Perceived Wealth as a Poverty Measure for Constructing a Poverty Profile. A Case Study Of Four Villages In Rural Tanzania

Poverty assessment and targetting usually relies on expensive, large scale survey data. We argue that, in some cases, exploiting information villagers have on their immediate neighbors in close-knit agricultural societies might provide an alternative. We use the results of a participatory wealth ranking gathered in four villages in Tanzania and explore correlations between perceived wealth and indicators related to household characteristics, human capital, housing and durables, and productive assets. Comparing our results to a similar analysis using houshold expenditure survey data, we find that participatory methods confirm the validity of most commonly used poverty indicators, but we also find some remarkable differences.

Modelling Trends in Food Market Integration: Method and an Application to Tanzanian Maize Markets

Pushed by increasing availability of price data and extensive market liberalisation efforts in many developing countries, research on food market integration has evolved rapidly over the last two decades. Empirical methods to measure market integration diverged in two directions: on the one hand, there is the Parity Bounds Model (PBM), while on the other hand the use of Threshold Autoregressive (TAR) Models has been proposed. This article provides a discussion of the two methods and argues that TAR models are more able to capture the dynamics of the arbitrage process underlying interconnected markets. Furthermore, we extend the standard TAR model to include a time trend in both the threshold and the adjustment parameter. Using weekly maize price data on seven selected markets in Tanzania, we illustrate how both transaction cost and the speed of adjustment have changed during the nineties.market integration, transaction costs, thresholds, maize, Tanzania, Agribusiness, F15, O18,

Dynamic Price Adjustment in Spatially Separated Food Markets with Transaction Costs

This paper presents an alternative technique to analyze market integration using price data, linking the cointegration version of Ravallion's dynamic model with the recent switching regression approaches as in Baulch's Parity Bounds Model. The Band- Threshold Autogression (Band-TAR) model allows for dynamic analysis of the adjustment process as well as for trade discontinuities and transaction costs, thereby avoiding some of the unrealistic assumptions of both approaches. We apply the model to the same rice price data on the Philippines as Baulch and find that, contrary to Baulch, the efficient arbitrage conditions are often not satisfied and unexploited profits are common, albeit relatively small. At least on one important trade route, we find evidence of substantial inefficiences.

In Search of Financial Globalization Traps

The question whether global financial integration is beneficial for everyone remains highly disputed. It is often assumed that financial globalization involves threshold effects, where integration is worthwhile only when certain preconditions are met. However, it has also been noted that financial account liberalization also brings about considerable additional indirect benefits. These indirect benefits are often the same as the preconditions, such that there exists a complex two-way relationship between financial globalization and the preconditions/additional benefits. Such a relationship can lead to financial globalization traps, where some economies are trapped at a low level stable equilibrium, while others enjoy ever increasing financial integration. In this paper, we use de facto indicators of international financial integration to investigate if the dynamics of financial integration exhibit signs of such thresholds and traps. We present a parametric way of estimating these important parameters, based on recently developed sample splitting and threshold estimation methods. We find that there are indeed signs of multiple equilibriums if we look at the growth rates of total assets and liabilities. We also find that a group of countries are apparently caught in a high debt stock trap.

Aid Effectiveness, Debt Relief and Public Finance Response: Evidence from a panel of HIPC Countries

Through the Heavily Indebted Poor Countries (HIPC) Initiative, substantial amounts of debt relief have been granted to a set of low-income countries as an alternative instrument of aid delivery. The theoretical (and moral) arguments in favour of debt relief are well established. However, the question whether debt relief is a more effective instrument of development assistance in practice is an empirical question. Hence, in this paper we investigate, for a panel of 28 decision point HIPC countries, the intertemporal linkages between debt relief and other fiscal variables such as current expenditure, government investment, taxation and domestic borrowing, in comparison to the effects of more traditional forms of development assistance, namely (non-debt relief) grants and concessional loans. To do so, we estimate a panel VAR and look at impulse response functions. Overall, we find that HIPC (only) debt relief impact on fiscal variables to follow fairly complex dynamics. For example, debt relief initially reduces government investment, but the effect becomes positive after two years, well outperforming other modes of aid delivery.

Who Engages in Water Scarcity Conflicts? A Field Experiment with Irrigators in Semi-arid Africa

Does water scarcity induce conflict? And who would engage in a water scarcity conflict? In this paper we look for evidence of the relation between water scarcity and conflictive behavior. With a framed field experiment conducted with smallholder irrigators from semi-arid Tanzania that replicates appropriation from an occasionally scarce common water flow we assess what type of water users is more inclined to react in conflictive way to scarcity. On average, water scarcity induces selfish appropriation behavior in the experiment which is regarded as conflictive in the Tanzanian irrigator communities where strong noncompetition norms regulate irrigation water distribution. But not all react to water scarcity in the same way. Poor, marginalized, dissocialized irrigators with low human capital and with higher stakes are most likely to react with conflictive appropriation behavior to water scarcity. Viewed from a political ecology perspective we conclude that circumstances in Tanzania are conducive to resource scarcity conflicts. Water scarcity and water values are increasing, and water governance institutions entail exclusionary elements. Moreover, a higher likelihood to react in a conflictive way to water scarcity coincides with real economic and political inequalities which could form a basis for mobilization for more violent ways of competing for scarce resources

Trading in turbulent times: Smallholder maize marketing in the southern highlands, Tanzania

The short-run effects of the 2007/2008 global food crisis on semisubsistence farmers' well-being in low-income countries depends on whether they are net sellers or net buyers of the affected commodities. Realizing that farmers face volatile prices over the course of an agricultural year, we analyze the timing of sales and purchases of maize. In addition, in our analysis, we depart from the oft-made assumption that farmers in rural villages are perfectly integrated within the wider economy. Comparing our results with a static analysis, we find that especially-poor farmers face greater losses from the maize food price crisis than others. The welfare impact is likely to be even more severe than previously thought, as the crisis hurts large households with relatively large numbers of children and women most. We also analyze the effects of factors that are likely to affect potential benefits from intertemporal and spatial price dispersion, such as means of transport, access to price information, and credit.Food prices, intertemporal arbitrage, Market participation, spatial price dispersion,

Who Engages in Water Scarcity Conflicts? A Field Experiment with Irrigators in Semi-arid Africa

Does water scarcity induce conflict? And who would engage in a water scarcity conflict? In this paper we look for evidence of the relation between water scarcity and conflictive behavior. With a framed field experiment conducted with smallholder irrigators from semi-arid Tanzania that replicates appropriation from an occasionally scarce common water flow we assess what type of water users is more inclined to react in conflictive way to scarcity. On average, water scarcity induces selfish appropriation behavior in the experiment which is regarded conflictive in the Tanzanian irrigator communities where strong noncompetition norms regulate irrigation water distribution. But not all react to water scarcity in the same way. Poor, marginalized, dissocialized irrigators with low human capital and with higher stakes are most likely to react with conflictive appropriation behavior to water scarcity. Viewed a political ecology perspective we conclude that circumstances in Tanzania are conducive to resource scarcity conflicts. Water scarcity and water values are increasing. Water governance institutions entail exclusionary elements. Moreover, a higher likelihood to react in a conflictive way to water scarcity coincides with real economic and political inequalities which could form a basis for mobilization for more violent ways of competing for scarce resources.

Empirical Evidence on the New International Aid Architecture

We conduct an empirical study on how 22 donors allocate their bilateral aid among 147 recipient countries over the 1970-2004 period to investigate whether recent changes in the international aid architecture-at the international and country level-have led to changes in donor behavior. We find that after the fall of the Berlin Wall and especially in the late nineties, bilateral aid responds more to economic needs and the quality of a country?s policy and institutional environment and less to debt, size and colonial and political linkages. We also find more selectivity by donors when a country uses a PRSP and passes the HIPC decision point. Importantly, PRSPs and HIPCs reduce the perverse effects of large bilateral and multilateral debt shares on aid flows, suggesting less defensive lending. Overall, it appears certain international aid architecture changes have led to more selectivity in aid allocations. The specific factors causing these changes remain unclear, however. And since there remain (large) differences among donors in selectivity that appear to relate to donors? own institutional environments, reforms will have to be multifaceted. --development aid,aid allocation,selectivity,debt relief,HIPC,PRSP,aid architecture

Road expansion and market integration in the Austrian low countries during the second half of the 18th century.

We analyse the integration of wheat markets across 18 towns in the Austrian Low Countries during the second half of the 18th century and the relationship with the rapidly expanding paved road network in this period. We use a switching regression approach (threshold cointegration) to study long-run and short-run integration of these markets, using monthly wheat prices. We find that throughout this period, markets were spatially interconnected. However, price margins adjust only slowly to long-term levels in response to local shocks. We also find that transaction costs are relatively high. The results suggest a complex market with regular trade flow reversals and periods of unprofitable trade between key markets. It is widely accepted in Belgian historiography that the construction of a paved road network caused a substantial reduction in transaction costs. Our research, however, indicates that distance, fixed costs or links by rivers and canals mainly influenced transaction costs, not the expansion of a paved road network. Two factors can account for this. First, the toll structure on paved roads discouraged bulk trade. Secondly, new private investment in inter-city grain trade that may have led to cuts in the trading costs, typically appeared to be absent in this period. However, adjustment speeds in markets are significantly affected by the existence of paved roads. Better communication and faster transport due to the road network resulted in faster arbitrage.