rafmacalaba/datause-encoder-data huggingface dataset:
consumption be denoted by _Fy_ .

**Assumption 2** _Fy can be represented by a normal mixture distribution of the form:_

_where Fj are normal distribution functions with mean mj and variance s_<sup>2</sup> _j_<sup>_,andwhere_</sup> _πj are non-negative mixing probabilities that sum up to_ 1 _._ Under Assumption 2, the distribution for log ̃ _xi_ denoted by _Gx_ can also be represented by a normal mixture distribution. It follows that: where _Gj_ are normal distribution functions with mean _mj_ and variance _νj_ = _s_<sup>2</sup> _j_<sup>+</sup><sup>_σ_2</sup><sup>_/b_2.</sup> Since log ̃ _xi_ is observed, the normal mixture distribution _Gx_ can readily be estimated (see for example the FMM package in Stata). This gives us estimates for _πj_ , _mj_ and _νj_ . Note that this also identifies two-thirds of the parameters of _Fy_ (as the parameters _πj_ and _mj_ are shared between _Fy_ and _Gx_ ). To fully identify _Fy_ , we also need estimates for _s_<sup>2</sup> _j_<sup>,whichcanbeobtainedbycombiningestimatesfor</sup><sup>_νj_withtheestimatesfor</sup><sup>_σ_2</sup> and _b_ , as: _s_<sup>2</sup> _j_<sup>=</sup><sup>_νj−σ_2</sup><sup>_/b_2(providedthat</sup><sup>_νj>σ_2</sup><sup>_/b_2;ifthisconditionisviolated,we</sup> could reduce the number of components by one until all mixture components satisfy this condition).

At this point we have an estimate of the unconditional distribution _Fy_ for NSS log consumption log _yi_ . What we really want is an estimate of the distribution for log _yi_ conditional on the observation of CPHS log consumption log ̃ _xi_ for household _i_ . Let us denote this conditional distribution by _Fy|x_ . It follows that _Fy|x_ is also a normal mixture distribution (see e.g. Elbers and van der Weide, 2014), i.e. _Fy|x_ satisfies _Fy|x_ =<sup>�</sup> _j_<sup>_αjFj|x_,where</sup><sup>_Fj|x_are normal distribution functions with mean</sup><sup>_mj|x_</sup> and variance _s_<sup>2Lemma2fromElbersandvanderWeide(2014)showsthatthe</sup> _j|x_<sup>.</sup> parameters that define _Fy|x_ can be derived from the parameters of the normal mixture ̃ _Fy_ and the estimate for _σ_<sup>2</sup> = _σ_<sup>2</sup> _/b_<sup>2</sup> :

35
# **TABLE OF CONTENTS**

||||Page Nu|mber|
|---|---|---|---|---|
|1.|INTR|ODUCTION ...........................................................||1|
|2.|NAT<br>CON|URAL MONOPOLY AND IDEAL COMPETITION IN NETWORKS<br>TRASTED ...........................................................||3|
|3.|INTR|ODUCING COMPETITION IN NETWORK INDUSTRIES .<br>.......|................|.... 10|
||3.1|Competition for the Market ...........................................................||10|
||3.2|Competition over Existing Networks ..................................................|.........|11|
||3.3|Investment in Expansion of the Bottleneck Facility ........................ ..|................|20|
||3.4|Remaining Natural Monopoly and the Role of Competition Policy ....|...... .......|22|
|4.|COM|PETING NETWORKS AND POLICY BARRIERS TO ENTRY ..........|.............|22|
||4.1|Competition among Networks .............................<br>....................|..........|22|
||4.2|Costs of Competition and Policy Barriers to Entry ........................ ...|................|24|
||4.3|The Political Economy of Natural Monopoly .....................................|.........**..**..|26|
||4.4|Basic Policy Rule ............................................................||28|
|_5._|A SK|ETCH OF SECTORAL IMPLICATIONS .............................................|..............|28|
|REF|ERENC|ES<br>.....................................................................................................|...........|30|
employer income, self-employment income, retirement income, rental income, land, transport, and stocks.

**A residential deduction is allocated to all West Bank and Gaza resident taxpayers, and additional deductions are allocated to those eligible due to expenditures on donations, education, housing, fixed transportation, and pension contributions, in that order.** We do not have information on the order in which these deductions are applied by law, and so they are allocated from largest to smallest (in terms of the average size amongst those that are eligible for the deduction, prior to scaling). Given other administrative and survey data gaps discussed in Annex B deductions cannot be precisely allocated and scaling is applied to compensate for these data gaps. This prevents a substantial over-allocation of these deductions, which would result in an under-allocation of PIT in the survey. Table 4-1 shows the difference in the allocated deduction amount in the survey prior to, and post, scaling, and compared with the administrative numbers. See Annex B for a discussion of the data gaps faced in allocating the deductions.

**Table 4-1: Scaling is applied to deductions to prevent an under-allocation of PIT in the survey**

|**Deduction**|**Survey**<br>**(pre-scaling)**|**Admin**|**Survey**<br>**(post-scaling)**|
|---|---|---|---|
|Residential(billion NIS)|7.1|1.1|1|
|Donations(million NIS)|46.4|n/a|46.4|
|Education(million NIS)|219|6.7|6.02|
|Housing (thousand NIS)|12,411.3|372|346.6|
|Fixed transport to work(thousand NIS)|79.8|329.3*|306.8|
|Pension contributions**|368860.5|34|31.8|

Source: World Bank and Ministry of Finance staff.

* Admin number from 2017

** Based on the employee contributions component only.

**Israeli tax policy allows deductions for disabilities, 52 percent of contributions to national health insurance, rental income, disabilities, and two tax credits: a tax credit**<sup>**41**</sup> **that varies by gender, and a tax credit of 35 percent of total contributions to pensions.** The size of the disability exemption varies based on duration; however the PECS 2016/17 does not indicate duration and so the full exemption of 72,720 NIS is applied to all individuals that report having a complete disability. A tax credit of 2.25 credit points (NIS 483 per month) was allocated to men and 2.75 credit points (NIS 591 per month) to women (a tax credit was worth NIS 215 per month in 2017). An additional 0.25 credit points were applied for travel to place of work for all men, and an additional 0.75 credit points for women. Due to data limitations, the following additional credits are not applied: credits for individuals who are supporting a spouse, have a working spouse, are a single parent supporting a child, have completed a degree within the last 2-3 years (depending on the degree), have applied for credit for individuals supporting a parent within an

> 41 Note that a tax credit differs from an exemption in that it is subtracted from an individual’s PIT liability, rather than from their taxable income.

28
countries, the MRS is smaller than unity, most notably in Italy, where however the budget is more skewed towards maintenance.

# 4. Conclusion

Reliable infrastructure, critical for businesses effective operation and household welfare, does not only rely upon government expenditure: governance matters. Indeed, high levels of governance —e.g. low corruption or high government effectiveness — are associated with high quality of electricity, water and transport networks.

This link between governance and infrastructure reliability provides a new lever for improving infrastructure. By ensuring better accountability and limiting flawed investments, infrastructure networks can be improved in the medium term without inflating fiscal budgets. We even find that improving governance as effectively as for example Ecuador did between 2010 and 2013 — what we define as exceptional but feasible governance reform — would allow to cut public expenditure by 30 % to 90 % in the transport sector, with highest savings for countries with poor governance quality but relatively high levels of per capita spending.

Wise budget allocation is another expression of good governance and participate in improving the overall infrastructure resilience. In most countries, maintenance of infrastructure assets is disregarded, due to lack of monitoring or because investments in new projects are more visible and therefore may serve electoral purposes. However, for most economies included in our analysis, we find that investment funds could be more productively used for maintenance purposes than if invested in infrastructure expansion. Thereby, overall road infrastructure spending could be reduced without loss of transport service quality.

In summary, meeting international and domestic policy objectives in terms of infrastructure quality and inclusion requires more than just investing in any infrastructure. It requires investing in the right type of infrastructure and taking into account a wide range of considerations and objectives.

# References

- Acemoglu, D (2005). Politics and Economics in Weak and Strong States. Journal of Monetary Economics, 52, 1199–1226. https://doi.org/10.1016/j.jmoneco.2005.05.001

- Arimah, B. C. (2005). What Drives Infrastructure Spending in Cities of Developing Countries? _Urban Studies_ , _42_ (8), 1345–1368. https://doi.org/10.1080/00420980500150680

- Boulin, J.-Y. (2006). _Local Time Policies in Europe_ . _Gender Divisions and Working Time in the New Economy_ . Edward Elgar Publishing. Retrieved from https://ideas.repec.org/h/elg/eechap/3591_12.html

- Cerra, V., Cuevas, A., Goes, C., Karpowicz, I., Matheson, T., Samake, I., & Vtyurina, S. (2016). Highways to Heaven: Infrastructure Determinants and Trends in Latin America and the Caribbean. _IMF Working Paper_ , _16_ (185), 40. https://doi.org/10.1089/cap.2006.16.671

- Fay, M., Hallegatte, S., Vogt-Schilb, A., Rozenberg, J., Narloch, U., & Kerr, T. (2015). Decarbonizing Development: Three Steps to a Zero-Carbon Future.

10
Table 7: Impact on rst generation reproductive health by age at start of the civil war

||(1)|(2)|(3)|(4)|(5)|
|---|---|---|---|---|---|
||Ever had a<br>stillbirth|Ever had a<br>miscarriage|Ever had an<br>abortion|Total live<br>births|Number of<br>infant deaths|
|Age 22 to 29 _×_ Months of war|0.002|0.001|-0.007**|-0.004|-0.000|
||(0.001)|(0.002)|(0.003)|(0.008)|(0.001)|
|Age 9 to 15 _×_ Months of war|0.001|0.000|-0.004|0.002|0.000|
||(0.001)|(0.002)|(0.002)|(0.006)|(0.001)|
|Age 4 to 8 _×_ Months of war|0.002|0.001|-0.005*|0.013*|0.000|
||(0.001)|(0.002)|(0.003)|(0.007)|(0.001)|
|Age0 to 3 _×_ Months of war|0.003***|0.006*|-0.002|0.024***|-0.001|
||(0.001)|(0.003)|(0.004)|(0.007)|(0.002)|
|Observations|4,421|4,421|4,421|4,421|4,421|
|Adjusted R-squared|0.022|0.018|0.061|0.466|0.003|
|Birth year and month xed eects|Yes|Yes|Yes|Yes|Yes|
|Regional trends and other controls|Yes|Yes|Yes|Yes|Yes|
|Village xed eects|Yes|Yes|Yes|Yes|Yes|
|Number of clusters|383|383|383|383|383|
|Control mean (Age 16 to 21)|0.0764|0.164|0.142|3.520|0.003|

Note: *** (**) (*) indicates signicance at the 1% (5%) (10%) level. Treatment on the treated estimates are reported based on a dierence-in-dierence specication. Standard errors are clustered at village level. All ages in the table refer to age at the start of the war. Comparison cohort is age 16 to 21 and cohort 22 to 29 is a second comparison group that serves as a placebo test. Other controls include an indicator for high caste and month of interview xed-eects.

45
# **Introduction**

Financial sector reform has gained center stage in current international economic policy debates. This certainly owes to the serious repercussions of the financial crisis that erupted in East Asia last year, as it should be expected to occur whenever critical financial events in a country or a region raise fears that market reactions could provoke widespread contagion. But the centrality of the issue has to do with a deeper reason, that is, the understanding of the crucial role that finance plays for the functioning of market monetary economies of production. Recent economic research has provided important theoretical and empirical elements to such understanding. More progress can be gained by further exploring the implications of the time dimension in the economic process. This will be one of the undertakings of this paper.

The paper analyzes the role of finance for economic growth and stability, and draws policy indications for financial sector reforms in emerging economies. Issues relating to financial crisis management problems and corporate governance are not dealt with in the paper as these are the subject of two recent World Bank policy studies (Claessens, 1988; Prowse, 1998).

The paper is structured in two parts. Part I analyzes the role of finance in a market monetary economy of production: Section 1. 1 presents a _circuit_ model of the financial system and illustrates the main structural, theoretical and incentive-related policy implications of circuit theory of finance. Section I.2 discusses the special role of the financial system as the core of the circuit process, and reports on recent empirical evidence. Part II focuses on policy issues: based on part I findings, section 1. 1 makes a case for improving incentives in financial sectors of market-oriented emerging economies, and section II.2 draws elements for incentive-based financial sector reforms.

3
households, plan to improve their businesses (microentrepreneurs only), do not operate in commerce (microentrepreneurs only), receive PROCAMPO transfers (farmers only), receive remittances (microentrepreneurs only), and are located in more agrarian municipalities. Microentrepreneurs with younger operations invest more but farmers with older operations invest more. Farmers that invested in land have formal and informal deposits/savings, improved the economic conditions of their households, and have younger operations. _For enterprises_ : have higher values of lagged I/K, stronger sales growth, and have more assets. Agricultural and manufacturing enterprises have lower I/K ratios.

The low use of loans has consequences for the amount of investment that occurs in the rural economy, posing a major obstacle to Mexico’s convergence toward its NAFTA partners. The empirical analysis, which includes proxies of business prospects and creditworthiness, shows that removing credit constraints would have its largest effect on the number of individual entrepreneurs that invest and on the I/K level of enterprises. From a policy perspective, the trick is to increase the level of prudent lending for a given level of risk-adjusted interest rate and per capita income. Had there been no credit constraints during the period covered by the surveys, the percentage of microentrepreneurs and farmers making investments would have been about 31 and 35 percent higher, respectively. The estimated effects on the I/K are smaller: 10 percent for microentrepreneurs and about 8 percent for farmers. In the case of enterprises, the estimated effects are more modest as the incidence of credit constraints is lower than for individual entrepreneurs. Removing credit constraints for enterprises would result in 3-9 percent increase in the number of enterprises investing and in 4-19 percent higher I/K ratio.

32
# 5. From preferences in principle to preferences in practice

So far, the analysis has been based on the preferential tariff rates that would in principle be levied on imports. However, not all imported products from preference‐receiving sources are automatically eligible for preferential duties. If, for instance, a specific product does not comply with the origin rules specified in an agreement between two countries, its imports will be subject to the higher MFN duty. Preference utilization rates are defined at the HS‐6 level as the share of total imports in a specific category that enter a country under preferences divided by the total imports from that source in the relevant category.<sup>15</sup> In this section, we illustrate the extent of preference utilization focusing on the European Union’s preferential trade.<sup>16</sup> More than 80 percent of preferences granted by the EU were fully utilized in 2016. More than 70 percent of exports from least developed countries to the European Union are eligible for preferences. In 2016, the rate of utilization of the duty free preferential advantage provided by the “Everything But Arms” arrangement<sup>17</sup> was equal to 94 percent. The share of exports from developing and developed countries which are eligible for preferences through non‐reciprocal (GSP and GSP+) as well as reciprocal agreements with the EU is much lower and equal to 18 and 16 percent, respectively. The rate of utilization of such preference is still high at above 80 percent (see Figure 16).

> 15 Note that the denominator of the utilization rate excludes all trade under zero MFN rates, and all trade in products under non‐zero MFN rates for which no tariff preference is available.

> 16 Data on utilization rates come from Eurostat.

> 17 The EBA agreement allows LDC‐originating products to enter the EU market duty‐free for all products except arms and ammunition.

18
censuses as their birth countries gained independence. Other changes are more subtle. The definition of an ‘Ethiopian’ included Eritreans in the 1970 census but not in 2000. Thus there is an artificial decline in Ethiopian migrants, as some have been relabeled as Eritreans in later years. Researchers need to keep these border changes in mind when performing their analysis and make the necessary adjustments.

# **_Collecting migrant data through proxy respondents_**

Collecting survey data on migrants in destination countries presents a number of challenges. These difficulties center on the absence of a proper sampling frame and the high cost of tracking down individuals who tend to form a small portion of the population or might be present without proper documentation and want to avoid detection.

Nevertheless, most high-income destination countries have sophisticated national data collection mechanisms, especially for surveys for labor-force, expenditure/income or health-related issues, and can overcome these challenges in relatively satisfactory ways. Among the most prominent examples is the micro sample of the US Census and the American Community Survey, where a smaller sample of the American population fills out an extensive questionnaire that covers migration-related questions such as the year of migration, languages spoken at home and ethnicity. When these are used together with information on education, income, occupation and demographic characteristics, researchers can answer questions on labor market performance, poverty, cultural integration and social outcomes. Similarly, Demographic and Health Surveys, Labor Force Surveys or Income and Expenditure Surveys with proper sampling frames and 14
Policy Research Working Paper 6176

# **Abstract**

Improving the investment climate is among the top priorities in development. The World Bank Group’s Doing Business reports have become an important guide and benchmark to inform regulatory reforms aimed at unleashing the potential of the private sector. This paper discusses the potential role of the _Doing Business Indicators_ in the reform process. Generally, the Doing Business studies are constrained in their prescriptive power for policy making. However, governments that nonetheless choose to use the Doing Business reports for guidance in the reform process can aim to improve their _Doing Business_ ranking to enhance the visibility of their general reform efforts; or they can aim at maximizing the impact of reform on economic growth. In this case, the evidence suggests that focusing on indicators relating to credit and the enforcement of contracts is the most important. Indicators related to cost have the largest potential for fostering growth.

This paper is a product of the Poverty Reduction and Economic Management Unit, East Asia and the Pacific Region. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://econ.worldbank. org. The author may be contacted at mhanusch@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
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hectares of which 5 miLlion hectares are already irrigated. This is an extremely small figure both in absolute terms and in relation to a contribution to the food needs of the population. However, there are 8 countries where although the areas involved are small the rainfall is insufficient to sustain production. The countries where irrigation can play an important role are Mauritania, Senegal, Mali, Burkina Faso, Niger, Somalia, Kenya and Botswana. Limited in area though it may be, irrigation will be an essential contributor to agricultural development in these countries although of little significance in an African regional context.

87. It is accepted wisdom that developing even the limited irrigation potential in Africa is a high cost proposition with figures quoted as high as US$40,000/ha, several times the costs in other regions. This is largely due to the inclusion among irrigation costs of many components that are aimed at remedying a lack of supporting infrastructure which are not directly attributable to the irrigation scheme itself. Examples are roads, houses, and public services. Recent FAO estimates provide a range of - irrigation development costs of US$5,000 20,000/ha. An ongoing World Bank study would indicate that costs in the upper part of this range are rather exceptional. The use of realistic expectations of real exchange rates would lower the figure further to a range that is both plausible and viable to contemplate.

88. There is another cost to be paid in irrigation development namely environmental damage. As in any region there are the risks associated with water-logging, salinization, damage to fisheries and downstream water