This dissertation consists of three chapters that study social influence and the diffusion of information in decision making contexts with limited observable outcomes. Chapter 1 studies social interactions and female genital mutilation (FGM), a traditional procedure of removing the whole or part of the female genitalia for non-medical reasons. Using survey data from Egypt, this paper attempts to identify effects of peer adoption and medicalization on a household's decision to opt for FGM. We find that households are less likely to adopt if their peers adopt less and (in certain areas) if medicalization is more widely used by their peers. Chapter 2, using a lab experiment, studies how influence of any given agent in a social network is driven by assessments of their reliability by network members based on observations of their past behavior. Agents repeatedly make choices, the optimality of which depends on an unobserved state of the world; they are able to communicate those choices with their social peers; and earn a reward after the last period. We enrich the non-Bayesian DeGroot model by postulating that the extent to which network members are influenced by a peer member depends on the extent of nonconformity, variability and extremeness of their past choices. We find that inferred reliability has an effect as significant as network centrality on social influence; when weighting the views of their peers, individuals are sensitive to their observed behavior, especially for those peers with low centrality. Chapter 3 analyzes the effects of a large-scale randomized intervention which provided incentivized block grants with the aim of improving twelve health and education outcomes. Communities were incentivized by having grants sizes dependent on performance. Our goal is to refine an earlier intention-to-treat evaluation, by examining the intervention's heterogeneous effect on the different subpopulations of households defined by their participation in health information outreach. We find that incentivized grants have a strong effect on immunization rates of children from households participating in outreach activities: as high as a 14.3% increase for children aged six months or less, compared to a maximum average treatment effect of 3.7%.

No description available.

In this thesis I study how networks are formed and I analyse the strategies that well-connected individuals adopt in public good games on a network. In chapter one I study an artefactual field experiment in rural India which tests whether farmers can create efficient networks in a repeated link formation game, and whether group categorisation increases the frequency of in-group links and reduces network efficiency. I find that the efficiency of the networks formed in the experiment is significantly lower than the efficiency which could be achieved under selfish, rational play. When information about group membership is disclosed, in-group links are chosen more frequently, while the efficiency of network structure is not significantly affected. Using a job-referral network experiment in an urban area of Ethiopia, I investigate in chapter two whether individuals create new links with the least connected players in the network. In a first treatment, competition for job-referrals makes it in the player's interest to link with the least connected partners. In this treatment, links to the least connected players are significantly more likely than links to better connected individuals. In a second treatment, connections only affect the welfare of the new partner. Choosing the least connected player minimises inequality and maximises aggregate efficiency. This may motivate other-regarding players. In this treatment, however, links to least connected partners are not significantly more likely than links to other players. In chapter three I explore the characteristics that individuals value in the people they approach for advice. Using cross-sectional data on cocoa farmers in Ghanaian villages and a matched lottery experiment, I find an association between the difference in the aversion to risk of two farmers and the probability that one farmer is interested in the advice of the other farmer. In chapter four I study a one-shot public good game in rural India between farmers connected by a star network. Contributions by the centre of the star have a larger impact on aggregate payoffs than contributions by the spoke players. I use the strategy method to study whether the centre of the star contributes more than the average of the spokes. In selected sessions, I disclose participants' expectations about the choices of the centre of star. I find that the centre player contributes just as much as the average of the spokes, and that he is influenced by the expectations that other players hold about his decisions.

O presente trabalho analisa algumas obras de Prebisch, escritas entre o final da década de 40 e início da década de 60, do ponto de vista do comércio internacional e do desenvolvimento econômico da América Latina. Procura-se identificar em suas obras um componente crítico sobre essas questões, tendo em vista a conjuntura internacional no início do século XX, que deixa evidente a situação periférica latino-americana na divisão internacional do trabalho. Essa se expressa e ao mesmo tempo tem suas raízes em uma estrutura interna desigual e subdesenvolvida. Além disso, essa posição crítica do autor é vista como resultado de uma busca pela explicação para os problemas latino-americanos, cujas respostas não podiam ser encontradas no arcabouço teórico da corrente de pesquisa tradicional sobre comércio internacional. Ao tratar os países como tendo estruturas homogêneas, a teoria neoclássica faz simplificações que, na visão de Prebisch, deixa de lado uma questão essencial: as assimetrias no plano internacional. Para o autor a incorporação dessa questão na análise é importante devido ao impacto exercido sobre o desenvolvimento latino-americano, e pela forma como condiciona as perspectivas futuras da América Latina. E, mostra-se como essa forma de pensar e estruturar suas idéias levou a defesa de políticas a serem adotadas pela América Latina, que diferem das defendidas pela teoria neoclássica. Mas, analisam-se as obras de Prebisch, levando em consideração o próprio desenvolvimento intelectual do autor, através do qual há uma ampliação de sua análise e a formação de idéias integradas sobre a situação periférica. Neste trabalho é mostrado como o pensamento de Prebisch implica na incorporação de variáveis sociais e políticas para construir uma abordagem econômica que priorize a conciliação teórica com as circunstâncias históricas e com a realidade latino-americana. Conclui-se, através da análise dessas questões, que a observação sobre a especificidade latino-americana, e a ausência desta inclusão na teoria tradicional, levou Prebisch a formar uma nova abordagem para as questões sobre comércio internacional e desenvolvimento econômico, no qual o objetivo deveria ser sempre a busca por uma maior homogeneidade internacional. / The following work analyses some of Prebisch?s work, written between the end of the 40s and beginning of the 60s, from the point of view of international trade and development economics in Latin America. Its intention is to identify a critical component in regard to these issues, in light of the international conjuncture in the beginning of the XX century, which reveals the peripherical situation of Latin America in the international division of labor. This is expressed and at the same time has its roots in an unequal and underdeveloped internal structure. In addition to that, this critical position of the author is seen as a result of his search for an explanation for Latin America problems, for which the answers couldn?t be found in the theoretical framework of the traditional research school of international trade. By treating countries as having homogeneous structures, the neoclassical theory, has done simplifications that, in Prebisch?s view, do not take in consideration an essential question: the asymmetries in the international sphere. For the author the incorporation of this matter is important due to its impact over Latin Americas development, and also because of the way it affects Latin Americas future perspectives. And, this work shows how this way of thinking and of structuring his ideas led him to defend policies to be adopted by Latin America, that differ from the ones defended by the neoclassical theory. But, it analyses Prebisch?s works, taking in consideration his own intellectual development, through which his analysis gets wider and he builds integrated ideas in relation to the peripherical situation. In this work it?s showed how Prebisch?s ideas implies that social and political variables should be incorporated in order to build an economic approach that gives a priority to the conciliation of theory with the historical circumstances and with Latin America reality. The work concludes through the analyses of these questions, that the observation of Latin America specificities, and the lack of inclusion of it in the neoclassical theory, led Prebisch to establish a new approach to the questions about international trade and economic development, in which the main goal should be the search for a bigger international homogeneity.

Esta tese apresenta três ensaios empíricos sobre a relação entre comércio internacional e crescimento, utilizando modelos empíricos não lineares. No primeiro ensaio, os autores propõem o modelo MR-STVEC (Multiple Regime Smooth Transition VEC), para uma amostra de quatro países desenvolvidos (Estados Unidos, Canadá, Japão e Alemanha), na perspectiva de avaliar de que modo as exportações influenciam a produtividade total dos fatores (PFT). Os resultados indicam que as exportações possuem um mecanismo de reverter possíveis choques negativos de produtividade. Adicionalmente, para o Canadá e Alemanha, quando há um movimento de ascensão da produtividade, proveniente de um eventual choque positivo, as exportações também agem, mas de modo a restringi-lo. O segundo ensaio verifica a relação de causalidade entre variáveis de comércio internacional (exportações e importações) e a taxa de crescimento do produto, aqui mensurado pela produção industrial. Neste caso, a amostra é composta de vinte nações com diferentes níveis de renda. Uma abordagem empírica alternativa, denominada entropia de transferência (ET), é aplicada, com a vantagem de não assumir a priori qualquer tipo de especificação paramétrica. Os resultados mostram que o comércio internacional é um importante fator para melhor entender crescimento, em termos do conceito de redução de incertezas futura, com destaque para as exportações quando são considerados países em desenvolvimento. Entretanto, o sentido de causalidade reversa é predominante na amostra, em especial para países mais ricos. Por fim, o último ensaio segue o argumento de Hausmman et al (2007) e avalia se o grau de especialização das exportações e importações cria uma possível não linearidade entre abertura comercial e renda per capita. Em outras palavras: a composição da pauta de exportação e importação pode alterar a capacidade que a abertura comercial tem em explicar o diferencial de renda entre nações? Para verificar esta hipótese, aplica-se o modelo de painel com transição suave para 110 países, seguindo o mesmo procedimento Frankel e Romer (1999), evitando assim o problema de endogeneidade. Os resultados empíricos indicam que quando as exportações são especializadas em commodities e as importações são diversificadas, a abertura não é capaz de influenciar a renda. Por outro lado, se as exportações são mais diversificadas, independentemente do grau de especialização que as importações venham apresentar, a abertura torna-se relevante em explicar o diferencial de renda entre as nações. / The present dissertation is composed of three essays that study the relations between economic growth and international trade through nonlinear empirical models. In the first essay, the author uses Multiple Regimes Smooth Transition Vector Error-Correction Models (MR-STVEC) for a sample of developed countries (United States, Canada, Japan and Germany) in order to evaluate how exports may affect productivity. The results indicate that exports may reverse a drop of productivity. Furthermore, in particular for Canada and Germany, exports are able to restrict productivity when there is an ascent movement. The second essay examines the causality between foreign trade variables (exports and imports) and output growth, as measured by industrial production. Here, the sample is composed of twenty nations with different income levels. An alternative time series empirical approach called transfer entropy (ET) is applied; it does not impose any aprioristic parametric function. The results show that trade is an important factor for the understanding of output growth, particularly exports when we focus on some developing countries. However, the reverse causality is also observed and, in general, is preeminent. Finally, the last essay follows the arguments of Hausmman et al (2007) in order to verify if sectorial specialization of exports and imports creates nonlinearities between the degree of openness of an economy and its per capita income. In other words: the compositions of exports and imports can change the capacity that the economic degree of openness has to explain the income differentials among countries? In order to address this issue, the third essay applies a Panel Smooth Transition Model for 110 countries, following the same procedure of Frankel e Romer (1999) to avoid endogeneity problem. Results indicate that when exports are specialized in commodities and imports are diversified, openness do not influence income. Otherwise, if exports are diversified, independently of the levels of import\'s specialization, openness turns out to be relevant to explain per capita income.

Identifying the complex channels through which civil war affects household decisions is important in the design of policies that eliminate or mitigate the consequences of armed conflict on household welfare. This is particularly relevant in conflict-affected countries looking to establish a transitory justice towards a post-conflict. In this dissertation, I analyze the micro-level impact of civil war and illicit activities on household welfare, using the case of Colombia and Burundi. For doing this, I develop five chapters where I provide an empirical investigation on three dimensions: (i) the impact of armed conflict on agricultural production; (ii) the role of institutions on the “war of drugs”; and, (iii) the determinants and socio-economics consequences of household migration during and after being exposed to civil war.The first part investigates the impact of armed conflict on the agricultural production, using the case of coffee growers in Colombia. After being many years out of conflict, coffee producer regions in Colombia were exposed to violence as a consequence of the intensification of conflict during nineties and the deteriorate of the world coffee market. In order to initially understand such relationship, in Chapter 1, co-authored with Ana María Ibañez and Philip Verwimp, we use unique census data sets from two different years (1997 and 2005) to estimate the relationship between coffee and violence. First, we explore how conflict generates disincentives to continue on agricultural production. Second, we examine the direct impact of conflict on agricultural production through different productive outcomes. We find a significant negative relationship between levels of violence and the decision to continue coffee production as well as the levels of productivity of the coffee production to coffee. Results are robust after controlling for sample selection bias and alternative specifications.After establishing observational evidence from the census analysis on the presumably negative impact of armed conflict on the agricultural production, I make a step further to establish a causal link in Chapter 2. I take advantage of a natural experiment in the levels of violence due to the unexpected rupture of the peace dialogues between Colombian Government and guerillas groups in 2002. Using data provided by National Federation of Coffee Growers of Colombia, I estimate the Intention to Treat (ITT) effect using a difference-in-difference specification. Results suggest that an exogenous increase of the levels of violence induced a reduction of hectares allocated to coffee, on average, -0.06 hectares (ha). Moreover, an average farm, which is 2 ha of coffee, an exogenous increase of the levels of violence induced a reduction of the sowing new coffee until 3.5%. This paper contributes to the literature on the microeconomics costs of conflict in Agricultural Production, providing further information about mechanisms (labor market).In long civil conflicts, rebel groups may eventually be evolved in production of illicit crops to finance their activities, boosting the intensity and prevalence of armed confrontations. Despite the different multi-lateral drug policies, the production continues increasing. In the second part of the dissertation I study this fact using the case of coca crops in Colombia. In Chapter 3, co-authored with Santiago Tobon and Jesse D’Anjou, we analyze the role of formalization of land property rights in the war against illicit crops in Colombia. We exploit an exogenous variation in the level of formalization of land property rights, as result of the application of a national land-titling program during 1994-2000. We argue that, as a consequence of the increase of state presence and visibility during the period of 2000-2009, municipalities with a higher level of formalization of their land property rights saw a greater reduction in the area allocated to illicit crops. We found a significant negative relationship between the level of formalization of land property rights and the number of hectares allocated to coca crops per municipality. We hypothesize that this is due to the increased cost of growing illicit crops on formal land compared to informal, and due to the possibility of obtaining more benefits in the newly installed institutional environment when land is formalized. Empirical results validate these two mechanisms. The third and last part of this dissertation, studies the nutritional status of formerly displaced households after return and the determinants of household structure during civil war in Burundi. In chapter 4, co-authored with Philip Verwimp, we investigate the food security and nutritional status of formerly displaced households. Using the 2006 Core Welfare Indicator Survey for Burundi we compare their food intake and their level of expenses with that of their non-displaced neighbors. We test whether it is the duration of displacement that matters for current food security and nutritional status or the time lapsed since returning. We use log-linear as well as propensity score matching and an IV-approach to control for self-selection bias. We find that the individuals and households who returned home just before the time of the survey are worse off compared to those who returned several years earlier. On average, the formerly displaced have 5% lower food expenses and 6% lower calorie intake. Moreover, we found evidence in favor of duration of displacement as the main mechanisms through which displacement affect household welfare Results are robust after controlling by self-selection bias. Despite international, government and NGO assistance, the welfare of recent returnees is lagging seriously behind in comparison with the local non-displaced populations.The final chapter, co-authored with Richard Akresh and Philip Verwimp, analyzes whether civil war modifies household structure by boosting individual migration. The identification strategy uses a unique two waves longitudinal data set from Burundi, for 1997 and 2008. This data set was collected during ongoing conflict and allows tracking individual migration decision over ten years. Besides the traditional conflict exposure measures at village level, our data gathered yearly information on household victimization. Results show that higher exposure to violence increases the probability to individual non-marital migration. These effects are concentrated on poor households and those household members that are adults or men. Our results are consistent with aggregated measure of conflict exposure, as well as household level victimization measures. Furthermore, we found that whereas marital migration in adult un-married women is unrelated with exposure to violence at village level, it does with household victimization approaches. In particular, we found that being victim of any assets related losses is related to an increase of marital migration for middle age unmarried women. It could imply the use of marriage market as strategy to face liquidity constraints. Results are robust to including province–specific time trends, alternative conflict exposure measures, and different levels of aggregation. / Doctorat en Sciences économiques et de gestion / info:eu-repo/semantics/nonPublished

The thesis consists of a short introduction and three self-contained analytical chapters on land policy in developing countries. Chapter 1 examines the agricultural investment choices of small-scale farmers in Ethiopia whose land will be expropriated to provide space for a large factory. I use data from a survey of households conducted before expropriation occurred, but after the policy was announced. I identify the anticipation effects of land expropriation using variation in whether households own plots located inside or outside the proposed project boundary. Households facing immediate expropriation hedge against future income risk by using less fertilizer on their plots, and and growing less risky crops. These households are more likely to grow sorghum (a safe crop) and less likely to grow wheat (a relatively riskier crop). Households also respond to the threat of expropriation by reducing long-term investments in soil quality. Using two-stage least squares I show that subjective beliefs about the likelihood of expropriation act as a channel through which the threat of expropriation affects investment decisions. The results are robust to a number of other specifications, including some that account for unobservable geographic variation in plot characteristics. Chapter 2 explores the consequences of land expropriation for small-scale farmers in Ethiopia. Expropriation of farmland is used by all levels of government in Ethiopia as a tool for providing new land for industrial investors, commercial agriculture and expanding cities. Farmers usually receive a cash payment in exchange for their land based on a fixed formula to establish the price of land. I evaluate the impact of such a policy on a group of small-scale farmers and assess the extent to which they make the transition to new livelihoods. On average, households lose 70% of their land and receive compensation payments that are about 5 times the value of their annual consumption expenditure. Using data collected before and after the intervention I examine the impact of expropriation and compensation on household consumption, productive assets, livestock holdings, savings and labour market participation. Households in the treatment group increase their consumption, start more businesses and participate more in non-farm activities than households that do not lose farmland. These households also reallocate livestock portfolios away from oxen and towards small ruminants and cattle, reflecting a shift away from growing crops. However, these shifts to new livelihoods are relatively small compared to the amount of compensation kept as savings: with the exception of a few households, most of the compensation payment is left in commercial banks earning a negative real return. Chapter 3 focuses on the recent increase in large-scale agricultural land deals across Africa and the nature of the contracts reached by governments and foreign investors. In recent years, multi-national firms and foreign governments have entered into long term contracts with host countries in which large tracts of land are purchased or leased for commercial agricultural production in exchange for promises of infrastructure development, job creation and rural infrastructure improvement. The profitability of these projects is uncertain, especially at a time of increased agricultural commodity price volatility in world markets. Based on stylized facts about land deals I present a theoretical model of land contracts reached by host governments and foreign investors that explains the policy tradeoff between investment timelines, revenue generation and uncertainty. When agricultural projects require fixed infrastructure investment and yield uncertain payoffs, firms benefit from being able to complete the fixed investment in stages. If firms can learn more about payoffs by holding off on investment, they effectively hold an option to abandon the project. The value of this option provides a channel by which uncertainty affects the terms of the land contract. When host governments determine the terms of the contract by setting an income tax, a royalty rate and an investment timeline, the value of this option will affect government's optimal policy choice. In particular, I find that if governments benefit a great deal from investment spillovers the optimal contract will be designed to encourage firms not to abandon a project. But, if governments benefit relatively little from investment spillovers, governments will choose contract parameters to extract the value of the firm's option to abandon the project. I end by examining the effect of increasing uncertainty on the government's optimal policy choice.

Philosophiae Doctor - PhD / The idea that the development of people's capabilities lies at the heart of all community and social development has gained support internationally over the past decades. This reflects a significant shift in community and society development thinking, addressing the broad spectrum of social upliftment, human rights and poverty alleviation needs that gained ground during the different historic economic phases of the past two centuries. Historically development thinking progressed from a centralised, structured and systemic approach as, for example, espoused by Adam Smith and Karl Marx, to Maynard Keynes’s more people-centred approach, and more specifically the Capability Approach advanced by Amartya Sen and Martha Nussbaum. In the world of liberal democratic capitalism, the mainstream view of development holds that civil society is a key role player in both deepening democracy and enhancing forms of development through various programmes and practices. In turn, the professionalised Non-Governmental Organisations sector, as opposed to more localised community-based organisations or social movements, tends to receive most donor funding to deliver high impact interventions. In sum, the development of society’s capabilities relies significantly on NGOs to deliver capability enhancing services to the needy in society. A key consideration in development debates has been how to efficiently operationalise the development of capability enhancing activities based in the context of the Capability Approach, the focus of my study. This study recognises that NGOs are major delivery agents of development work, both in South Africa and internationally. Their operations focus on delivering quality impact on their beneficiary communities, and on raising funds to sustain their operations. The current methods to assess the impact of NGO operations, both by NGOs and their donors, primarily address past performance of the organisation in delivering external programmes as measured against the objectives stated in NGO concept and roll-out proposal documents. These assessments are customised for every NGO, making it impossible to standardise assessments for comparative and rating purposes and focus on external delivery. When problems are uncovered, this approach results in proposing corrective recommendations during or after completion of a funding round. This study argues that a gap exists in techniques to assess NGO internal performance to improve external delivery before and during NGO operations. Furthermore, it will contribute to assessing the merits of NGOs' internal capacity to deliver on the promises made in funding proposals - before and during NGO operations. In practice the assessment of an NGO for funding purposes currently consists of consideration of a project proposal in the form of a concept and roll-out document of what the organisation intends to achieve, accompanied by historic record data. The assessment of project roll-out focuses on the outputs claimed in the proposal document without paying too much attention to the NGOs internal organisational culture and capacity which is the key to successful external service delivery. In addressing this two part gap of incomplete assessment techniques and overlooked key internal indicators, the study demonstrates, via a series of ten case-studies, that a direct causal relationship exists between the internal organisational capabilities of an NGO, including the motivation, skills and culture of its staff, and its delivery on its external programmes. In essence, an organisation’s internal capabilities will impact directly on the organisation’s ability to deliver externally on its programmes. In spite of this, no standardised organisational capability assessment is used by NGOs or grantmakers, and to date no set of instruments exists to measure the internal capabilities of NGOs. The study sets out to address this gap by offering a methodology for the systemic assessment of internal NGO capabilities, and includes its operationalisation in a toolkit of instruments to measure these capabilities. The instruments presented enable the quantifying of qualitative staff motivational data to develop comparable baseline results between NGOs assessed, thereby presenting qualitative data in a quantitative form that enables a comparison between NGOs’ performances. This capacity addresses a significant shortcoming in the assessment of NGO performance based on purely qualitative assessment that is the current norm, not enabling a measurement against a standardised baseline for NGO performance. In contrast the validity and reliability of the proposed instruments are demonstrated through its application to ten real-world case studies drawn from the SEEDS Consortium. The system proposed in this study is based on Nel and Beudeker's commercial change management and organisational performance improvement model. Nel developed his system over a period of some twenty years whilst working for the then Arthur Andersen Consulting and subsequently as a private change management consultant focusing on the development of high performance organisations, and it has been administered in more than 3000 companies. This model uses key performance indicators, using quantitative methods to develop a standardised internal capability profile for a business based on qualitative data. This study expands on and makes innovative changes in developing new NGO specific metrics to substantially refine Nel's model and thus provides an instrument for measuring the capability profile of NGOs. The modifications were necessitated as Nel's model was designed for commercial change management applications presupposing that all governance considerations are in place and that the business is a running medium or large concern. Nel's proven commercial change management system does not make provision for NGO specific criteria that are critical indicators for both internal NGO performance assessment and for grant-maker capability assessments. The areas added to the instrument relate to internal NGO specific considerations such as internal governance, management, monitoring and evaluation processes that are standard and legislated compliance issues in commercial concerns. This goes beyond the requirements for a substantial commercial concern to include key internal organisation indicators that reflect the opinion of the staff, the people who deliver on the NGO's objectives. As staff are the people who directly impact on the NGO's output, the system does not only rely on the opinion of the CEO of the NGO or the fundraising staff, i.e. the "promise-makers", alone. In order to assess the value of the proposed method, and more specifically the internal capability toolkit, the measuring instruments were administered to the CEOs and staff of ten NGOs/NGO equivalent projects at universities. The responses were quantified and confirmed that in at least ten of these cases, there is a 95% correlation between internal organisational capability and external performance output, both positive and negative. The results also enabled the creation of a baseline internal capability profile for NGOs. Ten international grant-makers from OECD embassies were also interviewed on current methods of assessing funding applications, indicating a 62% confidence level in current systems and an 84% confidence level in the proposed internal organisational capability assessment method. This serves as an indicator of external delivery on promises and to guide internal change interventions to optimise output. This approach reflects the potential value of a shift in assessment thinking beyond a systems approach towards a people-centred approach that focusses on the measurement and development of the organisation and its staff's internal capabilities to meet and exceed its external delivery objectives. My research confirms that a focus on NGO internal organisational capabilities directly reflects the capability levels of staff to deliver externally. The output is a new, standardised, replicable and defendable methodology and toolkit of instruments for assessing an NGO’s current and future operational performance. The toolkit should also provide for the objective comparison of the performance of NGOs and thus be of great use for future grant-maker decision-making. It will also complement existing assessment techniques by focusing on the internal people motivation and capability issues of an NGO. Furthermore, the study provides a method to support organisational self-improvement efforts and grant-making efficiency that can be used in pre-project and during project capability assessment. This goes beyond the more prevalent post-project systemic and summative evaluation methods. In conclusion, the proposed method and toolkit can make a significant contribution to the efficiency of NGOs as the key role-players in enabling the delivery of capability development of communities and societies. All the elements described collectively point to a practical way to operationalise the Capability Approach, an aspect criticised as a weakness in Amartya Sen's work.

M.Comm. / The objective of this thesis is to examine the importance of external finance of economic development and growth in South Africa. The investigation takes cognisance of the unique characteristics of the South African economy, especially the years of isolation from the world economy, unequal distribution of income and the need for sustainable economic growth to create employment and thus a stable social and economic environment conducive to foreign investment. The inflow of foreign capital in the economic development process is an imperative for filling either the investment-savings gap or the import-export gap. In a closed economic system the demand for investment funds will be met by the supply of domestic savings. Economic growth will be limited to the availability of investment funds, or domestic savings. In an open economic system, the demand for investment funds can be supplemented by the inflow of foreign capital, and growth will thus not be impaired by a scarcity of investment resources. Foreign capital inflows formed an integral part of the economic development process in the South African economy since the discovery of gold and diamonds in the latter half of the nineteenth century. Until 1976, in 24 out of 31 years, the South African economy recorded a net inflow of foreign capital. South Africa could, until 1976, the year in which political and social unrest broke out, finance a shortfall on the current account of the balance of payments with the inflow of foreign capital. Since then South Africa became a net exporter of capital. The South African economy found itself isolated from the world economy since the middle eighties due to the Apartheid policy. The inflow of foreign capital was greatly inhibited by sanctions and disinvestment. The South African economy had to rely on domestic savings to finance investment needs. This shortage of investment funds was an inhibiting factor on economic growth and development. This dissertation distinguishes between the different developing funding sources and as such outlines the benefits of using both multilateral as well as bilateral developing funding institutions to enhance and foster economic growth and development, especially in developing countries. It also gives a historical overview of South Africa's relationships with and use of these institutions. The reintegration of Eastern Europe into the world economy meant even bigger pressure on existing development funds. Since the early nineties funds available to the Third World for economic development have been steadily declining. New sources of funds for economic development had to be found. The emphasis has been moving away from pure development assistance and grants to direct foreign investment as a means of financing development in the developing world.

No description available.