2014.11 Kelbesa Megersa and Danny Cassimon | Public debt, economic growth and public sector management in developing countries: is there a link?
The paper investigates whether differences in public sector management quality affect the link between public debt and economic growth in developing countries. For this purpose, we primarily use World Bank’s institutional indices of public sector management (PSM). Using PSM thresholds, we split our panel into country clusters and make comparisons. Our linear baseline regressions reveal a significant negative relationship between public debt and growth. The various robustness exercises that we perform also confirm these results. When we dissect our dataset into ‘weak’ and ‘strong’ county clusters using public sector management scores, however, we find different results. While public debt still displayed a negative relationship with growth in countries with ‘weak’ public sector management quality, it generally displayed a positive relationship in the latter group. The tests for non-linearity shows evidence of an ‘inverse-U’ shape relationship between public debt and economic growth. However, we fail to see a similar significant relationship on country clusters that account for PSM quality. Yet, countries with well managed public sectors demonstrate a higher public debt sustainability threshold.
Keywords: public debt, economic growth, public sector management, developing countries
JEL Classification: E62, F34, H63, H83, O11
2014.10 Fekadu Nigussie Deresse and German Calfat | Impact of Integrated Programs for Monthly Households Consumption Expenditure: Empirical Evidence from Northern Ethiopia
The “minimalist” approach that once dominated microfinance outreach in the past is now a fading memory. A growing number of studies are suggesting a more “integrative” approach to support the marginalized and ultra-poor households. This study highlights the impact of the integrated programs-Village Saving and Loan Association (VSLA) and Productive Safety Net Programs (PSNP)-in Sekota district, Northern Ethiopia on consumption expenditure of households. Endogenous Switching Regression model is fitted to minimize threats of self-selection bias, unobserved characteristics and heterogeneity effect. The result reveals that self-selected participant in the integrated program has a significant and positive impact on monthly consumption expenditure compared with the random participants and non-participants.
Keywords: Endogenous switching regression, Productive Safety Net Programme, Self-selection bias, Village Saving and Loan Association, Ethiopia.
2014.09 German Calfat, Pedro Moncarz, Sergio Barone and Ricardo Descalzi | Poverty impacts of changes in the price of agricultural commodities: recent evidence for Argentina (an ex-ante analysis)
Argentina, like other land abundant country, benefited greatly from the increase in the prices of agricultural commodities. However, and in despite of the benefits at the macro level, with a large share of the population with low and medium-low incomes, the increase in agricultural commodity prices has the potential to hurt an important part of the population through a raise in the prices of the consumption basket of households, especially those that constitute the food-basket. The ex-ante evidence shows that this is expected to be the case. A less obvious channel, through changes in factor incomes would be more beneficial to the middle income households. Overall, losses range between 5.5 and 10% of initial household expenditure, with poorer households being the most negatively affected.
JEL Codes: F10, F13, F14, F16, I30.
Keywords: trade, commodity prices, poverty, Argentina.
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2014.08 Dennis Essers, Hans Blommestein, Danny Cassimon, Perla Ibarlucea Flores | Local currency bond market development in Sub-Saharan Africa: A stock-taking exercise and analysis of key drivers
This paper studies the current state and drivers of the development of government local currency bond markets (LCBMs) in Sub-Saharan Africa, a region whose progress in developing such markets has only recently received attention in the literature. We argue that well-developed LCBMs could reduce countries’ exposure to external shocks; help wash away or reduce ‘original sin’; facilitate the mobilisation of domestic savings; and may have important financial, macroeconomic and institutional spill-over effects. With detailed information collected from various sources the paper first shows that quite a number of African countries have made significant strides in this area. Increasingly, governments in the region issue fixed-rate local currency bonds with tenors of ten years and more on a regular basis. This does not imply all is well. We find that LCBMs in Africa often have low liquidity, feature very few corporate securities and generally have relatively narrow investor bases dominated by commercial banks. The second part of the study presents new results on the drivers of LCBMs based on an econometric analysis of new panel data collected by the OECD. Our results indicate that LCBM capitalisation in selected African countries is negatively correlated with governments’ fiscal balance and relatively high inflation, and positively related to common law legal origins, better institutional quality and strong democratic political systems.
Keywords: public debt; local currency bonds; Sub-Saharan Africa
JEL codes: H63; O16; O55
Disclaimer: The views expressed in this paper are personal and do not represent the views of the organisations the authors are affiliated with. Any remaining errors are those of the authors only.
2014.07 Stef Vandeginste | La Commission électorale nationale indépendante (CENI) du Burundi et la loi: les candidats poursuivis en justice sont-ils éligibles?
Conformément au Code électoral en vigueur au moment de la déclaration de candidature aux élections de 2010, le dossier des candidats aux élections communales, législatives, sénatoriales et présidentielles devait contenir une attestation de bonne conduite, vie et moeurs. Des poursuites judiciaires en cours contre les candidats constituaient un obstacle pour obtenir une telle attestation, ce qui avait des conséquences majeures sur la recevabilité de leur candidature. Suite à l’entrée en vigueur du nouveau Code électoral du 3 juin 2014, l’attestation de bonne conduite, vie et moeurs ne sera plus requise des candidats aux élections présidentielles, législatives
et sénatoriales en 2015. L’extrait du casier judiciaire ne concerne que les condamnations et ne peut pas être refusé aux candidats poursuivis en justice. Les personnes placées en détention préventive sont frappées d’incapacité électorale temporaire, ce qui les rend inéligibles. La CENI devrait clarifier et justifier – sinon corriger - la déclaration de son porte-parole par rapport à la recevabilité des candidatures des opposants politiques poursuivis en justice.
In accordance with the Electoral Code applicable at the time of the 2010 elections, candidates at the local, legislative, senate and presidential elections were requested to submit a certificate of good conduct and behavior. Ongoing criminal prosecution constituted an obstacle for candidates wishing to obtain such a certificate, which in turn had serious implications on their eligibility. With the entry into force of the new Electoral Code, the certificate of good conduct and behavior is no longer requested from candidates at the 2015 presidential, legislative and senate elections. An extract from the judicial record only relates to past condemnations and cannot be refused to candidates against whom there are ongoing prosecutions. Persons placed in pre-trial detention are temporarily unable to participate in the elections as voters and are therefore not eligible. It is recommended that the Electoral Commission clarify and justify – or, otherwise, rectify – the declaration of its spokesperson concerning the capacity of political opponents currently prosecuted to stand for the forthcoming elections.
2014.06 Danny Cassimon, Peter-Jan Engelen, Luc Van Liedekerke | When do firms invest in corporate social responsibility? A real option framework
In this paper, the process for firms to decide whether or not to invest in corporate social responsibility is treated from a real option perspective. We extend the Husted (2005) framework with an important extra parameter that allows us to understand the timing of CSR investment and explain why some companies drag their feet over CSR investments. Our model explicitly allows for the impact of the opportunity cost of delaying the CSR investment decision, providing firms with tools to determine the optimal moment of exercising the CSR investment option. We illustrate our timing model through a case study and analyze governmental support strategies for CSR from a real options perspective.
Keywords: Real options, CSR, stakeholder management, reputational risk,
JEL classification: D81,G13, G31, M14, K42
2014.05 Patricia Bamanyaki | Citizen-Led Gender-Responsive Budgeting In Health A theory-based approach to evaluating effectiveness
It is widely acknowledged that gender inequality impedes the attainment of development objectives. Specific to the health sector, inequality is evidenced through excess mortality of females and differences in life expectancy that are contrary to biological norms (Stotsky, 2006). Citizen-led gender-responsive budget initiatives have been undertaken in various sectors to promote gender equality in public resource allocation and utilization and to improve transparency and accountability in public service delivery. Thus far, existing literature on the effectiveness and impact of different kinds of gender-responsive budget initiatives is mostly policy-oriented or practitioner-oriented, and is largely descriptive; while empirical literature has focused on evaluating specific interventions rather than sectors.
This paper focuses on the health sector in Uganda and explains an approach to empirically evaluate the effectiveness of citizen-led gender-responsive budget initiatives at local government level, taking due consideration of the question of causality. First, the paper adopts the theory-based evaluation approach to describe the causal step process and underlying assumptions that link citizen-led gender-responsive budget initiatives to the outcome of gender equality in health outcomes. Next, the paper proposes the use of theory-testing process-tracing methods to investigate whether the causal theory and mechanism leading to the outcome were present in the case and functioned as predicted. The paper further proposes evaluation of the counterfactual using congruence methods to enhance the internal validity of the mechanism, by ascertaining that no alternative explanations are more congruent in leading to the outcome than the theorised mechanism.
Besides providing empirical evidence of the effectiveness and impact of citizen-led gender-responsive budget initiatives, the approach proposed in this paper enables the identification of specific stages along the causal chain that impede the achievement of the intended goal of gender equality in health outcomes.
Keywords: Citizen-led, gender-responsive budgeting, theory-based evaluation, theory-testing process-tracing
2014.04 Stef Vandeginste | La limitation constitutionnelle du nombre de mandats présidentiels: une coquille vide? Une analyse du cas du Burundi.
Dans le débat concernant l’éventuelle candidature à un mandat présidentiel supplémentaire des présidents en exercice au Burundi, en République démocratique du Congo et au Rwanda, on observe une tendance de la part d’acteurs politiques et diplomatiques à appeler au respect de la Constitution. Appliquée au cas du Burundi, l’analyse juridique présentée dans ce papier montre que d’importants défis peuvent se poser en ce qui concerne la mise en application de la norme constitutionnelle consacrant le principe de la limitation du nombre de mandats que peut exercer un président de la République. Cette norme n’aura, en toute probabilité, aucun effet au moment de l’évaluation de la recevabilité de l’éventuelle candidature de Pierre Nkurunziza aux élections présidentielles de 2015 par la Commission électorale nationale indépendance (CENI). La seule procédure qui, avant les élections, permettrait de jeter de la lumière sur l’éligibilité de Pierre Nkurunziza au scrutin présidentiel serait celle d’une demande d’interprétation de la Constitution adressée à la Cour constitutionnelle par Pierre Nkurunziza lui-même ou par d’autres requérants issus de son parti politique, le CNDD-FDD (Conseil national pour la défense de la démocratie – Forces de défense de la démocratie). Dans ces circonstances, un renvoi à la Constitution, aussi louable soit-il, ne remplace pas le choix essentiellement politique à faire.
In the ongoing debate around presidential term limits and how they apply to the cases of Burundi, the Democratic Republic of the Congo and Rwanda, national and international political and diplomatic actors have increasingly referred to the need to respect the Constitution. Applied to the case of Burundi, this legal analyses shows that important challenges arise when it comes to implementing the constitutional norm regarding presidential term limits. In all likelihood, this norm will have no effect whatsoever no the decision to be taken by the Independent National Electoral Commission (CENI) regarding the admissibility of a candidacy of Pierre Nkurunziza for the 2015 presidential elections. The only procedure through which, before the elections, some light can be shed on Pierre Nkurunziza’s eligibility for a third presidential mandate is through an interpretation of the Constitution by the Constitutional Court. This can only be done at the request of Pierre Nkurunziza himself or through a petition which is supported by at least some of the members of parliament who belong to his political party CNDD-FDD (Conseil national pour la defense de la démocratie – Forces de defense de la démocratie). In these circumstances, merely referring to the Constitution, however laudable in principle, clearly does not replace the essentially political choice to be made.
2014.03 Liesbeth Inberg and Nathalie Holvoet | Belgian Development Cooperation through a Gender Lens (2002-2012)
Since the nineties more attention has been paid to the gender dimension in development. Through the 1995 Being Declaration and Platform for Action and various policy documents of the OECD/DAC the shift from a Women in Development (WID) approach to a Gender and Development (GAD) approach has been internationally spread. Within the GAD approach the need to integrate a gender dimension in all different phases (diagnosis, planning, implementation, budgeting, monitoring and evaluation) (= vertical gender mainstreaming) of interventions in different sectors (=horizontal mainstreaming) is emphasised. In line with the 1995 Being declaration and Platform for Action and similar to the majority of bilateral and multilateral donors, Belgium has adopted a gender mainstreaming strategy. In order to take stock of and analyse the effective implementation of the gender mainstreaming strategy and its effects on the ground, the Belgian´s Special Evaluation Office of International Cooperation has recently (July 2013) commissioned an evaluation. The focus of the evaluation is both on headquarters and a selection of five case study countries. This working paper presents a selection of the first findings of the head quarters evaluative exercise and identifies several strengths, weaknesses,
opportunities and challenges.
2014.02 Katrien Van Aelst | Household decision-making and gender relations in Tanzania.
This working paper briefly compares statistical, economic and anthropological views of the household, and describes the main determinants of intrahousehold bargaining and decision-making powers. Next, it discusses the shortcomings of the economic household models: their lack of attention to social norms and the non-bargaining area (i.e. the possibility of latent decision-making or non-decision-making). Additional insights in the Tanzanian household context are gained, through empirical evidence from the academic literature and the Tanzanian Demographic and Health Surveys; as well as from the country’s legislation.
2014.01 Lara Cockx and Nathalie Francken | Extending the concept of the resource curse: Natural resources and public spending on health
This paper extends the concept of the resource curse by studying whether and through which transmission channels natural resource wealth affects social spending. Even though the availability of vast natural capital reserves has commonly been linked to the neglect of human development, most of the literature has continued to focus on economic performance. This paper is the first to empirically explore the link between natural resource wealth and public health expenditures in light of the hypothesis that the availability of resource wealth as a source of unearned state income enhances state autonomy, which leads to policies that fail to prioritize
human development. Using a large panel dataset of world countries covering the period from 1991 to 2010, we find a robust, significant inverse relationship between natural resource dependence, and even abundance, and public health spending over time. The effect remains significant after controlling for state autonomy, volatility, and other factors. These findings have implications for national authorities as well as the extractive industry. Governments should be made accountable for natural resource wealth and correct taxation could provide additional resources, earmarked for health. The extractive industry could increase their investments in sustainable Social Corporate Responsibility operations, specifically in the health sector.