rafmacalaba/datause-encoder-data huggingface dataset:
The impact of commodity price
            changes on rural households : the case of coffee in Uganda
Policies and external shocks affecting
            agriculture, the main source of income for rural households,
            can be expected to have a significant impact on poverty. The
            authors study the case of Uganda. Throughout the 1990s, more
            than 90 percent of its poor lived in rural areas and, during
            the same period, large international price fluctuations as
            well as an extensive domestic deregulation affected the
            coffee sector, its main source of export revenues. Using
            data from three household surveys covering the 1990s, the
            authors confirm a strong correlation between changes in
            coffee prices (in a liberalized market) and poverty
            reduction. This is highlighted by comparing the performance
            of different households grouped according to their
            dependence on coffee farming. Regression analysis (based on
            pooled data from the three surveys) of consumption
            expenditure on coffee-related variables, other controls, and
            time-fixed effects corroborates that the mentioned
            correlation is not spurious. The authors also find that
            while both poor and rich farmers enter the coffee sector,
            the price boom benefits the poorer households relatively
            more, whereas the liberalization seems to create more
            opportunities for richer farmers. Finally, notwithstanding
            the importance of the coffee price boom, the agricultural
            policy framework and the thorough structural reforms in
            which the coffee market liberalization was embedded have
            certainly played a role in triggering overall agricultural
            growth. These factors appear to matter especially in the
            second half of the 1990s when prices went down but poverty
            reduction continued.
The structural determinants of
            external vulnerability
The authors examine empirically how
            domestic structural characteristics related to openness and
            product- and factor-market flexibility influence the impact
            that terms-of-trade shocks can have on aggregate output. For
            this purpose, they apply an econometric methodology based on
            semi-structural vector auto-regressions to a panel of 90
            countries with annual observations for the period 1974-2000.
            Using this methodology, the authors isolate and standardize
            the shocks, estimate their impact on GDP, and examine how
            this impact depends on the domestic conditions outlined
            above. They find that larger trade openness magnifies the
            output impact of external shocks, particularly the negative
            ones, while improvements in labor market flexibility and
            financial openness reduce their impact. Domestic financial
            depth has a more nuanced role in stabilizing the economy. It
            helps reduce the impact of external shocks particularly in
            environments of high exposure-that is, when trade and
            financial openness are high, firm entry is unrestricted, and
            labor markets are rigid.
Development and the interaction of
            enforcement institutions
The authors examine how institutions
            that enforce contracts between two parties-producers and
            consumers-interact in a competitive market with one-sided
            asymmetric information and productivity shocks. They compare
            an informal enforcement mechanism, reputation, the efficacy
            of which is enhanced by consumers investing in
            "connectedness," with a formal mechanism, legal
            enforcement, the effectiveness of which can be reduced by
            producers by means of bribes. When legal enforcement is
            poor, consumers connect more with one another to improve
            informal enforcement. In contrast, a well-connected network
            of consumers reduces producers' incentives to bribe. In
            equilibrium, the model predicts a positive relationship
            between the frequency of productivity shocks, bribing, and
            the use of informal enforcement, providing a physical
            explanation of why developing countries often fail to have
            efficient legal systems. Firm-level estimations confirm the
            partial equilibrium implications of the model.
Development and the interaction of
            enforcement institutions
WPS4090

# Development and the Interaction _*_ of Enforcement Institutions

Amrita Dhillon _University of Warwick_ Jamele Rigolini _The World Bank_

## **Abstract**

We examine how institutions that enforce contracts between two parties, producers and consumers, interact in a competitive market with one-sided asymmetric information and productivity shocks. We compare an informal enforcement mechanism, _reputation_ , the efficacy of which is enhanced by consumers investing in “connectedness,” with a formal mechanism, _legal enforcement_ , the effectiveness of which can be reduced by producers by means of bribes. When legal enforcement is poor, consumers connect more with one another to improve informal enforcement; in contrast, a well-connected network of consumers reduces producers’ incentives to bribe. In equilibrium, the model predicts a positive relationship between the frequency of productivity shocks, bribing, and the use of informal enforcement, providing a _physical_ explanation of why developing countries often fail to have efficient legal systems. Firm-level estimations confirm the partial equilibrium implications of the model.

JEL: D02, D7, L14, O12. Keywords: Contracts, Institutions, Corruption, Reputation, Uncertainty.

World Bank Policy Research Working Paper 4090, December 2006 _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 view of the World Bank, its Executive Directors, or the countries they represent. Policy Research Working Papers are available online at_ _<u>http://econ.worldbank.org.</u>_ _*_ We thank Franklin Allen, Jonathan Cave, Philip Keefer, Andy Newman, Carlo Perroni, Johannes Hörner, Roger Myerson, Jennifer Reinganum, Myrna Wooders, seminar participants at Georgetown University, Northwestern University, The Harris School of Public Policy, University of Warwick, Vanderbilt University, the 2005 PET conference, the 2005 Conference on Liberalisation Experiences in Asia, and especially Avinash Dixit for extremely useful comments.
Reducing distortions to agricultural
            incentives : progress, pitfalls, and prospects
Most of the world's poorest people
            depend on farming for their livelihood. Earnings from
            farming in low-income countries are depressed partly due to
            a pro-urban bias in own-country policies, and partly because
            richer countries (including some developing countries) favor
            their farmers with import barriers and subsidies. Both sets
            of policies reduce national and global economic growth and
            add to inequality and poverty in developing countries.
            Acknowledgement of that since the 1980s has given rise to
            greater pressures for reform, both internal and external.
            Over the past two decades numerous developing country
            governments have reduced their sectoral and trade policy
            distortions, while many high-income countries continue with
            protectionist policies that harm developing country exports
            of farm products. Recent research suggests that the
            agricultural protectionist policies of high-income countries
            reduce welfare in many developing countries. Most of those
            studies also suggest that full global liberalization of
            merchandise trade would raise value added in agriculture in
            developing country regions, and that much of the benefit
            from global reform would come not just from reform in
            high-income countries but also from liberalization among
            developing countries, including in many cases own-country
            reform. These findings raise three key questions that are
            addressed in this paper: To what extent have the reforms of
            the past two decades succeeded in reducing distortions to
            agricultural incentives? Do current policy distortions still
            discriminate against farmers in low-income countries? And
            what are the prospects for further reform in the next decade
            or so?
Reducing distortions to agricultural
            incentives : progress, pitfalls, and prospects
WPS4092

# **Reducing Distortions to Agricultural Incentives: Progress, Pitfalls and Prospects**

## **Kym Anderson**

### World Bank Policy Research Working Paper 4092, December 2006

_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 view of the World Bank, its Executive Directors, or the countries they represent. Policy Research Working Papers are available online at http://econ.worldbank.org._ Kym Anderson is Professor of Economics, University of Adelaide and Lead Economist (Trade Policy), Development Research Group, World Bank.

Revision of AAEA Fellows Address, annual meetings of the American Agricultural Economics Association, Long Beach CA, 25 July 2006. Without implicating them or the World Bank, thanks are due to co-authors and colleagues including Will Martin and Ernesto Valenzuela for helpful ideas and suggestions, to Nahla Hilmi and Damiano Sandri for research assistance, and to the Bank-Netherlands Partnership Program (BNPP) and the UK’s DFID Trust Funds for financial support. Forthcoming in the _American Journal of Agricultural Economics_ 88(5), December 2006.
Are lives a substitute for
            livelihoods Terrorism, security, and U.S. bilateral imports
What is the impact of terrorism on trade
            through higher security at the borders? The authors set up a
            theory which shows that the impact goes not only from
            terrorism to trade. Higher trade with a partner might, in
            turn, increase the probability of terrorism acts and make
            security measures more costly for total welfare. To identify
            the true impact of terrorism, their theory allows for a
            strategy to condition out the latter mechanism. The authors
            show in particular how past incidents perpetrated in third
            countries (anywhere in the world except the origin or
            targeted country) constitute good exogenous factors for
            current security measures at the borders. Their tests
            suggest that terrorist incidents have a small effect on U.S.
            imports on average, but a much higher effect for those
            origin countries at the top of the distribution of
            incidents. In addition, the level of the impact is up to
            three times higher when the acts result in a relatively high
            number of victims, the products are sensitive to shipping
            time, and the size of the partner is small. The authors
            further show how terrorism affects the number of business
            visas given by the United States, thereby affecting
            significantly U.S. imports in differentiated products. These
            results suggest that security to prevent terrorism does
            matter for trade.
Labor markets and income generation
            in rural Argentina
This paper addresses three areas of the
            rural labor market-employment, labor wages, and agriculture
            producer incomes. Findings show that the poor allocate a
            lower share of their labor to farm sectors than the nonpoor
            do, but still around 70 percent work in agriculture, and the
            vast majority of rural workers are engaged in the informal
            sector. When examining nonfarm employment in rural
            Argentina, findings suggest that key determinants of access
            to employment and productivity in nonfarm activities are
            education, skills, land access, location, and gender.
            Employment analyses show that women have higher probability
            than men to participate in rural nonfarm activities and they
            are not confined to low-return employment. Moreover, workers
            living in poorer regions with land access are less likely to
            be employed in the nonfarm sector. There is strong evidence
            that educated people have better prospects in both the farm
            and nonfarm sectors, and that education is an important
            determinant of employment in the better-paid nonfarm
            activities. Labor wage analyses reveal that labor markets
            pay lower returns to poorer than to richer women and returns
            to education are increasing with increased level of
            completed education and income level. And nonfarm income and
            employment are highly correlated with gender, skills,
            household size, and education. This analysis also shows a
            rather heterogeneous impact pattern of individual
            characteristics across the income distribution, but
            education is important for all levels of income.
            Agricultural producer income analyses reveal that
            producers' income monotonically increases with land
            size and with completed education level, and positively
            correlates with road access and use of electricity,
            fertilizer, and irrigation. Finally, farms operated by women
            are slightly more productive than farms operated by men.
Rural poor in rich rural areas :
            poverty in rural Argentina
Rural poverty remains a crucial part of
            the poverty picture in Argentina. This paper used a rural
            dataset collected by the World Bank in 2003. Findings show
            that extreme income poverty in rural areas reached 39
            percent of the people or 200,000-250,000 indigent families.
            These families tend to: be large, and young, and to escape
            from poverty as they mature and children leave the household
            (life cycle); live largely in dispersed areas where basic
            service provision is often weak and delivery is difficult
            (in particular school attendance beyond 11 years of age
            falls off very rapidly compared with grouped rural or urban
            areas); and be more likely to be small landholders than
            landless laborers. The structure of poverty in rural
            Argentina shows that larger households are poorer than
            smaller households, female-headed households are poorer than
            male-headed households, young households/household heads are
            poorer than older households/household heads, the poor tend
            to work more in the informal sector, and a greater share of
            those engaged in agriculture are poor. However, poverty is
            by no means strictly an agricultural problem. Furthermore,
            the deepest poverty is among the poorly educated and young
            household heads with children. Without interventions to
            improve their opportunities and assets, their plight is
            likely to worsen.
Does insurance market activity
            promote economic growth Country study for industrial and
            developing countries
Insurance market activity, both as a
            financial intermediary and a provider of risk transfer and
            indemnification, may contribute to economic growth by
            allowing different risks to be managed more efficiently and
            by mobilizing domestic savings. During the past decade,
            there has been faster growth in insurance market activity,
            particularly in emerging markets given the process of
            liberalization and financial integration, which raises
            questions about its impact on economic growth. The author
            tests whether there is a causal relationship between
            insurance market activity (life and nonlife insurance) and
            economic growth. Using the generalized method of moments for
            dynamic models of panel data for 56 countries and for the
            1976-2004 period, he finds robust evidence of a causal
            relationship between insurance market activity and economic
            growth. Both life and nonlife insurance have a positive and
            significant causal effect on economic growth. High-income
            countries drive the results in the case of life insurance.
            On the other hand, both high-income and developing countries
            drive the results in the case of nonlife insurance.
Reform of the intergovernmental
            transfer system in China
In China, most of the service delivery
            responsibilities are assigned to the subnational
            governments. Yet for reasons of efficiency in tax collection
            and administration, the central government collects revenues
            far in excess of its expenditure needs. In 2003 the central
            government collected 70 percent of consolidated revenues but
            accounted for only 30 percent of consolidated expenditures.
            The initial fiscal surplus of the central government enables
            it to use its spending power to provide financing to
            subnational jurisdictions for the achievement of national
            objectives and to influence local priorities. This paper
            examines the incentives associated with the design of such
            transfers and their implications for the efficiency and
            equity of public service provision and accountable local
            governance in China. The paper argues that the existing
            design of such transfers is not consistent with efficiency
            and equity considerations. It further undermines local
            autonomy without enhancing local accountability while
            creating incentives for imprudent fiscal management. Its
            main limitations include a complex and opaque system, a
            piecemeal approach to gap filling, lack of consistency of
            design with objectives, focus on input controls without
            regard for output accountability, incentives to support an
            antiquated management paradigm, a one-size-fits-all approach
            to local financing, and lack of transparency and regulatory
            framework for the intergovernmental transfer system. The
            paper makes specific suggestions on a reform of this system
            to overcome these limitations and on better use of fiscal
            transfers to create responsive, responsible, equitable, and
            accountable local governance in China.
Road infrastructure in Europe and
            Central Asia : does network quality affect trade
The authors present a new database of
            minimum distance road routes connecting 138 cities in 27
            countries across Europe and Central Asia. They use it to
            show that improved road network quality is robustly
            associated with higher intraregional trade flows. Gravity
            model simulations suggest that an ambitious but feasible
            road upgrade could increase trade by 50 percent over
            baseline, exceeding the expected gains from tariff
            reductions or trade facilitation programs of comparable
            scope. Cross-country spillovers due to overland transit are
            important: total intraregional trade could be increased by
            30 percent by upgrading roads in just three
            countries-Albania, Hungary, and Romania.
Industrial competitiveness of the
            auto parts industries in four large Asian countries : the
            role of government policy in a challenging international environment
Rationalization and stabilization
            following the Asian financial crisis of the late 1990s
            combined with the expansion and liberalization of regional
            and global trade to create significant parts industries in
            China, Indonesia, and the Republic of Korea. Conventional
            policies of stabilization and liberalization, however,
            cannot fully explain growth patterns. Japan and Korea grew
            into major players before liberalizing trade and investment,
            while even after extensive liberalization Indonesia has yet
            to move from extensive to intensive growth. These anomalies
            suggest that to explain success in the auto parts industry
            we need to move beyond liberalization to look at policies
            and institutions promoting economies of scale, skill
            formation, quality upgrading, supplier-linkage cooperation,
            and innovation. In Japan, the regional and global leader,
            innovative assemblers led industrial development and
            supported key suppliers, but the government also supported
            diffusion of quality control techniques and new technology
            to small and medium enterprises, and encouraged stable
            employment among core employees. Korea remains weaker on
            both small and medium enterprise and employment fronts, but
            government-encouraged consolidation around a small number of
            business groups, an extended period of protection, and
            support for export promotion led to economies of scale.
            Liberalization of foreign investment after the financial
            crisis helped ameliorate the excessive statism of earlier
            policies and strengthened the parts industry. In China,
            liberalization for WTO entry, rapid expansion in demand, and
            strong support by local governments encouraged a wave of
            foreign investment in both assembly and parts. In contrast,
            institutional weaknesses continue to constrain development
            opportunities in Indonesia.