economics versus politics pitfalls of policy advice abstract the standard approach to policy making and advice in economics implicitly or explicitly ignores politics and political economy and maintains that if possible any market failure should be

learning about a new technology pineapple in ghana this paper investigates the role of social learning in the diffusion of a new agri cultural technology in ghana we use unique data on farmers communication patterns to define each individual s information neighborhood conditional on many potentially confounding variables we find evidence that farmers adjust their inputs to align with those of their information neighbors who were surpris ingly successful in previous periods the relationship of these input adjustments to experience further indicates the presence of social learning in addition applying the same method to input choices for another crop of known technol ogy correctly indicates an absence of social learning effects jel d83 013 033 q16

can peers improve agricultural revenue crop revenues vary greatly among farmers and the source of that variation is not fully understood even after controlling for factors including input use technology adoption and other agro climatic factors one hypothesis that may explain the variation in outcomes among farmers is differential access to information through peers using a household survey from india containing detailed information about personal relationships we estimate peer effects on cash crop revenue using a novel spatial econometric technique to control for reflection our results show that 60 of farmers revenue is explained by peers peer effects are particularly large in pesticide use and in the cultivation of a new crop however peer effects in input expenditures and land allocation cannot fully explain the variation in revenue implying peers may also associate with management negotiation and marketing we find that peer effects are significant among farmers self reported peers especially among those peers who are farmers main advisors for agricultural matters although caste based networks both within the same and in adjacent villages are important their effect is smaller than that of self reported peer networks we empirically rule out that our effects are driven by other factors such as geographically correlated unobservables farmers following a lead farmer or economies of scale our findings speak to both the potential and the limitations of peers as sources of agricultural information and highlight the need for future research about how to best integrate peers into agricultural extension

social networks and technology adoption in northern mozambique despite their potentially strong impact on poverty agricultural innovations are often adopted slowly using a unique household dataset on sunflower adoption in mozambique we analyse whether and how individual adoption decisions depend upon the choices of others in the same social networks since farmers anticipate that they will share information with others we expect farmers to be more likely to adopt when they know many other adopters dynamic considerations however suggest that farmers who know many adopters might strategically delay adoption to free ride on the information gathered by others we present empirical evidence that shows that the relationship between the probability of adoption and the number of known adopters is shaped as an inverse u in line with information sharing the network effect is stronger for farmers who report discussing agriculture with others the data contains information which is needed to ameliorate the identification issues that commonly arise in this context in particular social networks are precisely identified and in addition we can control for village heterogeneity and endogenous group formation

the political economy of stabilization commitment capacity and public response abstract political pressures are generally recognized as important in determining success or failure of economic stabilization and adjustment programs but there has been little comparative analysis of the politics of stabilization this study examines the factors affecting i political leaders commitment to stabilization measures often called political will ii governmental ability to implement stabilization measures and iii the responses of key interest groups and the public at large to those measures the study also discusses political implications of the design of programs and the attempted speed of stabilization and sketches the tactics available to governments to manage political risk including partial compensation persuasion diversion or obfuscation and containment of protest the discussion is based on case studies of stabilization efforts in five fairly poor small highly trade dependent countries ghana in the late 1960s and early 1970s and zambia kenya sri lanka and jamaica in the late 1970s and early 1980s a subsidiary theme within the broader discussion is the ways in which the political economy of stabilization may differ in such countries as compared to larger semi industrialized economies

the political economy of expenditures by the peruvian social fund foncodes 1991 95 the peruvian social fund foncodes was created by president alberto fujimori in 1991 with the stated objectives of generating employment alleviating poverty and improving access to social services this article uses province level data on monthly expenditures socioeconomic indicators and electoral outcomes to analyze political influences on the timing and geographic distribution of foncodes expenditures between 1991 and 1995 i reach three main conclusions first these expenditures increased significantly before national elections second foncodes projects were directed at provinces in which the marginal political effect of expenditures was likely to be largest third these projects favored the poorest provinces which suggests that the program also had a redistributive function the results are robust to a large number of specifications and controls the peruvian data support predictions made in the literature on political business cycles as well as the literature on political influences on the allocation of discretionary funds

capital and opposition in africa coalition building in multiethnic societies under what conditions can opposition politicians with ethnic constituencies form electoral coalitions in africa s patronage based political systems incumbents form coalitions by using state resources to secure the endorsement of politicians from other ethnic groups opposition politicians however must rely on private resources to do the same this article presents a political economy theory to explain how the relative autonomy of business from state controlled capital influences the formation of multiethnic opposition coalitions it shows that the opposition is unlikely to coalesce across ethnic cleavages where incumbents use their influence over banking and credit to command the political allegiance of business the largest potential funder of opposition in poor countries liberalizing financial reforms in freeing business to diversify political contributions without fear of reprisal enable opposition politicians to access the resources needed to mimic the incumbent s pecuniary coalition building strategy a binomial logistic regression analysis of executive elections held across africa between 1990 and 2005 corroborates the theoretical claim greater financial autonomy for business as proxied by the number of commercial banks and the provision of credit to the private sector significantly increases the likelihood of multiethnic opposition coalitions being formed

learning by doing and learning from others human capital and technical change in agriculture household level panel data from a nationally representative sample of rural indian households describing the adoption and profitability of high yielding seed varieties hyvs associated with the green revolution are used to test the implications of a model incorporating learning by doing and learning spillovers the estimates indicate that i imperfect knowledge about the management of the new seeds was a significant barrier to adoption ii this barrier diminished as farmer experience with the new technologies increased iii own experience and neighbors experience with hyvs significantly increased hyv profitability and iv farmers do not fully incorporate the village returns to learning in making adoption decisions

crop diversity household welfare and consumption smoothing under risk evidence from rural uganda abstract in the wake of climate change there is now a resurgence of interest in the promotion of crop diversification as a climate smart agricultural practice in sub saharan africa the development economics literature suggests that increasing crop diversity is an effective risk management and consumption smoothing strategy in a context characterized by repeated exposure to shocks but weak institutional innovations using panel survey data from rural uganda merged with historical weather data this paper sheds light on the household welfare and consumption smoothing effects of crop diversity we employ instrumental variables methods to control for unobserved heterogeneity and potential reverse causality our study finds that crop diversification is a welfare enhancing strategy that increases consumption and aggregate household diets instrumental variables quantile regression results show that crop diversification generates higher consumption benefits for poorest households in the lower quantile of the consumption distribution than for relatively richer households crop diversification also improves consumption smoothing through reducing households reliance on less effective strategies such as informal insurance and involuntary diet changes as risk coping mechanisms overall the findings suggest that transforming agriculture towards a more diversified cropping system is a viable pathway for improving diets welfare risk management and the resilience of rural households

the structural adjustment of politics in africa abstract it has long been recognized that the structural adjustment programs currently being proposed by the world bank and the international monetary fund in africa have important political consequences however there has been almost no attention devoted to what structural adjustment if implemented means for the way that politics is actually carried out in african nations the failure to examine the long term consequences of economic reform for politics is particularly surprising given that the major instruments of structural adjustment public sector reform devaluation elimination of marketing boards threaten to change not only the constituencies that african leaders look to for support but the way in which leaders relate to their supporters in the countries south of the sahara the paper examines how structural adjustment if actually implemented would affect politics in african countries the paper finds that structural adjustment makes the political climate much riskier for leaders while weakening the central apparatus of the state on which rulers have long relied to stay in power the implications of the analysis for donors are also discussed

leveling with friends social networks and indian farmers demand for a technology with heterogeneous benefits abstract agricultural technologies typically spread as farmers learn about profitability through social networks this process can be nuanced however when net returns for some farmers may not be positive we investigate how social learning influences demand for a resource conserving technology in eastern uttar pradesh india we identify potential adopters through an experimental auction and randomly select a subset to adopt we exploit this variation in adoption across networks to estimate network effects on demand for the technology one year later using a second auction technology benefits vary and network effects are completely conditional on benefits having a benefiting adopter in one s network increased demand by over 50 whereas having a non benefiting adopter had no effect these effects are strong enough to bring average demand in line with expected benefits for many farmers however demand remains below the market price suggesting that network effects will lead to increased but not rapid widespread adoption

liberalization of agricultural input markets in bangladesh process impact and lessons abstract the study takes a historical perspective to trace the path of evolutionary reforms in agricultural input markets of bangladesh it estimates the magnitude of the impact of these reforms on rice production the most important crop in bangladesh agriculture it is estimated that the production of rice could have been 20 32 lower than the level of 1992 1993 depending on the rice price that would have prevailed under alternative scenarios the 20 credit to market reform relates to a real rice price level 19 higher than the actual 1992 1993 prices the 32 credit to reform relates to the actual 1992 1993 price levels the lower contribution of reform 20 to increased production implies a loss to consumers not accounted for in the production benefit of reform while the higher contribution 32 of reform entails no loss to consumers the bottom line conclusion is that bangladesh without the market reforms described in the paper would have reverted back to the situation of regular food crisis and high rice prices as was the case historically the analysis of the process of reform provides interesting lessons for developing countries a gradual process based on a well designed sequencing of various steps of market reform particularly in the case of fertilizer was a crucial factor for success careful monitoring during the period of transition is another crucial factor that has to be institutionalized in the system second generation problems of market reforms particularly the emergence of an oligopolistic market structure are possible and warrant a cautionary watch

the illusion of sustainability this brief summarizes the results of a gender impact evaluation study entitled the illusion of sustainability conducted during the time period 1998 to 2001 in kenya the study observed that deworming is a public good since much of its social benefit comes through reduced disease transmission people were less likely to take deworming if their direct first order or indirect second order social contacts were exposed to deworming the introduction of a small fee for deworming drugs led to an 80 percent reduction in treatment rates take up was not sensitive to the exact price level suggesting that it is particularly counter productive to charge small positive prices for the treatment of infectious diseases an intensive school health education had no impact on worm prevention funding for the study derived from world bank nih fogarty international center berkeley center for health research

structural adjustment as a policy process the case of tanzania abstract analyses of structural adjustment in developing countries have increasingly come to emphasize the importance of grounding reforms in the political realities of the countries concerned while this approach is a step forward from the more economistic and prescriptive analyses that prevailed in the first part of the 1980s we believe that the dynamics of structural adjustment is only fully captured by an approach that treats the policy context as an explicit and independent variable on the basis of a case study of tanzania this article uses a policy process approach in which the notions of ambiguity and conflict in policy situations help us better understand the opportunities and constraints for action on structural adjustment issues

economic reform and political transition in africa the quest for a politics of development the 1980s were bracketed by crises in africa as protracted economic malaise was succeeded by a wave of political reform analysts have sought to understand the sources of economic decline as well as the political requisites for recovery in the region neoclassical and structuralist analyses have been challenged by state centric views of economic change the latter perspective emphasizes the need for capable developmental states as a basis for long term adjustment but a political theory of economic change is still lacking such a theory must address the institutional foundations of growth as well as the shifting basis of social coalitions in african regimes political liberalization suggests the possibility of a new setting for economic reform though the effects of political reform on institutions and coalitions remain ambiguous and democratization cannot be regarded as a panacea for the region s developmental failure future research must look more closely at the interests and structures in transitional regimes and scholars should adopt a more comparative vantage on africa s challenges of reform

time to change what to sow risk preferences and technology adoption decisions of cotton farmers in china this paper examines the role of individual risk attitudes in the decision to adopt a new form of agricultural biotechnology in china i conducted a survey and a field experiment to elicit the risk preferences of chinese farmers who faced the decision of whether to adopt genetically modified bt cotton a decade ago in my analysis i expand the measurement of risk preferences beyond expected utility theory to incorporate prospect theory i find that farmers who are more risk averse or more loss averse adopt bt cotton later farmers who overweight small probabilities adopt bt cotton earlier

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

a strategic model of social and economic networks we study the stability and efficiency of social and economic networks when self interested individuals can form or sever links first for two stylized models we characterize the stable and efficient networks there does not always exist a stable network that is efficient next we show that this tension persists generally to assure that there exists a stable network that is efficient one is forced to allocate resources to nodes that are not responsible for any of the production we characterize one such allocation rule the equal split rule and another rule that arises naturally from bargaining of the players

a simple theory of economic growth these migration experiments prove not that all labor forces are equally skilled but that these shortcomings of skill and so on in countries with poor educational systems are not even close to being sufficient to explain the gigantic differences in per capita income with richer countries i believe that the larger part of the story is the quality of the arrangements that the rich countries adopt poor countries are typically misgoverned or are anarchies with no government at all which is even worse m olson

rent seeking political influence and inequality a simple analytical example a simple model allowing an analysis of the interaction between economic policy decisions and rent seeking by private agents competing for political influence is developed rent seeking may be of the directly unproductive type requiring resources that are withdrawn from productive activities or it may manifest itself as income transfers corruption to political decisionmakers

welfare impacts of improved chickpea adoption a pathway for rural development in ethiopia we analyse the impact of improved chickpea adoption on welfare in ethiopia using three rounds of panel data first we estimate the determinants of improved chickpea adoption using a double hurdle model we apply a control function approach with correlated random effects to control for possible endogeneity resulting from access to improved seed and technology transfer activities to instrument for these variables we develop novel distance weighted measures of a household s neighbours access to improved seed and technology transfer activities second we estimate the impact of area under improved chickpea cultivation on household income and poverty we apply a fixed effects instrumental variables approach where we use the predicted area under cultivation from the double hurdle model as an instrument for observed area under cultivation we find that improved chickpea adoption significantly increases household income while also reducing household poverty finally we disaggregate results by landholding to explore whether the impact of adoption has heterogeneous effects adoption favoured all but the largest landholders for who the new technology did not have a significant impact on income overall increasing access to improved chickpea appears a promising pathway for rural development in ethiopia s chickpea growing regions