Microinsurance, trust and economic development

An interesting working paper on microinsurance in China-

While a large literature has examined the importance of microfinance for fostering economic development, microinsurance has received much less attention. A recent paper by Hongbin Cai, Yuyu Chen, Hanming Fang, and Li-An Zhou is among the first to examine the causal effect of microinsurance on production behavior, in the context of hog farming in rural China. Pork meat is an important part the Chinese daily diet, but pork production is very vulnerable to adverse shocks, such as infectious disease and natural disasters. In China, hogs are predominantly raised by rural households as a sideline business. In 2007, the Chinese government implemented a subsidized sow insurance program in some regions with the goal of increasing pork supply to lower prices that had risen after a disease had caused high mortality among hogs. In order to let farmers know about this program and to encourage them to enroll, the government hired an animal husbandry worker in each village. The authors designed an experiment where they provided additional monetary incentives to randomly chosen animal husbandry workers for enrolling farmers in the sow insurance program. Villages where animal husbandry workers received higher incentives have a higher number of insured sows after the experiment. The authors then estimate the effect of this randomly generated variation in the number of insured sows on village sow production. They find that larger insurance coverage significantly increases the number of sows raised in a village. Although the insurance program was heavily subsidized, take-up rates were only around 50 percent. The authors provide evidence that low take-up rates can be attributed to a lack of trust in government sponsored insurance programs. Take-up rates increased after claims were paid out in some regions hit by a natural disaster, allowing farmers to learn about the credibility of the insurance product.

Burundi Fact of the Day

GDP per capita is about $139, and only 18 percent of the population has food security. The IMF and World Bank have cancelled more than 90 percent of Burundi's debt, worth about $1.4 billion.

-Burundi's Debt Relief Savings to Go to Food, Health, Schools

Best Development Idea of 2009

World Bank should take heed:

Paul Romer's Charter Cities

Something to think about

"the IMF estimates that the balance of payments needs of low-income countries will be about $25 billion this year."

See
Appendix VI. Balance of Payments Financing Needs, The Impact of the Financial Crisis on Low-Income Countries.

Macroeconomic Management in Small States

Interesting conference on Small States

Development Blog of the Day

Caribbean Political Economy

Imagining India

The Daily Show With Jon Stewart	M - Th 11p / 10c
Nandan Nilekani
comedycentral.com
Daily Show Full Episodes Important Things w/ Demetri Martin Political Humor

Assorted on Financial Crisis and developing countries

Crisis Reveals Growing Finance Gaps for Developing Countries;

In remarks prepared for delivery at the same conference in London on Monday, World Bank Chief Economist and Senior Vice President Justin Yifu Lin said developed countries should spend some of their fiscal stimulus in developing countries as the economic effect could be significant.

“Clearly, fiscal resources do have to be injected in rich countries that are at the epicenter of the crisis, but channeling infrastructure investment to the developing world where it can release bottlenecks to growth and quickly restore demand can have an even bigger bang for the buck and should be a key element to recovery,” Lin said in his prepared remarks.

What the World Bank Is Doing

Impact of the Global Financial Crisis on Sub-Saharan Africa

A fiscal stimulus for Africa?

Amid Crisis, Africa Calls for Stronger Partnership With IMF

Poor Countries Need Extra Help to Get Through Global Crisis

Economic Crisis Starts to Hit World's Poorest Countries

The Implications of the Global Financial Crisis for Low-Income Countries

Economic Gangsters

Economic Gangsters

Month of birth and children's health in India

A recent working paper from World Bank-Month of birth and children's health in India

Summary: The authors use data from three waves of the India National Family Health Survey to explore the relationship between the month of birth and the health outcomes of young children in India. They find that children born during the monsoon months have lower anthropometric scores compared with children born during the fall and winter months. The authors propose and test four hypotheses that could explain such a correlation. The results emphasize the importance of seasonal variations in affecting environmental conditions at the time of birth and determining the health outcomes of young children in India. Policy interventions that affect these conditions could effectively impact the health and achievement of these children, in a manner similar to nutrition and micronutrient supplementation programs.

India and Africa

Mittal, Sanjiv Ahuja, Dr Mohamed Ibrahim

Why is Africa poor and what (if anything) can the West do about it?

Want to know more, follow this course.

Commodity prices and inflation dynamics

Commodity prices and inflation dynamics

Commodity prices rose strongly in recent years until mid-2008, driving inflation up worldwide. This feature investigates aspects of the impact of the rise in food and energy prices on headline inflation and its dynamics using a dataset for CPI inflation and its food and energy components that includes the major advanced and emerging economies. Our evidence suggests that in recent years core inflation has not tended to revert to headline, which suggests that higher commodity prices have generally not spawned strong second-round effects on inflation.

Photo of the Day- What Joy is like in Castro's Cuba

-The End of the End of the Revolution

Trade is declining

'We may have the first decline in trade since 1982 next year, and in many parts of the world, remittances are also drying up,” warned last month World Bank President Robert Zoellick just ahead of the G20 Summit in Washington D.C. “The most vulnerable in society, as always, are the ones at most risk.”

World trade has been an engine of the world economy, with developing countries posting nearly 8 percent growth and attracting a record $1 trillion in net private capital flows in 2007. But in 2009, world trade could decline for the first time since the eighties. The global economy is forecast to grow by only 1 percent, with developing country growth expected to fall to 4.5 percent from a previously projected 6.5 percent. The World Bank estimates each 1 percent drop in growth could trap another 20 million people in poverty.

“World trade, an engine of the world economy, is now dropping due to falling global demand and lack of trade credit,” said Danny Leipziger, World Bank’s Vice President for Poverty Reduction and Economic Management. “If you can’t get financing to ship your goods, exports will slow down and worsen the economic climate.”

-Trade Is Key to Overcome Economic Crisis

How Muhammad Yunus and Microfinance are Changing the World

Small Loans, Big Dreams: How Nobel Prize Winner Muhammad Yunus and Microfinance are Changing the World

Another Index

HUMAN OPPORTUNITY INDEX

Interesting Idea

MyC4.com- 'web-based platform that allows you to look up a list of African entrepreneurs who need funding for their projects (described briefly on the site) and to offer them loans'

via Dani Rodrik

Podcast of the Day

Karol Boudreaux on Wildlife, Property, and Poverty in Africa

More of the Poverty Trap story

The World Bank has just raised the bean count of global poverty to 1.4 billion people, from just under a billion. It had previously overestimated the level of Chinese and Indian per capita incomes, so the count now shows that the number of poor Chinese and Indians far exceeds the number of poor Africans. But this is misleading because Chinese and Indian incomes are rising far faster and more surely than African incomes. The big difference between a poor Asian household and an equally poor African one is hope, not necessarily for the present generation of adults but for their children.

Hope makes a difference in people’s ability to tolerate poverty; parents are willing to sacrifice as long as their children have a future. Our top priority should be to provide credible hope where it has been lacking. The African countries in the bottom billion have missed out on the prolonged period of global growth that the rest of the world has experienced. The United Nations’ goal should not be to help the poor in fast-growing and middle-income countries; it should do its utmost to help the bottom billion to catch up. Anti-poverty efforts should be focused on the 60 or so countries — most of them in Africa — that are both poor and persistently slow-growing.

A further weakness with the Millennium Development Goals is that they are devoid of strategy; their only remedy is more aid. I am not hostile to aid. I think we should increase it, though given the looming recession in Europe and North America, I doubt we will. But other policies on governance, agriculture, security and trade could be used to potent effect

-Paul Collier, A Measure of Hope