Improving productivity in developing countries: Identifying bottlenecks and obstacles to investments and technology adoption

Lead Research Organisation: Institute for Fiscal Studies
Department Name: IFS Research Team

Abstract

We propose to develop five research projects to address one overarching theme: the study of imperfections and constraints that hinder the process of development by trapping individuals in low-productivity activities, while missing out on productive (high return) investment opportunities, including the adoption of new technology. We will study different contexts in Ethiopia, Malawi, India and Pakistan, that, in their diversity, will provide a broad picture of the frictions and constraints that prevent or severely limit progress and economic growth in many countries in the developing world with a particular focus on agricultural activities in a rural context. We will focus on four themes:
(i) lack of information (on know-how or on returns) for making investment decisions
(ii) market failures: limited access to formal credit and insurance markets
(iii) constraints to market linkages and infrastructure
(iv) constraints relating to social norms: gender roles; the role of networks.
These general themes will be developed in five different contexts. The studies we propose use data collected for the evaluation of specific interventions aimed at improving the productivity and welfare of their beneficiaries. We take the impact estimates as a starting point and use the variation induced by the interventions to estimate structural models of individual behaviour and characterise the imperfections that hinder the adoption of productive investments. This approach will allow us to understand the mechanisms causing the observed impacts and, more generally, the determinants of individual choices. In turn, this will allow us to generalize the evidence from the impact evaluations and possibly improve the interventions.
The first project considers the provision of training and productive assets to indigent households in poor districts in Pakistan. The interventions also link these households to markets and market opportunities. The aim is to identify whether constraints relating to farmer knowledge and lack of market linkages result in low levels of productivity in livestock rearing. This project speaks to themes (i) through (iv).
The second project analyses a similar intervention, implemented in a remote region of India. Here however, to invest in livestock, beneficiaries have to take out a micro-loan. This allows us to relate investment decisions to the availability of credit and insurance, as well as to information on the activity's costs and returns available to households. An innovative feature is the use of subjective expectations to model investment decisions. This project is relevant for themes (i) through (iii).
The third project looks at the adoption of innovative irrigation technologies in Ethiopia to determine how lack of information and imperfections in credit and insurance markets pose barriers to the adoption of new technology. In its various branches, it provides information, resources and credit to beneficiaries. It is relevant for themes (i) and (ii).
The fourth project analyses the impacts of a sanitation intervention in poor parts of India, and particularly the indirect impacts of improved sanitation on medium- and long-term productivity, mainly through health. It also studies whether this changes the balance of power within the household, given that females tend to have a higher demand for better sanitation. This research project is relevant for themes (i) through (iv).
The fifth, project is motivated by the link between ill-health and long-run productivity. It seeks to answer the question of whether social norms hinder the adoption and diffusion of new health practices in rural Malawi, thus contributing to bottlenecks in the diffusion of new technology and other practices that enhance productivity. This addresses themes (i) and (iv).
This research agenda will ultimately help to design effective policies and institutions to help overcome these imperfections and improve long-run productivity and economic growth.

Planned Impact

First and foremost, we believe that our proposed research project will have a direct impact on the institutions, policy makers and funders involved in the specific interventions that will be the object of this study. Results of this research will help the implementing institutions to gain a better understanding of the underlying mechanisms of outcomes achieved through their interventions. This knowledge will be of importance for improvements in their intervention delivery strategy as well as for advocacy purposes. Also policy makers and funders directly involved in the projects will be able to feed our research outputs into general awareness creation and policy making with the aim of enhancing productivity in developing countries. Specifically, the main directly involved institutions are: The Government of Punjab through their Punjab Economic Opportunities Program (PEOP), the Indian microfinance institution BASIX India, the Ethiopian NGO International Development Enterprises (IDE), the Indian FINISH Society and its implementing partners (currently seven microfinance institutions), the Dutch NGO Waste, the Mai Mwana Project in Malawi, a collaboration between Kamuzu Central Hospital Department of Pediatrics, Mchinji District Hospital, and the UCL Centre for International Health and Development at the Institute of Child Health; on the funders side there is additionally DfID, ESRC, the Dutch Government (Ministry of Foreign Affairs, DGIS) and other stakeholders include Hewlett Packard, SNS Real, TATA-AIG Life Insurance, etc.. To achieve our aim of supporting their work with our research findings, we put emphasize on involving relevant actors in project design decisions and see regular communication through in-person meetings and discussion, workshops as well as simply through email and on the phone a key aspects of our work. We will also publicize our work not only in academic journals but project reports and summary documents accessible to those directly involved as well as to the general public free of charge.
In addition to actors directly involved, the research can be of important use to institutions and policy makers working in similar areas. To reach this audience, we will draw on the wide network that members of the research team have built up over the years, to organise workshops and seminars specifically targeted at policy makers and practitioners, including International Organisations staff. We will also engage in one-to-one meetings with staff of institutions such as the World Bank. We will also continue to actively participate in networks such as the International Growth Centre (IGC), which is explicitly designed to draw together policy makers and academics. Besides publishing findings in the form of reports and academic papers in peer-reviewed journals, as mentioned above, we further plan to ensure that our findings are published in local and international newspapers.
We also expect impacts through the project implementation rather than through then project's findings. This is will be achieved primarily through capacity building of the implementing institutions as well as research partners in the project countries. Staff of implementing institutions is closely involved in every stage of the evaluation designs such as: defining survey instruments, which include the key outcome variables and the variables on intermediate outcomes that help pin down mechanisms underlying the main outcomes and developing the treatment designs. Most of the projects hire and/or involve local field staff in all aspects of the intervention and evaluation, so that at the end of the project they will be in a strong position to design and implement further evaluations. As mentioned above, we aim to stay in close contacts with the institutions also beyond the project, so that also input or support can be provided on such issues if need arises.

Publications

10 25 50
 
Description This grant pooled together work of independent and distinct projects, linking them under one common theme, namely that of constraints to productivity. Each project made independently important strides during the period of this grant, producing evidence to answer stated research objectives. Some of the new evidence that comes out of this grant includes: (i) Relatives, grandmothers in particular, can play an important role in shaping responses to an information campaign targeting infant health. In order to increase the impact of information campaigns, our findings suggest that excluding influential older women can weaken intervention impact by exposing a divergence between traditional views and new information; (ii) A further important contextual factor in improving children's health is that of sanitation. Our research demonstrates a link between increased sanitation coverage in the child's environment and its health status, which has so far proven difficult to rigorously establish; (iii) evidence such as that linking sanitation and child health calls for programs that increase sanitation uptake. Our research suggests that credit constraints might not be a key barrier to adopting sanitation, despite households reporting the same. Our evaluation of an intervention providing credit for sanitation does not lead to an increase in the adoption of this technology (despite credit uptake); (iv) we conduct a cost-benefit analysis of owning livestock, particularly cattle. The findings feed into a recent debate on why people invest in livestock (some arguing that it is not rational given no/low returns), stressing the importance of considering variations in returns over time.
Exploitation Route Our findings will be particularly useful for policy makers and implementing NGOs. For example, findings from Malawi can be used by agencies working on child health and nutrition campaigns in developing countries, findings from India can be taken up by government officials and other stakeholders as backing evidence for the importance of pushing improvements in sanitation, and findings from Pakistan (not yet finalized at this stage) will be useful for government and donor funded programs aimed at improving livelihoods for the poor in Punjab, Pakistan as well as those wanting to learn about asset transfer programs.
Sectors Communities and Social Services/Policy,Environment,Healthcare,Other

 
Description The initial focus in terms of dissemination of the findings under this grant was on academic audiences. Study findings were presented at seminars and conferences to ensure academic integrity of the analysis and interpretation of results. Examples of seinars and conferences attended include among other the 10th Annual Conference on Economic Growth and Development (Delhi, December 2014), Royal Economic Society Conference (Manchester, April 2015), Econometric Society World Congress (Montreal, August 2015), European Economic Association Meetings (Mannheim, August 2015). These findings are then written up in working papers to be submitted in top academic journals and summarized in policy briefs and blogs. Outcomes of this grant are in different stages of this process, with some being under review at for example the Economic Journal and the Journal of Economic Development and Cultural Change. In parallel, we have now started to disseminate the findings to wider audiences through policy briefs, blogs, stakeholder engagement and also our end of grant conference which took place in July 2015 and brought together researchers from around the world, while keeping a policy angel, with for example Stefan Dercon, the Chief Economist of DfID as one of the keynote speakers.
First Year Of Impact 2015
Sector Other
Impact Types Societal

 
Description Beyond development aid: Sanitation financing & revenue models in reuse (human) waste 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Workshop held with FINIHS in May, The Hague, The Netherlands. Audience: Academics and policy makers
Year(s) Of Engagement Activity 2017
 
Description EDePo (end of award) conference presentation - Augsburg 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Other academic audiences (collaborators, peers etc.)
Results and Impact The presentation, jointly with two other presentations on the topic sparked an interesting discussion at the end of the session on the topic. In addition, discussions on possible future projects were held with other conference participants.

Feedback on results were given by peers.
One professor was quite surprised on the current state of the literature, having assumed so far that the evidence base on sanitation is much stronger than it actually is.
Year(s) Of Engagement Activity 2015
URL http://www.ifs.org.uk/events/1100
 
Description Is a toilet a worthwile investment? Views from India and Nigeria 
Form Of Engagement Activity A magazine, newsletter or online publication
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact The newsletter was pubilshed online and distributed at a conference involving acacademics, practitioners and policymakers.
Year(s) Of Engagement Activity 2015
URL http://www.ifs.org.uk/publications/7832
 
Description No toilet, no bride: The unlikely link between private toilets and marriage market outcomes in India 
Form Of Engagement Activity A magazine, newsletter or online publication
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact A blog piece by Britta Augsburg and Paul Rodríguez Lesmes was published on South Asio @LSE and IGC.
http://blogs.lse.ac.uk/southasia/2015/10/08/no-toilet-no-bride-the-unlikely-link-between-private-toilets-and-marriage-market-outcomes-in-india/
http://www.theigc.org/blog/no-toilet-no-bride-the-unlikely-link-between-private-toilets-and-marriage-market-outcomes-in-india/

The piece was read by a wide audience.
Year(s) Of Engagement Activity 2015
URL http://www.theigc.org/blog/no-toilet-no-bride-the-unlikely-link-between-private-toilets-and-marriage...
 
Description RCT research - when it works (as planned) and when it doesn't 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Other academic audiences (collaborators, peers etc.)
Results and Impact Seminar at Development Economics Network Berlin Seminar Series on Research in Development Economics, December 2014

Britta Augsburg took part in an international network for development economics.
Year(s) Of Engagement Activity 2014
URL http://www.deveconberlin.org/program-archive
 
Description Sanitation and child health in India 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Presentation at the UNU-WIDER Conference on Human Capital and Growth and the End of grant and EDePo conference.
Year(s) Of Engagement Activity 2015
 
Description Social norms and the role of the extended family 
Form Of Engagement Activity A magazine, newsletter or online publication
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/parliamentarians
Results and Impact This was a newsletter article, published online and distributed at a conference including practitioner, policymakers and academics in July 2015.

The newsletter stimulated discussion between academics and policymakers and include representatives from NGOs.
Year(s) Of Engagement Activity 2015