rafmacalaba/datause-encoder-data huggingface dataset:
ISIC3-country-year cell as, respectively, the share of firms which report an inspection by tax officials in the past 12 months, and the number of inspections over that period. To study tax compliance, we use the answer to the question: _“Recognizing the difficulties many enterprises face in fully complying with taxes and regulations, what percentage of sales would you estimate the typical establishment in your area of activity reports for tax purposes?”._ Full compliance is defined as the share of firms that report all of their sales. The reference to a “ _typical establishment in your area of activity_ ” is meant to encourage firms to truthfully report – either a reference group’s behavior or the firm’s own behavior. While we cannot infer whose behavior the firm is precisely referring to, we only require that the firm’s reported compliance rate corresponds to its own ISIC 3 industry, a plausible assumption, and weaker than that the answer to the own assuming corresponds firm’s compliance rate. We also construct the effective tax rate, defined as the product of the compliance rate and the statutory tax rate, where the tax rate is the sum of the corporate income tax rate and the general sales tax rate (or VAT).<sup>14</sup> In robustness tests we use informal payments, defined with the question: “ _It is said that establishments like this one are sometimes required to make gifts or informal payments to public officials to “get things done” with regard to customs, taxes, licenses, regulations. On average, what percent of total annual sales do establishments like this one pay in informal payments or gifts to public officials for this purpose?_ ”. This question provides a direct measure of the informal tax rate, since the informal payments are expressed as a percentage of sales.

Since we study outcomes at the industry level, we report summary statistics at the country-year-industry level, where the industry corresponds to the 3-digit ISIC. The 272 country-year surveys cover 140 countries, with on average 50 ISIC3 industries represented and a median at 52. The average industry surveys 10 firms. Table 1 displays the

> 14We collected the statutory sales and corporate tax rates in the relevant year of the WBES country-year cell using the KPMG worldwide tax summaries.

9
**Table III.9:  Typology of Technology and Cultivation Practices for Coffee, and Shares of Land Area and Production**

|**Typology**|**Characteristics of Technology**<br>**and Cultivation**|**Land Area**<br>**under Coffee**|**Production**<br>**Quantity and**<br>**Share of**<br>**National**<br>**Production**|**Yield per**<br>**Tarea and**<br>**Hectare**|
|---|---|---|---|---|
|Technified<br>and/or Modern|Intensive cultivation of caturra<br>and catuaí varieties. Density of<br>planting 5000 plants/ha.<br>Systematic management of<br>fertilization, pruning, and<br>phytosanitary control. Generally<br>cultivated in full sunlight.<br>Business type management.<br>Post-harvest practices on-farm<br>mechanized wet-milling or<br>commercial milling|Approximately<br>8% of land area|Approximately<br>50% of the<br>National<br>Production.|2 qq/ta<br>(1,600kg/ha)|
|Moderately<br>Technified|The majority cultivates typical<br>variety combined with caturra.<br>Relative deficiency in<br>management of pruning,<br>fertilization and control of shade.<br>Combines family type with<br>temporary labor.<br>Post-harvest practices: on-farm<br>simple technology, or<br>commercial milling|Approximately<br>16% of land<br>area|Approximately<br>20% of the<br>National<br>Production.|0.6 qq/ta<br>(440 kg/ha)|
|Traditional|Mainly cultivates typical.<br>Plantations very old. Many plots<br>located in marginal zones.<br>Minimal management in terms of<br>techniques and technology.<br>Post-harvest practices on-farm<br>traditional milling.|Approximately<br>76% of land<br>area|Approximately<br>30% of the<br>National<br>Production.|0.18 qq/ta<br>(140 kg/ha)|

Source: Prepared by the authors based on interviews.

# _Diseases and Pests_

Diseases and pests have traditionally not been a major problem for coffee production in the Dominican Republic (World Bank, 1981). Periodic outbreaks have usually quickly come under control such as leaf rust outbreak in the late 1980s (World Bank, 1991). The relatively dry winter accounts for the low incidence of disease. As a result of low prevalence of diseases, many traditional producers have long practiced a form of organic coffee production. In most cases, however, these growers have not been “certified” as such. Leaf rust fungus and the broca (the coffee berry borer) insect became serious problems because of lack of previous exposure to such risks and the lack appropriate control practices. In recent years coffee production has been 39
**Table 1: Non-OECD procurement markets exceeding US$5 billion, 1998.**

**_More than US$5 billion and less than US$10 billion_** :

Egypt, Morocco, Chile, Peru, Puerto Rica, Bangladesh, India, Israel, Kuwait, Malaysia, <u>Singapore, Syria, United Arab Emirates.</u> **_More than US$10 billion:_** <u>South Africa, Brazil, China, Indonesia, Saudi Arabia, Russia.</u> _Source:_ OECD (2002a).

Taking all of these 106 developing countries together, this OECD study found that government purchases of goods and services in these economies accounted for approximately 5.1 percent of their combined national outputs. (The comparable figure for the OECD member states was 7.9 percent.) The 106 developing countries’ procurement markets amounted to only 13.9 percent of the total worldwide procurement spending in 1998.

The share of total procurement outlays available to international competition is a function of many variables. These include the share of government services that are ‘contracted out’ to the private sector, the size distribution of contracts (smaller contracts tend not to be attractive to foreign firms), the size of central government as compared to local or municipal governments, and the share of expenditures financed through development assistance funds that are tied to sourcing of goods and services from the donor country, etc. Available data on the relative importance of aid flows as a share of government expenditure suggest that aid finances a significant share of total purchases of goods and services by developing country governments. The ratio of official aid flows (bi- and multilateral) to total expenditure was equivalent to 35 percent of total expenditures on goods and services for low-income countries in the early 1990s. For lower middle-income nations, total aid accounted for 16 percent of expenditures; for upper middle-income economies the figure dropped to 6 percent (Hoekman, 1998).

It is worth noting that very few developing country discriminatory state procurement practices against foreign firms appear to have been the subject of complaints Evenett and Hoekman (2005) analyze the conditions under which procurement policies affect market access.

7
optimality property of a tradable quota system—that is, the marginal abatement cost of pollution sources is equalized with the permit price—will not hold. Policies aimed at alleviating the uncertainty of carbon prices can help improve efficiency from this perspective.

In the paper, we do not consider that the fuel market is likely to respond to fluctuations in the price of emissions allowances so that the price premium for low‐sulfur coal also becomes uncertain. To analyze the more complicated effects resulting from the correlation between uncertainties in input markets is an interesting topic for future research.

# **References**

Arimura, T. H. 2002. “An Empirical Study of the SO2 Allowance Market: Effects of PUC Regulations.” _Journal of Environmental Economics and Management_ 44 (2): 271–89.

Averch, H., and L. L. Johnson. 1962. “Behavior of the Firm under Regulatory Constraint.” _American Economic Review_ 52 (2): 1052–69.

Baldursson, F. M., and N.‐H. M. Von der Fehr. 2004. “Price Volatility and Risk Exposure: On Market‐ Based Environmental Policy Instruments.” _Journal of Environmental Economics and Management_ 48 (1): 682–704.

Ben‐David, S., et al. 2000. “Attitudes toward Risk and Compliance in Emission Permit Markets.” _Land Economics_ 76 (4): 590–600.

Bohi, D. R., and D. Burtraw. 1992. “Utility Investment Behavior and the Emission Trading Market.” _Resources and Energy_ 14 (1‐2): 129–53.

Burtraw, D. 1996. “The SO2 Emissions Trading Program: Cost Savings without Allowance Trades.” _Contemporary Economic Policy_ 14 (2): 79–94.

Cason, T. N., and L. Gangadharan. 2003. “Transactions Costs in Tradable Permit Markets: An Experimental Study of Pollution Market Designs.” _Journal of Regulatory Economics_ 23 (2): 145–65.

22
consumptive use) in Bangladesh. They first applied factor analysis to derive representative dimensions, and identified agricultural intensification and technological diffusion as key explanatory variables. Employing Granger causality tests, they further explored the role of these two factors on water productivity changes, suggesting that technological diffusion was a causal factor of water productivity in the majority of districts in Bangladesh. Then they employed generalized least squares estimates and found that technological diffusion had a positive effect on inter-district water productivity differences while agricultural intensification and policy transition towards deregulated markets decreased water productivity.

# **4. Multi-Factor Approaches:  TFP Indices and Frontier Models**

Whereas single-factor productivity measures are mostly found in the irrigation literature, multifactor measures—in particular TFP indices and frontier models—dominate the productivity and efficiency-related literature in agricultural production economics.

TFP indices have been employed in a large number of empirical studies, mostly at the national level but more recently also at subnational levels. The usual TFP indices account for marketed outputs of goods and services but tend to disregard items , such as water, that are usually not marketed. The neglect of nonmarketed goods and services has long been recognized as a problem (see, for example, Antle and Capalbo, 1988). According to Gollop and Swinand (1998): “Because the consumption of water resources involves true opportunity costs no less than does the consumption of labor, capital, or material inputs, TFP measures must be viewed as biased barometers of how well society is allocating its scarce resources” (p. 577).<sup>16</sup> One of the conclusions of a review of agricultural productivity studies by Darku _et al_ . (2013) was that future studies should make an effort to investigate the effects of irrigation and rainfall. Yet, according to Alston and Pardey (2014): “It is challenging to partition growth of agricultural productivity among different possible sources because the available data for many countries are very limited, especially for inputs...” (p. 129). Some authors now specifically mention that they were not able to account for the contribution of water as a separate input in TFP growth estimates because of a lack of appropriate data (for example, Wang _et al_ ., 2013).

Studies in two recent books by Alston _et al_ . (2010a) and Fuglie _et al_ . (2012a) on agricultural productivity patterns at the country, regional and global levels can be used to illustrate typical approaches for the inclusion of water aspects in TFP indices. For example, Fuglie (2010a), in a study on Indonesia,

> 16 With a slightly different perspective, Fuglie _et al_ . (2012b) point out that it was increasingly recognized that future productivity gains in agriculture need to save not only land, but also a wider array of natural resources, such as water quantity and quality, so as to avoid negative impacts to the environment from agricultural intensification.

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<!-- Start of picture text --> South Asia 6 0<br>Middle East & North Africa 11 0<br>Europe & Central Asia 12 1<br>East Asia & Pacific 10 2<br>Sub-Saharan Africa 25 4<br>Latin America & Caribbean 11 4<br>High income: OECD 8 7<br>KPIs exist No KPIs<br><!-- End of picture text --> _Source: Reform Committee data Note: Note: Figure based on 107 economies with a functioning business reform committee, 54 of which have reported use of KPI._ Similarly, progress towards goals laid down by KPIs can be monitored and measured through different avenues. Progress reports and reform strategy action plans are the most common avenues used to monitor and measure progress towards goals laid down by KPIs, with approximately 60 percent of all initiatives deploying them. Other popular means used by reform committees to monitor and measure their goals include progression towards international benchmarks and closed meetings with supervisors of the reform committee. On the other hand, lack of progress towards these measurable goals usually requires the reform committees to present measures to rectify the situation (Figure 9).

Figure 9: _Monitoring and measuring avenues to measure progress towards KPIs_ <!-- Start of picture text --> Other<br>Progression towards<br>international<br>benchmarks<br>Firm surveys or user<br>feedback<br><!-- End of picture text --> <!-- Start of picture text --> Reform strategy<br>action plan with<br>timeline established<br><!-- End of picture text --> <!-- Start of picture text --> feedback<br>Inspection by other<br>government authorities<br>Closed<br>meetings with<br>the reform<br>committees’<br>supervisors<br><!-- End of picture text --> 17
_Figure 4:_ W _ho is the head/chair of the committee/council?_ <!-- Start of picture text --> Minister<br>Public sector official<br>Prime Minister<br>Private sector representative<br>Co-chaired by government and private sector<br>President/ Head of State<br>0 5 10 15 20 25 30 35 40 45<br>Share of economies (%)<br><!-- End of picture text --> _Source: Reform Committee data Note: Figure based on 107 economies with a functioning business reform committee._ Notably, in terms of their appointment, in close to 40 percent of cases the chairs of the committee are nominated by the Prime Minister or the President. In other exceptional cases, the chair is nominated by members of Parliament, as is the case in South Sudan and the Islamic Republic of Iran, or elected by members of the reform committee themselves. In terms of reporting lines, the chair of the reform committee reports to the President or the head of state in close to 40 percent of the committees, while in close to 30 percent of the committees the chair reports to the Prime Minister. In 20 economies the reporting line is to the minister in charge of business regulatory reforms. It is only in close to 20 percent of the committees that the reporting lines extend to the minister in charge of the business regulatory reforms (Figure 4).

Steering boards are decision making bodies, usually made up of high-level advisors who set the agenda and monitor and offer advice on broader objectives. A working group, on the other hand, has a more precise objective and consists of members who oversee the work and ensure its success. The membership of both steering boards and working groups may consist of different stakeholders, including representatives from the public sector, the private sector, think tanks, the research community, trade associations, and chambers of commerce.

As expected, the public sector is represented in close to 90 percent of all steering boards and in close to 70 percent of all working groups. Within the public sector, representatives from various ministries are the most prominent members involved in the steering boards and working groups. On the other hand, representatives from the private sector and trade associations are members of the steering boards in close to two-thirds of cases. In most of these cases, representatives of trade associations are included in the steering board membership. Similarly, in over half of economies, representatives from the private sector and trade associations are engaged in working groups. (Figure 5).

12
post-secondary institutions, and not on their proficiency in practical work, combine to thwart a whole-hearted implementation of the vocational curriculum, with the result that the schools remain academic schools in disguise.

Typical examples are the failure of the 1971 reform in Brazil (Piletti, 1984; Gallart, 1986) and the recent experience of Sierra Leone (Wright, 1986). In the Brazilian case, "the reform was difficult to implement even in the richest state, Sao Paolo. Some schools retained their old curricula by cheating. Under the cover of new names they kept the old subjects. Others chose "easy" vocational fields without taking into account labor market requirements in order to allow the students to concentrate their study for university requirements" (Gallart, 1986). Attempts to make technical or vocational subjects more attractive by enhancing their social status cannot be expected to have much effect under these circumstances: Such distortions may have both a positive and a negative influence on cost-effectiveness. If the vocationalization is implemented, schools can be left with high-cost facilities which are underutilized. On the other hand, if the resistance is so successful that the implementation, in terms of constructing workshops and hiring instructors, is token, it may help to reduce expenditure which is likely to be wasted anyway once the graduates leave school.

One solution to the problem is to make higher education genuinely selective, so that although secondary technical graduates have the right to apply for admission, only a few are accepted, as in Turkey. The likelihood of this solution being successful is increased if social demand for higher education is blunted by making the private contribution to its cost nontrivial. It is also more likely to be successful if the university curriculum Is rigorous and weaker students are deterred from seeking admission by the knowledge that they will be unable to cope.

# 7.3 Emplovers' views

Some of the most telling evidence against the provision of preemployment job-specific training comes from surveys of employers' opinions. There is a striking contrast betwean their unbounded enthusiasm for vocational guidance and their lack of enthusiasm for job-readiness training. Other things being equal, employers typically state that they would like entry-level workers to be better qualified all round--to be better equipped with basic skills, employability skills, and a knowledge of technical theory. Occasionally job-readiness training is added to the list, but is rapidly discarded when priorities are discussed; more often, it is actually discouraged.

Quite typical is one finding of an in-depth survey of New York employers conducted by the Labor Market Information Network during the years 1978-81. It is of particular interest because it addresses both the distinction between technical education and technical training within the field in question and the complex problem of how to devise a programme which will cater to those of different ability and motivation:

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# Financial Distortions and the Distribution of Global Volatility

## Maya Eden<sup>_∗_</sup> The World Bank, DECMG

January 3, 2012

**Abstract**

Why are emerging economies excessively vulnerable to shocks to external funding? What was the role of financial flows from emerging to developed economies in setting the stage for the subprime crisis? This paper addresses these questions in a simple general equilibrium framework that emphasizes the aggregate implications of the misallocation of funds on the micro level. The analysis shows that the misallocation of funds amplifies volatility even in a closed economy. Financial integration between relatively distorted emerging economies and relatively undistorted developed economies leads to a further divergence in volatility, thereby providing a new and simple explanation for the divergent trends in output volatility up to the recent crisis. In the integrated environment, cheap funding leads to an endogenous deterioration of the financial system in developed economies. These predictions are consistent with a wide variety of microfoundations, in which distortions cause productive projects to be relatively more sensitive to aggregate shocks.

The paper provides some empirical evidence for these microfoundations.

**JEL Classification:** E44, F36, G01, G15 **Sector Board:** FSE

**Keywords:** financial distortions, log supermodularity, emerging market volatility, the Great Moderation, financial crises, matching

> _∗_ This article is based on the first chapter of my thesis at MIT. I am very grateful to my advisors Ricardo Caballero, Arnaud Costinot and Guido Lorenzoni for their invaluable input. I have also benefited from comments made by Daron Acemoglu, George-Marios Angeletos, Harjoat Bhamra, Dave Donaldson, Ana Fostel, Veronica Guerrieri, Bengt Holmstrom, Leora Klapper, Aart Kraay, Roberto Rigobon, Luis Serven, Jenny Simon, Ivan Werning, participants of the NBER Summer Institute 2010 (IFM) as well as participants of various other conferences and seminars. I thank the World Economy Laboratory (WEL) for financial support. All errors are mine. This paper reflects my own views and not necessarily those of the World Bank, its Executive Directors or the countries they represent. Please send comments to meden@worldbank.org.

<mark>1</mark>
# **Figure 19 Change in STRI for professional services**

<!-- Start of picture text --> Professional services<br>Legal: Legal: Legal: Accounting Auditing<br>Home law representation advisory<br>STRI 2008-11 STRI 2016<br>70<br>60<br>50<br>40<br>30<br>STRI 2008-11, 2016<br>20<br>10<br>0<br><!-- End of picture text --> Accounting services are traditionally less restricted than auditing services, in particular for crossborder supply and for the presence of foreign accountants. This is reflected in both the 2008-11 and 2016 data. Restrictiveness in accounting was reduced on average similarly in high- and middleincome groups. Auditing was liberalized to a greater extent than accounting over the period considered, with reform driven by higher income economies.

**Figure 20 2008-11 and 2016 STRI accounting and auditing, by modes of supply and income group**

<!-- Start of picture text --> 90<br>80<br>70<br>60<br>50<br>40<br>30<br>20<br>10<br>0<br>M1 M3 M4 M1 M3 M4<br>Accounting Auditing<br>2008-11 2016<br>STRI 2008-11, 2016<br>High Middle Low High Middle Low High Middle Low High Middle Low High Middle Low High Middle Low<br><!-- End of picture text --> 27