Two Papers

I apologize the lack of blogging this month. The dry spell will continue until I complete my thesis at the end of March. In the meantime, let me recommend two interesting papers I came across in the course of my work:

Dani Rodrik – Why We Learn Nothing from Regressing Economic Growth on Policies – March 2005:

Government use policy to achieve certain outcomes.  Sometimes the desired ends are worthwhile, and sometimes they are pernicious.  Cross-country regressions have been the tool of choice in assessing the effectiveness of policies and the empirical relevance of these two diametrically opposite views of government behavior.  When government policy responds systematically to economic or political objectives, the standard growth regression in which economic growth (or any other performance indicator) is regressed on policy tells us nothing about the effectiveness of policy and whether government motives are good or bad.

Alessandro Nicita – Export led growth, pro-poor or not? Evidence from Madagascar’s textile and apparel industry – February 2006

Madagascar’s textile and apparel industry has been among the fastest growing in Sub-Saharan Africa. Fueled by low labor costs, a fairly productive labor force, and preferential access to industrial countries, Madagascar ‘ s exports of textile and apparel products grew from about US$45 million in 1990 to almost half a billion in 2001. The impact of this export surge has been large in terms of employment and wages, but less so in terms of poverty reduction. To address the concern of whether the poor benefit and to what extent, the author follows a new approach to identify the beneficiaries of globalization and to quantify the benefits at the household level, so as to understand which segments of the population benefit most and which, if any, are marginalized. The analysis focuses on the labor market channel which has been recognized as the main transmission between economic growth and poverty. The methodology uses household level data and combines the wage premium literature with matching methods. The results point to a strong variation in the distribution of the benefits from export growth with skilled workers and urban areas benefiting most. From a poverty perspective, export-led growth in the textile and apparel sector has only a small effect on overall poverty…