rafmacalaba/datause-encoder-data huggingface dataset:
**Table 12.** Percent increase in the <u>Gini coefficients after transfers are removed</u>

|||**2002**<br>|||**2003**<br>|||**2004**<br>||
|---|---|---|---|---|---|---|---|---|---|
||without<br>all<br>transfers|without<br>social<br>transfers|without<br>transfers<br>from<br>family<br>and<br>friends|without<br>all<br>transfers|without<br>social<br>transfers|without<br>transfers<br>from<br>family<br>and<br>friends|without<br>all<br>transfers|without<br>social<br>transfers|without<br>transfers<br>from<br>family<br>and<br>friends|
|Azerbaijan|203|150|168|145|83|106|194|133|147|
|Baku|169|139|140|157|99|151|183|114|146|
|Non-Baku urban|233|159|230|147|75|141|216|111|165|
|Rural|214|159|210|124|67|106|186|93|136|

Source: Azerbaijan HIES data.

# **5. Conclusions**

The Azerbaijan Household Income and Expenditure Survey (HIES) data show extremely low inequality measures, which wrongly suggest that Azerbaijan is one of the most or perhaps the most equal country in the world. Such oddly low inequality figures have cast serious doubts on the quality and the reliability of the HIES data for poverty analysis. This paper analyzed the HIES data to find out the main culprits for low inequality. The results of this analysis are summarized in Table 13.

The study finds two main sources of low inequality in the data. First, Azerbaijan HIES data are somewhat unrepresentative of living conditions of the population because of the fact that the richer households are disproportionately less willing to participate in the surveys. While this would have no impact on the aggregate number of poor households, it would affect the FGT poverty measures (i.e., headcount ratio, poverty gap ratio and poverty severity). The missing households add to the pool of the non-poor, so including them would lower the headcount poverty rates. Secondly, transfers have inequality reducing effect and there is significant amount of transfer incomes going into the hands of Azeri households. The finding suggest that households in the lower wealth echelon are benefiting more from transfers than those in the richer category, which in turn implies government and other transfer programs are relatively well targeted. Inequality in the HIES data would increase significantly—more than two-fold—if the effects of top truncation and transfers were accounted for (see Table 13).

**Table 13.** <u>Inequality in Azerbaijan HIES data under various hypotheses</u>

||**2002**|**2003**|**2004**|
|---|---|---|---|
|_Base case_|_18.4 _|_18.2 _|_16.3 _|
|Hypothesis1: transfereffect|31.8|32.9|31.8|
|Hypothesis 2: top truncation|41.2|28.0|32.4|
|Hypothesis 3: bottom truncation|18.4|20.4|18.4|
|Hypothesis4: bottomand top truncations|36.6|24.8|26.8|
|Hypothesis 5: transferand bottomtruncation|36.1|35.3|31.9|
|Hypothesis 6: transfer and toptruncation|55.8|44.5|47.9|

Source: Azerbaijan 2002-2004 HIES data.

16
HIRSHLEIFER, John and John Riley, (1979), "The Analytics of Uncertainty and Information - an Expository Survey," Journal of Economic Literature, Vol. 17, pp. 1375 - 1421 HODDINOTT, John, (1992), "Rotten Kids or Manipulative Parents: Are Children Old Age Security in Western Kenya?" Economic Development and Cultural Change 40(3): 545-66 HOGAN, John J., (1987), "Pensions and the Self Employed", The Irish Banking Review, Summer 1987, pp. 18 - 26 HOLZMANN, Robert & Steen Jorgensen, (1999), "Social Protection as Social Risk Management: Conceptual Underpinnings for the Social Protection Strategy Paper". Social Protection Discussion Paper No. 9904 HOLZMANN, Robert, Truman Packard & Jose Cuesta, (2000), "Extending Coverage in Multi Pillar Pension Systems: Constraints and Hypotheses, Preliminary Evidence and Future Research Agenda" in R. Holzmann & J. Stiglitz, Eds. New Ideas About Old Age Security. The World Bank HOLZMANN, Robert. (1997), "Pension Reform, Financial Market Development and Economic Growth: Preliminary Evidence from Chile" IMF Staff Papers, Vol. 44 No.2.

H{URD, Michael D. & Kathleen McGarry, (1997) "The Predictive Validity of Subjective Probabilities of Survival", NBER Working Paper No. 6193 HURD, Michael, (1990), "Research on the Elderly: Economic Status, Retirement, Consumption and Saving", Journal of Economic Literature, Vol. 28, No. 2, pp. 565-637 HURD, Michael, Daniel McFadden and Li Gan, (1998), "Subjective Survival Curves and Life Cycle Behavior" in David Wise (ed.), _Inquiries in the Economics ofAging,_ NBER, University of Chicago Press IADB, (2000), Social Protection for Equity and Growth, Poverty and Inequality Advisory Unit, Sustainable Development Department, Washington DC INSINGA, Ralph, (1998), "The Retirement Outlook for Chile's Independently Employed Workers: A Case Study of Attitudes and Saving Behavior", Economic Commission for Latin America and the Caribbean, LC/R. 1840 JAMES, E. (1999), "Coverage Under Old Age Security Systems and Protection for the Uninsured: What are the Issues?" Presentation given at IDB conference on Social Protection, Washington, D.C.

(1996), "Protecting the Old and Promoting Growth: A Defense of Averting the Old Age Crisis", World Bank Policy Research Working Paper No. 1570, Washington D.C.

(1997) "Pension Reform: Is there a Tradeoff Between Efficiency and Equity?" World Bank Policy Research Paper No. 1767, Washington D.C.

LAIBSON, David I., Andrea Repetto & Jeremy Tobacman, (1998), "Self-Control and Saving for Retirement", Brookings Papers on Economic Activity, 1, pp. 91 - 196 LITCHFIELD, Julie, (2001) "Updated Income Distribution and Poverty Measures for Chile: 1987 - 1998" Background Paper No. l, in World Bank, (2001) "Poverty and Income Distribution in a High Growth Economy: The Case of Chile 1987 - 1998", Washington, D.C.

MACIAS, Osvaldo and Jorge Tarzijan (1994), "Origen y Magnitud de la Evasion en el Sistema de Pensiones Chileno Derivado de la Capitalizacion Individual" CEPAL/PNUD Serie Politica 36
Poverty incidence was calculated using a consumption aggregate from the survey’s consumption module and the inflation-adjusted international poverty line of US$1.90 per person per day (Pape et al., 2019, Vol C).

Household heads were identified by the survey respondent who is asked who s/he considers to be the household head. About half of all households are headed by women in Somalia, although for IDP households living outside settlements, female headship is less common (36 percent). All IDP settlements are located in urban areas and about three-quarters of non-IDP households live in urban areas; however, a large share of IDPs living outside settlements (66 percent) are located in rural areas. The average household size is 5 people, three children and two adults. There is no difference between settlement IDPs and non-IDPs household size. Non-settlement IDP households are slightly larger than average with 6 people and settlement IDP households that are femaleheaded are also larger - 6 people on average (Table 1).

Figure 1 shows that most female heads of both IDP and non-displaced households are married, hence, they are _de facto_ heads. About two-thirds of female household heads are _de facto_ in non-IDP communities compared to just over half of female-headed IDP households living outside settlements. There is a slightly higher proportion of _de jure_ female heads in the nonsettlement IDP sample (43 percent) than in the settlement and non-displaced samples (34 and 30 percent, respectively).

Figure 2 shows that education levels are strikingly low, particularly among IDPs, and there are large gender gaps. On average 93 percent of all IDP heads have primary or less education compared to 69 percent of non-IDP household heads. For both IDPs and non-IDPs the gender gap is large. Female heads in settlements are significantly less educated. Only about 1 in 10 female heads in IDP settlements has some secondary education compared to nearly 1 in 4 male heads in settlements. The gender gap is similar for non-settlement IDPs. In contrast, for non-IDPs, the gender gap emerges at the tertiary level and secondary schooling rates are similar for male and female heads at around 25 percent.

11
# **_Table of Contents_**

|**_Acknowledgements______________________________________________________ 4_**|
|---|
|**_Introduction ___________________________________________________________ 5_**|
|**_Structure______________________________________________________________ 6_**|
|**_I. Growth Performance __________________________________________________ 7_**|
|**Overview ___________________________________________________________ 7**|
|**Stellar Growth_______________________________________________________ 8**|
|**Export-Orientation __________________________________________________ 10**|
|**2005 Slowdown _____________________________________________________ 12**|
|**Trade Integration ___________________________________________________ 13**|
|**From Agriculture to Industry _________________________________________ 15**|
|**Assembly-Based Manufacturing _______________________________________ 17**|
|**Extensive Growth and Reallocation ____________________________________ 19**|
|**_II. Cost of Finance_____________________________________________________ 21_**|
|**Overview __________________________________________________________ 21**|
|**Fixed Exchange Rates and Foreign Borrowing ___________________________ 22**|
|**Inflation Targeting and Current Account Surplus ________________________ 24**|
|**_III. Appropriability_____________________________________________________ 26_**|
|**Overview __________________________________________________________ 26**|
|**Modern Constitution and Centralized Power ____________________________ 27**|
|**Worsening Governance Yet Moderate Regulation ________________________ 28**|
|**_IV. Infrastructure______________________________________________________ 30_**|
|**Overview __________________________________________________________ 30**|
|**East Asian Trademark _______________________________________________ 31**|
|**Past Strength and Future Weakness____________________________________ 33**|
|**Public Investment Drive______________________________________________ 35**|
|**Reluctant Private Sector______________________________________________ 36**|
|**_V. Geography _________________________________________________________ 38_**|
|**Overview __________________________________________________________ 38**|
|**Agglomeration______________________________________________________ 39**|

2
# Travel channel meets discovery channel or how tourism can encourage better export performance and diversification in Ne al <u>p</u>

_José Guilherme Reis_<sup>_*_</sup> _Gonzalo Varela_<sup>_†_</sup> Keywords: tourism, export performance, diversification, panel data, trade fairs.

JEL: F14, L83, F63 Sector Board: Economic Policy

> * Economic Policy, Debt and Trade Department, jreis@worldbank.org

> † Economic Policy, Debt and Trade Department. Corresponding author: gvarela@worldbank.org. The authors acknowledge helpful comments from Ana Cusolito, Thomas Farole, Jose Daniel Reyes, Swarnim Wagle and Deborah Winkler. The usual disclaimer applies.

1
10 last few years.

An important implication of Krueger's definition is that a devaluation in the presence of QRs constitutes a step towards liberalization. The reason, of course, is that if there are QRs a devaluation will reduce the premium obtained by those that have an access to the quota.

On the other hand, as noted before, the definition of an unbiased or neutral trade regime (B = 1) does not preclude in any way an active role - for the government. We can attain a B 1 either with high levels of s, **t,** r, n, and P or with no government intervention in international trade. This has recently prompted a number of authors to make a distinc- tion between a neutral trade regime (B 1) and a liberal regime where there is almost no government intervention. According to this view governments should not only aim at reducing the anti-export bias

-- and definitely should not try to promote exports via intervention -- but should try to implement a liberal strategy.<sup>5</sup>

Lal and Rajapatirana (1987) are, perhaps the clearest representatives of the new liberal view regarding trade regimes. They -eject government intervention both to protect imports and to promote exports: Of course, exDort promotion can be as inefficient and chaotic as protection .... The liberal position on trade and growth (which we support) is different. As a first step it entails a neutral trade regime. (p. 208, emphasis added) And they go on to say: The case for a liberal trade regime ... becomes part of the general case for mar1gets against mandarins .... [I]f one accepts the need for restraints on the natural and often irrational 4Notice that until now we haven't said anything about other sectors such as the labor market, the capital market or the capital account. Some of the issues that arise when we look at many markets are addressed below.

5See, for example, World Bank (1987), Lal and Rajapatirana (1987).
When we drop these observations, the mean and median regression results are similar and close to the initial median regression results (see Tables A10 and A11). We show the mean and median regressions from Table 7 and the mean and median regressions when dropping observations according to the three criteria above. Our preferred criterion is the Cook’s distance, which shows that:

- a) The coefficient on years of schooling is small and not significant in either the mean or median regression. This result is closer to the outcome of the median regression using the whole sample.

- b) The coefficient on cognitive skills is highly significant for both the median and mean regressions. This finding is also in line with the outcomes of the median regression using the full sample.

- c) The coefficient on the interaction term for cognitive skills and “Out village” is positive and significant at the 5% level in the median regression and positive but not statistically significant at conventional levels and smaller in the mean regression.

Given these results, our preferred estimates use the median regressions for men. Note that for women, we need to continue reporting the mean regressions for the full sample, as the median earnings are 0.

65
reason to believe that the provision of services by donors and non-state actors could either strengthen or weaken citizens’ deference to government. I will identify the conditions under which these two scenarios are likely to occur. On the one hand, citizens may be less likely to support the government with deference to its laws and regulations when they credit non-state actors or donors for service provision. The provision of services by donors and nonstate actors is likely to prompt citizens to question why they should pay taxes to a government that is not providing them with anything in exchange. On the other hand, the provision of goods and services by donors and non-state actors might strengthen citizens’ legitimating beliefs and their willingness to defer to governmental laws and regulations if citizens view their government as essential to leveraging and managing these external resources.

I assess these competing hypotheses using multi-level analyses of Afrobarometer survey data. The sample, drawn from a continuum of developing societies in Africa, allows us to analyze associations between donor and nonstate actor service provision and the sense of obligation to comply with the tax authorities. Third, I assess the relationship between the provision of services by donors and non-state actors and citizens’ willingness to defer to two additional authorities, the police and courts. The findings yield support for the hypothesis that the provision of services by donors and non-state actors is strengthening, rather than undermining, the relationship between citizens and the state.

# **2 A Model of Legitimating Beliefs**

I extend the logic of the fiscal contract to consider the implications for citizens’ perceptions of their government’s legitimacy when actors other than the state are involved in providing the basic services that are at the heart of the fiscal contract relationship. My conception of government legitimacy and the reasons citizens adopt legitimating beliefs derives from the work of Weber (1968). I use the concept of legitimacy to denote acceptance of the right of governors to rule; its effect is an increased likelihood of quasi-voluntary compliance with governmental rules and regulations. Quasi-voluntary compliance is compliance motivated by a willingness to comply but backed up by coercion, particularly coercion that ensures that others will be obeying the law (Levi, 1997).

I treat legitimacy as a concept with two components: value-based legiti3
**<u>Table 1: Volume of approved PSG land program applications by region and farm size</u>**

||<br>**Num**<br>|<br>**ber of succ**<br>|<br>**essful applica**<br>|<br>**nts**<br>|<br>**Amount**<br>|<br>|<br>|**Area per far**<br>|**m**<br>|
|---|---|---|---|---|---|---|---|---|---|
||**Total**|**<20 ha**|**20- 50 ha**|**> 50 ha**|**($ mn.)**|**Total**|**<20 ha**|**20- 50 ha**|**> 50 ha**|
|Total|19,660|14,313|2,953|2,394|32.480|19.5|6.5|35.2|77.7|
|**Panel A: By re**|**gion**|||||||||
|Center|9,194|6,026|1,689|1,479|18.325|23.5|7.0|35.0|77.8|
|North|1,503|949|306|248|3.114|24.4|6.6|36.4|78.0|
|South|4,828|3,994|523|311|6.215|15.2|7.4|35.7|80.1|
|West|4,135|3,344|435|356|4.827|13.8|4.5|34.5|75.4|
|**Panel B: By or**|**ganizational**|**form**||||||||
|Individual|13,340|12,270|845|225|9.225|8.2|5.5|30.7|66.3|
|FOP|2,519|1,185|695|639|7.279|34.1|9.8|35.1|78.1|
|Legalentity|3,801|858|1,413|1,530|15.976|49.6|15.9|37.9|79.3|

_Source:_ Own computation based on PSG records.

Note: The total number of approved and paid applicants under the land program were 21,050 farms. Data reported in this table is only for 19,660, i.e., the number of PSG beneficiary farms used in the regression analysis after data cleaning.

17
exchanged between civil society leaders and the district administrator significantly decreased when civil society leaders were included in the sessions. Thus, civil society leaders may have been _less_ able to activate sanctions from above as a result of the intervention.<sup>25</sup> In the bottom panel of table 14, we consider whether the civil society leader variant of the intervention increased the ability of civil society leaders to mobilize villagers to pressure the village head. If this were the case, we would expect civil society leaders to play a bigger role in organizing community members as a result of the intervention, and we might also expect villagers to have more information about the regulations guiding village governance. Inconsistent with this sanctioning channel, the variant of the intervention that included civil society leaders is associated with a substantively large, even if statistically insignificant, reduction in organizational activity on the part of civil society leaders in the village. We also not find any evidence that the civil society leader variant of the intervention increased households’ knowledge of village governance regulations.

Thus, the evidence indicates the ability of civil society leaders to identify transgressions by the village head increased as a result of the intervention, which by itself would be sufficient to motivate reformed behavior if civil society leaders were already in a position to trigger sanctions on village heads, whether directly or indirectly. From the analysis above, it appears most likely that civil society leaders applied direct social pressure to change behavior; these leaders typically already had high social standing in their communities, even if we do not detect a measurable increase in status as a result of the intervention, and their interactions with the village head increased as a result of the intervention. In contrast, the likelihood of civil society leaders triggering pressure from above or below appears to have lessened as a result of the intervention.

# **7.2 Qualitative Research**

We also collected qualitative data from 10 villages for the purposes of better understanding mechanisms of change. Because our main goal for this research was mechanism analysis, we selected 10 villages for qualitative research that were “on the regression line” in the sense that there was little improvement in

> 25We would expect civil society leaders to have higher levels of communication with superordinate political leaders, at least until a new equilibrium is established, and recall that our survey was only three months after the intervention ended.

34
**4.2 Life with the road**

We need to specify how the road improves the household’s environment in period 1, as described by the vector **Z** 1. Starting with unit transport costs for goods, Bell and van Dillen (2012) estimate that these are reduced by about 5 percent of the net price received for commodities marketed. Khandker _et al_ . (2009) obtain a similar estimate for rural roads in Bangladesh, once an allowance is made for greater volumes marketed. They also estimate that the farm-gate price of fertilizers declined by 5 percent. With a new road, therefore, let **p** 1 = (0 _._ 95 _,_ 1 _._ 05). Where schooling is concerned, Bell and van Dillen’s (2012) analysis of the Orissa survey yields substantial savings in travel-time for secondary-school pupils (just over 30 minutes a day) and far fewer days of involuntary absences for all grades (about 2 instead of about 9 for primary and 14 for secondary). These estimates imply _τ_ = 0 _._ 04 and ̄ _et_ = (1 _−_ 2 _/_ 180)(1 _−d_<sup>1</sup> _t_<sup>)</sup><sup>_/_(1+0</sup><sup>_._04) = 0</sup><sup>_._9508(1</sup><sup>_−d_1</sup> _t_<sup>).</sup> It is not to be expected that the provision of an all-weather road will have such strong effects on morbidity, at least in the very short run; and Bell and van Dillen (2012) find none in the Orissa villages. Households did, however, respond by switching away from local healers, quacks and primary clinics to hospitals, which certainly suggests that all-weather roads are valued in this connection. To be quite conservative, therefore, let there be no improvement in **d** _t ∀t_ . The findings where mortality is concerned are mixed. An analysis of individual mortality in the sample households revealed no effects; but the respondents in the village ‘focus group’ interviews were adamant that mortality had dropped sharply, as the acutely sick and injured could be treated in good time. According to their claims, in the group of nine such villages, the average number of such deaths had dropped from 3.25 to 0.75 annually. Even allowing for ‘unavoidable’ deaths, these claims are rather startling; for the crude mortality rate of about 10 per 1000 in the sample drawn from all 30 villages implies just 10 deaths annually in a typical village of 1000 souls. Since _qt_ is assumed to fall from 0.125 in period 1 to 0.053 in period 2 even with no road, let the provision of the road reduce _q_ 1, not by the implied 25 percent or so, but rather by 10 percent, to 0.1125.

Turning to future periods, let the road be perfectly durable, thereby maintaining these more favourable prices of goods, as well as travel-times to, and involuntary absences from, school indefinitely. As argued in Section 3.2, however, morbidity and mortality will surely fall over the next generation even in the absence of a road. Staying on the conservative side, let the road continue to have no effect on morbidity in period 2, but let the 10 percent reduction in mortality continue to hold, so that _q_ 2 = 0 _._ 0477. Thereafter, all these rates remain stationary. The configuration 19