Growth and Chronic Poverty: Evidence from Rural Communities in Ethiopia

This article employs a computable general equilibrium model for Sandinista Nicaragua to argue that a foreign exchange constrained economy does not necessarily fall prey to the inflation‐devaluation‐inflation vicious cycle characteristic of more mature Keynesian economies. It is seen that when the economy is shocked by a devaluation, prices do not rise proportionately. Output increases and the distribution of income can actually improve. These results support Sandinista policy of raising wages along with devaluation, a policy widely criticised as counterproductive. When the model is structured to account for the combined effects of Sandinista policies, however, including rising government expenditure and multiple effective exchange rates, a host of macroeconomic problems experienced by the regime arise. Stagflation sets in, income distribution deteriorates and the incentives for export production seriously diminish.     

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.     

The Impact of Drinking Water Quality and Sanitation on Child Health: Evidence from Rural Ethiopia

This paper examines the association between stored drinking water quality and sanitation on diarrhoea incidence among under-five children in Ethiopia. Using primary household survey data and microbiological water quality testing for Escherichia coli, our results show that uncontaminated stored drinking water and safe child stool disposal are associated with decreased child diarrhoea incidences of 18 and 20 percentage points, respectively. In contrast, neighbourhood concentration of pit latrine shows an increased incidence of child diarrhoea of 16 percentage points. To protect rural children from the risk of contracting diarrhoea, improving household drinking water quality and changing people’s behaviour towards safe sanitation practices is needed.     

The Benefits and Costs of Microfinance: Evidence from Bangladesh

Using the latest developments from the evaluation literature, namely the technique of matching, this paper shows a positive, but lower than previously thought, effect of microfinance on expenditure per capita, supply of labour, and level of school enrolment for boys and girls. For instance, participants spend 3 per cent more on average than non-participants in control villages. This paper also takes into account repayment delays to calculate the cost of credit provision. It shows how a better investigation at the individual level of the benefits brought and the cost borne could help microfinance institutions to better select their customers.

JEL Classification : C14, D10, G21, I38, O12, O16     

Social Networks and Factor Markets: Panel Data Evidence from Ethiopia

We investigate the role of an indigenous social network in Ethiopia, the iddir, in facilitating factor market transactions among smallholder farmers. We use detailed longitudinal household survey data and employ fixed effects estimation approaches to identify the effect of iddir membership on factor market transactions among farmers. We find that joining an iddir network improves households’ access to land, labour and credit transactions. Our findings also hint that iddir networks may crowd-out borrowing from local moneylenders (locally referred as ‘Arata Abedari’), a relatively expensive credit source. These results suggest that non-market institutions can play crucial roles in facilitating market transactions.     

The Fiscal Effects of Aid in Ethiopia: Evidence from CVAR Applications

ABSTRACT

This article explores the fiscal effects of aid in Ethiopia using the Cointegrated Vector Auto-Regressive (CVAR) methodology to model complex long-run and short-run dynamics. We use national data for 1961–2010, including a measure of aid capturing flows through the budget as measured by the recipient. The data suggests three main conclusions on the long-run equilibrium. First, government long-term spending plans are based on domestic sources, treating aid as an additional source of revenue. Second, both grants and loans are positively related to tax revenue. Third, aid is positively associated with spending, with a particularly strong relation between capital expenditure and grants. Overall, our results show that aid in Ethiopia had beneficial fiscal effects.     

The Disease Environment,Schooling, and Development Outcomes: Evidence from Ethiopia

The disease environment could help explain underdevelopment in Africa. This article shows that local malaria risk is associated with worse local development outcomes. Combining an Ethiopian household survey with satellite-derived topographical information, the article shows that malaria incidence is correlated with village elevation, slope and their interaction; that is, malaria is sensitive to elevation in flatlands, where the habitat is suitable for mosquito breeding, but not in steeper lands. Using topography as a predictor of the disease environment, education levels are found to be negatively correlated with malaria. I find suggestive evidence that some other outcomes are related to malaria risk. Finally, the performance of topography predictors is assessed against other climate-based predictors of malaria.     

Bride Price and Fertility Decisions: Evidence from Rural Senegal

This paper provides evidence about the relationship between bride price payments and fertility decisions in Senegal. Higher bride price payments reduce the fertility pressure for women with results being robust to confounding socio-economic and contextual factors. The fertility-reducing impact is greater for women who are economically dependent on their husbands. In polygamous households and for arranged marriages, a lower bride price increases fertility pressure while in monogamous households and for non-arranged marriages, the bride price does not affect fertility. As bride price payments have less power over (economically) independent women, empowerment will give leeway to girls in traditional societies.     

Repeated Transaction in Rural Grain Markets of Ethiopia

This article uses the theory of repeated transaction to model exchange in rural grain markets. We examine the theoretical and empirical drivers of repeated transaction, as well as potential problems that may arise as a result of its widespread use. We develop a structural repeated game to represent buyer-seller relations in a developing country grain market, motivated by observations in Ethiopia. The model generates hypotheses regarding the logic that drives long-term tied transactions, as governed by information access, screening and investment costs, and time preferences. The model's predictions are tested using market transaction data collected in Ethiopia in 2009. Results support the view that a relational contract is driven by access to information and the costs of screening. Our major finding is that trust in relational trading can emerge through costly repeated interaction.     

Can the Rural Employment Guarantee Scheme Reduce Rural Out-migration: Evidence from West Bengal,India

Abstract

Using survey data from the Cooch Behar district of West Bengal, the paper documents the impact of the rural employment guarantee scheme in reducing rural out-migration. Using regression framework and case studies, it finds no significant impact of household participation in the programme on migration decision. However, extent of participation in terms of number of days of work and earnings has a significant negative impact on short-term migration but not on longer duration ones. The findings lay emphasis on effective implementation in terms of asset creation, reduction in rationing of works and tackling delayed payments to enjoy its potential benefits.     

The Impact of Microcredit on Child Education: Quasi-experimental Evidence from Rural China

Abstract

This article assesses causal effects of formal microcredit on children’s educational outcomes by using household panel data (2000 and 2004) in north-west rural China. The unobservables between borrowers and non-borrowers are controlled in static and dynamic regression-discontinuity designs. The static analysis reveals significant positive impact of microcredit on schooling years in 2000 only, and no influence on academic performance for either wave. The dynamic analysis shows progressive treatment effects on both longer schooling years and higher average scores. Formal microcredit improves education in the longer term compared to the short term, and hence may help relaxing the grip of educational poverty traps.     

The Impact of School Meals on School Participation: Evidence from Rural India

This article assesses the effect of transition from monthly distribution of free food grains to the daily provision of free cooked meals to school children on enrolments and attendance in a rural area of India. School panel data allow a difference-in-differences estimation strategy to address possible endogeneity of programme placement. The results suggest that programme transition had a significant impact on improving the daily participation rates of children in lower grades. The average monthly attendance rate of girls in grade one was more than 12 percentage points higher while there was a positive but insignificant effect on grade one boys' attendance rate. The impact on enrolment levels was insignificant.     

Sources of Civic Engagement in Latin America: Empirical Evidence from Rural Ecuadorian Communities

The concept of civic engagement has greatly influenced the policy-making process in the field of development cooperation. However, in contrast to a vast quantity of empirical studies for the Organisation for Economic Cooperation and Development (OECD)–world, there is only little knowledge with respect to developing countries. Using Ecuadorian rural communities as an example, this paper analyses socioeconomic, political and cultural sources of civic engagement with multivariate regression analyses, which demonstrate that volunteering strongly depends on the cultural tradition. Additionally, the empirical results show that a pure application of the theoretical assumptions and operationalisations from the OECD–world is misleading, when analysing social processes in developing countries.     

The Role of Empowerment in Agricultural Production: Evidence from Rural Households in Niger

We use new household and individual level WEAI data from the Tahoua region of Niger and estimate a variable coefficient Cobb-Douglas production function in which traditional inputs interact with two human capital variables – empowerment and formal education. Our estimation results reveal that human capital matters for productivity. So much so that it can be considered as technology-changing, significantly affecting a household’s production technology by enhancing returns to equipment. In fact, differentiating households by their status as dual or primary with only an adult female or male reveals that the productivity elasticity of empowerment is large for dual households in which women are the least empowered. Enhancing the empowerment of women in this group of households, by increasing their leadership skills or tenure security, would yield important productivity gains.     

Land Reforms,Poverty Reduction,and Economic Growth: Evidence from India

Abstract

Recognition of the importance of institutions that provide security of property rights and relatively equal access to economic resources to a broad cross-section of society has renewed interest in the potential of asset redistribution, including land reforms. Empirical analysis of the impact of such policies is, however, scant and often contradictory. We use panel household data from India, together with state-level variation in the land reform implementation, to address some of the deficiencies of earlier studies. Results suggest that land reform had a significant and positive impact on income growth and accumulation of human and physical capital. Policy implications are drawn, especially from the fact that the observed impact of land reform seems to have declined over time.     

Opposition to Immigration,Economic Insecurity and Individual Values: Evidence from Russia

Since 1991, Russia has become one of the leading immigration destinations in the industrialised world. The inflow has prompted substantial public opposition, as surveys show that half or more of the public want to limit new arrivals. The sources of public disapproval, however, are unclear: while public discourse includes complaints about perceived economic and cultural ills of immigration, research on public opinion finds that neither economic nor cultural concerns have a consistent impact on individual attitudes. This study provides a new analysis, showing that economic vulnerability and cultural orientations (such as social conservatism and low levels of interpersonal trust) play a significant role in shaping anti-immigrant sentiment.     

Unpacking Local Economic Development: A Case Study from Nekemte Town and Its Hinterlands,Oromia, Ethiopia

Most agree that local economic development (LED) is a “bottom-up” development approach seeking to unleash the development potential of a locality. Nonetheless, focusing closely on the dynamics of specific localities, this can be criticized for being too local and overlooking extra-local links. This article explores the drivers of LED from the local economic actors’ perspectives in Nekemte town and its hinterlands, Oromia region, Ethiopia. The results clarify that LED is not only just “local”, but also an approach that links urban and rural areas, and thus, understanding rural–urban linkages is a prerequisite for a better understanding of the local economic development.