rafmacalaba/datause-encoder-data huggingface dataset:
Policy ReseaRch WoRking PaPeR 4869

# **Abstract**

Drawing on the World Bank Investment Climate Assessment surveys, this paper investigates the relationship between firm-level technical efficiency and the investment climate for 22 developing economies and eight manufacturing industries. The authors first propose three measures of firms’ productive performance: labor productivity, total factor productivity, and technical efficiency. They show that, on average, enterprises in the Middle East and North Africa have performed poorly compared with other countries in the sample. The exception is Morocco, whose various measures of firm-level productivity rank close to the ones of the most productive economies. The analysis also reveals that the competitiveness of countries in the region has been handicapped by high unit labor cost, compared with main competitors like China and India. The empirical results show then? that the investment climate matters for firms’ productive performance. This is true (depending on the industry) for the quality of various infrastructure, the experience and education level of the labor force, the cost of and access to financing, as well as different dimensions of the government-business relation. The analysis reveals that some industries, more exposed to international competition, are more sensitive to investment climate deficiencies. For some industries, this is also true for small and medium domestic enterprises that do not have the possibility to influence their investment climate or choose their location. These findings bear clear policy implications by showing that increasing firms’ size and improving the investment climate (in particular of small and medium firms and industries more exposed to international competition) could constitute a powerful means of industrial development and competitiveness, in the Middle East and North Africa region in particular.

This paper—a product of the Middle East and North Africa Region—is part of a larger effort in the region to use enterprise surveys to identify constraints on productivity and growth in developing countries. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. For information, contact jdethier@worldbank.org.

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent._ Produced by the Research Support Team
Contents 2

# contents

|1|Intr|oduct|ion|5|
|---|---|---|---|---|
|2|Sri|Lanka|country risk profle|9|
||2.1|Risk|to assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|9|
||2.2|Inco|me and consumption poverty<br>. . . . . . . . . . . . . . . . . . . . . .|12|
||2.3|Risk|to wellbeing at the national level . . . . . . . . . . . . . . . . . . . .|17|
|3|Soc|ioecon|omic resilience to disasters|18|
||3.1|Dist|rict-level risk summary<br>. . . . . . . . . . . . . . . . . . . . . . . . . .|21|
||3.2|Poor|est quintile risk summary<br>. . . . . . . . . . . . . . . . . . . . . . . .|23|
|4|Ad|aptive|social protection|25|
||4.1|Prox|y means test (PMT) . . . . . . . . . . . . . . . . . . . . . . . . . . . .|26|
||4.2|Case|study: 50-year food in Rathnapura<br>. . . . . . . . . . . . . . . . . .|27|
||4.3|Post|-disaster support to Samurdhi enrollees<br>. . . . . . . . . . . . . . . .|29|
||4.4|Post|-disaster support to PMT-qualifed households<br>. . . . . . . . . . . .|32|
||4.5|Nati|onwide cost-beneft analysis of Adaptive Social Protection<br>. . . . .|32|
|5|Con|clusio|ns|33|
|6|Tec|hnical|Appendix — Methodology and model description|37|
|li<br>Fig|st <br>ure|of <br>1|figures<br>Traditional DRM heuristic . . . . . . . . . . . . . . . . . . . . . .|8|
|Fig|ure|2|District-level asset risk in Sri Lanka.<br>. . . . . . . . . . . . . . . .|11|
|Fig|ure|3|Impact of a disaster on per capita income and consumption<br>. .|13|
|Fig|ure|4|Time to recover 90% of assets destroyed in 100-year precipita-<br>tion food. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|16|
|Fig|ure|5|Socioeconomic resilience to precipitation fooding in Sri Lanka .|19|
|Fig|ure|6|District-level wellbeing risk in Sri Lanka . . . . . . . . . . . . . .|22|
|Fig|ure|7|Asset and wellbeing losses in Rathnapura food<br>. . . . . . . . .|27|
|Fig|ure|8|Asset and wellbeing losses, before and after Samurdhi scaleup .|28|
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NSI, minorities, particularly gypsies, are probably underrepresented. Moreover, the very detailed nature of the questionnaire can lead to a high refusal rate, increasing the likelihood of sample bias. However, officials of the NSI assured us that the sample adequately represented the incomes and expenditures of the Bulgarian population.

The remainder of the paper is structured as follows: Section II discusses the concept of and measurement of income, used in the survey and our analysis, the level of income, the composition of income and income distribution. Section III compares Bulgaria's income distribution with other developing, Eastern European and OECD countries. Section IV analyzes household characteristics by income decile and focusses on the salient features of lower income groups. Section V addresses the question of who benefits from the social safety net in Bulgaria. This section also suggests some improvements in the targeting of social benefits, drawing upon the characteristics of lower income households identified in the previous section. Finally, Section VI provides concluding remarks and policy implications.

# II. **Household Income: Its** Level, **Composition, and Distribution**

Income Measurement. The concept of income employed in the NSI survey includes seven major sources - earned income, property .ncome, social insurance, social benefits, income from sales, other sources of income, and income from loans, credits and savings. Some of these sources, such as income from sales of property, borrowing and saving withdrawals, do not belong to current income. The inclusion of these sources
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# **2.2 Socioemotional outcomes**

Most of the literature on CCTs and scholarships focuses on schooling and cognitive skill outcomes, with some exceptions that consider the impact of transfers on political and social factors, household consumption smoothing (Sparrow 2007), labor market outcomes (Araujo et al. 2016; Filmer and Schady 2014; Parker and Vogl 2018; Silva and Sumarto 2015), or health (Cruz et al. 2017). Few studies analyze the impacts on various outcome dimensions simultaneously. In high-income countries, socio-emotional skills have been found to be important predictors of success in school and life in general (see West et al. (2016) for an overview), and the importance of social skills has grown in the U.S. labor market between 1980 and 2012 (Deming 2017). Research from the United States suggests that teachers can have large effects on socioemotional outcomes, although a teacher’s productivity in terms of student cognitive achievement is only a weak predictor for her impact on measures of students’ socioemotional outcomes (Blazar 2017; Blazar and Kraft 2017; Jackson et al. 2014; Kraft 2017; Santorella 2017). At the same time, little is known—especially in low- and middle-income countries—about whether increased educational attainment leads to more socioemotional skills, and how this might interact with the formation of cognitive skills. Some analyses have tried to shed light on these relationships. For example, Kyllonen and Bertling (2013) report how participants’ self-reported confidence in mathematics in the 2003 Programme for International Student Assessment (PISA) study was positively correlated with performance. Claro et al. (2016) use a national data set of all tenth-graders in Chile to show that a student’s “growth mindset” can predict academic performance, offsetting socio-economic achievement gaps. However, these studies cannot identify exogeneous variation in schooling and cognitive skill, making causal inferences difficult.<sup>6</sup>

> 6In a well-identified study, Fabregas (2017) investigates the effect of school quality and peer composition on students’ academic performance, perseverance, aspirations, and time-management, in Mexico. But this and related research on peer effects ( _ibid._ , for a review) does not shed light on the of educational attainment.

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Figure 9: Heterogeneity in the Prevalence of Shocks across States <!-- Start of picture text --> 2009<br>60%<br>50%<br>40%<br>30%<br>20%<br>10%<br>0%<br>Northern River Nile Red Sea Kassala Al-Gadarif Khartoum Al-Gezira White Nile Sinnar Blue Nile Northern Southern Northern Western Southern<br>Kordofan Kordofan Darfur Darfur Darfur<br>Floods/Drought Crop Disease Livestock Loss Severe Illness/Accident Death of a hh. Member<br>Fire Robbery/Assult Dwelling Damaged Severe Water Shortage Other Shocks<br>2014/15<br>45%<br>40%<br>35%<br>30%<br>25%<br>20%<br>15%<br>10%<br>5%<br>0%<br>Floods/Drought Crop Disease Livestock Loss Severe Illness/Accident Death of a hh. Member Fire<br>Robbery/Assult Dwelling Damaged Severe Water Shortage Other Shocks Death of a hh. Head<br><!-- End of picture text --> _Source_ : Authors’ calculation using 2009 NBHS and 2014/15 NHBPS.

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The household scale of these new establishments following the political reforms is a more novel pattern and follows partly from the fact that most women-owned establishments in unorganized manufacturing are household based.

This related work about the specificity of local industrial networks among women-owned businesses is important for understanding the type of local stimulus we should be considering. Specifically, the stimulus following the elections can be neutral towards industries in its form and still match our cross-industry differences. That is, the stimulus does not necessarily need to target industries favored by women-owned businesses. In fact, the more neutral the orientation of the stimulus, the more likely we are to observe the industry patterns exhibited, with the added twist in this case that industries with a strong household-based nature are particularly affected. This is because a neutral stimulus can prompt entry rates that build upon and extend the existing foundation of women-owned businesses.

So what could be the local, neutral factor? We have two candidate explanations, neither of which we can definitely confirm. The first explanation descends directly from the celebrated studies that began this literature about how reserved leadership positions can influence the allocation of local resources (e.g., Pande 2003, Besley et al. 2004, Chattopadhyay and Duflo 2004a,b). This work highlights how the Indian political reservations stimulated greater provision of funds towards infrastructure and public goods favored by the minority group and/or greater access to existing infrastructure. This heightened provision of infrastructure and public goods specific to women could have lowered the cost of entrepreneurship for women, resulting in higher entry rates. To this end, a very consistent finding in studies of Indian entrepreneurship generally (i.e., male and female combined) is the important role of local infrastructure (Ghani et al. 2013a,b, Mukim 2011). Thus, a greater general provision of infrastructure and public goods towards women can match both the entry response and the cross-industry differences. It is important to note that this provision would need to have assisted women disproportionately compared to men in order for us to have observed entry rates in excess of the baseline responses of male-owned businesses. Overall the village-level evidence developed in the prior studies would be consistent with our work.

A second candidate explanation is that the political reservations inspired women to start their own businesses. The striking findings of Beaman et al. (2012) are that female leadership 28
- **Debt flows:** Our key measure for debt flows (or borrowing) is commitments to public and publicly guaranteed borrowers (series code “DT.COM.DPPG.CD” in the most recent vintage), where public and publicly guaranteed borrowers are defined as above and commitments refer to the total amount of long-term external loans for which contracts were signed in a given year.

# **3.2 Measurement and interpretation**

By comparing debt statistics across different vintages in our database, we can measure both the amount of unreported debt in any given year and the timing of discovery or revelation of previously unreported debt. More formally, we rely on the following two measures that we construct for both the debt stock and debt flow series.

where _Debt_ is either the debt stock or flow value, reported in vintages _V_ and _v_ 0, with _V_ being the most recent vintage and _v_ 0 being the first vintage with a value for country _i_ and year _t_ . In other words, the amount of unreported or hidden debt in a given year is defined as the difference between the debt value when first published and the debt value in the most recently published vintage.

We define hidden debt revelations as the amount of hidden debt uncovered in a given vintage and derive it as the difference in debt values in vintage _v_ and vintage _v −_ 1, summed across all past years for which both vintages report a value for _Debti,t_ .

where _Debti,t_ is defined as above, with _t_ 0 being the first year available in both vintages _v_ and _v −_ 1, and _T_ being the most recent year available in the same two vintages.<sup>17</sup> By definition, the total amount of hidden debt equals the total amount of hidden debt revelations for any particular country.

**Interpretation:** As explained above, the data from the World Bank International Debt Statistics that we analyze is exclusively based on debtor reporting. It is not subject to valuation changes and is compiled according to reporting rules that have been remarkably stable across 50 years. Therefore, revisions should be exclusively caused by changes in

> 17Note that equation (2) has a clearer interpretation for the flow measure than for the stock measure of debt. The reason is that an ex post addition of a single _loan_ leads to revisions of debt _stocks_ across all years until final repayment and therefore involves double-counting. The same issue does not exist for the flow measure.

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findings on absence rates from a large multi-country study indicate that absenteeism rates among teachers are between 11 and 27 percent and translate into low quality of services (Chaudhury et al. 2006), and country-specific surveys indicate even larger rates (close to 50% in primary health clinics in Uganda, Bjorkman and Svensson, 2009). The indicator of absenteeism among the frontline teaching staff is measured as the share of teachers not in schools as observed during two unannounced visits.

# _Number of hours children are in school being taught_

Even when in school, survey evidence from several countries suggests that teachers are not necessarily teaching (at regular teaching hours). The absenteeism survey can also be used to measure the extent to which teachers are not only in the school but actually in a classroom, as opposed to some other activity at the school. But plenty of anecdotal evidence suggests that even when a teacher is in a classroom, time is not necessary spent on teaching. Through a threepronged approach, we will capture the actual number of hours children are being taught. To this end we will combine data from the absenteeism survey, with information on actual (reported) teaching hours, and classroom observations to estimate the number of hours children are in school being taught (per day or week). The classroom observations will be done both in the classroom and by having the enumerators observe practice outside of it. As a by-product of the classroom observations we will generate detailed information about the pedagogical practices in the classroom.

# _Share of teachers with minimum qualification_

Having teachers teaching, however, many not be enough if the teacher’s competence (ability/knowledge) is inadequate -- a major problem in several SSA countries and especially in rural and poorer areas. This indicator measures teacher’s knowledge and is based on a basic test of competence administered at the school level. The proposal is to test all (or at least a sample of 10) teachers teaching English (French) and mathematics in Grade 4, and those that have taught those subjects in Grade 3 the preceding year. This will be done by administering mathematics and/or language tests covering the primary curriculum as well as a pedagogy test adapted from teacher training entry tests in developed countries.

# <u>Budget</u>

# _Effective education expenditure reaching primary schools (in % of the education budget)_

The transfer and availability of resources toward frontline service providers could be very low in various countries due to leakage of resources or because of allocation rules that favor administrative or other purposes not directly related to direct services to citizens. The indicator of availability of resources at the primary school level assesses the share of the education budget available for direct services to students at the school level. That is, for every dollar allocated in
other countries.<sup>8</sup> There is a vast literature which<sup>uses DEA for inter-countriescomparisons.For</sup> Scandinavian countries, a study by Berg _et al._ (1993)<sup>computeda separate frontierfor every</sup> country and a common frontier for all countries.<sup>The study found that Swedish banks were the</sup> most efficient, a result sustained by a follow-up<sup>paper by Bukh</sup><sup>_et aL_(1995).Bergendhal(1998)</sup> studied the same countries using a slightly modified<sup>approach.In a broader context,Pastor</sup><sup>_et al._</sup> (1994) applied DEA to 427 banks from 8 developed<sup>countries.Theyfound a mean efficiency</sup> value of 0.86, with the highest efficiency value of<sup>0.95for France and the lowestefficiency value</sup> of 0.55 for the U.K.

# Chapter 3. **Data** and Measurement Issues

The analysis presented below is based on a data<sup>set compiled by BankScope. 9The set</sup> contains comprehensive financial data on a large<sup>number of banks from transitioneconomies.</sup> The distribution of sample banks by countries<sup>for 1995-1998is shownin Table 2.A total of</sup> seventeen transition countries are represented.<sup>Table3 contains the sharesof assets of sarnple</sup> banks in total assets of the banking system<sup>in each particularcountry.As one can see,the data</sup> set is fairly representative: in some cases: (e.g. Croatia,<sup>Estonia,Slovenia)it coversover 90</sup> percent of the banking sector at a point in time between<sup>1995 and1998.Poorly represented</sup> banking sectors are those of Bulgaria, Russia<sup>and Ukraine, where the shareof sample banks does</sup> not exceed 40 percent for any particular year. The<sup>financialindicators of individualbanksare</sup> collected by BankScope using audit reports of<sup>banks completedby intemationallyreputable</sup> auditing firms, and are believed to be largely IAS<sup>compliant.As we foresee arguments</sup> concerning the reliability of some of the indicators<sup>in an environment whereserious misreporting</sup> and non-compliance takes place, the choice of<sup>countries (thosewith relativelyadvanced banking</sup> sectors compared with the overall population of<sup>transition economies'0),and sample period</sup>

**8** See Berger and Humphrey (1997) for a detailed survey.

9 In addition to making use of data collected by BankScope<sup>-which largely containedbalance</sup> sheet and income statement information - with the<sup>help of World Bank field staff, we collected</sup> data on banks' employment and foreign<sup>ownership.</sup> 1 Belarus and Ukraine would be the exceptions.
revenue. By using a 65 sector/48 household CGE for South Africa they show that triple dividend is possible for water policy.

Beritella _et. al._ (2005a) develop GTAP-W, a large scale CGE model that extends GTAP Model of Hertel _et. al._ (1987). Their main contribution is the introduction of a water module to a very large trade model, namely GTAP. They relate water scarcity with international trade and analyze the possible effects of reductions in water availability on global trade. Their model consists of 17 sectors, 16 regions and 16 household types. In the model they consider both a non-market case and a market solution case. They conclude that welfare losses are substantially larger in the non-market situation. Beritella _et. al._ (2005b) introduce the tax policies to the model of Beritella _et. al._ (2005a). They conclude that water taxes reduce water use and lead to shifts in production, consumption, and international trade patterns. The countries that do not levy water taxes are also affected by the taxes levied by other countries. Lastly, effects of water tax on production and water tax on final consumption are different. Another extension to Beritella _et. al._ (2005a) is Beritella _et. al._ . (2006) who uses a the same CGE model to estimate the impacts of the Chinese North-South water transfer project on the economy of China and the rest of the world. They conclude that China will benefit from the project at the expense of the International trade and global GDP.

Another international trade model is offered by Kohn (2003). Kohn uses a HeckscherOhlin framework to illustrate the effects of international water trade. The focus is on the Middle East, which is assumed to be one of the important water conflict areas. They model water both as a produced good in which one of the countries have a comparative advantage and as an input used to produce the other good. Both countries are better off with international trade. Consequently he offers water markets as an alternative to warfare. Kohn (2003) utilized the Heckscher-Ohlin-Samuelson general equilibrium framework to examine the economic efficiency of international trade in water as a means to mitigate water scarcity when water is both an input and output among the trading countries (Bucconsufo, 2005; Beritella _et. al,_ 2006).

Briand (2004) developed a static CGE model to estimate the effects of a water price policy on production and employment in Senegal (Velazquez, 2007). She models the drinking water as a consumer good and primary water as a production factor which is also a produced by government. Her modeling attempt turns out to be incomplete. However, she is the first to introduce the competition between irrigation and drinking water to a CGE model.

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