This paper examines the impact of free trade agreement (FTA) use on import prices. For this analysis, it employs establishment-level import data with information on tariff schemes, that is, the FTA and most-favored-nation schemes used for importing.
... See More + Unlike previous studies, this paper estimates the effects of FTA use on prices by controlling for differences in importing-firm characteristics. There are three main findings. First, the effect of FTA use is overestimated when not controlling for importing firm-related fixed effects. Second, on average, firms' FTA use reduces tariffs by 12 percentage points and raises import prices by 3.6-6.7 percent. Third, in general, a price rise resulting from the costs of complying with rules of origin was not found.
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Policy Research Working Paper WPS8416 APR 19, 2018
The rank-based measures of intergenerational mobility have become increasingly popular in economics literature. Recent evidence shows that rank-based measures are less affected by measurement error and life-cycle bias compared with other standard measures such as intergenerational regression coefficient and intergenerational correlation.
... See More + However, most of the available household surveys suffer from sample truncation, because coresidency is used to define household membership. There is no evidence on how sample truncation affects the rank-based mobility estimates relative to intergenerational regression coefficient and intergenerational correlation. This paper provides evidence on this in the context of intergenerational schooling persistence, using two exceptional surveys from India and Bangladesh that include all children irrespective of residency status. The analysis shows that the measures of relative mobility (slopes) are biased downward in coresident samples, but the average bias in rank correlation is less than half of that in intergenerational regression coefficient, and comparable to that in intergenerational correlation in magnitude. The intercept estimates are biased upward, with the largest bias found in the intercept of the regression used for intergenerational correlation. Truncation bias in rank-based absolute mobility estimates is the lowest in most cases. The results strengthen the case for rank-based measures of intergenerational mobility when working with the standard household surveys.
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Policy Research Working Paper WPS8414 APR 18, 2018
Many development policies, such as placement of infrastructure or local economic development schemes, are "place-based." Such policies are generally intended to stimulate private sector investment and economic growth in the treated place, and as such they are difficult to appraise and evaluate.
... See More + This paper sets out a framework for analyzing the effects of such policies and assessing their social value. It then reviews the literature on place-based policies in the contexts of transport improvements, economic corridors, special economic zones, lagging regions, and urban policies.
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Policy Research Working Paper WPS8410 APR 17, 2018
Governments play a very important role in supporting innovation, managing the disruptive effects of innovation, and ensuring that the benefits of innovation are broadly shared in the long run.
... See More + This paper reviews the literature on market mechanisms that translate innovation into jobs and policies that are needed to improve outcomes. Although many countries now recognize the importance of modifying fiscal redistribution and insurance mechanisms to deal with the challenges of the digitization age, no country has yet done so feasibly. Developing country governments, having lower institutional capacity and usually fewer resources, will likely find it even more difficult to manage these changes. Global production patterns are likely to continue shifting. These shifts will depend on a combination of factors: the direction of technological change, trade agreements, global demand patterns, policies, and endowment shifts. Developing countries may not follow the same structural route of the past, through manufacturing, to higher income, but with appropriate investments, they can develop high-productivity service sectors. The policies that are needed to harness the benefits of digitization span a wide range of sectors: finance, competition policy, public support to innovation, fiscal and regulatory incentives for innovation, macroeconomic frameworks supporting demand growth, public support to education and reskilling, infrastructure provision for the digitization age, and sustainable fiscal insurance and redistribution systems. Finally, a lot more research needs to be done to understand how the gig economy affects the welfare of workers of different types, its macro effects, and how digitization interacts with an aging or shrinking labor force in the growth process.
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Policy Research Working Paper WPS8406 APR 16, 2018
Mitigation of greenhouse gases in the land sector is complex and has a unique set of challenges. The most significant challenges arise from the geographically diffuse nature of the emissions sources (compared to, for example, point-based energy sources of emissions), the vast array of potential management responses, the ongoing effects of past actions, the interaction of human and natural processes, and the strong influences of policy and markets.
... See More + These factors result in a large number and diversity of actors involved, temporal variability in emissions sources and volumes, and higher uncertainty associated with the processes generating the emission reductions. Because of this, achieving large-scale mitigation in the land sector requires collective action involving multiple stakeholders undertaking different activities. This paper synthesizes several lessons learned in efforts to develop systems that integrate incentive mechanisms at multiple scales. It illustrates many lessons through examples and the appendix presents individual case studies from a variety of geographies, Acre (state in Brazil), Australia, Brazil (Amazon), the Democratic Republic of Congo (DRC), Guatemala, and Zambia. The hope is that the experiences of emerging ‘nested’ systems can provide inspiration to countries developing REDD systems, particularly those which seek to catalyze across a landscape local actions that contribute to national mitigation. The objective of this paper is to share a few lessons from nested systems. While there are many positive benefits to nesting, experience suggests that countries struggle with development of nested systems. Very few have been operationalized (with exception to a few developed countries, such as Australia and New Zealand), although several REDD nested systems are now emerging. Section two explores four high-level ‘typologies’ that countries may consider when developing a nested system. Section three summarizes three key technical challenges that countries face: alignment of measurement systems, reference levels, and double counting. Both sections illustrate options using real-world examples from countries pioneering nested approaches and explain why certain choices were made. The paper concludes with thoughts on overall lessons learned, recognizing that the journey is still young.
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Mitigation of greenhouse gases in the land sector is complex and has a unique set of challenges. The most significant challenges arise from the geographically diffuse nature of the emissions sources (compared to, for example, point-based energy sources of emissions), the vast array of potential management responses, the ongoing effects of past actions, the interaction of human and natural processes, and the strong influences of policy and markets.
... See More + These factors result in a large number and diversity of actors involved, temporal variability in emissions sources and volumes, and higher uncertainty associated with the processes generating the emission reductions. Because of this, achieving large-scale mitigation in the land sector requires collective action involving multiple stakeholders undertaking different activities. This paper synthesizes several lessons learned in efforts to develop systems that integrate incentive mechanisms at multiple scales. It illustrates many lessons through examples and the appendix presents individual case studies from a variety of geographies, Acre (state in Brazil), Australia, Brazil (Amazon), the Democratic Republic of Congo (DRC), Guatemala, and Zambia. The hope is that the experiences of emerging ‘nested’ systems can provide inspiration to countries developing REDD systems, particularly those which seek to catalyze across a landscape local actions that contribute to national mitigation. The objective of this paper is to share a few lessons from nested systems. While there are many positive benefits to nesting, experience suggests that countries struggle with development of nested systems. Very few have been operationalized (with exception to a few developed countries, such as Australia and New Zealand), although several REDD nested systems are now emerging. Section two explores four high-level ‘typologies’ that countries may consider when developing a nested system. Section three summarizes three key technical challenges that countries face: alignment of measurement systems, reference levels, and double counting. Both sections illustrate options using real-world examples from countries pioneering nested approaches and explain why certain choices were made. The paper concludes with thoughts on overall lessons learned, recognizing that the journey is still young.
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The basic economic model of labor supply has a very clear prediction of what should be expected when an adult receives an unexpected cash windfall: they should work less and earn less.
... See More + This intuition underlies concerns that many types of cash transfers, ranging from government benefits to migrant remittances, will undermine work ethics and make recipients lazy. This paper discusses a range of additional channels to this simple labor-leisure trade-off that can make this intuition misleading in low- and middle-income countries, including missing markets, price effects from conditions attached to transfers, and dynamic and general equilibrium effects. The paper uses this as a lens through which to examine the evidence on the adult labor market impacts of a wide range of cash transfer programs: government transfers, charitable giving and humanitarian transfers, remittances, cash assistance for job search, cash transfers for business start-up, and bundled interventions. Overall, cash transfers that are made without an explicit employment focus (such as conditional and unconditional cash transfers and remittances) tend to result in little to no change in adult labor. The main exceptions are transfers to the elderly and some refugees, who reduce work. In contrast, transfers made for job search assistance or business start-up tend to increase adult labor supply and earnings, with the likely main channels being the alleviation of liquidity and risk constraints.
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Policy Research Working Paper WPS8404 APR 12, 2018
This paper uses issuance-level data to study how equity capital inflows that enter emerging market economies affect equity issuance and corporate investment.
... See More + It shows that foreign inflows are strongly correlated with country-level issuance. The relation reflects the behavior of large issuers issuing in domestic equity markets and that of firms issuing in international markets. Those larger, more liquid, and highly valued firms are the ones more likely to raise equity when their country receives capital inflows. To identify supply-side shocks, capital inflows into each country are instrumented with exogenous changes in other countries' attractiveness to foreign investors. Shifts in the supply of foreign capital are important drivers of increased equity inflows. Instrumented inflows lead a subset of firms (large domestic issuers and foreign issuers) to raise new equity, which they use to fund investment. Corporate investment increases between one-tenth and four-tenths the amount of foreign equity capital entering the country.
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Policy Research Working Paper WPS8405 APR 12, 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
Small-scale entrepreneurs are ubiquitous in emerging market economies, yet very few graduate to become larger businesses. This paper asks whether such entrepreneurs aspire to grow and, if so, on which dimensions of the business?
... See More + What factors influence these aspirations, how realistic are they, and do entrepreneurs dynamically update them based on realized outcomes? A unique panel data set of small-scale retailers in Indonesia is used to show that the average business has strong short- and long-term aspirations for growth in shop size, number of employees, number of customers, and sales. Yet, more than 50 percent of the businesses report no aspirations for growth in the next 12 months, and 16 percent fail to imagine an ideal business over the long term. Entrepreneurs with low profits, business skills, and agency beliefs, as well as those who are older, female, and less educated have significantly lower aspirations. Analysis from a year later shows that most entrepreneurs fail to set realistic aspirations at baseline, but significantly adjust their aspirations to realistic levels with realized outcomes. The analysis also shows that baseline aspirations are a strong predictor of measures of business expansion and innovation, as well as performance outcomes a year later.
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Policy Research Working Paper WPS8400 APR 11, 2018
Returns to investment in education based on human capital theory have been estimated systematically since the 1950s. In the 60-plus year history of such estimates, there have been several compilations in the literature.
... See More + This paper reviews and highlights the latest trends and patterns based on a database of 1,120 estimates in 139 countries. The review shows that the private average global rate of return to one extra year of schooling is about 9 percent a year and very stable over decades. Private returns to higher education have increased over time, raising issues of financing and equity. Social returns to schooling remain high, above 10 percent at the secondary and higher education levels. Women continue to experience higher average rates of return to schooling, showing that girls' education remains a priority. Returns are higher in low-income countries. Those employed in the private sector of the economy enjoy higher returns than those in the public sector, lending support to the productive value of education.
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Policy Research Working Paper WPS8402 APR 11, 2018
There is an increasingly stronger demand for more frequent and accurate poverty estimates, despite the oftentimes unavailable household consumption data.
... See More + This paper offers a review of alternative imputation methods that have been employed to provide poverty estimates in such contexts. These range from estimates on a nonmonetary basis, estimates for specific project targeting or tracking trends at the national level, to estimates at a more disaggregated level, as well as estimates of poverty dynamics. The paper provides a concise and accessible synthesis, which serves as an introduction to the literature. The focus is on intuition and practical insights that highlight the nuanced differences between the existing methods rather than technical aspects.
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Policy Research Working Paper WPS8403 APR 11, 2018
The global economy grew faster than expected in 2017, with a broad-based upturn.Growth in developing East Asia and Pacific (EAP) accelerated slightly in 2017, reflecting the favorable global environment.The growth outlook for the region remains favorable.Following stronger than anticipated growth in 2017, China is expected to slow moderately in 2018 as its economy continues to rebalance.Growth in the large ASEAN economies is expected to be robust and relatively stable in 2018.The prospects for the region’s smaller economies are generally favorable, reflecting stronger commodity prices and higher investment.Robust growth has underpinned and will continue to contribute to the region’s success in reducing poverty and economic insecurity.This positive outlook for the region’s economies is subject to two sets of risks.
... See More + First, a more rapid pace of U.S. monetary policy tightening than is currently anticipated could increase volatility and exacerbate vulnerabilities.Second, heightened policy uncertainty could dim the prospects for global growth.Developing EAP countries will need to be prepared to address the risks associated with monetary tightening in advanced economies and their possible interactions with domestic financial vulnerabilities.In tandem, the prospects of moderating growth across the region in the medium term mean that countries will need to find ways of raising their long-term potential growth.With the threats to the continued openness of the global trading system, it is advisable for developing EAP to continue enhancing trade facilitation and integration.Improving competitiveness will also be important as developing EAP countries adjust to the ongoing changes in the manufacturing landscape.Increasing the contribution of education to economic growth will require increasing the effectiveness of schools and education systems. This will require action in the following five main domains so as to raise learning outcomes and the quality of human capital: (a) aligning institutions and creating sound administrative systems to ensure basic conditions for learning; (b) concentrating equitable public spending on primary education; (c) increasing teaching accountability, raising selectivity in recruitment, and providing adequate pay and career prospects; (d) providing a key package of services (for example, health coverage for children of preschool age) that can help ensure children’s physical and cognitive development, thus raising readiness to learn; and (e) adopting a systemic approach to assessment and using feedback to inform instruction.As technologies continue to evolve, including with greater automation, more emphasis will be needed on upgrading capabilities and ensuring that workers and managers have the necessary skills.To provide economic security, more focus will be needed on strengthening social assistance and insurance programs and on increasing resilience to systemic shocks.Pacific Island Countries (PICs) need to focus on maintaining fiscal sustainability and enhancing their economic resilience.
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This report contains the World Bank Group Boards' calendar for the period of April 2018 to June 2018, specifying the Boards' engagements, such as meetings and briefings.
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