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This special issue contributes to the development economics literature by highlighting the role of information communication and technologies (ICTs) in supporting rural and agricultural development. It is comprised of nine papers. Key findings from this special issue include: (1) internet use increases rural consumption diversity and agricultural productivity; (2) smartphone use empowers rural women in household decision‐making and off‐farm work participation; (3) smartphone‐based agricultural extension services boost rural income growth; (4) a lack of ICT infrastructure and inadequate skills to use digital technologies are two key factors that lead to digital poverty traps for smallholder rural farmers; (5) ICT adoption increases the probability of rural households' access to credit and empowers rural women and farm households in relatively less developed regions to access credit; (6) digital financial inclusion reduces farmers' vulnerability to poverty; and (7) e‐commerce adoption increases both sales prices and marketing costs, but the magnitude of increasing the former is higher than the magnitude of increasing the latter, which finally contributes to a higher gross return. This special issue also proposes practical instruments and implications for advancing the application of ICTs in rural areas to accelerate rural and agricultural development in the digital age. [ABSTRACT FROM AUTHOR]

Are markets in developing and transition economies overregulated or under-regulated? This is a perennial question in the development discourse, but one for which answers appear to come more from preset ideology than from context- specific analysis and evidence. These issues become even more pressing when the debate turns to the links between regulation, deregulation and inequality. The recent experience of rising inequality in many countries has also brought to the fore predictable policy positions. A key aspect of labor regulation in developing countries, and one becoming more prominent in the era of rising inequality, is the minimum wage. The range of issues around regulation, minimum wage and informality was addressed by papers presented to a conference held in New Delhi on December 17-18, 2014. The conference was co-sponsored by the World Bank, UK Department for International Development, Cornell University and Columbia University. The organizers of the conference were Kaushik Basu, Stefan Dercon, Ravi Kanbur and Jan Svejnar. A selection of papers from the conference which passed the usual review procedures of the Review of Development Economics, and a further selection of papers from those submitted to the journal, form this symposium. [ABSTRACT FROM AUTHOR]

This paper investigates the influence of the New Development Bank (NDB) on the structure of the multilateral development financial system, using social network analysis. The findings show that some emerging economies have been significantly affected by establishment of the NDB, whereas developed countries still dominate. Although the influence of BRICS countries has increased, they still play a relatively weak role. Further analyses examine the influence of the NDB's expansion; developed countries and most BRICS countries are not affected, and the rankings of some entry countries has increased whereas that of non‐entry countries with nondominant power has decreased. [ABSTRACT FROM AUTHOR]

The lack of health insurance for smallholder farmers in most sub‐Saharan African countries hurts the families and can also negatively affect agriculture production, exports, and tax revenues. This paper analyzes the linkage between medical emergencies and agriculture exports and the corresponding tax revenues for smallholder farmers in Côte d'Ivoire. It uses two complementary datasets: the 2016 Consultative Group to Assist the Poor (CGAP) smallholder survey and the 2015 Côte d'Ivoire living standard survey. The paper finds that a medical emergency is negatively and significantly associated with a decrease in the likelihood that a smallholder farmer cultivates cocoa of 3.9 percentage points, driving them into poverty and reducing productivity at the lower quantiles. The paper then estimates that medical emergencies can be correlated with the decline in cocoa exports of $853 million and in tax revenues of $125 million, representing 0.2% of the Ivorian gross domestic product (GDP) in 2017. [ABSTRACT FROM AUTHOR]

Early childhood is the period when inequality originates and the intergenerational transmission of poverty and inequality begins. It is therefore important to understand what drives inequality in early childhood health and nutrition in order to provide children with equal chances for healthy growth. In Jordan, there are substantial socioeconomic disparities in children's health and nutrition; children from wealthy households grow normally while other children falter. This paper examines the determinants and mediators of health disparities in children's height and weight in Jordan, including parental health knowledge, food quantity and quality, health conditions, the health environment, and prenatal development. While this paper demonstrates that the health environment and food quantity and quality contribute to inequality in child health, these effects explain only a small share of disparities. A large share of inequality in children's health is determined prenatally, and nutrition policies need to prioritize this period. [ABSTRACT FROM AUTHOR]

Formalizing firms can potentially increase the tax base, expand safety and social protections for workers, create good jobs, and promote firm growth. However, the costs and processes of formality may be too challenging for some firms to bear. Thus, informal firms may not be able to survive the transition to formality, and attempts to expand formality through more intensive enforcement may be harmful and counterproductive to job creation and growth. This paper investigates the potential for currently informal firms to formalize in Egypt. The paper compares the characteristics of formal and informal micro and small nonagricultural firms and identifies the extent of similarities and potential for formalization. The analysis finds that, beyond firm size and whether the firm operates in a fixed establishment, the basic and easily observable characteristics of firms are not closely linked to formality. Firm age, productivity, and owner characteristics, such as education, are strongly predictive of formality. The predicted probability of being formal is greater than 50% for only about 26% of informal firms, suggesting most firms are not good candidates for formalization. The paper develops profiles (groups and clusters) of similar firms to identify those with a higher potential for formalization. [ABSTRACT FROM AUTHOR]

The rapid development of rural e‐commerce in China has caught the attention of economists around the world. Through incorporating rural e‐commerce platform into the general equilibrium model, this paper theoretically analyzes the impacts of rural e‐commerce platform on industrial structure and the potential mechanisms. Then, taking the exogenous policy of Comprehensive Demonstration of National E‐commerce into Rural Areas in China as a quasi‐experiment, this paper constructs a staggered difference‐in‐differences model to empirically examine how rural e‐commerce platforms affect the output proportion of nonagricultural sector with samples of 2305 counties in China from 2009 to 2019. The findings indicate that the construction of rural e‐commerce platform promotes the transformation of industrial structure through technological advances and reduction of transaction costs. [ABSTRACT FROM AUTHOR]

This paper examines the impact of manufacturing servitization, service trade openness, and their interaction on the total factor productivity (TFP) of the manufacturing industry. Using panel data covering 43 economies, the study finds that higher levels of manufacturing servitization and service trade openness lead to higher TFP in the manufacturing industry. In addition, the positive impact of manufacturing servitization on TFP is greater in economies with higher levels of service trade openness. The study also shows that trade creation and research and development innovation mediate the relationship between manufacturing servitization, service trade openness, and TFP. Finally, the paper finds that the positive impact of manufacturing servitization, service trade openness, and their interaction on TFP is greater in developing countries and in low‐ and high‐TFP manufacturing industries. This research contributes to understanding the intricate relationship between manufacturing servitization, service trade openness, and manufacturing TFP. [ABSTRACT FROM AUTHOR]

High rates of school dropout and overeducation are typical problems faced by developing economies. This paper addresses these issues in a unique theoretical model that accounts for complementarity between household and infrastructural investment in education production function on the one hand, and school and higher education on the other hand. The results derived in this paper show that a reallocation of the education budget in favor of school education can solve both problems at the same time if certain conditions are satisfied. Otherwise, reallocation aggravates the problems. This paper questions the efficacy of the widely practiced budget reallocation policy in favor of school education, and in turn, shows that reallocation cannot eliminate school dropouts. [ABSTRACT FROM AUTHOR]

Abstract: Population aging (an increase in the share of the elderly in total population) is occurring in many, if not most, countries in the world, including those in Asia. Both economists and policymakers warn that population aging can have many deleterious effects on a country's economy including a decline in its saving rate, the emergence of a labor shortage, a deterioration in government finances owing to increased spending on old‐age related programs, and reduced innovation and productivity growth. It is therefore imperative for countries to prepare themselves for the advent of an aged society. The emerging and developing countries in Asia are no exception, with the region generally lacking adequate systems in such areas as long‐term care, public pensions, and health insurance. Against this background, an international workshop on “Aging in Asia” was held in Kitakyushu City, Japan, on November 15 to 16, 2016. The workshop was jointly sponsored by the Asian Development Bank Institute and the Asian Growth Research Institute and was organized by Charles Yuji Horioka, Peter J. Morgan, Yoko Niimi, and Guanghua Wan. This special issue of the Review includes nine papers presented at this workshop plus one paper that was not presented there but was written by one of the workshop participants. All of these papers underwent the usual rigorous refereeing process of this Review. [ABSTRACT FROM AUTHOR]

This paper examines the effect of an industrial policy in China named the VAT export tax on product upgrading. In particular, we use Chinese transaction data during 2003–2010 to isolate the causal impact of the exogenous variation of VAT refund and within the city‐product quality change in HS6 exported products. Our identification strategy entails the utilization of duality of the Chinese trade system to isolate the impact of the rebate by comparing a group of trade flows exempt from the refund and another that remains eligible. Our results suggest an increase in product upgrading in response to an increase in VAT refund. In this study, we also introduce the credit constraint to understand the change in quality. The industries that are confronted with tighter credit constraints impel firms to settle for low‐quality products. The model demonstrates that VAT refund provided a counterbalance force to credit constraints, thereby prompting firms to adjust quality. By increasing the refund granted to ordinary traders, firms leverage this excess cash flow to invest (in a fixed asset or innovative project) and improve the quality of products. This effect is reinforced for products exported to developed countries, heterogeneous products, or from larger industries. The Chinese policymakers formally introduced environmental objectives under the 10th and 11th FYP, respectively. The Party leaders put substantial weight on promoting products embedded with high‐added value or technological content. At the same time, they underscored the willingness to downscale the export share of energy‐intensive or polluting industries. We evaluate whether environmental and economic concern impacts product upgrading. According to the results of this study, the VAT refund is effective only for products produced in "cleaner" industries, for products necessitating technical skills, a range of know‐how in manufacturing, and high‐level technology or engaging in research and development activities. Our paper introduces a new and unexplored variable in the trade literature. We use the stock of non‐trade barriers to explicate the change in product quality. In the import market, Chinese exporters comply with the change in regulation by making upward adjustments in the quality. [ABSTRACT FROM AUTHOR]

Based on a mathematical model and empirical test, this paper explores the incentive of income for aspirations and its channels, forging links between theory and data. Results present evidence that income significantly inspires one's aspirations, and all conclusions still hold after overcoming the interference of potential endogenous issues. In terms of channels, the "aspirations window" (a set of similar perceivable individuals) and "bandwidth load" (the mental space to think, process problems, and come up with solutions) play the mediating role in the stimulation of money; that is, low incomes will make aspirations window narrower and bandwidth load heavier, which is a momentous force behind one's aspirations failure. This paper also enlightens income distribution and the construction of internal motivation mechanisms. [ABSTRACT FROM AUTHOR]

This paper investigates the extent to which households in rural Thailand across the income distribution are able to mitigate income risks in the face of shocks. It uses especially high‐quality household income and consumption data spanning 64 Thai villages over 15 years. The paper identifies income shocks by village‐level variations during drought conditions. It finds that richer households are better able to mitigate income risk than poorer households, in contrast to some studies of the South Asian subcontinent. These possibilities for managing income risk are shown to be correlated with the type of contract the head of household is likely to be employed in, the share of salaries in total household income, the education level of the head, the relative youth of the heads of richer households, and location effects. [ABSTRACT FROM AUTHOR]

Several studies have pointed out that manufacturing wages are relatively higher in African countries than in other countries at similar levels of development, and that this contributes to the continent's lower levels of manufacturing competitiveness. This paper derives unit labor costs (ULCs)—average wages relative to productivity—for two‐digit manufacturing sectors across a sample of 79 developed and developing countries, including 13 African countries, over the 1990–2015 period. We benchmark the ULCs to China and estimate the relationship between relative ULCs and manufacturing sector investment rates and export performance. We find that relative ULCs have a smaller association with exports in Africa relative to other developing regions. There is some evidence that investment responds to changes in relative ULCs in Africa; however, the estimated effects are smaller than in the full sample. Further, we find that for Africa, the level of labor productivity has a quantitatively stronger and more robust association with manufacturing performance than the level of real wages. The results have important implications for industrial policy in African countries. [ABSTRACT FROM AUTHOR]

This paper explores the impact of Chinese subsidy interventions in the upstream sector on the competitiveness of the downstream sector. In particular, the paper investigates the causal effect of Chinese subsidies on base metal products on the export competitiveness of downstream sectors in other major trading countries. To explore the impact of base metal subsidy interventions on the downstream sector of a trading partner, we exploit both temporal variation in subsidy interventions and base‐metal consumption by the downstream sector. Using a panel data for 137 sectors in 40 major trading partners of the Chinese economy, the results of the paper reveal that a one‐unit increase in Chinese subsidies decreases competitors' exports by an average of 16.6%. This indicates that an increase in one standard deviation of Chinese subsidies in the base metals sector decreases exports in the other major economies by 0.17 percentage points. The findings of the paper reveal that the impacts of Chinese subsidy interventions are larger and statistically significant for the exports of developed countries and metal‐intensive users in the downstream sectors. Production relocation to China, absorption of larger inexpensive base metals input by domestic Chinese firms, and subsidy complementarity in the Chinese upstream and downstream sectors could be some of the potential drivers for the negative impact of Chinese subsidy interventions on the export performance of foreign downstream firms. [ABSTRACT FROM AUTHOR]

This paper explores the impact of special economic zones (SEZs) policy and export status on firms' productivity. We first sketch a theoretical model to explain the selection mechanism of different types of exporters and SEZ firms, and provide the productivity ranking of firms. SEZ's exporters have the highest productivity. Firms facing high imported intermediate tariffs will select themselves into SEZs to avoid imported input tariffs; firms become non‐SEZ's exporters when their intermediate inputs tariffs are low. Compared with other types of firms, non‐SEZ's non‐exporters have the lowest productivity. Then, we empirically test the productivity ranking by firm‐level data, and the results are consistent with our theoretical framework. Besides, different SEZ policies are associated with heterogeneous impacts on the firms' productivity. Our paper further suggests that preferential policies are responsible for the productivity ranking of firms. [ABSTRACT FROM AUTHOR]

Abstract: This paper argues that the relationship between corruption and economic growth is dependent upon the uncertainty involved. Employing data on a cross‐section of countries, this paper uses an interaction between the frequency of bribery payments and the uncertainty regarding the delivery of the service in exchange for these bribes to show that corruption has a negative association with growth unless the uncertainty is minimal. Furthermore, the negative association becomes larger in magnitude with higher levels of uncertainty. At extremely high levels of uncertainty a relatively small increase in corruption, equivalent to moving from Sweden to the United States for example, is associated with economically large decreases in economic growth. [ABSTRACT FROM AUTHOR]

This paper studies the evolution of regional disparities in labor productivity, capital accumulation, and efficiency across Indonesian provinces over the 1990–2010 period. Through the lens of a nonlinear dynamic factor model, we first test the hypothesis that all provinces would eventually converge to a common steady‐state path. We reject this hypothesis and find that the provincial dynamics of labor productivity are characterized by two convergence clubs. We next evaluate the dynamics of the proximate sources of labor productivity and find some mixed results. On the one hand, physical and human capital accumulation are characterized by three and two convergence clubs, respectively. On the other hand, efficiency is characterized by a unique convergence club. The paper concludes by suggesting that, based on the provincial composition of each club and the common low level of efficiency across Indonesia, considerable improvements in both capital accumulation and efficiency are still needed to reduce regional disparities and accelerate productivity growth. [ABSTRACT FROM AUTHOR]

Energy is pivotal for sustainable economic growth. Undoubtedly, the role of the composition of the export basket (measured as economic complexity) is one of the crucial variables influencing energy consumption. Despite its importance, the existing body of literature does not intensively study the relationship between economic complexity and total energy consumption. Therefore, this study's primary aim was to examine the effect of economic complexity on energy consumption in a case study of 21 developed and 44 developing countries for the period 1971–2014. In this context, economic complexity expresses the level of sophistication of a country's export basket. This paper considers energy prices and income as explanatory variables in Durbin‐H panel cointegration analysis and applies a cointegration test with structural breaks to check for the long‐run relationships. For the long‐run estimations, we employ the augmented mean group method and dynamic seemingly unrelated regression. The findings reveal that economic complexity increases energy consumption in developing countries while it decreases energy consumption in developed countries. This is an important insight for countries concerned about their energy dependence. The diversification of their production and export baskets can reduce energy needs. The paper finally presents policy recommendations based on the empirical estimates. [ABSTRACT FROM AUTHOR]

An ethnic gap in education is prevalent around the world. This remains the case in Vietnam, a country that has achieved phenomenal economic growth and raised the educational attainment of the public. This paper examines the impact of language policy reorientation represented by the textbook supply program in Vietnam on the ethnic gap in children's learning measured by a vocabulary test. Applying difference‐in‐differences estimation to the Young Lives data between 2006 and 2015, we show that the program became more effective in narrowing the ethnic gap as the education policy became reoriented toward ethnic minority children. A causal mediation analysis reveals that increased study time is possibly a moderate mediator through which the language policy reorientation helped narrow the ethnic gap for the young cohort over and above the direct impact, but this was not the case for the old cohort. This paper, therefore, alludes to the importance of delivering learning materials carefully designed for the target group to bring about meaningful behavioral changes. It also underscores the importance of teaching in the right context, corroborating the findings from recent studies on teaching at the right level. [ABSTRACT FROM AUTHOR]

Remittances are an important source of external financing in low‐ and middle‐income countries. This paper uses the gravity model to analyze remittance flows in Russia and Caucasus and Central Asia countries. Standard gravity determinants, such as gross domestic product in sending and receiving countries, bilateral distance, existence of common borders and common official language, and fit remittance, flow well. Remittances also react to inflation and exchange rate movements in recipient countries to sustain their purchasing power. In line with the altruism hypothesis, remittances flow to countries with higher age dependency ratio. Remittances are countercyclical and help stabilize outputs in recipient countries. However, global shocks resulting in sharp output losses of sending countries would lead to large volatility and decline in remittance inflows in recipient countries. [ABSTRACT FROM AUTHOR]

Partner country (PC) selection lies in the centre of development policy decision‐making of donor countries and institutions, and plays a significant role in shaping aid patterns. This paper proposes a comprehensive analysis contrasting donor intentions in PC selection with actual aid flows. Having analysed selected members of the Development Assistance Committee of the Organization for Economic Cooperation and Development, namely, the European Union, France, Germany, Japan, Netherlands, Sweden, the United Kingdom and the United States of America, we suggest that (1) donors might not only be either altruistic or self‐interested but also motivated by an intention to contribute to the provision of global public goods; (2) self‐interest in aid provision can be an explicitly‐stated strategy, contrary to what has been argued in the majority of the literature, which often treats self‐interest as a non‐stated donor intention; and (3) donors' self‐interested intentions do not always lead to a less development‐oriented donor approach. [ABSTRACT FROM AUTHOR]

This paper investigates the determinants of participation and performance in post‐compulsory education, controlling for selection into post‐compulsory education and prior attainment, using a unique primary data set on pupils studying in the post‐compulsory grade in 2011–2012 from one district of Punjab province in Pakistan. The main findings of this paper show that participation and performance in post‐compulsory education are two different processes, with participation being driven by the availability of post‐compulsory institutions within travel distance and performance, once in post‐compulsory education, determined by ability. The results further highlight that distance reduces participation most for those living in rural areas. [ABSTRACT FROM AUTHOR]

In this paper, I estimate the effect of future pension benefits on pre‐retirement labor supply for a representative sample of Chilean workers. Using nonlinear patterns in pension benefit formulas and a reform that permanently changed non‐contributory pensions, I estimate the effect of pension accrual and expected pension wealth on labor force and contributory‐sector participation, labor earnings, and hours worked. I find that the effect is concentrated on the impact of pension accrual on the probability to contribute to the pension system. The effect is heterogeneous and is concentrated among middle‐aged workers, low‐skilled workers, and workers with higher financial literacy. [ABSTRACT FROM AUTHOR]

Should a typical developing country invest more in agriculture or education? At what stage of development is it optimal to invest more in each of these sectors? These are important questions that governments of developing countries grapple with when designing investment plans. In this paper, I propose a soil–human capital conceptual framework of development and use it to explain estimates of agricultural returns to schooling in Malawi. I use panel survey data for Malawi and rely on the exogenous education policy changes and spatial variation in access to schooling to identify effects of schooling on agricultural incomes. In addition, I correct for selection into income activities within a panel data and instrumental variables estimation framework. I find annual agricultural returns to schooling in Malawi of 3%–4% after correcting for selection and unobserved heterogeneity and 7% in the uncorrected specifications. I also find consistently higher returns to schooling in the nonagricultural sector for those not living in the village of birth and higher returns in the agricultural sector for those living in the village of birth. Given the size of the farm sector, wealth in Malawi is still in the soil, but that future growth in wealth depends on human capital investments. [ABSTRACT FROM AUTHOR]

In the context of two competing forces (i.e., socioeconomic transformation vs. traditional cultural norms) influencing Chinese family and its members, the paper uses the China Family Panel Studies (CFPS) to empirically examine the causal relation between intrahousehold bargaining power and women's marital satisfaction. By employing an instrumental variable approach, the paper finds that intrahousehold bargaining power negatively affects women's marital satisfaction. This conclusion remains valid after performing various robustness checks. However, there are some heterogeneous effects found that the negative effect is particularly significant among those women of higher age and constrained by external traditional norms. These women are more conservative in their own thoughts and thus tend to support the traditional gender belief of "men being the masters of the family." [ABSTRACT FROM AUTHOR]

Promoting youth and female entrepreneurship is crucial to inclusive growth and the future economic and social prospects of developing countries. Evidence tends to suggest that young and female entrepreneurs are in a minority, and the extent and generating mechanisms of this outcome tend to be country‐specific. This collection of papers brings together recent empirical contributions exploring key drivers of this heterogeneity entrepreneurial propensity of youth and female in the context of a group of countries in Africa, Latin America, and the Middle East, paying special attention to the role of and issues relating to access to credit, attitudes to risk, and migratory status. A common thread in all the papers is the effective role of risk, uncertainty, and asymmetric information in the determination of entrepreneurship and in the demand for and allocation of credit when potential entrepreneurs are from specific groups, that is, women, indigenous women, women and youth in conflict and post‐conflict situations, and migrant youth. Based on these results, the papers explore various challenges in the implementation of public policies designed to promote entrepreneurship within these specific segments of the population. [ABSTRACT FROM AUTHOR]

In many regions of the world, the persistent, and growing, proportion of young people who are currently Not in Employment, Education or Training—a group increasingly referred to as NEET—is of global concern. This is no less true of Morocco: about 30% of the Moroccan population between age 15 and 24 are currently NEET. Drawing from various rounds of Moroccan Labor Force Surveys, this paper contributes to understanding the complex dynamics of labor markets in developing countries. First, it identifies the socioeconomic determinants of Morocco's NEETs. Second, employing a synthetic panel (SP) methodology in the context of labor market analysis, the paper describes how the condition of NEETs changes over time. One striking, and worrisome, pattern that emerges from the 2010 SP data is that, even after 8 years, a majority of the NEETs remained outside either the labor market or education, with very little chance of moving out of their situation. Their chronic stagnancy confirms the powerful effect that initial conditions have on determining young people's future outcomes. It also highlights the absence of corrective mechanisms and policy interventions within the Moroccan political economy landscape that could help to change NEETs' outcomes along the line. [ABSTRACT FROM AUTHOR]

We examine the interaction between the relative inter‐industry pollution externality and resource stock externality of harvesting in deciding trade patterns and welfare gains from trade in a two‐country model (less‐developed countries) with renewable resources in the absence of resource management. This paper focuses on the impacts of trade policies on resource conservation and welfare outcomes in two countries with different environmental management regimes. Differences in pollution management standards between both countries determine the direction of trade flow and gains from trade in a diversified production case. The country with a lower pollution intensity parameter, an exporter of resource goods, certainly experiences welfare loss in the post‐trade steady‐state and may also suffer a decline in utility throughout the transition path. However, a country with higher pollution intensity and importers of resource goods tend to gain from trade. Under national open‐access resources, given that pollution is regulated up to a certain point in both countries, this study finds that implementing better restrictions on only one externality factor is not optimal from a post‐trade welfare perspective. Lastly, from the point of view of policy suggestion, this paper offers an optimal trade policy that the economic and environmental effects of enforcing import tax on resource goods are likely to be Pareto‐improving consequences compared to the implications of using an export tax. [ABSTRACT FROM AUTHOR]

This paper documents the existence of a "middle‐income trap" for the Middle East and North Africa region and contrasts the evidence with that of the East Asia and Pacific region. The results are twofold. First, nonparametric regressions show that the average rate of economic growth in the Middle East and North Africa has not only been significantly lower than that in the East Asia and Pacific region, but has also tended to drop at an earlier level of income. Second, econometric results point to the Middle East and North Africa having experienced a relatively slow pace of technology adoption in general‐purpose technologies and that a slower adoption pace of technology is associated with significantly lower economic growth. The paper concludes that barriers to the adoption of general‐purpose technologies related to the lack of contestability in key sectors constitute an important channel of transmission for the middle‐income trap. [ABSTRACT FROM AUTHOR]

Most evaluations of public works programs in developing countries study their effects on poverty reduction and other labor market outcomes (job creation, earnings, and participation). However, very few look at other collateral effects, such as the incidence of violence. Between 2009 and 2014, El Salvador implemented the Temporary Income Support Program (PATI), which aimed at guaranteeing a temporary minimum level of income to extremely poor urban families for 6 months, as well as providing beneficiaries with experience in social and productive activities at the municipal level. Making use of a panel data set at the municipal level for 2007–2014, with monthly data on different types of crime rates and social program benefits by municipalities, this paper assesses the effects of the program on crime rates in municipalities in El Salvador. There are several possible channels through which the PATI can affect crime. Since the program is associated with cash transfers to beneficiaries, a decrease in economically motivated crimes is expected (income effect). But since the program enforces work requirements and community participation, this could generate a negative impact on crime, because the beneficiaries will have less time to commit crime and because of community deterrence effects. Overall, the paper finds a robust and significant negative impact of the PATI on most types of crimes in the municipalities with the intervention. Moreover, the negative effects of the program on some types of crime rates hold several years after participation. The positive spillover effects for municipalities hold within a radius of 50 km. [ABSTRACT FROM AUTHOR]

Following the Millennium Development Goals and the Dakar Framework for Action, many African countries instituted free primary education policies in 2000 to achieve universal primary education by 2015. However, the impact of free education policies remains understudied, particularly for late‐adopters. This paper estimates the short‐term effects of free primary education on enrollment in the Democratic Republic of Congo, where the policy was implemented as a trial in only two provinces in 2010. We exploit the spatial variations in adopting the policies using difference‐in‐differences with propensity score matching and show that free primary education policies significantly increase enrollment. We find large heterogeneity in the effects depending on the school management types. Catholic conventional school accounts for most of the enrollment due to the perceived quality, level of teacher knowledge, school infrastructure, and better service delivery. [ABSTRACT FROM AUTHOR]

The paper examines the determinants and interrelationship of components of government spending using data for up to 142 countries over the period 1990–2017. We make use of two‐way fixed effect estimator with Driscoll‐Kraay standard errors, which accounts for cross‐sectional dependence and a system generalized method of moments estimator to examine the determinants of components of spending. We then adopt the seemingly unrelated regression estimation technique to examine the interrelationship between government spending types. From our results, there is little evidence of Wagner's Law as the coefficient of income is negative and statistically significant for most measures of spending. Further, we find that a reduction in overall government spending tends to reduce the share of almost all components of government spending except spending on economic services, non‐productive spending, and spending on transfers. In examining the interrelationship between government spending types, we find that government spending types under the Classification of Functions of Government (COFOG) classification, which may be described as "pure public goods" and "merit public good provision," have complementary relationships. However, government spending on pure public good vs merit public goods, pure public goods vs economic services, and pure public goods vs transfers could be considered substitutes. [ABSTRACT FROM AUTHOR]

Are elections immediately preceded by periods of increased violent crimes? In this paper, we test the link between criminal activity and electoral cycles. We use annual data from 1981 to 2007 on crimes and data from the parliamentary elections in India for the same period. Using a difference‐in‐difference design, we find that election years have significantly higher incidence of violent crimes even after accounting for poverty and inequality. This effect is statistically significant and consistent across specifications. The effect is magnified in districts that are more competitive. Similar regressions using economic crimes and elections show either a decline or no effect. Our results are strongly indicative of a close link between violent crimes and elections, and are critical for the growing debate on the criminalization of politics in developing countries. [ABSTRACT FROM AUTHOR]

This research constructs a simple model to illustrate the global supply‐chain (GSC) profit sharing and industrial upgrading mechanism, finding that the average profitability distribution in the different supply‐chain stages is determined by three main conditions: (1) the average product of the labor in the firms at each production stage; (2) the production complexity level of each production stage in the chain; and (3) the ratio of the output elasticity of capital to the output elasticity of labor in each stage. This study also proposes a new industrial upgrading mechanism, the "smile‐curve‐driven supply‐chain upgrading," for supply‐chain firms. Increases in production complexity and level of factor intensity in each production stage are found to be the two essential conditions for the smile‐curve‐driven supply‐chain upgrading. Our static and dynamic panel empirical models, including robustness checks, are both broadly consistent with the theoretical predictions of this paper. [ABSTRACT FROM AUTHOR]

This paper considers female labor force participation (FLFP) behavior over the past two decades in two MENA (Middle East and North Africa) countries, namely Egypt and Palestine. Low FLFP rates in these countries, as in other MENA countries, are well documented. We conduct synthetic panel analysis using age–period–cohort (APC) methodology and decompose the FLFP rates into age, period, and cohort effects. We present our results with Hanoch–Honig–Deaton–Paxson normalization and maximum entropy estimation approaches to the APC method to observe the robustness of our results. The analysis is carried out by aggregate FLFP as well as by stratification by rural–urban location and educational attainments. Most of our results are similar in Egypt and Palestine with some exceptions. The two salient findings are as follows. The year effects display an initial U‐shape followed by an inverted U‐shape in both countries. The declining arm of the inverted U‐shape is compatible with the "MENA paradox" observed in both countries. The increase in the participation of the younger cohorts of the below‐secondary educated women, which is a low‐educated group, may be an indication of the wearing away of the social norms in Palestine that are considered to hinder the participation of women. [ABSTRACT FROM AUTHOR]

This paper estimates the effects of money transfers sent by relatives or acquaintances, better known as remittances, on intimate partner violence (IPV) against married women living in Mexico. Using three waves of a national state‐based representative survey specialized in violence against women, and state‐fixed effects regression models, the results show that receiving remittances increases the likelihood of IPV by 6%. We document several mechanisms for this detrimental effect of receiving remittances on IPV. Among these mechanisms, we find that receiving remittances is positively correlated to men's alcohol consumption, a factor associated with IPV, and that receiving remittances is negatively correlated to the probability of men being employed, suggesting that men exert violence against women to compensate for the lack of income with remittances. [ABSTRACT FROM AUTHOR]

This paper uses a newly assembled dataset on various types of social protection spending in 154 countries during the COVID‐19 pandemic in 2020 and 2021 to analyze the effect of the electoral cycle on the size and composition of the social protection stimulus budget. The analysis shows that the longer the time since the last election in a country—and thus the sooner the next election date—the larger the share of the social protection pandemic budget allocated to social assistance and income protection, and the lower the share allocated to job retention schemes. The electoral cycle appears to have impacted the size of social assistance spending only in countries with high political competition. [ABSTRACT FROM AUTHOR]

This study formulates a theoretical framework to shed light on why cash grants fail to increase parental investment in child education, and what can be done to address the issue. The paper asserts that consumption vulnerability, loss aversion, and information friction render lump‐sum cash grants ineffective. Redesigning interventions as demand‐side cost‐sharing schemes would nudge parents to buy educational materials for their children. [ABSTRACT FROM AUTHOR]

Agricultural production in developing countries is heavily rainfall dependent. Any unexpected variation in rainfall can affect the welfare of households. Using unit record data from India, this paper shows that households can insure against agricultural productivity (rainfall) shocks. Evidence suggests that they do so by varying the time allocation of individual members to different activities, particularly to regular wage work and human capital accumulation. There is a gender‐differentiated aspect to this response. Rainfall shocks adversely affect women's human capital accumulation. While there is no evidence that households use participation in NREGS to insure against rainfall shocks, the availability of NREGS helps reduce the impact of rainfall shocks on human capital accumulation. [ABSTRACT FROM AUTHOR]

This paper proposes an analytical framework for growth and development, and based on this methodological framework, this paper reveals why the United States has become powerful and predicts its probable decline. Different from the past views, this paper argues that the advantage integration–oriented production model and the proactive open strategy and policy orientation based on it are the core driving forces for growth and development. Driven by both capital and technology, the economic structure and social fabric of the United States has been undergoing tremendous changes for more than 200 years, so the members, the power, and the appeals of different interest groups are also changing. At the microlevel, the production model adapted to the economic structure and social fabric of the United States is changing, and correspondingly, at the macrolevel, the strategy and policy orientation of the United States are changing as well. This paper details the advantage integration–oriented development practices in U.S. history and briefly discusses the prospects of the practical application of this methodology. The United States is a typical country that achieved catch‐up through advantage integration and ultimately gained global economic dominance, and this implies that the strategy and policy based on this model of development are necessarily open and positive. However, the current growing conservative policy orientation in the United States may not be a good sign. [ABSTRACT FROM AUTHOR]

Differences between the business environment in the home country and the host country are an important factor when enterprises consider their location choice with regard to outward foreign direct investment (OFDI). However, this is ignored by much existing literature. Based on the trade‐off framework of international firms between exporting and participation in OFDI under the condition of heterogeneous enterprises, this paper constructs a theoretical model of the impact of distance of doing business (DDB) on OFDI. We take China's OFDI as an example and use the World Bank Group's Ease of Doing Business Index to construct the DDB indicator, as well as test the impact of the DDB on China's OFDI by combining the macro‐location panel data of China's OFDI between 2004 and 2017. The results showed that increasing DDB significantly reduces the scale of China's OFDI. The effect is robust. The mechanism is that DDB significantly decreases the success rate of OFDI and increases the cost of OFDI, thereby decreasing the scale of OFDI. Further analysis then finds that official acts, such as building partnerships, and folk acts, such as increasing cultural identity, can significantly reduce the negative effect of DDB on OFDI. [ABSTRACT FROM AUTHOR]

We construct unanticipated government spending shocks for 103 developing countries from 1990 to 2015 and study their effects on income distribution. We find that unanticipated fiscal consolidations lead to a long‐lasting increase in income inequality, while fiscal expansions lower inequality. The results are robust to several measures of income distribution and size of the fiscal shocks, to an alternative identification strategy, across expansions and recessions and across country groups (low‐income countries vs. emerging markets). An additional contribution of the paper is the computation of the medium‐term inequality multiplier. This is on average about 1 in our sample, meaning that a cumulative decrease in government spending of 1% of gross domestic product over 5 years is associated with a cumulative increase in the Gini coefficient over the same period of about 1 percentage point. The multiplier is larger for total government expenditure than for public investment and consumption (with the former having larger effect), likely due to the redistributive role of transfers. Finally, we find that (unanticipated) fiscal consolidations lead to an increase in poverty. [ABSTRACT FROM AUTHOR]

Is the emphasis placed on domestic value added in trade and industry policy‐making in developing countries consistent with the objective of employment generation through an export‐oriented development strategy? This paper examines the rationale behind this policy emphasis by first revisiting the conventional case for using the value‐added ratio as policy guidance and then undertaking an input–output analysis of the manufacturing industry in Thailand with emphasis on domestic employment generation. The analysis is based on a panel data set covering 74 manufacturing sectors from 1990 to 2015. The findings do not support the widely shared view that industries with a high value‐added ratio have greater potential to create domestic export‐induced employment. The policy implication of the results is that, in this era of economic globalization driven by global production networks, national industry policy needs to be guided by the market potential of products. [ABSTRACT FROM AUTHOR]

This paper explores the variation in intergenerational educational mobility across the Brazilian states based on univariate econometric techniques. The analysis of the national household survey (PNAD‐2014) confirms a strong variation in mobility among the 27 federative units in Brazil and demonstrates a significant correlation between mobility and income inequality. In this sense, this work presents empirical evidence for the existence of the "Great Gatsby curve" within a single country: states with greater income disparities present higher levels of persistence in educational levels across generations. Finally, the paper investigates one specific mechanism behind this correlation: whether higher income inequality might lead to lower investment in human capital among children from socially vulnerable households. The paper delivers robust and compelling results showing that children born into families where the parents have not completed primary education have a statistically significant reduction in their chance of completing the educational system if they live in states with a higher level of income inequality. [ABSTRACT FROM AUTHOR]

New evidence on the relationships between economic freedoms and poverty traps is provided. Methodologically, a new way to classify countries into clusters is used, which stresses the relative position of economies with respect to each other. The paper investigates whether economic freedoms have any impact on shifts from one cluster to another, towards either better or worse situations. Moreover, it analyzes the contribution of economic freedoms to avoid falling into a poverty trap. The impacts of the five macro‐components of the index are studied separately. The results show that economic freedoms help economies to grow and to avoid poverty traps. [ABSTRACT FROM AUTHOR]

This paper analyzes agglomeration effects on innovation behavior by small and medium manufacturing enterprises in Vietnam. We use a novel data set of 1,520 small and medium enterprises from 2011 to 2015. We focus on the spatial concentration of economic activities that influence firms' innovation outcomes. Moreover, we outline firms' and owners' characteristics as we examine the role of entrepreneurs and other covariates such as firm size, age, and the number of establishments in fostering their firm's innovation. Empirical results show the following: agglomeration contributes to the firms' innovation. Firms were less likely to innovate when they become larger in size, but microfirms were less innovative than others. Firms were found to be more innovative if they produce more than one product and operate in different cities or provinces. In contrast to the strong effects of agglomeration on firm innovation, firm‐level characteristics, especially that of owners, exhibit a weaker or insignificant role. [ABSTRACT FROM AUTHOR]

This study explores the relationship between demographic factors and saving rates using a panel dataset covering 110 countries between 1963 and 2012. In line with predictions from theory, this paper finds that, on average, lower dependency rates and greater longevity are associated with higher domestic saving rates. However, these correlations are statistically robust only in Asia. In particular, Latin America, which is a region that has undergone a remarkably similar "saving friendly" demographic transition since the 1970s, did not experience the same boost in saving rates as Asia. The paper highlights that the potential dividends arising from a favorable demographic transition are not automatically accrued. This is a sobering message at a time when the demographic tide is shifting in the world. [ABSTRACT FROM AUTHOR]