Exchange Rate Pass-through in South Africa: Panel Evidence from Individual Goods and Services

This study estimates pass-through for South Africa using samples of final goods and services, and homogenous imports. Estimated pass-through to consumer goods prices is low, roughly 16 per cent in the two years following an exchange rate change; surprisingly, it is somewhat higher for services. Deviations from long run PPP appear to disappear relatively quickly, with a half-life of about 16 months. For imports, pass-through estimates are much higher, averaging around 60 per cent, but with wide source-country variation. Finally, there is virtually no support for a simple linear trend change in either pass-through or in reversion to PPP during the sample.     

The economic viability and stability of ‘capitalised family farming’: An analysis of agricultural decollectivisation in Peru

Abstract

The overall goal of this study is to examine if there is a dropout problem in rural China and to explore the effectiveness of a Conditional Cash Transfer (CCT) programme on the rate of dropping out. To meet this goal, we conduct a randomised controlled trial (RCT) to assess the impact of the CCT using a sample of the poorest 300 junior high school students in a nationally-designated poor county in Northwest China. We find that the annual dropout rate in the study county was 7.8 per cent and even higher, 13.3 per cent, among the children of poor households. We demonstrate that a CCT program reduces dropout by 60 per cent. The programme is most effective among students with poor academic performance, and likely more effective among girls and younger students.     

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.     

Vital Democracy: A Theory of Democracy in Action

Scottish citizens benefit from 19 per cent more public spending per head than English citizens. The ‘Barnett formula’ is slowly reducing the gap, but very little is known about the countries' relative needs and hence about how far the present gap is defensible: the aim of this paper is to throw some light on the countries' relative needs. We begin with the complex formulae that the Westminster government uses to assess the spending needs of English local authorities, and we use these English formulae to assess the needs of Scottish local authorities for three major blocks of local services. These formulae suggest that Scotland needs 6.4 per cent more per head than England for environmental, protective and cultural services, 8.1 per cent more for highway maintenance, and between 24.3 per cent and 35.3 per cent more for fire services. We also combine these results with those of two other papers concerned with local education and social services to show that these English formulae put Scotland's per capita needs for local government services as a whole at about 6 per cent above England's. However, we then compare the relative needs of Scottish local authorities as assessed by the English formulae with their relative needs as assessed by the Scottish needs formulae that are currently used by Holyrood, and we find major differences. This suggests either that at least one country uses seriously flawed formulae to assess needs, or that the two countries have different conceptions of need.     

Professionalism and regionalism: The case of hiring orientations in the south

The CASE (Computer-Assisted Sentencing) system has been developed to help sentencers to choose an appropriate sentence to impose on a convicted offender. Primarily, the system is aimed at Magistrates’ Courts. In England and Wales, by far the largest majority of sentencing is carried out by Magistrates, accounting for about 95 per cent of all sentences and over 80 per cent of sentences for more serious offences.     

Exchange Rate Pass-through to Import Prices,and Monetary Policy in South Africa

Abstract

Understanding how import prices adjust to exchange rates helps anticipate inflation effects and monetary policy responses. This article examines exchange rate pass-through to the monthly import price index in South Africa during 1980–2009. Short-horizon pass-through estimates are calculated using both single equation equilibrium correction models and systems (Johansen) models, controlling for both domestic and foreign costs. Average pass-through is incomplete at about 50 per cent within a year and 30 per cent in six months, and in the long-run, from the Johansen analysis including feedback effects, is about 55 per cent. There is evidence of slower pass-through under inflation targeting; pass-through is found to decline with recent exchange rate volatility and there is evidence for asymmetry, with greater pass-through occurring for small appreciations.     

The growth of Indian nitrogen fertilizer manufacture: Some lessons for industrial planning

Large‐scale manufacture of nitrogen fertilizers in India originated during the Second World War as a result of the interruption of the import of rice from Burma. The growth of production has been at the prodigious rate of 22 per cent per annum in the 17‐year period 1949/50–1965/6. Demand has never acted as a constraint; this suggests that agro‐industry can play an important part in an industrializing strategy for development. In spite of this success two negative features have characterized the economic history of fertilizer production: gestation lags and under‐utilized capacity. Had the establishments worked at design capacity and had the average gestation lag not exceeded three years, less than 60 per cent of the 2.1 million tons of nutrient imported into India during these 17 years would have been required. This highlights the need to include in planning models of output expansion both of these variables, getstation lag and low capacity utilization. Some of their causes have been exogenous to the industry. But a number are internal and recurrent. Unjustified technical risks, plant dis‐integration, faulty process selection and inadequate project appraisal in investment decision‐making. Attempts to reduce the balance of payments deficit have had a negative feedback on the foreign exchange flow by reducing the industry's average annual output. Such negative effects should be included in formulating import control, import substitution and export promotion policies. Finally the ubiquity of excess capacity and the invariance of labour force size with the degree of capacity utilization in this sector is shown to lead to large over‐estimates of the future required‐labour force when certain forecasting techniques are used, even in the absence of trends to increasing labour productivity.     

Awareness and quality of knowledge regarding HIV/AIDS among women in India

This paper examines the determinants of women's knowledge regarding HIV/AIDS using data from a nationally representative survey in India. Although around 45 per cent of sample women had heard about the disease, their knowledge regarding its modes of transmission and prevention is found to be limited. To explore the possibility that there may be a different process that determines awareness as opposed to quality of knowledge regarding HIV/AIDS, a negative binomial hurdle model and a two-stage ordered probit model are estimated. The results show that the effect of several covariates, such as education and mass media, on awareness is different from their effect on quality of knowledge.     

Smuggling of Indian Citizens

Abstract

This study examines the smuggling of Indian citizens to other countries and aims at gaining an insight into the modus operandi of the smugglers. It is based on an empirical study of deportation cases of Indian citizens from other countries.

About three-quarters of the deportees who accessed the services of smugglers belonged to the State of Punjab. Almost 80 per cent of the deportees were young and in the age group of 18-30. About 28 per cent of the deportees succeeded in reaching their countries of destination with the help of smugglers. Thus, the success rate of illegal migration with the help of smugglers is higher by more than quarter than without them.

Individual deportees had paid sums varying from US$ 2000 to US$ 10,000 to smugglers. No correlations have been observed between the countries of destination and the amounts paid to smugglers.

The study has shown that smuggling of aliens is carried out by professional organizations with links in the countries of source, transition, and destination. The study concludes that so long as opportunities for legal migration are limited there will always be a demand for smugglers. In order to prevent and control smuggling an international co-operation among countries of source, transition, and destination would be imperative. It would also be desirable to widen the ambit of legal migration for low-skill jobs like in agriculture, construction works, and service sectors for limited periods through country-specific bilateral agreements.     

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.     

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.     

THE EU AS LAWMAKER: THE IMPACT OF EU DIRECTIVES ON NATIONAL REGULATION IN THE NETHERLANDS

The impact of European directives on Dutch regulation is fairly limited when compared to the claims that are made by academics and politicians. We found that 12.6 per cent of all parliamentary acts, 19.7 per cent of all orders in council, and 10.1 per cent of all valid ministerial decisions were actually rules transposing EU directives. The total overall impact for all three types of legislation was 12.6 per cent. Departments generally employ the same type of rules in similar proportions both when transposing EC directives and when producing national rules. Departmental autonomy is a defining feature of Dutch central government in general, and this pattern persists in the coordination and implementation of EU directives. Nearly 90 per cent of the European directives in The Netherlands are transposed through delegated legislation in which no involvement of parliament is required. If we take into account the fact that the majority of formal laws are actually drafted by the executive and submitted to parliament, we could easily state that virtually all national rules that transpose European directives into the Dutch legal system are drafted by the executive.     

Book reviews

Given shortcomings in basic data collection and insufficient resources in preparing official statistics African growth data are unlikely to be very reliable. Estimates of an annual growth rate of 3 per cent may be consistent with a reality between 0 and 6 per cent growth. Although data from international databases are widely used in an expanding literature on African growth there has been no research into how serious these data inaccuracies are. This paper addresses the reliability of the available growth evidence for a selection of countries and offers concrete measures of inaccuracies. It examines the reasons for discrepancies and shows that they can be quite large.     

The financial management initiative in the u.k. public sector: the symbolic role of performance reporting

The emerging principles of performance reporting are explored in the context of urban policy and inner city regeneration programmes in the UK, upon which a great deal of evaluative research has been carried out in the last decade. The paper questions the extent that performance management principles as embodied by the FMI are necessary for public accountability. It illustrates that implementation of performance reporting in the urban regeneration programme has had a symbolic role in generating myths and images about practice which imply that the “rational model” of decision making is in operation. The imposition of performance reporting cannot per se guarantee improvements, in the sense of learning, in the organising approaches adopted by public sector organisations.     

Sexual Abuse, Trauma and Dementia in the Elderly: A Retrospective Study of 284 Cases

The study objective was to compare elders with a dementia with those without a dementia as to method of disclosure of sexual abuse, forensic markers of sexual abuse and legal outcome of cases. A convenience sample was obtained of 284 forensic cases known to a multidisciplinary group of professionals who investigated, examined or consulted on elder sexual abuse victims. The Comprehensive Sexual Assault Assessment (CSAAT) was used to enter data from case files. 60 percent of the 284 elders were diagnosed with some degree of dementia. Elders with dementia, compared to those without a diagnosis, were abused more often by persons known to them (family member, caregiver or another nursing home resident) than a stranger, presented behavior cues of distress rather than verbal disclosures, were easily confused and verbally manipulated, and were beaten. Suspects who were identified whom abused elders with dementia had less chance of being arrested, indicted or plea bargained. All reported suspected cases of elder sexual abuse need a complete physical examination as well as a sexual assault evidence kit. Patterns of verbal, behavioral or physical changes of elders can be used to support an allegation of sexual assault.     

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.     

The political economy of Indian planning

Peruvian statistics were examined to see if construction remained labour‐intensive during 1955–67. Data on output, employment, capital, and materials consumption were either lacking or had defects that made a direct comparison of trends impossible. But conclusions could be drawn from relative price and wage trends. If materials and capital had not been substituted for labour, average construction costs would have risen substantially more than they did. Our estimate was that by 1967 they would have been 25 per cent higher.

Evidence from a sample of firms, however, suggested that adoption of labour‐saving techniques cannot be tied simply to changes in wages compared with other costs. All eleven innovations studied, it is true, were markedly labour‐saving; but the rate of adoption did not closely follow wage changes. Adoption came most often during those less tense years when builders were neither overstrained with orders nor lacking credit and clients. One must conclude that both rising wages and innovations can limit employment expansion in relatively poor countries.

Since both agriculture and manufacturing have been unable to absorb the growing labour force of poor countries, economists have turned their attention to other sectors for supplementary employment expansion. One of these is construction. The construction sector creates not only jobs but builds capital goods with a desirable low import content. In association with carefully structured financial institutions, it may even generate savings. How much employment a given expansion of construction will provide depends on the production functions of the sector: their slopes and their potential shifts. One must find the changes in labour productivity that go with likely changes in volume, capital accumulation, trends in material supplies, and alternate technologies.

All these questions will get imprecise answers without good statistics on output, labour, capital, and materials, both unit prices and volume. If output varies in composition and in the relative quality of components, problems of weighting and aggregating arise. Because of the sector's ? instability and footloose nature, data on construction remain inferior compared with other sectors even in the most advanced and statistics‐rich countries. Can one make anything of the sorts of data available in poor countries where the sector must play its most crucial role?

In this article, using rather limited data, we note with considerable alarm that steady labour intensity and corresponding employment expansion cannot be taken for granted. Where daily wages are but a fraction of hourly American wages, and where interest rates are a multiple of American rates, the more lavish use of materials and machinery compared with labour can nevertheless begin early.

Peru is the country selected for our study. During 1955–67 Peru had a relatively high national output growth rate of 5.6 per cent together with a moderate rate of inflation of about 9 per cent. Except for the devaluation years of 1958 and 1967, flourishing exports of fishmeal, copper, cotton, and sugar helped carry this rate of growth. Lima was one of the continent's fastest‐growing cities in population and building, particularly in squatter barriadas. But in the 1960s commercial conduction also grew at more than a 15 per cent compound rate, measured in square metres built, according to some estimates.1 During 1964–68, construction had high priority under President Fernando Belaunde, a professional architect. More U.S. foreign aid for housing (direct and guaranteed private loans) went to Peru in absolute terms during this period than to any other country. We shall analyse the consequences by examining (1) trends in relative costs, (2) relative output and import trends, and (3) data about receptivity to innovations in a sample of firms.     

Efficiency differentials in peasant agriculture and their implications for development policies

This paper reviews the theoretical and empirical work on allocative efficiency in traditional agriculture and presents a new study of technical efficiency among Tanzanian cotton farmers. The theoretical arguments are shown to apply primarily in a competitive context that differs significantly from that in which peasant farms operate. Re‐analysis of earlier empirical studies shows that, on average, the marginal value products of inputs differ by more than 40 per cent from the marginal factor costs to which they should be equated under allocative efficiency. Our own study among Tanzanian cotton farmers in Geita District reveals that output could be increased by 51 per cent if all farmers achieved those levels of technical efficiency that were in fact achieved by the best farmers in the sample using the same inputs and technologies that the less efficient used. These results indicate that the efficiency hypothesis may not be applicable to much of peasant agriculture and that development policies might fruitfully place more emphasis on raising large numbers of farmers closer to the relatively high efficiency levels achieved by some of their neighbors.     

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.     

Do Beliefs About Herbicide Quality Correspond with Actual Quality in Local Markets? Evidence from Uganda

Adoption of modern agricultural inputs in Africa remains low, restraining agricultural productivity and poverty reduction. Low quality agricultural inputs may in part explain low adoption rates, but only if farmers are aware that some inputs are low quality. We report the results of laboratory tests of the quality of glyphosate herbicide in Uganda and investigate whether farmers’ beliefs about the prevalence of counterfeiting and adulteration are consistent with the prevalence of low quality in their local market. We find that the average bottle in our sample is missing 15 per cent of the active ingredient and 31 per cent of samples contain less than 75 per cent of the ingredient advertised. Farmers believe 41 per cent of herbicide is counterfeit or adulterated. Beliefs are significantly correlated with quality at the local market level, but beliefs remain inaccurate, adjusting for only a fraction of actual differences in quality. Price is also significantly correlated with quality in local markets, but prices also adjust for only a fraction of quality differences. Although, like fertiliser and hybrid maize seed, herbicide in Uganda is low quality, herbicide use is substantially higher.