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on Development |
| By: | David Hulme |
| Abstract: | This paper provides a chronological account of the evolution of the Millennium Development Goals (MDGs). It examines their historical antecedents; the UN conferences and summits that provided their content; the role of OECD’s Development Assistance Committee (DAC) in formulating the International Development Goals (IDGs); the influence of the UN’s Secretariat in drafting the Millennium Declaration; and the final negotiations between the UN, DAC, World Bank, and IMF to amend the IDGs into the MDGs in 2001. This account reveals the complexity and unpredictability of global policymaking processes. Although the overarching structures of economic and political power framed all negotiations, so the MDGs are largely a rich world product for rich world audiences, there are opportunities for norm entrepreneurs and message entrepreneurs to exercise personal agency. As the time approaches for the assessment of the MDGs, at the UN General Assembly in September 2010, it is useful to reflect on the ‘chaos of accidents and purposes’ that generated the MDGs in the first place. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:10009&r=dev |
| By: | Joseph Kimos Adjei; Thankom Arun |
| Abstract: | A key objective of microfinance programmes is to provide financial services to poor people who are excluded from such services by the formal banking system. It is in this perspective that governments, development partners and donor agencies continue to provide support to such institutions, to enable them to deepen their outreach. This paper examines the type of poor people served by one of the leading microfinance institutions in Ghana. By comparing the living standards of clients of Sinapi Aba Trust (SAT) with those of non-clients, representing the general population in its operational areas, the paper concludes that the microfinance institution reaches disproportionately a smaller percentage of very poor people. The study notes that programme placement plays a key role in determining the type of clients reached by SAT, since almost all its branches are located in urban centres. It finds that the objective of financial sustainability being pursued by SAT has eventually caused it to shift the provision of financial services from very poor households to the less poor. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:7209&r=dev |
| By: | Samuel Kobina Annim |
| Abstract: | The creeping effect of financial crisis and economic turmoil on African economies potentially questions the sustainability of microfinance institutions, in view of the heavy investment received both from development partners and government. This study tests the hypotheses that: (i) interacting own-mobilised funds with formal institutions, microfinance organisations reach less poor clients; and (ii) concentrating on the achievement of financial sustainability causes an institution to target non-poor clients. Using data from Ghana, we revisit the microfinance argument of serving poorer clients on a commercial basis, and control for the effect of source of funds and type of institution. Unlike financial self-sufficiency, operational self-sufficiency appeared to facilitate the reaching of poorer clients. The study upholds sceptics’ view of a trade-off. Categorising institutions based on source of funds, this study adds to knowledge on the future of microfinance. Formal institutions dispensing their own funds appeared to target less poor clients. Using instrumental variable estimation, plausible problems of endogeneity emerging via measurement error were observed. We instrument financial and operational self-sufficiency with density of microfinance institutions in a given location and the group-lending mechanism to resolve attenuation bias. This finding alludes to complementary development strategies and a deliberate harmonisation of microfinance intervention, irrespective of the source of funds. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:8809&r=dev |
| By: | Sarah Bracking; Lloyd Sachikonye |
| Abstract: | This paper reviews the political economy of development finance in Zimbabwe from the late 1980s to the present day, to see where the current sovereign debt arose from. It disaggregates initial private sector development interventions by type, provider, sector and at the firm level, to see how development finance was extended and spent during the structural adjustment era and after. It notes a number of design flaws and problems in development-financed projects and programmes over the period which undermined their later profitability as productive assets and contributed to debt build-up. The paper also notes the effects of poor domestic governance on the productivity of ventures supported. However, the macroeconomic policies within the structural adjustment programme were also a central trigger to the future unsustainability of debt. Also, in the post-2000 period, the deterioration of the debt position has been exacerbated by the Reserve Bank of Zimbabwe, by means of its extensive foreign exchange denominated loans to parastatal corporations, and by its quasi-fiscal activities. Zimbabwe’s public sovereign debt can be reduced, and future private sector development policy enhanced, if recourse to expensive and unproductive fiscal interventions, either by international financial institutions or by the Reserve Bank, are avoided. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:8409&r=dev |
| By: | Dennis Rodgers |
| Abstract: | Through a detailed life history of Bismarck, a Nicaraguan youth gang member turned illegal drug dealer turned legal entrepreneur, this paper explores the potential relationships between formal and informal economic activity. It focuses particularly on the various economic activities that he has been involved in at different stages in his life, tracing their origins and evolving dynamics in order to highlight not only how the ‘formal’ and ‘informal’ often mix, but also how they can in fact be extremely interdependent, to the extent that they often directly feed off each other. At the same time, however, Bismarck’s story also underlines how the systemic iteration of economic activity ultimately depends less on their form and more on the contingent articulation of the specific type of activity concerned, the particular trajectory of the individual social agents involved, as well as ultimately the nature of the broader contextual political economy. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:8209&r=dev |
| By: | Xiaobing Wang; Jenifer Piesse |
| Abstract: | The Lewis dual economy model is widely recognised in development economics for its profound explanatory power and applications in economic development. However, there remain some confusions and ambiguities, especially with respect to the definition of surplus labour and the wage determination mechanisms in both the traditional and modern sectors. This has prohibited its use, especially in empirical studies. This paper clarifies and extends this theory. Several questions are addressed. Firstly, it defines two types of surplus labour. Second, it considers the pattern of production and of population growth in the traditional agricultural sector to define the subsistence level of consumption. Third, it considers two wage determination mechanisms in the modern sector, which are then applied to the relationships between these mechanisms and labour market restrictions. Fourth, the role of agriculture and food supply is discussed. Fifth, it considers the dynamics of surplus labour and labour transfer, and defines two types of turning points, which have important implications for empirical studies. Sixth, a scenario for urban surplus labour is presented. In summary, the paper seeks to enhance the general level of understanding of the Lewis model and its application to the process of economic development. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:8909&r=dev |
| By: | Daniel Neff |
| Abstract: | The paper explores the extent to which people adapt to their deprived living conditions and what kind of form adaptation processes take. The study combines quantitative and qualitative information drawing back on survey data and case studies from two villages in Andhra Pradesh, India. One of the contributions of the paper is that two distinct adaptation processes in the context of poverty are identified, namely resignation and optimism. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:7109&r=dev |
| By: | Michael Woolcock |
| Abstract: | This overview essay on policy responses to global poverty and inequality over the last ten years is structured around four themes. First, drawing on the most recent empirical data, it provides some stylised facts on recent trends in poverty and inequality in developing countries. Second, it considers the distinctive ways in which the UK government in particular has responded to these challenges over the last decade, in the context of the broader global policy effort in which it is embedded. Third, it provides a critique of these responses, finding much to both commend and about which to be concerned. On the basis of this assessment, section four considers some options for the next decade, some quite modest and others more ambitious. Section five concludes. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:7809&r=dev |
| By: | Elizabeth Fortin |
| Abstract: | This paper considers struggles of legitimation by the South African government over the first ten years of the country’s democracy, by focusing on its engagement with policymaking processes in relation to land tenure reform in the former 'homelands' of the country. During such periods of upheaval and change, the achievement of legitimacy by the state will only be achieved through deeply political processes. In exploring the strategies adopted by policy-makers and bureaucrats to legitimise contested political change, it considers how they were influenced by wider ideals of participatory policymaking and consultation. However, in the process, the paper also demonstrates how they were further shaped by the everyday realities determining the practices of governing, as well as the changing extent to which government officials were constrained in their own ability to influence policy. In this context, it is argued, claims of participatory policy-making largely came to constitute strategies of legitimation for policies that had already been formulated. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:9009&r=dev |
| By: | Joseph Kimos Adjei; Thankom Arun; Farhad Hossain |
| Abstract: | The paper evaluates the extent to which Sinapi Aba Trust has contributed to poverty reduction among rural and urban poor especially women by supporting them with small loans to expand their businesses to generate income to build up their asset base. Using a cross-sectional data from 547 respondents, the study found that participation in the programme has enabled established clients to own savings deposits and subscribe to a client welfare scheme which serves as insurance to pay off debts in times of illness or death. Established clients were also found to be in a better position to contribute towards the education of their children and payment of healthcare for members of their households as well as contribution towards the purchase of household durables. The study noted that programmes that are financially sustainable have greater effects on participants, and that there is the need for clients’ graduation to benefit most from participation in such programmes. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:8709&r=dev |
| By: | John Gledhill; Maria Gabriela Hita |
| Abstract: | Critics of Lula’s administration argue that business has greatest weight in setting its priorities and that anti-poverty programmes based on conditional cash transfers have little long-term structural impact on social inequality. Yet the coherence and scope of these programmes is now an order of magnitude greater than under the previous administration, their impact on poverty has so far proved sustainable, and poor people themselves often express satisfaction with them. This paper argues that critics who see retreat from universal social benefits as undermining political commitment to reducing social inequality underestimate the countervailing force of the capacity of some poor communities to seize the opportunities that have emerged to oblige politicians to reengage with both poverty and the roots of social injustice. Analyses that focus solely on economic precariousness and the decline of sociability are ignoring the ways in which third sector activity and social change have produced new kinds of political actors and group identities, particularly amongst young people, that may be ambivalent in nature but indicate that levels of politicisation are not being reduced. Nevertheless, optimism about poverty reduction needs to be tempered by appreciation of how problems of violence and insecurity also shape state interventions in, and in some cases virtual withdrawal from, poor communities. The rationality of party politics may have a more negative effect on securing the longer-term patterns of public investment required to reduce social inequality than it has had on the administration of the Bolsa Familia programme. In the case of Salvador, Bahia, where urban real estate interests remain as politically influential as ever, change will depend on the strength of pressures from above and below on municipal and state governments, but although anti-poverty programmes help keep people invested in the political system, they can also increase aspirations for greater economic and racial equality. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:10209&r=dev |
| By: | Daniel Adler; Caroline Sage; Michael Woolcock |
| Abstract: | While there is broad agreement among scholars and practitioners on the importance of ‘good governance’, ‘the rule of law’ and ‘effective institutions’ for ensuring positive development outcomes, we have a much poorer understanding of how such goals should be realised. Whether informed by modernisation theory, Marxist perspectives or neoclassical assumptions, the prevailing imperatives guiding the work of development actors—from international agencies to national line ministries and local non-government organisations—tend to produce reforms that encourage (and in some cases actively require) rapid, linear, technically driven transitions to pre-determined end-state institutional forms deemed to be global ‘best practice’. Drawing on two very different cases from Indonesia and Cambodia, we outline an alternative, more process-oriented approach that focuses on building ‘interim institutions’—that is, formal or informal institutions conceived of in terms of their potential to engage with and incrementally transform the political economies within which they exist. Successful interim institutional approaches, we suggest, are hybrid in their nature; they are based on local knowledge but promote principles of rule-based, transparent and accountable decision making towards an end-state which emerges through a process of equitable political contestation (‘good struggles’), and is thus largely unknowable ex ante. A key goal of development assistance strategies should be to support the emergence of interim institutions which can both facilitate and be transformed by such contests. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:8609&r=dev |
| By: | Miguel Niño-Zarazúa; Paul Mosley |
| Abstract: | Improved household accessibility to credit is identified as a significant determinant of intra-household re-allocation of labour resources with important implications for productivity, income, and poverty status. However, credit accessibility could also have wider impacts on poverty if it leads to new hires outside the household. This paper contributes to the existing literature on microcredit in two important ways: first, it investigates the routes through which microcredit reaches those in poverty outside the household. We test whether, by lending to the vulnerable non-poor, microcredit programmes can indirectly benefit poor labourers through increased employment. Second, we conduct the study in the spatial dimension of urban poverty Mexico. This is relevant when considering that, unlike in rural areas, labour often represents the only source of livelihoods to the extreme poor. Our findings point to significant trickle-down effects of microcredit that benefit poor labourers; however, these effects are only observed after loan-supported enterprising households achieve earnings well above the poverty line. The paper concludes with reflections on the policy implications. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:10309&r=dev |
| By: | Jeidoh Duni; Robert Fon; Sam Hickey; Nuhu Salihu |
| Abstract: | Rights-based approaches to development promise to deliver many development goals, particularly in terms of creating a political environment conducive to development. As citizens become empowered through rights-based approaches to make increased demands on the state, it is envisaged that good, more accountable governance will emerge, as states fulfill their obligations to citizens. It is not clear, however, that the promotion of rights-based approaches by NGOs is likely to achieve this. Although processes of state and citizenship formation are critical for development, the sequencing of such processes and their outcomes, and the patterns of causality between them, remain historically and contextually specific. This paper reveals both the potential and the problems that arise when certain rights-based approaches engage with the politics of promoting progressive social change. It explores this challenge of transformation through a case study of a participatory rights-based programme that seeks to assist a marginal pastoral group in North West Cameroon to be empowered citizens. The programme has been relatively successful in catalysing underlying processes of sociopolitical and has improved the quality of local governance. However, the programme’s explicit, often confrontational engagement with the power relations underpinning exclusion and exploitation has been both a strength and a liability in advancing progressive social change. This raises critical challenges for the strategic, theoretical and philosophical dimensions of rights-based approaches. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:10409&r=dev |
| By: | Sunil S. Amrith |
| Abstract: | This paper suggests that history is essential to an understanding of the challenges facing health policy in India today. Institutional trajectories matter, and the paper tries to show that a history of under-investment and poor health infrastructure in the colonial period continued to shape the conditions of possibility for health policy in India after independence. The focus of the paper is on the insights intellectual history may bring to our understanding of deeply rooted features of public health in India, which continue to characterise the situation confronting policymakers in the field of health today. The ethical and intellectual origins of the Indian state’s founding commitment to improve public health continue to shape a sense of the possible in public health to this day. The paper shows that a top-down, statist approach to public health was not the only option available to India in the 1940s, and that there was a powerful legacy of civic involvement and voluntary activity in the field of public health. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:7909&r=dev |
| By: | Maria Gabriela Hita; John Gledhill |
| Abstract: | Brazilian slums and squatter settlements have acquired a generally unattractive public image that often obscures differences between peripheral urban situations. Based on research in a socially stigmatised neighbourhood of the city of Salvador, Bahia, this paper begins with a broad structural view of the processes that have shaped the situations of its poor residents, from the conservative modernisation led by the Bahian strongman and protégé of the military, Antônio Carlos Magalhães, to a multi-cultural present of anti-poverty and Afro-Brazilian empowerment initiatives, NGO interventions, and private-public partnerships. It then illustrates a range of variables that influence the ability of poor communities to counteract tendencies towards social and political fragmentation. It highlights the need to consider the particular histories of poor neighbourhoods, their differing relations with richer surrounding areas, their internal divisions and the way these reflect links with broader social, political and religious forces, and the social networks between different poor neighbourhoods that the poor themselves construct as they pursue strategies to maintain livelihoods and acquire assets. Consideration of the processes involved suggests a need to question conventional accounts of social segregation in Salvador and indicates ways in which more rounded ethnographic perspectives on how people live their lives help us to understand their greater or lesser capacity for collective action and why, in some cases but not others, residents are still trying to build ‘places’ that conform to their long-term aspirations to live better. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:9709&r=dev |
| By: | Mirko Bendig; Lena Giesbert; Susan Steiner |
| Abstract: | This paper argues that the study of the demand for financial services in developing countries leaves out part of the story if it looks at only one of the three elements of the so-called finance trinity—that is, savings products, loans and insurance—as is largely done in the literature. In contrast to previous research, this study assumes that households’ choices for any of these services are strongly interconnected. Therefore, the paper simultaneously estimates the determinants of household demand for savings, loans and insurance by applying a multivariate probit model to household survey data from rural Ghana. On the one hand, the estimation results confirm the common finding that poorer households are less likely to participate in the formal financial sector than better-off households. On the other hand, there is empirical evidence that the use of savings products, loans and insurance depends not only on the socioeconomic status of households, but also on various other factors, such as households’ risk assessment and past exposure to shocks. In addition, trust in the providing institution and its products appear to play a key role. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:7609&r=dev |
| By: | David Hulme; Sakiko Fukudu-Parr |
| Abstract: | Since their emergence in 2001, the Millennium Development Goals (MDGs) have become accepted as consensus objectives of international development efforts. They have generated controversies and literature that focus on the economics of whether and how they can be achieved. However, little work has been done to understand why they became so widely accepted as an international normative framework of development. This paper focuses on the MDGs as ideas and international norms to explain how they emerged, became institutionalised, yet stalled in implementation and behaviour change. The paper applies Finnemore and Sikkink’s analytical framework of international norm dynamics, and argues that the MDGs have proved an effective mechanism to promote the broad norm of eradicating global poverty. Finnemore and Sikkink note that broad and vaguely specified norms are difficult to implement. Global poverty eradication is an example of such a norm, but the MDGs gave it specificity and then provided an effective vehicle for its diffusion and institutionalisation. This paper introduces the concept of the ‘super-norm’ to clarify the nature of poverty eradication, as being a composite of several sub-norms. The paper also introduces the concepts of message entrepreneurs (as distinct from norm entrepreneurs) who play a key role in this process, who are motivated primarily by organisational objectives rather than ideational commitments. This in turn influences the content of the norm itself. In its conclusion, the paper explains the way in which both realist and constructivist ideas have to be utilised to explain the faltering advance of extreme poverty being seen as morally unacceptable in an affluent world. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:9609&r=dev |
| By: | Augustin Kwasi Fosu |
| Abstract: | This study explores the extent to which inequality affects the impact of income growth on the rates of poverty changes in sub-Saharan Africa (SSA) compared to non-SSA, based on a global sample of 1977-2004 unbalanced panel data. For both regions and all three measures of poverty – headcount, gap and squared gap – the paper finds the impact of GDP growth on poverty reduction to be a decreasing function of initial inequality. The impacts are similar in direction for SSA and non-SSA, so that within both regions there are considerable disparities in the responsiveness of poverty to income growth, depending on inequality. Nevertheless, income-growth elasticity is substantially less for SSA, implying relatively low poverty-reduction sensitivity to growth compared with the rest of the developing world. Furthermore, the paper uncovers a considerable variation in the predicted values of income-growth elasticity across a large number of SSA countries. This implies there is a need to understand country-specific inequality attributes for poverty-reduction strategies to be effective. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:9809&r=dev |
| By: | Matthias vom Hau; Guillermo Wilde |
| Abstract: | This paper explores the new politics of difference in Argentina since the 1994 constitutional reform, and its ramifications for citizenship and indigenous wellbeing. Through a comparison of land struggles among the Mbya Guaraní in Misiones and the Diaguita Calchaquí in Tucumán it is shown that new collective rights only gained traction once indigenous social movements employed the language of ‘differentiated rights’ and pushed for the implementation of multicultural legislation. At the same time, local indigenous communities continue to face adverse socioeconomic incorporation, and the new legal frameworks focus on land rights, thereby foreclosing the establishment of indigenous control over territory. The current politics of recognition in Argentina thus plays a crucial role in deepening cultural and political citizenship, while its impacts remain limited for addressing broader issues of social justice. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:9909&r=dev |
| By: | Andries du Toit; David Neves |
| Abstract: | This paper considers the dynamics of informal social protection in the context of chronic poverty and vulnerability in post-apartheid migrant networks. It argues that in poor and marginalised households in South Africa, the indirect impacts of social grants cannot be adequately understood by focusing simply on either individual or household decision making. Instead, the paper concentrates on the central role of the elaborate and spatially extended network of reciprocal exchange within the informal social protection systems. These networks link rural and urban households, and enable hybrid livelihood profiles to evolve that bridge rural and urban as well as formal and informal economic activities. These depend crucially on elaborate and gendered ‘care chains’ involving not only monetary remittances, but also paid and unpaid care work and household reproductive labour. The arrangements help the poor to survive, alleviate poverty and reduce vulnerability by allowing costs and resources, opportunities and shocks to be shared and redistributed. At the same time, these strategies have limitations, and are structured by deeply entrenched power relations pivoting on gender, age, status and other markers of exclusion. They may also increase the vulnerability of some individuals. This highlights the importance of the formal social protection system existing alongside the informal systems. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:bwp:bwppap:7409&r=dev |
| By: | Annabel Vanroose (Centre Emile Bernheim, CERMi, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels and Section for Economic, Monetary and Financial Policy, Vrije Universiteit Brussel.); Bert D’Espallier (Lessius Hogeschool Centre Emile Bernheim, CERMi, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels) |
| Abstract: | This paper analyzes the relationship between performance of microfinance institutions (MFIs) and the development of the formal financial sector of the country in which the MFI is active. We find that MFIs reach more clients and are more profitable where access to the formal financial system is low. This finding is in line with the market-failure hypothesis: MFIs respond to a need that banks do not fulfill and flourish where the formal banking sector fails. However, we also find indications of interdependencies between MFI-performance and formal financial sector development. First, MFIs are less profitable where interest rates are higher reflecting the fact that MFIs depend upon the domestic banking system for additional funding. Secondly, MFIs are less profitable where inflation is high, suggesting that MFIs benefit from stability of the formal financial system. Overall, the results show that the macro-economic environment is crucial to fully understand MFI-performance and that outreach and accordingly impact of MFIs are contingent on financial sector development. |
| Keywords: | O16, O50, G21 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:09-040&r=dev |
| By: | Gregory James (Dept of Economics, Loughborough University); Simon Deakin (Centre for Business Research, University of Cambridge); Panicos Demetriades (Dept of Economics, University of Leicester) |
| Abstract: | We use a new legal dataset tracking changes in creditor protection law over several decades to study the impact of legal reforms on banking system development in India. Cointegration analysis is used to show that the strengthening of creditor rights in relation to the enforcement of security interests in the 1990s and 2000s led to an increase in bank credit. We show that the change in the law was not endogenous to trends in stock market development and GDP per capita, and that the direction of causation ran from legal reform to banking development, rather than the reverse. |
| Keywords: | creditor rights; legal origin; banking development; India. |
| JEL: | G21 G38 K22 O16 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:lbo:lbowps:2009_12&r=dev |
| By: | Juergen Jung (Department of Economics, Towson University); Chung Tran (Department of Economics, University of New South Wales) |
| Abstract: | In this paper we argue that the strategic interaction between the labor supply decision of the elderly and private transfers from their children lowers the opportunity cost of leisure of the elderly. This in turn magnifies the crowding-out effect of public pensions on the labor supply of the elderly. We show that this mechanism has implications for evaluating the crowding-out effect of public pensions in developing countries. That is, a misspecified econometric model that does not control for the endogeneity of private transfers leads to a biased estimate of the crowding-out effect of public pensions. Using data from a household survey in Vietnam we find that the effect of public pensions on the probability of retirement is 2.5 times larger when explicitly accounting for the interaction between private transfers and the labor supply decision of elderly individuals. |
| Keywords: | Altruism, crowding-out, social security, retirement, transfers. |
| JEL: | H31 H55 I38 J14 J22 J28 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:tow:wpaper:2009-01&r=dev |
| By: | Naude, Wim |
| Abstract: | It is often claimed that entrepreneurship is indispensable for economic growth and development. These claims are mostly generated by scholars working in the field of entrepreneurship andmanagement studies. In contrast, development economics scholars seem to be less concerned about entrepreneurship in the development process Who is right? I show that the arguments and evidence marshalled so far fails to convincingly show that entrepreneurship is a binding constraint on development in the poorest countries. In development economics institutional weakness, not entrepreneurship, is considered by many tbe a more binding constraint on development, especially over the long run. However, recent advances at the interface of entrepreneurship and development economics suggest that unpacking the .black box. nature ofinstitutions may benefit from incorporating an .entrepreneur.. Thus, even if entrepreneurship isnot a binding constraint on economic development, it may still be worthwhile to study entrepreneurship in development as it may improve our understanding of the real binding constraints. |
| Keywords: | entrepreneurship, development, development economics, institutions |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:2009-45&r=dev |
| By: | Ramos, Raul (University of Barcelona); Duque, Juan C. (Universidad EAFIT); Surinach, Jordi (University of Barcelona) |
| Abstract: | The objective of this paper is to analyse the existence or not of a wage curve in Colombia, paying special attention to the differences between formal and informal workers, an issue that has been systematically ignored in the wage curve literature. The obtained results using microdata from the Colombian Continuous Household Survey (CHS) between 2002 and 2006 show the existence of a wage curve with a negative slope for the Colombian economy. Using information on metropolitan areas, the estimates of the elasticity of individual wages to local unemployment rates was -0.07, a value that is very close to those obtained for other countries. However, the disaggregation of statistical information for formal and informal workers has shown significant differences among both groups of workers. In particular, for the less protected groups of the labour market, informal workers (both men and women), a high negatively sloped wage curve was found. This result is consistent with the conclusions from efficiency wage theoretical models and should be taken into account when analysing the functioning of regional labour markets in developing countries. |
| Keywords: | formal and informal sectors, unemployment, wage curve |
| JEL: | J30 J60 O17 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4461&r=dev |
| By: | Magnus Hatlebakk |
| Abstract: | Livelihood strategies are identified at the household level as a function of assets held, using survey data. Only endowments that are likely to be predetermined are included in the empirical analysis. As expected, land, household size, age and primary education turn out to be important determinants of livelihood strategies. It appears that the relatively equal land-distribution among small-holders in Malawi still allows some wealthier households, and force others, to do non-farm activities. This, in turn, may lead to small-scale development within villages. Furthermore, investment in primary education, taking into account the low initial level of education in Malawi, is probably a good investment for rural development. And, we find it promising that younger people are able to find non-farm livelihoods. It also turns out to be significant regional variation in livelihood strategies, with more diversification in the Southern region, and with regional variation in the role of ethnic and religious identity as determinants of livelihood strategies. It appears that lack of agricultural opportunities in the south imply that households do, maybe more low-status, salaried work and household businesses in this region. For some households this may still be a way out of poverty. The policy implications for the poorer Southern region are not obvious. But, to the extent feasible, the farmers may learn from the more productive farmers in the Central region, where there is more emphasize on cash-crop production. |
| Keywords: | Livelihoods Non-farm employment Multinomial-logit Malawi |
| JEL: | D13 O12 Q12 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:chm:wpaper:wp2009-6&r=dev |
| By: | Dennis Tao Yang; Xiaodong Zhu |
| Abstract: | This paper develops a two-sector model that illuminates the role played by agricultural modernization in the transition from stagnation to growth. When agriculture relies on traditional technology, industrial development reduces the relative price of industrial products, but has a limited effect on per capita income because most labor has to remain in farming. Growth is not sustainable until this relative price drops below a certain threshold, thus inducing farmers to adopt modern technology that employs industry-supplied inputs. Once agricultural modernization begins, per capita income emerges from stasis and accelerates toward modern growth. Our calibrated model is largely consistent with the set of historical data we have compiled on the English economy, accounting well for the growth experience of England encompassing the Industrial Revolution. |
| Keywords: | long-term growth, transition mechanisms, relative price, agricultural modernization, structural transformation, the Industrial Revolution, England. |
| JEL: | O41 O33 N13 |
| Date: | 2009–10–13 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-376&r=dev |
| By: | Todd Moss; Lauren Young |
| Abstract: | Ghana can be considered a relative success story in Africa. We cite six variables—peace and stability, democracy and governance, control of corruption, macroeconomic management, poverty reduction, and signs of an emerging social contract—to suggest the country’s admirable political and economic progress. The expected arrival of sizeable oil revenues beginning in 2011–13, however, threatens to undermine that progress. In fact, numerous studies have linked natural resources to negative outcomes such as conflict, authoritarianism, high corruption, economic instability, increased poverty, and the destruction of the social contract. The oil curse thus threatens the very outcomes that we consider signs of Ghana’s success. This paper draws lessons from the experiences of Norway, Botswana, Alaska, Chad, and Nigeria to consider Ghana’s policy options. One common characteristic of the successful models appears to be their ability to encourage an influential constituency with an interest in responsible resource management and the means to hold government accountable. The Alaska model in particular, which was designed explicitly to manufacture citizen oversight and contain oil-induced patronage, seems relevant to Ghana’s current predicament. We propose a modified version of Alaska’s dividend program. Direct cash distribution of oil revenues to citizens is a potentially powerful approach to protect and accelerate Ghana’s political and economic gains, and a way to strengthen the country’s social contract. We show why Ghana is an ideal country to take advantage of this option, and why the timing is fortuitous. We conclude by confronting some of the common objections to this approach and suggest that new technology such as biometric ID cards or private mobile phone networks could be utilized to implement the scheme. |
| Keywords: | Ghana; resource curse; oil; resource management; direct cash distribution |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:186&r=dev |
| By: | Richard T. Carson; Phoebe Koundouri; NAUGES Céline |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:ler:wpaper:09.25.301&r=dev |
| By: | Alex William Trew |
| Abstract: | Endogenous growth models that imply a relationship between scale and growth are commonly refuted on the basis of empirical evidence. A focus on the extent of the market as opposed to the scale of the country has led recent studies to reconsider the role that scale plays when by conditioning on measures of openness. We develop a variant of a simple learning by doing model with endogenous market extent to include a role for institutions in determining the strength -- and direction -- of the scale effect. Using cross-country data, we find a significant interaction between property rights institutions and long-run growth: In countries with poor property rights institutions, scale is positively related with income per capita; where property rights institutions are good, higher scale is associated with lower per capita incomes. We find no evidence of such role for contracting institutions. |
| Keywords: | Scale and growth, learning by doing, institutions. |
| JEL: | O11 O40 O43 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:san:cdmawp:0906&r=dev |
| By: | Marco Crocco (Cedeplar-UFMG); Fabiana Santos (Cedeplar-UFMG); Pedro Amaral (Cedeplar-UFMG) |
| Abstract: | This paper explores the financial development in Brazil. It focuses on the impacts of the development level of a municipality’s financial system over its neighborhood, under the light of the Central Place Theory. Using a GMM estimator for a spatial panel model with an endogenous spatial lag and spatial moving average errors we investigate the spatial structure of the financial system in Brazil. The results point to a negative spatial association between the Brazilian municipalities’ financial system, in the way that a municipality with more developed financial system tends to be surrounded by municipalities with less developed financial systems. |
| Keywords: | financial development, spatial structure, bank strategy, Brazil |
| JEL: | O16 R12 G21 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td361&r=dev |
| By: | Lewis, Maureen; Pettersson, Gunilla |
| Abstract: | The impacts of health care investments in developing and transition countries are typically measured by inputs and general health outcomes. Missing from the health agenda are measures of performance that reflect whether health systems are meeting their objectives; public resources are being used appropriately; and the priorities of governments are being implemented. This paper suggests that good governance is central to raising performance in health care delivery. Crucial to high performance are standards, information, incentives and accountability. This paper provides a definition of good governance in health and a framework for thinking about governance issues as a way of improving performance in the health sector. Performance indicators that offer the potential for tracking relative health performance are proposed, and provide the context for the discussion of good governance in health service delivery in the areas of budget and resource management, individual provider performance, health facility performance, informal payments, and corruption perceptions. What we do and do not know about effective solutions to advance good governance and performance in health is presented for each area, drawing on existing research and documented experiences. |
| Keywords: | Health Monitoring&Evaluation,Health Systems Development&Reform,Public Sector Expenditure Policy,Health Economics&Finance,Health Law |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5074&r=dev |
| By: | Parry, Ian W.H.; Timilsina, Govinda R. |
| Abstract: | The Mexico City Metropolitan Area has been suffering severely from transportation externalities such as accidents, air pollution, and traffic congestion. This study examines pricing instruments to reduce these externalities using an analytical and numerical model. The study shows that the optimal levels of a gasoline tax and a congestion toll on automobiles could generate social benefits, measured in terms of welfare gain, of US$132 and US$109 per capita, respectively, through the reduction of externalities. The largest component of the welfare gains comes from reduced congestion, followed by local air pollution reduction. The optimal toll and tax would, however, double the cost of driving and could be politically sensitive. Still, more than half of those welfare gains could be obtained through a more modest tax or toll, equivalent to $1 per gallon of gasoline. The welfare gains from reforming the pricing of public transportation are small relative to those from reforming the taxation of automobiles. Although the choice among travel modes depends on specific circumstances, in the absence of road travel pricing that accounts for externalities, there will be potential for higher investment in roads relative to mass transit. Given the rapidly increasing demand for transportation infrastructure in Mexico City, careful efforts should be made to include the full social costs of travel in evaluating alternative infrastructure investments. |
| Keywords: | Transport Economics Policy&Planning,Roads&Highways,Energy Production and Transportation,Transport and Environment,Transport in Urban Areas |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5071&r=dev |
| By: | Neagu , Ileana C.; Schiff, Maurice |
| Abstract: | That remittances are a stable source of external finance seems to have become the received wisdom. In addition, many studies have found remittances to behave counter-cyclically, increasing during crises and times of hardship for the recipient countries. Are remittances reliable macroeconomic stabilizers? To answer this question, the present study examines the stability, cyclicality, and stabilizing impact of remittances in comparison with the same three features for other foreign-exchange inflows, namely foreign direct investment and official development aid. The analysis is performed at the country and regional levels rather than at the aggregate or global level (on which much of the received wisdom rests), because policymakers are concerned with the impact of remittances in their country rather than at the global level. The main findings for 1980-2007 are that in a majority of countries: i) official development aid is more stable than remittances, and remittances are more stable than foreign direct investment; ii) official development aid is counter-cyclical, while remittances are pro-cyclical, although less so than foreign direct investment; and iii) official development aid is stabilizing and remittances are destabilizing, although less so than foreign direct investment. The paper suggests that it is necessary to examine counter-cyclicality separately from the stabilizing impact, as the former does not seem to always imply the latter. |
| Keywords: | Economic Conditions and Volatility,Remittances,Debt Markets,Economic Theory&Research,Emerging Markets |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5077&r=dev |
| By: | Beegle, Kathleen; de Walque, Damien |
| Abstract: | Understanding the demographic and socioeconomic patterns of the prevalence and incidence of HIV/AIDS in Sub-Saharan Africa is crucial for developing programs and policies to combat HIV/AIDS. This paper looks critically at the methods and analytical challenges to study the links between socioeconomic and demographic status and HIV/AIDS. Some of the misconceptions about the HIV/AIDS epidemic are discussed and unusual empirical evidence from the existing body of work is presented. Several important messages emerge from the results. First, the study of the link between socioeconomic status and HIV faces a range of challenges related to definitions, samples, and empirical methods. Second, given the large gaps in evidence and the changing nature of the epidemic, there is a need to continue to improve the evidence base on the link between demographic and socioeconomic status and the prevalence and incidence of HIV/AIDS. Finally, it is difficult to generalize results across countries. As the results presented here and in other studies based on Demographic and Health Survey datasets show, few consistent and significant patterns of prevalence by socioeconomic and demographic status are evident. |
| Keywords: | Population Policies,Disease Control&Prevention,HIV AIDS,Gender and Health,Health Monitoring&Evaluation |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5076&r=dev |
| By: | Korkeala, Outi; Newhouse, David; Duarte, Mafalda |
| Abstract: | In rural Indonesia, around 60 percent of workers engage in agriculture and face regular climatic shocks that may threaten their crop production, household income, and human capital investments. Little is known about households’ ability to maintain consumption in response to these shocks. This paper uses both longitudinal and repeated cross-sectional data to examine the extent to which farm profits and household consumption are reduced by delayed monsoon onset, an important determinant of rice production in Indonesia. It also investigates whether poor households are more vulnerable to delayed onset. Overall, delayed onset has minor effects on rural households’ profit and consumption. For poor households, defined as those with average per capita consumption in the lowest quintile, delayed onset the previous year is associated with a 13 percent decline in per capita consumption. Most of this decline is due to an increase in household size, however, and delayed onset two years ago is positively correlated with consumption. The findings suggest that poor households experience greater volatility but no lasting reduction in consumption following delayed monsoon onset. |
| Keywords: | Rural Poverty Reduction,Small Area Estimation Poverty Mapping,Consumption,Regional Economic Development |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5070&r=dev |
| By: | Agenor, Pierre-Richard; Pereira da Silva, Luiz A. |
| Abstract: | This paper analyzes the cyclical effects of bank capital requirements in a simple model with credit market imperfections. Lending rates are set as a premium over the cost of borrowing from the central bank, with the premium itself depending on firms’ effective collateral. Basel I- and Basel II-type regulatory regimes are defined and a capital channel is introduced through a signaling effect of capital buffers on the cost of bank deposits. The macroeconomic effects of various shocks (a drop in output, an increase in the refinance rate, and a rise in the capital adequacy ratio) are analyzed, under both binding and nonbinding capital requirements. Factors affecting the procyclicality of each regime (defined in terms of the behavior of the risk premium) are also identified and policy implications are discussed. |
| Keywords: | Banks&Banking Reform,Access to Finance,Economic Theory&Research,Currencies and Exchange Rates,Debt Markets |
| Date: | 2009–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5067&r=dev |
| By: | Ravallion, Martin |
| Abstract: | Brazil, China and India have seen falling poverty in their reform periods, but to varying degrees and for different reasons. History left China with favorable initial conditions for rapid poverty reduction through market-led economic growth; at the outset of the reform process there were ample distortions to remove and relatively low inequality in access to the opportunities so created, though inequality has risen markedly since. By concentrating such opportunities in the hands of the better off, prior inequalities in various dimensions handicapped poverty reduction in both Brazil and India. Brazil’s recent success in complementing market-oriented reforms with progressive social policies has helped it achieve more rapid poverty reduction than India, although Brazil has been less successful in terms of economic growth. In the wake of its steep rise in inequality, China might learn from Brazil’s success with such policies. India needs to do more to assure that poor people are able to participate in both the country’s growth process and its social policies; here there are lessons from both China and Brazil. All three countries have learned how important macroeconomic stability is to poverty reduction. |
| Keywords: | Rural Poverty Reduction,Achieving Shared Growth,Regional Economic Development,Services&Transfers to Poor |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5080&r=dev |
| By: | Cull, Robert; Demirguc-Kunt, Asli; Morduch, Jonathan |
| Abstract: | Using two new datasets, the authors examine whether the presence of banks affects the profitability and outreach of microfinance institutions. They find evidence that competition matters. Greater bank penetration in the overall economy is associated with microbanks pushing toward poorer markets, as reflected in smaller average loans sizes and greater outreach to women. The evidence is particularly strong for microbanks relying on commercial funding and using traditional bilateral lending contracts (rather than the group lending methods favored by microfinance nongovernmental organizations). The analysis considers plausible alternative explanations for the correlations, including relationships that run through the nature of the regulatory environment and the structure of the banking environment; but it fails to find strong support for these alternative hypotheses. |
| Keywords: | Access to Finance,Debt Markets,Banks&Banking Reform,Microfinance,Economic Theory&Research |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5078&r=dev |
| By: | Das Gupta, Monica; Desikachari, B.R.; Somanathan, T.V.; Padmanaban, P. |
| Abstract: | Public health systems in India have weakened since the 1950s, after central decisions to amalgamate the medical and public health services, and to focus public health work largely on single-issue programs - instead of on strengthening public health systems’ broad capacity to reduce exposure to disease. Over time, most state health departments de-prioritized their public health systems. This paper describes how the public health system works in Tamil Nadu, a rare example of a state that chose not to amalgamate its medical and public health services. It describes the key ingredients of the system, which are a separate Directorate of Public Health - staffed by a cadre of professional public health managers with deep firsthand experience of working in both rural and urban areas, and complemented with non-medical specialists—with its own budget, and with legislative underpinning. The authors illustrate how this helps Tamil Nadu to conduct long-term planning to avert outbreaks, manage endemic diseases, prevent disease resurgence, manage disasters and emergencies, and support local bodies to protect public health in rural and urban areas. They also discuss the system’s shortfalls. Tamil Nadu’s public health system is replicable, offering lessons on better management of existing resources. It is also affordable: compared with the national averages, Tamil Nadu spends less per capita on health while achieving far better health outcomes. There is much that other states in India, and other developing countries, can learn from this to revitalize their public health systems and better protect their people’s health.<BR> |
| Keywords: | Health Monitoring&Evaluation,Disease Control&Prevention,Health Systems Development&Reform,Population Policies,Health Economics&Finance |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5073&r=dev |
| By: | Ghani, Ejaz; Anand, Rahul |
| Abstract: | The current global crisis may change globalization itself, as both developed and developing countries adjust to global imbalances that contributed to the crisis. Will these changes help or hinder economic recovery and growth in South Asia? This is the focus of this paper. The three models of globalization--trade, capital, and economic management--may not be the same in the future. Changes in globalization could change the composition of trade flows, capital flows, and economic management, which in turn, could accelerate or restrain growth. South Asia is somewhat peculiar and different from other regions in how it has globalized, although there is a lot of diversity within the region. Its trade characteristics are different. India's growth has been spearheaded by exports of modern services and less by goods exports. Modern service trade tends to be more resilient compared with goods trade. Globalization of services is still at an early stage. So, as consumers pull back in the United States, service trade is likely to be less impacted compared to goods trade. Trade also contributes to growth through knowledge spillovers, externalities, and learning. The global crisis has not reduced the stock of global knowledge. Changes in capital flows are also not likely to have a big impact on growth in South Asia, as South Asia's investments are largely driven by domestic savings. Its dependence on foreign capital is low. South Asia has attracted capital flows that are less volatile. Remittances, which are more resilient, have been the dominant form of capital inflows, exceeding foreign direct investment and other inflows.This global downturn calls for counter-cyclical economic management. But South Asia has limited room for fiscal stimulus, given high debt-to-gross domestic product ratios. Nevertheless, reduced commodity prices have created some fiscal space that can be used for growth enabling infrastructure and safety nets. As South Asia undergoes structural transformation, the region is well positioned to bounce back with global economic recovery. |
| Keywords: | Macroeconomic Management,Capital Flows,Globalization and Financial Integration,Economic Growth,Trade and Services |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5079&r=dev |
| By: | Ianchovichina, Elena; Ivanic, Maros; Martin, Will |
| Abstract: | Continuing rapid growth of China and India can be expected to raise incomes in Russia, but also to put adjustment pressure on Russian firms. The impacts of the rapid growth of China and India on the Russian economy are explored by examining a baseline projection using a global general equilibrium model, and then assessing the implications of higher-than-expected growth in China and India. The authors find that a major source of benefits to Russia is likely to be terms-of-trade improvements associated with higher energy prices - a quite different channel of effect from that for many developing countries that benefit primarily through expanded opportunities to trade directly with these emerging giants. Taking into account the likely improvements in the quality and variety of exports from China and India, the gains to Russia increase substantially. The expansion of the energy sector and the contraction of manufacturing and services are a sign of a Dutch disease effect that will increase the importance of policies to encourage adaptation to the changing world environment. |
| Keywords: | Economic Theory&Research,Emerging Markets,Markets and Market Access,Trade Policy,Free Trade |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5075&r=dev |
| By: | Beck, Thorsten; Peria, Maria Soledad Martinez |
| Abstract: | Remittances are a sizeable source of external financing for developing countries. In the L’Aquila 2009 G8 Summit, leaders pledged to reduce the cost of remittances by half in 5 years (from 10 to 5 percent). Yet, empirically, little is known about what drives the cost of remittances. Using newly gathered data across 119 country corridors, this paper explores the factors that determine the cost of remittances. Considering average costs across all types of institutions, the authors find that corridors with larger numbers of migrants and more competition among remittances service providers exhibit lower costs. By contrast, remittance costs are higher in richer corridors and in corridors with greater bank participation in the remittances market. Comparing results across all banks and all money transfer operators separately, the analysis finds few significant differences. However, estimations for Western Union, a leading player in the remittances business, suggest that this firm’s prices are insensitive to competition. |
| Keywords: | Population Policies,Remittances,Access to Finance,Debt Markets,Economic Theory&Research |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5072&r=dev |
| By: | Montalvo, Jose G.; Ravallion, Martin |
| Abstract: | China has seen a huge reduction in the incidence of extreme poverty since the economic reforms that started in the late 1970s. Yet, the growth process has been highly uneven across sectors and regions. The paper tests whether the pattern of China´s growth mattered to poverty reduction using a new provincial panel data set constructed for this purpose. The econometric tests support the view that the primary sector (mainly agriculture) has been the main driving force in poverty reduction over the period since 1980. It was the sectoral unevenness in the growth process, rather than its geographic unevenness, that handicapped poverty reduction. Yes, China has had great success in reducing poverty through economic growth, but this happened despite the unevenness in its sectoral pattern of growth. The idea of a trade-off between these sectors in terms of overall progress against poverty in China turns out to be a moot point, given how little evidence there is of any poverty impact of non-primary sector growth, controlling for primary-sector growth. While the non-primary sectors were key drivers of aggregate growth, it was the primary sector that did the heavy lifting against poverty. |
| Keywords: | Rural Poverty Reduction,Achieving Shared Growth,Regional Economic Development,Subnational Economic Development |
| Date: | 2009–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5069&r=dev |
| By: | Pinelopi Goldberg (Princeton University); Amit Khandelwal (Columbia GSB); Nina Pavcnik (Dartmouth College); Petia Topalova (IMF) |
| Abstract: | New goods play a central role in many trade and growth models. We use detailed trade and firm-level data from a large developing economy—India—to investigate the relationship between declines in trade costs, the imports of intermediate inputs and domestic firm product scope. We estimate substantial static gains from trade through access to new imported inputs. Accounting for new imported varieties lowers the import price index for intermediate goods on average by an additional 4.7 percent per year relative to conventional gains through lower prices of existing imports. Moreover, we find that lower input tariffs account on average for 31 percent of the new products introduced by domestic firms, which implies potentially large dynamic gains from trade. This expansion in firms' product scope is driven to a large extent by international trade increasing access of firms to new input varieties rather than by simply making existing imported inputs cheaper. Hence, our findings suggest that an important consequence of the input tariff liberalization was to relax technological constraints through firms’ access to new imported inputs that were unavailable prior to the liberalization. |
| Keywords: | Intermediate Inputs, Firm Scope, Multi-product Firms, Product Growth, Gains from Variety, Endogenous Growth, Trade Liberalization, India |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:pri:cepsud:1179&r=dev |
| By: | Channing Arndt (Department of Economics, University of Copenhagen); Sam Jones (Department of Economics, University of Copenhagen); Finn Tarp (Department of Economics, University of Copenhagen) |
| Abstract: | The micro-macro paradox has been revived. Despite broadly positive evaluations at the micro and meso-levels, recent literature has turned decidedly pessimistic with respect to the ability of foreign aid to foster economic growth. Policy implications, such as the complete cessation of aid to Africa, are being drawn on the basis of fragile evidence. This paper first assesses the aid-growth literature with a focus on recent contributions. The aid-growth literature is then framed, for the first time, in terms of the Rubin Causal Model, applied at the macroeconomic level. Our results show that aid has a positive and statistically significant causal effect on growth over the long run with point estimates at levels suggested by growth theory. We conclude that aid remains an important tool for enhancing the development prospects of poor nations. |
| Keywords: | foreign aid; growth; aid effectiveness; causal effects |
| JEL: | O1 O4 F35 C21 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:0922&r=dev |
| By: | Prema-chandra Athukorala |
| Abstract: | This paper examines emerging patterns and economic implications of Indian foreign direct investment from a historical perspective against the backdrop of the evolving role of developing-country firms (emerging multinational enterprises, EMES) as an important force of economic globalisation. The novelty of the analysis lies in its specific focus on the implications of changes in trade and investment policy regimes and the overall investment climate for internationalisation of domestic companies and the nature of their global operations. The findings cast doubts on the popular perception of the recent surge in outward FDI from India as an unmixed economic blessing, given the remaining distortion in the domestic investment climate |
| Keywords: | India, FDI, Emerging-Economy MNEs |
| JEL: | O53 F21 F23 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2009-14&r=dev |
| By: | Orso, Cristina Elisa |
| Abstract: | This paper describes, through a theoretical approach, the interactions between institutional lenders and local moneylenders, and how these affect the rural credit market. It evaluates the effects produced by the introduction of "spillovers" in a rural credit market with rationing in which banks and moneylenders interact simultaneously while working in distinct segments. Due to the strong and consolidated social ties, it is probable that the spread of knowledge concerning potential debtors comes about in targeted and rapid way with reduced costs for the lenders as well. |
| JEL: | G21 O17 O19 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:uca:ucapdv:135&r=dev |
| By: | Nazrul Islam |
| Abstract: | The paper suggests that, rather than through its narrow, direct financial impact, microfinance may prove to be more potent in reducing insecurity and poverty through its indirect, broader impact leading to a more egalitarian initial endowment distribution that is necessary for the "take-off" of an equitable growth process. The paper begins by examining the distinctive roles of micro credit, micro savings, and micro insurance programs in dealing with poverty and insecurity, and highlights the complementariness that exists among these programs and how this complementariness can be used to overcome the weaknesses of the individual programs. |
| Keywords: | Poverty, Economic insecurity, Micro credit, Micro savings, Micro insurance, Micro finance, Non Government Organizations (NGO) |
| JEL: | G21 G22 O16 O17 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:une:wpaper:82&r=dev |
| By: | Paul Mosley |
| Abstract: | The paper reviews attempts to provide insurance against risks afflicting the poorest. It presents empirical evidence on the impact of different types of microinsurance, and recommends the idea of ‘quasi-insurance’—the provision of insurance functions through a non-insurance route—where institutional or regulatory constraints prevent insurance proper from being offered. The paper argues that microinsurance so far has been somewhat supply-driven rather than driven by effective demand, especially from the poorest, and thus the insurance products which would benefit the poorest are still at a limited stage of development. Institutional innovations and new insurance products therefore deserve promotion. |
| Keywords: | microinsurance, microcredit, microsavings, microfinance, risk, insecurity, poverty |
| JEL: | G21 G22 O16 O17 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:une:wpaper:84&r=dev |
| By: | David Hulme; Karen Moore; Armando Barrientos |
| Abstract: | The paper contends that more attention should be paid to micro savings in view of multiple ways in which it can help poor to deal with economic insecurity. The paper presents information to show that while microsaving programs have spread, their full potential is far from being realized. It presents a detailed analysis on the basis of data from a selection of micro savings programs to show how savings help the poor to smooth consumption and undertake investment. The paper urges for a strong campaign to popularise micro saving programs. |
| Keywords: | Economic insecurity, Micro credit, Micro insurance, Micro savings, Micro finance institutions, Poverty |
| JEL: | G21 O16 O17 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:une:wpaper:83&r=dev |
| By: | Rao, B.Bhaskara; Hassan, Gazi |
| Abstract: | Many development economists believe that remittances by the migrant workers are an important source of long rum growth. Therefore, recent studies have investigated the indirect and direct effects remittances on the growth rates of the recipient countries. This paper analyses the strength of these effects with a common data set and with alternative methods of estimation. It is found that while the evidence supports the indirect effects of remittances, the direct growth effects of remittances seem to be insignificant. |
| Keywords: | Remittances; Growth; Panel Data; System GMM |
| JEL: | F22 F43 |
| Date: | 2009–10–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:18021&r=dev |
| By: | Diego A. Comin; Norman Loayza; Farooq Pasha; Luis Serven |
| Abstract: | We build a two country asymmetric DSGE model with two features: (i) a product cycle structure determines the range of intermediate goods used to produce new capital in each country and (ii) there are investment flow adjustment costs in the developing economy. We calibrate the model to match the Mexico-US trade and FDI flows. The model is able to explain (i) why US shocks have a larger effect on Mexico than in the US and hence why the Mexican economy is more volatile than the US; (ii) why US business cycles lead over medium term fluctuations in Mexico and (iii) why Mexican consumption is not less volatile than output. |
| JEL: | E3 F1 F2 F4 O3 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15428&r=dev |