Search

Begin New Search Topic Economics

3531. Pathways Out of Poverty During an Economic Crisis: An Empirical Assessment of Rural Indonesia

Author:
Peter Timmer and Neil McCulloch
Publication Date:
03-2007
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Most poor people in developing countries still live in rural areas and are primarily engaged in low productivity farming activities. Thus pathways out of poverty are likely to be strongly connected to productivity increases in the rural economy, whether they are realised in farming, rural non-farm enterprises or via rural-urban migration. We use cross-sectional data from the Central Statistical Board (BPS) for 1993 and 2002, as well as a panel data set from the Indonesia Family Life Survey (IFLS) for 1993 and 2000, to show which pathways out of poverty were most successful over this period. Our findings suggest that increased engagement of farmers in rural non-farm enterprises is an important route out of rural poverty, but that most of the rural agricultural poor that exit poverty still do so while remaining rural and agricultural. Thus changes in agricultural prices, wages and productivity still play a critical role in moving people out of poverty.
Topic:
Development, Economics, and Political Economy
Political Geography:
Indonesia and Asia

3532. Group Versus Individual Liability: A Field Experiment in the Philippines

Author:
Xavier Giné and Dean Karlan
Publication Date:
01-2007
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Group liability is often portrayed as the key innovation that led to the explosion of the microcredit movement, which started with the Grameen Bank in the 1970s and continues on today with hundreds of institutions around the world. Group liability claims to improve repayment rates and lower transaction costs when lending to the poor by providing incentives for peers to screen, monitor and enforce each other's loans. However, some argue that group liability creates excessive pressure and discourages good clients from borrowing, jeopardizing both growth and sustainability. Therefore, it remains unclear whether group liability improves the lender's overall profitability and the poor's access to financial markets. We worked with a bank in the Philippines to conduct a field experiment to examine these issues. We randomly assigned half of the 169 pre-existing group liability “centers” of approximately twenty women to individual-liability centers (treatment) and kept the other half as-is with group liability (control). We find that converting to individual liability from group liability but keeping other aspects of group lending such as weekly repayment meeting does not affect the repayment rate, but leads to higher outreach by attracting new clients.
Topic:
Economics, Markets, and Poverty
Political Geography:
Philippines and Southeast Asia

3533. Credit Elasticities in Less-Developed Economies: Implications for Microcredit

Author:
Dean Karlan and Jonathan Zinman
Publication Date:
01-2007
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Policymakers often prescribe that microfinance institutions increase interest rates to eliminate reliance on subsidies. This strategy makes sense if the poor are rate insensitive: then microlenders increase profitability (or achieve sustainability) without reducing the poor's access to credit. We test the assumption of price inelastic demand using randomized trials conducted by a consumer lender in South Africa. The demand curves are downward-sloping, and steep for price increases relative to the lender's standard rates. We also find that loan size is far more responsive to changes in loan maturity than to changes in interest rates, which is consistent with binding liquidity constraints.
Topic:
Development, Economics, and Markets
Political Geography:
Africa and South Africa

3534. Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions

Author:
Dean Karlan and Martin Valdivia
Publication Date:
01-2007
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Can one teach basic entrepreneurship skills, or are they fixed personal characteristics? Most academic and development policy discussions about microentrepreneurs focus on their access to credit, and assume their human capital to be fixed. The self-employed poor rarely have any formal training in business skills. However, a growing number of microfinance organizations are attempting to build the human capital of micro-entrepreneurs in order to improve the livelihood of their clients and help further their mission of poverty alleviation. Using a randomized control trial, we measure the marginal impact of adding business training to a Peruvian group lending program for female microentrepreneurs. Treatment groups received thirty to sixty minute entrepreneurship training sessions during their normal weekly or monthly banking meeting over a period of one to two years. Control groups remained as they were before, meeting at the same frequency but solely for making loan and savings payments. We find that the treatment led to improved business knowledge, practices and revenues. The program also improved repayment and client retention rates for the microfinance institution. Larger effects found for those that expressed less interest in training in a baseline survey. This has important implications for implementing similar market-based interventions with a goal of recovering costs.
Topic:
Development, Economics, Education, and Gender Issues

3535. Female Empowerment: Impact of a Commitment Savings Product in the Philippines

Author:
Dean Karlan, Wesley Yin, and Nava Ashraf
Publication Date:
01-2007
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Female “empowerment” has increasingly become a policy goal, both as an end to itself and as a means to achieving other development goals. Microfinance in particular has often been argued, but not without controversy, to be a tool for empowering women. Here, using a randomized controlled trial, we examine whether access to an individually-held commitment savings product leads to an increase in female decision-making power within the household. We find positive impacts, particularly for women who have below median decision-making power in the baseline, and we find this leads to a shift towards female-oriented durables goods purchased in the household.
Topic:
Development, Economics, and Gender Issues
Political Geography:
Southeast Asia

3536. Why Are There So Few Black-Owned Firms in Africa? Preliminary Results from Enterprise Survey Data

Author:
Vijaya Ramachandran and Manju Kedia Shah
Publication Date:
01-2007
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Much of the growth in Sub-Saharan Africa in the past decade has come from extractive industries, rather than from private, entrepreneurial activity. Furthermore, non-extractive activity in the private sector is often dominated by firms owned by ethnic minorities. This paper analyzes the characteristics of the formal private sector in five countries in sub-Saharan Africa, with a particular emphasis on Black African-owned (indigenous) firms. We find that indigenous firms start smaller and grow more slowly; however their rate of growth is positively influenced by whether the owner-entrepreneur has a university degree. We do not find overwhelming evidence that credit is the binding constraint but we do find that indigenous firms get less access to trade credit than firms owned by minority entrepreneurs. Finally, we discuss policy solutions that might enable a larger number of indigenous entrepreneurs to enter and survive in a vibrant, multi-ethnic private sector.
Topic:
International Relations, Development, Economics, and Humanitarian Aid
Political Geography:
Africa

3537. CONSOLIDATING STABILITY IN HAITI

Publication Date:
07-2007
Content Type:
Working Paper
Institution:
International Crisis Group
Abstract:
Haiti's security and stability remain fragile. President René Préval has endorsed national policies for security, police, justice and prison reform, but a weak state and decades, if not centuries, of institutional abandonment, make implementation slow, difficult and uneven. His first real success has been the dismantling of the toughest gangs in Port-au-Prince, but for this to be sustainable a community-friendly Haitian National Police (HNP) needs to be built under the security umbrella provided by the UN peacekeepers (MINUSTAH), infrastructure and economic opportunity must appear in the capital's poor neighbourhoods, and comparable recovery and reconstruction have to be extended across the country.
Topic:
Development, Economics, and Government
Political Geography:
Haiti

3538. Central Asia's Energy Risks

Publication Date:
05-2007
Content Type:
Working Paper
Institution:
International Crisis Group
Abstract:
Oil and gas are proving as much a burden as a benefit to Central Asia. The three oil and gas producers in the region – Kazakhstan, Turkmenistan and Uzbekistan – are showing signs of the “resource curse” under which energy rich nations fail to thrive or develop distorted, unstable economies. Geography and their history in the Soviet Union have bound them to Russia, through which most of their energy exports must be transported. Moscow is proving to be an unreliable partner for foreign consumers as it has been willing to cut off pipelines to apply commercial or political pressure. Low investment, corruption and gross mismanagement in Uzbekistan and Turkmenistan may mean that their supplies run low before they can diversify their links to markets or their economies. Central Asia is likely to see energy create instability within the region; the chances are low that it will be a factor in improving European energy security any time soon.
Topic:
Development, Economics, and Energy Policy
Political Geography:
Russia, Central Asia, Kazakhstan, Uzbekistan, Soviet Union, Moscow, and Turkmenistan

3539. Indonesia: Decentralisation and Local Power Struggles in Maluku

Publication Date:
05-2007
Content Type:
Working Paper
Institution:
International Crisis Group
Abstract:
South East Maluku (Maluku Tenggara, commonly abbreviated Malra), a district in a remote corner of the Indonesian archipelago, is about to be divided in two, and many residents are worried about the possibility of conflict. Attention by provincial and national officials to latent communal tensions, equitable distribution of development funds and even-handed prosecution of corruption, as well as dissemination by neutral parties of information about the division, would help ensure that all remains peaceful.
Topic:
Development, Economics, and Government
Political Geography:
Indonesia and Southeast Asia

3540. Abkhazia: Ways Forward

Publication Date:
01-2007
Content Type:
Working Paper
Institution:
International Crisis Group
Abstract:
Fourteen years of negotiation, led alternately by the UN and Russia, have done little to resolve the Georgian-Abkhaz conflict. There have been some successes on the ground: ceasefire violations are rare, approximately 45,000 internally displaced (IDP) Georgians have returned to homes in the Gali region, the two sides cooperate on operating the Inguri power plant, and a strategic railway through Abkhazia may restart. But the sharp deterioration in Russian-Georgian relations and a Georgian military adventure in the Kodori valley have contributed to a freeze in diplomacy over Abkhazia since mid-2006. In the absence of a new initiative, new violence is a real possibility. Because prospects are bleak for an early comprehensive settlement of the key political issues, in particular final status, the sides and international facilitators should shift their focus in 2007 to building confidence and cooperation in areas where there are realistic opportunities.
Topic:
Security, Economics, and United Nations
Political Geography:
Russia, Europe, Asia, Georgia, and Abkhazia