Knightian uncertainty and poverty trap in a model of economic growth

This paper explores how Knightian uncertainty affects dynamic properties in an economic growth model. The decision-making theory employed in the analysis is the theory of expected utility under a non-additive probability measure, i.e., the Choquet expected utility model of preference. We apply this decision-making theory to an overlapping generations model where producers face “uncertainty” in their technologies. When the producer is averse to uncertainty, the firm's profit function may not be differentiable. Therefore, the firm's decision to invest and hire labor becomes rigid for a certain measurable range of real interest rates. In dynamic equilibrium, the existence of firm-level rigidity causes discontinuity in the wage function; this makes multiple equilibria the more likely outcomes under the log utility and Cobb–Douglas production functions. In this paper, we show that even if aversion to uncertainty is small, the “poverty trap” can arise for a wide range of parameter values.     

Growth and poverty in developing countries

Despite the developing countries' impressive aggregate growth of the past 25 years, its benefits have only reached the poor to a very limited degree. Not only have the poorest countries grown relatively slowly, but growth processes are such that within most developing countries, the incomes of the poor increase much less than the average. Although many policies have been proposed to counter these trends, little has been done to estimate the possibilities for significantly reducing world poverty within a reasonable period. This paper develops a quantitative framework to project levels of poverty under different assumptions about GNP growth population growth and changes in income distribution. Although the interactions among development processes and policy instruments are not modelled in any detail, the results serve to clarify the nature of the problem. The policy simulations demonstrate that the elimination of absolute poverty by the end of this century is a highly unlikely prospect; even to achieve a substantial reduction will require a combination of policies designed to accelerate the growth of poor countries, to distribute the benefits of growth more equitably, and to reduce population increase.     

The approach to transforming the traditional agricultural economy: a research on the multiple paths of poverty alleviation and transformation in rural China

Transforming a traditional agricultural economy into a modern economy is one of the main themes in economic development. Through theoretical and empirical analysis, this paper finds out that the key to transformation is to raise the economic value of people, to improve human capital investment and to match the stocks of physical and human capital. China’s rural economy is on the edge of economic take-off, and different zones may pursue different paths for transformation. The source of rural poverty is not the scarcity of income or consumption, but the deficiency of education, social security, medical care and economic opportunity, which we define as “capability poverty”. __________ Translated from The Journal of World Economy (世界经济), 2005,(2) (in Chinese)     

Liberalization and tax amnesty in a developing economy

We show that tax evaders can respond to a tax amnesty, even if enforcement activities do not change, if it is timed to coincide with liberalization and rising incomes. The success of the amnesty, in terms of its effect on tax revenue and welfare, depends on the distribution of the gains from liberalization. Our analysis provides a theoretical justification of the link between successful amnesties and economic liberalization and points to factors that a policy maker should consider for success of future amnesties.     

Financial development and poverty in developing countries: a causal analysis

This article empirically examines the possible causal links between financial development and poverty in developing countries. To this end, we apply a modified form of traditional Granger causality tests to suit the short times series that are available. We conclude that the evidence supports the hypothesis that in the period of the 1970s–1980s financial development, measured by liquid assets of the financial system as a share of GDP or by money and quasi money as a percentage of GDP, leads to the reduction of moderate poverty. These results do not appear for the period of the 1980s–1990s or when financial development is measured by the ratio of the value of credits granted by financial intermediaries to the private sector to GDP, whereas they seem to be strengthened by using summary measures of financial development. Likewise, our analysis does not show any evidence of Granger causality from poverty to financial development.     

Financial reform and stabilization policy in a developing economy

Despite the long-run efficiency benefits that can be generated by a financial reform program, the authorities in developing countries are often reluctant to enact the required reforms because they fear that these programs will create short-run difficulties for important segments of the financial system. This paper argues that many of these difficulties can be avoided if financial reform is integrated with stabilization policy. The analysis focuses on the specific problem of how to remove nominal interest rate ceilings when complete interest rate decontrolwould lead to widespread bankruptcies amongst the firms in a major segment of the financial system. The optimal combination of stabilization policy and financial reform is shown to involve a mix of discrete and gradual changes in the rate of monetary growth and ceiling lending and depocit rates under either adaptive or rational expectations.     

贫困陷阱的微观机制与实证研究述评

近年来,一批发展经济学家在吸收早期贫困陷阱理论合理内核的基础上,借助现代经济学新的理论与方法,将贫困陷阱问题的研究从宏观层面推进到微观层次、从抽象的理论阐释推进到精细的实证分析,并在此过程中拓展了贫困陷阱问题的研究范围。本文以述论结合的方式梳理这一研究领域的新进展,并在发展经济学学科发展史的视野中审视贫困陷阱理论、展望进一步的研究方向。     

Consumption and communication perspectives of IT in a developing economy

Technological innovations are important sources of competitive advantage when there is a balanced rate of adoption that helps organisations maintain or improve performance levels. This paper synthesises and builds on efforts to conceptualise the adoption and implementation of technologically induced customer services in developing countries. Its point of departure is recent advances in computer-mediated marketing environments (CMMEs). It assesses relationships between customer services and evolving technologies in the provision of services in the banking sector. Using phenomenological hermeneutics and a case study approach, we iteratively engaged with data that emerged to identify core values and community-based values. These facets were further developed into seven main issues (core values: quality, education and reach, and community-based values: efficiency, usability, control and security). The paper offers practical steps by which companies and institutions may counter these issues and the theoretical implications for wider considerations are discussed.     

Downsizing, wage inequality and welfare in a developing economy

This paper focuses on the cost cutting effects of firm downsizing in a developing economy. Using a dualistic production structure to depict a developing economy, the impacts of downsizing on wage inequality and social welfare are examined. Downsizing is revealed to not only narrow the wage gap between skilled and unskilled labor but also to raise the level of manufactured output and reduce the unemployment ratio in the urban sector. These effects improve the social welfare of the economy.     

Fiscal policy and the structure of production in a two-sector developing economy

This paper develops a two-sector model of a developing economy and examines the role of the informal sector in limiting the government's ability to increase tax revenues. A key feature is the introduction of auditing of the informal sector and degree of tax enforcement in that sector. We emphasize the interdependence between tax policy and enforcement in achieving a developing economy's fiscal objectives and show that by judicious policy choices the presence of the informal sector need not hinder its ability to raise tax revenues. We supplement the formal analysis with numerical simulations highlighting the contrasting intertemporal tradeoffs implied by higher tax rates and tax-enforcement levels.     

Consumption versus asset smoothing: testing the implications of poverty trap theory in Burkina Faso

Despite solid theoretical foundations for the notion that poor, borrowing-constrained households will intertemporally manage assets to smooth consumption, the consumption-smoothing hypothesis has not always withstood empirical scrutiny. This paper reassesses the intertemporal asset management problem with a poverty trap model and shows that we would expect to see asset smoothing, not consumption smoothing, in the neighborhood of critical asset levels at which optimal accumulation behavior bifurcates. We then employ threshold estimation techniques to empirically confirm the co-existence of consumption and asset smoothing regimes using a household panel data set from West Africa. Households above the estimated threshold almost completely insulate their consumption from weather shocks, whereas those below the threshold do not. These results not only indirectly provide evidence of the existence of poverty traps but also speak to the level and incidence of the costs of uninsured risk.     

FDI in agricultural land, welfare and unemployment in a developing economy

The paper purports to examine the consequences of foreign direct investment (FDI) in agricultural land in a developing economy using a three-sector general equilibrium model with simultaneous existence of unemployment of both skilled and unskilled labour. The analysis finds that FDI in agriculture does not only improve national welfare unequivocally but also mitigates the unemployment problem of both types of labour. The paper theoretically justifies the desirability of flow of FDI in agriculture in the developing economies.     

Economic growth,the nature of growth and poverty reduction in rural China

This paper examines some of the major driving forces of poverty reduction in China. Based on time series and cross-sectional provincial data, the determinants of rural poverty incidence are estimated. The results show that economic growth is an essential and necessary condition for nationwide poverty reduction. It is not, however, a sufficient condition. While economic growth played a dominant role in reducing poverty through the mid-1990s, its impact has diminished since that time. Beyond general economic growth, growth in specific sectors of the economy is also found to be effective in reducing poverty. The finding of our paper is consistent with the idea that poverty reduction in the future will need to be adjusted with more emphasis being given on direct targeting through helping the poor to increase their human capital and incomes.     

The effect of rural labor migration on poverty alleviation: a village-level study in China

The construction of the new socialist countryside is being carried out in China nowadays. Although lots of successful experience has been gotten, different problems occur in various regions yet. To analyze the relationships among rural labor migration, poverty alleviation and characteristics of migrants is important in considering the effect of rural labor migration on the construction of the new socialist countryside. Available sampling and typical case study are adopted and 236 questionnaires are collected from[bur villages in northwest GuangxL China, Daxin Lixin, Longhe and Yongchang. We analyze the rural labor migration status, characteristics of migrants, remittance situation and income, household income and the ratio of remittance income to total household income. A bout 2/3 of the households have migrants in surveyed villages. And nearly half of the migration households have only one fam- ily member as migrants in the four villages. The migrants mainly comprise male and the younger, with the education level of junior middte school and higher More than half of the migrants are employed in Guangdong Province. But the characteristics of migrants in Yongchang are more diverse. The rural labor migration in the village is extremely active and extensive. And over 60% of the household with family members as migrants have remittance income. The rate in Yongchang is extremely high (80%). And the income of households with migrants getting remittance income significantly higher than their counterparts. More than half of their income comes from remittance as far as the former kind of household is concerned And in Yongchang, the rate is nearly 80%. The conclusion is that rural labor migration is popular and extensive in lots of villages. And the migration and remittance play an important role in rural household income, especially in some poor villages. For this kind of village, the rural labor migration may be some compulsory course in rural development. And the rural labor emigration is an essential way in poverty al-leviation. This is the first step in the construction of the new socialist countryside.     

The impact of growth and inequality on rural poverty in China

This paper analyzes the evolution of poverty in China from the late 1980s to the late 1990s, employing a version of Shapley decomposition tailored to unit-record household survey data. The changes in poverty trends are attributed to two proximate causes—income growth and shifts in income distribution. Different data sets, poverty lines, poverty measures, and equivalence scales are used to examine the robustness of the results. Potential biases arising from ignoring differential regional prices and inflation are also investigated. Notwithstanding some ambiguities in the results, it is consistently found that rural poverty increased in the second half of the 1990s and adverse distributional changes are the main cause. Journal of Comparative Economics 34 (4) (2006) 694–712.     

农村劳动力转移对农村经济负面效应的分析

农村劳动力的转移对发展农村经济、增加农民收入有着极为重要的意义.但必须清醒认识到农村经济近三十年发展变化到现阶段,劳动力已经开始从绝对剩余向相对剩余转变,如果不能认识到这个转变,将对发展现代农业、繁荣农村经济产生极为不利的负面影响.     

GDP nowcasting: application and constraints in a small open developing economy

Despite data limitations, an attempt is made to find out if a GDP nowcasting model can provide reliable forecasts for a small open economy. Two competing Bayesian vector autoregressive models are tested rigorously to obtain the optimal model by minimizing in-sample forecasting errors. The main finding of this study is that GDP nowcasting can produce reliable results for a small open economy despite the unavailability of sufficient data sets and the lack of high frequency indicators.     

Labor market reform and incidence of child labor in a developing economy

The paper is purported to examine the consequences of possible labor market reform in the developing economies on the incidence of child labor and economic well-being of the child labor supplying families. A two-sector, full-employment general equilibrium structure with child labor and imperfection in the market for adult labor has been used for the analytical purpose. Although this policy is likely to lower the incidence of child labor the welfare of the families supplying child labor worsens. The paper, therefore, questions the desirability of a policy designed at mitigating the child labor problem especially when it makes the poor families worse off.     

我国发展循环经济的绿色制度体系构建

循环经济是在资源与环境约束下追求有效经济增长的一种新的经济发展模式,是实施可持续发展战略的正确选择。目前,中国已经将发展循环经济作为一项基本国策,但是在实施的过程中还缺乏相应的理论指导与制度安排。因此,要避免过去的经典经济理论那种将资源与环境置于研究视野之外的做法,从经济激励和行为规范两方面入手,有效促进循环经济发展,依据各行业各种类产品的特性,建立生产、流通、消费等环节的绿色经济制度体系的框架。