The demand for manpower—an East African case study 1

Using cross-sectional data from 13 African countries, I compare long-term health outcomes across cut and uncut women. This study is the first to use nationally representative data. Consistent with medical research, no evidence of general health impairments or decreased fertility induced by female genital cutting (FGC) is found; rather cut women have more children. The most pronounced long-term health impairments are a 24 per cent increase in the odds of contracting sexually transmitted infections and a 15 per cent increase in genital problems. Concomitantly, the odds that a cut woman will marry before an uncut woman are 13 per cent.     

The Determinants of Gender Differences in Income in Trinidad and Tobago

The present study employs 1993 Continuous Sample Survey of the Population data for Trinidad and Tobago to investigate the causes of gender income differentials. The findings suggest that such differentials are not well explained by differences in levels of human capital and other measured factors valued by the labour market. This result is robust to the disaggregation of the data into African, Indian and Other ethnic groups thereby raising the possibility of gender discrimination. African and Indian women's incomes would increase by over 20 per cent with the returns to the measured factors of their male, ethnic counterparts. Women would benefit from having men's industry distribution of jobs, but not men's occupational distribution. African women appear to be significantly more disadvantaged relative to their male counterparts than are Indian or Other women.     

Decomposing the Labour Productivity Gap between Migrant-Owned and Native-Owned Firms in Sub-Saharan Africa

Migration studies have been primarily based on the movement of individuals from developing to developed economies, with a focus on the impact of migrants on host country wages. In this study we take a different angle by exploring the labour productivity of migrant-owned firms versus native-owned firms in 20 African economies using firm-level data. We find that labour productivity is 78 per cent higher in migrant-owned firms than native-owned firms. Using the Oaxaca-Blinder decomposition method we find that structural effects account for 80 per cent of the labour productivity gap. Returns to manager education largely explain the productivity advantage of migrant-owned firms over native-owned firms. Interactions with the government, access to finance, informality, and power outages are also considerable contributors to the labour productivity gap.     

How Can African Governments Reach Poor Farmers with Fertiliser Subsidies? Exploring a Targeting Approach in Ghana

African governments have been pursuing reforms to improve the targeting of fertiliser subsidy programmes, but recent experience suggests that these reforms have not ensured that subsidies reach intended beneficiaries. Using a targeting approach based on proxy means tests with carefully selected indicators, this paper suggests that Ghana’s fertiliser subsidy programmes can be targeted to the country’s poor and smallholder farmers more efficiently and more cost-effectively. While a universal subsidy in 2012 is estimated to have reached 11 per cent of poor farmers, the proposed targeting approach would have reached 70 per cent of the poor farmers in northern Ghana and 50 per cent of poor farmers in southern Ghana. Targeting reduces the costs of leakages by about 72 per cent, thus justifying the costs of administering targeted programmes using the poverty proxies. Furthermore, we show that once the initial models are constructed, the targeting approach can be used for nearly 20 years without any significant losses in accuracy. We propose that policy-makers should consider implementing this targeting approach on a pilot scale involving a few communities and, if found successful in practice, in a larger-scale programme.     

Higher education and economic growth in Africa

This paper uses panel data over the 1960–2000 period, a modified neoclassical growth equation, and a dynamic panel estimator to investigate the effect of higher education human capital on economic growth in African countries. We find that all levels of education human capital, including higher education human capital, have positive and statistically significant effect on the growth rate of per capita income in African counties. Our result differs from those of earlier research that find no significant relationship between higher education human capital and income growth. We estimate the growth elasticity of higher education human capital to be about 0.09, an estimate that is twice as large as the growth impact of physical capital investment. While this is likely to be an overestimate of the growth impact of higher education, it is robust to different specifications and points to the need for African countries to effectively use higher education human capital in growth policies.     

The impact of the Owen falls hydro‐electric project on the economy of Uganda 1

Inflation induced by an increase in the money supply may be conducive to economic growth, because it can be positively related to the savings ratio. This relationship is, however, limited by a certain rate of money supply which is associated with the maximum overall savings ratio. Treating money as a consumers’ good based upon Levhari‐Patinkin [1968], this study estimates a quadratic‐form savings function using international cross‐section data. It shows that the optimal rates of money supply are 11–12 per cent and 6–8 per cent in underdeveloped and developed countries respectively.     

Why growth is not enough: Household poverty dynamics in Northeast Gujarat,India

Despite high growth rates in Gujarat, exceeding 9 per cent per year over the decade of the 1990s, poverty in 36 villages located in the northeastern part of this state has changed hardly at all. In these villages, 9.5 per cent of households escaped from poverty over the past 25 years, but 6.3 per cent of households became poor at the same time. Escape and descent are not symmetric: different reasons account for escaping poverty than those for declining into poverty. Growth alone is hardly sufficient to achieve poverty reduction on any significant scale. Public policies will be needed to address directly the separate causes for descent into poverty.     

Agricultural Production,Dietary Diversity and Climate Variability

Abstract

Nonseparable household modelsoutline the interlinkage between agricultural production and household consumption, yet empirical extensions to investigate the effect of production on dietary diversity and diet composition are limited. While a significant literature has investigated the calorie-income elasticity abstracting from production, this paper provides an empirical application of the nonseparable household model linking the effect of exogenous variation in planting season production decisions via climate variability on household dietary diversity. Using degree days, rainfall and agricultural capital stocks as instruments, the effect of production on household dietary diversity at harvest is estimated. The empirical specifications estimate production effects on dietary diversity using both agricultural revenue and crop production diversity. Significant effects of both agricultural revenue and crop production diversity on dietary diversity are estimated. The dietary diversity-production elasticities imply that a 10 per cent increase in agricultural revenue or crop diversity result in a 1.8 per cent or 2.4 per cent increase in dietary diversity respectively. These results illustrate that agricultural income growth or increased crop diversity may not be sufficient to ensure improved dietary diversity. Increases in agricultural revenue do change diet composition. Estimates of the effect of agricultural income on share of calories by food groups indicate relatively large changes in diet composition. On average, a 10 per cent increase in agricultural revenue makes households 7.2 per cent more likely to consume vegetables, 3.5 per cent more likely to consume fish, and increases the share of tubers consumed by 5.2 per cent.     

An Exploratory Analysis of Fertility Differentials in India

The association between improving economic conditions and declining growth of population has led economists and demographers to hypothesise a direct relationship between indicators of economic development and fertility rates. Using recent National Family Health Survey data and the 1991 Census to explore factors contributing to fertility rates in India, we found that economic variables explain 70 per cent of the interstate variations in India's fertility rates. However, several non-economic variables explain an even greater proportion, for example, indicators of female autonomy explain 84 per cent of the variations. Our analysis demonstrates that to successfully explain Indian fertility rates, models must rely heavily on non-economic variables.     

The analysis of social interest rate in Trinidad and Tobago

In this article a Social Interest Rate (SIR) is derived for Trinidad and Tobago on the basis of an individualistic, independent and multi‐period consumption utility function. The component parameters of this rate are: a mortality‐based pure time discount rate, the growth rate of per capita real consumption and the elasticity of marginal utility of consumption. The final result is 6.2 per cent which is plausible and thus can be readily used by economic planners in various resource allocation policies in that country.     

Climate Instability,Urbanisation and International Migration

This paper focuses on climate-induced migration. We construct a simple theoretical model where, in a first step, climate shocks accelerate the transition from the traditional to the modern sector, leading rural workers to move to urban centres within national borders, while in a second step, downward pressures on wages due to the greater labour supply in cities push people to engage in international migration. To test this hypothesis, we exploit a rich panel dataset, displaying a representative picture of bilateral migration flows and climatic data across 222 countries for the period 1960–2000. Findings suggest that in the next few years the climate-induced growth rate of migrant stocks might be in a range between 8.6 per cent and 12.8 per cent, especially from developing countries, where the level of rural employment is more likely to be affected by climatic shocks.     

Population and income: Is there a puzzle?

Abstract

This note presents wide evidence on the relationship between population and income for 125 countries for which data was available for the period 1950–2000. The main result is that there is a weak but negative relationship between population growth and per capita GDP, as income increases population expands at a slower rate. This relationship appears to be stronger for African countries and for Asian countries before 1970.     

Trade,taxes and debt repayment in Sri Lanka

The purpose of this article is to estimate the cost of taxing the export, import or domestic sectors of Sri Lanka for the purpose of reducing the national debt. A simple GNP model is used to estimate the elasticities that characterise the three aggregate sectors and are used to simulate the effects of taxing for debt servicing. The results show that a tax on the import sector generates the largest net savings on trade balance and that the savings from not importing can be substantial. However, for the period 1977–87 a 10.0 per cent tax on the import sector caused a decline in the growth of the economy by 3.0 per cent. The burden of the tax falls heavily on the domestic sector in terms of lost production and increased unemployment.     

Interest Rates and Investment in East Asia: An Empirical Evaluation of Various Financial Liberalisation Hypotheses

The article attempts to shed light on the appropriate interest rate policy in the process of economic development. To this end, we examine whether higher interest rates lead to higher investment (and growth) in four East Asian countries. We find that the investment rate went up with real interest rates up to 9 per cent in all four countries but started declining at still higher interest rates in two of the countries. Further, a banking crisis occurred in each of the three countries for which the real interest rates exceeded 9 per cent. This evidence rejects the ‘neo-structuralist’ argument. Nor does it support unbridled financial liberalisation. Yet, it provides only limited support to Stiglitz's case for ‘mild financial repression (real interest rates near zero)’ since reducing real interest rates from say, 6 to 3 or 0 per cent would have reduced investment. The optimum policy seems to be closest to McKinnon's ‘restrained financial liberalisation’ policy, that is, liberalisation with a moderate upper limit (about 6 or 7 per cent) on the real interest rates.     

Economic Fluctuations and Growth in Sub-Saharan Africa: The Importance of Import Instability

The traditional thesis that export instability (XI) is deleterious to economic growth in developing economies has received mixed empirical results. For African countries, recent research suggests that the effect of XI is weak, but that capital (investment) instability (KI) adversely influences economic growth. The current study argues that in many of these nations, imports are likely to be critical to the growth process, while exports represent only one of the various sources of investment resources. Hence, import instability (MI) may pose a more serious problem than XI in hindering economic growth. Employing 1968-1986 World Bank data for 33 sub-Saharan African countries, XI, KI and MI variables are calculated for each country as the standard errors around the respective 'best-fitted' trends over the sample period. These instability measures and additional World Bank data are then used to estimate an augmented production function that controls for the effects of labour, capital, and exports. The study finds that although KI is still a relevant argument of the production function, MI appears to be even more important, while XI is extraneous.     

Risk,Credit Constraints and Financial Efficiency in Peruvian Agriculture

Based on a panel data set, we use a two-stage analysis to evaluate the effects of access to formal credit on financial efficiency of farms in northern Peru. The first stage uses non-parametric data envelope analysis to estimate farm-specific measures of financial efficiency; 28 per cent of farmers are financially inefficient and credit constraints reduce profits of these farmers by an average of between 17 and 27 per cent. The second stage uses Tobit regression to evaluate the determinants of financial inefficiency; the results point to uninsured risk as a key determinant of financial inefficiency and suggest that policies to strengthen agricultural insurance markets would likely pay large dividends in rural Peru.     

Democracy and the Distribution of NGOs Promoting Renewable Energy in Africa

Abstract

Roughly 60 per cent of Africans lack access to electricity, negatively impacting development opportunities. Non-governmental organisations (NGOs) have started promoting distributed generation – small-scale, localised electricity generation – to change this situation. Despite widespread need, however, the dispersion of these distributed generation NGOs (DG-NGOs) is uneven, with high concentrations in a few African countries. Drawing on an original database and field research, we analyse location variation among DG-NGOs across the continent. We find that DG-NGOs are likely to operate in democratic settings with large populations that lack access to electricity. International DG-NGOs are also likely to operate where aid allocation levels are relatively high.     

The relation between rate of growth and level of development

The paper tests the hypothesis that countries pass through three successive phases of development: an initial phase of stationary or slow growth; a phase when the growth rate is increasing (accelerating growth), and finally, a phase of decreasing (decelerating) growth. Since the regressions turn out to be significant at the 0.1 per cent level, it may be taken that the hypothesis is confirmed. An explanation is offered and deviant cases are discussed. One of the consequences of the established regularity is that the gap is widening between the least developed and other countries, but the countries at the intermediate level of development are catching up. Thus the usual twofold classification of countries will have to be replaced by a threefold one: less developed, developing and developed countries.     

Exchange Rate Pass-Through to Consumer Prices in South Africa: Evidence from Micro-Data

Abstract

A sizeable literature examines exchange rate pass-through to disaggregated import prices, but few micro-studies focus on consumer prices. This article explores exchange rate pass-through to consumer prices in South Africa, for 2002–2007, using a unique data set of highly disaggregated data at the product and outlet level. The empirical approach allows pass-through to be calculated over various horizons for different goods and services. The heterogeneity of pass-through for food sub-components is considerable. Switches between import and export parity pricing of maize are found significant for five out of ten food sub-components. Using actual weights from the CPI basket, overall pass-through to the almost 63 per cent of the CPI covered is about 30 per cent after two years, and higher for food.     

Standard of Living and Disability in Cambodia

Little is known about the extra costs faced by households with disabled members in low resource settings and the impact of these costs on living standards. In this paper we estimate the direct cost associated with disability for households in Cambodia. Using the Standard of Living approach, the direct cost associated with having a member with disabilities is estimated to be 19 per cent of monthly household consumption expenditure. Accounting for the direct cost of disability doubles the poverty rate amongst households with disabled members from 18 per cent to 37 per cent, and increases the poverty gap from 3 to 8 per cent. A comparison of the direct cost associated with disability and income support received from government and family sources reveals that only 7 per cent of the costs of disability are met. Our findings suggest that, in the absence of increased coverage of public income support, households with disabled members will continue to experience a lower standard of living compared to households without disability in Cambodia.