World Bank Research E-Newsletter [April 2009]
*********************************************************************** Population-wide services to check communicable diseases are cheap, but badly neglected Social safety nets: Lessons from rich and poor countries “Banking on politics” and more in the latest Research Digest Diversifying out of agriculture has helped reduce rural poverty in India What drives macroeconomic fluctuations in emerging markets? Advantages to market reforms and institution building go in hand in hand An analysis of informality in Latin America and the Caribbean Grandparents are increasingly caring for orphans in Sub-Saharan Africa New posts from our blogs
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Population-wide services to check communicable diseases are cheap, but badly neglected
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Aid to developing countries has largely neglected the population-wide health services that reduce the incidence of outbreaks of communicable diseases. These mostly non-clinical services limit exposure to disease through measures such as implementing health and sanitary regulations, but donors have focused mostly on clinical preventive and treatment services. Their neglect is manifested, for example, in a lack of coherent public health regulations in countries where donors have long been active, facilitating the spread of diseases such as avian flu. These services can be inexpensive, and dramatically reduce health inequalities while increasing global health security. Sri Lanka spends less than 0.2 percent of GDP on its well-designed population-wide services, and enjoys high levels of health equity and life expectancy despite low GDP per capita and civil war. In a new working paper, Monica Das Gupta and Lawrence Gostin discuss gaps in donors’ approaches to building strong health systems in poor countries. They highlight the need for more information on the institutional and regulatory underpinnings of population-wide health services, and for well-designed long-term international collaboration to build public goods in health.
Policy Research Working Paper 4907 ***********************************************************************
Social safety nets: Lessons from rich and poor countries
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As the global recession threatens to hamstring the pace of poverty reduction everywhere, many countries are looking for ways to cushion the blow. Historically, rich countries have taken countercyclical actions to stabilize their economies in times of economic stress through direct taxes and committed social spending. The current crisis is an opportunity to create pro-poor stabilizers in developing countries, similar to the automatic social safety nets that rich countries already have in place. Rich countries can also look to developing countries—which have had more experience with disasters of various kinds, from famines and floods to financial crises—for ideas. Governments in developing countries have experimented with a wide range of social protection programs, including those that protect poor people from financial crises. The ways in which their public budgets have been programmed provide valuable lessons. The two stars of social protection that have emerged over time are conditional cash transfers and guaranteed relief work schemes. A new web article summarizes World Bank research findings in these areas and provides links to papers, reports, and multimedia.
Web article ***********************************************************************
“Banking on politics” and more in the latest Research Digest
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In many countries former cabinet members, central bank governors, and financial regulators are far more likely than ordinary citizens to become board members at banks. A benign, public-interest view would see the prevalence of banker-politicians as a way knowledge and experience are shared between the private and public sectors. Under this view, this phenomenon would help produce more efficient banks, and there would be no particular reason to connect it to the government’s power to affect regulation, its accountability, or a predisposition to engage in corruption. However, recent research by Matias Braun and Claudio Raddatz shows that this view is not supported by cross-country evidence. Instead, they find that the prevalence of banker-politicians correlates negatively with the development of the banking system—and is higher in countries with greater corruption and more powerful but less accountable governments. Read more about “banking on politics” in the latest issue of the World Bank Research Digest. Other articles in the Digest cover teacher incentives, the role of timing in evaluating the impact of a program, drivers of growth in firm productivity, and the challenge of establishing world-class universities.
World Bank Research Digest, Vol. 3, No. 3
Banking on politics (Policy Research Working Paper 4902) ***********************************************************************
Diversifying out of agriculture has helped reduce rural poverty in India
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Historically, poverty trends in India have been closely associated with changes in agricultural wage rates, as agricultural labor remains dominated by the uneducated and, to a large extent, by rural India’s scheduled castes and scheduled tribes. An analysis of five rounds of National Sample Survey data shows that poverty in rural India declined at a modest rate between 1983 and 2004. In a new working paper, Peter Lanjouw and Rinku Murgai note that rural diversification out of agriculture has contributed to this decline. Although the rural non-farm sector did not grow dramatically between 1983 and 2004—and salaried non-farm employment remained largely inaccessible to people with low education levels and low social status—growth in non-farm casual labor and self-employment did offer new opportunities to disadvantaged groups. Moreover, growth in the non-farm sector contributed indirectly to poverty reduction by putting upward pressure on agricultural wages. The analysis also confirms the contribution to rural poverty reduction from agricultural productivity growth, improved availability of land, and growth in consumption levels in nearby urban areas.
Policy Research Working Paper 4858 ***********************************************************************
What drives macroeconomic fluctuations in emerging markets?
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Macroeconomic indicators like GDP, employment, investment, and net exports are highly volatile in emerging countries. To better understand this phenomenon, Constantino Hevia studied data from Mexico and Canada using a model in which households and firms choose how much to work, invest, and save. Introducing several distortions in labor markets, financial markets, and overall productivity to replicate the observed data, Hevia then compared the distortions required to match the data in Mexico with those required to match the data in Canada. The comparison, described in a new paper, suggests that the macroeconomic behavior of emerging countries, unlike that of developed countries, is driven by fluctuations in overall productivity, labor market distortions, and, most importantly, country risk premiums. These results suggest that eliminating fluctuations in country risk premiums—which explain the large volatility in consumption and savings and abrupt changes in capital flows—would greatly enhance welfare in developing countries.
Policy Research Working Paper 4897 ***********************************************************************
Advantages to market reforms and institution building go hand in hand
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Food policy often depends on markets and markets depend on institutions. But how good do institutions have to be before reforms can be launched? In the case of Bulgaria, a set of significant agricultural policy reforms took place at the close of the 20th century, while efforts to strengthen the public institutions supporting food markets were just beginning. In a new paper, Donald F. Larson and Alexander Sarris present evidence on how prices changed, suggesting that, on average, food markets improved following the reforms, resulting in benefits for most consumers. But measured performance also varied significantly by place and by commodity. Taken together, this suggests two lessons for policy. First, although strong institutions are preferred to weak ones, Bulgaria’s experience suggests there can be costs to delaying reforms until work on strengthening institutions is complete. Second, the experience suggests that markets developed at different tempos following reform and that the distribution of benefits from improved markets was uneven, pointing to the need to address the costs of adjustment as policies change.
Policy Research Working Paper 4876 ***********************************************************************
An analysis of informality in Latin America and the Caribbean
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Informality—the collection of firms, workers, and activities that operate outside the legal and regulatory frameworks—is a fundamental characteristic of underdevelopment. Widespread informality should be of great concern because it discourages economic growth by limiting the state’s ability to provide necessary public goods and by restricting firms’ access to financial services, technological improvements, and international markets. A new paper by Norman Loayza, Luis Serven, and Naotaka Sugawara studies the causes and consequences of this multi-faceted phenomenon. The analysis suggests that informality results from a combination of poor public services, a burdensome regulatory regime, and the state’s weak monitoring and enforcement capacity. This combination is especially worrisome when the country suffers from low educational achievement, is facing demographic pressures, and has an agrarian production structure. Finally, the authors assess the individual relevance of each determinant of informality for several economies in Latin America and the Caribbean, a region where informality is highly prevalent.
Policy Research Working Paper 4888 ***********************************************************************
Grandparents are increasingly caring for orphans in Sub-Saharan Africa
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Increasing adult mortality due to HIV/AIDS in Sub-Saharan Africa raises concern about the welfare of surviving children. The effect of orphanhood on health and education outcomes varies across countries, partly with the extended family network’s capacity to care for orphans. Kathleen Beegle and Deon Filmer note that this network may be under strain, given the sharp increase in the number of orphans. Using data from 21 countries in Africa, they find that orphanhood is increasing but that not all countries are experiencing rapid rises. Grandparents are taking on increased child care, especially in countries where orphan rates are growing rapidly. The extended network appears to be narrowing to focus on grandparents, who may be less able to care for and financially support orphans. The authors note, however, that patterns of child care have also changed in countries with stable orphan rates or low HIV prevalence, suggesting the need for further research.
Policy Research Working Paper 4889 ***********************************************************************
FROM OUR BLOGS
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Climate Change (Development in a Changing Climate)
In a post on our new climate change blog, hosted by the authors of the upcoming World Development Report 2010, Susmita Dasgupta discusses her new paper (co-authored with Benoit Laplante, Siobhan Murray, and David Wheeler) on the impact of storm surges.
Read Susmita’s post
Migration and Remittances (People Move)
In a new post, Emily Farchy describes research results from her recent paper, “The impact of EU accession on human capital formation: Can migration fuel a brain gain?”
Read Emily’s post
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New Policy Research Working Papers
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These papers, and all older papers, are also available using the Document Search on the Bank's Development Economics Research website and on the Social Sciences Research Network.
4899. The foreign-born population in the European Union and its contribution to national tax and benefit systems : some insights from recent household survey data by Luca Barbone, Misha Bontch-Osmolovsky, and Salman Zaidi 4900. International migration and gender differentials in the home labor market : evidence from Albania by Mariapia Mendola and Gero Carletto 4901. Sea-level rise and storm surges : a comparative analysis of impacts in developing countries by Susmita Dasgupta, Benoit Laplante, Siobhan Murray, and David Wheeler 4902. Banking on politics by Matias Braun and Claudio Raddatz 4903. Services in Doha : what's on the table ? by Batshur Gootiiz and Aaditya Mattoo 4904. Frame-of-reference bias in subjective welfare regressions by Kathleen Beegle, Kristen Himelein, and Martin Ravallion 4905. Industrial structure, appropriate technology and economic growth in less developed countries by Justin Yifu Lin and Pengfei Zhang 4906. Development strategy, viability, and economic distortions in developing countries by Justin Yifu Lin and Feiyue Li 4907. How can donors help build global public goods in health ? by Monica Das Gupta and Lawrence Gostin 4908. Moving up the ladder ? the impact of migration experience on occupational mobility in Albania by Calogero Carletto and Talip Kilic 4909. Risks, ex-ante actions and public assistance : impacts of natural disasters on child schooling in Bangladesh, Ethiopia and Malawi by Futoshi Yamauchi, Yisehac Yohannes, and Agnes Quisumbing 4910. Natural disasters, self-insurance and human capital investment : evidence from Bangladesh, Ethiopia and Malawi by Futoshi Yamauchi, Yisehac Yohannes, and Agnes Quisumbing 4912. Weathering the storm : investing in port infrastructure to lower trade costs in East Asia by Kazutomo Abe and John S. Wilson 4912. Making sense of Africa's infrastructure endowment : a benchmarking approach by Tito Yepes, Justin Pierce, and Vivien Foster 4913. Paying the price for unreliable power supplies : in-house generation of electricity by firms in Africa by Vivien Foster and Jevgenijs Steinbuks 4914. Infrastructure and growth in Africa by Cesar Calderon 4915. Toward defining and measuring the affordability of public utility services by Ioannis Kessides, Raffaele Miniaci, Carlo Scarpa, and Paola Valbonesi 4916. Beyond the information technology agreement : harmonization of standards and trade in electronics by Alberto Portugal-Perez, Jose-Daniel Reyes, and John S. Wilson 4917. The crisis-resilience of services trade by Ingo Borchert and Aaditya Mattoo 4918. Exit and save : migration and saving under violence by Rebekka E. Grun 4919. AIDS and dualism : Ethiopia's burden under rational expectations by Clive Bell and Anastasios Koukoumelis 4920. Assessing the economic impacts of an economic partnership agreement on Nigeria by Soamiely Andriamananjara, Paul Brenton, Jan Erik von Uexkull, and Peter Walkenhorst 4921. May growth lead to higher deprivation despite higher satisfaction ? by Quentin Wodon and Shlomo Yitzhaki 4922. Can risk averse competitive input providers serve farmers efficiently in developing countries ? by Paul Makdissi and Quentin Wodon 4923. Poverty and income seasonality in Bangladesh by Shahidur R. Khandker 4924. Dignity through discourse : poverty and the culture of deliberation in Indian village democracies by Vijayendra Rao and Paromita Sanyal 4925. International migration, transfers of norms and home country fertility by Michel Beine, Frederic Docquier, and Maurice Schiff 4926. Optimal devaluations by Constantino Hevia and Juan Pablo Nicolini 4927. A special safeguard mechanism for agricultural imports and the management of reform by J. Michael Finger 4928. Is deliberation equitable ? evidence from transcripts of village meetings in south India by Radu Ban and Vijayendra Rao 4929. When do Legislators pass on "Pork" ? the determinants of legislator utilization of a constituency development fund in India by Philip Keefer and Stuti Khemani |
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