High corruption income in Ming and Qing China

We develop an economic model that explains historical data on government corruption in Ming and Qing China. In our model, officials' extensive powers result in corrupt income matching land's share in output. We estimate corrupt income to be between 14 and 22 times official income resulting in about 22% of agricultural output accruing to 0.4% of the population. The results suggest that eliminating corruption through salary reform was possible in early Ming but impossible by mid-Qing rule. Land reform may also be ineffective because officials could extract the same rents regardless of ownership. High officials' incomes and the resulting inequality may have also created distortions and barriers to change that could have contributed to China's stagnation over the five centuries 1400–1900s.     

Lending policies of informal, formal and semiformal lenders

This paper compares lending policies of formal, informal and semiformal lenders with respect to household lending in Vietnam. The analysis suggests that the probability of using formal or semiformal credit increases if borrowers provide collateral, a guarantor and/or borrow for business‐related activities. The probability of using informal credit increases for female borrowers. It also appears that the probability of using formal credit increases in household welfare up to a certain threshold, but at a decreasing rate. In addition, the paper discerns the determinants of probability of default across lender types. Default risk of formal credit appears to be strongly affected by formal loan contract terms, e.g., loan interest rate and form of loan repayment, whereas default risk on informal loans is significantly related to the presence of propinquity and other internal characteristics of the borrowing household. Overall, the study raises several important implications for the screening, monitoring and enforcement instruments that may be employed by different types of lenders.     

International briefing 18: training and development in Vietnam

Vietnam provides a typical case of an emerging economy, which has attempted to develop the country and join the world economic mainstream with a highly agricultural base, large and young labour force, and a dynamically growing private sector. After a long period of quantitative growth, it is now focusing on achieving quality of development, with a view to balance economic growth and quality of life improvement for its population. Education has been chosen to be the key plank in the successful implementation of this strategy. This article reviews the general socio‐economic background of the country, the high need for skilled labour, the structure of its educational system, the pitfalls at the high education level, and its strategy to overhaul the whole system in order to ensure quality from the input phase of the development process.     

The role of endowments,technology and size in international trade: new evidence from product-level data

Using product-level trade data, we empirically investigate the export patterns of more than 150 countries in their exports to the USA, Brazil, India, and Japan. We document strong evidence that exporters specialize according to their relative factor endowments, technology, and economic size. More developed, capital abundant countries are found to export products of higher unit values and a wider range of products to developed, emerging and developing markets. More developed, economically larger, and technologically advanced countries are also the major exporters of new products, spanning a wide range of product categories with high unit values. Our findings provide important insights into the macro phenomenon that a large proportion of the global trade takes place among developed economies, and that the latter are also major exporters to developing markets.     

Strategies for integrating farmers into modern vegetable supply chains in Vietnam: farmer attitudes and willingness to accept

In Vietnam, the development of so‐called ‘modern’ vegetable supply chains is receiving considerable interest amongst researchers and governments. This interest partly stems from the view that enhancements in food safety can be achieved if farmers are willing to adopt supply chains that are often associated with ‘western’ forms of retailing. Our study investigates farmers’ willingness to change to two ‘modern’ alternatives – a supply model based on cooperatives and another based on investors facilitating the change. Using discrete choice data drawn from 412 farmers, mixed logit models in willingness to pay space are developed that reveal the relative importance of different drivers of change. The paper offers insights that can inform governments about the incentives required to bring about change. In addition, the paper illustrates the novel application of a choice experiment to enumerating the perceived costs of changes in vegetable supply chains.     

The economics of land fragmentation in the north of Vietnam*

Land fragmentation, where a single farm has a number of parcels of land, is a common feature of agriculture in many countries, especially in developing countries. In Vietnam, land fragmentation is common, especially in the north. For the whole country, there are about 75 million parcels of land, an average of seven to eight plots per farm household. Such fragmentation can be seen to have negative and positive benefits for farm households and the community generally. Comparative statics analysis and analysis of survey data have led to the conclusion that small‐sized farms are likely to be more fragmented, and that fragmentation had a negative impact on crop productivity and increased family labour use and other money expenses. Policies which allow the appropriate opportunity cost of labour to be reflected at the farm level may provide appropriate incentives to trigger farm size change and land consolidation. Policies which tip the benefits in favour of fewer and larger plots, such as strong and effective research and development, an active extension system and strong administrative management, may also lead to land consolidation.     

Hollowing out of middle-pay jobs in Ohio: An exploratory analysis

Hollowing out is a term that refers to the decline in the share of middle-pay and middle-skilled jobs relative to low-pay and high-pay jobs. This study employs county-level occupational data at the place of employment to document hollowing out of middle-pay jobs across regions in Ohio. The county-level data with occupational information allow us to study how regions' economic heterogeneity contributes to the decline of middle-paying jobs in Ohio over the 2001–2019 period. Of 88 counties in Ohio, 77 counties experienced declines in the shares of middle-paying jobs. On average, Appalachian Ohio counties experienced higher hollowing out rates than other counties. We found that the hollowing out of middle-paying jobs in Ohio is associated with the declines in the shares of manufacturing and mining jobs.     

A study of zero-out auctions: testbed experiments of a process of allocating private rights to the use of public property

Summary This paper applies an experimental testbed methodology to the evaluation of a proposed mechanism for allocating the right to land at the New York airports. The mechanism is called a zero-out auction because it is supposed to allocate the rights efficiently like an auction while leaving all of the consumer's surplus with the buyers (as opposed to allocating some to the seller as would be the case with an ordinary auction). A new behavioral hypothesis is introduced to account for limited rationality of individuals and unusual behaviors of the process. The axiom, called theunbiased expectations hypothesis, does a good job of modeling individual behavior in the context of a game model.We acknowledge the financial support of the National Science Foundation and the Caltech Laboratory for Experimental Economics and Political Science. Comments by David Grether, John Ledyard, Michael Levine, Jennifer Reinganum, and Richard Sutch have been very helpful.     

Does Real Exchange Rate Depreciation Boost Capital Accumulation? An Intertemporal Analysis

This paper examines the investment‐enhancing effect of real exchange rate (RER) depreciation in a two‐sector small open economy model where a representative firm in the tradable sector maximises its discounted profit over an infinite planning period. In this framework, a one‐time, permanent, unanticipated depreciation in the RER leads to a higher steady‐state level of capital stock and investment. This consequently increases the optimal investment rate associated with an arbitrary level of capital stock as the saddle path shifts upwards. In the benchmark calibration, the investment‐enhancing effect of RER depreciation is sizeable. One per cent depreciation in the RER leads to an increase of 0.4444 per cent in the rate of capital accumulation.