Review of Development Economics

Publisher:: Wiley
Publication date:: 2021-02-01

ISBN:: 1363-6669

Issue Number

No. 28-1, February 2024

Latest documents

Impact of mobile payment adoption on household expenditures and subjective well‐being
This paper estimates the effects of mobile payment adoption on household expenditures and people's subjective well‐being. We consider four categories of household expenditures (that on clothes, durable goods, consumer goods, and cultural and leisure activities) and four indicators (life satisfaction, contentment, income satisfaction, and depression) of subjective well‐being. We use the Augmented Inverse Probability Weighting estimator to analyze the 2017 Chinese General Social Survey data while accounting for the selection bias inherent in mobile payment adoption. The empirical results show that people's decisions to adopt mobile payment are positively associated with their educational levels, car ownership, social interaction, internet penetration rate, and residential location. Mobile payment adoption significantly increases household expenditures on consumer goods and cultural and leisure activities but not on expenditures on clothes and durable goods. Moreover, mobile payment adoption significantly decreases people's contentment while increasing depression. We also find that mobile payment adoption significantly decreases the contentment of urban people but significantly increases the depression of rural people.
Financial inclusion and healthcare in Africa: Examining the moderating role of education
The 2023 Sustainable Development Goal Report reveals that Africa is still struggling in its pursuit to achieve universal healthcare coverage. However, financial risk protection and human capital development could come to the rescue by facilitating the attainment of quality healthcare services. This study examines the effect of financial inclusion on healthcare in Africa, spanning from 2000 to 2021. Healthcare is proxied by life expectancy at birth, the immunisation rate, and the lifetime risk of maternal death. Financial inclusion is approached through access and usage of financial services. After controlling for the problem of potential endogeneity through the system generalised method of moment (GMM), the findings reveal that financial inclusion enhances healthcare in Africa, signifying that financially included individuals have a higher conditional probability of spending more on improving their health relative to the financially excluded individuals. Moreover, the findings indicate that education and technology diffusion are imperative in the quest for enhancing healthcare in Africa. In addition, after testing for sensitivity analysis by adopting different indicators of healthcare, the results remain consistent throughout the study, confirming the role of financial inclusion in enhancing healthcare in Africa. After computing the marginal effects, the findings depict that education and financial inclusion interact to produce positive synergy effects, signifying that the positive role of financial inclusion and education in enhancing healthcare outweighs the negative conditional effect. The results recommend policymakers establish a framework that promotes financial literacy for the enhancement of healthcare in Africa.
Relative contributions of indirect taxes and inflation on inequality: What does the Turkish data reveal?
One way inflation affects consumption inequality is through its varying impact on the purchasing power of different households. Indirect taxes, which affect commodity price levels, are another effective factor influencing consumption inequality. Turkey is a highly unequal country with a long history of high inflation. Moreover, indirect taxes have been used frequently as a policy tool in the last decades. This study develops a novel approach to examining the relative contributions of household inflation rates and indirect tax changes to real consumption inequality and applies it to the case of Turkey. The analysis is carried out using both household‐level data and artificial panel data created to apply the Shapley and Owen decomposition methods. The findings roughly can be summarized in two points. First, while nominal consumption during the 2003–2019 period became more equal, real consumption inequality increased as a result of price changes during that time. Variations in household inflation rates are the primary source of increased inequality. Second, changes in indirect taxes account for 31% to 68% of the unequalizing effect of price changes, depending on the method used. Results imply that monetary and indirect tax policy mix have been in favor of the rich in this period.
Asset accumulation, financial inclusion and subjective well‐being: The role of financial formality in South Africa's households
Asset building and financial inclusion programmes have contributed to the enhancement of consumers' welfare through asset accumulation. Employing the FinScope consumer survey for South Africa, we extended the analysis of the relationship between financial inclusion and asset holding by examining whether this, in turn, improves consumers' subjective well‐being (SWB). Financial inclusion was captured by credit, savings, and insurance whereas multiple correspondence analysis was employed to compute an asset index that captured indicators of individual material possessions. Results from the partial least squares path model suggested that financial inclusion had an indirect positive association with consumers' SWB through increased asset holding, but the association was more pronounced via formal channels of saving, credit, and insurance. As such, social policymakers are encouraged to integrate access to insurance, credit, and savings through formal channels in poverty interventions since this has a greater indirect association with consumers' SWB via increased asset ownership.
Mineral extraction and long‐term human capital accumulation
This study examines the long‐term impacts of early coal mining on human capital outcomes. Based on coal mines across 260 prefectures in late Qing China (c.1840–1912), we find that early coal mining led to a significant rise in schooling years in 2000. We trace the historical channels and show that the influence of early coal mining has persisted through and helped shape the modernization of China, which includes local industrialization and a complimentary supply of educational infrastructure. These results suggest that in contrast to other grabbing mineral extraction, inclusive coal mining systems benefit long‐term human capital accumulation and economic growth, not mining activity per se.
Do fertilizer and seed subsidies strengthen farmers' market participation? Evidence from Tanzania's subsidy program
This study examines whether the Tanzanian subsidy for inorganic fertilizers and improved seeds encourages farmers to participate in the input and grain markets. Using six waves from 2008–2009 to 2020–2021 of the National Panel Survey, we investigated whether the subsidy affected farmers' purchases and expenditures for all conceivable inputs, including nonsubsidized inputs (organic fertilizers, traditional seeds, pesticides/herbicides, labor, and capital). Subsequently, we estimated the subsidy's impact on the probability of farmers selling crops and their sales revenue. In the input markets, we found that improved seeds, rather than inorganic fertilizers, played a major role in farmers' market activities. Beneficiaries who received subsidized seeds were more likely to purchase pesticides/herbicides, hire more labor, and borrow oxen and tractors to make their farmland suitable for the growth of improved seeds. In crop markets, we found that receiving both subsidized fertilizers and seeds increased the probability of farmers selling maize or paddy nearly threefold relative to the receipt of only subsidized fertilizer. Moreover, legume sales revenue also increased among seed beneficiaries through intercropping with maize and paddy.
Pollution haven or pollution halo? The role of global value chains in Belt and Road economies
“Global value chains” (GVCs) participation brings countless economic and environmental benefits to “Belt and Road Initiative” (BRI) economies. As the nations associated with BRI are crucial members of GVCs, analyzing the influence of GVCs on environmental quality in BRI economies is of great significance. By joining regression models with “multi‐region input–output” analyses, current study inspects the influence of GVCs on environmental quality in 82 BRI economies from 2002 to 2018. This study considered different GVCs participation modes and national heterogeneity to check “pollution haven hypothesis and pollution halo hypothesis” theories. The GVC position worsened environmental quality in the full BRI panel and validated the pollution haven hypothesis theory. Forward and backward participation improves environmental quality and confirms the pollution halo hypothesis. Moreover, income‐specific outcomes showed divergent patterns related to GVCs and environmental quality. GVCs' position of GVCs promotes the environmental quality of developed and emerging countries and exacerbates that of developing and underdeveloped economies. Moreover, the links of forward and backward participation with environmental quality showed mixed results for the pollution haven and halo theories in all subpanels. The results propose that the BRI should focus on upgrading GVCs and adopting region‐specific green policies to ensure a sustainable environment.
Resource rents and environmental pollution in developing countries: Does the quality of institutions matter?
Despite global concerted efforts to enhance environmental sustainability, environmental quality has continued degrading following upsurges in carbon dioxide (CO2) emissions. The rising pollution emissions in recent decades have largely been blamed on the growing exploitation of natural resources and institutional dynamics. Consequently, this study empirically examines the effect of resource rents on environmental pollution. The system Generalised Method of Moments approach is adopted to analyse data for a panel of 39 developing African countries over the 1996–2020 period. The key results reveal that resource rents significantly contribute to pollution emissions in the context of African economies. This positive relationship between resource rents and environmental pollution is globally validated by the various sensitivity analysis and robustness checks. However, this relationship is divergent for alternative measures of natural resources and across sub‐regional economic blocs. Furthermore, the results reveal the critical role of good governance in modulating the environmental damaging role of natural resource dependence. Besides the key findings, the study equally highlights the importance of ICTs and the need to increase investments in green technologies and promote the consumption of clean energies. Indeed, the key findings suggest that for resource rents to effectively contribute to environmental sustainability by reducing CO2 emissions there is need for policymakers to reinforce the legislation through the enhancement of institutional quality. Particularly, African governments should develop and reinforce strategies aimed at curbing corruption which constitutes a major obstacle to environmental sustainability.
Economic openness, financial bias, and the urban–rural income gap
We develop a theoretical model to analyze the impact of economic openness and financial bias (i.e., open sector bias and urban area bias) on the urban–rural income gap. Our theoretical model puts forth three propositions, which we empirically test using a dynamic panel data model. We use data from 30 provinces in China spanning from 2004 to 2017 for our empirical analysis. Our results reveal a U‐shaped relationship between the urban–rural income gap and the level of regional economic openness. We also find an inverted U‐shaped relationship between the urban–rural income gap and the open sector bias of regional financial development. Moreover, our analysis indicates a positive relationship between the urban–rural income gap and urban area bias in regional financial development. These three propositions hold true for both nominal and real measures of the income gap.
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