Showing papers in "Oxford Development Studies in 2009"

Economic vulnerability and resilience : concepts and measurements

Abstract: In this paper, economic vulnerability is defined as the exposure of an economy to exogenous shocks, arising out of economic openness, while economic resilience is defined as the policy-induced ability of an economy to withstand or recover from the effects of such shocks. The paper briefly reviews the work already carried out on economic vulnerability and extends the research towards the development of a conceptual and methodological framework for the definition and measurement of economic resilience. Towards this end, the paper proposes an index of economic resilience gauging the adequacy of policy in four broad areas, namely macroeconomic stability, microeconomic market efficiency, good governance and social development. The analysis of economic resilience explains how small economies can attain a relatively high level of gross domestic product per capita if they adopt appropriate policy stances. In other words, the relatively good economic performance of a number of small states is not because, but in s...

An Economic Vulnerability Index: Its Design and Use for International Development Policy

Abstract: In response to the need expressed by the UN General Assembly, an economic vulnerability index (EVI) has been defined by the Committee for Development Policy. The present paper, which refers to this index, first examines how a structural economic vulnerability index can be designed for the low-income countries in particular. It recalls the conceptual and empirical grounds of the index, considers the structure of the present EVI, its sensitivity to methodological choices with respect to averaging, as well as related possible improvements, and briefly compares the levels and trends of EVI in various country groups, using a new database from a ‘retrospective EVI'. The paper examines how EVI can be used for international development policy, underlining two main purposes: first—the purpose for which EVI was initially designed—is the identification of the least developed countries (LDCs) that are allowed to receive some preferential treatment in aid and trade matters. EVI, in addition to income per capita and human capital, is one of the three complementary criteria a country needs to meet in order to be perceived as a LDC, and consequently it cannot be the sole criterion for countries wishing to avoid exiting the LDC list. And second, EVI is to be used, in addition to other traditional measures, as a criterion for aid allocation between developing countries. We argue that such an inclusion is legitimate for both reasons of effectiveness and equity. The two purposes are presented as complementary.

Social Protection for the Poor and Poorest in Developing Countries: Reflections on a Quiet Revolution

Abstract: The theory and practice of social protection in developing countries has advanced at a rapid pace over the last decade or so. There is a growing consensus around the view that social protection constitutes an effective response to poverty and vulnerability in developing countries, and an essential component of economic and social development strategies. This paper argues that the rise of social protection constitutes a response to global trends, but with considerable regional diversity. It examines the factors determining the future course of social protection and identifies urgent research needs.

Education and the Poverty Trap in Rural China: Closing the Trap

Abstract: Together with a companion paper to be published in the March 2010 issue, this is an ambitious attempt to view the relationships involving education and income as forming a system, and one that can generate a poverty trap. The setting is rural China, and the data are from a national household survey for 2002, designed with research hypotheses in mind. Enrolment is high in rural China in comparison with most poor rural societies, but the quality of education varies greatly. The paper analyses the determinants of drop-out from middle school and of continuation to high school. It also examines the determinants of pupil performance, time spent learning, and educational expenditure. Poverty is found to have an adverse effect on both the quantity and quality of education—so contributing to a poverty trap.

Human Capital Development, War and Foreign Direct Investment in Sub-Saharan Africa

Abstract: The authors use a panel data fixed effect model to identify the determinants of foreign direct investment (FDI) for a large sample of 29 sub-Saharan African countries from 1980 to 2003. They test whether human capital development, defined by either literacy rates or economic freedom, and the incidence of war affect FDI flows to these countries. Combining these explanatory variables to several widely used control variables, it was found that the literacy rate (human capital), freedom (political rights and civil rights) and the incidence of war are important FDI determinants. The results confirm our expected signs: FDI inflows respond positively to the literacy rate and to improvements in political rights and civil liberties; war events, by contrast, exert strong negative effects on FDI. For robustness, the model is estimated for religious groupings of sub-Saharan African countries.

The Impact of Violent Conflicts on Households: What Do We Know and What Should We Know about War Widows?

Abstract: This paper analyses how mass violent conflict and the legacy of conflict affect households in developing countries. It does so by pointing out how violent conflict impairs a household's core functions, its boundaries, its choice of coping strategies and its well-being. The paper contributes to the literature on the economics of conflict, reconstruction and vulnerability in three ways. First, it addresses explicitly the level of analysis in the context of conflict by contrasting strengths and weaknesses of a unitary approach to the household and extending it to intra-household and group issues. Second, it identifies important research gaps in this field. Third, it highlights the economic situation of war widows in conflict-affected countries and discusses a case study of widows of the Rwandan genocide.

Measuring Vulnerability: An Overview and Introduction

Abstract: This paper provides an introduction to this special issue of Oxford Development Studies. It starts by contextualizing the measurement of vulnerability, pointing to the need to take risks on the level of households, regions and countries into account in designing poverty-reduction strategies. It then summarizes the papers in this special issue, highlighting the ways in which they advance the conceptualization and measurement of vulnerability, and noting directions for future research.

A political economy of education in India: The case of Uttar Pradesh

Abstract: The effectiveness of the arrangements governing an educational system depends on the motivations of key actors. This paper analyses the state of education in the Indian state of Uttar Pradesh and the role that teachers have played in the political process. It describes how teachers have become embedded in the political system and the way teacher associations and unions have actively pursued demands through various strikes and other forms of action. Although teachers have been successful in improving pay, job security and service benefits, less progress has been made on broader improvements in the schooling system such as the promotion of education in general or improving equity and efficiency in the system.

Is fiscal decentralization conflict abating? Routine violence and district level government in Java, Indonesia

Abstract: Utilizing a newly created data set the authors examine the relationship between routine/everyday violence and fiscal decentralization in 98 districts of the Indonesian island of Java. By examining possible relationships between fiscal decentralization and routine violence, this paper fills a gap in the literature where the analysis of the relation between fiscal decentralization and violence is relatively scant. Routine violence, which is different from both civil war and ethno-communal conflict, centres around group brawls, popular justice or vigilante violence. Despite the uniform implementation of fiscal decentralization, subnational entities exhibit varying experiences with decentralization, but a common consequence is the increased size of local government. Fiscal decentralization, and the increased size of local government, can alleviate pent-up frustrations with a centralized state, as local government expenditure is seen to satisfy the needs of communities with which people identify more closely. ...

Measuring the Vulnerability of Subnational Regions in South Africa

Abstract: A small but growing literature has been concerned about the economic (and environmental) vulnerability on the level of countries. Less attention is paid to the economic vulnerability of different regions within countries. By focusing on the vulnerability of subnational regions, this paper contributes to the small literature on the “vulnerability of place”. They authors see the vulnerability of place as being due to vulnerability in various domains, such as economic vulnerability, vulnerability of environment, and governance, demographic and health fragilities. They use a subnational data set on 354 magisterial districts from South Africa, recognize the potential relevance of measuring vulnerability on a subnational level, and construct a Local Vulnerability Index for the various districts. They condition this index on district per capita income and term this a Vulnerability Intervention Index, interpreting this as an indicator of where higher income per capita, often seen in the literature as a measure of...

Total Factor Productivity Growth in Chinese Industry: 1952–2005

Abstract: This paper presents new estimates of total factor productivity (TFP) growth in Chinese industry over the past half century that seek to improve on earlier estimates in several respects: better data series are developed for capital and labour; the production function is estimated with fewer restrictive assumptions and corrected for serial correlation; and the TFP estimates are adjusted for cyclical fluctuations. The paper also offers a broader than usual interpretation of TFP growth. Its main findings are: (i) that over the whole period 1952–2005 the main source of industrial output growth was capital accumulation; (ii) that during the period since 1980 TFP growth also contributed significantly to industrial output growth; and (iii) that TFP growth in Chinese industry accelerated from the late 1980s, probably as a result of changes in the pattern of ownership and increased integration into the world economy.

Teacher Incentives and Performance: An Application of Principal–Agent Theory

Abstract: The paper summarizes principal–agent (P-A) theory and applies it to the teaching profession, arguing that it provides a strong framework for analysing institutional arrangements governing the work of teachers. P-A theory proposes factors that determine whether or not paying teachers in relation to measures of performance improves teacher productivity. Teachers' work is characterized by moral hazard, risk aversion, multiple principals and multiple objectives, which make the design of an optimal performance pay system complex, especially as it needs to be context specific. A crucial factor is the extent to which teacher motivation is altruistic or opportunistic. International evidence on teacher rewards systems and their relation to teacher performance is summarized. In many developing countries, such as India, teacher contracts fail to provide sanctions for poor performance or rewards for effective teaching. In such contexts, improved incentives for teacher performance are an essential component of reforms...

How Precisely Can We Estimate Vulnerability to Poverty

Abstract: There are alternative definitions of vulnerability to poverty. Most researchers prefer to define vulnerability to poverty as the probability of a household or individual falling into poverty in the...

Technological Efforts, Firm Size and Exports in the Basic Chemical Industry in India

Abstract: This paper attempts to examine the role of technological efforts and firm size in determining the export behaviour of firms belonging to the basic chemical industry in India. The basic chemical industry is an important industry that provides intermediate chemicals to firms operating in diverse industries in both India and abroad. In this study technological efforts have been considered in terms of in-house R&D, import of embodied technology, and import of disembodied technology. Three different econometric models, namely, the Tobit, the two-part (Probit + Truncation) and the sample selection (Heckman), have been used for estimation and the results have been compared. The authors find evidence in support of the view that export behaviour of the firm can be modelled in a more appropriate manner using a two-part or a sample selection model rather than the popular Tobit model. The results of the econometric exercise confirm that technological efforts, firm size and other firm-specific characteristics are impo...

Contentious Care: Foster Care Grants and the Caregiver–Orphan Relationship in KwaZulu-Natal Province, South Africa

Abstract: It is widely recognized that HIV/AIDS has devastating but also uneven effects on afflicted communities. While much research has rightly focused on the impact of HIV/AIDS on families, communities and countries, less attention has been paid to foster carers' experiences and to the network of care. Based on qualitative fieldwork carried out over a 3-month period in KwaZulu-Natal Province, South Africa, this study analyses the experiences of those caring for orphans who receive a state-funded Foster Care Grant. Conversations with caregivers suggest the contentious nature of care; this is worth exploring further, as it can cast light on how such macro-level interventions are shifting what it means to be an orphan at the community level. The main reason for bringing these issues to the fore is to make development interventions better informed and therefore better able to address those factors giving rise to the challenges faced by caregivers.

Capital Flows and Growth in Developing Countries: A Dynamic Panel Data Analysis

Abstract: This paper unravels the capital flow–growth nexus by employing a model that incorporates contemporaneous influences and contemporaneous expectations. Using an unbalanced panel data set, the paper considers and highlights the role of indirect effects, through the spillover or interaction channel, in influencing economic development. Rigorous tests—incorporating tertiary education, alternative capital flow types and an interaction term—confirm the hypothesis that private capital flows are growth promoting in general, and upper middle-income countries appear to gain more from such flows than low-income countries.

Fair trade, diversification and structural change: towards a broader theoretical framework of analysis

Abstract: This paper responds to the argument that while Fair Trade governance might increase short-term welfare, it reduces long-term development prospects by discouraging diversification and structural change. Even though it is agreed that lower value sectors, such as commodity agriculture, are unlikely to offer a long-term solution to global income inequalities, the importance of their short- and medium-term contributions cannot be ignored by analysis. Furthermore, critics have evaluated Fair Trade governance against the benchmark of perfect market organisation. However, given the realities of the developing world, dismantling Fair Trade abandons poor producers not to theoretical free markets and successful diversification, but to market failures, capability constraints, and risk management issues - all of which present serious obstacles to beneficial change. In this light, analysis of FLO Fairtrade is used to argue that far from being detrimental, Fair Trade might actively contribute to diversification by alleviating some of the real world obstacles that otherwise retard development.

Did China Hurt the Textiles and Clothing Exports of Other Asian Economies, 1990–2005?

Abstract: Employing a gravity model, this article examines the impact of the rise of China's textile and clothing (T&C) sector on the exports of its Asian counterparts. It was established that China's textile exports posed a greater competitive threat than its clothing exports to the T&C exports of other Asian economies. It was also found that higher-income Asian economies fared better than their lower-income counterparts. This is because the higher-income Asian economies tended to be specialized in segments of the T&C sector less exposed to Chinese competition.

Buddhist Feminist Transnational Networks, Female Ordination and Women's Empowerment

Abstract: Consideration of the role that religion plays in women's lives in developing contexts can be important in understanding ways of approaching their “strategic gender needs”. Rather than rejecting religion for its inherent patriarchy, styles of “religious feminism” have emerged across the globe. These argue for reinterpretations of religious systems that are consistent with the “core” values of the tradition as well as various types of feminist thinking. The aim of this paper is to discuss the emergence of a transnational movement across Buddhist traditions and countries that is concerned to make full ordination an available option to women in contexts where it is currently prohibited. While becoming fully ordained is considered to be the most suitable way of becoming enlightened and escaping future rebirths, a strong theme within the movement is the argument that gender hierarchies within Buddhism have a broader cultural impact upon social attitudes that disempower women and limit their development. Dialogu...

Herbert Frankel: From Colonial Economics to Development Economics

Abstract: Herbert Frankel (1903–96) was an economist of long and varied achievement, who, after a distinguished career in South Africa, served as Oxford University's first Professor of Colonial Economic Affairs (later Professor of the Economics of Under-developed Countries) from 1946 to 1971. His professional route took him from colonial economics to development economics, making a significant contribution to each. His intellectual trajectory took him from being a critic of colonial economic policies to being a champion of the efficacy of free market liberalism to deliver development. In this he was a true precursor of the counter-revolution in development economics of the 1980s. In a number of ways his writings were prophetic, but it was a younger colleague, Peter Bauer, who became the main standard-bearer of neo-liberalism in development economics.

Deconstructing Reconstruction in Post-tsunami Aceh: Governmentality, Displacement and Politics

Abstract: Rolled out as a solution to the problem of displacement in the new post-tsunami context of sudden natural disaster and unprecedented international humanitarian assistance, so-called “barracks camps”, it is argued here, must be understood against the backdrop of pre-tsunami militarized conflict, internal displacement, forced relocation and involuntary return. However, this analysis also shows that, once introduced, barracks camps also emerged as (contested) sites for the further elaboration of the problem of displacement in the wider context of the far-reaching transformations underway in post-tsunami Aceh. That is, the materialization of barracks as a preferred mode of governmentality of displacement in post-tsunami Aceh anticipated the (in this context novel) institutionalization of (international) humanitarian needs assessments and aid delivery targeting such camp-like relocation complexes. In this way, the barracks camps also contributed to the making of new experiences of displacement, which, in turn,...

Vertical Integration and Sunk Capital in Transition Economies

Abstract: Agency problems in inter-firm trading relationships are severe in developing and transitional economies because of the limited decentralized information that can support contract enforcement and because the timing of intermediate goods production and payment differ. The consequences are derived for the equilibrium distribution of firm structures, production, prices, profits and trade in developing and transitional economies. Within a multi-market setting, equilibrium outcomes are characterized both for firms that are directly affected by contracting problems and for those that are not. The equilibrium features both excessive vertical integration and excessive development of small-scale retail enterprises, and insufficient, inefficient inter-firm trade. Average profits of vertically integrated firms are higher and those of small-scale retail enterprises and intermediate suppliers are lower than they would be were enduring trading relationships more easily established.

Safety Net Perception and its Effects on Household Investment in Developing Countries: Chemical Fertilizer Input by Cambodian Farmers

Abstract: Farmers in developing countries are reluctant to make investments for fear of failure and the economic distress resulting from this, but the perception of protection by a safety net may induce farmers to invest by reducing that fear. Using Cambodian farm household data, this paper examines factors affecting the perception of protection by a safety net and then assesses the effect of this perception on farmers' investment. For empirical analyses, perceived credit availability from relatives represents this perceived safety net; and chemical fertilizer input signifies the investment size. The results of the econometric analysis demonstrate that farm households with higher economic status, who are able to repay a loan or favour, are more likely to perceive such a safety net. It is also shown that the safety net perception positively affects chemical fertilizer input, implying that farmers accept risk when they perceive a safety net. These findings suggest that it is not only a lack of capital that deters poo...