Exports,growth and threshold effects in Africa

Abstract

The relationship between openness and growth remains a controversial issue in development economics with many studies focusing on the export–growth relationship. This paper examines whether the relationship between exports and growth found in large cross-section studies also holds in the context of African economies. The paper employs threshold regression techniques to examine whether African countries benefit more from exports when they reach a certain level of development or openness. Our results suggest that there is indeed a positive relationship between exports and growth in Africa. The threshold regression analysis also suggests that it is not necessary for a country to reach a certain level of development or to have an existing export base for this relationship to hold, though it is found that the relationship is stronger for countries that experience higher rates of export growth.     

The Return to Foreign Aid

Abstract

We estimate the average rate of return on investments financed by aid and by domestic resource mobilisation, using aggregate data. Both returns are expected to vary across countries and time. Consequently we develop a correlated random coefficients model to estimate the average returns. Across different estimators and two different data sources for GDP and investment our findings are remarkably robust; the average gross return on ‘aid investments’ is about 20 per cent. This is in accord with micro estimates of the economic rate of return on aid projects and with aggregate estimates of the rate of return on public capital.     

Changes in human capital and earnings inequality: Recent evidence from Brazil 1

Abstract

This paper estimates changes in the rates of return to human capital across the earnings distribution using data from over a 10-year period for Brazil. It uses these estimates to simulate the separate impacts of changes in returns to skills and changes in the supply of skills on earnings inequality. Evidence points strongly to growing inequality in rates of return to education in Brazil. This finding suggests that recent macroeconomic and trade reforms have been of most benefit to the skilled rather than the unskilled. Supporting evidence points to an improved competitiveness in the labour market, with workers increasingly rewarded for productivity. However, although increases in returns to education are more pronounced at the top of the earnings distribution, this did not in practice led to increased inequality. This is because levels of education and other labour market-rewarded endowments have increased and offset the rate of return effect. Appropriate education policy is therefore an essential partner for macroeconomic and trade reform if a developing economy is to avoid worsening income inequality.     

Does Livestock Ownership Affect Animal Source Foods Consumption and Child Nutritional Status? Evidence from Rural Uganda

Abstract

In many developing countries consumption of animal source foods (ASF) among the poor is still at a level where increasing its share in total caloric intake may have many positive nutritional benefits. This paper explores whether ownership of different livestock species increases consumption of ASF and helps improving child nutritional status, finding some evidence that both food consumption patterns and nutritional outcomes may be affected by livestock ownership in rural Uganda. Our results are suggestive that promoting (small) livestock ownership has the potential for affecting human nutrition in rural Uganda, but further research is needed to more precisely estimate the direction and size of these effects.     

Corruption,Privatisation and Economic Growth in Post-communist Countries

Abstract

This article empirically investigates the effects of corruption and privatisation on economic growth in the post-communist countries of Central and Eastern Europe and the former USSR. We use a corruption and privatisation augmented open-economy leader–follower endogenous growth model to derive our research hypotheses. In this setting, corruption, privatisation and external openness jointly determine the per capita income in the follower economy. This model predicts that economies with higher shares of private ownership, lower corruption, and higher external openness enjoy higher rates of growth. Our empirical verification of these predictions is based on a panel of 29 post-communist countries during the period 1996–2014. Our estimation results confirm the negative effects of corruption, while the positive effects of privatisation are limited to small-scale privatisation.     

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.     

Identifying Spatial Efficiency–Equity Trade-offs in Territorial Development Policies: Evidence from Uganda

Abstract

We contribute to the debate on the spatial allocation of infrastructure investments by examining where these investments generate the highest economic return (‘spatial efficiency’), and identifying trade-offs when infrastructure coverage is made more equitable across regions (‘spatial equity’). We estimate models of firm location choice in Uganda, drawing on insights from the new economic geography literature. The main findings show that manufacturing firms gain from being in areas that offer a diverse mix of economic activities. Public infrastructure investments in other locations are likely to attract fewer private investors, and will pose a spatial efficiency–equity trade-off.     

Deported before experiencing the good sides of migration: Ethiopians returning from Saudi Arabia

ABSTRACT

In the period November 2013–April 2014 more than 160,000 Ethiopians were deported from Saudi Arabia after a seven months amnesty period for undocumented migrants came to an end. This large-scale regularization campaign of the Saudi government must be seen in light of the ‘Arab Spring’, when popular uprisings in the Middle East were threatening dictatorial regimes. The effect of the Arab Spring was felt globally; the uprisings impacted upon migrants living in countries in the Middle East and on their countries of origin. This paper looks into the experiences of Ethiopian deportees prior, during and after their forced return. We argue that the fact that the migrants were not prepared for their sudden return affected their economic, social network and psychosocial embeddedness back in Ethiopia. In addition, the Ethiopian government has not been able to improve the returnees’ economic embeddedness, which has affected their social and psychological status negatively.     

Education,Employment and Earnings of Secondary School and University Leavers in Tanzania: Evidence from a Tracer Study

This study uses a tracer survey of secondary school completers in Tanzania to analyse the impact of educational qualifications on labour market earnings. We show that the rates of return to the highest educational qualifications for wage employees are not negligible and, at the margin, provide an investment incentive. However, we find little evidence of human capital effects in the earnings determination process for the self-employment sector. Introducing controls for father's educational background and a set of school fixed effects designed to proxy for school quality and potential labour market network effects reduces the estimated rates of return to educational qualifications. A comparison of our results with the available evidence from other countries in the region suggest that, despite an extremely small secondary and university education system, the private rates of return to education in the Tanzanian wage employment sector are comparatively low.     

The Making of the Middle-Class in Africa: Evidence from DHS Data

Abstract

This article examines the size and profile of the middle class in Africa using alternative definitions based on pooled unit record data from the Demographic and Health Survey for 37 African countries covering the period 1990–2011. Results suggest that size of the middle class has grown modestly in many countries in the 2000 decade as compared with the 1990s. The article approached the making of the middle class in Africa from institutional and policy perspectives. Quality of institutions, ethnic fractionalisation and education play a significant role in determining the rise of the middle class.     

How do Migration and Remittances Affect Human Capital Investment? The Effects of Relaxing Information and Liquidity Constraints

Abstract

This article explores the heterogeneous effects of the migration–remittance process on the educational attainment of Nepalese children. The results suggest that when controlling for remittances, the children of more educated or informed parents suffer from parental absence, while the children of less informed parents gain from migration, implying that the migration experience helps less educated parents estimate the value of and returns to education more precisely. The results also suggest that remittances help severely credit-constrained households enrol their children in school and prevent dropouts. These remittances help households that face less severe liquidity constraints increase their investment in quality education.     

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.     

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.     

Education and Freedom of Choice: Evidence from Arranged Marriages in Vietnam

Abstract

Using household data from Vietnam, we provide evidence on the effects of education on freedom of spouse choice. We use war disruptions and spatial indicators of schooling supply as instruments. The point estimates indicate that a year of additional schooling reduces the probability of an arranged marriage by about 14 percentage points for an individual with eight years of schooling. We also estimate bounds on the effect of education on arranged marriage when exclusion restrictions are violated locally (the lower bound is six to seven percentage points). The impact of education is strong for women, but significantly weaker for men.     

Covariations in the currency ratio and the velocity of money in underdeveloped countries 1

This paper investigates the effects of various socioeconomic variables on fertility rates, with special reference to the United States. Most of the results are consistent with the earlier cross‐sectional results of Adelman, Drakatos, et. al. More specifically it appears that such socioeconomic variables as age structure, education, per capita income, population, density, and urbanization influence birth rates in both developing and developed countries. Both linear and logarithmic forms are used to estimate birth rates. In the final portions of the paper an attempt is made to reconcile those cases in which the results were not consistent with some of the earlier findings.     

Poland,Germany and the EU: Reimagining Central Europe

Abstract

In this article, we look at the fissures in United Europe from both sides of the region where a post-Cold War ‘Middle/Central Europe’ should have been forged. How do leading German and Polish newspapers treat the categories of ‘Central’ or ‘Middle’ Europe relative to the concept of the Eastern–Western European divide and what are the discourses associated with these perspectives? At the time of a looming redefinition of the entire European project, what can media reports from Germany and Poland tell us about its future? We conclude that the media narratives in these two countries portend further tensions for European unity, since the new divisions now overlap the old ones. Our findings have implications for the future of democracy in the newly democratic countries of Central and Eastern Europe, including Poland.     

Divergence in India: Income differentials at the state level, 1970–97

Abstract

We examine India's regional disparities in economic performance between 1970–97. Our preliminary analysis shows that, in absolute terms, initially poorer states grew at slower rates than initially wealthier ones and that there is also evidence of increasing dispersion of income levels across the states. Our econometric analysis investigates the possibility of club convergence and conditional convergence. Although we do not find evidence of the former, we can suggest some of the factors associated in the latter. Our research also indicates that the onset of economic policy reform in 1991 significantly intensified growth differentials between the states.     

Economic Benefits of Rural Feeder Roads: Evidence from Ethiopia

We estimate households’ willingness-to-pay for rural feeder roads in Ethiopia. Using purposefully collected data, we compare the economic behaviour of households by remoteness to estimate the benefits of access to feeder roads. Although we cannot definitively assert a causal relationship, we cautiously estimate that gravel roads have internal rates of return of 12–35 per cent. These results suggest that rural feeder roads may have relatively high rates of return even in unfavourable settings where (a) small-scale farmers have low levels of marketed agricultural surplus, (b) non-farm earning opportunities are negligible, and (c) motorised transport services are not guaranteed.     

The rate of return on investment in education in Thailand

This paper summarizes the findings of a study carried out in 1970 by a small team of Thai and foreign research workers under the auspices of the National Education Council of Thailand. The study consisted essentially of (1) a statistical analysis of the structure of personal earnings in Greater Bangkok as revealed by a household survey specially conducted for the purpose; (2) an analysis of the costs of education in the entire country from data gathered by a mailed questionnaire to public and private schools; and (3) a calculation of private and social rates of return on educational investment in Thailand, making use oj (1) and (2).¹ An earlier paper reported on the statistical analysis of earnings (Blaug 1974). The present paper concentrates on the rate‐of‐return calculations, with a passing glance at the cost figures.