The role of the government in industrialization is heavily debated. Some claim that extensive government involvement is key to initiate a sustainable development process, others see the government as an obstacle to it, pointing to the importance of government failure. We formulate a model, which explains why even a highly inefficient industrial policy can successfully promote big-push development. Moreover, we show that extensive government intervention is more likely to be successful when the initial level of development is low.

Is international migration an adaptation strategy to sudden or gradual climatic shocks? In this paper we investigate the direct and the indirect role of climatic shocks in developing countries as a determinant of out-migration flows toward rich OECD countries in the period 1990–2001. Contrarily to the bulk of existing studies, we use a macro approach and explicitly consider the heterogeneity of climatic shocks (type, size, sign of shocks and seasonal effects). Our results show that the occurrence of adverse climatic events in origin countries has significative direct and indirect effects on out-migration from poor to rich countries.

Enhancing productivity and growth in the agro-value chains in developing countries is a fundamental goal of national governments and international development agencies. A large part of the population in developing countries relies on agricultural production, and low productivity and food scarcity due to increasing demographic pressures represent a big challenge to actions aimed at poverty alleviation. In this report we first present a case-study based on a pilot project conducted jointly by UNIDO, FAO and ILO in Ethiopia sponsored by the MDG-Fund. This pilot project, focusing on value chain enhancement of the Ethiopian edible oil sector, highlights the importance and the critical aspects of an integrated approach where a value chain methodology is combined and integrated with a cluster development component and, hence, allows to simultaneously address several constraints which limit the development of the agro food sector in developing countries. In the second part of the report, we briefly discuss the case for a joint model for interventions aimed at promoting agro-value chain development.

Diasporans can contribute to the development of their home countries by investing their capital in existing businesses and/or setting up new ventures in their countries-of-origin. This paper analyzes whether these growingly important investors differ from domestic firms and foreign investors in terms of export behavior. Our results indicate that diaspora firms are more likely to be exporters, to export more intensively and toward more destinations compared to domestic firms; in addition their export performance is not substantially dissimilar to that of MNEs. The presence of diaspora investors and entrepreneurs may contribute to boost the internationalization of developing countries.

This paper examines the main determinants of linkages between foreign and domestic firms in developing countries. Based on existing evidence, we highlight the relevance of linkages generated by MNEs in developing countries and then we discuss the factors which boost or hamper the interactions between foreign and domestic firms and draw some policy implications. A particular attention is given to diaspora investments – i.e. investments carried out by members of the diaspora or return migrants – that represent a potentially powerful engine of growth and structural change in poor countries

This paper investigates the determinants of backward linkages of foreign manufacturing firms in 19 Sub-Saharan African countries. We shed light on the micro and macro level factors which contribute to a higher degree of interactions between foreign subsidiaries and local firms. Our results indicate that the time since entry of foreign firms, the presence of a local partner in the ownership structure and a finalmarket orientation are associated with higher local linkages. Finally, we lend further support to the idea that good institutions and in particular a reliable legal system are pre-conditions for boosting the linkages generated by foreign firms.

Job creation is one of the main challenges for developing countries. The aim of this paper is to analyse the relation between foreign ownership and employment using an original firm-level dataset that covers 19 sub-Saharan African countries. Our results show that although foreign firms are generally larger than local ones, the employment they generate is relatively more unskilled labour intensive compared with that generated by domestic firms. We discover substantial differences between foreign investors from the north and the south, in terms of both skill intensity and wage premiums. We also find that, ceteris paribus, Chinese firms employ more workers (mostly bluecollar workers) and pay lower wages for both skilled and unskilled workers compared with both domestic firms and other foreign investors.

The purpose of this reply is twofold. First, we discuss the major point raised by Stark and Lukasz (Review of Development Economics 17, no. 1 (2013):156–62), i.e. the fact that a framework which explicitly considers asymmetric information is correct and would imply a reversal of our finding. Although, we acknowledge that the mechanism highlighted by the authors is an alternative explanation to return decisions, we argue that the suggested framework is unsuitable in the specific context analyzed in our paper (as well as most real-world situations). Instead, the assumptions underlying our simple theoretical model are strictly linked to data availability in order to perform a sensible empirical analysis. Second, we present a slightly different version of the model proposed in the original article that overcomes possible inconsistencies on the saving behavior of the migrants. Although all the computations are shown in one of the articles cited in our published paper, we now prefer to show them fully in this issue of the Review. The conclusions of our theoretical model do not change. Hence, we conclude that the empirical evidence of the original article—which is the main contribution of our work—is supported by a robust framework.

The aim of this paper is to describe the recent evolution of the Apulian aerospace cluster and critically analyze the role of regional industrial policies in a "global" industry. Industrial policy at the regional level shows some shortcomings, and could serve for a second-best solution in the absence of a national strategy in the current Italian framework. We argue that a "normalization" of industrial policy and a clear division of labour between the different government levels is needed in order to avoid erosion of Italy’s comparative advantage in high tech industries characterized by strong market failures.

This paper analyses the return plans of irregular migrants by stressing the role of individual skills and network effects. We propose a simple two-period life-cycle model that we test using individuallevel data on irregular migrants in Italy and on undocumented Mexicans in the USA. Our evidence shows that highly skilled clandestine migrants are more likely to return home than migrants with low or no skills. We argue this result is due to constraints imposed by the irregular status on migrants’ ability to fully use human capital in the destination country. However, the presence of strong social networks may lessen this effect.