Policies In Low-income Countries Research Articles

Global Perspectives on Fiscal Policy and Labor Income-Leisure Choices: Theoretical and Practical Insights

In macroeconomic literature, fiscal policy is considered a powerful tool to achieve sustainable development, full employment, and social well-being in developed and developing societies. For this, public authority uses expansionary and contractionary tax policies to achieve stable growth and employment environment for the stable labor market. This study theoretically and empirically investigates the problem of inference on income-leisure labor preference. Also, it considers the impact of tax and expenditure structure on labor choices regarding working hours under the assumption of neoclassical theory. We use quantile regression analysis to investigate the data set for worldwide, high, and low-income countries from 2000 to 2022, for the macro-level analysis based on the empirical investigation of 123 countries cross-section panel. The outcomes show that when the fiscal authorities impose a regressive form of taxes, it may hurt the labor wages and distribution of income-leisure preferences or the welfare of labor. Similarly, non-labor income hurts labor utility through a large volume of non-development expenditure. However, when the progressive form of taxes is imposed, it may improve the labor utility. At the same time, on the other side, when fiscal authority disburses the development expenditure, it may support the non-labor income through the provision of public goods and services. For practice, the empirical results of quantile regression show that government expenditure has a positive while tax hurts labor supply. Fiscal policy in low-income countries has provided an alternative outcome

Tuition fees and the intra-household allocation of schooling: Evidence from Uganda’s Free Primary Education reform

Many education policies in low income countries impose eligibility limits, and these can generate household responses that distribute educational investments across children. In this paper, I study the effects of eligibility limits in the context of the Universal Primary Education (UPE) reform in Uganda. The program abolished elementary school fees for up to four children per household, with families paying fees on each additional child. Depending on the composition of children and their age at the onset of the reform, the policy generates costs for primary school that vary both within and across households. Children that are eligible for the tuition waiver but live in households with ineligible siblings complete fewer years of schooling. I estimate that the presence of ineligible siblings wiped out almost half of the overall impact of the UPE reform on educational attainment, with the effects concentrated among the poorest households. Household responses to the subsidy program are similar to those found in other types of schooling programs such as conditional cash transfers.

An update on lateral flow immunoassay for the rapid detection of SARS-CoV-2 antibodies.

Over the last three years, after the outbreak of the COVID-19 pandemic, an unprecedented number of novel diagnostic tests have been developed. Assays to evaluate the immune response to SARS-CoV-2 have been widely considered as part of the control strategy. The lateral flow immunoassay (LFIA), to detect both IgM and IgG against SARS-CoV-2, has been widely studied as a point-of-care (POC) test. Compared to laboratory tests, LFIAs are faster, cheaper and user-friendly, thus available also in areas with low economic resources. Soon after the onset of the pandemic, numerous kits for rapid antibody detection were put on the market with an emergency use authorization. However, since then, scientists have tried to better define the accuracy of these tests and their usefulness in different contexts. In fact, while during the first phase of the pandemic LFIAs for antibody detection were auxiliary to molecular tests for the diagnosis of COVID-19, successively these tests became a tool of seroprevalence surveillance to address infection control policies. When in 2021 a massive vaccination campaign was implemented worldwide, the interest in LFIA reemerged due to the need to establish the extent and the longevity of immunization in the vaccinated population and to establish priorities to guide health policies in low-income countries with limited access to vaccines. Here, we summarize the accuracy, the advantages and limits of LFIAs as POC tests for antibody detection, highlighting the efforts that have been made to improve this technology over the last few years.

A spatial analysis of out-of-pocket payments for healthcare in Malawi.

Out-of-pocket (OOP) expenditures on health remain high in many low- and middle-income countries despite policy efforts aiming to reduce these health costs by targeting their hotspots. Hotspot targeting remains inadequate, particularly where the OOP expenditures are related across geographic regions due to unequal demand, supply and prices of healthcare services. In this paper, we investigate the existence of geographical correlations in OOP health expenditures by employing a spatial Durbin model on data from 778 clusters obtained from the 2016 Malawi's Integrated Household Survey. Results reveal that Malawian communities face geographical spillovers of OOP health expenditures. Furthermore, we find that factors including household size, education and geographical location are important drivers of the OOP health expenditure's spatial dependency. The paper calls for policy in low-income countries to improve the quality and quantity of healthcare services in both OOP hotspots and their neighbouring communities.

Addressing the Burden of Education Financing in Low and Lower-Middle-Income Countries: The Role of Savings Accounts, Cash Transfers, and Other Income Sources

Cost-sharing between governments and families remains a strategic part of many governments’ post-secondary education funding policies in low-income countries. This shift to more cost-sharing raises questions about how households meet their contributions to post-secondary schooling costs. This study uses data from the World Bank’s Global Financial Inclusion survey and World Development Indicators to examine how savings account ownership, cash transfers, and other forms of income shape families’ decisions about education financing in 59 low and lower-middle-income countries. Results from generalized hierarchical linear modeling and logistic regression models show that individuals with savings accounts are more likely to dedicate resources to educational purposes than those without accounts. Other forms of income (cash transfers excepted) also predict an individual’s likelihood of earmarking savings for education to a lesser degree. Our findings offer compelling evidence that greater access to formal savings services may provide a viable long-term strategy to help families prepare financially for their children’s future education. These findings may inform future programs that promote financial inclusion and expand access to formal savings services to help individuals and families save for their children’s education.

Impact of Different Levels of Supervision on the Recovery of Severely Malnourished Children Treated by Community Health Workers in Mali.

(1) Background: The Ministry of Health in Mali included the treatment of severe acute malnutrition (SAM) into the package of activities of the integrated community case management (iCCM). This paper evaluates the most effective model of supervision for treating SAM using community health workers (CHWs). Methods (2): This study was a prospective non-randomized community intervention trial with two intervention groups and one control group with different levels of supervision. It was conducted in three districts in rural areas of the Kayes Region. In the high supervision group, CHWs received supportive supervision for the iCCM package and nutrition-specific supervision. In the light supervision group, CHWs received supportive supervision based on the iCCM package. The control group had no specific supervision. (3) Results: A total of 6112 children aged 6–59 months with SAM without medical complications were included in the study. The proportion of cured children was 81.4% in those treated by CHWs in the high supervision group, 86.2% in the light supervision group, and 66.9% in the control group. Children treated by the CHWs who received some supervision had better outcomes than those treated by unsupervised CHWs (p < 0.001). There was no difference between areas with light and high supervision, although those with high supervision performed better in most of the tasks analyzed. (4) Conclusions: Public policies in low-income countries should be adapted, and their model of supervision of CHWs for SAM treatment in the community should be evaluated.

Coping with intelligence deficits in poverty-alleviation policies in low-income countries

Poverty-alleviation initiatives in lower-income countries are challenged by intelligence deficits that cause suboptimal designs that threaten their effectiveness, targeting, and sustainability. The uncertainty of theory and information, the adverse consequences of conventional family-level “means testing,” and unpredictable future events and conditions call for auto-targeting and auto-correcting policy designs with built-in adaptive capacity. Numerous categories and examples of these designs from multiple countries are presented.

Filling knowledge gaps to strengthen livestock policies in low-income countries

Evidence-based livestock policies are needed to raise rural incomes and improve dietary diversity in low-income countries where the majority of populations depend on livestock for their livelihoods. Yet these contexts exhibit unique challenges on both information supply and demand sides, which widen the gaps between research and policy-making. This paper reviews the constraints to evidence-based policy-making and identifies knowledge areas most suitable for building a persuasive narrative that capture the attention of busy decision-makers. These promising spaces for production of new data and methods focus on livestock contribution to the economy, trade, food security and resilience. The examples discussed show the potential of current and future research for leveraging synergistic interests from multiple actors and improving livestock policy interventions.

Price and output effects of Monetary policy in Low Income Countries: The Case of Nepal

This paper examines the impact of monetary policy on economic growth and inflation in Nepal. The impact on economic growth and inflation have been observed using monetary policy instruments/indicators such as CRR, bank rate, interbank rate, M1, M2, private sector credit based on quarterly data from first quarter of 2006 to fourth quarter of 2018. The impact on economic growth and inflation rate has been examined separately. The econometric methods like ADF test, ARDL Model, Bound Test, Error Correction Model, Residual Test and Stability test have been used in the study. The empirical results show that economic growth and inflation are influenced by monetary policy. CRR, bank rate, broad money and private sector credit are significant to have impact on economic growth. Likewise, money supply (M1 and M2) has impact on inflation. The result shows that it takes longer time to have impact of broad money and private sector credit on economic growth than on inflation.

Exploring the Output Effect of Fiscal Policy Shocks in Low Income Countries

What do we know about the output effects of fiscal policy in low income countries (LICs)? There are very few empirical studies on the subject. This paper fills this gap by estimating the output effects of government spending shocks in LICs. Our analysis—based on the local projection method—finds that the output effects in LICs are markedly lower than those in AEs and marginally smaller than those in EMs. We also find that in LICs, the output effects are larger (i) during recessions; (ii) under a fixed exchange rate regime; and/or (iii) with higher quality of institutions. Our analysis could not confirm any statistically significant output effect under floating exchange rate regimes. For the estimation of the output effects of fiscal spending shocks, it is thus important to consider the state of the economy and the country’s structural characteristics. Our results imply that the output costs of fiscal adjustment in LICs may not be as large as previously thought, especially if adopted outside of a recession, based on cutting public consumption, and accompanied by reform to enhance institutions.

Exploring the Output Effect of Fiscal Policy Shocks in Low Income Countries

What do we know about the output effects of fiscal policy in low income countries (LICs)? There are very few empirical studies on the subject. This paper fills this gap by estimating the output effects of government spending shocks in LICs. Our analysis—based on the local projection method—finds that the output effects in LICs are markedly lower than those in AEs and marginally smaller than those in EMs. We also find that in LICs, the output effects are larger (i) during recessions; (ii) under a fixed exchange rate regime; and/or (iii) with higher quality of institutions. Our analysis could not confirm any statistically significant output effect under floating exchange rate regimes. For the estimation of the output effects of fiscal spending shocks, it is thus important to consider the state of the economy and the country’s structural characteristics. Our results imply that the output costs of fiscal adjustment in LICs may not be as large as previously thought, especially if adopted outside of a recession, based on cutting public consumption, and accompanied by reform to enhance institutions.

Soins de santé gratuits pour les uns, payants pour les autres : perceptions et stratégies d’adaptation dans le district de Boulsa (Burkina Faso)

Contexte : Les preuves des bienfaits des politiques de gratuité des soins sont réunies, mais les enjeux éthiques que ces politiques soulèvent dans les pays à faibles revenus ont été peu examinés. Au Burkina Faso, la gratuité a été introduite en juillet 2016 pour les enfants de moins de 5 ans et les femmes enceintes, en ce qui concerne les soins en santé reproductive. Il a été rapporté que les critères d’éligibilité sont parfois difficiles à interpréter ou à mettre en application. L’objectif de cette étude est double : 1) comprendre les perceptions et les pratiques du personnel de santé et des bénéficiaires à l’égard du respect des critères d’éligibilité à la gratuité et 2) explorer les tensions éthiques qui en ont découlé et les éventuels modes de résolution. Méthodologie : En 2018, une étude qualitative transversale a été menée dans cinq communautés rurales de Boulsa, au Burkina Faso, Des entrevues individuelles semi-dirigées ont été réalisées auprès du personnel soignant (n=10) et de mères de jeunes enfants (n=10), qui ont été sélectionnées avec l’aide d’agents de santé à base communautaire. Les enregistrements audios ont été traduits et retranscrits. Une analyse thématique de contenu a été réalisée sur l’ensemble du matériel. Les thèmes qui sont ressortis de l’analyse thématique ont été identifiés par les membres de l’équipe, qui en ont discuté et les ont reformulés. Résultats : L’étude suggère que les critères d’éligibilité à la gratuité ne sont pas toujours bien connus des bénéficiaires, ce qui peut entraîner des débordements involontaires. Elle révèle aussi l’adoption de pratiques pour contourner le respect strict des critères d’éligibilité à la gratuité, notamment pour en faire bénéficier les enfants de 5 ans et plus. Ces débordements délibérés résultent de tensions éthiques vécues par les bénéficiaires, et en soulèvent d’autres chez le personnel soignant. Des mécanismes sont mis en oeuvre officieusement pour réconcilier les dissonances ressenties par les prestataires. Conclusion : La mise en oeuvre de la politique de gratuité au Burkina Faso s’opère grâce à des mécanismes de réinvention locale pour surmonter les tensions éthiques liées au respect des critères d’éligibilité.

Low-Carbon Quick Wins: Integrating Short-Term Sustainable Transport Options in Climate Policy in Low-Income Countries

In low income countries (LICs) in Africa and Asia per capita transport greenhouse gas emissions are relatively low but are expected to grow. Therefore, a substantial reduction in projected increases is required to bring emissions in line with long-term global climate objectives. Literature on how LICs are integrating climate change mitigation and sustainable transport strategies is limited. Key drivers of transport policy include improving accessibility, congestion, air quality, energy security, with reducing greenhouse gas emissions being of lower priority. This paper assesses the current status, feasibility and potential of selected low-carbon transport measures with high sustainable development benefits that can be implemented in the short to medium term, so- called ‘quick wins’. It examines to what extent ten such quick wins are integrated in climate change strategies in nine low- and middle-income countries in Africa and South Asia. The research method comprises expert interviews, an online questionnaire survey of experts and policymakers in the focus countries, and a review of literature and government plans. Results indicate that sustainable urban transport policies and measures are considered high priority, with vehicle-related measures such as fuel quality and fuel economy standards and electric two- and three-wheelers being of key relevance. In existing national climate change strategies, these quick wins are integrated to a certain extent; however, with better coordination between transport and energy and environment agencies such strategies can be improved. A general conclusion of this paper is that for LICs, quick wins can connect a ‘top-down’ climate perspective with a ‘bottom-up’ transport sector perspective. A knowledge gap exists as to the mitigation potential and sustainable development benefits of these quick wins in the local context of LICs.

Age Dependency Ratios and GDP Growth in Developing Countries

What is the relationship, if any, between age dependency ratios (ADRs) and macroeconomic growth in low-income countries versus emerging economies? This paper probes the hypotheses that (1) ADRs and GDP growth are inversely correlated at both stages of development and (2) an equivalent rise in ADR is associated with a greater change in GDP growth in low-income countries than in emerging economies. The approach to testing the corresponding null hypotheses is to conduct linear fixed-effects regression analyses with AR(1) disturbances using annual World Bank and United Nations data on 38 low-income countries and 63 emerging economies over the 24-year period from 1994 to 2017. Model 1 is a simple bivariate regression of GDP growth against ADR by group; Model 2 adds population growth, unemployment, human capital (represented by Human Development Index scores), and technology (reflected in gross fixed capital formation) as control variables. The ADR coefficients have greater statistical significance in low-income countries than in emerging economies, but the differences themselves are more likely to be statistically significant in Model 2 than in Model 1, and tests of the null hypotheses produce mixed results. The paper closes with a comment on the implications for fiscal policy in low-income countries.

School uniform policy’s adverse impact on equity and access to schooling

ABSTRACT Research on the effect of school uniforms on school attendance in low income countries is scarce. Building on a meta-analysis of the available literature, this paper analyses primary survey data collected (n = 462) in Mongolia on students’ perceptions of school uniforms. The findings reveal that it is not only the cost of uniforms that matters, but also poor students’ feelings of exclusion when the majority of students in a school wear uniforms. The poor drop out from school when their symbolic association with the majority is visibly broken through their inability to afford and wear school uniforms. The study suggests that school uniform policies in low income countries are fraught with complications. Instead of creating cohesion, such policies are more likely to affect poor students’ negative perceptions of themselves and play a strong role in dropout rates.

Combining Carbon Taxation and Offset Payments: A New Approach to Climate Policy in Low-Income Countries

I consider a “low-ambition” (LA) country with no current climate policy, with two sectors. Sector 1 can in principle sell an unlimited amount of carbon offsets to a bloc of “high-ambition” (HA) countries. A condition for access to the right for sector 1 to sell unlimited offsets is that sector 2 of the LA country implements a comprehensive carbon tax. When the two sectors have equal size, and public and private revenues are valued equally by the LA government, a carbon tax in sector 2, equal to the offset price for sector 1, can be incentivized. The HA country bloc then buys offsets from the LA country at a price equaling its carbon externality cost. When sector 1 is larger (smaller) than sector 2, the offset price in sector 1 will be lower (higher) than the carbon tax in sector 2. When public funds are more valuable than private funds to the LA government, the implementable carbon tax is higher, and the optimal offset price lower. The model provides a novel mechanism by which a bloc of HA countries can incentivize LA countries to implement enhanced greenhouse gas mitigation.

Institutions, human capital and entrepreneurial orientation: implications for growth policy

PurposeThe purpose of this paper is to establish a more robust empirical support for the long established postulation by Adam Smith and Joseph Schumpeter that human capital and institutions enable Schumpeterian entrepreneurship, which, in turn, facilitates economic growth.Design/methodology/approachAdopting entrepreneurial orientation (EO) (i.e. innovativeness, proactiveness and risk taking; Mthanti and Ojah, 2017, Research Policy, 46:4, pp. 724-739) as the measure of Schumpeterian entrepreneurship at the macro-level, and using a sample of 93 countries, over 1980-2008, the authors employ system Generalised Method of Moments to investigate institutions and human capital as possible determinants of Schumpeterian entrepreneurship (EO).FindingsThe authors find that the human capital-EO nexus is robust across economic development levels. However, there is a cross-country variation in the institutions-EO nexus. In line with theoretical predictions, institutions indeed drive EO in middle-to-high-income countries. However, in low-income countries, building institutions in order to foster EO yields perverse outcomes, which, for us and especially based on deeper analysis, suggest that improving the quality of institutions may not be a necessary precondition for EO/growth policy in low-income countries. Furthermore, the authors find that EO is a highly persistent series, with self-reinforcing network effects, i.e. lofty EO behaviour encourages more lofty EO behaviour.Research limitations/implicationsDrivers of macro EO are erroneously taken as of growth. This empirical analysis corrects the sequencing.Practical implicationsPolicy practice must acknowledge macro-EO importantly has both direct and indirect growth effects.Originality/valueThis study is the first to empirically test the theoretical sequence between drivers of growth/EO and economic growth.

Informal financial transactions and monetary policy in low-income countries: Interpolated informal credit and interest rates in Malawi

Background: Official monetary data usually exclude informal financial transactions although the informal financial sector (IFS) forms a large part of the financial sector in low-income countries. Aim and setting: Excluding informal financial transactions in official monetary data, however, underestimates the volume of financial transactions and incorrectly presents the cost of credit, bringing into question the accuracy of expected effects of monetary policy on economic activity. Methods: Using IFS data for Malawi constructed from two survey data sets, indigenous knowledge and elements of Friedman’s data interpolation technique, this study employs innovation accounting in a structural vector autoregressive model to compare monetary policy outcomes when IFS data are taken into account and when they are not. Results: The study finds evidence that in certain instances, the formal and informal financial sectors complement each other. For example, it is observed that the rate of inflation as well as output increase following a rise in either formal financial sector (FFS) or IFS lending. Further investigation reveals that in other cases, the FFS and IFS work in conflict with each other. Demonstrating this point, the study finds that a rise in FFS interest rates is followed by a decline in FFS lending while IFS lending does not respond significantly and the response of FFS and IFS loans combined is insignificant. When IFS interest rates are raised, total loans decline significantly. Conclusion: The study, therefore, concludes that exclusion of IFS transactions from official monetary data has the potential to frustrate monetary policy through wrong inferences on the impact of monetary policy on economic activity.

The fiscal cost of weak governance: Evidence from teacher absence in India

The relative return to strategies that augment inputs versus those that reduce inefficiencies remains a key open question for education policy in low-income countries. Using a new nationally-representative panel dataset of schools across 1297 villages in India, we show that the large public investments in education over the past decade have led to substantial improvements in input-based measures of school quality, but only a modest reduction in inefficiency as measured by teacher absence. In our data, 23.6% of teachers were absent during unannounced school visits, and we estimate that the salary cost of unauthorized teacher absence is $1.5billion/year. We find two robust correlations in the nationally-representative panel data that corroborate findings from smaller-scale experiments. First, reductions in student-teacher ratios are correlated with increased teacher absence. Second, increases in the frequency of school monitoring are strongly correlated with lower teacher absence. Using these results, we show that reducing inefficiencies by increasing the frequency of monitoring could be over ten times more cost effective at increasing the effective student-teacher ratio than hiring more teachers. Thus, policies that decrease the inefficiency of public education spending are likely to yield substantially higher marginal returns than those that augment inputs.

Growth, inequality, and poverty reduction in developing countries: Recent global evidence

The study presents comparative global evidence on the transformation of economic growth to poverty reduction in developing countries, with emphasis on the role of income inequality. The focus is on the period since the early-mid-1990s when growth in these countries as a group has been relatively strong, surpassing that of the advanced economies. Both regional and country-specific data are analyzed for the $1.25 and $2.50-level poverty headcount ratios using World Bank Povcalnet data. The study finds that on average income growth has been the major driving force behind both the declines and increases in poverty. The study, however, documents substantial regional and country differences that are masked by this ‘average’ dominant-growth story. While in the majority of countries, growth was the major factor behind falling or increasing poverty, inequality, nevertheless, played the crucial role in poverty behavior in a large number of countries. And, even in those countries where growth has been the main driver of poverty-reduction, further progress could have occurred under relatively favorable income distribution. For more efficient policymaking, therefore, idiosyncratic attributes of countries should be emphasized. In general, high initial levels of inequality limit the effectiveness of growth in reducing poverty while growing inequality increases poverty directly for a given level of growth. It would seem judicious, therefore, to accord special attention to reducing inequality in certain countries where income distribution is especially unfavorable. Unfortunately, the present study also points to the limited effects of growth and inequality-reducing policies in low-income countries.