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World Bank Research E-Newsletter, February 2014
  Feb 27, 2014

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In this Issue
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Note from  Director
WPS Latest Media and Blog Posts
Blogs List of New Policy Research Working Papers
Research Output Correlates with Country Population and Wealth

Research output about a given country rises along with its population and wealth, yielding a strong correlation between per capita research output and per capita gross domestic product. Specifically, a 10 percent increase in a country’s per capita GDP translates into a 3.2 percent increase in the number of published economic research papers, according to a new journal article by Jishnu Das, Quy-Toan Do, Karen Shaines, and Sowmya Srikant. The large number of papers about the U.S. is almost entirely explained by the fact that it’s a large country and it’s rich. Papers about the U.S. are 2.5 percentage points more likely to be published in the top five economics journals, after accounting for authors’ institutional affiliations and field of study. Only 1.5 percent of all papers written about countries other than the U.S. are published in first-tier journals. These results raise questions about researchers’ incentives to publish in academic journals, and highlight the role of development institutions such as the World Bank in ensuring that the poorest countries are not left out of the knowledge generating process.

Journal of Development Economics 105 | Related: World Bank Policy Research Working Paper 5152 | Coverage in the Economist magazine | VoxEu blog »

Economic Agglomeration Is an Important Factor in Job Growth

Drawing on a comprehensive worldwide survey of firms, a recent paper by George Clarke, Yue Li and Lixin Colin Xu looks at how the business environment and economic agglomeration affect job creation. The analysis, holding constant conventional determinants of firm growth, such as firm ownership, size and age, finds that economic agglomeration — especially modern telecommunications, access to export markets, concentration of economic activity in large cities and capacity agglomeration (the concentration of large firms in a city) — is more important. Although the business environment affects job growth less than agglomeration does, some elements of the business environment matter, such as labor flexibility, unionization and local skill levels.

World Bank Policy Research Working Paper 6706 »

Vote-Buying: Bad for Society, but Good for the Disenfranchised

Vote-buying is pervasive in many developing countries, but there are significant variations across countries in the use of pre-electoral transfers vs. pre-electoral promises of post-electoral transfers to mobilize voters. To explain the phenomenon, a recent working paper by Marek Hanusch and Philip Keefer models the trade-offs politicians face when deciding between mobilizing support with vote-buying or with promises of post-electoral benefits. Politicians rely more on vote-buying when they are less credible. They only target vote-buying to those who don’t believe their political promises. However, the analysis also indicates the limits of vote-buying: the only groups targeted with vote-buying are those that would have received post-electoral transfers in a setting with more credible political competitors. The enforcement of a prohibition on vote-buying reduces the welfare of those targeted by vote-buying because politicians have no incentive to offer these voters post-electoral transfers if pre-electoral transfers are outlawed. However, a prohibition improves the welfare of all other groups in society.

World Bank Policy Research Working Paper 6653 »

Why Energy Intensity Declined in Four Chinese Industries

Energy intensity has declined significantly in four Chinese industries – pulp and paper; cement; iron and steel; and aluminum. Previous studies found technological changes within an industry affect energy intensity, but few have examined two other elements: industry-specific policies and market factors. In a recent working paper, Karen Fisher-Vanden, Yong Hu, Gary Jefferson, Michael Rock, and Michael Toman address this gap using unique firm-level data from China's most energy-intensive, large and medium-size industrial enterprises in those four industries during 1999-2004. They examine how China's energy-saving programs, liberalization of domestic markets, openness to the world economy, and other policies contribute to the decline in energy intensity in these industries. The results suggest that rising energy costs are one significant contributor to the decline in energy intensity in all four industries. However, China's industrial policies targeting scale economies, such as “grasping the large, letting go off the small,” also have led to reductions in energy intensity in those four industries. In contrast, the results suggest that trade openness and technology development led to declines in energy intensity in only one or two of these industries. Finally, the analysis finds that energy intensities vary among firms with different ownership types and regional locations.

World Bank Policy Research Working Paper 6551 »

Affordable Solar Panels Gaining Traction in Bangladesh

The Bangladesh government, with help from the World Bank and other donors, provided aid to a local agency and its partner organizations to devise a credit scheme marketing solar home system units and make them an affordable alternative to grid electricity for poor people in remote areas. In a recent working paper, Hussain A. Samad, Shahidur R. Khandker, M. Asaduzzaman, and Mohammad Yunus use household survey data to examine the financing scheme behind the dissemination of these solar home systems, especially the role of the subsidy, the factors that determine the adoption of the systems in rural Bangladesh and the welfare impact of such adoption. As the subsidy declined, the demand for solar home systems rose, mostly because technological developments made prices affordable. Prices have a statistically significant effect on adoption: a 10-percent decline in the system’s price increases the overall demand for a solar panel by 2 percent. Once adopted, a solar home system increases children’s evening study time, lowers kerosene consumption, and improves health for household members, especially women, whose decision-making ability in certain household affairs also improves. Finally, the adoption of solar energy systems increases household consumption expenditure by a small amount.

World Bank Policy Research Working Paper 6724 »

How Turkey Tapped New Trade Barriers during the Global Financial Crisis

Trade policy commitments to lower import tariffs and maintain tariffs at low levels entail political-economic costs and benefits in both the short and long run. Empirical work examining the relationship between such commitments and the exercise of trade policy flexibilities is still relatively nascent, especially for emerging economies. In a recent working paper, Chad Bown provides a rich, empirically based assessment of how Turkey exercised trade policy flexibilities during the global economic crisis of 2008-2011. First, despite multilateral and customs union commitments that might limit changes to applied tariffs, Turkey made changes to both its imposed Most Favored Nation and preferential tariffs, which affect nearly 9 percent of manufacturing imports and 10 percent of import product lines. Second, Turkey's use of temporary trade barrier (TTB) policies — antidumping, safeguards and countervailing duties — are estimated to affect an additional 4 percent of imports and 6 percent of product lines by 2011. Other surprising results on Turkey's use of flexibilities include: extending the duration of previously imposed antidumping and safeguards beyond expected removal dates, removing one TTB policy over a set of products and immediately reapplying a different TTB policy, covering lengthy upstream and downstream segments of important industries, and deepening discriminatory preference margins already inherent in existing preferential trade agreements.

World Bank Policy Research Working Paper 6322 »

Media and Blogs

Incomes in Sub-Saharan Africa: Standing Still but Going Backwards (The Economist’s Free Exchange blog, Jan. 21st
“A new World Bank paper paints a rather depressing picture of global poverty. From 1993 to 2008 the average per capita income of sub-Saharan African economies barely budged—it increased from $742 to $762 per year (measured in 2005 purchasing-power parity-adjusted dollars). If we exclude South Africa and the Seychelles, we see a decline from $608 to $556 over the period.”

Read the article | Related feature | Related blog post


How Does Corporate Governance Affect Bank Capitalization Strategies (Harvard Law School Forum on Corporate Governance and Financial Regulation, Jan.24)
“In our paper, How Does Corporate Governance Affect Bank Capitalization Strategies?, which was recently made publicly available on SSRN, we examine how corporate governance and executive compensation affect bank capitalization strategies for an international sample of banks over the 2003-2011 period. We find that ‘good’ corporate governance—or corporate governance that causes the bank to act in the interests of bank shareholders—associated with lower levels of bank capital.”

Read the post co-authored by World Bank Research Director Asli Demirgüç-Kunt.


India Savings Deposit Scam Collapse Leaves Thousands Penniless (Bloomberg News, Jan.6)
“Clients scraped up as little as 100 rupees a month in a country where the World Bank’s Global Financial Inclusion Database found just 35 percent of adults had a bank account and 8 percent borrowed through formal channels in 2011.”

Read the story | Findex Database


Addressing Household Air Pollution: A Case Study in Rural Madagascar (Let’s Talk Development blog, World Bank, Jan.28)
“More than half the world’s population cooks with solid biomass fuels, such as wood, dung, charcoal or agricultural residues. Use of these fuels has been found to cause significant levels of respiratory infections, as well as trachea, bronchus, and lung cancers, ischemic heart disease, cerebrovascular disease, chronic obstructive pulmonary disease, and cataracts. The Global Burden of Disease Study 2010 found Household Air Pollution (HAP) from solid fuels to be the third leading cause of disease worldwide. Mitigation of HAP has a vital role for lowering health risks, particularly for women and children in developing countries where cooking with solid fuels is a common practice.”

Read the post by Susmita Dasgupta, lead environmental economist in the World Bank’s research department, and Paul Martin, sector leader of the Bank’s Africa Region. Related paper.

List of New Policy Research Working Papers