Contenu du sommaire : Development Economics 20 Years One

Sixty years after its entry in academic circles, development economics has now been mainstreamed in economics. It has proven itself in placing articles in top economic journals, in mobilizing a vast membership of students and researchers, in receiving important financial contributions from development actors, and in influencing decision-making in economic development. We identify five lessons for its past successes to be reproduced in the future: maintain a strong engagement with policy advice, define research priorities to secure pertinence for development, push for discoveries on themes with greater importance, extend the identification of causal relations to the level of policy recommendations, and consolidate the capacity of the state to fulfill its functions in complement with those of the market and civil society. JEL Classification: O10, N01, O47.

This article deals with the many long time series databases that have been developed over the last two decades. These series cover a span of more than 100 years and allow us to compare the situation of current developed countries at a time when they were developing countries with that of present-day developing countries. Longitudinal econometric analyses are now feasible instead of cross-sectional analyses of recent data concerning developing and already developed countries. The field of development economics is thus significantly enlarged. This opens up new perspectives and allows us to test models and to understand the role of exogenous factors such as technology or institutions, which contribute to assessing the validity of models in two different periods. This article offers examples that show how useful such long time series, such as education data, can be to explaining variations in, for example, fertility rates.

In many developing economies, notably in Africa, both governments and private agents live in a high risk environment but have only poor risk coping mechanisms at their disposal. Nevertheless development is typically analyzed as if it occurs in a world without risk. This may be because the effect of risk and shocks on growth is poorly understood. The ex post effects are often implicitly assumed to cancel out in expectation while in the analysis of the ex ante effects it is often assumed that agents have access to perfect assets. This paper argues that the peripheral position of risk in the development literature is a dangerous mistake: risk and shocks should be a central concern for development economists. JEL Classification: D91, C51, O12, O11.

Although whether governments should play a facilitating role in economic development has long been a topic for economic discourse and research, as an important instrument industrial policy is often and actively used by governments to promote economic development, both in history and at the moment. Despite much controversy surrounding whether and how governments implement industrial policy, in this article failures and successes of implementing such policy are analyzed through a new structural economics perspective. Specifically, the article argues that (1) sector-targeted industrial policy is essential to achieve dynamic structural change and rapid, sustained growth in an economy; (2) most industrial policies fail because they target industries that are not compatible with the country's comparative advantages; (3) successful industrial policy should target industries that are the country's latent comparative advantages; (4) historical experiences show that in the catching-up stage, successful countries' industrial policies, in general, have targeted the industries in countries with a similar endowment structure and somewhat higher per capita income; and (5) the Growth Identification and Facilitation Framework, based on new structural economics, is a new, effective way to target latent comparative-advantage industries and support their growth. JEL Classification: L5, O1, P5.

In the development economics literature it is common to read that the poor cannot invest to escape their poverty because they are credit constrained, and that they are credit constrained because they lack collateral. In this paper the author deconstructs these often heard arguments and finds them fundamentally flawed. He argues that lack of collateral is not the reason why the poor often are credit constrained—lack of regular income is.

Over the last two decades, methodological developments on the parametric measurement of firms' productive performance have referred to two analytical approaches: the average production function and the production frontier. Each of these methods has its own benefits and limitations, either for econometric estimation or the interpretation of regression results. The methodological section of the paper is extended by an empirical application to the case of 324 Moroccan firms in the garment sector, which we follow over a three-year period (2000-2002). JEL Classification: D02, D03, D04, D22, D24.

Historically population health improvements and economic development are closely interrelated. The theme “Health and Development” poses indeed a large number of both theoretical and empirical questions, and social policy issues in this area are obvious. The issue of bidirectional causality between health and development has contributed to one of the most lively debates in the last two decades in development economics, with an alternation of mainstreams rather than a real dialogue. We offer four pathways to overcome these limitations, some of which are not new but have not been integrated together: (i) reconcile the micro-economic and macroeconomic analyses, (ii) explore the channels of influence to better resolve the ambiguity of the relationship, (iii) establish a dialogue with the epidemiology and biomedical sciences – the definition of a good or bad health is not neutral in this debate, neither are the health indicators used, (iv) develop a supply side analysis, while so far the demand side has received more attention. JEL Classification : I15.

The purpose of this paper is to present a framework explaining why different types of transactions occur in different settings- particularly in developing countries. The approach we propose is based on a new concept which we call “exchange-configuration”. The latter consists of three building blocks or elements: the item exchanged; the actors engaged in decisions related to the item being exchanged; and, the environment – physical, social, technological, and legal – within which the actors operate. The characteristics of these elements, in different combinations, shape distinct types of exchange relations and transactions. Each particular combination of elements together with the formation process of the exchange and the resulting transaction is considered an exchange configuration. This new concept can clarify the dynamics of exchange by examining the forces that affect the elements of exchange. Two examples, one within the setting of a developing country and the other relating to the global financial crisis that started in 2007, illustrate the use of exchange configurations. JEL Classification: O10, L14, O11, O17.

This paper discusses the state of knowledge about the trade-related environmental consequences of a country's development strategy along three channels: (i) direct trade-environment linkages (over-exploitation of natural resources and trade-related transport costs);(ii) ‘virtual trade' in emissions resulting from production activities; (iii) the product mix attributes of a ‘green-growth' strategy (environmentally preferable products and goods for environmental management). Main conclusions are the following. Trade exacerbates over-exploitation of natural resources in weak institutional environments, but there is little evidence that differences in environmental policies across countries has led to significant ‘pollution havens'. Trade policies to ‘level the playing field' would be ineffective and result in destructive conflicts in the WTO. Lack of progress at the Doha round suggests the need to modify the current system of global policy making.
JEL Classification: F18, Q56.

Many poor countries are now discovering valuable non-renewable natural resources. Unlike most other sources of tax revenue, the government revenues from the depletion of these resources are both unsustainable and volatile. Each of these features implies that the savings rate appropriate for resource revenues should differ from that on other revenues. Further, a discovery is ‘news', requiring a transition from a situation which has suddenly become sub-optimal. Such transitions must be expected to generate costs which will themselves affect the optimal savings rate. While the features themselves have long been well-understood, the implications for optimal savings behaviour are surprisingly underdeveloped. A fortiori, the implications for the rules which might be the practical embodiment of these analytic underpinnings are also underdeveloped. Our analysis proceeds in four stages. In Section 1 we discuss how savings should optimally respond to the known depletion path of a finite natural resource. In Section 2 we discuss revenue volatility in the context of costly adjustments in spending. In Section 3 we discuss the implications of costs of transition. Finally, in Section 4 we discuss the implications for fiscal rules and institutions. We argue that where revenues from depleting resources are significant, fiscal optimization requires that the intra-temporal rules conventionally incorporated into annual budgeting be supplemented by inter-temporal rules. Such rules protect the efficient fiscal allocation which in conventional circumstances integrated budgets are designed to achieve.

Cross‑country econometric studies of aid effectiveness are numerous and often criticized. Relying on results of those which seem the most relevant and robust, this paper argues that aid is leading to poverty reduction, in particular in vulnerable countries. It examines the main methodological challenges faced by these studies, related to the definition aid, to its endogeneity, to the heterogeneity of the country features conditioning its effectiveness, to its variable returns, to the time dynamics of this effectiveness. Three main channels by which aid may influence the poverty levels are considered: the economic growth, the public social expenditures, and the macroeconomic stabilizing impact, interrelated with the two other channels. The stabilizing impact of aid has a major influence on poverty reduction, which cannot be evidenced without cross country analyses. JEL Classification: F35, O11, O40, C21, I3.

This paper reviews some findings by Azam and Thelen (2008, 2010, 2012) that illustrate how foreign aid is used by rich countries to purchase the services of recipient governments with a view to protect or promote their economic and political interests. In particular, these findings show that foreign aid is effective at controlling the number of transnational terrorist attacks coming from the recipient countries, while it is not so regarding the number of attacks in the host countries. In contrast, they show that military intervention, as captured by the presence of US soldiers on the ground is counter‑productive, as it increases the number of terrorist attacks both by source country and by host country. JEL Classification : D74, F35, H11, I21, O19.

A recurring puzzle to many academics and some policymakers is why impact evaluations, which have become something of a cottage industry in the development field, have so little impact on actual policy-making. In this paper, I study the impact of impact evaluations. I show, in a simple Bayesian framework embedded within a standard contest success function-based model of competition amongst anti-evaluation policymakers, Bayesian policymakers, and frequentist evaluators, that the likelihood of a program being cancelled is a decreasing function both of the impact estimated by the evaluation and of the prior on whose basis the program was approved to begin with. Moreover, the probability of cancellation is a decreasing function of the effectiveness of the influence exerted by frequentist evaluators. Since the latter's effectiveness in terms of lobbying in favor of their findings in the real world is likely to be close to zero, the likelihood of cancelling a program that was approved in the first place, despite its suffering a highly negative evaluation, is extremely low. The model thus provides one possible explanation for why impact evaluations have so little impact in the realm of decision-making, and why they have contributed so little to evidence-based policy-making.
JEL Classification: O12, D04, D72, C11, C21, C72