Farm-Investment Strategies

This chapter reviews the broader investment strategies pursued by Kala’s farmers, the differences between the three assets – wells, oxen plough-teams, breeding cattle - in terms of the variability in returns due to rainfall fluctuations, difference in household size and access to complementary inputs. Returns are shown to be consistently greater for larger households, as their services are spread over a larger area, and maintenance costs of livestock, especially watering, are spread over a larger herd. Wells and plough teams generate rapid returns, while the payback period for breeding cattle is much longer. Returns from each asset are not perfectly correlated, though all rely on rainfall, and each is subject to certain risks. The chapter also compares the length of useful life, resale values and the consequences for farming families of not being able to invest in a particular asset. The distribution of all three assets is described in relation to household size, and the strong association shown between large domestic groups and a diverse range of assets. Returns to the overall household enterprise are shown to be vulnerable to climate, land availability, and control by the villagers over who gains access to land and water, and on what terms. It is shown that some households have been better able than others to seize opportunities to invest capital and labour in new assets and openings, which then cement their longer-term ownership of wealth.

The Effect of Fertilizer Subsidies on Investment in Soil and Water Conservation and Productivity among Ghanaian Farmers Using Mechanized Irrigation

The fertilizer subsidies reintroduced in various sub-Saharan African countries from 2007 aim to increase agricultural production and assist in the development of fertilizer markets. The present study evaluates the impact of a fertilizer subsidy program among farmers in Ghana who employ highly mechanized irrigation systems. The results indicate that farmers who received fertilizer under the subsidy program used 45% more fertilizer. However, they did not use more weedicide and were likely to reduce investment in soil and water conservation. Thus, the income gains resulting from the subsidy programs were not invested in such non-targeted inputs. Moreover, the program beneficiaries’ reduced investment in soil and water conservation may explain the finding that the subsidy did not improve their productivity. Thus, since fertilizer subsidy programs alone may not improve productivity, it may be necessary to target spending explicitly on complementary inputs such as investing in soil and water conservation.

Making the Grade: The Sensitivity of Education Program Effectiveness to Input Choices and Outcome Measures

This paper demonstrates the acute sensitivity of education program effectiveness to the choices of inputs and outcome measures, using a randomized evaluation of a mother-tongue literacy program. The program raises reading scores by 0.64SDs and writing scores by 0.45SDs. A reduced-cost version instead yields statistically-insignificant reading gains and some large negative effects (-0.33SDs) on advanced writing. We combine a conceptual model of education production with detailed classroom observations to examine the mechanisms driving the results; we show they could be driven by the program initially lowering productivity before raising it, and potentially by missing complementary inputs in the reduced-cost version.

Human Capital and Macroeconomic Development: A Review of the Evidence

The role of human capital in facilitating macroeconomic development is at the center of both academic and policy debates. Through the lens of a simple aggregate production function, human capital might increase output per capita by directly entering in the production process, incentivizing the accumulation of complementary inputs, and facilitating the adoption of new technologies. This paper discusses the advantages and limitations of three approaches that have been used to evaluate the empirical importance of these channels: cross-country regressions, development accounting, and quantitative models. The key findings in the literature are reviewed and some of them are replicated using updated data. The bulk of the evidence suggests that human capital is an important determinant of cross-country income gaps, especially when its measurement is broadened to go beyond simple proxies of educational attainment. The paper concludes by highlighting policy implications and promising avenues for future work.

Making the Grade: The Sensitivity of Education Program Effectiveness to Input Choices and Outcome Measures

This paper demonstrates the acute sensitivity of education program effectiveness to the choices of inputs and outcome measures, using a randomized evaluation of a mother-tongue literacy program. The program raises reading scores by 0.64SDs and writing scores by 0.45SDs. A reduced-cost version instead yields statistically-insignificant reading gains and some large negative effects (-0.33SDs) on advanced writing. We combine a conceptual model of education production with detailed classroom observations to examine the mechanisms driving the results; we show they could be driven by the program initially lowering productivity before raising it, and potentially by missing complementary inputs in the reduced-cost version.

Does Household Electrification Supercharge Economic Development?

In recent years, electrification has reemerged as a key priority in low-income countries, with a particular focus on electrifying households. Yet the microeconomic literature examining the impacts of electrifying households on economic development has produced a set of conflicting results. Does household electrification lead to measurable gains in living standards or not? Focusing on grid electrification, we discuss how the divergent conclusions across the literature can be explained by differences in methods, interventions, potential for spillovers, and populations. We then use experimental data from Lee, Miguel, and Wolfram (2019) — a field experiment that connected randomly selected households to the grid in rural Kenya — to show that impacts can vary even across individuals in neighboring villages. Specifically, we show that households that were willing to pay more for a grid electrification may gain more from electrification compared to households that would only connect for free. We conclude that access to household electrification alone is not enough to drive meaningful gains in development outcomes. Instead, future initiatives may work better if paired with complementary inputs that allow people to do more with power.

Nicholas Kaldor and Kazimierz Łaski on the pitfalls of the European integration process

Nicholas Kaldor and Kazimierz Łaski have been two very prominent exponents of Keynesian thinking. They both contributed to the debate on European economic integration, one (Nicholas Kaldor) in the early 1970s, when there were fierce debates about the United Kingdom's entry to the European Communities, and the other (Kazimierz Łaski) in the wake of the financial and economic crisis of 2008–2012, when the European Union and its Economic and Monetary Union were seriously challenged by potential disintegration. Both exponents provided deep and complementary inputs into an understanding of the centrifugal forces at work when a region with a rudimentary federal structure (but an extremely weak ‘central state’) embarks on tight economic integration with an inadequate macroeconomic policy framework in place.

Corporate Governance and Why It Matters

This chapter introduces the idea of governance and proceeds to a structured discussion of what corporate governance means and why it matters. The discussion is divided into three themes: the first deals with enterprise—long-run commitments that firms make in terms of investment and innovation; the second deals with complementary inputs, in particular labour and the commitment of employees; the final theme is politics, where the external effects of company actions are discussed in a context where governments increasingly withdraw from roles traditionally considered public responsibilities. These themes are used to illustrate some of the major debates in governance today, not just in terms of a distinction between shareholder and stakeholder approaches but within each of these as well. From this overall perspective we consider each of the individual chapters and comment on their distinctive ideas and how they relate to the overall themes.