financial development and the fdi growth nexus the malaysian experience this article examines the fdi growth nexus in the small open economy of malaysia by controlling for the level of financial development financial development is proxied by a composite index which is a summary measure of four financial development indicators using time series data from 1965 to 2004 the results show that fdi and financial development are positively related to output in the long run the impact of fdi on output is enhanced through financial development to supplement these findings we assess the causal relationships between the variables using the recent causality tests available in the literature the results indicate that economic growth causes fdi growth in the long run but no feedback relationship is observed

banking for the poor evidence from india state led credit and savings programs have been implemented in numerous low income countries but their success in reaching the poor remains widely debated we report on research which exploits the policy features of the indian social banking program to provide evidence on this issue state led branch expansion into rural unbanked locations reduced poverty across indian states in addition the enforcement of directed bank lending requirements was associated with increased bank borrowing among the poor in particular low caste and tribal groups

thinking inside the box a closer look at financial inclusion and household income using national representative household finance survey data covering more than 6200 chinese households we first construct a new multidimensional indicator for financial inclusion then we examine the effect of financial inclusion on household income our results elicit several findings first financial inclusion has a strong positive effect on household income this effect can be found across all households with different levels of income second low income households are found to benefit more from financial inclusion than high and mid level income ones we argue that in this sense financial inclusion helps reduce income inequality

the cost of a licensing system regulation an example from canadian prairie agriculture agricultural legislation and the resultant regulation that usually ensues can often change redirect or even stop the adoption of yieldincreasing technologies that have the potential to generate substantial economic rents this paper offers an example from the canadian wheat sector of how a variety licensing regulation had totally stopped the adoption of a yield increasing technology that had the potential to increase the economic rents flowing to western canadian farmers by 15 25 percent this regulation further prevented high internal rates of return greater than 50 percent from being generated by research into this new technology

does microfinance reduce poverty in bangladesh new evidence from household panel data abstract the study examines whether loans from microfinance institutions mfi reduce poverty in bangladesh drawing upon the nationally representative household panel with four rounds from 1997 to 2004 the effects of general microfinance loans and loans for productive purposes on income food consumption and women s body mass index are estimated overall effects of mfi loans on income and food consumption were positive and the purpose of the loan is important in predicting which household welfare indicator is improved alternative estimation methods confirm a positive impact of mfi loans on food consumption growth which supports the poverty reducing effects of microfinance in bangladesh

getting to the top of mind how reminders increase saving we provide evidence from field experiments with three different banks that reminder messages increase commitment attainment for clients who recently opened commitment savings accounts messages that mention both savings goals and financial incentives are particularly effective whereas other content variations such as gain versus loss framing do not have significantly different effects nor do we find evidence that receiving additional late reminders has an additive effect these empirical results do not map neatly into existing models so we provide a simple model where limited attention to exceptional expenses can generate undersaving that is in turn mitigated by reminders data as supplemental material are available at http dx doi org 10 1287 mnsc 2015 2296 this paper was accepted by teck hua ho behavioral economics

counterfactual decomposition of changes in wage distributions using quantile regression we propose a method to decompose the changes in the wage distribution over a period of time in several factors contributing to those changes the method is based on the estimation of marginal wage distributions consistent with a conditional distribution estimated by quantile regression as well as with any hypothesized distribution for the covariates comparing the marginal distributions implied by different distributions for the covariates one is then able to perform counterfactual exercises the proposed methodology enables the identification of the sources of the increased wage inequality observed in most countries specifically it decomposes the changes in the wage distribution over a period of time into several factors contributing to those changes namely by discriminating between changes in the characteristics of the working population and changes in the returns to these characteristics we apply this methodology to portuguese data for the period 1986 1995 and find that the observed increase in educational levels contributed decisively towards greater wage inequality copyright 2005 john wiley sons ltd

the private sector in agricultural research systems will it fill the gap abstract this article examines whether the private sector can fill the gap of declining public research in developing countries economic theory suggests private for profit research will focus on areas where returns to research are appropriable and reasonable profits are generated actual private for profit research activities concentrate on countries and industries with large markets appropriable returns strong science infrastructure and favorable government policies governments and donors can promote private research by easing constraints to private entry and operations but if governments stop funding research on public goods and technologies with limited market potential the private sector is unlikely to fill the gap completely

financial inclusion and poverty a tale of forty five thousand households abstractusing a new nationally representative survey data covering approximately 45 000 indian households we examine the effects of financial inclusion on poverty we construct a multidimensional

the search for a new paradigm for the development of national agricultural research systems this paper first reviews trends in the recent evolution of investment in national agricultural research systems it then synthesizes the major elements of an emerging paradigm for viewing the future evolution of research systems this paradigm has arisen in response to the funding crisis in public research organizations in the 1990s and the declining capacity of many of these organizations key elements of this new paradigm are a pluralistic institutional structure a growing role for the private sector new mechanisms for research funding improved efficiency and effectiveness of public research organizations and strengthening of global scientific links

globalization and rural poverty as is common in most contentious public debates different people mean different things by globalization some interpret it to mean the global reach of new technology and capital movements some refer to outsourcing by domestic companies in rich countries others protest against the tentacles of corporate capitalism or us hegemony economic military or cultural in this chapter i shall limit myself to interpreting globalization simply as openness to foreign trade and long term capital flows i shall ignore here the important issues arising from the devastation caused to fragile economies by billions of dollars of volatile short term capital stampeding around the globe in herd like movements or the substantial poverty reducing potential of international unskilled labour flows from poor to rich countries even if allowed in temporary and regulated doses

small sample bias and adjustment costs the response of most stock variables e g capital housing consumer durables and prices to exogenous impulses involves a dynamic or short run reaction and a target or long run reaction the difference between these two is typically attributed to some form of adjustment cost in this paper i argue that the small sample problems of cointegrating procedures used to estimate the long run component are particularly severe when adjustment costs are important more precisely elasticity estimates will tend to be biased downward i illustrate the empirical relevance of this by showing that the target elasticity of capital with respect to its cost is severely downward biased when estimated with conventional ols cointegration procedures once this is corrected the elasticity of the u s capital output ratio to the cost of capital is found to be large and close to minus one copyright 1994 by mit press

the impact of energy price shocks on capital formation and economic growth in a putty clay technology since the opec price increases of 1973 and 1979 a number of studies have examined the impact of higher energy prices on labor productivity investment and the capital stock 2 3 7 12 13 14 one of the goals of this research has been to assess the contribution of energy price shocks to the slowdown in long term economic growth that occurred in the 1970s and early 1980s this is an important question because in the long run growth in labor productivity is the principal determinant of increases in the standard of living and over shorter periods of time the level of potential output is a major constraint on the conduct of monetary and fiscal policy energy is an attractive explanation for the slowdown because the timing appears to be correct and the worldwide nature of the problem argues against other theories which are country specific many different types of models have been developed to address these questions but most assume a putty putty production technology in which capital is homogeneous and malleable this causes the economy to adjust rapidly to an increase in energy prices both in the size of the capital stock and in its associated labor and energy requirements however such an assumption is inappropriate in reality the capital stock cannot be instantaneously transformed after an energy price increase and to assume so seriously overstates the speed with which the economy can adapt to the new set of relative prices a more realistic assumption is that the production technology is putty clay factor intensities can be adjusted ex ante according to a smooth neoclassical production function but ex post no substitution is possible firms adjust to a change in relative prices on their new capacity but all old vintages must be replaced before adjustment is complete although the puttyputty and putty clay models eventually achieve the same long run equilibrium their paths to the new steady state are very different the putty putty model jumps immediately to the new

the impact of r d investment on productivity new evidence using linked r d lrd data the impact of r d investment on productivity new evidence using linked r d lrd data this paper uses confidential census longitudinal microdata to examine the association between r d and productivity for the period 1972 1985 these data allow for significant improvements in measurement and model specification yielding more precise estimates of the returns to r d our results confirm the findings of existing studies 1 positive returns to r d investment 2 higher returns to company financed research 3 a productivity premium on basic research these results are robust to adjustments for influential outliers also our evidence suggests that the return to company financed r d is an increasing function of firm size i introduction robert solow s studies in the late 1950s dramatically changed perceptions of the sources of economic growth until this time the commonly held view was that improvements in economic welfare were achieved primarily through the use of more inputs in particular capital input however solow 1957 reported that only 10 percent of the twofold rise in u s per capita output during the years 1909 1949 was due to growth in the capital labor ratio the remainder was attributed to more efficient use of inputs or technological change solow also established a framework for estimating technological change a productivity residual or a measure of changes in output that could not be explained by changes in input use the solow residual in modified form has become virtually synonymous with the measurement of total factor productivity tfp growth jorgenson and griliches 1967 demonstrated that under the assumptions of constant returns to scale and competitive factor pricing changes in total factor productivity measure shifts in a production function rather than treat technological change as exogenous or manna from heaven many economists have explored its determinants r d investment is generally regarded as having a strong impact on productivity growth empirical analysis of the r d productivity connection has often been based on estimation of reduced form equations derived from the r d capital stock model griliches 1979 which extends the solow model to include the stock of technical knowledge or knowledge capital as a factor of production in addition to the standard factors of production physical capital labor intermediate materials and energy if the rate of depreciation of knowledge capital is assumed to be negligible tfp growth dtfp is a function of the intensity of r d investment rdint which is usually measured as the ratio of r d expenditure to sales 1 dtf p sub t alpha beta rdin t sub t u sub t where u sub t is a classical disturbance term the coefficient on r d intensity beta is interpreted as both the marginal product of knowledge capital and the rate of return to r d investment 1 estimates of beta at the company or line of business level are interpreted as measures of the private rate of return to r d or those that accrue to the firm or its investors due to incomplete appropriability or other factors this return may not equal the social return to this activity most empirical studies especially those based on aggregate and sectoral data have found evidence of a strong positive correlation between tfp growth and r d investment however results using firm level data have been mixed the finding that these two variables are uncorrelated is cause for concern because it implies that firms may not be able to earn significant returns on their investment in r d making them less likely to undertake this investment in the future even if it is socially desirable for them to do so we believe that it is important to reestimate this relationship because it is highly likely that existing firm level studies have been based on measures of tfp that are crude imprecise and unrepresentative

detrending stylized facts and the business cycle the stylized facts of macroeconomic time series can be presented by fitting structural time series models within this framework we analyse the consequences of the widely used detrending technique popularised by hodrick and prescott 1980 it is shown that mechanical detrending based on the hodrick prescott filter can lead investigators to report spurious cyclical behaviour and this point is illustrated with empirical examples structural time series models also allow investigators to deal explicitly with seasonal and irregular movements that may distort estimated cyclical components finally the structural framework provides a basis for exposing the limitations of arima methodology and models based on a deterministic trend with a single break

economic impacts of the california one variety cotton law the california one variety cotton law is an important example of technological regulation in this case intended to serve as a de facto quality control and to mitigate externalities in production that can arise from the mixing of cottonseed at the gin this paper describes and interprets the economic history of the law presents a theoretical model of its economic effects and provides quantitative estimates of the impacts on output prices and economic welfare following a partial deregulation under a 1978 amendment to the law the analysis shows that large social costs have arisen from concentrating control over the genetic base for california cotton production in the hands of a single government cotton breeder and restricting production to the use of a single selection of a single variety some of these costs have been eliminated by the partial deregulation in 1978 to permit private breeders to compete in the provision of genetic material but production is still restricted to the acala variety of cot

looking beyond national boundaries regional harmonization of seed policies laws and regulations countries in west eastern and southern africa are pursuing the regional harmonization of their seed laws and regulations common regulatory frameworks are expected to reduce the costs of trading seed and encourage scale economies in seed production as a result commercial seed production is expected to expand providing farmers with improved access to new varieties and stimulating productivity growth the impact of these harmonization efforts will depend on the details of the regulatory agreements policy makers are being asked to consider a complicated series of trade offs between stricter measures for quality control and the need to encourage the multiplication and distribution of lower cost seed they are also being confronted with two possible views of sectoral development one view entails the pursuit of better linkages between distinct national seed markets the second involves the development of truly regionalized seed markets where seed can be readily produced in one country and sold in any other country this implies greater regional interdependence of seed supply the paper compares the harmonization agreements being pursued in each of the three african regions and progress in implementing the accords efforts to adapt international seed market standards to the contingencies of african markets are discussed and priorities for further policy analysis are identified

external capital factors and increasing returns in u s manufacturing theoretical models of endogenous growth identify capital accumulation and returns as a potential stimulus to economic growth existing empirical studies however are based on a limited notion of these returns which follows from the simple production function framework used for estimation the purpose of this study is to examine growth issues using dynamic cost function estimation this methodology enables us to broaden the concept of returns to include returns arising from short run quasi fixity of private capital long run internal scale economies and external knowledge factors overall investment in research r d technology high tech capital and education human capital based on detailed industry level data we find evidence of increasing returns to scale arising from cost savings on variable inputs although diminishing returns to capital are prevalent our results also show that knowledge factors augment growth more importantly they appear to explain a substantial proportion of measured

searching for a break in gnp it has been suggested that existing estimates of the long run impact of a surprise move in income may have a substantial upward bias due to the presence of a trend break in postwar u s gross national product data this article shows that the statistical evidence does not warrant abandoning the no trend break null hypothesis a key part of the argument is that conventionally computed p values overstate the likelihood of the trend break alternative hypothesis this is because they do not take into account that in practice the date is chosen based on pretest examination of the data

endogenous technical advance and the stochastic trend in output a neoclassical approach abstract in the recent endogenous growth literature the trend in output is stochastic while investment in scientific knowledge is treated as analogous to a capital stock this paper models both research and development r d and disembodied technical advance using neo classical equations which specify the equilibrium stocks as a function of prices and output the elasticity of r d in the production function estimated using factor shares is time varying and increasing returns to scale are increasing in all factors the most important aspect of the model is that the equilibrium rate of technical advance is not cyclically invariant but co moves with output at business cycle frequencies this allows the production function to behave as a stochastic trend growth accounting demonstrates that long term variations in the rate of productivity growth have been associated mainly with low frequency fluctuations in the rate of disembodied technical advance with secondary effects from the stocks of r d and physical capital during the high productivity period 1948 1972 technical advance contributed 1 48 percentage points per year to output with 0 98 accounted for by r d the productivity slowdown of the mid 1970s was accounted by a gradual decline in the effect of r d and a more abrupt collapse in disembodied technology the subsequent productivity revival was associated with two accelerations in disembodied technical advance the first beginning in the early 1980s and the second in the mid 1990s the production function is simulated in a small econometric model model simulations find that exogenous shocks to the inflation rate generate significant variations in growth by inducing fluctuations in disembodied technology

mechanization in ghana emerging demand and the search for alternative supply models influential studies in the 1980s and early 1990s drew on the boserup ruthenberg theories of farming systems evolution to argue that african countries were not yet ready for widespread agricultural mechanization through applying the theories of farming systems evolution and of induced innovation in technical change this paper shows that demand for certain mechanized farming operations particularly plowing has emerged even among smallholders suggesting that supply issues may now be the main constraint to successful mechanization we therefore adopt a supply chain approach to analyze two types of mechanization practices in ghana i e a recent state led mechanization program and the private sector led service hiring market against an international perspective by drawing on three asian supply models we identify two major flaws in existing policies first the agricultural mechanization service centers that the government promotes fail to use tractors services with sufficient intensity second direct importation of agricultural machinery by the government inhibits imports of appropriate and affordable machinery in contrast the development of mechanized service hiring market in which medium and large scale farmers who are tractor owners provide hiring out services to small scale farmers represents a promising model for sustainable mechanization in ghana this private sector led second model is consistent with international experiences

computers obsolescence and productivity this paper develops a new technique for measuring the effect of computer usage on u s productivity growth standard national income and product accounts nipa measures of the computer capital stock which are constructed by weighting past investments according to a schedule for economic depreciation the rate at which capital loses value as it ages are shown to be inappropriate for growth accounting because they do not capture the effect of a unit of computer capital on productivity this is due to technological obsolescence machines that are still productive are retired because they are no longer near the technological frontier and anticipation of retirement affects economic depreciation using a model that incorporates obsolescence alternative stocks are developed that imply a larger computer usage effect this effect together with the direct effect of increased productivity in the computer producing sector accounted for the improvement in u s productivity growth over 1996 1998 relative to the

unfair credit allocations this article investigates the impact of credit allocation on heterogeneous wealth entrepreneurs we show that with decreasing risk aversion and unobservable wealth poorer borrowers exert more effort as a consequence of endogenous adverse selection they are either excluded from the market or necessarily subsidize richer borrowers in a pooling equilibrium resulting in a paradoxical and inequitable redistribution alternatively a less likely separating equilibrium may occur in which poor types bear the entire weight of separation in the form of excess risk taking

the real impact of improved access to finance evidence from mexico this paper provides new evidence on the impact of access to finance on poverty it highlights an important channel through which access affects poverty the labor market the paper exploits the opening of banco azteca in mexico a unique natural experiment in which over 800 bank branches opened almost simultaneously in preexisting elektra stores importantly the bank has focused on previously underserved low income clients our key finding is a sizeable effect of access to finance on labor market activity and income levels especially among low income individuals and those located in areas with lower preexisting bank penetration

private sector incentives and the diffusion of agricultural technology evidence from developing countries abstractthe role of intellectual property rights iprs has been extensively debated in the literature on technology transfers and agricultural productivity growth in developing countries however few studies offer cross country evidence on how iprs affect yield growth by incentivising private sector investment in cultivar improvement we address this knowledge gap by testing technology diffusion patterns for six major crops using a unique dataset for the period 1961 2010 and an arellano bond linear dynamic panel data estimation approach findings indicate that biological and legal forms of iprs promote yield gap convergence between developed and developing countries although effects vary by crop

does financial development contribute to poverty reduction the article examines the contribution of financial development to poverty reduction in developing countries building on earlier research which has established links between financial development and economic growth and between economic growth and poverty reduction the article tests for a causal process linking financial sector growth and poverty reduction the empirical results indicate that up to a threshold level of economic development financial sector growth contributes to poverty reduction through the growth enhancing effect the impact of financial development on poverty reduction will be affected however by any change in income inequality resulting from financial development

local financial development and growth using a unique sample of net domestic product data for districts in india i investigate the connection between banking sector development human capital and economic growth at the sub national level using disaggregate data avoids many of the omitted variable problems that plague cross country studies of the finance growth connection and facilitates an instrumentation strategy the findings show that the growth of many districts in india is financially constrained due to lack of banking sector development and that the relationship between finance and growth may be non linear for the districts in the sample moving from the 75th percentile of credit net domestic product to the 25th percentile implies an average loss of 4 percent in growth over the 1990s this indicates that the gains from increased banking sector outreach may be large the analysis shows that human capital deepening can reduce the effect of the financial constraint and help decouple growth from financial development in a district at the 25th literacy percentile the implied growth loss due to a constrained banking sector is twice as large as in a district at the 75th literacy percentile thus higher levels of human capital may activate alternative growth and production channels that are less finance intensive

financing agricultural research international investment patterns and policy perspectives abstract for much of the post wwii period governments in rich and poor countries alike have increased public spending on and performance of agricultural research the public involvement in and policies toward agricultural research and development r d have undergone a sea of change in more recent years in this article we document these changes focusing on the public and rapidly evolving private roles in financing agricultural r d and the international dimensions of these funding and policy issues we restate the principles for government intervention in research and highlight the financing aspects of these interventions before concluding the paper with some reflections on the implications of all these changes for internationally conceived and funded public agricultural r d

women in politics evidence from the indian states abstract this paper uses panel data from the 16 larger states in india during the period 1967 2000 to study the effects of female political representation in the state legislatures on public goods policy and expenditure it finds that politicians gender affects policy but that their social position i e their caste should be taken into account as well female legislators in seats reserved for lower castes and disadvantaged tribes invest more in health and early education and favor women friendly laws such as amendments to the hindu succession act which was designed to give women the same inheritance rights as men they also favor redistributive policies such as land reforms in contrast female legislators from higher castes do not have any impact on women friendly laws oppose land reforms invest in higher tiers of education and reduce social expenditure the causal effect of female legislators is estimated using close elections between women and men

agricultural decisions after relaxing credit and risk constraints the investment decisions of small scale farmers in developing countries are conditioned by their financial environment binding credit market constraints and incomplete insurance can limit investment in activities with high expected profits we conducted several experiments in northern ghana in which farmers were randomly assigned to receive cash grants grants of or opportunities to purchase rainfall index insurance or a combination of the two demand for index insurance is strong and insurance leads to significantly larger agricultural investment and riskier production choices in agriculture the binding constraint to farmer investment is uninsured risk when provided with insurance against the primary catastrophic risk they face farmers are able to find resources to increase expenditure on their farms demand for insurance in subsequent years is strongly increasing with the farmer s own receipt of insurance payouts with the receipt of payouts by others in the farmer s social network and with recent poor rain in the village both investment patterns and the demand for index insurance are consistent with the presence of important basis risk associated with the index insurance imperfect trust that promised

public agricultural r d design and technological spill ins a dynamic model the paper presents a dynamic model for the analysis of the national agricultural research systems narss strategy in a context of increasing globalisation both intersectoral and international technology spill ins may greatly affect the nars design and this paper proposes an analytical framework for its study when major spill ins are present these spill ins are calculated by applying the yale technology concordance ytc methodology a var vec model is then specified to detect empirically given the calculated spill ins what nars design prevails in a dynamic framework the model is estimated for the italian agriculture data and provides evidence of close dependency on external r d sources

do we need a price index for industrial r d abstract price deflators for research expenditures of 12 individual industries and of all u s industries combined are constructed for the period 1969 1988 these indexes are derived with a set of proxy price series that are highly correlated with surveyed r d input prices and that may be easily extended forward in time as the requisite proxy data become available the approach could be replicated for other countries given the recent consideration to treat r d as part of capital formation in satellite accounts to the international system of national accounts and the u s national income and product accounts there is an immediate need for such deflators trends in u s industrial r d expenditures utilizing these r d deflators and others found in the literature are contrasted although broad based deflators such as the gnp deflator used in reporting most official r d statistics provide reasonable approximations of changes in aggregate industry r d costs they are much less appropriate for calculating real r d expenditures of individual industries the industry specific r d indexes built here rather readily capture variations in inter industry r d cost trends that broader deflators miss

an argument for deregulating the transfer of agricultural technologies to developing countries in the past few decades many developing countries have liberalized trade and investment removing barriers to imports and allowing the introduction of new foreign technologies unfortunately agriculture often remains outside this reform process regulatory obstacles continue to restrain the transfer of technologies through private trade in seeds and other inputs industrial countries characteristically allow the transfer of private and public technologies through multiple channels developing countries often force technology transfer through a single channel controlled by government agencies with an emphasis on official performance tests this article analyzes the institutional arrangements governing the international transfer of new agricultural technologies examining the cases of agricultural machinery in bangladesh and seed varieties in turkey the analysis shows that allowing the private transfer of technologies and refocusing input regulations on externalities could lead to significant productivity and income gains in developing countries