The treatment of non-essential inputs in a Cobb-Douglas technology : an application to Mexican rural household-level data

The standard approach for fitting a Cobb-Douglas production function to micro data with zero values is to replace those values with"sufficiently small"numbers to facilitate the logarithmic transformation. In general, the estimates obtained are extremely sensitive to the transformation chosen, generating doubts about the use of a specification that assumes that all inputs are essential (as the Cobb-Douglas does) when that is not the case. The author presents an alternative method that allows one to estimate the degree of essentiality of the production inputs while retaining the Cobb-Douglas specification. By using the properties of translatable homothetic functions, he estimates by how much the origin of the input set should be translated to allow the Cobb-Douglas functional form to capture the fact that the data have a positive output even when some of the inputs are not used. To highlight the empirical importance of the approach, he applies it to Mexican farm-level production data that he gathered. Many households did not use family or hired labor in farm production, or had different capital composition (that is, zero value for non-land farm assets). The estimations provide a clear measurement of the degree of essentiality of potentially non-essential inputs. They also indicate the size of the error introduced by the common"trick"of adding a"small"value to zero input values.Environmental Economics&Policies,Economic Theory&Research,Agricultural Knowledge&Information Systems,Health Economics&Finance,Banks&Banking Reform

Agricultural Growth and Poverty Reduction: The Case of Mexico

Poverty levels have been diminishing in Mexico since the late 90's, although several regions still show high levels of poverty, and they are extremely high in some rural areas. This paper have addressed the issue of the linkages between sectoral growth (urban/rural) and poverty levels. It was found that although both types of growth impacted negatively on poverty levels in Mexico, rural growth seems to have a higher power in improving consumption per capita of the poorest among the poor people. Moreover, the only inter-sector linkage found was the one that connects rural growth with urban poverty for those people above the food -poverty line but below the moderate poverty line. Exploring plausible channels, we have found that rural growth enhances equality of income distribution at total and urban levels, while urban growth does exactly the opposite. But this is still a general equilibrium effect. Thus, we further explored labor market issues. We found that rural growth impacted positively on labor demand for unskilled worker: on this base, ceteris paribus it is better for poverty alleviation to have rural growth. We have also explored the issue of relative prices, although no impact of rural/urban growth was found here. Everything seems to be driven by the real exchange rate behavior. The share of agriculture in total income is relatively more important for poor people in rural areas, and most of the food poor people live in rural areas. This may be at the root of our findings.Food Security and Poverty, International Development, O18, O5, E2, J43,

Growth and Poverty. The case of México

Although poverty levels have been diminishing in Mexico since the late 90’s, several regions still show high levels of poverty which are extremely high in some rural areas. The paper addresses the issue of the linkages between sectoral growth (urban/rural) and poverty levels by applying Ravallion and Datt (1996) reduced equation´s approach to regional data for Mexico. Poverty levels in rural and urban areas are thus linked to the performance of agricultural and non agricultural growth. Although the data cover only 8 years, following Deaton (1994) we make use, for the first time to these data to the best of our knowledge, of their spatial variation to get enough degrees of freedom. The main finding of the paper was that, although both types of growth impacted negatively on poverty levels in Mexico, rural growth seems to have had substantially higher power in improving consumption per capita for the poorest among the poor people. Urban growth affected mostly urban poverty whereas rural growth affected principally rural poverty. The only inter-sector linkage found was the one that connects rural growth with urban poverty for those people above the food-poverty line but below the moderate poverty line. Exploring plausible channels, we have found that whilerural growth enhances equality of income distribution at total and urban levels, urban growth does exactly the opposite increasing inequality in rural areas. We further explored labor market issues and found that rural growth impacted positively on labor demand for unskilled workers. We have also explored the issue of the impact of rural/urban growth on relative food prices, although no impact was found here. The share of agriculture in total income is relatively more important for poor people in rural areas, and most of the food-poor people live in rural areas. This may be at the root of our findingsEconomic growth, poverty, inequality, agriculture,

Distortions to Agricultural Incentives in Mexico

Distorted incentives, agricultural and trade policy reforms, national agricultural development, Agricultural and Food Policy, International Relations/Trade, F13, F14, Q17, Q18,

Editoriales Etno-iconográficos en Vogue (1948-2016): un enfoque a las diplomacias culturales

Este artículo ofrece la visión general de una investigación que ha sentado sus bases en una sistematización de los mensajes que surgen de la interfaz entre diferentes culturas a través de la comunicación visual de la moda. Profundiza en un estudio semántico de las composiciones relacionadas con la "etno-iconografía" desarrolladas por tres ediciones occidentales de Vogue desde 1948 a 2016. Para esta investigación, hemos examinado 100 editoriales fotográficos. El artículo propone un marco teórico que sirva para evaluar la forma en que la moda ha reflejado y construido las nociones coloniales del Otro, impulsadas por políticas visuales de género y raza, y moldeadas por ideologías imperialistas de la industria. El artículo también introduce una exploración del legado de los regímenes visuales eurocéntricos y la negociación con las subjetividades postcoloniales por parte de las últimas ediciones no occidentales. Finalmente resalta que este tipo de imagen puede proporcionar visibilidad a realidades sociales de dichos territorios, permitiendo a las revistas de moda actuar como detonadores de la reflexión crítica y agentes capaces de establecer interrelaciones culturales.This article offers an overview of a seminal research that laid its foundations in a systematization of the messages emerging from the interface between cultures through fashion image making. It delves into a semantic study of the compositions related to “ethno-iconography” that have been developed by three Western editions of Vogue since 1948 to 2016. We had examined 100 photographic editorials. The paper proposes a theoretical framework that serves to evaluate the way that fashion has reflected and built colonial notions of the Other, driven by race and gender visual politics, and shaped by the industry’s imperialist ideologies. The article also introduces a prospective exploration of the legacy of the Eurocentric visual regimes and the negotiation with post-colonial subjectivities by non-Western editions. It ultimately highlights that photo shoots also provide visibility to social realities that permit magazines to act as triggers of critical reflection and agents capable of establishing inter-cultural relations

How has regionalism in the 1990s affected trade?

The authors apply a gravity model to data on annual non-fuel imports for 58 countries for the years 1980-96, to quantify the effects on trade of recently created or revamped preferential trade agreements (PTAs). They modify the usual gravity equation to identify the separate effects of PTAs on intra-bloc trade, members'total imports, and members'total exports. They also formally test the significance of changes in the estimated coefficients before and after the blocs'formation. Their estimates give no indication that the"new wave"of regionalism boosted intra-bloc trade significantly. They found convincing evidence of trade diversion only for the European Union and the European Free Trade Association. For the same blocs they also observed"export diversion", which would be consistent with these blocs'imposing a welfare cost on the rest of the world. Trade liberalization efforts in Latin America have had a positive impact on the imports of bloc members (Andean Group, Central American Common Market, Latin American Integration Association, and MERCOSUR). Increasing propensities to export generally accompanied increasing propensities to import, suggesting that general trade liberalization had a strong effect. The exception was MERCOSUR, for which import and export propensities displayed opposite movements, with exports performing worse than expected over the mid-1990s. Although MERCOSUR members have undoubtedly liberalized since the mid-1980s, these results suggest that their trade performance has been influenced more by competitiveness than by trade policy.Payment Systems&Infrastructure,Economic Theory&Research,Environmental Economics&Policies,Common Carriers Industry,Trade Policy,Trade and Regional Integration,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Economic Theory&Research,Trade Policy,Environmental Economics&Policies

Trade reform and household welfare : the case of Mexico

The authors use a two-step, computationally simple procedure to analyze the effects of Mexico's potentially unilateral tariff liberalization. First, they use a computable general equilibrium model provided by the Global Trade Analysis Project (GTAP) as the new price generator. Second, they apply the price changes to Mexican household data to assess the effects of the simulated policy on poverty and income distribution. By choosing GTAP as the pricegenerator, the authors are able to model Mexico's differential tariff structure appropriately: almost zero for North American Free Trade Agreement (NAFTA) members and higher tariffs for nonmembers. Even starting with low tariff protection, simulation results show that tariff reform will have a positive effect on welfare for all expenditure deciles. Under an assumption of nonhomothetic individual preferences, trade liberalization benefits people in the poorer deciles more than those in the richer ones.Health Economics&Finance,Environmental Economics&Policies,Economic Theory&Research,Services&Transfers to Poor,Payment Systems&Infrastructure,Environmental Economics&Policies,Economic Theory&Research,Poverty Assessment,Inequality,Health Economics&Finance

A firm's-eye view of policy and fiscal reforms in Cameroon

After decades of heavy trade restrictions, fiscal distortions, and currency overvaluation, Cameroon implemented important commercial and fiscal policy reforms. Almost simultaneously, a major CFA devaluation cut the international price of Cameroon's currency in half. The authors examine the effects of these reforms on the incentive structure that manufacturing firms face. Did they create a coherent set of new signals? Was the net effect to stimulate the production of tradable goods? Was the dispersion of tax burdens lessened? They address each of these questions using a cost function decomposition applied to detailed firm-level panel data. They observe that Cameroon's reforms appear to have sent clear new signals to manufacturers, as the effective rate of protection fell by between 80 and 120 percentage points. Unlike trade liberalization, neither tax reforms nor the CFA devaluation had a major systemic effect on profit margins. But the CFA devaluation did twist relative prices dramatically in favor of exportable goods, so export-oriented firms exhibited rapid output growth.Economic Theory&Research,Environmental Economics&Policies,Labor Policies,Markets and Market Access,Public Sector Economics&Finance,Environmental Economics&Policies,Economic Theory&Research,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Markets and Market Access,Access to Markets

Weightless machines and costless knowledge - an empirical analysis of trade and technology diffusion

The authors examine the impact on productivity of technologies imported by a sample of developing, and transition economies in Central and Easter Europe, and the Southern Mediterranean - economies becoming increasingly integrated with the European Union. They depart from earlier studies of technology diffusion by focusing on the technology embodied in the machines imported. Earlier work focused mostly on spillovers from foreign research, and development conveyed through trade, without controlling for the characteristics of the goods imported. The authors jointly estimate the choice of foreign technology, and its impact on domestic productivity for a set of manufacturing sectors. They proxy the technological level of the machines imported, by using an index relating the unit value of the machines imported by a given country, to the unit value of similar machines imported by the United States. At any point in time between 1989 and 1997, there is a persistent (even increasing) gap between the unit values of the machines imported by the United States, and those imported by the sample of developing countries. Although developing economies buy increasingly productive machines, the technology embodied in the machines persistently lags behind that in the machines purchased by the United States - so far as unit values are good proxies of embodied technologies. The authors also find that productivity growth in manufacturing, depends on the types of machines imported in a given industry. So although the optimal choice for developing countries is to buy cheaper, less sophisticated machines, given local skills and factor prices, this choice has a cost in long-run productivity growth. If productivity is low, countries buy low-technology machines, but doing so keeps them in a low-technology, low-growth trap.Environmental Economics&Policies,Labor Policies,Banks&Banking Reform,Economic Theory&Research,General Technology,Banks&Banking Reform,Environmental Economics&Policies,Economic Theory&Research,General Technology,ICT Policy and Strategies