rafmacalaba/datause-encoder-data huggingface dataset:
- 24 -

36. The compositlon of nonfarm activity also differs in high-income agricultural states. The prominence of services, commerce and factory manufacturing rises perceptibly there, while household manufacturing attains less Importance (Table 12). These differences stand out most clearly in rural areas where the high-income states attract double the volume of services, commerce and factory manufacturing and only half the level of household manufacturing as In states with low-Income agriculture. Consequently, the disparity between rural and the urban nonfarm employment profiles becomes most pronounced In the low-income states because of their lower level of rural nonfarm activity (Table A.7).

37. Over the growth decade of the 1970s, urban nonfarm employment has Increased most rapidly In the high-productivity agricultural states (Table A.8). Yet rural nonfarm employment has grown at about the same rate In high- and low-income states, perhaps because the Initlal spurt In Punjab and Haryana began In the late 1960s, earlier than elsewhere. Unfortunately, the change In census employment definitlons makes it Impossible to confirm this, although Shalla et al (1989) advance anecdotal evidence of rapid growth In small agrolndustries during the 1960s.

38. In rural areas across Indla, the most rapidly growing segment of the nonfarm economy has been factory manufacturIng. (Table A.8). In huh-income states, commerce and transport have also contributed. Likewise, In urban areas factory manufacturing has dominated Increments to the nonfarm labor force.

39. Wage data reveal substantially higher farm earnings In Punjab and Haryana than in the other states. Although the gap has narrowed slightly In real terms, agricultural wages In Punjab and Haryana remain roughly double those In Bihar and Madhya Pradesh (Table A.10). Thus In part, the higher level of nonfarm activity In the high-productivity
-4

# III. APPLICATION OF THE POLICY

# A. Use of the Two-SteR A22roach

14. Of the 13 sectors reviewed, the two-step approach was consistently used in the project Staff Appraisal Reports (SARs) of seven sectors: coal, highways, irrigation, oil/gas, nower, telecommunications and water. While not yet widely reflected in App cal reports, sector-specific guidelines or research papers that follov t - two-step approach are also available in health and education. In the pot £ sector, a theoretical treatment of efficiency pricing issues is available, but without an empirical trial. For railroads, there is an excellent paper on cost estimation, but little on efficiency pricing. For housing and fertilizer, the pricing focus tends to be on cost recovery.

15. In comparing the experience with efficiency pricing across sectors, it **is** useful to distinguish among three categories of publicly provided goods **and** services: those with **external economies** in consumption; those with external economies in production; and those in the public sector for **some** other reason. While **these** categories are not mutually exclusive **(e.g.,** telecomunications exhibits external economies of both consumption **and** production), they serve to highlight the different approaches that have been developed to deal with essentially **similar problems.**

# Sectors with External Economies in Consuantion

16. The first category includes three of our 13 sectors: education, health and water/sewerage. In each case, the utility of one individual is positively affected by the consumption of the good or service by others. Thus, in order to maxiize utility, the economic price for each consumer should be lower than the marginal cost of production. In addition to efficiency arguments, income distributional objectives have justified low prices in these sectors. All three are sometimes classified as merit goods which society may wish to provide to all its citizens, regardless of their ability to pay.

17. In a number of countries, these arguments have been carried to their extreme and the services are provided free. The consequences have been remarkably similar.1/ Excess demand has overwhelmed available supplies, the quality of service has deteriorated (e.g., higher student/teacher ratios, longer waits at the health clinics, daily or seasonal water shortages), funds have been insufficient to provide for maintenance and operating costs, morale of the professional staff in the sector has declined and centralized budgeting has led to inefficient investment allocations and little managerial incentive for cost control. Distributional objectives have been frustrated by the lack of funds for service expansion. In some cases, income disparities have been exacerbated by a zero-fee policy since rural services are the hardest to justify on a per capita cost basis, given fiscal constraints.

18. As a result of such experiences, the pricing question is being reexamined in the education and health sectors. In the water sector,
<!-- Start of picture text --> Figure 3.1. Government final demands in 2012 and<br>average for 2020-2030 by simulation<br>45<br>40<br>35<br>30<br>HD<br>25<br>Infra<br>20<br>Other<br>15<br>Total<br>10<br>5<br>0<br>2012 base infhd+tx infhd+eff<br>% of GDP<br><!-- End of picture text --> <!-- Start of picture text --> Figure 3.2. Deviation from base growth for macro<br>indicators (%-age points)<br>0.6<br>0.4<br>0.2<br>0<br>Absorption<br>-0.2<br>Consumption - household<br>-0.4<br>GDP at factor cost<br>-0.6<br>-0.8<br><!-- End of picture text --> 21
Morocco, simple geographic targeting of resources to communities may not be particularly helpful if variation in living standards _within_ communities is pronounced. Geographic targeting will be most effective if the poverty maps reveal both great variation in poverty across communities and low levels of inequality in the poorest communities.

We have not pursued in this paper the related question of whether poverty maps could be used to target _individual households_ . We have emphasized that household-level estimates of poverty, derived on the basis of our methodology, are very imprecise. One might thus expect that household-level targeting using such estimates would yield expected post-transfer poverty rates with very wide confidence intervals, implying considerable risk that the transfer policy would not yield the expected outcome. However, even highly imprecise household level poverty estimates can still convey information. And indeed, preliminary calculations with our data suggest that household-level targeting could not only yield significant reductions in expected poverty, but that even the confidence bounds around this expectation might not be too large. However, we would submit that in deciding to shift from geographic targeting of resources to communities, to the targeting of those resources to individual households, there are a whole host of additional issues which come to the fore. These issues extend well beyond statistical considerations. For example, targeting individual households is likely to have quite a different, and generally more pronounced, effect on incentives and household behavior. Implementation of a national targeting scheme to individual households may also be much more difficult to administer than a community-level approach. And there are also ethical concerns. After all, an empirical study documenting that a particular health treatment would lead, _on average_ , to society-wide improvements in health status does not necessarily provide adequate justification for doctors to prescribe that specific treatment to individual patients.

23
_16_ _Ways Out ofPovert - Diffising Best Practices and Creating Capabilities_ <!-- Start of picture text --> Figure 9: Origin of Innovation In the United States<br>(percentage of 1989 Inc. 500 founders surveyed)<br>ro ea caufrom previLous<br>errploynlat<br>* Id caethroug h<br>.eperinitation<br>- -. oldea carrettrough research<br>DIdeacarrebyaccidend<br>Source: Bhide (2000).<br><!-- End of picture text --> D. **Poverty reduction: The diffusion of best practice and the creation of capability** _"... The engine (of development) is the advance of technology and the difusion of technical capacities ofpeople, firms and governments... "_ Robert Wade _"...If as I believe, the difference in efficiency between U.S. and developing-countryfirms is typically large, there is much room for quite rapid improvements in the developing countries as they learn how to adopt and adapt alreadyknown techniques from the advanced countries... "_ Armold Harberger So what does all this imply for poverty reduction?" Critical to creating wealth is the capability of institutions that allow people to work together and that create productive jobs in the process. For poverty to be eradicated quickly, these institutions must be open to learning and adapting know-how that already exists-and be capable of applying it efficiently. The traditional factors of production are not too hard to obtain: natural resources, capital goods, finance, ideas, and reasonably competent labor.

> **44** Whether we call it poverty reduction or wealth creation or growth, the widespread rise in individual incomes requires productivity improvements and the provision of better products or services. After all standards of living improve when people can get existing products or services at lower cost or better ones at acceptable costs.
Almost half of developing countries halted power sector competition during the decade 2005 to 2015. In order to understand the extent to which there continues to be momentum around competition in the power sector, Figure 5.7 plots the extent of competition in 2005 against the extent of competition in 2015. A first group of countries – located along the diagonal of the matrix – and comprising nearly half of all countries in the sample adopted no additional reform on competition between 2005 and 2015. It is striking that almost all these countries stopped at the very early stages: either with a monopoly or with Independent Power Producers.

**Figure 5.6: Prevalence of competition reform measures across country groupings**

|Percentage of<br>countries<br>adopted as of|Monopoly|Independent<br>Power<br>Producers|Single<br>Buyer<br>Model|Bilateral<br>contracting<br>with Third|Wholesale<br>market<br>competition|Retail<br>market<br>competition||
|---|---|---|---|---|---|---|---|
|2015||||PartyAccess||||
|**By incomegroup**||||||||
|LIC|33*|29*|23|9|4**|2|100|
|LMIC|25*|11*|14|4|24**|22|100|
|UMIC|0*|17|17|0|27**|39|100|
|**By system size**||||||||
|<1GW|43*|30*|15*|5*|5|2|100|
|1‐5GW|15*|25|30*|15*|10|5|100|
|5‐10GW|20|0*|40*|0*|0|40|100|
|10‐20GW|33*|11|22|11|11|12|100|
|>20GW|8*|8*|8*|0*|25|51|100|
|**By political econo**|**my**|||||||
|Dominant|24|29|32**|8|3*|4|100|
|Intermediate|24|18|24**|6|12|16|100|
|Competitive|22|17|4**|4|17*|36|100|
|**By rule of law**||||||||
|High rule of law|31|0**|31|8|0|30|100|
|Low rule of law|28|26**|18|7|9|12|100|
|**By fragility status**||||||||
|Non‐FCS|29|28*|16|4|9|14|100|
|FCS|28|14*|23|10|7|6|100|
|**By oil exporting s**|**tatus**|||||||
|Exporter|20|25|13|6|19|17|100|
|Importer|12|22|22|12|17|15|100|
|**Total**|**30**|**22**|**19**|**6**|**8**|**15**|**100**|

Source: Own elaboration based on RISE 2015 database ****** Differences are statistically significant at the 5% level ***** Differences are statistically significant at the 10% level 26
Policy Research Working Paper 6794

# **Abstract**

This paper assesses whether the Indonesia Early Childhood Education and Development project had an impact on early achievement gaps as measured by an array of child development outcomes and enrollment. The analysis is based on longitudinal data collected in 2009 and 2010 on approximately 3,000 four-year-old children residing in 310 villages located in nine districts across Indonesia. The study begins by documenting the intent-to-treat impact of the project. It then compares the achievement gaps between richer and poorer children living in project villages with those of richer and poorer children living in non-project villages. There is clear evidence that in project villages, the achievement gap between richer and poorer children decreased on many dimensions. By contrast, in non-project villages, this gap either increased or stayed constant. Given Indonesia’s interest in increasing access to early childhood services for all children, and the need to ensure more efficient spending on education, the paper discusses how three existing policies and programs could be leveraged to ensure that Indonesia’s vision for holistic, integrated early childhood services becomes a reality. The lessons from Indonesia’s experience apply more broadly to countries seeking to reduce early achievement gaps and expand access to pre-primary education.

This paper is a product of the Education Sector 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 authors may be contacted at ahasan1@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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WPS4198

# The Pricing Dynamics of Utilities with Underdeveloped Networks

Omar O. Chisari, Universidad Argentina de la Empresa Ioannis N. Kessides, World Bank<sup>1</sup>

### ABSTRACT

This paper employs an analytically tractable intertemporal framework for analyzing the dynamic pricing of a utility with an underdeveloped network (a typical case in most developing countries) facing a competitive fringe, short-run network adjustment costs, theft of service, and the threat of a retaliatory regulatory review that is increasing with the price it charges. This simple dynamic optimization model yields a number of powerful policy insights and conclusions. Under a variety of plausible assumptions (in the context of developing countries) the utility will find its long-run profits enhanced if it exercises restraint in the early stages of network development by holding price below the limit defined by the unit costs of the fringe. The utility’s optimal price gradually converges toward the limit price as its network expands. Moreover, when the utility is threatened with retaliatory regulatory intervention it will generally have incentives to restrain its pricing behavior. These findings have important implications for the design of post-privatization regulatory governance in developing countries.

## World Bank Policy Research Working Paper 4198, April 2007

_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._

> 1We would like to thank Daniel Benitez, Eric Groom, Atsushi Iimi, Michael Klein, Luis Serven, and Maria Vagliasindi for very helpful comments.
4 It cannot **assumed** Lhat the national accounts are more accurate, but dram.iatic discrepancies with that source would clearly be worrying. The national accounts may not provide a better estimate of average consumption than the HES, but (given the aforementioned changes over time in HES methodology), the NA series is probably a better basis for comparing consumption aggregates across time daring the 1980s.

Table 1 gives my estimates if real consumption per capita in Bangladesh based on both the HES and the NA. For urban areas, I have used the Consumer Price Index (CPI) for middle income groups in Dhaka, while for rural areas I have used the average CPI for rural areas. Consumption f om NA is estimated from the "World Tables" (World Bank., 1988).1 The results in Table 1 reveal substantial divergence between the HES and NA means for 1983/84 and (even more so) 1985/86, though the two sources are in close accord for 1981/82.2 However, for the purposes of comparing poverty levels over time, the more disturbing observation from Table 1 is the discrepancy in growth rates between the two data sources. The national accounts suggest that real consumption per capita grew at the compound annual rate of 0.5% over the period 1981/82-1985/86; the household expenditure survex' on the other hand implies a compound annual growth rate of 9.9%, which would have been _ne of the highest recorded for any country in the world over this (generally difficult) period, or at other times for that matter. While the NA mav well be underestimating the true rate of growth, it is very hard to believe the rate of growth implied by the HES.
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