rafmacalaba/datause-encoder-data huggingface dataset:
attention to implementation at each site. Overall, if policy makers use the cost-effectiveness results of pilot programs to inform whether or not they should scale up implementation, they may overestimate both the costs and the impacts of programs, confounding the estimation of cost-effectiveness, and ultimately, their decision making process. As a result, a policy maker considering the adaptation of a project in her country that was successful elsewhere would do well to take the scale into account when calculating the likely costs.

# **IV. Challenges in Reporting**

## **Insufficient Information**

The challenges of context-specificity of costs and over-estimation of costs from pilot programs can limit how easily policy makers can learn from the cost-effectiveness of one program and apply that to another program. But it is often the case that program costs are not reported at all, or are reported in vague and incomparable terms. In general costs – when reported at all – are reported with a lack of detail on their component parts or units of measure, which makes them ill-suited for the purposes of well-done cost-effectiveness analysis. Table 7 presents examples of current cost reporting from the evaluations of the sample of learning programs reviewed in Section III, which illustrate this lack of detail. McEwan's 2014 review found that 56% of 110 education treatments reported no information on incremental program costs and that most others reported only minimal information. At times, detail may only be reported on the largest cost ingredient of a program (e.g., only the amount of the transfer for a conditional cash transfer program), resulting in underestimated program costs, and an upward bias on the resulting cost-effectiveness estimate.

This compounds the problem of costs varying across different contexts, especially when different costs vary by different amounts. If a policy maker reading an education program evaluation is not given detailed information on what proportion of costs were made up of teacher salaries or construction materials, for example, then they will struggle to extrapolate what the cost-effectiveness of this program would be when implemented in their own country, even if they know the relevant per unit costs. The cost-effectiveness estimates reported in the evaluations in J-PAL (2014a) are, in almost every case, derived after a great deal of additional investigation beyond what is reported in the original research papers.

This problem is far from unique to education interventions. A recent review of costeffectiveness analyses in health highlighted that “the majority of studies provided insufficient information” on key details such as exchange rates (NICE International 2014). Across sectors, insufficient cost data are reported to draw any sort of reasonable inferences.

11
While China achieved extraordinary growth and poverty reduction over the last few decades, growing inequality has become a focal point of concern for policy makers. Although cross‐ sectional inequality and intergenerational mobility are different concepts, one would in general expect inequality in opportunities to be manifested as high cross‐sectional inequality. But high cross‐sectional inequality at a given point of time may not necessarily imply that inequality in opportunities is also high. For example, government policy interventions in education and health can improve mobility and such policies may be implemented partly in response to high cross‐ sectional inequality.<sup>4</sup> Since 1978, China has implemented several economic reforms, such as the household responsibility system, the gradual relaxation of _Hukou_ system (restrictions on geographic mobility), and 9 years of compulsory schooling policy (starting from 1986). Have these reforms expanded equality of economic opportunities in rural China?<sup>5</sup> Or, have the market oriented reforms instead generated inequality in economic opportunities, thus making the “accident of birth” increasingly more important in shaping the opportunities faced by an individual?<sup>6</sup> If the same reforms that resulted in high growth with high cross‐sectional inequality have also generated inequality in opportunity, it has profound economic and political implications. A related important issue is whether there are significant gender differences in intergenerational educational and occupational mobility in a given period and over time (over a

> 4 As argued by Friedman (1962), a given extent of cross‐section inequality is a bigger concern in a rigid society where the pattern of inequality is self‐reproducing compared to a mobile society where such inequality can decline in short to medium term because of equality of opportunity.

> 5 Given the spectacular growth in income rural China, one would expect a significant increase in parental investment in children’s education, especially because the family may no longer be dependent on the income from child labor (luxury axiom of child labor mentioned by Basu and Van (1998)). The growth in per capita income in rural China has been impressive after the initiation of economic reform in 1978. Per capita income in rural China grew from 133.6 yuan in 1978 to 544.9 yuan in 1988 to 2475.6 yuan in 2002 (National Bureau of Statistics of China).

> 6 The existing Sociological literature on mobility in China find that economic mobility of the poor peasants were positively affected by the communist policies before the economic reform of 1978. See, for example, Cheng and Dai (1995).

3
the dominant products in this category falls. The second is that a range of new products has appeared in recent years, yielding revenues significant enough to boost diversification indicators.

**Figure 9: Diversification of Non-Traditional Exports: 1993-2009**

<!-- Start of picture text --> 0.075<br>0.070<br>0.065<br>0.060<br>0.055<br>0.050<br>0.045<br>1993 1995 1997 1999 2001 2003 2005 2007 2009<br>índice<br><!-- End of picture text -->

**Table 4: Export Diversification Indicators**

- <u>(10 digit subheadings)</u>

|||<br>Non<br>1993|||Non<br>2009||
|---|---|---|---|---|---|---|
||Traditionals|<br>Traditionals|Total|Traditionals|<br>Traditionals|Total|
|Tariff lines that makes 50% of the total value|3|22|7|3|61|4|
|Tariff lines that make 70% of the total value|6|61|18|4|143|13|
|Total tariff lines|75|2,298|2,373|95|4,262|4,357|
|- Tariff lines that appear in both 1993 and 2009||||59|1,861|1,920|
|- New tariff lines<sup>1/</sup>||||36|2,401|2,437|
|- Tariff lines that disappear<sup>2/</sup>||||16|437|453|
|Relations tariff lines - country|461|9,826|10,287|612|28,307|28,919|
|1/Appear in 2009 but not in 1993.|||||||
|2/Appear in 1993 but not in 2009<br>Source: SUNAT-MEF.|||||||

To explore the issue of the growing diversification among non-traditional exports, Table 4 presents key data that compare the list of the most important export products (by value) in 1993 and in 2009 at a disaggregated level.<sup>17</sup> Overall, the evidence suggests that between these two years, there has been an increase in non-traditional exports both of the intensive margin (i.e., increase of exports due to products already exported to an established destination market) and of the extensive margin (i.e., increase of 17 Note that the data in Table 4 suggests that traditional exports have not expanded much on the intensive nor extensive margin. In 2009, these products accounted for 77% of total exports with only 7 subheadings explaining 97% of the total. As was the case in 1993, those subheadings were related to copper products, fishmeal, nonferrous metal transformation and coffee for consumption.

15
4 dom proposition’). His original empirical evidence showing democracies to fight less overall was based on data for a very short time-frame. But his later argument is based on the smaller losses suffered by democratic powers in wartime. Some of the participants on the democratic side of the major wars are very peripheral actors that join in for political solidarity more than anything. They hardly suffer any casualties, but they drive the rate of democratic war participation up. However, the lower losses of democracies is also compatible with the notion put forward by Galtung (1996) that democracies are particularly selfrighteous and belligerent, and the fact that democracies tend to win the wars they participate in (Lake, 1992; Reiter & Stam, 2002). However, Rummel’s argument about peripheral allies shows an important lead. Democracies are much better at building large coalitions once a war has broken out. These coalitions are frequently with other democracies, but democracies also ally with autocracies – the most glaring example is probably the wartime alliance between Stalin and the Western democracies, forged after Hitler’s June 1941 attack on the Soviet Union broke up the Hitler-Stalin pact. In all the large multilateral wars, the democracies were part of the larger coalition. In World War I it contained 73% of the participants (11 out of 15 countries), in World War II 75%, in the Korean War 82%, and in the Vietnam War 78%. Serbia (1999), Afghanistan (2001), and Iraq (1991 and again in 2003) fought alone against large coalitions built by the major Western powers.<sup>6</sup> Most of the participants on the democratic side, including many of the democracies, joined the war after conflict had broken out. The best case for arguing that democracies are more peaceful overall is that they participate less frequently in the outbreak of new armed conflict. In all but one of the eight wars mentioned above, the violence had been initiated by two non-democratic actors, while the democracies joined later. The one exception is the Iraq War of 2003, to which we return later.<sup>7</sup> As the number of democracies increases, the crucial question is what happens at the system level. Generalizing from the dyadic level, most writers (like Singer & Wildavsky, 1993) have assumed that the systemic relationship could be deduced from the dyadic: the more democracy in the world, the more peace.

> 6 Data from the Correlates of War Project and the Uppsala Conflict Data Project.

> 7 The 2000 Afghanistan war is also an exception if we do not count the Taliban regime as an ally of al Qaeda in the attack on the US on 11 September.
demanding service or repairs in return for reducing wait periods.<sup>7</sup> Enterprises will be less willing to pay bribes when the excess demand for utility service is lower - i.e., lower excess demand will force down the shadow price of utility service and, thus, lower the enterprises' willingness to pay bribes.<sup>8</sup> Since, other things being equal (including income level), we would expect excess demand for service to be highest in those countries with the largest capacity constraints, we thus expect:<sup>9</sup> _Hypothesis 1. Bribes paid to utilities will be lower in countries where the utility's capacity is greater._ Privatization of the utility company is often associated with an increase in investment and a large expansion of capacity.'<sup>0</sup> Hypothesis 1 then suggests that utility privatization will reduce bribe payments by removing capacity restrictions. However, privatization might affect bribes even after controlling for the impact of privatization on capacity. Here the penalty function imposed by management on utility employees who take bribes will play an important role. When a company is privatized, the private owners become residual claimants on the income of the company, giving them a large incentive to reduce corruption. In contrast, under public ownership, it is often not clear who the residual claimants are and who will gain from reducing corruption (e.g., whether the funds would go the Treasury, to political leaders, or to the utility itself). Further, although profits are the property of the general public in theory, individual members of the public have little incentive to monitor the employees of the utility company. Since privatization will raise the marginal benefit of monitoring employees without affecting the marginal cost, privatization will increase the optimal amount of monitoring, and thus reduce the extent of bribes.

> 7Of course, the utility employees will have to balance the gains from the bribe with the possible loss of income due to the penalty they will face if caught.

> 8 This is similar to the point made by Ades and De Tella (1999).

> 9 Although the waiting period might be seem to be a more appropriate measure of excess demand, waiting period is often poorly measured and can be endogenous if long waits deter people from bothering to request service.

> 10 See, for example, recent studies of the effect of privatization on the telecommunications sector (Ros, 1999; Wallsten 2001; Li and Xu 2001).

4
Performance and financial audits of procurement systems by an external auditing agency can also deter corruption schemes (World Bank, 2015: 84). “Reporting and auditing are critical to identifying corrupt transactions and to increasing the risks of detection” (Ware et al., 2007: 321; also see Avis et al., 2016; Olken, 2007; Di Tella and Schargrodsky, 2003). The PEFA assessments include a question (PI-26) on the comprehensiveness and timeliness of external audits, as well as on evidence of follow up on recommendations. The question encompasses audits of procurement systems, including performance audits such as assessing value for money in major infrastructure projects. However, there is no separate score provided for auditing of procurement and other elements of public expenditure systems. We expect higher scores on this indicator (AUDIT) to be associated with lower kickbacks. By enhancing firms’ perceptions of fairness and integrity, and reducing their expectations of paying costly bribes, AUDIT may also be positively related to the likelihood of bidding on contracts (World Bank, 2015: 84-87; Ware et al., 2007: 315-321).

We estimate equations of the general form: where _Yij_ is the relevant procurement outcome (bidding or making informal payments) for firm _i_ in country _j_ , _Pj_ is the relevant procurement system indicator(s), _Xj_ is a vector of country-level controls, including region dummies and survey year, and _Zij_ is a vector of firm-level controls, including sector dummies.

Firm-level control variables include size (log of the number of employees), age (log of the number of years it has operated), the top manager’s experience (log of the number of years), ownership composition, and a dummy for whether the establishment being surveyed is part of a larger firm or not. Smaller and younger firms with less experienced managers are more likely to “lack the resources and management expertise to plan, draft and complete tender applications,” and face greater difficulty in obtaining necessary information and providing required financial guarantees (World Bank, 2016: 7). Procurement systems sometimes establish preferences for domestic over foreign-owned firms, so we expect higher shares of foreign ownership to be associated with a lower probability of bidding for contracts, other things equal. Foreign firms might resort to kickbacks to gain access when discriminated against, but foreign firms might resort to bribery less often than domestic firms overall 12
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WPS3416

# **Foreign Bank Entry, Performance of Domestic Banks and the Sequence of Financial Liberalization**

Nihal Bayraktar and Yan Wang* 2<sup>nd</sup> Draft: August 18, 2004

## **Abstract**

The openness or internationalization of financial services is a complex issue as it is closely related to structural reforms in domestic financial sector with some perceived implications to macroeconomic stability. This paper attempts to investigate firstly the impact of foreign bank entry on the performance of domestic banks, and secondly how this relationship is affected by the sequence of financial liberalization. Our data set is constructed from the BANKSCOPE database including 30 developed and developing countries and covering the period from 1995 to 2002. We apply panel data regressions by pooling all countries together, and by grouping countries according to the sequence of their financial liberalization. One observation based on descriptive analysis is that the degree of openness to foreign bank entry varies a great deal which is not correlated with average income levels or with GDP growth. Second, the sequence of financial liberalization matters for the performance of domestic banking sector: After controlling for macroeconomic variables and grouping countries by their sequence of liberalization, foreign bank entry has significantly improved domestic bank competitiveness in countries which liberalized their stock market first. In these countries, both profit and cost indicators are negatively related to the share of foreign banks. Countries which liberalized their capital account first seem to have benefited less from foreign bank entry as compared to the other two sets of countries.

JEL Classification: G21, F10, F21.



> *Respectively, Penn State University – Harrisburg and World Bank. This is part of a larger effort in WBIPR –Trade to develop materials for capacity building on trade in financial services. The authors thank Gerard Caprio, Roumeen Islam, Will Martin, Aaditya Mattoo, Gianni Zanini, and trade team for encouragement and comments. The findings and views expressed in this paper are entirely those of the authors. They do not necessarily reflect the views of the Bank, its Executive Directors or the Countries the represent.
36

**_5.3_** JfiWnve Wmn ted

A good indicator of credibility and hence future sustainabiity of trade reform is investment response, especially by private domestic and foreign agents in productive activities. A detailed analysis of investment response to adjustment must eximine the sectoral composition of private and public investment and evaluate the impact of various incentives ordinarily provided under investment codes. This effort lies well beyond the scope of this paper. However, the representative data on total and private Investment in Tables 12-13 are quite illuminating. Among the countries examined, only four, namely Ghana, Mali, Tanzania and Uganda record rising investment shares in the post-reform period. In Madagascar the slight increase in investment appears to reverse its course in 1991 following the political unrest that put a halt to the adjustment program. In all other countries, investment decreases compared to its pre-reform or historic levels. The sharpest decrease occurs in countries like Cote d'Ivoire, Nigeria and Zambia, where public investment went up and down with their export earnings in the 1970s and early 1980s.34 However, in the countries for which data are available, private investment also shows a declining trend in the post-reform period. For example, this is true for C6te d'Ivoire, Kenya, Nigeria and Zambia. In C6te d'Ivoire, private investment decreases from 17 percent of GDP in 1980 to about 7 percent in 1990. In Kenya, it decreases from 12-13 percent at the beginning of the 1980s to around 10.5 percent in 1990. In Nigeri&, private investment recovers form its very low level in 1984-85, less than 2.5 percent of GDP, but remains still only a small fraction of total investment. These results indicate that the private sector maintained a profound skepticism about the sustainability of adjustment in the majority of the countries examined here.

# _6._ Conlsion

One of the causes of the rather disappointing performance of the tradables goods sector in SSA after several years of adjustment and considerable investment of resources can be traced to less than 341t must be noted that the fall in investment is not necessarily bad if its efficiency is increased. Besides, a good deal of public investment projects that w-' i carried out in the late 1970s in the wake of the commodities boom were in all likelihood little more than a waste of resources.
- 3 -

- -- helping develc.)ing countries to meet the costs of participation in the new global regimes that will be required if a new generation of security concerns, such as threats to the world's atmosphere, water resources, and biological diversity, are to be adequately managed.

7. While the ebbing of the bi-polar ideological competition should eliminate one contributing factor to the outbreak and escalation of local and regional conflicts, this could also weaken restraint of local antagonists who no longer need fear superpower interventions. As noted below, it is not yet clear whether a definite end of the Cold War, should it occur, would open the way for joint or parallel actions by the superpowers to promote peace and development in the Third World, or merely signal their disengagement. Either way, the opportunities for initiatives by multilateral institutions are likely to increase and in a more multipolar global environment their importance as a voice for majority of smaller and typically poorer developing countries will become more vital.

8. Before turning to the broad outlines of the global security system in transition, it is imporitant to rnote how the scope of "international security" is chang.ing in domestic and international affairs.

# Wldenine the Scone of International Security

9. The term "international security" is ambiguous and emotion-laden, greatly complicating its analytic use, even among those who identify it as their primary scholarly or professional interest.<sup>2</sup> While the exact meaning of "international security" has always been somewhat elusive, the topics and relevant government institutions have been easy to identify: preparing and sustaining military defenses, threatening and using military force when necessary, negotiating and managing alliances and arms control agreements, various intelligence operations; indeed, almost any problem related to central political problems of threat perception and management among sovereign states. The scholarship and public understanding of international security affairs primarily reflected the concepts and policy debates surrounding the emergence of the Cold War and the development of atomic weapons after World War II. The field has also

- _21_ Joseph S. Nye, Jr. and Sean M. Lynn-Jones, "International Security Studies: A Report of a Conference on the State of the Field," International Security, 12:4, 1988, pp. 5-27