Norms, Culture and Local Infrastructure: Evidence from a Decentralised Economy

Culture as reflected in social and religious norms may be pivotal to social organization in a decentralised economy where local authorities are responsible for the provision of local public goods. We distinguish between individualist and collectivist cultures to argue that collectivist culture may promote rules to indulge in family, social and religious values at the cost of individual values promoting material objects and may thus result in inefficient choice of pubic goods. We use Indonesia as a case in point to classify communities strictly adhering to traditional adat laws and Islamic religion as promoting collectivist culture. Results using 1997 and 2007 Indonesian Family Life Survey community-level panel data highlight that, even after controlling for other variables, traditional collectivist communities strongly adhering to adat and Islam tend to have significantly greater access to social (rather than physical) infrastructural goods; similar pattern is reflected in the allocation of community spending to these goods.decentralization, collectivist culture, adat law, Islam, social and physical infrastructure, allocation of spending, community development, Indonesia

Public Infrastructure, Location of Private Schools and Primary School Attainment in an Emerging Economy

The paper argues that access to public infrastructure plays a crucial role on the presence of private schools in a community, as it could not only minimise the cost of production, but also ensure a high return to private investment. Results using community, school and child/household-level PROBE survey data from five north Indian states provide some support to this central hypothesis: even after controlling for all other factors, access to village infrastructural facilities is associated with a higher likelihood of having a private school in the community. This is also corroborated by an analysis of household demand for private schools. The paper concludes by examining the effect of private school presence on year 5 pass rates: while all-school pass rates are significantly higher in villages with a private school, private school presence fails to have significant effect on local state school pass rates.school privatisation, school choice, school attainment, local public infrastructure, failing state schools, simultaneity bias, instrumental variable

Norms, Culture and Local Infrastructure: Evidence from Indonesia

The present paper explores the role of religious and social norms on a community’s access to public infrastructure. Distinguishing between social and physical infrastructure, we argue that investment in social infrastructural goods (e.g., health, education) could contribute to exchange both within and outside the community, while that in physical infrastructure (e.g., road, transport, communications) could only improve exchange outside the community. Accordingly, traditional communities may prefer to invest in social infrastructure goods at the cost of physical infrastructure goods in an attempt to preserve their indigenous identity. Using three rounds of Indonesian family life survey data, we find some support to this central hypothesis, even after controlling for all other possible covariates.

How Much of the Gender Difference in Child School Enrolment Can Be Explained? Evidence from Rural India

There are significant gender differences in child schooling in the Indian states though very few studies explain this gender difference. Unlike most existing studies we take account of the implicit and explicit opportunity costs of schooling and use a bivariate probit model to jointly determine child’s participation in school and market jobs. Results obtained from the WIDER villages in West Bengal suggest that indicators of household resources, parental preferences, returns to and opportunity costs of domestic work significantly affect child school enrolment. While household resources have similar effects on enrolment of boys and girls, other arguments tend to explain a part of the observed gender difference. Even after taking account of all possible arguments, there remains a large variation in gender differences in child schooling that cannot be explained by differences in male and female characteristics in our sample.Gender differences, Child schooling and child labour, Opportunity costs of schooling, Parental Preferences, Bivariate Probit, Oaxaca Decomposition. : Gender differences, Child schooling and child labour, Opportunity costs of schooling, Parental Preferences, Bivariate Probit, Oaxaca Decomposition.

Public Infrastructure, Location of Private Schools and Quality of Schooling in an Emerging Economy

The present paper argues that local public infrastructure exerts a significant and positive effect on the presence of private school as well as the quality of schooling in Indian villages. Given historical distribution of land and ethnic composition, villages with more unequal distribution of land are more likely to have better access to public infrastructure (for given level of ethnic fractionalization), which in turn enhances the likelihood of having a private school in the village. Results using PROBE survey of household-, school- and village-level data from five north Indian states provide some support to this central hypothesis. There is also evidence that the quality of overall schooling is generally better in villages with a private school; rise of private schools however fails to affect the quality of local state schools.

The Elite and the Marginalised: an Analysis of Public Spending on Mass Education in the Indian States

In the context of strikingly low literacy rates among Indian women and low caste popultaion, the paper explores whether and how far the interests of the marginalised poor are undermined by the dominant elite consisting mainly of the landed and the capitalists. We distinguish the dominant elite from the minority elite (i.e., elected women and low caste representatives in the ruling government) and also the marginalised as measured by the state poverty rate. Results based on the Indian state-level data suggest that a higher share of land held by the top 5% of the popultaion lowers public spending on education while presence of capitalist elite, as reflected in greater degree of industrialisation enhances it, even in poor states; the landed elite thus appears to be unresponsive to the underlying poverty rate. The effect of minority representation in the government appears to have a limited impact, indicating a possibility of their non-accountability to serve their cohorts and/or a possible allinace with the dominant elite.

Understanding the Effects of Siblings on Child Mortality: Evidence from India

This paper examines the efffect of siblings on child mortality in the Indian state of West Bengal arguing that prior and posterior spacing between consecutive siblings are important measures of the intensity of competition among siblings for limited resources. Parental decisions regarding spacing is endogenous to allocation of resources though available estimates of child mortality largely ignore it. To correct for this possible endogeneity bias, we allow for family specific unobserved heterogeneity and model birth spacing and child mortality as correlated processes within a sequential framework. These corrected estimates suggest: (a) the hazard of prior spacing may increase while that of posterior spacing decrease with mother’s literacy and household assets. (b) the chances of child survival increase with an increase in both prior and posterior birth interval but decrease with the birth of a twin. (c) prior and posterior birth intervals have different effects on young boys and girls, which, in turn, reflect the nature of decisions made by resource constrained parents characterised by pro-male bias.Sibling competition, Age and gender composition, Birth spacing, Child mortality, Pro-male bias, Unobserved heterogeneity.

The Value of Business Networks; an Analysis of Firm Financing in Transition Economies

The paper argues that the networked firms have an advantage in securing bank finance in countries with weak legal and judicial institutions. An analysis of recent BEEPS data from sixteen CEE transition countries lends some support to this hypothesis. Firms affiliated to business associations are more likely to have bank finance while small and medium firms are less likely to secure it. Importance of being associated with business networks is particularly evident among firms who borrow from foreign banks, as the latter attempt to hedge risk in an uncertain environment. Significance of business networking however vanishes if institutional quality improves.

DO EXTERNAL FUNDS YIELD LOWER RETURNS ? RECENT EVIDENCE FROM EAST ASIAN ECONOMIES

Using a large firm level panel data set from four Asian countries, this paper compares the returns to various internal and external funds. A novel feature of our analysis is that we distinguish between financially constrained and unconstrained firms and determine selectivity-corrected estimates of rates of return to internal and external funds in markets characterised by information problems. Results derived from a unique random effects panel data model with selection and unobserved heterogeneity suggest evidence of significant misallocation, especially in external financing of investment. While these results contrast some of the existing results, they seem to complement the moral hazard arguments put forward by the macro literature on the recent Asian crisis.Efficiency, Misallocation of capital, Returns to internal and external funds, Debt and equity, Financial constraint, Random effects model with selection

Evolution of Capital Strcture in East Asia: Corporate Inertia or Endeavours?

The present paper examines the capital structure adjustment dynamics of listed non-financial corporations in seven East Asian countries during 1994-2002. Compared to firms in the least affected countries, average leverages were much higher among firms in the worst affected countries while the average speeds of adjustment were lower. This general ranking is robust to various alternative specifications and sample selections. We argue that this pattern is closely linked to weaknesses in regulatory environment and lack of access to alternative sources of finance in the worst affected countries.