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Research and Working Papers

This page features publications and working papers by former and current team members of the Middle East and North Africa Chief Economist Office.

The study explores the effects of data transparency on economic growth for developing economies over a unique time period - at the onset of the 2007-2009 global financial crisis and thereafter. Data transparency is defined as the timely production of credible statistics as measured by the Statistical Capacity Indicator. The paper finds that data transparency has a positive effect on real gross domestic product per capita during a period of considerable uncertainty. The estimates indicate an elasticity of the magnitude of 0.03 percent per year, which is much larger than the elasticity of trade openness and schooling in the estimation sample. The empirics employ a variety of econometric estimators, including dynamic panel and cross-sectional instrumental variables estimators, with the latter approach yielding a higher estimated elasticity. The findings are robust to the inclusion of several factors in addition to political institutions and exogenous commodity-price and external debt-financing shocks.

Citation: Islam, Asif Mohammed; Lederman, Daniel. Data Transparency and Growth in Developing Economies during and after the Global Financial Crisis (English). Policy Research working paper,no. WPS 9493 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/947471607543857349/Data-Transparency-and-Growth-in-Developing-Economies-during-and-after-the-Global-Financial-Crisis

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This paper examines the Arab Republic of Egypt's labor market transition dynamics post—Arab Spring based on the two most recent rounds of the Egypt Labor Market Panel Survey conducted in 2012 and 2018. In addition to providing disaggregated-level analysis by examining labor market transitions by gender, education, and age groups, the paper provides a cross-country, cross-regional perspective by comparing Egypt's labor market transitions with Mexico's, relying on data from the Encuesta Nacional de Ocupación y Empleo. To match the span of Mexico's transitions (which are measured over a one-year period) and Egypt's (which are measured over six years), the analysis uses Monte Carlo simulations of repeated discrete-time Markov chains. Based on these results, the Egyptian labor market appears to be highly rigid compared to the Mexican labor market, which instead shows a large degree of dynamism regardless of individual initial labor market states at baseline. Auxiliary regression analyses focusing on transitions to and from the dominant absorbing labor market states in Egypt—public sector employment for both genders, nonparticipation for women, and the informal sector for men—show that having a post-secondary education is associated with a lower probability of remaining out of the labor force for women who were already out of the labor force at baseline, while being married at baseline is found to be a significant predictor for women to stay out of the labor force if they were already so. Among men, the better educated are found to be more likely to secure formal employment, be it in the public or private sector, and are more likely to keep their public formal jobs once they secure them.

Citation: Deng, J., Elmallakh, N., Flabbi, L., & Gatti, R. (2024). Labor market transitions in Egypt post-Arab Spring. Middle East Development Journal16(1), 117–141. https://doi.org/10.1080/17938120.2024.2360849

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Despite a consensus that quality of care is critically deficient in low-income countries, few nationally representative studies provide comparable measures of quality of care across countries. To address this gap, we used nationally representative data from in-person administrations of clinical vignettes to measure the competence of 16 127 health care providers across 11 sub-Saharan African countries. Rather than large variations across countries, we found that 81% of the variation in competence is within countries and the characteristics of health care providers do not explain most of this variation. Professional qualifications—including cadre and education—are only weakly associated with competence: across our sample, one-third of nurses are more competent than the average doctor in the same country and one-quarter of doctors are less competent than the average nurse. Finally, while younger cohorts do tend to be more competent, perhaps reflecting improvements in medical education, it would take 25 decades of turnover to improve care by 10 percentage points, on average, if we were to rely on such improvements alone. These patterns necessitate a fundamentally different approach to health care human resource management, calling into question typical staffing policies based on qualifications and seniority rather than directly measured quality.

Citation: Daniels, B., Yi Chang, A., Gatti, R., & Das, J. (2024). The medical competence of health care providers in sub-Saharan Africa: Evidence from 16 127 providers across 11 countries. Health Affairs Scholar2(6).

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In this paper the authors evaluate the impact of COVID-19 lockdown policies on Tunisia’s supply chains. They estimate a Poisson Pseudo Maximum Likelihood model using data on bilateral imports for intermediate, capital, and final goods for the years 2019 and 2020 at the country–month–product level. Their results show that, overall, lockdowns in Tunisia’s partner countries had a significant and negative effect on imports made under both offshore and onshore regimes. Specifically, they observe a considerable fall in imports of intermediate and final goods under the offshore regime, which primarily involves firms producing goods for export and having a higher level of integration in global value chains. Additionally, all types of imports made under the onshore regime were affected by exporter lockdowns. Their results also reveal a certain heterogeneity related to some specific product and product–country characteristics.

Citation: Medini, A., Baghdadi, L. COVID-19 shock on supply chains: evidence from a developing country. J. Ind. Bus. Econ. (2024). https://doi.org/10.1007/s40812-024-00307-2

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Sub-Saharan Africa has fewer medical workers per capita than any region of the world, and that shortage has been highlighted consistently as a critical constraint to improving health outcomes in the region. This paper draws on newly available, systematic, comparable data from 10 countries in the region to explore the dimensions of this shortage. We find wide variation in human resources performance metrics, both within and across countries. Many facilities are barely staffed, and effective staffing levels fall further when adjusted for health worker absences. However, caseloads—while also varying widely within and across countries—are also low in many settings, suggesting that even within countries, deployment rather than shortages, together with barriers to demand, may be the principal challenges. Beyond raw numbers, we observe significant proportions of health workers with very low levels of clinical knowledge on standard maternal and child health conditions. This study highlights that countries may need to invest broadly in health workforce deployment, improvements in capacity and performance of the health workforce, and on addressing demand constraints, rather than focusing narrowly on increases in staffing numbers.

Citation: Ashley Sheffel, Kathryn G Andrews, Ruben Conner, Laura Di Giorgio, David K Evans, Roberta Gatti, Magnus Lindelow, Jigyasa Sharma, Jakob Svensson, Waly Wane, Anna Welander Tärneberg, Human resource challenges in health systems: evidence from 10 African countries, Health Policy and Planning, 2024;, czae034, https://doi.org/10.1093/heapol/czae034

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A wealth of evidence has shown the positive effects of better management practices on firms. More recent evidence has highlighted that ownership matters for several developing and advanced economies. However, this relationship has not been studied extensively for economies in the Middle East and North Africa (MENA), a region where the presence of the government in the productive sphere looms large. This study addresses a gap in the literature by exploring how partial government ownership can influence management practices of medium and large formal firms in the MENA. Using two waves of Enterprise Surveys undertaken in 2013 and 2019/2020, the evidence points at a negative relationship between partial government ownership and management practices in the developing MENA region. The findings pass several robustness checks.

Citation - Islam, Asif M., and Roberta Gatti. "Management Practices and the Partial Government Ownership of Firms in the Middle East and North Africa Region." (2022).

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This paper examines the role of a country's data transparency in explaining gross domestic product growth forecast errors. It reports four sets of results that have not been previously reported in the existing literature. First, forecast errors—the difference between forecasted and realized gross domestic product growth—are large. Globally, between 2010 and 2020, the average same-year forecast error was 1.3 percentage points for the World Bank's forecasts published in January of each year, and 1.5 percentage points for the International Monetary Fund's January forecasts. Second, the Middle East and North Africa region has the largest forecast errors compared to other regions. Third, data capacity and transparency significantly explain forecast errors. On average, an improvement in a country's Statistical Capacity Index, a measure of data capacity and transparency, is associated with a decline in absolute forecast errors. A one standard deviation increase in the log of the Statistical Capacity Index is associated with a decline in absolute forecast errors by 0.44 percentage point for World Bank forecasts and 0.49 percentage point for International Monetary Fund forecasts. The results are robust to a battery of control variables and robustness checks. Fourth, the role of the overall data ecosystem, not just those elements related to gross domestic product growth forecasting, is important for the accuracy of gross domestic product growth forecasts. Finally, gross domestic product growth forecasts from the World Bank are more accurate and less optimistic than those from the International Monetary Fund and the private sector.

Citation - Gatti, R., Lederman, D., Islam, A. M., Nguyen, H., Lotfi, R., & Mousa, M. E. (2024). Data transparency and GDP growth forecast errors. Journal of International Money and Finance140, 102991.

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Studies have noted that output per worker varies enormously across countries. Using firm-level survey data, the present paper contributes to the related literature by analyzing difference in labor productivity between firms in 22 upper middle-income and 11 high-income countries. Labor productivity in upper-middle-income countries is about 57.5% lower than in high-income countries. The Oaxaca-Blinder decomposition analysis of the productivity gap reveals that the gap is somewhat larger due to differences in the level of contributory factors (endowment effect) than due to differences in the returns to such factors (structural effect). That is, 55.2% of the productivity gap is due to endowment effect and the remaining 44.8% is due to structural effect. The biggest contributors via the endowment effect include tertiary education attainment, law and order, and quality management. Factors that contribute most via the structural effect include secondary education attainment, market size, and law and order. Thus, our results underline the importance of human capital, institutions and market size for the upper middle-income countries aspiring to become high-income countries.

Citation -Amin, Mohammad, Asif M. Islam, and Usman Khalid. "Why Are Firms in High-income Economies More Productive than in Middle-income Economies? Decomposing the Firm Labor Productivity Gap." Studies in Comparative International Development 58.4 (2023): 645-674.

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The benefits of formal training are numerous, and yet in many regions few firms utilize them. This study builds on the literature by exploring how two forms of human capital—the quality of management practices and the proportion of university educated employees—influence the adoption of formal training. Using both cross-sectional and panel firm-level data for 29 economies in Eastern Europe and Central Asia and six economies in the Middle East and North Africa, the study finds that firm management practices are positively correlated with the implementation of formal training in Eastern Europe and Central Asia but not in the Middle East and North Africa. The proportion of university educated workers is positively correlated with formal training in both regions, but the finding is more robust for the Middle East and North Africa. These findings imply significant heterogeneity across regions in the determinants of formal training, suggesting that policies should be context specific.

Citation - Islam, Asif M., and Roberta Gatti. "The human capital of firms and the formal training of workers." IZA Journal of Development and Migration 14.1 (2022).

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This article studies the impact of the COVID-19 pandemic on men's labour supply in the West Bank and Gaza, both on the extensive (participation) and intensive (hours of work) margins. We find that the pandemic was associated with a decline in employment and labour supply in the immediate aftermath of the pandemic, with large adjustments at the intensive margin. Afterwards, labour market indicators quickly bounced back to their pre-pandemic levels, but less so for the most vulnerable segments of the workforce, such as informal workers, workers in blue collar occupations, the least educated, and residents in refugee camps

Citation - Deng, Jingyuan, et al. "Labour market impact of the COVID‐19 pandemic in the West Bank and Gaza." Labour 37.4 (2023): 491-518.

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This article examines fertility and labor supply responses to a 2014 French policy reform that consisted of conditioning the amount of child allowances on household income. Employing regression discontinuity design and French administrative income data, I find that restricting family allowance eligibility criteria decreases fertility among the richest households. The results also highlight that receiving half the amount of the allowances or none leads to an increase in both male and female labor supply through an increase in overtime work. The implied change in earned income, due to an increase in weekly working hours, is found to be comparable to the euro value reduction in benefits. Auxiliary regression analyses show that the fertility decline reflects a decrease in the probability of having an additional child for parents rather than in the probability of becoming parents for households without children.

Citation - Elmallakh, Nelly. "Fertility and Labor Supply Responses to Child Allowances: The Introduction of Means-Tested Benefits in France." Demography 60.5 (2023): 1493-1522.

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This study uncovers a gender labor productivity gap among informal firms in 14 developing economies. The mean labor productivity of women-owned informal firms is approximately 15.6 percent (0.17 log points) lower than that of men-owned informal firms. The difference in productivity is larger at the lower quantiles of the labor productivity distribution than at the higher quantiles. The Kitagawa-Oaxaca-Blinder and quantile decomposition methods are used to estimate the aggregate “endowment” vs “structural” effects, and individual factors’ contribution to the productivity gap. Several policy-relevant findings are revealed. First, the labor productivity gap at the mean is significantly larger due to lower education, prior work experience, capitalization, and less protection from crime among women than men owners of informal firms. The smaller size of the women-owned firms and their higher return from operations under contracts narrow the mean productivity gap. Second, the productivity gap at the mean and different labor productivity quantiles can be substantially narrowed by providing more resources to women owners of informal firms, such as education, managerial experience, and physical capital, without improvements in their returns to women-owned informal businesses. Third, overall, there is evidence of “sticky floors” for women owners, but not “glass ceilings”. Fourth, there is heterogeneity in the contribution of individual factors to the productivity gap at different quantiles of the labor productivity distribution. Targeting policies to the relevant quantiles will improve their effectiveness. Fifth, there are important similarities and differences between groups of countries in low-income Africa, middle-income Africa, and Latin America, as far as the gender labor productivity gap and its drivers are concerned. Thus, an eclectic policy approach is needed, combining the broader findings of the literature with the prevailing local conditions. Last, the data do indicate that a majority of women- and men-owned informal businesses would like to formalize.

Citation -Islam, Asif M., and Mohammad Amin. "The gender labor productivity gap across informal firms." World Development 167 (2023): 106229.

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This paper examines the impact of massive refugee inflows on the mobility patterns of host communities. We rely on panel data from before and after the Syrian war and exploit the geographical distribution of Syrians across Jordanian subdistricts. Using difference in differences, we find that native outflows of the camp-hosting areas increased by 27%. This increased residential mobility out of the camp-hosting areas seems to be triggered by an increase in rents and a crowding out of Jordanian students by Syrians in schools. Our results also show that the Syrian presence increased Jordanians’ job location mobility into the camp areas.

Citation -Elmallakh, Nelly, and Jackline Wahba. "Syrian Refugees and the Migration Dynamics of Jordanians: Moving in or moving out?." Economic Development and Cultural Change 71.4 (2023): 1283-1330.

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Using firm-level survey data for 29,962 manufacturing firms in 141 developing and emerging countries, the impact of exports (as a percentage of sales) on the share of female workers at the firm is estimated. The impact is positive, large, and statistically significant. For the baseline specification, moving from a firm that does not export to one that does all its sales abroad is associated with a 6.6 percentage point increase in the share of female workers. This positive relationship is much stronger when competition in the domestic markets is low, social attitudes and mobility laws are more favorable to women's work outside the home, and the law-and-order situation is better. We argue that these heterogeneities serve as important checks against endogeneity concerns. We also provide results using the average share of exports in a country–industry cell as an instrument. The policy implications of our findings are discussed in detail.

Citation -Amin, Mohammad, and Asif M. Islam. "Export intensity and its effect on women's employment." Kyklos 76.4 (2023): 676-704.

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The authors consider how fears of model misspecification on the part of the planner and/or the households affect welfare gains from optimal macroprudential taxes in an economy with occasionally binding collateral constraints. In this setup, the decentralized equilibrium may differ from the social planner's equilibrium both because of the pecuniary externalities associated with the collateral constraint and because of the paternalistic imposition of the planner's beliefs when designing policy. When robust agents have doubts about the model, they create endogenous worst-case beliefs by assigning a high probability to low-utility events. The ratio of worst-case beliefs of the planner over the household's captures the degree of paternalism. The authors show that this novel channel could render the directions of welfare gains from a policy intervention ambiguous. However, their quantitative results suggest that doubts about the model need to be large to make a “laissez-faire regime” better than an intervention regime.

Citation - Bennett, Federico, Giselle Montamat, and Francisco Roch. "Robust optimal macroprudential policy." Journal of International Economics 141 (2023): 103714.

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This article measures the impact of firms' declaration of Corporate Social Responsibility (CSR) on education and environmental quality. We use 2006 data from the World Bank Enterprise Surveys, the sub-national Human Development Index and the World Health Organization which covers 10 countries in Latin America. We estimate Instrumental Variables regression models. We find that CSR declaration increases the probability of adopting community programs leading to a small, but significant, positive effect on education at the subnational level. Also, CSR declaration has no significant impact on our pollution measure, particulate matter, even when CSR increases the probability of adopting environmental programs.

Citation -Galinato, Gregmar I., Marie Hyland, and Asif M. Islam. "Does corporate social responsibility benefit society? Evidence from Latin America." Emerging Markets Review 53 (2022): 100944.

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This article contributes to better understanding firms’ behavior in the presence of gender discriminatory laws and its linkages with labor market outcomes for women in a developing country setting. Using data collected through the World Bank Enterprise Surveys in the Democratic Republic of Congo, the study documents the existence of nonnegligible employer discrimination in the presence of discriminatory laws. Interestingly, discriminatory behaviors, and the related limitations in women’s autonomy, are more pervasive outside the capital city, Kinshasa, which suggests that differences in enforcement and social norms may be at play. The study also finds that, in those firms that do not enforce discriminatory laws, women benefit from better labor market outcomes, in terms of their representation among the upper echelons of management and their participation in the overall workforce. The positive relationship between nondiscriminatory behaviors and female employment is particularly strong in the manufacturing sector.HIGHLIGHTS In the Democratic Republic of Congo, discriminatory laws are linked to employer discrimination against women.Firms do not follow these laws uniformly, with enforcement varying by geography and type of law.This important nuance helps uncover the interaction between national laws and local norms.Firms that do not impose discriminatory laws have more women employees and managers.

Citation - Hyland, Marie, Asif M. Islam, and Silvia Muzi. "Firms’ Behavior Under Discriminatory Laws and Women’s Employment in the Democratic Republic of Congo." Feminist Economics 29.1 (2023): 70-96.

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Public debt in developing economies rose at a fast clip during 2020–21, at least partly due tothe onset of the global Covid-19 pandemic. Nobel laureate Paul Krugman opined in early 2021 that “fighting covid islike fighting a war.” This paper argues that the Covid-19 pandemic shares many traits with natural disasters, exceptfor the global nature of the pandemic shock. This paper empirically examines trends in debt and economic growtharound the onset of three types of calamities, namely natural disasters, armed conflicts, and external-debtdistress in developing countries. The estimations provide quantitative estimates of differences in growth and debttrends in economies suffering episodes of calamities relative to the trends observed in economies notexperiencing calamities. The paper finds that debt and growth evolve quite differently depending on the type ofcalamity. The evidence indicates that public debt and output growth tend to rise faster after natural disasters than inthe counterfactual scenario without disasters, thus illustrating how debt-financed fiscal expansions can helpeconomic reconstruction. The findings are different for episodes of debt distress defined as periods of debtrestructuring, however. Economies experiencing debt distress are associated with growth trends that are on average belowthe growth rates of unaffected economies prior to and after the beginning of an episode of debt restructuring.

Citation - Fan, Rachel Yuting, et al. "Calamities, debt, and growth in developing countries." IMF Economic Review 72.1 (2024): 487-507.

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