United Nations University World Institute for Development Economics Research

In this article we provide an introduction to the papers in the special section of this edition of the European Journal of Development Research. We start by framing the challenges posed by female entrepreneurship to the research community, note some of the findings in the literature pertaining to the cross-national understanding of female entrepreneurship, and review the existing literature on the role and experience of female entrepreneurs in developing countries. Despite progress in understanding the motivations, constraints and issues that confront female entrepreneurs, there is still substantial scope for further research. We then discuss four papers that advance this research agenda.

We examine sensitivity of the estimated relationship between innovation and firm performance. In doing so, we rely on a knowledge production function approach and carry out comparisons in a number of ways. The sensitivity analysis is based on the comparison of a basic econometric model estimated assuming different error structure and using the same data source, an identical model but different data sources, different classifications of firms performance, different classifications of innovation and the two main different subpopulations of the business sector. The analyses are performed in both level and growth-rate dimensions. New findings are reported and previous results are confirmed as well. The study gives indications of what factors cause variations in the estimated effects of interest and the direction of changes.

Abstract This paper explores the relationship of the informal economy to the formal economy and to the formal regulatory environment. It begins with a comparison of the earlier concept of the ‘informal sector’ with the new expanded concept of the ‘informal economy’, which includes microentrepreneurs, own account operators, informal wage workers, and industrial outworkers. It argues that (a) most informal enterprises and workers are intrinsically linked to formal firms; (b) different segments of the informal economy are over-regulated, de-regulated, or under-regulated; and (c) there are benefits and costs to both formality and informality. The paper concludes that the appropriate role for government is (i) to ensure that the formal regulatory environment is not biased in favour of formal firms and workers over informal enterprises and workers (or vice versa) and (ii) to regulate the commercial and employment relationships between formal firms, informal enterprises, and informal wage workers.

This paper examines the causal relationship between FDI and economic growth by using an innovative econometric methodology to study the direction of causality between the two variables. We apply our methodology, based on the Toda-Yamamoto test for causality, to time-series data covering the period 1969–2000 for three developing countries, namely Chile, Malaysia and Thailand, all of them major recipients of FDI with a different history of macroeconomic episodes, policy regimes and growth patterns. Our empirical findings clearly suggest that it is GDP that causes FDI in the case of Chile and not vice versa, while for both Malaysia and Thailand, there is a strong evidence of a bi-directional causality between the two variables. The robustness of the above findings is confirmed by the use of a bootstrap test employed to test the validity of our results.

Absent vaccines and pharmaceutical interventions, the only tool available to mitigate its demographic effects is some measure of physical distancing, to reduce contagion by breaking social and economic contacts. Policy makers must balance the positive health effects of strong distancing measures, such as lockdowns, against their economic costs, especially the burdens imposed on low income and food insecure households. The distancing measures deployed by South Africa impose large economic costs and have negative implications for the factor distribution of income. Labor with low education levels are much more strongly affected than labor with secondary or tertiary education. As a result, households with low levels of educational attainment and high dependence on labor income would experience an enormous real income shock that would clearly jeopardize the food security of these households. However, in South Africa, total incomes for low income households are significantly insulated by government transfer payments. From public health, income distribution and food security perspectives, the remarkably rapid and severe shocks imposed because of Covid-19 illustrate the value of having in place transfer policies that support vulnerable households in the event of 'black swan' type shocks.

This paper explores the relationship between foreign direct investment (FDI) and the productivity of host country domestic firms. We rely on a specially designed survey of over 4000 manufacturing firms in Vietnam, and separate out productivity gains along the supply chain (obtained through direct transfers of knowledge/technology between linked firms) from productivity effects through indirect FDI spillovers. In addition to identifying indirect vertical productivity spillovers from FDI, our results show that there are productivity gains associated with direct linkages between foreign-owned and domestic firms along the supply chain not captured by commonly used measures of spillovers. This includes evidence of productivity gains through forward linkages for domestic firms which receive inputs from foreign-owned firms.

Journal Article The Level and Distribution of Global Household Wealth Get access James B. Davies, James B. Davies University of Western Ontario Search for other works by this author on: Oxford Academic Google Scholar Susanna Sandström, Susanna Sandström UNU‐WIDER, Helsinki Search for other works by this author on: Oxford Academic Google Scholar Anthony Shorrocks, Anthony Shorrocks UNU‐WIDER, Helsinki Search for other works by this author on: Oxford Academic Google Scholar Edward N. Wolff Edward N. Wolff New York University Search for other works by this author on: Oxford Academic Google Scholar The Economic Journal, Volume 121, Issue 551, 1 March 2011, Pages 223–254, https://doi.org/10.1111/j.1468-0297.2010.02391.x Published: 23 November 2010 Article history Received: 14 April 2008 Accepted: 24 May 2010 Published: 23 November 2010

In recent years, empirical findings have been reported which suggest that female children in South Asia are more frequently undernourished than male children (Chen et al., 1983; Sen and Sengupta,

This paper confirms recent evidence of a positive impact of aid on growth and widens the scope of evaluation to a range of outcomes including proximate sources of growth (e.g., physical and human capital), indicators of social welfare (e.g., poverty and infant mortality), and measures of economic transformation (e.g., share of agriculture and industry in value added). Focusing on long-run cumulative effects of aid in developing countries, and taking due account of potential endogeneity, a coherent and favorable pattern of results emerges. Aid has over the past 40 years stimulated growth, promoted structural change, improved social indicators, and reduced poverty.

It is entirely befitting that this brief piece of Kaldorian empirics should be included in a volume dedicated to the memory of Lal Jayawardena. Lal regarded Nicholas Kaldor as his mentor and both shared an abiding interest in issues of economic policy. Kaldor was renowned as an apostle of industrialization. For both rich and poor countries alike, he regarded manufacturing as the engine of growth.1 This chapter examines this central Kaldorian theme in relation to the recent experience of today’s leading developing countries. In a number of these countries, certain longterm structural tendencies have become manifest, prima facie challenging Kaldor’s theses. These tendencies, which will be documented more fully in subsequent sections, are as follows:

This book is a collection of systematically prepared case studies describing the environmental policy ofthirteen countriesin terms ofcapacity-building. Capacity for environmental policy and management, as the concept is used in this volume, has been defined broadly as a society's "ability (...) to devise and implement solutions to environmental issues as part of a wider effort to achieve sustainable development" (OECD). Since the late 1960s capacity-building in environmental policy and management can be observed across the world. It may have made insufficient progress as yet from an environmentalist point of view, but it has produced some remarkable results, and not only in the industrialised world. In the first chapter we present the conceptual framework that underlies the national case studies. In the course ofour research project the authors ofthe book met together twice to discuss this framework in the light of the national experi­ ences and to harmonise their approaches. In this way we have tried to offer more than a collection of individual and incoherent case studies, focusing only on specific environmental problems, institutions, actors, or instruments. The idea behind this book is to give a systematic, comparative overview ofthe fundamental conditions under which environmental policies is practised in selected countries.

In this paper we use data from a developing country, South Africa, to empirically identify the determinants of start-up rates across different sub-national regions and in particular to investigate the role of access to finance on a regional (sub-national) level on start-ups. We find that the most important determinants of start-up rates across South Africa's magisterial districts are profit rates, educational levels, agglomeration as measured by the economic size of a district, and access to formal bank finance. Profits have by far the strongest effect on start-up rates. This, together with the insignificance of unemployment for start-ups, may imply that start-ups in South Africa are mainly opportunity-driven, as opposed to being necessity driven. It is also found that access to formal bank finance matter for regional start-up rates, which is not typical for a developing country and that market-size (agglomerations) is negatively associated with start-up rates in South Africa–an unexpected finding which may imply the existence of ‘congesting' factors such as increased competition, tougher barriers to entry, monopolistic behaviour, and a greater difficulty to be innovative and novel.

This paper reviews the theory and application of decomposition techniques in the context of spatial inequality. It establishes some new theoretical results with potentially wide applicability, and examines empirical evidence drawn from a large number of countries.

Abstract This study explores the extent to which inequality affects the impact of income growth on the rates of poverty changes in sub-Saharan Africa (SSA) compared to non-SSA, based on an unbalanced panel of 86 countries over 1977–2004. For all three measures of poverty – headcount, gap, and squared gap – the impact of GDP growth on poverty reduction is a decreasing function of initial inequality. The impacts are similar in direction for SSA and non-SSA, so that within both regions there are considerable disparities in the responsiveness of poverty to income growth, depending on inequality. Nevertheless, the income–growth elasticity is substantially less for SSA, implying relatively small poverty-reduction response to growth.

This paper is a survey of recent contributions to, and developments of, the relationship between outsourcing, efficiency and productivity growth in manufacturing and services. The objective is to provide a thorough and up–to–date survey that provides a significant discussion on data, as well as on the core methods of measuring efficiency and productivity. First, the readers are introduced to the measurement of partial and total factor productivity growth. Different parametric and non–parametric approaches to the productivity measurement in the context of static, dynamic and firm–specific modelling are discussed. Second, we survey the econometric approach to efficiency analysis. The issues of modelling, distributional assumptions and estimation methods are discussed assuming that cross–sectional or panel data are available. Third, the relationship between outsourcing and productivity growth in manufacturing and services is discussed. The correspondence between a number of hypotheses and empirical findings are examined. Examples of varieties of relevant empirical applications, their findings and implications are presented. Fourth, measurement of inputs and outputs in manufacturing and services are discussed. Finally, to promote useful research, a number of factors important to the analysis of outsourcing, efficiency and productivity growth in the service sector are summarised.

This article uses a cross-country econometric approach to identify the determinants for foreign direct investment (FDI) in Africa. The contribution is 3-fold. Firstly, we recognize that the estimation techniques used elsewhere, such as ordinary least squares, may be flawed. We therefore use a dynamic one-step generalized method of moments (GMM) estimator due to Arellano and Bond (1991 Arellano, M and Bond, S. 1991. Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Review of Economic Studies, 58: 277–97. [Crossref], [Web of Science ®] , [Google Scholar]). The GMM-estimates identified a number of robust determinants of FDI, namely government consumption, inflation rate, investment, governance (political stability, accountability, regulatory burden, rule of law) and initial literacy. It is concluded that geography does not seem to have a direct influence on FDI flows to Africa. Neither market-seeking nor re-exporting motives of FDI seem to dominate, with different policy instruments being significant in the different specifications. This does not discount the importance of good policies, but probably indicates the importance of good policies made by good institutions. Institutions, in the form of political stability showed up as a significant determinant of FDI.

Abstract This paper surveys five decades of empirical research on the macroeconomic impact of aid, looking mainly at studies examining the link between aid and growth. It argues that studies dating until the late 1990s produced either contradictory or inconclusive results. Aid either worked, or it didn't, according to this research. The paper then highlights a major shift in the literature that coincided with the release of the World Bank's Assessing Aid: What Works, What Doesn't and Why . Practically, all research published since that report agrees with its general finding that aid works to the extent that in its absence, growth would be lower. One controversy may therefore have been settled. Yet, as shown in this paper, the report has set‐off an intense debate over the context in which aid works. That debate centres on whether the effectiveness of these inflows depends on the policy regime of recipient countries. Some possible avenues through which the heat might be taken out of this debate are considered. Copyright © 2006 John Wiley & Sons, Ltd.

Abstract A considerable literature exists on the measurement of income inequality in China and its increasing trend. Much less is known about the driving forces of this trend and their quantitative contributions. Conventional decompositions, by factor components or by population subgroups, provide only limited information on the determinants of income inequality. This paper represents an early attempt to apply the regression‐based decomposition framework to the study of inequality accounting in rural China, using household‐level data. It is found that geography has been the dominant factor but is becoming less important in explaining total inequality. Capital input emerges as a most significant determinant of income inequality. Farming structure is more important than labor and other inputs in contributing to income inequality across households.

In this paper we examine the relative importance of rural versus urban areas in terms of monetary poverty and seven other related living standards indicators. We present the levels of urban-rural differences for several African countries for which we have data and find that living standards in rural areas lag far behind those in urban areas. Then we examine the relative and absolute rates of change for urban and rural areas and find no overall evidence of declining differences in the gaps between urban and rural living standards. Finally, we conduct urban-rural decompositions of inequality, examining the within versus between (urban and rural) group inequality for asset inequality, education inequality, and health (height) inequality.

China's recent accession to the WTO is expected to accelerate its integration into the world economy, which aggravates concerns over the impact of globalization on the already rising inter‐region income inequality in China. This paper discusses China's globalization process and estimates an income generating function, incorporating trade and FDI variables. It then applies the newly developed Shapley value decomposition technique to quantify the contributions of globalization, along with other variables, to regional inequality. It is found that: (a) globalization constitutes a positive and substantial share of regional inequality and the share rises over time; (b) domestic capital, however, emerges as the largest contributor to regional inequality; (c) economic reform characterized by privatization exerts an increasingly significant impact on regional inequality; and (d) the relative contributions of education, location, urbanization and dependency ratio to regional inequality have been declining.