Development

Allison Demeritt, Karla Hoff, James Walsh, 20 May 2015

Economists typically assume people behave in a rational and self-interested way, making standard models limited in their explanatory power. This column argues that psychological and sociological factors – though usually ignored in economic models – affect decision-making. The findings, drawn from the World Development Report, further suggest that better behavioural understanding could subsequently aid development efforts.

Yuriy Gorodnichenko, Gérard Roland, 14 May 2015

Social science studies usually explain democratisation of countries with the increase in incomes. In contrast, this column argues that culture is a neglected but important determinant of democracy. The findings show that countries with individualist culture democratise earlier than collectivist cultures that may remain stuck for a long time with relatively efficient autocracies.

Nicolas Magud, Sebastián Sosa, 13 May 2015

Emerging markets are not the hot investment prospect they used to be. This column estimates that weaker private investment in these nations is a slowdown after a period of boom rather than an outright slump. Prospects for a recovery of business investment, however, are not promising. Commodity prices are expected to remain weak and external financial conditions are set to become tighter. 

Christopher Adam, Ugo Panizza, Andrea F Presbitero, David Vines, 12 May 2015

World leaders are preparing for the third International Conference on Financing for Development in Addis. More money may help, but may also make things worse due to aid dependence, Dutch disease, and/or unsustainable debt. This column argues that the political discussion needs to be accompanied by more, and better data and research on how financing can support sustainable development.

Vincent Somville, Lore Vandewalle, 11 May 2015

Making transfers to bank accounts instead of paying cash could potentially enhance savings. This column tests this hypothesis using a randomised trial from India. The evidence suggests that being paid on the account increases the balance by around 110% within three months of weekly payments. The individuals who were paid in cash do not save more in other assets, such as cash at home, but increase consumption.

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