rafmacalaba/datause-encoder-data huggingface dataset:
# **Table 1: Variable definitions and sources**

|**Variable Name**|**Definition**|**Source**|
|---|---|---|
|US Stock Market Returns<br>(%)<br>|Monthly US stock returns between July 2007 and April<br>2009.|Bloomberg|
|Local Stock Market Returns in US$ (%)|Monthly local stock returns expressed in US dollars<br>between July 2007 and April 2009.|Bloomberg|
|**Trade Channel**|||
|Exports to US/GDP(%)|Export FOB(2006)divided bycurrent GDP(2006)|Direction of Trade Statistics(IMF)|
|Exports/GDP(%)|Total exports(2006)to current GDP(2006)|World Development Indicator|
|(Export+Import)/GDP (%)|Export FOB &Import CIF (2006) to current GDP (2006)|International Financial Statistics and World<br>Development Indicator|
|Fuel Exports / Exports(%)|Fuel exports(2006)to total merchandise exports(2006)|World Development Indicator|
|Agricultural Exports / Exports (%)|Agricultural raw materials exports (2006) to total<br>merchandise exports(2006)|World Development Indicator|
|**Financial Channel**<br>|||
|US Holdings of Foreign Equity<br>/Local Market Capitalization(%)|US investments in foreign equity(Jun. 2007) divided by<br>local market capitalization(Dec. 2006)|Treasury International Capital System (US Treasury<br>Department)and World Development Indicator|
|Foreign Holdings of US Equity<br>/Local Market Capitalization (%)|Foreign investments in US equity(Jun.2007) divided by<br>local market capitalization (Dec. 2006)|Treasury International Capital System (US Treasury<br>Department) and World Development Indicator|
|Chin-Ito Index of Financial<br>Openness|A measure of the degree of financial openness of a<br>country where higher value indicates greater de jure<br>financial openness.(2006)|Chin & Ito (September 2008)|
|FDI Inflows/GDP (%)|Foreign direct investment inflows divided by current<br>GDP (2006)|Balance of Payments & International Investment<br>Position Statistics (IMF) and World Development<br>Indicator|
|Portfolio Inflows/GDP (%)|Portfolio investment assets inflows divided by current<br>GDP (2006)|Balance of Payments & International Investment<br>Position Statistics (IMF) and World Development<br>Indicator|
|Other Inflows/GDP (%)|Other assets inflows divided by current GDP (2006)|Balance of Payments & International Investment<br>Position Statistics (IMF) and World Development<br>Indicator|
|Stock Market Turnover (%)|Ratio of the value of total shares traded to average real<br>market capitalization(2006)|Financial Structure Database (World Bank)|
|Stock Market Capitalization/GDP<br>(%)|Ratio of the value of listed shares to GDP (2006)|Financial Structure Database (World Bank)|

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and C.<sup>18</sup> Once we control for past income, the SATE and SATT are very similar to one another. We focus on the SATT, since this is more directly comparable to the experimental treatment effect estimated using the migration lottery as an instrument for migration.

Under the basic specification of variables to match on, the estimated income gain is $364 per week, 33% higher and significantly different from the experimental estimate of $274. Adding past income as a control lowers the bias to 28.5% and adding interactions reduces it to 27.4%. The t-statistic for testing equality of the treatment effect in model C with the experimental estimate is 1.61, close to the margin of being able to reject equality at the 10% level of significance.

Abadie and Imbens (2005) provide a bias-adjusted matching estimator which matches directly on the covariates rather than on the propensity-score, which has the advantage of not requiring an explicit choice of the propensity score functional form, such as the probit used above. They find that this bias-adjusted estimator performs well compared to the simple matching estimator and to regression in a simulation study. We carry out this biasadjusted estimator to calculate the SATT for each of the specification sets of variables used above.

Table 5 shows that the bias-adjustment brings the matching treatment effects closer to the experimental estimate, and we can no longer reject equality. In model C, with interactions, the bias is reduced from 27.4% to 19.9%. Dehejia (2005) notes that 18 Propensity-score matching was estimated in STATA using the routine described in Abadie et al. (2001).

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a wide coverage of countries over a log period of time. This data comes from the World Bank’s World Development Indicators (WDI).

# **3.2 Data on Trade Flows**

We collect data on bilateral trade flows from the Observatory of Economic Complexity (MIT). This database covers 215 countries over the period 1962-2014. The data are classified according the 4-digit Standard International Trade Classification (SITC), Revision 2. Only products and commodities are considered. Then, we aggregate these bilateral trade flows at the country-level.

To classify trade flows into final and intermediate goods, we use a concordance table from SITC Rev. 2 to Broad Economic Categories (BEC).<sup>4</sup> We then classify goods into five categories: primary, semi-finished goods, parts and components, capital goods, consumption goods, and a residual category called goods non-specified. We group these categories into intermediate and final goods as follows: intermediate goods are primary goods, semi-finished goods, parts and components; and final goods are consumption goods and capital goods.

# **3.3 Measures of GVC participation based on Value Added**

One of the main purposes in this paper is to identify production linkages between countries. Recent advances in data collection and theoretical decomposition of trade flows have shown the various ways of measuring GVC participation.<sup>5</sup> In this paper, we use the recent GVC indicators from Borin and Mancini (2019). They offer a new toolkit for value-added accounting of trade flows at the aggregate, bilateral, and sectoral levels that can be used to investigate a broad set of empirical questions—including in this case an assessment of the global inflation synchronization.

Based on this gross and value-added decomposition, we analyze the association between inflation co-movement and several indices of GVC participation and trade which are as described below.

> 4The concordance table from SITC Rev2 to BEC can be found on the UN Trade Statistics webpage: https://unstats.un.org/unsd/trade/classifications/correspondence-tables.asp .

> 5In particular, see Bems et al. (2011) and Johnson (2018)

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# **IX.  What are the Strengths and Weaknesses of Locally Educated MBAs?**

One of the most important questions in the survey was the question of what firms perceived to be the strengths and weaknesses of locally trained MBAs. The results are given in the figures below.

## **Figure 5**

<!-- Start of picture text --> MBA Survey Question 7: In your experience, what are locally<br>educated MBAs best at?<br>1%2%<br>8%<br>32% 8%<br>9%<br>17%<br>23%<br>Work Experience/Practical Knowledge Knowledge of Languages<br>Communication/ Interpersonal Skills Analytical Abilities<br>Managerial Skills Finance Skills<br>Technical Skills/Computer Skills Other<br><!-- End of picture text --> Question 7 of the survey asked about the greatest strength of local MBA graduates. Since the question was left open, a myriad of responses was received, though the most important responses can be separated from the rest. As Figure 5 shows, the majority of respondents (23%) found the technical skills of locally trained MBAs to be their greatest strength. The category of ‘Other’ encompasses about eight more subcategories, with no particular sub-category standing out. The second strength cited most frequently concerned financial skills, which was identified by 17% of the respondents. Other significant strengths were managerial skills, analytical abilities, and communication skills.

Across all regions, the skills found to be the strongest among local MBAs were the analytical/technical skills. The only exception is the African region where the strongest skill identified was communication and language skills (the analytical and technical skills were found to be significantly weaker in this region than in other regions). The survey found that 30% of the African respondents found these skills to be the strongest asset of local MBAs, which is higher than the corresponding responses from the other regions. Only 13% of African respondents found the analytical/technical skills of local MBAs to be their strongest asset, which is lower than the corresponding responses from the other regions.

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9 Domestic bank entry requirements (Figure 2) mostly remained unchanged, though there was some tightening in crisis countries, including in the U.S. case (increases shown in blue). Note that this index essentially counts the number of requirements for a banking license: (1) Draft bylaws; (2) Intended organizational chart; (3) Financial projections for first three years; (4) Financial information on main potential shareholders; (5) Background/experience of future directors; (6) Background/experience of future managers; (7) Sources of funds to be used to capitalize the new bank; and (8) Market differentiation intended for the new bank. Thus this index is a proxy for the hurdles that entrants have to overcome to get a license. However, the absence of changes does not necessarily imply that the banking sector was not undergoing significant change, as foreign entry was expanding sharply in a number of countries.

In the original survey, we did not have a separate question for the ease of foreign entry, as this was captured in a parallel survey by the U.S. Office of the Comptroller of the Currency,<sup>6</sup> and is not directly comparable to the question on foreign entry in the current survey.

**Figure 2. Change in the index of entry into banking requirements: Surveys I to IV**

<!-- Start of picture text --> Chile Finland<br>Germany<br>Kuwait<br>Trinidad and Tobago<br>Seychelles<br>Puerto Rico<br>Macao, China<br>Israel<br>India<br>France<br>Egypt<br>Burundi<br>Argentina<br>United States<br>Turkey<br>Philippines<br>Pakistan<br>New Zealand<br>Maldives<br>Malaysia<br>Ireland<br>Indonesia<br>Iceland<br>Hungary<br>Guyana<br>Guernsey<br>Gibraltar<br>Gambia<br>El Salvador<br>China<br>Cayman Islands<br>Bangladesh<br>Armenia<br>Hong Kong, China<br>Korea, Rep.<br>Jersey<br>Tanzania<br>South Africa<br>Norway<br>Malawi<br>Liechtenstein<br>Isle of Man<br>Greece<br>Botswana<br>Bosnia and Herzegovina<br>Belgium<br>Belarus<br>Austria<br>Qatar<br>Croatia<br>-4 -2 0 2 4 6 8<br><!-- End of picture text --> 6 This is based on a survey of bank borrowers on the extent to which they had to pay a bribe to get a bank loan. Since in this effort we controlled for economy-wide corruption, it is not the case that our results reflect countries stepping up supervision in response to greater corruption.
7 Once we allow for the price of non-tradables to be part of the trade/macro policy strategy we need to distinguish those that are a priori sustainable from those that are not. Sustainable strategies are those policy combinations that ex-ante imply either a balanced or surplus .urrent account.<sup>4</sup> These strategies are sustainable in the sense that they can be maintained for a long period of time without going through major instability in relative prices, particularly the real exchange rate. Ex-ante unsustainable strategies generate periodic deficits in the current account that require major (temporary) corrections in the real exchange rate once a balance of payments crisis becomes serious. After the crisis is over the policy mix is again biased toward external deficits which after a while require drastic expenditure/devaluation corrections and so on. The main characteristic of unsustainable strategies is to cause chronic economic instability, particularly reflected in large fluctuations of the real exchange rate. Table 1 proposes a taxonomy of six trade/macro policy strategies consistent with the previous discussion. Direct export promotion policies include export subsidies, drawbacks, preferential credit and other measures that favor the export sector directly. Direct import protection essentially covers quantitative restrictions, import tariffs and any other restrictions to imports that lend domestic production of import substitutes more profitable. Implicit in Table 1 are the indirect or general equilibrium effects of trade/macro policies which act through the price of non-tradables (or, equivalently, through wages). In the anti-non-tradable strategy the non-tradable sector is not compensated for the direct export promotion and import restriction measures. That is, the real exchange rate is undervalued or the wage rate is too low causing a current account surplus. Since this is quite sustainable there is no need of frequent adjustments and thus the system is inherently stable. This is translated in a low rate of variability of the real exchange rate. Strategies 2 and 3 concentrate the direct incentives on either the Of course the current account needs to be in equilibrium over the very long-run. The question is whether this equilibration process is achieved in a stable framework or require periodic major adjustments. The former occurs when the policy mix is ex-ante consistent with current account equilibrium or surplus.
avoid accountability when they violate market rules (including integrity or competition rules), access public contracts, or evade taxes (Canen and Wantchekon 2022).

Electoral politics are expensive and party financing creates important risks of policy distortions and corruption (Canen and Wantchekon 2022) – which some countries have started to address through the provision of public funding to political parties. In an attempt to curb reliance on opportunistic private donations and illicit sources, 71% of African countries provide direct public funding to parties (Achu Check _et al._ , 2019). However, this funding is not commensurate with the rise in electoral competition and costs, leading political parties to source funding from public, private and illicit sources with risks of collusion between political parties and opportunistic campaign donors (through the exchange of campaign finance and post-election favors, including for example preferential access to public contracts). African parties are under pressure during campaigns to provide material inducements to voters due to the clientelist structures of parties (Sigman 2023).

# Patterns of Contestation and Resilience

**<mark>Long-term trend 3. Civic capacity has considerably risen: the opening of politics since the 2000s has led to a surge in collective action, with positive spillovers for development. Yet, the inability of institutions to respond to social expectations and political mobilization threatens to turn liberal civic engagement into distrust, populism and radicalization</mark>** <mark>.</mark>

Popular mobilization from below and pressures exerted by street protests have become a recurrent feature of the political landscape in SSA. Over the past twenty years, there has been an exponential increase in mass demonstrations and protests as a means of contesting failing social contracts, with a considerable acceleration since the early 2010s (Figure 13). In 2022, there were a total of 7,697 manifestations (4,612 protests and 3,085 riots) in SSA according to the Armed Conflict Location & Event Data Project (ACLED), compared with 2,188 a decade earlier and 359 two decades earlier. SSA witnessed the largest increases in anti-government protests in the world over the last decade increasing by 23.8% each year (more than twice the global average).<sup>31</sup> Since 2000 most demonstrations and protests have been unarmed and peaceful – even if they can turn violent often in response to state crackdowns.

> 31 ACLED data confirms that the general trend of falling fatality rates also holds for all forms of political activity including armed rebellion and insurgency. When total fatalities are adjusted for Africa’s rapid population growth to represent the ratio of fatalities per million people in the population, it is clear that fatality rate has slowly come down over long-time horizons.

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# **I-** **<mark>Introduction</mark>**

1. **The Democratic Republic of Congo (DRC) has one of the world’s highest degrees of export concentration, which exposes the country to exogenous shocks.** According to the UNCTAD database, the concentration index in DRC reached 0.80 in 2014 (measured by the Herfindahl index). This concentration is high both in terms of products and of markets. Indeed, exports depend heavily on minerals, with more emphases on copper and gold, and on few destinations, China being the most important. In a volatile and uncertain world, the high export concentration level and low diversification make DRC very sensitive to changes in the international market. Those changes can have severe consequences on DRC’s growth and foreign balances, but also on revenue mobilization, employment, and poverty. Several papers and case studies (Hesse, 2008; Misztal, 2011; Cadot, Carrère, Strauss-Khan, 2011) have shown that a decrease of the level of export concentration (increase in the level of export diversification) leads to an increase of GDP per capita growth. Hence, these papers find an empirical positive relationship between export diversification and GDP per capita. Based on these findings, this paper assesses the degree of export concentration in DRC and the potential impact on the economy. Given the price and demand of commodity exports are exogenously determined, the paper analyzes the potential impact of a change in trade partners’ GDP on DRC’s income. Section II discusses the role of trade in DRC’s economy; Section III examines export dependence and export concentration, and Section IV concludes.

# **IIThe Role of Trade in the Economy of the DRC**

# 2. **Exports in DRC have been volatile, and the dynamics of GDP and exports correlate**

**closely.** Indeed, in the past 20 years, DRC has experienced 3 years where the growth rate of exports was negative: 1997 (East Asian financial crisis), 2001 (9/11), and 2009 (global financial crisis). With the onset of the global recession in 2009 and the subsequent decline in both export volumes and prices, the export share in GDP fell from 40 to 27 percent. The correlation between GDP growth and exports dynamic is strong, reaching 0.89 over the period 1990-2013. Indeed, DRC’s GDP contracted by an average of 5.6 percent between 1990 and 2000, while in 2001-2013 it

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intentions of the states involved and their capacity to carry out treaty provisions, which may be lacking (Brochmann 2012).

Inspired by the works of Brochmann (2012) and De Stefano et al. (2012), we set out to empirically examine whether basins governed by treaties exhibit resilience, in the form of cooperation as opposed to conflict, in comparison to basins (or basins at one point in time) not governed by treaties under conditions of water variability. We make a number of contributions to the existing literature. In contrast to De Stefano et al.’s (2012) study, we subject a number of variables to a large-n empirical investigation, examining the relationship among the presence, and number, of treaties and water variability as well as level of conflict and cooperation among riparians. In comparison to Brochmann’s (2012) study, which uses the same dependent variable, we not only consider a longer time period (1948-1999 versus 1948-2008), but we likewise examine whether water variability impacts basin resilience given the existence (or absence) of a treaty and number of treaties.<sup>3</sup> In the data section below, we describe our dependent and independent variables as well as our controls. Along with the description, we provide hypotheses regarding the expected impact of each variable.

# <u>Data</u>

# _<u>Treaties</u>_

Resilience and hydropolitical stability are evidenced when riparians evince more cooperative behavior relative to conflictive behavior, which can be achieved when a basin is governed by a water treaty (Wolf, 2007; Brochmann, 2012). In order to examine whether river basins governed by treaties exhibit resilience in the context of water variability, we coded all country dyads and identified whether that dyad is governed by a treaty. For country dyads with a treaty, we pay close attention to when the first treaty was negotiated. The time-period after the first treaty is signed is

> 3 Due to the most recent update of the TFDD treaty database (Giordano et al. 2014) and of the water event data set (De Stefano et al. 2010), this paper included 220 treaties and 755 water events more than the one by Brochmann (2012).

5
process innovations that can also affect the productivity terms of the new products were also introduced.

# **5.2 The impact of innovation on employment**

## **5.2.1 The impact of innovation on employment growth**

Table 3 shows the results of estimating equation (3) by OLS for the pooled sample and by different regions and income groups, with process innovation only, sector-country, size and age dummies.<sup>11</sup> Starting with the coefficient of process innovation only, this is negative and statistically significant, with the exception of ECA, MENA and high income countries; suggesting that cases where firms only introduce new processes, increases in efficiency can result in a decrease in employment growth. Adding the process innovation only coefficient to the constant term allows retrieving the original intercept that reflects the trend productivity term of old products (with negative sign).<sup>12</sup> The trend productivity parameter is negative for Africa, MENA and low income countries sample, which suggests that labor productivity for all products in these regions have gone backwards. For the entire sample, the trend productivity parameter is positive for process innovators only, and also positive for all firms in South Asia, ECA and high income countries.

vation on employment growth, is statistically significant and positive in all specifications, and 0.6 on average for the whole sample. Interestingly, the coefficient is below unity in all OLS specifications, which implies that new products are produced more efficiently than old products as in equation (2) and suggests a positive but less than proportional employment elasticity to innovative sales that results in some labor displacement. This elasticity is also larger in the MENA and South Asia region and middle income countries in general.

As discussed in section 3, however, OLS estimates are likely to be biased due to the endogeneity of the sales growth of new products when the true real change in growth of sales

> 11An alternative to splitting the sample by region and income groups would be to estimate the full sample and include interaction terms. However, the potential endogeneity of the innovation sales to employment changes described in previous sections makes it very difficult to find suitable instruments for the interactive terms. 12The size and country-sector dummies are restricted to add up to zero

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