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A regional multiplier approach to estimating the impact of cash transfers: The case of cash aid in rural Malawi

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  • Davies, Simon
  • Davey, James

Abstract

This paper analyses the impact on the local economy of an emergency cash transfer programme in rural Malawi. The results are of interest given the growing use of cash transfers as development aid as well as the increasing popularity of such transfers as a form of social protection across Sub-Saharan Africa. Using a form of social accounting matrix, we find that there are widespread benefits for regional economy as a whole (with multiplier estimates of 2.02 to 2.45) and for certain groups in particular. Small farmers and small businesses gain particular advantage as this is where poorer households’ purchases are focused; education and health also benefit. Such payments can also help to support the regional economy during the most “lean” periods of the year.

Suggested Citation

  • Davies, Simon & Davey, James, 2007. "A regional multiplier approach to estimating the impact of cash transfers: The case of cash aid in rural Malawi," MPRA Paper 3724, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:3724
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    File URL: https://mpra.ub.uni-muenchen.de/3724/1/MPRA_paper_3724.pdf
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    References listed on IDEAS

    as
    1. Greig, Michael A, 1971. "Regional Multiplier Effects in the U.K.: A Comment," Oxford Economic Papers, Oxford University Press, vol. 23(2), pages 277-284, July.
    2. G. C. Archibald, 1967. "Regional Multiplier Effects In The U.K," Oxford Economic Papers, Oxford University Press, vol. 19(1), pages 22-45.
    3. Coe, David T. & Helpman, Elhanan, 1995. "International R&D spillovers," European Economic Review, Elsevier, vol. 39(5), pages 859-887, May.
    4. Elhanan Helpman & David T. Coe, 1993. "International RandD Spillovers," IMF Working Papers 93/84, International Monetary Fund.
    5. Steele, D B, 1969. "Regional Multipliers in Great Britain," Oxford Economic Papers, Oxford University Press, vol. 21(2), pages 268-292, July.
    6. Armando Barrientos & Jocelyn DeJong, 2006. "Reducing Child Poverty with Cash Transfers: A Sure Thing?," Development Policy Review, Overseas Development Institute, vol. 24(5), pages 537-552, September.
    7. Beata Smarzynska Javorcik, 2004. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages," American Economic Review, American Economic Association, vol. 94(3), pages 605-627, June.
    8. Davies, Simon & Easaw, Joshy & Ghoshray, Atanu, 2006. "Mental Accounting and Remittances: A Study of Malawian Households," MPRA Paper 3603, University Library of Munich, Germany.
    9. Giles, Brynley D & Jennings, Anthony, 1982. "Project Appraisal and the Multiplier: The Case of the Viphya Pulp Mill Project in Malawi," Oxford Economic Papers, Oxford University Press, vol. 34(2), pages 390-402, July.
    10. Harold Brodsky & David E. Sarfaty, 1977. "Measuring the Urban Economic Base in a Developing Country," Land Economics, University of Wisconsin Press, vol. 53(4), pages 445-454.
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    Cited by:

    1. Mideros A. & Gassmann F. & Mohnen P., 2013. "Estimation of rates of return of social protection instruments. Making the case for non-contributory social transfers in Cambodia," MERIT Working Papers 063, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

    More about this item

    Keywords

    Rural Economic Development; Cash Transfers; Income Multiplier; Poverty; Malawi; Africa;

    JEL classification:

    • D19 - Microeconomics - - Household Behavior - - - Other
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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