Showing papers by "World Bank published in 1990"

Imperfect Information, Screening, and the Costs of Informal Lending: A Study of a Rural Credit Market in Pakistan

Abstract: Many governments have perceived the rural moneylender as usurious. This article takes a first step toward directly testing the validity of this view. In a study of services, costs, and charges of fourteen informal market moneylenders and their clients in Chambar, Pakistan, the article examines whether the high implicit interest rates charged reflect the actual costs of operating in that market. Estimates of the resource costs incurred by informal lenders for screening, pursuing delinquent loans, overhead, and cost of capital (including unrecoverable loans) suggest that lenders' charges are equal to their average cost of lending but exceed their marginal cost. This finding is consistent with the view that the informal credit market is characterized by excess capacity and monopolistic competition in the presence of imperfect information.

The effects of trade reforms on scale and technical efficiency

Abstract: This paper shows how the industrial structure and performance changed after Chile's dramatic trade liberalization A comparison of the 1967 and 1979 censuses shows little improvement in productivity overall, but these figures don't separate the effects of trade liberalization from the effects of recession, high interest rates, and real appreciation To isolate the effects of trade liberalization, the authors compared industries in which protection was significantly reduced with industries in which it was not It was found that of the industries for which protection was lifted, the smallest plants tended to expand output more Cross-plant estimates of returns to scale dropped significantly These findings are consistent with the view that exposure to foreign competition forces suboptimally small producers toward minimally efficient scale Also, production levels became higher and more uniform across plants in those industries undergoing dramatic reductions in protection Taken together, these results support the received wisdom that increased exposure to trade improves competition within an industry

Investigating the Determinants of Household Welfare in Cote D'Ivoire

Abstract: To predict the effect of economic policies on household welfare, one should first understand which characteristics of households and of the localities in which they live, enable them to raise their welfare levels. This paper outlines a simple procedure for investigating the determinants of household welfare and demonstrates its use with recent data from Cote d'Ivoire. Despite the relative simplicity, much information is obtained from its use on cross-sectional survey data. Results specific to Cote d'Ivoire include : high (low) returns to education in urban (rural) areas; high benefits from cocoa land relative to coffee land; a significant impact on economic welfare from the availability of medical services, and no apparent benefits from agricultural extension services.

The business cycle associated with exchange-rate-based stabilization

Abstract: This article examines the effects of disinflation on economic activity in countries characterized by chronic inflation. Such countries have a long history of inflation at rates exceeding those in industrial countries as well as labor and capital markets that have adjusted to function in an inflationary environment. A sample of disinflation in several Latin American countries and in Israel demonstrates that stabilization efforts in countries with chronic inflation often do not induce the usual Phillips curve tradeoff in the medium run. Specifically, stabilization programs that use the exchange rate as the main nominal anchor are often associated with a business cycle that begins with a boom and ends with a recession. Stabilization programs that use money supply as the nominal anchor generally induce the expected Phillips curve result: lower inflation is accompanied by a recession after the program is implemented.

Fiscal paradise: foreign tax havens and american business

Abstract: The offshore tax haven affiliates of American corporations account for more than a quarter of US foreign investment, an nearly a third of the foreign profits of US firms. This paper analyzes the origins of this tax haven activity and its implications for the US and foreign governments. Based on the behavior of US fins in 1982, it appears that American companies report extraordinarily high profit rates on both their real and their financial investments in tax havens. We calculate from this behavior that the tax rate that maximizes tax revenue for a typical haven is around 6%. The revenue implications for the US are more complicated, since tax havens may ultimately enhance the ability of the US government to tax the foreign earnings of American companies.

Are better-off households more unequal or less unequal?

Abstract: In many parts of the world, resources within a household are apparently not distributed according to need. Using a model of intrahousehold bargaining, this paper first tries to answer the question: As households become better off, does intrahousehold inequality increase or decrease? It finds that under certain conditions intrahousehold inequality first increases and then decreases. The debate on intrahousehold inequality is entwined with policy questions about the efficacy of targeting individual disadvantaged members of a household, as opposed to poor households in general. The paper found that an intrahousehold bargaining view tends to support targeting to disadvantaged members of the household, because of bargaining power effects. The bargaining framework also gives support for the concern that some observers have expressed about the impact of structural adjustment on intra-household inequality. When cash crops are predominantly under male control and food crops are primarily a female preserve, improving the relative price of cash crops can worsen intrahousehold inequality.

On the accuracy of economic observations : do sub-Saharan trade statistics mean anything?

Abstract: Matching exporters' freight on board (fob) trade statistics with the corresponding importers' cost, inventory and freight (cif) data, this paper studies the quality of official information on trade between 36 African countries. The author found the disparities in data so great as to make the official trade statistics almost useless for most empirical and policy studies. He concluded that: (a) statistics on matching exports and imports vary so much that the data cannot be used to assess the level of trade between African countries; (b) the data are probably equally useless for assessing the direction of trade since the countries that exporters report as the destination of trade often fail to report corresponding imports; (c) the data are inadequate for determining the composition of trade because countries report on different levels of detail; and (d) large, persistent, apparent differences in trends in intra-African trade may simply reflect different degrees of accuracy in country trade data. Finally, the fact that reported fob exports often exceed the corresponding reported imports suggests either that smuggling is widespread or that importers are intentionally underinvoicing because of high African tariffs or quotas.

The impact of the International Coffee Agreement on producing countries.

Abstract: The main objective of this article is to analyze the impact of the International Coffee Agreement's export system on the world coffee market, focusing on increases in real export revenues (transfer benefits) and reductions in income variability (risk benefits) in each exporting country. Over the recent period of operation of the International Coffee Agreement's export quota system, the authors find that the quota system had a stabilizing effect on world coffee prices. The quotas reduced real export revenues for most small exporting countries, but large producers gained. Most small countries gained, however, in terms of risk reduction. If a brief suspension of the quota occurs from time to time, caused, for example, by adverse weather which results in a shortfall in world supply, the quota system works like a buffer stock scheme; on average, producing countries as a whole lose transfer benefits but gain risk benefits.

The Automobile Industry

Abstract: In broad outline, the emerging dynamics in the world automotive industry look similar to those in electronics. Three features of the current competitive environment are particularly noteworthy. First, microelectronics are having a powerful impact on production technologies in the industrial countries. Possibilities for labor-saving mass production or flexible custom assembly are expanding rapidly. Secondly, product innovation continues at a rapid pace. Microelectronics and new materials are beginning to have a pronounced impact on automotive products. Some current models incorporate high-strength plastic body components and radically new transmission and steering systems. The next few years will witness replacement of metal by ceramics in major engine components; replacement of traditional wiring by single-cable communications systems linking smart power chips; and the advent of computer mapping and first-generation vehicle guidance systems.

Fiscal variables and growth: A cross-sectional analysis

Abstract: This paper examines the impact of the key fiscal variables — taxes, expenditures, and deficits — on economic growth performance, using a reduced-form model and cross-sectional data for a sample of 76 developed and developing countries for the period 1972–81. Its simultaneous consideration of fiscal variables overturns the results of some existing studies. While taxes seem negatively associated with GDP growth, they are concommitant with a higher rate of growth when their benefits in terms of reducing deficits are taken into account. The positive association of government expenditures with GDP growth is rendered negative when their impact on deficits are factored in. Deficits are contractionary, and deficit-reducing tax increases and expenditure cuts are positively associated with growth. A balanced budget expansion of taxes and expenditures is negatively associated with growth. When separating the sample into low-, middle- and high-income countries, these results hold only for the second group indicating that the level of development influences the linkages between fiscal variables and GDP growth.

Networking in International Agricultural Research

Abstract: Informal and structured collaboration is becoming increasingly common in international agricultural research. A network approach to research generally reduces costs, minimizes duplication, and boosts efficiency. Collaborative teams, sometimes involving hundreds of scientists in dozens of countries, have been formed to tackle numerous constraints to boosting food production. Networks have been established to test crop germplasm over a broad range of environments, explore ways of boosting the efficiency of fertilizer use, upgrade disease resistance in livestock, and identify socioeconomic obstacles to improved agricultural output. The benefits of networking are especially valuable to countries with limited funds and scientific manpower.

Institutions and dynamic comparative advantage: the electronics industry in South Korea and Taiwan

Abstract: If development proceeds by stages, then Taiwan (as a more developed economy) should have preceded South Korea into high technology (capital--and knowledge intensive) production. In fact, Korea has overtaken Taiwan in many respects. The resolution of the paradox is traced principally to differences in industrial and firm structures in the two countries. The conglomerate organizational mode in Korea has permitted entry into many markets; the smaller Taiwanese firms have been unable to sustain themselves in these markets. As there firms head onto the 1990s, the limitations of their present industrial structures presage a possible convergence, with each moving towards the other. This paper suggests the importance of studying flexible institutional response, and particularly the inner workings of a firm, as an integral element of a theory of dynamic comparative advantage. Copyright 1990 by Oxford University Press.

Financial liberalization in developing countries

Abstract: In the McKinnon and Shaw analysis, financial liberalization is defined to mean the establishment of higher interest rates that equate the demand for, and the supply of, savings. It expresses the views that higher interest rates will lead to increased savings and financial intermediation as well as to improvements in the efficiency of using savings. Balassa summarizes available empirical evidence, indicating that higher real interest rates increase the extent of financial intermediation while increased financial intermediation raises the rate of economic growth in developing countries. Furthermore, evidence is provided on the effects of interest rates on investment efficiency and on economic growth. The paper notes, however, that excessively high interest rates will have unfavorable economic effects. Such a situation can be avoided if the liberalization of the banking system takes place under appropriate conditions. Domestic financial liberalization may eventually be followed by the liberalization of the capital account. But this would have to be preceded by trade liberalization to avoid unnecessary resource shifts. Finally, it is noted that there is a need in most developing countries for improvements in the functioning of the financial sector.

Investment Incentives: New Money, Debt Relief, and the Critical Role of Conditionality in the Debt Crisis

Abstract: External debt depresses investment and lowers economic growth below its potential through its negative effect on liquidity and expected profitability. These effects can pull a country into a downward spiral in which both the debtor country and creditors lose. This article considers the possibilities for revising contracts between a debtor and its creditors once a debt crisis has erupted. The framework that we develop shows how various combinations of new money and cuts in debt and debt service affect a debtor country's welfare, its debt repayments, and the earnings of its creditors. The analysis distinguishes between debtor countries that are willing and able to precommit credibly to an adjustment program and those that are not. This distinction provides the basis for a discussion of conditional lending by the international financial institutions to provide incentives and sanctions that make credible a debtor's promises to invest. Copyright 1990 by Oxford University Press.

Water, peace and conflict management: the experience of the indus and mekong river basins

Abstract: (1990). WATER, PEACE AND CONFLICT MANAGEMENT: THE EXPERIENCE OF THE INDUS AND MEKONG RIVER BASINS. Water International: Vol. 15, No. 4, pp. 200-205.

Development of vaccines against leishmaniasis.

Abstract: A vaccine against leishmaniasis is the only practical means to control this disease in many epidemiological situations Two approaches have been adopted: pragmatic and systematic The pragmatic approach involves trial of crude leishmanial components in animals and then in humans if they meet safety requirements The systematic approach requires identification of the protective immunogen(s), appropriate carrier and adjuvant, and determination of the immune responses and modes of presentation of the immunogens to achieve the desired effect Progress have been made with both approaches Killed Leishmania promastigotes have been used in Brazil for high risk individuals with encouraging results Impressive results have also been observed with killed Leishmania plus BCG for immunotherapy of cutaneous leishmaniasis in Venezuela With the systematic approach, recent research has identified some protective immunogens, cloned protective murine T-cells, developed primate models resembling the human disease, cloned and expressed genes of some potential immunogens, identified some features of the protective immune response, determined modes of presentation of immunogen to produce a protective response, and been able to protect mice (even/Balb/c) against L major infection The difficult part that remains is the implementation of a vaccine or any control measure in the poor communities where they are needed and where the lack of required infrastructure does not allow adequate coverage

People are not Passive Acceptors of Threats to Health: Endogeneity and its Consequences

Abstract: The effect of behaviour on health is a major area of contemporary epidemiological enquiry. Most epidemiological studies of the effect of behaviour on health assume that the levels of the behaviour-related variables are determined by factors other than those under study. However, in many instances, obvious examples are breastfeeding and smoking, not only do behaviours affect health but, conversely, individuals take into account their (observable and non-observable) health conditions when making behavioural decisions. In models which allow for the joint determination of health and behaviour, both health and behavioural variables are 'endogenous', that is, determined by forces acting within the model. Through some simple didactic examples it is shown that estimates of the effect of behaviour on health are biased if endogeneity is ignored. Review of the small empirical literature on this subject shows perverse results, such as a negative relationship between the use of prenatal care and infant mortality, when endogeneity is ignored. Standard procedures for taking account of the effects of endogeneity are described briefly.

Tropical Moist Forest Management: The Urgency of Transition to Sustainability

Abstract: The International Tropical Timber Organization (ITTO), an increasing number of citizens and foresters, and the vast majority of environmentalists, must surely realize that most current use of tropical moist forest is unsustainable. The environmental services of tropical forest, and the biodiversity which it harbours — the world's richest source — is being lost so rapidly that consumer boycotts and other trade constraints aim to reduce the rate of irreversible damage but have so far proved little-effective. On one hand, tropical moist deforestation benefits exceedingly few people, and then only ephemerally. On the other hand, such deforestation permanently impoverishes, deracinates, or sickens, millions of people, impairs local or global environmental services, and exacerbates global environmental risks. The World Resources Institute ranks logging as one of the top causes leading to deforestation.