the world bank research program 1999: abstracts of current studies

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.

Pagei

TheWorldBankResearchProgram1999AbstractsofCurrentStudies

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

ThisreporthasbeenpreparedbythestaffoftheWorldBank.ThejudgmentsexpresseddonotnecessarilyreflecttheviewsoftheBoardofExecutiveDirectorsorofthegovernmentstheyrepresent.

Pageiii

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

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

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.

WhatResearchIsNowunderWayattheBank?Thisvolumereportsonresearchprojectsinitiated,underway,orcompletedinfiscal1999(July1,1998,throughJune30,1999).Theabstractsinthevolumedescribe,foreachproject,thequestionsaddressed,theanalyticalmethodsused,thefindingstodate,andtheirpolicy

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

interestedinobtainingmorefrequentandupto-dateinformationonBankresearchprojectsandtheirfindingsmaywishtosubscribetothequarterlyPolicyandResearchBulletin.EachissueincludesinformationonrecentWorldBankpublicationsandworkingpapers,abstractsofnewlyinitiatedresearchprojectsandsummariesofrecentresearchfindings,acolumnidentifyingelectronicinformationavailablefromtheBank,andaformfororderingreportsfeaturedinthatissue.Thebulletinisavailablefreeofcharge.Forinformationonhowtosubscribe,seethesubscriptionrequestformatthebackofthisvolume.

Thebulletin,AbstractsofCurrentStudies,articlesfromtheBank'stwojournalstheWorldBankResearchObserverandWorldBankEconomicReviewandahostofreportsandpublicationsfromBankresearchprojectsareavailableontheWebatwww.worldbank.orglresearch.

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

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.

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

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

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

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

AcidRaininChina

CausesandConsequencesofTropicalDeforestation 77

EconomicInstrumentsforGreenhouseGasReduction 78

Market-BasedInstrumentsforEnvironmentalPolicymakinginLatinAmericaandtheCaribbean:Lessonsfrom11Countries

79

AgriculturalIncentivesinSub-SaharanAfrica:PolicyChallenges

80

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

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

MotorizationandRoadProvision 103

ComparativeStudyofWaterInstitutionsandTheirImpactonWaterSectorPerformanceinSelectedCountries

103

TheImpactofRuralRoads 105

RuralRoads:WelfareImpactEvaluation 105

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

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

MakingAidWork 133

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

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

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


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

FirmAnalysisandCompetitivenessSurveys 184

RegionalProgramonEnterpriseDevelopmentinAfrica185

TheEconomicsofPoliticalandCriminalViolence 186

ABSTRACTSOFCURRENTSTUDIES

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

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

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.

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?

Thisresearchinvestigatestheeffectsofincreasedeconomicopennessonthewelfareofverypoorpeoplebyanalyzingtheimplicationsforthepricesofgoodsandlaborandthenassessingtheimplicationsofthesepricechangesforthewelfareofpoorhouseholds.ItexploresthisissueretrospectivelyusingIndonesiandataandprospectivelyusingSouthAfricandata.TheIndonesianstudyinvestigateshowthepricechangesthatoccurredduringtheAsianfinancialcrisisaffectedtheverypoor,andtheSouthAfricanstudylooksathowthepricechangesthatmightcomeaboutastradeisliberalizedwillaffectgroupsdefinedbyraceandincome.

BoththeIndonesianandtheSouthAfricanstudiesusedetailedhouseholdsurveydata.TheIndonesianstudymatchesthehouseholddatawithveryrecent(1997-98)anddisaggregatedpricedataorganizedbyprovince.TheSouthAfricandatacomefromdetailedhouseholdincomeandexpendituresurveysandthe1996census.TheIndonesianstudyreliesprincipallyonnonparametricanddescriptiveeconometricmethods,whiletheSouthAfricanstudyusesamoretraditionaldemandanalysisandnonparametricmethods.

FindingsforIndonesiashowthattheverypoorarenotsopoorastobeessentiallyinsulatedfromtheeconomicshocksoftheAsianfinancialcrisis.Theverypoorespeciallytheurbanverypoorwereseverelyaffectedbythepricechangesthatresulted.Thefindingsalsohighlightthemutingeffectofself-productionbytheruralpoorandthesubstantialgeographicvariationintheimpactofthecrisis.TheresultsprovideguidanceonwhereaidmightbetargetedinIndonesia(bothbyregionandbyincomeclass)tomitigatetheimpactofthecrisisontheverypoor.

TheSouthAfricanstudyshowsthatdifferentracialgroupshaveverysimilardemandelasticities,althoughconsumptionbasketsdiffer.Workisongoingtomeshtheseresultswithsimulatedpricechangestoinvestigatethepotentialdistributionalimpactofchangesinworld

pricesortradeliberalization.Theseinitialresultssuggestthatpriceandtaxreformswillinducesimilardemandresponsesacrossdifferentracialgroups.Asthetradeliberalizationresultsbecomeavailable,theywillallowbetterestimatesofwhowillbemostharmedandwhowillmostbenefitfromSouthAfrica'scontinuedeconomicintegrationintotheglobaleconomy.Usingrecentcensusdata,theprojectalsoinvestigateswhoisworkingandwhere,byoccupationandindustry.Studiespredictingwhichsectorsmightexpandorshrinkinresponsetoglobalizationordomesticpolicieswillbeabletorelyontheseresultstoinvestigatethedistributionalimpactofthesechanges.

TheresultsarebeingdisseminatedinIndonesiaandSouthAfricathroughseminarsanddiscussionswithgovernmentofficials.

Responsibility:DevelopmentResearchGroup,TradeWillMartin([email protected])andL.AlanWinters,

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.

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

oftobaccoconsumptionanddisabilityfromtheMurrayandLopezbook,adjustedbydisabilityweightsforthedifferentregions.Forthedirectcostsofmorbidity,itusesBankdataonhospitalbudgetsanddatafromtheliteratureonannualtreatmentcostsfortobacco-attributablediseases,averagenumberofyearsuntiltheonsetoftobacco-relateddisease,andaverageexpectedyearsoflifeaftertheonsetofdisease.

ResultswillbedisseminatedthroughtheBank'shealth,nutrition,andpopulationlectureseriesstartinginOctober1999.Theanalysisshouldprovideapproachesthatcountriescoulduseinpreparingtobaccocontrolprojects.

Responsibility:HumanDevelopmentNetwork,Health,Nutrition,andPopulationTeamPrabhatJha(pjha

@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

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

wealthrankingexercises,asocialcapitalinventory,andagenderrolesandissuesexercise.Thesemethodsarecomplementedbyahouseholdandcommunitysamplesurvey,basedonamodifiedLivingStandardsMeasurementStudysurveyinstrument,withasamplesizeof2,250households.Thedesignofthesurveyquestionnaireandtheanalysisoftheresultshavebeengreatlyenrichedbythequalitativefindings.

Studyresultsshowthatpovertyintheregionisacomplexphenomenonbasedoninterlockingsocial,economic,cultural,political,andgeographicandenvironmentalfactors.Threedistinctgroupsofpoorwereidentifiedinthestudyregionthedestitute,whotypicallybecamesothroughidiosyncraticshockssuchas

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.

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

WorldBanklending,withprojectstotaling$745millionlikelytobelaunchedbetween1997and2000.Theseprogramscombinenutrition,healthcare,andcognitivedevelopmenttooffsetthedisadvantagesofgrowingupinpoverty.Substantialevidenceshowsthatpoorhealthandaninadequateearlylearningenvironmentleadtohandicapsdifficulttoreverselaterinlife.Manychildrenmaynevergotoprimaryschoolwithoutinterventionsthatreachthemintheearlyyearsoftheirlives.Iftheydoattendprimaryschool,theymaybeathighriskofdroppingoutearlyorrepeatinggrades.Thatlowersthereturntobothpublicandprivateschooling.Soearlychilddevelopmentprogramsmaybothincreasetheefficiencyofarangeofotherinvestmentsinhumancapitalandpromoteequityinthepopulationtheyserve.

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

willbechosenfromcommunitiesdeemedespeciallyatriskbasedonresultsofasurveyofparasitesundertakenaspartoftheprojectin1998.Butallthreecasestudiesincludecomponentsthataredemand-driven.Sotheapproachusedfortheprojectsinwhichcommunitiesselecttheprogramstheywillsupportwillemploylongitudinaldataandcommunityfixedeffectstoaddressselectionbias.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesHaroldAlderman([email protected])andElizabethKing.WithJereBehrman,UniversityofPennsylvania;PatriceEngle,CaliforniaPolytechnicStateUniversity;DonaldBundy,OxfordUniversity;andN.B.Kabatereine,VectorControlDivision,Uganda.OxfordUniversityhascontributedfundingandin-kindsupportfortheresearch.


Ref.no.:682-34.

GrowthandInequality

Researchongrowthandinequalitycanbedividedintotwobranches.One,derivingfromtheworkofSimonKuznetsandArthurLewis,hastriedtoidentifyarelationshipbetweengrowthandinequality.Theotherhastriedtofindthecausesofgrowthandinequality,treatingthemindependently.

Thisresearchbeganwiththepresumptionthatgrowthandinequalityaresimultaneouslydeterminedthattheyarethejointoutcomesofothervariablesandprocesses.Theconventionoflookingatthemseparatelyassumesincorrectlythattheseunderlyingfactorsarenotrelated.Inaddition,thepursuitofamechanisticrelationshipbetweengrowthanddistributionassumesthattheyareunaffectedbychangesinpolicyandinstitutions.

Theresearchwasbasedontheinequalitydatasetconstructedby

KlausDeiningerandLynSquire,whichwasexpandedandupdatedaspartoftheproject.Theanalysiscombinedcross-countryandtime-serieseconometricmethodstodeterminetheimpactofchangingpoliciesandinstitutionsongrowthanddistribution.

Simultaneousexaminationofgrowthandinequalityyieldssignificantlydifferentresults,withdifferentimplicationsforpolicythanthosederivedbyearlierresearch.Whileearlierresearchassumedthatthesetofgrowthpolicieswasorthogonaltodistribution,andviceversa,theresearchfoundinsteadthatmanypoliciessimultaneouslyaffectbothoutcomes.

Althoughsomepolicieshaveconflictingeffectsongrowthanddistribution,itispossibletoadvancebothgoalssimultaneouslythroughacombinationofmutuallybeneficialandmutuallyexclusivepolicies.Ofallthe

variablestested,onlytheGinicoefficientforlanddistributionappearsrobustlytoimprovebothaggregategrowthandaggregatedistribution.

Theresearchalsoinvestigatedthefactorsunderlyinggrowthamongdifferentincomequintileswithincountries.Thisprovidedarobustnesstestoftheaggregateresults,andatestofwhetherthefactorsdrivingaggregategrowthanddistributionalsohaveanimpactonthepoor.

Theresearchfoundthattheconsequencesofsomepolicychangesdifferacrosscountrieswithdifferentincomelevels.Greaterfinancialdevelopment,forexample,mayincreaseinequalityinindustrialcountriesandreduceitinpoorercountries.Similarly,greateropennesstotradeleadstoslowergrowthinindustrialcountriesandfastergrowthinpoorercountries.

Responsibility:OfficeoftheSeniorVicePresident,DevelopmentEconomicsLynSquire([email protected])andF.HalseyRogers.WithMattiasLundberg.


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

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

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.

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

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

conductingalarge-scaleresearchprojecttoevaluatetheeffectofmass(untargeted)dewormingtreatmentoneducationaloutcomes.Theresultsindicatethatalarge-scaleresearchprojectisfeasible,andtheinitialefforthasbeenscaledup.Inthelargerresearchproject(TheImpactofDewormingTreatmentonPrimarySchoolPerformanceinBusia,Kenya,ref.no.683-55),whichbeganinearly1999,thedewormingtreatmentwillbeprovidedto15,000childrenin75primaryschoolsinBusiaDistrict,Kenya.Thetreatmentwillbeprovidedtorandomlyassignedschools,whiletheschoolsnotselectedfortreatmentwillserveasacontrolgroup.Thisexperimentaldesignwillallowanunbiasedestimationoftheimpactofdewormingtreatmentoneducationalout-

comesschoolattendance,gradeprogression,dropoutrates,andacademicperformance.

Thepilotstudymeasuredtheprevalenceandintensityofinfectionamongschoolchildrenin25schoolsinBusiaanddeterminedwhethersuchcharacteristicsassocioeconomicstatus,accesstosanitation,andpersonalhygienearecorrelatedwithinfectionstatus.Informationonsuchcharacteristicswascollectedthroughanoralinterviewadministeredtopupilsandthroughdirectobservationsbyfieldinterviewers.

Thestudyestimatedtherelationshipbetweenobservedcharacteristicsandinfection.Throughthismodeling,itwaspossibletocalculatethepropensityscoresofinfectionforallpupilsinthestudy.Thepropensityscoreistheconditionalprobabilityofbeingmoderatelyorheavilyinfectedgivenapupil'sobservedcharacteristics.Thepropensityscoremethodwillmakeitpossibleforthelargerresearchprojecttoidentifypupilslikelytobemoderatelyorheavilyinfectedinthecontrolschoolswithoutcollectingmedicalandparasitelogicalinformation.

Thestudentbackgroundinformationcollectedduringschoolvisits,togetherwithdatafromparasitologicalexaminationsconductedinthetreatmentschools,allowedestimationoftherelationshipbetweenobservedstudentcharacteristicsandinfectionstatususingalogisticregression.Thefittedvaluesforthisestimatedregressionarethepropensityscoresofheavyinfection.Bydifferencingtheaverageeducationaloutcomesoftreatmentandcomparisonstudentswithhighpropensityscores,estimatesareobtainedoftheeffectofthedewormingtreatmentamongstudentslikelytobemoderatelyorheavilyinfected.Theresultsofthepilotprojectindicatethatthismethodologyallowsidentificationofmoderatelyorheavilyinfectedstudentswithsatisfactoryaccuracy.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesPaulGlewwe([email protected])andSylvieMoulin;andHumanDevelopmentNetwork,EducationTeamDonaldBundy.WithEdwardMiguel,HarvardUniversity;MichaelKremer,MassachusettsInstituteofTechnology;andtheInternationaalChristelijkSteunfonds,Kenya.


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

problemstakeinpublicandprivatesystems,andwaystheseproblemshavebeenormightberesolved.

Thisresearchwillassistinthedesignofefficienthealthcaresystems,takingintoaccountthechangingofthepopulationdistribution.Thestudyisalsoexpectedtoleadtoaproposalforalargerresearchprojectontheimpactofpopulationagingonhealthcaresystems.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesEstelleJames([email protected]).WithLenNichols,UrbanInstitute;DenisarddeOliveiraAlves,SãoPauloUniversity;DovChernichovsky,BenGurionUniversityoftheNegev;RebeccaWong,GeorgetownUniversity;andClaudioSapelli.ThePan-AmericanHealthOrganizationisparticipatingintheresearch.


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

throughpublications,trainingcoursesforBankstaffonpovertyandonhouseholdsurveys,andconferencesandtrainingcoursesonsurveymethodsforLatinAmericanstatisticalofficessponsoredjointlybytheInter-AmericanDevelopmentBank,theEconomicCommissionforLatinAmericaandtheCaribbean,andtheWorldBank.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesMargaretE.Grosh([email protected]).WithJohnGibson,StanfordUniversityandUniversityWaikato;andJikunHuangandScottRozelle,UniversityofCaliforniaatDavis.


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

programsexpand?Domicrocreditprogramshaveanyspillovereffects?Dotheyhavenoncrediteffects?Doesthegroupplayanessentialpartingroupbasedmicrocredit?ThestudyisinvestigatingthesequestionsbyresurveyingthehouseholdsandcommunitiessurveyedintheearlierstudyinBangladeshduring199192.

Thesurvey,expectedtobegininSeptember1998,wasdelayeduntilFebruary1999bythedevastatingfloodduringthefallof1998.Sincethen,90percentofthesurveyhasbeencompleted.Thesurveyhasrevisited1,700of

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.


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

moreunequallydistributeddidredistributemore.Thebottomsegmentofthepopulation(rankedbymarketincome)endedupwiththesameshareofdisposableincomeregardlessofitsinitialposition.Themedianvoterhypothesisthusseemstofindstrongsupport.

Thestudydrawsondataondemocracy,educationalachievements,andinequalityfromtheWorldBank,anddataonredistributionandsocialspendingfromtheUnitedNations,theWorldBank,andtheLuxembourgIncomeStudy.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesBrankoMilanovic([email protected]).WithMarkGradstein,UniversityofPennsylvaniaandBenGurionUniversity.


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

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,

UniversityofChicago.TheInterAmericanDevelopmentBankhascontributedstafftimeandtravelcostsfortheresearch.


Ref.no.:683-18.

TheEconomicsofMalaria

Thisstudyproposestocontributetotherenewedefforttofightmalaria,whichkillsabout200millionpeopleayear,byexaminingtheeconomicsofmalariaandmalariacontrol.Itwilldevelopanoverallframework,basedonananalyticalreviewoftheliterature,thatlinkshouseholdbehavior,epidemiologicalparameters,themarketformalaria-relatedcommodities,andhealthstatus.Itwillalsodevelopaproposalforresearchthatwillinvestigatethe

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.

Betterunderstandingoftheeffectivenessofpublicinterventionsandhowitmaydifferunderdifferentconditions.

Theimplicationsoftherelationshipbetweeneconomics,individualbehavior,andthebiomedicalaspectsofmalariafortheroleofpublicpolicy.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesEmmanuelJimenez([email protected])andDeonFilmer.


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

decentralizationtoworkwell,centralizationmustworkwell.Thissuggestsaneedtoconsidertheincentivestructureswithintheentitiesinvolvedinantipovertyinterventions.

Theresultsofthisresearchwillhelptoimprovetheunderstandinganddesignofinstitutionalarrangementsinantipovertyinterventions.

EarlyresultswerepresentedattheWorldBank'ssummerresearchworkshoponJuly68,1999.

Responsibility:WorldDevelopmentReportOfficeRaviKanbur([email protected]).WithJohnHoddinottandLawrenceHaddad,InternationalFoodPolicyResearchInstitute;andTimothyBesley,LondonSchoolofEconomics.


Ref.no.:683-41.

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.


Ref.no.:683-46.

InequalitiesinChildHealth:ComparingtheLivingStandardsMeasurementStudyandDemographicandHealthSurveys

TheWorldBank,likemanyotherdevelopmentagencies,hasbeen

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

development.Resultsalsoshowthatinmanybutnotallcases,whethereconomicstatusismeasuredbyequivalentconsumptionorbythewealthindexmakesonlyasmalldifferencetothepicturethatemergesonthecross-countrydifferencesinnutritioninequalities.Thesepreliminaryresultssuggestthatlevelsofdevelopmentandaveragehealth,nutrition,andpopulationoutcomesmaybepoorindicatorsofhowthepoorfareintermsofsuchoutcomes.Theyalsosuggestthatassessingdifferencesbetweenthepoorandthenonpoorusingasyntheticwealthindexisausefulwayforwardwhereconsumptiondataareunavailable.

Oneofthemainproductsoftheprojectwillbecomparabledataondifferencesbetweenthepoorandthenonpoorinmalnutritionandchildmortality,bybothconsumptionandthesyntheticwealthindex.Thesedata,coupledwithdatabasedontheDemographicandHealthSurveys,willallowBankstaffpreparingcountryassistancestrategiesandpovertyassessmentstofindoutnotjusthowacountry'spopulationasawholefares,butalsohowitspoorfare.Thedatawillalsosupportsubsequentanalysestoexplorethecausesofdifferencesbetweenthepoorandthenonpoorinmalnutritionandchildmortality.Suchworkwillexpandknowledgeforassessingthereturnstodifferentpoliciesandprojectsintermsoftheirabilitytoimprovehealthandnutritionoutcomesamongpoorchildren.

TheresultsoftheworkonmalnutritionarebeingdisseminatedthroughaBankseminarinthefallof1999.ThefindingsanddatawillalsobedisseminatedthroughtheBank'sWebsite.

Responsibility:HumanDevelopmentNetwork,Health,Nutrition,andPopulationTeamHelenSaxenian([email protected])andNaokoWatanabe.


Ref.no.:683-47.

TheImpactofDewormingTreatmentonPrimarySchoolPerformance:Busia,Kenya

Thisresearchprojectfollowsapreliminaryfeasibilitystudy,TheImpactofDewormingTreatmentonPrimarySchoolPerformance(ref.no.682-75).Thatstudymeasuredtheprevalenceandintensityofparasiticinfectionamongchildrenin25schoolsinBusiaDistrict,Kenya,anddeterminedwhethersuchcharacteristicsassocioeconomicstatus,accesstosanitation,andpersonalhygienearecorrelatedwith

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

papersandthroughseminarsintheWorldBankandatOxfordUniversity'sCenterfortheEpidemiologyofInfectiousDisease.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesPaulGlewwe([email protected])andSylvieMoulin;andHumanDevelopmentNetwork,EducationTeamDonaldBundy.WithEdwardMiguelandMichaelKremer,HarvardUniversity;SimonBrooker,OxfordUniversityCenterfortheEpidemiologyofInfectiousDisease;AlfredLuoba,KenyaDivisionofVectorBorneDiseases;andInternationaalChristelijkSreunfonds,Nairobi.

Completiondate:April2002.

Ref.no.:683-55.

Gender,OldAge,andSocialSecurity:EvidencefromChileandArgentina

Thisresearchprojectwillanalyzetherelativelivingconditionsofoldermenandwomenandtheimpactofalternativesocialsecurityarrangementsontheirincomeandconsumption.Theresearchwilluseeconometricanalysisofhouseholdandemploymentsurveydatatoestimatethelabormarketexperienceandage-earningsprofilesofmenandwomenwithdifferentlevelsofeducation.

TheprojectwillfocusonArgentinaandChile,butcompareresultswithMexicoandPoland.Theobjectiveistodeveloprecommendationsforsecond-generationpensionreformsthatwilltreatbothmenandwomenfairlyandefficiently.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesEstelleJames([email protected]).WithAlejandraCox-Edwards,CaliforniaStateUniversity.


Ref.no.:683-65.

ImprovingthePolicyRelevanceofLivingStandardsMeasurementStudySurveys

TheWorldBankhasassisteddevelopingcountriesinimplementingLivingStandardsMeasurementStudy(LSMS)surveysformorethan10years.Thisresearchdrewonthatworkandtheworkofotherhouseholdsurveyprogramstosynthesizethelessonsofexperiencesothatcountriescanincorporatetheminthedesignoftheirsurveyprograms.Theresearchfocusedonthefollowingquestions:CanLSMSsurveysbemodifiedtocoverpolicyissuesthataredifficultorimpossibletoanalyzeusingexistingLSMSdata?CanthereliabilityandaccuracyofthedatacurrentlygatheredinLSMSsurveysbe

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.

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.

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.


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

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.

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.

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

EconomicsAssociation(1995),theAfricanStudiesAssociation(1993),andglobalandregionalAIDSconferences(1993,1994,and1995).Inthenext12monthsreportsontheanalysisoftheprojectdatawillbecompletedandthedatafromthestudywillbemadeavailableontheWebatwww.worldbank.orgllsmsllsmshome.html.

AttheBanktheresultsoftheresearcharehelpingtoincreaseawarenessoftheurgentneedtopreventthespreadofAIDS.TheresearchisalsorelatedtoongoingeffortsbythePovertyReductionandEconomicManagementNetworktounderstandhouseholdcopingbehaviorandtodefinetheconceptofthevulnerablehouseholdforpurposesofimprovingtheefficiencyofantipovertyprograms.

Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentMeadOver([email protected]),andPovertyandHumanResources

MarthaAinsworth.WithPhareMujinja,InnocentSemali,GeorgeLwihula,andGodlikeKoda,UniversityofDaresSalaam;IndraniGupta,InstituteforEconomicGrowth,Delhi;SusmitaGhosh;KathleenBeegle,RandCorporation;DanielDorsainvil,MinistryofFinance,Haiti;andPaurviBhatt,U.S.AgencyforInternationalDevelopment(USAID).TheUSAIDandtheDanishInternationalDevelopmentAgency(DANIDA)arecontributingfundingfortheresearch.TheUniversityofDaresSalaamiscontributingstafftime.


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

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.


SustainableBankingwiththePoor

Thisresearchprojectaimsatimprovingtheabilityofdonors,governments,andpractitionerstodesignandimplementpoliciesandprogramsforbuildingsustainablefinancinginstitutionsthatareeffectiveinreachingthepoor.TheprojecthascarriedoutaseriesofcasestudiesofmicrofinanceinstitutionsinAfrica,Asia,andLatinAmericathathavepioneeredinnovativeapproachesforreducingthecostsandrisksofprovidingfinancialservicestoalargenumberoflow-incomeclients.Thecasestudiescoverawiderangeofinstitutions,includingcommercialbanks,specializedbanks,nongovernmentalorganizations,nonbankfinancialinstitutions,andgovernmentdevelopmentfinanceinstitutions.

Theprojectdrawsonseveraldisciplineseconomics,finance,andanthropologyandhasusedbothquantitativeandqualitativeapproachestoanalyzewhysomeprogramshavesuccessfullydeliveredfinancialservices

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

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.


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.

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

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.)

.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

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

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.


TheMethodologyofPovertyAssessments

Policiestofightpovertyrelyincreasinglyondataaboutthelivingconditionsofthepoor,asreflectedinapovertyprofile.Butconstructingapovertyprofilethatcanbereliedontoguidepolicychoicesisoftendifficult.Andthedataandmethodsusedcanmattergreatlytothepolicieschosen.Attheirworst,poorlydevisedpovertyprofilescanmisdirectpovertyreductioneffortsforexample,bychannelingscarceresourcestocitieswhenpovertyisworseinruralareas,orviceversa.

Whatmethodsareavailableforconstructingpovertyprofiles?Whataretheirstrengthsandweaknesses?Thisresearchprojectseekstoanswerthosequestionsbyinvestigatingthetheoreticalandempiricalfoundationsofthemethodsusedinconstructingpovertyprofiles.Typically,toolittleworkgoesintoassessingtherobustnessofpovertycomparisonsastheunderlyingmeasurementassumptionschange.Manyofthedataroutinelyusedinpovertyanalysisarefulloferrorsasituationunlikelytochange.Therealsoareunavoidablevalue

judgmentsunderlyingmeasurementpractices.ThequalityoftheWorldBank'spolicyassessmentsandprescriptionsmayormaynotdependontheseerrorsandassumptions.Animportanttaskistofindoutjusthowconfidentanalystscanbeinformingpovertycomparisons.

Theprojectexaminesthepropertiesofthemeasuresusedforassessingindividualwelfare,includingthepracticesusedincomparingthewelfareofdifferentdemographicgroups(suchaslargeandsmallhouseholds).Italsoinvestigatesthedifferentmethodsusedforsettingpovertylinesandhowmuchtheymattertothepolicyconclusionsdrawn.Anditstudieswaysofmakingbetteruseofsuchnonincomeindicatorsofwelfareashealthandeducationindicators.

Anewstrandoftheresearchisinvestigatingthepropertiesofsubjectivewelfareindicators,suchasself-rated

assessmentsoftheminimumincomeneededtomakeendsmeet,ofconsumptionadequacy,andofwhethertherespondentispoorornot.Aseriesofcasestudies(includingJamaica,Nepal,andRussia)areexaminingthesemethodsaspotentialcomplementstomoreconventional,objectivemethodsofmeasuringpovertyandwelfare.

TheresearchprojectistailoredtotheproblemsfacedbyWorldBankstaffundertakingpovertyassessments,andthereisanactiveprogramoftraininganddissemination.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesMartinRavallion([email protected]),PeterLanjouw,MichaelLokshin,andMennoPradhan.


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

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

expenditureregimesinthesector.

Equity.Thiscomponentisbasedonanalysesofabout60DemographicandHealthSurveys.Thesesurveysdonotincludedirectmeasuresofincomeorconsumptionbutdohaveabatteryofquestionsrelatingtohousingcharacteristicsandownershipofconsumerdurables.InthecontextofsectorworkinBrazilandIndia,theprojectdevelopedanindexofwealthfromthesequestionsusingprincipalcomponentsanalysis.Thisindexisusedtoexaminetherelationshipbetweenhealthmeasures(infantandchildmortality,nutritionalstatus,incidenceofdisease)andfamilywealth.Theanalytictechniqueisadesign-adaptivenonparametricregression.Resultsforinfantandchildmortalityshowpronouncednonlinearrelationships,withthemortalityratefallingsteeplyrelativetowealthatvariouspointsinthewealthdistributioninmostcountries.

Theresearchhasalsoexaminedtheprincipaldeterminantsofhealthstatus.Resultsthusfarconfirmtheresultsintheliteratureontheimportanceofmothers'educationasadeterminantofchildmortality,andshowthatthereisoftenastrongrelationshipwith

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.


Reports

Belli,Paolo.1999.TheEffectsofAdverseSelectionintheHealth

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

projecthasalsotestedtherobustnessofcomparisonsacrossregionsandovertimetomeasurementassumptions.Thedatasetithasconstructedcovers80countries,withdataattwoormorepointsintimeovertheperiod1981-97for50ofthem.

Theestimatesindicatethataround1993,1.3billionpeopleroughlyoneinthreewerelivingonlessthanadollaradayat1985prices.Theincidenceofabsolutepovertyinthedevelopingworldasawholefellslightlyover1987-93.Thenumberofpoorbyanyconsumptionstandardfordefiningpoorhasbeengrowingataboutthesamerateasthepopulationofthedevelopingworld,about2percentayear.Butthereismarkedvariationamongregionsandcountries,withgenerallyrisingpovertyincidenceinAfrica,EuropeandCentralAsia,andLatinAmericaandtheCaribbeanandgenerallyfalling

incidenceinAsia.Amajorupdateisbeingpreparedthatwillprovidenewestimatesfor1996and1998.

ResultsofthisresearchwereusedintheWorldBank'sPovertyReductionandtheWorldBank:ProgressandChallengesinthe1990s(Washington,DC,1996).ResultshavealsobeenusedinrecentWorldDevelopmentReportsandintheforthcomingWorldDevelopmentReport2000/01,onpoverty.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesMartinRavallion([email protected]),ShaohuaChen,andJulieWilliams.


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

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

yieldsavingsinbothcostandtimeinobtaininggood-qualityinformation.Thedatabasefunctionsthroughanupdateengineandaqueryengine,witheachparticipatingagencyresponsibleformaintainingandupdatingasetofindicatorsandensuringquality.Atregularintervalstheupdateengineextractskeyindicatorsfromtheagencies'databasesandputstheminastandardelectronicformatinacommondatabase.Thecommondatabaseisthencopiedtothelocalareanetworkofeachagency.Thequeryengineplacedinthelocalareanetworkofeachagencythenaccessesthecommondatabasetoproducespecificoutputs(suchastables,graphs,andmaps).Thequeryengineisprogrammedtoensuredatacomparability.ThustheANDIallowsuserstogotoasinglesiteratherthantotheseparatesitesoftheparticipatingagencies.Anditprovidesaccesstomorereliable,better-qualitydatathatareautomaticallyupdated.

TheANDIhasprovidedagoodfoundationforpreliminaryworkonmodelsforin-countrynutritioninformationsystems(NIS)inthreepilotcountries:Eritrea,Mali,andZambia.TheNISisbeingoperationalizedin

Mali,anddiscussionsareunderwayinEritreaandZambiatoidentifywaystooperarionalizeitinthosecountries.Theseeffortswillbuildlocalcapacitytousetheinformationforbetterresearchandmoreeffectiveplanning,monitoring,andevaluationofnutritionprograms.

Responsibility:AfricaRegionTechnicalFamilies,HumanDevelopment2RichardSeifman([email protected]),andInstitutionalandSocialPolicyAntoineSimonpietri.TheItalianTrustFundiscontributingfundingfortheresearch.


SocialExclusionandPoverty

Thisresearchprojectconsistsofthreestudies.Thefirst,onsocialexclusionandpoverty,focusesonhowprocessesofsocialandpoliticalexclusionaffectthedynamicsofpoverty.Inparticular,itaskswhatthechancesareofexperiencingtransient(asopposedtochronic)poverty,andwhatpoliciesareeffectiveinmitigatingthecumulativeburdenofexclusion.Theanalysisisbasedonareviewoftheoreticalandempiricalsocialscienceliterature.

Thesecondstudyexamineshealthinequalitiesandpoverty.Itfocusesonthepathwaysthroughwhichpoorhealthandlowsocioeconomicstatusaffecteachother,andthepoliciesneededtobreakthisviciouscycle.ThestudywillcontributetotheWorldBank'sWorldDevelopmentReport2000/01andaddressbroaderconcernsintheWorldBankandtheWorldHealthOrganizationwiththerelationshipsbetweenpoverty,healthpolicy,andhealthinequalities.Theanalysiswilldrawlargelyonqualitativeandquantitativematerialsinthefieldsofpublichealth,economics,andothersocialsciences.

Thethirdstudywilllookatlocalinstitutionalconstraintstoimplementingpoliciesaimedatalleviatingpoverty.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesEmmanuelJimenez([email protected]),MonicaDasGupta,andMichaelWoolcock.WithKameshwarPrasad,All-IndiaInstituteofMedicalSciences,NewDelhi;andPaoloBelli,UniversityofPavia,Italy.TheDutchTrustFundiscontributingfundingfortheresearch.


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.

ThefirstnationalCWIQsurveywascarriedoutinGhanaonasampleofsome15,000householdsinlate1998,andthefirstresultsweremadeavailablewithinonemonthoftheendofthefieldwork.Asocialcapitalmodulewassuccessfullyadministeredtoasubsampleofsome2,000households.SincetheGhanasurveytherehavebeenseveralworkshopsandpresentationsinAfricaandinWashington,DC,andseveralmorecountriesLesotho,Mozambique,Nigeria,andRwandanowplantocarryoutCWIQsurveysin1999.

TheprojectisalsodevelopingacommunityCWIQasimple,community-levelinquiryforadministrationbylocalgovernmentauthorities.Thissurveyrecordsphysicalandsocialassetsofthecommunityaswell

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

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.


TheRuralNonfarmEconomy

Thisprojectisstudyingtheimpactofruralnonagriculturalactivitiesonruralpovertyindevelopingcountries.Thereisgrowingrecognitionthatthenonfarmsectorislargeandthatitplaysasignificantroleinshapingtheruraleconomy.Buthowitaffectsruralpovertyhasreceivedlittleempiricalattention.Thatistheissuethisprojectaddresses.

Theresearchposesaseriesofquestions:Whatshareofthepoor'sincomestemsfromnonfarmactivities?Doruralnonfarmactivitiespullpeopleoutofpoverty,orarethepoorpushedfurtherintolow-productivity,residualnonfarmactivitiesbecauseofstagnationordeclineinagriculture?Dothepoorfaceparticularimped-

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

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

contributionstoprogrammedsectorwork,andBanksectorwork,suchasruralpovertystudiesandruralsectorstrategyreports,isincorporatingtheoutputfromtheresearch.Inaddition,findingshavebeenpresentedataWorldBankworkshoponthenonfarmsectorinJune1999andataworkshopontheperiurbaneconomyinDaresSalaaminMay1999attendedbydonors,Bankstaff,andTanzaniancounterparts.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesPeterF.Lanjouw([email protected]).WithAbusalehShariff,NationalCenterforAppliedEconomicResearch,India;andRobertSparrow,FreeUniversity,theNetherlands.


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.

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

duringearlychildhoodonsubsequentcognitivedevelopment.Itfoundnoevidencesupportingthehypothesisthatchildrenscognitivedevelopmentismostvulnerabletopoornutritionduringthefirstsixmonthsoflife.Goodnutritionduringthesecondyearoflifemaybeatleastasimportant,ifnotmoreso.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesPaulGlewwe([email protected])andElizabethKing.WithHananJacoby,UniversityofRochesterandInternationalFoodPolicyResearchInstitute;LindaAdair,UniversityofNorthCarolinaatChapelHill;andAzotDerecho,OfficeofPopulationStudies,UniversityofSanCarlos,Cebu,Philippines.TheAsianDevelopmentBankcontributedfundingfortheresearch.


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

estimatesifschoolswithdifferentlevelsofinputsalsodiffersystematicallyinother,unobservedways.Randomizedexperimentsovercomemanyofthestatisticalproblemsinherentintheseeconometricstudies,buttheyarerarelydonebecauseoftheirhighcostsandbecauseofpublicofficialsreluctancetovarythelevelofinputsamongschools.ThisresearchtakesadvantageofanopportunityinKenyatoperformrandomizedevaluationsofseveraldifferenteducationpolicyoptionsincollaborationwithaninternationalnongovernmentalorganization.

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.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesPaulGlewwe([email protected]).WithMichaelKremer,MassachusettsInstituteofTechnology;DanLevy,NorthwesternUniversity;SylvieMoulin;andStacyNemeroff.FundingfortheresearchisbeingcontributedbytheInternationalChristianHumanitarianServices,theNetherlands;andtheNationalScienceFoundation,UnitedStates.


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.

Cross-countrycomparisonsareoftenhinderedbylackofcomparabilityacrossdatasets.TherearedatasetscollectedusingalmostidenticalmethodstheDemographicandHealthSurveys(DHS)foralargenumberofdevelopingcountriesandtheNationalFamilyHealthSurvey(NFHS)forIndia.Butthedatasetsdonotcontaininformationonconsumptionexpenditures,whichareusuallyusedtorankhouseholdsbyeconomicstatus.Themethodologicalcontributionofthisresearchwastoestablishanddefendanalternativeapproachtorankinghouseholds.Asaproxyforlong-runhouseholdwealth,itconstructedalinearindexfromasetofassetindicators,usingprincipalcomponentsanalysistoderivetheweights.

UsingthedatafromIndia,thestudyfoundthatthisassetindexisrobust,producesinternallycoherentresults,andprovidesaclosecorrespondencewithdataonstatedomesticproductandpovertyrates.Thestudyfurther

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

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.

TheresultsoftheresearchcontributedtoWorldBankreportsonstrengtheningsocialsectorsinIndiaandoneducationandpovertyinBrazil,theIndianstateofUttarPradesh,andthePhilippines.TheresultswillalsofeedintotheWorldBank'sforthcomingPolicyResearchReportongenderanddevelopmentanditsforthcomingWorldDevelopmentReport2000/01,onpoverty.Inaddition,themethodologyhasbeentakenupbyresearchersinsideandoutsidetheWorldBanktoinvestigateotheroutcomes,suchashealthstatusanduseoffamilyplanningservices.

ThemethodologyandresultshavebeenpresentedtoBankresearchersandoperationalstaffaswellatases-

sionoftheannualmeetingsofthePopulationAssociationofAmerica.

Responsibility:EastAsiaandPacificRegion,IndonesiaResidentUnitLantPritchett([email protected]);HumanDevelopmentNetwork,EducationTeamJeePengTan;andDevelopmentResearchGroup,PovertyandHumanResourcesDeonFilmer.


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

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.

Preliminaryanalysisshowsthatthepackageofinputsimprovedteachers'knowledgeoftheearlychilddevelopmentcurriculum,butledtomanyteachersquittingtomovetobetter-payingneighborhoodschools.Teachers'behaviorintheclassroomwasmoreenthusiasticandmorecloselymatchedtherecommendedcurriculum.Studentprogressionintofirstgradeimproved.Butteacherandstudentabsenteeismremainedhigh,andstudentperformanceontheachievementtestswasthesameinthetreatmentasinthecomparisonschools.Furtheranalysisofthedataisbeingconducted.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesPaulGlewwe([email protected])andSylvieMoulin.WithMichaelKremer,HarvardUniversity;andInternationaalChristelijkSteunfonds,Nairobi.TheNationalScienceFoundationcontributedfundingfortheresearch.


Ref.no.:682-16.

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

increaseddailyattendancebyalittlemorethantwochildren,andthatthisincreaseislargelyattributabletotheattendanceofgirls(changesforboysarenotsignificant).Theinterventionraisestheprobabilityofacenterremainingopenbyabout9percent.

Analysisoftestscoresindicatesnosignificantdifferenceintestperformancebetweentreatmentandcontrolstudents.Buttheinterventionhashadasignificantpositiveeffectontheperformanceofolderstudents(aged13and14).Theyscored0.44standarddeviationshigherthanthemeancomparisongroup.

Forpolicy,thesepreliminaryfindingssuggestthatwhiletheeffectoftheinterventionseemspositive,themereprovisionofsupplementaryteachersatnonformaleducationcentersmaybelessusefulthanfocusingonteachertrainingandteacherincentives.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesPeterLanjouw([email protected]).WithAbhijitBanerjeeandMichaelKremer,MassachusettsInstituteofTechnology;andJennyLanjouw,YaleUniversity.


Ref.no.:682-18.

EconomicAnalysisinEducationProjects

Projecteconomicanalysisismovingawayfromaconcernwithpreciserate-of-returncalculationstowardabroaderexaminationoftherationaleforpublicprovision.Ineducation,wherethebenefitsofinvestmentarehardtoquantify,ithasalwaysbeendifficulttoundertakeeconomicanalysis.Rate-of-returncalculationsforinvestmentsineducationhavetendedtoconcentrateonlabormarketoutcomes.Inothersectorsmoredirect,projectrelatedbenefitsareused.Thesectoralratesofreturnusuallycalculatedforeducationinvestmentsarenotalwaysausefulmeasureoftheprojectbenefits.

Thisresearchprojectreviewedcurrentpracticeineconomicanalysisintheeducationsector,primarilyusingWorldBankprojectdocuments.Thestudylookedfordiscussionsofexternalitiesfromeducationinvestmentsandofthedemandforeducation.Itcomparedeconomicanalysisineducationwiththatinothersectors.ItreviewedBankguidelinesforeconomicanalysistoassesstheirappropriatenessforeducationprojects.Anditlookedatotherconsiderationscriticaltoproperprojectappraisal,suchasthecounterfactualprivatesectorsupplyresponseandthefiscalimpactoftheproject.

Tojudgetherelationshipbetweeneconomicanalysisandtheultimateobjectiveofprojects,theprojectundertookastatisticalanalysisofeducationprojectsandtheirperformanceratings.Thepreliminaryfinding:bettereconomicanalysisdoesleadtobetterprojects.

Responsibility:HumanDevelopmentNetwork,EducationTeamHarryAnthonyPatrinos([email protected])andAyeshaVawda;EastAsiaandPacificRegion,EducationSectorUnitPeterMoock;andAfricaRegion,HumanDevelopmentUnitIINicholasBurnett.WithPriceGittinger.


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

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,

usingthelinkeddata,todescribeearningsandemploymentdynamicsinresponsetofirm-andindustry-levelchanges.EuropeanandCanadianstatisticalagencieshavebeensuccessfullylinkingsurveydatawithadministrativerecordsfor10-15years,greatlyincreasingthevalueofdatawithouthavingtoundertakecostlynewsurveys.

TheprojecthasexaminedthepossibilityofmergingthetwotypesofdataforacasestudyinMoroccotoprovideafullerpictureofhowjobreallocationworks.Theprojectwilldocumentthelevelanddistributionofjobflowsbyindustry,allowingacomparisonoftheextent,variation,andpersistenceofjobreallocationinMoroccowiththoseinothercountries.Thecomparisonwillprovideasenseofhowmuchthelabormarketadjusts.Thestudywillpayparticularattentiontotheworkforce

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.

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.


Ref.no.:683-23.

DoesMicrocreditEmpowerWomen?AStudyofGrameenBank,BRAC,andtheRD-12ProjectinBangladesh

Thisresearchisaimedatfindingoutwhethermicrocreditprogramsempowerwomen,themainparticipantsintheseprograms.Awomancouldbeconsideredempoweredinherhouseholdifshecontrolstheallocationothertimeandofotherhouseholdresources.Awomancouldalsobeconsideredempoweredifsheoperatesanincome-

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

DevelopmentStudies.


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

andprovideconcreteexamplesindifferentcountries,andrelatediscriminatorylawstointrahouseholdallocationofpowerandresources.Inparticular,itwillinvestigatewhetherornotlawsrelatingtoviolenceagainstwomenhavebeeneffectiveinprotectingwomen.Anditwillassesstheextenttowhichlawmatters(thatis,whetherlegalliteracyprograms,judicialtraining,testcasestrategies,andlegalreforminitiativeswork,andwhetherlawcreatessocialconsensusorfollowsit).

Thesecondstudywillundertakeacomprehensivesurveyoftheincidenceandtypesofgender-specific,gender-neutral,andgender-blindlabormarketlawsandpoliciesindevelopingcountries,focusingonthoseknowntohaveadifferentialimpactonmenandwomen.Suchpoliciesincludeminimumwagelaws,publicsectorretrenchment,andpensionsystemreform.Thestudywillestimateacompetitivelabormarketmodelthatpredicts

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.


Ref.no.:683-34.

NontraditionalAgriculturalExportsinEcuador:ImpactsonSmallholderAgricultureandHouseholdResourceAllocation

Thisstudyattemptstoevaluatemicro-levelwelfareeffectsoftradeandexchangerateliberalizationinEcuadorbylookingattheeffectsofruralemploymentforwomeninthecutflowersector.Cutflowerexportshaveboomedasaresultofeconomicreforms,andwomenhavebeenhiredinunprecedentednumbers.Thestudywilllookathowthenewemploymentopportunitieshaveaffectedgenderroles,howthisnewincomesourcehasaffectedfamilydecisionsrelatingto

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

provideanimportantcountertothestorythattheeffectshavebeenmoredamagingtovulnerablegroups.

ThestudywillincludecollaborationwithresearchersattheMinistryofAgricultureontheanalysisofthecutflowerindustry.DisseminationplansincludeajointpublicationwithConsejoNacionaldeMujeresandjointconferenceswithscholarsstudyingtheimpactoftheindustry.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesandRuralDevelopmentConstanceNewman([email protected])andPeterLanjouw.WithJorgeEguiguren;PilarLarreamendyandAnaMariaMaldonado,ConsejoNacionaldeMujeres;NormaMena;andPatriciaZambrano.


Ref.no.:683-50.

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

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

Tabellini,BocconiUniversity;DonnaMacsaac,Inter-AmericanDevelopmentBank;DaniRodrik,HarvardUniversity;CeciliaRouse,PrincetonUniversity;andManishaSingh,UniversityofMaryland.


Reports

Azam,Jean-Paul.1998.RentSharingandWagesintheManufacturingSectorofCôted'lvoire.UniversitedesSciencesSociales,Toulouse.

Bartel,Ann,andAnnHarrison.1999.OwnershipversusEnvironment:WhyArePublicSectorFirmsInefficient?NBER

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

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

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.)

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

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.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesElizabethKing([email protected]),DeonFilmer,EstelleJames,andClaudioMontenegro,TradeRobertaGatti,andMacroeconomicsandGrowthDavidDollar;PovertyReductionandEconomicManagementNetwork,GenderDivisionAndrewD.MasonandKarenMason;LatinAmericaandtheCaribbeanRegion,PovertyReductionandEconomicManagementSectorUnitNadeemIlahi;SouthAsiaRegion,SocialDevelopmentSectorUnitKarinKapadia;EuropeandCentralAsiaRegion,PovertyReductionandEconomicManagementSectorUnitMarniaLazreg;andOfficeoftheSeniorVicePresident,DevelopmentEconomicsLynSquire.WithAnneTier-

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.


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

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

(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

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.


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.

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.

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

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.

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

visitors.Theresults,forasampleof1,058respondents,showedthatexpectedwillingnesstopayforcoralreefimprovementwasheavilydependentonwhetherrespondentsbelievedthatmarinesystemspossessedinherentrightsorthathumanshadinherentdutiestoprotectmarinesystems.Suchpreferencesincreasedwillingnesstopaybyuptoafactorofthree.

Allthesevaluestogetherimplyanetpresentvalueofabout$400millionfortheMontegoBayreefs.Sincenoinstitutionalarrangementsexistforcapturingvaluesforbiologicalprospecting,thisvaluecanbetakenasalowerboundestimate.Whileitisdifficulttotranslatethevalueintoamarginalbenefitfunction,bestestimatesforcoralabundanceandavailablesubstratesuggestthatitisequivalenttoamarginalbenefitof$10millionforeachpercentagepointofimprovementincoralabundance.

TheresearchalsoestimatedthepharmaceuticalbioprospectingvaluesoftheMontegoBayreefs.Usingtyp-

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

(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.


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-

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:

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

cover,andthattheplotoflandliesinaprotectedarea.Theprobabilityofcultivationdependsontheslope,elevation,andaspectoftheplot,itssoilquality,andtheimpedance-weighteddistanceoftheplotfromthenearestmarket.Thestudyincludespopulationdensityinthedistrictinwhichtheplotislocatedasaproxyfortheagriculturalwage.Whethertheplotiscultivatedalsodependsonwhetheritliesinaprotectedareaandontheprovinceinwhichitislocated.Theprobabilityoftheplotlyinginaprotectedareadependsnotonlyonalloftheabovevariablesbutalsoonthedistanceoftheplotfromthenearestriver,aproxyfortheecologicalbenefitsofprotectingtheplot.

Thestudyfindsthattheprobabilityofcultivationisunaffectedbylocationwithinaprotectedareawhenprotectedareasaredefinedtoincludenationalparksandwildliferefuges;however,forestslyingwithinwildliferefugeshaveasignificantlylowerprobabilityofcultivationthansimilarlysituatedforeststhatarenotsopro-

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.


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

tothesourceofpollutionandapopulation'sawarenessandtendencytoreactisrelevantbutnotimmediate.Ideasofpollution,risk,andevenproximityaresociallyconstructed,anddirectphysicalexperienceofpollutionisnotsufficienttomobilizecommunities.Anenvironmentalorhealthproblemmustbecomeasocialissuetospurlocalcitizensandcommunitygroupsintoaction.

Communitiesthataresociallyandeconomicallydependentonasingle,largeindustrialfirmtendtobearthepollutionitemitsandassumetherisksitposes.Butdegreesofdependencyandtoleranceofpollutionvary,andcommunitiesrelationshipswithcompaniesmustbeseenasdynamic.

Thenotionsofenvironment,environmentalissue,pollution,andriskarealsorelativeandmaybeunderstooddif-

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

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.


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

fertilityoftheirlandinaregioncharacterizedbyenvironmentalstressandrapidtechnologicalchangeinagriculture.Twocentraleconomicissuesariseinthiscontext.

First,thereisacloserelationshipbetweenpropertyrights(vested,critically,intheindividualsinthehousehold)andincentivestoapplytechniquestomaintainsoilfertility.Thestudyfoundthatonlyinrarecircumstancesinthestudyareaarerightsoveraplotoflandvestedinaconditionallydefinedhousehold.Moreover,decisionsontheapplicationoffertility-enhancingtechniquestoaplotaremadebytheindividualcultivatingthatplot.

Second,decisionmakingwithrespecttothemaintenanceofsoilfertilitydependscriticallyoncharacteristics

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.

Responsibility:PovertyReductionandEconomicManagementNetwork,GenderDivision,andDevelopmentResearchGroup,PovertyandHumanResourcesShahidurR.Khandker([email protected]).WithChristopherUdry,NorthwesternUniversity.


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

enhancedproductivity?Caninsightsonhowfastandhowefficientlylandtenurehasadjustedinthepasttochangingeconomicconditionsbeusedtodesignproductivity-enhancinginterventions?

Thestudywasbasedonanalysisofapaneldatasetcovering800householdsin80villages(fourprovinces)inChina.Resultsindicatethatrestrictionsontenuresecurityand,moreimportant,transferabilityoflandhaveasignificantandquantitativelylargeoutput-reducingeffect.Theresearchfoundthatlandtransfersthroughrentalmarketsduringtheperiodstudiedwereextremelylimitedandcouldbeexplainedonlyinsufficientlybyeconomicfactors.Whileadministrativereallocationoflandappearstobeabletosubstitutetosomedegreeforthe

missinglandrentalmarkets,itdoessoimperfectlyandapparentlyathighcost.Thepotentialtradeoffbetweenequityandefficiency,andthefactorsthatallowtheemergenceoflocallandmarkets,needtobefurtherexplored.

ResultswerediscussedwithtopChineseandinternationalresearchersandpolicymakersduringaworkshopinChinacosponsoredbytheWorldBankandtheFordFoundation.

Responsibility:DevelopmentResearchGroup,RuralDevelopmentKlausDeininger([email protected]);RuralDevelopmentDepartmentShemMigot-Adholla;andEastAsiaandPacificRegion,BeijingResidentMissionUnitJuergenVoegele.WithMichaelCarter,UniversityofWisconsinatMadison;andYangYao,BeijingUniversity.


Ref.no.:681-76C.

Reports

Carter,Michael,andYangYao.1999.PropertyRightsandAgriculturalProductivityinanIndustrializingEconomy:TheoryandEvidencefromChina.WorldBank,Washington,DC.

.1999.SpecializationwithoutRegret:AdministrativeversusMarketReallocarionofPropertyRightsinChina.WorldBank,Washington,DC.

RegulatoryCapacityacrossIndianStates:AnInstitutionalPerspectiveontheEffectivenessofStatePollutionControlBoards

Thereisalargebodyofliteratureonenvironmentaleconomicsthatrelatestomonitoringandenforcingpollutioncontrollaws.Butlittleworkhasbeendoneontheinstitutionaldimensionsofenvironmental

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.


Ref.no.:681-86.

TheRoleofAgricultureinVenezuela'sEconomicRiseandDecline

Ingrowingeconomieslaborproductivityoftenincreasesmorerapidlyinagriculturethaninothersectors.Andthereisalong-standingviewthatrisinglaborproductivityinprimarilyagriculturaleconomiesandanout-migrationofagriculturallabortoothersectorshavebeenanessentialdynamicmechanismthatbringsequilibriumtodifferencesinaveragesectorincomes.

HistoricaldevelopmentsinVenezuelaofferanespeciallygoodopportunitytoexaminethedeterminantsoflargedifferencesinsectorproductivityandtheeffectsthatchangesinagriculturalproductivityhaveoneconomicgrowth.From1920to1958Venezuelawasthefastestgrowingeconomyintheworld.By1958ithadthesev-

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

priceshocks,withresultingfluctuationsinpublicrevenue.Ithasalsocreatedvolatilityinrelativeprices,interestrates,capitalflows,andexchangerates.Interventionistpolicieshavecontributedtolargedistortionsinrelativepricesandexchangerates.Throughanalysis,thestudyplanstoshowtheeffectsofsuchpoliciesonoverallandsectoralgrowth.

Responsibility:DevelopmentResearchGroup,RuralDevelopmentDonaldLarson([email protected]);andAfricaRegionTechnicalFamilies,RuralDevelopment1DavidNielson.WithYairMundlakandRitaButzer,UniversityofChicago;andJohnDevereaux,UniversityofMiami.TheIsraeliandIrishTrustFundsarecontributingfundingfortheresearch.


Ref.no.:682-33.

EnvironmentalandEconomicAnalysisIncorporatingMacroeconomicIssues

Despitethegrowingconcernaboutenvironmentalissues,relativelyfewoftheWorldBank'scountryassistancestrategieshavelinkedenvironmentalandmacroeconomicanalysis.Themainreasonmaybethelackofappropriatetools.Althoughseveralanalyticalframeworkslinkingenvironmentalandmacroeconomicvariableshavebeendeveloped,therearefewwell-articulatedframeworksthatcouldbereadilyappliedinmostdevelopingcountriesbecauseofdataandresourceconstraints.

Thisprojectdevelopedadatabaseofhealthandmortalityindicators,pollutiondata,andmeasuresofeconomicdevelopmentforalargenumberofcountriesfor1983,1988,and1993.Inaddition,itanalyzedthehealthpollutionnexususingclassificationtreeanalysis.

TheworkisbeingcontinuedundertheprojectHealth,Environment,

andtheEconomy(ref.no.683-73).

Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentF.DesmondMcCarthy([email protected]).WithRoseMarieGarcia,WolfHolger,andYiWu.


Ref.no.:682-38C.

PollutionControlinChina:TheRoleandImpactofInspectionsandComplaints

Governmentsofindustrialanddevelopingcountrieshaveenactedmanylawstoimprovethequalityoftheenvironment.Butwhilesignificantresourceshavegonetodesigningenvironmentalregulations,muchlesshasgonetomonitoringandenforcingcompliancewiththeseregulations.

Norhasmuchresearchbeendoneonissuesrelatingtomonitoringandenforcementofenvironmentalregu-

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

Congo.


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

naturetourismassetsandtheprocessoftheirexploitationindevelopingcountries.Theresearchwillexplore,amongothers,thesequestions:

Isitbettertoraiseconservationfundsthroughchangesindestinationpricingorthroughtaxesonthetourismtrade?

Howshouldparkentrancefeesbestructured?Shoulddifferentialpricingbeused(forexample,forlocalandforeignvisitors)?

Atwhatlevelshouldentrancefeesbesetsoastomaximizetheeconomicreturnstoboththesiteandthetourismservicessector?

Atwhatlevelshouldentrancefeesatparticularsitesbesetinordertominimizeenvironmentaldegradationanditsassociatedcostsandtomaximizerevenues?

Whatarethemainmanagerialoptionsforimprovingtheresourcebaseorminimizingdegradation?

Whatarethenetlocaleconomicbenefitsfromnaturetourism?Thatis,whataretheleakagesandlocalmultipliersinvolved?Howmuchdothepoorinlocalcom-

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

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.


Ref.no.:682-54.

MeasuringtheEfficiencyandProductivityofNationalAgriculturalResearchSystems:AQuantitativeApproach

Mostagriculturalresearchsystemshaveanongoingprocessof

evaluationtoreviewresearchprograms,almostalwaysrelyingheavilyonqualitativeinformation.Whilesuchevaluationscanyieldusefulrecommendationsforimprovingefficiencyintheprogramsreviewed,theyarepoorlysuitedforcomparingtheperformanceofprogramsandforallocatingresources.Whatisneededaresystematicquantitativeindicatorsthatwouldprovidebenchmarksforcomparingtheefficiencyandeffectivenessofresearchprogramsacrossanorganization,amongorganizations,andevenamongcountries.

Thisneedhasbecomemorepressingasnewresearchissueshavecometothefore,newtypesofinstitutionshaveenteredthefield,andnewopportunitiesforinternationalcollaborationhaveemerged.Andresearchinsti-

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,

UniversityofCaliforniaatDavis;andGeraldodaSilvaeSouzaandAntonioFlavioDiasAvila,EMBRAPA.


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

data,earlierworkinthisareahadbeenlimitedlargelytowaterpollutionandmedium-sizeplants.Thisstudyexaminedairpollutionandencompassedsmallplants(with120employees)aswellasmedium-sizeandlargeplants.

Theresearchaddressedfourmainquestions:

Aresmallplantsgenerallymorepollution-intensivethanlargefacilitiesindevelopingcountries?Clearly,yes.

Arethereproportionatelymoresmallplantsinlowincomeregions?InthousandsofBrazilianmunicipalities,yes.Smallplantsdominatepoorregionsandarearelativelysmallsourceofemploymentinhigh-incomeareas.

Isindustrymorepollution-intensiveinlowincomeregions?InBrazil,yes.Foreachmunicipalitytheresearchestimatedtheshareofthesixmostpollution-intensivesectorsintotalindustrialactivity,andfoundthatit

declinescontinuouslywithincreasesinmunicipalityincomepercapita.

Dopoorareassuffermorethanwealthyareasfromindustrialairpollution?Paradoxically,no.TheriskofmortalityfromindustrialairpollutionismuchhigherinthetoptwoincomedecilesamongBrazil'smunicipalities,andmostprojecteddeathsrelatedtoairpollutionareattributabletoemissionsfromlargeplants.Thescaleofemissionsfromlargeplantsdominatesallotherfactors.Lower-incomeareasinBrazilsuffermuchlessfromindustrialairpollution,despitethegreateremissionsintensityofsmallerplantsandtheprevalenceofsmallerplantsinlower-incomeareas.

ThedataonpollutionprojectionsusedinthestudyareavailableontheWebatwww.worldbank.org/nipr:

Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentSusmitaDasgupta([email protected]),DavidWheeler,andDavidShaman.WithAndrewSunilRajkumar.


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

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

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

@worldbank.org),SusmitaDasgupta,BenoîtLaplante,andDavidShaman.WithThomasBlackArbeláez,ColombianMinistryoftheEnvironment.


Ref.no.:682-69.

SocialValuationofNaturalResources

Biodiversityandotheramenitiesarisingfromnaturalresourcessuchasforestshavebeenthesubjectofmuchinterestandconcernfromeconomists.Butsatisfactorilytakingaccountofthebenefitsfromleavinganaturalresourcelargelyuntouchedorsustainablymanagedhasprovedadifficultchallengeforeconomists.Ideally,policymakerswouldliketobeabletoweighthetradeoffsbetweendevelopingaresourceandpreservingitthroughsomerigorousanalyticmethodsuchascostbenefitanalysis.

Thisresearchisdevelopingaframeworkforvaluingamenitiessuchasbiodiversitythroughapplicationofquasioptionvaluationandasocialstandard.Thequasioptionvaluationarisesfromtheirreversibilityofaninvestmentdecision,whilethesocialstandardreflectssociety'sdesiretopreserveacertainamountofanenvironmentalamenity.Theoptionapproachhasitsoriginsinthevaluationoffinancialinvestments.Thesocialstandardtechniquederivesfromtheanalysisofthebenefitsofmeetingbasicneeds,suchassatisfyingcalorierequirements.Bycombiningthesetwoapproaches,thestudywilldevelopmethodologiesforderivingasocialdemandfunctionforthepreservationofanaturalresourceandforestimatingthebenefitsfromnotdevelopingtheresourceorfromdelayingitsdevelopment.

Theresearchisadeskstudywithconstructedexamples.Itispreliminaryworkthat,ifsuccessful,wouldopenthedoortomorein-

depthanalysisandresearch.Thegoalwouldbetobuildintoprojectanalysisconsiderationoftheirreversibilityofnaturalresourceinvestmentsandsociety'sdemandforpreservation.

Responsibility:RuralDevelopmentDepartmentOdinKnudsen([email protected]).WithPasqualeScandizzo,SaraSavastano,andBarbaraMartini,UniversityofRome;andJiaLiu,GeorgeWashingtonUniversity.


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,

consistentwiththeproject'semphasisoncapacitybuilding.Thecurrentphasealsoincludesgatheringdata,prioritizingissues,andrefiningtheanalyticalmodels.Thenextphaseofresearchwillexaminethecircumstancesunderwhichgrowthinducing,economywidepolicies(suchasliberalization),andtheensuinggrowth,mightexacerbatetheenvironmentalharmcausedbypolicydistortions(suchassubsidizedpricesfornaturalresources).Theworkwillalsoidentifyconditionsunderwhichgrowthwouldworsentheadverseenvironmentaleffectsofmarketfailures.

ThisresearchwillimprovethequalityofthemacroeconomicdialoguebetweentheBankanditsborrowersinthecrucialareaofenvironmentallysustainabledevelopment.Thecasestudieswillhelptodeterminethecircumstancesunderlyingwin-winoutcomes,inwhicheconomywidepoliciespromotegrowthwhileavoidingsignificantenvironmentaldegradationorevenimprov-

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.


Ref.no.:683-04.

DynamicsofRuralSectorGrowth

AlthoughmanystudieshaveanalyzedthespectaculareconomicgrowthofAsiancountries,theyhavefocusedlittleontheruralsector,

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

Manarungsan,ChulalongkornUniversity,Bangkok;ProfessorBalisacan,UniversityofthePhilippines;andDr.Dillon,CenterforAgriculturalPolicyStudies,Indonesia.TheJapanConsultantTrustFundiscontributingfundingfortheresearch.


Ref.no.:683-06.

FactorsAffectingthePaceofDeforestationinNorthernThailand

Inexplainingtherateatwhichdeforestationoccurs,itisimportanttodistinguishtwocompetingtheoriesofagriculturalexpansionthepopulation-drivenorsubsistencemodelandthemarket-drivenexpansionorperfect

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

ofhouseholdsinforestvillagesthatgrowriceandtheamountoflandtheycultivateseemlittleaffectedbyeitherthepriceofriceorthewage.

Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentMaureenL.Cropper([email protected])andJyotsnaPuri.WithSiripunTaweesuk,SyracuseUniversity;andWilliamEvans,UniversityofMarylandatCollegePark.


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

directandtheindirecteffectsoftradeliberalizationtendtomitigateenvironmentaldamage.

FindingswillbedisseminatedontheWebatwww.worldbank.org/nipr.

Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentDavidWheeler([email protected]).WithJudithDeanandWilliamLahneman,JohnsHopkinsUniversity.


Ref.no.:683-20.

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.

Responsibility:RuralDevelopmentDepartmentArielDinar([email protected]).WithYakovTsurandVladimirLubinsky,HebrewUniversity;TerryRoeandRobertJohannson,UniversityofMinnesota;RachidDoukkali,InstituteofVeterinaryScienceandAgriculture,Morocco;MichaelSchur,MinistryofFinance,SouthAfrica;EnriqueAguilar;andZhouYaozhouandWeiBingcai,MinistryofWaterResources,China.


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

instruments.

Second,theresearchwillfocusattentiononpollutionexposurerisksforTVIEworkers.Workersinheavilypollutingfactoriesmaybeseverelyaffectedevenwhencommunity-levelairqualityisrelativelygood.Thestudywillcontributetotheunderstandingoftheissueintwoways.Itwillsharpentheoverallbenefitandcostassessmentofregulationbyprovidingseparateimpactestimatesforexposedworkersandneighboringcommunities.Andtheproject'seconometricanalysiswillseektoidentifytheprimarydeterminantsofwithin-plantpollution.Variablestobetestedincludesector,output,wages,vintage,humanresources,environmentalmanagement

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.


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

economicandsocialimpacts.Thebiologicalcomponentwillassesstheimpactofresultinglanduseconfigurationsonthestatusoftheecosystem,takingintoaccountboththerepresentationofdiversespeciesorelementsandtheviabilityofplantandanimalpopulations.Themodelwillusesecondarydata,includinggeographicinformationsystems(GIS)data,fromthecensusandothersources,andprimarydataonlandvaluesandbiodiversitytobecollectedbyBrazilianpartnersunderaparallelproject.Itwillalsobeinformedbyfocusgroupinterviewswithstakeholdersontheacceptabilityofalternativeeconomicinstruments.

TheresearchprojectisexpectedtocontributedirectlytothedesignandimplementationoftheParksandReservesProject(administeredbytheWorldBankforthePilotProgramfortheTropicalBrazilianForests).Morebroadly,itisintendedtoassessthefeasibilityofnew,market-likeapproachestoconservationthatmaybeofbroadinteresttotheBankanditsclients.

Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentKennethChomitz([email protected]).WiththeInstitutodeEstudiosSócioambientaisdoSuldaBahia;theInstituteforComputationalEarthSystemScience,UniversityofCaliforniaatSantaBarbara;TimothyThomas;andIndustrialEconomics.


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.

Policyrecommendationswillspringfromabetterunderstandingofthemechanismsthatallowprivatedistributionofagriculturaloutputsandinputs.

Responsibility:DevelopmentResearchGroup,RuralDevelopmentGershonFeder([email protected])andMarcelFafchamps.WithSouleGoura,Laboratoired'AnalyseRegionaleetd'ExpertiseSociale;andRichardKachule,InternationalFoodPolicyResearchInstitute.


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

25farmersfromavillageorlocalfarmersgroup,participate.Buttodisseminatenewknowledgemorerapidly,theparticipantsareencouragedtosharetheirexperienceswithotherfarmers.Thisfarmer-to-farmerdiffusionofknowledgeofferspromisethattheFFSapproachcanbecost-effectiveandsustainable.Butitsperformanceonalargescalehasnotbeenstudiedrigorously.ThisresearchinvestigateswhethertheFFSapproach,asimplementedtoday,iseconomicallyviableandthusasuitablemodelforanationalagriculturalextensionsystem.

TheresearchwillevaluateFFSperformanceatboththefarmandtheprogramlevel.Atthefarmlevelitwillusefarmprofitsasakeyindicatorofsuccess.Itwilleconometricallymeasurefarm-levelimpactsconditional

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.

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.


Ref.no.:683-56.

LandRentalMarketsandAgriculturalEfficiencyinEthiopia

ThisresearchisinvestigatingtheextenttowhichlandrentalmarketsinruralEthiopiasupportallocativeefficiencyandwhetherthechoiceoflandrentalcontracthasdetrimentaleffectsonworkincentivesandinputuse.DatacollectedbytheInternationalLivestockResearch

InstitutewillbeanalyzedincollaborationwiththeInternationalFoodPolicyResearchInstitute.TheresearchisexpectedtoprovideessentialbackgroundinformationtoEthiopianpolicymakersexploringlandreformsandtolandtenureinstitutionsinthecountry.

SeveralmeetingshavebeenheldinWashington,DC,andinAddisAbabawiththeexternalcollaboratorstodiscussconceptualissues,researchstrategies,anddataneeds.

Responsibility:DevelopmentResearchGroup,RuralDevelopmentGershonFeder([email protected])andMarcelFafchamps.WithJohnPender,InternationalFoodPolicyResearchInstitute;andSimeonEhuiandAmareTeklu,InternationalLivestockResearchInstitute,AddisAbaba.


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

restrictionshassignificantlyreducedthetransactionscostsassociatedwithlandrentals.Butbecauseofcreditmarketimperfections,thepoorwereoftenunabletotakeadvantageoftheincreasedmarketopportunities.

FieldsurveysinHondurasandNicaraguaarescheduledtostartinthefallof1999andinthespringof2000.Thesesurveyswillincorporatemodulespermittingtheinvestigationofintrahouseholdandgenderissues.Thesurveyapproachisbeingfine-tunedthroughworkshopswithkeypolicymakersandresearchersinJulyandOctober1999.

Responsibility:DevelopmentResearchGroup,RuralDevelopmentPedroOlinto([email protected]),KlausDeininger,andRinkuMurgai.WithMichaelCarterandBradfordBarham,UniversityofWisconsinatMadison;andAlaindeJanvryandElisabethSadoulet,UniversityofCaliforniaatBerkeley.TheU.S.AgencyforInternationalDevelopmentiscontributingfundingforthesurveysinHondurasandNicaragua.


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

1993forthelargestavailablesetofcountries.

Theempiricalworktodatedocumentsrobustlinksbetweenpollutantsandmortalityonthecross-sectionallevel,alongsidestrongincomethresholdsondeathsfromspecificdiseases.Thefindings,onceextendedtotheanalysisofthedevelopment-publichealthnexus,suggestthatattentiontopublichealthintheearlystagesofindustrializationisimportantandhasstrongadditionalbenefitsintermsofgrowthpotential.Theresearchwillprovideananalysisoftheseeffectsbydiseaseandpollutantandapictureofthestateofpublichealthandtheenvironmentincountriesrelativetotheirpeergroups.

Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentF.DesmondMcCarthy([email protected]),ZmarakShalizi,andYiWu.WithHolgerWolf,GeorgetownUniversity.


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

CorrosionInstitute.TheSwedishEnvironmentTrustFundprovidedfundingfortheresearch.


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

suggeststhatwell-informedregionalplanningcanenhanceruraldevelopmentwhilepreservingtheenvironment.Resultsofanalysisofvillage-leveldataforIndonesiasuggestthathigh-valuetreecropcultivation,ratherthansubsistence-orientedfoodcropproduction,playsamajorpartinsmallholder-relatedforestconversioninthatcountry.

AmodeloffuelwoodextractionandwoodlanddegradationintheSahelprovidedagenerallyapplicablemethodologyforrepresentingtheinteractionofmarketsandspatiallyexplicitlandusechange.Empiricalapplicationsshowedthatratesofwoodlanddegradationarerelativelyinsensitivetopricechangesinmodernfuels.

Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentKennethM.Chomitz([email protected]),KlausDeininger,DavidGray,CharlesGriffiths,NlanduMamingi,andBartMinten.WithVivi

Alatas,PrincetonUniversity;UpikRosalinaWasrin,SEAMEO/Biotrop;andXiaowenHuang.TheInternationalCenterforResearchinAgroforestry,Bogor,Indonesia,participatedintheresearch.TheUnitedKingdomandSwedishTrustFundsfortheSocialandEnvironmentalConsequencesofGrowth-OrientedPoliciescontributedfundingfortheresearch.


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.

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

ofcarbondioxidepermits,andJapan,theEuropeanUnion,andtheUnitedStatesthemainbuyers.ThestudyestimatedthatpermittradingwouldreducetheaggregatecostofmeetingtheKyototargetsbyabout50percentcomparedwithnotrading.Developingcountries,thoughtheywouldnottrade,wouldnonethelessbeaffectedbytrading.Forexample,thepriceofoilandthedemandforotherdevelopingcountryexportswouldbehigherwithtradingthanwithout.

Inthesecondscenarionon-AnnexBcountriesvoluntarilyacceptcapsequaltotheirbusiness-as-usualemissionsandareallowedtosellemissionreductionsbelowthesecapstoAnnexBcountries.Thestudyestimatedthatthegainsfromemissiontradingcouldbebigenoughtogivebuyersandsellersanincentivetosupportthesystem.Indeed,aglobalmarketforrightstoemitcarbondioxidecouldreducethecostofmeetingtheKyototargetsbyalmost90percent,ifthemarketweretooperatecompetitively.Thedivisionoftradinggains,however,maymakeacompetitiveoutcomeunlikely:

underperfectcompetitionthevastmajorityoftradinggainsgotobuyersofpermitsratherthantosellers.Evenmarketsinwhichthesupplyofpermitsisrestrictedcan,however,substantiallyreducethecosttoAnnexBcountriesofmeetingtheirKyototargets,whileyieldingprofitstodevelopingcountriesthatelecttosellpermits.

Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentMaureenL.Cropper([email protected]),KennethChomitz,andZmarakShalizi.WithA.DennyEllerman,HenryJacoby,andAnneleneDecaux,CenterforEnergyandEnvironmentalPolicyResearch,MassachusettsInstituteofTechnology.


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

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.

Theobjectivesweretopromotetheuseofcost-effectivepollutioncontrolmechanismsandcoordinateregulatorypolicyandreformsrelatedtoprivatesectordevelopmentandenvironmentalmanagement,assesstheimpactoftheuseofeconomicinstrumentsinLatinAmerica,examineinstitutionalconstraintsinimplementingsuchinstrumentsanddeterminehowtoovercomethem,anddiscussexamplesofbestpracticefromothercountriesandregions.

Responsibility:LatinAmericaandtheCaribbeanRegion,EnvironmentallyandSociallySustainableDevelopmentSectorUnitRichardM.Huber([email protected]),JohnRedwood,andJoachimvonAmsberg,andPovertyReductionandEconomicManagementSectorUnitDennisMaharandNormanHicks;WorldBankInstitute,

EnvironmentandNaturalResourcesDivisionAdrianaBianchiandSergioMargulis;andEnvironmentDepartmentMagdolnaLoveiandKseniyaLvovsky.WithH.JackRuitenbeek,H.J.RuitenbeekResourceConsultingLimited;andRonaldoSerôadaMotta,ResearchInstituteofAppliedEconomics.TheNetherlandsConsultantTrustFundandtheCanadianConsultantTrustFundcontributedfundingfortheresearch.


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.

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

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

commodityprices,securingaccesstoforeignmarkets(inparticular,meetingthesanitaryandphytosanitaryrequirements),removingdomestictradebarriers,stabilizingmacroeconomicpolicies,enhancingtheinstitutionalframeworkandthecredibilityofrules,removingtheremnantsofmarketingboardswheretheyexist,removingexcessiveagriculturaltaxationandensuringpublicruralinvestment,improvingtransportinfrastructure,andencouragingpublic-privatepartnerships.

Responsibility:AfricaRegionTechnicalFamilies,Macroeconomics4CharlesHumphreys([email protected])andTatsushiAdachi,andRuralDevelopment1RobertF.Townsend.TheJapaneseTrustFundcontributedfundingfortheresearch.


Report

Townsend,RobertF.1999.AgriculturalIncentivesinSub-SaharanAfrica:PolicyChallenges.WorldBankTechnicalPaper444.Washington,DC.

TheChallengesofManagingAgriculturalExtension

Inmanycountriesagriculturalextensionsystemsarepubliclyfundedandoperated.OvertheyearstheWorldBankandotherdevelopmentagencieshavesupportedlargeinvestmentsinexpandingextensionsystemsinmanydevelopingcountries.Buttheeffectivenessofextensionsystemshasbeenmixed.Thisstudyidentifiedeightgenericweaknessesinherentinpubliclyoperatedextensionsystems.Theseweaknessesrelatetothescopeoftheservicethatneedstobeprovidedandthestructureofincentivesaffectingemployeesandmanagementandthedecisionmakerswhoprovidefunding.

Thestudyalsopointedtoinstitutionalinnovationsintroducedinan

attempttoovercomesomeoftheweaknesses.Anditidentifiedinstitutionalandpolicyreformsthatcouldleadtosustainableandeffectiveextensionsystems,includinggreaterusercontrol,partialprivatization,decentralization,andparticipatoryapproaches.

ResultshavebeendisseminatedthroughpresentationstoWorldBankoperationalstaffandataconferenceattheUniversityofCaliforniaatBerkeley.

Responsibility:DevelopmentResearchGroup,RuralDevelopmentGershonFeder([email protected]);andRuralDevelopmentDepartmentWillemZijpandAnthonyWillett.


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:

Howdocommoncreditandlabormarketimperfectionsaffectproducers'demandforcultivatedandownedland?

Inthepresenceoftheseimperfections,howeffectivehavelandsalesandrentalmarketsbeeninefficientlyallocatinglandacrosshouseholdsthatdifferinvariousdimensions?Howhavelandsalesandrentalmarketsdifferedineffectiveness,whatinstitutionalarrangementshaveevolved,andhowhavetheyaffecteddifferentpopulationgroups?

Howhavepoliciesaimedatliberalizingrurallandandcreditmarketsaffectedlandsalesandrentaltransactions,theproductiveefficiencyofdifferentgroupsofproducers,andequityamongthesegroups?

Whataretheimplicationsforgovernmentpoliciesandprogramsaimedatimprovingthefunctioningofruralfactormarkets?Ifliberalizinglandmarketsturnsout

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.


Reports

Olinto,Pedro.TheImpactoftheEjidoReformsonLandMarketsinMexico.WorldBank,DevelopmentResearchGroup,Washington,

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

whichtradeoffsbetweengrowth,povertyreduction,andenvironmentalprotectionarethoughttobeespeciallyacute.Thefirstsetofissuesrelatestoindustrialpollutionandthebehaviorofindustrialfirms.Theresearchanalyzesregionalandfirm-leveldataonindustrialoutput,employment,andemissions.Policyleversexaminedincludemacroeconomicpoliciesaffectingthesectoralcompositionofindustrysuchastrade,industrial,andenergypoliciesandpollutionregulationpolicies.StudysitesincludeBrazil,China,Ecuador,India,Indonesia,andPakistan.

Thesecondsetofissuesrelatestolanduseconflictsbetweenagriculturalexpansionandnaturalhabitatpreservation.Theresearchanalyzestheincentivestoconverttropicalforestsandotherhabitatstoagriculture,theecologicalconsequences,thesizeandpersistenceof

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

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

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.


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.

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.

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.

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

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

percentofemployment.Businessactivitiesoccurmostfrequentlyinvillageswithasphaltroadaccess,wherenonfarmactivitiesaccountforanimportantshareofvillageemployment,andwheretheagriculturalpotentialofvillagelandisrelativelylow.Theseactivitiestendtoberunbymenbelowage45,withprimary,buttypicallynothigher,education,andoccurmostfrequentlyinhouseholdswithsmalllandholdings.Ownbusinessactivitiesofferanimportantalternativetoagricultureasasourceoflivelihood.Butaccesstosuchactivitiesappearstobelimitedtomen,influencedbyinfrastructure,andconcentratedincoastalareas.

Nonagriculturalwageemploymentisdominatedbymenranginginageuptothemid-fortiesandisstronglycorrelatedwitheducation(primaryandsecondary).Nonagriculturalwageemploymentismorefrequent(andearningshighest)invillageswithhighpopulationdensity.Earningstendtorisewitheducationandwithproximitytotheurbancenter.

Thesepreliminaryfindingswerepresentedtogovernmentpolicymakers,donors,academics,andothermembersofcivilsocietyinaMay1999seminarinDaresSalaamorganizedbytheWorldBank'sresidentmission.TheyarealsobeingcirculatedwithintheBankforcommentanddiscussion.

Responsibility:DevelopmentResearchGroup,RuralDevelopmentGershonFeder([email protected]),JaimeQuizon,andPeterLanjouw.


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

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,

investment,output,consumption,andhouseholdcashexpendituresoninputs.Itwillalsoexaminethedistributionoftheseimpactsacrosspoorandnonpoorruralhouseholds.

Thestudy,developedinresponsetoarequestfromthegovernmentofThailand,isintendedtoprovideagroeconomicinformationtohelpthegovernment,theWorldBank,andcivilsocietyformulateamoreeffectiveandequitableprogramtorespondtothecrisisintheshorttermandensuresustainableruraldevelopmentinthemediumterm.Consultationmeetingsontheinitialresultswillbeheldwithlocalcommunityleaders,non-governmentalorganizations,governmentofficials,researchgroups,andtheprivatesector.Alargerconfer-

encewillfollow,inBangkok,forseniorpolicymakers,donors,andotherelementsofcivilsociety.

Responsibility:DevelopmentResearchGroup,RuralDevelopmentGershonFeder([email protected]),JaimeQuizon,andHananJacoby.WithTongrojOnchan,CharlesMehl,andAnthonyZola,MekongEnvironmentandResourcesInstitute,Thailand.TheASEMTrustFundiscontributingfundingfortheresearch.


BrazilGlobalOverlayStudy

ThisstudywillanalyzeemergingpolicyissuesandproposedeconomicmechanismsrelatedtoforestprotectionandforestestablishmentinBrazil,lookingattheimplicationsforbiodiversityprotection,mitigationofclimatechange,andlocaleconomicbenefits.Thestudywillusespatialsimulationandothermethodologiestoassesshowpolicieswillchangespatialpatternsofincentivesforforestpreservation,management,andconversionandhowalternativespatialpatternsofexploitationandconversionaffectcarbonsequestrationoremissionsandhabitatsimportanttobiodiversity.

Thestudyhasthreecomponents:

Transferabledevelopmentrightsandgreaterflexibilityunderthelegalforestreserverequirement.Brazilianlawrequireslandownerstomaintainatleast20percentofeachpropertyundernaturalforestcoverasaforestreserve.Thereisactivediscussionaboutallowingpropertyownerstomeetthisrequirementonadifferentproperty,toreducecompliancecostsandincreasetheenvironmentaleffectivenessofthemeasure.Thiscomponentwillexaminethecostsandbenefitsofalternativeproposalsformakingthereserverequirementmore

flexible,focusingprimarilyonthestateofMinasGeraisasacasestudy.

Nativeforests,plantedforests,andcokeinMinasGerais.

Thiscomponentwillexamineanexusofissuesrelatedtothesubstitutabilitybetweencharcoalfromnativewoodlands,charcoalfromplantations,andmineralcokeinmeetingtheenergyneedsofMinasGerais'slargeironandsteelindustries,assessingpoliciesthatwouldinternalizetheenvironmentalbenefitsofusingsustainablesourcesofenergy.

LanduseintheAmazon.Thegovernmentisconsideringgreatlyexpandingthescopeofnationalforests,withtheaimofshiftingloggingactivityfromunregulatedprivatelandstoregulatedconcessionsinnationalforests.Thiscomponentwillexaminetheeconomicandenvironmentalcostsandbenefitsofsupportingandcomplementarylandusepolicies.

Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentKennethChomitz([email protected]).WithAlineBernardes,SantaUrsulaUniversity;andTimothyThomas.


EnvironmentalChangeandAdaptiveResourceMarkets:Computer-AssistedMarketforWaterAllocation

Experimentaleconomicscanyieldaformalandreplicablesystemforanalyzingalternativemarketstructures,suchasthesmartmarket,beforetheyareactuallyimplemented.Forexample,itallowsasmartwatermarkettobedevelopedandtestedinthelaboratoryundersimulateddroughtconditionsduringyearsofsufficientwater.Iftheresultsarepositive,suchamarketcouldbeimplementedduringyearsofwaterscarcity.

Thisstudyisdevelopingandtestingasmartmarketframeworkfor

waterinthecontextofCaliforniausingasimplifiedapproach.Theapproachhasseveralparts,includingestimatesofademandfunctionforurbancenters,awaterquantityandqualityproductionfunctionmodelofmajorcrops,environmentalwaterquantityandqualityrequirements,andthecostsofconveyancebetweenwatersupplyandwaterconsumptioncenters.Laboratoryexperimentshavebeencarriedouttostudytheefficiencyandpriceperformancecharacteristicsofauniformprice,double-auctionmechanismforthesimultaneousallocationofwaterandtransportationcapacityrightsamongbuyers,transporters,andsellers.Acomputeralgorithmmaximizestotalgainsfromexchangebasedonthesubmittedbidsandoffers,anddeterminesallocationsandnondiscriminatorypricesatallnodes.TheresearchdrawsondatafromtheCaliforniaDepartmentofWaterResources,previousstudiesonwaterinCalifornia,andsurveysandinterviews.

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.

Findingsofthestudyhavebeenpresentedataninternationalconference,UsingExperimentstoGuidePolicymakinginWaterandPowerMarkets,heldinMadrid,Spain,onJune22-23,1999.Theconferencewasattendedby60participantsfrom10countries.

Responsibility:RuralDevelopmentDepartmentArielDinar([email protected]).WithVernonL.SmithandStevenRassenti,UniversityofArizona;andRichardE.Howitt,UniversityofCaliforniaatDavis.TheNationalScienceFoundationiscontributingfundingfortheresearchthroughagranttotheUniversityofArizonaandtheUniversityofCalifornia.


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

Thisprojectinvestigateshow,usingaconventionalnationalaccountsframework,thedepletionofnaturalresourcesanddegradationoftheenvironmentbypollutioncouldbeincorporatedinasystemdesignedtomeasureeconomicperformance.Inthepastfiscalyearresearchactivitieshavefocusedonthreemainareas:

ProvidingcontinuingsupporttointernationalinitiativesthroughparticipationintheLondonGroupofenvironmentaldataexperts,withtheaimbeingtocompileamanualandaccompanyingworkbookreflectingproposedrevisionstotheUnitedNationsRecommendedSystemofIntegratedEnvironmentalandEconomicAccounts(SEEA).

ProvidingassistanceinfinalizingthereportoftheNairobiGroup,whichispreparingasetofacceptedguidelinestohelpdevelopingcountriesestimatethe

environmentalimpactofeconomicactivitiesindifferentsectors.

WorkingtowardageneralmeasureofsustainabilityinconjunctionwithrelatedresearchactivitiesoftheUnitedNations,Eurostat,theOECD,andleadingindustrialcountries.

TheseactivitieshaveallbeencloselyrelatedtoeffortswithintheWorldBanktoexpandtherangeofenvironmentalindicators,strengthentheirrelevance,andproduceandrefineassociatedstatisticalseries.ThisinitiativeformsanimportantpartoftheBank'scommitmenttoprovidingsuitabledataformonitoringnewlyagreedinternationaldevelopmentgoalsfortheenvironmentinthe21stcentury.

TheoutcomeoftherecentdataworktobetterunderstandthelinksbetweentheeconomyandtheenvironmentappearsregularlyintheWorldBank'sannualWorldDevelopmentIndicators.WorkingpapershavebeenpreparedforreviewbytheLondonandNairobiGroups,withonecontributingtothenewmanualrelatingtotherevisedSEEA.Inaddition,theprojectisreviewingalltheapproachesproposedforcreatingacoherentsetofenvironmentalaccountsandassessinghowwelleachfitswithinternationallyestablishedeconomicaccountingmethodsthatlinkassetstockswithflows.

Responsibility:DevelopmentDataGroupMichaelWard([email protected])andMohammadOrdoubadi.WithAsamiMiketa,KeioUniversity,Japan.


LandReform

Newopportunitiesandlingeringproblemshaverenewedtheinterestofgovernmentsinagrarianreform:

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

ofmaldistributionofassets.Theyalsoemphasizetheimportanceofplacingsucheffortsinabroaderpolicycontext.

TheprojecthascontributedtothedesignofBankoperationsbypointingtoelementscriticalforsuccess(focusingonintegratedproductiveprojects,involvingfinancialintermediaries,andusingadecentralizedapproach)andbyelaboratingaframeworkformonitoringandevaluatingsuchprojectsthatwilleventuallyallowanin-depthassessmentoftheirimpact.Theresearchalsohashelpedtoinformthepolicydebateandclarifythepotentialandthelimitsoflandreformincountrieswhereitremainshighlycontroversial(thePhilippines,Zimbabwe).

Resultsweredisseminatedataconference,AssetDistribution,Poverty,andGrowth,inBrasiliainJuly1998jointlysponsoredbytheWorldBankInstituteandtheBrazilianMinistryofLandReform,withabout100policymakersandkeyresearchersparticipating.(Aselec-

tionofpapersfromtheconferenceisavailableontheWebat(www.worldbank.org/landpolicy/brazil.)FindingswerealsodisseminatedthroughpresentationsataworkshoponsustainableagrarianreforminFortaleza,Brazil,inNovember1998;presentationsonthedesignofdemand-drivenlandreformprogramsforSouthAfricanpolicy-makersandataworkshopinPretoriainJune-July1999;andapresentationonlandreformissuestoagovernmentcommitteeonagrarianreforminthePhilippinesinJanuary1999.

Responsibility:DevelopmentResearchGroup,RuralDevelopmentKlausDeininger([email protected])andPedroOlinto.TheSwissTrustFundandtheBraziliangovernmentarecontributingfundingfortheresearch.


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

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.

InfrastructureandUrbanDevelopment

InfrastructureandGrowth:AMulticountryPanelStudy

Thisstudyhasdevelopedadatabaseofworldinfrastructurestocksandestimatedthegrowtheffectsoffourtypesofinfrastructureroads,rail,telephonelines,andelectricitygenerationandtransmissioncapacityoverthepastthreedecadesforabout100countries.Ithasmodeledthesefourtypesofinfrastructureseparatelyinastandardgrowthframework,includingprivatecapitalandhumancapitalasadditionalexplanatorsofoutputandproductivitygrowth.

Inlookingathowdifferentkindsofinfrastructureaffectgrowth,thestudyhaspaidparticularattentiontowhetherprivatecapitaliscrowdedinoroutbyinfrastructureinvestmentsandwhetherthegrowtheffectismediatedthroughstructuralchangeoftheeconomyandurbanization.Thestudyhasalsoaddressedquestionsonthespeedwithwhichgrowtheffectsoccur,whetherinfrastructureinvestmentaffectsthelevelofGDPortherateofgrowth,andwhetherinfrastructureactsasanormalinputintoproductionandwhetherasabottleneck.

Responsibility:DevelopmentResearchGroup,PublicEconomicsShantayananDevarajan([email protected]);andTransportation,Water,andUrbanDevelopmentDepartment,OfficeoftheDirectorChristineKessides.


Ref.no.:680-89.

Report

Canning,David.1998.ADatabaseofWorldStocksofInfrastructure,

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.


Ref.no.:681-54.

DatabaseonInfrastructurePrivatization

LackofdataaboutinfrastructureprivatizationhasseverelyconstrainedtheWorldBank'sabilitytocarryoutasystematicanalysisoftherelationshipbetweenthepolicy

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

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

expropriationofquasi-rentsandregulatorycaptureininstitutionallyweakenvironments.Third,constraintssuchasthepoliticalimportanceofwater,thecostandscarcityofwaterresources,andtheextentofunmetdemandprofoundlyaffectthedesignanddifficultyofreform.Fourth,thepoliticalmotivationfor,feasibilityof,andcommitmenttoreformaffectthechoiceofdesignforreformanditssuccess.Finally,theresearchconcludesthatevenwithseriousfailingsindesignorimplementation,theprivatelyoperatedsystemsproducedgainsoveranyreasonablecounterfactual.

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

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

collectedthroughsurveysof1,100householdsand44watercommitteesandthroughtechnicalassessmentsoftheperformanceofwaterservices.Qualitativedatawerecollectedthroughparticipatoryexercisescarriedoutinfemaleandmalefocusgroupsineachvillagesurveyed.

Theresultsrevealedthatadherencetothedemandresponsiveapproachanduserempowermentwasfarfromcompleteinallthewaterprojectssurveyedandalsovariedgreatlyacrossprojects.Theinstinctsandinstitutionsofthetraditionalsupply-drivenapproachhadnotwitheredaway,constrainingapplicationofthedemandresponsiveapproach.

Butwheredemand-responsiveelementswereintroducedintowaterprojects,theyproduceddesirableresults.Makingwaterservicesdemand-responsivewasfoundtoimproveperformance:householdsaremorelikelytomaintainservicesthatmatchtheirdemand.Demand-responsivenesscanbepromotedbyinvolvinghouseholdsindesigningservicesandbylettinghouseholds,notoutsidersorvillageleaders,makethefinaldecisionaboutthetypeandlevelofservices.Toensurethat

householdchoicesareinformed,adequateinformationaboutthecostsandmaintenancerequirementsofdifferentserviceoptionsneedstobeprovidedtousersduringthedesignprocess.

Ensuringthatvillageshaveeffectivemechanismsformonitoringhouseholdcontributionstoconstructionandoperationsandmaintenanceisalsocriticaltoperformance.Withoutmonitoring,householdshaveanincentivetofreeride.

Thechancesforsuccessfuldemand-responsivestrategiesaresignificantlyenhancedinvillageswithhighlevelsofsocialcapital.Inthesevillageshouseholdparticipationislikelytobehighandmonitoringmechanismsaremorelikelytobeinplace.

Responsibility:Transportation,Water,andUrbanDevelopmentDepartment,WaterandSanitationDivisionMikeGarn([email protected]).WithJonathanIshamandSatuKähkönen,UniversityofMaryland.


Ref.no.:682-19C.

Report

Isham,Jonathan,andSatuKähkönen.1999.WhatDeterminestheEffectivenessofCommunity-BasedWaterProjects?EvidencefromCentralJava,Indonesia,onDemandResponsiveness,ServiceRules,andSocialCapital.UniversityofMaryland.

EfficientNetworkAccessPricingRulesforDevelopingandTransitionEconomies

Thisresearchaimstotranslatetheprinciplesandresultsofthetheoreticalandanalyticworkonpricingaccesstoinfrastructurenetworksintoasetoftractablerulesandprocedures.Theneedfor

accesspricingrulesthatareeasytoimplementisespeciallyurgentindevelopingandtransitioneconomiesbecauseofseveremeasurementproblemsandlackoftechnicalexpertise.Theresearchseekstodevelopanoperationallyusefulapproachtothedefinitionandimplementationofaccessandinterconnectionrulesinnetworkindustriesthataremovingtowardacompetitivemarketstructure.Itwillderiveanefficientaccessformulathatproducesoptimalstaticanddynamicallocations.

Theresultsoftheresearchwillprovidepracticalguidancetopolicymakersindevelopingandtransitioneconomiesonhowtoensureaccessforcompetitorstoessential(bottleneck)networkfacilitiesontermsthatareconsistentwithefficientcompetitionandthataffordtheownersofthefacilitiesafairopportunitytorecoverprudentlyincurredcosts.

PreliminaryresultswerepresentedattheWorldBank'sEconomistsForuminthespringof1999.

Responsibility:DevelopmentResearchGroupIoannisKessides([email protected]).WithJean-JacquesLaffont,UniversityofToulouse;RobertWillig,PrincetonUniversity;andJanuszOrdover,NewYorkUniversity.


Ref.no.:682-36.

OptimalChoiceofIndustryStructureintheNetworkUtilities

Themainobjectiveofthisresearchprojectistodevelopasetofprinciplesforthehorizontalandverticalrestructuringofnetworkutilitiesintransitionanddevelopingeconomies.Itfirstidentifiestheeconomiccharacteristicsoftheseindustries(includingemployment,financialobligations,extentofnetworkdevelopment,marketsizeanddensity,initialconditionsrelatedtoproductiveandallocative

inefficiencies,andthenatureoftechnology,costs,anddemand)andanalyzestheimplicationsofthesecharacteristicsforthedesignofoptimalindustrystructure.Takingintoaccounttheindustrycharacteristics,itthenseekstodeveloppowerfulanalytictoolstoclarifytherelevantprinciplesforstructuralreformandreorganizationandforrestructuringtherelationshipsbetweengovernmentandthenetworkutilities.Inparticular,itcomparestheleadingstructuraloptionsintermsoftheirimplicationsforefficiencyandcompetition,coordinationeconomies,scopeeconomies,transactionscosts,credibleincentivestructures,andregulatorycomplexity.

Responsibility:DevelopmentResearchGroupIoannisKessides([email protected]).WithDavidNewbery,UniversityofCambridge;andPabloSpiller,UniversityofCaliforniaatBerkeley.


Ref.no.:682-37.

PilotStudyofCityEconomicGrowth

Thisresearchlookedatthecircumstancesofrapidgrowthinthegarmentindustryinfourcitiesinthedevelopingworldtoinvestigatehowrapidgrowthinteractswiththepolicyenvironment.Itthenexaminedthefourcasestudies,notingthesimilaritiesanddifferencesamongthem.

Eachcasestudyconstructedthehistoryofhowandwhythegarmentindustrydevelopedandanalyzeditsimpactonthecityeconomyandthepositionofthepoor.Ittracedthehistoryofthenationaleconomicregimeandprovincialandlocalpublicinterventions.Anditassessedthecontributionoflocalinterventionstothedevelopmentoftheindustryandtheextenttowhichpublicauthoritieswereabletoshieldthepopulationfromthedeleteriouseffectsofrapidindustrialization.Theresearchwasconductedthroughinterviewswithasampleofemployersineachcityandwithofficialsofpublicagenciesrelevanttotheindustry,relevantbusinessassociations,andthecitymanagement.

Thestudyyieldedasetofpolicypointersfornationalandlocalgovernmentsonthepreconditionsfordevelopingahigh-growthcityindustry.ItproducedaframeworkofanalysisandindicatorstoassistWorldBankstaffinrapideconomicassessmentofcityeconomies,sectoralpotentialforhighoutputgrowth,andmethodspublicauthoritiescanusetoaidgrowth.Italsodevelopedasetofhypothesesfortestingonabroadersampleofcitiesandmorethanasingleindustry.

Responsibility:Transportation,Water,andUrbanDevelopment

Department,GlobalUrbanUnitTimCampbell([email protected]).WithNigelHarris,SampathSrinivas,LamiaBulbul,andSamehNeguib,UniversityCollege,London;XiaochenMeng,PekingUniversity;MarkWang,UniversityofMelbourne;andGuicaiLi,InstituteofUrbanPlanningandDesign,Shenzhen.TheBritishConsultantTrustFundcontributedfundingfortheresearch.


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

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

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

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.


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.

TheGlobalBenefitsofPer-MileandPer-GallonAccidentPremiums

Themorepeopledrive,themoreaccidentsoccur.Butifpeopleweremadetopaythefulleconomiccostofdrivinganextramile,throughaninsuranceschemebasedonmilesdriven,theywoulddrivelessresultinginnotonlyfeweraccidentsandfewerinjuriesanddeathsbutalsolesscongestionandloweremissions.Analternativesystemthatmightbeeasiertoimplementwouldusegasolineconsumptionasaproxyformilesdriven.

Thisstudyestimatesandcomparesthebenefitsofintroducingper-mileandper-gallonautomobileinsuranceintheUnitedStatesandindevelopingcountries.Itconstructsananalyticeconomicmodeltoestimatethebenefitsusingdataoninsurancepremiums,currentdrivingpatterns,andgasolinepriceelasticities.Thestudyalsoinvestigatesthepracticalandpoliticalproblemsinimple-

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.

Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentZmarakShalizi([email protected]).WithAaronEdlin,UniversityofCaliforniaatBerkeley;andA.MushfiqMobarak,UniversityofMaryland.


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

chargesthatexceedthepopulation'struewillingnesstopaycanleadtowidespreadevasion,withdirepublichealthconsequences.Totheextentthatcostrecoveryisnotpossible,governmentsmightthereforeneedtosubsidizesolidwastecollectionanddisposal.Knowinghowmuchcanrealisticallyberaisedthroughchargesisimportantforbudgetingappropriatelyandfordeterminingwhichpartsoftheservicecanbeunbundledandchargedforandwhichwouldneedtobesubsidized.

Thisprojecthasundertakencontingentvaluationsurveysofthewillingnesstopayforappropriatesolidwastecollectionanddisposalintwomedium-sizecitiesinthePhilippines,IloiloandNaga.Itisexaminingthedeterminantsofwillingnesstopay,includingtheroleofinformationandeducation;lookingatdifferentpayment

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.


Ref.no.:682-77.

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

telecommunicationsproviderbemotivatedtouseitsexistingassetsbetterandtoinvestinadditionalcapacity?Howcantelecommunicationsreformbestructuredsothatitgainsthesupportofkeystakeholdersandfitswellwiththecountry'sinstitutionalcapacity?

Theresearchwillanalyzethesequestionsthoughitsbroaddatasetandthroughcasestudiesofcountriesthathavetriedamixofreformapproaches,includingnoreform.(TheproposedsetofcountriesincludesCôted'Ivoire,Ghana,Malawi,Senegal,Tanzania,andUganda.)Theworkwillbeginwithapilotcasestudy,followedby

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.


Ref.no.:682-92.

TheImpactofRegulatoryRisksontheCostofPrivateDebtforInfrastructureProjectsinEmergingMarkets

Atransparentandpredictableregulatoryframeworkiscriticaltoencourageflowsofprivateinvestment.Amajorchallengeforgovernmentsisdesigningtheregulatoryframeworksoastoreducetheriskperceivedbyinvestors.Thisresearchprojectinvestigatestheimpactofregulatoryrisksonthecostoffixedincomedebtforprivateinfrastructureprojects.

Theresearchfocusesonfixedrate,U.S.dollarbondsissuedforthetelecommunications,oilandgas,andenergyandutilitysectorsduring199099,whosespreadsareusedasadependentvariable(sampleof

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

researchshouldcontributetothatadviceaswellastotheBank'smethodologyforpricingriskinsurancetofacilitateprivateprojectfinanceinemergingeconomies.Theresearchwillalsoproduceadatabaseofregulatoryriskindicatorsinindustrialanddevelopingcountries.

Responsibility:EuropeandCentralAsiaRegion,EnergySectorUnitLaszloLovei([email protected]).WithNinaBubnovaandJohnQuigley,UniversityofCaliforniaatBerkeley;andIlyaLipkovich,VirginiaPolytechnicStateUniversity.


Ref.no.:683-25.

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.

Responsibility:DevelopmentResearchGroup,InfrastructureandEnvironmentZmarakShalizi([email protected]),AntonioBento,andElysaColes.


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,

whilecontrollingforotherchangesinthebusinessenvironment.TheresearchisbeingundertakeninHungary,Poland,andTurkey.

Thestudyiscloselyrelatedtoacomplementaryresearchproject,Telecommunications,Competition,andInnovation(ref.no.683-45).TheresultsofboththeseprojectsshouldhelppolicymakersandWorldBankoperationalstaffbetterassessthecaseforactivecompetitionpolicies.Inparticular,theyshouldindicatewhethereasinganyremainingbarrierstocompetitioninupstreambusinessservicesshouldbeapriority.

Responsibility:DevelopmentResearchGroupMarkDutz([email protected]).WithAydinHayri,Deloitte&

ToucheLLP;EdaKarakullukcu,MetaforConstructionandTradeCo.,Istanbul;andPatrickRey,UniversitédesSciencesSociales,Toulouse.


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

variables.Inaddition,theprojectwillexaminethelinksbetweenregulatoryreformandtheprovisionofnewservicesbytelecommunicationsproviders.

Thestudyiscloselyrelatedtoacomplementaryresearchproject,RoadFreightTransport,Competition,andInnovation(ref.no.683-44).TheresultsofbothshouldhelppolicymakersandWorldBankoperationalstaffbetterassessthecaseforactivecompetitionpoliciesandforimprovedcoordinationbetweensector-specificandeconomywideregulation.Andtheyshouldindicatewhethereasinganyremainingbarrierstocompetitioninupstreambusinessservicesshouldbeapriority.

Responsibility:DevelopmentResearchGroupMarkDutz([email protected]).WithMariaVagliasindi,EuropeanBankforReconstructionandDevelopment(EBRD);andDavidNewbery,CambridgeUniversity.TheEBRDiscontributingfundingfortheresearch.


Ref.no.:683-45.

CompetitiveCities:UrbanPrimacyandGrowth

Urbananalystsandsocialscientistshavehypothesizedthatexcessiveurbanprimacywhentoomanyofacountry'sorregion'sresourcesareconcentratedinanexcessivelylarge,costlymetropolitanareahindersnationalgrowthandqualityoflife.Moreover,theWorldBank'srecentfocusontheurbanizationstrategiesandentrepreneurshipofmedium-sizecitiesindicatesdisenchantmentwithconditionsinmegacities.Andthepopularpresshasfocusedonthecompetitivenessofmedium-sizecitiesintheUnitedStatesformosteconomicactivity,comparedwithlargemetropolitanareas.

Allthissuggeststworelatedquestionsforresearch.First,does

excessiveprimacyhavesignificanteffectsoneconomicgrowth?Manystudieshaveexaminedthedeterminantsofurbanprimacy,mostwiththepresumptionthattoomuchprimacyisdetrimentaltoacountry.Yetthatpresumptionappearsnottohavebeentested.Thisstudyistestingit.

Second,whatarethedeterminantsofurbanprimacy?Thisresearchaddressesthatquestioninamoresophisticatedway,withbetterdata,thanpaststudieshave.Whileearlierstudieshavereliedoncross-sectionaldataandmethods,thisoneusespaneldataandmethods.Itisalsocollectingandanalyzingdataonkeydeterminantsofprimacyrelatedtonationalinfrastructureinvestmentsanddecentralizationofgovernment,whicharetypicallynotused.

Theresearchstartswithastandarddescriptionoftheurbansectorofacountry,essentialforunderstanding

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.


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.

Thesenegativeexternalitiesofmotorizationindevelopingcountriesposeachallengeforpublicpolicyandtheallocationofpublicexpenditures.Thisresearchusestheoreticalandempiricalanalysesandcomparativecasestudyanalysestoaddressconcreteoperationalissues.Itaddressessuchquestionsasthese:Howmuchemphasisshouldbegiventopoliciesandprogramsthatmayreducetheneedforinvestmentsintransportinfrastructure?Howeffectivearedifferentpoliciesinaccommodatinglargepopulationsandeconomicgrowthinurbanareaswithminimumnegativeexternalitiesfrommotorization?Whatisthebenefitinencouragingamoreappropriatepaceofmotorizationthatis,onethatbetterbalancesprivatedecisionsonsmallcapitaloutlayswithsociety'sabilitytomobilizeresourcesandimplementcomplementarycapitalinvestments?Howshouldinvestmentsintransport

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.


MotorizationandRoadProvision

Paneldataatthenationallevel(for50countries)andtheurbanlevel(for35cities)havebeenanalyzedtosummarizetrendsanddeterminantsofmotorization(thenumberofvehicles)andofroadprovision(thetotallengthofroads).Sincebothvehiclesandroadsare

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.


Reports

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-

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

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

theperformanceimpactofinstitutionalcomponentsandaspects.Theysuggestthattheinteractionofinstitutionsandperformancecanderivefromthegeneralsocioeconomic,political,andresource-relatedenvironmentinwhichitoccurs.Andtheystronglyfavorasequentialstrategyforinstitutionalreform.

Thethirdphaseofthestudywillanalyzetheentiredataset,whichnowincludes125observationsfrom30countries.

TheresultsofthestudyhavebeendisseminatedthroughseminarsattheWaterResourcesCenteroftheUniversityofIllinoisatUrbanaandattheWorldBank.AnotherseminarisscheduledforNovember1999attheUniversityofIndianaatBloomington.Interimresults

havebeengivento130waterexpertsin30countriesforfeedback.

Responsibility:RuralDevelopmentDepartmentArielDinar([email protected]).WithR.MariaSaleth,InstituteofEconomicGrowth,Delhi.


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

paneldataonhouseholdsandcommunities,thestudywillcalculatetheeconomicandsocialreturnsofruralroads.

BIDShascollectedandreportedthebaselinesurveydataandwillcarryoutthenextfollow-upsurveyin2000.Animpactstudyofruralroadsbasedonthesurveydatawillbecarriedoutinthesummerof2000.

Responsibility:PovertyReductionandEconomicManagementNetwork,GenderDivision,andDevelopmentResearchGroup,PovertyandHumanResourcesShahidurR.Khandker([email protected])andHussainSamad;andSouthAsia,InfrastructureSectorUnitThampilPankaj.WithM.A.Latif,BangladeshInstituteofDevelopmentStudies.


RuralRoads:WelfareImpactEvaluation

Ruralroadsareoftenseenaskeytoraisinglivingstandardsinpoorruralareas,andmanyWorldBankruralroadsprojectshavethisastheirprimaryobjective.Yetdespiteageneralconsensusontheimportanceofruralroadsincludingmuchanecdotalevidencethereissurprisinglylittlehardevidenceonthesizeandnatureoftheirbenefits.

Thisstudyaimstoassesstheimpactofruralroadsonpoverty,toprovideinputstopolicydiscussiononhowbesttoallocatescarcepublicresources.TheempiricalinvestigationisbeingconductedinVietnam,wheretheWorldBankisfinancingandhelpingimplementalarge-scaleruralroadsprojectforpovertyalleviation.Thestudy'soverallfocusisonhowthedeterminantsoflivingstandardschangeovertimeincommunesthathaveroadprojectscomparedwithonesthatdonot.

Asurveycollectedpreprojectbaselinedataforarandomsampleof

100project(treatment)communesand100nonproject(control)communesinthespringof1997.AsecondroundwenttothefieldinJune1999.Theinformationfromthesefirsttworoundsshouldallowanassessmentofinitialimpacts.

Fourothersurveysalsowereconducted.Ineachsampledcommuneahouseholdquestionnairewasadministeredto15randomlysampledhouseholds.Ashortdistrict-levelsurveywasimplementedtohelpputthecommune-leveldataincontext,andanextensiveprovince-leveldatabasewassetuptohelpunderstandtheselectionoftheprovincesintotheproject.Finally,becausetheimpactofroadprojectswillvaryaccordingtothemagnitudeofthechangeresultingfromtheprojectandthemethodofprojectimplementation,aproject-leveldatabaseforeachoftheprojectareassurveyedisalsobeingconstructed.

Thebaselinewillbeusedtomodeltheselectionofprojectsites,withafocusontheunderlyingeconomic,

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.


Report

vandeWalle,Dominique.1999.AssessingthePovertyImpactofRuralRoadProjects.WorldBank,DevelopmentResearchGroup,Washington,DC.

Macroeconomics

FiscalDecentralizationinLatinAmerica

Thisresearchprojectinvestigatestheeffectsoffiscaldecentralizationonmacroeconomicmanagementandequityandontheefficiencyofresourceallocationintheeducationsector.ItfocusesonthecasesofArgentina,Brazil,andColombiaforboththeseissuesandalsoincludeseconometricinvestigationofawidersampleofindustrialanddevelopingcountries.Thethreecasestudycountrieswerechosenbecausetheyareamongthemostdecentralizeddevelopingcountriestodayandbecausetheysharemanyculturalandpoliticaltraits,includingdemocracy,whichallowsthestudytocontrolforthesevariablesandfocusontheeffectsofdecentralization.Thecountryanalysesarenotstand-alonecasestudiesbutintegratedcomparisons.

Themainmacroeconomicquestionaboutdecentralizationiswhetherithasledtounsustainablefiscaldeficits.Theseconcernscontrastwithearlierargumentsfordecentralizationbasedontheexpectationthatitwouldleadtosmallertotalgovernments,easingfiscalmanagement.Thoseargumentspresumedthatrulesormarketdisciplinewouldimposeahardbudgetconstraintonsubnationalgovernmentsandlimittheirborrowing.Butinmanycountriessoftnessofconstraintsseemstobeaproblem.Thecasestudiesinvestigatethisquestionindepth,andthemultinationaleconometricanalysisusespaneldatatofurthertestsomehypotheses.

Thesecondmainissuerelatestotheeffectsontheefficiencyofservicedelivery,allegedtobetheprimaryeconomicbenefitsofdecentralization.Whiletherecentexperienceswithdecentralizationaretooshorttoallowalong-termassessmentoftheseeffects,existingdataanddatathatthestudyiscollectingpermitsomepreliminary

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

stability.Argentinahashadgreatersuccess,becauseitimposedaharderbudgetconstraintonthepublicsectoratthenationallevelandbecausethenationalexecutivehasstrongerinfluenceonthecongressandonthesubnationalgovernmentsthroughthepartysystem.Establishingtherightincentivesforsubnationalgovernmentsandtheircreditors,asinArgentina,proved

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

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.


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.

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.

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.


Ref.no.:683-08C.

Reports

Atiyas,Izak,andSherifSayin.1998.APoliticalEconomy

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.

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

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,

organizations,andstatemattermuchforsustainedeconomicgrowthaswellasbroaderdevelopmentoutcomes.Civilliberties,participatoryprocesses,andthepoliticalsystemcanmakethedifferencebetweenastagnantandathrivingsociety.Corruption,aparticularlywidespreadaspectofmisgovernance,ismorethanamatterofunfairnessorimmorality:itentailsheavysocialcosts.Badeconomicpolicies,weaklegalframeworksandregulations,andalackofprofessionalismallfeedcorruption.Activecivilsocieties,strongpublicoversight,andswiftcorrectionofpolicydistortionsarecrucial.

Allthispointstothreeshiftsinemphasis,towardacomprehensivedevelopmentframework:

Broadeninggrowth-orientedactionstoincorporateactionsforequality,quality,andsustainability.

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

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

leadindealingwithfinancialsectorrestructuring.TheBank'sclientsalsoshouldbenefitfromanincreasedunderstandingoftheconsequencesofbankingcrisesformonetarypolicyandpricestability.Andtheresearchwillprovideguidanceonmonetaryindicatorsthatshouldbemonitoredduringcrisestoforecastinflationandkeepitincheck.

Responsibility:DevelopmentResearchGroup,FinanceMariaSoledadMartinezPeria([email protected])andIvannaVladkova.WithCristinaNeagu;andNeilEricsson,FederalReserveBoard.


Ref.no.:683-24.

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

AsiaRegion,PovertyReductionandEconomicManagementSectorUnitPradeepMitra.WithHongyiLi,HongKongUniversity;BernardinAkitoby,InternationalMonetaryFund;andSethaputSuthiwart-Narueput.


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.)

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

microeconomicliteratureonfirmsandhouseholdstoseewhethertheywerecompatible.

ThemainfindingisthatAfrica'spastslowgrowthcanbeexplainedbyarangeofpolicyandinstitutionalweaknessesalackofopennesstotheworldeconomy,lowsocialcapital,andpoorpublicservices.Eachofthesecontributestoahigh-risk,capital-hostileenvironmentthathinderstransaction-intensiveactivitiesandhasinducedseverecapitalflight.

ForWorldBankoperationsinAfrica,thepriorityhasprobablyshiftedfromemphasizingopenness,wheretherehasbeenmuchprogress,toemphasizingloweringtransactionscostsandrisks.

ThefindingshavebeenpresentedinthreeWorldBankInstitutecoursesandhavealsobeenwidelypresentedinAfrica.AndtheyhavebeendistributedtoBankeconomistsintheAfricaRegionandtoAfricaneconomistsintheAfricanEconomicResearchConsortiumnetwork.

Responsibility:DevelopmentResearchGroup,OfficeoftheDirectorPaulCollier([email protected]).


Reports

Collier,Paul.1999.ExplainingAfricanEconomicPerformance.

JournalofEconomicLiterature37(March):64111.

.Forthcoming.WhyHasAfricaGrownSlowly?JournalofEconomicPerspectives.

NationalEconomicPoliciesandGrowth

Thisprojectlookedatthedegreetowhichnationaleconomicpolicies

explaincountrygrowthperformance.Italsoexaminedwhethernationalpoliciescanbeusedasabasisforprojectinggrowthrates,lookingcriticallyatpastWorldBankforecastsandtestingtherelativemeritsoftimeseriesmodelsandgrowthregressionsasforecastingtools.

ThefindingshavebeenpresentedatseveralclinicsoftheBank'sPovertyReductionandEconomicManagementNetwork.

Responsibility:DevelopmentResearchGroup,MacroeconomicsandGrowthDavidDollar([email protected]),WilliamEasterly,AartKraay,andGeorgeMonokroussos.


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

fiscal,currentaccount,andgrowthcrisesdonot.Itshowedthatcountriesthathaveamiddle-classconsensusahighshareofincomeforthemiddlethreequintilesandrelativeethnichomogeneityhavebetteroutcomesingrowth,percapitaincome,health,andeducation.Finally,itfoundthataconsensusforinflationstabilizationmaybeeasiertoformthanusuallythought,asitisthepoor(thesupposedbeneficiariesofpopulistprogramsthatcauseinflation)whoaremostlikelytomentioninflationasatopnationalproblem.

Responsibility:DevelopmentResearchGroup,MacroeconomicsandGrowthWilliamEasterly([email protected]).WithAlbertoAlesina,HarvardUniversity;RezaBaqir,UniversityofCaliforniaatBerkeley;andAllanDrazen,UniversityofMaryland.


Reports

Alesina,Alberto,RezaBaqir,andWilliamEasterly.1999.PublicGoodsandEthnicDivisions.WorldBank,DevelopmentResearchGroup,Washington,DC.

Drazen,Allan,andWilliamEasterly.1999.DoCrisesInduceReform?SimpleEmpiricalTestsofConventionalWisdom.WorldBank,DevelopmentResearchGroup,Washington,DC.

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.

TherehasbeenanimportantshiftindisbursementsawayfromprivateandbilateralsourcestotheInternationalDevelopmentAssociation(IDA)andothermultilateralsourcesofconcessionalfinancing.In1988-97positivenettransfersfromtheIDA,othermultilateralconcessionalsources,andbilateralconcessionalsourcesoffsetnegativenettransfersfromtheWorldBank,theInternationalMonetaryFund,bilateralnonconcessionalsources,andprivatesources.

Responsibility:DevelopmentResearchGroup,MacroeconomicsandGrowthWilliamEasterly([email protected]).


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

growthandimprovementofthelivingconditionsofthepoor?Haveasset-poorhouseholdsorregionswithbelow-averageaccesstoinfrastructureorwithhighlevelsofviolencesystematicallylaggedinthegrowthprocess?Howeffectivelywerehouseholdsindifferentwealthclassesabletocopewithaggregateandidiosyncraticshocks,andwhatfactorshelpedthemindoingso?

Howeffectivelyhavethecountry'sagriculturalpotentialandinputs(purchasedandnonpurchased)beenused?Whatfactorshavefurtheredagriculturaldiversification,andhowmuchhastheperformanceofinputandoutputmarketsimprovedsinceadjustmentwasinitiated?

Whatfactors(policies)havepromotedproductiveinvestmentandnewenterprisestart-upsatthehouseholdlevel?Towhatdegreehastheabsenceofaminimumsetofendowmentsatthecommunitylevelledtoeconomicallymotivatedout-migrationamongthebetter

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

DevelopmentKlausDeininger([email protected]).WithJohnOkidi,MakerereUniversity,Uganda.


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]),

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.


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.


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

unlessthecenterretainsstrongtaxandredistributivepowers.Evidenceindevelopingcountriesshowsthatfiscaldecentralizationtypicallyallowsthecenterstrongredistributiverolesandinstruments,butmoreresearchisneededandisunderway.Theresearchasksthequestion,inwhatcontextsisredistributiongoodorbadforefficiency?

Theresearchemphasizesthechannelsthroughwhichdecentralizationworks,andthepoliticaleconomyofdecentralization.Inanalyzingthechannels,animportantissueiswhetherfiscaldecentralizationtypicallyornecessarilysoftensbudgetconstraints,thusreducingthefiscaldisciplineofconsolidatedgovernment.Resultsindicatethatdecentralizationoftencontributestoincreaseddeficits.Theworkonpoliticaleconomylooks

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.


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

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

openingpublicforumsin1998andhavebegunthefieldworkphase.MalihelditsforuminJuly1999.Zimbabwe'sgovernmentisreconsideringitsparticipation.

Responsibility:OfficeoftheSeniorVicePresidentandChiefEconomist,DevelopmentEconomicsLynSquire([email protected]),DevelopmentResearchGroup,OfficeoftheDirectorConstanceNewman,andPovertyandHumanResourcesBrankoMilanovicandEmmanuelJimenez;PovertyReductionandEconomicManagementNetwork,GenderDivisionAndrewMason;AfricaRegionTechnicalFamilies,InstitutionalandSocialPolicyLionelDemery;UgandaResidentMissionRandolphHarrisandMaryBitekerezo;ZimbabweResidentMissionBarbaraKafkaandEbrahimJassat;BangladeshResidentMissionFredTemple,

SyedNizammuddin,andZaidiSattar;HungaryResidentMissionRogerGraweandMihalyKopanyi;EcuadorResidentMissionPaulBeckermanandMarceloRomero;GhanaResidentMissionPeterHarroldandKofiMarrah;andMaliResidentMissionGraceYabrudyandYoussoufThiam.TheSweden,Netherlands,andNorwayTrustFundscontributedfundingfortheresearch.


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

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

gains.

Responsibility:PrivateSectorDevelopmentDepartment,BusinessEnvironmentUnitHongTan(htan@worldbank-org)andGeetaBatra.AnalysesusingpaneldatafromMalaysiaweresupportedbytheEconomicPlanningUnit,Malaysia,throughareimbursabletechnicalassistanceprojectcofundedbytheUnitedNationsDevelopmentProgrammeandtheEconomicPlanningUnit.

Completiondote:December1998.

Ref.no.:680-07C.

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

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

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.

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

addressed.

Theresearchincorporatedtheintergovernmentalfiscallinkinexaminingtheeconomicfungibilityofexternalassistanceandmodeledthreedimensionsoffungibilitytwoatthefederallevelandoneatthesubsidiarylevel.UsingdataonIndia,thestudydidnotfindevidencechatforeignaidfundsarebeingspentforthepurposeintendedbythedonoragencies.Mostfundsatboththecentralandthestatelevelarefungible.

Theyarespentonactivitiesthatwouldhavebeenundertakenanyway;foreignaidmerelysoftensthebudgetconstraint.

ThustheresultsshowthatexternalassistancetoIndiahashadnoperceptibleimpactonthecompositionofpublicspending.Oneapproachtoincreasingthedevelopmentimpactofaidmightbetolinkaidwithanoverallpublicexpenditureprogramthatprovidesadequateresourcestocrucialsectors.

ThefindingswerediscussedattwoworkshopsinNovember1997,oneattheIndiraGandhiInstituteofDevelopmentResearch,with50participantsfromthedevelopmentcommunity,andanotherattheNationalInstituteofPublicFinanceandPolicyinNewDelhi,attendedby30participantsfromacademiaandthedevelopmentcommunity.

Responsibility:DevelopmentResearchGroup,PublicEconomicsVinayaSwaroop([email protected])andAndrewSunilRajkumar.WithShikhaJha,IndiraGandhiInstituteofDevelopmentResearch.


Ref.no.:681-41C.

Report

Jha,Shikha,andVinayaSwaroop.1998.FiscalEffectsofForeign

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

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.

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

cross-countryspillovereffects.TheanalysisuseddatasetsfromBloomberg,theFederalReserveBoard,andtheInternationalMonetaryFund'sInternationalFinancialStatistics.

Thefindingsshowthatliberalizingcapitalmarketsdoesnotgenerateexcessvolatilityinlocalequitymarkets.Butopenmarketsaremorecloselycorrelatedwithworldfinancialmarkets,sotakingmeasurestopreventcontagionbecomesveryimportant.Thefindingsalsoshedlightonwhichnewsstoriesaffectmarketsduringcrises.Theresultssuggestthatmarkerswelcomeagreementswithmultilateralandbilateralorganizations.Theyalsoreactpositivelytoreformssuchasfinancialsectorrestructuringandliberalizationofcapitalaccountrestrictions.

ThepapersproducedbytheprojecthavebeenacceptedatconferencesoftheSocietyforEconomicDynamics,theLatinAmericanandCaribbeanEconomicAssociation,theEconometricSociety,andtheAmericanEconomicAssociation.Thedatacollectedforthenewsanalysisareavailableonrequest,inspreadsheetsandtables.

Responsibility:DevelopmentResearchGroup,MacroeconomicsandGrowthSergioSchmukler([email protected]).WithGracielaKaminsky,FederalReserveBoard;ArunSharmaandQingWang,UniversityofMaryland;MianaPlesca,GeorgetownUniversity;BernadetteRyan;andPushanDutt,NewYorkUniversity.


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

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

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

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

betterperspectiveontheirtradepolicychoicesandtheimpactofthosechoicesontheireconomies.ThefindingsontheAndeanPactcountrieshavebeendistributedtoBankcountryeconomistsworkingontherelevantcountriesandtoprofessionalsattheInter-AmericanDevelopmentBank.TheyhavealsobeenpresentedataWorldBankseminar.

Responsibility:DevelopmentResearchGroup,TradeMauriceSchiff([email protected])andDorsatiMadani.


Ref.no.:682-43.

Report

Madani,Dorsati.1999.South-SouthRegionalArrangements:

TheCaseoftheAndeanPact.PaperpresentedatMidWesternEconomicAssociationmeeting,PurdueUniversity,May.

PricingofBondsandBankLoansintheMarketforDevelopingCountryDebt

Privatefinancialflowstodevelopingcountrieshaveincreaseddramaticallysince1990,withmostresultingfrombondissuesorprivatebankloans.Butrecenteventsinemergingmarketshaveheightenedlong-standingconcernsabouttheefficiencyandstabilityofthemarketfordevelopingcountrydebt.Thisprojectusesdataoninternationalbondsandbankloanstoemergingmarketsinthe1990stotesthypothesesaboutthepricingofthisdebtandtheworkingsofthedebtmarket.

Theprojectfirstconsidersthepricingofsyndicatedbankloanstoemergingmarketsinthe1990s.ItfocusesonloanspricedofftheLondoninterbankofferrate(LIBOR)loansonwhichtheinterestpaidbytheborrowerisLIBORplusaspreadthatreflectstherisk

premium.Overthelifeoftheloanthespreadstaysfixed,buttheinterestratemoveswithLIBOR.Between1991and1997justover5,000LIBOR-basedloansweremadetoemergingmarkets.Thestudyanalyzesthespreadsonabout4,500loans,thesubsetforwhichcompletedataonloanandcountrycharacteristicsareavailable.

Thestudyanalyzesthedeterminantsofspreadsonsyndicatedbanklendingtoemergingmarkets,creatingtheloanextensionandpricingdecisionsasjointlydetermined.Thefindingshighlighttheroleofinternationalbanksinprovidingcredittosmallerborrowersaboutwhichinformationisleastcomplete.Moregenerally,theysupporttheinterpretationofbankfinanceasdominatingthesegmentofinternationalfinancialmarketscharacterizedbythemostpronouncedinformationasym-

metries.Domesticlendingboomsandlowreservesinrelationtoshorttermdebthavebeenpricedintheexpectedmannerbyinternationalbanks.ThehighlevelofshorttermdebtinEastAsiawassupportedbyhighgrowthratesbutwascharacterizedbyaknife-edgequality.

Theprojectisalsoexaminingwhetherthegoverninglawsunderwhichbondcontractsarewrittenhaveasignificantinfluenceonbondspreads.

Responsibility:DevelopmentProspectsGroupAshokaMody([email protected]).WithBarryEichengreen,UniversityofCaliforniaatBerkeley.


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

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

nongovernmentalorganizations.Thesesessionswillcenteronahandbookfortradenegotiatorsthatwillbepreparedduringfiscal2000.

PreliminaryresearchfindingsemergingfrombackgroundpaperssuggestthatdevelopingcountrieshaveagreatinterestinusingtheWTOasaforumtoundertakereforminmajorservicesectorssuchastransport,finance,andcommunications,ascurrentpoliciesmayimposeamajorimplicittaxontheeconomy.Analysisalsosupportsabroadeningofthenegotiatingagendatoincludeindustrialtariffs,whichremainamajorbarriertoexportgrowthformanydevelopingcountries.

Responsibility:DevelopmentResearchGroup,TradeBernardHoekman([email protected]).WillMartin,AnthonyVenables,J.MichaelFinger,AadityaMattoo,FrancisNg,DavidTarr,andAlexanderYeats;WorldBankInstitute,EconomicPolicyandPovertyReductionDivisionPhilipEnglish;andEastAsiaand

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;

EconomicResearchForum,Egypt;AfricanEconomicResearchConsortium,Kenya;CoordinatedAfricaProgramofAssistanceonServices(CAPAS)withUNCTAD;TradePolicyForumofthePacificEconomicCooperationCouncil;andNationalCouncilofAppliedEconomicResearch,NewDelhi,India.TheU.K.DepartmentforInternationalDevelopment,thegovernmentsofItalyandtheNetherlands,andtheSoci¢et¢eGeneraledeSurveillance,Geneva,havecontributedfundingfortheresearch.r


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.

Thisstudyaimstogobeyondthecross-countryregressionsandarriveatabetterunderstandingofthecausesofreformsandofthelinkbetweenforeignaidandreform.Itsfocusisontherealcausesofreformandwhetherandhowaidhasencouraged,generated,influenced,supported,orretardedreforms.Accordingly,itanalyzesthereformprocessesratherthantheresultsofthereforms.

Casestudiesof10Africancountriesareexaminingthenatureofexternalassistance,investigatingthecausesandpathsofpolicyreforms,andattemptingtotracetherelationship,ifany,betweenaidandreform.Thestudiesarebasedlargelyoninterviewsandonreviewsofavailabledata,literature,anddocumentation.ThedatacomefromOECD,InternationalMonetaryFund,andWorldBanksources.

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

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.


Ref.no.:683-31.

Micro-FoundationsofInternationalTechnologyDiffusion

Developingcountrygovernmentsoftentrytospuradoptionofforeigntechnologiesthroughpolicyinterventionsdesignedtoencouragedomesticfirmstoenterintojointventureswithforeignpartners,importsophisticatedcapitalgoods,licensetechnology,andexporttoindustrialcountrymarkets.Thecorrectpolicyintervention,ifany,dependscruciallyonwhichoftheseactivitiesarecausallyassociatedwithimprovementsinfirmperformance,howlargetheeffectsare,andwhethertheeffectsareinternalorexternaltothefirm.

Muchoftheresearchonthesequestionsfordevelopingcountriesreliesoncross-sectionaldata,whichmakeitdifficulttoidentifythedirectionofcausationbetweenactivitiesandperformance;aggregatetimeseriesdata,whicharedifficulttointerpret;orcasestudies,which

aredifficulttogeneralize.Thepremiseofthisresearchprojectisthatanalysisoffirm-levelpaneldataismostlikelytoshedlightontheissues.

Theobjectiveoftheprojectistodocumentcross-countryandsectoralpatternsintheincidenceoftheactivitiesassociatedwithtechnologytransferand,wherepossible,torelatethepatternstocountrypoliciesusingfirm-levelpaneldatasetsfor11developingeconomies:Bulgaria,theCzechRepublic,Ghana,Indonesia,theRepublicofKorea,Poland,Romania,theSlovakRepublic,Slovenia,Taiwan(China),andThailand.Econometrictechniqueswillbeusedtoinvestigatethecausalrelationshipbetweenfirmactivitiesandfirmperformance,andthesizeoftheeffects.

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.


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

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

([email protected]),L.AlanWinters,andAlexanderYeats;andFinanceGerardCaprioJr.;Energy,Mining,andTelecommunicationsDepartment,InformationDevelopmentAdministrationUnitCarlosPrimoBraga;PovertyReductionandEconomicManagementNetwork,EconomicPolicyDivisionHomiKharas;LatinAmericaandtheCaribbeanRegion,Finance,PrivateSector,andInfrastructureSectorUnitMargaretMillerandMalcolmRowat;WorldBankInstitute,RegulatoryReformandPrivateEnterpriseDivisionDannyLeipzigerandAntonioEstache;andInternationalFinanceCorporation,CentralCapitalMarketsDepartment,SecuritiesMarketDevelopmentGroupMikeLubrano.WithJuliodeBrunandJoseMaurodeMorais.


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

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

basedonanunderstandingoftheinitialconditionsunderwhichreformsarelaunchedandthatthebenefitsofmarketreformandtradeliberalizationarefullyrealizedonlywhensupportingfactormarketsandsupportinginstitutionswork.Often,becauselong-standinginterventionshaveobviatedtheneedforsuchmarketsandinstitutions,theyarenotimmediatelyavailableduringreform.Forthisreason,attentionshouldbegivenearlyinthereformprocesstofacilitatingthedevelopmentofmarketsandinstitutionsthataremissing.

Responsibility:DevelopmentResearchGroup,RuralDevelopmentPanosVarangis([email protected]),TakamasaAkiyama,andDonaldLarson;andDevelopmentProspectsGroupJohnBaffes.WithJonathanCoulter,NationalResourcesInstitute,UnitedKingdom.TheBritishTrustFundcontributedfundingfortheresearch.


Reports

Akiyama,Takamasa,DonaldLarson,PanosVarangis,andJohnBaffes.Forthcoming.CommodityMarketReforms:LessonsofTwo

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

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.


Reports

Larson,Donald,PanosVarangis,andNanaeYabuki.1998.CommodityRiskManagementandDevelopment.PolicyResearchWorkingPaper1963.WorldBank,DevelopmentResearchGroup,Washington,DC.

Varangis,Panos,andDonaldLarson.1998.CommodityPriceVolatilityandEconomicPolicy.PaperpresentedattheUNCTADPartnersforDevelopmentSummitonNewStrategiesforaChanging

CommodityEconomy:TheUseofModernFinancialInstruments,November912,Lyon,France.

TheDynamicImpactofTradeLiberalizationinDevelopingCountries

InternationaltradeeconomistsandWorldBankpolicyadvicehavetypicallyarguedthatanopentraderegimeisveryimportantforeconomicgrowthanddevelopment.Thisviewhasbeenbasedinpartonneoclassicaltradetheory,whichgenerallyfindsthattradeliberalizationimprovesacountry'swelfare;inpartoncasualempiricalobservationthatcountriesthatremainhighlyprotectedforlongperiodsappeartosuffersignificantlyandperhapscumulatively;andinpartonempiricalworkthatalsofindstradeliberalizationbeneficialtowelfareandgrowth.

Yetnumericalestimatesoftheimpactoftradeliberalizationhavegenerallyfoundthatitincreasesthewel-

fareofacountrybyonlyabout1percentofGDP.Theseestimateshavebeenbasedoncomparativestaticmodels,however,andresearcherstypicallyclaimthattheywouldbemuchlargeriftheyincorporatedthedynamicgainsfromtradeliberalization.Thesegainshavenotyetbeenquantified.

Thedevelopmentofendogenousgrowththeoryhasprovidedacleartheoreticallinkfromtradeliberalizationtoeconomicgrowth.Becauseofthecomplexityofthemodels,thetheoreticalliteraturehasnecessarilybeenbasedonratheraggregatemodels,andithasfocusedonthesteady-stategrowthpath,makingitdifficulttogaininsightintothedynamicgrowthpathofthekeyvariables.Moreover,sincetheadjustmentcostsarenotevaluatedinthetheoreticalliterature,thatliteraturecannotclearlyindicatethatwelfareissignificantlyincreasedevenifthelong-rungrowthrateincreases.

Thisprojectdevelopedappliedgeneralequilibriumendogenousgrowthmodelsthatwouldmakeitpossibletoobtainimportantinsightsintotherelationshipbetweentradeliberalizationandgrowth.Itfocusedontheclassofmodelsthatarerelevanttodevelopingcountriessmallopeneconomieswithtechnologicalchangegeneratedprimarilyintherestoftheworld.

Theresearchfirstquantifiedthedynamicgainsfromtradeliberalization,takingintoaccounttheadjustmentcostsassociatedwithforgoneconsumption,soastoassesstheclaimthatthedynamicwelfaregainsfromtradeliberalizationareconsiderablylargerthanthecomparativestaticestimates.Usinganumericalmodel,ittheninvestigatedtheimportanceoftheavailabilityofavarietyofimportedinputsintodomesticproductionaswellastechnologicalspilloversondomesticproductionderivingfromimportedgoods.Afterdevelopingsomewhatstylizedmodels,thestudyappliedthemodeltoasmallopendevelopingeconomythathasrecentlyundertakentrade

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.


Reports

Rutherford,Thomas,andDavidTarr.1998.TradeLiberalizationandEndogenousGrowthinaSmallOpenEconomy:AnIllustrativeModel.PolicyResearchWorkingPaper1970.WorldBank,

DevelopmentResearchGroup,Washington,DC.(Foramorerecentversionofthispaper,ADynamicAnalysisofTradeLiberalizationwithProductVariety,[email protected].)

.1998.RegionalTradingArrangementsforChile:DotheResultsDifferwithaDynamicModel?PaperpresentedattheconferenceUsingDynamicComputableGeneralEquilibriumModelsforPolicyAnalysis,Assens,Denmark,June1417.

TheLiberalizationandInternationalizationofFinancialServices

TradeinfinancialservicesisontheagendafortheWorldTradeOrganization(WTO)negotiationsin2000,andtheinternationalizationofsuchserviceshasbeenanimportantissueineffortstostrengthenandliberalizefinancialsystemsindevelopingcountries.BoththeWTO

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]).


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.

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.

MakingAidWork

Thisresearchprojectexaminedtheeffectsofdevelopmentassistanceongrowth,povertyreduction,andimprovementsinsocialwelfareinthedevelopingworldandsoughttoidentifytheconditionsunderwhichforeignaidismosteffectiveinmeetingthoseobjectives.

Theprojectuseddifferentapproachesfordifferentcomponents.Themacroeconomicworkwasputinthecontextofmoderngrowththeoryandpoliticaleconomy.Otherworkatthesectororprojectlevelreliedonmicroeconomicmodels.

Theprojectdrewonanewdatabaseitdevelopedonforeignaidflows.ItalsousedOECDdataonaidbysectorandbytype.AnditdrewontheWorldBank'sextensivedataonprojectsindifferentsectorsandonevaluationsofthoseprojectsbytheBank'sOperationsEvaluationDepartment.

Themainfindingsoftheresearcharethese:

Theimpactofforeignaidongrowthandpovertyreductiondependsonthequalityofeconomicinstitutionsandpoliciesintherecipientcountries.Butthequantityofaiddoesnotaffecteconomicpolicies.Nordoesaidconditionalitynecessarilyleadtoreformifthereisnostrongdomesticmovementinthisdirection.

Aidisoftenfungible,sothatdonoragenciescannottypicallydirecttheirfundingtoparticularsectorsorprojects.

Projectscanserveascatalystsforinstitutionalandpolicychangeatthesectororcommunitylevel,andtheyaremorelikelytodosoeffectivelywhenthereisbroadparticipationofcivilsociety.

ThesefindingshavestrongimplicationsforBankclientsandfordonoragencies.Datathrough1996showthataidwasallocatedin

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.

Responsibility:DevelopmentResearchGroup,MicroeconomicsandGrowthDavidDollar(ddollar@>worldbank.org),CraigBurnside,CharlesChang,WilliamEasterly,LuisServen,andJakobSvensson,andPublicEconomicsVinayaSwaroop;OfficeoftheSeniorVicePresident,DevelopmentEconomicsLynSquire;andEastAsiaandPacificRegion,IndonesiaResidentUnitLantPritchett.WithAlbertoAlesina,HarvardUniversity.


Reports

Alesina,Alberto,andDavidDollar.1998.Who.GivesAidtoWhom,andWhy?NBERWorkingPaper6612.NationalBureauofEconomicResearch,Cambridge,Mass.

Burnside,Craig,andDavidDollar.1997.Aid,Policies,andGrowth.PolicyResearchWorkingPaper1777.WorldBank,DevelopmentResearchGroup,Washington,DC.

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.

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

recipient.Creatinginstitutionalarrangementsthatincreasetheopportunitycostofaidmaybeawaytoincreaseitseffectiveness.

Theprojectalsoincludedworkonpoliticalcontagionacrosscountriesincrisisandpoliticaldeterminantsofspeculativeattacks.

ThefindingshavebeenpresentedatworkshopsattheBank,atseveraluniversities,andatacademicmeetings.Responsibility:DevelopmentResearchGroup,MacroeconomicsandGrowthJakobSvensson([email protected]),DavidDollar,andCharlesChang.WithAllanDrazen,UniversityofMaryland;andRezaBaqir,StanfordUniversity.


Reports

Drazen,Allan.1998.PoliticalContagioninCurrencyCrises.

WorldBank,DevelopmentResearchGroup,Washington,DC.

Svensson,Jakob.1998.ReformingDonorInstitutions:AidTournaments.WorldBank,DevelopmentResearchGroup,Washington,DC.

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

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

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.


Report

Akiyama,Takamasa,PanosVarangis,andLMCInternational.Forthcoming.StudyofMarketingandTradingPoliciesandSystemsinSelectedCoffee-ProducingCountries.TheNetherlandsCommonFundforCommodities,Amsterdam.

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

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.

ThethirdandfourthpapersinthesetconsiderfullgeneralequilibriummethodologiesforestimatingtheequilibriumRER.ThethirdpaperexaminestheuseofadynamicmacroeconomicmodelforestimatingtheequilibriumRERindevelopingcountriesandconcludesthat,asdesirableassuchanapproachmaybetheoretically,itisnotlikelytobepracticalempiricallyexceptinspecialcircumstances.Thefourthpaperdiscussesreduced-formsingle-equationeconometricestimatesoftheequilibriumRER.Thismethodologymakesitpos-

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

Macroeconomics4IngridIvins;AfricaCountryDirectorGroup13,WestCentralAfricaTheodoreAhlers;andDevelopmentResearchGroup,RuralDevelopmentJohnBaffes,PublicEconomicsShantayananDevarajan,PovertyandHumanResourcesLantPritchett,andMacroeconomicsandGrowthIbrahimElbadawi.WithNadeemUlHaqueandFabienNsengiyumva,InternationalMonetaryFund;NitaGhei;StevenKamin,U.S.FederalReserveBoard;PeterMontiel,WilliamsCollege;andStevenO'Connell,SwarthmoreCollege.


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

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.

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

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

Jean-MarieGrether,UniversityofNeuchatel,Switzerland;JaimedeMelo,UniversityofGeneva;andL.AlanWinters,UniversityofSussex.


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.

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.


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

thesebarriers.Itwilltheninvestigatetheirimplicationsforthelocationdecisionsoffirms,theextenttowhichtheycangiverisetoclusteringofactivity,andthusthespatialwagedifferencesthattheysupport.Inadditiontolookingatdistanceasabarriertotrade,theresearchwillalsostudyitseffectonthetransmissionofideasandnewtechnology.

Geographyandthespreadofdevelopment:Globalizationischangingthelocationofeconomicactivitiesastheybecomemorefootlooseandbetterabletosupplymarketsfromlower-wagelocations.Economiesbenefitingfromthisrelocationofactivityaretypicallyexport-oriented,oftenwithsignificantforeigndirectinvestment,andcloselyintegratedinworldproductionnetworks.Whatkindsofeconomicactivitiesarerelocatingtowhattypesofeconomies,andwhataretheimplicationsfordevelopment?Willdevelopmentbeconcentratedinafew

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.


RegionalismandDevelopment

Nearlyeverydevelopingcountryisinorisdiscussingaregionalintegrationarrangement.Policymakershavetodecidenotonly

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,

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.


Reports

Amjadi,Azita,andL.AlanWinters.1997.TransportCostsandNaturalIntegrationinMercosur.PolicyResearchWorkingPaper1742.WorldBank,InternationalEconomicsDepartment,Washington,DC.

Amjadi,Azita,L.AlanWinters,andAlexanderYeats.1995.TransportCostsandEconomicIntegrationintheAmericas.SwissJournalofEconomicsandStatistics131(3).

Andriamananjara,Soamiely,andMauriceSchiff.1998.RegionalGroupingsamongMicrostates.PolicyResearchWorkingPaper1922.WorldBank,DevelopmentResearchGroup,Washington,DC.

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.1996.Intra-IndustryTrade,ForeignDirectInvestment,andtheReorientationofEasternEuropeanExports.PolicyResearchWorkingPaper1562.WorldBank,InternationalEconomicsDepartment,Washington,DC.

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AgricultureandtheNewTradeAgendaintheWTO2000Negotiations:EconomicAnalysesofInterestsandOptionsforDevelopingandTransitionEconomies

Thisprojectaimstocarryoutanintegratedprogramofresearch,policyanalysis,andcapacitybuildingtostrengthentheparticipationofdevelopingcountriesintheWorldTradeOrganization(WTO)

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

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

HertelandAzizElbehri,PurdueUniversity;AmmarSiamwalla,ThailandDevelopmentResearchInstitute;AdemolaOyejide;OlawaleOgonkula,UniversityofIbadan,Nigeria;GavinMaasdorf,Imani-CapricornEconomicConsultants;AshokGulati;andPrema-ChandraAthukorala,AustralianNationalUniversity.TrustFundsfromtheWorldBank-NetherlandsPartnershipProgramandtheU.K.DepartmentforInternationalDevelopmentarecontributingfundingfortheresearch.


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

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

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;

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.


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?

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.

Theresearchcastnewlightonsuchpolicymeasuresaspensionandfinancialreform,oftenadvocatedonthegroundsoftheirsupposedlypositivesavingsimpact:

Fiscalissues.Eveninthelongrun,increasesinpublicsavingareonlypartlyoffsetbydeclinesinprivatesaving.Butthereismuchvariationinhowmuchprivatesavingoffsetschangesinpublicsavingfromlessthan30percentinIndiatoalmost80percentinMexico.Theevidencealsoconsistentlyshowsthatcuttingspendingisamoreeffectivewaytoincreasesavingthanraisingtaxesis.Nevertheless,whilepublicsavingmayhavethequickestandmostdirectpositiveeffectonnationalsaving,otherpoliciesthataffectsavingindirectly

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

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

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;

AndrewSamwick,DartmouthCollege;AlejandroLopez,InternationalMonetaryFund;FabioSchiantarelli,BostonCollege;PeterMontiel,WilliamsCollege;JanineAronandJohnMuellbauer,OxfordUniversity;AntonelloScorcuandLucioPicci,UniversitadeBologna;OrazioAttanasio,UniversityCollegeofLondon;DaniRodrik,ColumbiaUniversity;andCarmenReinhart,UniversityofMaryland.


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.

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.

.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

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.


Ref.no.:682-17.

Report

Orenstein,MitchellA.APolitical-InstitutionalAnalysisofPensionReforminthePostcommunistCountries.SyracuseUniversity,MaxwellSchoolofCitizenshipandPublicAffairs,Syracuse,N.Y.

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.


Ref.no.:682-41.

OperatingCostsandInvestmentReturnsofPensionFunds

Thisstudyisinvestigatingthedeterminantsofadministrativecostsinthedecentralizedpensionplansoftenintroducedinpensionreforms,suchasthoseinChileandotherLatinAmericancountries.Theseplanshavebeencriticizedfortheirhighadministrativecosts.Byexaminingthecostfunctionsofprivatepensionplans,thestudyaimstotargetthedeterminantsofcoststhatcanbeinfluencedandreducedbypublicpolicy.

Thestudyhasusedseveralapproaches.First,ithascarriedoutaneconometricanalysisofU.S.mutualfunds,whichoftenrunretirementplansandareacloseanaloguetoanindividualaccountsystem.Theresearchmodelscostsasafunctionofassets,numberofaccounts,marketingexpenses,activeorpassivefundmanagement,sizeoffundfamily,rateofreturn,andrisk.Itlooksfortheincrementalcostassociatedwitheachindividualaccount,economiesofscalestemmingfromlargerfundsandfund

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.


Ref.no.:682-50.

Contagion,FinancialVolatility,andtheSupplySide

ThereisbroadagreementamongeconomiststhatthemagnitudeanddepthoftheeconomiccrisesthateruptedinArgentinaintheaftermathofthepesocrisisinDecember1994,andinAsiaafterthecollapseoftheThaibahtinmid-1997,werecompoundedbydomestic

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.

Thesefindingsillustratetheimportanceoftakingintoaccounttherolethatdomesticcreditmarketimperfectionsmayplayinmagnifyingtherealeffectsofexternalshockandthustheimportanceofimplementingreformsaimedatremovingthesedistortions.Moregenerally,theyimplythatfinancialreformcannotbeconstruedsimplyasapolicyofinterestrateliberalization;suchapolicymustbeaccompaniedbystructuralmeasuresaimedatimprovingtheefficiencyofthefinancialsystem,notablybyremovinglegalimpedimentstoseizureofloancollateral.Thefindingsalsohelptounderstandtherolethatdebtrelief(inadditiontodebtrescheduling)mightplayinminimizingtheoutputlossesassociatedwithadverseshocks.

FindingswerepresentedataconferenceonintegrationandcontagionorganizedbytheWorldBankinBuenosAiresonJune17-18,1999.About100participantsattended,includingBankstaff,LatinAmericanpolicymakers,andacademics.

Responsibility:WorldBankInstitute,EconomicPolicyandPovertyReductionDivisionPierre-RichardAg¢enor([email protected]).WithJoshuaAizenman,DartmouthCollege;andAlexanderHoffmaister,InternationalMonetaryFund.


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

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.


Ref.no.:682-90.

PrimaryFinancialMarkets:MacroeconomicConditionsandMarketDevelopment

Thebroadgoalofthisprojectistobegintheprocessofunderstandinghowandwhyprimarydebtandequitymarketsdevelopandtheroletheyplayinprovidingfinancetolocalcompanies.Primarymarketsarewherefirmsraisecapitalbyissuingfinancialsecurities,whilesecondarymarketsarethosewherefinancialsecuritiestradeafterissuance.Theresearchexaminesthedevelopmentofdomesticprimarymarketsusingannualaggregateissuancedatagatheredfromoriginalsources.Itcovers19developingcountriesand,forcomparativepurposes,asetofindustrialcountries.

Theresearchaddressesthefollowingquestions:First,towhatextentcanvariationinaggregateissuanceactivitybeexplainedbymacroeconomicfactors?Second,

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.


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

totheprivatesector)andbyincludingdataforloansissuedin1994-95.Themainfindingisthatpostloanfinancialdevelopmenthasbeenbestincountrieswithasoundpolicyenvironment(asreflectedinlowinflation)andgoodpotentialforfinancialgrowth(lowinitialfinancialdevelopmentandalargepopulation).Thedetailsofthelendingoperationappeartohavebeenlessimportantthantheconditionsunderwhichthereformwascarriedout.Theinteractionbetweenaidandanindexofpolicyqualitywaspositiveandsignificant,however,indicatingthatsuchassistancedoescontributetofinancialsectordevelopmentinasoundpolicyenvironment.

Responsibility:DevelopmentResearchGroup,FinanceRobertCull([email protected]).


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

ChristopherClague,SanDiegoStateUniversity;andStephenKnackandMancurOlson,UniversityofMaryland.TheIRISCenter,UniversityofMarylandatCollegePark,contributedfundingfortheresearch.


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

implosionofthemonetaryeconomy.Inmostcountriesinterestratespreadswidenedtolevelsthatsuggestacontinuinglackofcompetitiondespitefreeentry.

Theresultssuggestthatamuchmoremeasuredandnuancedapproachtoliberalizationwouldhavebeenbetter.Toeliminatethemostsevereinterestratedistortionsdidnotrequirecompleteandimmediateremovalofinterestratecontrols,especiallywherebankswereinsolventorfragile.Removalofcontrolsonforeigncapital(especiallyshort-termflows)couldhavebeenphasedinlateratherthanearly.Freeentryshouldhavebeenqualifiedbyrequirementsforadequatecapitalizationandsuitablemanagement.Alongerlead-inwouldhave

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.


Reports

Aleem,Irfan,andLouisKasekende.1999.ReformingFinanceinaLow-IncomeCountry:Uganda.WorldBank,Washington,DC;and

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.

RuralFinanceinPakistan

Asaresultoflackofdata,littlehasbeenknownabouttheextentandnatureofruralfinancialmarketsinPakistanandabouttheroleofformalfinancialinstitutionssuchastheAgriculturalDevelopmentBankofPakistan.Asafirststeptowardimprovingtheunderstandingofthecountry'sruralcreditmarket,theWorldBankandthegovernmentofPakistancollectedhouseholdandcommunitysurveydataaswellasdataonthefunctioningofinformal,cooperative,andformallenders.Pakistaniresearchinstitutionsundertookadescriptiveanalysisofthesedata.

Thisstudycarriedoutarigorouseconometricanalysisofthedatatoaddressthefollowingquestions:Whatistheextentandnatureofruralcredittransactions?Whatistheextentandnatureofcreditconstraintsforruralproducers?Whatimpactdoesformalandinformalcredithaveonagriculturalgrowth,investment,andproductivity?WhatisthecostofdeliveringcredittoruralproducersfortheAgriculturalDevelopmentBankofPakistanandforothergovernment-controlledfinancial

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.


BenchmarkingFinancialSystems

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.


Report

Beck,Thorsten,Asl1Demirgüç-Kunt,andRossLevine.1999.ANewDatabaseonFinancialDevelopmentandStructure.PolicyResearchWorkingPaper2146.WorldBank,DevelopmentResearchGroup,Washington,DC.

PostalFinancialServicesReform

Financialservicesprovidedbypostalorganizationscanplayanimportantpartinestablishingahealthyfinancialinfrastructureindevelopingcountries.Throughtheextensive,nationalnetworkofpostalserviceoutlets,countriescanprovideaneffectivechannelforsavingsmobilizationandaconvenientmeansforpaymentsandfundstransfer,particularlyforruralandlow-incomecommunities.

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.


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

theborrower'scontinuedabilitytoobtainfundsfrominformalsources.Insuchacontextincome-deficithouseholdscouldfallintoacycleofincreasingdebt,leadingtoeventualdefault.

Thepotentialpolicyimplicationsoftheworkarevariedandintriguing.Forexample,onepossibilityisthatmicrofinanceinstitutionsthatemphasizesustainabilitywhileservingpoorborrowersmightinadvertentlycontributetotheincreasedimpoverishmentoftheirpoorestborrowers,atleastinthemediumterm.

Responsibility:DevelopmentResearchGroup,RuralDevelopmentGhazalaMansuri([email protected]).

WithSanjayJain,GeorgeWashingtonUniversity;andAmineMati.


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

howtheycomparewithothers.TheresultswillfeedintotheBank'sPolicyResearchReportonfinanceplannedfor2001.

Responsibility:FinancialSectorPracticeDepartmentandDevelopmentResearchGroup,FinanceGerardCaprioJr.([email protected])andDevelopmentResearchGroup,FinanceIffathSharifandMariaSoledadMartinezPeria.WithJamesBarth,AuburnUniversity;andRossLevine,UniversityofMinnesota.


CapitalMarkets

Thisresearchprojectexaminessecond-generationissuesinthesettingupofpensionfundsandthedevelopmentofmutualfunds.Theworkonpensionfundshasfocusedonthedecumulationphaseofdefinedcontributionpillars.Ithasexaminedthepolicyandregulatoryissuesinvolvedinofferingdisabilityandsurvivorbenefitsaswellasretirementannuitiesinpensionsystemsbasedonindividualcapitalizationaccounts.Continuingworklooksatwaysofinsulatingpersonalpensionplansand,especially,retirementannuitiesfromstockmarketvolatilityandatregulatoryissuesfacingprivatepensionfundsandannuitymarkets.

Theworkonmutualfundshasfocusedoncompilingadatabaseonsuchfundsinabout40countries.Mutualfundsremainsmallinmostdevelopingcountries,buttheyhavegrownrapidlyinrecentyearsandareexpectedtobecomeimportantfinancialinstitutions.PreliminaryanalysisoftheirdevelopmenthasbeenundertakenforArgentina,Morocco,andTunisiaaspartofbroaderfinancialsectorstudiesforthesecountries.Furtherresearchwillanalyzetheeconomicdeterminantsofmutualfundgrowthandaddresstheregulatoryframeworknecessaryforthesounddevelopmentofthesector.ItwillgivespecialemphasistosomesmallEuropeancountriesthathavesucceededinovercomingobstaclestosoundgrowth.

Responsibility:DevelopmentResearchGroup,FinanceDimitriVittas([email protected]),PatrickHonohan,andDeepthiN.Fernando.


Report

James,Estelle,andDimitriVittas.1999.TheDecumulation(Payout)PhaseofDefinedContributionPillars.PaperpresentedatSecondAsia-PacificEconomicCooperation(APEC)PensionReformForum,Santiago,Chile,April.

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

balances,thisprobabilityrisesto35percent.

Responsibility:DevelopmentResearchGroup,RegulationandCompetitionPolicyPhilipKeefer([email protected])andPatrickHonohan;andFinancialSectorPracticeDepartmentDanielaKlingebiel.


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

thedetailsoftheprivatizationcontracts.Portfolioguarantees,assumptionofonlygoodassets,andcontractstoprovidepostprivatizationservicestotheprovincewerethreeimportantconcessionstopurchasers.Inreturn,however,provincialpoliticiansoftenreceivedconcessionsrestrictinglayoffsandbranchclosings.

Workonthecross-countryanalysisisstillpreliminary.Theproposedanalysiswillexamine10countriesthathaveundergonesubstantialstructuralchangeintheirbankingsectors,especiallyprivatizationandinternationalentry.Usingbalancesheetdataforbanksinthesecountries,thestudywillexamineeconometricallywhetherthestructuralchangehascontributedtoahealthierfinancialsector.TheresearchinArgentinawillserveasaprototypeforthecountrycasestudies.

TheresultsonArgentinacontributedtoreportsonbankprivatizationandreformloansfromtheWorldBank.

Responsibility:DevelopmentResearchGroup,RegulationandCompetitionPolicyGeorgeClarke([email protected]),andFinanceRobertCull.


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

andregionsthroughtheFirmAnalysisandCompetitivenessSurveys.Thecross-countrystudieswillfocusontheroleofnonbankfinancingsuchassuppliercreditandleasing.

TheprojectwillalsoconductadetailedstudyofbanklendinginArgentinausingproprietarycreditdatafromtheCentralBankofArgentina.Thestudywillexaminethesegmentationofbanklendingbetweendomesticandforeignbanksandamongborrowersofdifferentquality.Thisstudyisexpectedtoenhanceunderstandingofcreditforsmallandmedium-sizeenterprisesincountrieswithvaryinglevelsoffinancialdevelopmentandliberalization.

Theresultswillbepresentedinaseriesofworkingpapersaimedatpolicymakers.

Responsibility:DevelopmentResearchGroup,FinanceLeoraKlapper([email protected])andIffathSharif.


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

incomesacrossvillages.

Inthepresenceofmarketimperfections,inequalityinhumancapitalcontributesmoretooverallinequality.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesPaulGlewwe([email protected]).WithHananJacoby;GuoLi;LorenBrandtandDwayneBenjamin,UniversityofToronto;ScottRozelle,StanfordUniversity;andtheResearchCenterinRuralEconomy,China.TheU.S.NationalAcademyofSciencesandtheInternationalDevelopmentResearchCentre,Canada,providedfundingfortheresearch.


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

householdendowmentsandtheallocationofsocialbenefitsaffectthetransitionoffamiliesintoandoutofpoverty.Theanalyticalframeworkused(onebasedonsamplesurvivaltechniques)madeitpossibletoevaluatehowvariouspolicieswillaffecthouseholdswithspecificcharacteristicsthatmakethemlikelytobecomepoorortomoveoutofpovertyunderdifferentscenarios.Suchscenariosincludewhetherthehouseholdisorisnotarecipientofagivenamountofaparticulartypeofsocialtransfer.Thestudyalsoexaminedhownonincomesourcesofwelfaresuchassavings,credit,andloansaffectthelikelihoodthatfamilieswillbecomeorstopbeingpoor.

Thestudyconcludesthatthereisatendencytowardlong-termpovertyinPoland.Butfamilyallowancesandunemploymentbenefitsthetwomajorsocialprogramsanalyzedhavedifferenteffectsondifferentgroupsabilitytomoveoutofpovertyoravoidbecomingpoor.Soitisvitalthatpolicymakerstakesuchdifferencesintoaccountwhendecidingonstrategiestoaddresslong-termpoverty.Tomakethispossible,countriesmayneedtodevelopahouseholdsurveywithanexplicitpanelcomponentortoaddsuchacomponenttoanexistingsurvey.

Bydistinguishingchronicfromtransientpoverty,thestudymayhelppolicydesignersinPolandandothercountriesintransition,whicharefundamentallyrestructuringtheirsocialexpendituresystems,toimprovetheallocationofresourcesforpovertyalleviation.Theresearchalsoprovidesasimpleanalyticalmethod(basedonsamplesurvivaltechniques)forpredictingtheeffectonpovertyofachangeinasocialprogram.

ResultshavebeendiscussedattwoseminarsattendedbyWorldBankoperationalstaff.Aseminarisalsoplannedinthefallof1999forpolicyanalystsandgovernmentofficials.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesEmmanuelJimenez([email protected])andWlodzimierzOkrasa.


Ref.no.:681-21C.

Report

Okrasa,Wlodzimierz.1999.PovertyandSafetyNetDynamicsinPoland,199396:AnEvaluationUsingPanelData.WorldBank,DevelopmentResearchGroup,Washington,DC.

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.

Responsibility:DevelopmentResearchGroup,PovertyandHumanResourcesBrankoMilanovic([email protected])andBrankoJovanovic.WithSvetlanaSidorenko,VCIOM,Moscow.


Ref.no.:681-42C.

Report

Milanovic,Branko,andBrankoJovanovic.Forthcoming.ChangeinthePerceptionofthePovertyLineduringtheTimesofDepression:Russia199396WorldBankEconomicReview.

TheDeterminantsofAgri-FoodMarketIntegrationintheTransitionEconomies,Phase2

Intransitioneconomiesagri-foodmarketsaretypicallysegmentedamongdifferentverticalchains,marketlocations,andtypesofownersandbetweendomesticand

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

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.


Ref.no.:68-45.

Reports

Guba,Waldemar.1998.SummaryoftheWorldBankProjectonMarketEfficiencyinthePolishAgri-foodSector.

Guba,Waldemar,AnningWei,JerzyDabrowski,andWanda

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:

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.

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

Romaniafor199296.

Responsibility:FinancialSectorPracticeDepartment,FinancialEconomicsUnitSimeonDjankov([email protected])andStijnClaessens.WithFabrizioCoricelli,UniversityofSiena,Italy;EnricoPerotti,UniversityofAmsterdam;andOctavianCarare,RutgersUniversity.


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).

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

leastuntilthetransitionprocessiscompleted.

Responsibility:EuropeandCentralAsiaRegion,PovertyReductionandEconomicManagementSectorUnitMarceloGiugale([email protected]),StephenEverhart,andRossanaPolastri,andOfficeoftheRegionalVicePresidentMarceloSelowskyandRicardoMartin.WithSamuelTalley.


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.

Tocontributetothediscussionamongofficialsandconcernedindividualsfromthecitiesaboutcommonproblemsandpossiblesolutionstotheseproblems.

Whileconsiderablestatisticalandotherinformationisavailableonoblasts,autonomousrepublics,andothersuchjurisdictions,littleinformationisreadilyavailableatthecitylevel.Theuniquenessofthisprojectthuslayprimarilyinitsfocusontheroleandcomparativeexperienceofcitiesinshapingthetransitionfromplantomarket.Thestudyfocusedon10regionalcapitalsalongtheVolgaRiver.

Thesecitiesprovideacross-sectionoftheRussianexperiencewithreformatdifferentincomelevels,butinmanywaystheyaresimilar.Eachcityisanoblastcenterorthecapitalofanautonomousrepublicandhasapopulationof0.51.5million.Thecitiestypicallyaccountforaboutathirdoftheirregion'spopulation.His-

toricalsimilaritiesintheinformationandtechnologytowhichthecitieshadaccess,andintheirculturalinfluences,suggestthatlessdiversitywillbeobservedamongthesecitiesthanamongcitiesmorewidelydispersedacrossRussiaormorevariedinsizeandfunction.

Duringthefirstphaseoftheprojectcasestudieswerepreparedforeightofthecities,andadatabasewasdevelopedwithcomparableindicatorsacrossthecitiesandtheirsurroundingregions.Inthesecondphasethecasestudiesanddatabasewereusedtodefineindicatorsofinitialconditions,politicaldevelopments,andreform.Inaddition,theprojectsupportedsixmaster'sthesesontopicsrelatingtothecityaseconomyandthecityasgovernment.Italsoconductedasmallsurveyofprivateenterprises.

Theresearchfoundthatreformisassociatedwithinitialconditionsandthatbothreformandfavorableinitialconditionsareassociatedwithrelativelysuccessfuloutcomes.Theexceptionstypicallyoccurwhereaccesstoextraresourcesenhancesoutcomesorweakgovernmentunderminessuccess.

ThestudyusedregressionanalysistoexplainfiscaldecentralizationtocitiesintheVolga.Itfoundthatbothrevenueandexpendituredecentralizationarestronglyassociatedwiththedropinindustrialproductionandwereusedtocompensatecitiesfortherapiderosionofthetaxbaseintheenterprisesectorearlyinthetransition.

AnOctober1998surveyofthebusinessenvironmentinsixVolgacitiesshowedthatthemainobstaclesfacedbyprivateenterprisescouldbeinfluencedifnotcontrolledbycitygovernments.Theseobstaclesincludeheavytaxation,continuedpricecontrols,poormunicipalservicesespeciallypublicandpropertysafety,settlementoflegaldisputes,andstreetmaintenanceandlightingandcorruptionandinefficiency.

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.

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

(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.


Ref.no.:682-52.

Report

Kapstein,Ethan.PoliticalEconomyofPrivatizationandFiscalPolicyinRussia.

EvaluationofActiveLaborMarketProgramsinChina

AsreformsofstateenterprisesinChinahaveaccelerated,addressing

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.

Dataonprogramcostswillalsobecollectedbytheinstitute.

AconferenceonlabormarketpolicieswasheldinBeijinginMay1999todiscusstheurbanlabormarketadjustmentinChina,lessonsofinternationalexperiencewithactivelabormarketpolicies,andevaluationmethodologies.AconferenceisplannedforMarch2000todisseminatetheresearchresultstopolicymakersandpractitionersinChina.Inaddition,theresultswillfeedintopolicynotesonurbanlabormarketadjustmentinChina.

TheWorldBankalreadyfundsprojectswithactivelabormarketcomponents,andsuchprogramsareincreasinglybeingconsideredinseveralEastAsianeconomiesaffectedbytheeconomiccrisis.Thisstudywilladdto

thebodyofresearchontheevaluationofactivelabormarketpolicies,anditsresultswillbeusefulindesigningandevaluatingsuchinterventionsinothercountries.

Responsibility:EastAsiaandPacificRegion,PovertyReductionandEconomicManagementSectorUnitHomiKharas([email protected]),TamarManuelyanAtinc,andBenuBidani.WithChristopherO'Leary,W.E.UpjohnInstituteforEmploymentResearch;andInstituteofLaborStudies,Beijing.


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

structuresthathavebeenpromotedbylocalgovernmentstoensurecontinuoussupporttocollectiveproducers.Andituseshousehold-leveldatacollectedintwodistrictsofRussiatoquantifythescaleofinformaltransactionsthatcreateanadditionalbondbetweencollectivefarmsandtheiremployees.

Theresearchhasfoundevidenceconfirmingtheimportanceofinformalandsemiformallinksbetweenlocalgovernments,collectiveproducers,andtheiremployees.Thesehidden,nonmarkettransactionscreateadditionalincentivesforpreservingcollectiveformsofagriculturalproductiondespitetheirlowefficiency.

Nexttheresearchwillcomparechangesinthestructureofagriculturalproductionwiththeagriculturalreformgoalssetbythegovernment.ThedivergentStrategiesadoptedbythenationalandsubnationalgovernmentsforimplementingreformsshouldallowtheanalysistodrawconclusionsaboutwhathascausedsuccessesandfailuresofthetop-downreforms.Theroleofexternaladvicewillalsobeexamined.

Responsibility:DevelopmentResearchGroup,RuralDevelopmentMariaAmelina([email protected]).WithVladimirGelman,EuropeanUniversity;TamaraKovaleva,PushkinAcademyofAgriculture;andViktorShabanov,RussianAcademyofScience.


Ref.no.:683-09.

FinancialSystemsinTransition:AFlow-of-FundsAnalysisofFinancialEvolutioninEuropeandCentralAsia

Thisresearchinvestigatedwhethertheflow-of-fundsapproachshouldbedeployedmoreextensivelytounderstandfinancialevolutioninthetransitioneconomiesinparticular,whetheritcanbeusefulinidentifyingfinancialconstraintsordevelopmentsthatcouldleadto

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-

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.


Ref.no.:683-13C.

Reports

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

empiricallyassesstheperformanceofagricultureandtheimpactoflandreformandfarmrestructuringontheruralpopulation,includingtherelativeefficiencyofcollectivesandfamilyfarms.Finally,itaimstoanalyzethecausesoftheobservedtransformationpatterns,toestablishrelationshipsbetweentheprogressinagriculturalreforminacountryandthecountry'spolitical,economic,social,andculturalprofile,andtoformulaterelevantpolicyconclusionsbasedonanintegratedoverviewoftheprocessesandexperiencesthroughouttheregion.

Theresearchcombinesseveralmethodologicalapproaches.Thefirstinvolvesgeneralizingandsynthesizinginformationonagriculturaltransformationintheregion,emphasizinglandreformandfarmrestructuring.Theseconddevelopsamultivariatetypologyofagriculturalreformindifferentcountriesthroughclusteranalysis,supplementingandvalidatingexistingsubjectiverankings.Thethirdapproachappliesstatisticalandeconometrictoolstoidentifytheimpactofreformanalyzingdifferencesinperformance,income,andsatisfactionbetweendifferentgroupsofstakeholders,

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.


Ref.no.:683-22.

Reports

Lerman,Zvi.1999.FromCommonalitytoDivergence:HowECEandCISAgriculturesAreDriftingApart.PaperpresentedattheconferenceLandOwnership,LandMarkets,andTheirInfluenceontheEfficiencyofAgriculturalProductioninCentralandEasternEurope,InstitutfurAgrarentwicklunginMittelundOsteuropaandFoodandAgricultureOrganization,Halle,Germany,May.

.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:

Increasingthegeneraltaxrateusingasocialsecurityorvalueaddedtax.

Requiringenterprisestopaya9percentpayrolltax,withnocontributionfromworkers.

Requiringworkerstocontribute9percentoftheirwages.

Undertakingcombinedwageandtaxreformunderwhichworkersgeta6percentwageincreaseandcontribute3percentandenterprisespayanother3percent,sothatthetaxburdenissharedbythestate,theenterprises,andtheworkers.

Preliminaryresultsshowthataggregateinvestmentanddemandwouldbehigher,andincomeinequalityless,ifthefirstpillarisfinancedthroughpayrolltaxesratherthangeneraltaxes.Outcomeswouldalsobebetterifthefinancialburdenissharedbythestate,theenterprises,andtheworkersratherthanbornesolelybytheenterprises.ButfinancingthefirstpillarthroughgeneraltaxeswouldincreasetheGinicoefficient,andtheruralpoorwouldbeworseoff.

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.

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.


Reports

Xu,Colin,andRobertCull.1998.Bureaucrats,StateBanks,andtheEfficiencyofCreditAllocation:TheExperienceofChineseState-OwnedEnterprises.WorldBank,DevelopmentResearchGroup,Washington,DC.

.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

evidenceontherelativeabilitiesofdifferentownershipstructurestoimprovefirmperformance.

Theresultsshouldprovideinsightintothelonger-termadvantagesanddrawbacksofdifferentprivatizationmethods,especiallylarge-scalevoucherprivatization.Byfocusingontheperformancecharacteristicsoftheweakestgovernancestructures,theresearchshouldalsohelpidentifywaystoimprovetheexistingpostprivatizationsituationinmanycountries.

AtpresenttheprojectcoversonlytheCzechRepublic.UsingasampleofprivatizedcompaniesprovidedbyDun&Bradstreet,theresearchisexamininghowchangesinfirmownershipaffectedcorporategovernanceasreflectedinfirmperformance.Preliminaryresultsindicatethatwidelydispersedshareholdingandownershipbyinvestmentfundshavebeenassociatedwithdeterioratingperformance.

Responsibility:DevelopmentResearchGroup,RegulationandCompetitionPolicyMaryShirley([email protected]),RobertCull,andJanaMatesova.


TradePolicyinTransitionEconomies

Integrationwiththeinternationaleconomyisanessentialpartofthetransitionfromcentralplanningtoamarketsystem.Pricedistortions,socommonundercentralplanning,canbemaintainedonlythroughformidabletradeandforeignexchangecontrolsthatdivorcethedomesticfromtheinternationalmarket.Dismantlingthesebarrierspromotesefficientdomesticresourceallocation.Internationalpricesposeacompetitivechallengetodomesticproducersandsignalneededstructuralchanges.Tradepolicyreformallowsthelinkbetween

domesticandinternationalpricesandmarketsandisthusakeydeterminantofthepaceandscopeofthestructuralchangenecessitatedbythetransition.

ThisprojecthaslookedattradepolicyreformissuesinthecountriesoftheformerSovietUnion.Areportsummarizingtradeperformanceandtheexperiencewithtradepolicyreforminthesecountriesrecommendedstrategiesforincreasingtheirintegrationwiththeinternationaleconomystrategiesthatentailactionsbythecountriesaswellasbytheirmaintradingpartners,theOECDcountries.

AstudyofcustomsunionsshowedthatalthoughpreferentialtradeareasintheCommonwealthofIndependentStates(CIS)mayhaveservedausefulpurposeinthepastasatransitionaldevice,thetimeforcustomsunionsandfreetradeareasintheCISisover.Integratingwiththeworldeconomyshouldbethehighestprioritynow,andcustomsunionswillretardthatintegration.WorkontheissueofaccessiontotheWorldTradeOrganization(WTO)bythetransitioneconomiesemphasizedthatWTOaccessionprovidesauniqueopportunityfortheaccedingcountrytolockinatradepolicythatisbeneficialtothatcountry,aslongasitadoptsalessthanminimalistapproachinitsaccessionoffer.

Theresearchinthepastyearexaminedissuesrelatingtotariffpolicyandtariffuniformityfortransitioneconomies,focusingonRussia.ItalsoassessedtheprogressofthetransitioneconomiesinintegratingintotheworldtradingsystemandaccedingtotheWTO.ThisresearchconcludedthatformanyofthecountriesoftheformerSovietUnion,integratingeffectivelywillrequireconsiderablereformandadjustment.ButtheUnitedStatesandtheEuropeanUnionalsomayneedtomakesomechanges,especiallyintheirdesignationofsomeofthesecountriesasnonmarketeconomies.

Thestudy'sfindingsandrecommendationshavebeencommunicatedtothegovernmentsinpolicydialogueoninternationaltradereform,

discussedwithrepresentativesoftransitioneconomies,andpresentedatconferences.

Responsibility:DevelopmentResearchGroup,TradeDavidTarr([email protected]);andEuropeandCentralAsiaRegion,BrusselsOfficeConstantineMichalopoulos.


Reports

Michalopoulos,Constantine.1998.WTOAccessionforCountriesinTransition.PolicyResearchWorkingPaper1934.WorldBank,DevelopmentResearchGroup,Washington,DC.

.IntegrationoftheTransitionEconomiesintotheWorldTradingSystem.WorldBank,DevelopmentResearchGroup,Washington,DC.

Michalopoulos,Constantine,andDavidTarr.1996.TradePerformanceandPolicyintheNewIndependentStates.Directionsin

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.


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

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.


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.

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.


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.

ResultsfromthestudywerepresentedataWorldBankseminarinAugust1998foroperationalstaffandatuniversitiesthroughouttheUnitedStates.

Responsibility:DevelopmentResearchGroup,RegulationandCompetitionPolicyMaryShirley([email protected]),PhilipKeefer,andLukeHaggarty.WithArthurLupiaandMathewMcCubbins,UniversityofCaliforniaatSanDiego;andRogerNollandBarryWeingast,StanfordUniversity.


Ref.no.:681-85C.

Reports

Lupia,Arthur,andMathewMcCubbins.1998.ConditionsfortheStabilityofPoliticalAgreements.UniversityofCaliforniaatSanDiego;andWorldBank,DevelopmentResearchGroup,Washington,DC.

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

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.


Ref.no.:681-93.

DoesMoreIntenseCompetitionLeadtoHigherGrowth?

Thisresearchprojectprovidessomeempiricalevidenceontheimpactofcompetitiononeconomicgrowthwiththeaimofquantifyingtheaggregategainsfrompromotingcompetition.Existingtheoreticalworkdoesnotprovideclear-cutanswerstothequestionofwhetheramonopolist'sgreatertendencytoinnovateisoutweighedbytheproductivitygainsinducedbycompetition.Manyempiricalstudieshaveattemptedtosettlethisissuebyusingindustryorfirm-leveldata.Butthesestudiesfailtocapturebroader,economywideeffects.

Thisresearchhasadoptedamoredirectapproach.Itteststherelationshipbetweendomesticcompetition(beyondtradeliberalization)andgrowthincrosscountrytime-seriesdata.Itidentifiesthreegroupsofvariablesthatcapturetheintensityofcompetitionat

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

University,andRossLevine,UniversityofVirginia.


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

analysisoftheeffectofcooperationonproductivityindicatethatcooperationmattersinaproductionfunctionframework.Furthertestingoftherobustnessofthesefindingsisunderway.

Theresultswillbedisseminatedinpartthroughadiscussionwithkeyplayersintheregionontherolesoftheprivateandpublicsectorsandofprivate-publicpartnershipsinenhancingcompetitivenessthroughinterfirmcooperation.TheresearchisexpectedtohelpshapethediscussiononregionaldevelopmentthroughinterfirmcooperationinBankclientcountries.

Responsibility:PrivateSectorDevelopmentDepartment,BusinessEnvironmentUnitR.ShyamKhemani([email protected]).HongTan,andManjulaLuthria.WithIzakAtiyas,SabanciUniversity.


Ref.no.:682-61.

DatabaseonInstitutionsforGovernmentDecisionmaking

Inbothoperationsandresearchthereisincreasingrecognitionthatpolicyrecommendationsandprioritiescanchangesubstantiallyoncetheinstitutionalenvironmentofcountriesistakenintoaccount.Thechallengehasbeentoundertakeanalysesthatrigorouslylinkparticularrecommendationstodifferentinstitutionalenvironments.Thatchallengeismagnifiedbythelackofdetailed,systematic,objectivedataonthenatureofdecisionmakinginstitutionsincountries.Theworkundertakeninthisresearchprojecthasaimedathelpingtoclosethisgap.

Usingseveraldifferentsources(politicalalmanacsandWebsites),theresearchhascollectedmorethan75variablesformorethan100countriesovertheperiod197595.Thevariablesincludewhethersystemsareparliamentaryorpresidential,howcompetitivetheirelectionsare,whichpartiesareinthegoverningcoalitionandintheoppositionandhowmanyseatstheyhold,whethertheelectoralsystemisproportionalrepresentationorfirstpastthepost,howmanyyearstheexecutivehasbeeninpower,andwhethertheexecutiveandthedefenseministerareinthemilitary.

Allthesevariablesareexpectedtoinformfutureresearchoninstitutionsanddevelopment.Theyarealsoexpectedtoaidoperationalworkforexample,bymakingiteasiertocomparetheinstitutionalenvironmentinacountryconsideringpossiblereformswiththeenvironmentincountriesthathaveprovedtheusefulnessofparticularbestpractices.

Compilationandwrite-upofthedatasetisexpectedtobefinishedbySeptember1999,anddistributionofthedatatocommencebyJanuary2000.ThedatawillbemadeavailableontheWebandinresponsetoemailrequests.

Responsibility:DevelopmentResearchGroup,RegulationandCompetitionPolicyPhilipKeefer([email protected]),ThorstenBeck,GeorgeClarke,RobertCull,andPatrickWalsh.


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.

ThisprojectisconcernedprimarilywithestimatingthelikelysizeoftheconsumerwelfarelossesthatwillbeassociatedwiththeintroductionofpharmaceuticalproductpatentsinIndiaandtheextentofprofitredistributionfromIndiancompaniestoforeignpatentholders.Thefirsttaskistoestimatedrugdemandfunctionsfortherapeuticcategorieswherepatentingissignificant.Theseestimationswillbebasedonanestedprobitconsumerchoicemodel,amultistagebudgetingmodel,orboth.Insuranceoftencomplicatesuseofthisapproachforindustrialcountries,sinceitmeansthatconsumersdonotfacethefullpriceofdrugs.Similarly,theprescrip-

tivepowerofphysiciansinindustrialcountriesmakestheconceptofconsumerchoiceproblematic.BoththeseproblemsaremuchlessimportantinIndia,wherefewpeoplearecoveredbyinsuranceandprescriptiondrugsarealmostalwaysavailablewithoutaprescription.

Thesecondtaskistodeterminetherangeofplausiblepricesunderapatentedregime.Thiscanbedonewithademandfunctiontoestimatethemonopolypriceofdrugs.TheprojectwillalsoattempttoassessthedistributionalimpactofthepredictedpricechangeandthepossiblesupplyresponseoftheIndianpharmaceuticalindustry.

TheresearchwillusedatafromOperationsResearchGroup,aprivateindustryorganizationinBombay.Thesedata,ahighlydisaggregatedsetofpricesandquantitiesofproductssoldtopharmaciesoverthepast11years,willallowestimationofthedemandfunctionsandthesupplyresponse.ThedistributionaleffectswillbeestimatedbycomparingpricechangeswithdatafromtheIndianNationalFamilyHealthSurvey.

Responsibility:DevelopmentResearchGroup,PublicEconomicsJeffreyS.Hammer([email protected]).WithJeanOlsonLanjouw,YaleUniversity;andRakeshBasant,IndianInstituteofManagement.


Ref.no.:682-88.

JobReallocation,theExportMarket,andFirmPerformance:MicroeconomicEvidence

Acrucialfactorineconomicperformanceishowwellacountryreallocatesitsresourcesincludinglaborfromlessproductivetomoreproductiveusesinresponsetolong-termchangesindemandpatternsandtechnology.Large-scalejobreallocation,broughtaboutbythe

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

9,000workersin198691,morethanonemillionjobswerecreated,andmorethanonemilliondestroyed.Inanygivenyearanaverageofabout12in100manufacturingjobsopenup(comparedwith10in100intheUnitedStates),andasimilarnumberdisappear.Thislarge-scalereshufflingofemploymentisgenerallyinterpretedasreflectingaflexibleandfluidlabormarket.Inaddition,ofthe1.89millionjobsin1986,onlyabout40percentwereretainedjobsheldincontinuingfirms.Therestwerelostthroughcontractionofincumbentsorshutdowns.In1991thevastmajorityofnewjobswerecreatedbyentrantsratherthanbytheexpansionofexistingfirms.ThuswhilethejobcreationanddestructionratesinTaiwan(China)areinlinewiththoseinothercountriesindustrial(Canada,theUnited

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.


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.

Responsibility:DevelopmentResearchGroup,RegulationandCompetitionPolicyPhilipKeefer([email protected]),PatrickWalsh,andGeorgeClarke.WithSharynO'HalloranandDavidEpstein,StanfordUniversity;andRobertBates,HarvardUniversity.

Competiondate:June2000.

Ref.no.:683-40.

DelayinDisposition:JudicialPerformanceinDevelopingCountries

Thisstudysoughttoprovideaninternationalcomparativeanalysisoftheperformanceofcourtsbydevelopingperformanceindicatorsthatmeasuretimeandcostoflit-

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

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.

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.

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

probabilityofviolence.

Theprojectcombineddatafrompublishedsourcestoproduceanewdatasetonthescopeandintensityofpoliticalviolencethatwillproveinvaluableforfutureresearch.ThedatawillbepostedontheHarvardUniversityWebsite.

Responsibility:DevelopmentResearchGroup,PublicEconomicsGeorgeClarke([email protected]).WithRobertBates,SmitaSingh,TzvetanaRavoski,andMacartanHumphreys,HarvardUniversity.TheDanishSocialCapitalTrustFundcontributedfundingfortheresearch.


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

characterizedbysystemiccorruption,theamountthatafirmneedstopayinbribesdependsonthefirm'scharacteristics.Thatis,bribesdemandedarenotfixedsumsforgivenpublicservices,butdependonthefirm'sabilitytopay.

Thestudyalsoassessedtheefficientgreasehypothesis:thatbriberyallowsfirmstogetthingsdoneinaneconomyplaguedbybureaucraticholdups.Theevidencerefutesthishypothesis.Cross-countrydatarevealthatfirmsthatfacemorebribedemandsarealsolikelytospendmore,notless,managementtimenegotiatingregulationswithbureaucrats.Moreover,firm-levelevidenceindicatesthattherateofbriberyhasasignificantnegativecorrelationwithfirmgrowth.

Empiricalresearchongovernanceandcorruptionisplaguedbylackofconsistentcross-countrydataspanning

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.


Reports

Eskeland,Gunnar,andH.Thiele.1999.OptimalCorruptionunderMoralHazard.WorldBank,DevelopmentResearchGroup,Washington,DC.

Fisman,R.,andRoberta.Gatti.1999.DecentralizationandCorruptionacrossCountries.WorldBank,DevelopmentResearchGroup,

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

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,

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

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.


Reports

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

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,

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

networkincreaseefficiency?

Corporategovernance.Doesmanagemententrenchmentaffectcorporatedecisions?Howdoownershiplinkstofinancialinstitutionsandforeignfirmsaffectleveragedecisions?Howdoesoperationalorfinancialmanagementbynonownersaffectcorporatedecisionsonproduction,leverage,andthelike?

Themodelsurveyinstrumentcombinesseveralobjectives.Itwilldirectlyassistfirmsbybenchmarkingtheirperformancerelativetotheircompetitors(domesticandinternational).Itwillmeettheimmediateneedsofadvisersandpolicymakerswhorequiredetailedinformationaboutindustriesandthebusinessenvironmentandhowthesecomparewiththoseofothercountries.Anditwillenhancetheabilityofpolicy-orientedresearcherstotesttheimpactofpoliciesonfirms'developmentandbehavior.

Theprojectwillalsobringtogetherexistingfirmleveldatasets(includingthosefromtheRegionalProgramonEnterpriseDevelopmentinAfrica,theEastAsiancompetitivenesssurvey,andsimilarsurveys)and

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.


RegionalProgramonEnterpriseDevelopmentinAfrica

OneofthelessonsemergingfromstructuraladjustmenteffortsinAfricaisthatmacroeconomicreformisanecessarybutnotasufficientconditionforprivatesectorgrowth.Thereareenterprise-levelconstraintsthatinhibitthegrowthofexistingfirmsandimpedetheentryofnewones.ThisresearchisdesignedtoimprovetheunderstandingoftheconstraintsonenterprisedevelopmentinAfrica

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

microeconomiceffectsofstructuraladjustmentwouldmakeasignificantcontributiontotheWorldBank'soperationalprograms.Theprogram'sextensionalsoallowsadditionalanalysisofAfricanprivatesectorgrowthproblemsandfurtherdisseminationofthefindingsofthiswork.

TheprogramlinksitsfindingstotheBank'soperationalworkinAfricathroughparticipationinregionalandcountryprivatesectordevelopmentstrategiesandprogramdesigns.ItdisseminatesitsfindingsintheBankthroughactivitiesthatincludeBankseminars,distributionofresearchpapers,andpublicationoftheFindingsnewsletter.OutsidetheBank,theprogramhashostedseminarsandconferencesinCameroon,Côted'lvoire,

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;

theSwedishInternationalEnterpriseDevelopmentCorporation;andtheDepartmentforInternationalDevelopment,UnitedKingdom.


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.

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

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,

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.


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

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.

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.

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:

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

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.

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

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.

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.

Demirgüc-Kunt,Asll,RossLevine,andHongMin.1998.OpeningtoForeignBanks:IssuesofStability,Efficiency,and

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.,

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.

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.

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.

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

Review13(1):2366.

Hamilton,Kirk,andMichaelClemens.1999.GenuineSavingsRatesinDevelopingCountries.WorldBankEconomicReview13(2):33356.

Hoekman,Bernard.1998.UsingInternationalInstitutionstoImprovePublicProcurement.


James,Estelle.1998.NewModelsforOld-AgeSecurity:Experiments,Evidence,andUnansweredQuestions.


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.

Morisset,Jacques.1998.UnfairTrade?TheIncreasingGapbetweenWorldandDomesticPricesinCommodityMarkets

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

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.

HealthEconomics7(6):50931.

Alam,Manzoor,JayantSathaye,andDougBarnes.1998.UrbanHouseholdEnergyUseinIndia:EfficiencyandPolicyImplications.EnergyPolicy26(11):88591.

Araujo,JorgeThompson,andMarcoA.C.Martins.1999.EconomicGrowthwithFiniteLifetimes.

EconomicsLetters62(3):37781.

Aturupane,Chonira,SimeonDjankov,andBernardHoekman.1999.HorizontalandVerticalIntra-IndustryTradebetweenEasternEuropeandtheEuropeanUnion.

WeltwirtschaftlichesArchiv(ReviewofWorldEconomics)135(1):6281.

Barker,G.C.,andD.A.P.Bundy.1999.IsolationofaGeneFamilyThatEncodesthePorin-LikeProteinsfromtheHumanParasiticNematodeTrichurisTrichiura.

Gene229(1):13136.

Batson,A.1998.SustainableIntroductionofAffordableNewVaccines:TheTargetingStrategy.

Vaccine16(November):S9398.

Belli,Pedro,QaiserKhan,andGeorgePsacharopoulos.1999.AssessingaHigherEducationProject:AMauritiusFeasibilityStudy.AppliedEconomics31(1):2735.

Bergquist,N.R.1998.SchistosomiasisVaccineDevelopment:ProgressandProspects.MemoriasdoInstitutoOswaldoCruz93(1):95101.

Bigsten,Arne,andothers.1999.ExportsofAfricanManufactures:MacroPolicyandFirmBehaviour.

JournalofInternationalTradeandDevelopment8(1):5171.

Bilal,Sam,andMarceloOlarreaga.1998.Regionalism,CompetitionPolicyandAbuseofDominantPositions.JournalofWorldTrade32(3):15366.

Booth,M.,D.A.P.Bundy,M.Albonico,H.M.Chwaya,K.S.Alawi,andL.Savioli.1998.AssociationsamongMultipleGeohelminthSpeciesInfectionsinSchoolchildrenfromPembaIsland.Parasitology116:8593.

Brieger,WilliamR.,andothers.1998.TheEffectsofIvermectinonOnchocercalSkinDiseaseandSevereItching:ResultsofaMulticentreTrial.TropicalMedicineandInternationalHealth3(12):95161.

Bundy,D.A.P.,andN.R.deSilva.1998.CanWeDewormThis

WormyWorld?BritishMedicalBulletin54(2):42132.

Burnside,Craig,KlausSchmidt-Hebbel,andLuisServen.1999.SavinginMexico:TheNationalandInternationalEvidence.EconomíaMexicana8(2):181230.

Buzina-Suboticanec,K.1998.Ageing,NutritionalStatusandImmuneResponse.InternationalJournalforVitaminandNutritionResearch68(2):13341.

Cabraal,Aanil,MacCosgrove-Davies,andLorettaShaeffer.1998.AcceleratingSustainablePhotovoltaicMarketDevelopment.ProgressinPhotovoltaics6(5):297306.

Campos,JoseEdgardo,DonaldLien,andSanjayPradhan.1999.TheImpactofCorruptiononInvestment:PredictabilityMatters.WorldDevelopment27(6);105967.

Cardoso,Eliana.1998.VirtualDeficitsandthePatinkinEffect.IMFStaffPapers45(4):61946.

Carolan,Terrie,NirvikarSingh,andCyrusTalati.1998.TheCompositionofU.S.-EastAsiaTradeandChangingComparativeAdvantage.JournalofDevelopmentEconomics57(2):36189.

Chan,M.S.,A.Srividya,R.A.Norman,S.P.Pani,K.D.Ramaiah,PVanamail,E.Michael,P.K.Das,andD.A.P.Bundy.1998.Epifil:ADynamicModelofInfectionandDiseaseinLymphaticFilariasis.AmericanJournalofTropicalMedicineandHygiene59(4):60614.

Claessens,Stijn,andSimeonDjankov.1999.EnterprisePerformanceandManagementTurnoverintheCzechRepublic.EuropeanEconomicReview43(46):111524.

Claessens,Stijn,SusmitaDasgupta,andJackD.Glen.1998.TheCross-SectionofStockReturns:EvidencefromtheEmergingMarkets.EmergingMarketsQuarterly2(4):413.

Clarke,GeorgeR.G.,andRobertCull.1999.WhyPrivatize?TheCaseofArgentina'sPublicProvincialBanks.WorldDevelopment27(5):86586.

Collier,Paul.1999.OntheEconomicConsequencesofCivilWar.OxfordEconomicPapers51(1):16883.

Collier,Paul,andAnishGarg.1999.OnKinGroupsandWagesintheGhanaianLabourMarket.OxfordBulletinofEconomicsandStatistics61(2):13351.

Collier,Paul,andJanWillemGunning.1999.ExplainingAfricanEconomicPerformance.

JournalofEconomicLiterature37(March):64111.

Collier,Paul,andAnkeHoeffler.1998.OnEconomicCausesofCivilWar.OxfordEconomicPapers50(4):56373.

Collier,Paul,P.Guillaumont,S.GuillaumontJeanneney,andJ.W.Gunning.1999.ReformingStabex.TheWorldEconomy22(5).

Cropper,Maureen,CharlesGriffiths,andMuthukumaraMani.1999.Roads,PopulationPressures,andDeforestationinThailand,19761989.LandEconomics75(1):5873.

Csaki,Csaba.1998.AgriculturalResearchinTransformingCentralandEasternEurope.EuropeanReviewofAgriculturalEconomics25(3):289306.

Currie,R.M.,C.S.Needham,L.J.Drake,E.S.Cooper,andD.A.P.Bundy.1998.AntigenicVariabilityinTrichurisTrichiuraPopulations.Parasitology117:34753.

Dailami,Mansoor,andDannyLeipziger.1998.InfrastructureProjectFinanceandCapitalFlows:ANewPerspective.WorldDevelopment26(7):128398.

Danner,M.,L.Fort,andG.Young.1999.InternationalDataonWomenandGender:Resources,Issues,CriticalUse.Women'sStudiesInternationalForum22(2):24959.

DasGupta,Monica.1999.GenderBiasinChina,SouthKoreaand

India,19201990:TheEffectsofWar,FamineandFertilityDecline.DevelopmentandChange30(3):61952.

.1999.Liberte,Egalite,Fraternite:ExploringtheRoleofModernGovernanceinFertilityDecline.JournalofDevelopmentStudies35(5).

.1999.LifeboatversusCorporateEthic:SocialandDemographicImplicationsofStemandJointFamilies.SocialScienceandMedicine49(2):17384.

Davis,Shelton,.1998.BringingCultureintotheDevelopmentParadigm:TheViewfromtheWorldBank.DevelopmentAnthropologist16(12):15259.

Deininger,Klaus.1999.MakingNegotiatedLandReformWork:InitialExperiencefromColombia,BrazilandSouthAfrica.WorldDevelopment27(4):65172.

Deininger,Klaus,andBartMinten.1999.Poverty,Policies,andDeforestation:TheCaseofMexico.EconomicDevelopmentandCulturalChange47(2):31344.

Deininger,Klaus,andLynSquire.1998.NewWaysofLookingatOldIssues:InequalityandGrowth.

JournalofDevelopmentEconomics57(2):25987.

Demery,Lionel,andMichaelWalton.1999.ArePovertyandSocialGoalsforthe21stCenturyAttainable?IDSBulletin(InstituteofDevelopmentStudies)30(2).

Demirguc-Kunt,Asli,andVojislavMaksimovic.1998.Law,Finance,andFirmGrowth.

JournalofFinance53(6):210737.Dervis,Kemal,andNematShafik.1998.TheMiddleEastandNorthAfrica:ATaleofTwoFutures.MiddleEastJournal52(4):50516.

Devarajan,Shantayanan,andDelfinS.Go.1998.TheSimplestDynamicGeneral-EquilibriumModelofanOpenEconomy.JournalofPolicyModeling20(6):677714.

Devarajan,Shantayanan,HafezGhanem,andKarenThierfelder.1999.LaborMarketRegulations,TradeLiberalization,andtheDistributionofIncomeinBangladesh.JournalofPolicyReform3(1):128.

Dinar,Ariel,andAnastasiosXepapadeas.1998.RegulatingWaterQuantityandQualityinIrrigatedAgriculture.JournalofEnvironmentalManagement54(4):27389.

Djankov,Simeon.1999.TheEnterpriseIsolationPrograminRomania.JournalofComparativeEconomics27(2):28193.

.1999.ManagementTraininginMoldova.Post-SovietGeographyandEconomics40(3):22231.

Domowitz,Ian,JackD.Glen,andAnanthMadhavan.1998.InternationalCross-ListingandOrderFlowMigration:EvidencefromanEmergingMarket.JournalofFinance53(6):200127.

Donner,A.,andothers.1998.MethodologicalConsiderationsintheDesignoftheWHOAntenatalCareRandomisedControlledTrial.PaediatricandPerinatalEpidemiology12(2):5974.

Driscoll,JohnC.,andAartC.Kraay.1998.ConsistentCovarianceMatrixEstimationwithSpatiallyDependentPanelData.ReviewofEconomicsandStatistics80(4):54960.

Duraisamy,P.,EstelleJames,JuliaLane,andJee-PengTan.1998.IsThereaQuantity-QualityTradeoffasPupil-TeacherRatiosIncrease?EvidencefromTamilNadu,India.InternationalJournalofEducationalDevelopment18(5):36783.

Easterly,William,JakobdeHaan,andJordiGali.1999.WhenIsFiscalAdjustmentanIllusion?

EconomicPolicy28(April):5786.

Edwards,Michael.1999.NGOPerformance:WhatBreedsSuccess?NewEvidencefromSouthAsia.WorldDevelopment27(2):36174.

Edwards,Michael,DavidHulme,andT.Wallace.1999.NGOsinaGlobalFuture:MarryingLocalDeliverytoWorldwideLeverage.PublicAdministrationandDevelopment19(2):11736.

Elbadawi,Ibrahim,andKlausSchmidt-Hebbel.1998.CrossRegionalDevelopmentExperiencesandLossesforSubSaharanAfrica:AnOverview.JournalofAfricanEconomies7(supplement2):137.

.1998.MacroeconomicPolicies,Instability,andGrowthintheWorld.JournalofAfricanEconomies7(supplement2):11668.

Eskeland,GunnarS.,EmmanuelJimenez,andLiliL.Liu.1998.PricesThatCleartheAir:EnergyUseandPollutioninChileandIndonesia.EnergyJournal19(3):85106.

Fafchamps,Marcel.1998.TheTragedyoftheCommons,Cycles,

andSustainability.JournalofAfricanEconomies7(3):384423.

Fafchamps,Marcel,andAgnesQuisumbing.1999.HumanCapital,Productivity,andLaborAllocationinRuralPakistan.JournalofHumanResources34(2).

Fafchamps,Marcel,AlaindeJanvry,andElisabethSadoulet.1999.SocialHeterogeneityandWastefulLobbying.PublicChoice98(1):527.

Faiz,Asif,ChristopherS.Weaver,andMichaelP.Walsh.1998.ControllingEmissionsfromIn-UseVehicles:TheRoleofInspectionandMaintenance(I/M)Programmes.InternationalJournalofVehicleDesign20(14):30412.

Farley,T.M.M.,O.Meirik,C.L.Chang,andN.R.Poulter.1998.CombinedOralContraceptives,Smoking,andCardiovascularRisk.JournalofEpidemiologyandCommunityHealth52(12):77585.

Feachem,RichardG.A.1998.TheWorldBank'sContributiontoTropicalMedicine:DiagnosisandPrognosis.AmericanJournalofTropicalMedicineandHygiene59(1):1923.

Filmer,Deon,andLantPritchett.1999.TheEffectofHouseholdWealthonEducationalAttainment:Evidencefrom35Countries.PopulationandDevelopmentReview25(1):85120.

Fisman,Raymond,andTarunKhanna.1999.IsTrustaHistoricalResidue?InformationFlowsandTrustLevels.JournalofEconomicBehaviorandOrganization38(1):7992.

Fisman,S.,andR.Fisman.1999.CulturalInfluencesonSymptomPresentationinChildhood.JournaloftheAmericanAcademyofChildandAdolescentPsychiatry38(6):78283.

Fredriksson,PerG.1999.ThePoliticalEconomyofTradeLiberalizationandEnvironmentalPolicy.SouthernEconomicJournal65(3):51325.

Fuwa,Nobuhiko.1999.AnAnalysisofSocialMobilityinaVillageCommunity:TheCaseofaPhilippineVillage.JournalofPolicyModeling21(1):10138.

Garcia,S.M.,K.Cochrane,G.VanSanten,andF.Christy.1999.TowardsSustainableFisheries:AStrategyforFAOandtheWorldBank.OceanandCoastalManagement42(5):36998.

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HealthinDevelopingCountries?EvidencefromMorocco.JournalofHumanResources34(1):12459.

Glewwe,Paul,andHarryAnthonyPatrinos.1999.TheRoleofthePrivateSectorinEducationinVietnam:EvidencefromtheVietnamLivingStandardsSurvey.WorldDevelopment27(5):887902.

Graham,E.M.,andL.G.Liu.1998.OpeningChina'sBondMarket:CatalysttoFurtherReformandaJumpstarttotheStalledWTOAccessionNegotiations.JournalofWorldTrade32(4):519.

Gulmezoglu,A.M.,andP.Garner.1998.TrichomoniasisTreatmentinWomen:ASystematicReview.

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Guyatt,H.L.,R.W.Snow,andD.B.Evans.1999.MalariaEpidemiologyandEconomics:TheEffectofDelayedImmuneAcquisitionontheCost-EffectivenessofInsecticideTreatedBednets.PhilosophicalTransactionsoftheRoyalSocietyofLondon,seriesB:BiologicalSciences354(1384):82735.

Haddad,Lawrence,S.Bhattarai,M.Immink,andS.Kumar.1998.EstimatingtheInteractionsbetweenHouseholdFoodSecurityandPreschoolDiarrhea.FoodPolicy23(34):24161.

Hall,P.E.1998.NewOncea-MonthInjectableContraceptives,withParticularReferencetoCyclofem(R)/Cyclo-Provera(TM).InternationalJournalofGynecologyandObstetrics62(1):S4356.

Heggie,lanGraeme.1999.CommerciallyManagedRoadFunds:ManagingRoadsLikeaBusiness,NotLikeaBureaucracy.Transportation26(1):87111.

Heleniak,Timothy.1999.Out-MigrationandDepopulationoftheRussianNorthduringthe1990s.Post-SovietGeographyandEconomics40(3):155205.

Hendrickson,Dylan,JeremyArmon,andRobinMearns.1998.The

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Hentschel,Jesko.1999.ContextualityandDataCollectionMethods:AFrameworkandApplicationtoHealthServiceUtilisation.JournalofDevelopmentStudies35(4):6494.

Hoekman,Bernard.1999.FreeTradeAgreementsintheMediterranean:ARegionalPathtowardsLiberalization?JournalofNorthAfricanStudies4(3.2).

Holzmann,Robert,andKatarzynaZukowska-Gagelmann.1998.MarketOpeninginEasternEurope:TheAsymmetryofTradeAdjustmentofOECDCountries.Aussenwirtschaft(Switzerland)53(June):25787.

.1998.TradeAdjustmentofEasternEuropeanReformCountriesduringTransition:ATaleoftheLargeandMighty.JournalofPublicPolicy18(1).

Honohan,Patrick.1998.APitfallinComputingExchangeRateDensityintheEMSBand.JournalofInternationalMoneyandFinance17(October):83953.

Honohan,Patrick,andCormacÓGráda.1999.TheIrishMacroeconomicCrisisof195556:HowMuchWasDuetoMonetaryPolicy?IrishEconomicandSocialHistory(UniversityCollege,Dublin)25:5280.

Honohan,Patrick,CharlesConroy,andBertrandMaître.1998.InvisibleEntrepôtActivityinIrishManufacturing.IrishBankingReview(summer):2238.

Huber,RichardM.,andS.C.Jameson.1998.CORAL:ALeast-CostManagementDecisionSupportModelforCoralReefEcosystems.IntercoastNetwork32(fall).

.1998.MontegoBay,Jamaica:ACaseStudyinPublic-Private

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Hughes,NeilC.1998.SmashingtheIronRiceBowl.ForeignAffairs77(4).

Ilahi,N.,andS.Jafarey.1999.GuestworkerMigration,RemittancesandtheExtendedFamily:EvidencefromPakistan.JournalofDevelopmentEconomics58(2):485512.

Isham,Jonathan,andDanielKaufmann.1999.TheForgottenRationaleforPolicyReform:TheProductivityofInvestmentProjects.QuarterlyJournalofEconomics114(1):14984.

Jalan,Jyotsna,andMartinRavallion.1998.TransientPovertyinPost-ReformRuralChina.JournalofComparativeEconomics26(2):33857.

.1999.ArethePoorLessWellInsured?EvidenceonVulnerabilitytoIncomeRiskinRuralChina.JournalofDevelopmentEconomics58(1):6182.

James,Estelle.1998.ThePoliticalEconomyofSocialSecurityReform:ACross-CountryReview.AnnalsofPublicandCooperativeEconomics69(4).

Jansen,W.Jos.1998.InterpretingSaving-InvestmentCorrelations.OpenEconomiesReview9(3):20517.

Jha,Prabhat,O.Bangoura,andK.Ranson.1998.TheCost-EffectivenessofFortyHealthInterventionsinGuinea.HealthPolicyandPlanning13(3):24962.

Jha,Shikha,andVinayaSwaroop.1999.ForeignAidtoIndia:WhatDoesItBuy?EconomicandPoliticalWeekly34(19):3438.

Jin,S.G.,G.H.Yang,EduardBos,J.Wang,J.H.Luo,J.Yang,E.B.Ma,M.X.Tong,andDeanJamison.1998.ChildMortalityPatternsinRuralAreasofAnhuiandHenanProvincesinChina,1990.BiomedicalandEnvironmentalSciences11(3):26476.

Kawai,Masahiro,andShigeruAkiyama.1998.TheRoleofNominalAnchorCurrenciesinExchangeRateArrangements.JournaloftheJapaneseandInternationalEconomies12(4):33487.

Kenward,LloydR.1999.WhatHasBeenHappeningatBankIndonesia?BulletinofIndonesianEconomicStudies35(1):12127.

Kenny,Charles.1999.DoesGrowthCauseHappiness,orDoesHappinessCauseGrowth?Kyklos52(1):325.

Khandker,ShahidurR.1998.MicroCreditProgrammeEvaluation:ACriticalReview.IDSBulletin(InstituteofDevelopmentStudies)29(4):1120.

Khandker,ShahidurR.,HussainA.Samad,andZahedH.Khan.1998.IncomeandEmploymentEffectsofMicroCreditPrograms:Village-LevelEvidencefromBangladesh.JournalofDevelopmentStudies35(2):96124.

Kittiprapas,S.,andP.McCann.1999.IndustrialLocationBehaviourandRegionalRestructuringwithintheFifthTigerEconomy:EvidencefromtheThaiElectronicsIndustry.AppliedEconomics31(1):3751.

Lane,Julia,HarryG.Broadman,andInderjitSingh.1998.LaborFlexibility,Ownership,andFirmPerformanceinChina.ReviewofIndustrialOrganization13(6):62135.

Langseth,P.,andB.Michael.1998.AreBribePaymentsinTanzaniaGreaseorGrit?Crime,Law,andSocialChange29(23):197208.

Lanoie,Paul,BenoîtLaplante,andMaiteRoy.1998.CanCapital

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Leach,M.,RobinMearns,andI.Scoones.1999.EnvironmentalEntitlements:DynamicsandInstitutionsinCommunity-BasedNaturalResourceManagement.WorldDevelopment27(2):22547.

Leandro,JoseE.,HartwigSchafer,andGasparFrontini.1999.TowardsaMoreEffectiveConditionality:AnOperationalFramework.WorldDevelopment27(2):28599.

Lee,K.W.1998.AnAlternativeTechnicalEducationSystem:ACaseStudyofMexico.InternationalJournalofEducationalDevelopment18(4):30517.

Lee,YungJoon,andHyounsooZang.1998.UrbanizationandRegionalProductivityinKoreanManufacturing.UrbanStudies35(11):208599.

Lerman,Zvi.1998.DoesLandReformMatter?SomeExperiencesfromtheFormerSovietUnion.EuropeanReviewofAgriculturalEconomics25(3):30730.

.1999.LandReformandFarmRestructuringinUkraine.ProblemsofPost-Communism46(3):4255.

.1999.LandReformandFarmRestructuring:WhatHasBeenAccomplishedtoDate?AmericanEconomicReview89(2):27175.

.1999.NewFarmStructuresintheFSU:HasEfficiencyBeguntoChange?BulgarianJournalofAgriculturalScience5(2):23646.

Li,Hongyi,andHeng-fuZou.1998.IncomeInequalityIsNotHarmfulforGrowth:TheoryandEvidence.ReviewofDevelopmentEconomics2(3):31834.

Li,P.,S.L.Zhang,A.Talvitie,andY.F.Chen.1999.NewModelsforFinancingandManagingHighways:Asset-BasedRoadCorporations

inChina.Transportation26(1):6786.

Lindo,J.,andD.A.P.Bundy.1998.ImmunomodulatoryEffectsofConcurrentHTLV-IInfectioninStrongyloidiasis.JournalofAcquiredImmuneDeficiencySyndromesandHumanRetrovirology18(2):18990.

Listorti,J.A.1999.IsEnvironmentalHealthReallyaPartofEconomicDevelopmentorOnlyanAfterthought?EnvironmentandUrbanization11(1):89100.

Lumbiganon,P.,J.Hofmeyer,A.M.Gulmezoglu,A.Pinol,andJ.Villar.1999.MisoprostolDose-RelatedShiveringandPyrexiaintheThirdStageofLabour.BritishJournalofObstetricsandGynaecology106(4):30408.

Mara,D.D.,andRichardG.A.Feachem.1999.Water-andExcreta-RelatedDiseases:UnitaryEnvironmentalClassification.JournalofEnvironmentalEngineering125(4):33439.

Marks,StephenV.,DonaldF.Larson,andJacquelinePomeroy.1998.EconomicEffectsofTaxesonExportsofPalmOilProducts.BulletinofIndonesianEconomicStudies34(3):3758.

McCalla,AlexF.1999.ProspectsforFoodSecurityinthe21stCentury:WithSpecialEmphasisonAfrica.AgriculturalEconomics20(2):95103.

Meesters,E.H.,RolfP.M.Bak,SusieR.Westmacott,MarkRidgley,andSteveDollar.1998.AFuzzyLogicModeltoPredictCoralReefDevelopmentunderNutrientandSedimentStress.ConservationBiology12(5):95765.

Milanovic,Branko.1999.ExplainingtheIncreaseinInequalityduringtheTransition.EconomicsofTransition7(2):299341.

Mody,Ashoka,andKrishnaSrinivasan.1998.JapaneseandU.S.FirmsasForeignInvestors:DoTheyMarchtothe

SameTune?CanadianJournalofEconomics31(4):77899.

Moll,PeterG.1999.Money,InterestRates,IncomeandInflationinSouthAfrica.SouthAfricanJournalofEconomics67(1):3464.

Momeni,A.Z.,andothers.1999.ARandomised,Double-Blind,ControlledTrialofaKilledL-MajorVaccinePlusBCGagainstZoonoticCutaneousLeishmaniasisinIran.Vaccine17(5):46672.

Musgrove,P.1999.PublicSpendingonHealthCare:HowAreDifferentCriteriaRelated?HealthPolicy47(3):20723.

Needham,C.S.,H.T.Kim,N.V.Hoa,L.D.Cong,E.Michael,L.Drake,A.Hall,andD.A.P.Bundy.1998.EpidemiologyofSoil-TransmittedNematodeInfectionsinHNamProvince,VietNam.TropicalMedicineandInternationalHealth3(11):90412.

Nokes,Catherine,StephenT.McGarvey,LindaShiue,GuanlingWu,HaiwaiWu,DonaldA.P.Bundy,andG.RichardOlds.1999.EvidenceforanImprovementinCognitiveFunctionFollowingTreatmentofSchistosomaJaponicumInfectioninChinesePrimarySchoolChildren.AmericanJournalofTropicalMedicineandHygiene60(4):55665.

Noland,M.,S.Robinson,andL.G.Liu.1998.TheCostsandBenefitsofKoreanUnification:AlternateScenarios.AsianSurvey38(8):80114.

Noorkoiv,Rivo,PeterF.Orazem,AllanPuur,andMilanVodopivec.1998.EmploymentandWageDynamicsinEstonia,198995.EconomicsofTransition6(2):481503.

Novotny,T.E.,J.Seward,R.K.Sun,andK.Acree.1999.TheSausageFactoryTouroftheLegislativeProcess:AnInteractiveOrientation.AmericanJournalofPublicHealth89(5):77173.

Olarreaga,Marcelo.1998.TariffReductionsunderForeignFactorOwnership.CanadianJournalofEconomics31(4):83036.

.1998.WhyAreTradeAgreementsMoreAttractiveinthePresenceofFDI?SwissJournalofEconomicsandStatistics134(4.1):56583.

OmodeoSale,F.,N.Basilico,M.Folini,P.Olliaro,andD.Taramelli.1998.MacrophagePopulationsofDifferentOriginsHaveDistinctSusceptibilitiestoLipidPeroxidationInducedbyBeta-Haematin(MalariaPigment).FEBSLetters433(3):21518.

Ostro,BartD.,GunnarS.Eskeland,JoseMiguelSanchez,andTarhanFeyzioglu.1999.AirPollutionandHealthEffects:AStudyofMedicalVisitsamongChildreninSantiago,Chile.EnvironmentalHealthPerspectives107(1):6973.

Over,Mead.1999.ConfrontingAIDS:AGlobalEconomicPerspective.AIDSPatientCareandSTDs13(4):21928.

Ozkaya,Mehmet,andHosseinAskari.1999.ManagementofNewlyPrivatizedCompanies:ItsImportanceandHowLittleWeKnow.WorldDevelopment27(6):10971114.

Patrinos,HarryAnthony,andRaptiGoonesekere.1998.TechnicalandVocationalEducationandTraininginaTransitionEconomy:TheCaseofVietnam.InternationalReviewofComparativePublicPolicy10:22342.

Piaggio,G.,H.vonHertzen,D.A.Grimes,andP.F.VanLook.1999.TimingofEmergencyContraceptionwithLevonorgestrelortheYuzpeRegimen.Lancet353(9154).

Piaggio,G.,H.Baaqeel,P.Bergsjo,G.Carroli,U.Farnot,P.Lumbiganon,A.Pinol,andJ.Villar.1998.ThePracticeofAntenatalCare:ComparingFourStudySitesinDifferentPartsoftheWorldParticipatingintheWHOAntenatalCareRandomisedControlledTrial.PaediatricandPerinatalEpidemiology12(2):11641.

Pinto,R.F.1998.InnovationsintheProvisionofPublicGoodsandServices.PublicAdministrationandDevelopment18(4):38797.

Pitt,MarkM.,andShahidurR.Khandker.1998.TheImpactofGroup-BasedCreditProgramsonPoorHouseholdsinBangladesh:DoestheGenderofParticipantsMatter?JournalofPoliticalEconomy106(5):95896.

Pitt,MarkM.,ShahidurR.Khandker,Signe-MaryMcKernan,andM.AbdulLatif.1999.CreditProgramsforthePoorandReproductiveBehaviorinLow-IncomeCountries:AreReportedCasualRelationshipstheResultsofHeterogeneityBias?Demography36(1):121.

Place,Frank,andShemE.Migot-Adholla.1998.TheEconomicEffectsofLandRegistrationonSmallholderFarmsinKenya:EvidencefromNyeriandKakamegaDistricts.LandEconomics74(3):36073.

Polackova,Hana.1999.RetirementAgeConsiderationsforCentralEurope.EconomicsofPlanning32(1):121.

Porto,M.,R.L.L.Porto,andL.G.T.Azevedo.1999.AParticipatoryApproachtoWatershedManagement:TheBrazilianSystem.JournaloftheAmericanWaterResourcesAssociation35(3):67583.

Pritchett,Lant,andDeonFilmer.1999.WhatEducationProductionFunctionsReallyShow:APositiveTheoryofEducationExpenditures.EconomicsofEducationReview18(2):22339.

Rama,Martín,andGuidoTabellini.1998.LobbyingbyCapitalandLaboroverTradeandLaborMarketPolicies.EuropeanEconomicReview42(7):12951316.

Raturi,Mayank,andAnandV.Swamy.1999.ExplainingEthnic

DifferentialsinCreditMarketOutcomesinZimbabwe.EconomicDevelopmentandCulturalChange47(3):585604.

Ravallion,Martin.1998.DoesAggregationHidetheHarmfulEffectsofInequalityonGrowth?EconomicsLetters61(1):7377.

.1998.FoodPricesandRuralPoverty.EconomicandPoliticalWeekly33(28):187071.

.1999.IsMoreTargetingConsistentwithLessSpending?InternationalTaxandPublicFinance6:41119.

Ravallion,Martin,andShaohuaH.Chen.1999.WhenEconomicReformIsFasterthanStatisticalReform:MeasuringandExplainingIncomeInequalityinRuralChina.OxfordBulletinofEconomicsandStatistics61(1):3356.

Ravallion,Martin,andJyotsnaJalan.1999.China'sLaggingPoorAreas.AmericanEconomicReview89(2):30105.

Renaud,Bertrand.1999.TheFinancingofSocialHousinginIntegratingFinancialMarkets:AViewfromDevelopingCountries.UrbanStudies36(4):75573.

Rozelle,Scott,GuoLi,andLorenBrandt.1998.Tenure,LandRights,andFarmerInvestmentIncentivesinChina,andProductivityinChina'sAgriculturalSector.AgriculturalEconomics19:6371.

Saavedra,Jaime,andAlbertoChong.1999.StructuralReform,InstitutionsandEarnings:EvidencefromtheFormalandInformalSectorsinUrbanPeru.JournalofDevelopmentStudies35(4):95116.

Sakti,H.,C.Nokes,W.S.Hertanto,S.Hendranto,A.Hall,D.A.P.Bundy,andSatoto.1999.EvidenceforanAssociationbetweenHookwormInfectionandCognitiveFunctioninIndonesianSchoolChildrenTropicalMedicineandInternationalHealth4(5):32234.

Sasaki,Masaru.1999.AnEquilibriumSearchModelwithCoworkerDiscrimination.JournalofLaborEconomics17(2):377407.

Schieber,George,andA.Maeda.1999.HealthCareFinancingandDeliveryinDevelopingCountries.HealthAffairs18(3):193203.

Schiff,Maurice.1998.EthnicDiversityandEconomicReforminSub-SaharanAfrica.JournalofAfricanEconomies7(3):34862.

.1998.PoliticalIntegration,LaborMobilityandWelfare:TheImpactofSocialCapital.Revued'EconomieduDéveloppement6(4).

Schmidt-Hebbel,Klaus,andLuisServén.1998.WorldSaving:TrendsandTheories.EstudiosdeEconomía25:191215.

Serageldin,Ismail.1999.NewPartnershipsandNewParadigmsfortheNewCentury.CurrentScience76(4):50106.

Servén,Luis.1999.Terms-of-TradeShocksandOptimalInvestment:AnotherLookattheLaursen-MetzlerEffect.JournalofInternationalMoneyandFinance18(3):33765.

Shirley,MaryM.1999.BureaucratsinBusiness:TheRoleofPrivatizationversusCorporatizationinState-OwnedEnterpriseReform.WorldDevelopment27(1):11536.

Shirley,MaryM.,andL.ColinXu.1998.Information,Incentives,andCommitment:AnEmpiricalAnalysisofContractsbetweenGovernmentandStateEnterprises.JournalofLaw,Economics,andOrganization14(2):35878.

Solo,T.M.1999.Small-ScaleEntrepreneursintheUrbanWaterandSanitationMarket.EnvironmentandUrbanization11(1):11731.

Stiglitz,JosephE.1999.LessonsfromEastAsia.JournalofPolicyModeling21(3):31130.

.1999.TowardaGeneralTheoryofWageandPriceRigiditiesandEconomicFluctuations.AmericanEconomicReview89(2):7580.

Striker,J.,R.S.Luippold,L.Nagy,BernhardLiese,C.Bigelow,andK.A.Mundt.1999.RiskFactorsforPsychologicalStressamongInternationalBusinessTravelers.OccupationalandEnvironmentalMedicine56(4):24552.

Svensson,Jakob.1998.Investment,PropertyRightsandPoliticalInstability:TheoryandEvidence.EuropeanEconomicReview42(7):131741.

Taffs,R.E.,J.C.Enterline,K.Rusmil,Muhilal,S.S.Suwardi,D.Rustama,Djatnika,C.Cobra,R.D.Semba,N.Cohen,andD.M.Asher.1999.OralIodineSupplementationDoesNotReduceNeutralizingAntibodyResponsestoOralPoliovirusVaccine.BulletinoftheWorldHealthOrganization77(6):48491.

Talvitie,Antti.1999.PerformanceIndicatorsfortheroadSector.Transportation26(1):530.

Thomas,Vinod.1999.Globalization:ImplicationsforDevelopmentLearning.PublicAdministrationandDevelopment19(1):517.

Tol,R.S.J.,S.Fankhauser,andJ.B.Smith.1998.TheScopeforAdoptiontoClimateChange:WhatCanWeLearnfromtheImpactLiterature?GlobalEnvironmentalChange:HumanandPolicyDimensions8(2):10923.

Treviño,LindaKlebe,G.R.Weaver,D.G.Gibson,andB.L.Toffler.1999.ManagingEthicsandLegalcompliance:WhatWorksandWhatHurts.CaliforniaManagementReview41(2):13151.

Tzannatos,Zafiris.1999.WomenandLaborMarketchangesintheGlobalEconomy:GrowthHelps,InequalitiesHurt,andPublicPolicyMatters.WorldDevelopment27(3):55169.

Valdés,Alberto.1999.MeasuresofAgriculturalSupportPoliciesinTransitionEconomies:19941997.AmericanEconomicReview89(2):26570.

Valdés,Alberto,CsabaCsaki,andAchimFock.1998.EstonianAgricultureinEffortstoAccedetotheEuropeanUnion.Post-SovietGerographyandEconomics39(9):51848.

vanVeen,TjaartW.Schillhorn.1999.AgriculturalPolicyandSustainableLivestockDevelopment.InternationalJournalforParasitology29(1):715.

vanWijnbergen,Sweder,andAntonioEstache.1999.EvaluatingtheMinimumAssetTaxonCorporations:AnOptionPricingApproach.JournalofPublicEconomics71(1):7596.

Vawda,AyeshaYaqub,andHarryAnthonyPatrinos.1999.ProducingEducationalMaterialsinLocalLanguages:CostsfromGuatemalaandSenegal.InternationalJournalofEducationalDevelopment19(45):28799.

Venables,AnthonyJ.1999.FragmentationandMultinationalProduction.EuropeanEconomicReview43(4):93545.

Venables,Anthony,J.,andJamesMarkusen.1999.ForeignDirectInvestmentasaCatalystforIndustrialDevelopmentEuropeanEconomicReview43:35556.

Venables,AnthonyJ.,andDiegoPuga.1999.AgglomerationandEconomicDevelopmentImportSubstitutionversusTradeLiberalization.EconomicJournal109(455):292311.

Villar,J.,andothers.1998.TheWHOAntenatalCareRandomisedcontrolledTrial:RationaleandStudyDesign.PaediatricandPerinatalEpidemiology12(2):2758.

Visaria,L.,S.Jejeebhoy,andThomasMerrick.1999.FromFamilyPlanningtoReproductiveHealth:ChallengesFacingIndia.InternationalFamilyPlanningPerspectives25(January):S4449.

Vittas,Dimitri.1998.SwissChilanpore:TheWayForwardforPensionReform?FinanceaUver(UniversitaKarlova,Prague)48(1):7688.

Vodoprivec,Milan.1998.TransitionfromCashBenefitstoWork:TheCaseofSlovenia.EmpiricalEconomics23(12):177202.

.1998.TurningtheUnemployedintoEntrepreneurs:AnEvaluationofaSelf-EmploymentPrograminaTransitionalEconomy.JournalofDevelopmentalEntrepreneurship3(1):7196.

.1999.DoestheSlovenianPublicWorkProgramIncreaseParticipants'ChancestoFindaJob?JournalofComparativeEconomics27(1):11330.

Walde,Klaus.1999.AModelofCreativeDestructionwithUndiversifiableRiskandOptimisingHouseholds.EconomicJournal109(454):C15671.

Ward,M.1999.PerceptionsofPoverty:TheHistoricalLegacy.IDSBulletin(InsituteofDevelopmentStudies)30(2).

Watson,R.1999.Common,themesforEcologistsinGlobalIssues.JournalofAppliedEcology36(1):110.

Wildasin,DavidE.,andJohnDouglasWilson.1998.RiskyLocalTaxBases:Risk-Poolingvs.Rent-Capture.JournalofPublicEconomics69(2):22947.

Wodon,QuentinT.1999.Between-GroupInequalityandTargetedTransfers.ReviewofIncomeandWealth1(March):2139.

Xie,Danyang,Heng-fuZou,andHamidDavoodi.1999.FiscalDecentralizationandEconomicGrowthintheUnitedStates.Journal

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Zaman,H.1998.CanMis-TargetingBeJustified?InsightsfromBRAC'sMicro-CreditProgramme.IDSBulletin(InstituteofDevelopmentStudies)29(4).

Zou,Heng-fu.1998.TheSpiritofCapitalism,SocialStatus,Money,andAccumulation.JournalofEconomics(ZeitschriftfürNational&unl;okonomie)68(3):21933.

E.WorldBankDiscussionPapeprs,TechnicalPapers,andOtherBankSeriesPublications

Alderman,Harold.1998.SocialAssistanceinAlbania:DecentralizationandTargetedTransfers.LivingStandardsMeasurementStudyWorkingPaper134.Washington,DC:WorldBank.

Anaya,JoséAntonioGonzález.1999.LaborMarketFlexibilityin13LatinAmericanCountriesandtheUnitedStates.LatinAmericanandCaribbeanStudiesSeries.Washington,DC:WorldBank.

Asad,Musa,LuizGabrielAzevedo,KarinE.Kemper,andLarryD.Simpson.1999.ManagementofWaterResources:BulkWaterPricinginBrazil.WorldBankTechnicalPaper432.Washington,DC.

Aylward,Anthony.1998.TrendsinVentureCapitalFinanceinDevelopingCountries.IFCDiscussionPaper36.Washington,DC:InternationalFinanceCorporation.

Aylward,Anthony,andJackGlen.1999.PrimarySecuritiesMarkets:Cross-CountryFindings.IFCDiscussionPaper39.Washington,DC:InternationalFinanceCorporation.

Barger,TeresaC.1998.FinancialInstitutions.IFCLessonsofExperience6.Washington,DC:InternationalFinanceCorporation.

Bitran,Eduardo,AntonioEstache,J.LuisGuasch,andPabloSerra.

1999.PrivatizingandRegulatingChile'sUtilities,19742000:Successes,Failures,andOutstandingChallenges.WBIDevelopmentStudies.Washington,DC:WorldBank.

Blackden,Mark,andChitraBhanu.1998.Gender,Growth,andPovertyReduction:SpecialProgramofAssistanceforAfrica,1998StatusReportonPovertyinsub-SaharanAfrica.WorldBankTechnicalPaper428.Washington,DC.(AlsopublishedinFrench.)

Bom,GertJan,RobertFoster,EbelDijkstra,andMarjaTummers.1999.EvaporativeAir-Conditioning:ApplicationsforEnvironmentallyFriendlyCooling.WorldBankTechnicalPaper421.Washington,DC.

Bos,Eduard,VivianHon,AkikoMaeda,GnanarajChellaraj,andAlexanderPreker.1998.Health,Nutrition,andPopulationIndicators:AStatisticalHandbook.Health,Nutrition,andPopulationSeries.Washington,DC:WorldBank.

Bredie,JosephW.B.,andGirindreK.Beeharry.1998.SchoolEnrollmentDeclineinSub-SaharanAfrica:BeyondtheSupplyConstraint.WorldBankDiscussionPaper395.Washington,DC.

Broadman,HarryG.1998.RussianEnterpriseReform:PoliciestoFurthertheTransition.WorldBankDiscussionPaper400.Washington,DC.

.1998.RussianTradePolicyReformforWTOAccession.WorldBankDiscussionPaper401.Washington,DC.

Buckley,Robert.1999.1998AnnualReviewofDevelopmentEffectiveness.OperationsEvaluationStudy.Washington,DC:WorldBank,OperationsEvaluationDepartment.

Burki,ShahidJaved,andGuillermoE.Perry.1998.BeyondtheWashingtonConsensus:InstitutionsMatte.LatinAmericanandCaribbeanStudiesSeries.Washington,DC:WorldBank.

Burki,ShahidJaved,GuillermoE.Perry,andSaraCalvo.1998.AnnualWorldBankConferenceonDevelopmentinLatinAmerica

1997:TradeTowardsOpenRegionalism.LatinAmericanandCaribbeanStudiesSeries.Washington,DC:WorldBank.

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Valletti,TommasoM.1999.ThePracticeofAccessPricing:

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.1999.TheMacroWageCurveandLaborMarketFlexibilityin

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Wei,Shang-Jin.1999.CorruptioninEconomicDevelopment:

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G.OtherBankWorkingPapers

DevelopmentResearchGroup

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HumanDevelopmentNetwork

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Badelt,Christoph.1999.TheRoleofNGOsinPoliciestoCombatSocialExclusion.SocialProtectionDiscussionPaper9912.

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.1999.WorldBankLendingforLaborMarkets:1991to1998.SocialProtectionDiscussionPaper9902.

Demarco,Gustavo,andRafaelRofman.1998.SupervisingMandatoryPensionFunds:IssuesandChallenges.SocialProtectionDiscussionPaper9817.

Dnes,Antony.1999.TheEffectsofLegislativeChangeonFemaleLaborSupply.SocialProtectionDiscussionPaper9905.

Fretwell,DavidH.,andJacobBenus.1999.EvaluatingtheImpactofActiveLaborPrograms.SocialProtectionDiscussionPaper9915.

Gora,Marek,andMichalRutkowski.1998.TheQuestforPensionReform:Poland'sSecuritythroughDiversity.SocialProtectionDiscussionPaper9815.

Holzmann,Robert.1998.FinancingtheTransitiontoMultipillar.SocialProtectionDiscussionPaper9809.

Holzmann,Robert,andSteenJorgensen.1999.SocialProtectionasSocialRiskManagement.SocialProtectionDiscussionPaper9904.

Kammersgaard,Jesper.1999.CausalitiesbetweenSocialCapitalandSocialFunds.SocialProtectionDiscussionPaper9908.

Karni,Edi.1999.OptimalUnemploymentInsurance:AGuidetotheLiterature.SocialProtectionDiscussionPaper9906.

Lee,KyeWoo.1998.AnAlternativeTechnicalEducationSystem:

ACaseStudyofMexico.SocialProtectionDiscussionPaper9811.

Paci,Pierella.1999.ABundleofJoyoranExpensiveLuxury:AComparativeAnalysisoftheEconomicEnvironmentforFamilyFormationinWesternEurope.SocialProtectionDiscussionPaper9903.

Palacios,Robert,andEdwardWhitehouse.1998.TheRoleofChoiceintheTransitiontoaFundedPensionSystem.SocialProtectionDiscussionPaper9812.

Rofman,Rafael,andGustavoDemarco.1999.CollectingandTransferringPensionContributions.SocialProtectionDiscussionPaper9907.

Rutkowski,Michal,ed-1999.Russia'sSocialProtectionMalaise.SocialProtectionDiscussionPaper9909.

Schwarz,AnitaM.,andAsllDemirguc-Kunt.1999.TakingStockofPensionReformsaroundtheWorld.SocialProtectionDiscussionPaper9917.

Tzannatos,Zafiris.1998.ChildLaborandSchoolEnrollmentinThailandinthe90sSocialProtectionDiscussionPaper9818.

Tzannatos,Zafiris,andSuzanneRoddis.1998.FamilyAllowances.SocialProtectionDiscussionPaper9814.

.1998.UnemploymentBenefits.SocialProtectionDiscussionPaper9813.

vanDomelen,Julie,andDanielOwen.1998.GettinganEarful:AReviewofBeneficiaryAssessmentsofSFs.SocialProtectionDiscussionPaper9816.

Vroman,Wa-yne.1999.UnemploymentandUnemploymentProtectioninThreeGroupsofCountries.SocialProtectionDiscussionPaper9911.

Whitehouse,Edward.1999.TheTaxTreatmentofFundedPensions.SocialProtectionDiscussionPaper9910.

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SocialDevelopmentDepartment

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