Current research

The types of research that we undertake essentially reflect the types of specializations that exist within the unit and in the department. The ambition is always to apply modern economics and econometric methods, while at the same time taking account of the special characteristics of the countries studied.

* Geography, Institutions, Technology and Economic Convergence (2003-2009)

The purpose of this research programme is to undertake analyses of the relationship between international economic integration and growth in less developed countries. We will particularly try to understand the reasons as to why some countries or regions converge towards rich country income levels, while others, notably in Africa, diverge. The starting point will be the work that has been done on the diffusion of technology and economic convergence, but we will more explicitly try to analyse the roles of geography and institutions in the process. The latter factors have featured prominently in development analysis in recent years, but they have not been systematically integrated in an approach to growth in poor countries in the context of globalisation.

Financial support: Jan Wallander and Tom Hedelius Foundation

* Determinants and Impacts of Institutional Reform: The Case of Rwanda (2008-2010)

Arne Bigsten and Ann-Sofie Isaksson

This project aims to evaluate the determinants and impacts of institutional reforms in a particular development context, namely Rwanda. We will study both the process leading to institutional reforms by the government and the impact of the reforms on the effectiveness of the institutions covered. We will select a sample of institutions to evaluate, but the first one will be the Office of the Auditor General for State Finance (OAG). We will look at the reform process itself, the changes that it has brought about within the institution, and the results that the institution has produced. Factors like the resources allocated to this institution, the room it is given to operate, and the actions taken by the government following the Auditor General's reports, are examples of aspects to be considered in the analysis.

Financial support: SAREC

* Rural Income Diversification and Poverty Reduction in Africa (2009-2010)

Arne Bigsten, Måns Nerman and Sven Tengstam

The income diversification of African smallholders is a potential pathway out of poverty as alternative activities to subsistence farming may have substantially higher returns, generate cash for credit constrained households and help them cope with income risks and shocks. The reasons put forward as to why poorer households have failed to take up the lucrative strategies that the better off have usually stress various constraints on the poorer households.

In this project we will have access to panel data for both Tanzania and Zambia, which make it possible to study patterns, dynamics and the potential poverty reducing impact of, as well as constraints to, income diversification in rural Africa. On the basis of the results from this study we will be able to discuss policy interventions that can improve the access of the poor to better income opportunities.

Financial support: SAREC

* When Will Africa Take Off? (2007-2009) 

Pelle Ahlerup, Arne Bigsten, Ann-Sofie Isaksson, Annika Lindskog and Sven Tengstam

We investigate constraints on African take-off. We investigate the importance of integration and in particular whether it matters with whom you integrate and whether the type of integration matters. We analyse what institutions matter the most for economic development in the African context by decomposing institutional measures. We look at the role of human capital investment in Africa. We consider educational externalities in production, investigate how the demand for educated labour has evolved, and estimate how demand for labour of various educational categories in the manufacturing sector has evolved. We consider how the choice of development policy in the forms of Poverty Reduction Strategies affects the incomes of the poor. We do a case study of Zambia of the links between trade, economic growth pattern, and poverty.

* Trade Liberalization, Productivity Growth, and Firm Turnover in the Ethiopian Manufacturing Sector (2007-2009)

Arne Bigsten and Mulu Gebreeyesus

The manufacturing industry in Ethiopia, like in all of Sub-Saharan Africa, has stagnated during at least two decades in spite of extensive economic reforms. These have meant opening up to the international economy, but in spite of this manufacturers have not been able to establish a significant presence in the export markets. The question why the reforms have not led to increased international competitiveness is of tremendous importance for the understanding of Africa's development problem. Increased exports was one of the main targets of the structural adjustment programmes, but because of the lack of adequate data relatively little in terms of in depth research has been done on the impact of trade liberalisation on African industry.

In this study we have access to panel data for an eight-year period covering all of Ethiopia's registered manufacturing firms as well as data about tariff protection. On the basis of this material we will analyse the effects of trade liberalisation and export promotion on productivity change and firm turnover, that is entry and exit of firms. Since we have access to a relatively long panel we can analyse how export affects productivity change, that is whether there is learning-from- exporting.

Financial support: SAREC

* Socioeconomic Impact of HIV/AIDS in Malawi (2008-2011)

Dick Durevall and Annika Lindskog

This study looks at how the presence of HIV/AIDS in communities affects behaviour of households in Malawi both among the general population and among those directly affected. It is vital to understand how households in general respond to the epidemic, both when designing policies and judging the long-term economic consequences. However, the vast majority of existing analyses focus on the impact on individuals directly affected by HIV/AIDS, and pay little attention to the adjustment of the general population.

Our theoretical point of departure is the analysis of risk and risk management, which focuses on adjustment of households vulnerable to negative shocks, and on survival strategies of households actually hit by them. Three questions will be addressed: How does fertility respond to HIV/AIDS? How does HIV/AIDS affect children¿s education? How are informal support networks affected by HIV/AIDS?

Changes in fertility affect the overall impact of the epidemic on key demographic indicators such as population growth, child mortality, the number of orphans, etc., as well as the ratio of children and elderly to those at working age, which is known to have a major impact on economic growth and poverty.The impact of HIV/AIDS on schooling has long-term social and economic consequences. And its influence on informal support networks is protection of orphans and poor households, since the extended family is the main provider of social insurance.

We use individual data from recent nationally representative surveys, which include information on HIV status, as well as many other socioeconomic variables. One important aspect in which our approach differs from earlier studies is that we exploit the fact that HIV prevalence varies greatly within Malawi, both geographically and over time. This will allow us to statistically identify the impact of HIV/AIDS.

Financial support: Sida/SAREC

* Female Non-Farm Entrepreneurs and Rural Diversification: A case study of rural Ethiopia (2009-2010)

Måns Söderbom and Eyerusalem Siba

This project investigates how stronger female entrepreneurship can contribute to growth and development in poor countries. We focus on rural Ethiopia, where traditional agriculture is the predominant source of livelihood and poverty is widespread. Based on quantitative analysis of new survey data on households, nonfarm enterprises and communities in rural areas in Ethiopia, combined with data on urban informal firms, we document key facts related to female entrepreneurship and rural diversification, and identify policy options. We pay close attention to human and physical capital, and to time constraints faced by women due to the domestic tasks to which they traditionally get assigned. We also consider the role of geography and institutions.

Our research will be of interest to policy makers, international donors and NGOs concerned with gender welfare inequality and the lack of growth of new jobs in rural areas.

* Institutional Economics and Long-Run Development (2007-2010)

Ola Olsson and Heather Congdon Fors

It has recently been widely acknowledged among economists that institutions like property rights and independent courts are central for understanding why some countries are rich while others are poor. However, the determinants of institutional quality and institutional change are still not well understood. The broad aim of this research project is to shed light on the fundamental factors that cause strong institutions for long-run economic development. More specifically, research will be carried out within five areas: (a) Country size and the rule of law. Why do large countries have a weaker rule of law? (b) Natural resource rents and endogenous institutional change after independence. The model shows that natural resource rents make postcolonial regimes choose weak property rights. (c) The institutional legacy of colonialism. We collect and use data on all former colonies in the world. (d) Social capital versus court institutions in the development process. A principal-agent analysis of an investment situation that takes place in a sequential, repeated game. (e) A cross-country empirical analysis of the determinants of ethnic diversity.

Our work will be both empirical and theoretical. The empirical work will use newly developed data from the World Bank on government quality and institutional strength, available for all countries in the world. We believe that our work has strong relevance for Western countries' development and aid policies towards Third World countries.

Financial support: Vetenskapsrådet (Swedish Research Council) and SAREC