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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

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    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.
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    4. Davies, Simon & Easaw, Joshy & Ghoshray, Atanu, 2006. "Mental Accounting and Remittances: A Study of Malawian Households," MPRA Paper 3603, University Library of Munich, Germany.
    5. 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.
    6. 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.
    7. Mr. Elhanan Helpman & Mr. David T. Coe, 1993. "International RandD Spillovers," IMF Working Papers 1993/084, International Monetary Fund.
    8. Steele, D B, 1969. "Regional Multipliers in Great Britain," Oxford Economic Papers, Oxford University Press, vol. 21(2), pages 268-292, July.
    9. repec:bla:devpol:v:24:y:2006:i:5:p:537-552 is not listed on IDEAS
    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.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Stephen Devereux, "undated". "Social Protection for Enhanced Food Security in Sub-Saharan Africa," UNDP Africa Policy Notes 2012-010, United Nations Development Programme, Regional Bureau for Africa.
    2. Henning Krause & Anja Faße & Ulrike Grote, 2019. "Nutrient-Dense Crops for Rural and Peri-Urban Smallholders in Kenya—A Regional Social Accounting Approach," Sustainability, MDPI, vol. 11(11), pages 1-22, May.
    3. Harold Alderman & Ruslan Yemtsov, 2014. "How Can Safety Nets Contribute to Economic Growth?," The World Bank Economic Review, World Bank, vol. 28(1), pages 1-20.
    4. Gentilini, Ugo, 2014. "Our daily bread : what is the evidence on comparing cash versus food transfers?," Social Protection Discussion Papers and Notes 89502, The World Bank.
    5. J. Edward Taylor & Karen Thome, 2012. "A Methodology for Local Economy-wide Impact Evaluation (LEWIE) of Cash Transfers," One Pager 183, International Policy Centre for Inclusive Growth.
    6. Tiberti, Luca & Maisonnave, Helene & Chitiga, Margaret & Mabugu, Ramos, 2018. "Reforming grants to tackle child poverty: An integrated macro-micro approach," World Development, Elsevier, vol. 112(C), pages 272-281.
    7. Franziska Gassmann & Cecile Cherrier & Andrés Mideros Mora & Pierre Mohnen, 2013. "Making the Investment Case for Social Protection: Methodological challenges with lessons learnt from a recent study in Cambodia," Papers inwopa694, Innocenti Working Papers.
    8. 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 2013-063, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    9. Camacho, Luis A. & Kreibaum, Merle, 2017. "Cash transfers, food security and resilience in fragile contexts: general evidence and the German experience," IDOS Discussion Papers 9/2017, German Institute of Development and Sustainability (IDOS).

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    More about this item

    Keywords

    Rural Economic Development; Cash Transfers; Income Multiplier; Poverty; Malawi; Africa;
    All these keywords.

    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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