DO MARKETS PENALIZE AGENCY CONFLICTS BETWEEN CONTROLLING AND MINORITY SHAREHOLDERS? EVIDENCE FROM CHILE

Using a sample of Chilean listed firms with widespread presence of economic conglomerates that use pyramid structures to control affiliated companies, we find that firms where controlling shareholders have higher coincidence between cash and control rights are persistently more valued by the market. We carefully check that our results are not driven by omitted variable biases and control for reverse causation using a feature of Chilean Corporations Law that provides an exogenous instrument for ownership concentration.     

SOCIAL CLEAVAGES AND ELECTORAL SUPPORT IN TURKEY: TOWARD CONVERGENCE?

Studies on Western democracies have shown that deep‐seated social cleavages stabilize the electoral behavior and thus reduce electoral volatility. But how do social cleavages affect a party system that is undergoing democratic consolidation, such as in Turkey? In this study, investigations were carried out on long‐ and short‐term relationships between social cleavages (religiosity, ethnicity, and sectarism) electoral volatility in Turkey during the 1961–2002 period. Cross‐sectional multiple regressions were applied to electoral and demographic data at the provincial level. The results showed that in the longterm, social cleavages on the whole have increased volatility rather than reduced it. The cleavage‐volatility relationship, however, has changed over time. Repeated elections have mitigated the volatile effect of social cleavages on the voting behavior, as political parties have become more representative of the existent social cleavages.     

CHILD LABOR AND SCHOOL ENROLLMENT IN RURAL INDIA: WHOSE EDUCATION MATTERS?

This paper empirically analyzes the determinants of child labor and school enrollment in rural Andhra Pradesh, India. A village fixed‐effect logit model for each child is estimated with the incidence of child labor or school enrollment as the dependent variable, in order to investigate individual and household characteristics associated with the incidence. Among the determinants, this paper focuses on whose education matters most in deciding the status of each child, an issue not previously investigated in the context of the joint family system. The regression results show that the education of the child's mother is more important in reducing child labor and in increasing school enrollment than that of the child's father, the household head, or the spouse of the head. The effect of the child's mother is similar on boys and girls while that of the child's father is more favorable on boys.     

DID GOOD INSTITUTIONS PRODUCE GOOD TARIFFS? EVIDENCE FROM TARIFF PROTECTION IN COLONIAL VICTORIA

Were tariff rates in the Australian colony of Victoria directed towards growth‐enhancing industries or rent seekers? Recent research suggests tariffs may be welfare enhancing if they are directed at industries with positive externalities; something more likely when institutions are strong. Using disaggregated tariff data for the years 1872, 1880, and 1890, we analyse the relationship between industry characteristics and tariffs, finding little evidence that Victorian industries with positive externalities received tariff protection. Our results throw doubt on good institutions necessarily producing good tariff outcomes and suggest the relationship between tariffs and growth is more complex than current studies assume.     

ON THE PATH TO ECONOMIC GROWTH,DO REMITTANCES HELP? EVIDENCE FROM PANEL VARs

Despite the emergence of remittances studies, knowledge about their effect on economic development is still ambiguous. This paper investigates the impact of remittances at macroeconomic level in developing countries controlling for endogeneity problems with the use of panel vector autoregression (panel VAR). The findings suggest that remittances have a positive, albeit small, impact on economic growth even without considering the role of institutions. When institutions are included, the pattern of response remains unaltered. A distinction between low versus high remittances participation in economic activity evidences that, although the impact of remittances on growth is similar, appreciation of the exchange rate occurs in economies with high remittances participation. Finally, a distinction by geographical region reveals that Eastern European economies receive the greatest benefit from these flows, followed by the Americas and Asia; however, African economic growth does not appear to have a statistically significant impact.     

HOW REVOLUTIONARY IS THE “NERICA REVOLUTION”? EVIDENCE FROM UGANDA

A new high‐yielding upland rice variety known as New Rice for Africa (NERICA) has been widely recognized as a promising technology for addressing the food shortage in sub‐Saharan Africa. However, there has been no on‐farm yield data to support this optimism. The present study attempts to assess the actual and potential yield of NERICA in Uganda where it has been introduced recently. We found that NERICA's yield is higher (2.5 tons) for farmers who had rice‐growing experience than those who had no previous experience (1.7 tons). These findings strongly indicate that strengthening training, extension, and other supporting systems is the key to the success of the “NERICA revolution” in this country.     

THE ORDINAL AND CARDINAL JUDGMENT OF SOCIAL WELFARE CHANGES IN SINGAPORE, 1982?99

This paper analyzes the changes in social welfare in Singapore using both cardinal and ordinal measures. Labour Force Survey data published by the Manpower Research and Statistics, Department of the Ministry of Manpower, Singapore are used. It is observed with the use of Lorenz dominance technique that social welfare in Singapore during 1999 is less than in 1991 while an unambiguous conclusion cannot be made on the welfare ranking of 1982 and 1991 or of 1982 and 1999. According to the generalized Lorenz dominance, 1999 ranks first; however, this criterion is also unable to make any unambiguous ranking between 1982 and 1991. The ranking based on Sen social welfare function shows a continuous increase in the social welfare in Singapore. But when a more general social welfare function is used a different ordering might occur.     

WHY IS THE TAKE-UP OF MICROINSURANCE SO LOW? EVIDENCE FROM A HEALTH INSURANCE SCHEME IN INDIA

Insurance for the poor, called microinsurance, has recently drawn the attention of practitioners in developing countries. There are common problems among the various schemes: (1) low take-up rates, (2) high claim rates, and (3) low renewal rates. In the present paper, we investigate take-up decisions using household data collected in Karnataka, India, focusing on prospect theory, hyperbolic preference, and adverse selection. Prospect theory presumes that people behave in a risk-averse way when evaluating gains but in a risk-loving way when evaluating losses. Because insurance covers losses, the risk-loving attitude toward losses might explain the low take-up rates, and we find weak empirical support for this. Households with hyperbolic preference were more likely to purchase insurance, consistent with our theoretical prediction of demand for commitment. We also find some evidence on the existence of adverse selection: households with a higher ratio of sick members were more likely to purchase insurance.     

FIRM PRODUCTIVITY AND INVESTMENT CLIMATE IN DEVELOPING COUNTRIES: HOW DOES MIDDLE EAST AND NORTH AFRICA MANUFACTURING PERFORM?

Firm productive performances in five Middle East and North African (MENA) economies and eight manufacturing industries are compared to those in 17 other developing countries. Although the broad picture hides some heterogeneity, enterprises in MENA often performed inadequately given the middle‐income status of the MENA economies, with the exception of Morocco and, to some extent, Saudi Arabia. Firm competitiveness is a more constant constraint, with a unit labor cost higher than in most competitor countries, as well as investment climate (IC) deficiencies. The empirical analysis also points out how IC matters for firm productivity through the quality of infrastructure, the experience and education of the labor force, the cost and access to financing, and different dimensions of the government–business relationship. These findings bear important policy implications by showing which dimensions of the IC, in which industry, could help manufacturing in MENA to be more competitive in the globalization context.     

IS A GOVERNMENTAL MICRO‐CREDIT PROGRAM FOR THE POOR REALLY PRO‐POOR? EVIDENCE FROM VIETNAM

It is argued that without collateral the poor often face binding borrowing constraints in the formal credit market. This justifies a micro‐credit program, which is operated by the Vietnam Bank for Social Policies to provide the poor with preferential credit. The present paper examines poverty targeting and the impact of the micro‐credit program. It is found that the program is not very pro‐poor in terms of targeting. The nonpoor account for a larger proportion of the participants. The nonpoor also tend to receive larger amounts of credit compared to the poor. However, the program has reduced the poverty rate of the participants. The positive impact is found for all three Foster‐Greer‐Thorbecke poverty measures.     

GROWTH ACCOUNTING FOR SRI LANKA'S AGRICULTURE WITH SPECIAL REFERENCE TO FERTILIZER AND NONAGRICULTURAL PRICES: DO POLICY REFORMS AFFECT AGRICULTURAL DEVELOPMENT?

The agricultural sector of Sri Lanka reacted sharply to the highly contentious policy reforms called Structural Adjustment Programs. We used a four‐sector general equilibrium model under a growth accounting approach to find out the effect of the policy (exogenous) variable on the target (endogenous) variable. Here, we considered only the most important variables, and the overall results indicate that policy changes are favorable to overall agricultural development, although their effect on the domestic food sector is negative. The most serious negative determinant under the policy changes relates to fertilizer, and our study indicates that fertilizer prices considerably affect agricultural production; it especially has a negative effect on domestic food production. Second, this paper analyzes the impact of nonagricultural price, finding that it positively helped the development of overall agriculture. Third, agricultural exports increased under the new policy reforms and made large contributions to agricultural production.