rafmacalaba/datause-encoder-data huggingface dataset:
robustness check, we also construct the employment shares for the GDP-by-field and relative employment _excluding_ workers that graduated in the same department where they work (namely, only based on “movers”). Results are the same with this alternative measure.

# **Effect of competition on entry**

Since the variables in _Mjdt_ include the number of competing programs from three provider types (public HEIs, private HEIs, and SENA), we construct four instruments. The main ones draw on the fact that HEIs tend to open programs in markets where their entry cost is low. Indeed, Table 2 panel B shows that HEIs are most likely to open programs in locations where they already operate. We use the number of programs from competitors in the baseline year of 2004 as a proxy for their entry costs. For instance, if public HEIs had offered a large number of programs in Bogota in 2004, they would have had the infrastructure required to open additional programs in later years. Moreover, institutions’ market presence and infrastructure in 2004 are arguably predetermined and uncorrelated with current supply-side shocks.

We interact the baseline number of programs with our GDP-by-field variable, which allows the instrument to vary over time and across fields. In other words, the effect of the baseline number of competitors on the contemporaneous number of competitors varies over time and across fields depending on our local economic activity measure, which is exogenous by construction. These interactions give us three instruments, based on the baseline supply of each of the three types of competitors (public HEIs, private HEIs, and SENA). For institution _j_ in department _d_ , field _k_ , at time _t_ , the three interactions are as follows: where # of Prog _−_<sup>_H_</sup> _j,d,_ 2004<sup>isthetotalnumberofprogramsofferedin2004(firstyear</sup> of our entry analysis) by _other_ providers of type _H_ (public, private, and SENA) in department _d_ .

Our fourth instrument is SENA’s budget by department and year. Since SENA’s budget is largely a political matter and is determined at the national rather than local level, it constitutes a valid instrument. We make the caveat that, since we do not observe SENA’s budget by field, this additional instrument varies over time and across 17
# _EDUCATION OUTCOMES: STUDENT PERFORMANCE AND TEST SCORES_

There is a new emphasis on putting more resources towards improving the quality of education. Indonesia ranks low in international standardized tests––an expected outcome since Indonesia is one of a handful of lower-middle income countries that participated in them. In 2003 Indonesia ranked 34 out 45 countries in the Third International Mathematics Science Study (TIMMS); Indonesian eighth graders had particularly low results in the higher cognitive areas such as 38 problem-solving. In the 2003 Program for International Student Assessment (PISA) examination, Indonesia ranked last out of 40 countries in both mathematics and language. Furthermore, on a proficiency scale from 0 to 6 for mathematics, over 50 percent of students did not reach level 1. In reading, only 31 percent could complete more than the most basic reading tasks (Figure 12).

These student outcomes in Indonesia were lower than in other countries even after taking family socioeconomic status into account. This finding suggests that school system deficiencies, rather than the poorer backgrounds of students, are responsible for poor performance (EFA Global Monitoring Report 2005). At the same time, however, one has to acknowledge that the PISA examination targets mostly developed or middle income countries and that Indonesia is one of the only lower-middle income countries in the group. The fact that Indonesia is participating in these tests is a positive sign that the GOI wants to measure student outcomes and determine ways to improve the quality of education.

Figure 12 Students at Each Level of Proficiency on the Mathematics Overall Scale (%) <!-- Start of picture text --> 1 2 0<br>L e v e l 6<br>1 0 0 L e v e l 5<br>L e v e l 4<br>L e v e l 3<br>8 0 L e v e l 2<br>L e v e l 1<br>6 0 B e lo w L e v e l 1<br>4 0<br>2 0<br>0<br>-2 0<br>-4 0<br>-6 0<br>-8 0<br>-1 0 0<br>N o te : C o u n trie s a re ra n k e d in d e s c e n d in g o rd e r o f p e rc e n ta g e s o f 1 5 y e a r o ld s in le v e ls 3 , 4 , 5 a n d 6<br>Source: PISA database 2003.<br>Finland Hong Kong-China Korea Canada Netherlands Liechtenstein Japan Macao-China Switzerland Belgium Australia New Zealand Iceland Denmark Czech Republic France Sweden Austria Germany Ireland OECD average Slovak Republic Norway Luxembourg Hungary OECD total Poland Spain Latvia United States Italy Portugal Greece Serbia<br>Uruguay Turkey Thailand<br>Russian Federation Mexico<br>Brazil Tunisia Indonesia<br><!-- End of picture text --> The trend of Indonesia’s scores on international examinations shows a slight upward movement. Indonesia has participated in the PISA study for 2 consecutive rounds in 2000 and 2003. While Indonesian students remained behind comparable countries in the sample, they improved their performance in reading and mathematics skills in this period (Figure 13).

> 38 Mullis, Ina V.S., Michael O. Martin, Pierre Foy. 2005. IEA’s TIMSS 2003 International Report on Achievement in the Mathematics Cognitive Domains, International Association for the Evaluation of Educational Achievement, Boston College.

26
Policy ReseaRch WoRking PaPeR 4901

# **Abstract**

An increase in sea surface temperature is evident at all latitudes and in all oceans. The current understanding is that ocean warming plays a major role in intensified cyclone activity and heightened storm surges. The vulnerability of coastlines to intensified storm surges can be ascertained by overlaying Geographic Information System information with data on land, population density, agriculture, urban extent, major cities, wetlands, and gross domestic product for inundation zones likely to experience more intense storms and a 1 meter sealevel rise. The results show severe impacts are likely to be limited to a relatively small number of countries and a cluster of large cities at the low end of the international income distribution.

This paper—a product of the Environment and Energy Team, Development Research Group—is part of a larger effort in the department to understand potential impacts of climate change. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The author may be contacted at sdasgupta@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
27 practices, and to reduce transaction costs, or do its actions contribute to and increase these harmful practices and costs? Well functioning markets generally require sophisticated regulatory mechanisms and some kind of social safety net to protect those exposed to inevitable market volatility. Failure to provide these regulations and safeguards may lead to major market failures and political disturbances.<sup>30</sup> The lack of adequate regulatory institutions may have been responsible for what Rodrik [1999] calls the “dismal failures” of privatization in Russia during the 1990s. Russia’s privatization during the 1990s was carried out hastily and without sufficient government regulation, and thus led to widespread monopolization, corruption and inefficient (and unfair) market outcomes. Similarly the absence of adequate social safety nets may have been the cause for the backlash against price reforms in Latin America during the 1980s.<sup>31</sup> Capitalism can only thrive if there is some trust in government institutions and confidence that the regulatory apparatus will work effectively. Unstable regulatory environments invite corruption as different groups invest in rent seeking or influence activities in an attempt to subvert regulations in their own favor. In cases where the regulatory mechanisms are weak, private groups might even invest in private enforcement of their own rules or in attempts to buy off state officials and judges.

Glaeser et al [2002] argue that the degree of corruption and regulatory uncertainty might also be due to inequalities of wealth. Inequalities of ownership of resources allow the rich to manipulate government institutions, including government agencies, legislatures and the judiciary, to obtain favorable laws, regulations and interpretations of regulations and laws.<sup>32</sup> In such cases those without influence will be unlikely to be able to raise capital or want to invest because their investments will be subject to regulatory expropriation. In such circumstances, investment will be undertaken only by small influential elites.<sup>33</sup> DeSoto’s proposal for legitimizing the “informal” sector, by giving formal property right protection to squatters and informal businesses operating outside the current legal system, may help in this regard by reducing inequality, promoting legal competition and bolstering the rule of law (so long as steps are taken to prevent a “race for property rights” as new squatters flood into public or unclaimed properties).

> 30 Rodrik, 1999, p. 7.

> 31 Ibid. p.2.

> 32 Glaeser, Scheinkman and Shleifer, 2002, p. 2. They cite studies by Alesina and Rodrik (1994) and Persson and Tabellini (1994) which indicate that inequality tends to reduce growth. See also Keefer and Knack [2000] and Rajan and Zingales [2003]. 33 Ibid. p.4.
Policy Research Working Paper 6040

# **Abstract**

This paper provides an historical overview of both the evolution of the economic performance of the developing world and the evolution of economic thought on development policy. The 20<sup>th</sup> century was broadly characterized by divergence between high-income countries and the developing world, with only a limited number (less than 10 percent of the economies in the world) managing to progress out of lower or middleincome status to high-income status. The last decade witnessed a sharp reversal from a pattern of divergence to convergence—particularly for a set of large middleincome countries. The latter phenomenon was also driven by increasing economic ties among developing countries, and on the intellectual scale, increased knowledge generation and sharing among the developing countries. Re-thinking development policy implies confronting these realities: 20<sup>th</sup> century economic divergence, the experience of the handful of success stories, and the recent rise of the multi-polar growth world. The paper provides descriptive data and a literature survey to document these trends. The paper also provides a brief survey of the role of multilateral institutions—in particular, the World Bank—in this changing context and offers suggestions on how they can adapt their strategies to improve development outcomes.

This paper is a product of the Office of the Chief Economist, Development Economics Vice Presidency. 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 author may be contacted at drosenblatt@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
**The pass-through of international commodity price shocks to producers’ welfare: Evidence from Ethiopian coffee farmers**<sup>∗</sup>

Hundanol A. Kebede<sup>†</sup>

# **1 Introduction**

What is the effect of frequent booms and busts in international commodity prices on smallholder farmers in developing countries who rely on production of these commodities for their livelihood? This is particularly relevant question because conventional consumption smoothing options such as bank loans or personal savings are likely to be meagre in these parts of the world. A number of studies show that informal risk-sharing arrangements among members of relatives or communities insure (perhaps imperfectly) household consumption against income shocks (see, for instance, Townsend, 1995; Jacoby and Skoufias, 1997; Fafchamps and Lund, 2003; and Gertler and Gruber, 2002), so that temporary income shocks may not necessarily have severe consequences on household consumption. However, some of the shocks that are discussed in these studies are idiosyncratic income shocks, such health or unemployment shock to household head. The effectiveness of informal risk-sharing against commodity price shocks that are correlated across households in a village is not clear, and is an empirical question.

In this paper, I use a unique household level panel data to estimate the pass-through of international coffee price shocks on household consumption, labor supply, and welfare in Ethiopia. A number of studies have looked at the effect of commodity price shocks on different outcomes such as child labor and schooling (Kruger, 2007; Cogneau and Jedwab, 2012; Carrillo, 2020); child mortality (Miller and Urdinola, 2010; Haaker, 2018); and long-term adult mental health ∗I would like to thank the editor and three anonymous referees for their helpful comments. I would also like to thank Kerem Cosar, James Harrigan, John McLaren, Caglar Ozden, Sheetal Sekhri, and Sandip Sukhtankar for their comments and encouragements. This paper has also benefited f rom comments received from participants in UVA’s Development workshops.

> †Assistant Professor, Department of Economics, Southern Illinois University Carbondale. Email: hundanol.kebede@siu.edu
Table 6: Optimal Weighting on GDP in Composite Estimate, _λ_ .

|Country Data Quality Grade (_g_)|A|B|C|D|E|
|---|---|---|---|---|---|
|Variance of GDP Measurement Error (_σ_<sup>2</sup><br>_z,g_<sup>; 1e-3)</sup>|0.73|2.90|4.94|12.99|28.69|
|Weight on GDP in Composite Estimate (_λg_)|0.91|0.72|0.60|0.36|0.20|
|Observations|240|208|1,697|412|150|
|Countries|16|13|109|27|10|

_Notes._ All specifications use baseline _β_ = 0 _._ 262 from instrumental variables estimation (Table 5). Then, _σz,g_<sup>2isestimatedindividuallyby-grade</sup><sup>_g_=A,</sup><sup>_. . ._,E,whichyields</sup><sup>_λg_accordingtoEquation6.</sup> relevant and not weak. Though the specification with all instruments in Column 5 covers a smaller sample than our original Column 2, which used only lights as an instrument, we reach an estimate of _β_ = 0 _._ 271, full circle back to our initial lights-based estimate in Column 2 of _β_ = 0 _._ 262. Finally, we note that we have already shown the relationship between GDP and NO2 to be in-common across nations in Table 3, and use _β_ = 0 _._ 262 henceforth.

# **5.3 Composite Estimate**

With the estimated growth elasticity of NO2 pinned down, we have enough moments to estimate the weighting _λg_ on GDP in the NO2 composite estimate, by-grades _g_ =A, _. . . ,_ E. To do so, we first obtain two estimates for the whole sample of countries, conditional on _β_ : the variance of true, latent economic activity _σy_<sup>2=cov(</sup><sup>_x, z_)</sup><sup>_/β_=7.74e-3andNO2measurementerror</sup> _σx_<sup>2= var(</sup><sup>_x_)</sup><sup>_−β_2</sup><sup>_σ_</sup> _y_<sup>2=5.48e-3.Withthisinformation,wemayinferthecountrygrade-specific</sup> variance of GDP measurement error _σz,g_<sup>2=var(</sup><sup>_zg_)</sup><sup>_−σ_</sup> _y_<sup>2foreachgradeAthroughE,and</sup> compute country grade-specific GDP weights _λA_ , _. . . λE_ using Equation 6.

Table 6 reports the results. As we move from grade A countries toward E, the variance of measurement error in GDP rises, as expected. As a result, the weight on GDP in the composite estimate containing NO2 falls, consistent with intuition there should be less weight on GDP when it is more erroneous. The weight on GDP is never 1, even for Grade A countries, indicating there is always some weight on the NO2 proxy.

**Implications and Context.** The fact that the NO2 proxy has information value beyond GDP even for grade A countries is important. Generally, it is thought that GDP from countries in this category encapsulates all available information. Using a fully data-dependent approach, we have shown that, for A-rated countries like the U.S., fully 9% of the optimal measure should come from satellite measures of NO2. For B ratings, including Spain and Germany, 28% of the composite estimate comes from NO2. In C-rated countries, including China, that figure rises to 40%. In D and E, including Zimbabwe and the Republic of Yemen, the NO2 weights reach

23
# About AICD and its country reports

This study is a product of the Africa Infrastructure Country Diagnostic (AICD), a project designed to expand the world’s knowledge of physical infrastructure in Africa. The AICD provides a baseline against which future improvements in infrastructure services can be measured, making it possible to monitor the results achieved from donor support. It also offers a solid empirical foundation for prioritizing investments and designing policy reforms in Africa’s infrastructure sectors.

The AICD is based on an unprecedented effort to collect detailed economic and technical data on African infrastructure. The project has produced a series of original reports on public expenditure, spending needs, and sector performance in each of the main infrastructure sectors, including energy, information and communication technologies, irrigation, transport, and water and sanitation. _Africa’s Infrastructure— A Time for Transformation_ , published by the World Bank and the Agence Française de Développement (AFD) in November 2009, synthesized the most significant findings of those reports.

The focus of the AICD country reports is on benchmarking sector performance and quantifying the main financing and efficiency gaps at the country level. These reports are particularly relevant to national policy makers and development partners working on specific countries.

The AICD was commissioned by the Infrastructure Consortium for Africa following the 2005 G8 (Group of Eight) summit at Gleneagles, Scotland, which flagged the importance of scaling up donor finance for infrastructure in support of Africa’s development.

The first phase of the AICD focused on 24 countries that together account for 85 percent of the gross domestic product, population, and infrastructure aid flows of Sub-Saharan Africa. The countries are: Benin, Burkina Faso, Cape Verde, Cameroon, Chad, Côte d’Ivoire, the Democratic Republic of Congo, Ethiopia, Ghana, Kenya, Lesotho, Madagascar, Malawi, Mozambique, Namibia, Niger, Nigeria, Rwanda, Senegal, South Africa, Sudan, Tanzania, Uganda, and Zambia. Under a second phase of the project, coverage was expanded to include as many of the remaining African countries as possible.

Consistent with the genesis of the project, the main focus is on the 48 countries south of the Sahara that face the most severe infrastructure challenges. Some components of the study also cover North African countries so as to provide a broader point of reference. Unless otherwise stated, therefore, the term _Africa_ is used throughout this report as a shorthand for _Sub-Saharan Africa._ The World Bank has implemented the AICD with the guidance of a steering committee that represents the African Union (AU), the New Partnership for Africa’s Development (NEPAD), Africa’s regional economic communities, the African Development Bank (AfDB), the Development Bank of Southern Africa (DBSA), and major infrastructure donors.
# _ENDNOTES:_

1. Stewart Joy, "Railway Costs and Planning," Journal of Transport Economics and Policy (January 1989), 52.

2. See World Bank, The Railways Problem (1982); Eric W. Beshers, Conrall: Government Creation and Privatizatlon of an American Railroad (1989); and Sir Robert Reid, Institutional Reform In Transport: The British Rall Experience (1989).

3. See, e.g., Dieter Havilcek, Experience with Labor Redundancy Schemes In the Transport Sector In Western Europe, the United States and Japan, World Bank Report INU 9 (April 1988); Alice Galenson, Labor Redundancy In the Transport Sector: A Review, Wc;rld Bank Report INU 36, (January 1989); and, J.C. Kohon and L.S. Thompson, Institutional Reform In Transport. Case Study: Uruguayan Railways, to be Issued by the World Bank In late 1989 or early 1990).

4. Some countries have used specially-appointed Independent groups of knowledgeable people to develop such plans. They are presumed to be more objective, and, If properly constituted, can broaden the arena within which all Interested groups can make their views known. They can also perform the useful function of serving as lightening rods for criticism from Interested parties who perceive that they may be harmed by the Plan. Many of the successful restructurings that have occurred -- e.g., France, U.K., and U.S. -- have used this approach for at least part of the Plan's development.

5. George A. Steiner, Strategic Planning (1979) [hereafter StelnerL, p. 192.

8. The term "Ramsey" pricing means a form of discrlminatory pricing such that tariffs deviate from marginal cost In Inverse proportion to the price elasticity of demand for the service In question. See, for example, W.J. Baumol and D. Bradford, "Optimal Departures from Marginal Cost Pricing," American Economic Revlew, 60 (1970) 265283.

- In the body of the paper this has been called "fully commercial" or "value of service" pricing.

7. Experience to date with rail rate deregulation In the United States, Canada, and several European countries shows that contract rates have been enormously successful from the standpoints of both shippers and railways.

8. For example, In 1984 the Uruguayan railways carried roughly only one-third of Its rldership at full fare, one-third on various fare discounts, and one-third on free passes.

27