Showing papers by "World Institute for Development Economics Research published in 2010"
TL;DR: In this paper, the authors provide an introduction to the papers in the special section of this edition of the European Journal of Development Research (EJDR) and discuss four papers that advance this research agenda.
Abstract: In this article we provide an introduction to the papers in the special section of this edition of the European Journal of Development Research. We start by framing the challenges posed by female entrepreneurship to the research community, note some of the findings in the literature pertaining to the cross-national understanding of female entrepreneurship, and review the existing literature on the role and experience of female entrepreneurs in developing countries. Despite progress in understanding the motivations, constraints and issues that confront female entrepreneurs, there is still substantial scope for further research. We then discuss four papers that advance this research agenda.
390 citations
TL;DR: In this article, the authors compare the experience of Asian countries that were able to launch a smallholder-based Green Revolution with the experiences of African countries that are still struggling with this goal.
201 citations
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TL;DR: In this paper, the authors examined the employment effects of a Finnish payroll tax subsidy scheme, which is targeted at the employers of older, full-time, low-wage workers.
Abstract: Low-wage subsidies are often proposed as a solution to the unemployment problem among the low skilled. Yet the empirical evidence on the effects of low-wage subsidies is surprisingly scarce. This paper examines the employment effects of a Finnish payroll tax subsidy scheme, which is targeted at the employers of older, full-time, low-wage workers. The system’s clear eligibility criteria open up an opportunity for a reliable estimation of the causal impacts of the subsidy, using a difference-in-difference-in-differences approach. Our results indicate that the subsidy system had no effects on the employment rate. However, it appears to have increased the probability of part-time workers obtaining full-time employment.
183 citations
TL;DR: This article developed a general equilibrium model based on a typology of informal activities that captures formal/informal linkages in product and labour markets and found that trade liberalisation increases formal employment, hurts informal producers, and favours informal traders.
Abstract: South Africa's high unemployment and small informal economy has been attributed to barriers to entry in informal labour markets. We develop a general equilibrium model based on a typology of informal activities that captures formal/informal linkages in product and labour markets. Simulations reveal that trade liberalisation increases formal employment, hurts informal producers, and favours informal traders and may explain the dominance of traders instead of producers. Wage subsidies also raise employment but further heighten competition for informal producers. Cash transfers favour informal employment, albeit with a fiscal burden. Results confirm the role of formal/informal linkages and product markets in explaining policy outcomes.
139 citations
TL;DR: The authors investigated the determinants of migration from 45 Sub-Saharan African (SSA) countries over the period 1965-2005 and found that the significant determinants are armed conflict and lack of job opportunities.
Abstract: This paper investigates the determinants of migration from 45 Sub-Saharan African (SSA) countries over the period 1965--2005. The significant determinants are armed conflict and lack of job opportunities. An additional year of conflict is estimated to raise emigration by 1.7 per 1,000 inhabitants, while an additional 1% reduction in relative growth is found to reduce emigration by 1.5 per 1,000. Demographic and environmental pressures are found to have a less important direct impact, although they may have an indirect impact on migration through conflict and job opportunities. Finally, evidence is found of a 'migration hump' in migration from SSA, which is consistent with the finding that much migration from SSA is forced. Copyright 2010 The author 2010. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.
128 citations
113 citations
TL;DR: In this paper, the authors used data from the World Bank's Investment Climate Private Enterprise Survey to investigate early international entrepreneurship (international new ventures) in China and found that 62% of the exporting firms start export operations within 3 years.
Abstract: We use data on 3,948 Chinese firms obtained from the World Bank’s Investment Climate Private Enterprise Survey to investigate early international entrepreneurship (international new ventures) in China. The extent of early international entrepreneurship in China is significant: 62% of the exporting firms start export operations within 3 years. Foreign shareholders within the firm and an entrepreneur with previous exporting experience are noted to significantly increase the probability that a firm internationalizes early. We find marked differences in the behaviour of indigenous and foreign-invested firms, and between direct and indirect exporters. For example, for an indigenous firm the more foreign experience its entrepreneur has, the less likely it is to start exporting early. As far as indirect exporting is concerned, business networks are significant determinants of the extent of such exporting, but delays the internationalization process of indigenous firms. The more firms in China export, the more time their managers need to spend on government regulations, although perhaps counter-intuitively, this was not found to discourage exporting. Overall, the findings suggest that exporting by indigenous Chinese firms is often due to challenging or adverse domestic conditions.
104 citations
TL;DR: In this article, the authors employ the basic-needs approach to derive an analysis-of-covariance model of the poverty-growth relationship, where the level of inequality enters both independently and interactively with income.
Abstract: I Introduction POVERTY HAS NOW BECOME A SUBJECT OF GLOBAL INTEREST, as Goal 1 of the Millennium Development Goals (MDGs) of halving poverty by 2015 enjoys a major emphasis in the international discourse Since the 1980s, the poverty rate has been trending considerably downward in all regions of the world except in Sub-Saharan Africa (SSA), where Goal 1 seems unlikely to be attained Indeed, the poverty headcount ratio in SSA, measured as the proportion of the population living on less that $1 per day, rose from 42 percent in 1981 to 46 percent in 2000, the same year that the MDGs were initiated (World Bank 2006) The SSA poverty rate appears to have fallen more recently, however For example, in 2004 the rate was 41 percent (World Bank 2007), which is nearly the same as the poverty level in 1981, despite the substantial progress in other regions of the world Given this challenge, it seems appropriate to focus the poverty debate on this region of the world, as the current article does Attention on the importance of income distribution in poverty reduction has also been growing A number of studies decompose the effects of inequality and income on poverty (eg, Ali and Thorbecke 2000; Datt and Ravallion 1992; Kakwani 1993) Both Datt and Ravallion (1992) and Kakwani (1993) estimate substantial contributions by distributional factors as well as by growth for single countries Based on cross-country African data, Ali and Thorbecke (2000) find that poverty is more sensitive to income inequality than it is to income Several papers, furthermore, emphasize the importance of inequality in determining the responsiveness of poverty to growth (eg, Adams 2004; Easterly 2000; Ravallion 1997) These particular studies do so by analyzing specific issues For example, Ravallion (1997) econometrically tested the "growth-elasticity argument" that while low inequality helps the poor share in the benefits of growth it also exposes them to the costs of contraction Similarly, Easterly (2000) evaluated the impact of the Bretton Woods Institution's programs by specifying growth interactively with the level of inequality in the poverty-growth equation and found that the effect of the programs was enhanced by lower inequality Moreover, emphasizing the importance of the definition of growth, Adams (2004) nonetheless provides elasticity estimates showing that the growth elasticity of poverty is larger for the group with the smaller Gini coefficient (less inequality) (1) The present article, first, employs the basic-needs approach to derive an analysis-of-covariance model of the poverty-growth relationship, where the level of inequality enters both independently and interactively with income Second, it estimates the fully specified and constrained models using a 1990s cross-sectional sample of rural and urban sectors of SSA countries The article finds that income inequality reduces the efficacy of income growth in reducing poverty, at a rate that rises with the order of the poverty measure, that is, it is largest for the severity of poverty (squared gap), followed by poverty depth (gap), and least for the spread of poverty (headcount) The article uncovers a wide range of growth effectiveness across countries and between the rural and urban sectors in certain countries, based on the disparities in inequality For efficient poverty reduction, therefore, the current results imply that the degree of emphasis required for growth relative to inequality should differ considerably across African economies, and even within a given country with considerable rural and urban inequality profiles II Derivation of the Estimating Model DERIVING THE MODEL for estimating the inequality-growth-poverty relationship, (2) an individual is said to be "poor" if his/her income falls short of "basic needs" in a given locality (3) Furthermore, the lower the level of income is the more likely that it will fall below basic needs and put the individual into poverty …
97 citations
01 Jan 2010
TL;DR: The Social Assistance in Developing Countries Database as discussed by the authors provides a summary of the evidence available on the effectiveness of social assistance interventions in developing countries, focusing on programmes seeking to combine the reduction and mitigation of poverty, with strengthening and facilitating household investments capable of preventing poverty and securing development in the longer term.
Abstract: The Social Assistance in Developing Countries Database aims to: - provide a summary of the evidence available on the effectiveness of social assistance interventions in developing countries; - focus on programmes seeking to combine the reduction and mitigation of poverty, with strengthening and facilitating household investments capable of preventing poverty and securing development in the longer term - select programmes for inclusion in the database on the basis of the availability of information on design features, evaluation, size, scope, or significance; - provide summary information on each programme in a way that can be easily referenced by DFID staff and others with only a basic level of technical expertise. Version 5 updates information on existing programmes and incorporates information on the following programmes: -Conditional cash transfers pilots in Kenya, Zambia, and Malawi -Integrated poverty reduction programmes in Panama, and the Dominican Republic -Conditional cash transfer programmes in Paraguay -CHARS in Bangladesh combining climate change adaptation, asset protection and accumulation, and transfers -Basic Income Grant Pilot in Namibia which, although not strictly a social assistance programme, will be of interest to users of the Database
77 citations
TL;DR: In this article, the authors used export data from 354 magisterial districts of South Africa for 1996 and 2001 to estimate spatial growth regressions that include measures of the degree of export specialization and diversification.
Abstract: This paper aims to provide empirical evidence on whether export specialization or diversification is better for local economic growth. Using export data from 354 magisterial districts of South Africa for 1996 and 2001 we estimate spatial growth regressions that include measures of the degree of export specialization and diversification. Overall, exporting regions outperform other (less or non-) exporting regions. Also, we find that export specialisation, rather than export diversification, has been associated with local economic growth; with specialization in mining and agriculture being especially beneficial. Our results support the view that specialization in a locality's area of comparative advantage is good for local economic development. We also find that localities with higher initial levels of human capital, and higher subsequent population growth, performed better. This is consistent with the belief that policies aimed at strengthening human capital and improving agglomeration economies, will enhance local economic development.
58 citations
TL;DR: In this article, the authors provide an overview of the recent extension of social protection in sub-Saharan Africa and identify two main "models" for social protection: the Southern Africa and Middle Africa models.
Abstract: This paper provides an overview of the recent extension of social protection in sub-Saharan Africa. It identifies two main ‘models’ of social protection in the region: the Southern Africa and Middle Africa models. It then assesses the contrasting policy processes behind these models and examines the major challenges they face as regards financing, institutional capacity and political support. It concludes that, for an effective institutional framework for social protection to evolve in sub-Saharan African countries, the present focus on the technical design of social protection programmes needs to be accompanied by analyses that contribute to also ‘getting the politics right’
TL;DR: The Social Assistance in Developing Countries Database as discussed by the authors provides summary information on social assistance interventions in developing countries, focusing on programmes seeking to combine the reduction and mitigation of poverty, with strengthening and facilitating household investments capable of preventing poverty and securing development in the longer term.
Abstract: The Social Assistance in Developing Countries Database is a user-friendly tool that provides summary information on social assistance interventions in developing countries. It provides a summary of the evidence available on the effectiveness of social assistance interventions in developing countries. It focuses on programmes seeking to combine the reduction and mitigation of poverty, with strengthening and facilitating household investments capable of preventing poverty and securing development in the longer term. The inclusion of programmes is on the basis of the availability of information on design features, evaluation, size, scope, or significance. Version 5 of the database updates information on existing programmes and incorporates information on pilot social assistance programmes in Latin America, Asia and Africa. It also adopts a new typology that distinguishes between social assistance programmes providing pure income transfers; programmes that provide transfers plus interventions aimed at human, financial, or physical asset accumulation; and integrated poverty reduction programmes. This new typology has, in our view, several advantages. It is a more flexible, and more accurate, template with which to identify key programme features. It provides a good entry point into the conceptual underpinnings of social assistance programmes.
TL;DR: In this paper, the authors look at the role played by aid, trade, remittances and governance in small island developing countries (SIDS) and provide various stylised facts about SIDS.
Abstract: Small Island Developing States (SIDS) are very different to other developing countries. Relative to GDP they have the highest levels of foreign trade and aid receipts of all developing countries. Remittances from abroad are a far more important source of income for SIDS, and some depend very heavily on export revenues. The quality of governance varies tremendously among SIDS, they are over-represented among countries classified as fragile states and many are prone to state failure. These and other factors combine to make SIDS highly vulnerable to external economic shocks. Achieving development in SIDS is as a consequence an especially complex task that requires an understanding of the roles played by aid, trade, remittances and governance in these countries. This paper looks at these issues, along with providing various stylised facts about SIDS. In so doing it serves as a background and broad contextual setting for the papers that follow in this Special Issue on ‘Fragility and Development in Sma...
TL;DR: In this article, the dynamic relationship between external and internal shocks and the current account in selected small islands developing states was investigated, and it was shown that external shocks explain a significant proportion of the variation in the average current account.
Abstract: The paper investigates the dynamic relationship between external and internal shocks and the current account in selected small islands developing states. External shocks, defined as terms of trade fluctuations, explain a significant proportion of the variation in the current account balances. The external shocks have a temporary negative impact on the current account balances with a subsequent improvement, generating a J-curve type reaction. In contrast, real output shocks have a positive and significant effect on the current account.
TL;DR: In this article, the authors analyzed export productivity and trade specialisation in China, Brazil, India and South Africa, and showed that export productivity is determined by real income and human capital endowments.
Abstract: The paper analyses export productivity and trade specialisation in China, Brazil, India and South Africa. The investigation calculates a time-varying export productivity measure using highly disaggregated product categories. The modelling shows that export productivity is determined by real income and human capital endowments. But the empirical analysis also reveals significant differences in export productivity and specialisation for countries with comparable per capita income levels.
TL;DR: In this article, a decision support model (DSM) is proposed to assist in the identification of such opportunities, and applied to the case of South Africa, the first time that it has been applied to an African country.
TL;DR: In this article, an alternative approach to investigate the non-linear effect of external debt on growth is proposed, where the authors develop an endogenous growth model with formal and informal sectors to analyse the effect of the public external debt share on the production efficiency.
TL;DR: In this paper, the authors explore how the space LDCs occupy in the trade regime will be affected by EPAs and suggest that they move LDC countries towards effective graduation from special and differential treatment, while innovating on policy tools to address underdevelopment.
Abstract: As trade is prominently mainstreamed into development policies, the ongoing Economic Partnership Agreement (EPA) negotiations between the EU and the African, Carribbean and Pacific (ACP) countries are a turning point in Least Developed Countries (LDC) engagement with the international trading system. The process covers most UN-designated LDCs and is the first time they feature in the first row of international trade talks. We explore how the space LDCs occupy in the trade regime will be affected by EPAs. The analysis suggests that they move LDCs towards effective graduation from special and differential treatment, while innovating on policy tools to address underdevelopment.
TL;DR: The authors introduced a general equilibrium effective rate of protection (GE-ERP) measure, which extends and generalizes earlier partial equilibrium nominal protection measures to capture the full impact of trade policies on agricultural price incentives.
Abstract: The measurement issue is the key issue in the literature on trade policy-induced agricultural price incentive bias. This paper introduces a general equilibrium effective rate of protection (GE-ERP) measure, which extends and generalizes earlier partial equilibrium nominal protection measures. For the 15 sample countries, the results indicate that the agricultural price incentive bias, which was generally perceived to exist during the 1980s, was largely eliminated during the 1990s. The results also demonstrate that general equilibrium effects and country-specific characteristics – including trade shares and intersectoral linkages – are crucial for determining the sign and magnitude of trade policy bias. The GE-ERP measure is therefore uniquely
suited to capture the full impact of trade policies on agricultural price incentives. A Monte Carlo procedure confirms that the results are robust with respect to tradability assumptions.
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TL;DR: This paper showed that agriculture is significantly more effective than non-agriculture in reducing poverty among the poorest of the poor (as reflected in the $1-day squared poverty gap).
Abstract: The role of agriculture in development remains much debated. This paper takes an empirical perspective and focuses on poverty, as opposed to growth alone. The contribution of a sector to poverty reduction is shown to depend on its own growth performance, its indirect impact on growth in other sectors, the extent to which poor people participate in the sector, and the size of the sector in the overall economy. Bringing together these different effects using cross-country econometric evidence indicates that agriculture is significantly more effective than nonagriculture in reducing poverty among the poorest of the poor (as reflected in the $1-day squared poverty gap). It is also up to 3.2 times better at reducing $1-day headcount poverty in low-income and resource-rich countries (including those in sub-Saharan Africa), at least when societies are not fundamentally unequal. However, when it comes to the better-off poor (reflected in the $2-day measure), non-agriculture has the edge. These results are driven by the much larger participation of poorer households in growth from agriculture and the lower poverty-reducing effect of non-agriculture in the presence of extractive industries.
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TL;DR: In this article, the authors link recent production trends to household incomes using a regionalized, dynamic computable general equilibrium and microsimulation model and conclude that low productivity, market constraints, and barriers to import substitution for major food crops are among the more binding constraints to reducing poverty and improving nutrition in Tanzania.
Abstract: Rapid economic growth has failed to significantly improve poverty and nutrition outcomes in Tanzania. This raises concerns over a decoupling of growth, poverty, and nutrition. We link recent production trends to household incomes using a regionalized, dynamic computable general equilibrium and microsimulation model. Results indicate that the structure of economic growth—not the level—is currently constraining the rate of poverty reduction in Tanzania. Most importantly, agricultural growth trends have been driven by larger-scale farmers and by crops grown in only a few regions of the country. The slow expansion of food crops and livestock also explains the weak relationship between agricultural growth and nutrition outcomes. Additional model simulations find that accelerating agricultural growth, particularly in maize, greatly strengthens the growth–poverty relationship and enhances households' caloric availability. We conclude that low productivity, market constraints (including downstream agroprocessing), and barriers to import substitution for major food crops are among the more binding constraints to reducing poverty and improving nutrition in Tanzania.
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TL;DR: The global economy is passing through a period of profound change as mentioned in this paper and the immediate concern is with the financial crisis, originating in the North, and the South is affected via reduced demand and lower prices for their exports, reduced private financial flows, and falling remittances.
Abstract: The global economy is passing through a period of profound change. The immediate concern is with the financial crisis, originating in the North. The South is affected via reduced demand and lower prices for their exports, reduced private financial flows, and falling remittances. This is the first crisis. Simultaneously, climate change remains unchecked, with the growth in greenhouse gas emissions exceeding previous estimates. This is the second crisis. Finally, malnutrition and hunger are on the rise, propelled by the recent inflation in global food prices. This constitutes the third crisis. These three crises interact to undermine the prosperity of present and future generations. Each has implications for international aid and underline the need for concerted action.
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TL;DR: The authors assesses the aid-growth literature and, taking inspiration from the program evaluation literature, re-examine key hypotheses and find that aid has a positive and statistically significant causal effect on growth over the long run, with confidence intervals conforming to levels suggested by growth theory.
Abstract: The micro-macro paradox has been revived. Despite broadly positive evaluations at the micro and meso-levels, recent literature doubts the ability of foreign aid to foster economic growth and development. This paper assesses the aid-growth literature and, taking inspiration from the program evaluation literature, we re-examine key hypotheses. In our findings, aid has a positive and statistically significant causal effect on growth over the long run, with confidence intervals conforming to levels suggested by growth theory. Aid remains a key tool for enhancing the development prospects of poor countries.
TL;DR: In this paper, the interaction between formal laws and informal social norms in generating de facto institutions for collective common pool resource governance is examined, using ethnographic fieldwork and a game theory model.
Abstract: This article examines the interaction between formal laws and informal social norms in generating de facto institutions for collective common pool resource governance. Utilizing ethnographic fieldwork and a game theory model, this study illustrates how the informal rules of surfing — which emerged in response to a resource scarcity engendered in part by formal state law — inadvertently facilitate collective action for environmental conservation by increasing the individual benefits for local surfers to organize against environmental threats. Lessons learned regarding effective institutions for governing common pool resources are relevant to sustaining ecosystem services necessary for human well-being such as clean air and healthy fish and wildlife populations. How and why some groups of surfers have managed to cooperate to protect surf breaks — a de jure open access common pool resource — is salient to the larger theoretical question of how any social group can overcome the collective action problem and self-organize to provide a non-excludable public good.
01 Jan 2010
TL;DR: According to the Stern Report, there could be as many as 200 million ‘environmentally forced migrants’ (EFMs) by 2050 due to climate change as discussed by the authors, which is expected to give a further impetus to international migration, especially from poorer countries who will find it more difficult to adapt to and mitigate the impacts of climate change on land degradation, freshwater availability, and extreme weather events.
Abstract: International migration is increasing as people flee conflict and political instability and seek better opportunities elsewhere. It is expected that climate change will give a further impetus to international migration, especially from poorer countries who will find it more difficult to adapt to and mitigate the impacts of climate change on land degradation, freshwater availability, and extreme weather events. According to the Stern Report, there could be as many as 200 million ‘environmentally forced migrants’ (EFMs) by 2050 due to climate change (Stern, 2006).
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TL;DR: This article used a gendered computable general equilibrium model to assess the implications of biofuels expansion in Mozambique and compared scenarios with different gender employment intensities in producing jatropha for biodiesel.
Abstract: We use a gendered computable general equilibrium model to assess the implications of biofuels expansion in Mozambique We compare scenarios with different gender employment intensities in producing jatropha for biodiesel Under all scenarios, biofuels acc
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TL;DR: In this paper, the authors present an analytical framework that prioritizes different aspects of a comprehensive national assessment and identifies suitable evaluation methods to guide these complex evaluations, and illustrate the findings from recent assessments for Mozambique and Tanzania.
Abstract: Many low income countries in Africa are optimistic that producing biofuels domestically will not only reduce their dependence on imported fossil fuels, but also stimulate economic development, particularly in poorer rural areas. Skeptics, on the other hand, view biofuels as a threat to food security in the region and as a landgrabbing opportunity for foreign investors. As a result of this ongoing debate, national biofuels task forces have been asked to evaluate both the viability of domestic biofuels production and its broader implications for economic development. To guide these complex evaluations, this paper presents an analytical framework that prioritizes different aspects of a comprehensive national assessment and identifies suitable evaluation methods. The findings from recent assessments for Mozambique and Tanzania are used to illustrate the framework. While these two country studies found that biofuels investments could enhance development, their experiences highlight potential tradeoffs, especially at the macroeconomic and environmental levels, where further research is needed.
TL;DR: In this article, changes to the domestic policy environment from the participation of a developing country in a US-anchored FTA and evaluating whether the resulting policy regime is flexible enough to enable a developmental government to pursue activities associated with industrialisation are presented.
Abstract: Free trade agreements have become a central feature of many developing countries' growth strategies, encouraged by an evaluation literature that quantifies their positive impact on trade. However, trade gains come at the cost of policy space, particularly when the partner is a developed country, and though this cost has been acknowledged, its impact has not been explored. This article seeks to address this oversight by detailing changes to the domestic policy environment from the participation of a developing country in a US-anchored FTA and evaluating whether the resulting policy regime is flexible enough to enable a developmental government to pursue activities associated with industrialisation.
01 Jan 2010
TL;DR: In this article, the authors explore the role of entrepreneurship in the field of development economics and explore the relationship between entrepreneurial activity and economic development by providing a short overview of how entrepreneurship differs between advanced and developing economies.
Abstract: This chapter aims to explore the role of entrepreneurship in the field of development economics. This is done in a twofold manner. First, the chapter asks how the concept of entrepreneurship relates to the study field of development economics. Second, the relationship between entrepreneurial activity and economic development is explored by providing a short overview of how entrepreneurship differs between advanced and developing economies, and by discussing a number of theoretical considerations in formalising the role of the entrepreneur in the economic development process.
TL;DR: This article reviewed the Dominican Republic's 2008 Trade Policy Review undertaken in the context of the WTO's regulations and revealed that the country has been successfully pursuing a more open trade regime, but several challenges remain, particularly like addressing the asymmetries between the domestic and export-oriented sectors, and the bias created by the incentives provided to specific industries.
Abstract: This paper reviews the Dominican Republic’s 2008 Trade Policy Review undertaken in the context of the WTO’s regulations. The Trade Policy Review reveals that the country has been successfully pursuing a more open trade regime. However, several challenges remain, particularly like addressing the asymmetries between the domestic and export-oriented sectors, and the bias created by the incentives provided to specific industries.