Showing papers by "World Bank published in 2006"

Governance matters VII : aggregate and individual governance indicators 1996-2007

Abstract: This paper reports on the 2009 update of the Worldwide Governance Indicators (WGI) research project, covering 212 countries and territories and measuring six dimensions of governance between 1996 and 2008: Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. These aggregate indicators are based on hundreds of specific and disaggregated individual variables measuring various dimensions of governance, taken from 35 data sources provided by 33 different organizations. The data reflect the views on governance of public sector, private sector and NGO experts, as well as thousands of citizen and firm survey respondents worldwide. The authors also explicitly report the margins of error accompanying each country estimate. These reflect the inherent difficulties in measuring governance using any kind of data. They find that even after taking margins of error into account, the WGI permit meaningful cross-country comparisons as well as monitoring progress over time. The aggregate indicators, together with the disaggregated underlying indicators, are available at www.govindicators.org.

Small and medium-size enterprises: Access to finance as a growth constraint

Abstract: This paper presents recent research on access to finance by small and medium-size enterprises (SMEs). SMEs form a large part of private sector in many developed and developing countries. While cross-country research sheds doubt on a causal link between SMEs and economic development, there is substantial evidence that small firms face larger growth constraints and have less access to formal sources of external finance, potentially explaining the lack of SMEs’ contribution to growth. Financial and institutional development helps alleviate SMEs’ growth constraints and increase their access to external finance and thus levels the playing field between firms of different sizes. Specific financing tools such as leasing and factoring can be useful in facilitating greater access to finance even in the absence of well-developed institutions, as can systems of credit information sharing and a more competitive banking structure.

Bank concentration, competition, and crises: First results

Abstract: Motivated by public policy debates about bank consolidation and conflicting theoretical predictions about the relationship between bank concentration, bank competition and banking system fragility, this paper studies the impact of national bank concentration, bank regulations, and national institutions on the likelihood of a country suffering a systemic banking crisis. Using data on 69 countries from 1980 to 1997, we find that crises are less likely in economies with more concentrated banking systems even after controlling for differences in commercial bank regulatory policies, national institutions affecting competition, macroeconomic conditions, and shocks to the economy. Furthermore, the data indicate that regulatory policies and institutions that thwart competition are associated with greater banking system fragility.

Missing in Action: Teacher and Health Worker Absence in Developing Countries

Abstract: In this paper, we report results from surveys in which enumerators make unannounced visits to primary schools and health clinics in Bangladesh, Ecuador, India, Indonesia, Peru and Uganda and recorded whether they found teachers and health workers in the facilities.

Gravity for dummies and dummies for gravity equations

Abstract: This paper provides a minimalist derivation of the gravity equation and uses it to identify three common errors in the literature, what we call the gold, silver and bronze medal errors. The paper provides estimates of the size of the biases taking the currency union trade effect as an example. We generalize Anderson-Van Wincoop’s multilateral trade resistance factor (which only works with cross section data) to allow for panel data and then show that it can be dealt with using time-varying country dummies with omitted determinants of bilateral trade being dealt with by time-invariant pair dummies.

Long Term Consequences Of Early Childhood Malnutrition

Abstract: This paper examines the impact of pre-school malnutrition on subsequent human capital formation in rural Zimbabwe using a maternal fixed effects - instrumental variables (MFE-IV) estimator with a long term panel data set. Representations of civil war and drought shocks are used to identify differences in pre-school nutritional status across siblings. Improvements in height-for-age in pre-schoolers are associated with increased height as a young adult and number of grades of schooling completed. Had the median pre-school child in this sample had the stature of a median child in a developed country, by adolescence, she would be 3.4 centimeters taller, had completed an additional 0.85 grades of schooling and would have commenced school six months earlier. © 2006 Oxford University Press.

Estimating Trade Restrictiveness Indices

Abstract: The objective of this paper is to provide indicators of trade restrictiveness that include both measures of tariff and nontariff barriers for 91 developing and industrial countries. For each country, the authors estimate three trade restrictiveness indices. The first one summarizes the degree of trade distortions that each country imposes on itself through its own trade policies. The second one focuses on the trade distortions imposed by each country on its import bundle. The last index focuses on market access and summarizes the trade distortions imposed by the rest of the world on each country's export bundle. All indices are estimated for the broad aggregates of manufacturing and agriculture products. Results suggest that poor countries (and those with the highest poverty headcount) tend to be more restrictive, but they also face the highest trade barriers on their export bundle. This is partly explained by the fact that agriculture protection is generally larger than manufacturing protection. Nontariff barriers contribute more than 70 percent on average to world protection, underlying their importance for any study on trade protection.

Financial performance and outreach: a global analysis of leading microbanks*

Abstract: Microfinance contracts have proven able to secure high rates of loan repayment in the face of limited liability and information asymmetries, but high repayment rates have not translated easily into profits for most microbanks. Profitability, though, is at the heart of the promise that microfinance can deliver poverty reduction while not relying on ongoing subsidy. The authors examine why this promise remains unmet for most institutions. Using a data set with unusually high quality financial information on 124 institutions in 49 countries, they explore the patterns of profitability, loan repayment, and cost reduction. The authors find that institutional design and orientation matter substantially. Lenders that do not use group-based methods to overcome incentive problems experience weaker portfolio quality and lower profit rates when interest rates are raised substantially. For these individual-based lenders, one key to achieving profitability is investing more heavily in staff costs-a finding consistent with the economics of information but contrary to the conventional wisdom that profitability is largely a function of minimizing cost.

Testing for cross-sectional dependence in panel-data models

Abstract: This article describes a new Stata routine, xtcsd, to test for the presence of cross-sectional dependence in panels with many cross-sectional units and few time-series observations. The command exe...

Threats to Water Supplies in the Tropical Andes

Abstract: Climate models predict that greenhouse warming will cause temperatures to rise faster at higher than at lower altitudes. In the tropical Andes, glaciers may soon disappear, with potentially grave consequences for water supplies.

The distributional impact of climate change on rich and poor countries

Abstract: This paper examines the impact of climate change on rich and poor countries across the world. We measure two indices of the relative impact of climate across countries, impact per capita, and impact per GDP. These measures sum market impacts across the climate-sensitive economic sectors of each country. Both indices reveal that climate change will have serious distributional impact across countries, grouped by income per capita. We predict that poor countries will suffer the bulk of the damages from climate change. Although adaptation, wealth, and technology may influence distributional consequences across countries, we argue that the primary reason that poor countries are so vulnerable is their location. Countries in the low latitudes start with very high temperatures. Further warming pushes these countries ever further away from optimal temperatures for climate- sensitive economic sectors.

Global epidemiology, ecology and control of soil-transmitted helminth infections

Abstract: Soil-transmitted helminth (STH) infections are among the most prevalent of chronic human infections worldwide. Based on the demonstrable impact on child development, there is a global commitment to finance and implement control strategies with a focus on school-based chemotherapy programmes. The major obstacle to the implementation of cost-effective control is the lack of accurate descriptions of the geographical distribution of infection. In recent years, considerable progress has been made in the use of geographical information systems (GIS) and remote sensing (RS) to better understand helminth ecology and epidemiology, and to develop low-cost ways to identify target populations for treatment. This review explores how this information has been used practically to guide large-scale control programmes. The use of satellite-derived environmental data has yielded new insights into the ecology of infection at a geographical scale that has proven impossible to address using more traditional approaches, and has in turn allowed spatial distributions of infection prevalence to be predicted robustly by statistical approaches. GIS/RS have increasingly been used in the context of large-scale helminth control programmes, including not only STH infections but also those focusing on schistosomiasis, filariasis and onchocerciasis. The experience indicates that GIS/RS provides a cost-effective approach to designing and monitoring programmes at realistic scales. Importantly, the use of this approach has begun to transition from being a specialist approach of international vertical programmes to becoming a routine tool in developing public sector control programmes. GIS/RS is used here to describe the global distribution of STH infections and to estimate the number of infections in school-age children in sub-Saharan Africa (89.9 million) and the annual cost of providing a single anthelmintic treatment using a school-based approach (US$5.0-7.6 million). These are the first estimates at a continental scale to explicitly include the fine spatial distribution of infection prevalence and population, and suggest that traditional methods have overestimated the situation. The results suggest that continent-wide control of parasites is, from a financial perspective, an attainable goal.

Will African agriculture survive climate change

Abstract: Measurement of the likely magnitude of the economic impact of climate change on African agriculture has been a challenge. Using data from a survey of more than 9,000 farmers across 11 African countries, a cross-sectional approach estimates how farm net revenues are affected by climate change compared with current mean temperature. Revenues fall with warming for dryland crops (temperature elasticity of -1.9) and livestock (-5.4), whereas revenues rise for irrigated crops (elasticity of 0.5), which are located in relatively cool parts of Africa and are buffered by irrigation from the effects of warming. At first, warming has little net aggregate effect as the gains for irrigated crops offset the losses for dryland crops and livestock. Warming, however, will likely reduce dryland farm income immediately. The final effects will also depend on changes in precipitation, because revenues from all farm types increase with precipitation. Because irrigated farms are less sensitive to climate, where water is available, irrigation is a practical adaptation to climate change in Africa.

Trade Policy, Trade Volumes and Plant-Level Productivity in Colombian Manufacturing Industries

Abstract: This paper explores a period of substantial variation in trade policy across industries in Colombia (1977-1991) to examine whether increased exposure to foreign competition generates productivity gains for manufacturing plants. Using an estimation methodology that addresses the shortcomings of previous studies, we find a strong positive impact of tariff liberalization on plant productivity, even after controlling for plant and industry heterogeneity, real exchange rates, and cyclical effects. The impact of liberalization is stronger for larger plants and plants in less competitive industries. Our findings are not driven by the endogeneity of protection. Similar results are obtained when using effective rates of protection and import penetration ratios as measures of protection. Productivity gains under trade liberalization are linked to increases in intermediate inputs' imports, skill intensity, and machinery investments, and to output reallocations from less to more productive plants.

How Important are Financing Constraints? The Role of Finance in the Business Environment

Abstract: What role does the business environment play in promoting and restraining firm growth? Recent literature points to a number of factors as obstacles to growth. Inefficient functioning of financial markets, inadequate security and enforcement of property rights, poor provision of infrastructure, inefficient regulation and taxation, and broader governance features such as corruption and macroeconomic stability are discussed without any comparative evidence on their ordering. In this paper, the authors use firm level survey data to present evidence on the relative importance of different features of the business environment. They find that although firms report many obstacles to growth, not all the obstacles are equally constraining. Some affect firm growth only indirectly through their influence on other obstacles, or not at all. Using Directed Acyclic Graph methodology as well as regressions, the authors find that only obstacles related to finance, crime, and political instability directly affect the growth rate of firms. Robustness tests further show that the finance result is the most robust of the three. These results have important policy implications for the priority of reform efforts. They show that maintaining political stability, keeping crime under control, and undertaking financial sector reforms to relax financing constraints are likely to be the most effective routes to promote firm growth.

Social Cohesion, Institutions, and Growth

Abstract: We present evidence that measures of social cohesion, such as income inequality and ethnic fractionalization, endogenously determine institutional quality, which in turn causally determines growth.

How Important is Selection? Experimental vs. Non-Experimental Measures of the Income Gains from Migration

Abstract: Measuring the gain in income from migration is complicated by non-random selection of migrants from the general population, making it hard to obtain an appropriate comparison group of non-migrants. This paper uses a migrant lottery to overcome this problem, providing an experimental measure of the income gains from migration. New Zealand allows a quota of Tongans to immigrate each year with a lottery used to choose amongst the excess number of applicants. A unique survey conducted by the authors in these two countries allows experimental estimates of the income gains from migration to be obtained by comparing the incomes of migrants to those who applied to migrate, but whose names were not drawn in the lottery, after allowing for the effect of noncompliance among some of those whose names were drawn. We also conducted a survey of individuals who did not apply for the lottery. Comparing this non-applicant group to the migrants enables assessment of the degree to which non-experimental methods can provide an unbiased estimate of the income gains from migration. We find evidence of migrants being positively selected in terms of both observed and unobserved skills. As a result, non-experimental methods are found to overstate the gains from migration, by 9 to 82 percent. A good instrumental variable works best, while difference-in-differences and bias-adjusted propensity-score matching also perform comparatively well.

Trading on Time

Abstract: The authors determine how time delays affect international trade using newly collected World Bank data on the days it takes to move standard cargo from the factory gate to the ship in 126 countries. They estimate a modified gravity equation, controlling for endogeneity and remoteness. On average, each additional day that a product is delayed prior to being shipped reduces trade by at least 1 percent. Put differently, each day is equivalent to a country distancing itself from its trade partners by 70 kilometers on average. Delays have an even greater impact on developing country exports and exports of time-sensitive goods, such as perishable agricultural products. In particular, a day's delay reduces a country's relative exports of time-sensitive to time-insensitive agricultural goods by 6 percent.

Health Financing Revisited: A Practitioner's Guide

Abstract: This overview of health financing tools, policies and trends--with a particular focus on challenges facing developing countries--provides the basis for effective policy-making. Analyzing the current global environment, the book discusses health financing goals in the context of both the underlying health, demographic, social, economic, political and demographic analytics as well as the institutional realities faced by developing countries, and assesses policy options in the context of global evidence, the international aid architecture, cross-sectoral interactions, and countries' macroeconomic frameworks and overall development plans.

Determining global population distribution: methods, applications and data.

Abstract: Evaluating the total numbers of people at risk from infectious disease in the world requires not just tabular population data, but data that are spatially explicit and global in extent at a moderate resolution. This review describes the basic methods for constructing estimates of global population distribution with attention to recent advances in improving both spatial and temporal resolution. To evaluate the optimal resolution for the study of disease, the native resolution of the data inputs as well as that of the resulting outputs are discussed. Assumptions used to produce different population data sets are also described, with their implications for the study of infectious disease. Lastly, the application of these population data sets in studies to assess disease distribution and health impacts is reviewed. The data described in this review are distributed in the accompanying DVD.

Gender, Time Use, and Poverty in Sub-Saharan Africa

Abstract: The papers in this volume examine the links between gender, time use, and poverty in Sub-Saharan Africa. They contribute to a broader definition of poverty to include time poverty, and to a broader definition of work to include household work. The papers present a conceptual framework linking both market and household work, review some of the available literature and surveys on time use in Africa, and use tools and approaches drawn from analysis of consumption-based poverty to develop the concept of a time poverty line and to examine linkages between time poverty, consumption poverty, and other dimensions of development in Africa such as education and child labor.

Migrant Networks and Foreign Direct Investment

Abstract: While there exists sizeable literature documenting the importance of ethnic networks for international trade, little attention has been devoted to studying the effects of networks on foreign direct investment (FDI). The existence of ethnic networks may positively affect FDI by promoting information flows across international borders and by serving as a contract enforcement mechanism. This paper investigates the link between the presence of migrants in the United States and U.S. FDI in the migrants' countries of origin, taking into account the potential endogeneity concerns. The results suggest that U.S. FDI abroad is positively correlated with the presence of migrants from the host country. The data further indicate that the relationship between FDI and migration is driven by the presence of migrants with a college education.