Overview. The goal of this project is to determine what types of state policies can effectively increase employment in the third world. The third world debt crisis has reduced the capacity of governments in underdeveloped countries to engage in expensive programs of domestic spending oriented to produce economic growth. This reality has forced many Latin American, Asian and African governments to design new strategies of economic development that can be executed cheaply. The present project is designed to evaluate the effectiveness of these new programs within three industries in Northeastern Brazil.
The project uses an innovative methodology to prevent the false attribution of success to a political program, if the good results are in fact the result of simple free market processes. A statistical model is used to estimate the amount of employment that would have been generated by market-oriented forces. States are then ranked by high or low employment after market forces have been statistically controlled. These rankings are then correlated with indicators measuring the presence and funding of various government programs to assess the independent contribution of these policies to creating jobs.
Broader Impact. Knowing what kind of government programs do or do not raise employment or income can be critical in the third world to the development of sound public policy under conditions of budgetary restraints. The identification of expensive programs that have little substantive impact of economic well being can help identify sources of government waste and allow the reallocation of scarce resources into more useful areas. Helping financially strapped third world governments raise employment and income while minimizing levels of public expenditure can reduce third world poverty, and lower levels of infant mortality while maintaining fundamental fiscal responsibility
