Author(s): Bassi, Vittorio; Muoio, Raffaela; Porzio, Tommaso; Sen, Ritwika; Tugume, Esau | Abstra... more Author(s): Bassi, Vittorio; Muoio, Raffaela; Porzio, Tommaso; Sen, Ritwika; Tugume, Esau | Abstract: This paper argues that rental market interactions allow small firms to increase their effective scale and mechanize production, even when each individual firm would be too small to invest in expensive machines. We conduct a novel survey of manufacturing firms in Uganda, which uncovers an active rental market for large machines between small firms in informal clusters. We then build an equilibrium model of firm behavior and estimate it with our data. Our results show that the rental market is quantitatively important for mechanization and productivity since it provides a workaround for othernmarket imperfections that keep firms small. We also show thatn the rental market shapes the effectiveness of policies to foster mechanization, such as subsidies to purchase machines.
The East African Community (EAC) implemented its Common External Tariff (CET) in 2005, for the th... more The East African Community (EAC) implemented its Common External Tariff (CET) in 2005, for the three countries that were then members (Kenya, Uganda, and Tanzania). Burundi and Rwanda joined later, with CET implementation taking place in 2009. At the present time (late 2017), EAC governments are conducting a review of the CET. This Policy Brief aims to inform that review.
This paper has been prepared as part of a series of studies on 'Natural Resources, structural cha... more This paper has been prepared as part of a series of studies on 'Natural Resources, structural change, and industrial development in Africa' as part of a larger UNU-WIDER research project on 'Jobs, poverty and structural change in Africa'.
This paper has been prepared as part of a series of studies on 'Natural Resources, structural cha... more This paper has been prepared as part of a series of studies on 'Natural Resources, structural change, and industrial development in Africa' as part of a larger UNU-WIDER research project on 'Jobs, poverty and structural change in Africa'.
The Political Economy and Development of India (PEDI) proposes what is now a very well-known hypo... more The Political Economy and Development of India (PEDI) proposes what is now a very well-known hypothesis about the reasons for the low-growth regime that India experienced from the 60s to the early 80s: interest-group politics in a democracy leads to populism and subsidies, choking off resources for accumulation through public investment in infrastructure. This political economy of constraints, according to Bardhan, seems to have blocked the economy’s escape from a low-level equilibrium trap of low growth. This chapter looks at a part of Bardhan’s argument, namely the relationship between subsidies and growth. The chapter studies the patterns of growth in income per capita and subsidies over the period 1980–81 to 2013–14 and finds, contrary to PEDI, that both economic growth and subsidies increased. Put together, these trends do not provide evidence in favour of the ‘Bardhan subsidy hypothesis’ that the subsidy Raj was the most important binding constraint to economic growth in the 1...
Author(s): Bassi, Vittorio; Muoio, Raffaela; Porzio, Tommaso; Sen, Ritwika; Tugume, Esau | Abstra... more Author(s): Bassi, Vittorio; Muoio, Raffaela; Porzio, Tommaso; Sen, Ritwika; Tugume, Esau | Abstract: This paper argues that rental market interactions allow small firms to increase their effective scale and mechanize production, even when each individual firm would be too small to invest in expensive machines. We conduct a novel survey of manufacturing firms in Uganda, which uncovers an active rental market for large machines between small firms in informal clusters. We then build an equilibrium model of firm behavior and estimate it with our data. Our results show that the rental market is quantitatively important for mechanization and productivity since it provides a workaround for othernmarket imperfections that keep firms small. We also show thatn the rental market shapes the effectiveness of policies to foster mechanization, such as subsidies to purchase machines.
The East African Community (EAC) implemented its Common External Tariff (CET) in 2005, for the th... more The East African Community (EAC) implemented its Common External Tariff (CET) in 2005, for the three countries that were then members (Kenya, Uganda, and Tanzania). Burundi and Rwanda joined later, with CET implementation taking place in 2009. At the present time (late 2017), EAC governments are conducting a review of the CET. This Policy Brief aims to inform that review.
This paper has been prepared as part of a series of studies on 'Natural Resources, structural cha... more This paper has been prepared as part of a series of studies on 'Natural Resources, structural change, and industrial development in Africa' as part of a larger UNU-WIDER research project on 'Jobs, poverty and structural change in Africa'.
This paper has been prepared as part of a series of studies on 'Natural Resources, structural cha... more This paper has been prepared as part of a series of studies on 'Natural Resources, structural change, and industrial development in Africa' as part of a larger UNU-WIDER research project on 'Jobs, poverty and structural change in Africa'.
The Political Economy and Development of India (PEDI) proposes what is now a very well-known hypo... more The Political Economy and Development of India (PEDI) proposes what is now a very well-known hypothesis about the reasons for the low-growth regime that India experienced from the 60s to the early 80s: interest-group politics in a democracy leads to populism and subsidies, choking off resources for accumulation through public investment in infrastructure. This political economy of constraints, according to Bardhan, seems to have blocked the economy’s escape from a low-level equilibrium trap of low growth. This chapter looks at a part of Bardhan’s argument, namely the relationship between subsidies and growth. The chapter studies the patterns of growth in income per capita and subsidies over the period 1980–81 to 2013–14 and finds, contrary to PEDI, that both economic growth and subsidies increased. Put together, these trends do not provide evidence in favour of the ‘Bardhan subsidy hypothesis’ that the subsidy Raj was the most important binding constraint to economic growth in the 1...
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