Projects

List of projects undertaken by the Centre for International Development

Poverty Reduction Strategy Papers (PRSPs) serve as a cornerstone of the World Bank’s and International Monetary Fund (IMF) development strategy for developing nations.

PRSPs sought to build medium to long-term strategies through participation from civil society, and national ownership with realisable goals focused on achieving multi-dimensional poverty reduction. The objective of this project, led by Meg Elkins, is to examine the policy content of PRSPs and to examine whether they are effective in achieving poverty reduction and improved Millennium Development Goal (MDG) outcomes in developing countries.

The United Nations is finalising the Sustainable Development Goals that will define the development agenda after 2015.

These Goals should reflect the needs and priorities of all people in the world yet the participation and views of many are neglected. This initiative led by Simon Feeny and Alberto Posso at RMIT University and Derek Brien at the Pacific Institute for Public Policy is looking to bridge this gap by including the voices of Pacific Islanders into this important global debate.

The research team has developed an on-line survey that asks respondents a series of questions regarding the Sustainable Development Goals and which ones better represent the needs of Pacific Islanders. Findings from this project will be presented to the United Nations Sustainable Development Solutions Network.

The multidimensional deprivation literature has been mainly static in nature, examining deprivations at a particular point in time.

However, the availability of panel surveys in recent times provides researchers with the means to examine dynamic considerations of deprivation and how it changes through time. Using a dynamic approach, this project attempts to distinguish between the ‘duration’ and ‘persistence’ of deprivation. Ankita Mishra (in collaboration with Prof. Ranjan Ray) use LSIC and LSAC panel surveys to compare Australian indigenous children with Australian children   on various dimensions of deprivation to identify those dimensions where deprivation is recurring and persistent. This identification will help with the targeting of policy intervention by the Australian government.

Bob Baulch and Le Van An Tam (RMIT Vietnam) were commissioned to prepare a working paper on the ‘The Progressivity and Regressivity of Aid to the Social Sectors’.

This paper was prepared for the United Nations’ World Institute for Development Economics Research, as part of a broader research programme on Research and Communication on Foreign Aid.  Their research analysed the distribution of total aid and aid to the social sectors for bilateral and multilateral donors between 2009 and 2011 for 106 developing countries.  Key findings were that total aid disbursements are broadly neutral, favouring neither the most deprived nor relatively well-off countries, and that the pattern of social sector aid disbursements follows those for total aid.  The aid allocation patterns of bilateral and multilateral donors were also found to differ, with multilaterals donors generally being more focused on the poorest countries. Finally, the distribution of aid for health and population was more progressive than that for education or other social sectors.  The paper is expected to appear in a special issue of the Journal of International Development.

Bob Baulch has also been providing technical inputs to the Asian Development Bank resident mission in Hanoi on poverty analysis and inclusiveness for their 2016-2020 Country Partnership Strategy.

The extant literature indicates that remittance inflows from developed to developing countries provide liquidity for domestic financial institutions, which aids in the development process.

However, the reverse effect has been neglected. In this paper Alberto Posso tests whether more financial services and opportunities in the home country attract remittances to developing countries. He addresses this hypothesis using a dataset of 72 developing countries over the period 1997 to 2011. The paper finds evidence that remittance inflows are driven by increased availability of domestic financial services. In particular, the presence of microfinance institutions is found to be a key driver in stimulating migrant remittances. These findings, perhaps, suggest that remittance-sending migrants may not be altruistic and send remittances to maximize their own future income. Alternatively, the results suggest that microfinance organizations have been successful in attracting remittances by lowering transaction costs and proving linked services.

Recent years have witnessed the proliferation of international trade agreements, that have not only been growing in number, but also in their scope and institutional complexity.

To evaluate these agreements, it is essential to be informed about their key components and the institutions behind them. This project aims to achieve this by analysing one such institution, Trade Promotion Authority. It is a central institution of the United States' trade policy, by which Congress commits not to amend a trade agreement signed with a partner economy, but to subject the agreement to an up-or-down vote. Bilgehan Karabay together with the other two project members offer a new interpretation of Trade Promotion Authority by analysing its raison d'être from the partner economy's perspective. The main idea is that if the United States signs a trade agreement with a partner economy without this authority, businesses in the partner economy can be vulnerable to changes made to the initial agreement if they already made irreversible investments. Hence, Trade Promotion Authority may be required in convincing foreign partners to sign an agreement with the United States.

Today’s world is highly integrated. Multinationals play a vital role in this integration, especially through global value chains.

Fragmentation in production has become more common as goods are produced in sequential stages in several countries either within the boundaries of the firm (i.e., through subsidiaries) or through arm’s length. The sequential nature of production implies that a good produced in a given country becomes an input for the production of another good in another country, therefore resulting in increased economic interdependence between countries. This project, which is led by Bilgehan Karabay, analyses the relationship between sequentiality of production and the contractual relationship between multinationals (that produce final goods) and their input suppliers. The central focus is on the choice of optimal organizational form that will incentivize optimal effort from different input suppliers at different stages, hence, maximize the value of the final output.

Financialisation is a term that describes the dominance of the financial sector over the real sector (or sectors) of the economy, including manufacturing industry and agriculture.

It refers to the increasing importance of financial markets, financial motives, financial institutions, and financial elites in the operation of the economy and its governing institutions, both at the national and international levels. In a financialised economy, profit making occurs increasingly through financial channels rather than through trade and production. The Dutch disease is defined as the apparent relationship between the increase in the economic development of natural resources and a decline in manufacturing industry and agriculture—it is typically associated with developing countries. However, the demise of manufacturing industry in both the U.S. and U.K. is attributed to excessive financialisation and the philosophy of “who needs manufacturing industry when we have the City” (or Wall Street for that matter). The objective of this project, led by Imad Moosa, is to demonstrate that the Dutch disease does not only arise out of excessive dependence on natural resources but also on excessive dependence on the financial sector.

Practical experience suggests that countries in general and developing countries in particular, may not practice what they declare with respect exchange rate regime choice.

Implying the presence of a gap between de facto and de jure exchange rate arrangements. This gives rise to the need for verifying the exchange rate regime declared by a country, which may be exposed to the “fear of floating”. In July 2005 China declared that it was shifting from a dollar peg to a basket peg, but the behaviour of the Chinese exchange rate for most of the period since then resembles a crawling peg more than a basket peg. The objective of this project, led by Imad Moosa, is to identify the Chinese exchange rate regime (or regimes) since July 2005. Casual empiricism suggests that the Chinese authorities have used a crawling peg, a dollar peg and perhaps (more recently) a basket peg with undisclosed components.

The environmental Kuznets curve is the implied inverted-U relation between environmental degradation and economic growth.

The important policy implication of the shape of this curve is that if environmental degradation rises with economic growth, this provides justification for strict environmental regulation and putting limits on economic growth. This is the policy-response explanation for the negative relation between environmental regulation and economic growth. In this project, Imad Moosa estimates the environmental Kuznets curve for a number of countries using time series data and structural time series modelling to account for missing variables.

Simon Feeny is part of a team working with World Vision International to undertake evaluations of their child sponsorship programs.

The project will provide an investigation of World Vision’s community based approach to improving the well-being of children and the way this is supported by child sponsorship. The research team also includes Patricia Rogers from RMIT University, as well as members of Deakin University, SOAS (University of London) and Community Matters Pty Ltd.

Alberto Posso, together with Douglas Brooks and Bekzod Abdullaev from the APEC Study Centre has been awarded a research grant from the Australian Government’s Department of Employment.

The research grant was awarded help to build understanding of labour mobility in the Asia-Pacific region.

The first phase of the project uses existing data sources to provide a quantitative analysis of labour flows around the world and APEC countries. The purpose is to identify the major push and pull factors determining migration. Using advanced panel data econometric techniques, the study finds migrants are attracted to higher relative wages in destination locations, as predicted by economic theory. Push factors include a high cost of living, very high levels of government expenditure, low levels of education, an underdeveloped export market, and unemployment. Based on these findings they propose a number of important policy recommendations.

Household vulnerability and resilience to economic shocks is a three-year research project examining economic shocks in two Melanesian countries: the Solomon Islands and Vanuatu.

It is a collaborative research project involving RMIT University, Oxfam Australia, Deakin University and the University of the South Pacific. Funding: Australian Agency for International (AusAID) through their Australian Development Research Awards.

Project overview

The Solomon Islands, Vanuatu and other Pacific are increasingly vulnerable to external shocks which include events outside the countries’ control such as economic shocks and natural disasters. Recent examples of economic shocks are the large increases in the prices of both food and fuel during 2007 and 2008 and the subsequent Global Economic Crisis (GEC).

While vulnerability at a national level is well-documented, very little is known regarding vulnerability and resilience at a household level in these countries.

The project employed mixed methods to answer the following research questions:

  1. Which households in the Solomon Islands and Vanuatu are most vulnerable to economic and other shocks?
  2. What have been the impacts of the recent food, fuel and economic crises on households in the Solomon Islands and Vanuatu; and
  3. How have households in the Solomon Islands and Vanuatu responded to recent shocks and how effective have these responses been?

By examining how shocks affect individual households, as well as understanding how households are resilient, the research aims to provide important evidence to help design and target policies that protect households from the effects of future shocks.

Fieldwork was conducted across 12 sites in the Solomon Islands and Vanuatu in 2010–11 and consisted of 1,000 household surveys, more than 50 focus group discussions, and a number of key informant interviews. Six of the sites were re-visited approximately two years later to assess how things are changing in the communities. In the latest round of fieldwork, smartphone technology was used to conduct the household survey. Thanks to Neil Penman at SMAP Consulting.

Project researchers

RMIT University Simon Feeny Alberto Posso
Deakin University Matthew Clarke Heather Wallace
Oxfam Australia Jaclyn Donahue
Kate Eccles
Lachlan McDonald
May Miller-Dawkins
University of the South Pacific Vijay Naidu Manoranjan Mohanty

Publications, reports, and papers

Simon Feeny and Alberto Posso are working with The Fred Hollows Foundation to assess the benefits of cataract removal and restoring sight in Vietnam.

The project does so holistically, examining the benefits to carers, family members and communities, improvements in school attendance, employment and food security as well as improvements in emotional and social well-being.

The project is part of a larger study on Port Phillip Bay's long term development plan.

Alberto Posso is currently working with Michael Nolan from the UN Compact Cities program on a comprehensive study that addresses how firms located on the coast of Melbourne and its surrounding areas have been affected by climatic events, such as floods and storms, and how they are preparing for potentially more serious climatic events as climate changes in the future.

Nobu Yamashita is part of a large project examining the dynamics of knowledge diffusions and the innovation performance of Japanese firms.

The project is led by Dr. Isamu Yamauchi of the Research Institute of Economy, Trade and Industry (RIETI) in Japan – a semi-government research institution in Tokyo. Nobu is examining the innovation performance of Japanese firms as a response to intensified import competition from China.

He is using a new firm-level data set, combining firm-accounting data from the Basic Survey of Business Activities conducted by the Ministry of Economy, Trade and Industry (METI) and the Survey on Intellectual Property Related Activities (SIPA) implemented by the Japan Patent Office. The data covers roughly 5,600 firms annually for the period of 1991-2013..

This is an international project involving researchers from Japan, Australia, the US, Canada and Denmark.

Nobu Yamashita is part of a team developing a practical measure of skill of workers that focuses on the content of the tasks in which workers engage, and whether they perform tasks that require specialised expertise or ability.

The skill content of jobs (tasks) is matched to the Career Matrix which is a comprehensive database of the skill content of occupations developed by the Japan Institute of Labour Policy and Training.

This is then merged to the employer-employee matched dataset by combing firm-level data of the Basic Survey of Business Activities by the Ministry of Economy, Trade and Industry (METI) and worker-level information (age, sex, education, the tenure, salaries and wages) extracted from the Basic Survey on Wage Structure (BSWS), compiled by the Ministry of Health, Labour and Welfare. In 2015, Nobu spent three months working on these datasets at Hitotsubashi University.

This is an international project involving researchers from University of Tokyo (Japan), University of Queensland (Australia), the John Hopkins University (US), McMaster University (Canada) and Arhus University (Denmark).

Since the publication of Thomas Piketty's Capital in the Twenty-First Century in 2013, the issue of income inequality has again come to the fore, both in industrialised and developing countries.

The detrimental effects of high inequality are well-known. It slows down economic development, weakens political institutions, and can also trigger violence. While policy experts have a good understanding of inequality dynamics at the national level, what is less well known is how inequality shapes our societies at the local level. This project hopes to fill this gap, which is of particular relevance in the Indian context, where both poverty and inequality are pressing issues.

Local-level inequality is an understudied topic. In order to obtain reliable measures of inequality at the local level, reliable GDP accounts at the regional level are necessary. Developing countries, however, lack the financial resources and statistical capacity to collect accurate, frequent income data for rural citizens, restricting all policy discussions to a very cursory level.

This project tackles this key difficulty by using satellite data on night-time light density as a proxy for economic activity. The rationale is that, especially in developing countries and rural areas, the use of electricity at night is a robust predictor of local wealth.

Reliable local-level inequality data will allow us to investigate the relationship between inequality and local development, but also whether inequality triggers violence, especially during economic crises. We also investigation location decisions by skilled workers and seek to identify which local political institutions areas are most fragile. This project is led by Ahmed Skali. Other investigators include Simon Feeny and Alberto Posso from the Research Group and Dr Shyam Nath, Dr Peter Holzschuh and Dr Sougata Ray from Amrita University, India.

Determinants and their Impact on Poverty

Since the start of the 21st century, inflation in India has mirrored its relative macroeconomic stability. For instance, between 2000 and 2006, the CPI averaged just 4 per cent during a period where growth and investment began a secular acceleration and external imbalances narrowed rapidly. However, that relative stability in the CPI began to change in 2006, when it rose dramatically by an average of more than 9 per cent between 2006 and 2013.

The stickiness of inflation coincided with greater global economic pessimism: the post-Lehman growth rebound was temporary, external imbalances began to widen as households flocked to physical assets and gold, and the Indian rupiah came under sustained depreciation pressures, with things coming to a head when the Federal Reserve tapered one of its Quantitative Easing programs in 2013.

However, as rigid as the CPI was between 2006 and 2013, its fall has been just as dramatic. After peaking at 12.1 per cent in November of 2013, the CPI collapsed to 4.3 per cent in December 2014, a fall of almost 8 per cent in only 13 months, before increasing to 5 per cent in October, 2015. This dramatic decline in the CPI has led to two important and related questions. First, what was responsible for the sharp decline over the last two years? And second is this decline in the CPI sustainable, or is it transitory?

Answers to these questions are not trivial, given the global and domestic events during this period. The disinflation over the last two years has occurred when global oil and commodity prices have collapsed, food prices have fallen sharply, the implementation of a new monetary policy regime by the Reserve Bank of India to anchor inflation expectations, a new Government working on alleviating food supply bottlenecks, and the continued restraint on agricultural support prices. So how does one ascertain the extent to which different factors contributed to this disinflation?

The purpose of this study will be to analyse this dramatic decline in inflation, and quantify the contribution of the different factors in explaining the recent reduction in inflation that has occurred in India, using an augmented Phillips curve. The CPI (and inflation) will also be disaggregated by State and rural/urban location to examine the importance of inflation to those living in poverty and potential impacts that changes in inflation can have on their lives.

This project is led by George Tawadros. Other investigators include Ankita Mishra and Imad Moosa from the Research Group and Prof Jay Misra and Dr Peter Holzschuh from Amrita University, India.

India is a mega-biodiversity centre with two of the world's 18 biodiversity hot spots located in the Western Ghats and in the Eastern Himalayas.

Anthropogenic climate change caused by increasing human population, consumption, and resources usage is becoming an important source of shocks to people that rely on the environment for their livelihoods. The rise in frequency of floods, droughts and extreme weather in the Indian subcontinent in recent years is testament to the severity of this problem. These shocks are relatively more severe for poor and vulnerable households, which directly depend on agriculture, biodiversity and the environment for food, income and shelter.

The proposed research aims to look at variations in temperatures and other climatic shocks using GIS secondary data and analysing households’ coping mechanisms and sources of vulnerability. The research will also consider gendered and cultural characteristics that determine the success and failure of various coping strategies. Given that environmental shocks potentially disrupt labour supply and infrastructure, the research team will also discuss the importance of these shocks to the wider economy with particular emphasis on international trade.

Overall, the project will highlight effective responses to various environmental shocks in each region. The research will take place in villages that have been adopted by Amrita University as part of their live-in- labs programs. This will provide readily available and diverse source of information across India.

The research team will provide practical and achievable evidence-based policy advice immersed within existing institutional and cultural structures. This is a new way of formulating economic policy, where grass-roots based policies that build on communal and local strengths, rather than imposing alien institutional frameworks, are recommended in order to provide higher levels of effectiveness.

This project is led by Alberto Posso. Other investigators include Simon Feeny and Ahmed Skali from the Research Group and Dr P K Vishwanathan and Dr Sushanta Mahapatra from Amrita University, India.

The aim of this project is to examine the effects of ethnic diversity on a wide range of social and economic outcome variables using micro level data from India.

Relying on national and cross-country level data, the existing literature has thus far explored a myriad of plausible mechanisms through which ethnolinguistic diversity works to impair the attainment of optimal social and economic outcomes. This strand of literature is said to present what is now known as the diversity-deficit hypothesis.

The diversity-deficit hypothesis is so well-grounded empirically that as Gisselquist, Leiderer, and Niño-Zarazúa (2016) puts it, asking whether diversity has negative implications for socioeconomic outcomes in today’s literature appears irrelevant. Instead, understanding why these relationships exists, i.e. the factors that underlie diversity’s harmful effects on social outcomes seem to be a more optimal direction for future research.

However, in a survey of the literature, it is evident that when micro data is employed, the evidence generally contrasts the conventional wisdom of diversity-deficit/debit. Thus, despite the wide-spread evidence of a negative effective of ethnic diversity using cross-country aggregate data, micro level evidence tends to support the diversity-dividend hypothesis (i.e., a positive effect). For example, using highly disaggregated community-level data from the developing world, Gerring, Thacker, Huang, and Lu (2011) find that ethnic and religious fractionalization is often associated with desirable socioeconomic outcomes.

Similar evidence is presented by Gisselquist et al. (2016) using district-level data for Zambia. They show that ethnic fractionalization has a positive relationship with some key welfare outcomes. Hopkins (2011) also finds mixed effects of diversity on social spending in U.S cities. These findings have ignited the academic discourse on re-examining the diversity-debit hypothesis, with renewed emphasis on micro level evidence.

Accordingly, the aim of this project is to examine the effects of ethnic diversity on a wide range of social and economic outcome variables using micro level data from India. Outcomes of interest include income, poverty, health, inequality, educational attainment, subjective wellbeing, and social capital among others.

This project is led by Sefa Awaworyi Churchill. Other investigators include Meg Elkins and Alberto Posso from the Research Group and Dr Yeti Nisha Madhoo and Dr Shyam Nath from Amrita University, India.

With the second wave of globalisation after 1970s, the anatomy of international trade has changed dramatically.

The world economy has become much more integrated than before. The rise of global value chains played a prominent role in this change. Given its rising importance, an extensive amount of research has been done on vertical fragmentation of production. According to this literature, the main trade-off in undertaking production in various countries is between lower input costs and higher trade costs.

A key benefit of geographical dispersion is to save on factor costs (Navaretti and Venables, 2004). Another finding is that when operating internationally through supply chains, different organizational forms are chosen even within the same firm. In particular, firms may keep some operations internal, i.e., within the firm boundary, and some others external, i.e., under arm's length contracts with independent input suppliers. In this project, based on these findings, a North-South model of international trade in intermediate inputs is developed in the presence of relationship-specific investments and incomplete contracts.

There are heterogeneous final-good producers that are located in the North and compete in monopolistic competition. Production entails a well-defined sequence of highly complementary stages such that a failure in any one of them destroys the whole project. In this environment, an equilibrium is characterized in which based on their productivity, firms decide where to buy their inputs in each production stage.

While doing so, they also choose their ownership structure in order to alleviate the hold-up problem they face due to contract incompleteness. Next, an analysis of how within sectoral heterogeneity and variations in industry characteristics affect the relative prevalence of firms that choose to (i) procure inputs from different locations, and (ii) form different organizational structures is performed.

This project is led by Bilgehan Karabay.

In low and middle income countries (LMICs) the shortage of physicians and nurses together with generally poor health practices pose significant public health risks.

In this setting, it has been shown that community health workers (CHWs) can provide cost effective preventive care, leading to policy-makers identifying this approach as a solution to achieving public health objectives in the UN SDGs. Despite this, the economic well-being of CHWs is often overlooked.

CHWs either volunteer their service or are paid token honorariums for their services making this approach cost effective. However these status-quo arrangements also pose significant risks to the sustainable human capacity of health systems for two reasons: (a) high turnover rate of staff (e.g., 15-20% annually in our partner NGO’s operations), and (b) significant variability across CHWs’ performance, which is partially driven by a lack of effort and motivation.

These inefficiencies lead to poor healthcare outcomes in communities and pose challenges to the operations of healthcare providing NGOs in LMICs.

In this project, academics from RMIT University, Monash University and Duke University are teaming up with BRAC International to run a Randomised Control Trial (RCT) to test the efficacy of various incentive schemes in stabilizing health systems.

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Acknowledgement of country

RMIT University acknowledges the people of the Woi wurrung and Boon wurrung language groups of the eastern Kulin Nation on whose unceded lands we conduct the business of the University. RMIT University respectfully acknowledges their Ancestors and Elders, past and present. RMIT also acknowledges the Traditional Custodians and their Ancestors of the lands and waters across Australia where we conduct our business. - Artwork created by Louisa Bloomer