January–March 1998
Volume 9, Number 1Publications and Data
For information on how to order the World Bank publications reviewed in this issue, see page 16.
Books
Income, Inequality, and Poverty during the Transition from Planned to Market Economy
Branko Milanovic
Regional and Sectoral StudyThe collapse of Communism proved to be an epoch of great turmoil. The period witnessed dramatic declines in income, growing poverty and unemployment, and great uncertainty. But it also saw the making of great fortunes, the introduction of consumer goods of incomparably better quality, and new opportunities for people to control and alter their lives.
This book studies income, inequality, and poverty during this remarkable period in 18 formerly socialist countries—from the Czech Republic in the west to Russia and Kazakhstan in the east. It examines what has happened to people's real incomes, to the distribution of incomes and expenditures among the population, and to poverty. It then explores the reasons for the changes it finds.
Tax Reform in Developing Countries
Wayne Thirsk, editor
Regional and Sectoral StudyFacing growing demands to suggest and sometimes to supervise desirable tax reforms in developing countries, the World Bank launched a project several years ago to study the experiences of developing countries that had initiated radical tax reform during the 1970s. The project was aimed at obtaining a better understanding of how developing countries could improve the performance of their tax systems.
This book presents the findings of that project. It examines the experience of eight developing countries that have undergone or are still undergoing comprehensive tax reform—Bolivia, Colombia, Indonesia, Jamaica, the Republic of Korea, Mexico, Morocco, and Turkey. It draws lessons from their experiences and analyzes how they might be applied in other countries on the road to tax reform. Throughout, the book focuses on the practical rather than the theoretical aspects of tax reform.
Urban Public Finance in Developing Countries
Roy W. Bahl and Johannes F. Linn
Published by Oxford University PressAs the problem of urban growth took on national significance in most developing countries, this book, first published in 1992 and now reissued, provided extensive research on urban public finance. It examines taxation by local governments, explores user charges for urban services, and looks at intergovernmental fiscal relations. It systematically identifies and analyzes the problems with urban finance in developing countries, and evaluates options for policy and reform. An important resource for the study of public finance, this book remains one of the most comprehensive reviews of municipal finance in developing countries.
The articles summarized below appear in the January issue of the World Bank Economic Review, vol. 12, no. 1.Does Mercosur's Trade Performance Raise Concerns about the Effects of Regional Trade Arrangements?
Alexander J. YeatsThis article uses a new methodological approach that measures production efficiency in changing trade patterns. It shows that the most rapidly growing products in Mercosur's intratrade generally are goods in which members do not have a comparative advantage and have not been able to export competitively to outside markets—a finding consistent with substantial trade diversion.
A Panel Data Analysis of the Fungibility of Foreign Aid
Tarhan Feyzioglu, Vinaya Swaroop, and Min ZhuThis article examines the link between aid and the recipient's public spending using cross-country samples of annual observations for 1971–90. Results show that most aid is fungible: governments receiving aid for agriculture, education, and energy reduce their own resources to these sectors for use elsewhere; only aid for transport and communications is fully used as donors intended.
Technological Capability and Firm Efficiency in Taiwan (China)
Bee Yan Aw and Geeta BatraUsing micro data from Taiwan (China), this article estimates the correlations of a manufacturing firm's efficiency both with investments in training and research and development (R&D) and with international linkages. It finds that efficiency is positively correlated with the firm's training and R&D investments and its informal contacts with foreign purchasers through export sales.
Skills, Schooling, and Household Income in Ghana
Dean JolliffeThis article examines the effect of cognitive skills on household income in Ghana. It uses scores on mathematics and English tests to measure cognitive skills and estimates the returns to these skills based on farm profit, off-farm income, and total income. The results show that cognitive skills have a positive effect on total and off-farm income but no statistically significant effect on farm income.
The Tragedy of the Commons in Côte d'Ivoire Agriculture: Empirical Evidence and Implications for Evaluating Trade Policies
Ram—n L—pezThis article uses a theoretical model and 1985Ð87 data to determine the land cultivation level that maximizes village income in Côte d'Ivoire, where much of the land is common property. It shows that farmers do not internalize the social cost of biomass in land allocation decisions, leading to large village income losses.
Economic Parameters of Deforestation
Joachim von AmsbergThis article provides an analytical framework for determining the effects of changes in economic policies and parameters on deforestation. The results suggest that measures to reduce the producer price of logs could be a second-best policy to reduce the pressures on the frontiers of unmanaged forests and to protect biodiversity.
Why Has Poland Avoided the Price Liberalization Trap? The Case of the Hog-Pork Sector
Anning Wei, Waldemar Guba, and Richard Burcroff IIAgrifood price liberalization in transition economies tends to slip into a trap: food prices rocket, but supply fails to catch up. In Poland's hog-pork sector, however, the restructuring of state enterprises and emergence of private firms introduced an effective price transmission mechanism between processing and retail and the farm level, enabling supply to respond to price changes.
The articles summarized below appear in the February issue of the World Bank Research Observer, vol. 13, no. 1.The Domestic Benefits of Tropical Forests: A Critical Review
Kenneth M. Chomitz and Kanta KumariThis article argues that the quantifiable benefits of forest preservation in providing hydrological services and nontimber forest products are highly variable. Locally important in some situations, these classes of domestic benefits may in general be smaller than popularly supposed. This underscores the need for financing conservation from global sources rather than from solely domestic sources.
Deforestation and Forest Land Use: A Comment
Jeffrey R. Vincent and Malcolm GillisAccording to this comment, William F. Hyde and his coauthors (vol. 11, no. 2) argue that market responses limit the scope of deforestation. But, it asserts, they fail to recognize that land markets will not develop efficiently, nor will efficient levels of forestry investments occur, when policy distortions and other factors obstruct the conversion of open-access forest to private or communal ownership. For these reasons deforestation can be far above optimal levels.
Deforestation and Forest Land Use: A Reply
William F. HydeThe author asserts that market responses limit the extent of deforestation because, as deforestation proceeds, increasing resource scarcity induces rising prices, which in turn induce private investments to satisfy both commercial and subsistence household uses of forest resources. As a result, deforestation proceeds to the geographic points where the costs associated with removing the remaining natural stock equal the costs of reforestation on land with enforceable property rights. This means that much natural forest is not endangered, and broad policy interventions designed as general protection against world deforestation are not well advised.
Creating a Legal Framework for Economic Development
Richard A. PosnerA modernizing nation's economic prosperity requires at least a modest legal infrastructure centered on protecting property and contract rights. The essential legal reform to create that infrastructure may be the adoption of relatively precise legal rules, as distinct from more open-ended standards or a heavy investment in upgrading the judiciary.
How Bad Is Unemployment in Tunisia? Assessing Labor Market Efficiency in a Developing Country
Martin RamaThis article claims that Tunisia's high unemployment rate reflects measurement problems rather than labor market inefficiency. It explains why unemployment rates may not be comparable across countries and reviews the tools available to analyze unemployment in a specific country.
Why Most Developing Countries Should Not Try New Zealand's Reforms
Allen SchickNew Zealand's model of far-reaching reforms of government agencies has attracted interest in developing countries because of the efficiency gains it promises. But developing countries, dominated by informal markets, are risky candidates for the model. This article suggests starting with basic reforms to strengthen rule-based government and pave the way for robust markets.
Evaluating Retraining Programs in OECD Countries: Lessons Learned
Amit Dar and Indermit S. GillAre retraining programs for the unemployed more effective than job search assistance? Evaluations of OECD retraining programs show disappointing results both for workers laid off en masse and for the long-term unemployed. Retraining programs are generally no more effective than job search assistance in increasing reemployment probabilities or earnings, and are two to four times more expensive.
Poverty in Russia during the Transition: An Overview
Jeni Klugman and Jeanine BraithwaiteThis article draws on several rounds of a household survey in Russia to document the sharp increases in the incidence and severity of poverty during the transition from a planned economy to a far less constrained environment. It finds no evidence that the poor have shared in the emerging economic recovery, and the emergence of a core group of long-term poor appears to be a distinct possibility.
Public Sector Reform in New Zealand and Its Relevance to Developing Countries
Malcolm Bale and Tony DaleDoes New Zealand's success story have lessons for developing countries contemplating public sector reform? This article maintains that poorer countries can extrapolate from the experience of this higher-income country despite the differences in conditions. A careful analysis of New Zealand's reforms can ascertain what might be transferable and what principles might apply.
Discussion, Technical, and Related Papers
Decentralization of Education: Teacher Management
Cathy Gaynor
Directions in Development SeriesMany countries are decentralizing the financing and administration of education to regional, local, or school levels. This report explores what can be learned from international experience in decentralizing teacher management. It examines what has prompted governments to decentralize teacher management, how they have done so, and what decentralization mechanisms have been most effective. The report aims to help guide policymakers in refining strategies that will improve teaching and learning in the classroom.
Dealing with Public Risk in Private Infrastructure
Timothy Irwin
Latin American and Caribbean StudiesMany infrastructure privatizations leave governments—and thus taxpayers—still exposed to significant financial risks. This report examines these risks and considers how governments should respond to investors' requests for guarantees and other forms of government support. It looks at how governments can decide which risks to bear and which to avoid, how they can reduce the risks that private investors face without providing them guarantees, and how they can measure, budget, and account for the risks that they do take on.
Water Markets in the Americas
Larry Simpson and Klas Ringskog
Directions in Development SeriesThis paper summarizes the practice of water markets as an instrument for improving the efficiency of water use. It also examines the evolving legal and institutional frameworks in Brazil, Chile, Mexico, and Spain (Canary Islands) and compares some of the difficulties and successes in these countries.
Policy research Working papers
Working Papers disseminate the findings of work in progress and encourage the exchange of ideas among Bank staff and all others interested in development issues.
Working Papers can be downloaded from the Website http://www.worldbank. org/html/dec/Publications/Workpapers/home.html or requested from the contact person indicated at the Bank's main address.Regulatory Tradeoffs in Designing Concession Contracts for Infrastructure Networks
Claude Crampes and Antonio Estache
WPS 1854 * Contact Antonio Estache, room G2-153, fax 202-676-9874.Stabilization, Adjustment, and Growth Prospects in Transition Economies
Cevdet Denizer
WPS 1855 * Contact Emily Khine, room MC3-341, fax 202-522-3518.Surviving Success: Policy Reform and the Future of Industrial Pollution in China
Susmita Dasgupta, Hua Wang, and David Wheeler
WPS 1856 * Contact Susmita Dasgupta, room MC3-539, fax 202-522-3230.Leasing to Support Small Businesses and Microenterprises
Joselito Gallardo
WPS 1857 * Contact Rozzy Garner, room F6K-292, fax 202-522-3199.Banking on the Poor: Branch Placement and Nonfarm Rural Development in Bangladesh
Martin Ravallion and Quentin Wodon
WPS 1858 * Contact Patricia Sader, room MC3-632, fax 202-522-1153.Lessons from Sao Paulo's Metropolitan Busway Concessions Program
Jorge Rebelo and Pedro Benvenuto
WPS 1859 * Contact Allison Turner, room I9-138, fax 202-676-9594.The Health Effects of Air Pollution in Delhi, India
Maureen L. Cropper, Nathalie B. Simon, Anna Alberini, and P. K. Sharma
WPS 1860 * Contact Anna Marie Maranon, room MC2-533, fax 202-522-3230.Infrastructure Project Finance and Capital Flows: A New Perspective
Mansoor Dailami and Danny Leipziger
WPS 1861 * Contact Mansoor Dailami, room G2-071, fax 202-334-8350.Spatial Poverty Traps?
Jyotsna Jalan and Martin Ravallion
WPS 1862 * Contact Patricia Sader, room MC3-632, fax 202-522-1153.Are the Poor Less Well-Insured? Evidence on Vulnerability to Income Risk in Rural China
Jyotsna Jalan and Martin Ravallion
WPS 1863 * Contact Patricia Sader, room MC3-632, fax 202-522-1153.Child Mortality and Public Spending on Health: How Much Does Money Matter?
Deon Filmer and Lant Pritchett
WPS 1864 * Contact Sheila Fallon, room MC3-638, fax 202-522-1153.Pension Reform in Latin America: Quick Fixes or Sustainable Reform?
Sri-Ram Aiyer
WPS 1865 * Contact Patricia Lee, room I5-011, fax 202-676-1733.Circumstance and Choice: The Role of Initial Conditions and Policies in Transition Economies
Martha de Melo, Cevdet Denizer, Alan Gelb, and Stoyan Tenev
WPS 1866 * Contact Cynthia Bernardo, room MC2-501, fax 202-522-1154.Gender Disparity in South Asia: Comparisons between and within Countries
Deon Filmer, Elizabeth M. King, and Lant Pritchett
WPS 1867 * Contact Sheila Fallon, room MC3-638, fax 202-522-1153.Government Support to Private Infrastructure Projects in Emerging Markets
Mansoor Dailami and Michael Klein
WPS 1868 * Contact Mansoor Dailami, room G2-071, fax 202-334-8350.Risk Reduction and Public Spending
Shantayanan Devarajan and Jeffrey S. Hammer
WPS 1869 * Contact Cynthia Bernardo, room MC2-501, fax 202-522-1154.The Evolution of Poverty and Inequality in Indian Villages
Raji Jayaraman and Peter Lanjouw
WPS 1870 * Contact Peter Lanjouw, room MC3-555, fax 202-522-1153.Just How Big Is Global Production Sharing?
Alexander J. Yeats
WPS 1871 * Contact Lili Tabada, room MC3-333, fax 202-522-1159.Electronic Information and Data
The Internet can be an extremely effective tool in the health sector—for sharing data and the results of practical experience and for creating networks among researchers and policymakers working toward solutions to similar problems. The World Bank has created or provided support to several Websites on health-related topics, including those featured here. Each Website described is the result of World Bank collaboration with other organizations to develop and disseminate general information and data.
ABC for ECD
This Website is a comprehensive knowledge base on early child development designed to assist teachers, project managers, program designers, parents, and government officials in making decisions about health and nutrition programs for children. It presents results from studies of child development and of the effectiveness of different types of early child development programs. It describes practical experience in developing countries in estimating program costs and choosing financing options. And it provides tools for planning and evaluating programs, including indicators of child health and development and of social, economic, political, and demographic conditions that should be taken into account in program planning. The site also provides direct links to 14 related Websites.The site includes a tool for cost-benefit analysis of early child development programs. This downloadable computer model, programmed in Microsoft Excel, allows users to calculate a program's net present value. To perform the calculations, users enter indicators on child health, education outcomes, and the age-earning profile for their country, and information on the program's expected costs and effects.
The Website is a collaborative effort of the World Bank's Human Development Network, the Inter-American Development Bank, the Consultative Group on Early Childhood Care and Development, and Children's House in Cyberspace. Address: http://www.worldbank.org/children
AIDS Economics
This Website has been created to further the understanding of the economics of HIV/AIDS and the implications of these economics for government responses to the epidemic. It is intended to serve as a repository for materials related to this topic and as a forum for policymakers and researchers. It focuses on the economic impact of HIV/AIDS on households, communities, and nations; the appropriate role of government in prevention and mitigation; the nature of government partnerships with such actors as nongovernmental organizations, communities, and donors; and the cost-effectiveness of different interventions.The site features materials relating to the 1997 World Bank Policy Research Report Confronting AIDS: Public Priorities in a Global Epidemic (see the cover story in this issue). It contains a summary of the report's findings and a set of statistical tables showing such indicators as HIV infection rates by subpopulation in developing countries, the classification of countries by stage of the epidemic along with variables that can be related to the spread of HIV, and socially marketed condom sales.
The site includes a searchable bibliography of publications relating to the economics of HIV/AIDS, a newsletter, and a toolkit designed to help project managers consider the implications of the HIV epidemic in development assistance projects. It also includes links to related Websites. Materials continue to be added to the site, including data sets and background papers relating to Confronting AIDS, and interactive tools to support discussion and research.
The Website is a product of collaboration among the World Bank, the European Commission, the U.S. Agency for International Development, and UNAIDS. Address: http://www.worldbank.org/aids-econ
Malaria Database
This Website is an information resource for scientists, teachers, and students interested in malaria research. It contains links to journals, projects, an on-line discussion group, information on malaria conferences, and other malaria and parasitology sites. It provides search engines for nucleotide and protein sequences, chromosome markers for the predominant strain of malaria, and information on malaria strains and antigens. It also includes chromosome maps and a malaria genome database.The Website is supported by the United Nations Development Programme, World Bank, and World Health Organization Special Programme for Research and Training in Tropical Diseases. Address: http://www.wehi.edu.au/resources
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