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Über dieses Buch

This IEA volume brings together a set of essays written by leading authors on themes relevant to the study of economic development. The book covers a range of topics many of which are relevant to policy issues. The contributors bring new insights from empirical research in a range of economies with chapters including discussions of the UN development agenda, fiscal policy in Latin America, poverty data in Africa and Jordan, and monetary policy in South Africa.

Contemporary Issues in Development Economics is an essential read for researchers, scholars and policymakers interested in economic development in low- and middle-income countries.



1. World Economic Outlook and the Challenges to the UN Development Agenda Beyond 2015

More than five years after the eruption of the global financial crisis, the world economy has not recovered to running at full capacity According to the latest update of the World Economic Situation and Prospects by the United Nations (United Nations, 2014a), the world output is expected to grow in 2014 and 2015 at the rates of 2.8 per cent and 3.2 per cent respectively. These rates are far from sufficient to close the output gap and recuperate the job losses caused by the financial crisis.
Pingfan Hong

2. Fiscal Policy, Income Redistribution and Poverty Reduction in Latin America: Bolivia, Brazil, Chile, Costa Rica, El Salvador, Guatemala, Mexico, Peru and Uruguay

Although inequality has been falling since 2000, Latin America is still the most unequal region in the world and poverty rates are high for Latin America’s GDP per capita.1 Given these facts, the extent to which governments use fiscal policy to reduce inequality and poverty is of great relevance. This short chapter summarizes the results of applying a standard benefit-tax incidence analysis to estimate the effect of taxes and social spending on inequality and poverty in nine Latin American countries: Bolivia (Paz Arauco et al., 2014), Brazil (Higgins and Pereira, 2014), Chile (Ruiz-Tagle and Contreras, 2013), Costa Rica (Sauma and Trejos, 2014), El Salvador (Beneke et al., 2014), Guatemala (Cabrera et al., 2014), Mexico (Scott, 2014), Peru (Jaramillo, 2014), and Uruguay (Bucheli et al., 2014). Depending on the country, the household surveys utilized in the incidence analysis are for 2009, 2010, and 2011.
Nora Lustig

3. “Small Miracles” — Behavioral Insights to Improve Development Policy: The World Development Report 2015

Rational actor models dominate much modern economic thinking. But rational choice theory cannot explain the striking effects of the policies discussed in the World Bank’s latest World Development Report (World Bank Group 2015). In his review of the report in The New York Times, David Brooks celebrates the behavioral approach to development because it creates opportunities for policy interventions that produce “small miracles” from the perspective of traditional economics.
Allison Demeritt, Karla Hoff

4. Culture and Collective Action

Are there cultural underpinnings for differences in types of collective action? One may think that countries that have been successful in establishing democracies earlier than other countries had stronger historical traditions of collective action. If this were true, countries that have not yet established democracies are simply lagging in having their population stage a successful revolution to establish democracy. Looking back in human history, things seem, however, quite different from such a simple scheme. Some countries may have had a stronger tradition of collective action than established democracies, but the aims of that collective action may not necessarily have been to establish democracy. In a recent paper, Gorodnichenko and Roland (2013) presented a model and empirical evidence showing that countries with individualist culture would adopt democracy earlier than countries with collectivist culture, even if the latter possibly had better traditions of collective action. In this chapter, we would like to take a closer look at this question and look for micro-foundations of different types of collective action in different cultures. We focus on the comparison between individualism and collectivism, so it is useful in such an endeavor to compare Chinese and European history, which are relatively well documented.
Gerard Roland, Yang Xie

5. Is Poverty in Africa Overestimated Because of Poor Data?

Africa’s GDP growth rates in the last decade have been averaging about 5 per cent per year, making it second only to East Asia as the fastest growing region. Seven of the 10 fastest growing economies in the last decade are in Africa. Trade with the rest of the world has increased by 200 per cent since 2000, although from a low base. In addition, Africa appears to have recovered from the recent global economic slowdown better than anyone predicted and the region is expected to resume its recent growth trajectory much earlier than envisaged. Further, projections by the World Bank and IMF indicate that on average Africa will have the world’s fastest growing economy over the next five years. All of these have led to an upbeat buzz about the future of Africa (see The Economist, 2011, 2013; Sachs, 2012; African Development Bank, 2011). Non-income indicators of the Millennium Development Goals (MDGs) such as primary school enrollment, child mortality, gender parity in schooling, and access to water and sanitation services are also improving (Demombynes and Trommlerová, 2012).
Andrew Dabalen, Alvin Etang, Rose Mungai, Ayago Wambile, Waly Wane

6. Filling Gaps when Poverty Data are Missing: Updating Poverty Estimates Frequently with Different Data Sources in Jordan

Tracking poverty trends can help us understand which policies work and which do not, and how efficient they are. Producing reliable poverty estimates by conducting household expenditure (consumption) or income surveys, however, requires significant financial and technical resources. Consequently, consumption surveys are typically conducted every few years by statistical agencies, and poverty estimates are not available in the intervening years during which surveys have not been implemented. Though policymakers often have a strong interest in monitoring poverty trends over time, they typically have little or no information on such trends during the years when consumption data are unavailable. Another challenge to tracking poverty trends is that survey design may change over time, thus making consumption data and poverty estimates not comparable between different rounds. Both of these challenges can be broadly characterized as a missing data situation.
Hai-Anh H. Dang, Peter F. Lanjouw, Umar Serajuddin

7. The Social Pension and Time Allocation in Poor South African Households

How do adult household members in developing countries respond to an exogenous increase in non-market income? In particular, how does it affect their choices regarding time allocation to various activities? We explore this question using nationally representative time use data from South Africa. We make use of the age of resident elderly members, in conjunction with pension eligibility rules to identify the aforementioned income effects.
Vimal Ranchhod, Martin Wittenberg

8. Assessing the Impact of Social Grants on Inequality: A South African Case Study

The purpose of this chapter is to investigate the role of social grants in reducing income inequality during the first 15 years of democracy in South Africa. Since the transition to democracy in 1994, the South African government has dramatically expanded this system of social grants. Building on an existing but racially biased social security system developed by the apartheid government, the social grant system was expanded to include all races and then, through the 1990s, additional social transfers were instituted.
Reinhard Schiel, Murray Leibbrandt, David Lam

9. Speculative Capital Flows, Exchange Rate Volatility and Monetary Policy: South African Experience

The South African currency (the rand) is volatile. The first chart in Figure 9.1 shows the three-month historical volatility (standard deviation, annualized) of the rand per dollar exchange rate since 1993. From the early 2000s, rand volatility consistently exceeds that of the Mexican and South Korean currencies, and moves very closely with that of the Brazilian and Turkish currencies.
Shakill Hassan

10. Challenges of Urbanisation in India

In recent years there has been an increasing realisation that urbanisation is set to accelerate with India’s transition to faster economic growth, but there is still an inadequate understanding about the need to plan for urbanisation and for translating these plans into action. Only then can conditions be created on the ground which foster agglomeration economies, encourage employment and enterprise, and support the growth momentum in an inclusive and sustainable manner. There is also not enough appreciation of a fundamental reality of the Indian situation that the fortunes of the rural sector are also crucially linked to the way urbanisation proceeds, e.g., how agriculture can be an important part of a modern supply chain, how the quantity and quality of water available for agriculture are significantly affected by the process of urbanisation, etc.
Isher Judge Ahluwalia

11. Are Foreign Direct Investments in the Balkans Different?

The chapter examines whether there are specific features driving foreign direct investment (FDI) to the Western Balkan (WB) countries—Albania, Bosnia and Herzegovina, Croatia, Macedonia, Montenegro and Serbia—compared with other transition economies. Despite many positive developments during the 2000s, the Balkans may still face an image problem: for many potential foreign investors, the word Balkan ‘conjures up troubled images of war and conflict, rather than investment opportunities and economic potential’ (Cviic and Sanfey, 2010, p. 124). This chapter explores whether FDI into the Western Balkans has been lower than can be explained by the economic characteristics of the region, such as the smaller size of domestic markets and greater distance from the main investing economies. Our analysis confirms this view; FDI to the Western Balkans is driven by the same economic, geographical and institutional factors as other transition economies, but there is evidence of a significant negative regional effect.
Saul Estrin, Milica Uvalic

12. Time-consistency and Dictator Punishment: Discretion Rather than Rules?

Following Kydland and Prescott’s (1977) seminal work exhorting the use of rules over discretion, many governments responded by attempting to bind policy makers who are susceptible to time-inconsistency. In subsequent decades, much of the policy discussion and analysis has been concentrated on monetary policy (cf. the extensive literature following Barro and Gordon (1983)). However, there have been other fields where governments have increased their commitment to remain time-consistent. One such area is international justice and the treatment of dictators and warlords who have committed crimes under international law. There, commitment has been increased through the establishment of a permanent International Criminal Court (ICC) in 2002. The purpose of the ICC is to hold high ranking officials (including heads of state) accountable for acts of genocide, war crimes, and crimes against humanity. Indeed, an explicit aim of the Rome Statute (the treaty that established the ICC) is to “to put an end to impunity for the perpetrators of these crimes and thus to contribute to the prevention of such crimes”.
Shaun Larcom, Mare Sarr, Tim Willems


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