Showing papers by "World Institute for Development Economics Research published in 2013"

Assessing Foreign Aid's Long-Run Contribution to Growth in Development

Abstract: This paper confirms recent evidence of a positive impact of aid on growth and widens the scope of evaluation to a range of outcomes including proximate sources of growth (e.g., physical and human capital), indicators of social welfare (e.g., poverty and infant mortality), and measures of economic transformation (e.g., share of agriculture and industry in value added). Focusing on long-run cumulative effects of aid in developing countries, and taking due account of potential endogeneity, a coherent and favorable pattern of results emerges. Aid has over the past forty years stimulated growth, promoted structural change, improved social indicators and reduced poverty.

Do electoral coalitions facilitate democratic consolidation in Africa

Abstract: In a region where democratization has led to a proliferation of opposition parties, pre-electoral coalitions represent an obvious means by which to reduce excessive party fragmentation in Africa. However, this article examines whether such coalitions facilitate democratic consolidation in terms of contributing to incumbent turnovers as well as creating competitive, institutionalized party systems. Election data for all opposition coalitions formed in Africa’s electoral democracies since 2000 reveals that coalitions rarely result in incumbent defeat. In addition, I find that a sizeable share of a country’s total electoral volatility is often due to fluctuations in voting for opposition parties that enter and exit coalitions, indicating the inability of coalition members to build loyal constituencies and become institutionalized over time. I argue that this is because many of these coalitions are primarily office-seeking and consist of parties that are distinguished predominantly by the personality of their...

Measuring the Carbon Intensity of the South African Economy

Abstract: We estimate the carbon intensity of industries, products, and households in South Africa. Direct and indirect carbon usage is measured using multiplier methods that capture inter-industry linkages and multi-product supply chains. Carbon intensity is found to be high for exports but low for major employing sectors. Middle-income households are the most carbon-intensive consumers. These results suggest that carbon pricing policies (without border tax adjustments) would adversely affect export earnings, but should not disproportionately hurt workers or poorer households. 7per cent of emissions arise though marketing margins, implying that carbon pricing should be accompanied by supporting public policies and investments.

Aid to Africa : the Changing Context

Abstract: To continue its economic growth and create new and better livelihoods, Africa must transform the productive side of its economy. Ongoing globalization–in trade, finance, and technology–opens up new possibilities for structural transformation, but also new risks as Africa´s integration with the global economy evolves. Climate change is impacting productive sectors and the livelihoods linked to them. Consolidating war-to-peace transition remains imperative for the Democratic Republic of the Congo, Somalia, and others, as they need inclusive growth to reinforce the politics of peace. This is the context within which official development assistance must operate and evolve if it is to remain useful.

Access to Land: Market and Non-Market Land Transactions in Rural Vietnam

Abstract: In a country as densely populated as Vietnam, land is a scarce resource. This is even more so because 70 per cent of the population still reside in rural areas. Therefore, achieving efficiency and equity in the allocation of land in this context is a key priority. Furthermore, in a rapidly developing economy such as that of Vietnam, there is a pressing need to facilitate a process whereby land can change hands without large inefficiencies. For example, to ensure an efficient flow of labor resources from rural to urban areas, it is necessary that households (HHs) in rural areas are able to transfer land rights without incurring excessive transaction costs. It is also important to ensure that agricultural land can be transformed into land for residential and industrial purposes without friction, and without imposing heavy costs on farmers. Evidence from other countries on the ability of land markets to perform these functions efficiently is mixed. The studies on land markets in four African countries in Holden et al. (2008) show considerable friction in the operation of land rental markets, but also, for example in Uganda, some positive effects on allocative efficiency. Similar results are reported in Holden et al. (2011), who find that land certification stimulated the rental markets in Northern Ethiopia, and those increased rental market activities, in turn, improved the efficiency of land use. On the other hand, Deininger et al. (2003) find land markets in Nicaragua to be largely ineffective in terms of improving equity as well as efficiency.

What do we know about non-clinical interventions for preventable and treatable childhood diseases in developing countries?

Abstract: Preventable and treatable childhood diseases, notably acute respiratory infections and diarrhoeal diseases are the first and second leading causes of death and morbidity among young children in developing countries. The fact that a large proportion of child deaths are caused by these diseases is symptomatic of dysfunctional policy strategies and health systems in the developing world. Though clinical interventions against such diseases have been thoroughly studied, non-clinical interventions have received much less attention. This paper contributes to the existing literature on child wellbeing in two important respects: first, it presents a theory of change-based typology that emerges from a systematic review conducted on non-clinical interventions against preventable and treatable childhood diseases. Second, it pays particular attention to policies that have been tested in a developing country context, and which focus on children as the primary target population. Overall, we find that improved water supply and quality, sanitation and hygiene, as well as the provision of medical equipment that detect symptoms of childhood diseases, along with training and education for medical workers, are effective policy instruments to tackle diarrhoeal diseases and acute respiratory infections in developing countries.

Microcredit, Labor, and Poverty Impacts in Urban Mexico

Abstract: Improved household accessibility to credit is a significant determinant of intra-household allocation of labor 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 can indirectly benefit poor laborers through increased employment. Second, we conduct the study in the context of urban poverty Mexico. This is relevant when considering that labor often represents the only source of livelihoods to the extreme urban poor. Our findings point to significant trickle-down effects of microcredit that benefit poor laborers; however, these effects are only observed after loan-supported enterprising households achieve earnings well above the poverty line.

Measuring the Carbon Intensity of the South African Economy

Abstract: We estimate the carbon intensity of industries, products and households in South Africa using data from a high resolution supply‐use table. Direct and indirect carbon usage is measured using multiplier methods that capture inter‐industry linkages and multi‐product supply chains. Carbon intensity is found to be high for exports but low for major employing sectors. Middle‐income households are the most carbon‐intensive consumers. These results suggest that carbon pricing policies (without border tax adjustments) would adversely affect export earnings, but should not disproportionately hurt workers or poorer households. Seven percent of emissions arise through marketing margins, implying that carbon pricing should be accompanied by supporting public policies and investments.

The impacts of the food, fuel and financial crises on households in Nigeria A retrospective approach for research enquiry

Abstract: This paper examines the impacts of the financial, food and fuel crises on the livelihoods of low-income households Nigeria. It uses primary household level data from Nigeria to analyse the impacts of induced price variability on household welfare. Our results indicate that aggregate shocks have significant adverse effects on household consumption, human capital, and labour decisions with a degree of impact variability between northern and southern regions of the country. We find that the coping strategies adopted by the poor to deal with the short-term effects of the crises, and which include substitution for lower quality food, increasing the intensity of work, withdrawing children from school – especially girls – and engaging children in child labour, can lock households in a low-income equilibrium or poverty trap. Provided that covariate shocks exacerbate these effects, tackling the effects of covariate risks becomes central for present and future development policy.

How Should Commodities Be Taxed? A Counterargument to the Recommendation in the Mirrlees Review

Abstract: The Mirrlees Review recommends that commodity taxation should in general be uniform, but with some goods consumed in conjunction with labour supply (such as child care) left untaxed. This paper examines the validity of this claim in an optimal income tax framework. Contrary to the recommendation of the Review, our theoretical results imply that even if all goods other than the good needed for working are separable from leisure, the optimal tax on these goods should not be uniform. Instead, goods with larger expenditure elasticities should be discouraged relatively more by the tax system. If the government fully subsidises the cost of the good needed for working, then commodity taxation is uniform under the standard separability assumption. Our results imply that the optimal commodity tax system is dependent on the expenditure side of the government. A calibration exercise presented in the paper suggests that these results can be quantitatively important.

Assessing Foreign Aid's Long-Run Contribution to Growth in Development

Abstract: This paper confirms recent evidence of a positive impact of aid on growth and widens the scope of evaluation to a range of outcomes including proximate sources of growth (e.g., physical and human capital), indicators of social welfare (e.g., poverty and infant mortality), and measures of economic transformation (e.g., share of agriculture and industry in value added). Focusing on long-run cumulative effects of aid in developing countries, and taking due account of potential endogeneity, a coherent and favorable pattern of results emerges. Aid has over the past forty years stimulated growth, promoted structural change, improved social indicators and reduced poverty.

What Can Experiments Tell Us About How to Improve Governance

Abstract: In recent years, randomized controlled trials have become increasingly popular in the social sciences. In development economics in particular, their use has attracted considerable debate in relation to the identification of ‘what works’ in development policy. This paper focuses on a core topic in development policy: governance. It aims to address two key questions: (1) ‘what have the main contributions of randomized controlled trials been to the study of governance?’ and (2) ‘what could be the contributions, and relatedly the limits of such methods?’ To address these questions, a systematic review of experimental and quasi-experimental methods to study government performance was conducted. It identified 139 relevant papers grouped into three major types of policy interventions that aim to: (1) improve supply-side capabilities of governments; (2) change individual behaviour through various devices, notably incentives, and (3) improve informational asymmetries. We find that randomized controlled trials can be useful in studying the effects of some policy interventions in the governance area, but they are limited in significant ways: they are ill-equipped to study broader governance issues associated with macro-structural shifts, national level variation in institutions and political culture, and leadership. Randomized controlled trials are best for studying targeted interventions, particularly in areas of public goods provision, voting behaviour, and specific measures to address corruption and improve accountability; however, they can provide little traction on whether the intervention is transferable and ‘could work’ (and why) in other contexts, and in the longer run.