-13ss5 IS TiHIJE \VOIt0LD IB ANIK kIESIEARCHI PR...OGIRAM 1199A - ABSTRACTS OF CURRENT STUDIES THE WORLD BANK RESEARCH PROGRAM 1994 Abstracts of Current Studies The World Bank Washington, DC World Bank Research-Objectives and Definition The World Bank's research program has four basic objectives: * To support all aspects of Bank operations, including the assessment of development progress in member counties * To broaden understanding of the development process * To improve the Bank's capacity to give policy advice to its members * To assist in developing indigenous research capacity in member countries. Research at the Bank encompasses analytic work designed to produce results with wide applicabil- ity across countries or sectors. Bank research, in contrast to academic research, is directed toward recognized and emerging policy issues and is focused on yielding better- policy advice. Although motivated by policy problems, Bank research addresses longer-term concerns rather than the imme- diateneedsofapartcularBarnklendingoperationorof aparticularcountryorsectorreportActivities classed as research at the Bank do not, therefore, include the economic and sector work and policy analysis carried outby Bank staff to support operations in particular countries. Economic and sector work and policy studies take the product of research and adapt it to specific projects or country setings, whereas Bank research contrbutes to the intellectual foundations of future lending opera- lions and policy advice Both activities-research and economic and sector work-e critical to the design of successful projects and effective policy. Copyright e 1994 by the Intenational Bank for Reconstuction and Development/The World Bank 1818 H Street, NW, Washington, DC 20433, US.A. AR rights reserved. First printing September 1994 Manufachtred in the United States of America -!SN 0258-3143 ISBN 0-8213-2923-5 CONTENTS - Introducton 1 Studies by Subject Area 3 Abstracts of Current Studies 11 Poverty and Socdal Welfare 13 labor Markets and Education 35 Environmentally Sstainable Development 51 Inrastucture and Usban Delopment 71 Macroeconomics 82 hternationeal Ecoomics 93 Domestic Fine and Capta Markes 119 Transitional Economies 129 Private Sector Development and Public Sedor Mm mt 15 Bank REseaur Output 175 Index of Studies by Department 207 INTRODUCTION Countries the world over regularly confront changes cent of funding comes from departments, which deter- and challenges in their envirounent, and developing mnine research priorities according to their mandate and countries are no exception. But unlike industrial coun- work program. Another 10 percent of funding is pro- tries, which have a greater margin for error, developing vided by other agencies, usually as cofinancing of re- countries can suffer enormously-both now and in the searchprojectsthattheBankisundertaking.Theremain- future, in reduced prospects for development-if they ing40percentoffundingcomesfromacentralResearch fail to respond appropriately to these changes and chal- Support Budget that carries out external and internal lenges.TheWorldBank,withitslongandbroadperspec- review of research proposals submitted from through- tive on what works in development, works to help out the Bank and theInternationalFinance Corporation. countries explore options for coping with change and Although much of the Bank's research is conducted in taking advantage of their circunstan:es. An important coliaborationwithotherintemationalandregionalinsti- vehicle for expanding understanding about develop- tutions, or with governments or institutes in countnes mentissuesis the Banksresearchprogram,which inves- thatare the subject of research, the research covered here tigates ways to reduce poverty, improve standards of islimitedtoprojectsforwhichfinarcingwasmanagedin living, and promote sustainable development. The ab- the Bank. stracts of World Bank research projects in this volume For each project the abstract descrbes the research descnbe these investigations into issues that are crucial questions addressed, the analytical methods used, the for development. findings to date, and the policy implications of the find- The Bank conducted about 230 research projects in ings. Each abstract also identifies the projects comple- fiscal 1994 (July 1,1993, through June 30,1994). Because tion date, the research team (induding participating these projects address questions that arise in the wide- institutions), and the reports, databases, or publications ranging development activities for which the Bank pro- it has produced. Abstracts identified by a five-digit ref- vides loans and grants, they cover a broad array of erence number cover research projects that have re- subjects.Theabstractsofresearchprojectsinthisvolume ceived support from the Research Support Budget are organized by nine major topics: This volume also lists separately the reports and * Povertyandsocialwelfare,includingequttyhealth publications produced from Bank research during fiscal and nutrition, demographics, and women in develop- 1994. The introduction to that list describes the different ment types of reports induded and explains how to obtain * Labor markets and education copies. Finally, the volume indexes the abstracts by the * Envirmentallysustainabledevelopmentindlud- WorldBanklorganizationalunitresponsible fortheasso- ing environrmental economics, energy, agriculture, and ciated research. natural resources The Abstracs of Currnt Studies, published annually, is * Inrastructure and urban development the only comprehensive compendium of Bank research * Macroecononics, including monetary and fiscal projects. Readers wishing to receive more frequent and policy and adjustment current information on Bank research projects and their - International econonics, including trade, finance, findings may subscnbe to the World Bank's Pohcy Re- and debt search Bullin (see the subscription request form at the * Domestic finance and capital markets back of the volume). The Bulletin provides up-to-date * Transitional economies information on Bank research five times a year and is * Privatesectordevelopmentandpublicsector man- available without charge to the public. Each issue in- agement, including industrial organiation, regulation, cludes information on new research projects and recent institutions, political economy, and privatization. Bank publications and working papers, summaries of The World Bank's research projects are chosen and recent research findings, and a calendar of intemational funded through three different channels. About 50 per- development events. I STUDIES BY SUBJECr AREA Poverty and Social Welfare 13 The Economic Impact of Fatal Adult ilness from AIDS and Other Causes inSub-Saharan Africa (675-71) 13 Household Investment in Human Capital and Utilization and Benefits of Social Services (676-44C) 14 Credit Programs for the Poor Household and Intrahousehold Impacts and Program Sustainability (676-59C) 15 Evaluations of Social Sector Investments (676-90) 15 Economic and Policy Determinants of Fertility in Sub-Saharan Africa (676-91C) 16 Data Analysis for DevelopmentPolicy (677-03C) 18 Management of Drought Risks in Rural Areas (677-51C) 19 The Dynamic Interrelationships between Nutrition, Morbidity, and Labor Productivity in Rwanda (677-52C) 20 Indigenous People and Poverty in Latin America: An Empirical Analysis (677-68) 20 Household Responses to Seasonal Income Fluctuations: Markets and Famlies in Rural India (677-BOC) 21 Poverty in India, 1950-90: A Dynamic Analysis of the Determinants Of the Distribution of Household Consumpbon (677-82) 22 Innovative Self-Tarting Techniques: Do They Improve Inidence? (678-14) 23 Revision of the LSMS Houshold-Based Agricultural Activities Survey (678-21) 24 Measuring the Impact of User Fee Increases: The Second Round of the Ionesian Resource Mobilization Study (678-30) 24 World Bank and UNDP Strategies for Reducing Poverty (678-36) 25 Effects of Fertility on Infant and Child Mortality (678-45c 26 The Dynamics of Poverty. Why Some People Escape Poverty and Others Don't- A Panel Analysis for CBte d'Ivoire (678-70) 26 AIDS in Africa (679-08) 27 Child Welfare and Female Labor Market Participation in Africa (679-22) 28 International Price Comparisons of Items of Basic Needs 28 Population and Economic Growth 29 Income Security for Old Age 29 Urban Poverty and Social Policy in the Context of Adjustment 30 A Volume on Subsidies Research . 31 The Methodology of Poverty Assessments 32 World Povt Monitoring 32 Health Benefits of Pollution Reduction 33 Public Expenditures and Poverty 34 Notc The numbers inpaarehses ae refernce numbers for projects funded centrally from the Research SupportBudget A C suffix denotes a project completed during fiscal 1994 Projects with no refence numbers are funded by depatmets S Studies by Subject Area Labor Markets and Education 35 Improving School Effectiveness and Efficiency in Developing Countries: The Case of Jamaica (676-87C) 35 Labor Markets and Employment Issues: Kenya and Cdte d'lvoire (677-73C) 36 Internal Efficiency in Turkish Higher Education (678-05) 36 Training, Technological Capability, and Firm-Level Productivity (678-11C) 38 Female Labor Market Participation and Child Welfare in Africa (678-12C) 38 Contributions of Secondary Education to Per Capita Growth in the Leading Newly Industrializing Countries of Asia (678-27) 39 Enterprise Training Strategies and Productivity: A Cross-National Study (678-39) 40 The Impact of Labor Market Policies and Institutions on Economic Performance (678-46) -41 Public Polircy, Private Response, and Educational Outcomes in India (67B-60) 41 Survey of Health and Education Indicators and Facilties in Morocco (67-C) 42 Putting Inputs to Work in Primary Schools: Four Experiments in-the Philippines (679-01) 42 International Migration, Trade Policy, and Capital Flows (679-05) 43 The Impact of Early Childhood Nutrition on Educational Outcomes (679-15) 43 Changing labor Market Conditions and Income Distribution in Brazil, Costa Rica, and Venezuela (679-16) 44 Impact Evaluation of Education Projects: Decentralization and Privatization Issues (679-18) 44 Dynamic Implications of "Return Migration" for Labor Markets (679-21) 45 Vocational Training Incentives and Foreign Direct Investment (679-25) 46 National and Intemational Wage Differentials: Effects of Trade, Growth, and Education (679-26) 46 Building Education Research and Assesment Capacitr 47 - igher Education Policy Study 48 Managing the Sodal Cost of Adjustment 48 Science and Technology Education 49 Statistical Indicators of Female Participation in Education in Sub-Saharan Afxica 50 Environmentally Sustainable Development 51 Pollution and the Choice of Economic Policy Instruments in Developing Countries (676-48) 51 Econonic Growth and Trade Policy in Westem Africa: Implications of the Degadation of the Vegetation Cover, Phase II (676-97C) 52 Property Rights, Rent Dissipation, and Environmental Degradation in the Brazilian Amazon (677-24C) 53 Rural Poverty and Agricultue m Mexico (67B-23C) 54 Air Pollution and Health Effects in Santiago, Chile (678-48C) 55 Population Growth and the Environment (678.59) 56 Land Tenure Insecurty and Small Farm Productivity in Honduras and Paraguay (678-74) 56 Energy Demand in Asian Developing Econonmes (679-19) 57 Envionmentaly Friendly Technology 58 Dryland Management 58 Panning Systems and Natural Reource Management A Comparison of Successful Experienc in Devedoping Countries 59 4 Studies by Subject Area The Urban Energy Transition in Developing Countries 60 Structure of and Prospects for Energy Demand in Five Major Asian Developing Countries 61 Agricultural Technology Development 62 Public Disclosure and Industrial Pollution Control 62 State Subsidies for Industrial Pollution Control 63 Acid Rain and Emissions Reduction in Asia (RAINS&ASIA) 63 Environmental Management of th e Industrial Sector: Lessons from the Newly Industrializing Economies of East Asia 63 Study of Cotton Production Prospects for the Next Decade 64 Agricultural Technology Policy 65 Global Environment 65 Industrial Emissions and Abatement Cost Modeling 66 Indigenous People and Biodiversity Mapping Project 67 Trade Policy and the Environment 67 The Benefits and Costs of Alternative Approaches to the Protection of Biodiversity 68 Environmental Impacts of National Policies 68 Prices, Policies, and Industrial Pollution 69 Inafastructure and Urban Development 71 Infrastructure Bottlenecks, Private Provision, and Industrial Productivity: A Study of Indonesian and Thai Cities (676-71) 71 Enhancing Urban Productivitr: Determinants of Optimal Expenditure on Infrastructure, Human Resources, and Consumption Public Goods (677-66) 71 An Econometric Assm ment of the Impact of Service Contracting on Inhatructure Provision: The Case of the AGET1-Ps of Africa (678-64) 72 Performance Measurement for Infrastructure and Environmental Resources (678-72) 73 Water Resource Polices in Mebopolitan Areas 74 Demand-Based Approach to Urban Sanitation 75 Export Credit Financing for Iifrastructure 76 Urban Transport Evaluation 77 Reform of Government-Owned Water Utilities 77 A Study of Postal Service Sector Reform 78 Factors Associated with the Reliability of Cost and Schedule Estimates for Power Generation Projects in Developing Countries 78 Private Sector Participation in Water Supply and Sanitation 79 Public Sect Pricing 80 Maaoeconomics 82 Some Economic Consequences of the Transition from Cvil War to Peace (677-31) 82 Adjustment in Africa: Reforms, Results, and the Road Ahead (677-67C) 82 Excha Rate Comrmitmenb and Central Bank Independence (677-77) 83 PatHtn of GrowiL Furher Work on Nahonal Policies and Lmng-Run Growth (678-26) 83 Macoomik Effects of Foreign Direct Investment (67849) 84 The Deteminants of Agricultual Growtl: County and Cros-CDunty Analysis (679-03) 84 5 Studis by Subject Area DEC Analytical Database 85 Intergovernmental Fiscal Relations in Developing Countries 85 Macroeconomic Effects of Terms-of-Trade Shocks 87 Strategies for Competitiveness 87 Total Factor Productivity Growth in Developing and Industrial Countries: Data and Estimates 88 Tax Administrationi Lesons 89 Extemal Shocks and Their Economic Impact 89 Public Expenditure Analysis and Data 89 The Composition of Public Expenditure and Economic Performance 90 Tools for Analysis 90 Fiscal Decentralization and Fiscal Performance 91 Design of a Value Added Tax: Some Issues and Options 91 Inrnational Economics 93 Japanese Foreign Direct Investment. Trends, Detenrinants, and Policies (676-57C) 93 Equipment Prices and Trade-Policies for Developing-Country Manufacturing Industies A Pilot Study of Brazil (676-61) 93 Commodity Exports and Real Income in Africa (676-70C) 94 An Evaluation of the Effectiveness of Preshipment Inspection on Trade, Capital Flight, Customs, and Other Revenue Problems of Developing Countries (677-34C) 95 Abandonment of the Fixed Exchange Rate Regime in Latin Amenca in te 1980s (677-71C) 95 Economic Shocs and ihe Global Environent (677-75C) 96 Understanding lDlateral Trade Flows in East Asia (677-86C) 96 Infoniational Value of Import Lcense Auctions: An Empirical Study (677-91) 97 Equity Portfolio Investment In Developing Countries (678-OIC) 98 Foreg Direct Investment in a Macroeconomic Framework (678-15) 99 Antidumping FoDow-up on Newly Emergig Issues (678-16C) 100 Regionalism and South Asia's Trade (678-22C) 100 Technology Spillovers, Agglomeration, and Foreign Direct Investment (67829C) 101 The Effet of Regionalism on Trading Prospects of Low- and Middle-Income Countries (678-43C) 101 Trade with Developing Countries and Wages in Europe (678-44) 102 Exteral Finanng hi Emerging Markets. An Analysis of Market Resoe (67849) 103 Cental America and the North American Free Trade Agreement (678-73) 104 Commodity Markets and the Macroeconomyr A Peristence Profile Analys (67&887) 104 Implications of the Uruguay Round for the Deveoping Economies (679-04) 105. Topics m itenational Compris of Incomes and Prices (679-09) 105 FactP s Inluwod Commodity Pnces during the 1980s and 1990s (679-10) 106 Rent-Seeking in Coffe-Exporting Countres (679-14) 106 M icm Foundations of Succful Export Promotion (679-20) 107 Unetainty and the Price of Oil ResePes (679-23) 108 Growth and Poreign Fa in Afica (679-30) lOB Vounbtry Export Restrains and the Republic of Korea's Trade Policy 109 The US. Texile Industry under the Multi-Fibre Arranment 109 6 Saudis y SI Arm. Bank-Globdl Economic Model 1i1 Commodity Price Formation and Behavior 110 Debt of Low-Income C.ountries 111 Export Diversification 112 External Shocks and Capital Flight 112 Intemational Linkages, Shocks, and Adjustment 112 North-South Linkages: Background Papers for Global Economic Prospects 1994 112 Price Formation 113 Regional Integration in Asia 114 Sustainability of Capital Flows 114 Trade, Investment, and Growth 115 Trade in Services 115 China's Trade Regime 116 Tariff Uniformnity and Optimality 116 Controlling Recidivism 117 Foreign Direct Investment Determinants and Consequences 117 Foreign Direct Investment and Trade 117 GATr Rules and Developing Countries 118 Dontestic Finance and Capital Markets 119 Risk-Weighted Capital Adequacy Requiremnts An Application to Developing-Country Banks (677-41C) 119 Financial Integration and Development in Sub-Saharan Africa (677-74) 120 Market Structure and Market Outcomes: The Mexican Stock Exchange (677-97C) 120 Stock Market Development and Financial Intennediary Growth (678-37) 121 Market Access Restrictions and Price Behavior (678-99) 2 The Japanese Main Bank System and Its Relevance for Developing and Transformung Economies 122 Meeting the Financial Needs of Ghana's Small- and Medium-Scale Enterprises 122 Commodity Risk Management 123 Housing Finance 125 Outreadh and Sustainability of Six Rural Finance Institutiorn in Sub-Saharan Africa 125 Effectiveness of Credit Policies In East Asian Countries 125 Financial Structures and Development 126 Contractual Savings in Selected Countries 126 Employee Stock Ownership Plans: Rationale, Practie, and Expeience 1 Transitional Economies 129 Industrial Reforms and Productivity in Chinese Entrprise (6flUC 1I Enterpnse Behavior and Econmic Reform A Comparative Study in Cental and Eastern Europe (67649 130 Tmpact of Market-Oriented Policy Reforms on Ho1uhold n Rural China (677-16) 132 Revenue under Uncertainty (677-18C) 133 Labor Market Dynamics during the Transition of a Sodalist Economy (677-20) 133 7 Studies by Subject Arm The Labor Market in Transitional Socialist Economies: A Macroeconomic Perspective (677-30) 134 Busiiess and Consumer Services as a Growth-Promoting Sector in the Fornner Soviet Union (677-43C) 135 Subnational Finance in Transitional Econonmies: Broadening the Framework for Analysis (677-70) 136 Survey of Service Firms in St Petersburg (677-89C) 137 Private Interhousehold Transfers in Poland, 1986-91 (677-96C) 137 Construction of an Integrated Data Base for the Former Soviet Union's Economic Accounts (677-99C) 138 The Ruble Shortage Phenomenon in the Members of the Ruble Currency Zone (678408C) 139 Reforms and Productivity in Chinese Enterprises, Phase H (678-24) 139 Enterprise Transformation in Poland (678-25C) 140 Food Price Liberalization and Marketing in the Former Soviet Union (678-31C) 140 The Economic Role of the State in Nations of the Former Soviet Union (678-32) 141 Enterprise Adjustment in the Russian Federation (678-40) -141 Corporate Governance in Central Europe (67-42) 143 Survey of Service Firms in St Petersburg: Follow-Up Study (678-56C) 144 Study of Land Reform and Farm Restructuring in Russia (678-58) 145 Women and the Transition of the Russian Labor Market (678-71C) 145 Bankruptcy Law and Entrise Restructring in Hungary (678-75) 146 The Dynamics of Poverty in Rural China (678-79) 146 Household Welfare during Viet Nam's Transition to a Market Economy (678-83) 147 Costs and Benefits of Alternative Agricultural Policies for Poland (678-88) 147 Fiscal Reform in Poland (678-96) 147 Credit Markets and Savings Mobilization in Transitional Economies (679407) 148 Deentralization in China (679-17) 149 Small-Scale Privatization in Hungary, Poland, and the Former Czechoslovakia 150 Trade Sale Privatization in Central Europe 150 Eastern Europe and EC-92 150 Housing Finance and Privatization. 151 Governance Structure in Transitional Economies: Insider Control and the Role of Bar*s 152 The Trade Impact of the Breakup of the Former Soviet Union 152 Trade and Payments in the Newly Independent States 153 The Transition of Socialist Agriculture in Europe and Asia A Synthesis of Early Experience 154 The Macroeconomic Management of the Transition from Socialism 155 Welfare duing the Process of Transition 155 Review of Socialist Transition 157 Private Sector Development and Public Sector Management 158 Explining Rapid Growth: Chinese C:oastl Provinces and Mexican Maquiladoras (677-0) 158 Strengtheing Accountability in Pulibc Services (677-65C) 158 Spontaneous Institutions and Sustainable Rural Development in Afria (67748) 159 8 S-uis by Subjed Arm Public-Private Intemctions in the Health Sector in Developing Countries (677-95C) 159 Institutions and Organizallonal Efficiency: The Provision of Education Services (678-28) 160 A Critical Evaluation of the Quality of Stale Intervention In Turkey: A Pour-Industry Comparison (67841C) 160 Optimal Bankruptcy Policies (678-51) 161 The Changing Role of the State: Strategies for Reforming Public Enterprises (678-69) 162 The Evolution, Character, and Structure of the Japanese Civil Service and Its Role in Shaping the Interrelationships between Government and the Private Sector 163 High Technology: Implicaions for Developing Countries 164 Public Sector Human Resource Management in Latin America 164 African Private Agricultural Marketing 165 Indigenous Management Practices: Lessons for Africa's Management in the 1990s 166 Regulatory Policy and Regulatory Reform in Industrializing Countries 166 Small Enterprises Adjusting to Liberalization in Five African Countries 167 Social Security Administration: Regional Study 168 Japanese Lessons on Technology Development 168 Mobilizing Private Capital for the Power Sector. Experience from Asia and Lathn America 168 Governance Capacity and Structural Adjustment 169 Political Institutions, Leadership, and the Principle of Shared Growb: ITnplications of the Asian Miracle for Policy ImplementatIon 170 Privatization of Agricultural Support Services 170 Intemational Comparison of Railway Privatization 172 The Role of Govenmment in Economic Development: An Analysis of East Asian Experiences 172 Modern Role of Rural Entrepreneurs in Economic Transition: Selected Asian Eiperiences 173 The Privatization Experiences of Airports 173 Regional Study: Decentralization Policies in Latin America 174 9 ABSTRACTS OF CURRENT STUDIES POVERTY AND SOCIAL WELFARE The Economic Impact of Fatal Adult be done as soon as possible. But several interesting Illness from AIDS and Other Causes results emerged from the analysis of the first "wave" of in Sub-Saharan Africa cross-sectionaldata.Forexample,analysisofhousehold expenditures and funerals occasioned by death frno Ref no. 675-71 fatal illness revealed thataverageexpendituresbyhouse- - TheAlDSepidemic presentsan additional burden of holdsinthesample for asingle death in 1991wereabout mortality to an African population already afflicted 20,001 Tanzanian shillings, of which 60 percent-ap- with high mortality rates. The World Health Organiza- proximately equal to the local per capita income-was tion estimates that annual adult deaths from AIDS in spent on funeral expenses. Income and expenditure Sub-Saharan Africa will grow from about 350,000 in variables (currently being constructed) will be useful 1992 to more than 700,000 by 2000. Because these cases reference points and important determinants of such derive entirely from existing infection, they will occur expenditures and will enhance future analysis. regardless of the effectiveness of recently initiated pro- Other results emerging from the preiminary data grams to prevent the spread of disease. analysis relate to the effects of adult deaths on school- -This project seeks to answer two broad research ing, on cultural coping behavior (such as funeral prac- questions: What are the economnic costs and impacts of tice-,childfosteringandinterhouseholdtransfers),and AIDS-related illness and death among adultsk on house- on the nutritional status of children. holds and communities? And how can the goverunent The project's preliminary results were disseminated targetpatientand survivor assistance programs tomaxi- at a September 1992 workshop in Bukoba, Tanzania, mize the benefit to survivors for a given government attended by the governmental, nongovernmental, and budget? The research complements ongoingresearch in international donor organizations operating in the re- the Policy Research Department's Envirnment, Infra- gion. Resultswere also presented ata seminarattheU.S. strucure, and Agriculture Division on the health im- AgencyforlnternationalDevelopmentinJanuary1993, pact of enviromnental degradation and in the Poverty at the annual meetings of the Population Association of and Human Resources Division on targeting poverty America in Cincinnati in March 1993, at the Ninth assistance programs. It also builds on earlier research InternationalConferenceonAIDSinBerlininJune1993, reflectedin WorldDevdopmentReportl993 onthe impor- and at the Eighth International Conference on AIDS in tance of edult health and on the allocation of resources Africa in Marrakechin December 1993. The final results among interventions to prevent and treat AIDS. will be disseminated throughabookaddressedtoprac- Theprojecthas completed a socioeconomic surveyof titioners and policymakers, and through papers and households in an area of Tanzania with a high preva- journal articles. lence of AIDS. A sample of both "healthy" and severely Reponsbdity: Policy ResearchDepartment, Environ- affected households was followed longitudinally over ment, Infatructure, and Agriculture Division-Mead 18 months, at six-month intervals. Becamise the longitu- Over, atd Poverty and Human Resources Division- dinal design allows the use of techniques to control for Martha Ainsworth and Indrani Gupta With FPare certainunobservedvariablesandcaptureshfetmepath Mujinja, Godlike Koda, Innocent Semali, and George of household responses, it will yield more complete Lwlhula,UniversityofDaresSalaam;nhomasWayman, estimates of the costs and impact of fatal ilness than field manager; and Beatriz Godoy and Teresa Reinaga could be gleaned from a single cross-section. And by Sisteuas Integrales, Chile. The Danish Intematonal comparing severely affected with relatively untouched Development Agency and the U.S. Agency for Intema- areas, the project will document the stress imposed by tional Development are providing funding. the epidemic on local coping mechanims and the con- Completion dae: March 1995. sequently higher burden on the affected households Report; and individuals. Ainswor Matha, Godlk Koda, George Lwhula, and other The survey is designed primarily for panel analysis, 1992. Mmumg the hud of Fat Mutt illndes in Sul'-Sam andthedataarebeingformattedsothatthisanalysiscan AJiWwAn Anwad QuVcmtar. Living Standards 13 Poverty and Social Welfare MeasuremEnt Study Working Paper 90. Washington, DC: Asia, and Latin America indicate that basic services World Bank have a larger impact on the survival and nutrition of poor households than of households with more assets. The opposite is often true for more specialized services. Household Investment in Human Capital Nevertheless, publicly provided services have no con- and Utilization and Benefits of Social sistent pattern of measurable impact across countries. Services Much of this variability is attributable to the patters of availability of privately provided substitutes. Ref no. 67644C The study also examined the response ofhouseholds This study examined the interaction between the to price and quality of public health services. The de- demand for and the supply of social services, the impli- mand for health care in developing countries is, in cations for the use of social services, and the effects of general, only moderately responsive to costs of services social services on outcomes of human capital invest- but highly responsive to distance and quality of ser- ments (sudh as children's health and nutritional status, vices. So it is often possible to raise the fees for services adult morbidity, and children's schooling attainment and yet increase their use byimproving their quality- and leaming achievements). It sought to answer such for example, by providing medicines more reliably. questions as: How imnportant are the various dimen- ThatwasshownrinGhana,wherethewillingnesstopay sionsof accesstoandqualityofpublicandprivatesocial for multiple characteristics of quality appears to be services in determining the demand for them and their higher than for the sum of the individual components. use? Specifically, it sought to study the effects of social In education, school quality has a major impact on servce availability and quality on child health; to deter- outcomes, but there is no unique blueprint that can be mine the demand for health care and the effect of the expected to increase quality. One promising approach quaiity of services in Ghana; to determine the effect of to improving cognitive achievement is to focus on per- the quality of schooling on student achievements in formance incentives rather than required levels of in- Indonesia, the effects of health services and the health puts into schooling. status of adults on labor force particpation and earn- Responsibility: Policy Research Department, Poverty ings in Cote d'voire,Ghana, andjamaica, and the effect and Human Resources Division-Harold Alderman. of health and education services on the nutritional and With Victor Lavy and Joshua Angrist, Hebrew Univer- health status of children in the Philippines; and to sity; Jere Behnnan, University of Pennsylvania; Eric explore the effect of child health on school attendance Hanushek, Rochester University, Steven Stern, Univer- and educational achievement sity of Virginia; Michael Palumbo, University of Hous- The research was a cross-country, cross-tme study. ton;Anil Deolalikar,UniversityofWashington; Howarth Analyses focused on the integration of the supply of Bouis,lntemationalFoodPolicyRseardilnstitute;and social services into the study of utilization and out- Rekha Menon, Brown University. comes. Theresearchused amatchingof eachhousehold Completion date June 1994. survey with surveys of providers of social services. It Reports: estimated reduced-form relations,bypassing theidenti- Aldennan, Hold. 1994. "Quality of Service Delivery and fication of the technology involved, onboth the demand Nutritional and Mortality Outromes." and the supply side. It also compared experience in the Angist Joshua, and Victor Lavy. 1994 "Frenc Language Skdlls main sodal sectors-health and education-of several and the Returns to Shooling in Morocco. countries wih diffnt economuc and policy contxts, Behrma, Jere. 1994. "Impact of Health on Education." usingvery similar datasets designed for theproject and Behnan, Jere, Howath Bouis and DuncanThomas. 1993. conditioned on country-specific circumstances. ries, Energy Expenditures, and Assets in a Poor Rural The main question examied is how household and Economy." individual behavior affects the education, health, and BemnJere, Anil Deaiiikar, and Victor Lavy. 1994. Dy- nutrition outcomes of govenment investments and nanue Decion Rules for Child owth nm Rural India and how those investments interact One strand of research the Philippimu Catihing Up or Staying Behind?" focused on he liHnks between the quality of service BermnanJere, and Victor Lavy. 1994. aCdMTsU Hea and delivery and nutnrton and mortaity outcomes. In both Adement in School. LSMS Working Paper 104. Washing- C8te dlvoire and Ghana changes in prices, induding ton, DC World Bank. food and drug prices, had a significant impact on child FUmer, D. 1994. "The Intra-Household Distibution of Health mortaity. The main diffee between the two coun- andCognitiveSkinls" tries is in the direction of price movement in recent HaY e Eric 199t "Interpretng Reen Rearch on yeas On health services, a range of studies in Africa, Sdcoong in Devloping Countries." 14 Poverty and Social Welfore Hanushek, Eric, and Victor Lavy. 1994. Dropping Out of School: poor. Experience in such countries as Bangladesh sug- Evidence an the Role of Schiol Quality in Deeloping Ceinrkis. gests thatgroup-basedcreditprograms maybe effective LSMS Working Paper 107. Washington, DC: World Bank. vehicles for disbursing credit to the poor. But little is Lavy, Victor. 1993. Investments in Human Capital: Sclhoding known about how group-based credit programs work Supply Constraints iit Rund Gbhna. LSMS Working Paper 93. and whether the programs are sustainable. Washington, DC: World Bank. This research addressed that issueby exaniining the _._ 1994. "Household Response to Public Health Services: cost structures of three credit programs in Bangladesh Cost and Quality Tradeoffs." (BRAC, the BRDB, and the Grameen Bank) and the Lavy, Victor, and Jean-Marc Germain. 1994. Quality and Cost in estimated effects of the programs on households and on Health Care Choice in Developing Countries. LSMS Working the members of the households. It paid particular atten- Paper 105. Washington, DC. World Bank. tion to the distribution of such effects by gender. Lavy, Victor, Michael Palumbo, and Steven Stern. 1993. To identify thehousehold and intrahousehold effects "Quality of Medical Facilities, Health, and Labor Force of credit, a random sample survey of 1,800 households Participation in Jamaica.' wasconducted in threerounds overayearinBangladesh, Lavy, Victor, and John M. Quigley. 1993. Wfillgness to PayJor jointly with the Bangladesh Institute of Development the Qualdy and ntesity ofMedical Cae: Low-Income House- Studies. A nutrition survey of a subsample of house- hlds in Ghana. LSMS Working Paper 94. Washington, DO holdswasconducted.andaneducationtestwasadmin- World Bank. istered to assess numeracy and literacy in rural Lavy, Victor,J. Spratt, and N. Leboucher. 1994. "Literacy and Bangladesh. In addition to the individual- and house- Illiteracy in Morocco: Patterns of Inddence and Change." hold-level data, program- and community-level infor- Lavy, Victor, John Strauss, Duncan Thomas, and P. de Vreyer. mation was collected from secondary and administra- 1994 Quality ofHealth Care, Survival and Health Outcomes in tive sources. These data were analyzed to examine the Ghan. [SMS Working Paper 106. Washington, DO World effect and the sustainability of the credit programs. Baik Respoilty Education and Socal Policy Depart- Mason, C- "Willingness to Pay for hmproved Health Care: A ment-Shahidur Khandker; and South Asia, Country Non-Parametric Approach Department I, Population and Human Reources Opera- Scultz, T. Paul, and AysitTanseL 1993. Meaureet of REtuns tionsDivisioi-MartinKarcher.W thZahedKhan,Baqui to Adult Hnlilt- Morsidity Effdts om Wage Rats n COke d'lwire Khaly, Mark Pitt, and Hussain Samad. The Bangladesh and Ghama. ISMS Worldng Paper 95. Washington, DC: World Institute of Development Studies contributed staff time, Bank. and the govemmentof Norway and theSwedishlntern- Thomas, Duncan, Victor Lavy. and John Strauss. 1992. Public tiorial Development Authority provided funding. PoliwyandAntlro etc Oucoms in Cle d'lwire LSMS Cornmpittion date June 1994. Working Paper 89. Washington, DC:: World Bank Report: Kharker, Suhidur, Baqui Khalily, and Zihed Khan. 1994. "'I Grameen Bank Sustainable?" Human Rsource Develop- Credit Programs for the Poor: Household ment and Operations Policy Working Paper 23. Wold Bank, and Intrahousehold Impacts and Program Washingho, DC. Sustainability Ref. no. 676-59C Evaluations of Social Sector Investments This research sought to identify the household and intrahousehold effects of credit on income, employ- Ref. no. 676-90 ment, education, nutntion, and other household out- The World Bank routinelyreviews proiectloans,but coms.ltalso examinedthesustainabilityof threemajor rarely evaluates the effect of an investment on socidal credit programs in Bangladesh, the participation of welfare. Given the BarWs central focus on poverty and women in the credit programs, and the effects of their the increased emphasis on obtaining reliable on-the- participation on various household outcomes. The ground results from development projects, there is a project was part of the Education and Social Policy need for an institutionaeized evaluation process that Deparbtent's research on the causes and consequences wiRalowtaskmanagersandpoliqcriakerstoassessthe of improving the productivity of women. quality of social sector investnents. This research is Access to affordable credit for productive activities attempting to develop such a methodology. can remove the obstale of low saving for the poor and The researchers worked with project managers and help improve their icome and employment. The ques- goverimentofficandesignitmnwitoninandevalu- lion is how affordable credit can be delivered to the ating componens of thre ogoing Bau prjects in the 15 Povert and Social Wefare LatinAmericaandCaribbeanregion: the BolivianSocial has survived numerous cabinet reshufflings and the InvestmentFund (SIF), the VenezuelanSocial Develop- breakdown of the Perez govermnent. But even though mentProject, and the Youth Training and Employment there has been no change in the objective of the evalua- Partnership Program (YTEPP) in Trinidad and Tobago. tion-to study the health and nutritional impact of the The objectives of the research are to ascertain the PAMI program by analyzing administrative records extent to which the projects have increased the welfare from the clinics and the PAW Foundation-uncertain- of thebeneficiaries abovewhatitwouldhavebeeninthe ties havedelayed the projectand reduced its scope from absence of the project; to evaluate the adequacy and a countrywide impactevaluation to an evaluation in the cost-effectiveness of the instruments used to target the federal districtand the state of Trujillo. The most recent projects; and to provide methodological guidance for Venezuelan household survey is being examined to choosing among competing social sector investments. determine the effectiveness of the targeting. The projects chosen represent a spectrum of social The study will produce a book containing a case investments with a variety of outcome measures in study of each of the sodal sector projects and a synthe- countries at different stages of development. The re- sis. A workshop will be held in the fail of 1995 to assess search has used quantitative evaluation methodolo- tie findings and lessons from the evaluation studies. gies--reflexvecomparisons,matchedcomparisons,and Responsibility: Latin America and the Caribbean, experimental designs-and qualitative assessments to Country Departnent 11 Human Resources Operations assess and demonstrate the applicability and validity of Division-JohnNewman;PolicyResearchDepartment, different methodological approaches. Poverty and Human Resources Division-Margaret Each quantitative evaluation seeks to answer the Grosh and Laura Rawlings; and Education and Social same counterfactual question: What would the welfare PolicyDepartment WithJamesHeckman,Universityof of thebeneficiaries havebeenif the proecthadnotbeen Chicago; Charles Manski, University of Wisconsin; and implemented or if some aspect of it had been changed? Burt Barnow, Johns Hopkins University The Ministry Smce these social sector evaluations involve sophisti- of theFamily and the Central Statistical Office, Venezu- cated econometric approaches, a paper on the technical ela; Social InvestmentFund and the National Statistical approadhes to estimating counterfactual results will be Office, Bolivia; and YTEPP, Trinidad and Tobago, are commissioned as part of the project contributing staff time. For the YTEPP in Trinidad and Tobago, a Bank- Compktion dak- December 1994. financed program that prepares youth for employment Report: and entrepreneurship, the purpose of the evaluation is Newman, John, Paul Center, and Laura Rawlings 1994. -Using to judge the program's effect on the YTEP trainees' Randomized Control Design in Evaluating Social Sector labor market position, earnings, and potential for em- Programs in Developing Countries." Wrd Bank Rems&R ploymet Two tracer studies of YTEPP trainees have Observ 9(2). beer. compklted and are being used to prepare for the mid-term review in September 1994. The evaluation alsoincludesareviewofpre-andpost-programliteracy Economic and Policy Determinants and numeracy scores, cost data, and beneficiary feed- of Fertility in Sub-Saharan Africa back. The YTEPP evaluation activities illustrate how research can be used effectively to inform Bank opera- Re. no. 676-9WC tions and developing countries' policymaking institu- Sub-SaharanAfricahasthehighestpopulationgrowth tions about a project's impact. rate and the highest fertility rate among the developing Evaluation of the Bolivian Social Investnent Fund regions. And although countries in every other devel- investments has called for all three evaluation strate- opingregionhavebeguntoexperiencededlinesinfertil- gies: a reflexive comparison in the health sector, a ity, this trend has only recently shown up in Sub- matched comparison in water and sanitation, and an Saharan Africa, and in only three countries, Botswana, experimental design in education. A pilot baseline sur- Kenya, and Zimbabwe. Results from the Demographic vey was conducted in the El Chaco region of Bolivia and Health Surveys indicate an increase in these mouw- before the baseline survey was extended to the rest of tries in the use of modern contraceptives and a possble the county. Follow-up surveys to determine program decline in etlity. But what accounts for these trends impact will be conducted after the investments have and how sustained they will prove to be remain uncer- beencompletedandsufficienttimehaselapsedforthem tauL Moreover, fertility rates In these countries are stll to have had an effect relatively high The Venezuelan evaluation project illustrates the In considering a strategy for reducing fertility and difficulties assocated with conducting evaluations in population growth rates in Sub-Saharan Africa, know- anunblepoliticalenvioment.Theevaluationproject ing why fertility remains high and cont tive use 16 Poverty and Socia Wyfare low is important.Surveysof womenofchildbearingage schooling for girls has expanded dramatically since in Sub-Saharan Africa over the past two decades have independence in 1980. shown that there is a growing unmet need for contra- Mother's schooling also is an importantinfluence on ceptives among certain groups of women who want to the tradeoff between family size and schooling invest- space and limit births but that, despite this trend, most ments per child-the "quantity-quality tradeoff.' In couples still want very large families. urban C6te d'Ivoire an increase in mother's schooling Among the factors thought to be most important in both raises child schooling and lowers ferility. An accountingforthedesireforlargefamiliesarehighchild increase in household income has the same effect for mortality rates and women's low levels of education. households with incomesabove the 70thpercentile. But That would suggest a two-pronged approach for reduc- there is no such tradeoff in rural C8te dlvoire, where ing fertility: first, multisectoral policies that will lower higher incomes at associated with higher child school- the demand for children (by reducing child mortality, ing and higher fertility. In both urban and rural Ghana raising the levelof educationfor females, and increasing there is evidence of tradeoff between fertility and child the attractiveness to parents of investing in children), schooling with higher incomes and, in rural Ghana, and second, improvements inthe performance of family with increases in mother's schooling. planning programs in attracting and retaining clients. The availability, price, and quality of family plan- The purpose of this research was to provide the neces- ning services affect the cost of averting births and thus sary empirical foundation for effective multisectoral shouldaffect contraceptive use. In Ghana, Nigeria,Tan- population policies. zania, and Zimbabwe data on women could be linked to The project addressed two questions: First, what is information on the availability, price, and quality of theeffectof economnicand social policieson fertHity and services. In rural Ghana, Nigeria, and rural Zimbabwe contraceptive use in Sub-Saharan Africa? And second, access to services constrains contraceptive use. But ex- how can African family planning programs be made pansion of family planning services need not involve more effective in attracting and retaining clients? To- the public sector. InNigeria and Tanzania, for example, ward answering these questions, the proiect, using re- improvedaccesstocontraceptivesfthroughprivatephar- cently collected household data, conducted compara- macies will likely raise contraceptive use at the margin, five microeconomic analyses of the economic andpolicy as will expanding the availability of the pill and contra- determinants of fertility and contraceptive use in 15 ceptive injections. Demand for contraception was re- African countries. The research focused on four issues: sponsive to price in Ghana and Nigeria, but not in the effect of women's education on fertility and contra- Zimbabwe. Contraceptive use was not related to most ceptive use; the relationbetween child investments and indicators of qualirty of service on which information number of children; the determinants of child mortality was available. The lack of significance does not imply and the effect of child mortality on fertility; and the that a factor has not been important in the pastor thatit effect of the availability, price, and quality of family could be important in the future, but that it is not a planning and other social services on contraceptive use. binding constraintat themargin now. So the availability The most consistent finding is the pervasive influ- of services and methods in some countries and female ence of female schoolingin loweringfertlity and raising education arethe mainconstraints to expanding contra- contraceptive use. These effects were found in virtually ceptive use. everycountrythat the projectstudied. Women with just Lowering child mortality will also induce couples to afewyearsofschoolinghaveanincreasedprobabilityof have fewer children and to obtain more schooling for contraceptive use in almost all cases But the negative them. Across a sample of 14 countries, a one-year in- association between education and fertility is not ob- crease in femaleschoolingwas associatedwitha dropof served in most countries until women have completed six to nine deaths per year per thousand children age 0- or almost completed primry schooling. 24 months. Other factors affecting child mortality are The research found that the impact of female school- more country-specific. For example, better access to ing differed among countries. It also found that the health care is associated with lower child mortality (age levels of female schooling were shockdngly low. For 0-5 years) in CGte dlIvoire; in Ghana better access to example, more than three-quarters of the women of marketsisassoaatedwithlowerchildmortality.Inboth reproductive age (15-50) in the Sahelian countries and countries women conpensate fhrough their fertDity for in Burundi had had no schooling. Not surprisingly, the about one-fifth of child deaths. three countries in which fertility has already begun to This pro4e relied on available cross-sectional data decline (Botswana, Kenya, and Zimbabwe) also have sets, some of which could be linked to information on the highest levels of female schooling. Schooling levels the availabilitr of services. Although that possibility cannot be raised overnight, but the effects can be felt in marks a big improvement, these data sets still present 8-10years.Thatwas the experience ZiZimbabwe,where shortcomings for studying fertility detemit First, 17 Poverty and Sociad We!Jfre it is difficult to infer from crass-sectional results at one Sauhran CGuntries.LSMSWorking Paper 110. Washington, pointintimethepotentialimpactoflargepolicychanges, DC: World Bank. anditisespeciallyriskytodosowhen the levelsofallthe Beegte, Kathleen. 1994 "The Quality and Availability of Family policy variables in question are so low. Second, the logic Planning Services and Contraceptive Use in Tanzania.' behindtheplacementof existingservicesisnotknown- World Bank, Policy Research Departnent and Eastem Africa in particular, how the placement might have been influ- Departnent, Washington, DC. enced by assessments of demand or of the need for Bendo, Kfi and T. Paul Schultz. 1994 ODerminants ofFertiy targeting specific groups. Third, there is often insuffi- and ChidU Mortality in Cete d'Iwire and GhCn& WSMS Working cient variation in variables of interest (or no experience Paper 103. Washington, DC World Bank (Also forthcoming witha policy)onthebasisofwhichtoinferanyoutcome. inFrench.) More could be leamed by including in ongoing devel- Feyisetan, Bamikale, and Martha Ainsworth. 1994. The Effect of opment projects a rigorous evaluation component in the Quality, Price, ond Aialbllity of Family Planning on which interventions could be randomly assigned and Conraceptive Use in Nigeria. LSMS Worldng Paper be. their impact evaluated relative to what occurs in control Washington, DC World Bankl groups. In the meantime, future fertilitysurveys should Ghosh, Susmita. 1994. -The Impact of Price, AvaDability, and strive to coliect detailed information on the availability, Quality of Servies on Contracepfive Use: A Review of quality, and price of services that can be linked to Rsults from Four Studies! World Bank, Policy Research sample women in both urban and rural areas. Department Washington, DC. The findings of the study have been disseminated Montgomery, Mark, and Ala Kouami. 1993 Feeailhty and through a nunber of workshops and seminars, as well Child Schooling hi CMt. d¶Ivoire: Is There a Tradeoff?" as at the 1994 annual meetings of the Population Asso- AFIHR Tecnical Working Paper 11. World Bank, Africa iation of America, held in Miami in May 1994, and at TedchicalDepartment, Washington, DC. (Also forthcoming the conference on Infant and Child Health in Africa, inFrench.) sponsoredhythenatitutpourlaformationetrecherdhe Montgomery, Mark, AkaKouam&, and Raylyrm Oliver, eds. dimographiques (WORD), Cameroon, in July 1993. 1994. The Tradeoff etwee Numbes of Children and Chid Resposiity: Policy Research Department, Poverty Sdwoalgn EUidKcef4m Cht d'hire and Gkhn LSMS and Human Resources Division-Martha AinswordL Working Paper 112. Washington, DC. World Bank. (Also With Kaleen Beegle, Michigan State University; Kofi forhcoming in Fren) Benefo and Mark Pitt, Brown University; Bamikale Oliver, Raylyri. 1994. The Efctofthe Qualty, PHic,and Feyisean OaeOWmni Awolowo University, Nigeria; An- Auilalily of Fanly Plamnng ens ConGaeniue Use in Ghana. drew Foster and Etienne van de Wale, University of ISMS Woking Paper 111. Washingt DC Word Bank. Penslvania; Susmita Ghosh, University of Southeem Pitt, Mark 1994. -Womens Schooling, Selective Fertility, and Califomia; Aka Kouam&, Instiftt pour la formation et nfant Mortality in Sub-Saharan Africa.! World Bank, Policy recherche d6mographiques, 'cmeroon, Mark Mont- Rearch Department, Washngto DC gomery, State University of New York, Stony Brook, Scr, Susan. 1994 Polics Affectng F iity ad Conae and the Population Councili John Maluccio and T. Paul Use An Assssmt of Twld SubSaan Countries. World Schultz, Yale University; ltyai Muvandi, Zimbabwe Bank Discuson Paper 259. Washington, DC National Family Planning Council; Andrew Nyamete; Thomas, Duncan, and John Maluac:o. 1994. Contrmacive Choim, Raylyrnn Oliver, Stanford University; Susan Scribner; Ffrtlity, mid Puwlic Polxy in Znhbw ISiS Worig Paper and Duncan Thomas, Rand Corporation and UCLA. 109. Washington. D World Bank. Coplei date December 1993. Thomas, Dunc and ltyai Muvandi. 1994. Hm Fast is Fetility RqwrtS: Decininxg m B_s ad Zimnss? World Bank Dison Ainawofh Martha 1994. "The Ecnmi and Policy Deterb- Paper 258 Washino, DC (Also forthcomg in French.) nart of Felity inS 9Saharan AMric Fmal Report van de WaDe, Etierne, and Andrew Foster. 1990. Pertil Dedine Word BDk Poicy Research Drpaemert, Washing DC. in Aft Asessmnt ad Prospecs. World BankTedtmial _ .1994 wlheSooecawmic Deermin of Fetiity in Paper125.WashingtoDC SubSaharan AfJica: A Sunuuq of the Findigs of a World Bak Resear Proje Panphlet prepared for the 1994 bernamm Conference on Population Cai. World Dab Analysis for Development Policy ak, Polic Resarh Department Wasgto, DC (Aso availabein Frnd) Ref no. 677.03C Ainwomft Marit. Kahlen Ble, and ndew Nyamete 'This reearch comprised a series of studies designed 199L TIm lep of Womm's Hm Caitl on Faily and toshowhowthecorrectuseof household-eveldatacan Cs q Usdi Sub%Shwa Afdr A StIMoflESub- inform policy. The studies covered saving, poverty and 18 Poverty and Social Wlfare inequality, price and tax reform and demand analysis, proved (formnal sector) insurance and credit different household composition and individual welfare, and typesofruralhouseholdswouldbewillingtobuyatfull private and social security. The research drew heavily cost The study used existing household survey data on the cumulative experience of the Living Standards from study regions in Burkina Paso and south India. Measurement Study (LSMS) surveys and on other data Both data sets include data from the same households sets, for example, for India and Taiwan (China). The for a severe drought and for a subsequent normal year. data obtained from the lSMS surveys were designed for The study first examined the variation in house- policy analysis, not just for the measurement of certain holds' responses to drought, focusing on the types of aspects of living conditiG3s, and it is for this purpose risk management strategies different types of house- that the studies were conducted. holds used and how successful they were in buffering The study has produced a book giving a range of income and consumption losses during droughts. Sec- examplesthatshowhowtheanalysisof datacanbeused ond, the study modeled household decisions to mea- to provide informnation and quantitative evidence for sure the costs and benefits to household welfare of risk policy desigrL management strategies and to quantify their contribu- Responsibility: Policy Research Departnent, Poverty tion to the ability to cope with drought Third, the study and Human Resources Division-Emmanuel Jimenez. used the model to derive the latent demand for inn- With Angus Deaton, Princeton University. proved credit and insurance instruments. Because the Completon dale: October 1993. latent demand for these instrumentk was derived from Report: an econometric model, it was directly conditioned by Deaon Angus Forthcorin& T7he Amysis ofHousehold Sureys: the risk management strategies that the households AfiMroenamdlricAnalysisfiw Development Policy. already use. So to the extent that these are already cost- effective,thelatentdemand forinsurancewillbesmaller. Some of the available risk management strategies in- Management of Drought Risks dude government relief programs. Because these are in Rural Areas essentially income transfers in drought years, they re- duce tte demand for improved credit and insurance. Ref. no 677-51C But the availability of data on household participation Many agricultural regions in the developing world in these programs inthe study regions makes itposslble are periodicaily subject to severe droughts, which can to control for such programs in the model and to con- have devastating effects on household incomes and duct counterfactual experiments to see how their re- consumption, especially for the poor. To protect their moval would affect the latent demand for improved consumption against drought risks, rural households credit and insurance. engage ina varietyof riskmanagementstrategies. Some Throughout the research, emphasis was given to of these-income diversification, intercroppin& farm analyzingdiferencesinbehavioramongdifferenttypes fragmentation,andseasonalmigrationforemployment of households (defined by income, resource endow- outside the region-are intended primarily to reduce ment, and occupation). Special attention was given to income losses in drought years. Other strategies-bor- analyzing the efficiency with which poorer household rowing from local stores and money lenders, drawing groupsare able to copewithdrughtsand to theirlatent down of food stocks, dissavings, sale of assets, and demand for improved credit and insurance. participation in government relief programs-are es- The results suggest that relatively simple models sentially coping devices designed to protect consump- based on dynamic programming formulations of farn- tion once income losses have occurred. ers' drought decisions yield both an.alytic insight and * The possibilities for effective risk management vary equation forms that can be estimated econometrically markedly across regions and across households within from the available survey data. They thus provide good regions. But several studies have shown that the poor indications that; for the firsttime, quantitative informa- typically have the least ability to manage drought risks. tion can be assembled on the costs and benefits of risk In.extreme cases they may suffer from inadequatenutri- managementstrategiestraditionallyusedbyruralhouse- tional intake duringdroughts.And some sinkinto long- holds. Once the more cost-effective strategies havebeen term debt orbecome permanently dispossessed of their identified, it is then possible to think about how thase productive assets. strategies might be strengthened through project and The primary purpose of this study was to determine, policy interventions. in selected study regions, the latent demand for im- It is also possible to identify the effectiveness with prvedaeditandisuranceforbettermanagingdrought which different types of households are able to cope risks. The study sought to determine how much im- with droughts and to identify those most in need of 19 Pouerly and Social Welare government assistance. The study provides informa- socioeconomic environment on the productivity of lion on the effectiveness of existing government relief adults. programns and estimates the demand for these services The proect investigated the links between house- by rural households. This informationwillbe useful for hold incomes, food prices, nutritional intakes, morbid- knproving the design and targeting of drought assis- itypattems,andproductivitybyestimatingasystemof tanceprograms. dynamic equations on data on individuals from 270 Responsibility. Agriculture and Natural Resources households in Rwanda. The analysis incorporated the Department, Agricultural Policies Division-Jock RI biomedical and behavioral aspects of the variables, and Andersonand ApparaoKatikWneandPolicyResearch investigated the influence of seasonal factors on the Department,Povertyand HumanResourcesDivision- nutritional intakes and morbidity pattems. HaroldAldennarLWithMadhurGautun,TomReardon, The project found that low incomes and high food Michigan State University; and Peter Hazell, Interna- prices reduce household food energy intakes, forcing tional Food Policy Research Institute. adults to spend additional time resting and sleeping. Completion date: December 1993. Undemutrition therefore reduces productivity. Effec- Repots: tivepublicprograms to alleviate energydeficiencies can Gautam, Madhur, Peter Haz and Harold Aldeman. thus have a role in longer-term poverty reduction. The Fortcoing. "Estimaing Demand for Drought Insurance in projectfindsevidenceofnumerousbehavioralresponses Rural South India. Policy Resuar Working Paper. World to poverty-induced nutritional deprivation. In addition Bank,Washington, DC. to the extra time spent restng. men and women share Sal,rai, Takeshi, Madhur Gautam, Thom Reardon, Peter work loads, and women substitute between housework HazeDl, and HaroldAlderman Forffcominr.n otential and agriculture. The project also finds evidence that Demand for Drought Insurance in Buwdna Faso?f Policy energy intakes of twice the basal metabolic rate are Rmearh Workig Paper. World Bank Washigt DC inadequate for active adults. Responsibility: Policy Research Department, Poverty and Human Resources Division-Martin Ravallion. The Dynamic Interrelationships With Alok Bhargava, University of Houston; and between Nutrition, Morbidity, and Christophe Muller, Delta, Paris. Labor Productivity in Rwanda Completio dett December 1993. 2Re no. 677-52C Uhuava, Alo. 1994. "Nutritional Stats and the Alocxatn of A reurt question in both development theory Tme in Rwandese Households." and development policy is thir How much does nutui- tional and health status influence labor productivity and, hence, incomes in developing economies? Some Indigenous People and Poverty in Latin researchhasbeenconductedonthzisquestion,primarily America: An Empirical Analysis esearch using static empirical models estimated on cross-sectional data sets. But to answer it convincingly Ref no. 677-68 requires isolating one lin in the potentially complex Itis well known that, worldwide, indigenous people anddynamiinterrelationshipsbetweennutritionalsta- are in a worse economic and social position than non- tus, sicess, and productivity. Longitudinal data sets indigenous people. The indigenous people of Latin offer a way of doung so, but their use requires taking America live inextreme poverty. Yet there is little docu- seriously the (difficult) econometric problems that can mentation of their actual position. One objective of this are i consistently estimating dynamic models with study was to document the socioeconomic conditions of sudc data. indigenous people usng empirical data from nationl This project had several goalm surveys. It represents the first major attempt to empii- * To quantify the effect of household incomes and coly document poverty among the indigenous popula- ote socioeconouic charactristics on the nutritional tion in four major Lati American countnes. intakesofchfldrenandadultsinasampleofhouseholds The goals of the project were to estimate the extent in Rwanda and determinants of poverty among Latin America's * To model te interrelationehips between nutri- indigenous populabon; to compare the living condi- tional inakes, anthropmetric measures, and morbid- tions of the indigenous population with those of the ity spels separaty for childr and adults within a nonindigenous population to examine differences in syten of dyna simultaneous equaions educational and occupational attainment between the * ToexamntheeffecctsofEnutrition,morbidityand indigenousandnonindignouspopulationsntoanalyze 2' Povery and SOCIAl Welfare the overall earnings differential between indigenous Patrinos, Harry Anthony, and Alexds Panagides. Forthcoming. and nonindigenous workers; and to review the findings 'Poverty and Indigenous People in Mexico." Akwtwm lounul with a view toward developing policy suggestions and (CoMell University Press). identifying areas for further analytical work. The study Patrinos, Harry Anthony, and George Psacharopoulos. 1992 was intended to contribute to the Banks poverty reduc- 'Socioeconomic and Ethnic Deteminants of Grade tion strategy. Repetition in Bolivia and Guatemala." Policy Research The study used household surveys from four Latin Working Paper 1028. World Bank, Lalin America and the American countries-Bolivia, Guatemala, Mexico, and Caribbean Techmical Department, Washington, DC. Peru. The data were for 1989, except for the data for . 1991 "The Cost of Being Indigenous in Bolivia: An Peru, which were for 1991. The study used standard Empirical Analysis of Educational Attainments and techniques to estimate poverty incidence, the inter- Outcomes." Bultin ofLatin American Rserch 12(3)293-309. ethnic distribution of income, and the interethnic distri- ..1993. 'The Cost of Being Indigenous in latin America hution of social indicators. It also estimated interethnic An Empical Analysis of Educational Attainments." Paper education, occupation, and earnings differentials, and presented at the Comparative and International Education conducted policy simulations. The research provided Society conference, Kingston, Jamaica, March 15-18. econometricestimates of the differentialwage structure .1993. -rhe Effects of Gender and Etlmicity on Educa- forindigenous and nonindigenousworkersanddecom- tional Attainment: The Case of Indigenous Women in latin posed the overall eaniings differential. America" Paper presented at the Conparative and Poverty among Latin America's indigenous popula- lnternational Education Society conference, Kingston, tion is pervasive and severe. The study found that in Jamaica, March 15-1S. Guatemala,forexample whilemorethantwo-thirdsof . 1993. "Gender, Emicity, and Education in Latin the total population is poor, almost 90 percent of the America." World Bankk Latin America and the Caribbean indigenous population is poor. Being indigenous con- Tedmical Department, Washington, DC. siderably increases the probability of being poor. But .1993. indigenous People and Poverty in Boliv An human capital characteristics have a significant impact Empirical Anasis. Paper presented at the Canadian on lowering the incidence of poverty. The study found Emnomics Assodation meetings, Ottaw, Canada, June 4-6. a strong correlation between schooling attainment and .1993. -Indigenous People and Poerty in Latin America: ethnicity, and between schooling attainment and pov- An Empiral Analysis." Paper presented at the erty category. Indigenous people have much lower investigacid Socdodemograflca Coneimporuata deFPudlos levels of schooling relative to the nonindigenous popu- Indigenas cnfrnce, Santa Cruz, Bolivi October 1-22. lation, and equalization of schooling levels would lead _. 199 "Schooling and Nonsdhooling Acivitis of to a considerable increase in indigenous people's rela- Peruvian Youth. World Bank, Human Resources Develop- live earnings, ment and Operations Policy, Office of the Vice President The results of the empirical analysis pointto areas of Washington, DC. appropriate intervention, such as increased provision of Psacaropoulos, George, and Harry Antony Patrino. 1994 education for indigenous people. The effort to analyze "Indigenwus People and Poverty in Latin America. Human poverty and devise strategies for its reduction needs to Resour Developnmnt and Operatios Policy Working take into account the ethnic componenL Paper 22. World Bank, Washinon, DC. Rponsily: Human Resources Developmernt and .1994. Indigenous Peopie and Poverty n Latin AmcKaf Operations Policy, Office of the Vice President-Gorge Fiac nd De _lpmn 31(1):*41-4 (Also published in PsharopndoosandEducatLonandSocalPolicyDepart- Arabic, Chinese, French, German, Poruge, and Spanish,) ment-Harry Anthony Patrnos. With Faraaz Siddiqi Psacharopoulos, Geoe, and Hary Anthon Patnnos, eda Completion date September 1994 Forthcomi& Indtigns Papl and PoFrny r Lat Amaim Reports: An EnzphaAnulysia World Bank Regional and SeCtoral Coenen,Johanna, ed. 1993. "Socioeconomic Conditions of the Study. Washington, DC. Indigenous People of the Americas: An Annotated Biblioga- phy. World Bank, Washington, DC Lee, HaeducdL 1993. -The Ethnc Dimension of Poverty and Household Responses to Seasonal Income Income Distnbution in Latin Americaf World Bank, Fluctuations: Markets and Families Washingtan, DC in Rural India Madsaac, Donna J., and Hay Anthony Painos. 1993. "Labor Market Discrimiation against Indigenou People in PenLr Ref. no. 677-80C . Paper prsented at meeling on the Demography of indig- Income seasonality is a pervasive feature of poor enous People, Montl Canada, August31. agrarian econonies. In the semiarid tropics of India 21 Poverty and Social Welfare farm incomes fluctuate much more markedly across Poverty in India, 195090: A Dynamic agricultural seasons than across years. Most previous Analysis of the Determinants of the research on risk and insurance in developing countries Distribution of Household Consumption has focused on year-to-year fluctuations inincome. This remcarchlookedatseasonalincomefluctuations,posing Ref. no. 677-82 a question central to economic and social policy: Can About 40 percent of the people in the developing consumption smoothing be achieved through private world living on less than a dollar a day reside in one means? If not, or if households pursue very costly country-India. Crisis and adjustment in India have consumption smoothing strategies, there is a potential brought the country to what is arguably the most impor- role for government policy. If seasonal consumption tant time for the poor since its independence in 1947. transfers-market and informal-play a central role, Decisions made thereover the nextcouple of years or so incomestabilization orseasonalemploymentprograms will matter to their well-being in both the short and the may be offset by reductions in private transferm long ternm The research addressed three main questions First, This research project plans to help inform those how much do households smooth their consumption decisions, by looking closely at the past evolution of acrss agricultural seasons? Second, how is this smooth- living standards and at how they have been affected by ingaccomplished?Dohouseholdsrelyoncreditmarkets, the economy and by policy. The key questions it ad- nonmarket transfers, or potentially more costly strate- dresses are these: What does the time series of house- gies? And third, do credit transactions and nonnarket hold consumption distributions in India since its inde- transfers play distinct roles in buffering seasonal income pendencelook like? What has happened to poverty and fluctuations, or are they direLtsubstitutes for each other? inequality over this period? Has the experience differed The research drew for its analysis on a survey by the amongstates and between urban and rural areas? How International Crops Research Institute for the Semi- does the distribution of consumption (and hence pov- Arid Tropics in India. The survey provides panel data erty) respond to changes in economywide and sectoral on household consumption expenditures, debt, variables? How important has economic growth been intrahousehold transfers, and income. The first part of compared with changes in relative inequalities? What the research developed some stylized facts about sea- role has the sectoral composition of economic growth sonal income fluctuations using nine years ofdata from played? How important have changing wages, prices, three villages. The second part of the research used and interest rates been? What role have public expendi- lime-series data on village rainfall to decompose sea- tures played, particularly the expanding set of direct sonal income changes econometrically into their antici- antipoverty interventions since the mid-1970s? pated and unanrticipated components. The response of The answers to these questions are hotly debated in conwumption,debtandtransferstothesedifferentcom- the literature on poverty in India. For example, some ponentscanrevealwhetherandhowhouseholdsachieve observers have ascribed the apparent improvemrent in consumption smoothing. the living standards of the poor during the 1980s to the Amongthepreliminaryfindings of the projectisthat substantial growth in direct public interventions. Oth- farm income fluctuates greatly across seasons in all ers have said that economic growth did most of the tuee study villages, and that these seasonal fluctua- work, and that (if anything) the fiscal burden of the lions donminate year-to-year changes in income. Sea- direct interventions may have hurt the poor. Even the sonal fluctuations are also not uniform, at least in some link between sectoral variables (such as the fortunes of villages, and thus may have a large unpredictable com- agriculture) and the distribution of consumption is con- ponrent Perhaps the most significant finding so far is tested, as that link depends critically on the perfor- that aggeation across seasons obscures the role of mance of consumption smoothing arrangements, on intrahousehold transfers in smoothing consumption. A which views differ widely. regrssion analysis reveals that, although such transs- The literature on the detenninants of poverty inci- fers do not appear to play a significantrole at the yearly dence over time in India has focused almostexclusively leveL they do respond to income shocks at the seasonal onruralpoverty.Anapproachthatismoreeconomywide leveL This suggests that the potential crowding-out is needed. Furthermore, the models used in the past effect of govenment policies on private transfer activ- have been static, and thus unable to reflect the likely ity may indeed be large at the seasonal level. stickiness in the distribution of consumption arising RPmsibaii4,c Policy Research Departmet, Poverly fromintertemporalconsumptionandsavingsbehavior. and Human Resources Division-ETnranuel Jimenez. The empirical models used in the literature have also With Hanan Jacoby, University of Rochester; and been fairly ad hoc, and have not been grounded in an Emmanuel Skoufias, Univrsity of Colorado at Boulder. explicit choice theoretic model of consumption behav- Completin date: October 1993. ior. This can seriously cloud the interpretation of em- 22, Poverty and Socia Welfare pirical results. The literature has also suffered from targeting also entails costs-the administrative costs of many data and measurement inadequacies. screening beneficiaries and of preventing fraud, for Yetlndiahas relatively good data on the poor. While example. In food programs commnon targeting tech- half the developing countries have no nationally repre- niques, such as food stamps, rely on individual assess- sentative household survey that permits a convincing ment(suchasmeans-testing)orgroupasswsment(such estimation of the distribution of household consump- asgeographiclocation)todistinguishbetweentheneedy tion or income for the 1980s, India has four such surveys and the nonneedy. spanning the decade. Indeed, for India a time series of An alternative method is self-targeting. A self-ar- consumption distributions can be compiled spanning geted program makes subsidized food products avail- 40 years. This provides a unique opportunity to empiri- able to all, but is designed to discourage higher-income calystudythelinkbetweenconsumptiondistributions groups from consuming them. In this approach subsi- and the key macroeconomic and sectoral variables dies are placed on foods such as 'inferior" goods- thought to be important influences on progress in re- consumed primarfly by the poor. The difficulty is in ducing poverty, identifying the appropriate foods to carry heavy subsi- The research project has developed a tractable eco- dies.The localdietmayinclude no "inferior" goods,and nomic model relating the interpersonal distribution of corsumptionpatternsmaynotdiffersignificantlyacross household consumption to prices, public expenditures, income groups. and relevant exogenous variables such as conditions of Aspartof a general reform of itsfood subsidyuystem, the monsoon. The project has compiled a consistent Tunisia is implementing two innovative self-targeting timne-eries data setof household consumption distribu- approaches. In the first, the "superior goods" approach, tions by state going back to the early 1950s, along with it is easing govemment market controls to allow the data on demand patterns and prices. It is collating these private sector to introduce high-quality, unsubsidized data with time-series data on the macroeconomy, the products that appeal to upper-income consumers, who sectoral composition of incomes, factor prices, and pub- would then consume less of the subsidized products. In ic expenditures and revenues over the same period. It thesecond,avariationof the"inferiorgoods"approach, will use the data set to calibrate the model and to study it is introducing different typas of packaging and using the deterninants of changes in poverty measures. genericingredientstodifferentiategoodsinaparticular A second stage of the project will inmestigate the product line. Products packaged in the lowest-quality extent to which the revealed differences across states in cartons or containing generic ingredients serve as the the evolution of poverty over these 40 years are expli- vehicles for the subsidies. These perceived "inferior" cable in the differences in policies pursued, particularly features discourage consumptionbywealthierconsum- the composition of public spending. ers, although the intrinsic quality of the subsidized The prqect will produce a series of research papers, products remains good. and some of the output will be used in the forthcoming Lack of systematic data makes it difficult to ascertain poverty assessment for India. Findings also will be whether this approach has improved the distribution of presented at seminars in India and at the World Bank subsidies across income groups, as theory suggests it and various universities. should. To assess whether the reforms have succeeded Responsiliy: Poliy Research Department Poverty in channeling a larger share of the money spent on the and Human Resources Division-Martin Ravallion and program to the poor, this research project conducted a Gaurav Daft. survey of about 1,000households,both rural and urban, Completion date: June 1995. that were included in the 1990 Household Expenditure Rqerts: Survey. The survey included both quantitative and Datt, Caurav, and Martin Ravallion. 19K "Poverty in India qualitative questions on the consumption of subsidized 195,s1-9m. foods. Survey results indicate that quality dferences Ravaiion Martin, and Gaurav Datt 199. "How Important to canbe an effective way to improve the targeting of food Idia's Poor i6 the Urban-Rural Composition of Growth?- subsidies by reducing the amount of benefits accruing to higher-incorne consumers The study has also examined the practical issues Innovative Self-Targeting Techniques: involved in implementing a self-targeted program us- Do They Improve Incidence? ingqualitydifferentiation,tohelpTunisianpoliymakers fine-tune the program and provide insight to other Rqf no. 678-14 countries inmplementing self-targeting refonns. Targeting is sometimes used in poverty reduction Responstibity: Middle East and North Afica, Court- programs to reduceleakage tothe nonpoorandconcen- try Department 1, Agricultural Operations Division- trate expenditures on those with the greatest need. Yet Kathy Lindert and Europe and Central Aida Regional 23 Poue"ty and Social We1fare Office, Office of the Vice President-laura Tuck. The Hons is warranted by the sort of responses recorded. It Tunisian National Statitics Office conducted the survey. results in recommendations to compress or delete Completion date: August 1994. underutilized questions and precoded responses and to expand heavily used ones. In the end it is the usefulness of the data to the Revision of the LSMS Household-UBased policymaker and the researcher that is used as a guide Aricultural Activities Survey for judging the quality of the questionnaire design and the resulting data. Ref. no. 676-21 ResponsibUlity: Policy Research Department, Poverty An important recent innovation in data collection for and Human Resources Division-Margaret Grosh and policy analysis has been the World Bank's Living Stan- Paul Glewwe. With Dean Jolliffe. dards Measurement Study (LSMS). The value of LSMS Completion date. August 1994. data for policy analysis and implementation has be- Report: come well known both inside and outside the Bank. Jolliffe, Dean. Forthcoming. Review of the LSMS Agrikultural Analyses based on ILSMS data have been disserninated Activities Module. LSMS Worktng Paper. Washington, DC: in more than 200 research papers, ranging from internal World Bank. World Bank reports to articles in top academic journals, andLSMS dataincreasingly arebeing used in theBank's dialogues with member countries on a variety of policy Measuring the Impact of User Fee Increases: reform issues. The Second Round of the Indonesian Nonetheless,,theLSMShasincludedverylittleanaly- Resource Mobilization Study sis of the usefulness of the data its surveys generate, maidng it difficult to evaluate whether the LSMS fulfills Ref. no. 678-30 the goal ofincreasing the use of household-level data for The IndonesianResource Mobilization Study (IRMS) policymaking. The goal of this research is to take one is designed to overcome weaknesses in the data typi- step toward filling thatgap by analyzing the agriculture cally used to conduct research on resource mobilization, section of three ISMS surveys. the demand for medical care, and the determinants of - TheagriculturemoduleofthehouseholdLSMSques- health outcomes. The study incorporates five key im- tionnaire is generally the longest both in number of provemnents.Itisacase-controlstudyinwhichinterven- pagesandinaamountof interviewtime,yetitisoneof the tions have been made in some facilities and not in least used modules of the survey. In one list of 178 others. It has collected longitudinal panel data. It has publications using the ISMS data, only seven concen- introduced large variations in price across facilities. It trated on household farning behavior, about 10 exam- includes measures of quality of care. And it measures ined the correlation between measures of household the effect of price and quality on health outcomes and welfare and farming characteristics, and five used the utilization of health care services. module to help estimate household income. The study raised user fees and improved the quality The main results of this ongoing analysis are recom- of service at selected health care facilities in experimen- mendations for improving the design of modules from tal regions in two provinces of Indonesia-East thuee countries-Ghana, Peru, and Viet Nam. Because Kalimantan and West Nusa Tenggara. Before the inter- there is variation in the design of these modules, future ventions were implemented, a benchmark survey of surveyscanbenefitfromtheirsuccessesandtheirshort- more than 6,0 households and 1,000 health care pro- comings. viders in both experimental and control regions was Recommendations for changes to the surveys rely on conducted. A resurvey of the same households and analysis at two levels. The first entails reviewing the providers was conducted beginning in July1993, about questionnaire design for intemal consistency and rel- 12-18 months after the price-quality interventionswere evance to policy concerns. That analysis has led to put in place. recommendations to expand the set of policy-relevant The IRMS has used the longitudinal data to measure questions and to reduce the number of questions de- the effect of the experimental changes in price and signed to help estimate crop-specific farm production quality on the use of medical care and on the health functions. outcomes. The study is the first in a developing country The second level of analysis entails reviewing the to use such experimentally generated data. The large data generated from the surveys. This review helps to and truly random variations in price and quality intro- determine the appropriateness of precoded responses duced in the experiment will allow much better estirn a- and to judge whete the level of detail in certain ques- tion of price and quality effects than in previous studies. 24 Poverty and Social Welfanr The study comprises four main parts. First, It has zation would drop twice as fast among individuals In conducted the second-round follow-up household and the poorest quintile. Second, total visit elasticities were provider surveys; the resulting data set will be put into found to be lower than the own-price elasticities of the public domain. Second, it has investigated the ef- demand. As a result, a fee increase not only would fects of the cost of medical care (monetary costs, as well reduce the number of poor using public facilities pro- as the cost in travel and waiting time) and the effects of portionally more than other groups, but would cause providers' quality characteristics (for example, drug proportionally more of thepoornotto obtainany formal availabilit,ystaff qualifications,serviceavailabllty,and medical care. Third, in the study's investigation of pri- sanitary conditions) on the utilization of preventiveand vateproviders price responsesto thefee lncrease6in the curative medical care. The study has measured utiliza- public sector, it found that the own-elasticity estimates tion by individuals' choices of providers for the treat- were reduced by about one-third when adjusted for ment of illness, focusing on the extent to which there is such feedback, and the total visit elasticities were in- substitution between different types of providers, such creased by as much as a third in the larger price ranges. aspublicandprivateproviders,clinics,andhospitals.It Such large price sensitivity for private providers, If has used the results to project the effects of user fees and validated, significantly sharpens the revenue-utiliza- willingness to pay for improved access and quality on tion tradeoff for user fee policy in Indonesia. Finally, the revenue and utilization. It has also used the results to study also explored measures of health status, includ- determine the effect if increases in fees for curative care ing the duration of cough, cold, and flu and of fevers in on the denand for preventive care. In addition, the the month prior to the survey (1993), an index measur- study has assessed the effect of the prices, accessibility, ing the ability to pex !orn intermediate activities of daily and quality of public medical care on the demand for living (a physical functioning measure), and whether and supply of private health care. And it has examined physical functioning improved or worsened between the effect of health insurance on the demand for health the two rounds of the survey. As expected, itfound that care and the market potential of health insurance. variation in each of these indicators is related to varia- Third, the study has sought to determine who ben- tionintheavailabilityofhealthservicesand tovariation efits from the user fee policy. To do so, it has examined in the quality of those health services that are available. whether the effects of medical care prices, provider Responsbility:EastAsiaandPacific,CountryDepart- quality, and publi health investments differ by indi- mentllPopulationandHumanResources Operations vidual and household characteristics. For example, do Division-Samuel Lieberman and VicenteLPaqueo and these policiesprimarilybenefitpoororbetter-offhouse- Indonesia Resident Mission-Rozany Deen. The Rand holds? Does female education determine who benefits Corporation and Lembaga Demografi, University of and how? And what is the cost-effectiveness of target- Indonesia, are collaborating in the research. ing subsidies through geographic price discrimination? Completion date: September1994. Finally, the study has investigated the effects of medical care prices, provider quality characteristics, and public health interventions (water and sanitation World Bank and UNDP Strategies improvements, nutrition and supplementation pro- for Reducing Poverty grams, and immunization programs) on health stitus. The indicators of health status include the symptoms Ref. no. 678-36 and duration of illness, child growth as measured by The World Bank nas recommended that poverty changes in height and weight, activity-of-daily-living reductionpoliciesfol.owatwo-prongedapproach pro- (ADL) measures of physical functioning, and self- motion of general economic growth, and special pro- assessments of general health status. Theseindicators of grams to increasehuman capital formationand provide health status allow the measurement of effects on indi- safety nets to vulnerable groups. The United Nations viduals of ail ages, from infants to the elderly. DevelopmentProgramme ikewise recommendsatwo- Only preliminary and partal results are available, pronged strategy of growth and meeting basic needs, but they suggest several possible condlusions. Flrst, butemphasizesthesecond.Aperceptionpersistsamong demand for hedlth center and health subcenter care was some observers that the World Bank approach is an- found tobe more price-inelastic than demand forhospi- other name for 'triclde-down" economic policies. tal services, implying that significant revenues would This resea&Jdiinvestigateswhether thatcharacteriza- be raised if fees were increased substantially. That the tion is a fair one. Focusing on hvo Asian countries that price elasticities are negative and significant indicates havehadverydifferentexperiencesinthepast3Oyearn- that increasing user fees at health centers, subcenters, Pakistan and Sri Lanka-the study seeks to clarify the and hospitals would also reduce utilization-and utili- issues and assess whether the differences in the World 25 Poverty and Social Welfare Bank and UNDP policy recommendations are as big as effect of intervals on survival. Closer examination of some have riaimed. It updates and modifies cross- mortality patterns indicates that a more refined mea- sectional regressions to putprevious suchexercises into surementis needed thatcould distinguishatleastbysix- proper perspective. And it looks at changes in social month intervals, if not by actual number of months. The indicators over time in Pakistan and Sri Lanka. application of the model is now being refined. Thestudy's findings,presented ina paperatthe 1994 The most important policy conclusions of this work American Economnic Association meetings, are that the concern the targeting of health and family planning World Bank and UNDP strategies are not substantially services across time. Reductions in mortality have long different; progress in social indicators should be mea- been recognized as an important factor stimulating the sured in terms of changes, not levels; and both Pakistan use of contraceptives. That argues for first introducing and Sri Lanka continue to have substantial poverty healthfacilitiesand thenintroducing family planning. If problems, bat of a very different nature. the initial hypotheses of this study prove correct, the Responsibility: South Asia, Country Department a, introduction offamilyplanningforchildspacingwould Office of the Director-Paul Isenman; and Policy Re- beanearly"health" intervention.Atalaterstagelonger- searcl Department, Poverty and Human Resources term family planning methods for limiting the number Division-PaulGlewwe.WithHarshaAturupane,Uni- of children would be more appropriate. Such a model versity of Colombo. would depend on local child survival rates and ideal Competion date: October 1994. family sizes. This strategy would be more appropriate Reort: for Africa than for countries in Latin America and East Atuupane, Harsha, Paul Glewwe, and Paul Isenman. 1994. Asia, but might also be appropriate for northem India, 'Poverty, Human Development, and Growth: An Energing Pakistan, and parts of Central America where tradi- Cosensusi American Ecomic Reviw (Papers and tional approaches to fertility reduction have not been Proceedings) 84(2)244-49. highly successful. Responsibility: Population, HIealth, and Nutrition Department-SusanCochrane. WithDavidGuilkeyand Effects of Fertility on Infant John Akin, University of North Carolina. and Child Mortality Campktimn date: June 1994. Report: RE. no. 678-45C Cochrane% Susan, David Guilkey, and John Akin. 1994. -The This project built on background work-for World Cost-Effectiveness of Family Planning in Reducing the Develpmnent 1993: Investing in Health-on the health Mordlity of Women andTheir Offspring.' World Bank consequences of family planning through improved Population, Health, and Nutition Department, timingand number ofbirhs. Much existing evidence on Washington, DC. this topic fails to control for the reciprocal effect of mortality on fertility. The aim of this work was to deirelop a simultaneous hazards model of the determi- The Dynamics of Poverty: Why Some nants of both the survival of children and their spacing. People Escape Poverty and Others Don't- The main effort in the project was to develop an A Panel Analysis for Cf8te d'Ivoire appropriate methodology to construct such a sinulta- neous hazards modeL A major innovation in this work Ref. no. 678-70 was the use of techniques developed in an earlier re- Between 1985 and 1988 in C6te d'Ivoire, against the search project ("Impediments to Contraceptive Use in backdrop of a prolonged economic crisis, the numberof Different Environments," ref. no. 675-72) to show how poor increased from 30 percent to 46 percent of the access to health and family planning servces affected population.Yetatthesametimesomehouseholdswere demographic behavior throughout a woman's repro- abletoimprovetheirstandardoflivingfromoneyearto ductive life. This stage has been completed, and the the next-many of them by enough to escape poverty model isbeingapplied tothreecountries forwhich data altogether. sets previously had been used: the Cebu area of the What enabled some households to escape poverty Philippines, Tunisia, and Zimbabwe. while others remained poor? Knowing the answer to The findings are stiU preliminary. Debate continues this question is important rather than relying on gen- ontheappropuiatecutoff points forageof firstbirth and eral transfers to the poor, poliymakers could specifi- measurement of birth intervals. Results may be highly cally target the factors that determiine whether house- sensitive to these technical choices. For example, the holds can leave poverty. first application of the model only compared births at To identify the key household characteristics that intervals of less thantwoyearsand longerand found no promote an escape from poverty and that could be 26 Poverty and Social Welfare targeted by policy interventions, this study will carry ally good sources of data for CBte d'Ivoire on which to out multivariate analysis of panel data from the CBte base analysis, arguably the best in Africa. divoire Living Standards Survey of 198548. The basic The study will use three types of data to understand method of analysis will be to estimate first-difference the dynamics of the epidemic: informnation on the pat- equations with a measure of household welfare (house- temns of sexual matching (from the knowledge, atti- hold consumption per capita) as the dependent variable, tudes, and practices survey of sexual behavior of 1989); The analysiswill test the effects of household charac- infonnation on HIV seroprevalence in different epide- teristics (such as age and sex of household head, house- miologicallyrelevantgroups (fromthenationalrandom hold composition, and rural or urban location), asset survey of seroprevalence of 1989); and socioeconomic endowments (education, housing, land, consumer data relevant to the epidemic (from four rounds of the durables, and productive assets), and sources of income Living Standards Measurement Survey for 198548, a (wage earnings and self-employment). Because it is World Fertility Survey from the early 1980s, and the hypothesized tat both initial levels and changes in national census of 1988). human and physical capital could affect changes in The main questions the study will address are these: living standards over time, the analysis will include Why has H[V infection emerged so rapidly in COte both the first-year value of the variables for labor, hu- dilvoire, and what can be done to contain the epidemic? man capital, and physical capital and the change in Will the prevalence of H[V infection stabilize, or will it these variables. continue its recent rapid growth? Is it likely that other The results of the analysis will help pinpoint where countries in WestAfrica will experience high incidence resourcesshould be directed ina poverty reductioneffort andhighprevalence like thatinCOte dIvoire?ls itlikely For example, if household enterprises are found to be that infection rates will rise in rural areas? Finally, how critical to households' ability to escape poverty, support can the answers to these questions be used to target could be targeted to such enterprises. And if apprentice- programstogroupswhosebehaviorismostsusceptible shipexperienceorotherinformaleducationis found tobe to change and forwhom changes inbehavior will make more important than formal education, the allocation of the largestdifference for the evolution of the epidemic? education resources could be adjusted accordingly. The first research task is to classiiypeople in terms of Responsibility: Transportation, Water, and Urban De- their sexual behavior as measured by what the math- velopmentDepartment UrbanDevelopmentDivision- ematical models say affect the dynamics of the epi- Christiaan Grootaertl and Western Africa Deparbnent, demic-average number of partners, variability in the Ghana Resident Mission-Ravi Kanbur. number of partners, and propensity to mix among Completion date? October 1994 groups Bywhatsocioeconomiccategories should people be grouped to study the dynamics of the epidemic and its economic impact? By age? By marital status? By AIDS in Africa sectoral or geographical residence? By frequency of travel? By living standard? Rne no. 679-08 Once this task is complete, it will be possible to Heterosexual transmission and the associated trans- simulate the evolution of the epidemic using standard mission from infected mothers to their children are the methods of mathematical epidemiology. The studywill main mechanism of human immunodeficiency virus base the parameters of such an epidemiological model (HV) infectionin Africa. The sccial determinants of this on the infonnation that it obtains on sexual activityand trarsmissionmechanismarenotwelldocumented.Con- information on the natural history of liHY, such as sequently, it is difficult to understand the dynamics of infectivity, latency, and the probability of perinataltrans- the epidemic and how to minimize infection, mission combined with information on fertility. These . This projectwllstudythesocialdeterminantsofHIV simulations could be used to distinguish between the transmission in CotedtIvoire. The goal is to mathemati- near-term develo,nent of the epidemic and the longer- cafly characterize sexual activity as it relates to the run outcome They can also identify how many indi- epidemic, therebyidentifyinghow manyindividuals of viduals of which type are likely to become infected and which type are likely to become infected and when. when,aresultthatcanbeusedinassessingtheeconomic COteddIvoireisastrategiccountryinwhichtostudy impact of the epidemic. The national seroprevalence the HIV epidemic. HIV prevalence has grown explo- survey can be used to provide a check on the simulation sivelyin Cote dlvoire, and the countr';s generallyseen model, especially if the micro data can be obtained. And as having the worst HIV problem in West Africa. The varyingthe levelsofsexualactivityandtypesof activity government of Cote d'Ivoire has a program in place (such as condom use and mixing) in the model would designed to fight HIV infection by changing behavior make it possible to identify what sort of interventions and making condoms available. And there are unusu- can have the largest impact on the epidemic. 27 Poverty and Social Welfare Responsibility: Research Advisory Staff-Mark dren using household survey data from Maputo, GersovitzWithDedySeri,UniversityofAbidjan;Hanan Mozambique, covering 1,816 households. It will inves- Jacoby, University of Rochester; and Tape Goze, Ecole tigate the issue of mothers' work and child health using Normale Superieure, Abidjan. two related methods, both of which can contribute to Completion date: February 1995. policy. First, using reduced-form models, it will inves- tigate the net impact of exogenous household and com- munityvariables on the nutrition (anthropometric) and Child Welfare and Female Labor Market illness outcome variables. Second, the study will esti- Participation in Africa mate a nutrition production function that relates nutri- tional status to inputs of proximate health determi- Ref. no. 679-22 nants, such as nutrient intake, household sanitation, Itiswidelyrecognizedthatwomenhavedualrolesas and infant feeding practices. generators of household income and as primnary care Fstimates from the nutrition production function givers to childrn.L Many policies in developing coun- help in identifying household behaviors that can be tries involve one or the other of these roles interven- alteredtoimprove nutrition. Butthelikely impacts may lions to improve women's economic and social status reasonably be inferred from models that relate nutrition are directed in part at encouraging their entry into the to changes in mothers' participation, sector of worlk, or labor force, and programs to reduce malnutrition in labor supply using standard but comprehensive data children twget mothers as care givers. But policies sets.Thisinformationcanbeavaluableinputintopolicy directed at improving female employment opportuni- design. If negative effects on nutrition are found, prior- ties typically ignore the important rolb of women in ity should be accorded to offsetting interventions, such household activities related to the healthy development asensuringthatdaycareisaccessibletoworkligwomenL of children, and the design of nutrition interventions If a particular risk is associated with mothers' employ- usually has not considered the time constraints that mentintheformalwagesector,institutingflexiblework mothers who work face. schedules and matemity leave may help women better Recognition of the dual responsibilities of women manage work and childcare, reducing the nutritional has led to concem that increasing female labor force risk participation and improving the welfare of children Responsibility: Policy Research Department, Poverty may be partially conflicting objectives in some cases. and Human Resources Division-Harold Aldennan. Althoughwomen'sworkwill tend to improve nutrition With David Sahn, Comell University. by inceasing household resources, their time in the Completion date. March 1995. home-in activities such as preparing food, breast- feeding, collecting water and fuel, and seeking preven- tive and curative medical care-i itself an unportant International Price Comparisons of Items input into infant or child health. Children of working of Basic Needs mothers may be at nutritional risk because of the severe time constraints many of these women face. It is not Many analysts prefer to compare poverty lines ex- dear that there are fuly functoning markets for many pressed in national currencies on the basis of values important time-intensive inputs into health Although converted to a common currency by purchasing power workingwomennmay rely on other household members parity (PPP) rates (for example, World Deuelopment Re- toprovidechildcarewhiletbeywork,thequalityofcare port 1991) rather tfian by exchange rates. When appro- provided by these substitutes, especiaUy if they are priate infonnation is lacking, the practice is to use PPP older children, maybe poor. And there is a high poten- rates for consumption as a conversion factor. A more tial cost to older siblings from such arrangements. So it appropriateconversionfactorwouldbeonethatreflects is important to understand whether there are tradeoffs the relative prices of items of basic needs that constitute between matemal work and children's welfare. the bulk of poor people's consumption. The goal of research obviously should not be to This study used detailed price and expenditure data discouragewomenfromenteringlaborri-arkets.Rather. produced by the United Nations International Com- itistoimproveunderstandingofboththewaysinwhich parison Programme (ICP) to analyze relative prices of the economic status of women can be improved and differentsetsofitems,andestimatedinternationalprice how any potentially deleterious effecs of the changing indices for basic needs ibms. The research involved economic roles of women on the welfare of children can defininganalyticalythecriteriaforchoosingbasicneeds be prevted. items,selectingthemfromthelCPdatabase,computing This research will examine women's labor market PPP rates for different sets of countries, and analyzing participation and the nutrition and schooling of chil- the results 25 Poerty and Social Welfire The findings of the study indicate that PPP rates for There are three findings. First, differences in actual necessities are often higher than those for consumption fertility across countries are explained almnost entirely orGDP.Thepoorerthecountry,thelargerthedifference by variations in desired fertility across countries, with between the PPP rate for items of basic needs and almost no role for variations in contraceptive cost. Sec- that for GDP or consumption. That implies that the ond, the research was unable to identify useful varia- purchasing power of the incomes of poorer groups is tionsacrosscountriesinthe impactoflaborforcegrowth often lower than the corresponding estimates based on Contcarytoexpectations, poorer,less-resource-endowed purchasing power parities for GDP or consumption countries did notshow morenegativeeffects ofpopula- would suggest. Measures of poverty lines based on tion growth than richercountries.Third,inthe long-run purchasing power parities for necessities thus could data, labor force growth shows no effect on the growth potentiallyalter ourviews about theextentofpovertyin of output per worker, no effect on the rate of accumula- different countries. tion, and no effect on total factor productivity. Responsibility: International Economics Department, The policy implications of these findings are not Socio-Economic Data Division-Sultan Ahmad and condusive But they suggest thatsupply-oriented mea- Yonas Biru. sures to reduce fertlity by lowering the cost of contra- Completion date: Marc 1994. ception are unlikely to have a large effect on population Report: growth. Also, more effort could be spent in identifying Bir, Yonas, and Sultan Ahmad. 1994 'A Comparative Analysis those countries In which population growth is welfare- of PPPs for Items of Basic Needs-" World Bank, Intemnational reducing. Economics Department, Washington, DC Resporsffility- Office of the Vice President, Develop- ment Econornics-Lant Pritchett Compltion date: June 199t Population and Economic Growth Repors: -Pritdhett, lant 1994 Desired Fertility and te impact of There are two critical questions in deexmining poli- Population Policiesf Pepubitn and Deveopmet Reviwa cies aimed at reducing population growth. Fir is 2013):1-s5. population growth at the rates obseived in the absence Pxitfdelt lant, and Jeff Kling. 1994. Popuatian Growth and of policy interventions welfare-reducing? Second, if it Emnominc Growt- Factor Accumulaon orProductivityr is, what policies are effective in reducing population .1994. -Where in the World is Population Growth Bad? growth? In particular, is the expansion of family plan- ning programs effective? This research attempted to provide insight into each Income Security for Old Age of these questions (in inverse order) by examining, first, therelationbetweenactualfertilityanditsdeterminants Systems providing financial security for the old are and, second, the relation between population growth under increasing strain throughout the world. Rapid and growth in per capita income. demnographic transitions caused by rising life expect- To address the first question, the study assembled ancy and declining fertility mean thatthe proportion of the results of a number of household surveys on actual oldpeopleinthegeneralpopulationisgrowingrapidly- fertility and fertility preferences that have been under- Traditional ways of supporting the old, such as ex- taken in the past two decades to examnine the relation tendedfamilies,areweakening.Meanwhile,fornalsys- between actual fertility, desired fertility, and the deter- tems,suchasgovemment-backedpensions haveproved minants (related to both child demand and familyplan- damaging to the economy, unsustainable, and very ning programs) of desired fertility. difficult to reform. In some developing countries, these To address the second question,the studyassembled systems are nearing collapse. In others, govemments cross-country data on labor force growth, investment, preparing to establishformal systems risk repeating the humancapital,andothergrowthdeterminantstoassess same expensive mistakes. The result is a looming old the independent effect of labor force growth on output age crisis that threatens not only the old, but also their per worker. It used these data in two ways. First, it children and grandchildren, who must shouder, di- examined the variation in the impact of labor force rectly or indirectiy, much of ihe increasingly heavy growth across various types of countries (for example, burden of providing for the aged. by region, by endowment, and by income level). Sec- For these reasons, a growingnumber of econonists, ond, it calculated factor accumulation (rates of growth policymakers, and govermnent officials are seeking in- of physical and human capital per worker) so that it formation and advice about old age security arrange- could decompose the growth of output per worker into ments. Many others, however, remain unaware of the per-worker accumulation and total factor productivity. impact these arrangements have on such diverse con- 29 Poverty and Social Welfare cems as poverty, employment, inflation, and growth. ber, after which the Policy Research Department will This study is the first comprehensive, global examina- work to share the findings with Bank staff, member tionof this complex and pressing setof issues.The study governments, nongovernmental organizations, academ- synthesizes what is known, analyzes policy alterna- ics, the press, and others interested in old age security tives, and provides a framework for determining the issues. Regional and country conferences for policy- policyrnix mostappropriate to a given country's needs. makers and trainingprogramsforBankstaffareplanned. The study identifies three f unctions of old age finan- Responsibility: Policy Research Department, Poverty cial security systems-redistribution, savin& and in- andHumanResourcesDivision-Estellejames,Robert surance-and evaluates the policy options for meeting Palacios,andMontserratPallares-Mirelles,Financeand these by two criteria: their impact on the aged and their Private Sector Development Division-Asli Demirgfiq- impact on the economy as a whole. It finds that most Kunt and Anita Schwarz, and Macroeconomics and existing systems provide inadequate protection for the Growth Division-Klaus Schmidt-Hebbel; Executive old because they rely excessively on a single mecha- Offices-LouiseFox;Financial Sector DevelopmentDe- nism-suclh as a goverrnent pension promise-that partment-Dimitri Vittas; Europe and Central Asia, cannot insure against a variety of risks. In addition, Country Department II, Office of the Director-Chris- distribution is frequently perverse-for example, from tine Wallich; and Intemational Finance Corporation, poor young families to comfortable retirees. Moreover, Europe Department, Office of the Director-Donald as these systems mature, they may actuaUy hinder Keesing. With Mukul Asher, National University of growth,throughhighwagetaxes,whichpushlabor into Singapore;EricDavis,Bank ofEngland;BarryBosworth the less-efficient informal sector; ftirough rising fiscal and Gary Burtless, Brookings Enstitution; Maria Cattell, deficits, which fuel inflation; by encouraging early re- Bryn Mawr Coilege; Robert Holzmann, L. Boltzmann tirement, which reduces the supply of experienced la- Institute for Analyses of Economnic Policy, Austria; Sal- bon;bysqueezingoutgrowth-promotingpublicspend- vador Valdez-Prieto, Cathfolic University, Santiago, in& such as education or health services for the young; Chile; Patricio Arrau, Ilades-Georgetown University and in some cases by diminishing or misallocating Program, Santiago, and Ministry of Finance, Chile; Jane savings. Falkingham and Paul Johnson, London School of Eco- The study suggests that financial security for the old nomics; DeborahMitchell, AustralianNationalUniver- andeconomic growthwould bebetter served if govern- sity; Olivia S. Mitchell, Cornell University; and Jeffrey ments develop three systems, or 'pillars,' of old age Nugent, University of Southem Califomia. security. These are a publidy managed, tax-financed Completion date September 1994. pillar with mandatory participation and the primary Report. goal of reducing poverty among the old; a privately WorldEBank.FarthcomingAvertig theOldAgeCris:Polciesto managed, funded pillar that requires people to save for Pratect the Old and Promote Growth A World Bank Policy theirownold age;andathirdpillarforvoluntarysaving Research Report New Yarlc Oxford University Press. and annuities. The first covers redistribution, the sec- ond and third cover savings, and all three coinsure against the many risks of old age. By separating the Urban Poverty and Social Policy redistributive function from the savings function, the in the Context of Adjustment public pillar-and the size of the payroll tax needed to support it-can be kept relatively small, thus avoiding This research project is a comparative study, using manyofthe growth-inhibitingproblemsassociatedwith longitudinal data, of poor urban community, house- a dominant public pillar. Spreading the insurance func- hold, and intrahousehold coping strategies during the ionacrossallthreepillarsoffersgreaterincomesecurity past decade and their implications for urban social to the old tha reliance on any single system. policy.Itcomprisesfoursub-citycasestudiesinBudapest The relative imporktnce of each pillar, and the timing (Hungary),Guayaquil (Ecuador), Lusaka (Zambia), and of transitions to a sustainable old age security frame- Metro Manila (Philippines). Fieldwork was undertaken work, will vary among countries. This study analyzes by women's research teams from local nongovenunen- these differences, the crucial design choices, and the tal organizations, working coliaboratively with the re- apprapriatereformstrategiesindetaiL Thebottomline: search team in Washington, DC. All countries should begin planning for their aging The research is concerned with the strategies that populatians now. poor urban households adopted to r-duce vulnerability The study has resulted in a World Bank Policy Re- and prevent increased impoverishment Its purpose is march Report, Averting the Old Age Crisis: Poliies to to identify how much both household-level and Ptet th Old and Prnote Growth, that will be released intrahousehold-level factors diminish or increase the at the World Bank's annual meeting in Madrid in Octo- capacity to respond to conditions created by macro- 30 Poverty and Social Weytie economic change and policy reform. For it is clear that Transportation, Water, and Urhan Development Depart- the way in which individuals, households, and commu- ment, Washintn, DC. nities react to changing conditions-whether through Moser, Caroline 0., Michael Catehouse, and Helen Gara. 1994. cutbacks in social and economic infrastructure provi- "Manual on Urban Poverty Research Methods, Module U- sion, increases in consumer prices, or the creation of Sub-City-Level Research." World Bank, Washingtonr DC new job opportunities--has important implications for Moser, Camline, Alicia Herbert, and Helen Garcia. 1994. the design of poverty reduction strategies and for the "Poverty and Vulnerability in Chawama, Lusaka, Zambia, formulation of coherent social policy consistent with 1978-92: Research Proiect on Urban Poverty and Social economic reform. Policy in the Context of Adjustment." World Bank, The research project has a number of unique aspects Washington, DC. in which it both differs from and complements such Moser, Caroline O, Alicia J. Herbert, and Roza E. Makonnean national-level household surveys as the Living Stan- 1992 "Urban Povert in the Context of Stuctural Adjust- dards Measurement Study and Social Dimensions of nent Recent Evidence and Policy Reform." TWURD Adjustment surveys. First, it provides sample survey, Discussion Paper 4. World Bank, Transportation, Water,and longitudinal trend data that track changes in a low- Urban Development Department, Washington, DC. income community over a 14-yeer period (1978-92), Salamin, Judit, and Maria Ser Floro. 1993. '"ungary in the allowing an examination of the wayinwhichchanges in 19BOs: A Review of National and Urban-Level Economic household structure and composition influence house- Reformnsf iWURDWorking Paper 2. World Bak Trans- hold poverty and vulnerability. Second, it provides porbton, Water, and Urban Development Department, detailed intrahousehold data (derived from both the Washington, DC. sample and the subsample surveys) that illustrate the Solon, Orville J., and Maria SergyForo. 1993. Ecuador in the way in which different household members respond to 198s: A Historical Review of Social Policy and Uran-Level change. Third, it provides community-level data (from InterventionsY- TWURD Working Paper 6 Wold Bank, both quantitative and qualitative sources) to illustrate Transportation, Water, and Urban Development Depr- the way in which such strategies are contextualized ment, Washington, DC. within the particular spatial community. . 1993. "lTe Philippines in the 1980s A nstoical Review Some 60 researchers have been involved in this col- of Social and Urban-Level Interventonsf' TWURD Wokiung laborative project, which has encompassed consulta- Paper . World Bank, Traportaion Water, and Urban tion through preparatory and finalworkshops inWash- Development Department, Washington, DC ington, DC, mid-term workshops in the field, and ca- _.1993. -The Philippines i the 1981k: A Review of National padty-buildingcomponenr.Duringtheresearchanuin- and Urban-Level Ecowmic Reforms? TWUR Working ber of new initiatives in the World Bank have provided Paper 1. World Bank, Transportation, Water, and Urban important opportunities for the project to contribute to Development Department, Washington, DC operational work: national policy dialogues on urban .1993. "Zambia in the 1980s: A Historical Review of Sodial poverty in Ecuador and Zambia; the development of Policy and Urban-Level Intervenaons" TWURD Working more appropriate urban poverty indicators; and the Paper 9.World Bank Transportation, Water, and Urban promotion of national research capacity. Development Deparbnent, Washington, DC. Responsibi7ity: Transportation, Water, and Urban De- velopmentDepartment,UrbanDevelopmentDivision- Caroline Moser. The Ministry of Development Coop- A Volume on Subsidies Research eration of the Netherlands, UNICEF, the Swedish Inter- national Development Authority, and the UNDP/ Despite general, impressive progress in reducing UNCHS (HAUrTAT)/World Bank Urban Management poverty over the past 30 years, the persistence of wide- Program are providing funding for this research spreadpovertyanditscorrelatespresentsachallegeto Completion date: December 1994. governments and development institutions alike The Reports: need for cost-effective poverty reduction strategies has Floro, Maria Sergy, and A. Acosta. 1993. "Ecuador in the 198Os taken on special urgency in recent years as budget A Review of National and Urban-Level EcDnomc Reforms." constraints have tightened, and interestin the targeting Wodd Bank, Washington, DC of goverment spending toward the poor has grown. KalidaBeatrice, and Maia Sergy Flor. 192. "Zambia in the There is also heightened interest in the distributional 1980s5 A Review of National and Urbanlevel Economic impact of govemment spending and the effect of public Reform." INURD Workng Paper I& World Bank, programs on the welfare of the poor as seen in such Washington, DC. outcomes as health status and consumption. Moser, Caroline O. 1993 'Urban Sodal Policy and Poverty This study aims to respond to the widespread and Reducdton" TWWURD Working Paper 10. World Bank, growing interest in these topics-and to the important 31 Porty and Social Welfare need to understand these issues for effective poverty the theoretical and empirical foundations of the meth- reduction.Theresearch,wbichcomprisesboththeoreti- ods used in constructing poverty profiles.Typically, too cal and empirical studies, concerns public expenditure little work goes into assessing the robustness of poverty benefit incidence; the effectiveness of public spending comparisons as the underlying measurement assump- (In terms of reducing poverty); and the role and scope tions dhange.Muchofthedataroutinelyusedinpoverty forbettertargeting of public spending towardthe poor. analysis are fullof errors-a situation thatis unlikely to Some of the studies use primary data, particularly from change. There are also unavoidable value judgments household surveys, and others survey the literature. A underlyingmeasurementpractices. Thequalityof Bank number of the empirical studies use econometric esti- policy assessments and prescriptions may or may not mation to address their research questions. Others use depend on these errors and assumptions. An important maceconometric techniques, such as benefit incidence task is to find out just how confident analysts can be in analysis,toexplorethedistributionof governmentsub- forming poverty comparisons. sidies and other issues. The project is examining the properties of the mea- The research highlights the following points: Mea- sures used for assessing individual welfare, including uuing the distributional impact of the benefits from thepracticesusedinmakinginterpersonalcomparisons public spending and detemnning the effectiveness of of thewelfare of different demographic groups (such as treted programs and their targeting mechanisms in large households versus smal1 ones). It is also investi- reducing poverty are extremely complex. The desirabil- gating the different methods used for setting "poverty ityof aterative instruments mustbedecided ona case- lines" and how much they matter to the policy conclu- bycase basis. In particular, the usefulness of targeting sions drawn. And it is studying ways of making better must be evaluated in each plicy environment, ideally use of such nonincome indicalars of welfare as health on the basis of the relevant counterfactual. Among and education indicators. many othe factors, the behavioral responses of partici- Responsld7ity: Policy Research Department, Poverty pants and others must be taken into account when and Human Resources Division-Martin Ravailion, desiningandevaluatingantipovertyprograms;anum- Peter lanjouw, and Benu Bidani. ber of the studies demonstrate that these responses can Completion date: June 1995. have a large effect on the ability of different schemes to Reports: reduce poverty. Chaudhur, Shubham, and Martin Ravallion. 1994 "How Wel The findings of the research were presented at a Do Static Indicators Identify the Chronically Poor?" ournal World Bank conferece in June 1992. of Public Ecnomics 53(Marh)T367-9t ResponsIbIlity: PoLicy Research Department, Public Lanjouw, Peter, and Martin Ravallion. 199L. overty and Economics Division-Dominique van de Walle. With HouseholdSize." Kimberly Nead. The Ministry for Development Coop- Ravallion, Martiu 1994 -A Better Way to Set Poverty Lines." nation of the Netherlands is contributing funding. Outah 15. World Bank, Policy Research Department, Completion date December 1994 Washingon, DC Repor. - 1994 Poery GCmparins. Vol. 56 of Fwdamotels of Pure vn de Walk Dominique, and Kimberly Need, eds. Forthrmm- and Applied Economics. Chur, Switzerland: Harwood ing Publk Spnding and tke Poor: Thwy and Evdence. Academic Publishers. _. FortIning. "Poverty Ran Using Noisy Data on Living Standards" Emomics Letters. The Methodology of Poverty Assessments Ravallion, Martin, and Benu Bidani. 1994 "How Robust Is a Poverty Profile?" Worid Bnk Eamic Review 8(1)75-102. Polcies to fight poverty rely increasingly on datb about the living conditions of the poor, as reflected in a 'poverty profile." But constructing a poverty profile World Povert Monitoring that can be relied on to guide policy choices is often difficuL And the data and methods used can matter Is poverty inaeasing in the developing world? This grealty to the poLicies chosen. At their worst, poorly question is surprisingly difficult to address convinc- devised poverty profiles can misdirect poverty reduc- inglyusingexistingdatasourcesbecauselittleefforthas tiondeffor-foreample,bychaningscarce resources gone into compiling and analyzing the available distri- to cities whe poverty is worse in rural areas, or vice butional data on a reasonably comparable basis. Yet verm there is a clear need to do so-to help monitor progress Whatmethodsareavailableforconstructingpoverty in reducing poverty and as a first step toward under- profies?Whataretheirstngthsandweaknesses?This standigthecausesandeffectsofchanging distibution. pectaeekstoanswerthosequestionsbyinvestigating Thisprojectaimstomonitorprogressinreducingaggre- 32 Poverty and Social Welfare gate poverty using a consistent compilation of distribu- Ravallion, Martin. 1994. "Measuring Sodal Welfare with and tional data from household surveys. without Poverty Lines.American EcnomiRevw (May). Estimates of various poverty measures are available Ravallion, Martn, Caurav Datt, and Dominique van de WaLle. from numerous studies of individual countries, but 1991. "Quantifying Absolute Povedy in the Developing their use for monitoring world poverty is questionable World." Reiew of Income and Wedth (December). because of comparability problems. Past work at the country level has used poverty lines appropriate to each country. But there is a marked tendency for the real Health Benefits of Pollution Reduction value of local poverty Lines to increase with the average income of a country. This fact clouds attempts to com- Thestandardpracticeinassessingthehealthbenefits pare and aggregate across countries using the poverty of pollution control in developing countries is to apply data available in standard (secondary) sources. The use estimates from the United States. Functions relating of official exchange rates also biases international pov- ambient pollution levels to risk of illness or premature erty comparisons. This project therefore turns to the death that are estimated using U.S. data are applied to primary data sources and reestimates all poverty mea- populations whose health status differs considerably suresonaconsistentbasis. Itconverts local currencies to from thatof the US. population. Estimates of the dollar constant purchasing power parity. The project is also value of illness or premature death are likewise trans- taking care to test the robustness of comparisons across ferred from U.S. studies, adjusting only for differences regions and over time to measurement assumptions. in per capita income. The data set contains 40 countries, with 18 at two points Research that examines the appropriateness of hrans- in time over the period 1981-91. ferringUS. estimates of benefits is needed. Specifically, The estimates indicate that around 1990 more than studies that relate airpollution concentrations to health -one billion people-roughly one in three-were living consequences must be conducted in developing coun- on less than a dollar a day. The incidence of absolute triessothattheresultscanbecomparedwiththedose- poverty in the developing world as a whole remained rsponse functions currently used to predict pollution static during the second half of the 1980s. With the damages in these countries. Similar studies must be cumulative distribution of consumption changing ondy conducted to see what people in different countries are negligibly, the number of poor-by any consumption willing to pay for the health improvenmnts that will standard for defining what "poor" means-has been result from pollution controL growingat the same rate as theaggregatepopulation of This project has conducted a study on th effects of the developing world, about 2 percent a year. But there particulates and ozone on acute respiratory illness in is marked variaton among regions and countnes, with Taiwan (China)-in conjunction with reearhs at generallyrisingpovertyincidenceintatinAmericaand Resources for the Future in Washington, DC, and Africa and generally falling incidence in Asia. Poverty Academia Sinica in Taipei-and is plamning a similar increased in about a third of the countries. study for New Delhi, India& The Taiwan (China) study Preliminary results of this research were used in correlated respiratory symptoms, reportedinthehealth Impfmenting the World Bank's Strategy to Reduce Porty: diaries of 1,000 subjects overathuee-mnthperiod,with Progress and Challenge (Washington, DC: World Bank, variations in daily pollution levels. This work was fol- 1993). The results have also been used in recent World lowed by a contingent valuation study to estimate the Deveopment Reports. Work on linking the data to social willingness to pay for reductions in respiratory illness indicators and access to public services is under way. The willingness-to-pay function, estimated using Responsiility: Policy Research Department, Poverty Taiwanese data, does a good job of predicting wiling- and Human Resources Division-Martin Ravallion, ness to pay to avoid an episode of respiratory illness in Gaurav Datt, and Shaohua Chen. the United States when U.S income and education Completion date: June 1995. levels are substituted into the equation. What does not Reports: work well is multiplying Taiwanese willingness to pay Anand, S. and Martin Ravalliomi 1993. "Human Deloment by the ratio of US. per capita incoms to Taiwanese per in Poor Counies: On the Role of Private Lncomes versus capita income-the common practice in benefits bans- Public Serviaes" ournl ofgEanmc Peivaes (Wmter). fer. That overestimates US. willingness to pay because Bidani, lknu, and Martin Ravallion 1994. tDemposing Social the income elasticity of willingness to pay is consider- Indicators Using Disributional Daa. ably below one. Chn, Shaohua, Caurav Dutt, and Martin Ravallion. 1993. 18 Responsibility: Policy and Researh Dertmeent, En- Poverty Inaeasing in the Developing World? Poicy vironment, Infrastructure, and Agriculture Division- Research Working Paper 1146. World Bank Policy Research Maureen L Cropper and Nathlie Simon. Departmet, Washingtmn, DCr Completion da4t December 1995. 33 Poerty and Social Welfare Report: between components: family allowance receipts de- Cropper, Maureen I, and others. Forthcoming. "What Is the crease sharply as the standard of living increases, but Value of Reduced Morbidity in Taiwan?" Pwiceedlngs of the the opposite is true for pensions. IEAS Cofirence on Economic Perspectis of Pollution Control The study also attempts to distinguish policy im- in Padfic Rim Countries. pacts on persistent poverty from those on transient poverty. To do so it uses a new approach in which changes in consumption over time are simulated with Public Expenditures and Poverty and without policy changes, allowing for behavioral responses. Poverty increased over the period,and would Public expenditure programs play an important role have increased even more if not for the gains in social in poverty reduction, income redistribution, and safety income that protected many households from poverty. netprovision in many countries. The past 10 years have Almost ail of the safety net's ability to protect the poor seen tremendous advances in the use of household- is found tobe due to higher average outlays rather than level data sets to explore avastarray of issues relating to improved targeting. public expenditures as access to good data has mark- TheprojecthasalsobegunacasestudyonVietNam's edly improved, at least for some countries. expenditure on physical infrastructure, to investigate This research aims to develop and use econometric its effects on the poor and on rural living standards. in techniques on household-level data sets to leam more particular, it asks how physical infrastructural con- about the wide range of factors underlying the ind- straints affect household participation in the emerging denceof public expenditures and,where feasible, about market economy. The study uses the newly available dynamic issues in incidence and social income provi- datafromtheVietNamLivingStandardsMeasurement sionL The research also aims to improve on the standard Survey. Another case study will examine the distribu- methodology for public expenditures incidence work. tional impact of social sector expenditures and infra- And it will explore the closely related issue of fiscal structure spending in India, at the level both of center- federalism and countries' revenue-coecting and other state fiscal relations and of househo.' i cess to public constraints-constraints that can have consequences services. for poverty and inequality. A workshop on the research was held in July 1993 in The project has recently completed a study on dy- Budapest with participants from universities and gov- namic issues in incidence using new panel data on- einment ministres. consumption and social incomes from the Hungarian Responsibiit: Policy Research Department, Public Household BudgetSurveys of 1987and 1989. The study Economics Division-Dominique van de Walie and reviews Hungary's social safety net and the changes Sanjay Pradhan. With Amit Mohindra. that occurred during the period of study. It attempts to Completion date: December 1995. throw light on such questions as these: How have the Reports: reforms instituted so far performed? How has the inci- Ravallion, Martin, Dominique van de Walle, and Madhur dence of social spending been affected? What are the Gautam Forthcoming. "Testing a Social Safety NeL' jurnal implications for future reform? qf Public Economics. Although social incomes ar re distnbutive-they van de Walle, Dominique, Martin Ravallion, and Madhur accontforhighershares in the consumption of the poor Gautanm 1994. How Wdl Does the Social Soty Nei Work? The than in that of the rich-they are not well targeted. In Inidnce of Csh Benefits in Hungry, 1987-89. ISMSWorking both survey years the richest group received more than Paper 102. Washington, DC: World Bank. twice the social income of the poorest. Disaggregating -. 1994. "Poverty and Sodial Spending in Hungary." World socialincomes shows that targetingperformancediffers Bank Policy Research Deparbnent, Washington, DC. 34 LABOR MARKETS AND EDUCATION Improving School Effectiveness demics at the University of theWestlndiesreviewed the and Efficiency in Developing Countries: survey instruments; Jamaican experts evaluated pro- The Case of Jamaica posalssubmittedunderasmallgrantscompetition;and Jamaicans willcarryoutfourresearchstudies under the Ref. no. 676-87C small grants program. This Jamaican involvement was Basic education is fundamental to economic and intended to ensure that the policy prescriptions derived social development, and for individuals it is a principal from the project feed into the country's education plan- means for raising their socioeconomic status. Yet in ning process. To this end, policy seminars were held many developing countries basic education is not orga- with the Jamaican government to discuss the results of nized to promote efficient production of cognitive skills. the research. Knowledge of which education investments are most Findings of the research have been presented at effective in inparting these skills would assist both seminars held during the meetings of the Comparative governmentsandtheWorldBankinallocatingresources and Intemational Education Society in Kingston, Ja- aimed at improving education outcomes in developing maica, in March 1993, and the American Educational countries. Research Association in Atlanta, Georgia, in April 1993. This project sought to demonstrate how to carry out Respomnsiblity: Education and Social Policy Depart- education research that will lead to immediate and ment-Marlaine Lockheed; and Policy Research De- specificpolicy recommendations thatcanbe acted onby partment, Poverty and Human Resources Division- ministry of education officials in developing countries. PaulGlewwe and MargaretGrosh WithDerekGordon, The project took Jamaica as the demonstration country. University of West Indies, Jamaica (deceased); Hanan Theresearchwasbasedon the 1990 expanded educa- Jacoby,Universityof RochesteAbigailHaris,F=darn tion module of the Survey of Living Conditions, which University; Lynn Ilon, State University of New York, includes detailed household data matched with exten- Buffalo; Lorraine Blank; Ddlon Aleyne; Claudia Cham- sive data on the schools attended by each child in the bers; Mignon Manderson-Jones; Ruth Morris; Hodan households surveyed. The data on schools include their Addou; Nathalie Laboucher; Henri Jeancard; and physical, pedagogical, managerial, and organizational Qinghua Zhao, American University. The Statistical characteristics, as well as informationbearing on policy Institute of Jamaica and the Plnning Institute of Ja- issues of central concem to the Jamaican Ministry of maica contributed staff time. Education. The data also include standard measures of Completion date: December 1993. reading and mathematics skills (California Achieve- Reports: ment Test). The study used analytical techniques to Chambers, Claudia.1993. "Attendance, Achievement, and controlforsampleselectivity,analyzed graderepetition Aspects of the Learning Eniroment in Primary Educa- in detail, and performed separate analyses for boys and tion." World Bank, Washington, DC. girls. Glewwe, Paul, Maiaret Crosh, Hanan jacoby, and Madaie At the primary level reading and mathematics Lokeed. 1993. "An Eclectic Approach to Estimating the achievement varies considerably among students. The Detemiinants of Cognitive Skills in Jamaican Prmary differences are due in part to household welfare and Education"World Bank Washingtn DC students'gender(femalesoutperforimales). Butschool Harris, Abigail. 1993. "The Validity of the Caliomia Auhieve- materialandpedagogicalinputs, pedagogical processes, ment Test as a Measure of Educationai Ptoductivity in and school management practices aU contribute signifl- Jamaic&" World Bank, Washingtonh. DC cantly to student achievement Differences between llon, Lynn 1992 Fbhe Unit Costs oSdcool inputs in Jamaica, higher-achieving and lower-achieving schools can be 1991." World Bank, Washington, DC. attributed to a few key policy variables, mainly peda- Manderson-Jones, Mignon 1993. he School Feeding Pro- gogical and managerial practices. gram. World Bank, Washington, DC An innovative aspectof the projectwas the extensive Moris, Ruth. 1993 An Analysis of the Facs which Impinge Jamaican involvement Govenmment officials and aca- on School Attendince.' World Bank Washington, DC 35 Labor Markets and Education Labor Markets and Employment Issues: half of the 1980s and whether it can therefore share the Kenya and COte d'Ivoire blame for the continuing mixed results of the adjust- ment effort begun in the early 1980s. The research ap- Ref no. 677-73C plied a microeconomic framework to the four annual This research examined survey data from C6te Living Standards Measurement Surveys conducted in dIlvoire and Kenya to investigate policy-relevant issues 1985-88. Flexibility is identified inavariety of ways, and relating to the labor market. nearly all indicators and approaches seem to suggest The research on Kenya relied on original tabulations that not only did significant changes occur in the labor and analysis of the two labor force surveys-urban for marketbutalso that these changes were generally in the 1986 and rural for 1988-made available to the Bank. expected direction. In particular, the narrowing of the The research compared results fronthese analyseswith differential between informal and formal sectorwages, the results of researchers who worked with the earlier the decline of the wage premium of educated workers labor force survey of 1977-78 or with other special and of public sector workers, the decrease in regional surveys. It supplemented this material with analysis of wage differences, the increased labor turnover (espe- the extensive series of economic data available for the cially in the urban formal sector), the positive labor formal sector to construct a consistent picture of the supply response and decrease in unemployment, and evolution of employment and wages in Kenya over the the increasing responsiveness of industrial employ- past quarter century. ment to wages and of migration to unemployment are Formal sector wages in Kenya have dearly shown al compatible with greater flexibility in the labor mar- downward flexibility: average real wages have fallen at ket. These results are qualified to the extent that, first, asignificantrate over two decades (1.2 percentayearin the period under consideration is short and labor mar- the private sector and 2.8 percent in the public sector). ket adjustment typically takes place after expectations The real wage dedine helped to sustain a reasonable are stabilized and, second, the annual data may reflect rate of growth in formal sector employment-particu- error correction and regression toward the mean. larly public employment The decline in formal wages Responsibility: Africa Regional Office, Office of the has been accompanied by a narrowing of educational Chief Economist-Dipak Mazumdar, and Education and skill differentials and in earnings differentials be- and Social Policy Department-Zaflris Tzannatos. tween the formal and informal sectors. Completion date. December 1993. Eanmings function analysis for 1986 showed that Reports: among male workers, employees earned twice as much Mazumdar, Dipak 1993. 'Kenya: Wages and Employment? as the self-employed, but much of the difference was World Bank, Africa Regional Office, Washington, DC. Draft accounted for by the difference in the characteristics of Tzannatos, Zafins 1994. 'rhe Labor Market and Adjustment in the labor in the two sectors. Detailed analysis of the Cote d¶voire, 1985-88." World Bank Education and Social rural-urban income gap showed that even after two Policy Department, Washington, DC. Draft. decades of falling real wages, a significant gap remains between urban and rural households in income per earner and income per adult equivalent. Internal Efficiency in Turkish The income gap may stem in part from the phenom- Higher Education enon of urban residents leaving part of their family in ruralareasasaresponsetothefallinurbanwagestThere Ref. no. 678-05 is strong evidence to suvgest that there has been a Over the past two decades higher education in Tur- marked fall in the size of urban households, a finding key has grown dramaticaily. But this growth has oc- that raises concerns about the productivity of urban curred without sufficient attention to the system's effi- labor for long-term growth of the economy. Stable ur- ciency and effectiveness. This study has examined is- ban settlement of mature households has often been sues relating to efficiency in Turkey's universities, fo- seen asa precondition for sustained skillform3tion and cusing on the costs of higher education. growth of labor productivity. The issues raised by the The study reviewed recent developments, institu- Royal Commission for Africa and the Carpenter Com- tionaldharcteristicsandsomeofthemajorissuesof the mission 40 years ago, when urban East Africa was stiU higher education system in Turkey. It estimated aver- dominated by short-period single migrants, once again age costs for all institutions, levels of instruction, and become important. fields of study. In addition, the study examined three Theproject'sanalysisofthedatasets forC8ted'lvoire groups of faculty fields across all universities through attempted to determine whether the country's labor theuseofafour-output(undergraduateteachin&gradu- market was characterized by inflexibility in the second ate training, doctoral-level instruction, and research 36 Labor Markets and Education productivity) quadratic cost function to estimate both 15 to 20 percent of anl available resources for universi- their average costs and their economies of scale and ties, only about 9 percent of students are graduate scope. The study gave special attention to costs and students. productivity in the expanding field of post-secondary In the examnination of the costs of postsecondary vocational education within universities. vocational training schools in Turkey, the most impor- The study's most important finding is that there are tantfindingisthatmostsuchschools are much too small substantial opportunities for economies of scale in the to have meaningful economies of scale Average annual production of both teaching and research in most of the costs of some two-year postsecondary vocational train- universities and that most institutions in Turkey are ing programs were higher than those of many four-year operating at less than their optimal size. Many schools programs, often even on the same campuses. could double their enrollments and reduce their aver- Although the study did not attempt to determine the agecosts of instructionby more thanhalf. A few schools effects of the recent expansion in higher education on were found to be operating beyond their optimal scale effectivenessor thequalityof outcomes,it did find some of plant; by reducing their enrollments, these schools evidence supporting claims by other observers that the could reduce their average cost per student. expansion has led to a decline in the quality of output. Findings concerning opportunities for economies of For example, the average rate of faculty research and scope were broadly consistent with results from similar publication has declined as faculty have been added to multiproduct cost studies for Australian, U.K, and U.S. the expanding number of institutions. Almost all facul- universities. These economies of scope arise from the ties have assumed a joint undergraduate and graduate joint use of institutional resources for the joint produc- education mission, and many of the new programs and lion of teaching and research outputs and for the joint faculties had very low graduate enrollments. Several of production of undergraduate and graduate training. the new schools barely had the senior academic faculty Expanding specalized and free-standing research cen- needed to staff their undergraduate programs, to say ters outside of universities would likely result in less nothing of their graduate progams. efficiency in the use of social resources than would the Contrary to the general expectation that the higher joint production of the same outputs in Turkey's public the qualityof aninstitution (as measuredby selectivity), research universities. the higher the cost of education, the study generalLy The study has found that most previous cost studies found the opposite to be true. In general, the lower the ofhighereducationinTurkey materially overestimated perceived quality of an institution, the higher the aver- the average costs of undergraduate education and un- age costs of instructionL Expenditures per studentwere derestimated the average costs of graduate education. lower at the more selective and older universities and Averageinstructionalecstswerefound tovarydramati- higher at less selective and developing universities. cally within and between institutions and programs. The findings of this study-especially those relating These variations related largely to differences in institu- to the likely effects of economies of scale and scope in tional and program enrollments, field-related technolo- Turkey's universities-ae especially tmely given the gies and resource needs, and the internal discretionary country's plans for expanding higher education. allocation of institutional resources. Strengthening, expanding, and building on existing One of the moststriking features of higher education institutions should be given higher priority if concems in Turkey is the recent specification that all universities about the system's intemal efficiency are to be ad- will have teaching, research, and public service respon- dressed. Higher education in Turkey will1 continue to sibilities as part of their main missions. As a result, all sufferfrominefficiencyunlessmoreatbentionisgivento universities are organized as "research universities," these issues. with concurrent responsibilities for producing under- Rlapbdty: Europe and Central Asia, and Middle graduates, graduate degrees, research, and pubLic ser- East and North Africa Regions Techical Department, vice, and all are treated equally in the alocation of Human Resources and Social Development Team- public funding. But many universities lack the neces- StephenHeynemanmndEuropeandCentralAia,Coun- sary resources to maintain even a minimum level of try Department I, Human Resources Operations ivi- quality for effective graduate education. And many sion-Michael Mertaughl With Halil Dundar, Univer- graduate programs may fail to attract enough students sity of Minnesota. to acdhieve viability and warrant continuance. The pro- Completion date June 1995. iferation of high-cost, low-quality graduate programs Report: has become one of the major factor- affecting the effi- Pundar, HaiL 1994. "IntemadEfficency m Turkish Hher cency and the quality of graduate education through- Educaiorn A Shtdy of Iitional Costs and OutputrL outthesystem.Althoughgraduate educaioconsumes World Bank, Waldngton, DC. DrafL 37 labor Markets and Education Training, Technological Capability, groups of firms-those that invested in new technology and Firm-Level Productivity or know-how (high-tech) and those that did not (low- tech)-and for each technology group compared the Ref no. 678-lIC relative efficiency of exportingand nonexporting firms. - In many developing countries where productivity The results indicate that exporting firms are more effi- gains from factor reallocation have been largely ex- cientonlyinthelow-techgroup.Buthigh-techflrmsare hausted, itis recognized that purposeful investments- on average more productive than low-tech exporting in both human and technological capital-will be re- firms. The findings suggest that exporting can give rise quiredtoraiseratesofproductivitygrowthinthemanu- to efficiency gains when initial technological capabili- facturingsector.Butthereisonlylimitedunderstanding ties are low. As firms develop these capabilities, the of the factors that shape the incentives of firms to invest efficiency gains from technology investments become in worker training and in such technological improve- more important than exporting. ments as research and development or purchases of The final set of analyses sought to explain the struc- know-how. Nor is there sufficient understanding of the ture of wage differentials by firm size, industry, and complementarities between the two kinds of capital, of skill level in terms of firm investments in knowledge- the productivity outcomes of these investments, and of through export market development, firm-based train- the appropriate role of govenmment in training and ing, and research and development. For two groups of technology policy. frms-high-techandlow-techindustries-nonparamet- This research had two objectives: to improve the ric and semiparametric methods were used to measure understanding of firms' behavior in making decisions the firm size distribution of wages free of functional aboutworkertraining and technology, and to measure formassumptions, andtodisentangletheseparatewage the effects of these joint decisions on firm-level produc- contributions of each source of knowledge. The results tivity growth and worker compensation. The research indicate two things. FLrst, a considerable part of the firm used firt-level data from the 1986 manufacturing cen- sizeandintenindustrywagedifferentialsisexplainedby sus of Taiwan (China). These data are unique in report- firm investments in knowledge. Second, of the three ing finn-level expenditures on training& research and sources of knowledge, firms' investments in research development, and purchased know-how, as well as a and developmentare associated with the largest impact welth of information on individual enterprises, their on wages, followed by enterprise-based training. Ex- production (inputs and outputs), and exports. porting by itself has relatively little impact on wages. n the first set of analyses the research estimated Responsibility: Private Sector Development Depart- jointly a thee-equation model of training, technology, ment-Hong Tan. With Bee-Yan Aw and Geeta Batra, and production to help quantify the contribution of Pennsylvania State University; and Amy Hwang, the enterprisebased training to productivity. In this model Academia Seneca, Taiwan (China). an attempt was made to correct econometrically for Completion date: June 1994. selectivity bias a sing from the endogenous nature of Reports: these investments. The results indicate that tl.e key Aw, Bee-Yan, and Geeta Batra. 1994. "Linking Exports, determinants of both training and technology invest- Tedmalogy, and Efficiency." Pennsylvania State University ments are a firm's size, its export orientation, and the and the World Bank. kill composition of its work force. Training has a large Aw, Bee-Yan, and Hong W. Tan. 1993. "Training, Technological positive effect on the productivity of firms, and the Capability, and Frmn-Level Productivity.' World Bank productivity effects of worker trainung are much larger Private Sector Development Department, Washington, DC for firms that investin technology than for those that do Tan, Hong W., Bee-Yan Aw, and GCeta Batra. 1994. "Technology noL Consistent with the new econnmic growth models, and the Distribution of Wages The Role of Training, R&D, these findings suggest that investments in human capi- and Exports." World Bank, Private Sector Development bl and tedhnology have interactive effects on raising Departmenlt Washington, DC firms' productity. A second anazysis focused on the role of exports in raising firm-level productive efficiency. At issue is Female Labor Market Participation wheher theobservedpouitivecorrelationbetweeneffi- and Child Welfare in Africa ciencyand exportlis attributabletothebeneficialeffects of e vxpoting-improved access to foreign sources of Ref. no. 678-12C tecuhnlogy and know4-w, and learning to compete As African countries restore macroeconomic stabil- hnbtafmonaly-or to the fact that exporting firms are ity, there is a need for policies directed toward raising more effiient to start with. To address this issue, the women's productivity and incomes. At the same time, dudy estimated frontier producton functions for two attention mustbe giventohowchanges inlabor market 38 Labor Markets and Education conditions affect women's labor force activity and their Contributions of Secondary Education allocation of time in general, and how these changes to Per Capita Growth in the Leading Newly affectchildwelfare.Increasing family resourcesthrough Industrializing Countries of Asia women's market work should, all thing. being equal, improvechild nutrition. Butwomen'stimeinnonmarket Ref no. 678-27 activities is also an important input In Infant or child An increase in a nation'seducation level Isviewedas health. Children of working mothers may be at nutri- a prime contributor tD economic growth and poverty tional risk because these women lack the time to, for reduLtion. The transformation from a low-productivity example, make use of public services. to a high-productivity economy requires technological This project sought to contribute to the understand- capability that is often associated with at least a second- ing of both the ways in which women's economic status ary education. But since World War II some countries can be improved and how any potentially deleterious have dramatically increasedcoverageofsecondaryedu- effects of women's changing economic roles on the cation without experiencingthe desired economic tram- welfare of children can be prevented. formatton.Japanand Asia's newly industrializingcoun- The project used two data sets from Sub-Saharan tries, however, have long been seen as examples of Africa collected as part of more general studies of Afri- economies that have successfully achieved growth can economies in transition: the Conakry (Guinea) through explicit human resource developmentpolicies, Household Welfare Survey conducted by Comell Uni- including secondary education. The results imputed to versity with a sample of 1,725 households, and data these policies have been higher per capita income and collected from 1,800 households in Maputo in 1991-2 lower income inequality. The project included two analyses of labor force partici- Secondary education has expanded rapidly in the pation and of self-employment, segmented by sector newlyindustrializingeconoirues,yettheyhaveadopted and by gender. [n addition, it developed a method to different strategies to achieve their economic and social model the simultaneous choice of female participation objectives. These strategies include the following; and sector of employment with investments in child * Developing the structure of secondary education nutrition either directly or through intermediary in- (type of institution, length of course, curricular empha- puts, including decisions on breastfeeding and wean- sis, stratification of schooling) ing, as well as participation in child weighing and * Diversifying the curriculum within the general vaccination programs. secondary stream The research supports the hypothesis that urban * Financinginstitutionsandprovidingstudentsup- labor forces are heterogenous. In particular, education port (balance between public and private financin& andthe date of migration intothe citystronglyaffectthe reliance on fees, general or specific grants as mecha- sector of employment. As found elsewhere in te devel- nismsforfinancinginstiutions,andscholarships,grants, oping world, schooling is pnsitively correlated with or loans as forms of student support) female entry into wage employment and is negatively * Stimulating private ownership and management correlated with self-employment The presence of small of institutions. dhildren decreases the likelihood of women's wage This study seeks to test the basic proposition that employment, but not their self-employment, indicating secondary education plays an important role in raising differencesbetweensectorsinthecompatibilityofwork labor productivity wiffiin industry, and in facilitating and childcare. The Conakry data also reveal signifi- the structural aidjustment from agriculture to nianufac- cantly lower earnings for women than men in each turing and to more capital-intensive services. It corn- sector of the labor market, holding other factors pares the foliowing development indicators of three constant. Southeast Asian countries-Malaysia, the Republic of Responsibility: Policy Research Department, Poverty Korea, and Thailand: and Human Resources Division-Harold Alderman. * Percapitainomegrowthalongwithmajorsoures With David Sahn, Cornell University. of economic growth (investment in secondary educa- Compltion date: September 1993. tion, investment in physical capital, and investment in Reports: research and development or technology transfer, aU as Glick, P., and David Sahn. 1993. Labor Form Pafidpation, Sector- a percentage of GDP) ial Chow, aand Erings in Conlry, Guine. Cornell Food and * Populationgrowthratesandwomen'seducational Nutrition Policy Program WorLing Paper 43. Ithaca, N.Y. attainment Sahn, David. 1993. -An Analysis of Labor Force Patipaton * Export growth rate and Sectora Choice among Wemen in Maputo, * Education of the labor fore. Mozambique Col Food and Nutriton Policy Program. The study comprises three elements. First, it carries Ihac-, N.Y. out a general statifstical review of the development of 39 labor Markets and Education secondary ecducation in the Asian region from 1950 to sons of the training effects of different education sys- 1990. Second, itreviews the history of secondary educa- tems, training policies, trade regimes, and macro- tion in the three countries, focusing on economic and economic conditions. social trends and the implications for secondary educa- tSurveys have been completed in Colombia, Indone- tion in coverage, function, and structure; internal effi- sia, and Mexico. The research is using the data from clency; extemal efficiency; and equity and quality. Fi- these surveys to study the determinants of firm-level nally,itperforms a comparative anal:isis of the effects of compensation and relative productive efficiency in these alternative patterns and strategies for developing sec- countries, and to compare their experiences with those ondary education in response to changing economic of Taiwar. (China). Preliminary analyses of Colombia, and social demands and severe budgetary constraints. Indonesia,andMexicorevealthat asin Taiwan(China), Responsibility: Education and Social Policy Depart- wages paid by enterprises are strongly influenced by ment-Donald Holsinger and Ompom RegeL. With new technology, by training, and by exports, as welL as Walter lvcMahon, University of Indiana. byotherfirmandworkercharacteristics. Investments in Completion date: September 199t new technology and training have the largest wage effect in Indonesia, Mexico, and Taiwan (China); in Colombia, which is now removing trade barriers, ex- Enterprise Training Strategies porting firms pay the highest wage. Preliminary analy- and Productivity: A Cross-National Study ses of productive efficiency indicate that enterprises in Taiwan (China) operate closer to the production frontier Ref no. 678-39 thanenterprisesinColombia andMexico. The dataalso Itiswidelyrecognized thatenterpiIsesare thesingle reveal that productive efficiency increases with firm largest source of post-school trainin& and that enter- size, with the education and skill mix of the work force, p-rim training can be the most effective way to develop with the presence of foreign technology licenses, and the skills of the work force. Yet in many countries little with enterpnse training. These findings point to a po- is Imown about the extent, form, and productivity of tentially important role for training, technology, and enterprise taining, its links to the macroecomic and trade-related policies in promoting skills upgrading, instittionalfactorsthatsbapebothincentivesforenter- technology diffusion and adoption, and productivity primestotrainandtheoutcomesof trairiginvestments, growth. and the kdnds of government training policies that are The project will produce separate country studies, appropriate in different national circumstances. Data written jointly with local country consultants; crss- on enterpnse trairing are scar This paucity of data, national comparisons in selected topics and a final re- coupled with the very lUmited theoretical and empirical port summanzing the cross-national findings and the researchon enterprise training, has meant that in many policy implications; and a book on enterprise-based developing countries training policies ofte are de- training and productivity. It wil also organize an inter- signed and impLemented in a vacuum of knowledge. national conference for both country researchers and This research seeks to fill this gap in knowledge by policymaker fielding a set of similar enterprise surveys in six coun- Responsibiliy: Private Sector Development Depart- trieswithvarying economic and technological develop- ment-HongTanandGeeta Batra; and Policy Research ment levels, educationandvocational train systems, Department,lovertyandHumanResourcesDivision- and geogaphiclocation.Thesample comprisesColom- Elizabeti King. With Lisa Lynch, Brown University, b Indoesia.Japan, Malaysia, Mexico, and the United Robert Zemusky and Peter Cappelli, University of Penn- States. From each enteprise covered, the survey elicits sylvania; Shunichiro Umetani, Tokyo Gakugei Univer- informaon on its attributes, its work force, work orga- sity; Sano Yoko, Yoshio Higuchi, and Atsushi Seike, rizon, training strategies, technology, and produc- KeioUniversity;AnuwarAli,OsmanRaniHassan,and tinsevealcountriesarandomsampleofemployees RljahRasiah, University Kebangsaan, Malaysia; Zainol a also surveyed, to elicit information about their per- Rashid, Eonoic Planning Unit, Malaysia; Roberto monac prior work histories, trairng ex- Flora Lima, Ser etariat of Labor and Social Welfare, periences, and compensation. Mexico; and Ai so Garcia Duran, SENA, Colombia. Thesedatawfilbeusedforcountry-specificanalyses The Economk Planning Unit, Malaysia, Secretriat of af the determinants of diffent types of enterpr Libor andSocial Welf, Mexico,and SENA, Colonbia traing, and the effects of trainn on wages and firm- areprovdindataig heUS.DepartnentofEducationthe lvel produdvity; and of links betem training and Japannsitute ofLabor,andUNDP,Malaysia,areprwvid- erprs Aves_m'ts in new tewlogy atkd exports. ing funding The data wil alo be ued for crs-nattional comipari- Comp.tion dat June 1995. 40 labor Markets and Educaton The Impact of Labor Market Policies Second, do publicly and privately owned plants re- and Institutions on Economic Performance spond differently to the same exogenous shock? And how doeswagedeterminationinthe public sectoraffect Ref. no. 67846 that in the private sector? Over the past decade the World Bank has shifted its Finally,whatarethegrowtheffectsofdifferentlabor emphasis from project lending to policy lending, recog- market imperfections and policy interventions, such as nizing the need in many countries to end excessive severance pay, discrimination, and the share of public reliance on interventions that distort incentives. The sector employment? Do such features of organized la- new emphasis called for big changes in policies that bor as the extent of unionization and of the centraliza- affect performance of product markets-taxes, price tion of wage bargaining affect long-run growth? controls, trade barriers, ownership structures-but the In addressing these issues, the study will draw on resulting structural adjustment packages gave little at- two sets of data: a cross-country, time-series set of tention to the labor market and other factor markets. aggregate labor market indicators, induding measues The neglect of labor markets may stem in part from ofpolicy intervention, unionization, andtheshareof the lack of knowledge of how they operate. It may also stem public sector in total employment, and plant-level data, from a belief that if product markets face appropriate both cross-section and time-series. for the nanufactur- incentives, labor markets will function smoothly. This ing sectors of 10 developing countries. project seeks to expand the understanding of labor RespoUsibity: Policy Research Departnent, Poverty markets'roleintheeconomy,bymeasuringtheeffectof and Human Resources Division-Marlin Rama, Ann policy interventions in the labor market, and the effect Harrison, and Anat Levy. of organized labor, on short-run adjustment to eco- Completion date: June 1995. nomic reform and on long-run economic performance. The project seeks also to help assess whether the WorldBank'sfocusonproductmarketreformshasbeen Public Policy, Private Response, appropriate.Iftherelativeneglectof labormarketissues and Educational Outcomes in India is found to contributetopoorsuccessof productmarket reformsandtosluggishemploymentgrowth,thiswould Ref. no. 678-60 suggest that future adjustment programs need to em- The initial object of this study was to analyze how brace participation of organized labor and reforms of government policies and private sector response affect labor markets. enrollments-particularly rural and female enroll- Thestudywillapproachanalysisof thelabormarket's ments-attheprimaryandsecondarylevelsusingTamll role in short-run adjustment through three issues. First, Nadu, India, as an example Three questions were tobe howcriticalarelabor marketdistortions-suchasunion addressedcHowdoesgovemnmentalocatepublicsdhois activity-in determining whether product market re- andteachersamongvillages?Whatdeterminestheemer- forms succeed? To gain the (probably critircal) supportof gence of private schools among villages and the public- organizedlaborforreforms,arecompensationschemes private mix of enrollments? Which policy variables or agreements with organized labor (social pacts) use- explain thevariationinschoo[attainment(wroliments, ful? Second, how do adjustment programs affect wages completion, years attained) across villages? and employment, and does the effect differ across skill As a result of a visit to India in fiscal 1994, a fourth levels, plant sizes, and types of ownership? Knowing question was adlded and the focus of the study was who wins and who loses from trade liberalization or shifted to exarnine the possible tradeoff between the other shocks would help in designing programs to quantity and the quality of education as enrollments smooth labor market responses. And third, can we expand. The reearch plans to investigate the degree to separateproductmarketfromlabornmarketdistortions? which this tradeoff has been exacerbated by (past and Analysis of the relation between the labor market present) government policies that limit the reallocaon and long-run economic performance wifl likewise be of resources across schools and disticts, prohibit pri- broken down into three issue areas. First, what is the vate contributions to public schools, and keep tuacber effect of govenment interventions-mmiimum wages, salaries in public sdhools well above omnetiive levels. payroll taxes, hiring and fring regulations-on wages This research will help rw liht on how countrs and employment? If these policies raise labor costs in withlowenrollmtratioscanraisethmandhowhey the formal sector and prompt a shift in labor to the can avoid negative consequences for the quality of informal secloratlowerwages,alterativesocialw i - education by changing policies that constrain the sup- ance policies may be needed to avoid exacatating ply of education resources or the efficient allocation of nome disparities between the two sector. such resourcs. 41 Labor Markets and Education Thefirstsetof questionswillbeaddressed usingdata ferent set of conclusions when using cross-section data collected in 198647 by India's National Sample Survey than when using panel data. The advantage of panel Organization on the availability, financing, and utiliza- data comes from the ability to control for unmeasured tion of social services, including education. This survey factors (for example, individual heterogeneity such as includes data on village and household characteristics, that stemming from parental inputs, intellectual envi- as well as detailed information on school type, fees, ronment at home, and genetic ability) that affect out- subsidies, and educational attainment The last set of comes but are also correlated with the policy variables. questions will be analyzed using time-series data, ob- This research fielded a resurvey in early 1994 of the tainedfromtheeducationauthoritiesinTamilNadu,on health and education modules of the 1990-91 Morocco enrollments, education resources, and quality across Living Standards Survey. The health and education the 18 distrcts in the state. Both data sets will be aug- modules of the first survey collected extensive data for mented by qualitative information collected in Tamil studying these sectors in Morocco. The health module Nadu, through meetings with education officers and covered health insurance, hospitalization, expenditure visits to 26 schools in urban and rural areas, including on dental work, and medical care and child vaccina- public, aided, and fee-financed schools, both primary tions; italso induded a survey of al health care facilities and secondary. in the survey areas. The education module included The study found that Tanil Nadu has an impressive cognitive achievement tests and collected school data in record of raising enrollment ratios and literacy among the rural sample areas. both girls and boys. Almost all villages have a primary The resurvey added quesfions about chronic illness school, mast children complete primary and middle and disability. Primary and secondary schools were school and many continue to high school. The govern- resurveyed, and data on urban schools fhat were not ment of Tamil Nadu has undertaken a wide array of coveredin thefirstroundwere added. Theresearchhas initiAtives-withconsiderable success-to make schools produced panel data on a randomly selected sample of accessible and attractive to families. Other countries the households covered under the education module in and other states in India have much to learn from this the first survey. AU children ages 9-19 in these house- example. But resources have not kept up with enroll- holdshavebeencovered,andthesampleincludesabout menrts in Tamnil Nadu, and the resources available are 1,500 children in a thousand households. not always efficiently used. It seems highly likely that Responsibility: Policy Research Department, Poverty the quality of education has suffered as a result The and Human Resources Division-Elizabeth M. King. study will analyze the policies that led to this situation With Victor Lavy, Hebrew University; Mohamunad and policy chages that might rectify it Abzahd, Direction of Statistics, Planning Ministry, Mo- The findings will be disseminated through published rocco; and Sistemas Integrales, Chile. papers inseminarsatheWorldBank,and inworkshops Completim date: June 1994. directed to poliymakers in Madras and New Delhi. Responsility: Policy Research Department, Poverty and Human Resources Division-Estelle James; and Putting Inputs to Work in Primary Schools: EducationandSoclPolicyDepartent-Jee-PengTanm Four Experiments in the Philippines With Paul Durassaiiy, University of Madras. Coin pktimhi date- june 1995. Ref. no. 679-01 Education in the Philippines appears relatively well developed at first sight. In the 1990s the gross primary Suvey of Health and Education Indicators enrollment ratio stood at 112 percent, well above the 87 and Facilities in Morocco percent for Asian countries at comparable per capita GNP levels. But not all is well. Although most Filipino Ref no. 67Ui8C- children enter first grade, 30 percent drop out before Panel data on health and education status and facili- finishingthe ccle. Ofthosewho drop out, 60percentdo lies are important for assessing the effect of polices in so inthe first two grades, when they are still too young the social ecos Observations before and after policy for many tasks at home, on the farm, and in the family dcange are necessary to properly estimate the value business.Thus,poorprogressatschoolappearstobean added of any reformL And multiple observations are important reason for parents' decision to terminate a zitical for studymg the impact of health interventions child's schooling. becauseoftheneedtoestablishinitialhealthcondilions. The government recognizes the need to improve In education recent micr studies about how specific student achkevemt and has invested heavily to do so, school caracteristics affect the adhievement scores of in part with assisLance fom the World Bank. Under the primry school sh0ents have found a significantly dif- SecondElemmntrEducationProjectfourepTerinb 42 LAbor Markets and Education were implemented to address the problem of dropouts grants have access and strengthening border controls. inlow-income communities. The experiments involved Altemative measures, such as liberalizing trade and (1) school feeding programs; (2) useof multi-level learn- increasingcapital flows to thesendingcountries, would ing materials; (3) school feeding programs with parent have different effects on the sending countries. This participation; and (4) use of multi-level leaming materi- research is intended to contnrbute to the debate about als with parent participation. these issues. This research will evaluate the cost-effectiveness of The initial research addresses several basic ques- the four interventions in enhancing student achieve- tions: What are the stylized facts related to migration? ment and lowering dropout rates. The results are ex- Whatis the relationbetweenmigrationanditseconomic pected to offer guidance for future investments in el- determinants? Does trade liberalization (and an in- ementary education. crease in trade flows) lead to a reduction in mnigration The research will use data generated by a survey of flows, and how important is that effect? Does the effect students in the 30 schools that received the interven- in the short run differ from the effect in the long run? tions and in 10 control schools that received no interven- Does an increase in capital flows lead to a reduction in tion. Students are tracked for attendance and test scores migration flows, and how important is that effect? And (in three subjects inthe lower grades and in foursubjects how are these relations affected by migration laws and in the upper grades) over the course of two years, the enforcementefforts? The answers to these questionsare first being the base year before the interventions were far from obvious and have not been satisfactorily re- put in place. The survey will also gather information solved in the migration or trade literature. about students' personal and family characteristics and Theoretical results and preliminary empirical find- about the classroom, school, and community environ- ings in Mexico and Morocco indicate that once migra- ments. The research will use multiple regression meth- tion costs are taken into account, trade liberalization ods to model the determinants of student achievement may result in more rather than less migration. and the decision to drop ouL Findings were presented in June 1994 at Tel Aviv Responsibility: Education and Social Policy Depart- University, at the universities of Brussels, Namr, and ment-Jee-Peng Tan. With Julia Lane and David Brat, Antwerp, and at the European Investment Bank in American University. Luxembourg; in July at the OECD conference on Em- Completion date: May 1995. ploymentand Migration; andinAugustattheHarvard Institute for Intemational Development Responsibility. International Economics Department, International Migration, Trade Policy, International Trade Division-Maurice Schiff. With and Capital Flows Ramon Lopez, University of Marylandc and Claude Montmarquette, University of Montreal. Ref no. 679-05 Completion date: October 1994. This research prqect will consist of two phases, a pilot Report: analysis and a more detailed study. The first (pilot) phase Schiff, Maurice 1994. "Trade Policy and intermtional of the research project focuses on the analysis of South- Migration in the Short and the Long Run.' World Bank, North migration flows. The second phase of the project Washington, DC will analyze South-South flows and the gainers and the losers fron migration, trade policies, and capital flows. The principal factors affecting intemational migra- The Impact of Early Childhood Nutrition tion are economic, demographic, political, and legal. on Educational Outcomes This prject wilt address a number of economic aspects of migration. In particular, it wil examine the impact of Ref no. 679-15 trade policy in the short and in the long run, as well as The purpose of thisproject, adatacdlecdon effort,is the impact of capital flows (including remittances, for- to collect data that will permit measurement of the eign aid, and foreign direct investment). cognitiveskills(readingcomprehensionandmathemat- The first phase of the prect focuses on South-North ics computation) of about 3,000 Fllipino children who migration for at least two reasons First, most of the have been followed since birth as a part of the Cebu available data on migration relate to South-North flows Longitudinal Health and Nutrition Survey. The chil- and are collected by receiving countries (the United tren are now 11 years old and thus have completed StatesandtheEuropeanUnion).Second,receivingcoun- most of their primary schooling. The data will allow tries in the North have increasingly been considering investigation of the impact of early childhood nutri- measures to reduce the migration pressure, including tional status on sdhool progress several years later. An linmiting the level or type of services to which immd- additional, more general objective is to examin the 43 Labor Markets and Education impactofschoolcharacteristicsonstudentachievement ognized the importance of labor markets and wages in in primary sdhools in the Philippines. poverty determination, little attempt has been made to Reponsibility: Policy Research Department, Poverty trace how macroeconomic changes interact with labDr and Human Resources Division-Paul Glewwe and market conditions and to identify the mechanism of ElizabethKing.WithHananJacoby,Universityof Roch- transmission between growth and personal income. ester; Linda Adair, University of North Carolina; and The basic hypotheses that this study will examine are Ana Miren Intal, Ateneo de Manila University. based onaverysimple model of the linkbetween growth, Completion date: June 1995. poverty, and income distribution. For each country, the study hypotesizes that, when macroeconomic growth -taes place, the following occurs Changing Labor Market Conditions * Open unemployment fals. and Income Distribution in Brazil, m Thecompositionofemploymentimproves (work- Costa Rica, and Venezuela ers shift from low-paying to better-paying sectors, and toward better-paying occupations). Ref no. 679-16 * Average wages rise, because of the intersectoral It has often been assumed that growth in Latin shifts of workers and rising wages within sectors. America tended to worsen the inequality of income * Because of the above changes, poverty falls and distnrbution. But some recent research has pointed to a inequality decreases. differet pattem, finding that during the 1980s eco- * Recessionanddepressionproducepattemsoppo- nomic growth reduced inequality in Latin America sitetothesechanges,andthemorerapidthegrowth,the while economic recession increased it. This findingsug- larger the changes. gests that the high inequality that has plagued Latin * Likewise, the larger the growth in output in a Amerca can be lowered by the very growth that the given economic sector (manufacturing agriculture) or World Bank and other international institutions seek to subsector(machinery,electronics),the greaterthegrowth achieve. It also suggests that the poor are not well in employment and wages will be in that sector. protected durimg a recession and that their incomes A view of a segmented labor market, in which the drop faster than those of the nonpoor. modern or formal sector hires workers based on their Still unanswered is the question of how macro- perceived marginal productandpays them theequiva- econonuc changes are transmitted through countries' lent wage, forms the basis of this model. The formal productand labor markets toproduce the inversecorre- sectorisaffectedbygovernnentregulations concerning lation between growth and inequality. This study will minimum wages, social security taxes, severance pay- examine these processes for Brazil, Costa Rica, and ments,andlegalprotectionagainsttermination.Butthe Venezuela. In each of these economies regular house- degree to which firms abide by these regulations varies hold surveys have been conducted since the 1970s from within the sector. Workers unable to find work in the whichyear-by-yeardatacanbederivedonlabormarket modern sector seek work in the informal sector, which conditions (unemploymentrate,employmentcomposi- largely provides services based on manpower or agri- tion, real wage rates) and on income distribution (pov- cultural products under very competitive conditions. erty and inequality). Decreased demandforformalsectoroutputresultsboth Earlier studies have focused largely on the relation inmoreopenunemploymentandinashiftofworkersto between poverty and adjustment in latin America dur- the informal sector, leading to lower wages, output uig the 1980s. A 1993 study by Samuel Morley found prices, and incomes in that sector. littlerelationbetweenchangesinrealwagesandgowth, Responsibility: Latin America and the Caribbean but it concentrated on the official minimum wage as a Regional Office, Office of the Chief Economist- measure ofwages. Since minimum wages apply only in NormanLHicks. WithGaryFields,ComellUniversity. the formal sector, they may have little bearing on aver- Compltion dat December 1994. age earnings, particularly among the pooresL Oscar Altimir, in anolher 1993 study, showed that real wages often have failed to recover fully as an economy recov- Impact Evaluation of Education Projects: ers after a recession, even though poverty is declining. Decentralization and Privatization Issues Again, it is undear what is being measured in the conceptof"realwages"sincemostwagedatacoveronly Ref no. 679-18 the fomal sector. Most authors have focused on the There is a growing awareness in many developing problem A absolute poverty; few have focused on the countries that central govemments are limited in their problem of income distribution. Although Altimirec- ability toaddress local needs and to use local capacity to 44 Labor Markets and Education meet those needs.In the education sector this awareness Dynamic Implications of "Retum has led to such policies as transferring decisionmaking Migration" for Labor Markets areas from central to local govemments, increasing autonomy for schools, introducing voucher schemes, Ref. no. 679-21 and offering incentives for private school providers. This research will analyze the dynamic adjustment Will these initiatives improve the delivery of services process generated by return migration. In particular, it and thus the quality of education in those countries that wil emphasize unemployment, real wages, and invest- have adopted them? ment in the home, or receivin& country and policies that This research aims to develop impact evaluation can be helpful during the adjustment process. These poli- strategies and to integrate them into World Bankeduca- des should encourage investmentandjob creation by, for tion projects in four countries to assess the impact of example, expanding the public infrastructure and subsi- changes in the way central govermments devolve finan- dizing private investment and new employment cial planning and education decisiornaking to local The research will study the issue at both the analyti- governments, communities, orschools.The study seeks cal and the empirical levels. Its main focus wil be on the tobenefitWorld Bankoperations and clientcountriesby receivingcountry,althoughitwill also give some atten- providing rigorously derived lessons from interven- tion to the sending country. tions that are becoming more popular but that have not The research comprises five components. First, itwill yet been the subject of empirical work. By assessing synthesize past episodes of return migration. It will interventions that are still experimental, the research identify cases of return migration over the past 20-30 wiRl benefit not only the countries included in the study years, assess the causes of the return migration, and but also other countries that are considering similar study the major economic effects on both the receiving policies. and the sending countries. Research staff are designing an evaluation strategy Second, it will identify potential sources of return foreachprojectbeforereformisareiimplemented.Baseline migrationinvariousregions and assesstheextentof the surveys will establish initial conditions at the student, potential return migration. This will entail gathering household, school, and community levels. Close moni- data on large minority groups (including, to the extent toringof projectimplementationwifl track the tiningof possible, ages and proxies for skldls, such as education reformsandrecordmodificationsintheoriginalproject and occupation), the size of the labor forces in the design. Folow-up surveys will measure changes in sendingandreceivingcountnes,andadjustedrealwages initial conditions. in both locations (and, to the extent possible, wage Where possible, beneficiaries are being randomly trends). The research will also attempt to classify the assigned to the intervention; changes in output mea- countries according to the degree of social, politicaL or sures in the intervention group will then be compared economicinstabilityandtheexistenceofalegalcommit- with changes in output measures for a randomly as- ment to accept returnees. signed control group. Where such experimental design Third,thestudywillprepareananalyticalpaper.The is not possible, the treatment group will be compared basicmethodologywillbe to constructamodelcontain- with a comparison group chosen to be similar in all ing the relevant characteristics for studying the transi- respects except for receiving the treatment. The out- tional dynamics, obtain as mnany analytical results as come measures for the evaluation will include not only possible,andthensolvethemodelnumericallybysimu- enrollment and achievement test scores-performance lation, using realistic parametervalues. The solutionby indicatorschosenbythestudycountries-butalsoindi- simulation makes it possible to use realistic specifica- catorsofadministrativeandmanagerialefficiencyatthe tions that do not allow for analytical solutions, and local govermnent and school levels. yields quantitative results. These results can be used in Respmsibility: Policy Research Departmnent, Poverty twoways-inacompaisonwithactualcasestudydata and Human Resources Division-Elizabeth Kin& to provide an interpretation of the observed expedence, Harold Alderman, Estelle James, and Emmanuel and insimulatingfuture paths underdifferentscenarios Jimenez; South Asia Country Department m, Popula- and policy variables. tion and Human Resoure Operations Division-Mae Fourth, the research wil carry out a case study ad- Chu Chang and Guilherme Sedlacek, Education and dressing the effects of the immigration of SovietJews on Social Policy Departm t-Jee-Peng Tan; and Latin the Israeli economy, which represents almost a labora- America and the Caribbean Technical Department, tory expeiment of return niigration. In 1989 the labor AdvisoryGroup-DonaldWinkler.WithPeter0razem, force in Israel numbered about 1.6 million. The corre- Iowa State University; and Laura Rawlings. sponding annual flow of job-seekers-new entrantsand Competion date: June 1997. recentseparatios-isabout8percentoffhelaborfore,or 45 Labor Markets and Education 130,000individuals.Theannualflowoflaborforcepartici- about the relative importance that the incentive played pants among the immigrants in 1990 and 1991 was about in these firns' location decisions. The effectiveness of 100,000,implyinganincreaseinthenumberofjob-seekers the incentive in raising the quality of the skilled labor of 77 percent The experience with the economic policies force will be determined through interviews-for sub- adopted in Israel can be used in shaping policies for sidized (customized) training provisions-or through countries exposed to return migration. examination of altemative administrative frameworks Finally,the studywillprepare an overview of the four within which incentive measures operate-for ear- individual studies, tying together their findings, lessons, marked training grants or tax incentives. Government and reconunendations into a coherent policy paper. datawillbe used to calculate the approximate costof the The project will produce five papers, which will be incentive per trained worker. presented in serninars in March 1995 and submitted to Responsibility: Intemational Finance Corporation, the Policy Research Working Paper series, the World Foreign Investment Advisory Services-Wayne Edisis. Bank Ecomic Review, and other journals. With Adrian Ziderman, Bar-Ilan University; Fernan Responbily: World Development Report Office- lbaniez, PROFINDE; Padraic White; and Neil Hood. Michael Walton; and Policy Research Departnent, Pov- University of Strathclyde. erty and Human Resources Division-Emmanuel Completion date: November 1994. J-im. With AnatLevy; Zvi Hercowitz, Tel-Aviv Uni- versity; Flora Tsui, Johns Hopkins University; and Sumana Dhar. National and International Wage Cmptin date March 1995. Differentials: Effects of Trade, Growth, and Education Vocational Training Incentives Ref. no. 679-26 and Foreign Direct Investment Wage differentials are associated in part with differ- ences in skill and in part with labor market conditions. Ref no. 679-25 Wage differentials across skills play an important sig- In recent years developing countries have come to naling role as they affect input ni-x and human capital recognize the important role foreign direct invesbnent investrnent. Wage differentials across local mnarkets af- plays in the development of their economies, not only fectbusinesslocationandworkers' migrationdecisions. bybringingdebt-freecapital,butalsobycontributingto International wage differentials affect comparative technologicaland managerialdevelopment As aresult, advantage, capital flows, international trade, and inter- competition among countries to attract investment has national migration. How do intemational capital mobil- sharpened. This has prompted governments to search ity and intemational trade flows affect labor market for new measures to make their countries attractive to conditions andwage differentials? A growingliterature foreign investors, as well as for measures to ensure that in ihe United States suggests that they result in an they gain the maximum national benefit from the in- increase in the relative rewards to skill. What is the vestnent received. Traiing incentives may well offer evidence from developing countries? these advantages. Thisresearchwilldocumentwagedifferentialswiffiin Thisstudyseeks toanswertwo relatedquestions: Do and across countries by skill and education level and trinirxgincentivesofferedtopotentialinvestorsmakea occupational group and provide a conceptual frame- difference in a country's ability to attractforeign direct work for analyzing these differentials over time. Using investmnent? And if they do make a difference, how countrystudies,theresearchwillexaminetheimpactof shouid govenmments design such incentives to adcieve tradeopeningsonrelative demand forinputs (unskilled maximum benefit? The resmrdt will analyze in-depth versus skdlled labor) and factor price equalization. The the types of training incentive used in a set of countries empirical exarmination of these * sues is a useful tool for that have perfonned wel in attracting foreign invest- estimatingthedistributive impactof intemationaltrade ment. For each type of training incentive, the research across skill groups within countries and within skill wil evaluate the relative importance of the incentive in groups across countries. the location decisions of foreign firms, assess the effec- Theprojectwilundertakefiveinterrelatedactivities tiveness of the vocational training provided under the It will gather information on wage differentials for incentive, and esfimate the cost to the government of different skills and education levels. It will review the granting the incentive per trained worker produced. conceptual framework to examine changes in wage Interviews with foreign firms enjoygin the incentive differentials over time. It will conduct a senes of case inetargetucountrieswillbeusedtogatherinformation studies based on time series of household data to ana- 46 Labor Marlkets and Education lyze the evolution of wage differentials by skill. It will is necessary for measuring learning achievement and for undertake one case study (Mexico) using plant-level analytic methods. A positive social and political environ- data tc analyze the relative contribution of trade policy ment includes incentives for research productivity, fund- to labor demand. And it will use household data (for ing for research, openness to free and critical inquiry, and Indonesia) to explore the consequences of changes in stable and high-quality research leadership. wage differentials on the demand for education. Lessons from the case studies and analysis were The studywillbebasedinpartDnareviewofpublished applied in two residential staff training seminars and work and in part on original work using household data three regional seminars for policymakers, cosponsored for several countries (Chile, ColDmbia, Costa Rica, Indo- by the Economic Development Institute. In addition, nesia, Malaysia, thePhilippines,andThailand) and plant- findings have been presented at Bank trainingseminars level data for one country (Mexico). The analysis of inter- for staff, international policy seminars, and scholarly national wage differentials will be based on an Intera- meetings. And a "tool kit' for Bank staff has been tional Labour Organisation data base. dissemninated to the Bank's country operations depart- Responsibility: World Development Report Office- ments. Alejandra Cox Edwards and Michael Walton; and Edu- Responsibility: Education and Social Policy Depart- cationandSocialPolicyDepartment-ZafirisTsannatos. ment-Marlaine E. Lockheed, Donald Holsinger, and With Richard Freeman, Harvard University; Donald Linda larach; and Southern Africa Department, Popu- Robbins, Harvard Institute for Intemational Develop- lation and Human Resources Operations Division- ment; Adrian Wood, University of Sussex; Gordon RosemaryBellew.WithKennethKing,EdinburghUni- Hanson, University of Texas; Brian Aitken, Interna- versity; Abby Riddell, Harvard University; Levy tional Monetary Fund; and Finis Welch, Texas A&M Nyagura, University of Zimbabwe; Dean Nielsen; and University. Alistair Rodd. CompletiDn date: March 1995. Completion date: December 1993. Reports: Harris, Abigail M 1991. 'Effective Assessment of Educational Building Education Research Progres. A Review of Strategies for Measuring learning and Assessment Capacity Achievement? PHREE 91/34. World Bank Washington, DC , The 1991 World Conference on Education for All lion, Lynn. 1992. 'A Framework for Costing Tests in Tird catalyzed intemational commitment to basic education World Settings." PHR 92/65. World Bank, Washington, and the cognitive learning achievement of children, and DC to the use of education data and statistics to inform Laracl, Linda P., and Marlaine E. Lockheed. 1992. "World Bank educationpolicy. Withfewexceptions,developingcoun- Lending for Educational Testing; A General Operational tries have lacked the capacity to measure learning Review? PHREE 92/63. World Bank, Washington, DC. achievement or to carry out education policy analysis Lockheed, Madaine E. 1991. "Multi-Dimensional Evaluatifon and research to estimate the effects of policy reforms on Measures for Both Right and Left Sides of the Equation? achievement. The purpose of this project was to review PHREE 91/46. World Bank, Washington, DC. international experience with building education re- W. orld Bank Support for Capacity Building: The search and assessment capacity and to assist Bank op- Challenge of Educational Assessment? erations in designing and implementing assessment Lockheed, Marlaine E., ed. 1993. 'Building Education Researdc components of education projects. Capacity: Lessons from Developing Countries.?World Bank, The research involved desk review of Bank and Education and Social Policy Depaitment, Washinon, DC. donor experience, case studies of specific country expe- DrafL rience, and direct operational support in designing and Lockhed, Marlaine E, and Linda P. Larach, eds. 1993. testing methods for coliecting and analyzing sectoral ¶Perfrnance Monitrng in Education-Assessing Lering data. AJievement An Operations Sourcebook? 2 volumes. The lessons leamed from this work show that capac- World Bank, Washington, DC ity development in education research is enhanced by Lockheed, Marlaine E., and Alstir C Rodd. 1991. "World (1) local involvement in setting research agendas, (2) a Bank Lending for Education Reseac, 1982-5." Policy gradual approach as absorptive capacity increases, (3) Research Working Paper 583. World Bank, Washing, DC. dialogue among policymakers, administrators, and re- Nyagura, Levi IL, and Abby RiddelL 1993. "Primary Shool searchers, (4) a mix of strategies for staff development, Adcievement English and Matheatiw A Multiel (5) a mix of tehnical assistance, and (6) a positive social Analysis? Polihcy R rch Working Paper IZOt World and political environment Specific technical asistance Dank, Washingto DC 47 labor MarkLets and Education Higher Education Policy Study Managing the Social Cost of Adjustment Many countries have invested considerable resources Events over the past decade have produced a climate inbuildinganddevelopingtheirsystemsofhighereduca- of economic change and adjustment in industrial and tion, often with the assistance of development agencies, developing countries. The performance of labor mar- induding the World Bank Yet in many instances these kets-in facilitating the movement of labor from newly investments have not been effective in establishing the noncompetitive to newly competitive sectors and in capacity to train the high-level manpower and produce encouraging the accumulation of sldlls for emerging the new scientificand technological knowledge necessary industriesand technologies-is increasingly recognized to sustain economuc growth and development. Govern- as important in managing the social cost of economic ments are therefore trying to reform their higher educa- adjustment Rigid labor markets can produce slower tion systems to improve performance. economic growth, price instability, and unemployment This policy study identified options for improving The effects of the past decade's events, particularly the performanceinhighereducation.Itfocused on the roles globalization of trade and the movement toward mar- of the government and the private sector, strategies for ket economies, will continue to put pressure on labor the effective mobilization, allocation, and use of re- markets in the 1990s. sources, the role of higher education in scientific and This study is concemed with how to improve the technological development, the cost-effectiveness of in- competitiveoperationof labormarketsand increase the vestments in different inputs, and options for diversify- efficency of private and public spending on education ing highereducation structures and altemative delivery and training. Itaddresses two principal questions: What modes. policy interventions should be given priority in labor Thepolicystudywasdevelopedthroughaprocessof market reforms? And what labor market strategies can samultaneous research, review, and consultation. Re- be used to manage the social cost of economic and labor search papers and country studies were commissioned reforms? The first phase of the study began with a to assemble the empirical evidence that underpins the review, through background and state-of-the-art pa- policy recommendations. Reviews of the literature on pers, of the World Bank's treatment of labor market several subjects linked to the role and performance of issues in its econonic and sector work. The second higher education systems (economic contribution of phase is synthesizing the findings and initiating addi- higher education, financing issues, governance, and tional studies where gaps in knowledge have been equity) and a review of World Bank lending for higher found. education were conducted. A worldwide consultative A best practices paper is being produced along with meetingwasheldinJuly1991inKualaLumpur,Malay- a volume of the edited studies. With regard to labor sia, to identify the concerns of higher education reforms, the study shows that the cumulative effect of policymakers and specialists in mnember states. And a labor marketinterventions may differ from the effect of number of regional consultative meetings were held in individual interventions. For example, a binding wage Africa, Asia, and Latin America to promote acollabora- floorcombinedwiithjobsecuntymeasuresmay increase tive process of analysis and information sharing with the disemployment effect of these measures by limiting higher education leaders from developing countries the ability of enterprises to shift the cost of added job and representatives of donor agencies. security to workers. Such policy interactions need to be The final report has been distributed to ministers of reflected in the design of labor market analysis. The higher education and managers of higher education study also indicates that critical economic reforms can institutions in developing countries and discussed in bestalledbyafailuretoaccountforthepoliticaleconomy various international professional meetings. of the refonns affecting workers. It identifies examples Raponsibiity: Education and Social Policy Depart- of how active and passive labor market policies can be ment-Peter Moock, Thomas Eisemon, Lauritz Holm- used to lower political barriers to economic reforms*. Niels, Omporn Rege, and Kin Bing Wwu and Latin pi ity: Education and Social Policy Depart- America and the Caribbean, Country Department 1 ment-ArvilVanAda.m,GuilhermeSedlace,andAmit Population and Human Resources Operations Divi- Dar;PolicyResearchDepartment,PovertyandHuman son-Jamil SahnL Resources Division:- li King; Europe and Cen- Compkein daft June 1994. ral Asia, Country Department U, Human Resourfes Report: OperationsDivision-DavidFretwel,SusanGoldber, Word Bak 1994. HighEr Eiac m: Thel LnmssqoExpeis. and Jolanta Hess; Middle East and North Africa, Office Deveupment in Practice Sri Washigtn DC (Spanish oftheVicePrident-lshacDiwan;andAfricaCountq and Frend veson forthming in September 199.) Deparntent U, Population and Human Resources Op- 48 Labor Markets and Education erations Division-Reema Nayar. With Ray Marshall, Science and Technology Education Luis Riveros, Ricardo Paredes, RobertGoldfarb, Daniel Hamermesh, Harry Katz, Sarosh Kuruvilla, Lowell In recent years scientific and technological knowl- Turner,Duane Leigh, RamonLopez,StephenMangum, edge hasbecome the mostimportant factor determining Garth Mangurn, Janine Bowen, Olivia Mitchell, Gail comparative advantage in many areas of production. Stevenson, and Cynthia Nuhiez-Ollero. The potentially immense effec on development of sci- Completion date: December 1994. entific and technological training, research, and appli- Reports: cations is beginning to be recognized in most develop- Adams, Arvil Van. 1993. 'Developing Effective Employment ing countries, but they often find it difficult to identify Services." HRO Dissemiration Notes 9. World Bank, effective strategies in this area. Education and Social Policy Department, Washington, DC. This research was designed to produce important Adams, A vil Van, and athers 1992. The World Bank's Treatment inputs for policy studies, in both higher education and of Employment and LaborMarkt Issues. World Bank Tedmical secondary education. The study conducted a general Paper 177. Washington, DC: World Bank. operationalreviewof scientificandtechnologicalprojects Fretwell, David, and Susan Goldberg. 1993. Deeloping Effectime in the Bank. And it conducted studies on how to im- Employment Services. World Bank Discussion Paper 20L prove research quality at developing-country universi- Washington, DC: World Bank. ties, on higher education indicators, on cooperation Coldfarb, Robert S., and Arvil Van Adans. 1993. Designing a between universities and industry, on scientific and Systen of Labor Market Statistics and Infojnbtion. World Bank technological education and research in the newly in- Discussion Paper 205.Washington, DC. dustalizing economies of East Asia, and on scentific Hamermesh, Daniel S. 1992. 'Unemployment hwurance for and technological indicators in developing countries. Developing Countries." Policy Research Working Paper 897. The research contributed to the secondary educaton World Bank Popuation and Human Resources Department, study thoughacomprehensivestudyofschoolsdencein Washington, DC_ developing countries and an operational review of Bank Katz, Harry C., Sarmsh Kuruvilla, and Lowell Tuner. 1993. lending for school science Cross-cutting contributions to "Trade Uirons and CoUective Bargaining." Policy Research higher and secondary educationwork came from studies Working Paper 1099. World Bank, Education and Social on evironmental education in Central and Eastem Eu- Policy Department, Washington, DC. rope and on training for science teachers. The study's Leigh, Duane E 1992. "Retraming Displaced Workerw What results are being tranred to Bank operationad staff Can Developing Countries Learn from the Experience of through an informal Science Group network in the Bank. QECD Nations?" Policy Research Working Paper 946. World FormaltramingforBankstaffwasprovidedmaone-week Bank, Population and Human Resources Department, flaghip minar Knoxvile in April 1992. Washington, DC. Responsibility: Education and Socal Policy Depart- Mangwun, Stephen 1., Garth L Mangum, and J. BowenL 1992. ment-LauritzIHolm-Nielsen.WithXlnBingWwu; Blqa "strategies for Transitional Employment Ciation during Boh ancd Ales Musar, ICCS; and Jacques Gailiard, Structural Adjustment" Policy Resarch Working Paper 947. ORSTOM. DANIDA contributed funding. World Bank, Population and Human Resources Departmt, Compltion date: June 1994. Washington, DC. Rworts: Mithell, Olivia S. 1993. "Trends in PRtrement Systems and Bob, Bojana. 1993. "Environmental Isues in Secondary Lessons for Reform." Policy Research Working Paper 1118. Education." World Bank, Washin, DC. World Bank, Education and Social Policy Deparment, . Bob, Bajana, and A. ornuhauser. 1992. "Envirnmeua Washington, DC. Education in Central and Easten European Countries: Paredes, Ricardo D. 1993. "Job Security and labor Market Problms and Prospects Adjustment in Developing Countries. HRO Worldng Paper GatBard, Jacques, and Eik Thulstrup. Nort-Soth Cooperh 16. World Bank, Human Resources Development and tni: Contbutions to Research Capadty Building. Operations Policy, Washington, DC. Hap, D, and othens. 19! "World Bank Lending for Secndary Riveras, Luis A. 1993. flbhe Effects of Wage hIation an Shol Scence: A General Operational Revieww PHEE Adjstment, inflation, and Equity' HRO Working Paper 17. Bakgound Paper 58R. World Bank, Washington, DC. World Bank, Human Resources Deveopment and Opera- Hoffnara, R. 1992 'Sme Refledions on Sdacie in the Low- tins Polcy, Washigton, DC Inme Economies? PHREE Bckgrund Paper 71. World Stevenson GaiL 1992. "How Publc Sector Pay and Employmet Dank, Washington, DC. Affect Labor Market: Research Isue? Policy Reseach KeX, H[ 1992. aPerformance Indicats for Highr EducaniaD A Working Paper 944 World Bank, Populaion and Hunma Crbcal Reviww with Policy R. PFER Resources Department, Wasigton, DCt Bakund Paper 56 World Dank, WaVnton DC. 49 labor Markets and Education Komhauser, A. 1992. "University-Industry Cooperation under .1992. "Science Education in Hong Kong." World Bank, Constraints: Experience of the Intemational Center for Washington, DC. Chemical Studies, Ljubliana, Sloverda." PHREE Background _ 1993. "Science and Tednology Education and Econonuc Paper 67. World Bank, Washington, DC. Development in South Korea.' World Bank, Washington, DC. XnKytboech, C 1993. "Scence and Technology Indicators in 1993. SScience and Technology Education and Economic Developed and Deveoping Countries: Availability, Quality, Development in Taiwan." World Bank, Washington, DC and Utility." World Bank, Washington, DC Mar, Ales. 1993. "Equipment for Science Educatiorm Con- straints andOpportunities." World Bank, Washingwon, DC. Statistical Indicators of Female Participation Muldin,J. 199J IWorld Bank Lending for Science and in Education in Sub-Saharan Africa Technology." PHREE Background Paper SIP. World Dlank, Washington,zDC. Along with the growing recognition of the impor- Parkr, L 1992. "Industry-University Cdoaboration in Devel- tance of female education for development has come an oped and Developing Countries." PHREE Background enonnousneedfordatatoinformpolicydiscussionwithin Paper 6L World Bank, Washington, DC. andamongcountries. Perhaps nowhere isthis need greater Thubtrup, Erik. 1992. -Evaluation Report Ihe Bilateral thaninS-SaharanAfrica,wherefemaleparticipationin Proamme for Enhanement of Reserch Capacity in education is inordinately low and disparities between DeeoiCountries." DANIDA, Copeihagen. females and males vary greatly among countries. .199. "Evaluation Report Capaoty Buding forReseareu This study responded in two ways to the need for in Traditional Fermted Food Pcssing in Ghana." statistics on female education. First, it defined statistical DANIDA, Copenhagen, and World Bank, Washinton, DC indicators that canbe used to describe the level of female 1992. "Evaluation Report RemoteSensing for Envirn- partidpation and the disparites between males and fe- mental Monitoring in Gharna. DANIDA, Copenhag and males in educationsysems. One form for these indicators World Bank, Washington, DC that was introduced by the study is the concept of the _. 99. "Evaluation Report StreTgt Tedology "gender ratio" as a generic tool for comparing male and Assesment Capacity inChana." DANIDA, Copenhagen, female partidpation in education across all indicators and World Bnk Washington DC. used to assess the performance of education systems. .1 992. "Improving the Quality of Researc in Develpng Second, thestudypresenteddatafromexistingsourcesfor Coutry Universities. PHREE Bacgound Paper 52. World the46countriesinSub-SaharanAfrica.Thesestatisticswill Dnk, Washngtn DC be updated and published by the beginnig of 1995. _..1992 'Natural Resoure for Development Evaluaton of The study used 18 indicators on tihe performance of a Botanil Researc Collaboratonbetween Denark and education systems, formulated to take advantage of Ecuador. DANIDA, Copenhgen, and World Bank country-level statistics from existing sources. These in- Washinon, DC dicators are grouped into three categories of education . 1992. "World Bank Lendig for Scence and Technology." performance: access, attinment, and accomplishment In Sandy, Scima nd Gounmw. Wamw State Committee Data on achievement were not included because data for Scentific Research comparableacrosscountriesarenotavailable.Thestudy 199ScienceEducatoforDeveloment'WorldBank, produced suggestions on two uses for the statistics- Washngton, DC. intemational and country comparisons, and country 1993 "Scietific Research for Development" World profiles-and examples of the kinds of analysis thatare Bn Wasingto,C possble. Ware, S, I2 fe Educationf Seconday Scince Teachedsm iRsponsity: Africa Technical Deparhnent, Human DevdopingCounties. PH Backound Paper 68 Resources Division-Ward Heneveld, Teresa Hartnett, Wod lank, Washington DC. and Adhiambo Odaga. _.199Z S Sda l Scce in Devopig Coun- GCmption date June 1995. im Stabs and Issues" PHREE Backgrmmd Paper 53. Report: World Dnk, Washington, DC Teresa, and Ward Hinevdd. 1993. "Satisical Wu, Kin Di 1992. 7Hig Education in Hong ICoaw Indiatrs of Female Paripabon in Education in Sub- lm_vne in Sien and Technology duing the rTme of Saharan Africa." AFIHR Techical Note 7. World Bank, Paital and Ecnwi aQ PtUE Bdground Paper Ahica Tedhnicl Deparment Human Resourcesw ivision, 70. Wodd Danrk Wahigon, DC Washington, DC 50 ENVIRONMENTALLY SUSTAINABLE DEVELOPMENT Pollution and the Choice of Economic Policy conceptual work on the incentive effects of altemative Instruments in Developing Countries policy instruments. Findings have been presented at the World Bank and Ref no. 676-48 Resources for the Future in Washington, DC, and in This project addresses these questions for develop- Cambridge, Massachusetts, as weUl as in Indonesia, Ma- ing countries: What is the least-costpolicy intervention laysia, Mexico, Norway, and New Orleans, Louisiana for reaching a given ambientlevel or effluent standard? The final results will be disseminated through one or two And what are the distributional implications of such books synthesizingthefindings and throughconferences. interventions acrossincomegroups?7naddressingthese Responsibility: Policy Research Department, Public questions the project compares standard regulatory Economics Division-Shantayanan Devarajan and interventions, but also-more important-price-based Gunnar S.Eskeland, andPovertyand HumanResources (or tax-based) policy changes to reduce pollution in the Division-Emmanuel Jimenez; and Enviromnent De- most efficient way. partment, Pollution and Environmental Economics Di- In its evaluation of policy interventions, the project vision-Robin Bates. With Dina Backinezos, Robert Ba- systematically considers the constraints that develop- con, ScottBarrettGuoChia-Hsiang,EinarHope,Michael ing countries face in implementing policy, such as Hoy, William Jack, Raymond Kopp, Alan Krupnick, enforcement problems, tightbudgets, thecostofmoni- Jeffrey Lewis, Lili Liu, Bart Ostro, Mark Roberts, toring emissions levels, and uncertainty about costs Emmanuel Skouflas, Joffre Swaite, Adriaan Ten Kate, and benefits. Under these constraints such direct inter- James Tybout, Christopher Weaver, Robert Deacon, ventions as damage-based charges or regulations, tra- Tarhan Feyzioglu, Michael Hannemann, Barbara ditionaly considered to be "first-best' instruments, Kanninen, Nalin Kishor, Chingying Kong, Ml Laysefsy, may in fact be costly; if so, how do they compare with Geir Asheim, Jess Gaspar, Haran Sivam, Nell Bruce, 'second-best" indirectinstruments? An important hy- Anil Deoalikar, Gregory Ellis, Robert Hamrin, Yahya pothesisisthatindirectinstruments-suchastaxesand Jammal, and the Fus! Emissions Engineering Engi subsidies on marketed inputs and outputs-can play a The U.S. Census Bureau is contributing to the research. role in cost-effective pollution controL Completion date: December 1994. The project consists of case studies of Brazil, Chile, Reports: Indonesia, Mexico, and Poland. The work focuses on Asheim, Geir B. 199L "Sustainabilit: Ethical Foundations and pollution problems from local sources and is supple- Economic Properties." Policy Research Worldig Paper 1302. mented by country analyses. The case studies comprise World Bank, Policy Research Department, Washington, DCl a background description of pollution problems in Bacon, Robert. 1992. "Measuring the Possibilities of hteuel specific metropolitan areas and analysis of the underly- Stbstitutfonf' Policy Researdc Worldng Paper 1031. lVodd ing causes of pollution and the role of public policy. Ban WashWngton DC. Setor-specific simulation models are developed to Barrett, Scott 1994. "Conflict and Cooperation in Managng address such questions as these: What are the economic Intemational Water Resours" Policy Research Working costs of using altemative instruments to reach a given Paper 1301 World Bank, Policy ResearhDeprtment, target level of emissions? How do taxes on inputs and Washington, DC. outputs compare with direct emissions-related inter- Deacon, Robert T. 192 "Controlling Tropicd Defatao An ventions7 And who benefits and who loses from the Analysis of Alterative Policies." Policy Researh Working interventions? The parameters are derived from Paper O29. World Bank, Washington, DC microeconometric analyses of specific sectors to exam- Eskeland, Gunnar& S 199L 'Curbing Pollution in Developing ine the degree of flexibility in input substitution in Countries." Finnc and Devetopmani (March). consumption (such as interfuel substitution) and the _. 199 "Attading Air Pollufion in MecoCity." Fnnc incidence of alternative policy interventions, nmd Uevdcpmt pDecenbr). The case studies also -include partial and general .1993. A Presumptive Pigouvian Tax on Gasoline equilibrium analyses of the role of fiscal policy, and Analysis of an Air PoButon Control Program for Mexiw .52 Environmentally Sustainable Development . City." Policy Research Working Paper 1076. World Bank, ments would improve the social value of the natural Polcy Research Department, Washington, DC. vegetation cover? And what effects has trade policy in Eskeland, Gunnar S., and Tarhan Feyzioglu. 1994. "Is Demand Western Africa had on agricultural productivity, consid- for Polluting Goods Manageable? A Model of Vehide ering its impact on the evolution of the vegetaton cover? Ownership and Gasoline Denund in Mexico." Policy A theoretical model was used to guide the empirical Research Working Paper 1309. World Bank, Policy Research work. The empirical analysis drew on Living Standards Department, Washington, DC. Survey (LSS) data from Cote d'lvoire for 1985-88 for Eskeland, Cunnar S, and Emmanuel Jimenez. 1991. 'Choosing information on inputs, area cultivated, real wages, rural Policy Instrunents for Pollution Control: A Review." Policy household production, and so on, and it relied on re- Research Workiag Paper 624. World Bank, Washington, DC. mote sensing data for biomass density, area under fal- (Ala published in Wod Bank Research Obsever7(2):45-69, low, and area under closed forest The remote sensing 1992.) data were matched with the LSS data at the village level Eskeland, Gunnar S., Emmanuel Jimenen, and Lif Liu. 1994. for each year. "Energy Pricing and Air PoHlution: Econometric Evidence The main empirical findings from the first phase of from Manufacturing in Chile and Indonesia." Policy the research are as follows: Research Working Paper 1323. World flank, Policy Research * Natural biomass is an important factor of agricul- Deparmen Washingtn, DC. tura! production, with an output elasticity of about 0.25. Eakelnd, Gunnar S,, and Ch$ingyg Kong. 1994. "Protcng * Communities do exert some control over the use of the Envionment and the Poor. A Welfare Function common property resources, indudingbiomass,butthe Approach to Air Pollution Control an Java.N Wodd Bank, controls are insufficient. Only about a third of the social Washington, DC. value of biomass is internalized in their land allocation Gun, Charles C, and James Ri Tybout 1994 "How Relatrve decisions. Pri Affect Fuel Use Paterns in Maufactminp Pant- * The insufficient controls lead to overcultivation, Level Evidence fm Cie. Policy Research Working which causes long-run income losses for agricultural Paper 1297. World Bank, Policy Research Dqarment, communities equal to about a fourth of village income. Washngton, DC. * Agriculturaloutputpriceelasticitiesareestimated Harison, Ann E, and Gunnar S Eskeland. 1994. "Multination- at about 0.4 in the short run; in the long run they are als and the PoUution Haven Hypothesis." World Bank, negative because of the negative effect of biomass re- Washingt, DC duction on agricultural output. Moss Diana L, and James R. Tybout. 1994. The Scope for Fuel The second phase ofthe research extended theanaly- Substiution in Manufacturing Industtier A Cas Study of sis to Ghana, where the fidin gs were highly consistent Chile and Colombia." World Bank Ewnmk Rwik B(1). withthoseforCOtedlvoire.TheGhana study alsowent OCto, Baut 1994 "Estimating the Health Effects of Air further, developing an empirical small general equilib- Polutants A Method with a- Application to Jakart." Policy riummocdeL This model was used to analyze the impact Resrch Worlkng Paper 1301. World Bank, Policy Researc of economywide policies on national income, explicitly Department Waslinton, DC. accounting for the effectof such policies on the environ- Swait Jof and Gununar S. Eskeland. 1l99 lfhe Sacpe for mental factor. The effect of four policies was measured: Travel Mode Substitution in Sio Paulo: Esimates and a net reduction of agricultural implicit taxation; de- lmplicatios for Air Pollution ControL" World lank, creased tariff protection to industry; a cut in govern- Washington, DC mentemployment; and a cut in government wages. The last two policies were considered as altemative mecha- nismsforreducingthecurrentgovernentdeficit,which Economic Growth and Trade Policy appears to be the most pressing problem that Ghana's in Western Africa: Implications of the economy faces today. Degradation of the Vegetation Cover, Ghana has made enormous progress in liberalizing Phlm U its economy, particularly its trade regime. The research addressed the question of whether f urther liberalization Ref. no. 676-97C isapproprate.Ano therquestionthereseawhaddressed This reseach tried to establish empirically the imn- is what effect the four economywide policies would be portance of resoumce degradation for agricultural pro- likely to have on biomas once general equilibrium ductivity in Westem Afica. The findings could have interactions are accounted for. . imnpfnt implicaions for policy evaluation. Among the principal findings is that, gven the envi- Theresearchaddressedthefollowingqueslions What rownental externality, Ghana has already xeached an is the mle of vegtftiona oerm in agricultral growth? To approimatly optimal degree of trade liberalization. what extent is there an extenality? What policy inustm- Any fuher liberaization would induce slight ce 52 Environnmcntally Sustainable Daewopment losses for the economy. Trade liberalization promotes Lopez, Ramon, and Mario Nikitschek. 1991. "Dual Economic further expansion of the area under cultivation, which, Growth In Poor Tropical Areas." ounli of Developmen in turn, reduces biomass and is thus detrimental to Econoilcs 36:189-211. agricultural productivity in the long run. This negative Lopez, Ramon, and aaudla Sepulveda. 1990. "Analysil of the effect of further trade liberalization must be compared Tine Consistency of the LSS Farm Data for C5te d'lvoire with the conventional efficiency gains associated with (1985-87): Some Preliminary Results on the Estimation of a trade liberalization; the analysis shows that the losses Production Function." from a fall in biomass slightly outweigh the additional conventional efficiency gains of trade liberalization. Although the net effect of liberalization on national Property Rights, Rent Dissipation, income is only slightly negative, the effect on the envi- and Environmental Degradation ronmental resource is quite large. A 5 percent improve- in the Brazilian Amazon ment in the domestic terms of tradie of agriculture is likely to cause biomass losses of 1.5-3 percent, depend- Ref no. 677-24C ing on the assumptions used. There has been much concem that the rapid settle- The net effect of reducing government employment ment of the Amazon region will lead to the destruction and public sector wage or national income is, however, of the rain forest and the degradation of the land. Some still positive and sizable. A reduction in govemment of the attention to this issue has centered on the role that employment would increase national income because land tenure plays in decisions on resource use. Land of the low labor productivity in government. But the tenure on Brazil's frontier is generally weak. The abun- lower urban wages that such policy induces would dance of land keeps economic rents low and makes reduce rural out-migration, which, in turn, would in- investnents in land ownership and protection unprof- crease the pressure on thebiomass, causing a significant itable. As the frontier moves on, economic rents gradu- decline inbiomass and a fall in agricultural productivity ally increase, but institutionalbarriers often prevent the in the long run. The economic losses associated with this emergence of land tenure services (titling and property effect, however, would not be large enough to offset the rights enforcement). Both situations lead to a tendency positive direct effects of reducing low-productivity by economnic agents to mine the resource. in the first employment in the public sector and increashig em- situation because land's abundance makes new land ployment in sectors with higher labor productivity. cheaper than fertilizers and pesticides, and in the sec- The second phase also expanded the analysis of Cote ond because, without the ability to exclude others, there d'lvoire to a much broader and more representative is no incentive for landholders to invest in the future sample. And it explicitly disaggregated agriculture into productivity of the resource. threesubsectorstoconsiderthedifferentenviror,nental This research project examined the relations among effect, of different outputs. The econometic results are land values, property rights, and natural resource deg- stillbeing interpreted and will be reported in two forth- radation in the Brazilian Amazon. Its central policy- comning papers. relevant question was whether, and to what extent, -Rsponsibility: International Economics Department, imrprovinglandtenuresystemns mightimproveenviron- InternationalTradeDivision-MauriceSchiff;Environ- mental outcomes. The answer, takinginto accountloca- ment Department, Land, Water, and Natural Habitats tion, the costs of establishing title, and other factors, is Division-Ernst Lutz; and Asia Technical Department, essential for designing the appropriate ni-x of land Infrastructure Division-Wayne Luscombe. With tenure and other policies to reduce deforestation. Many Ramon Lopez, University of Maryland; Claudia of the costs of defining property rights are inherent in Sepulveda; Julie Stanton; and Earth Satellite Corpora- theprocess,butothersmaybeduetopoliyandpolitical tion. conditions, and thus amenable to policy refornL If the Completion date: April 1994. costs of securing property rights are high relative to the Reports: value of the land, it can be expected that open-access Earthsat. 1991. "Ivory Coast Change Dewacton: Quantitative conditions will persist and thus that rents will continue Assesment for Basic Land-Cover Categories for the Years to be dissipated through wastehld land use practices. 1985,1986, and 1988." The research used both historical census data and Lopez, Ramon. 1992 "Resource Degradation and Agricultural household surveys to address these issues. Using his- Productivity in Poor Tropical Areasr The Effectiveness of toncal data, the study investigated the relation among Community Controls for Common Property Resour" distance from the frontier, land values, property rights, ...199 "Enomwnomywide Polds, Agricultral Productivity, and fam investment This investigation compared land ard Environmental Fadors; The Case of Ghana." University use, investment and techniques on the frontier with of Maryland, College Park thoseinmoresettledareaswhileobservingtheindepen- 53 Environmentally Stustainable Development denteffectof tenurestatus.Farmn-level surveydata were Responsibilily:1LatinAmerica and theCaribbeanTech- used to explore the important issue of farm turnover. nical Department, Environment Division-Robert R Work on the household data focused on Identifying the Schneider. With Gary Libecap, University of Arizona; demographic characteristics of first- and second-gen- and Lee Alston, University of Illinois. erationsettlers and the deterrninants of a decision tosell Comt,pletion date: December 1993. a farm and move farther out into the frontier. The Reports: relationamonggrowthineconomic rent,propertyrights, Alston, Lee, Gary Libecap, and Robert Schneider. 1993. "An and land use decisions was also analyzed. Analysis of Pmperty Rights, Land Rents, and Agricultural Consistent with theory, results show that the de- Investment on Two Frontiers in Brazil." Paper presented at mand for land tenure services rises together with eco- Economic History Association meetings, Tucson, Arizona, nomic rent to land. Historical data from Parana show September 15. (Also presented at several other conferences that distance from administrative and market centers and workshops.) has a negative effect on tenure, with the effect declining _. 1993. "The Settlement Process, Property Rights, and Land over time as dte frontier moves across the state. On the Use on the Brazilian Amazon Frontier Preliminary Results supply side, jurisdictional disputes between state and and Lessons from U.S. History." Paper presented at the All- federal governments depressed titling. In Parana the University of California Economic History Conference, importance of tenure for investment grew significantly March. aseconomicrentincreasedthroughoutthestudyperiod .1994. "Property Rights and the Precondition for Markets: (1940-70). On the more recent Amazon frontier of Para The Case of the Amazon Frontier." Paper presented at the the relation among property rights, land rents, and Emergence of Markets CoitLrence, Saarbrucken, Gernany, investmemt is much weaker. Until 1985 there was a June9. negative statistical relation between investment and _ . Forthcoming. 'Demand and Supply of Property Rights tenure at the municipal level, probably reflecting low on the Frontier The Cases of North America and Brazil." In per-hectare investment on large (titled) fanms and the Terry Anderson and Tj. Hill, eds, The Priwiizalion Pross: delay between settlement subsidies (affecting invest- A Worldwide Perspediie. mat) and subsequent titling. The hypothesis that set- Schneider, Rober R. 1994. "Government and the Economy on tlers deared excess land and made other premature the Amazon Frontier." Latin America and the Caribbean investments to establish tenure failed to find statistical Technical Departnent Regional Studies Program Report 34. support. Abundant land, rather than a lack of title, World Bank, Washington, DC. (Also presented at the appears to have contributed to the rapid deforestation conference Refonna de las Politica de Gobierno Relacionade and other forms of nutrient minLing that are often criti- con la Conservacion y el Manejo de los Recursos Forestales cized in the literature. en America Latina, sponsored by the World Bank, CIFOR, The frontier acts as a filter for opportunity costs: USAID, and IICA, Washington, DC, June 1994.) those first to settle on the frontier typicaly have low human and physical capital. For reasons having to do with differential access to services and credit, later- Rural Poverty and Agriculture in Mexico arriving, better-endowed farmers or entrepreneurs can be expected to bid first-generation squatters off the Re. no. 678-23C land. Household survey data confirm that those who One purpose of this study was to monitor the condi- leaveareyoungerandhavefewerassetsthanthosewho tion of Mexican farmers, especially the poor, during a stay. Informal property rights to low-valued land pro- period of rapid change in the policy environment This vide initial squatters with an entry into the market, and was done by reexamining "baseline" data from a large land exdhanges allow the accumulation of sufficient survey in 1991, and by comparing the results from a wealth to ultimately develop more permanentfarms. As resurvey of a small sample of these farmers in 1993 with land values rise, titling becomes a condition for broad- their responses in 1991. These data have a number of eting the range of purchasers and for obtaining finance limitations, including the 1993 sample's small size and forinvesthients,bothofwhichfurtherraiseappropriable geographical homogeneity, as well as problems inher- rents and land values. Settlers are willing to expena ent to panel survey data, and the results must be inter- coniderable resources to establish and maintain formal preted with some caution. Nonetheless, a number of property rights to land. As long as land values are interesting, if tentative, conclusions emerged from the generally low, the absence of titling has small effects on analysis. wealth, but as transport and markets improve, titling From the large 1991 sample, it appears that the farm- will become even more important in promoting the erswith more limited useofproductive assets (the"low- development of wealth and encouraging wise land use asset' goup) were more likely to gow corn as their -ai prncipal crop, and grew fewer crops on average, than 54 Environmentally Sustainable Development the other farmers. They also had less access to and more able to take full advantage of the opportunities pr- problems with credit and were less likely to use pur- sented by the reforms. They may require some assis- chased inputs, such as seeds, fertilizer, and pesticides, tance,particularlyingainingaccesstothecreditmarket. or to use a tractor for soil preparation. Their land was of That may support the case for the income support lower quality on average, and iney had a lower educa- model of assistance, since guaranteed payments not tion level. dependent on the vagaries of production could act asa Thecomparisonacrossyearsforthesmallsubsample signal of creditworthiness similar toasset ownership or showed that, in general, conditions have improved for use. All these findings will need to be corroborated in the average farmer in the sample area. Cropping pat- the more elaborate study for which this one was the terns have become more diversified. Theaveragesize of pilot. landholdhig has increased. The average farmer receives Responsibility; International Economics Department, more credit in real terms than in 1991. More farm house- International Trade Division-John Nash. With Ramon holds receive income from off-farm work. Purchased Lopez and Julie Stanton, University of Maryland; and inputs have become more accessible, with a consequent the Instituto Tecnologico Autonomo de Mexico. rise in the incidence of use. And asset ownership and Completion date: April 1994. educational attainment have also improved modestly. Comparisons of the "asset groups" across time showed that, in several ways, the low-asset group fared Air Pollution and Health Effects as well as orbetter than the other groups-althdiogh the in Satntiago, Chile conclusions based on these comparisons must be re- garded as even more tentative than those based on the Rf. no. 678-48C entire subsample. Relative to the other groups, the low- Programs to control air pollution are now being asset group experienced a greater increase in its use of proposed even in very poor countries. But methods for credit irrigation, machinery, and purchased inputs and designing cost-effective programs, although improv- in its asset ownership. On the other hand, the level of ing, are still rueimentary. Ideally, the costs of emissions educational achievement fell for this group, and fewer controls should be compared with benefits across a had off-fann income than in 1991. wide range of categories-health and productivity, nui- The study also examined empirically the relation sance and aestetic values, crop loss, and damage to between assets and the supply function- Using a pro- man-made assets. duction model focusing on capital as a productive in- Developing countries assessing possible pollution put, the study showed that both the level of supply and control strategies have had to rely on dose-response the responsiveness (elasticities) to changing input and functions estimated for ities in industrial countries. outputpricesshouldbeexpectedtodependona farmer's StadiesinCanada, theUnited Kingdom,andtheUnited wealth and asset position. Regression analysis using StaL s, for example,have looked at the relation between data from the surveys empirically showed that farmers air pollution and such health outcomes as premature who use productive assets such as machinery or irriga- mortality, work loss, acute respiratory symptoms, tionhavestatisticallysignificantresponsivenesstoprice asthma attacks, acute bronchitis in children, and hospi- changes but that farmers without access to these assets tal visits and admissions. This researcfrhowever, made do not. There may appear to be some inconsistency estimates based on data for a developing country- between a finding that the low-asset group is less ca- Chile. pable of adapting to changing incentives and the find- One part of the study estimated dose response func- ing that it had experienced a greater increase in input lions for daily mortality (total, by age group, gender, use and asset ownership than the other groups. With a and cause). The results-a midpoint estimate for the larger sample, this finding might not hold up. An alter- elasticity of daily mortality to respirable dust of 0.078- native explanation of this finding is that the low-asset indicate relations similar to those found in industrial group may not have adjusted well to changes in incen- countries (in the higher range of elasticities estimated in tives, but may have been aided by the government's the literature). rural programs, such as Solidaridad. Another part of the study investigated lower respir- The study's findings are germane to several policy tory illness among children, using two data set-one issues. One is the question of whether the goals of from clinics and another from a hospital emergency Mexico's ongoing reforms in agriculture are being met room. The results indicate that morbidity is also sensi- Tentatively, the answer seems to be that, by and large, tive to air poflution levels-the estimated short-tem they are. But the finding that farmers without access to elasticity is in the same range as that for mortality. certainproductiveassetsarelessresponsivetochanges The study led to several general conclusionr Dose in incentives raises a warning flag that they may notbe response relations can be estimated in a developing 55 Environmentally Sustainable Development country. There is no indication that dose response func- rate. Evidence that the rate of deforestation declines dions in a developing country would differ fundamen- once per capita income reaches a certain point is weak, taUy from those that have been found in industrial however. The research has thus found little support for countries. And reductions in air pollution can deliver the notion that countries will eventually "grow their substantial healthbenefits in a city with pollution levels way out' of deforestation. And in Africa the relation like those in Santiago. The study identified a number of between per capita income and deforestation is shifted control strategies for which the health benefits exceed upward by rural population density. Countries with the control costs. higher rural population density have a higher rate of Responsibility: Policy Research Department, Public deforestation at any level of per capita income. Economics Division-Cunnar S. Eskeland. With Bart Responsibility: Policy Research Department, Environ- Ostro, U.S. Environmental Protection Agency, Califor- ment, Infrastructure, and Agriculture Division- nia; Jose Miguel Sanchez, ILADES; and Carlos Aranda, Maureen L. Cropper, Muthukumara Mani, and Charles Instituto Medico Infantil. Griffiths. Completion date: December 1993. Compktion datc October 1994. Report: Cropper, Maureen L, and Charles W. Griffiths. 1994. "The Population Growth and the Environment Interaction of Population Growth and Environmental Quality." Ariamn Eaonomic Review (May). Ref no. 678-59 In environmental economics population growth is often cited as a major cause of environmental degrada- Land Tenure Insecurity and Small Farm fion, especially in developing countries. It is a particu- Productivity in Honduras and Paraguay larlyvalidclaiminthecaseof deforestatiorn population growth, by increasing the need for arable land, encour- Refno. 679-74 ages the conversion of forest land to other uses. The primary objective of this research is to study the Theinteractionbetweenpopulationgrowthanddefor- efficiency implications of land tenure insecurity and estation can be studied at a macroeconomic or a other institutional restrictions affecting rural land mar- niicmerononiic level. This reseaich is pursuing both ap- kets in Honduras and Paraguay. The- need for such a proaches. At the microeconomic level it is examining study in Latin America is great Although earlier Bank factors influencing deforestation in Thailand between studies have analyzed the constraints arising from inse- 1973 and 1989, usmg data at the chlngumt leveL The cure property rights in Africa and Asia, there are no emphasis is on assessing the importance of the effect of studies with a similar scope for Latin America. Lack of size of the agricultural population as a determinant of tenure security is pervasive in the region, especially deforestation relative to the importance of other factors- among small farmers. Several factors account for this: fragmentationofforestsduetopriorlogging,anenlanced farmers' lack of legal title, inappropriate legislation, road network, and changes in agricultural prices, institutions'lackof technical capacitytohandlea proper Analternativemacroeconomicapproachusespooled registration system, lack of enforcement, and compli- crow,-n,tme-serie.,lnationab-eveldata.Theproject cated and nontransparent procedures that unduly in- examied whether a systematic relation existsbetween crease the cost of land registration. percapitaCDP and deforestation (that is, whether there Most studies that have evaluated the effects of land is anenvironmental Kuznets curve for deforestation). If tenure insecurity onsmalUfarmers' agricultural produc- sudh a relation exists, how is it affected by population tivity in Latin America have used simple correlation pressures? Does faster population growth or greater analysis.Theirresultsaregenerallyambiguous,provid- population density raise the rate of deforestation atany ingnoclearsupportforthemajorhypothesesregarding level of per capita income? the effect of land titles. This question was investigated by estimatng equa- This study will specify and estimate an econometric dions to explain the rate of deforestation in Africa, Asia, model to assess the role of tenure security. ltwill use the and LatinAmerica. Foreach continentthe rate of defres- model to quantify the effects of several factors that tatioi was explained by per capita incme, the square of contribute directly to agricultural productivity and to percapitaincome,therateof growtinpercapitaainome, identify the impact of titling on the demand for land. logprimsruralpopulationdensity,theurateofpopulation The study will consider three factors affecting agtrrl- growt and counxy-spediic dummy variables. turalproductivitysanefficiencyeffect,aninputdemand TM results suggest that in Africa and Latin America, effect, and a crdit supply effect The efficiency effect deforaetationincreaseswithincome,butatadecreasing captures market mechanisms, such as the degree to 56 Environmentally Sustainable Development which the land market permits efficient farmers to hold Energy Demand in Asian onto their land and adjust to their optimal operational Developing Economies size, the degree to which it permits potentially efficient farmers to enter the sector, and the degree to which it Ref. no. 679-19 permits inefficient farmers to exit The input demand Energy demand in developing countries merits re- effect reflects reduced incentives to invest, especially in search attention for two main reasons. First, developing capital goods that become attached to the land, and the countries are playing an increasingly imnportant role in credit supply effect reflects credit constraints that un- world energy markets, with their consumption of com- titled farmers frequently face in formal credit markets. mercial energy increasing substantially over the past ModernizingtherurallandmarketsinLatinAmerica two decades. The increase has been particularly pro- will require institutional reform efforts on severaL re- nounced among the developing countries of East and lated fronts,-for example, changes in the legal frame- Southeast Asia and is expected to continue into the next work regarding land tenure, land tenure information century.The strengthof future energy demandby these (cadastral surveys and a registry system), an expedient lower-middle-income countries will depend on a host titling program, and increased capacity of public insti- of factors, however,suchasexpectedincomelevels,real tutions (including the judiciary) to enforce property energy prices, the continuing trend away from tradi- rights. Proper enforcement is not feasible unless the tional noncommercial energy sources to commercial legislation is clear, the institutions are strong, and a fuels, and the speed of shifts toward energy-intensive reliable technical data base exists. These are expensive activities due to such factors as urbanizationand indus- and politically sensitive initiatives, and those who cap- trialization, increased motoriztion, and households' ture economic rents from an ill-defined system are use of electrical appliances. bound to resist them. Political support for such initia- Second,thegrowingconcernabouttheenvironment tives is unlikely to be forthconing unless policymakers and the global nature of environmental problems has and politicians are convinced that the payoff of reform- focused attention on the pattern and trend of energy ing the tenure system is worth the effort demand in the developing economies. More than half Land titing, like other policies that promote agricul- the total carbon dioxide emissions originate in the en- tural growth and productivity (agricultural research, ergy sector, and a large and increasing share of the flow extension, infrastructure investment), implies signifi- of emissions will be from lower-middle-income coun- cant investment by the government Thus a key ques- tries. For example, with capital scarce in such countries tion is whether investing in land titling reforms is likely as China and lndia,but highly polluting coal abundant, to have a higher social rate of return than that of the coal consumption in these economies, under present other, more conventional investments. energy policies, will almost certainly continue to rise As the Bank intensifies its dialogue on land issues in substantially over the next decade, with important im- theregion,itwillbeessentialtohaveadearunderstand- plications for the carbon diaxide emission abatement ingnotordy of the potentialbenefitsofoperationsaimed policies discussed attheRiosummit. Adetailed analysis at providing greater security of tenure but also of their of energy demand and the possibilities of interfuel limitations. This study's empirical estimates will pro- substitutioninthemajorcoal-producingcountries,such vide information permitting an evaluation of the effi- as China and India, is therefore of greatimportance to a ciencyanddesirabilityofinvestinginlandtitlingprojects. better understanding of global environmental prob- The results, by providing a decomposition of the effi- lems and the energy needs of these economies. ciency effects of tenure security, will help focus policy This research will review recent patterns of energy recommendations on the most relevant effects. And consumption in Asian developing countries, model en- tey will make it possible to assess farmers'willingness ergy demand using econometric and end-use ap- to pay for additional tenure security. proaches,projecttheenergydemandofthemnajorAsian Responsibility: Agriculture and Natural Resources countries over the next 15 years, and analyze the effects Department, Agricultural Policies Division-Derek of energy-related pollcies on energy demand. Byerlee, Gershon Feder, and Apparao Katikineni; and The study will use an econometric approach to ob- Latin America and the Caribbean Technical Depart- tain estimates of income and price elasticities of sectoral ment, Advisory Group-Alberto Valdez. With Ramon energy demand disaggregated by fuel type. For most Lopez,UniversityofMaryland;iClaudiaRomano;Isidro sectors, it will pay special attention to adjustment dy- Soloaga; Alexander Coles; Atenec dela Agro-Industria, namics, developingand usingdynamiicfuel shareequa- Honduras; Land Tenure Center, United States; and tions for this purpose. For countries for which detailed Centro Paraguayo de Estudios Social. time-seriesdataarenotavailable,theresearchwillplace Completion date: February 1996. greater reliance on cross-section estimates based on 57 Environmentally Sustainable Development long averages. The estimated elasticities will be incor- The research found that rising emissions standards porated into the model to project demand. In sectors for are an important element in the effort to limit pollution, which reliable elasticities are not obtained, an end-use including in developing countries. A survey of 107 approach will be used to project demand. OECD exporters of clean technologies showed that the The results of the research should provide elasticities strengthofenvironmentalregulationsindevelopingcoun- indispensable for analysis of energy-related policies in tries was cited as the main factor creating a demand for developing countries. They should also provide com- know-how and products relating to pollution controL puter models to project energy demand by key sectors The research also found that there is an important under various policy and other scenarios. need for good informationtosupportgovemunentregu- Responsibility: International Economics Department, lationdirectlyandtoraiseconsumerawareness,whether InternationalTrade Division-Takamasa Akiyama and environmental efforts rely on regulation and standards ShaneStreifel.WithM.Pesaran,CambridgeUniversity; or on market mechanisms. Monitoring is also impor- B. Baltagi, Texas A&MUniversity;T. Baker, Cambridge tant. In Japan, where monitoring is best developed, the Econometrics Ltd.; R Smith, Birkbeck College; and R information generated through the monitoring of emis- Mabro, Oxford University. sions has been used effectively by local authorities and Completion date: December 1995. nongovernmental organizations to negotiate standards and agreements with firms. Responsibility: Private Sector Development Depart- Environmentally Friendly Technology ment-Ashoka Mody.WithJean O. Lanjouw,YaleUni- versity. In the past two decades there has been substatial Completion date. JuLy 1993. innovationinpoilution-reducingtechnology.Evidenceof Report: this is the share of patents going to such technology in Lanjouw, Jean 0., and Ashoka Mody. 1993. "Stimulating industrial countries. That share is about 2.5 percent in Innovation and the Intemational Diffusion of Environmen- Germany, more than 2 percent in Japan, and 1 percent in tally Responsive Technology: The Role of Expenditures and te Uniled Sttes. Developingcountries have also done a Institutions." World Bank, Private Sector Development fairamountof innovationandadaptationbasedinparton Deparbtent, Washington, DC DrafL technologies transferred from industrial countries. Paralleling the growth in tecnology has been a rapid expansion in the demand for consulting and monitoring Dryland Management services TIhe world market for pollution control equip- ment and related services is estimated at more than $200 There has been considerable controversy in recent billiona yearandisprojectedtoreach$300billionby2000. years over the question of whether the standard notions This project looked at new evidence relating to envi- of "carrying capacity" in the drylandrangeareasofSub- ronmentlinnovation to try todeterniinewhat hasstimu- Saharan Africa are relevant when considering policy lated the growth in new tedhnologies and the pollution toward traditional producers operating primarily in control industry, and whether the results have been communal areas. The controversy relates to changing achieved efficiently. It investigated the effect of environ- ideas on the underlying ecological views about the mental regulation onexpenditure forpollutioncontrolon impact of alternative management strategies on the innovation, and on the diffusion of new technology. And range ecosystemnand about the objectives of range man- it looked at how nonregulatoxy instruments-incentive agement These views have led to a questioning of the mehanims and information channels-can be brought position that the traditional "opportunistic' range man- to bear in encouraging pollution controL agementstrategiesare responsible for muchof the range- The researh drew on three main sources of informa- land degradation reported to be occurring. And they tion: a data base on patents, a defined set of capital have led to a reconsideration of appropriate policies to goodsusedforpoilutioncontrolthatcanbe identified in support pastoral production as population and eco- international trade statistics, and case studies drawn nomic growth increases the pressure on the pastoral from international data bases, OECD studies, and the areas and disrupts the earlier use patterns. interational media. This research had three main objectives: to review Tighter regulations and greater pollution control recent findings and assess the current thinking on the expenditureswerefoundtobetypicaliyassociatedwith precision with which carrying capacity can be esti- falling pollution levels But the information available mated, on current definitions of the concept, and on its didnotpermitaseriouscost-benefitanalysisthatwould relevance to dry African environments;to undertake, in shed light on whether the decline in pollution has oc- thelightofthesestudies,ananalysisoftheeconornicsof curred at an unacceptably high cost herd management under these conditions and the likely 58 Environmentally Sustainabk Development impact on rangeland degradation; and to assess the Completion date: December 1993. implications of these findings for policies on economic Reports: development in dryland areas, including land tenure Dehnke, Roy, and Ian Scoones. 1992. 'Rethinking Range and administration. Ecology Implications for Rangeland Management in The initial review indicated some consensus on three Africa." Enviromnent Working Paper 53. World Bank, broad propositions regarding the ecological function- Environment Department, Washington, DC. ing of pastoral systems in these conditions. First, a Behnke, Roy, [an Scoones, and Carol Kerven. 1993. "Range distinction must be made behveen the concepts of "eco- Ecology at Disequilibrium." Overseas Development logical' and "economic' carrying capacity. While eco- Institute, London. logicalcarrnyingcapacityrepresentsthephysicallimitof English John. 1993. "Economic and Social Policies and Land population, what constitutes an economically optimal Degradation in Dryland Areas." Paper presented to the stocding rate will vary according to circumstances. Sec- Intergovernmental Committee for a Convention to Combat ond, in Africa's dry savannas rainfall variability and Desertification, Nairobi, Kenya. other episodic events control both plant and animal Perrings, Charles. 1993. "Pastoral Strategies in Sub-Saharan populations, and these grazing systems may be ecologi- Africa: The Economic and Ecological Sustainability of cally in constant disequilibrium. Third, African range- Dryland Range Management" Environment Worldng Paper lands are ecologically heterogeneous at a variety of 57. World Bank, Environment Department, Washington, DC differenttspatial scales, and care must be taken to main- Scoones, Ian. 1994. "Living with Uncertainirn New Directions tain acce is to "key resources" witiin the range to pre- for Pastoral Development in Africa. IIED, LondonL vent a collapse of the system. The analysis developed a series of models simulating the impact of altemative range management strategies Farming Systems and Natural Resource and of variations of key economic policy variables. It Managemenb A Comparison of Successful suggested thatovergrazingisnotduetotheopportunis- Experiences in Developing Countries tic nature of traditional range -management strategies but to the economic and institutional conditions in There is limited scope for opening up new lands for which such strategies are worked out Given the range agricultural use. Many of the areas still under forest of benefits received by the traditional owners and the cover are rich in diverse biological species but poor in nonmarketed nature of many of them the results of the soil nutrients. And it is widely recognized that agricul- analysis of the impact of variations in the available tural output must be raised to meet the needs of the policy variables are not always intuitive. The results rapidlyincreasingpopulationinmostdevelopingcoun- showhowrecenttrendsinpolicyandeconomicparam- tries, as well as to reduce poverty. The dilemma is that eters may have worked to provide incentives to tradi- more intensive use of natural resources is essential to tional producers to increase, rather than decrease, the provide the total output required, yet there seem to be size of their herds. few, if any, intensified farming systems that are indefi- Theresultsof thisworkformed thebasisof aresearch nitely sustainable without continuing evolution and workshop on New Directions in African Range Man- adjustment. agement held in the United Kingdom in June 1993 and This inquiry into farming systems and natural re- sponsored jointly with the Commonwealth Secretariat source management addressed that dilemma. A set of This workshop explored the implications of the re- studies briefly described selected rainfed farming and search for a number of development issues, including naturalresourcemanagementsystemsthatcomplywith range management and planning, altemative feed sup- sound environmental management practices and that ply management livestock marketing, resource tenure, areevolvingin the light of accumulatingexperience and institutions (pastoral associations and grazingschemes), changes in context. For intensified systems of farming and pastoral administration. The submitted papers are andnaturalresourcemanagementthathavebeenwidely to be published in book form. adopted and have stood the test of time, the research Reonsbtsility: Agriculture and Natural Resources De- outlined the macroeconomic and sector policy and the partinent, Agricultunal Technology and Services Divi- institutional and social factors that enabled the systems sion-Comelis de Haan, and Environment Department, to function successfully. Land, Water, and Natual Habitats Division-Hassan The principal goals of the research were: Hassan.WiththeOverseasDevelopmenthLsfituteandthe * To identify, evaluate, compare, contrast and dis- lrstituteforEnvironmentandDevelopment,UnitedKing- seminate positive experiences with some technical don hleCommonwealthSecretariat OverseaslDevelop- changesinselectedrainfed farmingsystems and natural mentAdministration, and the govemmentof Nonvayare resource managementsystems in tropical and subtropi- contributing funding to the research. cal regions of the world 59 Environmetitally Sustainable Development * Topromoteexchangesofexperienceamong Bank transition from traditional to modem fuels in urban and otherstaffworking in different regions of the world areas of developing countries. It also explored the feasi- * Toprovide a set of case studies and a commentary bility of substituting kerosene, liquefied petroleum gas for use by the Economic Development Institute and its (LPG), or electricity for wood-based fuels. To accom- collaborating training institutions plish this task, thestudyexamined thecauses of interfuel * To provide the Operations Evaluation Department substitution and the effect of interfuel substitution on with background papers that will be useful in preparing equity and the quality of life in urban areas. The study's future audit reports on projects covered by the study. main hypothesis was that urban income, the type and Information was collected through field visits and location of an urban area, the wood fuel resources correspondence with collaborators in Brazil, Bolivia, around acity,and the typeof governrmentpolicy will all China, ColDmbia, India, Kenya, Malaysia, Nigeria, the affectthe use of fuels by urbanclasses in different ways. Philippines, Turkey, and Uruguay. This study moved in a new direction to deal with Themainfindingsof the researchare thatthenatural many of the inherent weaknesses in past research on resource management systems that are both highly interfuel substitution. The research utilized existing productive and apparently sustainable reveal a positive surveys to analyze patierns of energy use by urban area integration of a sound scientific basis, a favorable public and class of income. For about 45 urban locations, a data policy and investment climate, and a social context in base was assembled with significant variation in the which there is a balanced combination of diverse farm mainvariablesinthestudy-governmentpolicies,mar- types, autonomy of fanners' decisionmaking, and suffi- ket conditions, urban location and type, and fuel use by dient cooperation among farmers. urban households. In addition, data on resource condi- Resposibility: Agriculture and Natural Resources tions were gathered for each country. These data sets Department,OfficeoftheDirector-J.A.NicholasWallis; enabled the study to statistically analyze the causes of Environment Departmnent, Economic Development In- urban interfuel substitution, including the effect ofsuch utitute; Europe and Central Asia, Country Department factors as government policy or resource conditions on 1, Resident Mission in Turkey-Nedret Durutan; West- urban fuel use. em Africa Department, Resident Mission in Nigeria; The results of the research shed some light on the and South Asia, Country Department I, Resident Mis- effectiveness of existing policies, the conditions under sion, Agriculture Division-M. Balasubramanian. With which transitions can be expected to occur, and the Fairless Consultores, Uruguay; and John Landers. socioeconomiceffectand consequences of interfuel sub- Compktion date: December 1993. stitution. The research addressed such issues as what Report: policies are appropriate based on the socioeconomic Wais, J.A.N. Forthcoming. Some intmsid Systems of Farming conditions of the urban environment, the equity impli- in the Tropicsand Subtropic World BankTedhical Paper. cations of such policies, the implications of the availabil- Washington, DC. ity of local resources for energy use, and the foreign exchange implications of importing or producing com- mercialforms of energy for household use. Asexpected, The Urban Energy Transition thepreliminaryfindingsindicatethatgovermrnentpolicy, in Developing Counties along with income, has a significant effect on residential fuel use in developing countries. A somewhat surpris- Withgrowthratesatbetween3 and 7percentayear, ing finding is that many of the poorest households in the population of the urban areas of developing coun- urban areas of developing countries use electricity, but tries has reached startling numbers. More than 1.25 rarely use LPG. The use of wood fuel is fairly extensive billionurbandwelierslivein360citieswithpopulations in all but the largest cities. These findings are prelimi- over 500,000. The high growth rates stem from high nary, however, and more analysis is needed before firm birhates and extensive migration from rural areas to conclusions can be drawn. cities, and they are accompanied by increased demand The work completed so far shows that government for energy, food, water, and other resources. The mi- policy plays a very important role in influencinghouse- grants from rural areasbring with them their traditional holds to choose one fuel over another. It also shows that pattems of energy use, which are based mainly on the policies to promote LPG for households with incomes use of wood for fuel. In urban areas demand for wood that are less than about $25 per capita per month are products is highly concentrated, creating such difficul- likely to have disappointing results. Apparently, elec- ties as the environmental problems associated with tricity can be promoted at much lower levels of income harvesting trees around urban centers. because of the high value that urban households piece The purpose of this research was systematically to on lighting, although this will require substantial capi- anayze the dynamics of interfuel substitution and the tal expenditure by the electricity industry. In develop- 60 Environmentally Sustainable Development ing countries, wood fuels do not disappear completely Structure of and Prospects for as incomes rise because many high-income households Energy Demand in Five Major Asian still use these fuels, reflecting their utility for urban Developing Countries households. But wood-based fuels do seem to disap- pearfromurbanhouseholds inlarge metropolitanareas The growth rate of energy demand in Asian coun- with populations of more than 1 million, where wood tries in the 1980s-5.3percentayear-wassubstantially apparently is difficult to obtain. The urban poor are higher than that of any other region. The causes of the affected mostby urban fuel policiesbecause theyspend rapid increase in commercial energy consumption in a significant proportion of their incomes on energy. In Asian developing countries include high economic urban areas with high energy prices the poor can spend growth rates, high energy intensities, rapid industrial- 10 to 20 percent of their cash income on fueL ization, high shares of energy-intensive industries in It is important to understand the transition from industrial sectors, rapid electrification in industries and wood fuels in individual urban areas and individual households, rapid motorization, and rapid switching countries in the contextof the socioeconomic forces that from traditional to commercial energy sources. A num- drivethetransition.Policiesandprojectsthatruncounter ber of problems are associated with the fast growth of to prevailing socioeconomic forces are bound to en- energy consumption in these countries-problems that counterproblems.Forexample,encouragingtreeplant- could become much more serious in the future, such as ingfortheproductionoffuelwoodineconomiesthatare environmental deterioration, the high cost of energy rapidly making the transition to commercial fuels may infrastructure (especially for electricity), and increases be good environnental policy, but it does nothing to in world energy prices. help alleviate energy problems in urban areas. Like- One direction these countries could take to reduce wise,encouragingpoorhouseholdstorelyonexpensive their energy consumption is energy conservation. En- modem fuels early in the transition, when fuelwood is ergy efficiency in most Asian developing countries is verycheap,maydonothingbutstrainthebudgetsof the still quite low compared with that in industrial coun- urban poor and of national governments. tries.Muchof thetechnologyandequipmentusedinthe Responsibility: Industry and Energy Department, idustrial sectors of these countries is old and energy- Power Development, Efficiency, and Household Fuels inefficient Some of these countries have encouraged Division-Douglas Barnes. With Liu Qian, University energy conservation efforts in their industrial sectors, of Penns,ylvania; Jeffrey Dowd, U.S. Department of but there is stifl much room for improvement Energy Energy; Kerry Krutila, Indiana University; William efficiencycouldbeincreasedsignificantlybyalleviating Hyde, US. Department of Agriculture; and Mark Pitt, urban traffic congestion and building mass transit sys- Brown University. Indiana University contributed staff tems. In thehousehold sector, electric appliances, light- time. mg fixtures, and cooking stoves are considerably less Completion date: January 1994. energy-efficient than dwse used in industial counitres. Reports: The main goal of this reserch was to identify, in five Bames, Dougla& 1992. -Understanding Puelwood Prices in Asian developing countries, the areas in which there is Developing Nations. Industry and Enery Departnent technical and economic potential for energy conserva- Working Paper, Energy Seres 56. World Bank, lion. It found great potential for energy conservation in Washington, DC the industrial sectors of China and India, and consider- Barnes, Douglas, Kevin Fitzgerald, and Gordon McGranahan. able potential in the transport sectors of the Republic of 1991. "Interfuel Substliution and Canges in the Way Korea and Thailand. In all five countres the research Households Use Energy: Estimated Changes in Cooking and identifiedanumberofcost-effective measures thatcould Lighfing Behavior in Urban lava." Pefic n Asian Jounnl of be taken to conserve energy. Enaey 1 (New Series):21-49. (Also Industry and Eney Developing counties still lack the technical and or- Department Working Paper, Energy series 29. World Bank, ganizational know-how to undertake effective energy Washington, DC) conservation measures. This is an area that merits en- Barnes, Douglas, and Liu Qian. 1992. "Urban Interfuel Substilu- hanced international collaboration because the benefits tion, Energy Use and Equity in Developing Countries.- in energy conservation and pollution abatement would IWdustry and Energy Department Working Paper, Ener accrue not only to the countries concemed but to other Series 53. (Also published in James Dorian and Peridun countries as well. Fesharad, eds, IniterionalsUes in Emy Poliy, Deeop ResponsIility: International Economnics DLepartment, ment, and Ea,nmmies. Boulder. Westview Press, 1993.) International Trade Division-Takamasa Akiyama and 1993. -he Impact of Energy Pricingon the Urban.Poor. Masayasu Ishiguro. The Japan Trust Fund contributed World Bank, Industry and Energy Departnent, Washington, funding for the rsearch. DC Draft. Completion date. June 1994. 61 Envimrnmentally Sustainable Development Report: Responsibiity: Agriculture and Natural Resources Ishigura, Masayasu, and Takamasa Akiyama. 1994. 'Structure Department, Agricultural Technology and Services Di- of and Prospects for Energy Demand in Five Major Asian vision-Cornelis de Haan, Hamdy Eisa, and Jitendra Developing Countries! Importance of Energy Conservation.' Srivastava. With Jacques Brossier, INRA, France; Peter World Bank, International Economics Departnent, Washing- Oram, International Food Policy ResearchInstitute; Rita ton, DC Draft Aggarwal; Jumanah Farah; and Winrock International. The International Livestock Center for Africa, the Inter- national Laboratory for Research on Animal Diseases, Agrcultural Technology Development the Canadian Center for International Development, the Consultative Group on International Agricultural The introduction of improved agricultural technol- Research, the Rockefeller Foundation, and Institut Na- ogy will be a key factor in determining whether the tional de la Recherche Agronomnique, Morocco, are par- world'sfuturepopulationwillbeadequately nourished ticipating in the research. and clothed. For some time Bank staff have been con- Completion date- December 1994. cerned that Bank-funded agricultural projects have not Report: made adequate efforts to identify sources of technology Winrck Intemational. 1992 An Asessmen of Anima Agculuure and have not used available technology to its best ad- in Sub-Sdora n Africa. vantage. The Agriculture and Natural Resources De- partment is therefore undertakinga general assessment of available technologies,.identifying major technical Public Disclosure and and socioeconomic constraints to their adoptiDn, and Industrial Pollution Control assessing mechanisms of transfer into Bank lending operations Two well-known approaches to industrial pollution In its initial phase the study is focusing on two areas control are the regulatory (command-and-control) and in which the lack of technology has been most badly the market-based approaches. A third, potentially cost- felt-the arid and semiarid regions of the cool subtrop- effective, strategy for inproving the regulatory envi- ics, where tecenology generation has been hindered by ronment in developing countries would be to increase the poor resource base, and the livestock sector in Sub- public disclosure of pollution data. The Toxic Release Saharan Africa, where past introductions of technology Inventory in the United States and the enviromnental and overall project performance have been particularly pollution control agreements between firms and com- disappointing. munities inJapan have brought public pressure to bear Theprojecthascompleteda detailed inventoryof the on polluting corporations, through "informal regula- tchnologies used in World Bank-funded projects in tion' by affected parties. northernChina, North Africa and the Middle East, and This research is investgating the means by which southem Latin America. It has analyzed farn data to public information and participation can be integrated establish the effect of the adoption of many of the most into national regulatory programs. It focuses on modes frequently used technologies in Morocco and produced and costs of gathering and disclosing information; the a working paper on the results. The analysis shows an necessary preconditions for effective public paricipation enormous variation in the impact of each technology; (organization, media, means of effective legal recourse); the impact is strongly dependent on institutional ar- and the natureof public partidpation inpoiButioncontrol rangements and climate conditions. A technical paper (direct negotiation, legal liability, damage to the reputa- on this analysis, to be available by December 1994, will tions of polluting enterprises). Comparative skudies are highlight the conditions under which each technology under way for Japan, Thailand, and the United States. has performed well. Responsibility: Asia Technical Deparbnent, Environ- A report on livestock production technologies for ment and Natural Resources Development Division- Sub-Saaran Africa has been published and has been CarterBrandon;PolicyResearchUepartnent,Environ- discussed at a seminar attended by Bank staff and ment, Infrastructure, and Agriculture Division-David outside policymakers The report contriuted to the Wheeler;andEastAsia,CountryDepartmentl,Country formulation of a gtobal livestock research strategy un- Oporations Division-Nosuko Ichikawa. With Mainul dertheaegisoftheConsultativeGrouponlnternational Huq, Seema Aurora, Neeraj Malhotra, N. Nakazawa, Agricultural Research and to the restructuring of inter- and H Ogasawara. The Norwegian Ministry of Foreign national livestock research in Africa. A workshop is Affairs Trust Fund and the Japan Trust Fund are planmed for fall 1994 for the work on the arid and contibuting funding to the research. semiiard regions of the subtropics. Completion date December 1994. 62 Environmentally Sustainable Deuelopment State Subsidies for Preliminary calculations show that large areas of Industrial Pollution Control China, India, the Republic of Korea, and Southeast Asia receive depositionestimated toexceedthe criticaHloads. This research asks when, if ever, state subsidy of The methodology and the model will be made avail- private investment for pollution abatement tech- able to national and international agencies and research nologyis warranted in market-oriented econonijes The institutions to facilitate further development and dis- "polluter-pays"principle,simplystated,doesnotallow cussions on actions to alleviate environmental degrada- forpublicsubsidies. Sinilarly, theconunondebateabout tion. The methodology is expected to contribute to the whether command-and-control or market-based poli- development of regional policy on acidic deposition cies should be used for industrial poUutioncontrol does and transboundary pollution. not carry over into the extra dimension of why and The RAINS-ASIA model has been presented at a when subsidies are Iheoretically and practicafly justi- number of workshops held at the World Bank and in fied. The research found that four economic arguments Austria, Japan, Norway, and the Republic of Korea. typically put forward are theoretically weak, although Responsibility: Asia Technical Department, Environ- the institutional and political arguments are more com- ment and Natural Resources Division-Jitendra Shah, pelling for short-term programs. Katsunori Suzuki, and Maritta Koch-Weser, and Office ResponUbility: Asia Technical Department, Environ- of the Director-Anil Malhotra. With L. Hordijk, ment and Natural Resources Development Division- WageningenAgriculturalUniversity;W.Foell,Resource Carter Brandon and Ramesh Ramakutty. The Norwe- Management Associates; D. Streets, Argonne National gianMinistryof ForeignAffairsTrustFundiscontribut- Laboratory; G. Cannichael, University of Iowa; J. P. ing funding to the research. Hettelingh, National Institute of Public Health and En- Competion date: December 1994 vironmental Protection; hi Amann, International Insti- tute for Applied Systems Analysis; N J. Chadwick, Stockholm Environment Institute; Z7 Dianwu, Chinese Acid Rain and Emissions Reduction Academy of Sciences; and T. Haughland, ECON. Re- in Asia (RAINS-ASIA) search institutes in Asia are collecting the country- specific energy scenario data unde the auspices of an By the year 2010 the sulfur dioxide emissions cf Asia Asian Development Bank project at the Asian Institute are expected to exceed those of North America and of Technology. Europe combined. To assess the consequences of acid Completim date. January 1995. rain and oF emission reduction strategies, a collabora- Rewrts: live effortwas begun in l992 to produce a methodology CarmidhaeL G, and others 1993. 'An hlnernational Colabora- andPC-basedsoftware called RAINS-ASIA. The model tive Projet on Arid Rain in Asia. Paper psented at the is based on successful pioneering applications of acid inteatioal confeence n Reional Environmental rain scenario analysis in Europea Chang, Taipei, Taiwan (China), November. This projecthas several objectives: to develop meth- Foell, W, and others. 1994 "'Draft Report on Acid Rain and odologies that assist in formulating regional and subre- Emissions Reduction in Asia, Phase I. gional policies to mitigate the rapidly emerging prob- lems associated with atmospheric emissions; to provide preiminaryassessmentstocatalyzeintergovermmental Environmental Management of the policy dialogue on controlling emissions of acid ra:n Industrial Sector. Lessons from the Newly precursors;andtodevelopbasicstrategiesforthe' orld Industrializing Economies of East Asia Bank and other agenaes for assisting borrowing coun- tries in carrying out the strategy and policy analysis at Explosive export-manufacturing-led gowth and a national and regional levels. nearly fourfold increase in percapita income in the past The RAINS-ASIA model combines sectoral energy 25 years in the newly industrializing econonmes of East use, sulfur dioxide emissions, abatement approaches, a Asiahavebroughtincreasingpollution-hntensity, grow- long-range transport model for dry and wet deposition ingpublicpressureforpollutionabatement,andgreater of sulfur dioxide and sulfate, and regional environmen- resources for pollution control in these countries. The tal effects of sulfur deposition. Effects of acidification on environmental managementexperence of these econo- ecosystems will be treated in two ways: through a mies is more proximate tothechallenges facing the next qualitative map showing the sensitivity of ecosystems generation of counties entering rapid manufacturing- to add deposition, and through a quantitative map of led grwth than is the experience of the industrial critical loads (for 14 ecosystems). countries. 63 Enivironientally Sustainable Development Thisresearchprojectwillcarryoutcountrystudiesof competitive, the cotton industries of many countries environmental managementin the industrial sectors of will need to undergo adjustments. They may need to Singapore and the Republic of Korea to analyze the make changes in varietal development and mainte- effects of environmental regulation and enforcement, nance, cultivation practices, application of inputs, pest financial incentives, and public pressure on plant-level management, irrigation, and harvesting. Reforms maybe pollution abatement and to compare regulatory capac- needed in policies relating to producer prices, input pric- ity-uilding approaches. A synthesis study will incor- ing, land tenure, tariffs, and taxes. Reforms may also be porate data on Japan's environmental management of needed in institutions related to the supply of inputs and its industrial sector, compare the intensity of each marketing services (for example, public versus private), country's use of regulation, incentives, and public pres- the competitive structure of cotton industries, and the sure, and assess whether there is a specifically East- links between research, extension, production, gining, Asian mix of these elements, or whether each country and marketing And there may need to be changes in the tends to create its own optimal mrix productniixandmarketorientation,anincreaseintheuse Responshii4ty: Asia Technical Departnent, Environ- of cotton byproducts, and greater orientation toward ment and Natural Resources Development Division- production for spedalized market niches. Jean Aden and Carter Brandon. With Kyi-Hong Ahu, Many governments have intervened heavily in na- Korean Institute of Science and Technology; Sang Don tional cotton production and marketing because of Lee, Chung-Ang University; Faith Halter Loh Wah Sing, cotton's multisectoral role, its importance as a foreign Singapore Institute of Standards andlndustriaResearch, exchange earner, and, in some cases, its representation K K Chin and Chia lin Sien, National University of by influential interest groups. Some of the arguments Singapore; and KazuhikoTakemato,JapanEnvironment for this intervention-such as economies of scale, qual- Agency. The Korea General Consultant Trust Fund, the ity control, logistical barriers, and environmental con- Swedish Consultant Trust Fund, Singapore Pools, Nor- cerns-have strong economic and technical justifica- wegian Trust Fund, and the Japan Environment Agency tion:, others do not are contributing funding to the research. This study seeks to provide insight into the prospects Completion date: March 1995. for cotton during the next decade. It emphasizes the prospects for developing a sustainable, environmen- tally friendly farming system incorporating cotton as Study of cotton Production Prospects one of its components. As part of the task of examining for the Next Decade strategies for successful development of and adjust- ments in the cotton industry in the next decade, the Cotton has a vital multisectoral role in the economies rationale for government intervention and the appro- of many developing countries. But over the past decade priate division between the public and private sectors there have been wide differences in the performance of should be reevaluated. cotton industries in different countries. AU cotton in- The study examines the status of cotton production dustries are experiencing a number of strategic prob- andoutlinesthechallengesandopportunitiesfacingthe lems that are affecting the competitiveness of cotton industry during the next decade by drawing on case withalternativecropsandinthetextileindustry,evenin studies carried outin Brazil, China, Egypt, India, Mali, countries where there has been dynamic development Mexico, Pakistan, Tanzania, and Uzbekistan. It exam- Production costs have been rsing because of the in- ines a series of technological, economic, policy, and creased cost of labor, water, and other inputs, and the institutional issues that may help explain the differ- reduction or removal of subsidies. The real price for ences among countries in the performance of their cot- cotton lint has been declining, and there has been in- ton industries. These issues concem govemment poli- creasing competition from alternative crops that have cies and the role of the private sector; varietal develop- become more profitable as a result of market liberaliza- ment, maintenance, and seed production; agronomic tion and expanded domestic and export markets. Cot- practices; crop protection; availability and cost of in- ton yield and quality have been declining because of puts; institutional organization and links between re- weaknesses in varietal maintenanre and seed multipli- search, production, and marketing; and product devel- cation and because of salinity and waterlogging associ- opment and marketing. The study also examines the ated with irrigation schemes. And there is increasing influence of government policies on the patterns of concern among governments, donors, and consumer development the choice and adoption of technologies groups about environmental and health hazards associ- at the farm and processing levels, and market develop- ated with excessive use of pesticides. ment and efficacy. World prices for cotton are expected to reimain stag- The country case studies have been conducted by nant or to decline over the next decade. Thus, to remain study teams ineach country. Country reports havebeen . - .6 Environmentally Sustainable Development received and a synthesized report is being prepared. duction and environmental goods and assess the many The country reports and the synthesis report will be organizations (public and private, national and interna- discussedandfinalizedataworkshopinlsmailia,Egypt, tional) supporting the knowledge industries on which in November 1994. The final report will be published in agriculture depends. March 1995. The findings and recommendations will The research will focus on several policy issues. It provide a basis for future directions in cotton research will look at the level and stability of investment in and development and will identify investment needs. national agricultural research systems, especially in Responsibility: Agriculture and Natural Resources Sub-Saharan Africa and South Asia, and the efficienty Department, Agricultural Technology and Services Di- of resource use (especially human resources) in such vision-Johannes H Ri ter Vrught; East Asia and Pa- systems, induding economies of size and scope of re- cific, Country Department U, Agriculture Operations seardh programs for crop improvement, and coiabora- Division-Albert Nyberg and Rapeepun Jaisaard; Eu- tive arrangements between groups of countries. And it rope and Central Asia, Country Departnent Im, Agri- will assess the challenges in ensuring the sustainability culture, Industry, and Finance Division-Jorge Garcia- of agricultural production systems and evaluate the Garcia; Middle East and North Africa, Country Depart- institutional mechanisms for research on the natural ment 11, Agriculture Operations Division-Youssef resource base underpinning agriculture and on envi- Fuleihan, Latin Amenica and the Caribbean, Country ronmental issues relating to agriculture. Departnentll,AgnicultureOperationsDivision-Louise Responsibility4 Agriculture and Natural Resources Cord, and Country Departnent I, Environment and Department, Agricultural Policies Division-Jock R AgricultureDivision-MalcolmBale;SouthAsia,Coun- Anderson and Derek Byerlee. With P. Crosson. The try Department II, Agriculture Operations Division- InternationalFoodPolicyResearchInstituteandlSNAR Ashok Seth, and Country Department m, Agriculture are collaboratirng in the research. Operations Division-Guy Motha; Eastern Africa De- Cmpleti dalte: June 1995. partment, Agriculture and Environment Division- Rp-rts James Coates; Sahelian Department, Agriculture Op- Anderso, Jock R. 1994. Socil Scierce m Agriultural erations Division-Chantal Dejou; Legal Department, Research Implications and Isue for the IARCa" In M.P. East Asia and Pacific Division-Natalie Lichtenstein, Collinson and LWright Platais, eds, Sdcia Scinc in the Europeand CentralAsiaDivision-DilekBarlas,Middle CGLRA CGlIStudy Paper 28 Washingtz DC World East and North Africa Division-Aly Abu-Akeel, Latin Bant America and the Caribbean Division-Rudolf van Anderson, Jock R, and J.B. Hardaker. 199Q 'Efficacy and Puymbroeck and Jose Augusto Carvalho, South Asia Efficency in Agricultral Research A Systems View.- Division-Salman Salman and Akhtar Hamid, and Af- Agicultul Systems 40(1-3):15--23 nca Division-Elizabeth Adu and Sidi Boubacar. With Anderson, Jock R., P.G. Pardey, and J. Roseboom. 199 Fred GUllam (study coordinator), Mirtha Araujo, Tijen "Sustaining Grwth in Agriculture A Quantitative Review Arin, Thomas Bell, Mohamed Al-Saffy, Claude le of National and lntemationalAg&uIturalleseach Rumeur, and Graham Matthews. The Common Fund Investmenta. Agrktudhult Eonomics 10l(2):107-23. for the Commodities, the Netherlands; thelntemational Cwosson, P., and Jock R Anderson. 1993 'Concns for Cotton Advisory Committee, United States; and the Sustahrability Integration of Natural Resouce and Canada-Egypt-McGill Agricultural Response Enviro bnl Issues for the Rsearch Agendas of NAES Programme, Canada, are contributing funding to the Research Report 4. ISNAR The Hagme research. .1993I Integration of Natal Resou and Environmen- Compktion date: March 1995. tal Issues in the Research Agendas of NAS." Briefing Paper 7. ISNAR, The Hague .t193. "Natural Resoum Managment and Envimnmen- Agricultural Technology Policy tal Issues: An Ageda for ISNARB Discussion Paper 9l36- ISNAR The Hague. This research builds on an earlier proect, "Advanc- ing Agricultural Productivity" (see Jock R Anderson, ed., Agricutural Technlgy: Policy Issuesfor the Inemra- Global Environment tiollConmtunit,Wallingford:CABlntemational, 1994), that dearly identified the inportance of a better under- We still do not know whether the buildup of geen- standing of the policy environment sufrounding the house gases in the atmosphere could trigger a signifi- generatio transfer, and implementation of agricul- cant warming of the earths surface. Nor do we know tural technology. This research will examine the de- with any precision what the socal and economic conse- mand and supply situations for both agricultural pro- quencesofglobalwarmingmithtbe.Yetcountriesalover 65 Environmentally Sustainable Development the world are increasingly showing a willingness to act realizing the same target through unilateral reductions now rather than wait for further scientific evidence. by the OECD countries. Butgiventheuncertaintysurroundingthelikelihood Responsibility: Policy Research Department, Public and possible consequences of a global wanming, what Economics Division-Anwar Shah and Bjom Larsen. steps should nations take that they could justify at least Completion date: June 1995. an economic or local environmental grounds? That is Reports: thequestionthatthisprojecthastriedtoanswer,through Larn, Bjom, and Anwar Shah. 1992. 'Combatting the research on the potential benefits of removing energy Greenhouse Effect" FinancE and Development (December). subsidies and on the desirability of carbon taxes. 1992. "World Fossil Fuel Subsidies and Global Carbon Faced with the uncertainty of global warming and Emissions." Policy Research Working Paper 1002. World the economic costs that concrete actions to stem global Bank, Office of the Vice President, Development Economics, change would impose on present and future genera- Washington, DC. tions, policymakers must find toos that can be justified . 1994. "Ecnomic Policy ntrumnents for Global Climate purely on economic and local environmental consider- Change and Developing Countries." Paper presented at the ations. For any nation with energy subsidies, the first Intemational Ilstitute of Public Finance Congress on Public prioritymustbetoeliminatethosesubsidies.Thatwould Finance and Environment, Cambridge, Mass., August release $230 billion in revenues for developing and .1994. Energy Pricing and Taxation Options for Combat- emergingmarketeconomies,reduceglobalcarbonemis- tin the 'Greenhouse Effect.'" In Akihiro Amano, edt, Climte sions by 5 percent, improve the allocation of economic Chnge Policy Istruments ad Their Implicalions. Tsukuba, resources, and make scarce public funds available for Japan: Intergovermental Panel on Climate Change. development projects. .1994. "Global Tradable Carbon Pernits, Participation For countries that have eliminated energy subsidies Incentives, and Transfer. Policy Research Working Paper buthavelittle ornotaxation of energy, and forcountries 1315. World Bank, Policy Research Department, Washing- that cannot overcome political obstacles to remLoving ton, DC (Also presented, in an earlier version, at the subsidies, small carbon taxes would be in order. Such Fifteenth Annual International Conference of the Intemna- txes would discourage fossil fuel consumption and tional Association for Energy Economics, Tours, France, May reduce locad pollution while raising significant rev- 18-20, 1992t and forthcoming in Oxfod Ewnomk Paps.) enues at lower administ-ative costs than the prevalent Shah, Anwar, and Bhom larse.L 1992. "Carbon Taxes, the taxes entail. They would also impose lower economic Greenhouse Efect, and Developing Countriesf Poicy casts for the societyasawhole than do corporate income Researh Working Paper 957. World Bant Office of the Vice taxes, without unduly hurting the poor. President Development Economics, Washington, DC The project has also evaluated different schemes for . .1992. "Global Warming, Carbon Taxes, and Developing allocating permits under a global tradable permit re- Countries." Paper presented at the 1992 Annual Meetings gime designed to minimize the costsofstabilizingworld of the American Economic Association, New Orleans, carbon emissions from foSsil fuel combustion at 1987 January 3. levels by the year 2000. It concluded that an important cross-section of countries would have little incentive to participate in a treaty based on such widely discu5sed Industrial Emissions and schemes as allocating permits by GDP, by population, Abatement Cost Modeling or by some combination of the two. To encourage participation in such a scheme, each Many of the Bar's client countries are now commit- nnm-OECD country could be allocated permits equiva- ted to industrial pollution control, and the rapid devel- lenttoitsprojectedbaselineemission-andOECDcoun- opment of supporting information and analysis sys- tries could be allocated permits equivalent to the world tems has become a prority. Cost-effective regulatory emissions target minus the permit allocations to the strategies require detailed information about the loca- non-OECD countries Such a scheme would recognize tionandseverityiof emissions and thecostof abatemntL that OECD countries have a higher willingness to pay In most developing countries, however, such data are for increasing reductions and that non-OECD countries currently unavailable. Forthe foreseeable future, envi- have a sanuller historical "global emissions debtL" rcunentalplanners,researchers,andintemationalagen- Under this regime, the costs of emissions reductions cies will have to base much of their analysis on esti- for OECD countries would be about 50 percent lower mated poUution loads and abatement costs. than the coa of unilateral reductions, and non.OECD To meet this need, the Policy ResearchDepartment's counties would also realize substantial net gains fom Environment, Infrastructure, and Agriculture Division participation. Moreover, the worldwide costs of this (PRDEI) has developed the Industrial Pollution Projec- gIbal treaty would be 68 percent less than the costs of tionSystem PPS),whichisbuiltaround emissionsand 66 Environmentally Sustainable Deuelopment abatementcostparametersestimatedfromlargesamples (ENVSP) has designed dn applied research project to of plant-level data. These parameters can be combined increase the Bank's and borrower countries'knowledge withcommonly available data from manufacturingsur- of the relation between indigenous people and veys to provide comprehensive estimates of industrial biodiversityconservation.Theprojectusescartographic emissions and abatement costs for all major sectors and techniques, scientific information, and public policy industrial areas in client countries. analysis to increase the information base for the partici- In the first stage, the research completed statistical pation of indigenous and other traditional rural pevple estimatesofcomprehensive parametersforalargenum- in protected area management programs. ber of industry sectors and pollutants from a massive Thefirststageofthe prolectistakingplaceinBolivia. US. data base constructed in collaboration with the U.S. Centro de Investigaciony Manejo de RecurosNaturales Census Bureau and the US. Environmental Protection Renovables (CIMAR), a Bolivian natural resource man- Agency. In the second stage, now under way, the study agement institute, is working with the Bolivian Na- will develop revised parameter estimates from large tional Park Service and Bolivian cartographers, anthro- samples of plant-level data in developing and newly pologists, and biologists to produce two large national industrializing countries. The first revision-for water maps and a report that documents the 'elationship of pollution-will draw on data from Brazil, India, Indo- indigenous people to areas of high biodiversity and the nesia, the Republic of Korea, Mexico, the Philippines, country's proposed protected area regime. South Africa, Sri Lanka, Taiwan (China), and Thailand. A second stage of the project wili apply the lewsons The Industrial Pollution Projection System has al- that are learned from the Bolivian experience to ready been widely used in Bank operations,clientcoun- Cameroon. As Cameroon has a different sociocultural tries' environmental protection agencies, and interna- and biological profie than Bolivia and is at a different tional policy research institutes. As the most compre- stage in the evolution of its protected area regime, hensivesystemofitsldnd,itishelpingtoestablishanew extending the project to that country will help show international standard of quality for estimation of emis- how the general approach needs to be adapted to spe- sions and costs. The IPPS is available in Lotus or Excel cific country contexts. formats from PRDEI. The country maps and public policy papers and the Responsibiity PolicyResearchDepartment,Eviron- lessons leamed from their design and production will ment,lnfrastructure, and Agriculture Division-David enable ENVSP to develop a more general methodology Wheeler, MalaHettige, and Sheoli PargaL With Shakeb and set of operational procedures for incorporating AfsaW Mainul Huq; Paul Martin; Raymond Hartman; indigenous people into protected area regimes. It is and the Bureau of National Statistics, Indonesia. hoped that this methodology wili become standard in Completion date: June 1995. biodiversity conservationprojects fundedbytheWorld Report: Bank and the Global Environment Facility and that it Hettige, Mala, Paul Martin, and David Wheeler 19 "The will make a significant contribution to the growing Industrial Polluion Projection System." World Bank, Policy worldwide effort to reconcile the sometimes divergent Research Departnent, Washington, DC and conflicting interests of resident people and nature parks. Responibility:EnvironnentDepartment,SocialPolicy Indigenous People and Biodiversit and Resettlement Division-Shelton H. Davis. With Mapping Project Roland Wood and CIMAR. The Envrnmental Trust Fund of the Swedish Intemational Development Au- International agencies and national govemments are thority is contributing funding to the researdL becomning increasingly aware of the important role that Compltion date: July 1995. indigenous and other traditional rural people can play in biodiversity conservation and the management of threatened ecosystems. These people often possess so- Trade Policy and the Environment phisticated ecological knowledge that can contribute to programs of land use and protected area managemex#. Thisstudyisexaminingtheintegated theoryofopen Yet there is a paucity of information on the current economy environmental and trade policy. t has devel- sociocultural and demographic characteristics of indig- oped an integrated model of international trade and enous people, their relations to protected area manage- environmental flows using the dual approach. .- ment regimes, and their capacity to be active partici- The study's findings suggest that the optimal trade pants in biodiversity conservation programs. and pollution policies in the presence of cross-border To remedy this situation, the Environment spillovers to the domestic country depend on whehr Departnent's Social Policy and Resettlement Division the foreign country uses an emissions fee or a quantity 67 Environnien tally Sustainable Deelopmnent constraint on emnissions. Both domestic tariffs and do- An initial paper that empirically analyzed U.S. mestic pollution fees will tend to be higher when the biodiversityconservationspendingprioritiesfound that foreign country uses an emissions fee than when it extinction threat or species uniqueness had little bear- adopts an emissions cap. ing on spending; rather, funds were biased toward The project iB also developing the theory of regional "charismatic megafauna"-large, familiar birds and integration in the presence of environmental pollution mammals. Future work will focus on cases in develop- and capital mobility. ing countries. Responsibility: Intemational Economics Department, Responsibility: Policy Research Department, Environ- InternationalTrade Division--Arvind Panagariya and ment, Infrastructure, and Agriculture Division-Ken- Maurice Schiff.- neth M. Chomitz and Maureen Cropper. Completion date: September 1995. Completion date: December 1995. Report: Report: Panagariya, Arvind, Wallace Oats, and Karen Palmer. Weitzman, Martin, and Andrew MetricL Forthcoming. 'Towards an Integrated Theory of Open Economy Environ- "Patterns of Behavior in Biodiversity Preservation." Policy m-ental and Trade Policy." World Bank Washington, DC Research Working Paper. World Bank, Policy Research Department, Washington, DC The Benefits and Costs of Alternative Approaches to the Protection of Biodiversity Environmental Impacts of National Policies Substantialeffortsarebeingdevoted to theconserva- This project is studying the impact of national poli- lion oi biodiversity through the preservation of natural cies on three critical factors for the environment the habitats.Forstrategikcoordinationof theseefforts atthe scale of econornic activity; its location relative tovulner- national, continental, or global level, it would be desir- able communities or ecosystems; and its environmental able to quantify the benefits and costs of interventions. intensity (or environmental damage inflicted per unit of But on the benefit side, we lack an operational measure output-environmental intensity depends on sectoral of biodiversity-one that captures the essential notion composition and process tecnology witnin sectors, thatwe care about the genetic (or other) diversity repre- both of which are affected by national policies). The sensed by a set of species. On the cost side, we lack primnaryobjective of the researchis to quantifythe main methods for assessing the opportunity costs of protect- links between policies and environnental outcomes, ing--orreducingeconomicactivityin-designatedhabi- with particular attention to industrial pollution and tat areas. Thus we are unable to assess thecost-effective- deforestation. The results are intended to inform the ness of projects or to plan for the optimal allocation of intemational debate about the limits of "win-win' poli- conservation expenditures across habitats. Qes and the design of adjustment packages that pro- This project seeks to improve the quantitative meth- mate sustainable development. ods for biodiversity conservation planning. It wil de- The research relies heavily on econometric analysis velop practical, nonmonetary metrics for quantifying of national and cross-country data sets that include biological diversity, taking into account data availabil- information on policies, sectoral responses, and envi- ity and reliability. It will examine the tradeoff between ronmental damage at different locations. The data are habitat loss and economic gains introduced by road drawn from national and intemational sources, includ- construction and other development interventions. Pi- ingtheUnitedNationslndustrialDeuelopmentOrgani- nally, it will devote some attention to optimization zation (UNIDO), the Food and Agriculture Organiza- techniques that can combine cost and benefit informa- tion(FAO),theNationalAeronauticsandSpaceAdmin- tion for planning purposes. istration (NASA), and n ational statistical and environ- The research methods the project is using are appro- mental protection agencies. priately diverse. A nonnative approach to biodiversity Preliminary work has focused on relations between quantification involves the application of optimization national policies and industrial pollution. Completed methods to taxonomic and other biological data; a posi- (but still partial) s.udies suggest that openness to trade tiveapproachexammes the relevantpreferences of con- and domestic price reform are at worst neutral and at ervation planners. Measurement of tradeoffs between best quite progressive in reducing pollution intensity development and habitat loss involves the econometric and encouraging deconcentration of manufacturi. estimation of spatially explicit models of change in land But the results show a countervailing scale effect, use, combining land use and socioeconomic data in a supporting earlier work on adjustment. Reform pro- geographic information system framework. motes rapid industrial growth: evenwith loweraverage 68 K I ~~~~~~~~~~P1 I r ' illlii II tll tenni I it I Iv :n riI' erJt,l :terIt-aI ,'jti:Dn,tltrc.ilt 'tAx'rl el't11 I'n k-' A rii e (c, iSZI'r!t. is greater pa1ll uin Anlmost everywhere. 7 Tirdr, nd th bit eBan World Discuk s)t' w fis a'per 15' T he work that has been completed has twvo implica- Waskington, DC. tions for Bank operations and for policymakers in devel- . 1993. "National Econormic Policy and Industrial Pollution opingcountries. First,economic reform isnosubstitute for in Indonesia: 1975-89." World Bank, Policy Research appropriate regulation in the case of industrial pollution. Department, Washington, DC. Developing effective pollution control systems is particu- larlyimportant in countries undertaking.adjustment. Sec- ond, if existing regulation is weak, adjustment packages 4) Prices, Policies, and Industrial Pollution may have to include environmental safety netsthat sup- 7 ' port targeted regulation or technical assistance for pollu- Whatpollution control strategies are mostcost-effec- tion-intensive industries near vulnerable communities tive for developing countries? Anecdotal evidence sug- andecos'ystems.Targetingcanbeassistedbyquantitative gests that many factors play some role in determining research of the type undertaken in this project. international (and interregional)variationsinindustrial - Findings of the research have been presented at the pollution: differerces iri' input prices, environmental armnual meetings of the AmericanEconomic Association standards, regulatoiy'instruments, enforcement strat- in Anaheim, California, in January 1993; the New En- t egy, and "informal regulation" (pressure from neigh-' gland Universities Consortium Conference on Devel- "ti' boring communities, "green consumers," and so on). I , " ' 0c,pment at Williams College in October 1993; and at a + But little is known about their relative importance as l g z workshop on National Policies and the Environment in sources of pollution reduction. Better pollution control ecember 1993, oreanized by. the World,Bank's .Envi- strategies will require much more detailed quantitative, ,t i,a I i f utcomes. Thew ~~~ t e~~~~~~vid~~~~~~~raa ea v a c ush Mody.it With Ken- detailed data from several countries toecono- " ".-'''nethChornitz; 'Mainul Huq;'Susmita Dasgupta; Paul metrically estimate the impact of variable input prices, -4 Martin; and Robert Lucas and Subhendu Roy, Bostod formal regulation, and informal regulatory pressure on University. the environmental performance of industrial facilities. Completion date: June 1996. . The second part is working on ways to adapt OECD- Reports: based regulatoryeconomics to conditions in developing Birdsall, Nancy, and David Wheeler. 1993. "Trade Policy and countries. Industrial Pollution in Latin Amnerica: Where Are the Pollu- The initial empirical work has focused on gauging tion Havens?" lournal of Environment and Development 2(1). the potential of informal regulatory pressure as a low- Dasgupta, Susmita, Ashoka Mody, Subhendu Roy, and David cost complement to formal regulation. Analyses for ' Wheeler. 1994. "Quantification of Environmental Policy several Southeast Asian countries have suggested that Performance: Evidence from Thirty Countries." World Bank, local community pressure and national emissions dis- Washington, DC. closure campaigns can, under at least some conditions, . Lucas, Robert, Mala Hettige, and David Wheeler. 1992. lead to rapid reductions in emissions. "Economic Development, Environmental Regulation, and The.initial work on regulatory economics has fo- the Intemational Migration of Toxic Industrial Pollution: cused onadapting incentive regulation systems thatare .k 1960488." In Patrick Low, ed., Internatiotal Trade and the now widely used in implementing energy policy in ' Environment. World Dank Discussion Paper 159. OECD countries. Such systems combine performance Washington, DC.; t. 4. 4 i' z ,ji, ' targets with economnic incentives for efficient adapta- . 1992. '-he Tax ci t lyiofrProduction: . tion by industrial facilities. Given the inevitability of Global , quantitativetaPgetsinmany pflutioncontrolprograms, ,... EconomicR aZ is an4,Poding (May). ji Su suchrincentivere,ulMion'sy4teimay contribute ' ' Wheeler, David, Mainul Huq, and Paul Martin. 1993. "Process nificantly to economic efflciency-because they can ap-,, I i Change, Economic Policy, and Industrial Pollution: Cros- proximnate the workings of tradable permit systems. Country Evidence from the Wood Pulp and Steel Indus- Responsibility:PolicyResearchDepartine t,Environ- " '~~'2 ties -Worl Ban, Poic ReseArc Departmnent, Washing- ment, hinfrastructure, and Agricultu're Dvso-Dv .>,,, X ton$,>triesAWoll¢tlterr,Was D( Wheeler, MalaHetiggee,and ShePt . Wheeler, David, and Paul Martin. 1992. 'Prices, Policies, and Afsah, Malnul Huq, and Raymond Hartman 1kF the International DiJffwvo Clean T Iology The Cae of Compktion date: June 1997. . t5,3 i " : , t 4 69 Environmentally Sustainable Development Reports: In Praipol Koomsup, ed., Eoontmic Demelopment and the Hiuq, Mainul, Raymond Martman, and David Wheeler. 1994. Entviroment in ASEAN Countries. Bangkolc The Economic "Ownership, Process Choice, and Industrial Pollution: Plant- Society of Thailand. Level Evidence hum Indonesia, ThaDand, Bangladesh, and Wheeler, David, and Raymond Harbnan. 1994. 'Incentive India." World Bank, Washington, DC. Regulation: Market-Based Pollution Control for the Real Huq, Muinul and David Wheeler. 1993. "Pollution Reduction World?" In Claudio Frisehtak, ed., Regunary Policks and without Formal Regulattorn Evidence from Bangladesh." Rebfom in Induslrllizing Counttires. Washington, DO World World fank, Washington, DC Bank Warlord, Jeremny, and David Wheeler. 1993. "Environmental _. "Incentive Regulation for Environmental Protction in Economics and Development Policies A Research Agenda." Developing Countries." World Bank, Washington, DC. *70 INFRASTRUCTURE AND URBAN DEVELOPMENT Infrastructure Bottlenecks, Private Enhancing Urban Productivitly Provision, and LIdustrial Productivity: Determinants of Optimal Expenditure A Study of Indonesian and Thai Cities on Infrastructure, Human Resources, and Consumption Public Goods Ref. no. 676-71 This study investigated the contribution of invest- Ref. no. 677-66 ment in infrastructure to industrial productivity and Publicinfrastructurehasbeenidentifiedasonesource economic growth. It also studied private sector partici- of agglomeration economies, and there is reasonably pation in the supply of infrastructure services. Under- strong evidence that the spatial clustering of economic standing the relation between public infrastructure ser- activities leads to reductions inproductionand transac- vices and industrial productivity is important for policy tions costs. Because of infrastructure's role in enhancing and lending operations. productivity in urban areas, investment in infrastruc- Theresearchhadthreeprincipalcomponents.First,it ture has received renewed attention in developing and studied the effects of deficiencies in infrastructure on the transitional economies. But how much should be spent costs and productivity of manufactring firms. Second, on infrastructure-and how much on public goods- it compared the effects of infrastructural deficiencies on given fiscal constraints, policy goals, an economy's in- industrial growth in regional cities with the effects of ternal features, and foreign aid flows? This research such deficiencies in the most important-or primate- project evaluates that question. city of Indonesia and of Thailand. And third, the project The study's empirical analysis relies in part on a conducted an analysis of private sector participation in general equilbrium framework for analyzing the opti- the provision of such public infrastructure services as nal mix of public expenditures on infrastructure, hu- power and water. man resources, and consumption public goods, and the Using manufacturing establishment survey data col- optimal mix of taxes on wages, domestic output, and lected as part of the project, the study then estimated urbanproperty.Althoughthisteoreticalframeworkis econometric models for firms' cost functions and con- used tosiiulate the effects of changes in external assis- structed simulation models to study efficiency gains to tance and other parameters on the optimal fiscal mix manufacturingindustriesfromalterativemarketstruc- and to generate testable hypotheses, the main focus of tureswith varying degrees of public and private partici- the project is on the empirical analysis of determinants pation in the supply of infrastructure services and with of fiscal mixes and determinants of rates of return to different tariff structures. World Bank projects. The results from the research project, along with The first part of the study analyzes empirically the those from a similar study conducted earlier in Nigeria, determinants of the optimal allocation of publc expen- have been widely used in the World Bank's policry and diture to infrastructure, human resources, and con- operational work. sumption public goods, drawing on World Bank cross- PResponsibili: Transportation, Water, and Urban De- sectional data bases. The results of the analysis are velopmentDepartment,UrbanDevelopmentDivision- expectedtoprovideusefu infomation forpolicynaing Kyu Sik Lee and Satyendra Verma. With Alex Anas, on the internal features of an economy that influence State University of New York; Michael Murray, Bates publicinvestmentininfrastructure,humancapital,and College; and Hasfann Consultants. The IndonesianCen- consumption goods, as wei as oher fisc choices. T he tral Bureau of Statistics, the Institute of Technology analysis will also provide estimates of the incremental Bandung, and the Thaland Development Research In- effects of external assistance on the relevant public stitute are contnbuting staff time, and the U.S. Agency expenditure and tax rates. forIntemationalDevelopmentisprovidingfundingfor The second part of the study explores the link be- the research. tween the economic rates of return of World Bank- CompKlion date December 1994. supported prcts and the tax and expenditure poLcies 71 Infrastructure and Urban Developmsent of the host govermnent and other policy-related vari- Interest (AGETIPs) operate in West Africa. These non- ables. This analysis builds on the study for World Dce1- profit, nongovernmental agencies have been organized opment Report 1991 of the macroeconomic-policy- to undertake general contracting conmmissions from related determdnants of the productivity of World Bank public entities in Benin, Burkina Faso, Mali, Mauritania, projects. It readdresses the complementarity of public Niger, and Senegal. Similar agencies are under prepara- investment in different sectors and the effects Df eco- tion in Chad, the Gambia, and Madagascar. AGETTPs nomic institutions on the productivity of investments. have several objectives, including creating immediate Preliminary findings indicate that per capita central employment opportunities and providing basic infra- government expenditures on infrastructure depend on structure for new immigrants in urban areas; develop- internal features of the economy, the level and mix of ing the local construction industry; and testing and extemal funding, and govermnent objectives. Infra- eventually implementing the "delegated contract man- structure expenditures increase with GDP per capita agement" approach as an alternative to inefficient pub- (nonlinearly if measured on the basis of exchange rate lc sector management practices. A typical AGETIP is conversions, but linearly if measured on the basis of involved in the preparation, selection, and execution of purchasing power parities), population densities infrastructure projects. (nonlinearly), urban-rural migration rates, institutional This research assesses the service contracting option, development the size of the foreign sector, and the evaluating the performance of the AGETIPs compared existingstockof infrastructure.Theyarelowerinhilty with other altematives for infrastructure provision in urbanized countries and in countries with a high labor the countries inwhich the AGETIPs exist. The research force participation rate. Infrastructure expenditures re- will also measure the extent to which the AGTIPs have spond most strongly to dhanges in the level of develop- induced the participation of theprivatesectorand evalu- ment, the labor force participation rate, and the urban- ate the effectof the AGETIPs on the success of infrastruc- ization rate. When a relatively high proportion of for- ture projects. eign funding is in the form of commercial bank loans, The research measures the performance of the infrastruture expenditures are greater. They are also AGETIPs at three levels: infrastructure provision (qual- gater when foreign direct investment constitates an ity and efficiency of infrastructure services provided to especially large (relative) share of foreign funding. The the final consumer); project implementation (intemal strength of a country's credible commnitment to poverty efficiency of the AGETIP in executing subprojects); and reduction influences infrastructure spending non- WorldBank operations (efficiency of the AGEIP project linearly: counties whose commitment to poverty re- design and implementation relative to those of other duction is either higher or lower than is typical spend fonns of provision, such as the "socal funds). less on infrastructure. The research is based on several kinds of data. It Resibiity:-EuropeandCentralAsia,CountryDe- draws on operational indicators from project docu- partinent 1, Country Operations Division-Zeljko mentsspanning 15 years, three of which are years with Bogetic With Dennis Heffley and Susan Randolph, AGEI7IP experience. It uses a detailed data base on University of Connecticut AGETIP implementation over a two-year period in Compln date December 1994. Senegal and one year inNigertoassess theeffectiveness of the AGETIPs in those two countries. And it uses response by AGETIP executives in the participating An Econometric Assessment countries to a questionnaire developed as part of the of the Impact of Service Contracting research. Analysis involves econometric estimates of on Infrastructure Provision: performance against a benchmark with statisticai tests The Case of the AGETIPs of Africa on the significance of deviations from the benchmark. The benchmark is the avenge of a set of peer projects in Ref. no. 678-64 a country or a predefined performance target Altrnative arrangevnents for infrastructure provi- PreiniryfindingsoftheresearchshowthatAGElPs sionhavereceivedmuchattentionrecently-espedafly have contributed to more efficient infrastructure provi- those thatrelyonsomeformof privatesectorparticipa- sio in the countries in which they have bee Mple- tion. One such arrangement is service contracting, in nmeted and have brought a statistically significant seg- whih a public infastructure provider 'contracts our ment of the private sector into infrastructure provioL specific operations and maintenance activities to the The research will allow a number of policy concu- private sector fora fixed period (a few months oryears). sicns tobe drawn. ItwLI help in judging the potential of Service contrcting is the angemet under which servicecontracingasanalternutiveforprovidinginfra- the Agencies kf the mExecution of Works in the Public structure services in low-income countries, and the 72 Infrastructure and U rban Dcvelopment potential of AGETlilike sti ctur'es to eAhancze'private ing priority indicators relevant to service users. Most sectorparticipationininfrastructureprovision,improve current performance indicators- are measured at the publicsectorefficiency,andensurethesuccessofdecen- sourceofsupply-forexample,infrastructurefacilities. ;, q;; 4tralization efforts. The research will help identify the But because data are collected. on th input side of a :t2 ; -''4: 17 , .-.79, w .g.t, t "4]$4it:tt'>>111*1 ,, :;:i tIfrastructure and Urban Development ery has been enhanced because it is a prerequisite for Reports: prvate sector involvement. Richard, Baara, and Thelma Triche, 1994. "Reducing One of the main advantages c' Tontractual forms of Regulatory Barriers to Private-Sector Participation in Latin private sector participation is that Liey simplify regula- America's Water and Sanitation Services." Policy Research tion and provide opportunities to develop regulatory Working Paper 1322. World Bank Transportation, Water, capacity and credibility. A small but competent over- and Urban Development Departinent, Washington, DC. sightdepartmentorauthorityissufficienttoadminister Tridce, Thelma A. 1990. "Private Participation in the Delivery of and enirce an initial contract The regulatory frame- Guinea's Water Supply Services." Policy Research Working work, rules, and procedures can be specified in a man- Paper 477. Wortd Bank, Washington, DC. agement contract, lease contract, or concession for a _ .1990. Private Participation in Water Supply." Infrastruc- single urban area. As experience is gained, similar ar- tre Notes WS-1. World Bank, Transportation, Water, and rangements may be adopted in other cities and a com- Urban Development Departnent, Washington, DC prehensive framework for the sector can evolve. Regu- .1990. "Private Participation in Water Supply in C6te latorycapacitycanbereinforcedbyshort-termtechnical dlvoiref Infrastructure Notes WS-2. World Bank, Transpor- assistance for periodic in-depth contract reviews or the tation, Water, and Urban Development Department, renegotiation of fees. Washington, DC Theresearch hasalsoexaminedtheregulatorycondi- . Private Sector Involvement in Water Supply.' Nagarlok tions that private operators of water and sanitation (Urban AtMairs Quarterly, Indian Institute of Public services look for in deciding whether to participate in a Administration) 22 (4):5595 bid. The key conditions include specification of terms .1992. Private Sector Parfidpation in Infiastructure and conditions of regulation in the contract with the in Nigeria: Urban Water Supply." World Bank, private service provider, leaving little discretion to the Washingto DC regulatory authority; credible procedures for the fair .1993 the institutianal and Regulatory Framework for resolution of disagreements; realistic and clearly speci- Water Supply and Sewerage Public and Private Roles." fled technical objectives; tariff policies and adjustnent Infrastructure Notes WS-9. World Bank, Transportation, formulas that support full cost recovery, including Water, and Urban Development Department, chains in the exchange rate; historical colection rates Washington, DC that indicate consumers' willingness to pay for services; Tridue, Thelma, Abel Mejia, and Emmanuel Idelovitch. 1993. protection from nonpayers; legal protection for long- "Arranging Concessions for Water Supply and Sewerage tem investments by the provider; elimination of bu- Services: Lessons from Buenos Aires and Caracas." reaucratic adminustrative requirements that make the Infrastructure Notes WS-10. World Bark, Transportation, biddingprcessunnecessarilypesive;adequateprof- Water, and Urban Development Department, itability and size of contract to justify cost of bidding; Washingn DC and education participation programs to secure the Water and Sanitain Division. 1993. "Agents of Change: Public- support of consumers and labor interests. The support Private Parnrships in Urban Water and Sewerage Services of the Wodd Bank or other development assistance in Developing Countries."Water and Sanitation Utilities agendes in the preparation phase and the use of repu- Part hip Report 4. World Bank, Transportation, Water, table cone-tants to prepare bidding documents tend to and Urban Development Department, Washington, DC create confidence on the part of potential private pro- MI. "Potential Private Sector Particpation in l s viders. Activities for frther World Bank support could Water Sevices: Report ofa Workslhop." Water and Sanita- include judicial refomi; the development of credible ton Utilities Partnership Report 2. World Bank Trasporta- regulatoryapproaches; the development of mechanisms lumn. Water, and Urban Development Department, Washing- for reducing the cost of bidding for contracts; and con- tn, DC sumer representation and involvement in the defining .- 1993 "Utility Reform and Envimu enta Cean-Up in of stantards and rgulatory services. Fomerly Sodaist Countries: Report of a Workhop on the The research findings have been presented at World baltic Sean Water and Sanittion Utilities Partip Bank seminas an private sector delivery of social ser- Report World Bank, Transportaiom, Water, and Usban vices and in workshops on sector restructuring in Peru Development Deartment Wasewnmgtn, DC and the Plilippines. Respsity: Transportation, Water, and Uxban De- vedpmentDmtmet.Water andSanitationDivision- Public Sector Priin Harvey A. Garn, Thelm Tiche, and Penelope Brook- Cowan.Rapiduzbangrowthandinceaseimotorizationcause Ceupletim date: December 1994. chronic severe affic jams in many cities in developing s0 hnftaslructure and Urban Development countries. Public policy in the past has relied largely on implemented cordon tolling using both manual and road capacity expansion. But because space in urban electronic technologies (electronic technologies are be. areas is tight and construction cots are high, continued coming increasingly common on toll roads). Capital- capadty expansion is not a viable solution over the long and cash-strapped cities in developing countries may haul on both financial and environmental grounds. A find area licensing worth considering (at a cost of about potential win-win strategy is the public pricing of the 5-10 cents per transaction). But better-off cities could external effects of road use, of which congestion is an pursue electronic road pricing and financing, especially important component Congestion pricing saves time, as technological breakthroughs and scale economies improves the environment, and raises public revenues. continue to make it worthwhile on both econornic and (Without some form of peak-off-peak pricing, traffic financial grounds. will converge on preferred times and places until there The study will undertake further research on the is congestion and delay, resulting ininefficient tripsand tradeoffs between schedule delay costs and con;aiuon economic activity.) Developing countries cannot afford costs in urban areas and on the estimation and pricingof to continue with largely futile attempts to ease conges- accident cost externalities. tion by perennially expanding facilities. Responsibility: Policy Research Department, Public This research lays out a method for estimating con- Economics Division-Timothy D. Hau. gestion costs, congestion toils, and revenues for road Completion date: December 1995. use and applies ittolndonesia. The marginal congestion Reports: cost (and thus congestion toil) for urban road use in Hau, runohy D. 1994. "A Conceptua Framework for Pricing Indonesia is estimated to be 1.5 cents per vehicle-kilo- Congestion and Road Damage. In Borge Johanson and meter. Estimating the marginal congestion cost using LamsGoran Mattson, eds, Roud Prking: Teoy, Enpfl the conversion factors of passenger car units for each Asessmnt, and Policy. Nonvell, Masst: Itluwer Academic vehicle class yielded a rough estimate of the annual Publier congestion toll revenue of about 0.5 percent of GDP. . 1949LEstimation of Marginal Congesto Costs, Based on the estimated marginal road use costs-for Congestion Tolls and Revenues for Urban Road Use in both congestion and moad damage-and revenues for Indonesiaf In Proceedings of tnh deraln Confr4ee Tndonesia for 1990-91, the research also calculates cost on AdwncredTedrm4ogies in Transport aion ad Traffic recovery factors using revenue-cost ratios for each ve- MAnageme. hide class. .994. Instrtuments foi Chargn Cngestion EXenai- Technologies with varying degrees of sophistication ties."In Borge jolnson and Lars-Goran Mattson, edt, are available to implement congestion pricing. Several Road Pridnjrllhn EwiAsesmentfi Poliy. cities-Bergen,Oslo, Singapore, andTrondheim-have Noawel Mama: Kluwer Academic Pubishert. 81 MACROECONOMICS Some Economic Consequences policyreforms? Did those policy reforms restoregrowth? of the Transition from Civil War to Peace Andwhatisahead foradjustmentin Africa? Sincemany African countries have only recently undertaken adjust- Re no. 677-31 mentprograms, thestudy focused on those reforms that A number of African economies have been severely countries can implement relatively quickly and that are disrupted by civil war in the past three decades. Re- expected to reverse the economic decline rapidly. These cently, however, prolonged civil wars have ended in reforms include adopting realisticexchange rate policy, parts of Africa (forexample, inEthiopiaandin Uganda), increasing fiscal discipline, moving to reasonable posi- and there are prospects for peace in several of the tive real interest rates, liberalizing agricultural market- currentAfricanconflicts. Thisresearchattemptstodraw ing and pricing, liberalizing trade, privatizing public some generaleconomicinferecesabouteconomic poliy enterprises, decontrolling prices, eliminating directed in the aftermath of civil wars from the experiences of credit, increasing domestic competition, and reorient- Ethiopia and Uganda. ing public spending to high-priority areas. The study The study concludes that the peace dividend in the focused on a sample of 29 countries in Sub-Saharan aftemath of war is modest in tenns of a windfall both Africa that had adjustment programs in place at some forthe economy in general and for tlv*budgetinparticu- point during 1987-91. har. At the same time, the analysis for Uganda suggests To evaluate systematically how much policy reform thatwithawell-planned demobilization rogram, there has taken place, the study assessed wher e couniries neednotbeamicro-levelsecurityproblemnonaccountof stand in relation to the "policy frontier-where coun- a reduction in the armed forces. To preserve macro- tries would be located if they implemented the basic economic security, however, the government may in adjustment policy reforms. The policy frontier consists addition need to have offsetting increases in expendi- ofsoundmacroeconomicpoliciessupportiveofgrowth, tures in the form of compensation to losers, incentives for the production of tradables, little govern- Aprincipalthemeemergingfromthestudyconcems ment intervention in markets, and public spending the private sector's hesitany and apprehension in the priorities favoring the provision of basic social services aftemath of war, and hence the need for a policy envi- and infrastructure. The indicators used to deterniine ronment &tt will foster its confidence so that it can where countries are in relation to the policy frontier capitalize on its large liquid asset holdings. Recom- include the black market prermium in the foreign ex- mended policies indude the early sequencing of invest- change market, the extentof real depreciation relative to ment-sensitivoreforns, undervaluationof fheexchange average developing countries outside Africa, the fiscal rate, the preservation of very low inflation using direct deficit, seigniorage, real interest rates, inflation, and a consumer price index targeting, and an emphasis on government intervention index combining the extent of infrastructurerhabilitation. agricultural export crop marketing liberalization, Raspnbility: Policy Researh Department, Public demonopolization of other key public sector monopo- Economics Division-Sanjay Pradhan; and the Africa lies, and the extent of price controls. Progress in other Regional Office. With Jean-Paul Azam, David Bevan, areas-such as trade reform, public enterprise reform, Paul Collier, Stefan Dercon, and Jan Gunning, Center and financial sector reform-was also assessed. for the Study of African Economies, Oxford University. Most of the adjusting Sub-Saharan African countries Compltion &da Eptember 1994 entered thel980swell insidethepolicylfontier, though some were furter from it than others. Many adjusting countries have comealongway in key reforms. Buteven Adjushnent in Africa Reforms, Results, thoe that progssed most still have some distance to and the Road Ahead go. And in policy perfonnance the adjusting countries inthesamplestillagbehindtheadvanced,high-growth Rif. aI 677-67C adjusters in other regions. ThisstudyaddressedthuequestionsTowhatemtent The study focused on the change in growth rates- did Submhaan Aficanadjustincountries undertake the turnaround in grwth-as the major indicator of 82 Macroeconomics whether adjustment is paying off in the near term. Report: Adjustment policy shifts are not likely to remove deep- World Bank. 1994. AdjustientS in Afrka: RPrms, ResUlts, dnd the rooted impediments to growth in the short term. But Road Ahead. New York: Oxford University Press. (Also over the long term the rate of growth is the most impor- published in French.) tant indicator of whether development efforts, of which adjustment is a part, are reducing the disparities in growth between Africa and other regions. The question Exchange Rate Commitments and Central is whether the positive turnaround will bring countries Bank Independence back up to their historically lower trend level of growth, or whether it will shift them onto a higher growth path. Ref. no. 677-77 The evidence to date suggests that countrieswith higher This research examines the substitutability or growth turnarounds also have higher rates of growth, complementarity between exchange rate regimes and but that no country has moved onto an accelerated central bank independence as commitment devices to growth path. This is in part because none of the adjust- helpmaintainpoliciesaimedatpricestability.Itcomple- ing countries could be said to have put in place sound, ments earlier research that demonstrated the impor- sustainable macroeconomic policies or to have pro- tance of central bank independence for price stability in duced clear signals con private-sector-led growth. It also developing and industrial countries, and for growth in reflects the enormous development challenge facing developing countries. African countries. The study uses accommodation of the growth of Of the 29 adjusting countries, 14 had a positive tum- money and domestic credit to past inflation as the key around in GDP growth in 1987-91, meaning that their (inverse) indicator of the degree towhicha central bank average GDP growth rates were higher in 1987-91 than pursues policies to achieve price stability. Focusing on in the first half of the decade. Fourteen other countries accommodation, rather than inflation outcomes, will had a negative turnaround, meaning that GDP growth enable the study to obtain a clearer picture of the deter- rates declined in the second half of the decade relative to minants of the central bank's policy stance on inflation. the first Changes in policy explain part of the variation And it wll allow the study to estimate jointly and in the size of the growth turnaround. compare the effects of central bank independence and The study developed an index of macroeconomic different types of exchange rate arrangements on the policy stance and changes based ona combined index of tendency to accommodate. performance on monetary, fiscal, and exchange rate The research is being conducted in two steps. First, policy reforms. Countries were classified into three for a sample of about 60 countries at all incomc levels, groups depending on whether their macroecononkic accommodation equations will be estimated in which policies improved somewhat, improved only slightly, high-powered money and credit growth are regressed or deteriorated. Changes in macroeconomic poicies- on domestic and foreign inflation and past wage infla- which have a large effect on the extent of trade reform tion. Second, the measures of accommodation from and on agricultural pricing policies--are associated those equations will be related to central bank indepen- with a positive turnaround in outcomes. While dence and to type of exchange rate regime. increasesinextemalflowshaveprovidedsomeimpetus Responsbilitj Policy Research Department, Maro- to growth, there isa clear associationbetween improve- economics and Growth Division-Miguel Kiguel; and mentsin macroeconomicpoliciesandchangesin growth Latin America and theCaribbean,Country Department rats m, Country Operations Division 2-Steven Webb. With ResponsibMlity: Policy Research Department, Macro- Alex Cukierman, University of Tel Aviv; and P. economics and Growth Division-Christine Jones, Rodriguez, Georgetown University. Miguel Kiguel, and Lawrence Bouton; intemational Completion datE; December 1994. Economics Departnent, InternationalTradellivision- John Nash and Faezeh Foroutan; Office of the Vice President, Development Economics-Lant Pritchett; Patterns of Growth: Further Work Environment Department, PoUution and Environmen- on National Policies and Long-un Growth tal Economnics Division-Wilfrido Cruz; Cofinancing and Financial Advisory Services Department, Private Ref. no. 678-26 Sector Development and Pnvatization Group-Hafeez This follow-up project to 'How Do National Policies SihailvandFlnanilSectorDevelopmentDepartment- Affect Long-Run Growth?" (ref. no. 676-66) is intended Yoon Je Cho, lo Ann Pauklon, Gerard Caprio, and An- tocontinuetoprovideplecesofevir!encethatwilifitinto drew ng. the larger picture of how countnes adcieve rising stan- Coentitm daft August 1993. dards of living It aims to stimulate continued research 83 Macroeconomics on the connections between policy and growth by con- compute the ratio of interest payable for each year to the solidating the data from the earlier projectand making corresponding stock of private guaranteed loans out- the data easily accessible to researchers and analysts. standing(includingthestockofprincipalarrears)andto And itwill investigate some questions raised during the compute the flows of debt (so defined and portfolio course of the earlier research and a related conference equity each year). And it used the IMF's Balance of that have not been answered. These questions include Payments data base, cumulating PDI inflows since 1965 the following: (the earliest year these data are available) to obtain * How do social indicators and disaggregated GDP estimates of inward FPI stock, The study used thestock measures respond to some of the same policy indicators estimates to calculate rates of total and repatriated re- considered in earlier growth research? turns onFDI.ltthencompared these rates of returnwith * How do growth pattems differacross continents? ratesof interestpayable on private guaranteed debtand * Howdotradeandcapitalrestrictionsaffectgrowth performed statistical tests of significance. patterns? The next task is to examine the relation of FDI inflows * Throughwhichchannelsdopoliciesaffectgrowth? to both capital flight and portfolio equity inflows. First In addition to disseminating and extending the large cross-correlations of FDI inflows will be examined. Sec- data base from the first research project, this study wrn ond, the relation of PDI inflows to capital flight wiln be exploit the data to explore additional dimensions of the examined in greater detail using an econometric study. growth-policy nexus. Oher research has shown that FDI outflow frorn the Resposibity Policy Research Department, Macro- United States is a perfect substitute for the country's economicsandrGrowthDivision-WilliamEasterlyand portfolio equityoutflow.Thestudywillexamine whether Ross Levine. With Reza Baqir, Harvard University. this relation holds when US. outflow data are disaggre- Completion dte: December 1994. gated between industrial countries and developing counties. Many developing countries are only now emerging Macroeconomic Effects from the debt crisis following the boom in commercial of Foreign Direct Investment loans of 1978-91, and their wariness about the financial effects of the current boom in FDI is not surprising. A Ref no. 678-89 better understanding of these effects of FDI thus can Foreign direct investment (FIDI) is now the largest contribute to macroeconomic management and stock- single source of extenal finance for developing coun- taking of this type of capital inflow, and to the develop- tres. FDI flows to developing countries have increased ment of polices to smooth out and minimize the harm- at an annual rate of 19 percent since 1985 (even though ful effects, if any, of such inflows. global FII outflows fell during the past three years). ResponsibibityntemationalFinanceCorporation,Eco- Despite the increasing importance of FDI, little re- nomics Department-Guy P. Pfeffermann. With search attention has been given to its financial effects. Chander Kant, Seton Hall University; and Uma Somerecentstudieshaveexamined theconsequencesof Ramakrishnan, Georgetown University. international capital flows, particularly those to Latin Completiot date: September 1994. America, but they generally have not analyzed FDI separate from other private capital flows. This research fmcuses on where FDrs financial effects can be expected The Determinants of Agricultural Growth: todiffer from those of debt capital ad those ofportfolio Country and Cross-country Analysis equity investment. The study first examines the prediction stated in the Ref. no. 679-03 World Bankes World Debt Tabes 1993-94 that the recent Understanding the process of agricultural growth is rise in FDI inflows can be expectd to generate strong vitally important for understanding the growth of the reflows of profit remittances. It examines rates of total econom.y asawholeand for understanding the implica- returns from FDI and the repatriation ratios of returms tions of yolicy change for the rural sector, which typi- from FDI. The it analyzes whether FDI is in fact more daly contains the majority of the poor. This project stable than portfolio equity inestenL A related ques- analyzes agricultural growth using a comprhensive tion is whether FDI inflows substitute for portfolo approach based on the fundamental determnb of equity intlows, and whether they constitute the return that growth: changes in inputs (land, labor, capital, of the capital flight purchased inputs), in technology, and in the economic This research draws on two main data sources, It environmnent used the World Bank's Debtor Reporing System (DRS) Thefirststepistonmrsalabroaddatasetforasmany and other data induded in the World Debt Tabes to countries as posibt drawing n FAO agricultural data, U Macroeconomics OECD data bases, and data from the World Bank, the tries and regions. It has demonstrated a capability for International Labour Organisation, the US. Department efficiently handling a global data base comprising more of Agriculture, and a range onational sources. than 100,000 series on a personal computer. Thus, ex- Using these data, the study will analyze the behavior pensive and cumbersome computers are no longer re- of the main inputs to agriculture using the theoretical quired to process and manage global model systems. framework developed by Yair Mundlak and applied in This creates opportunities for analysts in all countries to earlier studies of Argentina, Chile, Punjab, and Thai- monitor their countries as linked components of the land. The study will then analyze production decisions, world system, using their own hardware and readily allowing considerable flexibility in the choice of pro- transferable data and software. duction technique. Finally, itwill analyze the process of DAD will be disseminated electronically after addi- growth, taking into account the effects of demand levels tional validation and testing. on the level of output. Responsibi7ity: International Economics Departnent, The study will produce a monograph as well as a International Economic Analysis and Prospects Divi- seriesof technicalarticles focusingonparticularcompo- sion-ElliotJ. Riordan and Abdel Illah Stambouli, Sys- nents of the research. Another important output will be tems Division-Ibrahim Levent, and Socio-Economic an extensive data base for the analysis of agricultural Data Division-Boris Blazic-Melzner. The United Na- growth and productivity. tions (DIESA) contributed data to the research. Responspiility: International Economics Department, Completion date: December 1993. International Trade Division-Will Martin and Donald Larson. With Yair Mundlak, Hebrew University of Is- rael; Julie Coronado, University of Texas; and Al Grego, Intergovernmental Fiscal Relations University of Maryland. in Developing Countries Completion date: December 1995. The delineation of taxing and spending authority and the structure of intergovernmental transfers in a DEC Analytical Database country have come to be recognized as of fundamental importance ih the efficient and equitable provision of The DEC Analytical Database (DAD) developed in public services. This project attempted to provide a this projectfills the need for a minimal butconsistentset framework for evaluating these arrangements. It also of macroeconomic data that covers all countries and developed empirical frameworks for examining the hence permis analysis and modeling at the global level effidencyandequityimplicationsofjurisdictionalchoice of aggregation, and for any region desired by the user. mechanisms; assessing the impactof higher-level trans- DAD organizes data on national accounts, trade, bal- fers on subnational government fiscal behavior; and ance of payments, debt, government finance, money, examining the relations between fiscal decentralization and prices into a coherent three-sector framework- and fiscal performance. private, public, and rest-of-world-for about 140 counp First, the project developed a framework for assess- tries. It is a comerstone of the global modeling effort of ing intergovernmental fiscal relations and blueprints the Intemational Econonic Analysis and Prospects Di- for the reform of these relations in developing and vision (ICAP). transitional economies. Second, the research examined, BeforestartingDAD,IECAPspentayeardeveloping at both the conceptual and the empirical level, the andvettingasuitableglobalaccountingframeworkand Tiebout hypothesis that consumer mobility and inter- testing it with benchmark data for 1985 for certain junrsdictionalcompeti oionleadstoefficientprovisionof regions. In DAD this framework is filed with indi- local services. In doing so, it presented and imple- vidual-country senes of maximum length, using stan- mented new empirical methods on tax and expenditure dard Bank nomenclature and the most authoritative incidence and on public sector allocative efficiency. It standardized data available through the Banks central concluded that only under very restrictive assumptions files (the Bank's Social and Economic Da'abase). The will "voting with the feet" and interjurisdictional com- work also included meticulously fillinggaps in the data petition ensure allocative efficiency in the local public through additional sources and staff estimates, and sector. developingefficientmeansforupdatingdata, changing Third, the research looked at the effect of intergov- base years, and manipulating the data for analysis and enmental transfers on local fiscal behavior. Itsurveyed projections. the theoretical and empirical literature on grants and DAD has been used in a vanrety of descriptive studies modeled th incentive effects of intergovernmental tans- (for example, on trends in global savings and invest- fers to examine the effect of higher-level transfers on ment) and for the estimation of models of many coun- subnational govemrnment budgetary choices. It exam- 85 Macroeconomics ined the income and price effects of grants and the extent McMillan, Melville. 1994. 'A Local Perspective an Fiscal to which grants were need-compensating as opposed to Federalism: Practices, Experiences, and Lessons from effort-rewarding. And it specified a dynamic model to Developed Countries." exaniine the long-run and short-mn effects of permanent Shah, Anwar. 198L. "Capitalization and the Theory of Local changes in federal grants on local public investment and Public Finance: An Interpretative Essay." Jourmal of Economic recurrentexpnditures.Itisplannedtoexpandthismodel SurvEs 2(3):20943. to indude the role of public capital in private production, .1989. "A Capitalization Approach to Fiscal Incidence at to endogenize local own revenues, and to model the the Local Level." Land Econmics 65(4):359-75. private sector,localgovernments,andthefederal govern- .1989. "A Linear Expenditure Systen Estimation of Local ment in a hfl general equilibrium framework Fiscal Response to Provincal Transportation Grants." journal The study's framework for assessing intergovern- of Emonmics and Business, pp. 150-68. mental fiscal relations has been drawn onby the Bankrs _ . 1991. "A Fiscal Needs Approach to Equalization." Paper operations complex in its work in several countries, pretnted at the Annual Meetings of the Canadian Economic including Albania, Brazil, China, Indonesia, Russia, Association, Kingston, Ontario, June. (Also forthcoming in South Africa, and Venezuela. The framework paper has Candian Public Policy.) been translated into Chinese and Russian and is being _ .1991. The New r-isa Fedealism in BraziL World Bank used by several developing countries in their training DiscLssion Paper 124. Washington, DC. program for public officials. .1991. fPerspectives on the Design of Intergovenunental Responsihityy:PoliqyResearchDeparbnent,PublicEco- FLscal Relations." Policy Research Workcing Paper 726. World norics Division-Anwar Shah and Heng-fu Zou. With Bank, Washington, DC- Antulio Bomfim, University of Maryland; and Robin .1992. "Empirical Tests for Aflocative Effidency in the Boadway and Sandra Roberts, Queens University. Local Public Sector."Fublic Finance Qartcrly 2D(3):359-77. Compktion date June 1994. .. 1993. "A Distribuio de Tarefas no Fedelismo FiscaL" eorts: In A REfonna Fisal No BTsil. Subsidios Do Simp6sio Bird, Rihard, and Hengft Zou. 1992. "Fmancng Local Intemacional Sobre Reforma Fiscal, SSu Paulo, Setembro De. Govemment in Romania." World Bank, Policy Research . 993. "Intergovernmental Transfers in Developing Deparment, Washingt, DC Countries." Presented at the conference on Boadway, Rbin, Sadra Roberts, and Anwar Shat 1993. "The Intragovenmnental Fscal Relations in China, Shanghai, Reform of Fiscal Systems in Developing Countries: A October. Federalism Perspective." 26 as. lonrdes definans piblicas . 1993 "On Alloation of Functions in Federal Systems." (Cordoba, Areina). Presented at the International Sympositun on Tax Reform, _. 1993. -The Reform of Fiscal Systems in Developing Sbo Paulo, Brazil, Septenber. Countries: A Fil Federalism Perspective. Paper pre- . 994. "A Fiscal Needs Approach to Equalization sated at the International Conference on Fiscal Reform and Transfers in a Decentralized Federation? Policy Research Stnucul Chang, New Delhi, August 25-27. Working Paper 1289. World Bank, Policy Research Depart- _. 1994. "The Reform of Fiscal Systems in Developing and ment, Washington, DC. Emerging Market Ecnomies: A Federalism Perspective?- .1994. The Rerjm of Intergownmental Fisal Relations in Policy Research Working Paper 1259. World Bank, Policy Dvelooping and Emerging Market Economies. Policy and Research Deptmnt, Washington, DC. Research Series 23. Washington, DC: World Bank. Boadway, Robi and Anwar Shah 1994. Fiscl Federalism in . Forthcoming. "Economic Design of Constitutions.? Developing/Transibon Economies: Some Lessons from Canadian Economic Jurnal (Proceedings of the Canadian ndustrialized Countries. National Tar Journdl (Procedings Econmic Assoiation Annual Meetings, Calgary, Alberta, of the 86th Annual Conferma on Taxation), pp. 64-71. June 10-42). Bomfim, Aniulia, and AnwarShah. 1991. "Macrconomic Shah, Anwar, Robin Boadway, and Sandra Roberts. 1994. Mangement and the Division of Powers in Brazil: Perspec- Fiscal Federalism Dimesions of Tax Reform in Developing tives for the Ninees." Poliy Research Woring Paper 567. Countries." World Bank, Policy Research Department, Wodd Bank Washintn DC Washington, DC. _ . 1994. "Maaoecononic Managemnut and the Division of Shah, Anwar, Zia Qureshi, and others. 1994. hntergommantal Pwer in BraziL Perpcives for the Nineties? World Fiscl Rhtorns in Indonesia Issues and Rerm Optums. World Deaepmnu 22(4)Z3-42 Bank Discussion Paper 239. Washington, DC Fez William, and Hang-fu ZYL 1992. "Local Govennt Zou, Heng-fu. 1993. "Optibml Design of Federal Grants to Fance in South Africa. World Bank, Policy Research Localities.' World Bank, Policy Researc Departnent, Department, WaDhngt DC Washingtn DC Ma JuIL1994. 7' U c uManagement and Intergovern- . 1994. "Dynamic Effeets of Federal Grants on Local m=nul Relations in China." Spending" Jouma of Urban Ewnomics 3698-115. 86 Macroenaomics _._ 1994. "Taxes, Grants, Local Public Expenditure, and suggest that government consumption responded al- Growth." World Bank, Policy Research Department, most twice as strongly as private consumption. A sig- Washington, DC. nificantnegative findingis theabsence of Dutch disease effects: the study observed no contraction in agriculture or manufacturing in response to the oil price increase. Macroeconomic Effects The absenceof Dutch disease effects isdue inpartto the of Terms-of-Trade Shocks policy-induced output restraints in the oil sector and in part to the "enclave" nature of the oil sector, which does Most development economists agree that variations not participate in domestic factor markets. in world prices are an important source of risk and Responsibility: International Economics Department, instabilityfor developingeconomies. Developingcoun- International Economic Analysis and Prospects Divi- tries derive about half their export earnings from pri- sion-Uri Dadush and Andrew Wamer. With Lamin mary commodities, whose world prices are quite vola- Leigh, Oxford University; and Nikola Spatafora, Yale tile. This volatility is not purely short-term; extensive University. data suggest that commodity prices undergo long peri- Completion date: June 1994. ods of rise and decline. Reports: Empirical studies generally find a positive relation Leigh, Lamin. Forffiwming. 'the Effects of Tenns-of-Tmade between terms-of-trade shocks to an economy and its Shocks on Economic Growth: The Case of Some Africn medium-term growth rate. The Keynesian aggregate Cocoa/Coffee Exporting Economiese demand models support this finding, though in a typi- Spatafora, Nikola, and Andrew Wamer. Forthcoming. cally neoclassical account the effect of such shocks is a Maroeconomic Effeds of Ternis-of-Tde Shocbs The Case priori indeterminate once intertemporal ramifications of Oil-Exporting Countries.' are allowed for. Further, much controversy remains about the nature of the transmission mechanism. The effects of such shocks on output are better understood Strategies for Competitiveness by examining their effect on other macroeconomic ag- gregates, which necessitates a disaggregate analysis. In Technology and technical change are among the addition, the process of slow adjustment to equilibrium main driving forces behind the structure of production, is better analyzed econometrically through an error- opportunities for trade, increase in intemational com- correction specification. petitiveness, and the growth of national income. Eco- The sharp movements in world prices of oil and nomic development is thus intimately related to the beverages in the 1970s and 1980s provide a very good effective use of technology to make efficient use of approximation to a controlled experiment for exam- resourcesandtoexpandtherangeofgoodsandserwices ining the effect of unanticipated terms-of-trade shocks produced to satisfy needs and increase social welfara. to different groups of relatively open economies. This Thisprojectwasconcemedwiththecentrallessonsio study used these country and time period samples to be derived by contrasting countries' industrial perfor- investigate the effect of price shocks on growth and mances over the past 30 years from the viewpoint of external position for oil-exporting and beverage- technology. Itdeveloped a frameworkforanalyzing the exporting country groups. relationbetweentechnologyandeconomiicperformance. The study found that for beverage-exporting coun- To put the discussion of economic performance, in- tries in Africa, terms of-trade shocks had a lagged effect dustrial strategy, and technology strategy into perspec- on growth but a contemporaneous effect on consump- tive, and to analyze the relation between technology tion and investment, with the effect on investment developmentand capabilityandeconomicperformance, much stronger than that on consumption. The effect of the project examined three types of variables: indica- terms-of-trade changes on output was directly related tions of themacroeconomicenvironmentindications of to the degree of openness of the economy. The findings the economic incentive regime, and indications of ef- alsosuggestthatapositiveterms-of-tradeshockleadsto forts to acquire and develop technology, as well as a deficit in the trade balance. In conformity with theo- education and technical human capital. retical expectations, positive shocks also led to a real Using this analytical framework, the prject exam- exdhange rate appreciation. ined 14 developing economies: the high-performing For oil exporters, the study found that permanent East Asian newly industralizing economies (NIE)- terms-of-tradeshockshaveasignificanteffectoninvest- Hong Kong, the Republic of Korea, Singapore, and ment and on consumption, but almost no effect on Taiwan (China); the second-tier Asian N lE--China, saving. As a result, the trade balance and the current Indonesia, Malaysia, and Thailand; the three most ad- account balance were adversely affected. The data also vanced Latin Amencan economies-Argentina, Brazil, 87 M iaroeonoics and Mexico; and India, Israel, and Turkey. These are for others, reducing the need for backward extrapola- rougblythedevelopingeconomieswiththelargestvalue tion of enrollments to calculate the initial stock. added in manufacturing among those not in Eastem Inthesecondphaseoftheprojecttotalfactorproduc- Europe or the former Soviet Union. tivity growth in 83 countries was derived based on the Responsibility: Private Sector Development Depart- estimates of human and physical capital stock, using ment-Carl Dahlman. error correction models, an econometric technique that Compltion date: June 1994. has not been used before for such a purpose. The re- Report: search reached six conclusions: DahlmanCarl. 1994. 'Technology Strategy in East Asian * The estimated cross-country production function Developing Economies.P World Bank, Private Sector showed that human capital accumulation is far more Development Department, Washington, DC. important in explaining growth than several earlier studies indicated. This finding is in conformity with recentstudies that find the share in income of raw labor Total Factor Productivity Growth to be much less than previously thoughL in Developing and Industrial Counties: . Contrarytotheresultsofotherstudies,TFPgrowth Data and Estimates inhigh-incomecountrieswas found tobecomparable to that in the faster-growing low- and middle-income This research project was part of a broader effort by economnies. the Wforld Bank to better understand the sources of * Arelatedfindingisthatthefastest-growingdevel- econom-iic growth in developing and industrial coun- oping economies have based their growth more on the tries and how they rnay be influenced by national poli- rapidity with which they have accumulated physical ies and global economnic trends and events. The main and human capital than on high TFP growth. objective of the study was to develop a cross-country * Cross-country differences in TFP growth are due data base on human and physical capital stock that largely to differences in political stability and in initial couldbeused toestimatetotal factor productivity MP) conditions (notably, initial per capita income and initial growth in a range of industrial and developing level of human capital). countries. * After an exhaustive search for other explanations, The first phase of the project focused on the prepara- the study concluded that cross-country differences in lion of the data base on human and physical capital TFP growth (corrected for initial conditions) cannot be stock Physical capital stock estimates were prepared explained by structural and policy vanables for which for a selected group of 92 countries (of which 68 were data are readily available. developing countries) for the period 1960-90. A special * Sub-Saharan Africa is the only region for which effortwas made tocompileinvestmentseries from 1950 actual TFP growth is significantly lower than the TFP onward for as many countries as possible; these data growth predicted on the strength of initial conditions series were then aggregated according to a perpetual and political stability (by approximately 1.1 percentage inventorymethod.Anevaluationof differenttechniques points a year). for estimating an initial capital stock showed that a The cross-country profile of TFP growth and the role modified Harberger method was most suitable. The of initialconditionspointtowardthe dualroleofhuman capital stock series were subjected to a number of tests, capital in the development process--as a standard fac- including comparisons with capital stock series pne- tor of production to be accum';ated and as a source of pared by other researchers. learningand entrepreneurship,and hencekof interesting Human capital stock estimates were prepared for 85 growth dynamics. -his finding may entail a rethinking countries for the period 1960-87. The data base covers of the concept of 'TFP as the residual" in models with all importantdevelopingregions exceptthecountriesof human capital. the formerSovietUnionlThe researchemployeda well- All the data generated by the project are available on esiabshedtrend-in-growthmethodofusingeducation diskette in the STARS fonnat and are being dissemi- stock (measured as mean school years of education of nated to researchers and research organizations around the labor force) as a proxy for human capitaL The series the world. were built from enrollment data using the perpetual Respomsibiliti: Intemational Economics Department, inventory method, adjusted for mortality. Estimates Office of the Director-Vikram Nehru, and Interna- were corrected forgade repetitionamongschool-goers tional Economic Analysis and Prospects Division- and country-specific drop-out rates for primary and Ashok Dhareshwar and Eric Swanson. With Jere secondaryshoolstudentsEnrollmentdataseriesstarted BehrmanUniversity of Pennsylvania;Ashutosh Dubey as far back as 1930 for most countries, and even earlier and Ingmar Prucha, University of Maryland; Alain 88 Macroeconomics D'Hoore, Johns Hopkins University; Kavita Mathur; tries and on sectoral planning for low- and middle- QingyingKong,CeorgetownUniversity;Theresa Brad- income countries. The most distinctive feature of post- ley; and Lawrence Lau, Stanford University. 1970 developments in economics is the recognition of Completion date: June 1994. the importance of external shocks. Reports: Different analytical frameworks have been used to Behrman, Jere EL, and Mark IL Rosenzweig. "Adult Schooling tackle the management of shock-ridden economies: Stacks Comparison among Aggregate Data Series." Keynesian models, Dutch disease models, construction World Bank, International Economcs Department, boom models, and intertemnporal and computable gen- Washington, DC. eral equilibrium models. No approach supported by a Nehru, Vikram, and Ashok Dhareshwar. 1993. "A New broad consensus appears to have emerged. Database on Physical Capital Stock: Sources, Methodology, The lack of consensus extends to "facts" aswelL How and Results." Revifsta deAndlisis Ewnn6mke S(1)37-59. (Also is the incidence ofshockonan economy tobe measured? presented at a conference on National Policies and tong- How is the magnitude of shocks affecting a country Term Growth, Center of Macroeconomic Studies, Buenos related to its position by region and analytical category? Aires, Argentina, August 1993.) Do shocks matter for growth performance? Can shocks _. 1994. "New Estimates of Total Factor Productivity be analyzed in isolation from the policy responses to Growth for Industrial and Developing Countries." Policy them? There appear to be no established propositions Research Working Paper 1313. World Bank, International regarding many such issues,pointingtoa need to arrive Econonicr Department, Washington, DC. ata setof "stylized facts" aboutshocksand their impor- Nehru,Viam, Eric Swano, and Ashuosh Dubey. Forthom- tance that the profession generally can agree on. This ing. "A New Database on Human Capital Stodc Soures, resea-ch seeks to contribute to the development of such Methodology, and Results. Journal of Deepmet Economics a set of stylized facts. Preliminaryanalysisindicatesthatincidenceofshocks and long-term growth are unrelated. Many earlier stud- Tax Administration: Lessons ies have also come to that conclusion. It throws into sharp relief the observation that the question of the This proj&t builds on the World Bank's 1991 policy impactofshockscannotbeunderstoodinisolationfrom paper, Lssons of Tax Reform, which identified appropri- the precise mechanism through which it affects an ate directions for changes in tax policy in developing economy and from the response to it countries. But this study addresses the reforn of tax Pastworkonshockshasfocusedalmostexdusivelyon administration, which has received much less attention. the currentaccount,withspecialemphasis on trade mag- Theresearchsetsoutthe majorproblems thatariseinthe nitudes. Such a framework implicitly assumes that the reform of tax administration in developing and transi- current account drives the external position of a country, tional economies, identifies the key factors that deter- an assumption that is becoming increasingly tenuous mine appropriate solutions in different contexts, and withtheintegrationof theintemationalcapitalmarketTo illustrates how some of these problems have been suc- stay abreast of recent trends in the world economy, it cessfulty resolved in particular countries. wouldbedesirabletodevelopanintegratedfiameworkto The research is being carried out as a desk study, think about financial and trade shocks in a uniform way. drawing heavily from the extensive work done on tax This study is part of the Intemational Economics administration reform at the World Bank and the Inter- Departnent lnternationalEconomicAnalysisandPros- nationalMonetaryFund,asweDasfirstiandexperience pects Division's ongoing research on global issues. Its in a number of countries, findings are incorporated in various editions of the Responsibility: Policy Research Department, Public Bank's Global Economic fPspects. Economics Division-Shantayananr Devarajan and Reonsipbiity: International Economics Departnient, Anwar Shah. With Aareslh Bagchi and Arindam Das- International Economic Analysis and Prospects Divi- Gupta, National nstitute of Policy and Public Finance; sion-UriDadushandAshokDhareshwar. WithMoshe and Richard Bird, University of Toronto. Syrquin, Bar-Ilan University. Completion date: July 1994. Completion date: October 1994. External Shocks and Their Economic Imp,act Public Expenditure Analysis and Dab_ Around 1970 macroeconomics focused on a dosed- A confluence of factors has heightened attention to economy Keynesian framework for high-income coun- public expenditure allocations. In developingcountries 89 Macroeconomics fiscal austerity has entailed expenditure cuts, and the andoutcomesindevelopingcountries.Earlierworkhas issue of where to make these cuts has acquired central established thatthestockof educated and healthypeople importance. And in the World Bank it is now widely and the stock of public infrastructure capital are posi- acknowledged that project loans have ignored larger tively associated with economic growth. But it remains sectoral priorities and thatadjushnentloanshavepaid too to be seen what public spending buys in these sectors. Is little attention to the composition of public spending it possible that public expenditures in these sectors do Recognizing the importance of these issues, the Bank not necessarily lead to increases in the stock of human has devoted considerable resources in recent years to and physical capital, so that the connection with eco- carrying out public expenditure reviews (PERs), which nomic growth is severed? Physical indicators of capital analyzeandmake recommendations ona govemment's stock (forexample, number of telephone lines percapita, expenditure program. A review of these PERs reveals miles of paved road, enrollment in primaryand second- the lack of a systematic methodological or data frame- ary education and other measures of educational attain- work to guide thenL Similarly, budgeting in developing ment) will be used to study the impact of public spend- countries is ad hoc or incremental, with political dy- ing in a cross-country time-series framework. namics weighing in heavily. Responsibility: Policy Research Department, Public Thisstudyseekstoimprovepublicexpenditureanaly- Economics Division-Shantayanan Devarajan, Vinaya sis in the Bank and in developing countries and to Swaroop, and Min Zhu. deepen the knowledge of budgeting practices in devel- Completion date: December 1995. oping countries. It seeks to develop a simple method- Report. ologicalanddataframework,iliustratedbycountryand Devarajan, Shantaynan, Vinaya Swaroop, and Heng-fu Zou. sectoral examples, that can be disseminated to Bznk 1993. -What Do Govermnents Buy? The Conposition of staff involved in PERs and to policy analysts in develop- Public Spending and Economic Perfonnance.' Policy ing countries. The framework will be disseminated Research Working Paper 1082. World Bank, Policy Research through training seiinars and assocated training ma- Department, Washington, DC terials and through outreach and working papers. The framework also will be applied in in-depth public ex- penditure reviews in a couple of countries. Tools for Analysis It is planned to extend the research to an analysis of budgeting processe This research will entail an in- Many of the qualitative aspects and lessons of tax deptheKamninationof budgetingpracticesin asampleof reformarewell-known,butsubstantialuncertaintyabout developing countries--both those with successful out- the quantitative magnitudes remains. For example, if a comes and those with unsuccessful outcomes. The re- country wanted to introduce a value added tax (as the searchwiUalsoevaluatethelessonsfromtheexperience received wisdom says it should), what rate should it of recent budgeting inrovations in OECD countries. use? What are the revenue implications of different Responsibility: Policy Reseach Departnent, Public rates? What is known about the incidence of a value Economics Division-Sanjay Pradhan. With Min Zhu. added tax? These questions are representative of those Compltio date: June 1995. that Bank economists are asked. Given enough time, theycan perform thenecessary analysis toanswer them. Butfrequently there isnotenough time.And itwould be The Composition of Public Expenditure preferableinanycase to equip thecountryeconomistor and Economic Performance policynmaker asking the question with the capacity to arrive at the answers. This research examnines the link between the compo- Thisstudywill exaniine practical methods of anaiyz- sition of public expenditure and economic growth. It ing tax problems in developin 'muntries. The ultimate focuses on econonmc growth as the salient and most goal of this exercise is to develop a family of tools that easily measured objective of public expenditure. Initial can be used to answer questions about the revenue, work using "ooled cross-section tme-series data on efficiency, and equity aspects of tax reform. The tools developingcountriesyieldedsomesurprisingresults.It will be classified according to the question they are found that all of the obndard candidates of productive designed to answer and by their data requiremnents to expenditure-capital, transport and communication, enable an economist looking at tax instruments in a and health and education-had either a negative or an particular country to find the tool best tailored to the insignificant relationship with economic growth. situation. Futureremarchwil seeklto determinewhetherthere The study will consist of two parts. The first part wili is a problem in the link between public expenditures surveyexistingtoolstoexplainhowtheyareconstructed, 90 Macroeconomics rather than develop new ones. At present, there appear national government's ability to control the size of the to be three main types of tools: ones that are essentially overall budget deficit? accounting exercises, which keep track of revenues at an * Doesthedecentralization of spendingpowerswith- aggregate level; detailed microeconomic simulation out the decentralization of taxing decisions encourage models, which try to capture the effect of tax changes on the expansion of the public sector? different types of households and firms; and general The answers to these questions are important for equilibrium models, which attempt to incorporate the policymakers in most transitional and some market- effects of tax changes on relative prices. The task will be oriented economies because governments often decen- to render the three tools broadly consistent with each tralize their spending powers while pursuing the objec- other and then develop a means by which any of the tive of smaller public sector and budget deficits. three can be used on a country, depending on the This research comprises two phases. The first phase, question asked and the data available. which has been completed, addressed the deficiency of The second part of the study will explain how to the existing literature and the first and third questions apply these tools to selected, significant tax problems in above. The-econometric results show that simultaneous developing countries. It will examine major tax issues, decentrali ation of the national government's taxing including the reform of indirect taxes,such as the intro- and spending decisions exerts a negative influence on duction of a value added tax,.the liberalization of trade the size of the public sector, being statistically signifi- taxes, and the refinementof direct taxes and the effectof cant at the 90 percent probability level. The results also tax incentives on investment, savings, exports, and show that the simultaneous transfer of the national grow't . ' t will also investigate tax policy under special government's revenue and of its spending decisions to circumstances, such as when there is a potential Dutch subnational units of government has a positive but disease problem; when there is significant uncertainty statistically insignificant effect on the size of the public and risk because of fluctuating world prices or a funda- sector because the stimulating effect of revenue sharing mental economic transformation, such as in Eastern overwhelms the constraining effect of decentralization Europe; when there is imperfect competition in key of expenditure. industries; and when tax compliance is low. In each of Thesecondphasewilladdressthequestionofwhether these areas the stud"r will examine which tools apply fiscal decentralization limits the national government's and whatincreasinglevels of sophisticationwill require ability to control the size of the budget deficiL and add tn the analysis. Wherevei dvailable, existing Responsibility: Policy Research Department, Public examples and studies both inside and outside the Bank Economics Division-Jaber Ehdaie. With Min Zhu. will be used. Complekon dafe: December 1995. Responsibility: Policy Research Department, Public Report: Economics Division-Delfin S. Go and Shantayanan Ehdaie, Jaber. 1994. 'Fiscal Deventralization and Covertunent Devarajan. . Size: An Extension. World Bank, Washington, DC- Completion date: December 1995. - Design of a Value Added Tax: Some Issues Fiscal Decentralization and Options and Fiscal Performance Evidence from both industrial and developing coun- Manystudies have attempted to examine the relation tries suggests that the value added tax, with its built-in, between fiscal decentralization and govertnment inter- self-enforcing mechanism, has proved to be a reliable vention in the economy. All of these studies treated revenue generator incurring relatively small efficienqc fiscal decentralization as the decentralization of either losses. A consumption-type value added tax is now taxing or spending powers, neglecting the inseparabil- widelyseenasa desirable taxinstrumentfordeveloping ity of taxing and spending decisions. This research countries, and has been promoted by agencies such as corrects this deficiency and addresses the following the International Monetary Fund and the World Bank. questions in an econometric model of govemment be- Research ontaxationhas increasingtly focused on design havior using international cross-country data: issues of value added taxes. * Does the simultaneous decentralization of the na- This research will look at three issues in46 2a dehiqn of tional government's taxing and spending powers- a value added tax. First, what is the relation between the fiscal decentralization-tend to act as a constraining rateofa valueadded tax (a weighted average in the case influence on the overall size of the public sector? of multiple rates) and its revenue yield? Second, is a * If so, does fiscal decentralization constrain the value added tax truly a regressive tax? If yes, is there a 91 Macroecononics real need to introduce progressivity? If equity features sovereign nations and when countries enter an eco- must be incorporated into the design of a value added nomic union (such as the European Common Market)? tax,how can they be introduced in a simple, pragmatic, The study will discuss these issues in an analytical and cost-effective way? And third, in an economy with framework and develop guidelines helpful to policy- a federal structure of govemment, should avalue added makers and Bank and IMP economists. tax be based on a destination principle or an origin Responsibility: Policy Research Department, Public principle? Should there be a switch in the value added Economics Division-Vinaya Swaroop and Delfin Go. tax regime when economies disintegrate into separate Completion date: June 1996. 92 INTERNATIONAL ECONOMICS Japanese Foreign Direct Investment Trends, countries also declined, but by a smaller amount. The Determinants, and Policies biggest losers were the NIEs and the Caribbean tax havens. Japanese investments continued to grow in Ref rno. 676-57C other Latin American countries and even more in the Many developing countries need to attract foreign ASEAN economies and China. direct investment (FDI) flows to achieve sustainable Japaneseirvestorsreducedtertiarysectorinvestnents, growth, especially in the current environment of gen- geared primarily to maintaning or expanding marketa eral credit shortage. The leading source of FDI is now Investments inthesecondarysectorcontinued toexpand. Japan, which presents possibilities for even larger in- This trend is expected to continue in the near future, with vestments in developing countries. A significant im- FDI flows declining further, though more slowly. Low- pediment to an in-depth analysis of Japanese FDI has wagecountriessuchasChinasndlndonesiawiliattractan been the lack of comprehensive and refined data. increasing share. Investments to expand markets in the his research explored several related issues pertain- industrial countriesand the NIEs are likely to decline. But ing to Japanese FDL: What is the emerging trend? What the medium-term prospects forJapanese FD1 in develop- causes the shift in priorities in Japanese FDI? And what ing countries are brighter, as econonic recovery and policy choices do host developing countries have for continuing current account surpluses in Japan should facilitating FDI flows? The project was part of a larger lead to a resumption of active foreign investment by effort to study alternative forms of resource mobiliza- Japanese multinational corporations. tion for development in general and for I:DI in particu- The main reah findings of the project were pre- lar. The research was conducted by gatheringand refin- sented at a Bank seminar in November 1992 ing Japanese FDI data from official sources and survey Responsiblity: International Economics Department, results,analyzing the data bysectorandbycountry, and IntemationalFinanceUnit-KwangW.Jun. WithHaruo discussing policy measures. Horaguchi,HoseiUniversity;andHyunT.Kwalc,Mitsui The research found that the main beneficiaries of the MarineResearchInstitute. ThejapanCenterforlnterna- rapid increase in investment flows from Japan were tional Finance provided funding for the research. industrial countries, but the developing world (espe- Completin date: November 1993. cially East Asia and Latin America) also received sub- Report stantial inflows. Jun, Kw W., FrankSader, Haru Horaguhi, and Hyuntai In East Asia the newly industrializing economies Kwak. 1993 -Japanese Foreign Direct Weshtment Recent (NIEs) Hong Kong, the Republic of Korea, Singapore, Trends, Determinants, and Prospects'? Policy Research and Taiwan (China) served as production bases for Wodng Paper 1213. World Bank, Internatonal Economics Japanese manufacturing in the 1970s and early 1980s. Department. Wasligon, DC But in the late 1980s, as these economies emerged as nlew, expanding consumer markets, they attracted huge Japanese investments in the tertiary (service) sector Equipment Prices and Trade Policies whileinvestmentsintheirmanufacturingsectorsshrank for Developing-Countr Manufacturing rapidly because of rising labor cost. ASEAN countries Industries: A Pilot Study of Brazil and China became Japan's new production base. In Latin America Japan's focus has been almost ex- R1f no. 676-61 dusively on tax havens (mostly smal Caribbean coun- This project tests the hypothesis that the "law of tries). It has invested only marginally in the secondary similars or '¶domestic availability" style of licensing (manufacturing) and service sectors of the major Latin equipment imports by developing countries exdudes American economies. some potential foreign machinery suppliers or other- Japanese investment flows declined drastically after wise reduces competition between foreign suppliers, 1989, mostly because of the depressed global and do- raises foreign currency prices or worsens odter seHing mersticeconomy. HardesthitbythedeclinewereEurope terms or both, and leads to the choice of overspecified or and the United States.JapaneseFDIflowstodeveloping otherwise inappropriate imported equipment The 93 International Economics projectalsoconsiders thehypothesisthatthecreditrisks Thomas Magyar; Barbara Spencer, University of British faced by suppliers of equipment to highly indebted Columbia, Vancouver; Francis Ng; and Sumana Dhar. countries also worsen the terms on which machinery Completion date: June 1995. and equipment are imported. If these hypotheses are correct and the terms of trade for equipment are wors- ened, another dimension is added to the well-known Commodity Exports and Real Income economic costs of importsubstitution policies that lead in Africa to higher-cost local production. To assess how well these hypotheses can be tested Ref. no. 676-70C empirically, the research has been narrowed to a pilot There has long been a concern that a simultaneous study of exports of garmentand textile machinery from expansion of commodity exports by several developing Germany, Italy, and Switzerland to Brazil. Brazil was countries could cause a decline in export prices large chosen in theexpectation thatthe trade policy liberaliza- enough to reduce the export revenues and real incomes tion in 1990 would allow useful comparisons of the of exporting countries. Early writings argued that world before-and-after situations in import licensing, and be- demand for primary products was inelastic and that causeitsextemalindebtednesshasgreatlyincreased the therefore any productivity gains in exports were likely credit risks perceived by foreign equipment suppliers tobe passed on to importingcountries througha change and their banks. in the terms of trade that favored them Later analyses The study's empirical work consists of small, struc- countered this argument. But the more efficient use of hired interviews with and questionnaire surveys of production resources envisioned by structural adjust- textile machinery exporters and other firms and organi- ment programs has renewed the concern. There is par- zations in Germany, Italy, and Switzerland and similar ticular concem about commodities said to exhibit low surveys of importing textile manufacturing and other price elasticity of demand, such as coffee and cocoa- relevant firms and organizations in Brazil. This work is exports critical for some African countries. being supplemented by an analysis of World Bank This research sought to ascertain whether that con- subprojectdata, and by independentstatistical analysis cern is justified. The study focused on cocoa because it (separately financed) of unit value data from official accounts foralargeshareoftheexportsof manyAfrican trade statistics. A theoretical conceptual framework countries, African countries have a large share of the developed for analyzing the effects of the 'law of worldmarketinthiscommodity,anditisexportedonly similarsT imnport licensing is being developed further to by developing countries. take account of the empirical findings. The project analyzed the current situation in African The fieldwork has so far broadly confirmed the hy- and non-African cocoa-exporting countries, focusing potheses. In particular, it is dear that a number of on how cocoa exports affect the rest of the economy and European textile machinery firms that are regular sup- how they affect tax revenues, trade balance, and real pliers to other markets either do not bid at all or have incomes. Econometric studies of the cocoa sector exam- limited their activity in Brazil. Before 1990 a complex ined the likely effects of deviations from the current game was played in which Brazilian textile finrs ad- state on the countries' export eamings, tax revenues, justed the Idnds of machinery they ordered so that they and real income. Because cocoa is extremely important could obtain an import license on the grounds that there both as a source of export earnings and as a contributor was no similar local macinery, while Brazilian machin- toGDP, the general equilibrium implicationsare impor- erymanufacturersextended the rangeof machinesthey tant. More to the point, for a major export, the welfare produced toblock import license applications. After the and income effects of export taxes cannot be evaluated 1990 trade liberalization, these practices and the accom- correctly without taking into account import restric- panying economic costs largely but not entirely disap- tions as well. For this reason, for countries in which peared. But the perceived cost and risk of financing cocoa is very important in the economy-such as equipment exports to Brazil was still limitinEg competi- Cameroon, C6te d'[voire, and. Ghana-equilibrium tionanongexportersandworseningthetermsonwhich models were constructed. For other countries, partial the equipment was sold from the viewpoint of the equilibrium models were used. Cocoa sector equations Brazilian textile firms. wereestimatedeconometrically,andsomeothersectors Separate papers are being written on the European of the economy were calibrated. survey, the Brazilian survey, and the theoretical frame- Theprojectalso analyzed the implications ofspillover work which will be incorporated in a synthesis paper. effects andstrategic interaction for the investment policy Reponsility: International Economics Department, of commodity-producing countries and for the com- IntemationalTrade Division-GarryPurselLWith Dean moditylendingpolicyofrmultilateraldevelopmentagen- Spinanger,KiellnstituteofWorld Economoics,Germany; cies such as the World Bank. 9' International Economics Responsibility: International Economics Department, collectingrevenue from tradetaxes.This researchevaLu- International Trade Division-Maurice Schiff and ated the experiences of different countries that lave Arvind Panagariya. With Robert Chambers and Ramon used preshipment inspection services and sought to Lopez, University of Maryland; Dani Rodrik, Columbia define the appropriate role for these services. University; Indrani Gupta; Kamil Yilmaz; and Claudia The research was based on 12 country studies in Sepulveda. Africa,Asia,andLatinAmerica.Thestudiesweresupple- Completion date: April 1994. mented by quantitative and qualitative information Reports: provided by preshipment inspection companies. Statis- Chambers, Robert. 199Y4 A Long-Run, General Equilibrium tical information from the preshipment inspection cam- Cocoa Model for Ghana." panies included detailed data on price, quantity, and Lopez Ramon. 1992. "Supply Response of Cocoa in C6te quality adjustnents that they make in their inspection d'lvoire: Partial vs. General Equilibrinum Results." and price verification activities. Panagariya, Arvind, and Maurice Sdiff. 1992. "Commodity The study concluded that the substance of Exports and Real Incomes in Africa: A Preliminary Analy- preshipmentinspectionworkhaschangedsignificantly sis." In Ajay Chhiboer and Stanley Fischer, ede., Analysis of in recent years, shifting toward an emphasis on the Economic Rom in Afica. Washington, DC: World Bank. revenue side rather than capital flight. Preshipment (Also available as Policy Research Working Paper 537, inspection has had limited impact in many of the coun- World Bank Washington, DC, 1990.) tries using the service, mainly because governments _._ 1992. "Taxes versus Quoi The Case of Cocoa Exports." have not made better use of the service. Preshipment In I. Goldin and LA. Winters, eds., Intentiol Dimensions inspection can be valuable to countries while they re- ofSlucdura Adjstmen: Implicationsfor Dwelapiug Count-y form and modernize theircustomsadministrationsbut Agricultr. Cambnidg Cambridge University Press. (Also only if govermments provide the necessary support and available as Policy Research Working Paper 756, World cormmitment Bank, Washington, DC, 199l.) Thefindingsof thestudywilibepresentedinaWorld 1 1993. "Optimum and Revenue-Maximizing Trade Taxes Bank Discussion Paper. in a MulticountryFrameworlc Theory and Applicaton to Responsibility: Intemational Economics Department, Cocoa." --International Trade Division-Patrick Low and *1994. 'Can Revenue-Maxmizing Export Taxes Yield Alexander Yeats; Middle East and North Africa Coun- Higher Welfare thian Welfare-Maximizing Export Taxes?' try Department I, Country Operations Division-Luc Ewo7ick Z:dttm 45&9-4. deWulf; Africa Country Department I, Country Opera- Schiff, Maurice. 1994. "Commodity Exports and the Adding-Jp tions Division 1-Brendan Horton; and EastAsia Coun- Problem in Developing Countries Trade, Investment, and try DepartmentlI,Country0perationsDivision-Tamar Leding Policy. Policy Research Working Paper 133. Manuelyan. With Geoffrey Bannister and Farvin World Bank, Washingtn, DC. Alizadeh. The Overseas DevelopmentAssoiation pro- Yihmaz, Kamil. 1994. "Commodity Exports and Policy Interde- vided funding for the research. penderace The Case of Cocoa." Comnpetion daft October 1993. An Evaluation of the Effectiveness of Abandonment of the Fixed Exchange Rate Preshipment Inspection on Trade, Capital Regime in Latin America in the 1980s Flight, Customs, and Other Revenue Problems of Developing Countries Ref no. 677-71C This research project examined the abandonment of Re no. 677-34C fixed exchange rate regimesbyanumberof LatinAmen- Merchandise imports into developing countries are can countries during the 1980s and the concomitant oftenoverinvoiced as a vehicle of capital flight orunder- permanent increases in their inflation rates. Italso stud- invoiced to avoid taxes on trade. Preshipment inspec- ied the policy inferences for simnilar circumstances. t,c.n services have been perceived as a means of control- The study outlined the reasons for the abandonment ling these practices, and thus of improving countnes' of the fixed exchange rate regime and the consequences foreign exchange positions and helping governments to it has had for extemal competitiveness and macroeco- secure higher tax revenue. The use of preshipment nornic performance. It found that the abandonment of inspection services has been recommended by the Bank the fixed exdhange rate was induced by large extemal where imports are being brought in under structural shocks. Countries adopted flexible exchange rate s- adjustment funding and where customs administra- tens in response to the need to generate fiscal revenues lions encounter problems in managing imports and through seigniorage to offset the loss of external finance 95 Internatfonal Economics andtofacilitatetherealdepreciationnecessitatedbythe On the theoretical side it constructed an intertemporal fal in terms of trade and the larger current account dynamic general equilibrium model to test how differ- deficita. More flexible exchange rate systems were per- ent policy interventions-such as tariffs, quotas, indi- ceivedas more suitable for adjusting to external shocks. rect taxes, and investment subsidies-affect welfare. It The abandonment of the fixed exchange rate was tested how shocks to factor endowments, technology, associated with a rise in inflation. The higher inflation world prices, and the world interest rate affect welfare, resulted in part from higher fiscal pressures and lower output, the real exchange rate, and the balance of pay- external lending, which forced governments to rely on ments. And it investigated how the assumption that printing money to finance budget deficits. But equally wages are sticky in the short run-so that unexpected important was the need to generate a real depreciation shocks lead to transitional unemployment-affects the to reduce real wages in an environment in which mon- conclusions reached in the first two theoretical tests. etary policy moved from rules to discretion (particu- Ontheempiricalsidetheresearchintroducedgreater larly regarding exchange rate policy). disaggregation into the data on exports, imports, and Towardtheendof thel980stherewasatendencyinthe level of economic activity for four Caribbean coun- economies that had had fixed exchange rates to redress tries-the Dominican Republic, Guyana, Jamaica, and their fiscal problems-by reaching manageable agree- Trinidad and Tobago-to produce more precise results mints onextemaldebtand reformingtheireconomies.To on policy responses and their consequences. The find- the extent that these measures represented a reversal of ings of the research yield insights into appropriate theconditions that led totheincreaseininflation, they are policy responses to external shocks. paying off in the form of greater price stability. Responsibiity: Office of the Vice President, Develop- Responsibility: Latin America and the Caribbean, mnentEcononice-F.DesmondMcCarthyandGiovanni Country Department I, Country Operations Division- Zanalda. With Peter Neary. Denmtris Papageorgiou and Valeriano Garcia. With Completion date: June 1994. Nissan Liviatan and Blanca Moreno-Herrero. Report: Compktion daE: November 1993. World Bian. 1994. 'Coping with Changes in the Extemal Environment." Latin America and the Canbbean, Country Department ]IL Washington, DC Economic Shocks and the Global Environment Understanding Bilateral Trade Flows hf. no. 677-75C in East Asia Economic policy analysis historically has focused on the domestic economy. But as the world economy has Ref. no. 677-86C become more integrated, economic shdcks caused by With regional trade schemes apparently here to stay, changes in the global environment have become more knowing what kinds of schemes are likely to expand important. in large industrial countries extemal shocks tradehasbecomeimportant Thisstudysoughttoaddto can cause deviations in gross dornmestic product as large the understanding of regional trade flows by looking at as 2 percent, and in some developing countries, 10 the determinants of bilateral trade relationships. percent or more. For a country whose trade liberalization is to take a EalierWorldBankresearchlowkedathowthriekinds preferential course, it is necessary to identify trading ofexlemalshmk-hosecausedbyshifsinternof trade, partners with which that country exhibits most d ges in glba demand, and variations in interest complementarity. This study conducted an economet- rt-affected the crrnt accunts of different countries, ric analysis of the trade flows of 45 major trading coun- and athow thecountries responded. It found that the size tries, over 12 years, using the gravity model. Unlike of a dswcks effect on a country depends on the country's earlier studies that estimated the gravity equation using _pmme to trade, the compositin of Lts imports and data for total trade and pooling across countries, this egaft and the aze of its eKtral debt To respond to study estimated separate equations for the exports and emal dsh some countries uined anexport pro. imports of each country and used them to analyze the nwmin strategy with tighened domesic demand tD im- development of trading blocs over time. prove the baince of p;ynts. And sore relied on During the past three decades East Asia has become edmdn fitancng ofte suffeing major problems with one of the world's most inportant economic regions. exbnal balnes in the medium term as a result With the creation of tradingblocs in North America and This reerch sought to extend and refine the earlier Europe, policy advisors are beginning to ask whether it reseamh, on both th theoretical and the empirical side. is time for East Asia too to form such a bloc. The results 96 International Economics of this study suggest that such a discriminatory trading Informational Value of Import License blocisnotfeasible,becauseof bothintemal and extemal Auctions: An Empirical Study factors. Eva!uating three approaches to regionalism in East Asia, the research found that the costs of sub- Ref. no. 677-91 regionalpreferential tradingachemesintheregion have Over the past decade a consensus has emerged in far outweighed their expected benefits; that although developing countries on the advantages of an open the thrst of an East Asian trading bloc along the lines of trading regime. Many of these countries are reforming the European Union might serve some purpose, its their restrictive trade regimes. One important aspect of actual execution might be difficult; and that the case for trade policy reform is the movementaway fromdiscre- simultaneous, most-favored-nation-style, nondiscrimi- tionary policy instruments-such as import licensingor natory liberalization for the whole region is far from quotas-toward a more transparent regime based on airtight, tariffs alone. For policymakers formulating a reform The empirical analysis estimated equations for trade strategy it would often be useful to know the degree of flowsofasampleof22countries-ninecountriesinEast protection provided by the existing regime. But this is Asia, six in Europe, one in South Asia, tluee in North often difficult to assess if the primary instruments of America, two in South America, and one in Oceania. trade control are licensing requirements, quotas, or The research empirically tested different hypotheses other forms of quantitative trade restrictions (QRs). about what determines complementarity in trade. The Conversion of QRs to tariffs would be made easier by a results based on the individual country equations are method of estimating the tariff rates that would dupli- very different from those of traditional cross-country cate the economic effects of the current restrictions. equations. Economists have frequently suggested auctioning im- The research concluded that if there is intraregional portlicensesasameans of determiningthe tariff equiva- biasintrade,itistobefoundmoreinNorthAmericaand lent of existing QR regimes. the European Union ian in East Asia. Testing for the This research attempts to answer two related ques- openness of each region to outside countries, the re- tions: How can import license auctions be designed to search found no support for the hypothesis that East provide accurate estimates of the tariff equivalents of Asian markets are dosed to such counties. In the same QR regimes? And does the evidence from the experi- vein, the research found that exports of many countries ence of Australia and New Zealand-the two countries to North America are less than their exports to the withextensiveexperiencewith iportlicenseauctions- control group of countries outside the three regions. indicate thatbidsaccuratelymeasuretariff equivalents? Preliminary results indicate that the predictions ofbilat- The research is divided into three tasks. First, it will eral trade flows using the individual cDuntry equations develop a model of bidding behavior in import license have a much higher precision than those obtained from auctions based on auction theory. This task will gener- the traditional gravity equation. ate insights on bidding behavior and the intepretation Responsibility: International Economics Department, ofthebids underdifferenttypesofauctionsandprovide International Trade Division-Arvind Panagariya, recommendations on the design of auctions to maxi- Maurice Schiff, and Sumana Dhar. mize the reliability of the bids as measures of tariff Completion date. June 1994. equivalents. Second, it wfll use econometric analysis of Reports: bids in the Australian and New Zealand auctions to Dhar, Sumana, and Anrind Panagariya. 1994. 'Predictions of investigate conditions under which bids track tariff Trade Patterns Using the Gravity Equation.' Wodd Bank, equivalentsclosely. Andthird,itwillusedataonexpost Washint DC. Draft observed values atwhich licensestradedin thesecond- _ . 1994. The Trading Blocs Story and East Asia: Experi- ary market to test the validity of the teory, tighten the ments with the Gravity Equation.' World Bank, Washing- connection between observed bids and the value of the ton, DC licenses, and develop a method for deriving estimates of __. 1994 Who Is Trading with Whaot The Stoy of Japan, tariff equivalents from bidding profiles. USA, and the EEC" World Bank, Washington, DC Draft The findings will provide guidance on designing Pangariya, Arvnd. 1993. "Should East Asia Go Regionial? No, importlicense auctions and interpreting the size of bids. No, and Maybe.! Policy Research Workang Paper 1209. The results will be useful not only for trade liberaliza- World Bank, Washingto DC tion programs but as guidance for using auctions to _ . 1994. East Asia: A New Trading Bloc?" Finance d distnrbute export licenses in cases in which developing Deudqement 31(1):16-19. countries have agreed to control their exports as part of .Forthcming. East Asia and the New Regionalism in negotiated trading rangements, such as-the Multi- World Trade." World Enmy. Fibre Arrangemnent 97 Internatioral Economics Responsibility: International Economics Department, The findings of the research suggest that developing IntemationalTradeDivision-DavidTanT.WithPreston countries should: McAfee, University of Texas at Austin; Wendy Takacs, * Establish an appropriate domestic institutional University of Maryland; Jim Tybout, Georgetown Uni- framework to effectively channel these flows versity; and Daniel Vincent, Northwestern University. * Lowerthebarrierstoequityinflows-suchaspoor Completion date: October 1994. credit ratings, high and variable inflation, the small size Report: of emerging stock markets, the absence of a solid regu- Takacs, Wendy E. 1993. 'Import License Auctions and Trade latory and accounting framework and investor protec- Uberalizatiln: Theory and Experienc" World Bank, tion, and restrictions on ownership that reduce the Washington, DC. benefits of inflows and lead to "rents" captured by foreigners o Use various mechanisms to limit the appreciation Equity Portfolio Investment of the real exchange rate in Developing Countries * Carefully scrutinize the intermediary-whether the banking system or stock market-through which Ref. no. 678-OIC the flow occurs This research analyzed the determinants of and con- * Try to internationalize "local" risk-for example, straints to equity portfolio flows to developing countries. by permitting international investors to buy local com- Altlwgh this form of external finance still represents a paniesbecause they canbearrisksspecific to the domes- relativelysmall share of the flows to developing countries tic economy more efficiently. in the aggregate (about 10 percent of aggregate net re- Thepapersproducedintheprojectwerepresentedat source flows), it has become an incmasingly important a conference organized by the Intemational Economics source of finance for some developing countrs Department in September 1993. Participants included The emergence of portfolio flows raises many issues: about 300 policymakers, investors, academics, invest- Are they sustainable? Are the terms right? How should ment bankers, national regulators, and officials of mul- they be managed? What are the barriers (in both devel- tilateral agencies. Several of the papers were also pre- oping and industrial countnes) to a free flow of funds, sented at smaller semuinas at the World Bank and at and how important are they? several universities. The research examined these issues largely through Responsibiliy: Intemational Economics Department, empirical tests. Itassessed the returnand diversification InternationalFinanceUnit-StijnClaessens,Sudarshan benefits for an industrial country investor of investing Gooptu, and Kwang Jun; and Intemational Finance in these markets. Using data ftom the Intermational Corporation, Economics Department-Jadc Glen. With Finance Corporation's Emerging Markets Database, the Campbell Harvey, Duke University; Ingrid Werner and research covered about 20 emerging-market countries. Geert Bekaert, Stanford University; Cheol Hun, Univer- It examined price and rate-of-return behavior (cross- sity of Maryland; E. Han Kim, University of Michigan; section and time-dseries) for individual stocks and mar- Linda Tesar, University of California at Santa Barbara; ket indexes. It also investigated American depository and Susmita Dasgupta. receipt issues and country funds. Completion date: December 1993. The resemah identified several factors motivating Reports: the equity inflows: Bekaert Gent. 1993. "Market Integration and Investment * The improved macroeconomic performance and Banieus in Emerging EquiLy Markets" In Stijn Claens and the structura reforms in the recipientcountries, and the Sudarshan Gooptu, eds., Porfolio Investmnt in Developing improved creditworthiness following the resolution of CoGtries. World Bank Discussion Paper 228. Washington, the debt crisis for many countries DC. (Also forthoming in WorM Bk Eamnmic Reiew.) * Greater demand for private-to-private capital, in CLaesse, Sijn Susmita Dasgupta, and Jack Glen. Stock Price part as a result of privatizations Behavior in Emerging Markets." In Stijn Claessens and * Wider differentials in interest rate and equity re- Sudarshan Gooptun edt, Porfoi bntment in Develping tms between developing and industria countries. Countris. World BankDiscussion Paper225. Washdigto Italsoidentifiedseveralbenefitsfordevelopingcoun- DC (Also forhming in World Bank Enomic Review.) tim receiving equity inflows: Claessens, Stijn, and Sudarshan Gooptu, eds. 1993 Portfoio • Greater risk-bearing by investors Inedment in Dwoping GCouutric. World Bank Discussion * Reduced cost of capital Paper 225. Washington DC- * Greater efficiency in the development of domestic Eum, Cheol, Stn Claessens, and Kwang W. Jun 1993. Inrtns- capital markets, which will enhance the mobilization of bonal Trade of Asseb, Prcng Externalis, and the Cost of resoura Capital. In Stijn Clsens and Sudarshan Gooplo, eds., 98 International Economics Pa rlfolio hIvetumen in Developing Couttries. World Bank domestic investment and rates of economic growth Discussion Paper 228. Washington, DC. while worsening the current account. In a sample of tl Harvey, Campbell. 1993. "Portfolio Enhancements Using developing countries outside the Pacific Basin, how- Emerging Markets and Conditioning Information.' In Stijn ever, higher PDI is accompanied by lower domestic Claessens and Sudarshan Gooptu, eds., Portfolio Investment investment, lower national saving, larger current ac- in Developing Countries. World Bank Discussion Paper 228. count deficits, and lower growth rates. Washington, DC. (Also forthcoming in World Bank Economic Theexplanationforthesedisparateeffectslieslargely Review.) in the different macroeconomic environments of these Kim, E. Han, and Vijay Singal. 1993. 'Opening Up of Stock groups of countries. Greater trade and financial distor- Markets by Emerging Economies: Effect on Portfolio Flows tions reduce the efficiency of all forms of investment, and Volatility of Stodc Prices." In Stijn Claessens and including FDI. Indeed, at some point such distortions Sudarshan Gooptu, eds., Potfolio Investment in Developing tum FDI's positive effects on investment and econonic Countries. World Bank Discussion Paper 228. growth into negative effects. Washington, DC. The policy implications of the research findings are Tesar, Linda, and Ingrid Wemer. 1993. "Equity Investment in as follows: Emerging Stock Markets." In Stijn Claessens and Sudarshan * Foreign direct investment can increase capital for- Gooptu, eds., Portfolio Investment in Developing Countries. mation or provide additional balance of payments fi- World Bank Discussion Paper 228. Washington, DC (Also nancing but cannot perform both functions at the same forthcoming in World Bank Econwmic Review.) time. If FPD is attracted for privatization or debt-equity swap programs, it may provide additional or alterna- live balance of payments support,but itwill notacceler- Foreign Direct Investment ate capital formation or economic growth. in a Macroeconomic Framework * StimulatingFDIthroughspecialincentiveschemes may simply encourage roundtrip capital flowsfromthe Ref. no. 678-15 host country. In this case, measured national savings Since1982 foreign capital inflo-ws indevelopingcoun- may fall. tries have dedlined as world real interest rates have * In the presence of financial and trade distortions, increased. In the aftermath of the debt crisis, foreign FDI can remove from the host country more than it direct investmnent (PDI) has appeared to be an increas- contributes. In other words, it can be immiserizing. ingly attractive alternative to iong-term bank loans as a * The most effective way to encourage FDI is to form of capital inflow for developing countries. Indeed, implement policies that generally improve the invesL- FDI has been viewed by some as the remedy for declin- ment climate. ing domestic investment and higher costs of borrowing * Maximum benefit from FDI can be achieved in abroad. Emulating the earlier policy decisions of open economies that are free of domestic distortions Singapore and other Pacific Basin developing econo- such as financial repression and trade controls mies, developing countries in other parts of the Responsibilily: International Economics Department, world have taken measures to attract FDI over the past International Finance Unit-Stijr. Claessens, and Inter- decade. national Trade Division-Ann Harrison. With Maxwell This research is assessing the economic effects of FDI Fry, University of BirminghamL in recipient countries under diverse macroeconomic Completion date: August 1994. conditions. In contrast to other empirical investigations Reports: into the causes and consequences of FDI, which typi- Fq, Maxwel J. 1993. "Foreign Diect Investment in a cally use single-equation models, this research exam- Macroecmnomic Framework Some Further Fmding inesthe effects of FDIin a five-equation macroeconomnic Intebational Fnac Group Working Paper 93.0 Univer- model containing investment, saving, growth, export, sity of Birmingham. Birmingham. and importequations. This framework isbeing applied _. 1993. Foreign Direm Iwesnnt i Sobai Ait fibes- to 70 developing countries that have experienced a Hia Impacts. Sigapo hInstitute of Southeast Asian Studies. gross inflow of FDI exceeding 0.5 percent of GDP in at .1994. "Foeign Diect Investment, Fiancig and least three years. The research has completed this exer- GrowtI" In Bernhard Fischer, ed., Invrt m and Finanig cise for a smaller sample of 21 developing countries. in Deeloping Countries. Baden-Baden Nons The research demonstrates that PDI is not always Veriagsgesellschaf. associated with increased domestic investment. The .1994. "Malaysia's sTverne SavingIvmsment Correaion: econometricwork shows thatFDI inflows into a sample The Role of Public and Foreign Direct hwestmntt In VN. of five Pacific Basin countries (Indonesia, Malaysia, the Balasubramanyam and David Sapoford, ed., Ihc EauOmi Philippines, the Republic of Korea, and Thailand) raise of Intrndional Invetment. Cheltenham: Edward Elgar. 99 International Eonomics Antidumping: Follow-Up on Newly etsinowprotectedbyantidumpingactionsrealizethatto Emerging Issues replace antidumping law with competition law is tanta- mount to repealing antidumping law. The politics of this Ref, no. 678-16C replacement would therefore be very difficult An earlier World Bank study ("Regulations against With regard to the overlap of section 301 and compe- Unfair Imports: Effects on Developing Countries," ref. tition law, the research found that of 82 section 301 no. 675-52) documented the rise of antidumping to actions taken in 1975-92, in only three were foreign become one of the most frequently used means of re- uncompetitive practices the basis for the complaint. But stricting imports. This study examined issues that have many other disputes involved allegations of foreign arisen since the completion of that research: uncompetitive practices that were taken up through * A number of antidumping actions have been ap- other mechanisms. In several of these cases the foreign pealedtotheGATTdisputesettlementmechanism.Wil government agreed to (and implemented) more rigor- this flurry of GATT cases bring discipline to the use of ous antitrust enforcement, but these actions seldom antidumping? ended the dispute. The U.S. goverunent pressed for * What are the possibilities for substituting compe- tangible evidence of increased US. export sales. Com- tition law for antidumping regulations? How effective petition policy thus seems not to be the antidote for would competition law be in controlling the problems section 301. that should be controlled and yet avoiding the excesses The analysis of the overlap between competition characterizing the use of antidumping? policy and antidumping policy should provide sub- s Would the implementation of internationally stantiveargumentagainstdevelopingcountries'adopt- ageed on competition standards reduce the frequency ing antidumping regulation out of concern about with which the US. government uses section 301 of U.S. anticompetitive actions-regulations that in several in- trade law? dustrialcountrieshavebecomea significantforceagainst Inanalyzingtheefficacy of GATr disputesettlement trade liberalization. procedures in controlling antidumpin& the research The analysis has served as the basis for advice for first identified the cases-which countries have com- Bank operations in Guatemala, India, Indonesia, and phained about which antidumping actions by which Trinidad and Tobago. In addition, the findings were countries? Second, the documents, briefs, and other presented ataresearchseminaron ApproachestoCom- materials related to the cases were reviewed, and inter- petition Policy in International Trade on September 16- views conducted with representatives of the govern- 18, 1993, at Hochschule, St. Gallens, Switzerland, at a m-ens involved, to identify the dimensions of anti- seminar at the Industrial Institute for Economic and dwnpingregulationthathavebeencalledintoquestion. Social Research in Stockholm on September 21,1993, Third,theresearchanalyzed,againstthebackgroundof and at a workshop at the Massachusetts Institute of the public choice icgc of the GATT (that is, how it Technology on February 13,1994. attemptstoinflrencenationaldecisionsontradepolicy), Responsibility: International Economics Department how the changes in practice requested in the cases International Trade Division-J. Michael Finger. With would change the scope of antidumping, and how that K. C. Fung, Council of Economic Advisers and Univer- change of scope would, in tum, discipline the use of sity of California at Santa Cruz. antidumping. Similar steps were taken to analyze pro- Completion date: December 1993. posals to use competition law in place of anlidumping Reports: regulations. Fmger, J. MichaeL and K.C Fung. 1993. 'Wilt GAIT Enfofce- The research found that GAIT enforcement is un- ment Control Antidumping?' Policy Research Working likey to provide effective discpline over the national Paper 1232. World Barn, Washington, DC. (Also forthcoim- use of antidunping. Boththe legaland the bureaucratic ing in lournd of Ermi Integramtion.) momentum of GAIT dispute settlement is toward in- -. 1994. Can Competition Policy Control 30m nocuous findings-focusing on procedural erros that Poliy Research Working Paper 1253. Wodd Banr, can be corrected without lifting the antidumping order Washington, DC. in question. The research also found that replacing antidumping law with competiion law would eliminate most of the Regionalism and South Asia's Trade evils of antidumping law. But this conclusion is based on the finding tatvirtuallynoantidumpingcasepursuedin Ref. no. 678-22C the past two decades provided the substaie basis fora South Asian economies have been less integrated in cmpetition law case. Antidumpingt law does not polie world markets than many developing countries. They tIcopetitivepries;itpolisimport.hoseinter- traded relatively little with the rest of the world and 100 International Economics with each other as they pursued inward-oriented trade - 1993. "Preferentlal Trading Arrangements: Estinating development strategies and relied on trade barriers to the Effects on South Asian Countriems. World Bank, promote industrialization. But in recent years several Washington, DC. economies in the region have begun liberalizing their trade regimes. This research project had two main objectives: first, to Technology Spillovers, Agglomeration, initiate analysis of the options open to South Asian coun- and Foreign Direct Investment tries in a world characterized both by multilateral trade liberalization and by such regional trading arrangements Re. no. 678-29C asNAFrA, Mercosur, and APEC and, second, to identify Despite the voluminous literature on foreign direct policy options of enduring interest to the countries of investment (PDI) in the 1960s and 1970., the empirical South Asia that would warrant further work. evidence on the benefits from FDI remains slim. This The project estimated a gravity model to explain research sought to fill that gap by focusing on three bilateral trade flows among South Asian countries and aspects of foreign investment in developing countries. between these countries and the rest of the world. The First, the research examined the extent to which foreign model was used to analyze the impact on the region's investment in Mexico and Venezuela has increased economies of the formation of other trading blocs. wages in the manufacturing sector. Second, it examined The study found very litle support fora South Asian the determinants of exportbehavior inMexico, focusing preferential trading arrangement compared with other on the role of foreign investment and of agglonmeration options considered. Its findigs suggest that the best econonies. And third, it tested for the role of agglom- strategy for SouthAsiancountries wouldbe tounilater- eration economies and foreign presence to explain total ally liberalize trade, preferably coordinating such steps factor productivity growth in Mexican firms. with each other; to ratify and implement the final act of This research complements other work in the World the Uruguay Round; and to explore possibilities of Bankonthedeterminantsandbenefitsofforeigninvest- membershipinAPEC,theEuropeanUnion,andNAFTA. ment. Related work includes the International Econom- Liberalizing external trade in a coordinated manner ics Department's research on the determinants and con- and extending the liberalized market access to the restof sequences of FDI, which focuses on cros-county deter- the world on a most-favored-nation basis would not minants of FD! and its impact on growth. This research, only take advantage of the lower transport costs of however,focusedonmore microeconomiaspects.While intraregional trade compared with interregional trade. other work in the International Economics Department t would also help to rationalize infrastructural invest- has examined the financial aspects of PDI (such as its ments in the region. Such a coordinated liberalization role as a source of external financing or as a source of effort needs to be seen as an integral part of the reform investment), this researdh examined the role of FDI in process unfoldinginSouth Asia and could lend support raising wages, promoting exports, and encouraging to a concerted program for liberalizing foreign direct technology transfer. investment policies. Resonsfibity-: Interational Economics Department The results of the study will contribute to the indus- InternationalTradeDivision-AnnHarison.WithBrian trial and trade reform discussions with the countries in Aitken, International Monetary Fund; and Gordon the region. They are being disseminated through a Hanson, University of Texas. series of working papers and through a monograph Completion datc April 1994. under preparation for a wider audience. A Bank-wide seminar was held in February 1994, and a series of seminars are being planned in the region. The Effect of Regionalism Responsibility: South Asia Regional Office, Office of on Trading Prospects the Regional Vice President-Rui Coutinho. With T. N. of Low- and Middle-Income Countries Srinivasa, Yale University; and Gustavo Canonew, Massachusetts Institute of Tedhnology. Rg. no. 67843C Completion date. April 1994. Regionalism in trade and trade policy is her to Repor& stay-to paraphrase Jagdish Bhagwati. This project re- Srinivasan, T.N 1994. "Preferential Trading Arangemet in viewed the evidence and ana;yses on regionalism in South sia: Theory, Empirics, and Policy Work Bank, trade and concluded that it exists and is growing, and Washito DC thatifiteesftheform of freeradeareas, itcanbe good Srinivas. TXN, and Gustawvo Canmnero199a "LIberalization fr developing countieL of Trade mong Neighbors Two Iluuirtie Mdels and his imptant to distinguishbetween regnlism in SinUIabIonsW World Buda, Washington, DC. trade policy, as in the formation of free-tade areas, and 101 Intrnational Economics regionalism as a regional concentration of trade. Both toward developing countries, freeing the correspond- exist and seem to be growing, generally along a North- ing labor force (Heckscher-Ohlin); or that increased Southpaltern. ..reelarge regions can be distinguished: competition cuts into monopolistic rents (the intra-in- Europe-Africa, the Americas, and Pacific Asia-Austra- dustry trade view). In the second case the effect on Ha. One question is how South Asia, the Middle East, demand is unclear. Astradeincreasesefficiency,overall China, and the countries of the former Soviet Union fit demand for labor may rise in industrial countries. On into the picture. the other side, the market shares of industrial country Regional free-trade areas can be particularly benign firms decline, which is bound to hurt labor. Of course, if if the regions have similar factor endowments and are wages are rigid, an appropriate presumption for Eu- large enough to exhausteconomies of scale. That seems rope, unemployment is the symptom to look for. to be the case in comparing Europe-Africa and the Yet there are good reasons to doubt that either of Americas, butnotincomparingthese areaswith Pacific these two effects can be observed in its purest form. Asia-Australia or South Asia-Middle East That per- First, specialization may not follow the simple prescrip- haps accounts for the concentration of trade across the tion. Under plausible conditions on technology (for ex- Pacific. ample, that the marginalproductivity of human capital is The analysis of the political economy of regionalism nondecreasing), thepattern ofspecialization thatemerges depends on whether external barriers are exogenous. If does not follow a sirnple rankingby labor intensity. That external barriers are exogenous, as they are in most is the case when nonconvexities in the production func- analyses of customs unions, preferential trade arrange- tion lead to factor reversals. As a consequence, a given ments may be better than free-trade areas and GAIT product may be produced using vastly different pro- Article 24 seems perverse. But if barriers are endog- cesses. For example, highly labor-intensive shipbuilding enous, large freade areas reduce incentives for pro- has responded to competition from low-wage countries tecionisn, and free-trade areas in accordance with by developing highly capital-intensive technologies Sec- Artide 24 are preferable. ond, services often are highly (low-skill) labor-intensive This research contributed to the World Bank's Gobal but rarely subject to trade competition. Wedfure-enhanc- Economic Prospects 1994. ing trade could actually raise the demand forservices and Rponsibdity: International Economics Department, therefore forlow-skilled labor.Third, thesupplyof inputs International Economic Analysis and Prospects Divi- should not be taken as exogenous. Pressure from trade is sion-UriDadush.WithWilliamn.nHBranson,Princeton normally expected to elicit changes in the mix of skills University. supplied on the labor markets. Completion date October 1993. Heckscher-Ohlinspecializationwouldcreateserious Report social and political difficulties in Europe, undoubtedly nson,s William H 1993. Regonalism in Trade and Trade strengthening protectionist sentiment That would also Posi3r A Point of View for CEP.R' Paper pres2nted at the be true for intra-industry trade, which would hurt capi- GlW Ewnmonk Pnds 1994 sminur series. World Bank, tal as well as labor or lead to relocation of capital. Intentional Eamomics Department, Washingt DC Further, the presence of nonconvexities in production leading to factor reversals would demonstrate the abil- ity of industrial countries to fend off competition from Trade with Developing Countries low-wage countries. Although that effect niXghtbe lim- and Wages in Europe ited to particular industries, it would nevertheless be important in shaping public perception. On the other Ref. no. 67844 side, it would mean that these industries are not easy Several studies have investigated the links between ones for developing countries to enter. (At the extreme. wages in industrial countries and trade with low-wage if all industries were subject to factor reversals, trade developing countrie Even though most of the work liberalization would not lead to increased trade.) hasfocusedontheUnited States, no consensusseems to This research proposes to trace these effects, looking be emerging-unsurprising, since the effect is a priori at wages and ernployment in a nunber of industries for ambiguous.Thisprojectwillrevisittheissue,lookingat a number of countries. The liberalization of European diffeent posible outcomes and focusing on the Euro- trade with developing countries over the past 30 years, pean expene at least as part of tne GAiT negotiations, offers the The standardpresumptionthattradewithlow-wage possibility of learning from past experience. A number countrie huts wages in industrial countries rests on of industry-level indicators have been developed to either of two casn thatspecialization leads to a shift in determine the reduction in protection. The choice of the production of goods intensive in low-skilled labor courieswildependondataavailabity.Andtedhice 162 International Economics of industries will be made to detect different outcomes tries, primarily because of their high expected retuns while focusing on effects large enough to have an impact and their potential portfolio diversification benefits. on the labor market-industries in which changes have The changes in extemal financing methods for firms been observed, industries that account for large shares of in developing countries have raised a number of policy totalemploymentinboth industrialand developingcoun- issues-among them, how portfolio flows affect the cost tries, and industries in which nonconvexities are likely (as of capital of the issuing firm. Several approaches could in the shipbuilding example). be used to investigate this question. One approach is to For these industries, the study will analyze the evo- examine the response of a fir's cost of capital and the lution of trade and competition pattems, both in Euro- marketvalue of its equity to its issuance of intemational pean countries and in selected developing countries bonds or equity. When foreign finance is beneficial to a (using data from the European Commission and the developing-country firm, it will lower the cost of the World Bank). The studywil thenevaluate theevolution firm's capital and thus raise the market value of its of each industry's inputs (capital, labor). This will allow equity. This should lead to the announcement effect, in the study to determine whether production in both which the marketvalue of equity increases as a resultof industrial and developing countries has responded to (the announcement of) a beneficial offering of a new trade as liberalization has occurred and, if so, whether foreign security or access to a new group of investors. A factor intensities have changed, in order to determine similar effect can be expected when foreigners effec- the respective importance of Heckscher-Ohlin, tively gain access to an emerging market through a nonconvexities, and intra-industry effects. It will also newly created investment fund. makeitpossibletoobserve thelaborresponse,disentan- This research examined the behavior of stock prices gling the supply and demand effects by considering in emerging capital markets in response to two an- both wages and emnployment nouncements related to the opening of sudh capital Finaily, the study will move from miroeconomic markets. Eurobond offerings increased substantially in (industry-level) effects to aggregate effects, because itis the emerging markets in the past three years, and their only the aggregate effects that matter for wages and offerings were assocated with positive abnormal re- employment The selected industry results and existing turns to the underlying stocks around the offein, estimates of labor supply elasticities will be used to which led to unexpected gains for their shareholders derive an estimate of aggregate effects. and perhaps to a lower cost of capital for the firm. This The findings of the research will inform the Bank's also implies that there is value assocated with the Global Economic Prospects 1995. They will be disseni- successful completion of such offerings in emering natedturoughthelntermationalEconomicsDepartment's mark, since they enhance the exposure and credit- GEP 1995 seminar series, World Bank working papers, worthness of the firm in international markets. and possibly through journal articles. The research also analyzed in aspect of the openng Responsibility. Intenational Economics Department, of emerging markets: the launching of their closed-end International Econonic Analysis and Prospects Divi- country funds. Mean returns in the month of the fun:: sion-Uri Dadush and Swati Ghosh. With Damien launching and the months preceding it were hih., and Neven, University of Lausanne; and Charles Wyplosz, positive in anticipation of the influx of new toreign INSEAD. money in the market Butthe trend reversed an Irehtms Complim date. August 1994. deaeased in the monfts following the fund launrMdng Increased monitoring and advanced financil research and analysis by fund managers and analys led to a External Financing in Emerging Markets: decrease in the speculative behavior in the market, as An Analysis of Market Responses evidenced by a decease in stock market volatility fol- lowing the launching of the country fund. This derease Ref. no. 678949 in volatility may ultimatly bring discipline and more As the supply of traditional extenal finance has responsible development of the emergg stock market lightened and emerging firancial markets have devel- by decreasing specuative bubbles. oped and liberalized, the pattem of extemal finance Ressibility; Inemational Economics Departent, flows to developing countries has dcanged. Inas- Inerational Finance Unit-Sudarshan Goopt; and igly, firms in developing countries are raising funds Europe and Central Asia, and Middle East and North diectyonintenaonalcapitalinarketLTheyareissu- Africa Techical Department, Private Sector and li- ing global equities (such as American deposio re- nance Team-Stijn Claessens. With Kishore Tandom, ceiptsand globaldepositaryreceipts)andbods-ec- BRuch Coilege, City University of New York ritiesattractivetoportfoliomanagsinindustricoun- Compleion date: December 1994L 103 Intenational Econmics Central America and the North American the United States, however, will open up opportunitles Free Trade Ageement to serve Mexico's market, where Central Amerka has a strong locational advantage over Asia. The amount of Ref. no. 678-73 riskreductionaffordedMexicaninvestmentsbyNAFTA, Followingaperiodofmacroeconomicinstabilityand and NAFFA's impact on the choice of investments in low growth during the 1980s, the countries of Central Central America versus investments in Mexico, are not America (Costa Rica, El Salvador, Guatemala, Honduras, clear. But the study does show that real exchange rate Ncaragua,andPmnama)have madeconsiderableprogress uncertaintyhasaveryimportantnegativeeffectongrowth instabilizing theireconomiesand reviving growth. Struc- and foreign investment And savings rates In Central tural reforms designed to encourage nontraditional ex- America fail far short of the levels needed to support ports have played a key role in the subregion's improved development strictly from internal sources. Distance ef- perfrma during te early 1990s. The U.S. market has fects are translated into tariff equivalents. The distance been the main destination for this export expansion. hn- disadvantage that China suffers compared with Mexico provements in per capita incomes in Central America whensellingintheU.S.marketislikeatariffoflOOpercent have been, and will continue to be, closely linked with and more on many goods. The locational advantage of nontraditional exports, especialy labor-intensive manu- Central America over Asia for selling in Mexican markets factures to markets in North America. The advent of the is e-en. greater, but is not the same for all goods. NorthAmericanFreeTrade Agreement(NAFTA),which A number of important policy implications flow grants Mexico prefential access to U.S. and Canadian from the study. Central American countries should try markes, raises the quesion of whether this outward-led to secure free access to Mexico through bilateral free- growth strateg wil be short-lived. trade agreements, as Costa Rica recently did. Since The main objective of this research is to analyze the distanceadvantagevaries,CentralAmericashould move potential impact of NAFrA on the competitiveness of its product niux toward items that have the greatest Central American exports of labor-intensive manufac- locational advantage-those that are expensive to ihp tur to Nort America. Although the main focus is on from Asia to North Amenca. Central American govem- the effects of NAFTA, the study also looks at other ments need to do allth can to reduce investment risks. critical drivers thatwill affect competitiveness-global In addition to free-trade agreemtens, the study suggests economic liberalization, real exchange rate uncertainty stabilizationoftherealexchangerateandestablishmentof inCentralAmerica relative tocompetitors, the effects of an intenal legal system that encourages forei invest- distance on pattems of intemational trade and Central ment Exchange rate stability would be encouraged by America's locational advantage, and low domestic sav- apprpriate m economic policie, exports of labor- ings in the subregion. intensive manufactures, and supporting infru The study uses a partial equihbrium model to esti- andeducationinveatmenls.hnvestmentinasportina- mate trade diversion and trade creation induced by the stucture that can facilitate trade with Mexico is likely to Mexican liberalization and by NAlTA. A thre-factor have large payoffs. multiproductHeckscher-Ohlin model is used to predict Responsibili4y. Latin America and the Caribbean, how the labor-intensive net exports of Central America Country Department I, Country Operations Division will evolveinthe future. An estimationof the relaiornship 2-4anfBannon.WithEdwardfE.Leamer,AlfonsoGuerra, betweengrowthandexportsofbbor-intensivegoodswas Martin Kaufman, and Boris Segura, University of Cali- done using a data set for 62 countries at two points (1974 fornia at Los Angeles. and 1988). This relationship was tien applied to Central Completion date: August 1994. America to show that these economies' growth prospects Report: will confinue to be dosely tied to exports of labor-inten- Leamer, Edward E 1994. "Cental Ameica and lhe Noith sive manufature The study also uses short-nm elastic- American Fm Trade AgreemenL" Wodd Bank -itycomputatonstoestimatetheeffectof NAFrAontrade Washington DC Bow in several key manufactured goods and gravity models to estmate loational advantage. The study's main conclusion is that Central Anerica Commodity Markets and the Macroeconomy: has much to gain from NAFrA, provided that Mexican A Persistence Profile Analysis productionis lrge enough to have animpactin the US, market and that Mexico opts for low barriers agaist Ref. no. 678-87 Central American products Central America can ex- hI principle, shods originating in the commodity pecttobe crowded outof the proected US. marketby markets nay have an impact on the macroeconomy, as moreintensecompetition ifomMexo,whichnowhas the crude oil price shodc of the 1970s and the 1961 prefential access. The diersion of Mexican supply to dramatically illustrated. The converse can also be true 104 Internatilo Economics macroeconomic shocks-such asthose affectingmoney Round for the developing countries. The project will supply and interest and exchange rates-may affect first assess the policy changes agreed to in the Uruguay commodity prices. Some type of long-run relation is Round. It will then evaluate the implications of these expectedbetweensomemacroeconomicaggregatesand policy changes for developing countries. commodity prices. But the short-run dynamics, espe- Ratification of the Uruguay Round agreement will cially the speed with which the variables respond to usher in a new era for developing countries' participa- impulses and shocks, are also of Interest and are rel- tlion in world trade. Developing countries wDI have evant to the problem of forecasting. The key issue con- greater-and more secure-access to world markets cerns the degree of integration between commodity and will have committed themselves to liberalization markets and the rest of the economy, and the dominant that will enhance their ability to take advant1ge of the direction of causal interactions. expanded opportunities. Studies in recent years have looked at the impact of The project's analysis involves an integrated set of macroeconomic variables on commodity prices, but the quantitative and qualitative studias of the keyaspectsof issues of short-run dynamics (path of convergence) and the agreement The first set of studies focuses on the the speed of convergence have not been examined. The nature of the liberalization (improvements in market ac- purpose of this study is to analyze those issues. Its contri- cess) agreed to in agriculture, manufacturing, and ser- bution to the understanding of how commwdity prices vices. The second set of studies uses quantitaive nodelo respond to macroeconomnic events should be useful to to evaluate the econonic consequences of this hiemrilza- policymakers in countries that rely on primary cominodi- tionfordevecopingcountries.Thethirdsetofstudiesdeals ties for a large part of their export revenues, who need to with the systemic aspects of the agreement and with the beable to assess the magnitude of the shodcks aswell asthe post-Uruguay Round work program, incuding trade- speed of adjustment to a new equilibrium related inteectual property rights, trade-relted invest- The project's analytical approach uses impulse re- mentmeasures,contingentprotectionmeasur(sudhas sponse function analysis to study the interactions be- antidumping), strengtenig of the mulfilateral trading tween commodity price and macroecononiic variables. system, and the issues involved in consideration of emvi- This approach is based on vector auto regressive mod- ronmental and worke' rights issues. els. The study has also experimented with persistence Initial dissemination of the results of this research proffleanalysis-whichisbasedoncointegrationanaly- will be through a conference at the World Bank on sis and is a major alternative to the impulse response January 26-27, 1995. function analysis-but with limited success. Responsbility: International Economics Depatmnt, The study is applying the analysis to aggregate com- International Trade Division-Will Martin, L. Alan modity price indexes rather than individual commodi- Wtnters,CarlosPrimoBraga,PatrickLow,andJ.Micael ties. Commodity price index data are available in the Finger; Europe and Central Asa, and Middle East and Intenational Trade Division, and the macroeconomic North Africa Tecmical Dqertmt, Private Sectw and variables used are drawn from the IMF's Internationl Finance Tean-Bernard Hoeklun, and Middle Eastand Financia Statistics. NorthAfrica,Country DqertmentI, AgiculhtreOpera- The study's main prelimrinary finding is that, by and ls Diision-lan Goldin. With 14 Abreu, Cathic large, the World Bank's 33-commodity price index ex- University, Rio de Jareiro; K Anderson, Univerit of hibits a rapid response to real denand shocks in OECD Adelaide, Australia; R. Blackhurst and J. Fransois, GATT; countries and real interest rate shocks. That indicates D. Brown, Tufts University A. Deardorff, Uiversity of that policies in industrial countries could have an im- Mihgn D. Hathaway, Naional Center for Food and pact that is transmitted rather quicldy to developing Agrculhual Policy, Washigt, DQC T. Herte, Purdue countries that produce commodities. Universitr, D. van der Mensb , OCD Devop- Responsibility: International Economics Department, mnt Centre; A. Subramanian, International Mowtry Intenational Trade Division-Panos Varangis. With Fund, R Sm, University of Michwn; . Whalley, Ui- Pravin Trivedi, Indiana University. versity of Waeten Ontario; and K Yanagshima. Compietin date Septernber 1994. Competion date: June 1995. Implications of the Uruguay Round Topics in Intemational Compaisons for the Developig Economies of Incomes and Prices *Ref. no. 679-04 Ref. o. 679-09 The purpose of this project is to provide a compr The ternateonal Comparson Pgramme (ICP) of : hensive evaluation of the implications of the Uruguay the United Nations, suWported by the Word Bank ad 'ED Intr.natknal Economics other national and international organizations, has gen- early 1990s have had linportantconsequences for devel- erated a great deal of survey-based data on aggregate oping countries, particularly for those for which com- and detailed price, expenditure, purchasing power par- mod ties account for a large part of their exports. As the ity (PPP), and real output for a large number of bench- industrial countries emerge from the recessions of the mark countries. These data and their extensions to 1980s, commodity prices are expected to rise. The pro- nonbenchinark countries and years have been widely jected economic -ecovery of the economies in transition used in analyses in the Bank, in other international in particular is expected to have a positive impact on institutions, and in the academic community-but not conunodity prices: as deniand grows in these economies, without reservations. their net exports will decline, reducing the supply of The reservations stem manly from the survey data's metals, minerals, and energy to the world. The demand Incomplete coverage and lack of timeliness, and the forgainsandbeverageswillalsoincrease,pushingworld resulting loss of quality when these data have to be prices up. But the size of the increases may be limited by extended to other years and countries. As the World the prevailing glut Many marketanalysts predict that the Bank prepares to launch an effort to improve the ICP's expected recovery in commodity prices will be limited coverage and timeliness, this research will look at topics andthatcornmoditypriceswillnotrecovertotheirhistori- relating to enhancing and maintaining the quality of the cal levels Thus, a key issue is whethercommodity prices data, which are likely to be based on a reduced sample are on a long-term downward trend. and to rely more on data collected for other purposes, The study's methodology is based on reduced-form such as the consumer price index. models that explain commodity prices. This type of First, the study will address the question of whether analysis is based on a framework developed by the the growth rates based on national price weights and Intemational Manetary Fund, but it improves on it by thosebasedonintermationalpriceweightsdivergesym- disaggregating the commodity price index into sub- metrically for rich and poor countries. The answer will indexes relevant to particular developing countries; help improve the quality of extrapolations based on examining the role of supply in commodity price deter- growth rates. Second, the research will examine price nination; investigating the parameter constancy and similarities of tradables and nontradables, with a view exogeneity of demand variables; and companng results toimprovingways of measuring nonprked or compari- from different functional forms. son-reistantservices.Third,ftwillinvestigatetheprob- The analysis will also run sensitivity scenarios on lem of differences across regions in the quality of the commodity price subindexes based on different as- data, a problem that wiU become more acute as the sumptions about projected demand growth in indus- sample size is reduced. Experiments will be made to trial countries and economies in transition as well as group countnes based on similarity of quality. The commodity supply paths. It also seeks to improve the results may provide a rational path of chain-linidng forecasting ability of commodity price equations. The regiond results. FinaUy, the study will investigate the results of the analysis could have implications for com- robustness of ICP-derived variables, to determine modity production and export policies for commodity- whther they perform better or worse than non-ICP exporting countries, especially those with large world varables in explaining economic phenomena. In con- market share ducting these experiments, tie study will draw on the The commodity price and supply data used in the vast away of information generated by the ICP and analysis come from theWorldBank's IntenationalEco- related efforts. nomics Department, International Trade Division. The Responsty: Intenational Economics Departmnent, data for macroeconomic variables come from the IPs Socio-Economic Data Division-Sultan Ahmad, and Intenational Financial Statistics and the OECD. Office of the Director-Ramesh Chander. With Alan Raponsiiity: Intermational Economics Dprtmnt, Hestonand RobertSummers, University of Pen rva- International Trade Division-Panos Varangis and 1a; and Daniel Nuxoll, Vina Polytechic Institute. Takumasa Aklyama. With Pravin Trivedi, Indiana Uni- Completion date: December 1994. versity; and Sudhakar Satyanarayan, RockhurstColege. Completion date: Septeber 1994. Factors Influencing Commodity Prices dring the 1980s and 1990s Rent-Seeking in Coffee-Exporting Countries Ref. o. 679-10 This resach seeks to explain trends in commodity Ref. o. 79-14 pries. Tlhe significant rise of commodity prices in the Duing the 190s several international comrmodity 197t and the subsequent Sh in te 1980s and into the agreemts were in eft, includig anes for coffee, 1lO InternatIonal Economics cocoa, and rubber. Of these commodities, coffee, be- obtain information on how the rents were distributed cause of its iriaportance in the exports of many develop- and to evaluate the market results. Ing countries, has had the longest history of being The findings of the research are expected to provide covered by international agreements, and the coffee new Insight Into the effects of international commodity agreements are considered among the most successful. agreements. The research may also shed light on the The export quota system of the last International effects ofdomestic programs thatarealmedatialmingor Coffee Agreement (ICA), which was In effect from Oc- stabilizing commodity prices-findings that would be tober 1980 to July 389, had a significant impact on especially relevant because of the intemational stock world coffee trade. It also hnad an Important effect In the retention program that the coffee-producing countries domestic markets of producing countries, where It cre- have recently put Into effect to raise and stabilize world ated rents because export prices were considerably coffee prices. higher than domestic prices. In July 1989 the ICA sus- Responsibility: International Economics Department, pended its quotas on coffee exports,whichaffected both International Trade Divislon-Takamasa Akiyama and domestic and international coffee prices, as well as Panos Varangis. With Lovell Jarvis, University of Cali- coffee rents. fomia at Davis; and Mary Bohman, University of British This research tests the hypothesis that elimination of Columbia. the coffee rents previously available from export quotas Completion date: December 1994. has reduced the incentive for-and in some cases the ability of-exporters or a government marketing board in a country to control coffee policy for theirbenefiL It is Microeconomic Foundations of Successful expected that decliningworld prices, farm incomes, and Export Promotion export revenues have reduced investment in coffee production in some countries while heightening inter- Ref. no. 679-20 eatinothercountriesintechnicalchangeand inmarket- Export supply msponsiveness detemines whether a ing efficiency. transition to freer trade will generate current account Rent-seeking behavior has been analyzed empiri- deficts and the extent to which trade acts as a buffer cally in relatively few studies, primarily because it has between domestic demand shocks and production In the been difficult to obtain data on such nonmarket-even long run it determines the extent to which the traditional clandestine-activities. Because government policy comparative advantage gains from trade are reaped. changes may be motivated simultaneously by several But the empirical literature provides little guidance goals, even more information is required to determine on when or how exporters will respond to changing whatchangesshouldbeattributed torent-seekingalone. incentives. Research in this area has produced a variety The changes in domestic policy prompted by the break- of supply elasticity estimates that vary dramatically down of ICA quotas thus offer an unusual opportunity. across countries and time periods, and few hints on how To understand the impact of rents, the research will to reconcile the diverse results. attempt to determine who has supported and who has In a recent series of theoretical papers Richard opposed the ICA, and why. Public choice theory sug- Baldwin, Avinash Dixit, and Paul Krugman have ar- gests that support for and opposition to the ICA quotas gued that the existing literature fails because there are byinterestgroupsincoffee-exportingcountries,includ- sunk costs associated with breaking into foreign mar- ing the government, should depend on who won and kets. Hence the current-period export supply function who lost from the imposition of quotas. depends on the number and type of producers thatwere The research will obtain information from partici- exporting in previous periods. Further, start-up costs pantsinBrazil'scoffeesectorabouttheirunderstanding mean that transitory policy changes or macroeconomic of how ICA quotas worked, how quotas affected each shocks can lead to permanent changes in the export grup'sinterests,andhowtheyaffecteddomesticpolicy, supply function. Finaly, when future market condi- both when implemented and when eliminated. Brazil tions are uncertai, sunk costs make pattems of entry waschosenbecauseof itsimportanceintheworldcoffee and exit dependent on the stochastic processes that mnarket andbecause of the availability of useful data for govem variables such as the exchange rate. that country. Taking the Baldwin-Dixit-Krugman persetive as a The information will be obtained by analyzing data point of departure, this study will investigate the em- on, among other things, prices, production, exports, pirical importance of sunk costs, heterogeneous pro- taxes, and quotas. These data will be analyzed using a ducers, and recent history in shaping aggregate export model developed to estimate the welfare of market responses. The analysis will be based on annual plant- participants under the quota ystemL Interviews with level survey data from Colombia, Morocco, and Ven- major ples in the coffee market will be conducted to ezuela that cover all establishments with at least 10 107 International Economics workers. It will also exploit panel data on several thou- leum are volatile, the risk premium on the asset valuc of sand large fArms in Mexico. inventories Increases with uncertainty. When these as- The project is expected to make several contribu- setsarepublicorwhen they form the taxbase forpublic tions. Pirst, it will generate new descriptive evidence on funds, an understanding of how uncertainty affects the heterogeneity among exporters (including information price of reserves helps in matching volatile revenues on the proportion and characteristics of plants that with more constant public expenditures. export), plant transition rates into and out of the export Themodernpetroleumrefiningestablishment,which markets, and the relative contribution of entry and exit buys crude oil and reflnes petroleum products, Is the to aggregate changes in export supply. decisionmaking unit in this study. The research will Second,thestudywillprovide nicroeconomlcpanel- derive three empirical relations from an optimization based estimates of an export ripply model directly problem in which maximum profits occur when ex- motivated by theory. This model will distinguish two pectedmarginalproductioncosts,spotprices,andstock dimensions of the supply response-entry into and exit shadow values are all equal. It will derive convenience from foreign markets and adjustments In the volume of yield relations for crude using an approach that in- exports by incumbents-and isolate the determinants volves a price arbitrage condition. The condition states of each. Furiher, it will generate quantitative estimates that the expected price change equals the costs of carry of the sunk costs and the expected future retums asso- minus a dispersion premium calculated from the asso- ciated with breaking into foreign markets under differ- ciated stochastic value function. ent crcumstances. By comparing trade liberalization Responsibility: Intenational Economics Department, episodes in different time periods and countries, the Intentional Trade Division-Donald F. Larson. With project is expected to generalize about the way that TirnothyConsidine,UniversityofNewcastle,Australia. producercharacteristicsandrecentmacroeconomiccon- Completon date: July 1995. ditions influence export responsiveness. Responsibiql: Intenafional Economics Department, International Trade Diviion-L Man Winters; Private Growth and Foreign Finance in Africa Sector Development Department-Mark A. Dutz; and Poli Research Department, Public Economics Divi- Ref no. 679-30 sion-Sethaput Suthiwart-Narueput. With Mark J. Africa grows significantly more slowly than pre- Roberts. Pennsylvania State University, and James EL dicted by standard cross-country econometric growth Tybout and resa Sullivan, Georgetown University. models. Traditional and new insights in the economic Competion date: July 1995. development literature not yet incorporated into re- evant empirical models may contain the answer to this puzzle and, by implication, help define the role of Uncertainty and the Price of Oil Reserves foreign finance in African development. One of the more compelling reasons that Africa is poor and does Ref. i. 679-23 notappearto "catch up" with the richercountries-and Innovations in futures, options, and derivative in- that foreign capital does not flow in to alleviate pov- strments now permit active trading, speculatinf and erty-isembedded inthenotionof "povertytrap."That hedgingthatlinkmarketsforphysicalpetroleumprod- notion is developed as the foundation of this research ucts with financial markets. These derivative markets project continuously value petrleum stcks by balandng the The proect has two main objectives. The first is to costs of strage with the reurns to holding inventories. analyze and assess the determinants of Afncan eco- Underground petroleum reserves are also an inmventory nomic growth. To this end, the research will review the definedbyexploration surveys and development drili- extent to which the growth of African countries differs ig The objective of this study is to developamethod to from the pattem of growth of developing countries as a value these inventories and to apply this method to group by deriving and estimating a growth equation. It reserves in one or two developing countries will focus on 1hree key areas: savings, education and Such an analysis is highly relevant to production and demography, and stodcs of physical and human capitaL inestment decisions. The time profile of production The second objectve is to shed light an the role of from current resenes depends on the opportuity cost foreiign finance in African economic growth. The analy- of frgone production, whih is related to asset values. sis will focus on why capital does not flow into Africa Once invests discr thse values, they can use the and the conditions under which it could. asset to secue credit to finance development And Reapesbity: Interational Ecnomics Dqertment because the physical and financial marke for petro- ationalFinanceUt-EduardoFeandez-Anias, 208 International Economnic and Africa Regional Office, Chief Economist-Ishrat indicatkd that there wore rents (and hence binding Husain. With Daniel Cohen, CEPREMAP. quotas), but also mild quality downgrading. Conmpletion date: May 1995. The natural question to ask of countries that hove coped successfully with VERs Is what they have done right. The study argued that the two-tier quota alloca- Voluntary Export Restraints tdon mechanism (as well as transferability among quota and the Republic of Korea's Trade Policy holders) must have been an important factor contribut- ing to their successful adjustment. The study developed Successful manufacturing exporters, such as thc Re- a simple model that shows how a two-tier allocation public of Korea and Taiwan (China), increasingly en- mechanism, though inefficient, mops up the rents from countered nontariff barriers (NTBs) in industrial coun- producers by inducing them to diversify their exports try markets for their principal exports as their market towards hitherto unrestricted markets. shares grew and as industrial economies lost the use of A case study of Korean exporters' adjustment to the tariffs as an Instrument of protection. Thebest-known- footwear VERexandnedthenegotiationswiththeUnited and perhapsmostdamaging-nontariffbarrierhasbeen States and the ensuing domino effect as the VE5Rspread the successive rounds of bilateral quotas negotiated to other countries. This domino effect Is an additional under the Multi-Pibre Arrangement (MPA). But NTBs rationale for the two-tier quota allocation mechanism. spread to many commodities in the early 1970s, and by The study also carried out a partial equlilbrium ecowo- the late 1970s a significant share of Korean exports was metric and simulation analysis of the welfare effects of undersome form ofnontariff barrier. Copingwith NTBs the footwear VER. The simulations suggest that, despite therefore became a major concern for Korean trade the potential benefits of rent transfers, VERa are afili policy. likely to be costly for exporting countries. The study Besides the tightly negotiated bilateral quotas under suggests, however, that Korea adopted policies that the MWA, voluntary export restraints (VERs) were the midnimized the adverse effects of VERs. instrument most frequently used to control exports. Responsibility: International Economics Department, VERs, like most other NTBs, are negotiated outside of Intenational Trade Division-Jaime de Melo. the GATr on a bilateral basis. The negotiations invari- Competwin date: July 1993. ably stipulate that exporters administer licenses to the restricted mark2ets. This implies that, should any rents occur because the quotas are binding, the exporting The U.S. Textile Industry under countries will get those rents. How to administer 1i- the Multi-Fibre Arrangement censes and how to dispose of these rents then become additional policy issues for exporting countries subject This research addressed two questions: Why has the to VERs. How should the quota rights be distributed, US. textile industry been more successful han other and who should get the rents? Another characteristic of US. industries in obtaining protction? And why has VERs is that they are usually negotiated for broad protection since the 1930s tended to be in the form of product categories (the tightly defined produict catego- negotiated export restraints? ries under the MBA are exceptions). This means that The analysis was broken down into three tim peri- there is room for adjustment in the product mix within ods. For each period the analysis identified the groups firms in exporting countries. Will there typically be that were actively involved, the arguments-both for product upgrading or product downgrading? and against protection-that they presented, the back- ThisstudylookedathowKorea (and othersuccessful groundpolitics of tradepolicyagainstwhichthfirargu- East Asian manufacturing exporters) handled these mentswouldhavebeenevaluated,andthemiechaicsof VERs. It reviewed the distinguishing characteristics of applying policy to particular cases. VERs, as well as the evidence on Korean quota utiliza- The study analyzed the U.S. industry, to determine tionrates in theEuropean Union,whichare persistently how and why it became organized. In each period, was high compared with those of most other exporting the cotton manufactures indusy more closely orga- countries. The study then analyzed incentives for prod- nized than other US. industies? That is, does tis uct mix adjustnent under a VEi, showing at quality dimension differetiate between the textile industry upgrading is not a necessary outcome. The study pro- and other industries? vided evidence on price and quality shift for Korean The research also looked at induts in exportng leather fohtwear exports during the Ordedy Marketing countries And it looced at the deveopment of the A gement negotiated by Korea with the United States. industries in other countries as they became significant The analysis, carried out at a very disagrated level, exporters, to determie wheer the Multi-Fibre Ar- 109 Intenuational Economiics rangementhad animportanteffecton how these indus- sis and Prospects Division working papers; forecasts tries evolved. and scenario analysesare published in Global Economic Responsibility: Intlrnational Economics Department, Prospects papers. International Trade D ivision-J. Michael Finger. Responsibility: International Economics Department, Corn pket! ut daic: Dltrch 1994. International Economic Analysis and Prospects Divi- Reprt: sion-ChristianlE.Petersen,T.G. Srinivasan,andShigeru Finger, 1. Michael, and Ann Hanison. The MFA Pardox: Mare Otsubo. Protedin and More Trade? NBER Working Paper 4751. Completion date: June 1994. Cambridge, Mass: National Bureau of Economic Research. Reports: Pederen, Karsten N. 1993. "The Prototypical Developing Country Model in Bank-GEM." Paper presented at an Bank-Global Economic Model International Symposium of Economic Modeling, Athens, June. The Bank's Global Economic Model (Bank-GEM) is Petersen, Christian E., and others. 1991. "Bank-GEM: A World the underlying forecasting and scenario tool for the Dank Global Economic Model." Paper presented at a Project Short-term Outlookl and Global Econoniic Prospects LINK conference, Moscow, September. papers. The system consists of 144 single-country struc- _. . 1991. "nTe Stmcture of a World Bank Economic Model. tural models that fotecast the key macroeconomic indi- Paper presented at a Brookings, OECD, CEPR, and KDI cators of each country. The countries are linked consis- conference, Seoul, May. tentlythrough trade and financial markets. The forecast Petersen, Clristian E, and T. G. Srinivasan. 1993. "Effects of a is baseœi on the assumptions of the Planning Assump- Rise in G-7 Real Interest Rates on Developing Countries." lions Committee and on the unified survey. The basic Paper presented at a CEPR conference, Oxford, ApriL accounting framework is consistent with that of the RMSM-X, but limited to a three-sector split-public, private, and foreign sector. Commodity Price Formation and Behavior The DEC Analytical Database (DAD) and MAXSIM softwaresupportthiswork.Prototypemodelsarespeci- Developing countries are heavily dependent on ex- fled for individual developing countries. Countries are ports and imports of primary conunodities. They are mappedinto model types. Onthe real side of the cLrrent thus very susceptible at both micro and macro levels to account, behavioral equations are estimated based on sharp changes in commodity prices. A better under- the experience with the regional prototype models be- standing of commodity price behavior would lead to ing developed for the GEM-Regional Models project better price policies, including better policies for man- rume-series cross-section techniques are used to esti- aging price risks. A better understanding would also mate parameters for each group of countries. The trade improve the International Trade Division's ability to links are specfied on the basis of the United Nations forecast prices-to the extent that it is possible. Achiev- bilateraltradematrices,whichareexpandedtol44xl44 ing an improved understanding of commodity price countries,refinedwivthlMDOTdata,andmadeconsis- behavior requires answers to such questions as: What tent through the RAS method. Finandal variables are are the main influences on conmnodity price move- linked directly. ments? How do these factors influence price move- Theresearchhas shown thatitispossibletoassemble ments? Are these influences random? data for macroeconomic accounts for essentially all This research soughttocontribute to theunderstand- countries. These data and the model canbe managed on ing of commodity price behavior by investigating the personal computers at zero marginal cost using statistical properties of the time series of prices. It also MAXSIL The use of pooled data to estimate model investigated therelationsbetweenmacroeconomicvari- puametershasshownprmisingresudts.Globalylnked ables (such as interest rates, exchange rates, inflation model simulation results suggestthat the nodel will be a rates, and industrial production) and the formation and powerfu toolforforecastingandforanalyzingscenarios. behavior of primary commodity prices. And it exam- Bank-GEM provides the mank's operations complex ined the relatien between stoclkholding behavior and with an analytical sOoi io asse the consequences of commodity price movements. global events forabnost any country. It canbe used as a The research found that there is a highly nonlinear descriptivedevice, ad asa prescriptive tool forfinding relation between stocks of a commodity and its price optml policy responses to extenal shocks. movements. When stocks decine to low levels, the The resuhs of model specifications and estimations ability to dampen pnce movements is sharply reduced. arediseminatedthroughlneinafiornlEcononmicAnry- Most conumodity prices do not appear to follow a ran- 112 International Ecowomics dom walk, as long believed. Stock-out periods are peri- Vrangis, Panos. 1990. "How Integrated Are Tropical Timber ods of linear dependence in the series. Of the macroeco- Markets?" Policy Research Working Paper 465. World Bank. nomic variables, the real interest rate exerts the stron- Intemational Economics Department, Washington, DC. gest influence on commodity prices. It is generally not possible to forecast commodity prices accurately. The preliminary results of this study Debt of Low-income Countries suggest that greater emphasis should be put on the use of financial marketinstruments for managingconunod- The debt burden of severely indebted low-income ity price risk. For this reason also, Bank project evalua- countries (SILCs) is largely official (as opposed to pri- tion should pay more attention to analyzing the riski- vate) and is the direct result of increased support from ness of projects involving primary commodities. Where both bilateral and mulblateral creditors in the wake of possible, price-hedging strategies should be incorpo- the external shocks of the 1980s. Debt indicators of rated. Industrial country policies that affect real interest SlLICs-such as the debt-to-exports ratio and the debt rates will have an important influence on primary com- service ratio-deteriorated sharply inthe firsthalf of the modity prices. 1980s, not only because of the increase in debtflows,but Repnsiblity: Intemational Economics Departnent, also because of a weakening in growth and export IntemationalTradeDivision-TakamasaAkiyani,Panos performance and significant dedines in terms of trade. Varangis, and Boum-long Choe. With Pravin Trivedi. SlUCsdifferwidely in theirindebtedness. This study Completion date: June 1994. defined a framework for assessing the magnitude of the Reports: twokey aspects of ihe debt problem in individual coun- Akdyama, Takanasa, and Pravin X; TrivedL 1991. "Stabilizing tries. First, it used the debt-to-exports ratio on a present imported Food Pnces for Small Developing Countrie Any value basis to assess the extent of the debt overhang. Role for Fuhtrs? Paper prsented at the 21st Intemational Second, it used actual and scheduled debt service ratios Conference of Agricultural Economists, Tokyo, AuguSL to assess the magnitude of the current debt servicing Alogoskoutis, C., and Panos Varangis. 1992. "OECD Fiscal burden.Takingtheseratiostogetherprovidesacompre- Policies and the Relative Prices of Primary Commodities." hensive view of the liquidity and solvency dimensions Policy Research Working Paper 955. World Bank, intema- of the debt problem by country and by creditor. tional Economics Department Washington, DC This analysis showed that, for most SIICs, severe Choe, Boum-long. 1990. "Commodity Price Forecasts and indebtedness is manifested in both high current debt Futures Prices? Policr Research Working Paper 43i service ratios and large overhang of debt stock. But the World Bank Inational Economis Department, size of the debt overhang and the debt servicing burden Washington, DC. variesbyafactorof more thanif across the SILCS. Debt _ . 1990. The Metals Price Boom of 1987B9: The Role of sustainability (the long-term ability to service debt) can Supply Disruptions and Stock Changes. Poicy Research be determned only on a country-by-country basis; of Working Paper 542. World Bank, Intenational Economis the 33 SIlCs and severely indebted middle-income Depatwent, Washingn, DC. countries (SIIfCs) analyzed in this study, 32 have debt- .. 1990. Rational Expecations and Commodity Price toexport ratios of more than 200 percent on a present Forecasts" Policy Research Working Paper 435. World Bank, valuebasis, a level beyond which debtorcounties have International Economics Department, Washington, DC. typically faced problems of debt susainability. -. 1992. "The Precautionary Demand for Commodity Solving the debtproblemwil require a comprehen- Stocks.f sive and concerted effort on the part of both debtor Pajkas, Theodosios B., and PanOs N. varangis 1991. Is Thee counties and creditors. Debtor countries must play Ewess Co-Movekent of Ptimawy Commodity Priy es? A eirpartbypersevernginthdrrefornefforts.Without Cointegration Tes Policy Research Wokng Paper 73 such efforts, the dynaunic benefits of debt reduction and Wodd Bank, Intaionmal Economics Deparent, new money would be lost. And creditors need to build WashingN, DC. an recent measures to find a lasting solution to te debt Qian, Yin 1990. "Do Steel Prics Move Together? A problem of these countries mwst handicapped by debt Cointegration Test." Policy Researci Working Paper 4a3. Responsbility: International Econoniics Department, World Bank International Ecnomis DepartmenLt Interational Finane Unit-Ronald L Johannea Washngton, DC. Compkion da: june 1994. Trivedi, PravinK. 1991. TmemSeries Behavior of Some Reprt: Conmodity Price- World Bank 1994 Toward Resoling th Debt Probem of Trivedi, Pravin K, and Panos Vangis. 199L -Excess Co- Severely Indebted low-Income Countrie (SLICs). moveme of Commodity Pric A Stsbtl hin?" WashioDC. 1lI International Economics Export Diversification the policies used bycountries thatsuccessfully adjusted to shocks should yield helpful lessons for future eco- The purpose of this research is to develop a frame- nomic management. work for assessing the benefits of greater export diver- Applying the basic methodology used by Balassa sification for developing countries. Greater diversifica- and McCarthy (Adjustment Policies in Developing Coun- tion can, in principle, reduce overall export variability, tries, 1975-83: An Update, World Bank Staff Working but whether and to what extent it does so depends on a Paper 675, Washington, DC 1984), this study measured number of covariances between world commodity theeffectof externalshocks on the currentaccountof the prices. Diversification also comes at a resource cost- Philippines. It found that when the Philippines experi- not only because resources will be expended in shifting enced adverse shocks in the 1970s, it first relied heavily among different types of production, but also because on external flows, which fueled an investment boom. distortionary taxes and subsidies may need to be levied Given the low interest rates at that time, this approach to encourage grea'lr diversity. The framework that the seemed reasonable, but there were two flaws to it. First, study seeks to develop will bring all these consider- investmentswerepoorlyconceivedandmanaged, failed ations together. The goal is to assess whether the avail- to produce appropriate returns, and became a burden able data still show that export diversification is benefi- onthe state. For example, one large nuclearplanthas yet cial even after considering all these issues. to yield a return. Second, with so many external re- Responsibility: Intermational Economics Department, sources available, the government ignored the need for International Economic Analysis and Prospects Divi- mearnngful structural reform, especially in trade and sion-Andrew Warner and Will Martin. public sector france. Inefficient allocation of public Compktion datc. June 1994. resources arnd distortionary trade policies can absorb more than aU the gains from favorable shocks. Responsbiity: Office of the Vice President, Develop- Exterinl Shocks and Capital Fligt mentEconomics-F. Desmond McCarthy; and Interna- tional Economics Department, Intemational Economic This research proposed an analytical model of an Analysis and Prospects Division-Ashok Dhareshwar. equilibium real exchange rate. The model was tested Comnpetion date: June 1994. usig Mexican data with Johansen cointegration tests. Report: After the research showed that the model passes these McCarthy, F. Desmond, J. Peter Near, and Giovanni Zanalda. tests, the model was used to measure exchange rate 1994 "Measuring the Effect of Extenal Shacks and the misalignment in Mexico during 1979-1. he research Poliy Response to Thau: Empirial Metwdology Applied then examned the extent to which capital flight can be to e Philippines" Policy Rearch Woring Paper 1271. ecplained by exhange rate misalignment and the fail- World Bank, office of the Vice Preident Development ure by the Mexican authorities to dcange the exchange Ecnomks, Washingtn DC rate quicldy enough in response to external shocks. The principal finding is that terms-of-trade shocks (oil prices) are an important determinant of the equilib- North-South Linkages: Background Papers rium real exchange rate and that this simple proposition for Global Economic Prospects 1994 stands up to fairly strict econometric tests. Countries such as Mexico that export commodities with volatile In support of its annual flagship publication, Gloal prices risk capital flightproblems if they hil to devalue EconomicProspects, the International Economics Depart- quicldy in respwse to adverse external shodcs such as a mentinl994 undertook several shortbackground stud- fal in their terms of trade. ies on how the outlook for the world's nmjor economies Responsibility Intational Economics Department, (China,Japan,Europe, and NorthAmerica) affectspros- Intenutional Economic Analysis and Prospects Divi- pects for development tends over the coming decade. sion-Andrew Wamer. A primary theme of these studies was the likely effects Comklti date: June 1994. of macroeconomic policies in the major economnies- "fiscal consolidation" in the OECD countnes, unifica- tion in Europe, the emegence of China as a major Inleteaidonal Linkages, Shodck, player-on the grwth prospects of the developing and Adjustment countries. The btanmission of effects rough interest rates and commodity prices was a recurrent theme, Over theperiod 197349 counties faced a numberof bringg out the reasons why trends inthe 1990s would extwernltshok whichtheytidtoadjustidifferent probablybemuchbetterforindebtedprimaryexportes ways and with diffeent records of suces Identifying dan trends in the 198. But slow adjustment in labor 212 International Economics markets and dangers of protectionist responses were (in dollar value) for all low- and middle-incomne coun- importantsecondarythemes, tending to underscore the tries for which the trade data are complete and can be growing importance of China and Japan as markets of disaggregated by market and commodity class. Dollar the future. The dynamic role of exports in the long-term for dollar, exports from low- and middle-income coun- growth process in low- and middle-income countries tries are high-powered in generating long-term growth was highlighted by results suggesting that exports of irrespectiveof incomes in marketeconomiesand of type manufactures are no more high-powered in explaining of commodity (manufactures or nonmanufactures). strongGDP trends thanareexports ofnonnanufactures. These results suggest that the "East Asian miracle" has And good export performance in low-income markets implications for low- and middle-income countries in such as China is just as strongly linked to the exporter's general, not just for exporters of manufactures selling GDP trend as is good export performance for high- mainly in high-income markets such as the United income markets such as the United States. States. - Using the MSG2 multicountry model, one study Responsibility: International Economics Department, evaluated the macroeconomic effects of proposed cuts International Economic Analysis and Prospects Divi- inUS. fiscal deficitsandinlEurope'sdeficits pursuant to sion-Paul Armington, Shigeru Otsubo, Christian the Maastricht Treaty. It found that negative market Petersen,UriDadush,DongHe,andAshokDhareshwar. effects on the growth of low- and middle-income coun- WithAndreaBoltho,OxfordUniversity;T.G.Srinivasan; tries would be offset in the medium term by positive Warwick J. McKibbin, Australian National University; effects working through lower interest rates and stron- and Charles Wyplosz, INSEAD. ger capital flows to these countries. Completion date: June 1994. * A second study surveyed how Europe's policy- Reports: making institutions are and will be strivingto dealwith Anmingon, Paul. 1990. The Central Role of Exports in majormacroeconomicimbalancesunderpost-Maastricht DevelopmenL" World Bank, Intemational Economics pressures to harmonize deficits and other conditions. A Department, Washington, DC. contractionary bias in demand policies is likely for Boltho, Andea, Ui Dadush, Dong He, and Shigru Otubo. several years, putting a premium on labor market poli- 1994. "China's Emergence: Prospects, Opportunities, des. Offsetting this, lower interest rates in Europe will and Challenges." Policy Researcd Working Paper 1339. have increasing leverage over "world' interest rates, World BDank, Intentional Economics Department, which should help the low- and middleincome coun- Wadshngton, DC. tries. Overall, whether Europe's policies will be devel- Mcxlbbin, Warwick 1994. "The Consequences of Fiscal opment-friendly may depend on the course of "fortress Consolidation in the OECD.' World Bak, Intenational Europe,"particularly&therisingprotectionistsentiments Economics Department, Washington, DC against "social dumping." Petersen, Christian, and T.G. Srinivasam 194. "Effects of a * Using the World Bank's Global Economic Model Rise in C-7 Real Interest Rates on Developing Countries." as a simulator, a third study looked at the effects of World Ba, International Economcs Department, higher interest rates in major high-income countries on Washinghtn, DC analyticafly significant groups of developing countries. Wyplosz, Charles. 1994. "Europe and the World after Itidentified five channels of linkage from "world"inter- MaastrichtL World Bank, Intematonal Eacnomics Depart- est rates to medium-term growth in low- and middle- ment, Washington, DC income countries: export market growth, domestic cost of capital, extemal debt service payments, real com- modityprices, andpolicyreactionsbylow-andmiddle- Price Formation income countries themselves. * Combining techniques of the economic historian Thellberalizationofagriculturalmarketsindevelop- with model-based analysis, another study examined ing countries has great implications for the way domes- howthetwo-wayeconomicinteractionsbetweenJapan, tic agricultural prices are determined and for the way rapidly emerging China, and the rest of the world may international prices are transmitted into local marketl evolve over the coning two decades. Although strong As local markets liberalize, producer prices tend to complementarities in development are expected to en- increase as a share of the free-onboard (fob) pice courage open trade relations among China, Japan, and Often, market liberalization in developing countries is theUnited States,Chinawillbea formidablecompetitor accompanied by lower export taxes and by a devalua- for poorer countries exporting labor-intensive manu- tionofthecurrency.Whenasinglesmal countryunder- factured products. tames market lberalization, international commodity * The last study related growth trends in per capita prices are not affected, but if a large number of smaU GDP in 1965-91 to the corresponding trends in exports countries or a large producer adopts such policies, tHy 113 Internationul Economics could have an impactoncommodity prices.Thatimpact Beltwide Coton Conference, San Diego, California, is called the 'adding-up" problem. January 5-8. This research investigated these domestic and inter- national effects of agricultural market liberalization in developing counties, focusing on primary-commod- Regional Integration in Asia ity-producing countries in Sub-Saharan Africa. Tlhese countries are undertaking majorreforms of agricultural This study, part of a larger research effort organized markets, and their governments are evaluating their by the Bank's EastAsia and Pacific Region, Office of the policyoptionsinaliberalizedmarketenvironment.The Vice Presidenk examined the potential for a "principal researchalsoexaminedtheimpactonagriculturalprices supplier" exchange of trade liberalizations among Asian ofpastexperiencesofagricultural marketliberalization. dev-elopingcountries.Thestudypositedtateachcountry's The research.found thatinSub-SaharanAfrica, cocoa concessions would be made on a most-favored-nation marketchanges in Ghana and Nigeria increased output basis-that is, that the reductions of importbarriersby the and welfare in these two countries. But the impact on participating Asian developing countries would be ap- world cocoa prices was snall compared with the effect plied toinportsfromallcountres, notjust to importsfrom of the expansion of production in Asia, Brazil, and CUte oher Asian developing countries. dlvoie. In the absence of market changes, other pro- The analysis followed the format of early rounds *f ducers would have increased their output, crowding GATT negotiations-restricting the "spillover" of ben- out output expansion in Ghana and Nigeria. efits from concessions to the counties that make recip- On the "adding-up" problem, the research found rocal concessions by idenifying a basket of goods that that, individually, few countries in Sub-Saharan Africa these countries import principally from each other. have sufficient market power to influence commodity After identifying this basket, the analysis determined pries.PossibleexceptionsincludeCoted'lvoireand, to for each participating country the value of the exports a lesser extnt, Ghana (in cocoa), Kenya (in tea), and on which it would receive concessions and the value of Malawi (in burley tobacco). Export taxes may prove the imports on which it would make concessions. The beneficial for these countries, but at certain levels the plausibility of such a set of concessions being agreed to primaryeffectof optimal taxesistotransferresources was assesd by comparing the degrees of "balance" from smaflholders to governments, with limited mar- (between concessions made and concessions received) g-n welfare ains. amongcountriesandbycomparingthedegreeof "inter- The rsarch also fund thatitis not feasible to design nalization" (percentage of concessions received by par- a reginal commodity productin and trade poicy for ticipatingcountriesratherthanoutsiders)withintemal- SubaharanAficaasawholebecauseofthe difficulty of ization figures from early GATT rounds. equitbly ditributing the benefits of such a poLcy. More- Responsibiity: International Economics Department, over,ifanexporttaxisimposedonSub-SaharaAfricaas International Trade Division-J. Michael Finger. awhole,hegreatestbenefltsmay gotoproducersinother Completion date: June 1994. regions, such as Asia and Latin America. R iliy: Interational Economis Deparmt, International Trade Division-Panos Varangis, Sustainability of Capital Flows TakamasaAkiyama,Donaldlarson,andEltonThigpen. Conmpdion date June 1994. This research tested a view implicit in much Rtrs: policymaking-that short-term capital flows are highly Ak,an. Takmsa,nand Donald Laso. t9e. mhe Andg- volatile and unstable but long-tem capital flows and Up nuko Stateiesh l wimarycommnodity mqcun direct investment flows are not For example, many Sub-Saharn Afi Poicy Rmuear& Working Paper 1245. argue that the large capital inflows into Latin America Ward 3k Intemliinal Eawnmis Department Washing- are hot flows because they are short-term. Many coun- tn, DC tries have in the past restricted short-termbut not long- Coletrua,jmwauu, Talcmaa Aliy.ma, and Panas Varangis. term capital flows, presumably based on the premase 1993. How Polibcy OC ges Afcd Coma Sec in Sub- that the short-term flows are hotter than the long-term SArn Afin Co mr Pobiqcy Reserc Workng Paper flows. The study, which examined balance of payments Is Wor Bankumins EceSondciDepartint data for 10 contries-five developing and five indus- Wlaitmu. DC. triai-found no evidence that measures of volatiity Thipe,on, Pa VarngisandSnhkrSaty=>ayaL nmatch up with the data abels of the flows in this way. l99ifcst Cotton Markting Rehuns a Majo Develop- Policymaking based purely on data labels in this way ogpdwugombm.r Paperpresd at the 1994 are thus probably nisguided. 114 Interational Economics Responsibility: International Economics Department, Responsibility: International Economics Department, International Economic Analysis and Prospects Divi- International Economic Analysis and Prospects Divi- sion-Andrew Wamer, and Europe and Central Asia, sion-Andrew Warner. and Middle East and North Africa Technical Depart- Completion date: June 1994. ment,PrivateSectorandlinanceTeam-Stijnaaessens. Reports: With Michael Dooley, University of California. Warner, Andrew M. 1993. "Did the Debt Crsis or Decining Oil Completion date: June 1994. Prices Cause Mexico's Investnent Collapse?" Policy Report: Research Working Paper 1102. World bank, International Claessens, Stijn, Michael Dooley, and Andrew Warner. 1993. Economics Department. Washington, DC. "Porfolio Capital Flows: Hot or Cool?" In Stijn Claessens .1994. "Mexico's Investment Collapse: Debt or Oil? and Sudarshan Gooptu, editors, PorUfolio Inveslman in journal of Inferffonul Money and Finance (April). Developing Counhies. World Bank Discussion Paper 225. Washington DC. (Also forthcoming in World Bank Ewnomic Reviw.) Trade in Services Recent policy developments indicate that many de- Trade, Investment, and Growth veloping countries have become interested in devel- oping a more efficient service sector. To that end, a This research tested the hypothesis that commodity growing number of countries are pursuing a mix of price shocks (such as the decline in oil prices) have been measures that include privatization of state-owned ser- underestimated as a direct cause of decliing invest- vice enterprises, reformof the existing regulatory frame- mentinthel980s.Thestudyestimatedamicroeconomic work, and liberalization of intermational service trans investment model to determine the relative importance actions. ofthreeexplanationsforMexico'sinvestmentdedinen Intematnal service transactions encompass cross- the early 1980s: border trade (such as traniborder data flows), move- * The decine in oil prices ment of consumers (tourism), temporary labor move- * The termination of capital inflows ments, and foreign-direct-investment-related transac- * The effects of debt overhang and uncertainty. tions. They have become inueasngly important for The study used investment data for private indus- bothindustrialanddevelopingeconomiesoverthepast tries for the period between 1981 and 1985-the first fewyears. time that such data have been used in addressing these This research was designed to clarify conceptual issues. The data indicate that the main nicroeconoic issues about intemnational transactions in services and mechanismdrivingthedeclineininvestnentwasarise to proide current information on the importance of intherelativepriceofinvestmentgoods-especiallythe services in the world economy. It also addressed the relative price of madhinery (a traded good in Mexico). implications fordevelopingeconomiesof thliberaliza- Moreover, the decline in trade (driven by fallingworld Von of services. oil prices) explains much of the increase in this relative As a result of the research supported by this prosct, price theDivisiononTransnationalCorporationsandInvest- The decline in Mexico's intenational terms of trade ment of the United Nations Conference on Trade and was probably the most important ultimate cause of the DevelopmenLt(UNCrAD),inassodationwiththeWorld inreased relative costof machinery,butthe reversal in Bank, prepared a report titled Libegalizing International netcapitalinflowstoMexicoprobablyalsoplayedarole Transacti i Seruies: A Hnidbook. The handbook is in increasing tis relative price On this point the evi- intended to provide guidance to developing countries dence is less clear. The study found little evidence that wishing to adopt policies to incse effiiency in their the effects of debt overhang and uncertainty had much services sector, including through liberalization of for- to do with the decline in investment eign inetment and trade in sevices. InvestmentinTexas and louisiana (whichwere also The handbook examines a comprehensive list of riding the oil boom of 1973-S1) also fell in 198146, and in ents used to limit international transactions in adverse conunodity price shocks also affected many services and suggests ways that reform of such instru- other heavily indebted countries. Commodity price ments may help create conditions for improving effi- shocks (such as the decie in oil prices) have been iency in service sectos Several major questions are inufficiently emphasized i a directcause of decining addresed: Why are efficient services so important to ivresment levels in the 19809 in the literatue on the economiLcdevelopment?Whatiseconoiicefficieacyin effects of the interational debt crisis. services? When is reguiltion justified? Can environ- 115 Intenational Economics ments be found that preserve legitimate regulatory WithKarlSauvant,PadmaMallanpallyThierryNoyeLle, needs without stifling competition? Can objectives of Jorg Weber, and Zbigniew Zimny, UNCTAD; Patrick regulation and contestability of markets be pursued Messerlin; Marie Nigon; and Bernard Hoekman. jointly? Is there an optimal sequencing of policy reform UNCTAD contributed funding for the research. when engaging in a liberalization exercise? What is the Completion date: June 1994. nature of the barriers placed on international transac- Report: lions in services? What is the extent of international UNCrAD and World Bank. W94. Likbrizing hrntkmt6al cooperation in services, and what are the benefits of Trnsactaios in Senis: A Handbook New York and Geneva: multilateral or regional liberalization of international United Nations, no. E.94LA.11. transactions in services compared with unilateral liber- alization? The handbook also provides insights into practical issues associated with liberalization in the China's Trade Regime services sector, drawing an countries' experiences. The discussion in the handbook includes these high- This research projecthassystematically analyzed the lights complex trade regime of China Itargues that the comer- * Access to efficient services-particularly efficient stone of Chinese trade policy has been export promo- intermediate services-has become crucial for the pro- tionChinahasengagedinbothgeographicalandsctorl ductivity and competitiveness of economies. targeting. The research also found that the strict export * Opening the domestic market to foreign service quotas given to state enterprises played an important providers is an important way to ensure increased effi- role in China's spectacular performance in world mar- diency in the provision of services. It allows for the kets during the 1980s. inportof services that mightnotbe produced domesti- This research has contributed to the World Bank's oiUy or that are not produced at the price and quality Policy Researh Report The East Asin Miracle (New levels that users demand. By fostering competition, it Yord Oxford University Press, 1993). tends to enhance the efficiency of domestic produces Responsiia: International Economics Dqepartt, * Although liberalized entry into the domestic mar- International Trade Division-Arvind Pangariya and ket for foreign serviceproviders is an importantcondi- Maurice Schiff. lion for icased efficiency, liberalization does not Complein date: December 1994. imply total deregulation. When liberalizng, some regu- Reports: lations may need to be strengthened, especiaily to deal Panagiya, Arvind. 1993. "Unravelling the Mystre of hinas wnth problems of natural monopoly or asymmetic in- Forein Trade Regme." World Ewamy Ganuary). fornation. Often the central policy issue is how best to .1994. "Trade Refrm in China lessons for Idia." combine regulation with the discpline of competition. Word dBa Intnional Ecmics Detment a Liberalization of inter-atonal transactions in ser- WaSington, DC vices in the quest for greater efficiency does not neces- sarily need to be pursued in a unilateral context The GeneralAgreenentonTradeinServices(GATS),nego- Tariff Uniformity and Optimality tiatedaspartoftheUruguayRound,presentsacompre- hensive approach to lberalization of services, and its This studyanalyzes the optimality of uniform tariffs concepts, rules, and principles will likely be used as a and value added taxes. It views trade reform as apartof point of departur for future multilateral efforts in this the overall tax reform and explains under whatciru- direcfion. stances tariff and tax uniformity is desirable. The find- * Regional agrmnts may also provide a compe- i gs of the analysis were presented at a conference in mentary route tward regulatory harmonization, fur- India in August 1993. ther promoting trade in servces. Theprojectaalso-pullstogether,inasymposiumissue * Individual cotries' experiences with liberaliza- of the Eonomic Studis Quarely (Japan) due to appear tion in servic underscore the importne of develop- in September 1994, papers written in the Policy Re- ing a political consetsus around liberalization, putting search Department over the past six years on the eco- in place a number of macrconomic regulatory mea- noumics of tariff uriformity. suns as a foundation for sectoral liberalizati and Rpon-sbiiy: International Economics Department, promoting new behaviors by public and private sector Intemational Trade Division-Arvind Panagaiya and operatos. MauriceSchiff;andPolicyResearcDepa nt,PubLe ResposliblI International Economics Dqetet E Division-Sluntayanan Devaraja nlenational Trade Division-Calos A. Primo Brag. Cmspim Ade: Decmber 1994. 116 Internatinal Economics Controlling Recidivism Responsibility: International Economics Department, Intemational Trade Division-J. Michael Finger. Constituentpressures for trade restrictions are inevi- Completin date: January 1995. table. A government, to maintain its momentum toward trade liberalization, must have orderly procedures not only to develop and advance new liberalization initia- Foreign Direct Investment: Determinants iives, but to respond to constituent pressures for new or and Consequences continued protection in a manner that does notcompro- misetheprocessofliberahzation. That is, itneeds to find Despite the voluminous literature on foreign direct a way to control recidivism, investment (1DI) in the 1960s and 1970s, the empirical Tocontrolrecidivism,agovemmentmustfindaway evidence on the benefits from PDI remains slim. This tosaynotorequestsforprotection-awaythatdoesnot research seeks to fill that gap by focusing on several turn the rebuffed petitioner into an active enemy of the aspects of foreign investment in developing countries. liberalizationprogram lThegovernmentmustalsoavoid First, the study will examine the relation between for- backsliding into the administrative quicksand of bu- eign investment and technology spillovers-do multi- reaucratic protectionism-a phenomenon that in the nationals act as a means of transferring the latest tech- 1980s significantly changed the liberality of trade poli- nology to the host country? Second, the study will look des of industrial countries. at the general determinants of foreign investment in This project centers on studies of abDut 10 develop- manufacturing. It will examine the importance of im- ing countries that have implemented significant trade port barriers, industry concentration, and other factr policy reforms. It wil identify inddents in which a to examine what deternmines foreign investment in de- country has considered or allowed a significant excep- veloping countries. Finally, it will examine the relation tion to its liberalization program. Examples of these between pollution intensity and foreign investment incidents would include a case in which a country has Analysis of this issue draws on the current debate created a protectionist instrument such as a reference regarding the importance of lower enviromentalregu- price systemor an antidumpingsystem, orhas inposed lations as a motive for foreign investment import restrictions that were a significant departure ResponstfltInternatior 'EconomicsDepartmet fiom or reversal of its hberalization program. In a case Intemational Trade Division-Ann Harrison. in which a specific restriction has been introduced, the Compltion date. March 1995. rtesearch will identify the nature of the economic prob- Reports: lemfacing thesectorthatpressedforexceptionalprotec- Aifien, B., and Ann Harison 1993. "Does Foreign kirseneb tion and isolate the causes of the problem. It will be Generate TedmologyTrwnsferar World Bank, Policy important to determine whether the sector's situation Research Deptment, Washngto DC was, in fact,exceptional. The research will then identify Hamsion, Ann. 1993. DFL Detmiats and Con m the argument that the sector used to justify its request World Bank Policy Rseach Department, Washingt, DC for exceptional protection, and the administrative or political mechanisms dutough which a proposal for exception was transiurned into a realihty Past expei- Foreign Direct Investment and Trade ence indicates that it is important to look into the rheto- ric and into the process of such events. Thisresearchprojectseekstoidentify themamdeter- InsomecasesthepolicyeventunderstudywiUbethe minarts of foreign direct investment in developing passage of an antidumping law, or the adoption of a countries. The results should help countries that are referencepricesystemorsomeothersortof"safeguardw analyzing their polices with a view toward attracting procedure The reasons forcreatingsucha policyinstru- geater inflows of foreign investmentbysheddinglight ment are often economic problems encountered by a on what factors are more effective in encouraging for- few sectors: it is always tempting for a government to eign investmeneL make a rule rather han to make a decision when it is The study is conducting an analysis of cross-sec- pushed hard to make an exception to a general policy. tional, time-seris data on investment originatng in the The project will provide a tabulation of the ways in United States (for 1977-90) and In Japan (1981-0). The which developing countries have approached this issue purpose of the analyss, which covers investment in 40- and analyze best practice among developing countries. 50 developing countries, is to determme whether tax And it will prepare a model safeguards regulation that incentives or more fundamental factors, such as humnn would put into practice the lesswos learned in theanaly- capital and infrastructure, awe more effectLve in attract- sis of developing countries' experience. ing private investment. 117 International Economics The research has found that tax incentives seen to important in cases brought forward. The GATr as an have a weak and ambiguous effect in attracting foreign institution, horever, has been important. It has pro- direct investment, and that good infrastructure and a vided a venue that countries outside regional trading stable political and economic situation (the creditwor- blocs can use to defend their access to those markets. thiness of acountry, forexample)have a very important A second study reviewed the recent explosion of effect antidumping and other legal actions to restrict imports. Some of the research conducted is being linked with Itconcluded that recentclmangesinCATTrulesconcern- efforts in the East Asia and Pacific and the South Asia ingfiese actions havenotstrengthened theGAT's disci- Regional Offices. As part of these efforts, a survey of 175 pline over such actions. Instead, these changes are the Japanese investors was conducted with the assistance of product of pressures from the major users of such instru- Japan's Ministry of International Trade and Industry. A ments to broaden the scope of GATr rules until they seminar was conducted in the International Finance sanction the wider applications to which the users have Corporation in March 1991 for Bark and IFC staff to been driven by their own countries' domnestic politics. discuss the findings of the research. A third study looked at antidumping in the context of Responsibility: Private Sector Developmien;t Depart- the GA1T dispute settlement mechanism. It concluded ment-Ashoka Mody. With Fang-Yi Wang; Susmita that the same pressures that have stretched the GATr Dasgupta; SarabjitSinha; and Krishna Srinivasan, Indi- rulestoaliowincreasingapplicationofantidumpingmea- ana University at Bloomington. suresarenowworkingtorendertheGATTdisputesettle- Competidn date June 1995. ment mechanism inefective. GAiT findings concentrate Reports: on procedural errors that can be corrected without lifting Srinivasan, Krina, and Ashoka Mody. 1994. "Location and the antidumping measure being chaRlenged. Foeign Direct Investment An Enpirical Analysis of U.S. Responsibility: Intemational Economics Department, Firs" Draft International Trade Division-J. Michael Finger. Wlherer, David, and Ashoka Mody. 1992. "nrnation Compkeion date: June 1996. Investment Location Decisions: The Case of US. Finns.u" Rprts: wrnad of Interalional Ecnanmis 33 (August)57-7& Finger, J. MichaeL 1993. "GATrs Influence on Regional Arrangements." In Jaime de Melo and Axvind Panaanya eds., New Dimensns mi Regiona Inlegmuim. London: CAT1r Ruies and Developing Countries Cambridge University Press. Figer, J. Mihael, and Sumana Dhar. Forthcoming. "Do Rules This project comprises a series of studies of problenms Control Power? GAT Articles and Agreenents in the of theGATlsystemthatareofparticularimportancefor Uruguay Round' In Robert U Sten, ed.,Analyticalnd developing countries. Negotiati lsus in the Global Tding System. Ann Arbon A study that examined the GAiT's influence on University of fichigan Pnss regional arrangements found that the GAiT's rules Finger,J. MichaeL and KC Fung. 1993.Ca" Competiion regardingthe properties required of a regional arrange- Pobly Conrtrol '301'r Paper for discusion at a researdh ment have not been rigorously appled-in large part seminar on Approacdhs t Competition Poliy in Intema- because the GATr member countries foundt that these tional Trade, Hochschule SL Galen, Switzerland, rules did not give expression to concerns considered September 1Sf-I. IIJ DOMESTIC FINANCE AND CAPITAL MARKETS Risk-Weighted Capital Adequacy risk, and management risk. Ideally, each bank's capital Requirements: An Application adequacy should be determined based on its riskiness, to Developing-Country Banks with riskier banks being subject to a more stringent capital requirement Ref. no. 677-41C But in most developing countries it is difficult to In July 1988 the Basle Comnmittee on Banking Regu- obtain accurate information, if any, on the qualityr of lations and Supervision Practices reached an agreement banks' loan portfolios. Accounting standards are inad- on a framework for measuring capital adequacy and equate, disclosure is poor, and markets do not function setting minimum standards for international banks. well. Moreover, banks are notable to hold a fully diver- This agreement established a system of risk-based stan- sified portfolio because of exchange restrictions and dards of capital adequacy for the depositinstitutions of lack of information and technical expertis the major industrial countries. The two goals of the This research projectsought to understand the diffi- streement are, first, to increase the stability of the culties of transferring risk-based capital requirements inttrnational banking system and, second, to harmo- to developing countries and to develop ways to im- nizegovernmentsupervisionand regulation of interna- prove developing-country regulators' risk assessment tionally active banks. The Basle Agreement undoubt- and capital measurementfunctions. It found that hans- edly represents a major step toward regulatory conver- ferringtheBaslecapitaladequacystandardstodevebp- gence in industrial countries. mig countnes without adapting the standards to their The trend toward harmonization and unification has circumstances is economically inappropriate and politi- spilled over to the developing countries, as banking callyinfeasible.Theelementsofsupervisorytechrology supervisors of more and more developing countries thatmostdesperatelyneed tobetranserredtodevelop- have started adopting the Basle risk-weighted capital ing countries are not standards but methods of collect- adequacy guidelines, often at the World Bank's behest ing and managing information, legal processes for Egypt, Mexico, Tunisia, and Turkey are just a few ex- prompt and equitable default resolution, and mecha- amples of countries that have adopted the guidelines. nismsforcontrollingtheincentiveconflictsbankersand Because the guidelines were developed with industrial government supervisors face. So, as a first step, the country mstitutions in mind, it is important to analyze World Bank should promote reforms in information whether these guidelines, without any adjustments, collection and management that do not in themseves wouldalsobeappropriatefordeveloping-countrybanks. preclude flexibility ina country's prudential standards. For developing countries to achieve the two goals of Theresearchalsooutlinedadatabasethatneedstobe the Basle Agreement, institutional risks and capital constructed (depending on a country's level ofsophis- must be defined and measured appropriately by the tication, this can be a computerized data base) before regulators of individual countries. In a firm's financial risks in developing countries can be assessed properly structure, capital plays the role of an income shock and before the concept of risk-based capital will make absorber for those who hold stakes in the cash flows of sense. In the more sophisticated countries, where this the firm. Capital and loan loss provisions represent the informationand computer technology are readily avail- aggregate of accounts that, for a given stakeholder, able, banks could use standardized exet-system mod- absorb increases and decreases in a firm's current and els for credit analysis, and bank examiners could use anticipated future eamings. The amount of capital ap- themtodouble-checkbarnks'creditanalysisprocedures. propriate for a bank can be defined only relative to a Responsiblty: Policy Research Department Finance givensetofrisks-itistheamountthatwouldndnimize and Private Sector Development Division-Asli the loss exposure of a deposit insurer (whether it is a Demirgiiq-Kunt With Edward Kane, Bmoston College. fumd or the government itself). In turn, risk must be Compktion dat: Sptepmber 1993. defined as the net exposure of an institution's capital to Rewrt loss from all sources. For banks, the most common risks Kan, Edward 1g4. -Difficulis of Tansferr Risk-Basna are credit risk, interest rate risk, foreign exchange rate Capil Requiremens to Devopi Counts" Policy 119 Domestic Finance and Capital Markets Research Working Paper 1244. World Bank, Policy Research The study will analyze direct and indirect links be- Department, Washington, DC. tween segments, and differences in risks, transaction costs, and intermediation costs among differentcatego- ries of intermediaries and borrowers. The research will Financial Integration and Development also analyze the comparability of terms and conditions in Sub-Saharan Africa forcontracts across differentsegments and the extent to which clients can choose among segments as measures no. 677-74 of the degree of integration. Research has shown that the fragmentation of finan- Responsibility: Africa Technical Department, Private cial markets in Africa impedes mobilization of financial Sector DevelopmentandEconomicsDivision-William resourcesand financial intermediation. This fragmenta- F. Steel; and Policy Research Department, Environment, tion has been attributed in large part to repressive Infrastructure, and Agriculture Division-Hemamala financial policies and to structural and institutional Hettige. With Machiko Nissanke, Overseas Develop- features associated with low economic and financial ment Institute, London; Ernest Aryeetey, University of development Reforms aimed at liberalizing the finan- Ghana; and Carlos Cuevas, Inter-American Develop- cial sector have had only limited-or, at best, delayed- ment Bank. The Swedish International Development effect on domestic resource mobilization and on access Autiority and the African Economic Research Consor- tofinanceforAfrica'spotentiallydynamicsmallprivate tium are providing financial support for the research, sector investors, whooperate mostly outside the formal and the Overseas Development Institute is both provid- financial system. ing funding and participating in the research. This research project addresses this central question: Completion date: June 1995. Wb'Vatexplainsthe existenceof dualism inAfrican finan- cial markets and its persistence despite liberalization of those markets? The research seeks to identify policy, Market Structure and Market Outcomes: structural, and institutional measures that can acceler- The Mexican Stock Exchange ate (or impede) financial integration, deepening, and intermediationinAfricancountries. Recentresearch on Ref. no. 677-97C the causes of fragmentation has focused on iimperfect In theory, the stock market allocates capital by ana- informationas a source of structural market failure The lyzing the risk of each company and rewarding inves- cost to formal institutions of obtaining information on tors appropriately. But this theory takes the market as a and transacting business with small private sector cli- black box into which goes information and outof which ents and informal financial agents can be high. comes an efficiently deternined price. Increasingly, In investigating alternative explanations for fragnen- market microstructure theory underlines the impor- ation and ways to improve integration, the research will tance of institutional features of stock markets as deter- focus on the costs and risks of financial transactions be- minants of price behavior. That suggests that policy- tween different segments and on the incentives for such makers, through their choice of trading systems and transactions. Itwilldevelophypothesesexplainingdiffer- other institutional features, can influence trading and ent aspects of fragmentation and test them with data pricebehavior. Yetdespite their theuretical importance, gathered through questionnaires administered in four little is known about the effects of trading systems on African countries-Ghana, Malawi, Nigeria, and Tanza- trading behavior. nia-inthefonnalandinfonralsectors,inurbanandrural To shed light on the effects oF institutional features, locations, and to clients and institutions, this study analyzed the market structure of the Bolsa The study's main task is to administer the question- Mexicana de Valores (BMV) and its implications for naires to formal, semiformal, and informal financial daily stock price and volurne. Using daily stock price institutions and borrowers in the sample countries to and volume data on shares listed on the BMV, the obtain the data necessary to test the research hypoth- researchcarriedouttheoreticalandeconometricmodel- aes. In each country it will attempt to gather in-depth ing of price and volume behavior and how they are information from 20 branch banks and 30 Informal and affected by changes in market framework. The primary semiformal lenders in urban areas and from the same example of such changes is the issuance of American number in rural areas. A more limited survey of 20-30 depository receipts (ADRs) by a number of Mexican formal sector clients and 20-30 informal sector clients issuers in recent years. willbecanductedtoverifytheirinfonationprovidedby The results show that price volatility is related to the insfitutions and to assess the degree of overlap market lquidity and that the cross-listing of shares in among clientele. foreign markets can result in either more or less liquid- 120 Domestic Finance and Capital Markets ity in the Mexican market Similarly, competition from ies, and evaluating how stock market development cross-listing can force trading costs in the market to influences the financing decisions of finns. decrease. Data analysis indicates that there have been First,thestudywillconstructmeasure of stockmarket important changes in the behavior of the Mexican mar- development These measures should have a number of ketsince the introduction of ADRs. Forthose shares that immediate and long-term uses. Such measures a' atify were accessible to foreigners, ADRs resulted in an in- the level of development and help gauge improvements crease in volatility, a reduction in market liquidity, and in the stock market. They will allow analysts to monitor a reduction in the bid-ask spreads. Conversely, for those the evolution of a country's stock market and prvide a shares closed to foreigners, ADRs had no systematic criterion for assessing the success of policies designed to effect improve the stock market In the longer rnm such indica- The findings were presented at a seminar for staff of tors will facilitate more researh on how the financial the World Bank, the International Finance Corporation, sector influences economic development and the International Monetary Fund in June 1994. Scond, using purely descriptive statistics, the re- Responshiity.InternationalFinanceCorporation,Eco- search will illustrate the codevelopment of stock mar- nomics Departnent-Jack Glen. With Ian Domowitz, kets, banks, mutual funds, pension funds, and other NorthwesternUniversity;andAnanthMadhavan,Uni- nonbank financial intermediaries. This will allow the versity of Pennsylvania. study to address such questions as: Does the role of Completion date: June 1994. banks in the economy become less important as stock markets develop, or are there complementarities be- tweenbanksand stockmarkets sothatbanks flourishas Stock Market Development and Financial stock markets develop? The research will also docu- Intermediary Growth ment the evolution of and interactions among stock. markets and pension fumds, mutual funds, and other Ref. no. 678-37 nonbank financial intermediaries. This documentation Empiicalevidencesuggeststhatfinancialservices- will represent a first step toward charachtizing finan- mobilingsavings,managingrisk,aUocatingresources, cial sector development andfacilitatingtransacfions-4mportantlyinfluenceand Third, theprojectwill examine conceptuallyhowthe are importantly influenced by economic development debt-equity ratios of firms and economic growth vary A larger literature demonstrates that financial cises, withtheleveloffinanciaidevelopment,particularlythe such as widespread bank failures and stock market level of stock market development. The research will coUapses, can impede and even reverse economic ad- forge new analytical insights into the joint determira- vances. In the light of these observations and experi- tion of the capital structures of firms and economic ence, the World Bank in the 1980s began devoting an growth by studying how the investment decisions of increasingamountofattentiontotwoissues.improving firms are linked to their debt-equity choices. Since the the financial systems of countries and coping with fi- level of stock market development influences debt- nancial crises that threaten economic prosperity. equity choices, the efficiency of investment depends on ThroughoutthatdecadeWorld Bank--supported pro- the level of stock market development Thus, the level of grams focused on core financial them-loosening in- stock market development and the resultant corporate terest rate controls, reducing government involvement finaning decisions are linked to the efficiency of capital in credit allocation, and rationalizng the taxation of allocation and to overall economic growth. financial intermediaries-and on managing banldng Fourth, the research wil look at how the financing failures, rehabilitating isolvent banks, and training patterns of firms change as stock markets develop. As bank managers and supervisors. More recently, World stock markets develop and firms raise more capital by Bank programs have stressed the development of capi- issuing shares, will the debt-equity ratio of firms fall, or tal markets in general and stock markets in particular. will borrowing also increase, so that the debt-equity Yet there has beenlittle work on measuring the level of ratio either remains constant or nses? The study will stock market development and comprehending the re- examine how stock market development influences the lationbetweenstock marketdevelopmentand the func- compositionofcorporatefinancingusingacombination tioning of financial intermediaries, of data-the data on firms recently assembled by the This research project seeks to improve our under- International Finance Corporation, the IFC's data on standing of the role of stock markets in financial sector emerging markets, and the measures on stock market developmentby constructing measures-and therefore development constucted in the first part of the study. criteria-of stock market development, relating these Improvingour undersbanding of the link between stock measures to the development of financial mediar- market development and corporate financing will im- 121 Domestic Finance and Capital Markets prove our comprehension of the interactions between are well developed and play an important role. The stock market development and intermediary activities. second Is relationship banking, which Involves close And dissection of the relationship between stock market ties between borrowers and the banks. The third Is the development, intennediary behavior, and corporate fi- banking system of planned economies, in which the nancing decisions will represent an important step to- banks'mainrole is the allocation of resources according ward a more complete understanding of how the process to national plans. of financial sector development affccts investment and The Japanese main bank system JMBS) is a unique efficiencyat the firm level, and amorepredse view of how fourth model. It combines an Intimate relationship with financial services affect economic development the client with a system in which the main bank acts as Responsibility: Policy Research Department, Finance a syndicator of loans to its clients with other banks and and Private Sector Development Division-Asti financial institutions. This permits banks to help their Demirgilc-KuntandRossLevine.WithRobertKorajczyk, clients make decisions during periods of financial dis- Northwestem University; Bruce Smith, Comell Univer- tress, and also permits reciprocal relations amongbanks sity; and Vojislav Maksimovic, University of Maryland. inthe appraisal monitoring, and supervision of assisted Completion date: December 1994. enterprises. This research project carried out a theoretical and empirical analysis of the JMBS and the functions it Market Access Restrictions and performedduringjapan'sacceleratedindustrialization. Price Behavior And it assessed the relevance of the JMBS as an institu- tionalmechanism forpromoting rapid industrialization Ref. no. 678-99 in the developing economies and the transforming so- In theory, the stock rnarket rewards investors with cialist economies, particularly in the private sector. financialreturns for the capital thattheyhave atrisk But The research compared the Japanese model with the in addition, shareholders also receive some degree of German universal banking system, the Korean banking control over management for the risk that they bear. system,aLatinAmericanbank,and theIndianbanking Fearful of giving too much control to foreign investors, system. A set of papers prepared for the proect and emerging-market regulators often control the voting collected in a volume for publication examine key fea- rights of foreign investors. That is the case in Mexico, hures of the JMBS and its evolution; discuss how the whereforeigninterestsarelimitedto49percentformost main bank system works; detail comparative country publidy listed Mexican companies. studies of relationship banking; and discuss the rel- This research project uses daily price and volume evance of the JMS to other countries, lessons learned data on shares listed on the Bolsa Mexicana de Valores from the analysis of the JMBS, and implications for to investigate the effects of foreign ownership restric- developing and transforming economies. tions on the behavior of share prices. The research ResponsbiltEconon-icDevelopmentlstitute,Stud- involves econometric modeling of price behavior and iesandTrainingDesignDivision-Hyung-iKim. With volume behavior and how they are affected by changes HughPatrick, ColumbiaUniversity. The Center of Japa- in corporate and market factors. The results should be nese Business and Economy of Columbia University, helpful to regulators in the Mexican market and other and the Economy of Japan Program at Stanford Univer- emergig markets who are concemed about the effects sity contributed staff time. of foreign portfolio investment and want to know how Complektion date July 1993. their attempts to control it will be reflected in stock Report: market price behavior. Ahko, Masahiko, and Hugh Patridc, eds Fothcoming. The ResponsIbIity:InntemationalFinanceCorporation,Eco- Jmnes Main Baisk Syem and Its Relance fr Deeloping and nomics Department-Jack Glen. With Ian Domowitz, Thnmsnrmng Ennies. New York Oxford University Press. NorthwestemUniversity; and AnanthMadhavan, Uni- versity of Pennsylvania. Completion date: June 1995. Meeting the Financial Needs of Ghana's Small- and Medium-Scale Enterprises The Japanese Main Bank System The purpose of this study was to investigate the and Its Relevance for Developing capacity of the financial system in Ghana to meet the and Transforming Economies needs of small- and medium-scale enterprises (SMEs). Bysurveyingthenature of demand forfinanceby SMEs Thearethree main models forbankingThe firstis and investigating the constaints on both formal and theAnglo-Americanmodel,inwhichsecuritiesmakets informal financial institutions, the research sought to 122 Domestic Finanace and Capital Markets draw conclusions on ways that Ghana's financial devel- cients, or the acceptability of substitute collateral to opment could be hastened to facilitate growth of an landed property. efficient, dynamic private sector. Despite the SMEs' strong interest in credit, conuner- Ghana has liberalized its financial policies and re- dal banks'profit orientation may deter them from sup- structured its banking system as part of its economic plying credit to SMEs because of the higher transaction recovery program. In principle, the removal of interest costs or risks Involved. The study's finding suggest rate ceilings and of directed allocation of credit should three preliminary lessons. First,priority should be given establish more suitable conditions for SWM lending. But to the working capital needs of SMEs. That would help evidence indicates that there Is little increase in such to keep the transaction costs low, because banks would credit. While SMEs cite lack of access to finance as an have to concenitrate on the entrepreneur's track record important constraint on their operation and growth, rather than on project appraisal, which is difficult and bankssuggestthatapplications fromcreditworthySMEs costly. Second, an appropriate point of intervention for are insufficient to utilize those resources that are avail- SME investment loans would be when enterprises need able. This may result in part from the banks' insistence significant external finance to graduate to a new level. on propertyascollateral, given the difficulty they face in And third, although under the existing procedures few assessing creditworthiness through other methods. bankable SMEs come forward, a change in procedures In one component of the study interviews were con- affecting authority and incentives at the bank branch ducted at a range c. financial institutions to assess their level may yield a greater volume of SME projects. relative abijities to provide financial services to SMEs. Responsibilily: Private Sector Development Depart- The interviews focused on the institutions' access to ment-Hemamal; Hlettige and William F. Steel; and information on small-scale entrepreneurs, the transac- Western Africa Department, Industry and Energy Op- tion costs involved, and the risks they face. For banks, erations Division. With Ernest Aryeetey and A. Baah- the transaction costs of SME lending are high because it Nuakoh, University of Chana; and Tamara Duggleby. is difficult and time-consuming to obtain the informa- The National Board for Small-Scale Industries, Ghana, tion needed to appraise SME loan proposals. Further, provided financial support. perceived risks are high because of economic uncer- Completion date: September 1993. tainty, the high turnover rate among SMEs, and the lack Reports: of risk-sharing arrangements. Banks' deposit structures Aryeetey, Emest, A. Baah-Nuakoh, Tamara Duggleby, are predominantly short-term, and they remain ori- Hemamala Hettige, and Wiliam F. SIt.± & Meiting the ented toward short-term commercial finance. Financal Needs of Small- and Mediuim-Sized Enterprises in The second componentconsisted of a survey of more Ghain." Draft than IoD firms of different sizes. SMEs in Ghana make Daah-Nuakoh, A., and William P. Steel. "Background Paper on little use of informal financial mechanisms, either as %MB Demand for Finunce Ghana." Uraft. savers or as borrowers. This is in part because the Duggleby, Tamara J." Best Practic in Innovafive Smal informal savings schenmes involve relatively small sums Enterprise Fnance Institutions." World Hank, compared with the amounts required by SMEs. Borrow- Washingon, DC. ing from moneylenders is rare because their rates are Duggleby, Tamara J., Ernest Aryeetey, and William R. SteL high. So mostSMEs finance their operations and growth 1992. "Formal and Infonnal Finance for Small Enterprises in from internal funds. Although many would have diffi- Ghana." Indusiry and< Energy Depaitment Wofting Paper, culty using and repaying credit, someSMEs withstrong Industry Series Pape r 61. World Dank, Washingto, DC. demand and growthpotential could benefitfrom greater Hettige, Hemamala. 19 oa 'Toward Finarcial Deepening in Sub- access to credit at rates dose to those prevailing in the Sahan rAfica: An Analytical rFramnewort" World Bank, formal financial sector. Washington, DC. Research findings indicate that efforts to expand finance available to SMEs through financial liberaliza- tion and the creation of an SMB creditprogramhave not Commodity Risk Management been sufficient to generate substantially more lending to SMEs. Two sets of forces (monetary tightening and High exposure to volatiity in primary commodity pressure to restructure banks) have worked against prices continues to bedevil many developing countries SME lending since lberalization. In tightening their that stil depend on a few comnmodities for most of their procedures tD improve performance, banks have cen- exports. Commodityprice fluctuations affectstate bud- tralized credit analysis, decisionmaking, and supervi- gets and local companies' cash flows and make future sion of loans; this centralization is not conducive to revenueslesspredictable.indevelopingcountriesinthe lending to SMEs. In addition, there has been no im- process of liberalization, farmers and local traders are provement in their information base on projects or exposed to international pnce volatility. In the past, 123 Domestic Finance and Capital Markets several governments intemalized this extemal price World Bank, International Economics Department, Washing- volatility. Butwith market liberalization,domestic mar- ton, DC ket participants need to deal with price volatility. Claessens, Stijn, and Panos Varangis. 1991. "Hedging Crude Oil Market-based financial riskmanagementinstruments Imports In Developing Countries." Policy Research Working could provide a way to manage commodity price risks Paper 755. World Bank, International Economics Depart- in developingcountries. A technical assistanceprogram ment, Washington, DC. in the International Economics Department is helping . 1992. "Developing Countries Can Mitigate Exposure to developing countries adopt such instruments for com- Oil Price Shocks with Energy Futures, Options." NYMEX modity risk management. This research aims to support Ene7gy in the News (Winter 1991/92):28-31. these technical assistance efforts. First, it will further _ . 1992. "Energy Futures, Options Can Help Developing investigate circumstances in which it may be useful to Countries Manage Long-Term Energy Price Risk" NYMEX use domestic stabilization schemes in conjunct:on with Energy in the New (Spring):34-37. financial hedging instruments. Second, it wilH evaluate _ . 1994. "oil Price Instability, Hedging, and an Oil the possibility of substituting electronic trading of for- Stabilization Fund: The Case of Venezuela.' Policy Research ward contracts for the (absent) futures markets for some Working Paper 1290. World Bank, International Econonics commodities. Andthird, itwillinvestigate riskmanage- Department, Washington, DC. ment options for developing countries in the process of . Forthcnming. "Managing Energy Price Risks: Emerging lberalizing their internal marketing systems. Regional Markets." In Energy Price Rksk London: RISK Over the past two years this research has concen- Coleman, Jonathan R, and Donald F. LArson. 1991. "Tariff- trated on the role that financial risk management instru- Based Commodity Prie Stabilization Schemes in Venezu- ments can play in hedging commodity price risks. An ela." Policy Researdh Working Paper 611. World lank, important role and an immediate application in manag- International Economics Department, Washington, DC ing price risks over the short and long term can be seen Coleman, Jonafian R, and Ying Qian. 1991. "Managing in the participation of developing countries in trade in Financial Risks in Papua New Guinea: An Optimal Exterd petroleum and petroleum products-whether as ex- Debt Portfolio."Policy Research Working Paper 739. porters or as importers. Other research pointed to the World Bank, International Economics Departmnent, benefits of using the new financial instruments-com- Washingtorn, DC. modity swaps and commodity bonds-to manage the Lason, Donald F. 1993. "Policies for Coping with Price risks associated with the foreign debt portfolios of de- Uncertainty for Mexican Maize." Policy Research Working veloping countries. Paper 1120. World Bank, Intemational Economics Depart- Responsibity: International Economics Department, ment, Washington, DC. International Trade Division-Panos Varangis, Ronald . 1994w "Copper and the Negative Price of Storage." Policy C. Duncan,YingQian,Takamasa Akiyama, and Donald Reseach Working Paper 128. World Bank, Intermational Larn; and Europe and Central Asia, and Middle East Economics Department, Washington, DC. and Norih Africa Technical Department, Private Sector larson, Donald P., and Jonathan Coleman. 1991. "The Effects of and Finance Team-Stijn Claessens With Tom Scott Option-Hedging on the Costs of Domestic Price Stabilization Sparks Commodities. UNCTAD, the Tokyo Sugar Ex- Schemes." Policy Research Working Paper 653. World Bank, change, and the Federal Office for Economic Affairs, Intemational Economics Department,Washington, DC Switzerland, are providing financial support Privols, T., and Ronald C Duncan, eds. 1991. Commodity Risk Completion date: June 1994. Abnagemnt and Finance VoL 1. New York: Oxford Univer- Reports: sity Pres. Akiyama Takamasa, and Panos Varangis. 1991. "Price Qian, Ying and Ronald C. Duncan. 1994. "Optimal Hedging Stabilization for Raw Jute in Bangladesh." Policy Research Strate Revisited Aknowledging the Existence of Working Paper S13. World Bank, International Ecnomics Nonstatimoary Economic Time Series. Policy Research Depart_ent, iashington, DC. Working Paper 1279. World Bank. International Economics COaee, Stn, and Jonathan Coleman. 1991. "Hedging Departnent. Washington, DC. Commodity Price Risks in Papua New Guinea. Policy Satyanarayan, Sudhakar, Elton Thigpen, and Panes Varangis Reearch Working Paper 749. World Bank, Interational 199t 'Hedging Cotton Price Risk in Francephone Affican EAonomics Department, Washington, DCr Countries." Policy Research Working Paper 1233. Claeses, Stjn, and Ronald C Duncm, eds 1993. Commodity World Bank, International Economics Deparbtent R*Magm udan rFinnce. Vol. 2. Baltimore: Johns Washington, DC. Hopkns Univesity Pres. Satyanawayan, Sudhakar, and PanosVarangi 1994. -An Efficient Ca..', StijiI, and Ying Qian 1991. "Risk Management in Frontier for International Portfolios with Commodity Assets." Sub-shara Africa." Policy Reearch Working Paper 593. Policy Research Working Paper 1266. World Bank Intema- 124 Domestic Finance and Capital Markets tional Economics Depariment, Washington, DC. (Also Buckley, Robert, Barbara Lipmsan, and Thakoor Persaud. 1993. presented at the International Symposium on Economic 'Mortgage Design under Inflation and Real Wage Uncer- Modeling, World Bank, Washington, DC, June 22-24.) tainty: The Use of a Dual Index Investnentf World Scotl, Tom, Takamasa Akiyaina, Donald Larson, and L Rutten. Developmnnt 21 (3):455-64. 1993. 'Risk Management in Southeast Asia." Joint World Bank-UNCTAD study. Varangis, Panos, Elton Thigpen, and Sudhakar Satyanarayan. Outreach and Sustainability of Six Rural 1994. "The Use of New York Cotton Futures Contracts to Finance Institutions in Sub-Saharan Africa Hedge Cotton Price Risk in Developing Countries." Paper presented at the Cotton Econiomics and Marketing Confer- This study reviewed the performance of six rural ence of the 1994 Beltwide Cotton Conference, San Diego, finance institutions inSub-SaharanAfrica: the Coopera- Califomia, January 7-8. (Also forthcoming as a Policy tives d'epargne et de credit in Togo, the Credit Unions Research Working Paper, World Bank, Intemational in Cameroon, the Smallholder Agricultural Credit Ad- Economics Department, Washington, DC.) ministration in Malawi, the Banques populaires in Rwanda, the Caisses de credit agricole mutuel in Benin, and the Credit solidaire in Burkina Faso. All six institu- Housing Finance tions were identified in consultation with the Africa Regional Office of the World Bank The primary crite- In most developing countries relatively little mort- rionfortheselectionofaruralfinanceinstitutionwasits gagecreditis suppliedvoluntarily, inlargepartbecause performance in outreach and sustainability. These rural of the high cost of enforcing contracts, a form of transac- finance institutions were selected because, in the con- tion cost. In most countries it is the cost of pstcontract text of widespread failure of rural finance institutions, governance rather than the ex ante cost of producing they exhibit modes of operation that have been rela- contracts that explains the restrained supply of mort- tively successful and could be helpful in designing gage credit This is an important distinction because ex future rural finance institutions in Sub-Saharan Africa. ante costs are dictated by technological conditions- Responsibility: Agriculture and Natural Resources De- that is, the nature of the production function-and thus partmnent, Agricultural Policies Division-Jacob Yaron. little can be done to change these costs. The costs of With Marc Gurgand, Ecole Normale Superieure and governance, however, are more amenable to change. So DELTA; and Glenn Pederson, University of Minnesota. if there are significant gains from reducing these costs, Completion date: June 1994. institutional reforms may help realize them. Report: This research found that in the lowest-income coun- Gurgand, Marc, Glenn Pederson, and Jacob Yaron. 1994. tries the ex ante transaction costs of providing housing Outreach and Sustainabil.fy of Six Rural rinancE Instituti2ns in finance are probably sufficiently high per dollar of loan Sub-Saha rn Africa. World Bank Discussion Paper 248. that low levels of demand explain the relatively smail Washington, DC. size of this sector. But in most other devdoping coun- tries housing finance systems could grow more sponta- neously and rapidly if there were more effective ex post Effectiveness of Credit Policies contract enforcement procedures. This growth would in East Asian Countries improve the efficiency of financial systems and reduce the distortionsin theeconomy. So theeconomic benefits This project aims to assess the effectiveness of credit of reducing transaction csts in this sector are likely tobe policies in East Asia. It examines the theoretical under- significanL pinnings of government intervention in credit alloca- Responsibility:Transportation,Water,andUrbarDe- tion, reviews the implementation of credit policies in velopmentDepartrnent,UrbanDevelopmentDivision- fourAsiancountties,and undertakesaneempiricalanaly- Robert M. Buckley; and Latin America and the Carib- sis of credit policy in Japan based on a large, specially bean, Country Department III, Infrastructure Opera- constructed data base. tions Division-ThakoorPersaud. TheFederal National The projecthas found thatdirected creditpoliciescan Mortgage Association participated in the research. overcome market constraints in providing extemal fi- Completion date: June 1994. nance to industrial and exporting firms and can facili- Reports: tate the phasing out of declining industries. To be effec- Buckley, Robert. 1994. "Housing Finance in Developing live, however, such policies should be of limited scope, Countries: The Role of Credible Contracts' Economic size, duration, and subsidy, they should be based on Development and Cullura Changee42(2)317-32. economic criteria, and they should be supported by 125 Domestic Finance and Capital Markets well-functioning monitoring systems. In the absence of . 1994. "The Role of Credit Policies in Japan and Korea." these conditions, they are more likely to have damaging Finance and Development (March). effects by distorting the functioning of financial mar- Vittas, Dimitri, and Akihiko Kawaura. 1993. "Policy-Based kets. Detailed empirical work on the effectiveness of Finance and Financial Sector Development in Japan." World credit policies in Japan is continuing and is expected to Bank, Fnancial Sector Development Department, Washing- be completed soon. ton, DC Theproject's main findings,especially thosefrom the Vittas, Dimitri, and Bo Wang. 1992. "Credit Policies in Japan workon Japan and the Republic of Korea, were incorpo- and Korea: A Review of the Literature.' Policy Research rated into the World Bank's Policy Research Report The Working Paper 747. World Bank, Washington, DC. East Asian Miracle. In addition, findings were presented Xdao, Geng, amid Meizheng Xu 1993. "Policy-Directed Lending at a World Bank conference in February 1993 and at a and Economic Transition in China." World Bank Financial conference in Stanford in October 1993 on the "East Sector Development Department. Washington, DC Asian miracle." A conference will also be organized in Japan or another East Asian country to disseminate the project's complete findings. Financial Structures and Development Resposibility: FinancialSector Development Depart- ment-Dimitri Vittas; South Asia, Country Deparinentl, Countries differ with respect to their financial struc- Country Operations, Industry and Finance Division- ture (the types of financial instruments and financial Akibiko Kawaura; and Policy Researdc Departnment, Fi- institutions in existence) and with respect to the size of mawe and Private Sector Development Division-Bo the financial sector relative to the rest of the economy. Wang With Charles Calomiris, University of Illinois; But how do financial systems change as economies CharlesHlmmelberg,UniversityofChicago;YoonJeCho, develop? This research project will measure and study Korea Tax Institute; Joon-Kyung Kim, Korea Develop- the evolution of financial structures in a sample of ret Institute; Thomas Hellmann, Stanford University; countries over the past three decades. GengXiao, Un.iversity of Hong Kong; Srinivasa Madhur, The researchwill firstdocumenthow financialstruc- Planning Commission, India; Jene Kwon, Northem mi- tures differ across countries and how they evolve with noisUniveisity,andKozoKato,TsuiomuShibata,Koichiro economnic development. It will then explore and try to FukuL Aiichiro Mogi, Yuicbiro Miwa, Yoshikaz Niwa, explain the relations between different patterns of fi- Nobuhiko Ichilcawa, and Masahiro Furuta, japan Devel- nancial development and economic growth. The study opment Bank/Japan Economic Research Institute. will cover a sample of industrial countries and of devel- Completion date: December 1994. oping countries in Africa, Asia, Latin America, and the Re,orts Middle East. Calouiris, Charles W., and Charles P. Himmelberg. 1994. To allow a comparison of financial structures at "Directed Credit Programs for Agriculture and Industr. differentbenchmark dates, thestudy iscompilinga data Arguments from Theory and Fact" In Proeedings of the set on financial institutions for each country in the Worid Bank Annud Conference on Development Economics 1993. sample through time. Data are being collected on assets Washington, DO World BaiT of different types of financial intermediaries (central Cho, Yoan Je, and Thomas Hellmann 1993. "The Govenment's banks, deposit-money banks, nonbank financial institu- Role in Japanese and Korean Credit Markets: A New tions, insurance companies and pension funds, and Irstitutional Economics Perspective?' Policy Research development banks). Where possible, distinctions are Working Paper 1190. World Bank, Financial Sector Develop- made between private and public ownership and do- ment Depatment, Washington, DC. mestic and foreign ownership. The results of this re- Cho, Yoon Je, and Joon-lCyung KMni 1993. -Credit Policies and searchshould help countryecononistsdiagnoseanoma- Industrialization of Korea?' World Bank, Financial Sector lies in their countries' financial systems compared with Devlopment Departmt Washington, DC countries at similar levels of economic development Japan Development Bank, Japan Economic Research Institute, Responsibility: Policy Research Department, Finance Koo Kato, and Tsutomu Shibata. 1994. Policy-Bawd Finm:w and Private Sector Development Division-Asli 77e Ezpence of Posowa ppan. World Bank Discussion Paper Demirgiis-Kunt and Ross Levine. With Bo Wang. 221. Washingo, DC. Completion date: December 1994. Madhur, Srinivasa. 1993 -Dieted Credit Policy in India. World Bank, Financ Sector Development Departmenl, Whgon, DC Contractual Savings in Selected Countries Vintb, Dimi and Yoon e Cxo. 1993. "Credit Policies: Lessons fun East Asia.' Wodd Bank, Financial Sedor Development Contractual savings institutions (a category that in- Dprme Washbington, DC. cludes pension funds and insurance companies) can 126 Domestic Finance and Capital Malrkets make a significant contribution to the mobilization of for Eastern Europe. World Bank, Financial Sector Develip- long-term savings and to the development of debt and mnet Department, Washington, DCr equity markets. This project reviews the progress of _ . 1994. "Policy Issues in Contractual Savings in South these institutions in both industrial and developing Africa!'World Bank, Fmancial Sector Development countries, assesses their effect on the economy, and Departnent, Washington DC evaluates policies designed to promote them The first Vittas, Dimiri, and Augusto Iglesias. 1992. The Rationale and part of the project has focused on policy issues, and the Performance of Pemnal Pension Plans in Chila" Policy second partwill cover experiences in selected countries, Research Working Paper 067. World Bank, Financial Sector induding Argentina, Chile, Costa Rica, Hungary, Ma- Development Department Washington DC laysia, Singapore, South Africa, and Tunisia, as well as Vittas, Dimitri, and Michael Skully. 1991. "Overview of Conttac- Switzerland and other OECD countries. tual Savings Institutionse World Bank, Washington, DC. The projecthas found thatcontractual savings do not Wright, Kenneth NE 1992. he Life Insurance Industry in the have a clear effect on the rate of saving but shift the United States AnAnalysis of Rcmomicand Regulatory composition of savings toward long-term financial as- LIsues?' Policy Research Worlidng Paper 857. World Bank, sets. They stimulate the modernization of secarities Fmancial Sector Development Deparbent, Washingtn, DC markes and the development of more efficient tech- niques of risk management. They require a supportive regulatory environment that protects the interests of Employee Stock Ownership Plans: Rationale, savers, prevents the use of contractual savings as cap- Practice, and Experience tive sources for funding budget deficits, and minimizes labor market distortions. Employee stork ownership plans (ESOPs) are com- The papers produced in conjunction with the project mon in the United Kingdom and the United States. will be collected for publication in a book Many transitional economies (including many of the Responshility:Financial SectorDevelopmentDepart- countries of the forner Soviet Union) have significant, ment-Dimitri Vittas and Monika Queisser; and Policy ongoing employee ownership programs. And some Research Department, Finance and Private Sector De- developing countries are planning ESOPs or are m the velopmnent Division-Asli Demirgit,-Kimt, Anita process of introducing them, often in the context of the Schwarz, and Robert Palacios. privatizationofstate-ownedenterprises.Yetdespitethe Cornptetion dat: June 1995. widespread use of ESOPs, the concept of these plans is Reports: often poorly understood. Eavis, Phfilp. 1993. The Structure, Regulaion, and Perfor- This research reviews the ESOP concept, including mance of Pension Funds in Nine Industrial Countries." issues of particular concern to developing countries. It Poliy Research Working Paper 1229. World Bank Financial addresses thepolicyrationalebehind thegrowinginter- Sector Development Dpartment, Washingtn, DC est in ESOPs, summarizes their core opemting prin- DemirgdC-Kunt Ash, and Anita Schwarz. 1994. Pension ciples, addresses design issues, reviews a range of po- Refarn in Costa Rica." World Bank, Poliy Research tential financing alternatives, and suggests a variety of Departent, Washington, DC policy initiatives. It also covers many of the common Grace, Martin F., and Michael NL Barth. 1993. "The Regulation issues encountered in operating ESOPs and summa- and Structure of Monlife Inurance in the United States." rizes the Lessons leamed through epeiene in diffeent Policy Research Working Paper 1155. World Bank, Financial countries. Sector Development Departnent Washington, DC Properlydesignedand implemented,employeeshare Vittas, Dimitri. 1992. "Contractual Savings and Emerging participationcanprovideanreffectivemethodforachiev- Securities Markets." Policy Research Workin Paper 858. inga variety of economic, political andsocial objectives. World Bank, Financial Sector Development Department But ESOPs can vary greatly. Some may be little more Wahington, DC. than profit-sharing arrangements implemented in con- .1993. "Options for Pension Reform in Tunisia." Policy junction with a managementbuyout Others include an Research Worldng Paper 1154. World Bank, Financal Sector element of permanent majority employee ownershp Development Departmen, Washington, DC and control. Some provide free shares, others offer _. 1993. "The Simple(r) Algebra of Pension Plan" Policy discount purchases, and others provide shares that are Reseach Woring Paper 1145. World Bankr, Fiancal Sector purchased solely from the sponsor companry's future Development Department, Washington, DC. eamings. Some distribute shares to employees simulta- _.1993. Swiss CHilanporc The Way Forward for Pension neDusly with their purchase; others retain the shares for Reform?" Policy Research Worlkng Paper 1093 World Bank, distribution until retirement These designoptions offer Finanal Sector Development Department, Washington, DC enormous latitude, both for public policy goals and for . 1994 -The Argentine Pension Reform and its Relevance company (and employee) creativity. 127 Domestic Finance and Capital Markts The primary strength of the ESUP concept is its enterprise has an ongoing economic relationship (for flexibility and adaptability. Originally envisioned and example, suppliers, distributors, and customers). The designed as an ownership-broadening technique of cor- ESOPconcept can also be adapted to encouragebroadly porate finance, the ESOPcontinuesto attractthe interest based ownership participation beyond the employee of policymakers worldwide. Each ESOP may require a population. design tailored to fit unique economic, political, and Responsibility: Cofinancing and Financial Advisory commemial circumstances. Certain principles can help Services Department, Private Sector Development and guide the waf, but experience suggests that the final PrivatizationGroup-KevinYoung,BanerjiShyamadas, details of each ESOP initiative are invariably unique. and Jamal Saghir. With Jeffrey Gates. Finally, ESOP financing techniques may be com- Completion date: June 1996. bined with broader ESOP-like financing techniques to Report: assist in creating ownership not only by those directly Gates, Jeffrey, and Jamal Saghir. 1994. 'Employee Stock employed by an enterprise but also by those employed Owner.hip Plans: ationae, Practice, and Experiw e." by another company (or companies) with which the Draft 128 TRANSITIONAL ECONOMIES Industrial Reforms and Productivity * The type of ownership under which an enterprise in Chinese Enterprise operates (state-owned, collective, and town-village en- terprises) hasa significanteffecton the level and growth Ref no. 675-38C rates of total factor productivity. The objective of this research was to identify and * The greater the freedom to lay off and recruit analyze the factors affecting the productivity and effi- workers that is granted to an enterprise under labor ciencyof Chinese enterprises and toevaluate theimpact market reforrns, the greater the total factorproductivity of industrial reforms in China. The value of the activity of that enterprise. derives from its assessment of the effect of ongoing * The relative efficiency of capital is related to the reforms in the industrial sector. The project also sought sourceofinvesbnentfinance(governmentbudgets,bank to increase the research capacity of the collaborating loans, or retained earmings). Chinese institutions. * The degree of domestic market competition is The project addressed several research and policy positively related to the levels and growth rates of total questions: To what extent and in what industries has factor productivity reform increased total factor productivity? Why does * The degree of openness to foreign trade-as mea- productivity, growth, and efficiency differ among dif- sured,first.bygreateraccesstoforeignechangethrough ferent types of enterprises, and how can the difference higher retention rates and, second, by a lower peroent- be accounted for? How do different policies influence age of exports and imports through governmentforeign the prodtuction and investmentbehavior of enterprises? trade corporations-is positively related to the level The project used enterprise-level panel data sets for and growth rates of total factor productivity. up toL,200firmsinChinafortheperioduptol989,and * Over time, there will be a convergence of factor for 1,500 firns for 1990, to analyze industrial enterprise returns among industries as evidence of the increasing behavior issues. The data, obtained from three collabo- role of factor and product markets. rating Chinese institutes, cover all industry branches, * The incidence of product innovation is positively ownership types, and firm sizes and allow a detailed related to the degree of domestic and foreign competi- comparative analysis of productivity changes. tion. The first phase of the project focused on data collec- The project has produced 35 workingpapers, a num- tion and organization. A first resurvey was carried out ber of which have been published in journals or edited during the fall of 1990 to update all the existing survey volumes; and an edited volume of 20 contnbuted pa- data to 1989. But the existing data did not have enough pers wiU be published later this year. Informal work- observationsoncollectivesandtown-villageenterprises, shops were held throughout the project to discuss the and data on some key industrial branches, especiafly research findings. heavy industry, were missing. To correct these short- Responsibility: Policy Research Department, Transi- comrngs, a unified survey was designed with the assis- tion Economics Division-lndeajt Sinvh, Alan Celb, tance of the collaborating institutes. This survey, carried Dilip Ratha, and Vesasa etrovic East Asia and Pacific, out in June 1991, updated industrial information for Country Departfnentfl,OfficeoftheEDirectorandCom- 1,000 enterprises up to 1990, induding 500 new enter- tryOperationsDivision;andResearchAdvisoryStaff- prises (in place of 400 enterprises that had reported ShahidYusuf.WithV.KChetty,IndianStatisticalInsti- implausible data). tute; Gary Jefferson and John Zhao, Brandeis Univer- Thesecondphaseoftheprojectfocusedonempirical sity; Xu Wenyi, Brandeis University and Wuhan Uni- analysis of these data sets. Key hypotheses and issues veisity, Thomas Rawski, University of Pennsylvania, relatingtotheeffectofspecficrefornswereempirically Pittsburgh; Richard Day, University of Southem Cali- investigated, using the firm-level data. Examples of fornia; Zvi Griliches; and Zhang Xeujun. The Chinese these hypotheses and issues are as follows: Academy of Sciences, the Research Center for Rural * Themaagementcontractsystemunderwhichan Development of the State Council, and the Economic enterpnse operates has a significant effect on the level Systems Reform Institute participated in the research. and growth rates of total factor productivity. Completion date: June 1994. 129 Trnsitional Econmies Repors: RawskL Thomas G. 1993. "How Fast Has Chinese Industry Chen, Kang. 1992. "Te Failure of Recentralization in China: Grown?" Policy Research Working Paper 1194. World Bank, nterplays among Local Governments and the Center. In Policy Research Department, Washington, DC. Arye Hillman and Branko Milanovic, eds, Tmnsitionfium .1993. 'An Overview of Chinese Industry in the 1980s." Sodaism in Eaten Europe: Domestic Restructuring and Foreign . 1993. "Progress without Privatization: The Refonn of Trade. Washington, DO World BankL China's State Industries." Zhongguo shtlgchanlu biandong Chen, Kag Inde4jit Singh, and Gary IH Jefferson. 1992. qushi zhi yanjiu (Studies an the Trend of Productivity in Lessons from China's Economic Reform n. ournal of China). Beijing: Shehui kexue wenxian chubanshe. (Also Corn ptiv Econmics 16-201-25. published in Vedat Milor, ed., The Political Economy of Chelty, VJL, Dilip Ratha, and Indeijit Singh. 1994. 'Wages and Primlizatlon and Public Enterprise in Post-Communist and Efficiency in Chinese Industry." Refonming Communist States. Boulder Lynne Rienner, 1994.) Fan, Qimiao, and Mark E. Sdhaffer. 1992. "Enterprise Reforms in . 1993. 'What is Jingii Xiaoyi (Economic Effect)?" lingji Chinese and Polish-Owned Industries.' yanjiu (Economic Research). Gelt, AlanrGary lefferson, and Indejit Singh. 1993. "Can . 1994. "Chinse Industrial Reform: Accomplishments, Communist Economies Transform Incrementally? The Prospects, and Implications." Experience of China." Policy Research Working Paper 1189. Sing4 IndeiJiL 1991. "China and Central and Eastern Eumpe Is World Bank, Policy Research Departnent Washington, DC. There a Professional Schizophrenia on Socialist Refonnr? Hswmh, rin-tun6g Thomas G. Rawski, and Kai-yuen TsuL 1993. Singh, Inderjil, and Kang Chen. 1993. "Industrial Productivity in 'The Impact of Reform on China's State Industry: A Socialist Economies." Regiona Perspective? In Zlungguo sbengchnnlu b Bndong Singh Inderjit, Geng Xiao, and Dilip Ratha. 1993. "Non-State qshi zhi yafjii (Studies -n the Trend of Preductvity in Enterprises as an Engine of Growth: An Analysis of China). Beijing: Shehui kexue wenxian chubanshe. Provincial Industrial Growth in Post-Reforn China.? jeffersom, Gary al 1991. "Sources of Gains in Allocative Xiao, Geng. 1990. "The Impact of Property Rights Struture on Efficiency.? Productivity, Capital Allocation, and Labor Inome in ___ 1993. 'Are OCina's RurDI Enterrises Outperforming Chinese State and Collective Enterprises." State-Owned Enterprises,? .. 1991. "The Economic Role of Chinese Central and Local Jefferson Gary 1., Mai Lu, and John Zhao. "Reforming Governnents: Challenges and Opportunities from the State Prperty Rights in Chinese Industry." and Non-State Industrial Enterprises." Jeffeson, Gary E., Dilip Rafha, Indenjit Singh, and John Zhao. _.1991. "Managerial Autonomy, Fringe Benefits, and "Comparative Investnent Behavior in China's Industrial Ownership Structure: A Comparative Study of Chinese State Enterprisesr" and Collective Enterprises." Jefferson, Gary H., and Thomas G. Rawski 1992. "A Theory of . 1991. "Property Rights Arrangenents and Industrial Economic Reform.' Productivity in China. ____ 1994. "Enterprise Reform in Chinese Industry." . 1991. "What Ls Special about Chirsi's Reforms?" Jeffeson, Gary H., Thomas C. Rawski, and Yuxin Zheng. 1992. Xiao, Geng, and Meizheng Xu. 1993. 'Policy-Directed Lending 'Growt, Efficiency, and Convergence in China's State and and the Economic Transition in China." Collective Industry." Economic Deudopment and Cultural Change 40(2)239-66. .1993. "Innovation and Reform in Chinese IndustryT A Enterprise Behavior and Economic Prlimina Analysis of Survey Data. Zhangguo shengchanlu Reform: A Comparative Study bandng qushi zi yajiu (Studies on the Trend of Productiv- in Central and Eastem Europe tly in China). Bijing; Sheui kexe wemxan chubanshe. .199. SInstitutional Change and Industrial Inwvation in Ref. no. 676-99 Tanstional Economies." The Czech Republic, Hungary, Poland, and Slovakia Jefferson, Gary a, and IndeiJit Singh 1993. Chin's state- are undertaking bold reforms as they move toward Owned Industrial Enterprises: How Effedive Were the market economies based or. a system of private prop- Reformsof the 1980s? A Revew of the Evidence." erty rights. Their transition is likely to be difficult for Jeffeson, Gauy a, and Wenyi Xu. 1990. "The Impact of Reforms several reasons. Factor markets are underdeveloped, an Social Enterprise in Trasition: Structure, Conduct and ownership rights and legal and commercial institutions Performance in Chinese Industry." founuflCoW tim are lacking, and there are tensions between the objec- Ecsmics 15:45-64. tives of structural change (requiring increased invest- _.1992. "Assessing Gains in Efficient Production among ments) and those of stabilization (requiring tight credit). Chin's Industrial Enterprises." Policy Research Working Atthe same time, these countries have been subjected to Paper 877. Word Bank4 Policy Research Depatment, external economic shocks-such as the collapse of the Washington, DC. Council for Mutual Economic Assistance (CMEA) trad- 130 Transitional Economies ing system, which has forced firms to find non-CMEA end, it will conduct surveys of more than 200 firms suppliers and to compete in international markets. representativeof themanufacturingsectorsintheCzech How industrial enterprises are responding and what Republic, Hungary, and Poland to augment the infor- is happening to their performance, viability, productiv- mation on enterprise behavior gathered in the project's ity, and efficiency are crucial questions on which the first phasewith data onproperty rightsandotheriinsti- successofthereformswill depend.Thisresearchaimsto tutional factors relating to reforms-data that are un- contnbute to the understanding of this adjustment and available through statistical offices. The impact of, and response-anunderstandingessentialforpolicymakers response to, new policies and systemic reforms are guiding the reform process. difficult to assess using macroeconomic data; the sur- The research is using firm-level data obtained from veys will permit the study to more. directly relate enter- the central statistical organizations of the Czech Repub- prise-specific information about institutional changes lic, Hungary, Poland, and Slovakia to explore six major and specific reforms to enterprise performance. thematic areas relating to enterprise adjustment and The project is designed to permnit comparisons with behavior in the industrial sector. (1) growth, productiv- parallel studies on China. ity, and efficiency of industrial enterprses; (2) indus- Responisibility: Policy Research Department, Trarsi- trial employment, labor market adjustment, and behav- tion Economics Division-Indeoiit Singh, Alan Gelb, ior of enterprises; (3) the effect of changes in corporate andVesnaPeh.ovic.WithMarekBelka,PolishAcademy gavemance and of privatization on enterprise perfor- of Scences; Zygmut Bienko, Polish Statistical Office; mance; (4) fiscal and financial aspects of firm behavior Jo-.eph Brada, Arizona State University; John Bonin, and their relation to macroeconomic stability; (5) devel- 'Vesleyan University; Saul Estrin, London Businkss opment of a theory of firm behavior in the transition; School; Ian FLschera, Czech Statistical Office; Stanisla - and (6) comparative experience and lessons from re- Gomulka and Mark Schaffer, London School of Eco- forms in different settings. nomics; Milutin Cristofic, Slovak Statistical Office; Jana The research is tracking reforns over a period of four Matesova, Czech Management Center; Jan Sveinar, years and evaluating their effect on industrial enter- University of Pittsburgh and CERGE/EI; and Adam prises. Analytical studies are being carried out to she i Torok, Hungarian Academy of Sciences. Collaborating light on the effect of economic reforms on enterpr'se in the project arn the Research Center of Central Plan- behaviorand response. Data on more than5,000 firu sin ning, Poland; Research Institute of Industrial Econom- each country for 1980-90 and 1991-94 will be us- d to ics at the Hungarian Academy of Sciences, Hungary; estimate parameters for the levels and rates of char ge of Center forEconomic Researchand GraduateEducation such performance indicators as output, sales, emrploy- at Charles University, Czech Republic; Czechoslovak ment, profitability, indebtedness, and total factsr pro- ManagementCenter,CzechRepublic;LondonBusiness ductivity and the components of technical and alloca- School; Universidade Catolica Portuguesa, Portugal; five efficiency of firms across industries, regions, and and Reforme et Ouverture des Systemes (post) countries. These will then be related to key changes in Economiques at the University of Paris. The central institutional characteristics (ownership, management, statistical offices of the Czech Republic, Hungary, Po- and marketcompetition) and ineconoanicpolicie.4trade, land, and Slovakia are collaborating in the provison of prices, taxes, subsidies, and exchange rates) to measure data. The Japanese Grant Facility and USAID are con- the impact of key refonns and address key hypotheses. tributing funding to the research. Finally, the research will attempt to develop theories Completion date: December 1994. of enterprise behavior during the transition to a market Reports: economy aad test them using stylized facts developed Brada, Josef C. 1993. "Breaking Up Is Hard to Do: The Econom- from information drawn from the analytical results and ics of Creating hidependent Czech and Slovak Republics. the case studies of enterprises carried out in an earlier . 1993. -1he Transfornation from Communism to phase of the research. The research will try to isolate the Capitalism: How Far? How Fast?" effects of privatization. Differences in policy among the Brada, Josef C., and Arthur E. King. 1992. "Sequening countries will help-through cross-country compari- Measures for the Transformution of Socialist Economies to son-in understanding the relation between refonn Capitalism: Is There a 3-Curve for Economic Reforms?" programs and firms' responses. Econonics of Planning 25(1)37-53. (Also in K Poznanski, ed., The project will complement this analytical, econo- Stailiztuin and Tmnsformation of the Polish Ecanmy, Bostorc metric work with two additional research efforts. First, Kluwer, 1993.) it wiU carry out additional annual case studies of 12-15 Brada, Josef C., Arthur E King, and Chia Ying Ma. 1993. firmsineachcountry,focusingon firms'decisionmaking "Industrial Ecnomics of the Transition Determinants of in an effort to understand their adaptation to the newly Enterprise Efficiency in Czechoslovakia and Hungary?- emerging policies and market environment. And sec- Brada, Josef C., and A.M. Kutan. 1994. "Enterprise Responses to 131 Transilionnl Economies Prke and Output Shocks in Transitioning Economies: The ed., The Polilical Economity of Privalizution ol(id Public Ens eaprise Case of the Czechoslovak Machine Building Sector." in Post-Comuniisl and Reforingtg Commnnist Slates. Boulder Brada, Josef C, Inderjit Singh, and Adam Torok. 1993. Firms Lynne Rienner. Afloat and Firns Adrift: lndustry in the Hunigarian Transition. Johnson, Simon, Heidi Kroll, and Mark Horton. Forthcoming. New York: Sharpe. "New Banks in the Former Soviet Union: How Do They Estrin, Saul, Alan Gelb, and Indeqit Singh, guest eds. 1993. Operate?" In Anders Aslund and Richard Layard, eds., "Eastern European Enterprises in Transition I and II.L Reforming l/te Rus.ian Ecotomy. Eastern European cenonmirs, A lourmal of Teranslations Johnson, Simon, and Oleg Ustenko. 1993. "The Road to (Armonk, N.Y.) 31(i); 31(6). Hyperinflation: Economic Independence in the Ukraine, Estrin, Saul, Mark Schaffer, and Indejit Singh. 1992. "Enterprise 1991-93." Adjustment in Transition Economies: Czechoslovakia, Jorgensen, Erika A., Alan Gelb, and Inderjit Singh. 1990. "The Hungary, and Poland." Paper presented at the IMF/World Behavior of Polish Firms after the 'Big Bang': Findings from Bank Conference on the Macroeconomic Situation in Eastern a Field Trip." World Bank, Washington, DC. Europe, Washington, DC, June 4-5. (Forthcoming in MOCTI Kotrba, Josef, and Jan Svejnar. ForthCOming. 'Rapid and MOST.) Multifaceted Privatization: Experience of the Czech and Estrin, Saul, and Lina Takla. 1992. "Reform in Yugoslavia: The Slovak Republics." MOCT-NOMISMA. Retreat from Self-Management." In J. Selfires, ed, Induslrial Lehmann, Hartmut, and Mark E. Schaffer. 1992. "Productivity, Reform in Eastern Europe. Blackwell. Employment, and Labor Demand in Polish Industry in the Gomnulka, Stanislaw. 1991. "The Causes of Recession Following 1980s: Some Preliminary Results from Enterprise-level Stabilization." Comparative EcIonoic Studies 32(2). Data." _ . 1992. "Economic Reforms in Poland, 19119-91: Aims, Richet, Xavier, and Saul Estrin. Forthcoming. "Industrial Policies, and Outcomes." In A Clesse and R. Tokes, eds, Restructuring and Microeconomic Adjustment in Poland: A Preventing a New East-West Divide: TJe Economic and Social Cross-Sectoral Approach." Comparative Economic Studies. Imperatives of the Future Europe. Baden-Baden: Nomos Paris: Roses. VerlagsgeseilschafL Schaffer, Mark E. 1992. "The Polish State-Owned Enterprise .1992. "Economic, Social, and Political Problems in Sector and the Recession in 199D." Comparative Economic Economic Transformation: The Case of Poland, 1989-91." Studics 34(Spring)58-85. - . 1992. "Polish Economic Reform: Principles, Policies and . 1993. °The Enterprise Sector and Emergence of the Polish Surprises." In M. Keren and G. Ofer, eds, Trials and Fiscal Crisis, 1990-92." Policy Research Working Paper 1195. Transition: Economic Reorm in the Former Communist Bloc. World Bank Policy Research Department, Washington, DC. Westem Press. (Also published as "Polish Economk Reform, Singh, Inderjit 1991. 'China and Central and Eastern Europe: Is 1990-91: Principles, Policies, and Outcomes" in Cambridge There a Professional Schizophrenia on Sodalist Reform?" Iournal of Economics (16):355-72.) - 1991. "Industrial Restructuring in Socialist Economies in _ . 1993. "Budget Deficit and Inflation in Transition Transition: Some Preliminary Observations.' Economies." Singh, Inderjit, and Alan Gelb. 1991. "Public Enterprise Reforms .1993. "On the Design of Economic Policy: The Challenge in Transitional Economies." of Eastern Europe." In Horst Siebert, ed., Economic Growlh in Spinnewyn, Frans, and Jan Svejnar. 1993. "Worker Power, the World Economy. Tubingen: J.C.B. Mohr. Surplus Sharing, and the Wage-Employment Outcome in .1993. "Economic and Political Constraints during Transitional Economies." Transition." Sveinar, Jan, and Miroslav Singer. 1993. "Using Vouchers to .1993. 'The Finandal Situation of Polish Enterprise (1992- Privatize the Economy: The Czech and Slovak Case." 93) and Its Impact on Monetary and Fiscal Policies." Torok, Adam. 1993. "Hungarian Industry and the Economic _ . 1993. "The Puzzles of Fairly Fast Growth and Rapid Transition: A Survey." Collapse under Socialism." Viszt, Erzsebet, and Judit Vanyai. 1993. "Employment and the Gora, Marek. 1993. "Industrial Employment Adjustment during Labor Market in Hungary.' Transition: The Case of the Polish Industry." Zieleniec, Josef, and Jiri Hlavacek. 1993. "Behavior of a Producer Hiavacek, Jiri, and Tomas Jandik. 1993. "Generalized Problem in Transitional Economies." of a Producer A Theory of the Behavior of Firms in Economies in Transition." Johnson, Simon. 1992. "Private Business in Eastern Europe." Impact of Market-Oriented Policy Reforms __.1993. "Ukraine on the Brink of Hyperinflation." on Households in Rural China Johnson, Simon, and Santiago Eder. 1992. "The Prospecs of Privatization in the Ukraine." Ref. no. 677-16 Johnson, Simon, Heidi Kroll, and Santiago Eder. 1994. "Strategy, In the 1980s China dismantled the commune systemn, Structure, and Spontaneous Privatization." In Vedat Milor, in which land was communally owned and farmed, and 132 Transitional Economnies replaced it with the household responsibility system, in revenue in transitional economies. The terms-of-trade whichiand isteased toandworkedbyindividualhouse- shocks from the collapse of the CMEA trade and the holds. In the early 1980s agricultural production in- rigid but uncertain economic responses in transitional creased dramatically. No further large increases are economies are both important factors. expected,however, as itappears that the gains from this The results of the study indicate that import tariffs new policy have now been reaped. are more effective than other traditional tax instruments This research project intends to obtain answers to the in raising revenue, especially if real revenue is defined following questions: What are the main determinantsof in dollar terms (the price anchor). The contraction in the productivity of agricultural households in rural domestic output and prices and the devaluation of the China? Would removal of restrictions on factor markets real exchange rate that are necessary in economies un- (credit, labor, and land) produce further increases in dergoing the transition to market-based systems are agricultural output? How has the household responsi- significant reasons for favoring imports as a tax base bilitysystem affected income distribution, and whatare overotherrevenuesources. Toemphasizethetransitory the principal determinants of the variation in incomes nature and reversibilityof the policyrecommendations, across rural households in China? import tariffs should be implemented as temporary, Answering these questions requires detailed house- uniform import surcharges. hold-levelinformation.Atpresent,household-leveldata This conclusion seems to hold whether the govem- sets from China are rare. This project will collect data ment formulates tax policy with correct or incorrect fromabout 1,500households in 30 villages inHebeiand expectations. But the choice of revenue target matters. Liaoning provinces. The research will be based on mi- All tax instruments will do almost equally well if the croecononuic models of rural household behavior, commonly used tax-to-GDP ratio is the target. But the The results are expected to shed light on two broad ratio isa misleading measure,because it does not reflect policy questions. First, what would be the effect on the inunense erosion of domestic tax bases in transi- productivity of further liberalization of the rural tional economies and the fact that real revenue, in abso- economy (that is, ending restrictions on hiring of labor, lute terms, may be decreasing rapidly as a result private provision of credit, and buying, selling, and The revenue decline and uncertainty can also be renting of land)? And second, what avenues are avail- viewed as a necessary consequence of downsizing the ableforfurtherreducingpovertyinruralareasofChina? large state sector and of redirecting trade away from Responsibility: Policy Research Department, Poverty formerly nomnarket trading partners. Hence, the re- and Human Resources Division-Paul Glewwe. With sults emphasized that efforts to restore revenue should Loren Brandt, University of Toronto; and Scott Rozelle, never lead to maintaining subsidies to unprofitable Stanford University. The National Academy of Sci- state enterprises or other public expenditures no longer ences, United States, and the International Develop- relevant in a market system. Doing so will only lead to ment Research Centre, Canada, are providing funding. unreasonably high taxation. No less important is mov- Completion date: June 1995. ing assets out of collapsing sectors, privatizing them, and restoring their productivity. Responsibility: Policy Research Department, Public Revenue under Uncertainty Economics Division-Delfin S. Go. With Pekka Sinko, Government Institute of Economic .Research, Finland. Ref no. 677-1KC Completion date: October 1993. Using a framework that allows for risk factors in Report: assessing tax instruments, this study explored the im- Go, Defin 5.1994. "Revenue Uncertainty and the Choice of Tax plications for transitional economies of the eroding tax Instrument durng the Transition in Eastem Europe." Policy bases that they face. It focused on the question of which Research Working Paper 1330. World Bank, Policy Research tax instruments should be used in an uncertain world. Department, Washington, DC The study examined Eastern Europe's revenue prob- lem-including the implications for public revenue of different causes of uncertainty-and investigated which Labor Market Dynamics during the taxes are "better" at generating revenue. Although it is Transition of a Socialist Economy possible to raise the same amount of revenue using different tax instruments,a "better' taxis definedasone Ref. no. 677-20 that generates more stable revenue in a risky environ- Asanessential pareofcurrent reforms in transitional ment and has the least adverse impact on the economy economies, the state has abandoned its patemalism (for example, on consumption). The study used the toward workers. Finns have been allowed to lay work- framework to explain much of the fall in output and ers off, and individ tals have had to assume the respon- 133 T7astional Economties sibility for finding a job. Flexible hiring legislation has industries. These largechanges in relativewagesshould facilitated labor mobility, and collective bargaining has signal future reallocation of labor toward more produc- replaced the rigid, centralized system of wage determi- tive, higher-paying sectors. nation. The disruption of a previously stable economic The project's results point to the need to improve the system caused large changes both in patterns of labor skills of the least educated to enable them to gain better mobility and in returns to education, experience, and access to jobs and higher wages. They also show that gender. This project seeks to provide hard evidence generousunemploymentinsuranceintransitionalecono- concerning these changes. mies may reduce the incentive to find a job and that The studyuses an estimation of hazard and multino- subsidizing early retirementcan be a very costly way to mial logit models to analyze the determinants of labor lower unemployment. market transitions and an estimation of earnings func- The findings of the project were presented at the tions to analyze the determinants of displaced workers' World Bank conference on Unemployment, Restructur- reemployment earnings. Data are drawn from the ad- ing,and the LaborMarketin EastemEuropeand Russia, ministrative data seton the personal characteristics and held in Washington, DC, in October 1993; at Slovenia's work history of virtually all labor force participants. MinistryofLabor(MayandNovemberl993);andattwo The main findings of the study-many of which can World Bank seminars (May 1993 and June 1994). The be generalized to other transitional economiesare as findings also are to be presented at the 1995 meetings of follows: the American Econormics Association, to be held in * Both young workers and old workers have been Washington, DC. disproportionately affected by the economic transition. Resporusibility: Policy Research Department, Transi- Young workers have been frozen out of jobs, and old tion Economics Division-Milan Vodopivec. With workers who enter unemployment face a lower prob- KatharineAbraham,DebabratahDas,AshutoshDubey, ability of finding a job. Jennifer Mellor, and Ann Mitchell, University of Mary- * The relative advantage enjoyed by highly edu- land; Peter Orazem, Iowa State University; Ruth Wu, cated workers has increased. Compared with others in GeorgeMasonUniversity;HealthCareOfficeofSlovenia; thelabortorce,moreeducatedworkersretainedagreater and Enstitute for Sociology. The Statistical Office of ability to switch jobs, are less likely to be laid off, face a Slovenia, Pension and Invalidity Fund of Slovenia, and higherprobabilityof findinganother job if they become Employment Office of Slovenia are contributing staff unemployed, and increased their wage premium. time. - Womenhavegainedrelativetomeninbothwages Completion date: September 1994. and employment Butthe gains occurred becausewomen Reports: account for a disproportionate share in the education Abraharn, Katharine, and Milark Vodopivec. Forthcmnirg. and industry groups less adversely affected by the Slovmia: A Study of Labor MarketTransitions.' Policy ransition, not because of economywide reductions in Research Working Paper. World Bank, Washington, DC. disaimination against women. Orazem, Peter, and Milan Vodopivec. Forthcoming. -Winners * Ethnic mninorities have encountered increased dif- and Losers in Transitioni Returns to Education, Experience, ficulties in the labor market they are more likely to be and Gender in Slovenia2f Policy Researdc Warking Paper. laid off and face a lower probability of finding a job if World Bank, Washington, DC. unemployed. * Unemployment compensation has had a deleteri- ous effect on the incentive to take a job. The probability The Labor Market in Transitional Socialist that a person receiving 'inernployment compensation Economies: A Macroeconomic Perspective will find a job has been significantly lower than the probabiity for an otherwise identical person. Ref. no. 677-30 * The early retirement policy has proved costly for This research project seeks to provide empirical and Slonia,boththrughthedrainonGDP to meetpension analytical treatment of the effects of key policy changes obligations and through lost production by retiree on the labor market in a number of transitional econo- ' Retirementhasnot"maderoomf"oryoungwork- mies. It is intended to contribute to a more precise err. Employment shares fell for the least experienced, understanding of the nature of the unemployment be- but rose for those who were the dosest substitutes for ing generated, the relation between wage and employ- retirees-those just under pensionable age. ment behavior, and the consequences of incomes regu- * Wage inequality has increased. Wage differences lation under a range of country experences. haveinceasedbetweenskillgroups,withinslkllgroups, A first stage involving country studies and some within groupswith identical idustry and human capi- initial comparative work has been completed. Several btl characterist, and across firms within the same themes have emerged from this first stage. 134 Transitional Ewnomies The unemployment rate in Eastern Europe averages Completion date: June 1995. 10-15 percent. State firms are shedding labor as some Report: restructure and others close-in part because of Commander, Sinon, and Fabrizia Coricelli, eds. Forhcoming. privatization-and a new private sector is emerging. Unemployment, Restructuring, and the Labor MArk in Enl This process of reallocation results in unemployment. Europe and Russia. Washingon, DC: World Bank. Althoughchangesinemploymenthavegenerallylagged behind changes in output, the dedines in state employ- ment have indeed been large. At the start of the transi- Business and Consumer Services tion in these economies, state firms moved slowly, cut- as a Gmwth-Promoting Sector ting employment through attrition, early retirement, in the Former Soviet Union '.ud o:ther voluntary means. This approach was associ- ated with quite large movements out of the labor force. Ref. no. 67743C In the pihase that has followed, layoffs and involuntary Services have played an increasingly strong role in separations have increased, raising the rate of flow into industrial market economies, reaching two-thirds of unemployment GNPin some countries. They have playeda smaller role The offset provided by growth in private sector em- in the countries of the former Soviet Union, which are ployment has been far from trivial. In almost all cases a undergoing a general contraction in output and em- new private sector, concentrated mostly in services, has ployment. Business and consumer services are of par- rapidly emerged. An obvious question arises Having ticular interest because they are an important factor in completed the stock adjustment, can these types of improving static and dynanic efficiency, enhancing the initiatives be expected to generate further growth? quality of life, generating jobs, and providing good Privatization has occurred largely from below, and opportunities for the expansion of the private sector- largelyconsistentwiththeinterestsofincumbents.Even through joint ventures as well as wholly domesically where large-scale privatization from above has domi- owned companies. nated, the restructuring and associated employment The purpose of this research was to estimate the consequences have yet to work through. In general, we potential contributon of services to economic growth in should expect continued, though lagged, contraction in Russia and other countries of the fonner Soviet Union employment associated with privatization. by identifying the gap between the expected and the Thenatureofunemploynentcanbeexpectedtochange actual levels of service activifies in these countries. rver time. The initial adjustment in employment in the Drawing on international cross-country, time-senes state sector wras largey accommodated by direct flows to data sets, the research first undertook a comparative other jobs and by movements out of the labor force, analysis of the importance )f services at different levels throughearlyretirementanddisability.Forthoseurducky of development Services were measured in terms of enougli to find themselves unemployed, the prospects of value added, employment, and household consump- finding new jobs were dim. Increasingly, the majority of lion;aproxyindicator,GDPpercapita,wasusedforthe jobtojobmovementsnowtakeplacethrmughunemploy- levelofdevelopment Serviceswereclassifiedinto utee ment Even so, unemployment remains a low-tumover subsectors: infrastructure servioes (truaport, commu- pool wiith large regional diffrences. mication,andhousing),publcsenices(educaton,heali An international conference to present the results of andpublicadministration),andbusinessandconsumer the firststage of the researchwas held at the World Bank services (all other sevices). Particular emphasis was in October 1993. A book containing this work wiUl be given to the last category. published in October 1994 by the World Bank. A work- Thestudy,afterfilrstprovidinganinternationalcom- shop for the researchers on the second phase of the pauison, used historical data on services in Russia and project-the results of which will be presented in a othe countries of the former Soviet Union to explore shorter, comparative book-was held at the University differences in the level of services in recent yeas With of Siena in June 1994t A dissemination conference will alooktwardthefuture,thestudysimulated thepoten- be held in Eastern Europe in 1995. tial contribution of services to future value added and Responsibiity: Economic Development Istitute, Na- employment and identified a policy agenda to support ftonal Economic Management Division-Simon Com- the rapid expansion of the service sector. mander. With Olivier Blanchard, Massachusetts Insti- The findings of the study were presented at the tute of Tedmology; Fabrizio Coricel University of Eighth Annual Seminar on the Service Economy, opW Siena, Saul Estrin, London Business School; Janos Kollo, nized by PROGRES and held September 28-29,1992, in Lnstitute of Econonucs, Budapeso lKryzsztof Rybiuin, Geneva. WarsawUniversity;andjanSvejnar,UniversityofPitls Responsiblity Policy Research Deptmet, TrNui- burgh and CERGE/EI, Prague. tion Economics Division-Martha de Melo, Cur Ofer, 135 Transitional Economies and Olga Sandier, and Macroeconomics and Growth socialist economies. This research project explores the Division-WilliamEasterly.WithGennadi Zoteev,Cen- need for a broader framework for analyzing decentrali- ter for Information and Soviet Technology. zation and intergovemmental fiscal issues in the transi- Completion dte: June 1994. tiunal economic. Such a framework would incorporate Report: the likelihood of continuing structural changes in the Easterly, Witiam, Martha de Melo, and Cur Ofer. 1994. econony and of political shifts, the likelihood that inter- "Services as a Major Source of Growih in Russia and Other govemmental reforms willproceed simultaneously with Fonner Soviet Sates." Policy Research Working Paper IM. stabilization and the need to provide a safety net, the World Bank, Washington, DC (Also published in Mario likelihood of continued (local) public ownership on a 1lejer, ed., Macmeconmic and Struadural Ampecs of Russian significant scale, though with privatization as the objec- Eonomic Refrm, San Frandsco: International Center for tive, and the likelihood of continued vestiges of price Emnomic Growt, 199.) and wage controls and other rigidities. Accounting for these elements is crucial to ensure a comprehensive and accurate analysis of decentralization. Subnational Finance in Transitional The study's methodology combines empirical analy- Economies: Broadening the sis and case studies, building on earlier work on Alba- Framework for Analysis nia, BulgaEia, Hungary, Poland, Romania, Russia, and Ukraine. The research examnines the importance of own- Ref. no. 677-70 ership for subnational governments, and the relations Thefiscaldecentralizationtakingplace inmnanyEast- between fiscal decentralization and privatization and em European countries is in part a reaction to the between fiscal decentralizationand thesafetynetltalso previously tight central political control. But it also has examinesthedevelopmentofnewsystemnsofsubnational roots in the movement to privatize the economy and in governmentflnance,includingintergovemmentaltrans- the central governments' strained fiscal situation. And fers and local tax and user fee systems that have aLtrac- the aspirations and the role of local governnent are tiveallocativeandresourcemobilizationpropertiesand becoming stronger. that address equalization issues and the need to replace The ongoingrefornsin subnational finance are much subnational revenues from state-owned enterprises. more important than generally recognized. First, Some of the issues examined are suitable for empiri- subnational governments in these countries account for cal analysis. The following analyses have been under- a farlrger shareof the budget(as muchas 50 percantof taken for at least a iew countries: total outlays) than in most developing or industrial * An analysis of the expenditure patterns of the marketeconorniesSecond,intergovemmentalrelations present intergovernmental fiscal regimes and their ef- are infimaely tied up with major reform issues of fets on distribution and equity privatization, the social safety net, and stabilization. * An analysis of the effects of existing transfer sys- And within the fiscal sector, tax policy, deficit control, tems on equity among regions and jurisdictions and intergovernmental finance can be compared to * Estimates of local taxable capacity-an essential three legs supportng economnic reform; unless each leg element of a sound transfer formula is properly set up, the entire edifice may collapse. * Simulation of alternative transfer formulas using Tradiional analysis of intergovemental finance ex- demographicand other variables, and an analysis of their nines the fiscal functions of subnational and central implications for equity and efficient resource allocation goverments interms ofheirrespectiverolesand respon- * Estimates of the implications of these reassign- sibilities for stabilization, income distibution, expendi- ments for fiscal balance at the subnational level. ture provision, the appropriate assignment of tax func- A book-length manuscript setting out the issues, a tiors, and the design of a transfer syem that provides case study of each country, empirical studies, conclu- appropriate incentives. For the subnational sector the sions, and policy recommendations is being readied for benefit model of service provision suggests that local publication. In addition, findings have been presented governmentswhose mrole is essentialy that of a service at the American Economics Association conference in provider-finance themslves to the extent possible by Boston (1993-94),attheNationalTaxAssociationmeet- charging for the services they provide, making up the ing (November 1993), and at the OECD Conference on difffere withlocaltaxes,supplementedasnecemsaryby Fiscal Federalism (April 1993). Findings will also be trafers and, to a limited degree, borrowmng. presented at the American Economics Association con- These issues are important in the ransitional econo- ference in Washington, DC (1994-95). mis also, but this traditional approach misses several Respotsibility: Europe and Central Asia, and Middle key features of local govenment roles in the formerly East and North Africa Technical Department, Infra- 136 Transitional Economes structure Team-Robert Ebel and Peter Simon, and It appears to have good potential for development be- Public SectorTeam-David Sewell; Europe and Centrml cause of its location and attractiveness, its culture's Asia, Country Department II, Office of the Director- traditional Western orientation, and the high share of ChristineWallich, Country Operations Division-Luca trained professionals In Its work force. The project's Barbone, and Country Department 1, Infrastructure focus on service firms provided a perspective that had Operations Division-Felix Jakob; and Transportation, not yet been explored. Water, and Urban Development Department, Urban The project's survey covered 86 firms that each satis- Development Division-James Hcks. With Richard fied three criteria: more than 50 percent of revenues Bird, University of Toronto; Gibor Peterl, Local Gov- from services, more than 50 percent privately owned, ernment Know-How Program, Hungary; Charles and more than 50 percent domestically ownted. The McLure, Stanford University; and Roy Bahl, Jorge survey thus excluded majority foreign-ownedjointven- Martinez, and Sally Walace, Georgia State University. tures. The survey questionnaire covered a broad range Completion date: December 1994. of subjects, including the background of the entrepre- Reports: neurs, employment and wage data, the market environ- Litvack, J, and Christine Wauich. 1993. hIntergovenunental ment, and the firms' performance. Finance: Crtical to Russia's Transition?" Finnce and Based on its examination of these issues, the study Deudopweni Uunr). reconunended policies that would foster the develop- Walh Christine. 1992. Flam Decentrallzallon: Intogeommnmral ment of small and medium-size private firms in Russia. RElonis in Russia. Studies of Economies in Transformation The recommendations include improving the business & Washington, DC: World Bank environment, strengthening core govermnent institu- Waflichk Christine, and PlJcard Bird. 1993. "Local Finance and tions while reducing intervention in markets, reducing Economic Refom in Eastern Europe." Paper presented at the andsimplifyingtaxes,openingup therealestatenmarket conference on Local and Intergovenmuental irnunce in and increasing the security of ownership, providing Transitn EBooil Lincn bstitute, Cinbridge, Mas., equal treatment for different economic activites, offer- Oeber (Also published In rRD lownl, April1994.) ing special assistance to smail businesses during the _,1993 "&ibubtional Finance In Transitional Economist transition, and minimizing direct government involve- Towards a Systemic Approach.' Paper presented at the ment in targeted assistance programs. National Tax Association Meeting, St PauL Minn., Novem- The findings of the study werepresented ataseminar ber. (Also fothoming in NauILvu Tar Joun.) held on May 31, 1993, in St. Petensburg and attended by 199 "Intergovermental Finances in the Transition from about 50 policymakers, academics, and joumaists. Command to Market.' Paper presented at the American Responsibility: Policy Research Department, Transi- Economics Assodation Meetings, January. mon Economics Division-Martha de Melo, Cur Oer, Wallich,Cristine, a RoxEbeL eiorthdcmi. and Olga Sandler. Wit Tom Adshead and Joanna Subatimnl Fiance in Tran tm a Edmndis: Broadeing the Chataway, European Bank for Reconstruction and De- Fmwnfori Anlysis. Washington, DC World Bank velopment, London; Eugene Tankhelevich, Academy Waflidi, Chrsfine, and Rilu Nayyar. 1993. 'Russia'slntergov- of Sciences Istitute of Economic Forecasting, Moscow; emmental Fiscal Relatbns: A Key to Naoal Cohesion? and Elena Belova, Leontief Center, Russia. Challnge (November-December). Completion date: June 1994. Report: de Melo, Marsa, and Gutr Ofer. 1994. Privte Stoke Firm in a Survey of Service Firms in St. Petersburg TrmWSUd Eanauy. Studies of Economies in Transorma- tion 11. Washinton, DC World Dank. Ref. no. 677-89C New strtups and privatized finns are contributing to the development of the private sector ffiroughout Private Interhousehold Transfers Russia Some of dhse firms are producing manufac- in Poland, 1986-91 tured goods, but most are providing services-tRn port, trade, financial servics, business services, con- Rf no. 677-96C m er sevices, and services that are often publicy Can those Eastem European families that are most provided, such as health and education. severely impoverished dunng the transition hom so- This research aimed to ievelop an in-depth under- cialism to capitalism rely on private family safety neb sndg of the daracertics and constramits of private for support? Answerng this question is critical evalu- servicefirmsinStPetersburgthroughasurveyofsudc ating dte likely success of econc tranitio in whe firmsTheStPetersburgare isnottypiculofRussia,but Easternblc. Goverunmtsarehard-pressedtoihnreaue 137 Transitional Economies social spending, and, without substantial aid from the Construction of an Integrated Data Base West, they are unllikely to be able to improve the equity for the Former Soviet Union's of income distribution. But family networks provide an Economic Accounts altemative means of income redistribution-far ex- ample,throughcashorin-kindgiftstransferred tolower- Ref. no. 677-99C income households by more fortunate relatives or Reliable accounting information is indispensable for friends. sound economic policies. For the countries of the former Knowing the size of the informal private safety net is Soviet Union, the quality of the policies they are design- essential because private transfers determine the neces- ing as part of their economic restructuring efforts inevi- sary scope of public assistance to the poor once private tably depends on the quality of the data that can be mechanisms have been exhausted.Despite the potential obtained on economic conditions. And greater access to importance of such networks in Eastern Europe, we comprehensiveandstandardizeddatawouldstrengthen know few of the basic facts about them-let alone how the policy advice and operational work of the intema- they might function. Researchers have only begun to tional agencies providing support in this region and explore household survey data with information about facilitate their dialogue with local govemments. private transfers in Eastem European countries. This research project assembled a set of tabular eco- This research sought to fill that gap by analyzing a nomic accounts, currently in an input-output format, newly available household survey for Poland-the for these countries, and integrated the accounts with Household Budget Survey. This large, representative, software for convenient on-line access and a variety of annual household survey includes measures of cash aggregationanddataextractionfunctions. Thesoftware andin-kindprivatetransfersgivenand received,aswell is designed to allow flexible aggregation across sectors as infornation on income, expenditure, consumption, and regions and can produce extract tables to be down- schoolin&health,housingconditions,anddemographic loaded for use with spreadsheet and other analytical trends. software. Preliminary results based on the 1986 Household The basic information for the database was obtained Budget Survey show that private transfers constitute an from the International Economics Department, Socdo- important share of Polish income. Gross receipts of Economic Data Division (IECSE). This information con- private transfers account for 10 percent of total income; sists of input-outputtables for each of the 15 countries of for recipients, net receipts of private transfers comprise the former Soviet Union and a trade flow matrix 20 percent of income. Nearly two-thirds of the house- The software was developed in two forms, one com- holds in the study's sample are involved in inter- patible with most mainframe and DOS environments household private transfers. and one for the MS Windows environment on the PC. Private transfers respond to economic and demo- The first version uses a command line language in a graphic status. They flow from high-income to low- shell similar to UNIX and a variety of other operating income households, and to young couples, large fami- systems. This version can run on standard PCs and the lies, and those experiencing illness or injury-groups WorldBankmainframe.TheWindowsversionresembles adversely affected by the transition. And private trans- more conventional spreadsheet software. All the soft- fers vary by age of recipient in a way that suggests ware is in the - programming language and is self- responsiveness to liquidity constraints. documenting. Simulating the impact of eanings loss on private The World Bank has already made a considerable transfers, the research found that, in the face of lost investment in the input-output and trade data for the eanmingsofthehouseholdhead,estimatediprivatetrans- former Soviet Union. These data, provided in an elec- fer receipt.s increase substantialy. The boost in private tronic data base with flexible aggregation software,will transfers would fill about a sixth of the income gap left create a valuable infonnational resource to support by the lost earnings. If these figures are validated for further operations and research subsequentyears,thatwouldsuggestthatprivatetrans- The data base is expected to complement ongoing fers have a potentially important role in cushioning workoftheIntem ;onalTradeDivisioninquantitative Poland's economic transition. analysis of trade and economic restructuring in this ResponsIbity: Policy Research Department, Poverty region. It is also intended to support other policy re- and Human Resources Division-Emmanuel Jimenez. sponsibilities. The data base will be turned over to WithDoonaldCox,BostonColiege;WlodzimierzOkrasa, IECSE toake it readily available to the largest possible Social Sciencaesearch Council, Poland: and the Polish interested comununity. Statistical Aksociation. Rossibility: International Economics Department, Com tn dat: February 1994. International Trade Division-David Tarr, and Socio- W3 Transitionatl Economies Economic Data Division-Boris Blazic-Metzner. With tions-particularly on implementing policies to David Roland-Holst, Mills College. strengthen financial discipline and foster financial in- Completion date: October 1993. termediation-have been included in several of the policy-based operations of the Bank in countries of the former Soviet Union. The Ruble Shortage Phenomenon in the Responsibility: Europe and Central Asia, Country Members of the Ruble Currency Zone DepartmentlV,CountryOperationsDivision2-Wafik Grais and Chandrashekar Pant. With Patrick Conway, Ref. no. 678-t8C University of North Carolina, Chapel HilL. Currency shortages were among the early preoccu- Completion date: October 1993. pationsofeconomicpolirymakers in the countries of the Reports: formerSovietUnion. Shortages of cash were preventing Conway, Patrick. 'The Economics of Cash Sholtage.' the payment of wages, pensions, and other cash trans- _ . "Rubles, Rubles, Everywhere ... : Currency Shortages fers and causing major disruptions in the economy. The and Financial Disintermnediation in the FSU. policies that the countries adopted to address the prob- . "Sustained Inflation in Response tD Price Laberalizationf lem relied mainly on printing more money, imposing restrictions on the withdrawal of deposits from banks, or rationing payments in cash. These policies were Reforms and Productivity in Chinese largely unsuccessful, and cash shortages resurfaced. Enterprises, Phase II Thisresearchsoughttoidentify thecauses of thecash shortagesand torecommendpolicies toelinminateitThe Ref. no. 678-24 work conbined theoretical and empirical analysis. The Although there are obvious differences between theoretical framework was a simple model of private China's industrial systems and those of other transi- sector saving and portfolio allocation decision with a tional economies, China's experience with enterprise governmentfacingabudget deficit. The empirical work reform and industrial performance provides important relied on a data collection network established through lessons for refirm strategy in Eastern Europe and the the project which provided daily information on prices, countries of the former Soviet Union. This project ad- exchange rates, interest rates, and other important pa- dresses issues related to induswtrial restructuring and rameters in several countries. ownership reform in China during its economic transi- The main conclusions of the research are these: First, tion, building on an earlier research project (lReform cash shortages are manifestations of financial dis- and Productivity in Chinese Enterprises, Phase l," reE intermediation-thatis,thebankingsystemis unable to no. 675-38). The research should be of direct interest to attractsufficientdepositsvoluntariy.Second,cashshort- Chinese policymakers and to those in the international ages allow the govermment to hold inflationary pres- policy community who are concerned with China's sures in check. Third, solutions to the cash shortage that economic reform program. rely on printing currency will provide only temporary The project examines issues relating to industrial relief and will lead to accelerating inflation. More ap- concentration and market structure, as well as the rela- propriate solutions to the shortage involve broader tionbetweenenterprise performance, profitability, and financial sector policies aimed at promoting greater adjustment behrvior. The data sets obtained in the financial intermediation. Policies that further under- earlier study pr' vide the initial database for the analy- mine public confidence in the banking system (such as sis. This research augments that information with firm- restrictions onwithdrawalsof deposits) willonlyaggra- leveldata fromChina'sState StatisticalBureauonenter- vate the cash shortage. prises of all ownership types. The study uses standard The researchwasconceived to investigate rubleshort- econometric techniques. Where issues of simultanety ages among members of the common ruble currency or a truncated sample arise, two-stage least squares, zone. But as the persistence of currency shortages even probit,orothermethodsofanalysismaybeappropriate. after the countries introduced separate currencies Using the data sets, the project seeks to answer showed,thefindingsareofwiderrelevance.Theresults several specfic poliy questions related to ownership confirm the importance of stabilization policies and and industrial structure, induding hese: early emphasis on strengthening prudential regula- * Why has the output from large and medium-size tions, bank licensing, and supervision procedures to enterpnses remained stable at 40 44 percent since 1978 develop confidence in the bankdng system. while output from the state-owned sector has decined The findings of the research were discussed in a nearly 80 percent? Bankvide seminar in January 1994. Its recommenda- * Howaretheseshifminprodictionassocatedwith 139 Transitional Econtomies ownership, profitability, export performance, produc- wage tax (the much-criticized popiwek scheme) contrib- tivity, industrial branch, and geographic location? uted to wage restraint and could therefore be useful * How do the expansion of the non-state-owned before privatization. sector,thedeclineofstate-ownedenterprises,andchange Responsibility: International Finance Corporation, in ownership status contribute to change in the owner- Economics Department-Brian Pinto, Sanjay Shah, and ship profile among China's large and medium-size Mariusz Sumlinski. With Sweder van Wijnbergen, Uni- enterprises? versity of Amsterdam; and N. Subramanian. * tnwhichindustrialbranchesand geographic loca- Completion date: April 1994. tions are these changes most concentrated? Among the Report: state-owned enterprises reporting a change in owner- Pinto, Brian, and Sweder van Wijnbergen. 1994. 'Ownership ship status, are there characteristics that make the enter- and Corporate Control in Poland: Why State Finns Defied prises "ripe" for change in ownership, such as profit- the Odds." Policy Research Working Paper 1308. World ability, industrial branch, or geographic location? Bank, Intemational Finance Corporation, Washington, DC Responsibility: Policy Research Department, Transi- tion Economics Division-InderJit Singh, Alan Gelb, Dilip Ratha, and Vesna Petrovic; and East Asia and Food Price Liberalization and Marketing Pacific, Country Department IL, Office of the Director, in the Former Soviet Union and Country Operations Division. With Gary Jefferson and John Zhao, Brandeis University; and Thomas Ref. no. 678-3C Rawski, University of Pennsylvania, Pittsburgh. Since 1990, in nearly every country of the former Completion date: June 1995. Soviet Union the government has declared its intention to reform the agricultural and food sectors and taken some steps toward doing so. Nowhere have such re- Enterprise Transformation in Poland forms gone forward smoothly. Indeed, little improve- menthasbeen observed inthe functioningof markets or Ref. no. 678-25C the efficiency of food processingand distribution. Why? Anearlier study on stateenterprises in Poland ("State What have been the chief impediments to reform? How Enterprise Behavior in Poland during the Economic can the constraints be removed? Transformation Program," ref. no. 677-58) generated a This projectsought to determine how much progress data set on 75 large Polish manufacturing companies. price liberalization reforms nave made in producing These data, collected monthly from June 1989 to June marketpricesthatareresponsive todemandandsupply 1992, covered sales, costs, profits, wages, bank borrow- conditions and consistentwith market-determined spa- ings, interfirm credit, tax arrearsexcesswage penalties, tial differences. It also sought to identify-and estimate and so on. the importance of-factors that have prevented price Using that data set, thisstudy econometricallyinves- liberalization from being fully successful. tigatedwage-settingbehaviorand the dynamics ofbank The work concentrated on developing a data set on lending in large state firms in Poland. It found that the prices, extent of demonopolization, and spatial price controversial excess wage tax effectively restrained relations that is suitable for cross-country comparison. wages in state firms, a significant finding because the Sector reviews by the Bank, official statistics of the effectiveness of the tax has been a subject of debate. It countries, and Bank and International Monetary Fund also found that banks were financing the losses of state missions provide a substantial body of raw rnaterial for firms.Thiscircumstance changed afterthereformsimple- such comparison. mented at the end of 1991, a clear break-point in the An analysis of data on weekly prices for 19 staple econometric results. food commodities in 132 Russian cities during 1992 and Clear policy conclusions emerge. First, eliminating 1993 showed that some regional price adjustments have open-ended subsidies is essential. Subsidies enable firms occurred since the price liberalization of January 1992. tocontinuetheirpastbehavioranddestroyanymecha- But many opportunities for arbitrage still exist, espe- nism of control that other claim holders might have. cially across oblasf (province) boundaries. It seems clear Second, commercial banks can be made to exercise thatoblast-level traderestrictionshavepersisted despite govemance overstate firms. But in the absence of effec- the lack of national regulation. tive takeovermechanisms,withholding funds from firms Estonia, Latvia, and Lithuania initiated price liberal- with nonperforming loans is their most powerful in- ization reforms during July-December 1991, and most strument Banks started to respond this way after their other countries of the former Soviet Union announced own control and incentive mechanisms had been re- changes similar to Russia's in the first half of 1992. formed, in the fourth quarter of 1991. Third, the excess Although there is less detailed price information for 140 Transitional Economies these countries, and almost none for Armenia, China, Hungary, and Poland. And it will attempt to Azerbaijan, and Georgia, it is nevertheless clear that the identify initial economic and sociopolitical conditions trends are similar across the former Soviet Union. that are likely to influence the transition process. The research identified several obstacles to true price Responsibility: Europe and Central Asia, Country liberalization: lack of enterprise reforms and privatiza- DepartmentlV, Country Operations Division 2-Wafik tion in the food sector; remaining price regulation, par- Grais and Chandrashekar Pant. With Lance Taylor and ticularly of marketing margins; continuing subsidies to Meenu Tewari, Massachusetts Institute of Technology. state food enterprises; continuing monopoly power of Comnpletion date: October 1994. food marketing enterprises; lack of managerial skills and market mentality in the enterprises; lack of market information; and local regulation of and restrictions on Enterprise Adjustment in the private marketing activities (formal and informal). Russian Federation Responsibility: Europe and Central Asia, Office of the RegionalVicePresident-MarceloSelowsky,andCCoun- Ref. no. 67840 try Department IV, Natural Resource Management Di- The primary problem of reform in Russia and in vision-Geoffrey Fox and Csaba Csaki. With Bruce other formerly socialist countries is the failure of its Gardner, University of Maryland. architects to anticipate and recognize the emergence of Completion date: December 1993. anew typeof enterprise, one thatis unique to the period Reports: of transition. Enterprises of this type are neither fully Gardner, Bruce L. 1994. "Food Marketing and Price Liberaliza- socialist nor fully market-oriented. Rather, they are tion in the Former USSR. Paper presented at the Fourteenth survival-oriented, attempting to ensure their continu- World Bank Agricultural Symposium, Washington, DC, ing operation despite great uncertainty in the institu- January 6. tional environment. This study explores the behavior of Gardner, Bruce L, and Karen ML Brooks. 199t "Retail Food these enterprises using a miuxture of theoretical, institu- Prices and Market Integration in Russia: 1992-93.' Paper tional, and empirical techniques. presented at ASSA Meetings, Boston, January 3-5. The research began by conducting a survey of 75 enterprise directors in seven cities in western Russia. The survey revealed an important legacy of central The Economic Role of the State in Nations planning-the high degree of vertical dependence of the Former Soviet Union among enterprises. Nearly all the directors claimed that they were very dependent on their present trading Ref. no. 678-32 partners. Most claimed that only one or two enterprises Newly formed states will play pivotal roles in the produced their most important inputs or consumed unfolding economic transformations of the countries of their most important products. This feature makes en- the former Soviet Union. The great unknown is how terprise directors concerned not only with the viability states in different countries will have to change to per- of their own enterprises, but with the viability of their form market-generating and market-supporting func- trading partners. tions while avoiding actions that cripple equitable re- Many directors were willing to use the resources of distributions of income and wealth and sustained eco- their enterprises to help their trading partners survive. nomic growth. For example, many downsteam firms directly pur- As the countries of the former Soviet Union seek to chased inputs for their suppliers. Other firms facilitated make the transition from a socialist system to a market the delivery of inputs to their suppliers by providing economy, they are looking to different models for the transport, and some provided trade credit for their rme the state can play in the economy. This project aims customers' purchases. This practice, the provision of to provide insights on that role based on the experience interenterprise credit, was an important feature of the of other countries making the transition somewhatsuc- enterprises' economic environment and a central focus cessfully and on the experience of capitalist countries. of the research. The study will look at international historical experi- During the first six months of 1992 the stock of ence that may permit generalizations about the role of interenterprise debtinarrearsrosefromrabout37billion the state. It will contrast the roles played by the state in rubles to 32 trillion rubles. This dramatic increase is widely discussed capitalist models (Germany, the Re- symptomatic of the deepest conflicts in the transition. public of Korea, and Spain) and produce possible gen- The central paradox facing reformers in Russia today eralizations about common factors. It will examine the concemsthepotentialcostofsignalingacommitmentto experience in other countries making the transition market incentives in an environment ripe with the po- from socialism more or less successfully-for example, tential for market failure. To signal a comnmitment to 141 Tra nsitional Economies market incentives, the government must implement a legacy of central planning is a highly segmented indus- policymnixthatincludesalowfiscaldeficit,tightmoney, trial structure based on historic trading relationships. and hard budget constraints. If the commitment is not The historical lack of economywide data on enter- credible, enterprises wiUl not adjust to markets and the prise characteristics suggests that Westem observers of government wll be forced, if it carries through with its the Russian economy-like enterprise directors-are policy commitnment, to liquidate a large number of likelytobermisinformedaboutRussianindustrialstruc- enterprises. ture. Consequently, the project initiated a comprehen- Clearly, this policy is dynamically inconsistent for sivestudyonthe currentstructureof industry in Russia. two reasons. First, imposing liquidation or bankruptcy The study discovered that the conventional view of on a large number of enterprises would create serious the industrial structure is misinformed in two impor- political problems for the central government. Second, tant ways. First, many econonists believe that enter- imposing these policies would create serious economic prises in a given industry in Russia are relatively homo- problems. Complicating the situation is interenterprise geneous. In fact, industries in Russia are remarkably lending, which leads to a dramatic deterioration in the heterogeneous,possiblybecauseof differencesinmana- qualityofinformationintheeconomy.Manycreditwor- gerial skills and experience. This heterogeneity pro- thy enterprises extended credit to customers of long vides evidence that under central planning, industrial standing, initiallybelieving such debt would be repaid. ministers evaluated the tradeoffs implicit in allocating But as the customers extended debt to their customers, resources across firms witiina sector, presumably with many upstream enterprises found that they could no thegoaLofminimizingeconomiccosts.Recognizingthis longer evaluate the likelihood thatinterenterprise loans heterogeneity is essential in the conduct of econonmic would be repaid. So, many creditor enterprises lost reform, particularly in the treatment of enterprises un- sightof their own financialviability. An external arbiter dergoing privatization. in a bankruptcy proceeding cannot be expected to be Thestudydevelopedapracticalguideforidentifying able toevaluateanenterprise'sviabilitywhen theenter- lessproductive enterprs inreformingeconomies,one prise itself cannot. Consequently, the government's that does not rely on using the questionable pnce data policy, if imnplemented, could lead to the wrong set of available. Using a simple model of economic selection entterpnses being shut downL Not surprisingly, these under socialism, the study demonstrated that, even in problemscausedthegovernmenttobackdownfromits tie absence of exit, inefficient firms will tend to be commnitment to hard budget constraints, allocated fewer resources than efficient ones. This ten- The interenterprise debt crisis was temporarily re- dencygeneratesabimodal industrial structure inwhich solvedbyacoutinationofpolicies,indudingamassive inefficient firms agglomerate at one end of the size infusion of credit into the enterprise sector by the Cen- spectrum and efficient firms agglomerate at the other. tal Bank ofRussia. But this solutionfailstoaddress (and This size distribution of firms canbe used to identify the may even exacerbate) the underlying problem-that less productive ones. enterprise directors do not view the governmenVs com- Second, many economists in Russia and in the West mitmenttostabilfzationascredlble Consequently,many believe that Russian industry is characterized by very directorscontinue to pursuebusiness as usual, resisting large enterprises operating in highly concentrated in- adjustment dustriesr Russianindustrialconcentrationwasestimated The next stage of the study explored policies other by examining the Soviet Industrial Census of 1989 and than stabilization that might reorient enterprises away by comparing Russia's industrial structure with that in fromsurvivalara toward markets. Onehypothesis that the United States and in other countries. It was found arose out of the research is that the enterprise directors' that very large firms are more prevalent in the United beliefinverticaldependencymaysimplybeavestigeof States than in Russia. The analysis suggests that plan- the central planring system and not based onan under- ners economized on the costs of central economic coor- standing of industrial nmrket structure. Under central dination not by building very large enterprises, but by planning Gossnab (the State Committee for Material notbuildingvery small enterprises Because innovation Techical Supply) and the industrial ministies coordi- was centrally directed, small firms did not play the role nated the distrbution of goods. This system lacked they play in a market economy, and thus industry institutionstoprovideenterpriseswiththeinfonration evolved under a completely different process of eco- they needed to establish links with other fims on a nomic selection. decentralized basis. In effect, Gossnab and the indus- Themostimportantfindingandtheonemostclearly trial ministries created a barrier to insulate enterprises linked to reorienting enterprises away from survival, is from their trading partrs. Thus, enterprises tended to that there is little aggregate or industry concentration at becon is lated, without knowledge of national and, in the national level in Russia. The study classified indus- some cases, local market structure. So, an important triesasmonopolies(onefirm),oigopodies(fourfirmsor 142 Transitional Economies fewer), orpotentiallycompetitive(more ian four firms). .1993. "Roadblock to Economic Reform: Inter-Enterprise Although26 percent of Russian industry is oligopolistic, Debt and the Transition to Markets." these industries account for only 1 percent of all indus- trial enterprises and for less than 2 percent of the total employment. Corporate Governance in Central Europe Of course, industries considered competifive (those with more than four firms) may in fact not be compefi- Ref. no. 67842 tive. Some industries may be dominated by a small The move toward private ownership of enterprises numberof large firms. The study measured the effective in Central and Eastem Europe is based on the underly- concentration by calculating the percentage of employ- ing proposition that the incentives created by private mentcreatedbythefourlargestfirnmsinanindustry.For ownership will lead to a more efficient economy. For an industry to be considered concentrated, its four this to happen, however, ownership must be coupled largest enterprises must employ atleast 60 percent of its with same degree of shareholder control over manage- workers. Although by this measure 55 percent of Rus- rial decisionmaking in a firm. While good corporate sian industry appears concentrated, these industries governance is a key to the sound functioning of any contain less than 7 percent of aU industrial enterprises prvate market economy, the need for massive enter- and less than 18 percent of all industrial workers. prise restructuring in refonning socialist economies What are the implications of these observations? arguably heightens the importance of effective corpo- They suggest that more than one or two enterprises rate govemance (and may charge the nature of gover- must produce many of the needed inputs. The vertical nance issues) in those settings. dependency of enterprises is a perception of directors, Theobjective of this research istoadvanceourunder- and not based on the actual market structure. Given a standingofissues and patternsofcorporate governance well-functioningdistribulionsystern,enterprises should inlarge,newlyprivatizedfirmsinfourreforningecono- be able to identify alternative trading partners at low mies-the Czech Republic, Hungary, Poland, and Rus- cost But Russia's distributionsystern is not functioning sia. It will examine how the broad legal and regulatory well. The infornation barriers created by the previous regime-including the privatization programs, the un- ministerial system combine with importantgeographic dertying company and securities laws, and specific impediments to segment the national market into many regulations goveming financial intermediaries and cer- smaUler markets. Consequently, an important remedy tain other types of investors-is influencing or is likelv for the survival orientation of enterprises is to develop to influence the effectiveness of shareholder monitoring the system of distribution. in these countries. Its main goal is to address this ques- The study is presently surveying more than 150 tion: Do existing Central and Eastern European legal enterprisesinfiveRussiancities-Barmaul,Novosibirsk, and regulatory frameworks (privatization, company Saratov, Voronezh, and Yekaterinburg. The purpose of and securities laws, and laws regulating equity owner- the survey is to better understand the role of market ship by specific groups), as written on paper and en- organization,particularlythesystemofwholesaletrade forced in practice, promote active, independent, and and distribution, in the survival orientation of Russian effective shareholder monitonrng (including pressure enterprises. Another survey is planned for the spring of for restructuring when needed)? 1995. The project involves three components. ReWonsibility: Policy Research Department, Transi- * Cross-cuntry analyses of the legal and regutaonj tion Economics Division-Randi Ryterman and Alan franeworkforcorporateonwrshipandgovernnThe first Gelb. component consists of a set of cross-country compara- Completion date: June 1995. tive papers that identify and analyze the legal and Reports: economic influences on patters of ownership and the Brown, A., B. Ickes, and Randi Ryterman 1993. ¶Ihe Myth of process of corporate governance in the relevant Central Monopoly: A New View of Industrial Stuture in Russia." and Eastern European economies, including laws and Goldberg, L, B. ldes, and Randi RytermanL 1993. 'Departures regulations covering ownership of equity by financial fom the Ruble Zone: The Implications of Adopting intermediaries (including banks, insurance companies, independent Currences_ pension funds, and mutual funds); ownership by "in- leis, t, and Randi Rytermian 1992. -lhe interenterprise siders" (rnanagers and employees) or contracting part- Arrears Crisis in Russia Post-Sui Affairs 8(4y331-61. ners; interenterpnse ownership; public ownership; and .1993 "Entry witlhut Exit Ecoomic Selection under shareholder rights and oversight mechanisms. Socalism? * Daa auaysis on pi*utizaion and arging patters _.199 "From Entprise to Firm: Notes for a Theory of the of company or'iership. The second component of the Enbrprise in Tranition? project will provide an overview of emerging owner- 143 Transitional Economies ship patterns for large private sector firms and the way versity of Lodz; Charles Sabel, Massachusetts Institute privafizationprogramsand thelegat frameworkforown- of Technology; David Stark, Cornell University; Laszlo ership are shaping those patterns. Data will be collected Urban; East European Associates; Salans Hertzfeld & and compa:ed with analogous data fhom advanced mar- Heilbronn; and Sodomka and Soucek. ket economies-particularly Germany, Japan, and the Completion date: October 1994. United States, and perhaps France and the United King- donm. This analysis can determine the relative degree of ownershipdispersionandthenatureoftheowners-two Survey of Service Firms in St. Petersburg: factors thatappear to have a strong influence on the type Follow-Up Study and efficacy of shareholder monitoring. * Survey of shareholder mnonitoring in practice. The Ref. no. 678-56C thirdcomponentof theprojectwillattempttoshedlight In January 1993 an initial survey was undertaken of onhowthelegalframeworkforcorporategovemanceis 86 private service firms in SL Petersburg, Russia. The working in practice and how it is influenced by owner- purpose was to gain a detailed understanding of firms' ship patterns. This analysis will draw on two surveys characteristics and performance and to identify factors taken in mid-1994: (1)a surveyofabout150 firms in each in the business environment that encourage or impede of the Czech Republic, Hungary, and Poland, to deter- their growth. Survey participants, asked to identify the mine how the finns are govemed and how their modes three biggest problems affecting their business, most of govvenance are affecting their ability to restructure frequently cited the uncertain and unstable macroeco- andltoreactflexibly to changingexternal circumstances, nomicand legal environment, the lackof bank financing and (2) a survey of investment funds in Russia, to (for both investment and working capital), and the tax identify their regulatory and governance structure and systeml The survey resultswere used to develop recom- thir role in monitonng the companies in which they mendations on policy to expedite the development of own shares. small and medium-size enterprises-particularly ser- The project's major findings will be presented at a vice firms, which are potentially an importantsource of World Bank conference in December 1994. A second, growti in Russia. snaller workshop targeted to policynakers may be This follow-up study was based on a telephone sur- offend in Central Europe in early 1995. Comparative vey of the 82 of the original 86 firms that were available papes and survey results will be published in two for an interview. The survey was conducted in Novem- volumes in 1995; papers will also be published as jour- ber 1993, 10 months after the original survey. It ques- nial articles. The output not only will complement the tioned firms onchanges in the main indicators of perfor- extensive academic work on corporate governance in mance-continued operation (versus exit), new invest- advanced market economies, it can also help guide ment,diversification,employment,salesvolume,prices, policynikersandlegislatorsinthecountriesbeingstud- wages, profits, and export activity. The follow-up sur- ied and in other formerly socialist economies (including vey asked about steps the firms had taken to improve those in the former Soviet Union) now in the process of their operation, such as reorganization, obtaining train- developing privatization plans and legal frameworks ing,acquiringnewequipmentortechnology,movingor for private sector development expanding their space, using or canceling bank credit Responsibility: Policy Research Department, Trasi- and developing new extemal business relations. It also tion Economics Division-Cheryl Gray, Maxine Berg, inquired about changes in the firms' business environ- and Roland Mihelitsch, Financial Sector Development ment-in the effective demand for their output and in Department-Dimitri Vittas; and Legal Department, governmentregulations.Finally,thesurveyaskedfirms EuropeandCentralAsiaDivision-DouglasWebb. With how their perceptions of the problems they face have Bemard Black and John Coffee, Columbia Law School; changed. Peter Dittus, Bank for International Settlements; John Despite the difficult business environment, all of the Earle, Andrzej Rapaczynski, Jan Mladek, and Joel original 86 firms were still in operation 10 months after Turkewitz, Central European University; Saul Estrn, theinitialsurey.Mostentrepreneursthoughtthattheir London Business SchooL Roman Frydman, New York firms were doing better or at least as well as dunng the Unersity, Jonathan Hay and Dmitry Vassiliev, State first survey. On average, performance improved: firms CommitteeonStatePropertyManagement(GKI);Bruce expanded, and they increased thr sales and employ- Kogut, Wharton School Reinier Kraakman, Katharina ment. But the entrepreneurs reported the same three Pistor,andAndrewShkifer.HarvardUniversity;Sergey nain bamers to growth-4ack of finance, an uncertain Lysakov;StephenProwse,FederalReserveBoard;Anna and unstable macroeconomic and legal environment, Halustyilc, Baker & McKenzie; Stefan Kajewski, Uni- and the tax syste.L 1t Transitional Economies Responsibility: Policy Research Department, Transi- the pace and nature of land reform and farm restructur- tion Economics Division-Martha de Melo and Olga ing after December 1992. Sandler.WitCGurOfer,Hebrew University,Jerusalem; Responsibility: Agriculture and Natural Resources and Elena Belova, Leontief Center, St. Petersburg. Department, Agricultural Policies Division-Karen Completion date: June 1994. Brooks. With Zvi Lennan, Hebrew University. The Reports: Agrarian Institute, Russia, contributed staff time and de Melo, Martha, Gur Ofer, and Olga Sandier. 1994. 'Pioneers data. for Profit SL Petersburg Entrepreneurs in Services." World Comtpletion date: July 1994. Bank, Policy Research Department, Washington, DC. .1994. "Services and Small Business Development he View from St. Petersburg. World Bank, Policy Research Women and the Transition of the Department, Washington, DC. Russian Labor Market Ref. no. 678-71C Study of Land Reform and Farm The transition from a centrally planned to a market- Restructuring in Russia based economy in Russia has had important implica- tions for the Russian labor market. This researdc as- Ref no. 678-58 sessed theeffectof the transition on female laborniarket Privatizationof farmland and reorganization of state participants by examining a number of labor mnarket and collective farms are important components of agri- outcomes, particularly ernployment, unemployment, cultural reform in economies in transition. In most and wage outcomes at the micro level. countries of the former Soviet Union ownership of Transition appears to have had adverse effects on assets is transferred through a variant of the share female employment, with unemployment spells falling system. Under this system entitled participants receive disproportionately on women. In addition, the size of a paper share of land and farm assets, and then must thegenderwagegapprovidesanimportantinsightinto decdde what to do with these shares during further the wage disadvantage that women experience in the reorganization. Options include leaving the collective Russian labor market. Assessing the determinants of toform an individual or group private farm, reinvesting bothfemale unemploymentand the genderwage gap in the share in a minimally restructured collective, or tlhe Russian labor market can provide important evi- joining with others to form a business with some of the dence that maybe usefulin designing policies to reduce assets of the former farm. women's disadvantage. This study evaluates changes in asset ownership, The research examined the factors that determine farm structure, and producers' behavior as a result of unemployment of women in the Russian labor market, farm restructuring in Russia. The study is a second emphasizing those attributable to the transition. It ex- round of survey work, following a first round con- plored wornen's employment by examining their occu- ducted at the end of 1992. The survey includes about pational distribution and then comparing it with thatof 2,500 farm managers, farm employees, andprivate farm- men. The study constructed occupational segregation ers in five provinces of Russia. Some of the participants indices and assessed the role of occupational segrega- in the first round were resampled in the second, but tion in determining the size of the gender wage gap. most surveyed in early 1994 were new to the study. This study used the Russian Longitudinal Monitor- The first round of the study showed that the reform ing Surveys (1992 RL1S); the initial analysis drew on program had not achieved substantial restructuring of the April 1992 RLMS survey. The study obtained econo- state and collective farms, even though most farms had metric estimates of labor force participation, employ- registered under one of the new forms of enterprise. ment, and wage formation using these data and then Implementation of the share system alone appears to be used the econometric esimates to quantify the extent to insufficient to achieve change in farm structure or be- which unemployment, occupational differentials, and havior. Problems impeding further restructuring in- wage differentials are due to differences in individual dude lack of understanding of how to move beyond characteristics and to other factors (for example, gender distribution of paper shares, an inhospitable macro- discrimination). economic environment, and lack of start-up capital for Responsibilty: Europe and Central Asia, Country new businesses. Members who left collectives to start Departnent III, Human Resources Development Divi- private farms rarely took the reported land or asset sion-leni Ilugman. With Andrew Newell, B. Relly, shares with them, although some expected to receive and J. Noakes, University of Sussex. assets in the future. The second round will investigate Completion date: June 1994. [45 Transitional Economies Bankruptcy Law and Enterprise teristics, processing time, and outcome of the case. The Restructuring in Hungary survey involves analysis of available court documents and interviews with firms' managers, major creditors, ef. no. 678-75 and liquidators. Hungary beganan unprecedented experimentat the The project will produce an overview paper on beginning of 1992-it adopted an extremely rigorous Hungary's bankruptcy law and experience, a concep- bankruptcy law intended to serve as a primary vehicle tual paper on the role of banks in enterprise restructur- for closing insolvent firms and restructuring the ineffi- ing& a paper providing in-depth analysis of the aggre- dent enterprise sector inherited from socialist times. gate and sample data, and a paper comparing Hungar- ThisresearchprojectexaminesHungary'sexperience in ian bankruptcy procedures and Polish conciliation pro- enforcing its new law. It will compare, to the extent cedures. These papers will be collected in an edited possible, the effectiveness of Hungary's approach in volume for dissemination primarily through discus- stimulatingenterpriserestructuringwiththatofPoland sions and informal seminars held with officials of the (eing studied in a separate research effort) and pro- Hungarian govermnent duce lessons that may be applicable to other transform- Responsibility: Policy Research Department, Transi- ing socialist economies (including those in the forrner tion Economics Division-Cheryl Gray, Maxine Berg, Soviet Union) as they consider policy options in bank- and Richard Hirschler, and Finance and Private Sector ruptcy and enterprise restructuring. Development Division-Herbert Baer. With Miklos The project's main goal is to address this underlying Szanyi, institute for World Economics, Hungary. question: To what extent, and under what conditions, Completion date: April 1995. can traditional judicial bankruptcy proceedings serve as a useful tool forclosingor restructuringtroubled enter- prisesintransformingsocialisteconomies?Thisgeneral The Dynamics of Poverty in Rural China question leads to several sub-questions about the cover- age of the new law, the incentives of the parties con- no. 678-79 cerned, the tradeoffs between reorganization and liqui- Panel data (tracking the samne households over time) dation options under the law, the design of rearganiza- for developing countries are rare. Yet the need for such tion andliquidation schemes in practice, and the institu- data is great for a number of reasons. The vagaries of tional capacity of Hungary's judiciary to handle the rain-fed agriculture bring issues of risk and transient large influx of cases. poverty to the fore, and transient poverty is also an To address these questions, the project is examining important issue in the processes of economic transition Hungary's experience in implementing its new bank- and adjustment that many of these countries have been ruptcy law from January 1992 through August 1993, undergoing. Conventional data are less than ideal for focusing in particular on the handling of cases filed in informing policy decisions in such settings. 1992. The analysis is being conducted on two levels. This project will construct a large new panel data set The first level of the research entails gathering and for four provinces of rural China from a time series of analyzing aggregate data on Hungary's experience to household surveys from 1985 to 1990. These surveys, date. Much of the information can be collected from rural household surveys conducted by China's State existing data in the Ministries of Justice and Finance, Statistical Bureau, repeatedly resampled a large num- and these data are then supplemented with interviews ber of households. The four provinces selected span the with ministry officials and court personnel. The inter- range from a prosperous coastal region (where reforms viewswithcourtpersonnelarealsobeingusedtoexam- have brought rapid gains) to far less prosperous, lag- ine the courts' capacity (in both staff numbers and staff ging inland areas. The data appear tobe of good quality skills) to handle the influx of bankruptcy cases. by prevailing standards, and forming the panel is fea- The second level of the research involves a more sible. The final result will be a new, rich panel data set detailed survey of the characteristics and outcomes of a constructed at a fraction of the cost of setting up such sample of about 150 cases filed in 1992. Of the 150, about data from scratch. twohirds are reorganization cases and one-third are The data will allow investigation of numerous future liquidation cases. The sample is selected at random (to research issues. In addition to creating the data set, the theextentpossiralegivenconstraintsondata and access) projectwill focus on an importantsubset of these issues. and stratified to indlude both state-owred and private In particular, itwill investigate the dynamics of poverty firms as wel as fims of different sizes and in two in rural China during 1985-90; the deterninants of both loations. The goal of the survey is to collect more in- the persistent and the transient components of house- depth data on certain variables, including firm charac- hold consumption; and the performance of exisfting 146 Transitiotal Economies arrangements (both public and private) for poverty Costs and Benefits of Alternative relief, including self-insurance and risk-sharing prac- Agricultural Policies for Poland tices, and the implications of that performance for fu- ture antipoverty policies. This research will be the first Ref. no. 678-88 systematic investigation using household-level data of In Poland, as in most formerly socialist economies in the transitions into and out of poverty in rural China Europe, agriculture accounts for a disproportionately during a period of economic reform and growth. large share of employment and output and is character- The project will be done in close collaboration with ized by a rather inefficient structure of production. For China's State Statistical Bureau, both in setting up the all these economies, agricultural restructuring is one of dataset and in drawing on the results of the research, to the major policy tasks that they must confront. In addi- help the State Statistical Bureau put on a firm footing tion,severalofthesecountrieswishtojointheEuropean future poverty monitoring efforts using these and other Union in the future. These countries are thus grappling data. with the question of what kind of agricultural policies Responsibility: Policy Research Department, Poverty they should implement to achieve their objectives. andHumanResourcesDivision-MartinRavallionand This research looks at the agricultural policy that Shaohua Chen; and EducationandSocialPolicy Depart- Poland may introduce and seeks to determine what ment-Jyotsna Jalan. With Stephen Homes. outcome it would have. The research will assess how Completimon date: September 1996. well the agricultural policy will do in easing the adjust- mentof Polish agriculture to thenew marketconditions. And it will determine what agricultural policy tools Household Welfare during Viet Nam's should be chosen to avoid high policy costs, munimize Transition to a Market Economy market distortions, avoid the trap of overwhelming protectionism and isolation from the world market, and Ref. no. 678-83 prevent the slowing down of the process of structural In t'he late 1980s Viet Nam began a series of major change. Although the study will focus exclusively on policy changes designed to dismantle its plarned Poland, both the lessons learned and the methodology economyandreplaceitwithamarket-orientedeconomy. employed are likely to provide important inputs to Thecountryhasexperiencedveryhighecononicgrowth other work by the Bank in the region. since the late 1980s, but almost nothing is known about The research is based on a simulation analysis using the incidence of the effects of this growth across the a computable general equilibrium model of the Polish population. There is some evidence, however, that the economy. It will construct an appropriate social ac- quality of government-provided social services, par- counting matrix, with high disaggregation of the agri- ticularly education and health care, has declined in cultural sector and food processing industry (based on some areas. national accounts data, household surveys, farm sur- Theobjectiveof thisresearchistoanalyzehousehold veys, and international technology comparisons). welfareinthis transitional economy. It will give particu- Responsibility: Europe and Central Asia, Country De- lar attention to the distribution of the benefits (and partment II, Country Operations Division-Luca costs) of the change fromaplanned to a marketeconomy. BarboneandWitoldvtOrlowski. With-fadeuszHunek, Theresearchwiliconsistof separatestudiesonpoverty, Leszek Zienkowski, and Adam B. Czyzewski, Polish education, health, nutrition, labor markets, infrastruc- Academy of Siences; Andrzej Kwiecinski, Warsaw ture, and agriculture. The data will be drawn primarily University; Jerzy Plewa, Warsaw Agricultural Univer- from the 1992-93 Viet Nam Living Standards Survey, sity; and Walenty Poczta, Poznan Agricultural Univer- which gathered extensive information on 4,800 house- sity. holds throughout Viet Nam. Completion date: September 1994. Responsibility: Policy Research Department, Poverty and Human Resources Division-Paul Glewwe, Emmanuel Jimenez, and Jaikishan Desai, and Public Fiscal Reform in Poland Economics Division-Dominique van de Walle; East Asia and Pacific, Country Department I, Country Op- Ref no. 678-96 erations Division-David Dollar and Jennie Litvack, Poland has pursued a fast-track strategy in making andAg;ricultureandNaturalResourcesDivision-Tho- the transition to a market economy. The country has mas Wiens. With Hanan Jacoby, University of Roches- been especialy successful in price liberalization, cur- ter; and Donald Cox, Boston College. rency converbtbility, and private sector developnment Competion date: March 1995. and it is the first in Eastern Europe to record real GDP 147 Transitional Economies growthsincethestartofreforms.Butbalancingthebudget Dabrowski, Center for Social and Economic Research, has remained difficult for Poland. Although it recorded a Warsaw, Poland. surplus in 1990 after implementing a strong stabilization Completion date: October 1994. package, in 1991 and 1992 it experienced budget crises. Thisstudyseeks toexplain the difficulty of managing the budget in a period of stabilization and to explore Credit Markets and Savings Mobilization ways to improve the effectiveness of budgetary policy in Transitional Economies while creatinga marketeconomy. Ithas three objectives: to explain why the 1990 stabilization was followed by a Ref. no. 79-07 second fiscal crisis; to identify the budget's main rev- Private saving is at the center of both present and enueandexpenditurecomponentsand themainsources future concerns of the economies of the former Soviet of fluctuations, and distinguish between short-term Union. The success of stabilization programs is contin- changes and long-term trends in the budget's structure; gent on adequate private savings to finance continued and toseehowastrictspecificationoftheroleofthestate public sector borrowing needs. And a strong private (in terms of revenue and expenditures) in a market savings and investment response will be needed to economy could limit the budget deficit and improve the restore economic growth. economy's efficiency. Despite the importance of incentives for private sav- To meet these objectives, the study will discuss the ing in these economies, they have received little atten- role of conmnonly advanced hypotheses, such as that tion. This research will provide an analytical and em- a The 1990 budget surplus was mainly the product pirical examination of private savings incentives in the of two nonrecurrent elements: the cut in subsidies and countriesof the former SovietUnion, especially in exist- the paper profits of firms ingandevolvingcreditmarketinstitutionsandpolicies. - The 1991 budget crisis was a revenue crisis stem- Of particular relevance are at least four features of the ming from the excessive destruction of the economy, existingformal financial system: thedominance of a few especially the state enterprises, by the 1990 stabilization large banks, a large degree of specialization, the distinc- progranm tion between cash and noncash transactions, and the * Thel991budgetcrisiswasarevenuecrisiscausedby proliferation of financial sector activity by informal delays in introducing personal income taxes and value intermediaries. added taxes, or at least in reforming the turnover tax. The research will extend the existing literature in two * The persistingbudgetcrisis is due to theexplosion dimensions. First, itwilHprovideananalysisof thebehav- of social expenditures and to the continuing inefficien- ior of "rational' savers in institutions characteristic of the cies of the labor market financial markets of transitional economies. Primary at- * The budgetary policy is too short-term and ne- tention wili be given to adjustnents occurring out of glects long-term financial equilibriums and the supply steady state, because that corresponds to the present side of the economy. situationinthesecountries.Theproposedanalyticmethod The research will use three sets of data to test these is a straightforward extension of existing intertemporal hypotheses.Thefirstsetconsists ofstructuraldata,such analyses of savings behavior to include the institutional as the present and future age structure of the popula- rigidities of the existing financial system and the adjust- tion, type of employment, and level and distribution of ment path for out-of-steady-state behavior- income. The second set comprises the parameters link- Second, the study will use the analytical model as a ing the main revenue and expenditure items to the framework for investigating the observed response of structural data-typically, incomeand priceelasticities. private saving to incentives in five transitional econo- The third describes the preferences of the country for mies-Belarus, Georgia, Kazakhstan, Lithuania, and different types of taxes and expenditures. These prefer- Ukraine. The empirical work will rely mainly on a data ences are inferred from current policies and also from collection network established in some of the countries current and expected commitments such as the debt in an earlier research project ("The Ruble Shortage reduction agreements initiated by the Paris Club and the Phenomenon in the Members of the Ruble Currency European association agreement The data will be used to Zone," ref. no. 678-08). This information will be supple- model budgetary policies in a structural way, closer to a mented by published data from commercial banks and macroeconomic model than to a general equilibrium the national banks. model. The study will use simulation to compare actual Responsibility: Europe and Central Asia, Country De- budgetary policies with optimal policies. partment IV, Country Operations Division 2- Responsibility: Research Advisory Staff-Boris Chandrashekar Pant With Patrick Conway, University Pleskovic.WithleffreySachs, Harvard University; Alain of North Carolina, Chapel Hill. L de Crombrugghe, University of Namur; and Marek Competion date: December 1994. 148 Trnsitioial Economies Decentralization in China and transparency regarding the roles of central and subnational governments are to the success of decen- Ref. no. 679-17 tralized systems of government and administration. Ad Decentralization has been the linchpin of economic hoc arrangements may be useful, even essential, for reforms in China. Notwithstanding periods of tempo- initiating reform, but are they enough to sustain the rary recentralization, the trend in China since 1978 has process, or does it become necessary to codify and been toward the progressive devolution of decision- institutionalize rules? making responsibility to lower levels of govemment. The third paper will examine the political motivation Decentralization is not new to post-revolution China, for the apparent progressive devolution of decision- but the recent phase has been unique. While earlier making authority to lower levels of government. It will attempts at decentralization were intended to improve investigate the hypothesis that ad hoc decentralization the efficiency of the planning machinery, decentraliza- was used as a tool by certain factions of the Comnnunist tion since 1978 is widely believed to have promoted Party to build a coalition for market reforms. The paper market reforms. Over the past decade and a half decen- will also analyze the extent to which the power of the tralization has given local govermnents far greater con- Central Party leadership has diminished relative to the trol over resources, helping to unleash local initiative Party leadership at the local and provincial level and but also impairing central goverrnment control over explore the implications of decentralization for the fu- macroeconomic policy. China's repeated cycles of infla- ture of the Party. tion and retrenchment since 1978 can be attributed in The fourth paper will focus on managing fiscal de- part to the conflict between investment-hungry local centralizationinawaythatisconsistentwithmacroeco- govemments and a central government trying to main- nomic stability. It will explore the implications for ex- tain macroeconomic stability. penditure assignment and revenue sharing of treating This research has three objectives: to improve our stability (rather than efficiency) as the main objective understanding of decentralization in China and its links and assess the prospects for achieving these objectives to economic reform; to assess whether decentralization in China. And it will develop a simulation model to has, in economic terms, been a beneficialforce forChina analyze the likely implicatiorLs for intergovernmental since the beginning of reforms in 1978; and to analyze revenue sharing of the tax reforms announced in De- whether further decentralization is desirable or sustain- cember 1993. This analysis will use micro-level data for able and, if not, under what conditions it might be. 700 enterprises spread across all provinces and munici- Because the questions that the project addresses have palities. This model would be an important tool for tax equally important, interrelated, social, political, and policyanalysisinCfr-.aandshouldprovideinsightinto economic dimensions, the research will be based on a the potential problems arising from the proposed tax multidisciplinary approach. It will rely in part on case reform package. studies to examine how decentralization has affected Thestudy's findingscould contributetopolicymaldng the growth performance of selected counties, town- in China by identifying the measures needed to obtain ships, municipalities, and provinces and how it has maximum benefit from decentralization and to contain facilitatedec[nomicreforms.Usingprovince-leveldata, the associated costs. They should also be relevant to the study will model and test econometrically the rela- other countries-particularly those of the former Soviet tion among decentralization, growth, and regional dis- Union-try-ng to come to grips with rapidly increasing parity. It will also explore the relation between decen- subnational autonomy. tralization and macroeconomic instability in models Responsibility:EastAsia and Pacific,Country Lepart- explainingthe causes of recurring inflationary pressure ment U, Country Operations Division-Rajiv Lall, and in the Chinese economy. Office of the Director-Eliana Cardoso; and Policy Re- Fourpaperswill tacklethe issueof theingredientsfor search Department, Office of the Director-Shahid successful decentralization from the political, socio- Yusuf. Withjames Tong, University of CaliforniaatLos anthropological, legal, and economic perspectives. In Angeles; Dorothy Solinger, University of California at China, as in other East Asian countries, much has been Irvine; Christopher Findlay, University of Adelaide; made of the importance of the 'Confucian ethic." The jean Ci, Harvard University; Andrew Feltenstein, Uni- first paper will address the question of whether there is versity of Kansas; Victor Nee, Cornell University;James anything intrinsic in the traditional social relationships Feinerman, Committee on Scholarly Communication in China that make the country better suited for decen- with China; Susan Shirk, University of California atSan tralized decisionmaking. Diego; and Roy Bahl, Georgia State University. The Decentralization in China has evolved in an ad hoc Cilinese Research Institute for Fiscal Science is partici- way rather than based on clearly established rules. The pating in the research. second paper will assess how important legal clarity Completion date: August 1995. 149 Transitional Economies Small-Scale Privatization in Hungary, The study reviewed the tradeoffs inherent in the Poland, and the Former Czechoslovakia policy decisions made as part of the trade sale process, and looked at how each country addressed the tradeoffs. This study reviewed the privatization of small-scale The study was based on case studies of about six trade (fewerthan50employees),nonmanufacturingbusiness sale privatizations in each country. units in the Czech Republic, Hungary, Poland, and The results of the study are expected be useful to Slovakia. It focused primarily on businesses in the ser- government officials responsible for executing trade vice sectors, such as retail trade. Its objective was to sale privatization programs in other formerly socialist identifypractical lessonsand operational recommenda- countries tackling the problems of implementing a pri- tions for decisionmakers responsible for implementing vatization program while undergoing the transforma- small-scaleprivatization programs in Centraland East- tion to a market economy. em Europe and Central Asia. This study was carried out in conjunction with a The study comprised the following components: separate study on small-scale privatization in Central * A comparative review of the various privatization Europe. processes, including a detailed descriptive comparison Responsibility: Cofinancing and Financial Advisory of small-scale privatization methods and approaches to Services Department, Private Sector Development and common issues, such as valuation, method of sale, deli- Privatization Group-Susan Rutledge, Christina nition of assets transferred, treatment of debt, condi- Kappaz, and Maziar Minovi; and Legal Department, tions of sale, and employee preferences Europe and Central Asia Division-Martin Stewart- - An aggregate statistical overview of the small- Smith. With Andrew Alexandrowicz, ITCA Europe; scale privatization process, including a quantitative Ladislav Venys, Anglo-American Business Institute; overview of the scope, pace, and characteristics of the and Joan Stein, Central Europe Trust. The Ministry of process in each country Finance, Japan, contributed funding to the research. * Asurveyofapproximatelyf0Orecentlyprivatized Completion date: December 1993. small-scalebusiness units in each country (a total of 300 surveys) * Evaluation and policy recommendations. Eastern Europe and EC-92 The study was a collaborative effort with the Central European University Foundation. The European Union has become the major trading Responsibility: Cofinancing and Financial Advisory partner for the formerly centrally planned economies of Services Department, Private Sector Development and Central and Southern Europe, replacing the Council for PrivatizationGroup-KevinYoung,ShyamadasBaneji, Mutual Economic Assistance. With the increased open- and April Harding; Private Sector Development Depart- ness of these economies following the implementation ment-4ohn Nellis; and Legal Department, Europe and of stabilization-plus-transformation programs, the Central Asia Division-Douglas Webb. With Roman sustainability of export expansion and access to EU Frydmann, Andrej Rapaczynski, Jan Mladek, and John markets have become of pivotal importance to them. Earle,CentralEuropeanUntversityFoundation.TheMin- The European association agreements between the Eu- istry of Privatization (Poland), State Property Agency ropean Union and several Central and Southern Euro- (Hungary), and Ministry of Privatization (Czech Re- pean economies have established a framework for their public) participated in the research. The Ministry of economic relationships. The agreements' trade provi- Finance (apan) and the Central European University sions,based ontheprinciple of asymmetrical treatnent, Foundation contributed funding to the research. commit the European Union to providing duty-free Completion date: September 1993. access to industrial products originating in these econo- mies for five years. One objective of this study was to assess the signifi- Trade Sale Privatization in Central Europe cance of EU trade concessions for Central European economies' composition of industrial exports and their Overthepastthreeyears privatization through trade sensitivities to tariff and nontariff measures. This as- saleshas represented an importantvehicle forthe trans- sessment was performed by analyzing the incidence of fer of medium-size and large state enterprises to the EUtradebarriersonimportsfromtheregionbeforeand private sector. This study looked at the experience of the after the implementation of the agreements and identi- formerCzechoslovakia,Hungary,andPolandandiden- tying trade flows of groups of industrial products sub- tified the obstacles that the governments in these coun- ject to different concessions. tnes encountered-and their successful strategies for The research was based on information on tariff and overcoming the obstacles. nontariff measures affecting industrial imports from 150 Transitional Economies Central European countries that was obtained from the .1993. "Patterns of Foreign Trade in Eastern Europe, 1984- UNCTAD-World Bank SMART data base. The data 92." Paper presented at the Third U S.-Polisl Economic base contains data on flU trade flows disaggregated to Roundtable on Economic Recovery, Trade Record, and eight-digit combined nomenclature codes, as well as Social Cots, Charleston, S.C., Septemner 17-19. information on the tariff and nontariff measures thatare _ .1993. "ShiftIng Poreign Trade Pattems of Central Eumipe applied by the European Union to these items. Indus- The Role of External Factors." Paper presented at the trial imports were broken down into groups identified Twenty-First Annual Convention of the American Asocia- in the agreements in terms of the combined nomencla- tion for the Advancement of Slavic Studies, Honolulu, ture. Foreach country, the appropriate range of imports Hawaii, November 18-22. and of applicable nontariff barriers was identified. The _ . 1994. "The Significance of the 'Europe Agreements' for research used two major indicators extracted from Central European Industrial Exports." Policy Research SMART: the proportionof importssubjecttorestraints- Working Paper 1314. World Bank, International Economics that is, the nontariffbarriercoverage ratio-and asimple Department, Washington DC. arithmetic average of tariffs calculated over a group of tariff lines. The industrial product trade provisions of the E:uro- Housing Finance and Privatization pean association agreements, which affect about 80 percent of Central Europe's exports to the European In the past several years the World Bank has ap- Union, significantly improve the region's access to EU praisedsevenhousingloanstorefonningsocialistecono- markets. In 1992, the first year that the agreements with mies, including large initial projects in China and Rus- the former Czechoslovakia, Hungary, and Poland were sia. Atleastfour otherhousingsector operations inthese in force, they freed slightly less than 50 percent of these economies, including a sectoral adjustment loan, are countries' exports to the European Union from imnport now being planned. For Russia, current plans call for duties and nontariff barriers. This "free-trade" share in housing sector loans every few years for the next de- total exports to the European Union increases over the cade. Clearly, housing sector reforms play an important five-year period to about 80 percent for the former role in the country strategies of tansitional economnies. Czechoslovakia, 60 percentfor Hungary, and 70 percent Inparticular, the relation between housingprivatization for Poland. and housing finance has been a central issue in this Althoughltheassociationagreementsimproveaccess strategy development to European Union markets, they do not create an This research sought to identify the benefits of re- environment that provides satisfactory incentives for form in the housing sector and some of the i.nportant inflows of capital and know-how to Central Europe- constraints on implementing such reform. inflo isthatare crucial to the restructuringof the region's Responsibility: Transportation, Water, and Urban D- industrial base-for two reasons. First the agreements velopmentDepartment Urban DevelopmentDivision- allow the European Union to resort to protectionist Robert Buckley. measures,whichinturnmayseriouslydeterinvestment Completion date: June 1994. in CentralEurope, thus influencing investment, growth, Reports: and trade specialization. And second, rules of origin, Bucldey, Robert, and James Alm. 1994. "Decentralization, which influence sourcing decisions by firms in both Privatization, and the Solvency of Local Govenmments in the European Union and Central Europe, also discour- Reforming Economies: The Case of Budapest." Enuinmmnnta age firms from investing in production in Central Planning: Govnment and Policy. Europe. Budcley, Robert, Zsuzsa Daniel, and Margre Thalwitz. 1994. Responsibility: International Economics Department, lThe Welfare Cost and Transparency of Housing PoLicies in InternationalTradeIDivision--BartlomiejKaminskiiand Socialist Economies: The Hungarian Experience." Noga Lewin. Kozgazdasagi Smmle (Hungary) and lournal of Houng Completion date: June 1994. Ecnmomics. Reports: Budkey, Robert, Dagney Faulk, and Leke Olajide. 1994. 'Private Kaminski, Bartlomiej. 1993. "Central European Access to EC Sector Participation, Structural Adjustnent, and Mfgeria's Markets: Hard or Easy? An Unorthodox View." 'ransition New National Housing Policyg. bournl of fican Economics. (World Bank, Policy Researdc Department, Transition Buddey, Robert, and Eugene Gurenko. 1993. 'Housing Finance Economics Division) 4(7). in Hungary and Russia: A Framework for Measuring the __. 1993. "How the Transition Affected the Export Perfor- Movement to Market." Housing Finance Interaloana. mance of Central European Economies." Policy Research Bucldey, Robert, Patric Hendemshott, and Kevin Villani. 1994 Working Paper 1179. World Bank, Intemational Eonomics "Rapid Housing Privatization in Reforming Economics.- Department, Washington DC. Journal f Real Estate Economics and Finance. 151 Transitional Economies Governance Structure in Transitional Collegium Budapest; Ivan Rozinsky; Elena Belyanova; Economies: Insider Control and Ellu von Thadden, University of Basel; Takeo Hoshi, the Role of Banks 'Jniversityof California atSan Diego; Hideaki Miyajima, Waseda University; Juro Teranishi, HitoLcubashi Uni- During the initial phase of transformation in for- versity; and Theodor Baums, University of Osnabruck. m rly planned economies there was a naive belief that Policy and Human Resources, Japan, and the Develop- the transition to a market economy could be readily ment Trust Fund aIe contributing funding to the re- achieved through the privatization of state-owned en- search. terprises combined with the introduction of the equity Completion date: September 1994. market (which would also serve as the marketforcorpo- rate control). Recommendations for economic reform based on this belief have proved unrealistic or simplis- The Trade Impact of the Breakup tic. Meanwhile, incapitalist economies thereisgrowing of the Former Soviet Union interest in the problems of corporate governance struc- tures.Andthereisanexpectationthatthe textbook-type The collapse of the Soviet Union has prompted a market for corporate control may be withering away dramatic realignment in the international economy. It even in the most advanced securities-based capitalist has also created an adjustmentproblem for trade of the economies. InJapanand Germany,forexample,banks- countries of the former Soviet Union (FSU)-the termi- not the market for corporate control-have played nation of the single economir space, combined with the unique romes in the corporate governance structure. collapse of import demand, has compelled them to This study examines the role of banks in the evolu- search for new markets, mainly in the OECD countries. tion of the corporate governance structure in the trans- This project analyzed the trading relationships of the formingandreformingeconomiesfromtheoreticaL, .om- countries of the FSU with the industrial and developing parative, and historical perspectives, drawing espe- countries and with each other. Over the past year re- cally on the Japanese postwar experience. The study searchhasconcentratedontheimpactofthedissolution addresses these questions: Why are banks likely to play of the Soviet Union on international primary conmmodi- a major role in the evolution of effective corporate ties markets; changes in the conditions of marketaccess; governance structures in transforming and reforming andstatisticalproblemsassociatedwithmeasuringtrade economies? Should banks be privatized as soon as pos- flows. sible in the process of transformation, or should some The !xi of the Soviet Union has had significant impli- type of state control or subsidization be retained during cations for a wide range of international commodity the transition? How can banks be recapitalized to create markets. The Soviet Union was a major producer and a sound financial basis? How can economies cope with exporter of several major primary commodities, includ- the softbudgeting problem atthebank level while at the ing oil, gas, and ferrous and nonferrous metals. Several same time creating incentives for development financ- economies, not only those in the now-defunct Council ing? What types of ownership structures can be devel- for Mutual Economic Assistance (CMEA) but also de- oped consistent with the role of banks in the transition veloping countries (such as India), were heavily depen- process? Who should have primary responsibility for dentonSovictsuppliesof energyand raw materials. On selecting management and penalizing poor manage- the demand side, the Soviet Union was a majoriimporter mentperformance? Whatwas the role of banks in trans- of grains, sugar, tea, coffee, and cocoa, purchasing at forming the ownership structure, and how did banks least an eighth of world grain exports. [ts demise, com- solve their recapitalization problems in the postwar bined with an economic slump in successor states of the period? What role can the govemment play in the Soviet Union, has affected many markets. corporate governance of enterprses before privatiza- Using information about changes in the output of tion and during the transition process? major primary commodities exported by the FSU and The research will compare and contrast the experi- their trade before and after the dissolution of the FSU, encesof China,easternGermany,Japan,andRussia and the research examined relations between the changes in survey recent theoreticalwritings on the role ofbanks in exports and imports and world prices. The analysis corporate governance. sheds light on the unique set of circumstances associ- Responsibility:Economic Developmentlnstitute, Stud- ated with the transition from central planning and the ies and Training Design Division-Hyung-Ki Kim and impact of those circumstances on export performance. Noritaka Akamatsu. With Masahiko Aoki and Yingyi The dissolution of the Soviet Union has contributed Qian, Sbtford University; Gerard Roland and Erik to falling prices in many primary commodity markets Berglof, Universiti Ubre de Bruxelles; John Litwack, (especially in nonferrous metals) as the region either 152 Transitional Econonmes inc. eased its exports (often shifting from being a net sources, on tariffs and nontariff measures applied by importer to being a net exporter) or slashed its imports OECD countries to imports from the FSU countries. (such as sugar and grains). The impact was exacerbated The research found that although the unimpressive by several factors; weak demand in OECD economies trade performance of the countries of the FSU in OECD combined witha simnultaneous d- .ersion of FSUexports markets was due to initial structural impediments, the from CMEA countries to FlCPrO markets; markets' be- breakdown in supply links among enterprises of the ing taken by surprise by the collapse of the FSU and the FSU common economic space, and limited progress in subsequentincrease in exports or fall in import demand; macroeconomic stabilization and liberalization of the cuts in strategic reserves, which temporarily increased foreign trade regime, it is also attributable to the condi- the FSU export offer; and the collapse of domestic de- tions in access to OECD markets. The dismantling of mand becauase of the demise of central planning and the central planning and state monopoly over foreign trade decline in armaments production (a major consumer of produced only a delayed and incomplete response from nonferrous metals and mineral fuels). The price-de- most OECD countries in market access. During most of pressing impact of FSU exports would have been even the short independent existence of the countries of the more significant had the output of minneral fuels and FSU, their exports have faced adverse tariff margins and some nonferrous metals not fallen. nontariff barriers in major OECD markets as well as Although changes in exports originating in the FSU antidumping tariffs and investigations inherited from will affect world balances in nonferrous metals, it is the Soviet Union. unlikely that the export expansion will continue and- This research has contributed to a conference spon- even if it does-that its price impact will be similar to sored jointly by the World Bank, Commnonwealth of that in 1991-93. Although the countries of the FSU are Independent States, and Russian Statistical Office on richly endowed in many minerals, their mineral base foreign trade statistics for officials of the central statisti- suffers from many problems related to the long neglect cal offices and customs services of the countries of the of naintenance and modernization. Overcoming do- FSU. mestic supply bottlenecks wiU require a large infusion Responsibilitsv: International Economics Department, of new investment In the short runpossible increases in International Trade Division-Bartlomiej Kaminsid. demand in countries of the FSU and in iimport demand Completion date: June 1994t in the former CMEA economies (some of which are now Reports: rebounding from a deep recession) are not likely to be Kaminski, Bartlomiej. 1993. "he hnpact of the Dissolution of fully offset by improvements in recovery efficiency and the Former Soviet Union an Primary Commodity Marketh." resource use efficiency in successor states of the FSU. Background paper for Glbhl EcnouicmPlspects 1994. World Trade flows of the countries of the FSU have increas- Bank, Intemnational Econonics Departnent Washingtn DC ingly been determined by economic rather than by . 1994. "Trade Performance and Access to OECD Mar- political considerations. That change explains the con- kehts. World Bank, Intrnational Economics Department, traction of their trade with some developing countries Washington DC as well as with former CMEA partners, which was Kaninsi Bartlomi, and Alexander Yeats. 1993. 'OECD Trade artificially sustained by the Soviet Union for political Bariers Faced by the Succss; States of the Soviet Union.' reasons. Interstate trade still accounts for most of the Policy Research Working Paper 1175. World Bank, interna- ti.ade of the countries of the FSU except for Russia and tional Economics Department, Washington DC Estonia. Other countries of the FSU are heavily depen- Ssa, Pirita. 1993. "Regional Integration and the Baltics-Which dent on trade with Russia. But for all af them, the Way?" World Ban, Interational Economics Deparmentm significance of OECD nurkets has increased substan- Washbigtn DC. tially. A very large increase in the OECD share of their exports was due not only to the expansion in exports in 1993 but also to the contraction of exports to other Trade and Paymtents in the Newly markets. So, it is important to assess the extent to which Independent States theiraccess toOECD hasbeen obstructedbyprotection- ist measures. Appropriate trade and payments policy in the coun- The study assessed the changes in market acce.ss triesof theformerSovietUnionisregardedascrucialfor using the results of estimates of trade flows originating restoring macroeconomicstability, arresting the decline inthecountries of the FSU and the incidence of tartffand in output and ensuring efficient long-run resource alo- nontariff measures. The estimates were based c a infor- cation and growth. The World Bank has therefore done mation, obtained from the UNCTAD-Word Bank extensive worksince 1992 on the trade and payments of SMART data base and from other OECD gow emient these countries, including eight country studies in 1993 153 Transitional Economies and 1994,asurveyofenterprises inUkrainetoassessthe model to adapt it lo local circumstances. These va&ia- implicationsoftradeandpaymentspolicyestimatesfor tions have conditioned the policies now being pursued all the countries of the terms-of-trade change entailed in in Europe and Asia to dismantle the apparatus of collec- moving to world prices, work on providing and im- tivization and to encourage the transition to a market- proving trade statistics, a review of the restraints on driven agriculture. China's accelerated gradualism, these countries' exports in OECD markets, and three Poland'sbigbang, theRussianFederation'spartly.stalled policy papers. agricultural transition, and Ukraine's poorly articu- That work remains generally unknown or unavail- lated reforms are all yielding lessons-both positive able outside the Bank. To rectify that situation, this and negative-that might be applicable elsewhere. It is project will produce a volume entitled Trade and Pay- becoming increasingly apparent that the transition in mentsintheNFewlylndependentStatesthatincorporates - most economies will take much longer than initially and extends-the most important aspects of thestudies. anticipated. Thus, a synthesis of the lessons that have The projectwill produceabrief description of the macro- emerged is timely, and it could provide useful informa- economic and regulatory framework in each country, tion for policy designs and mid-course corrections. an update of the policy framework where necessary, an The study's principal objective is to analyze the main update of the statistical information, and an assessment directions of agricultural and food policy reform in the of how trade policy has or has not contributed to suc- transforming economies and compare the effectiveness cessful macroeconomic and enterprise adjustment in of different instruments in inducing an agricultural the countries. recovery and improved efficiency. Lines of inquiry wiU A conference of the authors and key Bank and Inter- includesystems reform in the agroind ustrial complexes national Monetary Fund country desk economists was (land refonr, enterprise restructuring and privatiza- held in June 1994. This conference enabled the partici- tion, framework for competition, and new roles for pants to team from their collective experience what has public administration), programs to stimulate an agri- or has not worked well in the countries of the former culturalrecoveryandtheresumptionofsectoralgrowth, Soviet Union. strategies for longer-term structural reform in priary Responsibility: Intemational Economics Department, production, agroprocessingand marketing,intemational International Trade Division-David Tanr, Bartdomiej trade and rural financial markets, the incidence of food Kaminski, John Nash, and Piritta Sorsa. With Ardo and agricultural subsidies and their financing, and food Hansson, Stockholm Institute of East European Econo- security interventions. mnies; Sergei Glaziev, Russian Parliament; Greta Bull, The study is using a matrix approach to highlight Eurasia Foundation; and Morris Morkre, Federal Trade country experience in several policy areas from which Commission. The UNDP is contributing funding to the generalizations can be made. (The sample countries are research being selected from those with advanced reforms, those Compltion date: December 1994. with partial reforms, and those with stalled or yet-to-be- Report: announced programs.) The research will be grounded Michalopoulos, Costas, and David Tarr, eds. Forthcoming. Trade in a review of the extensive inventory of published and and Paymaens in the Newly Indendent States. Studies of unpublished materials now available in the Bank, other Ewonomies in Transformation. Washington, DC: World international organizations, and national research insti- Banl. (ro be published in both English and Russian) tutes, concurrent surveys of land reform in China and Eastern Europe, and primary analyses of agricultural market structure and integration. The initial work will The Transition of Socialist Agriculture consistofaliterature reviewtoformalizelinesof inquiry in Europe and Asia: A Synthesis and to finalize the selection of countries and reform of Early Experience programs to be analyzed. In parallel, designs for the primarysurveyswillbecompletedand in-countrycoun- This sturlv win l analyze the main directiors of agri- terparts identified. The project will then prepare coun- cultural and food policy reforms in several of the social- try and "reform" case studies. ist economies in transition in Europe and Asia in order The study's research results and synthesis will be to synthesize their experiences. It will emphasize sys- presented in book form, as well as in several topical temic, structural,and incentives policyreformsrdesigned pieces for publication in professionaljournals. T he book to enhance recovery and stimulate productivity and and articles will target primarily policymakers in the efficiency, economies in tansition and in the international com- As the socialist revolution spread through Asia and munity. the Central and Eastern European countries, significant Responsibility Agriculture and Natural Resources variations were introduced into the Soviet agricultural Deparbnent, Agricultural Policies Division-Richard 1.54 Transitional Economies Burcroff U and Apparao Katikineni; and Europe and In fiscal 1993 this project produced a book on the Central Asia, Country Department Ill, Agriculture, In- macroeconomic situation in Eastem Europe, based on a dustry, and Finance Division-Mohinder S. Mudahar. World Bank-IMF conference, that assessed the reasons With Justin Yifu Lin, Development Research Center of for the apparent output decline in Eastem Europe's the State Council, China. Academies of agriculture and economies and the prospects for recovery. Research in social sciences in Russia and several Eastern European fiscal 1993 also included studies on the operation of countries are also expected to participate. The Ford credit markets in Eastem Europe, interenterprise ar- Foundation is contributing funding to the research. rears in Eastern Europe and Russia, macroeconomic Completion date: January 1995. management in China, and comparisons of reform in Eastern Europe and Latin America. Workin fiscal 1994 focused or the comparative expe- The Macroeconomic Management rience of economic reform in transitional and develop- of the Transition from Socialism ing economies. Other country research on stabilization and reformnunder transition-whichcomplementedop- Thisprojectintegratesseveralstudiesontheproblem erational support in individual countries-focused on of achieving and maintaining macroeconomic stability the choice of nominal anchors in pursuing stabilization. while effecting a transition from a socialist to a largely During fiscal 1995 the project will focus on fiscal private marketeconomy. The structural policy elements policies in the Baltic countries and their implications for of such a transition are likely to include price and market stabilization and reform under transition. liberalization, an opening to trade (usually with a sharp Respnibity Policy Research Department, Macro- exchange rate devaluation and, for many countries, in economics and Growth Division-Klaus Schmidt- the face of a systemic disruption of trading relation- Hebbel, Luis Serven, and Andres Solimano. ships), and decentralization of production decisions Compktion datft June 1995. (with privatization oratleastthe rapid growth ofnonstate Reports: firms). Blejer, Mario, Fabrizio Coricelli Alan Gelb, and GuiLermo Country experience in Eastern Europe, the former Calvo, eds. 1993. Eastern Eumpe in Transtim Frno Soviet Union, Central America, and even East Asia Reessi to Growth. World Bank Discussion Paper 196. suggests that maintaining macroeconomic balance Washington, DC throughsuch a transition is not easy. Typical symptoms Solimano, Andr6s. 1993. -The Post-Socialist Transition in of macroeconomic weakness include sharp declines in Comparative Perspective Recent Experienm and Policy fiscal revenues-due in large part to the sharply declin- Issues' World Deolopment (November). ing state enterprise sector-at the same time that the ___. 1994. "After Socialism and Dirigisme: Which Way Now?" need grows for fiscal resources (to cushion the effect of In Andr6s Solimano, Osvaldo Suikel, and Mario Blejer, eds., the transition) and difficulties increase in the banking Rebuilding Capitalism: Alternaie Roads after Sciasm and system, both because of the stock of old debts and Dirigisnm. Ann Arbor University of Midcigan Press. because of the weakness of market-based credit assess- Soliumano, AndrEs, Osvaldo Sunkel, and Mario Blejer, eds. 1994t ments for new loans. There is usually also a large in- Rebuilding Gapitalism: Altrnative Reads after Socilism and crease in interenterprise arrears, representing in part an Dirigisma. Ann Arbor University of Michigan Press. extension of normal trade cred it and in part involuntary credit that binds solvent and insolvent enterprises together. Welfare during the Process of Transition The important interactions between the micro- economic and macroeconomic aspects of reform have As income distribution has become more unequal led to heated debate about some aspects of macro- and incomeshave declined inEastemEuropeand coun- economic management Has stabilization policy been tries of the former Soviet Union, poverty has increased. excessively contractionary, undermining the ability of Anew type of poorhas appeared. Because of the general economies to restructure? Should potential revenue slide in incomes, large chunks of the population, includ- weighheavilyintheconsiderationofprivatizationstrat- ing the middle class, have become poor. The new poor egies? When is the introduction of a new currency include not only unemployed urban workers,but nany appropriate?Isthereamacroeconomiccasefororagainst employed but badly paid skilled wc;kers, administra- generalized debt cancellation and forgiveness? What tive staff in enterpris and the government, education lessons for the transitional econornies emerge from sta- and health personnel, pensioners, and single parent. bilization plus liberalization effort-, in other countries? This is not the "residual poverty" found in most other What lessons do the leading reformers offer the other countries. The social implications of the changed com- countries? position of poverty must not be overlooked. 155 Transitional Economies This research focuses on the two most important new * Urban workers, whose incomes plummeted in the developments: the emergence of unemploymentand of past five to 10 years, were most affected by the economic open poverty (related only in part to unemployment). decline. Until recently, the institutional framework required to * The private sector's increased share in the economy deal with these phenomena has been lacking, and sub- is associated with greater inequality in the distribution of stantial institutioncl adjustments are required. income. The study addresses these questions: * Social transfers have no redistributive function - What social and professional groups have ben- because they are almost uniform across income groups. efited most from the change? * Direct taxes are both small and broadly propor- * Who are the losers and winners in the transition? tional to income. * What happened to the overall income inequality? In looking at the first effects of stabilization in Po- * Who are the new poor? land, the research found the following: * What is the relation between unemployment and * The real wages of urban workers declined more emerging poverty? than the incomes of other social groups. * How did wage distribution change? * Wage distribution, fairly egalitarian under com- * Did returns to education increase? munism, shows some signs of becoming more unequal * Is universal welfare a financially feasible altema- with increasing retums to education. tive, and, if so, can such support be delivered with the * The main beneficiaries of the transition appear to existing social infrastructure? be those with strongprivate sector orientation and skills Transition from socialism to capitalism is an experi- in high demand in the market economy, such as manag- mentwithout precedent. Onlya priori judgments about ers, accountants, and economists. changes in employment and welfare can be made. Few * The main losers are most industrial workers and empirical studies on these issues exist, in part because mid-level clerical staff. thechange is so recenLtThe purpose of thisstudy is to fill Resprn.sibility: Policy Research Department, Transi- this gap in knowledge. tion Economics Division-Branko Milanovic, Carlos The study is organized in three parts. First, it will Cavalcanti,andVictorGabor.WithkzabelaRutkowska; produce an overview of the social policy and social CarolGraham,EBrookings Institution; AlistairMcAuley, achievements at the end of the socialist period. Second, Essex University, U.K.; Luisa Ferneira; and Nanak it will conduct empirical studies of the changes that Kakwani, University of New South Wales. have occurred since, looking both at the actual out- Completion date: June 1995. comes (poverty, wage levels, unemployment, income Reports: distribution) and at the new policies designed to deal Cavalcanti, Carlos. 1993. 'Bridging the Poverty Cap in the withtheproblems(unemploymentbenefits,divestment Former Soviet Union." Research Paper Series 4. World Bank, by enterprises of their social support role, and so on). Policy Research Department, Transition Economics Division, Tlhird, the research will analyze the key problems Washington, DC. and use cross-country analysis to draw lessons for Bank Ferreira, Luisa. 1994. 'Poverty and Inequality during Structural policyand forpolicymakers in reformingcountries. The Adjusttnent in Rural Tanzania." Research PaperSeries S. most important issues are these: Should universal wel- World Bank, Policy Research Department, Transition fare benefits be introduced? Is means-testing possible if Economics Division, Washington, DC. income levelsare difficult to gauge? Isself-targeting (for Graham, Carol. 1993. "The Political Economy of Safety Nets example, through public works) an alternative? during Market Transitions: The Case of Poland." Research The project uses data published by the countries' Paper Series 3. World Bank, Policy Research Department, statistical offices. It combines descriptive and analytical Transition Economics Division, Washington. DC. (Also approaches (testing a number of hypotheses) and uses published in Carol Graham, ed., Democracy, Markeis, and the the technical approaches derived from the analysis of Poor New Coalitionsfor Economic Refonn, Washington, DC: Gini and concentration coefficients. Brookings Institution, 1994.) The project's analysis of income distribution at the Kakwani, Nanak. 1994- "Income Inequality, Welfare, and end of communist rule in the five Eastem European Poverty in Ukraine." Research Paper Series 7. World Bank, countries has produced some preliminary findings: Policy Research Department, Transition Economics Division, *Income distributioninsocialistcountrieswas fairly Washington, DC. egalitarian, with little difference in average incomies McAuley. Alastair. 1994. "Social Welfare in Transition: What among social groups. Happened in Russia." Research Paper Series 6. World Bank. * Farmers tended to enjoy incomes at least at parity Policy Research Department, Transition Economics Division, with those of urban workers. Washington, DC. 156 Transitional Economies Mtlanovic, Branko. 1992. 'Income Distribution in Late Sodal- parallels in those countries. But others are quite distinc- ism: Poland, Hungary, Czechoslovakia, Yugoslavia, and tive, and have parallels perhaps only in some countries Bulgaria Compared." Reseaich Paper Series 1. World Bank, in Central Asia. The essential difference is that China Policy Research Department, Transition Economics Division, has confronted a development and growth problem in Washington, DC. (Revised version publisled as 'Cash Social relative political stability, while the initial challenge for Transfers, Direct Taxes, and hnome Distribution in Late the countries of Eastem Europe and the former Soviet Socialism." Journal of Comparti Ewoumics Apri 175-97, Union has been to cope with macroeconomic crises and 1994.) fundamentaladjusment in the contextof (mostly)radi- . 1993. "Detenninants of Cross-Country Income Inequal- cal political changes. ity: An 'Augmented' Kuznets Hypothesis." Research Paper This project will carry out a set of comparative re- Series S. World Bank, Policy Research Department, Transi- search studies to synthesize the adjustment experience tion Economics Division, Washington, DC of countries in transition. These studies will focus on - 1993. -lhe Social Costs of Transition to Capitalisnm selectedcountriesinEastemEurope,Russia,andChina, Polnd 1990-91." Research Paper Series 2. World Bank, as well as other countries, depending on the topic. The Poficy Research Department, Transition Eacnomics Division, studies include a macroeconomic overview, a focus on Washington, IC. agriculture, industry, and energy, the emergence of markets and the role of international trade, the institu- tional transition toward private ownership, and the Review of Socialist Transition impact on households. The studies addressing extemal trade will also consider the implications for the global The post-socialisttransitionhasnow been underway economyof the awakening of China and the opening of for up to four years in the countries of Eastern Europe the previously autarkic countries of the Council for and the former Soviet Union. The initial emphasis in Mutual Economic AssistaLnce. many of these countries was a.i macroeconomic stabili- The studies wifl address these questions: What was zation. This aspect of the transition has been relatively the legacy of the previous system? What have been the well addressed in comparative work, although many main adjustment issues faced in the area concerned? poliy issues are still debated and the range of country What reform strategies have been foilowed in the lead- experience is expanding rapidly, especially with the ingcountnes,andhowhavetheyaffectedbehaviorand introduction of new currencies in the countries of the performance at the microeconomic level? What major formerSovietUnion.Ithasalwaysbeenaccepted,how- policy lessons have emerged from experience to date? ever, that institutional, sectoral, and microeconoiric How do these sectoral or market reforms interact with adjustments are at the core of the transition process, so eachotherandwithrmacroeconomicperformance?And that the overall transition is a large set of interrelated where are the major unknowns? Where are there still transitions, each with its own characteristics. As coun- important areas of policy disagreement? tries pursue very different approaches to these reforms, Resonsbility: Policy Research Department, Transi- there is an increasing need for comparative analysis of lion Economics Division-Alan Gelb, Indeyit Singh, country experience, in particular to assess the progress Cheryl Gray, Branko Milanovic, Martha de Melo, Milan of themore advanced reformersand to extractlessons of Vodopivec, and Martn Schrenk, and Finance and Pri- experience (both positive and negative) for other coun- vateSectorDevelopmentDivision-G dCaprio;Agri- tries, some of which are lagging in their reforms (includ- culture and Natural Resources Departnent, Agricultural ing in stabilization). In some areas, such as energy, there Polices Division-Gershon Feder, Richard Burcoff, and is also a need to take a perspective that goes beyond one KarenBrooks;PrivateSectorDevelopmentDepartment- country because the adjustment ivolves much interde- Leila Webster; Intemnational Economics Department, In- pendence between countries. temational Trade Division-L Alan Winters and There is also need to consider the sectoral and Bartlomiq Kanski Europe and Central Asia, Country microeconouicprocessesofadjustmentinChina,where Deparmnt IV, Country Operations Division 2-Wafilk reforms have been under way since 1978. China repre- Grais;Officeof theVicePresidentDDevelopmentEconom- sents the "other half" of the transition experience-its ics-PauloVieira DaCunhaandPopulation,Healt,and weightinworld trade, forexample, is farlarger than that Nutrition Deparhment-William McGreevy. With Randi of Eastern Europe and the countries of the former Soviet Ryterman and Richard Hrschter. Union combined. Certain aspects of its reforms have Completllm datc July 1995. 157 PRIVATE SECTOR DEVELOPMENT AND PUBLIC SECTOR MANAGEMENT Explaining Rapid Growth: Chinese Coastal sylvania; Helen Garcia; Brian Sikkert, University of Provinces and Mexican Maquiladoras Maryland; and Bart Verspagen, MEJRT, the Nether- lands. The Development Research Center, China, is Ref. no. 677-50 contributing staff time. A question of central interest to the Bank's opera- Completion date: December 1994. tional work and policy advice is this: When does the Reports: process of economic growth become self-sustaining? In Bateman, Deborah, and Ashoka Mody. "Growth in an Ineffi- other words, when does growth provide positive feed- dent EconornT: Case Study from Coastal China." World back to generate continued growth? A significant body Bank Washington, DC. of work has emphasized the importance of providing Wang, Fang-Yi, and Ashoka Mody. 1993. "Explaining Endustrial firmswiththerightincentivesandpricesignalstoallow Growth in Coastal China: Econoiic Reforms. . . and What economically efficient decisions. Recent analysis also Else?" World Bank, Private Sector Development Depart- reminds us that investment in physieal capital and ment Washington, DC. Draft. knowledge-generating activities, inflows of high-qual- ity intemational knowledge, and self-sustaining ag- glomeration effects have a powerful impact on growth. Strengthening Accountability in ln contrast to most existing studies, this study views Public Services economywide or regional growth through the eyes of individual firms. Its strategy is to seek the perception of Ref. no. 677-65C firms on the resources they draw from their environ- Considerable research has been done in recent years ment and to discern how they use these resources to on the role of 'exit' (cornpetition) in improving the implement growth strategies. accountabilityandperformanceoforganizations. Exitis In keeping with the study's emphasis on analyzing not, however, a viable option for the public, especially in the microeconomics of growth, the main data source for essential services for which, in many developing coun- tis research is a survey it conducted of firms (360 in tries,the govermnentisthesoleprovider.Can "voice"- China and 100 in Mexico). The study is also conducting the only feasible option available to the public under a more conventional investigation using published these circumstances-be used to improve the account- reginWal data. abilityof serviceproviders? Verylittle researchhasbeen Through its finn-level survey in two of the highest- done on this important issue. gowthregionsinthe developingworld (southemChina This study investigated whether public service pro- and northem Mexico), the study is mapping various viders perform better when their accountability is en- knowledge flows and agglomeration effects and identi- hanced through the public's use of voice. The public tying the leverage points at which these long-run dnv- service selected for study was irrigation in Indonesia. ers of growth can be influenced. The study explored two related research questions: RSpOmiiliyH Private Sector Development Depart- Did the use of voice cause public accountability in ment-Ashoka Mody and Fang-Yi Wang; International irrigation to improve? If accountability did in fact im- EconomicsDepartment,lntemationalTrade Division- prove,didserviceoutcomessubsequentlyalsoimprwve? Arvind Panagariya; and Latin America and the Carib- Whenandhowvoiceworksandthemechanisms through bean, Country Department M, Country Operations Di- which it influences accountability received particular vision 1-Deborah Bateman. With Paul Romer, Univer- attention. sity of Califomia at Berkeley; Andrei Shleifer, Harvard The field research findings from Indonesia confinn Univenity-GuillermoAbdelMusik,UniversityofPenn- that there is a positive association between farmers' use of voice mechanisms hirough water user associations and the accountability ofthe irrigationservice provider. Note: More research projecb in this subject area are They also provide evidence that such service outcomes described in the section on transitional economies. as increased crop intensity come about at least in part through the mediating variable of improved account- 158 Private Sector Development and Public Sector Management ability. Thus, where exit is not feasible, voice can be an turalconditions. Examplesaresavingsandcreditgroups effective altemative. and producers' cooperatives. Improvements in the accountability of the service This research is designed to shed light on how spon- provider were manifested in several ways: a decline in taneous institutions work. How do they make deci- farmers' complaints about the service, evidence of the sions? What rural development problems do they con- providers compliance with rules and better sharing of sider most important, and what obstacles-including in infornation, and the decentralization of the provider the policy environment-do they face in addressing agency. these problems? And how do thelocalsociocultural and The study's findings have several implications for other conditions affect each of these variables? The policy: answers to these questions will contribute to govem- * Careful research on the role of voice and account- ments' and international organizations' understanding ability needs to be undertaken in several sectors before of how to create an enabling environmrent to help these broad generalizations can be made about the effect of institutions flourish. voice on public accountability and on outcomes across In this pilot phase of the prqect, researchers identified sectors. threespontaneousinstitutions inSouthAfrica (asampleto * Because different voice mechanisms are likely to be expanded in the full study to 40 institutions in six be appropriate for different sectors and services, it is countries).Eachinstitutionwasgivenagrantlargeenough important that the context, capabilities, and experience toundertakeasignifir ttactivitybutsmallenoughnotto of the communities and people involved are taken into dwarf the institution's current scale. The grants were account in selectig the mechanisms. made under two conditions-that they be used for a * User fees are not only a means of generating rev- development purpose, and that researchersbe allowed to enue for the governtent but also a potential aid to interview the institution's members to detemiine how publicaccountability.Govenmentsshouldbeprepared they made the decision on the use of the funds. to face public demands for increased accountability Researchers rapidly documented the setting of each when citizens are made to pay for services. participating institution, including the policy environ- * Government'ssupportofvoicemechanismsatthe ment, using a set of sociocultural variables developed local level needs to be matched by its wilingness to forthat purpose. Aboutsixmonthsafter the grantswere decentralizethep-ovideragency,toincreaseitsbudget- made, they conducted the interviews on the decision- ay flexibility, and to create incentives for staff to be- making process and assessed the results of each come more responsive to clients, institution's undertaking. a The governing legislation for provider agencies The findings of these case studies andthe findingson should provide for the disclosure of the norms and sociocultural settings are being used to analyze the standards of service to which the public is entitled. relations among the policy and sociocultural environ- Transparencyandthesharingofinformationareimpor- ments, the behavior of spontaneous institutions, the tant in promoting public accountability. obstaclesthey encounter,and the outcomes they achieve. Responsibility: Policy Research Departmenet, Fnance Responsibility: Environmentally Sustainable Devel- andPrivateSectorDevelopmenttDivision-JoseEdgardo opment, Office of the Vice President-Pierre Landell- Campos and Mark Schacter. With Samuel Paul; and Mills. With Robert Klitgaard, E. Preston-Whyte, Lisa SoesiloPartodarsono,PusatPengembanganAgribisnis, Avellini, Herbert Zwane, Justin Bums, Catherne Tay- Jakarta. lor, Dumisani Sikhosani, and Goodwill Zondi Univer- Completion date- June 1994. sity of Natal. The University of Natal is contributing staff and computer time. Conpletion date: July 1994. Spontaneous Institutions and Sustainable Rural Development in Africa Public-Private Interactions in the Health Ref. no. 677-88 Sector in Developing Countries Accumulating experience with rural development efforts in Africa suggests thatthe mostsuccessfulefforts Ref. no. 677-95C center on local organizations-and that the most suc- There are vast differences in developing countries cessfullocalorganizationsarespontaneousinstitutions. between the public sector's provision, financing, and Theseinstitutionsareunderstoodtobevoluntary,cop- delivery of health care and the private sector's. These erative activities aimed at development and initiated, differences-some in management style, and some in without outside intervention, by the particpants them- differentappreciation and interpretationof objectives- selves-and therefore appropriate to the local sociocul- add a new dimension to the already vexing problem of I59 Private Sector Development and Public Sector Management health care delivery. Recurrent budget deficits make a study or, in the extreme case, are predetermined. If they study of these issues even more critical. are predetermined, it appears that there are no readily This study examined the efficiency implications of available incentive packages that the government could government health personnel practicing privately, a implement to ensure that physicians put in adequate formofpubLic-privateinteractionintheproductionand effort in their primary occupation. Further research is delivery of health care that is pervasive in developing needed to consider demand-side factors. countries.Thestudysoughttoidentifyincentivemecha- Responsibility: Middle East and North Africa, Coun- nisms that would be compatible with optimal effort try Department II, Population and Human Resources levels by the health personnel in the public sector. Operations Division-Douglas Keare and Mohua The study developed a theoretical model to examnine Mukherjee. the effect of government health personnel practicing in Completion date: October 1993. two markets. Estimation of the model requires data on physicians'earnings in the two markets, their allocation of tme between their prmary and secondary employ- Institutions and Organizational Efficiency: ment, and the amount of effort they exert in the two The Provision of Education Services sectors. Designing practical and enforceable contracts with appropriate incentives requires background data Ref no. 678-28 on the relevant characteristics of public and private The new institutional economics offers a new and health care systems. Finally, any innovation in the work potentially quite powerful set of concepts for analyzing regime ofphysicians should take into account the needs organizational effectiveness and for designing rules of patients, which would require a demand-side study that could raise the efficiency of public and private to identify the factors that influence patients' choice of economic entities. The purpose of this research is to use provider, spending on health care, types of service institutional approaches-derived from agency theory, received, and types of service desired. This study con- the literature on contracts and property rights, and the centrates only on supply-side factors. work done on political economy-to assess factors in- Data are lacding on many of these issues. So the fluencing the efficiency of service delivery by public studyundertookanewprimarydatacollectioneffortin agencies in a sample of developing countries. The re- Egypt gathering data through a field survey of six search will focus primarily on the provision of bAic facilities and 121 local health personnel selected from education,inacountrysamplecomprisingBangladesh, these facilities. At the same time, a number of Brazil, and China. policymakers and public and private hospital adminis- Besides examining the determinants of organizational trators were interviewed. The data collected were used efficiencyfromaninstitutionalvantagepoint,theresearch to estimate secondary labor force participation deci- will devise a framework relating stitutional change and mions and supply of labor. Sample selection methods theefficacyofinstitutionstomacroecnomicanddistnbu- were used in the econometric estimation. tional trends that affect expectations, the retums from The study found that the plhysicians' decision to education, and thus the degree to which users are pre- work in the secondary market is independent of the pared to monitor organizations providing services charactristics of their prmary employment The num- Responsibility: Policy Research Department, Office of ber of dependents a physician has is by far the most the Director-Shahid Yusut important factor in explaining the number of hours the Compketion date: June 1995. physician works in the evening. Increasing salaries in the prmary enployment would probably increase the time the physicians spend in the secondary market, A Critical Evaluation of the Quality since higher salaries seem to have a positive effect on of State Intervention in Turkey: patients' willingss to pay higher fees during the A Four-Industy Comparison eveninghours There is noevidencethathigher salaries intheprimaryemploymentwould lead tog reaterwork Ref no. 678-41C effort in the primary hours. Govenunents of newly industrializing economies, The study also found that there is a link between the seeking to achieve strong economic growth through number of patiens seen in the primary employment rapid industrialization, have often resorted to perva- and hours spent in the secondary employment, though sine, persistent intervention in the economy. Although the connection is ambiguous. these governments have used generally similar policy A physidan's decision to have multiple jobs and the instruments, policyagencies' attributes and capabilities horm spent in he seondary market either are affected have varied widely, and the economic outcomes of the moe by fatos not taken into consideration in this interventions have differed markedlyamongcountries. 160 Private Sector Delopment and Public Sector MAnagement Porthis reason, many analysesofstate interventionhave aging the transfer of productiveassets to managerswho drawn on a typology of strong versus weak states in may use them more productively. explaining the relations between state and society in Essentiafly, bankruptcy policies serve two key pur- national economies. But this broad approach became poses.Pirst,theyprovideacoDectivemechanismofdebt increasingly suspect as studies began showing signifi- collection, and thus enhance the enforceability of debt cantvariations among industries in the same country in contracts. Second, they provide a forum for restructur- the state's capacity to intervene effectively. ing the assets and liabilities of companies experiencing This analysis of the quality of state intervention took financial distress; this restructuring may result in liqui- a more disaggregated view of the state. The study fo- dation. Even though, in principle, these objectives do cused on a single newly industrializing country-Tur- not contradict each other, because of agency problemrs key-and investigated and compared the dynamics of and strategic behavior under bankrupty, rles that the relationship between the government and the favor one objective rnay hinder attainment of the other. economy in four industrial sectors. The research looked In particular, policies that protect debtors in order to at three levels of economic planning- macroeconomic, encourage rehabilitation may end up acting as barriers industrial, and sectoral. It covered the early 1960s to the to exit by delaying necessary liquidations. Similarly, present, aliowing comparison not only among sectors policiesthataimnprimarilyatprotectingcreditors'rights but across periods. may lead to the liquidation of companies that are worth The study explored the hypothesis that the state's nore alive. capacity to undertake effective intervention, particu- Theefficiencyimplicationsofdifferenttypesofbank- larly its ability to formulate and maintain stringent ruptcy policies have not yet been adequately analyzed. performance criteria, depends on specific institutional Nor has there been enough analytical work on how the factors. Two are believed especially critical: first, the bankruptcy laws of industrial countries would need to natureofthepolicynetworksofpersonalorinstitutional be adapted to accommodate the underdeveloped capi- relations and contacts linking state policymaking agen- tal markets and weak and inefficientjudicial systems in cies with private firms, associations, and elites, and, many developing countries. second, the incentives and accountability mechanisms This research project reviews the basic models of through which state policy agencies influence the com- bankruptcy policies in a sample of industrial countries, petitive environment in the private sector. The four identifies their benefits and shortcomings, and exam- sector-glass, clothing, automobiles, and military elec- ines conditions under which they are ;3ely to attain the tronics-were chosen because they differ in important two main objectives of bankruptcy. The sample com- ways in characterstics relating to these two factors. prises Findand, France, Germany, the United Kingdom, The analysis drew on several unconventional eco- and the United States-countries whose bankruptcy nomic approaches, including the new institutional eco- policies vary substantially in the degree to which they nomics and the new neoclassical political economy. It grantcontrolpower to debtors, creditors, and the court also drewon the institutionalistperspective,whichhelps The analysis reliesonand extends the existingempircal accountforthestronggrowth of thehighlyintervention- literature; the research also undertakes detailed studies ist East Asian economies. of a few cases from each of the countries. The fieldwork has been completed, and research The project seeks to distill lessons for bankruptcy papers are being written to disseminate the findings. policy design in industrializing counties, talkng into Responsibility Private Sector Development Depart- account the institutional features that distinguish these ment-Izak Atiyas. With Vedat Milor, Brown Univer- countries from their industrial counterparts. It looks at sity; Jesse Biddle, American University; Mehmet ahu examples of these institutional characteristics and their and Ziya Onis, Bogazici Universityr and Erhan Erdil, effectonbankruptcyproceduresinasampleofindustri- METU. alizing countnes, with more detaied analyses of proce- Completion date: May 1994. dures in Colombia and India. Theexisting modelsofbankruptcyinindustrialcoun- tries all have shortconings. In debtor-oriented models, Optimal Bankruptcy Policies such as that in the United States, where debtors often remain in control of assets after a company files for Ref. no. 678-51 barncruptcy, debtors can extract concessions by threat- Bankruptcy is an important component of the set of ening to delay procedures. By contrast, in the United policies that affect industrial restructuring. Adequate Kingdommostcontrolpowerresideswithsecuredcredi- bankruptcy policies encourage the development of fi- tors, who under many circumstances are biased toward nncial markets. And they enhance efficiency by allow- quick repayments even if thatprecludes the reorganiza- ing the timely exit of unproductive firms and byencour- tion of viable companies and encourages premature 161 Private Sector Development and Public Sector Management liquidations. Suggestions for improvements in bank- the state too can faiL The bureaucracy may be unable to ruptcy policy include providing moreequal bargaining respond as quickly and as efficiently as necessary to powerand control to differentclasses of creditorswhile changes in technology and markets, and it may distort seriously curtailing or eliminating the control rights of incentives and increase transaction costs to the point debtor owners and managers. where market solutions are more advantageous. Not Evidence also shows thatoutcomes of informal reor- surprisingly, many countries now propose to realign ganizationsare strongly influenced by the provisions of the role of the state by increasing the size of the unregu- bankruptcy laws. In the United States the debtor- lated (and sometimes the regulated) private sectorat the oriented features of chapter 11 reorganization allow expense of public enterprises-to undo what they now companies substantial bargaining power under infor- view as the excessive expansion of government mal reorganizations as well. Notwithstanding the recent contraction in the role of Results of the research so far reveal that one of the thestate,countriesvaryagreatdealin the intensitywith important common drawbacks of bankruptcy policies which they have pursued public enterprise reform. in industrializing countries is that they insufficiently There has been nosatisfactoryexplanation of why some differentiate between companies and their owners and countries have chosen to reform expeditiously while managers. Other constraints are court systenm' insuffi- others lag behind; why reforrming countries have cho- cient processing capacity, and the lack of skills to man- senwidelydifferingstrategies(forexampleprivatization ageworkouts. One of the mainreasons for the success of versus commercialization); or why some reforms are bankruptcy reform in Colombia is that the competent more benteficial to society than others. This study, initi- authority in the country is endowed with sufficient ated in mid-1993, is intended to fill this informational tchnical skills Perhaps more important to the out- gap. cmes of bankruptcy procedures are asrects of the The study argues that cross-country variations can regulatory environment, such as restrictions on capital be attributed to four factors: the political economy of and labor mobility, and the prudential regulation and reform, the state of development and functioning of supervision of financial institutions. product and factor markets, countries' institutional ca- Responsibility: Private Sector Development Depart- parity, and macroeconomic conditions. More specifi- ment-IzakAtiyas.WithJulianFranks andKljelNyborg, cally, the study hypothesizes that, first, public enter- London Business School; Walter Torous, University of prise reform is likely to occur in countries in which the California at Los Angeles; Avri Ravid, Rutgers Univer- rentassociated with public enterprise operation is rela- ity; Bruno Biais, Universitb de Toulouse; and Stefan tivelysmal oritsrecipientsareidentified and thtepoten- Sundgren, Swedish School of Economnics and Business. tial losers from reform compensated; labor is particu- Cmpltiom date: Decenber 1994. larly important here. Second, successful public enter- prise reform is likely to be associated with increased competition, especially in the markets for goods and The Changing Role of the State: Strategies capitaL Competition forces managers to behave effi- for Reforming Public Enterprises ciently. Well-developed capital markets facilitate the sale of shares on the stock exchange, and they impose Ref. no. 678-69 financial discipline on firms, private or not. Third, suc- A dramatic shiftinthinking aboutthe role of the state cessful reform is likely to follow when governments inthepastderadehasbroughttotheforefrontquestions find ways to write, monitor, and enforce credible con- about the appropriate role of govenmment This shift is tracts with public enterprise management (assuming not confined to formerly centrally planned economies: continued public ownership) and with private manage- almost all govemrnents have announced measures to ment (again assuming continued public ownership), or reduce or alter their direct involvement in the economy regulatory contracts with private monopolies (assum- through privatization and deregulation of certain ac- ing the privatization, for example, of electricity or tele- tivities and better regulation of others. The shift con- commnunicationscompanies).Finally,thestudyhypoth- tastswiththetrendsinceWorldWarU;,aperiodduring esizes that public enterprise reform is likely to gain which the state played an increasingly active role in momentum in response to macroeconomic crisis. And economic activity. appropriate and stable macroeconornic policy is likely Past expansion of the state has been justified in part to enhance the benefits from reform thereafter. onthe grounds thatmarketsalonewill failto adequately To explore these hypotheses, the study has presented finance lumpy investment projects, protect consumers newdataonwhethertheroleof thestatehasdiriinished from exploitation by monopolies, and accelerate eco- after a decade of privatization. These data cover more nmic development But there has been increasing rec- than 50 developing countries over the period 1978-92, opgiion inrecentyearsthat evenwithgood intentions, and includesuchindicatorsasshare of public enterprise 162 Private Sector Development and Public Sector Management in GDP, employment, and investment. The data have cally backward agrarian society into today's economic been used to explore whether the size of public enter- superpower pays little attention to the role of Japan's prise is negatively correlated with economic growth. civil service. The exceptions are a few works that focus The study has also analyzed the public enterprise re- on the economic ministries' roles in fornulating and form experience of 12 countries in depth: Chile, China, administering economic policy following WorldWarll. the Czech Republic, Egypt, Ghana, India, Mexico, the But these works do not address some important issues, Philippines, Poland, the Republic of Korea, Senegal, including these: andTurkey.Thehighvariancethesecountriesexhibit in * How can Japan maintain such a relatively small their public enterprise reform strategies and in their civil service given its pervasive role in the marketplace? institutional capacity, political economy, market, and * How might Japan's reliance on the private sector macroeconomic conditions should make it possible to for economic development be adapted to the needs of draw generalized conclusions about the appropriate developing countries? public enterprise strategy under different country and * How does the civil service make the most effective economic circumstances, use of its resources, including human resources? Among the preliminary conclusions emerging from * Whatincentivesmotivatecivilservantstosetlong- the research, the study has found that the most success- term goals? ful public enterprise reformers in the sample are Chile, * How does the civil service resolve conflicting in- Korea, and Mexico, particularly compared with India, terests, and how does it remain accountable? Senegal,andTurkey.Successfulreformersdivestedsub- * How does the civil service remain relevant and stantiafly, especially those whose public enterprise sec- flexible? tor was initially large (Chile and Mexico). They in- * How did Japan minimize the effects of distortions creased competitive pressure on enterprises (public and to market signals introduced by political intervention? private), regulated private monopolies, and aligned * Howdoesthecivilservicepermiteconomicagents managerial incentives with efficient outcomes (explic- to concentrate on their business activities by maintain- itly in Korea and Mexico, implicitly in Chile). Public ing order? enterprise reform followed an economic crisis in Chile This project examined aspects of the role played by and Mexico, but not in Korea. Equally important, suc- Japan's administrative structure in helping the country cessfil reformers have devised credible commitment achieve its high economic performance, focusing on the mechanisms to assure the private sector (and even pub- relationship between Japan's civil service and the pri- lic enterprise managers) that they will not behave op- vate sector. It sought to deduce general lessons that portunistically.Suchmechanismsincludedkeepingtheir could be of value to developing countries and other promisesandinstitutingconflictresolutionmechanisms. economies attempting to adopt a free-enterprise Responibility: Policy Research Department, Finance system. and Private Sector Development Division-Ahmed The project has produced a collection of papers di- Galal, Mary Shirley, Ross Levine, Asli Demirgu;--Kunt, rected topolicymakers from developing and transform- Ed Campos,and NicholaCisse,andTransitionEconom- ing economies. These papers focus on three areas: ins- ics Division-Inderjit Singh, and Cofinancing and Fi- tutional aspects (for example, legal instruments and nancial Advisory Services Department, Private Sector analyses of historical issues pertaining to the civil ser- DevelopmentandPrivatizationGroup-AbdulShaikh. vice), case studies on the behaviorof the civil service (for With Richard Sabot, Hadi lEsfahani, Roberto Cordon, example, the coordination of financial policy and the Abdalla Gergis,JoaquinGonzalez,EnunanuelGyimah- effect of labor policy on industrial rationalization), and Boadi, Rolf Luders, VedatMilor, Bharat Nauriyal, Steve conclusions that examine the relevance to formerly cen- Saeger,DaeH.Song.ClemenciaTorres,RaquelArtecona, trally planned economies and newly industrializing Felipe Larrain, Florencio Lopez-de-Silanes, Heo Hoon, economies of the lessons learned from the study of Rebecca Hife, and Luke Haggarty. Japan's civil service. Completion date: March 1995. ResponslbilitfyEconomicDevelopmentlnstitute,Stud- iesand TrainingDesignDivision-Hyung-KilKim.With Michio Muramatsu, University of Kyoto; T. J. Pempel, The Evolution, Character, and Structure University of Colorado; and Kozo Yamamura, Univer- of the Japanese Civil Service and Its Role sity of Washington, Seattle. The Society for Japanese in Shaping the Intermlationships between Studies contributed staff time. Government and the Private Sector Comletion date: July 1993. Report: The large body of non-Japanese literature that exam- Kim, Hyung-Ki, Midcio Muramatsu, T.. PempeL and Kezo ines how Japan transformed itself from a technologi- Yamamura, eds. Forthomming Crataess of Eanomic 163 Private Sector Development and Public Sector Management Dfudopment:T71heRaktejofanseCbECvilr sAigeaAtsof Public Sector Human Resource Change. New York, Oxford University Press. Management in Latin America This study examined public sector human resource High Technology: Implications management policies and practices in Latin America for Developing Countries and the Caribbean. Its aim was to identify concrete reconunendations for improving the human resource Today's factoryisbeingtransformed atapacethatis management capacities of public agencies in Latin truly remarkable, and probably unprecedented. Some American countries. industries have already experienced profound change; The study was not intended to be comprehensive. no manufacturer will remain unaffected for long. The Norwasitintendedtorigorouslytestempiricalhypoth- ability to keep pace with the ongoing change has be- eses about how particular human resource manage- come an important ingredient of success. ment policies or practices affect the performance of Manufacturing processes worldwide are being human resources in the public sector. The systematic reconfigured by organizational innovations pioneered data measuring performance that are required for such by the Japanese and by microelectronics-based tech- an exercise-to estimate econometric models of the nologies. This research project developed a cost model determinants of performance-could not be collected that simulated factories with several variations in the either over time for a given agency or across similar productionpracticesandtechmologiesused.Theresults agencies in different countries. show that in a period of rapid technical change signifi- Given thedata constraints, thestudy took the follow- cantdifferencesinproductivitycanemergeamongcom- ing approach: First, it sorted packages of public sector peting firms-even in mature sectors. These differences human resource management policies and practices by are amplified if learning across innovations is cumula- the reputation of the corresponding agencies for the tive. For firms in developing countries, the findings effectiveness of their human resource management ca- suggest that efforts to effect organizational changes pacities. Second, it proposed an analytic framework that should be supplemented by close international relation- can provide a simple and consistent explanation for the ships and appropriate infrastructure; a passive trust in differences in reputation and identify concrete recom- the product cycle could be unhelpfuL mendations for improving the human resource man- Respmibiity: Private Sector Developmtent Depart- agement capacities of public agencies in Latin America. ment-Ashoka Mody. The underlying hypothesis for the differences in Completion date: September 1993. reputation of public sector human resource manage- Reports. ment in the countries examined in the study is this: the Mody, Ashoka, Jeny Sanders, Rajan Sun, Chandu Rao, and more thoroughly a human resource management sys- Frmando Contreras. 1991. nternational Competition in *te tem takes advantage of and enhances competitive pres- Diqcyelndustr. Keeping Pace wilh Technollogi Change." sures on all agents in each dimension of a human re- Industy and Energy Department Working Paper, Industry source management system, the more effectively hu- eries 50. World Band, Washington, DC man resources in that system can be managed and the Mody, Ashoka, Jerry Sanders, Rajan Sun, and Eric Thompson. more efficiently they perform. In short, just as competi- 1991. "Internaional Tnnds in Steel Mini-Mills: ing Pace tive conditions improve the functioning of private mar- wilh Technoogial Change." Industry and Energy Depart- kets, so they improve the functioning of public sector ment Worlin Paper, Industry Series 52. World Bank, labor markets. Washington, DC. The primary contribution of this research was to use Mody, Ashoka, Rapn Sui, and Jerry Sanders. 1991. 'Keeping this simple framework and hypothesis to illustrate why Pace with Change: Organizational and Tedhnological some public sector human resource management poli- Imperative.- World Delmuent 20(12). cies and practices work and why others do not. The Mody. Ashokd6 Raan Sun, Jenry Sanders, and Mohan studyshowed why many human resource management Tatikonda. 1991. "Itertional Competition in Pdnted policies and practices widely used in Latin America's Circuit Boad AssemblT King Pace with Tedhnoloical publicsectorsconsistentlyyieldbloa-ed,inefficient,and atange."lndustry and Eney DepamentWorking Paper, ineffective bureaucracies. It also showed wh, a few Industy S 53. Word Dad. Wahington DC. bureaucraciesinLatinAmericaen0joyconsiderablevepu- Mody, Ashoa, Rajan Suri, Jerry Sanders, and Davd VanZos tations for their capacity to effectively and efficiently 1991. 'Internaonal Competition in the Fotwear ndustr. manage their human resources. The study has pro- Keeping Pawith Tedogical Change." InduWtry and duced concrete suggestions of ways that the human Enry Depament Woring Paper, bndustry Series 51. resource management policies in nmny latin American Wold Bank, Washington DC countries could be strengthened if the govemnments in 16X Private Sector Development and Public Sector Management those countries are willing to take steps that are techni- elements from welfare and institutional economics. The cally fairly straightforward, but politically somewhat framework positions focal food processing and market- more difficult None of the suggestions, however, re- ing functions and institutions in the wider producer-to- quires steps that are patently impossible politically, consumer chain for individual commodities. It identi- such as firing a large share of public employees. fies the range of public goods and externalities associ- The findings of the research were presented at a ated with food processing and marketing that may World Bank conference on Civil Service Reform, held requiregovernmentintervention,assesses the technical May 20-21, 1993. The proceedings of that conference and economic characteristics of individual commodi- will be published, and a set of the papers from the tieaandmarketingfunctions,andidentifiestherangeof conferencemaybepublished inasymposiumvolumeof feaslbleinstitutionalstructureswithin the privatesector the Internationallournal ofPublic Administration. A trans- for coordinating food production, processing, and mar- latededitionof theproceedingsvolumewillbedissemi- keting activities. natedtoseniormembersofcentralpersonnelofficesand The empirical component of the research had two senior economic decisionmakers in client countries in parts. The first part, comnpleted in fiscal 1992, was a Latin America and the Caribbean. It is also planned to review and synthesis of major "success stories' in food organize country-specific or subregional seminars in processingandmarketingindevelopingcountries.Most Latin America and the Caribbean on the topic. of the cases examined were in Asia and Latin America Responsibility:LatinAmericaandtheCaribbeanTech- and covered relatively high-value horticultural, fish, nical Departinent, Public Sector Modernization Divi- meat, and oilseed products. The analysis covered the sion-Gary J. Reid. roles of the public and private sectors in commodity Completion date: September 1993. system development, patterns of competition and verti- cal coordination in these commodity systems, and the market and macroeconomic contexts in which these African Private Agricultural Marketing successful commodity systems developed. The second part of the empirical research was under- Over the past two decades many countries in Sub- taken in fiscal 1993. It focused on private sector activity SaharanAfricahaveexperiencedastagnationordecline in Sub-Saharan Africa in the processing and marketing intheir traditional agricultural exports and agro-indus- of higher-value food commodities and nontraditional tries, and the region has had few cases of successful food exports, including livestock and fisk products, agricultual export diversification. Food processing in- fresh and processed fruits and vegetables, vegetable dustries remain underdeveloped, and much of the po- oils, nuts, and spices. Based on a literature review, a tential for intraregional trade in fresh and processed surveyofacademicsandpractitioners,andfieldworkin food products has not been realized. Although there several countries, the research combined a regionwide have been adverse trends in the international market analysis of present pattens of private sector involve- conditions for Africa's leading export conunodities, ment in food processing and trade with detailed case there has also been a growing consensus that Africa's studies of food commodity systems and industries. poor agricultural export and agro-industrial perfor- Caseshtdieswere undertakenondairyandhorticulture mance is linked more closely to government failure at inKenya, cashew nuts in Tanzania, vanilla in Madagas- the macroeconomiic and sectoral levels. car, fishenes in Ghana, and cattle in Somalia. This analysis has led many researchersar ;practitio- Reponbity: Agriculture and Nahtral Rources De- ner- to reconmend policy adjustments as well as the paumttAgriculturalPoliciesDivision-aershonFeder restructuring of agricultural marketing systems to al- andStevenJaffee;AficaTechnicalDeparnt,Environ- low the private sector to play a greater (or dominant) mentally Sustainable Development Division-Graeme role in agricultural processing and marketing. But the Donovan; and South Asia, Coumtry Deparbnent U, Agri- understanding of the potential of private sector market- culture Operations Division-Benoit Blarel. With Diane ing in Africa and the forms that private enterprises and Dolinsky, U.S Department of Agriculture; Peter Little, privatemarketsstakeinAfricanagro-industryand trade Institute for Development Anthropology; and John is very limited. This research was undertaken to assess Morton, Geoffrey Ames, and Ben Bennett, Natural Re- the extent and forms of private sector activity in these sources lnstitute. The Overseas Development Admnis- areas,toexamnebothsuccessfulandunsucressfulcases tration, U.LK, contriluted funding to the researcL of private sctor food processing and marketing, and to Competion date- June 1994. determine the policy, financil, or other barriers to Rerts: further development in this area. Jfdee, SIens 199± -The Oraniato Coordinafion, and A cneptual framwork for the research was devel- Peromanc of Food Mrketin Systems A Conptual oped thatcombinesacommoditsystemapproadhwith Framwoik." 165 Private Sector Development and Public Sector Managemtlent _ . 1994. 'Private Sector Response to Market Liberalization methods suited to microenterprises and small and In Tanzani's Cashew Nut Industry.' Policy Research medium-scale enterprises, and the traditional institu- Woring Paper 1277. World Bank, Agriculture and Natural tions have the right operating methods but not the Resour Department, Washington, DC. resources to support the growth of such enterprises. Jaffee, Steven, with Peter Gordon. 1993. Expnrting High-Value Finally, at the micro level the performance of public FOOd Commoditis: Success Storiesfrem DeUVloping Countries. utilities and strategic enterprises remaining in the gov- World Bank Discussion Paper 19& Washington, DC. emient portfolio is impeded by distorted corporate )affee, Steven, and John Morton, eds 1994. Marketing Africa's governance and an inappropriate employee incentive High-Value Foods: Compmrative EWpeinces of an Emergent system. Undue political interference by the patrimonial PriveSector. Dubuque, Iowa: Kendall Hunt Publishing state destroys the balance between autonomy and ac- Company. countability needed for an efficient principal/agent model. And the incentives used in modem enterprises are not adapted to the indigenous cultures. Indigenous Management Practices: Lessons Thus, institutional disconnect is present at all three for Africa's Management in the 1990s levels--macro, meso, and micro-and the three types of disconnect are interrelated. and mutually reinforcing. This reseacmh project coprised 14 sparate empirical Although the crisis of institutional disconnect is only investigations, groupedinthreeclusters, lookingat issues now emerging as a recognized problem, it isa continen- of governance, participation, and accumulation in Africa. tal situation long in the making and resulting from a A major theme permeating the research is that the complex combination of cultural and historical factors, present social, economic, and political crisis in Africa is primary among them the political and social ruptures reaily a crisis of institutions-and that understanding occasioned by the colonial period. this crisis requires a reading of both the history and the The findings of the research have important opera- culture ofthe continentlThis crisis of institutions results tional implications for donors and national govem- essentially from a structural disconnect between the ments, for both substance and process. The operational indigenous (informal) institutions and management implications of policy changes suggested by these re- practices of the civil society and the modem (formal) sults will be explored in a conference in Senegal, sched- institutions and governance (inherited mostly from the uled for September 1994. colonial period). This disconnect has created a crisis of Responsibility: Africa Technical Deparbnent, Capac- legitimacy and accountability affecting every area and ity Building and Inplementation Support Division- level of African life. MamadouDia,CoralieBryant,PhilipMorgan,andPaula At the macro level the strong centralized govern- Donnelly-Roark; and East Aia and Pacific, Country ment inherited from the colonial period-lacking ac- Department IH, Country Operations Division-Habib countabilityto thecivil society, legislativeandjudiciary Fetini- With Carol Lancaster; Emile Ahohe; Moses checks andbalances, and transparency-4ed toastatein Kiggundu; Bemard Dasah; Monte Palmer; Asgede which dintelism substitutes for moral and political Hagos;DynaArhin;VemonRuttan;AlainHenri;Caisse legitimacy, and political and personal loyalty receive Frangaise; Waisfaiz; Englemarn and Mwai; Irma greaterrewardthanmeritThlispatrimonialgovernance Adelman; Tamara Duggleby; and Daniel C. Bach. The system is die major cause of poor economic manage- Swedish International Development Authority, Nor- ment and service delivery. wegianAgencyforIntemationalDevelopment,Finnish At the meso level the operational and financial dis- Intemational Development Agency, and Netherlands connectbetweentheinformalsector(mostlyindigenous) Ministry of Foreign Affairs contributed funding for the and the formal sector (mosthy foreign-dominated) has research. impeded the development of the local private sector. Completion date: June 1994. The absence of operational links between the activities of the inimrmal and formal sectors has led to a "missing middle" by limidting the possibility for muicroenterprises Regulatory Policy and Regulatory Reform to graduate to small and medium-scale enterprises and in Industrializing Countries to formal modem enterprises. And the absence of finan- cdal links between the formal banks and financialinsti- The purpose of this research, part of a series of tuiions and the traditional, rotating savings and lending studies in the Private Sector Development Department institutions has created an institutional void in the fi- on regulatory policy and regulatory reform in industri- nancial intennediation system that also hinders the alizing countries, was to provide a survey of consumer deveopment of the bl private sector. The formal policy that will be useful to World Bank staff and to institutions have the resources but not the operating poicymakers in indusializg countnes. Tle study 166 Private Sector Developnent and Public Sector Management synthesized recent developments in the economics lit- of strategies for private sector development, in particu- erature and reviewed the case for selective govermnent lar the extent towhich macroeconomic policy liberaliza- intervention. It conducted a systematic overview of lion needs to be complemented by measures at the existing public and private initiatives in both industrial institutional and sectoral levels in finance, technical and developing economies, surveying the main public assistance, and regulatory reform. and private institutions that deal with consumer policy The research is based on data from interviews with and the principal areas of legislation and enforcement, firms on the owners' characteristics; start-up and evolu- and highlighting differences in approach and emphasis tion of the business; structure of supply and demand; across countries. And it assessed appropriate policy, sources and intensity of competition; major constraints regulatory, and institutional initiatives for industrializ- on operations and new investmnent, changes in produc- ing developing countries. tion, employment, sales, and other business barometers Responsibility: Private Sector Development Depart- since r-kiural adjustment; use of and demand for mnent-Claudio Frischtak. With Eduardo Engel, Har- finance; aim future outlook and planst Firns across a vard University. full range of sizes were interviewed, from micro- Completion date: June 1994. enterprises to large firms. Within each country the re- sponses and constraints of firms of differentsizes willbe compared; these differences will, in turn, be contrasted Small Entexprises Adjusting to across countries. In addition, fims of the same size will Liberalization in Five African Countries becomparedacrosscountries. Thisanalysisshouldhelp to identify priority areas for policy intervention. The reforms embodied in structural adjustment ef- Preliminary findings suggest thatbefore the reforms forts have created the framework for an increased role the small-scale manufacturing sectorwas operating be- for the private sector in African industrialization. Be- lowitspotentialinthesamplecountriesasaresultof the causeofthelowlevel of foreigninvestnentandreduced difficult business environment that it faced. Liberaliza- direct government involvement, the local private sector tion eliminated some obstacles, generating gains in must provide the impetus for growth in the medium productive investment and output in this sector, but it term and a foundation for sustained industrialization. also increased competition, especially from imports. Evidence suggests that the expansion of the small-scale Small-scale enterprses appeared particularly respon- mnanufacturingsectorprecededthespreadoflargeplants sive to liberalization compared with large industries, inindustrializingcountries,displacingmicroenterprises many of which suffered from inefficient production and cottage industries and preparing the ground for practices and excess capacity, and compared wiLh larger-scale production by serving as a locus for the microenterprises, which tended to be constrained by development of more efficient produ:tion and manage- shortages of skills and resources and by intense compe- ment techniques. In Africa, however, the small-cale tition resulting from easy entry. Successful small-scale sector has expanded more slowly than it has in other enterprises were especially IkDely to have made adjust- regions. ments in thek intemal operations in the liberalizing This study synthesizes data from surveys cond icted environment These moves included taking advantage in five countries that undertook structural adjustment of the increased availability of imported inputs, finding reforms (Ghana, Malawi, Mali, Senegal, and Tanzania) market niches, branching out into new producb, and to identify constraints on small-scale enterprise growth. purchasing equipment. The objectives are to compare the prospects for smaDl Responibility: Africa Technical Department, Private enterprise in countries with varying degrees of reform SectorDevelopmentandEcononmcsDivision-William and differing industrial structures; to identify trends Steel; and Private S&ctor Development Department- andpatternsacrosscountries;andtoenhancetheunder- Leila Webster. With Ron Parker. standing of the support of small-scale enterprises as Completion date- September 1994. dynamiic agents in development. Rqnvits: The study asks five basic questions: (1) How can FPsdtak, Claudio 1990. "Adjustment and Conusained small-scaleenterprisescontributeeffectivelytodynamic Response Malawi on the Threshold of Sustained Gwth private sector development in African countries? (2) In Wold Barik Wash_ntn DC what ways does liberalization help and hinder these Cesou, 1.1991. 'LI Sectu hduserid au Mali R4pose a enterprises? (3) What are the main costraints that pri- rAuntfv btude Ma=mique Corw, Quebec DrafL vate manufachurers fac,? (4) What are the key detemi- Parker, Ron, and Whlliam Steel 19 1 "Smnl Enterus unde nantsof firs' success? (5) And what can policynakers Adjustment in SeregaL" World Usak Wahingon DC. and donors do to facilitate prvate sector growth? The Seed, Wiliam, and dla1 Webte. 1991. "Smal Enteyise answers to these questions are important for the design under Adjustment in Ghana." Weord Bn Washingto, DC 167 Private Sector Development and Public Sector Management Social Security Administration: between adniinistrative costs and the scope of thesocial Reqgonal Study security system's mandate. It will also examine the constraints thatcapacities and characteristics of existing There is extensive debate in the World Bank's Latin financial and capital markets impose on the feasibility America and the Caribbean Regional Office on social and advisability of different administrative approaches security reform. But the administrative capacity of so- to operating a social security system-for example, cial security institutes in Latin America and the Carib- privatized versus state-run management of mandatory bean to implement such reform is open to serious pension funds. question. The study will raise several types of economic argu- The gains to be realized from improved administra- ments: economies and diseconomies of scale and scope; tion are potentially large In Argentina, for example, devices for enhancing competitive pressures for social social security expenditures are 10 percent of GDP and security administrations to perform their tasks effi- 38 percent of total government spending. Moreover, ciently (transparency, decentralization of resource allo- administrative costs representa disproportionate share cation authority within a fixed budgetary envelope of these large total cost. In Mexico 12.8 percent of total when service provision units can be held accountable socialsecurityexpendituresarespentonadministrative for performance, and competition among multiple pro- costs. A recent World Bank study reported that admin- viders of given social security services). istrative costs for social security programs ranged be- Responswib7ity:LatinAmericaandtheCaribbeanTech- tween 10 and 32 percent of total expenditures in Latin nical Department, Public Sector Modernization Divi- Anmrica; the comparable figures for the United States sion-Gary J. Reid. and Canada are between 2 and 4 percent Although a Competion date: September 1994. Largepartofthe differenceisprobablyattributable to the broader mandate given most Latin American social securitysysteins--mcludingpovertyreductionartadpro- Japanese Lessons visionofhealthca-differencesinadmninistrativecosts on Technology Development undoubbedly also help explain the difference. This study will look at several issues. It will seek to The importance of technology in industrial develop- determine the extent to which such differences in costm ment, especially fora counhythatcannotrelyonnatural are accounted for by differences in social security man*- resources or cheap labor, is widely recognized. Coun- dates It wil examine the advantages and disadvan- tries must compete in quality, productivity (cost), and tages of housing under a single "social security" um- timeliness of delivery by making full use of technol- brella pension, poverty reduction, and health care pro- ogy-which in this case includes management and skill grams,comparedwithassigningthem toseparate agen- development cies. It will determine the extent to which apparently This study draws lessons for developing countries high administrative costs reflect administrative ineffi- fromJapan'sexperienceinindustrialtechnologydevelop- ciencies. And it will identify reasons why administra- ment The study intends to produce three reports, ad- tiveinefficiendesmayexistinLatin Americancountries dressing how Japan successfuly introduced microelec- and strategies that have proved effective in reducing or tronics automation, how Japanrs research and develop- eliminating such inefficiencies. mentssystem peroms, and how technology efforts make Thestudyfocusesontheadministrativecapacityand the difference in the performance of Japanese firms. efficiencyofsocialsecurityinstitutionsinLatinAmerica The study is being carried otut mainly through a and the Caribbean, controlling for their scope of activi- review of Japanese literature; additional data analyses ties (required contributions, actual collections,distribu- will be carried out when they are needed. tion of pension benefits, provision of health benefits). It Respnsiility: Private Sector Development Depart- will develop comparative indicators of perform ance ment-Carl Dahlman and Masayuki Kondo. and cost, and assess the implications of different social Compltin dat: October 1994. security schemes, organization, and scope of activities for those indicators. The study will identify best prac- ticesintheregion, and makerecommendations forBank Mobilizing Private Capital kndingtoimprovesocalsecurityadministradan.Coun- for the Power Sector. Experience triesliklFytobestudiedincludeChile,Ecuador,Hondu- 'from Asia and Latin America ras, Mexico, ard Uruguay. The study will link the administrative issues to As the conditions in the market for private power broader poligc and fincing issues, such as the link continue to evolve rapidly and governments push for- m6s Private Sector Development and Public Sector Management ward with privatization efforts, new financing models international environmental guidelines, and be com- and approaches to risk allocation warrant closer exami- patible with least-cost expansion programs. nation. This study examines private power projects and The results of the studywiU be disseminated through programs in a range of countries with varying degrees a workshop bringing together representatives from the of country risk and access to intemational capital mar- World Bank Group, developing-courttry goverunents, kets and with differing regulatory environments. and private power developer and investor groups. To assess private power initiatives under varying Responsibility: Cofinancing and Financial Advisory circumstances, the study considers eight countries in Services Department, Private Sector Development and three country typologies: Privatization Group-David Baughman; and Industry * Categoryl -countrieswithhighcountry riskpro- and Energy Departnent, Power Development, Effi- files and little or no access to capital markets (Belize, ciency,andHouseholdFuelsDivision-PeterCordukes Guatemala, Jamaica, Pakistan) and Ranjit Lamech. With Hagler Bailly; and Claudio * Category2-countrieswithmoderatecountryrisk Pardo, InternationalLinks. The U.S.AgencyforInterna- profiles and some access to capital markets (Colombia, tional Development contributed funding to the project the Philippines) Completion date: October 1994. * Category 3-countries that have good country risk profiles and access to capital markets but may be constrained by amounts or term, or both (Chile, China, Governance Capacity Malaysia). and Structural Adjustment The study examines eight project finance transac- lions undertaken on a build-own-operate (BOO) or Political and institutional constraints are often the build-operate-transfer (BCT) basis. It performs a com- most serious obstacles to the successful adoption and parative analysis to identify the similarities among the implementation of adjustment programs. The political projects in risk sharing, and the extent towhich country costs of displacing entrenched interests and imposing and sector environments led to particular levels of gov- short-term losses on economically vulnerable groups emnment support-important because the close inter- may be too high for many governments to face. In face between public and private sectors that is often addition, adjustment policies often require new institu- presentinprivate sectorinfrastructureprojectscanpose tionalarrangementstosupportthemprogramscanalso a significantpolitical risk The study also looks atpower be stalled or reversed because of failure to promote pricing issues, the role of multilateral and bilateral timely and complex institutional change. guarantees, and issues relating to competitive bidding; This project is undertalang a cross-country analysis least-cost planning, and environmental compliance. of the relation between governance capacity and the Preliminary results suggest that, although private degree of success in economic reform in developing power projects are unlikely to fill the significant gap in countries. For the purposes of this analysis, governance power sector financing, theywill have an importantrole capacityisunderstoodprimarilyas theability toenforce in many countries and offer significant private capital. universalrulesthatregulatesocialandeconomicbehav- -Basic structures (for example, BOO and BOT) can be ior,andtopoliticallyaggregatediverginginterests, thus replicated acrosscountries,buteachprojectwillhave its promoting policies that can credibly be taken to repre- own unique set of circumstances that wili lead to differ- sentthe public interest The project focuses in particular ent solutions regarding risk-sharing between private onthestate'sabilitytowithstandpressurefrominterest and public entities. Projects can proceed in countries groups and avoid capture, and seeks to examine condi- without fully established private sector power policies tions under which developing-country states can de- inplacebecauseprivatesectorprojectscanberegulated ploy enough of such capacity to overcome political throughcontractualarrangements.Butthesector'slong- resistance, design and implement apppriate polices, term development will hinge on the success of power and sustain economic reform over time sector reforms. In high-risk countries goverunent guar- The project indudes 10 case studies-4olivia, Brazil, antees and involvement of multilateral and bilateral Egypt, Ghana, Malaysia, Pakistan, Tanzania, Turkey, agencies also play a critical role in enabling project Venezuela, and Zambia. These case studies pay special sponsors to mobilize private debt and equity. Pricing in attention to fiscal reform, for three basic reasons. First the private power sector tends to reflect the cost of this policy area is more amenable to cross-county com- power more explicitly than that in the public sector, but parisons, thanks to moe or less standardized data. In nonetheless seems to be broadly in line with public additio, policy altmeatives and reform attempts are alternativesdespitesubsidiesinpowertaffsPrvately easily identified. Second, fisca policy is subject to sg- owned projectsalso ted tobe bid competitively, follow nificant distributive struggles between different inter- 169 Private Sector Development and Public Sector Management estgroups,and thereforeisamongthepolicyareas most ologically from previous work on East Asia in that it difficult to reform. Third, experience suggests that eco- views the problem of development in partas a problem of nomic reform programs most often flounderbecause of contractual relations between the state and the polity and failures to carry out fiscal reform, including the stabili- among key groups within the polity. The study's tool kit zation of public accounts. consists of concepts and theories that have been devel- The analytical framework of the project is based on a oped under the rubric of the new institutional economics. recent background paper (Leila Frischtak, Governance Among the central issues it addresses are path depen- Capacity end Economic Reform in Deueloping Conntries, dence, asynmetric informtation, and opportunism. World Bank Technical Paper 254, Washington, DC, The study argues that in the successful East Asian 1994). First drafts of papers based on the case studies economies the state was thrust by history toward a have been completed and were discussed in June at a developmentstrategy that required it to paycloseatten- workshop in Washington, DC. The project will also tiontothe needs of the less fortunate members ofsociety include a paper that lays out the analytical framework, -path dependency. Growth had to be accompanied by and another that summarizes the main results in a poverty atleviation and the reduction of income ineq- comparative perspective and derives policy conclu- uality. To achieve this required solving problems in- sions. The results of the research will be presented in a volving asymmetric information and opportunistic be- conference tentatively scheduled for mid-November. havior. Broadly speaking, the state had to be able to Responsibility: Private Sector Development Depart- provide credible signals to the polity to indicate that it mnent-Izak Atiyas. With Leila Frischtak, Stanford Uni- was truly interested in improving the living standards vetyitSunelEsim,AmericanUniversity,juanAntonio of the less well-off. Equally important, the state had to Morales, Universidad Catolica Boliviana; Saad Eddin provide credible guarantees that private investment Tbrahim, Ibn Khaldun Center, Cairo; Charles Jebuni, (both physical and human)-the main engine of University of Ghana;Jomo Kwame Sundaram, Univer- growth-would not be expropriated directly, through sity of Malaya, Kuala Lumpur; Hafeez Pasha, Univer- confiscation, or indirectly, through bad policies. In the sity of Karachi; Brian van Arkadie, Consultants for language of the institutional economnist, the state had to Development Program, the Netherlands; Juan Carlos be able to signal its true type and had to establish Navarro, Enstituto de Estudios Superiores de Admini- mechanisms to guardagainst its own potentiallyoppor- stracion, Caracas; and Oliver Saasa, University of Zan- tunisticbehavior.Thesocialcontractrequired forshared bia. The RoyalMinistryof ForeignAffairs, Norway,and growth could not have been enforceable unless these the Ministry of Foreign Affairs, the Netherlands, are problems were successfully addressed. contributng funding for the research This analysis has important implications for Compleion date: December 1994. policymaking. One is the necessity of packaging the right institutions with the right policies. By themselves, even the right policies are likely to fail. Policies must be Political Institutions, Leadership, and the juxtaposed with institutions that facilitate the building Principle of Shared Growth: Implications of of political supporL the Asian Miracle for Policy Implementation Responsibility. Policy Research Department, Finance andPrivateSectorDevelopmentDivision-JoseEdgardo The unprecedented performance of eight East Asian Campos. With Hilton Root, Hoover Institution. economies has preoccupied scholars, researchers, aca- Compltion dak: December 1994. demics, joumalists, and policymakers for more than a decade It has spawned a debate that stil rages: In the successful East Asian economies, did the state pursue Privatization of Agricultural interventionist polices, and, if so, how effective were Support Services tese policies? Thedebatehastendedtomissacrucialpoint,however. Agricultural support services-such as agricultural It has glossed over the importance of the efforts of dtese research and extension, seed production and distribu- eocmonies'govenmentstobuildanappropriate political tion,plantprotecton,andlivestockservices-cangreatly foundation to support the requisite econuoc policies. As influence the sector's productivity, sustainability, and the experience of many other developing countries has flexibility and are an essential element of agricultural shown,potenbialrygoodpoiciesareeasilydealtedinhe development In the past, a principal component of absee of an adequate political foundatixL government strategies for ensuring growth in agricul- This study is analyzing the prooess of foundation tural output has been the public provision of agricul- building in these eight economies. It differs method- tural support services. Recently, however, as countries 170 Private Sector Development and Public Sector Management have struggled to achieve higher levels of economic thus scope fora considerably greater role for the private efficiency-and spurred by growing fiscal deficits and sector in the delivery of agricultural services in many pervasive govemment inefficiencies-governments developing countries. have had to reconsider their strategies. And the transi- But the privatization of agricultural services cannot tion from planned to market economies occurring in and should not be undertaken as one broad strategy. Eastem European countries and the countries of the Some agricultural services, because of their public good former Soviet Union has sharpened the focus on market nature, externalities in their production or use, econo- liberalization and privatization options, extending to mies of scale, or other features associated with their the delivery of agricultural support services. This re- delivery, may require some form of government inter- search was initiated in response to the need to under- vention. This need not entail government delivery or stand the appropriate roles of the public and private ownership. The research has found that for many ser- sectors in the delivery of these services. vices, regulation, subsidization, and taxation of private The research applies principles of welfare and insti- sector activities have frequently proved to be more tutional economics to analyze the economic nature of efficient forms of intervention. the many functions that constitute agricultural research The study's findings have been presented at the and extension, seed production and distribution, plant International Symposiumn on Public and Private Sector protection, and livestock health services. It examines Roles in the Provision of Agricultural Support Services, whether these functions have public or private good held at the Inter-American Institute for Cooperation in properties and whether their delivery entails externali- Agriculture, San Jose, on May 17-19, 1993, and at a ties, moral hazard problems, or economies of scale. This workshop on Issues in Private Sector Development in analysis is used to develop a framework for establishing Agriculture, held at the World Bank on June 2-3,1993. the appropriate government and private sector roles in Responsibility: Agriculture and Natural Resource the delivery and financing of these services. Department, Agricultural Policies Division-Cershon The study identifies and analyzes worldwide pat- Feder, and Agricultural Technology and Services Divi- temsinthen-ixof publicand privatesectorinvolvement sion-CornelisdeHaan,JitendraSrivastavaandWidlem in thesupplyof agriculturalservicesL Thisworkisbased Zijp. With Steven Jaffee; Lisa Schwartz, Cornell Univer- oninterviews and correspondencewith research, exten- sity, and Dina Lb Umali-Deininger. The French Foreign sion, livestock, crop, and seed specialists in the Consul- Ministry, CIRAD (France), DANIDA (Denmark), and tative Group on Intemational Agricultural Research thelnter-AmericanlnstituteforCooperationinAgricul- system, the academic community, and international ture (Costa Rica) contributed fumding to the researdL development organizations and with industry repre- Completion date: December 1994. sentatives, and on information in published sources. Reports: Trawing on published materials, project documents, Jaffee, Seven, and jitendra Srivastava. 1992. Sed System and interviews, the study has developed country case Developmet: The Appropriate Rates of the Private d Public studies examining the complementary or conflicting Sectors. World Bank Discssion Paper 167. Washington, DC. roles of the public and private sectors in the delivery of _.1999. 'The Roles of the Private and Public Sectos in particular agricultural services, the evolution of institu- Enhancing the Perfonmance of Seed Sytms." Wol Bank tional arrangements in such service sectors, and the Resavh Observer 9(1):97-117. nature of private sector service delivery systems. Umali, Dina L. 1992. Pubik and Private Sector Roim in Agulha The research has found that the public and private Rendu The"y and Eapere World Bank Discon sectors have come to play complementary roles in the Paper 176. Washigton, DC delivery of many agricultural services (with the private Umai, Dina L, Gershon Feder, and Comelis de Hua 1992. Th sector undertakdng most commercial activities) in in- Basm bdwe Publk and Private Sector Actiies in th dustrial market economies and in many of the more Ddiey of Ltock Services. World Dank Dbui Pa commerially advanced developingcountries. Ina lrge 6a Wahington, DC number of developing countries,howeverpublicsector . 1994 'Animal Health Servkxc: Pinding the Balance institutions continue to dominate formal systems of between Publc and Prvate Delivy. World Bank Rnh agricultural service delivery. In tiese countries a combi- Observer 9(1):fl-n nation of restrictive licensing, monopoly marketing ar- Umoli, DiN, and Lisa Sdhwatz. 199 Pubcand Prkwe rangements, subsidized public services, price interven- Agricdiural Extensio: Beygvt TrIdILm FresHer. Wold tions, weak legal protection, smaU market size, and BankDisusion Paper 236. Washinto, DC inadequate human, financial, and techncal resoure Usnul, Diu L, Li Swartz, ard Wilem Zp. "BalandgU has inhubited private sector participation, even in areas Pulic and Private Sector Role in the Prvision of Agicd- tht have proved profitable in other countries. There is turl Extbn Servmes Word Ua; Wauhktn DC in Private Sector Development and Public Sector Management Umali-Deininger, Dia. Forthcoming. 'Plant Protection The Role of Govemment Services: The Babnce between Private and PubUc Sector in Economic Development: Roles." An Analysis of East Asian Experiences World Bank and the Inter-American Istitute for Cooperation in Agriculture. 1994. Publicand Privle Sector Roles in the The rapid transformation of a number of East Asian Prnouon of Agridlural Sport Senics, Puweings of the economies since 1965 constitutes a remarkable event in IntIentinal Symposiuaiz. InLer-American Istitute for the history of economic development Rapid structural Cooperation on Agricultu, San Jose, Costa Rica, change, steady expansion of the nontraditional export May 17-19. sector, and sustained high growth rates are key features of the postwar development experience of the high- performing East Asian economies. Another important Intemational Comparison element of the East Asian development experience has of Railway Privatization beenthe role ascribed to govemmentand publicpolicy. The precise form that role has taken remains the subject Anumberofcountriesareembarkingonprivatization of lively debate among academics and development programns for the transport sector, particularly for rail- practitioners. roads. These countries stand to benefit from the lessons Thisstudyfocuses on thefoUlowingconcernsrelating thatothercountreshaveleamedfromtheirexperiences to government and public policy: with railroad privatization. This study aims to assess * 77e creation and distribution of performance-indered and analyze the lessons leamed from the privatization rents. How does the allocation of rents affect the incen- and private sector development experience of railways tive structure, and how does the incentive structure in Argentina, Canada, Japan, New Zealand, Sweden, influence the behavior of various economic agents (sav- and the United States. The study will extract generaliz- ers,banks, industrial firms)? The study will investigate able lessonsand definebest practices in this unique and the role of goverrunment in the creation and distribution specialized industrial reformL of rents, giving special attention to financial repression The study will develop a typology of privatization and regulation. and private sector development approaches in the rail- * Comnmitment versus flexibility. Does the East Asian road sector based on a comparative analysis of the case support a discretion-based model of decision- recent experience of the six countries. It will assess the making, or does it reinforce the traditional view that relative merits and limitations of differentprivatization good policy regimes should apply transparent and uni- tactics, enterprise structures, regulatory reforms, and form rules, endow bureaucrats with few discretionary restructuring techniques. Based on prmary data col- powers, and insulate policy formulation and impe- lected from these countries and through in-depth inter- mentation from organized interests? views with key officials and experts, the study will * Thwcoordiinag roleofgovenment.Whatdoeseco- conduct financial and economic analysis foreach of the nomic theory applied to East Asia say about the role of sixcasestudies. The analysis will cover company finan- govermment in coordinating the exchange of infonma- cial data, emplovee productivity, productivity ratios, tion and in facilitating private decisionmnaking? operating data, traffic data, rolling stock, and system * The role of gouvrnment in designing and adapting length both before and after reform. institutional bases so as to capture foreign investment The study's results wiU be widely disseinated, and technology. especially to policymakers and experts in the railroad * fndutrialpolidk,especiallythoepromotingheavy sector in developing countries. Findings will be dis- industy. seminated through a series of regional seminars and in * Governments in the tansition pom a socialist to a a Cofinancing and Facial Advisory Services Discus- narket ecom. sion Series paper. * Chagein tlieroeofthesike Do the roles assurnedby Responsibiy: Cofinancng and Fiancial Advisory stabesdhangeorshouldtheychangeascountriesprogress Services Department, Private Sector Development and frm one stage of development to another? What is the Pdvatization Group-Ronald I. Kopidci. With Murray role of goverment in system change in general? King; Jorge Kohon Transmode Consultants; and Jan The findings of the research will be disseminated Eric Nielson, Japan Economic Research Institute. The th EDIWorkingPapers,aworkshopforBankstaff govemmentsofArgentin,ada,J apan,NewZealand, inSeptember 1994, and the publication of a book-ength Sweden, and the UnitedStates are contributing funding mnanuscript to the rearch. PResoniiy:EcnomicDevelopmentlnstitute,Stud- Competion dft January 1995. ies and Training Design Division-Hyung-Ki Kim, and 272 Private Sector Devdopment and Public Sector Management Finance and Private Sector Development Division- Responsibilily: EconomicDevelopmentInstitute,Stud- Saha Meyanathan.With MasahiroOkuno-Fujiwara and iesandTrainingDesign Division-Hyung-KiKim.With Tetsuji Okazaki, University of Tokyo; Masahiko Aoki, Yujiro Hayami, Aoyama-Gakuin University; Toshihiko Thomas Hellmian, Lawrence Lau, and Yingyi Qian, Kawagoe and Akihiko Ohno, Seikei University; Kazuo Staniford University; Joseph Stiglitz, Stanford Univer- WadaandMotoshigeIto,UniversityofTokyo;Masayukd sity and Council of Economic Advisors; Juro Teranishi, Tanimoto, Tohoku University; I. Geaun, National Tai- Hitotsubashi University; Yoon Je Cho, Korea Tax Insti- wanUniversity;Jung-HwanLee,KoreaRuralEconomic tute; Jomo Kwame Sundaram, University of Malaya; Institite; Keijiro Otsuka, Intemnational Food Policy Re- Meredith Woo-Cummings and Kiminori Matsuyama, search Istitute; De-Qing Liu, Tokyo Gakugei Univer- Northwestern University, and Barry Weingast, Hoover sity; Masao Kikuchi, Chiba University; and Benja InstitutiorL Policy and Human Resources, Japan, and Jirapatpimol, Chiang Mai University. Policy and Hu- the Development Trust Fund are contributing funding manResources Japan,andtheDevelopnmentTrustFund to the research. are contributing funding to the research. Completion date: February 1995. Completion date: June 1995. Modem Role of Rural Entrepreneurs The Privatization Experiences of Airports in Economic Transition: Selected Asian Experiences Privatization in the airport sector has received less attention compared with that in other sectors, yet it is Withthecurrent rate of growthinpopulationand the nevertheless a rapidly growing trend worldwide. By labor force and the high underemployment in rural early 1994 some form of privafized airport operation areas,developingcountries,particularlythe Asiancoun- existed, was being developed, or was under way in tries, face a severe employment problem. The purely more than 50 countries. Airport privatization has been agriculturalsectorcannotabsorb thesurpluslabor. And undertaken in both industrial and developing coun- themodemindustialsector,evenifitgrewlf-15percent tries, but in different forms. Generally, industrial coun- ayear,cannotcreateemploymentopportunitiesattherate tries divest all or partial interest in existing airports or required because of its small initial size and the capital airport authorities, and developing countries use the intensity of its tedhnology. This situation leads in many long-termleaseandconcessionmechanismstopromote counties to migration from rural to urban areas in search private sector participation in the development of air- of employment, aggravating the problem of urban con- port facilities while retaining ownership rights. gestionandleadingtoopenunemploymentandsocioeco- This study will begin with an overview of the airport nomic-political tensions and conflitsa sector, defining the nature of the business and review- To improvelivingstandards and reduce poverty and ing its financial and economic performance. It will also inequality, it is essential to promote the development of examine the pattems of changing ownership structures the rural, nonfann, labor-intensive sector. Such a rural- in selected countries and their effects on the perfor- based development process would provide employ- mance of airports. The study will then examine the key ment opportunities in rural areas at a much lower issues that will concern policymakers and airport man- capital cost than in the urban areas and at tie same time agers in the coming decades as airport capacity falls sklw migration from rural to urban areas. increasingly short and the need grows to develop new From historical and current evidence, it appears that and innovative sources of financing in response to stra- theemergenceofruralentrepreneursdependsonobjec- tegic shifts in aviation policy. The study will include a tive opportunities, an appropriate institutional or orga- comparativeanalysisof differentcountries'airportregu- nizational structure, and a sympathetic and favorable latory frameworks and their effect on the cost and government policy famework. This research is aimed revenuestructuresofairports,congestion,environmen- at identifying these and other strategic factors respon- tal concers, and ownership patterm. sible for the emergence of rural entrepreneurs in differ- The study is expected to produce some lessons and ent countries. The objective of the research is to assist specific suggestions for policymakers wishing to policymakers in developing countries and in the for- privatize airports. It will seek to increase the awareness merly socialist countries in formulating strategies and of policymakers and Bank staff about emerging trends policies that promote rural entrepreneurship and the that are improving the effectiveness of aiport manage- rapid development of the nonfarm rural sector. The ment and administration. resarch is problem- and policy-oriented and so does Repowwibii:LatinAmerimandtheCarlbbeanTech- not deal with theoretical abstractions. nical Departnent, Public Sectr Modernization Divi- 173 Private Sector Doevlopment and Public Sector Management sion-Anil Kapur and Albert Amos; Cotinancing and local arrangements; the studies will highlight strategic Financial AdvisoryServices Departnent, Private Sector options enhancing the fonnationof decentralized policy Development and Privatization-Roxolana Kassaraba; and promoting economic development and improved andTransport,Water,andUrbanDevelopmentDepart- service delivery. The studies will address some the- ment, Transport Division-Jean Paul Desgranes. With matic strands emerging in the Latin America and the Aviation Planning Associates, United States. Caribbean Regional Office, such as the outcome of dif- Completion date June 1995. ferent models of intergovernmental distnbution of ad- ministrative tasks and responsibilities; financial arrange- ments (induding capital market financing of infrastruc- Regional Studr: Decentralization Policies ture by local and regional governments); and strength- In Latin America ening of insfitutions and organizations. The studies will reflect country characteristics (size, This research project is motivated by the increasing administrative stuctures, and organization of the state- evidence that macroecnomic policy change, new in- for example, unitary versus different degrees of feder- vestment, and social development cannot be sustained alization), sectors (human resources and poverty, envi- without political and institutional change at the ronment and infrastructure), and levels and styles of subnational levels. Drawing on and exending work by government (such as formal and informal networks of the Latin America and the Caribbean Region Country central-regional-local cooperation and issups of partici- andTechncalDepartmentsandthemostrecentoutside pation). The research will review theoretical and con- reviews of economic and sector work and lending, the ceptualworkon decentralizationand analyze five to sLx project reviews emerging solutions to practical prob- case studies to examine policies thatgovernments have lenisof improvingdecentralized governance and imple- pursued.Thestudieswillbetailored toaddressissues of enting related policies. It gives special attention to implementation arising in the cocttry operations de- intermediate, or 'meso," levels of public and private partments. interactions; expanding the menu of options open to An important part of the project is a series of four to Local governments for mobilizing resources; efforts to five seminars planned to disseminate the research find- reduce or remove political interference in public sector ings among Bank staff and in the region. management; and means to increase participation, In- ResponsMluity:Latin America and the CaribbeanTech- cluding electoral instrumnts to guide public policy- nical Department, Public Sector Modernization Divi- making and investment decisions. sion-Harald Fuhr, and Advisory Group-Tim The projectcomprises a set of small, complementary CampbelLWithGeorge PetersonUrbanistitute; Gwen studies designed to document best practice exprience Ball; Gary Bland, Woodrow Wilson Center, Florence in elected countries and to identify gaps requiring Eid, Massachusetts Institute of Technology; and Jorge attention. One theme concerns incentive structu im- Daniel Taillant plicitly or explicitly incorporated in central-regional- Completion dte: August 1996. 174 BANK iRESEARCH OUTPUT Below are listed varioustypesof research outputarising G. Policy Research Working Papers. These working from research and policy review activities at the Bank. papersare avehicle forquickdissemination, sometimes To provide maximum coverage of suchoutput, research in an incompletely polished format, of findings of work is defined for the purposes of this list in a broader rather under way in the Bank. The primary audience is Bank than a narrower sense. Copies of Bank publications staff, though some copies are circulated to interested (categories A, E, and F) can be purchased or ordered researchers outside the Bank. fromthe Bank's bookstore ordistributors (see liston last H. Othr working papers. These papers are produced page of this volume). Copies of working papers and and distributed by departments, some divisions, and a background papers (categories CG-) can be obtained vice presidency. They disseminate quickly findings of from the authors or the associated Bank departments. departnental research and are targeted primarily to Reprints of articles from the Bank's research journals specialists in the Bank (category C) may be requested from the authors; other L Background papers to World Deveklpment Report published material can be purchased from the publish- 1994. These papers are conmmissioned from researchers ers (categories B and D). The following types of fiscal inside and outside the Bank Some also come out as 1994 research output are listed: Policy Research Working Papers or in other forms. A. Research-oriented books written by Bank staff and published either by the Bank or by other publishers. Thislistalsoindudesperiodicdatapublications,suchas A. Books by Bank Researchers the World Debt Tables, that feed subsequent research. I. Research by Bank staff published as part of col- Alderman, Harold. 1993. Poverty, Household Food Secu- lected volumes of research papers. rity and Nutritn in Rural Pakistan. InternationalFood C. Articles appearing in the Bank's two economics Policy Research Institute Research Report 96. Wash- jourals, the WorldBankEconomic Reiewand WorldBank ington, DC. Reseah ObserVEr. Bamberger, Michael, and Abdul Aziz. eds. 1993. The D. Articlesrelated toBankresearchandpublishedin Design andMagment ofSustainabk Proects toAllei- non-Bank professional joumals. ate Poverty in South Asia: Co11ected Papers from an EDI E. Policy and Research Series, a formal series for dis- Seminar Hdd in Bangalore, India, July 31 to August 9, senination of policy and research work of professional 1991. EDI Seminar Series. Washington, DC: World quality, with a strong policy orientation, and of interest Bank. to a relatively wide audience. Bitran, Ricardo A., and D. Keith Mdnnes. 1993. The F. World Bank Discussion Papers, Technical Papers, Demand for Health Care in Latin America Lessons from and other Bank papers series. the Dominica Republic and El Salmdor. EDI Semina * WorldBankDiscussion Papers. This series provides Paper 46. Washington, DO World Bank. anoutletin the public domain forabroad range of Bank Caprio, Gerard, David Follerts-Landau, and rimothy D. outputthatprovidesdetailed resultsofinteresttodevel- Lane. 1994. Building Sound Finance in EmergingMarket opmeent practitioners-from work on narrow research Ecoomies. Washington, DC. Intemational Monetary topics or country-specific studies. Fund and the World Bank. * World Bank Tedinial Papers This series pwvides an Cernea, Michael ht, and Scott Guggenheim, eds. 1993. outlet in the pubic domain for research and studies that Anthopolgical Apprches to InwluntaryeleWmnt: are highly technical and aimed at a narrower audience. Policy, Practice, and Theory. Boulder, Colo.: Westview - Othr published series. Papers in such series as the Press. Uving Standards Measurement Study Workng Paper Claessens, Stipn, and Ronald C Duncan-, edt 1993. Man- and Econormic Development Istitute series typically aging Commodity Price Risk in Developing Countrie. focus on a speialized topic and are designed to give Bhltmore, Md.: Johns Hopkins University Press prominence to Bank work on that topic or to work by a Connolly, Mchael, and Jaime de Mdo, eds. 1994 The particular Bank uniL Fffets of Phtecionim on a Small Country: The Cae of 175 Bank Research Output Uruguay. World Bank Regional and Sectoral Study. Janiison, Dean T., and W. Henry Mosley, eds., with Washington, DC. Anthony R. Measham and Jose Luis Bobadilla. 1993. Demery, Lionel, Marco Ferroni, and Christiaan Disease Control Priorities in Developing Countries. New Grootaert, with Jorge Wong-Valle, eds. 1993. Under- York Oxford University Press. (Also published in standingthe Social Effects of PolicyReform. Washington, French and Spanish.) DQ World Bank. Kumar, Krishna. 1993. Rapid Appraisal Methods. World d'Silva, Emmanuel, and Simmatiri Appanah. 1993. Bank Regional and Sectoral Study. Washington, DC. Forestry Managementfor Sustainable Development. ED! Kwaku, Ken. 1994. MIGA Roundtable on Foreign Direct Policy Seminar Report 32. Washington, DC: World Investnmnt Policies in Africa: Proceedings and lessons. Bank. Washingi-n, DC: World Bank. Fafloux, Pransois, and L Talbot. 1993. Crisis and Oppor- Leipziger, Dtanny M., and Vinod Thomas. 1993. The tunity: Environment and Development in Afria. Lon- Lessons ofEast Asia:An Overuiew of CountryExperience. don: Earthcan Publications. Washington, DC: World Bank. Faruqi, Shaki, ed. 1993. Financial SectorReforms in Asian Lipton, Michael, and Jacques van der Gaag, eds. 1993. and Latin American Countries: Lessons of Comparative Including the Poor: Proceedings of a Symposium Orga- Experin. EDI Seminar Series. Washington, DC: nized by the World Bankand the International Food Policy World Bank. Researck Institute. World Bank Regional and Sectoral Farvacque-Vitkovic, Catherine, and Patrick McAuslan. Study. Washington, DC. 1993.Politiquesjfci?resdanslesvlksendEvepment. Little, Ian, Richard N. Cooper, W. Max Corden, and Paris: Association des etudes fonci&res. Sarath Rajapatirana. 1993. Boom, Crisis, and Adjust- Fmndlay, Ronald, and Starislaw Wellisz. 1993. The Politi- ment: The MacroeconmicExperienofDevelopingCoun- cl Economy of Poverty, Equity, and Growth: Fie Small tries. Washington, DC: World Bank, and New York Open Ecamomies. Washington, DC. World Bank Oxford University Press. Gala, Ahmed, and Mary Shirley, eds. 1994. Does Middleton, John, Adrian Zidennan, and Arvil Van Privatization Ddiver? Highlights from a Wrorld Bank Adams. 1993. Skills Training for Productivity: Voc- ConfrenceEDIDevelopmentStudy.Washington,DC: tional Education and Training in Developing Countries. World Bank. Washington, DC: World Bank. Goldin, lan, Odin Knudsen, and Dominique van der Miflngton, Andrew C, Richard W. Critchley, Terry D Mensbrugghe. 1993. Trade Liberdizatiom Gla Eco- Douglas, and Paul Ryan. 1994 Estimting Woody Ho- nomiclmplwations Washington,DC.WorldBank.(Also ; s in Sub -Sd)m Afrir Washington, DC. Wodd Barn published in Frenchl) Mohan, Rakesh. 1994. Understanding the Developing Me- _. .1994. TradLbdizaln:Towards 2000. Washing- tropos: Lessons fm the City Study of Bogota and Cai, ton, DC: World Bank. Colombi. Washdngton, DC; World Bank. Goodland, Robert and Valerie Edmundson, eds. 1994 Moser, Caroline. 1993. Gender Planningand Deuelopment: Emronmenial Assemet and Devlpment. A World Theony, Practice and Traning. New York and London: Bank Symposium. Washngton, DC. Routledge. Grosh, Margaret E. 1994. Administering rted Social Munasinghe,Mohan,ed.1993.EnvironmentalEcomnics Prgrm in latin Amei: From Platitudes to Practice. and Natural Resource Management in Developing Coun- World Bank Regional and Sectoral Study. Washing- tries. Compiled in association with the Committee of ton, DC. International Development Institutions on the Envi- Haddad,WadiD.,andTerdDemsky. 1994.7 TeDynam- ronment Washington, DC: World Bank. ics of Eduattion Policymaking: Cas Studies otf Burkina Norse, Elliott A. 1993. Global Marine Biologial Diversity: Fasojorda, Peruad 7Thail Washington, DC: World A Strategy for Building Conserva tion into Decision Mak- Bank. ing. Washington, DCO Island Press. Husain, Isuhrat, and Rashid Faruqee, eds. 1994t Adjust- Ransom, Angela, Siew-Mun Khoo, and Viswanathan mentinAfria:LessonsfmCountryCaseStudiks.World Selvaratnam. 1993. Improuving HighEr Education in De- Bank Regional and Sectoral Study. Washingtom DC. veloping Countries. EDI Seminar Report. Washington, Inter-Aerican Istitution for Cooperation on Agricul- DO World Bank. tme (IICA), World Bank, Center of International Co- Ravallion, Martin. 1994. Poverty Comparisons. Vol. 56 of operationonAgricultualResearchforDevelopment Fundmetals of Pure and Applied Economics. Chur, (CIRAD),DANIDA,andtheFrenchForeignMinistry. Switzerland: Harwood Academic Publishes 1994. Pubc aud Pritte Setor Roles in the Priion of Serven, Luis, and Andris Solimano, eds 1993. Striving Agriclural Support Services. Costa Rica: IICA and for Growth AfterAdpustment The Role of C F -orm- World Bank. tion. Washington, DO World Banl. 176 Bank Research Output Singh,Inderjit,J.Brada,andA.Torok.1994. Firms Afloat .1993. Commodity Trade and Price Trends, 1989-91 and Firms Adrift: Hungarian Industry and the Economic Edition. Washington, DC. Transition. Armonk, N.Y.: M.E. Sharpe. . 1993. The East Asian Miracle.: Economic Growth and Solimano, Andres, Osvaldo Sunkel, and Mario 1. Blejer, Public Policy. A World Bank Policy Research Report. eds. 1994. RebuildingCapitalism:AlternativeRoadsaft'ir New York: Oxford University Press. Socialism and Dirigsme. Ann Arbor. University of .1993. Georgia: A Blueprintfor Reform. Washing- Michigan Press. ton, DC- Srivastava,Jitendra P.,andHaroldAlderman,eds. 1993. _. 1993. Guyana: Private Sector Development. Wash- Agriculture and Environmental Challenges: Proceedings ington, DC. of the 7Thirteenth Agricultural Sector Syntposium. Wash- _. 1993. Gwyana: Primate Sector Review. Washing- ington, DC: World Bank ton, DC Summers, Lawrence H. 1994. Investing in All the People: .1993. Historically Planned Economies 1993:A Guide Educating WKmen in Developing Countries. EDI Semi- to the Data. Washington, DC. nar Paper 45. Washington, DC: World Bank. ---_. 1993. Implementing the World Bank's Strategy to Tagwireyi, Julia, and Ted Greiner. 1994. Nutrition in Reduce Poverty Progress and Challenges. Washing- Zimbabwe: An Update. Washington, DC: World Bank. ton, DC Talvitie, Antti, David Hensher, and Michael Beesley, 1. 993. Kazakhsfan: The Transition to a Market eds. 1993. Priatization and Deregulation in Passenger Economy. Washington, DC. Transportation: Selected Proceedings of the Second Inter- . 1993. Kyrgyzstan: Social Protection in a Reforming national Conference. Forssa, Finland: Auranen Ltd. Economy. Washington, DC. UNCTAD and World Bank. 1994. Liberalizing Trmnsac- .1993. Madagascar: Financial Policiesfor Divemiled tions in Services: A Handbook New York Growtk Washington, DC (Also published in French.) UNDP, UNEP, and the World Bank. 1994. Global Envi- . 1993. Price Prospectsfor Major Prinmay Commrodi- ronment Facility: Independent Evaluation of the Pilot ties,1990-2005.Washington,DC.(Updatedquarterly.) Phase. Washington, DC: World Bank. . 1993.RussianEconmn rreCrossingthe Thresh- Wallich, Christine I., ed. 1994. Russia and the Challenge of old of Cultural Change. Washington, DC Fisl Federalism. World Bank Regional and Sectoral .. 1993. Trends in Developing Ecomies 1993. Wash- Study. Washington, DC. ingion, DC Wellenius, Bjom, Amold Miller, and Carl J. Dahhnan, . 1993. Uganda: Social Sectors. Washington, DC Mds. 1993. Developing the Elctronics Industry. A World .1993. Ukraine: The Socuf Sectors during Transitfio Bank Symposium. Washington, DC. Washington, DC Wellenius, Bjom,Peter A. Stem, and others. 1994. Impe- _ .1993. Uzbekistan: An Agendafor Economic ReoJm. menting Reforms in the Tetecommunications Sector: IUs- Washington, DC. fsonsromEperience. WorldBankRegionalandSectoral .1993. WaterResourcesManagement. AWorld Bank Study. Washington, DC. Policy Paper. (Also published in Arabic, French, and Wigg, David. 1993. And Then Forgot to Tell Us Why: A Spanish.) Look at the Campaign Against River Blindness in West . 1993. The World Bank and the Environment A Africa. A World Bank Development Essay. Washing- Progress Report, Fiscal 1993. Washingn, DC. (Also ton, DC (Also published in French.) published in French and Spanish) .1993. The Quiet Revolutionaries: A Look at the . 1993. World Bank Atlas 1994. Washington, DC Campaign by Agricultural Scientists to Fight Hunger. A .1993. WorldDebtTabesl993-94.2volumes.Wash- World Bank Development Essay. Washington, DC ington, DC. (Also published in Spash) . 1993. World Tal Upuhtes 1993. Washington, DC. -. 1994. Of Mosaic and Mosques: A look at the Cam- .1994. Adjustment inAfrica: forms, Results, and the paign to Preserw Cultural Heritage. A World Bank Road Ahead. A World Baink Policy Research Report Development Essay. Washington, DC. New York: Oxford University Press. (Also published World Bank 1993. Argentint From Insolwvency to Growth. in French.) A World Bank Country Study. Washington, DC. _.1994. Ch il Subnti CalGouemnt Finance Wash- - 1993. Argentina's Privatization Progranc Expei- ington, DC. (Also published m Spanish) ence, Issues, and Lessons. Development in Practice Se- .194. Chin Foreign TnreReflmn W asngton, DC ries. Washington, DC . 1994. Developing the Occupied Terriories. 6 vol- .1993. Azerbaijan: From Crisis to Sustined Growh. urns. Washington, DC. AWorldBankCountryStudy. Washington,DC.(Also . 1994. Emergency Assistance Programfor the Occu- publihd in Russian.) pk- Territories. Washingtm DC. 177 Bank Research Output .1994.Global EconomicProspects and the Developing Brooks, Karen, and Avishay Braverman. 1993. Countries 1994. Washington, DC. (Also published in "Decollectivization in East and Central Europe." Sus- French and Spanish.) tainable Agricultural Development: Tire Role of Interna- _ . 1994. Governance: 7The Worn Bank's Experience. tional Cooperation, Proceedings of the 21st Inteniational Washington, DC. Conference of Agricultural Economists. Tokyo, August . 1994. Guidebook to Economic and Social Data and 22-29,1991. Anaysis. Washington, DC. Cernea, Michael M. 1993. "Re-Tooling in Applied Social . :94. Indonesia Sustaining Development. Wash- Investigation forDevelopment Planning: Some Meth- ington, DC. odological Issues." In N.S. Scrimshaw and Gary . 1994. Jamaict Economic Issues for Environmental Gleason, eds.,RapidAssessmenteMethodologiesforPlan- Management. Washington, DC. ning and Evaluation of Health Related Programs. Boston, . 1994.MoldoztMovingtoaMarketEconomny.Wash- Mass.: INFDC. igo, DC. Cropper, Maureen, W. Evans, S. Berardi, M. Ducla- -.1994.PovertyRedudwtionandtheWorldBankProgress Soares, and P. Portney. 1994. "The Determinants of in Fisal 1993. Washington, DC. Pesticide Regulation: A Statistical Analysis of EPA .1994. Poverty Reducftion in South Asia: Promoting Decisionmaking." In R. Congleton, ed., The Political Partiipaion o the Poor. Washington, DC. Economy of Environmental Protection: Analysis and Evi- .1994. Proceedings of the World BankAnnual Conmr- denw. .Ann Arbor: University of Michigan Press. ncwon Deeopment Ecnomics 1993. Washington, DC. Cropper, Maureen, Shreekant Gupta, and George Van . 1994. Republic of Yemrn= Health Sector Review. Houtven. 1994. "Do Benefits and Costs Matter in Washingtn, DC. Environmental Regulation? An Analysis of EPA De- - 1994. Russia: ThBankingSystem duringTransition. cisionsunderSuperfund." InR. Reveszand R.Stewart, Washington, DC. (Also published in Russian.) eds., Reauthorizing Superfund: Theoretical and Empirical _ 1994. Socal lndicators of Development. Washing- Issues.Baltimore,Md.:JohnsHopkinsUniversityPress ton, DC. for Resources for the Future. .1994.TurkmntanAWorldBankCountryStudy. de Melo, Jaime, and Sumana Dhar. 1993. "Lessons of Waslington, DC. Trade Liberalization in Latin America for Economies . 994. Uruguay: The Priae Sector. Washing- in Transition." In Oli Havrylyshyn and Ludmila ton, DC. Kistersky, eds, World Experience in Trade Liberalea- .1994. World Devlpment Report 1994. New York: tion. Kiev: Institute for Scientific Innovation. Oxford University Press. de Melo, Martha, William Easterly, and Gur Ofer 1994. 1 1994. World Tabes 1994. Baltimore, Md.: Johns 'Services as a Major Source of Growth in Russia and Hopkins University Press. Other Forner Soviet States." In Mario Blejer, ed., Maoeconomic and Structural Aspects of Russian Eco- nomic Reform. San Francisco: International Center for B. Book Chapters by Bank Researchers Economic Growth Devarajan, Shantayanan. 1994. "Growth without Ad- Akiyame. Takamasa, and Panos Varangis. 1993. justxnent: Thailand, 1973482." In Pradeep K. Mitra, 'erspectivas del mercado mundial del caf&" In ed., Adjustment i. Oil-Importing Developing Countries. Pontifica Universidad Javeriana y Departamento Cambridge: Cambridge University Press. Nacional de Planeaon, eds, Economfa cfetera-Cri- Dinar, Ariel. 1994. "Economic and Policy Implications isyperspedias. SantaMdeBogot,Colombia: Centro of Large-Scale, Multi-Disciplinary Regional Resource editorial javeriano. Froblems: The Experience of the SJVDP, California." Alderma, Harold. 1993. Food Preferences and Nutri- In Albisu Miguel and Carlos Romero, eds., Environ- tin.' Inl . Craig, ed., The Agriculture ofEgypt. Oxford: mental and Land Use Issues in the Mediterranean Basin: Oxford University Press. An Economic Perspective. Berlin: Wissenschaftsverlag 1993. "Obtaining Usefiu Data on Household Vauk Kiel. Incomes fom Surveys." In loachim von Braun and Dinar, ArieL and J. Letey. 1994. "Evaluation of Manage- Detlev Puet, aeds., Da NwJdsfir Food Polcy i Davt- mentand Policy lssues Related to Irrigation ofAgricul- apng Cmuntri Washington, DO International Food turalCrops." InKTanji andB.Yaronmed.,AManagement PdicT Research Institue. f Water Use in Agiculure. VoL 22of Adlarw SeriEs in .1994eGhaaAustmensSbrPupilrlnDavid Agrcuul Sc . Heidelberg Springer Verlag B. San, ed., Adjting to Polc Failur in Afriam Duda, Alfred. 1993. "Resolving Conflicts between Irri- E.u.omis. Ihuca, N.Y.: Comell University Press. gation Development and Environmental Protectivn 178 Bank Researchl Output and Preservation in Developing Countries." In D. oftheWorld Bank" InNormanUphoff,ed.,Puzzlesof Manz, ed., Water and Wilderness: Development, Stew- ProductivityinPublicOrganizations.San Franicisco:ICS ardship, and Management. Cambridge, Ontario: Cana- Press. dian Water Resources Association. James, Estelle. 1993. "The Distribution of Benefits from Easterly, William, and S. Fischer. 1994. "La macro- Nonprofit Organizations." In C. Clotfelter, ed., Who economfa del deficit del sector putblico: El caso de Benefitsfrom the Nonprofit Sector? Chicago: University Colombia."lnR.Steiner,ed.,Estabillzcinycrecimiento: of Chicago Press. Nuas lecturs de macroeconomsa Colombiana. BogDth, James, Estelle, and N. Alsalonm 1993. 'College Choice, Colombia: Tercer mundo editores. Academic Achievement and Future Earnings." In Finger, J. Michael. 1993. "A Rock and a Hard Place: The Emily Hoffman, ed., Essays on the Economics ofEduca- Two Faces of U.S. Trade Policy toward Korea." In tion. Kalamazoo, Mich.: Upjohn Institute. Jongryn Mo and RamonfH. Myers,eds.,Shapinga New James, Estelie, and Nancy Birdsall. 1993. "Health, Gov- Economic Relationship: The Republic of Korea and the emnment, and the Poor: The Case of the Private Sec- United States. Stanford: Hoover Institution Press. tor." In James Gribble and Samuel Preston, eds., The Grosh, Margaret, and Paul Glewwe. 1993. "Using Na- Epidemiological Transition. Washington, DC: National tionaily Representative Household Surveys for Food Academy Press. Policy Analysis: An Examination of the World Bank's Jimenez, Emmanuel. 1994. "Pinancing Education." In LSMS Surveys." In Joachim von Braun and Detlev International Encyclopedia of Education. Exeter, U.K.: Puetz, eds., Data Needs for Food Policy in Devekloping Pergamon Press. Countries. Washington, DC: IntemationalFood Policy Kaminski, Bartlomiej. 1993. "Emerging Patterns of For- Research Institute. eign Trade." In Richard Staar, ed., Transition to a Hau, Timothy. 1994. "Estimation of Marginal Conges- Market-Based Democracy in Poland. New York: St. tion Costs, CongestionTolls,qud Revenues for Urban Martin's Press. Road Use in Indonesia." In Proceedings of the Internw- _ . 1994. "Institutional Dimension of the Transfor- tional Conference on Advanced Technologies in Trans por- mation." In Z. Hockubu, ed., Economics and Transfor- tation and Traffic ManagemenL Singapore. mation. Warsaw: University of Warsaw Press. Hernandez, Leonardo. 1993. 'Inflation Risk andl Bank Kaminski, Bartlomiej, and James Hicks. 1993. "Local Interest Margins." In Proceedings qf the Sirxt; Annual Government Reform.' In Richard Staar, ed, Transi- Australasian Finance and Banking Conference. Sydney, tion to a Market-Based Democracy in Poland. New York: Australia. St Martin's Press. . 1994. "Corporate Financial Structure in Chile: King Elizabeth 1994. "Economics of Gender and Edu- Evidence from Accounting Data: 1978-90." In AZ. cational Choices." In InternationalcEnyclpedia ofEdu- Vasquez-Parraga,ed., Bridging the Americas: Rediscou- cation. Exeter, U.K.: Pergamon Press. ery, Understanding, Partnership. Proceedings of the Lanjouw, Peter P. 1994. "Living Standards in a North 1994 Meeting of the Business Association of Latin Idian Vilage:AnAnalysiswithintheStocdasticDon-i- American Studies, Florida International University, nance Framework" InT. Uoyd and 0. Morrissey, eds, Miami. Poernta,InequaIiy,andRuralDeveLopment: Case Studiesin 1994. "The Macroeconomics of Capital Inflows: Ecomic Develnemmt. Vol. 3. London: MadMillan SomeRecentCountryExperiences."InA.Z.Vasquez- Larsen, Bjorn, and Anwar Shah. 1994 "Energy Pricing Parraga, ed., BridgingtheAmmricas: Rediscovery, Under- and Taxation Options for Combating the Greenhouse standing, Partnership. Proceedings of the 1994 Meeting Effect" In Akihiro Ameano, ed., Climate Change: Policy of the Business Association of Latin American Stud- Instruments and Their Implications. Tsukuba, Japan: ies, Florida Intemational University, Miami. Intergovernmental Panel on Climate Change. Hawes,S,andPeterF.Lamjouw. 1994. "Regional Varia- Levine, ioss, andRobertG. King. 1993. "Financiallnter- tiom in Living Standards in Urban China." In Q. Fan mediation and Economic Development." In Colin andP.Nolan,eds.,China'sEconomicRgebrms:77eCosts Mayer and Xavier Vives, eds., Capital Markets and and Bnits of Incremenlalism. London: St. Martins Financial Intermediation. Cambridge: Cambridge UNi- Press. versity Press. Hughes, Helen. 1993. "East Asian Export Success?- In Low, Patrick 1993. "The Free Trade Debate?- In Roy E. OliHavrylyshynandLudnilaKistersky,eds,Expei- Green, ed., The Enterprise for the Awmricas Inititive. ences in Trade Liberalization. Kiev: Institute for Scien- Westport Conn.: Praeger. tific Innovation. . 1993. "The International Location of Polluting IsraeL,Arturo.1994. "DatingwithGapsinPublicSector Industries and the Harmonization of Environmental Perfmance:InstitutionalDevelopmentPerfornunce Standards."-InHeraldoMufiozandRobinRosnber 179 Bank Research Output eds., Diffi4cilt Liaison: Trade and Environment in the sostenibilidad de la agricultura. Santiago, Chile: Amecas. Miami: University of Miami Press. Asociaci6n de Latinoamerica y del Caribe de Moser,Caroline. 1993. "Ajuste desdelabase: Mujeresde economistas agrfcolas. bajosingresos,tiempoyeltriplerolenGuayaquil."In Schmidt-Hebbel, Klaus. 1993. "Development and Ap- Z. Palan, Caroline Moser, and L. Rodriguez, eds., La plication of Macroeconomic Models at the World mujerfrcnte a las poltkicas te ajuste. Quito: CEPAM. Bank." In J.G. Bennett and M. Ciegerich, eds., .1993. "Market Modernization Policy in Bogota; Informationssysteme ter volkswirtschaftlichen Welfare Consequences for Low-Income Market Sell- Regierungsbermtung in EntwicklungslIndern. Baden- ers." InC. Abel and C.M. Lewis, eds., We4fare, Poverty, Baden: Nomos. and Development in latin Amerca. Basingstoke,Hamp- . 1994. "Ddficits piblicos y ajuste macroecon6mico shire, U.K: Macmillan. en paLses en desarrollo." In J.R Brenes and J.R. Varges, __., 1994. "The Informnation Sector Debate, Part I: eds., Aspectos macroecondmicos tie la reforuna del estado. 1970-83." In C. Rakowski, ed., Contrapunto: The hnfor- San Jose, Costa Rica: Ministet io de Hacienda. mal Sector Debate in Latin America. Albany: State Uni- Schmidt-Hebbel, Klaus, and Luis Serven. 1994. "Dy- versity of New York Press. namic Response to Extemal Shocks in Classical and Nash, John. 1993. 'World Bank Experience with Trade Keynesian Economics." In D. Currie and D. Vines, Poicy Reform in the 1980s.' n Oli Havrylyshyn and eds., North-South Linkages and Intnational Macro- Ludmila Kistersky. eds, World Experience in Trade economic Policy. Cambridge: Cambridge University Liberalization. Mev Istitute for Scientific Innovation. Press. Over, Mead, and Martha Ainsworth. 1993. "The Eco- Shah, Anwar. 1993. "A Distribuiqao de Tarefas no nomic Inpact of AIDS on Africa." In M. Essex and Federalismo Fiscal." In A Relorma Fiscal No Brasi. ohers, eds, AIDS in Afica. New York: Raven Press. Subsidios Do Simposio Internacional Sobre Reforma Pedersen, Karsten. 1994. "The Prototypical Developing FiscaL S3o Paulo. Country Model of the World B,ank Global Economic .1994. "Perspectives on the Design of Intergovern- Model." In M.MF Scobie, ed., Ecowvnic Progress and mental Fiscal Relations in Developir -/Transition Growth London: Chapman and Ha.l. Economies." In S.P. Gupta, Peter Knight, Robert J. Pindyck, Robert, and Andr6s Sclimano. 1993. "Eco- Waxman, and Yin-Kann Wen, eds., Intergovernmental nomin Instability and Aggregate Investment." In FiswIRdatmnsandMacrowconomicManagementinlar Olivier Blanchard and Stanley Fischer, eds., NBER Countris. New Delhi: Allied Publishers Limited. M.e,nomic Annual. Cambridge: MIT Press. Shah, Anwar, with Javed Khalilzadeh-Shirazi. 1993. Primo Braga, Carlos A. 1993. "Intellectual Prperty "Adoplitkai problemak a fejilodo orszagokban a 90- RightsinNAFrAlinplicationforinternaionalTrade." es evekben." In Semjen Andras, ed., Szocial-Politlkni In Al Rigps and T. Velk, eds., Beyod NAFFA. An Ertesito. Budapest MTA Szociologiai Intezet. Economic, Political and Sociological Perspective. Shah, Anwar, with John Whalley. 1993. "A fejiodo Vancouver The Praser Institute. orszagok adoteher-megoszlasanak elemnzese: egy .1993."TheNewlylndustrializingEconomies.fIn alternativ nezet." In Semien Andras, ed., Szocial- M.B. Wallerstein, M.E. Mogee, and R.A. Schoen, eds, Politiau Ertesito. Budapest MTA Szociologiai Intezet Global Dmensin of Intelectual Property Rights in Sci- Takeuchi, Kenji. 1994. "Does Japan Import Less Than It emcand Technology. Washington, DO National Acad- Should? A Review of the Econometric Literature." In emy Pies. John RavenhilL ed., 7hc Political Econoy of East Asia. Rain, Martin. 1993. "Sindicatos. In Instituicinaldid Edward Elgar. taboral y crecimiento econdmico en el Uruguay. Varangis, Panos, and Elton higpen. 1994. "RecentCot- Montevideo: Academia nacional de economria. tonMarketingReformnsinMajorDevelopingProduc- Rosati, Dariusz. 1993. "Foreign Trade Liberalization ing Countries." In DJ. Herber and D.A Ritcher, ads., Poland" InOhli Havzylyshyn and Ludmila Kistersky, 1994 Proceedings: Betwide Cotton Conferences. Mem- ers., WOFa: Expeinc in Trade .nlial&tiom. Kieiv. phis, Tenn.: National Cotton Council of America. Institute for Scieutific Innovation. .1994. "The Use of N.Y. Cotton Futures Contracis Sader, Frank. 1993. 'The Experience of Privatization in toHedgeCottonPriceRiskinDevelopingCountries.f the Developing World, 1988-92." In Proceedings of Ike InD.J.Herberand D.A. Ritcher,eds.,1994ProWieedig Tid Asia Pacfc Conrence of Management Cosult- Belturide Cotton Conferences. Memphis, Tenn.: Na- inks. Brisbane, Australia. tiona Cotton Council of America. Sdciff, Maurice. 1994. "Trade Policy. Maroeconomics, Wheler, David, and Jermy Warford. 1993. "Environ- andAgricultural Incentives."InE. MudchikandA.N. mental Economics and Development Policies A Re- de Zepeda, eds., Apetu econCica, odeizacin y seamh Agenda." In Praipol Koomsup, ed., Econonic 180 Bank Research Output Development and the Environmernt in ASEAN Countries. Haggard, Stephan, and Steven B. Webb. 1993. "WhatDo Bangkok: The Economic Society of Thailand. We Know about the Political Economy of Economic Policy Reform?" World Bank Research Observer 8(G): 143-68. C. Articles Published in the World Bank Hallett, A.J. Hughes. 1994. "The Impact of EC-92 on Economic Review and World Rank Research Trade in Developing Countries." World Bank Research Observer Observer 9(1):121-46. Harris, John R., Fabio Schiantarelli, and Miranda G. Anderson, James E., and J. Peter Neary. 1994. "Measur- Siregar. 1994. "The Effect of Financial Liberalization ing the Restrictiveness of Trade Policy." World Bank on the Capital Structure and Investment Decisions of Economic Reiew B(2):151-69. Indonesian Manufacturing Establishments." World 1994. "The Trade Restrictiveness of the Multi- Bank Economic Reuiew 8(l):17-47. Fibre Arrangement." World Bank Economic Review Jaffee, Steven, and litendra Srivastava. 1994. "The Roles 8(2):171-89. of the Private and Public Sectors in Enhancing the Barnes, Douglas P., Keith Openshaw, Kirk R. Smith, and Performance of Seed Systems." World Bank Research Robert van der Plas. 1993. "The Design and Diffusion Observer 9(1):97-117. of Improved Cooking Stoves." World Bank Research Kanbur, Ravi, Michael Keen, and Matti Tuomala. 1994. Observer 8(2Y119-41. "Labor Supply and Targeting in Poverty Alleviation Benjamin, Dwayne, and Angus Deaton. 1993. "House- Programs.' World BakEconomic Review 8(2)191-211. hold Welfare and the Pricing of Cocoa and Coffee in Marrion, Nancy P. 1994. "Dual Exchange Rates in Eu- COte d'lvoire: Lessons from the Living Standards ropeandLatinAmerica."WorldBankEconomicmRevkw Surveys." World Bank Econonic Review 7(3):293-318. 8(2)}213-45. Besley, Tinothy. 1994. "How Do Market Failuresjustify Martin, Will, and Peter G. Warr. 1993. "Explaining the Interventions in RuraL Credit Markets?" World Bank RelativeDeclineofAgriculture ASupply-SideAnaly- Research Observer 9(1):27-47. sis for Indonesia." World Bank Economic Review Briscoe, John, Dale Whittington, M.A. Altaf, P.P. 7(3)381401. Decastro, C. Griffin, ApiaOkorafor, Augustine Okore, Mazumdar, Dipak. 1993. "Labor Markets and Adjust- B. Singh, R. Ranasubban, P. Robinson, and V.K.Smith. ment in Open Asian Economies: The Republic of 1993. "The Demand for Water in Rural Areas: Deter- Korea and Malaysia." World Bank Eaonomic Revw minants and Policy Implications.' World Bank Re- 7(3):349-80. search Observer 8(1).47-70. Moss, Diana L, and James IL Tybout. 1994. "The Scope Caprio, Gerard, Jr., and Ross Levine. 1994. "Reforming for Fuel Substitution in Manufacturing Industries A Finance in Transitional Socialist Economies: Avoid- Case Study of Chile and Colombia." World Bank Eco- ing the Pathfrom Shell Moneyto Shel Games." World nomic Review 8(1):49-74. Bank Research Observer 9(1):1-24. Pitt, Mark N., Mark R. Rosenzweig, and Donna Ni Coriceli, Fabrizio, and Timothy D. Lane. 1993. "Wage Gibbons. 1993. "The Determinantsand Consequences Controls during the Transition from Central Planning of the Placement of Government Programs in Indone- to a Market Economy.' World Bank Research Observer sia." World Bank Economic Reiew 7(3)319-48. 8(2):195-210. Pohl, Gerhard, and Piritta Sorsa. 1994. "Is European Cuddington, John T. 1993. "Further Results on the Integration Bad News for Developing Countries?' Macroeconomic Effects of AIDS: The Dualistic, La- World Bank Research Observer 9(1):147-54. bor-Surplus Economy." World Bank Economic Review Pritchett, Lant, and Geeta Sethi. 1994. 'Tariff Rates, 7(3):403-17. Tariff Revenue, and Tariff Reform. Some New Facts." Demery,Lionel, and CristiaanGrootaert. 1993."Correct- World Bank Economic Review 8(1):1-16. ing for Sampling Bias in the Measurement of Welfare Ravallion, Martin, and iSenu Bidani. 1994. "How Robust and Poverty in the C6te d'Ivoire Living Standards Is a Poverty Profile?" World Bank Economic Review Survey?- World Bank Eanomic Revw 7(3):263-9 8(1):75-102. Easterly, William, and Klaus Schmidt-Hebbel. 1993. Revenga, Ana, Midhelle Riboud, and Hong Tan. 199t "Fiscal Deficits and Macroeconomic Performance in "The Impact of Mexico's Retraining Program on Em- DevelopingCountries." PWrld Bank Research Observer ployment and Wages?' World Bank Econmic Review 8(2)::Z11-37. 8(2):247-77. Guasch, j. Luis, and Thomas Glaessner. 1993. "Using Schiff, Maurice. 1994. 'The Impact of Two-Tier Pro- Auctions to AUlocate and Price Long-Term Credit" ducer and Consumer Food Pricing in India." World World Bank Reserch Observer 8(2):169-94. Bank Ecommic Review 8(1):103-25. 181 Bank Research Output Summers, Lawrence H., and Vinod Thomas. 1993. "Re Anderson, jock R., P.G. Pardey, and 1. Roseboom. 1994. cent Lessons of Development" World Bank Research 'Sustaining Growth in Agriculture: A Quantitative Observer8(2)241-54. Review of Agricultural-Research Investments." Agri- Takacs, Wendy E. 1994. "Domestic Content and Com- cultural Economics 10(2):107-23. pensatory Export Requirements: Protection of the Arrau, Patricio, and Klaus Schmidt-Hebbel. 1994. "Pen- Motor Vehicle Industry in the Philippines." World sion Reforms in Developing Countries: Policy and Bank Economic Review 8(1):127-49. Research Issues." Revista de andlisis economico 9(l): Umali, Dina L., Gershon Feder, and Comelis de Haan. 3-20. 1994. "Animal Health Services: Finding the Balance Astapovich, A. 1994. "Foreign Investment in Russia: between Public and Private Delivery." World Bank Problemsand Solutions." Problems ofEconomicTransi- Research Observer 9(1):71-96. tion 36(10):82-100. van de Walle, Dominique. 1994. "The Distribution of Athukorala, Premachandra, and Sarath Rajapatirana. Subsidies through Public Health Services in Indonesia, 1993. "Domestic Financial Market and the Trade Lib- 1978-87." World Bank Economic Reiuew 8(2)279-309. eralization Outcome: Evidence from Sri Lanka." World Yaron, Jacob. 1994. "What Makes Rural Finance Institu- Development 21(7):1191-1203. tions Successful?" World Bank Research Observer 9(1): Aturupane, Harsha, Paul Glewwe, and Paul Isenman. 49-70. 1994. "Poverty, Human Development, and Growthl An Emerging Consensus." American Economic Review 84(2):24 49. D. Articles Related to Bank Research haer,Herb,andj. McElravey. 1993."CapitalShocksand and Published in Non-Bank Bank Growth-1973 to 1991, Federal Reserve Bank of Professional journals Chicago." Economic Perspectives (July/August). Baffes, John. 1993. "Optimal Tax Subsidy Intervention Acharya, Sankarishan, and Ishac Diwan. 1993. "Debt in Commodity Markets When the Groups of Interest Buybacks Signal Sovereign Countries' Creditworthi- are Weighted Unequally." European Reieuw ofAgricul- ness:TheoryandTests."InternationalEconomicReview tural Economies 20(3):365-78. 34(4):795-817. 1994. "Does Comovementamong Exchange Rates Adair,L.S., B. Popkin,J. Vanderslice,J.S. Akin, David K. Inply Market Inefficiency?" Economic Letters 44(3): Guilkey, R. Black, J. Briscoe, and W. Flieger. 1993. 273-SO. "Growth Dynamics during the First Two Years: A Bannister, Geoffrey, and Carlos A. Primo Braga. 1994. Prospective Study in the Philippines." European Jour- "East Asian Investment and Trade: Prospects for nal of Clinica Nutrition (47):42-51. Growing Regionalization in the 1990s." Transnational Alderman, Harold. 1993. "Intercommodity Private Corporation 3(1). Transmittak Analysis of Food Markets in Ghana.' Berg, Alan. 1993. "More Resources for Nutrition Educa- Oxford Bulltin of Ecnomics and Statistics 55(1):43-64. tion: Strengthening the Case." Journal of Nutrition Alderman, Harold, and Marito Garcia. 1994. "Food Education 25(5):278-90. SecurityandHealthSecurity:ExplainingtheLevelsof . 1993. "Sliding toward Nutrition Malpractice: Nutritional Status in Pakistan." Economic Development Time to Reconsider and Redeploy." Annual Review of and Cultural Change 42(3):48S-507. Nutrition 13:1-15. Alderman, Harold, and David E. Sahn. 1993. "Substitu- Bhargava, Alok, and Martin Ravallion. 1993. "Does tion between Goods and Leisure in a Developing Household Consumption Behave as a Martingale? A Country.' American Journal of Agricultural Economics Test for Rural South India." Review of Economics and 75(4):75-83. Statistics 75 (August):500-04. Altaf,MirAnjum,DaleWhittington,Haroonjamal,and Bidani, Benu, and Martin RavaUion. 1993. "A New V. Kerry Smith. 1993. "Rethinking Rural Wiater Sup- Regional Poverty Profile for Indonesia." Buletin of ply Policy in the Punjab, Pakistan." Water Resources Indonsian Econornic Studies 29(3):37-68. Research 29(7):1943-54. Binswamger,HansP.,andKlausDeininger. 1993. "South Amuzu, A.T., and Josef Leitmann. 1994. "Environmen- African land Policy: The Legacy of History and Cl r- tal Profile of Accra, Ghana." Cities 11(l):5-9. rent Options." World Developnmnt 21(9):1451-75. Anderson, Dennis. 1993. "Energy Efficiency and the Binswanger, Hans P., Klaus Deininger, and Gershon Economics of Pollution Abatement" EnerRy Environ- Feder. 1993. "Agricultural Land Relations in the De- wmet (Annual Review) 18:291-318. velopingWorld.'"AmeriloumalofAgricultulnEco- Anderson, Jock R. 1993. "The Economics of New Tech- nomics 75(5):1242-48. nology Adaptation and Adoption." Reviw ofMarket- Binswanger, Hans P., Shahidur R. Khandker, and ing and Agricultural Economics 61(2Z Part 1), 109-17. Mark Ri Rosenzweig. 1993. "How Infrastructure and 152 Bank Research Output Financial InstitutionsAffect Agricultural Outputand Christiansen, R.E. 1993. "Implementing Strategies for Investment inIndia."Journalof Development Economics the Rural Economy: Lessons from Zimbabwe, Op- 41(2):337-66. tions for South Africa." World Development 21(9): Birdsall, Nancy, and David Wheeler. 1993. 'Trade Policy 1549-66. and Industrial Pollution in Latin America: Where Are Claessens, Stijn, and Sweder van Wijnbergen. 1993. the Pollution Havens?" Journal of Environment and "Me 1990 Mexico and Venezuela Recaptu Clauses: Development 2(1). An Application of Average Price Options." Journal of Booth, A., and Martin Ravallion. 1993. "Employment Banking and Finance 17(4):733-45. and Length of the Working Week in a Unionized .1993. "SecondaryMarketPricesand MexicoBrady Economy in which Hours of Work Influence Produc- Deal.' Quarterly Journal of Economics 108(4)96542. tivity." Economic Record 69(207):428-36. Cohen, M. 1994. "Mega Cities and the Environment." Briscoe, John. 1993. "Incentives Are the Key to Improv- Stahl und Eisen 114(1):19-23. ing Water and Sanitation Services." Water and Waste- Collion, M.H., and A. Kissi. 1993. "Learning by Doing water Iniernational 8(2)28-36. DevelopingaProgram-PlanningMethodin Morocco.' ___. 1993. 'When the Cup is Half Full: Improving Public Administration and Development 13(3):261-70. Water and Sanitation Services in the Developing Connolly, M., A. Rodriguez, and W.G. Tyler. 1994. "The World." Environment 35(4):6-15 and 28-37. Use of the Exchange Rate for Stabilization: A Real Briscoe,John,andAndrewSteer.1993."NewApproaches Interest Arbitrage Model Applied to Argentina." to Sanitation: A Process of Structured Learning." Journal of International Money and Finance 13(2): Ambio 22(7):456-59. 223-31. Brooks, Karen. 1993. "Challenges of Trade and Agricul- Corradin, C., FL Engers, and P.L Trigg. 1994. "Malaria turalDevelopmentforEast/CentralEuropeandStates Vaccines CurrentStatus." Clinicalbmunotherapeutics of the FormerUSSR."Agricultural Economics8:401-20. 1(3):191-98. Brooks, Karen, and Zvi Lernan. 1993. "Land Reformn Cropper, Maureen, Sema Aydede, and Paul Portney. and FannRestructuringin Russia: 1992Status."Ameri- 1994. "references forLifeSavingPrograms How the can Journal of Agricultural Economics 75(5):125459. Public Discounts Time and Age." Journal of Risk and Bruestle,Arthur. 1993. "EastAsiaUrban Environment;" Uncertainty a Environmental Scienes and Technology 27(12):2280-84. Cropper, Maureen, and Charles Griffiths 1994. 'lhe Buckley, Robert M. 1994. "HousingFinance inDevelop- Interaction of PopulationGrowth3ndEnvironmental ing Countries: Role of Credible Contracts." Economic Quality." American Economic Review 84(2)250-54. Development and Cultural Change 42(2)31742. Crosson, P., and Jodck R. Anderson. 1994. '"emand and Bufman, G., and L Leidermian. 1993. "Currency Substi- Supplyr Trends in Global Aginclture." Food Polcy tution under Nonexpected Utility: Some Empirical 19(2):105-19. Evidence." Journal of Money, Credit and Banking Crousillat, E.O., P. Dorfner, P. Alvarado, and HKM 25(3):320-35. Merrill. 1993. "Conflicting Objectives and Risk in Campos, Jose Edgardo. 1993. "Leadership and the Prin- Power System Planning." IEEE Transactions on Power ciple of Shared Growth: Insights into the Asian Systems 8(3):887-93. Mirade."AsianJournalofPoliticalScience (December). Csaki,Csaba, and ZviLennan. 1993. "land Reformand Carbajo, Jose C., and Asif Faiz. 1994. "Motor Vehide Farm Sector Restructuring in the Former Socialist EmissionsControl:Some PolicyOptions for Develop- Countries in Europe." European ReviewofAgricultrul ing Countries." Science of the Total Environment 147 Economics 21(314). (May):11-18. Daly, Herman. 1993. "The Perils of Free Trade." Scen- Cemea, Michael M. 1993. "Culture and Organization: tfic American 269(5). The Social Sustainability of Induced Development" Daly, Herman, and Robert Goodland. 1994. "An Eco- Sustainable Deelopmt (Australia) 1(2):18-29. logical-Economic Assessment of Dereulation of In- .1993. "Social ScienceResearchand theCraftiagof temational Commerce under GATT." Ecologcal Ea- Policy on Population Resettlement.' Knowledge and nomics 9(1):73-92. Policy 6(3-4):176-200. de Melo,Jaime, A. Pfaff, and David G. Tarr. 1994. "Trade Chadha, B., Fabrizio Coricelli, and K. Krajnyak. 1993. and Politics of Trade: Welfare Costs and Rent Prenia "Economic Restructuring, Unemployment, and When Quotas Are Not Transferable." Eurpan Ec- Growth in a Transition Economy." International Mon- nomic Reiew 38(3-4):577-85. etary Fund StaffPapers 40(4):744-80. de Melo, Jaime, and David G. Tar. 1993. "Indusrial Chaudhur, S., and Martin Ravallion. 1994. " How Well Policy in the Presence of Wage Distortions The Case Do Static Indicators Identify the Chronically Poor?" of US. Auto and Steel Industries." Internatimol Ew- Journal of Public Economics 53(3):367-94. nomic Review 34(4):833-51. 183 Bank Research Output de Melo, Jaime, and L. Alan Winters. 1993. "Do Export- . 1993. "La gestion du sol urbain en Europe et ers Gain from VERSV' European Economic Review 1'Est." Urbanisme 260(January/February). 37(7):1331-49. . 1993. "Un livre, un auteur." Urbanisme 269(De- Demirguic-Kunt, Asli, and Harry Huizinga. 1993. "Offi- cember). cial Credits to Developing Countries: Implicit Trans- Fidler, A., R. Hartog, M.A. Lezana, B. Salvatierra, C. fers to the Banks."JournalqfMoney, Credit and Banking Silveira, and R. Tapia. 1994. "Field-Test of a Rapid 25(3):430-44. Assessment Technique against a Probabilistic Com- Detragiache, Enrica. 1994. "Sensible Buybacks of Sover- munity Survey: Operational Implications for Neona- eign Debt." Journal of Deoelopnent Economics 43(2): talTetanusElimination."JnternationallournalofEpide- 317-33. miology 23(2):386-92. Dinar, Ariel. 1994. "Impact of Energy Cost and Water Foroutan, Faezeh, and Lant Pritchett. 1993. "Intra-Sub- ResourceAvailabilityandQualityonAgricultureand Saharan-African Trade: Is It Too Little?" Journal of Groundwater Quality in California." Resource and African Economies 2(1)74-105. Energy Economics 16:47-66. Fuhr, Harald. 1994. "Munidpal Institutional Strenghen- Dinar, Ariel, and A. Wolf. 1994. "International Markets ing and Donor Coordination: The Case of Ecuador." for Water and the Potential for Regional Cooperation: Public Administrtion and Development 14(2):169-86. Economic and Political Perspectives in the Western Gelb, Alan, Gary Jefferson, and Inderjit Singh. 1993. Middle East" Economic Development and Cultural "Can Communist Economies Transform Incremen- Change43(1). tally? The Experience of China." Economies in Transi- Dixon, John A. 1993. "Economic Benefits of Marine lion 1(3). Protected Areas." Oceanus 36(3):35-40. Ghose, D.,and K. Kharas. 1993. "International Competi- Duda, Alfred M. 1993. "Addressing Nonpoint Sources tiveness, the Demand for Exports and Real Effective of Water Pollution Must Become an International Exchange Rates in Developing Countries." Joumal of Priority. Water Scnce and Tecknology 28(3):1-11. Development Economics 41(2) 377-98. Easterly, WiUliam. 1993. "How Much Do Distortions Giovannini, A., and Martha de Melo. 1993. "Govern- Affect Growth?" journal of Monetary Economics ment Revenue from Fmancial Repression." American 32(2):187-212. Econormic Review 83(4).953-63. Easterly, William, M. Kremer, Lant Pritchett, and Godal, T. 1993. "Fighting the Parasites of Poverty: Pub- Lawrence H. Summers. 1993. "Good Policy or Good 1icResearch,PrivateIndustry,andTropicalDiseases." Luck?Country GrowthPerformanceandTemporary Sciec 264(5,167):186446. Shocks." Journal of Monetary Economics 32(3):459-84. Goldberg, M., Barry W. Ickes, and Randi Ryterman. sterly, William, and Lant Pritchett. 1994. "Economic 1994. "Departures from the Ruble Zone: The hnplica- Growth: A Result of Hazard or Good Policy?" Stahl tions of Adopting Independent Currencies." World und Eism 114(4):31-35. Economy 17(3):293-322. Easterly,William,andSergioRebelo. 1993. "FiscalPolicy Goodland, Robert 1993. "Ethical Priorities in Environ- and Econonmic Growth: An Empirical Investigation." mentally Sustainable Energy Systems: The Case of Journal of Monetary Economics 32(3):417-58. Tropical Hydropower." International Journal of Sus- Easterly, William, and L Summers. 1994. "Economic tainable Development 1(4)3-14. Stagnation, Fixed Factors, and Policy Thresholds." Goodland, Robert, Herman Daly, and John Kellenberg. Journal of Monetary Economics 33(June). 1994. "Burden Sharing in the Transition to Environ- El-Ashry, Mohamed T. 1994. "Water iesources Man- mental Sustainability." Futures 26(2):146-55. agement for the Next Century.' Interciencia 19(3): Goodland, Robert, A.Juras, and R. Pachauri. 1993. "Can 117-19. Hydro-Reservoirs in Tropical Moist Forests Be Envi- Estrin, Saul, Alan Gelb, and lndeijitSingh. 1993. "Enter- ronmentaly Sustainable?" Environmental Consenra- prises inTransition: Issues and Methodsof Analysis." tion 20(2):122-30. Eastern Europe Ecoomics 31(5):3-18 Gray, CheryL 1993. "The Legal Framework for Private Evans,D.B.,andDeanT.Jamison. 1993."Econonticsand Sector Activity in the Czech Republic.' Vanderbilt the Argument for Parasitic Disease Control.' Scence Joumal of Trarnational Law 26(2). 264(5,167):1866-67. Gray, Cheryl, R. Hanson, and M. Heller. 1993. "Legal Evans, W.N., and LN. Kessides. 1994. "Living by the Reform for Hungary's Private Sector." The Georgc GoldenRule: MultirarketContactintheUnitedStates Washington Journal of International law and Economics Airline Industry." Quarterly Journal of Economics 26(2). (Also published in Ada Oeconomica 45(3-4) ) 109(2):341-66. Gray,Cheryl, and P. lanachkov. 1993. "Bulgaria's Evolv- Farvacque-Vilc,Cathrine.1993t"Accisdespauvres ing Legal Framework for Private Sector Develop- au sol urbainL EtudesfJices 59(june). ment" The Itenational LAuyer 27(4). 184 Bank Research Output Gray, Cheryl, and F. Stiblar. 1993. "The Evolving Legal Howe,Charles W.,andJohn A. Dixon. 1993. "Inefficien- Framework for Private Sector Activity in Slovenia.' cies in Water Project Design and Operation in the University of Pennsylvania oumnal of Business Law Third World; An Economic Perspective.' Water Re- 12(2). sources Research 29(7):1889-94- Griffin, C.C., and J.H. North. 1993. "Water Source as a Hughes, G., P. Hare, J. Charap, A. Zemplinerova, T. Housing Characteristic. Hedonic Property Valuation Revesz D. Wilczynska, B. Wyznikiewicz, and C. Senik. and Wilingness to Pay for Water." Water Resources 1994.-MThelnternationalCompetitiveness of Industries Research 29(7):1923-29. in Bulgaria, Czechoslavakia, Hungary, and Poland." Grootaert, Christiaan. 1994. "Education, Poverty, and Oxford Economic Papers (new sernes) 46(2):200-21. Structural Change in Africa: Lessons from C8te Hughes, G.A., and N.E. Savin. 1994. "Is the Minimum d'lvoire.' International Journal for Education Develop- Chi-Square Estimator the Winner in Logit Regres- ment 14(2). sion?" Journal of Econometrics 61(2):345-66. Grootaert, Christiaan, and Ravi Kanbur. 1994. "A New Ickes, Barry W.,and Randi Ryterman. 1993. "Roadblock Regional Price Index for Cote d'lvoire Using Data to Economic Reform: Interenterprise Debt and the from the Intemational Comparisons ProjecL" journal TransitiontoMarkets."Post-SovietAffairs9(3):231-52. of Afrian Economimes 3(1). James, Estelle. 1993. "Why Do Different Countries Gulati, A., and R. Chadha. 1994. 'Economic Liberaliza- Choose a Different Public-PrivateMix of Educational tion in India.' Asian Studies Review 17(2). Services?" Journal of Human Resources 28(3):571-92 Guyatt, ILL., D.A.P. Bundy, and D. Evans. 1993. "A Kanbur,Ravi, and M.Keen. 1993. 'Jeux-sans-fronti&res Population-Dynamic Approach to the Cost-Effective- Tax Competition and Tax Coordination When Coun- ness Analysis of Mass Anthelmintic Treatnent Ef- tries Differ in Size." American Economic Review fects of Treatnent Frequency on Ascaris Infection. 83(4):877-92. Transact ions of the Royal Socety of Tropical Medicme and Katz, A., and R. Walgate. 1993. "TDR., New Targets and Hygiene 87(5):570-75. Management Structure." Parasitology Today 9(12): Haddad, M., and Ann Harrison. 1993. "Are There Posi- 43942 tive Spiliovers from Direct Foreign Investment? Evi- Kempner, K, CD. Castro, and D. Bas 1993. "Appren- dence from Panel Data for Morocco." lournal of Devel- ticeship:-hePerilousJoumeyfromGermanytoTogo." opment Economics 42(1):51-74. International Review of Education 39(5):373-90. Hadiwinoto, Suhadi, and Josef Leitmann. 1994. "Envi- Khalilzadeh-Shirazi, Javad, and RK Zagha. 1994. '"Eo- ronmental Profile of Jakarta, Indonesia." Cities 11(3). nomic Reforrns in India: Achievements and the Harrison, Ann E. 1994. "Productivity, Inperfect Com- Agenda Ahead." Columbia Journal of World Business petition, and Trade Reformn Theory and Evidence." 29(1):24-31. Journal of International Economics 36(1-2):53-73 Khatkhate, D. 1993. "Productivity in Manufacturin. rn Hazell, Peter, and Stewart Rigoberto. 1993. "Should a Determninant of Growthl The Indian Case.' World Costa Rica's Grain Markets Be Liberalized?" Food Development 21(9):1441-45. Policy (December). Kindler, J., and S.F. Lintner. 1993. "A Plan of Action to Hecht, R, C. Overholt, and H. Holhnberg. 1993. "Im- Clean up the Baltic.' Environment 35(8). proving the Implementation of Cost Recovery for ing, RobertG.,and RossLevine. 1993. 'Finance,Entre- Health: Lessons from Zimbabwe." Health Policy preneurship, and Growth: Theory and Evidence." 25(3):213-42. Jounat of Moneta,y Ecowmics 32(3):513-42. Heyneman, Stephen P. 1993. "Educational Quality and . 1993. "Finance and Grwthc Schumpeter Might Be the Crisis of Educational Research." Intemational Re- Right" Quarterly Joumal of Ecnomis 109(3):717-7. view ofEducation 39(6):511-17. Kuzoe, F.AS. 1993. "Current Situation of African .1993. 'Quantity, Quality, and Source." Compara- Trypanosomiasis.f Acta Tropica 54(3-4):153-62 tim Education Review 37(4) 372488. Leitmann, Josef. 1993. "Rapid Urban Environmental Hines, JR., and E.M. Rice. 1994. "Fiscal Paradise: For- Assessment Toward Environmental Management in eign Tax Havens and American Business." Quarterly Cities of the Developing World." Impact Assesmnt loumal of Economics 109(1):149-82. 11(3):225 -60. Hoekman, Bemard M., and Petros C. Mavroidis. 1994. _ . 1994. "Enviromnental Profile of Katowice, Po- "Competition, Competition Policy, and the GAfT." land." Cities 11(3). World Economy 17(2):121-50. .1994."UrbanEnvironmentalProfileSeries Intro- Homedes, N., and A. Ugalde. 1993. "Patients' Compli- duction." Cities 11(l):4. ance with Medical Treatments in the Third World: . 1994. "The World Bank and the Brown Agenda: What Do We Know?" Health Policy and Planning Evolution of a Revolution." Third World Planning Re- 8(4):291314. view (special issue, May). 185 Bank Research Output L Moigne,Guy.1993. "ComprehensiveWaterResources McMillan,D. 1993. "DiversificationandSuccessfulSettle- Management A Framework." Terra et Aqua: Interna- ment in the River-Blindness Control Zone of West tional lournal on Public Works, Ports and Waterways Africa." Human Organization 52(3):269-82. Development (53). McNelis, Paul, and Klaus Schmidt-Hebbel. 1993. "Fi- . 1994. "The World Bank's Policy on Water Re- nancial Liberalization and Adjustment: The Cases of sources Management." The International Journal on Chile and New Zealand." ournalof mtenational Money Hydropower and Dams 1(1). and Finance (July). Levine, Ross,and RobertG.King.1994. "CapitalFunda- McPhail, A.A. 1993. "The 5 Percent Rule for Improved mentalism, Economic Development, and Economic Water Service: Can Households Afford More?" World Growth." Carnegie-Rocester Public Policy Conftrence Development 21(6):963-73. Series (40). Michael, T., T. Revesz, P. Hare, and G. Hughes. 1993. Levine, W.C., and others. 1994. 'Development of Sexu- "The Competitiveness of Hungarian Industry." Acta altyTransmittedDiseasesTreatmentCuidelines,1993: Occonomica 45(3-4)z319-48. New Methods, Recommendations, and Research Pri- Milanovic, Branko. 1994. "Cash Transfers, DirectTaxes, orities." Sexually Transmitted Diseases 21(2)996-S101. and Income Distribution in Late Socialism." Journal of Utvack, J.L, and C. Bodart. 1993. "User Fees Plus Qual- Comparatiue Economics 18(2):175-97. ityEqualsImprovedAccesstoHealthCare:Resultsof .1994. "The Gini-type Functions: An Alternative - '-ield Experiment in Cameroon." Social Scince and Derivation." Bulletin ofEconomic Research 46(1):81-90. Medicine 37(3):369-83. .1994. "Why Have Communist Federations Col- Loehbman, E., and A. DinaLr. 1994. "Cooperative Solution lapsed?" Challenge Magaine 37(2):61-64. of ocal Externality Problems: A Case of Mechanism Morduch,J., K Brooks, and Y.MI Unnson. 1994. 'Distri- Design Applied to Irrigation." Journal ofEnuironmen- butional Consequences of the Russian Price liberal- taf Economis and Management 26(3):235-56. ization.' Economic Dewelopment and Cultural Change Lopez, Ramon, and Robert Chambers. 1993. "Fixed 42(3).46943. Pnce Controls and Ad-Valorem Distortions in an Muscatelli, V.A., T.G. Srinivasan, and D. Vines. 1994. Open Economy." Economic Letters 41(3):287-92 'The Empirical Modeling of NIE Exports: An Evalu- _._ 1993. "Public Envestment and Real Price Sup- ationofDifferentApproaches.'fournalofDevelopent ports." Journal qf Public Economics 5273482. Studies 30(2):279-302. Lovei, [azio. 1993. "Rent-Extracting Behavior by Mul- Mustafa, MA. 1993. "Methods of Sale of State-Owned tiple Agents in the Provision of Municipal Water TelecommunicationsEnterpises."Telemmunkations Supply: A Study of Jakarta, Indonesia." Water Re- lournd 60(9)345-53. sources Rearch 29(7):1665-1774. Mwabu, G., Martha Ainsworth, and Andrew Nyamete. Low, Patrick. 1993. "Trade and the Environment: What 1993. "Qualityof MedicalCareandChoiceofMedical Worries the Developing Countries?" Environmental TreatmentinKenya."JournalofHumanResources28(4). Lmw 23(2). Nguyen, N.X., and F.W. Derrick. 1994. "Hospital Mar- Lii, L 1993. "Entry-Exit, Learning, and Productivity kets and Competition: Implications for Antitrust Change: Evidence from Chile.' Joural of Devlopment Policy-" Health Care Management Review 19(1)34-43. Econmics 42(2)217-42. Novaes, A.D. 1993. "Revisiting the Inertial Inflation Lundin, C.G, and 0. Linden. 1993. "Coastal Ecosys- Hypothesis forBrazil."JournalefjDevelopmentEconom- tesmr Attempts to Manage a Threatened Resource." ics 42(1):89-1 10. Ambio 22(7.468-73. Oliviera, C., and Jovai Leitmann. 1994. "Er 'ironmental Luscombe, BW., and HLM. Hassan. 1993. "Applying Profile of Sao Paulo, Brazil." Cities 11(1):1O-14. Remote-SensingTechnologiestoNaturalDisasterRisk Olliaro, P. 1994. "How Plasmodium Secures Nutrient: Management Implications forDevelopmentallnvest- New Targets for Drugs." Parasitology Today 10(1):4-5. ments." Acts Astromutica 29(1D-11):871-76. Ozgediz, S. 1993. "Organization and Management of Lutz,ErnstandMohanMunasinghe.1994."Integration the CGLAR System: A Review." Public Administration of Environmental Concerns into Economic Analyses and Devlopment 13(3):217-31. of Projects and Policies in an Operational Context" Palafox, J.C., J. Prawda, and E. Velez. 1994. "Primary EcolgiCal Ecwnomcs 10(1):3746. School Quality in M"'xico/' Comparative Education Re- Martn, W. 1993. "Modeling the Post-Refom OCinese view 38(2):167-M. Economy." Journd of Policy Modlking 15(56)54-79. Pangariya, Arvind, and Dani Rodrik. 1993. "Political Marti W.j., and J.M. Alston. 1994. "A Dual Approach Economy Arguments for a Uniform Tariff." Intern- to Evaluating Research Benefits in the Pence of tional Economic Review 34(3):685-703. Trade Distortions." Amrica Journa of Agrictural Panagariya, Arvind, and Maurice Schiff. 1994. "Can Ecoommi 76(1)26-3 Revenue-Maximizing Export Taxes Yield Higher 18h Bank Research Output Welfare than Welfare-Maximizing Export Taxes?" Rebelo, Sergio. 1993. "Fiscal Policy and Economic Economic Letters 45(1):79-84. Growth: An Empirical Investigation."journal ofMon- Pankaj,T.,andA. Coulthart. 1993. "Nonmotorized Trans- eary Economics 32(December):417-55. port in Rural and Urban Ghana." Appropriate Technol- Roseberry, W.L, D.L. Heymann, L. Ndoye, and P.S. oY 20(1):29-30. Nsubuga. 1994. "Rapid Sexually Transmitted Disease Persley, GJ. 1993. "Policies and Programs of the World Assessment in Two Developing Countries." Sexually Bank in Biotechnology." Annals of ir1 New York Acad- Transmitted Dieses 21(2).S84-S5. eny of Sciences 700:74-79. Ryrie, W. 1994. "Financing Development in a World of Phillips,M.,RG.A.Feachem, CJ.L.Murray,MeadOver, Market Economics." World Today 50(1):15-18. and T. Kjellstrom. 1993. "Adult Health: A Legitimate Ryterman, Randi, and Barry Ickes. 1993. "Roadblock to Concem for Developing Countries.! AmeicanJornal EconomicRefonn lnter-EnterpriseDebtand theTran- of Public Health 83(11):1527-30. sition to Markets." Post-Soviet Affairs 9(3). Pleskovic,Boris. 1993. "RegionalDevelopmentandTran- Sandstrom, S. 1993. "Carbon Storage and Flow: Their sition in the Former Soviet Union: A Comment.' Relationship to Water, Soil, and Land Management." International Regional Science Review 15(3):297-305. Amblo 22(73:438-41. Prawda, J. 1993. "Educational Decentralization in Latin Sapelli, C. 1993. "Inflation, Capital Markets and the America: Lessons Learned.' Internatioal Jounral of Supply of Beef." Agricultural Economics 9(2):145-54. Educational Devclopment 13(3):253-64. Schiff, Maurice. 1993. India's Food Procurement and PrimoBraga, CarlosA., and M Birch. 1993. "Regulation Distribution Policy: Inpact on Prices and Welfare!' in Latin Americx Prospects for the 1990s. Quarterly Journal of Development Economics 42(2):387-97. Review of EconomiCs and Finance 33(S).119-33. Schramm, Gunter. 1993. "Issues and ProblemAs in the Pritchett, Lant. 1994. "Desired Fertity and the Impact PowerSectorsofDevelopingCountra"es.nergyPolicy of Population Policies." Population and Developmnt 21(7):735-47. Review 20(1):1-55. Shah, Anwar, Robin Boadway, and Sandra Roberts. Psacharopoules, George, Carlos Rojas, and Eduardo 1993. "The Reform of Fiscal Systems in Developing Velez. 1993. "Achievement Evaluation of Colombia Countries: A Federalism Perspective." 26 as. Jornades EscuelaNueva: IsMultigrade the Answer?" Compara- definnzas pfiblicas (Cordoba, Argentina). tive Education Reviev 37(3):263-76. Shah, Anwar, and Anthlio Bomfim 1994. "Macro- Psacharopoulos, George, and Zafiris Tzaatos. 1993. economicManagenentand the Division of Powers in "Economic and Demographic Effects on Working Brazil: Perspectives for the Nineties." World Develop- Women in Latin America." Journal of Popuation Eco- mct 22(4)535-4 nonics 6(4):293-315. Shaw, R.P. 1993. "Warfare, National Sovereignty, and Quiroz, J., and Alberto Valdes. 1993. "Agricultural In- the Environment.' Environmental Conservation centives and International Cornpetitiveness: Govern- 20(2):113-21. ment Interventions and Exogenous Shoclks. in Four Silberman, J.M., C. Weiss, and M. Dutz. 1994 'Jump- East African Countries." Food Policy 18(4):3-t Starting Ex-Communist Economies: A Leaf from the Quisunbin& A.R. 1994. "Intergenerational Transfers in Marshall Plan." Foreign irs 73(1):21-26. Philippine RiceVillages:-GenderDifferencesinTradi- Singh, B., R Ranmaubban, R Bhatia, John Briscoe, C.C tional Inheritance Customs." journal of Deropmet Griffin, and CC. Kim. 1993. "Rural Water Supply in Econonics 43(2):167-95. Ierala, India: How to Emerge froma Low-Level Equi- Rama,Martin.1993.'"tent-SeeldngandEcononicGrowt: librium Trap." War Resource Rsch 29(7)193142. A Theoretical Modei and Some Empirical Evidence Singi, Indeyit, X. Gen& and D. Ratha. 1993. "Insiders Jurnal of Development Ecnomics 42(1)35-50. and Capitalisb: Does Ownership Matter?" Journa of 1994. "Bargaining Structure and Economic Per- Comparative LDrnomics ( uly). formance in the Open Economy." European Economic Solimano, Andrfs 1993. "Diversidad en la reforma Review 38(2):403-15. econ6mica: Experiencias recientes en economia de . 1994. "Politicas laborales para un desarrollo mercado y economias socialistas." Pensanminto econ6mico sostenido." Bana Central (Guatemala) lbe_mmeicano, revista de economai politic (Madrid) 20.31-44. 22/23(1):59-100. Ravauion,Martin. 1994. MeasuringSocialWelfarewith .1993. "ThePosocialistTransitionsinCompara- and without Poverty Linet" Amea Economi Re- tive Perspective: Policy Issues and Recent Experi- view B4(2)359-65. ence." World DeveKlmet 21(11):18235. Ravalliin, Martin, and S. Chaudhuri. 1994. "How Well Souza, E., P.N. Fox, D. Byerlee, and B. Skovmand. I99 Do Static Indicators Identify the Chronically Poor?" "Spring Wheat Diversity in Irrigated Are of Two journal of Public Econmics 53:367-9t Developing Countries." Crop Science 34:77443. 187 Bank Research Output Takacs,WendyE. 1993. "La lib&ralisation du commerce Developing Countries' Exports?" Indian Economic au Mali: Une analyse du jumelage entre achats Review (Summer). domestiquesetattributiondeslicencesd'importation." .1994. "NAFrA: Its Impact on South Asia." Asian Revue d'economic du d&vloppement 3:81-101. Economic Journal (May). Tarr, David G. 1994. "The Terms-of-Trade Effects of . 1994. "The North American Free Trade Agree- Moving to World Prices on Countries of the Former ment. Its Effects on South Asia." Journal of Asian Soviet Union." Journal of Comparative Economics 18(1): Economics (March). 1-24. Yeats, Alexander, and J. Rozanski. 1994. "An Assess- Thome, A. 1993. "Eastern Europe's Experience vith ment of the Quality of International Trade Statistics." Banking Refonn: Is There a Role for Banks in the Journal of Development Economics (Tune). Transition?" lournal of Banking and Finance 17(5): Yeats, Alexander, and Raed Safadi. 1994. "The Escalation 959-1000. of Asian Trade Barriers." Asian Ecnomicournal (2). Unal, H., Asli Demnirgi4-Kunt, and ICW. Ieung. 1993. Yusuf, Shahid. 1994. "China's Macroeconomic Perfor- "TheBradyPlan,1989MexicanDebt-ReductionAgree- mance and Management during Transition." lounual mnt, and Bank Stock Returns in the United States of Economic Perspectives 8(2):71-92. and Japan." Journal of Money, Credit and Banking 25(3):410-29. Valdes, Alberto. 1993. "The Macroeconomic Environ- E. Policy and Research Series Paper ment Necessary for Agricultural Trade and Price Policy Reforms." Food PoliLy 18(4):272-82. Shah,Anwar. 1994. TheReformoflutergovernmentalFiscal Vanderslice, J., and John Briscoe. 1993. "All Coliforms Relations in DeuelopingandEmergingMarket Economies. Are Not Created Equal: A Comparison of the Effects PolicyandResearchSeries23.Washington,DC: World of Water Source and In-House Water Contamination Bank on Infantile Diarrheal Disease." Water Resources Re- searc 29(7):19&3-95. Varangis, Panos, Carlos A. Primo Braga, and Kenji F. World Bank Discussion Papers, Technical Takeuchi.1993."TropicalTimberTradePolicies:What Papers, and Other Bank Series Papers ImpactWiliEco-LabelingHave?" WirtschaftsPolitische Blifter 3/4:338-51. Abeille, Bernard, and Jean-Marie Lantran. 1993. Socda Venkatesan, V. 1993. "Enhancing Organizational Effec- Infrastructure Construction in the Sahel: Optionsfor Im- tiveness in Developing Countries: The Training and proving Current Practices. World Bank Discussion Pa- Visit System Revisited-Comments." PublicAdminis- per 200. Washington, DC. bution and Develoment 13(5):515-19. Ahmed,Kulsum. 1994. Renewable Energy Technologies: A Vijverberg, W.P.M. 1993. "Labor Market Performance Review of the Status and Costs of Selected Technologies. as a Determinant of Migration." Econmica 60(238): World Bank Technical Paper 240. Washington, DC. 143-60. Ahuja,Dilip. 1994. The Incremental CostsofClimate Change Vodopivec, Milan, Milan Cvikl, and Evan Kraft. 1993. Mitigation Projects: First Steps toward a Frameworkfor "CostsandBenefitsofSlovenianlndependence."Com- Assessment. Global Environment Facility Working muwist Economies and Ewnomic Transformation 5(3): Paper 9. Washington, DC: World Bank. 295-315. Ameur, Charles. 1994. Agricultural Extension: A Step Wamer, A.M. 1994. "Mexico tnvestrnentCollapse: Debt Beyond the Next Step. World BankTechnical Paper 247. or Oil?" Jounal of International Money and Finance Washington, DC. 13(2):239-56. Anderson, Dennis, and Robert H. Williams. 1994. 7he Wolf, A.T., and A. Dinar. 1994. "Middle East Gost-Effictiveness ofGEF Projer's. Global Environment Hydropolitics and Equity Measures for Water-Shar- FacilityWorkingPaper6.WashmgtonDC:WorldBank ing Agreemenis." Journal of Social, Political and EL- Antholt,Charles. 1994. GettingReadyfortheTwenty-First mmic Studits 19(1):69-3. Century: Technicl Change and Institutional Moderniza- Yeats, Alexander. 1993. "Do Natural-Resource-Based tion in Agriulture. World Bank Technical Paper 217. Industrialization Strategies Convey Important (Jn- Washington, DC. recognized) Price Benefits for Commodity Exporting Archondo-Callao, Rodrigo S., and Asif Faiz 1993. Esti- Developing Countries?" Singapor Economic Reveuw matingVehicleOperatingCosts. WorldBank Technical (Summer). Paper 234. Washington, DCr .193. "What Do Alternative Measures of Com- Bagchee, Aruna. 1994. Agricultural Extension in Afjic. parativeAdvantage Reveal about the Composition of World Bank Discussion Paper 231. Washington, DC. 18J Bank Research Output Baker, 1., and Margaret Grash. 1994. Poverty Reduction Paper 242. Washington, DC. through Geographic Targeting: How Well Does It Work? Bindlish, Vishva, and Robert Evenson. 1993. Evaluation Living Standards Measurement Study Working Pa- of the Perfonrance of T&V Extension in Kenya. World per 99. Washington, DC: World Bank. Bank Technical Paper 208. Washington, DC. Baneth, jean. 1994. 'Fortress Europe' and Other Myths Bindlish, Vishva, Robert Evenson, and Mathurin about Trade: Policies towards Merchandise Imports in the Gbetibouo. 1993. Evaluation of T&V-Based Extension in EC and Other Major Industrial Economies (and What Burkina Faso. World Bank Technical Paper 226. Wash- They Meanfor Developing Countries). World Bank Dis- ington, DC. cussion Paper 225. Washington, DC. Bitran, Ricardo. 1994. A Supply--Demand Model of Health Barghouti, Shawki, E. Cromwell, and A.J. Pritchard. Care Financing with an Application to Zaire. EDI Tech- 1993. Agricultural Technologiesfor Market-Led Develop- nical Materals. Washington, DC: World Bank. ment Opportunities in the 1990s. World Bank Technical Bonfiglioli, Angelo Maliki. 1994. Agropastoralism in Chad Paper 204. Washington, DC. as a Strategyfor Survival: An Essay on the Relationship Barnes, Douglas F., Keith Openshaw, Kirk R. Smith, and between Anthropology and Statistics. World Bank Tech- RobertvanderPlas. 1994. WhatMakesPeople Cookwith nical Paper 214. Washington, DC. Improved Biomass Stoves: An International Review of Bradley, P.N.,and K. McNamara, eds. 1993. Living with Stove Programs. World Bank Technical Paper 242. Trees: Policies for Forestry Management in Zimbabwa. Washington, DC. World Bank Technical Paper 210. Washington, DC Bartone, Carl, Janis D. Bernstein, Josef Leitmann, and Brandon, Carter, and Ramesh Ramankutty. 1993. To- T. '-ien Eigen. 1994. Toward Environmental Strategies ward an Environmental Strategyfor Asia. World Bank for Cities: Policy Considerationsjor Urban Environmental Discussion Paper 224. Washington, DC. Management in Developing Countries. Urban Manage- Brooks, Karen M., and Zvi Lerman. 1994. Land Reform ment Paper 18. Washington, DC: World Bank. and Farm Restructuring in Russia. World Bank Discus- Bates, Robin, Janusz Cofala, and Michael Toman. 1991. sion Paper 233. Washington, DC. Alternative Policies for the Control of Air Pollution in Brown, Katrina, David Pearce, Charles Perrings, and Poland. World Bank Environment Paper 7. Washing- Timothy Swanson. 1994. Economics and the Conserva- ton, DC. tion of Global Biological Diversity. Global Environment Behrman, Jere R., and Victor Lavy. 1994. Children's Facility Working Paper 2. Washington, DC: World Health and Achievmt in Scosol. Living Standards Bank. Measurement Study Working Paper 104. Washing- Carr, Stephen J. 1993. Imprving Cash Crops in Africa. ton, DC. World Banl. Factrs Influencing theProductivityof Cotton, Coffe, and Benefo,KofiDarkwa, and T.PaulSchultz. 1994. Determi- Tea Grown by Smailholders. World Bank Technical Pa- nants of Fertility and Child Mortalty in C6ted'Ivoire and per 216. Washington, DC. Ghana. Living Standards Measurement Study Work- Carrin, Guy, and Marc Vereecke. 1993. StratEgies pourun ing Paper 103. Washington, DC: World Bank. financement des soins de sante dans les pays en Bennett, Lynn, and Mike Goldberg. 1993. Providing En- diveloppement. EDI Technical Materials. Washington, terprise Deveopment and Financial Serdices to Women: A DC: World Bank Decade of Bank Experience in Asia. World Bank Techni- Cercone. !ames A. 1993. Alcohol-Related Problems as an cal Paper 236. Washington, DC. Obstacdetothe Development ufHuman Capital: Issues and Bernstein, Janis D. 1994. Iand Use Considerations in Urban PolicyOptions. WorldBankTechnical Paper2l9. Wash- Environmental Management. Urban Management Pa- ington, DC per 12. Washington, DC: World Bank. Cemea, Michael M 1993. The Urban E.vironment and Bertaud, Alain, and Bertrand Renaud. 1994. Cities with- Population Relocation. World Bank Discussion Paper out Land Markets: lessons of the Failed Socialist Exper.- 152. Washington, DC. ment. World Bank Discussion Paper 227. Washing- Chau, Leung Chuen. 1993. Hong Kong: A Unique Case of ton, DC. Development. Lessornsof East Asia Series. Washington, Bhattacharya, Amar, and Mari Pangestu. 1993. Imnon- DC: World Bank sia: Deuelopment Transformation and Public Policy. Les- Christensen, Scott, David Dollar, Anmmar Siamwalla, sons of East Asia Series. Washington, DC World and Pakorn Vichyanond. 1993. Thailand: The Institu- Bank. tional and Political Underpinnings of Grhth. Lessons of Biggs, Tyler,Gail R. Moodyjan-Hendrik van Leeuwen, East Asia Series. Washington, DC: World Banki and E. Diane White. 1994. Afiica Can Comnpete! Export Claessens, Stijn. 1993. Risk Management in Develping Opportunities and Challnges for Garments and Home Countries. World BankTechnical Papet 235. Washing- Products in the U.S. Market. World Bank Discussion ton, DC. I 89 Bank Resarch Output Claessens, Stijn, and Sudarshan Gooptu, eds. 1993. Port- Dillinger, William. 1994. Decentralization and Its Implica- folio lnvestment in Developing Coutntries. World Bank tionsfor Urban Service Delivery. Urban Management Discussion Paper 228. Washington, DC. Paper 16. Washington, DC: World Bank. Cleaver, Kevin M. 1993.A Strategy to DevelopAgriculture Eisa, Hamdy M., Shawki Barghouti, Fred Gillham, and in Sub-Saharan Africa and a Focus for the World Bank. M. Tawhid Al-Saffy. 1994. Cotton Production Prospects World Bank Technical Paper 203. Washington, DC. for the Decade to 2005: A Global Overview. World Bank (Also published in French.) Technical Paper 231. Washington, DC. Cointreau-Levine, Sandra. 1994. PrivateSector Participa- English, John, Mary Tiffen, and Michael Mortimore. tion in Municipal Solid Waste ServiCes in Developing 1994. Land Resource Management in Machakos District, Countries. Vol. 1, The Formal Sector. Urban Manage- Kenya, 1930-90. World Bank Environment Paper 5. ment Paper 13. Washington, DC: World Bank. Washington, DC. Collinson, Michael P., and Kerri Wright Platais, eds. Farah, Jumanah. 1993. Pesticide Policies in Developing 1994. Social Science in the CGLAR: Proceedings of a Countries: Do They Encourage Excessive Pesticide Use? Meeting of CGIAR Social Scientists held at the Intrna- World Bank Discussion Paper 238. Washington, DC. tional ServiceforNational AgriculturaIResearch (ISNAR), Fong, Monica S. 1993. The Role of Women in Rebuilding the the Hague, the Netherlands. CGIAR Study Paper 28. Russian Economy. Studies of Economies in Transfor- Washington, DC: World Bank. mation 10. Washington, DC World Bank. Cook, Cynthia C. 1994. tnwfountaryResettlementinAfrica: Fox, William F. 1994. Strategic Options for Urban Infra- Seect Papers from a Conference on Envirotnment and structure Management. Urban Management Paper 17. Settkment Issues in Africa. World Bank Technical Pa- Washington, DC: World Bank. per 227. Washington, DC. Frederiksen, Harald D., Jeremy Berkoff, and William Creightney, Cavelle D. 1993. Transport and Economic Barber. 1993. Principks and Practicesfor Dealing with Performance: A Survey of Deueloping Countries. World Water Resources Issues. World Bank Technical Paper Bankk Technical Paper 232. Washington, DC. 233. Washington, DC. Dasgupta, Partha, and KCarl-Goran Maler. 1994. Poverty, . 1993. Water Resources Management in Asia. Vol. 1, Institutions,and the Environmental Resource Base. World Main Report. World Bank Technical Paper 212. Wash- Bank Environment Paper 9. Washington, DC. ington, DC. Datt, Gaurav, and Martin Ravallion. 1994. Income Gains Fretwell, David, and Susan Goldberg. 1993. Developing for the Poor from Public Works Employment: Evidence Effectie Employment Services. World Bank Discussion from Two Indian Villages. Living Standards Measure- Paper 208. Washington, DC. ment Study Working Paper 100. Washington, DC: Frischtak, Leila L 1994. Governance pacity and Eco- World Bank. nomic Reform in Developing Countries. World Bank Davis, Shelton, Guillermo Castilleja, Peter J. Poole, and Technical Paper 254. Washington, DC. Charles C Geisler, eds. 1993. The Social Challenge of Fuglestvedt,JanTedHanisch,lvarlsaksen,lRolfSelrod, Biodiersity Conservation. Global Environment Facil- Jon Strand, and Asbjom Torvanger. 1994. A Review of ity Working Paper 1. Washington, DC: World Bank. Country Case Studies on Climate Change. Global Envi- Deininger,Klaus W. 1993. Cooperatives and the Breakup of ronment Facility Working Paper 7. Washington, DC: Large Mechanized Farms: Theoretia Perspectives and World Bank. Empirical Evidence. World Bank Discussion Paper 218. Glewwe, Paul,and HananJacoby. 1993. DelayedPrimary Washington, DC. School Enrollment and Child Malnutrition in Ghana: An de Melo, Martha, and Gur Ofer. 1994. Private Service Economic Analysis. Living Standards Measurement Firms in a Transitional Economy: Findings of a Survey in Study Working Paper 98. Washington, DC: World St. Petc-sburg. Studies of Economies in Transforma- Bank. tion 11. Washington, DC: World Bank. Goldfarb,RobertS.,and Arvil VanAdams. 1993. Design- Demirgiiy-Kunt,Asli, and Harry Huizinga. 1993. Portfo- ing a System of Labor Market Statistics and Information. lio Investments in Emerging Stock Markets: Direct and World Bank Discussion Paper 205. Washington, DC. Indirect Barriers. World Bank Discussion Paper 228. Gray,Cheryl, andassociates. 1994. EwovingLal Frame- Washingtm, DC: World Bank. works for Private Sector Development in Central and Dewees, Peter A. 1993. Trees, [and, and Labor. World Eastern Europe. World Bank Discussion Paper 209. Bank Environment Paper 4. Washington, DC. Washington, DC. Dia, Mamadou. 1993. A Governance Approach to Civil Gurgand, Marc, GlennPederson, andJacobYaron. 1994. ServiceReform in Sub-SaharanAfrica. World BankTech- Outrechand Sustainability ofSix Rural Finanac Institu- nical Paper 225. Washington, DC. (Also published in tions in Sub-Saharan Africa. World Bank Discussion French.) Paper 248. Washington, DC. 190 Bank Research Output Hahm, Hongjoo. 1994. The Development of fit Private . 1994. Issues to be Addressed by the Program for Sector in a Small Economy in Transition: The Case of Measuring Incremental Costs fr the Environment. Glo- Mongolia. World Bank Discussion Paper 223. Wash- bal Environment Facility Working Paper 8. Washing- ington, DC. ton, DC: World Bank. Hanna, Donald P. 1994. Indonesian Experienc wfth Finan- Kingsley, Thomas. 1993. Managing Urban Environmental cial Reform. World Bank Discussion Paper 237. Wash- Quality in Asia. World Bank Technical Paper 220. ington, DC. Washington, DC. Hanna, Nagy K., and Sandor Boyson. 1993. Infonnation Kirnani, Syed S., and Robert Rangeley. 1994. Intera- Technology in World Bank Lending: Increasing the Devel- tional Inland Water: Concepts for a More Active World opmental Impact. World Bank Discussion Paper 206. BankRole. World BankTechnicalPaper239. Washing- Washington, DC. ton, DC Harper,Caroline, and theSave the Children Fund. 1994. Klein, Thomas M. 1994. External Debt Management: An An Assessment of Vulnerable Groups in Mongolia: Strat- Introduction. World Bank Technical Paper 245. Wash- egiesfor Social Policy Planning. World Bank Discussion ington, DC. Paper 229. Washington, DC. Kostermans, Kees. 1994. Assessing the Quality of Harrold, Peter, E.C. Hwa, and Lou Jiwei. 1994. Anthropometric Data: Background and Mustrted Guide- Macroeconomic Management in China: Proceedings of a linesfor Survey Managers. Uving Standards Measure- Conference in Dalian, June 1993. World Bank Discus- ment Study Working Paper 101. Washington, DC: sion Paper 222. Washington, DC. World Bankl Heath, John RP 1994. land Rights in Cdte d'lwvire: Survey Lall, Rajiv. 1993. China: Reform and Deelopment in 1992- andProspwectsjrProjectlnkrvention.WorldBankTech- 93. World Bank Discussion Paper 215. Washing- nical Paper 238 Washington, DC. ton, DC. Holt, Jane. 1993. Transport Strategies for the Russian Fed- Lavy, Victor, and Jean-Marc Germain. 1994. Quiality and eration. Studies of Economies in Transfonnation 9. Cost in Health Care Choice in Developing Countries. Washington, DC: World BankL Living Standards Measurement Study Working Pa- Japan Development Bank Japan Economic Research per 105. Washington, DC: World Bank. Institute, Kozo Kato, and Tsutomu Shibata. 1994. Leitmann,Josef. 1994. Rapid Urban EnvironmentalAssess- Policy-Based Finanec The Experie of Postuar Japan. ment: Lessons fom Cities in the Developing World. Vol. World Bank Discussiorn Paper 221. Washington, DC 1, Methodology and Preliminary Findings. Urban Man- Johansen, Frida. 1993. Poverty Reduction in East Asia: The agement Paper 14. Washington, DC: World Bank. Silent Rewlution. World Bank Discussion Paper 203. _. 1994. Rapid Urban Environmental Assessment: Is- Washington, DC. sons from Cities in the Developing World. Vol. 2, Tools John, Joshua. 1994. Managing Redundancy in Over- and Outputs. Urban Management Paper 15. Washing- exploited Fisheries. World Bank Discussion Paper 240. ton, DC: World Bank. Washington, DC. Le Moigne, Guy, K. William Easter, Walter J. Ochs, and Keck,Andrew,Gershon Feder,andNarendra P. Sharma. Sandra Giltner. 1994. Water Policyand Water Markets: 1994. Population Growth, Shifting Cultivation, and Selected Papers and Procadings fromn the World Bank's Unsustainable Agricultural Deveopent. World Bank NTinth Annual Irrigation and Drainage Seminar. World Discussion Paper 234. Washington, DC. Bank Technical Paper 249. Washington, DC. Keith, Simon H. 1993. Property Tax in Anglophone Africa. Le Moigne, Guy, U. Kuffner, and M. Xie. 1993. Using World Bank Technical Paper 209. Washington, DC. Water Efficiently. World Bank Technical Paper 205. Kessides, Christine. 1993. he Contnbutions ofInfastruc- Washington, DC. ture to Economic Development: A Review of Experience Liebenthal,Andres,SubodhMathur,andHerbertWade. and Policy Implications. World Bank Discussion Paper 1994. Solar Energy: Lsofrom the Pacific Islad Expe 213. Washington, DC. rience. World Bank Technical Paper 244. Washing- .1993. Institutional Optionsfor the Provision of Infra- ton, DC. structure. World Bank Discussion Paper 212. Wash- Liviatan, Nissan, ed. 1993. Proceedings of a Conferen of ington, DC- CurrencySubstitutionandCurrencyBoards.WorldBank Kim, Kihwan, and Danny Mt Leipziger. 1993. Korea: A Discussion Paper 207. Washington, DC. Case of Government-Led Development. Lessons of East Loayza, Eduardo A., ed. 1994. Managing Fishery Re- Asia Series. Washington, DC: World Bank. sources: Procedings ofa Symposium Co -Spoasoed by the King& Ken. 1994. Te Incremental Costs ofGlobal Environ- World Bank and Peruvian Mminstry of Fishries Held in ment Benefits. Global Environment Facility Working Lima, Peru, June 1992. World Bank Discussion Paper Paper 5. Washington, DC: World Bank. 217. Washington, DC. 191 Bank Research Output Lutz, Emst, Stefan Pagiola, and Carlos Reiche. 1994. sues, and Applications. World Bank Technical Paper Economicand Institutional Analyss of Soil Conservation 246. Washington, DC. Projts in Centrat America and the Caribban. World Redwood, John, [II. 1993. World Bank Approaches to the Bank Environxment Paper B. Washington, DC. Environment in Bmzil.A A orld BankOperations Evalu- Mansfield, Edwin. 1994. Intellectual Property Protection, ation Study. Washington, DC. Foreign Direct Investment, and Technology Transfer. IFC Saito, Katrine. 1994. Raising the Productivity of Women Discussion Paper 19. Washington, DC. Farmers in Sub-Saharnn Africa. World Bank Discussion McMillan,DellaE.,Jean-BaptisteNana.,andKimseyinga Paper 230. Washington, DC. Savadogo. 1993. Settkment and Development in the Salleh, Ismail Muhd, and Saha Dhevan Meyanathan. River Blindness Control Zone: Case Study-Burkina Faso. 1993. Malaysia: Growth, Equity, and StructuraI TransfJor- World Bank Technical Paper 200. Washington, DC. mation. Lessons of East Asia Series. Washington, DC: (Also published in French.) World Bank. Meier, Peter, Mohan Munasinghe, and the Sri Lanka Schiavo-Campo, Salvatore. 1994. Institutional Change Study TeamL 1994. Inworporating Environmental Con- and the Public Sector in Transitional Economies. World tens into Power Sector Decisionmaking: A Case Study of Bank Discussion Paper 241. Washington, DC. Sri Lanka World Bank Environment Paper 6. Wash- Selvaratnam, Viswanathan. 1994. Innovations in Higher ington, DC. Education: Singapom at the Competitive Edge. World Menke, Christoph, and P. Gregory Fazzari. 1994. Im- Bank Technical Paper 222. Washington, DC proing Electric Power Utility Effisciency Issues and Rec- Serageldin, Ismail, and June Taberoff. 1994. Culture and omwnmdations.WorldBankTechnicalPaper243.Wash- Development in Africa: Froceedings of an Interntional ington, DC. onferen. Environmentally Sustainable Development Midgley, Peter. 1994 Urbat Transpt in Asia: An Opera- Proceedings Series 1. Washington, DC: World Bank. tiona Agenda for the 1990s. World Bank Technical (Also published in French.) Paper 224. Washington, DC. Siddayao, Coraz6n M., and Lisa Griffin, eds. 1993. En- Miller, Robert, and Mariusz Sumlinski. 1994. Trends in ergy Investments and the Environment: Selected Topics. Pivat Investment in Devuelping Countries 1994: Statis- EDI Technical Materials. Washington, DC: World tics for 1970-92. IFC Discussion Paper. Washington, Bank. DC World Bank. Shah, Anwar. 1994. Intergovernmental Fiscal Relations in Mintzer, Irving Nt 1994. Iplepmnting the Framework Indonesia: Issues and Reform Options. World Bank Dis- Convention on Climate Change.:Incremental Cots and the cussion Paper 239. Washington, DC. Role ofthe GEF. Global Environment Facility Working Smith, Peter L, and Gregory Staple. 1994. Telecommuni- Paper 4. Washington, DC: World Bank. cat ions SectorReform in Asia: Toward a New Pragma tism. Munasinghe,Mohan. 1993. Enviomental Economicsand World Bank Discussion Paper 232. Washington, DC Sustainabl Deveopment. World Bank Environment Soon, Tech-Wong, and C Suan Tan. 1993. Singapore: Paper 3. Washington, DC. Public Policy and Economic Development. Lessons of Narayan, Deepa. 1993. Participatory Evaluation: Toolsfor East Asia Series. Washington, DC: World Bank. Managing Change in Water and Sanitation. World Bank Srivastava, Jitendra P., and Steven M. Jaffee. 1993. Best Tehnical Paper 207. Washington, DC (Also pub- PracticesforMoving Seed Technology: NewApproachesto lihed in French.) Doing Business. World Bank Technical Paper 213. O'Bnen, Peter, and Yannis Karmokolias. 1994. Radical Washington, DC. Re*jrm in the Automotive industry: Policies in Emerging Srivastava, Jitendra P., Prabhakar Mahadeo Tambodi, Markets. IFC Discussion Paper 21. Washington, DC: John C. English, Rattan Lal, and Bobby Alton Stewart World Bank. 1993. Conserving Soil Moisture and Fertility in the Warm Petes,HansJ. 1993. TheMaritime Transport Crisis. World Seasonally Dry Tropics. World Bank Technical Paper Bank Discussion Paper 220. Washington, DC. 221. Washington, DC. Petri, Peter A. 1993. Common Foundations of East Asian Thillairajah, Sabapathy. 1994. Development of Rural Fi- Succa Lessons of EastAsia Series. Washington, DC: nancial Markets in Sub-Saharan Aftrica. World Bank World Bank. Discussion Paper 219. Washington, DC. Piotrow,Phyllis T., Katherine A. Treiman,Josk G. Rimon Thomas, Vinod, and Yan Wang. 1993. GovernmentPolicy M1, and Sung Hee Yun. 1994. Strategis for Family and Produdivity Growth. Is East Asia an Exception? Planing Promotion. World Bank Tedhnical Paper 223. Lessons of East Asia Series. Washington, DC: World Washinton DC. Bank. PhlueUec, Horvw, Charles Burt, and Hans W. Wolter. Umnali-Deininger, Dina L. 1993. Irrigation-Induced Salin- 1994. Moadrn Water Control in Irrgation: Concepts, Is- ity:A GrowingProblemforDevelopmentand theEnviron- 192 Bank Researcht Output ment. World Bank Technical Paper 215. Washing- G. Policy Research Working Papers ton, DC. 1994. Public and Private Agricultural Extension: Agrawal,NishaZafarAhmed,MichaelMered,andRoger Beyond Traditional Frontiers. World Bank Discussion Nord. 1993. "Structural Adjustment, Economic Perfor- Paper 236. Washington, DC. mnance, and Aid Dependency in Tanzania." Policy Re- van Blarcom, Bonni, Odin Knudsen, and John Nash. searchWorkingPaperl204.World BankEastemAfrica 1993. The Refonn of Public Expendituresfor Agriculture. Department, and International Monetary Fund, Fiscal World Bank Discussion Paper 216. Washington, DC. Affairs and African Deparbnents, Washington, DC vandeWalle,Dominique,MartinRavauion,andMadhur Ahmad, Sultan. 1993. "Intertemporal and Interspadal Gautam. 1994. How Well Does the Social Safety Net Comparisons of Income: The Meaning of Relative Work? The Incidence of Cash Benefits in Hungary, 1987- Prices.' Policy Research Working Paper 1157. World 89. Living Standards Measurement Study Working Bank, Intemational Economics Department, Wash- Paper 102. Washington, DC: World Bank. ington, DC. Vergara, Walter. 1993. The Materials Rewlution: What Aitken, Brian, and Ann Harrison. 1994. "Do Domestic Does ItMeanfor DeoelopingAsia? World Bank Techni- Firms Benefit from Foreign Direct Investmoent? Evi- cal Paper 202. Washington, DC. dence from Panel Data." Policy Research Working Webster, Leila M. 1993. The Emergence of Private Sector Paper 1248. World Bank, Policy Research Depart- Manufacturing in Hungary: A Survey of Firms. World ment, Washington, DC. Bank Technical Paper 229. Washington, DC. Akiyama, Takamasa, and Donald F. Larson. 1994. 'The .1993. The Emergence of Private Sector Manufacitur- Adding-Up Problem: Strategies for Primary Comn- ing in Poland: A SurveyvfFirms. World Bank Technical modity Exports in Sub-Saharan Africa." Policy Re- Paper 237. Washington, DC. search Working Paper 1245. World Bank, Intema- Webster, Leila IV , andJoshua Charap. 1993. Te Emr- tional Economics Department, Washington, DC. genceofPrivatefSectorManufacturinginSt.Petersburg:A Alam, Asad. 1994. "The New Trade Theory and Its Survey o,' Firms. World Bank Technical Paper 228. RelevanceforDevelopingCountries."PolicyResearch Washington, DC. Working Paper 1274. World Bank, Office of the Chief Webster, Leila M., and Dan Swanson. 1993. The Emer- Econonmist, Africa Regional Office, Washington, DC. gence of Private Sector Manufacturing in the Former Anderson,JamesE.,andj.PeterNeary.1993.'"Domestic Czech and Slovak Federal Republic: A Survey of Finrs. DistortionsandlnternationalTrade."PolicyResearch World Bank Tecuhical Paper 230. Washington, DC. Working Paper 1163. World Bank, International Eco- Weijenberg, Jan, Josu0 Diond, Michael Fuchs-Carsch, nomics Department, Washington, DC. Adolphe KS6, and Jacques Lefort. 1993. Revitalizimg Asheim, Geir B. 1994. "Sustainability: Ethical Founda- Agricultural Research intheSahel:A Proposed Frammewark tions and Economic Properties." Policy Research for Action. World Bank Discussion Paper 211. Wash- Working Paper 1302. World Bank, Policy Research ington, DC. Department, Washington, DC. Wiebers, Uwe-Carsten. 1993. Integrated Pest Manage- Baffes, John, and Anwar Shah. 1993. 'Productivity of mentandPesticide Regulation in DevelopingAsia. World Public Spending, Sectoral Allocation Choices, and Bank Technical Paper 211. Washington, DC. Economic Growth." Policy Research Working Paper World Rank. 1993. Statistical Handbook 1993. Studies of 1178.WorldBank,PolicyResearchDepartmnt,Wash- Economies in Transformation 8. Washington, DC. ington, DC. (Also published in Russian.) Bannister, Geoffrey]. 1993. 'Rent-Sharing in the Multi- World Bank, FAO, and UNIDO. 1994. World and Re- Fibre Arrangement The Case of Mexico." Policy Re- gional Supply and Demiand Balancesfor Nitbogen, Phos- search Working Paper 1191. World Bank, Interna- phate, and Potash, 1991-92 to 1997-98 World Bank tional Economics Departnent, Washington, DC. Technical Paper 206. Washington, DC. Barbone, Luca, and Domenico jr. Marchetti 1994. "Eco- Wu, Kin Bing. 1994. Mongolia: Financing Education dur- nomnicTransfornationandtheFiscalCrisistACriticai ingEconomicTransition. World BankDiscussion Paper LookattheCentral EuropeanExperience of thel990s." 226. Washington, DC. Policy Research Working Paper 1286. World Bank, Zijp, Willem. 1994. Improving the Transfer and Use of Europe and Central Asia, Country Department IL Agricultural Information. World Bank Discussion Pa- Washington, DC. per 247. Washington, DC. Bar-l"an, Avner, and Anat Levy. 1993. "lob Search by Zilinskas, Raymond A., and Carl G. Lundin. 1993. Ma- Employed Workers: The Effectsof Restrictions? Policy rineBiotehmlogyandfDewopingCountries.WorldBank Research Working Paper 1170. World Bank, Policy Discussion Paper 210. Washington, DC. Research Department, Washington, DC- 193 Bank Research Output Barrett, Scott. 1994. "Conflict and Cooperation in Man- Bogetic, Zeljko, and Fareed Hassan. 1993. 'Determi- aginglnternationalWaterResources." PolicyResearch nants of Value-Added Tax Revenue: A Cross-Section Working Paper 1303. World Bank, Policy Research Analysis."PolicyResearch WorkingPaperl2O3.World Department, Washington, DC. Bank, Europe and Central Asia, Country Department Barros, Ricardo, Louise Fox, and Rosane Mendonca. I, Washington, DC. 1994. "Female-Headed Households, Poverty, and the Bogetic, Zeljko, and Dennis Heffley. 1993. "Reforming Welfare of Children in Uroan Brazil." Policy Research Health Care: A Case for Stay-Well Health Insurance.' Working Paper 1275. World Bank, Policy Research Policy Research Working Paper 1181. World Bank, Departnent, Washington, DC. Europe and Central Asia, Country Department 1, Bernstein, Jeffrey, and Anwar Shah. 1993. "Corporate Washington, DC. TaxStructureandProduction."PolicyResearchWork- Bogetic, Zeljko, and Arye L. Hillman. 1994. "The Tax ing Paper 1196. World Bank, Policy Research Depart- Base in Transition: The Case of Bulgaria." Policy ment, Washington, DC. Research Working Paper 1267. World Bank, Europe Biiler, Dan. 1994. "Informal Gold Mining and Mercury and Central Asia, Country Department 1, Washing- Pollution in Brazil." Policy Research Working Paper ton, DC. 1304WorldBank,PolicyResearchDepartment,Wash- Boray, Yavuz, and Hector Sierra. 1993. "Bank Perfor- ington, DC. mance and the Impact of Financial Restructuring in a Binswanger, Hans P., Klaus Deininger, and Gershon Macroeconomic Framework: A New Application." Feder. 1993. TPower, Distortions, Revolt, and Reform Policy Research Working Paper 1237. World Bank, in Agricultural Land Relations." Policy Research Latin America and the Caribbean, Country Depart- Working Paper 1164. World Bank, Latin America and ment TV, Washington, DC. theCaribbeanTechnicalDepartmentandAgriculture Bruce, Neil, and Gregory M. Ellis. 1993. 'Environmental andNaturalResourcesDepartnent,Washington,DC. Taxes and Policies for Developing Countries." Policy Bird, Richard. 1994. "DecentralizingInfrastructure: For Research Working Paper 1177. World Bank, Policy Goodorfor?li" PolicyResearchWorkingPaper1258. Research Department Washington, DC. World Bank, Office of the Vice President, Develop- Bulow,Jeremy, Kenneth Rogoff,and Ning S. Zhu. 1994. ment Economics, Washington, DC. "Estimating the Efficiency Gains of Debt Restructur- Birdsall, Nancy, and Charles Griffir. 1993. "Population ing." Policy Research Working Paper 1317. World Growth, Extemalities, and Poverty." Policy Research Bank, International Economics Department, Wash- Working Paper 1158. World Bank, Policy Research ington, DC Department and Eastern Africa Department, Wash- Caprio, Gerard, Jr., and Lawrence R. Summers. 1993. ington, DC. '"inanceandItsRefornmBeyondLaissez-Faire."Policy Birdsall, Nancy, and Changyong Rhee. 1993. "Does ResearchWorkingPaper1171.WorldBank,Financial Research and Development Contribute to Economic Sector Development Departnent, Washington, DC. Growth in Developing Countries?' Policy Research Chiappori, Pierre-Andre, Lawrence Haddad, John Working Paper 1221. World Bank, Policy Research Hoddinott, and Ravi Kanbur. 1993. "Unitary versus Department, Washington, DC. Coilective Models of the Household: Time to Shift the Boadway, Robin, and Frank Flatters. 1993. "The Taxa- Burden of Proof?" Policy Research Working Paper tion of Natural Resources: Principles and Policy Is- 1217. World Bank, Ghana Resident Mission, Wash- sues." Policy Research Working Paper 1210. World ington, DC. Bank, PolicyResearch Department,Washington, DC. Cho, Yoon Je, and Thomas Hellmann. 1993. "The Boadway, Robin, Sandra Roberts, and Anwar Shah. Govemment's Role in Japanese and Korean Credit 1994. "The Reform of Fiscal Systems in Developing Markets: A New Institutional Economics Perspec- and Emerging MarketEconomies: A Federalism Per- tive." Policy Research Working Paper 1190. World spective."PolicyResearchWorkingPaperl259.World Bank, Financial Sector Development Departmnent, Bank, Policy Research Department, Washington, DC. Washington, DC. Boccara, Bruno. 1994. "Why Higher Fiscal Spending Chuhan, Punam. 1994. "Are Institutional Investors an PersistsWhenaBoominPrinmaryCommoditiesEnds." Important Source of Portfolio Investment in Emerg- Policy Research Worldng Paper 1295. World Bank, ing Markets?" Policy Research Working Paper 1243. Sahelian Department, Washington, DC. World Bank, International Econormics Department, Boccara,BDruo,andShantayananDevarajan. 1993.'De- Washington, DC. tuwminant of Inflation among Franc Zone Countries Chuhan,Punam,StynClaessens,andN]anduMamingi. inAfrica."PolicyResearchWorldngPaperl197.World 1993. "Equity and Bond Plows to Asia and Latin Bank,PolicyResearchDepartment,Washington,DC. America: The Role of Global and Country Factors." 194 Bank Research Output Policy Research Working Paper 1160. World Bank, Diwan, Ishac, Vihang Errunza, and Lenmna W. Senbet. International Economics Department, Washing- 1993. "Empirical Perspectives on National Index ton, DC. Funds." Policy Research Working Paper 1206. World Claessens, Stijn, and David Naude. 1993. "Recent Esti- Bank, International Economics Departmnent, Wash- mates of Capital Flight." Policy Research Wurking ington, DC. Paper 11B6. World Bank, Intemational Economics Due, John F. 1994. "Excise Taxes." Policy Research Department, Washington, DC. Working Paper 1251. World Bank, Policy Research Claessens, Stijn, and Moon-Whoan Rhee. 1994. "The Department, Washington, DC. Effects of Barriers on Equity Investment in Develop- Easter, WiiliamK., and RobertR. Hearne. 1993. Decen- ing Countries." Policy Research Working Paper 1263. tralizing Water Resource Management Economic World Bank, Intemational Economics Departrnent, Incentives, Accountability, and Assurance." Policy Washington, DC. Research Working Paper 1219. World Bank, Agricul- Claessens, Stijn, and Panos Varangis. 1994. "Oil Price ture and Natural Resources Department, Washing- Instability, Hedging, and an Oil Stabilization Fund: ton, DC. The Case of Venezuela." Policy Research Working Easterly, William. 1993. "How Much Do Distortions Paper 1290. World Bank, International Economics AffectGrowth?"PolicyResearchWorkingPaperl2lS. Department and Europe and Central Asia, Middle World Bank, Policy Research Departnut, Washing- East and North Africa Regions Technical Depart- ton, DC. ment, Washington, DC. _ .1994. "Explaining Miracles: Growth Regressions Commander, Simon, and RichardJackman. 1993. "Pro- Meet the Gang of Four." Policy Research Working viding Soial Benefits in Russia. Redefining the Roles Paper 1250. World Bank, Policy Research Depart- of Firms and Government" Policy Research Working ment, Washington, DC. Paper 1184. World Bank, Economic Development In- Easterly, William, Martha de Melo, and Cur Ofer. 1994. stitute, Washington, DC. "Services as a Major Source of Growth in Russia and Commander, Simon, Leonid Liberman, Cecilia Ugaz, Other Former Soviet States.' Policy Research Work- and Ruslan Yemtsov. 1993. "The Behavior of Russian ing Paper 1292. World Bank, Policy Research Depart- Firms in 1992: Evidence from a Survey." Policy Re- ment, Washington, DC. search Working Paper 1166. World Bank, Economic Easterly, William, and Stanley Fiscler. 1994. "The Sc- Development Institute, Washington, DC. viet Economic Decline: Historical and Republican Commander, Simon, Leonid Liberman, and Ruslan Data." Policy Resarch Working Paper 1284. World Yemtsov. 1993. "Unemployment and Labor Market Bank,PolicyResearch Department,Washington,DC. Dynamicsin Russia."PolicyResearchWorkingPaper Easterly, William, and Paulo Vieira da Cunha. 199t 1167. World Bank, Economic Development Institute, "Financing the Storn: Macroeconomic Crisis in Rus- Washington, DC. sia, 1992-93." Policy Research Working Paper 1240. .1993. 'Wage and Employment Decisions in the World Bank, Policy Research Department, and Eu Russian Economy: An Analysis of Developments in ropeandCentralAsia,CountryDepartment,Wash- 1992." Policy Research Working Paper 1205. World ington, DC. Bank,Economic Developmentlnstitute, Washington, Elbadawi, Ibrahim A., and RaimundoSoto. 1994. "Capi- DC, and Moscow State University, Moscow. tal FlowsandLong-TermEquilibriumRealExchange Davis, E.P. 1993. "The Structure, Regulation, and Per- RatesinChile."PolicyResearchWorkingPaperl306. formance of Pension Funds in Nine Industrial Coun- World Bank, Policy Research Department, Washing- tries." Policy Research Working Paper 1229. World ton, DC. Bank, Financial Sector Development Department, Esfahani, Hadi Salehi 1994. 'Regulations, Institutions, Washington, DC. and Economic Performance: ThePoliticalEconomy of Demirgii;-Kunt, Asli, and Ross Levine. 1993. "Stock the Philippines' Telecommunications Sector.' Policy Market Development and Financial Internediary Research Working Paper 1294. World Bank, Policy Growth A Research Agenda." Policy Research Work- Research Department, Washington, DC ing Paper 1159. World Bank, Policy Research Depart- Eskeland,Gunmar S.,andTarhan N.Feyzioglu. 1994. "Is ment, Washington, DC Demand forPollutingGoodsManageable?AnEcono- Devarajan, Shantayanan, and Michael Walton. 1994. metric Study of Car Ownership and Use in Mexico." "Preserving the CFA Zone: Macroeconomic Coordi- Policy Research Working Paper 1309. World Bank, nation after the Devaluation." Policy Research Work- Policy Research Department, Washington, DC. ing Paper 1316. World Bank, Policy Research Depart- Fatkingham, Jane, and Paul Johnson. 1993. "The Life- ment, Washingktn, DC. Cycle Distributional Consequences of Pay-As-You- 195 Bank Research Output Go and Funded Pension Systems." Policy Research sons from Advanced Market Economies." Policy Re- Working Paper 1200. World Bank, Policy Research search Working Paper 11B2. World Bank, Policy Department, Washington, DC Research Department, Washington, DC. Faruqee, Rashid. 1993. "How Macroeconomic Projec- Grosh, Margaret E. 1993. "Five Criteria for Choosing tions in Policy Framework Papers for the Africa Re- among Poverty Programs." Policy Research Working gion Compare with Outcomes." Policy Research Paper 1201. World Bank, Policy Research Depart- Working Paper 1168. Wornd Bank, Africa Regional ment, Washington, DC. Office, Washington, DC. Guo, Charles C., and James R. Tybout. 1994. "How Femandez-Arias, Eduardo. 1993. "Costs and Benefits of Relative Prices Affect Fuel Use Patterns in Manufac- Debt and Debt Service Reduction." Policy Research turing: Plant-Level Evidence from Chile." Policy Re- Working Paper 1169. World Bank, Intemational Eco- search Working Paper 1297. World Bank, Policy nomics Department, Washington, DC. Research Deparhnent, Washington, DC. . 1994. "The New Wave of Private Capital Inflows. Gupta, Dipak Das, and Bejoy Das Gupta. 1994. "Interest Push or Pull?" Policy Research Working Paper 1312. Rates in Open Economies: Real Interest Rate Parity, World Bank, International Economics Department, Exchange Rates, and Country Risk in Industrial and Washington, DC. Developing Countries." Policy Research Working Finger, J. MichaeL 1994. "A Rock and a Hard Place: The Paper 1283. World Bank, East Asia and Pacific, Coun- Two Faces of U.S. Trade Policy toward Korea." Policy try Department m, Washington, DC. Research Working Paper 1264. World Bank, Policy Gupta, Shreekant, George Van Houtven, and Maureen Research Departnent, WVashington, DC. L. Cropper. 1994. "The Value of Superfund Cleanups: Finger, J. Michael, and KC. Fung. 1993. 'Will GAIT EvidencefromUS.EnvironmentalProtectionAgency EnforcementControlAntidumping?"PolicyResearch Decisions." Policy Research Working Paper 1272. Working Paper 1232. World Bank, Policy Research World Bank, Environment Department and Policy Department, Washington, DC. Research Department, Washington, DC 1994. "Can Competition Policy Control 301?' Haddad,Lawrence,JohnHoddinott,andHaroldAlder- Policy Researdc Working Paper 1253. World Bank, man. 1994. "Intrahousehold Resource Allocation: An Policy Research Department, Washington, DC. Overview." Policy Research Working Paper 1255. Foroutan, Faezeh. 1993. "Trade Reform in Ten Sub- World Bank, Policy Research Department, Washing- Saharan Countries: Achievements and Failures." ton, DC. Policy Research Working Paper 1222. World Bank, Harrison, Glenn, Thomas Rutherford, and David- G. Policy Research Department, Washington, DC. Tar. 1994. "Product Standards, Imperfect Competi- Foroutan, Faezeh, and Lant Pritchett 1993. "Intra-Sub- tion, and Completion of the Market in the European Sahara African Trade Is It Too Little?" Policy Re- Union. Policy Research Worldng Paper 1293. World search Working Paper 1225. World Bank, Policy Re- Bank, International Economics Department, Wash- search Departnent, Washington, DC. ington, DC. Fox, Louise. 1994. "Old-Age Security in Transitional Hill, Alice, and Manuel Angel Abdala 1993. "Regula- Economies." Policy Research Working Paper 1257. tion,lnstitufions,andCommitment.Privatizationand World Bank, Policy Research Department, Washing- Regulation intheArgentineTelecommunicationsSec- ton, DC. tor." Policy Research Working Paper 1216. World Galal, Ahmed. 1994. "Regulation and Commitment in Bank, Policy Research Deparbnent, Washington, DC. the Development of Telecommunications in Chile.' Hoekman, Bernard. 1993. "Developing Countries and Policy Research Working Paper 1278. World Bank, theUruguayRound:NegotiationsonServices."Policy Policy Research Department, Washington, DC. Research Working Paper 1220. World Bank, Europe Gelb, Alan, Gary Jefferson, and IndezJit Singh. 1973. and Central Asia, and Middle East and North Africa "Can Comnmunist Econonies Transform Incremen- Regions Technical Department, Washington, DC. tally? China's Experience." Policy Research Working Hoekman, Bemard M., and Petros C Mavroidis. 1993. Paper 1189. World Bank, Policy Research Depart- "Competition, Competition Policy, and the GATT." ment, Washington, DC. Policy Research Working Paper 1228. World Bank, Grace, Martin F., and Michael M. Barth. 1993. "The Europe and Central Asia, and Middle East and North Regulation and Structure of NonlifeL nsurance in the Africa Regions Technical Department, Washing- United Sates." Policy Research Working Paper 1155. ton, DC. World Bank, Financial Sector Development Depart- Huizinga, Harry. 1993. 'The Financing and Taxation of ment. Washington, DC U.S. Direct Investment Abroad." Policy rch Gray, Cheryl W., and Rebecca J. Hanson. 1993. 'Corpo- Worldng Paper 1180. World Bank, Intemational Eco- rate Governance in Centrl and Eastem Europe Les- nomics Departnent Washington, DC. 196 BankResearch Output Husain, Ishrat 1993. "Trade, Aid, and Investment in Paper 1224. World Bank, Policy Research Depart- Sub-SaaranAfrica."Policy ResearchWorkingPaper ment, Washington, DC. 1214. World Bank, Office of the Chief Economist, Kiguel, Miguel A., and Nissan Liviatan. 1994. "Elx- Africa Regional Office, Washington, DC. change-Rate-Based Stabilization in Argentina and Jaffee,Steven. 1994. "PrivateTraderResponse to Market Chile:AFreshLook.' PolicyResearchWorkingPaper Liberalization in Tanzania's Cashew Nut Industry." 1318. World Bank, Office of the Vice President, Devel- Policy Research Working Paper 1277. World Bank, opment Economics, Washington, DC Agriculture and Natural Resources Department, Kiguel, Miguel A., and Stephen A. O'Connell. 1994. Washington, DC. "Parallel Exchange Rates in Developing Countries: Jimenez, Emmanuel. 1994. "Human and Physical Infra- Lessons from Eight Case Studies." Policy Research structLre: Public Investment and Pricing Policies in Working Paper 1265. World Bank, Policy Research Developing Countries." Policy Research Working Department, Washington, DC. Paper 1281. World Bank, Policy Research Depart- King, Robert G., and Ross Levine. 1994. "Capital Funda- ment, Washington, DC. mentalism, Economic Development, and Econormc Jun, Joosung. 1994. "How Taxation Affects Foreign Di- Growth."PolicyResearchWorkingPaper1285.World rect Investment (Country-Specific Evidence)." Policy Bank, Policy Research Department, Washington, DC. Research Working Paper 1307. World Bank, Interna- Kinsey, Bill H., and Hans P. Binswanger. 1993. "Charac- tional Economics Department, Washington, DC. teristics and Performance of Settlement Programs: A Jun, Kwang W., Frank Sader, Haruo Horaguchi, and Review."PolicyResearchWorkingPaperl207.World Hyuntai Kwak 1993. "Japanese Foreign Direct In- Bank,SouthemAfricaDepartment,Washington,DC. vestment. Recent Trends, Determinants, and Pros- Kroner, Kenneth P., Devin P. Kneafsey, and Stijn pects." Policy Research Working Paper 1213. World Claessens. 1993. "Forecasting Volatlity in Commod- Bank, International Economics Department, Wash- ity Markets." Policy Research Worldng Paper 1226. ington, DC World Bank, International Economics Department, Kminski, Bartlomiej. 1993. "How the Market Transi- Washington, DC. lion Affected Export Performance in the Central Eu- La Ferrara, Eliana, Gabriel Castillo, and John Nash. 1994. ropean Economies." Policy Research Working Paper 'jThe Reform of Medhanisms for Foreign Exchange 1179. World Bank, International Economics Depart- Allocation: Theory and Lessons from Sub-Saharn Af- ment, Washington, DC. rica."PoliyResearchWorldngPaperl268.WorldBank, .1994 e Significance of the 'Europe Agreements' Policy Research Deparmt, Washington, DC. for Central European Industrial Exports." Policy Re- Larsen, Bjom. 1994. "World Fossil Fuel Subsidies and searchWorkingPaper 1314. World Bank,International Global Carbon Emissions in a Model with Interfuel Economics Deprtmet, Washington, DC. Substitution!' Policy Research Worldng Paper 1256. Kaminsld, Biartlomi4 and AlexanderYeats. 1993./OECD World Bank, Policy Rwsearch Department, Washing- Trade Barriers Faced by the Successor States of the ton, DC. Soviet Union." Policy Research Working Paper 1175. Larsen, Bjom, and Anwar Shah. 1994. "Global Tradable World Bank, International Economics Department, Carbon Permits, Particpation Incentives, and Trans- Wasihingtn, DC. fem" Policy Research Working Paper 1315. World Kanbur, Ravi. 1993. "The LinksbetweenEconomicPolicy Bank, Policy Research Department, Washington, DC. andResearch ThreeExamples fromGhanaandSome Larson,DonaldFrederick 1994. "Copper andthe Nega- General Thoughts." Policy Research Working Paper tivePriceof Storage."Policy ResearchWorkingPaper 1212. World Bank, Ghana Resident Mission, Wash- 1282. World Bank, International Economics Depart- ington, DC. ment, Washington, DC. Kane, Cheikh, and Jacques Monsett 1993. "Who Would -Uchtenstein,Naalie.1993.-EnterpriseReforminChina: VoteforlnflationinBrazil?AnlntegratedFramework The Evolving Legal Framework." Policy Research ApproachtolflationandlncomeDistrlbuon.-Policy WorkingPaper1198. World Bank,LegalDepartment, Research Working Paper 1183. World Bank, Latin Washingtonm DC. Ameica and the Canbbean, Country Department I, .1994. "A Survey of Viet Nams Legal Framework Washington, DC. in Transition." Policy ResearchWorldng Paper 1291. Kane, EdwardJ. 1994. "Difficulties ofTransferring Risk- World Bank, Lega Department, Waslington, DC. Based Capital Reuirements to Developmg Coun- lin, Justin Yifu, Fang Cai, and Zhou Li 1994. "China's tries." Poliy Research Workdng Paper 1244. World Economic Reforms: Potitters for Oer Economies in Bank,PicyResearchDerent,Washington,DC. Transition?" Policy Research Woridng Paper 1310. Kiguel, Miguel A., and Nita Ghei 1993. 'Devaluation in World Banc, Agriculture and Natual Resourc De- Low-Inflation Econondies" Polic Research Worldng partmnt Washinton, DC. 197 Bank Research Output Uvingston, Marie Leigh. 1993. "Designing Water Insti- World Bank, Policy Research Department, Washing- tutions: MarketFailures and Institutional Response." ton, DC. Policy Research Working Paper 1227. World Bank, Musalem, Alberto, Dlniltri Vittas, and Asli Demirgfi8- Agriculture and Natural Resources Department, Kunt. 1993. 'North American Free Trade Agreement Washington, DC. Issueson Trade inFinancialServices for Mexico."Policy Mamig Nlandu. 1993. "Savings-Investment Correla- Research Working Paper 1153. World Bank, Financial dions and Capital Mobility in DLeveloping Countries." Sector Development Deparment, Washington, DC. Polircy Research Working Paper 1211. World Bank, Nash, John. 1993. "InplementatIon of Trade Reformn in IntenationalEconomicsDepartment,Washington,DC. Sub-aharan Africa: How Much Heatand How Much Marcel, Mario, and Andrds Solimano. 1993. Light?" Policy Research Working Paper 1218. World "Developmentalism, Socialism, and Free Market Re- Bank, Policy Research Department, Washington, DC. form:ThreeDecadesoflncomeDistributioninChile." Nehru, Vlkram, and Ashok Dhareshwar. 1994. "New Policy Research Working Paper 1188. World Bank, Estimates of Total Factor Productivity Growth for Policy Research Department, Washington, DC. DevelopingandIndustrialCountries."PolicyResearch McCarthy, F. Desmond, J. Peter Neary, and Giovanni Working Paper 1313. World Bank, International Eco- Zanalda. 1994. "Measuring the Effect of External nomics Department, Washington, DC. Shocb and the Policy Response to Them: Empirical Nyagura, Levi M., and Abby Riddell. 1993. "Primary Methodology Applied to the Philippines." Policy School Achievement in English and Mathematics in Research Working Paper 1271. World Bank, Office of Zimbabwe: A Multi-Level Analysis. Policy Research the Vice President, Development Economics, Wash- Working Paper 1208. World Bank, Education and ington, DC. Social Policy Department, Washington, DC. Milanovic, Branko. 1993. "Cash Social Transfers, Direct Ostro, Bara 1994. "Estimating the Health Effects of Air Taxes, and Income Distribution in Late Socialism." Pollutants:AMethodwithanApplicationtojakarta." Policy Research Working Paper 1176. World Bank, Policy Research Working Paper 1301. World Bank, Polcy Research Deartment, Washington, DC. Policy Research Department, Washington, DC. 1993. -Social Costs of the Transition to Capital- Panagariya, Arvind. 1993. "Should East Asia Go Re- ismr Poland, 1990-91." Policy Research Worldng Pa- gional? No, No, and Maybe." Policy Research Work- per 1165. World Bank, Policy Research Department, ing Paper 1209. World Bank, Policy Research Depart- Washington, DC. ment, Washington, DC. 1994. "Determinants of Cross-Country Income Panagariya, Arvind, and Ronald Findlay. 1994. "A Po- 1neqality. An 'Augmented' Kuznets' Hypothesis.' litical-Economy Analysis of Free Trade Areas and Policy Research Working Paper 1246. World Bank, Customs Unions." Pclicy Research Working Paper Policy Research Department, Washington, DC. 1261. World Bank,PolicyResearchDepartment Wash- MitchelL OlHvia. 1993. "Public Pension Governance and ington, DC. Performance Lessons for Developing Countries.' Panagides, Alexis, and Harry Anthony Patrinos. 1994. Policy Research Working Paper 1199. World Bank, "Union-Nonunion Wage Dfferentials in the Develop- Policy Research Department, Washington, DC. ing World A Case Study of Mexico." Policy Reearch Mody, Ashoka, and Kamil Yilmaz. 1994. "Is There Per- Woricng Paper 1269. World Bank, Latin America and sistence in the Growth of Manufactued Exports? the Canbbean, Country Department IL and Education Evidence from Newly Industralizing Countries!' and Socal Policy Department, Washington, DC. Policy Research Working Paper 16. World Bank, Pinto, Brian, and SwedervanWijnbergen. 1994. "Own- Policy Research Department, Washington, DC. ership and Corporate Control in Poland: Why State Mosset,Jacques.199t"UnStablelnflationandSeignorage Firms Defied the Odds." Policy Research Worldng RenuesinLinmica: HowMany ruesCanthe Paper 1308. International Finance Corporation, ES- Govenment Fool People?" Policy Research Working nomics Departnent, Washington, DC. Paper 1287. Worid Bank, Latin America and the Carb- Pleskovic, Boris. 1994 "Financial Policies in Socalisat bem, Contry Deprtmet IV, Washington, DC. Countries in Transition!' Policy Research Worldng Morisset Jacques, and Alejandro Izquierdo. 1993. "Ef- Paper 1242 World Bank, Research Advisory Staff, fects of Tax Reform on Argentina's Revenues.' Policy Washington, DC. Research Worldng Paper 1192. World Bank, Latin Piitchett, Lant H. 1994. "Desired Fertility and the Im- America and the Caribbean, Country Departnent IV, pact of Population Policies." Policy Research Work- Washington, DC. ing Paper 1273. World Bank, Office of the Vi-ce Presi- Morkre, Morris E., and David G. Tarr. 1993. "Reforming dent, Development Economics, Washington, DC. HungarianAgriculturalTradePolicy:A Quantitative Prudhomme, Riny. 1994. "On the Dangers of Decen- Evaluation." Policy Research Working Paper 1185. traliztion." Policy Research Working Paper 1252. In Bank Reware: Output World Bank, Transportation, Water, and Urban De- Working Paper 1233. World Bank, International Eco- velopment Department, Washington, DC. nomics Department, Washington, DC i Pursell, Garry, and Ashok Gulati. 1993. "Liberalizing Satyanarayan, Sudhakar, and Panos Varangis. 1994. Indian Agriculture An Agenda for Reform." Policy "AnEfficientFrontierforlntemationalPortfolioswith Research Working Paper 1172. World Bank, Policy Commodity Assets." Policy Research WorkingPaper Research Department Washington, DC. 1266. World Bank, International Economics Depart- Qian, Ying, and Ronald Duncan. 1994. "Optimal Hedg- ment, Washington, DC. ing Strategy Revisited: Acknowledging the Existence Schaffer, Mark. 1993. "The Enterprise Sector and Bmer- of Nonstationary Economic Time Series." Policy Re- gence of the Polish Fiscal Crisis, 1990-91." Policy search Working Paper 1279. World Bank, Interna- Research Working Paper 1195. World Bank, Policy tional Economics Department, Washington, DC. Research Department, Washington, DC Rama, Martin. 1994. "Flexibility in Sri Lanka's Labor Schiff, Maurice. 1993. 'The linpact of Two-Tier Pro- MarketL'PolicyResearchWorkingPaperl262.World ducer and Consumer Food Pricing in India." Policy Bank, Policy Research Department, Washington, DC. Research Working Paper 1236. World Bank, Policy Ravallion, Martin, and Benu Bidani. 1993. "How Robust Research Department, Washington, DC. IsaPoverty Proffle?' Policy Research WorkingPaper Schmidt-Hebbel, Klaus, and Luis Serven. 1994. "Dy- 1223. World Bank,PolicyResearchDepartment, Wash- namic Response to External Shocks in Classical and ington, DC. Keynesian Economies." Policy Research Worldng Ravallion, Martin, and Binayak Sen. 1994. "How Land- Paper 1300. World Bank, Policy Research Depart- Based Targeting Affects Rural Poverty.' Policy Re- ment, Washington, DC. serch Working Paper 1270. World Bank, Policy Re- _ . 1994. "Fiscal Policy in Classical and Keynesian search Department, Washington, DC. Open Economies." Policy Research Working Paper Rawski, Tonm 1993. "How Fast Has Chinese Industry 1299.WorldBank,PolicyRerchDearent,Wash- Grown?" PolicyResearchWorkingPaper 1194.World ington, DC. Bank, Policy Research Department, Washington, DC. Serven, Luis. 1994. "Capital Goods Inports, the Real Revenga,Ana,and MichelleRiboud. 1993. "Unemploy- Exchange Rate, and the Current Account"- Policy mentinMexicolt;CharacteristicsandDeterminants." Research Worldng Paper 1298. World Bankc, Policy Policy Research Working Paper 1230. World Bank, Researc Departent, Washington, DC. Latin America and the Caribbean, Country Depart- Shafik, Nemat. 1993. "Making a Market Mabss Privat- ment U, Washington, DC. ization in the Czech and Slovak Republics." Policy Rouis, Mustapha, Weshah Razzak, and Carlos Research Working Paper 1231. World Bank, Central Mollinedo. 1994. "The Supply Response to ExSchange Europe Department, Washington, DC. Rate Reform inSub-Saharan Africa." Policy Research .1994. "Information and Pnce Determination un- Working Paper 1311. World Bank. Africa Regional der Mass Privatization.' Policy Research Working Office, Washington, DC. Paper 1305. World Bank, Europe and Central Asia, Rutherford, Thomas F., EX. Rutstrbm, and David G. Country Department I, Washington, DC. Tarr. 1993. "Morocco's Free Trade Agreement with Shah,Anwar.1994. "AFiscalNeedsApproachtoEqual- the Europea n Comrununity: A Quantitative Assess- izationTrarsfersinaDecentaizedFederation."Policy ment." Policy Research Working Paper 1173. World Research Worldng Paper 1289. World Bank, Policy Bank, Policy Research Department, Washington, DC Research Departmet, Washington, DC. Sader, Frarn 1993. "Privatization and Foreign Invest- Solimano, Andrfs, and David E. Yuravlivker. 1993. ment in the Developing World, 1988-92." Policy Re- "Price Formation, Nominal Andcors, and Stabiliza- search Working Paper 1202. World Bank, Interna- tion Policies in Hungary: An Empirical Analysis." tional Economics Department, Washington, DC Policy Research Working Paper 1234 World Bank, Safadi, Raed, and Alexander Yeats 1993. "Asian Trade PoliqrResear&DepartmentandEuropeandCentrI BarriersagainstPrimaryandProc5sedComuodities." Asia, Country Department D, Washington, DC. Policy Researh Working Paper 1174. World Bank, Sorsa,Piritta. 1994. "CompeHtivenessandEnvironmen- InteationalEconomicsDepartnmt,Wa-hington,DC til Standards: Some Exploratory Results." Policy Re- Sappington, DavidE.M. 1994. "Principlesof Reguatory search Working Paper 1249. World Bank, Interma- Policy DesigrL" Policy Research Working Paper 1239. tional Econonics Deparment, Washngton, DC. World Bank, Office of the Vice President, Develop- Spiller, Pablo T., and Ingo Vogelsang. 1994. 'Regula- ment Ecnomics, Washington, DC. tion, Institutions, and Commitment in the British Satyanaryan, Sudhakar, Elton Thigpen, and Panos Telecommunicatio Sector. Policy Research Work- Varangis. 1993. "Hedging Cotton Price Risk in ig Paper 1241. World Banrk, Polcy Reserch Dept- Francophone African Countries." Policy Research ment, Washington, DC. 199 Bank Research Output Stone, Andrew. 1994. "Complex Transactions under Bank, Financial Sector Development Departnent, Uncertainty Brazil's Machine Tool Industry." Policy Washington, DC. Research Working Paper 1247. World Bank, Private Vodopivec, Milan, and Samo Hribar-Milic. 1993. "The SectorDevelopmentDepartrnentand PolicyResearch Slovenian Labor Market in Transition: Issues and Departnent, Washington, DC. Lessons Learned.' Policy Research Working Paper Swamy, Gurushri. 1994. "Kenya: Structural Adjustment 1162. Warld Bank, Policy ResearchDepartment,Wash- in the 1980s." Policy Research Working Paper 1238. ington, DC. World Bank, Africa Regional Office, Office of the Vodopivec, Milan, and Wayne Vroman. 1993. "The Chief Economist, Washington, DC. Armenian Labor Market in Transition: Issues and Swaroop,Vinaya.1994. "ThePublicFinance of hfrastruc- Options." PolicyResearchWorkingPaper1193.World ture.' Policy Research Working Paper 1288. World Bank, Policy Research Department, Washington, DC. Bank Policy Research Department, Washington, DC. Warner, Andrew. 1993. "How Should Sovereign Debt- Takacs, Wendy L 1994t "The Economic Impact of Ex- ors Restructure Their Debts? Fixed Interest Rates, port Controls: An Applicafton to Mongolian Cash- Flexible Interest Rates, or Inflation-Indexed." Policy mere and Romanian Wood Products." Policy Re- Research Working Paper 1187. World Bank, Intema- search Working Paper 1280. World Bank, Policy Re- tional Economics Department, Washington, DC. search Department, Washington, DC. Yeats, AlexanderJ. 1994 "'What Are OECD Trade Pref- Teas, Molly Maguire. 1993. "Increasing Women's Par- erences Worth to Sub-Saharan Africa?" Policy Re- tidpation in the Primary School Teaching Force and search Working Paper 1254. World Bank, Interna- TeacherTraininginNepal." PolicyResearchWorldng tional Economics Department, Waslhington, DC. Paper1161.WorldBank,SouthAsia,Country Depart- merit L Washington, DC. Thorne, Mfredo. 1993. "Eastem Europe's Experience H. Other Working Papers with Banldng Reform: Is There a Role for Banks in the Transition?" Policy Research Working Paper 1235. Agriculture and Natural Resourms Departmt World Bank, Europe and Central Asia, and Middle East and North Africa Regions Technical Depart- Josiah, S.J., and N. Jones. 1993. "Root Trainers in Seed- meent, Washington, DC ling Production Systems for Tropical Forestry and Vaillancourt, Denise, Stacye Brown, and others. 1993. Agroforestry." Agriculture and Natural Resources "Population, Heialth, and Nutrition Annual Opera- Technical Paper 4. tional Review for Fiscal 1992."Policy Research Work- Landis, E., N. Jones, and J. Smyte. 1993. "Commercial ing Paper 1152. World Bank, Population, Health, and Applicationsof Cloningfor ForestPlantations."Agri- Nutrition Department, Washington, DC. culture and Natural Resources Technical Paper 5. ValdEs,Prieto, Salvador. 1994. "Eanings-Related Man- datory Pensions: Concepts for Design. Policy Re- Economic Development Institute search Working Paper 1296. World Ba'nk, Policy Re- search Department, Washington, DC. Akala, Ykdni Alao, and others. 1993. "Investissements Van Houtven, George L., and Maureen L. Cropper. energetiquesetenvironnement."EDIWorkingPaper 199t 'When Is a Life Too Costly to Save? Evidence 93-46. from US. Enviromnental Regulations." Policy Re- Akizuki, Kengo. 1993. "Institutionalizingthe Local Sys- search Working Paper 1260. World Bank, Policy Re- tem: The Ministry of Home Affairs and Intergovem- search Department, Washington, DC. mentalRelationsinjaparifEDIWorkingPaper93-37. vanMa2rrewik,FederickvanderPloeg,andJosVerbeeL Aodd, Masahiko. 1994. Monitoring Characteristics of 1993. ¶sGrowthBadfor the Environment? Polution, the Main Bank Systenm An Analytical and Develop- Abatement, and Endogenous Growthf" Policy Re- mental View." EDI Working Paper 94-5. search Worldng Paper 1151. World Bank, Iterna- Aoki, Masahiko, Hugh Patrick, and Paul Sheard. 1994. ional Economics Department, Washington, DC. "The Japanese Main Bank System: An Introductory Varangis, Panayotis N., Carlos A. Primo Braga, and Overview." EDI Worldng Paper 94-2. Kienji Takeuchi. 1993. "Tropical limber Trade Poll- Baums, Theodor. 1994. "The Gennan Banking System cies What Impact Will Eco-Labeling Have?" Policy and Its Impact cn Corporate Finance and Gover- Raearch Working Paper 1156. World Bank, Interna- nance." EDI Working Paper 94-13. onsal Ecnms Deptent Washigt DC Berstein, Mark Allen. 1993. "AreDevelopingCountries Viltl, DihitrL 1993. "Options fur Pension Reform in Deinkng EnergyDemandandEconomkGrowth?- Tundsia.PolcyRsearchWorldngPaper 1154LWorld EDI Woring Paper 93-50. 280 Bank Research Output Bhatt, V.V. 1994. "Lead Bank Systems in India." EDI Kim, Ji-Hong. 1993. "Restrucuring of the Textile and Working Paper 94-15. ClothIng lndustry in Korea." EDIWorkingPaper 93-24. Camara, Naby Issa, and A. Sherif Blah. 1994. "Politique Kitayama,Toshiya.1993.1LocalGovernmentsandSmmll energetique de la Rdpublique de Guinde." EDI Work- and Medium-sized Enterprises." EDI Working Paper ing Paper 94-23. 93-38. Campbell, John Y., and Yasushi Hamao. 1994. "Chang- Kone, Oumy Ndlaye, and others. 1994. "Politique ing Patterns of Corporate Financing and the Main tnergdtique du Sdn4gal." EDT Working Paper 94-27. Bank System in Japan." EDI Working Paper 94-11. Kosal, Yutaka. 1993. "Government-Business Relations Charles, Niyibizi, and others. 1994. "Politique andCompetitiveness:ThejapaneseCase."EDIWork- 6nergftique des Pays des Grands Lacs." EDIWorking ing Paper 93-31. Paper 94-24. Kume, Ikuo. 1993. "Institutionalizing the Active Labor Cheong, Kee-Cheok, and others. 1993. "Strengthening Market Policy in Japan." EDI Working Paper 93-36. Economic Management in Viet Nam: Lessons from a Lazarus, Michael, and others 1993. "Integrated Energy- Training Project." EDI Working Paper 93-48. EnvironmentPlanning: Inital Results from SenegaL. Cuevas, Fernando. 1993. "Conceptos de economfa in- EDI Working Paper 93-52. dustrial en el analisis de organizaci6n del sector Mabuchi, Masaru. 1993. "Financing Japanese lndustry: el&ctrico en los paises en desarrollo." EDI Working The Interplay between the Financial and Industrial Paper 93-53. Bureaucracies." EDI Working Paper 93-35. Diatike, Haouma, and others. 1994. "Politique Mafouari,Pierre,andothers.1994.Politique&uermgtique 4nerg6tique du Mali." EDI Working Paper 94-25. de la Rdpublique Populaire du Congo."EDIWorking Elierman, David P., ed. 1994. "Valuation Training Pro- Paper 94-28. gram: Background Papers."' DI Working Paper 94- Mbainainkoro-Ndjendole, Laotoudjij, and Sibaye 36. (in Russian.) N'Gakoutou. 1994. "Politique dnerghtique de la _ 1994. "Valuation Training Program: The Math- Rdpublique du Tchad." EDI Worldng Paper 94-29. ematics of Real Estate Appraisal." EDI Working Pa- M'Boussa, Gabriel, and Emmanuel Tanga-Kete. 1994. per 94-35. "Politique 4nerg4tique de la Rtpublique Centrafri- Gonzales, Anthony, and Yin-KannWeneds. 1993. "The caine." EDI Working Paper 94-30. EuropeanCommunityand theCaribbeaninthe1990s." Mintzer, Ihring M. 1993. "EnvironmentalAssessment of EDI Working Paper 93-25. Energy Technologies." EDI Working Paper 93-51. Gueye, Yvonne Issie, and Pierre Glouzon. 1994. Miwa, Yoshiro. 1993. "Polcies for Small Busness in "Politiquednergdtique delaC8ted'lvoire."EDIWork- Japan." EDT Working Paper 93-39. ing Paper 94-26. Muramatsu, Michio, and T.J. Pempel. 1993. "The Evolu- Haley, John. 1993. "Japan's Postwar Civil Service: The tion of the Civil Service before World War 1." EDI Legal Framework." EDI Working Paper 93-27. Working Paper 93-30. Hall, Peter A. 993. 'The Japanese Civil Service and Nam, Sang-Woo, and Dong-Won Kim. 1994. 'The Prin- Economic Development: Are There Lessons for Rus- cipalTransactionsBankSysteminKoreaandltsCom- sia and the Reforming Socialist Economies?" EDI parison with the Japanese Main Bank System." EDI Working Paper 93-42. Working Paper 94-14. Horiuchi,Toshihiro. 1994. "The Effect of Firm Status on Noguchi,Yukio. "The Role of the Fical Investment and Banking Relationships and Loan Syndication." EDI Loan Program in Postwar Japanese Economic Working Paper 94-9. Growth" EDI Working Paper 93-34. Hoshi, Takeo, Anil Kashyap, and Gary Loveman. 1994. Packer, Frank. 1994. 'The Role of Long-Term Credit 'Lessons from ihe Japanese Main Bank System for Banks within the Main Bank System.' EDI Worlkng Financial Reform in Poland." EDI Working Paper Paper 94-6. 94-18. Patick, Hugh. 1994. "The Relevance of Japanese Fiance Inoki, Takenori. 1993. "Japanese Bureaucrats at Retire- and Its Main Bank System." EDI Working Paper94-12. mentTheMobilityofHumanResourcesfrom Central Patrick,Hugh,andMasahikoAoki 1994. "Introduction: Government to Public Corporations." EDI Worldng The Japanese Main Bank System." EDI Working Pa- Paper 93-32. per 94-1. Ito, Mitsutoshi. 1993. "Administrative Reform." EDI PempeL T.. 1993"The Japanese Bureaucracy and Eco- Worldng Paper 93-33. nomic Development" EDI Worldng Paper 93-26 Kim, Hyung-Ki 1993. "The Japanese Civi Service and Petkosli, Djordja, and others. 1994. "Enerpise Man- Economic Developmnent Lessons for Policymakers agenentforRestructuringandPrivatizationTrainu from Odter Countries." EDI Working Paper 93-43. Prgam. Case Studies and Badcgound Notes 201 Bank Research Output Qian, Yingyi. 1994. "Lessons and Relevance of the Japa- Korean Civil Service." EDI Working Paper 93-40. nese Main Bank Systern for Financial System Reform Yamamura, Kozo. 1993. "The Role of Government in in China.' EDI Working Paper 94-17. Japan's 'Catch-up' Industrialization: A Neoinsttu- Quelroz, Cesar. 1994. "Technical and Economic Issues tional Perspective." EDI Working Paper 93-28. in Road Maintenance and Rehabilitation." EDI Work- ing Paper 94-20. Education and Social Policy Department Ramseyer, J. Mark. 1994. "Explicit Reasons for Inplicit Contracts The Legal Logic to the Japanese Main Bank Abadzi,Helen. 1994. "Nonformal Education forWomen System." EDI Working Paper 94-8. in Latin America and the Caribbean." lISP Discussion Reynolds, Clark W. 1994. "The Reprivatization of Bank- Paper 19. ing in Mexico." EDI Working Paper 94-16. Adams, Arvil Van, Dilek Barlas, David Fretwell, and Saint-Jean,Wilfrid.1994.-Politiquednergdtiqued'HaitL- Teresa Hio. 1993. "Albania Training, Enterprise, and EDI Working Paper 94-31. Employment Fund: Preparation Documents." ESP Salifou, Seini Modi, and others. 1994. 'Politique Discussion Paper 4. 4nerg4tique du Niger." EDI Working Paper 94-32. Addison, Tony. 1993. "A Review of the World Bank's Sellen, Daniel. 1994. "Economic Reform and Agricul- Efforts to Assist African Goverments in Reducing tural Sector Policy in Zimbabwe: Case Studies in Poverty." ESP Discussion Paper 10. Policy Analysis." EDI Working Paper 94-21. Boh, Bojana. 1994. "Environmental Issues in Secondary Sheard, Paul. 1994. "Main Banks and the Governance of Education." ESP Discussion Paper 21. Financial Distress." EDI Working Paper 94-7. CoweRl, Richard. 1993. "The Design and Development Siddayao, Coraz6n M1 1994. "The 1973-74 Oil Price of Secondary Education Curriculum." ESP Discus- Shoc Effects onthelnterationalFinancialSituation sion Paper 9. and Future Directions.' EDI Working Paper 94-22. Dayton, Julia, Aziz IChan, Helena Ribe, and Marc Silberman, Bemard S. 1993. "The Structure of Bureau- Schneider. 1993. "Country Policies for Povertv Re- cratic Rationality and Economic Development in Ja- duction: A Review of Poverty Assessments.- ESP pan!' ED[ Working Paper 93-29. Discussion Paper 15. Sunamur Satoshi. 1994. "The Development of Main DePietro-Jurand, Robin. 1994. "Women's Access to Bank Mwtanagerial Capacity." EDI Working Pa- Higher Education: A Review of the Literature." ESP per 94-10. Discussion Paper 20. Taouema, Bernard, and others. 1994. "Politique Fuller, Bruce, and Prema Clarke. 1994. "How to Raise dnergdtique du Benin et du Togo." EDI Working the Effectiveness of Secondary Schools? Universal Paper 94-33. andLocallyTaioredlnvestmentStrategies."ESPDis- Termishi, Juro. 1994. "Emergence of Loan Syndication cussion Paper 28. inWartimeJapan: AnInvestigation into the Historical Fuller, Bruce, and Donald Holsinger. 1993. "Secondary Origin of the Main Bank System." EDI Working Pa- Education in DevelopingCountries." ESP Discussion per 94-3. Paper 7. Thomton, Judith. 1993. "Thejapanese Bureaucracy and Garfield, Reed, Donald Holsinger,andAdrianZidennan. Economic Development Are There Lessons for Rus- 1994. "TheCosts of SecondaryEducationExpansion." sia and the Reforming Socialist Economies?" EDI ESP Discussion Paper 29. WorkingPaper93-41. Jalan, Jyotsna, and Kalanidhi Subbarao. 1994. "Gender Ueda,Kazuo.1994.-EstitutionalandRegulatoryFrame- Disparity in Human Resource Development Cross- works for the Main Bank System." EDI Worldng Country Patterns." ESP Discussion Paper 25. Paper 94-4 Kamens, David H,John W. Meyer, and Aaron Benavot Voyadrzis, Claudine. 1994. "Conception et gestion des 1993. "The Changing Content of Secondary Educa- programmes de lutte contre la pauvrete en Afrique tion." ESP Discussion Paper 6. Francophone du sud du Sahara." EDI Working Pa- Kotlikoff,LaurenceJ.1994. "Re9tktheWorldBank's per 94-19. Socal Insurance Analysis." ESP Discussion Paper 31. Vukina, Tomislav, and Jacqueline Percebois-Mathieu. Musar, Ales. 1993. -Equipment for Science Education 1993Energieet nirnmntQuelquesprobl&mes Constraints and Opportunities." ESP Discussion Fa- c1iEs." EDI Working Paper 93-49. per 11. Werem,Alhadi,and others 1994L'Polifiquenergtique Wu, Kin Bing. 1993. "Science Education inHong Kong. du Burkd