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title: WorldBankResearchProgram.1999:AbstractsofCurrentStudies
author:publisher: WorldBank
isbn10|asin: 082134580Xprintisbn13: 9780821345801ebookisbn13: 9780585283906
language: English
subjectEconomicassistance--Abstracts--Periodicals,Technicalassistance--Abstracts--Periodicals.
publicationdate: 1999lcc: HC60.I535ebddc: 338.9/007/2
subject:Economicassistance--Abstracts--Periodicals,Technicalassistance--Abstracts--Periodicals.
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TheWorldBankResearchProgram1999AbstractsofCurrentStudies
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DefinitionofWorldBankResearch
ResearchattheBankencompassesanalyticalworkdesignedtoproduceresultswithwideapplicabilityacrosscountriesorsectors.Bankresearch,incontrasttoacademicresearch,isdirectedtowardrecognizedandemergingpolicyissuesandisfocusedonyieldingbetterpolicyadvice.Althoughmotivatedbypolicyproblems,Bankresearchaddresseslonger-termconcernsratherthantheimmediateneedsofaparticularBanklendingoperationorofaparticularcountryorsectorreport.ActivitiesclassifiedasresearchattheBankdonot,therefore,includetheeconomicandsectorworkandpolicyanalysiscarriedoutbyBankstafftosupportoperationsinparticularcountries.Economicandsectorworkandpolicystudiestaketheproductofresearchandadaptittospecificprojectsorcountrysettings,whereasBankresearchcontributestotheintellectualfoundationsoffuturelendingoperationsandpolicyadvice.Bothactivitiesresearchandeconomicandsectorworkarecriticaltothedesignofsuccessfulprojectsandeffectivepolicy.
Copyrightã1999InternationalBankforReconstructionandDevelopment/THEWORLDBANK1818HStreet,NW,Washington,DC20433,U.S.A.Allrightsreserved.FirstprintingSeptember1999ManufacturedintheUnitedStatesofAmericaISSN0258-3143ISBN0-8213-4580-X
ThisreporthasbeenpreparedbythestaffoftheWorldBank.Thejudgments
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ThisreporthasbeenpreparedbythestaffoftheWorldBank.ThejudgmentsexpresseddonotnecessarilyreflecttheviewsoftheBoardofExecutiveDirectorsorofthegovernmentstheyrepresent.
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CONTENTSIntroduction 1
StudiesbySubjectArea 3
AbstractsofCurrentStudies 11
PovertyandSocialWelfare 13
EducationandLaborMarkets 42
EnvironmentallySustainableDevelopment 55
InfrastructureandUrbanDevelopment 91
Macroeconomics 107
InternationalEconomics 119
DomesticFinanceandCapitalMarkets 143
TransitionEconomies 160
PrivateSectorDevelopmentandPublicSectorManagement
173
BankResearchOutput 189
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INTRODUCTIONTheanalyticalskillsoftheWorldBank'sresearchersanditsvastexperienceintacklingdevelopmentproblemsprovideafoundationforresearchoncriticalpolicyissuesfacingthedevelopingworld.Asthisvolumeattests,Bankresearchprojectsinvestigateabroadrangeofissuesinawidevarietyofsettings.ButthepolicychallengesaroundtheworldareprofuseandtheWorldBank'sresearchresourcesscarceanddeclining.
Ideally,researchprojectswouldbeconductedbothconcurrentlyandcollaborativelybytheWorldBankanddevelopingcountries.Thosefacingthepolicyproblemsandtheirconsequencesarebestabletoidentifywhicharepriorities.Andlocalresearcherscanbetteraccountforlocalconditions,institutions,andcultures.Butpolicyresearchrequiresextensiveeducationandtraining,accesstocurrentdataandinformation,computingtechnology,institutionalsupport,andfinanceresourcesthatmanydevelopingandtransitioneconomieslack.
Thusasingledevelopingcountrymaybeunabletosupportresearchinstitutionsindependently.Butcofinancingbyseveralcountriescanmakemanyresearchactivitiesfeasible.Internationalcollaborationalsoallowsresearcherstoaddresscommonissuesjointly,andtolearnfromtheexperienceofcountriesfacingsimilarproblems.
Tohelpfosterregionalcollaborationandbuildresearchcapacity,theWorldBankhassupportedthedevelopmentofregionalnetworksoverthepastdecade.Thesenetworkscreateregionalcommunitiesofresearcherswhosharedataandnewmethods,critiqueandencourageoneanother'swork,andhelptrainoneanother'sstudents.Prominentinternationalexpertsprovidetutorialsorreviewthereportsofjuniorresearchersinworkshops,presenttheirownworkatregional
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conferences,andteachatlocaluniversitiesthroughinternationalexchangeprograms.Grantcompetitionsmotivateresearcherstodevelopnewandcreativeapproachestoinvestigatingpolicyproblems.Fellowshipsencouragestudentsandscholarsworkingabroadtoreturn,introducingthemtothebuddinglocalresearchcommunityandtonewopportunitiesforapplyingtheirskillstotheircountry'sneeds.Thenetworksestablishnewchannelsforcommunicationamongfragmentedresearchgroupsandoftenisolatedresearchers:journals,newsletters,Websites,electronicmail,andworkingpapersseries.
TheBankhasprovidedgrantfundstohelpestablishandstrengthenregionalresearchnetworks,suchastheAfricanEconomicResearchConsortiumandtheprogramforEconomicEducationandCapacityBuildinginTransitionEconomies.Butitsroleisintendedtobecatalytic,andafteraninitialperiodthenetworkshaveobtainedlong-termsupportfromotherinternationalagencies,privatefoundations,andlocalbusinessesandinstitutions.
Asthesenetworksbecomeself-sustaining,theopportunitiesforandadvantagesofparticipatinginthebroaderinternationalcommunityofdevelopmentresearchersincrease.ThuslastyeartheWorldBank,theInternationalEconomicAssociation,andsixregionalnetworksinitiatedtheGlobalDevelopmentNetwork.RepresentativesofresearchagenciesandinstitutionsfromaroundtheworldwillmeetinBonn,Germany,inDecember1999todiscussthebestwaystolinkresearchersworldwidetoenhanceourunderstandingofdevelopment.Proposedtoolsincludestaffexchanges,anannualglobalconferenceonresearchandpolicy,guidelinesondatacollectionandpreparation,informationonopportunitiesforresearchtrainingandfunding,anddirectoriesofdevelopmentresearchers,policyanalysts,andthinktanks.Perhapsinfutureyearsthisvolumewillshowsomeofthefruitsoftheseefforts,indescriptionsofstudiesconductedundertheauspicesofthenewglobalnetwork.
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WhatResearchIsNowunderWayattheBank?Thisvolumereportsonresearchprojectsinitiated,underway,orcompletedinfiscal1999(July1,1998,throughJune30,1999).Theabstractsinthevolumedescribe,foreachproject,thequestionsaddressed,theanalyticalmethodsused,thefindingstodate,andtheirpolicy
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implications.Eachabstractalsoidentifiestheexpectedcompletiondate,theresearchteam,andanyreportsorpublicationsproduced.Tomakeiteasiertoobtaininformationanddata,eachabstractgivestheemailaddressfortheresearchproject'ssupervisor.
Theabstractscover202researchprojectsfromthroughouttheBank,groupedunderninemajorheadings:
Povertyandsocialwelfare,includingequity,demographics,andhealthandnutrition.
Educationandlabormarkets.
Environmentallysustainabledevelopment,includingenergy,agriculture,naturalresources,andenvironmentaleconomics.
Infrastructureandurbandevelopment.
Macroeconomics,includingadjustmentandmonetaryandfiscalpolicy.
Internationaleconomics,includingdebt,trade,andfinance.
Domesticfinanceandcapitalmarkets.
Transitioneconomies.
Privatesectordevelopmentandpublicsectormanagement,includingregulation,institutions,privatization,politicaleconomy,andindustrialorganization.
AnappendixlistsreportsandpublicationsproducedfromBankresearchandexplainshowtoobtainthem.
HowtoGetMoreInformationThisistheannualcompendiumofcurrentBankresearch.Readers
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interestedinobtainingmorefrequentandupto-dateinformationonBankresearchprojectsandtheirfindingsmaywishtosubscribetothequarterlyPolicyandResearchBulletin.EachissueincludesinformationonrecentWorldBankpublicationsandworkingpapers,abstractsofnewlyinitiatedresearchprojectsandsummariesofrecentresearchfindings,acolumnidentifyingelectronicinformationavailablefromtheBank,andaformfororderingreportsfeaturedinthatissue.Thebulletinisavailablefreeofcharge.Forinformationonhowtosubscribe,seethesubscriptionrequestformatthebackofthisvolume.
Thebulletin,AbstractsofCurrentStudies,articlesfromtheBank'stwojournalstheWorldBankResearchObserverandWorldBankEconomicReviewandahostofreportsandpublicationsfromBankresearchprojectsareavailableontheWebatwww.worldbank.orglresearch.
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STUDIESBYSUBJECTAREAPovertyandSocialWelfare 13
PoliciesforPoorAreas(681-39) 13
PovertyandtheInternationalEconomy:WhatAretheLinks?(681-83)
14
QuantifyingtheNetEconomicLossorGainfromTobaccoUse(681-95)
15
ANewApproachtoValuingMortalityRiskReductions:WhatAreOlderPeopleWillingtoPaytoReduceTheirRiskofDying?(682-12)
16
SocialandEconomicDeterminantsofPovertyinIndia'sPoorestRegions:QualitativeandQuantitativeAssessments(682-21)
16
EvaluationoftheImpactofInvestmentsinEarlyChildDevelopment(682-34)
17
GrowthandInequality(682-63C) 18
RiskManagementOptionsintheHealthSectorinEastAsia(682-71C)
19
CombiningCensusandSurveyDatatoStudytheSpatialDimensionsofPovertyandInequality(682-73)
20
TheImpactofDewormingTreatmentonPrimarySchoolPerformance(682-75C)
20
TheImpactofPopulationAgingonHealthCareSystems(682-82)
21
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DoesItMatterHowWeEstimateAnnualExpenditures?AnEmpiricalComparisonofMethods(682-84C)
22
Long-TermImpactsofMicrocreditPrograms:AStudyoftheGrameenBankandOtherProgramsinBangladesh(682-93)
22
Democracy,Redistribution,andInequality(683-01) 23
TheMicroeconomicsofIncomeDistributionDynamicsinEastAsiaandLatinAmerica(683-18)
24
TheEconomicsofMalaria(683-32) 24
Information,Incentives,andAntipovertyInterventions:DevilishDetailsontheRoadtoPovertyReduction(683-41)
25
TheDynamicsoftheUrbanPoorandImplicationsforPublicPolicy(683-46)
26
InequalitiesinChildHealth:ComparingtheLivingStandardsMeasurementStudyandDemographicandHealthSurveys(683-47)
26
TheImpactofDewormingTreatmentonPrimarySchoolPerformance:Busia,Kenya(683-55)
27
Gender,OldAge,andSocialSecurity:EvidencefromChileandArgentina(683-65)
28
ImprovingthePolicyRelevanceofLivingStandardsMeasurementStudySurveys
28
Note:ThenumbersinparenthesesarereferencenumbersforprojectsfundedcentrallyfromtheResearchSupportBudget.ACsuffixdenotesaprojectcompletedduringfiscal1999.Projectswithnoreferencenumbersarefundedbydepartments.
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TheEconomicImpactofFatalAdultIllnessfromAIDSandOtherCausesinSub-SaharanAfrica
30
HouseholdWillingnesstoPayforMalariaPreventioninTigray,Ethiopia
31
SustainableBankingwiththePoor 31
TechnologyandPovertyAlleviation 33
TheMethodologyofPovertyAssessments 34
ThePublicEconomicsofHealthReform 35
WorldPovertyMonitoring 36
AfricaNutritionDatabaseInitiative 37
SocialExclusionandPoverty 38
CoreWelfareIndicatorsQuestionnaire 38
TheLivingStandardsMeasurementStudy,Phase |39
TheRuralNonfarmEconomy 39
EducationandLaborMarkets 42
TheImpactofChildHealthandNutritiononEducationalOutcomesinCebu,Philippines(679-57C)
42
ImprovingPrimaryEducationinKenya:ARandomizedEvaluationofDifferentPolicyOptions(681-14)
42
EducationalEnrollmentandAttainment(682-11C) 43
ImprovingtheQualityofPreschoolEducationinKenya(682-16)
45
EvaluatingtheImpactofSupplementaryTeachersin 46
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NonformalEducationCenters(682-18)
EconomicAnalysisinEducationProjects(682-95C) 46
AnAssessmentInstrumentforChildhoodCognitiveandSocio-EmotionalDevelopment(683-10)
47
TheGainsfromMatchedEmployer-EmployeeData:ACaseStudyofMorocco(683-23)
47
DoesMicrocreditEmpowerWomen?AStudyofGrameenBank,BRAC,andtheRD-12ProjectinBangladesh(683-30)
48
Gender,Law,andDevelopment(683-34) 49
NontraditionalAgriculturalExportsinEcuador:ImpactsonSmallholderAgricultureandHouseholdResourceAllocation(683-50)
50
TheImpactofLaborMarketPoliciesandInstitutionsonEconomicPerformance
51
GenderPolicyResearchReport 53
EnvironmentallySustainableDevelopment 55
Cost-EffectivenessAnalysisofCoralReefManagementandProtection:ALeast-CostModelfortheDevelopingTropics(680-08C)
55
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MarineSystemValuation:AnApplicationtoCoralReefsintheDevelopingTropics(681-05C)
57
SpatialEnvironmentalProcesses(681-35) 59
PublicInvolvementinIndustrialPollutionControlinArgentinaandBrazil(681-46)
60
Gender,PropertyRights,andResourceManagementinGhana(681-47C)
61
LandTenure,LandMarkets,andLandProductivityinRuralChina(681-76C)
62
RegulatoryCapacityacrossIndianStates:AnInstitutionalPerspectiveontheEffectivenessofStatePollutionControlBoards(681-86)
63
TheRoleofAgricultureinVenezuela'sEconomicRiseandDecline(682-33)
63
EnvironmentalandEconomicAnalysisIncorporatingMacroeconomicIssues(682-38C)
64
PollutionControlinChina:TheRoleandImpactofInspectionsandComplaints(682-44C)
64
NatureTourism'sContributiontoEconomicDevelopmentandConservationFinance(682-54)
65
MeasuringtheEfficiencyandProductivityofNationalAgriculturalResearchSystems:AQuantitativeApproach(682-60C)
66
SmallPlants,Pollution,andPoverty(682-66C) 67
Colombia'sPollutionChargeSystem:Implementation,Impact,andImplications(682-69)
68
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SocialValuationofNaturalResources(682-89) 69
MakingLong-TermDevelopmentMoreSustainable(683-04)
69
DynamicsofRuralSectorGrowth(683-06) 70
FactorsAffectingthePaceofDeforestationinNorthernThailand(683-17)
70
TestingtheImpactofTradeLiberalizationontheEnvironment:TheoryandEvidence(683-20)
71
GuidelinesforPricingIrrigationWaterBasedonEfficiency,Implementation,andEquityConsiderations(683-35)
72
UnderstandingandImprovingtheEnvironmentalPerformanceofChina'sTownship-VillageIndustrialEnterprises(683-38)
72
EconomicInstrumentsforConservation(683-42) 73
MarketsforAgriculturalInputsandOutputsinSub-SaharanAfrica(683-48)
74
SendingFarmersBacktoSchool:AnEconometricEvaluationoftheFarmerFieldSchoolExtensionApproach(683-56)
74
LandRentalMarketsandAgriculturalEfficiencyinEthiopia(683-59)
75
LandMarkets,Gender,andAccesstoLandinLatinAmerica(683-64)
76
Health,Environment,andtheEconomy(683-73) 76
EstimatingtheExtentofCorrosionDamageCausedby 77
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AcidRaininChina
CausesandConsequencesofTropicalDeforestation 77
EconomicInstrumentsforGreenhouseGasReduction 78
Market-BasedInstrumentsforEnvironmentalPolicymakinginLatinAmericaandtheCaribbean:Lessonsfrom11Countries
79
AgriculturalIncentivesinSub-SaharanAfrica:PolicyChallenges
80
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TheChallengesofManagingAgriculturalExtension 81
TheImpactofPolicyReformonFarmPerformance 81
SocialandEnvironmentalConsequencesofGrowth-OrientedPolicies
82
TheRoleoftheNonfarmRuralSectorandPeriurbanAgricultureinTanzania'sRuralDevelopment
85
TheImpactoftheFinancialCrisisontheFarmSectorinThailand
86
BrazilGlobalOverlayStudy 87
EnvironmentalChangeandAdaptiveResourceMarkets:Computer-AssistedMarketforWaterAllocation
87
EnvironmentalDataAccounting 88
LandReform 89
EmergencefromSubsistence:TheCaseofNepal 90
InfrastructureandUrbanDevelopment 91
InfrastructureandGrowth:AMulticountryPanelStudy(680-89)
91
InfrastructureProductivity:DirectandIndirectEffects(681-54)
91
DatabaseonInfrastructurePrivatization(681-66) 91
Institutions,Politics,andContracts:PrivateSectorParticipationinUrbanWaterSupply(681-87)
92
IdentifyingtheDeterminantsofPerformanceof 93
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Community-BasedWaterandSanitationServices(682-19C)
EfficientNetworkAccessPricingRulesforDevelopingandTransitionEconomies(682-36)
94
OptimalChoiceofIndustryStructureintheNetworkUtilities(682-37)
94
PilotStudyofCityEconomicGrowth(682-39C) 95
RevisitingDevelopment:UrbanPerspectives(682-40C) 95
TheGlobalBenefitsofPer-MileandPer-GallonAccidentPremiums(682-70)
96
TheSustainableFinancingofInvestmentsinMunicipalInfrastructure:CostRecoveryforSolidWasteManagementinthePhilippines(682-77)
97
PrivatizationofTelecommunicationsinSub-SaharanAfrica(682-92)
98
TheImpactofRegulatoryRisksontheCostofPrivateDebtforInfrastructureProjectsinEmergingMarkets(683-25)
99
TheCost-EffectivenessofAlternativeTransportPolicies(683-39)
100
RoadFreightTransport,Competition,andInnovation(683-44)
100
Telecommunications,Competition,andInnovation(683-45)
101
CompetitiveCities:UrbanPrimacyandGrowth(683-51)
101
MotorizationandthePricingofExternalities 102
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MotorizationandRoadProvision 103
ComparativeStudyofWaterInstitutionsandTheirImpactonWaterSectorPerformanceinSelectedCountries
103
TheImpactofRuralRoads 105
RuralRoads:WelfareImpactEvaluation 105
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Macroeconomics 107
FiscalDecentralizationinLatinAmerica(682-97) 107
ChallengesofStabilizationandSustainableFinancialPolicies:TheCaseofTurkey(683-08C)
109
TheChallengeofDevelopmentinthe21stCentury(683-14)
110
MonetaryPolicyandMonetaryIndicatorsduringBankingCrises(683-24)
111
ToolsforFiscalAnalysis 112
AfricanEconomicPerformance 112
NationalEconomicPoliciesandGrowth 113
PoliticalEconomyofReform 113
QualityofFiscalAdjustment 114
TheImpactofPublicSpendinginUganda 114
CanAfricaClaimthe21stCentury? 115
JointDevelopmentResearchGroup-AfricaRegionWorkProgramonAfricanDevelopment
116
FiscalDecentralizationinDevelopingCountries 116
StructuralAdjustmentParticipatoryReviewInitiative 117
InternationalEconomics 119
ForeignDirectInvestmentSpilloversinDevelopingCountries(680-07C)
119
AStrategicApproachtoAssetandLiability 120
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ManagementinDevelopingCountries(681-23C)
AidAllocationinaFederalSystem:ACaseStudyofIndia(681-41C)
121
UnderstandingCapitalMarketCrisesinEmergingEconomies:TheRoleofAnnouncementsandNewsinSpreadingCrisesandStoppingContagion(682-26C)
121
CurrencyCrises,FinancialIntermediation,andNominalRigidities(682-27C)
123
TheImpactoftheRevivaloftheAndeanPactandtheASEANGrouponTheirMemberCountries'IndustrialGrowth(682-43)
123
PricingofBondsandBankLoansintheMarketforDevelopingCountryDebt(683-12)
124
PreparingfortheWTO2000Negotiations(683-29and683-54)
125
AidandReforminAfrica(683-31) 126
Micro-FoundationsofInternationalTechnologyDiffusion(683-43)
127
EconomicIntegration:TheAmericas 128
CommodityPriceandMarketReform 129
CommodityPriceRiskManagement 130
TheDynamicImpactofTradeLiberalizationinDevelopingCountries
130
TheLiberalizationandInternationalizationofFinancialServices
131
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MakingAidWork 133
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PoliticalEconomyofAid 134
MarketingandTradingPoliciesandSystemsinSelectedCoffee-ProducingCountries
135
ExchangeRateMisalignment:ConceptsandMeasurementforDevelopingCountries
136
PoliticalEconomyofTradePolicy 138
TheInfluenceofWorldBankResearchonPolicyintheDevelopingWorld
139
GeographyandTrade 139
RegionalismandDevelopment 140
AgricultureandtheNewTradeAgendaintheWTO2000Negotiations:EconomicAnalysesofInterestsandOptionsforDevelopingandTransitionEconomies
143
TradePolicyDevelopmentProgram 144
DomesticFinanceandCapitalMarkets 146
SavingintheWorld:PuzzlesandPolicies(681-36C) 146
ThePoliticalEconomyofPensionReform(682-17) 148
FinancialStructureandEconomicDevelopment(682-41)
149
OperatingCostsandInvestmentReturnsofPensionFunds(682-50)
149
Contagion,FinancialVolatility,andtheSupplySide(682-76C)
150
DepositInsurance:IssuesofPrinciple,Design,and 151
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Implementation(682-90)
PrimaryFinancialMarkets:MacroeconomicConditionsandMarketDevelopment(682-98)
151
WorldBankFinancialSectorAdjustmentLending:TheExperiencetoDate
152
Contract-IntensiveMoney 153
FinancialLiberalization 153
RuralFinanceinPakistan 154
BenchmarkingFinancialSystems 155
PostalFinancialServicesReform 155
InformalLendersandMicrofinancePrograms:CompetitiveorSymbiotic?
156
MeasuringFinancialRegulationandSupervision 157
CapitalMarkets 157
BankInsolvency 158
BankPrivatizationinDevelopingCountries 158
FinancingofSmallandMedium-SizeEnterprises 159
TransitionEconomies 160
TheImpactofMarket-OrientedPolicyReformsonHouseholdsinRuralChina(677-16C)
160
HouseholdWelfareChangeduringtheTransitioninPoland(681-21C)
160
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ChangingIdeasaboutPovertyinRussia(681-42C) 161
TheDeterminantsofAgri-FoodMarketIntegrationintheTransitionEconomies,Phase2(681-45)
161
EnterpriseRestructuringinRomania(681-96C) 163
ExternalFinancing,MacroeconomicStability,andGovernmentPolicyinEasternEuropeanCountries(682-35C)
164
ReformalongtheVolga(682-42C) 164
ThePoliticalEconomyofSocialPolicyinTransitionEconomies(682-52)
165
EvaluationofActiveLaborMarketProgramsinChina(682-78)
166
DreamsoftheMarket:AgriculturalPolicyAdoptionandImplementationinPresent-DayRussia(683-09)
167
FinancialSystemsinTransition:AFlow-of-FundsAnalysisofFinancialEvolutioninEuropeandCentralAsia(683-13C)
167
AgricultureinTransition:LandReformandFarmRestructuringinFormerlySocialistCountries(683-22)
168
TheEfficiencyandDistributionEffectsofChina'sSocialSecurityReform(683-52)
169
ChineseState-OwnedEnterprisesinthe1980s 170
PrivatizationandCorporateGovernanceinTransitionEconomies
170
TradePolicyinTransitionEconomies 171
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PrivateSectorDevelopmentandPublicSectorManagement
173
ScienceParksandFirm-LevelProductivityinChina(681-43C)
173
AgencyIndependenceandPoliticalInstitutions(681-80)
174
PoliticalCredibilityandEconomicReform(681-85C) 174
Government-BusinessConsultativeMechanismsandEconomicGovernance:AThree-CountryComparison(681-93)
175
DoesMoreIntenseCompetitionLeadtoHigherGrowth?(682-47)
175
TheRoleofInterfirmLinkagesinEmergingIndustrialClusters(682-61)
176
DatabaseonInstitutionsforGovernmentDecisionmaking(682-79)TheIntroductionofPharmaceuticalProductPatentsinIndia(682-88)
177
JobReallocation,theExportMarket,andFirmPerformance:MicroeconomicEvidence(683-26)
178
TheImpactofPoliticalInstitutionsonEconomicGrowth:ADataCollectionandWebArchiveInitiative(683-40)
179
DelayinDisposition:JudicialPerformanceinDevelopingCountries
179
SocialCapitalinAfrica 181
Corruption. 181
EastAsiaCompetitivenessStudy 182
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FirmAnalysisandCompetitivenessSurveys 184
RegionalProgramonEnterpriseDevelopmentinAfrica185
TheEconomicsofPoliticalandCriminalViolence 186
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ABSTRACTSOFCURRENTSTUDIES
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PovertyandSocialWelfare
PoliciesforPoorAreas
Mostcountrieshavewell-recognizedpoorareasinwhichtheincidenceofabsolutepovertyisunusuallyhighbynationalstandards.InChina,forexample,thereisahighincidenceofpovertyinruralareasofthesouthwestandnorthwest.Similarexamplesinothercountriesabound.
Dothesepoorareascallforspecificpolicyinterventions?Onewouldhope,andundercertainconditionsexpect,thatthegrowthprocesswouldhelpthesepoorareascatchup.Butthatdoesnotappeartobehappeninginsomecountries.Poorareasappeartopersistevenwithrobusteconomicgrowth.
Governmentsanddonorsareregularlycalledontodosomethingabouttheselaggingpoorareas,andareabasedinterventionsarenowfoundinmostcountries.TheWorldBankhasassistedmorethan300areadevelopmentprojectssincetheearly1950s,mostdesignedtodeveloparuralareaforthebenefitofpoorpeople.Otheragenciesalsoprovidesubstantialsupportforsuchdevelopmentprograms.
Howmuchimpactdotheseeffortshaveonlivingstandards?Toanswerthisquestion,wemustbeabletoassesswhatwouldhavehappenedtolivingstandardsintheabsenceoftheinterventions.Itshouldnotbeassumedthatsuchschemeswillbringnetgainstopoorpeople;byactingagainsttheflowoflaborfromlow-tohigh-productivityareas,theymayactuallymakemattersworseinthelongterm.
Properlyassessingthebenefits(netofhiddencosts)oftheseprogramsisproblematic.Butthegeographicvariationininitialconditionsand
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intheevolutionoflivingstandardsovertimeoffersscopefordisentanglingtheeffectsofpoor-areaprogramsfromotherfactors.Eveninpoorcountriesgeographicareasdifferwidelyintheirendowmentsofgeographiccapital,includinglocallyprovidedpublicservicesandaccesstoareaspecificsubsidies.Thesedifferencesarebothgeo-climaticandtheoutcomesofpastpoliciesandprojects.Theretypicallyisalsoaspatialvarianceinpovertyindicators.
Byexploitingthisspatialvariationintheincidenceofpovertyandinareacharacteristics,thisprojectaimstounderstandwhatpartlackofgeographiccapitalandtheperformanceoflocalgovernmentsplayincreatingpoorareas,asopposedtosuchfactorsasresidentialdifferentiation,wherebypeoplewholackpersonalcapitalendupbeingspatiallyconcentrated.Byidentifyingspecificpolicyinterventionsortheirimmediateoutcomesintermsofcommunity-levelattributestheanalysisassessesthegainsfrompoor-areapoliciesandprojectsandtheimplicationsforthedesignoffutureprojects.
Theprojectisstudyingthedynamicsofthegeographyofpovertyfromamicroeconomiclevelsothatitcanhelpinunderstandinghowvariousgovernmentalandnongovernmentalarea-basedactions,aswellasotherfactors,affecthouseholdsprospectsofescapingpoverty.Itsapproach,amicroeconometricinvestigationoftheeconomicgeographyofpovertyinselectedcountriesinAsiaandLatinAmerica,entailsasubstantialincreaseinthepolicy-relevantvariablesincludedinmicroeconomicempiricalmodelsofpoverty.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesMartinRavallion([email protected] ),ShaohuaChen,JyotsnaJalan,andQuentinWodon.
Completiondate:March2000.
Ref.no.:681-39.
Reports
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Jalan,Jyotsna,andMartinRavallion.1998.AreThereDynamicGainsfromaPoor-AreaDevelopmentProgram?JournalofPublicEconomics67:6585.
.GeographicPovertyTraps?WorldBank,DevelopmentResearchGroup,Washington,DC.
Lanjouw,Peter,andMartinRavallion.1999.BenefitIncidenceandtheTimingofProgramCapture.WorldBankEconomicReview13(2).
Pradhan,Menno,andMartinRavallion.Forthcoming.MeasuringPovertyUsingQualitativePerceptionsofWelfare.ReviewofEconomicsandStatistics.
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Ravallion,Martin.1998.DoesAggregationHidetheHarmfulEffectsofInequalityonGrowth?EconomicsLetters61(1):7377.
.1998.PoorAreas.InDavidGilesandAmanUllah,eds.,TheHandbookofAppliedEconomicStatistics.NewYork:MarcelDekkar.
.1998.ReachingPoorAreasinaFederalSystem.PolicyResearchWorkingPaper1901.WorldBank,DevelopmentResearchGroup,Washington,DC.
.1999.IsMoreTargetingConsistentwithLessSpending?InternationalTaxandPublicFinance6:411-19.
.Forthcoming.ArePoorerStatesWorseatTargetingTheirPoor?EconomicsLetters.
.Forthcoming.OnDecomposingChangesinPovertyintoGrowthandRedistributionComponents.JournalofQuantitativeEconomics.
Ravallion,Martin,andJyotsnaJalan.1996.GrowthDivergenceDuetoSpatialExternalities.EconomicsLetters53(2):227-32.
.1999.China'sLaggingPoorAreas.AmericanEconomicReview89(May):301-05.
Ravallion,Martin,andQuentinWodon.1997.BankingonthePoor?BranchPlacementandNonfarmRuralDevelopmentinBangladesh.PolicyResearchWorkingPaper1858.WorldBank,DevelopmentResearchGroup,Washington,DC.
.Forthcoming.DoesChildLaborDisplaceSchooling?EvidenceonBehavioralResponsestoanEnrollmentSubsidy.EconomicJournal.
.Forthcoming.PoorAreas,orJustPoorPeople?JournalofRegionalScience.
PovertyandtheInternationalEconomy:WhatAretheLinks?
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Thisresearchinvestigatestheeffectsofincreasedeconomicopennessonthewelfareofverypoorpeoplebyanalyzingtheimplicationsforthepricesofgoodsandlaborandthenassessingtheimplicationsofthesepricechangesforthewelfareofpoorhouseholds.ItexploresthisissueretrospectivelyusingIndonesiandataandprospectivelyusingSouthAfricandata.TheIndonesianstudyinvestigateshowthepricechangesthatoccurredduringtheAsianfinancialcrisisaffectedtheverypoor,andtheSouthAfricanstudylooksathowthepricechangesthatmightcomeaboutastradeisliberalizedwillaffectgroupsdefinedbyraceandincome.
BoththeIndonesianandtheSouthAfricanstudiesusedetailedhouseholdsurveydata.TheIndonesianstudymatchesthehouseholddatawithveryrecent(1997-98)anddisaggregatedpricedataorganizedbyprovince.TheSouthAfricandatacomefromdetailedhouseholdincomeandexpendituresurveysandthe1996census.TheIndonesianstudyreliesprincipallyonnonparametricanddescriptiveeconometricmethods,whiletheSouthAfricanstudyusesamoretraditionaldemandanalysisandnonparametricmethods.
FindingsforIndonesiashowthattheverypoorarenotsopoorastobeessentiallyinsulatedfromtheeconomicshocksoftheAsianfinancialcrisis.Theverypoorespeciallytheurbanverypoorwereseverelyaffectedbythepricechangesthatresulted.Thefindingsalsohighlightthemutingeffectofself-productionbytheruralpoorandthesubstantialgeographicvariationintheimpactofthecrisis.TheresultsprovideguidanceonwhereaidmightbetargetedinIndonesia(bothbyregionandbyincomeclass)tomitigatetheimpactofthecrisisontheverypoor.
TheSouthAfricanstudyshowsthatdifferentracialgroupshaveverysimilardemandelasticities,althoughconsumptionbasketsdiffer.Workisongoingtomeshtheseresultswithsimulatedpricechangestoinvestigatethepotentialdistributionalimpactofchangesinworld
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pricesortradeliberalization.Theseinitialresultssuggestthatpriceandtaxreformswillinducesimilardemandresponsesacrossdifferentracialgroups.Asthetradeliberalizationresultsbecomeavailable,theywillallowbetterestimatesofwhowillbemostharmedandwhowillmostbenefitfromSouthAfrica'scontinuedeconomicintegrationintotheglobaleconomy.Usingrecentcensusdata,theprojectalsoinvestigateswhoisworkingandwhere,byoccupationandindustry.Studiespredictingwhichsectorsmightexpandorshrinkinresponsetoglobalizationordomesticpolicieswillbeabletorelyontheseresultstoinvestigatethedistributionalimpactofthesechanges.
TheresultsarebeingdisseminatedinIndonesiaandSouthAfricathroughseminarsanddiscussionswithgovernmentofficials.
Responsibility:DevelopmentResearchGroup,TradeWillMartin([email protected] )andL.AlanWinters,
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PublicEconomicsShantayananDevarajan,andPovertyandHumanResourcesMartinRavallionandDominiquevanderMensbrugghe.WithStevenBerry,YaleUniversity;AnneCase,PrincetonUniversity;andJamesLevinsohn,WeiFan,JedFriedman,AndersonIchwan,andEdwinPranadjaja,UniversityofMichigan.TheSwedishInternationalDevelopmentAuthorityandtheSwedishMinistryofForeignAffairsarecontributingfundingfortheresearch.
Completiondate:June2000.
Ref.no.:681-83.
Report
Levinsohn,James,StevenBerry,andJedFriedman.1999.ImpactsoftheIndonesianEconomicCrisis:PriceChangesandthePoor.NBERWorkingPaper7194.NationalBureauofEconomicResearch,Cambridge,Mass.
QuantifyingtheNetEconomicLossorGainfromTobaccoUse
Thisstudyteststhehypothesisthattobaccoproductionanduseresultinaglobaleconomiclossandthatthislossremainsoverarangeofdiscountrates,mortalityandmorbidityeffects,andprices.Thestudycomputestheglobalbenefitsofconsumingtobaccoproducts(measuredinU.S.dollars)andestimatespercapitabenefitsbyregion.
ThemethodologybuildsoninitialworkbyHowardBarnum(TheEconomicBurdenoftheGlobalTradeinTobacco,TobaccoControl3[4]:358-61,1994),refiningtheestimatesofbenefitsandcostsarisingfromtobaccoconsumption.Itinvolvesestimatingthetotalconsumerandproducersurplusassociatedwithtobaccoconsumption,takingintoaccounttheexternalandinternalcosts.Themaincostsarethedirectandindirectcostsofmorbidityandmortality.
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Estimatingconsumersurplus,thestudyassumesthatthelong-rundemandcurveislinear.Thestudyalsoassumesthatsupplycurvesareiso-elastic.Thelineardemandmodelusedinthestudyindicatesthatconsumersurplusvariesinverselywiththepriceelasticity.Whenthepriceelasticityisinfinite,consumersurplusiszero;whenitislessthan.5,consumersurplusexceedstotalexpenditures.Becauseofdatalimitations,consumersurplusisdeterminedsolelybyexpendituresandpriceelasticity.
Toincorporateexternalandinternalcosts,theannualnumberofdisability-adjustedlifeyears(DALYs)associatedwithtobaccouseisestimatedandconvertedintoadollarvaluebymultiplyingthenumberbytheexternalvalueofthelossofayearoflife.Thestudy'smainobjectiveistodeterminetheminimumexternalvalueofahumanlife(willingnesstopayperDALY)atwhichthenetbenefitsoftobaccoconsumptionarezero.Italsoaimstodeterminethefractionofthepopulationthatmustbeuninformedfornetsocialbenefitstoequalzero.Theapproachparallelstheclassiccost-benefittechniqueofdetermininganinternalrateofreturnfindinganinterestratethatequatesnetbenefitswithzero.
DataforcalculatingtheconsumerandproducersurplusesaredrawnfromFoodandAgricultureOrganization(FAO),WorldBank,andWorldHealthOrganization(WHO)sources.TheindirectcostsofprematuredeathareestimatedonthebasisofBankprojectionsofincome,tobaccoconsumptiondatafromtheFAOandWHO,anddataondeathsandyearsoflifelostfromtherecentworkquantifyingtheglobaldiseaseburdenandsmoking-relatedmortality(C.J.L.MurrayandA.Lopez,GlobalBurdenofDisease,Cambridge,Mass.:HarvardUniversityPress,1996;andR.Petoandothers,MortalityfromSmokinginDevelopedCountries,19502000,NewYork:OxfordUniversityPress,1994).
Toestimatetheindirectcostsofmorbidity,thestudyusescorrelations
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oftobaccoconsumptionanddisabilityfromtheMurrayandLopezbook,adjustedbydisabilityweightsforthedifferentregions.Forthedirectcostsofmorbidity,itusesBankdataonhospitalbudgetsanddatafromtheliteratureonannualtreatmentcostsfortobacco-attributablediseases,averagenumberofyearsuntiltheonsetoftobacco-relateddisease,andaverageexpectedyearsoflifeaftertheonsetofdisease.
ResultswillbedisseminatedthroughtheBank'shealth,nutrition,andpopulationlectureseriesstartinginOctober1999.Theanalysisshouldprovideapproachesthatcountriescoulduseinpreparingtobaccocontrolprojects.
Responsibility:HumanDevelopmentNetwork,Health,Nutrition,andPopulationTeamPrabhatJha(pjha
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@worldbank.org)andAydaA.Yurekli.WithFrankChaloupkaandRichardPeck,UniversityofIllinois.
Completiondate:October1999.
Ref.no.:681-95.
ANewApproachtoValuingMortalityRiskReductions:WhatAreOlderPeopleWillingtoPaytoReduceTheirRiskofDying?
Inmostindustrialcountriesthemortalitybenefitsofenvironmentalprogramsaccrueprimarilytoolderpeople.Inthecaseofairpollutiontheagedistributionofstatisticallivessavedparallelstheagedistributionofdeaths,implyingthat75percentofpeoplesavedareover65yearsold.Yetthemostcommonmethodofvaluingtheseriskreductionsistousecompensatingwagedifferentialsfromthelabormarket.
Toremedythisdifficulty,thisstudyhasdevelopedasurveythataskspeopleaged5075whattheywouldpaytoreducetheirriskofdying.Specifically,itasksrespondentswhattheywouldpayforadrug(notcoveredbyhealthinsurance)that,iftakenforthenext10years,wouldreducetheirchancesofdyingoverthisperiodbyastatedamount.Thisquestionisprecededbyexercisestofamiliarizerespondentswiththeconceptofriskofdyingandwiththeirownbaselineriskofdyingoverthenext10years.Alsoprecedingitisasectiondiscussingmeasuresthatpeopleintheagegroup5075commonlytaketoprolongtheirlives(suchascancerscreeningtestsanddrugtherapyforhighbloodpressureorhighcholesterol)andthequantitativeriskreductionsthatsuchmeasuresprovide.
ThesurveywillbeadministeredinCanada,Japan,andtheUnitedStates.Preliminaryresults,basedonpretestsofthesurveyinJapanandtheUnitedStates,suggestwillingness-to-payestimatesfarlower
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thanthoseobtainedinlabormarketstudies.AdministrationofthesurveyinCanadabeganinthespringof1999,andresultsfromthatsurveywillbepresentedattheAlliedSocialSciencesAssociationMeetingsinBostoninJanuary2000.
Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentMaureenCropper([email protected] ).WithAnnaAlberini,UniversityofColorado;RonaldGoereeandBernardO'Brien,McMasterUniversity,Canada;AlanKrupnick,ResourcesfortheFuture;andNathalieSimon,U.S.EnvironmentalProtectionAgency.TheresearchisfundedinpartbyagranttoResourcesfortheFuturefromtheNationalScienceFoundationandU.S.EnvironmentalProtectionAgencyandbyEnvironmentCanada,whichisfundingtheadministrationoftheCanadiansurvey.
Completiondate:January2000.
Ref.no.:682-12.
SocialandEconomicDeterminantsofPovertyinIndia'sPoorestRegions:QualitativeandQuantitativeAssessments
Thisstudyisaimedatdeepeningtheunderstandingofthekeycharacteristicsofthepoor,andofrecentchangesintheconditionsandcharacteristicsofpoverty,inoneofIndia'smostimpoverishedregions,easternUttarPradeshandBihar.Itexploresthemultipledimensions(economicandnoneconomic)ofpovertyandseekstoimprovetheunderstandingofthebarriersandopportunitiesthatdetermineeconomicandsocialmobility.Italsoassessestheeffectofthegovernment'sbasicservicesandantipovertyprogramsinimprovingthewell-beingofthepoor.
Thestudyhasusedbothqualitativeandquantitativeresearchmethodsinaphased,iterativeapproach.Derivedfromparticipatoryruralanalysisandrapidruralanalysis,itsqualitativetechniquesincludefocusgroupdiscussions,casehistoryinterviews,socialmappingand
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wealthrankingexercises,asocialcapitalinventory,andagenderrolesandissuesexercise.Thesemethodsarecomplementedbyahouseholdandcommunitysamplesurvey,basedonamodifiedLivingStandardsMeasurementStudysurveyinstrument,withasamplesizeof2,250households.Thedesignofthesurveyquestionnaireandtheanalysisoftheresultshavebeengreatlyenrichedbythequalitativefindings.
Studyresultsshowthatpovertyintheregionisacomplexphenomenonbasedoninterlockingsocial,economic,cultural,political,andgeographicandenvironmentalfactors.Threedistinctgroupsofpoorwereidentifiedinthestudyregionthedestitute,whotypicallybecamesothroughidiosyncraticshockssuchas
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death,desertion,orsevereillness;thestructuralpoor,whosepovertyislinkednotonlytolackofhumanandphysicalassetsbutalsotosocialidentity;andthemobilepoor,whohaveastrongpotentialforupwardmobility.
Thepotentialforandlikelypathofupwardmobilitydifferforeachgroupofthepoor;eachfacesdifferentconstraintsandopportunities,andeachhasdifferentcopingstrategies.Thepresenceorabsenceofsocialcapital,particularlylinksoutsidethevillage,provedtobeanimportantdeterminantofmobility.Socialfactorsfoundtobeassociatedwithpersistentpovertyincluderisk,vulnerability,dependencerelationships,andverylowcastestatus.Poorhouseholdsinattachedlaborrelationshipsgainameasureofsecurity,butthosethathaveoptedforcasuallaborhavebetteropportunitiestonegotiatehigherwagesortomigratetoemploymentcenters.Althoughdiversifyingoutofland-basedagriculturewasacommonpatternamongthemobilepoor,manyotherpoorhouseholdssawgreaterpotentialforeconomicbettermentoutsidethetraditionalvillageeconomy.
Concernsaboutriskandvulnerabilityfundamentallyaffecttheeconomicbehaviorofthepoor.Governmentservicesandantipovertyprogramscouldpotentiallyeasethetransitionfromatraditionalagriculturalsystemtoonewithgreaterincomediversificationbyreducingvulnerabilityandfacilitatingrisktaking.Butmostoftheprogramsinoperationweredescribedbysurveyrespondentsasunsatisfactorybecauseofpoormanagementandmisappropriationofresources.Amongantipovertyprograms,thePublicDistributionSystemwascitedmostoftenasessentialtothewell-beingofthepoor,whileothersweregenerallyfoundtobenonfunctionalinthevillagessurveyed.Amongservices,schoolsandwatersystemsweredeemedmostvaluable,andgovernmenthealthservicesmostdysfunctional.
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ThesefindingshavesignificancefortheWorldBank'spolicydialogueandassistanceprograminIndia,andtheprojectisundertakingfurtheranalysisandworktobetteridentifypivotalfactorsinthefailureofprogramsandpolicies.Arecentlycompletedstudyofthegovernment'snewTargetedPublicDistributionSysteminUttarPradeshfoundthatleakageremainedhigh(halfthefoodgrainsneverreachedconsumers)despitesignificantimprovementsintargeting(80percentofthegrains
reachingconsumerswenttopoorhouseholds).Otherworkislookingatvulnerability,childlabor,thedeliveryofbasichealthandeducationservices,andthelinksbetweenconsumption-baseddefinitionsofpovertyandself-reportedmeasures.ThefindingsofthisworkwillbedisseminatedatapovertyconsultationworkshopinIndiainfiscal2000.Inaddition,theresearchwillcontributetoapovertyassessmentandaPovertyMonitoringandEvaluationSystembeingpreparedtomonitorandevaluatetheimpactofreformsanddevelopmentspendinginUttarPradesh.
Responsibility:SouthAsiaRegion,PovertyReductionandEconomicManagementSectorUnitValericKozel([email protected] )andSalmanZaidi;andPovertyReductionandEconomicManagementNetwork,PovertyDivisionGiovannaPrennushi.WithBarbaraParker;MadhaviKuckreja,Vanangana,India;NishaSrivastavaandRaviSrivastava,AllahabadUniversity,India;SashiBhushan;AjayKumar,CenterforActionResearchandDevelopmentInitiatives;andSandeepKhare,Vigyan,India.TheDutchPovertyTrustFundiscontributingfundingfortheresearch.
Completiondate:December1999.
Ref.no.:682-21.
EvaluationoftheImpactofInvestmentsinEarlyChildDevelopment
Investmentsinearlychilddevelopmentarearapidlygrowingpartof
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WorldBanklending,withprojectstotaling$745millionlikelytobelaunchedbetween1997and2000.Theseprogramscombinenutrition,healthcare,andcognitivedevelopmenttooffsetthedisadvantagesofgrowingupinpoverty.Substantialevidenceshowsthatpoorhealthandaninadequateearlylearningenvironmentleadtohandicapsdifficulttoreverselaterinlife.Manychildrenmaynevergotoprimaryschoolwithoutinterventionsthatreachthemintheearlyyearsoftheirlives.Iftheydoattendprimaryschool,theymaybeathighriskofdroppingoutearlyorrepeatinggrades.Thatlowersthereturntobothpublicandprivateschooling.Soearlychilddevelopmentprogramsmaybothincreasetheefficiencyofarangeofotherinvestmentsinhumancapitalandpromoteequityinthepopulationtheyserve.
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ThisresearchappliesastrategyofearlycoordinationwithBankoperationstoevaluatetheimpactofinvestmentsinearlychilddevelopmentinthreeprojects:theBolivianIntegratedChildDevelopmentProject,theUgandaNutritionandEarlyChildDevelopmentProject,andthePhilippineEarlyChildhoodDevelopmentNationalInvestmentProgram.Allthreeofthecasestudiesinvestigatetheeffectofearlychildstimulationandcoachingontheageofschoolenrollmentandonindicatorsofcognitivedevelopment.Theywillalsorelateindicatorsofearlycognitivedevelopmenttoearlyprimaryschoolgradeprogressionandperformance.Theresearchalsoassessesthesuitabilityofmeasuresofcognitivedevelopmentandachievementforprojectevaluation.
Thecasestudiesincludebothhome-based(centerbased)andparentaleducationapproachestochildstimulation.Moreover,becauseBoliviaisconsideringthesustainabilityofitsdaycareprogram,whichoperatesinthehomesofserviceprovidersbutfunctionsasacenterbasedprogram,thatcasestudywillcomparethecosteffectivenessofthatapproachwiththecosteffectivenessofnew,indirectapproachesthatwillbeimplementedonapilotbasis.
TheUgandacasestudywillevaluateseparatelytheimpactofdewormingonchildrenundertheageofsix.Whiledewormingprogramsworldwidearetargetedtoschool-agedchildren,forwhomwormloadsarehighest,workinprogressinLucknow,India,showsthepotentialfordramaticincreasesinweightforyoungerchildrenfollowingamassdewormingcampaign.Asnocomparableevaluationhasbeenundertakenforthisagegroupinothercountriesorforotherindicators,theUgandaexperimentwillbeparticularlyinformative.
ThedewormingpilotinUgandawillfollowastandardexperimentalmethodologyinwhichtherewillbearandomassignmentoftreatmentandcontrolcommunities.Boththetreatmentandthecontrolgroups
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willbechosenfromcommunitiesdeemedespeciallyatriskbasedonresultsofasurveyofparasitesundertakenaspartoftheprojectin1998.Butallthreecasestudiesincludecomponentsthataredemand-driven.Sotheapproachusedfortheprojectsinwhichcommunitiesselecttheprogramstheywillsupportwillemploylongitudinaldataandcommunityfixedeffectstoaddressselectionbias.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesHaroldAlderman([email protected] )andElizabethKing.WithJereBehrman,UniversityofPennsylvania;PatriceEngle,CaliforniaPolytechnicStateUniversity;DonaldBundy,OxfordUniversity;andN.B.Kabatereine,VectorControlDivision,Uganda.OxfordUniversityhascontributedfundingandin-kindsupportfortheresearch.
Completiondate:January2001.
Ref.no.:682-34.
GrowthandInequality
Researchongrowthandinequalitycanbedividedintotwobranches.One,derivingfromtheworkofSimonKuznetsandArthurLewis,hastriedtoidentifyarelationshipbetweengrowthandinequality.Theotherhastriedtofindthecausesofgrowthandinequality,treatingthemindependently.
Thisresearchbeganwiththepresumptionthatgrowthandinequalityaresimultaneouslydeterminedthattheyarethejointoutcomesofothervariablesandprocesses.Theconventionoflookingatthemseparatelyassumesincorrectlythattheseunderlyingfactorsarenotrelated.Inaddition,thepursuitofamechanisticrelationshipbetweengrowthanddistributionassumesthattheyareunaffectedbychangesinpolicyandinstitutions.
Theresearchwasbasedontheinequalitydatasetconstructedby
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KlausDeiningerandLynSquire,whichwasexpandedandupdatedaspartoftheproject.Theanalysiscombinedcross-countryandtime-serieseconometricmethodstodeterminetheimpactofchangingpoliciesandinstitutionsongrowthanddistribution.
Simultaneousexaminationofgrowthandinequalityyieldssignificantlydifferentresults,withdifferentimplicationsforpolicythanthosederivedbyearlierresearch.Whileearlierresearchassumedthatthesetofgrowthpolicieswasorthogonaltodistribution,andviceversa,theresearchfoundinsteadthatmanypoliciessimultaneouslyaffectbothoutcomes.
Althoughsomepolicieshaveconflictingeffectsongrowthanddistribution,itispossibletoadvancebothgoalssimultaneouslythroughacombinationofmutuallybeneficialandmutuallyexclusivepolicies.Ofallthe
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variablestested,onlytheGinicoefficientforlanddistributionappearsrobustlytoimprovebothaggregategrowthandaggregatedistribution.
Theresearchalsoinvestigatedthefactorsunderlyinggrowthamongdifferentincomequintileswithincountries.Thisprovidedarobustnesstestoftheaggregateresults,andatestofwhetherthefactorsdrivingaggregategrowthanddistributionalsohaveanimpactonthepoor.
Theresearchfoundthattheconsequencesofsomepolicychangesdifferacrosscountrieswithdifferentincomelevels.Greaterfinancialdevelopment,forexample,mayincreaseinequalityinindustrialcountriesandreduceitinpoorercountries.Similarly,greateropennesstotradeleadstoslowergrowthinindustrialcountriesandfastergrowthinpoorercountries.
Responsibility:OfficeoftheSeniorVicePresident,DevelopmentEconomicsLynSquire([email protected] )andF.HalseyRogers.WithMattiasLundberg.
Completiondate:June1999.
Ref.no.:682-63C.
Reports
Lundberg,Mattias,andLynSquire.1998.NewEvidenceonPoverty,Inequality,andGrowth.PaperpresentedattheWorldBank-BrazilMinistryofLandReforminternationalseminarDistribuçaodeRiqueza,PobrezaeCrescimentoEconcmico,SãoPaolo,July16.
.1999.GrowthandInequality:ExtractingtheLessonsforPolicymakers.PaperpresentedintheMacroeconomicsandGrowthseminarseries,WorldBank,Washington,DC.
RiskManagementOptionsintheHealthSectorinEastAsia
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TherecentfinancialcrisisinEastAsiahashadtwomajoradverseeffectsonthehealthsector.Currencydepreciationhasraisedthepriceofimportedpharmaceuticals,increasingthefinancialrisksofillhealth.Andthedropinhouseholdincomehasreducedtheaffordabilityofthesefinancialrisks.Designinganappropriatepolicyresponsetothiscrisis-inducedcombinationofincreasedrisksandreducedaffordabilityrequiresagoodunderstandingofthefinancialriskprobleminthehealthsectorandoftheoptionsformanagingthoserisks.Thisstudyaimedtocontributetotheunderstandingofthoseissues.Itaddressedtwoquestions:Whatistheempiricaldensityofnetfinancialrisksduetoobtainingmedicalcare,particularlyofmajor,potentiallycatastrophicfinancialrisksindifferentincomegroups?Andhoweffectivearepublicinterventions,suchasbudgetsubsidiesorsocialinsurance,inprovidinginsuranceagainsttheserisks?
Toanswerthesequestions,theresearchestimatedprobabilitydensityfunctionsandcumulativedistributionfunctionsforthenetmedicalcareexpendituresincurredbyhouseholds.TheanalysisdrewonhouseholdsurveydataforIndonesiaandThailand.
Theresearchfoundthattheempiricaldistributionoffinancialrisksexhibitsthestylizedlognormaldensityofunderlyingmedicalcarecosts,indicatingthatpublicpolicyisgenerallyineffectiveinsmoothingthelongtailofmajorrisksfacedbyhouseholds.Riskmanagementisworseforthepoor:bothsocialinsuranceandbudgetsubsidiestendtobetargetedtowardbetter-offusersofmedicalcare.
Thefindingsweredisseminatedattwoconferencesondesigninghealthcarefinancingsystems,onesponsoredbytheChineseAcademyofSocialSciencesandtheChineseEconomistsSocietyinBeijingonJune2325,1998,thesecondsponsoredbytheInstituteforHealthPolicyandSystemsResearchinHongKongonJune1516,1998.ResultswerealsopresentedatanInterAmericanDevelopment
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BankconferenceonFebruary45,1999.
Responsibility:EastAsiaandPacificRegion,Health,Nutrition,andPopulationSectorUnitNicholasPrescott([email protected] ).WithMennoPradhan,FreeUniversity,Amsterdam.
Completiondate:February1999.
Ref.no.:682-71C.
Report
Prescott,Nicholas,andMennoPradhan.1999.CopingwithCatastrophicHealthShocks.PaperpresentedattheconferencePovertyandSocialProtection,InterAmericanDevelopmentBank,Washington,DC,February45.
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CombiningCensusandSurveyDatatoStudytheSpatialDimensionsofPovertyandInequality
Policymakersneedinformationaboutthegeographicdistributionofpoorhouseholdstoguidetheallocationofresources.Suchinformationisoftenpresentedinpovertymaps.Adifficultyinconstructingfinelydisaggregatedmapsisthatgood-qualityincomeorexpendituremeasuresgenerallyarenotavailableforasufficientnumberofhouseholds.Thisresearchprojectiscombininghigh-qualityhouseholdsurveysthathavegoodconsumptionmeasuresbutcoverfewhouseholdswithcensusdatathatcovermosthouseholdsbuthavenoconsumptionmeasuresoronlypoorones.
TheresearchisbeingcarriedoutinEcuador,Panama,andSouthAfrica.InallthreecountriesitusesdatafromLivingStandardsMeasurementStudysurveystoderiveeconometricmodelsexplaininghouseholdconsumption.Theexogenousvariablesinthemodelsarealsoavailableinthecensusdata.Theresearchshowsthatstandarderrorsofestimatingpovertyinthecensusareafunctionoftheinitialregressioninthesurvey,thedesignofthesample,andthesimulationexercise.Itfindssamplingerrorsforlow-leveldissolutionstobereasonablylowbutincreasingstronglyifthepopulationsize(forwhichstatisticsarederived)becomesverysmall.Theprojectderivestheformulasandcomputerprogramstocalculatesuchstandarderrorsforavarietyofpovertyandinequalitymeasures.Itusesthepovertystatisticsinallthreecountriestoderivehigh-dissolutionpovertymaps.Suchmapsallowpolicymakersindevelopingcountriestocombineincomeandconsumptionmeasuresofpovertywithinformationondeficienciesinasector(suchaselectricityorsanitation)andthustoprioritizesectoralinvestments.
Theresearchusestheindicatorsoflocaldeprivationtostudywhetherlocalinequalityaffectsprojectchoiceinsocialfunds.Itpostulatesthat
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localinequalitywilltranslateintoabiaseddistributionofpowerthatwillbeoneofthefactorsdeterminingthechoiceofprojecttypesinsocialfunds.TheresearchistestingthemodelforthesocialfundinEcuador.
Theresearchisbeingconductedinclosecooperationwiththethreecountries'statisticalandplanninginstitutes,whosestaffshaveconductedmostofthestatisticalmodelingandapplication.SeminarsonthemethodologyusedintheresearchhavebeenheldinEcuador,Panama,Peru,andSouthAfrica,aswellasattheWorldBank,theLondonSchoolofEconomics,andinternationalconferencesinBaltimoreandinArendal,Norway.ThemethodologyformspartoftwotrainingclassesattheWorldBank.
Responsibility:PovertyReductionandEconomicManagementNetwork,PovertyDivisionJeskoHentschel([email protected] );andDevelopmentResearchGroup,PovertyandHumanResourcesBerkOzler.WithPeterLanjouw;JeanOlsonLanjouw,YaleUniversity;GabrielDemombynes,UniversityofCaliforniaatBerkeley;andRicardoSabates,UniversityofWisconsin,Madison.
Completiondate:September1999.
Ref.no.:682-73.
Report
Hentschel,Jesko,JeanOlsonLanjouw,PeterLanjouw,andJavierPoggi.1998.CombiningCensusandSurveyDatatoStudytheSpatialDimensionsofPoverty.PolicyResearchWorkingPaper1928.WorldBank,DevelopmentResearchGroupandPovertyReductionandEconomicManagementNetwork,Washington,DC.
TheImpactofDewormingTreatmentonPrimarySchoolPerformance
Thiswasanexploratorystudytodeterminethefeasibilityof
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conductingalarge-scaleresearchprojecttoevaluatetheeffectofmass(untargeted)dewormingtreatmentoneducationaloutcomes.Theresultsindicatethatalarge-scaleresearchprojectisfeasible,andtheinitialefforthasbeenscaledup.Inthelargerresearchproject(TheImpactofDewormingTreatmentonPrimarySchoolPerformanceinBusia,Kenya,ref.no.683-55),whichbeganinearly1999,thedewormingtreatmentwillbeprovidedto15,000childrenin75primaryschoolsinBusiaDistrict,Kenya.Thetreatmentwillbeprovidedtorandomlyassignedschools,whiletheschoolsnotselectedfortreatmentwillserveasacontrolgroup.Thisexperimentaldesignwillallowanunbiasedestimationoftheimpactofdewormingtreatmentoneducationalout-
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comesschoolattendance,gradeprogression,dropoutrates,andacademicperformance.
Thepilotstudymeasuredtheprevalenceandintensityofinfectionamongschoolchildrenin25schoolsinBusiaanddeterminedwhethersuchcharacteristicsassocioeconomicstatus,accesstosanitation,andpersonalhygienearecorrelatedwithinfectionstatus.Informationonsuchcharacteristicswascollectedthroughanoralinterviewadministeredtopupilsandthroughdirectobservationsbyfieldinterviewers.
Thestudyestimatedtherelationshipbetweenobservedcharacteristicsandinfection.Throughthismodeling,itwaspossibletocalculatethepropensityscoresofinfectionforallpupilsinthestudy.Thepropensityscoreistheconditionalprobabilityofbeingmoderatelyorheavilyinfectedgivenapupil'sobservedcharacteristics.Thepropensityscoremethodwillmakeitpossibleforthelargerresearchprojecttoidentifypupilslikelytobemoderatelyorheavilyinfectedinthecontrolschoolswithoutcollectingmedicalandparasitelogicalinformation.
Thestudentbackgroundinformationcollectedduringschoolvisits,togetherwithdatafromparasitologicalexaminationsconductedinthetreatmentschools,allowedestimationoftherelationshipbetweenobservedstudentcharacteristicsandinfectionstatususingalogisticregression.Thefittedvaluesforthisestimatedregressionarethepropensityscoresofheavyinfection.Bydifferencingtheaverageeducationaloutcomesoftreatmentandcomparisonstudentswithhighpropensityscores,estimatesareobtainedoftheeffectofthedewormingtreatmentamongstudentslikelytobemoderatelyorheavilyinfected.Theresultsofthepilotprojectindicatethatthismethodologyallowsidentificationofmoderatelyorheavilyinfectedstudentswithsatisfactoryaccuracy.
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Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesPaulGlewwe([email protected] )andSylvieMoulin;andHumanDevelopmentNetwork,EducationTeamDonaldBundy.WithEdwardMiguel,HarvardUniversity;MichaelKremer,MassachusettsInstituteofTechnology;andtheInternationaalChristelijkSteunfonds,Kenya.
Completiondate:December1998.
Ref.no.:682-75C.
TheImpactofPopulationAgingonHealthCareSystems
Populationagingcanhaveanimportantimpactonhealthexpenditures(bothpublicandprivate)aswellasontheoptimaldesignofhealthcaresystems.Thetechnologiesassociatedwithdiseasesoftheoldtendtobemoreexpensivethanthetechnologiesassociatedwithdiseasesoftheyoung.Sodevelopingcountrieswillhavetoreexaminetheirhealthcarebudgetsandprioritiesastheirpopulationsage.Inaddition,inplanninghealthinsurancesystems,theywillneedtotakeintoaccountthedifferenttypesanddegreesofmoralhazardandcream-skimmingproblemsthatolderpopulationsmaygenerate.
Thisprojectisinvestigatingtheseissuesindevelopingcountries.ItisundertakingaquantitativeanalysisofexistingdatasetsfromseveralcountriesBrazil,Chile,Indonesia,Mexico,andVietnamtoshedlightonhowhealthstatusandhealthcareutilizationandexpendituresvaryacrossagegroups.Itisalsoexploringwhytheseagehealthpatternsmaydifferacrosscountrieswithdifferenttypesofhealthcaresystems.Itwillprojecthowpublicandprivatehealthexpenditurewouldchangeinthesamplecountriesastheirpopulationsage,undertwoassumptions:thattheage-spendingrelationshipsremainconstantandthattheychangeasafunctionofgrowthinincomeandeducation.Casestudiesareexaminingingreaterdepththeinsurancemarketproblemsassociatedwitholderpopulations,thedifferentformsthese
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problemstakeinpublicandprivatesystems,andwaystheseproblemshavebeenormightberesolved.
Thisresearchwillassistinthedesignofefficienthealthcaresystems,takingintoaccountthechangingofthepopulationdistribution.Thestudyisalsoexpectedtoleadtoaproposalforalargerresearchprojectontheimpactofpopulationagingonhealthcaresystems.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesEstelleJames([email protected] ).WithLenNichols,UrbanInstitute;DenisarddeOliveiraAlves,SãoPauloUniversity;DovChernichovsky,BenGurionUniversityoftheNegev;RebeccaWong,GeorgetownUniversity;andClaudioSapelli.ThePan-AmericanHealthOrganizationisparticipatingintheresearch.
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Completiondate:December1999.
Ref.no.:682-82.
DoesItMatterHowWeEstimateAnnualExpenditures?AnEmpiricalComparisonofMethods
Thisresearchwasdesignedtohelpinunderstandinghowsurveydesignaffectsthemeasurementofconsumptionandthusofpoverty.Theuseofsurvey-basedconsumptionasthemonetarymeasureofwelfareisnowawellestablishedstandardinWorldBankpovertyassessmentsandanalyticwork.Moreover,theBankhasanactiveprogramofadvisingcountriesontheimplementationofsurveys.Butmethodshavevariedgreatlyinthisbodyofwork,andthereislittleunderstandingofhowsensitivetheresultsaretothemethodused.
ThisresearchbeganwithrawdatafromtheHouseholdIncomeandExpenditureSurveyintwourbanareasintheHebeiandSichuanprovincesofChina,covering232households.Thissurveycollectsinformationinmonthlydiariesineachof12consecutivemonthsfromparticipatinghouseholds.Afterreprocessingthedata,thestudycalculatedconsumptionandpovertyestimatesusingdatarepresentingdifferentoptionsfordesigningaconsumptionsurvey.Itbasedaggregatesonthefull12monthsofdata,andgeneratedsimulationsofresultsobtainedfromcollectingdatainalternatemonths,inonemonthperquarter,andinonemonthperyear.Preliminaryresultsindicatethatthemoremonthsofdatacollected,theloweraremeasuresofpovertyandinequality.
TheresultsoftheworkwillhelpguidetheadvicetheBankgivesfordatacollectionefforts.Andthelighttheyshedonthesensitivityofconsumptionandpovertymeasurestosurveymethodwillhelpanalystsjudgehowmuchstocktheycanputincomparisonsofsurveysthatusedifferentmethods.Theresultswillbedisseminated
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throughpublications,trainingcoursesforBankstaffonpovertyandonhouseholdsurveys,andconferencesandtrainingcoursesonsurveymethodsforLatinAmericanstatisticalofficessponsoredjointlybytheInter-AmericanDevelopmentBank,theEconomicCommissionforLatinAmericaandtheCaribbean,andtheWorldBank.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesMargaretE.Grosh([email protected] ).WithJohnGibson,StanfordUniversityandUniversityWaikato;andJikunHuangandScottRozelle,UniversityofCaliforniaatDavis.
Completiondate:June1999.
Ref.no.:682-84C.
Long-TermImpactsofMicrocreditPrograms:AStudyoftheGrameenBankandOtherProgramsinBangladesh
ProvidingaffordablecredittothepoorandimprovinginstitutionsthatdeliversuchcredithavelongbeenimportantobjectivesinWorldBankoperations.Recentexperiencewithmicrocreditprogramsshowsthatwithproperincentivesandmonitoring,loandefaultscanbekepttoaminimumandaffordablecreditcanbedeliveredtothepoorandtowomeneveniftheylackphysicalcollateral.Anearlierstudy(CreditProgramsforthePoor:HouseholdandIntrahouseholdImpactsandProgramSustainability,ref.no.676-59)thatconductedahouseholdandcommunitysurveyinBangladeshin199192foundthatmicrocreditprogramshaveasubstantialeffectinreducingpovertyandthatcreditgiventowomenhasasubstantiallylargereffectthancreditgiventomen.
Buthowsustainablearemicrocreditprograms,andhowsustainablearetheirbenefits?Thisresearchproject,buildingonthefindingsoftheearlierstudy,explorestheseandrelatedissues.Itaddressesthesequestions:Dotheestimatedeffectsofmicrocreditprogramsremainovertime?Aretherediseconomiesofscaleinvillagesasmicrocredit
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programsexpand?Domicrocreditprogramshaveanyspillovereffects?Dotheyhavenoncrediteffects?Doesthegroupplayanessentialpartingroupbasedmicrocredit?ThestudyisinvestigatingthesequestionsbyresurveyingthehouseholdsandcommunitiessurveyedintheearlierstudyinBangladeshduring199192.
Thesurvey,expectedtobegininSeptember1998,wasdelayeduntilFebruary1999bythedevastatingfloodduringthefallof1998.Sincethen,90percentofthesurveyhasbeencompleted.Thesurveyhasrevisited1,700of
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the1,798householdssurveyedearlier.Ithasalsosurveyedanadditional(nontarget)householdineachofthe87villagesintheoriginalsurvey.Inaddition,ithassurveyed250of340newhouseholdsin17villagesaddedtotheoriginal87toallowcomparisonbetweenprogramimpactsinoldandnewprogramvillages.DataentryshouldbecompletedbySeptember1999.
Thesurveyincludesthreenewcomponentsinadditiontothegeneralhouseholdquestionnaire:aquestionnaireonempowermentofwomen,afloodsurvey,andagroupsurvey.Theexistingcomponentsincludeabasicskillsattainmenttestandvillageandschoolfacilitysurveys.
Thestudyisexpectedtocontributetotheunderstandingoftheroleofmicrocreditinpovertyreduction,humancapitaldevelopment,economicgrowth,andthustheoveralldevelopmentprocess.Knowledgeaboutthelong-termeffectsofmicrocreditonincomeandotherwelfareindicatorswillhelpinanalyzinghowmuchpovertyreductionispossiblewithmicrocredit.Byquantifyingtheeffectofthegroup,thestudyisexpectedtohelpinunderstandingthenecessityofthegroupmechanisminmicrocredit.Andbyquantifyingthenoncrediteffectsofmicrocreditprograms,thestudyshouldshedlightontheimportanceofprovidingnoncreditinputsthroughtheseprograms.
Responsibility:PovertyReductionandEconomicManagementNetwork,GenderDivision,andDevelopmentResearchGroup,PovertyandHumanResourcesShahidurR.Khandker([email protected] )andHussainSamad;andDevelopmentResearchGroup,RuralDevelopmentGershonFeder.WithMarkPitt,BrownUniversity;JonathanMorduch,HarvardUniversity;andBinayakSenandM.AbdulLatif,BangladeshInstituteofDevelopmentStudies.
Completiondate:December2000.
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Ref.no.:682-93.
Democracy,Redistribution,andInequality
Thecurrentthinkingabouttherelationshipbetweenthedistributionofpoliticalpowerandthedistributionofeconomicresourceshasinvariablyledtotheconclusionthatwhenthepooracquirepoliticalpower,theyuseittomassivelyredistributeeconomicresourcesintheirfavor,whichshouldreduceinequality.Thisstudylooksatthelinkbetweendemocracyandinequalityandassesseshowandthroughwhatmechanismsdemocracyaffectsincomedistribution.Itasksthefollowingquestions:Dodemocraticcountriesreallyredistributemoreincometothepoor?Anddodemocraticcountriestendtobemoreequal?
Thestudyisundertakingcross-countryanalysisusingindicatorsofdemocratization,levelofredistribution,anddegreeofinequality.Itisalsocarryingoutmoredetailedanalysisofcountriesthathaveexperiencedarecenttransitiontodemocracy(Greece,theRepublicofKorea,Portugal,andSpain)tofindouthowthepoliticalchangehasaffectedredistributionandeducationpoliciesinthesecountries,aswellasincomeinequality.Itdevotesspecialattentiontoformerlysocialistcountries,where,unlikeinothercases,theintroductionofdemocracywasaccompaniedbymassiveincreasesininequality.
Thestudyhastestedthemedianvoterhypothesis,using,forthefirsttime,thecorrectspecificationthatis,comparingtheincomegainofthelowestdecile(orquintile,orbottom50percentofthepopulation)whenpeoplearerankedbytheirmarket(factor)income.Theassumptionisthatpeoplebasethedecisiononhowmuchtoredistributeontheirmarketincome.(Lackofdataonthedistributionofmarket,gross,anddisposableincomehadpreventeduseofthisspecificationbefore.)Resultsfor19advanceddemocraciesforthe1980sand1990sshowthatthecountrieswhosemarketincomewas
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moreunequallydistributeddidredistributemore.Thebottomsegmentofthepopulation(rankedbymarketincome)endedupwiththesameshareofdisposableincomeregardlessofitsinitialposition.Themedianvoterhypothesisthusseemstofindstrongsupport.
Thestudydrawsondataondemocracy,educationalachievements,andinequalityfromtheWorldBank,anddataonredistributionandsocialspendingfromtheUnitedNations,theWorldBank,andtheLuxembourgIncomeStudy.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesBrankoMilanovic([email protected] ).WithMarkGradstein,UniversityofPennsylvaniaandBenGurionUniversity.
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Completiondate:June2000.
Ref.no.:683-01.
Report
Milanovic,Branko.1999.DoMoreUnequalCountriesRedistributeMore?DoestheMedianVoterHypothesisHold?WorldBank,DevelopmentResearchGroup,Washington,DC.
TheMicroeconomicsofIncomeDistributionDynamicsinEastAsiaandLatinAmerica
Thisresearchseekstoidentifythemicroeconomicdeterminantsofthehouseholdincomedynamicsthatliebehindaggregatechangesinpovertyorinequality.Inparticular,bygeneratingabetterunderstandingofwhatdetermines(changesin)theincomesofthepoor,itaimstoprovidecountry-specificpolicyguidanceontheoptimallevelandscaleofeducationinvestments,thescopeforlabormarketinterventionstopreventdiscriminationorreducesegmentation,and,potentially,theregionaltargetingofsocialprotectionspending.TheresearchcentersoncasestudiesofBrazil,Chile,Colombia,Indonesia,Malaysia,Mexico,Taiwan(China),Thailand,andVenezuela.Dataaredrawnfromhouseholdsurveysineachofthoseeconomies.
Theresearchreliesonanewmethodologybasedonthejointestimationofindividualincomeequations,laborsupplyequations,andatotalhouseholdincomeequationforrepeatedcross-sectionalsurveysatdifferentpointsintime.Simulationsbasedontheestimatedcoefficientsallowassessmentofthepartialimpactsofdifferenteffects:changesinratesofreturnto(orpricesof)assetsorattributesinlabororproductmarkets,changesinthedistributionofhumanandphysicalcapital,demographictrends,andthe(endogenous)individual
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decisionsonlaborforceparticipation,onoccupation(wageemploymentorself-employment),andonmarriageandchildbearing.
Whilegeneralizationsaredifficult,thestudyhasfoundincreasesinthereturnstoeducationinAsia,whilethestagnanteconomiesinLatinAmerica(Brazil,Venezuela)showdeclinesinaveragereturns,withincreasingmarginalreturnsatthetop.Inallcountriesincreasesintheeducationandlaborforceparticipationofwomenhaveplayedimportantroles,ashavesuchdemographicfactorsasthereductionofdependencyratios.Rural-urbanandinterregionaldisparitieshavegrowninmanycases(Mexico,Thailand).
Findingshavebeendisseminatedthroughsessionsatthe1998LatinAmericanandCaribbeanEconomicAssociationMeetingsinBuenosAires,theFarEasternMeetingsoftheEconometricSocietyinSingapore(July1999),andtheLatinAmericanMeetingsoftheEconometricSocietyinMexico(August1999)andthroughseminarsatCornellUniversityandtheFreeUniversityofAmsterdam.SessionsarealsoplannedfortheAmericanEconomicAssociationMeetingsinBoston(January2000).
Responsibility:PovertyReductionandEconomicManagementNetwork,PovertyDivisionFranciscoH.G.Ferreira([email protected] );EastAsiaandPacificRegion,PovertyReductionandEconomicManagementSectorUnitBenuBidani;andLatinAmericaandtheCaribbeanRegion,PovertyReductionandEconomicManagementSectorUnitCarlosE.Velez.WithFrançoisBourguignon,DELTA;NoraLustig,AriannaLegovini,CesarBouillon,andInderRuprah,InterAmericanDevelopmentBank;RicardoPaesdeBarros,AssociaçãoNacionaldeCentresdePós-GraduaçãoemEconomia(ANPEC);JoseLeibovich,UniversidaddeLosAndes;GaryFields,CornellUniversity;DanteContrerasandSergioUrzua,UniversidaddeChile;AdrianaKugler,UniversitatPompeuFabra;ViviAlatas,PrincetonUniversity;andHyeokJeong,
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UniversityofChicago.TheInterAmericanDevelopmentBankhascontributedstafftimeandtravelcostsfortheresearch.
Completiondate:December1999.
Ref.no.:683-18.
TheEconomicsofMalaria
Thisstudyproposestocontributetotherenewedefforttofightmalaria,whichkillsabout200millionpeopleayear,byexaminingtheeconomicsofmalariaandmalariacontrol.Itwilldevelopanoverallframework,basedonananalyticalreviewoftheliterature,thatlinkshouseholdbehavior,epidemiologicalparameters,themarketformalaria-relatedcommodities,andhealthstatus.Itwillalsodevelopaproposalforresearchthatwillinvestigatethe
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relationshipsbetweenmalariaandpovertyandassesstheeffectivenessofdifferenttypesofinterventionsdeliveredthroughdifferentmodespublicandprivatefocusingonhowhouseholdsandindividualsrespondtotheinterventions.Thisfurtherresearchwillbesetwithintheoverallframeworkbeingdeveloped.
Aspartofthiseffort,andinresponsetorequestsfromtheinternationalcommunity(particularlytheWorldHealthOrganization)todevelopandundertakearesearchagendaontheeconomicaspectsofmalariacontrol,theWorldBankorganizedabrainstormingmeetingonJuly29,1999,toreviewwhatisknownabouttheeconomicsofmalariaandtooutlineagendasforfutureresearch.TheHarvardInstituteforInternationalDevelopment,whichisdevelopingitsownresearchgrouptoworkonmalaria,helpedgreatlyinsettingtheagendaforthemeetingandinbringingseveralleadingexpertstocontributetothediscussion.
Whilethenumberofparticipantswaslimitedtofacilitatefrankexchange,thegroupwasdrawnfromavarietyofprofessionalbackgroundsbiomedicine,epidemiology,economics,andothersocialsciences.Moreover,tostimulatefuturepartnerships,theparticipantsrepresentedawiderangeofinstitutionsinbothindustrialanddevelopingcountries.
Thegroupidentifiedseveralareasasprioritiesforfurtherresearch:
Betterunderstandingoftheeconomicimpactofmalaria.
Betterunderstandingofthepublic-privateinterfaceintheprovisionandfinancingofmalaria-relatedcommodities.
Creativethinkingontheeconomicsofresearchanddevelopmentofnewweaponsagainstmalariaandoncreatingstructurestospurprivateresearchoneffectiveweapons.
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Betterunderstandingoftheeffectivenessofpublicinterventionsandhowitmaydifferunderdifferentconditions.
Theimplicationsoftherelationshipbetweeneconomics,individualbehavior,andthebiomedicalaspectsofmalariafortheroleofpublicpolicy.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesEmmanuelJimenez([email protected] )andDeonFilmer.
Completiondate:September1999.
Ref.no.:683-32.
Information,Incentives,andAntipovertyInterventions:DevilishDetailsontheRoadtoPovertyReduction
Thisprojectattempts,throughtheoreticalandempiricalanalysis,tounderstandtheinstitutionalbasisforthesuccessorfailureofantipovertyinterventions.Itisdevelopingatheoreticalframeworkbasedonamodelwiththreeentitiesinvolvedinantipovertyinterventionsfinanciers(forexample,theWorldBank),providers(forexample,agovernmentdepartmentornongovernmentalorganization),andthebeneficiaries(thepoor).ThestudywillthentestthisframeworkonadatasetforinterventionsinSouthAfrica.ThedatacomefromaspeciallyconductedsurveyinSouthAfrica,whichcombineshousehold-leveldataonbeneficiarieswithinstitutionaldataontheinterventionstoallowcharacterizationofthedegreeofparticipation.
Althoughtheempiricalresultsareincomplete,thetheoryandtheliteraturesurveysuggestsomeconclusions.Increasedinvolvementofbeneficiariesinthedesignandimplementationofantipovertyprogramsdoesnotlowerallcosts:inparticular,coordinatingalargernumberofactorsrequiresincreasedstafftime.Andfor
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decentralizationtoworkwell,centralizationmustworkwell.Thissuggestsaneedtoconsidertheincentivestructureswithintheentitiesinvolvedinantipovertyinterventions.
Theresultsofthisresearchwillhelptoimprovetheunderstandinganddesignofinstitutionalarrangementsinantipovertyinterventions.
EarlyresultswerepresentedattheWorldBank'ssummerresearchworkshoponJuly68,1999.
Responsibility:WorldDevelopmentReportOfficeRaviKanbur([email protected] ).WithJohnHoddinottandLawrenceHaddad,InternationalFoodPolicyResearchInstitute;andTimothyBesley,LondonSchoolofEconomics.
Completiondate:December1999.
Ref.no.:683-41.
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TheDynamicsoftheUrbanPoorandImplicationsforPublicPolicy
Thisstudytakesadvantageofrare,high-qualitydatagathered30yearsagotoshedlightontheintergenerationalpersistenceofurbanpovertyinRiodeJaneiro.Thedata,whichareservingasbaselineinformation,stemfrominterviewsconductedin1969with750residentsoffavelassquattersettlementsinRiodeJaneiro.
Theprojecthaslocatedmorethanhalftheoriginalrespondentsandappliedaspeciallystructuredinterview,keyedtotheoriginalone,tothemaswellastopresentandpastcommunityleaders.ThestudytracestheevolutionofpovertyagainstthebackgroundofmajorpoliticalandeconomictransformationsinBrazil.Itassessestheeffectsofpublicpolicies,includingsometargetedtothepoor(suchasstatehousingprograms).Thestudyalsoexploresthesurvivalstrategiesofhouseholdsandtheeffectivenessofcommunityandnongovernmentalorganizationsasresourcesandasmediatorsoftheimpactsofpolicyandofeconomicandpoliticalchange.
Responsibility:Transportation,Water,andUrbanDevelopmentDepartment,GlobalUrbanUnitTimCampbell([email protected] ).WithJanicePerlman,TheMegacitiesProject,NewYork;andCarlosVainerandPedroAbramo,InstitutedePesquisaePlanejamentoUrbanoeRegional(IPPUR),RiodeJaneiro.ThePortugueseConsultantTrustFundiscontributingfundingfortheresearch.
Completiondate:December1999.
Ref.no.:683-46.
InequalitiesinChildHealth:ComparingtheLivingStandardsMeasurementStudyandDemographicandHealthSurveys
TheWorldBank,likemanyotherdevelopmentagencies,hasbeen
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givingincreasedemphasistoimprovinghealth,nutrition,andpopulationoutcomesamongtheworld'spoor.Buttheseeffortsareconstrainedbyashortageofdataondifferencesinsuchoutcomesbetweenthepoorandthenonpoor.Thebroadaimofthisprojectistohelpfillthisinformationgapforoutcomesrelatingtochildhealth.Thespecificaimistoassesstheusefulnessofconsumptionandwealthproxiesinthisarea:Throughtheuseofsuchproxies,cansurveydatathatexcludeconsumptiondata,suchastheDemographicandHealthSurvey,nonethelesspaintareliablepictureofdifferencesbetweenthepoorandthenonpoorinhealth,nutrition,andpopulationoutcomes?
Theresearchinvolvescomputingmeasuresofchildhealthinfantandunder-fivemortality,stunting,underweight,andwastingforfivequintilesrankedbyeconomicstatus.Thesemeasuresarethencomparedusingconcentrationcurvesthatplotthecumulativepercentageof,say,childrenborn,rankedbyeconomicstatus,againstthecumulativepercentageof,say,deathsofchildrenunderfive.Aconcentrationindexisthencomputed;analogoustotheGinicoefficient,thisindexindicatestheextenttowhichadverseoutcomesareconcentratedamongthepoor.Standarderrorsarecomputedfortheseindexestoallowassessmentoftheirsignificanceandofthesignificanceofcross-countrydifferences.Economicstatusismeasuredbyequivalenthouseholdconsumptionandbyanindexofwealth.Thewealthindex,usedinstudiesbasedonDemographicandHealthSurveydata,isconstructedbyapplyingprincipalcomponentsanalysistodataonhousecharacteristics,landcultivation,andownershipofdurables.
Theresearchhasthusfarfocusedonchildmalnutrition.Analysisofdatafromnearly25countrieshasshownthatinallthecountries,poorchildrenarelesswellnourishedthanbetter-offchildrenare.Butthedegreeofinequalitybetweenpoorandnonpoorchildrencanvarysubstantiallyacrosscountries,evenamongthoseatsimilarlevelsof
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development.Resultsalsoshowthatinmanybutnotallcases,whethereconomicstatusismeasuredbyequivalentconsumptionorbythewealthindexmakesonlyasmalldifferencetothepicturethatemergesonthecross-countrydifferencesinnutritioninequalities.Thesepreliminaryresultssuggestthatlevelsofdevelopmentandaveragehealth,nutrition,andpopulationoutcomesmaybepoorindicatorsofhowthepoorfareintermsofsuchoutcomes.Theyalsosuggestthatassessingdifferencesbetweenthepoorandthenonpoorusingasyntheticwealthindexisausefulwayforwardwhereconsumptiondataareunavailable.
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Oneofthemainproductsoftheprojectwillbecomparabledataondifferencesbetweenthepoorandthenonpoorinmalnutritionandchildmortality,bybothconsumptionandthesyntheticwealthindex.Thesedata,coupledwithdatabasedontheDemographicandHealthSurveys,willallowBankstaffpreparingcountryassistancestrategiesandpovertyassessmentstofindoutnotjusthowacountry'spopulationasawholefares,butalsohowitspoorfare.Thedatawillalsosupportsubsequentanalysestoexplorethecausesofdifferencesbetweenthepoorandthenonpoorinmalnutritionandchildmortality.Suchworkwillexpandknowledgeforassessingthereturnstodifferentpoliciesandprojectsintermsoftheirabilitytoimprovehealthandnutritionoutcomesamongpoorchildren.
TheresultsoftheworkonmalnutritionarebeingdisseminatedthroughaBankseminarinthefallof1999.ThefindingsanddatawillalsobedisseminatedthroughtheBank'sWebsite.
Responsibility:HumanDevelopmentNetwork,Health,Nutrition,andPopulationTeamHelenSaxenian([email protected] )andNaokoWatanabe.
Completiondate:December1999.
Ref.no.:683-47.
TheImpactofDewormingTreatmentonPrimarySchoolPerformance:Busia,Kenya
Thisresearchprojectfollowsapreliminaryfeasibilitystudy,TheImpactofDewormingTreatmentonPrimarySchoolPerformance(ref.no.682-75).Thatstudymeasuredtheprevalenceandintensityofparasiticinfectionamongchildrenin25schoolsinBusiaDistrict,Kenya,anddeterminedwhethersuchcharacteristicsassocioeconomicstatus,accesstosanitation,andpersonalhygienearecorrelatedwith
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infectionstatus.Informationonsuchcharacteristicswascollectedthroughanoralinterviewadministeredtopupilsandthroughdirectobservationsbyfieldinterviewers.Thestudythenestimatedtherelationshipbetweenobservedcharacteristicsandinfection.Throughthismodeling,itcalculatedthepropensityscoresofinfectionforallpupils.Thepropensityscoreistheconditionalprobabilityofbeingmoderatelyorheavilyinfectedgivenapupil'sobservedcharacteristics.
Thepresentstudyisevaluatingtheeffectofmassdewormingtreatment(treatingallstudentsinaschool)oneducationaloutcomesinBusiaDistrict.Thedewormingtreatmentisbeingphasedinat75primaryschools(withanenrollmentofabout15,000students).Thetreatmentisbeingprovidedtorandomlyassignedschools,whiletheschoolsnotselectedfortreatmentserveasacontrolgroup.Thepropensityscoremethodwillbeusedtoidentifypupilslikelytobemoderatelyorheavilyinfectedinthecontrolschoolswithouttheneedtocollectmedicalandparasitologicalinformationintheseschools.
Thefirstphaseoftheproject,in1998,providedtreatmentto25ofthe75schools.Theremaining50wereacontrolgroup.Duringthesecondandthirdyearsoftheproject,1999and2000,dewormingtreatmentisbeingprovidedtotheinitial25schoolsplusanadditional25.Twenty-fiveschoolswillthusremainasacontrolgroup.Thisexperimentaldesignwillallowanunbiasedestimationoftheimpactofdewormingtreatmentoneducationaloutcomesschoolattendance,gradeprogression,dropoutrates,andacademicperformance.
Afteroneyearthefeasibilitystudyfoundthatdewormingtreatmentimprovedstudentparticipationinschool(fewerdropoutsandhigherattendanceamongthosestillenrolled)by8percentagepoints,butthatacademicscoresdidnotimprovebyastatisticallysignificantamount.Otheroutcomesarestillbeinganalyzed.
Thefindingsfromthisstudywillbedisseminatedthroughpublished
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papersandthroughseminarsintheWorldBankandatOxfordUniversity'sCenterfortheEpidemiologyofInfectiousDisease.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesPaulGlewwe([email protected] )andSylvieMoulin;andHumanDevelopmentNetwork,EducationTeamDonaldBundy.WithEdwardMiguelandMichaelKremer,HarvardUniversity;SimonBrooker,OxfordUniversityCenterfortheEpidemiologyofInfectiousDisease;AlfredLuoba,KenyaDivisionofVectorBorneDiseases;andInternationaalChristelijkSreunfonds,Nairobi.
Completiondate:April2002.
Ref.no.:683-55.
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Gender,OldAge,andSocialSecurity:EvidencefromChileandArgentina
Thisresearchprojectwillanalyzetherelativelivingconditionsofoldermenandwomenandtheimpactofalternativesocialsecurityarrangementsontheirincomeandconsumption.Theresearchwilluseeconometricanalysisofhouseholdandemploymentsurveydatatoestimatethelabormarketexperienceandage-earningsprofilesofmenandwomenwithdifferentlevelsofeducation.
TheprojectwillfocusonArgentinaandChile,butcompareresultswithMexicoandPoland.Theobjectiveistodeveloprecommendationsforsecond-generationpensionreformsthatwilltreatbothmenandwomenfairlyandefficiently.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesEstelleJames([email protected] ).WithAlejandraCox-Edwards,CaliforniaStateUniversity.
Completiondate:December1999.
Ref.no.:683-65.
ImprovingthePolicyRelevanceofLivingStandardsMeasurementStudySurveys
TheWorldBankhasassisteddevelopingcountriesinimplementingLivingStandardsMeasurementStudy(LSMS)surveysformorethan10years.Thisresearchdrewonthatworkandtheworkofotherhouseholdsurveyprogramstosynthesizethelessonsofexperiencesothatcountriescanincorporatetheminthedesignoftheirsurveyprograms.Theresearchfocusedonthefollowingquestions:CanLSMSsurveysbemodifiedtocoverpolicyissuesthataredifficultorimpossibletoanalyzeusingexistingLSMSdata?CanthereliabilityandaccuracyofthedatacurrentlygatheredinLSMSsurveysbe
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furtherimproved?AndcanimplementingLSMSsurveysbemadeeasier?
Theresearchincludeddetailedanalysisofallmajorsections,ormodules,ofLSMSquestionnaires,includingthoseonhealth,education,fertility,migration,housing,anthropometries,employment,consumption,agriculture,nonagriculturalenterprises,andcreditandsavings.DatafromLSMSsurveysandotherpertinentsurveyswereanalyzedforquality,literatureonrelevantanalyticalissueswasreviewedforimplicationsfordatarequirements,andfieldexperimentsweresetupfortheconsumptionmodule.
Theresultsoftheresearchsupporttheoriginalmodular,multitopicapproachoftheLSMSsurveys.Detailedguidanceisgivenonhowtocombinemodulesmoreflexiblyintodifferentkindsofsurveyswithdifferentpurposes,samples,andperiodicities.Thelargestmodificationsaremadetothehealthandagriculturemodules.Optionsforenvironmentalmodulesarepresented,andquestionsabouthowtobetterdefinethecommunityforthecommunityquestionnaireareaddressed.Formostmodules,shortandlongversionsareprovidedtohelpincombiningthemintosurveysfordifferentpurposes.
TheinterimresultswerediscussedattwoworkshopsinWashington,DC,onApril1719,1996,andJune1113,1997.Theworkshopsbroughttogethertheauthorsparticipatingintheprojecttoagreeonavisionforthefinaloutputandtodetectgapsandoverlapsinthework.Representativesofeightclientagenciesindevelopingcountriesattendedtoensurethattheproductwouldmeettheirneeds.WorldBankoperationalstaffimplementingsurveysandpolicyadvisersinallsectorscoveredinthequestionnairewereinvited,toensurethattheirneedstooweremet.RepresentativesofotheragenciesinvolvedinsurveyworkindevelopingcountriesandtheUnitedStateswerealsoinvited,tobenefitfromtheirexperienceandmakethemawareoftheresearch.
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TheManualforPlanningandImplementingtheLSMSSurvey(MargaretE.GroshandJuanMu&tidle;noz,LivingStandardsMeasurementStudyWorkingPaper126,Washington,DC:WorldBank,1996),producedunderthisproject,wasdisseminatedataninternationalsurveyworkshopforallLatinAmericancountriesinAguascaliences,Mexico,onApril13,1998.TheworkshopwassponsoredjointlybytheInter-AmericanDevelopmentBank(IDB),theWorldBank,andtheEconomicCommissionforLatinAmericaandtheCaribbean(ECLAC).Themanualwasalsopresentedatasamplingcourseforrepresentativesof30francophonecountriesonJune1221,1997.ThemanualservesasthetextbookfortheBank'sannualtrainingcourseonhouseholdsurveys.IthasbeentranslatedintoRussianandSpanish.
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Theproject'sworkhasinfluencedsurveyprojectsfundedbytheBankandotherinternationaldevelopmentagencies.ProjectmaterialshaveaffectedthedesignorimplementationofBank-sponsoredsurveysinAzerbaijan,Cambodia,Jamaica,theKyrgyzRepublic,Nicaragua,Panama,andVietnam.TheyalsoarebeingusedastrainingmaterialsbythenewjointIDB-WorldBank-ECLACsurveyprogramforLatinAmerica.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesMargaretGrosh([email protected] ),PaulGlewwe,HaroldAlderman,DeanJolliffe,CarlodelNinno,KinnonScott,DianeSteel,TilahunTemesgen,LynnTsoflias,andYvonneYing,andInfrastructureandEnvironmentMaureenCropper;PovertyReductionandEconomicManagementNetwork,GenderDivisionNobuhikoFuwa,ShahidurKhandker,AndrewMason,andTaraViswanath;andEuropeandCentralAsiaRegion,CountryDepartmentIV,MoldovaResidentMissionWlodekOkrasa.WithJereBehrman,UniversityofPennsylvania;InduBhushan,AsianDevelopmentBank;KimChung,BrownUniversity;AngusDeatonandEricEdmonds,PrincetonUniversity;ElizabethFrankenburg,RandCorporation;PaulGertler,UniversityofCaliforniaatBerkeley;AndrewHarvey,St.Mary'sUniversity,Canada;HananJacoby,UniversityofRochester;AnjiniKocharandJulieSchaffner,StanfordUniversity;RobertLucas,BostonUniversity;FionaMackintosh;StephenMalpezzi,UniversityofWisconsin;AndrewMcKay,UniversityofNottingham;DonaldMeadandThomasReardon,MichiganStateUniversity;JuanMunoz,SistemasIntegrales,Chile;RaylynnOliver;
ElainaRose,UniversityofWashington;WimVijverberg,UniversityofTexasatDallas;DaleWhittington,UniversityofNorthCarolinaatChapelHill;andCentralStatisticalBureau,Latvia.
Completiondate:December1998.
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Reports
Blank,Lorraine,andMargaretE.Grosh.1997.BuildingAnalyticalCapacityinDevelopingCountries.WorldBank,DevelopmentResearchGroup,Washington,DC.
Blank,Lorraine,MargaretE.Grosh,andPaulineKnight.1996.BuildingAnalyticCapacityinConjunctionwithLSMSSurveys:TheJamaicaStory.ImprovingthePolicyRelevanceofLSMSSurveysResearchPaper1.WorldBank,PolicyResearchDepartment,Washington,DC.
Contreras,ManuelE.1995.BuildingAnalyticCapacityinBolivia:TheSocialPolicyAnalysisUnit(UDAPSO).ImprovingthePolicyRelevanceofLSMSSurveysResearchPaper2.WorldBank,PolicyResearchDepartment,Washington,DC.
Drummond,LisaB.W.1995.BuildingAnalyticCapacityinConjunctionwithLSMSSurveys:AReportontheVietnamLivingStandardsSurvey.ImprovingthePolicyRelevanceofLSMSSurveysResearchPaper3.WorldBank,PolicyResearchDepartment,Washington,DC.
Grosh,MargaretE.,andPaulGlewwe.1996.HouseholdSurveyDatafromDevelopingCountries:ProgressandProspects.AmericanEconomicReview86(2):15-19.
.1998.DataWatch:TheWorldBank'sLivingStandardsMeasurementStudyHouseholdSurveys.JournalofEconomicPerspectives12(1):187-96.
.DesigningHouseholdSurveyQuestionnairesforDevelopingCountries:LessonsfromTenYearsofLSMSExperience.WorldBank,DevelopmentResearchGroup,Washington,DC.Draft.
Grosh,MargaretE.,andJuanMunoz.1996.AManualforPlanningandImplementingtheLSMSSurvey.LivingStandardsMeasurement
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StudyWorkingPaper126.Washington,DC:WorldBank.Grosh,MargaretE.,Qing-huaZhao,andHenriJeancard.1995.TheSensitivityofConsumptionAggregatestoQuestionnaireFormulation:SomePreliminaryEvidencefromtheJamaicanandGhanaianLSMSSurveys.ImprovingthePolicyRelevanceofLSMSSurveysResearchPaper6.WorldBank,PolicyResearchDepartment,Washington,DC.
Jolliffe,Dean.1995.ReviewoftheAgriculturalActivitiesModulefromtheLivingStandardsMeasurementStudySurvey.ImprovingthePolicyRelevanceofLSMSSurveysResearchPaper7.WorldBank,PolicyResearchDepartment,Washington,DC.
Oliver,Raylynn.1995.BuildingAnalyticCapacityinConjunctionwithLSMSSurveys:TheKyrgyzRepublic.ImprovingthePolicyRelevanceofLSMSSurveysResearchPaper4.WorldBank,PolicyResearchDepartment,Washington,DC.
Wilson,Francis,andDudleyHorner.1996.LessonsfromtheProjectforStatisticsonLivingStandardsandDevelopment:TheSouthAfricanStory.ImprovingthePolicyRelevanceofLSMSSurveysResearchPaper5.WorldBank,PolicyResearchDepartment,Washington,DC.
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TheEconomicImpactofFatalAdultIllnessfromAIDSandOtherCausesinSub-SaharanAfrica
Thisprojectaddressedtwobroadresearchquestions:WhataretheeconomiceffectsofAIDS-relatedillnessanddeathamongadultsonhouseholdsinnorthwestTanzania?Andwhataretheimplicationsoftheseeffectsforsurvivorassistanceprograms?
TheprojectcarriedoutadetailedsocioeconomicsurveyintheKageraregionofTanzania,anareawithahighrateofHIVinfection.Asampleofbothhealthyandseverelyaffectedhouseholdswasfollowedover18months,at6-to7-monthintervals.
TheresearchconfirmedthatadultmortalityandmorbidityratesareextremelyhighinKagera.Theeconomicconsequencesforhouseholdsofthehighmortalitycanbesummarizedunderthreegeneralthemes,eachwithimplicationsforpoliciesrelatedtoAIDSandpovertyalleviationinKageraandinTanzania.
First,somehouseholdsaremorevulnerablethanotherstoanadultdeath.Theaveragehouseholdsufferinganadultdeathhadtoreducetheconsumptionofsurvivors,butthesizeofthereductionvaried,dependingonthecharacteristicsofthehouseholdandofthedeceasedadult.
Second,householdcopingstrategiessucceedinlimitingtheshort-termimpactofanadultdeathonlyattheexpenseofseriouslonger-termconsequences.Forexample,whenprime-agedwomendie,malnutritionincreasesamongtheirorphaneddaughtersunderagethree,andtheschoolingofolderchildrenissacrificed.
Third,adultmortalityfromAIDSandothercausesisonlyoneamongmanyrootsofpovertyandlowlivingstandardsinKagera,anditisnotthemostimportantone.
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WhatdothesefindingssayabouttheimplicationsoftheAIDSepidemicforantipovertypolicy?SinceanalysisoftheKagerasurveydatashowsthatpercapitaconsumptioninthebetter-offhouseholdsisnotdepressedbyanadultdeath,andmanypoorhouseholdshavehadnoadultdeath,theprojectresultsdonotsupporttheideaoftargetingassistancetoallKagerahouseholdsthathavesufferedanadultdeath.Thiscriterionwouldleadtoinefficientdistributionofthescarceresourcesavailabletofightpoverty.
Nevertheless,thefindingssuggestanimportantsynergybetweenAIDSmitigationandantipovertyprograms.Forexample,thefindingthatpoorhouseholdsaremorevulnerabletotheimpactofanAIDSdeathimpliesthatgeneralantipovertypoliciescanalsobeAIDSmitigationpolicies.Ifpoorhouseholdswerestrengthenedbygeneralantipovertypolicies,theywouldbeabletocopewithAIDSdeathsatasmallercosttothesurvivors.
Butthefindingthatanadultdeathdepressesthepercapitafoodconsumptionofthepooresthouseholdsby15percentimpliesthatAIDSdeathsinpoorhouseholdsexacerbatepoverty.SowhenAIDSmitigationpoliciesaretargetedtohouseholdsthatwerepoorbeforeanAIDSdeath,theyarelikelytopreventthehouseholdsfromslippingevenfurtherintomiseryasaresultofthedeath.Insum,theresultsoftheresearchprojectsuggestintegratingantipovertyandAIDSmitigationprogramsinKagera.
Thestudy'sfindingsmadeamajorcontributiontotheanalysisoftheimpactofAIDSonpovertyintheWorldBankPolicyResearchReportConfrontingAIDS:PublicPrioritiesinaGlobalEpidemic(NewYork:OxfordUniversityPress,1997).Inaddition,findingsweredisseminatedatthreeworkshopsinTanzania(September1992,December1995,andSeptember1996)andatinternationalconferences,includingtheannualmeetingsofthePopulationAssociationofAmerica(1993and1995),theAmerican
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EconomicsAssociation(1995),theAfricanStudiesAssociation(1993),andglobalandregionalAIDSconferences(1993,1994,and1995).Inthenext12monthsreportsontheanalysisoftheprojectdatawillbecompletedandthedatafromthestudywillbemadeavailableontheWebatwww.worldbank.orgllsmsllsmshome.html.
AttheBanktheresultsoftheresearcharehelpingtoincreaseawarenessoftheurgentneedtopreventthespreadofAIDS.TheresearchisalsorelatedtoongoingeffortsbythePovertyReductionandEconomicManagementNetworktounderstandhouseholdcopingbehaviorandtodefinetheconceptofthevulnerablehouseholdforpurposesofimprovingtheefficiencyofantipovertyprograms.
Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentMeadOver([email protected] ),andPovertyandHumanResources
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MarthaAinsworth.WithPhareMujinja,InnocentSemali,GeorgeLwihula,andGodlikeKoda,UniversityofDaresSalaam;IndraniGupta,InstituteforEconomicGrowth,Delhi;SusmitaGhosh;KathleenBeegle,RandCorporation;DanielDorsainvil,MinistryofFinance,Haiti;andPaurviBhatt,U.S.AgencyforInternationalDevelopment(USAID).TheUSAIDandtheDanishInternationalDevelopmentAgency(DANIDA)arecontributingfundingfortheresearch.TheUniversityofDaresSalaamiscontributingstafftime.
Completiondate:December1999.
Reports
Ainsworth,Martha,andInnocentSemali.1999.TheImpactofAdultDeathsonChildren'sHealthinNorthwesternTanzania.WorldBank,DevelopmentResearchGroup,Washington,DC.
Ainsworth,Martha,MeadOver,andothers.1992.MeasuringtheImpactofFatalIllnessinSub-SaharanAfrica:AnAnnotatedQuestionnaire.LivingStandardsMeasurementStudyWorkingPaper90.Washington,DC:WorldBank.
Beegle,KathleenJ.1997.TheImpactofAdultMortalityinAgriculturalHouseholds:EvidencefromRuralTanzania.Ph.D.dissertation.MichiganStateUniversity,DepartmentofEconomics.Over,Mead,JuliaDayton,DanielDorsainvil,IndraniGupta,andPhareMujinja.1999.TheImpactofAdultMortalityfromAIDSandOtherCausesonHouseholdConsumptioninKagera,Tanzania.WorldBank,DevelopmentResearchGroup,Washington,DC.
WorldBank.1997.ConfrontingAIDS:PublicPrioritiesinaGlobalEpidemic.PolicyResearchReport.NewYork:OxfordUniversityPress.
WorldBankandUniversityofDaresSalaam.1993.Reportofa
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WorkshopontheEconomicImpactofFatalAdultIllnessinSub-SaharanAfrica.WorldBank,PolicyResearchDepartment,Washington,DC.
HouseholdWillingnesstoPayforMalariaPreventioninTigray,Ethiopia
ThisstudymeasuresthemonetaryvaluethathouseholdsplaceonpreventingmalariainTigray,Ethiopia.Itestimatesahouseholddemandfunctionforahypotheticalmalariavaccineandcalculateswillingnesstopaytopreventmalariaastheareabeneaththisdemandfunctiontotheleftofhouseholdsize.Willingnesstopayiscontrastedwiththetraditionalcostsofillnessthemedicalcostsandtimelostduetomalaria.
Theresultsoftheresearchindicatethatthevalueofpreventingmalariawithvaccinesisabout$36perhouseholdperyear,orabout15percentofimputedannualhouseholdincome.Thisis,onaverage,abouttwoorthreetimestheexpectedhouseholdcostofillness.Whilethebenefitsfrompreventingmalariaarelarge,thefactthatvaccinedemandispriceinelasticsuggeststhatitwillbedifficulttoachievesignificantmarketpenetrationunlessthevaccineissubsidized.
Similarresultsareobtainedforinsecticide-treatedbednets.Estimatesofhouseholddemandfunctionsforbednetssuggestthatatapricethatmightpermitcostrecovery($6perbednet),onlyathirdofthepopulationina200-personvillagewouldsleepunderbednets.
Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentMaureenL.Cropper([email protected] )andJulianLampietti.WithDaleWhittingtonandChristinePoulos,UniversityofNorthCarolinaatChapelHill;andMitikuHaile,MekelleUniversityCollege,Ethiopia.
Completiondate:December1999.
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SustainableBankingwiththePoor
Thisresearchprojectaimsatimprovingtheabilityofdonors,governments,andpractitionerstodesignandimplementpoliciesandprogramsforbuildingsustainablefinancinginstitutionsthatareeffectiveinreachingthepoor.TheprojecthascarriedoutaseriesofcasestudiesofmicrofinanceinstitutionsinAfrica,Asia,andLatinAmericathathavepioneeredinnovativeapproachesforreducingthecostsandrisksofprovidingfinancialservicestoalargenumberoflow-incomeclients.Thecasestudiescoverawiderangeofinstitutions,includingcommercialbanks,specializedbanks,nongovernmentalorganizations,nonbankfinancialinstitutions,andgovernmentdevelopmentfinanceinstitutions.
Theprojectdrawsonseveraldisciplineseconomics,finance,andanthropologyandhasusedbothquantitativeandqualitativeapproachestoanalyzewhysomeprogramshavesuccessfullydeliveredfinancialservices
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tothepoorwhileothershavefallenshort.Successisdefinedbyfinancialsustainabilityandbyaccessandoutreach.Financialsustainabilityismeasuredintermsofkeyfinancialperformanceindicators,includingtheSubsidyDependenceIndexwidelyusedintheWorldBank.Accessandoutreacharemeasuredbyassessinghowfarbeyondthefrontieroffinanceaprogramhasgonetoreachthosewhohavebeenunabletouseformalfinancialserviceswhetherbecauseofgender,income,illiteracy,ethnicidentity,geographiclocation,orlackofcollateral.
Onthebasisofthecasestudies,theprojecthasproduceddocumentsthatprovidelessonsforpolicyformulation,programdesign,andimplementation.Theseincludeanintegratedanalysisandcriticalreviewoftheroleofnongovernmentalorganizationsinmicrofinanceandathoroughanalyticalassessmentofthecurrentstateandpotentialofcreditunionoutreachtothepoor.IncollaborationwiththeConsultativeGroupforAssistingthePoorest(CGAP),theprojectproducedtheMicrofinancePracticalGuide(CecileFrumanandMichaelGoldberg,WorldBank,Washington,DC,1997),designedtoassistBanktaskmanagersinformulatingandimplementingmicrofinanceactivities.Theguidepresentsastep-by-stepapproachtodesigningamicrofinanceloanorloancomponentandprovidesextensiveadviceonsuchnonlendingactivitiesaspolicydialogueandtechnicalassistance.
Targetedtoawideraudience,theMicrofinanceHandbook(JoannaLedgerwood,Washington,DC:WorldBank,1998)isatechnicalguideaimedatclientcountrygovernments,financialinstitutions,donoragencies,andpractitioners.Thehandbookoffersacomprehensiveoverviewofthemainissuesinmicrofinanceandanupdateonthelessonslearnedandbestpracticesinthefield.
Comparativeanalysesofcasestudieswerepresentedatthreeregional
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conferences(twoinAfricaandoneinLatinAmerica)andatprofessionalmeetingsinLatinAmerica.TheprojecthasestablishedaBankseminarseriestodisseminatebestpracticeandtodiscussissuesandproblemsemergingintherapidlygrowingfieldofmicrofinance.ByJune30,1999,35seminarshadbeenheld.Theprojecthasalsoorganizedregionaldisseminationworkshopsincollaborationwithpartners:inThailandinNovember1997,inZimbabweinFebruary1998,inBenininMay1998,andinPeruinJune1999.These'regionalconferences,eachgatheringmorethan100policymakersandpractitioners,haveconveyedkeymessagesonbuildingregulatoryframeworksandinstitutionsformicrofinanceandruralfinance.Inaddition,theprojecthasestablishedaWebsitetodisseminatecasestudiesandotherpublications(www-esd.worldbank.org/html/esd/agr/sbp).
Theproject'soutputshavehadasubstantialinfluenceonthedesignandimplementationofmicrofinanceprojectssupportedbytheBank,helpingtoensurethattheyreflectbestpractice.
Responsibility:SouthAsiaRegion,SocialDevelopmentSectorUnitLynnBennett([email protected] );AfricaRegionTechnicalFamilies,PrivateSectorFinanceCarlosE.CuevasandSangaeSherman;andPrivateSectorDevelopmentDepartment,KnowledgeManagementUnitKorotoumouOuattara,andSmallEnterpriseDevelopmentUnitJacobYaron.WithTomDichter;JoannaLedgerwood;JuliaPaxton;J.D.vonPischke;JeffreyPoyo;GloriaAlmeyda;StephanieCharitonenko;JorgeRodriguez-Meza;DevelopmentPartners,UnitedStates;CEPES,Peru;InversionesNacionalesdeTurismo,Peru;SilviaDorado;NancyMcGaw;andAliJaffrey.FundingfortheresearchhasbeencontributedbytheSwissAgencyforDevelopmentandCooperation;theRoyalMinistryofForeignAffairs,Norway;andtheFordFoundation.
Completiondate:December1999.
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Reports
Almeyda,Gloria.1998.Colombia:CupocreditoCreditUnion.CaseStudiesinMicrofinance.(AlsoissuedinSpanish.)
.1999.Colombia:SolidariosFinancialCooperative(Cali).CaseStudiesinMicrofinance.(AlsoissuedinSpanish.)Almeyda,Gloria,andBrianBranch.1999.Ecuador:OSCUS(Ambato)andProgeso(Quito)CreditUnions.CaseStudiesinMicrofinance.(AlsoissuedinSpanish.)
.1999.Guatemala:TheCaseofUnionPopularandUnionProgresistaAmatitlaneca(UPA)CreditUnions.CaseStudiesinMicrofinance.(AlsoissuedinSpanish.)
Benjamin,McDonald,andJoannaLedgerwood.1999.DominicanRepublic:ADEMI.CaseStudiesinMicrofinance.
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Burnett,Jill,CarlosCuevas,andJuliaPaxton.1999.PeruTheCajasMunicipalesdeAhorroyCredito.CaseStudiesinMicrofinance.
CEPES,Peru.1997.ServiciosFinancierosyDesarrolloRural.InCarlosCuevas,ed.,MercadosFinancierosRuralesenAmericaLatina.Charitonenko,Stephanie,CecileFruman,andGlenPederson.1999.Kenya:KREP.CaseStudiesinMicrofinance.Charitonenko,Stephanie,RichardH.Patten,andJacobYaron.1998.Indonesia:BankRakyatIndonesia(BRI)UnidDesa1970-96.CaseStudiesinMicrofinance.Churchill,Craig.1998.SouthAfrica:GetAheadFoundation.CaseStudiesinMicrofinance.
Cuevas,Carlos.1999.CreditUnionsinLatinAmerica:RecentPerformanceandEmergingChallenges.(AlsoissuedinSpanish.)Dichter,Tom.1997.Egypt:TheAlexandriaBusinessAssociationSmallandMicroenterpriseProject.CaseStudiesinMicrofinance.
.1998.Pakistan:AgaKhanRuralSupportProgram1982-94.CaseStudiesinMicrofinance..1998.PhilippinesTSPI.CaseStudiesinMicrofinance..1999.NGOsinMicrofinance:Past,Present,andFutureAnEssay.Fidler,Peter.1998.Bolivia:AssessingthePerformanceofBancoSolidaro.CaseStudiesinMicrofinance.(AlsoissuedinSpanish.)Fidler,Peter,andMohiniMalhotra.1997.Zimbabwe:ZambukoTrust.CaseStudiesinMicrofinance.Fruman,Cecile.1997.Benin:FECECAM.CaseStudiesinMicrofinance.(AlsoissuedinFrench.).1998.Mali:Self-ManagedVillageSavingsandLoansBanks.CaseStudiesinMicrofinance.(AlsoissuedinFrench.)Fruman,Cecile,andMichaelGoldberg.1997.MicrofinancePracticalGuide.Kantor,Paula,andChristineRobinson.1997.FinancialSustainabilityforCreditPrograms:ATravelSurvivalGuide.Kantor,Paula,AliciaRobb,andChristineRobinsonParajuli.1998.
Laautosuficienciafinanciera:unaguiabasicaparaprogramasde
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micro-creditoenAmericaLatina.Lapenu,Cecile.1998.Indonesia'sRuralFinancialSystem:TheRoleoftheStateandPrivateInstitutions.(AlsoissuedinFrench.)Ledgerwood,Joanna.1998.MicrofinanceHandbook:AnInstitutionalandFinancialPerspective.SustainableBankingwiththePoorSeries.Washington,DC:WorldBank..1999.Albania:AlbanianDevelopmentFund(ADF).CaseStudiesinMicrofinance.
Muraki,Tetsutaro,LeilaWebster,andJacobYaron.1998.Thailand:BAACTheThaiBankforAgricultureandAgriculturalCooperatives.CaseStudiesinMicrofinance.
Ouattara,Korotoumou,MayadaBaydas,andJuliaPaxton.1998.Niger:CreditUnions(Caissespopulairesd'epargneetdecredit).CaseStudiesinMicrofinance.
Paxton,Julia.1997.BurkinaFaso:LeprojetdepromotiondupetitcreditruralPPPCR.CaseStudiesinMicrofinance.
.1997.Guatemala:CAREVillageBanks.CaseStudiesinMicrofinance.(AlsoissuedinSpanish.)
.1997.AnInventoryofMicrofinanceInstitutionsinEastAsiaandthePacific.
.1997.AnInventoryofMicrofinanceInstitutionsinEast,Central,andSouthAfrica.
.1997.AnInventoryofMicrofinanceInstitutionsinSouthAsia.
.1998.Colombia:Women'sWorldBanking.CaseStudiesinMicrofinance.(AlsoissuedinSpanish.)
.1998.CostaRica:FINCAVillageBanking.CaseStudiesinMicrofinance.(AlsoissuedinSpanish.)
.1998.AnInventoryofMicrofinanceInstitutionsinLatinAmericaandtheCaribbean.(AlsoissuedinSpanish.)
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.1998.AnInventoryofMicrofinanceInstitutionsinWesternandWestCentralAfrica.(AlsoissuedinFrench.)
.1998.AWorldwideInventoryofMicrofinanceInstitutions.(AlsoissuedinFrenchandSpanish.)
.1999.BalancingOutreachandSustainability:Evidencefrom12LatinAmericanFinancialInstitutions.
.1999.Colombia:BancoCajaSocial.CaseStudiesinMicrofinance.(AlsoissuedinSpanish.)Paxton,Julia,andCecileFruman.1997.OutreachandSustainability:AComparativeAnalysisofSavings-FirstandCredit-FirstFinancialInstitutionsinAfrica.(AlsoissuedinFrench.)
Poyo,Jeffrey,andCarlosCuevas.1999.CreditUnionsinMicrofinance:CurrentStateandProspects.Draft.
TechnologyandPovertyAlleviation
TheroleoftechnicalchangeinpovertyalleviationhasbeenidentifiedasacentralconcerninplanningtheWorldBank'sWorldDevelopmentReport2000/01:PovertyandDevelopment,whichwillevaluatepovertyreduction
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in1990-2000,withastronganalyticalfocusontheriskandvulnerabilityofthepoor.Thisresearchwillcontributetothatreportbyassessingtheextenttowhichpost-greenrevolutiontechnologicaladvanceshavereducedpoverty,bothdirectly(throughtheincomeorconsumptionofadoptingfarmers)andindirectly(throughfoodprice,wage,employment,andsectorallinkageeffects),andbyassessingthepotentialofrecentadvancesinbiotechnologytoreducepovertyinthefuture.
AhouseholdsurveydesignedtoassessthedirectimpactofmodernpotatovarietiesonpovertyisbeingconductedinthenorthernhighlandsofPeru.Theresearchwillusedatafromthesurveytoanalyzethepatternofadoptionanddiffusionofnewpotatovarietiesintermsoftheirattributes(suchasexpected-income-increasing,risk-reducing,liquidity-saving,ornutrition-enhancingqualities)acrossheterogeneouscategoriesofhouseholds.Itwillalsomeasuretheimpactoftechnologyadoptiononhouseholdincomeandconsumption.
TheresearchwillassesstherelativeimportanceofdirectandindirecteffectsbyestimatingcomputablegeneralequilibriummodelsforarchetypaleconomiesrepresentingpoorcountriesinAsia,LatinAmerica,andSub-SaharanAfrica.Themodelswillcharacterizesourcesofincometoidentifytherealincomeeffectsoffoodpricedeclineandfarmincomeimprovementresultingfromtechnologicaladvances.
Assessingthepotentialofbiotechnologytoalleviatepovertywillrequirecarefulidentificationofthemainfeaturesofagriculturalbiotechnologyresearchthatcanhavedirectandindirecteffectsonpoverty:whatcrops,whattraits,andforwhichenvironments?
PreliminaryresultsofthisstudywerepresentedataworkshoporganizedbytheWorldBankinMalaysiaonMay10-12,1999,andat
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aBanksummerresearchworkshoponpovertyinWashington,DC,onJuly6-8,1999.BesidescontributingtoWorldDevelopmentReport2000/01,theresultswillinformtheongoingeffortbytheWorldBank'sBiotechnologyTaskForcetodefineguidingprinciples,strategies,andprioritiesthatsupportcapacitybuildinginagriculturalbiotechnologyinordertoenhanceitsimpactonpovertyalleviation.
Responsibility:DevelopmentResearchGroup,RuralDevelopmentRinkuMurgai([email protected] )andGershonFeder.WiththeInternationalPotatoCenter(CIP),Peru;OscarOrtizandRebeccaNelson,CIP;AlaindeJanvryandErinMcCormick,UniversityofCaliforniaatBerkeley;andPaulWinters,UniversityofNewEngland,Australia.
Completiondate:January2000.
TheMethodologyofPovertyAssessments
Policiestofightpovertyrelyincreasinglyondataaboutthelivingconditionsofthepoor,asreflectedinapovertyprofile.Butconstructingapovertyprofilethatcanbereliedontoguidepolicychoicesisoftendifficult.Andthedataandmethodsusedcanmattergreatlytothepolicieschosen.Attheirworst,poorlydevisedpovertyprofilescanmisdirectpovertyreductioneffortsforexample,bychannelingscarceresourcestocitieswhenpovertyisworseinruralareas,orviceversa.
Whatmethodsareavailableforconstructingpovertyprofiles?Whataretheirstrengthsandweaknesses?Thisresearchprojectseekstoanswerthosequestionsbyinvestigatingthetheoreticalandempiricalfoundationsofthemethodsusedinconstructingpovertyprofiles.Typically,toolittleworkgoesintoassessingtherobustnessofpovertycomparisonsastheunderlyingmeasurementassumptionschange.Manyofthedataroutinelyusedinpovertyanalysisarefulloferrorsasituationunlikelytochange.Therealsoareunavoidablevalue
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judgmentsunderlyingmeasurementpractices.ThequalityoftheWorldBank'spolicyassessmentsandprescriptionsmayormaynotdependontheseerrorsandassumptions.Animportanttaskistofindoutjusthowconfidentanalystscanbeinformingpovertycomparisons.
Theprojectexaminesthepropertiesofthemeasuresusedforassessingindividualwelfare,includingthepracticesusedincomparingthewelfareofdifferentdemographicgroups(suchaslargeandsmallhouseholds).Italsoinvestigatesthedifferentmethodsusedforsettingpovertylinesandhowmuchtheymattertothepolicyconclusionsdrawn.Anditstudieswaysofmakingbetteruseofsuchnonincomeindicatorsofwelfareashealthandeducationindicators.
Anewstrandoftheresearchisinvestigatingthepropertiesofsubjectivewelfareindicators,suchasself-rated
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assessmentsoftheminimumincomeneededtomakeendsmeet,ofconsumptionadequacy,andofwhethertherespondentispoorornot.Aseriesofcasestudies(includingJamaica,Nepal,andRussia)areexaminingthesemethodsaspotentialcomplementstomoreconventional,objectivemethodsofmeasuringpovertyandwelfare.
TheresearchprojectistailoredtotheproblemsfacedbyWorldBankstaffundertakingpovertyassessments,andthereisanactiveprogramoftraininganddissemination.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesMartinRavallion([email protected] ),PeterLanjouw,MichaelLokshin,andMennoPradhan.
Completiondate:June2000.
Reports
Chaudhuri,Shubham,andMartinRavallion.1994.HowWellDoStaticIndicatorsIdentifytheChronicallyPoor?JournalofPublicEconomics53(March):367-94.
Lanjouw,jeanO.,andPeterLanjouw.1996.AggregationConsistentPovertyComparisons:TheoryandIllustrations.WorldBank,PolicyResearchDepartment,Washington,DC.Lanjouw,Peter,andMartinRavallion.1994.PovertyandHouseholdSize.EconomicJournal105(November).(AlsopublishedasPolicyResearchWorkingPaper1332,WorldBank,PolicyResearchDepartment,Washington,DC,1994.)
Pradhan,Menno,andMartinRavallion.1998.MeasuringPovertyUsingQualitativePerceptionsofWelfare.PolicyResearchWorkingPaper2011.WorldBank,DevelopmentResearchGroup,Washington,DC.
Ravallion,Martin.1994.ABetterWaytoSetPovertyLines.Outreach
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15.WorldBank,PolicyResearchDepartment,Washington,DC.
.1994.FundamentalsofPureandAppliedEconomics.Vol.56,PovertyComparisons.Chur,Switzerland:HarwoodAcademic.
.1994.PovertyRankingsUsingNoisyDataonLivingStandards.EconomicsLetters45:481-85.
.1996.HowWellCanMethodSubstituteforData?FiveExperimentsinPovertyAnalysis.WorldBankResearchObserver11(2):199-221.
.1998.PovertyLinesinTheoryandPractice.LivingStandardsMeasurementStudyWorkingPaper133.Washington,DC:WorldBank.
Ravallion,Martin,andBenuBidani.1994.HowRobustIsaPovertyProfile?WorldBankEconomicReview8(1):75-102.
Ravallion,Martin,andMichaelLokshin.1999.SubjectiveEconomicWelfare.PolicyResearchWorkingPaper2106.WorldBank,DevelopmentResearchGroup,Washington,DC.
.1999.WhoWantstoRedistributeRussia'sTunnelEffectinthe1990s.PolicyResearchWorkingPaper2150.WorldBank,DevelopmentResearchGroup,Washington,DC.
Ravallion,Martin,andShankarSubramanian.1996.WelfareMeasurementwithandwithoutSubstitution.WorldBank,PolicyResearchDepartment,Washington,DC.
ThePublicEconomicsofHealthReform
Thisprojectencompassesresearcheffortsthatapplystandardtechniquesofpubliceconomicsanddevelopandapplyextensionstothesetechniquestotheproblemsofthehealthsectorindevelopingcountries.Theapproachistoformulatetheproblemsofthesectorinawaythatisconsistentwithapublicexpenditurereviewthatis,toexaminetheequity,efficiency,andimplementabilityofpoliciesand
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expenditureregimesinthesector.
Equity.Thiscomponentisbasedonanalysesofabout60DemographicandHealthSurveys.Thesesurveysdonotincludedirectmeasuresofincomeorconsumptionbutdohaveabatteryofquestionsrelatingtohousingcharacteristicsandownershipofconsumerdurables.InthecontextofsectorworkinBrazilandIndia,theprojectdevelopedanindexofwealthfromthesequestionsusingprincipalcomponentsanalysis.Thisindexisusedtoexaminetherelationshipbetweenhealthmeasures(infantandchildmortality,nutritionalstatus,incidenceofdisease)andfamilywealth.Theanalytictechniqueisadesign-adaptivenonparametricregression.Resultsforinfantandchildmortalityshowpronouncednonlinearrelationships,withthemortalityratefallingsteeplyrelativetowealthatvariouspointsinthewealthdistributioninmostcountries.
Theresearchhasalsoexaminedtheprincipaldeterminantsofhealthstatus.Resultsthusfarconfirmtheresultsintheliteratureontheimportanceofmothers'educationasadeterminantofchildmortality,andshowthatthereisoftenastrongrelationshipwith
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waterandsanitation.Resultsalsopointtoatightlinkbetweenwealthandaccesstowaterandsanitationservices.
Efficiency.Twomajortypesofmarketfailuresandtheinteractionbetweenthemcharacterizetheprivatehealthcaresector.Thefirstistheprincipal-agentproblemassociatedwithamedicalcareprovider'sknowledge.Thesecondisthegeneralabsenceofinsurancemarkets,dueprimarilytoadverseselectionandmoralhazard.Thispartoftheprojectattemptstodeveloptoolsformodelingmarketswiththesecharacteristics,measuringthewelfarelossfromthelackofinsuranceandassessingtheeffectofdifferentpaymentsystems(feeforservice,capitation,salariedpositions)onhealthcare.Theworkhasbeentheoretical,butempiricalapplicationsforCostaRicaandanEasternEuropeancountryareplanned.
Implementability.Partlyasaresultoftheefficiencyproblems,thepublicsectorhasalwaysbeenamajorproviderofmedicalservices.Forstandardpubliceconomicsreasonstheinherentmarketfailurespublicinterventioniswarranted.Butthequalityofpublicprovisionhasrangedfromgoodtohorrendous.Thispartoftheprojectwilllookatalternativeincentivearrangementsforthedeliveryofpublicservices,focusinginitiallyondecentralizationandcontractswithnongovernmentalorganizations.
Responsibility:DevelopmentResearchGroup,PublicEconomicsJeffreyS.Hammer([email protected] )andVarunGauri.WithPaoloBelli,UniversityofPavia,Italy;WilliamG.Jack,UniversityofMaryland;andMariaEugeniaBonilla-Chacin,JohnsHopkinsUniversity.
Completiondate:June2000.
Reports
Belli,Paolo.1999.TheEffectsofAdverseSelectionintheHealth
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InsuranceMarket.WorldBank,DevelopmentResearchGroup,Washington,DC.
Belli,Paolo,andJeffreyS.Hammer.1999.ReimbursementSystemsforMedicalCareProviders.WorldBank,DevelopmentResearchGroup,Washington,DC.
Hammer,JeffreyS.,andMariaEugeniaBonilla-Chacin.1999.LifeandDeathamongthePoorest.WorldBank,DevelopmentResearchGroup,Washington,DC.
WorldPovertyMonitorin
Ispovertyincreasinginthedevelopingworld?Thisquestionissurprisinglydifficulttoaddressconvincinglyusingexistingdatasourcesbecauselittleefforthasgoneintocompilingandanalyzingtheavailabledistributionaldataonareasonablycomparablebasis.Yetthereisaclearneedtodosotohelpmonitorprogressinreducingpovertyandasafirststeptowardunderstandingthecausesandeffectsofchangingdistribution.Thisprojectaimstomonitorprogressinreducingaggregatepovertyusingaconsistentcompilationofdistributionaldatafromhouseholdsurveys.
Estimatesofvariouspovertymeasuresareavailablefromnumerousstudiesofindividualcountries,buttheiruseformonitoringworldpovertyisquestionablebecauseofcomparabilityproblems.Pastworkatthecountrylevelhasusedpovertylinesappropriatetoeachcountry.Butthereisamarkedtendencyfortherealvalueoflocalpovertylinestoincreasewiththeaverageincomeofacountry.Thisfactcloudsattemptstocompareandaggregateacrosscountriesusingthepovertydataavailableinstandard(secondary)sources.Theuseofofficialexchangeratesalsobiasesinternationalpovertycomparisons.
Thisprojecthasthereforeturnedtotheprimarydatasourcesandreestimatedallpovertymeasuresonaconsistentbasis.Ithasconvertedlocalcurrenciestoconstantpurchasingpowerparity.The
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projecthasalsotestedtherobustnessofcomparisonsacrossregionsandovertimetomeasurementassumptions.Thedatasetithasconstructedcovers80countries,withdataattwoormorepointsintimeovertheperiod1981-97for50ofthem.
Theestimatesindicatethataround1993,1.3billionpeopleroughlyoneinthreewerelivingonlessthanadollaradayat1985prices.Theincidenceofabsolutepovertyinthedevelopingworldasawholefellslightlyover1987-93.Thenumberofpoorbyanyconsumptionstandardfordefiningpoorhasbeengrowingataboutthesamerateasthepopulationofthedevelopingworld,about2percentayear.Butthereismarkedvariationamongregionsandcountries,withgenerallyrisingpovertyincidenceinAfrica,EuropeandCentralAsia,andLatinAmericaandtheCaribbeanandgenerallyfalling
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incidenceinAsia.Amajorupdateisbeingpreparedthatwillprovidenewestimatesfor1996and1998.
ResultsofthisresearchwereusedintheWorldBank'sPovertyReductionandtheWorldBank:ProgressandChallengesinthe1990s(Washington,DC,1996).ResultshavealsobeenusedinrecentWorldDevelopmentReportsandintheforthcomingWorldDevelopmentReport2000/01,onpoverty.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesMartinRavallion([email protected] ),ShaohuaChen,andJulieWilliams.
Completiondate:June2000.
Reports
Anand,S.,andMartinRavallion.1993.HumanDevelopmentinPoorCountries:OntheRoleofPrivateIncomesversusPublicServices.JournalofEconomicPerspectives(winter).
Bidant,Benu,andMartinRavallion.1994.DecomposingSocialIndicatorsUsingDistributionalData.PolicyResearchWorkingPaper1487.WorldBank,PolicyResearchDepartment,Washington,DC.
Ravallion,Martin.1994.MeasuringSocialWelfarewithandwithoutPovertyLines.AmericanEconomicReview(May).
.1997.CanHigh-InequalityDevelopingCountriesEscapeAbsolutePoverty?PolicyResearchWorkingPaper1775.WorldBank,PolicyResearchDepartment,Washington,DC.
Ravallion,Martin,andShaohuaChen.1996.WhatCanNewSurveyDataTellUsaboutRecentChangesinLivingStandardsinDevelopingandTransitionalEconomies?BackgroundpapertoWorldBank,PovertyReductionandtheWorldBank:Progressand
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Challengesinthe1990s(Washington,DC,1996).WorldBank,PolicyResearchDepartment,Washington,DC.
.1997.WhatCanNewSurveyDataTellUsaboutRecentChangesinPovertyandDistribution?WorldBankEconomicReview11(2):357-82.Ravallion,Martin,GauravDatt,andDominiquevandeWalle.1991.QuantifyingAbsolutePovertyintheDevelopingWorld.ReviewofIncomeandWealth40(December):359-76.
AfricaNutritionDatabaseInitiative
Lackofaccesstogood-qualitynutritioninformationforAfricahasconstrainedtheformulationofeffectivenutritionpoliciesandstrategiesandimpededproperplanning,monitoring,andevaluationofnutritionprograms.Toaddressthisproblem,theAfricaNutritionDatabaseInitiative(ANDI)waslaunchedinFebruary1997.Thisinitiativehascreatedauser-friendlydatabaseontheWeb(www.africanutrition.net)coveringanthropometricmeasures,micronutrientdeficiencies,foodsecurity,demography,andpoverty.TheWebsiteallowsuserstocompareAfricancountriesonseveralindicatorsandtoaccesssubnational-levelinformation.BecausetheANDIusesdatathatarealreadyavailableandcontinuouslyupdatedbytheparticipatingagencies,themaintenancecostsareexpectedtobenegligible.
TheWorldBankhasservedasacatalystfortheinitiative,proposingtheeffortandfundingworkonthetechnicalaspectsofdevelopingtheinteragencydatabase.TheUnitedNationsAdministrativeCommitteeonCoordination,SubcommitteeonNutritioniscoordinatingtheparticipatingUNagencies.AmemorandumofunderstandingfordatabasesharinghasbeensignedbytheFoodandAgricultureOrganization,UNICEF,andtheWorldBank,withUNESCOandtheWorldHealthOrganizationascooperatingpartners.
TheANDIhasdevelopedanovelapproachtodatabasesthatshould
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yieldsavingsinbothcostandtimeinobtaininggood-qualityinformation.Thedatabasefunctionsthroughanupdateengineandaqueryengine,witheachparticipatingagencyresponsibleformaintainingandupdatingasetofindicatorsandensuringquality.Atregularintervalstheupdateengineextractskeyindicatorsfromtheagencies'databasesandputstheminastandardelectronicformatinacommondatabase.Thecommondatabaseisthencopiedtothelocalareanetworkofeachagency.Thequeryengineplacedinthelocalareanetworkofeachagencythenaccessesthecommondatabasetoproducespecificoutputs(suchastables,graphs,andmaps).Thequeryengineisprogrammedtoensuredatacomparability.ThustheANDIallowsuserstogotoasinglesiteratherthantotheseparatesitesoftheparticipatingagencies.Anditprovidesaccesstomorereliable,better-qualitydatathatareautomaticallyupdated.
TheANDIhasprovidedagoodfoundationforpreliminaryworkonmodelsforin-countrynutritioninformationsystems(NIS)inthreepilotcountries:Eritrea,Mali,andZambia.TheNISisbeingoperationalizedin
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Mali,anddiscussionsareunderwayinEritreaandZambiatoidentifywaystooperarionalizeitinthosecountries.Theseeffortswillbuildlocalcapacitytousetheinformationforbetterresearchandmoreeffectiveplanning,monitoring,andevaluationofnutritionprograms.
Responsibility:AfricaRegionTechnicalFamilies,HumanDevelopment2RichardSeifman([email protected] ),andInstitutionalandSocialPolicyAntoineSimonpietri.TheItalianTrustFundiscontributingfundingfortheresearch.
Completiondate:June2001.
SocialExclusionandPoverty
Thisresearchprojectconsistsofthreestudies.Thefirst,onsocialexclusionandpoverty,focusesonhowprocessesofsocialandpoliticalexclusionaffectthedynamicsofpoverty.Inparticular,itaskswhatthechancesareofexperiencingtransient(asopposedtochronic)poverty,andwhatpoliciesareeffectiveinmitigatingthecumulativeburdenofexclusion.Theanalysisisbasedonareviewoftheoreticalandempiricalsocialscienceliterature.
Thesecondstudyexamineshealthinequalitiesandpoverty.Itfocusesonthepathwaysthroughwhichpoorhealthandlowsocioeconomicstatusaffecteachother,andthepoliciesneededtobreakthisviciouscycle.ThestudywillcontributetotheWorldBank'sWorldDevelopmentReport2000/01andaddressbroaderconcernsintheWorldBankandtheWorldHealthOrganizationwiththerelationshipsbetweenpoverty,healthpolicy,andhealthinequalities.Theanalysiswilldrawlargelyonqualitativeandquantitativematerialsinthefieldsofpublichealth,economics,andothersocialsciences.
Thethirdstudywilllookatlocalinstitutionalconstraintstoimplementingpoliciesaimedatalleviatingpoverty.
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Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesEmmanuelJimenez([email protected] ),MonicaDasGupta,andMichaelWoolcock.WithKameshwarPrasad,All-IndiaInstituteofMedicalSciences,NewDelhi;andPaoloBelli,UniversityofPavia,Italy.TheDutchTrustFundiscontributingfundingfortheresearch.
Completiondate:June2001.
CoreWelfareIndicatorsQuestionnaire
ThisprojectisdevelopingtheCoreWelfareIndicatorsQuestionnaire(CWIQ),amarketresearchtooldesignedtoenablecountriestogeneratekeyleadingindicatorsrapidlyandtohelpthemstrengthentheircapacitytousesuchindicatorsindesigningandmonitoringprogramsandprojects.TheCWIQleadingindicatorsnotonlyprovideasnapshotofcurrentlivingconditions.Moreimportant,theyalsoindicatewhichpopulationgroupsare,andwhicharenot,benefitingfromdevelopmentprogramsandactions.TheCWIQcanprovideinformationthatwillsimplifytheWorldBanksworkinpreparingandmonitoringcountryassistancestrategies.TheneedforsuchatoolhasbeendiscussedinsideandoutsidetheBank,anditsdevelopmenthasbenefitedgreatlyfrominputsfromUNICEF,theUnitedNationsDevelopmentProgramme,andtheInternationalLabourOrganisation.
TheCWIQsystemincorporatesanumberoftechnologicalandinnovativefeatures.Theseincludealargesampleofhouseholdsformoreeffectivetargeting,asimplequestionnairewithmultiplechoicequestionsforeasyandrapiddatacollection,astrongemphasisonhigh-qualityfieldwork,theuseofopticalscannerstospeeddataentry,preprogrammedvalidationprocedurestoensureahighqualityofdata,push-buttonstandardizedoutputs,andaCD-ROMwithsurveydocumentationandsurveydataavailableforfurtheranalysis.TheCWIQmanual,systemsspecifications,andprogramswillsoonbemadeavailableonCD-ROM.
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ThefirstnationalCWIQsurveywascarriedoutinGhanaonasampleofsome15,000householdsinlate1998,andthefirstresultsweremadeavailablewithinonemonthoftheendofthefieldwork.Asocialcapitalmodulewassuccessfullyadministeredtoasubsampleofsome2,000households.SincetheGhanasurveytherehavebeenseveralworkshopsandpresentationsinAfricaandinWashington,DC,andseveralmorecountriesLesotho,Mozambique,Nigeria,andRwandanowplantocarryoutCWIQsurveysin1999.
TheprojectisalsodevelopingacommunityCWIQasimple,community-levelinquiryforadministrationbylocalgovernmentauthorities.Thissurveyrecordsphysicalandsocialassetsofthecommunityaswell
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asthetraditionalCWIQindicatorsofaccessto,useof,andsatisfactionwithsocialandeconomicservices.ThefirstcommunityCWIQisexpectedtobepilotedinTanzaniainlate1999.
Responsibility:AfricaRegionTechnicalFamilies,KnowledgeandLearningTimothyMarchant([email protected] )andDianaMasone,andInstitutionalandSocialPolicyAntoineSimonpietri;andHumanDevelopmentNetwork,SocialProtectionTeamSudharshanCanagarajah.WithO.Dupriez;H.Fofack;JamesOtto;P.Romand-Heuyer;EmmanuelFiadzo;andKiaWeistein,DHS/MacroInternational.TheNorwegianandBelgianAfricaPovertyTrustFundsarecontributingfundingfortheresearch.
Completiondate:Ongoing.
TheLivingStandardsMeasurementStudy,Phase3
TheLivingStandardsMeasurementStudy(LSMS)wasestablishedbytheWorldBankin1980toexplorewaysofimprovingthetypeandqualityofhouseholddataindevelopingcountries.TheLSMShascontributedtoboththequantityandthequalityofresearchpossibleonpovertyandhumanresourceissues.Ithasgeneratedmethodsofdatacollectionandsurveydesignandprovidedsupportfornew,high-quality,multitopichouseholdsurveysaswellasfurtherresearchintoimprovingsurveydataandanalysis.LSMSsurveyshavebeenconductedinmorethan20countries,generatingmorethan30datasets.ThesedatasetshavebeenthekeyinputformuchoftheworkonpovertyintheWorldBankandhavesupportednearly400academicstudies.
ThepresentphaseoftheLSMSfocusesonsupportingthedecentralizationoftheLSMSprogramwhilemaintaininghigh-qualitydatacollectionandanalysis.DemandfornewsurveyscontinuestocomefromcountriesandBankoperationalunits,andtheLSMS
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providestools,expertise,andresearchthatrespondtotheneedsofsurveyplanners,policymakers,andanalysts.
InitspresentphasetheLSMScontinuestocreatepublicgoodsforresearch:
Toolsforsurveyplanners(manualsandtrainingcoursesonsurveysandanalysis).
Researchonsurveydesignmethods(questionnairedesign,measurementofconsumptionforwelfare,theeffectofsamplingerrorandvariousexperimentsinmeasurement).
Operationalsupportfornewsurveys(fromappraisaltosupervisiontoevaluation).
Adatabank(archivingtheLSMSsurveyswiththenecessarydocumentationanddisseminatingdatasets).
Publicationsanddissemination(theLSMSWorkingPaperSeries).
TheLSMSWebsite(www.worldbank.org/lsms/lsmshome.html),whichincorporatesinformationonalltheLSMSsurveys,datasets,andinformationonhowtoobtaindatasets.
Aspartofthedecentralizationandcapacity-buildingeffortsinphase3,theBankstaffandconsultantsinvolvedintheLSMSprogramworkcloselywithcounterpartsandclientsintheBankandexternally,includingstatisticalofficesindevelopingcountries,theInter-AmericanDevelopmentBank,theEconomicCommissionforLatinAmericaandtheCaribbean,theUnitedNationsDevelopmentProgramme,theU.S.BureauoftheCensus,andtheU.S.BureauofLaborStatistics.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesKinnonScott([email protected] ),PaulGlewwe,MarthaAinsworth,HaroldAlderman,MargaretGrosh,andDianeSteele.WithSalmanZaidiandTilahunTemesgen.
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Completiondate:Ongoing.
TheRuralNonfarmEconomy
Thisprojectisstudyingtheimpactofruralnonagriculturalactivitiesonruralpovertyindevelopingcountries.Thereisgrowingrecognitionthatthenonfarmsectorislargeandthatitplaysasignificantroleinshapingtheruraleconomy.Buthowitaffectsruralpovertyhasreceivedlittleempiricalattention.Thatistheissuethisprojectaddresses.
Theresearchposesaseriesofquestions:Whatshareofthepoor'sincomestemsfromnonfarmactivities?Doruralnonfarmactivitiespullpeopleoutofpoverty,orarethepoorpushedfurtherintolow-productivity,residualnonfarmactivitiesbecauseofstagnationordeclineinagriculture?Dothepoorfaceparticularimped-
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imentsorbarrierstoemploymentinwell-remuneratednonfarmoccupations?Doesanexpandingnonfarmsectorhaveanygeneralequilibriumeffectsthatbenefitthepoorthroughindirectchannels?Whatpolicyleversareavailabletopromotethenonfarmsectorandtoenhanceitspoverty-reducingeffect?
Theresearchdrawsonthewealthofhouseholdsurveydatafordevelopingcountriestoaddressthesequestions.Thegoalistogeneratebothbroad,generalizablestylizedfactsaboutthenonfarmsectorandruralpoverty,andspecificpolicyrecommendationsforthecountriesbeingstudied.
Thecurrentphaseoftheprojectfocusesonfourcountries:Brazil,India,Mexico,andTanzania.Asthesecountrystudiesarecompleted,newoneswillbestarted.ForBrazil,theanalysisdrawsonasurveyof5,000householdsconductedinthecoastalregionin1996andanationallyrepresentativehouseholdincomesurveyfromthesameyear.ForIndia,itreliesonanationallyrepresentativesurveycovering33,000households,carriedoutin1994bytheNationalCenterforAppliedEconomicResearch.DataforMexicocomefromatwo-periodpanelsurveybetween1994and1997thatcoveredabout1,300householdsintheejido(smallholder)sector.AnddataforTanzaniaarefromasurveyof600periurbanhouseholdsconductedbytheWorldBankin1998.
Theresearchhasproducedseveralbroadfindings:
Nonfarmactivitiestypicallyaccountforabout4050percentoftotalincomeinruralareasforthepooraswellasfortherich.
Thepoortendtobeinvolvedinnonagriculturalcasualwageemployment,whiletherichgenerallyoperatetheirownenterprisesorareemployedinlong-term,salariedpositions.
Educationisakeydeterminantofnonfarmincomes,andreturnsto
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educationareoftenhigherinthenonfarmsectorthaninagriculture.
Nonfarmactivitiesaregenerallymostcommonwhereinfrastructureisadequate.Butthatisnotnecessarilynearlargeconurbations.Ruralareassurroundingsmallandmedium-sizetownsoftenhavethegreatestactivity.
Thepooroftenfacebarrierstoentryinhighincomenonfarmoccupations.Controllingforeducationandotherhouseholdcharacteristics,forexample,thosewithmorewealth,withmoreextensivepersonalnetworks,andfromhigher-statusethnicandreligiousgroupsappeartohavebetterprospectsforemploymentinthesejobs.
Manynonfarmactivities(agroprocessingandsuchservicesastransportandcommerce)arelinkedtoagriculturalproductionandincomes.Butsubcontractingwithurban-basedmanufacturingfirmsisalsoanimportantsourceofincome.
Thegeneralequilibriumimpactofthenonfarmsectorsuchasonagriculturalwageratescanbeveryimportanttothepoor.
Animportantlessonisthatruraldevelopmentisaboutmuchmorethangrowthinagriculture.Thechallengeistodesignprojectsandinterventionsinsuchawaythatthefarmandnonfarmsectorscaninteractinamutuallybeneficialmanner.Itisimportanttothinkaboutsuchfactorsasruraleducation,ruralinfrastructure,ruralfinance,anddecentralizationnotonlyintermsofhowtheywillinfluenceagriculturalproduction,butalsointermsofwhetherandhowtheywillinfluencethenonfarmsector.Theroleofsmallandmedium-sizeruraltownsmaywarrantcloseexaminationurbaninterventions(housing,urbaninfrastructure)targetedatthesesettingsmightdomuchtopromoteruralnonfarmactivitiesandreduceruralpoverty.
AllfourcountriescoveredinthecurrentphaseofthestudywereselectedinresponsetorequestsfromBankoperationalstafffor
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contributionstoprogrammedsectorwork,andBanksectorwork,suchasruralpovertystudiesandruralsectorstrategyreports,isincorporatingtheoutputfromtheresearch.Inaddition,findingshavebeenpresentedataWorldBankworkshoponthenonfarmsectorinJune1999andataworkshopontheperiurbaneconomyinDaresSalaaminMay1999attendedbydonors,Bankstaff,andTanzaniancounterparts.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesPeterF.Lanjouw([email protected] ).WithAbusalehShariff,NationalCenterforAppliedEconomicResearch,India;andRobertSparrow,FreeUniversity,theNetherlands.
Completiondate:Ongoing.
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Reports
Lanjouw,PeterE1998.PovertyandtheNonfarmEconomyinMexico'sEjidos:199497.WorldBank,DevelopmentResearchGroup,Washington,DC.
.Forthcoming.RuralNonagriculuralEmploymentandPovertyinEcuador.EconomicDevelopmentandCulturalChange.
Lanjouw,PeterF.,andAbusalehShariff.1999.RuralPovertyandtheNonfarmSectorinIndia:EvidencefromHouseholdSurveyData.FreeUniversity,Amsterdam.
Lanjouw,PeterF.,andRobertSparrow.1999.NonagiculturalEarningsinPeriurbanAreasofTanzania:EvidencefromHouseholdSurveyData.FreeUniversity,Amsterdam.
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EducationandLaborMarkets
TheImpactofChildHealthandNutritiononEducationalOutcomesinCebu,Philippines
Episodesofmalnutritioninearlychildhoodareoftenthoughttohaveseriousimplicationsforachild'sschoolperformancelaterinlife.Butresearchonthisissuehasbeenambiguous,inpartbecauseofalackofhighqualitydatawithwhichtoaddresstheissue.ThisresearchprojectusednewdatacollectedinCebu,Philippines,toassesstheimpactofearlychildhoodnutritiononsubsequentschoolattendanceandperformance.Thedata,coveringabout3,000children,werefirstcollectedinthe1980s,duringthechildrensfirsttwoyearsoflife.Afollowupsurveywasdonein1991,whenthechildrenwereabouteightyearsold.In199495asecondfollowupsurveycollecteddataoncurrentschoolenrollmentandperformanceforthesechildren,almostallofwhomwereenrolledinprimaryschool.Theresearchexaminedseveralschoolingoutcomesageofenrollment,graderepetition,andperformanceontestsofcognitiveskills(mathematics,English,andCebuano)andinvestigatedtheimpactofearlychildhoodnutrition,asmeasuredbyheightforage,ontheseoutcomes.
Thefindingsindicatethatchildrenwhoaremalnourisheddoperformrelativelypoorlyinschool.Theyaremorelikelytoenrolllate,torepeatgrades,andtolearnlessperyearofschooling.Buttheeffectsarenotparticularlylarge,suggestingthathealthandnutritionprogramsaimedatveryyoungchildrenwillhaveatbestonlyamodestimpactonschoolingoutcomes.Sootherapproachesforimprovingschoolingoutcomes,suchasenhancingschoolquality,maybemoreefficient.
Theresearchalsoexaminedtheimpactofthetimingofmalnutrition
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duringearlychildhoodonsubsequentcognitivedevelopment.Itfoundnoevidencesupportingthehypothesisthatchildrenscognitivedevelopmentismostvulnerabletopoornutritionduringthefirstsixmonthsoflife.Goodnutritionduringthesecondyearoflifemaybeatleastasimportant,ifnotmoreso.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesPaulGlewwe([email protected] )andElizabethKing.WithHananJacoby,UniversityofRochesterandInternationalFoodPolicyResearchInstitute;LindaAdair,UniversityofNorthCarolinaatChapelHill;andAzotDerecho,OfficeofPopulationStudies,UniversityofSanCarlos,Cebu,Philippines.TheAsianDevelopmentBankcontributedfundingfortheresearch.
Completiondate:September1998.
Ref.no.:679-57C.
Reports
Glewwe,Paul,andElizabethKing.1999.TheImpactofEarlyChildhoodNutritionalStatusonCognitiveDevelopment:DoestheTimingofMalnutritionMatter?WorldBank,DevelopmentResearchGroup,Washington,DC.
Glewwe,Paul,HananJacoby,andElizabethKing.1999.EarlyChildhoodNutritionandAcademicAchievement:ALongitudinalAnalysis.WorldBank,DevelopmentResearchGroup,Washington,DC.
ImprovingPrimaryEducationinKenya:
ARandomizedEvaluationofDifferentPolicyOptions
Manyeconometricstudieshavetriedtoestimatetheeffectofeducationpoliciesonschoolperformanceinindustrialcountries.Buteventhemostsophisticatedeconometrictechniquesmayyieldbiased
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estimatesifschoolswithdifferentlevelsofinputsalsodiffersystematicallyinother,unobservedways.Randomizedexperimentsovercomemanyofthestatisticalproblemsinherentintheseeconometricstudies,buttheyarerarelydonebecauseoftheirhighcostsandbecauseofpublicofficialsreluctancetovarythelevelofinputsamongschools.ThisresearchtakesadvantageofanopportunityinKenyatoperformrandomizedevaluationsofseveraldifferenteducationpolicyoptionsincollaborationwithaninternationalnongovernmentalorganization.
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Thestudybeganwithasmallnumberofschoolsin1995.Of14schools,7wererandomlychosentoreceivethenongovernmentalorganizationsstandardpackageofassistance.Pretestswereadministeredatthebeginningof1995,andposttestsinthefallof1995.Preliminaryresultsshowalargeincreaseinstudentattendance,probablybecauseoftheprovisionoffreeschooluniforms,whicheffectivelyloweredthepriceofschooling.Buttestscoresshownoimprovement.
Theprojectexpandedin1996to100schools,ofwhich25wererandomlychosentoreceivealargenumberoftextbooks.Pretestswereadministeredinearly1996,andposttestsneartheendofthatyear.Thechildrenarebeingfollowedforatleasttwomoreyearstoassesswhethertheinitialeffectsendureforseveralyears.
Preliminaryresultssuggestthattheimpactoftextbooksisweakerthansomeearlierstudieshaveindicated.Ofparticularinterestisthefindingthatonlythetop20percentofstudents,asidentifiedbythescoresonthe1996pretests,benefitedfromtheprovisionoftextbooks.Theprovisionoftextbookshadlittleeffectondropoutratesorgraderepetition.
In1997another25ofthe100schoolswereselectedtoreceiveblockgrantsthatcouldbespentonseveraloptions,suchastextbooks,otherschoolsupplies,andconstructionofnewclassrooms.Thepurposeofthisinterventionistoseewhetherfundsareusedmoreeffectivelywhenschoolsaregivenachoiceonhowtospendthem.Preliminaryanalysisshowsasmallbutstatisticallysignificantimpactonoveralltestscoresafteroneyear.
FindingshavebeenpresentedatBrown,Cornell,Harvard,Michigan,Minnesota,Toronto,andYaleUniversities,attheMacArthurFoundation,andattheInternationalFoodPolicyResearchInstitute.
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Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesPaulGlewwe([email protected] ).WithMichaelKremer,MassachusettsInstituteofTechnology;DanLevy,NorthwesternUniversity;SylvieMoulin;andStacyNemeroff.FundingfortheresearchisbeingcontributedbytheInternationalChristianHumanitarianServices,theNetherlands;andtheNationalScienceFoundation,UnitedStates.
Completiondate:October1999.
Ref.no.:681-14.
Reports
Glewwe,Paul,MichaelKremer,andSylvieMoulin.TextbooksandTestScores:EvidencefromaProspectiveEvaluationinKenya.WorldBank,DevelopmentResearchGroup,Washington,DC.Draft.
Glewwe,Paul,MichaelKremer,SylvieMoulin,andEricZitzewitz.DoWallChartsImproveStudentPerformanceinPrimarySchools?EvidencefromaRandomizedEvaluationinKenya.WorldBank,DevelopmentResearchGroup,Washington,DC.Draft.
Kremer,Michael,SylvieMoulin,DavidMyatt,andRobertNamunyu.TheQuantity-QualityTradeoffinEducation:EvidencefromaProspectiveEvaluationinKenya.Draft.
EducationalEnrollmentandAttainment
Patternsofeducationalenrollmentandattainmentvarygreatlyacrosscountriesandacrosspopulationgroups(inparticular,wealthgroups)withincountries.Forsome,basiceducationispracticallyuniversal,whileforothersattainmentisdismal.Thisresearchaimedtodocumentthesedifferencesusingauniquecollectionofcomparablehouseholddatasets.Theresearchfirstaddressedamethodologicalissueestablishingthevalidityofrankinghouseholdsbytheirwealthstatusintheabsenceofdataonhouseholdconsumptionexpenditures.
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Cross-countrycomparisonsareoftenhinderedbylackofcomparabilityacrossdatasets.TherearedatasetscollectedusingalmostidenticalmethodstheDemographicandHealthSurveys(DHS)foralargenumberofdevelopingcountriesandtheNationalFamilyHealthSurvey(NFHS)forIndia.Butthedatasetsdonotcontaininformationonconsumptionexpenditures,whichareusuallyusedtorankhouseholdsbyeconomicstatus.Themethodologicalcontributionofthisresearchwastoestablishanddefendanalternativeapproachtorankinghouseholds.Asaproxyforlong-runhouseholdwealth,itconstructedalinearindexfromasetofassetindicators,usingprincipalcomponentsanalysistoderivetheweights.
UsingthedatafromIndia,thestudyfoundthatthisassetindexisrobust,producesinternallycoherentresults,andprovidesaclosecorrespondencewithdataonstatedomesticproductandpovertyrates.Thestudyfurther
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validatedtheassetindexusingdatafromIndonesia,Pakistan,andNepalthatincludebothconsumptionexpendituresandassetownership.Theassetindexhasreasonablecoherencewithcurrentconsumptionexpendituresand,mostimportant,worksaswellasorbetterthantraditionalexpenditure-basedmeasuresinpredictingenrollmentstatus.
ThestudyusedDHSdatafrom44surveys(in35countries)todocumentdifferencesintheenrollmentandattainmentpatternsofchildrenfromrichandpoorhouseholds,rankinghouseholdsbytheassetindex.Itfoundthattheenrollmentprofilesofthepoordifferacrosscountriesbutfallintodistinctiveregionalpatterns.Insomeregionsthepoorreachnearlyuniversalenrollmentinfirstgrade,butthendropoutindroves,leadingtolowattainment(typicalofLatinAmerica).Inotherregionsthepoorneverenrollinschool(typicalofSouthAsiaandWestAfrica).Thestudyalsofoundthatthereareenormousdifferencesacrosscountriesinthewealthgapthedifferencebetweenrichandpoorinenrollmentandeducationalattainment.Whileinsomecountriesthedifferenceinmedianyearsofschoolcompletedisonly1or2years,inothersitis9or10.Theattainmentprofilescanbeusedasdiagnostictoolstoexamineissuesintheeducationsystem,suchaspointsinthesystemwhereinterventionsshouldbefocusedortheextenttowhichlowenrollmentisduetophysicalunavailabilityofschools.
TheresearchuseddatafromtheNFHSinIndiatoestimatethedeterminantsofchildenrollment(forthoseaged6-14)andeducationalattainment(aged15-19)ofarecentcohort.Theanalysisidentifiedenormousgapsinenrollmentandattainmentbetweenchildrenfromrichandpoorhouseholds.While82percentofchildrenfromrichhouseholdscompletegrade8,only20percentofchildrenfrompoorhouseholdsdo.ThewealthgapsvarywidelyacrossstatesofIndia.Moreover,genderdifferencesexacerbatethegaps:while80
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percentofgirlsfromrichhouseholdscompletegrade8,only9.5percentofgirlsfrompoorhouseholdsdoso.Thephysicalpresenceorabsenceofschoolfacilitiesintheruralvillagesexplainsonlyasmallpartofenrollmentdifferences.Finally,therearehugegapsinenrollmentratesbetweenobservationallyequivalenthouseholdsacrossstates,especiallyamongthepoor.Forexample,enrollmentratesare44percentagepointshigherinKeralathanforobservationallyequivalentpoorhouseholdsinBihar.
TheprojectusedDHSdatatoinvestigatethewaysinwhichgenderandwealthinteractingeneratingwithincountryinequalitiesineducationalenrollmentandattainmentin40countries.Inaddition,itcarriedoutamultivariateanalysisforeachcountrytoassesstheindependenteffectsoftheeducationofadultsinthehouseholdandofthepresenceofschoolsinthecommunity,andhowtheseinteractwithgender.ThestudyfoundalargefemaledisadvantageineducationincountriesinSouthAsiaandWest,Central,andNorthAfrica.Butwhilegendergapsarelargeinasubsetofcountries,wealthgapsarelargeinalmostallthecountriesstudied.Theeducationofadultsinthehouseholdhasasignificantrelationshipwiththeenrollmentofchildreninallthecountriesstudied,andtherelationshipwithwomen'seducationislargerthanthatformen'sinsomebutnotallofthecountriesstudied.Thepresenceofaprimaryandasecondaryschoolinthecommunityhasasignificantrelationshipwithenrollmentonlyinsomecountries(notablyinWestandCentralAfrica),andtherelationshipdoesnotappeartodiffersystematicallybygenderofthechild.
Thestudy'sresultsareavailableonaWebsite(www.worldbank.org/research/projects/edattain/edpintro.htm,)whichpresentsprofilesofeducationaloutcomesfor40developingcountriesand25statesofIndia.Theseprofilescanbecomparedacrosspopulationsubgroups(wealthgroups,malesandfemales,ruralandurban)andacrosscountriesinthesameregion.
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TheresultsoftheresearchcontributedtoWorldBankreportsonstrengtheningsocialsectorsinIndiaandoneducationandpovertyinBrazil,theIndianstateofUttarPradesh,andthePhilippines.TheresultswillalsofeedintotheWorldBank'sforthcomingPolicyResearchReportongenderanddevelopmentanditsforthcomingWorldDevelopmentReport2000/01,onpoverty.Inaddition,themethodologyhasbeentakenupbyresearchersinsideandoutsidetheWorldBanktoinvestigateotheroutcomes,suchashealthstatusanduseoffamilyplanningservices.
ThemethodologyandresultshavebeenpresentedtoBankresearchersandoperationalstaffaswellatases-
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sionoftheannualmeetingsofthePopulationAssociationofAmerica.
Responsibility:EastAsiaandPacificRegion,IndonesiaResidentUnitLantPritchett([email protected] );HumanDevelopmentNetwork,EducationTeamJeePengTan;andDevelopmentResearchGroup,PovertyandHumanResourcesDeonFilmer.
Completiondate:June1999.
Ref.no.:682-11C.
Reports
Filmer,Deon.1999.TheStructureofSocialDisadvantageinEducation:GenderandWealth.GenderandDevelopmentWorkingPaper3.WorldBank,DevelopmentResearchGroup,Washington,DC.
Filmer,Deon,andLantPritchett.1998.TheEffectofHouseholdWealthonEducationalAttainmentaroundtheWorld:DemographicandHealthSurveyEvidence.PolicyResearchWorkingPaper1980.WorldBank,DevelopmentResearchGroup,Washington,DC.
.1998.EstimatingWealthEffectswithoutExpenditureDataorTears:AnApplicationtoEducationalEnrollmentsinStatesofIndia.PolicyResearchWorkingPaper1994.WorldBank,DevelopmentResearchGroup,Washington,DC.
.1999.TheEffectofHouseholdWealthonEducationalAttainment:Evidencefrom35Countries.PopulationandDevelopmentReview25(1).
.Forthcoming.EducationalEnrollmentandAttainmentinIndia:HouseholdWealth,Gender,Village,andStateEffects.JournalofEducationalPlanningandAdministration.
ImprovingtheQualityofPreschoolEducationinKenya
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TheMinistryofEducationinKenya,withthehelpofaWorldBankgrant,isincreasingitsfundingandsupporttoearlychildhooddevelopmentprogramsthroughoutthecountry.ButtodatetherehasbeennosystematicresearchontheeffectivenessofsuchprogramsinSub-SaharanAfrica.ThisstudyaimstomeasuretheimpactofearlychildhooddevelopmentprogramsastheyarebeingimplementedinKenya.
Analysisofpreschoolinterventionsishamperedbytheendogeneityofpreschoolcharacteristics.Preschoolsthatmakeimprovementsinobservablecharacteristicsarealsolikelytodifferfromotherpreschoolsinunobservablecharacteristics.Forexample,preschoolswithwelltrainedteachersmayalsohavehighlymotivateddirectors.Onewaytogetaroundthisproblemofendogenouspreschoolcharacteristicsistoconductrandomizedtrialsofeducationinterventions.
Thisprojectusesrandomizedassignmentoftreatmenttoassesstheeffectoftheearlychildhooddevelopmentintervention.Thestudyparticipantsareasetof100preschools,halfofwhichwererandomlyselectedtoreceiveatypicalpackageofearlychildhooddevelopmentinputs:teachertraining,instructionalmaterials,andincentivesforteacherattendance.Theinputsweregivenatthebeginningofthe1997schoolyearandagainatthebeginningof1998.
Theoutcomesmeasuredincludeteacherattendance,studentenrollment,studentattendance,dropoutrates,gradeprogression,classroomactivities(teachers'andstudents'behavior),andstudentachievement.Achievementwasmeasuredattheendofeachschoolyear,inOctober,throughatestbasedonthepreschoolcurriculum.Thetesthadanoralandawrittensectionandcoveredsuchitemsasshapes,colors,counting,knowledgeoftheenvironment,andletterandnumberrecognition.
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Preliminaryanalysisshowsthatthepackageofinputsimprovedteachers'knowledgeoftheearlychilddevelopmentcurriculum,butledtomanyteachersquittingtomovetobetter-payingneighborhoodschools.Teachers'behaviorintheclassroomwasmoreenthusiasticandmorecloselymatchedtherecommendedcurriculum.Studentprogressionintofirstgradeimproved.Butteacherandstudentabsenteeismremainedhigh,andstudentperformanceontheachievementtestswasthesameinthetreatmentasinthecomparisonschools.Furtheranalysisofthedataisbeingconducted.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesPaulGlewwe([email protected] )andSylvieMoulin.WithMichaelKremer,HarvardUniversity;andInternationaalChristelijkSteunfonds,Nairobi.TheNationalScienceFoundationcontributedfundingfortheresearch.
Completiondate:December1999.
Ref.no.:682-16.
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EvaluatingtheImpactofSupplementaryTeachersinNonformalEducationCenters
Studiesinindustrialcountriestendtofindlittleeffectonstudentperformancefromreducingpupil-teacherratios.Butthiseffectcouldbesignificantinaschoolinwhichasingleteachermustteachstudentsatalllevelsandthatoperatesonlywhenthesingleteacherispresent.Suchschoolsarecommonindevelopingcountries.
Usingrandomizedevaluation,thisresearchisassessingtheimpactonattendanceandachievementscoresofhiringasecondteacherin46randomlychosenruralnonformaleducationcentersinKherwaraBlock,UdaipurDistrict,intheIndianstateofRajaschan.TheresearchisbeingundertakenincollaborationwithSEVAMANDIR,anongovernmentalorganizationbasedinUdaipur.
Theprojectiscompilingadatabaseofattendancefiguresforallstudentsattendingallnonformaleducationcenters(treatmentandnontreatment)inKherwaraBlock,coveringnotonlytheperiodoftheinterventionbutalsothepreviousyear.Itisalsoconstructingadatabaseofthestudents'achievementscores.
Analysisofattendancedata(fromteachers'attendancerecords)hasindicatedthataddingasecondteachertoanonformaleducationcenterincreaseschildren'sattendanceby55daysayear(to344,comparedwith289incontrolschools,onaverage).Theeffectseemstodiminishovertime,however,withattendancereturningtopreinterventionlevelsroughlyayearafterthesecondteacherwasadded.Analysisofself-reporteddatasuggeststhatasaresultoftheintervention,schoolsoperateroughlyonedaymoreeachmonthandenrollmentshaverisenby25percent.
Analysisofmonitoringdata(collectedbyexternalmonitors)forthefirst26monthsoftheprogramindicatesthattheinterventionhas
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increaseddailyattendancebyalittlemorethantwochildren,andthatthisincreaseislargelyattributabletotheattendanceofgirls(changesforboysarenotsignificant).Theinterventionraisestheprobabilityofacenterremainingopenbyabout9percent.
Analysisoftestscoresindicatesnosignificantdifferenceintestperformancebetweentreatmentandcontrolstudents.Buttheinterventionhashadasignificantpositiveeffectontheperformanceofolderstudents(aged13and14).Theyscored0.44standarddeviationshigherthanthemeancomparisongroup.
Forpolicy,thesepreliminaryfindingssuggestthatwhiletheeffectoftheinterventionseemspositive,themereprovisionofsupplementaryteachersatnonformaleducationcentersmaybelessusefulthanfocusingonteachertrainingandteacherincentives.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesPeterLanjouw([email protected] ).WithAbhijitBanerjeeandMichaelKremer,MassachusettsInstituteofTechnology;andJennyLanjouw,YaleUniversity.
Completiondate:June2000.
Ref.no.:682-18.
EconomicAnalysisinEducationProjects
Projecteconomicanalysisismovingawayfromaconcernwithpreciserate-of-returncalculationstowardabroaderexaminationoftherationaleforpublicprovision.Ineducation,wherethebenefitsofinvestmentarehardtoquantify,ithasalwaysbeendifficulttoundertakeeconomicanalysis.Rate-of-returncalculationsforinvestmentsineducationhavetendedtoconcentrateonlabormarketoutcomes.Inothersectorsmoredirect,projectrelatedbenefitsareused.Thesectoralratesofreturnusuallycalculatedforeducationinvestmentsarenotalwaysausefulmeasureoftheprojectbenefits.
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Thisresearchprojectreviewedcurrentpracticeineconomicanalysisintheeducationsector,primarilyusingWorldBankprojectdocuments.Thestudylookedfordiscussionsofexternalitiesfromeducationinvestmentsandofthedemandforeducation.Itcomparedeconomicanalysisineducationwiththatinothersectors.ItreviewedBankguidelinesforeconomicanalysistoassesstheirappropriatenessforeducationprojects.Anditlookedatotherconsiderationscriticaltoproperprojectappraisal,suchasthecounterfactualprivatesectorsupplyresponseandthefiscalimpactoftheproject.
Tojudgetherelationshipbetweeneconomicanalysisandtheultimateobjectiveofprojects,theprojectundertookastatisticalanalysisofeducationprojectsandtheirperformanceratings.Thepreliminaryfinding:bettereconomicanalysisdoesleadtobetterprojects.
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Responsibility:HumanDevelopmentNetwork,EducationTeamHarryAnthonyPatrinos([email protected] )andAyeshaVawda;EastAsiaandPacificRegion,EducationSectorUnitPeterMoock;andAfricaRegion,HumanDevelopmentUnitIINicholasBurnett.WithPriceGittinger.
Completiondate:June1999.
Ref.no.:682-95C.
Report
Vawda,Ayesha,PriceGittinger,andPeterMoock.1999.AnAnalysisoftheRelationshipbetweentheQualityofEducationProjects:AnalysesandProjectOutcomes.WorldBank,HumanDevelopmentNetwork,Washington,DC.
AnAssessmentInstrumentforChildhoodCognitiveandSocio-EmotionalDevelopment
Whilemeasuringchildren'shealthandnutritionalstatusisfairlystraightforward,assessingtheircognitiveandsocio-emotionaldevelopmentisfarmorecomplicated.Existingassessmentinstrumentsusenormsthatareinappropriateindifferentcultures,failtoadequatelypredictlaterperformanceinschoolandinlife,andmaymeasureskillsthatdonotmatchthosebeingtargetedbychilddevelopmentprograms.Andevenwhenadapted,testshavenotbeentransferableacrosscultures.
Thisresearchprojectaimstocontributetothedesignofabatteryofassessmenttestsformonitoringthecognitiveandsocialdevelopmentofyoungchildren,withsomeelementsthatwouldbetransferableacrosscountriesandculturesandotherelementsthatwouldchangeindifferentculturalcontexts.Thisphaseoftheworkhascenteredonacomprehensivereviewofexistingassessmenttestsofthecognitive
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andsocio-emotionalfunctioningofpreschoolers(aged0-6).
Anextensiveliteraturesearchhasbeenconductedtoensurecomprehensivecoverageofassessmentinstruments.Thereviewofeachinstrumentincludesadescription,underlyingtheory,qualitativeandquantitativecharacteristics,purposeandreputationinthefield,strengthsandweaknesses,NorthAmericanculturalbiasesembeddedinthetest,andapplicationsindevelopingcountries.Theprojecthasreviewedassessmentinstrumentsinthefollowingcategories:cognitivefunctioninginpreschoolers,sensimotorandperceptualdevelopmentinpreschoolers,learningandschoolreadiness,neuropsychologicaldevelopment,socio-emotionalfunctioningandadaptivebehavior,andplay-basedassessment.
Ahandbooksummarizingtheinstrumentsreviewedisbeingprepared,andadatabankofitemsfortheproposedbatteryofassessmenttestswillbedevelopedasabasisforpilottestinginselecteddevelopingcountries.InitialfindingswillbereviewedinaworkshopinOctober1999.
Responsibility:HumanDevelopmentNetwork,EducationTeamMaryEmingYoung([email protected] ).WithRobertSternbergandElenaGrigorenko,YaleUniversity.
Completiondate:November1999.
Ref.no.:683-10.
TheGainsfromMatchedEmployer-EmployeeData:ACaseStudyofMorocco
Theeconomyconsistsofhouseholdsandfirmsinteractingtogether,butmostdatacollectionindevelopingcountriesissplitintotwoparts:industrialandhouseholdsurveysandindividualadministrativerecords.Thisprojectseekstodemonstratethefeasibilityoflinkingsurveydatawithadministrativerecordsindevelopingcountriesand,
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usingthelinkeddata,todescribeearningsandemploymentdynamicsinresponsetofirm-andindustry-levelchanges.EuropeanandCanadianstatisticalagencieshavebeensuccessfullylinkingsurveydatawithadministrativerecordsfor10-15years,greatlyincreasingthevalueofdatawithouthavingtoundertakecostlynewsurveys.
TheprojecthasexaminedthepossibilityofmergingthetwotypesofdataforacasestudyinMoroccotoprovideafullerpictureofhowjobreallocationworks.Theprojectwilldocumentthelevelanddistributionofjobflowsbyindustry,allowingacomparisonoftheextent,variation,andpersistenceofjobreallocationinMoroccowiththoseinothercountries.Thecomparisonwillprovideasenseofhowmuchthelabormarketadjusts.Thestudywillpayparticularattentiontotheworkforce
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compositionofexpandingindustries,suchastextilesandfoodproduction,andcontractingindustries,suchasbasemetalsandchemicals.Itwillalsolookathowchangesinexportlevelsaffectjobandworkerflows.Theanalysiswillshedlightonwhichgroupsofworkersbearthebruntofadjustment.Itwillalsodeterminewhetherworkersshedfromcontractingindustrieseventuallygetjobsintheformalsector,orwhethernewhiresinexpandingindustriesarenewentrantsintotheformallabormarket.
Morocco,likemostdevelopingcountries,conductsanannualsurveyofmanufacturersEnqueteannuellesurlesindustriesdestransformationacensusofallfirmswithmorethan10workers,andasampleofsmallerfirms.Inadditiontofirmname,identificationnumber,andaddress,thesurveyprovidesawealthoflongitudinaldataonexports,revenues,inputs,capitalexpenditures,totalpayroll,andemployment.
MoroccoalsohasawealthofadministrativerecordsaspartofitsCaissenationaledesecuritesociale(CNSS),orsocialinsurancefund.Formalsectorfirmsarerequiredtofileinformationeverymonthontheearningsofeachoftheirworkers,togetherwiththeiremployeridentificationnumberandtheworkers'identificationnumbers.Theinformationisuniversal(fortheformalsector)andlongitudinalandincludessomedemographiccharacteristicsontheworkers:theirdateofbirth,sex,andimmigrationstatus.
Datahavebeenacquiredfortwoyears1992and1994.ThefirmidentificationnumberintheCNSSdataturnedouttobedifferentfromthatintheEnquete,whichmakeslinkingthedatamuchmoredifficult.Butsincebothdatasetspreservethenameandaddressofeachfirm,itwaspossibletousestatisticalmatchingsoftwaretolinkthedata.Thisapproachhasbroaderapplicabilitymostcountriescanmatchonthebasisofthenameandaddressoffirms.
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Thestudyhasmatchedthedatafor1992and1994.Usingafairlyhighthresholdfordeterminingmatchrates,itachievedamatchrateof43percentforallfirmsinthesurveyin1994,48percentforthosewithmorethan10employees.Whatpotentialbiasdidthematchingprocedureintroduce?Thebiasappearsminimal:thefirmsinthematcheddatasetaregenerallyabitbigger,withslightlysmallerrevenues,butthewagebill,investment,andexportsdidnotdiffersignificantlybetweenthematchedandunmatcheddatasets.Allregressionswillberunwithbothmatchedandunmatcheddataforcomparison.
Thestudyhascalculatedmonthlyjobcreationanddestructionratesandworkerflowratesbyindustryfor1992,usingsimpleadministrativerecords.Theresultsshowenormousjobandworkerflowsinallsectors.Theanalysiswillbeexpandedtolookatworkerandjobflowsbyage,sex,andimmigrationstatus.Thestudywillalsocalculatethemovementofworkersacrossindustriesbetween1992and1994.Itwillthencharacterizetheeffectofinvestmentandexportchangesonemploymentflowsandearningsinequality.
Theresultswillhelpidentifythecharacteristicsofvulnerablegroupsinthefaceofjobreallocationsinducedbyinternationaltrade,changesininvestments,andexpandingandcontractingindustries.Thisinformationwillaidthedesignoflabormarketinterventionsaimedatmitigatingriskforworkers.Theprojectshouldalsohelpimprovetheproductionandqualityofnewdataandtheutilizationofexistingdata.
ThedatasetwillbemadeavailabletopolicymakersinMoroccoandtosupportoperationalworkattheWorldBank.FindingswillbepresentedataconferenceinMorocco.
Responsibility:MiddleEastandNorthAfricaRegion,HumanDevelopmentGroupGuillermoHakim([email protected] ).WithJuliaLane,AmericanUniversity;andJulesTheeuwes,UniversityofAmsterdam.
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Completiondate:December1999.
Ref.no.:683-23.
DoesMicrocreditEmpowerWomen?AStudyofGrameenBank,BRAC,andtheRD-12ProjectinBangladesh
Thisresearchisaimedatfindingoutwhethermicrocreditprogramsempowerwomen,themainparticipantsintheseprograms.Awomancouldbeconsideredempoweredinherhouseholdifshecontrolstheallocationothertimeandofotherhouseholdresources.Awomancouldalsobeconsideredempoweredifsheoperatesanincome-
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earningactivityindependentoftheinfluenceofotherfamilymembers,particularlymen.Ofcourse,empowermentisarelativetermandverycontext-specific,sothereareotherwaystodefinewomen'sempowerment.
TheresearchwillusebothquantitativeandqualitativemethodsbasedonhouseholdandcommunitysurveydatafromruralBangladesh.Thestudywillattempttodevelopindicatorsforthreeconceptsofwomen'sempowermenteconomic,social,andpoliticalthroughparticipatoryandfocusgroupresearchinvolvingwomen,men,villageandurbanelite,academics,programorganizers,andleadersofwomen'sgroups.Questionnairesbasedontheindicatorsofempowermentwillbeadministeredtowomeninbothprogramandnonprogramhouseholdsinprogramvillagesandintargetandnontargethouseholdsinnonprogramvillages.Theresearchwilluseaparticipatoryorotherqualitativeapproachtostudysimilarempowermentissuesinselectedhouseholdsinthesamestudyvillages.
Answerstothequestionnaireswillbeprocessedwithappropriateweightstodevelopindexesofsocial,economic,political,andoverallempowerment.Oncebothempowermentanditsquantitativedimensionsaredefined,theimpactofmicrocreditonwomen'sempowermentstatuswillbeestimated.Theanalysiswillcontrolfortheunobservedempowermentofwomenbeforeprogramparticipation;otherwise,itwouldbeunclearwhetherparticipatinginamicrocreditprogramempowerswomenoronlyempoweredwomenjointheprogram.
Responsibility:PovertyReductionandEconomicManagementNetwork,GenderDivision,andDevelopmentResearchGroup,PovertyandHumanResourcesShahidurR.Khandker([email protected] )andHussainSamad.WithMarkPitt,BrownUniversity;andRitaAfsar,BangladeshInstituteof
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DevelopmentStudies.
Completiondate:December1999.
Ref.no.:683-30.
Gender,Law,andDevelopment
Theoutcomesofdevelopmentpolicywithrespecttogenderaredeterminedinpartbytheinstitutionalenvironmentinacountry.Thisenvironmentreflectssocial
andculturalnormsthatshapetherolesofmenandwomen;thelegalandregulatoryframework,whichmayvalidategenderdifferenceswhetherornottheyimproveindividualwelfare;andtheeconomiccontext,whichincludestechnology,thestateofmarkets,andtheprevailinggenderdivisionoflabor.Theseinstitutionscreateincentivesandopportunitiesthatshapeindividualandgroupchoicesandbehaviors,includinghowmenandwomenareabletorespondtoincentivesfromdevelopmentpoliciesandprograms.
Thisresearchaimstoreviewthecross-countryevidenceonhowdifferentaspectsofthelawtreatmenandwomen.Itincludestwostudies:onethatfocusesonfamilylaw(suchaslawsrelatingtodivorce,childcustody,separationrights,andpunishmentfordomesticviolence),andonethatfocusesonlaborlaw(suchasprotectionlawsandminimumwagelaws).Thesestudieswillpresentevidenceonthelegalframeworkindifferentcountriesandonthemechanismsforenforcementoftheselaws,andreviewtheeffectthatthelawshavehadonthewelfareofmenandwomen.Whiletherearelessonstobelearnedfromindustrialcountries,thestudieswillfocusonexperienceindevelopingcountries.
Thefirststudywillexaminethemeaningofequalprotectionlawsasgivenindifferentinternationalconventionsandnationalconstitutions,reviewgenerallyhowlawscandiscriminateagainstwomenormen
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andprovideconcreteexamplesindifferentcountries,andrelatediscriminatorylawstointrahouseholdallocationofpowerandresources.Inparticular,itwillinvestigatewhetherornotlawsrelatingtoviolenceagainstwomenhavebeeneffectiveinprotectingwomen.Anditwillassesstheextenttowhichlawmatters(thatis,whetherlegalliteracyprograms,judicialtraining,testcasestrategies,andlegalreforminitiativeswork,andwhetherlawcreatessocialconsensusorfollowsit).
Thesecondstudywillundertakeacomprehensivesurveyoftheincidenceandtypesofgender-specific,gender-neutral,andgender-blindlabormarketlawsandpoliciesindevelopingcountries,focusingonthoseknowntohaveadifferentialimpactonmenandwomen.Suchpoliciesincludeminimumwagelaws,publicsectorretrenchment,andpensionsystemreform.Thestudywillestimateacompetitivelabormarketmodelthatpredicts
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theeffectthatcertainpoliciesineachcategoryhaveonwomen'semployment,wages,andworkinghours.ThestudywillgeneratenewempiricalevidenceonthelabormarketeffectsofsuchlegislativemeasuresastheGender-EqualEmploymentActintheRepublicofKorea,theLaborStandardsLawinTaiwan(China),andpublicretrenchmentduringVietnam'stransition.Itwillalsosummarizethefindingsofexistingempiricalstudiesinindustrialanddevelopingcountries.
TheresearchwillcontributetotheWorldBank'sPolicyResearchReportongenderanddevelopment.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesElizabethKing([email protected] );andPovertyReductionandEconomicManagementNetwork,GenderDivisionAndrewD.Mason.WithAnneTierneyGoldstein,InternationalWomenJudgesFoundationandGeorgeWashingtonUniversityLawCenter;andYanavanderMuelenRodgers,CollegeofWilliamandMary.
Completiondate:September2000.
Ref.no.:683-34.
NontraditionalAgriculturalExportsinEcuador:ImpactsonSmallholderAgricultureandHouseholdResourceAllocation
Thisstudyattemptstoevaluatemicro-levelwelfareeffectsoftradeandexchangerateliberalizationinEcuadorbylookingattheeffectsofruralemploymentforwomeninthecutflowersector.Cutflowerexportshaveboomedasaresultofeconomicreforms,andwomenhavebeenhiredinunprecedentednumbers.Thestudywilllookathowthenewemploymentopportunitieshaveaffectedgenderroles,howthisnewincomesourcehasaffectedfamilydecisionsrelatingto
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otheragriculturaloperations(investmentsorwithdrawals),andhowthechangeshaveaffectedinequalityandpoverty.
Thestudywilluseseveralmodelsoftimeuse,fertilitychoice,andexpendituredecisionmakingalongthelinessuggestedbytheintrahouseholdbargainingliteraturetotesthypothesesaboutgender.Itwillusemodelstoevaluatetheeffectofnonfarmactivitiesoninvestmentandotherdecisionsinagriculture,andstandardstatisticalmethodstoevaluatetheeffectsoninequalityandpoverty.
Thedatawillcomefromseveralsurveysdesignedandconductedforthisproject.One,anextensivequantitativesurvey,hasbothcontrolandtreatmentgroupstobettercapturetheeffectsoftheemployment.ThesurveyismodeledalongthelinesofaLivingStandardsMeasurementStudysurveyandcontainsextrapartsthatcapturegenderindicators.Thefieldworkforthesurveyhasbeencompleted,andthedatabaseisbeingfinalized.Adetailedqualitativestudyfocusingonthegenderimpactsincludes50open-endedinterviews,about10focusgroups,and5townhall-typeparticipatorymeetings.Athirdstudyiscollectingdataonthetremendousgrowthofthetownwheretheflowerindustryhasbeencentered,includingdataonmanyindicatorsofcommunityservicesandcharacteristics.
EmploymentgenerationisanimmediateconcernoftheEcuadorangovernmentasonewayofalleviatingthedamageoffinancialcrisis.AstheWorldBank'scountryteamproposesemergencyandlonger-termsolutionsoverthenextfewmonths,thisresearchcouldprovideimportantinputintounderstandingthesocialimpactsofgrowingagriculturalexportemployment.Thisisadoublyimportantcaseofemploymentgrowth,sinceitisinthepoorestruralareasofthecountry.
Moregenerally,theresultsofthestudywillcontributetothepolicydiscussionsoftheimpactofadjustment.Itisoneoffewstudiesfocusingonthemicro-leveleffectsofbroadreformsandcould
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provideanimportantcountertothestorythattheeffectshavebeenmoredamagingtovulnerablegroups.
ThestudywillincludecollaborationwithresearchersattheMinistryofAgricultureontheanalysisofthecutflowerindustry.DisseminationplansincludeajointpublicationwithConsejoNacionaldeMujeresandjointconferenceswithscholarsstudyingtheimpactoftheindustry.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesandRuralDevelopmentConstanceNewman([email protected] )andPeterLanjouw.WithJorgeEguiguren;PilarLarreamendyandAnaMariaMaldonado,ConsejoNacionaldeMujeres;NormaMena;andPatriciaZambrano.
Completiondate:September1999.
Ref.no.:683-50.
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TheImpactofLaborMarketPoliciesandInstitutionsonEconomicPerformance
Thiswasthesecondphaseofabroaderstudywhosemaingoalwastoassesstheeffectoflabormarketinterventionsonwages,employment,andeconomicgrowth.Arelatedobjectiveofthisresearchwastounderstandhowthereformofthoseinterventionsshouldbeapproached.Ratherthandiscussingtheconsequencesoflabormarketrigidityingeneral,thestudyfocusedonaseriesofwell-defineddeparturesfromtheundistorted,partialequilibriummodelofthelabormarket:minimumwages,mandatedbenefits(ornonwagecosts),payrolltaxation(includingsocialsecuritycontributions),publicsectoremployment,jobsecurity,andunionization.
Theresearchcombineddetailedcasestudiesusinghouseholdandplant-leveldata,crosscountryanalysis,andtheoreticalwork.Foreachlabormarketdistortionconsidered,acoupleofstudieswerecarriedout,focusingoncountrieswherethedistortionwasthoughttobeparticularlyacute.Thecrosscountryanalysiswasmadepossiblebytheconstructionofacrosscountry,timeseriesdatabaseoflaborindicators.Thedatawerecollectedfromexistingcrosscountrysourcesandavarietyofcountry-specificsources.Thedatabasewasusedtoextendthenowstandardgrowthregressionanalysissoastotakelabormarketpoliciesandinstitutionsintoaccount.Thetheoreticalworkdealtwiththepoliticaleconomyoflabormarketdistortionsanditsimplicationsforthedesignofeconomicreforms.
Duringfiscal1999apreliminaryversionofthecrosscountrydatabasewasusedtoperformaseriesofanalysesontheimpactoflabormarketpoliciesandinstitutionsonlong-rungrowth,onshort-termadjustment,andoninequality.Theanalysesinvolvedmatchingthedatabaseoflabormarketindicatorswithcrosscountrydatabasescontaininginformationonlong-rungrowthanditsdeterminants,on
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adjustmentprogramsimplementedwiththesupportoftheWorldBank,andonthedistributionofincomeorconsumptionacrossdifferentquintilesofthepopulation.Thethreecrosscountryanalyseswillbereplicatedandcompletedusingthefinalversionofthelabormarketdatabaseduringthefirsthalfof2000.
Effortsduringfiscal1999alsofocusedonthecrosscountrydatabaseoflabormarketindicators,whichisalmostcomplete.Thisdatabaseincludes44variablesrelatingtolaborforceparticipation,employmentandunemployment,wagesandproductivity,conditionsofworkandbenefits,tradeunionsandcollectivebargaining,publicsectoremployment,andlaborstandards.Thedatabasecovers125countriesand11five-yearperiods,startingimmediatelyafterWorldWarII.Nocomparablelabormarketdatabaseiscurrentlyavailabletoresearchersandpractitioners.Theconsistencyandcompletenessofthedataarebeingcheckedcountrybycountry,andtheaccompanyingdocumentationisbeingorganized.Thedatabasewillbepubliclyreleasedattheendof1999andwillbemadeavailableatitsmarginalcosttointerestedresearchers.
Findingshavebeendisseminatedthroughworkshops,training,andseminarsforresearchers,governmentofficials,andtradeunionleaders.Inaddition,apolicyorientedvolumeisplannedtodisseminatethefindingsofthisresearchprojecttopractitioners.Thevolumewouldalsodrawlessonsfromotherresearchonlabormarketpoliciesandinstitutionsindevelopingcountries.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesMartinRama([email protected] )andRaquelArtecona.WithJean-PaulAzam,Universited'Auvergne;AnnBartelandAnnHarrison,ColumbiaUniversity;KristinButcher,BostonCollege;AlexCukierman,TelAvivUniversity;FrancescoDaveri,UniversitadiBrescia;IyabodeFahm;AlvaroForteza,UniversidaddelaRepublica,Montevideo,Uruguay;AnnaFrutteroandGuido
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Tabellini,BocconiUniversity;DonnaMacsaac,Inter-AmericanDevelopmentBank;DaniRodrik,HarvardUniversity;CeciliaRouse,PrincetonUniversity;andManishaSingh,UniversityofMaryland.
Completiondate:June2000.
Reports
Azam,Jean-Paul.1998.RentSharingandWagesintheManufacturingSectorofCôted'lvoire.UniversitedesSciencesSociales,Toulouse.
Bartel,Ann,andAnnHarrison.1999.OwnershipversusEnvironment:WhyArePublicSectorFirmsInefficient?NBER
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WorkingPaper7043.NationalBureauofEconomicResearch,Cambridge,Mass.
Bell,Linda.1995.TheImpactofMinimumWagesinMexicoandColombia.PolicyResearchWorkingPaper1514.WorldBank,PolicyResearchDepartment,Washington,DC.(AlsopublishedinJournalofLaborEconomics15(3):S102-35,1997.)
Butcher,Kristin,andCeciliaRouse.CentralizedBargaininginSouthAfrica:AStudyofUnionsandIndustrialCouncils.
.TheUnionWageGapinSouthAfrica.PrincetonUniversity,Princeton,N.J.
Currie,Janet,andAnnHarrison.1997.SharingtheCosts:TheImpactofTradeReformonCapitalandLaborinMorocco.JournalofLaborEconomics15(3):S44-71.
Daveri,Francesco,andGuidoTabellini.1997.Unemployment,Growth,andTaxationinIndustrialCountries.InnocenzoGaspariniInstituteforEconomicResearch(IGIER),Milan.
Forteza,Alvaro.1999.AdjustmentEffectiveness:TheRoleoftheLaborMarket.UniversidaddelaRepublica,Montevideo.
Freeman,Richard.1994.AGlobalLaborMarket?DifferencesinWagesamongCountriesinthe1980s.WorldBank,PolicyResearchDepartment,Washington,DC.
Gruber,Jonathan.1997.TheIncidenceofPayrollTaxation:EvidencefromChile.JournalofLaborEconomics15(3):S72-101.
Maclsaac,Donna,andMartinRama.1997.DeterminantsofHourlyEarningsinEcuador:TheRoleofLaborMarketRegulations.JournalofLaborEconomics15(3):S136-65.
.1997.DoLaborMarketRegulationsAffectLaborEarningsin
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Ecuador?PolicyResearchWorkingPaper1717.WorldBank,PolicyResearchDepartment,Washington,DC.
Rama,Martin.1994.FlexibilityinSriLanka'sLaborMarket.PolicyResearchWorkingPaper1262.WorldBank,PolicyResearchDepartment,Washington,DC.
.1995.Determinationdessalairesauparadis:UneanalysedumarchedutravailaI''IIeMaurice.Revued'EconomieduDeveloppement2:3-27.
.1995.DoLaborMarketPoliciesandInstitutionsMatter?TheAdjustmentExperienceinLatinAmericaandtheCaribbean.Labour,pp.S243-69.
.1995.UnionsandEmploymentGrowth:EvidencefromJamaica.WorldBank,PolicyResearchDepartment,Washington,DC.
.1996.TheConsequencesofDoublingtheMinimumWage:TheCaseofIndonesia.PolicyResearchWorkingPaper1643.WorldBank,PolicyResearchDepartment,Washington,DC.
.1997.Distortionsdesmarchesdesbiensetdutravail:Determinantsetconsequences.InJaimedeMeloandPatrickGuillaumont,eds.,CommerceNord-Sud,migrationetdelocalisation:ConsequencespourlessalairesetI'employ.Paris:Economica.
.1997.ImperfectRentDissipationwithUnionizedLabor.PublicChoice93:55-75.
.1997.LaborMarketInstitutionsandtheSecond-BestTariff.ScandinavianJournalofEconomics99(2):299-314.
.1997.OrganizedLaborandthePoliticalEconomyofProductMarketDistortions.WorldBankEconomicReview11(2):327-55.
.1997.TradeUnionsandEconomicPerformance:EastAsiaandLatinAmerica.InJamesMcGuire,ed.,RethinkingDevelopment:EastAsia
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andLatinAmerica.LosAngeles:PacificCouncilonInternationalPolicy.
.1998.HowBadIsTunisianUnemployment?AssessingLaborMarketEfficiencyinaDevelopingCountry.WorldBankResearchObserver13(1):59-78.
.1998.WageMisalignmentinCFACountries:AreLaborMarketPoliciestoBlame?PolicyResearchWorkingPaper1873.WorldBank,DevelopmentResearchGroup,Washington,DC.
.1999.TheSriLankanUnemploymentProblemRevisited.WorldBank,DevelopmentResearchGroup,Washington,DC.
Rama,Martin,andGuidoTabellini.1995.EndogenousDistortionsinProductandLaborMarkets.PolicyResearchWorkingPaper1413.WorldBank,PolicyResearchDepartment,Washington,DC.(AlsopublishedasCentreforEconomicPolicyResearchWorkingPaper1143,London,1995.)
.1998.LobbyingbyCapitalandLaboroverTradeandLaborMarketPolicies.EuropeanEconomicReview42(7):1295-1316.
Revenga,Ana.1997.EmploymentandWageEffectsofTradeLiberalization:TheCaseofMexicanManufacturing.JournalofLaborEconomics15(3):S20-43.
Rodrik,Dani.1997.WhatDrivesPublicSectorEmployment?HarvardUniversity,KennedySchoolofGovernment,Cambridge,Mass.
Weiss,Yoram.1994.GrowthandLaborMobility.WorkingPaper8/95.FoerderInstituteforEconomicResearch,TelAviv.(AlsopublishedinSolomonW.Polachek,ed.,ResearchinLaborEconomics,1996.)
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GenderPolicyResearchReport
Overthepastseveraldecadesgenderissueshavegainedgreaterprominenceinthedebateondevelopment.Internationalwomen'sconferencessuchasthoseinBeijing,MexicoCity,andNairobihavehelpedtobringcriticalissuesoffemaleempowermentandgenderequalitytothetable.Policyresearchersanddevelopmentpractitionershavebegunbuildingabodyofevidenceandexperiencethatlinksattentiontogenderinpolicyandprojectstoequitableandefficientoutcomesindevelopment.Despitethesedevelopments,theimportanceofbringingagenderperspectivetopolicyanalysisanddesignisstillnotwidelyunderstood,norhavethelessonsfordevelopmentbeenfullyintegratedbydonorsandnationalpolicymakers.
Thisresearchfocusesonhowunderstandingandaccountingforthelinksbetweengender,policy,anddevelopmentoutcomescanimprovepolicyformulationanddevelopmenteffectiveness.Itsobjectivesaretostrengthentheanalyticalandempiricalunderpinningsoftheselinksand,indoingso,toclarifythevalueaddedofbringingagenderperspectivetotheanalysisanddesignofdevelopmentpoliciesandprojects.TheresearchwillculminateinaPolicyResearchReportongenderanddevelopmentthatwillprovidepolicyguidancetotheWorldBank'slendingprogramandtoitsdialoguewithclientcountries.
Thestudyisdrawingonthemostup-to-dateanalyticalandempiricalworkongenderandonrecentpolicyandprogramexperience.Itisalsogeneratingabodyofnewempiricalevidenceandhascommissionedmorethan25backgroundpapersfromresearcherswithabroadrangeofdisciplinaryperspectives,includingeconomists,sociologists,anthropologists,historians,andlegalexperts.Thesepapers,intendedtofillgapsintheempiricalliterature,analyzesuch
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issuesasthelinksbetweengenderequality,growth,andeconomicdevelopment;thegenderdimensionsofpoverty;howintrahouseholdresourceallocationandsocialcapitalaffectgenderoutcomes;andhowlegalandregulatoryenvironmentspromoteorinhibitgenderequality(seeGender,Law,andDevelopment,ref.no.683-34).InJune1999anauthors'workshopwasheldinOslo,Norway,toreviewandrecommendrevisionsondraftsofthebackgroundpapers.
Amongthekeyfindingsfromthebackgroundresearchtodate:
Greatergenderequalityenhancesdevelopmentinanumberofdimensions.Atlowlevelsofincome,closinggendergapsineducationandstatushelpstoalleviatesomeoftheworstmanifestationsofpoverty,includinghighinfantmortalityandchildmalnutrition.Closinggendergapsineducationisalsogoodforeconomicgrowth.
Economicgrowthisgoodforgenderequalityinthelongrun.Developmentstrategiesthatpromotegrowtharethusgoodforthestatusofwomen.
Becausetheprocessbywhichgrowthanddevelopmentbringgenderequalitycanbeslowanduneven,thereisanimportantrolefordirectactionbygovernments,civilsociety,andinternationalorganizationsinremovingormitigatingdiscriminatoryelementsembodiedinlaws,institutions,marketstructures,andtechnology;inpromotingequitableaccesstoandappropriatedesignofbasicservicesthatsupporthouseholds'reproductiveactivitiesandenhancehumancapital(includingtargetedinterventions,asneeded);andinusingproactivepoliciestoredresspersistent(long-run)genderdisparitiesandtoprotectandinsureagainst(short-run)risksandshocks.
ThereportwillbedisseminatedontheWebaswellasinprint.Inaddition,abriefsummarydocumentwillbetheBank'scontributiontothepreparatorycommitteemeetingsfortheBeijingPlus-5meetingsattheUnitedNationsinJune2000.
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Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesElizabethKing([email protected] ),DeonFilmer,EstelleJames,andClaudioMontenegro,TradeRobertaGatti,andMacroeconomicsandGrowthDavidDollar;PovertyReductionandEconomicManagementNetwork,GenderDivisionAndrewD.MasonandKarenMason;LatinAmericaandtheCaribbeanRegion,PovertyReductionandEconomicManagementSectorUnitNadeemIlahi;SouthAsiaRegion,SocialDevelopmentSectorUnitKarinKapadia;EuropeandCentralAsiaRegion,PovertyReductionandEconomicManagementSectorUnitMarniaLazreg;andOfficeoftheSeniorVicePresident,DevelopmentEconomicsLynSquire.WithAnneTier-
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neyGoldstein,InternationalWomenJudgesFoundation;YanavanderMuelenRodgers,CollegeofWilliamandMary;JereR.Behrman,UniversityofPennsylvania;AlejandraCox-Edwards,CaliforniaStateUniversityatLongBeach;CristinaEstrada,MassachusettsInstituteofTechnology;MarioS.Floro,AmericanUniversity;BrankoJovanovic,TexasA&MUniversity;StephanKlasen,UniversityofMunich;JulianLampietti;LynellynLong,PopulationCouncil;RuvimboMabezaChimedza,UniversityofZimbabwe;JohnMaluccioandAgnesQuisumbing,InternationalFoodPolicyResearchInstitute;NilufarMatin,AinOSalishKendra;PratimaPaul-Mazumder,BangladeshInstituteofDevelopmentStudies;PatriciaRice,UniversityofSouthampton,UnitedKingdom;RocioRibero,UniversidaddelosAndes;SidneyRuthSchuler,JSIResearchandTrainingInstitute;SamitaSen,CalcuttaUniversity;LindaStalker,UniversityofNorthCarolina;TaiLuiTan;AysitTansel,MiddleEastTechnicalUniversity;VuManhLoi,InstituteofSociology,Vietnam;andAnanyaBasi.TheNetherlandsgovernmentandtheRoyalMinistryofForeignAffairs,Norway,arecontributingfundingfortheresearch.
Completiondate:September2000.
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EnvironmentallySustainableDevelopment
CostEffectivenessAnalysisofCoralReefManagementandProtection:ALeast-CostModelfortheDevelopingTropics
Thisprojectaddressedtwomainquestions:Whatisthemostcosteffectivemeansforachievingagivenlevelofcoralreefhealth?Andhowcanthelimitedecologicaldataavailableindevelopingcountriesbeusedmostefficientlyinidentifyingleast-costsolutions?
Therearemanypracticalissuesindevisingcosteffectivepolicyinterventionstomanageandprotectcoralreefs.Therehasalsobeenakeyconceptualbarrier:
alackofquantitativemodelsforcomprehensiveeconomicandecologicalanalysisoftheeffectsofeconomicactivityoncoralreefs.Thislackhasmadeitdifficulttorankpolicyandinvestmentinterventionsbycosteffectivenessandthustodevelopleast-costplanstomanageandprotectcoralreefs.
Theprojectdevelopedaprototypemodelcapableofmeasuringthecosteffectivenessofsinglepolicyinterventions.EstimatesofunitcostshavebeenpreparedforpolicyinterventionsusingdatalooselybasedonMontegoBay,Jamaica.OthercasestudiesincludethesoutherncoastofCuraçaoandtheMaldives.
Foreffectivemitigationofhumanimpactsonreefs,quantitativemodelsarerequiredthatfacilitateacomprehensiveanalysisoftheeffectsofhumanactivity.Fuzzylogicproceduresgenerateacomplexdose-responsesurfacethatmodelstherelationshipsamongcoralabundanceandvariousinputs(suchasphysicaldamage,sedimentation,andnutrientinflux)withintheabioticmarineenvironment.Thisislinkedtoanonlineareconomicstructure
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incorporatingtechnicalinterventions(pollutiontreatment)andpolicyinterventions(taxation)ineighteconomicsectors.Optimizationprovidesinsightsintothemostcosteffectivemeansforprotectingcoralreefsunderdifferentreefqualitytargets.
Theresearchdemonstratesthatitisfeasibletousefuzzylogictomodelcomplexinteractionsincoralreefecosystems,andthatconventionaleconomicproceduresformodelingcosteffectivenesscanresultinsuboptimalpolicychoiceswhenappliedtocomplexsystemssuchascoralreefs.InMontegoBay,Jamaica,uptoa20percentincreaseincoralabundancemaybeachievablethroughpolicymeasureswithapresentvaluecostof$153millionover25years.
Thedisseminationstrategyhasfocusedonincountryworkshopsandseminarsforusergroupsandstakeholders,governmentagencies,andprivateandnongovernmentalorganizationsinvolvedincoastalzonemanagement.Ithasalsoincludedactivitiestofostercooperationamongcountriesoncoordinatedenvironmentalpolicies,strategies,andactionplansinthecoastalzone,andtoprovideaconsultationmechanismforformulating,strengthening,harmonizing,andenforcingenvironmentallawsandregulations.FourworkshopswereheldinMontegoBay,Jamaica,themostrecentinMarch1999tomakepreliminaryresultsavailable.
InformationisavailableonseveralWebsites.ForageneralexplanationoftheMontegoBayCORALmodelseewww.resource.n//coral.htm.Foranonlinedemonstrationofanintegratedcoastalzonemanagement(ICZM)decisionsupportsystem(COSMO-BIO)seewww.minvenw.n//projects/netcoast/bioweb/index.htm.TofollowthedevelopmentoftheMontegoBayCORALmodelseewww.island.net/hjr/.
ThisstudywascomplementedbytheresearchprojectMarineSystemValuation:AnApplicationtoCoralReefsintheDevelopingTropics
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(ref.no.681-05),whichderivedimprovedestimatesofcoralreefbenefitstobeusedinconjunctionwiththecostfunction.
Responsibility:LatinAmericaandtheCaribbeanRegion,EnvironmentallyandSociallySustainableDevelopmentSectorUnitRichardM.Huber([email protected] ),MariaDonosoClark,andCarlLundin;andJamaicaResidentMissionSamWedderburn.WithH.JackRuitenbeek,H.J.RuitenbeekResourceConsultingLimited;
FrankRijsberman,RolfPM.Bak,J.PeterM.Kouwenhoven,SusieR.Westmacott,andDanielleHirsch,ResourceAnalysisConsulting;andSteveDollarand
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MarkRidgley,UniversityofHawaii.TheNetherlandsEnviron'mentConsultantTrustFund,theNorwayConsultantTrustFund,theSwedishConsultantTrustFund,andtheCanadianConsultantTrustFundcontributedfundingfortheresearch.StafftimewascontributedbytheNaturalResourceandConservationAuthority,MontegoBayMarineParkTrust,andGreaterMontegoBayRedevelopmentCorporationinJamaica.InCuraçaostafftimewascontributedbyalargenumberoforganizations,includingtheEnvironmentDepartmentoftheNetherlandsAntilles,CuracaoUnderwaterPark,CuracaoMarineBiologyInstitute,UniversityoftheNetherlandsAntilles,CentralBureauvoorJuridischeenAlgemeneZaken,CuracaoDivingOperatorsAssociation,CuracaoTourismDevelopmentBureau,ReefCare,CuracaoPortsAuthority,MinistryforPublicHealthandEnvironmentalHygiene,DepartmentofPublicWorks,DepartmentofSpatialPlanningandPublicHousing,andDepartmentofAgriculture,AnimalHusbandry,andFisheries.
Completiondate:June1999.
Ref.no.:680-08C.
Reports
Brown,B.,J.Bythell,S.Clark,A.Edwards,E.H.Meesters,andSusieR.Westmacott.1996.CostEffectivenessAnalysisofCoralReefManagementandProtection:ACaseStudyfortheMaldivesFormulationoftheEcologicalResponseModel.WorldBank,LatinAmericaandtheCaribbeanRegion,EnvironmentandUrbanDevelopmentDivision,Washington,DC.
Dollar,Steve,andMarkRidgley.1997.ALeastCostModelforCoralReefManagementandProtection,PhaseII:TheFuzzyEcologicalModel.WorldBank,LatinAmericaandtheCaribbeanRegion,CountryDepartmentIII,Washington,DC.
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Huber,RichardM.,andS.C.Jameson.1998.CORAL:ALeastCostManagementDecisionSupportModelforCoralReefEcosystems.IntercoastNetwork32(fall).
.1998.IntegratedCoastalZoneManagementDecisionSupportModelingforCoralReefEcosystems.InProceedingsoftheOceanCommunityConference1998.Baltimore.
.1998.MontegoBay,Jamaica:ACaseStudyinPublic-PrivatePartnershipsforPollutionPreventionandManagementofaValuableCoralReefEcosystem.TropicalCoasts(December).
Huber,Richard,JackRuitenbeek,SteveDollar,MarkRidgley,FrankRijsberman,andSubodhMathur.1996.ALeastCostModelforCoralReefManagementandProtection,PhaseI:APrototypeModel.WorldBank,LatinAmericaandtheCaribbeanRegion,CountryDepartmentIII,Washington,DC.
Jameson,S.C.,RichardM.Huber,andM.Miller.1999.RestorationofaValuableCoralReefEcosystem:ReefFix,MontegoBay,Jamaica.InProceedingsoftheNCRlConferenceonScientificAspectsofCoralReefAssessment,Monitoring,andRestoration.FortLauderdale.
Meesters,E.H.1995.CostEffectivenessAnalysisofCoralReefManagementandProtection:ACaseStudyofCuracao,PhaseI:CoralReefDataCollectionandAnalysis.WorldBank,LatinAmericaandtheCaribbeanRegion,EnvironmentandUrbanDevelopmentDivision,Washington,DC.
Meesters,E.H.,RolfP.M.Bak,andSusieR.Westmacott.1995.AFuzzyLogicModeltoPredictCoralReefDevelopmentunderNutrientandSedimentStress.WorldBank,LatinAmericaandtheCaribbeanRegion,EnvironmentandUrbanDevelopmentDivision,Washington,DC.Paperalsopresentedatthe8thInternationalCoralReefSymposium,1996,Panama.
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Meesters,E.H.,RolfP.M.Bak,SusieR.Westmacott,MarkRidgley,andSteveDollar.1998.AFuzzyLogicModeltoPredictCoralReefDevelopmentunderNutrientandSedimentStress.ConservationBiology12(5):957-65.
ResourceAnalysis.1995.CostsModelforWasteWaterTreatment,CORAL.WorldBank,LatinAmericaandtheCaribbeanRegion,CountryDepartmentIII,Washington,DC.
Ridgley,Mark,andSteveDollar.1996.ACoral-Reef-ImpactAssessmentModelUsingFuzzyRule-BasedLogic,PhaseIIInterimReport.WorldBank,LatinAmericaandtheCaribbeanRegion,EnvironmentandUrbanDevelopmentDivision,Washington,DC.
Ridgley,Mark,SteveDollar,andK.Bailey1995.OverviewoftheDevelopmentofaPrototypeModeltoEstimateFuturePollution-InducedCoralReefImpacts.WorldBank,LatinAmericaandtheCaribbeanRegion,EnvironmentandUrbanDevelopmentDivision,Washington,DC.
Rijsberman,Frank,andSusieR.Westmacott.1996.CostEffectivenessAnalysisofCoralReefManagementandProtection:ACaseStudyforCuraçao.WorldBank,LatinAmericaandtheCaribbeanRegion,EnvironmentandUrbanDevelopmentDivision,Washington,DC.
Rijsberman,Frank,RichardHuber,SusieR.Westmacott,andDanielleHirsch.1995.CostEffectivenessAnalysisofCoral
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ReefManagementandProtection:ACaseStudyofCuraçaoWorldBank,LatinAmericaandtheCaribbeanRegion,CountryDepartmentIII,Washington,DC.
Ruitenbeek,H.Jack,MarkRidgley,SteveDollar,andRichardM.Huber.1999.OptimizationofEconomicPoliciesandInvestmentProjectsUsingaFuzzyLogic-BasedCostEffectivenessModelofCoralReefQuality:EmpiricalResultsforMontegoBay,Jamaica.FinalreporttoWorldBankResearchCommittee.WorldBank,LatinAmericaandtheCaribbeanRegion,EnvironmentallyandSociallySustainableDevelopmentSectorUnit,Washington,DC.AlsoforthcominginCoralReefs.
Westmacott,SusieR.,andFrankRijsberman.1996.CostEffectivenessAnalysisofCoralReefManagementandProtection:CORALCoralReefManagementModelfortheRepublicoftheMaldives.ResourceAnalysis,Delft.
Westmacott,SusieR.,FrankRijsberman,andRichardM.Huber.1996.CostEffectivenessAnalysisofCoralReefManagementandProtection:ACaseStudyoftheMaldives.WorldBank,LatinAmericaandtheCaribbeanRegion,CountryDepartmentIII,Washington,DC.
MarineSystemValuation:AnApplicationtoCoralReefsintheDevelopingTropics
Thebroadobjectiveofthisresearchwastoassistpolicymakersinmanagingandprotectingcoralreefsbyderivingimprovedestimatesoftheeconomicbenefitsofreefs.Whileresearchonbiodiversityvaluationhasgrownsignificantlyoverthepastdecade,mosthasfocusedonterrestrialdiversity;nomethodicalinvestigationofmarinebiodiversityvaluationhadbeendone.
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Theresearchreviewedbiodiversityvaluationstudieswithaviewtoidentifyingappropriatemethodologicalframeworksformarinebiodiversityvaluation.Theworkgenerallyendorsesatotaleconomicvalueapproach,whichincludesdirectuse,indirectuse,andnonusevalues,butitunderlinestheneedtorecognizethatsuchvaluesareoftennonadditive.Inaddition,theclassificationframeworkdevelopedunderthisprojectrecognizesthreedifferentmethodologicalapproachestobiodiversityvaluation:production,utility,andrentvaluation.Eachofthesemethodsusesadifferentestimationapproach,generallyaddressesadifferenttypeofpolicyproblem,andgenerallyresultsinadifferentempiricalvaluation.Thisresearchfoundallthesemethodstobepotentiallyusefulandtechnicallyvalid.
Thestudyconcludedthateconomicvaluedependsonthedecisionmaking,institutional,orpolicycontext.Nosinglebiodiversityvaluecanbeattachedtoanyparticularreefarea.Biodiversityvaluationshouldthusberegardedprimarilyasaneducationaltooltoassistpolicymakers,andsecondarilyasaplanningtoolinformulatingpolicies.Althougheconomictheoryprovidesabasisforusingbenefitvaluationinanoptimizingframework(suchaschoosingoptimalconservationlevelsorqualitytargets),thisshouldbedoneonlywithextremecaution.Thestudy'sresultsindicatethatoptimalpolicychoicesareverysensitivetothevaluationmethodchosen.
TheresearchundertookempiricalworkinMontegoBay,Jamaica,beginningbyestimatingthenetpresentvalueofreadilyidentifiedlocalusesusingproductionvaluationapproaches.Theseprovideabenchmarkvalueforcomparativepurposes.Valuesestimatedincludedfisheries,coastalprotection,andtourismandrecreation.
Theprojectusedcontingentvaluationtoestimatetheconsumersurplus,orindividualutility,ofcoralreefimprovement.AsurveyinstrumentwasdesignedtocapturethenonusebenefitsofmarinebiodiversityatMontegoBayforlocalJamaicanresidentsandfor
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visitors.Theresults,forasampleof1,058respondents,showedthatexpectedwillingnesstopayforcoralreefimprovementwasheavilydependentonwhetherrespondentsbelievedthatmarinesystemspossessedinherentrightsorthathumanshadinherentdutiestoprotectmarinesystems.Suchpreferencesincreasedwillingnesstopaybyuptoafactorofthree.
Allthesevaluestogetherimplyanetpresentvalueofabout$400millionfortheMontegoBayreefs.Sincenoinstitutionalarrangementsexistforcapturingvaluesforbiologicalprospecting,thisvaluecanbetakenasalowerboundestimate.Whileitisdifficulttotranslatethevalueintoamarginalbenefitfunction,bestestimatesforcoralabundanceandavailablesubstratesuggestthatitisequivalenttoamarginalbenefitof$10millionforeachpercentagepointofimprovementincoralabundance.
TheresearchalsoestimatedthepharmaceuticalbioprospectingvaluesoftheMontegoBayreefs.Usingtyp-
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icalcostestimatesforJamaica,andtypicalhitratesandend-usevalues,itconductedscenarioanalysesusingaparametricmodel.Thesescenariosplacethemarinebioprospectingvaluesatabout$7,775perspecies,somewhathigherthantypicalestimatesforterrestrialspecies,primarilybecauseofsomewhathighersuccessrates.UsingbasecaseestimatesofecosystemyieldsfortheMontegoBayarea,coupledwithahypotheticalsamplingprogram,thestudyascribedabasecasevalueof$70milliontotheMontegoBayreefs.About$7millioncouldrealisticallybecapturedbyJamaicaundertypicalroyaltyregimesorsamplerentalarrangements.Noneofthisvalueiscapturedunderexistinginstitutionalarrangements.
Theresearchconcludedthatbiodiversityvaluationisbestimplementedwithinaspecificpolicycontext;thechoiceoftechniqueshouldbedrivenbypolicyquestionsoranalyticalissues.Mosttechniquesstillfailtocomeadequatelytogripswithsystemcomplexity.
Thedisseminarionstrategyhasfocusedonincountryworkshopsandseminarsforusergroupsandstakeholders,governmentagencies,andprivateandnongovernmentalorganizationsinvolvedincoastalzonemanagement.Ithasalsoincludedactivitiestofostercooperationamongcountriesoncoordinatedenvironmentalpolicies,strategies,andactionplansinthecoastalzone,andtoprovideaconsultationmechanismforformulating,strengthening,harmonizing,andenforcingenvironmentallawsandregulations.FourworkshopswereheldinMontegoBay,Jamaica,themostrecentinMarch1999tomakepreliminaryresultsavailable.
InformationisavailableonseveralWebsites.ForageneralexplanationoftheMontegoBayCORALmodelseewww.resource.nl/coral.htm.Foranonlinedemonstrationofanintegratedcoastalzonemanagement(ICZM)decisionsupportsystem
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(COSMO-BIO)seewww.minvenw.nl/projects/netcoast/bioweb/index.htm.TofollowthedevelopmentoftheMontegoBayCORALmodelseewww.island.net/~hjr/.
Responsibility:LatinAmericaandtheCaribbeanRegion,EnvironmentallyandSociallySustainableDevelopmentSectorUnitRichardM.Huber([email protected] ),TomWiens,MariaDonosoClark,JanPost,andCarlLundin;andEnvironmentDepartmentMareaHatziolosandAndyHooten.WithH.JackRuitenbeekandCindyCartier,H.J.RuitenbeekResourceConsultingLimited;FrankR.Rijsberman,PeterM.Kouwenhoven,SusieR.Westmacott,andDanielleHirsch,ResourceAnalysisConsulting;KentR.Gustavson;DanielM.Putterman,BiotechnologyTransferCenter;CliveL.Spash,CambridgeUniversity;LeahL.Bunce,NationalOceanicandAtmosphericAdministration,UnitedStates;andMaldenMillerandJillWilliams,MontegoBayMarineParkTrust.TheNetherlandsEnvironmentConsultantTrustFundcontributedfundingfortheresearch.StafftimewascontributedbytheNaturalResourceandConservationAuthority,MontegoBayMarineParkTrust,andGreaterMontegoBayRedevelopmentCorporationinJamaica.InCuraçaostafftimewascontributedbyalargenumberoforganizations,includingtheEnvironmentDepartmentoftheNetherlandsAntilles,CuraçaoUnderwaterPark,CuraçaoMarineBiologyInstitute,UniversityoftheNetherlandsAntilles,CentraalBureauvoorJuridischeenAlgemeneZaken,CuraçaoDivingOperatorsAssociation,CuraçaoTourismDevelopmentBureau,ReefCare,CuraçaoPortsAuthority,MinistryforPublicHealthandEnvironmentalHygiene,DepartmentofPublicWorks,DepartmentofSpatialPlanningandPublicHousing,andDepartmentofAgriculture,AnimalHusbandry,andFisheries.
Completiondate:June1999.
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Ref.no.:681-05C.
Reports
Bunce,LeahL.,andKentR.Gustavson.1998.CoralReefValuation:ARapidSocioeconomicAssessmentofFishing,Watersports,andHotelOperationsintheMontegoBayMarinePark,Jamaica,andanAnalysisofReefManagementImplications.WorldBank,LatinAmericaandtheCaribbeanRegion,EnvironmentallyandSociallySustainableDevelopmentSectorUnit,Washington,DC.
Cartier,CindyM.,andH.JackRuitenbeek.1998.PreliminaryReviewofStudiesandModelsforMarineBiodiversityValuation.WorldBank,LatinAmericaandtheCaribbeanRegion,EnvironmentallyandSociallySustainableDevelopmentSectorUnit,Washington,DC.
Gustavson,KentR.1998.ValuesAssociatedwiththeLocalUseoftheMontegoBayMarinePark.WorldBank,LatinAmer-
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icaandtheCaribbeanRegion,EnvironmentallyandSociallySustainableDevelopmentSectorUnit,Washington,DC.
Hanley,N.1996.ContingentValuationasaMeansofValuingtheConservationofCoralReefsinJamaica:AState-of-the-ArtAssessmentoftheMethod.WorldBank,LatinAmericaandtheCaribbeanRegion,EnvironmentallyandSociallySustainableDevelopmentSectorUnit,Washington,DC.
Huber,RichardM.,andH.JackRuitenbeek,eds.1997.MarineSystemValuation:AnApplicationtoCoralReefSystemsintheDevelopingTropics.InterimreporttoWorldBankResearchCommittee.WorldBank,LatinAmericaandtheCaribbeanRegion,EnvironmentallyandSociallySustainableDevelopmentSectorUnit,Washington,DC.
Putterman,DanielM.1998.AccesstoMarineGeneticResourcesinJamaica:IncorporatingGeneticResourcesUtilizationintoIntegratedCoastalZoneManagementAStudyofPoliciesandInstitutions.WorldBank,LatinAmericaandtheCaribbeanRegion,EnvironmentallyandSociallySustainableDevelopmentSectorUnit,Washington,DC.
Ruitenbeek,H.Jack,andCindyM.Carrier,withLeahL.Bunce,KentR.Gustavson,DanielM.Putterman,CliveL.Spash,J.D.vanderWerff,SusieR,Westmacott,andRichardM.Huber.1999.IssuesinAppliedCoralReefBiodiversityValuation:ResultsforMontegoBay,Jamaica.FinalreporttoWorldBankResearchCommittee.WorldBank,Washington,DC.
Spash,CliveL.1998.EnvironmentalValues,Attitudes,andEthics:NoncompensatoryChoicesinaDevelopingCountryContext.Paperpresentedatthe25thAnniversaryoftheDoctoralProgram,UniversityofWyoming,April17.
.1998.InformingandFormingPreferencesinContingentValuation:
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ACaseStudy.PaperpresentedattheWorldCongressofEnvironmentalandResourceEconomists,Venice,June2527.
Spash,CliveL.,J.D.vanderWerff,SusieR.Westmacott,andH.JackRuitenbeek.1998.LexicographicPreferencesandtheContingentValuationofCoralReefBiodiversityinCuraçaoandJamaica.WorldBank,LatinAmericaandtheCaribbeanRegion,EnvironmentallyandSociallySustainableDevelopmentSectorUnit,Washington,DC.
SpatialEnvironmentalProcesses
Forpolicypurposesitisimportanttopredict,andoftentoinfluence,thespatialpatternoftropicaldeforestation.ThisresearchpresentsamodelthatexplainsthespatialpatternofdeforestationinNorthThailand,anareathatbetween1973and1991lost32percentofitsforestcover.ThestudyusesthemodeltopredictwhichforestareasinNorthThailandareunderthegreatestthreatofcultivationandtoevaluatetheimpactofprotectedareasbothnationalparksandwildernessareasontheconversionofforeststoagriculture.
Thestudyaddressesthefollowingquestions:Whatistheprobabilitythatecologicallyfragileforestareas(suchaswatershedswithsteepslopes)willbecultivated?Aretheynaturallyprotectedfromdeforestationbytopographicalfactors,orcanroadbuildingandproximitytowaterovercomethenaturalprotectionthatslopeandelevationprovide?Howaretheanswerstothesequestionsinfluencedbypopulationpressures?Doesestablishingaparkorwildliferefugereducethechancesthataforestwillbecultivated,otherthingsequal?
Toanswerthesequestions,thestudycompiledageographicinformationsystems(GIS)databaseonlanduseinNorthThailandin198586thatincludesinformationonslope,elevation,population,soilquality,roads,rivers,marketlocations,andprotectedareaboundaries.Thestudyestimatesabivariateprobitmodeltoexplaintheprobabilitythataplotoflandiscultivated,ratherthanremainingunderforest
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cover,andthattheplotoflandliesinaprotectedarea.Theprobabilityofcultivationdependsontheslope,elevation,andaspectoftheplot,itssoilquality,andtheimpedance-weighteddistanceoftheplotfromthenearestmarket.Thestudyincludespopulationdensityinthedistrictinwhichtheplotislocatedasaproxyfortheagriculturalwage.Whethertheplotiscultivatedalsodependsonwhetheritliesinaprotectedareaandontheprovinceinwhichitislocated.Theprobabilityoftheplotlyinginaprotectedareadependsnotonlyonalloftheabovevariablesbutalsoonthedistanceoftheplotfromthenearestriver,aproxyfortheecologicalbenefitsofprotectingtheplot.
Thestudyfindsthattheprobabilityofcultivationisunaffectedbylocationwithinaprotectedareawhenprotectedareasaredefinedtoincludenationalparksandwildliferefuges;however,forestslyingwithinwildliferefugeshaveasignificantlylowerprobabilityofcultivationthansimilarlysituatedforeststhatarenotsopro-
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tected.Theseresultsarenotsurprising.NationalparksinThailandaredesignedwithoutformalbufferzonestoseparatetheparksfromadjacentlanduses.Parkboundariesoftenbecomedefactobufferzones,aresultsupportedbythestudy'sanalysis.Thestoryissomewhatdifferentforwildliferefuges.Anecdotalevidencesuggestsadeliberatepolicytopreventencroachmentintheseareas,whichisconsistentwiththestudy'sfindings.
Thestudyalsoprovidesinsightsintofactorsthataffectthesitingofprotectedareas.ItestimatesaunivariateprobitmodeltopredicttheprobabilitythataplotiscultivatedandthenappliesthismodeltothesamplepointsinNorthThailand.Theprobabilitythatarandomlychosenplotiscultivatedis0.42.Theprobabilitythataplotthatwasdeclaredaprotectedareaiscultivatedisonly0.12.Itthusappearsthatinsitingprotectedareas,theThaigovernmentchoseareaswhereconflictoverlandusewouldbelow.
Themodelalsoquantifiestheimpactofroadsontheprobabilityofdeforestation.ThiseffectisgreaterinthenineupperprovincesofNorthThailandthanintheeightlowerprovinces.Theupperprovincesaremoredenselyforested(73percentoflandunderforestcover)thanthelowerprovinces(37percent).Thestudyfindsthatinthenineupperprovinces,theelasticityofprobabilityofconversionwithrespecttomarketaccessistwiceaslargeasintheeightlowerprovinces.Ithasproducedmapsthatshowwhereimprovingmarketaccessthroughintensificationorextensificationoftheroadnetworkwouldhavethelargestimpactonconversionofforeststoagriculture.
Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentMaureenL.Cropper([email protected] )andJyotsnaPuri.WithCharlesW.Griffiths,U.S.EnvironmentalProtectionAgency.
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Completiondate:December1999.
Ref.no.:681-35.
PublicInvolvementinIndustrialPollutionControlinArgentinaandBrazil
Agrowingbodyofempiricalandhistoricalresearchhasshownthatconventionalcommand-and-controlandmarketinstrumentsareinsufficienttopreventandcontrolpollutioninrapidlyindustrializingcountries.Whenformalregulatorymechanismsareabsentorineffective,citizensandcommunitieswillseekothermeansoftranslatingtheirpreferencesintoreality.Informalregulation,throughwhichcitizensandcommunitiesnegotiatewithorinformallypressurepollutingplantstocleanup,hasbecomewidespread.
Thisresearch,conductedbyateamofsocialanthropologistsfromtheFederalUniversityofRiodeJaneiro,investigatedthenatureandefficacyofcitizenandcommunityeffortsinregulatingindustrialpollutioninArgentinaandBrazil.Thestudy'sanalyticalapproachdrewonseveralconceptsinthecontemporarysocialscienceliterature.Theseincludedtheideaofinformalregulation,thesocialandculturalconstructionofrisk,theroleofcivilsocietyandintermediaryorganizationsinsocialchange,andtheroleofpoliticalcultureinenvironmentalreform.Basedontheliterature,thestudydevelopedasetofsevenhypothesestoexplainthesocialcauses,dynamics,andconsequencesofcitizenandcommunityresponsetoindustrialpollutionissuesindifferentlocalandnationalcontexts.Thestudytestedthehypothesesusinganarrayofsociologicaltechniquescommunitycasestudiesusingparticipantobservationandinformalinterviewing,questionnairesurveysusingstandardsamplingproceduresandstatisticalanalysis,citizencomplaintanalysis,andcross-stateandcross-nationalcomparisons.
Amajorfindingofthestudyisthatthecorrelationbetweenproximity
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tothesourceofpollutionandapopulation'sawarenessandtendencytoreactisrelevantbutnotimmediate.Ideasofpollution,risk,andevenproximityaresociallyconstructed,anddirectphysicalexperienceofpollutionisnotsufficienttomobilizecommunities.Anenvironmentalorhealthproblemmustbecomeasocialissuetospurlocalcitizensandcommunitygroupsintoaction.
Communitiesthataresociallyandeconomicallydependentonasingle,largeindustrialfirmtendtobearthepollutionitemitsandassumetherisksitposes.Butdegreesofdependencyandtoleranceofpollutionvary,andcommunitiesrelationshipswithcompaniesmustbeseenasdynamic.
Thenotionsofenvironment,environmentalissue,pollution,andriskarealsorelativeandmaybeunderstooddif-
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ferentlybydifferentsocialgroups,suchasbusinessmen,farmers,fishermen,andindustrialworkers.Genderalsoplaysaroleinthesignificancegiventoenvironmentalissues.
Besidesperception,thenatureofcitizenandcommunityparticipationagainstpollutiondependsonthepoliticalcultureandonthedemocratizationattainedatdifferentlevelsofgovernment(township,state,federal).Socialactionagainstpollutionmaybecarriedonbyorganizationsaimedatgoalsotherthanenvironmentalones,suchasneighborhoodorganizations,laborunions,fishermen'sassociations,farmersgroups,andscientificandprofessionalassociations.Butanimportantinnovationforsocialaction,particularlyinBrazil,isthetownshipenvironmentalboard.
Recenttrendstowardglobalizationandprivatizationhaveaffectedcitizensviewsofenvironmentalissues.Thenotionofenvironmentalcompensation,forexample,hasemergedduringprivatization,especiallyinBrazil,includingtheideathatlocalcommunitiesortownshipsshouldreceivemonetarycompensationforpastenvironmentaldamage.Whileprivatizationandcompensationhaveincreasedcommunitiesawarenessoftheirenvironmentalrights,theyhavealsobroughttotheforenewwaysinwhichtheenvironmentcanbeusedforpoliticalpurposes,especiallyatthelocallevel,wherecompensationschemesoftenhavetheirmostsignificanteffects.
TheresultsofthestudyhavebeendisseminatedatseveralworkshopsinBrazilandattheWorldBankconferencePoverty,Environment,andGrowth-OrientedPoliciesinMarch1999.
Futureactivitieswillincludefurtherstatisticalanalysisofdatafromtheenvironmentalattitudessurvey,presentationsatBrazilianscientificassociationmeetings,collaborationswithEuropeansocialresearchersworkingonenvironmentalissues,andaformalpresentationofthefindingsoftheresearchtolocaltownshipofficials
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andenvironmentalboards.
Responsibility:SocialDevelopmentDepartmentSheltonH.Davis([email protected] );EnvironmentDepartmentDavidHanrahan;andWorldBankInstitute,EnvironmentandNaturalResourcesDivisionSergioMargulis.WithJoseSergioLeiteLopesandBeatrizM.AlasiadeHeredia,FederalUniversityofRiodeJaneiro;RosaneM.Prado,StateUniversityofRiodeJaneiro;GlauciaOliveiradaSilva,FederalUniversityofFluminense;MyriamMousinhoFurtadoGomez,DevelopmentBankofMinasGerais;andLeandroPiquetCarneiro,UniversityofSãoPaulo.TheFederalUniversityofRiodeJaneiro,FordFoundation,Brazil,andtheNorwegianTrustFundarecontributingfundingfortheresearch.
Completiondate:April2000.
Ref.no.:681-46.
Report
Lopes,JoseSergioLeite,ed.1999.ParticipaçãodapopulaçãonocontroledapoluiçãoindustrialnoBrasilenaArgentina.UniversidadeFederaldoRiodeJaneiro,MuseuNacional,DepartamentodaAntropologia,ProgramadeP6s-GraduaçãoemAntropologiaSocial.(ExecutivesummaryavailableinEnglish.)
Gender,PropertyRights,andResourceManagementinGhana
ThisresearchexaminedindividualpropertyrightsandindividualdecisionsonuseoflandresourcesinGhana.ThestudyfocusedonareasnearNsawam,intheeasternregionofGhana,wherefarminghasshiftedfromanestablishedsystemofcassavaandmaizeintercroppingtointensivevegetableproduction.Theprimarychallengeinthistransitionistofindtechniquesthatwillmaintainsoilfertilityunderthenewcroppingsystem.
Thestudyexaminedtheincentivesfarmersfaceastheymanagethe
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fertilityoftheirlandinaregioncharacterizedbyenvironmentalstressandrapidtechnologicalchangeinagriculture.Twocentraleconomicissuesariseinthiscontext.
First,thereisacloserelationshipbetweenpropertyrights(vested,critically,intheindividualsinthehousehold)andincentivestoapplytechniquestomaintainsoilfertility.Thestudyfoundthatonlyinrarecircumstancesinthestudyareaarerightsoveraplotoflandvestedinaconditionallydefinedhousehold.Moreover,decisionsontheapplicationoffertility-enhancingtechniquestoaplotaremadebytheindividualcultivatingthatplot.
Second,decisionmakingwithrespecttothemaintenanceofsoilfertilitydependscriticallyoncharacteristics
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ofthemarkets,particularlythecapitalmarkets,availabletofarmers.Suchdecisionsareaffectedbythecapitalmarketenvironmentbecauseoftheirintertemporaldimension.Avarietyofcapitalmarketsareavailabletocultivatorsinthestudyarea.Butwhilemanyofthepeopleinterviewedduringthepreliminaryfieldworkreportedborrowingorlendinginformally,mostmadenotransactionswithformalsectorfinancialinstitutions.Thereissomecontractfarminginpineapplecultivation(andrarerforwardsalesofonionsandtomatoes),whichmaycontainacreditcomponent.
Thestudywasbasedonasimultaneousandinteractiveprocessofdetailedobservation,theoryconstruction,andstatisticaltesting.Onthebasisofpreliminaryfieldwork,modelsweredevelopedonthetwocoreeconomicissues.Thegoalwastomodelindividualincentivesinthecontextofagivensetofinstitutionsratherthantomodeltheevolutionoftheinstitutions.DatawerecollectedthroughasurveyinfourvillageclustersnearNsawamcovering240randomlyselectedhouseholds.Thesurveycompleted10roundsofinterviewswitheachoftheadultrespondentsinthesehouseholds.Thestudyalsoincludedtworoundsofsoiltesting(soilorganiccarboncontentandpH)oneachoftheplotscultivatedorownedbytherespondents,andglobalpositioningsystem(GPS)mappingoftheseplots.
Thestudyusedthesurveydatatoverifytheimplicationsofasimplemodelofoptimalsoilfertilitymanagement.Ingeneral,resultsshowedthatsoilfertilityisadecliningfunctionoftheyearssincetheplotwasfallowed,andthatannualprofitsdeclineascultivationproceeds.Therearelargedifferencesbetweenmen'sandwomen'splotsinsoilfertility,andespeciallyinsoilfertilitydecline,evenformenandwomeninthesamehousehold.Women'splotshavealowerproportionofsoilorganicmatterthanmen's,andalowerrateofdeclineofsoilorganicmatter.
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Responsibility:PovertyReductionandEconomicManagementNetwork,GenderDivision,andDevelopmentResearchGroup,PovertyandHumanResourcesShahidurR.Khandker([email protected] ).WithChristopherUdry,NorthwesternUniversity.
Completiondate:June1999.
Ref.no.:681-47C.
Report
Udry,Christopher,andMarkusGoldstein.1999.GenderandLandResourceManagementinSouthernGhana.
LandTenure,LandMarkets,andLandProductivityinRuralChina
ThisstudyoflandtenurearrangementsinChinaaddressedthreesetsofquestionswithkeypolicyrelevanceforChinaandforotherdevelopingcountries.First,howlargeistheoutput-reducingeffectofadministrativerestrictionsonlandownershipandtransferability?Howmuchofthiseffectisduetodisincentivestoinvest,andhowmuchtoinefficientallocationoflabor?Byimplication,whatwouldbetheexpectedeffectofimprovedtransferabilityoflandrightswithintheexistingtenurearrangements(thatis,long-termleases)comparedwithmeasuresspecificallyaimedatincreasingtenuresecurity?
Second,towhatdegreecantheinformallandrentalarrangementsusedinthestudyvillagesbereliedontobringaboutefficiency-enhancingreallocationofland?Istheamountoflandrentalconstrainedbyrestrictionsonlandtransferabilitythatareinherentinthecurrenttenuresystemsorbyvillage-levelfactorsunrelatedtolandtenure,suchaslimitedoff-farmemploymentandfailurebylocalenterprisestosufficientlydifferentiatewagesbyskilllevel?
Third,whatisthescopeforoutsideinterventiontocontributeto(orprevent)asmoothevolutionoflandtenurearrangementstoward
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enhancedproductivity?Caninsightsonhowfastandhowefficientlylandtenurehasadjustedinthepasttochangingeconomicconditionsbeusedtodesignproductivity-enhancinginterventions?
Thestudywasbasedonanalysisofapaneldatasetcovering800householdsin80villages(fourprovinces)inChina.Resultsindicatethatrestrictionsontenuresecurityand,moreimportant,transferabilityoflandhaveasignificantandquantitativelylargeoutput-reducingeffect.Theresearchfoundthatlandtransfersthroughrentalmarketsduringtheperiodstudiedwereextremelylimitedandcouldbeexplainedonlyinsufficientlybyeconomicfactors.Whileadministrativereallocationoflandappearstobeabletosubstitutetosomedegreeforthe
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missinglandrentalmarkets,itdoessoimperfectlyandapparentlyathighcost.Thepotentialtradeoffbetweenequityandefficiency,andthefactorsthatallowtheemergenceoflocallandmarkets,needtobefurtherexplored.
ResultswerediscussedwithtopChineseandinternationalresearchersandpolicymakersduringaworkshopinChinacosponsoredbytheWorldBankandtheFordFoundation.
Responsibility:DevelopmentResearchGroup,RuralDevelopmentKlausDeininger([email protected] );RuralDevelopmentDepartmentShemMigot-Adholla;andEastAsiaandPacificRegion,BeijingResidentMissionUnitJuergenVoegele.WithMichaelCarter,UniversityofWisconsinatMadison;andYangYao,BeijingUniversity.
Completiondate:September1998.
Ref.no.:681-76C.
Reports
Carter,Michael,andYangYao.1999.PropertyRightsandAgriculturalProductivityinanIndustrializingEconomy:TheoryandEvidencefromChina.WorldBank,Washington,DC.
.1999.SpecializationwithoutRegret:AdministrativeversusMarketReallocarionofPropertyRightsinChina.WorldBank,Washington,DC.
RegulatoryCapacityacrossIndianStates:AnInstitutionalPerspectiveontheEffectivenessofStatePollutionControlBoards
Thereisalargebodyofliteratureonenvironmentaleconomicsthatrelatestomonitoringandenforcingpollutioncontrollaws.Butlittleworkhasbeendoneontheinstitutionaldimensionsofenvironmental
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regulation.Whilepolicymakersagreethatinstitutionalcapacityisvitalinawell-performingregulatorysystem,thisconsensusisbasedlargelyoncasestudiesandhasnotreliedoncoherentmeasuresofsuchcapacity.Thusthereappearstobeaneedforobjectivemeasuresofinstitutionalcapacityandforempiricalworkthatrigorouslylinksthesemeasurestowell-definedperformanceindicators.
ThisresearchfocusesondevelopingpreliminarymeasuresofinstitutionalcapacityforenvironmentalregulatoryagenciesinfiveIndianstates.Itwillassessthevalidityofthesemeasureslargelybytheirabilitytopredictanagency'seffectivenessasindicatedbythecomplianceratesofpollutingfacilitiesinitsjurisdictionoverafive-yearperiod.Theanalysisisbasedonplant-leveldatafromenvironmentalregulatoryagenciesandstatelevelpublisheddata.Thestudyusesstandarddiscretechoiceeconometrictechniquestoestimatetheeffectofregulatorycapacityoncomplianceratesinapanelofplants,controllingforplantcharacteristics.Thevariablesproxyingregulatorycapacityvarybystateaswellasovertime,andthestudyfocusesoncompliancewithwaterpollutionregulation.
Theresearchhasdirectpracticalrelevanceinidentifyingareaswhereinstitutionalstrengtheningeffortscouldmostusefullybefocused.Itwillalsoproduceasetofindicatorsofinstitutionalcapacitythatcouldbeusedtoassesstheeffectivenessofenvironmentalregulatoryagencies.
Responsibility:LatinAmericaandtheCaribbeanRegion,Finance,PrivateSector,andInfrastructureSectorUnitSheoliPargal([email protected] ).WithMainulHuq;NlanduMamingi;andthestatepollutioncontrolboardsofTamilNadu,AndhraPradesh,UttarPradesh,WestBengal,andKarnatakainIndia.
Completiondate:December1999.
Ref.no.:681-86.
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TheRoleofAgricultureinVenezuela'sEconomicRiseandDecline
Ingrowingeconomieslaborproductivityoftenincreasesmorerapidlyinagriculturethaninothersectors.Andthereisalong-standingviewthatrisinglaborproductivityinprimarilyagriculturaleconomiesandanout-migrationofagriculturallabortoothersectorshavebeenanessentialdynamicmechanismthatbringsequilibriumtodifferencesinaveragesectorincomes.
HistoricaldevelopmentsinVenezuelaofferanespeciallygoodopportunitytoexaminethedeterminantsoflargedifferencesinsectorproductivityandtheeffectsthatchangesinagriculturalproductivityhaveoneconomicgrowth.From1920to1958Venezuelawasthefastestgrowingeconomyintheworld.By1958ithadthesev-
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enthhighestaverageincomeintheworld,slightlygreaterthanthatintheUnitedKingdomandsignificantlyhigherthanincomesinFranceandGermany.Thenext38yearswerecharacterizedfirstbystagnationandthenbydecline,andVenezuelanowranks46thinpercapitaincome.
Thisstudyhypothesizesthatpoorruraldevelopmentstrategiescontributedsignificantlytothatspectaculardecline.Throughempiricalexplanationofthedecline,itisexpectedtoyieldimportantlessons.
TheproductivitydifferencesbetweenagricultureandtherestoftheVenezuelaneconomywereimmense.Inthe1960soutputperworkerinnonagriculturewasmorethanseventimesthatinagriculture.Suchlargedifferencesareunusual,especiallyforahigh-incomecountry,asVenezuelawasthenclassified.Sincethenproductivityhasgrownfasterinagriculturethaninothersectors,andinthe1990stheratioofnonagriculturaltoagriculturalproductivityhasbeenabout2.
ThestudymodelsagriculturalandnonagriculturalproductivityinVenezuelausinganapproachthatrecognizestheroleoftechnologyandpolicystatesintheunderlyingfactorchoiceandthusmakesitpossibletocapturetheeffectsofpolicyonproductivity.Thestudyalsomodelsintersectoralmigration.Thecombinedmodelswillprovideanempiricalmeasureofthedeterminantsofagriculturalandnonagriculturalproductivity,includingtheeffectsoftechnology,infrastructure,andhumancapitalonproductivityandout-migrationfromagriculture.
Earlyresultsshowthatwhilethefundamentalrelationshipsbetweenincentives,migration,andproductivitychangehold,theeconomywassubjecttoincreasingvolatilityfromthe1940sonward.Changingimmigrationpoliciesaffectedthecompositionofsectorallaborforces.Theimportanceoftheoilsectorhaslefttheeconomyvulnerabletooil
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priceshocks,withresultingfluctuationsinpublicrevenue.Ithasalsocreatedvolatilityinrelativeprices,interestrates,capitalflows,andexchangerates.Interventionistpolicieshavecontributedtolargedistortionsinrelativepricesandexchangerates.Throughanalysis,thestudyplanstoshowtheeffectsofsuchpoliciesonoverallandsectoralgrowth.
Responsibility:DevelopmentResearchGroup,RuralDevelopmentDonaldLarson([email protected] );andAfricaRegionTechnicalFamilies,RuralDevelopment1DavidNielson.WithYairMundlakandRitaButzer,UniversityofChicago;andJohnDevereaux,UniversityofMiami.TheIsraeliandIrishTrustFundsarecontributingfundingfortheresearch.
Completiondate:December1999.
Ref.no.:682-33.
EnvironmentalandEconomicAnalysisIncorporatingMacroeconomicIssues
Despitethegrowingconcernaboutenvironmentalissues,relativelyfewoftheWorldBank'scountryassistancestrategieshavelinkedenvironmentalandmacroeconomicanalysis.Themainreasonmaybethelackofappropriatetools.Althoughseveralanalyticalframeworkslinkingenvironmentalandmacroeconomicvariableshavebeendeveloped,therearefewwell-articulatedframeworksthatcouldbereadilyappliedinmostdevelopingcountriesbecauseofdataandresourceconstraints.
Thisprojectdevelopedadatabaseofhealthandmortalityindicators,pollutiondata,andmeasuresofeconomicdevelopmentforalargenumberofcountriesfor1983,1988,and1993.Inaddition,itanalyzedthehealthpollutionnexususingclassificationtreeanalysis.
TheworkisbeingcontinuedundertheprojectHealth,Environment,
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andtheEconomy(ref.no.683-73).
Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentF.DesmondMcCarthy([email protected] ).WithRoseMarieGarcia,WolfHolger,andYiWu.
Completiondate:December1998.
Ref.no.:682-38C.
PollutionControlinChina:TheRoleandImpactofInspectionsandComplaints
Governmentsofindustrialanddevelopingcountrieshaveenactedmanylawstoimprovethequalityoftheenvironment.Butwhilesignificantresourceshavegonetodesigningenvironmentalregulations,muchlesshasgonetomonitoringandenforcingcompliancewiththeseregulations.
Norhasmuchresearchbeendoneonissuesrelatingtomonitoringandenforcementofenvironmentalregu-
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lations.Thebulkoftheliteratureontheseissueshasbeentheoretical.AverysmallnumberofempiricalStudieshavelookedatmonitoringandenforcementissuesattheplantlevel,butonlyinindustrialcountries.
Thisstudyperformedaplant-levelempiricalanalysisoftheimpactanddeterminantsofthemonitoringandenforcementactivitiesofenvironmentalagenciesintwoChineseindustrialcities:TianjinandZhenjiang.Thestudyhadthreeobjectives:toprovideacomprehensiveunderstandingofthemonitoringandenforcementactivitiesoftheenvironmentalregulatorsofTianjinandZhenjiang,toanalyzetheimpactofcitizenscomplaintsonthebehavioroftheregulatorsandontheenvironmentalperformanceofplants,andtomeasuretheeffectivenessoftheregulatorsmonitoringandenforcementinshapingthebehaviorofindustrialpollutersacrosscities,districts,andindustrialsectors.
PreliminaryfindingsindicatethatenvironmentalinspectionsofplantsinChinaarestronglydeterminedbythefilingofcomplaintsbycitizensandthatinspectionshaveastatisticallysignificantimpactontheenvironmentalperformanceofindustrialpolluters.TheyalsosuggestthatthestrictnesswithwhichenvironmentalregulationsareenforcedvariesinChina,withlocalregulatorshavingconsiderablediscretion.
ThefindingsshouldbeusefulnotonlyforChinabutalsoforothercountriesinwhichtheresourcesdevotedtomonitoringareseverelylimited.
Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentSusmitaDasgupta([email protected] ),CraigMeisner,HuaWang,andBenoîtLaplante.WithGenfaLu,NanjingUniversity,China;Defu'Lu,TianjinEnvironmentalProtectionBureau,China;andNlanduMamingi,WestIndiesUniversity,Republicof
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Congo.
Completiondate:June1999.
Ref.no.:682-44C.
Reports
Dasgupta,Susmita,BenoctLaplante,andNlanduMamingi.1999.TheEnvironmentalPerformanceofFirmsinChina:TheRoleofInspections.PaperpresentedattheconferenceCreatingIncentivesforPollutionControlinChina,ProfessionalAssociationforChina'sEnvironmentandStateEnvironmentalProtectionAgencyofChina,Beijing,May.
.1999.TheImpactofInspectionsonCorporateEnvironmentalPerformance:EvidencefromChina.PaperpresentedattheDepartmentofEnvironmentalScienceandEngineering,NanjingUniversity,China,May.
Dasgupta,Susmita,BenoîtLaplante,NlanduMamingi,andHuaWang.1999.ImplementingEnvironmentalStandards:TheRegulatorsBehaviorinChina.WorldBank,DevelopmentResearchGroup,Washington,DC.
NatureTourism'sContributiontoEconomicDevelopmentandConservationFinance
Throughoveruseorinappropriateuse,naturetourismcanleadtodegradationordestructionoftheenvironmentalassetsonwhichitisbasedandtherebygothroughaboom-and-bustcycle.Butifmanagedwisely,itofferspotentiallyvaluableopportunitiesforgeneratingrevenuesnotonlyfordevelopmentbutalsoforconservation.
Thisstudywillinvestigatethecontributionthatnaturetourismcanmakebothtoconservationandtotheeconomy.Theresearchwillalsodelvemoredeeplyintothechoicesthatdeterminethesustainabilityof
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naturetourismassetsandtheprocessoftheirexploitationindevelopingcountries.Theresearchwillexplore,amongothers,thesequestions:
Isitbettertoraiseconservationfundsthroughchangesindestinationpricingorthroughtaxesonthetourismtrade?
Howshouldparkentrancefeesbestructured?Shoulddifferentialpricingbeused(forexample,forlocalandforeignvisitors)?
Atwhatlevelshouldentrancefeesbesetsoastomaximizetheeconomicreturnstoboththesiteandthetourismservicessector?
Atwhatlevelshouldentrancefeesatparticularsitesbesetinordertominimizeenvironmentaldegradationanditsassociatedcostsandtomaximizerevenues?
Whatarethemainmanagerialoptionsforimprovingtheresourcebaseorminimizingdegradation?
Whatarethenetlocaleconomicbenefitsfromnaturetourism?Thatis,whataretheleakagesandlocalmultipliersinvolved?Howmuchdothepoorinlocalcom-
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munitiesadjacenttoparksbenefit?Aretherewaystoincreasethosebenefits?
Thereisalackofappliedeconomicanalysisofthesupplyanddemandrelationshipsinthesenaturetourismmarkets,aswellasoftherelationshipsamongthemarkets.Sotheprojectfocusesonamultimarketmodelapproach.Theresearchwillattempttoincorporateenvironmentaldamagefunctionsintotheanalyticalframework,methodology,andcasestudieswherepossibleandappropriate.Theevaluationofthelinksbetweennaturetourismandtheenvironmentwillattempttohighlightpotentialthresholdeffectsandcriticalfeaturesoftherelationship.
Political,institutional,andmanagerialcontextsarefundamentaltothetradeoffsinnaturetourismandwilldeterminethechoiceofpolicyorcontrolvariablesthatmaybereasonablymanipulated.Theprojectwillthusseekcollaborationandcooperationwithstateagencies,theprivatesector,nongovernmentalorganizations,andcivilsocietysoasnottomisstatewhatmaybelocallimitationsontherealmofthepossible.Nonetheless,asaneffortinappliedeconomicresearch,theprojectwillquestiontheselimitations.
Theprojecthasdevelopedageneralsectoralmultimarketanalyticframeworkthatclarifiestheprincipaldirectandindirectlinksbetweentheeconomic,environmental,social,andpolicyvariablesinvolvedinnaturetourism.Themodelattemptstorespondtothreekeyissues:thesustainabilityofresourceuse,therelativebenefitsfromandinteractionsamongmultipleusers,andtherolesofthepublicandprivatesectorsinnaturetourismactivities.Thegoalistodevelopaframeworkthatwillallowpolicyanalyststoassesstheseissuesindifferentcircumstancesandregions.
TheframeworkwillbeappliedtothenorthernareaoftheKwaZuluNatalProvinceinSouthAfricainpartnershipwiththe
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KwaZuluNatalNatureConservationServiceandtheKwaZuluNatalTourismOrganization.Theintentistoillustratetheutilityofthemodel,particularlyinsheddinglightontherelativeimportanceofdifferentpolicyvariablesinaparticularecologicalandeconomiccontext.Itisexpectedtodemonstratehowparametersforthemodelrelationshipswillbeestimatedandwhatdatacanreliablybefoundforthispurpose.Plannedforthenexttwoyearsaredemandstudies(onsitesurvey,origin-countrysurvey,householdsurvey,huntersurvey,gamesalesstudy,andawrite-upofexperienceswithpriceincreasesanddifferentialpricinginAfrica),aproducersurvey(supplystudy),anecologicalstudy,asocialaccountingmatrix,andpolicyanalysis(localandinternational).
Responsibility:AfricaRegion,RuralDevelopmentandEnvironmentDepartmentErnstLutz([email protected] )andJohnDixon.WithBruceAylward,IwokramaInternationalCentreforRainForestConservationandDevelopment,Guyana;GeertCreemers,PeteGoodman,andStuartFerrer,KwaZuluNatalNatureConservationService;KregLindberg,EcotourismSociety;BarryJamesandDanielleJames,Brousse-James&Associates;DawieMullins,ConningarthConsultants;CarrolMoore,DecisionSurveyInternational;andJohnWagner,StateUniversityofNewYork.TheKwaZuluNatalConservationServicehasmadecontributionsinkind,theSouthAfricaTourismAuthorityiscofinancingthehouseholdsurvey,andtheBelgianTrustFundwillfundMr.Creemers'sworkinfiscal2000-01.
Completiondate:June2001.
Ref.no.:682-54.
MeasuringtheEfficiencyandProductivityofNationalAgriculturalResearchSystems:AQuantitativeApproach
Mostagriculturalresearchsystemshaveanongoingprocessof
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evaluationtoreviewresearchprograms,almostalwaysrelyingheavilyonqualitativeinformation.Whilesuchevaluationscanyieldusefulrecommendationsforimprovingefficiencyintheprogramsreviewed,theyarepoorlysuitedforcomparingtheperformanceofprogramsandforallocatingresources.Whatisneededaresystematicquantitativeindicatorsthatwouldprovidebenchmarksforcomparingtheefficiencyandeffectivenessofresearchprogramsacrossanorganization,amongorganizations,andevenamongcountries.
Thisneedhasbecomemorepressingasnewresearchissueshavecometothefore,newtypesofinstitutionshaveenteredthefield,andnewopportunitiesforinternationalcollaborationhaveemerged.Andresearchinsti-
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tutionseverywhere,facingincreasingbudgetaryandcompetitivepressuresandgrowingdemandforaccountabilityintheuseofresources,needamethodforallocatingresourcestoimproveefficiencyandimpact.
Brazil'snationalagriculturalresearchinstitution,EmpresaBrasileiradePesquisaAgropecuaria(EMBRAPA),hasdevelopedandtestedamethodforestimatingthetechnicalefficiencyofresearchorganizations,withquantitativemanagementindicatorsfordefiningandmonitoringresearchproductiongoals.EMBRAPAisusingthismethod,dataenvelopmentanalysis,toassesstheefficiencyofits37nationalagriculturalresearchcentersandtheirscientists.Itallocatesresearchfundstotheseinstitutionsbasedonsuchanevaluationannually.
Thisstudy,incollaborationwithexpertsfromEMBRAPAandotherorganizations,reviewedtheexperiencewiththedataenvelopeanalysismethod,assessedcompetingmethods,andexploredthepotentialforextendingthesetechniquesfromwithin-countryapplicationstocross-countrycomparisons.AworkshoponJune1516,1998,gatheredanalystsfromindustrialanddevelopingcountriestoevaluatethedataenvelopeanalysismethodandassessthepossibilitiesforreplicatingitinothernationalagriculturalresearchsystems.WorkshopparticipantsincludedanalystsfromU.S.universities,theConsultativeGrouponInternationalAgriculturalResearch(CGIAR)centers,theWorldBank,andtheInter-AmericanDevelopmentBankaswellasscientistsfromEMBRAPA.
Responsibility:EnvironmentallyandSociallySustainableDevelopmentVicePresidency,AgriculturalResearchandExtensionGroupUmaLele([email protected] )andDerekByerlee.WithRobertEmerson,UniversityofFlorida;GregTraxler,AuburnUniversity;WallaceHuffman,IowaStateUniversity;ScottRozelle,
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UniversityofCaliforniaatDavis;andGeraldodaSilvaeSouzaandAntonioFlavioDiasAvila,EMBRAPA.
Completiondate:June1999.
Ref.no.:682-60C.
SmallPlants,Pollution,andPoverty
Smallenterprisesarecontroversialintheliteratureonenvironmentanddevelopment.Someeconomistshavetoutedsmallplantsastheagentsofchoiceforsustainabledevelopment.Othershavearguedthattheyarepollution-intensive,costlytoregulate,and,intheaggregate,farmoreenvironmentallyharmfulthanlargeenterprises.Whilethesecondviewiswidelyshared,itisbasedalmostentirelyonanecdotalevidence.
Moreempiricalresearchisclearlyjustified,becausethesmallenterprisequestioniscriticalfordesigningandimplementingpollutioncontrolpoliciesindevelopingcountries.Ifsmallenterprisesaregenerallyclean,regulatorscanfocusonlarge,pollutingfacilities.Evenifsmallenterprisesarepollution-intensive,theymaybedominantonlyinpoorregionswheretotalindustrialproduction,emissions,andpollutiondamagearesmall.Inthiscaseliberalizationandrapidgrowthwillsolvemuchoftheproblem,andsocietycanavoidamajorcommitmenttoregulatingpollutionbysmallenterprises.Butifsmallenterprisesarehighlycompetitive,liberalizationmayresultinseriousenvironmentaldamagefromthesmallenterprisesector.Pollutionmanagementstrategieswillhavetofocusonsmallenterprisesiftheyaredirty,highlycompetitiveunderconditionsofrapiddevelopment,and,intheaggregate,amajorsourceofpollutiondamage.
ThisresearchusednewdatafromBrazilandMexicotoanalyzerelationshipsbetweeneconomicdevelopment,thesizedistributionofmanufacturingplants,andexposuretoindustrialpollution.Forlackof
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data,earlierworkinthisareahadbeenlimitedlargelytowaterpollutionandmedium-sizeplants.Thisstudyexaminedairpollutionandencompassedsmallplants(with120employees)aswellasmedium-sizeandlargeplants.
Theresearchaddressedfourmainquestions:
Aresmallplantsgenerallymorepollution-intensivethanlargefacilitiesindevelopingcountries?Clearly,yes.
Arethereproportionatelymoresmallplantsinlowincomeregions?InthousandsofBrazilianmunicipalities,yes.Smallplantsdominatepoorregionsandarearelativelysmallsourceofemploymentinhigh-incomeareas.
Isindustrymorepollution-intensiveinlowincomeregions?InBrazil,yes.Foreachmunicipalitytheresearchestimatedtheshareofthesixmostpollution-intensivesectorsintotalindustrialactivity,andfoundthatit
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declinescontinuouslywithincreasesinmunicipalityincomepercapita.
Dopoorareassuffermorethanwealthyareasfromindustrialairpollution?Paradoxically,no.TheriskofmortalityfromindustrialairpollutionismuchhigherinthetoptwoincomedecilesamongBrazil'smunicipalities,andmostprojecteddeathsrelatedtoairpollutionareattributabletoemissionsfromlargeplants.Thescaleofemissionsfromlargeplantsdominatesallotherfactors.Lower-incomeareasinBrazilsuffermuchlessfromindustrialairpollution,despitethegreateremissionsintensityofsmallerplantsandtheprevalenceofsmallerplantsinlower-incomeareas.
ThedataonpollutionprojectionsusedinthestudyareavailableontheWebatwww.worldbank.org/nipr:
Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentSusmitaDasgupta([email protected] ),DavidWheeler,andDavidShaman.WithAndrewSunilRajkumar.
Completiondate:June1999.
Ref.no.:682-66C.
Reports
Dasgupta,Susmita,RobertE.B.Lucas,andDavidWheeler.1998.SmallPlants,Pollution,andPoverty:NewEvidencefromBrazilandMexico.PolicyResearchWorkingPaper2029.WorldBank,DevelopmentResearchGroup,Washington,DC.
.Forthcoming.IndustrialPollutionandPovertyinBrazil.InRuthHillary,ed.,SmallandMedium-SizeEnterprisesandtheEnvironment:BusinessImperatives.GreenleafPublishers.
Colombia'sPollutionChargeSystem:Implementation,Impact,and
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Implications
Economistshavelongarguedthatpollutionchargesaresuperiortocommand-and-controlregulationofindustrialemissions,andtheWorldBankhasadvocatedtheiruseinavarietyofsettings.ButpollutionchargeshaveseldombeenimplementedoutsideOECDcountriesandEasternEurope.Furthermore,existingsystemsgenerallyusechargestofinanceregulatoryadministration,nottoprovidesignificantincentivesforpollutionreduction.
Colombia'snewpollutionchargesystemprovidesastrongandpromisingcontrasttoearlierefforts.Itisnationalinscope,focusedonsignificantincentivesforpollutioncontrol,anddesignedaccordingtotextbookprinciplesofenvironmentaleconomics.Moreover,itreflectsthePigoviandesignbyeliminatingemissionstandardsandchargingforallunitsofpollution.ThismakestheColombianprogramauniqueexperimentandsetsthestageforapolicyresearchprogramwithstronginternationalinterest.
Thisresearchisassessingthechargeprogram,drawingonseveralnewdatasources:censusbureaurecordsforindividualplants,aspecialcensussurveyofplantlevelpollutionabatementexpenditures,databasesattheColombianMinistryoftheEnvironment,andplantlevelrecordsofemissionsandpollutionchargesmaintainedbyregionalauthorities.Theresearchusescasestudiesandeconometricanalysisbasedonprobitandcross-sectionalregression.
Theresearchaddressesthefollowingquestions:Whatdeterminesregionaldifferencesinambientqualitygoalsanddischargereductiontargets?Whatdeterminesregionaldifferencesinimplementationofthechargeprogram?Andhowdochargesaffectpollutersbehavior?
ThestudyisprovidingimmediatefeedbackontheperformanceofthechargesystemtotheMinistryoftheEnvironmentandthecouncilsthatadministerthesystemineachregion.Itisalsoprovidinga
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prototypeforfutureevaluationsbyColombianpolicyresearchers.
Todate,theadministrativeregionofCornare,inMedellin,hasreportedonfoursemestersofexperiencewiththepollutioncharge.Preliminaryresultsindicatethatfirmsarerespondingstrongly.Anotherindicatorofprogressistheparticipationofotherregionalcouncils.ThechargeprogramisbeingimplementedbytheregionalagenciesinthecitiesofBarranquilla,Bucaramarga,Bogota,andCaliandinthestatesofCauca,Uraba,andValle.
ResultsoftheresearcharebeingdisseminatedthroughtheDevelopmentResearchGroup'sNewIdeasinPollutionRegulationWebsite(www.worldbank.org/nipr),throughmeetingswithpolicymakersinColombia,andintheWorldBank'sforthcomingPolicyResearchReport,GreeningIndustry(NewYork:OxfordUniversityPress).
Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentDavidWheeler(dwheeler
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@worldbank.org),SusmitaDasgupta,BenoîtLaplante,andDavidShaman.WithThomasBlackArbeláez,ColombianMinistryoftheEnvironment.
Completiondate:June2000.
Ref.no.:682-69.
SocialValuationofNaturalResources
Biodiversityandotheramenitiesarisingfromnaturalresourcessuchasforestshavebeenthesubjectofmuchinterestandconcernfromeconomists.Butsatisfactorilytakingaccountofthebenefitsfromleavinganaturalresourcelargelyuntouchedorsustainablymanagedhasprovedadifficultchallengeforeconomists.Ideally,policymakerswouldliketobeabletoweighthetradeoffsbetweendevelopingaresourceandpreservingitthroughsomerigorousanalyticmethodsuchascostbenefitanalysis.
Thisresearchisdevelopingaframeworkforvaluingamenitiessuchasbiodiversitythroughapplicationofquasioptionvaluationandasocialstandard.Thequasioptionvaluationarisesfromtheirreversibilityofaninvestmentdecision,whilethesocialstandardreflectssociety'sdesiretopreserveacertainamountofanenvironmentalamenity.Theoptionapproachhasitsoriginsinthevaluationoffinancialinvestments.Thesocialstandardtechniquederivesfromtheanalysisofthebenefitsofmeetingbasicneeds,suchassatisfyingcalorierequirements.Bycombiningthesetwoapproaches,thestudywilldevelopmethodologiesforderivingasocialdemandfunctionforthepreservationofanaturalresourceandforestimatingthebenefitsfromnotdevelopingtheresourceorfromdelayingitsdevelopment.
Theresearchisadeskstudywithconstructedexamples.Itispreliminaryworkthat,ifsuccessful,wouldopenthedoortomorein-
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depthanalysisandresearch.Thegoalwouldbetobuildintoprojectanalysisconsiderationoftheirreversibilityofnaturalresourceinvestmentsandsociety'sdemandforpreservation.
Responsibility:RuralDevelopmentDepartmentOdinKnudsen([email protected] ).WithPasqualeScandizzo,SaraSavastano,andBarbaraMartini,UniversityofRome;andJiaLiu,GeorgeWashingtonUniversity.
Completiondate:October1999.
Ref.no.:682-89.
MakingLong-TermDevelopmentMoreSustainable
Developmentstrategiesgenerallyemphasizesustainedgrowthasameansofraisingaverageincomes.Butfailuretoaccountforenvironmentaldegradationcanerodethecapitalbaseforfuturedevelopment.Thisresearchaimstoimprovetheunderstandingofthelinksbetweeneconomicdevelopmentandtheenvironmentandtoidentifypoliciesthatwillhelptomaintainlong-termgrowthprospects.Theresearchcentersoncasestudiesinthreecountries:Brazil,Chile,andSriLanka.
Theresearchusesavarietyofapproaches.Eachcasestudywillprepareanaction-impactmatrix,acosteffectiveapproachthatusesexistingdatatoshowthekeyenvironmentalimpactsofdevelopmentpolicies.Otherapproachesrangefromfairlysimplemodelstoquitecomplex(andthuscostly)ones,andthestudywillattempttocomparetheirusefulnessandcosteffectivenessinmodelingthelinksbetweengrowthandtheenvironment.Thedatawillcomeprimarilyfromincountrysources,theWorldBank,andtheInternationalMonetaryFund.
Initialworkhasfocusedonorganizingstrongincountryteamsofresearcherswhowillberesponsibleforcriticalelementsofthework,
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consistentwiththeproject'semphasisoncapacitybuilding.Thecurrentphasealsoincludesgatheringdata,prioritizingissues,andrefiningtheanalyticalmodels.Thenextphaseofresearchwillexaminethecircumstancesunderwhichgrowthinducing,economywidepolicies(suchasliberalization),andtheensuinggrowth,mightexacerbatetheenvironmentalharmcausedbypolicydistortions(suchassubsidizedpricesfornaturalresources).Theworkwillalsoidentifyconditionsunderwhichgrowthwouldworsentheadverseenvironmentaleffectsofmarketfailures.
ThisresearchwillimprovethequalityofthemacroeconomicdialoguebetweentheBankanditsborrowersinthecrucialareaofenvironmentallysustainabledevelopment.Thecasestudieswillhelptodeterminethecircumstancesunderlyingwin-winoutcomes,inwhicheconomywidepoliciespromotegrowthwhileavoidingsignificantenvironmentaldegradationorevenimprov-
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ingtheenvironment.Theywilllookattheincidenceofenvironmentalcostsandbenefitsamongdifferentincomegroups,andinvestigatewhetheradjustingthesequencingofeconomywidepolicyreformscouldchangetheirenvironmentaleffects.
Severalin-countryworkshopsthatwillincludeseniordecisionmakersareplanned,toreviewanddisseminatetheresultsofthestudy.AconcludingconferenceattheBankwillcommunicatethemainfindingstoresearchandoperationalstaff.
Responsibility:EnvironmentDepartment,OfficeoftheDirectorMohanMunasinghe([email protected] )andAratiBelle,andGlobalEnvironmentCoordinationUnitNoreenBeg;DevelopmentResearchGroup,PovertyandHumanResourcesAnnikaHaksar;andWorldBankInstitute,EconomicPolicyandPovertyReductionDivisionJorgeAraujo,andEnvironmentandNaturalResourcesDivisionNalinKishor.WithPeterMeier,IDEAInc.,UnitedKingdom;ChitruFernando,ESIInc.,SriLanka,andTulaneUniversity;RonaldoSeroadaMottaandClaudioFerraz,IPEA,Brazil;CarlosYoung,UniversidadFederaldoRiodeJaneiro;OsvaldoSunkelandCarlosdeMiguel,CenterfortheAnalysisofPublicPolicies,Chile;ShaviFernando,CeylonElectricityBoard;NimalSiripala,MinistryofFinance,SriLanka;U.Sapukotane,MinistryofEnvironment,SriLanka;andD.Chandrasekere,CeylonPetroleumCorporation.
Completiondate:September2000.
Ref.no.:683-04.
DynamicsofRuralSectorGrowth
AlthoughmanystudieshaveanalyzedthespectaculareconomicgrowthofAsiancountries,theyhavefocusedlittleontheruralsector,
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themechanismsofitsgrowth,andtheimpactofgovernmentpoliciesonthesector.AgriculturalandruraldevelopmentperformancehasbeenimpressiveinAsiancountries,andtheWorldBankanditsclientcountrieswouldbenefitfromacomprehensivestudyofthepolicies,institutions,andmechanismsofruraldevelopmentintheregion.
ThisresearchwillexaminethemechanismsofruralsectordevelopmentinIndonesia,thePhilippines,andThailandinahistoricalcontext.First,theresearchwillreviewthedevelopmentofpoliciesthathavehaddirectorindirecteffectsontheruralsector,particularlyonruralincomegrowth,overthepastthreedecades.Itwillusequantitativeanalysistoevaluatetheimpactofdifferentpoliciesonruralincomeandexaminethepolitical,social,andeconomicbackgroundofpolicychoices.Second,theresearchwillundertakeacross-countrycomparativestudyfocusingoninvestmentandproductivityandontradeanddomesticmarkets.Applyingquantitativeandcomparativeinstitutionaleconomicanalysis,thestudywillexaminethedynamicsofruraldevelopmentandtheimpactofpoliciesonit.Finally,theresearchwillsynthesizethemechanismsofruraldevelopment,theimpactofpoliciesontheruralsector,andthepolitical,social,andeconomicbackgroundofthesepolicies.
Inthepastyearseveralmissionshavebeenconductedtocollectdataandinformation.
Responsibility:DevelopmentResearchGroup,RuralDevelopmentTakamasaAkiyama([email protected] )andMariaAmelina;andDevelopmentProspectsGroupDonaldLarson.WithToshihikoKawagoeandMasaHonma,SeikeiUniversity;JunTeranishi,HitotsubashiUniversity;ProfessorHayami,AoyamaGakuinUniversity;NobuhikoFuwaandProfessorKikuchi,ChibaUniversity;ProfessorOkura,SenshuUniversity;YairMundlak,UniversityofChicago;PeterTimmer,HarvardUniversity;ShinShigetomi,InstituteofDevelopingEconomies,Japan;Professor
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Manarungsan,ChulalongkornUniversity,Bangkok;ProfessorBalisacan,UniversityofthePhilippines;andDr.Dillon,CenterforAgriculturalPolicyStudies,Indonesia.TheJapanConsultantTrustFundiscontributingfundingfortheresearch.
Completiondate:June2000.
Ref.no.:683-06.
FactorsAffectingthePaceofDeforestationinNorthernThailand
Inexplainingtherateatwhichdeforestationoccurs,itisimportanttodistinguishtwocompetingtheoriesofagriculturalexpansionthepopulation-drivenorsubsistencemodelandthemarket-drivenexpansionorperfect
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marketsapproach.Accordingtothesubsistencemodel,agriculturaldecisionsaremadebyhouseholdsthatareimperfectlymobileandhavelimitedopportunitiesforofffarmwork.Inthesimplestversionofthemodeleachhousehold'sgoalistoachieveafixedlevelofconsumption,eitherbyconsumingwhatitproducesorbysellingitsoutputinthemarket.Twokeypredictionsofthesubsistencemodelarethatincreasesinagriculturalpopulationwillincreasetheareacultivatedandthatanincreaseinagriculturalproductivitywillreducetheareacultivated.Animmediateimplicationisthatprogramsaimedatintensifyingagriculture,suchassubsidiesforinputsorprovisionofhigh-yieldingseeds,wouldtakepressureoffforests.
Theperfectmarketsmodelleadstotheoppositeimplication.Thismodelassumesthatcompletelabormarketsexist,thatonandofffarmlaborareperfectsubstitutes,andthatagriculturalhouseholdsmaximizeprofits.Theamountofagriculturallandcultivateddoesnotdependdirectlyonpopulationbutonoutputandinputprices(especiallythewagerate).Thusintheperfectmarketsmodelanexogenousincreaseinoutputperhectareincreasescultivatedarea,implyingthatprogramstoraisefarmincomesmayhavenegativeenvironmentalconsequences.
ThisprojectteststhesetheoriesusingpaneldataonvillagesintheprovinceofChiangMai,Thailand,for1986-96.Itestimatesequationstoexplaintheamountoflanddevelopedbyeachvillage,thenumberofhouseholdsgrowingrice,andwhetherhouseholdshaveadoptedhigh-yieldingvarietiesofrice.Separatemodelsareestimatedforvillagesinreservedforestsandforthoseoutsidesuchforests.
Preliminaryresultssuggestthatthesubsistencemodelappliestohouseholdsinforestvillages.Thesehouseholdsarelesslikelytogrowhigh-yieldingvarietiesofrice,butwhentheydo,itreducestheamountoflanddevelopedbyeachhousehold.Ingeneral,thenumber
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ofhouseholdsinforestvillagesthatgrowriceandtheamountoflandtheycultivateseemlittleaffectedbyeitherthepriceofriceorthewage.
Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentMaureenL.Cropper([email protected] )andJyotsnaPuri.WithSiripunTaweesuk,SyracuseUniversity;andWilliamEvans,UniversityofMarylandatCollegePark.
Completiondate:December1999.
Ref.no.:683-17.
TestingtheImpactofTradeLiberalizationontheEnvironment:TheoryandEvidence
Thisstudyteststheimpactoftradeliberalizationontheenvironment,incorporatingboththestaticandthedynamicrelationshipsbetweentrade,environment,andgrowth.Itdevelopsatwo-equationsimultaneoussystemforasmalltradingeconomy,whichincorporatesanendogenousstockofenvironmentalservices.Itestimatesthissystemusingprovincial-leveldataonChinesewaterpollutionemissionsfor1987-95.
Resultsshowthattradeliberalizationhasbothdirectandindirecteffectsongrowthinemissionsandthattheseeffectsmaybeofoppositesign.Inthefirstcasestateownershipisnotdirectlyaccountedfor.Tradeliberalizationimprovesthedomestictermsoftrade,acceleratinggrowthinemissions.Thusthedirectimpactoftradeliberalizationwouldbetoaggravateenvironmentaldamage.Butresultsalsoindicatethatincreasedopennesssignificantlyraisesthegrowthofincome,andthatincomegrowthhasanegativeandsignificanteffectongrowthinemissions.Thustheindirecteffectoftradeliberalizationistomitigateenvironmentaldamage.Whenadjustmentsaremadeforthefactthatstate-ownedenterprisestendtobemorepollution-intensiveandlessresponsivetolevies,boththe
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directandtheindirecteffectsoftradeliberalizationtendtomitigateenvironmentaldamage.
FindingswillbedisseminatedontheWebatwww.worldbank.org/nipr.
Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentDavidWheeler([email protected] ).WithJudithDeanandWilliamLahneman,JohnsHopkinsUniversity.
Completiondate:June2000.
Ref.no.:683-20.
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GuidelinesforPricingIrrigationWaterBasedonEfficiency,Implementation,andEquityConsiderations
WorldBankirrigationprojectsincreasinglyemphasizepricingasaprimarymeansofregulation.Disbursementsofloansforirrigationprojectsareoftenconditionedonappropriatepricingfortheirrigationwaterthatwillbegenerated.Butitisunclearwhatappropriatewaterpricesareandhowtheyshouldbeapplied.Competinggroupsofwaterusersoftendisagreeaboutthisissue,particularlyiftheyareindifferentsectors.Andeconomistsdisagreeonhowbesttoaddressit.
Theobjectiveofthisresearchistoclarifythebasicconceptofwaterpricingandtodevelopguidelinesonselectingandimplementingwaterpricingmethodsunderdifferentcircumstances.Themaincriterionusedtoevaluatepricingmethodsisefficiency,broadlydefinedtoincludeimplementationcosts.Theresearchconsistsofseveralparts:
SummarizingexistingmethodsforpricingirrigationwaterinanumberofcountriesandsolicitingdetailedreportsforfiveChina,India(AndhraPradesh),Mexico,Morocco,andSouthAfrica.Thesecountriesofferarangeofphysical,social,economic,andinstitutionalconditions.
Developingandapplyingacost-benefitframeworktoevaluatetheperformanceofdifferentwaterpricingmethods.
Conductinganin-depthanalysisinoneortworegionsofMorocco,includingincomedistribution,waterinstitutions,andpoliticalconstraints.
RepeatingtheanalysisinregionsofChina,India,Mexico,andSouthAfricaforwhichdataarecollected.
Theresearchwillthencomparetheresultsofthefivecasestudies.
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Responsibility:RuralDevelopmentDepartmentArielDinar([email protected] ).WithYakovTsurandVladimirLubinsky,HebrewUniversity;TerryRoeandRobertJohannson,UniversityofMinnesota;RachidDoukkali,InstituteofVeterinaryScienceandAgriculture,Morocco;MichaelSchur,MinistryofFinance,SouthAfrica;EnriqueAguilar;andZhouYaozhouandWeiBingcai,MinistryofWaterResources,China.
Completiondate:October2001.
Ref.no.:683-35.
UnderstandingandImprovingtheEnvironmentalPerformanceofChina'sTownship-VillageIndustrialEnterprises
China'stownship-villageindustrialenterprises(TVIEs)arecommunity-basedandanswerabletothemarket.TVIEshaverisentonearparitywithChina'straditionalindustrialsectorinlessthanadecade:recentestimatessuggestthattheynowaccountforabout50percentofChina'sindustrialoutputandmorethan30percentofruralincome.Butwiththeirpollutingemissionsonlypartiallyregulated,theyalsoareestimatedtoaccountfornearlyhalfofindustrialpollution.China'sStateEnvironmentalProtectionAgencyrequestedthiscollaborativeresearchprojecttodevelopamoresystematicandcomprehensiveapproachtopollutioncontrolforTVIEs.
Theproject'sresultswillcontributetothediscussionofenvironmentalregulatoryreforminChinainseveralways.First,theyshouldprovideusefulinsightsfordecentralizationofthenationalregulatorysystem.Reformsnowunderdiscussionmayinvolvechangesintheadministrationofnationalregulatorystandards,pollutioncharges,andmonitoringandenforcementprocedures.Atthelocallevelregulatoryinstrumentsmayneedadjustmenttorespondtothegapbetweenactualandoptimalemissions.Theprojectwilldemonstratemethodsformeasuringthegapandsuggestprinciplesforadjustingregulatory
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instruments.
Second,theresearchwillfocusattentiononpollutionexposurerisksforTVIEworkers.Workersinheavilypollutingfactoriesmaybeseverelyaffectedevenwhencommunity-levelairqualityisrelativelygood.Thestudywillcontributetotheunderstandingoftheissueintwoways.Itwillsharpentheoverallbenefitandcostassessmentofregulationbyprovidingseparateimpactestimatesforexposedworkersandneighboringcommunities.Andtheproject'seconometricanalysiswillseektoidentifytheprimarydeterminantsofwithin-plantpollution.Variablestobetestedincludesector,output,wages,vintage,humanresources,environmentalmanagement
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strategies,qualityofenvironmentalinformation,andalternativeemploymentopportunities.
Third,theprojectwillprovideinsightsintotheimpactofmoregeneralpolicyreformsonTVIEpollution.EarlierresearchinotherAsiancountriessuggeststhatpoliciesthataffectinputprices,workereducation,enterprisescale,andtechnologychoicecanhaveeffectsonpollutionsimilarinmagnitudetothoseofdirectregulation.
Fourth,theprojectwilluselocalsurveydatatoassesstheimpactofenvironmentalinformationandlocalcapacitytouseiteffectively.AfindingthatenvironmentalinformationplaysanimportantroleasasourceofpressureonTVIEstocontrolpollutionwouldsuggestgreaterallocationofregulatoryresourcestocollectinganddisseminatingsuchinformation.
Fifth,theprojectwillprovidebetterinsightintotheuseofenvironmentalinformationwithinTVIEs.RecentevidencefromMexicosuggeststhatinternalenvironmentalmanagementandtrainingstrategiescanhavesignificanteffectsonfactoryemissionsbecausetheyincreaseresponsivenesstoregulatoryincentivesforpollutioncontrol.TheprojectwillassesstheimportanceoftheseeffectsforTVIEs.Strongresultswouldsuggestgreaterfocusonpilottechnicalassistanceandtrainingprogramsforplant-levelenvironmentalmanagement,ascomplementsto(butnotsubstitutesfor)moretraditionalregulatorydevelopmentprograms.
Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentDavidWheeler([email protected] ),HuaWang,BenoîtLaplante,andSusmitaDasgupta.WithYiLiuandFengzhongCao,StateEnvironmentalProtectionAgency,China;ZhifengYang,BeijingNormalUniversity;andGenfaLu,NanjingUniversity.
Completiondate:June2001.
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Ref.no.:683-38.
EconomicInstrumentsforConservation
Aspressuresforbothagriculturalexpansionandbiodiversityprotectionincrease,itisimportanttoallocateandmanagelandasefficientlyaspossibletomeetthesetwoneeds.Thisprojectisaimedatimprovingtheabilitytomeetthosedualneedsthroughthreeobjectives:
Developingaquantitative,operationaldefinitionofbiodiversityusefulforassessinglarge-areaconservationpolicies.
Developinganddemonstratingamethodologytoassessbiodiversityanddevelopmenttradeoffsarisingfromlandallocationdecisionsorpolicies.
Applyingthatmethodologytoassessthepotentialenvironmentalimpactofeconomicinstrumentsforconservation,withparticularattentiontoincentivepaymentsforlandusesconsistentwithconservation.
ThestudysitefortheresearchistheAtlanticForestofSouthBahia,inBrazil,anareathatexemplifiestheissuesthatarisewheneconomicpressuresthreatenimportantbiodiversityresources.TheAtlanticForestisextremelybiodiverseanddistinctive;manyconservationbiologistsrankitamongthehabitatswithhighestpriorityforconservation.TheBahiansectionoftheforestisnowreducedtorelativelysmallfragments,comprisingperhaps7percentoftheforest'soriginalarea.Lessthanafifthofthisisprotected.Theremainingareaisthreatenedbyconversion,oftentouseswithloweconomicvalueandlittleimpactonemployment.
Theprojectwillbuildaspatiallyexplicitbioeconomicmodel.Theeconomiccomponentofthismodelwillrepresentlandholderresponsestoalternativeeconomicinstrumentsandassessthe
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economicandsocialimpacts.Thebiologicalcomponentwillassesstheimpactofresultinglanduseconfigurationsonthestatusoftheecosystem,takingintoaccountboththerepresentationofdiversespeciesorelementsandtheviabilityofplantandanimalpopulations.Themodelwillusesecondarydata,includinggeographicinformationsystems(GIS)data,fromthecensusandothersources,andprimarydataonlandvaluesandbiodiversitytobecollectedbyBrazilianpartnersunderaparallelproject.Itwillalsobeinformedbyfocusgroupinterviewswithstakeholdersontheacceptabilityofalternativeeconomicinstruments.
TheresearchprojectisexpectedtocontributedirectlytothedesignandimplementationoftheParksandReservesProject(administeredbytheWorldBankforthePilotProgramfortheTropicalBrazilianForests).Morebroadly,itisintendedtoassessthefeasibilityofnew,market-likeapproachestoconservationthatmaybeofbroadinteresttotheBankanditsclients.
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Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentKennethChomitz([email protected] ).WiththeInstitutodeEstudiosSócioambientaisdoSuldaBahia;theInstituteforComputationalEarthSystemScience,UniversityofCaliforniaatSantaBarbara;TimothyThomas;andIndustrialEconomics.
Completiondate:April2001.
Ref.no.:683-42.
MarketsforAgriculturalInputsandOutputsinSub-SaharanAfrica
Thisresearchaddressesasimplequestion:Domarketsforagriculturaloutputsandinputsminimizetransactionscostsandfostercompetition?TwosurveyshavebeenorganizedinBeninandMalawiincollaborationwiththeInternationalFoodPolicyResearchInstitute.Traderquestionnaireshavebeendesignedandtested,enumeratorshavebeentrained,andsampleselectionisunderway.Thesurveysareexpectedtobecompletedinthefallof1999,anddataentrybyJanuary2000.Dataanalysiswillbeundertakenin2000.
Ontheoutputside,surveyresultswillbeusedtocontrastthemarketorganizationoffoodandcashcropscottoninBenin,tobaccoinMalawi.Ontheinputside,thestudywillexaminetheinstitutionalarrangementsthatmaketradeinagriculturalinputspossible.Thestudyisexpectedtoshowthattraderswithbetternetworkscollectrentsbecauserelationshipshelpreducetransactionscosts;thattheserentsarenotdissipateddespitetheexistenceofacompetitivefringeofsmalltraderswithhightransactionscosts;thatnetworksmayormaynotbecorrelatedwithethnicity,inwhichcasemarketdevelopmentnaturallyleadstoethnictension;andthatthefearofbeingcheatedpreventssomemutuallybeneficialtrades,especiallyinagriculturalinputmarketswherefarmersneedcreditandinsurance.
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Policyrecommendationswillspringfromabetterunderstandingofthemechanismsthatallowprivatedistributionofagriculturaloutputsandinputs.
Responsibility:DevelopmentResearchGroup,RuralDevelopmentGershonFeder([email protected] )andMarcelFafchamps.WithSouleGoura,Laboratoired'AnalyseRegionaleetd'ExpertiseSociale;andRichardKachule,InternationalFoodPolicyResearchInstitute.
Completiondate:December2000.
Ref.no.:683-48.
SendingFarmersBacktoSchool:AnEconometricEvaluationoftheFarmerFieldSchoolExtensionApproach
Growingfiscaldeficitsinmanycountrieshavethreatenedthesustainabilityofstaff-intensiveapproachestoagriculturalextensionbecauseoftheirhighcosts.Otherissueshavealsoledtorenewedquestioningofstaff-intensivepublicextensionsystems:themanyproblemswithadministeringalargeextensionbureaucracy,agrowingdisenchantmentwithpackagedtechnologiesandwiththetop-down,centralizedapproachtodisseminatingknowledge,andthealienationoffarmersfromcreatinganddisseminatingknowledge.
Inrecentyearsmanydevelopmentagencies,includingtheWorldBank,havepromotedfarmerfieldschools(FFS)asamorerelevant,efficient,andcost-effectiveapproachtoagriculturalextension.TheFFSapproachreliesonparticipatorytraining.Typically,afieldschoolentails812weeksofhands-onexperimentationandinformaltrainingduringasinglecropseason.Paidtrainersleadthisvillage-levelprogram,focusinginitiallyonproblemsolvinginpestmanagement,butalsoteachinggoodoverallcropmanagementpractices.
NotallfarmersattendFFStraining.Instead,asmallnumber,usually
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25farmersfromavillageorlocalfarmersgroup,participate.Buttodisseminatenewknowledgemorerapidly,theparticipantsareencouragedtosharetheirexperienceswithotherfarmers.Thisfarmer-to-farmerdiffusionofknowledgeofferspromisethattheFFSapproachcanbecost-effectiveandsustainable.Butitsperformanceonalargescalehasnotbeenstudiedrigorously.ThisresearchinvestigateswhethertheFFSapproach,asimplementedtoday,iseconomicallyviableandthusasuitablemodelforanationalagriculturalextensionsystem.
TheresearchwillevaluateFFSperformanceatboththefarmandtheprogramlevel.Atthefarmlevelitwillusefarmprofitsasakeyindicatorofsuccess.Itwilleconometricallymeasurefarm-levelimpactsconditional
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onFFSparticipation,usingbothwith-and-withoutandbefore-and-aftercomparisonswithpaneldatatodealwithestimationproblemsarisingfromindividualselectionandprogramplacementbiases.Carefulselectionofsamplesitesandrespondentswillallowisolationoftheeffectsofotheractivitiesonfarmprofits.Theempiricalanalysiswillalsoisolatesecondaryeffectsoffarmer-to-farmerdiffusionofknowledgefromdirectprogrameffectsonparticipants,andmeasurethedepthandbreadthofknowledgediffusionthroughcasestudiesandparticipantobservation.AttheprogramlevelthestudywillaggregatetheeffectsforallFFS-affectedhouseholdstocompareprogrambenefitswithcosts.
TheanalysiswilldrawondatafromIndonesia,Peru,andthePhilippines.A1990-91FFSsurveywithawith-and-withoutdesignisavailableasabaselineforIndonesia.Thissurveycovered1,000farmersin48villagesandcontainshouseholdinformationneededtoisolatetheFFSextensioneffect.Aresurveyofthehouseholdsisplannedfor1999.Thesurveydatawillbecomplementedwithinformationgatheredbylocalsocialscientiststhroughdetailedcasestudiesandparticipantobservation.
InPeruabaselineFFSsurveycoveringabout500householdsisunderway.Sinceprogramplacementandfarmerselectionarestilltobedone,itwaspossibletoidentifycontrolcommunitiesandselectfarmerswhomeetcertaincriteria.Aresurveyofthehouseholdsisplannedforthesameseasonin2000.
InthePhilippinesadetailedcasestudyisplannedthatwillbuildonasmallFFSdatabasethathastrackedsome45farmersinthreevillagessince1995forfourseasons.Thisdatabase,complementedwitharesurveyofthefarmers,willbeusedtoexplorelong-termissues,includingthespreadeffectsofFFS,retentionofknowledge,andmaintenanceoflearnedpractices.
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TheresultswillhelpinformnationalextensioneffortsinmanydevelopingcountriespoisedtopromotetheFFSstrategy.IntheBankthestudywillsupportongoingtrainingprojectsinIndonesiaandVietnam,aplannedpilotofalternativeagriculturalextensioneffortsinIndonesia,andsimilaractivitiesinPeru.ExtensionprojectsinAfricawillalsobenefitfromthestudy.
TheUniversityofHannover(Germany)andtheCentredeCoopérationInternationaleenRechercheAgricolepourleDéveloppement(CIRAD,France)haveplannedevaluationsofFFSextensionprogramsusingthesamemethodologyinselectedcountriesinAfricaandLatinAmerica.Comparingfindingsacrosscountrieswillhelpelaborateoncomplementaryfactors(suchasthemacro-economicenvironment)requiredforsuccessfulFFSefforts.
Responsibility:DevelopmentResearchGroup,RuralDevelopmentGershonFeder([email protected] ),JaimeQuizon,andRinkuMurgai.WithTahlimSudaryanto,SjaifulBahri,andHaniaRahma,CenterforAgriculturalSocioeconomicResearch,Indonesia;AgnesRola,InstituteofStrategicPlanningandPolicyStudies,Philippines;RebeccaNelson,PaulWinters,andOscarOrtiz,InternationalPotatoCenter,Peru;andHermannWaibel,UniversityofHannover,Germany.TheGlobalIPMFacilitywillfundresearchactivitiestobeundertakenbytheBank'sresearchpartnersinthiscoordinatedeffort.
Completiondate:December2001.
Ref.no.:683-56.
LandRentalMarketsandAgriculturalEfficiencyinEthiopia
ThisresearchisinvestigatingtheextenttowhichlandrentalmarketsinruralEthiopiasupportallocativeefficiencyandwhetherthechoiceoflandrentalcontracthasdetrimentaleffectsonworkincentivesandinputuse.DatacollectedbytheInternationalLivestockResearch
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InstitutewillbeanalyzedincollaborationwiththeInternationalFoodPolicyResearchInstitute.TheresearchisexpectedtoprovideessentialbackgroundinformationtoEthiopianpolicymakersexploringlandreformsandtolandtenureinstitutionsinthecountry.
SeveralmeetingshavebeenheldinWashington,DC,andinAddisAbabawiththeexternalcollaboratorstodiscussconceptualissues,researchstrategies,anddataneeds.
Responsibility:DevelopmentResearchGroup,RuralDevelopmentGershonFeder([email protected] )andMarcelFafchamps.WithJohnPender,InternationalFoodPolicyResearchInstitute;andSimeonEhuiandAmareTeklu,InternationalLivestockResearchInstitute,AddisAbaba.
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Completiondate:June2000.
Ref.no.:683-59.
LandMarkets,Gender,andAccesstoLandinLatinAmerica
ThisresearchprojectinvestigateshowrecentpropertyrightsreformsaimedatimprovingthefunctioningofruralfactormarketsinHonduras,Mexico,andNicaraguahaveaffectedagriculturalproductivityandthelivesoftheruralpoor.Thestudyispartofabroaderresearchagendatoassesstheeffectivenessoflandmarkets(rentalandsales)asamechanismforallocatinglandefficientlyacrossheterogeneoushouseholds;toexaminetheeffectofimperfectionsinruralmarketsonthedirectionoflandtransfers,thetypeofcontractsadopted,andtheensuingchangesintheagrarianstructure;andtoidentifypoliciesthatcanhelpmakelandmarketsfunctionbetterandincreaseproductivityandequity.Thestudywillalsoinvestigatehowrecentpropertyrightsreformshaveaffectedthepropertyrightsofwomeninruralareasand,therefore,ruralhouseholdwell-being.
Theprojectreliesonmicroeconometricanalysisofpaneldatacollectedrecentlyorbeingcollectedinthecourseoftheproject.DataforMexicoarefromasurveyofabout1,500ejiditarios,orsmallholders(includinginformationonabout400smallholdings),undertakenbytheFoodandAgricultureOrganization(FAO),theMexicanMinistryofAgriculture,andtheUniversityofCaliforniaatBerkeleyin1994and1997.ForNicaraguadatacomefroma1996surveyof1,500producersbytheFAOandtheUniversityofCaliforniaatBerkeley.Thesurvey,representativeofthemainagriculturalareasofthecountry,willbecomplementedbyaresurveyoftherespondentsin1999.ForHondurasdatacomefroma1992surveybytheUniversityofWisconsin.
PreliminaryresultsforMexicoindicatethateliminationofrental
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restrictionshassignificantlyreducedthetransactionscostsassociatedwithlandrentals.Butbecauseofcreditmarketimperfections,thepoorwereoftenunabletotakeadvantageoftheincreasedmarketopportunities.
FieldsurveysinHondurasandNicaraguaarescheduledtostartinthefallof1999andinthespringof2000.Thesesurveyswillincorporatemodulespermittingtheinvestigationofintrahouseholdandgenderissues.Thesurveyapproachisbeingfine-tunedthroughworkshopswithkeypolicymakersandresearchersinJulyandOctober1999.
Responsibility:DevelopmentResearchGroup,RuralDevelopmentPedroOlinto([email protected] ),KlausDeininger,andRinkuMurgai.WithMichaelCarterandBradfordBarham,UniversityofWisconsinatMadison;andAlaindeJanvryandElisabethSadoulet,UniversityofCaliforniaatBerkeley.TheU.S.AgencyforInternationalDevelopmentiscontributingfundingforthesurveysinHondurasandNicaragua.
Completiondate:June2001.
Ref.no.:683-64.
Health,Environment,andtheEconomy
Economicdevelopmentisrelatedtopublichealthininterlinkedways.Increasedprosperityimprovestheprovisionandqualityofpublichealthservices.Atthesametime,industrializationandurbanizationincreaseenvironmentaldamageandexposuretopollutants.Thisresearchprojectempiricallyanalyzestheselinks,combiningclassificationtreeanalysis,whichallowscontrolforthresholds,cross-dependencies,andothernonlinearities,andmultivariateregressionanalysis.Theresearchisbasedonanewdatasetcombininginformationonspecificpollutants,dataondeathsfromdiseasesassociatedwiththesepollutants,generalpublichealthindicators,andmeasuresofeconomicdevelopment.Thedatacover1983,1988,and
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1993forthelargestavailablesetofcountries.
Theempiricalworktodatedocumentsrobustlinksbetweenpollutantsandmortalityonthecross-sectionallevel,alongsidestrongincomethresholdsondeathsfromspecificdiseases.Thefindings,onceextendedtotheanalysisofthedevelopment-publichealthnexus,suggestthatattentiontopublichealthintheearlystagesofindustrializationisimportantandhasstrongadditionalbenefitsintermsofgrowthpotential.Theresearchwillprovideananalysisoftheseeffectsbydiseaseandpollutantandapictureofthestateofpublichealthandtheenvironmentincountriesrelativetotheirpeergroups.
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Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentF.DesmondMcCarthy([email protected] ),ZmarakShalizi,andYiWu.WithHolgerWolf,GeorgetownUniversity.
Completiondate:December1999.
Ref.no.:683-73.
Report
McCarthy,F.Desmond,HolgerWolf,andYiWu.1999.TheHealthandEnvironmentalPanelDataBase.WorldBank,DevelopmentResearchGroup,Washington,DC.
EstimatingtheExtentofCorrosionDamageCausedbyAcidRaininChina
ThisstudyperformedaninitialassessmentofthecorrosioncostsofacidicprecipitationinChinausingamodeloriginallydevelopedandappliedinEurope.Estimatesofcostsfallintherangeof$110percapitaperyearinurbanareas,and$0.101.00inruralareas.ValuesarebasedonChinesecostsforlaborandmaterials.
Themethodologyuseddose-responseequationsdevelopedforEuropebutverifiedforChineseconditions.Stocksatriskwereassumedtocorrelatewithcensusdata.ThetotalamountofmaterialsurfacesexposedwasobtainedfromtheChinaBuildingDevelopmentCenter.ThestudycarriedoutcalculationsforeveryprovinceinChina.Themostcorrosion-sensitiveareaswerefoundtobeinSichuanandinsouthernprovinces.
Responsibility:EastAsiaandPacificRegion,EnvironmentandSocialDevelopmentSectorUnitToddJohnson([email protected] )andTanviNagpal.WithVladimirKuceraandJohanTidblad,Swedish
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CorrosionInstitute.TheSwedishEnvironmentTrustFundprovidedfundingfortheresearch.
Completiondate:November1998.
CausesandConsequencesofTropicalDeforestation
Althoughtropicaldeforestationisamajorglobalenvironmentalconcern,itscausesremainpoorlyunderstood.Inconnectionwithalargerproject(SocialandEnvironmentalConsequencesofGrowth-OrientedPolicies)lookingatlinksamonggrowth,poverty,andtheenvironment,thisstudyexaminedthecauses,correlates,andconsequencesofforestconversioninthetropics.Aparticularfocuswastheeconomicandenvironmentaleffectsofroadbuilding,sinceroadsarethoughttohelptheruralpoorbutalsotoleadtodeforestation.Theresearchalsosoughttoelucidatethenatureofsmallholderactivitiesattheforestmarginandthedegreetowhichtheseactivitiesareaffectedbymacroeconomicandsectoralpolicies.
Theresearchstrategyemphasizedthespatialanalysisofdeforestationpatterns,fortworeasons.Importantforanalyticalpurposesisthatspatialvariationinthecausesofdeforestationmakesitpossibletodisentanglethesecauses.Andimportantforpolicyisthattheimpactofchangeinlandcoveronbothbiodiversityandpovertydependsstronglyonwherethechangetakesplace.Accordingly,theresearchpioneeredinthestatisticalanalysisofgeographicinformationsystems(GIS)data.Theseincludedremotesensingdataonlandcoverandtopography,datafromsoilsurveys,andgeo-referencedsocioeconomicdatafromcensusesandhouseholdsurveys.StudyareasincludedBelize,Brazil,Chad,Indonesia,andthetropicalbeltofAfrica.
ResearchresultsforBelize,Brazil,Mexico,andCentralAfricaemphasizethekeyimpactofroadnetworks,butshowthattheeffectsarehighlysensitivetosoilcharacteristicsandmarketproximity.This
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suggeststhatwell-informedregionalplanningcanenhanceruraldevelopmentwhilepreservingtheenvironment.Resultsofanalysisofvillage-leveldataforIndonesiasuggestthathigh-valuetreecropcultivation,ratherthansubsistence-orientedfoodcropproduction,playsamajorpartinsmallholder-relatedforestconversioninthatcountry.
AmodeloffuelwoodextractionandwoodlanddegradationintheSahelprovidedagenerallyapplicablemethodologyforrepresentingtheinteractionofmarketsandspatiallyexplicitlandusechange.Empiricalapplicationsshowedthatratesofwoodlanddegradationarerelativelyinsensitivetopricechangesinmodernfuels.
Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentKennethM.Chomitz([email protected] ),KlausDeininger,DavidGray,CharlesGriffiths,NlanduMamingi,andBartMinten.WithVivi
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Alatas,PrincetonUniversity;UpikRosalinaWasrin,SEAMEO/Biotrop;andXiaowenHuang.TheInternationalCenterforResearchinAgroforestry,Bogor,Indonesia,participatedintheresearch.TheUnitedKingdomandSwedishTrustFundsfortheSocialandEnvironmentalConsequencesofGrowth-OrientedPoliciescontributedfundingfortheresearch.
Completiondate:December1998.
Reports
Chomitz,KennethM.,andDavidA.Gray.1996.Roads,LandUse,andDeforestation:ASpatialModelAppliedtoBelize.WorldBankEconomicReview10(3):487-512.
Chomitz,KennethM.,andCharlesGriffiths.1996.Deforestation,ShiftingCultivation,andTreeCropsinIndonesia:NationwidePatternsofSmallholderAgricultureattheForestFrontier.Poverty,Environment,andGrowthWorkingPaper4.WorldBank,PolicyResearchDepartment,Washington,DC.
.1997.AnEconomicAnalysisofWoodfuelManagementintheSahel:TheCaseofChad.PolicyResearchWorkingPaper1788.WorldBank,DevelopmentResearchGroup,Washington,DC.
Chomitz,KennethM.,andKantaKumari.1998.TheDomesticBenefitsofTropicalForests:ACriticalReview.WorldBankResearchObserver13(1):1335.
Chomitz,KennethM.,CharlesGriffiths,andJyotsnaPuri.1998.FuelPrices,Woodlands,andWoodfuelMarketsintheSahel:
AnIntegratedEconomic-EcologicalModel.PaperpresentedattheconferenceTrade,GlobalPolicy,andtheEnvironment,WorldBank,Washington,DC,April.
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Deininger,Klaus,andBartMinten.1996.Poverty,Policies,andDeforestation:TheCaseofMexico.Poverty,Environment,andGrowthWorkingPaper5.WorldBank,PolicyResearchDepartment,Washington,DC.
Mamingi,Nlandu,KennethM.Chomitz,DavidA.Gray,andEricLambin.1996.SpatialPatternsofDeforestationinCameroonandZaire.Poverty,Environment,andGrowthWorkingPaper8.WorldBank,PolicyResearchDepartment,Washington,DC.
Pfaff,AlexanderS.P.1997.WhatDrivesDeforestationintheBrazilianAmazon?EvidencefromSatelliteandSocioeconomicData.PolicyResearchWorkingPaper1722.WorldBank,PolicyResearchDepartment,Washington,DC.
EconomicInstrumentsforGreenhouseGasReduction
Thecostofreducingglobalgreenhousegasemissionscanbegreatlyloweredbyinvolvingdevelopingcountriesintheeffort.Thatisbecausethecostofreducing(orabsorbing)emissionsissignificantlylowerinsuchcountriesasChinaandIndiathanitisinsucheconomiesasJapan,theUnitedStates,andtheEuropeanUnion.Thetradingofrightstoemitgreenhousegaseshasbeenproposedasamethodofcompensatingdevelopingcountriesfortheireffortswhilereducingthecostofmeetingemissiontargetsinindustrialcountries.Twoformsoftradinghavebeensuggested:attheprojectlevel(jointimplementation)andthroughpermitmarkets.
Thepurposeofthisresearchwastoestimatethepotentialcostsavingsfromthetradingofemissionrightsthroughpermitmarkets.Twoscenarioswereconsidered.Inthefirst,AnnexB(developing)countriesareallowedtotradetheemissioncapsassignedundertheKyotoProtocol.ThiswascomparedwiththecostofAnnexB(industrial)countriesmeetingtheircapswithoutpermittrading.UnderthistradingscenariotheformerSovietUnionwouldbethemainseller
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ofcarbondioxidepermits,andJapan,theEuropeanUnion,andtheUnitedStatesthemainbuyers.ThestudyestimatedthatpermittradingwouldreducetheaggregatecostofmeetingtheKyototargetsbyabout50percentcomparedwithnotrading.Developingcountries,thoughtheywouldnottrade,wouldnonethelessbeaffectedbytrading.Forexample,thepriceofoilandthedemandforotherdevelopingcountryexportswouldbehigherwithtradingthanwithout.
Inthesecondscenarionon-AnnexBcountriesvoluntarilyacceptcapsequaltotheirbusiness-as-usualemissionsandareallowedtosellemissionreductionsbelowthesecapstoAnnexBcountries.Thestudyestimatedthatthegainsfromemissiontradingcouldbebigenoughtogivebuyersandsellersanincentivetosupportthesystem.Indeed,aglobalmarketforrightstoemitcarbondioxidecouldreducethecostofmeetingtheKyototargetsbyalmost90percent,ifthemarketweretooperatecompetitively.Thedivisionoftradinggains,however,maymakeacompetitiveoutcomeunlikely:
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underperfectcompetitionthevastmajorityoftradinggainsgotobuyersofpermitsratherthantosellers.Evenmarketsinwhichthesupplyofpermitsisrestrictedcan,however,substantiallyreducethecosttoAnnexBcountriesofmeetingtheirKyototargets,whileyieldingprofitstodevelopingcountriesthatelecttosellpermits.
Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentMaureenL.Cropper([email protected] ),KennethChomitz,andZmarakShalizi.WithA.DennyEllerman,HenryJacoby,andAnneleneDecaux,CenterforEnergyandEnvironmentalPolicyResearch,MassachusettsInstituteofTechnology.
Completiondate:December1998.
Report
Ellerman,A.Denny,HenryD.Jacoby,andAnneleneDecaux.1998.TheEffectsonDevelopingCountriesoftheKyotoProtocolandCarbonDioxideEmissionsTrading.PolicyResearchWorkingPaper2019.WorldBank,DevelopmentResearchGroup,Washington,DC.
MarketBasedInstrumentsforEnvironmentalPolicymiakinginLatinAmericaandtheCaribbean:Lessonsfrom11Countries
ThisstudyinvestigatedtheuseofmarketbasedinstrumentsforenvironmentalmanagementinLatinAmericaandtheCaribbean,focusingonBarbados,Bolivia,Brazil,Chile,Colombia,Ecuador,Jamaica,Mexico,Peru,TrinidadandTobago,andVenezuela.Applicationsinvestigatedincludenoise,energy,agriculture,airquality,waterquality,watersupplyandextraction,andsolidandliquidwastemanagement(includingtoxicsubstances).
Thestudydefinedamarketbasedinstrumentasonethatreducesexternalitiesbyaligningprivatecostswithsocialcosts.Thestrength
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ofamarketbasedinstrumentdependsonthedegreeofflexibilitythatapolluterhasinachievinganenvironmentaltargetthatis,thedegreetowhichsocial(orstate)decisionsaretransferredtotheprivate(individual)level.Aweakmarketbasedinstrumentusesregulations,whileastrongoneusesmarketforcestodecentralizedecisionmaking.
Intheorymarketbasedinstrumentsareeconomicallyefficientandenvironmentallyeffective.Theyhavelowprivatecompliancecostsandcanprovidegovernmentrevenue.Butinpracticethecostsofadministering,monitoring,andenforcingmarketbasedinstrumentsmaybeashighasthecostsfortraditionalcommand-and-controlregulation.
Thestudy'sexaminationofexperiencewithmarketbasedinstrumentsinLatinAmericaandtheCaribbeanledtoseveralconclusions.First,marketbasedinstrumentscanbeanimportantmeansforintroducingaddedefficiencytoexistingcommand-and-controlmechanisms.Buttheirscopemustmatchtheinstitutionalcapacitytoimplementthem.Marketbasedapproachesthatintroducegradualandflexiblereformsarethereforemorelikelytobeconsistentwithongoinginstitutionalchanges.Second,whiletherevenue-generatingroleofmarketbasedinstrumentsisoftenhighlighted,thereisastrongneedtochanneltherevenuestolocalauthoritiestoassistinbuildinginstitutionalcapacity.Finally,internationaldonoragencieshaveatendencytorecommendOECDsolutionswithlittleregardforinstitutionalissues.Whilemostoftheinformationflowonmarketbasedinstrumentshasbeennorth-south,increasedinformationsharinginasouth-southdialoguewouldbenefitallparties.
TheWorldBankInstitutesponsoredtwoseminarstodiscusstheresearchissues,oneinJuly1997inArgentina,attendedbyrepresentativesfrom8LatinAmericanandCaribbeancountries,andtheotherinMarch1997inTrinidadandTobago,attendedbyrepresentativesfrom15countriesoftheEnglish-speakingCaribbean.
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Theobjectivesweretopromotetheuseofcost-effectivepollutioncontrolmechanismsandcoordinateregulatorypolicyandreformsrelatedtoprivatesectordevelopmentandenvironmentalmanagement,assesstheimpactoftheuseofeconomicinstrumentsinLatinAmerica,examineinstitutionalconstraintsinimplementingsuchinstrumentsanddeterminehowtoovercomethem,anddiscussexamplesofbestpracticefromothercountriesandregions.
Responsibility:LatinAmericaandtheCaribbeanRegion,EnvironmentallyandSociallySustainableDevelopmentSectorUnitRichardM.Huber([email protected] ),JohnRedwood,andJoachimvonAmsberg,andPovertyReductionandEconomicManagementSectorUnitDennisMaharandNormanHicks;WorldBankInstitute,
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EnvironmentandNaturalResourcesDivisionAdrianaBianchiandSergioMargulis;andEnvironmentDepartmentMagdolnaLoveiandKseniyaLvovsky.WithH.JackRuitenbeek,H.J.RuitenbeekResourceConsultingLimited;andRonaldoSerôadaMotta,ResearchInstituteofAppliedEconomics.TheNetherlandsConsultantTrustFundandtheCanadianConsultantTrustFundcontributedfundingfortheresearch.
Completiondate:December1998.
Reports
Belausteguigoitia,J.C.,H.Contreras,andL.Guadarrama.1995.Mexico:Lagestiónambientalyelusodeinstrumentoseconomicos.
Escobar,J.,andJ.A.Muñoz.1996.MarcoregulatorioeinstrumentosdemercadodelapoliticaambientalenBolivia.
Huber,RichardM.1995.Ecuador:EconomicInstrumentsforEnvironmentalManagementintheSectorsofWater,Air,andIndustrialPollutionandSolidWasteDisposal.WorldBank,LatinAmericaandtheCaribbeanRegion,EnvironmentallyandSociallySustainableDevelopmentSectorUnit,Washington,DC.
Orlando,M.B.1995.EconomicInstrumentsforEnvironmentalManagementinLatinAmericaandtheCaribbean:VenezuelaCountryBackgroundPaper.
Persaud,B.,M.Wright,andW.Benfield.1995.Market-BasedInstrumentsforUrbanEnvironmentalManagement:ACaseStudyofJamaica.UniversityoftheWestIndiesCentreforEnvironmentandDevelopment,Kingston,Jamaica.
Ramirez,J.,andR.Cubillos.1995.EconomicInstrumentsforEnvironmentalManagementinLatinAmericaandtheCaribbean:ColombiaCountryBackgroundPaper.
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Ríos,M.1995.EconomicInstrumentsforEnvironmentalManagementinLatinAmericaandtheCaribbean:ChileCountryBackgroundPaper.
Ruitenbeek,H.Jack,andD.Sawyer.1995.SpecialProjectStudyonInstitutionalStructureandEconomicInstrumentsforUrbanEnvironmentalManagementinLatinAmericaandtheCaribbean:BarbadoswithSelectedComparisonstoJamaica,TrinidadandTobago,andLatinAmericaandtheCaribbean.
Ruitenbeek,H.Jack,RonaldoSerôadaMotta,andRichardM.Huber.1995.SpecialProjectStudyonInstitutionalStructureandEconomicInstrumentsforUrbanEnvironmentalManagementinLatinAmericaandtheCaribbean:PhaseIBackgroundPaper.
SerôadaMotta,Ronaldo.1996.ApplyingEconomicIncentivesinaContextofInstitutionalFragility:TheCaseofLatinAmericaandCaribbeanEnvironmentalManagement.
.1996.EconomicInstrumentsforEnvironmentalManagementinLatinAmericaandtheCaribbean:BrazilBackgroundPaper.
Tolmos,R.1995.EconomicInstrumentsforEnvironmentalManagementinLatinAmericaandtheCaribbean:PeruCountryBackgroundPaper.
AgriculturalIncentivesinSub-SaharanAfrica:PolicyChallenges
ThisstudyexaminedthestateofagriculturalincentivesinSub-SaharanAfrica,takingstockofthecurrentprice-relatedpolicyenvironmentanditsrecentevolution.TheaimwastoupdateknowledgeandtostimulatediscussionwithWorldBankclientcountriestohelpdevelopastrongerconsensusonappropriatepoliciesandincentivestoincreaseagriculturalgrowthandfarmincomes.
Thestudyexaminedtheglobalmarketenvironment,togetherwiththe
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macroeconomic,exportcrop,foodcrop,andfertilizerpoliciesin16Africancountries.Basedonanarrayofpriceratiosandpolicyscores,policydiamondswereconstructedasincentiveindicatorsreflectingthestateofmacroeconomic(monetary,exchangerate,andfiscal)policiesandagriculturalpolicies(onexports,foodcrops,andfertilizers)relativetoaperceivedfrontier.Anattemptwasthenmadetodeterminethefactorsinhibitingcountriesfrommovingtowardthisfrontier.
Thestudyidentifiedbothpriceandnonpricefactorsasconstrainingfactorsandusedquantitativemethodologies(regressionanalyses),togetherwithadescriptiveanalysis,toisolatetheireffects.Itfoundthatcross-countrydifferencesintheincentiveindicatorscouldbeexplainedbydifferencesinmacroeconomicandagriculturalpolicies,theextentandqualityofthetransportinfrastructure,thevolumestradedondomesticmarkets,andthetypesofcropsproduced.
ThestudyhighlightsseveralcontinuingpolicychallengesthatSub-SaharanAfricafacesinensuringappropriateagriculturalincentivestostimulategrowth.Theseincludecopingwithdecliningandfluctuatingagricultural
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commodityprices,securingaccesstoforeignmarkets(inparticular,meetingthesanitaryandphytosanitaryrequirements),removingdomestictradebarriers,stabilizingmacroeconomicpolicies,enhancingtheinstitutionalframeworkandthecredibilityofrules,removingtheremnantsofmarketingboardswheretheyexist,removingexcessiveagriculturaltaxationandensuringpublicruralinvestment,improvingtransportinfrastructure,andencouragingpublic-privatepartnerships.
Responsibility:AfricaRegionTechnicalFamilies,Macroeconomics4CharlesHumphreys([email protected] )andTatsushiAdachi,andRuralDevelopment1RobertF.Townsend.TheJapaneseTrustFundcontributedfundingfortheresearch.
Completiondate:June1999.
Report
Townsend,RobertF.1999.AgriculturalIncentivesinSub-SaharanAfrica:PolicyChallenges.WorldBankTechnicalPaper444.Washington,DC.
TheChallengesofManagingAgriculturalExtension
Inmanycountriesagriculturalextensionsystemsarepubliclyfundedandoperated.OvertheyearstheWorldBankandotherdevelopmentagencieshavesupportedlargeinvestmentsinexpandingextensionsystemsinmanydevelopingcountries.Buttheeffectivenessofextensionsystemshasbeenmixed.Thisstudyidentifiedeightgenericweaknessesinherentinpubliclyoperatedextensionsystems.Theseweaknessesrelatetothescopeoftheservicethatneedstobeprovidedandthestructureofincentivesaffectingemployeesandmanagementandthedecisionmakerswhoprovidefunding.
Thestudyalsopointedtoinstitutionalinnovationsintroducedinan
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attempttoovercomesomeoftheweaknesses.Anditidentifiedinstitutionalandpolicyreformsthatcouldleadtosustainableandeffectiveextensionsystems,includinggreaterusercontrol,partialprivatization,decentralization,andparticipatoryapproaches.
ResultshavebeendisseminatedthroughpresentationstoWorldBankoperationalstaffandataconferenceattheUniversityofCaliforniaatBerkeley.
Responsibility:DevelopmentResearchGroup,RuralDevelopmentGershonFeder([email protected] );andRuralDevelopmentDepartmentWillemZijpandAnthonyWillett.
Completiondate:June1999.
Report
Feder,Gershon,AnthonyWillett,andWillemZijp.1999.AgriculturalExtension:GenericChallengesandSomeIngredientsforSolutions.PolicyResearchWorkingPaper2129.WorldBank,DevelopmentResearchGroupandRuralDevelopmentDepartment,Washington,DC.
TheImpactofPolicyReformonFarmPerformance
Duringthepast10yearsLatinAmericahasundergoneamajoreconomictransformation.Inmostcountriesintheregionsweepingreformshaveledtotheemergenceofanopen,competitive,market-basedsystem.Thisresearchisinvestigatinghowrecentmarket-orientedreformshaveaffectedagriculturalproductionandthelivesoftheruralpoorintheMexicanejido(smallholder)sector.
ThestudyfocusesontheeffectsofrecentpropertyrightsreformsreformsthataffectrurallanduseandownershiprightsonthefunctioningofrurallandandcreditmarketsinMexico.Theresearchaddressesthefollowingquestions:
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Howdocommoncreditandlabormarketimperfectionsaffectproducers'demandforcultivatedandownedland?
Inthepresenceoftheseimperfections,howeffectivehavelandsalesandrentalmarketsbeeninefficientlyallocatinglandacrosshouseholdsthatdifferinvariousdimensions?Howhavelandsalesandrentalmarketsdifferedineffectiveness,whatinstitutionalarrangementshaveevolved,andhowhavetheyaffecteddifferentpopulationgroups?
Howhavepoliciesaimedatliberalizingrurallandandcreditmarketsaffectedlandsalesandrentaltransactions,theproductiveefficiencyofdifferentgroupsofproducers,andequityamongthesegroups?
Whataretheimplicationsforgovernmentpoliciesandprogramsaimedatimprovingthefunctioningofruralfactormarkets?Ifliberalizinglandmarketsturnsout
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nottobeenoughtopromoteequity-andefficiency-enhancingtransactions,whatcomplementarypoliciesshouldberecommended?
Theresearchreliesonpaneldataeconometricmethodstoanalyzethelandmarketparticipationdecisionsofruralhouseholdsthatarequiteheterogeneousinwealth,education,andaccesstocredit,technology,andinputandoutputmarkets.Theanalysisisbasedonapaneldatasetofabout1,500householdsconstructedfromtheresultsofhouseholdsurveysconductedintheejidosectorofMexicoin1990,1994,and1997.Thepanelstructureofthedatamakesitpossibletoexplainchangesinhouseholds'landaccumulationdecisionsandincomegenerationstrategiesasafunctionoftheirrelativewealthbeforereforms.
Preliminaryresultsindicatethatpropertyrightsreformshaveinvigoratedlandrentalmarketsbyinducinglargelandholderstosupplymoreagriculturallandforrental.Smallfarmersappeartohavebenefitedthroughincreasedparticipationinrentaltransactions.Butthelandlessappearnottohavegainedmoreaccesstoland,perhapsbecauseoftheirreducedaccesstoinstitutionalcreditafterreforms.Moreresearchisbeingconductedtoidentifythedeterminantsofaccesstocreditandtheimpactofaccesstocreditonwealthaccumulation.
Responsibility:DevelopmentResearchGroup,RuralDevelopmentPedroOlinto([email protected] )andKlausDeininger.WithBenjaminDavis,InternationalFoodPolicyResearchInstitute.
Completiondate:December1999.
Reports
Olinto,Pedro.TheImpactoftheEjidoReformsonLandMarketsinMexico.WorldBank,DevelopmentResearchGroup,Washington,
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DC.
Olinto,Pedro,BenjaminDavis,andKlausDeininger.DidthePoorBenefitfromLandMarketLiberalizationinMexico?PanelDataEvidenceoftheImpactoftheEjidoReforms.WorldBank,DevelopmentResearchGroup,Washington,DC.
SocialandEnvironmentalConsequencesofGrowth-OrientedPolicies
TheWorldBankhaslongmaintainedthateconomicgrowthisgoodforpeopleandgoodfortheenvironment.Yetskepticismpersistsaboutwhetherthiswin-win-winscenarioappliesinallplacesatalltimes.Insomecasestherearetradeoffsthatclearlyhavetobeconsidered:Anewfactorythatbringshigherincomesmayalsofoultheairandwater.Expansionofsmallholderfarmingmayresultinthelossofnaturalhabitats.Howsignificantandwidespreadarethesetradeoffs?Dowin-win-winsolutionsbecomefewerasaneconomybecomesmoreefficient?Arethereinstancesinwhicheconomicgrowthisatoddswithimprovedhumanandecologicalwelfare,orinwhichpovertycanbereducedonlybyharmingtheenvironment?
Thisprojectaddressestheseandotherquestionsabouttherelationshipsbetweenpoverty,growth,andtheenvironment.Itusesasystematic,quantitativeapproachanddrawsonextensivedatareflectingawiderangeofcountryexperiencethathaverecentlybecomeavailable.Thestudyseekstoderivelessonsfromthisexperiencetoguidefuturepolicy,usingthreeanalyticalmethods.
Thefirstofthethreeresearchcomponentsconsistsofcross-nationalanalysis.Thisanalysisisintendedtosetthestagebyexaminingtherelationship,acrosscountriesandovertime,betweenmacroeconomicpolicyindicatorsandindicatorsofgrowth,environmentalconditions,andpovertyorequality.
Thesecondcomponent,centeredonstructuralmodels,istheheartoftheproject.Theresearchattemptstomodelthreesetsofissuesin
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whichtradeoffsbetweengrowth,povertyreduction,andenvironmentalprotectionarethoughttobeespeciallyacute.Thefirstsetofissuesrelatestoindustrialpollutionandthebehaviorofindustrialfirms.Theresearchanalyzesregionalandfirm-leveldataonindustrialoutput,employment,andemissions.Policyleversexaminedincludemacroeconomicpoliciesaffectingthesectoralcompositionofindustrysuchastrade,industrial,andenergypoliciesandpollutionregulationpolicies.StudysitesincludeBrazil,China,Ecuador,India,Indonesia,andPakistan.
Thesecondsetofissuesrelatestolanduseconflictsbetweenagriculturalexpansionandnaturalhabitatpreservation.Theresearchanalyzestheincentivestoconverttropicalforestsandotherhabitatstoagriculture,theecologicalconsequences,thesizeandpersistenceof
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economicgains,andthedistributionofthosegains.Policiesinvestigatedincludeenergypricing,agriculturalpricing(includingexchangerates),andregionaldevelopmentstrategies,especiallythesitingofinfrastructure.StudysitesincludeBelize,Indonesia,Mexico,andtropicalAfrica.
Thethirdsetofissuescentersonpoverty,fertility,andhouseholduseofenvironmentalresources.Becauseofthediversityofhouseholdsandtheirenvironmentalproblems,thissetofmodelsalsoisdiverse.Onelineofresearchstudiesthelinksbetweenpoverty,fertility,education,technology,anduseoffuelwoodandotherenvironmentalresourcesinNepalandPakistan,andtherelationshipbetweentenureandpovertyinUganda.AnotherlineofresearchfocusesontheresponsivenessofdecisionmakingandurbansanitationtochangesintenureconditionsinEcuadorandIndonesia.
Intheproject'sthirdcomponent,casestudiesbuildonthestructuralmodels,placingtheminahistorical,environmental,andpolicycontextandexploringcross-sectorallinks.CasestudiesincludeeconomicliberalizationinChinaandtradereforminMexico.
Finally,theresearchisaddressingthepoliticaleconomyandsociologicalimplicationsofthefindingsoftheprojectcasestudies.
ResultsfromtheresearchwerepresentedataworkshopinMay1999.Thefindingsaffirmthecomplexityofthelinksbetweenpovertyandtheenvironment,stemmingfromthemultidimensionalityofboth.Thereisaneedtodistinguishdifferenttypesandlevelsofpovertyanddifferentkindsofpollutionandlanddegradation.
Whilethepoormaybetheproximateagentsofenvironmentaldegradation,thisdoesnotimplythattheyareblameworthyandmaynotevenimplythatpovertycausesenvironmentaldegradation.Itisalwaysessentialtolookatthesocialandeconomicconstraintsand
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incentivesfacedbythepoor,searchingforultimateratherthanproximatecausesofbothpovertyandenvironmentaldegradation.
Overlongperiodsandatthenationalorregionallevel,thereisageneralthoughnotperfectconsonancebetweenincomegrowthandenvironmentalimprovement.Butthesebroadrelationsdonotimplythattargetedantipovertyeffortsareaneffectivemeansofaddressingenvironmentalproblemsorthatresolvingthoseproblemsrequiresadecades-longdevelopmentprocess.
Thereisevidencethatthecostsofpollutionabatementareoftenlowrelativetoitsbenefits,andthatformalandinformal(community)regulationcanoftenbeeffectiveinreducingpollution.Somewhatlesshopeful,recentstudiesoftropicaldeforestationsuggestthatlocallytargetedantipovertyefforts,suchasimprovedagriculturaltechnologiesorroadprovision(whoseantipovertyeffectisdisputed),willoftenincreaseratherthandecreasedeforestationpressures.Herethedis-junctionbetweenthelocalbenefitsandglobalcostsofdeforestationsuggestsinternationaltransfers,conditionedonforestpreservation,asonemeanstofightpovertyandmaintainenvironmentalservices.Theremaybeacloserlinkbetweenantipovertyactionsandenvironmentalpreservationforotherformsoflanddegradation.Ingeneral,however,theresearchconclusionssupporttheprinciplethatdifferentproblemsmustbeaddressedbydifferent(thoughcoordinated)instruments.
PapersproducedbytheprojectareavailableontheWebatwww.worldbank.org/research/peg.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesEmmanuelJimenez([email protected] ),MartinRavallion,LantPritchett,PeterLanjouw,DeonFilmer,andAnnikaHaksar,InfrastructureandEnvironmentDavidWheeler,KennethChomitz,andHuaWang,andMacroeconomicsandGrowthWilliamEasterlyandGiuseppeIarossi;WorldBankInstitute,Environment
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andNaturalResourcesDivisionMuthukumaraMani;EnvironmentDepartmentDavidGrayandGi-TaikOh;andEastAsiaandPacificRegion,SocialDevelopmentSectorUnitChaohuaZhang.WithDavidCoady;JeanLanjouwandArunAggrawal,YaleUniversity;JorgeEguiguren;JanGunning,FreeUniversity,Amsterdam;DavidLoughran;JavierPoggi;AngusDeaton,PrincetonUniversity;RobertLucas,BostonUniversity;MarkHeil;QingyingKong;Jean-PhilippePlatteauandQuentinWodon,UniversityofNamur;ThomasTietenberg,ColbyCollege;AlaindeJanvry,UniversityofCaliforniaatBerkeley;BartMinten;CharlesGriffiths;AyoHeinegg;XiawenHuang;BinayakSen;RebeccaGrey;andWilliamHawthorne.
Completiondate:December1999.
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Reports
Chomitz,KennethM.,andDavidA.Gray.1996.Roads,LandUse,andDeforestation:ASpatialModelAppliedtoBelize.WorldBankEconomicReview10(3):487-512.(AlsoavailableasPoverty,Environment,andGrowthWorkingPaper3.)
Chomitz,KennethM.,andCharlesGriffiths.1996.Deforestation,ShiftingCultivation,andTreeCropsinIndonesia:Nation-widePatternsofSmallholderAgricultureattheForestFrontier.Poverty,Environment,andGrowthWorkingPaper4.WorldBank,PolicyResearchDepartment,Washington,DC.
Chomitz,KennethM.,CharlesGriffiths,andJyotsnaPuri.1998.FuelPrices,Woodlands,andWoodfuelMarketsintheSahel:AnIntegratedEconomic-EcologicalModel.Poverty,Environment,andGrowthWorkingPaper24.WorldBank,DevelopmentResearchGroup,Washington,DC.
Dasgupta,Susmita,andDavidWheeler.1996.EnvironmentalRegulationviaCitizenProtestinDevelopingCountries:EvidencefromChina.Poverty,Environment,andGrowthWorkingPaper7.WorldBank,PolicyResearchDepartment,Washington,DC.
Dasgupta,Susmita,HuaWang,andDavidWheeler.1997.SurvivingSuccess:PolicyReformandIndustrialPollutioninChina.Poverty,Environment,andGrowthWorkingPaper12.WorldBank,PolicyResearchDepartment,Washington,DC.
Deininger,Klaus,andBartMinten.1996.DeterminantsofForestCoverandtheEconomicsofProtection:AnApplicationtoMexico.Poverty,Environment,andGrowthWorkingPaper10.WorldBank,PolicyResearchDepartment,Washington,DC.
.1996.Poverty,PoliciesandDeforestation:TheCaseofMexico.
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Poverty,Environment,andGrowthWorkingPaper5.WorldBank,PolicyResearchDepartment,Washington,DC.
Easterly,William.1997.LifeduringGrowth:ACompendiumofSocial,PoliticalandEnvironmentalIndicatorsofWhatGetsBetterandWhatGetsWorsefromLowtoHighIncome.Poverty,Environment,andGrowthWorkingPaper17.WorldBank,PolicyResearchDepartment,Washington,DC.
Filmer,Deon,andLantPritchett.1996.EnvironmentalDegradationandtheDemandforChildren:SearchingfortheViciousCircle.Poverty,Environment,andGrowthWorkingPaper2.WorldBank,PolicyResearchDepartment,Washington,DC.(AlsopublishedasPolicyResearchWorkingPaper1623,WorldBank,PolicyResearchDepartment,Washington,DC,1996.)
Heil,Mark,andQuentinWodon.1997.Cross-CountryInequalitybyEnergySource,196090.Poverty,Environment,andGrowthWorkingPaper21.WorldBank,PolicyResearchDepartment,Washington,DC.
.1997.FutureInequalityinCO2EmissionsandtheImpactofAbatementProposals.Poverty,Environment,andGrowthWorkingPaper20.WorldBank,PolicyResearchDepartment,Washington,DC.
Hoy,Michael,andEmmanuelJimenez.1997.TheImpactontheUrbanEnvironmentofIncompletePropertyRights.Poverty,Environment,andGrowthWorkingPaper14.WorldBank,PolicyResearchDepartment,Washington,DC.
Lanjouw,Jean,andPhilipLevy.1999.AStudyofFormalandInformalPropertyRightsinUrbanEcuador.Poverty,Environment,andGrowthWorkingPaper23.WorldBank,DevelopmentResearchGroup,Washington,DC.
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Lanjouw,Peter.1997.Small-ScaleIndustry,PovertyandtheEnvironment:ACaseStudyofEcuador.Poverty,Environment,andGrowthWorkingPaper18.WorldBank,PolicyResearchDepartment,Washington,DC.
Loughran,David,andLantPritchett.1997.EnvironmentalScarcity,ResourceCollection,andtheDemandforChildreninNepal.Poverty,Environment,andGrowthWorkingPaper19.WorldBank,PolicyResearchDepartment,Washington,DC.
Lucas,Robert.1996.PollutionLeviesandtheDemandforIndustrialLabor:PanelEstimatesforChina'sProvinces.Poverty,Environment,andGrowthWorkingPaper9.WorldBank,PolicyResearchDepartment,Washington,DC.
Mamingi,Nlandu,KennethM.Chomitz,DavidGray,andEricLambin.1996.SpatialPatternsofDeforestationinCameroonandZaire.Poverty,Environment,andGrowthWorkingPaper8.WorldBank,PolicyResearchDepartment,Washington,DC.
Mani,Muthukumara,andDavidWheeler.1997.InSearchofPollutionHavens:DirtyIndustryintheWorldEconomy,196095.Poverty,Environment,andGrowthWorkingPaper16.WorldBank,PolicyResearchDepartment,Washington,DC.
Mani,Muthukumara,SheoliPargal,andMainulHuq.1997.IsThereanEnvironmentalRacetotheBottom?EvidenceontheRoleofEnvironmentalRegulationinPlantLocationDecisionsinIndia.Poverty,Environment,andGrowthWorkingPaper15.WorldBank,PolicyResearchDepartment,Washington,DC.
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Pargal,Sheoli,MuthukumaraMani,andMainulHuq.1997.RegulatoryInspections,InformalPressureandWaterPollution:ASurveyofIndustrialPlantsinIndia.Poverty,Environment,andGrowthWorkingPaper22.WorldBank,PolicyResearchDepartment,Washington,DC.
Ravallion,Martin.1996.CanHigh-InequalityDevelopingCountriesEscapeAbsolutePoverty?Poverty,Environment,andGrowthWorkingPaper11.WorldBank,PolicyResearchDepartment,Washington,DC.
Ravallion,Martin,andShaohuaChen.1996.WhatCanNewSurveyDataTellUsaboutRecentChangesinLivingStandardsinDevelopingandTransitionalEconomies?Poverty,Environment,andGrowthWorkingPaper1.WorldBank,PolicyResearchDepartment,Washington,DC.(AlsopublishedasPolicyResearchWorkingPaper1694,WorldBank,PolicyResearchDepartment,Washington,DC,1996.)
Ravallion,Martin,MarkHeil,andJyotsnaJalan.1997.ALessPoorWorld,ButaHotterOne?Poverty,Environment,andGrowthWorkingPaper13.WorldBank,PolicyResearchDepartment,Washington,DC.
Wang,Hua,andDavidWheeler.1996.PollutionControlandProvincialDevelopmentinChina:AnAnalysisoftheLevySystem.Poverty,Environment,andGrowthWorkingPaper6.WorldBank,PolicyResearchDepartment,Washington,DC.
TheRoleoftheNonfarmRuralSectorandPeriurbanAgricultureinTanzania'sRuralDevelopment
Thereisagrowingrealizationamongpolicymakersoftheimportanceofpromotingruralnonfarmemploymentopportunities.Inmany
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developingcountriesagriculturealonecannolongerabsorbtherapidlygrowingruralpopulation,andrurallabormigrationtourbanareasbringsonlyhighersocialcostsinmostcases.Thereisalsoarecognitionthatinmostdevelopingcountries,deliberatelyexploitingthedynamicinterplaybetweenagriculturalandnonagriculturalsectorsinruralsettingscanleadtosustaineddevelopmentandpovertyreduction.
Periurbanareas,bydefinition,areatthemargindemarcatingurbanandrural,andthusareareaswherefarmandnonfarmopportunitiesarelikelytocoexist.Theobjectivesofthisstudyaretoreviewtherangeofnonagriculturalactivitiesamongperiurbanhouseholdsandtheirlinkstotheagriculturaleconomy,toidentifythedeterminantsofnonagriculturalemploymentandincomes,andtoexplorekeyfactorsaffectingyieldsandfarmincomesinperiurbanareas.
Thestudyanalyzeshouseholdandvillagedatafromthe1998TanzaniaPeriurbanSurvey,whichcollectedinformationfrom592householdsin48periurbanvillagessurroundingsixTanzaniancities.Thesurveygathereddataonhouseholdincomeanditssources,employmentinfarmandnonfarmactivities,socioeconomicandotherconstraintsontheseactivities,availabilityanduseofbasicservices(suchaseducation,health,andextension),foodconsumptionexpenditures,socialcapital,andprivateassetownershipandstructure.
Themainempiricalanalysisinvolvesfirstestimatingaprobitmodeloftheprobabilityofhouseholdinvolvementinbusinessactivitiesandthenestimatingabusinessincomeregressiontodrawoutthefactorsthatexplainbusinessearnings.Thesesametwostepsarerepeatedforwageemploymentandearnings.
Preliminaryfindingsshowthatnonfarmearningscontributeabout24percentoftotalhouseholdincomeinperiurbanareasfrom9percentforMoshito32percentforDaresSalaam.Most(75percent)comesfromownbusinessactivities.Nonfarmactivitiescontributeabout15
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percentofemployment.Businessactivitiesoccurmostfrequentlyinvillageswithasphaltroadaccess,wherenonfarmactivitiesaccountforanimportantshareofvillageemployment,andwheretheagriculturalpotentialofvillagelandisrelativelylow.Theseactivitiestendtoberunbymenbelowage45,withprimary,buttypicallynothigher,education,andoccurmostfrequentlyinhouseholdswithsmalllandholdings.Ownbusinessactivitiesofferanimportantalternativetoagricultureasasourceoflivelihood.Butaccesstosuchactivitiesappearstobelimitedtomen,influencedbyinfrastructure,andconcentratedincoastalareas.
Nonagriculturalwageemploymentisdominatedbymenranginginageuptothemid-fortiesandisstronglycorrelatedwitheducation(primaryandsecondary).Nonagriculturalwageemploymentismorefrequent(andearningshighest)invillageswithhighpopulationdensity.Earningstendtorisewitheducationandwithproximitytotheurbancenter.
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Thesepreliminaryfindingswerepresentedtogovernmentpolicymakers,donors,academics,andothermembersofcivilsocietyinaMay1999seminarinDaresSalaamorganizedbytheWorldBank'sresidentmission.TheyarealsobeingcirculatedwithintheBankforcommentanddiscussion.
Responsibility:DevelopmentResearchGroup,RuralDevelopmentGershonFeder([email protected] ),JaimeQuizon,andPeterLanjouw.
Completiondate:January2000.
Report
Lanjouw,Peter,andRobertSparrow.NonagriculturalEarningsinPeriurbanAreasofTanzania:EvidencefromHouseholdSurveyData.WorldBank,DevelopmentResearchGroup,Washington,DC.Draft.
TheImpactoftheFinancialCrisisontheFarmSectorinThailand
TheeconomiccrisisinThailandhashadanespeciallysevereimpactontheruralsector.Increasingunemploymentanddecliningrealwagesinurbanareashaveresultedinlarge-scaleemigrationbacktoruralareas,reducinghouseholdremittances,increasingpressureonnaturalresources,andintensifyingcompetitionforagriculturallandandthelimitedoff-farmemployment.Inaddition,highinterestratesandthedepreciationofthebahthaveconstrainedruralcreditandthustheconsumptionoffertilizerandotherimportedgoods,reducingagriculturalproductionandincreasingfoodinsecurityforpoorhouseholds(outputhasalsobeenaffectedbylowrainfallduetoElNiño).Finally,reductionsingovernmentexpendituresforruralinfrastructurehaveconstrictedruralemploymentandsetbackruraldevelopmentobjectives.
Fewconcretedataareavailableforquantifyingtheshort-orlong-term
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impactofthesedisparateeconomicshocksonthewell-beingofruralhouseholds.Todistinguishtheshort-fromthelong-termimpacts,itisessentialtounderstandhowtheshocksaffectboththecurrentproductionandtheinvestmentbehavioroffarmhouseholds.Thatrequiresdetailedagroeconomicdataatthehouseholdlevel,presentlyunavailableforpostcrisisThailand.
ThisstudyisaimedatidentifyingandmeasuringtheeffectsoftheeconomicshocksfromThailand'seconomiccrisisonruralhouseholds'well-being.Thestudyhasthreeparts:
Providingreliableinformationoncrisis-inducedchangesinagriculturalemployment,ruralcredit,ruralinfrastructure,agriculturallandusepatterns,farminvestment,output,andconsumption.
Identifyingandmeasuringtheimpactsofthedifferentcrisis-inducedshocksonfarmhouseholdbehaviorandwell-beinginordertodesigneffectiveinterventionstomitigatetheadversesocialimpactsofthecrisis.
Consultingwithtargetedgroupsanddisseminatingtheresultsoftheanalysisandtheirpolicyimplicationstocivilsocietytohelpbuildanationalconsensusonshort-andmedium-termmeasurestorestoreequitableandsustainableruralgrowth.
Thestudywillproduceinformationoncrisis-inducedchangesbycombiningtwodatasources:adetailed,nationwide,farmhouseholdsurveyconductedbytheMinistryofAgriculturein1996,ayearbeforetheonsetofthecrisis,andafollow-upsurveyofalargesubsampleofthesamehouseholdsthatisbeingconductedwiththeassistanceofaMinistryofAgricultureresearchteam.Applyingcommoneconometrictechniques,thestudywillusethesepaneldatatoanalyzehowdifferentindicatorsofshocksuchasjoblossofhouseholdmembers,reductionincreditavailability,changesinoutputprices,anderosionofinfrastructurearerelatedtochangesinlanduse,
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investment,output,consumption,andhouseholdcashexpendituresoninputs.Itwillalsoexaminethedistributionoftheseimpactsacrosspoorandnonpoorruralhouseholds.
Thestudy,developedinresponsetoarequestfromthegovernmentofThailand,isintendedtoprovideagroeconomicinformationtohelpthegovernment,theWorldBank,andcivilsocietyformulateamoreeffectiveandequitableprogramtorespondtothecrisisintheshorttermandensuresustainableruraldevelopmentinthemediumterm.Consultationmeetingsontheinitialresultswillbeheldwithlocalcommunityleaders,non-governmentalorganizations,governmentofficials,researchgroups,andtheprivatesector.Alargerconfer-
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encewillfollow,inBangkok,forseniorpolicymakers,donors,andotherelementsofcivilsociety.
Responsibility:DevelopmentResearchGroup,RuralDevelopmentGershonFeder([email protected] ),JaimeQuizon,andHananJacoby.WithTongrojOnchan,CharlesMehl,andAnthonyZola,MekongEnvironmentandResourcesInstitute,Thailand.TheASEMTrustFundiscontributingfundingfortheresearch.
Completiondate:March2000.
BrazilGlobalOverlayStudy
ThisstudywillanalyzeemergingpolicyissuesandproposedeconomicmechanismsrelatedtoforestprotectionandforestestablishmentinBrazil,lookingattheimplicationsforbiodiversityprotection,mitigationofclimatechange,andlocaleconomicbenefits.Thestudywillusespatialsimulationandothermethodologiestoassesshowpolicieswillchangespatialpatternsofincentivesforforestpreservation,management,andconversionandhowalternativespatialpatternsofexploitationandconversionaffectcarbonsequestrationoremissionsandhabitatsimportanttobiodiversity.
Thestudyhasthreecomponents:
Transferabledevelopmentrightsandgreaterflexibilityunderthelegalforestreserverequirement.Brazilianlawrequireslandownerstomaintainatleast20percentofeachpropertyundernaturalforestcoverasaforestreserve.Thereisactivediscussionaboutallowingpropertyownerstomeetthisrequirementonadifferentproperty,toreducecompliancecostsandincreasetheenvironmentaleffectivenessofthemeasure.Thiscomponentwillexaminethecostsandbenefitsofalternativeproposalsformakingthereserverequirementmore
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flexible,focusingprimarilyonthestateofMinasGeraisasacasestudy.
Nativeforests,plantedforests,andcokeinMinasGerais.
Thiscomponentwillexamineanexusofissuesrelatedtothesubstitutabilitybetweencharcoalfromnativewoodlands,charcoalfromplantations,andmineralcokeinmeetingtheenergyneedsofMinasGerais'slargeironandsteelindustries,assessingpoliciesthatwouldinternalizetheenvironmentalbenefitsofusingsustainablesourcesofenergy.
LanduseintheAmazon.Thegovernmentisconsideringgreatlyexpandingthescopeofnationalforests,withtheaimofshiftingloggingactivityfromunregulatedprivatelandstoregulatedconcessionsinnationalforests.Thiscomponentwillexaminetheeconomicandenvironmentalcostsandbenefitsofsupportingandcomplementarylandusepolicies.
Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentKennethChomitz([email protected] ).WithAlineBernardes,SantaUrsulaUniversity;andTimothyThomas.
Completiondate:June2000.
EnvironmentalChangeandAdaptiveResourceMarkets:Computer-AssistedMarketforWaterAllocation
Experimentaleconomicscanyieldaformalandreplicablesystemforanalyzingalternativemarketstructures,suchasthesmartmarket,beforetheyareactuallyimplemented.Forexample,itallowsasmartwatermarkettobedevelopedandtestedinthelaboratoryundersimulateddroughtconditionsduringyearsofsufficientwater.Iftheresultsarepositive,suchamarketcouldbeimplementedduringyearsofwaterscarcity.
Thisstudyisdevelopingandtestingasmartmarketframeworkfor
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waterinthecontextofCaliforniausingasimplifiedapproach.Theapproachhasseveralparts,includingestimatesofademandfunctionforurbancenters,awaterquantityandqualityproductionfunctionmodelofmajorcrops,environmentalwaterquantityandqualityrequirements,andthecostsofconveyancebetweenwatersupplyandwaterconsumptioncenters.Laboratoryexperimentshavebeencarriedouttostudytheefficiencyandpriceperformancecharacteristicsofauniformprice,double-auctionmechanismforthesimultaneousallocationofwaterandtransportationcapacityrightsamongbuyers,transporters,andsellers.Acomputeralgorithmmaximizestotalgainsfromexchangebasedonthesubmittedbidsandoffers,anddeterminesallocationsandnondiscriminatorypricesatallnodes.TheresearchdrawsondatafromtheCaliforniaDepartmentofWaterResources,previousstudiesonwaterinCalifornia,andsurveysandinterviews.
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Experimentsandactivitiesinthepastyearcenteredonthreeissues:
Instreamflowsandenvironmentalimpacts.Instreamflowshavevalueimprovedwaterquality,environmentalandrecreationalbenefits,andaestheticvalue.Traditionally,instreamflowswereprotectedbyminimumflowconstraintsandregulatoryreview,whichwereoftenviewedasbarrierstotrade,notplayersinthemarket.Apotentialmarketsolutionistoincorporateinstreamflowvaluesintothemarketallocationmechanism.Resultsfrom12experimentsfor25periodseachsuggestthatthetotalrealizedsurplusishigherwhentheenvironmentisaplayerinthemarketandthatenvironmentalparticipationintroducesvolatilityinpricesandquantities.
Localirrigationprojectsasacommonpropertyresourcequestion.Experienceshowsthatcooperativeeffortisneededtomaintainanetworkofirrigationcanals.Usually,individualeffortbenefitsallmembersofagroup,butinmanycasesitmaybeanincentivetofreeride.Theexperimentsevaluatedwhetheracommonpropertyresourceproblemcanberesolvedlocallyandautonomously,andunderwhatconditionsgovernmentinterventionimprovesordegradesthecommonpropertyresource.Thestudyusedasimpleexperimentaldesignwiththreeirrigators,onegovernmentagency,andtwocanals,andwiththegovernmenthavingtheabilitytotaxorsubsidizeandtoprofitfromcropoutput.Theexperimentwasrununderdifficultandregularoperationalconditionsfortheirrigationproject.Preliminaryresultssuggestthatcooperationtakestime,butonceitisachieved,efficiencyishigherthanwithgovernmentintervention.
Waterquality.Whenwaterfromdifferentsourcesismixedbeforedeliverytoconsumerswithdifferentwaterqualitypreferences,waterqualitybecomesapublicgood.Thestudyseekstodesignamechanismthatresultsinthedeliveryofwaterofefficientqualityandquantity.Theresultsoftheexperimentsarenotyetavailable.
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Findingsofthestudyhavebeenpresentedataninternationalconference,UsingExperimentstoGuidePolicymakinginWaterandPowerMarkets,heldinMadrid,Spain,onJune22-23,1999.Theconferencewasattendedby60participantsfrom10countries.
Responsibility:RuralDevelopmentDepartmentArielDinar([email protected] ).WithVernonL.SmithandStevenRassenti,UniversityofArizona;andRichardE.Howitt,UniversityofCaliforniaatDavis.TheNationalScienceFoundationiscontributingfundingfortheresearchthroughagranttotheUniversityofArizonaandtheUniversityofCalifornia.
Completiondate:June2000.
Reports
Dinar,Ariel,RichardE.Howitt,StevenRassenti,andVernonL.Smith.1998.DevelopmentofWaterMarketsUsingExperimentalEconomics.InK.WilliamEaster,MarkW.Rosegrant,andArielDinar,eds.,MarketsforWater:PotentialandPerformance.Boston:KluwerAcademic.
Dinar,Ariel,RichardE.Howitt,J.J.Murphy,StevenRassenti,andVernonL.Smith.1998.HowMightFutureWaterMarketsLook?TheUseofExperimentalEconomicstoDesignMarketsforWater.PaperpresentedattheWorldCongressofEnvironmentalandResourceEconomists,Venice,Italy,June2527.
Murphy,J.J.,andRichardE.Howitt.1998.TheRoleofInstreamFlowsinaWaterMarket:UsingExperimentalEconomicstoAddressEnvironmentalIssues.PaperpresentedattheEconomicScienceAssociationAnnualMeeting,Mannheim,Germany,June1113;andattheWorldCongressofEnvironmentalandResourceEconomists,Venice,Italy,June2527.
EnvironmentalDataAccounting
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Thisprojectinvestigateshow,usingaconventionalnationalaccountsframework,thedepletionofnaturalresourcesanddegradationoftheenvironmentbypollutioncouldbeincorporatedinasystemdesignedtomeasureeconomicperformance.Inthepastfiscalyearresearchactivitieshavefocusedonthreemainareas:
ProvidingcontinuingsupporttointernationalinitiativesthroughparticipationintheLondonGroupofenvironmentaldataexperts,withtheaimbeingtocompileamanualandaccompanyingworkbookreflectingproposedrevisionstotheUnitedNationsRecommendedSystemofIntegratedEnvironmentalandEconomicAccounts(SEEA).
ProvidingassistanceinfinalizingthereportoftheNairobiGroup,whichispreparingasetofacceptedguidelinestohelpdevelopingcountriesestimatethe
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environmentalimpactofeconomicactivitiesindifferentsectors.
WorkingtowardageneralmeasureofsustainabilityinconjunctionwithrelatedresearchactivitiesoftheUnitedNations,Eurostat,theOECD,andleadingindustrialcountries.
TheseactivitieshaveallbeencloselyrelatedtoeffortswithintheWorldBanktoexpandtherangeofenvironmentalindicators,strengthentheirrelevance,andproduceandrefineassociatedstatisticalseries.ThisinitiativeformsanimportantpartoftheBank'scommitmenttoprovidingsuitabledataformonitoringnewlyagreedinternationaldevelopmentgoalsfortheenvironmentinthe21stcentury.
TheoutcomeoftherecentdataworktobetterunderstandthelinksbetweentheeconomyandtheenvironmentappearsregularlyintheWorldBank'sannualWorldDevelopmentIndicators.WorkingpapershavebeenpreparedforreviewbytheLondonandNairobiGroups,withonecontributingtothenewmanualrelatingtotherevisedSEEA.Inaddition,theprojectisreviewingalltheapproachesproposedforcreatingacoherentsetofenvironmentalaccountsandassessinghowwelleachfitswithinternationallyestablishedeconomicaccountingmethodsthatlinkassetstockswithflows.
Responsibility:DevelopmentDataGroupMichaelWard([email protected] )andMohammadOrdoubadi.WithAsamiMiketa,KeioUniversity,Japan.
Completiondate:June2000.
LandReform
Newopportunitiesandlingeringproblemshaverenewedtheinterestofgovernmentsinagrarianreform:
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Theinabilitytoaddressruralviolence,deep-rootedpoverty,andinequalityofopportunitythroughconventionalmeans,andtheexpectationthataredistributionofproductiveassetswouldimprovetheaccessofthepoortoeconomicopportunities.
Thepotentialforimprovingproductivityandequitygiventhelargetractsofunutilizedorunderutilizedlandonlargefarms,theinversefarmsize-productivityrelationship,andthedesireoflargelandlordstoliquidatetheirlandholdings.
Thefailureofold-stylelandreform,thecontinuingpoliticalpressure,andthedropinlandpricesfollowingtheeliminationofmanydistortionsfavoringagriculture.
Thisresearchaimstoquantifythescopeforandeconomicpotentialoflandreform,helpinthedesignofprogramsthatwouldrealizethispotential,andmountmonitoringandevaluationsystemsthatwouldallowin-depthevaluationoftheimpactofsuchprogramsonbothproductivityandpovertyreduction.TheprojectcombinesexanteanalysisoflandreformbasedonfarmbudgetanalysiswitheconometricanalysisofsurveydataforBrazil,Colombia,thePhilippines,SouthAfrica,andZimbabwe.Country-specificresultsandinternationalexperienceprovideimmediatefeedbackonongoingefforts.
Inadditiontohelpingtoestablishbaselinesurveys,theprojecthasundertakenseveralcasestudyevaluations.Ingeneral,thesedemonstratethescopeforincreasingproductivitythroughlandreformandtheadvantagesofademand-drivenapproach,buttheyalsohighlighttheimportanceofdesigningmechanismsforimplementingsuchreformsthatareincentive-compatibleinordertoensurereplicabilityandeconomicviability.
ThefindingssupporttheWorldBank'sstanceinfavoroflandreform,andtheeffortsindevelopingcountriestoaddresslong-standingissues
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ofmaldistributionofassets.Theyalsoemphasizetheimportanceofplacingsucheffortsinabroaderpolicycontext.
TheprojecthascontributedtothedesignofBankoperationsbypointingtoelementscriticalforsuccess(focusingonintegratedproductiveprojects,involvingfinancialintermediaries,andusingadecentralizedapproach)andbyelaboratingaframeworkformonitoringandevaluatingsuchprojectsthatwilleventuallyallowanin-depthassessmentoftheirimpact.Theresearchalsohashelpedtoinformthepolicydebateandclarifythepotentialandthelimitsoflandreformincountrieswhereitremainshighlycontroversial(thePhilippines,Zimbabwe).
Resultsweredisseminatedataconference,AssetDistribution,Poverty,andGrowth,inBrasiliainJuly1998jointlysponsoredbytheWorldBankInstituteandtheBrazilianMinistryofLandReform,withabout100policymakersandkeyresearchersparticipating.(Aselec-
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tionofpapersfromtheconferenceisavailableontheWebat(www.worldbank.org/landpolicy/brazil.)FindingswerealsodisseminatedthroughpresentationsataworkshoponsustainableagrarianreforminFortaleza,Brazil,inNovember1998;presentationsonthedesignofdemand-drivenlandreformprogramsforSouthAfricanpolicy-makersandataworkshopinPretoriainJune-July1999;andapresentationonlandreformissuestoagovernmentcommitteeonagrarianreforminthePhilippinesinJanuary1999.
Responsibility:DevelopmentResearchGroup,RuralDevelopmentKlausDeininger([email protected] )andPedroOlinto.TheSwissTrustFundandtheBraziliangovernmentarecontributingfundingfortheresearch.
Completiondate:June2001.
Reports
Deininger,Klaus.1999.MakingNegotiatedLandReformWork:InitialEvidencefromColombia,Brazil,andSouthAfrica.WorldDevelopment27(4):651-72.
.Forthcoming.NegotiatedLandReformasOneWayofLandAccess:ExperiencefromColombia,Brazil,andSouthAfrica.InA.deJanvry,E.Sadoulet,andJ.P.Platteau,eds.,LandReformRevisited:AccesstoLand,RuralPoverty,andPublicAction.
Deininger,Klaus,andHansBinswanger.Forthcoming.TheEvolutionoftheWorldBank'sLandPolicy.WorldBankResearchObserver:
EmergencefromSubsistence:TheCaseofNepal
PovertyinNepal,likethatinitsSouthAsianneighbors,continuestobepredominantlyrural,withagricultureprovidingalivelihoodformorethan80percentofthepopulation.Agricultureremainsprimarily
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subsistence-based,withlittlediversificationintohigh-valuenoncerealcrops.Norhastherebeenmuchdiversificationoftheruraleconomyintononfarmactivities.Ruralhouseholdsparticipatelittleintheoutput,input,andfactormarkets.
Thisresearchisaimedatexplainingthepredominanceofsubsistenceactivitiesintermsofhouseholdandcommunitycharacteristics.Atthecommunitylevel,theresearchusestheVonThunenmodeltostudythespatialpatternofspecializationinruralareas.Atthehouseholdlevel,itcombinestheagriculturalhouseholdmodelwiththeEllet-Waltermodeloftransportnetworkstostudycroppingpatterns,allocationoflabor,andparticipationinoutputandinputmarkets.
Atthefirststageofeconometricestimation,thecross-sectionaldatafromthe1995-96NepalLivingStandardsSurvey(NLSS)areusedtoestimatethehousehold-andcommunity-levelregressions.Toaccountforhousehold-andcommunity-levelfixedeffects,theresearchwillconductahouseholdsurveytoconstructpaneldatathatwillbeusedforestimationinthesecondstage.
Thecombinationofcommunity-andhousehold-levelanalysiswillhighlighttheroleofeducation,agriculturalservices(extension,irrigation),infrastructure(roads,communications),andothergeographicfactorsinhouseholddecisionsonlandandlaborallocationandmarketparticipation.Theeconometricestimateswillallowestimationofreturnsfrom,anddistributionalconsequencesof,improvedprovisionofpublicinputsandservicesthatarelikelytobeinstrumentalinanemergencefromsubsistence.
TheresearchisexpectedtoformabasisfordeterminingpolicyprioritiesandformulatingaruraldevelopmentstrategyinNepal.
Responsibility:DevelopmentResearchGroup,RuralDevelopmentForhadShilpi([email protected] ).WithMarcelFafchamps,UniversityofOxford.
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Completiondate:February2002.
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InfrastructureandUrbanDevelopment
InfrastructureandGrowth:AMulticountryPanelStudy
Thisstudyhasdevelopedadatabaseofworldinfrastructurestocksandestimatedthegrowtheffectsoffourtypesofinfrastructureroads,rail,telephonelines,andelectricitygenerationandtransmissioncapacityoverthepastthreedecadesforabout100countries.Ithasmodeledthesefourtypesofinfrastructureseparatelyinastandardgrowthframework,includingprivatecapitalandhumancapitalasadditionalexplanatorsofoutputandproductivitygrowth.
Inlookingathowdifferentkindsofinfrastructureaffectgrowth,thestudyhaspaidparticularattentiontowhetherprivatecapitaliscrowdedinoroutbyinfrastructureinvestmentsandwhetherthegrowtheffectismediatedthroughstructuralchangeoftheeconomyandurbanization.Thestudyhasalsoaddressedquestionsonthespeedwithwhichgrowtheffectsoccur,whetherinfrastructureinvestmentaffectsthelevelofGDPortherateofgrowth,andwhetherinfrastructureactsasanormalinputintoproductionandwhetherasabottleneck.
Responsibility:DevelopmentResearchGroup,PublicEconomicsShantayananDevarajan([email protected] );andTransportation,Water,andUrbanDevelopmentDepartment,OfficeoftheDirectorChristineKessides.
Completiondate:December1999.
Ref.no.:680-89.
Report
Canning,David.1998.ADatabaseofWorldStocksofInfrastructure,
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1950-95.WorldBankEconomicReview12:529-47.
InfrastructureProductivity:DirectandIndirectEffects
Overthepastdecadestudieshaverepeatedlyreportedratesofreturntopubliccapitalfarexceedingthosetoprivatecapitalorthoseemergingfromcost-benefitanalysisorprojectevaluationforinfrastructureinvestments.Inparttoinvestigatethesestillcontroversialreturnsandtofindoutwhethertheoperationofindirecteffectsmayhelpexplainthem,thisstudywillidentifyandmeasurethegrowthandproductivityeffectsofinfrastructureinIndiausingtime-seriesdataforroughly1960-90.
Thestudywilladdressthreemainquestions:First,inadditiontodirecteffectsonoutputandgrowth,doesphysicalinfrastructurehavesignificantindirecteffects?Second,whataretheeconomicratesofreturnofdifferentkindsofinfrastructureinvestment,andhowdotheycomparewiththesocialratesofreturntootherusesofcapital?Third,isinfrastructureanecessaryconditionforgrowth?
Thestudyhasbeenfocusingonextensivedatagatheringefforts.Oncethenecessarydatahavebeenassembled,thestudywillestimategrowtheffectsseparatelyforroads,rail,telephonelines,andelectricitygenerationandtransmissioncapacity.Thegrowtheffectswillbemeasuredinmanufacturingandindomesticproductfirstatthestateandthenatthedistrictlevel.Thestudywilltrytodetermineatwhatleveltheeffectsoperateandthroughwhatchannelsforexample,urbanizationorchangeintheorganizationofmanufacturing.
Responsibility:DevelopmentResearchGroup,PublicEconomicsShantayananDevarajan([email protected] )andSethaputSuthiwart-Narueput;andTransportation,Water,andUrbanDevelopmentDepartment,OfficeoftheDirectorChristineKessides.WithEsraBennathan;SubhashisGangopadhyay;SylajaSrinivasan;
CharlesHulten;PaulSeabright;andMartinRobertWeale.
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Completiondate:December2000.
Ref.no.:681-54.
DatabaseonInfrastructurePrivatization
LackofdataaboutinfrastructureprivatizationhasseverelyconstrainedtheWorldBank'sabilitytocarryoutasystematicanalysisoftherelationshipbetweenthepolicy
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alternativesinprivatizinginfrastructureandtheinstitutionalenvironmentinwhichthesealternativesexist.Thisproject,inlinewiththerecommendationsoftheBank'sWorldDevelopmentReport1994:InfrastructureforDevelopment(NewYork:OxfordUniversityPress,1994),isdevelopingadatabaseofvariablescrucialtotheunderstandingofexperienceininfrastructureprivatization.TheaimistoenablepolicymakersandBankstafftolearnfromthesuccessesandfailuresofinfrastructurereform.TheaccelerationininfrastructureprivatizationandtherapiddisappearancefromtheBank'sshelvesandinstitutionalmemoryofmuchoftheinformationonutilities'performanceastheseentitiesareprivatizedmaketheneedforthiseffortespeciallypressing.EarlyeffortstocollectinformationfromBanksourcesidentifiedsubstantialgapsthatmustbefilledthroughcountryvisits.
Thedatabasecoverssalesinelectricityandtelecommunicationsin24countriesandincludesfinancialinformationandperformanceindicatorsbeforeandaftersale,thetermsandconditionsoftheprivatizationtransaction,anddetailsontheregulatoryframework.ThedatabasewillfillimportantgapsintheBank'sinstitutionalmemoryandallowstaffpreparingandsupervisinginfrastructureprojectstoquicklycompareperformancemeasuresandregulatoryframeworkswiththoseforsuccessfulandunsuccessfulprivatizedfirms.Subsequentanalysisusingthedatawilldevelopdetailedguidelinesbasedonwhatworkedandwhatfailedinprivatizinginfrastructure.Responsibility:DevelopmentResearchGroup,RegulationandCompetitionPolicyMaryShirley([email protected] )andLukeHaggarty.WithRogerNoll,StanfordUniversity.
Completiondate:December1999.Ref.no.:681-66.
Institutions,Politics,andContracts:PrivateSectorParticipationinUrbanWaterSupply
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Reformspromotingprivatesectorparticipationintheprovisionofurbanwatersupplyareoftencitedassuccessstories,butthesereformshavefollowedmanydifferentapproaches,includingleases,concessions,andservicecontracts.Therehasbeennorigorousanalysisthatcriticallyexaminesthereformsandtheoutcomesorthatwouldenabledevelopmentpractitionerstochoosethemostefficientreformfortheircircumstances.Usingacasestudyapproach,thisresearchsystematicallyanalyzesexperiencewithattemptsatprivateparticipationintheprovisionofurbanwaterservicesinsixcities:BuenosAires,Argentina;Santiago,Chile;Abidjan,Côted'Ivoire;Conakry,Guinea;MexicoCity,Mexico;andLima,Peru.Thesamplerepresentsthemaincontractingoptionsusedinwatersupply,providessignificantvariationintheinstitutionalsetting,andallowscomparisonwithcountriesthathavenotusedprivateparticipation.
Thestudyanalyzestheeffectsofpoliticalandcontractinginstitutionsonthedesignandperformanceofcontractsforreformofurbanwatersupply,comparingdifferentformsofprivateparticipationandreformsunderpublicownership.Itexaminesthedesignandperformanceofreform(includingthecontractorselectionprocess,contractdesign,andregulatoryframework),lookingathowthedifferenttypesofreformaddressed,orfailedtoaddress,possibleproblemsofincentives,informationasymmetries,andcredibility.Finally,theresearchassessestheresultsofthereform,lookingatdifferentindicatorsofperformanceandmeasuringthewelfareeffectsofreformcomparedwithacounterfactual(usingthemethodologydevelopedbyAhmedGalalandothers,WelfareConsequencesofSellingPublicEnterprises:AnEmpiricalAnalysis,NewYork:OxfordUniversityPress,1994).
Theresearchhasproducedseveralkeyfindings.First,theverylargehealthandenvironmentalexternalitiesassociatedwithwaterprovisionmakeitfundamentallydifferentfromotherinfrastructuresectors.Second,itisdifficulttoprovideinstitutionalizedprotectionagainst
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expropriationofquasi-rentsandregulatorycaptureininstitutionallyweakenvironments.Third,constraintssuchasthepoliticalimportanceofwater,thecostandscarcityofwaterresources,andtheextentofunmetdemandprofoundlyaffectthedesignanddifficultyofreform.Fourth,thepoliticalmotivationfor,feasibilityof,andcommitmenttoreformaffectthechoiceofdesignforreformanditssuccess.Finally,theresearchconcludesthatevenwithseriousfailingsindesignorimplementation,theprivatelyoperatedsystemsproducedgainsoveranyreasonablecounterfactual.
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Thefindingsofthecasestudieswillbedisseminatedthroughworkingpapersandasynthesispaperonthepolicyandoperationallessons.TheWorldBankInstitutewillusethecasesforitstrainingprogramsonthewatersectorandonregulation.
Responsibility:DevelopmentResearchGroup,RegulationandCompetitionPolicyMaryM.Shirley([email protected] ),GeorgeR.G.Clarke,LukeHaggarty,ColinXu,andAnaMariaZuluaga;andPrivateSectorDevelopmentDepartment,PrivateParticipationinInfrastructurePenelopeBrookCowen.WithClaudeMenard,SorbonneUniversity;SimonCowan,WorcesterCollege,Oxford;ManuelAbdala;LorenaAlcazar,UniversityofthePacific;DouglassNorth,WashingtonUniversityinSt.Louis;ScottMastenandKeithCrocker,UniversityofMichigan;RogerNoll,StanfordUniversity;DaleWhittington,NortheasternUniversity;andMatthewMcCubbins,UniversityofCaliforniaatSanDiego.Completiondate:December1999.Ref.no.:681-87.
Reports
Clarke,GeorgeR.G.,andClaudeMenard.1999.ATransitoryRegime:WaterSupplyinConakry,Guinea.''Draft.
Cowan,Simon,GeorgeR.G.Clarke,andAnaMariaZuluaga.1999.PrivatizationandCompetitioninUrbanWaterSupply:TheCaseofThamesWater,U.K.Draft.
Haggarty,Luke,PenelopeBrookCowen,andAnaMariaZuluaga.1999.Institutions,Politics,andContracts:PrivateSectorParticipationinUrbanWaterSupplySystemsTheCaseofMexicoCityWaterSectorServiceContracts.Draft.
Menard,Claude,andGeorgeR.G.Clarke.1999.ReformingUrbanWaterSupply:TheCaseofAbidjan,Côted'Ivoire.Draft
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Noll,Roger,MaryShirley,andSimonCowan.1999.ReformingUrbanWaterSystems:TheoryandEvidencefromDevelopingCountries.Draft.
Shirley,Mary,andClaudeMenard.1999.CitiesAwash:ReformingUrbanWaterSystemsinDevelopingCountries.Draft.
Shirley,Mary,L.ColinXu,andAnaMariaZuluaga.1999.ReformingUrbanWaterSupply:TheCaseofSantiago,Chile.Draft.
Shirley,Mary,LorenaAlcazar,L.ColinXu,andAnaMariaZuluaga.1999.ReformingUrbanWaterSupply:TheCaseofLima,Peru.Draft.
IdentifyingtheDeterminantsofPerformanceofCommunity-BasedWaterandSanitationServices
ToimproveaccesstosafedrinkingwaterinCentralJava,Indonesia,severalgovernmentalandnongovernmentalorganizationsinitiatedcommunity-basedwaterprojectsinthelate1980sandearly1990s,withvaryingsuccess.Whyhavesomewaterservicesfinancedbytheseprojectssucceeded,andwhyhaveothersfailed?
Toanswerthisquestion,thisstudyanalyzedhowcloselythesewaterprojectshadfollowedinpracticethecommunity-basedapproach,whichincorporatesademand-responsivefocusonwhatuserswantandwhattheyarewillingtopay.Weretheservicesprovidedtrulydemand-responsive,anddidtherulesgoverningdesign,construction,andoperationsandmaintenanceprovideincentivesforuserparticipation?Thestudyalsoanalyzedtheinfluenceofsocialcapitalonuserinvolvementandontheperformanceandimpactofwaterservices.
Theresearchwasbasedoneconometricanalysisofquantitativeandqualitativedatafrom44CentralJavanesevillagesthathadbeenservedbycommunity-basedwaterprojects.Quantitativedatawere
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collectedthroughsurveysof1,100householdsand44watercommitteesandthroughtechnicalassessmentsoftheperformanceofwaterservices.Qualitativedatawerecollectedthroughparticipatoryexercisescarriedoutinfemaleandmalefocusgroupsineachvillagesurveyed.
Theresultsrevealedthatadherencetothedemandresponsiveapproachanduserempowermentwasfarfromcompleteinallthewaterprojectssurveyedandalsovariedgreatlyacrossprojects.Theinstinctsandinstitutionsofthetraditionalsupply-drivenapproachhadnotwitheredaway,constrainingapplicationofthedemandresponsiveapproach.
Butwheredemand-responsiveelementswereintroducedintowaterprojects,theyproduceddesirableresults.Makingwaterservicesdemand-responsivewasfoundtoimproveperformance:householdsaremorelikelytomaintainservicesthatmatchtheirdemand.Demand-responsivenesscanbepromotedbyinvolvinghouseholdsindesigningservicesandbylettinghouseholds,notoutsidersorvillageleaders,makethefinaldecisionaboutthetypeandlevelofservices.Toensurethat
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householdchoicesareinformed,adequateinformationaboutthecostsandmaintenancerequirementsofdifferentserviceoptionsneedstobeprovidedtousersduringthedesignprocess.
Ensuringthatvillageshaveeffectivemechanismsformonitoringhouseholdcontributionstoconstructionandoperationsandmaintenanceisalsocriticaltoperformance.Withoutmonitoring,householdshaveanincentivetofreeride.
Thechancesforsuccessfuldemand-responsivestrategiesaresignificantlyenhancedinvillageswithhighlevelsofsocialcapital.Inthesevillageshouseholdparticipationislikelytobehighandmonitoringmechanismsaremorelikelytobeinplace.
Responsibility:Transportation,Water,andUrbanDevelopmentDepartment,WaterandSanitationDivisionMikeGarn([email protected] ).WithJonathanIshamandSatuKähkönen,UniversityofMaryland.
Completiondate:June1999.
Ref.no.:682-19C.
Report
Isham,Jonathan,andSatuKähkönen.1999.WhatDeterminestheEffectivenessofCommunity-BasedWaterProjects?EvidencefromCentralJava,Indonesia,onDemandResponsiveness,ServiceRules,andSocialCapital.UniversityofMaryland.
EfficientNetworkAccessPricingRulesforDevelopingandTransitionEconomies
Thisresearchaimstotranslatetheprinciplesandresultsofthetheoreticalandanalyticworkonpricingaccesstoinfrastructurenetworksintoasetoftractablerulesandprocedures.Theneedfor
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accesspricingrulesthatareeasytoimplementisespeciallyurgentindevelopingandtransitioneconomiesbecauseofseveremeasurementproblemsandlackoftechnicalexpertise.Theresearchseekstodevelopanoperationallyusefulapproachtothedefinitionandimplementationofaccessandinterconnectionrulesinnetworkindustriesthataremovingtowardacompetitivemarketstructure.Itwillderiveanefficientaccessformulathatproducesoptimalstaticanddynamicallocations.
Theresultsoftheresearchwillprovidepracticalguidancetopolicymakersindevelopingandtransitioneconomiesonhowtoensureaccessforcompetitorstoessential(bottleneck)networkfacilitiesontermsthatareconsistentwithefficientcompetitionandthataffordtheownersofthefacilitiesafairopportunitytorecoverprudentlyincurredcosts.
PreliminaryresultswerepresentedattheWorldBank'sEconomistsForuminthespringof1999.
Responsibility:DevelopmentResearchGroupIoannisKessides([email protected] ).WithJean-JacquesLaffont,UniversityofToulouse;RobertWillig,PrincetonUniversity;andJanuszOrdover,NewYorkUniversity.
Completiondate:June2000.
Ref.no.:682-36.
OptimalChoiceofIndustryStructureintheNetworkUtilities
Themainobjectiveofthisresearchprojectistodevelopasetofprinciplesforthehorizontalandverticalrestructuringofnetworkutilitiesintransitionanddevelopingeconomies.Itfirstidentifiestheeconomiccharacteristicsoftheseindustries(includingemployment,financialobligations,extentofnetworkdevelopment,marketsizeanddensity,initialconditionsrelatedtoproductiveandallocative
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inefficiencies,andthenatureoftechnology,costs,anddemand)andanalyzestheimplicationsofthesecharacteristicsforthedesignofoptimalindustrystructure.Takingintoaccounttheindustrycharacteristics,itthenseekstodeveloppowerfulanalytictoolstoclarifytherelevantprinciplesforstructuralreformandreorganizationandforrestructuringtherelationshipsbetweengovernmentandthenetworkutilities.Inparticular,itcomparestheleadingstructuraloptionsintermsoftheirimplicationsforefficiencyandcompetition,coordinationeconomies,scopeeconomies,transactionscosts,credibleincentivestructures,andregulatorycomplexity.
Responsibility:DevelopmentResearchGroupIoannisKessides([email protected] ).WithDavidNewbery,UniversityofCambridge;andPabloSpiller,UniversityofCaliforniaatBerkeley.
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Completiondate:June2000.
Ref.no.:682-37.
PilotStudyofCityEconomicGrowth
Thisresearchlookedatthecircumstancesofrapidgrowthinthegarmentindustryinfourcitiesinthedevelopingworldtoinvestigatehowrapidgrowthinteractswiththepolicyenvironment.Itthenexaminedthefourcasestudies,notingthesimilaritiesanddifferencesamongthem.
Eachcasestudyconstructedthehistoryofhowandwhythegarmentindustrydevelopedandanalyzeditsimpactonthecityeconomyandthepositionofthepoor.Ittracedthehistoryofthenationaleconomicregimeandprovincialandlocalpublicinterventions.Anditassessedthecontributionoflocalinterventionstothedevelopmentoftheindustryandtheextenttowhichpublicauthoritieswereabletoshieldthepopulationfromthedeleteriouseffectsofrapidindustrialization.Theresearchwasconductedthroughinterviewswithasampleofemployersineachcityandwithofficialsofpublicagenciesrelevanttotheindustry,relevantbusinessassociations,andthecitymanagement.
Thestudyyieldedasetofpolicypointersfornationalandlocalgovernmentsonthepreconditionsfordevelopingahigh-growthcityindustry.ItproducedaframeworkofanalysisandindicatorstoassistWorldBankstaffinrapideconomicassessmentofcityeconomies,sectoralpotentialforhighoutputgrowth,andmethodspublicauthoritiescanusetoaidgrowth.Italsodevelopedasetofhypothesesfortestingonabroadersampleofcitiesandmorethanasingleindustry.
Responsibility:Transportation,Water,andUrbanDevelopment
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Department,GlobalUrbanUnitTimCampbell([email protected] ).WithNigelHarris,SampathSrinivas,LamiaBulbul,andSamehNeguib,UniversityCollege,London;XiaochenMeng,PekingUniversity;MarkWang,UniversityofMelbourne;andGuicaiLi,InstituteofUrbanPlanningandDesign,Shenzhen.TheBritishConsultantTrustFundcontributedfundingfortheresearch.
Completiondate:December1998.
Ref.no.:682-39C.
Reports
Bulbul,Lamia,andSamehNeguib.1998.UrbanizationandIndustrializationinShubraEl-Kheima.UniversityCollege,DevelopmentPlanningUnit,London.
Harris,Nigel.1998.GarmentMakingandUrbanization:AReviewofFourCaseStudies.UniversityCollege,DevelopmentPlanningUnit,London.
Mainuddin,Khandaker.1998.TheGarmentIndustryofDhaka.BangladeshCenterforAdvancedStudies.
Meng,Xiaochen,MarkWang,andGuicaiLi.1998.TheGarmentIndustryinShenzhenCity.PekingUniversity,Beijing;UniversityofMelbourne;andInstituteofUrbanPlanningandDesign,Shenzhen.
Srinivas,Sampath.1998.PublicInterventions,Industrialization,andUrbanization:TirupurinTamilNadu.UniversityCollege,DevelopmentPlanningUnit,London.
RevisitingDevelopment:UrbanPerspectives
Thisresearchaimedtoshedlightonsomeofthemainissuesinformulatinganurbanperspectiveonnationalandregionaldevelopmentforthe21stcentury.Itwasmotivatedinpartbyan
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interestinpresentingafreshyethistoricallygroundedperspectiveontheeconomiccontributionsofurbandevelopment,asbackgroundforarenewedurbanresearcheffortintheWorldBank.Theproject'sfocuswastwofold:identifyingfactorsandtrendsdeterminingurbangrowth,particularpatternsofurbansystems,andthesizeandeconomiccharacterofcities;andidentifyingpoliciesfoundtobeimportantinaffectingboththeseoutcomesandthespatialefficiency,orproductivity,ofcities.
Theresearchconsistedofalinkedsetoffivepapers(seebelow),eachofwhichreviewedthestateoftheartand,wheregapsexist,attemptedtobridgethesegapsconceptually;developedhypothesesontheevolvingrolesofcities;andexaminedrelevant,readilyaccessibledata.
ThepapersbyMeyerandHohenbergtakeanexplicitlyhistoricalandmacroperspectiveonurbandevelopment.Indoingso,theyapplyhistoricallyallthemajorunderlyingconceptsofurbananalysistheoriesofthecentralplace,networksystem,industriallocation(logistics),agglomerationeconomies,andeconomicexportbasetoexploretherolesanddifferingpatternsofcity
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growthinindustrializationandtradedevelopment.Glaeser'spaperaddspoliticalorganizationtotheseconcepts,arguingandshowingempirically(throughcitycasestudiesandcross-countrydata)thaturbansystemsinparticular,patternsofcityprimacyarestronglyinfluencedbypoliticalforces,includingthedegreeofcentralizationofpoliticalpower.Thepaperfindsevidencethatstabledemocraciesaremeasurablylessprimatethanunstabledictatorships,anddiscussesthelikelyimpactofarangeofpublicpolicies(includingincreasingdemocratization,decentralization,andfederalism)andexternaltrends(includingglobalizationandadvancesininformationtechnology)onpatternsofcityprimacy.
ThepapersbyMillsandKearetakeamoremicroanalyticalapproachbylookingatfactorsaffectingtheefficiencywithincitiesandthustheirpotentialcontributionstonationaleconomicandsocialdevelopment.Millsarguesthathowwellurbanareasfunctioninparticular,byrealizingtheadvantageofproximatelocationdetermineswhetherthelabormarketdevelopseffectivelyasamajorsourceofeconomicgrowthandhumandevelopment.Education,technology,labormarket,landuse,realestatemanagement,andtransportandcommunicationspoliciesboththosewithinandthoseaffectingcitiesinfluencecities'productivity.Kearecontinuesfromthispointofdeparturetolookfurtherattheinternal,spatialaspectsofcityplanningandmanagementandelaboratesthelinksbetweentheseandthecentralimportanceoftheurbanlabormarketanditsefficientfunctioning.
InterimworkonthepaperswasdiscussedataBankworkshopinMay1998(inconnectionwithpreparationoftheBank'snewurbanandlocalgovernmentstrategy)andinJuly1998(aspartofapreparatoryworkshopfortheBank'sWorldDevelopmentReport1999/2000).ThepapershavebeencirculatedamongBankstaffandwillbedisseminatedtonationalandlocalgovernmentclientsthrough
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ongoingdialogueonurbanstrategyandpolicyandthedirectionsoffutureBankassistance.ThepaperswillalsobeavailableontheBank'sWebsiteatwww.worldbank.org/html/fpd/urban/index.html.
Itishopedthattheproject,togetherwiththeactivitiestowhichithascontributed,willhelptopersuadetheBankthaturbanshouldbeconsideredakeyfocusofpolicyformulationandthatcitiesareanimportantunitofeconomicanalysiswithimplicationsforsubregionalandnationaldevelopment.TheresearchsupportstheeconomiccaseforBankurbanassistanceprogramsandforincreasingBankassistancetocitiesintheireffortstoformulatelocaldevelopmentstrategies.
Responsibility:Transportation,Water,andUrbanDevelopmentDepartment,OfficeoftheDirectorChristineKessides([email protected] ).WithDouglasHamiltonKeare,LincolnInstituteofLandPolicy;EdwardL.GlaeserandJohnRobertMeyer,HarvardUniversity;EdwinS.Mills,NorthwesternUniversity;andPaulJ.Hohenberg,RensselaerPolytechnicInstitute.
Completiondate:June1999.
Ref.no.:682-40C.
Reports
Glaeser,EdwardL.1998.PrimacyandPolitics.
Hohenberg,PaulM.1998.UrbanSystemsandEconomicDevelopment:TheEuropeanLongTermandItsImplications.
Keare,DouglasH.1999.TheImportanceofSpatialEfficiencyforLargeCities.
Meyer,JohnR.1998.TheRoleofCitiesinIndustrialandPost-IndustrialSocieties.
Mills,EdwinS.1998.InternalFunctioningofUrbanAreas.
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TheGlobalBenefitsofPer-MileandPer-GallonAccidentPremiums
Themorepeopledrive,themoreaccidentsoccur.Butifpeopleweremadetopaythefulleconomiccostofdrivinganextramile,throughaninsuranceschemebasedonmilesdriven,theywoulddrivelessresultinginnotonlyfeweraccidentsandfewerinjuriesanddeathsbutalsolesscongestionandloweremissions.Analternativesystemthatmightbeeasiertoimplementwouldusegasolineconsumptionasaproxyformilesdriven.
Thisstudyestimatesandcomparesthebenefitsofintroducingper-mileandper-gallonautomobileinsuranceintheUnitedStatesandindevelopingcountries.Itconstructsananalyticeconomicmodeltoestimatethebenefitsusingdataoninsurancepremiums,currentdrivingpatterns,andgasolinepriceelasticities.Thestudyalsoinvestigatesthepracticalandpoliticalproblemsinimple-
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mentingsuchinsuranceschemes.Theresearchshouldhelpclarifywhethersuchschemeswouldbeappropriateforcontainingtheexternalitiesofmotorization,particularlyindevelopingcountries.Morethanhalfamilliontrafficdeathsoccureachyearinthedevelopingworld,andthatnumberisexpectedtorisedramaticallyasincomesandthusthenumberofcarsontheroadsurgeinthenextfewdecades.
Thestudycomparesthepotentialbenefitsofchargingper-milepremiums,optimalper-milepremiums,anduniformper-gallonpremiums.Per-milepremiumswouldbelinearinsurancechargesproportionaltomilesdriventhatallowinsurancecompaniestobreakeven,exactlycoveringaccidentcosts.Optimalper-milepremiumswouldinvolvetaxingpremiumstoaccountfortheexternalitiesofaccidents.Uniformper-gallonpremiumswouldbelinearinsurancechargesproportionaltogallonsofgasolineconsumedthatallowinsurancecompaniestobreakeven.TheanalysisdrawsonU.S.state-leveldataonprivatepassengerautoinsurancepremiumsfromtheNationalAssociationofAutoInsuranceCommissionersDatabaseonInsurancePremiumsfor1996.
BasedonestimatesfortheUnitedStates,theresearchhasfoundthatper-milepremiumsaremoreeffectivethanper-gallonpremiums.Comparingoptimalchargesperliterofmotorfuelwithcurrenttaxes,thestudyhasfoundthatmanydevelopingandseveralindustrialcountrieschargeinsufficientmotorfueltaxesincludingBenin,Canada,Colombia,Israel,theRepublicofKorea,Thailand,andtheUnitedStates.Thailandstandsout:itsgasolinetaxis$0.04aliter,whiletheoptimalchargewouldbe$1.13aliter(in1995purchasingpowerparitydollars).ThegainsfromadjustingmotorfueltaxestoreflectthenegativeexternalitiesofmotorizationwouldexceedabilliondollarsayearinChina,India,Indonesia,Japan,theRepublicofKorea,Thailand,andtheUnitedStates.
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Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentZmarakShalizi([email protected] ).WithAaronEdlin,UniversityofCaliforniaatBerkeley;andA.MushfiqMobarak,UniversityofMaryland.
Completiondate:September2000.
Ref.no.:682-70.
TheSustainableFinancingofInvestmentsinMunicipalInfrastructure:CostRecoveryforSolidWasteManagementinthePhilippines
Costrecoveryformunicipalinvestmentshasbecomeincreasinglyimportantwiththeworldwidetrendtowarddevolvingresponsibilityforprovidingpublicservices.Municipalitiesoftenneedtofinancelargeinvestmentsinsuchcoreserviceareasassolidwastemanagementorwatersupplyandsanitation.Whiletheseserviceshavetraditionallybeenprovidedbythegovernment,oftenatnochargeorathighlysubsidizedrates,manyofthemcouldefficientlybeprovidedbytheprivatesector.Buttheprivatesectorisusuallyreluctanttoenterthearenaintheabsenceofcostrecoveryguarantees.Forsolidwastemanagementinparticular,thereislittleevidenceonhowmuchpeoplevaluetheseservicesandthereforeonhowmuchtheywouldbewillingtopayforthem.
Economistshavetraditionallyusedrevealedpreference(indirect)methodsorthemoredirectcontingentvaluationmethodtoinferthevalueattachedtomanysuchnonmarketservices.Butforsolidwastemanagement,indirectmethodsarenotveryuseful.Peoplewhoarenotservedtendtodisposeoftheirgarbagethroughburial,burning,orsimpledumping,soitisdifficulttocalculatethecoststheyincurforcollectionanddisposal.
Itisalsomoredifficulttomonitorandenforceachargesystemforsolidwastemanagementthanforothermunicipalservices.Imposing
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chargesthatexceedthepopulation'struewillingnesstopaycanleadtowidespreadevasion,withdirepublichealthconsequences.Totheextentthatcostrecoveryisnotpossible,governmentsmightthereforeneedtosubsidizesolidwastecollectionanddisposal.Knowinghowmuchcanrealisticallyberaisedthroughchargesisimportantforbudgetingappropriatelyandfordeterminingwhichpartsoftheservicecanbeunbundledandchargedforandwhichwouldneedtobesubsidized.
Thisprojecthasundertakencontingentvaluationsurveysofthewillingnesstopayforappropriatesolidwastecollectionanddisposalintwomedium-sizecitiesinthePhilippines,IloiloandNaga.Itisexaminingthedeterminantsofwillingnesstopay,includingtheroleofinformationandeducation;lookingatdifferentpayment
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vehicles;andassessingtheacceptabilityofdifferentmodesofserviceprovision.Theresultsoftheresearchwillshedlightonthecostsandbenefitsofinvestmentsinsolidwastemanagement.SincetheseissuesareofcriticalimportancetoWorldBankoperations,theresearchisbeingconductedincloseconsultationwith,andispartlyfinancedby,Bankoperationalunits.
Datacollectionandpreliminaryanalysishavebeencompleted.Theprincipalfindingtodateisthatwillingnesstopayforsolidwastedisposalisclosetozero,signalinganeedforenhancedpublicinformationcampaigns.Peoplearewillingtopayforsolidwastecollection,however,sotheprospectsofcostrecoveryforthisservicearenotallthatdim.Theproject'sfindingsareexpectedtoinformtheeconomicanalysisfortheBank-supportedSolidWasteEcologicalEnhancementProjectinthePhilippines.
PreliminaryanalyticalresultshavebeenpresentedtooperationalstaffduringtheStudyTouronWasteManagementinScandinavia,June711,1999,aswellastocounterpartsinthePhilippines(mayorsandcityofficialsinIloiloandNaga,andtheDepartmentofEnvironmentandNaturalResources,localnongovernmentalorganizations,andacademicsinManila)inFebruaryandMarch1999.
Responsibility:LatinAmericaandtheCaribbeanRegion,Finance,PrivateSector,andInfrastructureSectorUnitSheoliPargal([email protected] );andDevelopmentResearchGroup,InfrastructureandEnvironmentMaureenCropper.WithNathalieSimon,U.S.EnvironmentalProtectionAgency;andtheUniversityofthePhilippines.PartialfundingfortheresearchcomesfromagrantfromtheJapanesegovernment.
Completiondate:March2000.
Ref.no.:682-77.
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PrivatizationofTelecommunicationsinSub-SaharanAfrica
Muchofthepolicyadviceonprivatizationandregulationoftelecommunicationsisbasedontheexperienceofhigh-andmiddle-incomecountries.ButagrowingnumberofSub-SaharanAfricancountrieshaveprivatizedtheirtelecommunicationsfirmsorallowedprivatecellularoperatorstoentertheirdomesticmarket.AbetterunderstandingofthisexperiencewouldhelpdonorsdeveloppolicyadvicetailoredtotheinstitutionalenvironmentsandmarketconditionsofcountriesinSub-SaharanAfrica,avoidingone-size-fits-allapproachestoreform.
ThisresearchwillanalyzeSub-SaharanAfricancountries'experiencewithtelecommunicationsreformindepthandtrackchangesoverthenextthreeyears.Therigorousempiricalanalysisnotonlywillassistdonorsbutalsowillhelptheproponentsofreformmaketheircase.TheprojectwillalsostrengthenpolicyandregulatoryskillsintheregionbyjoiningAfricanresearchinstituteswithseniorresearchersfromacademiaandtheWorldBankinclosepartnership,allusingasinglemethodologicalandconceptualframework.OverthefouryearstheparticipatingAfricanresearchinstitutestheCenterforResearchinMicroeconomicsofDevelopment(CIRES)inCôted'IvoireandtheEconomicandSocialResearchFoundation(ESRF)inTanzaniawilltakeonmoreandmoreleadresponsibilityfortheresearch,withthegoalofcreatinganinstitutionalizedregionalcapacitytoadviseontelecommunicationsreformandoninfrastructureregulationmorebroadly.Finally,theresearchwillprovideacomprehensivedatabaseontelecommunicationsinSub-SaharanAfrica,asetofdetailedcasestudies,andaseriesofanalyticalpapers,whichwillbepresentedattwomajorconferencesinAfrica.
TheresearchwillexplorethreekeyquestionsfacedbypolicymakersinSub-SaharanAfrica:Howcangreatercompetitionbeencouragedbyfacilitatingefficiententry?Howcantheincumbent
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telecommunicationsproviderbemotivatedtouseitsexistingassetsbetterandtoinvestinadditionalcapacity?Howcantelecommunicationsreformbestructuredsothatitgainsthesupportofkeystakeholdersandfitswellwiththecountry'sinstitutionalcapacity?
Theresearchwillanalyzethesequestionsthoughitsbroaddatasetandthroughcasestudiesofcountriesthathavetriedamixofreformapproaches,includingnoreform.(TheproposedsetofcountriesincludesCôted'Ivoire,Ghana,Malawi,Senegal,Tanzania,andUganda.)Theworkwillbeginwithapilotcasestudy,followedby
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teammeetingstoensureconsistencyintheconceptualframeworkandthequalityofthework.ByJune2000theinitialcasestudiesandsynthesisreportwillbefinalizedanddisseminatedthrougharegionwideconferenceinAfrica.Additionaldevelopmentswillbetrackedandanalyzedoverthenexttwoyears,resultinginasecondsetofupdatedcasesandpapersforaconferenceinJune2002.
Responsibility:DevelopmentResearchGroup,RegulationandCompetitionPolicyMaryM.Shirley([email protected] ),LukeHaggarty,GeorgeClarke,andAnaMariaZuluaga.WithDavidSappingtonandMarkJamison,UniversityofFlorida;Jean-JacquesLaffontandJean-PaulAzam,UniversityofToulouse;TchetcheN'Guessan,GulbertMarieN'Gbo,andMathieuMeleu,CIRES,Côted'Ivoire;andSamuelWangwe,HajiSemboja,andDavidChristian,ESRF,Tanzania.TheU.S.AgencyforInternationalDevelopmentiscontributingfundingfortheresearch.
Completiondate:June2002.
Ref.no.:682-92.
TheImpactofRegulatoryRisksontheCostofPrivateDebtforInfrastructureProjectsinEmergingMarkets
Atransparentandpredictableregulatoryframeworkiscriticaltoencourageflowsofprivateinvestment.Amajorchallengeforgovernmentsisdesigningtheregulatoryframeworksoastoreducetheriskperceivedbyinvestors.Thisresearchprojectinvestigatestheimpactofregulatoryrisksonthecostoffixedincomedebtforprivateinfrastructureprojects.
Theresearchfocusesonfixedrate,U.S.dollarbondsissuedforthetelecommunications,oilandgas,andenergyandutilitysectorsduring199099,whosespreadsareusedasadependentvariable(sampleof
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710).Inadditiontoregulatoryriskfactors,theresearchconsidersmacroeconomicandbondissuecharacteristics.
Theresearchusesthreemethodologicalapproachestoestimateessentiallyonerelationship,toallowadeepandaccurateunderstandingoftheresearchproblem.First,theresearchconductsacross-sectionalanalysisofthejointvariationofbondspreads,thecountryregulatoryenvironmentriskindicator,andmacroeconomicandbondissueriskfactors.Second,theresearchsegregates185bondsissuedforenergyutilityprojectsin27countriestoconductsimilarcross-sectionalanalysis,butusingdetailedregulatoryriskindicatorsfortheelectricityindustry,suchastypeofregulator(electedorappointed),durationoftheregulatoryframework,regulatorylag,typeoftariffregulation,andallowedreturnonequity.Third,theresearchconductsatime-seriesanalysisofspreadsofinfrastructurebondstradedintheaftermarket,relatingthemtothecountryregulatoryenvironmentriskindex,macroeconomicindicators,andbondissuecharacteristicsastheychangeovertime.DatasourcesincludetheEuromoneyBondware,BloombergFinancialServices,andWorldBankWorldDevelopmentIndicatorsdatabases,andasurveyofregulatoryexpertsattheWorldBankandInternationalFinanceCorporation.
Althoughnofinalconclusionshavebeendrawn,theinitialexploratoryanalysishasrevealedstrongrelationshipsbetweenthebondissuerandguarantorcreditratingsandthebondspread.Thisrelationshipwasexpectedandconfirmstheaccuracyandrelevanceofthedataselected.
Therelationshipbetweenregulatorypolicyandthecostofprivatedebtforinfrastructureindevelopingcountrieshasreceivedalmostnoattention,yethasimportantimplicationsforthepolicyadvicetheBankgivestoclientcountriesonbuildingandstrengtheningregulatoryregimestopromoteprivatesectordevelopment.This
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researchshouldcontributetothatadviceaswellastotheBank'smethodologyforpricingriskinsurancetofacilitateprivateprojectfinanceinemergingeconomies.Theresearchwillalsoproduceadatabaseofregulatoryriskindicatorsinindustrialanddevelopingcountries.
Responsibility:EuropeandCentralAsiaRegion,EnergySectorUnitLaszloLovei([email protected] ).WithNinaBubnovaandJohnQuigley,UniversityofCaliforniaatBerkeley;andIlyaLipkovich,VirginiaPolytechnicStateUniversity.
Completiondate:September2000.
Ref.no.:683-25.
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TheCost-EffectivenessofAlternativeTransportPolicies
Thisresearchaimstocontributetotheliteratureonsecond-bestcongestiontaxesbyexploringinteractionswithpreexistingtaxdistortionsoutsidethetransportsector.Itbuildsonagrowingbodyofanalysis,mainlyinenvironmentaleconomics,thathasshownthatthewelfareeffectsofnewregulationscandependcriticallyonhowthosepoliciesinteractwithpreexistingtaxdistortionsinthelabormarket.Whennewregulationsdriveupfirms'productioncostsandproductprices,theyreducetherealhouseholdwageandthis(slightly)reducesthelaborsupply.Giventhelargewedgebetweengrossandnet(oftax)wages,thisreductioninlaborsupplycanleadtoefficiencylossesthataresizablerelativetothepartialequilibriumcostsoftheregulation.Butthereisanoffsettingeffectifregulationsraiserevenue(aspollutiontaxesandauctionedpollutionpermitsdo)andthegovernmentusesthisrevenuetoreducedistortionarytaxes.
Thisresearchwillembedasimpletextbookmodeloftrafficcongestionintoaseriesofgeneralequilibriummodelstoillustratehowtheexistenceoftaxdistortionsinthelabormarketcruciallyaffectstheoverallwelfareimpactofcongestiontaxes.Akeyissuethatcongestionfeesraiseiswhattodowiththerevenuesgenerated.Oftentheserevenuesareearmarkedforpublic.transportationprojects(asinNorway).Alternatively,revenuescanbeusedtoimproveeconomicefficiencybyreducingotherdistortionarytaxesintheeconomy.Theresearchwillexaminecaseswherecongestiontaxrevenuesareusedtoreducedistortionarytaxesandtosubsidizemetrofares.Itwillalsoexaminethestandardtextbookassumptionthatrevenuesarereturnedtohouseholdsinlumpsumtransfersandthusdonotdirectlyaffecteconomicefficiency.Thisresearchwillbethefirstextensivecomparisonofthesecongestionpoliciesinasecond-bestsettingwithdistortionarytaxes.
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Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentZmarakShalizi([email protected] ),AntonioBento,andElysaColes.
Completiondate:June2000.
Ref.no.:683-39.
RoadFreightTransport,Competition,andInnovation
Economistshavelongdebatedtheclaimthatinfrastructureserviceshaveastrongeffectoneconomicdevelopment.Oneimportantchannelthroughwhichsucheffectscouldoccuristheimpactofupstreambusinessservicesondownstreamuserindustries.Improvementsinupstreamservicescouldstimulateentryandcompetitionindownstreamindustries,allowingnewfirmstoenter,incumbentuserstooffernewproductsinnewmarkets,andrivalrytointensify.Totheextentthatregulatoryreformandincreasedcompetitionspurinnovationsandotherimprovementsininfrastructureservices,andtheseinnovationsinturngeneratesubstantialdownstreambenefits,theeconomywidecaseforincreasedcompetitionwouldbesubstantiallystrengthened.
Thisresearchprojectaimstoexamineasmallbutsignificantpartofthisdebate:Whatistheimpactofimprovedroadfreightservicesonselecteddownstreambusinessusers?Inparticular,itwillattempttomeasurethemaximumbenefitsfrominnovationsinkeylogisticalservicesonindustriesthatareintensiveusersoffreighttransport.Enterprise-levelpaneldatasetsarenotsufficientlydetailedtoalloweconometricanalysisoftheseissues,sincetheygenerallydonotseparatesalesofnewproductsorallowinferencesabouttheimportanceofspecificupstreaminnovations.Theempiricalmethodologywillthereforerelyonastructuredsurveyinstrumenttomeasurethebenefitstoselectedusercompaniesfrominnovationsinroadfreightlogistics,includingtheimpactonoperatingmargins,
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whilecontrollingforotherchangesinthebusinessenvironment.TheresearchisbeingundertakeninHungary,Poland,andTurkey.
Thestudyiscloselyrelatedtoacomplementaryresearchproject,Telecommunications,Competition,andInnovation(ref.no.683-45).TheresultsofboththeseprojectsshouldhelppolicymakersandWorldBankoperationalstaffbetterassessthecaseforactivecompetitionpolicies.Inparticular,theyshouldindicatewhethereasinganyremainingbarrierstocompetitioninupstreambusinessservicesshouldbeapriority.
Responsibility:DevelopmentResearchGroupMarkDutz([email protected] ).WithAydinHayri,Deloitte&
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ToucheLLP;EdaKarakullukcu,MetaforConstructionandTradeCo.,Istanbul;andPatrickRey,UniversitédesSciencesSociales,Toulouse.
Completiondate:June2000.
Ref.no.:683-44.
Telecommunications,Competition,andInnovation
Manypolicystudiesassertthatenhancedtelecommunicationsservices(expandedtraditionalserviceandnewcellularservice,aswellasInternetconnectivityanddata-relatedservices)willtransformbusinesspracticesandsignificantlyincreasebusinessproductivity.Thepremiseisthatenhancedtelecommunicationsservicescanstimulateentryandcompetitionindownstreamuserindustries,allowingnewfirmstoenter,incumbentuserstooffernewproductsinnewmarkets,andrivalrytointensify.Ifregulatoryreformandincreasedcompetitionspurinnovationsandotherimprovementsintelecommunicationsservices,andtheseinnovationsinturngeneratesubstantialdownstreambenefits,thatwouldsubstantiallystrengthentheeconomywidecaseforincreasedcompetition.
Thisresearchprojectwillexaminehowregulatorychanges,competition,andenhancedtelecommunicationsserviceshaveaffectedbusinessesthatmakeintensiveuseoftheseservicesinEstonia,Hungary,andPoland.Thesethreecountrieshavepursueddifferentpoliciesinthetelecommunicationssector.Theydifferstronglyintheirapproachtointroducingcompetitioninlocalfixedlines,incellularpenetrationandprices,andinInternetservicesprovided.Buteachhasimplementedaregimeshiftinthepastdecade.
Theproject'sapproachinvolvesinterviewingintensiveuserfirmstoquantifytheimpactofincreasedinvestmentandinnovationintelecommunicationsservicesontheiroperatingmarginsandrelated
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variables.Inaddition,theprojectwillexaminethelinksbetweenregulatoryreformandtheprovisionofnewservicesbytelecommunicationsproviders.
Thestudyiscloselyrelatedtoacomplementaryresearchproject,RoadFreightTransport,Competition,andInnovation(ref.no.683-44).TheresultsofbothshouldhelppolicymakersandWorldBankoperationalstaffbetterassessthecaseforactivecompetitionpoliciesandforimprovedcoordinationbetweensector-specificandeconomywideregulation.Andtheyshouldindicatewhethereasinganyremainingbarrierstocompetitioninupstreambusinessservicesshouldbeapriority.
Responsibility:DevelopmentResearchGroupMarkDutz([email protected] ).WithMariaVagliasindi,EuropeanBankforReconstructionandDevelopment(EBRD);andDavidNewbery,CambridgeUniversity.TheEBRDiscontributingfundingfortheresearch.
Completiondate:June2000.
Ref.no.:683-45.
CompetitiveCities:UrbanPrimacyandGrowth
Urbananalystsandsocialscientistshavehypothesizedthatexcessiveurbanprimacywhentoomanyofacountry'sorregion'sresourcesareconcentratedinanexcessivelylarge,costlymetropolitanareahindersnationalgrowthandqualityoflife.Moreover,theWorldBank'srecentfocusontheurbanizationstrategiesandentrepreneurshipofmedium-sizecitiesindicatesdisenchantmentwithconditionsinmegacities.Andthepopularpresshasfocusedonthecompetitivenessofmedium-sizecitiesintheUnitedStatesformosteconomicactivity,comparedwithlargemetropolitanareas.
Allthissuggeststworelatedquestionsforresearch.First,does
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excessiveprimacyhavesignificanteffectsoneconomicgrowth?Manystudieshaveexaminedthedeterminantsofurbanprimacy,mostwiththepresumptionthattoomuchprimacyisdetrimentaltoacountry.Yetthatpresumptionappearsnottohavebeentested.Thisstudyistestingit.
Second,whatarethedeterminantsofurbanprimacy?Thisresearchaddressesthatquestioninamoresophisticatedway,withbetterdata,thanpaststudieshave.Whileearlierstudieshavereliedoncross-sectionaldataandmethods,thisoneusespaneldataandmethods.Itisalsocollectingandanalyzingdataonkeydeterminantsofprimacyrelatedtonationalinfrastructureinvestmentsanddecentralizationofgovernment,whicharetypicallynotused.
Theresearchstartswithastandarddescriptionoftheurbansectorofacountry,essentialforunderstanding
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urbandevelopment.Thenitanalyzestheinstitutionalandpolicyframeworkneededtosustainalevelplayingfieldincompetitionamongcitiessoastofosterallocativeefficiency.Thisworkprovidesbackgroundonthepossibleoriginsofexcessiveurbanprimacyandthereasonsthatexcessiveprimacycanhurteconomicgrowth.
ThestudydrawsondatafromthePennWorldTables,theBarro-Leedataset,theWorldDevelopmentIndicators,andtheUnitedNationsurbanizationdatasets.Inaddition,itisacquiringdataonroadsandtelecommunicationsatfive-yearintervalsin196095forabout100countries(includingqualitymeasures),tryingtodistinguishintercityfromintracitymagnitudes.Itisalsocollectinginformationondecentralization.
Preliminaryresultssuggestthatexcessiveprimacystronglydetractsfromeconomicgrowthrates.Theeffectislessforcountriesinearlystagesofurbanization.
Theanalysisofthedeterminantsofurbanprimacyshouldrevealtheforcesthatencourageexcessiveprimacyandhelpindevelopingasetofdiagnostics,orindicators,thatsignalwhenexcessiveprimacyisbeginningtohurtgrowth.Theprojectwillexplorediagnosticsandthepolicyimplicationsofthefindings.Theworkbearsondecisionsabouttheallocationofpublicresourcesacrossregions,betweencoastalandhinterlandareas,andbetweenbigandsmallcities.
ApaperwillbepresentedattheRegionalScienceAssociationmeetingsinMontrealinNovember1999,withabout60specialistsinurbandevelopmentattending.
Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentZmarakShalizi([email protected] ).WithJohnVernonHendersonandJamesDavis,BrownUniversity.
Completiondate:June2000.
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Ref.no.:683-51.
MotorizationandthePricingofExternalities
Inthepast50yearsthenumberofmotorvehiclesworldwidehasgrownfromabout60millionto700million.Between1995and2010urbanization,income,andrealpricetrendsareexpectedtocausebothmotorvehicleownershipandusetogrowfasterthanpopulationorGDPworldwide.WhilethegrowthofmotorvehicleownershipwillslowinOECDcountries,itwillaccelerateindevelopingcountries.ThesecountriesalreadyhavemorecarsthanOECDcountriesdidatthesamepercapitaincomesandsomustcopewithahigherlevelofmotorvehicleownershipwithlessdevelopedpublicinfrastructureandinstitutionalcapacity.
Therearealsoqualitativedifferencesindevelopingcountries(suchasproportionatelymoretwo-strokeenginevehiclesandmixedrightofway)thathavecreatedunprecedentednegativeexternalities.TheWorldHealthOrganization(WHO)predictsthatby2020about2.4millionpeopleworldwidewilldieannuallyinroadtrafficaccidents,88percentofthemindevelopingcountriesmakingtrafficaccidentsindevelopingcountriesthesecondworstepidemicintermsofyearsoflifelost.Theadverseeffectsofvehicle-relatedpollutionatthelocallevelarealsomuchworseindevelopingcountries.WhiletheambientlevelofsuspendedparticulatemattermeetstheWHOstandardinmostindustrialcountrycities,itexceedsthatstandardinsuchdevelopingcountrycitiesasBeijing,Delhi,MexicoCity,andXianbyasmuchasfivetimes.Acceleratedmotorizationisalsocloggingcitiesindevelopingcountrieswithtrafficcongestion.AsaresultofcongestioninBangkok,Cairo,andManila,themostcitedexamplesofurbangridlock,thesecitieshaveaveragecommutingspeedsthatareafractionofthespeedsinindustrialcountrycities,despitemuchlowermotorvehicleownership.
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Thesenegativeexternalitiesofmotorizationindevelopingcountriesposeachallengeforpublicpolicyandtheallocationofpublicexpenditures.Thisresearchusestheoreticalandempiricalanalysesandcomparativecasestudyanalysestoaddressconcreteoperationalissues.Itaddressessuchquestionsasthese:Howmuchemphasisshouldbegiventopoliciesandprogramsthatmayreducetheneedforinvestmentsintransportinfrastructure?Howeffectivearedifferentpoliciesinaccommodatinglargepopulationsandeconomicgrowthinurbanareaswithminimumnegativeexternalitiesfrommotorization?Whatisthebenefitinencouragingamoreappropriatepaceofmotorizationthatis,onethatbetterbalancesprivatedecisionsonsmallcapitaloutlayswithsociety'sabilitytomobilizeresourcesandimplementcomplementarycapitalinvestments?Howshouldinvestmentsintransport
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infrastructurebeallocated?Shouldinvestmentsbemadeintheurbancoreortheurbanperiphery,inrailorroads,inringroadsorinarterialsorcorridors,inmotorizedornon-motorizednetworks,innetworksfavoringpersonalorcollectivemodesoftransport?
TheinitialfocusisonsuchneglectedareasofanalysisastheroleoflanduseandurbanformandtheavailabilityofalternativetransportmodesindeterminingthepaceofmotorizationatdifferentstagesofdevelopmentinAsia(differentiatingamongcountriesatthematurestageofmotorization,thosemidwayintheprocess,andthoseattheinitialstage).Theresearchwilllaterexpandtodevelopingcountriesinotherregions.
Theresearchprogramencompassestwoprojectsdescribedelsewhereinthisvolume:TheGlobalBenefitsofPer-MileandPer-GallonAccidentPremiums(ref.no.682-70)andTheCost-EffectivenessofAlternativeTransportPolicies(ref.no.683-39).ItisacollaborativeeffortbytheWorldBank,nationalandcitygovernmentagencies,universitiesandindependentresearchgroups,nongovernmentalorganizations,andotherinternationaldevelopmentagencies.
Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentZmarakShalizi([email protected] ),ElysaColes,AntonioBento,SomikLall,MaureenCropper,KennethChomitz,andMeadOver.
Completiondate:January2000.
MotorizationandRoadProvision
Paneldataatthenationallevel(for50countries)andtheurbanlevel(for35cities)havebeenanalyzedtosummarizetrendsanddeterminantsofmotorization(thenumberofvehicles)andofroadprovision(thetotallengthofroads).Sincebothvehiclesandroadsare
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inputstotheproductionofroadtransportservices,thedeterminantsoftheratioofvehiclestoroadsareexaminedinaproductionfunctionframework.
Theresultsindicatestrongempiricalregularitiesacrosscountriesandurbanareasandovertime.Atthenationallevelbothmotorizationandtheprovisionofpavedroadsincreaseatapproximatelythesamerateasincome.Inurbanareasmotorizationincreasesatthesamerateasincome,butroadsincreasemuchlessrapidlythanincome.Thismeansthatvehiclesperlengthofroad(aproxyforcongestion)increasewithincomeinurbanareas.Theannexationofsurroundingdevelopedareaisthemainsourceofadditionalurbanroadlengthexpandingurbanroadlengthandmoderatingcongestion.Forspecificurbanareas,percapitaroadlengthispositivelyassociatedwithnationalincomelevelbutchangeslittleovertime,indicatingthathistoryorurbanendowmentsmatter.
Additionalworkisfocusingonimprovingthecoverageofthedata,addingsuchvariablesastransitavailabilityanddevelopingvariablesthatmeasurepricesofinputs.
TheresearchisexpectedtoinfluenceWorldBankoperationsbyclarifyingtheeffectsthatincreasingmotorizationislikelytohaveonnationalandurbantransportsystems.Inaddition,itwillequipBankstaffwithinformationaboutlikelytrendsinmotorizationandroadprovision.
Responsibility:OperationsEvaluationDepartment,SectorandThematicEvaluationDivisionGregoryIngram([email protected] );andTransportation,Water,andUrbanDevelopmentDepartment,TransportDivisionZhiLiu.
Completiondate:June2000.
Reports
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Ingram,Gregory,andZhiLiu.1997.MotorizationandtheProvisionofRoadsinCountriesandCities.PolicyResearchWorkingPaper1842.WorldBank,ResearchAdvisoryStaff,Washington,DC.
.1998.Vehicles,Roads,andRoadUse:AlternativeEmpiricalSpecifications.PolicyResearchWorkingPaper2036.WorldBank,ResearchAdvisoryStaff,Washington,DC.
.1999.DeterminantsofMotorizationandRoadProvision.InJ.A.Gomez-Ibañez,W.B.Tye,andC.Winston,eds.,EssaysinTransportationEconomicsandPolicy.Washington,DC:BrookingsInstitution.(AlsopublishedasPolicyResearchWorkingPaper2042,WorldBank,ResearchAdvisoryStaff,Washington,DC,1999.)
ComparativeStudyofWaterInstitutionsandTheirImpactonWaterSectorPerformanceinSelectedCountries
Inresponsetoincreasingwaterscarcity,waterinstitutionsformalandinformalpolicy,legal,andadminis-
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trativeentitiesareundergoingfar-reachingchangesworldwide.Whatisthecross-countryexperienceintheevolutionofwaterinstitutions,anddothechangesadvanceorimpedethewatersector'sfinancialviabilityandresourcesustainability?Thisprojecthasaddressedthesequestionsthroughacomparativestudyofwaterinstitutionsandtheirimpactonthesector'sperformanceinselectedindustrialanddevelopingcountries.Sincewaterinstitutionsareadomainintersectedbylaw,economics,andpublicpolicyandarestronglyinfluencedbydemography,resourceendowment,andscienceandtechnology,thestudy'sapproachwasnecessarilyinter-disciplinary.
Thestudycomparedthewaterinstitutionsofthe11samplecountrieswithinacommonframeworkdefinedbyasetofinstitutional(legal,policy,andadministrative)featuresfocusingoneconomicandoperationalperformance.Itthencarriedoutacomparativeanalysisofwatersectorperformancebasedonqualitativeandquantitativevariables.Linkingthecomparativeanalysisofinstitutionswiththeanalysisofsectorperformanceallowedidentificationofbothcommonanduniquefeaturesinbestpracticecasesandworstcases.Theresultsprovidethebasisforderivingstrategicoptionsandactionplansforstrengtheninginstitutionsandimprovingtheirperformance.
Theanalysisdrewprimarilyondataderivedfrompersonalinterviewsonkeywatersectorchallengesandrecentinstitutionalresponses,andadetailedquestionnaireadministeredtoasampleofkeywatersectorexpertstoobtainbothfactualandsubjectiveinformationonwaterinstitutionsandsectorperformance.
Theanalysisidentifiedcommontrendsandpatterns,despitevariationsinresourceandpoliticaleconomysituations.Thekeyissuesarenolongerresourcedevelopmentandwaterquantitybutresourceallocationandwaterquality.Thenotionofwaterprovisionasapublicgoodandwelfareactivityisbeingreplacedbytheconceptofwateras
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aneconomicgoodandasaninputineconomicactivity.Andtheolddevelopmentparadigmcenteredoncentralizeddecisionmaking,administrativeregulation,andbureaucraticallocationisfastgivingwaytoanewparadigmrootedindecentralizedallocation,economicinstruments,andstakeholderparticipation.
FortheWorldBankandotherinternationaldevelopmentagencies,thefindingssuggestthatwhilethecurrentemphasisisonformulatingwaterpolicyandlawandreorganizingwateradministration,thereisacriticalneedtoconcentrateeffortsincountries,areas,andsubsectorsthatalreadyhaveacriticalmassofinstitutionalcapacity.Here,theprobabilityofsuccessishigherthanelsewherebecauseoflowertransactionscosts.Theinstitutionalchangesoccurringacrosscountriessuggestthattheopportunitycosts(thepotentialnetgain)ofinstitutionalchangearebecominghigherthanthecorrespondingtransactionscostsinmostcontexts.
Forwatersectorreformstrategies,themultidimensionallinksamongkeysectorproblemssuggestthatalthoughreformsinonedimensionwillcertainlyhaveeffectsinothers,anintegratedapproachwillhavethemaximumeffectsthroughsynergy.Attheheartofsuchanintegratedapproachlieinstitutionalchangestostrengthenandmodernizethelegal,policy,andadministrativearrangementsgoverningthewatersector.
Inasecondphase,thestudydevelopedananalyticalframeworktoidentifyvariouslayersofinstitutionallinkagesandinstitution-performancelinkagesevidentintheinteractionofinstitutionsandsectorperformance.Thestudythenevaluatedthelayersoflinkagesusinganevaluationmethodologythatusesperception-basedcross-countrydata.Theseanalyticalandempiricalanalyseswerethenusedtoidentifykeyinputsforagenericstrategyofwaterinstitutionreform.
Theresultsindicatetherelativestrength,direction,andsignificanceof
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theperformanceimpactofinstitutionalcomponentsandaspects.Theysuggestthattheinteractionofinstitutionsandperformancecanderivefromthegeneralsocioeconomic,political,andresource-relatedenvironmentinwhichitoccurs.Andtheystronglyfavorasequentialstrategyforinstitutionalreform.
Thethirdphaseofthestudywillanalyzetheentiredataset,whichnowincludes125observationsfrom30countries.
TheresultsofthestudyhavebeendisseminatedthroughseminarsattheWaterResourcesCenteroftheUniversityofIllinoisatUrbanaandattheWorldBank.AnotherseminarisscheduledforNovember1999attheUniversityofIndianaatBloomington.Interimresults
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havebeengivento130waterexpertsin30countriesforfeedback.
Responsibility:RuralDevelopmentDepartmentArielDinar([email protected] ).WithR.MariaSaleth,InstituteofEconomicGrowth,Delhi.
Completiondate:October2000.
Reports
Saleth,R.Maria,andArielDinar.1999.EvaluatingWaterInstitutionsandWaterSectorPerformance.WorldBankTechnicalPaper447.Washington,DC.
.1999.WaterChallengeandInstitutionalResponse:ACross-CountryPerspective.PolicyResearchWorkingPaper2045.WorldBank,RuralDevelopmentDepartment,Washington,DC.
TheImpactofRuralRoads
Ruralroadscanboostagriculturalgrowthandinvestment,householdfoodsecurity,andinvestmentinhumancapital.Andtheycanimproveaccesstomarketsforruralproductsandreducetransactionscosts.Butthereturnstoruralroadinvestmentsarenotknown,inpartbecauseofmethodologicalproblems.Evenifthereturnsarecalculatedusingtheinternalrateofreturnapproach,theestimatesaregenerallysolowthattheinvestmentsdonotappearviable.Andtheimpactsofruralroadsarelongtermandcannotbecapturedthroughcross-sectionalsurveydata.
Thisresearchprogramhasdesignedalong-termimpactstudyofaWorldBank-financedruralroadsprojectinBangladesh.ItisprovidingtechnicalhelptotheBangladeshInstituteofDevelopmentStudies(BIDS)tocarryoutbaselineandfollow-upsurveys.ItwillprovidesupporttoBIDSinanalyzingdescriptivedata.Andbasedon
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paneldataonhouseholdsandcommunities,thestudywillcalculatetheeconomicandsocialreturnsofruralroads.
BIDShascollectedandreportedthebaselinesurveydataandwillcarryoutthenextfollow-upsurveyin2000.Animpactstudyofruralroadsbasedonthesurveydatawillbecarriedoutinthesummerof2000.
Responsibility:PovertyReductionandEconomicManagementNetwork,GenderDivision,andDevelopmentResearchGroup,PovertyandHumanResourcesShahidurR.Khandker([email protected] )andHussainSamad;andSouthAsia,InfrastructureSectorUnitThampilPankaj.WithM.A.Latif,BangladeshInstituteofDevelopmentStudies.
Completiondate:December2000.
RuralRoads:WelfareImpactEvaluation
Ruralroadsareoftenseenaskeytoraisinglivingstandardsinpoorruralareas,andmanyWorldBankruralroadsprojectshavethisastheirprimaryobjective.Yetdespiteageneralconsensusontheimportanceofruralroadsincludingmuchanecdotalevidencethereissurprisinglylittlehardevidenceonthesizeandnatureoftheirbenefits.
Thisstudyaimstoassesstheimpactofruralroadsonpoverty,toprovideinputstopolicydiscussiononhowbesttoallocatescarcepublicresources.TheempiricalinvestigationisbeingconductedinVietnam,wheretheWorldBankisfinancingandhelpingimplementalarge-scaleruralroadsprojectforpovertyalleviation.Thestudy'soverallfocusisonhowthedeterminantsoflivingstandardschangeovertimeincommunesthathaveroadprojectscomparedwithonesthatdonot.
Asurveycollectedpreprojectbaselinedataforarandomsampleof
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100project(treatment)communesand100nonproject(control)communesinthespringof1997.AsecondroundwenttothefieldinJune1999.Theinformationfromthesefirsttworoundsshouldallowanassessmentofinitialimpacts.
Fourothersurveysalsowereconducted.Ineachsampledcommuneahouseholdquestionnairewasadministeredto15randomlysampledhouseholds.Ashortdistrict-levelsurveywasimplementedtohelpputthecommune-leveldataincontext,andanextensiveprovince-leveldatabasewassetuptohelpunderstandtheselectionoftheprovincesintotheproject.Finally,becausetheimpactofroadprojectswillvaryaccordingtothemagnitudeofthechangeresultingfromtheprojectandthemethodofprojectimplementation,aproject-leveldatabaseforeachoftheprojectareassurveyedisalsobeingconstructed.
Thebaselinewillbeusedtomodeltheselectionofprojectsites,withafocusontheunderlyingeconomic,
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social,andpoliticaleconomyprocesses.Laterroundswillthenbeusedtounderstandgainsmeasurableatthecommunelevel,conditionalonselection.Thegeneralapproachwillbeinthetraditionofdoubledifferencingwithmatchingmethods.Matchingmethodscanbeusedtoselectidealcontrolsfromamongthe100samplednonprojectcommunes.Next,outcomesinprojectcommunescanbecomparedwiththosefoundinthecontrolcommunesbeforeandaftertheintroductionoftheroadprojects.Outcomeindicatorstobeexaminedincludecommune-levelagriculturalyields,incomediversification,employmentopportunities,availabilityofgoods,landuseanddistribution,servicesandfacilities,andassetwealthanddistribution.
Responsibility:DevelopmentResearchGroup,PublicEconomicsDominiquevandeWalle([email protected] ).WithVuTuanAnh,EconomicsInstitute,Hanoi;andDorothyJeanCratty,UniversityofMarylandatCollegePark.TheCanadianInternationalDevelopmentAgency(CIDA)TrustFundiscontributingfundingfortheresearch.
Completiondate:December2001.
Report
vandeWalle,Dominique.1999.AssessingthePovertyImpactofRuralRoadProjects.WorldBank,DevelopmentResearchGroup,Washington,DC.
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Macroeconomics
FiscalDecentralizationinLatinAmerica
Thisresearchprojectinvestigatestheeffectsoffiscaldecentralizationonmacroeconomicmanagementandequityandontheefficiencyofresourceallocationintheeducationsector.ItfocusesonthecasesofArgentina,Brazil,andColombiaforboththeseissuesandalsoincludeseconometricinvestigationofawidersampleofindustrialanddevelopingcountries.Thethreecasestudycountrieswerechosenbecausetheyareamongthemostdecentralizeddevelopingcountriestodayandbecausetheysharemanyculturalandpoliticaltraits,includingdemocracy,whichallowsthestudytocontrolforthesevariablesandfocusontheeffectsofdecentralization.Thecountryanalysesarenotstand-alonecasestudiesbutintegratedcomparisons.
Themainmacroeconomicquestionaboutdecentralizationiswhetherithasledtounsustainablefiscaldeficits.Theseconcernscontrastwithearlierargumentsfordecentralizationbasedontheexpectationthatitwouldleadtosmallertotalgovernments,easingfiscalmanagement.Thoseargumentspresumedthatrulesormarketdisciplinewouldimposeahardbudgetconstraintonsubnationalgovernmentsandlimittheirborrowing.Butinmanycountriessoftnessofconstraintsseemstobeaproblem.Thecasestudiesinvestigatethisquestionindepth,andthemultinationaleconometricanalysisusespaneldatatofurthertestsomehypotheses.
Thesecondmainissuerelatestotheeffectsontheefficiencyofservicedelivery,allegedtobetheprimaryeconomicbenefitsofdecentralization.Whiletherecentexperienceswithdecentralizationaretooshorttoallowalong-termassessmentoftheseeffects,existingdataanddatathatthestudyiscollectingpermitsomepreliminary
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assessments.Theprojectfocusesontheeffectsineducationbecauseitisalwaysoneofthemostimportantsectorsbeingdecentralizedandthereisrarelymuchprivatizationgoingonatthesametime.
Decentralizationvariesalongseveraldimensions:thefunctionalresponsibilitiesbeingdevolvedtolowerlevelsofgovernment,therecipientlevelofgovernment(municipalorprovincial),theamountandnatureofchangesinsubnationalfinancing(taxreassignment,conditionsofintergovernmentaltransfers,borrowingrules),andthechangesinthemechanismforsubnationalpoliticalaccountability(electionorappointmentofmayors,forexample).InLatinAmericatheseaspectsofdecentralizationhavetypicallyoccurredtodifferentdegreesandnotsimultaneously,andthelackofcoordinationseemstohavecausedmanyoftheproblemsexperienced.Thusthestudyinvestigatestheeffectsofdifferentdesignsfordecentralization.
Thestudyusesthetoolsofpoliticaleconomyandnewinstitutionaleconomicstoexplainthesuccessesandfailuresofdecentralization.Itexamineshowtheinstitutionalarrangementsaffectthepower,incentives,options,andinformationoftheparticipantsnationalandsubnationalpoliticians,bureaucrats,creditors,schoolprincipals,teachers,unions,andparents.Forsomeissuesitusestheinterestgroupanalysisoftraditionalpoliticalscience;forotherissuesthenewinstitutionalistconceptsofincentive-compatiblecontracts,principal-agentrelations,informationasymmetries,andexitvoicewillbemoreuseful.Thecasestudyapproachisbestsuitedforinvestigatingthesesubtleissuesandforgeneratingandrefininghypotheses;thestudywillusetheeconometricanalysistotestafewofthehypotheses.
Inthefiscalmanagementcomponent,thecasestudiesofArgentinaandBrazilfoundthatinthe1980sthetwocountriesfacedsimilarproblems,withsubnationaldeficitsaddingtoexcesspublicdeficitsandhighinflation.Inthe1990sbothcountriescontinuedwithfiscaldecentralizationandwiththestruggletoachievemacroeconomic
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stability.Argentinahashadgreatersuccess,becauseitimposedaharderbudgetconstraintonthepublicsectoratthenationallevelandbecausethenationalexecutivehasstrongerinfluenceonthecongressandonthesubnationalgovernmentsthroughthepartysystem.Establishingtherightincentivesforsubnationalgovernmentsandtheircreditors,asinArgentina,proved
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moreeffectiveforrestraininglocalandstateborrowingthanrulesforpriorapprovalsofcreditbythecentralgovernment,asinBrazil.TheColombiancasestudyfoundthatalthoughincreasedsubnationalautonomy,spending,anddeficitscoincidedintimewiththedeteriorationoftheoverallfiscalbalanceandmacroeconomicstability,mostofthedeteriorationwasduetoslippageatthenational,notsubnational,level.Centralgovernmenteffortstorestrainsubnationaldeficits,whilehandicappedbypoliticalfragmentation,foundsuccessinColombiawhentheycombinedexanteconstraintsonsubnationalborrowerswithstricterbankingregulationstomotivatebankstoholdbacklending.
Resultsofthemultinationaleconometricanalysis,withapanelof32industrialanddevelopingcountriesfor1980-94,implythattheproblemswithsubnationalspendinganddeficitsleadingtocentralgovernmentdeficitsariseprimarilyinthecontextoftransitions.Mostofthesamplecountriesreducedtheircentralgovernmentdeficitduringtheperiod,butcountrieshadmoredifficultydoingsoifsubnationaldeficitswererising.Withcross-sectionalaverages,reflectingalonger-runsituation,theregressionssuggestthatcentralgovernmentspendingismuchlowerwhensubnationalspendingisfinancedbysubnationaltaxesconsistentwithtruedevolutionofspendingresponsibilitiesandnooverallchangeinthesizeofthepublicsector.Butwhensubnationalspendingishigherwithoutcorrespondinglyhighersubnationaltaxesimplyingthatthefinancingismostlybytransfersthecentralgovernment'sownspendingdoesnotdeclinewiththeexpansionofthesubnationalspending,implyingalargeroverallpublicsector.Inthecross-sectionalregressionthecentralgovernmentdeficitsdonotseemtobehigherwhensubnationaldeficitsarehigher,suggestingthatinthelongruncentralgovernmentscancreateinstitutionstokeeptheirdeficitsundercontrol,nomatterwhatfiscalposturethesubnationalgovernments
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follow.
Intheeducationcomponent,theBrazilianstudyhasproducedpreliminaryresults.Thestudyestimatesaninstitutionallyexpandedproductionfunctiontoassesswhethervariablesassociatedwithdecentralizationschoolownership(stateormunicipal),theschool'sparticipationwiththecommunity,andtheschool'sautonomyaffectschoolproductivity.Theimpactofthesevariablesisassessedthroughstudenttestscoresaftertakingaccountofschoolinputsandthechildren'ssocioeconomicbackground.Thepreliminaryresultsindicatethatparticipationandautonomyincreaseschoolproductivity.Moreover,correctingforinputsandbackground,municipalschoolsaremoreproductivethanstateschools.Sothemostimportantbenefitsofdecentralizationineducationcomefrommovementofauthoritytothemostlocallevel,notfrominitialstepstomovedownfromthenationallevel.
Theresultsoftheresearcharebeingpresentedatseminarsinthecasestudycountriesandatthe1999AnnualBankConferenceonDevelopmentinLatinAmericaandtheCaribbean,tobeheldinChile.FindingshavebeenpresentedatWorldBankseminars,the1999EconomistsForum,andtheAmericanPoliticalScienceAssociationannualmeetingsin1998.
Responsibility:LatinAmericaandtheCaribbeanRegion,PovertyReductionandEconomicManagementSectorUnitStevenB.Webb([email protected] )andWilliamDillinger;andDevelopmentResearchGroup,PublicEconomicsHeng-fuZouandGunnarEskeland.WithBarryWeingast,StanfordUniversity;RicardoPaesdeBarros,InstitutodePesquisaEconomicaAplicada(IPEA);FrancescaFornasari,GeorgetownUniversity;andStephanHaggard,UniversityofCaliforniaatSanDiego.
Completiondate:December1999.
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Ref.no.:682-97.
Reports
Dillinger,William,andStevenB.Webb.1999.DecentralizationandFiscalManagementinColombia.PolicyResearchWorkingPaper2122.WorldBank,LatinAmericaandtheCaribbeanRegion,PovertyReductionandEconomicManagementSectorUnit,Washington,DC.
.1999.FiscalManagementinFederalDemocracies:ArgentinaandBrazil.PolicyResearchWorkingPaper2121.WorldBank,LatinAmericaandtheCaribbeanRegion,PovertyReductionandEconomicManagementSectorUnit,Washington,DC.
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ChallengesofStabilizationandSustainableFinancialPolicies:TheCaseofTurkey
Recentdevelopmentsinanumberofemergingmarketeconomieshaveheightenedinterestintechnicalandpoliticaleconomyissuesthatariseindesigningstabilizationpoliciesinthemodernsettingofopencapitalaccountsandlarge-scaleprivatecapitalmovements.LargefiscaldeficitsandhighinflationhaveplaguedTurkeythroughoutthepastdecade.Nevertheless,thecountryhasbeenabletoattractconsiderableprivatefundsfromabroadduringmostofthisperiod.AlthoughTurkeyhassufferedperiodiccrisesorcreditcrunchesfollowinglarge-scaleoutflowsofprivatecapital,itseconomicgrowthhasgenerallybeenbuoyantanditsexternalcurrentaccountdeficitsrelativelymodest.Turkishpolicymakershavethusfacedlittlepressuretobringaboutadurablecorrectioninfinancialpolicies.
TherehasbeenmuchdebateaboutthemagnitudeofthemacroeconomicdisequilibriuminTurkey,andthecostsandbenefitsofanystabilizationeffortrequired.ThisresearchusedavarietyofanalyticalandmethodologicalapproachestoinvestigatesomeofthequestionsarisinginTurkey'sstabilizationeffortsinthemodenenvironmentofincreasingcapitalmarketintegrationandfinancialsectorsophistication.Thestudyexamineddistributionalandotherpoliticaleconomyissues,institutionalproblemsforfiscalpolicyanddebtmanagement,andthelessonsforTurkeyfromtheexperienceofBrazilandotherchronic-inflationeconomies.
Preliminaryfindingsincludeevidencethat:
Restoringfiscalcontrolwouldrequireinstitutionalfiscalreform(notably,improvedbudgetarycoverage).
Contrarytopopularbelief,stabilizationwouldhaveapositiveimpactontheTurkishbankingsector.
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Eliminatingdistortionsintherepurchaseagreementandbankdepositmarketswouldprobablysubstantiallyincreasecompetitivepressuresinthegovernmentdebtmarketandlowerborrowingcosts.
Sustaineddisinflation(tosingle-digitlevels)dependscriticallyonsynchronizingthepaceofdisinflationwithstructuralfiscalreforms,aswasdonesuccessfullyinArgentinabutnotinBrazilorMexico.
PapersproducedbythestudywerepresentedataconferenceondisinflationinTurkeyheldinAnkaraonOctober2223,1998.TheconferencewassponsoredbytheTurkishUndersecretariatoftheTreasury,theWorldBank,theBankersAssociationofTurkey,theCentralBankofTurkey,CreditSuisseFirstBoston,andBogazici,Sabanci,andBilkentUniversities.Itattractedabout350participants,amongthemhigh-rankingTurkishpolicymakers,academicsandanalysts,internationalandlocalbankers,andseniorrepresentativesoftheWorldBankandtheInternationalMonetaryFund.
Asynthesispaperwillbepreparedandsubmittedtoarefereedjournalforpublication,providinganopportunityforbroaddisseminationofthefinalresearchfindings.
Responsibility:EuropeandCentralAsiaRegion,PovertyReductionandEconomicManagementSectorUnitSamuelOtoo([email protected] ),andTurkeyResidentMissionIsmailArslan.WithA.ErincYeldan,BilkentUniversity;CarolinevanRijkeghem,BogaziciUniversity;IzakAtiyas,SabanciUniversity;MemduhKarakullukcu,LondonSchoolofEconomics;MuratUcer,CreditSuisseFirstBoston;andNissanLiviatan,BankofIsrael.
Completiondate:June1999.
Ref.no.:683-08C.
Reports
Atiyas,Izak,andSherifSayin.1998.APoliticalEconomy
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PerspectiveonTurkishBudgetDeficits.
Karakullukcu,Memduh.1998.AnInstitutionalAnalysisofDomesticDebtPricinginTurkey:SeekingaStructuralSolutiontoaStructuralProblem.
Liviatan,Nissan.1999.DisinflationinTurkey:LessonsfromBrazilandOtherChronic-InflationEconomies.
Ucer,Murat.1998.MonetaryFrameworksforDisinflation:InSearchofanAnchorforTurkey.
vanRijkeghem,Caroline.1998.TheImpactofStabilizationontheProfitabilityoftheTurkishBankingSector:HowConcernedShouldBanksBe?
Yeldan,Erinc,andUmitCizre-Sakallioglu.1999.DynamicsofMacroeconomicDisequilibriumandInflationinTurkey:TheState,Politics,andtheMarketsinaGlobalizingDevelopingEconomy.
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TheChallengeofDevelopmentinthe21stCentury
Thepastdecadewitnessedstrikingprogressinthedevelopingworld.Butitalsosawdismalsetbacks,includingincountriesthatnotlongagohadregisteredthefastesteconomicgrowth.Theseextraordinaryreversalshavetaughtusmuchaboutachievingrapiddevelopmentandaboutfaltering.Thisstudyreviewedthedevelopmentperformanceinthepastdecadeanddrewlessonsfordevelopmentattheturnofthecentury.Itfocusedontwooverarchingthemes.
First,fordevelopmenttobecomprehensiveandsustainable,itneedstoaugmentthreesetsofassets:humanandsocialcapital,naturalandenvironmentalcapital,andphysicalandfinancialcapital.Thefirsttwoconstitutetruedevelopmentobjectives,whilethethirdisameansratherthananend.Ironically,mostemphasisisusuallyplacedonphysicalandfinancialcapital,themeans.Balancingthesethreesetsofassetsispreferabletoasingle-mindedpursuitofshort-termgrowththroughtheaccumulationofphysicalandfinancialcapital.
Second,thevolatilityandinequalityingrowthareprovingespeciallyharmfultothepoor.Anexternalshockcouldthrowmillionsofnearpoorbackintolong-termorpermanentimpoverishment.Alegitimateaimofdevelopmentpolicymightbetoreducethevolatilityingrowth,enhanceriskmanagement,andreducethevulnerabilityofthepoortochangingeconomicfortunes.
Theoverarchingconcernsofthedistributionandqualityofgrowtharerootedinthenatureofpolicyreformsatbothnationalandgloballevels.Specifically,theybringoutmissingactionsinfourareashumandevelopment,environmentalprotection,financialregulation,andgovernance.
Lookingbeyondquantitytothequalityanddistributionofeducation.Accesstoeducationisnotenough.Thequalityanddistributionof
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schooling(asmeasuredbygirls'education,accessforthepoor,andthedistributionofeducation)needattention,aspopulationgrowthputspressureonthelimitedservices.Supportivelabormarketpoliciesandsocialprotectionarealsoneeded.Governmentshaveacrucialroleinensuringthequalityandequitabledistributionofsocialservicesandthebetteruseofthehumancapitalofthepoorthroughattentiontothedistributionoflandandotherassets.
Combiningincentives,investments,andinstitutionstosustaingrowthandtheenvironment.Environmentaldegradationhasworsened,aconsequenceofgrowingpoverty,increasingpopulation,domesticandglobalpressureonscarceresources,short-termeconomicgrowthheedlessofenvironmentalconsequences,andtheneglectoflocalandglobalcommons.Thecostsofenvironmentalpollutionandresourceoverexploitationareenormousthelossesinsomecasesirreversible.Astrongercombinationofincentives,investments,andinstitutions,domesticallyandglobally,canmakeenvironmentallysustainablegrowthareality.
Formulatingastrategytodealwithglobalfinancialrisks.Globalfinancialintegrationhasundeniablebenefits.Butithasalsomadedevelopingcountriesmorevulnerabletosuddenswingsininvestorsentiment,capitalflight,andtheconsequentdamagetotherealsector.Inadditiontosoundmacroeconomicpolicies,thereisaneedforactionstostrengthendomesticregulationandfinancialsupervisionaswellastorebuildinformationinfrastructureandtoimprovecorporategovernance.Meanwhile,countriesmayneedtobecautiouswhenopeningtheircapitalaccounts,makingsurethatspecialincentivesarenotprovidedforshort-termflowsandthatpolicyoptionssuchasreserverequirementsandtaxationforshort-termflowshavebeenconsidered.
Improvinggovernanceandfightingcorruption.Thetraditions,norms,andinstitutionsgoverningtheinteractionsofpeople,markets,
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organizations,andstatemattermuchforsustainedeconomicgrowthaswellasbroaderdevelopmentoutcomes.Civilliberties,participatoryprocesses,andthepoliticalsystemcanmakethedifferencebetweenastagnantandathrivingsociety.Corruption,aparticularlywidespreadaspectofmisgovernance,ismorethanamatterofunfairnessorimmorality:itentailsheavysocialcosts.Badeconomicpolicies,weaklegalframeworksandregulations,andalackofprofessionalismallfeedcorruption.Activecivilsocieties,strongpublicoversight,andswiftcorrectionofpolicydistortionsarecrucial.
Allthispointstothreeshiftsinemphasis,towardacomprehensivedevelopmentframework:
Broadeninggrowth-orientedactionstoincorporateactionsforequality,quality,andsustainability.
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Buildingregulatoryframeworksforcompetitionandefficiencyalongwithliberalizationandprivatization,replacingsingle-mindedeffortstomaximizethepaceofmarketliberalization.
Nurturingcivilliberties,participatoryprocesses,andcapacitybuildingtocomplementpolicychanges,replacingeffortstogetonlythegovernmentsideofpoliciesright.
ThisstudyprovidedbackgroundforthedevelopmentcorecourseattheWorldBankInstituteaswellasfortheWorldBank'sWorldDevelopmentReports1998/99and2000/01(NewYork:OxfordUniversityPress).ConclusionswerepresentedduringtheWorldBank'sPovertyReductionandEconomicManagementWeekinJuly1999,atasessionattendedbyabout50people.
Responsibility:WorldBankInstitute,OfficeoftheDirectorVinodThomas([email protected] ),YanWang,andAshokDhareshwar,Governance,Regulation,andFinanceDivisionMansoorDailamiandDanielKaufmann,andEnvironmentandNaturalResourcesDivisionNalinKishor.WithRamonLopez,UniversityofMaryland;XiboFan;andAndresBecker.
Completiondate:August1999.
Ref.no.:683-14.
Reports
Thomas,Vinod,andothers.1999.DevelopmentintheBalance:EqualityandSustainabilityatCentury'sEnd.WorldBankInstitute,Washington,DC.
.1999.RevisitingtheLessonsofDevelopment.WorldBankInstitute,Washington,DC.
MonetaryPolicyandMonetaryIndicatorsduringBankingCrises
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Thisprojectstudiestheconsequencesofbankingcrisesfortheconductofmonetarypolicy,drawingontheexperiencesofcountriesthathaverecentlyundergoneseverebankingproblems.Bankingcrisesarechallengingperiodsformonetaryauthorities.Theseepisodesaffecttheefficiencyofmonetarypolicyinstruments,theinformationcontentofmonetaryindicators,theusefulnessofmonetarytargets,andtheimpactofmonetarypolicy.
Thisresearchhastwoobjectivesandthustwoparts.Thefirstpartdocumentstheeffectsofbankingcrisesontheimplementationandassessmentofmonetarypolicybyanalyzingthecasesofanumberofindustrialanddevelopingcountriesthatenduredbankingcrisesduring197098.Thesecondpartanalyzestheinformationcontentofmonetaryindicatorsduringperiodsofbankunsoundness.
Thestudyusescointegrationanalysisanderrorcorrectionmodelingtoinvestigatewhetherbankingcrisesaffectmoneydemandandtoempiricallyanalyzetheinformationcontentofmonetaryindicatorsduringtheseepisodes.Itdrawsonmonthlydatacollectedfromnationalsources(suchascentralbankbulletinsandministryoffinancereports)andinternationalsources(InternationalMonetaryFundandWorldBankdatabases).
Preliminaryresultssuggestthat,contrarytowhatsomehaveargued,bankingcrisesdonotseemtothreatenthestabilityofmoneydemand.Buttheinformationcontentofmonetaryindicatorsdoesappeartodeteriorateduringtheseepisodes.
TheresearchshouldbeusefultotheBankanditsclientsforseveralreasons.AlthoughtheBankdoesnotadviseclientsonhowtoconductmonetarypolicy,itmonitorsandpromotesmacroeconomicstabilityand,inparticular,pricestabilityindevelopingcountriesasaprerequisiteforgrowth.ThusitisimportantthattheBankbeawareofthedifficultiesformonetarypolicyimplementationandofthethreatstopricestabilityposedbybankingcrises,especiallyasithastakenthe
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leadindealingwithfinancialsectorrestructuring.TheBank'sclientsalsoshouldbenefitfromanincreasedunderstandingoftheconsequencesofbankingcrisesformonetarypolicyandpricestability.Andtheresearchwillprovideguidanceonmonetaryindicatorsthatshouldbemonitoredduringcrisestoforecastinflationandkeepitincheck.
Responsibility:DevelopmentResearchGroup,FinanceMariaSoledadMartinezPeria([email protected] )andIvannaVladkova.WithCristinaNeagu;andNeilEricsson,FederalReserveBoard.
Completiondate:October1999.
Ref.no.:683-24.
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ToolsforFiscalAnalysis
TheDevelopmentResearchGrouphasdevelopedasimpleyetflexibletoolforthequantitativeanalysisoffiscalpolicies.Calledthe1-2-3model,thisgeneralequilibriummodelofanopeneconomyenablespolicyeconomists,usingapopularspreadsheetformatandlittlemorethannationalaccountsdata,tocalculatethelikelyimpactofproposedpolicychanges,suchastheeffectoftradeliberalizationontherealexchangerateortherevenueimpactofreplacingtradetaxeswithdomesticindirecttaxes.ThemodelhasbeenadoptedinseveralcountriesinAfrica,includingtheCFAcountries,Botswana,Ethiopia,Swaziland,Zambia,andZimbabwe,andinsuchcountriesasIndia,Latvia,andMorocco.
Apracticaltime-seriesversionisnowavailableforuseincountryeconomicworkattheWorldBanktogeneratepolicyscenariosorstandardtablesforcountryassistancestrategiesandunifiedsurveys.Econometricestimationofkeyparametersofthemodelhasbeendoneformorethan60countries.Adynamicversionoftheframeworkhasbeendevelopedtoexaminetheimpactoffiscalpolicyoninvestmentandgrowth.AndmoredisaggregatedversionshavebeendevelopedtolookattradepolicyreforminIndiaandtoexaminethelinkandinteractionbetweenmacroeconomicpoliciesandincomedistributioninZimbabwe.
Morethan700copiesofthefiscalanalysistool(oncomputerdiskettes)andmorethan900copiesofthecorrespondingdocumentationhavebeendistributedattrainingseminarsandresearchfairsandtoindividualsingovernmentsandtheacademiccommunity.
Responsibility:AfricaRegionTechnicalFamilies,Macroeconomics1DelfinS.Go([email protected] );DevelopmentResearchGroup,PublicEconomicsShantayananDevarajan;andEuropeandCentral
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AsiaRegion,PovertyReductionandEconomicManagementSectorUnitPradeepMitra.WithHongyiLi,HongKongUniversity;BernardinAkitoby,InternationalMonetaryFund;andSethaputSuthiwart-Narueput.
Completiondate:December1998.
Reports
Akitoby,Bernardin,andothers.1998.AdjustmentandIncomeDistributioninZimbabwe:AGeneralEquilibriumAnalysis.WorldBank,DevelopmentResearchGroup,Washington,DC.
Devarajan,Shantayanan.1997.RealExchangeRateMisalignmentintheCFAZone.JournalofAfricanEconomies6(March):3553.
Devarajan,Shantayanan,andDelfinS.Go.1998.TheSimplestDynamicGeneralEquilibriumModelofanEconomy.JournalofPolicyModeling20(6):677714.
Devarajan,Shantayanan,DelfinS.Go,andHongyiLi.1999.QuantifyingtheFiscalConsequencesofTradeLiberalization.WorldBank,DevelopmentResearchGroup,Washington,DC.
Devarajan,Shantayanan,DelfinS.Go,SethaputSuthiwart-Narueput,andJohnVoss.1997.DirectandIndirectFiscalEffectsoftheEuro-MediterraneanFreeTradeAgreements.PaperpresentedattheMediterraneanDevelopmentForum,KnowledgeandSkillsforDevelopmentintheInformationAge,Marrakech,Morocco,May1217.
Devarajan,Shantayanan,DelfinS.Go,JeffreyD.Lewis,ShermanRobinson,andPekkaSinko.1997.SimpleGeneralEquilibriumModeling.InJ.FrancoisandK.Reinert,eds.,AppliedMethodsforTradePolicyModeling.Cambridge:CambridgeUniversityPress.(AlsopublishedasPolicyResearchWorkingPaper1375,WorldBank,PolicyResearchDepartment,Washington,DC,1994.)
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Go,DelfinS.,andPradeepMitra.1998.TradeLiberalization,FiscalAdjustment,andRealExchangeRateinIndia.PaperpresentedattheconferenceTrade,Growth,andDevelopment,heldinhonorofT.N.Srinivasan,YaleUniversity,NewHaven,Conn.,March2728.(AlsopublishedasPolicyResearchWorkingPaper2020,WorldBank,DevelopmentResearchGroup,Washington,DC,1998.)
AfricanEconomicPerformance
ThisresearchsoughttoaccountforthesloweconomicgrowthinAfricasince1970.Itcarriedoutacomprehensiveliteraturereviewandgroupedthepossibleexplanationsbeforeadjudicatingamongthem.Althoughtheresearchincludedsomeoriginaleconometricwork,themainapproachwastosynthesizeawiderangeofexistingempiricalwork.Partofthisinvolvedcomparingmacroeconomicaccountsofthegrowthprocesswiththe
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microeconomicliteratureonfirmsandhouseholdstoseewhethertheywerecompatible.
ThemainfindingisthatAfrica'spastslowgrowthcanbeexplainedbyarangeofpolicyandinstitutionalweaknessesalackofopennesstotheworldeconomy,lowsocialcapital,andpoorpublicservices.Eachofthesecontributestoahigh-risk,capital-hostileenvironmentthathinderstransaction-intensiveactivitiesandhasinducedseverecapitalflight.
ForWorldBankoperationsinAfrica,thepriorityhasprobablyshiftedfromemphasizingopenness,wheretherehasbeenmuchprogress,toemphasizingloweringtransactionscostsandrisks.
ThefindingshavebeenpresentedinthreeWorldBankInstitutecoursesandhavealsobeenwidelypresentedinAfrica.AndtheyhavebeendistributedtoBankeconomistsintheAfricaRegionandtoAfricaneconomistsintheAfricanEconomicResearchConsortiumnetwork.
Responsibility:DevelopmentResearchGroup,OfficeoftheDirectorPaulCollier([email protected] ).
Completiondate:June1999.
Reports
Collier,Paul.1999.ExplainingAfricanEconomicPerformance.
JournalofEconomicLiterature37(March):64111.
.Forthcoming.WhyHasAfricaGrownSlowly?JournalofEconomicPerspectives.
NationalEconomicPoliciesandGrowth
Thisprojectlookedatthedegreetowhichnationaleconomicpolicies
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explaincountrygrowthperformance.Italsoexaminedwhethernationalpoliciescanbeusedasabasisforprojectinggrowthrates,lookingcriticallyatpastWorldBankforecastsandtestingtherelativemeritsoftimeseriesmodelsandgrowthregressionsasforecastingtools.
ThefindingshavebeenpresentedatseveralclinicsoftheBank'sPovertyReductionandEconomicManagementNetwork.
Responsibility:DevelopmentResearchGroup,MacroeconomicsandGrowthDavidDollar([email protected] ),WilliamEasterly,AartKraay,andGeorgeMonokroussos.
Completiondate:June1999.
Reports
Collier,Paul,andDavidDollar.1999.PovertyReductionandEconomicGrowth.WorldBank,DevelopmentResearchGroup,Washington,DC.
Easterly,William.Forthcoming.TheJoysandSorrowsofOpenness:AReviewEssay.InTheDeterminantsofEconomicGrowth.
Kraay,Aart,andGeorgeMonokroussos.GrowthForecastsUsingTimeSeriesandGrowthModels.WorldBank,DevelopmentResearchGroup,Washington,DC.
PoliticalEconomyofReform
Thisprojectlookedatnationalpolicydecisionsasdeterminedbytwoopposingforces:crisisandpolarization.Crisistendstospurreform,whilepolarizationofsocietybetweenopposinginterestgroupstendstodelayreform.Theprojectexploredseveralaspectsoftheseissues.Itlookedatthelowerlevelofpublicgoodsinethnicallypolarizedjurisdictions.Formallytestingthehypothesisthatcrisesspurreforms,itfoundthatinflationandblackmarketcrisesspurreforms,while
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fiscal,currentaccount,andgrowthcrisesdonot.Itshowedthatcountriesthathaveamiddle-classconsensusahighshareofincomeforthemiddlethreequintilesandrelativeethnichomogeneityhavebetteroutcomesingrowth,percapitaincome,health,andeducation.Finally,itfoundthataconsensusforinflationstabilizationmaybeeasiertoformthanusuallythought,asitisthepoor(thesupposedbeneficiariesofpopulistprogramsthatcauseinflation)whoaremostlikelytomentioninflationasatopnationalproblem.
Responsibility:DevelopmentResearchGroup,MacroeconomicsandGrowthWilliamEasterly([email protected] ).WithAlbertoAlesina,HarvardUniversity;RezaBaqir,UniversityofCaliforniaatBerkeley;andAllanDrazen,UniversityofMaryland.
Completiondate:June1999.
Reports
Alesina,Alberto,RezaBaqir,andWilliamEasterly.1999.PublicGoodsandEthnicDivisions.WorldBank,DevelopmentResearchGroup,Washington,DC.
Drazen,Allan,andWilliamEasterly.1999.DoCrisesInduceReform?SimpleEmpiricalTestsofConventionalWisdom.WorldBank,DevelopmentResearchGroup,Washington,DC.
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Easterly,William.1999.HappySocieties:TheMiddle-ClassConsensusandEconomicDevelopment.WorldBank,DevelopmentResearchGroup,Washington,DC.
Easterly,William,andStanleyFischer.1999.InflationandthePoor.Paperpresentedatthe1999AnnualWorldBankConferenceonDevelopmentEconomics,Washington,DC,April.
QualityofFiscalAdjustment
Thisprojectstudiedhowpolicymakersrespondwhenforcedtocutbudgetdeficitsorcurrentaccountdeficitsinadjustmentprograms.Itfoundthatpolicymakersforcedtocutbudgetdeficitsoftenengageinactionsthattemporarilylowerthedeficitbutdonotchangethetruedeficit(thechangeinpublicsectornetworth).Anditfoundthatthehighlyindebtedpoorcountries(HIPCs)havemaintainedhighcurrentaccountdeficitsdespitethepresenceofadjustmentprograms.
Theoreticalmodelspredictthatcountrieswithunchangedlong-runsavingspreferenceswillrespondtodebtreliefwithamixofassetdecumulationandnewborrowing.AreviewoftheexperienceoftheHIPCscomparedwithotherdevelopingcountriesfounddirectandindirectevidenceofassetdecumularionandnewborrowingassociatedwithdebtrelief,althoughthereweremoresuccessfuloutcomesinthepastthreeyears.
AveragepoliciesinHIPCsin1980-97weregenerallyworsethanthoseinotherdevelopingcountries,controllingforincomeandforinitialpoliciesin1979.Ananalysisoftrendsin1979-97foundthatcurrentaccountdeficits,budgetdeficits,andfinancialdepthinHIPCshavefailedtoimprove,buttherehasbeenanimprovementinrealovervaluationandtheblackmarketpremium.HIPCsshowtrendsintermsoftradenodifferentthanthoseinotherdevelopingcountries.
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TherehasbeenanimportantshiftindisbursementsawayfromprivateandbilateralsourcestotheInternationalDevelopmentAssociation(IDA)andothermultilateralsourcesofconcessionalfinancing.In1988-97positivenettransfersfromtheIDA,othermultilateralconcessionalsources,andbilateralconcessionalsourcesoffsetnegativenettransfersfromtheWorldBank,theInternationalMonetaryFund,bilateralnonconcessionalsources,andprivatesources.
Responsibility:DevelopmentResearchGroup,MacroeconomicsandGrowthWilliamEasterly([email protected] ).
Completiondate:June1999.
Reports
Easterly,William.1999.HowDidtheHighlyIndebtedPoorCountriesBecomeHighlyIndebted?AReviewofTwoDecadesofDebtRelief.WorldBank,DevelopmentResearchGroup,Washington,DC.
.1999.WhenIsFiscalAdjustmentanIllusion?EconomicPolicy(April):5786.
TheImpactofPublicSpendinginUganda
ThisresearchisusingdatafromfourconsecutivehouseholdsurveysinUganda,undertakenin1992-96,toinvestigatequestionsaboutsocialandeconomicdevelopmentinthecountry'sruralareas.Thedatacoverapanelof215communities(surveyedinthreeofthefoursurveys)and1,200panelhouseholds(ofwhicharandomsamplewasdrawnineachsurveyyearsothatonlyabout300householdswereinthesampleforallfouryears).
Thekeyquestionsbeingexaminedareasfollows:
Whatwerethemostimportantdeterminantsofcommunity-level
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growthandimprovementofthelivingconditionsofthepoor?Haveasset-poorhouseholdsorregionswithbelow-averageaccesstoinfrastructureorwithhighlevelsofviolencesystematicallylaggedinthegrowthprocess?Howeffectivelywerehouseholdsindifferentwealthclassesabletocopewithaggregateandidiosyncraticshocks,andwhatfactorshelpedthemindoingso?
Howeffectivelyhavethecountry'sagriculturalpotentialandinputs(purchasedandnonpurchased)beenused?Whatfactorshavefurtheredagriculturaldiversification,andhowmuchhastheperformanceofinputandoutputmarketsimprovedsinceadjustmentwasinitiated?
Whatfactors(policies)havepromotedproductiveinvestmentandnewenterprisestart-upsatthehouseholdlevel?Towhatdegreehastheabsenceofaminimumsetofendowmentsatthecommunitylevelledtoeconomicallymotivatedout-migrationamongthebetter
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educated?Howdotheincomesofthesemigrantscomparewiththeaverageintheirregionoforiginandwiththeincomesoftheirpeersintheregionstowhichtheymigrate?
Hastheincreaseinschoolfeesobservedovertheperiodreducedenrollmentbythepoororledtohigherdropoutrates?Orwasthefeeincreasemorethancompensatedforbyimprovementsinschoolquality?Whataretheimplicationsforpoliciesaimedatcostrecovery?
Whatwastheeconomicbenefit(inreducednumberofdayslosttodisease)fromprovidingpublichealthservicesinruralandurbanareas?Howdidcurativeandpreventiveinterventions(includingimprovingindividuals'knowledgeaboutthecausesandtreatmentofdiseases)interactinpreventingadultorchildhooddiseases,andwhatdoesthisimplyforpublichealthpolicies?
Thestudy'smainfindingstodateareintwoareas.First,whileeducation,roaddistance,andaccesstoextensionhaveasignificantpositiveimpactonagriculturalproduction,ruralproducersoverusenontradedinputs(homegrownseed)andunderusepurchasedinputs(fertilizer).Creditconstraintssignificantlyaffectinputdemand.Lackofaccesstofinancialservices(asmeasuredbydistancetotheclosestbank)negativelyaffectsthestart-upofnonagriculturalenterprisesandintegrationintomarketsforagriculturalproduce,supportingthegovernment'semphasisinitsruraldevelopmentstrategyonimprovingaccesstofinancialservices.
Second,knowledgeaboutthecausesandtreatmentofdiseases,inadditiontoaccesstoandqualityofhealthservices,hasasignificantimpactinreducingindividualspropensitytofallsick.Evenunderconservativeassumptions,themonetarybenefits(derivedbyvaluingthenumberofdayslostatthelocalwagerates)canbeveryhigh.
Responsibility:DevelopmentResearchGroup,Rural
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DevelopmentKlausDeininger([email protected] ).WithJohnOkidi,MakerereUniversity,Uganda.
Completiondate:December1999.
Report
Deininger,Klaus,andJohnOkidi.1999.CapitalMarketAccess,FactorDemand,andAgriculturalDevelopmentinRuralAreasofDevelopingCountries:TheCaseofUganda.PaperpresentedattheannualmeetingsoftheAmericanAgriculturalEconomicsSociety.
CanAfricaClaimthe21stCentury?
Thisresearchseekstoanswerthefollowingquestions:
WhatarethedeterminantsofAfrica'seconomicperformance,andhowdothesedeterminantslinkwithpovertyreduction?HowcanwebuildsocialcapitalinAfrica,andhowcanthisenhancetheeffectivenessofthestate?HowcanproductivesectorsinAfricabestrengthenedsoastoenabletheregiontoparticipateintheglobaleconomy?Whataretheissuesrelatingtodevelopmentpartnership(aidandexternaldebt)?WhatdevelopmentstrategycanAfricaadoptinthe21stcentury?
Theresearchcombineseconomicandeconometricanalyticalapproaches,politicaleconomy,andinstitutionalanalysis.ItdrawsonaWorldBankdatabase,theInternationalMonetaryFund'sfinancialstatistics,andpovertydatacollectedfromprimarysources.
ThefindingsoftheresearcharebeingpresentedatresearchworkshopsandconferencesinAbidjaninJuly1999,inNairobiinDecember1999,andinAddisAbabainMarch2000,andataconferenceoftheAfricanCouncilofMinistersinJune2000.
Responsibility:AfricaRegionTechnicalFamilies,RegionalEconomicsandSocialPolicyAlanGelb([email protected] ),
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GeneTidrick,andJohnRanda,RegionalRuralDevelopmentandEnvironmentHansBinswanger,CapacityBuildingUnitBrianLevy,GlobalCoalitionforAfricaTesfayeDinka,HumanDevelopment2NicholasBurnett,InstitutionalandSocialPolicyLionelDemery,andRuralDevelopment1RobertTownsend;andDevelopmentResearchGroupIbrahimElbadawi,PaulCollier,andTayeMengistae.WithCharlesSoludo,UniversityofNssuka;LualDeng;NjugunaNdungu,UniversityofNairobi;Jean-PaulAzam,UniversityofToulouse;MichaelChege,UniversityofFlorida;ErnestAryeetey,UniversityofGhana;LemmaSenbet,UniversityofMaryland;TshikalaTshibaka,FoodandAgricultureOrganization;T.AdemolaOyejide,UniversityofIbadan;andCarolLancaster,GeorgetownUniversity.TheDutchandSwissgovernmentsandtheCanadianInternationalDevelopmentAgencyareprovidingfundingfortheresearch.
Completiondate:June2000.
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JointDevelopmentResearchGroupAfricaRegionWorkProgramonAfricanDevelopment
AchievingacceleratedeconomicgrowthandpovertyreductioninSub-SaharanAfricamaybethebiggestchallengeforthedevelopmenteconomicsprofessionandtheWorldBank.TheBank'sDevelopmentResearchGroupandAfricaRegionalOfficeinitiatedajointefforttodevelopaworkprogramonsalientissuesonwhichfurtheranalyticalworkcouldleadtoimprovedpolicyoutcomesinAfrica.Preliminaryworkhasidentifiedseveralissues:debt,finance,countryselectivity,publicresourcemanagement,equitableruraldevelopment,andtradeandindustrialpolicy.
Theworkprogramconsistsofasetofresearchprojectsonthesetopicscarriedoutin10samplecountriessothattheinteractionamongthetopicscanbeassessed.TheworkinvolvescollaborationwithAfricanresearchersandoutsideinstitutions.
CurrentresearchprojectsfocusonearlychildhoodeducationinKenya,regionalintegrationinAfrica,bankinsolvencyinZambiaandZimbabwe,theimpactofAfricandebtoninvestment,thepoliticaleconomyofaidandreforminAfrica,andtelecommunicationsprivatizationinCôted'Ivoire,Ghana,andTanzania.
Responsibility:DevelopmentResearchGroup,PublicEconomicsShantayananDevarajan([email protected] )andHowardPack,RegulationandCompetitionPolicyMaryShirley,FinanceGerardCaprioJr.,PovertyandHumanResourcesPaulGlewwe,andMacroeconomicsandGrowthDavidDollar;andAfricaRegionalOffice,OfficeoftheVicePresidentAlanGelb.WithNdjugunaNdungu,TunjiOsobudi,SamuelWangwe,TchetcheNguessan,MathieuMeleu,Jean-PaulAzam,Jean-JacquesLaffont,andTorgnyHolmgren.
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Completiondate:June2000.
FiscalDecentralizationinDevelopingCountries
Thisprojectfocusesonpositiveandnormativeanalysisofgovernmentdecentralizationindevelopingcountries.Thenormativeanalysisrecognizesasobjectivesofdecentralizationmacroeconomicmanagementandstability,microeconomicefficiency,andredistribution.
Withreferencetotraditionaltheory,decentralizationcannotbesupportedonthebasisoftheseobjectivesunlessonemodelsgovernmentbehaviorinwaysthatacknowledgeweaknessesincentralgovernment.Thatiswhatlendsimportancetopositiveanalysis,inwhichweaknessesinthefunctioningofgovernmentcanbemodeledexplicitly.Suchweaknessesmaylendsupporttosystemswithdecentralizationundersomecircumstances,suchaswhenthemarketanalogyofcompetitionbetweenjurisdictionsappliesorwhenlocalparticipationisimportant.Anexampleoftheoppositeiswhencompetitionerodesthetaxbaseandleadstoaracetothebottom(ifandwhengovernmentisnotsodysfunctionalthatsuchalow-taxequilibriumisthepreferredoutcome).Thetheoreticalliteratureindicatesthatthemarketeconomyoftenwouldnotbebeneficialunlessthereisastrongcenter(asaregulator).
Theprojectthusemphasizesacombinationofconceptualanalysisandempiricalresearch.Empiricalresearchindicatesthatfiscaldecentralizationhasinawiderangeofcircumstancesandinvaryingformsshowneithernoassociationoranegativeassociationwitheconomicgrowth.Atthemicroeconomiclevelaspectsofdecentralizationcanleadtoefficiencygains(insocialsectorssuchaseducation),buttheseaspectstypicallyarenotfiscal.Autonomyandcommunityparticipationcancontributetoresultsinschools,buttheseneednotbeassociatedwithfiscaldecentralization.Onredistribution,theoreticalprincipleswarnthatfiscaldecentralizationcanharmequity
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unlessthecenterretainsstrongtaxandredistributivepowers.Evidenceindevelopingcountriesshowsthatfiscaldecentralizationtypicallyallowsthecenterstrongredistributiverolesandinstruments,butmoreresearchisneededandisunderway.Theresearchasksthequestion,inwhatcontextsisredistributiongoodorbadforefficiency?
Theresearchemphasizesthechannelsthroughwhichdecentralizationworks,andthepoliticaleconomyofdecentralization.Inanalyzingthechannels,animportantissueiswhetherfiscaldecentralizationtypicallyornecessarilysoftensbudgetconstraints,thusreducingthefiscaldisciplineofconsolidatedgovernment.Resultsindicatethatdecentralizationoftencontributestoincreaseddeficits.Theworkonpoliticaleconomylooks
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attheextenttowhichtheeffectsofdecentralization,anditsspeed,dependonthepoliticalcontext.Finally,theresearchaskswhethertherearelinksbetweendecentralizationandgovernance.
Responsibility:DevelopmentResearchGroup,PublicEconomicsShantayananDevarajan([email protected] ),GunnarEskeland,Heng-fuZou,VinayaSwaroop,andStutiKhemani,RegulationandCompetitionPolicyGeorgeClarke,andPovertyandHumanResourcesElizabethKing;LatinAmericaandtheCaribbeanRegion,PovertyReductionandEconomicManagementSectorUnitStevenB.Webb;EuropeandCentralAsiaRegion,PovertyReductionandEconomicManagementSectorUnitDeborahWetzel;SouthAfricaResidentMissionJunaidAhmad;andPovertyReductionandEconomicManagementNetwork,PublicSectorManagementDivisionJennieLitvack.WithDavidWildasin,DavidPines,CanicePrendergast,OliverHart,andJanBrueckner.
Completiondate:December2000.
Reports
Davoodi,Hamid,andHeng-fuZou.1998.FiscalDecentralizationandEconomicGrowth:ACross-CountryStudy.JournalofUrbanEconomics43:24457.
Fornasari,Francesca,StevenB.Webb,andHeng-fuZou.1999.TheMacroeconomicImpactofDecentralizedSpendingDeficits:InternationalEvidence.WorldBank,Washington,DC.
Xie,Danyang,Heng-fuZou,andHamidDavoodi.1999.FiscalDecentralizationandEconomicGrowthintheUnitedStates.JournalofUrbanEconomics45:22839.
Zhang,Tao,andHeng-fuZou.1998.FiscalDecentralization,PublicSpending,andEconomicGrowthinChina.JournalofPublic
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Economics76:22140.
StructuralAdjustmentParticipatoryReviewInitiative
Thisisajointprojectwithsevengovernmentsandaninternationalnetworkofnongovernmentalandcivilsocietyorganizations.Theobjectiveistoexaminetheimpactofstructuraladjustmentthroughabroad-basedconsultativeprocessinvolvingbothpublicforumsandfieldinvestigations.Theprojectaimstoimproveunderstandingnotonlyoftheeffectsofadjustmentpoliciesbutalsoofhowbroadparticipationoflocalcivilsocietycanimprovepolicymaking.TheinitiativewillattempttoidentifypracticalchangesineconomicpoliciesforbothgovernmentsandtheWorldBank.
ThesevencountriesparticipatingintheexerciseareBangladesh,Ecuador,Ghana,Hungary,Mali,Uganda,andZimbabwe.IneachcountrynongovernmentalandcivilsocietyorganizationshavesetuplocalnetworksandrepresentativecommitteestoworkwithrepresentativesfromtheBankandfromdifferentpartsofthegovernmentindesigningthework.Thetripartitesteeringcommitteeineachcountryisresponsibleforplanningfirstanopeningpublicforum,thenafieldinvestigationintotheimpactofselectedpolicies,andfinallyaclosingforumwheretheresultsoftheanalysisarepresented.TheprojectwasofficiallylaunchedbyaglobalforuminWashington,DC,inJuly1997thatwasattendedbyallthecountryparticipants.Theprojectwillendwithasimilarglobalforumonceallthecountrystudieshavebeencompleted.
Thefieldworkformsthecoreoftheproject'sresearch.Consistentwiththeconsultative,participatorynatureoftheproject,theresearchwilluseaninnovativeapproachtoensurethatseveralmethodsofanalysisfromqualitativetoquantitativetonewparticipatorymethodswillbeused.
Bangladesh,Ecuador,Ghana,Hungary,andUgandacarriedouttheir
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openingpublicforumsin1998andhavebegunthefieldworkphase.MalihelditsforuminJuly1999.Zimbabwe'sgovernmentisreconsideringitsparticipation.
Responsibility:OfficeoftheSeniorVicePresidentandChiefEconomist,DevelopmentEconomicsLynSquire([email protected] ),DevelopmentResearchGroup,OfficeoftheDirectorConstanceNewman,andPovertyandHumanResourcesBrankoMilanovicandEmmanuelJimenez;PovertyReductionandEconomicManagementNetwork,GenderDivisionAndrewMason;AfricaRegionTechnicalFamilies,InstitutionalandSocialPolicyLionelDemery;UgandaResidentMissionRandolphHarrisandMaryBitekerezo;ZimbabweResidentMissionBarbaraKafkaandEbrahimJassat;BangladeshResidentMissionFredTemple,
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SyedNizammuddin,andZaidiSattar;HungaryResidentMissionRogerGraweandMihalyKopanyi;EcuadorResidentMissionPaulBeckermanandMarceloRomero;GhanaResidentMissionPeterHarroldandKofiMarrah;andMaliResidentMissionGraceYabrudyandYoussoufThiam.TheSweden,Netherlands,andNorwayTrustFundscontributedfundingfortheresearch.
Completiondate:December2000.
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InternationalEconomics
ForeignDirectInvestmentSpilloversinDevelopingCountries
Manydevelopingcountriesseeforeigndirectinvestmentasakeyelementoftheirdevelopmentstrategiesandseektoattractitthroughfinancialincentives.Theyviewforeigndirectinvestmentasasourceofimportantdirectbenefitsforthehostcountryfinancingnewfirmsorbusinessexpansions,creatingjobs,andgeneratingtaxrevenues.Theyalsobelievethatitproducesimportantindirectbenefitsfordomesticfirmsspilloversfromtheacceleratedtransferofsuperiortechnology,turnoverofskilledlabor,andincreasedexportopportunitiesthroughlinkswithmultinationalcorporationsandforeignbuyers.
Thisstudysoughttoquantifythemostimportantspilloversfromforeigndirectinvestmentandtoinvestigatethemechanismsthroughwhichthesespilloversoccur.ItfocusedontwodevelopingeconomiesMalaysiaandMexicowherefirm-leveldatawereavailableonforeignownership,researchanddevelopment(R&D)spending,training,andproduction.Thestudyuseddataontheproduction,R&Dspending,andworkertrainingofforeignfirmstocreateaggregatemeasuresofforeigndirectinvestmentforestimatingpotentialspilloversondomesticfirms.Itusedfrontierproductionfunctionmodelstoestimatethetechnicalefficiencyoflocalfirmsandtheextenttowhichefficiencyisenhancednotonlybythepresenceofforeigndirectinvestment,butalsobythetechnologicalandtrainingactivitiesofforeignfirms.
Thecross-sectionalanalysesbasedondatafrom1992forMexicoand1994forMalaysiayieldedseveralresults.Forbothcountries,evidencewasfoundthatforeign-ownedfirmsandjointventureshavelevelsoftechnicalefficiencythatare,onaverage,higherthanthoseoflocal
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firms.Thissuggeststhatthereispotentialforefficiencyspilloverstootherlocalfirms.Againinbothcountries,thelargertheforeignpresenceasmeasuredbytheforeigndirectinvestmentshareofindustryoutputoremploymentthehighertheestimatedefficiencylevelsoflocalfirmswere.Thisisconsistentwith
foreigndirectinvestmentspillovers.Butthespilloversappearedtodifferbetweenthetwocountries.InMexicotheevidencesuggestedthatR&Dbyforeignfirmsraisedtheproductivityoflocalfirmsinthesameindustry;inMalaysia,bycontrast,onlyR&Dbyjointventureshadasignificanteffectondomesticfirms.Finally,inMalaysiatrainingbyforeignfirmshadapositiveimpactontheefficiencyoflocalfirms;inMexiconoevidencewasfoundforskillspilloversfromforeignfirms.
AnalysesusingpaneldatafromMalaysiacovering1985-95providedadditionalinsightsintothemechanismsthroughwhichforeigndirectinvestmentspilloversoccur.Asecondsurvey,fieldedin1996,providedinformationaboutthepresenceofverticalandhorizontalinterfirmlinksandtheformalandinformalformsoftechnologytransferthatoccurthroughtheselinks.Econometricanalysisindicatedthatthemoredensearethesenetworkslinkinglocaltoforeignfirms,themorethetechnicalefficiencyoflocalfirmsimproved(spilloversfromotherlocalfirmswerealsoimportant).Italsoshowedthattheproductivityprofilesoflocalfirmsincreasewithyearsofexperienceasasupplier.
Theresearchresultssuggestthattheefficiencyspilloversfromforeigndirectinvestmenttolocalfirmscanbesignificant.Spilloversoftechnologyandskillsaremoreimportantinsomeeconomiesthaninothers,andinterfirmlinksareanimportantmechanismthroughwhichtheyoccur.Evidencethatlocalfirmslearnthroughexperienceasasuppliertobothforeignandotherlocalfirmssuggeststhatsupplierdevelopmentprogramscouldyieldpotentiallylargeefficiency
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gains.
Responsibility:PrivateSectorDevelopmentDepartment,BusinessEnvironmentUnitHongTan(htan@worldbank-org)andGeetaBatra.AnalysesusingpaneldatafromMalaysiaweresupportedbytheEconomicPlanningUnit,Malaysia,throughareimbursabletechnicalassistanceprojectcofundedbytheUnitedNationsDevelopmentProgrammeandtheEconomicPlanningUnit.
Completiondote:December1998.
Ref.no.:680-07C.
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Reports
Tan,Hong,andGeetaBatra.1995.TechnologySpilloversfromFDI:EvidencefromMexico.PSDWorkingPaper.WorldBank,PrivateSectorDevelopmentDepartment,Washington,DC.
.Forthcoming.Malaysia:InterfirmLinkages,TechnologyDevelopmentandProductivityGrowth.WorldBank,PrivateSectorDevelopmentDepartment,Washington,DC.
WorldBank.1997.Malaysia:EnterpriseTraining,Technology,andProductivity.WorldBankCountryStudy.Washington,DC.
AStrategicApproachtoAssetandLiabilityManagementinDevelopingCountries
Developingcountriesregularlyseekadviceonthemanagementoftheirexternalassetsandliabilities.Butthatadviceoftenisnonoptimalorsimplywrong.Althoughmanytacticaltoolsforactiveriskmanagementindevelopingcountrieshavebeendevelopedinthepastdecade,aframeworkfordevelopingastrategythatincorporatescountry-specificfactorshaslaggedfarbehind.Typicalapproachestoassetandliabilitymanagementexcludetradeandfiscalflows,forexample,resultinginstrategiesthatareunrelatedtoanymeasureofthecountry'searningspotentialandthatignorethenaturalhedgesintheimportandexportsector.
Thisprojectdevelopedtoolsandguidelinesthatincorporatecountry-specificfactorstoassistcountriesindevisinganassetandliabilitymanagementstrategy.Ageneralmodelingprocesswascompletedthatincludestradeandfiscalflowsandestimatesofthesensitivityofimportsandexportsandrevenuesandexpensestocommodityprices,interestrates,exchangerates,andothermacroeconomicfactors.
TheprojectappliedthemethodologyandmodeltoColombiaasacase
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study,emphasizingsignificantparadigmshiftsoverexistingmethodologies.UsingpracticalinputacquiredinpartduringamissiontotheColombianCentralBankandMinistryofFinance,theprojectformulatedanassetmodelfortheCentralBank,aliabilitymodelfortheMinistryofFinance,andacombinedassetandliabilitymodeltoeasefinancialcoordinationbetweenthetwoinstitutions.Fortheassetmodeltheprojectdevelopedtechniquesforcapturingtheuncertainty
structureofthejointstochasticmovementsofinterestandexchangeratesforuseinthestochasticdynamicoptimizationmodel.Macroeconomicfactorsandcommoditypriceriskwereadded.Specificcomputingtoolsforthesolutionofstochasticdynamicoptimizationproblemsweredevelopedandlinkedtoamodelingsystem.Themodelwasrunandcomparedwiththeactualportfoliostrategiesadoptedintermsofriskandreturntradeoffs.
Themodelisportabletoapersonalcomputer(PC),andtheprojecttransferredthemethodologyandmodeltothecountry.TheabilitytoworkwithamodelingsystemonaPCallowsusersinColombiatointroducechangestotheequationsystem(constraints,policies,andthelike)andeasesthetreegenerationprocesscapturingthestochasticnatureoftheproblem.
FeedbackhasindicatedthatthestrategictoolsandguidelineswillgreatlyenhanceColombia's(andperhapsothercountries')capacityforassetandliabilitymanagementandprovidenewtechniquesforriskanalysis.ActiveuseofthemodelisplannedattheCentralBankandtheMinistryofFinance.
Furtherworkisplannedtorefinethetoolsandsolutionprocessdevelopedforunderstandingandanalyzingriskandmodelsolutions,andtheresultswillbepublished.Moregenerally,itwillbeinvestigatedhowbesttointegratethesetoolsintodevelopingcountries'operations,toaccommodatetheirpolicyobjectives,andtoensurethatthemodelwillbetreatedasatoolfordecisionmaking,not
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asasubstituteforit.
TheprojectinvolvedintensecollaborationwithteamsfromtheColombianCentralBankandMinistryofFinanceandseveraltrainingprograms,includingaone-week,hands-oncourseinWashington,DC,inMay1998.Besidesthe6participantsfromtheColombianCentralBankandMinistryofFinance,theworkshopwasattendedby16participantsfromothercentralbanksandministriesoffinanceindevelopingcountries.PresentationswerealsomadeattheTrainingCourseonDebtManagement(WorldBank),Moscow,May1997;ForumonSovereignDebtManagement(WorldBank),Washington,DC,October1997;DebtManagementSeminar(UNCTAD),December1997,Geneva;andEUAccessionandSovereignDebtManagementSeminar(WorldBankandEuropeanUnion),Brussels,December1997.
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Responsibility:PovertyReductionandEconomicManagementNetwork,EconomicPolicyDivisionStijnClaessens([email protected] ).WithJeromeKreuser,RiskAnalysis&ManagementSystems,Inc.;
RogerJ.-B.Wets,UniversityofCaliforniaatDavis;andPhilippeJorion,UniversityofCaliforniaatIrvine.
Completiondote:July1998.
Ref.no.:681-23C.
Report
Claessens,Stijn,JeromeKreuser,LesterSeigel,andRogerJ.-B.Wets.Forthcoming.AToolforStrategicAssetandLiabilityManagement.InProceedingsofDebtManagementSeminar.Geneva-.UNCTAD.
AidAllocationinaFederalSystem:ACaseStudyofIndia
Amongdevelopingcountries,Indiacontinuestobeoneofthelargestrecipientsofforeignaid.Annualdisbursementsofaid(officialgrantsandconcessionaryloans)toIndiaaveragedcloseto$2.9billioninthefirsthalfofthe1990s.Onayearlybasisaidfinancedroughly4.2percentofthecombinedspendingofthecentralgovernment,stategovernments,andpublicenterprises.
Publicspendinghaslongbeenconsideredoneofthemainchannelsthroughwhichforeignaidinfluencesdevelopmentoutcomes.HowhasforeignaidinfluencedthelevelandcompositionofpublicspendinginIndia?Hasitbeenspentonthepurposesintendedbythedonors?Howhaveaidresourcesparticularlythoseforspecificstategovernmentprojectsaffectedfiscaltransfersfromthecentraltothestategovernments?Isforeignaidmonitoringeffectiveatthecountrylevel?Atthestatelevel?Thesearethequestionsthisresearch
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addressed.
Theresearchincorporatedtheintergovernmentalfiscallinkinexaminingtheeconomicfungibilityofexternalassistanceandmodeledthreedimensionsoffungibilitytwoatthefederallevelandoneatthesubsidiarylevel.UsingdataonIndia,thestudydidnotfindevidencechatforeignaidfundsarebeingspentforthepurposeintendedbythedonoragencies.Mostfundsatboththecentralandthestatelevelarefungible.
Theyarespentonactivitiesthatwouldhavebeenundertakenanyway;foreignaidmerelysoftensthebudgetconstraint.
ThustheresultsshowthatexternalassistancetoIndiahashadnoperceptibleimpactonthecompositionofpublicspending.Oneapproachtoincreasingthedevelopmentimpactofaidmightbetolinkaidwithanoverallpublicexpenditureprogramthatprovidesadequateresourcestocrucialsectors.
ThefindingswerediscussedattwoworkshopsinNovember1997,oneattheIndiraGandhiInstituteofDevelopmentResearch,with50participantsfromthedevelopmentcommunity,andanotherattheNationalInstituteofPublicFinanceandPolicyinNewDelhi,attendedby30participantsfromacademiaandthedevelopmentcommunity.
Responsibility:DevelopmentResearchGroup,PublicEconomicsVinayaSwaroop([email protected] )andAndrewSunilRajkumar.WithShikhaJha,IndiraGandhiInstituteofDevelopmentResearch.
Completiondote:December1998.
Ref.no.:681-41C.
Report
Jha,Shikha,andVinayaSwaroop.1998.FiscalEffectsofForeign
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Aid:ACaseStudyofIndia.WorldBank,DevelopmentResearchGroup,Washington,DC.
UnderstandingCapitalMarketCrisesinEmergingEconomies:TheRoleofAnnouncementsandNewsinSpreadingCrisesandStoppingContagion
Thisresearchprojectlookedattheissueofcontagioninfinancialcrises.Theprojectconsistedoftwostudies.Thefirstfocusedonfinancialcycles,characterizingupturnsanddownturnsinstockmarketpricesincountriesthathaverecentlyfacedaseverecurrencyandbankingcrisis.ThestudyincludedsevenEastAsianeconomies(HongKong,Indonesia,theRepublicofKorea,Malaysia,thePhilippines,Taiwan[China],andThailand),sevenLatinAmericancountries(Argentina,Brazil,Chile,Colombia,Mexico,Peru,andVenezuela),andsevenEuropeancountries(Denmark,Finland,Ireland,Norway,Portugal,Spain,andSweden).Asabenchmarkthestudy
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alsoincludedtheG-7countries(Canada,France,Germany,Italy,Japan,theUnitedKingdom,andtheUnitedStates).
ThestudyassessedwhetherthelastcrisisinEastAsiadiffersfrompreviouscontractionsintheregion.ThenitcomparedtheEastAsianstockmarketcycleswiththeEuropean,G-7,andLatinAmericancycles.Itlookedatwhetherfinancialcyclesarecoordinatedacrosscountriesand,ifso,how.Italsoexaminedwhetherstockmarketscomovedifferentlythroughoutcycles.Anditlookedatthecross-countrycomovementindifferentsampleperiodstoinvestigatewhetherstockmarketsmovemorecloselytogetherwhencapitalmarketsaremoreintegrated.
Toisolatefluctuationsofvariablesatbusinesscyclefrequencies,thestudyusedanapproachpioneeredbyresearchersattheNationalBureauofEconomicResearchandconstructedanalgorithmthatidentifiesbusinesscycleturningpoints.Theevidenceonfinancialcrisesshowedthattheyareprecededbyboom-bustcyclesinfinancialmarketsofanintermediatedurationbetweentwoandthreeyears.Thusthestudyexaminedstockmarketfluctuationsatintermediatefrequencies.
Thestudy'smainresultsareasfollows:
FinancialcyclesinLatinAmerica(bothboomsandbusts)arealwaysmorepronouncedthancycleselsewhere,butrecentfinancialcyclesappeartobemuchlessseverethanthoseinthe1970sand1980s.Estimatesshowthatthevolatilityofstockprices(atbusinesscyclefrequencies)inthe1990sisaboutathirdthatintheearlierdecades.
StockpricefluctuationsinAsiainthe1990saresomewhatlargerthanthefluctuationsinthatregioninthepast,withthecrashesin1997similarinmagnitudetothoseinLatinAmericaaroundthetimeofthedebtcrisis.
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Financialmarketsmovetogether.Amongthesamplecountriesindustrialmarketstendtomovemostcloselytogether,whileAsiancapitalmarketsmovemoreinisolation.Butallemergingmarketshavebecomemorecloselyintegratedinthe1990s,withfinancialcyclesmoresynchronizedwithinandacrossregions.
Insum,capitalmarketintegrationhasresultedinclosersynchronizationoffinancialcycles,withtheonsetoffinancialboomsandthetimingoftherecoveriesinthe28countriesexaminedbecomingmorealignedacrosscountries.Buttheboom-bustcycleoffinancialmarketshasnotchangedsubstantiallyovertime.Insomecases,suchasLatinAmerica,theamplitudeoffinancialcycleshasdiminished.
Thesecondstudylookedattheroleofnewsstoriesinspreadingcontagiontoothercountriesandinisolatinganeconomyfromanexternalcrisis.Ittriedtodeterminewhetherdailymovementsinstocks,exchangerates,andinterestratesintheEastAsianeconomiesduringthe1990sarerelatedtodailyeconomicnewsstoriespublishedinnewspapers.Itexaminedwhetherchangesinthecorrelationsbetweeninterestandexchangeratesarerelatedtocertainnewsabouttheeconomy.ThestudyalsoexaminedwhetherannouncementsandinformationreleasedbyAsiangovernmentsaftertheThaicrisishelpedtoavertcontagionfromabroad.Andittriedtoidentifywhattypesofannouncementsseemedtobeadequatetocontainthespilloverandwhattypesacceleratedthespillover.
BecauseofthelargenumberofnewsstoriesrecordedduringtheEastAsiancrisis,observingthemarketreactiontoeachpieceofnewswouldbedifficult.Thusthestudyusedamethodologythatinvolvedlookingatwhathappensonthedayswhenthemarketsreactedstrongly.Foralargebutmanageablenumberofstockmarketchanges,thestudyidentifiedthenewsstoriesreleasedonthosedays.Bytracingthecountryoriginatingthenews,thestudycouldthenexaminethe
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cross-countryspillovereffects.TheanalysisuseddatasetsfromBloomberg,theFederalReserveBoard,andtheInternationalMonetaryFund'sInternationalFinancialStatistics.
Thefindingsshowthatliberalizingcapitalmarketsdoesnotgenerateexcessvolatilityinlocalequitymarkets.Butopenmarketsaremorecloselycorrelatedwithworldfinancialmarkets,sotakingmeasurestopreventcontagionbecomesveryimportant.Thefindingsalsoshedlightonwhichnewsstoriesaffectmarketsduringcrises.Theresultssuggestthatmarkerswelcomeagreementswithmultilateralandbilateralorganizations.Theyalsoreactpositivelytoreformssuchasfinancialsectorrestructuringandliberalizationofcapitalaccountrestrictions.
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ThepapersproducedbytheprojecthavebeenacceptedatconferencesoftheSocietyforEconomicDynamics,theLatinAmericanandCaribbeanEconomicAssociation,theEconometricSociety,andtheAmericanEconomicAssociation.Thedatacollectedforthenewsanalysisareavailableonrequest,inspreadsheetsandtables.
Responsibility:DevelopmentResearchGroup,MacroeconomicsandGrowthSergioSchmukler([email protected] ).WithGracielaKaminsky,FederalReserveBoard;ArunSharmaandQingWang,UniversityofMaryland;MianaPlesca,GeorgetownUniversity;BernadetteRyan;andPushanDutt,NewYorkUniversity.
Completiondate:October1998.
Ref.no.:682-26C.
Reports
Schmukler,Sergio,andGracielaKaminsky.1998.OnBoomsandCrashes:AreFinancialCyclesChanging?WorldBank,DevelopmentResearchGroup,Washington,DC.
.Forthcoming.WhatTriggersMarketJitters?AChronicleoftheAsianCrisis.PolicyResearchWorkingPaper.WorldBank,DevelopmentResearchGroup,Washington,DC.(AlsoforthcomingasanInternationalFinanceDiscussionPaper,FederalReserveBoard,Washington,DC.)
Schmukler,Sergio,MasahiroKawai,andRichardNewfarmer.1999.FinancialCrisisandContagioninEastAsiaandSoutheastAsia:Analysis,PolicyResponses,andLessons.Paperpresentedatthe1999SeminaronASEANMacroeconomicOutlookandEconomicRecovery,Manila.
CurrencyCrises,FinancialIntermediation,andNominalRigidities
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RecenteventsinIndonesia,theRepublicofKorea,Malaysia,thePhilippines,andThailandhighlighttheneedtounderstandthecausesandconsequencesofcurrencycrises.Thisprojectexaminedtheroleofthefinancialsectorincausing,propagating,andamplifyingtheeffectsofcurrencycrises.TheresearchconcludedthattherecentEastAsiancurrencycrisesmaywellhavebeencausedbylargeprospectivedeficitsassociatedwithimplicitbailoutguaranteestofailingbankingsystems.
Theresearchwasbasedonsimplemodelswhosekeyfeatureisthataspeculativeattackonacountry'scurrency
isinevitableoncethepresentvalueoffuturegovernmentdeficitsrisesregardlessofthegovernment'sforeignreservespositionortheinitiallevelofdebt.Whilethegovernmentcannotpreventaspeculativeattack,itcanaffectitstiming.Thelongerthedelay,thehigherinflationwillbeunderflexibleexchangerates.Theresearchpresentedempiricalevidenceinsupportofthethreekeyassumptionsofthemodels:foreignreservesdidnotplayaspecialroleinthetimingoftheattack,largelossesinthebankingsectorwereassociatedwithlargeincreasesingovernments'prospectivedeficits,andthepublicknewthatbankswereintroublebeforethecurrencycrisesoccurred.
TheresultswerepresentedatseminarsattheWorldBank,severalmemberbanksoftheFederalReserveSystem,andacademicandpolicyinstitutionsintheUnitedStatesandabroad.FindingswerealsopresentedatamajorconferenceontheEastAsiancrisisheldinOctober1998attheFederalReserveBankofChicagoandattendedbyfinancialmarketparticipants,centralbankers,developingcountrypolicymakers,membersofthepress,andstaffofinternationalfinancialinstitutions.
Responsibility:DevelopmentResearchGroup,MacroeconomicsandGrowthCraigBurnside([email protected] ).WithMartin
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EichenbaumandSergioRebelo,NorthwesternUniversity.
Completiondote:June1999.
Ref.no.:682-27C.
Reports
Burnside,Craig,MartinEichenbaum,andSergioRebelo.1999.ProspectiveDeficitsandtheAsianCurrencyCrisis.NBERWorkingPaper6758.NationalBureauofEconomicResearch,Cambridge,Mass.
.1999.WhatCausedtheRecentAsianCurrencyCrisis?InWilliamC.Hunter,GeorgeG.Kaufman,andThomasH.Krueger,eds.,TheAsianFinancial'Crisis:-Origins,Implications,andSolutions.Boston:KluwerAcademic.
TheImpactoftheRevivaloftheAndeonPactandtheASEANGrouponTheirMemberCountries'IndustrialGrowth
Thepastdecadehasseenincreasedinterestinandrevivalofregionalpreferentialtradeagreementsamong
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developingcountries.Howdoesadherencetosuchanagreementaffectadevelopingcountry'sindustrialgrowth?Thepreferentialtreatmentgiventomembercountryimportsmightaffectthevarietyofgoodsavailable.Totheextentthatinputsareaffected,thiscouldhaveanimpactonmedynamicgrowthofindustries.Thisresearchisaddressingthequestionbystudyingtheimpactoftherevivaloftworegionaltradearrangements,theAndeanPactandtheAssociationofSoutheastAsianNations(ASEAN),ontheindustrialgrowthoftheirmembercountries.
ThestudycoversthreeAndeanPactcountries(Bolivia,Colombia,andEcuador)andfourASEANcountries(Indonesia,Malaysia,thePhilippines,andSingapore).Itsanalyticalframeworkreliesonendogenousgrowthmodelsbasedongoodsvarietyandincorporatesscaleeffects.Itsempiricalapproachcombinesqualitativeandeconometricanalysis.Theanalysisisperformedon22industries(three-digitISICclassifications)anddrawsonInternationalMonetaryFundandUnitedNationsIndustrialDevelopmentOrganization(UNIDO)databasesandnationaldatasources.
ResultsfortheAndeanPactcountriesshowthatthevarietyofintermediateinputsoriginatingfromnonregionaltradepartnershasagenerallypositiveandsignificantimpactongrowth,whiletheeffectofregionalvarietyisatbestmixed.Thislendspreliminarysupporttotheargumentthatunilateralliberalizationwillhaveapositiveimpactonoutputgrowththroughthechannelofimportedintermediateinputs.Thereissignificantheterogeneityinindustry-levelreturnstoscale.Furthermore,thethreeAndeanPactcountriesinthestudyhaveverysmall,negativecross-industryscaleeffects.Therefore,theAndeanPactcountriesshouldnotexpectlargeoracross-the-boardgainsfromtheirregionalarrangementthroughscaleeffects.
ThefindingsoftheresearchmaygiveWorldBankclientcountriesa
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betterperspectiveontheirtradepolicychoicesandtheimpactofthosechoicesontheireconomies.ThefindingsontheAndeanPactcountrieshavebeendistributedtoBankcountryeconomistsworkingontherelevantcountriesandtoprofessionalsattheInter-AmericanDevelopmentBank.TheyhavealsobeenpresentedataWorldBankseminar.
Responsibility:DevelopmentResearchGroup,TradeMauriceSchiff([email protected] )andDorsatiMadani.
Completiondote:December1999.
Ref.no.:682-43.
Report
Madani,Dorsati.1999.South-SouthRegionalArrangements:
TheCaseoftheAndeanPact.PaperpresentedatMidWesternEconomicAssociationmeeting,PurdueUniversity,May.
PricingofBondsandBankLoansintheMarketforDevelopingCountryDebt
Privatefinancialflowstodevelopingcountrieshaveincreaseddramaticallysince1990,withmostresultingfrombondissuesorprivatebankloans.Butrecenteventsinemergingmarketshaveheightenedlong-standingconcernsabouttheefficiencyandstabilityofthemarketfordevelopingcountrydebt.Thisprojectusesdataoninternationalbondsandbankloanstoemergingmarketsinthe1990stotesthypothesesaboutthepricingofthisdebtandtheworkingsofthedebtmarket.
Theprojectfirstconsidersthepricingofsyndicatedbankloanstoemergingmarketsinthe1990s.ItfocusesonloanspricedofftheLondoninterbankofferrate(LIBOR)loansonwhichtheinterestpaidbytheborrowerisLIBORplusaspreadthatreflectstherisk
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premium.Overthelifeoftheloanthespreadstaysfixed,buttheinterestratemoveswithLIBOR.Between1991and1997justover5,000LIBOR-basedloansweremadetoemergingmarkets.Thestudyanalyzesthespreadsonabout4,500loans,thesubsetforwhichcompletedataonloanandcountrycharacteristicsareavailable.
Thestudyanalyzesthedeterminantsofspreadsonsyndicatedbanklendingtoemergingmarkets,creatingtheloanextensionandpricingdecisionsasjointlydetermined.Thefindingshighlighttheroleofinternationalbanksinprovidingcredittosmallerborrowersaboutwhichinformationisleastcomplete.Moregenerally,theysupporttheinterpretationofbankfinanceasdominatingthesegmentofinternationalfinancialmarketscharacterizedbythemostpronouncedinformationasym-
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metries.Domesticlendingboomsandlowreservesinrelationtoshorttermdebthavebeenpricedintheexpectedmannerbyinternationalbanks.ThehighlevelofshorttermdebtinEastAsiawassupportedbyhighgrowthratesbutwascharacterizedbyaknife-edgequality.
Theprojectisalsoexaminingwhetherthegoverninglawsunderwhichbondcontractsarewrittenhaveasignificantinfluenceonbondspreads.
Responsibility:DevelopmentProspectsGroupAshokaMody([email protected] ).WithBarryEichengreen,UniversityofCaliforniaatBerkeley.
Completiondate:December1999.
Ref.no.:683-12.
Report
Eichengreen,Barry,andAshokaMody.1999.LendingBooms,Reserves,andtheSustainabilityofShortTermDebt:InferencesfromthePricingofSyndicatedBankLoans.NBERWorkingPaper7113.NationalBureauofEconomicResearch,Cambridge,Mass.(AlsopublishedasPolicyResearchWorkingPaper2155,WorldBank,DevelopmentProspectsGroup,Washington,DC,1999.)
PreparingfortheWTO2000Negotiations
The1993agreementestablishingtheWorldTradeOrganization(WTO)includedabuilt-innegotiatingagendafordifferentsubjectsmostimportant,inagricultureandservices.Newmultilateralnegotiationsaretobeginin2000.AlthoughthefinalagendafortheseWTO2000negotiationswillnotbedetermineduntillatein1999,itmaygobeyondagricultureandservicestocoversuchnewissuesas
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tradefacilitation,governmentprocurement,competitionpolicy,orforeigninvestmentregimes.
ThisprojectaimstohelpdevelopingcountriesidentifyandassessnegotiatingoptionsinthenextroundofWTOtalksthroughanintegratedprogramofresearch,capacitybuilding,andknowledgedissemination.Itwilladdresspolicyquestionssuchasthese:Whatissuesshouldbeincludedinamultilateralnegotiationtopromoteeconomicgrowthanddevelopment?HowmightsuchissuesbeaddressedintheWTO?AndhowcantheWTOframeworkhelptoestablishdomesticincentiveregimesthatpromoteinternationaltradeandinvestment?
Theresearchwillbeundertakeninlargepartbydevelopingcountryanalysts,drawingonaseriesofthematicstudiesbyinternationalspecialists.Theresearchwillfocusonissuesrelatedtotheliberalizationofservicesandagriculture,theparticipationofdevelopingcountriesintheWTOsystem,andnewagendaissuessuchasinvestmentandcompetitionpolicy.ResultswillbediscussedinregionalworkshopsatleastsixeventsareplannedandinamajorinternationalconferencehostedbytheWTOSecretariatinSeptember1999.TheconferenceisintendedtopublicizemajorrecommendationsrelatingtotheinterestsofdevelopingcountriesinthecomingWTOnegotiations.
Thecapacitybuildingeffortswillfocusonbothresearchonthenewtradeagendaandpolicyformation.Tosupporttheresearchindevelopingcountries,theprojectenvisagestwinninginternationalexpertswithpartnerresearchersandresearchinstitutionsindevelopingcountries.Thiscollaborationwillbecomplementedbytraininganddisseminationactivities.AftertheWTOnegotiationsbegin,theprojectwillsponsoraseriesofmeetingsandworkshopstargetingpolicyadvisersandseniorpolicymakers,complementedbyoutreachactivitiesforthepress,chambersofcommerce,and
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nongovernmentalorganizations.Thesesessionswillcenteronahandbookfortradenegotiatorsthatwillbepreparedduringfiscal2000.
PreliminaryresearchfindingsemergingfrombackgroundpaperssuggestthatdevelopingcountrieshaveagreatinterestinusingtheWTOasaforumtoundertakereforminmajorservicesectorssuchastransport,finance,andcommunications,ascurrentpoliciesmayimposeamajorimplicittaxontheeconomy.Analysisalsosupportsabroadeningofthenegotiatingagendatoincludeindustrialtariffs,whichremainamajorbarriertoexportgrowthformanydevelopingcountries.
Responsibility:DevelopmentResearchGroup,TradeBernardHoekman([email protected] ).WillMartin,AnthonyVenables,J.MichaelFinger,AadityaMattoo,FrancisNg,DavidTarr,andAlexanderYeats;WorldBankInstitute,EconomicPolicyandPovertyReductionDivisionPhilipEnglish;andEastAsiaand
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PacificRegion,RuralDevelopmentandNaturalResourcesSectorUnitMerlindaIngco.WithFlorianAlburoandJoyArbrenica,UniversityofthePhilippines;KymAndersonandChristopherFindlay,UniversityofAdelaide;DrusillaBrown,TuftsUniversity;RimChattiandMohamedLahouel,UniversityofTunis;LinSienChia,UniversityofSingapore;ChaherliNabil,CGIAGR;InbornChoi,KoreaInternationalInstituteforEconomicPolicy;PeterCowhey,UniversityofCalifornia;AlanDeardorff,AlanFox,andRobertStern,UniversityofMichigan;HanaaKheirElDin,UniversityofCairo;MoatazEl-Said,InternationalFoodPolicyResearchInstitute;RiadElKhouri,MEBAConsulting;Erwidodo,BogorUniversity;TubagusFeridhanusetyawanandMariPangestu,CSIS;JosephFrancois,ErasmusUniversity,Rotterdam;ThomasHertel,PurdueUniversity;LorenzaJachia,UNCTAD;GerrishonIkiara,UniversityofNairobi;AugustinKaranga;WilliamLyakurwaandDominiqueNjinkeu,AfricanEconomicResearchConsortium(AERC),Kenya;R.Koenigsberg,JamesMarkusen,andKeithMaskus,UniversityofColorado;PeterLloyd,UniversityofMelbourne;PetrosMavroidis,UniversityofNeuchatel;PatrickMesserlin,SciencesPolitiques;FrancisMwega,UniversityofNairobiandAERC;ManengaNdulo,UniversityofZambia;AdemolaOyejide,UniversityofIbadan;WisarnPupphavesa,NIDA;RaedSafadi,OrganisationforEconomicCooperationandDevelopment;TonamySahar,ECES;DeanSpinanger,KielUniversity;SulimanSoulama,UniversityofOuagadougou;NattapongThongpakde,ThailandDevelopmentResearchInstitute;SubideyTogan,BilkentUniversity;WeeraworawitWeerawit,DepartmentofIntellectualProperty,Thailand;ObieWhichard,BureauofEconomicAnalysis;JohnWilson,ITI;L.AlanWinters,UniversityofSussex;JamelZarrouk,ArabMonetaryFund;andBensonZwizwai,UniversityofZimbabwe.PartnerinstitutionsinvolvedintheresearcharetheWorldTradeOrganization;FacultadLatinoamericanadeCienciasSociales(FLACSO),Argentina;
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EconomicResearchForum,Egypt;AfricanEconomicResearchConsortium,Kenya;CoordinatedAfricaProgramofAssistanceonServices(CAPAS)withUNCTAD;TradePolicyForumofthePacificEconomicCooperationCouncil;andNationalCouncilofAppliedEconomicResearch,NewDelhi,India.TheU.K.DepartmentforInternationalDevelopment,thegovernmentsofItalyandtheNetherlands,andtheSoci¢et¢eGeneraledeSurveillance,Geneva,havecontributedfundingfortheresearch.r
Completiondate:June2001.
Ref.nos.:683-29and683-54.
Reports
Croome,John.1998.ThePresentOutlookforTradeNegotiationsintheWorldTradeOrganization.PolicyResearchWorkingPaper1992.WorldBank,DevelopmentResearchGroup,Washington,DC.
Hertel,Thomas,andWillMartin.1999.DevelopingCountries'InterestsinLiberalizingManufacturesTrade.WorldBank,DevelopmentResearchGroup,Washington,DC.
Krueger,AnneO.1998.TheDevelopingCountriesandtheNextRoundofMultilateralTradeNegotiations.PolicyResearchWorkingPaper2118.WorldBank,DevelopmentResearchGroup,Washington,DC.
AidandReforminAfrica
Recentcross-countrystudieshavefoundthatforeignaidhasastrong,positiveeffectonacountry'seconomicperformanceifthecountryhasundertakencertainpolicyandstructuralreforms.Buttheevidencealsoshowsthatlessaidgoestocountriesthathaveundertakenthesereformsthantothosethathavenot.Moreover,thereisevidencethataidcannotbuyreform.
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Thisstudyaimstogobeyondthecross-countryregressionsandarriveatabetterunderstandingofthecausesofreformsandofthelinkbetweenforeignaidandreform.Itsfocusisontherealcausesofreformandwhetherandhowaidhasencouraged,generated,influenced,supported,orretardedreforms.Accordingly,itanalyzesthereformprocessesratherthantheresultsofthereforms.
Casestudiesof10Africancountriesareexaminingthenatureofexternalassistance,investigatingthecausesandpathsofpolicyreforms,andattemptingtotracetherelationship,ifany,betweenaidandreform.Thestudiesarebasedlargelyoninterviewsandonreviewsofavailabledata,literature,anddocumentation.ThedatacomefromOECD,InternationalMonetaryFund,andWorldBanksources.
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Preliminaryfindingsindicatethatreformsaregeneratedlargelybycausesnotdirectlyrelatedtoaidsuchascrises,politicalleadership,committedlocaltechnocrats,countryrolemodels,andconsensusamongsocialgroups.Butincertaincircumstancesandphases,foreignassistancecanhelptriggerandsustainreformsthroughpolicydialogue,advisoryservices,andfinancialaid.Conditionalitycanhelpreform-mindedtechnocratstolockinreforms,butprobablycannotgeneratesustainablereforms.Thesefindingscouldinfluencehowaidandwhattypesandamountsofaidareusedduringdifferentphasesofareformprogramandhowdonorsallocatetheirresourcesamongcountriesandsectors.
Preliminaryfindingsfromthecasestudiesandpotentialconclusionsoncross-cuttingissueswerediscussedataconferenceinJune1999inFrankfurt,Germany.Theconference,jointlysponsoredbytheWorldBankandtheGermanAgencyforTechnicalCooperation,hadsome75participantsthecasestudyauthors,hostcountryofficials,andrepresentativesofresearchinstitutions,theBank,Europeandonors,andinternationalorganizations.AjointconferencesponsoredbytheBankandtheOverseasDevelopmentCouncilisplannedinSeptember1999inWashington,DC,todisseminatepreliminaryfindingsoftheproject.AfinalconferencewillbeheldinAfricaforAfricanpolicymakersaswellastheprojectteamandbilateralandmultilateraldonors.
TheprojecthasestablishedaWebpage(www.worldbank.org/research/aid)withgeneralprojectinformation,termsofreference,anddraftcasestudyreports.
Responsibility:DevelopmentResearchGroup,OfficeoftheDirectorPaulCollier([email protected] ),MacroeconomicsandGrowthDavidDollarandTorgnyHolmgren,andPublicEconomicsShantayananDevarajan.WithElliotBerg;Patrickand
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SylvianeGuillaumont,Universit¢ed'Auvergne;JacquesPegatienan;JeromeChevallier;GilbertKiakwama;BerhanuAbegaz,CollegeofWilliamandMary;YvonneTsikata,SamuelWangwe,andDeogratiasMutalemwa,EconomicandSocialResearchFoundation,Tanzania;KwesiBotchwey,HarvardUniversity;StephenO'Brien;TerryRyan;CheikhSidib¢e,MinistryofFinance,Mali;JeffreyHerbst,PrincetonUniversity;CharlesSoludo,UniversityofNigeria;ArneBigsten,UniversityofGoteborg,Sweden;LouisKasekende,MichaelAtingi-Ego,andDanielDdamulira,BankofUganda;LiseRakner,ChristianMichelsenInstitute;NicvanderWalle,MichiganStateUniversity;andDominicMulaisho.TheNorwegianMinistryofForeignAffairs,SwedishInternationalDevelopmentAuthority,SwedishConsultantTrustFund,GermanAgencyforTechnicalCooperation,andNetherlandsConsultantTrustFundarecontributingfundingfortheresearch.
Completiondate:November1999.
Ref.no.:683-31.
Micro-FoundationsofInternationalTechnologyDiffusion
Developingcountrygovernmentsoftentrytospuradoptionofforeigntechnologiesthroughpolicyinterventionsdesignedtoencouragedomesticfirmstoenterintojointventureswithforeignpartners,importsophisticatedcapitalgoods,licensetechnology,andexporttoindustrialcountrymarkets.Thecorrectpolicyintervention,ifany,dependscruciallyonwhichoftheseactivitiesarecausallyassociatedwithimprovementsinfirmperformance,howlargetheeffectsare,andwhethertheeffectsareinternalorexternaltothefirm.
Muchoftheresearchonthesequestionsfordevelopingcountriesreliesoncross-sectionaldata,whichmakeitdifficulttoidentifythedirectionofcausationbetweenactivitiesandperformance;aggregatetimeseriesdata,whicharedifficulttointerpret;orcasestudies,which
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aredifficulttogeneralize.Thepremiseofthisresearchprojectisthatanalysisoffirm-levelpaneldataismostlikelytoshedlightontheissues.
Theobjectiveoftheprojectistodocumentcross-countryandsectoralpatternsintheincidenceoftheactivitiesassociatedwithtechnologytransferand,wherepossible,torelatethepatternstocountrypoliciesusingfirm-levelpaneldatasetsfor11developingeconomies:Bulgaria,theCzechRepublic,Ghana,Indonesia,theRepublicofKorea,Poland,Romania,theSlovakRepublic,Slovenia,Taiwan(China),andThailand.Econometrictechniqueswillbeusedtoinvestigatethecausalrelationshipbetweenfirmactivitiesandfirmperformance,andthesizeoftheeffects.
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Thefindingswillbereportedinaseriesofcross-countryandsectoralpapersandsummarizedinanoverviewreport.
Responsibility:DevelopmentResearchGroup,TradeBernardHoekman([email protected] ),AnthonyVenables,andDavidTarr,andMacroeconomicsandGrowthAartKraay,MaryHallward-Driemeier,andIsidroSoloaga.WithGaryAnderson,UniversityofMaryland;Bee-YanAw,MarkRoberts,andJamesTybout,PennsylvaniaStateUniversity;MarcBacchettaandFelixEschenbach,WorldTradeOrganization;SimonEvenett,RutgersUniversity;HowardPack,UniversityofPennsylvania;KamalSaggi,SouthernMethodistUniversity;andFrancisTeal,OxfordUniversity.
Completiondate:June2001.
Ref.no.:683-43.
EconomicIntegration:TheAmericas
TheeconomiceffectsofMercosur,atradearrangementamongArgentina,Brazil,Paraguay,andUruguay,couldbesubstantial.Thenewmarketencompasses200millionpeople,aGDPofalmost$1trillion,andmorethanhalfofLatinAmerica'smarket.TheproposedreductionsintariffsandnontariffbarriersunderMercosuraresubstantialandareexpectedtoexposeitsmembereconomiestovigorouscompetition.
TraditionalstaticcomputationsofwelfaregainsfromtradedonotpredictgreatbenefitsfromMercosur.Buttheyaddressonlytheeffectoftariffchangesonthelikelypatternoftrade.ThechangesunderMercosurareexpectedtogofardeeper.IfMercosurisaharbingerofabroaderphilosophyofopentradeandfreercompetitiontoencouragegrowth,itwouldrepresentaseachangeinitsmembers'developmentstrategiesandhaveimportantimplicationsfortheWorldBank's
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countryassistancestrategies.
ThisresearchwasaimedatdevelopingabetterunderstandingoftheimplicationsofMercosurtohelpshapeWorldBankviewsonmacroeconomicprospects,theconstraintsofpolicymaking,andtherisksofrecidivism.Theworkhighlightedkeysectoralissueslikelytoarisewithadjustmenttothenewregimeissuesrelatingtotransportcosts,agriculture,andservicesaswellasregionalissues.Thestudyhypothesizedthatimprovementswillberequiredinalltheseareastomaximizethehoped-forallocativeefficiencygains;theyareallelementsofgettingthepricesright.Theworkwillinformconsiderationofthekindsofcompetitionpoliciesandinstitutionsthatneedtoemergetosupportthenewparadigmofcompetitive,privatesector-leddevelopment.
TheworkwasorientedlesstowardgovernmentinstitutionsthantowardtheongoinglocaldialogueonMercosur.ItsaimwastodevelopaWorldBankpositiononkeyissuesthatcanbediscussedinbroad,strategictermsineachMercosurmembercountry,andtobuildknowledgetosupporttheBank'sabilitytorespondtorequestsforassistance.ForthesepurposestheprojectproducedpapersonanoverviewofMercosur,tradepatternsdevelopinginMercosur,integrationandintraregionaltransportcosts,tradeinfoodandagriculture,smallandmediumsizeenterprisefinance,professionalservices,financialservices,tradepolicy,andthescopeforharmonization,competitionpolicy,andindustrialpolicies.
TheresearchalsoconsideredChile'sprospectiveaccessiontotheNorthAmericanFreeTradeAgreement(NAFTA)andtoMercosur.ItassessedtheargumentsthatthetradebenefitsarelikelytobesmallsincebothChileandtheNAFTAcountrieshaverelativelylowtradebarriers,butthatadvantagesmightarisefromlockinginChile'sreformsandfromincreasingthesecurityofitsaccesstoU.S.markets.
Responsibility:DevelopmentResearchGroup,TradeMauriceSchiff
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([email protected] ),L.AlanWinters,andAlexanderYeats;andFinanceGerardCaprioJr.;Energy,Mining,andTelecommunicationsDepartment,InformationDevelopmentAdministrationUnitCarlosPrimoBraga;PovertyReductionandEconomicManagementNetwork,EconomicPolicyDivisionHomiKharas;LatinAmericaandtheCaribbeanRegion,Finance,PrivateSector,andInfrastructureSectorUnitMargaretMillerandMalcolmRowat;WorldBankInstitute,RegulatoryReformandPrivateEnterpriseDivisionDannyLeipzigerandAntonioEstache;andInternationalFinanceCorporation,CentralCapitalMarketsDepartment,SecuritiesMarketDevelopmentGroupMikeLubrano.WithJuliodeBrunandJoseMaurodeMorais.
Completiondate:December1998.
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Reports
Amjadi,Azita,andL.AlanWinters.1997.TransportCostsand'Natural'IntegrationinMercosur.PolicyResearchWorkingPaper1742.WorldBank,InternationalEconomicsDepartment,Washington,DC.
Frischtak,Claudio,DannyM.Leipziger,andJ.ENormand.IndustrialPolicyinMercosur:IssuesandLessons.WorldBank,InternationalEconomicsDepartment,Washington,DC.
Laird,S.Mercosur:ObjectivesandAchievements.WorldBank,InternationalEconomicsDepartment,Washington,DC.
Miller,Margaret,andGerardCaprioJr.SmallBusinessFinanceinMercosur.WorldBank,LatinAmericaandtheCaribbeanRegion,CountryDepartmentI,Washington,DC.
Rowat,Malcolm,MikeLubrano,andRafaelPorrataJr.1997.CompetitionPolicyandMercosur.WorldBankTechnicalPaper385.Washington,DC.
Rutherford,ThomasF.,andDavidTarr.1997.RegionalTradingArrangementsforChile:DotheResultsDifferwithaDynamicModel?PaperpresentedattheASSAmeetingsinNewOrleans,January.
.1998.RegionalTradingArrangements:TheImplicationsforChileanEconomicGrowth.PaperpresentedatColoquioAcad¢emicodelasAmericas,CostaRica,March1214.
Yeats,AlexanderJ.1998.DoesMercosur'sTradePerformanceRaiseConcernsabouttheEffectsofRegionalTradeArrangements?WorldBankEconomicReview12(1):128.
CommodityPriceandMarketReform
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Duringthepastdecadereforms,bothsweepingandincremental,havedisplacedlong-livedpoliciesofinterventionincommoditymarkets.Thesemarketreformshavemeantreducinggovernmentinvolvementinmarketingandproduction,increasingtheparticipationoftheprivatesectorintheseactivities,andreducingdistortionsincommoditypricesespeciallyproducerprices.Measurestoachievethesegoalsvarybutoftenincludeeliminatinggovernmentmarketingagenciesandofficialmonopoliesininputandoutputmarkets,replacinggovernment-determineddomesticpriceswithmarketdeterminedprices,reducingexplicitandimplicittaxes,andprivatizingrelatedmarketingandprocessingassets.
Thedegreeofreformdiffersfromcountrytocountry,andfromcommoditytocommoditywithincountries.
Interventionistpoliciestendtotaxexportcropssuchascoffee,cocoa,andcotton,soforthesecommoditiesreformstendtoimproverelativepricesandfosternewinvestments.Buttradereformsoftenthreatenprotectedsugarindustries.Incontrasttocoffeeandcocoa,inthecottonandsugarindustriespublicownershipofcrucialprocessingfacilitiesandtheinterdependenceofprocessorandproducercomplicatereforms.Policiesdesignedtofavorurbanconsumersortopromotefoodself-sufficiencyexpandthegroupsaffectedbyreformofgrainandsugarmarkets.Andforsugar,preferentialtradearrangementsencouragethecontinuationofexistinginterventions.Consequently,governmentshavebeenunwillingtoaimforthesamelevelofmarketreform.
Thisresearchexploredreformofcocoa,coffee,cotton,grain,andsugarmarketsanddrewlessonsfromexperiencesinthosemarketsthatshouldproveusefultopolicymakers.Theresearchfocusedoncommodityspecificconditionsthathastenedorslowedreformandlookedattherelationshipbetweenchangingmarketsandchanginginstitutions.Theresultsshowthatsuccessfulreformstrategiesare
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basedonanunderstandingoftheinitialconditionsunderwhichreformsarelaunchedandthatthebenefitsofmarketreformandtradeliberalizationarefullyrealizedonlywhensupportingfactormarketsandsupportinginstitutionswork.Often,becauselong-standinginterventionshaveobviatedtheneedforsuchmarketsandinstitutions,theyarenotimmediatelyavailableduringreform.Forthisreason,attentionshouldbegivenearlyinthereformprocesstofacilitatingthedevelopmentofmarketsandinstitutionsthataremissing.
Responsibility:DevelopmentResearchGroup,RuralDevelopmentPanosVarangis([email protected] ),TakamasaAkiyama,andDonaldLarson;andDevelopmentProspectsGroupJohnBaffes.WithJonathanCoulter,NationalResourcesInstitute,UnitedKingdom.TheBritishTrustFundcontributedfundingfortheresearch.
Completiondate:June1999.
Reports
Akiyama,Takamasa,DonaldLarson,PanosVarangis,andJohnBaffes.Forthcoming.CommodityMarketReforms:LessonsofTwo
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Decades.WorldBankRegionalandSectoralStudy.Washington,DC.
McIntire,John,andPanosVarangis.1999.ReformingCôted'Ivoire'sCocoaMarketingandPricingSystem.PolicyResearchWorkingPaper2081.WorldBank,DevelopmentResearchGroup,Washington,DC.
CommodityPriceRiskManagement
Volatilityofcommoditypricesisamajorsourceofuncertaintyincommodity-dependentcountries,affectinggovernments,producers,processors,traders,andfinancialinstitutions.Further,commoditypriceinstabilityhasanegativeimpactoneconomicgrowth,incomedistribution,andpovertyalleviation.
Thisresearchmeasuredtheexposureofdevelopingcountriestocommoditypricerisksandreviewedthechallengesinmanagingsuchrisks.Thestudyalsolookedattheproblemsofearlyapproachestodealingwithcommoditypricevolatility,whichreliedonbufferfunds,bufferstocks,governmentinterventionincommoditymarkets,andinternationalcommodityagreementstostabilizeprices.Theseapproacheswerelargelyunsuccessful.Bufferfundswentbankrupt,bufferstocksprovedineffective,governmentinterventionincommoditymarketsprovedcostlyandineffective,andcommodityagreementsweresuspended.
Asthepoorperformanceofsuchstabilizationschemesbecamemoreevident,academicsandpolicymakersbegandistinguishingbetweenprogramsthattriedtoalterpricedistributionandprogramsthatusedmarketbasedapproachesfordealingwithmarketuncertainty.Thischangeofapproachcoincidedwithasignificantriseintheuseofmarketbasedriskmanagementinstruments,aidedbytheliberalizationofmarkets,theloweringoftradeandcapitalcontrolbarriers,andthe
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globalizationofcommoditymarkets.Duringthe1990sseveralgovernments,statecompanies,andprivatesectorparticipantsbeganusingriskmanagementinstrumentstohedgetheircommoditypricerisks.
Theresearchexaminedtheuseofthenewmarketbasedapproachesandfoundthatwhileparticipationinthemarketsforriskmanagementinstrumentsisgrowing,importantbarriersforusersindevelopingcountriesremain.Theseincludecounterpartyrisk,problemsofaggregation(dealingwithmanysmallfarmersortraders),lowcorrelationattimesbetweendomesticandworldprices,lowvolumesoftransactionsinsomeriskmanagementmarkets,lackofcapitalforperformanceguarantees,andlowlevelsofknow-how.
ResultsfromtheresearchwerepresentedataconferenceorganizedbytheUnitedNationsConferenceonTradeandDevelopment(UNCTAD)inLyon,France,inNovember1998thatattractedmanyacademics,policymakers,privatesectorrepresentatives,andgovernmentofficialsfromdevelopingcountries.
Responsibility:DevelopmentResearchGroup,RuralDevelopmentPanosVarangis([email protected] )andDonaldLarson.WithNanaeYabuki.
Completiondate:June1999.
Reports
Larson,Donald,PanosVarangis,andNanaeYabuki.1998.CommodityRiskManagementandDevelopment.PolicyResearchWorkingPaper1963.WorldBank,DevelopmentResearchGroup,Washington,DC.
Varangis,Panos,andDonaldLarson.1998.CommodityPriceVolatilityandEconomicPolicy.PaperpresentedattheUNCTADPartnersforDevelopmentSummitonNewStrategiesforaChanging
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CommodityEconomy:TheUseofModernFinancialInstruments,November912,Lyon,France.
TheDynamicImpactofTradeLiberalizationinDevelopingCountries
InternationaltradeeconomistsandWorldBankpolicyadvicehavetypicallyarguedthatanopentraderegimeisveryimportantforeconomicgrowthanddevelopment.Thisviewhasbeenbasedinpartonneoclassicaltradetheory,whichgenerallyfindsthattradeliberalizationimprovesacountry'swelfare;inpartoncasualempiricalobservationthatcountriesthatremainhighlyprotectedforlongperiodsappeartosuffersignificantlyandperhapscumulatively;andinpartonempiricalworkthatalsofindstradeliberalizationbeneficialtowelfareandgrowth.
Yetnumericalestimatesoftheimpactoftradeliberalizationhavegenerallyfoundthatitincreasesthewel-
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fareofacountrybyonlyabout1percentofGDP.Theseestimateshavebeenbasedoncomparativestaticmodels,however,andresearcherstypicallyclaimthattheywouldbemuchlargeriftheyincorporatedthedynamicgainsfromtradeliberalization.Thesegainshavenotyetbeenquantified.
Thedevelopmentofendogenousgrowththeoryhasprovidedacleartheoreticallinkfromtradeliberalizationtoeconomicgrowth.Becauseofthecomplexityofthemodels,thetheoreticalliteraturehasnecessarilybeenbasedonratheraggregatemodels,andithasfocusedonthesteady-stategrowthpath,makingitdifficulttogaininsightintothedynamicgrowthpathofthekeyvariables.Moreover,sincetheadjustmentcostsarenotevaluatedinthetheoreticalliterature,thatliteraturecannotclearlyindicatethatwelfareissignificantlyincreasedevenifthelong-rungrowthrateincreases.
Thisprojectdevelopedappliedgeneralequilibriumendogenousgrowthmodelsthatwouldmakeitpossibletoobtainimportantinsightsintotherelationshipbetweentradeliberalizationandgrowth.Itfocusedontheclassofmodelsthatarerelevanttodevelopingcountriessmallopeneconomieswithtechnologicalchangegeneratedprimarilyintherestoftheworld.
Theresearchfirstquantifiedthedynamicgainsfromtradeliberalization,takingintoaccounttheadjustmentcostsassociatedwithforgoneconsumption,soastoassesstheclaimthatthedynamicwelfaregainsfromtradeliberalizationareconsiderablylargerthanthecomparativestaticestimates.Usinganumericalmodel,ittheninvestigatedtheimportanceoftheavailabilityofavarietyofimportedinputsintodomesticproductionaswellastechnologicalspilloversondomesticproductionderivingfromimportedgoods.Afterdevelopingsomewhatstylizedmodels,thestudyappliedthemodeltoasmallopendevelopingeconomythathasrecentlyundertakentrade
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liberalizationandsignedanimportantregionaltradeagreement.TheanalysisdrewontheGlobalTradeAnalysisProjectdatabase,theTradeUnit'sdatabaseontariffs,andinput-outputtablesasappropriate.
Twopapershavebeenproduced.ThefirstextendsacomparativestaticanalysisofChile'stradepolicyoptionstoaRamsey-typedynamicmodelofChilewithconstantreturnstoscaleandperfectcompetition.Itshowsthatsimplyaddingadynamicelementtotheanalysisdoesnotincreasethewelfaregainsfromtradeliberalizationmuch.Thesecondpaperdevelopsastylized,somewhataggregatecomputablegeneralequilibriummodelofasmallopeneconomywithendogenousgrowthenteringthroughaproductivitymultiplieroftheEthier-DixitStiglitzvariety.Tradeliberalizationinthismodeldramaticallyincreaseswelfarebecauseitresultsinasignificantincreaseinthenumberofvarieties(technologies)availableintheeconomy.ThemodelisappliedtofivedevelopingcountriestoevaluatetheimpactoftheconcessionstheymadeaspartoftheirUruguayRoundcommitmentstolowertariffs.
Thestudy'sresultsprovidesupportforthestrongversionofthelinkbetweentradeliberalizationandeconomicgrowth.Theyshouldbuttresstheintellectualcaseinthedevelopmentcommunityfortheimportanceofopennessforgrowth.
Responsibility:DevelopmentResearchGroup,TradeDavidTarr([email protected] ).WithThomasRutherford,UniversityofColorado.
Completiondate:June1999.
Reports
Rutherford,Thomas,andDavidTarr.1998.TradeLiberalizationandEndogenousGrowthinaSmallOpenEconomy:AnIllustrativeModel.PolicyResearchWorkingPaper1970.WorldBank,
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DevelopmentResearchGroup,Washington,DC.(Foramorerecentversionofthispaper,ADynamicAnalysisofTradeLiberalizationwithProductVariety,[email protected] .)
.1998.RegionalTradingArrangementsforChile:DotheResultsDifferwithaDynamicModel?PaperpresentedattheconferenceUsingDynamicComputableGeneralEquilibriumModelsforPolicyAnalysis,Assens,Denmark,June1417.
TheLiberalizationandInternationalizationofFinancialServices
TradeinfinancialservicesisontheagendafortheWorldTradeOrganization(WTO)negotiationsin2000,andtheinternationalizationofsuchserviceshasbeenanimportantissueineffortstostrengthenandliberalizefinancialsystemsindevelopingcountries.BoththeWTO
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SecretariatandtheWorldBankhavebeenactiveinresearchandpolicyworkonliberalizingandinternationalizingfinancialservicesinthepastfewyears,andthisandotherworkhasshownthatitisanareawhereexchangingcountryexperiencescanbeveryuseful.
Anumberofstudieswerecompletedunderthisproject.AfirstroundofstudiesservedasinputforaBankstaffnoteoutliningtheissuessurroundinginternationalizationforaministerialworkshopattheAnnualWorldBank-InternationalMonetaryFundMeetingsinHongKongin1997.Additionalstudies,adatacollectionexercise,andanalysisoftheinternationalizationoffinancialserviceswerethenundertaken.GiventhesuccessfuloutcomeofthenegotiationsonfinancialservicesundertheGeneralAgreementonTradeinServices(GATS)inDecember1997,someoftheadditionalworkfocusedonevaluatingtheagreementandontheimplementationissuesarisingfromtheopeningupoffinancialsectorstoforeigncompetition,includingtransitionissuesandregulatoryandlegalmatters.Otherstudieslookedattheeffectsofopeninguponthecontestabilityofthefinancialservicesinseveralcountries.
Aconferenceonthetopic,sponsoredjointlybytheWTOSecretariatandtheWorldBank,wasconductedonMay10,1999,attheWTO,inGeneva.InviteesincludedGeneva-baseddelegations,representativesfrominternationalfinancialinstitutionsandtheprivatesector,academics,theWTOSecretariat,andWorldBankstaff.TheproceedingsoftheconferencewillbepublishedasajointWorldBank-WTObook.ThepapersalsoareavailableontheBank'sWebsite(www.worldbank.org/research/interest/confs/upcoming/may10.htm).
Responsibility:PovertyReductionandEconomicManagementNetwork,EconomicPolicyDivisionStijnClaessens([email protected] ).
Completiondate:June1999.
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Reports
Claessens,Stijn,andThomasGlaessner.InternationalizationofFinancialServicesinAsia.WorldBank,Washington,DC.Claessens,Stijn,Asl1Demirgüç-Kunt,andHarryHuizinga.HowDoesForeignEntryAffecttheDomesticBankingMarket?
WorldBank,Washington,DC.Cull,Robert,GeorgeClarke,LauraD'Amato,andAndreaMolinari.1999.TheEffectofForeignEntryonArgentina'sDomesticBankingSector.WorldBank,Washington,DC;andCentralBankofArgentina.
Denizer,Cevdet.1999.ForeignEntryinTurkey'sBankingSector,198097.InternationalFinanceCorporationandWorldBank,Washington,DC.
François,Joseph,andLudgerSchuknecht.1999.TradeinFinancialServices:ProcompetitiveEffectsandGrowthPerformance.ErasmusUniversity,Rotterdam;andWorldTradeOrganization,Geneva.
Gardener,Edward,P.Molyneux,andB.Moore.TheImpactoftheSingleMarketProgrammeonEUBanking:SelectPolicyExperiencesforDevelopingCountries.InstituteofEuropeanFinance,UnitedKingdom.
Gardener,Edward,P.Molyneux,B.Moore,andL.AlanWinters.1999.RegionalApproaches:TheEU.InstituteofEuropeanFinance,UniversityofWales,Bangor;UniversityofCambridge;andUniversityofSussex.
Hindley,Brian.1999.InternationalizationofFinancialServices:ATradePolicyPerspective.LondonSchoolofEconomics.
Honohan,Patrick.1999.ConsequencesforGreeceandPortugaloftheOpeningUpoftheEuropeanBankingSector.EconomicandSocialResearchInstitute,Dublin;andWorldBank,Washington,DC.
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Kiraly,Julia,B.Majer,L.Matyas,B.Ocsi,A.Sugar,andU.Varhegyi.1999.ExperiencewithInternationalizationofFinancialServicesProvision:CaseStudyforHungary.BankersInstitute,Hungary.
Pastor,JoseM.,FranciscoPerez,andJavierQuesada.1999.TheOpeningoftheSpanishBankingSystem:198598.UniversidaddeValencia,Spain.
Qian,Ying.1999.FinancialServicesandGATSAnalysisoftheCommitmentsundertheGATSattheWTO.AsianDevelopmentBank.
Steiner,Roberto,AdolfoBarajas,andNataliaSalazar.1999.ForeignInvestmentinColombia'sFinancialSector.Fedesarrollo,Colombia;InternationalMonetaryFund,Washington,DC;andDepartamentoNacionaldePlaneación,Colombia.
vanEmpel,Martijn,andAnnaMörner.1999.FinancialServicesandRegionalIntegration.QueenMaryandWestfieldCollege,UniversityofLondon.
Vives,Xavier.1999.CompetitionandRegulationinEuropeanBanking.Institutd'AnàlisiEconòmica,Spain.
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MakingAidWork
Thisresearchprojectexaminedtheeffectsofdevelopmentassistanceongrowth,povertyreduction,andimprovementsinsocialwelfareinthedevelopingworldandsoughttoidentifytheconditionsunderwhichforeignaidismosteffectiveinmeetingthoseobjectives.
Theprojectuseddifferentapproachesfordifferentcomponents.Themacroeconomicworkwasputinthecontextofmoderngrowththeoryandpoliticaleconomy.Otherworkatthesectororprojectlevelreliedonmicroeconomicmodels.
Theprojectdrewonanewdatabaseitdevelopedonforeignaidflows.ItalsousedOECDdataonaidbysectorandbytype.AnditdrewontheWorldBank'sextensivedataonprojectsindifferentsectorsandonevaluationsofthoseprojectsbytheBank'sOperationsEvaluationDepartment.
Themainfindingsoftheresearcharethese:
Theimpactofforeignaidongrowthandpovertyreductiondependsonthequalityofeconomicinstitutionsandpoliciesintherecipientcountries.Butthequantityofaiddoesnotaffecteconomicpolicies.Nordoesaidconditionalitynecessarilyleadtoreformifthereisnostrongdomesticmovementinthisdirection.
Aidisoftenfungible,sothatdonoragenciescannottypicallydirecttheirfundingtoparticularsectorsorprojects.
Projectscanserveascatalystsforinstitutionalandpolicychangeatthesectororcommunitylevel,andtheyaremorelikelytodosoeffectivelywhenthereisbroadparticipationofcivilsociety.
ThesefindingshavestrongimplicationsforBankclientsandfordonoragencies.Datathrough1996showthataidwasallocatedin
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favorofmediocrepolicies,aftercontrollingforthelevelofpoverty.Thefindingsimplythataidwouldhaveamuchlargereffectonpovertyreductionifitwereallocatedinfavorofgoodpolicy.
FungibilitymeansthatthevalueoftheBank'soranyotheragency'sinterventioninaparticularprojectisnottheoutcomeoftheproject.Rather,itdependsonanassessmentofthecounterfactual:Howhastheinvolvementinfluencedtheinstitutionsandpoliciesofthesector?
Thetraditionalapproachtopromotingpolicyreformthroughconditionalityhasgeneratedgoodpoliciesinfewcountries.Reformdependsprimarilyonacountry'sowninitiative.Donorsneedtobemoreselective,providingpolicy-basedloanstogenuinereformmovements.
Thefindingshavebeenwidelydisseminated,inlargepartthroughtheWorldBankPolicyResearchReportAssessingAid:WhatWorks,WhatDoesn't,andWhy(NewYork:OxfordUniversityPress,1998)andrelatedactivities.ThefirstmajorconferencerelatingtotheresearchwasheldinTokyoinSeptember1997.Inthepastyeartheprojectteamhasgivenmorethan100presentationsonfivecontinents.
TheresearchfindingshavehadabroadimpactinsidetheBankandinthelargerdevelopmentandpolicycommunity.Thebookhasgottenextensivecoverageinthepress.Thefindingshavebeendiscussedinparliamentsofdonorcountries(suchasItaly,theNetherlands,Sweden,andtheUnitedStates).Themessageshavebeenwellreceivedinthedevelopingworld.Forexample,findingsweredebatedatameetingofAfricanfinanceministers.WithintheBank,thefindingshavebeendisseminatedthroughacourseonaideffectiveness,sessionsatPREMWeek,meetingswithcountryteams,andsessionswithnetworks.Thefindingshavestimulatedthedevelopmentofnewproducts,suchasthepublicexpenditurereformloan.
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Responsibility:DevelopmentResearchGroup,MicroeconomicsandGrowthDavidDollar(ddollar@>worldbank.org),CraigBurnside,CharlesChang,WilliamEasterly,LuisServen,andJakobSvensson,andPublicEconomicsVinayaSwaroop;OfficeoftheSeniorVicePresident,DevelopmentEconomicsLynSquire;andEastAsiaandPacificRegion,IndonesiaResidentUnitLantPritchett.WithAlbertoAlesina,HarvardUniversity.
Completiondate:June1999.
Reports
Alesina,Alberto,andDavidDollar.1998.Who.GivesAidtoWhom,andWhy?NBERWorkingPaper6612.NationalBureauofEconomicResearch,Cambridge,Mass.
Burnside,Craig,andDavidDollar.1997.Aid,Policies,andGrowth.PolicyResearchWorkingPaper1777.WorldBank,DevelopmentResearchGroup,Washington,DC.
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.1998.Aid,theIncentiveRegime,andPovertyReduction.PolicyResearchWorkingPaper1937.WorldBank,DevelopmentResearchGroup,Washington,DC.
Chang,Charles,EduardoFernandez-Arias,andLuisServen.1998.MeasuringAidFlows:ANewApproach.WorldBank,DevelopmentResearchGroup,Washington,DC.
Collier,Paul,andDavidDollar.1998.AidAllocationandPovertyReduction.WorldBank,DevelopmentResearchGroup,Washington,DC.
Deininger,Klaus,LynSquire,andSwatiBasu.1998.DoesEconomicAnalysisImprovetheQualityofForeignAssistance?WorldBankEconomicReview12(3):385418.
Dollar,David,andWilliamEasterly1998.TheSearchfortheKey:Aid,Investment,andPoliciesinAfrica.WorldBank,DevelopmentResearchGroup,Washington,DC.
Dollar,David,andJakobSvensson.1998.WhatExplainstheSuccessandFailureofStructuralAdjustmentPrograms?PolicyResearchWorkingPaper1938.WorldBank,DevelopmentResearchGroup,Washington,DC.
Easterly,William1997.TheGhostofFinancingGap.PolicyResearchWorkingPaper1807.WorldBank,DevelopmentResearchGroup,Washington,DC.
Feyzioglu,Tarhan,VinayaSwaroop,andMinZhu.1998.APanelDataAnalysisoftheFungibilityofForeignAid.WorldBankEconomicReview12(1):2958.
Isham,Jonathan,DanielKaufmann,andLantPritchett.1997.CivilLiberties,Democracy,andthePerformanceofGovernmentProjects.WorldBankEconomicReview11(2):21942.
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Isham,Jonathan,DeepaNarayan,andLantPritchett.1995.DoesParticipationImprovePerformance?EstablishingCausalitywithSubjectiveData.WorldBankEconomicReview9(2):175200.
WorldBank.1998.AssessingAid:WhatWorks,WhatDoesn't,andWhy.PolicyResearchReport.NewYork:OxfordUniversityPress.
PoliticalEconomyofAid
Thisresearchexaminedtheinterplaybetweenforeignaidandthepolicyformationprocessintherecipientcountries.Amongthekeyquestionsitaddressed:Doesaidinfluencethechoiceofpoliciesintherecipientcountry?Ifso,how?Towhatextentisthepolicyinfluencedrivenbythepoliticalandinstitutionalenvironmentintherecipientcountry?Whatpoliticalandinstitutionalfeaturesmatter?Whatistherelationshipamongcrises,aid,andpolicies?
Theresearchshowedthatforeignaidandexpectationsofconcessionalassistancemayhaveadverseconsequencesintherecipientcountryifthedonordoesnottakeintoaccountthepoliticalrealitiesinthatcountrywhendisbursingaid.Inparticular,thestudyfoundthatincountrieswithcompetingsocialgroups,discretionaryaidisonaverageassociatedwithincreasedrentseeking.Empiricalanalysisrevealedthatdemocraciesseemtobelesssubjecttoaid'sperverseeffectonrentseeking,suggestingthatpoliticalliberalizationshouldrankhighondonors'policyagendas.
Asecondsetofquestionsrelatedtotheworkingsofdonoragencies(includingtheWorldBank)andhowtheirincentivesystemsinfluencepolicyformationinrecipientcountries.Empiricalanalysisofdonorbehaviorrevealedthatcommittedaidandconcessionaladjustmentfinancearegenerallydisbursedregardlessofpolicychoices(andreform)intherecipientcountry,providingsupportforthenotionthattheagentresponsibleforthedisbursementdecisionfacesaverylowopportunitycost(expost)ofdisbursingaidtothedesignated
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recipient.Creatinginstitutionalarrangementsthatincreasetheopportunitycostofaidmaybeawaytoincreaseitseffectiveness.
Theprojectalsoincludedworkonpoliticalcontagionacrosscountriesincrisisandpoliticaldeterminantsofspeculativeattacks.
ThefindingshavebeenpresentedatworkshopsattheBank,atseveraluniversities,andatacademicmeetings.Responsibility:DevelopmentResearchGroup,MacroeconomicsandGrowthJakobSvensson([email protected] ),DavidDollar,andCharlesChang.WithAllanDrazen,UniversityofMaryland;andRezaBaqir,StanfordUniversity.
Completiondate:June1999.
Reports
Drazen,Allan.1998.PoliticalContagioninCurrencyCrises.
WorldBank,DevelopmentResearchGroup,Washington,DC.
Svensson,Jakob.1998.ReformingDonorInstitutions:AidTournaments.WorldBank,DevelopmentResearchGroup,Washington,DC.
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.Forthcoming.ForeignAidandRent-Seeking.JournalofInternationalEconomics.
MarketingandTradingPoliciesandSystemsinSelectedCoffee-ProducingCountries
Thisstudyconsideredthecoffeemarketingandtradingpoliciesandsystemsofninecoffee-producingcountriesAngola,Cameroon,theDemocraticRepublicoftheCongo,Ethiopia,Ghana,Guatemala,India,Madagascar,andTogo.First,itprovidedanoverviewofglobalmacroeconomicandcoffeemarketdevelopmentsunderwhicheachmarketingsystemhastooperate.Second,itreviewedthestructuresofthecoffeemarketingsystems,bothbeforeandafterliberalization.Third,itexaminedthekeyfactorsaffectingtheperformanceofthecoffeesector,drawingontheexperienceoftheninecountries.Fourth,intheeightcountriesthathaveliberalizedcoffeemarketing,itanalyzedtheeffectsoftheliberalization.Finally,itanalyzedsomeofthechallengesandissuestheninecountriesfaceintheircoffeesectorsandprovidedsomepointerstowardbestpractice.
Whiletheissuesvarybycountry,severalcommonthemesemerged:
Improvementsinproductivitywillbeanimportantdeterminantofacountry'scompetitiveness.Thishighlightstheimportanceofprovidingcost-effectiveresearchandextensionservicesforfarmers.
Pricevolatilityisanimportantissue.Wheregovernmentregulationspermit,exporterscanuseanumberoftoolstoreducerisk,althoughsmallexportershavemorelimitedoptions.Farmers,too,haveonlylimitedmechanismsopentothemforhedgingpricerisk.
Cropfinancingisanotherimportantareawheresolutionsareneeded.Forexperiencedexporters,fundsareavailablefromavarietyofsources,includingownfunds,internationalbuyers,andinternational
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andlocalbanks.Forsmallerandnewerlocalexporters,difficultiesinraisingcropfinancecanbeoneofthegreatestconstraints.Acost-effectiveandproperlyconstitutedwarehousewarrantschemecanbeausefultoolinincreasingtheavailabilityofcropfinancetolocalexporters.Lendingtogrowersisconstrainedbyalackofcollateralandthehighperformancerisk.Developingfinancingmechanismsforfarmersisparticularlyimportantforreplantingandrehabilitatingcrops.
Withliberalization,thegovernment'srolehasshiftedfromactiveparticipantinthemarkettoserviceproviderandmarketregulator.Thusanimportantfunctionofthegovernmentistoensurethatthelocalmarketremainscompetitive.Thecountrieswiththehighestlevelsofcompetitionarethosewithgoodcommunications,broaddisseminationofmarketinformation,andgoodruralinfrastructure.
Amongregulatedmarkets,themostsuccessfularethosewhereregulationsdonotinhibittheflowofcoffeeoranexporter's(ortrader's)abilitytoconductbusiness.
Asliberalizationhasincreasedtheroleoftheprivatesector,associationsofexporters,traders,andproducershavebecomeimportantmechanismsforrepresentingprivatesectorinterests.Foranexportersassociationtocarryoutthisroleeffectively,andtoensuretheprofessionalismofitsmembers,requiresthatitbeproperlyanddemocraticallyconstitutedandrun,thatitnotbepoliticized,andthatitsconstitutionpreventsmallgroupsorindividualsfrommonopolizingpower.
Theresultsoftheresearchhavebeencommunicatedtothegovernmentsofthecountriesinthestudy.TwopresentationswerealsomadeduringtheInternationalCoffeeOrganization'scouncilmeetingsinMay1999.
Responsibility:DevelopmentResearchGroup,Rural
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DevelopmentPanosVarangis([email protected] )andTakamasaAkiyama.WithRobSimmons,AnnGrey,andDianeLing,LMCInternational;JanvanHilten;JohnSchluter,SchluterTrading;SurendraKotecha,TransinLimited;OwusuAkoto,GoldcrestCommoditiesLimited;JumaineHussein;AloysiusBabilaGalebe;Andre-JosephOnyembe,UniversityofKinshasa;FidyRaharimanana;S.V.Ranganathan,IndianCoffeeBoard;NanaeYabuki;andChristopherGilbertandJanterWegel,FreeUniversity,Amsterdam.TheNetherlandsCommonFundforCommoditieshascontributedfundingfortheresearch.
Completiondate:August1999.
Report
Akiyama,Takamasa,PanosVarangis,andLMCInternational.Forthcoming.StudyofMarketingandTradingPoliciesandSystemsinSelectedCoffee-ProducingCountries.TheNetherlandsCommonFundforCommodities,Amsterdam.
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ExchangeRateMisalignment:ConceptsandMeasurementforDevelopingCountries
Acentralprobleminempiricalmacroeconomicsinlowincomecountriesistodeterminewhenandbyhowmuchtheexchangerateismisaligned.Decisionstodevalueortoimplementanyexchangeratepolicyotherthanacleanfloatrequirebothmeasuringtheactualrealexchangerate(RER)andestimatingtheequilibriumRER.Inaddition,whenconsideringadevaluation,policymakerswanttoknowwhatitseffectsoninflation,theRER,andoutputgrowthwillbe.Quantitativeanswerstothesequestionsareessentialforimplementingexchangeratepolicyandfordesigningaccompanyingreforms.
Theobjectiveofthisresearchistosetout,forusebyWorldBankeconomistsandothers,practicalmethodologiesforassessingexchangeratemisalignmentinlowincomedevelopingcountrieswheredata,time,andprofessionalcapacityarelimited.Theresearchdrawstogethermethodologiesfromdisparatesourcesanddocumentsempiricalinnovationsinapplyingthem.Itaddressesthreemethodologicalissuesthatarecentraltomeasuringexchangeratemisalignment:thedefinitionandmeasurementoftheactualRER,thetheoreticalandempiricaldeterminantsoftheequilibriumRER,andempiricalestimationoftheequilibriumRER.Theresearchalsoexaminesthreecloselyrelatedoperationalquestions:theactualempiricalrelationshipbetweentheRERandtradeflowsindevelopingcountries,theuseoftheparallelmarketpremiumasanindicatoroftheequilibriumexchangerate,andtherelationshipbetweennominaldevaluations,inflation,andtheRER.
Theresearchhasproduced12technicalpapersorganizedinfoursets.ThefirstsetofthreepapersexaminesalternativeconceptsandmeasuresoftheactualRERtodeterminehowbesttomeasureitindevelopingcountriesandsummarizestheempiricalevidenceonthe
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effectsofRERmovementsontradeflowsindevelopingcountries.ThesepapersshowthatmovementsinRERindexesmustbecarefullyanalyzedwhenthehomecountryisexperiencingtradeliberalization,fluctuationsinitstermsoftrade,ordifferentproductivitygrowthratesthanitstradingpartnersorwheretherearesignificantparallelmarkets,unrecordedtrade,orshiftsintradepatterns.InsuchcircumstancescalculatingseparateRERindexesforimportsandexportsisparticularlyimportant.
Thesecondsetoftwopapersconsidersthetheoreticalandempiricaldeterminantsofthelong-runequilibriumRER(LRER).ThefirstoftheseanalyzesthedefinitionsoftheLRERintheliteratureandtherelationshipofthesetotheempiricallyobservedRER.ItthenreviewstheresultsofearlierempiricalresearchonestimatingtheequilibriumRERinbothindustrialanddevelopingcountries.ThesecondpaperprovidesananalyticalmodelthatsynthesizesthetheoreticalworkonthedeterminantsoftheLRER.
Thethirdsetoffourpapersistheheartoftheproject.Thesepapersassessalternativemethodologiesforestimatingthelong-runequilibriumRERempirically.ThefirstpaperdiscussestheestablishedoperationalapproachesforestimatingtheLRER.Itsetsoutupdatedversionsofthepurchasingpowerparity-baseyearandtradeequationsmethodologiesandconsidersgeneralanalyticalproblemsinvolvedindeterminingsustainablecapitalflowsandatargetresourceorcurrentaccountbalance.Thesecondpaperpresentsasimplegeneralequilibriummodelemployingconstanttradeelasticities.Thesimplifiedapproachespresentedinthesetwopapershaveseveralpracticalvirtues:theydrawonasubstantialbodyofempiricalworkontradeelasticities,imposeminimaldatarequirements,andarecomputationallystraightforward.Althoughinsomecasestheymaynotdojusticetothegeneralequilibriumnatureofrealexchangerateadjustments,theycanstillprovideusefulestimatesofmisalignmentandbenchmarksformoresophisticatedanalyses.
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ThethirdandfourthpapersinthesetconsiderfullgeneralequilibriummethodologiesforestimatingtheequilibriumRER.ThethirdpaperexaminestheuseofadynamicmacroeconomicmodelforestimatingtheequilibriumRERindevelopingcountriesandconcludesthat,asdesirableassuchanapproachmaybetheoretically,itisnotlikelytobepracticalempiricallyexceptinspecialcircumstances.Thefourthpaperdiscussesreduced-formsingle-equationeconometricestimatesoftheequilibriumRER.Thismethodologymakesitpos-
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sibletotakeintoaccounttheinteractionofthekeymacroeconomicvariablesinafullgeneralequilibriumtheoreticalframework.Itisapromisingavenueforfurtherresearchonestimatingequilibriumexchangerates,althoughitsusefulnessinpolicyapplicationsdependsontheavailabilityoffairlylongandreliableseriesofdatafortheRERandthekeyvariablesdeterminingit.
ThelastthreepapersaddressoperationalquestionsrelatingtotherelationshipsbetweentheRER,tradeflows,andparallelandnominalexchangerates.ThefirstreviewstheextensiveempiricalevidenceonthevaluesoftradeelasticitiesandfindsthatchangesintheRERhaveimportanteffectsontradeflowseveninlow-incomecountrieswithundiversifiedstructuresofproduction.Thesecondpaperexaminestheusefulnessoftheparallelmarketpremiumasaguideforsettingtheofficialexchangerate,distinguishingbetweentheproblemsofunifyingatashort-runequilibriumrateandestimatingthelong-runequilibriumrate.ThepaperfindsthattheparallelratewillusuallybemoredepreciatedthantheLRERandthuswillbeabiasedestimatorofit.Finally,evenifanaccurateestimateoftheLRERisavailable,policymakerscannotchangetheRERdirectly;theycanonlyadjusttheofficialnominalexchangerateandmonetaryandothernominalpolicyinstrumentsthatmayaffectthedomesticpricelevel.AlthoughextensiveworkhasbeendoneonmethodologiesforestimatingtheequilibriumRER,littlehasbeendoneonmethodologiesfordeterminingthenominalexchangerateadjustmentsrequiredtoachieveagivenrealignmentoftheRER.ThusthelastpaperinthestudysummarizesthestylizedfactsrelatingtotheeffectsofnominaldevaluationsoninflationandtheRERandsetsoutareasonablyaccurateconsistencyframeworkforquantifyingtheseeffectsthatcanbeuseduntilmoresophisticatedapproachesaredeveloped.
Responsibility:AfricaRegionTechnicalFamilies,Macroeconomics3LawrenceE.Hinkle([email protected] ),and
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Macroeconomics4IngridIvins;AfricaCountryDirectorGroup13,WestCentralAfricaTheodoreAhlers;andDevelopmentResearchGroup,RuralDevelopmentJohnBaffes,PublicEconomicsShantayananDevarajan,PovertyandHumanResourcesLantPritchett,andMacroeconomicsandGrowthIbrahimElbadawi.WithNadeemUlHaqueandFabienNsengiyumva,InternationalMonetaryFund;NitaGhei;StevenKamin,U.S.FederalReserveBoard;PeterMontiel,WilliamsCollege;andStevenO'Connell,SwarthmoreCollege.
Completiondate:September1999.
Reports
Ahlers,Theodore0.,andLawrenceE.Hinkle.1998.EstimatingtheEquilibriumRealExchangeRateEmpirically:OperationalApproaches.WorldBank,Washington,DC.
Baffes,John,IbrahimA.Elbadawi,andStephenA.O'Connell.1998.Single-EquationEstimationoftheEquilibriumRealExchangeRate.WorldBank,Washington,DC.
Devarajan,Shantayanan.1998.EstimatesofRealExchangeRateMisalignmentwithaSimpleGeneralEquilibriumModel.WorldBank,Washington,DC.
Ghei,Nita,andLawrenceE.Hinkle.1998.ANoteonDevaluations,Inflation,andtheRealExchangeRate.WorldBank,Washington,DC.
Ghei,Nita,andStevenB.Kamin.1998.TheUseoftheParallelMarketRateasaGuideforSettingtheOfficialExchangeRate.WorldBank,Washington,DC.
Ghei,Nita,andLantPritchett.1998.TheThreePessimisms:RealExchangeRatesandTradeFlowsinDevelopingCountries.WorldBank,Washington,DC.
Haque,NadeemUl,andPeterJ.Montiel.1998.Long-RunReal
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ExchangeRateChangesinDevelopingCountries:SimulationsfromanEconometricModel.WorldBank,Washington,DC.
Hinkle,LawrenceE.,andPeterJ.Montiel.Forthcoming.ExchangeRateMisalignment:ConceptsandMeasurementforDevelopingCountries.NewYork:OxfordUniversityPress.
Hinkle,LawrenceE.,andFabienNsengiyumva.1998.ExternalRealExchangeRates:PurchasingPowerParity,theMundellFlemingModel,andCompetitivenessinTradedGoods.WorldBank,Washington,DC.
.1998.TheThree-GoodInternalRealExchangeRatesforExports,Imports,andDomesticGoods.WorldBank,Washington,DC.
.1998.TheTwo-GoodInternalRealExchangeRatesforTradablesandNontradables.WorldBank,Washington,DC.Montiel,PeterJ.1998.DeterminantsoftheLong-RunEquilibriumRealExchangeRate:AnAnalyticalModel.WorldBank,Washington,DC.
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.1998.TheLong-RunEquilibriumExchangeRate:ConceptualIssuesandEmpiricalResearch.WorldBank,Washington,DC.
Montiel,PeterJ.,andLawrenceE.Hinkle.1998.ExchangeRateMisalignment:AnOverview.WorldBank,Washington,DC.
PoliticalEconomyofTradePolicy
Despitetradeeconomists'centuries-longadvocacyoffreetradeasasuperiorpolicy,tradebarriersexistinallWorldTradeOrganizationmembersexcepttwoHongKong(China)andMacao.Whysuchagapbetweenpolicymakers'practicesandtradeeconomists'recommendations?Veryearlytradeeconomistsrecognizedtheroleoflobbyinginthis.Thisresearchinvestigatestheforcesbehindtheexistenceoftariffsandthestructureoftariffschedules.Italsoexplorestheforcesbehindcustomsunionformation.
Twostudiesexploretwodifferentaspectsoftariffdeterminationusingdifferentdatasets.ThefirstinvestigatestheeffectsofforeigndirectinvestmentonMexico'stariffstructure.Howdoforeignfirmslobby,andaretheymoresuccessfulthandomesticfirmsinthepoliticalgame?
Thesecondstudyexplorestheimportanceoftermsof-tradeeffectsontariffstructureinMercosur.Dosectorswithlargeworldmarketsharestendtohavehigherlevelsofprotection?Ifso,howimportantisthiseffect?Thisisanimportantquestionfortradeeconomists,sincemanymodelsexplaintheexistenceoftariffsbasedontermsof-tradeeffects.Thestudyalsoexploreswhethertermsof-tradeexternalitieshavebeeninternalizedwithinMercosur,andwhatmainforcesdroveformationofthecustomsunion.
TheanalyticalapproachisbasedontheGrossmanHelpmanmodeloftradepolicyformation,whoseadvantageoverotherapproachesisits
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solidmicroeconomicfoundations.Theresearchdrawsontariffdatafromnationalsources,tradedatafromtheUnitedNationsStatisticsDivision'sCommodityTradeStatisticsDatabase(Comtrade),andindustrialdatafromnationalcensusesreportedatthefirmlevelforMexicoandtheindustrylevelforMercosur.
ForMexico,theresearchhasfoundthatforeignfirmshaveanimportanteffectonthetariffstructure.Thepresenceofforeigndirectinvestmenttendstoleadtolowerlevelsofprotectionoverall,consistentwiththetheoreticalliterature.Butthetradeorientationoftheforeigndirectinvestment(import-competingorexport-oriented)iscrucialindeterminingtheeffectthatlobbyingbyforeignfirmswillhaveonthetariffstructure.Takingthisintoaccount,itturnsoutthatinimport-competingsectorsindustrieswithalargeshareofforeigndirectinvestmenthavehigherlevelsofprotectionthanindustrieswithnoforeigndirectinvestment.Theexplanationmaybebetterlobbyingtechniquesbyforeignfirmsornoneconomicrationalesforthepresenceofforeigndirectinvestmentinsensitivesectors.
ForMercosur,theresearchhasfoundthattermsof-tradeeffectscanexplain628percentofvariationinthecommonexternaltariffandthattermsof-tradeeffectshavebeeninternalizedwithinthecommontariff.
Theresearchfindingsprovideabetterunderstandingofhowpoliciesareformedandhowreformsshouldbeundertaken.Inparticular,anunderstandingofthepoliticaleconomyforcesbehindtradeprotectioncanhelpindevelopingpoliticallysustainablereforms.
FindingshavebeenpresentedatWorldBanktradeseminarsandataWorldBankInstituteseminarinColombia,andwillbepresentedatotherworkshopsandconferences,includingaEuropeanTradeStudyGroupconferenceinAmsterdam.
Responsibility:DevelopmentResearchGroup,TradeMarceloOlarreaga([email protected] )andIsidroSoloaga.With
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Jean-MarieGrether,UniversityofNeuchatel,Switzerland;JaimedeMelo,UniversityofGeneva;andL.AlanWinters,UniversityofSussex.
Completiondate:November1999.
Reports
deMelo,Jaime,Jean-MarieGrether,andMarceloOlarreaga.1999.WhoDeterminesMexicanTradePolicy?WorldBank,DevelopmentResearchGroup,Washington,DC.
Olarreaga,Marcelo,IsidroSoloaga,andL.AlanWinters.1999.What'sBehindMercosur'sCET?WorldBank,DevelopmentResearchGroup,Washington,DC.
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TheInfluenceofWorldBankResearchonPolicyintheDevelopingWorld
ThisprojectisseekingevidenceontheextenttowhichWorldBankresearchisconsideredinthepolicydialogueintheBank'sclientcountries.Itisaskingpolicymakersaboutthepolicymakingprocessintheiragency;informationsourcesusedinthatprocess;theextenttowhichWorldBankresearchisrecognized;howBankresearchisused,ifitis;andwhatwouldmakeBankresearchmoreusefulforpolicymakers.
Interviewsarebeingconductedwith250policymakersin37developingandtransitioneconomies.Thesampleswillbestratifiedbyregionandsector,andresponseswillberelatedtothesizeoftheBankloanportfolioandtherespondents'knowledgeofBankresearch.
Thesurvey'sfindingswillbepresentedinaBankwidemeetingchairedbytheBank'schiefeconomist,andsubmittedtoanddiscussedbytheBank'sboardofdirectors.Areportreflectingtheboard'scommentswillbedisseminatedthroughouttheBankandtootherresearchinstitutionsthroughtheGlobalDevelopmentNetwork.
TheresultsmayrequirechangesintheroleofBankoperationsincommunicatingpolicymakers'researchneeds,inhelpingtosettheresearchagenda,incommentingonresearchdesign,orinconductingresearch.Thesurvey'sfindingsareexpectedtoinfluenceboththeagendaforBankresearchandthewaysinwhichitisdisseminated,makingitmorerelevantforandaccessibletopolicymakers.
Responsibility:ResearchAdvisoryStaffClaraElse([email protected] ),AnupaBhaumik,andKazimSaeed.WithAbtAssociates,UnitedStates.
Completiondate:December1999.
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GeographyandTrade
Astrikingfeatureofthegeographyoftheworldeconomyistheunevennessinthelocationofeconomicactivity.Production,income,andwealthareconcentratedinrelativelyfewcountries.Withincountries,too,activityisconcentrated.Changesintheworldeconomysuchastechnicalchangeandtradeliberalization,thedrivingforcesofglobalizationarereducingthecostofdistanceandleadingtochangesinthelocationofactivities,althoughincomplexways.Sometypesofproductionaremovingoutofhigh-wagecountries,buttheirrelocationisconcentratedinafewplaces.Sowhiletheeconomicgeographyoftheworldischanging,itisnotclearthatallregionswillbenefit.
Theobjectiveofthisprojectistoprovideaunifiedwayofthinkingaboutdevelopmentintermsofthelocationofeconomicactivity.Theresearchseekstoanswerthefollowingquestions:Whyiseconomicactivityconcentratedinsomeplacesandnotinothers?Howdoesthelocationofactivitychange?Whataretheimplicationsofthesechangesforspatialinequalitiesbetweenandwithincountries?Andwhatpolicyleverscaninfluencethesechanges?Theresearchwilldrawonnewtheoreticaldevelopmentsandagrowingempiricalliterature.
Theworkwillbeorganizedaroundtwomainissues:geographicaladvantageanddisadvantage,andgeographyandthespreadofdevelopment.
Geographicaladvantageanddisadvantage:Alocationmightbegeographicallydisadvantagedfortwokindsofreasons:physicalgeography(topography,poorclimate,propensityfordisease)andeconomicgeography(distancefromestablishedeconomiccentersthatprovidesourcesofsupplyandmarketsforoutput).Theresearchwillinvestigatebothsourcesofdisadvantage.Itwillstudythebarriersthatgeographypresentstotradeandthemagnitudeanddeterminantsof
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thesebarriers.Itwilltheninvestigatetheirimplicationsforthelocationdecisionsoffirms,theextenttowhichtheycangiverisetoclusteringofactivity,andthusthespatialwagedifferencesthattheysupport.Inadditiontolookingatdistanceasabarriertotrade,theresearchwillalsostudyitseffectonthetransmissionofideasandnewtechnology.
Geographyandthespreadofdevelopment:Globalizationischangingthelocationofeconomicactivitiesastheybecomemorefootlooseandbetterabletosupplymarketsfromlower-wagelocations.Economiesbenefitingfromthisrelocationofactivityaretypicallyexport-oriented,oftenwithsignificantforeigndirectinvestment,andcloselyintegratedinworldproductionnetworks.Whatkindsofeconomicactivitiesarerelocatingtowhattypesofeconomies,andwhataretheimplicationsfordevelopment?Willdevelopmentbeconcentratedinafew
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regions,leavingothersbehind,orwillitbespreadmoreevenly?Toanswerthesequestions,thestudywilllookataggregatedataonregionalpatternsofindustrializationandinvestigatethreemicroeconomicissues.
First,whatcharacteristicsofeconomiesmakethemattractivebasesforindustrialactivity?Endowments,institutions,andlocationallplayarole,andthestudywillpayparticularattentiontoagglomerationforces.
Second,whatkindsofindustriesaremostmobile,andwhathappenstoacountry'sindustrialstructureandtradeduringitsdevelopment?Thestudywilldrawontheliteratureonpatternsofdevelopment,butfromtheperspectiveoftheneweconomicgeography.ItwillalsoanalyzepatternsofindustrializationinAsiaandundertakeempiricalanalysisofdisaggregatedtradedata,includingdataontheverticaldisintegrationofproduction.
Third,whatroledoesforeigndirectinvestmentplayintherelocationofindustry?Thestudywilllookatboththedeterminantsofthelocationofforeigndirectinvestmentandtheextenttowhichsuchinvestmentcausesspilloverstothelocaleconomy,actingasacatalystforwiderdevelopment.
Responsibility:DevelopmentResearchGroup,TradeAnthonyJ.Venables([email protected] )andMarceloOlarreaga.TheU.K.DepartmentforInternationalDevelopmentiscontributingfundingfortheresearch.
Completiondate:June2000.
RegionalismandDevelopment
Nearlyeverydevelopingcountryisinorisdiscussingaregionalintegrationarrangement.Policymakershavetodecidenotonly
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whethertopursueregionalarrangementsbutalsohowbesttomanagethem(includingthosethatalreadyexist).ManydevelopingcountriesareseekingadvicefromtheWorldBankonwhethertojoinaregionalarrangementoronhowbesttoorganizeone.TheBankhasalsobeenaskedtorespondtoinitiativessuchastheCross-BorderInitiativeinAfricaandthedevelopmentoftheFreeTradeAreaoftheAmericasandtoworkwithothermultilateralagenciesonregionalmatters.
Proponentsofregionalintegrationarrangementspresentthemasameansofstimulatingcompetition,reapingeconomicsofscale,attractingcapitalinflows,andpromotingtechnologytransfer.Theyclaimthatsucharrangementsallowsomeliberalizationbycountriesunwillingtoopenuponanondiscriminatorybasis,andfacilitateliberalizationinareastoocomplextobenegotiatedsuccessfullyintheWorldTradeOrganization.Opponentsseeregionalarrangementsasfosteringdiscriminatorytraderestrictions,causinggovernmentstolookinwardratherthanoutward,andunderminingthemultilateraltradingsystem.
Thisresearch,andresearchundertakenelsewhere,isstartingtoshedlightonsuchquestionsastheeffectoftradingblocsongrowthandonpolicycredibility,thediplomaticandpoliticalbenefitsofregionalintegration,whetherandhowtoharmonizestandardsorindustrialpolicy,andwhetherregionalblocsareunderminingthemultilateraltradingsystem.
TheresultsofthisresearcharefeedingintoaWorldBankPolicyResearchReportplannedforwinter2000andalargervolumeplannedforspring2000.
Responsibility:DevelopmentResearchGroup,TradeMauriceSchiff([email protected] )andBernardHoekman.WithL.AlanWinters,UniversityofSussex;SoamielyAndriamananjara,OfficeoftheU.S.TradeRepresentative;DaniBen-David,TelAvivUniversity;MagnusBlomstrom,UniversityofStockholm;EricBond,
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PennsylvaniaStateUniversity;WonChang;D.deRosa,ADRInternational;ValericdeBonis,SapienzaUniversity,Rome;RaquelFernandez,NewYorkUniversity;AnjuGupta;J.Hayden;BartlomiejKaminski,UniversityofMaryland;AriKokko,StockholmSchoolofEconomics;PatrickMesserlin;MarceloOlarreaga,WorldTradeOrganization;J.F.Ruhashyankiko;IsidroSoloaga;andAnthonyVenablesandDiegoPugo,LSF.
Completiondate:June2000.
Reports
Amjadi,Azita,andL.AlanWinters.1997.TransportCostsandNaturalIntegrationinMercosur.PolicyResearchWorkingPaper1742.WorldBank,InternationalEconomicsDepartment,Washington,DC.
Amjadi,Azita,L.AlanWinters,andAlexanderYeats.1995.TransportCostsandEconomicIntegrationintheAmericas.SwissJournalofEconomicsandStatistics131(3).
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Andriamananjara,Soamiely,andMauriceSchiff.1998.RegionalGroupingsamongMicrostates.PolicyResearchWorkingPaper1922.WorldBank,DevelopmentResearchGroup,Washington,DC.
Bakoup,Ferdinand,andDavidTarr.1998.HowIntegrationintotheCentralAfricanEconomicandMonetaryCommunityAffectsCameroon'sEconomy:GeneralEquilibriumEstimates.PolicyResearchWorkingPaper1872.WorldBank,DevelopmentResearchGroup,Washington,DC.
Blomstrom,Magnus,andAriKokko.1997.CompetitionPolicyinCustomsUnions:TheoryandanExamplefromU.S.History.PennsylvaniaStateUniversity,StateCollege.
.1997.HowForeignInvestmentAffectsHostCountries.PolicyResearchWorkingPaper1745.WorldBank,InternationalEconomicsDepartment,Washington,DC.
.1997.RegionalIntegrationandForeignDirectInvestment:AConceptualFrameworkandThreeCases.PolicyResearchWorkingPaper1750.WorldBank,InternationalEconomicsDepartment,Washington,DC.
Blomstrom,Magnus,C.Syropoulos,andL.AlanWinters.1996.DeepeningofRegionalIntegrationandMultilateralTradeAgreements.CEPRDiscussionPaper1317.CentreforEconomicPolicyResearch,London.
Bond,EricW.1997.TransportationInfrastructureInvestmentsandRegionalTradeLiberalization.PolicyResearchWorkingPaper1851.WorldBank,DevelopmentResearchGroup,Washington,DC.
.1997.UsingTariffIndicestoEvaluatePreferentialTradingArrangements:AnApplicationtoChile.PolicyResearchWorkingPaper1751.WorldBank,InternationalEconomicsDepartment,
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Washington,DC.
DeBonis,Valeria.1997.RegionalIntegrationandCommodityTaxHarmonization.PolicyResearchWorkingPaper1848.WorldBank,DevelopmentResearchGroup,Washington,DC.
.1997.RegionalIntegrationandFactorIncomeTaxation.PolicyResearchWorkingPaper1849.WorldBank,DevelopmentResearchGroup,Washington,DC.
Fernandez,Raquel,andJonathanPortes.1997.ReturnstoRegionalism:AnEvaluationofNontraditionalGainsfromRegionalTradeAgreements.PolicyResearchWorkingPaper1816.WorldBank,InternationalEconomicsDepartment,Washington,DC.(AlsopublishedinWorldBankEconomicReview12[2],1998.)
Galal,Ahmed,andBernardHoekman,eds.1997.RegionalPartnersinGlobalMarkets:LimitsandPossibilitiesoftheEuro-MedInitiative.London:CentreforEconomicPolicyResearch.
Gupta,Anju,andMauriceSchiff.1997.OutsidersandRegionalTradeAgreementsamongSmallCountries.PolicyResearchWorkingPaper1847.WorldBank,InternationalEconomicsDepartment,Washington,DC.
Harrison,Glenn,ThomasRutherford,andDavidTarr.1996.IncreasedCompetitionandCompletionoftheMarketintheEuropeanUnion:StaticandSteadyStateEffects.JournalofEconomicIntegration11(3):332-65
.1997.EconomicImplicationsforTurkeyofaCustomsUnionwiththeEuropeanUnion.EuropeanEconomicReview41(35):861-70.
.1997.TradePolicyOptionsforChile:AQuantitativeEvaluation.PolicyResearchWorkingPaper1783.WorldBank,InternationalEconomicsDepartment,Washington,DC.
Hoekman,Bernard.1995.TradingBlocsandtheTradingSystem:The
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ServicesDimension.JournalofEconomicIntegration10(1):131.
.1997.TheWTO,theEU,andtheArabWorld:TradePolicyPrioritiesandPitfalls.InNematShafik,ed.,ProspectsforMiddleEasternandNorthAfricanEconomics:FromBoomtoBustandBack?NewYork:St.Martin's.
.1998.TradeandCompetitionPolicyinRegionalAgreements.BrookingsTradePolicyForum.
.1999.FreeTradeAgreementsintheMediterranean:ARegionalPathtowardsLiberalization?JournalofNorthAfricanStudies4(3.2).
Hoekman,Bernard,andSimeonDjankov.1996.TheEuropeanUnion'sMediterraneanFreeTradeInitiative.WorldEconomy19(4):387406.
.1996.Intra-IndustryTrade,ForeignDirectInvestment,andtheReorientationofEasternEuropeanExports.PolicyResearchWorkingPaper1562.WorldBank,InternationalEconomicsDepartment,Washington,DC.
.1997.DeterminantsoftheExportStructureofCentralandEasternEuropeanCountries.WorldBankEconomicReview11(3):471-90
.1997.EffectiveProtectionandInvestmentIncentivesinEgyptandJordan:ImplicationsofFreeTradewithEurope.WorldDevelopment25:281-91.
.1997.TowardsaFreeTradeAgreementwiththeEuropeanUnion:IssuesandPolicyOptionsforEgypt.InAhmed
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GalalandBernardHoekman,eds.,RegionalPartnersinGlobalMarkets:LimitsandPossibilitiesoftheEuro-MedInitiative.London:CentreforEconomicPolicyResearch.
Hoekman,Bernard,DeniseKonan,andKeithMaskus.1998.EconomicEffectsofaFreeTradeAgreementbetweenEgyptandtheUnitedStates.InAhmedGalalandRobertZ.Lawrence,eds.,BuildingBridges:AnEgypt-U.S.FreeTradeAgreement.Washington,DC:BrookingsInstitution.
Kaminski,Bartlomiej.1996.ImpedimentstoEstablishingEconomicFoundationsforaViableStateofBosniaandHerzegovina:IssuesandPolicies.WorldBank,InternationalEconomicsDepartment,Washington,DC.
.1997.TheRoleofForeignDirectInvestmentandTradePoliciesinPoland'sAccessiontotheEuropeanUnion.BackgroundpapertoWorldBank,Poland:StrategiesandPolicyOptionsontheRoadtoEuropeanUnionMembership.InternationalEconomicsDepartment,Washington,DC.
.1998.ForeignTrade:Performance,Institutions,andPolicies.InR.Staar,ed.,ChallengestoDemocracyinPoland.NewYork:St.Martin's.
.1998.ForeignTradePolicyandInstitutions:GettingReadyforAccession.GreaterEurope,NatolinReview1(1).
.1998.Poland'sTransitionfromthePerspectiveofPerformanceinEUMarkets.CommunistEconomicsandEconomicTransformation10(2).
Majd,Nader,andL.AlanWinters.EU-EgyptianAssociationAgreement.WorldBank,InternationalEconomicsDepartment,Washington,DC.
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Martin,Will.AssessingtheImplicationsforLebanonofFreeTradewiththeEuropeanUnion.WorldBank,DevelopmentResearchGroup,Washington,DC.
Maskus,KeithE.,andDeniseEbyKonan.1997.TradeLiberalizationinEgypt.ReviewofDevelopmentEconomics1(3).
Michalopoulos,Constantine,andDavidTarr.1997.TheEconomicsofCustomsUnionsintheCommonwealthofIndependentStates.Post-SovietGeographyandEconomics38(3):125-43.
Olarreaga,Marcelo,andIsidroSoloaga.1998.EndogenousTariffFormation:TheCaseofMercosur.WorldBankEconomicReview12(2):297320.
Padoan,PierCarlo.1997.TechnologyAccumulationandDiffusion:IsThereaRegionalDimension?PolicyResearchWorkingPaper1781.WorldBank,InternationalEconomicsDepartment,Washington,DC.
Puga,Diego,andAnthonyVenables.1997.TradingArrangementsandIndustrialDevelopment.PolicyResearchWorkingPaper1787.WorldBank,InternationalEconomicsDepartment,Washington,DC.(AlsopublishedinWorldBankEconomicReview12[2]:221-49,1998.)
Rutherford,ThomasE.,andDavidTarr.1997.Morocco'sFreeTradeAgreementwiththeEU:AQuantitativeAssessment.EconomicModelling14:237-69.
.1997.RegionalTradingArrangementsforChile:DotheResultsDifferwithaDynamicModel?PaperpresentedattheASSAmeetingsinNewOrleans,January.
.1998.RegionalTradingArrangements:TheImplicationsforChileanEconomicGrowth.PaperpresentedatColoquioAcademicodelasAmericas,CostaRica,March1214.
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Schiff,Maurice.1997.SmallIsBeautiful:PreferentialTradeAgreementsandtheImpactofCountrySize,MarketShare,andSmuggling.JournalofEconomicIntegration12:359-87.
.1999.WilltheRealNaturalTradingPartnerPleaseStandUp?PolicyResearchWorkingPaper2161.WorldBank,DevelopmentResearchGroup,Washington,DC.
Schiff,Maurice,andC.Sapelli,eds.1996.ChileenelNAFTA:
Acuerdosdelibrecomercioversusliberalizacionunilateral.Santiago,Chile,andSanFrancisco:CentreInternationalparaelDesarrolloEconomico.
Schiff,Maurice,andL.AlanWinters.1997.RegionalIntegrationasDiplomacy.PolicyResearchWorkingPaper1801.WorldBank,InternationalEconomicsDepartment,Washington,DC.(AlsopublishedinWorldBankEconomicReview12[2]:27195,1998.)
Stephenson,Sherry.1997.StandardsandConformityAssessmentasNontariffBarrierstoTrade.PolicyResearchWorkingPaper1826.WorldBank,DevelopmentResearchGroup,Washington,DC.
Vamvakidis,Athanasios.1998.RegionalIntegrationandEconomicGrowth.WorldBankEconomicReview12(2):25170.
Winters,L.Alan.1996.Integrationeuropeenneetbien-etreeconomiquedansIerestedumonde.Economicinternationale65:12342.
.1996.RegionalismversusMultilateralism.PolicyResearchWorkingPaper1687.WorldBank,InternationalEconomicsDepartment,Washington,DC.(AlsoforthcominginR.Baldwin,D.Cole,A.Sapir,andAnthonyVenables,eds.,RegionalIntegration.Cambridge:CambridgeUniversityPress.)
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.1997.AssessingRegionalTradeArrangements.PaperpresentedattheAnnualWorldBankConferenceonDevelopmentinLatinAmericaandtheCaribbean,Montevideo,Uruguay,June.
.1997.Experienciasyleccionesdelaintegracioneuropea.InLasAmericas:Integracioneconomicaenperspectiva.Washington,DC:Inter-AmericanDevelopmentBank.
.1997.Lebanon'sEuro-MediterraneanAgreement:PossibleDynamicBenefits.InW.ShahinandK.Shehadi,eds.,PathwaystoIntegration:LebanonandtheEuro-MediterraneanPartnership.KonradAdenauerFoundation.
.1997.RegionalismandtheRestoftheWorld:TheIrrelevanceoftheKemp-WanTheorem.OxfordEconomicPapers49:22834.
.1997.RegionalismandtheRestoftheWorld:TheoryandtheEffectsofEuropeanIntegration.ReviewofInternationalEconomics5(4,supplement):13447.
.1997.WhatCanEuropeanExperienceTeachDevelopingCountriesaboutIntegration?WorldEconomy20:889912.
Winters,L.Alan,andWonChang.1997.RegionalIntegrationandthePricesofImports:AnEmpiricalInvestigation.PolicyResearchWorkingPaper1782.WorldBank,InternationalEconomicsDepartment,Washington,DC.
AgricultureandtheNewTradeAgendaintheWTO2000Negotiations:EconomicAnalysesofInterestsandOptionsforDevelopingandTransitionEconomies
Thisprojectaimstocarryoutanintegratedprogramofresearch,policyanalysis,andcapacitybuildingtostrengthentheparticipationofdevelopingcountriesintheWorldTradeOrganization(WTO)
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negotiationsin2000.Theprograminvolvesquantitativeresearchandpolicyanalysesoftheinterestsofdevelopingcountriesinthenewtradeagendaandsecond-generationtradeissuesinagriculture.Theinitialanalyticalworkisdesignedtoinfluencetheagendaforthenextnegotiationsinagricultureandtoprovideanalyticalcapacityfordeepertradeandagriculturalliberalizationindevelopingcountries.Theanalyseswillalsoprovidenewestimatesofprotection,takingintoaccounttradeanddomesticpolicymeasuresimplementedsincetheUruguayRound.Theoutputswillprovideabasisforfurtheranalyticalworkandcountry-specificsupportdesignedtostrengthendevelopingcountries'analyticalcapacityandparticipationinthenegotiationsandfacilitatetradeanddomesticpolicyreformsinthenextRound.
Thefirstphaseoftheprojectinvolvesrobustandfocusedanalysesoftheinterestsofdevelopingcountriesineachareaofthebuilt-inagendamarketaccess,domesticsupport,andexportcompetitionaswellasissuesonthenewtradeagendaincludingstatetrading,sanitaryandphytosanitarymeasures,technicalbarrierstotrade,standards,andintellectualproperty.Thisphasealsoincludespreparatoryresearchandanalysesonselectedregions,subregions,andcountriestoassistdevelopingcountriesinanalyzingpolicyoptionsandobjectives.Theresearchandanalyticalworkwillbedonebyateamoflocalandregionalexpertsfromdevelopingcountriesandinternationalexperts.Theoutputsfromthisphasewillbeusedtodirectlyassistpolicymakersindevelopingcountriesinevaluatingtheirinterestsandtheeffectsofdifferentnegotiatingstrategies.
Beginninginearly2000,theprojectwillconductregionalworkshopsandtrainingactivities.ItwillcarryoutfurtherresearchandanalysesfollowingtheWTOministerialmeetingin2000,andprovidefollow-upcountryspecificsupportduringthenegotiations.Theanalyticalresultswillbepresentedinaseriesofregionalworkshopsandtrainingseminarsforseniorpolicymakersfromdevelopingcountries.Inaddition,aneditedvolumeonagriculturaltradeissuesandahandbook
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withanalyticaltoolsanddatabasesonagriculturalprotectionwillbeprepared.
Responsibility:EastAsiaandPacificRegion,RuralDevelopmentandNaturalResourcesSectorUnitMerlindaD.Ingco([email protected] );RuralDevelopmentDepartmentAlexanderMcCalla,AlbertoValdes,andRobertL.Thompson;DevelopmentResearchGroup,TradeWillMartinandFrancisNg;andWorldBankInstitute,EconomicPolicyandPovertyReductionDivisionBernardHoekman.WithKymAnderson,UniversityofAdelaide;TimJosling,StanfordUniversity;L.AlanWinters,UniversityofSussex;SpencerHenson,UniversityofReading;BrentBorrell,CenterforInternationalStudies;JohnWhalley,UniversityofWesternOntario;JosephFrancois,ErasmusUniversity;Thomas
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HertelandAzizElbehri,PurdueUniversity;AmmarSiamwalla,ThailandDevelopmentResearchInstitute;AdemolaOyejide;OlawaleOgonkula,UniversityofIbadan,Nigeria;GavinMaasdorf,Imani-CapricornEconomicConsultants;AshokGulati;andPrema-ChandraAthukorala,AustralianNationalUniversity.TrustFundsfromtheWorldBank-NetherlandsPartnershipProgramandtheU.K.DepartmentforInternationalDevelopmentarecontributingfundingfortheresearch.
Completiondate:June2002.
TradePolicyDevelopmentProgram
Thisprogramencompasseseightprojects:
WTO2000:Themillenniumroundoftradenegotiations.
ThisprojectaimstostrengthendevelopingcountryparticipationinthenextWorldTradeOrganization(WTO)roundoftradenegotiations,toassistcountriesinevaluatingtheirinterestsandoptions,andtobuildlocalcapacityforanalyzingtradepolicyissues.Theprojectwillproducethematicandregionallybasedresearchpapersforpresentationathigh-levelandregionalconferences,ahandbook,andaneditedvolumeofpapers.
Agricultureandthenewtradeagenda.TheobjectiveofthisprojectistostrengthendevelopingcountryparticipationinthenextWTOroundoftradenegotiationsonagriculture,toassistcountriesinevaluatingtheirinterestsandoptions,andtosupportimplementationofreformcommitments.Theproject'soutputwillincludethematicandregionallybasedresearchpapersforpresentationathigh-levelandregionalconferences,ahandbook,andaneditedvolumeofpapers.
Adatabaseonmeasuresaffectingtradeinservices.Thepurposeofthisprojectistoadvanceempiricalworkontradeinservices,to
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facilitatenegotiationsonservicesinthenextroundoftradenegotiations,tohelpdesignprogramsforpolicyreform,andtoprovidetheprivatesectorwithbetterinformationaboutmarketaccessinservices.Theprojectwilldevelopacomprehensivesourceofinformationonmeasuresaffectingtradeinservicesand,wherepossible,estimatesoftheireffectontraderestrictiveness.
Tradesupportprogram.ThisprogramwillprovideinputstocountriesundertakingtradepolicyreformsordevelopmentprojectstomeetWTOstandardsandobligations.ProjectswillberecommendedforsupportbyclientcountriesandBankstaff.Supportwillbeprovidedthroughreports,policyrecommendations,andthedevelopmentofbestpracticemethodsofimplementingtradereform.
Standards,certification,andmutualrecognition.Productstandardsplayanimportantroleinintegratingandsegmentinginternationalmarkets.Thisprojectwillgenerateinformationonthequantitativeimportanceofproductstandardsasbarrierstointernationaltradeandidentifyinstitutionaloptionsandbestpracticepolicyresponsesfordevelopingcountries.
Tradeandtradepolicydatasystem.TheUNCTADWorldBankSMARTdatasystemfortheanalysisoftariffandnontariffbarriersisbeingupdated.Thisprojectwilltaketheupdatedsystemtodevelopingcountriesandruncoursesonitsuse.
ModelingtheimpactsoftradeliberalizationundertheWTO2000negotiations.Thisprojectwillsupportaseriesofstudiesanalyzingtheconsequencesofliberalizingtradeinagriculture,manufacturing,andservices.ItsobjectiveistoquantifytheeffectsofliberalizationandtherebyinformnegotiatorsoftheeffectsofdifferentpolicychoicesintheWTO2000roundoftradenegotiations.Twoconferenceswillbeheld,andavolumeofpaperswillbeproduced.
WorldBankInstitutecorecourse:Globalintegrationandthenew
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tradeagenda.Thiscourse,tobeheldinfivelocations,isdesignedtoassistcountriesinidentifying,analyzing,andimplementingtradepolicyoptions;toassistinpreparingforinternationalnegotiations;tobuildcapacityforquantitativeanalysis;andtobuildnationaltrainingcapacity.
Responsibility:DevelopmentResearchGroup,TradeAnthonyJ.Venables([email protected] ),BernardHoekman,MichaelFinger,AadityaMattoo,andWillMartin;WorldBankInstitute,EconomicPolicyandPovertyReductionDivisionPhilipEnglish;andEastAsiaandPacificRegion,RuralDevelopmentandNaturalResourcesSectorUnitMerlindaIngco.WithFlorianAlburoandJoyArbrenica,UniversityofthePhilippines;KymAndersonandChristopherFindlay,UniversityofAdelaide;DrusillaBrown,TuftsUniversity;
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RimChattiandMohamedLahouel,UniversityofTunis;LinSienChia,UniversityofSingapore;InbomChoi,KoreaInternationalInstituteforEconomicPolicy;PeterCowhey,UniversityofCalifornia;AlanDeardorffandRobertStern,UniversityofMichigan;HanaaKheirElDin,UniversityofCairo;RiadElKhouri,MEBAConsulting;Erwidodo,BogorUniversity;SimonEvenett,RutgersUniversity;TubagusFeridhanusetyawanandMariPangestu,CSIS;JosephFrancois,ErasmusUniversity,Rotterdam;ThomasHertel,PurdueUniversity;PeterHolmesandL.AlanWinters,UniversityofSussex;PeterLloyd,UniversityofMelbourne;JamesMarkusenandMariMaskus,UniversityofColorado;PetrosMavroidis,UniversityofNeuchatel;PatrickMesserlin,SciencesPolitiques;AdemolaOyejide,UniversityofIbadan;WisarnPupphavesa,NIDA;TohamySahar,ECES;DeanSpinanger,KielUniversity;BrianStaples;NattapongThongpakde,ThailandDevelopmentResearchInstitute;SubideyTogan,BilkentUniversity;WeeraworawitWeerawit,DepartmentofIntellectualProperty,Thailand;ObieWhichard,BureauofEconomicAnalysis;andJohnWilson,ITI.TheU.K.DepartmentforInternationalDevelopmentiscontributingfundingfortheresearch.
Completiondate:June2002.
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DomesticFinanceandCapitalMarkets
SavingintheWorld:PuzzlesandPolicies
Overthepastthreedecadestheworldhaswitnessedalargeandgrowingdivergenceinsavingsrates.Thegapbetweenindustrialanddevelopingcountrysavingsrateshaswidenedsincethemid-1970s,andtherehasbeenadramaticdivergenceinthedevelopingworld:savingsrateshavedoubledinEastAsia,stagnatedinLatinAmerica,andcollapsedinSub-SaharanAfrica.Theseregionaldisparitieshavebeencloselyreflectedingrowthperformancewithhighersavingsrateshascomehigherincomegrowth.
Evenapartfromanydirecteffectongrowth,thereareotherreasonswhyanadequatesupplyofsavingsisapolicyobjective.Anationalsavingsratebroadlyinlinewithaneconomy'sinvestmentneedsiskeytoreducingtheeconomy'svulnerabilitytounexpectedshiftsininternationalcapitalflows.Inconditionsofincreasinginternationalfinancialintegration,highdomesticsavinghelpsensuremacroeconomicstabilityalthoughitcannotprovidefullinsuranceagainsttheconsequencesofunsustainableexchangeratesorfragilefinancialsystems.
Alargeliteraturehasshedlightondifferentaspectsofconsumptionandsavingsbehavior,butmanypolicyrelevantquestionshadremainedlargelyunanswered.Thisresearchprojectaddressedmanyofthem,underthreebroadthemes:Whydosavingsratesdiffersomuchacrosscountriesandtimeperiods?Whatisbehindthesavings-growthrelationandwhichwaydoesthecausallinkgo?Whichpolicymeasureshavethebiggestimpactonnationalsavingandwhichshouldnotbeexpectedtowork?
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Theresearchyieldedarichsetofempiricalresultsonthebehaviorofprivate(andnational)savingsratesoverthepastthreedecades:
Persistence.Privatesavingsratesshowinertia,beinghighlyseriallycorrelatedevenaftercontrollingforotherfactors.Theeffectsofachangeinagivendeterminantofsavingarethusfullyrealizedonlyaftersomeyears.
Income.Privatesavingsratesrisewithrealpercapitaincome,lendingsupporttotheviewthatabilitytosaverisessharplyonlyafterincomeexceedssubsistenceconsumption.Theinfluenceofincomeislargerindevelopingthaninindustrialcountries,taperingoffatmediumorhighincomelevels.Butdevelopmentalsobringschangesindemographicsandurbanization,someofwhichtendtoreducesaving.Nevertheless,theoverallimplicationisthatpoliciesthatspurdevelopmentareanindirectbutmosteffectivewaytoraiseprivatesaving.
Growth.Carefulscrutinyoftheevidencerevealsthatmuchoftheactionrunsfromgrowthtosavingratherthantheotherway,particularlyovershorthorizons.Theevidencedoessuggestthatsustainedaccelerationsofgrowthareassociatedwithpermanentsavingshikes.Butcloseinspectionofanumberofepisodesofsavingstakeoffshowsthatsustainedincreasesinsavingaretypicallyfollowedbyanaccelerationofgrowththatpersistsforseveralyearsbuteventuallydisappears.Theresultisapermanentriseinincomelevelsratherthaningrowthrates.
Demographics.Cross-countryevidenceconfirmsthathigherdependencyratios(especiallyoldagedependency)reducetheprivatesavingsrate.
Uncertainty.Evidenceconfirmsthatuncertaintymeasuresarepositivelyassociatedwithsavingsrates,inlinewiththetheoreticalpredictionthathigheruncertaintyshouldraisesavingasrisk-averseconsumerssetresourcesaside.
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Theresearchcastnewlightonsuchpolicymeasuresaspensionandfinancialreform,oftenadvocatedonthegroundsoftheirsupposedlypositivesavingsimpact:
Fiscalissues.Eveninthelongrun,increasesinpublicsavingareonlypartlyoffsetbydeclinesinprivatesaving.Butthereismuchvariationinhowmuchprivatesavingoffsetschangesinpublicsavingfromlessthan30percentinIndiatoalmost80percentinMexico.Theevidencealsoconsistentlyshowsthatcuttingspendingisamoreeffectivewaytoincreasesavingthanraisingtaxesis.Nevertheless,whilepublicsavingmayhavethequickestandmostdirectpositiveeffectonnationalsaving,otherpoliciesthataffectsavingindirectly
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throughfasterincomegrowthmayhavebiggerandmorelastingsavingseffectsinthelongterm.
Theevidenceontheeffectivenessoftaxincentivesinraisingsavingismixedand,overall,notpromising.Theelasticityofsavingtonetratesofreturnisusuallyfoundtobeloworevennegative.Evidencefromindustrialcountriesontheeffectivenessoftaxincentivesforvoluntaryretirementsavingisalsomixed.Overall,thepositiveeffectsoftaxincentivesonnationalsavingaresmall,particularlywhenthenegativeeffectsonpublicsavingaretakenintoaccount.
Pensionreform.Replacingpay-as-you-gopensionsystemswithfullyfundedschemesisoftenadvocatedforitsfavorableimpactonsaving.Buttheimpactofpensionreformonsavingwillhingeinpracticeonthewaythetransitiondeficitisfinancedandontheefficiencygainsofthereform.
Pensionreformhaslittleshort-runeffectonprivatesavingifitisfinancedbyissuingpublicdebt,whichmerelyconvertsanimplicitgovernmentliabilityintoanexplicitone.Butifthetransitionisfinancedbyreducingthenonpensionpublicdeficit(throughreducedbenefitstocurrentretireesandhighertaxesonthecurrentlaborforce),thesavingslevelsoffuturegenerationswillincrease,thoughnotnecessarilytheirsavingsrate.Inthelongtermpensionreformcanhaveadditionaleffectsonsavingthroughmandatorysavingsrequirements.Pensionreformcanalsohaveotherpositive,indirecteffectsonsavingifitraisespercapitaincomeandgrowthbyreducinglabormarketdistortionsandspurringcapitalmarketdevelopment.
Financialliberalization.Financialliberalizationliberalizinginterestrates,eliminatingcreditceilings,easingentrybyforeignfinancialinstitutions,developingnewcapitalmarketsectors,andenhancingprudentialregulationandsupervisionwasuntilrecentlywidelybelievedtoraisesaving.Analytically,theeffectoffinancial
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liberalizationonprivatesavingsratescanbedividedintoadirect,short-runimpact,whichisgenerallynegative,andanindirect,long-runeffect,whichisgenerallypositive.Thedirectimpactconsistsofpriceandquantitychannels.Thepricechannelworksthroughhigherinterestratesandempiricallyisseldomeffectiveinraisingprivatesavingsuggestingthatthenegativeincomeeffectofhigherinterestratestendstoneutralizetheirpositiveintertemporalsubstitutioneffect.Thequantitychannelworksthroughexpansionofthesupplyofcredittopreviouslycredit-constrainedprivateagents,allowinghouseholdsandsmallfirmstousecollateralmorewidelyandreducingdownpaymentsonloansforhousingandconsumerdurables.Theorypredictsthatthisshouldreduceprivatesavingbecauseindividualscannowfinancehigherconsumptionatagivencurrentincomelevel.Thispredictioniswellsupportedbythecross-countryevidence.
Nevertheless,theindirectpositiveeffectsoffinancialliberalizationonsavingshouldnotbeunderplayed.Liberalizingdomesticfinancialmarketsparticularlyifdonebystrengtheningthedomesticbankingsectorimprovestheefficiencyoffinancialintermediationandthusinvestment,contributingtohighergrowth.So,itisthroughfasterincomegrowththatfinancialliberalizationmayincreaseprivatesavingsratesinthelongrun.
TheseresearchfindingsarebeingwidelydisseminatedwithinandoutsidetheWorldBank.AttheBanktheyhavebeendisseminatedthroughamajorconferenceinOctober1998,trainingcoursesforBankcountryeconomists,andactivitiesoftheGrowth,Investment,andSavingKnowledgeManagementThematicGroup.Disseminationactivitiesaimedatthebroaderacademicanddevelopmentcommunityhaveincludedspecialsessionsandpresentationsatmajorprofessionalconferences,abook,andnumerousarticlesinBankandprofessionaljournals,includingspecialjournalissuesunderpreparation.Someofthereportslistedbelowareavailableontheproject'sWebsite(www.worldbank.org/research/projects/savings/policies.htm).Also
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availableontheWebisacomprehensivedatasetonsavingsaggregatesandrelatedvariableswww.worldbank.org/research/projects/savings/data.htm).
Responsibility:DevelopmentResearchGroup,MacroeconomicsandGrowthNormanLoayza([email protected] ),LuisServen,CraigBurnside,andAartKraay,andFinanceGerardCaprioJr.;andWorldBankInstitute,MacroeconomicManagementandPolicyDivisionCevdetDenizer.WithPatrickHonohan;KlausSchmidt-Hebbel,CentralBankofChile;TimothyBesleyandCostasMeghir,LondonSchoolofEconomics;AngusDeatonandChristinaPaxson,PrincetonUniversity;
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AndrewSamwick,DartmouthCollege;AlejandroLopez,InternationalMonetaryFund;FabioSchiantarelli,BostonCollege;PeterMontiel,WilliamsCollege;JanineAronandJohnMuellbauer,OxfordUniversity;AntonelloScorcuandLucioPicci,UniversitadeBologna;OrazioAttanasio,UniversityCollegeofLondon;DaniRodrik,ColumbiaUniversity;andCarmenReinhart,UniversityofMaryland.
Completiondate:December1998.
Ref.no.:681-36C.
Reports
Aron,Janine,andJohnMuellbauer.1998.PersonalandCorporateSavinginSouthAfrica.
Attanasio,Orazio,LucioPicci,andAntonelloScorcu.1998.Saving,GrowthandInvestment.
Bandiera,Oriana,GerardCaprioJr.,PatrickHonohan,andFabioSchiantarelli.1998.DoesFinancialReformRaiseorReducePrivateSavings?
Besley,Timothy,andCostasMeghir.1998.DoTaxIncentivesRaisePrivateSaving?
Burnside,Craig.1998.PrivateSavinginMexico.
Burnside,Craig,KlausSchmidt-Hebbel,andLuisServen.1999.SavinginMexico:TheNationalandInternationalEvidence.EconomiaMexicana8:181-230.
Deaton,Angus,andGuyLaroque.1998.LandPrices,Housing,andHouseholdSaving.
Deaton,Angus,andChristinaPaxson.1998.SavingandGrowth:AnotherLookattheCohortEvidence.
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Denizer,Cevdet,andHolgerWolf.1998.AggregateSavingintheTransition:ACross-CountryStudy.
Elbadawi,Ibrahim,andFrancisMwega.1998.CanAfrica'sSavingCollapseBeReverted?
Kraay,Aart.1998.PrivateSavinginChina.
Loayza,Norman,andRashmiShankar.1998.PrivateSavinginIndia.
Loayza,Norman,KlausSchmidt-Hebbel,andLuisServen.1998.WhatDrivesSavingacrosstheWorld?
Loayza,Norman,HumbertoLopez,KlausSchmidt-Hebbel,andLuisServen.1998.SavingintheWorld:TheStylizedFacts..1998.TheWorldSavingDataBase.
Lopez,Alejandro,andJuanRicardoOrtega.1998.SavinginColombia.
Lopez,Humberto,KlausSchmidt-Hebbel,andLuisServen.1998.
HowEffectiveIsFiscalPolicyinRaisingNationalSaving?Montiel,Peter.1998.ConsumptionBooms.
Rodrik,Dani.1998.AStudyofTransitionsfromLowtoHighSavingsRates.
Samwick,Andrew.1998.IsPensionReformConducivetoHigherSaving?
Schmidt-Hebbel,Klaus,andLuisServen.1996.IncomeInequalityandAggregateSaving:TheCross-CountryEvidence.PolicyResearchWorkingPaper1561.WorldBank,PolicyResearchDepartment,Washington,DC.
.1997.DoesIncomeInequalityRaiseAggregateSaving?
WorkingPaper97-08.CentralBankofChile,Santiago.
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.1997.SavingacrosstheWorld:PuzzlesandPolicies.WorldBankDiscussionPaper354.Washington,DC.
.1998.IncomeInequalityandAggregateSaving.InAndresSolimano,ed.,SocialInequality,Values,Growth,andtheState.AnnArbor:UniversityofMichiganPress.
.1998.WorldSaving:TrendsandTheories.EstudiosdeEconomia25:191-215.
.Forthcoming.DoesIncomeInequalityRaiseAggregateSaving?JournalofDevelopmentEconomics.
Schmidt-Hebbel,Klaus,andLuisServen,eds.1999.TheEconomicsofSavingandGrowth:Theory,Evidence,andImplicationsforPolicy.Cambridge:CambridgeUniversityPress.
Schmidt-Hebbel,Klaus,LuisServen,andAndresSolimano.1996.SavingandInvestment:Paradigms,Puzzles,Policies.WorldBankResearchObserver11(1):87-117.
.1996.Saving,Investment,andGrowthinDevelopingCountries:AnOverview.InAndresSolimano,ed.,RoadMapstoProsperity:EssaysonGrowthandDevelopment.AnnArbor:UniversityofMichiganPress.
ThePoliticalEconomyofPensionReform
Thisresearchisputtingtogetheradatabaseonpensionreformthatwillmakeitpossibletouseeconometricanalysistoexplainwhythemixofpublicandprivate,andofpay-as-you-goandfunded,plansvariesamongthecountriesthathavereformedtheirsocialsecuritysystems.Thestudyhypothesizesthatamajorexplanatoryvariableisthesizeofthepreexistingimplicitpensiondebt.Countrieswithlargepay-as-you-goobligationsarelikelytoretainalargepublicpay-as-you-gopillarintheirreformedsystemstocontaintransitioncosts,illustratingthepath
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dependencyofpensionpolicy.Preliminarystatisticalanalysisperformedinfiscal1998isconsistentwiththishypothesis.Thestudyalsohypothesizesthatpoliticalvariablessuchasthepoweroftherulingpartyandthepresidency,andthenumberofvetopointsintheprocess,willaffectthespeedanddegreeofchangeembeddedinthereform.
TheresearchisalsocarryingoutcasestudiesofsixcountriesthathavereformedtheirpensionsystemthreeinLatinAmerica(Argentina,Mexico,andUruguay)andthreetransitioneconomies(Hungary,Kazakhstan,andPoland)tothrowfurtherlightontheobstaclestoreform,howtheseobstacleswereovercome,andwhatlessonscanbelearnedforothercountriesnowplanningpensionreform.
Thisresearchwillassistinthedesignofpensionreformandthedevelopmentofstrategiesforenhancingthepoliticalacceptabilityofthereform.Theresultsarebeingdisseminatedatseminarsandconferences,includingtheWorldBankPensionResearchConferenceonSeptember19,1999.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesEstelleJames([email protected] ).WithSarahBrooks,DukeUniversity;andMitchellOrenstein,SyracuseUniversity.
Completiondate:December1999.
Ref.no.:682-17.
Report
Orenstein,MitchellA.APolitical-InstitutionalAnalysisofPensionReforminthePostcommunistCountries.SyracuseUniversity,MaxwellSchoolofCitizenshipandPublicAffairs,Syracuse,N.Y.
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FinancialStructureandEconomicDevelopment
Whatlegal,regulatory,andpolicychangescangovernmentsimplementtoproducefinancialsystemsthatencourageeconomicdevelopment?Toshedlightonthisissue,thisresearchprojectisstudyingthedeterminantsoffinancialstructuredefinedasthemixofbanks,securitiesmarkets,andnonbanksinaneconomyandtheimportanceoffinancialstructureforeconomicdevelopment.Theresearchisbasedonfirm-level,country-level,andcross-countryanalyses.
Theprojectisconstructingmeasuresoffinancialstructureanddocumentinghowfinancialstructurechangesascountriesdevelop.Inmeasuringfinancialstructure,itemphasizestheclassicdistinctionbetweenbank-basedandmarket-basedfinancialsystems.Inaddition,theprojectexaminessomeofthelegal,regulatory,andpolicydeterminantsofstockmarketdevelopment,bankingdevelopment,andtheoverallstructureoffinancialsystems.Finally,itevaluatestheimplicationsofdifferentfinancialstructuresforeconomicdevelopment.Althoughpastresearchsuggeststhatwell-functioningbanksandstockmarketsspurgrowthoffirmsandofoveralleconomies,thereislittleanalysisofthelinksbetweenfinancialstructureandeconomicperformanceindevelopingcountries.
AdatabaseonfinancialstructureswillbemadeavailableontheWebinthecomingmonths.
Responsibility:DevelopmentResearchGroup,FinanceAsl1Demirgüç-Kunt([email protected] ).WithRossLevine,ReneStulz,VojislavMaksimovic,SheridanTitman,andMustafaGultekin.
Completiondate:January2000.
Ref.no.:682-41.
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OperatingCostsandInvestmentReturnsofPensionFunds
Thisstudyisinvestigatingthedeterminantsofadministrativecostsinthedecentralizedpensionplansoftenintroducedinpensionreforms,suchasthoseinChileandotherLatinAmericancountries.Theseplanshavebeencriticizedfortheirhighadministrativecosts.Byexaminingthecostfunctionsofprivatepensionplans,thestudyaimstotargetthedeterminantsofcoststhatcanbeinfluencedandreducedbypublicpolicy.
Thestudyhasusedseveralapproaches.First,ithascarriedoutaneconometricanalysisofU.S.mutualfunds,whichoftenrunretirementplansandareacloseanaloguetoanindividualaccountsystem.Theresearchmodelscostsasafunctionofassets,numberofaccounts,marketingexpenses,activeorpassivefundmanagement,sizeoffundfamily,rateofreturn,andrisk.Itlooksfortheincrementalcostassociatedwitheachindividualaccount,economiesofscalestemmingfromlargerfundsandfund
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families,andtherelationshipbetweencostandreturns.Second,ithascomparedthesecostswiththecostsoflargeinstitutionalinvestorsandtriedtoexplainthedifferences.Third,ithascomparedU.S.datawithdatafromAustralia,Chile,andtheUnitedKingdom.Thestudyhasalsoanalyzedannuitiesmarketsandannuitiescostsinseveralcountries,includingCanada,Chile,Israel,Singapore,Switzerland,andtheUnitedKingdom.
Thestudywillprovideamenuofstepsthatpolicymakerscouldtaketoreduceadministrativecostsinpensionreformsthatincludeamandatoryprivatepillar,aswellasabetterunderstandingofwhatserviceswouldbeforgoneifthesecost-reducingmeasuresareadopted.
Theresultswillbedisseminatedatseminarsandconferences,includingtheWorldBankPensionResearchConferenceonSeptember19,1999.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesEstelleJames([email protected] )andDimitriVittas.WithGaryFerrier,UniversityofArkansas;Chiu-ChengChang,ChangGungUniversity;JonathanCallund,CallundyCompañ¢iLtda.;JeffreyBrown,UniversityofWaterloo;DavidMontgomeryKnox;KeithPatrickSharp;andAviaSpivak.
Completiondate:December1999.
Ref.no.:682-50.
Contagion,FinancialVolatility,andtheSupplySide
ThereisbroadagreementamongeconomiststhatthemagnitudeanddepthoftheeconomiccrisesthateruptedinArgentinaintheaftermathofthepesocrisisinDecember1994,andinAsiaafterthecollapseoftheThaibahtinmid-1997,werecompoundedbydomestic
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financialsectorweaknesses.Theseweaknessesincludeinefficientintermediation,inadequatelendingpractices,largevolumesofnonperformingloans,excessiveexposuretothepropertysector(asinThailand),large,unhedgedshort-termforeignborrowing,limitedandinaccuratedisclosureoffinancialstatementsbyborrowers,andineffectivesupervision.
Thisresearchsoughttounderstandthemechanismsthroughwhichfinancial,volatilityandcontagiousexternalshocksaretransmittedtotherealsector,andtheroleplayedbythestructureofthebankingsysteminthisprocess.Theproject'smainobjectivewastoextendtheresearchonthelinksbetweencontagiousshocks,financialmarketimperfections,andtherealsectorintwodirections:testingempiricallysomeofthepredictionsofmodelsdevelopedinearlierwork,andexaminingtheimplicationsoffinancialsectorinefficienciesforcrisismanagementandtherolethatdebtreliefcanplay,inaneconomysubjecttoadebtoverhang,inminimizingtherealcostofadverseshocks.
Thefirstpartusedgeneralizedvectorautoregressiontechniques,arelativelyrecentextensionofstandardvectorautoregressionmodels.Thesecondwastheoreticalandusedbasicresultsfromalgebraandmathematicalstatistics.TheanalysesdrewondatafromtheInternationalMonetaryFund'sInternationalFinancialStatistics,Fundaci¢ondeInvestigacionesEcon¢omicasLatinoamericanas(FIEL),andMerrillLynch.
Theresearchfoundthatinefficienciesinthedomesticfinancialsectorplayakeypartintransmittingtheeffectofexternalfinancialshockstothesupplysideoftheeconomy,becauseoftheimportanceofbanks'roleinfinancingfirms'workingcapitalneeds.Theseinefficienciesalsohaveimportantimplicationsforcrisismanagementinaneconomywhereforeignindebtednessislargeandanadverseshocklowersthecountry'scapacitytoserviceitsdebt.
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Thesefindingsillustratetheimportanceoftakingintoaccounttherolethatdomesticcreditmarketimperfectionsmayplayinmagnifyingtherealeffectsofexternalshockandthustheimportanceofimplementingreformsaimedatremovingthesedistortions.Moregenerally,theyimplythatfinancialreformcannotbeconstruedsimplyasapolicyofinterestrateliberalization;suchapolicymustbeaccompaniedbystructuralmeasuresaimedatimprovingtheefficiencyofthefinancialsystem,notablybyremovinglegalimpedimentstoseizureofloancollateral.Thefindingsalsohelptounderstandtherolethatdebtrelief(inadditiontodebtrescheduling)mightplayinminimizingtheoutputlossesassociatedwithadverseshocks.
FindingswerepresentedataconferenceonintegrationandcontagionorganizedbytheWorldBankinBuenosAiresonJune17-18,1999.About100participantsattended,includingBankstaff,LatinAmericanpolicymakers,andacademics.
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Responsibility:WorldBankInstitute,EconomicPolicyandPovertyReductionDivisionPierre-RichardAg¢enor([email protected] ).WithJoshuaAizenman,DartmouthCollege;andAlexanderHoffmaister,InternationalMonetaryFund.
Completiondate:June1999.
Ref.no.:682-76C.
Reports
Ag¢enor,Pierre-Richard,andJoshuaAizenman.1999.FinancialSectorInefficienciesandCoordinationFailures:ImplicationsforCrisisManagement.PolicyResearchWorkingPaper2185.WorldBankInstitute,Washington,DC.
Ag¢enor,Pierre-Richard,JoshuaAizenman,andAlexanderHoffmaister.1999.Contagion,BankLendingSpreads,andOutputFluctuations.PolicyResearchWorkingPaper2186.WorldBankInstitute,Washington,DC.
DepositInsurance:IssuesofPrinciple,Design,andImplementation
Mostcountrieshavesomeformofprotectionforbankdeposits,butthearrangementsvaryconsiderablyindesign.Whilethereareformalsystemsthatexplicitlyguaranteedeposits,implicitsystemsinwhichparticipantssimplytakeitforgrantedthatthegovernmentwillstepinifthereisacrisisarealsowidespread.Explicitsystemsvaryincoverage,inwhethermembershipisvoluntaryormandatory,infundingandpremiumstructures,andinmanagement.Somedepositinsuranceinstitutionsarealsoresponsibleforsupervisingtheinsuredinstitutions.Whilemostpolicymakersconsiderdepositinsuranceastabilizingtoolthatsparescountriesfrombankingcrises,agrowingliteratureemphasizesthedestabilizingeffectsofdepositinsurancesystemsthatendupexacerbatingtheverycrisestheyweremeantto
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prevent.
PolicymakersoftenasktheWorldBankforadviceonthedesignofdepositinsurance.Inrespondingtosuchinquiries,Bankstaffarehamperedbythelackofprofessionalconsensusonthemainissuesandtheunavailabilityofacross-countrydatasetondesigncharacteristicsofdepositinsuranceandsafetynets.ThisprojectisaimedatimprovingBankadviceonthedesignofdepositinsurance.
Theprojectconsistsofthreemaintasks.Thefirstistosurveytheoryandpolicyexperiencetoarticulatewhetherandhowdepositinsurancecanbefittedintoanefficientandincentive-compatiblesystemforregulatingfinancialinstitutions.Thesecondistocatalogvariationsindepositinsurancesystemsaroundtheworldsoastoconvertinformationondifferentdesignfeaturesintoacross-countrydataset.Thethirdistousethisdatasettotesthypothesesabouthowvariationsinthedesignofdepositinsuranceaffectthebankingsystem,thefrequencyandcostofbankingcrises,andoverallfinancialsystemdevelopment.
Theultimatepurposeoftheresearchistoturntheconsiderabletheoreticalworkonfinancialregulationinindustrialcountriesintoatestedbodyoftheorythatcansupportreliablepolicyrecommendationsonhowtotailordepositinsurancetothecircumstancesofdevelopingcountries.WorldBankpolicyadvicemustbesensitivetovariationsininstitutionalstartingpointsandtransitioncosts.Thustheresearchwillproducedesignlessonsformanydifferentinitialconditions.
Responsibility:DevelopmentResearchGroup,FinanceAsl1Demirgüç-Kunt([email protected] ).WithEdwardKane,BostonCollege.
Completiondate:September2000.
Ref.no.:682-90.
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PrimaryFinancialMarkets:MacroeconomicConditionsandMarketDevelopment
Thebroadgoalofthisprojectistobegintheprocessofunderstandinghowandwhyprimarydebtandequitymarketsdevelopandtheroletheyplayinprovidingfinancetolocalcompanies.Primarymarketsarewherefirmsraisecapitalbyissuingfinancialsecurities,whilesecondarymarketsarethosewherefinancialsecuritiestradeafterissuance.Theresearchexaminesthedevelopmentofdomesticprimarymarketsusingannualaggregateissuancedatagatheredfromoriginalsources.Itcovers19developingcountriesand,forcomparativepurposes,asetofindustrialcountries.
Theresearchaddressesthefollowingquestions:First,towhatextentcanvariationinaggregateissuanceactivitybeexplainedbymacroeconomicfactors?Second,
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whatistherelativegrowthofactivityindebtandequityprimarymarkets,andcanmacroeconomicfactorsexplaindifferencesingrowthratesacrosscountries?Third,arethereobservablefactorsthatexplaintheconcentrationofdebtandequityissuanceinafewdevelopingmarkets,andcanthesefactorsbeusedtoprescribepolicyforacceleratingprimarymarketgrowth?Fourth,whatmacroeconomicfactorsinfluencethedecisiontoraiseequityanddebtoverseasratherthanonlydomestically?Doesthisdecisionhaveimplicationsfordomesticgrowthanddevelopment?Andfifth,whatpartdoesgovernmentprivatizationactivityplayinalltheseissues?
Theanalysiscentersonastructuralvectorautoregressiveframework.Thiseconometricmethodologyallowsanalysisofacombinedcross-sectionandtimeseriesofbothdependentandindependentvariablesinaframeworkfreeofarigideconomicmodel.
Themacroeconomicfactorsconsideredincludeeconomicgrowth,inflation,andlevelofprivatizationactivity.Collectively,thesefactorsshouldencompassmuchofwhatexplainsaggregateissuanceactivity.Butotherfactorsarealsoinvestigated,includingopennesstoforeigninvestmentandtypeofinformationavailabletoinvestors.Autonomousdynamicsinequityanddebtofferingsovertimemayalsoplayanimportantpart.
Thestudyisfindingthatthereisalinkbetweenthemacroeconomicandregulatoryenvironmentandthedevelopmentofprimarymarkets,whichsuggeststhatbetterpolicycanfostermarketdevelopment.Theresultsshouldsuggestwhattypeofpolicyimprovementswillmatter.
Responsibility:InternationalFinanceCorporation,CorporatePortfolioManagementGroupJackGlen([email protected] ).WithIanDomowitz,PennsylvaniaStateUniversity;andAnanthMadhavan,UniversityofSouthCarolina.
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Completiondate:December1999.
Ref.no.:682-98.
WorldBankFinancialSectorAdjustmentLending:
TheExperiencetoDate
Thepast20yearshaveseenbankingcrisesinmorethan100countries.Boththesizeofthecrisesinmanycasesbailoutcostshaveexceeded10percentofGDPandthefactthattheyrecurreflectfundamentalweaknessesinthefinancial(particularlybanking)sectorsofmanycountries.Notsurprisingly,theWorldBankhasincreasinglyissuedloanswithconditionalitiesdesignedtostrengthenfinancialsectors.Theobjectivesofthisstudyweretodescribehowtheconditionalityofthoseloanshaschangedovertime,toexaminewhetherinitialmacroeconomicandfinancialsectorconditionsintherecipientcountryhadadiscernibleimpactonpostloanfinancialsectoroutcomes,and,aftercontrollingforinitialconditions,todeterminewhetherthetypeofconditionalityhadanimpactonpostloanoutcomes.
TheanalysisusedadatabasecreatedbytheBank'sOperationsEvaluationDepartmenttoclassifythetypesofconditionalitiesineachloan.DataonmacroeconomicandfinancialsectorconditionsatthetimeoftheloanweretakenfromtheInternationalMonetaryFund'sInternationalFinancialStatistics.Inanearlierstudysimplestatisticaltechniqueswereusedtomodelsubsequentchangesinfinancialdepth(especiallyasmeasuredbytheratioofM2toGDP)forloansissuedbefore1994.ThoseresultswerelaterincorporatedintoNicholasMathieu,FinancialSectorReform:AReviewofWorldBankAssistance(OperationsEvaluationStudy,Washington,DC:WorldBank,OperationsEvaluationDepartment,1998).
Thisstudyupdatedtheearlieranalysisbyincorporatingadditionalmeasuresoffinancialdepth(quasimoney,liquidliabilities,andcredit
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totheprivatesector)andbyincludingdataforloansissuedin1994-95.Themainfindingisthatpostloanfinancialdevelopmenthasbeenbestincountrieswithasoundpolicyenvironment(asreflectedinlowinflation)andgoodpotentialforfinancialgrowth(lowinitialfinancialdevelopmentandalargepopulation).Thedetailsofthelendingoperationappeartohavebeenlessimportantthantheconditionsunderwhichthereformwascarriedout.Theinteractionbetweenaidandanindexofpolicyqualitywaspositiveandsignificant,however,indicatingthatsuchassistancedoescontributetofinancialsectordevelopmentinasoundpolicyenvironment.
Responsibility:DevelopmentResearchGroup,FinanceRobertCull([email protected] ).
Completiondate:January1999.
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Report
Cull,Robert.1999.CountryCharacteristics,LoanConditionalities,andtheSuccessorFailureofWorldBankFinancialSectorLendingOperations,1985-96.WorldBank,DevelopmentResearchGroup,Washington,DC.
Contract-IntensiveMoney
Anobjectivemeasureofpropertyandcontractualrightsthatiseasilyavailableformostcountriesandmostyearshasbeenlacking.Thislackhashinderedbothresearchintotheimpactofpropertyandcontractualrightsoneconomicdevelopmentanddialoguewithcountrycounterpartsontheprioritytheyshouldgiveintheirreformprogramstoincreasingthesecurityofsuchrights.
Comparedwithcountrieswithgoodprotectionofpropertyandcontractualrights,incountrieswithpoorprotectionofsuchrightsindividualsshouldbelesswillingtoentrusttheirmoneytothirdparties,suchasbanks,andthefractionofmoneyheldascashshouldbehigher.Thissuggeststhatconstructingamonetarymeasureofthesecurityofpropertyandcontractualrightsinacountryshouldbefeasible.Thisresearchconstructedsuchameasurecontract-intensivemoney,thefractionofM2notheldascurrency.Evenafterfinancialdepthandinflationarecontrolledfor,thismeasurehasasignificantpositiveimpactoneconomicgrowthandinvestmentinacountry.
Contract-intensivemoneyisauseful,easilyaccessible,andobjectivemeasureofpropertyandcontractualrightsthatcanbeusedformonitoringcountries'progressinprotectingsuchrightsandincountrydialogueontheserights.
Responsibility:DevelopmentResearchGroup,RegulationandCompetitionPolicyPhilipKeefer([email protected] ).With
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ChristopherClague,SanDiegoStateUniversity;andStephenKnackandMancurOlson,UniversityofMaryland.TheIRISCenter,UniversityofMarylandatCollegePark,contributedfundingfortheresearch.
Completiondate:June1999.
Report
Clague,Christopher,PhilipKeefer,StephenKnack,andMancurOlson.Forthcoming.Contract-IntensiveMoney:ContractEnforcement,PropertyRightsandEconomicPerformance.JournalofEconomicGrowth.
FinancialLiberalization
Manycountrieshavemetwithdifficultiesinmovingtomarket-basedinterestrates.Thedownsideoffinancialliberalizationcanbeseeninheightenedvolatilityofassetmarkets,distributionalshifts,andlowerincentivesforsoundriskmanagementandcorporategovernanceoffinancialintermediaries.Thisstudyassessedtheneedforcomplementarypoliciestoensureimprovedperformanceofthefinancialsectorintheliberalizedenvironment.
Theresearchwasbasedoncountrycasestudieschosentoreflectthecontrastingconditionsintransitioneconomies,industrialeconomies,low-incomecountries,chronicallyhigh-inflationcountries,countriesthathavereliedheavilyondirectedcredit,andeconomieswithseverefiscalproblems.OnecasestudytrackedtheroleofpoorlyphasedandimplementedliberalizationintheKoreancrisisof1997.Theresearchalsousedcrosscountryeconometrics.
Thecasestudiesshowthatfinancialliberalizationwasfarfromsmooth.Undermanycircumstancesinterestratevolatilitycontributedtobankingfragility.IntheextremecaseoftheformerSovietUniondefactoliberalizationunsupportedbycontractenforcementledtoan
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implosionofthemonetaryeconomy.Inmostcountriesinterestratespreadswidenedtolevelsthatsuggestacontinuinglackofcompetitiondespitefreeentry.
Theresultssuggestthatamuchmoremeasuredandnuancedapproachtoliberalizationwouldhavebeenbetter.Toeliminatethemostsevereinterestratedistortionsdidnotrequirecompleteandimmediateremovalofinterestratecontrols,especiallywherebankswereinsolventorfragile.Removalofcontrolsonforeigncapital(especiallyshort-termflows)couldhavebeenphasedinlateratherthanearly.Freeentryshouldhavebeenqualifiedbyrequirementsforadequatecapitalizationandsuitablemanagement.Alongerlead-inwouldhave
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allowedmorethoroughtrainingofregulatorypersonnel,thoughtheireffectivenessmightstillhavebeenlimitedbypoliticalinterference.Evenafterliberalization,someofthelostgroundcanberegainedbytheuseofaportfolioofbluntinstrumentsofintermittenteffect.
TheresearchresultswerediscussedataWorldBankworkshopinMarch1999withparticipantsfromtheBankandtheInternationalMonetaryFund.Thepaperspresentedattheworkshopareavailableatwww.worldbank.org/reseach/interest/confern.htmandwillbemadeavailableinavolumenowbeingeditedforpublication.Theresultsareservingasinputtoafinancialsectorpolicypaper.
Responsibility:DevelopmentResearchGroup,FinancePatrickHonohan([email protected] )andAsl1Demirgüç-Kunt;EastAsiaandPacificRegion,FinancialSectorDevelopmentUnitIrfanAleem;FinancialSectorPracticeDepartment,FinancialEconomicsUnitGerardCaprioJr.;SouthAsiaRegion,PovertyReductionandEconomicManagementSectorUnitJamesA.Hanson;andLatinAmericaandtheCaribbeanRegion,MexicoCountryManagementUnitLuisLandaandFernandoMontes-Negret.WithYoonJeCho,SogangUniversity,Seoul;DavidCole;BettySlade;FabrizioCoricelli,UniversityofSiena;EnricaDetragiache,InternationalMonetaryFund;LouisKasekende,CentralBankofUganda;CharlesWyplosz,GraduateInstituteofInternationalStudies,Geneva;C.Calomiris,ColumbiaUniversity;S.Janjua,StateBankofPakistan;E.Kane,BostonCollege;H.Pill,EuropeanInvestmentBank;andPaoloVieiradaCunha,LehmanBrothers.
Completiondate:June1999.
Reports
Aleem,Irfan,andLouisKasekende.1999.ReformingFinanceinaLow-IncomeCountry:Uganda.WorldBank,Washington,DC;and
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CentralBankofUganda,Kampala.
Caprio,Gerard,Jr.,andJamesA.Hanson.1999.TheCaseforLiberalizationandSomeDrawbacks.WorldBank,DevelopmentResearchGroup,Washington,DC.
Caprio,Gerard,Jr.,PatrickHonohan,andJosephE.Stiglitz.1999.FinancialLiberalization:HowFar,HowFast?IntroductionandOverview.WorldBank,Washington,DC.
Cho,YoonJe.1999.Korea'sFinancialCrisis:AConsequenceofUnbalancedLiberalization.SogangUniversity,Seoul.
Cole,DavidC.,andBettyF.Slade.1999.LiberalizationofGovernmentDebtMarkets.
Coricelli,Fabrizio.1999.TheFinancialSectorinTransition:TalesofSuccessandFailure.UniversityofSiena.
Demirgüç-Kunt,Asl1,andEnricaDetragiache.1998.FinancialLiberalizationandFinancialFragility.WorldBankandInternationalMonetaryFund,Washington,DC.
Hanson,JamesA.1999.IndonesiaandIndia:ContrastingApproachestoRepressionandLiberalization.WorldBank,Washington,DC.
Honohan,Patrick.1999.TheEvolutionofInterestRatesacrossCountries:AStatisticalSurvey.WorldBank,DevelopmentResearchGroup,Washington,DC.
Honohan,Patrick,andJosephE.Stiglitz.1999.RobustFinancialRestraint.WorldBank,Washington,DC.
Montes-Negret,Fernando,andLuisLanda.1999.InterestRateSpreadsinMexicoduringLiberalization.WorldBank,Washington,DC.
Wyplosz,Charles.1999.FinancialRestraintsandLiberalizationinPost-WarEurope.GraduateInstituteofInternationalStudies,Geneva.
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RuralFinanceinPakistan
Asaresultoflackofdata,littlehasbeenknownabouttheextentandnatureofruralfinancialmarketsinPakistanandabouttheroleofformalfinancialinstitutionssuchastheAgriculturalDevelopmentBankofPakistan.Asafirststeptowardimprovingtheunderstandingofthecountry'sruralcreditmarket,theWorldBankandthegovernmentofPakistancollectedhouseholdandcommunitysurveydataaswellasdataonthefunctioningofinformal,cooperative,andformallenders.Pakistaniresearchinstitutionsundertookadescriptiveanalysisofthesedata.
Thisstudycarriedoutarigorouseconometricanalysisofthedatatoaddressthefollowingquestions:Whatistheextentandnatureofruralcredittransactions?Whatistheextentandnatureofcreditconstraintsforruralproducers?Whatimpactdoesformalandinformalcredithaveonagriculturalgrowth,investment,andproductivity?WhatisthecostofdeliveringcredittoruralproducersfortheAgriculturalDevelopmentBankofPakistanandforothergovernment-controlledfinancial
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institutions?Whatisthelikelyimpactofpolicyandinstitutionalreformonruralgrowthandwelfare?Andwhatisthepotentialofmicrofinance,providedbynongovernmentalorganizationsandotheragencies,asamethodfordeliveringcredittowomen,thepoor,andsmallproducers?
ResearchfindingsindicatethattheruralcreditmarketinPakistanishighlysegmented.FormalinstitutionssuchastheAgriculturalDevelopmentBankofPakistanandcooperativesocietiesservetherich,whilesmallandmedium-sizefarmersandproducersdependentirelyoninformallenders.Whilethecostofborrowingislowforformalfinance,theinterestrateforinformalfinanceisextremelyhigh.Buttheloanrecoveryrateforformallendersisquitelow,averaginglessthan40percentovertime.Theloandefaultcostsaretoohighforthebankstoabsorbthroughtheirinterestandotherincomealone,andtheycancontinuefunctioningonlyasaresultofthegovernmentsubsidiestheyreceive.
FindingsweredisseminatedthroughseminarsandworkshopsinPakistan,andpapersarebeingwrittenforaneditedbookaimedatpolicymakersandpractitioners.
Responsibility:PovertyReductionandEconomicManagementNetwork,GenderDivision,andDevelopmentResearchGroup,PovertyandHumanResourcesShahidurR.Khandker([email protected] )andHussainSamad;andSouthAsiaRegion,RuralDevelopmentSectorUnitRashidurR.Faruqee.WithAnnayaBasu;DanMillimet,BrownUniversity;andTulikaNarayan,UniversityofMarylandatCollegePark.
Completiondate:June1999.
BenchmarkingFinancialSystems
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WorldBankstaffoftentrytocompareacountry'sfinancialsystemwiththoseofbenchmarkcountries.Partofthiscomparisonrelatestothesizeandmixoffinancialintermediariesandmarketsacrosscountries.TheotherpartrelatestotheactivityandefficiencyofinstitutionsandmarketsofcountriesatsimilarorhigherlevelsofeconomicdevelopmentForexample,Mexico'sinsuranceindustryissmallrelativetothatintheUnitedStates,butdoesitdifferimportantlyfromArgentina'sortheRepublicofKorea's?Takeninisolation,suchcross-countrycomparisonsdonotyieldaclearfinancialsectordevelopmentstrategy:findingthatacountry'sinsuranceindustryissmallrelativetothoseincountrieswithsimilarGDPpercapitadoesnotnecessarilyimplyaproblem.Butinformedcross-countrycomparisonscanhelpidentifyirregularitiesneedingmorerigorousanalysis,suchasaninactivestockexchange.Unfortunately,theBankhaslackedadatabaseforsimplecross-countrycomparisonsoffinancialsystems.
Toallowcomparisonoffinancialsystemsatdifferentbenchmarkdates,thisinitiativehascontributedtothecompilationofadatasetonfinancialinstitutionsforalargesampleofindustrialanddevelopingcountriesovertime.Datahavebeencollectedonthesize,activity,andefficiencyofdifferenttypesoffinancialintermediariesandmarkets(banks,nonbankfinancialinstitutions,insurancecompanies,pensionfunds,developmentbanks,andstockandbondmarkets).Thisdatabasewillsimplifycross-countrycomparisonsforcountryofficialsandWorldBankstaffandsupportadditionalresearch.
ThedatabasewillbemadeavailableontheInternet.Thepaperlistedbelowdetailsthedatasourcesanddefinitions.
Responsibility:DevelopmentResearchGroup,FinanceAsl1Demirgüç-Kunt([email protected] ).WithRossLevine.
Completiondate:September1999.
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Report
Beck,Thorsten,Asl1Demirgüç-Kunt,andRossLevine.1999.ANewDatabaseonFinancialDevelopmentandStructure.PolicyResearchWorkingPaper2146.WorldBank,DevelopmentResearchGroup,Washington,DC.
PostalFinancialServicesReform
Financialservicesprovidedbypostalorganizationscanplayanimportantpartinestablishingahealthyfinancialinfrastructureindevelopingcountries.Throughtheextensive,nationalnetworkofpostalserviceoutlets,countriescanprovideaneffectivechannelforsavingsmobilizationandaconvenientmeansforpaymentsandfundstransfer,particularlyforruralandlow-incomecommunities.
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Thisresearchprojectaddressesseveralquestions:Couldthenationalpostalnetworkprovideaneffectivefinancialinfrastructureincountrieswithaweakfinancialsector?Evenindevelopingcountrieswithareasonablydevelopedfinancialsector,couldthepostalnetworkprovideefficientbasicfinancialservicestoruralareas,lowincomecommunities,andsmallbusinessesandtraders?Whatarethemajorissuesandconstraintsindevelopingorimprovingtheperformanceofpostalfinancialservices?Whatstepsareeffectiveinreforminganddevelopingpostalfinancialservices?
Theresearchisbasedoncasestudiesofcountriesthathavesuccessfulpostalfinancialservicessystems,includingAustralia,Belgium,Greece,Ireland,Japan,theNetherlands,andSwitzerland;developingcountryexperienceinprovidingandreformingpostalfinancialservices;literatureandarticlesonpostalfinancialservices;experiencefromBankoperationsinthisarea;andastatisticalsurveyofpostalfinancialservicesaroundtheworld.TheotherprimarysourcesofdataaretheUniversalPostalUnionandtheWorldSavingsBanksInstitute.
TheresearchisexpectedtoraiseawarenesswithintheWorldBankandamongborrowersoftheappropriatenessandthebenefitsofpostalfinancialservicesreformforruraldevelopmentandforfinancialsectordevelopmentinruralorlowincomeareas.ThefindingswillbedisseminatedmainlythroughpublicationandatleasttwoconferencestobeorganizedjointlywiththeUniversalPostalUnion.
Responsibility:PrivateSectorDevelopmentDepartment,PrivatizationServicesGroupKumarRanganathan([email protected] ),AuroraFerrari,andAndreaFernandez.WithLaposte,Switzerland;UniversalPostalUnion;andING-Barings,theNetherlands.TheSwissAgencyforDevelopmentandCooperation,SwissSpecialStudiesTrustFund,UniversalPostalUnion,andPostalDevelopmentActionGrouparecontributingfundingfortheresearch.
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Completiondate:November1999.
InformalLendersandMicrofinancePrograms:
CompetitiveorSymbiotic?
ManyrecentstudiessuggestthathouseholdsinvolvedinmicrofinanceprogramsinBangladeshcontinuetohavesubstantialdealingswithmoneylendersandotherinformalsourcesofcredit.Moreimportant,theysuggestthatatleastsomehouseholdsroutinelyrepayloansfromonesourcebyborrowingfromanother,thatindebtednessisincreasing,andthattheGrameenBank,atleast,doesnotappeartoenforcejointliabilityorcontingentrenewal.Thereisalsosomeevidenceofincreasingdefaultrates.
Thesefindingsraiseanumberofquestions.Underwhatconditionsshouldweexpectasymbioticrelationshipbetweenmicrofinanceinstitutionsandinformalsourcesofcredit?Inparticular,istherearelationshipbetweenthemechanismsofcontractenforcementusedbyamicrofinanceinstitutionandtheformofinteractionbetweenitandtheinformalfinancialmarket?Iftheinteractionissymbiotic,whataretheimplicationsforthesustainabilityofmicrofinanceinstitutionsandofinformallenders?Whattypesofhouseholdsarelikelytofallintoadebttrap?
Toexplorethesequestions,thisstudyisdevelopingamodelofstrategicinteractionbetweenborrowers,aninformallender,andamicrofinanceinstitutionthatusesagroup-basedlendingprogram,andlookingatevidenceofinteractionusingexistingdata.Themodelwillyieldtestablehypothesesthatthestudywillevaluateinitiallywithavailabledataandlater,ifwarranted,throughnewdatacollection.
Theworkingpremiseisthatrelianceoncertaincontractenforcementmechanismscanleadtoasymbioticrelationshipbetweeninformallendersandamicrofinanceinstitution,suchthattheapparentsustainabilityofthemicrofinanceinstitutionbecomescontingenton
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theborrower'scontinuedabilitytoobtainfundsfrominformalsources.Insuchacontextincome-deficithouseholdscouldfallintoacycleofincreasingdebt,leadingtoeventualdefault.
Thepotentialpolicyimplicationsoftheworkarevariedandintriguing.Forexample,onepossibilityisthatmicrofinanceinstitutionsthatemphasizesustainabilitywhileservingpoorborrowersmightinadvertentlycontributetotheincreasedimpoverishmentoftheirpoorestborrowers,atleastinthemediumterm.
Responsibility:DevelopmentResearchGroup,RuralDevelopmentGhazalaMansuri([email protected] ).
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WithSanjayJain,GeorgeWashingtonUniversity;andAmineMati.
Completiondate:February2000.
MeasuringFinancialRegulationandSupervision
Thisprojectwillinvestigatewhetheraparticularmixoffinancialregulationsandsupervisorystandardsiscloselyassociatedwithsuccessfulbankingoperationsand,moregenerally,withwell-functioningfinancialsystems.Itwillalsotracetheeffectofdifferentregulatoryandsupervisoryfeaturesinitiallyonthefinancialsystemandthenonoveralleconomicperformance.Theresearchwilluseavarietyofapproaches,butwillbemostlycross-countryempiricalworkusingregression,logit,andprobitanalysis.
Theprojectwillcollectcomprehensivedataonfinancialregulationsandsupervisorystandards,thestructureofregulatoryandsupervisoryagencies,andthecapabilitiesofregulatoryandsupervisoryauthoritiesforabroadcross-sectionofdevelopingandindustrialcountries.Informationonsupervisionwillincludethedataandinformationcollectedbysupervisors,supervisorypowers,thenumberofon-siteexams,thebudgetforsupervisorywork,andsupervisors'compensationrelativetothatofmarketcounterparts.
Thedatacollectionwillcoverthebroadfinancialsystem,notonlybecausethedefinitionofbankingvarieswidelybutalsobecausefinancialcrisescanoriginateamongnonbankfinancialintermediaries,asseenmostrecentlyinThailand.Moreover,WorldBankresearchhasshownthatbothbankingandnonbankfinancialdevelopmentmattersforgrowth.
ThefindingswillallowtheBanktofine-tuneitsrecommendationsonkeyimprovementsinregulationandsupervisionatvariouslevelsoffinancialsectordevelopment.Andtheywillallowcountriestosee
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howtheycomparewithothers.TheresultswillfeedintotheBank'sPolicyResearchReportonfinanceplannedfor2001.
Responsibility:FinancialSectorPracticeDepartmentandDevelopmentResearchGroup,FinanceGerardCaprioJr.([email protected] )andDevelopmentResearchGroup,FinanceIffathSharifandMariaSoledadMartinezPeria.WithJamesBarth,AuburnUniversity;andRossLevine,UniversityofMinnesota.
Completiondate:September2000.
CapitalMarkets
Thisresearchprojectexaminessecond-generationissuesinthesettingupofpensionfundsandthedevelopmentofmutualfunds.Theworkonpensionfundshasfocusedonthedecumulationphaseofdefinedcontributionpillars.Ithasexaminedthepolicyandregulatoryissuesinvolvedinofferingdisabilityandsurvivorbenefitsaswellasretirementannuitiesinpensionsystemsbasedonindividualcapitalizationaccounts.Continuingworklooksatwaysofinsulatingpersonalpensionplansand,especially,retirementannuitiesfromstockmarketvolatilityandatregulatoryissuesfacingprivatepensionfundsandannuitymarkets.
Theworkonmutualfundshasfocusedoncompilingadatabaseonsuchfundsinabout40countries.Mutualfundsremainsmallinmostdevelopingcountries,buttheyhavegrownrapidlyinrecentyearsandareexpectedtobecomeimportantfinancialinstitutions.PreliminaryanalysisoftheirdevelopmenthasbeenundertakenforArgentina,Morocco,andTunisiaaspartofbroaderfinancialsectorstudiesforthesecountries.Furtherresearchwillanalyzetheeconomicdeterminantsofmutualfundgrowthandaddresstheregulatoryframeworknecessaryforthesounddevelopmentofthesector.ItwillgivespecialemphasistosomesmallEuropeancountriesthathavesucceededinovercomingobstaclestosoundgrowth.
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Responsibility:DevelopmentResearchGroup,FinanceDimitriVittas([email protected] ),PatrickHonohan,andDeepthiN.Fernando.
Completiondate:December2000.
Report
James,Estelle,andDimitriVittas.1999.TheDecumulation(Payout)PhaseofDefinedContributionPillars.PaperpresentedatSecondAsia-PacificEconomicCooperation(APEC)PensionReformForum,Santiago,Chile,April.
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BankInsolvency
Substantialuncertaintysurroundstwocrucialissuesinfinancialsectormeltdowns.First,whatregulatorydecisionspermittedthecrisis,andwhywerethosedecisionsmade?Forexample,whywasexposureofbankportfoliostoforeigncurrency-denominatedassetspermittedtoreachhighlevels?Sincemostpolicyadvicerevolvesaroundtheregulatorypracticesofcountries,understandinghowregulatorydecisionsprecedingacrisisweremadeiscrucialtounderstandingthepotentialofthisadviceanditslimitations.
Second,howhavecountriesrespondedtocrisis?Governmentdecisionsearlyinacrisishaveasubstantialeffectonlaterfinancialandeconomicdevelopment,includingsuchdecisionsaswhethertorescueborrowers,bankowners,anddepositorsandotherholdersofbankliabilities.Foronlyafewcountries,however,isthereadetaileddescriptionofresponsestocrisis.
Thisresearchwillchartgovernmentdecisionsbeforeandimmediatelyafterfinancialcrisisforatleastsixcountriesindifferentpartsoftheworld.Andthroughcountrycasestudiesandcross-countryeconometricanalysis,itwillexaminethehypothesisthatpoliticalinstitutionsinfluencethecausesofcrises,thedecisionsmadetoresolvecrisesoncetheyoccur,andthetimingofthosedecisions.
Earlyresultsofcross-countryregressionsindicatethatmostofthefinancialandeconomicvariablesthoughttoinfluencetheprobabilityofcrisisrangingfromeconomicgrowthtowhetherinterestratesareliberalizedhaveasignificantlydifferentimpactonbankingcrisesinthepresenceofpoliticalchecksandbalances.Interestliberalizationprovidesthestrongestexampleofthis.Atthemeanlevelofchecksandbalances,interestliberalizationincreasestheprobabilityofbankingcrisesby19percent.Atthelowestlevelofchecksand
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balances,thisprobabilityrisesto35percent.
Responsibility:DevelopmentResearchGroup,RegulationandCompetitionPolicyPhilipKeefer([email protected] )andPatrickHonohan;andFinancialSectorPracticeDepartmentDanielaKlingebiel.
Completiondate:June2001.
Report
Keefer,Philip.1999.PoliticalInstitutionsandCrisis:TheEffectsofPoliticalChecksandBalancesontheDynamicsofFinancialSectorDistress.PaperpresentedatthemeetingsoftheWesternEconomicAssociation,July.
BankPrivatizationinDevelopingCountries
Severalcountrieshavehaddifficultyinsellinglossmaking,insolventstate-ownedbankstotheprivatesector.Thesecountrieshaveusedarangeofmethodsofprivatization.Thisprojectwillsummarizethoseexperiences,analyzethepoliticaleconomyfactorsthataffectedthechoiceofprivatizationmethod,andstudyhowpostprivatizationperformancedifferedunderalternativemethods.
TheresearchhasthusfarfocusedonArgentina,whereanunprecedentednumberofbankprivatizationstookplaceinarelativelyshortperiod(1995-98).Theresultsindicatethatpoliticianswhoseprovinceswereindirefiscalsituationsandwhosebankswerelosingmoneyfastestweremostwilling(orable)toprivatize.Theoppositiontheyfacedalsoenteredintothecalculationoverstaffedprovincialbanks,forexample,weregenerallyhardertoprivatize.Finally,thedepositlossesandliquidityproblemsassociatedwiththeTequilacrisisincreasedthelikelihoodofprivatization,aformalizationoftheintuitionthatcrisisoffersopportunity.
Thedifficultiesprovinceshadinattractingbuyerswerereflectedin
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thedetailsoftheprivatizationcontracts.Portfolioguarantees,assumptionofonlygoodassets,andcontractstoprovidepostprivatizationservicestotheprovincewerethreeimportantconcessionstopurchasers.Inreturn,however,provincialpoliticiansoftenreceivedconcessionsrestrictinglayoffsandbranchclosings.
Workonthecross-countryanalysisisstillpreliminary.Theproposedanalysiswillexamine10countriesthathaveundergonesubstantialstructuralchangeintheirbankingsectors,especiallyprivatizationandinternationalentry.Usingbalancesheetdataforbanksinthesecountries,thestudywillexamineeconometricallywhetherthestructuralchangehascontributedtoahealthierfinancialsector.TheresearchinArgentinawillserveasaprototypeforthecountrycasestudies.
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TheresultsonArgentinacontributedtoreportsonbankprivatizationandreformloansfromtheWorldBank.
Responsibility:DevelopmentResearchGroup,RegulationandCompetitionPolicyGeorgeClarke([email protected] ),andFinanceRobertCull.
Completiondate:June2001.
Reports
Clarke,GeorgeR.G.,andRobertCull.1998.ThePoliticalEconomyofPrivatization:AnEmpiricalAnalysisofBankPrivatizationinArgentina.PolicyResearchWorkingPaper1962.WorldBank,DevelopmentResearchGroup,Washington,DC.
.1999.ProvincialBankPrivatizationinArgentina:TheWhy,theHow,andtheSoWhat.PolicyResearchWorkingPaper2159.WorldBank,DevelopmentResearchGroup,Washington,DC.
FinancingofSmallandMedium-SizeEnterprises
Thereisgrowingconcernabouttheaccessofsmallandmedium-sizeenterprisestoexternalsourcesoffinancing.Earlierstudieshavearguedthatsmallbusinessesplayanimportantpartinpromotingtechnologicalinnovationandexpandingemployment.Studieshavealsoshownthataccesstoshort-termfinancingiscriticalforthedevelopmentofthesmallbusinesssector.Thisresearchwilllookatsourcesofoutsidecapitalavailabletosmallandmedium-sizeenterprisesandfactorsthataffecttheiraccesstoexternalcredit.Itwillincludebothcountryspecificandcross-countrystudies.
Cross-countrystudieswillincludedataonabout55countriesinEastAsia,EasternEurope,andLatinAmericaforwhichpublishedstatisticsareavailable.Theywillalsousedatacollectedinvariouscountries
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andregionsthroughtheFirmAnalysisandCompetitivenessSurveys.Thecross-countrystudieswillfocusontheroleofnonbankfinancingsuchassuppliercreditandleasing.
TheprojectwillalsoconductadetailedstudyofbanklendinginArgentinausingproprietarycreditdatafromtheCentralBankofArgentina.Thestudywillexaminethesegmentationofbanklendingbetweendomesticandforeignbanksandamongborrowersofdifferentquality.Thisstudyisexpectedtoenhanceunderstandingofcreditforsmallandmedium-sizeenterprisesincountrieswithvaryinglevelsoffinancialdevelopmentandliberalization.
Theresultswillbepresentedinaseriesofworkingpapersaimedatpolicymakers.
Responsibility:DevelopmentResearchGroup,FinanceLeoraKlapper([email protected] )andIffathSharif.
Completiondate:June2001.
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TransitionEconomies
TheImpactofMarket-OrientedPolicyReformsonHouseholdsinRuralChina
Inthe1980sChinadismantledthecommunesystem,inwhichlandwascommunallyownedandfarmed,andreplaceditwiththehouseholdresponsibilitysystem,inwhichlandisleasedtoandworkedbyindividualhouseholds.Intheearly1980sagriculturalproductionincreaseddramatically.Nofurtherlargeincreasesareexpected,however,asitappearsthatthegainsfromthisnewpolicyhavenowbeenreaped.
Thisresearchprojectsetouttoaddressthefollowingquestions:WhatarethemaindeterminantsoftheproductivityofagriculturalhouseholdsinruralChina?Wouldremovalofrestrictionsonfactormarkets(credit,labor,andland)producefurtherincreasesinagriculturaloutput?Howhasthehouseholdresponsibilitysystemaffectedincomedistribution,andwhataretheprincipaldeterminantsofthevariationinincomesacrossruralhouseholdsinChina?Toanswerthesequestions,theprojectcollecteddetaileddatafromabout800ruralhouseholdsin30villagesinHebeiandLiaoningProvincesinthesummerof1995.
Themainfindings:
Clearpropertyrightsleadtomoreinvestmentinlandimprovements,buttheincreaseininvestmentmaynotbeverylarge.
IncreasesininequalityinruralNortheastChinaaredominatedbyincreasedinequalityinnonfarmselfemploymentincome.
MostinequalityinruralChinaiswithinvillages,ratherthaninmean
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incomesacrossvillages.
Inthepresenceofmarketimperfections,inequalityinhumancapitalcontributesmoretooverallinequality.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesPaulGlewwe([email protected] ).WithHananJacoby;GuoLi;LorenBrandtandDwayneBenjamin,UniversityofToronto;ScottRozelle,StanfordUniversity;andtheResearchCenterinRuralEconomy,China.TheU.S.NationalAcademyofSciencesandtheInternationalDevelopmentResearchCentre,Canada,providedfundingfortheresearch.
Completiondate:June1999.
Ref.no.:677-16C.
Reports
Benjamin,Dwayne,LorenBrandt,PaulGlewwe,andGuoLi.1999.Markets,HumanCapital,andInequality:EvidencefromRuralChina.PaperpresentedatInternationalEconomicAssociationconference,BuenosAires,August.
Jacoby,Hanan,GuoLi,andScottRozelle.1999.HazardsofExpropriation:TenureInsecurityandInvestmentinRuralChina.WorldBank,DevelopmentResearchGroup,Washington,DC.
Rozelle,Scott,GuoLi,andLorenBrandt.1998.Tenure,LandRights,andFarmerInvestmentIncentivesinChina,andProductivityinChina'sAgriculturalSector.AgriculturalEconomics19:6371.
HouseholdWelfareChangeduringtheTransitioninPoland
Thisresearchusedfour-yearpaneldatafromPoland'sHouseholdBudgetSurveytoexplorethedistinctionbetweentransitoryandlong-termpoverty,acrucialdistinctionindesigningandevaluatingapovertyreductionstrategy.Itanalyzedhowtheincidenceof
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householdendowmentsandtheallocationofsocialbenefitsaffectthetransitionoffamiliesintoandoutofpoverty.Theanalyticalframeworkused(onebasedonsamplesurvivaltechniques)madeitpossibletoevaluatehowvariouspolicieswillaffecthouseholdswithspecificcharacteristicsthatmakethemlikelytobecomepoorortomoveoutofpovertyunderdifferentscenarios.Suchscenariosincludewhetherthehouseholdisorisnotarecipientofagivenamountofaparticulartypeofsocialtransfer.Thestudyalsoexaminedhownonincomesourcesofwelfaresuchassavings,credit,andloansaffectthelikelihoodthatfamilieswillbecomeorstopbeingpoor.
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Thestudyconcludesthatthereisatendencytowardlong-termpovertyinPoland.Butfamilyallowancesandunemploymentbenefitsthetwomajorsocialprogramsanalyzedhavedifferenteffectsondifferentgroupsabilitytomoveoutofpovertyoravoidbecomingpoor.Soitisvitalthatpolicymakerstakesuchdifferencesintoaccountwhendecidingonstrategiestoaddresslong-termpoverty.Tomakethispossible,countriesmayneedtodevelopahouseholdsurveywithanexplicitpanelcomponentortoaddsuchacomponenttoanexistingsurvey.
Bydistinguishingchronicfromtransientpoverty,thestudymayhelppolicydesignersinPolandandothercountriesintransition,whicharefundamentallyrestructuringtheirsocialexpendituresystems,toimprovetheallocationofresourcesforpovertyalleviation.Theresearchalsoprovidesasimpleanalyticalmethod(basedonsamplesurvivaltechniques)forpredictingtheeffectonpovertyofachangeinasocialprogram.
ResultshavebeendiscussedattwoseminarsattendedbyWorldBankoperationalstaff.Aseminarisalsoplannedinthefallof1999forpolicyanalystsandgovernmentofficials.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesEmmanuelJimenez([email protected] )andWlodzimierzOkrasa.
Completiondate:March1999.
Ref.no.:681-21C.
Report
Okrasa,Wlodzimierz.1999.PovertyandSafetyNetDynamicsinPoland,199396:AnEvaluationUsingPanelData.WorldBank,DevelopmentResearchGroup,Washington,DC.
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ChangingIdeasaboutPovertyinRussia
InthetransitiontoamarketsystemtheRussianeconomyhasexperiencedaseriesofshocksasharpfallinoutput,rapidandcontinuinginflation,andtheemergenceofopenunemployment.Theseshockshaveledtoasubstantialfallinrealwages.Therehasalsobeenamarkedincreaseinincomeinequalityastheenterprisinghavetakenadvantageofnewopportunitiesandtheluckyhavereapedwindfallgains.WhilesomeRussianshaveprospered,mosthaveseenafallintheirstandardofliving.
ThisresearchlookedathowideasaboutpovertyinRussiaparticularlyonthesubsistenceminimumandthesubjectivepovertylinehaveevolvedduringthisperiod.Thesharpdeclineinincomemakesitpossibletosee,withinaverycompressedperiod,howideasaboutpovertyrespondtoabruptchangesinoverallincomeandinincomedistribution.
Thestudyshowedthatpeople'sperceptionofwhatconstitutesasubsistenceminimumisextremelyincomesensitive.Thesubjectivepovertylinefellfasterthanthepopulation'srealincome(incomeelasticityofabout1.5).Thus,paradoxically,thepercentageofpeoplewhofeelpoordeclinedatthesametimeasrealincomefell.ThestudyalsoestimatedtheequivalencescalesparameterforRussia(0.62)andfoundaregionaldiscrepancybetweentheofficialminimumbasketandthesubjectivepovertyline.
TheresearchwasbasedontheresultsofasurveybytheAll-RussianCenterforMonitoringofPublicOpinion(VCIOM).InthissurveyarepresentativesampleofRussianhouseholdswasaskedaLeyden-typequestion(onthesubjectivesubsistenceminimum)monthlybetweenMarch1993andJanuary1994andabouteveryothermonthfromthenuntillate1996.Theresearchusedtheinformationfromthisrepeatedcross-sectionalsurvey(24surveysintotal),coveringthreeyears,toestablishaseriesofsubjectivepovertylinesforRussia.
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Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesBrankoMilanovic([email protected] )andBrankoJovanovic.WithSvetlanaSidorenko,VCIOM,Moscow.
Completiondate:March1999.
Ref.no.:681-42C.
Report
Milanovic,Branko,andBrankoJovanovic.Forthcoming.ChangeinthePerceptionofthePovertyLineduringtheTimesofDepression:Russia199396WorldBankEconomicReview.
TheDeterminantsofAgri-FoodMarketIntegrationintheTransitionEconomies,Phase2
Intransitioneconomiesagri-foodmarketsaretypicallysegmentedamongdifferentverticalchains,marketlocations,andtypesofownersandbetweendomesticand
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internationalmarkets.Thisprojectinvestigatedtowhatextentthesegmentationofagri-foodmarketshasbeenovercomethroughreformandwhatkindofgovernmentpolicieswouldfacilitatefurthermarketintegration.
Theproject'sanalyticalapproachwasbasedonthesolidunderstandingofmarketinstitutionsandfluctuationsofsupplyanddemand.Itappliedmodelsofmarketmargindetermination,pricetransmission,andcointegrationtoselectedcommoditymarkets,usuallypork,wheatandwheatflour,andmilkanddairyproducts.Theanalysisreliedonstatisticaldatapublishedbygovernmentandnongovernmentalinstitutionsandtheresultsoffieldinterviewsandcasestudies.
ThefirstphaseofthestudyfocusedonPoland,whereitfoundthatagri-foodmarketsarereasonablywellintegrated.Effectivemarketliberalizationledtotheemergenceofastrongprivatesectorandintensecompetitionandthusrelativelyhighefficiencyintheagri-foodmarkets.Marketriskandamarketstructuredominatedbyprocessorsarethetwoprimaryobstaclestofurthermarketintegration.
ThissecondphaseofthestudyextendedtheanalysistoHungary,Romania,andUkraine.ThesethreecountrieswereselectedbecausetheycomplementPolandtogether,thefourcountriesrepresentthefullspectrumofslowandadvancedreforms,andsmallandopen,andlargeandclosedeconomies.Preliminaryfindingsfromthisphasearedescribedincountry-specificreportspreparedbylocalresearchcollaboratorsinHungary,Romania,andUkraine.
Afinalreportnowbeingcompletedwillincludebothcountry-specificfindingsandacross-countrycomparativesynthesisthatdrawsoutthepolicyimplicationsofthestudy.
ThefindingsofthefirstphasecontributedtotheWorldBank's
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agriculturalsectoradjustmentloanoperationinPoland,andtheresultsofthesecondphaseareexpectedtocontributetosimilarprogramsinHungary,Romania,andUkraine.ThesummaryofexperienceinPolandshouldbehelpfultoothertransitioneconomiesindevelopingtheiragri-foodmarketsystems.
ThefindingsfromthefirstphaseweredisseminatedattwoBankseminarsinAugustandOctober1995,throughpresentationstogovernmentofficialsinWarsawinJanuary1996,andthroughpresentationsatthe1995AmericanAssociationofAgriculturalEconomistsConferenceandthe1996EuropeanAssociationofAgriculturalEconomistsConference.ThefirstphaseproducedanExceldatabasecontainingmonthlyagri-foodpricedataforPolandfor199096.
Responsibility:RuralDevelopmentDepartmentAlbertoValdes([email protected] ).WithBruceGardnerandJohanMistiaen,UniversityofMaryland;ConstantineCiupageaandVirginiaCampeanu,InstituteofWorldEconomy,Romania;JozsefTothandMariaNagyOrban,BudapestUniversityofEconomicSciencesandInformationInstituteofAgriculturalEconomics,Hungary;MartonSzabo,MinistryofAgriculture,Hungary;YuriNechayev,EconomicResearchCenter,Ukraine;andWaldemarGuba,JerzyDabrowski,MagdalenaOpalka,andWandaChmielewska,MinistryofAgricultureandFoodIndustry,Poland.
Completiondate:August1999.
Ref.no.:68-45.
Reports
Guba,Waldemar.1998.SummaryoftheWorldBankProjectonMarketEfficiencyinthePolishAgri-foodSector.
Guba,Waldemar,AnningWei,JerzyDabrowski,andWanda
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Chmielewska.1995.EmergingTrendsinPolishAgri-FoodMarkets:AReportofFieldInvestigation.
Modos,Gyula,andJozsefToth.1998.TheDeterminationofAgri-FoodMarketIntegrationinHungary:ASynthesis.
Nechayev,Yuri.1997.ReportontheProject:Agri-FoodMarketDevelopmentandGovernmentPolicyinUkraine(Phase1CaseStudiesofAgri-FoodMarketingNodes).
1998.ReportontheProject:Agri-FoodMarketDevelopmentandGovernmentPolicyinUkraine(Phase2CaseStudiesofMarketingNodes:Trendsin199798).
Orban,MariaN.,andJozsefToth.1998.AgriculturalMarketDevelopmentandGovernmentPolicyinHungary:TheCaseofthePig/PorkSector.
Szabo,Marton,andJozsefToth.1998.AgriculturalMarketDevelopmentandGovernmentPolicyinHungary:TheCaseoftheMilk/DairySector.
Valdes,Aiberto,AnningWei,ConstantineCiupagea,andVirginiaCampeanu.1998.ThePeasantMarketsinRomania:
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ImplicationsfortheEmergenceofanIntegrated,EfficientandModernMarketingSystem.
Wei,Anning,andRichardBurcroffII.1996.PolandASAL:InterCountryAgriculturalPolicyPerformanceReview.WorldBank,EuropeandCentralAsiaRegion,CountryDepartmentIII,Washington,DC.
Wei,Anning,WaldemarGuba,andRichardBurcroffII.1998.WhyHasPolandAvoidedthePriceLiberalizationTrap?WorldBankEconomicReview12(1):155-74.
Wei,Anning,WaldemarGuba,andZ.Krzyzanowska.1997.MarketDevelopmentandGovernmentPolicyinthePolishDairySector.WorldBank,AgricultureandNaturalResourcesDepartment,Washington,DC.
Wei,Anning,WaldemarGuba,RichardBurcroffII,JerzyDabrowski,andWandaChmielewska.1996.MarketEfficiencyandGovernmentPolicyinthePolishWheatMarket.PaperpresentedattheEuropeanAssociationofAgriculturalEconomistsConference,Edinburgh,Scotland.(AlsopublishedinPolish.ForthcomingasaWorldBankDiscussionPaper.)
Wei,Anning,WaldemarGuba,JerzyDabrowski,WandaChmielewska,MagdalenaOpalka,andRichardBurcroffII.Forthcoming.TheEmergenceofIntegratedAgriculturalMarkets:PriceComovementsinceLiberalisationinPoland'sHogandPorkSector.WorldBankDiscussionPaper.Washington,DC.(AlsopublishedinPolish.)
Zhurova,SvitlanaV.,AnningWei,andYuriNechayev.1997.AgriculturalMarketinginUkraine:ACaseStudyofaDairyEnterprise.WorldBank,AgricultureandNaturalResourcesDepartment,Washington,DC.
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EnterpriseRestructuringinRomania
ThisprojectdocumentedthedegreeofenterpriserestructuringinRomaniaandtherelationshipsbetweenenterpriserestructuringandaccesstocredit,andbetweenrestructuringandenterprisesurveillance(orisolation)programs.Theprojectconsistedofthreeparts.
First,theprojectundertookacomprehensiveanalysisoftheisolationprogramforfinanciallydistressedfirmsinRomania.Theresultsindicatethattheisolationprogramdeliverednotangibleimprovementsinoperationalperformance,nordiditenhancetheprocessofprivatizingorliquidatinglargeloss-makingenterprises.Firmsincludedintheprogramfacedsofterbudgetconstraintsthancomparatorsoutsidetheprogram,fewmanagementchangestookplaceinpoorlyperformingfirms,andmanagersofenterprisesoutsidetheprogramreceivedconfusingsignalsabouttheurgencyoftherestructuringeffort.Thesefindingscallintoquestionwhethersuccessfulenterpriserestructuringprogramscanbecreatedundergovernmentauspices.
Second,theresearchinvestigatedtheselectionofenterprisesintheisolationprogram,buildingatheoreticalmodelthatexplicitlyaccountsforthelinksbetweenpoliticiansandenterprisemanagers,andtheenterpriseprogramsthatresult,whichmayservetoshieldpoliticallyinfluentialenterprisesfromliquidationandclosure.Enterprisedatawerethenusedtotestthemodel.
Third,theprojectlookedatthelinkbetweenthelackofhardbudgetsandthelackofenterpriserestructuringinRomania.Asimplemodelwasusedtodistinguishdifferenttypesofcreditorsandtheirbehaviorduringthetransitionperiod.Aflow-of-fundsanalysiswasusedtoshowthedynamicsofcreditfromalternativesources(banks,customers,suppliers,wagearrears,andtaxarrears).Theresearchwasbasedonpanelregressionsovertheentirepopulationof4,430firmsin
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Romaniafor199296.
Responsibility:FinancialSectorPracticeDepartment,FinancialEconomicsUnitSimeonDjankov([email protected] )andStijnClaessens.WithFabrizioCoricelli,UniversityofSiena,Italy;EnricoPerotti,UniversityofAmsterdam;andOctavianCarare,RutgersUniversity.
Completiondate:October1998.
Ref.no.:681-96C.
Reports
Carare,Octavian,StijnClaessens,andEnricoPerotti.1999.CanGovernmentsMandateHardBudgetConstraints?BankLendingandFinancialIsolationinRomania.WorldBank,FinancialSectorPracticeDepartment,Washington,DC.
Coricelli,Fabrizio,andSimeonDjankov.1999.SoftBudgetConstraintsandEnterpriseRestructuringinRomania.WorldBank,FinancialSectorPracticeDepartment,Washington,DC.
Djankov,Simeon.1999.TheEnterpriseIsolationPrograminRomania.JournalofComparativeEconomics,(June).
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ExternalFinancing,MacroeconomicStability,andGovernmentPolicyinEasternEuropeanCountries
Thisresearchprojectfocusedontherelationshipsbetweencapitalflowreversals,bankingsystemsustainability,andprudentialregulationinCentralandEasternEurope.Itexploredthechannelsfortransmissionofvolatilitybetweenexternalfinancingflowsandbanksperformance,bothinprincipleandinthecontextoftransition.Itassessedprudentialbankregulationinasampleofcountriesintheregion(theCzechRepublic,Hungary,Poland,theSlovakRepublic,andSlovenia),usingasabenchmarktheEuropeanUnion'sbankingdirectives.Thisassessmentfocusedontheroleofregulationinstrengtheningtheresilienceofthebankingsectortocapitalflowreversals.Againstthisbackground,theprojectaddressedcorepolicyquestions:ShouldCentralandEasternEuropeancountriestightentheircurrentregulatorysystemstoensurethatbankscanwithstandincreasedturbulenceintheinternationalfinancialmarkets?Ifso,howshouldthattighteningbeimplemented?
Thesequestionshavebeenatthetopofthefinancialregulationagendaintheregion,especiallyintheaftermathoftheEastAsiancrisisandthemorerecentfinancialinstabilityinRussia.Whiletheoreticalandempiricalliteratureinthisareaisavailable,nonespecificallyaddressesCentralandEasternEurope.
TheresearchfoundthatcapitalinflowstoCentralandEasternEuropeareparticularlyvulnerabletoreversals.Bankingsystemsintheregionareinordinatelyexposedtosuchvolatilitybecauseoftheirroleinchannelinginflowsandbecauseofthetransition-relatedweaknessesintheirinstitutionalenvironment.AlthoughprudentialbankingregulationsinCentralandEasternEuropeancountriesarelargelyalignedwiththeEuropeanUnion'sbankingdirectives,thereisastrongcaseforcountriesintheregiontoovershootthosedirectives,at
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leastuntilthetransitionprocessiscompleted.
Responsibility:EuropeandCentralAsiaRegion,PovertyReductionandEconomicManagementSectorUnitMarceloGiugale([email protected] ),StephenEverhart,andRossanaPolastri,andOfficeoftheRegionalVicePresidentMarceloSelowskyandRicardoMartin.WithSamuelTalley.
Completiondate:December1998.
Ref.no.:682-35C.
Report
Talley,Samuel,MarceloM.Giugale,andRossanaPolastri.1998.CapitalInflowReversals,BankingStability,andPrudentialRegulationinCentralandEasternEurope.PolicyResearchWorkingPaper2023.WorldBank,EuropeandCentralAsiaRegion,OfficeoftheChiefEconomist,Washington,DC.
ReformalongtheVolga
ThisresearchprojectlookedatthetransitionexperienceofmajorRussiancitiesbeyondMoscowandSt.Petersburg.Theintentwastoidentifypolicyleversandlocalgovernmentprogramseffectiveinmakingasuccessfulshifttoamarketeconomy.Theresearchhadthreemainobjectives:
TodocumenttheexperiencewithtransitionincitiesalongtheVolgaRiverandtodevelopsomehypothesesaboutthedeterminantsandtheeffectsofreformthatwillhelpinbetterunderstandingthecitiesproblemsandindevelopingfurtherresearchtoaddresstheseproblems.
ToinvolvegraduatestudentsattheNewEconomicSchoolinMoscowandtherebyhelptrainanewgenerationofRussianeconomistsandfaninterestinpracticalproblems.
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Tocontributetothediscussionamongofficialsandconcernedindividualsfromthecitiesaboutcommonproblemsandpossiblesolutionstotheseproblems.
Whileconsiderablestatisticalandotherinformationisavailableonoblasts,autonomousrepublics,andothersuchjurisdictions,littleinformationisreadilyavailableatthecitylevel.Theuniquenessofthisprojectthuslayprimarilyinitsfocusontheroleandcomparativeexperienceofcitiesinshapingthetransitionfromplantomarket.Thestudyfocusedon10regionalcapitalsalongtheVolgaRiver.
Thesecitiesprovideacross-sectionoftheRussianexperiencewithreformatdifferentincomelevels,butinmanywaystheyaresimilar.Eachcityisanoblastcenterorthecapitalofanautonomousrepublicandhasapopulationof0.51.5million.Thecitiestypicallyaccountforaboutathirdoftheirregion'spopulation.His-
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toricalsimilaritiesintheinformationandtechnologytowhichthecitieshadaccess,andintheirculturalinfluences,suggestthatlessdiversitywillbeobservedamongthesecitiesthanamongcitiesmorewidelydispersedacrossRussiaormorevariedinsizeandfunction.
Duringthefirstphaseoftheprojectcasestudieswerepreparedforeightofthecities,andadatabasewasdevelopedwithcomparableindicatorsacrossthecitiesandtheirsurroundingregions.Inthesecondphasethecasestudiesanddatabasewereusedtodefineindicatorsofinitialconditions,politicaldevelopments,andreform.Inaddition,theprojectsupportedsixmaster'sthesesontopicsrelatingtothecityaseconomyandthecityasgovernment.Italsoconductedasmallsurveyofprivateenterprises.
Theresearchfoundthatreformisassociatedwithinitialconditionsandthatbothreformandfavorableinitialconditionsareassociatedwithrelativelysuccessfuloutcomes.Theexceptionstypicallyoccurwhereaccesstoextraresourcesenhancesoutcomesorweakgovernmentunderminessuccess.
ThestudyusedregressionanalysistoexplainfiscaldecentralizationtocitiesintheVolga.Itfoundthatbothrevenueandexpendituredecentralizationarestronglyassociatedwiththedropinindustrialproductionandwereusedtocompensatecitiesfortherapiderosionofthetaxbaseintheenterprisesectorearlyinthetransition.
AnOctober1998surveyofthebusinessenvironmentinsixVolgacitiesshowedthatthemainobstaclesfacedbyprivateenterprisescouldbeinfluencedifnotcontrolledbycitygovernments.Theseobstaclesincludeheavytaxation,continuedpricecontrols,poormunicipalservicesespeciallypublicandpropertysafety,settlementoflegaldisputes,andstreetmaintenanceandlightingandcorruptionandinefficiency.
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Responsibility:DevelopmentResearchGroup,PublicEconomicsMarthadeMelo.WithGurOfer,HebrewUniversity;DanielBerkowitz,UniversityofPittsburgh;KatiaZhuravskaya,HarvardUniversity;PlamenYossifov,UniversityofDelaware;ElenaLukoyanova,NadyaYakovleva,MaximIvanov,YuriAndrienko,AlexanderPiskunov,NinaBaranchuk,andNinaParphinnko,NewEconomicSchool,Moscow;VICOM,Moscow;andtheNewEconomicSchool.
Completiondate:May1999.
Ref.no.:682-42C.
Reports
Andrienko,Yuri.1998.IndustrialStructureandEnterprisePerformanceduringTransitioninVolgaCities.Master'sthesis.NewEconomicSchool,Moscow.
Baranchuk,Nina.1998.LiberalizationProcessesinVolgaCities.Master'sthesis.NewEconomicSchool,Moscow.
deMelo,Martha,andGurOfer.1999.TheRussianCityinTransition:TheFirstSixYearsinTenVolgaCapitals.WorldBank,DevelopmentResearchGroup,Washington,DC.
deMelo,Martha,GurOfer,andPlamenYossifov.1999.TheRussianCityinTransition:AViewfromtheVolgaonGovernmentandEconomy.WorldBank,DevelopmentResearchGroup,Washington,DC.
Ivanov,Maxim.1998.IndustrialStructureinTransition:ExperienceofChangeinVolgaCities.Master'sthesis.NewEconomicSchool,Moscow.
Lukoyanova,Elena.1998.IntergovernmentalTransfersinRussia:TheCaseofVolgaCities.Master'sthesis.NewEconomicSchool,Moscow.
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Parphinnko,Nina.1998.EducationandGrowthintheRussiaRegions.Master'sthesis.NewEconomicSchool,Moscow.
Piskunov,Alexander.1998.EconomicSituationandGovernorElectionCampaigns:CaseofRussia'sRegions.Master'sthesis.NewEconomicSchool,Moscow.
ThePoliticalEconomyofSocialPolicyinTransitionEconomies
Asimplepoliticaleconomymodelmightconceptualizeeconomicreformandsocialpolicyintransitioneconomiesastheoutcomeofdecisionsbyself-interestedpoliticiansweighingtheexpectedpayoffsoffavoringrentrecipients(stateenterpriseworkersandmanagers)againstthoseoffavoringtransferrecipients(mostlypensioners).SuchamodelmightpredictsimilarsocialpolicyoutcomesintheCzechRepublic,Poland,andRussia,whichstartedtransitionwithsimilarconditionsandwithsimilarsharesofpensionersinthepopulation.Yetthathasnotbeenthecase.
InRussiatherehasbeenmassiveredistributionofincomeandwealth,withprivatizationfavoringinsiders
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(managersandworkers),taxrevenuefalling,andpensionerslosingmuchgroundrelativetoworkers.InPolandprivatizationhasproceededmoreslowly,therehasbeenmuchlessredistributionandrentseeking,andpensionershavefaredbetterthanworkers.TheCzechRepublichasseensomerentseeking,butprivatizationhasbenefitedthepopulationmuchmorebroadlyandpensioners'incomeshavekeptpacewithworkersincomes.
Thisstudyseekstoexplainthesedisparateoutcomesthroughcasestudyanalysisofpolicyformulationinthethreecountries,drawingonofficialdocuments,secondarysources,andinterviews.ThecountrystudyofRussialooksatthepoliticaleconomydecisionsunderlyingthefastandabuse-fraughtprivatizationmethodthatwasselectedbytheGaidargovernmentandcontinuedbysucceedinggovernments(includingtheloan-for-sharesdeal).Theaimistoshowthatpolicychoicesareendogenousthattheprivatizationstrategywastheproductoftheconstellationofpoliticalforcesatthetimethekeydecisionsweremade.
Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesBrankoMilanovic([email protected] ).WithEthanKapstein,UniversityofMinnesota.
Completiondate:June2000.
Ref.no.:682-52.
Report
Kapstein,Ethan.PoliticalEconomyofPrivatizationandFiscalPolicyinRussia.
EvaluationofActiveLaborMarketProgramsinChina
AsreformsofstateenterprisesinChinahaveaccelerated,addressing
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laborredundancyintheseenterpriseshasgainedurgency.Butdownsizinghasbeenhinderedbyenterprise-basedprovisionofsocialbenefitstoworkers.Apracticalresponsetothisproblemhasbeentheemergenceofanewcategoryofworkers,xiagangworkers,whoarelaidoffbutretaintheirlinkstotheirenterprisesaswellassubsistencewagesandaccesstohousingandmedicalbenefits.
Thegovernment'smainresponsetotheunemploymentthreathasbeentheReemploymentProject,launchedasapilotin30citiesin1994andexpandedto200citiesin199596.Theprojectencompassesarangeofactivelabormarketpolicies,includingretraining,jobsearchassistanceandcounseling,wagesubsidiesandtaxbreaksforenterprisesthatemploylaid-offworkers,andassistanceforself-employmentdesignedtoredeployunemployedworkersinproductiveactivities.
Thisresearchwillevaluatethecost-effectivenessofretrainingandemploymentservicesintwocitiesinChina(ShenyangandWuhan).Thestudywilluseaquasi-experimentalevaluationdesignthatinvolvescollectingdatafromindividualswhoparticipatedinretraininganddatafromacomparisongroupdrawnrandomlyfromalistofretrenchedworkers.Thestudywillthencomparesuchoutcomesasprobabilityofreemploymentandearningsafterreemploymentforthegroupstoderivethenetimpactoftheprograms.Finally,itwillcollectdataonthecostsofadministeringtheprogramsandcomparethecost-effectivenessofdifferentinterventions.
TherandomsampleofretrainingparticipantswillbedrawnfromprogramlistskeptattheLaborBureau.Forthecomparisongrouparandomsamplewillbedrawnfromthelistsofredundantworkersmaintainedatthemunicipallaborbureaus.DatawillbecollectedfromthesampleofparticipantsandthecomparisongroupbytheInstituteofLaborStudiesbetweenOctoberandDecember1999;sampleselectionisnearlycomplete,andthequestionnaireisbeingfinalized.
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Dataonprogramcostswillalsobecollectedbytheinstitute.
AconferenceonlabormarketpolicieswasheldinBeijinginMay1999todiscusstheurbanlabormarketadjustmentinChina,lessonsofinternationalexperiencewithactivelabormarketpolicies,andevaluationmethodologies.AconferenceisplannedforMarch2000todisseminatetheresearchresultstopolicymakersandpractitionersinChina.Inaddition,theresultswillfeedintopolicynotesonurbanlabormarketadjustmentinChina.
TheWorldBankalreadyfundsprojectswithactivelabormarketcomponents,andsuchprogramsareincreasinglybeingconsideredinseveralEastAsianeconomiesaffectedbytheeconomiccrisis.Thisstudywilladdto
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thebodyofresearchontheevaluationofactivelabormarketpolicies,anditsresultswillbeusefulindesigningandevaluatingsuchinterventionsinothercountries.
Responsibility:EastAsiaandPacificRegion,PovertyReductionandEconomicManagementSectorUnitHomiKharas([email protected] ),TamarManuelyanAtinc,andBenuBidani.WithChristopherO'Leary,W.E.UpjohnInstituteforEmploymentResearch;andInstituteofLaborStudies,Beijing.
Completiondate:March2000.
Ref.no.:682-78.
DreamsoftheMarket:AgriculturalPolicyAdoptionandImplementationinPresent-DayRussia
CollectivefarmsremainthedominantagriculturalproducersinRussia.Employeesstayincollectivefarmsdespitealegallysanctionedandpoliticallyendorsedrighttoleavethemwithashareofthelandandassetstostartindividualproduction.Thisresearchexaminesthepoliticalandeconomicreasonsfortheenduranceoftheunprofitablecollectivefarms.Specifically,itstudiestheincentivesthatdifferentstakeholders(localgovernments,collectivefarmmanagers,andcollectivefarmemployeesandshareholders)haveforpreservingcollectivefarms.Understandingthemechanismsthatperpetuateinefficientpost-Sovietinstitutionsand,moreimportant,theincentivesofstakeholderstopreservetheseinstitutionsiscriticalforvalideconomicadviceandsoundpoliticalandeconomicanalysesofthesituation.
Throughaninstitutionalanalysisofpoliticalandeconomictransactions,theresearchreexaminestheboundariesofthefarminpresent-dayRussia.Itanalyzesthepost-Sovietorganizational
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structuresthathavebeenpromotedbylocalgovernmentstoensurecontinuoussupporttocollectiveproducers.Andituseshousehold-leveldatacollectedintwodistrictsofRussiatoquantifythescaleofinformaltransactionsthatcreateanadditionalbondbetweencollectivefarmsandtheiremployees.
Theresearchhasfoundevidenceconfirmingtheimportanceofinformalandsemiformallinksbetweenlocalgovernments,collectiveproducers,andtheiremployees.Thesehidden,nonmarkettransactionscreateadditionalincentivesforpreservingcollectiveformsofagriculturalproductiondespitetheirlowefficiency.
Nexttheresearchwillcomparechangesinthestructureofagriculturalproductionwiththeagriculturalreformgoalssetbythegovernment.ThedivergentStrategiesadoptedbythenationalandsubnationalgovernmentsforimplementingreformsshouldallowtheanalysistodrawconclusionsaboutwhathascausedsuccessesandfailuresofthetop-downreforms.Theroleofexternaladvicewillalsobeexamined.
Responsibility:DevelopmentResearchGroup,RuralDevelopmentMariaAmelina([email protected] ).WithVladimirGelman,EuropeanUniversity;TamaraKovaleva,PushkinAcademyofAgriculture;andViktorShabanov,RussianAcademyofScience.
Completiondate:January2000.
Ref.no.:683-09.
FinancialSystemsinTransition:AFlow-of-FundsAnalysisofFinancialEvolutioninEuropeandCentralAsia
Thisresearchinvestigatedwhethertheflow-of-fundsapproachshouldbedeployedmoreextensivelytounderstandfinancialevolutioninthetransitioneconomiesinparticular,whetheritcanbeusefulinidentifyingfinancialconstraintsordevelopmentsthatcouldleadto
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financialcrises.Inaddition,toshedlightonfinancialtransition,thestudyappliedtheflow-of-fundstechniquetoeightcountriesinEuropeandCentralAsiaEstonia,Hungary,Kazakhstan,Latvia,Lithuania,Poland,Romania,andRussia.
Theflow-of-fundsanalysisofthecountriesfinancialtransitionshowedthatthewaygovernmentshandledthemismatchbetweenfiscalrevenuesandexpenditures,coupledwithothersectorsreactionstothatmismatch,provedcrucialindeterminingthesuccessofmacroeconomicstabilization.Fromaflow-of-fundspointofview,transitionhasbeenanintersectoralfinancinggame,wherepricessimplyreflectedthebalancebetweenthesectoraldemandsforandsuppliesoffunding.
Theeightcountrystudiesrevealedsixbroadflow-of-fundspatterns,allofwhichfolloweddeepinitialfiscalimbalances:continuingdisequilibriainthepublicandpri-
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vatesectors(KazakhstanandRomania),continuingdisequilibriuminthepublicsectorwithequilibriumintheprivatesector(HungaryandRussia),publicsectorequilibriumwithprivatesectordisequilibrium(Estonia),publicandprivatesectorequilibria(LatviaandPoland),anddisequilibriuminthequasi-publicsector(Lithuania).Eachpatternledtodistinctmacroeconomicandfinancialconsequencesthrough1997(highinflationorhyperinflation,unsustainableindebtedness,externaldependency,bankingcrises,andsoon)andpresentsspecificpolicychallengesoverthecomingyears.
TheresearchshowsthatitisimportantfortheWorldBanktoexaminemacroeconomicdevelopmentsfromasectoralperspectiveandtoanalyzethefinancialsectorusingtheflow-of-fundstechnique.Theworkhasalreadyfedintocountryvulnerabilityreviews,providingtheanalyticlinkbetweenthemacroeconomyandthefinancialsector.
FindingsweredisseminatedinaworkshopinWashington,DC,inSeptember1998.Inaddition,thepapersproducedbytheprojectwillbepublishedinabook.
Responsibility:LatinAmericaandtheCaribbeanRegion,MexicoCountryManagementUnitMarceloGiugale([email protected] )andStephenEverhart;andEuropeandCentralAsiaRegion,PrivateandFinancialSectorsDevelopmentUnitAlexFleming.WithJohnDawson,GrinnellCollege;JohnHolsen,JohnsHopkinsUniversity;WitoldOrlowski,ResearchCenterforStatisticalandEconomicStudies,Warsaw,StephenPeachey,Irvin&Co.;andAnnaKerekes,NationalBankofHungary.
Completiondate:June1999.
Ref.no.:683-13C.
Reports
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Dawson,John,andStephenEverhart.KazakhstanForeignCapitalorDomesticFinance.
.LithuaniaTamingthePublicSector.
Giugale,Marcelo,andAlexFleming.AFlow-of-FundsOverviewofTransition.
Holsen,John.RussiaTrackingtheFinancialMalaise.
Kerekes,Anna.HungaryTowardSustainableGrowth.
Orlowski,Witold.PolandOntheWaytoNormality.
Peachey,Stephen.EstoniaTooReliantonContinuedForeignFinance.
.LatviaFinelyBalancedforStrongGrowth.
.RomaniaTheImportanceofSoundBanking.
AgricultureinTransition:LandReformandFarmRestructuringinFormerlySocialistCountries
IntheformerlysocialistcountriesofEuropeandCentralAsialandreformandfarmrestructuringareamongthemainareasoftransitiontothemarketintheagriculturalsector.TheWorldBankhasbeenmonitoringprogressintheseareassince1992forall23countriesoftheformerSovietUnionandCentralandEasternEuropethroughcountrysectorreviewssupplementedbyextensivefarm-levelsurveys.Thismonitoringworkshowsthatdespitethecountriescommonheritageofsocialistcommandeconomywithpervasivecollectivizationofagriculture,theyarenotfollowingthesamepathinmarketreforms.
ThisresearchisassemblingandgeneralizingcountrymaterialsonthevariouspathsoflandreformandfarmrestructuringinEuropeandCentralAsiainordertosynthesizeacoherentpictureofagrariantransformationintheregion.Itappliesarangeofanalyticaltoolsto
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empiricallyassesstheperformanceofagricultureandtheimpactoflandreformandfarmrestructuringontheruralpopulation,includingtherelativeefficiencyofcollectivesandfamilyfarms.Finally,itaimstoanalyzethecausesoftheobservedtransformationpatterns,toestablishrelationshipsbetweentheprogressinagriculturalreforminacountryandthecountry'spolitical,economic,social,andculturalprofile,andtoformulaterelevantpolicyconclusionsbasedonanintegratedoverviewoftheprocessesandexperiencesthroughouttheregion.
Theresearchcombinesseveralmethodologicalapproaches.Thefirstinvolvesgeneralizingandsynthesizinginformationonagriculturaltransformationintheregion,emphasizinglandreformandfarmrestructuring.Theseconddevelopsamultivariatetypologyofagriculturalreformindifferentcountriesthroughclusteranalysis,supplementingandvalidatingexistingsubjectiverankings.Thethirdapproachappliesstatisticalandeconometrictoolstoidentifytheimpactofreformanalyzingdifferencesinperformance,income,andsatisfactionbetweendifferentgroupsofstakeholders,
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betweenregionswithdifferentlevelsofreform,andbetweencountrieswithdifferentpoliticalorientations.Dataenvelopmentanalysisisappliedtoestimatedifferencesinefficiencybetweencollectivesandfamilyfarms.Individualchoicemodels(logitandprobitregressions)areusedtoexaminethedecisionsofindividualstobecomeprivatefarmersortoremaininacollective.
Theresearchwillproduceabooksummarizingandgeneralizingtheexperiencesofthefirstdecadeofagriculturaltransition.Findingswillalsobedisseminatedthroughaspecialworkshopforscholars,policymakers,andgovernmentofficialsintheregion.Preliminaryresultshavebeenpresentedtointernationalaudiences,includingscholarsfromtheregion,ataconferenceinParisinApril1999,andanotherinHalle,Germany,inMay1999.
Responsibility:EuropeandCentralAsiaRegion,EnvironmentallyandSociallySustainableDevelopmentSectorUnitCsabaCsaki([email protected] );AfricaRegionTechnicalFamilies,RuralDevelopment1KarenBrooks;andDevelopmentResearchGroup,RuralDevelopmentGershonFeder.WithZviLerman,HebrewUniversity.
Completiondate:October1999.
Ref.no.:683-22.
Reports
Lerman,Zvi.1999.FromCommonalitytoDivergence:HowECEandCISAgriculturesAreDriftingApart.PaperpresentedattheconferenceLandOwnership,LandMarkets,andTheirInfluenceontheEfficiencyofAgriculturalProductioninCentralandEasternEurope,InstitutfurAgrarentwicklunginMittelundOsteuropaandFoodandAgricultureOrganization,Halle,Germany,May.
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.1999.LandReformandFarmRestructuring:WhatHasBeenAccomplishedtoDate?AmericanEconomicReview89(2):27175.
.1999.RecordofLandReforminTransitionalEconomies.PaperpresentedatOECDForumonAgriculturalPoliciesinNonmemberCountries,Paris,April.
.1999.StatusofLandReformandFarmRestructuringintheCEECountriesARegionalOverview.PaperpresentedattheSecondEuropeanUnionAccessionWorkshopintheRuralSector,WorldBankandFoodandAgricultureOrganization,Warsaw,June.
TheEfficiencyandDistributionEffectsofChina'sSocialSecurityReform
OneofthebiggestimpedimentsinChina'stransitionisitslackofaneffectivesocialsecuritysystem.Tosuccessfullyrestructurestate-ownedenterprises,theirsocialfunctionsmustbeseparatedfromtheircommercialfunctions.Butthatrequiresfirstestablishingaviablesocialsecuritysystem,includinganoldagepensionsystem.AlthoughmanystudieshaveexaminedtheproblemsofChina'scurrentpensionsystemandproposedpolicysolutions,therehasbeentoolittlequantitativeanalysisofthepolicyoptions.
Therearemanyoptionsfordesigningandfinancingthefirstpillar(thepublicpillar)ofapensionsystem,eachwithrisksandtradeoffs.ThisstudyinvestigatestheeffectoffourfinancingschemesforthefirstpillarofapensionsysteminChinaonthecountry'smacroeconomicstructureandincomedistribution.Usinganewlydevelopedcomputablegeneralequilibrium(CGE)model,itestimatesquantitativelytheeffectofeachschemeonGDP,theGinicoefficient,aggregatedemand,consumption,investment,andindicatorsofwelfare.
Thefourschemesareasfollows:
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Increasingthegeneraltaxrateusingasocialsecurityorvalueaddedtax.
Requiringenterprisestopaya9percentpayrolltax,withnocontributionfromworkers.
Requiringworkerstocontribute9percentoftheirwages.
Undertakingcombinedwageandtaxreformunderwhichworkersgeta6percentwageincreaseandcontribute3percentandenterprisespayanother3percent,sothatthetaxburdenissharedbythestate,theenterprises,andtheworkers.
Preliminaryresultsshowthataggregateinvestmentanddemandwouldbehigher,andincomeinequalityless,ifthefirstpillarisfinancedthroughpayrolltaxesratherthangeneraltaxes.Outcomeswouldalsobebetterifthefinancialburdenissharedbythestate,theenterprises,andtheworkersratherthanbornesolelybytheenterprises.ButfinancingthefirstpillarthroughgeneraltaxeswouldincreasetheGinicoefficient,andtheruralpoorwouldbeworseoff.
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Ingeneral,theresultspointtowardcombiningwagereformwithtaxandpensionreform,anoptionthatwouldspreadthetaxburdenamongeconomicagentsandimproveeconomicefficiencyandwelfare.
InthenextstageofresearchtheCGEmodelwillbemodifiedfurthertomeettheneedsofanalysisofsocialsecurityissues.Moredatawillbecollectedonwagesandsalariesbyage,sex,ruralandurbansector,andenterpriseownershipstructure.Morerealisticscenarioswillbedesigned,andthesimulationsrerun.ThemodelanddatawillfitChina'scurrentconditionsbetterandthusshouldyieldresultsmorecloselyapplicabletoChina'spensionreform.
TheresultsofthestudyareexpectedtoprovidevaluableinputtotheWorldBank-supportedpensionreformprojectinChina.Andthestudy'smethodologycanbeadaptedforuseinothercountriesconductingpensionreform.
Responsibility:WorldBankInstitute,EconomicPolicyandPovertyReductionDivisionYanWang([email protected] ).WithDianqingXu,UniversityofWesternOntario;andZhiWang,U.S.DepartmentofAgriculture.
Completiondate:June2000
Ref.no.:683-52.
ChineseState-OwnedEnterprisesinthe1980s
LittlehasbeenknownaboutthefinancingofChinesestate-ownedenterprisesandabouttheperformancecontractssignedbetweenthemandthegovernment.ThisprojectusedpaneldataonChinesestate-ownedenterprisestoexaminebanks'behaviorinallocatingcredittothemandtheeffectivenessofperformancecontracts.
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Theresearchfoundthatbanksoutperformgovernmentgrantprogramsinallocatingcredit.Oncethegovernmentshiftedbailoutresponsibilitytobanks,however,therelativeeffectivenessofbankfinancingdeclinedsignificantly.Examinationofbankandgovernmentdecisionstograntcreditfoundthatbankfinancewasmorepositivelyrelatedtofirmperformanceandaseriesofefficiency-enhancingreforms.
Theresearchfoundthat,onaverage,usingperformancecontractsdidnotimprovetheproductivityofChinesestate-ownedenterprises.Buttheprovisionsofthecontractsdidmatter.Inparticular,wageincentivesweresignificantlyandpositivelycorrelatedwithproductivity.Performancecontractswerealsomoreeffectivewhenthetargetstheysetfocusedonprofits.Andthosewithlongertermswereassociatedwithahigherproductivitygrowthrate.
Thefindingssuggestthatperformancecontractscanimproveproductivitywhentheysimultaneouslysettherighttargets,offerincentives,andspecifyalongercontractterm.MostoftheperformancecontractssignedbytheChinesegovernmentdidnotdothesethings;however,andtheoveralleffectonproductivitywasnegligible.
Responsibility:DevelopmentResearchGroup,RegulationandCompetitionPolicyColinXu([email protected] )andMaryShirley,andFinanceRobertCull.
Completiondate:March1999.
Reports
Xu,Colin,andRobertCull.1998.Bureaucrats,StateBanks,andtheEfficiencyofCreditAllocation:TheExperienceofChineseState-OwnedEnterprises.WorldBank,DevelopmentResearchGroup,Washington,DC.
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.1998.WhoGetsCredit?TheBehaviorofBureaucratsandStateBanksinAllocatingCredittoChineseSOEs.WorldBank,DevelopmentResearchGroup,Washington,DC.
Xu,Colin,andMaryShirley.1998.TheEmpiricalEffectsofPerformanceContracts.WorldBank,DevelopmentResearchGroup,Washington,DC.
PrivatizationandCorporateGovernanceinTransitionEconomies
Establishingeffectivecorporategovernanceintransitioneconomieshasproveddifficult.Large-scalevoucherprivatizationwasthepreferredvehicleforachievingtherapidownershipchangesinmanyformerlystate-ownedenterprises.Butthewidelydispersedshareholdingsthatresultedhavenotcoincidedwithsubstantialimprovementsinperformance.Thisresearchdocumentstheevolutionofshareholdingsinceprivatizationanddescribescorrespondingchangesinfirmperformance.Usingpanelestimationtechniques,thestudyprovideseconometric
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evidenceontherelativeabilitiesofdifferentownershipstructurestoimprovefirmperformance.
Theresultsshouldprovideinsightintothelonger-termadvantagesanddrawbacksofdifferentprivatizationmethods,especiallylarge-scalevoucherprivatization.Byfocusingontheperformancecharacteristicsoftheweakestgovernancestructures,theresearchshouldalsohelpidentifywaystoimprovetheexistingpostprivatizationsituationinmanycountries.
AtpresenttheprojectcoversonlytheCzechRepublic.UsingasampleofprivatizedcompaniesprovidedbyDun&Bradstreet,theresearchisexamininghowchangesinfirmownershipaffectedcorporategovernanceasreflectedinfirmperformance.Preliminaryresultsindicatethatwidelydispersedshareholdingandownershipbyinvestmentfundshavebeenassociatedwithdeterioratingperformance.
Responsibility:DevelopmentResearchGroup,RegulationandCompetitionPolicyMaryShirley([email protected] ),RobertCull,andJanaMatesova.
Completiondate:December1999.
TradePolicyinTransitionEconomies
Integrationwiththeinternationaleconomyisanessentialpartofthetransitionfromcentralplanningtoamarketsystem.Pricedistortions,socommonundercentralplanning,canbemaintainedonlythroughformidabletradeandforeignexchangecontrolsthatdivorcethedomesticfromtheinternationalmarket.Dismantlingthesebarrierspromotesefficientdomesticresourceallocation.Internationalpricesposeacompetitivechallengetodomesticproducersandsignalneededstructuralchanges.Tradepolicyreformallowsthelinkbetween
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domesticandinternationalpricesandmarketsandisthusakeydeterminantofthepaceandscopeofthestructuralchangenecessitatedbythetransition.
ThisprojecthaslookedattradepolicyreformissuesinthecountriesoftheformerSovietUnion.Areportsummarizingtradeperformanceandtheexperiencewithtradepolicyreforminthesecountriesrecommendedstrategiesforincreasingtheirintegrationwiththeinternationaleconomystrategiesthatentailactionsbythecountriesaswellasbytheirmaintradingpartners,theOECDcountries.
AstudyofcustomsunionsshowedthatalthoughpreferentialtradeareasintheCommonwealthofIndependentStates(CIS)mayhaveservedausefulpurposeinthepastasatransitionaldevice,thetimeforcustomsunionsandfreetradeareasintheCISisover.Integratingwiththeworldeconomyshouldbethehighestprioritynow,andcustomsunionswillretardthatintegration.WorkontheissueofaccessiontotheWorldTradeOrganization(WTO)bythetransitioneconomiesemphasizedthatWTOaccessionprovidesauniqueopportunityfortheaccedingcountrytolockinatradepolicythatisbeneficialtothatcountry,aslongasitadoptsalessthanminimalistapproachinitsaccessionoffer.
Theresearchinthepastyearexaminedissuesrelatingtotariffpolicyandtariffuniformityfortransitioneconomies,focusingonRussia.ItalsoassessedtheprogressofthetransitioneconomiesinintegratingintotheworldtradingsystemandaccedingtotheWTO.ThisresearchconcludedthatformanyofthecountriesoftheformerSovietUnion,integratingeffectivelywillrequireconsiderablereformandadjustment.ButtheUnitedStatesandtheEuropeanUnionalsomayneedtomakesomechanges,especiallyintheirdesignationofsomeofthesecountriesasnonmarketeconomies.
Thestudy'sfindingsandrecommendationshavebeencommunicatedtothegovernmentsinpolicydialogueoninternationaltradereform,
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discussedwithrepresentativesoftransitioneconomies,andpresentedatconferences.
Responsibility:DevelopmentResearchGroup,TradeDavidTarr([email protected] );andEuropeandCentralAsiaRegion,BrusselsOfficeConstantineMichalopoulos.
Completiondate:June2000.
Reports
Michalopoulos,Constantine.1998.WTOAccessionforCountriesinTransition.PolicyResearchWorkingPaper1934.WorldBank,DevelopmentResearchGroup,Washington,DC.
.IntegrationoftheTransitionEconomiesintotheWorldTradingSystem.WorldBank,DevelopmentResearchGroup,Washington,DC.
Michalopoulos,Constantine,andDavidTarr.1996.TradePerformanceandPolicyintheNewIndependentStates.Directionsin
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DevelopmentSeries.Washington,DC:WorldBank.(AlsopublishedinRussian.).1997.TheEconomicsofCustomsUnionsintheCommonwealthofIndependentStates.Post-SovietGeographyandEconomics38(3):12543.(AlsopublishedasPolicyResearchWorkingPaper1786,WorldBank,InternationalEconomicsDepartment,Washington,DC,1997.)
Tarr,David.1999.DesignofTariffPolicyforRussia.InHarryBroadman,ed.,RussianTradePolicyReformforWTOAccession.WorldBankDiscussionPaper401.Washington,DC.
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PrivateSectorDevelopmentandPublicSectorManagement
ScienceParksandFirm-LevelProductivityinChina
Likemanycountries,Chinahasestablishednational-levelscienceparksinrecentyearsaspartofastrategytoboosteconomicandtechnologicaldevelopment.Its52scienceparks,callednew-andhigh-technologydevelopmentzones,aredesignedtoattractforeigndirectinvestmentandhigh-technologydomesticcompaniesandtocreateanenvironmentconducivetotechnologicaldevelopment.Thisstudyinvestigatedhoweffectivethesezoneshavebeeninacceleratingfirms'technologicaldevelopmentandproductivitygrowthandwhetherChina'sexperiencewiththezonesofferslessonsforotherdevelopingcountries.
Thestudyaddressedthesequestionsusingpaneldatafor1992-95,collectedbyChina'sNationalResearchCenterforScienceandTechnologyforDevelopment,onfirmsinthe52zones.First,itsoughttocomparetheproductivitygrowthofzoneandnonzonefirmstoseewhetherlocationinthescienceparkswasassociatedwithhigherproductivitygrowth.Althoughseveralcontrolgroupswereidentified,thisstrategyproveddifficulttoimplementbecauseoflackofcomparabilitythecontrolgroupsreferredtoanearlierperiodandincludedmanylargefirmsandstate-ownedenterprises,whilezonefirmstendedtobesmallandnewlyestablished.Notsurprisingly,controlgroupfirmstendedtohavehigherproductivitythanzonefirms.Butthestudyfoundevidencethatovertimezonefirmsnarrowedtheproductivitygap.
Next,thestudycomparedtheperformanceofdifferentgroupsoffirmsacrosszones,estimatingfrontierproductionfunctions.Theresults
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showthatownershipmatters.Efficiencyishigheramongfirmsthathavereceivedforeigndirectinvestment,followedbyjointventureswithoverseasChinese.Itislowestamongstate-ownedenterprises.Efficiencyalsoishigheramongfirmsthatexport,investinresearchanddevelopment,employamoreeducatedworkforce,orareaffiliatedwitharesearchinstituteoruniversity.Efficiencyvariessystematicallyacrosszones.Ittendstobehigheramongfirmsinzonescolocatedinspecialeconomiczones,inindustry-basedparks,andinzoneswithmedium-levelpolicysupport.Efficiencyisloweramongfirmsinsciencebasedparksand,paradoxically,inzoneswherelocalgovernmentsupportwashighest.Thestudyfoundevidenceofforeigndirectinvestmentspilloverstheefficiencyoflocalfirmstendedtorisewithproximitytofirmsthathadreceivedforeigndirectinvestment.
Thestudyidentifiedapuzzlingdipinproductivitygrowthin1992-94(wheninflationinChinasoared),followedbyarisein1994-95.Partofthisdipmayhaveresultedfromtheuseofinappropriatepricedeflators;anotherpartprobablystemsfromthechangingcompositionofcohortsoffirmentrantsandexits.Intheinitialperiod,entryofrelativelyinefficientfirmsfueledtherapidgrowthinthenumberofzonefirms;later,moreefficientfirmsenteredandinefficientonesexited.Theimprovementinoverallefficiencyin199495mayreflectbetterscreeningofnewentrantsbyzoneadministratorsasthepolicyprogrammatured.
Responsibility:PrivateSectorDevelopmentDepartment,BusinessEnvironmentUnitHongTan([email protected] )andXiaominChen.WithLanXue,GeorgeWashingtonUniversity;andChenZhao-Ying,NationalResearchCenterforScienceandTechnologyforDevelopment,Beijing.TheresearchwasconductedjointlywithChina'sNationalResearchCenterforScienceandTechnologyforDevelopment.
Completiondate:March1999.
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Ref.no.:681-43C.
Reports
Chen,Xiaomin.1998.ScienceParksandFirmProductivityinChina.WorldBank,PrivateSectorDevelopmentDepartment,Washington,DC.
Chen,Xiaomin,Chenzhao-Ying,HongTan,andLanXue.1999.ComparisonsofFirm-LevelProductivityinChina'sScienceParks.WorldBank,PrivateSectorDevelopmentDepartment,Washington,DC;andNationalResearchCenterforScienceandTechnologyforDevelopment,Beijing.
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AgencyIndependenceandPoliticalInstitutions
Problemsofpolicyimplementationareacoredevelopmentissue.Oneareaofconcernsharedbyscholars,developmentprofessionals,andpublicofficialsistheextenttowhichpoliticalinterferencecontributestopooroutcomesinthepublicsector.Thepolicyadvicethathasflowedfromthisconcernemphasizestheneedtomakepublicadministrationmoreindependentofday-to-daypoliticalintervention.Buttheconditionsunderwhichsuchindependencecanbeachievedanditscontributiontoimprovedpolicyoutcomeshavenotbeenrigorouslyexamined.Thisresearchexaminestheseissues.
Thepremiseoftheprojectisthatpoliticalinstitutionsandtheinterestsofpoliticalactorsarekeytounderstandingtheextentofagencyindependenceandtheeffectsofindependenceonpolicyoutcomes.Crosscountryeconometricanalysishaslookedattherolesofpoliticalchecksandbalancesandsocialpolarizationintheeffectofcentralbankindependenceoninflation.Thestudyfindsstrongevidencethatcentralbankindependencereducesinflationonlywhenpoliticalchecksandbalancesarehighandsocietiespolarized.Thissupportstheconclusionthatintheabsenceofmultiplepoliticalactorswithdiversepolicypreferences,thelegalindependenceofpublicagencieshaslittleeffectonpolicyoutcomes.
Infurtheractivitiestheprojectwillcomprehensivelyanalyzeavarietyofagenciesresponsibleformacroeconomicpolicymaking,suchascentralbanksandbudgetbureaus.Theseanalyseswillapplybothcross-countryeconometricandrigorouscountrycasestudytechniques.Responsibility:DevelopmentResearchGroup,RegulationandCompetitionPolicyPhilipKeefer([email protected] ).WithDavidStasavage,OxfordUniversity.
Completiondate:December2001.
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Ref.no.:681-80.
Report
Keefer,Philip,andDavidStasavage.1999.WhenDoesDelegationMatter?Polarization,ChecksandBalances,andCentralBankIndependence.WorldBank,DevelopmentResearchGroup,Washington,DC.
PoliticalCredibilityandEconomicReform
Thisresearchdevelopedanewconceptualframeworktohelpanalystsdrawreliablejudgmentsaboutacountry'sreadinessforreform.Itaimedtoidentifythenecessarypoliticalconditionsforsuccessfulreform,extendingtheanalysisintheWorldBank'sPolicyResearchReportBureaucratsinBusiness(NewYork:OxfordUniversityPress,1995).
Theworkinvestigatedhowanalystscanjudgewhetherthepromisesforreformthatpolicymakersmakeareintheirinterests,whethertheyarecapableofpassingandimplementingthepromisedreform,andwhethertheycansustainthereformonceitisimplemented.Theresearchidentifiedthekindofevidencethatcanbeusedtodeterminewhetherthenecessarypoliticalconditionsforreformhavebeenmet.Asecondphaseoftheresearchwillinvolvesystematicandrigorousempiricalworktoapplythetheorytocasestudycountries.
ThisworkispartofabroadefforttoimprovetheabilityoftheWorldBanktodesignprojectsappropriatetotheinstitutionalconditionsincountriesandtoassessmorerigorouslyandtransparentlycountries'readinessforreform.EarlyfindingshavebeenusedtopreparetrialcheckliststhathavebeenreviewedandcommentedonbymembersoftheBank'sPovertyReductionandEconomicManagementNetworkandwillbetestedintwoorthreepilotcasesfordifferentkindsofreformcommitments.
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ResultsfromthestudywerepresentedataWorldBankseminarinAugust1998foroperationalstaffandatuniversitiesthroughouttheUnitedStates.
Responsibility:DevelopmentResearchGroup,RegulationandCompetitionPolicyMaryShirley([email protected] ),PhilipKeefer,andLukeHaggarty.WithArthurLupiaandMathewMcCubbins,UniversityofCaliforniaatSanDiego;andRogerNollandBarryWeingast,StanfordUniversity.
Completiondate:August1998.
Ref.no.:681-85C.
Reports
Lupia,Arthur,andMathewMcCubbins.1998.ConditionsfortheStabilityofPoliticalAgreements.UniversityofCaliforniaatSanDiego;andWorldBank,DevelopmentResearchGroup,Washington,DC.
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.1998.PoliticalCredibilityandEconomicReform:DoPoliticiansIntendtoKeepthePromisesTheyMake?UniversityofCaliforniaatSanDiego;andWorldBank,DevelopmentResearchGroup,Washington,DC.
Noll,Roger.1999.TelecommunicationsReforminDevelopingCountries.StanfordUniversity,Stanford,Calif.;andWorldBank,DevelopmentResearchGroup,Washington,DC.
Weingast,Barry,andRogerNoll.1999.EndogenousCredibilityandProjectEvaluation.StanfordUniversity,Stanford,Calif.
Government-BusinessConsultativeMechanismsandEconomicGovernance:AThree-CountryComparison
Thisresearchprojectaimstocontributetotheunderstandingofhowdifferentorganizationalpracticesandinstitutionalstructuresinfluencetheeffectivenessofbusiness-governmentconsultativemechanisms.Thestudyistestinghypothesesstatingthattheeffectivenessofaconsultativemechanismispositivelyrelated:
Totheformation(supply)ofanorganizationexplicitlydesignedtofacilitateeconomicreformandrestructuringbyinstitutionalizingdialogueamongeconomicstakeholders.
Tothecredibilityofcommitmentsundertakenbystakeholders.
Tothecreationofmutualmonitoringmechanismsforthecommitmentsundertakenbystakeholders.
Toamembershipthatlegitimatelyandauthoritativelyrepresentsthemajoreconomicstakeholders.
ThestudyhasundertakenacomparativeanalysisofthreecountriesGhana,Malaysia,andMexicothathaverecentlyexperimentedwithconsultativemechanismsasameanstoenhance
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theirregulatoryreformandeconomicrestructuringpolicies.Thecomparativedesignallowsempiricaltestingoftheresearchhypotheses.Originalfieldresearchhasbeenconductedinallthreecountries.Secondarymaterialsalsohavebeencollected,andin-depth,semistructuredinterviewshavebeenheldwiththemajoreconomicactorsassociatedwiththeconsultativemechanismsineachcountry.Casestudieshavebeenwritten,reviewed,andrevised.Theoreticalgeneralizationsarisingfromthecasestudieswillbecrosscheckedthroughareviewofabroaderrangeofnationalexperienceswithconsultativemechanisms.
ToelicitWorldBankexperiencewithconsultativemechanisms,aBankseminarisplannedatwhichtaskmanagerswillbeinvitedtopresentcountryexperiencesineachregionofthecasestudies,accordingtoauniformprotocolofquestionsparallelingtheresearch.Theseminarwillalsoallowsynthesisoflessonsfromtheresearch.
TheresultsofthisresearchwillhelpclarifyfortheBankwhenandhowtopromoteconsultativemechanisms.Thestudywillidentifypromisingnationalcontextsforpromotingthesemechanismsandtheorganizationalandinstitutionalformsthatcharacterizeeffectivemechanisms.Thisexperiencewillbesummarizedandpresentedinasinglevolumewiththecasestudies.
Responsibility:PrivateSectorDevelopmentDepartment,BusinessEnvironmentUnitAndrewStone([email protected] ).WithJessieBiddle,PennsylvaniaStateUniversity;VedatMilor,BrownUniversity;MichaelLofchie,UniversityofCaliforniaatLosAngeles;JosephAyee,UniversityofGhana;JomoKwameSundaram,UniversityofMalaysia;MatildaLunas,AutonomousUniversityofMexico;RobertBates,HarvardUniversity;AndrewMac-Intyre,UniversityofCaliforniaatSanDiego;andBenRossSchneider,NorthwesternUniversity.
Completiondate:December1999.
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Ref.no.:681-93.
DoesMoreIntenseCompetitionLeadtoHigherGrowth?
Thisresearchprojectprovidessomeempiricalevidenceontheimpactofcompetitiononeconomicgrowthwiththeaimofquantifyingtheaggregategainsfrompromotingcompetition.Existingtheoreticalworkdoesnotprovideclear-cutanswerstothequestionofwhetheramonopolist'sgreatertendencytoinnovateisoutweighedbytheproductivitygainsinducedbycompetition.Manyempiricalstudieshaveattemptedtosettlethisissuebyusingindustryorfirm-leveldata.Butthesestudiesfailtocapturebroader,economywideeffects.
Thisresearchhasadoptedamoredirectapproach.Itteststherelationshipbetweendomesticcompetition(beyondtradeliberalization)andgrowthincrosscountrytime-seriesdata.Itidentifiesthreegroupsofvariablesthatcapturetheintensityofcompetitionat
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theeconomywidelevel:competitionpolicyvariables,whichcapturetheeffectivenessofantitrustorotherdomesticpoliciesinpromotingcompetition;structuralvariables,whichreflecttheextenttowhichmarketstructureisconcentratedfromaneconomywideperspective;andmobilityvariables,whichcapturetheeasewithwhichnewenterprisescanenterandgrowinanymarket.Theresearchthenexamineswhetheranyofthesevariablescanexplainsomeofthecross-countryvariationineconomicgrowththatconventionalvariables(suchasinitialincomelevel,tradeopenness,humanandphysicalcapitalaccumulation,governmentfinances,andmacroeconomicstability)cannotexplain.
Preliminaryresultsindicatethatcompetitionpolicycouldbeanimportantdeterminantoflong-rungrowth.Onlyoneofthepotentialmeasuresofintensityofcompetitioneffectivenessofantitrustenforcement(basedondirectresponsesfromalargenumberofmarketparticipantsacrossallcountriesinthesample)hasastrongcorrelationwithunexplainedgrowth.Theonlyothervariableexhibitingsomerobustcorrelationisamobilityvariable,emphasizingtheimportanceoffreeentryandmobilityintheeconomy.Theworkhighlightstheneedtocollectandcompileinternationallycomparabledataonmeasuresofeconomywidecompetition,particularlycorporateandentrepreneurialmobility.
Preliinaryresultshavebeendiscussedinacademicforums,includingaconference.IndustrialOrganizationandDevelopment,inToulouseinNovember1998.AdraftpaperwascirculatedatthecompetitionpolicycourseorganizedbytheWorldBankInstituteinDecember1998.
Responsibility:OfficeoftheSeniorVicePresident,DevelopmentEconomicsMarkDutz([email protected] ).WithAydinHayri,DeloitteandTouche;GregorioImpavido;RichardCaves,Harvard
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University,andRossLevine,UniversityofVirginia.
Completiondate:December1999.
Ref.no.:682-47.
Report
Dutz,Mark,andAydinHayri.DoesMoreIntenseCompetitionLeadtoHigherGrowth?WorldBank,OfficeoftheSeniorVicePresident,DevelopmentEconomics,Washington,DC.Draft.
TheRoleofInterfirmLinkagesinEmergingIndustrialClusters
Thisresearchseekstoshedlightonthefactorsthatfacilitateorimpedetheformationofinterfirmlinkageswithinindustrialclustersandtoexaminetheroleofthosefactorsinenhancingproductivity.Ifanyofthefactorsidentifiedareamenabletopublicpolicyoraprivate-publicpartnership,anactionprogramwillbedesignedthatcanbeusedasatoolinpromotingregionaldevelopmentinWorldBankclientcountries.
Manystudieshaveanalyzedindustrialclusters,butmosthavedonesoonlyaftertheclustershavebecomesuccessful,notduringtheirtransformation.ThisstudyfocusesonanemergingindustrialclusterinaTurkishindustrialdistrictknownasCorum.Asurveyhascollecteddataonthecharacteristicsoffirmsandtheirmodesofinteraction.AcasestudyhasbeencompletedthatrevealsthatcertaincharacteristicsoftraditionalclustersarepresentinthisregionofTurkeyandthatsomesectorsmayhavegreatertendencytoexploitinterfirmlinkagesthanothers.
Usingregressionanalysis,thestudyhasfoundthatpropensitytocooperatedoesnotseemtobeexplicitlylinkedtoafirm'ssize,age,ownershipstructure,orsector.Thefirmsthatdoengageincooperativebehaviorseemtodosobecausetheybelieveittranslatesintoincreasedproductivity.Preliminaryfindingsofeconometric
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analysisoftheeffectofcooperationonproductivityindicatethatcooperationmattersinaproductionfunctionframework.Furthertestingoftherobustnessofthesefindingsisunderway.
Theresultswillbedisseminatedinpartthroughadiscussionwithkeyplayersintheregionontherolesoftheprivateandpublicsectorsandofprivate-publicpartnershipsinenhancingcompetitivenessthroughinterfirmcooperation.TheresearchisexpectedtohelpshapethediscussiononregionaldevelopmentthroughinterfirmcooperationinBankclientcountries.
Responsibility:PrivateSectorDevelopmentDepartment,BusinessEnvironmentUnitR.ShyamKhemani([email protected] ).HongTan,andManjulaLuthria.WithIzakAtiyas,SabanciUniversity.
Completiondate:October1999.
Ref.no.:682-61.
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DatabaseonInstitutionsforGovernmentDecisionmaking
Inbothoperationsandresearchthereisincreasingrecognitionthatpolicyrecommendationsandprioritiescanchangesubstantiallyoncetheinstitutionalenvironmentofcountriesistakenintoaccount.Thechallengehasbeentoundertakeanalysesthatrigorouslylinkparticularrecommendationstodifferentinstitutionalenvironments.Thatchallengeismagnifiedbythelackofdetailed,systematic,objectivedataonthenatureofdecisionmakinginstitutionsincountries.Theworkundertakeninthisresearchprojecthasaimedathelpingtoclosethisgap.
Usingseveraldifferentsources(politicalalmanacsandWebsites),theresearchhascollectedmorethan75variablesformorethan100countriesovertheperiod197595.Thevariablesincludewhethersystemsareparliamentaryorpresidential,howcompetitivetheirelectionsare,whichpartiesareinthegoverningcoalitionandintheoppositionandhowmanyseatstheyhold,whethertheelectoralsystemisproportionalrepresentationorfirstpastthepost,howmanyyearstheexecutivehasbeeninpower,andwhethertheexecutiveandthedefenseministerareinthemilitary.
Allthesevariablesareexpectedtoinformfutureresearchoninstitutionsanddevelopment.Theyarealsoexpectedtoaidoperationalworkforexample,bymakingiteasiertocomparetheinstitutionalenvironmentinacountryconsideringpossiblereformswiththeenvironmentincountriesthathaveprovedtheusefulnessofparticularbestpractices.
Compilationandwrite-upofthedatasetisexpectedtobefinishedbySeptember1999,anddistributionofthedatatocommencebyJanuary2000.ThedatawillbemadeavailableontheWebandinresponsetoemailrequests.
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Responsibility:DevelopmentResearchGroup,RegulationandCompetitionPolicyPhilipKeefer([email protected] ),ThorstenBeck,GeorgeClarke,RobertCull,andPatrickWalsh.
Completiondate:September1999.
Ref.no.:682-79.
TheIntroductionofPharmaceuticalProductPatentsinIndia
NegotiationoftheAgreementonTrade-RelatedAspectsofIntellectualPropertyRights(TRIPs)gaverisetoanacrimoniousdebatebetweenindustrialanddevelopingcountries.Businessinterestsintheindustrialworldclaimedlargelossesfromtheimitationanduseoftheirinnovationsindevelopingcountries.Theyalsoassertedthatestablishingstrongintellectualpropertyrightswouldbenefitthedevelopingcountriesbyencouragingforeigninvestment,thetransferoftechnology,andgreaterdomesticresearchanddevelopment.Developingcountrygovernmentsadamantlyopposedthisview,worryingaboutthehigherpricesthatstrongerintellectualpropertyrightswouldentailandabouttheharmthattheserightsmightcausetoinfanthigh-technologyindustries.
AsaresultofWorldTradeOrganizationmembershiprequirements,manycountriesthathavekeptdrugpriceslowbynotgrantingpropertyrightstopharmaceuticalcompanieswillhavetobegindoingso.Patentprotectionhasmanypotentialcostsandbenefits.Mostofthecostsarestatic:ashiftfromdomesticproductiontoimports,higher-costpharmaceuticals,andpossiblyaslowerdiffusionofnewdrugstodevelopingcountriesasinventingfirmsgainmonopolycontrolofsales.Thepotentialbenefitsaredynamicandhardertomeasure:moreresearchanddevelopment(R&D)directedtowardtherapiesfordiseasesprevalentindevelopingcountries,andmoreR&Dindevelopingcountries,eitherbymultinationalsubsidiariesorbydomesticfirms,withassociatedpositivespillovers.
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ThisprojectisconcernedprimarilywithestimatingthelikelysizeoftheconsumerwelfarelossesthatwillbeassociatedwiththeintroductionofpharmaceuticalproductpatentsinIndiaandtheextentofprofitredistributionfromIndiancompaniestoforeignpatentholders.Thefirsttaskistoestimatedrugdemandfunctionsfortherapeuticcategorieswherepatentingissignificant.Theseestimationswillbebasedonanestedprobitconsumerchoicemodel,amultistagebudgetingmodel,orboth.Insuranceoftencomplicatesuseofthisapproachforindustrialcountries,sinceitmeansthatconsumersdonotfacethefullpriceofdrugs.Similarly,theprescrip-
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tivepowerofphysiciansinindustrialcountriesmakestheconceptofconsumerchoiceproblematic.BoththeseproblemsaremuchlessimportantinIndia,wherefewpeoplearecoveredbyinsuranceandprescriptiondrugsarealmostalwaysavailablewithoutaprescription.
Thesecondtaskistodeterminetherangeofplausiblepricesunderapatentedregime.Thiscanbedonewithademandfunctiontoestimatethemonopolypriceofdrugs.TheprojectwillalsoattempttoassessthedistributionalimpactofthepredictedpricechangeandthepossiblesupplyresponseoftheIndianpharmaceuticalindustry.
TheresearchwillusedatafromOperationsResearchGroup,aprivateindustryorganizationinBombay.Thesedata,ahighlydisaggregatedsetofpricesandquantitiesofproductssoldtopharmaciesoverthepast11years,willallowestimationofthedemandfunctionsandthesupplyresponse.ThedistributionaleffectswillbeestimatedbycomparingpricechangeswithdatafromtheIndianNationalFamilyHealthSurvey.
Responsibility:DevelopmentResearchGroup,PublicEconomicsJeffreyS.Hammer([email protected] ).WithJeanOlsonLanjouw,YaleUniversity;andRakeshBasant,IndianInstituteofManagement.
Completiondate:December1999.
Ref.no.:682-88.
JobReallocation,theExportMarket,andFirmPerformance:MicroeconomicEvidence
Acrucialfactorineconomicperformanceishowwellacountryreallocatesitsresourcesincludinglaborfromlessproductivetomoreproductiveusesinresponsetolong-termchangesindemandpatternsandtechnology.Large-scalejobreallocation,broughtaboutbythe
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creationanddestructionofjobs,hasbeenfoundtobetypicaloflabormarketsthatarefluidandflexible,movingresourcestowardtheirhighest-valueuses.ButexceptfortheU.S.labormarket,littleisknownaboutthesizeofjobcreationanddestructionrates,especiallyindevelopingcountries.
ThisprojectlooksatjobreallocationinTaiwan(China).ThefirstpartoftheprojectassesseswhethertheTaiwaneselabormarketdisplayscharacteristicsconsistentwiththepredictionsofanefficientlabormarket.Anditusesinformationonjobcreationanddestructionratestoinvestigatewhetherfirmsorindustriesthatexperiencerapidproductivitygrowthalsoexperiencehighernetemploymentgrowth.
Theanalysisisbasedondetailedfirm-leveldatafromtheManufacturingCensusesofTaiwan(China)for1986and1991.Taiwan(China)isaninterestingcasebecause,incontrasttoseveralofitsstrugglingneighborsaffectedbytheEastAsianfinancialcrisis,ithassofarescapedwithonlyasmalldevaluationofitscurrencyandmodestdeclinesinshareprices.Economicperformanceremainsstrong.ThusoneofthemainobjectivesistodeterminehowmuchtheindustrialstructureofTaiwan(China),particularlyitslabormarket,hascontributedtoitsabilitytowithstandmacroeconomicshocks.
Theevolutionofanindustrygeneratesjobcreationatexpandingandenteringfirms,andjobdestructionatcontractingandexitingfirms.Usingmeasuresoffirms'jobcreationanddestructionratesclassifiedbythefirms'turnoverstatus,thestudyaddressestwoquestions:First,whatistheunderlyingpatternofgrossjobflows,andwhatistheimportanceofincumbentfirmsrelativetoturnoverfirmsinthenetgrowthofjobsintheTaiwanesemanufacturingsector?Andsecond,whichtypesoffirmsaremostproficientatcreatingnewjobs?Toaddressthesecondquestion,thestudyfurtherclassifiesfirmsbyquartilesofemploymentsizeandtotalfactorproductivity.
Theresultsshowthatwhilethemanufacturingsectorgainedlessthan
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9,000workersin198691,morethanonemillionjobswerecreated,andmorethanonemilliondestroyed.Inanygivenyearanaverageofabout12in100manufacturingjobsopenup(comparedwith10in100intheUnitedStates),andasimilarnumberdisappear.Thislarge-scalereshufflingofemploymentisgenerallyinterpretedasreflectingaflexibleandfluidlabormarket.Inaddition,ofthe1.89millionjobsin1986,onlyabout40percentwereretainedjobsheldincontinuingfirms.Therestwerelostthroughcontractionofincumbentsorshutdowns.In1991thevastmajorityofnewjobswerecreatedbyentrantsratherthanbytheexpansionofexistingfirms.ThuswhilethejobcreationanddestructionratesinTaiwan(China)areinlinewiththoseinothercountriesindustrial(Canada,theUnited
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States)anddeveloping(Chile,Colombia)thefindingsindicatethatunlikeintheseeconomies,entryandexitoffirmsisthemainsourceofjobturnover,nottheexpansionandcontractionofcontinuingfirms.
Thefindingsalsoshowthatjobdestructionratesarenegativelycorrelatedwithtotalfactorproductivityacrossallindustries,whilejobcreationratesarenotsystematicallyrelatedtoproductivity.Thushigh-productivityfirmsexhibithighernetjobcreationratesthanthosewithlowproductivity.
Finally,thestudyshowsthat,justasintheUnitedStates,smallemployershaveamuchhighergrossjobcreationratethantheirlargercounterparts.ButunlikeintheUnitedStates,grossjobdestructionratesdeclinesharplywithsizeinonlyahandfulofindustriesandactuallyincreasewithsizeinothers.Giventhepredominanceofsmallenterprises,thisevidencesuggeststhat,contrarytofindingsintheUnitedStates,thisgroupoffirmsmakesanimportantcontributiontonetjobcreation.
Thesecondpartoftheprojectwilllinktheresultsonjobreallocationandproductivitytotheexportactivityoffirms.Byconsideringthepossibleinteractionbetweenexportactivityandproductivitygrowth,andtheresultingchangesintheflowoflaborwithdifferentskillsatthefirmlevel,theprojectwillbeabletoseparatethecontributionsofexportactivityandlaborinputstoproductivitygrowthandsuccessfulmarketperformance.Theseinteractionswillprovideinsightsintowhethertheexportmarketisanetgeneratorofjobsandhighwages,asfoundinothercountries.
Responsibility:PrivateSectorDevelopmentDepartment,BusinessEnvironmentUnitGeetaBatra([email protected] ).WithBee-YanAwandTorWinston,PennsylvaniaStateUniversity.
Completiondate:January2000.
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Ref.no.:683-26.
Report
Aw,Bee-Yan,andGeetaBatra.JobTurnoverandTotalFactorProductivity:MicroEvidencefromTaiwan(China).
TheImpactofPoliticalInstitutionsonEconomicGrowth:ADataCollectionandWebArchiveInitiative
Researchintotheinstitutionalandpoliticalpreconditionsofeconomicgrowthandgoodpolicyhasgrownenormouslyinthepastdecade.Thisworkhasbothquantifiedtheimportanceofinstitutionalreforms(suchasthosethatprotectpropertyandcontractualrights)foreconomicgrowthandspecifiedtheinstitutionalconditionsunderwhichreformcanoccur.Butempiricalinvestigationhasbeenlimitedbythepooravailabilityofinstitutionalandpoliticaldataacrosscountriesandovertime.
Thisprojectaimstoremovetheseobstaclesbysettingupacentralized,Web-basedarchiveofcross-nationalpoliticalandeconomicdata.Theworkenvisagedwillcorrectboththedispersionofdataandtheincompatibilitiesamongexistingpoliticalandinstitutionaldatasets.ThedatawillcomefromtheWorldBank,politicalscientists,riskevaluationfirms,andothers.ThecoreoftheWebsiteinitsinitialdevelopmentwillbeadatabaseonpoliticalinstitutionsdevelopedattheWorldBankunderaseparateresearcheffort.
TheresearchtowhichthisdatabasewillcontributeisexpectedtoimprovetheBank'scapacitytoidentifyreformprioritieswithinthecontextoftheComprehensiveDevelopmentFramework.Themuch-improvedaccessibilityofthedatashouldalsoimprovethecapacityofresearchersandanalystsinclientcountriestoperformpoliticaleconomyresearch.
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Responsibility:DevelopmentResearchGroup,RegulationandCompetitionPolicyPhilipKeefer([email protected] ),PatrickWalsh,andGeorgeClarke.WithSharynO'HalloranandDavidEpstein,StanfordUniversity;andRobertBates,HarvardUniversity.
Competiondate:June2000.
Ref.no.:683-40.
DelayinDisposition:JudicialPerformanceinDevelopingCountries
Thisstudysoughttoprovideaninternationalcomparativeanalysisoftheperformanceofcourtsbydevelopingperformanceindicatorsthatmeasuretimeandcostoflit-
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igationandbyanalyzinghowreformprogramsaffecttimeandcost.Thestudyreviewedtheefficiencyandeffectivenessofcourtsinaboutadozendevelopingandindustrialcountries.
Thestudyassessedcourtsystems'efficiencyonthebasisoftheirclearancerates(casesresolvedasapercentageofthosefiled)andtheirabilitytoprovidequalityataminimumcost.Itdevelopedindicatorsthatshowthechangeovertimeincaseload,backlogs,timetodisposeofacase,andcostofsupplyingcourtservices.Themeasureofcostincludesnotonlyoperationalcostsbutalsocapitalexpendituresandtheopportunitycostsoffinancingthesystem.Theseindicatorsallowacomparisonoftherelativeimprovementordeteriorationofcourts.
Thestudyassessedcourtsystems'effectivenessonthebasisoftheircapacitytoresolveconflictsatareasonablecostandwithinareasonabletimeandobjectiveandsubjectiveperceptionsthatjusticeisbeingdelivered.Thesubjectiveperceptionofthequalityofjusticewasbasedinpartoninformationcollectedthroughaquestionnaireadministeredtoastratifiedsampleofjudgesandcourtpersonnelinthecourtsdealingwiththemostcommontypesofcasesreachingthejudicialsystem.Theobjectivemeasureofeffectivenesswasdeterminedbyaweightedindexthatincludesseveralobjectivevariablescapturingthecapacityofthecourtstosatisfythepublic'sdemandforcourtservices.
Thestudyfoundthatthemoremanagerialactivismbyjudges,thegreaterthecapacityofbudgetaryresourcesistoincreasethesupplyofcourtservices(thenumberofcasesdisposed).Amongthestudycountries,thosewiththeleastactivismareArgentinaandVenezuela,andthosewiththemostareGermanyandHungary.Themoredaysjudgesdevotetoadministrativetasks,thelowertheclearanceratesare.JudgesdevotethemostdaystosuchtasksinArgentina,Colombia,andVenezuela,andthefewestinChileandFrance(though
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inFrancethenumberofdaysdecreasedonlyinrecentyears).
Courtsystemswithlargercapitalbudgetshavehigherclearanceratesandshorterexpecteddurationsforcases.Amongthestudycountries,GermanyandSingaporehavehadthegreatestincreasesincapitalbudgetsforthecourtsystems,andEcuadortheleast.Courtsthatusemoreinformationtechnologyalsohaveshorterexpecteddurationsforcases,andloweroperationalcostspercase.CountriesthatusetheleastinformationtechnologyincludeEcuadorandVenezuela(inEcuadoradebtcollectioncasetakesonaverageabout800days).Germanyusesthemostinformationtechnology.Thelesstimespentonadjudicativeduties,thelongertheexpecteddurationofcasesandthelowertheclearanceratesare.JudgesdevotetheleasttimetoadjudicativedutiesinArgentinaandEcuador.
Thestudyreviewedtheratioofjudgestopopulationtodetermineaccesstothecourts,andtheratioofjudgestoadministrativestafftoassesstheadministrativesupportprovidedtojudges.
Mostofthedatawereobtainedfromjudgesthroughaquestionnairethatthestudydeveloped.Informationontypesofcasesandlitigantswasobtainedfromthestatisticalofficeofthesupremecourt,lowercourts,orministryofjustice.Thestudyalsocollectedinformationoncourtstructure,casestatistics,proceduralsteps,andthelike.AdatabaseoftheinformationcollectedwillbemadeavailableontheWorldBank'sWebsite.Justiceministrieswillbeabletoaccessthequestionnaireandinsertdatafortheirowncountry.
ResultshavebeendisseminatedtoBankoperationalstaffandareexpectedtocontributetothedevelopmentofjudicialreformprogramsinBankclientcountries.TheresultshavealreadyhelpedindiscussionswithBankclients,makingitpossibletoprovidethemwithbenchmarksforassessingtheperformanceoftheirjudicialsystemsandtheprogressofjudicialreformprograms.
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Responsibility:LegalDepartment,LegalandJudicialReformUnitMariaDakolias([email protected] ).WithEdBuscaglia,StanfordUniversityandWashingtonCollege;JavierSaid;IsabelAtencio;FlordeMariaMezaTananta;FrankKonig;ThomasGunther;HeikeScherff;andAlexanderHuneeus.
Completiondate:July1998.
Reports
Buscaglia,Ed,andMariaDakolias.1999.ComparativeInternationalStudyofCourtPerformanceIndicators:ADescriptiveandAnalyticalAccount.WorldBank,LegalDepartment,Washington,DC.
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Dakolias,Maria.Forthcoming.CourtPerformancearoundtheWorld:AComparativePerspective.YaleHumanRightsandDevelopmentLawJournal.
SocialCapitalinAfrica
Collectiveethnicidentitiescanhavegreatsocialvalue,andthesocialcapitalthathasbeenbuiltbetweenpeopleinanethnicgroupcanbeapositiveforcefordevelopment.Ethnicgroupscanprovideincentivesthatorganizetheflowofresourcesacrossgenerations,producecapitalforurbanmigrationandfortheacquisitionofskillsforindustrialemployment,andpromotetheforcesofmodernization
Butethnicidentitycanalsounderminesocialcapitalinsociety.Althoughethnicidentityhelpsmembersofthesameethnicgrouptoworktogetherforcommongoals,thegoalstheyworktowardmightnotbebeneficialforsociety.Ratherthanencouragepublicgoodsproductionthatbenefitseverybody,groupsmightinsteadfindthemselvesbattlingforscarceresources.Theethnicconflictthatresultscanleadtocostlyactsofviolence.Inthiswayethnicgroupsmightactuallyreduceacountry'ssocialcapitalbyunderminingtrustbetweengroupsandreducingtheeffectivenessofpoliticalinstitutions.
UsingdatadrawnlargelyfromAfrica,thisresearchexploredtheseclaims.Itfoundthatthepresumedlinkbetweenethnicityandviolenceismorecomplexthanmostassume.Theresearchidentifiedconditionsunderwhichethnicgroupscandwellinpeace,andconditionsunderwhichethnicdiversity(orlackofit)posespoliticaldangers.Thedatasuggestthatwhenagroupbecomesascendantinajurisdiction,violencemightreplaceprotestasapreferredpoliticalstrategy;theprospectofpoliticalcaptureofthestateandthefearofpoliticalexclusionamongsmallergroupsmaydriveethnicleaderstowageronviolence.Inthiswaydiversity,nothomogeneity,lowersthe
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probabilityofviolence.
Theprojectcombineddatafrompublishedsourcestoproduceanewdatasetonthescopeandintensityofpoliticalviolencethatwillproveinvaluableforfutureresearch.ThedatawillbepostedontheHarvardUniversityWebsite.
Responsibility:DevelopmentResearchGroup,PublicEconomicsGeorgeClarke([email protected] ).WithRobertBates,SmitaSingh,TzvetanaRavoski,andMacartanHumphreys,HarvardUniversity.TheDanishSocialCapitalTrustFundcontributedfundingfortheresearch.
Completiondate:June1999.
Report
Bates,Robert.1999.Ethnicity,CapitalFormation,andConflict.PaperpresentedattheSocialCapitalandPovertyReductionConference,WorldBank,Washington,DC,June2224.HarvardUniversity,Cambridge,Mass.
Corruption
Thisresearchaimstoprovideevidenceontheconsequencesanddeterminantsofcorruptionandthepolicyoptionsthatcanbeusedtocombatiteffectively.Unlikemostresearchoncorruption,itfocusesprimarilyonempiricalanalysisbasedoncross-countryandin-depthcountrydata.
Theresearchincludesworkonthedeterminantsofcorruptionanditscorrelatesincludingtherelationshipbetweencorruptionandopenness,andthatbetweencorruptionanddecentralizationbasedoncross-countrydata.Italsoincludesworkonthedeterminantsofgraftbasedonfirm-leveldataonestimatedbribepayments.Preliminaryevidencesuggeststhatcorruptionisnegativelyassociatedwithopennessandwiththedegreeoffiscaldecentralization,andthatinanenvironment
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characterizedbysystemiccorruption,theamountthatafirmneedstopayinbribesdependsonthefirm'scharacteristics.Thatis,bribesdemandedarenotfixedsumsforgivenpublicservices,butdependonthefirm'sabilitytopay.
Thestudyalsoassessedtheefficientgreasehypothesis:thatbriberyallowsfirmstogetthingsdoneinaneconomyplaguedbybureaucraticholdups.Theevidencerefutesthishypothesis.Cross-countrydatarevealthatfirmsthatfacemorebribedemandsarealsolikelytospendmore,notless,managementtimenegotiatingregulationswithbureaucrats.Moreover,firm-levelevidenceindicatesthattherateofbriberyhasasignificantnegativecorrelationwithfirmgrowth.
Empiricalresearchongovernanceandcorruptionisplaguedbylackofconsistentcross-countrydataspanning
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alargesetofcountries.Toovercomethisproblem,thisprojecthasconstructedalargedatabasewithmorethan300indicatorsreportingperceptionsofdifferentaspectsofgovernance,drawnfromavarietyofsources.Anunobservedcomponentsframeworkhasbeenusedtocombinerelatedgovernanceindicatorsfromvarioussourcesintoaggregategovernanceindicators.Theseaggregatesaremorereliableandspanalargersetofcountriesthanindividualindicators,andalsohaveassociatedstandarderrorsthatareusefulforinferenceaboutcross-countrydifferencesingovernance.Thedatarevealastrongcausallinkfromsixaggregategovernanceindicatorstodevelopmentoutcomes.
ThefindingshavebeenpresentedatworkshopsattheWorldBankandinclientcountries,atuniversities,andatacademicmeetings.
Responsibility:DevelopmentResearchGroup,MacroeconomicsandGrowthJakobSvensson([email protected] )andAartKraay,andPublicEconomicsGunnarEskeland;EastAsiaandPacificRegion,PovertyReductionandEconomicManagementSectorUnitMaryHallward-Driemeier;andWorldBankInstitute,Governance,Regulation,andFinanceDivisionDanielKaufmann.WithS.Filipov,C.Arevalo-Correa,R.Fisman,V.Kartamyshev,G.Mehrez,A.Terada,H.Thiele,T.Vishwanath,Shang-JinWei,andPabloZoido-Lobaton.
Completiondate:June2000.
Reports
Eskeland,Gunnar,andH.Thiele.1999.OptimalCorruptionunderMoralHazard.WorldBank,DevelopmentResearchGroup,Washington,DC.
Fisman,R.,andRoberta.Gatti.1999.DecentralizationandCorruptionacrossCountries.WorldBank,DevelopmentResearchGroup,
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Washington,DC.
Fisman,R.,andJakobSvensson.1999.TheEffectsofCorruptionandTaxationonGrowth:Firm-LevelEvidence.WorldBank,DevelopmentResearchGroup,Washington,DC.
Gatti,Roberta.1999.ExplainingCorruption:AreOpenCountriesLessCorrupt?WorldBank,DevelopmentResearchGroup,Washington,DC.
Kaufmann,Daniel,andShang-JinWei.1998.DoesGreaseMoneySpeedUptheWheelsofCommerce?WorldBank,DevelopmentResearchGroup,Washington,DC.
Kaufmann,Daniel,AartKraay,andPabloZoido-Lobaton.1999.AggregatingGovernanceIndicators.WorldBank,DevelopmentResearchGroup,Washington,DC.
.1999.GovernanceMatters.WorldBank,DevelopmentResearchGroup,Washington,DC.
Svensson,Jakob.1999.TheCostofDoingBusiness:UgandanFirms'ExperienceswithCorruption.WorldBank,DevelopmentResearchGroup,Washington,DC.
.1999.WhoMustPayandHowMuch?EvidencefromaCross-SectionofFirms.WorldBank,DevelopmentResearchGroup,Washington,DC.
Wei,Shang-Jin.1999.CorruptioninEconomicDevelopment.PolicyResearchWorkingPaper2048.WorldBank,DevelopmentResearchGroup,Washington,DC.
EastAsiaCompetitivenessStudy
ThisstudyofthemicroeconomicunderpinningsofcompetitivenessinEastAsiafollowingthatregion'sfinancialcrisisbuildsonaregionaldatabasecontainingtheresultsofafirm-levelsurveyconducted
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betweenOctober1998andFebruary1999.Thesurveycoveredmorethan3,750firmsinIndonesia,theRepublicofKorea,Malaysia,thePhilippines,andThailand.Comparableacrosscountries,thesurveydataprovideinsightintocategoriesoffirmsonwhichlittleinformationhadbeenavailablemostofthefirmsareunlistedprivatecompanies,andtwo-thirdsaresmallormedium-size.Thesurveyhadtwoareasoffocus:short-termissuesrelatedtotheimpactofthecrisisandtheconstraintstorecovery,andthedeterminantsofcompetitivenessandproductivity.Itgeneratedinformationonabroadsetoffirmpracticesrelatingtoproduction,employment,training,corporatefinance,corporategovernance,andtechnologyacquisitionaswellasonthebusinessenvironmentandfeedbackongovernmentprograms.
Theresultingdatabaseisthefirstofitskindfortheregion.Itprovidesaninformationbaseforregionaldialogueonissuesofcompetitiveness,feedbackfromtheprivatesectortothegovernments,andresearchonabroadsetoffirmbehaviors.ThedatabasehasbeenusedbyresearchersintheWorldBankandacrossEastAsia,withresultspresentedataconference,AsianCorporateRecovery:CorporateGovernance,GovernmentPolicy,
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inBangkokonMarch31April2,1999.Attheconferencehigh-rankinggovernmentofficialsandrepresentativesoftheprivatesectordiscussedtheprospectsforrecoveryand,inparticular,theextenttowhichcreditavailabilityremainsaprincipalconstraint.
Thesurveyresultsindicatethatwhilemorethan70percentoffirmsinthefivecountriescoveredbythesurveywereadverselyaffectedbythecrisis,atthetimeofthesurveycreditconstraintswerelessimportantthanthedifficultyinsellinggoodsduetothefallindemand,evenamongexportingfirms.WithhalftheexportsdestinedforothercountriesinAsiaandwithwidespreaddevaluations,increasingexportvolumesstillresultedinflatordecliningexportvaluesformostexportingfirms.Whiletheresultsshowthatoverallcreditavailabilityisnotthemainconcern,issuesofcreditmisallocation,transparency,andgovernanceremain.Continuedcorporaterestructuringmustkeeppacewithfinancialrestructuringifmanyoftheweaknessesinthecorporateandfinancialsectorsaretobeavoidedinthefuture.
SurveyresultshavebeenincorporatedinthePhilippinecountryeconomicmemorandum,andadditionalworkisunderwayinsupportoflendingandotheroperationalworkinallfivecountries.Inaddition,moreindepthworkhasbeencarriedoutonThailand,withtwocompletedroundsofsurveys.Analysisofinvestmentpatternsandresourceallocationleadinguptothecrisisrevealsthatimbalancesinthemanufacturingsectorwereapparentbeforethecrisisbegan.Aseriesoflabormarketstudiesarealsounderwayandwillbefurtherexpandedwiththenewwaveofdata.
InadditiontotheregionalconferenceinBangkok,disseminationseminarswereheldattheWorldBankandinHongKong(China),Jakarta,KualaLumpur,Manila,Seoul,Singapore,andTokyo,andattheAssociationofSoutheastAsianNations(ASEAN)Chambersof
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CommerceandIndustrymeeting.Asecondregionalconferenceisplannedin1999tofocusontheissuesofcompetitivenessusingthesurveydata.Inaddition,theresearchwillbediscussedatasessionattheAsianDevelopmentForuminearly2000.AnddiscussionsareunderwaywiththeAsianDevelopmentBankInstituteaboutholdingaresearchconferenceinTokyotodiscussapproachestothestudyofcompetitiveness.
Countrycounterpartswereinstrumentalinallstagesoftheprojectpreparingthequestionnaires,implementingthesurveys,andpreparingcountryreports.TheBankprovidedtechnicalassistanceandcapacitybuilding,includingthreetrainingsessionsontheuseofthedatabaseandmethodsofconductingproductivityanalysis.Thereisinterestinallfivecountriesincontinuingthesurveyandregularlypublishingsurveyresults.ItisalsohopedthatthemulticountrysurveycanserveasablueprintforthelargerFirmAnalysisandCompetitivenessSurveysinitiativebytheDevelopmentResearchGroup.
Thedatabasewillbemadeavailabletothepublic.
Responsibility:DevelopmentResearchGroup,MacroeconomicsandGrowthMaryHallward-Driemeier([email protected] ),DavidDollar,GiuseppeIarossi,DennisTao,HairongYu,andAlbertZeufack;andEastAsiaandPacificRegion,PovertyReductionandEconomicManagementSectorUnitDominiqueDworFrecaut.WithAtchanaWaiquamdee,BankofThailand;FrancisColaco,AsiaPacificManagement;RonaldDuncan,AustralianNationalUniversity;KenSokoloff,UniversityofCaliforniaatLosAngeles;andDeeSutthiphisal.TheJapanandASEMTrustFundsarecontributingfundingfortheresearch.
Completiondate:June2000.
Reports
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Dollar,David,andMaryHallward-Driemeier.1998.Crisis,Adjustment,andReforminThaiIndustry.WorldBank,DevelopmentResearchGroup,Washington,DC.
Duncan,Ronald,andMengXing.1999.CorporateEmploymentandPublicPolicy.PaperpresentedattheconferenceAsianCorporateRecovery:CorporateGovernance,GovernmentPolicy,Bangkok,March31April2.
DworFrecaut,Dominique,MaryHallward-Driemeier,andFrancisColaco.1999.CorporateCreditNeedsandGovernance.PaperpresentedattheconferenceAsianCorporateRecovery:CorporateGovernance,GovernmentPolicy,Bangkok,March31April2.
Hallward-Driemeier,Mary,DominiqueDworFrecaut,andFrancisColaco.1999.AsianCorporateRecovery:AFirm-Level
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Analysis.WorldBank,DevelopmentResearchGroup,Washington,DC.
Kawai,Masahiro,HongjooHahm,andGiuseppeIarossi.1999.CorporateForeignLiabilitiesinEastAsia:TooMuch,TooLittle?PaperpresentedattheconferenceAsianCorporateRecovery:CorporateGovernance,GovernmentPolicy,Bangkok,March31April2.
Waiquamdee,Atchana,SoravisKrairiksh,andWasanaPhongsanarakul.1999.Corporates'ViewsoftheConstraintstoRecovery.PaperpresentedattheconferenceAsianCorporateRecovery:CorporateGovernance,GovernmentPolicy,Bangkok,March31April2.
WorldBank.1999.Philippines:TheChallengeofEconomicRecovery.Washington,DC.
Zeufack,Albert.1999.Employer-ProvidedTrainingunderOligopolisticLaborMarkets:EvidencefromThaiManufacturingFirms.WorldBank,DevelopmentResearchGroup,Washington,DC.
FirmAnalysisandCompetitivenessSurveys
Firmlevelanalysishasbeenhinderedbythescarcityofreliabledata.AlthoughtheWorldBankhasputincreasingeffortintoconductingfirmsurveysandgatheringfirmleveldata,thosesurveysaregenerallytailoredtoaparticularcountry,topic,orperiod.ThisprojectaimstohelpBankclientcountriesmoresystematicallycollectandmaintainfirmleveldatathatcanbeusedforpolicyanalysisandresearch.Theprojectisdevelopingandimplementingamodelsurveyinstrumentdesignedforthedevelopingworld;Itwillusetheinstrumenttocollectcomparablefirmleveldatafromadiversesetofcountries(initiallyoneineachoftheBank'sregionsBrazil,India,Morocco,Russia,Thailand,
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andUganda).Datawillbecollecteddirectlyfromfirmsinseveralsectors:textiles,garments,electronics,autoparts,andafifthindustrytobechosenineachcase.
Themodelsurvey,developedwithinputsfrombothBankstaffmembersandoutsideexperts,isaimedataddressingsomepolicyandresearchquestionsrelatingtofirmactivitiesthathaveremainedunansweredbecauseofdataconstraints:
Corporatefinance.Aresmallandmedium-sizeenterprisescredit-constrained?Doestheirinabilitytoraisecapitalaffecttheirproductiondecisions?Arefirmsabletoborrowinternationally,anddoesthataffectoutcomes?
Technologyandinvestment.Howdoeseconomicorpoliticaluncertaintyaffectinvestment?Howdotradingrelationsaffecttechnologydiffusion?Whatdeterminesfirms'decisionstoadoptnewtechnologies?
Contractenforcement.Howdoestheefficacyofthelegalsystemaffectthemarketstructure?Doescontractlawfosterlong-termleasesandcommitments?Dopropertyrightsprotectbusinessassetsandencouragefixedinvestment?Doefficientconflictresolutionmechanismsencouragetheuseofthecourtsystem?
Laborandhumanresources.Whatinfluencesfirms'decisionstoinvestintrainingtheirworkers?Whatistheimpactoflaborregulationsonfirms'hiring,growth,andtechnologydecisions?
Governmentregulations.How,ifatall,dogovernmentassistanceprogramsimproveproductivity,laborpractices,andinvestmentdecisions?Howdogovernmentregulationsaffectfirmbehavior?
Businessassociations.Doesproximityoffirmspromoteagglomerationeconomies?Whatfactorsaffectafirm'sdecisiontojoinabusinessgroup?Doesmembershipinaformalorinformal
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networkincreaseefficiency?
Corporategovernance.Doesmanagemententrenchmentaffectcorporatedecisions?Howdoownershiplinkstofinancialinstitutionsandforeignfirmsaffectleveragedecisions?Howdoesoperationalorfinancialmanagementbynonownersaffectcorporatedecisionsonproduction,leverage,andthelike?
Themodelsurveyinstrumentcombinesseveralobjectives.Itwilldirectlyassistfirmsbybenchmarkingtheirperformancerelativetotheircompetitors(domesticandinternational).Itwillmeettheimmediateneedsofadvisersandpolicymakerswhorequiredetailedinformationaboutindustriesandthebusinessenvironmentandhowthesecomparewiththoseofothercountries.Anditwillenhancetheabilityofpolicy-orientedresearcherstotesttheimpactofpoliciesonfirms'developmentandbehavior.
Theprojectwillalsobringtogetherexistingfirmleveldatasets(includingthosefromtheRegionalProgramonEnterpriseDevelopmentinAfrica,theEastAsiancompetitivenesssurvey,andsimilarsurveys)and
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makethemavailableonanewWebsite.Itwillstrengthenthecapacityofcountriestoimplementhigh-qualityfirmlevelsurveysonanongoingbasisandtoanalyzethedataforpolicypurposes.Anditwillhelpcountriesthatalreadycollectsuchdatatomakemodest,incrementalimprovementsintheirsurveyinstrumentsandcollectionapproach.
AconferencetolaunchandpublicizetheinitiativewasheldinWashington,DC,onDecember1415,1998,withabout100participants.Thisconferencereviewedrecentresearchbasedonfirmleveldata,toidentifyimportantunresolvedquestionsanddatalimitationsthatmakeitdifficulttoaddressthosequestions.
Responsibility:DevelopmentResearchGroup,MacroeconomicsandGrowthDavidDollar([email protected] ),MaryHallward-Driemeier,GiuseppeIarossi,JakobSvensson,andTayeMengistae,RegulationandCompetitionPolicyMaryShirley,LukeHaggarty,PhilipKeefer,ColinXu,andFrancescaRecanatini,TradeAnthonyVenables,OfficeoftheDirectorPaulCollier,andFinanceLeoraKlapper.WithMarcelFafchamps,OxfordUniversity;RaymondFisman,ColumbiaBusinessSchool;MarkGersovitz,JohnsHopkinsUniversity;FabioSchiantarelli,BostonCollege;JohnSutton,LondonSchoolofEconomics;andJamesTybout,GeorgetownUniversity.
Completiondate:June2000.
RegionalProgramonEnterpriseDevelopmentinAfrica
OneofthelessonsemergingfromstructuraladjustmenteffortsinAfricaisthatmacroeconomicreformisanecessarybutnotasufficientconditionforprivatesectorgrowth.Thereareenterprise-levelconstraintsthatinhibitthegrowthofexistingfirmsandimpedetheentryofnewones.ThisresearchisdesignedtoimprovetheunderstandingoftheconstraintsonenterprisedevelopmentinAfrica
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andtodeveloprecommendationstoeasethoseconstraints.
Theresearchisinvestigatingtheseissuesinthreeways.First,itiscollectingsurveydatathroughinterviewsconductedannuallywithapanelof200largeandsmallmanufacturingfirmsinCameroon,Côted'lvoire,Ghana,Kenya,Tanzania,Zambia,andZimbabwe.Thesurveyfocusesonfourmanufacturingsectors:foodprocessing,woodworking,metalworking,andtextilesandgarments.Surveyquestionsseekgeneralinformationonthefirmandonissuesrelatingtolabor,technology,regulation,infrastructure,financialmarkets,conflictresolution,andtheuseofbusinesssupportservices.
Second,itiscarryingoutaseriesofcasestudiesoffirmsselectedfromastratifiedsubsampleofthepanelfirms.Thesecasestudiesfocusonselectedaspectsoftheresearchagenda,suchasfinance,businessstrategy,andtechnologicalcapability,andareconductedtocomplementquantitativeinformationgatheredinthesurvey.
Third,itisconductingcross-countrystudiesandstudiesofissuesrelatedtofirmdynamicsovertime.Theseissuesincludelabormarkets,businessstrategy,financialmarkets,technologicalcapabilities,thenatureanddeterminantsofentrepreneurship,theimpactofinfrastructureonfirmoperationsandgrowth,regulationandtheextenttowhichfirmsperceiveregulationasconstrainingtheiroperationsandgrowth,andhowfirmsgrowintheseeconomiesandwhy.TheanalysesoftheseissuesshouldcontributetoevaluationsoftheimpactofstructuraladjustmentprogramsinAfrica.
In1997theprogramwasextendedforanadditionalthreeyears.Byallowingmorepaneldatacollectionandanalysis,theextensionpermitsfurtherassessmentoftheimpactofstructuralreformprogramsinAfricaatthemicroeconomiclevel.Inadditiontoassessingtheimpactofpolicyreforms,theextendedprogramaimstobuildlocalcapacitytocontinuegatheringinformationaftertheprogramends.Alocalbaseforcontinuedmonitoringofthe
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microeconomiceffectsofstructuraladjustmentwouldmakeasignificantcontributiontotheWorldBank'soperationalprograms.Theprogram'sextensionalsoallowsadditionalanalysisofAfricanprivatesectorgrowthproblemsandfurtherdisseminationofthefindingsofthiswork.
TheprogramlinksitsfindingstotheBank'soperationalworkinAfricathroughparticipationinregionalandcountryprivatesectordevelopmentstrategiesandprogramdesigns.ItdisseminatesitsfindingsintheBankthroughactivitiesthatincludeBankseminars,distributionofresearchpapers,andpublicationoftheFindingsnewsletter.OutsidetheBank,theprogramhashostedseminarsandconferencesinCameroon,Côted'lvoire,
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Ghana,Kenya,Tanzania,Zambia,andZimbabwe,aswellasinBelgium,Canada,Denmark,Finland,France,Germany,theNetherlands,Norway,Sweden,Switzerland,theUnitedKingdom,andtheUnitedStates.Inadditiontothepublicationslistedbelow,theprogramhasproducedmorethan80countrystudies,analyticalreports,casestudies,anddiscussionpapers.
Responsilibility:AfricaRegionTechnicalFamilies,PrivateSectorFinanceTylerBiggs([email protected] )andMelanieMbuyi.WithManjuKediaShah;LanZhao;JohnNasir;AlfredRobinson;GeraldTyler;AtaMazaheriandDipakMazumdar,UniversityofToronto;andHowardPack,UniversityofPennsylvania.AssistanceinthefieldsurveysandcountryreportshasbeenprovidedbytheEcoledesHautesEtudesCommerciales,Canada;CentreUniversitairedeDouala,Cameroon;Centerd'EtudesetdeRecherchessurIeDeveloppementInternational,France;CIRESandORSTROM,Côted'lvoire;OxfordUniversity;UniversityofGhana;UniversityofGoteborg,Sweden;UniversityofNairobi;CatholicUniversity,Leuven,Belgium;UniversityofBurundi;HelsinkiSchoolofEconomics;UniversityofDaresSalaam;FoundationforResearchinEconomicsandBusinessAdministration,Norway;UniversityofZambia;FreeUniversity,Amsterdam;andtheUniversityofZimbabwe.FundingfortheresearchhasbeenprovidedbytheBelgianAdministrationforDevelopmentCooperation;theCanadianInternationalDevelopmentAgency;theDanishInternationalDevelopmentAgency;theFinnishInternationalDevelopmentAgency;theMinistryofCooperationandtheMinistryofForeignAffairs,France;theFederalMinistryofEconomicCooperation,Germany;
theMinistryofForeignAffairs,Italy;theMinistryofForeignAffairs,theNetherlands;theNorwegianAgencyforDevelopmentCooperation;theSwissAgencyforDevelopmentandCooperation;
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theSwedishInternationalEnterpriseDevelopmentCorporation;andtheDepartmentforInternationalDevelopment,UnitedKingdom.
Completiondate:June2001.
Reports
Biggs,Tyler,andMayankRaturi.1997.ProductivityandCompetitivenessofAfricanManufacturing.RPEDPaper80.WorldBank,Washington,DC.
Biggs,Tyler,andPradeepSrivastava.1996.StructuralaspectsofManufacturinginSub-SaharanAfrica:FindingsfromaSeven-CountryEnterpriseSurvey.WorldBankDiscussionPaper346.Washington,DC.
Biggs,Tyler,VijayaRamachandran,andManjuKediaShah.1998.DoesGreaterLocalCompetitionImproveFirmPerformanceinAfrica?RPEDPaper85.WorldBank,Washington,DC.
Biggs,Tyler,ManjuKediaShah,andPradeepSrivastava.1995.TechnologicalCapabilitiesandLearninginAfricanEnterprises.WorldBankTechnicalPaper288.Washington,DC.
Biggs,Tyler,MargaretMiller,CarolineOtto,andGeraldTyler.1996.AfricaCanCompete!OpportunitiesandChallengesforGarmentsandHomeProductsintheEuropeanMarket.WorldBankDiscussionPaper300.Washington,DC.
Biggs,Tyler,GailR.Moody,Jan-HendrikvanLeeuwen,andE.DianeWhite.1994.AfricaCanCompete!OpportunitiesandChallengesforGarmentsandHomeProductsintheU.S.Market.WorldBankDiscussionPaper242.Washington,DC.
Lall,Sanjaya,GiorgioBarbaNavaretti,SimonTeitel,andGaneshanWignaraja.1994.TechnologyandEnterpriseDevelopment:GhanaunderStructuralAdjustment.London:Macmillan;andNewYork:St.Martin's.
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Ramachandran,Vijaya,andManjuKediaShah.1997.TheEffectsofForeignOwnershipinAfrica:EvidencefromGhana,Kenya,andZimbabwe.RPEDPaper81.WorldBank,Washington,DC.
.1998.EntrepreneurialCharacteristicsandPrivateSectorGrowthinSub-SaharanAfrica.RPEDPaper86.WorldBank,Washington,DC.
Raturi,Mayank,andAnandSwamy.1997.ExplainingEthnicDifferentialsinCreditMarketOutcomesinZimbabwe.RPEDPaper78.WorldBank,Washington,DC.
TheEconomicsofPoliticalandCriminalViolence
Thisresearchseekstoanswerthefollowingquestions:Whydocivilwarsoccur?Whatarethedeterminantsofviolentcrime?Whataretheeconomiccausesandconsequencesofpoliticalandcriminalviolence?Canwepredictandpreventthesephenomena?Whateconomicpoliciesareappropriateincountriesthathaveundergoneperiodsoflarge-scaleviolenceandpoliticalconflict?
Theprojectusesseveralmethodologies,includinggame-theoreticmodeling,econometricmodeling,and
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hypothesistesting.Itsmultidisciplinaryapproachcombinesperspectivesfromeconomics,politicalscience,criminology,law,andsociology.
Theprojectwilldevelopadatabaseoncrimeandviolenceindevelopingcountriescombiningeconomic,social,andpoliticalindicators.Inaddition,itwillhaveaccesstoprimarysourcessuchasinterviewsandofficialdocumentsthroughitsassociationwithuniversityresearcherswhowillbeconductingcasestudies.TheprojectwillalsodrawonWorldBankandotherrelevantdatabases.
Theproject'sfindingsareexpectedtocontributetotheBank'sadviceonthemicroeconomicandmacroeconomicmanagementofcountriesunderriskofcivilwarandonpoliciesduringpostconflictreconstruction.Inaddition,itishopedthattheprojectwillidentifysetsofoptimalpoliciesforcountriesunderdifferentlevelsofriskofwarandforcountrieswithdifferentconflictbackgrounds.
Theprojectseekstobuildlocalresearchcapacityindevelopingcountriesbyincorporatingresearchersfromsuchcountriesand,especiallyinthecasestudyphase,pairingU.S.-basedresearcherswithscholarsinthecountriesstudied.
TheprojectwaslaunchedwithaworkshopinFebruary1999.Threeconferenceswillbeheldtopresentanddiscussworkinprogress,andafinalconferencetodisseminatefindings.
Responsibility:DevelopmentResearchGroup,OfficeoftheDirectorPaulCollier([email protected] ),PublicEconomicsShantayananDevarajan,IbrahimElbadawi,andNicholasSambanis,MacroeconomicsandGrowthNormanLoayza,WilliamEasterly,andDavidDollar,TradeMauriceSchiffandRobertaGatti,andPovertyandHumanResourcesEmmanuelJimenezandVijayendraRao;andLatinAmericaandtheCaribbeanRegion,
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PovertyReductionandEconomicManagementSectorUnit.WithAnkeHoeffler,OxfordUniversity;JeffreyHerbstandMichaelDoyle,PrincetonUniversity;PatrickRegan,BinghamtonUniversity;RobertBatesandEdwardGlaeser,HarvardUniversity;NadeemulHaque,InternationalMonetaryFund;GregoryHess,OberlinCollege;NjugunaNdung'u,UniversityofNairobi;Jean-PaulAzam,UniversitedeToulouse;SteveLevitt,UniversityofChicago;PabloFajnzylber,UniversityFederaldoMinasGerais;AnnPiehl,UniversityofCaliforniaatBerkeley;MauricioRubioandOrianaBandiera,UniversidadCarlosIIIdeMadrid;NilsPeterGledisch,IndradeSoysa,andHavardHergre,PRIO;andScottGates,PRIOandMichiganStateUniversity.
Completiondate:June2002.
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BankResearchOutputBelowarelistedvarioustypesofresearchoutputarisingfromresearchandpolicyreviewactivitiesattheWorldBank.Toprovidemaximumcoverageofsuchoutput,researchisdefinedforthepurposesofthislistinabroaderratherthananarrowersense.CopiesofBankpublications(categoriesAandE)canbepurchasedororderedfromtheBank'sbookstore(foron-lineordering,gotowww.worldbank.org/publications)orfromdistributors(seelistonlastpageofthisvolume).Copiesofworkingpapersandbackgroundpapers(categoriesF-H)canbeobtainedfromtheauthorsortheassociatedBankdepartments.Inaddition,thefulltextofsomeworkingpapersseriescanbefoundontheBank'sWebsite(www.worldbank.org).ReprintsofarticlesfromtheBank'sresearchjournals(categoryC)mayberequestedfromtheauthors;
thefulltextofrecentarticlesisalsoavailableontheWebatwww.worldbank.org/research/journals.Otherpublishedmaterialcanbepurchasedfromthepublishers(categoriesBandD).Thefollowingtypesoffiscal1999researchoutputarelisted:
A.Research-orientedbookswrittenbyBankstaffandpublishedbytheBankorbyotherpublishers.Thislistalsoincludesperiodicdatapublications,suchasGlobalDevelopmentFinance,thatfeedsubsequentresearch.
B.ResearchbyBankstaffpublishedaspartofcollectedvolumesofresearchpapers.
C.ArticlesappearingintheBank'stwoeconomicsjournals,theWorldBankEconomicReviewandWorldBankResearchObserver.
D.ArticlesrelatedtoBankresearchandpublishedinnon-Bank
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professionaljournals.
E.WorldBankDiscussionPapers,TechnicalPapers,andotherBankseriespublications.
WorldBankDiscussionPapersThisseriesprovidesanoutletinthepublicdomainforabroadrangeofBankoutputthatprovidesdetailedresultsofinteresttodevelopmentpractitionersfromworkonnarrowresearchtopicsorcountry-specificstudies.
WorldBankTechnicalPapers.Thisseriesprovidesanoutletinthepublicdomainforresearchandstudies
thatarehighlytechnicalandareaimedatanarroweraudience.
Otherpublishedseries.PapersinsuchseriesastheLivingStandardsMeasurementStudyWorkingPaperandWorldBankInstitute(formerly,EconomicDevelopmentInstitute)seriestypicallyfocusonaspecializedtopicandaredesignedtogiveprominencetoBankworkonthattopicortoworkbyaparticularBankunit.
F.PolicyResearchWorkingPapers.Theseworkingpapersareavehicleforquickdisseminanion,sometimesinanincompletelypolishedformat,offindingsofworkunderwayintheBank.TheprimaryaudienceisBankstaff,thoughsomecopiesarecirculatedtointerestedresearchersoutsidetheBank.
G.OtherBankworkingpapers.Thesepapersareproducedanddistributedbydepartments,somedivisions,andavicepresidency.TheydisseminatequicklyfindingsofdepartmentalresearchandaretargetedprimarilytospecialistsintheBank.
H.BackgroundpaperstoWorldDevelopmentReport1999/2000.ThesepapersarecommissionedfromresearchersinsideandoutsidetheBank.SomealsocomeoutasPolicyResearchWorkingPapersorinotherforms.
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A.BooksbyBankResearchers
Ainsworth,Martha,LieveFransen,andMeadOver,eds.1998.ConfrontingAIDS:EvidencefromtheDevelopingWorldSelectedBackgroundPapersfortheWorldBankPolicyResearchReport,ConfrontingAIDS:PublicPrioritiesinaGlobalEpidemic.Brussels:EuropeanCommission;andWashington,DC:WorldBank.
Bevan,David,PaulCollier,andJanWillemGunning.1999.ThePoliticalEconomyofPoverty,Equity,andGrowth:NigeriaandIndonesia.NewYork:OxfordUniversityPress.
Bokros,Lajos,andJean-JacquesDethier,eds.1998.PublicFinanceReformduringtheTransition:TheExperienceofHungary.Washington,DC:WorldBank.
Brouwer,ElizabethC.,BruceM.Harris,andSonomiTanaka,eds.1998.GenderAnalysisinPapuaNewGuinea.Washington,DC:WorldBank.
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Burki,ShahidJaved,andGuillermoE.Perry,eds.1999.AnnualWorldBankConferenceonDevelopmentinLatinAmericaandtheCaribbean1998BanksandCapitalMarkets:SoundFinancialSystemsforthe21stCentury.Washington,DC:WorldBank.
Cernea,MichaelM.1999.TheEconomicsofInvoluntaryResettlement:QuestionsandChallenges.DirectionsinDevelopmentSeries.Washington,DC:WorldBank.
Diwan,Ishac,andRadwanA.Shaban,eds.1999.DevelopmentunderAdversity:ThePalestinianEconomyinTransition.Washington,DC:WorldBank.
Easter,K.William,MarkW.Rosegrant,andArielDinar,eds.1998.MarketsforWater:PotentialandPerformance.Boston:KluwerAcademic.
Edwards,Michael.1999.FuturePositive:InternationalCooperationinthe21stCentury.London:Earthscan.
Gacs,Janos,RobertHolzmann,andMichaelL.Wyzan,eds.1999.TheMixedBlessingofFinancialInflows:TransitionCountriesinComparativePerspective.Northampton,Mass.:EdwardElgar.
Galal,Ahmed,andRobertZ.Lawrence,eds.BuildingBridges:AnEgypt-U.S.FreeTradeAgreement.Washington,DC:BrookingsInstitution.
Gauri,Varun.1999.SchoolChoiceinChile:TwoDecadesofEducationalReform.Pittsburgh:UniversityofPittsburghPress.
Grootaert,Christiaan,andHarryA.Patrinos,eds.1999.ThePolicyAnalysisofChildLabor:AComparativeStudy.NewYork:St.Martin's.
Guasch,J.Luis.1999.LaborMarketReformandJobCreation:
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TheUnfinishedAgendainLatinAmerica.DirectionsinDevelopmentSeries.Washington,DC:WorldBank.(AlsopublishedinSpanish,byKonradAdenauerStiftungA.C.,CentroInterdisciplinariodeEstudiossobreelDesarrolloLatinoamericano[CIEDLA],BuenosAires.)
Hinkle,LawrenceE.,andPeterJ.Montiel,eds.1999.ExchangeRateMisalignment:ConceptsandMeasurementforDevelopingCountries.NewYork:OxfordUniversityPress.
Honohan,Patrick.1998.KeyIssuesofCost-BenefitMethodologyforIrishIndustrialPolicy.Dublin:EconomicandSocialResearchInstitute.
InternationalFinanceCorporation.1999.EmergingStockMarketsFactbook1999.Washington,DC.
InternationalFinanceCorporation,EnvironmentDivision.1998.DoingBetterBusinessthroughEffectivePublicConsultationandDisclosure:AGoodPracticeManual.Washington,DC.
Jefferson,GaryH.,andInderjitSingh.1998.EnterpriseReforminChina:Ownership,Transition,andPerformance.NewYork:OxfordUniversityPress.
Khandker,ShahidurR.1998.FightingPovertywithMicrocredit:ExperienceinBangladesh.NewYork:OxfordUniversityPress.
Kochendorfer-Lucius,Gudrun,andBorisPleskovic,eds.1999.DevelopmentIssuesinthe21stCentury.Berlin:GermanFoundationforInternationalDevelopment;andWashington,DC:WorldBank.
Ledgerwood,Joanna.1998.MicrofinanceHandbook:AnInstitutionalandFinancialPerspective.Washington,DC:WorldBank.Manor,James.1999.ThePoliticalEconomyofDemocraticDecentralization.DirectionsinDevelopmentSeries.Washington,DC:WorldBank.
Marino,Manuel,andJohnBoland.1999.AnIntegratedApproachtoWastewaterTreatment:DecidingWhere,When,andHowMuchto
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Invest.DirectionsinDevelopmentSeries.Washington,DC:WorldBank.
Measham,Anthony,andMeeraChatterjee.1999.WastingAway:TheCrisisofMalnutritioninIndia.DirectionsinDevelopmentSeries.Washington,DC:WorldBank.
Nash,John,andWendyTakacs,eds.1998.TradePolicyReform:LessonsandImplications.RegionalandSectoralStudiesSeries.Washington,DC:WorldBank.
Nunberg,Barbara.1998.TheStateafterCommunism:AdministrativeTransitionsinCentralandEasternEurope.Washington,DC:WorldBank.
Ofosu-Amaah,W.Paatii,RajSoopramanien,andKishorUprety.1999.CombatingCorruption:AComparativeReviewofSelectedLegalAspectsofStatePracticesandMajorInternationalInitiatives.Washington,DC:WorldBank.
Pesaran,M.H.,R.P.Smith,andTakamasaAkiyama.1998.EnergyDemandinAsianDevelopingCountries.NewYork:OxfordUniversityPress.
Pleskovic,Boris,andJosephE.Stiglitz,eds.1999.AnnualWorldBankConferenceonDevelopmentEconomics1998.Washington,DC:WorldBank.
Pouliquen,LouisY.1999.RuralInfrastructurefromaWorldBankPerspective:AKnowledgeManagementFramework.Washington,DC:WorldBank.
Robb,CarolineM.1999.CanthePoorInfluencePolicy?RespondingtotheChallengeofInclusionthroughParticipatoryPovertyAssessments.DirectionsinDevelopmentSeries.Washington,DC:WorldBank.
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Rushbrook,Philip,andMichaelPugh.1999.SolidWasteLandfillsinMiddle-andLower-IncomeCountries:ATechnicalGuidetoPlanning,Design,andOperation.Washington,DC:WorldBank.
Schmidt-Hebbel,Klaus,andLuisServen,eds.1999.TheEconomicsofSavingandGrowth:Theory,Evidence,andImplicationsforPolicy.NewYork:CambridgeUniversityPress.
Sosale,Shobhana,ed.1999.EducationalPublishinginGlobalPerspective:CapacityBuildingandTrends.Washington,DC:WorldBank.
Tooley,James.1999.TheGlobalEducationIndustry:LessonsfromPrivateEducationinDevelopingCountries.Washington,DC:InternationalFinanceCorporationandInstituteforEconomicAffairs.
Umana,AlvaroQuesada,ed.1998.TheWorldBankInspectionPanel:TheFirstFourYears(199498).Washington,DC:WorldBank.
vanGreuning,Hennie,andSonjaBrajovic-Bratanovic.1999.AnalysingBankingRisk:AFrameworkforAssessingCorporateGovernanceandFinancialRiskManagement.Washington,DC:WorldBank.
Venables,AnthonyJ.,M.Fugita,andPaulKrugman.1999.TheSpatialEconomy:Cities,RegionsandInternationalTrade.Cambridge,Mass.:MITPress.
West,GeraldT.,andEthelI.Tarazona.1998.MIGAandForeignDirectInvestment:EvaluatingDevelopmentalImpacts.Washington,DC:WorldBank.
WorldBank.1998.AfricanDevelopmentIndicators1998.Washington,DC.
.1998.AssessingAid:WhatWorks,WhatDoesn't,andWhy.World
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BankPolicyResearchReport.NewYork:OxfordUniversityPress.
.1998.EastAsia:TheRoadtoRecovery.Washington,DC.
.GlobalEconomicProspectsandtheDevelopingCountries1998/99:BeyondFinancialCrisis.Washington,DC.
.1998.WorldDevelopmentReport1998/99:KnowledgeforDevelopment.NewYork:OxfordUniversityPress.
.1999.CurbingtheEpidemic:GovernmentsandtheEconomicsofTobaccoControl.DevelopmentinPracticeSeries.Washington,DC.
.1999.GlobalCommodityMarkets.Quarterly.Washington,DC.
.1999.GlobalDevelopmentFinance1999.Washington,DC.
.1999.NaturalGas:PrivateSectorParticipationandMarketDevelopment.Washington,DC.
.1999.PopulationandtheWorldBank:AdaptingtoChange.Washington,DC.
.1999.ThePrivateSectorinWaterSupply:CompetitionandRegulation.Washington,DC.
.1999.WorldBankAtlas1999.Washington,DC.
.1999.WorldDevelopmentIndicators1999.Washington,DC.
WorldBankandEuropeanCommission.1999.EuropeanUnionAccession:TheChallengesforPublicLiabilityManagementinCentralEurope.Washington,DC.
WorldBankandOrganisationforEconomicCo-operationandDevelopment.1998.AFrameworkfortheDesignandImplementationofCompetitionLawandPolicy.Washington,DC.
WorldBank,withUnitedNationsIndustrialDevelopmentOrganizationandUnitedNationsEnvironmentProgramme.1999.
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PollutionPreventionandAbatementHandbook1998:TowardCleanerProduction.Washington,DC.
B.BookChaptersbyBankResearchers
Bruno,Michael,MartinRavallion,andLynSquire.1998.EquityandGrowthinDevelopingCountries:OldandNewPerspectivesonthePolicyIssues.InVitoTanziandKe-youngChu,eds.,IncomeDistributionandHigh-QualityGrowth.Cambridge,Mass.:MITPress.
Burnside,Craig.1999.DiscreteState-SpaceMethodsfortheStudyofDynamicEconomies.InRamonMarimonandAndrewScott,eds.,ComputationalMethodsfortheStudyofDynamicEconomies.Oxford:OxfordUniversityPress.
Burnside,Craig,MartinEichenbaum,andSergioRebelo.1999.WhatCausedtheRecentAsianCurrencyCrisis?InWilliamC.Hunter,GeorgeG.Kaufman,andThomasH.Krueger,eds.,TheAsianFinancialCrisis:Origins,ImplicationsandSolutions.Boston:KluwerAcademic.
Canagarajah,S.,andH.Coulombe.1999.Letravaildesenfantsetlafrequentationscolaire:EvidenceduGhanaetdelaCôted'lvoire.InB.KervynandQ.Wodon,eds.,L'Economicdutravaildesenfants.UniversityofNamur,Belgium.
Caprio,Gerard,Jr.,andPhilipBartholomew.1999.SystemicRisk,Contagion,andtheAsianFinancialCrisis.InJamesBarthandDanBrumbaugh,eds.,RestructuringRegulationandFinancialInstitutions.SantaMonica,Calif.:MilkenInstitute.
deMelo,Martha,andCevdetDenizer.1999.MonetaryPolicyduringTransition:AnOverview.InMarioBlejerandMarkoSkreb,eds.,FinancialSectorTransformation:LessonsfromEconomiesinTransition.NewYork:CambridgeUniversityPress.
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Demirgüc-Kunt,Asll,RossLevine,andHongMin.1998.OpeningtoForeignBanks:IssuesofStability,Efficiency,and
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Growth.InProceedingoftheBankofKoreaConferenceontheImplicationsofGlobalizationofWorldFinancialMarkets.
Devarajan,Shantayanan.1999.ModelsandDiscountRates:CommentsonManneandCline.InPaulR.PortneyandJohnP.Weyant,eds.,DiscountingandIntergenerationalEquity.Washington,DC:ResourcesfortheFuture.
Dinar,Ariel,RichardE.Howitt,StevenRassenti,andVernonL.Smith.1998.DevelopmentofWaterMarketsUsingExperimentalEconomics.InK.WilliamEaster,MarkW.Rosegrant,andArielDinar,eds.,MarketsforWater:PotentialandPerformance.Boston:KluwerAcademic.
Dollar,David,MaryHallward-Driemeier,Giuseppelarossi,andMitaChakraborty.1998.Short-TermandLong-TermCompetitivenessIssuesinThaiIndustry.InJ.WitteandS.Koeberle,eds.,BackgroundPapersfortheConferenceThailand'sDynamicEconomicRecoveryandCompetitiviness.Bangkok:NationalEconomicandSocialDevelopmentBoardofThailand;andWashington,DC:WorldBank,ThailandOffice.
Finger,J.Michael.1999.DevelopingCountriesintheNextWTORound:IsThatEnough?InIISakongandKwangSukKim,eds.,TheFiftyYearsoftheGATT/WTO:PastPerformancesandFutureChallenges.Seoul:InstituteforGlobalEconomics.
Finger,J.Michael,andAdrianaCastro.1999.TradePolicyandCompetitionLaw:IssuesforDevelopingCountries.InGavinBoydandJohnH.Dunning,eds.,StructuralChangeandCooperationintheGlobalEconomy.Cheltenham,U.K.:EdwardElgar.
Hoekman,Bernard,DeniseKonan,andKeithMaskus.1998.EconomicEffectsofaFreeTradeAgreementbetweenEgyptandtheUnitedStates.InAhmedGalalandRobertZ.Lawrence,eds.,
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BuildingBridges:AnEgypt-U.S.FreeTradeAgreement.Washington,DC:BrookingsInstitution.
Honohan,Patrick.1998.PolicyforFinancialandMacroeconomicStability:IrelandintheEarlyYearsofEMU.InTheDuisenbergSeminar.Dublin:InstituteofEuropeanAffairs.
.1999.FiscalAdjustmentandDisinflationinIreland:SettingtheBasisforEconomicRecoveryandExpansion.InFrankBarry,ed.,UnderstandingIreland'sEconomicGrowth.London:Macmillan.
Huber,RichardM.,andS.C.Jameson.1998.IntegratedCoastalZoneManagementDecisionSupportModelingforCoralReefEcosystems.InProceedingsoftheOceanCommunityConference1998.Baltimore.
Ingram,Gregory,andZhiLiu.1999.DeterminantsofMotorizationandRoadProvision.InJ.A.Gomez-Ibanez,W.B.Tye,andC.Winston,eds.,EssaysinTransportationEconomicsandPolicy.Washington,DC:BrookingsInstitution.
James,Estelle.1998.CommentsonU.K.andChileanReforms.InH.Siebert,ed.,RedesigningSocialSecurity.InstitutfurWeltwirtschaftanderUniversitatKiel.
.1998.PensionReforminLatinAmerica:IsThereanEfficiency-EquityTradeoff?InNancyBirdsall,C.Graham,andRichardSabot,eds.,BeyondTradeoffs:MarketReformsandEquitableGrowthinLatinAmerica.Washington,DC:Inter-AmericanDevelopmentBankandBrookingsInstitution.
Jameson,S.C.,RichardM.Huber,andM.Miller.1999.RestorationofaValuableCoralReefEcosystem:ReefFix,MontegoBay,Jamaica.InProceedingsoftheNCRIConferenceonScientificAspectsofCoralReefAssessment,Monitoring,andRestoration.FortLauderdale.
Jha,Prabhat,T.E.Novotny,andR.G.A.Feachem.1998.
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UnderstandingtheRoleofGovernmentsinGlobalTobaccoControl.InR.Lu,J.Mackay,S.Niu,andR.Peto,eds.,TheGrowingEpidemic:Proceedingsofthe10thWorldConferenceonTobaccoandHealth,August2428,1997,Beijing,China.Singapore:SpringerVerlag.
Kaminski,BartekK.1998.ForeignTrade:PoliciesandPerformance.InR.Starr,ed.,TransitiontoDemocracyinPoland.NewYork:St.Martin's.
Khandker,ShahidurR.1998.AMicro-LevelViewofRuralFinance.InRashidFaruqee,ed.,BangladeshAgricultureinthe21stCentury.Dhaka:UniversityPressLimited.
MacKinnon,Kathy,JessicaMott,andHermantaMishra.1999.InJohnSeidensticker,SarahChristie,andPeterJackson,eds.,RidingtheTiger:TigerConservationinHuman-DominatedLandscapes.Cambridge:CambridgeUniversityPress.
Ravallion,Martin.1999.FaminesandEconomics.InJeanDreze,ed.,TheEconomicsofFamine.Cheltenham,U.K.:EdwardElgar.
.1999.Inequality,WelfareandPoverty:Comment.InJacquesSilber,ed.,HandbookofInequalityMeasurement.Boston:KluwerAcademic.
.1999.ThePerformanceofRiceMarketsinBangladeshduringthe1974Famine.InJeanDreze,ed.,TheEconomicsofFamine.Cheltenham,U.K.:EdwardElgar.Schmidt-Hebbel,Klaus,andLuisServen.1998.IncomeInequalityandAggregateSaving.InAndresSolimano,ed.,SocialInequality,Values,Growth,andtheState.AnnArbor:UniversityofMichiganPress.
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vandeWalle,Dominique.1999.SafetyNetsinanEmergingMarketEconomy.InJennieLitvackandDennisRondinelli,eds.,MarketReforminVietNam:BuildingInstitutionsforDevelopment.Westport,Conn.:QuorumBooks.
C.ArticlesPublishedintheWorldBankEconomicReviewandWorldBankResearchObserver
Alderman,Harold,andKathyLindert.1998.ThePotentialandLimitationsofSelf-TargetedFoodSubsidies.WorldBankResearchObserver13(2):21330.
Angelsen,Arild,andDavidKaimowitz.1999.RethinkingtheCausesofDeforestation:LessonsfromEconomicModels.WorldBankResearchObserver14(1):7398.
Assaad,Ragui.1999.MatchingSeverancePaymentswithWorkerLossesintheEgyptianPublicSector.WorldBankEconomicReview13(1):11754.
Baffes,John,andJacobMeerman.1998.FromPricestoIncomes:AgriculturalSubsidizationwithoutProtection.WorldBankResearchObserver13(2):191212.
Behrman,JereR.,andJamesC.Knowles.1999.HouseholdIncomeandChildSchoolinginVietnam.WorldBankEconomicReview13(2):21156.
Bloom,DavidE.,andJeffreyG.Williamson.1998.DemographicTransitionsandEconomicMiraclesinEmergingAsia.WorldBankEconomicReview12(3):41956.
Brunetti,Aymo,GregoryKisunko,andBeatriceWeder.1998.CredibilityofRulesandEconomicGrowth:EvidencefromaWorldwideSurveyofthePrivateSector.
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WorldBankEconomicReview12(3):35384.
Canning,David.1998.ADatabaseofWorldStocksofInfrastructure,195095.WorldBankEconomicReview12(3):52947.
Caprio,Gerard,Jr.,andAsliDemirguc-Kunt.1998.TheRoleofLong-TermFinance:TheoryandEvidence.
WorldBankResearchObserver13(2):17190.
Castro-Leal,Florencia,JuliaDayton,andLionelDemery.1999.PublicSocialSpendinginAfrica:DothePoorBenefit?WorldBankResearchObserver14(1):4972.
Chisari,Omar,AntonioEstache,andCarlosRomero.1999.WinnersandLosersfromthePrivatizationandRegulationofUtilities:LessonsfromaGeneralEquilibriumModelofArgentina.WorldBankEconomicReview13(2):35778.
Deininger,Klaus,LynSquire,andSwatiBasu.1998.DoesEconomicAnalysisImprovetheQualityofForeignAssistance?WorldBankEconomicReview12(3):385418.
Demirguc-Kunt,Asli,andHarryHuizinga.1999.DeterminantsofCommercialBankInterestMarginsandProfitability:SomeInternationalEvidence.
WorldBankEconomicReview13(2):379408.
Easter,K.William,MarkW.Rosegrant,andArielDinar.1999.FormalandInformalMarketsforWater:Institutions,Performance,andConstraints.WorldBankResearchObserver14(1):99116.Guasch,J.Luis,andRobertW.Hahn.1999.TheCostsandBenefitsofRegulation:ImplicationsforDevelopingCountries.WorldBankResearchObserver14(1):13758.
Haltiwanger,John,andManishaSingh.1999.Cross-CountryEvidenceonPublicSectorRetrenchment.WorldBankEconomic
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Review13(1):2366.
Hamilton,Kirk,andMichaelClemens.1999.GenuineSavingsRatesinDevelopingCountries.WorldBankEconomicReview13(2):33356.
Hoekman,Bernard.1998.UsingInternationalInstitutionstoImprovePublicProcurement.
WorldBankResearchObserver13(2):24970.
James,Estelle.1998.NewModelsforOld-AgeSecurity:Experiments,Evidence,andUnansweredQuestions.
WorldBankResearchObserver13(2):271301.
Jayaraman,Rajshri,andPeterLanjouw.1999.TheEvolutionofPovertyandInequalityinIndianVillages.WorldBankResearchObserver14(1):130.
Jeon,Doh-Shin,andJean-JacquesLaffont.1999.TheEfficientMechanismforDownsizingthePublicSector.WorldBankEconomicReview13(1):6788.
Lanjouw,Peter,andMartinRavallion.1999.BenefitIncidence,PublicSpendingReform,andtheTimingofProgramCapture.WorldBankEconomicReview13(2):25773.
Maloney,WilliamF.1999.DoesInformalityImplySegmentationinUrbanLaborMarkets?EvidencefromSectoralTransitionsinMexico.WorldBankEconomicReview13(2):275302.
Masson,PaulR.,TamimBayoumi,andHosseinSamiei.1998.InternationalEvidenceontheDeterminantsofPrivateSaving.WorldBankEconomicReview12(3):483502.
Messick,RichardE.1999.JudicialReformandEconomicDevelopment:ASurveyoftheIssues.WorldBankResearchObserver14(1):11736.
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Morisset,Jacques.1998.UnfairTrade?TheIncreasingGapbetweenWorldandDomesticPricesinCommodityMarkets
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duringthePast25Years.WorldBankEconomicReview12(3):50326.
Pradhan,Menno,LauraRawlings,andGeertRidder.1998.TheBolivianSocialInvestmentFund:AnAnalysisofBaselineDataforImpactEvaluation.WorldBankEconomicReview12(3):45782.
Rama,Martin.1999.PublicSectorDownsizing:AnIntroduction.WorldBankEconomicReview13(1):122.
Rama,Martin,andDonnaMaclsaac.1999.EarningsandWelfareafterDownsizing:CentralBankEmployeesinEcuador.WorldBankEconomicReview13(1):89116.
Rama,Martin,andKinnonScott.1999.LaborEarningsinOneCompanyTowns:TheoryandEvidencefromKazakhstan.WorldBankEconomicReview13(1):185209.
Ravallion,Martin.1999.AppraisingWorkfare.WorldBankResearchObserver14(1):3148.Ruppert,Elizabeth.1999.TheAlgerianRetrenchmentSystem:AFinancialandEconomicEvaluation.WorldBankEconomicReview13(1):15584.
vandeWalle,Dominique.1998.TargetingRevisited.WorldBankResearchObserver13(2):23148.
Yaron,Jacob,McDonaldBenjamin,andStephanieCharitonenko.1998.PromotingEfficientRuralFinancialIntermediation.WorldBankResearchObserver13(2):14770.
Younger,StephenD.,DavidE.Sahn,StevenHaggblade,andPaulA.Dorosh.1999.TaxIncidenceinMadagascar:AnAnalysisUsingHouseholdData.WorldBankEconomicReview13(2):30331.
D.ArticlesRelatedtoBankResearchandPublishedinNonBankProfessionalJournals
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Adams,RichardH.,Jr.1998.ThePoliticalEconomyoftheFoodSubsidySysteminBangladesh.JournalofDevelopmentStudies35(1):6688.
.1998.Remittances,InvestmentandRuralAssetAccumulationinPakistan.EconomicDevelopmentandCulturalChange47(1):15573.
Agenor,Pierre-Richard,andJoshuaAizenman.1999.MacroeconomicAdjustmentwithSegmentedLaborMarkets.JournalofDevelopmentEconomics58(2):27796.
Agenor,Pierre-Richard,C.Bismut,P.Cashin,andC.J.McDermott.1999.ConsumptionSmoothingandtheCurrentAccount:EvidenceforFrance,19701996.JournalofInternationalMoneyandFinance18(1):112.
Akin,JohnS.,DavidK.Guilkey,P.L.Hutchinson,andM.T.Mclntosh.1998.PriceElasticitiesofDemandforCurativeHealthCarewithControlforSampleSelectivityonEndogenousIllness:AnAnalysisforSriLanka.
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Alam,Manzoor,JayantSathaye,andDougBarnes.1998.UrbanHouseholdEnergyUseinIndia:EfficiencyandPolicyImplications.EnergyPolicy26(11):88591.
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