Improving productivity in developing countries: Identifying bottlenecks and obstacles to investments and technology adoption

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We propose to develop five research projects to address one overarching theme: the study of imperfections and constraints that hinder the process of development by trapping individuals in low-productivity activities, while missing out on productive (high return) investment opportunities, including the adoption of new technology. We will study different contexts in Ethiopia, Malawi, India and Pakistan, that, in their diversity, will provide a broad picture of the frictions and constraints that prevent or severely limit progress and economic growth in many countries in the developing world with a particular focus on agricultural activities in a rural context. We will focus on four themes:(i) lack of information (on know-how or on returns) for making investment decisions(ii) market failures: limited access to formal credit and insurance markets(iii) constraints to market linkages and infrastructure(iv) constraints relating to social norms: gender roles; the role of networks.These general themes will be developed in five different contexts. The studies we propose use data collected for the evaluation of specific interventions aimed at improving the productivity and welfare of their beneficiaries. We take the impact estimates as a starting point and use the variation induced by the interventions to estimate structural models of individual behaviour and characterise the imperfections that hinder the adoption of productive investments. This approach will allow us to understand the mechanisms causing the observed impacts and, more generally, the determinants of individual choices. In turn, this will allow us to generalize the evidence from the impact evaluations and possibly improve the interventions.The first project considers the provision of training and productive assets to indigent households in poor districts in Pakistan. The interventions also link these households to markets and market opportunities. The aim is to identify whether constraints relating to farmer knowledge and lack of market linkages result in low levels of productivity in livestock rearing. This project speaks to themes (i) through (iv).The second project analyses a similar intervention, implemented in a remote region of India. Here however, to invest in livestock, beneficiaries have to take out a micro-loan. This allows us to relate investment decisions to the availability of credit and insurance, as well as to information on the activity's costs and returns available to households. An innovative feature is the use of subjective expectations to model investment decisions. This project is relevant for themes (i) through (iii).The third project looks at the adoption of innovative irrigation technologies in Ethiopia to determine how lack of information and imperfections in credit and insurance markets pose barriers to the adoption of new technology. In its various branches, it provides information, resources and credit to beneficiaries. It is relevant for themes (i) and (ii).The fourth project analyses the impacts of a sanitation intervention in poor parts of India, and particularly the indirect impacts of improved sanitation on medium- and long-term productivity, mainly through health. It also studies whether this changes the balance of power within the household, given that females tend to have a higher demand for better sanitation. This research project is relevant for themes (i) through (iv).The fifth, project is motivated by the link between ill-health and long-run productivity. It seeks to answer the question of whether social norms hinder the adoption and diffusion of new health practices in rural Malawi, thus contributing to bottlenecks in the diffusion of new technology and other practices that enhance productivity. This addresses themes (i) and (iv).This research agenda will ultimately help to design effective policies and institutions to help overcome these imperfections and improve long-run productivity and economic growth.