Vinod Thomas

The Quality of Growth

Human, natural, and physical capital assets are a countrys main resources for growth and welfare improvements. Their distribution, growth and productivity largely determine peoples income and welfare. The poor rely on human and natural capital in addition to physical capital, so the accumulation and productivity of these assets have a strong impact on poverty. Growth based on relatively undistorted or balanced accumulation is likely to be less volatile and to be sustained over the long term. We provide evidence on improving the distribution of opportunities, sustaining the natural capital, dealing with global financial crises, and improving governance and fighting corruption. These evidence focuses on the experiences of 1990s. This book was translated into ten languages and a new Chinese edition is coming soon.

Measuring Education Inequality: Gini Coefficients of Education

The authors use a Gini index to measure inequality in educational attainment. They present two methods (direct and indirect) for calculating an education Gini index, and generate a quinquennial data set on education Gini indexes for the over-15-population in 85 countries (1960-90). Preliminary empirical analysis suggests that: 1) Inequality in education in most of the countries declined over the three decades, with a few exceptions. 2) Inequality in education as measured by the education Gini index is negatively associated with average years of schooling, implying that countries with higher educational attainment are more likely to achieve equality in education, than those with lower attainment. 3) A clear pattern of an education Kuznets curve exists if the standard deviation of education is used. 4) Gender gaps are clearly related to education inequality, and over time, the association between gender gaps, and inequality becomes stronger. 5) Increases in per capita GDP (adjusted for purchasing power parity) seem to be negatively associated with education inequality, and positively related to labor forces average years of schooling, after controlling for initial income levels.

Addressing the education puzzle: the distribution of education and economic reform

No country has achieved sustained economic development without substantially investing in human capital. Previous studies have shown the handsome returns to various forms of basic education, research, training, learning-by-doing, and capacity-building. But education by itself does not guarantee successful development, as history has shown in the former Soviet bloc, Sri Lanka, the Philippines, and the Indian states of Kerala and West Bengal. The question is, when and how does education bring high payoffs? Although theory has suggested a strong causal link between education and growth, the empirical evidence has not been unanimous and conclusive. The authors examine two explanatory factors. First, who gets educated matters a good deal, but the distribution of education is complex and not much has been written about it. They construct an asset allocation model that elucidates the importance of the distribution of education to economic development. Second, how education affects growth is greatly affected by the economic policy environment. Policies determine what people can do with their education. Reform of trade, investment, and labor policies can increase the returns from education. Using panel data from 12 Asian and Latin American countries for 1970-94, they investigate the relationship between education, policy reform, and economic growth. Their empirical results are promising. First, the distribution of education matters. Unequal distribution of education tends to have a negative impact on per capita income in most countries. Moreover, controlling for human capital distribution and the use of appropriate functional form specifications consistent with the asset allocation model makes a difference for the effect of average schooling on per capita income. Controlling for education distribution leads to positive and significant effects of average schooling on per capita income, while failure to do so leads to insignificant, even negative effects, of average education. Second, the policy environment matters a great deal. Our results indicate that economic policies that suppress market forces tend to dramatically reduce the impact of human capital on economic growth. Investment in human capital can have little impact on growth unless people can use education in competitive and open markets. The larger and more competitive these markets are, the greater are the prospects for using education and skills.

Spatial differences in the cost of living

A method that represents income and poverty differences within a country more accurately than do methods based on money income measures is described. Focusing on the cost of basic requirements of food and nonfood categories, a cost index of a basket typically consumed by the poor is built up. The index is used to deflate money estimates into real estimates. The cost of living index also is combined with income estimates to obtain measures of regional differences in poverty that are more accurate than those based on money income estimates. Using Peru as a case study, it is shown that the cost differences have significant implications for measures of real income and poverty across regions and between urban and rural areas. A detailed derivation of the nonfood price index is appended.

Welfare cost of pollution control

Abstract A model of joint-production of a conventional output and of pollutants is presented, within which continuous substitution between polluting fuels and nonpolluting inputs on the one hand and pollution control inputs on the other is allowed for. Using the steel industry as a case study, the welfare cost under an efficient policy to reduce particulate emissions is evaluated and compared with that under alternative inefficient policies. The results suggest that substantial cost savings can be made by following the “optimal” policy.

Contributors to the frequency of intense climate disasters in Asia-Pacific countries

The frequency of intense natural disasters (defined here as events triggered by hazards of nature and causing at least 100 deaths or affecting the survival needs of at least 1,000 people) has been on the rise over the past 40 years. This is especially true for Asia and the Pacific, where such disasters have long been relatively frequent. A crucial question is the extent to which the frequency of such disasters is related to increases in the number of people exposed to hazards, changes in people’s vulnerability to hazards, and temperature and precipitation anomalies. This paper addresses this question with an econometric analysis of disaster risk determination for countries of Asia and the Pacific during 1971–2010. The objective is to determine the role (if any) of greater likelihood of climate-related natural hazards, alongside changes in exposure of people to the hazards and their greater vulnerability, in explaining the annual frequency of climate-related disasters. Results indicate that hydrometeorological disasters are strongly associated with rising population exposure as well as precipitation anomalies, while climatological disasters are strongly associated with changing temperatures. Taken together with the evidence from literature that it is “very likely” that the rising incidence of greenhouse gas emissions in the atmosphere is altering the climate system, the findings suggest a connection between the frequency of intense natural disasters observed in the region and man-made climate change.

Climate-Related Disasters in Asia and the Pacific

Natural disasters are on the rise worldwide. There are more and more intense natural disasters—which are defined to cause at least 100 deaths or to affect the basic survival needs of at least 1,000 people—resulting from floods and storms as well as droughts and heat waves. The Asia and the Pacific region has experienced some of the most damaging disasters in recent decades, with alarming consequences for human welfare. At the same time, the climate in the region has been changing. Temperatures have been higher, on average, and also more variable and more extreme. Rainfall has also been more variable and more extreme. Is there a relationship between these changes in climate and the increase in natural disasters in Asia and the Pacific? This paper considers three main disaster risk factors—rising population exposure, greater population vulnerability, and increasing climate-related hazards—behind the increased frequency of intense natural disasters. In a regression analysis within a model of disaster risk determination, the most significant association is between the increase in natural disasters and population exposure, represented by population densities. Population vulnerability also matters, but increasing incomes seem to be associated first with greater and then lesser vulnerability. Finally, there is a notable association between climate-related hazards (greater precipitation linked to floods and storms and especially higher temperature linked to droughts and heat waves) and the frequency of intense natural disasters in Asia and the Pacific and its subregions during 1971–2010. Along with the scientific association between greenhouse gases and the changes in the climate, the findings in this paper suggest that there is a link between increasing natural disasters in Asia and the Pacific and man-made emissions of greenhouse gases in the atmosphere.

Differences in income and poverty within Brazil

Regional disparities in living standards within Brazil have received increasing attention in recent years. This paper indicates that although costs of living adjustments narrow spatial differences, large regional disparities remain, particularly upon comparing the Northeast and the Southeast. The application of price indices reduces urban-rural variations more than regional differences, drastically narrowing the urban-rural gap in food consumption. Poverty is, nevertheless, much more concentrated in the rural areas than in the urban areas, although regional differences in its incidence are more striking than the urban-rural divergencies. This paper has not primarily concerned the policy implications of these income differentials, but tries to highlight the importance of measuring cost of living differences, and thus obtaining more accurate measures of income and poverty levels.

Spatial differences in poverty : the case of Peru

Using Peru as a case study, the implications of spatial differences in living costs for measures of poverty are examined. To obtain location specific poverty lines that reflect comparable levels of consumer expenditure, regional consumer price indices are required. Ideally such indices should permit the comparison of regional differences in the cost of achieving a certain level of utility. The application of consumer indices to poverty problems requires a definition of poverty levels. In constructing the absolute poverty expenditure levels for the different parts of Peru, the food element is based on the cost of a basket consumed by people at the twentieth percentile in the income distribution in the Rural Sierra. This annual cost of 2,650 soles per capita provides a lower bound on food costs. Such a definition leads to the calculation of poverty indices. The derivation of poverty indices requires the comparison of poverty expenditure levels with the actual distribution of expenditure. The findings of the study suggest that it is important to construct and use spatial price indices in the measurement of poverty. The approach can be applied to other developing countries by constructing regional nonfood price indices from information on nonfood expenditures. 20 references.

Evaluating pollution control: The case of São Paulo, Brazil

This article is on the alarming pollution in Sao Paulo and how a selective approach must be adopted to reduce it. It recommends regulating industrial location rather than establishing policies that directly limit growth in production as a means to improve environmental quality.