This paper investigates the sources of capital misallocation across a group of 11 developing and developed countries. The main findings are (i) technological frictions, namely, adjustment costs and uncertainty, account for only a modest share of observed misallocation, leaving ample scope for other factors; (ii) heterogeneity in firm-level technologies potentially explains between one-quarter and one-half; but (iii) dispersion in markups is much smaller; and (iv) after accounting for these factors, on average, at least 50 percent of misallocation within each of these countries remains unexplained, suggesting a large role for additional, potentially distortionary factors.
... See More + These factors are largely attributable to a component that is correlated with firm size/productivity and one that is essentially permanent to the firm. The paper reports a broad set of moments describing firm-level investment dynamics and detailed parameter estimates on a country-by-country basis, with an eye toward future work in this area.
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Policy Research Working Paper WPS9031 OCT 01, 2019
This policy memo outlines the main points raised and discussed by the representatives ofthe Yemeni private sector in a meeting that was held in Amman on 27th January, 2019.
... See More + Themeeting was a follow up of previous meetings with several private sector bodies and representatives to discuss the formulation of the representative body of the private sector asa cluster. The main aim of the follow up meeting was to officially launch the private sectorcluster and highlight its roles and governance structure to ensure its participation in decisionmaking summarized in the three broad points: engaging the private sector in economic policy-making; enhancing the role of the private sector in humanitarian and development efforts; and engaging the private sector in recovery and reconstruction programs and efforts.
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The purpose of this background note is to give an overview of the literature on output volatility and economic growth, assess output volatility and its impact in São Tomé and Príncipe (STP).
... See More + This note is organized in four sections, besides this introductory part. The second section reviews the literature on the impact of output volatility on economic growth. The third section discusses different measures of volatility, calculating volatility for STP across different periods, and compares them to peer countries. The last section offers some policy recommendations. Output volatility and its relationship with growth have been a hot topic in economic research literature for a long time. There is significant controversy about how economic volatility1 affects economic growth. Although the link between economic growth and volatility is theoretically ambiguous, a negative impact of economic volatility on output growth dominates the empirical literature. This negative relationship also holds with newer and better datasets, advanced econometrics methodologies, and for specific country groups. There are three mains messages in this note. The first one is that volatility affects growth as supported by the literature review and the econometric estimations carried out in this note. The second one is that STP is a volatile country, although volatility of GDP growth and inflation has declined over time and are in line with peers. On the other hand, STP still faces higher volatility on current account balances and net lending and borrowing than its peers. The third message is that, on average, a fifty percent increase in volatility translates into a 25 percent decrease in GDP per capita growth rates. Finally, policy measures aimed at diversifying exports in terms of goods and markets, reduce the reliance on external finance and fiscal rules can help cushion the volatility and reduce its impact.
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Private schools that cater to low-income students are popular with parents seeking alternatives to government schools. But these private schools, which are often owned by local entrepreneurs, may lack the resources and incentives to expand enrollment or improve quality.
... See More + They generally operate in markets where access to credit is limited and where there aren't loan products tailored to their needs. This means that any improvements have to be financed through school fees or their own funds. When donors and investors step in to provide support to private schools, they tend to focus on larger operators with a chain of schools, which typically implies selective funding to a limited number of schools rather than broad support to the schooling market. Is this the best way to support private schools that cater to poor families? Could supporting the entire market, rather than select schools—or chains—lead to more competitive pressure to invest in quality improvements that promote students’ learning? And is a market for loans for private schools sustainable?
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This report contains two chapters: (i) A review of Aid Information Management (AIM) Systems in West Bank and Gaza; and (ii) A proposed Concept Note for a new national AIM system.
... See More + The first chapter assesses the background, operations and status of recent and current AIM Systems, and provides recommendations on how to move forward toward improving AIM for all concerned actors. The second chapter of this report provides the concept note (CN) for the proposed AIM system based on the consultations that took place during the workshop and virtually. The overall objective of the Palestinian Aid Information Management (PalAIM) System Project is to support the effective design and assure the sustainable roll-out and operation of a national aid information management system. The activities per expected output include:(i) activities for output 1: nationally-run aid flows tracking system set up and fully operational; (ii) activities for output 2: nationally-run project and activity (4ws) tracking and mapping system set up and fully operational; (iii) activities for output 3: nationally-run PalAIM analysis, planning and coordination support toolkit set up and fully operational; and (iv) activities for output 4: enhanced capacities of Palestinian Authorities, as well as key users/clients of the system, to implement and assure sustainable operation of an integrated PalAIM system.
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Growth fluctuations exhibit substantial synchronization across countries, which has been viewed as reflecting a global business cycle driven by shocks with worldwide reach, or spillovers resulting from local real and/or financial linkages between countries.
... See More + This paper brings these two perspectives together by analyzing international growth fluctuations in a setting that allows for both global shocks and spatial dependence. Using annual data for 117 countries over 1970-2016, the paper finds that the cross-country dependence of aggregate growth is the combined result of global shocks summarized by a latent common factor and spatial effects accruing through the growth of nearby countries -- with proximity measured by bilateral trade linkages or geographic distance. The latent global factor shows a strong positive correlation with worldwide TFP growth. Countries' exposure to global shocks rises with their openness to trade and the degree of commodity specialization of their economies. Despite its simplicity, the empirical model fits the data well, especially for advanced countries. Ignoring the cross-country dependence of growth, by omitting spatial effects or common shocks (or both) from the analysis, leads to a marked deterioration of the empirical model's in-sample explanatory power and out-of-sample forecasting performance.
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Nepal’s risk of external debt distress remains low. Under the revised IMF/World Bank Debt Sustainability Analysis Framework for Low Income Countries (LIC-DSF), all debt and debt service ratios are projected to remain below relevant indicative threshold values.
... See More + Following a prolonged decline, to 25 percent of GDP in mid-2015, the sum of external and domestic public debt rose to 30 percent of GDP in mid-2018. A further rise in total public debt is projected, to about 35 percent of GDP in the medium term and about 48 percent of GDP in the long term, owing to continuing fiscal and current account deficits, as the authorities implement fiscal federalism and aim to put the economy on a higher growth path. Stress tests suggest that debt burden indicators are vulnerable to growth/exports shocks and natural disasters. This underscores the importance of implementing sound macro-economic policies. Efforts to improve the business climate and competitiveness through high-quality public investment and structural reforms would support growth and expand foreign exchange income streams.
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Comprehensive and is gradually being improved; 12 laws are relevant for water resources management and usage; more legal instruments are under preparation to implement the 2012 Law on Water Resources by MONRE; further instruments are required, but outstanding, from other ministries.
... See More + Highly decentralized responsibilities to local authorities; weak capacities at local institutional levels; some overlaps in tasks between Ministries; coordination between ministries and within ministries between central and local levels within an integrated framework is weak. Water resources assessments are underway but face implementation problems. Development of the master plan on water resources is delayed, resulting in some provinces and sectors preparing their own plans, risking an unintegrated and piecemeal approach. Sector needs to integrate within the recently approved Law on Planning in 2017 that aims to streamline and unify planning. Integrated planning remains a challenge; development of intra-provincial river basin planning remains slow; establishment of river basin organizations (RBO) only limited success; existing RBOs are not fully empowered as they are not state management agencies and are dependent on state budget allocations.
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This paper provides an assessment of the trade performance of Western Balkan (WB) countries with the European Union (EU) countries. The particular focus is on Bosnia and Herzegovina's (BiH) trade potential and an estimation of the effects of the Agreement on Amendment of and Accession to the Central European Free Trade Agreement (CEFTA 2006) using gravity equations.
... See More + The approach taken by Bussière et al. (2005) is used as a base reference to develop the model of BiH trade flows and later on BiH trade potential. Bussière et al. (2005) estimated the potential trade of Central and Eastern European countries using a new measure of trade integration called the trade condition indicator. This indicator is calculated from country-pair specific effects after controlling for the levels of the time-invariant variables, like distance. Fixed effect vector decomposition (FEVD) procedure offers a solution to the problem of estimating time-invariant variables in panel data when at least one variable is correlated with the unobservable unit effect. FEVD is considered as a proper procedure for this application since CEFTA 2006 is considered endogenous and correlated with unobserved unit effect. Applying FEVD it was found that in each WB country imports and exports are below their potential level with the EU. The results suggest that even as BiH moves towards its potential trade levels the trade deficit will remain, albeit at a diminishing level if capacity building for stronger trade policy dialog continues and more opportunities to diversified BiH export are exploit.
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