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231. Externalities in Rural Development: Evidence for China

Author:
Martin Ravallion
Publication Date:
07-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The paper tests for external effects of local economic activity on consumption and income growth at the farm household level using panel data from four provinces of post-reform rural China. The tests allow for nonstationary fixed effects in the consumption growth process. Evidence is found of geographic externalities, stemming from spillover effects of the level and composition of local economic activity and private returns to local human and physical infrastructure endowments. The results suggest an explanation for rural underdevelopment arising from underinvestment in certain externality-generating activities, of which agricultural development emerges as the most important.
Topic:
Development and Economics
Political Geography:
China and Asia

232. Are Neighbours Equal? Estimating Local Inequality in Three Developing Countries

Author:
Chris Elbers, Peter Lanjouw, Johan Mistiaen, Berk Ozler, and Ken Simler
Publication Date:
07-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Based on a statistical procedure that combines household survey data with population census data, this paper presents estimates of inequality for three developing countries at a level of disaggregation far below that allowed by household surveys alone. We show that while the share of within-community inequality in overall inequality is high, this does not necessarily imply that all communities in a given country are as unequal as the country as a whole. In fact, in all three countries there is considerable variation in inequality across communities. We also show that economic inequality is strongly correlated with geography, even after controlling for basic demographic and economic conditions.
Topic:
Development and Economics
Political Geography:
Africa and South America

233. Optimality and Overuse of Labour in Estonian Manufacturing Enterprises

Author:
Almas Heshmati and Jaan Masso
Publication Date:
07-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
For transition economies labour market flexibility is necessary for successful restructuring and reallocation of labour force and for coping with the requirements of the European Monetary Union. In this paper we apply a novel approach to the issue of labour market flexibility in transition countries by studying the optimality and efficiency of labour usage among Estonian manufacturing enterprises. A dynamic model is employed where both the long run optimal level of employment and the speed at which actual employment is adjusted to the optimal are modelled as functions of several variables. Firm level panel data from 1995 to 1999 were used. The results showed that in the long run employment responds greatest to wages, followed by valueadded and capital stock. Speed of adjustment and labour use optimality and efficiency show much greater variations over firms than over time. In the course of time there occurs both labour saving technical change and an increase in the efficiency of labour usage. On average there is shortage of labour compared to firm's own optimal level, while over use of labour compared to best-practice technology. Capital seems to be a binding constraint on the development of employment in the Estonian labour market.
Topic:
Development, Economics, and Industrial Policy
Political Geography:
Eastern Europe

234. Impact of Trade Liberalization on Returns from Land: A Regional Study of Indian Agriculture

Author:
Ghosh Nilabja
Publication Date:
06-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Trade liberalization, by aligning domestic prices with world prices, is envisaged to bring welfare gains to a country. In the case of Indian agriculture, owing to the vastness and diversity of the sector, the impact is likely to be profoundly unequal across regions especially when liberalization is double-edged, acting on both output and input sides. This paper views returns from land resource as a primary determinant of farmers' economic well-being and production incentive and considers paddy both as the dominant support for the rural population and as a product with comparative advantage, as most studies have demonstrated. Working with state and sub-state level data and taking account of the differences in technologies, productivities and transport costs, the paper finds that the gains vary regionally and may not be positive in all cases when both output and input prices are globally aligned.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
South Asia and India

235. Irregular Migration and Asylum Seekers in the Caribbean

Author:
Elizabeth Thomas-Hope
Publication Date:
06-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Irregular migration is increasing in the Caribbean while the opportunities for applying for asylum hardly exist. The policy regarding most Caribbean irregular migrants is based on the view of the potential destinations, namely that the migrants are economic rather than political refugees. Whatever the specific cause of a migrant's departure, the movement is rooted in a complex amalgam of political, socioeconomic and (increasingly) environmental, factors. Thus irregular movements are part of the wider Caribbean migration process. The irregular movements differ from other forms of migration in that they represent the informal sector of migration, providing an alternative to those sectors of national populations that for political or economic reasons fall outside the immigration categories for entry to the United States. Locations in the Caribbean largely provide the intended transit stops to the United States, but with the implementation of policies to interdict migrants at sea, many of these intermediary locations become final destinations and, ultimately, marginalized communities of the migrants themselves and successive generations. These centres are the nodal points of an established transnational network that sustains the ongoing process of irregular migration. The economic and emotional cost and risks faced by the migrants are high, and the economic and political cost and challenges faced by host governments are also high. Irregular migration and the issue of asylum poignantly reflect various aspects of poverty and the vast economic disparities that exist within the region. Further, irregular migration and the question of asylum greatly affect diplomatic relations between Caribbean countries of migration source and destination. Better and more thoughtful policies are needed to address the continuing issues relating to irregular migration.
Topic:
Development and Migration
Political Geography:
United States, Central America, and Caribbean

236. The EU's Everything But Arms Initiative and the Least-developed Countries

Author:
Lucian Cernat, Sam Laird, Luca Monge-Roffarello, and Alessandro Turrini
Publication Date:
06-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Using a computable general equilibrium simulation model and partial equilibrium simulations, based on the SMART model, the paper attempts to assess the aggregate worldwide distribution of gains and losses of the EU's Everything But Arms (EBA) initiative for both LDCs and third developing countries under different scenarios.
Topic:
Development and International Trade and Finance
Political Geography:
Europe

237. Developed Country Trade Barriers and the Least Developed Countries: The Economic Results of Freeing Trade

Author:
Jon D. Haveman and Howard J. Shatz
Publication Date:
06-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The Doha Ministerial Declaration emphasized that priority should be given to improving market access for products originating in the Least Developed Countries (LDCs). In this paper, we analyze the importance of this proposition with respect to market access in the Triad economies. We first present a brief history of non-reciprocal preferences granted by the Triad. This covers Generalized System of Preference (GSP) programmes in each, and further preferences granted to African, Caribbean and Pacific countries by the EU and preferences granted to Caribbean Basin, Andean, and African countries by the US. This history is followed by an assessment of trade generated by these preferences in the year 2000, and of the extent to which LDC exports might be expected to increase should the preferences be made comprehensive. Preferences in 2000 are shown to have led to an increase of US$3.5 billion in LDC exports, while a complete duty-free treatment could expand LDC exports by as much as US$7.6 billion, 90 per cent of which will be absorbed by the US. As this represents a doubling of LDC exports to these countries, we interpret these results as an endorsement of this priority in the Doha Round of negotiations.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
Africa, United States, and Caribbean

238. The New Global Determinants of FDI Flows to Developing Countries: The Importance of ICT and Democratization

Author:
Tony Addison and Almas Heshmati
Publication Date:
05-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Foreign direct investment (FDI) has increased dramatically in recent years. However, the distribution of FDI is highly unequal and very poor countries face major difficulties in attracting foreign investors. This paper investigates the determinants of FDI inflows to developing countries, with a particular emphasis on the impact of the 'third wave of democratization' that started in the early 1980s and the spread of information and communication technology (ICT) that began in the late 1980s. These two global developments must now be taken into account in any explanation of what determines FDI flows. Using a large sample of countries, together with panel data techniques, the paper explores the determinants of FDI. The causal relationship between FDI, GDP growth, trade openness and ICT is investigated. The main findings are that democratization and ICT increase FDI inflows to developing countries. The paper concludes that more assistance should be given to poorer countries to help them to adopt ICT and to break out of their present 'low ICT equilibrium' trap.
Topic:
Democratization, Development, Economics, and International Trade and Finance

239. Inflation, Output and Perfectly Enforceable Price Controls in Orthodox and Heterodox Stabilization Programmes

Author:
George Mavrotas and Mario Reyna-Cerecero
Publication Date:
05-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The paper deals with the success of price controls in stabilizing high inflation rates and their effects on the real economy under an imperfect competition setting derived by optimal maximization. Our model builds on Helpman's work of price controls and imperfect competition, and incorporates inflation inertia through adaptive expectations. The model predicts that under these circumstances price controls can be an effective method of curving inflation when they accompany an orthodox monetary restriction programme; incomes policies alone cannot curve inflation substantially. Efforts where monetary growth is decreased gradually and price controls are implemented to achieve zero inflation result in the boom-recession cycle observed in many real life programmes. When monetary growth is curved immediately and price controls are implemented to achieve zero inflation, there follows a recession and not a boom. Orthodox money-based stabilization programmes implemented on their own need more time to control inflation and always produce a recession.
Topic:
Development, Economics, and International Trade and Finance

240. The 'Pull' and 'Push' Factors in North-South Private Capital: Conceptual Issues and Empirical Estimates

Author:
Matthew Odedokun
Publication Date:
05-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper is an attempt to rectify some of the problems that characterize most earlier studies that seek to explain private capital flows to developing countries or, at least, to examine the subject from a different and complementary perspective. To accomplish this, we propose a model framework that approaches the issue from the perspective of a capital-exporting developed country and which also takes cognizance of developments in other industrialized countries that could be competing with developing countries for private capital flows. The model is operationalized and estimated with annual panel data over 1970-2000 for 19 capital-exporting developed countries. Specifically, we estimate equations for total private flows, FDI, total portfolio capital flows (PCF) and various categories of PCF. We also test for the effects of a number of factors, each of which has its own 'push' and 'pull' components. The specific explanatory factors are the level of per capita income, interest rate, economic growth, the prevailing phase of economic cycle, the degree of openness of the economy in the balance-of-payment capital account, macroeconomic imbalances, and external debt burden. The empirical findings confirm the posited effects of the 'push' and/or 'pull' component of each of the above factors.
Topic:
Development, Economics, Emerging Markets, and International Trade and Finance