restructuring enterprises in eastern europe eastern europe s enterprises are undergoing fundamental reform this paper evaluates alternative forms of corporate restructuring emphasizing different sequences in which reforms can be organized in some countries restructuring is undertaken by the state prior to privatization in some restructuring is delegated to private sector institutions before shares are offered to the public at large and in some public share offerings are preceding restructuring the paper develops a general framework for evaluating sequencing drawing on recent literature on corporate ownership and vertical integration it points to market failures that are particularly acute during the initial stages of transition these discourage privatization through wide share ownership and explain why privatization has in practice progressed slowly the paper examines in some detail restructuring in the one country in which reform has been rapid east germany the paper discusses the role of the government the treuhandanstalt the banks the incumbent management and western firms in the reform process it uses the theoretical framework to explain the contributions of public and private sector institutions and considers whether any lessons can be drawn for the design of institutions elsewhere

stabilizing a previously centrally planned economy poland 1990 stabilization in poland guillermo a calvo and fabrizio coricelli we examine the dynamics of the january 1990 stabilization programme in poland focusing on the substantial and sudden collapse in industrial output and inflation persistence we discuss three non mutually exclusive explanations of these phenomena 1 excessive initial stocks of inventories 2 an exogenous fall in household demand and 3 tight credit we conjecture that tight credit was at centre stage it helped to magnify the fall in output and to coordinate such a fall across sectors we base such a conjecture on the existence of substantial credit segmentation and on the underdevelopment of private credit markets the latter may explain the substantial shrinkage of interenterprise credit compounding the initial contraction of bank credit they argue that credit tightness is reflected in firms offering wages below the programme s ceilings especially given that firms are controlled by workers councils this conjecture is further strengthened by the fact that wages increased and even went beyond the programme s ceilings as credit expanded during the year we argue that the wage hike may be the reason why credit expansion did not result in a major output recovery and inflation persisted during the year

cash crop liberalization and poverty alleviation in africa evidence from malawi this article uses the case of burley tobacco liberalization in malawi to investigate the efficacy of cash crop liberalization as an instrument for poverty alleviation in sub saharan africa the principal justification for cash crop liberalization is that markets allow farm households to increase their incomes by producing that which provides the highest return to their productive resources and use the cash to buy consumption goods using a latent welfare model we find that households that selected to grow cash crops had higher incomes than those that did not grow cash crops however we also find that due to the lumpiness and seasonality of cash crop incomes higher household incomes while increasing food purchases did not significantly affect per capita food intake irrespective of participation in cash crops for much of the cropping season rural households seem to rely more on nonfarm income for expenditure and consumption smoothing

the stagnation of smallholder agriculture in malawi a decade of structural adjustment abstract malawi s efforts at structural adjustment have revolved around reforming the marketing and pricing of outputs and inputs in smallholder agriculture in practice the price oriented adjustment policies were not thorough enough and have led to disappointing results there is clearly a need to push for further reforms in pricing however structural adjustment in malawi will have to go beyond just getting prices right policies must also concentrate on structural and institutional weaknesses that constrain smallholder agriculture and contribute to widespread food insecurity and malnutrition

time consistent collection of optimal seigniorage a unifying framework this paper reviews the existing literature on the time consistency problem of seigniorage collection when monetary policy is determined by optimal taxation considerations it develops a unifying accounting framework and suggests a general measure for seigniorage which encompasses the standard measures employed in the literature in addition the ex ante optimal solution to the optimal taxation problem is derived and interpreted in relation to the ramsey principle we show that the different recommendations of the public finance literature i e the friedman rule of optimal deflation moderately positive inflation and seigniorage maximizing inflation are specific solutions to the optimal taxation problem the paper continues with a formal illustration of the time consistency problem of the ex ante optimal policy and the characterization of the time consistent solution under discretion as possible solutions to the time consistency problem we consider reputational forces institutional reforms that establish central bank independence and specific ways of asset and debt management in particular it is formally shown that a modified version of the asset and debt management scheme suggested by persson persson and svensson is not only necessary but also sufficient for optimality although this did not hold in their model

rural income and poverty in a time of radical change in malawi abstract malawi is one of the poorest countries in africa there is widespread though not universal agreement about the shape of poverty in the country and the policy challenge this sets agriculture continues to be the most obvious means to stimulate broad based rural growth and to provide levels of food security and income needed for the majority rural population a longitudinal study over a decade during which radical policy and political changes occurred provides the data and basis for discussing the appropriate policy directions for reducing poverty

the effectiveness of structural adjustment lending initial evidence from malawi abstract the world bank s new programs of structural adjustment lending are likely to prove most effective with those governments which demonstrate shared ideals in their approach to economic adjustment and policy reform malawi has long been regarded as a country placing great reliance on the market in resource allocation showing restraint in public sector expansion and retaining a strong export orientation the balance of payments difficulties and the deterioration in economic circumstances which began in 1980 did not arise solely from external shocks but the structural adjustment lending programs introduced in 1981 as a means of easing the painful reform process found root in a fertile and responsive policy environment this paper chronicles the first two sals to malawi reviewing in particular the specific policy reforms advocated and required by the bank the extent of their implementation and the provisional effects on the malawi economy

maize of the ancestors and modern varieties the microeconomics of high yielding variety adoption in malawi farmer adoption of seed fertilizer technology can be characterized in terms of several interrelated choices one choice is whether to adopt only seed only fertilizer or both components of the technology adoption another choice relates to the extent of land allocation to modem and to farmers seed varieties extent of adoption a third choice is the level per hectare of either seed or fertilizer or both intensity of adoption 1 in the literature about agricultural innovations in developing countries some theoretical models treat more than one aspect of the adoption decision 2 but most econometric approaches have portrayed only the discrete adoption choice for a single input although farmers often adopt parts or components of recommended technology neither the theoretical nor the econometric models have included the level of fertilizer applied to farmers varieties in the analysis of seed fertilizer adoption 3 two features of the seed fertilizer adoption decision as defined above are particularly evident in malawi first even when farmers adopt hybrid maize they continue to allocate a part of their maize area to their own varieties microeconomic theory provides four explanations for land allocation to both modern and traditional seed variet

labor absorption and agricultural development bangladesh s experience and predicament significant employment gains have resulted from the green revolution technologies in bangladesh while the kharif wet season employment has remained more or less stagnant employment in the rabi dry season increased fourfold between the early 1960s and the late 1980s with overall crop sector employment increasing by 30 interseasonal differences in employment have declined steadily the employment generating effect of the green revolution is slowing down i e agricultural growth at the margin has become progressively less labor intensive in recent years changes in the occupational structure may merely reflect a relocation of surplus labor from the farm to the nonfarm sector where it is also largely surplus rather than heralding a real turning point in bangladesh there is little prospect of agriculture providing much greater employment and there is little sign that labor transfer in bangladesh will lead to a pattern of successful industrialization as in the contemporary developed countries of east asia or the western countries

education and entrepreneurial success this paper estimates the effect of education on the success of entrepreneurial activity using survey data from malawi an instrument variable approach is used to address the endogeneity of education we find a significant and substantial effect of an added year of primary education on entrepreneurial profitability this is consistent with theoretical arguments that primary schooling provides a generalised form of competence that underpins the variety of skills an entrepreneur needs to succeed in business results are robust to non random selection into entrepreneurship

spice price spikes simulating impacts of saffron price volatility in a gendered local economy wide model summary access to international markets provides smallholders with unprecedented opportunities but also exposes them to world market whims we use a local economy wide impact evaluation lewie model to analyze how the recent global saffron price variability affected morocco s taliouine taznakht region a specialized agro export economy with a stark gender division of labor prices of saffron increased by 71 per year over the 2007 09 period before falling quickly back to their trend our modeling approach allows us to simulate such shocks and evaluate impacts not only on producers but also on the local economies around them in our simulations positive price shocks and increases in productivity both cause large reallocations of labor resources particularly for female workers at harvest time we use monte carlo simulations to evaluate how saffron price variance affects the economy female wage income is especially sensitive to global price variability a 100 increase in saffron price variance leads to 133 increase in female wage income variance but only 36 for males accounting for general equilibrium effects is critical for understanding the ramifications of exposure to export price volatility in poor economies

central banks and seigniorage a study of three economies in transition abstract the paper examines the relations between central banks and other macro sectors in the czech republic hungary romania with respect to the creation and distribution of seigniorage taking austria and germany as a reference in economies in transition transfers of seigniorage from the central bank to the government and to the banking sector may appear as a natural way to soften the financial constraints of both sectors we propose a simple framework for the analysis of central bank seigniorage based on the opportunity cost approach and measure both the amount and allocation of seigniorage for the five countries in 1993 we find central bank seigniorage to be approximately four times our benchmark value in hungary and thirty times in romania the latter due to the high level of the inflation tax in hungary and romania most seigniorage is appropriated as an interest rate subsidy by the government in romania a large part also goes as a subsidy to the financial sector in none of the five countries we find that central banks retain an excessive amount of seigniorage for reserve accumulation or for current expenditures in the last part of the paper we discuss the implications of our findings on seigniorage for the evaluation of central bank independence vis a vis the government

central bank reform liberalization and inflation in transition economies an international perspective this paper develops extensive new data on the legal independence of new central banks in 26 former socialist economies fse this data is constructed using the codification system for measuring legal independence developed in cukierman webb and neyapti 1992 and in chapter 19 of cukierman 1992 this makes it comparable with earlier data on central bank independence cbi in the industrial democracies and in non fse developing countries and permits experimentation with alternative indices of cbi like those reviewed in eijffinger and van keulen 1995 the new indices of independence indicate that central bank cb reform in the fse during the nineties has been quite ambitious in spite of the large price shocks induced by the transformation from plan to market reformers in those countries chose to create central banks with levels of legal independence that are substantially higher on average than those of developed economies during the eighties based on data from 1989 through 1998 the evidence in the paper suggests that cbi is unrelated to inflation during the early stages of liberalization but for sufficiently high and sustained levels of liberalization and controlling for variables like price decontrols and wars legal cbi and inflation are significantly and negatively related these findings are consistent with the view that legal cbi no matter how high cannot contain the powerful inflationary impact of wide scale liberalization of formerly controlled prices but once the process of liberalization has gathered sufficient momentum legal independence becomes effective in slowing inflation down and the cumulative liberalization index developed by de melo et al 1996 becomes relatively less important the paper also presents evidence on factors that affect the level of cbi and examines the relation between inflation and cbi within a broader sample composed of the transition and of the developed economies

a general measure of inflation tax revenues abstract a general measure of the revenues from the inflation tax and seignorage is presented which is correct across models previous measures seemingly dependent on specific policy assumptions can be seen as special cases of this unified measure

structural change in malawi since independence consequences of a development strategy based on large scale agriculture abstract this paper investigates the nature of the structural change which has occured in the malawian economy since independence and identifies key policies pursued by the government which it is argued have been decisive in shaping this development the salient feature of structural change is shown to be the rapid growth of large scale agriculture associated with an equally rapid transfer of labour into wage employment and a decline in the importance of peasant production the implications of these changes for living standards and future development and policy are considered

the political economy of policies for smallholder agriculture summary as the experience of the 20th century has shown implementing policies that increase agricultural productivity among smallholders is a particularly promising strategy to achieve pro poor growth however history also reveals major political challenges to adopting this strategy the paper compares the experience of asian countries that were able to launch a smallholder based green revolution with the experience of african countries that are still struggling with this goal it then reviews the political economy literature to identify the factors that account for these divergent experiences finally the paper develops a conceptual framework to guide empirical research to close the knowledge gaps identified by the review

seigniorage delegation and common currency why monetary unions may fail we provide a parable that can explain why monetary unions havehistorically been dissolved following political separation using a simple model of government finance in a commoncurrency area it is shown that delegation to an inflationary central banker is an optimal policy whencountries struggle for seigniorage revenues whether delegatescoordinate monetary policy or not furthermore a commoncentral bank in which representatives coordinate monetarypolicy will reach an outcome that is pareto inferior to thatproduced by a non cooperative seigniorage war accordingly without political dialogue regarding the designation of therepresentatives a monetary union can fail

maize is life malawi s delayed green revolution abstract the pattern of maize seed development in malawi demonstrates the importance of farmers capacity to articulate their interests through collective action and institutions despite the vital significance of maize as a wage good in malawi limited effective demand for maize seed research prolonged the period of technical stagnation analysis of the institutional factors shaping the demand for maize seed research complements previous work on malawi s political economy the supply of seed technology and adoption with implications for current political changes in that nation the importance of farmers organizations and state commitment to agricultural research in sub saharan africa

the adoption of intensive monocrop horticulture in southern cameroon abstract results from a 1997 survey of 208 households in the humid forest zone of southern cameroon indicate that african policy makers seeking to intensify agricultural production should focus attention on the horticultural sub sector the survey which gathered information on horticultural production practices found that the average expenditure on agro chemical inputs by horticultural producers using monocrop production systems was 190 us ha which greatly exceeds the fao reported national average expenditure of 6 50 us ha a logit model of monocrop adoption indicated that the size of land holding per household had a negative effect on adoption congruent with population driven technical change and that increases in unit transportation costs significantly decreased the probability of adoption these findings suggest that policy makers should target horticultural intensification in areas of higher population density and promote investment in rural roads the age of the household head had a significant negative and elastic effect on adoption which in combination with an increase in the cohort of younger farmers in the rural population induced by macro economic events contributed to the spread of intensified horticulture in the study area roughly two thirds of rural households also produce cocoa and the quantity of cocoa produced was positively associated with adoption of intensive horticultural systems suggesting that export crop promotion indirectly facilitated diversification of agriculture women s participation in intensive monocrop production was limited and efforts to promote their greater involvement are recommended

off farm labor supply and correlated shocks new theoretical insights and evidence from malawi abstractwe offer new conceptual insights into the understanding of occupational choice in uncertain rural environments with a focus on its ex ante before a shock and ex post after a shock consequences for farmers belonging to different portions of the asset distribution we model theoretically the choice between relatively safe subsistence farming higher return but higher risk cash crop activities and off farm labor conditional on preexisting asset allocation and look at the general equilibrium labor market implications of correlated shocks our results backed by evidence from malawi challenge some stylized perceptions in the literature on consumption smoothing via off farm labor supply

to specialize or diversify agricultural diversity and poverty dynamics in ethiopia recent agricultural development policies have begun to shift focus from the promotion of a few staple crops toward encouraging crop diversity the belief is that crop diversification is an effective strategy for dealing with a variety of issues including poverty alleviation however there is a lack of empirical evidence to justify these positions we contribute to filling this research gap by providing quantitative evidence on the impact of diversity in crop cultivation on household poverty using household panel data from ethiopia we develop a diversity index to measure the effect of crop diversity on poverty status to control for endogeneity and selection bias resulting from unobserved heterogeneity we utilize a recently developed parametric method for estimating dynamic binary response models with endogenous contemporaneous regressors our results provide evidence that households which grow a diverse set of crops are less likely to be poor than households that specialize in their crop production additionally crop diversity reduces the probability that a non poor household will fall into poverty and the probability that a poor household will remain in poverty we conclude that crop diversification is a viable way to deal with the exigencies of being poor

adapting to adjustment smallholder livelihood strategies in southern malawi abstract this study uses the sustainable livelihoods framework to analyze changes in livelihood strategies for 50 case study households in the blantyre shire highlands southern malawi during 1990 2000 although evidence from rapid rural appraisal rra suggests that the poor are becoming poorer the majority 56 reported an improvement in their economic status improvement was linked to market liberalization through higher income from crops burley tobacco vegetables grain legumes and microenterprise one quarter of households were worse off downward economic mobility was attributable partly to market liberalization but also to the adverse consequences of widowhood or divorce for female headed households monitoring livelihoods under adjustment requires a pluralist approach that relies not just on rra but also on quantitative methods household case studies and insights from farming systems research

green gold burley tobacco smallholder agriculture and poverty alleviation in malawi abstract the abolition in 1990 of the estate monopoly on cultivation of burley tobacco is expected to play an important role in reducing poverty among smallholders in malawi a nationwide survey in 1993 shows that smallholder households cultivating burley also grow more hybrid maize use more fertilizer and are more food secure but resource poor households particularly those headed by women face land and labor constraints on burley adoption burley and hybrid maize increase the demand for hired labor but not enough to absorb the growth in the rural labor force broad based poverty alleviation requires technology and programs targeted at the majority of smallholders with holdings of 0 5 hectares or less

development studies findings frontiers and fights abstract very low incomes and relatively low mobility in ldcs limit the scope for lessons for dcs three areas remain however analogues interactions and above all conceptual transfers development studies have moved away from adding up individual responses to change towards examining interactions that produce systemic outcomes examples are analyzed from the evolving debates about a peasant response as related to tenure and risk b farm systems vs village systems analysis c impact of the green revolution on the poor d unemployment development studies show analysts of developed countries especially in case d above that adding up approaches ignoring interactions and total systems produce very misleading results