This report presents an overview of current trends in tax policy, tax administration, and international taxation and provides a broad landscape of practical examples drawn from World Bank operations across global practices over the past several decades.
... See More + As a starting point for a more comprehensive research agenda, it is intended to play two roles: to provide guidance to World Bank staff working on related tax issues and to trigger a wider external dialogue through a forthcoming flagship report addressing strategic aspects of taxation in greater depth. This report analyzes the status of government revenues and identifies policy and administrative steps that may help to mobilize domestic resources in low- and middle-income countries (LMICs) with a view to helping to frame the strategic position of the World Bank at this particular time. The suggestions are meant to support the role of the Bank in the context of the Addis tax initiative and the sustainable development goals 2030 as well as to facilitate the collection of tax and nontax revenue in order to provide LMICs with a stable and predictable fiscal environment.
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The Palestinian people face an increasingly uncertain political environment, and an economy that is failing to generate the jobs and incomes that are needed to improve living standards.
... See More + The Palestinian economy can only reach its full potential after a resolution on final status is reached, yet there is much more that can be done now to increase growth and improve the situation of the Palestinian people. The main body of the report is organized in two chapters with two supporting annexes. Chapter one focuses on recent economic developments in the real, fiscal and banking sectors, while providing a near term outlook that highlights critical challenges facing the Palestinian economy. Chapter two discusses key challenges in the energy sector with critical messages for GoI, and the PA on steps to create an environment conducive to the needed private sector investment in the sector. Annex one assesses the status of the World Bank recommendations to the AHLC meeting over the years. This section is a follow up to the stock take in the September 2016 report to the AHLC, and will be a standard feature of our future reports. In annex two there is an update on the disbursement of pledges made at the Cairo conference in October 2014 on reconstructing Gaza.
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It has long been recognized that household decision-making may not result in outcomes consistent with the unitary household model. Within the collective bargaining framework, consumption decisions would be driven by the spouse with greater bargaining power, while the outcomes would still be Pareto efficient.
... See More + Within the non-cooperative framework, households would not achieve Pareto efficient outcomes, and under the simplest representation, bargaining power would not affect consumption decisions. This paper develops a model that allows consumption patterns and labor supply to be affected by both bargaining power and non-cooperation. The model highlights the potential gains from improving bargaining power versus increasing cooperation between spouses, and presents conditions under which relatively large gains would be expected from moving to more equitable bargaining power versus achieving intra-household cooperation. The model's predictions are in turn tested using a unique panel data set on married couples in rural Malawi. The analysis shows that, relative to increasing wives' bargaining power, improving cooperation between spouses would exert larger and statistically significant positive impacts on total household income and consumption expenditures per capita, as well as the share of household consumption devoted to public goods. Supported also by cross-country qualitative research, the results suggest that household public goods are relatively important to both women and men in rural Malawi, husbands' capacity to control wives' incomes is relatively limited, and development programs that promote intra-household cooperation could lead to greater gains in income and household public goods provision compared with interventions focusing exclusively on women's empowerment.
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Policy Research Working Paper WPS8043 APR 26, 2017
Ratings for the Income Support and Employability Project for El Salvador were as follows: outcomes were satisfactory, the risk to development outcome was substantial, the Bank performance was satisfactory, and the Borrower performance was also satisfactory.
... See More + Some lessons learned included: designing and implementing a program in contexts of high levels of violence and criminality requires a great ownership by local actors because of their knowledge of the territory, the stakeholders, and the potential risks involved so that they can be ameliorated. The implementing agency successfully enhanced ownership by municipalities as trusted stakeholders in the community and also implement security protocols to ensure the safety of the participants, all of which add complexity to the intervention. In the case of PATI, the knowledge of the municipalities of its own territories was key to manage the risks, in addition to working closely with community leaders and the police. To develop a social protection system, it is critical to establish a strong inter-sectoral coordinating unit with normative mandate and operational and budgetary incidence. The STPP had enough political and technical leverage to (a) coordinate and general inter-sectoral consensus; (b) follow up the implementation of social protection programs and evaluate their impact; and (c) guarantee the financial resources from the Central Government to implement the system. These important elements were also regulated by the SPD Law and its regulation. In the project, the regulatory package accompanying the SPD Law came two years later, limiting the role of the law as an indicator of achievement. Similar operations should ensure that legal indicators include specific mention to both general and specific normative instruments to ensure the objective is achieved.
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Implementation Completion and Results Report ICR3976 FEB 22, 2017
To estimate the impact of weather on rural income changes over time, this study combines data from the panel subsample of the latest Vietnam Household Living Standard Surveys 2010, 2012, and 2014 and gridded weather data from the Climate Research Unit.
... See More + The analyses show: (i) crop cultivation, livestock management, forestry and fishing activities, and agricultural wages remain important income sources in rural Vietnam—especially for poorer households; (ii) rural communes are exposed to substantial inter- and intra-annual weather variation, as measured by annual, seasonal, abnormal, and extreme weather conditions and weather events; and (iii) these types of weather variation are indeed related to income variation. In particular, warmer temperatures and heat extremes can have negative income effects in all climate contexts and for all socioeconomic groups and most income activities. Only staple crops, forestry, and fishing seem to be less sensitive to hotter conditions. The effects of rainfall are more difficult to generalize. Some findings indicate that more rainfall is beneficial in drier places but harmful in wetter places. Interestingly, the incomes of poorer households seem to be negatively affected by wetter conditions, while those of wealthier households are more impacted by drier conditions. An increase in rainfall levels and flood conditions between 2012 and 2014, which were relatively wet years, is related to reduced income growth between these two years. Altogether these findings suggests that greater attention has to be paid to making rural livelihoods more resilient to weather variation which, is very likely to increase because of climate change.
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Policy Research Working Paper WPS7764 JUL 25, 2016
Household income surveys often fail to capture top incomes which leads to an underestimation of income inequality. A popular solution is to combine the household survey with data from income tax records, which has been found to result in significant upward corrections of inequality estimates.
... See More + Unfortunately, tax records are unavailable in many countries, including most of the developing world. In the absence of data from tax records, this study explores the feasibility of using data on house prices to estimate the top tail of the income distribution. In an application to Egypt, where estimates of inequality based on household surveys alone are low by international standards, the study finds strong evidence that inequality is indeed being underestimated by a considerable margin. The Gini index for urban Egypt is found to increase from 36 to 47 after correcting for the missing top tail.
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Policy Research Working Paper WPS7727 JUN 22, 2016
Van Der Weide,Roy; Lakner,Christoph; Ianchovichina,ElenaDisclosed
Is there a “middle-income trap”? Theory suggests that the determinants of growth at low and high income levels may be different. If countries struggle to transition from growth strategies that are effective at low income levels to growth strategies that are effective at high income levels, they may stagnate at some middle income level; this phenomenon can be thought of as a “middle-income trap.”
... See More + Defining income levels based on per capita gross domestic product relative to the United States, we do not find evidence for (unusual) stagnation at any particular middle income level. However, we do find evidence that the determinants of growth at low and high income levels differ. These findings suggest a mixed conclusion: middle-income countries may need to change growth strategies in order to transition smoothly to high income growth strategies, but this can be done smoothly and does not imply the existence of a middle-income trap.
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Journal Article 113004 MAY 01, 2016
J. Bulman,David; Eden,Maya; Nguyen,Ha MinhDisclosed
This paper examines the earnings premiums associated with different types of employment in 73 countries. Workers are divided into four categories: non-professional own-account workers, employers and own-account professionals, informal wage employees, and formal wage employees.
... See More + Approximately half of the workers in low-income countries are non-professional own-account workers and the majority of the rest are informal employees. Fewer than 10 percent are formal employees, and only 2 percent of workers in low-income countries are employers or own-account professionals. As per capita gross domestic product increases, there are large net shifts from non-professional own-account work into formal wage employment. Across all regions and income levels, non-professional own-account workers and informal wage employees face an earnings penalty compared with formal wage employees. But in low-income countries this earnings penalty is small, and non-professional own-account workers earn a positive premium relative to all wage employees. Earnings penalties for non-professional own-account workers tend to increase with gross domestic product and are largest for female workers in high-income countries. Men earn greater premiums than women for being employers or own-account professionals. These results are consistent with compensating wage differentials and firm quasi-rents playing important roles in explaining cross-country variation in earnings penalties, and raise questions about the extent to which the unskilled self-employed are rationed out of formal wage work in low-income countries.
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Policy Research Working Paper WPS7530 JAN 07, 2016
The development objective of the Medium Cities Development Project for Vietnam is to increase access to improved urban infrastructure services in three selected medium sized cities, Lao Cai, Phu Ly, and Vinh, in a sustainable and efficient manner.
... See More + Some of the negative impacts and mitigation measures include: (1) cash compensation for crops and trees at replacement cost; (2) cash compensation for land at: (i) 100 percent of replacement cost of the land acquired to the legal and legalizable users; and (ii) support by cash equivalent to the remaining values invested in such lands, or equivalent to 50 percent of replacement costs of land to the users having no legal land use rights; (3) compensation at 100 percent of replacement cost of the affected houses and structures; (4) compensation for loss of income during transition period, equivalent average monthly net income at least for six months; and (5) the minimum support will be two times of agricultural land price for the whole acquired area (the land for annual tree only); and in case, households need a vocational training, they will be admitted to a vocational center in the province and are exempted from tuition fees for such training course (including level of primary, secondary training, and vocational college) for those in the working age (not applicable for those who enroll for a vocational training outside the province.
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The World Bank Group (WBG) Country Partnership Framework (CPF) for Egypt for FY15-19 has been prepared at an important juncture in Egypt’s history to support transformational changes to the economic and social space.
... See More + It builds on the Government of Egypt’s (GOE) medium-term strategy and national priorities for economic development, responds to client demands, and is informed by consultations with a broad array of stakeholders in Egypt. At the same time, the CPF proposes selective interventions in line with the development priorities of the Systematic Country Diagnostic (SCD) for Egypt, and draws on the WBG’s comparative advantage. This program will also seek to implement the new MENA Regional strategy, especially the pillars on renewing the social contract, supporting economic recovery, and promoting regional cooperation. The CPF supports a transformative program to renew the social contract to support private sector job creation, social inclusion, and enhanced governance. The WBG is moving towards more than doubling its lending program compared to the recent past, to a total of about $8 billion over FY15-19, of which an indicative amount of about $6 billion is requested by the authorities to come from IBRD and about $2 billion from IFC. The actual volume and pace of IBRD lending will dependon the implementation of the program, including the ability to address macroeconomic risks, choice of instruments and economic performance in the course of the CPF period, continued Government interest in IBRD financing, and on IBRD’s lending capacity and demands from other borrowers. Similarly, the actual investments by IFC and guarantees by MIGA during the CPF period will depend on improvements in macroeconomic stability and progress in investmentclimate reforms that would boost investor confidence and facilitate greater private sector participation.
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On October 9, 2015, International Bank for Reconstruction and Development (IBRD) Board of Governors adopted resolution number six hundred and forty-five.
... See More + It was resolved that: (i) the report of the Executive Directors dated August 6, 2015 on allocation of FY15 net income is noted with approval; (ii) the addition to the General Reserve of the IBRD of 36 million dollars, plus or minus any rounding amount less than 1 million dollar, is noted with approval; and (iii) the IBRD transfers to the International Development Association, by way of a grant out of the FY15 allocable net income of the IBRD, 650 million dollars, which amount may be used by the Association to provide financing in the form of grants in addition to loans; such transfer is to be drawn down by the Association immediately upon approval by the Board of Governors of the IBRD.
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Wage inequality decreased significantly in the Russian Federation over the 2000s. The economic expansion experienced throughout the decade led to an improvement in social indicators, with a large reduction in poverty rates and an increase in higher education.
... See More + In this context, wage inequality showed a sharp decline, with the Gini index on labor income decreasing by 18 percent between 2002 and 2012. Using data from the Russian Longitudinal Monitoring Survey, this paper documents the reduction in wage inequality and explores potential factors behind the trend. The analysis uses a decomposition technique proposed by Fortin, Lemieux, and Firpo (2011) to disentangle the main drivers behind changes in the wage distribution. The results suggest that wage structure effects are more important than composition effects for explaining changes in wage inequality. Institutional factors, such as minimum wage policies and changes in the returns to employment in different sectors and types of firms as well as the reduction of the skill premium, emerge as the most relevant factors for explaining changes in the wage structure.
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Policy Research Working Paper WPS7392 AUG 13, 2015
This newsletter includes the following headings: international comparison program (ICP) in the media; ICP workshops; publications; 46th United Nations Statistical Commission (UNSC) session; and ICP video tutorials.
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Over the past decade (2003-12), Latin America has experienced strong income growth and a notable reduction in income inequality, with the region's Gini coefficient falling from 55.6 to 51.8.
... See More + Previous studies have warned about the sustainability of such a decline, and this paper presents evidence of stagnation in the pace of reduction of income inequality in Latin America since 2010. This phenomenon of stagnation is robust to different measures of inequality and is largely attributable to the impact of the Global Financial Crisis on Mexico and Central America, where inequality rose after 2010 as labor income recovered. Moreover, this paper finds evidence that much of the continuation of inequality reduction after the crisis at the country level has been due to negative or zero income growth for households in the top of the income distribution, and lower growth of the incomes of the poorest households. The crisis also highlighted weaknesses in the region's labor markets and the heavy reliance on public transfers to redistribute, underscoring the vulnerability of the region's recent social gains to global economic conditions.
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Policy Research Working Paper WPS7146 DEC 01, 2014
This review examines the implementation of the FY2009-12 country partnership strategy (CPS) of FY2009 and the CPS progress report (CPSPR) of FY2011, and assesses the CPS completion report (CPSCR).
... See More + The CPS was implemented by International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA) and this review covers their program. The Banks CPS consisted of three pillars. Pillar one, promoting good governance and public sector capacity, through reduced and better-managed liabilities, strengthened management of public resources at central and local levels, and strengthened public administration regulatory and oversight role. Pillar two, improving competitiveness and the investment climate for private sector-led growth, through improved business climate and improved access to and quality of key economic infrastructure services. Pillar three strengthening human capital and social inclusion through better positioning of the education and technical and vocational education and training (TVET) sectors to meet the needs of the labor market and improved targeting of public expenditures and specific programs. The CPSCR draws a number of lessons to be heeded in the next CPS. These lessons include: (a) the results matrix needs to be aligned only with outcomes of projects in the portfolio, and not with outcomes dependent on external factors; (b) the Bank can assist Cape Verde in facilitating South-South exchanges on sector reforms and on the provision of guidance to low-income countries; and (c) stronger institutional capacity building will be necessary to strengthen the sector ministries, particularly in the collection, evaluation, and dissemination of the data needed to monitor projects and programs. Independent evaluation group (IEG) finds that the value of a candid assessment of risk to development outcomes during the implementation status report and CPSPR processes can enable mid-course correction and provide more solid ground to assess the likelihood and sustainability of achievements.
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The objective of the Telangana Rural Inclusive Growth Project of India is to enable selected poor households to enhance agricultural incomes and secure increased access to human development services and social entitlements.
... See More + The project is composed of five components. The objective of the Value Chain Development component is to increase the income of 250,000 small and marginal farmers by at least 50 percent through productivity enhancement and improved market access. The second component is Human Development (US$ 19 million). The vast network of women's groups has the ability to converge both nutrition sensitive and nutrition specific interventions at the village level to reach intended beneficiaries. The Digital Local Government (US$ 13 million) complements the Government of Telangana's efforts to strengthen panchayati raj institutions (PRI), this component aims to improve the coverage and service delivery of social protection entitlements to 500,000 of poorest households. Component four is ICT, TA and Partnerships (US$ 20 million). This component will create an enabling ecosystem for innovation and transformation in delivering good quality last-mile services planned under the components 1, 2 and 3. The final component is Project Implementation Support (US$11 million). The objective of this component is to strengthen the project implementation and will finance dedicated staffing for the project activities, consultancies, training and related material, office equipment, and operational costs.
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Some of the headings included in this issue of the Development Economics Prospects Group (DECPG) daily economic news are as follows: financial markets; high income economies; and developing economies.
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This is a statement by Luis Videgaray Caso, Secretary of Finance and Public Credit at the ninetieth meeting of the Development Committee held on October 11, 2014.
... See More + He discusses that the World Bank Group must help the countries to tackle the challenge of designing, implementing, and evaluating smart policies to help achieve a more equitable income by enhancing productivity widely, through greater investments in human capital, innovation and technology, by strengthening investment climate and access to finance, as well as promoting a better use of production values, and focusing on the transition to value-added sectors. He congratulates the World Bank Group for its great leadership on the green growth agenda, especially during the United Nations general assembly. He also congratulate the Bank for its timely response to the Ebola crisis in Africa; and assure management of unwavering support to its efforts to help solve the situation and encourage the institution to keep focusing its efforts to help address the on-going crisis.
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This is a statement by Mr. Nhlanhla M. Nene, Minister of Finance of South Africa at the ninetieth meeting of the Development Committee held on October 11, 2014.
... See More + He discusses that the outlook of the global economy is particularly important for the World Bank Group's (WBG's) twin goals of ending extreme poverty and boosting shared prosperity, endorsed a year ago by the development committee (DC). He notes that the reorganization of the Bank's structure, with a focus on becoming a knowledge repository particularly in reflection to what policy choices and interventions work; the new country engagement model (CEM), focusing on providing in depth analyses of the key challenges and opportunities in focusing on the bottom 40 percent of respective countries, with the Bank targeting its assistance to where it has a comparative advantage; and enhancing the Bank's lending capacity. He notes to look forward to further engagement with the WBG and the International Monetary Fund (IMF) not only in assisting low-income developing countries (LIDCs) in developing appropriate comprehensive responses to these challenges but also putting in place metrics that assist in tracking progress.
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