Impact of health aid in developing countries: The public vs. the private channels

This paper examines the efficient allocation of international health aid. We built a simple macroeconomic model which considers an endogenous allocation of aid mixed between the public and the private channels. We derive a non-cooperative interaction-game involving the private sector, the donor and the recipient government. We compare the equilibrium of the game to the optimal level of health aid allocation, showing a gap between both. The empirical analysis is based on the Institute for Health Metrics and Evaluation (IHME) and World Health Organization (WHO) data sets using dynamic panel data model with fixed effects (system-GMM). Our results show that health aid actually reduces adult mortality in developing countries. Furthermore, we show that the actual allocation of aid-mix between government and private channels is not health efficient and there is room for reallocation.     

The effects of health aid on child health promotion in developing countries: cross-country evidence

Although epidemiological knowledge in relation to child health has improved in the last few decades, around 3 million children die each year in developing countries from preventable diseases. The international development community views increased immunization coverage for children as an important step in eliminating or reducing these deaths. Many developing countries have very limited resources to tackle major health problems and have to rely on external finance. This article examines the impact of foreign aid devoted to the health sector on child health promotion in developing countries. Two proxies for child health promotion are used: (a) immunization against measles and (b) immunization against Diphtheria–Pertussis–Tetanus (DPT). A range of model specifications and panel data econometric techniques are applied to data covering the period 1990 to 2005. This article finds a positive and statistically significant link between health aid and the measures of child health promotion.     

The impact of the credit crisis on poor developing countries: Growth,worker remittances,accumulation and migration

We show that the credit crisis of OECD countries has a negative impact on the growth of the world economy according to an error-correction model including China and Australia. This causes negative growth effects in poor developing countries. The reduced growth has a direct or indirect impact on the convergence issue, aid, remittances, labour force growth, investment and savings, net foreign debt, migration, tax revenues, public expenditure on education and literacy. We estimate dynamic equations of all these variables using dynamic panel data methods for a panel of countries with per capita income below $1200 (2000). The estimated equations are then integrated to a dynamic system of thirteen equations for thirteen variables that allows for highly non-linear baseline simulations for these open economies. Then we analyze the effects of transitional shocks as predicted by the international organizations for the OECD and world growth for 2008 and 2009. Whereas growth rates return to the baseline scenario until 2013 with overshooting for China and Australia, the level of the GDP per capita shows permanent effects, which are positive only for China. In the poor countries, investment, remittances, savings, tax revenues, public expenditure on education, all as a share of GDP as well as literacy and the GDP per capita, are reduced compared to the baseline until 2087 where our analysis ends. Investment, emigration and labour force growth start returning to baseline values between 2013 and 2017. GDP per capita and tax revenues start returning to baseline around 2040. Education variables do not return to baseline without additional effort.     

How do income and education affect health inequality: evidence from four developing countries

Using household survey data from four countries ? Albania, Nepal, Tajikistan and Tanzania ? this article calculates income-related inequality in health care utilization. We measure health disparity separately for generally and chronically ill individuals by constructing two models: one for the probability of a visit to a physician and another for the number of visits. Following model-based measurements, we decompose inequality into two major parts: one accounted for by identity-related factors and another by socioeconomic and other factors such as education, geography and distance to a clinic. We propose a new method to quantify the effect of changes in income and education on health disparity. One of our important findings suggests that health disparity is pro-rich in all our sample countries. The pro-rich disparity is prevalent among generally ill as well as chronically ill patients, in both visit probability and visit frequency models. Health inequality seems primarily driven by income differences followed by nonidentity factors. Further, the principle of equal treatment for equal need is not fulfilled in any of our countries. Among policy implications, increasing average income and education in a way that also reduces disparity in income and education, respectively, will substantially shrink inequality in health care utilization.     

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.     

Investments in worker health and production: Evidence from Vietnam

In manufacturing industries, occupational health and safety measures ensure better working conditions for employees, which may influence their productivity. We study the impact of investments undertaken by small and medium enterprises in Vietnam in mitigating indoor pollution (including air quality improvements, heat and noise protection as well as lighting) on firm-level gross output and value added. We find that the amount invested by the firm in health has a significant positive effect on both outcomes. Given historically poor working conditions in Vietnam, policy implications relate to incentivizing and enabling firms to undertake such investments, on both moral and economic grounds.     

Industrial policy in developing countries

Traditionally, proindustry policies were associated with incentives for import substitution and an inward-oriented development strategy. This is no longer so. Whereas in the past, world-market orientation was seen as implying reliance on primary production, today policies favoring international competition and export orientation are considered compatible with policies favoring rapid industrialization. Differences of opinion on the appropriate degree of public intervention remain. The debate between “purist” laissez-faire advocates and those who believe in industrial planning, public investment, and generous subsidies often obscures the real need for reduction in antiexport bias, rationalization of incentives, and reform of public-sector activities.     

Taxation base in developing countries

Informal sectors are larger in developing countries than in rich countries. This is a result of higher fixed costs of entry into the formal economy in developing countries. We show that raising barriers to entry is consistent with a deliberate government policy for raising tax revenue. By generating market power, and hence rents, for the permitted entrants, market entry fees foster the emergence of large taxpayers. The rents can be readily confiscated by the government through entry fees and taxes on profits at a low administrative cost. The relevance of the theory is assessed with a sample of 64 countries. Empirical analysis supports the results of the paper.     

Technology assessment and developing countries

The assessment of technologies may be of great importance to developing countries in their present process of industrialization in the framework of the New International Economic Order. The main criteria for the assessment of the technologies most relevant to the needs of developing countries are reviewed from the point of view of employment, scarce capital, and energy resources. The design of appropriate technologies should take into account the tastes, culture, needs, purchasing power, and raw materials available in developing countries. A systems approach should therefore be used to assess technologies. The programs undertaken by several agencies of the United Nations System are described which may contribute to build up technology assessment capability in developing countries.     

Labor markets and productivity in developing countries

In middle-income countries, the informal sector often accounts for a substantial fraction of the urban labor force. We develop a general equilibrium model with matching frictions in the urban labor market, the possibility of self-employment in the informal sector, and scope for rural–urban migration. We investigate the effects of labor market institutions, different types of growth, and company taxes on labor market outcomes and aggregate productivity. We quantify these effects by calibrating the model to data for Mexico, and show that matching frictions can lead to a large informal sector when formal sector workers have substantial bargaining power.     

Elections and economic policy in developing countries

This paper explores the impact of elections on economic policies and governance in developing countries. We distinguish between a structural effect, which increases accountability, and a cyclical effect which may be disruptive. Since the effects are offsetting, neither can be analysed in isolation. We implement an econometric analysis on more than 80 developing countries using positive changes in the Country Policy and Institutional Assessment of the World Bank and the International Country Risk Guide as signalling improvements in economic policy and governance. We find that both structural and cyclical effects matter. The cyclical effect suggests that mid-term is the best moment for policy change. We investigate the structural effect by comparing different frequencies of elections. Except at the extremes, a higher frequency of elections improves both policy and governance net of any cyclical effect. The important exception to this benign net effect is if the electoral process is badly conducted. Badly conducted elections have no structural efficacy for policy improvement. A reasonable interpretation of our results is that honest elections increase accountability and thereby discipline governments to improve economic policy and governance, but that if candidates can win by fraud this chain is broken.
— Lisa Chauvet and Paul Collier     

Output-inflation tradeoffs in industrial and developing countries

This paper presents further international evidence on output-inflation tradeoffs implied by Lucas's model of the Phillips curve. Various relationships among the output-inflation trade-off coefficient and variances of the nominal shocks and the general price level implied by the theoretical model are evaluated among two groups of countries. These relationships are strongly confirmed for nineteen industrial countries, but are only moderately supported for the group of thirty-seven developing countries.     

Fiscal deficits and growth in developing countries

This paper examines the relation between fiscal deficits and growth for a panel of 45 developing countries. Based on a consistent treatment of the government budget constraint, it finds evidence of a threshold effect at a level of the deficit around 1.5% of GDP. While there appears to be a growth payoff to reducing deficits to this level, this effect disappears or reverses itself for further fiscal contraction. The magnitude of this payoff, but not its general character, necessarily depends on how changes in the deficit are financed (through changes in borrowing or seigniorage) and on how the change in the deficit is accommodated elsewhere in the budget. We also find evidence of interaction effects between deficits and debt stocks, with high debt stocks exacerbating the adverse consequences of high deficits.     

Job search and mobility in developing countries. Theory and policy implications

A labor market model is developed in which the formal sector is characterized by search frictions whereas the informal sector is competitive. We show that there exists a unique steady-state equilibrium in this dual economy. We then consider different policies financed by a tax on firms' profits. We find that reducing the unemployment benefit or the firms' entry cost in the formal sector induces higher job creation and formal employment, reduces the size of the informal sector but has an ambiguous effect on wages. We also find that an employment/wage subsidy policy and a hiring subsidy policy have different implications. In particular, the former increases the size of the informal sector while the latter decreases it.     

Resource-based industrialization in the developing countries: A survey

This survey at

shed light on the potential contribution of industrialization based on resource processing to efficient growth, employment creation, greater equity and economic independence. The use of capital-intensive methods to reduce raw material costs appears to confer comparative advantage on countries with cheap capital. Lower transport costs due to substantial weight reduction in processing may counter this advantage for some stages of processing, but does not universally favor LDC exporters. Most major producers export sufficient quantities to achieve scale economies typical of resource processing, but economies of scale are a barrier in processing for the domestic market in all except the largest LDCs. External economies of industrialization are also thought to favor processing in the industrial countries, but potential linkages could stimulate some complementary investments in LDCs. Because resource-based industries are not impressive contributors to direct or indirect employment creation, they are likely to perpetuate the pattern of dualism and inequality present in typical resource-rich countries.Third-world exporters may be barred from entry into resource processing by the dominance of multinational firms in the metals and petroleum industries; by shipping conference freight rates that discriminate against processed commodities; and by importing country tariff structures that provide substantial effective protection against many LDC semi-processed exports. Processing of natural resources for export tends to continue the broad pattern of trade, financial and technical dependence of developing countries, although market dependence may decrease at some stage of processing. Home-oriented processing avoids market dependence, but cannot escape outside dependency on technology, management and finance.     

Fiscal limits in developing countries: A DSGE Approach

This paper studies fiscal limits in developing countries using a dynamic stochastic general equilibrium (DSGE) approach. Distributions of fiscal limits, which measure a government’s capacity to service its debt, are simulated based on macroeconomic uncertainty and fiscal policy. The analysis shows that expected future revenue plays an important role in explaining the low fiscal limits of developing countries, relative to those of developed countries. Large devaluation of real exchange rates can significantly reduce a government’s capacity to service its debt and lower the fiscal limits. Temporary disturbances, therefore, can shift the distribution of fiscal limits and suddenly change perceptions about fiscal sustainability.     

Testing for PPP in developing countries using confirmatory analysis and different base countries: an application to Asian countries

Previous studies on PPP have tested either the null hypothesis of non-stationary or the null of a stationary real exchange rate and used the US as the base country and focused on industrialized countries. It has been argued that testing either null is insufficient to confirm the presence of PPP. It has also been noticed that the results are sensitive to the choices of the base country; for instance, the US versus Germany. In contrast to previous studies, this paper uses different unit root tests, confirmatory analysis, and different base countries to test PPP for a sample of developing countries in Asia during the current float. Overall, the results do not seem to be sensitive to the choice of the base country, and joint rejections are not present but joint non-rejections are far more common. Using Perron's test, which allows for a one-time break in the series, the results indicate evidence of stationarity for Indonesia, Korea, Malaysia and Thailand when the US is the base country. When Japan is the base country, evidence of stationarity is detected only for Indonesia.     

贸易便利化:发展中国家的机遇与挑战

近几十年来,随着国际贸易在全球范围内的不断扩展,人们逐步意识到复杂的海关及贸易相关程序将对经济发展带来不利影响。贸易便利化逐渐成为发达国家和发展中国家共同关注的问题。贸易便利化旨在为国际贸易活动创造一种协调、透明和可预见的环境。它以国际公认的标准和惯例为基础,涉及各种手续和程序的简化,基础设施和设备的标准化,以及改进对各种适用法律和规定的协调。贸易便利化的主要目标在于减少国际商贸活动中的交易成本,降低交易的复杂性,改善一国的贸易环境,同时使政府的管制措施更为有效。贸易便利化可为发展中国家带来各种好处。从…