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Research in Development Economics

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Poverty, Poverty Traps and Income Distribution Dynamics

Few questions in development economics have been more debated than the impact of economic growth (and now globalization) on income distribution.  While earlier work in this area often worked with cross-country data, the increasing availability of panel or longitudinal living standards studies opens the door to a range of new methods and insights.  Projects in this area have included studies of Vietnam  and South Africa.  In addition, research on poverty traps and asset dynamics has led to new measures of vulnerability and chronic poverty, as well as new approaches to social protection policies.  Faculty involved in this area of work include Jennifer Alix-Garcia, Ian Coxhead and Laura Schechter.

Experimental Economics

Economic experiments, which explore the nature of human behavior and preferences by placing subjects in controlled environments with well-defined incentives and strategic interactions, were first used in development economics to understand risk aversion and its economic effects.  Our work in this area continues to explore the nature of risk aversion and its interaction with other behavioral norms, as well as individuals’ willingness to pay for contractual devices designed to mitigate risk.   Increasing attention to the economic importance of social norms at both the macro level (economic growth) and the micro level (the ability of individuals to secure access to capital and insurance in the presence of imperfect information) has led to novel efforts to use economic experiments to measure social norms.  Research projects include analyses of trust and its economic effects in Paraguay and South Africa, as well as an effort to understand the nature and importance of social context as a determinant of individual behavior.  Faculty active in this area include Laura Schechter.

Impact Evaluation of Development Policies and Programs

Evaluation of programs and policies has always been a part of development economics.  However, contemporary debates on aid effectiveness, as well as a rediscovery of randomization methods for impact evaluation, have sparked new interest in this area of work.  Research projects in this area include evaluations of cash transfer programs in Honduras and Nicaragua.   Faculty active in this area include Jennifer Alix-Garcia, Brad Barham and Laura Schechter.

Resources and the Environment in Development

Increasing awareness of the importance of natural resource depletion and environmental degradation as influences on long-term economic growth in poor countries has spawned a large literature at the interface of resource and development economics. In many poor countries, growth and globalization threaten to accelerate environmental damage and natural resource depletion rates, a process that in turn could undermine poverty alleviation by reducing the income-earning capacity of the poor.  In other cases, globalization and related policy reforms may reduce distortions that exacerbate environmental damages, for example through import tariffs on polluting sectors and industries   Research projects include studies of globalization, poverty and environment in Vietnam and spatial externalities in Bolivian agriculture. Faculty in this area include Jennifer Alix-Garcia, Brad Barham and Ian Coxhead.  Also see the natural resource economics page for more information on work in this area.

Risk and Financial Markets in Agrarian Economies

For-profit financial institutions often seem to bypass low-wealth individuals, leaving them undercapitalized, exposed to risk and sometimes unable to fully participate in, and benefit from, economic growth.  While the ‘microfinance revolution’ has at least partially solved this problem for urban households, rural and especially agricultural producers continue in many places to have inadequate access to finance.  The structure of agricultural risk offers one explanation for this continuing problem of rural finance, as explored by ongoing research on risk rationing in rural financial markets.   Other projects explore policy options for alleviating the problem of rural finance, including land titling programs that enhance the collateral value of rural assets and programs to remove risk from the rural system through index-based insurance.  Faculty working in this area include Brad Barham.

Trade and Development

Economic progress in developing economies is inextricably linked to trade and other modes of international integration, such as FDI and migration.  The most successful examples of long-term growth in an integrated world are from East and Southeast Asia.  The growth and structural transformation of China, along with its own process of opening to world markets has had significant effects on the structure of production and trade elsewhere in Asia and throughout the developing world.  China has emerged as one of the world’s largest importers of a wide range of natural resource products; a significant competitor for labor-intensive manufactures, and an increasingly large market for ‘parts and components’ trade such as electronics.  These changes, because of the size of the Chinese economy, have the potential to alter world prices, and as such to alter the apparent comparative advantage of China’s trading partners and competitors. Current projects in this area include collaborations on Southeast Asian electronics export trade to China (Coxhead and Pishayasinee Mulapruk) and Vietnam’s comparative advantage in sectoral exports (Coxhead and Phan Thi Nhiem, Hanoi National Economics University). Faculty working in this area include Ian Coxhead and Brad Barham.  

Last updated on Thu, Jun 30, 2016 10:42am