Forhad Shilpi

The Extent of the Market and Stages of Agricultural Specialization (La Taille Du Marché Et Les Étapes Dans La Spécialisation Agricole)

This paper provides empirical evidence of an U‐shaped causal relationship between the extent of the market (size of the relevant urban market) and the pattern of crop specialization in a village economy. We use the recent two‐stage estimator developed by Lewbel (2012) and exploit heteroscedasticity for identification. The results suggest that the portfolio of crops in a village economy becomes more diversified initially as the extent of the market increases. However, after the market size reaches a threshold, the production structure starts to specialize again. This evidence on the stages of agricultural diversification is consistent with the stages of diversification identified in the recent literature for the economy as a whole and also for the manufacturing sector. Ce texte fournit des resultats empiriques sur la relation causale en U entre la taille du marche (taille du marche urbain pertinent) et le pattern de specialisation des cultures dans une economie village. On utilise un estimateur en deux etapes developpe par Lewbel (2012) et on exploite l’heteroskedasticite pour l’identification. Les resultats suggerent que le portefeuille de cultures dans une economie village devient plus diversifie initialement a proportion que la taille du marche s’accroit. Cependant, apres que le marche depasse un certain seuil, la structure de production tend a se specialiser a nouveau. Ce resultat sur les stages de diversification agricole sont consistants avec les stages de diversification identifies dans la litterature recente pour l’economie dans son ensemble et aussi pour le secteur manufacturier.

Isolation and Subjective Welfare: Evidence from South Asia

Using detailed geographical and household survey data from Nepal, this article investigates the relationship between isolation and subjective welfare. We examine how distance to markets and proximity to large urban centers are associated with responses to questions about income and consumption adequacy. Results show that isolation is associated with a significant reduction in subjective assessments of income and consumption adequacy, even after controlling for consumption expenditures and other factors. The reduction in subjective welfare associated with isolation is much larger for households that are already relatively close to markets. These findings suggest that welfare assessments based on monetary income and consumption may seriously underestimate the subjective welfare cost of isolation.

From farm to firm : rural-urban transition in developing countries

Around the world, countries are becoming urbanized at an astonishing pace. As countries develop economically, their economies shift from mainly rural and agrarian to increasingly urban and nonagricultural. This rural-urban transformation presents both opportunities and challenges for development. When managed effectively, the transformation spurs growth and reduces poverty. When managed poorly, however, the process can result in stark welfare disparities, the marginalization of entire regions, and poorly functioning cities that fail to realize the potential gains from agglomeration economies. This book investigates the rural-urban transformation underway in Sub-Saharan Africa and South Asia, emphasizing the influence of country conditions as well as the potential of good policies to minimize disparities and ensure that everyone shares in the benefits of urbanization. The first part of this book investigates urbanization and rural-urban welfare inequalities on three geographic scales global, national, and local featuring countries and cities in Sub-Saharan Africa on the national and local levels. The second part of the book sheds light on the texture of transformation in five countries in South Asia, each at a different stage in the process: Bangladesh, India, Nepal, Pakistan, and Sri Lanka.

Intergenerational Occupational Mobility in Rural Economy: Evidence from Nepal and Vietnam

This paper presents evidence on intergenerational occupational mobility from agriculture to the nonfarm sector using survey data from Nepal and Vietnam. In the absence of credible instruments, the degree of selection on observables is used as a guide to the degree of selection on unobservables, à la Altonji et al. (2005) to address the unobserved genetic correlations. The results show that intergenerational occupational mobility is lower among women in both countries, and is lower in Nepal compared with Vietnam. In the case of Nepal, strong evidence favors a causal role played by the mothers nonfarm participation in the daughters occupation choice, possibly because of cultural inheritance in a traditional society.

Estimating an Import Demand Function in Developing Countries: A Structural Econometric Approach with Applications to India and Sri Lanka

Owing to the unavailability of time-series data on the domestic market-clearing price of imports, the estimation of notional price and income elasticities of aggregate import demand remains a daunting task for a large number of developing countries. This paper develops a structural econometric model of a two-goods representative agent economy that incorporates a binding foreign exchange constraint at the administered prices of imports. A theoretically consistent parameterization of the “virtual relative price” of imports circumvents the data problem, and thus enables the estimation of income and price responses by cointegration approach. The price and income elasticity estimates for India and Sri Lanka, in contrast to the extant literature, have correct signs, high statistical significance, and plausible magnitudes.

Spatial Specialization and Farm-Nonfarm Linkages

Using individual level employment data from Bangladesh, this paper presents empirical evidence on the relative importance of farm and urban linkages for rural nonfarm employment. The econometric results indicate that high return wage work and self-employment in nonfarm activities cluster around major urban centers. The negative effects of isolation on high return wage work and on self-employment are magnified in locations with higher agricultural potential. The low return nonfarm activities respond primarily to local demand displaying no significant spatial variation. The empirical results highlight the need for improved connectivity of regions with higher agricultural potential to urban centers for nonfarm development in Bangladesh.

Where to Sell? Market Facilities and Agricultural Marketing

This paper analyzes the effect of facilities and infrastructure available at the market place on a farmers decision to sell at the market using a comprehensive survey of farmers, markets and villages conducted in Tamil Nadu, India in 2005. The econometric estimation shows that the likelihood of sales at the market increases significantly with an improvement in market facilities and a decrease in travel time from the village to the market. The results suggest that wealth reduces a farmers cost of accessing market facilities more than it increases her/his opportunity cost of leisure. The wealthy farmers are able to capture a disproportionate share of the benefits of facilities available at congested markets. The policy simulation, however, shows that the marginal benefits from an improvement in market facilities will favor poorer farmers in the context of India.

Gender, Geography, and Generations: Intergenerational Educational Mobility in Post-Reform India

The existing studies report substantial improvements in educational mobility in post-reform India using intergenerational regression coefficient (IGRC) across age cohorts in a cross-section survey. In contrast, our estimates of sibling (SC) and intergenerational (IGC) correlations for the same age cohort from two surveys show strong persistence, stronger than in Latin America, which remained largely unchanged from 1991–92 to 2006. Only the women in urban areas experienced substantial improvements, with the lower caste urban women benefitting the most. As measures of mobility, IGC and SC are more informative and robust than IGRC, and the widely accepted conclusions based on IGRC alone may be misleading.

Gender, Geography and Generations: Intergenerational Educational Mobility in Post-reform India

India experienced sustained economic growth for more than two decades following the economic liberalization in 1991. While economic growth reduced poverty significantly, it was associated with an increase in inequality. Does this increase in inequality reflect deep-seated inequality of opportunity or efficient incentive structure in a market oriented economy? This paper provides evidence on economic mobility in post-reform India by focusing on the educational attainment of children. It uses two related measures of immobility: sibling and intergenerational correlations. The paper analyzes the trends in and patterns of educational mobility from 1992/93 to 2006, with a special emphasis on the roles played by gender and geography. The evidence shows that family background plays a strong role; the estimated sibling correlation in India in 2006 is higher than the available estimates for Latin American countries. There is a persistent gender gap in rural and less-developed areas. The only group that experienced substantial improvements is women in urban and developed areas, with the lower caste women benefiting the most. Almost 70 percent of the variance in childrens education can be accounted for by parental education and geographic location. The authors provide possible explanations for the apparently puzzling improvements for urban women in a country with strong son preference.

Migration, Sorting and Regional Inequality: Evidence from Bangladesh

Using household level data from Bangladesh, this paper examines the differences in the rates of return to household attributes over the entire welfare distribution. The empirical evidence uncovers substantial differences in returns between an integrated region contiguous to the countrys main growth centers, and a less integrated region cut-off from those centers by major rivers. The evidence suggests that households with better observed and unobserved attributes (such as education and ability) are concentrated in the integrated region where returns are higher. Within each region, mobility of workers seems to equalize returns at the lower half of the distribution. The natural border created by the rivers appears to hinder migration, causing returns differences between the regions to persist. To reduce regional inequality in welfare in Bangladesh, the results highlight the need for improving connectivity between the regions, and for investing in portable assets of the poor (such as human capital).