Trade reform in a corrupt economy : A note

We construct a general equilibrium model and analyze the effectiveness of trade reform in a distorted economy where distortion exists in form of bureaucratic corruption that arises because of trade protection at the border. In this kleptocratic set up, intermediaries are employed in order to run off from paying a part of import tariff. We use HOSV kind of framework to prove that whether trade liberalization necessarily helps reducing corruption activities and to check what happens to the production of commodities.Corruption; International Trade; Tariff Reform; General Equilibrium

Would Recession Induce More Intermediation in the Corrupt Informal Sector?

In this paper my endeavor is to give you an idea about the upshot of a recessionary phase on the intermediation activity which is required for the survival of the informal fragment of the society. Informal part of the economy covers a large chunk of the total economic activities in any stylized developing economy. Therefore it is imperative to check possible consequences of recession on this subdivision because intermediation also requires unskilled work force which need to be pulled out from the productive spectrum. In doing so I would be using the hybrid of standard Heckscher - Ohlin and Specific Factor general equilibrium models of trade. I would also strive to focus on the wage-inequality paradigm.International Trade; Corruption; Informal sector; General Equilibrium.

Extortion and Informal Sector in a Small Open Economy

Informal economy involving unrecorded, unregistered, extra legal activities employs majority of the workforce in the developing world. Such extra legal existence of informal manufacturing and service sectors is facilitated through extortion by agents of political forces in power. Such extortion activities themselves constitute an informal segment. We develop a general equilibrium model to explore the possible consequences of a change in the degree of extortion, change in the quality of administration, tariff reform etc. Economic reform of various kinds has interesting effects on the size of the extortion sector. Various reformatory policies may actually lead to an expansion of the informal sector.International Trade, Extortion, General Equilibrium.

Corruption and Trade in General Equilibrium

We use the HOSV model of trade to find out a link between corruption and the pattern of trade, not just its effect on the volume of trade. We prove that greater corruption in labor-abundant countries will restrict the volume of world trade while corrupt capital-abundant countries promote trade. This is caused by intermediaries who are engaged in mitigating the transaction cost of corruption. Relatively corrupt economy will export capital-intensive goods. However, relatively capital-abundant country will be worse off with increasing degree of corruption at home and abroad, whereas the labor-abundant country may gain from further corruption.Corruption, International Trade, Factor-intensity, General equilibrium

Conspicuous Consumption, Social Status and Measures of Poverty – An Example

The existing literature on poverty has discussed about the conflict between income-based measure and nutrition-based measure. However, the role of social inequality in influencing individual’s consumption and inducing greater consumption of the so called status good has been relatively undermined. This paper attempts to show that in presence of inequality a status driven utility function reconciles the conflict between income based and nutrition based measures of poverty.Inequality, Utility, Poverty

Recessionary shock and factor return in an underemployed economy

This paper builds a general equilibrium model for a small open economy with unemployment of unskilled labor to assess the impact of a recessionary shock. It is shown that irrespective of the factor intensity assumption skilled wage and rental ratio goes up if recession led price fall is significant. However, when the price fall is not sufficiently big, factor intensity assumption becomes crucial for the eventual effect on factors’ return ration.International Trade, General Equilibrium

Transaction Cost, Technology Transfer and Mode of Organization

We develop a monopolistically competitive model for a closed economy without contract incompleteness. We show that if superior technology is not allowed to be transferred, integration would be the best mode of organization given that the transaction cost of intermediate input is sufficiently small. However, transferability of technology calls for adding the dimension of factor intensity of input. We then prove that integration could be the better option only when input production technology is capital-intensive. Thus we validate the empirical claim of Antras (2003) from a perspective other than incomplete contract.Transaction Cost, Technology Transfer, Outsourcing, Organization of Production, Intra-firm Trade.

Demand for Maternal health inputs in West Bengal-Inference from NFHS 3

Using data from National Family Health Survey-3 (NFHS-3) for India this paper attempts to look at various socioeconomic factors that account for the demand for maternal health inputs in an Indian state-West Bengal. Conditional Mixed Process estimation is used to estimate the demand functions for prenatal care and hospital delivery. We jointly estimate both these equations to control for selection bias in the use of health inputs. However, exogenous estimation results are also provided. It has been observed that the place of residence, standard of living, and educational level of women are those covariates that remarkably increase the demand for both the maternal health inputs. An impression we derive from the analysis is that the infrastructural facilities, supply of health professionals, workers, educational attainment of women have to be emphasized on to contain the undesired problems during pregnancy and child-birth. At the same time access to information and whether the women can keep some money for own use also raise the demand for quality care associated with pregnancy. This also indicates a linkage between mother’s autonomy and healthcare utilization behavior

A Note on How and Why Growth and Unemployment Go Hand in Hand in Developing Economies

This paper develops a very simple model to explain the phenomenon of persistent unemployment even in an economy experiencing high output growth. Unemployment will also grow at a rate identical with other factors and sectors. The result is primarily triggered by pre-fixed minimum wage rate for unskilled workers. To corroborate our claim we have checked it for twelve developing countries and found empirical results quite consistent with theoretical apprehension. In deciding on desired rate of growth in different sectors to mitigate or reduce unemployment history becomes crucial

A Note on How and Why Growth and Unemployment Go Hand in Hand in Developing Economies

This paper develops a very simple model to explain the phenomenon of persistent unemployment even in an economy experiencing high output growth. Unemployment will also grow at a rate identical with other factors and sectors. The result is primarily triggered by pre-fixed minimum wage rate for unskilled workers. To corroborate our claim we have checked it for twelve developing countries and found empirical results quite consistent with theoretical apprehension. In deciding on desired rate of growth in different sectors to mitigate or reduce unemployment history becomes crucial