Using a panel of 80 developing and developed countries for the period 1990-2015, this studyanalyses the relationship between exchange rate volatility and foreign direct investment (FDI)inflows.
... See More + The results reveal a negative relationship between de facto exchange rate volatility andFDI. Reducing exchange rate volatility by 10 percent over one-year can boost FDI inflows—ceterisparibus—by an estimated 0.48 percentage points of GDP while the same reduction over the pastfive years can boost FDI inflows by 0.27 percentage points over the long-run. The results areapplied to the case of South Africa, which has been experiencing high volatility of the rand inrecent years. Reducing the rand's volatility to that of developing country peers, South Africa could boost FDI inflows by a potential of 0.25 percentage points of GDP.
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Working Paper (Numbered Series) 127042 JUN 01, 2018
Rwanda's economy rebounded in the second half of 2017. The rebound, driven by improved exportperformance and revitalized agriculture, pushed annual growth to 6.1 percent and led to upwardrevisions of the growth projections for 2018 and 2019.
... See More + However, although growth is currently recovering and is more balanced, it will most likely continue to be below the high rates achieved during the 2013–15 investment push.
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Working Paper (Numbered Series) 127256 JUN 01, 2018
The aim of this analysis is to quantify the losses from potential materialization of contingent liabilities by applying a new methodology for the case of South Africa and, to assess their impact on debt dynamics.
... See More + Accordingly, we bring a novelty to this research by utilizing probabilities of distress, which is a different approach compared to the existing, already applied methodology. The central finding of the simulations conducted is that estimated losses from contingent liabilities, are significantly lower in the first year when they materialize compared to the existing applied methodology, and will gradually add up over time. Accordingly, the solvency and liquidity situation in the country will deteriorate. For example, the largest deterioration will occur in the debt to GDP ratio where the debt accumulation may be higher by 2.1 percent of GDP within three years, compared to the baseline projection. What is more concerning is that the debt trajectory is not stabilizing and losses incurred from materialization of contingent liabilities may become significant driving factor of debt accumulation in medium-term. Ultimately, the current estimates suggest that contingent liabilities may constitute a drag to fiscal policy in medium-term and their long-term accumulation may jeopardize the debt sustainability of the country. In that respect, this analysis suggests remedial measures and building protective buffers by the South African Treasury in the case CLs materialize.
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Working Paper (Numbered Series) 126841 MAY 01, 2018
IEG’s evaluation on pollution and the World Bank Group commissioned a review of theempirical literature on pollution co-benefits from climate change mitigationinterventions, emphasizing air pollution benefits.
... See More + Such pollution is defined usingparameters such as sulfur dioxide (SO2), oxides of nitrogen, and particulate matter for airemissions, and total suspended solids for water releases. The review used a multistageidentification technique based on 40 keyword strings in Google Scholar, web of science,and Scopus to identify a universe of peer-reviewed articles. Papers were included only ifthey focused on developing countries. Additional papers were identified iterativelybased on references from the initial papers. The final papers cited were based on expertjudgment, with emphasis for studies published after 2010. A systematic search wasconducted to locate relevant review articles and meta-analyses; no formal systematicreviews were found. Google was also used to identify non-peer-reviewed studies fromreputable sources, such as the International Energy Agency, U.S. EnvironmentalProtection Agency, and World Bank.The paper lays out the methods and models used in calculating pollution co-benefits, and then presents sector-by-sector results for energy, buildings, industry, transportation,solid and liquid waste management, agriculture, forests/other land use, and multiplesector studies.
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Working Paper (Numbered Series) 125195 APR 12, 2018
For a long time, the urbanization and development discourse has coincided with a focus on economic growth and big cities. Yet, much of the world's new urbanization is taking place in smaller urban entities (towns), and the composition of urbanization may well bear on the speed of poverty reduction.
... See More + This paper reviews the latter question within the context of Tanzania. It starts from the observation that migration to towns contributed much more to poverty reduction than migration to cities because many more (poor) rural migrants ended up in Tanzania's towns than its cities, despite larger welfare gains from moving to the city. Drawing on the findings from a series of studies, looking at this from different angles (theoretical and empirical, quantitative and qualitative), the paper shows how towns are better at enabling the rural poor to access off-farm employment and exit poverty because they are more nearby. It concludes with a call for greater consideration of the role of towns in accelerating Africa's poverty reduction.
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Working Paper (Numbered Series) 125073 APR 01, 2018
Economic growth in Sub-Saharan Africa is estimated to have picked up to 2.6 percent in 2017 from 1.5 percent in 2016. This upswing reflected, on the supply side, rising oil and metals production, encouraged by recovering commodity prices, and improving agricultural conditions following droughts.
... See More + On the demand side, growth was supported by a rebound in consumer spending as inflation moderated, and a recovery in fixed investment as economic activity picked up among oil and metals exporters.The special topic of this issue of Africa’s Pulse explores options for accelerating electrification in Sub-Saharan Africa, the role of innovation in facilitating such expansion, and the implications of achieving rapid electrification for inclusive economic growth and poverty reduction in the region. Countries’ national electrification plans typically have focused on the expansion of the national electricity grid using large-scale fossil fuel and hydroelectric generation facilities and, more recently, some grid-scale investments in solar and wind power generation; off-grid solutions have been limited.
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Working Paper (Numbered Series) 125329 APR 01, 2018
Economic growth in Sub-Saharan Africa is estimated to have picked up to 2.6 percent in 2017 from 1.5 percent in 2016. This upswing reflected, on the supply side, rising oil and metals production, encouraged by recovering commodity prices, and improving agricultural conditions following droughts.
... See More + On the demand side, growth was supported by a rebound in consumer spending as inflation moderated, and a recovery in fixed investment as economic activity picked up among oil and metals exporters.The special topic of this issue of Africa’s Pulse explores options for accelerating electrification in Sub-Saharan Africa, the role of innovation in facilitating such expansion, and the implications of achieving rapid electrification for inclusive economic growth and poverty reduction in the region. Countries’ national electrification plans typically have focused on the expansion of the national electricity grid using large-scale fossil fuel and hydroelectric generation facilities and, more recently, some grid-scale investments in solar and wind power generation; off-grid solutions have been limited.
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Working Paper (Numbered Series) 125329 APR 01, 2018
Tehran, the capital of the Islamic Republic of Iran (IRI), is located in the north of the country with a population of about 8.5 million. The population can reach over 12.5 million during the day, with people from nearby cities commuting daily to Tehran for work.
... See More + There are more than 17 million vehicular trips per day in Tehran, and many of the vehicles have outdated technology. Thus, the air in Tehran is amongst the most polluted in the world. Topography and climate add to the pollution problem. Tehran is at a high altitude and is surrounded by the Alborz Mountain Range, which traps polluted air. Temperature inversion, a phenomenon particularly occurring during the winter months, prevents the pollutants from being diluted. Several recent trends indicate that reducing air pollution will not be straight forward: rapid population growth (partially due to migration from other cities), industrial development, urbanization, and increasing fuel consumptionare pressure points for clean air in Tehran. To design an effective approach to air pollution management, it is important to diagnose the problem, determine its sources, and identify affordable and sustainable solutions. This discussion paper provides an overview of the seriousness of air pollution in the city of Tehran; quantifies its impact in terms of health and economic costs; identifies the sources of pollution; and, finally, provides a framework to addressthe problem.
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Working Paper (Numbered Series) 126402 APR 01, 2018
Drawing on in-depth interviews with young women and men in rural and urban Brazil, this qualitative research explores gender dimensions in the causes and consequences of being ‘out of work and out of school.’
... See More + A key conclusion from this research is that this term (or the Portuguese: ‘nem-nem’) does not translate well the complex realities of this highly heterogeneous group. The paper develops inductively from the data a typology of these youth, who face different barriers along their trajectories: a) barriers to building aspirations and internal motivation to return to school or work, b) barriers to action, and c) external barriers. Participants’ position along this spectrum is shaped by social context and gender norms that frame youth’s trajectories and envisioned futures. These observed patterns are particularly strong in rural areas, where youth perceive fewer quality economic opportunities and stronger division of gender roles within the household and in farming activities, which keeps young women in lower paid or unpaid roles. Participants who have successful trajectories to technical schools, universities, or formal work demonstrate strong resilience, which seems to be built on their relationships with their families, peers, partners, and role models.
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Working Paper (Numbered Series) 125675 MAR 01, 2018
This paper combines district-level government spending data from Indonesia and natural disaster damage indices to analyze the extent to which districts are forced to reallocate their expenditures across categories after the incidence of floods, earthquakes, and volcanic eruptions.
... See More + The results reveal that district government spending is quite sensitive to the incidence of natural disasters at the local level. In the case of floods, districts reallocate spending away from the category of general administration to sectors such as health and infrastructure. Moreover, volcanic eruptions seem to lead to less investment in durable assets both in the year of the disaster as well as the following year. Overall, these results highlight the potentially useful role of a national disaster risk financing insurance program toward maintaining a relatively stable level of district-level spending in different sectors.
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Working Paper (Numbered Series) 125676 MAR 01, 2018
In the past 10 years, Ethiopia experienced high and consistent growth, invested in public goods provision to poor households, and saw impressive gains in well-being for many households.
... See More + This paper exploits variation in sectoral growth and public goods provision across zones and time, to examine whether poverty reduction was driven by growth and provision of public goods and what type of growth, growth in agriculture, manufacturing, or services, was more effective at reducing poverty. The paper pays attention to controlling for other drivers of poverty reduction and instrumenting growth in a sector of policy focus, agriculture, to identify causal effects. The analysis finds that reductions in poverty were largest in places where agricultural output growth has been higher, safety nets have been introduced, and improvements in market access have been made. Agricultural output growth caused reductions in poverty of 2.2 percent per year on average post-2005, and 0.1 percent per year prior to 2005. The government’s policy focus on stimulating productivity gains in smallholder cereal farmers contributed to this growth, but only when the weather was good, and prices were high. Access to markets was essential: agricultural growth reduced poverty in places close to urban centers, but not in remote parts of the country.
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Working Paper (Numbered Series) 125681 MAR 01, 2018
This study carries out a thorough investigation of the potential sources of mismatch in poverty and inequality levels and trends between the Tanzania National Panel Survey and Household Budget Survey.
... See More + The main findings of the study include the following. First, the difference in poverty levels between the Household Budget Survey and the National Panel Survey is essentially explained by the differences in the methods of estimating the poverty line. Second, the discrepancy in poverty trends can be mainly attributed to the difference in inter-year temporal price deflators, and, to a lesser extent, spatial price deflators. The use of the consumer price index for adjusting consumption variation across years would show a decline in poverty during the past five years for the Household Budget Survey and the National Panel Survey. Third, despite noticeable differences in the methods of household consumption data collection, the Household Budget Survey and National Panel Survey show close mean household consumption levels in the last rounds, when using the consumer price index to adjust for interyear price variations. Mean household consumption levels in the Household Budget Survey 2011-12 and National Panel Survey 2010-11 are comparable, and the mean consumption level in the National Panel Survey 2012 13 is around 10 percent higher. The difference is driven by higher levels of aggregate and food consumption by the better-off groups in the National Panel Survey. Fourth, the mismatch in inequality trends and pro-poor growth patterns between the two surveys could not be resolved and is a subject for further analysis.
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Working Paper (Numbered Series) 125678 MAR 01, 2018
This paper uses household surveys from 89 countries to look at gender differences in poverty in the developing world. In the absence of individual-level poverty data, the paper looks at what can we learn in terms of gender differences by looking at the available individual and household level information.
... See More + The estimates are based on the same surveys and welfare measures as official World Bank poverty estimates. The paper focuses on the relationship between age, sex and poverty. And finds that, girls and women of reproductive age are more likely to live in poor households (below the international poverty line) than boys and men. It finds that 122 women between the ages of 25 and 34 live in poor households for every 100 men of the same age group. The analysis also examines the household profiles of the poor, seeking to go beyond headship definitions. Using a demographic household composition shows that nuclear family households of two married adults and children account for 41 percent of poor households, and are the most frequent household where poor women are found. Using an economic household composition classification, households with a male earner, children and a non-income earner spouse are the most frequent among the poor at 36 percent, and the more frequent household where poor women live. For individuals, as well as for households, the presence of children increases the household likelihood to be poor, and this has a specific impact on women, but does not fully explain the observed female poverty penalty.
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Working Paper (Numbered Series) 125677 MAR 01, 2018
Munoz Boudet,Ana Maria; Buitrago Hernandez,Sandra Paola; Leroy De La Briere,Benedicte; Newhouse,David Locke; Rubiano Matulevich,Eliana Carolina; Scott,Katherine M.; Suarez Becerra,PabloDisclosed
Tobacco taxes are considered an effective policy tool to reduce tobacco consumption and produce long-run benefits that outweigh the costs associated with a price increase.
... See More + Through this policy, some of the most adverse effects and economic costs of smoking can be reduced, including shorter life expectancy, higher medical expenses, added years of disability among smokers, and the effects of secondhand smoke. Nonetheless, tobacco taxes are often considered regressive because low-income households tend to allocate a larger share of their budgets to purchasing tobacco products. This paper uses an extended cost-benefit analysis to estimate the distributional effect of tobacco taxes on household welfare in South Africa. The analysis considers the effect on household income through an increase in tobacco prices, changes in medical expenses, and the prolongation of working years. The results indicate that a rise in tobacco prices initially generates negative income variations across all groups in the population. If benefits through lower medical expenses and an expansion in working years are considered, the negative effect is reduced, particularly in medium- and upper-bound elasticity's. Consequently, the aggregate net effect is progressive and benefits the bottom deciles more than the richer ones. Overall, tobacco tax increases exert a small, but positive effect in the presence of low conditional tobacco price elasticity. If the population is more responsive to tobacco price changes (or participation elasticity estimates are included), then they will experience even more gains from the health and work benefits. More research is needed to clarify the distributional effects of tobacco taxation in South Africa.
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Working Paper (Numbered Series) 125679 MAR 01, 2018
Fuchs Tarlovsky,Alan; Del Carmen Hasbun,Giselle Eugenia; Mukong, Alfred KechiaDisclosed
In a context of fiscal consolidation and the need to deliver on a structural reform agenda, policy makers in Albania must not lose sight of the critical redistributive role of the fiscal system, particularly its impact on poverty and inequality.
... See More + Using household survey data, this paper estimates the redistributive effect of fiscal policy on income distribution and poverty in Albania, assessing the individual and combined effects of taxes and public social spending. The findings show that the fiscal system in Albania plays a positive role in reducing inequality. Yet, it has a moderate poverty-increasing effect. Specifically, taxes and social protection contributions have a poverty-increasing effect; indirect taxes, particularly the value-added tax, account for the largest increases in poverty. This effect is somewhat compensated by direct government transfers, which are pro-poor and equalizing, but are not large enough to offset fully the negative impact on the taxation side. Ongoing reforms aimed at improving the efficiency and targeting of social assistance can contribute to enhancing the pro-poor impact of the fiscal system.
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Working Paper (Numbered Series) 125680 MAR 01, 2018
Dávalos, María E.; Robayo-Abril, Monica; Shehaj,Esmeralda; Gjika,AidaDisclosed
The European Union (EU) Regular Economic Report (RER), is an annual publication of the World Bank Group and covers economic developments, prospects, and economic policies in the European Union.
... See More + The report finds that while growth is back on track, the bottom 40 percent of the income distribution is lagging behind in the EU’s recovery. This is likely caused by the interaction between involuntary increases in part-time work, technological change, a decline in the bargaining power of labor, an ageing population and weak overall productivity growth. However, absolute poverty (estimated using a poverty line defined specifically for this report) should continue to fall in Europe, driven by strong poverty reduction in central Europe. The special section of this Regular Economic Report assesses the impact of the Common Agricultural Policy on inclusive growth - past and present. The report argues that the process of structural transformation in the EU is largely on track, with the decoupled and non-market distorting components of the CAP playing a positive role in the reduction of poverty and the creation of better jobs for farmers. The gap between agricultural incomes and incomes in other sectors is also closing, while across the EU agricultural incomes are converging with each other. The successful transformers, about half of the Member States, have turned agriculture into a key sector for shared prosperity in rural areas: agriculture is no longer associated with poverty. The other half—the incomplete transformers—still have some way to go, which includes ensuring that the basic conditions for agriculture to thrive are in place: roads, advisory services, secure property rights, and access to health and education. This will ensure a more efficient use of CAP resources.
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Working Paper (Numbered Series) 123443 FEB 19, 2018
Van Den Brink,Rogier J. E.; Kordik,Hans Christoph; Azevedo,Joao Pedro Wagner DeDisclosed
Tobacco-use–related diseases are the main cause of mortality in Moldova, where tobacco consumption is widely spread, especially among men. In addition to health concerns, tobacco consumption has economic consequences, as households spend substantial resources on tobacco and related out-of-pocket medical costs.
... See More + Tobacco tax increases are one of the most effective measures to reduce tobacco consumption, but are usually believed to be regressive, taxing the poor proportionally more than the rich. This paper estimates the tobacco price elasticity of demand for Moldova by income decile and undertakes an extended cost-benefit analysis to estimate the distributional effect of a rise in tobacco taxes on income distribution. The paper’s main findings are that a tobacco price increase would generate a rise in expenditure deriving from direct tobacco price increases, but will reduce the costs of out of-pocket medical expenses. Based on these two factors, the net effect of a tobacco tax increase will be progressive in the analyzed cases, ultimately benefitting the incomes of the lower-income groups in the population.
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Working Paper (Numbered Series) 125620 FEB 01, 2018
This paper uses 1–2–3 survey data on the Democratic Republic of Congo to analyze heterogeneity in the informal sector. It empirically identifies three types of entrepreneurs in the sector.
... See More + The first group of entrepreneurs, top performers, is growth oriented and enjoys greater access to capital. The second group, constrained gazelles, includes entrepreneurs who share many characteristics, especially management skills, with the top performers, but operate with less capital. The third group, survivalists, comprises firms struggling to grow. Based on logit and fixed effect ordinary least squares models, the results presented in this paper show that poverty and income inequality are more common among constrained gazelles and survivalists. The paper also shows that income inequality is explained mainly by educational disparities and lack of credit access among entrepreneurs. Additionally, the outcomes of a Blinder-Oaxaca decomposition show that the performance of firms is a key factor in explaining differences in income. Examining the drivers of performance, the paper finds that human capital and managerial skills are important engines of performance.
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Working Paper (Numbered Series) 125621 FEB 01, 2018
The effects of urban transport policies on household welfare are a broadly understudied topic in developing countries. This paper analyzes the distributional effects of a newly established bus rapid transit system in Barranquilla, Colombia.
... See More + The paper uses pooled cross-sectional household survey data, analyzed by block, over 2008–15 and a difference-in-differences approach. The analysis shows that, in proximity to newly opened stations, poor households were replaced by households in the middle and upper socioeconomic strata. These results suggest that the designers of the system, despite the generally positive assessment of the system, may have overlooked the distributional consequences. Moreover, the paper shows that any results on outcomes that may be directly affected by the related policy will be biased due to urban displacement.
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Working Paper (Numbered Series) 125624 FEB 01, 2018
