Showing papers in "Economic Development and Cultural Change in 2004"

Foreign Aid, Institutions, and Governance in Sub‐Saharan Africa*

Abstract: Introduction More than a decade ago, the World Bank argued that “underlying the litany of Africa’s development problems is a crisis of governance.” Poor quality institutions, weak rule of law, an absence of accountability, tight controls over information, and high levels of corruption still characterize many African states today. Aid levels have been reduced in many parts of Africa during the past decade. Yet in many of the countries with poor governance records, aid continues to contribute a very high percentage of government budgets. This article explores the institutional impact of these high levels of aid and the way that large amounts of aid are delivered. There are many reasons why governance is poor in much of sub-Saharan Africa. Colonialism did little to develop strong, indigenously rooted institutions that could tackle the development demands of modern states. Economic crisis and unsustainable debt, civil wars, and political instability have all taken their toll over the past 2 decades and more. It is difficult to separate the impact of these problems from the possible impact of foreign aid, which is often high in countries that suffer from precisely these problems. Theory provides conflicting guidance here. On the one hand, aid can release governments from binding revenue constraints, enabling them to strengthen domestic institutions and pay higher salaries to civil servants. Aid can provide training and technical assistance to build legal systems and accounting offices. In many countries, aid personnel (sometimes expatriate) manage important government programs, and the infusion of resources and technical assistance can give an important boost to the efficiency and effectiveness of governance, if only in a partial sense. Yet despite these likely benefits, it is also possible that, continued over

The Impact of PROGRESA on Food Consumption

Abstract: In this article we used data from the Mexican poverty alleviation program called PROGRESA (Programa de Educacion, Salud y Alimentacion) to examine whether eligibility for a cash transfer provided by the program conditional on children’s regular school attendance and regular visits to health centers is also associated with increased consumption of food. We used a longitudinal sample of approximately 24,000 households from 506 communities. A distinguishing characteristic of this sample was that some of the communities were randomly selected for participation in PROGRESA, while the rest were introduced into the program at later phases. Exploiting this feature in our analysis, we found that eligible households in the villages covered by PROGRESA increased caloric acquisition compared with eligible households not receiving these benefits. By November 1999, median beneficiary households in treatment localities obtained 6.4% more calories than did comparable households in control localities. Perhaps eve...

Child Malnutrition in Ethiopia: Can Maternal Knowledge Augment the Role of Income?*

Abstract: Over the past decades, child malnutrition in Ethiopia has persisted at alarmingly high rates. By applying the conditional nutrition demand approach to household data from three consecutive welfare monitoring surveys over the period 1996-1998, this study identifies household resources, parental education, food prices, and maternal nutritional knowledge as key determinants of growth faltering in Ethiopia. Income growth is important for alleviating child stunting, though on its own it will not suffice to reach the international goal of halving each country's level of child malnutrition by 2020. Universalizing access to primary schooling for girls has slightly more promise. However, to reduce child growth faltering in Ethiopia in a significant - and timely - manner, our empirical results indicate that targeted child growth monitoring and maternal nutrition education programs will be needed in conjunction with efforts to promote private income growth and formal schooling.

The Impact of Farmer Field Schools on Knowledge and Productivity: A Study of Potato Farmers in the Peruvian Andes

Abstract: Using survey data from Peru, this article evaluates the impact of a pilot farmer‐field‐school (FFS) program on farmers’ knowledge of integrated pest management (IPM) practices related to potato cultivation. We use both regression analysis controlling for participation and a propensity score matching approach to create a comparison group similar to the FFS participants in observable characteristics. Results are robust across the two approaches as well as with different matching methods. We find that farmers who participate in the program have significantly more knowledge about IPM practices than those in the nonparticipant comparison group. We also find suggestive evidence that improved knowledge about IPM practices has the potential to significantly improve productivity in potato production.

Agricultural Productivity Growth, Rural Economic Diversity, and Economic Reforms: India, 1970–2000*

Abstract: A salient theme in D. Gale Johnson’s work is the importance of agricultural development for general prosperity and for economic diversification (e.g., Johnson 2000). Johnson has also noted that most of the world’s poor are engaged in farming, so that a key focus of development policy is to raise the incomes of farmers. From a global perspective, increasing the productivity of agriculture, given the fixity of land, is necessary for both poverty reduction and the development of the nonagricultural sector. At the level of the world, agricultural productivity gains, poverty reduction, and the growth of the nonfarm sector are complements. However, the question remains whether these observations imply that every poor country should focus its public resources on agricultural development in order to raise the incomes of people now engaged in farming and whether such a policy is necessary for obtaining economic diversity. In this article, we use the experience of India over the past 30 years to address the issue of whether agricultural technical change actually leads to economic diversification and income growth within the rural sector in the context of an open-economy country in which there are cross-area trade and capital flows. We focus in particular on the rural sector because this is the sector in which linkages between agricultural and nonagricultural sectors are thought to be the strongest. We exploit the fact that India has maintained a policy of openness with respect to agricultural technology over this period, permitting and actively supporting agricultural development, and has moved to a reformed regime in which goods are traded and capital is more mobile in the 1990s. Evidence on the relationship between agricultural growth and nonfarm

Reforms, Investment, and Poverty in Rural China*

Abstract: Shenggen FanInternational Food Policy Research Institute and Institute of AgriculturalEconomics of the Chinese Academy of Agricultural SciencesLinxiu ZhangCenter for Chinese Agricultural Policy of the Chinese Academy of SciencesXiaobo ZhangInternational Food Policy Research InstituteI. IntroductionChina is one of the few countries in the developing world that has madeprogress in reducing its total number of poor over the past 25 years.

Migrants and Housing Investments: Theory and Evidence from Nigeria*

Abstract: The dominance of housing may reflect limitations in the menu of investment choices available to migrants in the country of origin. In many developing countries individuals face relatively few savings opportunities where productive assets (such as land farm assets) are associated with high risks and/or low rates of return. Housing investments offer unique advantages in that they are durable highly visible and associated with low risk and monitoring requirements. However there are some important drawbacks associated with housing investments. In particular where resale and rental markets for housing are not well developed migrants housing assets may be relatively illiquid and irreversible. In the next section I provide some background on general patterns of investment behavior among migrants. Here the evidence on housing investments is discussed for a rich set of migrant sending and receiving countries. In Section III I develop the conceptual framework for understanding migrants housing investment decisions. Section IV provides a description of the data sources. Section V outlines the empirical strategy. In Section VI I discuss the empirical findings. Section VII presents conclusions. (excerpt)

Health, Nutrition, and Economic Growth*

Abstract: Today the most remarkable instances of rapid economic growth are in Asian and Latin American countries which together represent more than half of the population of the world. This vast expansion of modern economic growth did not get under way until after World War II but since then has proceeded with lightning speed. These changes first became evident in the improvement in life expectancy. In the case of India for example life expectancy at birth increased from 29 years in 1930 to 60 years in 1990. An increase of that magnitude required two and a half centuries in England and France. The sharp drop in the death rates of developing nations led to an enormous surge in the growth of population which in turn led to widespread fears that the food supply could not keep up with population growth and that industrialization would be thwarted. (excerpt)

Mobility in the Urban Labor Market: A Panel Data Analysis for Mexico

Abstract: We analyze mobility in urban Mexico between three labor market states: working in the formal sector, working in the informal sector, and not working. A dynamic multinomial logit panel data model with random effects is used, explaining the labor market state of each individual during each time period. The data are drawn from Mexico’s Urban Employment Survey, a quarterly household survey for urban Mexico. While some of the descriptive statistics suggest that informal sector jobs are inferior to formal sector jobs, formal tests cannot reject the null hypothesis of equal transition rates between formal and informal sector jobs for homogeneous groups of workers. Looking at entry and exit into and out of nonemployment, we find that transitions from formal sector jobs to nonemployment were less likely than transitions from informal sector jobs to nonemployment in 1992 but not in 1999, suggesting that employment protection in the formal sector has been reduced.

Is Consumption Insured against Illness? Evidence on Vulnerability of Households to Health Shocks in Rural Ethiopia

Abstract: Low and volatile incomes and absence of well‐developed financial markets make consumption smoothing an important issue in low‐income countries. Based on the theory of full insurance and using 2 years of panel data, this study examines the impact of illness on the consumption of rural households and the capacity of existing risk‐sharing mechanisms in insuring consumption against health shocks in the rural areas of Ethiopia. The results show that illness has a statistically significant negative impact on the stability of consumption and the capacity of households or existing intra‐ and interhousehold risk‐sharing arrangements in insuring consumption against illness varies across different consumption items. The regression results show that the hypothesis of consumption insurance cannot be rejected in the case of total food consumption, implying that basic items that come from own production and from external sources (gifts) are better insured and insensitive to the illness of the head. However, the...

Nutrition information and formal schooling as inputs to child nutrition.

Abstract: Few studies have explored whether or how nutrition knowledge interacts with education--do they act as substitutes or complements? Exceptions include research in Nicaragua (Lamontagne Engle and Zeitlin 1998) which found that maternal education and certain types of nutrition knowledge are significantly but independently associated with child outcomes. Another study in Brazil (Thomas Strauss and Henriques 1990) found that most of the correlation between maternal knowledge and child height could be explained by mothers’ access to media messages (on TV and radio) and that formal schooling and messages gained through community health services acted as substitutes. Similarly Glewwe (1999) found that maternal knowledge (rather than schooling) in Morocco strongly influences child height-for-age (a measure of longer-term child nutritional well-being) and that such knowledge is obtained mainly outside the classroom through the media from relatives and via public service messages. Variyam et al (1999 p. 381) also report that maternal schooling in the United States has a strong impact on children’s diets “wholly through its positive effect on maternal . . . nutrition knowledge.” Thus some of the contribution of schooling to child nutrition appears to come through its interaction with nutrition knowledge--possibly by enhancing women’s ability to acquire knowledge or by enabling them to put such knowledge into practice. However since nutrition knowledge has been shown to generate nutritional improvements even among illiterate populations and since formal education remains severely limited in most poor developing countries the potential for targeted transfers of nutrition information to assist in nutritional improvements may be large. This article offers preliminary support for such an argument. The article is organized as follows. Section II describes the survey data used in the analysis as well as the construction of our proxy for nutrition knowledge. Section III presents nonparametric evidence of the effects of nutrition knowledge maternal education and per capita expenditures on nutritional outcomes. Section IV presents supporting parametric results and Section V concludes with programmatic and research implications. (excerpt)

Externality Effects of Education: Dynamics of the Adoption and Diffusion of an Innovation in Rural Ethiopia

Abstract: This article investigates the role of schooling at the household and community levels in the adoption and diffusion of agricultural innovations in rural Ethiopia. We find that household‐level education is important to the timing of adoption but less crucial to the question of whether a household has ever adopted fertilizer (since those without schooling may eventually copy the educated). Community‐level education substitutes for low levels of household education, encouraging uneducated farmers to adopt sooner than would be predicted in the absence of educated neighbors. Moreover, community‐level education is complementary to household education in determining which farmers will eventually adopt. Thus, evidence is presented to suggest that there are two externality effects: educated farmers are early innovators, providing an example that may be copied by less‐educated farmers; and educated farmers are better able to copy those who innovate first, enhancing diffusion of the new technology more wide...

The Indigenous Test Score Gap in Bolivia and Chile

Abstract: This article analyzes the magnitude and determinants of the indigenous test score gap in Bolivia and Chile (i.e., the mean difference in academic achievement between indigenous and nonindigenous children). In both countries, it finds that the gap ranges between 0.3 and 0.5 standard deviations, favoring nonindigenous children. A decomposition of achievement regressions that include classroom fixed effects suggests that 50%–70% of the difference is attributable to differences in schools and classrooms that are attended by indigenous and nonindigenous students. A smaller proportion (20%–40%) is attributable to varying endowments of family variables like parental education. The smallest proportion of the gap (10%–20%) is unexplained. Several implications for policy are discussed in light of the results.

Migration and Gender in China: An Origin‐Destination Linked Approach*

Abstract: During the past 2 decades, major social and economic transformations have occurred in China. One of the demographic consequences of these changes is the large increase in the migrant population. In the prereform era, the Chinese government strictly controlled and regulated migration through the household registration system (hukou) and other mechanisms. Since the late 1970s, however, the role of household registration has weakened so much that one does not need to obtain local hukou in order to migrate. Migration, especially floating migrant population, is clearly on the rise. Social scientists are quick to take the opportunity to study different aspects of migration. Not surprisingly, with few exceptions, most studies of migration focus on migrant men even though women constitute a high proportion of the migrant population. According to the 1990 China Population Census, migrant women account for 46% of intraprovincial migrants and 42% of interprovincial migrants in China. The most recent data from the 2000 Chinese census show that 52% of migrants are women. Although the subject of female migration is relatively neglected for other countries as well, the Chinese case promises a particularly interesting comparison because of its current hukou system. Originally designed and implemented in the late 1950s, hukou was and continues to be an important institution that is associated with entitlements, such as housing, medical care, and jobs, as well as children’s education. Before 1978, not having hukou meant that migrants would not be able to find jobs and housing, let alone benefits such as medical care and pension. Notwithstanding, since China initiated market reforms in the late 1970s, the function of China’s hukou system has been gradually declining but still plays an important role in the receipt of

Why Japan, not China, was the First to Develop in East Asia: Lessons from Sericulture, 1850-1937

Abstract: Raw silk exports constituted the most important foreign currency-earning item for China and Japan during the period of 1860-1929. In the 1870s, China exported three times as much as Japan, but by the late 1920s, Chinese exports became less than 30% of Japanese exports. This paper focuses on the comparative performance of sericulture in Japan and the Lower Yangzi delta of China and constructs productivity indices including a price dual total factor productivity index. These indices, supported by a comparative narrative of the cocoon production and distribution sectors, suggest that Japan’s competitive success resulted from a set of interrelated technical and institutional innovations. It was the different reform policies pursued by Meiji Japan and Late-Qing China that created different conditions leading to the rise and absence of innovations respectively in these two regions.

Implications of Agency Theory for Optimal Land Tenure Contracts

Abstract: Explores landowner-tenant contracts in land tenure in agriculture. Inefficiency of share tenancy relative to owner cultivation; Introduction of principal-agent models; Influence of monitoring in studying optimal landowner-tenant risk sharing; Need to study adequate tenant incentives

Multinational Corporations, Patenting, and Knowledge Flow: The Case of Singapore*

Abstract: We examine in this paper the nature of multinational corporations’ (MNC) R&D activity in Singapore and whether it facilitates knowledge flow from MNCs to local inventors using U.S. patent and patent citations data. Comparing the quality of patents taken out by Singapore local inventors, MNC inventors in Singapore, and MNC inventors elsewhere using various patent citations-based measures, we do not find any difference between these three groups of patents. We also find that Singapore local inventors cite MNC patents significantly more intensively than a random rest-of-the-world patent does. Regression analysis reveals that the intensity of a Singapore local patent citing a nonSingapore MNC patent is significantly correlated with the number of MNCs’ patents invented in Singapore, suggesting that MNCs’ Singapore subsidiaries facilitate knowledge flow from MNCs to local inventors. JEL classification: O3, F2

Institutional Assets for Negotiating the Terms of Development: Indigenous Collective Action and Oil in Ecuador and Alaska

Abstract: Case studies of two oil fields with superficial similarities—same company, same time period, similar anticipated scale of production, similar remote field design, similarly situated in indigenous territory—show radically different benefits for the adjacent indigenous communities. This analysis finds that the major differences driving these results are institutional: primarily differences in property rights regimes and secondarily in local institutional development. In the Alaska context, the community was able to negotiate a direct share of the royalties, while the Ecuadorian community was entitled only to an indirect revenue share from the national government. Both communities also negotiated for various community assistance projects from the company. The Ecuadorian communities likely would have succeeded in instituting their sustainable development proposal if they had stronger local organization. Comparative analysis of the factors for local institutional development fit well in the conceptual...

Understanding Interhousehold Transfers in a Transition Economy: Evidence from Russia

Abstract: This article uses data from the Russian Longitudinal Monitoring Survey to describe the patterns and determinants of private interhousehold transfers. Russian households have experienced large reductions in income during the post‐Soviet transition period, with a particularly severe decline occurring in the fall of 1998. Sharply declining fertility, increasing mortality, and past demographic catastrophes have left a population that is both young (few elderly) and old (one of the oldest working‐age populations in the world). Informal networks in Russia are likely to take on distinctive characteristics as the country’s economic institutions are underdeveloped and there is a very limited social safety net, while household structure closely resembles that found in much wealthier countries. Although it is often assumed that the elderly in Russia are a highly vulnerable economic group, we actually find that transfers flow strongly from elderly and “empty‐nest” households to households in the early part o...

The Effect of Macroeconomic Turbulence on Real Wage Levels and the Wage Structure: Brazil, 1981–1999*

Abstract: How does a turbulent macroeconomic environment affect real wage levels and the wage structure? A method for addressing this question is offered and then applied to data for Brazil between 1981 and 1999. Cohorts of workers are followed over time to determine whether movements in median wages are associated with age or with calendar year events. Changes in the wage structure-by gender, by schooling, and by formal-informal sector-are investigated. Profound macroeconomic impacts on real wage levels are clearly identified but effects on the wage structure are far less.

Measuring the Productivity from Indigenous Soil and Water Conservation Technologies with Household Fixed Effects: A Case Study of Hilly-Mountainous Areas of Bénin

Abstract: In this article, we examine the productivity of indigenous soil and water conservation (SWC) investments in the Boukombe region in Northwest Benin, using an in-depth survey among 101 farmers on farm inputs, outputs, and SWC investments. We show that positive effects of SWC investments are only observed if one controls for household-specific constraints. We use a production function approach to relate SWC to farm output, and we control for observable and unobservable household characteristics with household fixed effects. The results show that (1) there are large productivity effects from indigenous SWC investments in the Boukombe region of Benin, (2) there is a positive interaction between plot size and SWC on productivity, and (3) SWC tends to be most productive on plots with flat or light slopes but less effective on steep plots. Misspecification tests for omitted variable bias, endogeneity bias, and selection bias are performed and show that the results are robust. The structure of this article is as follows: in Section II we start with a discussion of the role of indigenous SWC techniques for agricultural intensification. We will argue that there is a strong rationale behind the promotion of indigenous SWC techniques in areas with unfavorable natural conditions and poor infrastructure. In Section III, we discuss the different types and adoption rates of the most important indigenous SWC techniques that can be observed in the Boukombe region of Northwest Benin. In Section IV, we use a production function approach to relate farm output to inputs and SWC investments to measure the productivity of indigenous SWC investments. Section V concludes. © 2004 by The University of Chicago. All rights reserved.