Journal Issue: World Bank Economic Review, Volume 27, Issue 2
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Volume
27
Number
2
Issue Date
Journal Title
Journal ISSN
1564-698X
Journal
World Bank Economic Review
1564-698X
Journal Volume
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Articles
Evaluating Program Impacts on Mature Self-help Groups in India
(Oxford University Press on behalf of the World Bank, 2013-06) Liu, Yanyan; Deininger, Klaus
Despite the popularity and the unique nature of women's self-help groups in India, evidence on the economic impact of these groups is scant. On the basis of two rounds of surveys of 2,517 households, we use a strategy of double differences and propensity score matching to assess the economic effects of a program that promoted and strengthened self-help groups in Andhra Pradesh in India. Our analysis finds that longer exposure to the program has a positive impact on consumption, nutritional intake, and asset accumulation. Our investigation into the heterogeneity of these effects suggests that even the poorest households are able to benefit from the program.
Learning versus Stealing : How Important Are Market-Share Reallocations to India's Productivity Growth?
(Oxford University Press on behalf of the World Bank, 2013-06) Harrison, Ann E.; Martin, Leslie A.; Nataraj, Shanthi
Recent trade theory emphasizes the role of market-share reallocations across firms
(“stealing”) in driving productivity growth, whereas previous literature focused on
average productivity improvements (“learning”). We use comprehensive, firm-level data
from India’s organized manufacturing sector to show that market-share reallocations
were briefly relevant to explain aggregate productivity gains following the beginning of
India’s trade reforms in 1991. However, aggregate productivity gains during the period
from 1985 to 2004 were largely driven by improvements in average productivity. We
show that India’s trade, FDI, and licensing reforms are not associated with productivity
gains stemming from market share reallocations. Instead, we find that most of the productivity improvements in Indian manufacturing occurred through “learning” and that
this learning was linked to the reforms. In the Indian case, the evidence rejects the
notion that market share reallocations are the mechanism through which trade reform
increases aggregate productivity. Although a plausible response would be that India’s
labor laws do not easily permit market share reallocations, we show that restrictions on
labor mobility cannot explain our results.
Structural Change and Cross-Country Growth Empirics
(Oxford University Press on behalf of the World Bank, 2013-06) Eberhardt, Markus; Teal, Francis
One of the most striking features of economic growth is the process of structural change whereby the share of agriculture in GDP decreases as countries develop. The cross-country growth literature typically estimates an aggregate homogeneous production function or convergence regression model that abstracts from the process of structural change. In this paper, we investigate the extent to which assumptions about aggregation and homogeneity matter for inferences regarding the nature of technology differences across countries. Using a unique World Bank dataset, we estimate production functions for agriculture and manufacturing in a panel of 40 developing and developed countries for the period from 1963 to 1992. We empirically model dimensions of heterogeneity across countries, allowing for different choices of technology within both sectors. We argue that heterogeneity is important within sectors across countries implying that an analysis of aggregate data will not produce useful measures of the nature of the technology or productivity. We show that many of the puzzling elements in aggregate cross-country empirics can be explained by inappropriate aggregation across heterogeneous sectors.
Does Urbanization Affect Rural Poverty? Evidence from Indian Districts
(Oxford University Press on behalf of the World Bank, 2013-06) Cali, Massimiliano; Menon, Carlo
Although a high rate of urbanization and a high incidence of rural poverty are two
distinct features of many developing countries, there is little knowledge of the
effects of the former on the latter. Using a large sample of Indian districts from the
1983–1999 period, we find that urbanization has a substantial and systematic
poverty-reducing effect in the surrounding rural areas. The results obtained through
an instrumental variable estimation suggest that this effect is causal in nature and is
largely attributable to the positive spillovers of urbanization on the rural economy
rather than to the movement of the rural poor to urban areas. This rural poverty-reducing
effect of urbanization is primarily explained by increased demand for local agricultural
products and, to a lesser extent, by urban-rural remittances, the rural land/
population ratio, and rural nonfarm employment.
Wage Effects of High-Skilled Migration : International Evidence
(Oxford University Press on behalf of the World Bank, 2013-06) Grossmann, Volker; Stadelmann, David
The international migration of high-skilled workers may trigger productivity effects at the macro level such that the wage rate of skilled workers increases in host countries and decreases in source countries. We exploit data on international bilateral migration flows and provide evidence consistent with this theoretical hypothesis. We propose various instrumentation strategies to identify the causal effect of skilled migration on log differences of GDP per capita, total factor productivity, and the wages of skilled workers between pairs of source and destination countries. These strategies aim to address the endogeneity problem that arises when international wage differences affect migration decisions.
Is Foreign Aid Fungible? Evidence from the Education and Health Sectors
(Oxford University Press on behalf of the World Bank, 2013-06) Van de Sijpe, Nicolas
This paper adopts a new approach to the issue of foreign aid fungibility. Unlike most existing empirical studies, I employ panel data that contain information on the specific purposes for which aid is given. This approach enables me to link aid that is provided for education and health purposes to recipient public spending in these sectors. In addition, I distinguish between aid flows that are recorded on a recipient's budget and those that are not recorded, and I illustrate how the previous failure to differentiate between on- and off-budget aid produces biased estimates of fungibility. Sector program aid is the measure of on-budget aid, whereas technical cooperation serves as a proxy for off-budget aid. I show that the appropriate treatment of off-budget aid leads to lower fungibility estimates than those reported in many previous studies. Specifically, I find that in both sectors and across a range of specifications, technical cooperation, which is the largest component of total education and health aid, leads to, at most, a small displacement of recipient public expenditures.
Industry Switching in Developing Countries
(Oxford University Press on behalf of the World Bank, 2013-06) Newman, Carol; Rand, John; Tarp, Finn
Firm turnover (i.e., firm entry and exit) is a well-recognized source of sector-level productivity growth. In contrast, the role and importance of firms that switch activities from one sector to another is not well understood. Firm switchers are likely to be unique, differing from both newly established entrants and exiting firms that are closing down operations. In this study, we develop an empirical model that examines switching behavior using data from Vietnamese manufacturing firms during the 2001–2008 period. The diagnostic shows that switching firms exhibit different characteristics and behavior than do entry and exit firms. Switchers tend to be labor intensive and to seek competitive opportunities in labor-intensive sectors in response to changes in market environments. Moreover, resource reallocation resulting from switching forms an important component of productivity growth. The topic of switching merits attention in the future design of firm surveys across developing countries and in associated analytical studies.