The Dual Policy in the Dual Economy - The Political Economy of Urban Bias in Dictatorial Regimes

One of the most common policy obstacles in the global effort against poverty is what is termed as “urban bias” where rural residents, who constitute majority of the poor in the world, face systematic bias against their economic interests by their own governments. This paper develops a simple political economy model of urban bias in dictatorial regimes. Equilibrium outcomes relating policy outcomes with economic structure, political power, and other behavioral and structural variables are analyzed. The model shows that anti-agricultural biases can emerge in primarily agrarian societies even if there is no bias in political power between urban and rural citizens. Evidence from recent World Bank country level panel data on biases against/for agriculture provides support for the model’s prediction.Urban bias; rural poverty; dictatorship

Poor rural land property rights as a manifestation of urban bias

Though poor agricultural land property rights are typical constraints that many peasants in Sub-Saharan Africa (SSA) have faced since independence, little has been done to explain their persistence. I will first discuss the so called evolutionary theory of property right (ETPR), which stipulates that land property rights evolve as an afficient response to the economic environment. The empirical evidence suggests that the policies adopted by African regimes are actually in sharp contrast to what the ETPR predicts. I will then present a simple political economy model with three major assumptions that are commonly observed in SSA countries: (1) de jure political power belongs to the urban elite, (2) urban unrest is a source of threat to the elite and (3) a dual economy with urban and rural sector side by side. Major prediction of the model is that, in such political and economic environment, we observe poor land property rights if there is low level of urbanization and/or large gap between rural and urban wages, which actually are features of many SSA countries.Land property rights, Urban bias, Population pressure, Rural-urban migration, Land Economics/Use,

Does agricultural growth have a causal effect on manufacturing growth?

Though the role of agricultural growth for manufacturing growth has been at the center of the discourse on economic development, empirically identifying the causal effect of agricultural growth on manufacturing growth has remained illusive for the correlation between the two doesn't necessarily imply causality. This paper attempts to overcome the identification problem. Since agriculture is heavily dependent on the weather, random weather variations are used as instruments to identify the causal impact of agricultural growth on manufacturing growth. Results show that agricultural growth has a significant positive impact on manufacturing growth. The impact is higher the higher is agriculture's share in the economy (as measured by GDP and employment share). For example, in an economy with 50% of agricultural GDP, a 1% increase in agricultural output increases manufacturing output by about 1%.Agricultural Growth, Manufacturing Growth, Instrumental variable., Community/Rural/Urban Development, International Development, O14, O25, Q10,