The JDE is on fire

The November issue of the Journal of Development Economics is a blockbuster.  A quick look at the table of contents leads me to want to read the issue cover to cover.  There are too many good ones to list, but here are some titles and abstracts of the ones I found most intriguing.

1. “Institutions and the long-run impact of early development” by James B. Ang

We study the role of institutional development as a causal mechanism of history affecting current economic performance. Several indicators capturing different dimensions of early development in 1500 AD are used to remove the endogenous component of the variations in institutions. These indicators are adjusted with large-scale movements of people across international borders using the global migration matrix of Putterman and Weil (2010) to account for the fact that the ancestors of a population have facilitated the diffusion of knowledge when they migrate. The exogenous component of institutions due to historical development is found to be a significant determinant of current output. By demonstrating that the relationship between early development and current economic performance works through the channel of institutions and that better institutions can be traced back to historical factors, the results of this paper shed some light on how history has played a role in shaping long-run comparative development.

2. “The rise and fall of (Chinese) African apparel exports” by Lorenzo Rotunno, Pierre-Louis Vézina, Zheng Wang

During the final years of the Multifiber Agreement (2001–2005) the US imposed quotas on Chinese apparel while it gave African apparel duty- and quota-free access. We argue that the combination of these policies led to a rapid but ephemeral rise of African exports that can be explained in part by ethnic-Chinese firms using Africa as a quota-hopping export platform. We first provide a large body of anecdotal evidence on the ethnic-Chinese apparel wave in Africa. Second, we show that Chinese exports to Africa predict US imports from the same countries and in the same apparel categories but only where transhipment incentives are present, i.e. for products facing US quotas and in countries with preferential access to the US unconstrained by rules of origin. Our estimates indicate that direct transhipment may account for around 22% of Africa’s apparel exports during 2001–2008.

3. “Trade and thy neighbor’s war” by Mahvash Saeed Qureshi

This paper is the first to examine the spillover effects of regional conflicts, defined as internal or external armed conflicts in contiguous states, on international trade. Our empirical findings—based on different measures of regional conflict constructed using alternate definitions of contiguity and types of conflict for 145 countries over 1948–2006—reveal a significant negative effect of both intrastate and international conflicts on the bilateral trade of neighboring countries that may not be directly involved in any conflict. The impact increases with conflict duration, and is persistent—on average, it takes bilateral trade 3–5 years to recover after the end of a regional conflict.

4. “Exogenous volatility and the size of government in developing countries” by Markus Brückner & Mark Gradstein

This paper presents instrumental variables estimates of the effects of GDP per capita volatility on the size of government. We show that for a panel of 157 countries spanning more than half a century, rainfall volatility has a significant positive effect on GDP per capita volatility in countries with above median temperatures. In these countries rainfall volatility has also a significant positive reduced-form effect on the GDP share of government. There is no significant reduced-form effect in the sample of countries with below median temperatures where rainfall volatility has no significant effect on GDP per capita volatility. Using rainfall volatility as an instrumental variable in the sample of countries with above median temperatures yields that greater GDP per capita volatility leads to a significantly higher GDP share of government.

5. “International competition and industrial evolution: Evidence from the impact of Chinese competition on Mexican maquiladoras” by Hale Utar and Luis B. Torres Ruiz

Effects of the competition between two South locations (Mexico and China) in a Northern market (US) are analyzed. By employing a plant-level data set that covers the universe of Mexican export processing plants (maquiladoras) from 1990 to 2006 and relying on an instrumental variable strategy that exploits exogenous intensification of Chinese imports in the world in conjunction with the WTO accession of China, the empirical analysis reveals a substantial effect of intensified Chinese competition on maquiladoras. In particular, competition from China has a negative and significant impact on employment and plant growth, both through the intensive and the extensive margin. As the negative impact is stronger on the most unskilled labor intensive sectors, it triggers significant sectoral reallocation. Suggestive evidence on industrial upgrading among maquiladoras in response to competition with China is also provided. Overall the results provide additional insight into the way low-wage competition shapes the evolution of industries.

6. “Good countries or good projects? Macro and micro correlates of World Bank project performance” by Cevdet Denizer, Daniel Kaufmann, & Aart Kraay

This paper investigates macro and micro correlates of aid-financed development project outcomes, using data from over 6000 World Bank projects evaluated between 1983 and 2011. Country-level “macro” measures of the quality of policies and institutions are strongly correlated with project outcomes, consistent with the view that country-level performance matters for aid effectiveness. However, a striking feature of the data is that the success of individual development projects varies much more within countries than it doesbetween countries. A large set of project-level “micro” variables, including project size, project length, the effort devoted to project preparation and supervision, and early-warning indicators that flag problematic projects during the implementation stage, accounts for some of this within-country variation in project outcomes. Measures of World Bank project manager quality also matter significantly for the ultimate project outcomes. We discuss the implications of these findings for donor policies aimed at aid effectiveness.

7. “Mass education or a minority well educated elite in the process of growth: The case of India”  by Amparo Castelló-Climent, Abhiroop Mukhopadhyay

This paper analyzes whether mass education is more growth enhancing in developing countries than having a minority well educated elite. Using Indian Census data as a benchmark and enrollment rates at different levels of education, we compute annual attainment levels for a panel of 16 Indian states from 1961 to 2001. Results indicate that if the reduction in illiteracy stops at the primary level of education, it is not worthwhile for growth. Instead, the findings reveal a strong and significant effect on growth of a greater share of population completing tertiary education. The economic impact is also found to be large: a one percent change in tertiary education has the same effect on growth as a 13% decrease in illiteracy rates. A sensitivity analysis shows the results are unlikely to be driven by omitted variables, structural breaks, reverse causation or atypical observations.

Mexico round-up

1. Mexican maquiladora industry cry foul on new taxes

2. Educating Journalists: Alfredo Corchado & Mónica Ortiz Uribe at Columbia University

3. Entrevista con un Zeta

4. NPR: Riding ‘The Beast’: Alt.Latino Interviews Salvadoran Journalist Oscar Martinez

5. From Mansfield to Mexico: Man of two countries is at home in neither 

6. Death and Corruption: Organized Crime and Local Govt in Mexico

Mexican Monday Round Up

1. U.S. and Mexico quietly building trust on their own terms ““We’re very much doing the same thing we’ve done for the past decade or so. We’re just more aware of the sensitivities and respectful of the current climate.'”

2. Mexico’s Female Vigilante Squads “The force is made up of mostly middle-aged housewives, mothers and grandmothers. Many of these women have lost loved ones to violence, or were victims of crime themselves. They have lived in fear for their family, and they decided that they’ve had enough. So roughly 100 women have now volunteered to put their lives on the line in order to protect their children and defend their community.”

3. How Tacos Explain Mexico’s Labor Market “Like meat in an over-stuffed taco, many people don’t fit into the formal sector and fall out to the sidelines.”

4. From a Tortilla, the Feeling of a Warm Embrace “People have been putting food inside tortillas and eating them for centuries, but the first tacos to be called tacos were probably eaten by 18th-century laborers working in the silver mines of Mexico, said José R. Ralat, an expert on the folklore of tacos. The miners gave the food the same name as the little sticks of dynamite they used in their work.”

Monday’s links are full of Lant

I am teaching a Ph.D. class this semester on Economic Development and I was telling my students about an article that Lant Pritchett had written about Indian education.  I told them I’d find the link and that they should read all of Lant’s work because it was some of the most interesting and thought provoking work in the field.

To help them out, I put together a list of links of Lant’s recent work.  Given that we blogged this morning about Lant’s book, I figured I’d make it an all-Lant Monday and reproduce the links here:

1. Service with a Smile  “For government services to improve, those providing them should want to do a better job”

2. The first PISA results for India: The end of the beginning

3. Is Microfinance A Schumpeterian Dead End?

4. Interview with Lant on Indian Education

5. Fact and Ficiton in Development

6. One Size Doesn’t Fit All: Lant Pritchett on Mimicry in Development

7.  Everything you think you know about poverty is wrong

8. Lant Pritchett v the Randomistas on the nature of evidence – is a wonkwar brewing?


A round up of interesting news articles

1. Mexico bets on reforms to boost wages, but no quick fix (indeed, if there was one, I think they would have already tried it)

2. Young India irony: 75% will vote but 52% support dictatorship

3.  In the Violent Favelas of Brazil (“There is a de facto sharing of power between the legitimate organs of the state and the gangs, the militias. The police cannot safely enter a large part of Rio by land or by air.”)

4.  Anarchy along Mexico’s southern border crossings (“Unmonitored goods and migrants cross the Suchiate River all day long in southern Mexico, where criminals and corrupt officials lie in wait.”)

5.  When Liberian Child Soldiers Grow Up (“This desolate stretch of land is known as Poto Corner in the local Liberian-English vernacular, meaning a place for those without use. It is situated within Monrovia’s largest slum, West Point, on a peninsula home to migrants, fishermen, crack addicts, street kids, and many Liberians who fought and were displaced by the successive and complex civil wars that ravaged the country during most of the 1990s”)

Developing country news round up

1. The plight of Latin America’s teachers.  “Japan: take our soccer, give us your education.” 

2. Nicaragua canal a big dig — or big scam? “There are many reasons to think it may be the latter.” Indeed!

3. Mexico City launches trash-for-food clean-up program. “Recyclable materials are exchanged for points then used to buy organic food and product.”

4. Bhutan Is No Shangri-La.  “Bhutan conducted a special census in the south and then proceeded to cast out nearly 100,000 people — about one-sixth of its population, nearly all of them of Nepalese origin.”

5. Afghanistan’s new rich – in pictures.



Mexico news & views

1. Why Mexico’s Management of Protected Witnesses is a Disaster by the excellent InSight Crime.

“Mexico, must deal with all of the downsides [of protected witnesses] (cases falling apart because of lying witnesses) but none of the benefits (witnesses regularly contributing to successful convictions against dangerous criminals).”

2. Mexico Extortion Hits 1/3 of Foreign Businesses (also by InSight Crime)

“A survey by the American Chamber of Commerce of Mexico (Amcham) found that 36 percent of the businesses questioned reported being threatened with extortion last year, double the number reported in 2011.”  uh-oh

3. Reflections on Mexico’s Energy Reform

“Based on the fallacy of Pemex’s resource shortages (financial, technical and human), it will be claimed that it is essential to complement them with contributions from private individuals – both national and foreign.” not sure I agree with this article, but still interesting.

4. Economy as Grand Guignol: The Postreform era in Mexico  by William Glade

What is labeled by the portmanteau term “drug trafficking” is actually instantiated in a complex of thriving ancillary enterprises that support output of the main product, narcotics. Viewed as an oligopolistic set of multiproduct firms, popularly called “regional drug cartels,” the narcotics industry per se has been backed up by an astonishingly efficient production regime for such side products as assassination, intimidation, human trafficking (moving illegal migrants of Mexican and other origin) across the northern frontier, extortion, lucrative kidnapping-for-profit schemes, money laundering, and increasingly grisly massacres over wider stretches of the Republic.”  I had to google “guignol” but a very interesting book chapter available online.  Also check Tyler Cowen’s video on the economics of drug trafficking and violence in Mexico here.

5. Student loans come to Mexico

“Meanwhile, some analysts question the real value of a college education in Mexico, where graduates often suffer higher rates of unemployment than those with less education.”

Recent research on Latin America

Now that classes are over and grading is done, it is a great time to catch up on recent research.  Here is a list of papers on Latin America that I am anxious to check out:

Exiting Belindia? Lesson from the Recent Decline in Income Inequality in Brazil by Luis F. Lopez-Calva; Sonia Rocha

Better Jobs in Central America : The Role of Human Capital by the World Bank

Stated social behavior and revealed actions: Evidence from six Latin American countries  by Juan Camilo Cárdenas, Alberto Chong, Hugo Ñopo (this is forthcoming from the JDE, which is gated, so the link is to a 2008 working paper)

Risk attitudes and economic well-being in Latin America  by Juan Camilo Cardenas, Jeffrey Carpenter (this is also a recent JDE paper; the title is linked to a 2010 working paper version).

Also, from a non-academic perspective, I am eager to read the just published book Midnight in Mexico: A Reporter’s Journey Through a Country’s Descent into Darkness by Alfredo Corchado.  Here is a good review of the book in the Washington Post. I am teaching a class on Mexican development next semester.  I will mostly use the videos I made for MRU but I am also on the lookout for good background reading for my students.  Any suggestions are most welcome.

Mixed news from Latin America

In the “truth is stranger than fiction” department, Venezuela (a perennial contender) wins hands down:  “Venezuela’s National Assembly has backed plans to import 39 million rolls of toilet paper, in an effort to relieve a chronic shortage.”  I’m not sure if this qualifies as good news or bad news. I guess good news that the shortage is over, bad news that the government has so screwed up macro and exchange rate policies that such a phenomena could even happen in the first place.  It’s never a good thing when your economic problems sound similar to the ones created by Mugabe in Zimbabwe.

In the “mean reversion” department, there are two contenders.  First, in Guatemala, the country’s top court overturned the previous week’s conviction of former President Rios Montt on charges of genocide and crimes against humanity. Second, in Mexico, it looks like much needed energy reform has stalled.

And finally, in the “questionable causality but hopefully still true” department, there seems to be evidence that economic stability in the region has reduced inequality.

Africa round-up

1. China’s EXIM Lend More to Sub-Sahara Africa Than World Bank

2. How reliable are employment statistics in Africa? (hint: not very)

3. How China is educating Africa – and what it means for the West

4. Evaluating antipoverty transfer programmes in Latin America and sub-Saharan Africa: Better policies? Better politics? (pdf)

5. The Making of Middle Class in Africa: Evidence from DHS Data (pdf)