Showing papers by "World Bank published in 2009"

The challenge of establishing world-class universities

Abstract: Governments are becoming increasingly aware of the important contribution that high performance, world-class universities make to global competitiveness and economic growth. There is growing recognition, in both industrial and developing countries, of the need to establish one or more world-class universities that can compete effectively with the best of the best around the world. Contextualising the drive for world-class higher education institutions and the power of international and domestic university rankings, this book outlines possible strategies and pathways for establishing globally competitive universities and explores the challenges, costs, and risks involved. Its findings will be of particular interest to policy makers, university leaders, researchers, and development practitioners.

Financial institutions and markets across countries and over time - data and analysis

Abstract: This paper introduces the updated and expanded version of the Financial Development and Structure Database and presents recent trends in structure and development of financial institutions and markets across countries. The authors add indicators on banking structure and financial globalization. They find a deepening of both financial markets and institutions, a trend concentrated in high-income countries and more pronounced for markets than for banks. Similarly, the recent increase in cross-border lending and debt issues has been concentrated in high-income countries, while low and lower-middle income countries have experienced an increase in remittance flows. Low net interest margins, rising profitability and declining stability in high-income countries’ banking sectors characterize the recent financial sector boom in high income countries leading up to the global financial crisis of 2007.

Bank Activity and Funding Strategies: The Impact on Risk and Return

Abstract: This paper examines the implications of bank activity and short-term funding strategies for bank risk and return using an international sample of 1334 banks in 101 countries leading up to the 2007 financial crisis. Expansion into non-interest income generating activities such as trading increases the rate of return on assets, and it may offer some risk diversification benefits at very low levels. Non-deposit, wholesale funding in contrast lowers the rate of return on assets, while it can offer some risk reduction at commonly observed low levels of non-deposit funding. A sizeable proportion of banks, however, attract most of their short-term funding in the form of non-deposits at a cost of enhanced bank fragility. Overall, banking strategies that rely prominently on generating non-interest income or attracting non-deposit funding are very risky, consistent with the demise of the U.S. investment banking sector.

Africa's infrastructure : a time for transformation

Abstract: This study is part of the Africa Infrastructure Country Diagnostic (AICD), a project designed to expand the world's knowledge of physical infrastructure in Africa. The AICD will provide a baseline against which future improvements in infrastructure services can be measured, making it possible to monitor the results achieved from donor support. It should also provide a more solid empirical foundation for prioritizing investments and designing policy reforms in the infrastructure sectors in Africa. The AICD is based on an unprecedented effort to collect detailed economic and technical data on the infrastructure sectors in Africa. The project has produced a series of original reports on public expenditure, spending needs, and sector performance in each of the main infrastructure sectors, including energy, information and communication technologies, irrigation, transport, and water and sanitation. The first phase of the AICD focused on 24 countries that together account for 85 percent of the gross domestic product, population, and infrastructure aid flows of Sub-Saharan Africa. Under a second phase of the project, coverage is expanding to include as many of the additional African countries as possible.

A Polycentric Approach for Coping with Climate Change

Abstract: This paper proposes an alternative approach to addressing the complex problems of climate change caused by greenhouse gas emissions. The author, who won the 2009 Nobel Prize in Economic Sciences, argues that single policies adopted only at a global scale are unlikely to generate sufficient trust among citizens and firms so that collective action can take place in a comprehensive and transparent manner that will effectively reduce global warming. Furthermore, simply recommending a single governmental unit to solve global collective action problems is inherently weak because of free-rider problems. For example, the Carbon Development Mechanism (CDM) can be ‘gamed’ in ways that hike up prices of natural resources and in some cases can lead to further natural resource exploitation. Some flaws are also noticeable in the Reducing Emissions from Deforestation and Forest Degradation in Developing Countries (REDD) program. Both the CDM and REDD are vulnerable to the free-rider problem. As an alternative, the paper proposes a polycentric approach at various levels with active oversight of local, regional, and national stakeholders. Efforts to reduce global greenhouse gas emissions are a classic collective action problem that is best addressed at multiple scales and levels. Given the slowness and conflict involved in achieving a global solution to climate change, recognizing the potential for building a more effective way of reducing green house gas emissions at multiple levels is an important step forward. A polycentric approach has the main advantage of encouraging experimental efforts at multiple levels, leading to the development of methods for assessing the benefits and costs of particular strategies adopted in one type of ecosystem and compared to results obtained in other ecosystems. Building a strong commitment to find ways of reducing individual emissions is an important element for coping with this problem, and having others also take responsibility can be more effectively undertaken in small- to medium-scale governance units that are linked together through information networks and monitoring at all levels. This paper was prepared as a background paper for the 2010 World Development Report on Climate Change.

One Hundred Questions of Importance to the Conservation of Global Biological Diversity

Abstract: We identified 100 scientific questions that, if answered, would have the greatest impact on conservation practice and policy. Representatives from 21 international organizations, regional sections and working groups of the Society for Conservation Biology, and 12 academics, from all continents except Antarctica, compiled 2291 questions of relevance to conservation of biological diversity worldwide. The questions were gathered from 761 individuals through workshops, email requests, and discussions. Voting by email to short-list questions, followed by a 2-day workshop, was used to derive the final list of 100 questions. Most of the final questions were derived through a process of modification and combination as the workshop progressed. The questions are divided into 12 sections: ecosystem functions and services, climate change, technological change, protected areas, ecosystem management and restoration, terrestrial ecosystems, marine ecosystems, freshwater ecosystems, species management, organizational systems and processes, societal context and change, and impacts of conservation interventions. We anticipate that these questions will help identify new directions for researchers and assist funders in directing funds.

Remittances and the Dutch Disease

Abstract: Using data for El Salvador and Bayesian techniques, we develop and estimate a two-sector dynamic stochastic general equilibrium model to analyze the effects of remittances in emerging market economies. We focus our study on whether rising levels of remittances result in the Dutch disease phenomenon in recipient economies. We find that, whether altruistically motivated or otherwise, an increase in remittances flows leads to a decline in labor supply and an increase in consumption demand that is biased toward nontradables. The increase in demand for nontradables, coupled with higher production costs, results in an increase in the relative price of nontradables, which further causes the real exchange rate to appreciate. The higher nontradable prices serve as an incentive for an expansion of that sector, culminating in reallocation of labor away from the tradable sector. This resource reallocation effect eventually causes a contraction of the tradable sector. A vector autoregression analysis provides results that are consistent with the dynamics of the model.

Addressing human vulnerability to climate change: Toward a ‘no-regrets’ approach

Abstract: This paper presents and applies a conceptual framework to address human vulnerability to climate change. Drawing upon social risk management and asset-based approaches, the conceptual framework provides a unifying lens to examine links between risks, adaptation, and vulnerability. The result is an integrated approach to increase the capacity of society to manage climate risks with a view to reduce the vulnerability of households and maintain or increase the opportunities for sustainable development. We identify ‘no-regrets’ adaptation interventions, meaning actions that generate net social benefits under all future scenarios of climate change and impacts. We also make the case for greater support for community-based adaptation and social protection and propose a research agenda.

Put Your Money Where Your Butt is: A Commitment Contract for Smoking Cessation

Abstract: The authors designed and tested a voluntary commitment product to help smokers quit smoking. The product (CARES) offered smokers a savings account in which they deposit funds for six months, after which they take a urine test for nicotine and cotinine. If they pass, their money is returned; otherwise, their money is forfeited to charity. Eleven percent of smokers offered CARES tookup, and smokers randomly offered CARES were 3 percentage points more likely to pass the 6-month test than the control group. More importantly, this effect persisted in surprise tests at 12 months, indicating that CARES produced lasting smoking cessation.

The Microeconomic Determinants of Emigration and Return Migration of the Best and Brightest: Evidence from the Pacific

Abstract: A unique survey which tracks worldwide the best and brightest academic performers from three Pacific countries is used to assess the extent of emigration and return migration among the very highly skilled, and to analyze, at the microeconomic level, the determinants of these migration choices. Although we estimate that the income gains from migration are very large, not everyone migrates and many return. Within this group of highly skilled individuals the emigration decision is found to be most strongly associated with preference variables such as risk aversion, patience, and choice of subjects in secondary school, and not strongly linked to either liquidity constraints or to the gain in income to be had from migrating. Likewise, the decision to return is strongly linked to family and lifestyle reasons, rather than to the income opportunities in different countries. Overall the data show a relatively limited role for income maximization in distinguishing migration propensities among the very highly skilled, and a need to pay more attention to other components of the utility maximization decision.

Does Regulatory Supervision Curtail Microfinance Profitability and Outreach

Abstract: Regulation allows microfinance institutions to evolve more fully into banks, particularly for institutions aiming to take deposits. But there are potential trade-offs. Complying with regulation and supervision can be costly. The authors examine the implications for the institutions' profitability and their outreach to small-scale borrowers and women. The tests draw on a new database that combines high-quality financial data on 245 of the world's largest microfinance institutions with newly-constructed data on their prudential supervision. Ordinary least squares regressions show that supervision is negatively associated with profitability. Controlling for the non-random assignment of supervision via treatment effects and instrumental variables regressions, the analysis finds that supervision is associated with substantially larger average loan sizes and less lending to women than in ordinary least squares regressions, although it is not significantly associated with profitability. The pattern is consistent with the notion that profit-oriented microfinance institutions absorb the cost of supervision by curtailing outreach to market segments that tend to be more costly per dollar lent. By contrast, microfinance institutions that rely on non-commercial sources of funding (for example, donations), and thus are less profit-oriented, do not adjust loan sizes or lend less to women when supervised, but their profitability is significantly reduced.

Agriculture for Development: Toward a New Paradigm

Abstract: The fundamental role that agriculture plays in development has long been recognized. In the seminal work on the subject, agriculture was seen as a source of contributions that helped induce industrial growth and a structural transformation of the economy. However, globalization, integrated value chains, rapid technological and institutional innovations, and environmental constraints have deeply changed the context for agriculture's role. We argue that a new paradigm is needed that recognizes agriculture's multiple functions for development in that emerging context: triggering economic growth, reducing poverty, narrowing income disparities, providing food security, and delivering environmental services. Yet, governments and donors have neglected these functions of agriculture with the result that agriculture growth has been reduced, 75% of world poverty is rural, sectoral income disparities have exploded, food insecurity has returned, and environmental degradation is widespread, compromising sustainability...

Rethinking School Feeding Social Safety Nets, Child Development, and the Education Sector

Abstract: This review highlights three main findings. First, school feeding programs in low-income countries exhibit large variation in cost, with concomitant opportunities for cost containment. Second, as countries get richer, school feeding costs become a much smaller proportion of the investment in education. For example, in Zambia the cost of school feeding is about 50 percent of annual per capita costs for primary education; in Ireland it is only 10 percent. Further analysis is required to define these relationships, but supporting countries to maintain an investment in school feeding through this transition may emerge as a key role for development partners. Third, the main preconditions for the transition to sustainable national programs are mainstreaming school feeding in national policies and plans, especially education sector plans; identifying national sources of financing; and expanding national implementation capacity. Mainstreaming a development policy for school feeding into national education sector plans offers the added advantage of aligning support for school feeding with the processes already established to harmonize development partner support for the education for all-fast track initiative.

Why Don't We See Poverty Convergence?

Abstract: Average living standards are converging among developing countries and faster growing economies see more progress against poverty. Yet we do not find poverty convergence; countries starting with higher poverty rates do not see higher proportionate rates of poverty reduction. The paper tries to explain why. Analysis of a new dataset suggests that, at given mean consumption, high initial poverty has an adverse effect on consumption growth and also makes growth less poverty-reducing. Thus, for many poor countries, the growth advantage of starting out with a low mean is lost due to a high incidence of poverty. (JEL D63, I31, I32, O15)

Corruption and Cross-Border Investment in Emerging Markets: Firm-Level Evidence

Abstract: This paper studies the joint impact of corruption on the entry mode and volume of inward foreign direct investment (FDI) using a unique firm-level data set. We find that corruption not only reduces inward FDI, but also shifts the ownership structure towards joint ventures. The latter finding supports the view that corruption increases the value of using a local partner to cut through the bureaucratic maze. However, R&D intensive firms are found to favor sole ownership.

The Short-Term Impacts of a Schooling Conditional Cash Transfer Program on the Sexual Behavior of Young Women

Abstract: Recent evidence suggests that conditional cash transfer programs for schooling are effective in raising school enrollment and attendance. However, there is also reason to believe that such programs can affect other outcomes, such as the sexual behavior of their young beneficiaries. Zomba Cash Transfer Program is a randomized, ongoing conditional cash transfer intervention targeting young women in Malawi that provides incentives (in the form of school fees and cash transfers) to current schoolgirls and recent dropouts to stay in or return to school. An average offer of US$10/month conditional on satisfactory school attendance – plus direct payment of secondary school fees – led to significant declines in early marriage, teenage pregnancy, and self-reported sexual activity among program beneficiaries after just one year of program implementation. For program beneficiaries who were out of school at baseline, the probability of getting married and becoming pregnant declined by more than 40 percent and 30 percent, respectively. In addition, the incidence of the onset of sexual activity was 38 percent lower among all program beneficiaries than the control group. Overall, these results suggest that conditional cash transfer programs not only serve as useful tools for improving school attendance, but may also reduce sexual activity, teen pregnancy, and early marriage.

China's Health System and Its Reform : A Review of Recent Studies

Abstract: This paper provides a survey of the recent empirical research on China's 'old' health system (i.e. prior to the spate of reforms beginning in 2003). It argues that this research has enhanced our understanding of the system prior to 2003, in some cases reinforcing conclusions (e.g. the demand-inducement associated with perverse incentives) while in other cases suggesting a slightly less clear storyline (e.g. the link between insurance and out-of-pocket spending). It also concludes that the research to date points to the importance of careful evaluation of the current reforms, and its potential to modify policies as the rollout proceeds. Finally, it argues that the research on the pre-2003 system suggests that while the recently announced further reforms are a step in the right direction, the hoped-for improvements in China's health system will far more likely occur if the reforms become less timid in certain key areas, namely provider payments and intergovernmental fiscal relations.

Put Your Money Where Your Butt Is: A Commitment Contract for Smoking Cessation

Abstract: The authors designed and tested a voluntary commitment product to help smokers quit smoking. The product (CARES) offered smokers a savings account in which they deposit funds for six months, after which they take a urine test for nicotine and cotinine. If they pass, their money is returned; otherwise, their money is forfeited to charity. Eleven percent of smokers offered CARES tookup, and smokers randomly offered CARES were 3 percentage points more likely to pass the 6-month test than the control group. More importantly, this effect persisted in surprise tests at 12 months, indicating that CARES produced lasting smoking cessation.

Climate volatility deepens poverty vulnerability in developing countries

Abstract: Extreme climate events could influence poverty by affecting agricultural productivity and raising prices of staple foods that are important to poor households in developing countries. With the frequency and intensity of extreme climate events predicted to change in the future, informed policy design and analysis requires an understanding of which countries and groups are going to be most vulnerable to increasing poverty. Using a novel economic-climate analysis framework, we assess the poverty impacts of climate volatility for seven socio-economic groups in 16 developing countries. We find that extremes under present climate volatility increase poverty across our developing country sample—particularly in Bangladesh, Mexico, Indonesia, and Africa—with urban wage earners the most vulnerable group. We also find that global warming exacerbates poverty vulnerability in many nations.

The short-term impacts of a schooling conditional cash transfer program on the sexual behavior of young women.

Abstract: This brief summarizes the results of a gender impact evaluation study, entitled The short-term impacts of a schooling conditional cash transfer program on the sexual behavior of young women, conducted during the time period 2007 to 2009 in Malawi. The study observed that recent evidence suggests that conditional cash transfer (CCT) programs for schooling are effective in raising school enrolment and attendance. In addition, the incidence of the onset of sexual activity was 38 percent lower among all program beneficiaries than the control group. Overall, these results suggest that CCT programs not only serve as useful tools for improving school attendance but may also reduce sexual activity, teen pregnancy, and early marriage. The program led to large statistically significant increases in enrollment, particularly among those who were not enrolled at baseline. The program reduced dropout rates by 35 percent, from 10.9 percent among control to 7 percent among the treated. The program reduced the propensity to get married for those who dropped out, but had no effect on girls who remained in school. Funding for the study derived from Spanish Impact Evaluation Fund.