rafmacalaba/datause-encoder-data huggingface dataset:
In terms of revenue growth, we see in CEE a high positive effect of privatization to foreign owners in the early period and a small effect in the later period, and an insignificant effect of privatizing to domestic owners. The one study that covers CIS does not distinguish between domestic and foreign private ownership and suggests that the effect of privatization is statistically insignificant. The somewhat positive findings for foreign-owned firms may be brought about by their better access to foreign markets and possibly support from foreign headquarters.

With respect to China, Jin Jia, Sun, and Tong, (2005) find the effect of ownership on the rate of change of real sales to be insignificant, while Sun and Tong (2003) estimate this effect to be negative for state majority ownership, insignificant for foreign majority ownership and positive for companies that are listed on the stock exchange.

Overall, the studies of CEE and CIS countries indicate that privatization tends to have a positive effect on the scale of operation, while studies of the effect of private ownership on the rate of change of scale of operations (from CEE, CIS and China) suggest that this effect is not statistically significant except in some well defined categories of ownership.

# _4.4 Labor Productivity_

Estimates of the effect of ownership on labor productivity (not controlling for the use of others inputs) are based on twenty four studies. The results of these studies have a less clear-cut interpretation since differences across types of firms could be due to different efficiency or simply to different non-labor (especially capital) factor intensity. For this reason we do not present these results graphically. Nevertheless, it is reassuring that the findings of these studies are similar to the TFP results -- they suggest that the effect of private ownership is primarily positive or insignificant. Similarly, as in the case of TFP, foreign ownership and concentrated ownership are found to have a positive or insignificant effect, while the effects of employee and management ownership are estimated to be mostly statistically insignificant. Finally, newly established firms are found to have lower labor productivity than others in some studies but not in others, but this may be brought about by a scale effect. Government retention of a golden share (veto power over certain key decisions) appears to have an insignificant effect.

25
# **II. THEORETICAL UNDERPINNINGS OF POLICY-BASED LENDING**<sup>4</sup>

In a world of "perfect and costless" information, the role of the financial system is passive: finance is provided to the projects that yield the highest returns. There is little scope for activist involvement by either governments or financial institutions for improving the allocation of credit. In the real world, however, information is highly "imperfect" and costly. The allocation of credit suffers from the existence of informational asymmetries, from the costs of monitoring and verification, and from the costs of contract enforcement. Under these conditions, credit is not necessarily allocated to its best use.

Informational asymmetries give rise to problems of adverse selection, moral hazard, free riding and incentive incompatibility. Asymmetric information problems are further compounded by uncertainty about project returns and by the existence of dynamic externalities. These support a greater involvement ot governments and financial institutions in the allocation of credit, although the information problems that inhibit the functioning of markets also constrain the ability of governments and financial institutions to enhance efficiency in the allocation of credit. The information problems that cause markets to be imperfect also cause financial intermediaries (whether privately or publicly owned) and governments to be imperfect.

Economic theory has made considerable progress in recent years in understanding these phenomena and has bridged the wide gap that used to exist between theory and practice. For instance, economic theory stresses the role of market imperfections in explaining the reliance of firms on internally generated funds (retained earnings) as well as on other forms of so-called "inside" finance, i.e. finance provided by owners, managers and banks that have access to information that is not available in the public domain. Such reliance is especially pronounced for young growing firms and for new industrial sectors in developing countries and is clearly a factor constraining their growth. "Inside" finance is less costly than "outside" finance. Increases in available "inside" finance reduce the marginal cost or premium of outside funds.

In the absence of full information, banks tend to allocate credit to firms with available internal funds or with a reliable track record even if they are not the ones with the best investment opportunities. Financial intermediaries, especially (but not only) commercial banks, can play an important role<sup>in</sup> screening projects, monitoring behavior, verifying outcomes, managing corporate distress and resolving agency problems. By developing and maintaining close long-term relationships with their customers, commercial banks can have superior information to that of outsiders, can support expansion plans, and can also reduce the costs of corporate distress.

4 This section draws on Calomiris et al (1992) and Calomiris and Himmelberg (1994a and 1994b), which also contain detailed references to the academic debate on theoretical issues.

3
**Table 2: Descriptive Statistics**

||**First W**|**ave=2004**|**Second**|**Wave=2006**|**P**|**anel**|
|---|---|---|---|---|---|---|
|**Variables**|**Mean**|**Std. Dev.**|**Mean**|**Std. Dev.**|**Mean**|**Std. Dev.**|
|Household size|6.5|2.4|6.8|2.4|6.6|2.4|
|Age|44.7|13.5|47.5|13.3|46.1|13.5|
|Female head of household<sup>*</sup>|0.13|0.33|0.12|0.32|0.12|0.33|
|Education<sup>*</sup>|0.03|0.18|0.02|0.16|0.03|0.17|
|Credit<sup>*</sup>|0.71|0.45|0.75|0.43|0.73|0.44|
|Extension<sup>*</sup>|0.65|0.48|0.36|0.48|0.50|0.50|
|Fertilizer distribution center<sup>*</sup>|0.34|0.47|0.40|0.49|0.37|0.48|
|Climate|611|257|530|229|570|246|
|Price risk|0.32|0.63|0.30|0.61|0.31|0.62|
|Wealth<sup>*</sup>|0.47|0.50|0.59|0.49|0.53|0.50|
|Village Council membership<sup>*</sup>|0.16|0.36|0.16|0.37|0.16|0.37|
|Relative price|1.78|0.31|2.31|0.41|2.06|0.45|
|Area|2.58|5.92|2.10|8.37|2.33|7.30|
|Weather|13.6|170.6|-65.7|149.2|-27.1|164.8|
|Livestock density|6.8|8.2|8.9|26.1|7.9|19.6|

Source: Authors’ calculations based on EEA-World Bank survey, Central Statistical Authority, Ministry of Agriculture and Rural Development, Agricultural Marketing Directorate, and the Ethiopian Meteorological Agency. Note: * denotes binary variable.

30
The paper is organized as follows: Section I provides a theoretical framework that gives rationale for the hypothesis that that global funds would prefer to invest in firms where they are subject to milder information asymmetries than specialized funds. Section II describes our data. Section III presents the bivariate analysis of firm characteristics and mutual fund holdings while Sections IV and V reports the multivariate analysis with logit and poisson models with overdispersion of the determinants of mutual fund holdings. Section VI concludes.

# **I. Theoretical Framework**

A simple portfolio model with short-selling constraints allows us to relate the mandate of mutual funds to their incentives to gather and process costly information. The theoretical framework used here is based on Calvo and Mendoza (2000) and adequately reflects the cost-benefit analysis of information acquisition and processing faced by Global and Specialized funds. The model shows that more specialized investors will be more informed about particular countries or firms than investors with broader mandates. Hence, global funds would prefer to invest in firms where they are less prone to information disadvantages than the more specialized ones. The model thus gives rationale to the hypothesis of this paper – there is heterogeneity in how information asymmetries affect investors’ portfolio choices.

The model assumes that a representative investor can choose assets from _J_ countries (2  _J_   ) of which _J-1_ are identical countries and there is a single different Country _i_ . All

> See for example, Fama and French (1992, 1993, 1996) and Daniel and Titman (1997) for evidence on abnormal returns for small firms.

9
In addition to these issues of specification, there are some measurement considerations. First, in our preferred regression models, we specify the dependent variables as the change in the prevalence of food insecurity across two successive periods. This approach is in contrast to most of the analogous growth-poverty literature, in which it is common to measure the dependent variable as a percentage change. However, taking the percentage changes of a prevalence rate can cause scaling problems and create outliers (Deaton 2006; Headey 2011c **[[There is no “Heady 2011c” listed in the references section. Do you mean 2011a or 2011b?]]** ).<sup>13</sup> The only significant advantage of using a percentage change is that it allows for the derivation of elasticities that can be directly compared to the literature that examines the impact of economic growth on poverty. Therefore, in some of our results, we also report these elasticities, although our preferred estimates focus on first differences.

A second issue pertains to measurement error in the Gallup data. Some apparent outliers are indicative of this measurement error. In figure 1, we consider potential outliers more systematically with scatter plots between changes in food security and various indicators of assumption that both right-hand side variables are strictly exogenous at all leads and lags, which is unlikely. Hence, we do not solely rely on the fixed effects estimator.

13 The problem with taking percent changes in prevalence rates can be illustrated with an example of a country with high food insecurity and a country with low food insecurity. In the food-insecure country, suppose that food insecurity decreases from 42 percent at time _t_ − 1 to 40 percent at time _t_ . This yields a first difference of two percentage points and a percent change of approximately −4.7 percent (that is, 2/40 × 100). However, an equally large reduction in malnutrition prevalence in the foodsecure country from 4 to 2 percent yields a percent change of 50 percent. Not only is a 50 percent change likely to be an outlier, but it is also 10 times the value of the equally large reduction in malnutrition in the high-malnutrition country. Of course, one could argue that this may not matter if percent differences are applied to the right-hand-side variables. In the case of per capita income, however, this is not true because the denominator (initial income) is invariably large enough to produce more meaningful estimates of percent change. Moreover, percent changes in income make sense if there is a diminishing marginal impact of income on food insecurity.

17
they could not coordinate with the Bank missions. Also, Bank missions were sometimes viewed as having disruptive effects due to their unplanned and hurried style and short periods of stay. One such observer described it thus: "multiple individuals flying in and immobilizing large numbers of people, forcing quick decisions too soon in an unreal timeframe." This sentiment is also expressed as follows: "The numerous Bank missions to Egypt were seen by some Egyptian officials as a hindrance to this work. Egyptian officials complained that time and effort were spent with mission members, and this delayed their work."<sup>3 0</sup> There are also a number of countries where program managers perceived Bank missions as helpful in providing a forum for concentrated discussion, clarification of issues and removing short term bottlenecks. Intensive Bank supervision was one of the favorable factors in successful performance of the Population and Family Welfare Project in the Dominican Republic.<sup>3 1</sup> During the implementation of the Kenya-I Project, supervision missions were found "helpful in resolving problems and removing bottlenecks related to procurement, disbursement and project management."v32 However, while supervision missions are effective in routine activities, they do not afford majpr strategic reviews or a very close look at the periphery, where worker-client transactions take place. The PPAR for Indonesia-II points to the need for the supervisory missions to "spend more time in the field, where the impact of the program ultimately will have to be assessed."<sup>3 3</sup>

# 3. The Evaluation Component

Evaluation is the weakest link in the project process. Supervisory missions provide neither the time nor the incentives for the mission leader to give adequate attention to process evaluation. PCRs and audit reports are generally not available until long after the beginning of the next project. There is also no consistent methodology for evaluation. The problem of evaluation is compounded due to weak project designs, which do not detail evaluation procedures and measures. The PPAR for Indonesia-II gives a succinct analysis of this problem:

> 3 0 PPAR: Egypt - First Population Project (October 19, 1982)

p. 4.

> 3 1 PPAR (April 19, 1985) p. 33.

> 3 2 PPAR (July 2, 1981) p. 44.

> 3 3 PPAR (June 23, 1986) p. 18.

60
distinguishes between average impacts on exports of all B&R economies, and specific impacts by country and industry. In a third step, the paper characterizes the current degree of exposure of each B&R economy to cross-industry supply and demand shocks that are likely to arise from further integration with China. To conclude, the paper reviews recent empirical evidence on the labor market impacts of trade shocks, and discusses policy options to deal with trade-induced adjustment costs.

The descriptive analysis reveals that, over the past two decades, Chinese exports became less concentrated geographically. Although the share of exports to the US remained little changed between 1995 and 2015 (at about 20% in both 1995 and 2015), the relative importance of other major destinations, notably Hong Kong SAR, China, and Japan, declined considerably at the expense of other markets, including Mexico, United Kingdom, India and Vietnam. B&R economies accounted for about a third of China’s export revenue between 1995 and 2015. While they have been more important for China as export markets than as sources of imports, in recent years the share of imports originated in B&R economies has observed an upward trend, rising from about 25% in 1995 to nearly 30% in 2015. China is an important trade partner for many B&R economies, especially as a source of imports.

The econometric analysis reveals that industry-level exports of B&R economies were significantly impacted by China’s trade shocks. Between 1995 and 2015, demand shocks associated with China’s trade growth were more important than competition shocks, implying that the overall net impact of China trade shocks on the exports of B&R economies during this period was significantly positive. However, in the period 2005-2015 competition shocks had a stronger negative impact on exports of B&R economies. These effects were heterogeneous across B&R economies and industries.

Looking ahead, the analysis of trade data from 2015 reveals that several B&R economies exhibit a relatively high degree of exposure to competition shocks associated with further integration with China. This is the case of Hong Kong SAR, China, Vietnam, Malaysia, Philippines, Thailand and Indonesia, which source a relatively large share of imports from China and have an export structure that is closer to that of China. To the extent that heterogeneity in export structure reflects the 3
**_Electricity Sector Reform in Developing Countries, Jamasb, Mota, Newbery, Pollitt_**

In developing countries, the macroeconomic crisis of the 1980s created the need for a regime of fiscal responsibility. A combination of high levels of inflation, increasing debt burden and deterioration of the quality of public services, spurred political support for the liberalisation of infrastructure industries. Tariffs kept artificially low for antiinflationary purposes meant that electricity utilities’ self-financing capacity was increasingly eroded during the 1980s, affecting both investment and quality of service. Privatisation would improve not only the financial health of the sector, but would also increase revenue for state treasuries, so helping to reduce and restructuring public debt. In addition, new investment would be undertaken by the private sector.

The need to ensure expansion of capacity is of special importance to less developed countries where there are 1.7 billion people without access to electricity (WRI, 2002), and social and environmental considerations need to be integrated into reform design. The pressure for reform from donor agencies also reinforced the move towards liberalisation.

# **2.1.2 Elements of reform**

The electricity industry is a network comprising separate but connected and closely coordinated, potentially competitive and natural monopoly activities. Also, historical development, institutional features and resources characteristics of power sectors can differ considerably across countries. Although there is a substantial variability in individual reforms, they generally involve a combination of the following key elements (see e.g. IADB, 2001; Joskow, 1998; Newbery, 2002a):

- Corporatisation of state-owned utilities;

- Enactment of an electricity reform law;

- Unbundling of vertically-integrated utilities into corporatised generation, transmission, distribution and supply activities, and where necessary horizontal separation of these;

- Provision of third party access to networks;

- Regulatory reform, including adoption of incentive regulation for the natural monopoly network activities;

- Establishment of an independent regulator;

- Establishment of a competitive wholesale generation market;

- Liberalisation of the retail supply market;

- Privatisation of electricity assets;

- Definition of rules concerning consumer protection, allocation of energy subsidies, and stranded costs.

A World Bank survey on the state of energy reform in developing countries focused on six key steps to electricity sector reforms: (i) corporatisation or commercialisation of the core utility; (ii) enactment of an ‘Energy Law’; (iii) establishment of an independent regulatory authority; (iv) restructuring of the core utility; (v) private investment in greenfield sites; and (vi) privatisation (Bacon, 1999). The survey suggests a sequence of key reform steps in which the most common component is corporatisation and 7
Table 7: Estimates of Employment and Unemployment Duration, by Sector

|||Unemployment<br>(Weeks)|Formal Sector<br>(Months)|Informal Sector<br>(Months)|
|---|---|---|---|---|
|Estimate using hazards||183|||
|||(0.0041)|||
||FSO Defnition||62|167|
||||(0.0030)|(0.0022)|
|Estimate from Duration Data||52|||
|||(0.903)|||
||FSO Defnition||69|100|
||||(1.16)|(1.11)|
||SP Defnition||82|92|
||||(1.21)|(92.33 )|

Author’s calculations based on ECH, Second Quarter 2003, 13 Metropolitan Areas. All statistics weighted using expansion factors. Standard errors in parentheses Table 8: Fixed Parameters -Based on data or previous micro studies

||Description|Value|
|---|---|---|
|PARAMETERS|||
|_r_|interest rate|0.02|
|_PF_|price formal-sector good|0.84|
|_PI_|price informal-sector good|0.76|
|_μy_<br>|mean, worker types|10.31|
|_σ_<sup>2</sup><br>_y_|variance, worker types|17.38|
|_λ_|rate of arrival productivity shock|0.04|
|_b_|opportunity cost of leisure|1.0|
|_β_|worker’s Nash bargaining power|0.5|
|_A_|technological parameter, matching function|2_._0|
|_αm_|elasticity matching function|0_._5|
|PUBLIC POLICY|||
|PARAMETERS|||
|_δ_1|employer NWL cost as percent of FS wage|0_._534|
|_δ_2|employee NWL cost as percent of FS wage|0.083|
|_δ_3|subsidized health as percent of IS wage|0.118|
|_s_|severance cost|0|
|VALUATION|||
|PARAMETERS|||
|_τ_|FS worker, valuation of social security services|0|
|_μ_|IS worker, valuation of social assistance services|0.5|

39
2 policies and institutions aimed at easing the friction incurred with intersectoral labor mobility. Similarly, wage setting mechanisms must be instituted, possibly through collective bargaining. These would be more compatible with the way a market economy functions, and include limited state intervention. The new system will also require a new union movement and new regulations on job security and non-wage compensations.

During the transition period, crucial labor market policies to be adopted include: (a) Adoption of suitable wage indexation norms using wages as a nominal anchor while the wage structure is deregulated to reflect lrbor productivity; (b) Facilitation of labor dismissal and encouragement of labor mobility; and (c) Implementation of a social safety net to assist the unemployed. In the medium to longer term the basic reforms to be pursued are: (a) Creation of a wage setting mechanism based on employer bargaining; (b) Establishment of an unemployment insurance system and other institutions needed in a market economy; (c) Design of an appropriate system for monitoring the labor market.

This paper is written in four sections. After this introduction, Section 2 describes the present economic situation and the policies adopted to date with respect to employmnent, unemployment and wages. Section 3 analyzes the implications and problems associated with these policies and presents alternative unewiloyment scenarios. Section 4 offers conclusions and elaborates policy implications.

# AL LABOR **MARKET** CONDMTIONS AND RECENT POUCIES

## **A.** Labor Forc and Employment

CSFR is characterized by relatively low population growth and high labor force participation (LFP). Over the period 1970-1990 the population grew at a rate of 0.4 percent per annum (p.a.), a rate that dropped to 0.2 percent p.a. during 1985-90. The working age population (WAP) grew at a similar rate (0.4 percent) during these periods. This change in the age structure in turn suggests the absence of important supply pressures.1 In general, the LFP is relatively high (Table 1A, Appendix), reaching on average 86.9 percent in 1981-882. In contrast, in 1981 and 1980 this rate reached 55.8 and 72.5 percent in, respectively, Hungary and Yugoslavia. In the Western European countries of Austria, the former West Germany, France, and Spain, the LFP was respectively 65.9%, 67.2%,

**_1_** Figures on flow of entrants into and leavers from the labor force also indicate a relatively static labor market. In 1985-1987 the net additions to the labor force were 03% p.a., while this same indicator declined to 0.1% in 1987-1989.

2 According to the International Labor Office (ILO), in 1980 the LFP in CSFR reached 78.9%. IL defines working age population as those between 15 and 65 years. CSFR's statistical sources define working age population as those between 15 and 60 years for males, and 15 and 55 years for females. Therein lies the difference between ILO results and those reported here.