The paper focuses on Nigeria, which has over the years invested substantially to improve the educational attainment of the labor force and to raise productivity but yet still faces declining real output and slow economic growth. The study observes that this puzzle is attributable to labor market distortions, redundancy of the workforce, benefit captured syndrome, industrial dispute and job discontinuities as well as leakages in the Nigerian society such as brain drain, among others. The paper further suggests the improvement of the education system, appropriate pricing of teachers labor and prevention of industrial disputes in order to upgrade and internalize the contributions of educational capital to economic growth in Nigeria.
Over the last two decades, many countries around the world have been enthusiastically embarking on the path of decentralization. However, because of a preconceived idea that decentralization will automatically result in efficient allocation of public resources and due to the absence of an analytical framework and data, very little empirical work has been done in this area. Nor has much attention been given to an analysis of the factors enabling or constraining its outcomes. In this paper, we develop a theoretical model and use it to test empirically the impact of fiscal decentralization on rural infant mortality rates in India between 1990 and 1997. The random effect regression results show that fiscal decentralization plays a statistically significant role in reducing rural infant mortality rate and the results are robust. The results also show that the effectiveness of fiscal decentralization can be affected by other complementary factors such as the level of political decentralization.
This study aims at investigating the nature of the causal relationship between immigration and two macroeconomic indicators, GDP per capita and unemployment, in Sweden using autoregressive distributed lag (ARDL) bounds testing procedure and Granger-causality within vector error correction model (VECM) based on annual data spanning the period between 1980 and 2004. Results of the ARDL bounds test are supportive of the theory that the variables are in a long-run equilibrium level relationship. On the other hand, results of the Granger-causality tests support the existence of a long-run, bidirectional causality between immigration and GDP per capita. However, results do not support the hypothesis that immigration causes unemployment. On the contrary, evidence suggests that unemployment causes immigration.
Low teacher motivation and its detrimental effect on student achievement are central problems of many education systems in Africa. Using standardized data for student achievement in Burkina Faso, Cameroon, Côte d'Ivoire, Madagascar and Senegal, this paper analyzes the empirical links between various policy measures, teacher job satisfaction and primary education outcomes. It appears that there is only very limited evidence for the effectiveness of intensively debated and costly measures such as reducing class size, increasing academic qualification requirements, and increasing teachers salaries. Other, simpler measures such as an increased provision of textbooks are both more effective and less costly.
It also appears that teacher job satisfaction and education quality are not necessarily complementary objectives. Especially those measures ensuring control and incentive related working conditions for teachers, significantly increase student achievement while reducing teacher job satisfaction. In addition, teachers' academic qualification beyond the "baccalauréat", while beneficial for students' learning, tends to lead to a mismatch between teachers' expectations and professional realities, and thereby reduces teachers' job satisfaction.
Relatively little is known about the transmission mechanism of monetary policy in small developing countries. In such countries financial markets tend to be relatively unsophisticated hence monetary policy is likely to affect the real sector by altering the quantity and availability of credit rather than the price of credit. Using a structural VAR analysis it is found that the credit channel is dominant in Trinidad and Tobago. The findings can assist policy makers in other developing countries in the design and implementation of monetary policy.
Sustaining competitiveness over the long run can suggest that decision makers must acquire knowledge to support the selection of technology systems and an understanding of an implemented technology. Social learning is an important source of knowledge acquisition as the decision maker exchanges and discusses information with other decision makers via social communication. The empirical questions are (i) how does the decision maker choose learning partners, and (ii) how does the social learning behavior influence the firm’s production decision and technology over time?
This study constructs an econometric model to reflect the connection between the decision maker’s social learning and the production behavior. The latent class stochastic frontier model (LCSFM) is used to estimate a model of heterogeneous learning using the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) India data. Since caste rank plays an important role in people’s social life in rural areas in India, the empirical results reveals the connection between social learning and production behavior by showing the importance of caste rank in production decisions.
Fuelwood remains the primary energy to a majority of the population in Africa. However, little is known about the factors influencing its use particularly in urban centers where alternative energy sources are available. Using cross-sectional survey data from 200 households in the Jimma town of Ethiopia, this study investigates why some urban households use more fuelwood than others. Empirical results of the Tobit model reveal that the association between per capita income and per capita fuelwood consumption is non-linear and that per capita fuelwood consumption is inversely associated with family size and education of the household head. Additionally, refrigerator ownership has a significant positive effect on per capita charcoal consumption. Therefore, energy policy and development projects aimed at reducing fuelwood dependency in urban areas of Ethiopia should work not only to increase the supply of modern energy but also reduce poverty to the poor households.
This paper uses a panel approach and annual observations of over 150 countries for the period 1975 – 2000 to examine the impact of foreign aid and trade on income. The paper addresses the simultaneity of international trade, foreign aid and economic performance by using a full information system or three-stage least squares approach. The findings of this paper strongly suggest that foreign aid and trade are strong determinants of GDP per worker, albeit in opposite directions. The regression results are robust to the inclusion of a multitude of exogenous variables that are considered to be determinants of GDP per worker. Foreign aid is a commonly owned resource, powerful individuals and state heads establish property right in the system and, as a result, rent extractors expend resources resisting deregulation that attempt to remove that privilege. On the other hand, the empirical evidence reaffirms that international trade appears complementary to economic performance.
This paper employs cross-country growth regressions for a sample of developing countries to examine the determinants of FDI. In addition to economic factors affecting foreign direct investment, the analysis also tests for the role of institutional quality (enforcement of property rights, corruption, etc.) and policy orientation factors (openness). The paper evaluates whether foreign investment responds to changes in levels of economic freedom. In addition it tests whether the insignificant coefficient found in previous studies is the result of the level of aggregation in the economic freedom data. Finally, it disaggregates the data on economic freedom and re-estimates the relationship between FDI and components of economic freedom. Foreign direct investment is found to vary positively with increases in certain components of economic freedom.
This paper suggests that unemployment is favorable to monopoly rights. Monopoly rights tied to work practices and use of more productive technologies blocking the use of superior technologies result in a low Total Factor Productivity (TFP) and thus low per worker income. Given a high unemployment rate as a signal, households and monopolies recognize that it is difficult to find new jobs. This gives the monopolies extra incentive to protect their vested interests by lobbying government officials to set high barriers to potential entrants with superior technologies. Consequently, inferior technologies have to be continually adopted. In an analysis of 49 countries, three regularities emerge. When other key variables are controlled, the initial unemployment rate is negatively correlated with the subsequent TFP levels, relative real per worker income levels, and real per capita income growth rates.
This paper examines the efficiency in the stock markets of India, Sri Lanka, Pakistan and Bangladesh. The Augmented Dickey Fuller (ADF-1979, 1981), the Phillips-Perron (PP-1988), the Dicky-Fuller Generalized Least Square (DF-GLS-1996) and Elliot-Rothenberg-Stock (ERS – 1996) tests are used to examine weak form stock market efficiency. Weak form efficiency is supported by the classical unit root tests. However, it is not strongly supported for Bangladesh under the DF-GLS and ERS tests. Cointegration and Granger causality tests are used to examine semi-strong form efficiency. Semi-strong form efficiency is not supported as these tests indicate a high degree of interdependence among the South Asian stock markets. The above results have implications for domestic as well as foreign investors in South Asian stock markets.
Following Friedman and Meiselman (1963), the role of money supply in determining income and output has been extensively studied both in the context of developed and developing economies. This paper tests the money-output relationship for Mexico. Drawing on the latest development in time series and cointegration analysis, we estimate a multivariate error-correction model (VECM). Results seem to indicate a unidirectional causation from money to output, implying monetary policy effectiveness. A variety of diagnostic tests are employed, which indicate these results to be quite robust. The results seem to be consistent with the theoretical prediction because Mexico has gradually moved away from a regime of fixed to a flexible exchange rate over this period.
This paper attempts to briefly review the financial impact of the recent economic reforms in Botswana. In particular, it investigates the influence of these reforms on savings, and tests the financial repression hypothesis. The paper examines such effects through empirical examination using the Johansen VECM approach and annual data running from 1971 to 2003. While private savings have shown a remarkably increasing trend in recent years, our preliminary empirical results show that savings are positively related to real interest rates in Botswana. Additionally, while using a carefully constructed composite index and a considerable list of controlling variables, we observe a positive and significant link between private savings and the financial liberalization index. Finally, unlike other studies where cross-country time series data is utilized, of which the predicted results may fail to capture country-specific developments and institutional differences, this study aims to provide a reasonable country-level investigation.
This paper applies the sequential Malmquist index to calculate multi-lateral, multi-factor productivity (MFP) indices for agriculture in 16 regions of Bangladesh from 1964 to 1992 and examines convergence amongst regions. Productivity grew at an average rate of 0.9% per annum, led by regions with high level of Green Revolution technology diffusion. The growth mainly occurred due to technological progress estimated at 1.9% per year. Overall technical efficiency declined steadily at 1.0% per year due to falling efficiency in most of the regions in later years. Both cross-section and time-series tests confirm that divergence among regions disappeared and agricultural productivity reached convergence in the long-run. Policy options to reverse declining efficiency are considered. These include: strengthening of extension services, improvements in rural infrastructure, widening of R&D activities to non-cereals, and promotion of new technologies.