It is often argued that for poor countries, increases in agricultural productivity result in higher non-agricultural output, but the theory is ambiguous and the empirical evidence is limited. This column presents evidence from a natural experiment provided by China’s early 1980s agricultural reforms. Higher agricultural output induced by the reforms led to quantitatively important growth in non-agricultural output. This growth appears to be primarily due to rural savings increasing the supply of capital to the non-agricultural sector.
Samuel Marden, Sunday, December 28, 2014
Sebastian Edwards, Friday, November 28, 2014
The effectiveness of official development aid is the subject of heated debate. This column argues that aid affects recipient economies in extremely complex ways and through multiple and changing channels. Moreover, this is a two-way relationship – realities in recipient countries affect the actions of aid agencies. This relationship is so intricate and time-dependent that it is not amenable to being captured by cross-country or panel regressions. Even sophisticated specifications with multiple breakpoints and nonlinearities are unlikely to explain the inner workings of the aid–performance connection.
Mercedes Delgado, Christian Ketels, Michael Porter, Scott Stern, Thursday, September 18, 2014
There is a consensus among economists that ‘deep roots’ – geography, natural endowments, and institutions – are important determinants of prosperity differences across countries. This column argues that deep roots matter, but they are neither the whole story nor an excuse for political inaction today. Current policies are important – especially the broad range of policies that shape the business environment and the sophistication of companies – and they are affected but not determined by the past.
Marco Annunziata, Saturday, August 16, 2014
Africa has generated a lot of enthusiasm lately. The cynical view of the continent as a hopeless basket case has been replaced by the lofty narrative of Africa Rising. This column argues that Africa’s progress is impressive, and there is more to the story than a commodity boom. But Africa is at a crossroads. The opportunities are huge, but the road ahead is long, and will require persistent and patient effort from policymakers as well as business.
Patricia Ellen, Jaana Remes, Saturday, July 12, 2014
Brazil has grown rapidly and reduced poverty over the past decade, but it has grown more slowly than other emerging economies and its income per capita remains relatively low by global standards. This column points out that sectors of the Brazilian economy that have been opened up to international competition have outperformed those that remain heavily protected. Deeper integration into global markets and value chains could provide competitive pressures that would improve Brazil’s productivity and living standards.
André Carlos Martínez, Aldo Musacchio, Martina Viarengo , Wednesday, July 9, 2014
Institutions are known to play a powerful and enduring role in countries’ divergent levels of economic development. This column presents evidence that institutions matter for within-country inequality, too. In Brazil, changes in export prices and export tax revenues led to an increase in education spending in states that experienced commodity booms, which increased the number of schools and improved educational outcomes such as literacy rates. However, the effect was limited in states where slavery was predominant in colonial times.
Julia Cagé, Valeria Rueda, Wednesday, May 14, 2014
African regions where Protestant missionaries were active had indigenous newspapers a century before other regions. This column argues, based on new research, that this difference has had lasting effects. Proximity to a mission that had a printing press in 1903 predicts newspaper readership today. Population density and light density (a proxy for economic development) is also higher today in regions nearer to missions that had printing presses. The results suggest that a well-functioning media – not Protestantism per se – was important for development.
Joachim De Weerdt, Kathleen Beegle, Jed Friedman, John Gibson, Tuesday, February 18, 2014
Whereas the Millennium Development Goal of reducing extreme poverty by half was achieved by 2010, the global hunger rate has only fallen by a third since 1990. Differences in survey design may account for part of this discrepancy. This column presents the results of a recent experiment in which households were randomly assigned to different survey designs. These different designs yield vastly different hunger estimates, ranging from 19% to 68% of the population being hungry.
Eugenio Proto, Aldo Rustichini, Saturday, January 11, 2014
The link between higher national income and higher national life satisfaction is critical to economic policymaking. This column presents new evidence that the connection is hump-shaped. There is a clear, positive relation in the poorer nations and regions, but it flattens out at around $30,000–$35,000, and then turns negative.
Andrés Rodríguez-Pose, Roberto Ezcurra, Friday, November 29, 2013
Does government quality affect the size and evolution of regional inequality? This column approaches this question using regional data for 46 countries with different degrees of economic development over the period 1996-2006. We find that there is a strong negative association between quality of government and within-country disparities. Countries with better quality of government register lower levels of spatial inequality.
Lawrence Edwards, Robert Z. Lawrence, Wednesday, November 20, 2013
Preferential import policies that allow developing markets to export to advanced economies are intended to dynamically promote development rather than just provide basic gains from trade. This column argues that the Africa Growth and Opportunities Act achieves the latter but not the former, distorting incentives along the value-added chain. While beneficial, preferential trade deals are not a panacea and are certainly not a replacement for pro-development policies.
David Dollar, Tatjana Kleineberg, Aart Kraay, Tuesday, November 19, 2013
A key Millennium Development Goal was to halve the number of people living on less than $1.25 a day. This was met five years ahead of schedule, and the World Bank is promoting a new goal of ‘shared prosperity’ defined in terms of the growth rate of incomes in the bottom 40% of households. This column discusses research showing that there is a strong one-for-one relationship between overall growth and average income growth in the poorest quintiles. Overall growth is thus still important.
Enrico Spolaore, Romain Wacziarg, Thursday, October 3, 2013
There is now widespread agreement that ‘deep’ history matters for comparative development. Recent research has shown that ancestry – the transmission of genetic and cultural traits across generations – matters more than the history of geographic regions. This column argues that long-term divergences in inherited traits can create barriers to the diffusion of technology. The greater a population’s genetic distance to the population on the technological frontier, the lower its relative income will be. Development policies should aim at reducing barriers to exchange and communication.
Alberto Alesina, Stelios Michalopoulos, Elias Papaioannou, Sunday, November 18, 2012
This paper explores the consequences and origins of contemporary differences in well-being across ethnic groups within countries. The authors show that ethnic inequality is strongly inversely related to per capita income, and that differences in geographic endowments across ethnic homelands explain a sizable portion of contemporary ethnic inequality. This deeply rooted inequality in geographic attributes across ethnic regions is also negatively related to comparative development.
Leander Heldring, James A Robinson, Thursday, January 10, 2013
Most of Africa spent two generations under colonial rule. This column argues that, contrary to some recent commentaries highlighting the benefits of colonialism, it is this intense experience that has significantly retarded economic development across the continent. Relative to any plausible counterfactual, Africa is poorer today than it would have been had colonialism not occurred.
Mohsin Khan, Thursday, November 8, 2012
Since the Arab Spring, Egypt has seen some political transformation. But what of its economic policy? This column debates whether Egypt, under its newly elected president, will pursue both badly needed short- and long-term economic reform, or succumb to myopic populism.
Emmanuel Frot, Anders Olofsgård, Maria Perrotta, Friday, October 26, 2012
What does the Arab Spring mean for development in the region? This column looks at development aid during the political transition in East Europe in the 1990s. It argues that aid donors need to be aware of the potential pitfalls.
Alessandra Fogli, Laura Veldkamp, Sunday, October 21, 2012
Does the pattern of social connections between individuals matter for macroeconomic outcomes? This paper uses network analysis tools to explore how different social structures affect technology diffusion and thereby a country’s rate of technological progress.
Bernardo Guimaraes, Kevin D Sheedy, Thursday, July 5, 2012
Institutions are a key determinant of economic development and indeed many developing institutions are deeply dysfunctional. This column presents a new model suggesting that those in power may prefer to keep bad institutions despite their anti-development effects since they alllow the elite to grab a bigger slice of a smaller pie.
Shimelse Ali, Uri Dadush, Saturday, June 2, 2012
According to the broadest measure, anyone who is not poor is part of the middle class – that could mean that anyone living on more than $2 a day. This column suggests a more sensible measure: anyone who owns a car. Based on this measure, the global middle class looks quite different.