I i"iQo W O R L D B A N K P O L I C Y A N D R E S E A R C H July-September 1997 Volume 8, Number 3 5 New Research 9 Publications and Data 16 Order Form Reducing corruption n effective state can contribute powerfully to sustainable lead to paralysis. Every instrument for restraining government needs to be development and the reduction of poverty. But there is no complemented by institutional arrange- ments that build in flexibility for the s . ~~guarantee that state intervention will benefit society. executive branch in formulating and implementing policies and adapting to The state's monopoly on coercion, which gives it the power new information and changing circumstances. to intervene effectively in economic activity, also gives it the Countries have used a variety of institutional arrange- power to intervene arbitrarily. This power, coupled with ments that combine flexibility with restraint. Some arrange- access to information not available to the general public, ments-such as deliberation councils in East Asia and the creates ample opportunities for public officials to promote Administrative Procedures Act in the United States-dele- their own interests, or those of friends or allies, at the gate substantial autonomy to executive agencies to define expense of the general interest. How can countries establish the substance and undertake the implementation of policy. and nurture mechanisms that give state agencies the flexibil- But they also require these agencies to follow procedures ity and the incentive to act for the common good, while at that open their decisions to input and oversight by other the same time restraining arbitrary and corrupt behavior in arms of the state and by civil society and businesses. Other dealings with businesses and citizens? What formal checks arrangements rely on mechanisms within the executive and balances must be built into the structure of govern- branch to promote flexibility within restraints, such as the ment? And what can the state do to combat corruption? devolution of managerial authority to executive agencies Restraining the potential use and abuse of state power is within set budgets and performance targets. a challenge for any country. Harder still is doing it without But even if bureaucracies are embedded in processes that depriving state agencies of the flexibility they need to do provide ample opportunity for outside input and oversight, their job. But arbitrary and capricious state action under- the risk remains that officials will pursue personal rather mines more than credibility. It undermines the rule of law than organizational goals. Self-seeking behavior can degen- itself, by weakening the force of whatever rules the state has erate into corruption when private interests wield their set in place. And it fosters conditions that encourage state influence in illegal and secret ways, circumventing the legal officials to place themselves above the law and tempt the and bureaucratic rules designed to keep them out. rest of society to do the same. Development, in these cir- Whether public institutions succumb to these and other cumstances, hits a brick wall. sources of corruption will depend on the strength of their Instruments of restraint-including an independent institutional defenses. Corruption flourishes where distor- judiciary and the separation of powers-are a vital founda- tions in the policy and regulatory regime provide scope for tion for sustainable development. But excessive restraint can it and where institutions of restraint are weak. It lies at the intersection of the public and private sectors, as private siphons off payments of, say, 10 percent on average may gen- interests wield their influence through illegal means to take erate pressures to increase the take to 15 or 20 percent. advantage of opportunities for corruption and rent seeking, Corruption feeds on itself, creating a widening spiral of illegal and public institutions succumb to these and other sources payoffs until ultimately development is undermined and years of corruption in the absence of credible restraints. of progress are reversed. And the very growth that permitted Corruption violates the public trust and corrodes social corruption in the past can produce a shift from productive capital, and it can have far-reaching externalities. Unchecked, activities to an unproductive struggle for the spoils. Over time the creeping accumulation of seemingly minor infractions corruption becomes entrenched, so that when governments can slowly erode political legitimacy to the point where even finally do move to contain it, they meet powerful resistance. honest officials and members of the public see little point in playing by the rules. The implications for investment and Causes of corruption economic growth are profound. A private sector survey con- Incentives for corrupt behavior arise whenever public offi- ducted for the World Bank's World Development Report 1997: cials have wide discretion and little accountability. Some The State in a Changing World (New York: Oxford University corruption stems from opportunities generated by the pol- Press, 1997) confirms earlier studies that found that corrup- icy environment, at the bottom or the top of the hierarchy. tion (as perceived by businesspeople) is negatively correlated Payoffs are frequent to lower-level officials charged with col- with both investment and growth. (This survey created an lecting tariffs, providing police protection, issuing permits, internationally comparable data set, for 69 developing and and the like. When corruption is endemic, these officials industrial countries, on different aspects of institutional may create additional red tape and delays to induce even uncertainty as perceived by entrepreneurs.) And surveys and higher payments. Corruption also occurs at the highest lev- anecdotal evidence suggest that the greatest victims of petty els of government, in the awarding of major contracts, pri- corruption are usually the poor. vatization, the allocation of import quotas, and the regula- Despite such evidence, many parts of the developing world tion of natural monopolies. This helps explain why retain a certain ambivalence toward corruption. A commonly corruption is more prevalent in countries with highly dis- heard view is that corruption merely greases the wheels of torted policies, as measured by such variables as the black commerce, and that without it there would be no transactions market premium (top panel in figure 2). and no growth. Apparent support for this argument comes from the fact that some countries (including a few in East F I G U R E I Asia) with high levels of corruption have also achieved high High and unpredictable corruption hurts investment levels of growth. The private sector survey provides some Gross investment-GDP ratio insights into this apparent paradox. It found that the pre- (percent) dictability of corruption-in terms of both the amount of the 30 28.5 bribe and the certainty of obtaining the desired outcome-is 25 an important mediating factor. Countries with similar levels of .21.3 _95 20 2. corruption can differ dramatically in their rates of investment; countries with highly predictable corruption have significantly 15 12.3 higher investment rates than those in which payments and 10 outcomes are more uncertain (figure 1). Overall, however, cor- ruption hurts economic performance: no matter how high the 5 degree of predictability of corruption in a country, its rate of 0 High High Low Low investment would have been significantly higher had there corruption, corruption, corruption, corruption, been less corruption. low predictability high predictability low predictability high predictability Note: Each value is an average for a group of countries. Results are based on a Moreover, countries that have achieved high rates of eco- regression using data from 39 industrial and developing countries, controlling for nomic growth despite serious corruption may find themselves income, education, and policy distortion. Source: World Bank, World Development Report 1997 (New York: Oxford paying a higher price in the future. Tolerating corruption that University Press, 1997). 2 World Bank Policy and Research Bulletin July-September 1997 The probability of being caught and punished also affects F I G U R E 2 the level of corruption. Economic analysis of the law sug- Some factors associated with corruption gests that individuals weigh the expected benefits of break- Index of corruption ing the law against the expected costs (the probability of 6 being caught and punished multiplied by the level of pun- ishment). Corruption may be high in countries in which 5 the government does little to deter bribes. Corruption can 4 even persist in countries with substantial freedom of the press and public resentment of corruption if there is little 3 * hope of independent judicial resolution of important cases, 2 * a relationship confirmed by the private sector survey (mid- dle panel in figure 2). 1 Finally, corruption may thrive if the consequences of 0 being caught and disciplined are low relative to the benefits. 0 1 2 3 4 Where civil service wages are very low, officials may try to Policy distortion index supplement their pay with illegal payoffs (bottom panel of figure 2). But simply raising civil service salaries may not Index of corruption 6 reduce corrupt behavior. Pay reform must be combined with credible monitoring and law enforcement. 5 4 + Combating corruption * Corruption cannot be effectively attacked in isolation 3 from other problems but must be combated through a 2 multipronged strategy. Critical is to reduce opportunities for corruption by cutting back on officials' discretionary authority, to increase accountability by strengthening 0 1 2 3 4 5 6 mechanisms of monitoring and punishment, and to Predictability of judiciary index reward favorable performance in decisions on pay and promotion. Index of corruption 6 Reducing opportunities for corrupt practice Any reform that increases the competitiveness of the econ- 5 omy will reduce incentives for corrupt behavior. Thus poli- 4 cies that lower controls on foreign trade, remove entry barri- ers to private industry, and privatize state firms in a way that 3 ensures competition will all support the fight. If the state 2 has no authority to restrict exports or to license businesses, there will be no opportunities to pay bribes in those areas. If 1 a subsidy program is eliminated, any bribes that accompa- o nied it will disappear as well. Of course, reducing official 0 0.5 1.0 1.5 2.0 2.5 ' ~~~~~~~~~~Ratio of civil service wages to manufacturing discretion does not mean eliminating regulatory and spend- Note: Data for the top panel are from 39 industrial and developing countries ing programs with strong justifications. Such programs during 1984-93 (for the policy distortion index) and 1996 (for the corruption must be reformed, not eliminated. index). The middle panel is based on a regression using data from 59 industrial must be reformed , not eliminated, and developing countries during 1996. Data for the bottom panel are from 20 Governments have sought to reduce the opportunities industrial and developing countries in the late 1980s to early 1990s. Source: World Bank, World Development Report 1997 (New York: Oxford for corruption in various ways: University Press, 1997). July-Septemnber 1997 World Bank Policy antd Research Bulletin 3 * Clarifying and streamlining laws in ways that reduce patronage and attract and retain more capable staff. Clear official discretion. and widely understood rules of conduct, accountability in * Contracting for services with private companies, performance, and transparency in decisions on pay and pro- possibly foreign firms with no close ties to the country. motion all contribute to a healthy esprit de corps. They also * Making rules more transparent. encourage closer identification with an organization's goals, * Introducing market-based schemes that limit the reduce the costs of making people play by the rules, and discretion of regulators. nurture internal partnerships and loyalty. * Adopting administrative reforms that introduce Meritocracy has not yet become established in many competitive pressures into government. countries. But countries with weak institutions and inade- quate checks and balances can improve the performance of Strengthening mechanisms for monitoring their civil service by relying on more transparent and com- and punishment petitive mechanisms for hiring and promotion. Independent watchdog institutions that are part of the gov- ernment structure can also curb corruption. Countries have Strategic options: Balancing flexibility with restraints experimented with various approaches: States in many developing countries have demonstrated a * Independent anticorruption commissions or inspectors clear imbalance between flexibility and restraint. The capri- general can investigate allegations and bring cases to trial. cious exercise of state power coupled with rampant and - Ombudsmen can hear citizen complaints and help unpredictable corruption has undermined development in increase the accountability of government agencies. several countries. States with too much flexibility and not - Public agencies can establish internal units to root out enough restraint will find that their actions are not viewed corrupt contractors and propose ways to reorganize the as credible, and investment and growth will suffer. These agency to reduce corruption. countries need to strengthen the formal instruments of e Whistleblower statutes can be adopted to protect and restraint to enhance the credibility and accountability of the reward public employees who report the malfeasance of state. International commitment mechanisms can serve as a coworkers or government contractors. short-term substitute while these institutions are built up. Citizens groups can also be an important check on the Yet these actions will not be sufficient to stop the rot in arbitrary abuse of government power-if people can orga- countries in which endemic and entrenched corruption has nize and if they can find out what is happening. To provide undermined key functions of the state. Strengthening for- citizens with the means to act as independent watchdogs, mal instruments of restraint is only one element of a multi- governments should publish budgets, revenue collection pronged strategy to control corruption. Reforming the civil data, statutes and rules, and the proceedings of legislative service, reducing opportunities for officials to act corruptly, bodies. Financial data should be audited by an independent and enhancing accountability are other essential steps. authority; unaudited secret funds or extrabudgetary funds Strengthening mechanisms for monitoring and punish- available to chief executives are an invitation to corruption. ment-of the people who pay bribes as well as those who But even if both the necessary information and the means accept them-will require vigorous enforcement of criminal of punishing corrupt practices are available, individual citi- law. But it will also require oversight by formal institutions zens are unlikely to act alone. Laws that make it easy to such as statutory boards and by ordinary citizens (through establish associations and nonprofits can help resolve this voice and participation). These efforts can help not only in collective action problem. controlling corruption but also in improving many other functions of the state, such as policymaking and service Fostering incentives to play by the rules delivery. The same oversight mechanisms used to detect and punish corrupt practices can be used to reward politicians and civil Drawn from World Bank, World Development Report 1997: servants who act in the collective interest. Merit-based The State in a Changing World (New York: Oxford recruitment, promotion, and remuneration restrain political University Press, 1997). 4 World Bank Policy and Research Bulletin July-September 1997 hzr n I and how it has affected their wages be realized and the types of empirical New Reesearch and income. Combining this work measures that are the best indicators with computable general equilibrium that they have been realized. These The research projects described here modeling, it will also derive the impli- measures should assist in evaluating are directed by World Bank staff and cations of a broader set of policy whether a country's reform program is funded by the Banks central Research shocks than are observable in the data. a good investment and in designing Support Budget (RSB). Research Through household-level analysis reforms that are appropriate for a proposals being prepared with RSB of demand and supply, the study will country's institutional conditions. funding are listed on page 8. For then explore how households have RSB support: $30, 000 irnformation about the research adjusted to the shocks resulting from Staff weeks: 4 projects described here, contact the trade reforms and what the net effects researchers at the Banks main address are for households. This analysis will Regulatory Capacity across Indian (see back page). recognize that the poor are hetero- States: An Institutional geneous and will fare in different ways Perspective on the Effectiveness R E S E A R C H S T A R T S under trade reform. of State Pollution Control Boards RSB support: $100, 000 Sheoli Pargal Poverty and the International Staff weeks: 32 Development Research Group Economy: What Are the Links? Ref no. 681-86 L. Alan Winters, Will Martin, Political Credibility Adequate institutional capacity is con- Shantayanan Devarajan, and Economic Reform sidered essential for a regulatory sys- and Martin Ravallion Philip Keefer tem to perform well. But how can Development Research Group Development Research Group institutional capacity be measured, Ref no. 681-83 Ref no. 681-85 and how might such measures be As countries liberalize trade and allow Research has shown that a key linked to indicators of performance? exchange rate adjustments, prices to successful reform is political This study proposes to develop change, wages adjust, and resources credibility-when policymakers who preliminary measures of institutional are reallocated. Governments consid- can make and keep promises on enact- capacity for environmental regulatory ering trade reform naturally are con- ing reform actually do so. But what agencies in six states of India. It would cerned about how these changes will are the necessary conditions for politi- validate the measures by their ability affect the poor. But evidence on the cal credibility, and how can their suffi- to predict an agency's effectiveness in links between poverty and trade ciency be measured? inducing regulatory compliance. reform is scant. Using Indonesia and This study will develop a frame- To identify key structural determi- South Africa as case studies, this study work to help analysts draw reliable nants of institutional capacity, the aims to contribute to the understand- judgments about political credibility study will assess the importance for ing of the channels through which and thus readiness for reform. It is performance of such factors as the size trade reform affects poverty by based on the premise that political of the agency's budget, the share of advancing the methodology for ana- credibility has three parts: the percep- technical staff, and staff training and lyzing these links. tion by policymakers that reform is in compensation. Performance will be The study will focus on two their interests, the capability of policy- evaluated on the basis of the agency's links-that between policies and makers to pass and implement reform, effectiveness in inducing initially non- prices and that between prices and and the sustainability of reform (an compliant firms to comply with water poverty. Using detailed time-series aspect that depends a great deal on pollution regulations over five years. data spanning particular reforms, it institutional structure). The panel of firms will consist of 50 will look at how trade liberalization The research will identify the con- plants in each state, randomly selected has affected the prices of the goods ditions under which each of these in five water-pollution-intensive sec- that the poor produce and consume components of political credibility can tors: textiles, chemicals, food process- July-September 1997 World Bank Policy and Research Bulletin 5 ing, pulp and paper, and iron and pation in urban water supply. It will and efficiency in banking in several steel. address such questions as, Under what countries, including Chile, Colombia, The study will use standard conditions is the private sector more and Italy. It will examine banks' econometric techniques to estimate efficient than the government? How behavior to find out whether interest the effect of regulatory capacity on can reforms best be implemented- rates are determined competitively and compliance rates. The probability of a and the desired outcomes in efficiency whether they pose an obstacle to eco- plant's compliance will be a function and coverage achieved-in different nomic growth. If adequate disaggre- of plant-specific factors (sector, size, institutional and political settings? gated data are available, the study will inspection history) and two factors The study will look at how differ- use the data to identify sectors and that depend on the agency's monitor- ent types of contracts address prob- types of borrowers for which such ing capacity-the probability of lems of incentives, information asym- obstacles may be greatest. being inspected and the quality of metries, and credibility. It will also The study will apply a common inspection. assess the effects of reform on perfor- methodology and analytical frame- RSB support: $40, 000 mance and on welfare. work across the sample countries, to Staff weeks: 6 RSB support: $246,350 allow international comparison and a Staff weeks: 123 meaningful assessment of the success Institutions, Politics, and of reforms. The study should yield Contracts: Private Sector Financial Reforms, Market useful policy lessons on financial sec- Participation in Urban Structures, and Bank Credit tor reform and on finance for small Water Supply Fernando Montes-Negret and Luca Papi and medium-size enterprises. Mary Shirley Financial Sector Development RSB support: $32,000 Development Research Group Department Staff weeks: 22 Ref no. 681-87 Ref no. 681-90 Poor performance in water and sanita- Financial sector reforms are generally Delay in Disposition: tion has led some developing countries thought to be good for borrowers and Judicial Performance in to involve the private sector in service for growth-because they are expected Developing Countries provision. This study will evaluate the to reduce the cost and increase the Maria Dakolias experience with private contracts in availability of credit by lowering inter- Legal Department, Operations urban water supply, compare it with est rate spreads and leading to finan- Front Office reforms under public ownership, and cial deepening. But much of the Ref no. 681-92 derive guidelines on designing and analysis of financial reforms has As a growing number of countries implementing successful reform looked at their effects on average have undertaken judiciary reform to through case studies in six countries- spreads, and this aggregate view can meet the requirements of modernizing Argentina, Chile, C6te d'Ivoire, conceal important differences in and integrating economies, a need has Guinea, Mexico, and Peru. This sam- results among sectors and types of arisen for indicators of the perfor- ple represents the main contracting borrowers. If reforms are not accom- mance of courts, to assist in monitor- options in water supply (leases, man- panied by actions to foster efficiency ing and evaluating reform and in agement contracts, concessions), and competition in banking, for designing future reforms. includes reformers and nonreformers, example, they may lead to a perverse Through a cross-country compara- provides varied institutional settings, outcome. In an oligopolistic banking tive analysis of courts, this study aims and includes countries with continued sector and dualistic economy, financial to develop such performance indica- public operation. reforms can widen interest rate differ- tors and to provide a framework for The study will analyze the effect of entials, increasing the cost of credit for measuring the effects of reforms. The political institutions and contracting small and medium-size borrowers. study will review the efficiency and practices on the design and perfor- This study will analyze the effects effectiveness of courts in about a mance of contracts for private partici- of financial reform on competition dozen developing and industrial coun- 6 World Bank Policy and Research Bulletin July-September 1997 tries. It will determine efficiency on economies have met many of the diseases and deaths impose a high the basis of clearance rates (cases expectations. But some have failed to social cost not captured in the price of resolved as a share of those filed) and enhance reform or have even worked tobacco products. These facts argue the ability to provide quality at a against successful reform. for public efforts to control tobacco minimum cost. This study aims to contribute to use. Effectiveness will be evaluated on the understanding of how different To be effective, however, tobacco the basis of the capacity to resolve organizational practices and institu- control policy requires a sound analyt- conflicts within a reasonable cost and tional structures influence the effec- ical basis, including measures of the time, and subjective and objective tiveness of consultative mechanisms. It health risks and economic costs and evaluations of whether the court sys- will test hypotheses, develop theoreti- benefits of tobacco use. Although sev- tem delivers justice. The subjective cal generalizations, and derive policy eral studies have looked at the costs of evaluations will be based in part on recommendations through compara- tobacco use, few have included cost- the perceptions of judges and court tive analysis of experience with consul- benefit analysis, and none has focused personnel, who will be surveyed as tative mechanisms in three coun- on developing countries. part of the collection of data. The tries-Ghana, Malaysia, and Mexico. Applying cost-benefit analysis, this objective measure will be based on a The study will assess the effective- study will quantify the net economic weighted index of variables capturing ness of consultative mechanisms on loss (or gain) from tobacco use in low- the court's capacity to satisfy the pub- the basis of their performance and middle-income countries with lic's demand for court services. (whether they achieve the objectives different rates of tobacco consump- RSB support: $35, 000 set for them), longevity, and the sub- tion. It will take into account the con- Staff weeks: 14 jective evaluations of stakeholders, sumer and producer surpluses associ- obtained through in-depth, semi- ated with tobacco consumption along Government-Business Consultative structured interviews. By identifying with the costs of tobacco-related dis- Mechanisms and Economic the national settings and organiza- eases and deaths, including productiv- Governance: A Three-Country tional and institutional forms that are ity losses and medical costs. It will also Comparison most promising for effective consulta- examine the impact on income trans- Andrew Stone tive mechanisms, the study will help fers (taxes, pensions, and life and Private Sector Development Department clarify for the Bank when and how to health insurance premiums). Ref no. 681-93 promote such mechanisms. RSB support: $30, 000 One element in Bank-recommended RSB support: $111,313 Staff weeks: 6 strategies for market-oriented reform Staff weeks: 13 is the formation of government- Enterprise Restructuring business consultative mechanisms. Quantifying the Net Economic Loss in Bulgaria and Romania These mechanisms bring together gov- or Gain from Tobacco Use Simeon Djankov, Frank Lysy, Stijn ernment, business, and other eco- PrabhatJha Claessens, Patrick Tardy, nomic actors to work out solutions to Human Development Department and Sudhee Sen Gupta collective problems. They are thought Ref no. 681-95 Europe and Central Asia, and Middle to strengthen reform by improving the If present smoking patterns persist, East and North Africa Regions Technical flow of information among economic tobacco-related deaths will rise from Department, Private Sector and Finance actors, by fostering a sense of common 0.5-1 million a year in developing Team; Europe and CentralAsia, ownership of reform, by pooling tech- countries today to 7 million by 2025. Country Department I, Office of the nical expertise, and by generating Despite these large numbers, smokers Director, and Industry, Trade, and mutual trust. do not know all the risks of tobacco Finance Operations Division; East Asia The record of such mechanisms has use. Nor do they assume all its costs: and Pacific Regional Office, Office of the been mixed, however. Those in the the medical expenses and productivity Regional Vice President; and Private high-performing East Asian losses arising from smoking-related Sector Development Department, July-September 1997 World Bank Policy and Research Bulletin 7 Private Sector Development and considering or using such programs. of the rehabilitation of cultural her- Privatization Group RSB support: $38,500 itage, focusing on the revenue and Ref. no. 681-96 Staff weeks: 2 financing implications. Bulgaria and Romania lag behind the RSB support: $40, 000 other economies in Central and Evaluation of Cultural Heritage Staff weeks: 15 Eastern Europe in restructuring state Investments enterprises. Few enterprises have been Michael Cohen R E S E A R C H P R O P O S A L S privatized, and many continue to Environmentally Sustainable U N D E R P R E P A R AT I O N make large losses. These countries Development, Office of the Vice have nevertheless gone further in President The Maintenance of Investments enterprise restructuring than those in Ref no. 681-98 in Bangladesh the former Soviet Union, and their Requests for World Bank financing for Shekhar Shah experience may offer some useful restoration and preservation of urban South Asia Country Department I, lessons. This study will look at that cultural heritage have led to a need for Country Operations Division experience, drawing on enterprise- a method for economic evaluation of Ref no. 681-72 level data for large panels of firms. such investments. Estimating the rate RSB support: $12, 000 The study will investigate the link of return based on the projected between enterprise restructuring and increase in tourist revenues is straight- Measuring the Health Benefits the lack of hard budgets in Bulgaria forward, but it undervalues the intrin- of Improved Water and and Romania. It will examine the sic value of heritage. This study aims Sanitation effect of the source of financing- to develop a valuation method that Maureen Cropper bank credit, interenterprise credit, captures the broader value and Development Research Group budgetary subsidies-on the softness economic impact of investments in Ref no. 681-74 of the budget. The focus will be on cultural heritage. RSB support: $15,000 the role of the banking systems, which In such sectors as water and sanita- have continued to finance loss-making tion, contingent valuation has been The Interaction of Politics, enterprises. successfully used to value proposed Political Institutions, The study will look at several investments based on customers' will- and Agency Independence aspects of privatization, including the ingness to pay for improved services. in Monetary and Fiscal effect of delayed privatization on the The study will test the utility of this Policy development of private entrepreneur- method in estimating the intrinsic Philip Keefer ship and the effect on performance of value of cultural heritage investments Development Research Group newly appointed boards of directors in by applying it to a program to rehabil- Ref no. 681-80 the interim before sale of an enter- itate the Fez medina (old city) in RSB support: $10, 000 prise. The study will also examine the Morocco. Using contingent valuation, two countries' isolation programs, it will interview foreign tourists in Inequality and Labor Markets which isolate loss-making enterprises Morocco, questioning them on how in East Asia from the banking system. It will assess much they would be willing to pay- Michael Walton and Ravi the programs' effectiveness in encour- in the form of, say, a special fee-for Kanbur aging restructuring and investigate specific improvements to the medina. Poverty Reduction and Economic possible shortcomings in credibility, The study will develop a valuation Management, Poverty Group incentives, and coverage of financial equation to predict willingness to pay as Ref no. 681-91 risks. It will draw policy conclusions a function of age, income, nationality, RSB support: $12, 000 that may be useful not only for and whether the tourist has visited Fez. Bulgaria and Romania but also for The study will also develop a countries in the former Soviet Union methodology to guide public funding 8 World Bank Policy and Research Bulletin July-September 1997 * . J 0 U R N A L supply and use of water support a shift P u bli1 c ati oinis to a market-based approach. Chile's The articles summarized below experience shows that formal water aInlid Dabt appear in the August issue of the markets can improve the economic World Bank Research Observer, efficiency of water use and stimulate For information on how to order the vol. 12, no. 2. investment. World Bank publications reviewed in this issue, seepage 16. Globalization and Inequality, The Impact of T&V Extension in Past and Present Africa: The Experience of Kenya B 0 0 K S Jeffrey G. Williamson and Burkina Faso In both the late nineteenth and late Vishva Bindlish and Robert E. Evenson Everyone's Miracle: Revisiting twentieth centuries, the trend toward Agricultural extension programs based Poverty and Inequality in East Asia globalization was accompanied by ris- on the training and visit (T&V) sys- VinodAhuja, Benu Bidani, Francisco ing income inequality in rich coun- tem operate in some 31 Sub-Saharan Ferreira, and Michael Walton tries and declining inequality in poor African countries. Evidence from Directions in Development Series ones. A third to a half of the rise in Kenya and Burkina Faso shows that For the past 35 years a growing num- inequality since the 1 970s in the rich such programs support agricultural ber of East Asian economies have con- countries has been attributed to global growth and produce high returns on sistently recorded some of the highest economic forces, about the same as a investments. But long-term increases rates of economic growth in the century earlier. Will political pressure in output in Sub-Saharan Africa will world. This growth was accompanied in the rich countries cause the world depend on the development of by improvements in a number of economy to once again retreat from improved technologies relevant to social indicators, suggesting that social globalization? local conditions. welfare was rising throughout the region. Nevertheless, recent develop- The Policymaking Uses of Public and Private Agricultural ments and newly available distribu- Multitopic Household Survey Data: Extension: Partners or Rivals? tional data require that the issues of A Primer Dina Umali-Deininger poverty and inequality in East Asia Margaret E. Grosh This article examines the roles of the and Pacific be revisited. This report Household surveys are a valuable tool public and private sectors in agricul- undertakes a comprehensive assess- for policymakers deciding among pol- tural extension. It identifies areas ment of the situation in the region icy options. This article illustrates the where opportunities for private (for- and a more detailed look at particular kinds of issues typically addressed in profit and nonprofit) participation issues. The study had two fundamen- these surveys and shows how detailed will arise, but finds that because of tal motivations. First, poverty remains analyses of the data can feed into the market failures, some types of exten- a central concern in the region, with decisionmaking process. sion services will require public about a third of the world's poor living funding-although not necessarily in East Asia in the mid- 1 990s. Formal Water Markets: Why, public delivery. Second, the region has a growing When, and How to Introduce concern with inequality. The report Tradable Water Rights Cofinanced Public Extension shows that East Asia's past success Mateen Thobani in Nicaragua should not make the world assume In most countries the state owns the Gabriel Keynan, Manuel Olin, that development in the region is a water resources and hydraulic infra- and Ariel Dinar finished task. structure, and public officials decide A pilot program in Nicaragua set out who gets the water, how it is to be to test whether a truly demand-driven used, and how much will be charged extension system aimed at farmers for it. But costly inefficiencies in the with small and medium-size holdings July-Septem ber 1997 World Bank Policy and Research Bulletin 9 could be developed. It introduced Poverty, Social Services, and Water Pricing Experiences: incentives for providers through a Safety Nets in Vietnam An International Perspective contribution by the farmers paid as a Nicholas Prescott Ariel Dinar and Ashok Subramanian bonus to the extensionist. The out- Discussion Paper 376 Technical Paper 386 comes showed that the cofinancing Although Vietnam has made impres- This paper compares water pricing can be successful. sive progress in providing broad access experiences across 22 countries in dif- to basic social services, the quantity ferent sectors. Case studies show that Reconsidering Agricultural and quality of service provision have countries have different reasons for Extension shown signs of deterioration in the charging for water, including recover- Robert Picciotto andJock R. Anderson past two decades. This paper examines ing costs, redistributing income, This article reviews the evolution of the public sector's changing role in improving water allocation, and the institutional design of agricultural financing and providing social services encouraging conservation. Tables extension programs and of the institu- and safety nets in Vietnam. It assesses illustrate such topics as the average tional environment in which they the country's efficiency in targeting price of municipal water in Spain, operate. It characterizes their present public resources to the poor in the monthly water fees in Lisbon, nomi- environment as one of declining gov- wake of the important economic pol- nal and real irrigation water prices in ernment funding and more differenti- icy reforms initiated in 1989. And it Tunisia, canal water rates for irrigation ated requirements. And it recom- highlights the emerging importance of in India, and water charges for mends that development assistance public sector pricing policy and pri- metered residences and industries in agencies support policies aimed at vate out-of-pocket spending in social Sudan. increasing the role of users, private sector financing. companies, and the voluntary Privatization and Restructuring sector. A Commercial Bank's Microfinance in Central and Eastern Europe: Program: The Case of Hafton Evidence and Policy Options National Bank in Sri Lanka Gerhard Pohl, Robert E. Anderson, D I S C U S S I 0 N, Joselito S. Gallardo, Bikki K. Stijn Claessens, and Simeon T E C H N I C A L, A N D Randhawa, and Orlando J Sacay Djankov R E L A T E D P A P E R S Discussion Paper 369 Technical Paper 368 This paper reviews the experience of The countries of Central and Eastern The World Bank Research Program Hatton National Bank, Sri Lanka's Europe must determine what policies 1997: Abstracts of Current largest private commercial bank, will most encourage enterprise Studies which has initiated a program offering restructuring, essential for the transition This volume provides a snapshot of one financial services to the poor while to a normal market economy and for year in the process of investigation, continuing its traditional business accession to the European Union. debate, and reassessment of issues by the operations. The paper addresses four Based on analysis of data for more than World Bank's research program. It reports issues: What motivated the bank to 6,300 industrial firms in seven coun- on the research projects initiated, under undertake a microfinance program? tries of the region, this paper concludes way, or completed in the Bank in fiscal Can a privately owned commercial that privatization is the key to restruc- 1997. An abstract for each project bank successfully downscale part of its turing. Because privatization methods describes the questions addressed, the operations for microfinance? What show similar results, the paper com- analytical methods used, the findings to adjustments are needed in regular pares the extent of restructuring across date, and their policy implications. Each banking operations to build a prof- firms in the seven countries to deter- abstract also lists any reports or publica- itable microfinance program? Is a mine which country's policies have tions produced. The volume covers more microfinance operation consistent been most effective in encouraging than 200 research projects, grouped by with a privately owned bank's profit- restructuring. theme. maximizing objective? 10 World Bank Policy and Research Bulletin July-September 1997 P O L I C Y R E S E A R C H Shifting Responsibility for Social Roads, Population Pressures, and W O R K I N G P A P E R S Services as Enterprises Privatize Deforestation in Thailand, 1976-89 in Belarus Maureen Cropper, Charles Griffiths, Working Papers disseminate the find- David Sewell and Muthukumara Mani ings of work in progress and encour- WIPS 1719 * Contact Constance WPS 1726 * Contact Anna Marie age the exchange of ideas among Lawrence, room H7-092, fax 202- Maranon, room N10-031, fax 202- Bank staff and all others interested in 477-0686 522-3230. development issues. Wevelorking Papuers are notaaiahe The Distribution of Foreign Direct The Economics of the Informal throu nghh Puations Salesno Unait.e Investment in China Sector: A Simple Model and Some Pleaseh address rqueatis fpaplers Uito Harry G. Broadman and Xiaolun Sun Empirical Evidence from Latin Please address requests forpapers to WPS 1720 * Contact Joan Grigsby, America the contactperson sndicated at the room MC8-238, fax 202-522-1556 Norman A. Loayza WaPS 1727 * Contact Rebecca EU Accession of Central and Eastern The Evolution of Poverty Europe: Bridging the Income Gap 522-3518. and Welfare in Nigeria, 1985-92 Luca Barbone andJuan Zalduendo Sudharshan Canagarajah, John WIPS 1721 * Contact Luca Barbone, Regional Labor Markets during Ngwafon, and Saji Thomas room HI1-079, fax 202-477-1034. Deregulation in Indonesia: Have the WIPS 1715 * Contact Betty Casely- Uncertainty, Instability and Outer Islands Been Left Behind? Hayford, room J8-270, fax 202- Irreversible Investment: Theory, Chris Manning 473-8065. Evidence, and Lessons for Africa WIPS 1728 * ContactJoseph Israel, Reforming Pensions in Zambia: Luis Serve'n room MC9-378, fax 202- An Analysis of Existing Schemes WIPS 1722 * Contact Emily Khine, 522-1675. and Options for Reform room N11-061, fax 202-522-3518. Does Mercosur's Trade Performance Monika Queisser, Clive Bailey, The Productivity Effects of Raise Concerns about the Effects of and john Woodall Decentralized Reforms: An Analysis Regional Trade Arrangements? W/PS 1716 * Contact Hedia Arbi, . . Alexander Yeats room G8-149, fax 202-522-3190. Lixin Cohln Xu WIPS 1729 * ContactJennifer Do Labor Market Regulations Affect WPS 1723 * Contact Paulina Ngaine, room N5-060, fax 202- Labor Earnings in Ecuador? Sintim-Aboagye, room N9-030, fax 522-1159. Donna MacIsaac and Martin Rama 202-522-1155. Have Trade Policy Reforms Led to WPS 1717 * Contact Sheila Fallon, Debt Maturity and Firm Performance: Greater Openness in Developing room N8-030, fax 202-522-1153. Ael Studyond Comanies Countries? ' ~~~~~~A Panel Study of Indian Companies ShbAnrannja Does Environmental Regulation Fabio Schiantarelli and Vivek Shuby Andriamanansara Matter? Determinants of the Location Srivastava of New Manufacturing Plants in India WPS 1724 * Contact Bill Moore, room WPS 1730 * ContactJennifer in 1994 N9-038, fax202-522-1155. Ngaine, room N5-056, fax 202- Muthukumara Mani, Sheoli Pargal,52119 Muthuumar Mani Sheli Pagal,Access to Long-Term Debt and Effects and Mainul Huq Pension Reform, Growth, and the WVPS 1718 * Contact Evelyn de Castro, on Firms' Performance: Lessons from Labor Market in Ukraine room Ni 0-019, fax 202- Ecuador Michelle Riboud and Hoaquan Chu 522-3230. FVPeljaramillo and abio Schzantarelli WPS 1731 * Contact Rosario Hablero, WPS 1725 - Contact Bill Moore, room room H5-163 fax 202-477-3378. N9-038, fax 202-522-1155. July-September 1997 World Bank Policy and Research Bulletin 11 Agricultural Trade and Rural Safe and Sound Banking in The Role of Long-Term Finance: Development in the Middle East and Developing Countries: We're Not Theory and Evidence North Africa: Recent Developments in Kansas Anymore Gerard Caprio Jr. and and Prospects Gerard Caprio Jr. Asli Demirguic-Kunt Dean A. DeRosa WVPS 1739 * Contact Bill Moore, WPS 1746 - Contact Paulina W/PS 1732 * Contactjennifer Ngaine, room N9-038, fax 202-522-1155. Sintim-Aboagye, room N9-030, fax room N5-056, fax 202-522-1159. Wen Is Foreign Aid Policy Credible? 202-522-1155. The Usefulness of Private and Public Aid Dependence and Protection and Trade in Services: Information for Foreign Investment Conditionality A Survey Decisions Jakob Svensson Bernard Hoekman and Carlos A. Yuko Kinoshita and Ashoka Mody WVPS 1740 * Contact Rebecca Martin, Primo Braga WPS 1733 * Contact Rafaela Reff, room NI1-059, fax 202-522-3518. W/PS 1747 - Contact Jennifer Ngaine, room Q5-139, fax 202-477-0218. . . . room N5-060, fax 202-522-1159. Q5-139, fax ~~~~Privatization, Public Investment, Are Markets Learning? Behavior in the and Capital Income Taxation Has Agricultural Trade Liberalization Secondary Market for Brady Bonds Harry Huizinga and Soren Bo Nielsen Improved Welfare in the Least- Luca Barbone and Lorenzo Forni WIPS 1741 * Contact Paulina Developed Countries? Yes WPS 1734 * Contact Luca Barbone, Sintim-Aboagye, room N9-030, fax Merlinda D. Ingco room HI 1-079, fax 202-477-1034. 202-522-1155. WIPS 1748 * Contactjennifer Ngaine, Competition Policy and the Global Transport Costs and "Natural" room N5-060, fax 202-522-1159. Trading System: A Developing- Integration in Mercosur Applying Economic Analysis to Country Perspective Azita Amjadi and L. Alan Winters Technical Assistance Projects Bernard Hoekman WIPS 1742 * Contact jennifer Ngaine, Gary McMahon WVPS 1735 * ContactJenniferNgaine, room N5-056, fax 202-522-1159. WPS 1749 * Contact Cynthia room N5-060, fax 202-522-1159. How Chinas Government and State Bernardo, room NI 0-055, fax 202- Creating Incentives for Private Enterprises Partitioned Property and 522-1154. Infrastructure Companies to Become Control Rights Regional Integration and Foreign More Efficient Lixin Colin Xu Direct Investment: A Conceptual Ian Alexander and Colin Mayer WPS 1743 * Contact Paulina Framework and Three Cases WVPS 1736 * Contact Randee Sintim-Aboagye, room N9-030, fax Magnus Blomstrim and Ar Kokko Schneiderman, room G4-040, fax 202- 202-522-1155. WPS 1750 * ContactJennifer Ngaine, 522-3481. . room N5-060, fax 202-522-1159. Moving to Greener Pastures? Ownership and Corporate Multinationals and the Pollution- Using Tariff Indices to Evaluate Governance: Evidence from the Haven Hypothesis Preferential Trading Arrangements: Czech Republic Gunnar S. Eskeland andAnn E An Application to Chile Stijn Claessens, Simeon Djankov, and Harrison Eric Bond Gerhard Pohl WVPS 1744 * Contact Cynthia WVPS 1751 * Contact Jennifer Ngaine, W/PS 1737 * Contact Eaten Hatab, Bernardo, room N10-053, fax 202- room N5-060, fax 202-522-1159. room H8-087, fax 202-477-8772. 522-1154. Ghana's Labor Market (1987-92) Some Aspects of Poverty in Sri Lanka: How Foreign Investment Affects Sudharshan Canagarajah 1985-90 Host Countries and Saji Thomas Gaurav Datt and Dileni Gunewardena Magnus Blomstrim andAri Kokko WPS 1752 * Contact Betty Casely- WVPS 1738 * Contact Patricia Sader, WVPS 1745 * Contact Jennifer Ngaine, Hayford, room J8-270, fax 202- room N8-040, fax 202-522-1153. room N5-060, fax 202-522-1159. 473-8065. 12 World Bank Policy and Research Bulletin July-September 1997 Can Capital Markets Create Credibility of Rules and Economic Pension Reform: Is There a Tradeoff Incentives for Pollution Control? Growth: Evidence from a Worldwide between Efficiency and Equity? Paul Lanoie, Benoit Laplante, Survey of the Private Sector Estelle James and Maite Roy Aymo Brunetti, Gregory Kisunko, WPS 1767 * Contact Selina WPS 1753 * Contact Roula Yazigi, and Beatrice Weder Khan, room N8-024, fax 202- room Ni 0-023, fax 202-522-3230. WPS 1760 * Contact Michael Geller, 522-1153. Research on Land Markets in South room N7-078, fax 202-522-0056 Is There a Quantity-Quality Tradeoff Asia: What Have We Learned? Bending the Rules: Discretionary as Enrollments Increase? Evidence Rashid Faruqee and Kevin Carey Pollution Control in China from Tamil Nadu, India WPS 1754 * Contact Clydina Anbiah, Susmita Dasgupta, Mainul Huq, 1? Duraisamy, Estelle James, Julia Lane, room T7-020, fax 202-522-1778. and David Wheeler andJee-Peng Tan Survey Responses from Women WTPS 1761 * Contact Evelyn de Castro, WYIPS 1768 * Contact Selina Workers in Indonesirs Textile, room N10-019, fax 202-522-3230. Khan, room N8-024, fax 202- Garment, and Footwear Industries Strategies for Pricing Publicly 522-1153. Mari Pangestu and Medelina K Provided Health Services Information, Incentives, and Hendytio PaulJ Gertler andJeffrey S. Hammer Commitment: An Empirical Analysis WPS 1755 - Contact Joseph Israel, WPS 1762 * Contact Cynthia of Contracts between Government room MC9-378, fax 202-522-1675. Bernardo, room Ni 0-053, fax 202- and State Enterprises World Crude Oil Resources: Evidence 522-1154. Mary M. Shirley and L. Colin Xu World Crude Oil Resources: Evidence UM~WS 1769 * Contact Paulina from Estimating Supply Functions China and the Multilateral Investment Sintim - room n a for 41 Countries Guarantee Agency 202-5221 155. G. C. Watkins and Shane Streifel Yushu Feng WPS 1756 - Contact Jean Jacobson, WPS 1763 * Contact Elisabeth Beers, Poverty and Social Transfers room N5-032, fax 202-522-3564. room U12-121, fax 202-522-2640. in Hungary Christiaan Grootaert Using Economic Policy to Improve A Reversal of Fortune for Korean WPS 1770 * Contact Gracie Ochieng Environmental Protection in Pakistan Women: Explaining 1983's Upward WPS 177042 Cac202 -522i324i Rashid Faruqee Turn in Relative Earnings WIPS 1757 * Contact Clydina Anbiah, Yana van der Meulen Rodgers Government Employment and room T7-020, fax 202-522-1778. WPS 1764 - Contact Dawn Pay: A Global and Regional The Restructuring of Large Firms Ballantyne, room S10-147 fax 202- Perspective in Slovakia 522-3237 Salvatore Schiavo-Campo, Giulio Simeon Djankov and Gerhard Pohl Explaining Agricultural and Agrarian Mukherjee WIPS 1758 * Contact Faten Hatab, Policies in Developing Countries MP11CncAs room H8-087, fax 202-477-8772. Hans P Binswanger and Klaus PS 177m - faxt202- Deininger ~~~~~Panton, room H8-005, fax 202- Institutional Obstacles to Doing W 7eIznoger 477-3387. Busiess:Regon-b-Regon esuls WPS 1765 * Contact Dean Housden, Busmess: Reglion-by-Regon Results room S11-046, fax 202-522-3307. What Drives Deforestation in the Brazilian Amazon? Evidence from Private Sector New Systems for Old Age Security: Satellite and Socioeconomic Data Aymo Brunetti, Gregory Kisunko, Theory, Practice, and Empirical Alexander S. 1? Pfaff and Beatrice Weder Evidence W/PS 1772 * Contact Anna Marie WVPS 1759 * Contact Michael Estelle James Maraeion, room Ni0-037 fax 202- Geller, room N7-078, fax 202- WPS 1766 * Contact Selina Khan, 522-3230. 522-0056. room N8-024, fax 202-522-1153. July-September 1997 World Bank Policy and Research Bulletin 13 The Costs and Benefits of Regulation: High-level Rent-Seeking and Trading Arrangements and Industrial Implications for Developing Corruption in African Regimes: Development Countries Theory and Cases Diego Puga andAnthonyj Venables J. Luis Guasch and Robert W Hahn Jacqueline Coolidge and Susan WPS 1787 * Contact Jennifer Ngaine, WPS 1773 * ContactJoy Troncoso, Rose-Ackerman room N5-056, fax 202-522-1159. room I8-314, fax 202-676-0239. WPS 1780 * Contact Nessa Busjeet, An Economic Analysis of Woodfuel The Demand for Base Money and room F3K-138, fax 202-974-4303. Management in the Sahel: The Case the Sustainability of Public Debt Technology Accumulation and of Chad Valeriano E Garcia Diffusion: Is There a Regional Kenneth M. Chomitz and Charles WPS 1774 * Contact Jorge Forgues, Dimension? Griffiths room 18-449, fax 202-676-9271. Pier Carlo Padoan WPS 1788 * Contact Anna Marie Can High-Inequality Developing W/PS 1781 * ContactJennifer Ngaine, Marafion, room NIO-037, fax 202- Countries Escape Absolute Poverty? room N5-05., fax 202-522-1159. 522-3230. Martin Ravallion Regional Integration and the Prices of Competition Law in Bulgaria after W/PS 1775 * Contact Patricia Sader, Imports: An Empirical Investigation Central Planning room N8-040, fax 202-522-1153. W/PS 1782 * ContactJennifer Ngaine, Bernard Hoekman and Simeon From Prices to Incomes: Agricultural room N5-056, fax 202-522-1159. Djankov Subsidization without Protection? Trade Policy Options for Chile: WVPS 1789 * Contact Jennifer Ngaine, John Baffes andJacob Meerman A Quantitative Evaluation room N5-056, fax 202-522-1159. WPS 1776 * Contact Pauline Glenn W Harrison, Thomas E Interpreting the Coefficient of Kokila, room N5-030, fax 202- Rutherford, and David G. Tarr Schooling in the Human Capital 522-3564. WPS 1783 - Contact Jennifer Ngaine, Earnings Function Aid, Policies, andt Growth room N5-060, fax 202-522-1159. Barry R. Chiswick Craig Burnside and David Dollar Analyzing the Sustainability of Fiscal V/PS 1790 * Contact Promila Singh, WITS 1777 * Contact Kari Labrie, Deficits in Developing Countries room J3-227, fax 202-522-3233. room N 11-056, fax 202-522-3518. John T Cuddington Toward Better Regulation of Private HlVPS 1784 * Contact Sheila King- Pension Funds How Government Policies Affecr thePesoFud Relationship between Polish and IVatson, room N3-040, fax 202-522- Hemant Shah World Wheat Prices 3277. WPS 1791 * Contact Hemant Shah, Szczepan Figiel, Tom Scott, The Causes of Government room '8-337, fax 202-676-0368. and Panos Varangis and the Consequences for Growth Tradeoffs from Hedging Oil Price WVPS 1778 * ContactJean and Well-Being Risk in Ecuador Jacobson, room N5-026, fax 202- Simon Commander, Hamid R. Sudhakar Satyanarayan and Eduardo 522-3564. Davoodi, and Unel Lee Somensatto WoPS 1785 * Contact Eric Witte, room WPS 1792 * Contact Eduardo Water Allocation Mechansms: M3-094, fax 202-676-0965. Somensatto, room H5-103, fax 202- Principles and Examples Ariel Dinar, Mark W Rosegrant, The Economics of Customs Unions 477-8518. and Ruth Meinzen-Dick in the Commonwealth Wage and Pension Pressure on the WVPS 1779 * Contact Michele of Independent States Polish Budget Rigaud, room S8-258, fax 202- Constantine Michalopoulos Alain de Crombrugghe 522-3309. and David Tarr WVPS 1793 * ContactManiJandu, WVPS 1786 * Contact Minerva Patefia, room N7-032, fax 202-522-0304. room N5-048, fax 202-522-1159. 14 World Bank Policy and Research Bulletin July-September 1997 E L E C T R 0 N I C four-digit levels of the International to be significantly lower than those in I N F 0 R M A T I 0 N A N D D A T A Standard Industrial Classification developing countries. And because (ISIC). The pollution intensities cover technology does not advance at an In many developing countries govern- emissions of about 200 metals and even pace across industries, the indus- ment support for regulation of indus- toxic substances to air, water, and tries that are now "clean" in industrial trial pollution has remained lukewarm soil. countries may be among the "dirtiest" despite the large potential benefits. Multiplying the pollution intensity in developing countries. For these rea- The resistance stems in part from coefficients by estimates of output and sons the Bank has begun work to uncertainty about the cost of pollution employment in a locality yields first- extend the IPPS using developing reduction and about which pollution order estimates of pollution loads. The country data. control instruments will work under coefficients also enable policymakers In China a team from the Bank developing country conditions. What to estimate the pollution generated by and the National Environmental is needed are information on different different sectors down to the level of Protection Agency (NEPA), using methods of pollution abatement and the industry (such as manufacturing information on about 6,000 plants, reliable estimates of their costs in of woven garments) and to identify a has recently estimated pollution inten- developing countries. For the past sev- target pollution level. Tests of the sities for the most critical air and eral years the World Bank has been IPPS estimates in several Asian and water pollutants at three- and four- working to meet this need. Latin American countries have shown digit ISIC levels. In Mexico, working that the estimates provide good indi- with the National Environment A toolforpolicymakers cators of the relative contribution to Ministry, Bank staff are estimating air In 1993 the Bank developed the pollution problems by different types pollution intensities at the two- and Industrial Pollution Projection System of manufacturers. three-digit ISIC level, using data for (IPPS), a method for estimating pollu- Having estimated relative contribu- about 6,000 plants. In Brazil the Bank tion problems and abatement costs tions to pollution, policymakers need is estimating pollution intensities quickly and inexpensively in settings to know how much pollution abate- using data from the Sao Paulo state where environmental data are incom- ment will cost for different industries. environment agency on about 1,500 plete or lacking. The IPPS provides Drawing information from two plants for water pollution and 300 policymakers with a tool for establish- sources-the U.S. Department of plants for air pollution. The pollution ing regulatory priorities based on prin- Commerce's annual 20,000-plant sur- intensity parameters for China, ciples of cost-effectiveness. Unlike vey of pollution abatement costs and Mexico, and Brazil and abatement engineering estimates or projections expenditures and the U.S. Census cost parameters to be estimated for based on case studies, the IPPS is Bureau's Annual Survey of China will be incorporated in the based on actual data on emissions and Manufacturers-the Bank has esti- IPPS in the coming year. abatement costs, covering about mated marginal and average total 100,000 manufacturing plants. The abatement costs by sector for several How to get the data Bank developed the IPPS parameters major air and water pollutants. The IPPS estimates are available for in collaboration with the U.S. Census downloading at a Bank Website Bureau and the U.S. Environmental Extending the IPPS (http://www. worldbank. org/NIPRI). Protection Agency (EPA), drawing on A drawback in using the IPPS in Data also are available at the cost of EPA databases for air, water, and soil developing countries is that the U.S.- reproduction, on diskette or paper, for pollution at the plant level. based estimates of emissions rates selected countries, variables, and peri- The IPPS has aggregated the plant- reflect technologies in use in industrial ods. A CD-ROM version is planned level pollution data to estimate average countries. In these countries the drive for release in 1998. For information pollution "intensities," or emissions to increase efficiency and meet high contact Evelyn de Castro (tel. 202- per unit of economic activity (output emissions standards has led to pollu- 458-9121, fax 202-522-3230, email and employment), at two-, three-, and tion intensities that could be expected edecastro@notes.worldbank.org). Jul-ySeptember 1997 World Bank Policy and Research Bulletin 15 the World Bank Policy and Research BULLETI Executive Directors or the countries they Bulletin is published four times represent. The Bulletin is not copyrighted, a year by the Research Advisory The World Bank and may be reproduced with appropriate Staff. The Bulletin's purpose is to inform the 1818 H Street, NW source attribution. Alison Strong is the Washington, DC development community of the Bank's policy 20433 consulting editor. For information or and research output. The views and inter- complimentary subscriptions, contact pretations in articles are those of the authors and do not Evelyn Alfaro at the Bank's main address or by fax necessarily represent the views of the World Bank or of its (202-522-0304) or email (rad@worldbank.org). Please send me the following Ordering and payment information Ordering the Research Observer publications reviewed in this Customers in the United States, The World Bank Research Observer issue: send your publications order to: (2 issues a year) is available at the The World Bank following prices: 0 Everyone's Miracle: Revisiting Poverty Box 7247-8619 Subscription Individuals Institutions and Inequality in East Asia Philadelphia, PA 19170-8619 1 year 0 $25 0 $40 116 pages/stock #13979/$20.00 or send this coupon by fax to 2 year 0 $45 0 $75 202-522-2627. To charge by credit card, 3 year 0 $60 O $100 O The World Bank Research Program call 202-473-1155. Please send journal orders to: 1997: Abstracts of Current Studies For customers outside the United The World Bank 192 pages/stock #14051/$20.00 States, prices vary by country. For prices Box 7247-7956 or payment in local currency, please ask Philadelphia, PA 19170-7956. O Poverty, Social Services, and Safety Nets your local distributor. For the name and Subscriptions are available without in Vietnam address of your distributor, write to: The charge to readers with mailing addresses 76 pages/stock #14024/$20.00 World Bank, Marketing Unit, in developing countries and in socialist Department Ul1- 1119, 1818 H Street, economies in transition. Send requests to O A Commercial Banks Microfinance NW, Washington, DC 20433 or fax to the World Bank, Research Advisory Staff, Program: The Case ofHatton National 202-522-2631. 1818 H Street, NW, Washington, DC Bank in Sri Lanka Product total US$ 20433, by fax (202-522-0304), or by 41 pages/stock#14002/$20.00 Shipping & handling $5.00 email (rad@worldbank.org). Total order $ O Water Pricing Experiences: An International Perspective Name 174 pages/stock #14060/$20.00 Address Apt. orfloor O Privatization and Restructuring Cit in Central and Eastern Europe:c Evidence and Policy Options Statel 48 pages/stock #13975/$20.00 O Enclosed is my check for US$ drawn on a US bank and payable to the World Bank in US dollars. O Bill my organization (U.S. institutional customers only). Include a purchase order. Charge my: 0 VISA 0 MasterCard O American Express Credit card account no. Exp. date Signature 1279 Ifyou wish to order both publications and a journal subscription, please duplicate this form and send each copy to the appropriate address. 16 World Bank Policy and Research Bulletin July-September 1997