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

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.

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.