Conditional cash transfers (CCTs) have recently received considerable attention as a potentially innovative and effective
approach to the prevention of HIV/AIDS. We evaluate a conditional cash transfer program in rural Malawi which offered financial
incentives to men and women to maintain their HIV status for approximately one year. The amounts of the reward ranged from
zero to approximately 3–4 months wage. We find no effect of the offered incentives on HIV status or on reported sexual behavior.
However, shortly after receiving the reward, men who received the cash transfer were 9 percentage points more likely and women were 6.7 percentage points less likely to engage in risky sex. Our analyses therefore question the “unconditional effectiveness” of CCT program for HIV prevention:
CCT Programs that aim to motivate safe sexual behavior in Africa should take into account that money given in the present
may have much stronger effects than rewards offered in the future, and any effect of these programs may be fairly sensitive
to the specific design of the program, the local and/or cultural context, and the degree of agency an individual has with
respect to sexual behaviors.
This article generalizes and extends the earlier analyses of Cuddington (1993) and Cuddington and Hancock (forthcoming) by
incorporating the presence of underemployment and dual labor markets—considerations that seem particularly important when
assessing the likely impact of AIDS in many African countries. The dual-economy simulations of the economic impact of AIDS using Tanzanian data suggest that the macroeconomic consequences of the epidemic are of the same order of magnitude as those
obtained using a single-sector, full-employment model: gross domestic product (GDP) is 15 to 25 percent smaller by 2010 than it would have been without AIDS, and per capita GDP is 0 to 10 percent smaller. The output loss from AIDS in the dual-economy framework is roughly the same as the output gain achievable through policies designed to increase labor
market flexibility. The exercise is crude, but it suggests that meaningful efforts at economic reform in economies devastated
by AIDS may at least ameliorate some of the negative economic effects of the epidemic, although they would certainly not offset its
personal and social costs.
The 1956 Solow growth model is expanded to study the effects of the AIDS epidemic on the growth path of the economy and per capita GDP (gross domestic product). AIDS and no-AIDS scenarios are compared analytically and via simulations based upon Tanzanian demographic and macroeconomic data. The 1st section discusses various channels through which AIDS might affect the macroeconomy and describes its expected demographic impact in Tanzania. The model incorporating these key channels is then developed in the 2nd section. It is employed specifically to discuss the likely effect on the ratio of capital to labor and on output per capita as the economy moves from a no-AIDS situation toward a new steady state in which AIDS is assumed to be endemic. A simple simulation model in the 3rd section forecasts the time paths of macro aggregates in Tanzania as the prevalence of AIDS increases. These time paths are then compared with simulated results for a no-AIDS situation to determine the severity of the impact of the disease on the growth path of the Tanzanian economy, Bulatao's 1990 demographic scenarios are input in the simulated version of the model. The 4th section concludes by considering the policy implications of the analysis. The analysis indicates that without decisive policy action AIDS may reduce the GDP of Tanzania in the year 2010 by 15-25% over what it would be if AIDS did not exist. Per capita income levels are expected to fall by 0-10% by the year 2010.
The economic determinants of the demand for infant delivery services in the Cebu region of the Philippines are examined in
this article. Although user charges can be a significant source of revenues to pay for maternal and child health services,
important policy questions are whether charging for such services will significantly deter use, and how service quality can
Price and income elasticities of the demand for types of services are computed, and simulations are carried out on the effects
of different delivery service characteristics on the type of delivery method chosen.
The results suggest that increasing the availability of modern public practitioners and facilities in rural areas, increasing
the hours that health care facilities are open, making drugs available, and providing trained midwives for delivery will increase
the use of modern delivery services. Perhaps the most important finding—which suggests an area for further investigation—is
the apparent relative insensitivity of the choice of delivery service to changes in prices and household income in our model.
This article examines individual, household, and community characteristics that may affect fertility in contemporary Côte
d'Ivoire and Ghana and the relationship between child mortality and fertility. It was not possible to reject the null hypothesis
that child mortality is exogenous. Treating child mortality as exogenous, fertility responds directly to child mortality,
but by a smaller proportion than estimated in studies of East Asia and Latin America. Increases in female education and urbanization
are likely to contribute to declines in fertility in both countries, but economic growth without these structural changes
is not yet strongly related to lower fertility.
This article analyzes three criteria for labor market integration between Mexico and the United States before and since the North American Free Trade Agreement: the responsiveness of Mexican wages to US wage shocks, the speed at which relative wages return to a long-run differential, and changes in the rate of convergence of absolute wages. Tests for increased integration using these three criteria generate mixed results, which are then explored by directly incorporating trade, foreign direct investment ( fdi ), and migration. The results suggest that trade and fdi did in fact positively contribute to integration but that the increase in border enforcement depressed Mexican wages, masking the positive benefits. Copyright 2005, Oxford University Press.
This article analyzes the World Bank's experience with project evaluation for a sample of l,015 projects by comparing estimated rates of return at appraisal with reestimated rates of return when construction works are completed, usually 5 to 10 years after appraisal. The analysis highlights the high degree of uncertainty in project analysis. A wide range of variables has been introduced to explain the observed divergence in appraisal and reestimated rates of return, but only a relatively small part of the divergence can be explained, even with the benefit of hindsight. Project analysis thus has to cope with a large degree of uncertainty, which the traditional methods of project evaluation and selection have not been able to reduce. Copyright 1992 by Oxford University Press.
Remittances are a substantial source of external financing for developing countries that influence many aspects of their development. Though research has shown that remittances are both expensive and price sensitive, little is known about what explains their price. Newly gathered data across 119 country pairs or corridors are used to explore the factors associated with the price of remittances. Corridors with larger numbers of migrants and more competition among providers are found to exhibit lower prices for remittances, when average prices across all types of remittance service providers are considered. Corridors with lower barriers to access banking services and broader regulation of remittance service providers also have lower prices. Remittance prices are higher in richer corridors and in corridors with greater bank participation in the remittance market. Few significant differences emerge when results are compared across banks and, separately, across money transfer operators. However, estimations for Western Union, a leading player in the remittances business, suggest that its prices are less sensitive to competition. Copyright , Oxford University Press.
Analysis of 14 household surveys from 13 developing countries suggests that 1–2 percent of the population have disabilities.
Adults with disabilities typically live in poorer than average households: disability is associated with about a 10 percentage
point increase in the probability of falling in the two poorest quintiles. Much of the association appears to reflect lower
educational attainment among adults with disabilities. People of ages 6–17 with disabilities do not live in systematically
wealthier or poorer households than other people of their age, although in all countries studied they are significantly less
likely to start school or to be enrolled at the time of the survey. The order of magnitude of the school participation deficit
associated with disability—which is as high as 50 percentage points in 3 of the 13 countries—is often larger than deficits
related to other characteristics, such as gender, rural residence, or economic status differentials. The results suggest a
worrisome vicious cycle of low schooling attainment and subsequent poverty among people with disabilities in developing countries.
This article presents data on the evolution of top incomes and wages for 1922--2000 in India using individual tax return data. The data show that the shares of the top 0.01 percent, 0.1 percent, and 1 percent in total income shrank substantially from the 1950s to the early to mid-1980s but then rose again, so that today these shares are only slightly below what they were in the 1920s and 1930s. This U-shaped pattern is broadly consistent with the evolution of economic policy in India: From the 1950s to the early to mid-1980s was a period of "socialist" policies in India, whereas the subsequent period, starting with the rise of Rajiv Gandhi, saw a gradual shift toward more probusiness policies. Although the initial share of the top income group was small, the fact that the rich were getting richer had a nontrivial impact on the overall income distribution. Although the impact is not large enough to fully explain the gap observed during the 1990s between average consumption growth shown in National Sample Survey--based data and the national accounts--based data, it is sufficiently large to explain a nonnegligible part of it (20--40 percent). Copyright 2005, Oxford University Press.
This article describes an annual database of physical infrastructure stocks for a cross-section of 152 countries for 1950–95.
The database includes estimates of six measures of infrastructure: the number of telephones, the number of telephone main
lines, kilowatts of electricity-generating capacity, kilometers of total roads, kilometers of paved roads, and kilometers
of railway lines. Both raw and manipulated data sets, in which series have been linked to overcome changes in definition and
coverage, are reported. Some measures of infrastructure quality, such as the percentage of roads in poor condition, the percentage
of local telephone calls that do not go through, the percentage of diesel locomotives available for use, and the percentage
of electricity lost from the distribution system, are included. The data on all series except total roads are of reasonably
good quality and should prove useful to researchers.
The article also presents regression results relating stocks of infrastructure to population, per capita gross domestic product,
land area, and level of urbanization. It shows that stocks of telephones, electricity-generating capacity, and paved roads
tend to increase proportionately with population and more than proportionately with per capita gross domestic product. Both
the length of total roads and the length of total rail lines rise with country size and are relatively insensitive to population
Global matrices of bilateral migrant stocks spanning 1960-2000 are presented, disaggregated by gender and based primarily on the foreign-born definition of migrants. More than one thousand census and population register records are combined to construct decennial matrices corresponding to the five census rounds between 1960 and 2000. For the first time, a comprehensive picture of bilateral global migration over the second half of the 20th century emerges. The data reveal that the global migrant stock increased from 92 million in 1960 to 165 million in 2000. Quantitatively, migration between developing countries dominates, constituting half of all international migration in 2000. When the partition of India and the dissolution of the Soviet Union are accounted for, migration between developing countries is remarkably stable over the period. Migration from developing to developed countries is the fastest growing component of international migration in both absolute and relative terms. The United States has remained the most important migrant destination in the world, home to one fifth of the world's migrants and the top destination for migrants from some 60 sending countries. Migration to Western Europe has come largely from elsewhere in Europe. The oil-rich Persian Gulf countries emerge as important destinations for migrants from the Middle East and North Africa and South and Southeast Asia. Finally, although the global migrant stock is predominantly male, the proportion of female migrants increased noticeably between 1960 and 2000. The number of women rose in every region except South Asia. Copyright , Oxford University Press.
For decades, agricultural price and trade policies in Sub-Saharan Africa hampered farmers' contributions to economic growth
and poverty reduction. This paper draws on a modification of so-called trade restrictiveness indexes to provide theoretically
precise partial-equilibrium indicators of the trade and welfare effects of agricultural policy distortions to producer and
consumer prices in 19 African countries since 1961. Annual time series estimates are provided not only by country but also,
for the region, by commodity and by policy instrument. The findings reveal the considerable extent of policy reform over the
past two decades, especially through reducing export taxation; but they also reveal that national policies continue to reduce
trade and economic welfare much more in Sub-Saharan Africa than in Asia or Latin America.
Some governments facing high rates of inflation have adopted wage and exchange rate indexation in an attempt to offset the
costs to workers and exporters. But indexation based on past values of inflation is considered to be a powerful source of
current and future inflation that undermines fiscal and monetary stringency designed to reduce inflation. Brazil indexed wages
and the exchange rate for more than twenty years, and we examine Brazilian evidence on these issues. We derive a transfer
function and estimate time-varying parameters to allow for the changes in indexing policy over the period. We find that the
increased frequency of wage and exchange rate adjustment amplified the effect of past inflation and made it less sensitive
to monetary and fiscal policies and more vulnerable to domestic agricultural supply shocks. Indexing did not eliminate the
effectiveness of monetary policy, however, which retained a significant effect throughout the indexation period.
The economic theory of “Dutch disease” is extended and applied to the 1976–79 coffee boom in Kenya in this article. When a
commodity boom is perceived as temporary, a large fraction will tend to be saved out of transient income. The spending effect
of the boom is supplemented by relative price changes resulting from capital stock increases. In the presence of foreign exchange
and import controls, the benefits of a sudden export price increase may be transferred intersectorally. Using a general equilibrium
model, it is estimated that in Kenya the benefits of the boom were largely transferred from coffee growers to urban groups.
The database described in this article provides researchers with a broad set of data on trade, production, and protection for 28 manufacturing sectors at the three-digit level of the International Standard Industrial Classification, Revision 2. The database covers up to 100 developing and developed countries over the period 1976--2004, but data availability varies by country and year. The trade, production, and protection database is available online and can be freely accessed through the World Bank trade website. Copyright 2007, Oxford University Press.
Eastern Europe experienced an economic crisis between 1978 and 1987. Declining income led to substantial increases in poverty
rates in Poland and Yugoslavia, while poverty in Hungary remained at about the same level as before the crisis. In all three
countries urban poverty increased, as the economic condition of state sector workers deteriorated to a much greater extent
than that of agricultural and mixed households. The increased poverty was entirely explained by declining income, because
the overall income distribution did not change or in some cases improved.
There is considerable uncertainty and debate about changes in poverty and living standards that are likely to occur in an
economy in transition from centrally planned allocations to a more market-oriented basis, but a dearth of evidence and rigorous
analysis remains. There is a tradeoff between policies that provide a guaranteed living standard with low inequality, albeit
at a low income level, and systems that provide much higher monetary incomes, but create greater income variability and vulnerability,
particularly during periods of high inflation. The Chinese experience following the economic reforms of 1978 highlights this
dilemma, and our analysis strongly suggests the need for appropriate social safety nets if rapid growth is to be achieved
without the poor and vulnerable bearing the costs of such growth.
Indonesia has made great progress during the past fifteen years in enhancing the command of the poor over privately provided goods, such as food, clothing, and housing. Has similar progress been made in improving their access to publicly provided social services? The article looks at how the use of health services and the incidence of subsidies in the health sector varied across socioeconomic groups in Indonesia in 1987. It also examines how the distributions of utilization and subsidies altered between 1978 and 1987. The findings indicate that changes in utilization patterns and in the incidence of subsidies have been pro-poor. Disparities in access and utilization have diminished. However, public spending on health care is not yet well targeted. Copyright 1994 by Oxford University Press.
This article employs established techniques from the spatial economics literature to identify regional patterns of income
and growth in Mexico and to examine how they have changed over the period spanned by trade liberalization and how they may
be linked to the income divergence observed following liberalization. The article first shows that divergence has emerged
in the form of several income clusters that only partially correspond to traditional geographic regions. Next, when regions
are defined by spatial correlation in incomes, a “south” clearly exists, but the “north” seems to be restricted to the states
directly on the U.S. border and there is no “center” region. Overall, the principal dynamic of both the increased spatial
dependency and the increased divergence lies not on the border but in the sustained underperformance of the southern states,
starting before the North American Free-Trade Agreement, and to a lesser extent in the superior performance of an emerging
convergence club in the north-center of the country.
This article employs established techniques from the spatial economics literature to identify regional patterns of income and growth in Mexico and to examine how they have changed over the period spanned by trade liberalization and how they may be linked to the income divergence observed following liberalization. The article first shows that divergence has emerged in the form of several income clusters that only partially correspond to traditional geographic regions. Next, when regions are defined by spatial correlation in incomes, a "south" clearly exists, but the "north" seems to be restricted to the states directly on the U.S. border and there is no "center" region. Overall, the principal dynamic of both the increased spatial dependency and the increased divergence lies not on the border but in the sustained underperformance of the southern states, starting before the North American Free-Trade Agreement, and to a lesser extent in the superior performance of an emerging convergence club in the north-center of the country. Copyright 2005, Oxford University Press.
How does the relationship between earnings and schooling change with the introduction of comprehensive economic reform? This
article sheds light on this question using a unique data set and procedure to reduce sample-selection bias. The evidence is
from consistently coded, nonretrospective data for about 4 million Hungarian wage earners. Returns to skill increased 75 percent
from 1986 to 2004 (that is, during the period stretching from communism to full membership in the European Union). The winners
were those with a college or university education and those employed in the services sector (which here excludes those in
public services). The reform losers were those in construction and agriculture, those with only a primary or vocational education
(who experienced a decline in returns to their education), and younger workers who acquired most of their education after
the main reforms were in place.
After rising during most--but not all--of the 1960-85 period, inequality in Chile seems to have stabilized since around 1987. Following the stormy period of economic and political reforms of the 1970s and 1980s, no statistically significant Lorenz dominance results could be detected since 1987. Scalar measures of inequality confirm this picture of stability, but suggest a slight change in the shape of the density function, with some compression at the bottom being "compensated for" by a stretching at the top. As inequality remained broadly stable, sustained economic growth led to substantial welfare improvements and poverty reduction, according to a range of measures and with respect to three different poverty lines. Poverty mixed stochastic dominance tests confirm this result. All of these findings are robust to different choices of equivalence scales. Copyright 1999 by Oxford University Press.
Moving beyond the simple comparisons of averages typical of most analyses of household income shocks, this article employs quantile analysis to generate a complete distribution of such shocks by type of household during the 1995 crisis in Mexico. It compares the distributions across normal and crisis periods to see whether observed differences were due to the crisis or are intrinsic to the household types. Alternatively, it asks whether the distribution of shocks during normal periods was a reasonable predictor of vulnerability to income shocks during crises. It finds large differences in the distribution of shocks by household types both before and during the crisis but little change in their relative positions during the crisis. The impact appears to have been spread fairly evenly. Households headed by people with less education (poor), single mothers, or people working in the informal sector do not appear to experience disproportionate income drops either in normal times or during crises. Copyright 2004, Oxford University Press.
Policymakers working on enterprise restructuring should take a close look at Hungary's experience with bankruptcy reform since
1992. This article provides detailed data on a randomly selected stratified sample of actual cases filed in the first two
years after the enactment of the law. These data are supplemented with information obtained from interviews with judges, liquidators,
and firms involved in the bankruptcy process to give an overall picture of the process in the first two years of its implementation.
The bankruptcy process in Hungary has indisputably spurred institution building in the courts, the trustee profession, and
the banks. It may also have succeeded broadly in separating viable from unviable firms. It did little, however, to further
either deep restructuring or the exit of ailing firms. The changes in incentives and institutions that are needed to make
bankruptcy work in transition economies invariably take time. Hungary's initiative, albeit imperfect, was a bold start toward
Recent studies argue that the spread-adjusted Taylor rule (STR), which includes a response to the credit spread, replicates monetary policy in the United State. We show (1) STR is a theoretically optimal monetary policy under heterogeneous loan interest rate contracts in both discretionay and commitment monetary policies, (2) however, the optimal response to the credit spread is ambiguous given the financial market structure in theoretically derived STR, and (3) there, a commitment policy is effective in narrowing the credit spread when the central bank hits the zero lower bound constraint of the policy rate.
Economic transition in Russia was accompanied by a precipitous decline in real income for most of the population. This article analyzes how the decline affected people's perception of the minimum level of income needed to make ends meet. Individual-level data collected from repeated surveys between March 1993 and September 1996 reveal that the elasticity of subjective minimum income with respect to actual median income was 1.5 or that people's subjective estimate of the minimum income for an adult Russian fell about 1.7 percent each month. This sharp reduction in the face of a decrease in real income meant that the percentage of the population who felt that they were poor declined, even though poverty remained at a very high level (more than 60 percent of the population) throughout the period. This self-perception is in marked contrast to an "objective" measure of poverty: the percentage of the population whose income was less than a given real poverty line rose. Copyright 1999 by Oxford University Press.
The 1997 Indonesian financial crisis resulted in severe economic dislocation and political upheaval, and the detrimental consequences for economic welfare, physical health, and child education have been previously established in numerous studies. We also find the crisis adversely impacted population psychological well-being. We document substantial increases in several different dimensions of psychological distress among male and female adults across the entire age distribution over the crisis period. In addition, the imprint of the crisis can be seen in the differential impacts of the crisis on low education groups, the rural landless, and residents in those provinces that were hit hardest by the crisis. Elevated levels of psychological distress persist even after indicators of economic well-being such as household consumption had returned to pre-crisis levels suggesting long-term deleterious effects of the crisis on the psychological well-being of the Indonesian population.
The authors present estimates of six dimensions of governance covering 199 countries and territories for four time periods: 1996, 1998, 2000, and 2002. These indicators are based on several hundred individual variables measuring perceptions of governance, drawn from 25 separate data sources constructed by 18 different organizations. The authors assign these individual measures of governance to categories capturing key dimensions of governance and use an unobserved components model to construct six aggregate governance indicators in each of the four periods. They present the point estimates of the dimensions of governance as well as the margins of errors for each country for the four periods. The governance indicators reported here are an update and expansion of previous research work on indicators initiated in 1998 (Kaufmann, Kraay, and Zoido-Lobat 1999a,b and 2002). The authors also address various methodological issues, including the interpretation and use of the data given the estimated margins of errors.
Six dimensions of governance are estimated covering 199 countries and territories for four periods: 1996, 1998, 2000, and 2002. The indicators are based on several hundred individual variables measuring perceptions of governance drawn from 25 data sources constructed by 18 organizations. These individual measures are assigned to categories capturing key dimensions of governance. An unobserved-components model is used to construct six aggregate governance indicators in each of the four periods. Point estimates of the dimensions of governance are provided as well as the margins of errors for each country for the four periods. Methodological issues are also addressed, including tests for potential biases, and the interpretation and use of the data, given the estimated margins of errors for the indicators. The data and a Web-based graphical interface are available online at www.worldbank.org/wbi/governance/govdata2002/index.html . Copyright 2004, Oxford University Press.
The literature on the correlation between exports and economic development runs deep into the history of economic thought and permeates policy debates. This paper studies the microeconomic structure of export growth in Costa Rica, with special emphasis on the extensive margin of trade, encompassing new exporting firms, new products, and new export markets, as well as the unit values of new versus incumbent products. The data suggest that few new firms survive the test of exporting -- more than 40 percent of firms exit export activities after one year -- and this firm turnover is associated with a steady deterioration of export unit values (prices). Furthermore, most new export products are associated with product switching by incumbent exporting firms. The typical new product introduced by incumbent firms tended to be priced at about 90 percent of the unit values of incumbent products. In contrast, the usual suspected obstacles to export growth, such as the inability of small firms to enter exporting activities or to grow their exports, appear to be important sources of export growth. In fact, the smallest exporting firms experienced the fastest growth in their export values. Some of these results are compared withthose from other countries that have been examined in related literature.
This case study of fiscal sustainability in Turkey after the crisis in 2001 reviews and extends quantitative approaches to
fiscal sustainability analysis and brings them together in a user-friendly tool applicable in a data-sparse environment. It
combines a dynamic simulations approach with a steady-state consistency approach. It also incorporates user-defined stress
tests and stochastic simulations to deal with uncertainty. And it derives the future distribution of debt-output ratios, evaluating
the fiscal adjustment required to stabilize them. Value at Risk analysis shows that considerable risks remain unless explicit
feedback rules from debt surprises to the primary surplus are implemented.
Life insurance has become an increasingly important part of the financial sector over the past 40 years, providing a range of financial services for consumers and becoming a major source of investment in the capital market. But what drives the large variation in life insurance consumption across countries remains unclear. Using a panel with data aggregated at different frequencies for 68 economies in 1961--2000, this article finds that economic indicators--such as inflation, income per capita, and banking sector development--and religious and institutional indicators are the most robust predictors of the use of life insurance. Education, life expectancy, the young dependency ratio, and the size of the social security system appear to have no robust association with life insurance consumption. The results highlight the importance of price stability and banking sector development in fully realizing the savings and investment functions of life insurance in an economy. Copyright 2003, Oxford University Press.
Following the endorsement by the international community of the Millennium Development Goals, there has been an increasing demand for practical methods for steadily tracking poverty. An economically intuitive and inexpensive methodology is explored for doing so in the absence of regular, comparable data on household consumption. The minimum data requirements for this methodology are the availability of a household budget survey and a series of surveys with a comparable set of asset data also contained in the budget survey. This method is illustrated using a series of Demographic and Health Surveys for Kenya. Copyright The Author 2007. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / the world bank . All rights reserved. For permissions, please e-mail: firstname.lastname@example.org, Oxford University Press.
Unannounced visits were made to health clinics in Bangladesh to determine what proportion of medical professionals were at their assigned post. Averaged over all job categories and types of facility, the absentee rate was 35 percent. The absentee rate for physicians was 40 percent at the larger clinics and 74 percent at the smaller subcenters with a single physician. Whether the medical provider lives near the health facility, the opportunity cost of the provider's time, road access, and rural electrification are highly correlated with the rate and pattern of absenteeism. Copyright 2004, Oxford University Press.
Little is known in developing country environments about how a child's cognitive skills manifested in the first years of schooling are related to later educational success, because the panel data needed to analyze this question have been lacking. This study takes advantage of a unique data set from Senegal that combines test score data for children from the second grade with information on their subsequent school progression from a follow-up survey conducted seven years later. Measures of skills from early primary school, corrected for measurement error using multiple test observations per child, are strongly positively associated with later school progression. A plausible interpretation is that parents invest more in a child's education when the returns to doing so are higher. The results point to the need for remedial policies to target lagging students early on to reduce early dropout. Grade repetition policies target poorly performing students and are pervasive in Francophone Africa. Using variation across schools in test score thresholds for promotion to identify the effects of second-grade repetition, the analysis shows that repeating students are more likely to leave school before completing primary school than students with similar ability who are not held back, pointing to the need for alternative measures to improve the skills of lagging children. Copyright The Author 2010. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / the world bank . All rights reserved. For permissions, please e-mail: email@example.com, Oxford University Press.
A strong theoretical argument for focusing on access to finance is that financial market imperfections can result in large
inefficiencies, as firms with productive investment opportunities underinvest. Lack of access to finance is a frequent complaint
of microenterprises, which account for a large share of employment in developing countries. However, assessing the extent
to which a lack of capital affects their business profits is complicated by the fact that business investment is likely to
be correlated with a host of unmeasured characteristics of the owner and firm, such as entrepreneurial ability and demand
shocks. In a randomized experiment that gave cash and in-kind grants to small retail firms, providing an exogenous shock to
capital, the shock generated large increases in profits, with the effects concentrated among firms that were more financially
constrained. The estimated return to capital was at least 20–33 percent a month—three to five times higher than market interest
The effective market access granted to textiles and apparel under the North American Free Trade Agreement (nafta) is estimated, taking into account the presence of rules of origin. First, estimates are provided of the effect of tariff
preferences combined with rules of origin on the border prices of Mexican final goods exported to the United States and of
U.S. intermediate goods exported to Mexico, based on eight-digit Harmonized System tariff-line data. A third of the estimated
rise in the border price of Mexican apparel products is found to compensate for the cost of complying with nafta’s rules of origin, and nafta is found to have raised the price of U.S. intermediate goods exported to Mexico by around 12 percent, with downstream rules
of origin accounting for a third of that increase. Second, simulations are used to estimate welfare gains for Mexican exporters
from preferential market access under nafta. The presence of rules of origin is found to approximately halve these gains.
Recent data compilations show that many poor and nonpoor people in many developing countries face a high degree of financial exclusion and high barriers in access to finance. Theory and empirical evidence point to the critical role that improved access to finance has in promoting growth and reducing income inequality. An extensive literature shows the channels through which finance promotes enterprise growth and improves aggregate resource allocation. There is less evidence at the household level, however, and on the effectiveness of policies to overcome financial exclusion. The article summarizes recent efforts to measure and analyze the impact of access to finance and discusses the unfinished research agenda. Copyright The Author 2008. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / the world bank . All rights reserved. For permissions, please e-mail: firstname.lastname@example.org, Oxford University Press.
The Indonesian Social Safety Net health card program was implemented in response to the economic crisis that hit Indonesia in 1997, to preserve access to health care services for the poor. Health cards were allocated to poor households, entitling them to subsidized care from public health care providers. The providers received budgetary support to compensate for the extra demand. This article focuses on the effect of the program on primary outpatient health care use, disentangling the direct effect of allocating health cards from the indirect effect of government transfers to health care facilities. For poor health card owners the program resulted in a net increase in use of outpatient care, while for nonpoor health card owners the program resulted mainly in a substitution from private to public health care. The largest effect of the program seems to have come from a general increase in the supply of public services resulting from the budgetary support to public providers. These benefits seem to have been captured mainly by the nonpoor. As a result, most of the benefits of the health card program went to the nonpoor, even though distribution of the health cards was propoor. The results suggest that had the program, in addition to targeting the poor, established a closer link between provision of services to the target groups and funding, the overall results would have been more propoor. Copyright 2007, Oxford University Press.
A recent, comprehensive database is used to investigate the link between inward foreign direct investment (FDI) and innovation activity in China. The results of the analysis suggest that private and collectively owned firms with foreign capital participation and those with good access to domestic bank loans innovate more than other firms do. Among enterprises not owned by the state, inward FDI at the sectoral level is positively associated with domestic innovative activity only among firms that engage in their own research and development or that have good access to domestic finance. At the sector level the effect of inward FDI into technology transfer is distinguished from the effect on domestic credit opportunities. FDI affecting credit is of little significance for state-owned enterprises and is independent of their access to finance. In contrast, better access to credit is an important channel through which FDI affects the innovation of domestic private and collectively owned enterprises. Copyright The Author 2008. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / the world bank . All rights reserved. For permissions, please e-mail: email@example.com, Oxford University Press.
Information from 209 banks in 62 countries is used to develop new indicators of barriers to banking services around the world,
show their correlation with measures of outreach, and explore their association with bank and country characteristics suggested
by theory as potential determinants. Barriers such as minimum account and loan balances, account fees, and required documents
are associated with lower levels of banking outreach. While country characteristics linked with financial depth, such as the
effectiveness of creditor rights, contract enforcement mechanisms, and credit information systems, are weakly correlated with
barriers, strong associations are found between barriers and measures of restrictions on bank activities and entry, bank disclosure
practices and media freedom, and development of physical infrastructure. In particular, barriers are higher in countries where
there are more stringent restrictions on bank activities and entry, less disclosure and media freedom, and poorly developed
physical infrastructure. Also, barriers for bank customers are higher where banking systems are predominantly government-owned
and are lower where there is more foreign bank participation. Larger banks seem to impose lower barriers on customers, perhaps
because they are better positioned to exploit economies of scale and scope.
This article uses a multisector, multicountry, computable general equilibrium model to examine Chile's strategy of "additive regionalism"--negotiating bilateral free trade agreements with all of its significant trading partners. Taking Chile's regional arrangements bilaterally, only its agreements with Northern partners provide sufficient market access to overcome trade diversion costs. Due to preferential market access, however, additive regionalism is likely to provide Chile with gains that are many multiples of the static welfare gains from unilateral free trade. At least one partner country loses from each of the regional agreements considered, and excluded countries as a group always lose. Gains to the world from global free trade are estimated to be vastly larger than gains from any of the regional arrangements. Copyright 2002, Oxford University Press.
A recent, comprehensive database is used to investigate the link between inward foreign direct investment (FDI) and innovation
activity in China. The results of the analysis suggest that private and collectively owned firms with foreign capital participation
and those with good access to domestic bank loans innovate more than other firms do. Among enterprises not owned by the state,
inward FDI at the sectoral level is positively associated with domestic innovative activity only among firms that engage in
their own research and development or that have good access to domestic finance. At the sector level the effect of inward
FDI into technology transfer is distinguished from the effect on domestic credit opportunities. FDI affecting credit is of
little significance for state-owned enterprises and is independent of their access to finance. In contrast, better access
to credit is an important channel through which FDI affects the innovation of domestic private and collectively owned enterprises.
Immigrants from countries with more effective institutions are more likely than other immigrants to have a relationship with a bank and to use formal financial markets more extensively. The evidence that a country's institutional environment shapes beliefs--and by extension the use of financial services--provides support for policies that focus on institutional reforms in promoting financial access. After holding wealth, education, and other factors constant, the impact of institutional quality in the country of origin affects the financial market participation of all immigrant groups except those who have lived in the United States for more than 28 years. These findings are robust to alternative measures of institutional effectiveness, to controlling for additional country of origin characteristics, and to various methods for addressing potential biases caused by immigrant self-selection. Copyright The Author 2008. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / the world bank . All rights reserved. For permissions, please e-mail: firstname.lastname@example.org, Oxford University Press.
This article examines the impacts of China's accession to the World Trade Organization on prices in its agricultural sector. The analysis uses a new methodology to estimate nominal protection rates in China's agricultural sector before its accession to the WTO. These new measures account for differences in commodity quality within China and between China and world markets. The analysis shows that some of China's agricultural commodities are well above world market prices and others are well below. The article also assesses market integration and efficiency in China. It finds high degrees of integration between coastal and inland markets and between regional and village markets. The remarkable improvements in market performance in recent years mean that if increased imports or exports affect China's domestic price near the border, producers throughout most of China will feel the price shifts. Copyright 2004, Oxford University Press.
This article is concerned with the interaction of regulated efficiency and World Trade Organization (WTO) accession and its impact on China's motor vehicle sector. The analysis is conducted using a 23 sector--25 region computable general equilibrium model. Regulatory reform and internal restructuring are found to be critical. Restructuring is represented by a cost reduction following from consolidation and rationalization that moves costs toward global norms. Without restructuring, WTO accession means a surge of final imports, though imports of parts could well fall as production moves offshore. However, with restructuring, the final assembly industry can be made competitive by world standards, with a strengthened position for the industry. Copyright 2004, Oxford University Press.