Microcredit, labour, and poverty impacts in urban Mexico

Improved household accessibility to credit is identified as a significant determinant of intra-household re-allocation of labour resources with important implications for productivity, income, and poverty status. However, credit accessibility could also have wider impacts on poverty if it leads to new hires outside the household. This paper contributes to the existing literature on microcredit in two important ways: first, it investigates the routes through which microcredit reaches those in poverty outside the household. We test whether, by lending to the vulnerable non-poor, microcredit programmes can indirectly benefit poor labourers through increased employment. Second, we conduct the study in the spatial dimension of urban poverty Mexico. This is relevant when considering that, unlike in rural areas, labour often represents the only source of livelihoods to the extreme poor. Our findings point to significant trickle-down effects of microcredit that benefit poor labourers; however, these effects are only observed after loan-supported enterprising households achieve earnings well above the poverty line. The paper concludes with reflections on the policy implications.Mexico, microcredit, labour, poverty

Implicit Models and Policy Recommendations: Policy towards the ‘Informal Sector’ in Kenya

SUMMARY Encouragement of the ‘informal sector’ of employment in developing countries, recommended by many advisers including the ILO's mission to Kenya (1972), is attacked as an ambiguous and, in part, counter?productive policy. Ambiguous in that at least four definitions of informality (according to size of firm, degree of official enumeration, pattern of industrial relations and relationship to the State) are current; possibly counter?productive in that much informal employment is either in the production of ‘inferior’ goods and services with few dynamic growth possibilities, or orientated towards the demands of an elite, and hence undesirable from an equity point of view. RESUME Modèles implicites et recommandations en vue d'une politique à adopter: Le “Secteur non officiel” au Kenya Encourager le “secteur non officiel” du marché du travail dans les pays en voie de développement, comme le recommandent nombre de conseillers, y compris la mission du BIT au Kenya (1972), est, d'après l'auteur, une politique ambigue et, en partie, contre?productrice. Ambigue parce qu'il y a actuellement au moins quatre définitions du caractère non officiel (selon la taille de l'entreprise, le degré officiel, la structure des relations industrielles et des rapports avec l'état) ; sans doute contre?productrice parce que la majeure partie de l'emploi non officiel est soit dans la production de biens et services de qualité inférieure avec peu de possibilités de croissance dynamique, ou bien orienté vers la demande d'une élite, et donc indésirable du point de vue de l'égalité. RESUMEN Recomendaciones de Politica y Modelos Implicitos: El “Sector Informal” en Kenya El alentar el “sector informal” en los países en desarrollo, que ha sido recomendado por muchos asesores, incluyendo la misión de la OIT a Kenya (1972), es criticado por ser una política ambigua y en parte, contraproductiva. Resulta ambigua en que la informalidad ocurre en por lo menos cuatro aspectos (segun el tamaño de la empresa, el grado de oficialidad, la tendencia de relaciones industriales y relaciones con el estado) ; por otra parte, resulta contraproductiva en que mucha de la mano de obra está dedicada a la producción de artículos y servicios de calidad inferior, con pocas posibilidades dinámicas de expansión, o está orientada hacia los requisitos de una clase superior, por lo que no es oportuno desde el punto de vista de igualdad

The importance of a better design of conditionality for improving implementation of World Bank-supported reforms: The case of Sub-Saharan African countries

Some recent empirical research suggests that the implementation of policy reforms is largely dependent on domestic political economy factors. This finding is taken to suggest that aid and adjustment lending should only be provided to those countries that, on the basis of certain characteristics, are more likely to implement policy reform. We put these issues to scrutiny by employing a sophisticated World Bank dataset to explain Sub-Saharan African programme countries’ compliance record. Our empirical results highlight the role of a country’s income status, economic performance and political stability during the programme, the external economic environment, the size of financial support for the reform programme, and initial macroeconomic conditions. These results contradict the evidence underpinning the selectivity approach to policy-based lending and suggest that poor compliance is not the result of low implementation capacity and poor institutional quality alone but also a consequence of poor policy design.

Aid?effectiveness: The Micro?Macro Paradox

SUMMARY Over the last 20 years measured aid?effectiveness has been high at the project level, in the sense that ex post rates of return are more than satisfactory, but low at the macro level, in the sense that it is impossible to establish any statistically significant correlation between aid flows and increases in growth across a sample of recipient countries. Three possible explanations of this paradox are considered: (i) errors in the data; (ii) switching of expenditure within the public sector; (iii) indirect effects of aid on the private sector. Some evidence of the second and third of these is found, to give a partial and incomplete explanation of the ‘micro?macro paradox’ in the case of Kenya. SOMMAIRE Efficacité de l'aide: le paradoxe micro — macro Durant les dernières 20 années l'efficacité mesurée de l'aide à été haute au niveau de projets, dans le sens que les taux de remboursement ex post sont plus que satisfaisant, mais a été basse au niveau macro, dans le sens qu'il est impossible d'établir une corrélation statistique significative entre le montant de l'aide et la croissance à travers un échantillon de pays recevants. Trois explications possibles pour ce paradoxe sont sonsidérées: (i) des erreurs de données; (ii) une réallocation des dépenses dans le secteur public; (iii) des effets indirects de l'aide pour le secteur privé. Le cas du Kenya semble soutenir la deuxième et la troisième, et nous donne une explication partielle et incomplète de ce ‘paradoxe micro — macro’. RESUMEN Efectividad de la ayuda: la paradoja macro/microeconómica La medición de la efectividad de la ayuda durante los últimos 20 años, demuestra que ésta ha sido alta a nivel de proyectos, en el sentido de que las tasas de retorno ex post son más que satisfactorias. Sin embargo, a nivel macroeconómico éstas son bajas, en el sentido de que es imposible establecer correlaciones estadísticamente significativas entre flujos de ayuda y aumentos en el crecimiento en una muestra de países receptores. Se consideran tres posibles causas de esta paradoja: (i) errores en los datos, (ii) cambios de la estructura del gasto fiscal, (iii) efectos indirectos de la ayuda en el sector privado. Una explicación parcial e incompleta de la paradoja en el caso de Kenya, se encuentra en la segunda y tercera de las causas mencionadas