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World Institute for Development Economic Research  Conferences on spatial inequality and development
Spatial Inequality and Development
Overview of UNU-WIDER Project
Ravi Kanbur and Anthony J. Venables - September, 2005
The UNU-Wider project on ‘Spatial disparities in development’, directed by Ravi Kanbur and Anthony J. Venables, has analyzed evidence on the extent of spatial inequalities in over 50 developing countries. The peer reviewed papers published under the auspices of the project find that spatial inequalities are high, with disparities between rural and urban areas, and also between geographically advantaged and disadvantaged regions. In many countries such disparities are increasing, partly as a consequence of the uneven impact of trade openness and globalization. While there are efficiency gains from the concentration of economic activity in urban centers and in coastal districts, the associated regional inequalities are a major contributor to overall inequality. They are particularly worrying if they align with political or ethnic divisions. The broad outline of appropriate policy for managing high and rising spatial disparities is also clear. The case for policy interventions to ensure a more spatially equitable allocation of infrastructure and public services, and for policies to ensure freer migration, has been made powerfully in the papers in this project.
Conference on Spatial Inequality in Asia
Fifty years of regional inequality in China: a journey through central planning, reform and openness
Ravi Kanbur and Xiaobo Zhang
August 2004
This paper constructs and analyses a long-run time-series for regional inequality in China from the Communist Revolution to the present. There have been three peaks of inequality in the last fifty years, coinciding with the Great Famine of the late 1950s, the Cultural Revolution of the late 1960s and 1970s, and finally the period of openness and global integration in the late 1990s. Econometric analysis establishes that regional inequality is explained in the different phases by three key policy variables; the ratio of heavy industry to gross output value, the degree of decentralization, and the degree of openness.

Divergent Means and Convergent Inequality of Incomes among the Provinces and Cities of Urban China
John Knight, Shi Li and Renwei Zhao
August 2004
Two precisely comparable national household surveys relating to 1988 and 1995 are used to analyse changes in the inequality of income in urban China. Over those seven years province mean income per capita grew rapidly but diverged across provinces, whereas intra-province income inequality grew rapidly but converged across provinces. The reasons for these trends are explored by means of various forms of decomposition analysis. Comparisons are also made between the coastal provinces and the inland provinces. The decompositions show the central role of wages, and within wages profitrelated bonuses, together with the immobility of labour across provinces, in explaining mean income divergence. The timing of economic reforms helps to explain the convergence of intra-province income inequality. Policy conclusions are drawn.

Income Inequality in Rural China: Regression-based Decomposition Using Household Data
Guanghua Wan and Zhangyue Zhou
August 2004
A considerable literature exists on the measurement of income inequality in China and its increasing trend. Much less is known, however, about the driving forces of this trend and their quantitative contributions. Conventional decompositions, by factor components or by population subgroups, only provide limited information on the determinants of income inequality. This paper represents an early attempt to apply the regression-based decomposition framework to the study of inequality accounting in rural China, using household level data. It is found that geography has been the dominant factor but is becoming less important in explaining total inequality. Capital input emerges as a most significant determinant of income inequality. Farming structure is more important than labour and other inputs in contributing to income inequality across households.
Externalities in Rural Development: Evidence for China
Martin Ravallion - July 2003
The paper tests for external effects of local economic activity on consumption and income growth at the farm household level using panel data from four provinces of post-reform rural China. The tests allow for nonstationary fixed effects in the consumption growth process. Evidence is found of geographic externalities, stemming from spillover effects of the level and composition of local economic activity and private returns to local human and physical infrastructure endowments. The results suggest an explanation for rural underdevelopment arising from underinvestment in certain externality-generating activities, of which agricultural development emerges as the most important.
Spatial-horizontal inequality and the Maoist insurgency in Nepal
Mansoob Murshed and Scott Gates
July 2004
The Maoist insurgency in Nepal is one of the highest intensity internal conflicts in recent times. Investigation into the causes of the conflict would suggest that grievance rather than greed is the main motivating force. The concept of horizontal or inter-group inequality, with both an ethnic and caste dimension, is highly relevant in explaining the Nepalese civil war. There is also a spatial aspect to the conflict, which is most intense in the most disadvantaged areas in terms of human development indicators and land holdings. Using the intensity of conflict (fatalities) as the dependent variable and HDI indicators and landlessness as explanatory variables, we find that the intensity of conflict across the districts of Nepal is significantly explained by the degree of inequalities.
Aspiration to inequality: regional disparity and centre-regional conflicts in Indonesia
Mohammad Tadjoeddin, Widjajanti Suharyo and Satish Mishra
What has luck got to do with it? A regional analysis of poverty and agricultural growth in India
Richard Palmer-Jones and Kunal Sen
Decomposing Spatial Differences in Poverty in India
Shatakshee Dhongde
August 2004
Over the last decade, India has been one of the fastest growing economies, and has experienced considerable decline in overall income poverty. However, in a vast country like India, poverty levels vary significantly across the different states. In this paper, we analyze the differences between poverty at the state and national level, separately for the rural and urban sector, in the year 1999-2000. Instead of following the usual practice of decomposing the changes in poverty over time, we decompose the changes in poverty across regions. Such decomposition reveals that differences in state and national poverty levels were largely explained by differences in the state and national mean income levels. Differences in the state and national distributions of income were less important in explaining spatial differences in poverty. An important policy implication of our results is that states with extremely high levels of poverty would have reduced...
Unequal fiscal capacities across Indian states: how corrective is the fiscal transfer mechanism?
Pinaki Chakraborty
Commune-level estimation of poverty measures and its application in Cambodia
Tomoki Fujii
Poverty mapping with aggregate census data: what is the loss in precision
Nicholas Minot and Bob Baulch
The Industrial Location in Post-Reform India:Patterns of Inter-regional Divergence and Intra-regional Convergence
Sanjoy Chakravorty - 2003
Where do new industrial investments locate, and what factors drive the industrial location decisions? Do these investments follow the model of ‘divergence followed by convergence’ suggested by the cumulative causation, agglomeration economies, and transportcosts approaches? These questions are examined with district-level data from India for the pre- and post-reform periods using: first, tables and maps of concentration and clustering, aggregated for all industry and disaggregated into five sectors (Heavy Industries, Chemicals and Petroleum, Textiles, Agribusiness, and Utilities), and second, logistic and OLS/Heckman selection regression models for these six elements. The data provide solid evidence both of inter-regional divergence and intra-regional convergence, and suggest that ‘concentrated decentralisation’ is the appropriate framework for understanding industrial location in post-reform India.
China's telecommunications universal service in a competitive environment Mingzhi Li and Liangshu Qi
The effects of migration on interregional differentials in consumer behaviour:evidence from the Baise district, Guangxi
Chen Zhao, Lu Ming and Pan Hui
International Trade, Location and Wage Inequality in China
Songhua Lin - September 2003
Models of economic geography predict that transportation costs directly affect demand for goods and the supply of intermediate inputs. One of the reasons that international trade is concentrated in the coastal provinces of China is that they have lower transportation costs in transporting goods to other countries than do provinces in the interior. This paper examines the relationship between the provincial wage rate and each province’s access to international markets, and to suppliers of intermediate inputs. A gravity equation is first estimated to construct these ‘market access’ and ‘supplier access’ variables. In the second stage, the effect of market access and supplier access on the wage rate is estimated. It is found that about one quarter of the provincial wage differences in the coastal provinces and 15 per cent of the wage differences in the interior provinces can be explained by these economic geography variables.
Trade Liberalisation and Spatial Inequality: Methodological Innovations in Vietnamese Perspective
Henning Jensen and Finn Tarp
Regional disparity and economic growth in China The impact of labor market distortions
Fang Cai, Dewen Wang and Yang Du
Is spatial inequality increasing in the Philippines?
Arsenio Balisacan and Nobuhiko Fuwa
February 28, 2003
The Philippines has been long known for its high level of inequality in income and wealth distribution. A widely held view on the inequality in the Philippines is that development policy has favored the island of Luzon and discriminated against peripheral islands (provinces) of Visayas and (especially) Mindanao. Moreover, the poor performance of the Philippine economy over the last three decades has been attributed partly to the relatively large variation in access to infrastructure and social services between the major urban centers and rural areas. Spatial variation in certain summary measures of human development is also evident (UNDP 1996, 2000). If indeed spatial income disparities are at the core of the poverty and inequality problem in the Philippines, then policy reforms aimed at reducing these disparities have to be central elements of the country's poverty reduction program. This may also promote...
Bangalore: Divided City under the Impact of Globalization
Christoph Dittrich
Regional dimensions of poverty in Russia. Is it geography or economics that matter?
Stanislav Kolenikov and Tony Shorrocks
July 10, 2001
This paper analyses poverty in the regions of Russia from the point of view of economic, social, and demographic factors distinguishing each of the regions. A (nonlinear) regression model is proposed for the poverty indicators that links the latter to the above factors via mean income and inequality taken as the \fundamental" variables characterizing income distribution as a whole. The application of a novel method of factor decomposition, Shapley-Owen-Shorrocks technique, as well as a number of regression diagnostic tools, is demonstrated.
Spatial inequality and development in Central Asia
Kathryn Anderson and Richard Pomfret
June 2004
This paper focuses on inequality in living standards across oblasts and regions within Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan. Regional inequality is an important area of research and policy development. Inequality in income and consumption are logical outcomes in a market-based economic system. If inequality within countries exists because of barriers to competition, then inequality can foment internal tension, and economic and social development within countries is negatively affected. We examine Living Standards Measurement data from Tajikistan, Kyrgystan, and Kazakhstan and additional survey data from Uzbekistan. We find that the most important explanations for the variation in expenditures per capita in the region are household location, household composition, and education. We find large variation in per capita expenditure by location within each country, and the differences go beyond the simple rural-urban distinction. Family structure is also important, and in all...

WIDER Project on Spatial Disparities in Human Development

Papers selected for the conference will be considered for a special issue of a leading English language Asian journal, to be edited by Ravi Kanbur (Cornell University), Tony Venables (London School of Economics) and Guanghua Wan (WIDER).



Programme United Nations University
Spatial Disparities in Human Development  
Project name/title: Spatial Disparities in Human Development
Year: 2002
Theme: Poverty, Inequality and Well-being
Abstract: Many developing and transition countries have considerable regional variation in average household income, poverty, and in health and educational status. National human development indicators can therefore mislead policy-makers when large regional disparities exist. This project will investigate the size and determinants of regional disparities in a representative selection of countries. It will use indicators such as poverty incidence and depth, within-region income inequality, human development, and gender indicators to better understand why some regions fall behind in the development process.
Director:Guanghua Wan Senior Research Fellow
Ravi Kanbur Project co-director
Anthony J. Venables Project co-director
Assistant:Lorraine Telfer-Taivainen  Secretary to the Director 
Project Meetings:
29 May 2003 Project meeting on Spatial Inequality and Development
28 March 2003 WIDER Conference on Spatial Inequality in Asia 
1 November 2002 WIDER Conference on Spatial Inequality in Latin America 
21 September 2002 WIDER Conference on Spatial Inequality in Africa 
28 June 2002 Cornell - LSE - WIDER Development Conference on Spatial Inequality and Development
Adverse Geography and Differences in Welfare in Peru
Javier Escobal and Máximo Torero
October 2003
In Peru, a country with an astonishing variety of different ecological areas, with 84 different climate zones and landscapes, with rainforests, high mountain ranges and dry deserts, the geographical context may not be all that matters, but it could be very significant in explaining regional variations in income and poverty. The major question this paper tries to answer is: what role do geographic variables, both natural and manmade, play in explaining per capita expenditure differentials across regions within Peru? How have these influences changed over time, through what channels have they been transmitted, and has access to private and public assets compensated for the effects of an adverse geography?
An Inquiry into Cities and Their Role in Subnational Economic Growth in South Africa
W.A. Naudé and W.F. Krugell - 2003
South Africa is characterised by significant inequality in spatial economic activity. Whether future growth and development on a sub-national level in South Africa will be such as to reduce this inequality may depend on the economic growth and development of South Africa's largest cities. Our local economic growth empirics show some indications of conditional convergence in output between poorer towns, as well as overall between all cities and towns. Between 1990 and 2000 some limited sigma convergence was found, but this was driven by declines in the standard deviation of per capita income amongst the poorest quintile of towns. An estimate of conditional beta convergence of 1.2% over the period 1990 to 2000 confirms that overall convergence has been taking place. From an estimation of the determinants of economic growth on a local level, using a dataset on 353 local areas in South Africa between 1990 and 2000, we found the most significant determinants to be stocks of human capital and distance from harbours and markets. Human capital's effect on economic growth was strongly associated with the presence of large cities, as one would predict from endogenous growth theory.
Microsimulation, CGE and Macro Modelling for Transition and Developing Economies
James B. Davies - June 2004
Alternative approaches to modelling distributional and welfare effects of changes in policy and the economic environment in developing and transition countries are surveyed. Microsimulations range from pure accounting approaches to models with behavioural equations based on econometric estimates and various dynamic models. Microsimulation accounting models are key to analysing the impact effects of tax and benefit changes and are becoming widespread. Computable general equilibrium (CGE) modelling endogenizes price changes and changes in industry and labour market structure. An essential CGE input is a social accounting matrix (SAM), which can be used to do simple multiplier analyses. A wide range of macroeconomic models have also been used in developing countries, endogenizing variables like interest rates and exchange rates.
Are Neighbours Equal? Estimating Local Inequality in Three Developing Countries
Chris Elbers, Peter Lanjouw, Johan Mistiaen, Berk Özler and Ken Simler
July 2003
Based on a statistical procedure that combines household survey data with population census data, this paper presents estimates of inequality for three developing countries ( Ecuador, Madagascar and Mozambique ) at a level of disaggregation far below that allowed by household surveys alone. We show that while the share of within-community inequality in overall inequality is high, this does not necessarily imply that all communities in a given country are as unequal as the country as a whole. In fact, in all three countries there is considerable variation in inequality across communities. We also show that economic inequality is strongly correlated with geography, even after controlling for basic demographic and economic conditions.
Changes in Spatial Income Inequality in the Philippines: An Exploratory Analysis
Arsenio M. Balisacan and Nobuhiko Fuwa
May 2004
The purpose of this paper is to establish some basic facts about income inequality in the Philippines, with a special focus on the importance of spatial income inequality. Despite major fluctuations in macroeconomic performances, income inequality remained relatively stable during the years 1985-2000. Spatial inequality accounts for a sizable but not overwhelming portion of the national-level income inequality, and the relative importance of spatial inequality was declining over time. We also find that mean income levels across provinces were converging at a much faster rate than those observed in currently developed countries.
Convergence Club Empirics: Some Dynamics and Explanations of Unequal Growth across Indian States
Sanghamitra Bandyopadhyay - November 2003
This paper documents the convergence of incomes across Indian states over the period 1965 to 1998. It departs from traditional analyses of convergence by tracking the evolution of the entire income distribution, instead of standard regression and time series analyses. The findings reveal twin-peaks dynamics—the existence of two income convergence clubs, one at 50 per cent, another at 125 per cent of the national average income. Income disparities across states seem to have declined over the 1960s, only to increase over the subsequent three decades. The observed polarization is strongly explained by the disparate distribution of infrastructure, and that of education, and to an extent by a number of macroeconomic indicators; that of capital expenditure and fiscal deficits.
Crime, Isolation, and Law Enforcement

A Decomposition Analysis of Regional Poverty in Russia

Economic Polarization Through Trade: Trade Liberalization and Regional Growth in Mexico

How Responsive is Poverty to Growth? A Regional Analysis of Poverty, Inequality, and Growth in Indonesia, 1984-99

Industrial Location and Spatial Inequality: Theory and Evidence from India

Longevity in Russia's Regions: Do Poverty and Low Public Health Spending Kill?

Love Thy Neighbour? Evidence from Ethnic Discrimination in Information Sharing within Villages
Mattia Romani - 2003
CSAE, University of Oxford
There is increasing evidence to suggest that a fundamental source of information for farmers on how to access and use new agricultural technologies comes from interacting with their neighbours. Economic research on adoption of innovations in a rural context has only partially addressed the issue of how the social structure of a village can affect adoption and the final impact on productivity of farmers. This paper investigates the role of proximity interpreted not only in geographical terms but also along the line of ethnic similarities among neighbours (what we define as ‘social proximity’). We use a panel dataset collected in Côte d'Ivoire to define the probability of accessing the knowledge network. The main results indicate that farmers from ethnic minorities are less likely to access, and benefit less from, extension services. However, they seem to try to re-equalise their condition by putting more effort than dominant ethnic group neighbours in sharing information among themselves.
Human Well-being: Concepts and Conceptualizations
Des Gasper - April 2004
Economic measures of income have ignored large areas of human well-being and are poor measures of well-being in the areas to which they attend. Despite increased recognition of those distortions, ‘GNP per capita continues to be regarded as the quintessential indicator of a country’s living standard’ (Partha Dasgupta). Well-being seems to have intuitive plausibility as a concept, but in practice we encounter a bewilderingly diverse family of concepts and approaches, partly reflecting different contexts, purposes, and foci of attention. Is there a unifying framework that yet respects the complexity and diversity of well-being? This paper presents an imperfect comparative and integrative framework that builds on the contributions by Sen and others. We move toward the framework gradually, since well-being concepts are in fact complex entitities which reflect pictures of personhood and of science. Insight grows through surveying a wide range of relevant experience and views, before risking blinkering one’s vision in a framework. The paper then uses the framework to examine conceptualizations of human well-being, by Dasgupta, Sen, Nussbaum, Doyal and Gough, and Alkire.
Conceptual and Measurement Issues in Poverty Analysis
Erik Thorbecke
February 2004
The objective of this paper is to review a number of issues related to poverty, while taking stock of the ongoing research. Most of the remaining unresolved issues in poverty analysis are related directly or indirectly to the dynamics of poverty. Before the development community can become more successful in designing and implementing poverty-alleviation strategies, within the context of growth, we need to understand better the conditions under which some households remain permanently (chronically) poor and how others move in and out of poverty. In what follows we review the state of the art under a number of interrelated headings: (1) Chronic vs. transient poverty; (2) Poverty and vulnerability; (3) The determination of the poverty line across time and countries; (4) The quantitative vs. qualitative approach to poverty measurement; and (5) Growth, inequality and poverty.
Spatial Inequality for Manufacturing Wages in Five African Countries

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