The Long-run Relationship between Outward Foreign Direct Investment and Total Factor Productivity: Evidence for Developing Countries

Outward foreign direct investment (FDI) from developing countries has been growing significantly in both absolute and relative importance in recent years. Nevertheless, there is surprisingly little research on the home-country effects of outward FDI for these countries. This paper examines the long-run relationship between outward FDI and total factor productivity for a sample of 33 developing countries over the period from 1980 to 2005. Using panel co-integration techniques, we find that outward FDI has, on average, a robust positive long-run effect on total factor productivity in developing countries and that increased factor productivity is both a consequence and a cause of increased outward FDI.     

Bridging the donor-decentralization gap: Rethinking incentives and institutional impacts in control-oriented bureaucracies

Some important studies suggest that the organizational imperatives of donor agencies explain the tendency of foreign aid to reinforce institutional centralization rather than to support the development of decentralized institutions in recipient countries. This article shows that certain design features of two decentralized USAID projects completed in Peru during the 1980s facilitated achieving donor objectives, decentralized institutional development, and national-level reforms favoring decentralization. Analysis of this experience reveals that these design features reduced the costs and increased the benefits of decentralized implementation for the donor, while allowing synergies between implementation and institution building to be exploited. Indeed, in the context of Peru’s highly centralized, control-oriented public sector, bypass mechanisms traditionally used by donors to expedite implementation and insulate projects from uncertainty also generally enhanced the development of decentralized institutions. The lessons distilled in this case study have broad relevance since the sorts of administrative obstacles encountered by USAID in Peru—excessive centralization, disbursement bottlenecks, and onerous bureaucratic controls—are all too frequently found in other developing countries. Gregory D. Schmidt is an associate professor of political science at Northern Illinois University and an associate ofSeguimiento, Análisis y Evaluación Para el Desarrollo (SASE), a Peruvian nongovernmental organization specializing in grassroots development. He is the author of a book and various journal articles on development issues, and of a forthcoming book on the 1990 Peruvian presidential election.     

The Effects of Competition Policy on Development – Cross-Country Evidence Using Four New Indicators

Over the last two decades, many developing countries have introduced competition policies. This paper introduces four new indicators on various aspects of competition laws and competition agencies to make competition policies comparable. These indicators are used to estimate the effects of competition policies and all four contribute at least marginally to explaining differences in total factor productivity. This is also true if developing countries are analysed separately. In addition to the direct effects of competition policy on total factor productivity, an indirect effect is identified: countries scoring high with regard to competition policy suffer less from corruption.     

Cross-Country Disparity in Agricultural Productivity: Quantifying the Role of Modern Seed Adoption

Inequality of agricultural labour productivity across the developing world has increased substantially over the past 40 years. This article asks: to what extent did the diffusion of Green Revolution seed varieties contribute to increasing agricultural labour productivity disparity across the developing countries? We find that 22 per cent of cross-country variation in agricultural labour productivity can be attributed to the diffusion of high-yielding seed varieties across countries, and that the impact of such diffusion differed significantly across regions. We discuss the implications of these findings for policy directed at increasing agricultural labour productivity in the developing world.     

Decentralization in Tanzania: Design and Application in Planning Decisions

Every state copes with the question of which level of government should bear responsibility for social services such as health care and education. Tanzania is no exception. The current government infrastructure of Tanzania is based on the principle of Decentralization by Devolution (DbyD) and can be seen as a reaction to previous structures based on centralized de-concentration. This article reviews the decentralization as designed in the DbyD policy and its application in planning decisions by assessing the involvement of local communities in decision making, based on a case study in two primary facilities. The conclusion is that even though policy states a strong decentralized government, in reality central preferences dominate the decision-making. Wishes expressed in local plans are ignored in the planning procedure. The article identifies the factors that contribute to this central influence and concludes with reviewing the value of decentralization policy in Tanzania and other developing countries.     

Household Welfare Effects of Agricultural Productivity: A Multidimensional Perspective from Ghana

Although poverty reduction policies in developing countries hinge on the link between smallholder productivity and welfare, micro level empirical evidence on this is limited in sub-Saharan Africa and neglects the multidimensionality of welfare. This article contributes through investigating the productivity-poverty relationship using a number of welfare measures with a three-period panel dataset for Ghana. The findings are that welfare is increasing with labour productivity irrespective of the measure used, but that dramatic increases in productivity would be required to achieve meaningful poverty reduction.     

Fixed capital stock depreciation in developing countries: Some evidence from firm level data

Abstract

Previous growth accounting studies suggest severe capital underutilisation and mismeasurement of the stocks of capital in some developing countries. Using the firm level data sets from the World Bank surveys, this paper estimates the economic depreciation rates of fixed capital stocks in the manufacturing industries of seven developing countries. The findings indicate that the stocks of fixed capital may depreciate at higher rates in these countries, as compared with the normal rates usually assumed for advanced industrial countries. This study also discusses the economic and social forces that may influence the incentive to maintain capital appropriately and the implications of high depreciation for the total factor productivity (TFP) growth estimates and volatility of capital accumulation.     

Deindustrialisation and the social and economic sustainability nexus in developing countries: Cross‐country evidence on productivity and employment

In an empirical investigation of the interactions between industrial structure and macro outcomes, an accounting framework was applied to relate changes in sectoral employment and output compositions to changes in overall productivity growth over time. The numerical results were interpreted using a taxonomy describing industrialisation and deindustrialisation in developing countries. The findings suggest that, in particular, industrial performance correlates with the overall performance of an economy, and therefore is the key sector in explaining the sustainability of different regional patterns in overall productivity and employment growth. That is, negative rates of productivity growth in the industrial sector are strongly associated with negative productivity growth for the economy as a whole, and vice versa. Further, slow industrial growth may lead to low road development, in which productivity growth trades off with employment growth, while high road development is defined as simultaneously expanding employment and overall productivity growth.     

Private Sector Incentives and the Diffusion of Agricultural Technology: Evidence from Developing Countries

The role of intellectual property rights (IPRs) has been extensively debated in the literature on technology transfers and agricultural productivity growth in developing countries. However, few studies offer cross-country evidence on how IPRs affect yield growth by incentivising private sector investment in cultivar improvement. We address this knowledge gap by testing technology diffusion patterns for six major crops using a unique dataset for the period 1961–2010 and an Arellano–Bond linear dynamic panel-data estimation approach. Findings indicate that biological and legal forms of IPRs promote yield gap convergence between developed and developing countries, although effects vary by crop.     

Health strategy and development planning: Lessons from the people's republic of China

In Section I of this paper we present an analytical paradigm by which to evaluate health and medical care services in underdeveloped countries. In Section II, we apply this framework to an analysis of the health policies of one developing country, China. In Section III, we evaluate the Chinese health and medical care policies within the framework of a cost‐benefit analysis and argue that these policies are appropriate to China's factor proportions and health needs. Finally, in Section IV, we raise a number of questions to be considered in any more detailed studies on the transferring of the Chinese services to other developing countries.     

Planning,Budgeting, and Health Care Performance in Ukraine

Abstract

The Government of Ukraine has not pursued health care reforms now commonplace in the rest of Europe and Central/Eastern Europe that rely less upon centralized, state delivery of services and more on decentralized operational responsibilities and competition for services that increase patient choice. The Ukrainian health sector suffers from personnel overspecialization and facility overcapacity, resulting in high-cost, low productivity services. Budget funds are unavailable for operations and maintenance resulting in poor quality services. The state provides health care as a constitutionally-protected monopoly, relying on the traditional command and control model which ignores cost/quality competition options and responsibilities to patients. Overall, the system which produces these results is over-centralized, requiring achievement of physical service norms without providing sufficient funds. The centralized system does not monitor or evaluate services beyond narrow financial accountability and control requirements. The health care system is paradoxically over-centralized but unable to regulate or control local health care official decisions to ensure compliance with national standards. Needed are reforms in the health care policy and operational areas to produce the supply of services needed for national economic recovery. In the short-term, the budgetary framework can be improved as an operational/management guide through development of comparative information on results. Most of this information can be based on the economic classification consistent with the chart of accounts. Funding stability can be increased to improve expenditure control by implementing a new fiscal transfer formula that provides discretion (i.e., block grants) and performance criteria (i.e., outcome measures). In the medium-term, building on the technical foundation of physical norms and statistical reporting, the health care budgeting and financial management system should shift emphasis to: program planning, policy and management analysis, and public communications. The results of these reforms should lead to decentralized health care operations, service analysis, and delivery responsibilities. At the same time, the reforms should lead to proper centralization of responsibilities for strategic policy decisions, safety regulation, national standards, and program evaluation.     

PATH: pioneering innovation for global health at the public–private interface

Seattle-based PATH is one of the world’s largest not-for profit organisations focused on improving health in low-income countries. This article argues the history of this understudied organisation is critical to understanding how collective action focused on facilitating developing countries’ access to essential health technologies is structured. Since its establishment almost 40 years ago, the organisation has been a catalyst for multidisciplinary public–private collaboration that has produced affordable, culturally appropriate health technologies. From its origins in reproductive health, enabling contraceptive technology transfers and advising on regulatory standards, to its more recent managerial roles in the development of inexpensive vaccines produced in developing countries, PATH has repeatedly illustrated how public–private collaboration in product research and development can increase poor populations’ access to essential health technologies. This in turn has provided substance to the contested narrative that engaging business is critical to reducing global health disparities.     

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.     

International Trade,R&D Spillovers and Productivity: Evidence from Indian Manufacturing Industry

This paper examines the effect of trade facilitated R&D spillovers on the productivity of manufacturing firms in India, inter-sectoral variation in the effect on productivity and the importance of firms' investment in R&D, technology imports and plant and machinery in enhancing the productivity effect. Using firm level panel data, the study shows that R&D spillovers have a significant effect on productivity and that this effect is greater in technology-intensive industries. The paper also shows that firms' investment in plant and machinery enhances the productivity effect of R&D spillovers. The paper provides detailed micro-level evidence on the argument that trade openness promotes technological progress in developing countries.     

Improving the Health Coverage of the Rural Poor: Does Contracting-Out Mobile Medical Teams Work?

Low population density in rural developing countries coupled with deficient infrastructure, weak state capacity and limited budgets makes increasing health care coverage difficult. Contracting-out mobile medical teams may be a helpful solution in this context. This article examines the impact of a large-scale programme of this type in Guatemala. We document large impacts on immunisation rates for children and prenatal care provider choices. The programme increased substantially the role of physician and nurses at the expense of traditional midwives. The results indicate that mobile medical teams substantially increased coverage of health care services in Guatemala, and could be effective in other developing countries.     

Suicide in developing countries (3): prevention efforts

Until now, suicide prevention efforts have been limited in developing countries, although there are pockets of excellent achievement. Various universal, selective, and indicated interventions have been implemented, many of which target a different pattern of risk factors to those in developed countries. In the absence of sufficient mental health services, developing countries rely heavily on nongovernment organizations (NGOs) to provide crisis interventions for suicidal individuals, as well as proactive interventions aimed at raising community awareness and building resilience. Often these NGOs work within a social and public health framework, collaborating with others to provide nested suicide prevention programs that are responsive to local community needs. There is a clear need to develop appropriate, relevant and effective national suicide prevention plans in developing countries, since, to date, only Sri Lanka has done so. These plans should focus on a range of priority areas, specify the actions necessary to achieve positive change in these priority areas, consider the range of collaborators required to implement these actions, and structure their efforts at national, regional, and local levels. The plans should also promote the collection of accurate data on completed and attempted suicide, and should foster evaluation efforts.     

The challenge of design of intergovernmental relations in economies in transition

The governments of Eastern Europe and the former Soviet Union are at a crucial juncture in their movement from highly centralized command economies to more decentralized market economies. While there is a belief in these countries that decentralization brings greater economic efficiency, the reality is that such a transition is a difficult process. This paper examines what types of administrative reforms are needed for the decentralization process, how far along the countries are with respect to these reforms, and what reforms are missing. As we discuss, many of the necessary administration reforms are missing and we argue that more attention must be paid to these elements for successful decentralization of these governments.

This paper examines the recent experience and reform needs of the key administrative aspects of the design of intergovernmental relations in countries in transition in Eastern Europe and in the former Soviet Union. There is a widespread realization in all of these countries that decentralizing government will help increase efficiency in the public sector just as privatization will improve efficiency in their economies. Decentralization of government operations is also attractive as a way to cement a democratic form of government. Despite the appearances of the existence of an already decentralized system, such as in the case of the Soviet Union, this experiment started in practically all cases with a lack of institutions and experience on how decentralized government operations should be organized.

As different as these countries are, there are many similarities in the reform process they are following in order to decentralize government structure. While the basic components of a decentralized system of government are emerging in many of these countries the structure of government has not fully evolved in a manner that can support such a decentralized system. Often, governments remain structured along a vertical hierarchy: information, budgetary authority, and revenue pass from the central government down to subnational levels of government while little communication or interaction exists at a horizontal level. In general, the assignment of revenue and expenditure has not been clearly defined among the two or three levels of government, central government transfers continue to occur in a relatively ad hoc manner, and the entire budgeting system still rests in many cases on more or less formal system of negotiations and bargaining among the different levels of government. There has been some change in this structure in certain countries. Over the last three years, both Poland and Hungary have legally increased the automony of subnational governments. In 1994 in Russia a new and more transparent system of intergovernmental grants has been established between the federal government and the regions. In 1994 also, Latvia introduced a more transparent formula-driven, transfer formula for the regional and municipal governments.

The focus of this paper is to develop a “blue print” for necessary changes in organization and administration of intergovernmental relations in countries in transition. While many experts have recently been discussing the public finance policy components of this new, evolving relationship among levels of government, less attention has been paid to the structural and administrative challenges and the information design issues that must be met in order to develop and support a system of intergovernmental relations.

The paper is organized as follows: First we review the major responsibilities and their allocation among levels of government, the assignment of revenue sources, and the system of transfers. We then turn to a discussion of the current experience of Eastern European and NIS countries in the context of the structural components of an intergovernmental fiscal system. Next, we analyze the organizational reforms that are necessary for the efficient functioning of a decentralized system of government in the economies in transition. Finally we “rate” the transition economies in relation to their current design of the system of intergovernmental relations and support mechanisms.     

Spatial Spillover Effects from Foreign Direct Investment in Vietnam

This paper investigates the role of inter-firm interaction and geographical proximity in the determination of productivity spillover effects from foreign to domestic firms. We developed an estimation approach using the Spatial Durbin model and applied this to a firm-level dataset from Vietnam from 2000–2005. We found that productivity spillovers diminished when the distance between foreign and domestic firms increases and that interactions among local firms amplify the spillovers. Within short distances, the presence of foreign firms creates positive backward, negative forward and horizontal spillovers. Based on the findings, several implications are extracted regarding promotion policy for foreign direct investment in developing countries.     

Post-Accra: is there space for country ownership in global health?

Abstract

On 4 September 2008 the Accra Agenda for Action, which emphasised that country ownership over health must be strengthened, was agreed upon. While the Agenda for Action, which builds on the 2005 Paris Declaration, is a major step forward, there are still structural factors that impede developing country ownership in health. This paper outlines the key issues in the governance and resourcing of public health in low- and middle-income countries focusing on three major structural challenges for developing countries: the proliferation of initiatives, donor influence on priority setting and donors' lack of accountability, and the sustainability of current levels and types of external financing. How can these structural obstacles be overcome? Three avenues hold considerable promise: creating new mechanisms to hold donors to account, developing national plans and strengthening national leadership in health, and building South–South collaborative networks through bilateral, multilateral and plurilateral relations.     

Decentralisation and government provision of public goods: The public health sector in Uganda

While many developing countries have devolved health care responsibilities to local governments in recent years, no study has examined whether decentralisation actually leads to greater health sector allocative efficiency. This paper approaches this question by modeling local government budgeting decisions under decentralisation. The model leads to conclusions not all favourable to decentralisation and produces several testable hypotheses concerning local government spending choices. For a brief empirical test of the model we look at data from Uganda. The data are of a type seldom available to researchers–actual local government budgets for the health sector in a developing country. The health budgets are disaggregated into specific types of activities based on a subjective characterisation of each activity's ‘publicness’. The empirical results provide preliminary evidence that local government health planners are allocating declining proportions of their budgets to public goods activities.