rafmacalaba/datause-encoder-data huggingface dataset:
Trade costs, export development, and
            poverty in Rwanda
WPS3784

# **Trade Costs, Export Development and Poverty in Rwanda**

Ndiame Diop<sup>a</sup> , Paul Brenton<sup>a</sup> and Yakup Asarkaya<sup>b*</sup>

## **Abstract**

For Rwanda, one of the poorest countries in the world, trade offers the most effective route for substantial poverty reduction. However, the poor in Rwanda, most of whom are subsistence farmers in rural areas, are currently disconnected from markets and commercial activities by extremely high transport costs and by severe constraints on their ability to shift out of subsistence farming. The constraints include lack of access to credit and lack of access to information on the skills and techniques required to produce commercial crops. The paper is based on information from the household survey and a recent diagnostic study of constraints to trade in Rwanda. It provides a number of indicative simulations that show the potential for substantial reductions in poverty from initiatives that reduce trade costs, enhance the quality of exportable goods and facilitate movement out of subsistence into commercial activities.

### World Bank Policy Research Working Paper 3784, December 2005

_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._

> *<sup>a</sup> Trade Department, World Bank.<sup>b</sup> University of Virginia. We would like to thank Ataman Aksoy, John Baffes, Kene Ezemenari and Waly Wane for helpful comments and Yakup Asarkaya for research assistance.

1
Fiscal decentralization and fiscal performance
A resurgence of recent interest in
            fiscal federalism has been a source of concern among
            macroeconomic stabilization experts. They argue that a
            decentralized fiscal system poses a threat to macroeconomic
            stability as it is incompatible with prudent monetary and
            fiscal management. The author addresses these concerns by
            taking a simple neo-institutional economics with an
            econometric analysis perspective. His analysis concludes
            that, contrary to a common misconception, fiscal
            decentralization is associated with improved fiscal
            performance and better functioning of internal common
            markets. Fiscal policy coordination represents an important
            challenge for federal systems. In this context, fiscal rules
            and institutions provide a useful framework but not
            necessarily a solution to this challenge. Fiscal rules
            binding on all levels can help sustain political commitment
            in countries having coalitions or fragmented regimes in
            power. Coordinating institutions help in the use of moral
            suasion to encourage a coordinated response. Industrial
            countries' experiences also show that unilaterally
            imposed federal controls and constraints on subnational
            governments typically do not work. Instead, societal norms
            based on fiscal conservatism such as the Swiss referenda and
            political activism of the electorate play important roles.
            Ultimately capital markets and bond-rating agencies provide
            more effective discipline on fiscal policy. In this context,
            it is important not to backstop state and local debt and not
            to allow ownership of the banks by any level of government.
            Transparency of the budgetary process and institutions,
            accountability to the electorate, and general availability
            of comparative data encourages fiscal discipline. Fiscal
            decentralization poses significant challenges for
            macroeconomic management. These challenges require careful
            design of monetary and fiscal institutions to overcome
            adverse incentives associated with the "common
            property" resource management problems or with rent
            seeking behavior. Experiences of federal countries indicate
            significant learning and adaptation of fiscal systems to
            create incentives compatible with fair play and to overcome
            incomplete contracts. This explains why that decentralized
            fiscal systems appear to do better than centralized fiscal
            systems on most aspects of monetary and fiscal policy
            management and transparent and accountable governance.
Sri Lanka's migrant labor
            remittances : enhancing the quality and outreach of the
            rural remittance infrastructure
Remittances-money sent home by immigrant
            workers abroad-are hugely beneficial to Sri Lanka.
            Migrants' remittances have grown dramatically in recent
            years and are now estimated at US$1.5 billion annually. This
            national phenomenon is consistent with remittance trends in
            neighboring countries where remittance flows are growing as
            rapidly. The trend is likely to continue as many workers
            continue to look abroad for the chance to make a better
            living. The economic policy implications of these trends are
            significant. The Sri Lankan Central Bank is now debating the
            following key issues: the developmental impact of
            remittances; the high transaction costs associated with
            remittances; and the level of transparency and
            accountability in the remittance industry, especially the
            informal remittance sector. This paper highlights the key
            policy issues associated with each of these aspects of
            remittances with the objective of improving the public and
            private infrastructure for current and future flows.
            Building on recent World Bank research on remittances that
            prominently features South Asia, it has been prepared in
            recognition of the development potential of these flows. It
            discusses some of the key issues relating to the remittance
            industry in Sri Lanka. This paper complements the existing
            literature on migrant labor remittances to Sri Lanka and
            extends that literature by providing specific
            policy-relevant guidance on short and long-term policies for
            enhance enhancing the quality and outreach of rural
            remittance infrastructure.
Sri Lanka's migrant labor
            remittances : enhancing the quality and outreach of the
            rural remittance infrastructure
WPS3789

# **SRI LANKA’S**

# **MIGRANT LABOR REMITTANCES:**

**Enhancing the Quality and Outreach of the Rural Remittance Infrastructure**

Esperanza Lasagabaster Samuel Munzele Maimbo Sriyani Hulugalle World Bank Policy Research Working Paper 3789, December 2005 _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._ Esperanza Lasagabaster (elasagabaster@worldbank.org) is Senior Financial Economist, Samuel Munzele Maimbo (smaimbo@worldbank.org) is Senior Financial Sector Specialist and Sriyani Hulugalle (shulugalle@worldbank.org) is a Senior Economist in the Finance and Private Sector Unit, South Asia Region of the World Bank. The authors gratefully acknowledge comments from Anjali Kumar, Mona Sur, Dina Umali-Deininger, Simon C. Bell, Alawode Abayomi, Haans Boon, Peter Harold, Ismail Radwan, Ole Andreason, and Ranee Jayamaha for their valuable comments. The authors wish to record the excellent administrative support provided by K. Nalin Perera, Maria Marjorie Espiritu, Sakm Abdul Hye, and Malathi Ratnayake. The paper draws on a larger Economic and Sector Work study on remittances, which was funded by the South Asia Region Vice Presidency and South Asia Finance and Private Sector Development Unit of the World Bank.
Health systems in East Asia : what
            can developing countries learn from Japan and the Asian tigers
The health systems of Japan and the
            Asian Tigers--Hong Kong (China), the Republic of Korea,
            Singapore, and Taiwan (China)--and the recent reforms to
            them provide many potentially valuable lessons to East
            Asia's developing countries. All five systems have
            managed to keep a check on health spending despite their
            different approaches to financing and delivery. These
            differences are reflected in the progressivity of health
            finance, but the precise degree of progressivity of
            individual sources and the extent to which households are
            vulnerable to catastrophic health payments depend too on the
            design features of the system-the height of any ceilings on
            social insurance contributions, the fraction of health
            spending covered by the benefit package, the extent to which
            the poor face reduced copayments, whether there are caps on
            copayments, and so on. On the delivery side, too, Japan and
            the Tigers offer some interesting lessons. Singapore's
            experience with corporatizing public hospitals-rapid cost
            and price inflation, a race for the best technology, and so
            on-shows the difficulties of corporatization. Korea's
            experience with a narrow benefit package shows the danger of
            providers shifting demand from insured services with
            regulated prices to uninsured services with unregulated
            prices. Japan, in its approach to rate-setting for insured
            services, has managed to combine careful cost control with
            fine-tuning of profit margins on different types of care.
            Experiences with diagnosis-related groups in Korea and
            Taiwan (China) point to cost-savings but also to possible
            knock-on effects on service volume and total health
            spending. Korea and Taiwan (China) both offer important
            lessons for the separation of prescribing and dispensing,
            including the risks of compensation costs outweighing the
            cost savings caused by more "rational"
            prescribing, and cost-savings never being realized because
            of other concessions to providers, such as allowing them to
            have onsite pharmacists.
Measuring the impact of the
            investment climate on total factor productivity : the cases
            of China and Brazil
This study measures the impact of
            investment climate factors on total factor productivity
            (TFP) of firms in Brazil and China. The analysis is
            conducted in two steps: first an econometric production
            function is estimated to produce a measure of TFP at the
            firm level. In the second step, variation in TFP across
            firms is statistically related to a indicators of the
            investment climate as well as firm characteristics. The
            results yield a number of insights about the factors
            underlying productivity. In both countries, and in a variety
            of industry groups, indicators of poor investment climate,
            especially delays in customs clearance and interruptions in
            utility services, have significant negative effects on TFP.
            Reducing customs clearance time by one day in China could
            increase TFP by 2-6 percent. Indicators such as email usage
            have positive effects on TFP. In the case of China,
            state-owned firms and firms located in the interior are
            shown to be much less productive than privately owned firms
            and firms located in the east. In Brazil, the results
            present an interesting contrast between the apparel industry
            and the electronics industry. In the apparel industry, older
            firms in competitive markets are more productive, while in
            the case of electronics, newer firms with higher market
            shares are more productive.
Creating a Poverty Map for Azerbaijan
"Poverty maps"-that is,
            graphic representations of spatially disaggregated estimates
            of welfare-are being increasingly used to geographically
            target scarce resources. But the development of detailed
            poverty maps in many low resource settings is hampered
            because of data constraints. Data on income or consumption
            are often unavailable and, where they are, direct survey
            estimates for small areas are likely to yield unacceptably
            large standard errors due to limited sample sizes. Census
            data offer the required level of coverage but do not
            generally contain the appropriate information. This has led
            to the development of a range of alternative methods aimed
            either at combining survey data with unit record data from
            the census to produce estimates of income or expenditure for
            small areas or at developing alternative welfare rankings,
            such as asset indices, using existing census data. This
            paper develops a set of poverty maps for Azerbaijan that can
            be used by different users. Two alternative approaches to
            the measurement and mapping of welfare are adopted. First, a
            map is derived using imputed household consumption. This
            involves combining information from the 2002 Household
            Budget Survey (HBS) with 1999 census data. Second, an
            alternative map is constructed using an asset index based on
            data from the 1999 census to produce estimates of welfare at
            the rayon level. This provides a unique opportunity to
            compare the welfare rankings obtained at the regional level
            under the two alternative approaches. In order to visually
            present the spatially disgaggregated estimates of welfare in
            Azerbaijan, this paper has also produced a digital census
            map of Azerbaijan. This involved matching the census
            enumeration areas to a digital settlement map of Azerbaijan.
            Therefore, it is now possible for the State Statistical
            Committee of Azerbaijan to display graphically the results
            of the 1999 census of Azerbaijan along with other data.
Disability, poverty, and schooling
            in developing countries : results from 11 household surveys
This paper analyzes the relationship
            between whether a young person has a disability, the poverty
            status of their household, and their school participation
            using 11 household surveys from nine developing countries.
            Between 1 and 2 percent of the population is identified as
            having a disability. Youth with disabilities sometimes live
            in poorer households, but the extent of this concentration
            is typically neither large nor statistically significant.
            However, youth with disabilities are almost always
            substantially less likely to start school, and in some
            countries have lower transition rates resulting in lower
            schooling attainment. The order of magnitude of the school
            participation disability deficit is often larger than those
            associated with other characteristics such as gender, rural
            residence, or economic status differentials.
A more complete conceptual framework
            for financing of small and medium enterprises
The authors propose a more complete
            conceptual framework for analysis of credit availability for
            small and medium enterprises (SMEs). In this framework,
            lending technologies are the key conduit through which
            government policies and national financial structures affect
            credit availability. They emphasize a causal chain from
            policy to financial structures which affect the feasibility
            and profitability of different lending technologies. These
            technologies, in turn, have important effects on SME credit
            availability. Financial structures include the presence of
            different financial institution types and the conditions
            under which they operate. Lending technologies include
            several transactions technologies, plus relationship
            lending. The authors argue that the framework implicit in
            most of the literature is oversimplified, neglects key
            elements of the chain, and often yields misleading
            conclusions. A common oversimplification is the treatment of
            transactions technologies as a homogeneous group, unsuitable
            for serving informationally opaque SMEs, and a frequent
            misleading conclusion is that large institutions are
            disadvantaged in lending to opaque SMEs.
What have we learned from a decade
            of manufacturing enterprise surveys in Africa
In the early 1990s the World Bank
            launched the Regional Program on Enterprise Development in
            several African countries, a key component of which was the
            collection of manufacturing firm-level data. In this paper
            the authors review the research based on the data sets
            generated by these and subsequent firm surveys in Africa,
            with a special view to what they think are the most
            important policy implications. The authors survey the
            research on the African business environment, focusing on
            market size, risk, access to credit, labor, and
            infrastructure. They cover the research on how firms choose
            to organize themselves and how firms do business. They
            review the research on firm performance, including firm
            growth, investment and technology acquisition, and exports.
            They conclude with an extended discussion of the policy lessons.
What have we learned from a decade
            of manufacturing enterprise surveys in Africa
WPS3798

# **What Have We Learned From a Decade of Manufacturing**

**Enterprise Surveys in Africa?** *

Arne Bigsten** and Måns Söderbom***

## **Abstract**

In the early 1990s the World Bank launched the Regional Program on Enterprise Development in several African countries, a key component of which was the collection of manufacturing firm-level data. In this paper we review the research based on the data sets generated by these and subsequent firm surveys in Africa, with a special view to what we think are the most important policy implications. We survey the research on the African business environment, focusing on market size, risk, access to credit, labor, and infrastructure. We cover the research on how firms choose to organize themselves and how firms do business. We review the research on firm performance, including firm growth, investment and technology acquisition, and exports. We conclude with an extended discussion of the policy lessons.

## **JEL Classification** : D21, O12, O14.

**Key words** : African manufacturing, economic performance, survey data.

World Bank Policy Research Working Paper 3798, December 2005 _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._

* We thank the World Bank for funding this research. Many thanks go especially to John Nasir for encouraging us to write this paper and for excellent comments on an earlier draft. We are also grateful to participants at a seminar at Göteborg University for helpful comments and suggestions.

** Arne Bigsten is Professor of Economics at the Department of Economics, University of Göteborg, Göteborg, Sweden. He can be contacted by e-mail: Arne.Bigsten@economics.gu.se

*** Måns Söderbom is a Research Officer at the Centre for the Study of African Economies, Department of Economics, University of Oxford, UK. He can be contacted by e-mail: Mans.Soderbom@economics.ox.ac.uk
Pending issues in protection,
            productivity growth, and poverty reduction
This paper selectively synthesizes much
            of the research on Latin American and Caribbean labor
            markets in recent years. Several themes emerge that are
            particularly relevant to ongoing policy dialogues. First,
            labor legislation matters, but markets may be less segmented
            than previously thought. The impetus to voluntary
            informality, which appears to be a substantial fraction of
            the sector, implies that the design of social safety nets
            and labor legislation needs to take a more integrated view
            of the labor market, taking into account the cost-benefit
            analysis workers and firms make about whether to interact
            with formal institutions. Second, the impact of labor market
            institutions on productivity growth has probably been
            underemphasized. Draconian firing restrictions increase
            litigation and uncertainty surrounding worker separations,
            reduce turnover and job creation, and poorly protect
            workers. But theory and anecdotal evidence also suggest that
            they, and other related state or union induced rigidities,
            may have an even greater disincentive effect on
            technological adoption, which accounts for half of economic
            growth. Finally, institutions can affect poverty and equity,
            although the effects seem generally small and channels are
            not always clear. Overall, the present constellation of
            labor regulations serves workers and firms poorly and both
            could benefit from substantial reform.