Annual Bank Conference on Development Economics 2014: The Role of Theory in Development Economics

The Annual Bank Conference on Development Economics (ABCDE), organized by the World Bank Development Economics (DEC) Vice Presidency, is one of the world’s best known series of conferences for the presentation and discussion of new knowledge on development.

OVERVIEW
AGENDA and PROCEEDINGS
SPEAKERS
PAPERS

ABCDE 2014 is intended to be a stock-taking of the foundations and methods of development economics. Over the last two decades, development economics has risen dramatically into prominence. The emergence of several developing economies as major global players, their integration in global decision-making arena—for instance, the G-20—and the evolving methods of empirical development economics research, which has generated new knowledge but also contributed to controversy, makes this a good moment to take stock of where we stand. How well can we bring together economic theory and the new empirical development economics? Are there synergies in this that can give development economics and development policymaking a boost?

With these questions in the background, the plan is to make this ABCDE conference, which will delve into the full sweep of development economics, from theory to controlled experiments, but with an eye on methodology, to egg on the profession one way or another and not shying away from commenting where we need to go. To celebrate this, it has been decided to create a special, Papers and Proceedings issue of the World Bank Economic Review based on this conference.

CONFERENCE THEMES

The Validity of Experiments

A public recycling center for the disposal of renewable resources

Behavioral Economics

A trained medical staff administers a vaccine on an infant. Preah Vihear province, Cambodia.

Health and Insurance

Labor Contracts

Natural Resources and Market
Incentives

Finance and Macroeconomics

Products from Vietnam arrive at the Phnom Penh Autonomous port in Kandal province

The Political Economy
of Trade Policy

Economics of the Internet

Migrant construction labourers working in Dubai.

Migration

Monday, June 2, 2014
	Preston Auditorium
08:00 – 09:00	Registration and Breakfast
09:00 – 09:30	Opening Address Kaushik Basu (Senior Vice President and Chief Economist, Development Economics, World Bank) Download:
09:30 – 10:20	Keynote Address 1: “Using Theory to Inform Impact Evaluation in Development Economics” Chair: Indermit Gill (Director, Development Policy, Development Economics, World Bank) Speaker: Michael Kremer (Harvard University, United States) Download:
10:20 – 10:45	Coffee
10:45 – 12:15	Sessions 1A-1C
	Sessions 1A: Labor Contracts \| Room MC7-100 Chair: Kathleen Beegle (Lead Economist and World Development 2013 Deputy Director, World Bank) “Reducing Information Asymmetries in the Youth Labor Market of Jordan with Psychometrics and Skill Based Tests" Matthew Groh, David McKenzie, and Tara Vishwanath (World Bank) Download: \| "Endogenous Employment and Incomplete Markets" Andrés Zambrano (Universidad de los Andes, Colombia) Download: \| "Unemployment Insurance in the Presence of an Informal Sector" David Bardey (Universidad de los Andes, Colombia), Fernando Jaramillo (Universidad del Rosario, Colombia) and Ximena Pe?a (Universidad de los Andes, Colombia) Download: \| Discussant: ?W. Bentley MacLeod (Columbia University, United States) Download:
	Session 1B: The Political Economy of Trade Policy \| Room MC8-100 Chair: Chad Bown (Lead Economist, Trade and Integration, Development Economics, World Bank) “Protectionism Through Exporting: Subsidies with Export Share Requirements in China” Fabrice Defever and Alejandro Ria?o (University of Nottingham, United Kingdom) Download: “A Theory of Trade Policy Under Dictatorship and Democratization” Ben Zissimos (University of Exeter, United Kingdom) Download: \| “Who Decides on Trade Policy?”? Joachim Jarreau ?(Aix-Marseille School of Economics, France) Download: \| Discussant: Kishore Gawande (Texas A&M University, United States) Download:
	Session 1C: Health Risks and Insurance \| Room MC9-100 Chair: Andrew Foster (Brown University, United States) “The Effect of HIV Infection Risk Beliefs on Risky Sexual Behavior: Scared Straight or Scared to Death?” Jason Kerwin (University of Michigan, United States) Download: \| “Ethiopia’s Pilot Community Based Health Insurance Scheme on Household Economic Welfare” Zelalem Yilma, Anagaw Mebratie (Erasmus University Rotterdam, Netherlands), Robert Sparrow (Australian National University, Australia), Marleen Dekker (Leiden University, Netherlands), Getnet Alemu (Addis Ababa University, Ethiopia), and Arjun S. Bedi (Erasmus University Rotterdam, Netherlands) Download: \| “Endogenous Insurance and Informal Relationships” ?Xiao Yu Wang (Duke University, United States) Download: \| Discussant: Daniel Bennett (University of Chicago, United States) Download:
12:15 – 13:30	Lunch—Poster Session \| James D. Wolfensohn Atrium
	Preston Auditorium
13:30 – 14:20	Keynote Address 2: “The Global Financial Crisis of 2008-2009 and the Developing World: A Historical Perspective” Chair: Asli Demirgü?-Kunt (Director, Research Department, World Bank) Speaker: Carmen Reinhart (Harvard University, United States) Download:
14:20 – 14:45	Coffee
14:45 – 16:15	Sessions 2A-2C
	Session 2A: Natural Resources and Market Incentives \| Room MC 7-100 Chair: William Martin (Research Manager, Agricultural and Rural Development, Development Economics, World Bank) “Markets, Contracts, and Uncertainty: A Structural Model of a Groundwater Economy” Xavier Giné and Hanan Jacoby (World Bank) Download: \| “Scope of Economic Incentives and Abatement Technologies to Regulate a Natural System’s Resilience in a General Equilibrium Model” David Tobón Orozco, Carlos Molina Guerra, and Carlos Vasco Correa (Universidad de Antioquía, Colombia) Download: \| “Winning the Oil Lottery:? The Impact of Natural Resource Extraction on Growth” Tiago Cavalcanti (University of Cambridge, United Kingdom), Daniel Da Mata (Instituto de Pesquisa Econ?mica Aplicada, Brazil), and Frederik Toscani (University of Cambridge, United Kingdom) Download: \| Discussant: Gunnar Eskeland (Norwegian School of Economics, Norway)
	Session 2 B:? Economics of the Internet \| Room MC 8-100?? Chair: Uwe Deichmann (Co-director, World Development Report 2016, World Bank) “Has the Internet Fostered Inclusive Innovation in the Developing World?” Caroline Paunov (Organisation for Economic Co-operation and Development) and Valentina Rollo (Graduate Institute of International and Development Studies, Switzerland) Download: \| “The Substitution of ICT Capital for Routine Labor: Transitional Dynamics and Long-Run Implications” Maya Eden (World Bank) and Paul Gaggl (University of North Carolina, United States) Download: \| “Smartcards: Identifying General Equilibrium Effects from Randomized Controlled Trials” Karthik Muralidharan, Paul Niehaus (University of California, San Diego, United States) and Sandip Sukhtankar (Dartmouth College, United States) Download: \| Discussant: Eric Bartelsman (Amsterdam University, Netherlands) Download:
	Session 2C: Finance and Macroeconomics \| Room MC 9-100???????? Chair: Aart Kraay (Senior Adviser, Development Economics, World Bank) "State-Owned Banks and Fiscal Discipline" Jesus Gonzalez-Garcia and Francesco Grigoli (International Monetary Fund) Download: \| "Causality Between FDI and Financial Market Development: Evidence from Emerging Markets" Issouf Soumaré (Laval University, Canada) and Fulbert Tchana Tchana (World Bank) Download: \| “Uncertainty and Economic Activity: A Global Perspective” Ambrogio Cesa-Bianchi (Bank of England, United Kingdom), M. Hashem Pesaran (University of Southern California, United States and Cambridge, University, United Kingdom), and Alessandro Rebucci (John Hopkins University, United States) Download: \| Discussants: ?Norman Loayza (World Bank) and Maria Soledad Martinez Peria (World Bank) Download:
16:15-16:40	Coffee
16:40-17:30	Keynote Address 3: “Theories of Underdevelopment and the Development of Development Theory” \| Preston Auditorium Chair: Jeffrey D. Lewis, (Director, Economic Policy, Debt, and Trade Department, Poverty Reduction and Economic Management Network, World Bank) Speaker: Maitreesh Ghatak (London School of Economics, United Kingdom) Download:
17:30-18:30	Cocktails \| James D. Wolfensohn Atrium
Tuesday, June 3, 2014
	Preston Auditorium
08:00-09:00	Registration and Breakfast
09:00-09:50	Keynote Address 4: “Why Haven’t Global Markets Reduced Inequality in Developing Economies?” Chair: Sri Mulyani Indrawati (Managing Director and Chief Operating Officer, World Bank) Speaker: Eric Maskin (Harvard University, United States and 2007 Nobel Laureate in Economics) Download:
09:50-10:15	Coffee
10:15-11:45	Sessions 3A-3C
	Session 3A:?Behavioral Economics \| Room MC 7-100 Chair: ?Karla Hoff (Co-director, World Development Report 2015, World Bank) “The Future in Mind: Aspirations and Forward-Looking Behavior in Rural Ethiopia” by Tanguy Bernard (International Food Research Policy Institute), Stefan Dercon (Oxford University, United Kingdom), Kate Orkin (Cambridge University, United Kingdom) , and Alemayehu? Seyoum Taffesse (International Food Research Policy Institute) Download: \| “The Culture of Entrepreneurship” Shankha Chakraborty, Jon C. Thompson (University of Oregon, United States), and Etienne Yehoue (International Monetary Fund) Download: \| “On Top of Pyramids: Cronyism and Private Sector Growth in Egypt” Ishac Diwan (Harvard University, United States), Philip Keefer, and Marc Schiffbauer (World Bank) Download: \| Discussant: Patricio Dalton (Tilburg University, Netherlands) Download:
	Session 3B: Migration \| Room MC 8-100?? Chair: Michael Clemens (Center for Global Development, United States) “Remittance Flows under Asymmetric Information: A Contracting Approach” Ganesh Seshan (Georgetown University, United States) and Robertas Zubrickas (University of Zurich, Switzerland) Download: \| “Intra-household Selection into Migration: Evidence from a Matched Sample of Migrants and Origin Households in Senegal” Isabelle Chort (Université Paris-Dauphine, France) and Jean-No?l Senne (Institut de Recherche pour le Développement, France) Download: \| ‘Structural Transformation and the Rural-Urban Divide” Viktoria Hnatkovska and Amartya Lahiri (University of British Columbia, Canada) Download: \| ?Discussant: ?Garance Genicot (Georgetown University, United States)
	Session 3C:? Validity of Experiments \| Room MC 9-100???????? Chair: James Foster (George Washington University, United States) “Designing Experiments to Measure Spillover Effects” Sarah Baird (George Washington University, United States and University of Otago, New Zealand), Aislinn Bohren (University of Pennsylvania, United States), Craig McIntosh (University of California, San Diego, United States), and Berk ?zler (World Bank and University of Otago, New Zealand) Download: \| “Randomized trials for Policy: a Review of the External Validity of Treatment Effects” Sean Muller (University of Cape Town, South Africa) Download: \| “’Revisit’ the Silk Road: A Quasi-Experiment Approach Estimating the Effects of Railway Speed-Up Project on China-Central Asia Exports” Hangtian Xu (Tohoku University, Japan) Download: \| Discussant: ?David McKenzie (World Bank) Download:
11:45-12:10	Coffee
12:10-13:00	Keynote Address 5: “How Business Community Institutions Can Help Fight Corruption” \| Preston Auditorium Chair: Kaushik Basu (Senior Vice President and Chief Economist, Development Economics, World Bank) Speaker: Avinash K. Dixit (Princeton University, United States) Download:
13:00-14:00	Lunch \| James D. Wolfensohn Atrium
	LUNCH POSTER SESSION Monday, June 2, 2014 James D. Wolfensohn Atrium
	“Housing Windfalls and Intergenerational Transfers in China" Albert Park (Hong Kong University of Science & Technology, Hong Kong-China) and Maria Porter (Michigan State University, United States) "Better Knowledge Does Not Affect Behavior: The Demand for Lottery Tickets in Rural Thailand" Juliane Zenker, Andreas Wagene (University of Hannover, Germany), and Sebastian Vollmer (University of Goettingen, Germany) "Foreign Aid and Mobilization of Growth Factors in Sub-Saharan Africa" Douzounet Mallaye (University of N'Djamena, Chad) and Yogo Thierry Urbain (University of Yaoundé II- Cameroon) "Do Weak Institutions Prolong Crises? On the Identification, Characteristics, and Duration of Declines During Economic Slumps" Richard Bluhm, Denis de Crombrugghe and Adam Szirmai (Maastricht University, Netherlands)

Avinash Dixit is John J. F. Sherrerd ’52 University Professor of Economics Emeritus at Princeton University. He is also a Distinguished Adjunct Professor of Economics at Lingnan University, Hong Kong, and a Senior Research Fellow at Nuffield College, Oxford. His research interests have included microeconomic theory, game theory, international trade, industrial organization, growth and development theories, public economics, political economy, and the new institutional economics. His book publications include Theory of International Trade (with Victor Norman), The Art of Strategy (with Barry Nalebuff), Investment Under Uncertainty (with Robert Pindyck), Games of Strategy (with Susan Skeath), Lawlessness and Economics: Alternative Modes of Governance, and The Making of Economic Policy: A Transaction Cost Politics Perspective. He has also published numerous articles in professional journals and collective volumes. He was President of the Econometric Society in 2001, and of the American Economic Association in 2008. He was elected to the American Academy of Arts and Sciences in 1992, the National Academy of Sciences in 2005, and the American Philosophical Society in 2010, and was elected a Corresponding Fellow of the British Academy in 2006.
Maitreesh Ghatak was educated at the Presidency College, University of Calcutta, Delhi School of Economics, and Harvard University, where he received his Ph.D. in 1996. He has been Professor of Economics at the London School of Economics since 2004, having earlier taught at the University of Chicago. He is the Editor-in-Chief of the Journal of Development Economics since 2009 and the Director of the research programme Economic Organization and Public Policy (EOPP) at STICERD, LSE since 2006. Earlier he was the Managing Editor of the Review of Economic Studies, and a Co-Editor of the Economics of Transition. He is currently a member of the Executive Committee of BREAD, and a Lead Academic of the India-Bihar Programme of the International Growth Centre. He is a founder member of the research networks Theoretical Research in Development (ThReD). His areas of research interest are development economics, economics of contracts and organisations, and public economics. Current projects include the role of market structure in microfinance, land acquisition and compensation for displaced farmers, non-profits and social enterprise, and incentives and organisation design in public service delivery.
Michael Kremer is the Gates Professor of Developing Societies in the Department of Economics at Harvard University and Senior Fellow at the Brookings Institution. He is a Fellow of the American Academy of Arts and Sciences, a recipient of a MacArthur Fellowship and a Presidential Faculty Fellowship, and was named a Young Global Leader by the World Economic Forum. Kremer’s recent research examines education and health in developing countries, immigration, and globalization. He and Rachel Glennerster have recently published Strong Medicine: Creating Incentives for Pharmaceutical Research on Neglected Diseases.
Eric Maskin is Adams University Professor at Harvard. He received the 2007 Nobel Memorial Prize in Economics (with L. Hurwicz and R. Myerson) for laying the foundations of mechanism design theory. He also has made contributions to game theory, contract theory, social choice theory, political economy, and other areas of economics. He received his A.B. and Ph.D from Harvard and was a postdoctoral fellow at Jesus College, Cambridge University. He was a faculty member at MIT from 1977-1984, Harvard from 1985-2000, and the Institute for Advanced Study from 2000-2011. He rejoined the Harvard faculty in 2012.
Carmen M. Reinhart is the Minos A. Zombanakis Professor of the International Financial System at Harvard Kennedy School. Previously, she was the Dennis Weatherstone Senior Fellow at the Peterson Institute for International Economics and Professor of Economics and Director of the Center for International Economics at the University of Maryland. Professor Reinhart held positions as Chief Economist and Vice President at the investment bank Bear Stearns in the 1980s. She spent several years at the International Monetary Fund. Reinhart is a Research Associate at the National Bureau of Economic Research, and a member of the Congressional Budget Office Panel of Economic Advisers and Council on Foreign Relations. She has served on numerous editorial boards, has testified before congress, and was listed among Bloomberg Markets Most Influential 50 in Finance, 2011. She received her Ph.D. from Columbia University.

Session on Labor Contracts

"Testing the importance of search frictions and labor market matching constraints through randomized experiments in Jordan" by Matthew Groh, Nandini Krishnan, David McKenzie, Nour Shammout and Tara Vishwanath
"Endogenous Employment and Incomplete Markets" by Andres Zambrano
"Unemployment Insurance in the Presence of an Informal Sector" by David Bardey, Fernando Jaramillo and Ximena Pe?a

Session on Behavioral Economics

"Aspirations and Future-oriented Behaviour in Rural Ethiopia" by Tanguy Bernard, Stefan Dercon, Kate Orkin, and Alemayehu Seyoum Taffesse
"The Culture of Entrepreneurship" by Shankha Chakraborty, Jon C. Thompson, and Etienne Yehoue
"The Effect of Cronyism on Private Sector Growth in Egypt" by Ishac Diwan, Philip Keefer, and Marc Schiffbauer

Session on The Validity of Experiments

"Designing Experiments to Measure Spillover Effects" by Sarah Baird, Aislinn Bohren, Craig McIntosh, and Berk Ozler
"Randomized trials for Policy: a Review of the External Validity of Treatment Effects" by Sean Muller
"A Quasi-Experiment Approach Estimating the Effects of Railway Speed-Up Project on China-Central Asia Exports" by Hangtian Xu

Session on Finance and Macroeconomics

"State-Owned Banks and Fiscal Discipline" by Jesus Gonzalez-Garcia and Francesco Grigoli
"Causality between FDI and Financial Market Development: Evidence from Emerging Markets" by Issouf Soumaré and Fulbert Tchana Tchana
"Uncertainty and Economic Activity: A Global Perspective" by Ambrogio Cesa-Bianchi, M. Hashem Pesaran, and Alessandro Rebucci

Session on The Political Economy of Trade Policy

"Protectionism Through Exporting: Subsidies with Export Share Requirements in China" by Fabrice Defever and Alejandro Ria?o
"A Theory of Trade Policy Under Dictatorship and Democratization” by Ben Zissimos “Who Decides on Trade Policy?" by Joachim Jarreau
"Who Decides on Trade Policy?" by Joachim Jarreau

Session on Economics of the Internet

"Has the Internet fostered inclusive innovation in the developing world?" by Caroline Paunov and Valentina Rollo
"The Substitution of ICT Capital for Routine Labor: Transitional Dynamics and Long-Run Implications" by Maya Eden and Paul Gaggi
"Smartcards: Identifying General Equilibrium Effects from Randomized Controlled Trials" by Karthik Muralidharan, Paul Niehaus, and Sandip Sukhtankar

Session on Natural Resources and Market Incentives

"Markets, Contracts, and Uncertainty: A Structural Model of a Groundwater Economy" by Xavier Giné and Hanan Jacoby
"Scope of Economic Incentives and Adoption of Technologies to Regulate a Natural System’s Resilience in a General Equilibrium Model" by David Tobón Orozco, Carlos Molina Guerra, and and Carlos Vasco Correa
"Winning the Oil Lottery: The Impact of Natural Resource Extraction on Growth" by Tiago Cavalcanti, Daniel Da Mata, and Frederik Toscani

Session on Migration

"Remittance Flows under Asymmetric Information: A Contracting Approach" by Ganesh Seshan and Robertas Zubrickas
"Intra-household Selection into Migration: Evidence from a Matched Sample of Migrants and Origin Households in Senegal" by Isabelle Chort and Jean-No?l Senne
"Structural Transformation and the Rural-Urban Divide" by Viktoria Hnatkovska and Amartya Lahiri

Session on Health Risks and Insurance

"The Effect of HIV Infection Risk Beliefs on Risky Sexual Behavior: Scared Straight or Scared to Death?" by Jason T. Kerwin
"The Impact of Ethiopia’s pilot Community Based Health Insurance Scheme on Household Economic Welfare" by Zelalem Yilma, Anagaw Mebratie, Robert Sparrow, Marleen Dekker, Getnet Alemu, and Arjun S. Bedi
"Endogenous Insurance and Informal Relationships" by Xiao Yu Wang

Poster Session

"Housing Windfalls and Intergenerational Transfers in China" by Albert Park and Maria Porter
"Better Knowledge Does Not Affect Behavior: The Demand for Lottery Tickets in Rural Thailand" by Juliane Zenker, AndreasWagene, and Sebastian Vollmer
"Foreign aid and mobilization of growth factors in sub-Saharan Africa" by Douzounet Mallaye
"Do weak institutions prolong crises? On the identification, characteristics, and duration of declines during economic slumps" by Richard Bluhm, Denis de Crombrugghe and Adam Szirmai