Search

This chapter is about demand for the Digital Economy Kit. It opens with an exegesis of why policymakers need economy-wide digital transformation, why (after some encouragement) they wanted it, and why they (and the Oxford team) thought the Kit responded to that need. En route it discusses the drivers of such a transformation: bringing down the costs of providing goods and services, of exchanging goods and services, and of networking and organization. It also presents the five pathways developed by the Pathways Commission by which digital transformation can be realized in emerging and developing countries: raising value from agriculture; new GVCs in manufacturing; creating new global trade in services; linking the informal sector to the formal economy; and creating diverse, connected domestic economies. Finally, it goes on to discuss how the Pathways Commission and its Oxford secretariat took these frameworks and turned them into a toolkit.

This chapter discusses the Digital Economy Kit’s multi-stakeholder dialogue phase. It sets out why this was deemed to be so important: along with the government champion and steering committee, participants would form a loose coalition for sustained change, vital once the Oxford team had left. The chapter compares the theoretical design (the multi-stakeholder groups would hold the difficult conversations, rehearsing and resolving the tensions or trade-offs) with the expediencies of a relatively short process in practice. The chapter then discusses how this played out, with successes, shortcomings, and lessons learned for future efforts in digital transformation in other countries and for government reform initiatives more broadly.

This chapter critically evaluates the first stage of the Digital Economy Kit, the assessment phase. It opens with an assessment of diagnostics themselves: their past use in development has been chequered. It makes the case that a sensible diagnostic should not just identify some abstract need but instead be clear about what investments and other actions should be taken to unlock the next stage of digital potential. It explains the significance of the Kit’s design: why infrastructure, people, finance, and policy and regulation are the key pillars in which a minimum level of implementation is a prerequisite for economy-wide digital transformation. It goes on to assess three related challenges this phase encountered in actuality in the seven countries: poor quality quantitative data; absence of such data in the first place; and where it does exist, their contested nature.

This chapter provides background on the Digital Economy Kit, sets out the impetus for the project, summarizes the theoretical framework and methodology, and outlines the structure for the book as a whole. The introduction demonstrates how digital transformation is affecting emerging economies, changing how goods and services are produced, consumed, and exchanged. It describes government efforts to encourage, innovate, and regulate these activities, and how new technologies might affect the broader nature of ‘development’. This chapter briefly introduces the design and process of the Digital Economy Kit, the partner countries in which it was trialled, and the criteria for their inclusion. It then describes the book’s intended audience and goals, what lessons can be drawn from the pilots, and caveats to keep in mind. Next, it outlines the political economy theoretical framework through which these lessons are interpreted, and reviews the structure of the subsequent chapters.

This chapter develops a political economy framework that understands digital transformation as an instance of reform. It identifies three conceptual approaches that help policymakers understand the conditions under which digital reform is likely to succeed or fail: these are bureaucratic politics, special interest groups, and the nature of the elite bargain. And it shows how these three approaches resonate with the design of the Kit and the theory of change embedded in it. Based on in-country experience, the chapter then discusses the three preconditions mentioned above, and it shows how the Oxford team together with implementing partners aimed to identify those preconditions in potential partner countries. In one or two countries we possibly misread the runes and were over-optimistic in deciding to work there.

This chapter critically assesses implementation. Although it is too early to say what worked and causal pathways are undoubtedly too unclear to claim anything with certainty, this chapter offers an attempt to link back any failures—and apparent initial successes—to the three perspectives on the political economy of reform. Some are due to not getting bureaucratic politics right, such as turf wars and inter-ministerial siloes. Others are due to a lack of special interest groups. Still others have failed—at least so far—to take off because there never was an elite bargain in place that was willing to gamble on digital transformation in the first place. Similarly apparent success can also be associated with these three perspectives. The chapter states that the Kit has in some countries fostered a loose alliance of people with a shared interest in seeing the strategy primers converted into policy implementation, which helped achieve their goals.

This chapter explains the theory and reality of the Digital Economy Kit’s final stage, the development of the strategy primer. It argues that outsider-led processes should not deliver recommendations, but rather should suggest priority actions or areas that can be properly debated and taken up into policy and strategy by the appropriate domestic process. Otherwise, this stage at best bypasses and at worst undermines domestic ownership and policy processes. This was a complex phase of the Kit which entailed boiling down an extensive enquiry into an implementable list and getting the balance right between incorporating pre-existing priorities and letting the Kit process determine them. The chapter then explains what was needed beyond a strategy primer for its actions to take root.

This book traces the experience of digital economic transformation in seven developing countries, providing insights for policymakers and practitioners in similar situations as well as lessons for outsiders trying to support government reform efforts more broadly. In one country, the prime minister pushes for the liberalization of digital finance as a central pillar of the country’s national strategy, while the central bank almost makes it a criminal offence. In another, the digital minister tries to scupper the very process to support digital transformation that the president has asked them to co-lead. This book gives a ringside seat on seven developing countries’ tumultuous early steps on the path to a reform of the economy and the government using technology. Written by a group of academics and practitioners from Oxford at the heart of the process, but foregrounding the voices of the policymakers and participants, this book documents and critically assesses efforts to assist a set of governments to kick-start digital transformation. In doing so, it offers lessons for policymakers in other countries. But beyond that, it is an exposition of the process of policymaking more generally in the 2020s, and offers a broader insight as to how outsiders can play a sensible role in other reform processes in developing and emerging countries.

This chapter concludes the book. The conclusion’s primary argument is that even when you think you have been politically smart—and the Oxford team designed the Digital Economy Kit with realpolitik at its heart—you probably have not been smart enough. Sensible people can disagree as to the initial outcomes of the Kit: an optimist would point to achievements. A pessimist would say that change was already coming and the Kit only nudged at the margins, if at all, and that any coalitions for change are not likely to last. Both can be correct, but this chapter comes down on the side that for all the challenges it met, the Kit was worthwhile for the countries, and its design and roll out offers wider lessons for outsiders seeking a sensible role in helping developing countries with change, be it in the digital area or in other aspects of their economies and societies.

This paper investigates whether aspirations matter for education, which offers a common route out of poverty. We find that mother aspirations are strongly related to the child’s grade achieved at age 18. The relation is nonlinear, suggesting there is a threshold, and depends on caste, household income and the village setting. The coefficients remain large and significant when applying control function estimation, using firstborn son as instrument. A similar strong relation is observed with learning outcomes, including local language, English and maths test results, and with attending school, but not with attending private education. These results are confirmed for outcomes at age 15. The findings provide direct evidence on the contribution of mother aspirations to children’s education outcomes and point to aspirations as a channel of intergenerational mobility. They suggest that education outcomes can be improved more rapidly by taking aspirations into account when targeting education programmes, and through interventions that shape aspirations.

Using micro-level panel data from villages in rural Ethiopia, the paper uses standard decompositions of income changes and develops a new decomposition of poverty changes to analyse the determinants of growth and poverty changes during a period of economic reform (1989-95). Consumption grew and poverty fell substantially, but the experience was mixed. I find that common and idiosyncratic shocks mattered, but that the main factors driving income changes are relative price changes, resulting in changes in the returns to land, labour, human capital and location. A regression-based decomposition of the changes in poverty shows that the poor have benefited on average more from the reforms than the non-poor households. But the experience of the poor is mixed: one group of the poor in 1989, with relatively good land, labour and location, outperformed all other households, while another group with much poorer endowments and location experienced virtually unchanged and persistent poverty.

The article analyses the different income portfolios of households using survey data front rural Ethiopia and rural Tanzania. It suggests that the different portfolios held by households cannot be explained by their behaviour towards risk as is usually suggested. It is better explained by differences in ability, location, and in access to credit. A logit analysis of households with different income portfolios, controlling for the effects of location, suggests that entry into high-return activities is determined by investment in particular skills or by access to capital.

Rural households engaged in agricultural activities face considerable risks in their income process. These income risks are especially important if they result in consumption fluctuations. This is likely if insurance and credit markets are absent. One possible strategy for household is to take up low-risk activities, even if they imply lower returns. Such response cannot be viewed independently from the other options available to households to reduce consumption fluctuations. This paper focuses on the importance of liquid asset formation for risk-taking behaviour by households. An intertemporal model of consumption under liquidity constraints is developed in which households can choose between income activities with different returns and riskiness. It shows that if liquid asset holdings are large, providing a buffer for consumption shortfalls, then households will be more willing to take up high risk activities. Evidence based on survey data from Shinyanga District, Tanzania is presented, consistent with this prediction.

A funeral is a costly occasion. This paper studies indigenous insurance institutions developed to cope with the high costs of funerals, based on evidence from rural areas in Tanzania and Ethiopia. These institutions were found to be highly prevalent in the study areas. They are based on well-defined rules and regulations, often offering premium-based insurance for funeral expenses. Increasingly, they are also offering other forms of insurance and credit to cope with hardship. The paper argues that the characteristics and inclusiveness of these institutions make them potentially well placed as models to broaden insurance provision and other developmental activities in these communities. The history of these institutions is characterized by a resistance to attempts of political capture, and helps to understand their apparent opposition to engage more broadly with NGOs and government agencies. As a result, any attempt to expand their activities will have to be done cautiously.

With the overthrow of the Derg in 1991, some 500,000 ex-soldiers needed to be demobilized and reintegrated back into their communities. Successfully integrating such a large number of ex-soldiers is clearly important to social stability. While carefully targeted assistance is necessary, conditions in the rural and urban economies at the time of demobilization are also critical to ex-soldiers and the reconstruction of their livelihoods. This paper therefore pays close attention to land tenure and to the urban labour market, and their implications for reintegrating ex-soldiers back into the community. Data from four recent household surveys are used for this purpose. On the basis of the data analysis, the paper concludes that the demobilization and reintegration programmes achieved some success. Ex-soldiers returning to their rural communities did not, by and large, face major problems in gaining access to land. State ownership of land facilitated the reintegration process. However, lack of a land market does pose problems, and tensions over land may increase. Ex-soldiers have below average holdings of livestock (a key asset for rural livelihoods) reflecting difficulties in livestock provision in the reintegration programme. Moreover, ex-soldiers who entered the urban economy encountered a tough labour market and many became unemployed. In summary, young people have few livelihood opportunities in either rural or urban Ethiopia, a situation that must be remedied if social conflict is to be avoided and poverty reduced.

A large literature focuses on the biases of individuals and consumers, as well as "nudges" and other policies that can address those biases. Although policy decisions are often more consequential than those of individual consumers, there is a dearth of studies on the biases of policy professionals: those who prepare and implement policy on behalf of elected politicians. Experiments conducted on a novel subject pool of development policy professionals (public servants of the World Bank and the Department for International Development in the United Kingdom) show that policy professionals are indeed subject to decision making traps, including sunk cost bias, the framing of losses and gains, frame-dependent risk-aversion, and, most strikingly, confirmation bias correlated with ideological priors, despite having an explicit mission to promote evidence-informed and impartial decision making. These findings should worry policy professionals and their principals in governments and large organizations, as well as citizens themselves. A further experiment, in which policy professionals engage in discussion, shows that deliberation may be able to mitigate the effects of some of these biases.

This paper examines the contractual practices of African manufacturing firms using survey data collected in Burundi, Cameroon, Ghana, Ivory Coast, Kenya, Zambia and Zimbabwe. Descriptive statistics and econometric results are presented. They show that contractual flexibility is pervasive and that relational contracting is the norm between manufacturers, their suppliers, and their clients. The existence of long-term relations between firms helps them deal with contract non-performance through negotiation. Confrontational methods such as lawyers and courts are used when negotiations fail. Whenever confrontation can be avoided, business is resumed.

We explore how to measure poverty over time, by focusing on trajectories of poverty rather than poverty at a particular point in time. We consider welfare outcomes over a period in time, consisting of a number of spells. We offer a characterization of desirable properties for measuring poverty across these spells, as well as an explicit discussion of three issues. First, should there be scope for compensation so that a poor spell can be compensated for by a non-poor spell? Second, is there scope for discounting or should all spells be equally valued? Third, does the actual sequence of poor spells matter, for example whether they are consecutive or not? We offer a number of measures that implicitly offer different answers to these questions, in a world of certainty. Finally, we also offer an extension towards a forward-looking measure of vulnerability, defined as the threat of poverty over time, that incorporates risk. An application to data from Ethiopia shows that especially the assumption of compensation results in different inference on poverty.

Standard poverty analysis makes statements about deprivation after the veil of uncertainty has been lifted. This implies that there is no meaningful role for risk as part of an assessment of potentially low states of well-being. In this paper, we introduce a concept of vulnerability, as a threat of poverty, with downside risk at its core. More specifically, we define a vulnerability measure as an assessment of the magnitude of the threat of poverty, measured ex-ante, before uncertainty is resolved. We describe the welfare-economic foundations for desirable properties of a vulnerability measure and assess to what extent some measures used in empirical work abide by them. We also present two families of measures that are fully consistent with our axiomatic approach.

Low-income and middle-income countries have increasingly relied on cash transfer programmes to expand social protection among the most poor and vulnerable people. Many of these cash transfer programmes have given cash directly to adolescents to incentivise behaviour that improve a range of health and social outcomes. The evidence for the effectiveness of these programmes has been mixed. Some studies show cash transfer to be effective in promoting desired behaviours among adolescents—such as school participation and reducing sexually transmitted infections—whereas others find no evidence for an effect. One possible reason for these mixed results is that cash transfer programmes targeting adolescents have not taken into account the many biological, cognitive, and social changes that occur during this transitional period, thus failing to incorporate a developmental perspective in the design.

We show theoretically that the presence of basis risk in index insurance makes it a complement to informal risk sharing, implying that index insurance crowds-in risk sharing and leading to a prediction that demand will be higher among groups of individuals that can share risk. We report results from rural Ethiopia from a first attempt to market weather insurance products to existing informal risk-sharing groups. The groups were offered training on risk management and the possible benefits of holding insurance. Among those trained we randomized the content of training, with some sessions focusing on the benefits of informally sharing basis risk. Our results suggest benefits from marketing index-based insurance with an emphasis on informally sharing basis risk, at least in terms of uptake. Specifically, and consistent with learning informed by the theoretical results, we found that members of groups whose leaders had received training that emphasized risk-sharing had considerably higher uptake.

We study two interventions for underemployed youth across five Ethiopian sites: a $300 grant to spur self-employment, and a job offer to an industrial firm. Despite significant impacts on occupational choice, income, and health in the first year, after five years we see nearly complete convergence across all groups and outcomes. Shortrun increases in productivity and earnings from the grant dissipate as recipients exit their micro-enterprises. Adverse effects of factory work on health found after one year also appear to be temporary. These results suggest that one-time and one-dimensional interventions may struggle to overcome barriers to wage- or self- employment.

We present results from a field experiment using price incentives to address two obstacles to women's access to formal land ownership. First, the price of formal land titles is often prohibitive, restricting access for both men and women. Second, when formal titles are issued, men are recorded as the sole owners of household land in the vast majority of cases. In theory, these problems may be in tension: requirements to grant women equal ownership may reduce the overall household demand for titling. In practice, we find no such trade-off: when residents of low-income, unplanned settlements in Dar es Salaam were offered price discounts for formal land titles, demand rose significantly. Price elasticity of demand was unchanged when price discounts were conditional on registering a woman as (co-)owner of household land. Furthermore, conditional price discounts achieved near gender parity in land ownership.

This chapter discusses the role agriculture has played in growth and economic transformation in Ethiopia since the 1990s. Ethiopia’s dominant development strategy narrative since the 1990s has been Agricultural Development-Industrialization (ADLI), which takes its inspiration from dual-economy models of linkages between sectors. We use the theoretical perspectives of these models and of ADLI to discuss progress in growth and poverty in this period. We find that ADLI offered a plausible and seemingly successful strategy for Ethiopia at an earlier stage of its growth and transformation, but it has serious limitations. In more recent years there appears to have been more emphasis on urban and industrial growth and this may also have the potential to boost value added and labour productivity in agriculture—reversing the sectoral dynamics of the ADLI approach. Looking forward, we posit that to make further progress in agriculture, there is a need to acknowledge and facilitate the transmission of urban and international demand, thereby encouraging higher-value crops and higher value addition.

This chapter looks at trends in poverty and inequality at national and regional levels in Ethiopia during the period 1995/6–2015/16. The data indicate that poverty in Ethiopia has shown a substantial decline over this period, with the share of population living under the national absolute poverty line reduced from almost one in two Ethiopians in 1995/6 to about one in four in 2015/16. Results from growth–inequality poverty decomposition indicate that the declines in the absolute poverty rates are accounted for by changes in the rate of economic growth rather than by distribution of wealth. While Ethiopia still has a low level of income inequality, the upward trend in the Gini coefficient from 0.29 in 1995/6 to almost 0.33 in 2015/16 may constrain the scope for further poverty reduction, suggesting a need for policies that consider growth and redistribution at the same time.

We report on an experiment with poor rural households in Ethiopia, which aimed to boost aspirations for a better future through exposure to documentaries featuring local male and female role models. We explore effects on parents' educational aspirations and investment in children's education. At baseline, educational aspirations are high but biased against girls. At a six-month follow-up, the intervention increased parents' aspirations for their children's education and increased enrollment, time spent in school, and schooling expenditures. There was no catching up of girls relative to boys. Results are consistent with broader local social norms that value education but disfavor women.

As low-income countries industrialize, workers choose between informal self-employment and low-skill manufacturing. What do workers trade off, and what are the long run impacts of this occupational choice? Self-employment is thought to be volatile and risky, but to provide autonomy and flexibility. Industrial firms are criticized for poor wages and working conditions, but they could offer steady hours among other advantages. We worked with five Ethiopian industrial firms to randomize entry-level applicants to one of three treatment arms: an industrial job offer; a control group; or an “entrepreneurship” program of $300 plus business training. We followed the sample over a year. Industrial jobs offered more hours than the control group’s informal opportunities, but had little impact on incomes due to lower wages. Most applicants quit the sector quickly, finding industrial jobs unpleasant and risky. Indeed, serious health problems rose one percentage point for every month of industrial work. Applicants seem to understand the risks, but took the industrial work temporarily while searching for better work. Meanwhile, the entrepreneurship program stimulated self-employment, raised earnings by 33%, provided steady work hours, and halved the likelihood of taking an industrial job in future. Overall, when the barriers to self-employment were relieved, applicants appear to have preferred entrepreneurial to industrial labor.

Working with five Ethiopian firms, we randomized applicants to an industrial job offer, an “entrepreneurship” program of $300 plus business training, or control status. Industrial jobs offered more and steadier hours but low wages and risky conditions. The job offer doubled exposure to industrial work but, since most quit within months, had no impact on employment or income after a year. Applicants largely took industrial work to cope with adverse shocks. This exposure, meanwhile, significantly increased health problems. The entrepreneurship program raised earnings 33 percent and provided steadier hours. When barriers to self-employment were relieved, applicants preferred entrepreneurial to industrial labor. (JEL D22, I12, J23, J28, J81, L26, M53)

In this paper, we focus on the effectiveness of video-based interventions in inducing behavioural changes in poor countries. We first review relevant literature from different disciplines. This suggests both that information targeted to an individual’s specific needs is more effective than broader messages and that videos featuring role models similar to viewers reinforce persuasiveness as the latter relate to the character. We then discuss some of the challenges in designing non-laboratory randomized controlled trials to evaluate video-based interventions. We draw on our design of a recently completed study in remote rural Ethiopia, which showed that simple documentaries of relatively successful individuals from the same region affected both viewers’ investment in their children’s education and other future-oriented behaviors (Bernard, T., S. Dercon, K. Orkin, and A. S. Taffesse. 2014. "The Future in Mind: Aspirations and Forward-Looking Behaviour in Rural Ethiopia." Paper presented at Centre for the Study of African Economies conference on economic development in Africa, Oxford, UK, March 25). We discuss the importance and challenges of placebo treatments to evaluate the effects of exposure to video and gatherings, explore the potential for controlling variation in the exposure of an individual’s network of friends to the same treatment, and discuss external validity. Our experiment only partially addresses the issues we highlight, so we suggest directions for future research.

Are markets in developing and transition economies over‐regulated or under‐regulated? This is a perennial question in the development discourse, but one for which answers appear to come more from preset ideology than from context‐specific analysis and evidence. These issues become even more pressing when the debate turns to the links between regulation, deregulation and inequality. The recent experience of rising inequality in many countries has also brought to the fore predictable policy positions. A key aspect of labor regulation in developing countries, and one becoming more prominent in the era of rising inequality, is the minimum wage. The range of issues around regulation, minimum wage and informality was addressed by papers presented to a conference held in New Delhi on December 17–18, 2014. The conference was co‐sponsored by the World Bank, UK Department for International Development, Cornell University and Columbia University. The organizers of the conference were Kaushik Basu, Stefan Dercon, Ravi Kanbur and Jan Svejnar. A selection of papers from the conference which passed the usual review procedures of the Review of Development Economics, and a further selection of papers from those submitted to the journal, form this symposium.

The HIV epidemic exacerbated the prevalence of prime-aged adult death in many parts of sub-Saharan Africa, resulting in increased rates of orphanhood. Little is known about whether this will coincide with adverse psychosocial wellbeing in adulthood for those who were orphaned at childhood.We studied a cohort of 1,108 children from Kagera, a region of Tanzania that was heavily affected by HIV early in the epidemic. During the baseline data collection in 1991-94 these children were aged 0-16 years and had both parents alive. We followed them roughly 16-19 years later in 2010, by which time 531 children (36%) had lost either one or both parents before their 19 birthday. We compared the 2010 10-item Rosenberg Self-Esteem Scale (RSES) score between children who lost a parent before the age of 19 and those who did not. We used the baseline data to control for pre-orphanhood confounders. This is important, since we find that children who will lose their fathers in the future before age 19 came from somewhat lower socioeconomic backgrounds.We found no correlation between maternal death and self-esteem measured through RSES. Paternal death was strongly correlated to lower levels of self-esteem (0.2 standard deviations lower RSES CI95% 0.059-0.348) and the correlation was stronger when the death occurred during the child's teenage years. These effects are net of socioeconomic differences that existed before the orphanhood event.Our study supports the further development and piloting of programmes that address psychosocial problems of orphans.This is an open-access article distributed under the terms of the Creative Commons Attribution-Non Commercial License 4.0 (CCBY-NC), where it is permissible to download, share, remix, transform, and buildup the work provided it is properly cited. The work cannot be used commercially without permission from the journal.

Summary For economic development to succeed in Africa in the next 50 years, African agriculture will have to change beyond recognition. Production will have to have increased massively, but also labor productivity, requiring a vast reduction in the proportion of the population engaged in agriculture and a large move out of rural areas. The paper questions how this can be squared with a continuing commitment to smallholder agriculture as the main route for growth in African agriculture and for poverty reduction. We question the evidence base for an exclusive focus on smallholders, and argue for a much more open-minded approach to different modes of production. To allow alternative modes and scale of production to emerge, new institutional and policy frameworks are required. A rush to establish “mega-farms” with government discretionary allocation of vast tracts of land is unlikely to be the answer. Allowing a more dynamic agriculture to develop will require clear institutional frameworks, and not just a narrow focus on smallholders.

With serious impacts of climate change looming in a few decades, but current poverty still high in the developing world, we ask how to spend development aid earmarked for the poor. Poverty reduction tends to be strongly linked to economic growth, but growth impacts the environment and increases carbon-dioxide emissions. So can greener growth that is more climate-resilient and less environmentally damaging deliver large-scale poverty reduction? Can aid be used for effective poverty reduction now without affecting carbon emissions substantially? We argue that there are bound to be trade-offs between emissions reductions and a greener growth on the one hand, and growth that is most effective in poverty reduction. We argue that development aid, earmarked for the poorest countries, should only selectively pay attention to climate change, and remain focused on fighting current poverty reduction, including via economic growth, not least as future resilience of these countries and their population will depend on their ability to create wealth and build up human capital now. The only use for development aid within the poorest countries for explicit climate-related investment ought to be when the investments also contribute to poverty reduction now, including for increasing resilience to current impacts of environmental shocks, or when the investments done now have serious intertemporal ‘lock-in’ problems so that they have implications also for when climate change bites by 2050. In an annex, we offer a series of concrete principles to judge development spending.

The developing world is experiencing substantial environmental change, and climate change is likely to accelerate these processes in the coming decades. Due to their initial poverty, and their relatively high dependence on environmental capital for their livelihoods, the poor are likely to suffer most due to their low resources for mitigation and investment in adaptation. Economic growth is essential for any large-scale poverty reduction. Green growth, a growth process that is sensitive to environmental and climate change concerns, is often seen to be particularly helpful in this respect, leading to a win-win in growth and poverty reduction terms, with additional gains for the cause of greening the planet and avoiding further disastrous environmental change. This paper argues that such a view ignores important trade-offs in the nature of"green growth"strategies, stemming from a poor understanding of the sector and spatial processes behind effective poverty reduction. High labor intensity, declining shares of agriculture in gross domestic product and employment, migration, and urbanization are essential features of poverty-reducing growth. The paper contrasts some common and stylized green-sensitive growth ideas related to agriculture, trade, technology, infrastructure, and urban development with the requirements of poverty-sensitive growth. It finds that they may well cause a slow-down in the effectiveness of growth in reducing poverty. The main lesson therefore is that trade-offs are bound to exist; they increase the social costs of green growth and should be explicitly addressed. If not, green growth may not be good for the poor and the poor should not be asked to pay the price for sustaining growth while greening the planet.

In 1984, the world was shocked at the scale of a famine in Ethiopia that caused over half a million deaths, making it one of the worst in recent history. The mortality impacts are clearly significant. But what of the survivors? This paper provides the first estimates the long-term impact of the famine twenty years later, on the height of young adults aged 17–25 who experienced this severe shock in-utero and as infants during the crisis. Improving methodologically on other studies, famine intensity is measured at the household level, while impacts are assessed using a difference-indifferences comparison across siblings. We find that by adulthood, affected children who were under the age of 36 months at the peak of the crisis are significantly shorter than the older cohort, by at least 3cm. They are also less likely to have completed primary school, and more likely to have experienced recent illness. Indicative calculations show that this may lead to income losses of between 3% and 8% per year over their lifetime. The evidence also suggests that the relief operations at the time made little difference.

We study the distribution of food aid in Ethiopia between 1994 and 2004 using data from the Ethiopian Rural Household Survey. Over this period village leaders had considerable discretion in disbursing aid subject to official guidelines and periodic monitoring. We use a principal-agent model and household panel data for approximately 940 households to understand biases in the allocation of aid. The model shows that correlations between aid and observed measures of need are not a good measure of targeting because agents have incentives to distort allocations within targeted classes. Consistent with the model, we find that the aid recipients match official criteria but disbursements are negatively correlated with determinants of need that are not easily observable by monitoring agencies, namely pre-aid consumption, self-reported power and involvement in village-level organizations. Our results suggest informal structures of power within African villages influence the extent to which food aid insulates some of the world's poorest families from agricultural shocks but also that policy guidelines do constrain permissible deviations from need-based allocations.

Despite the popularity of school meals as interventions in education, little evidence exists on their effect on health outcomes. This study uses newly available longitudinal data from the State of Andhra Pradesh in India to assess the impact of the introduction of a national midday meal programme on the anthropometric z-scores of primary school students, and investigates whether the programme had any impact on ameliorating the deterioration of health in young children resulting from a severe drought. Correcting for self-selection into the programme using a non-linearity in the probability of enrolment, we find that the programme acts as a safety net for children, cushioning them from negative nutritional factors; in particular, there are large and significant health gains for children whose families were affected by the drought.

We study changes in living conditions using longitudinal data covering 30 years in six villages in Andhra Pradesh and Maharashtra, initially surveyed during 1975–1984, and resurveyed in recent years, as part of the ICRISAT Village Level Studies. Monetary welfare indicators (such as incomes, assets, consumption and poverty) and non-monetary indicators of well-being (such as basic literacy, education, health and subjective well-being) have improved considerably. Consumption growth is linked to literacy and education at baseline. Other assets, such as land, have a neglible impact, suggesting that labour and human capital have been instrumental for growth in these villages.Change involved a large increase in various off-farm activities.

This essay questions the way the findings from research on agriculture in poor countries tend to be summarized in policy narratives, and more specifically the role agricultural economics tends to play in this process. I conclude that there is a tendency to overstate the role agriculture plays in development and, as a result, some of the wrong battles are being fought in the policy advocacy arena, and inappropriate advice is being offered to policy makers. A more open and self-critical approach to the place of agriculture in development would be more helpful for policy design.

Empirical studies of the relationship between school inputs and test scores typically do not account for the fact that households will respond to changes in school inputs. This paper presents a dynamic household optimization model relating test scores to school and household inputs, and tests its predictions in two very different low-income country settings -- Zambia and India. The authors measure household spending changes and student test score gains in response to unanticipated as well as anticipated changes in school funding. Consistent with the optimization model, they find in both settings that households offset anticipated grants more than unanticipated grants. They also find that unanticipated school grants lead to significant improvements in student test scores but anticipated grants have no impact on test scores. The results suggest that naïve estimates of public education spending on learning outcomes that do not account for optimal household responses are likely to be considerably biased if used to estimate parameters of an education production function.

Childhood, and the extent and consequences of childhood poverty, have a central place in the study of development. In many economies of Asia and Latin America, where growth has picked up considerably in recent years, the patterns of growth and the extent and nature of inclusion of poor people are crucially important for the type of society that will be produced for the next generation. More specifically, the educational and health opportunities for children who are currently poor, as well as the nature of their social inclusion and their general well-being, will determine their chances of partaking fully in this future society. In several sub-Saharan African countries, despite recent growth successes, sustained growth is still largely elusive, and current child poverty, with its cumulative effects on destitution, may undermine the possibility of economic growth in the future. Recent research has highlighted the cumulative consequences of childhood poverty and deprivation. For example, a meta-analysis of the effects of early childhood nutritional deficiency and poverty has highlighted its serious consequences for a variety of outcomes, including school achievement and earning potential in later life (Grantham-McGregor et al. 2007).

The article suggests further improvements in the methodology to analyse market integration. It provides corrections to and methodological extensions of recent work in this journal. It also presents a way of applying market integration techniques to the analysis of shocks such as market liberalisation and war. The method is applied to the effects of liberalisation and the end of the civil war on food markets in Ethiopia. The conclusion is that liberalisation had important effects on the long‐run and short‐run integration of food markets.

After decades of armed conflict, during the first part of 1990s, about half a million ex-soldiers were demobilized in Ethiopia. This chapter provides an analysis of the consequences of this demobilization. It looks at the impact on the ex-soldiers, on their households and on society at large. After looking at the context in which demobilization took place, the second section presents a profile of the ex-combatants, the assistance that was provided, and the impact of the assistance on the ex-soldiers. It also looks at the government expenditure and security consequences of the demobilization. In a third section, micro-level evidence from ex-soldiers who returned to rural areas is presented, to assess the welfare effects of the demobilization.1