Do International Sanctions Reduce Household and Government Consumption in Developing Countries?

This paper uses a panel of 30 developing countries over the 1996-2015 period to study the effect that international sanctions have on household and government consumption in target countries. I use a broad set of sanctions covering different aspects of sanctions. The panel model estimates show that sanctions have heterogeneous effect on household and government consumption. Household consumption responds significantly negative to noneconomic sanctions. Government consumption, in contrast, is negatively associated with intensity of sanctions, economic sanctions, plurilaterial sanctions, EU sanctions and U.S. sanctions. Disaggregating government consumption reveals that the intensity of sanctions increases government expenditure on subsidies and transfers, while government expenditure on goods and services is not correlated with sanctions. With regard to health outcomes, there is no clear evidence that sanctions are significantly associated with either life expectancy or infant mortality in target countries.     

Do Remittances Induce Inflation? Fresh Evidence from Developing Countries

The goal of this article is to examine the determinants of inflation in both the short run and the long run for 54 developing countries using a panel data set covering the 1995–2004 period. Apart from the commonly used economic determinants of inflation, we model the impact of remittances and institutional variables on inflation. Using the Arellano and Bond panel dynamic estimator and the Arellano and Bover and the Blundell and Bond system generalized method of moments estimator, we find evidence that in developing countries remittances generate inflation. The effect of remittances on inflation is more pronounced in the long run. Moreover, we find that openness, debt, current account deficits, the agricultural sector, and the short‐term U.S. interest rate have a positive effect on inflation. We also find that improvements in democracy reduce inflation.     

New Public Management and Developing Countries

While N-PM gained higher popularity in many developed countries, such as New Zealand and Australia, the problem of its perfect transferability comes into agenda. This paper points out that the inappropriateness of NPM to developing countries lies in the internal inability such as informal public sectors （mainly focus on human resource perspective） and budget, and informal market economy; and finally concludes that NPM is not necessarily suitable for developing countries.     

Credit Booms in Developing Countries: Are They Different from Those in Advanced and Emerging Market Countries?

While earlier studies focus on credit booms in advanced and emerging market countries, this paper examines the characteristics and determinants of credit booms in developing countries. The results find that credit booms in developing countries are less likely to be associated with systemic banking crises. Rather, they are more likely to be the result of financial deepening than of dangerous buildups of financial risks; the prevention of credit booms in developing countries may thus be associated with higher opportunity costs in terms of foregone growth opportunities. Random effect probit and tobit regressions find some evidence that credit booms are likely to start when the economy is expanding and if the financial sector is larger. Although monetary and fiscal policies do not help in preventing credit booms in developing countries, we find that prudential regulations and supervision can play a much more effective role in preventing “bad” booms, while incurring substantially lower costs. Although “bad” booms are hard to identify ahead of time, the duration and size of booms, as well as the level of credit aggregates, appear to be useful indicators in determining them.     

Does Aid Unpredictability Weaken Governance? Evidence from Developing Countries

This paper examines the effects of aid on governance from a different perspective by asserting that aid unpredictability can potentially increase corruption in recipient countries by providing incentives to risk‐averse and corrupt political leaders to engage in rent‐seeking activities. Analyses of data from 80 developing countries over the period 1984–2004 offer evidence that higher aid unpredictability is associated with more corruption as measured by a synthetic index. We also find further evidence that this latter impact is more severe in countries with weak initial institutional conditions. These findings are a supplementary advocacy for the need for better management and better predictability of aid flow in developing countries.     

Does Teacher Subject Knowledge Contribute to Student Academic Performance in Developing and Least Developed Countries?

Little is known about the causal impact of teacher knowledge on student performance. In this research paper we intend to approach the potential causal effect (i.e. going beyond correlation) of sixth grade teachers’ knowledge on their students’ academic achievement for three Sub-Saharan African countries. To achieve this, we have used the heterogeneity of teachers’ subject knowledge and students’ correspondent academic achievement within-student between-subjects using student fixed effects. Concretely, our work is based on previous research by Bietenbeck, Piopiunik and Wiederhold. Compared to them, we do not use countries that lack representative information after keeping only those students taught by the same teacher for the subjects under analysis. This enables us to obtain more reliable results on this issue. Our results indicate that teacher subject knowledge in reading and mathematics does not have a significant influence on student academic achievement in these subjects for the countries under scrutiny. Many robustness checks have corroborated this conclusion, which contrasts with the positive effect found by Bietenbeck, Piopiunik and Wiederhold.     

Is Informal Job Experience of Youth Undermining their Labor-Market Prospects in Transition Economies?

The objective of the paper is to investigate if previous informal employment experience of youth affects later labor-market outcomes in transition economies. We consider the effects on employment, decent job and wages. Some theories suggest that previous informal job experience may extend informality later and negatively impact decent employment and wages, while others argue that informal jobs may provide training, networks and working attitudes to young workers hence improving their formal employment and wage potential. We rely on the newly-produced School to Work Transition Surveys for seven transition economies of Southeast Europe and the Commonwealth of Independent States. Our results robustly suggest that early informality of youth is negative for the later labor-market outcomes. However, for the wage, there is limited evidence that the negative effect potentially turns positive for long informal job experiences. The negative effect of informal job on later outcomes is stronger for females, while any differences between the two regions of transition economies are neither systematic nor robust.     

Do Patent Protection and Technology Transfer Facilitate R&D in Developed and Emerging Countries? A Semiparametric Study

This paper examines if patent protection and technology transfer facilitate R&D in a sample that includes both developed and emerging countries. A semiparametric model is used to estimate the relevant parameters using country level data from 21 countries, of which six are emerging, for the period 1981–1997. The results suggest thresholds in patent protection and technology transfer: patent protection has a positive effect which weakens at high levels of protection, and FDI has a positive effect only if the country depends heavily on FDI.

The Asymmetric Loss Function and the Central Banks’ Ability in Developing Countries

Abstract

This paper seeks to develop a theoretical strand of research in monetary economics by modelling central bank ability in the loss function. Recently, many working papers issued by the International Monetary Fund (IMF) prove that some central banks, particularly from developing countries, are suffering from serious operational problems that might affect their abilities to control the economy. Simultaneously, a literature review shows that the movements are toward using asymmetric loss function. Therefore, we utilize this function in the standard monetary approach. The results proved that both central bank ability and preference in developing countries are fundamental to explain inflation bias and the movement of monetary policy instrument.     

Do Asian Countries Upgrade in Global Value Chains? A Novel Approach and Empirical Evidence

This paper examines the move into upstream and downstream global value chain (GVC) activities by 11 Asian countries. We use international input–output tables in combination with employment data and measure the number of workers in each country involved in manufactures GVC. Jobs are classified by business function based on occupational information, such as R&D, fabrication, logistics, sales and marketing. In most Asian countries, we find a faster employment increase in R&D and other support services relative to fabrication activities between 2000 and 2011. However, the participation in GVC and the pace of upgrading appears to differ substantially across Asian countries. We use a structural decomposition method to explore the role of trade, consumption and technological change in accounting for changes in countries' involvement in GVC.     

Energy Dependence in Developing Countries: Does the Level of Income Matter?

This paper re-examines the causal relationship between energy consumption and economic growth in four developing countries. The four countries include two lower-middle income economies, Ghana and Cote d’Ivoire, and two upper-middle income economies, Brazil and Uruguay. The study attempts to answer one critical question: Is the causal relationship between energy consumption and economic growth sensitive to a country’s level of income? In order to account for the omission-of-variable bias, the study incorporates exports as an intermittent variable between energy consumption and economic growth—thereby creating a simple multivariate model. Using the auto-regressive distributed lag (ARDL)-bounds testing procedure, our results show that while energy consumption Granger-causes economic growth in upper-middle income countries, in lower-middle income countries it is economic growth that drives energy consumption.     

Can Market Potential Explain Regional Disparities in Developing Countries? Evidence from Turkey

Regional disparity is one of the important characteristics of the Turkish economy. This study examines the impact of market potential on the regional differences in Turkey by investigating wages in the manufacturing industry for 1987 and 2000. Evidence suggests that market potential is an important determinant of inequality in Turkey. In addition, public–private decomposition reshapes the dispersion of wages supportive of rising heterogeneity in the private manufacturing industry. This increases the explanatory power of market potential, which is observed to be high in western Turkey and diminishes toward eastern Turkey. Our findings highlight that during the postliberalization era of the 1980s, Turkey's regional inequality concern transformed into a structural problem which can be explained by provincial market potential. Moreover, our results underline that the modern geography framework, which has been tested for developed economies, is able to elucidate the regional differences in a developing country suffering from persistent imbalances.