rafmacalaba/datause-encoder-data huggingface dataset:
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# FINANCING IURBAN SERVICES IN LATIN AMERICA: Spatial Distribution Issues

# SMary of-the eort

## i. Urban Services axe the Main 1.us of Ubti l _ornments._

Municipal or Regional governments would not exist if central authorities did not recognize that certain public services are better organized and provided at the local level. Most of these services are city-based, but they benefit also. the rural ciwellers of territorial jurisdictions. Because all members of the communities concerned are potential consumers of urban services and because their availability also involves brtader concerns of national welfare, they are financed through a mixture of user charges, local taxes, revenue sharing, inter-governmental transfers and institutional horrowing.

The budgets managed by subnational governmerts are therefore composite and can be seen as those of "social enterprises" producing and distributing services for the resident clientele of certain geographical areas. They are responsible to provide these services not "a-la-carte", but in whole "packages" that must satisfy diverse needs, preferences and income groups.

These "enterprises" may be quite numerous within the same country, and will differ from one another not only in the range and type of functions they perform, but also in their capacities to deliver services and in the fiscal efforts they devote to recovering their costs. And, because customers move from one jurisdiction to another, subnational governments are engaged in some form of competition. This paper discusses how the regulatory frameworks of IAC governments and the lending practices of international donors do influence the patterns of this competition and the comparative performance of subnational authorities.

# ii. Large and Constant Aggregate Numbers.

Government finance statistics of Latin American countries show that the activities of these regional and local "enterprises" account for about 20 percent of total government outlays, the equivalent of eight percent of GDP. Moreover, observing budgetary trends over time, one notices that the expenditures of subnational authorities did not contract measurably, in proportion to GDP, even during the 1980's crisis, when the overall volume of fiscal resources declined in almost all countries.

The declining revenues of local and regional authorities were buttressed by the central governments through incremental transfers, subsidies and deficit absorptions. Public credit also played a role, rising to an all time high level of 15 pev-ent in 1984. In order to sustain the volume of subnational expenditures during the recession, the central governments had to shift resources from the productive to the social sectors, from "tradeables" to "non-tradeables". Ad-hoc allocations were introduced to supplement the mandatory systems of revenue sharing, opening contentious issues of inter-jurisdictional equity.
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- (b) It exploits one of the few administrative benefits of property-its immobility. If the tax is imposed on occupants, they can evade by decamping. If the owner leaves, he sacrifices the use of his property.

3.74 In developing countries, however, ownership is subject to dispute. In much of Africa, land on the urban periphery has never been formally adjudicated. In Latin America, formerly adjudicated claims are disputed because of years of illegal occupation. Even where claims to ownership are not disputed, title data may be inaccessible to the taxing authority. In the Philippines, title records are o¶ganized by claimant and date of issue, rendering them useless to a valuer who knows only the location of a given property.

3.75 Taxing authorities have addressed this problem by adopting definitions of ownership that effectively absolve the taxing authority of any obligation to prove legal ownership. Such definitions enable the taxing authority to exploit the leverage that comes from being able to deprive the taxpayers of the benefit of de facto ownership, without obligating the taxing authority to meet an impossible standard of proof.

3.76 Two specific legal strategies are used. (1) In the Philippines and Liberia (and the United States), the tax law defines the proDerty itself as liable for the property tax. Under this ad rem definition, if the property does not pay its tax, it can be seized and sold--a threat intended to bring the de facto owner forward. (2) In Latin America, sub-Saharan Africa, and South Asia, the strategy entails a very broad ad personam definition. In Brazil and Nigeria, the owner is defined as liable, but ownership may include anyone in beneficial occupation of the property.

3.77 Define Notification as Delivering the Bill to the Property. An 'ownership" definition of liability also requires an appropriate legal definition of notification. The owner--unlike the occupants--may live off the premises. If the law requires the owner to be notified in person, finding the owner can be a major obstacle to the imposition of the tax. In Abidjan, for example, an estimated 40% of tax bills are uncollectible because the owner's address is unknown. Amman faces a similar problem because of the large number of property owners working in neighboring countries.

3.78 Two measures can address this problem. First the taxing authority can be absolved of the legal obligation to personally notify the taxpayer as a condition of imposing the tax, by defining legal notification as delivery of a bill to the taxable property. In Nigeria, delivery of a tax bill to the taxable property--even to the extent of pasting it to the door if no person is willing to accept receipt--constitutes legal notification.

3.79 Second, a secondary level of liability can be imposed upon the occupants. Tenants have the virtue of being on site. Their tendency to evade taxes by decamping can be addressed by permitting them to deduct property tax payments from their rents--an arrangement Lhat takes advantage of the divergence in interests between landlords and tenants. (Such arrangements are provided for in Lagos and Calcutta.)
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Aside from their incidence, concern has been expressed about the NTBs' changing nature, sinc, they involve a growing tendency for non-discriminatory trading policies to be replaced by bilateral or other discriminatory arrangements. As a result, the most-favored-nation (MFN) principle, a cornerstone of the GATT, has been eroded by an increasing reliance on nontariff barriers directed at specific countries or country groups. 2/ The spread of these measures is sometimes seen as a threat to the functioning of the Ceneral Agreement.

A major problem that has been encountered in previous research and policy studies on changes in the use and importance of nontariff barriers is that much of the available empirical information has been insufficient to draw conclusions on many basic issues. 3/ To some degree, these data problems have been resolved by recent initiatives of international organizations. In this paper we utilize these new data sources in connection with similar surveys taken in the 1960s to address three basic questions concerning the longc.--term (1966-1986) spread of nontariff protection:

- 2/ The MPN principle guarantees equal treatm(-at .o a country's trading partners and requires that concessions negotiated on a bilateral basis be extended to all GATT members. It also prohibits di-crimination or differential treatment of GATT members. See Evans (1971) for an early preceptive analysis of problems posed by NTBs and departures from the MFN principle. Laird and Yeats (1988) survey studies that estimated nominal equivalents or the trade losses and other economic costs of nontariff barriers.

- 3/ An important exception is an UNCTAD (1987) report that documents the spread of nontariff barriers over a relatively short (1981-86) time period. This study found that in 1981 19.6 per cent of all developed countries non-oil exports encountered NTBs and by 1986 this share had grown to 22.7 per cent. However, the time period covered by this investigation appears too short to identify clear-cut trends in NTB use. Nogues et. al. (1986) provide some empirical information on the growth of NTBs over 1981-1983.
and shows that the share not living their spouse falls from 60 to less than 20 percent within five years after migration. This, in turn, suggests that “transnational households” appear to be a fragile and temporary living arrangement, with the two spouses resuming their coresidence–either at origin or in the United States, or possibly dissolving their marital union in the case of a prolonged physical separation.

# **4.3 Robustness to return migration**

We have so far examined the probability of a change in marital status conditional upon staying in the U.S.. Yet, migrants can also return to their home country, and this decision may depend on their marital status. For migrants who were unmarried before migrating, three outcomes are possible at a time of _t_ years after migration: ( _i_ ) they got married to someone in the U.S., ( _ii_ ) they remained unmarried in the U.S., or ( _iii_ ) they returned to the origin. Even though return migrants may have different marriage prospects upon return and thus could marry in the home country a different person from who they would have married had they never migrated, we can obtain a lower bound on the fraction who have changed marital status after migration by assuming no further change in marital status occurs after return. Likewise, for initially married migrants, we can obtain a lower bound on their likelihood of changing marital status by assuming they do not divorce or remarry after return. A lower bound on the _un_ conditional probability of a change in marital status _t_ years after migration can then be written as the product of the probability of a change in status in the U.S. conditional on staying (which we have shown above), times the probability of not returning to the home country after _t_ years. To examine sensitivity of our results to return migration, we therefore need estimates of the rate of return migration by initial marital status.

To estimate the rates of return migration separately for migrants married and migrants unmarried before migration, we use yearly rounds of the ACS between 2008 and 2021 (no information on the year of marriage is available in the ACS before 2008).<sup>19</sup> We measure 19 Origin country census data on the relative timing of migration, marriage and return is scarce. IPUMS International reveals that, out of 156 dataset in 93 countries (either in 2000/01 or 2010/11), only three dataset contains data on the year of marriage for important origin countries (China, Indonesia and the Philippines). Yet, data on the year of emigration is never available for return migrants, which makes it impossible to know whether the latter were married or unmarried when they first migrated to the U.S.

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# Table 3

Welfare Costs of Rationing (Variant<sup>2)</sup> to Scale in Manufacturing a/

|Rationing Rate a/|.9|.8|.7|.6|.5|
|---|---|---|---|---|---|
|CDR=0.07|5.3|6.1|8.1|11.2|16.0|
|Scale elasticity b/|(.925)||||(.956)|
|CDR=0.035|2.7|3.8|5.9|9.4|14.4|
|Scale elasticity b/|(.965)||||(.979)|

- a/ See table 2 for definition. Rationine is for both consumer<sup>and</sup> intermediate goods.

- b/ The scale elasticity for solutions<sup>with rationing rates of .9 and .5</sup> respectively are reported in parentheses.<sup>Scale elasticities are computed</sup> as the ratiu of marginal to average<sup>costs at the solution values.</sup>

- Notes: CDR, the cost disadvantage<sup>ratio, is definedsthe ratio of fixed costs</sup> to total costs.
# **Acknowledgments**

This study was prepared by a team led by Andrej Popovic (Senior Financial Sector Specialist), comprising Shanthi Divakaran (Senior Financial Sector Specialist, and the principal author of the study), Samuel Schneider (Consultant) who provided research assistance, and Patrick McGinnis (Consultant) who supported finalization of the study. Peer review comments were received from Simon Bell (Global Lead, SME finance) Juan Costain (Lead Financial Sector Specialist) and Michael Fuchs (Consultant).

Michel Noel (Head, Investment Funds) provided valuable comments which have been incorporated into the report. Michael Ehst (Program Officer, infoDev) provided extremely helpful input into the section on accelerators, incubators, and angel networks. Michael Grist (Senior Financial Sector Specialist) and Fiona Stewart (Senior Pensions Specialist) provided very helpful guidance for the sections on insurance companies and pension funds as investors. Erik Huitfeldt provided guidance on the new Securities Industries Law. Jamal Isa (IFC) and Samuel Akyianu (IFC) provided input on IFC’s program in Ghana. Gregoria Dawson (Program Assistant) provided critical logistical support and mission coordination. Thelma Ayamel (Program Assistant) and Marilyn Benjamin (Program Assistant) provided remote logistical support from Washington DC. The study benefitted from particularly helpful input from a number of players in Ghana who provided guidance in arranging meetings and very helpful information on the landscape. The team is also very thankful to the key players in the PEVC ecosystem in Ghana, who were interviewed as part of this report. An interview list is provided in Annex 1 of this report. The team wishes to thank, in particular, Hamdiya Ismaili (Manager, VCTF) and Seth Asante (Partner, Bentsi-Enchill Letsa & Ankoma law firm) for their extremely valuable guidance and input. Seth Asante reviewed and provided input into the legal/ regulatory section of this report. The report also draws from previous studies conducted by the Investment Funds Group focused on PE/VC and technical assistance (TA) in LAC (Shanthi Divakaran (TTL); Patrick McGinnis (Expert Consultant); and a World Bank policy research working paper on the role of technical assistance in PE/VC investments in SMEs co-authored by Shanthi Divakaran, Patrick McGinnis and Masood Shariff.

Ghana Private Equity and Venture Capital Ecosystem Study was prepared with the support of _Programme for Sustainable Economic Development_ (PSED) in Ghana, implemented by the _Deutsche Gesellschaft für Internationale Zusammenarbeit_ (GIZ GmbH) on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ).

2
4 GVC framework, recognizing the centrality of dynamic rents to the global fragmentation and relocation of economic activity (Kaplinsky, 2005) distinguishes four types of upgrading activity (Humphrey and Schmitz, 2001). The first two are familiar to the innovation literature – upgrading of process and product. The third is central to the GVC approach, referring to the upgrading of function. That is, firms may change their positioning in the chain, perhaps moving from physical transformation to design or marketing. Often, as in Figure 2, there is a hierarchy in this process of upgrading as firms move from assembly, to manufacturingtransformation, to design and to branding (or often a combination of these functions). In mature chains, when firms have developed capabilities, they may also upgrade by moving to a new chain.

||**Figure 2: Is There**<br>|**a Hierarchy of **<br>|**Upgrading?**<br>||
|---|---|---|---|---|
|Trajectory|Process<br>Upgrading|Product<br>Upgrading|Functional<br>Upgrading|Chain<br>Upgrading|
|Examples|Original<br>equipment<br>assembly (OEA)<br>Original<br>equipment<br>manufacture<br>OEM|Original<br>design<br>manufacture|Original<br>brand<br>manufacture|Moving chains<br>– e.g. from<br>black and white<br>TV tubes to<br>computer<br>monitors|
|Degree of<br>disembodied<br>activities|Disembodied c|ontent of value|added increases p|rogressively|

Source: Kaplinsky and Morris, 2001.

The reason why these categories of upgrading are important is that the buyers, who have a key role to play in informing suppliers of market requirements, have their own interests to protect and will generally limit the upgrading path of their suppliers. Buyers naturally are focused on protecting their own rents in the chain and will therefore “guide” and often limit through contractual conditions, the upgrading path of suppliers. The nature of these constraints on upgrading will depend on the particular competences of the buyers. For example, in the global furniture value chain large global buyers such as IKEA will allow, and indeed foster, process upgrading by their suppliers which reduces cost. But, at the same time, they will zealously guard the design and branding functions and keep these functions off-limits to suppliers (Kaplinsky, Morris and Readman, 2002). The more variety and brand-conscious markets are, the more likely that lead chain buyers will strive to maintain their control over design and branding.

Of course, the understanding of capability-growth must reflect both supply and demand factors. But it also will reflect the interaction between these two sets of
plants reported a non-zero value of electricity expense. Although non-zero reporting among plants in the informal sector dramatically increased by the 67<sup>th</sup> round of NSS survey, the shares remained below 75% in rural regions and 90% in urban regions.

In the case where plants do not report a non-zero electricity expense, it could be true that the establishment does not use electricity. However, missing values of electricity expense in our data are observationally equivalent to assigned zero values. This creates important challenges for calculating consistent trends given that the surveys vary in size across years and the introduced or dropped plant observations are unlikely to be random in this process. For example, the average energy values for the NSSO data are likely to be biased by the doubling of the rural sector sample size in 1989-1994.

As one approach to learning about this issue, we explored in the ASI and NSSO data the degree to which the data strictly adhered to the definitional requirement that the ASI include all plants with (a) 10 or more employees if they use electricity and (b) 20 or more employees if they do not use electricity. In tabulations available from the authors, we found this definition did not hold well, with many deviations evident (e.g., ASI plants with 15 employees that are not reporting electricity, NSSO plants with 15 employees that are reporting electricity). The conclusion from this exercise was that we could not use a single approach to the zero values or missing values, but that we would need to consider several reasonable alternatives to learn if a consistent pattern emerged that was robust to these considerations.

# _Raw Electricity Consumption Rates_

Table 2a presents the raw electricity usage per plant observed in the data. Panel A presents the raw averages for reporting plants using sample weights, Panel B imposes a 1% winsorization to cap extreme values, and Panel C presents unweighted median values. Panels D and E repeats Panels A and B in an unweighted format. We report these last two panels for completeness but do not believe their trends are very informative given the sample changes over time and surveys.

Plants in the organized sector, not surprisingly, consume substantially larger amounts of electricity than reporting unorganized sector plants (even among plants with non-zero reported 19
Firm Consolidation and Labor Market Outcomes<sup>_∗_</sup> Sabien Dobbelaere Grace McCormack Daniel Prinz S ́andor S ́ov ́ag ́o _Keywords:_ Takeovers, labor market outcomes, labor restructuring. _JEL classification:_ G34, J2, J3, M51.

> _∗_ Dobbelaere: Vrije Universiteit Amsterdam, Tinbergen Institute and IZA Institute of Labor Economics (sabien.dobbelaere@vu.nl). McCormack: University of Southern California (gracemcc@usc.edu). Prinz: World Bank (dprinz@worldbank.org). S ́ov ́ag ́o: University of Groningen (sovago.sandor@gmail.com). The authors are grateful to Statistics Netherlands (CBS) for providing the non-public microdata and Nathan Hendren for facilitating data access. The authors would also like to thank Eric Bartelsman, Sandra Gain, Larry Katz, Bas van der Klaauw, Hessel Oosterbeek, Roula Yazigi, and participants in the Harvard Labor and Applied Microeconomics Workshops, the University of Southern California Price School of Public Policy Workshop, and the University of Notre Dame for insightful comments and suggestions. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not represent the views of the World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
households. Recall that migration status is based on whether a household had one or more members departing at some time between the 1998 and 2003 survey waves. Figure 3 shows a cumulative density function for the change in the overall assets index by migration status over this five-year period. The distribution of (positive) asset gains for migrant households first-order stochastically dominated the distribution of asset gains for non-migrant families. In other words, the probability of a migrant household experiencing an asset gain of any known magnitude was greater than that of their non-migrant counterparts.

# **5. Results**

# _A. IV First-Stage Results_

The results of a first-stage regression (Table 3) predict a household’s participation in overseas and domestic migration. Column 1 presents correlates for the number of international migrants from a household after 1998, while column 2 presents coefficient estimates for the number of domestic migrants from a household after 1998. All three instrumental variables are highly significant individually, while behaving in a predictable manner. The F-test statistic for the number of overseas and domestic migrants is 45.6 and 18.5, respectively. The coefficient estimates confirm that Muslim households were more likely to have an overseas migrant and far less likely to send a member to work within India. Migration along both overseas and domestic pathways was also more likely in households with higher counts of prime-age male members as of 1998, and in households with increases in that count over the five-year interval.

# _B. Welfare Gains_

Do migrant households experience larger gains in assets relative to non-migrant families? And how different are the gains to households from international migrants as opposed to domestic migrants? Table 4 provides answers to these questions obtained from estimating equation (1), using OLS in Panel A and two-stage least squares (2SLS) in Panel B. I present three standardized indices 18