overcoming market and government failures in india and africa shanta devarajan world bank
TRANSCRIPT
Overcoming Market and Government Failures
in India and Africa
Shanta Devarajan
World Bank
http://africacan.worldbank.org
GDP growth in South Asia has been strong and accelerating
Source: World Development Indicators
Rapid growth is reducing poverty, but inequality is increasing
Source: Narayan, Ambar, et. al. 2006. “The challenge of promoting equality and inclusion in South Asian countries.” mimeo, World Bank: Washington DC.
Big gaps between enrolment and completion in primary education
Source: Schweitzer, Julian. 2006. “Human development in South Asia.” mimeo, World Bank: Washington, DC.
Immunization rates are low and stagnant
Measles Immunization: 12-23 Months
50
55
60
65
70
75
80
85
90
2000 2001 2002 2003 2004
Year
% Im
mu
niz
ed Bolivia
ChinaIndiaIndonesiaKenya
Source: WDI Indicators Database
For the first time in 20 years, Africa’s growth is high and accelerating
Per capita income
-4
-2
0
2
4
6
8
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
An
nu
al c
ha
ng
e in
re
al G
DP
pe
r c
ap
ita
(%
)
Developing countries Developing countries, excluding China and India
Sub-Saharan Africa High-income countries
Africa’s progress on poverty and social outcomes is uneven
Number of countries that will achieve MDGs Number of population that will achieve MDGs
-800
-700
-600
-500
-400
-300
-200
-100
0
100
200
Maln
utriti
on
Educa
tion
Gende
r
Child m
ortal
ityBirt
hs
Wate
r
Nu
mb
er o
f p
opul
atio
n, m
illio
n
-60
-50
-40
-30
-20
-10
0
10
20
Pover
ty
Maln
utrit
ion
Educa
tion
Gende
r
Child
mor
tality
Births
Wat
er
Sanita
tion
Nu
mb
er o
f co
un
trie
s
-800
-700
-600
-500
-400
-300
-200
-100
0
100
200
Maln
utriti
on
Educa
tion
Gende
r
Child m
ortal
ityBirt
hs
Wate
r
Nu
mb
er o
f p
opul
atio
n, m
illio
n
-60
-50
-40
-30
-20
-10
0
10
20
Pover
ty
Maln
utrit
ion
Educa
tion
Gende
r
Child
mor
tality
Births
Wat
er
Sanita
tion
Nu
mb
er o
f co
un
trie
s
Achieved 1 On track 2 Off track 3 Seriously off track 4 No data 5 Source: Global Monitoring Report, 2007.
I. Water in India
24x7 water: A pipe dream?
Source: Data collected from the water boards or utilities
per capita lpd vs. hours of supply/dayGoa
Chandigarh
Mumbai
Delhi
Patna
Ludhiana
Jodhpur
Dasuya
Dera Bassi
Paris
Jaipur
Ahmedabad
Bikaner
Bangalore
Gurdaspur
Bathinda
Bharatpur
Udaipur
Chennai 3280
105106
108123
133145
149
173184
190220
222223
240332
341
1.5 2.5 1.5
8 10 2.5 1.5
2 3
8 10 2.5 10 10
4 5
10
8
24150
Service to the Poor is big business
Politics, patronage, & network servicesPOLITICIANS
EMPLOYEESUTILITY
COMPANY
CONNECTEDPOPULATION
Operational subsidiesAppointment of directors
Political favours
Artificiallydepressed
tariffs
Poorquality of
service
Over-staffing
UNCONNECTEDPOPULATION
High prices
CONTRACTORS
Untendered contracts
II. Transport in Africa
• Transport corridors
From Teravaninthorn and Raballand, Transport Prices and Costs in Africa: A Review of the Main International Corridors, Directions in Development Series, World Bank, 2008.
SELECTED CORRIDORS
OF THE STUDY
23.5 4
5 5 5
78
11
0
2
4
6
8
10
12
14
Pakis
tan
Bra
zil
US
A
Chin
a
Weste
rn
Euro
pe –
long
dis
tance
Afr
ica-
Durb
an-
Lusaka
Afr
ica-
Lom
é -
Ouagadougou
Afr
ica –
Mom
basa
Kam
pala
Afr
ica-
Douala
-
Ndja
ménaA
vera
ge t
ransport
prices
(in U
S c
ents
per
tkm
)
Central Africa East Africa West Africa Southern Africa France
Variable costs (USD per veh-km) 1.31 0.98 1.67 1.54 0.72
Fixed costs (USD per veh-km) 0.57 0.35 0.62 0.34 0.87
Total transport costs (USD per veh-km)
1.88 1.33 2.29 1.88 1.59
Transport costs are not excessively high in Africa comparing to France for example
However, average transport prices in Africa are high in a global comparison
Corridor Gateway - Destination Price(USD/ veh-km)
Variable cost
(USD/veh- km)
Fixed cost(USD/veh- km)
Average yearly
mileage (‘000)
Profit margin
(%)
West Africa
Tema/Accra - Ouagadougou 3.53 1.54 0.66 30-40 80%
Tema/Accra - Bamako 3.93 1.67 0.62 40-50 80%
Central Africa
Douala - N’Djaména 3.19 1.31 0.57 60-70 73%
Douala - Bangui 3.78 1.21 1.08 50-60 83%
Ngaoundéré - N’Djaména 5.37 1.83 0.73 20-30 118%
Ngaoundéré - Moundou 9.71 2.49 1.55 10-20 163%
East Africa
Mombasa - Kampala 2.22 0.98 0.35 130-140 86%
Mombasa - Nairobi 2.26 0.83 0.53 90-100 66%
Southern Africa
Lusaka - Johannesburg 2.32 1.54 0.34 160-170 18%
Lusaka - Dar-es-Salaam 2.55 1.34 0.44 160-170 62%
An interesting observation: On Central Africa corridor, trucks with lower average yearly mileage
have the higher profit margins
West Africa Central Africa East Africa Southern Africa
Market entry
Licenses Not restrictive Not restrictive Not restrictive Not restrictive
Market access
Bilateral agreement Yes Yes No Yes
Quotas/freight allocation
Yes Yes No No
Queuing system Yes Yes No No
Third country rule Prohibited Prohibited ProhibitedAllowed in some
countries
Technical regulation (road
user charges, axle-load, vehicle
standard, import restriction)
Problem of harmonization of
axle-load regulation
Problem of enforcement of
axle-load regulation
Problem of harmonization of axle-load regulation, delays
at weighbridges
Prohibition of second-hand
vehicle imports in South Africa
Customs regulation
Cumbersome transit procedures inducing border-crossing delays
Cumbersome transit procedures
1. Prohibition for trailers in transit to pick-up backloads in Kenya2. Cumbersome transit procedures inducing border-crossing delays
Cumbersome transit procedures inducing
border-crossing delays
Source: Darbera (1998)
Average transport prices (constant and current) from Mombasa to Kigali
0
50
100
150
200
250
300
3501
98
9
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
Years
US
$/T
on
0
100
200
300
400
500
600
700
800
900
US
$/T
on
Current transport tariffs (left) Real transport tariffs - GDP deflator (right)
After liberalizationBefore liberalization
III. Agriculture in India
Agriculture value added per worker, 1990=100
90
100
110
120
130
140
150
160
170
1990 1992 1994 1996 1998 2000 2002 2004 2006
Bangladesh China India
China
Bangladesh
India
0
1
2
3
4
5
6
7
1975-79 1980-84 1985-89 1990-94 1995-99 2000-02
Perc
ent of A
g. G
DP
Subsidies
Public Investment
Public expenditures in India
IV. Education in India and Uganda
Percent of Std. 2-5 children who cannot read or do sums
0
10
20
30
40
50
60
70
Public Private
Pe
rce
nt Level 2 reading
Subtraction/Division
All India Teacher Absence Map (Public Schools)
StateTeacher
Absence (%)Maharashtra 14.6Gujarat 17.0Madhya Pradesh 17.6Kerala 21.2Himachal Pradesh 21.2Tamil Nadu 21.3Haryana 21.7Karnataka 21.7Orissa 23.4Rajasthan 23.7West Bengal 24.7Andhra Pradesh 25.3Uttar Pradesh 26.3Chhatisgarh 30.6Uttaranchal 32.8Assam 33.8Punjab 34.4Bihar 37.8Jharkhand 41.9Delhi -All India Weighted 24.8%
Source: Kremer, Muralidharan, Chaudhury, Hammer, and Rogers. 2004. “Teacher Absence in India.”
Public School Teachers are paid a (lot) more
• Definitions• Unadjusted Wage
is the average wage of teachers in the public and private sector
• The adjusted wage is what a 25 year old female with a bachelors degree and a 2-year teacher training course residing locally would earn in the public and private sector
1231
1619
6178
5299
02
,00
04
,00
06
,00
0S
ala
ry in
Rs.
Private Public
Unadjusted Adjusted Unadjusted Adjusted
Teacher Compensation
-400
-200
020
040
060
0D
evia
tion
from
Mea
n S
alar
y in
Rs
0 10 20 30Days Absent per Month
Private Schools Public Schools
Teacher Absenteeism and Compensation
The private sector pays more absent teachers
less
The public sector pays more absent teachers
more
Salary results are presented as“deviations from mean”. So the number
200 on the vertical axis means that the person’s salary is Rs.200 more than the average salary for the sector The figure is based on a non-parametric
plot of deviations from mean salary against the number of days absent.
No incentives to perform…
Primary Education in Uganda(PETS)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
1990 1991 1993 1994 1995
US$ per
Student
Intended Grant Amount Received by School (mean)
1999
Grants for Primary Education in Uganda
• In 1995, survey of 250 primary schools in 19 of 39 districts;
Absence rate among teachers
Country Rate (percent)
Bangladesh 15
Ecuador 14
India 25
Indonesia 19
Papua New Guinea 15
Peru 11
Zambia 17
Uganda 27
Uganda: What enumerators found
In class, teaching, 18.2%
Out of class, break, 17.6%
Out of class, in school, 34.2%
Can't find teacher, 19.2%
Administrative work, 8.1%
With surveyor, 0.2%
In class, not teacher, 2.4%
V. Health in India and Chad
Immunization rates are low and stagnant
Measles Immunization: 12-23 Months
50
55
60
65
70
75
80
85
90
2000 2001 2002 2003 2004
Year
% Im
mu
niz
ed Bolivia
ChinaIndiaIndonesiaKenya
Source: WDI Indicators Database
Distribution of Health Care Subsidies All India, 1995-6
0
5
10
15
20
25
30
35
Poorest II III IV Richest
Hospitals
Primary HealthCenters
Source: calculations based on Mahal et. al. 2001 – referred to in MTA para. 2.2.68
India 2003: Doctor absence from PHC’s
by state and reason
0
10
20
30
40
50
60
70
80
Official Duty
Leave
No reason
Quality is low, even when present (Delhi doctors)
0.1
.2.3
.4%
Who
ask
ed th
e re
leva
nt q
uest
ion
Private MBBS Private, No MBBS Public
...And What They DoWhat They Know
% Asked (DCO) % Asked (Vignettes)
What they do is in blue, what they know is in red. MBBS doctors are (roughly) the equivalent of MDs in the US. Das and Hammer (2005)
Chad
“Although the regional administration is officially allocated 60 percent of the ministry's non-wage recurrent expenditures, the share of the resources that actually reach the regions is estimated to be only 18 percent. The health centers, which are the frontline providers and the entry point for the population, receive less than 1 percent of the ministry's non-wage recurrent expenditures.”
-- Bernard Gauthier and Waly Wane, “Leakage of public resources in the health sector : An empirical investigation of Chad,” 2008.
What can be done?
• Information
Primary Education in Uganda(PETS)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
1990 1991 1993 1994 1995
US$ per
Student
Intended Grant Amount Received by School (mean)
1999
Grants for Primary Education in Uganda
• In 1995, survey of 250 primary schools in 19 of 39 districts;
Primary Education in Uganda(PETS)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
1990 1991 1993 1994 1995
US$ per
Student
Intended Grant Amount Received by School (mean)
1999
• In 1995, survey of 250 primary schools in 19 of 39 districts;
• Survey repeated in 1998 and 2000.
Grants for Primary Education in Uganda
What can be done?
• Information
• Separate public financing from provision
Stipends yield big gains for Bangladesh secondary education
Source: World Bank. 2006. Bangladesh: Secondary Education Development Support Credit II. World Bank: Washington, DC.
Rwanda: Results-based Financing
Donors
National Government
Households or Individuals
Results Based Aid
Results Based Contracting for
CCT, RB bonuses
Hospitals, Health Centers
Sub-National Government
District
Results Based Planning and Budgeting
National PBF model for Health Centers• Learning from 3 pilot experiences (since 2001)• Roll-out since May/June 2006• Currently 23 out of 30 districts covered• Seven control districts• 16 Primary Health Care indicators, e.g.
– New Curative Consultation = $0.27– Delivery at the HC = $3.63– Completely vaccinated child = $ 1.82
• 14 HIV/AIDS indicators, e.g. – One Pregnant woman tested (PMTCT) = $1.10– One couple tested voluntarily (PMTCT)= $1.10– HIV+ women treated with NVP = $1.10
• Separation of functions between stakeholders
Increase in Volume of Services (after 27 months)
PBF Indicator January 2006 average/month/
health center( 258 health centers
on average)
March 2008average/month/
health center(286 health centers
on average)
Percentage increase (linear/log R2)
Institutional Deliveries
21 37.5 78% (log 0.75)
New Curative Consultations
985 1,489 51% (log 0.19)
ANC: second dose of TT
21 52.5 150% (log 0.63)
Family Planning new users
15.5 47.9 209% (linear 0.88)
Family Planning users at the end of the month
175.2 711.6 306% (linear 0.98)
Rwanda 2005-2008Indicators DHS-2005 DHS-2008
Contraception (modern) 10% 27%Delivery in Health Centers 39% 52%
Infant Mortality rate 86 per 1000 62 per 1000
Under-Five Mortality rate 152 per 1000
103 per 1000
Anemia Prevalence : Children 56% 48%Vaccination : All 75% 80.4%
Vaccination : Measles 86% 90%Use of Insecticide treated nets
among children less than 54% 67%
Fertility 6.1 children
5.5 children
How to end poverty
Market failuresEfficiency & Equity
Government
failure
How to end poverty
Market failuresEfficiency & Equity
Government
failure