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Policies and external shocks affecting agriculture, the main source of income for rural households, can be expected to have a significant impact on poverty. The authors study the case of Uganda. Throughout the 1990s, more than 90 percent of its poor lived in rural areas and, during the same period, large international price fluctuations as well as an extensive domestic deregulation affected the coffee sector, its main source of export revenues. Using data from three household surveys covering the 1990s, the authors confirm a strong correlation between changes in coffee prices (in a liberalized market) and poverty reduction. This is highlighted by comparing the performance of different households grouped according to their dependence on coffee farming. Regression analysis (based on pooled data from the three surveys) of consumption expenditure on coffee-related variables, other controls, and time-fixed effects corroborates that the mentioned correlation is not spurious. The authors also find that while both poor and rich farmers enter the coffee sector, the price boom benefits the poorer households relatively more, whereas the liberalization seems to create more opportunities for richer farmers. Finally, notwithstanding the importance of the coffee price boom, the agricultural policy framework and the thorough structural reforms in which the coffee market liberalization was embedded have certainly played a role in triggering overall agricultural growth. These factors appear to matter especially in the second half of the 1990s when prices went down but poverty reduction continued.
Agricultural Activities --- Agriculture --- Alternative Crops --- Capita Incomes --- Coffee --- Coffee Farmers --- Coffee Market --- Coffee Prices --- Coffee Production --- Coffee Sector --- Commodity --- Cotton --- Cotton Production --- Crop --- Crop Prices --- Crops --- Crops and Crop Management Systems --- Export Crops --- Farm --- Farmers --- Farming --- IFPRI
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Seasonal worker programs are increasingly seen as offering the potential to be part of international development policy. New Zealand's Recognised Seasonal Employer program is one of the first and most prominent of programs designed with this perspective. This paper provides a detailed examination of this policy through the first six seasons. This includes the important role of policy facilitation measures taken by governments and aid agencies. The evolution of the program in terms of worker numbers is discussed, along with new data on the (high) degree of circularity in worker movements, and new data on (very low) worker overstay rates. There appears to have been little displacement of New Zealand workers, and new data show Recognised Seasonal Employer workers to be more productive than local labor and that workers appear to gain productivity as they return for subsequent seasons. The program has also benefitted the migrants participating in the program, with increases in per capita incomes, expenditure, savings, and subjective well-being. Taken together, this evidence suggests that the program is largely living up to its promise of a "triple win" for migrants, their sending countries in the Pacific, and New Zealand.
Corporate Social Responsibility --- Education --- International Development Policy --- Labor Markets --- Labor Standards --- Per Capita Incomes --- Policy Facilitation Measures --- Private Sector Development --- Social Protections and Labor --- Tertiary Education --- Work & Working Conditions --- Worker Movements --- Worker Overstay Rates
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Policies and external shocks affecting agriculture, the main source of income for rural households, can be expected to have a significant impact on poverty. The authors study the case of Uganda. Throughout the 1990s, more than 90 percent of its poor lived in rural areas and, during the same period, large international price fluctuations as well as an extensive domestic deregulation affected the coffee sector, its main source of export revenues. Using data from three household surveys covering the 1990s, the authors confirm a strong correlation between changes in coffee prices (in a liberalized market) and poverty reduction. This is highlighted by comparing the performance of different households grouped according to their dependence on coffee farming. Regression analysis (based on pooled data from the three surveys) of consumption expenditure on coffee-related variables, other controls, and time-fixed effects corroborates that the mentioned correlation is not spurious. The authors also find that while both poor and rich farmers enter the coffee sector, the price boom benefits the poorer households relatively more, whereas the liberalization seems to create more opportunities for richer farmers. Finally, notwithstanding the importance of the coffee price boom, the agricultural policy framework and the thorough structural reforms in which the coffee market liberalization was embedded have certainly played a role in triggering overall agricultural growth. These factors appear to matter especially in the second half of the 1990s when prices went down but poverty reduction continued.
Agricultural Activities --- Agriculture --- Alternative Crops --- Capita Incomes --- Coffee --- Coffee Farmers --- Coffee Market --- Coffee Prices --- Coffee Production --- Coffee Sector --- Commodity --- Cotton --- Cotton Production --- Crop --- Crop Prices --- Crops --- Crops and Crop Management Systems --- Export Crops --- Farm --- Farmers --- Farming --- IFPRI
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This paper applies a growth diagnostics approach to identify the most binding constraints to private-sector growth in Malawi - a small, landlocked country in Southern Africa with one of the lowest per capita incomes in the world. The approach aims to identify the constraints (in terms of public policy, implementation, and investments) most binding on marginal investment, and therefore whose relaxation would have the largest impact on growth through the investment channel. The authors find that growth in Malawi has been primarily driven by the domestic multiplier effect from export revenues. The multiplier effect is particularly pronounced due to the high number of smallholder farmers, which produce Malawi's main export crop, tobacco, and consequently results in the widespread and rapid transmission of agricultural export income. Furthermore, despite changes in the structure of agricultural production from estate to smallholder farming and liberalization of prices and finance, a longstanding relationship persists between exports in real domestic currency and overall gross domestic product. This central role of exports in creating domestic demand highlights the importance of the real exchange rate in Malawi's growth story, which directly increases the strength of the export multiplier. The most pressing constraint to growth in Malawi continues to be the regime of exchange rate management. Despite good progress, there is compelling evidence that the rate is still substantially overvalued. Furthermore, it is also likely that the inflow of foreign aid - in excess of 50 percent of exports -contributes to the overvaluation through its large component of recurrent expenditures.
Access to Finance --- Agriculture --- Currencies and Exchange Rates --- Debt --- Debt Markets --- Economic Theory and Research --- Emerging Markets --- Export growth --- Exports --- Finance and Financial Sector Development --- GDP --- GDP deflator --- GDP per capita --- Gross domestic product --- Human capital --- Income --- Inflation --- Interest rates --- Living standards --- Monopoly --- Multiplier effect --- Overvaluation --- Per capita incomes --- Private Sector Development --- Real GDP --- Total factor productivity --- Treasury bills
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The validity of instrumental variables (IV) regression models depends crucially on fundamentally untestable exclusion restrictions. Typically exclusion restrictions are assumed to hold exactly in the relevant population, yet in many empirical applications there are reasonable prior grounds to doubt their literal truth. In this paper I show how to incorporate prior uncertainty about the validity of the exclusion restriction into linear IV models, and explore the consequences for inference. In particular I provide a mapping from prior uncertainty about the exclusion restriction into increased uncertainty about parameters of interest. Moderate prior uncertainty about exclusion restrictions can lead to a substantial loss of precision in estimates of structural parameters. This loss of precision is relatively more important in situations where IV estimates appear to be more precise, for example in larger samples or with stronger instruments. The author illustrates these points using several prominent recent empirical papers that use linear IV models.
Access to Finance --- Benchmark --- Bilateral trade --- Consumers --- Currencies and Exchange Rates --- Econometrics --- Economic Theory & Research --- Finance and Financial Sector Development --- GDP --- GDP per capita --- Growth rate --- Human capital --- Macroeconomics --- Macroeconomics and Economic Growth --- Per capita incomes --- Property rights --- Statistical & Mathematical Sciences
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This paper applies a growth diagnostics approach to identify the most binding constraints to private-sector growth in Malawi - a small, landlocked country in Southern Africa with one of the lowest per capita incomes in the world. The approach aims to identify the constraints (in terms of public policy, implementation, and investments) most binding on marginal investment, and therefore whose relaxation would have the largest impact on growth through the investment channel. The authors find that growth in Malawi has been primarily driven by the domestic multiplier effect from export revenues. The multiplier effect is particularly pronounced due to the high number of smallholder farmers, which produce Malawi's main export crop, tobacco, and consequently results in the widespread and rapid transmission of agricultural export income. Furthermore, despite changes in the structure of agricultural production from estate to smallholder farming and liberalization of prices and finance, a longstanding relationship persists between exports in real domestic currency and overall gross domestic product. This central role of exports in creating domestic demand highlights the importance of the real exchange rate in Malawi's growth story, which directly increases the strength of the export multiplier. The most pressing constraint to growth in Malawi continues to be the regime of exchange rate management. Despite good progress, there is compelling evidence that the rate is still substantially overvalued. Furthermore, it is also likely that the inflow of foreign aid - in excess of 50 percent of exports -contributes to the overvaluation through its large component of recurrent expenditures.
Access to Finance --- Agriculture --- Currencies and Exchange Rates --- Debt --- Debt Markets --- Economic Theory and Research --- Emerging Markets --- Export growth --- Exports --- Finance and Financial Sector Development --- GDP --- GDP deflator --- GDP per capita --- Gross domestic product --- Human capital --- Income --- Inflation --- Interest rates --- Living standards --- Monopoly --- Multiplier effect --- Overvaluation --- Per capita incomes --- Private Sector Development --- Real GDP --- Total factor productivity --- Treasury bills
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The validity of instrumental variables (IV) regression models depends crucially on fundamentally untestable exclusion restrictions. Typically exclusion restrictions are assumed to hold exactly in the relevant population, yet in many empirical applications there are reasonable prior grounds to doubt their literal truth. In this paper I show how to incorporate prior uncertainty about the validity of the exclusion restriction into linear IV models, and explore the consequences for inference. In particular I provide a mapping from prior uncertainty about the exclusion restriction into increased uncertainty about parameters of interest. Moderate prior uncertainty about exclusion restrictions can lead to a substantial loss of precision in estimates of structural parameters. This loss of precision is relatively more important in situations where IV estimates appear to be more precise, for example in larger samples or with stronger instruments. The author illustrates these points using several prominent recent empirical papers that use linear IV models.
Access to Finance --- Benchmark --- Bilateral trade --- Consumers --- Currencies and Exchange Rates --- Econometrics --- Economic Theory & Research --- Finance and Financial Sector Development --- GDP --- GDP per capita --- Growth rate --- Human capital --- Macroeconomics --- Macroeconomics and Economic Growth --- Per capita incomes --- Property rights --- Statistical & Mathematical Sciences
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This paper documents an unusual and possibly significant phenomenon: the export of skills, embodied in goods, services or capital from poorer to richer countries. The authors first present a set of stylized facts. Then, using a measure that combines the sophistication of a country's exports with the average income level of destination countries, they show that the performance of a number of developing countries - notably China, Mexico and South Africa - matches that of much more advanced countries - such as Japan, Spain and the United States. The authors create a new combined dataset on foreign direct investment (covering greenfield investment as well as mergers and acquisitions). The analysis shows that flows of foreign direct investment to developed countries from developing countries - like Brazil, India, Malaysia and South Africa - as a share of their GDP, are as large as flows from developed countries - like Japan, Korea and the United States. The authors suggest that it is not just the composition of exports but their destination that matters. In both cross-sectional and panel regressions, with a range of controls, a measure of uphill flows of sophisticated goods is significantly associated with better growth performance. These results suggest the need for a deeper analysis of whether the benefits of development might derive not from deifying comparative advantage but from defying it.
Comparative advantage --- Competitiveness --- Debt Markets --- Development economics --- Economic integration --- Economic performance --- Economic Theory and Research --- Economies of scale --- Emerging Markets --- Exports --- Finance and Financial Sector Development --- Fixed costs --- GDP --- GDP per capita --- Growth theories --- Human capital --- Imperfect competition --- Income --- International Economics & Trade --- International trade --- Investment and Investment Climate --- Macroeconomics and Economic Growth --- Mergers --- Per capita income --- Per capita incomes --- Private Sector Development --- Product differentiation --- Productivity --- Public Sector Development --- Trade Policy
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Since the mid 1980s a substantial amount of research has been undertaken on trade in services. Much of this is inspired by the World Trade Organization or regional trade agreements, especially the European Union, but an increasing number of papers focus on the impacts of services sector liberalization. This paper surveys the literature, focusing on contributions that investigate the determinants of international trade and investment in services, the potential gains from greater trade (and liberalization), and efforts to cooperate to achieve such liberalization through trade agreements. It concludes that there is increasing evidence that services liberalization is an important source of potential welfare gains, but relatively little research has been done that can inform the design of international cooperation-both trade agreements and development assistance-so as to more effectively promote development objectives.
Banks and Banking Reform --- Commodities --- Competitiveness --- Development --- Development Assistance --- Distribution --- Economic Growth --- Economic Theory and Research --- Emerging Markets --- Free Trade --- GDP --- ICT Policy and Strategies --- Incentives --- Income --- Information and Communication Technologies --- Inputs --- International Economics & Trade --- International Trade --- Investment --- Macroeconomics and Economic Growth --- National Income --- Open Economies --- Per Capita Incomes --- Political Economy --- Private Sector Development --- Production --- Public Sector Corruption and Anticorruption Measures --- Public Sector Development --- Telecommunications --- Trade --- Trade and Services --- Trade Policy --- Transport --- Transport Economics, Policy and Planning --- Welfare --- WTO
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Using nationally representative, economywide data, this paper investigates the relative importance of trade-mandated effects on industry wage premia; industry and economywide skill premia; and employment flows in accounting for changes in the wage distribution in Brazil during the 1988-95 trade liberalization. Unlike in other Latin American countries, trade liberalization appears to have made a significant contribution toward a reduction in wage inequality. These effects have not occurred through changes in industry-specific (wage or skill) premia. Instead, they appear to have been channeled through substantial employment flows across sectors and formality categories. Changes in the economywide skill premium are also important.
Agriculture --- Debt Markets --- Development --- Distribution --- Economic Theory and Research --- Economy --- Emerging Markets --- Exchange --- Finance and Financial Sector Development --- Financial Literacy --- Free Trade --- Goods --- Growth Rate --- Income --- Industry --- Inequality Measures --- International Economics & Trade --- Labor Markets --- Labor Policies --- Law and Development --- Macroeconomics and Economic Growth --- Per Capita Incomes --- Prices --- Private Sector Development --- Public Sector Development --- Social Protections and Labor --- Theory --- Total Factor Productivity --- Total Factor Productivity Growth --- Trade --- Trade Law --- Trade Liberalization --- Trade Policy --- Trade Reforms --- Trends --- Value --- Wages --- Water and Industry --- Water Resources
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