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08 декабря 2014, 08:00

How significant is Africa's demographic dividend for its future growth and poverty reduction ?

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Africa will be undergoing substantial demographic changes in the coming decades with the rising working age share of its population. The opportunity of African countries to convert these changes into demographic dividends for growth and poverty reduction will depend on several factors. The outlook will likely be good if African countries can continue the gains already made under better institutions and policies, particularly those affecting the productivity of labor, such as educational outcomes. If African countries can continue to build on the hard-won development gains, the demographic dividend could account for 11 to 15 percent of gross domestic product volume growth by 2030, while accounting for 40 to 60 million fewer poor in 2030. The gains can become much more substantial with even better educational outcomes that allow African countries to catch up to other developing countries. If the skill share of Africa's labor supply doubles because of improvements in educational attainment, from 25 to about 50 percent between 2011 and 30, then the demographic dividends can expand the regional economy additionally by 22 percent by 2030 relative to the base case and reduce poverty by an additional 51 million people.

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08 декабря 2014, 08:00

Economic effects of the Syrian war and the spread of the Islamic state on the Levant

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This paper uses a global computable general-equilibrium framework with new detail on six Levant countries -- the Arab Republic of Egypt, Iraq, Jordan, Lebanon, the Syrian Arab Republic, and Turkey -- to quantify the direct and indirect economic effects of the Syrian war and the advance of the Islamic State on the Levant. Syria and Iraq bear the brunt of the direct economic costs, while the other Levant countries lose in per capita but not in aggregate terms. The fact that the Islamic State's spread has undermined regional trade adds to varying degrees to the direct costs in all Levant economies and in the case of Syria and Iraq doubles the welfare losses. All these countries are foregoing opportunities to expand intra-Levant trade and the associated gains in economic efficiency and diversification. The average welfare effects are not indicative of within-country incidence, which varies among workers, landowners, and capitalists.

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04 декабря 2014, 08:00

Sukuk markets : a proposed approach for development

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The issuance of sukuk, as an instrument in Islamic finance, has been growing in recent years. Many policy makers and businesses are looking at the sukuk markets as sources of long-term financing. The paper identifies key issues impeding further development of sukuk markets globally, namely, standardization of structures and practices, investor protection concerns relating to insolvency and governance regimes, and market liquidity. The paper also offers approaches in developing domestic sukuk markets and in accessing the international market. The authors suggest that, in developing domestic sukuk markets, policy makers use a framework similar to that of the development of conventional bond markets, that is, by establishing (1) well-functioning money markets, (2) efficient primary markets and securities-offering regimes, (3) a robust and diversified investor base, (4) a market infrastructure that facilitates trading, price transparency, and efficient clearing and settlement of transactions, (5) derivatives market and hedging tools to support risk management by issuers and investors, and (6) a credible legal and regulatory framework. In accessing the international market, the issues policy makers or potential sukuk issuers should consider include awareness of and knowledge of sukuk, legal foundation, taxation, governance, and obligors' credit rating.

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03 декабря 2014, 08:00

Party age and party color : new results on the political economy of redistribution and inequality

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This paper advances research on inequality with unique, new data on income distribution in 61 countries, including 20 Latin American countries, to explore the effects of political parties on redistribution. First, consistent with a central -- but still contested -- assumption of the political economy literature, left-wing governments redistribute more. In addition, consistent with recent research on the importance of party organization and the organizational differences between younger and older parties, older left-wing parties are more likely to internalize the long-run costs of redistribution and to be more credible in their commitment to redistribution, leading them to redistribute less. With entirely different data, the paper also provides evidence on mechanisms: left-wing governments not only redistribute more, they tax more; older left-wing parties, though, tax less than younger ones.

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03 декабря 2014, 08:00

Local foundations for better governance : A Review of Ghazala Mansuri and Vijayendra Rao's Localizing Development

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In Localizing Development, Mansuri and Rao survey theory and evidence for development strategies based on local community empowerment. This note extends their theoretical argument by focusing on local government as a vital source of new leadership. Local leaders who provide better public service can prove their qualifications for higher office, but new competition from popular local leaders may be against the interests of incumbent national leaders. Thus, decentralization reforms that could benefit economic development may face powerful resistance. International assistance should promote a balanced development of local and national governments, along with a free press to monitor government at all levels. To better inform public discussions of decentralization reforms, the World Bank should actively support research on comparative subnational politics.

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03 декабря 2014, 08:00

Incomplete integration and contagion of debt distress in economic unions

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This paper compares different fiscal integration schemes on the basis of their ability to finance public investments and resilience to debt distress and contagion. Complete integration schemes, where a central authority chooses the level of public investments with productivity-enhancing externalities across different jurisdictions, are shown to be superior to incomplete integration schemes, where member governments choose public investments unilaterally. As a result, equilibrium income is greater for citizens of member states under a complete integration scheme. Moreover, complete integration schemes are shown to be more resilient to idiosyncratic shocks and more effective in limiting contagion of debt distress. This is mainly because the central authority can credibly borrow more without risking default than member states taken together can and it can "transfer resilience" across them if needed. These findings inform discussions on structural aspects of secular stagnation in Europe by emphasizing a potential challenge in the institutional design of fiscal responsibilities.

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26 ноября 2014, 08:00

Trade and civil conflict : revisiting the cross-country evidence

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This paper revisits and expands the evidence on the impact of trade shocks on intra-state conflict with a large sample of developing countries in the 1960-2010 period. The results suggest that increases in the prices of a country's exported commodities raise the country's risk of civil conflict and its duration. The effect on conflict risk is mainly driven by the price of point-source commodities, in line with the rapacity effect theory of conflict. However, the paper does not find support for the opportunity cost theory via exported commodities. The analysis also finds that intense trading with contiguous countries is associated with lower duration of intra-state conflict, consistent with the idea that such trade reduces the incentive of contiguous countries to fuel conflict in their neighbor. Trading with neighbors is also associated with a lower risk of conflict, when such trade occurs under trade agreements. By contrast, neither imported commodity prices nor the economic cycle in export markets appears to exert any influence on the probability or duration of conflict. The paper identifies several conditions under which changes in the value of exported commodities cease to matter for conflict probability.

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26 ноября 2014, 08:00

Climate change and poverty -- an analytical framework

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Climate change and climate policies will affect poverty reduction efforts through direct and immediate impacts on the poor and by affecting factors that condition poverty reduction, such as economic growth. This paper explores this relation between climate change and policies and poverty outcomes by examining three questions: the (static) impact on poor people's livelihood and well-being; the impact on the risk for non-poor individuals to fall into poverty; and the impact on the ability of poor people to escape poverty. The paper proposes four channels that determine household consumption and through which households may escape or fall into poverty (prices, assets, productivity, and opportunities). It then discusses whether and how these channels are affected by climate change and climate policies, focusing on the exposure, vulnerability, and ability to adapt of the poor (and those vulnerable to poverty). It reviews the existing literature and offers three major conclusions. First, climate change is likely to represent a major obstacle to a sustained eradication of poverty. Second, climate policies are compatible with poverty reduction provided that (i) poverty concerns are carefully taken into account in their design and (ii) they are accompanied by the appropriate set of social policies. Third, climate change does not modify how poverty policies should be designed, but it creates greater needs and more urgency. The scale issue is explained by the fact that climate will cause more frequent and more severe shocks; the urgency, by the need to exploit the window of opportunity given to us before climate impacts are likely to substantially increase.

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25 ноября 2014, 08:00

Structural reforms and labor market outcomes : international panel data evidence

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This paper explores the impact of structural reforms on a comprehensive set of macro-level labor-market outcomes, including the unemployment rate, the average wage index, and overall and female employment levels and labor force participation rates. Together these outcome variables capture the overall health of the labor market and the aggregate welfare of workers. Yet, there seems to be no other comprehensive empirical investigation in the existing literature of the impact of structural reforms at the cross-country macro level on labor-market outcomes other than the unemployment rate. Data were collected from a variety of sources, including the World Bank World Development Indicators, the International Monetary Fund International Financial Statistics, and the International Labor Organization Key Indicators of the Labor Market. The resulting dataset covers up to 88 countries, the majority being developing, for 10 years on either side of structural reforms that took place between 1960 and 2001. After documenting the average trends across countries in the labor-market outcomes up to 10 years on either side of each country’s structural reform year, the authors run fixed-effects ordinary least squares as well as instrumental variables regressions to account for the likely endogeneity of structural reforms to labor-market outcomes. Overall the results suggest that structural reforms lead to positive outcomes for labor. Unlike related literature, the paper does not find conclusive evidence on unemployment. Redistributive effects in favor of workers, along the lines of the Stolper-Samuelson effect, may be at work.

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24 ноября 2014, 08:00

What doesn't kill you makes you poorer : adult wages and the early-life disease environment in India

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A growing literature documents links between early-life health and human capital, and between human capital and adult wages. Although most of this literature has focused on developed countries, economists have hypothesized that effects of early-life health on adult economic outcomes could be even greater in developing countries. This paper asks whether the early-life disease environment in India influences adult economic wages. The paper uses two measures of early-life disease environment to investigate this question: infant mortality rates and open defecation. A district-level differences-in-differences strategy is used to show that men born in district-years with lower infant mortality and better sanitation earned plausibly higher wages in their 20s and 30s. The effect estimates are applied to calculate the fiscal and welfare consequences of the disease environment, which are considerable. In particular, eliminating open defecation would increase tax revenue by enough to offset completely a cost to the government of over \$400 per household that stops defecating in the open. A fiscally neutral elimination of open defecation in India would increase the net present value of lifetime wages by more than \$1,800 for an average male worker born today. These large economic benefits ignore any other benefits of improved health or reduced mortality. The result suggests that the disease environment could have important effects on developing-country economic outcomes.

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24 ноября 2014, 08:00

Importing high food prices by exporting : rice prices in Lao PDR

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This paper shows how a developing country, Lao PDR, imports high glutinous rice prices by exporting its staple food to neighboring countries, Vietnam and Thailand. Lao PDR has extensive export controls on rice, generating a sizable difference between domestic and international prices. Controls are relaxed after good harvests, leading to a surge in exports early in the season and rapidly rising prices later in the year. There is thus a strong case for removal of trade restrictions since they give rise to price spikes, keep the long-term price of glutinous rice low, and thereby hinder increases in income from agriculture. Although this is a case study of Lao PDR, the findings may equally apply to other developing countries that export their staple food.

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19 ноября 2014, 08:00

The creative wealth of nations : how the performing arts can advance development and human progress

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Cultural activities are increasingly noted as drivers of meaningful development. But they have yet to gain a prominent place in the architecture of development strategy. The performing arts, discussed here, exhibit direct effects on social progress and economic growth through trade in music, movies, and temporary work permits for artists, for example. Indirect contributions may also include environmental stewardship, tourism, nation branding, social inclusion, cultural democracy, and shifting cultural behaviors. These direct and indirect contributions are not well documented. As such, how is the creative or cultural sector a crucial part of the wealth of nations, and how could the World Bank Group better leverage the performing arts in its development strategy? This discussion provides a broad snapshot, from arts education, to social inclusion, to international trade in services. Key constraints include: the paucity of data and the difficulty of measuring cultural activities, the challenge of intellectual property, and the unclear benefits of cultural tourism. Part I sets the stage. Part II then provides policy options to foster the performing arts as a promising engine for development. Suggestions include: 1. expanding direct involvement in artistic projects, 2. increasing the use of performing arts to address social issues, 3. collecting data, 4. promoting intellectual property training programs, 5. supporting digital platforms in the developing world that advance indigenous music, and 6. funding studies on such areas as cultural tourism. Progress still needs to be made in the discussion of the diverse ways that the performing arts can contribute to meaningful development.