The Truth about Trade: The Real Impact of Liberalisation

The usual perspective on technology spillovers from FDI sees the MNC subsidiary as a passive actor. It presumes that the technological superiority that spreads from subsidiaries to other firms in the host economy is initially created outside it by MNC parent companies, and is delivered to subsidiaries via international technology transfer. The role of subsidiaries is little more than to act as a ‘leaky container’ lying between the technology transfer pipeline and the absorption of spillovers by domestic firms. This paper suggests a different model in which a substantial part of the potential for spillover is created within local subsidiaries as a result of their own knowledge-creating and accumulating activities in the host economy. We explore empirically the effects of these activities on technology spillovers from FDI using data for industrial firms in Argentina over the period 1992–96. The analysis suggests that significant results can be obtained incorporating subsidiaries' own technological activities as an explanatory variable of the spillover process.     

Trade Liberalisation and Export Performance in Selected Developing Countries

This article examines the impact of trade liberalisation on export growth for a sample of 22 developing economies. The research applies dynamic panel data models based on fixed-effects and generalised methods of moments (GMM) estimators. In addition, heterogeneous panels for the complete sample, as well as for different regions of the world, are estimated using a time-series/cross-section technique. The main findings are that trade liberalisation is a significant determinant of export performance, but its effect varies across continents. Export duties have a small detrimental effect on export growth, while relative price changes and world income growth have the expected signs.     

The Impact of Household Structure on Female Autonomy in Developing Countries

Abstract

Joint household structures in which several generations co-reside in a single house are common across developing countries. Such households may confer benefits on all the family members through household public goods with the patriarch exercising greater control over resources. Therefore, the household structure may affect the bargaining power of its members. This paper estimates the effect of joint versus nuclear household structure in India on the autonomy of women and their labour force participation and the heterogeneity in the effects by income, caste, and region. I use an instrumental variable approach and find that women living in nuclear households have greater decision-making power.     

Short and Long Recall Errors in Retrospective Household Surveys: Evidence from a Developing Country

While recall errors in retrospective data from household surveys may generate estimation biases, the nature and the relative magnitude of the errors are still largely unknown, especially in the context of developing countries. To bridge this gap in the existing studies, we conduct a resurvey of respondents of the Vietnam Household Living Standards Survey (VHLS) 2006. The combined data set allows us to investigate a variety of short-term and long-term errors associated with recall surveys. First, our empirical results suggest that when we ask total expenditure rather than categorised expenditures, long recall errors are no worse than short recall errors. Second, we found mean-reversion only for long recall errors in the sum of categorised expenditures but not necessarily for total expenditure. Finally, the inclusion of household size, asset, income, and geographical dummy variables in regression analyses may mitigate the biases arising from measurement errors.     

Trade Liberalisation and The Poverty of Nations: A Review Article

This two‐part article is an attempt to clarify the social conditions upon which the viability and efficiency of the market system rest. It strives to show that the ‘embeddedness’ thesis, that is, an explanation based upon the existence of long‐run personal ties involving the use of reputation mechanisms among transactors, cannot fully elucidate the question as to how the problem of trust is solved in market societies. As explained in Part I, there are difficulties of both theoretical and empirical/historical kinds and these explain why the ‘market order’ needs to be sustained by private and public order institutions.

In Part II, the role of generalised morality in backing or supplementing such institutions is discussed in the light of game theory, and particular emphasis is put on the ability of moral norms to sustain honest behaviour by generating the right kind of preferences and establishing trust. The vexed problem of the dynamics of norm emergence and erosion is then addressed with a view to showing that norms of generalised morality — perhaps contrary to moral norms in small groups — cannot be easily created by fiat nor be expected to evolve spontaneously when they are needed to make economic exchanges viable. Ultimately, the cultural endowment of a society plays a determining role in shaping its specific growth trajectory, and history therefore matters. Finally, to illustrate the theoretical discourse, reference is made to present‐day Third World countries. It is argued that economic development is especially difficult in countries where norms of limited‐group morality prevail and do not readily give way to generalised morality.     

Rethinking the Effects of Microcredit on Household Welfare in Cambodia

This article analyses the effects of microcredit on household welfare in terms of household expenditure per capita in Cambodia, with data from the Cambodia Socio-Economic Survey carried out in 2014. The analysis describes the effects via formal and informal lending sectors, accounting for endogenous selection bias arising from unobserved factors and for structural differences between borrowers and non-borrowers in terms of expenditure functions. The findings suggest that microcredit in both sectors reduces household expenditure.     

The Proliferation of Developing Country Classifications

We study the external and internal proliferation of country classifications in development policy. The number of classifications increased from four (1985) to 17 (2013) when the average in our sample of 111 developing countries exceeded three classifications per country. Based on historical overview and comparative case study for land-locked development countries and small-island development states (geographically defined classifications without overlap) we find that internal proliferation is associated with lacking a clear rationale, no definition of country characteristics, and possibly the direct involvement of developing countries in designing the category. External proliferation may reflect antinomic delegation, geopolitical and bureaucratic motives.     

The Effects of Improved Roads on Wages and Employment: Evidence from Rural Labour Markets in Indonesia

This paper examines the impact of road quality on labour supply and wages using household panel data from rural Indonesia. The analysis uses fixed-effect instrumental variable estimation by first differencing two-round panel data. First, road projects are found to increase the transportation speed. Second, the empirical results from intra-village variations of household endowments and labour-market behaviour show that an increase in transportation speed raised wages in both non-agricultural and agricultural employment, and was associated with a decline in working time in agricultural employment, for the households whose members are relatively educated. The findings support potential complementarity between road quality and education, implying that the government’s public investments in roads and education should be coordinated to capture cross-augmenting positive impacts in the long run.     

Job Strenuousness and Obesity: The Case of a Developing Country

Abstract

This paper analyses the Indonesian Family Life Survey to show that job strenuousness is negatively related to obesity, which is largely consistent with the literature. However, this paper does not interpret the relationship as causal. Instead, efforts are made to demonstrate that the relationship is attributable to sample selection: workers with low socioeconomic status are lightweight and selected for strenuous jobs. This paper warns against reflexive applications of the conclusions derived from the developed world to the developing world. Our results imply that sedentariness at work probably plays a small role in the prevalence of obesity in the region.     

Foreign Ownership and Employment Growth in a Developing Country

Many developing countries would like to increase employment in the formal sectors. One way to accomplish this goal may be to encourage the entrance of foreign firms. We examine employment growth in Indonesian plants taken over by foreign owners from domestic ones. We also examine the effect of FDI during different trade regimes and the timing of employment effects following an acquisition. For plants that change the nationality of ownership, we find a strong effect of shifts from domestic to foreign ownership in raising the growth rate of employment, but no significant effects of shifts from foreign to domestic ownership.     

Local Financial Development and Household Welfare in Vietnam: Evidence from a Panel Survey

We examine the impact of local financial development on household welfare in Vietnam. We employ household-level panel data for the periods 2007, 2008, 2010 and 2013 covering three provinces and measure local financial development at the district, sub-district and village levels. To account for potential endogeneity that could emanate from the fact that local economic development could spur local financial development, we employ a recently suggested method of identification through heteroscedasticity. Our results show that local financial development has a significantly positive effect on household annual income, consumption and consumption smoothing.     

The Impact of International Remittances on Child Outcomes and Household Expenditures in Nepal

Nepal has one of the highest ratios of international remittances to gross domestic product in the world. We examine whether the massive inflow of international remittances affects child schooling, child labour and household expenses. Controlling extensively for a host of observed characteristics of households and migrants, and using an instrumental variable approach, this research finds no effect of international remittances on child education or child labour in Nepal. However, it does find a significant increase in non-food expenditures, including education spending, due to international remittances. Despite increased expenditure on child education, educational outcomes are not improving because of international remittances.     

Returns to Foreign Language Skills in a Developing Country: The Case of Turkey

This paper analyses the economic value of foreign languages in Turkey using data on some 6000 adult male wage-earners in 2007. We find positive earnings returns to proficiency in English and Russian, which increase with the level of competence. French and German skills are also positively rewarded, although their return seems mostly linked to the likelihood to hold specific occupations. In contrast, knowing Arabic does not generate an earnings premium. Focusing on English, we check for heterogeneous returns along the conditional earnings distribution. The results are qualitatively invariant when we account for misclassification errors in self-reported English skills.     

The Labour Market Impacts of Immigration to Developing Countries: Evidence from a Registration Campaign in Thailand

Little is known about the labour market impact of immigration to developing countries, because most immigration to developing countries is poorly measured. We use an unusual dataset from a campaign to register irregular migrants to study how immigration has affected wages, employment, and internal migration in Thailand. We allow for endogenous migration, whereby immigrants are disproportionately attracted to areas with higher wages. Our results suggest that immigration sufficient to increase Thailand's total labour force by one per cent would reduce Thai wages by approximately half a per cent. This effect is stronger than is generally found in developed countries. We find no evidence that immigration has reduced Thai employment rates or has affected internal migration by Thais.     

Bilateral Graduation: The Impact of EPAs on LDC Trade Space

Abstract

As trade is prominently mainstreamed into development policies, the ongoing Economic Partnership Agreement (EPA) negotiations between the EU and the African, Carribbean and Pacific (ACP) countries are a turning point in Least Developed Countries (LDC) engagement with the international trading system. The process covers most UN-designated LDCs and is the first time they feature in the first row of international trade talks. We explore how the space LDCs occupy in the trade regime will be affected by EPAs. The analysis suggests that they move LDCs towards effective graduation from special and differential treatment, while innovating on policy tools to address underdevelopment.     

Public Sector Restructuring and Democracy: The State,Labour and Trade Unions in India

This article looks at the ways in which marketisation reforms affect the empowerment, ideological universes and functioning limits of popular institutions. Under what circumstances do left-leaning trade unions accept job cuts and wage freezes? What are the boundaries of consent and dissent? Case studies of three public sector companies in Bangalore city in the southern state of Karnataka, India, indicate that labour rationalisation has occurred with trade union acquiescence and support. However, as yet there is no broad institutional framework to handle social security, rehabilitation and redeployment of displaced workers. Public sector workforce reduction is taking place in a general economic context where there has been little growth of employment in the organised manufacturing sector. Beneath unions' apparent acquiescence to rationalisation processes, there are critical areas of dissent. Dissent, however, has not manifested itself in a critical alternative to the state's rationalisation policies. Changing party-union relations, and shifts in the internal dynamics of unions affecting choice of leaders, union aspirations and ideologies - underwritten by the broader economic changes wrought by the marketisation process - partially explain the inability of the labour movement to shape a definitive challenge to the marketisation process.     

Exploring the Impact of Conflict Exposure during Formative Years on Labour Market Outcomes in Tajikistan

This study explores the effect of the 1992–1998 armed conflict in Tajikistan on the labour market outcomes by gender. The focus is on cohorts that were of school age during the conflict or recently entered the labour force. The regression analysis controls for the cohort and district-level exposure to conflict. Younger women but not men who also lived in regions more affected by conflict were at least 10 percentage points more likely to be employed than similarly aged women from lesser affected districts. These results suggest a change in female employment patterns potentially induced by war.     

Disability and Its Correlates in a Developing Country Context: Evidence from Multiple Datasets and Measures

Disability profiles showing how the magnitude of disability differs across subgroups of a population are important tools in designing effective policies. Yet little is known about the sensitivity of the correlates of disability to the way disability is measured. This study uses an unprecedentedly large amount of nationally representative survey data from Indonesia. Based on 13 different datasets that were collected between 2000 and 2014, and which together contain disability information on more than 1 billion individuals, we assess how robust disability profiles are to measurement issues. Our findings suggest that irrespective of the dataset and measure used, disability is disproportionally more common among the poor, the elderly and rural areas in the country. Hence, Indonesian policies on poverty reduction, population ageing, and rural development should pay particular attention to how they reach and affect persons with disabilities. Our research further reveals that the gender gap in disability is highly sensitive to measurement issues with different datasets and measures reaching different conclusions about the size and direction of the gap.     

Social Welfare and Ethnic Warfare: Exploring the Impact of Education on Ethnic Violence

This article questions the popular assumption that education promotes peaceful ethnic relations and explores ways education potentially contributes to ethnic violence. It begins by describing mechanisms through which education can shape ethnic violence. Next, it provides a comparative–historical analysis of Assam, Cyprus, and Sri Lanka. The analysis offers evidence that education can promote ethnic violence by strengthening ethnic divisions and inter-communal disfavor, increasing frustration and aggression, intensifying competition, and providing mobilizational resources.