debate on the means of reaching it and its realism with regard to the situation in most of the least developed countries. The recommendations made for the achievement of this goal are mainly medical ones. However, without underestimating the importance of these measures, in particular vaccinations, it seems increasingly obvious that the rate of reduction of child mortality is mainly determined by the evolution of macroeconomic environment. The influence of per capita income level on mortality is frequently underlined. But a given income growth does not have the same effect on child survival if it is stable or unstable. Indeed, rises and falls of income probably have asymmetrical effects on mortality. The purpose of this analysis is precisely to show how macroeconomic instability influences the evolution of child mortality. The analysis is based on a panel sample of 97 developing countries over the period 1980-1999. The effect of exogenous shocks is first examined through a variable of income instability. The study of the relation is then deepened with ?primary instabilities?: instability of world agricultural commodity prices, instability of exports of goods and services and instability of agricultural production. |
| Keywords: | MDGs, mortality, children, health |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-51&r=dev |
| By: | Sinha, Anushree; Khan, Haider |
| Abstract: | The main purpose of this paper is to look at the incorporation of gender and the informal sector within a general equilibrium framework for India. Moreover, we clarify some important links between a gender aware informal sector based social accounting matrix (SAM) and general equilibrium models such as the computable general equilibrium (CGE) models including as a special case the fixed price multiplier (FPM) models. In particular, economy wide modelling of gender and the informal sector is facilitated by the use of national level data and constructing the base data set as an SAM. Another important strategy is to conceptualize the economy within gender structures, entailing the recognition of gender relations as an intervening variable in all economic activities. |
| Keywords: | general equilibrium, informal sector, gender |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-65&r=dev |
| By: | McGillivray, Mark; Feeny, Simon |
| Abstract: | The literature on aid has come a long way in recent years, and as a result we now know much more about aid effectiveness than possibly ever before. But significant gaps in knowledge remain. One such gap is the effectiveness of aid in the so-called ?fragile states?, countries with critically low policy and institutional performance ratings. The current paper addresses this void by examining possible links between aid and economic growth in fragile states. It finds that: (i) growth would have been 1.4 percentage points lower in highly fragile states in the absence of aid to them, compared to 2.5 percentage points in other countries; (ii) highly fragile states from a per capita income growth perspective can only efficiently absorb approximately one-third of the amounts of aid that other countries can, and; (iii) while from the same perspective most fragile states are under-aided, to the extent that they could efficiently absorb greater amounts of aid than they currently receive, many of the highly fragile states are substantially over-aided in this sense. The overall conclusion is that donors need to look very closely at their aid to the sub-set of fragile states deemed in this paper as highly fragile. |
| Keywords: | foreign aid, economic growth, fragile states, policies, absorptive capacity |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-03&r=dev |
| By: | Popli, Gurleen K. |
| Abstract: | In this paper I examine the trend in income inequality and poverty among the self-employed workers in Mexico over the last two decades (1984?2002). This is the period over which Mexico opened its economy to the global market through trade and investment liberalization. For the first decade following the liberalization, inequality and poverty among the self-employed increased; as the economy stabilized and the country saw economic growth inequality started to go down, but poverty kept increasing. To understand the changes in inequality and poverty I decompose the inequality and poverty indices into within and between group components. Rising returns to skilled labour, regional differences in impact of liberalization and sectoral shifts in employment are important factors in explaining the trends in both inequality and poverty. |
| Keywords: | income inequality, poverty, Shapley?Shorrocks decomposition, self-employed, Mexico |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-05&r=dev |
| By: | Gandhi, B. Valentine Joseph; Bantilan, M. Cynthia Serquina; Parthasarathy, Devanathan |
| Abstract: | This paper discusses the livelihood dynamics in the fragile landscape of the semi arid tropics (SAT) of Andhra Pradesh. SAT is home to the poorest of the poor who live in conditions of persistent drought, subsistence agriculture and poor access to markets. This paper is a case study focusing particularly on labour migration, its role in influencing the health risk behaviour of migrants and in the spread of the HIV epidemic among SAT rural households. The most vulnerable population in these drought prone regions are the migrant labourers, and their vulnerability is influenced by three major factors?the vulnerability and unstable productivity in the degraded and marginal landscape, the caste system that has traditionally kept them backward and vulnerable, and experiences in the external environment to which they migrate. This study?based on a theoretical framework, whereby livelihood risks lead to health risks, particularly HIV infection?outlines the process that causes a further deterioration of the household and the occurrence of cyclical health risk. The paper calls for a multisectoral approach to tackle the issue of migrant vulnerability, and for interventions with a more migrant-need sensitive |
| Keywords: | labour migration, HIV risk behaviour, agriculture, health, semi-arid tropics |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-49&r=dev |
| By: | Chowdhury, Anis |
| Abstract: | Most small island economies or ?microstates? have distinctly different characteristics from larger developing economies. They are more open and vulnerable to external and environmental shocks, resulting in high output volatility. Most of them also suffer from locational disadvantages. Although a few small island economies have succeeded in generating sustained rapid growth and reducing poverty, most have dismal growth performance, resulting in high unemployment and poverty. Although macroeconomic policies play an important role in growth and poverty reduction, there has been very little work on the issue for small island economies or microstates. Most work follows the conventional framework and finds no or very little effectiveness of macroeconomic policies in stabilization. They also concentrate on short-run macroeconomic management with a focus almost entirely on either price stability or external balance. The presumption is that price stability and external balance are prerequisite for sustained rapid growth. This paper aims to provide a critical survey of the extant literature on macroeconomic policies for small island economies in light of the available evidence on their growth performance. Given the high output volatility and its impact on poverty, this paper will argue for a balance between price and output stabilization goals of macroeconomic policy mix. Drawing on the highly successful experience of Singapore, it will also outline a framework for growth promoting, pro-poor macroeconomic policies for small island economies/microstates. |
| Keywords: | Caribbean, Pacific Islands, fiscal policy, small open economies |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-47&r=dev |
| By: | Chakraborty, Suparna |
| Abstract: | Can we use neoclassical growth model to single out the important transmission channels through which external factors or ?primitives? affected the Indian economy and caused the remarkable growth of the period 1982?2002? In this paper, we answer the question by applying the new technique of business cycle accounting to the Indian economy. Our results show us that the primary conduit of policies that brought about significant growth in India was productivity that registered an unprecedented increase particularly in the 1990s. Our results further indicate that changes in labour market frictions and investment market frictions did not play a significant role, though increased government consumption aided growth by propping up demand. In addition, we examine the effective tax rates in India and find that while investment taxes barely fluctuated, income tax rates were increasing throughout. We suspect other positive developments in the Indian economy overwhelmed the negative effect of increasing labour income taxes on growth. Our result suggests that any emerging country that aims to replicate the Indian experience would do well to formulate policies that target productivity, a lesson that seems consistent with the Japanese experience since the Second World War. |
| Keywords: | business cycle accounting, India, growth, wedges, neoclassical growth, taxes |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-67&r=dev |
| By: | Attzs, Marlene |
| Abstract: | This paper explores the linkages between poverty and disaster vulnerability in the context of remittance flows to households in the Caribbean. Jamaica is used as the case study country. The paper discusses the channels through which natural disasters and remittances affect each other but also reviews the distribution of female-headed households in Jamaica as a percentage of households living below the poverty line and seeks to identify whether flows of remittances alleviate the post-disaster living conditions of such households. The dislocation of households coupled with the loss of livelihoods caused by natural disaster, which usually affects the poor disproportionately, provides a push factor for migration and future remittances. After hurricane Gilbert in Jamaica (1988) there was an increase in migration. At the same time, there is an increased flow of remittances to help alleviate some of the suffering in the aftermath of a natural disaster. The paper concludes that given the increase in remittances to Jamaica, this flow of income could be used to smooth out the consumption patterns of already vulnerable, female-headed households living in poverty. |
| Keywords: | natural disasters, remittances, economics of gender, Jamaica |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-61&r=dev |
| By: | Cai, Fang |
| Abstract: | With the aid of an analytical framework of the Lewis model revised to reflect the experience of China, this paper examines the country?s dualistic economic development and its unique characteristics. The paper outlines the major effects of China?s growth as achieved during the course of economic reform and the opening-up of the country: the exploitation of the demographic dividend, the realization of comparative advantage, the improvement of total factor productivity, and participation in economic globalization. By predicting the long-term relationship between the labour force demand and supply, the paper reviews the approaching turning point in China?s economic development and examines a host of challenges facing the country in sustaining growth. |
| Keywords: | demographic dividend, Lewisian turning point, economic development, China |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-09&r=dev |
| By: | Naude, Wim; McGillivray, Mark; Rossouw, Stephanie |
| Abstract: | A small but growing literature has been concerned about the economic (and environmental) vulnerability on the level of countries. Less attention is paid to the economic vulnerability of different regions within countries. By focusing on the vulnerability of subnational regions, our paper contributes to the small literature on the ?vulnerability of place?. We see the vulnerability of place as being due to vulnerability in various domains, such as economic vulnerability, vulnerability of environment, and governance, demographic and health fragilities. We use a subnational dataset on 354 magisterial districts from South Africa, recognize the potential relevance of measuring vulnerability on a subnational level, and construct a local vulnerability index (LVI) for the various districts. We condition this index on district per capita income and term this a vulnerability intervention index (VII) interpreting this as an indicator of where higher income per capita, often seen in the literature as a measure of resilience, will in itself be unlikely to reduce vulnerability. |
| Keywords: | vulnerability, regional development, decentralization, South Africa |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-54&r=dev |
| By: | Gindling, T.H.; Terrell, Katherine |
| Abstract: | To be competitive in the global economy, some argue that Latin American countries need to reduce or eliminate labour market regulations such as minimum wage legislation because they constrain job creation and hence increase poverty. On the other hand, minimum wage increases can have a direct positive impact on family income and may therefore help to reduce poverty. We take advantage of a complex minimum wage system in a poor country that has been exposed to the forces of globalization to test whether minimum wages are an effective poverty reduction tool in this environment. We find the net effect of minimum wage increases in Honduras is the reduction of extreme poverty, with an elasticity of -0.18, and all poverty, with an elasticity of -0.10 (using the national poverty lines). These results are driven entirely by the effect on workers in large private sector firms, where minimum wage legislation is enforced. Increases in the minimum do not affect the incidence of poverty among workers in sectors where minimum wages are not enforced (small firms) or do not apply (self-employed and public sector). Hence, we show that minimum wages can be used as a poverty reduction tool in the formal sector. However, we do not endorse minimum wages as the best tool as we have not carried out a complete cost-benefit analysis of this policy vis-.-vis others. |
| Keywords: | minimum wage, poverty, Central America, Honduras |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-23&r=dev |
| By: | Fields, Gary S.; Sanchez Puerta, Maria Laura |
| Abstract: | In recent years, the economy of Argentina has experienced both rapid economic growth and severe economic decline. In this paper, we use a series of one-year long panels to study who gained the most in pesos when the economy grew and who lost the most in pesos when the economy contracted. To answer these questions, we test two hypotheses both unconditionally and conditionally. The ?divergence of earnings? hypothesis holds that in any given year, the highest earning individuals are those who experienced the largest earnings gains or the smallest earnings losses in pesos. The ?symmetry of gains and losses? hypothesis holds that those groups that gained the most in pesos when the economy grew are those that lost the most in pesos when the economy contracted. Both hypotheses are decisively rejected in the data. Rather, we find that it is the lowest income individuals and groups who gain the most in pesos, whether in good times or in bad. Thus, the panel data analysis performed in this paper presents a picture of economic growth that is much more pro-poor than one gets from cross sectional inequality comparisons. |
| Keywords: | finance, growth, inequality, Argentina, survey, gains, losses |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-06&r=dev |
| By: | Gupta, Sanjeev |
| Abstract: | This paper explores the macroeconomic implications of aid flows in countries with weak institutions. It argues that these countries should take into account their overall macroeconomic position, their capacity to absorb aid at the sectoral and subnational levels, and the strength of their fiscal institutions in deciding how much and how fast to spend aid. These considerations may warrant a gradual use of aid, except when aid is provided for humanitarian purposes. There is some basis for frontloading spending for countries emerging from a conflict, otherwise fragile states should seek to smoothen their spending against the background of aid volatility and uncertainty. |
| Keywords: | aid absorption, aid flows, institutions, post-conflict |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-07&r=dev |
| By: | Wu, Yanrui |
| Abstract: | Economic growth in China and India has attracted many headlines recently. As a result, the literature comparing the two Asian giants has expanded substantially. This paper adds to the literature by comparing regional growth, disparity and convergence in the two economies. This is the first of its kind. The paper presents a detailed examination of economic growth in the regions of China and India over the past twenty years. It also provides an assessment of regional disparity in the two countries and investigates whether there is any evidence of regional convergence during the period of rapid economic growth. It attempts to identify the sources of regional disparity and hence draw policy implications for economic development in the two countries in the near future. |
| Keywords: | regional development, China, India, disparity, convergence |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:rp2008-13&r=dev |
| By: | Durevall, Dick (Department of Economics, School of Business, Economics and Law, Göteborg University); Lindskog, Annika (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | In many Sub-Saharan countries the HIV epidemic has spread to over 10% of the working-age population, and is likely to affect economically relevant behaviour. We evaluate the impact of the HIV/AIDS epidemic on the reproductive behaviour for women in Malawi, allowing for a heterogeneous response depending on age and prior number of births. HIV/AIDS increases the probability that a young woman would give birth to her first child, while it decreases the probability to give birth of older women or of young women who have already given birth. The resulting change in the distribution of fertility across age-groups is likely to be more demographically and economically important than changes in the total number of children a woman gives birth to. |
| Keywords: | HIV; Fertility; Malawi; Panel-data logit |
| JEL: | I19 J13 O12 |
| Date: | 2008–09–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0318&r=dev |
| By: | Ziesemer, Thomas (UNU-MERIT, and Maastricht University) |
| Abstract: | We show empirically that aid given to poor developing countries enhances growth and reduces emigration once several dynamically interacting effects of aid are taken into account in a system of equations. We estimate equations for net immigration flows as a share of the labour force and GDP per capita growth and also for all their regressors including remittances and official development aid. We use dynamic panel data methods for a sample of poor countries with GDP per capita below $1200 (2000) for which aid is about 9.5% of GDP. The partial effects in these regressions are as follows. Remittances enhance net immigration, savings, public expenditure on education and growth, but reduce tax revenues, all as a share of GDP. Net immigration enhances labour force growth and the savings ratio. Official development aid decreases the savings ratio and the per capita GDP growth rate, but it increases investment, public expenditure on education and literacy and also labour force growth. Then we integrate all equations to a dynamic system and run a simulation. The result is an endogenous migration hump with several peaks. In a counterfactual simulation we double aid with the result that for more than a hundred years migration is reduced and the GDP per capita is enhanced, because the positive effects of aid on investment and education dominate the negative direct effects of aid on growth and the unfavourable effects on savings, tax revenues, and labour force growth. |
| Keywords: | International Migration, Remittances, Aid, Growth |
| JEL: | F22 F24 F35 F43 O11 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2008057&r=dev |
| By: | Getachew, Yoseph (UNU-MERIT) |
| Abstract: | Public capital investment plays an important role in long run growth through enhancing productivity and complementing the accumulation of private inputs. Under appropriate conditions, public capital could also have important implications for income distribution dynamics. When the credit market is imperfect and there are diminishing returns to private factors, income inequality is negatively related to economic growth. The dynamics of income distribution is determined by relative income shares of private input, wherever initial endowment differs among individuals. Therefore, if the provision of public capital has an effect on relative income shares of private inputs, then it will have an effect on income distribution dynamics. In this case, public capital once more becomes an important determinant of long-run growth through its indirect effect on income distribution. The paper studies this and other interesting issues with respect to public capital, income inequality and economic growth. |
| Keywords: | Income Distribution, Public Capital, Economic Growth |
| JEL: | D31 H54 O41 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2008056&r=dev |
| By: | Aamir Rafique Hashmi (Department of Economics, National University of Singapore) |
| Abstract: | I add intangible capital to a variant of the neoclassical growth model and study the implications for cross-country income differences. I calibrate the parameters associated with intangible capital by using new estimates of investment in intangibles by Corrado et al. (2006). When intangible capital is added to the model, the TFP elasticity of output increases from 2.14 to 2.64. This finding implies that the addition of intangible capital increases the ability of the neoclassical growth model to explain international income differences by more than a factor of two. |
| Keywords: | International Income Differences; Intangible Capital |
| JEL: | O33 O41 O47 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:nus:nusewp:wp0801&r=dev |
| By: | Fox, Louise; Oviedo, Ana Maria |
| Abstract: | The authors use firm-level survey data from the manufacturing sector in 20 Sub-Saharan African countries to explore the links between labor market regulations and net job creation. A first look at firm characteristics, perceptions, and the dynamics of employment at the firm level suggests that labor regulations are not the main"binding constraint"on job creation. Other issues seem more important at this level of development. The analysis estimates the determinants of net job creation incorporating the legal origin of the country as a proxy for regulation. The findings show that, after controlling for other firm-level characteristics, legal origin is uncorrelated with net job creation in the short run. |
| Keywords: | Labor Markets,Labor Policies,Microfinance,Banks&Banking Reform,Labor Management and Relations |
| Date: | 2008–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4721&r=dev |
| By: | Dayoub, Mariam; Lasagabaster, Esperanza |
| Abstract: | Following Chile's pension reform in 1981, a wave of multi-pillar pension reforms took place in Latin America (LAC). Their implementation has revealed new policy challenges. To shed light on these issues, this paper reviews the structure and performance of mandatory DC pillars in LAC. The review highlights three important points. First, it suggests overall positive outcomes from reforms in the LAC countries that implemented multi-pillar pension systems. There is, however, scope for increasing efficiency. Second, management fees have declined but remain relatively high whereas decreases in operational costs have only been partially passed through to consumers reflecting inadequate competition. Limits on transfers and related measures have been ineffective in curtailing management fees but created new barriers to entry. In recent years, a few countries in LAC introduced or are in the process of introducing a combination of new measures that focus more directly on the two root causes of inadequate competition - the inelasticity of demand to fees and selective elimination of barriers to entry by facilitating unbundling of services. These new measures show some promise. Third, the paper's review indicates that a greater diversification of pension fund portfolios in LAC appears to be necessary. Portfolio concentration owes to the adoption of strict quantitative investment regulations, underdeveloped capital markets and volatile macroeconomic environments. A gradual relaxation of these restrictions is now in progress in several countries. Regulators have become more conscious of the costs imposed by such regulations and macroeconomic conditions have improved. Greater overseas diversification seems inevitable given the development stage of local capital markets. |
| Keywords: | Debt Markets,,Emerging Markets,Access to Finance,Investment and Investment Climate |
| Date: | 2008–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4720&r=dev |
| By: | Arbache, Jorge Saba; Page, John |
| Abstract: | This paper examines the country-level dynamics of long-run growth in Africa between 1975 and 2005. The authors examine how growth has affected mobility and the distribution of income among countries. They analyze changes in cross-country income structure and convergence, and look for evidence of the formation of country groups or"clubs."Using a novel method of breaking up the growth histories of African economies into medium-term spells of growth accelerations and declines, the authors investigate whether a group of African"leopards"- the regional equivalent of Asia's"tigers"- is beginning to emerge. |
| Keywords: | Economic Conditions and Volatility,Achieving Shared Growth,Economic Theory&Research,Economic Growth,Inequality |
| Date: | 2008–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4715&r=dev |
| By: | Agustina, Cut Dian R.D.; del Granado, Javier Arze; Bulman, Tim; Fengler, Wolfgang; Ikhsan, Mohamad |
| Abstract: | Indonesia's oil revenues and fuel subsidies dominate the nation's economic policy agenda. This paper estimates the impact of higher international oil prices on the Indonesian government's fiscal position in 2008 and beyond. It analyzes the interactions between government revenues and expenditures, as well as international oil prices, energy subsidies, and inter-governmental transfers. Looking at the impact of oil prices over US$100 per barrel, the paper presents five main findings. First, despite record high oil prices, the government's oil and gas revenues have been decreasing relative to non-oil and gas revenues since 2001. Second, fuel subsides will reach record levels in 2008 while electricity subsidies have been increasing even faster. Third, the paper finds that most of the fuel subsidy that directly benefits households goes to the richest 20 percent. Fourth, even at levels above US$100 per barrel, the government receives more revenues from oil and gas than it spends on energy subsidies. However, due to significant revenue-sharing with sub-national governments, high oil prices are net-negative for the central government, while they create fiscal windfalls for many regions. Finally, the oil sector's positive impact on Indonesia's public finances declines as oil prices rise, because subsidies and other expenditures outgrow oil and gas revenues. |
| Keywords: | Energy Production and Transportation,Oil Refining&Gas Industry,Markets and Market Access,Debt Markets,Energy and Environment |
| Date: | 2008–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4718&r=dev |
| By: | Filmer, Deon; Friedman, Jed; Schady, Norbert |
| Abstract: | A family preference for sons over daughters may manifest itself in different ways, including higher mortality, worse health status, or lower educational attainment among girls. This study focuses on one measure of son preference in the developing world, namely the likelihood of continued childbearing given the gender composition of existing children in the family. The authors use an unusually large data set, covering 65 countries and approximately 5 million births. The analysis shows that son preference is apparent in many regions of the developing world and is particularly large in South Asia and in the Eastern Europe and Central Asia region. Modernization does not appear to reduce son preference. For example, in South Asia son preference is larger for women with more education and is increasing over time. The explanation for these patterns appears to be that latent son preference in childbearing is more likely to manifest itself when fertility levels are low. As a result of son preference, girls tend to grow up with significantly more siblings than boys do, which may have implications for their wellbeing if there are quantity-quality trade-offs that result in fewer material and emotional resources allocated to children in larger families. |
| Keywords: | Population Policies,Gender and Development,Gender and Law,Adolescent Health,Primary Education |
| Date: | 2008–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4716&r=dev |
| By: | King, Elizabeth M.; Orazem, Peter F.; Paterno, Elizabeth M. |
| Abstract: | Many educators and policymakers have argued for lenient grade promotion policy - even automatic promotion - in developing country settings where grade retention rates are high. The argument assumes that grade retention discourages persistence or continuation in school and that the promotion of children with lower achievement does not hamper their ability or their peers'ability to perform at the next level. Alternatively, promoting students into grades for which they are not prepared may lead to early dropout behavior. This study shows that in a sample of schools from the Northwest Frontier Province of Pakistan, students are promoted primarily on the basis of merit. An econometric decomposition of promotion decisions into a component that is based on merit indicators (attendance and achievement in mathematics and language) and another that is uncorrelated with those indicators allows a test of whether parental decisions to keep their child in school is influenced by merit-based or non-merit-based promotions. Results suggest that the enrollment decision is significantly influenced by whether learning has taken place, and that grade promotion that is uncorrelated with merit has a negligible impact on school continuation. |
| Keywords: | Tertiary Education,Education For All,Secondary Education,Primary Education,Teaching and Learning |
| Date: | 2008–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4722&r=dev |
| By: | Portugal-Perez, Alberto; Wilson, John S. |
| Abstract: | This paper reviews data and research on trade costs for Sub-Saharan African countries. It focuses on: border-related costs, transport costs, costs related to behind-the border issues, and the costs of compliance with rules of origin specific to preferential trade agreements. Trade costs are, on average, higher for African countries than for other developing countries. Using gravity-model estimates, the authors compute ad-valorem equivalents of improvements in trade indicators for a sample of African countries. The evidence suggests that the gains for African exporters from improving the trade logistics half-way to the level in South Africa is more important than a substantive cut in tariff barriers. As an example, improving logistics in Ethiopia half-way to the level in South Africa would be roughly equivalent to a 7.5 percent cut in tariffs faced by Ethiopian exporters. |
| Keywords: | Transport Economics Policy&Planning,Free Trade,Economic Theory&Research,Trade Policy,Trade Law |
| Date: | 2008–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4719&r=dev |
| By: | Fukunishi, Takahiro |
| Abstract: | Increases in clothing exports after 2000 signaled the first incidence of large-scale manufacturing exports from sub-Saharan Africa. Using firm-level information, this paper explores the potential of clothing exports for poverty reduction and further growth as seen in other low income countries. It shows that the garment exporting industries in Kenya and Madagascar have contributed poverty reduction in the short term by providing mass employment for female and less educated workers with wages beyond the poverty line. However, the long-term impact is not certain. High production costs and limited development of local firms weaken potential for further growth in the competitive world market. Upgrading of the market and improvement of efficiency are required to remain competitive for African industries, and governmental support for local participation are needed to facilitate technology transfer. |
| Keywords: | Manufacturing exports, Poverty reduction, FDI spillover, Productivity, Textile industry, Africa |
| JEL: | D24 F21 J31 O33 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper163&r=dev |
| By: | Shin-ichi Fukuda (Faculty of Economics, University of Tokyo) |
| Abstract: | After prolonged recessions, the Japanese economy had recovered from the crisis in the first half of the 2000s and has recorded sustained growth in the last several years. Tremendous structural changes during and after the financial crisis were one of the main driving forces for the recovery. However, dramatic increases in exports were another. In particular, increases of Japanese exports to China were substantial in the 2000s and supported the recovery of the Japanese economy from its demand side. The purpose of this paper is to examine the role of the exports to China for the recovery in the 2000s. The dependence of the Japanese export sectors on the Chinese economy has risen in the past ten years. China is now almost surpassing the United States as destination of Japanese exports. Vector autoregressions (VARs) show that the Japanese production was caused by exports to the United States until the mid-1990s but was caused by exports to China after the late 1990s. However, the effects on the production were highly different across firms. The increased exports to China were beneficial for the recovery of manufacturing industries with advanced technology. Their impacts were, in contrast, insignificant for the recovery of labor-intensive small firms and non-manufacturing firms. Consequently, the sustained growth in the last several years was accompanied by widening inequalities across firms. |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:tky:fseres:2008cf589&r=dev |
| By: | Bah, El-hadj M. |
| Abstract: | Dierences in key features of the development process across rich and poor countries can provide clues to the sources of the large variation of cross- country income. Kuznets included structural transformation as one of six stylized facts of economic development, nding that developed countries all followed the same process. In this paper, I compare structural transformation processes in developed and developing countries. I nd that developing countries follow distinct structural transformation paths that deviate from that followed by developed countries. A puzzling nding is the presence of substantial sectoral changes during times of economic stagnation or decline. |
| Keywords: | Africa; Asia; Latin America; Structural Transformation; Eco- nomic Development; Structural Change |
| JEL: | O11 O10 O57 O14 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:10655&r=dev |
| By: | William Easterly |
| Abstract: | In the new millennium, the Western aid effort towards Africa has surged due to writings by well-known economists, a celebrity mass advocacy campaign, and decisions by Western leaders to make Africa a major foreign policy priority. This survey contrasts the predominant "transformational" approach (West saves Africa) to occasional swings to a "marginal" approach (West takes one small step at a time to help individual Africans). Evaluation of "one step at a time" initiatives is generally easier than that of transformational ones either through controlled experiments (although these have been much oversold) or simple case studies where it is easier to attribute outcomes to actions. We see two themes emerge from the literature survey: (1) escalation. As each successive Western transformational effort has yielded disappointing results, the response has been to try an even more ambitious effort. (2) the cycle of ideas. Rather than a progressive testing and discarding of failed ideas, we see a cycle in aid ideas in many areas in Africa, with ideas going out of fashion only to come back again later after some lapse long enough to forget the previous disappointing experience. Both escalation and cyclicality of ideas are symptomatic of the lack of learning that seems to be characteristic of the "transformational" approach. In contrast, the "marginal" approach has had some successes in improving the well-being of individual Africans, such as the dramatic fall in mortality. |
| JEL: | O1 O11 O12 O13 O15 O23 O24 O4 O55 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14363&r=dev |