rafmacalaba/datause-encoder-data huggingface dataset:
# **1. Introduction**

Over the past two decades, community-driven or community based development (CDD/CBD) has become an increasingly common way to distribute public assistance, and is intended to provide a variety of benefits including better poverty targeting, improved social capital, and capacity building at the local government level. Mansuri and Rao (forthcoming) estimate that the World Bank allocated $32 billion for CBD and CDD development projects between 1999 and 2007. They argue that the current wave of interest in localized participatory development started as a reaction to “top-down” development aid that was “... deeply disconnected from the needs of the poor, the marginalized, and the excluded (p. 2).” Social Funds projects, which were created in the 1980s to mitigate the impacts of structural adjustment programs, allow local stakeholders to determine investment decisions (World Bank, 2002). Over time, these projects took on many of the characteristics of CBD programs and became an important part of the social protection strategy in many countries. While social funds initially funded public goods from a menu of infrastructure projects that communities could choose from, they have recently been used to deliver private goods to the poor, such as cash transfers or grants for income generating activities.

Despite the fact that the poor are explicitly the target group for most of these programs, the empirical literature on targeting performance shows that they tend to be only moderately propoor. For example, World Bank (2002) found that “...social funds projects have delivered slightly more than proportional benefits to the poor and the poorest. (p. xi)” Given their demanddriven nature, the beneficiaries of these programs are determined by who applies and who, having applied, gets approved. The literature before us has examined the determinants of being a program beneficiary (i.e. the final allocations) in great detail, but we know of no studies that decompose targeting performance into applications and, conditional on application, selection.

In this paper, we exploit a unique combination of datasets to examine the application and selection processes at the national and household levels. At the national level, we combine data on the universe of project applications and final funding allocations in Tanzania‟s Social Action Fund (TASAF II) with a poverty map, census data, and voting data at the ward level to distinguish determinants of applications from determinants of funding conditional of having 2
investment funds, and this should lead to an increase in the access of external finance and a reduction in the "premium" of extemal finance over internal finance. At the same time, the elimination of subsidized credit programs could increase the financing constraints on those firms that previously benefited from the directed credit system.

Evidence about the effects of financial liberalization on financing constraints in developing countries has been provided by Harris, Schiantarelli and Siregar (1994) for Indonesia, Jaramillo, Schiantarelli and Weiss (1997) for Ecuador, Gelos and Werner (1999) for Mexico, and Gallego and Loayza (2000) for Chile. For Indonesia, Harris, Schiantarelli and Siregar (1994) find evidence that the sensitivity to cash flow decreases for small firms after financial liberalization and that borrowing costs have increased, while for Ecuador, Jaramillo, Schiantarelli and Weiss (1997) find no evidence of a change in borrowing constraints after financial reform. This may be the result of the fact that in Ecuador financial liberalization was less profound than in Indonesia, or benefited only certain firms. The findings may also be the result of using relatively short panels, while the effects of liberalization are only felt over a long period of time. Gelos and Werner (1999) examine the impact of financial liberalization on financing constraints in Mexico and find that financial constraints were eased for small firms but not for large ones. They argue that large firms might have had stronger political connections than small firms and hence better access to preferential directed credit before financial deregulation. Gallego and Loayza (2000) examine the impact of financial liberalization on financing constraints in Chile and find that financial constraints were eased during the period of liberalization in the following sense: firm investment became more responsive to changes in Tobin's q, less tied to internal cash flow, and less affected by the debt-tocapital ratio.

From the above it is clear that there can be distributional consequences to programs of financial liberalization, and whether they relax financing constraints for different categories of firms is ultimately an empirical question. This paper aims to address this question, We contribute to the literature by using panel data for a large number of firms in 13 developing countries to analyze the effects of financial liberalization on firm investment and financing constraints, rather than focusing on one single country.

**2** See Gertler and Rose (1994).

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proportion of workers with less than secondary education decreased. Conversely, there was a significant increase in the proportion of workers with tertiary-level qualifications (9.5 percent had higher education in 1992, compared with 16 percent in 2002). These figures show an apparent improvement in human capital levels in Argentina.

A simple analysis of the demand for skilled labor over the decade shows a positive relationship between changes in supply and changes in wages for the entire period of 1992 to 2002. Therefore, a tentative conclusion is that there could have been increased demand for skills over the entire decade. However, the models do not perform as well as in the case of the United States or Germany, so we cannot outright reject stable factor demand for the period 1992 to 2002 in Argentina, although it seems that the rising supply in more educated workers is being compensated by a rising demand for skills.

In addition to results from Mincerian wage functions, this result is confirmed through the use of quantile regressions estimated for the same period. The quantile regression analysis also shows that men in higher quantiles have higher returns to schooling compared to those in the lower quantiles. For women returns are highest at the lowest quantile. Looking at differential returns across the income distribution, most of the cases present significant differences between the highest and the lowest quintile. Differences in returns at the upper and lower level of the income distribution are large. Differences between sexes are more difficult to explain. Over time, despite the year analyzed, men in higher quantiles of the distribution have higher returns to schooling compared to those who are in the lower quantiles. Quantile regression results for men imply that further investments in education, all else being equal, would contribute to increased 28
As illustrated in Figure 4, our findings seem to be more consistent with positive correlation between the extensive and the intensive margin predicted by the model of Bernard, Redding, and Schott (2006a), though after a point the relationship between extensive and intensive margin becomes flat.

Figure 4: Correlation between intensive and extensive margin (All firms) <!-- Start of picture text --> 0 5 10 15<br>lnaverageSalesbyExpProd<br>95% CI predicted frmNvartotyearVE<br>(mean) frmNvartotyearVE<br>8<br>6<br>4<br>2<br>0<br><!-- End of picture text -->

# 4 Not all products are equal within the firm: evidence on product heterogeneity

When modeling multi-product firms one of the first assumption to be made is whether or not there is heterogeneity among products within the same firm. One can model heterogeneous firms producing multiple products as being equally good at each one of products. Or one can assume that firms have product-specific competencies and produce some products more efficiently than others. In this section, we will use the firm-product data to shed some light at which of these assumptions appears to be supported by the empirical evidence.

## 4.1 Core products

Firms expanding their exports tend to focus on their “core products.” The literature emphasizing heterogeneity at the product level (Bernard, Redding, and Schott 2006a, Eckel and Neary 2006) predicts that a decline in export costs will induce firms to 14
is predicted by the theory, while the positive effect of average income on health inequality is consistent with it but not predicted by it. Interestingly, both these coefficients have the same signs as their counterparts in the study by van Doorslaer and others, though as already indicated neither was significant in their study.<sup>6</sup> At 0.24, the adjusted R<sup>2</sup> is very much smaller than that reported by van Doorslaer and others in their study. But their sample was much smaller and more homogenous, so this is perhaps not unexpected.

**Table 6. Regression results for concentration indices of under-five mortality**

||_Mode_|_lI _|_Mod_|_el2_|
|---|---|---|---|---|
|_Variable_|_Parameter_|_t-value_|_Parameter_|_t-value_|
|Constant|9.50E-02|1.683|9.73E-02|1.823|
|Ginicoefficient|7.98E-02|0.490|2.28E-02|0.191|
|GNP percapita atPPP 1999|||2.04E-05|**3.403**|
|Publicspendingonhealthaspercenttotal|||-6.35E-04|-0.979|
|F-statisticformodel|0.240||4.043||
|R-squared|0.012||0.309||
|Adjusted R-squared|-0.020||0.237||
|N|33||33||

The results in Table 6 are thus not at odds with the theory we outlined above. How far, though, do they help us understand the sources of cross-country and cross-region differences in health inequalities? Consider the case of the differences in under-five mortality inequality between Latin America and Sub-Saharan Africa. **Table** 7 shows the derivation of predicted values of the under-five mortality concentration index for the two regions, along with the results of a decomposition which help us pinpoint the sources of the differences in health inequality between them. The actual (negatives) of the concentration indices for Sub-Saharan Africa and Latin America are 0.089 and 0. 172, respectively. The means of the explanatory variables for each region are indicated. By applying these means (and a constant) to the coefficients reported in Table 5, we obtain predicted concentration indices for the two regions of 0.106 and 0. 159. Sub-Saharan Africa thus has slightly less inequality than one would expect given the regression coefficients and the means of the explanatory variables, while the opposite is true of Latin America. But the predicted concentration index is lower in SubSaharan Africa than Latin America. The means show that, compared to Latin America, SubSaharan Africa has marginally lower levels of income inequality (inequalities have risen there in recent years) and substantially lower levels of GNP per capita. Both differences help us understand the lower levels of health inequality in Sub-Saharan Africa. But the means also show that Sub-Saharan Africa has a slightly _smaller_ share of health expenditures financed

> 6 In their study, van Doorslaer and others also included health spending per capita. In retrospect, it is arguable whether this should be in the equation. Although health spending is frequently included in health regressions alongside income, the implication of the theoretical model is that one ought to include either **income** (in which case the equation is a demand equation) or health spending (in which case the equation is a production function), but not both.

_22_
2

# **Abstract**

The World Bank publication "Assessing Aid: What Works, What Doesn't, and Why" generated a new wave of controversy about foreign aid and policy conditionality that had seen several decades of intense debate. Much of the recent debate has focused on the aidgrowth relationship and the role of "good" policies. While a great deal has been said about qualitative aspects of aid-effectiveness (i.e. fungibility, among other things), little attention has been paid so far to some important quantitative aspects. The present study draws attention to this neglected aspect of the aid debate to demonstrate that the level of aid requirements of a country is an equally important and integral part of aid and aideffectiveness. The World Bank/IMF approaches to estimation of external assistance requirements of a country in quantitative terms is compared with an alternative model, the so-called "Balance of Payments Constrained Growth Model" (based on the Harrod trade multiplier). It is revealed that the latter is not a real alternative as it is an incomplete model. More importantly, it is shown that international financial institutions use these quantitative frameworks in a very flexible and pragmatic way to carry on a meaningful policy dialogue with both donors and recipient countries, which has an important bearing on aid-effectiveness.
**Figure 3** _Flow of permanent migrants by region, 1991-2004_

**Figure 4** _Shares of permanent migrants by region, 1991-2004_

<!-- Start of picture text --> year year<br>Coastal Central Mountain Tirana Coastal Central Mountain Tirana<br>1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004<br>20000 .6<br>.5<br>.4<br>.3<br>10000<br>first-time migrants .2<br>share of first-time migrants<br>.1<br>0 0<br><!-- End of picture text --> As can be seen in Figure 5, an increasing number of members living the original households tend to set up their own families in Albania and migrate less abroad. Despite this trend and the decreasing number of overall emigrants in very recent years, however, the shares of ‘split-offs’ moving abroad remain remarkable, with about half of the 2004 split-offs currently residing abroad. Also, considerable differences can be observed in terms of country of destination of these first migration episodes: while overall Greece and Italy each account for about 40 percent of total current migration, the pattern has fluctuated somewhat over the years, presumably in response to country-specific migration policies and other pull factors.

**Figure 5** _Current residence of split-offs, by year in which they left_

<!-- Start of picture text --> AL GR IT D EU USA CA/oth<br>1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004<br>100<br>80<br>60<br>40<br>percentage at destination<br>20<br>0<br><!-- End of picture text --> 6
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worth the losses involved is an empirical question.251 A final question to be raised is that of administrative feasibility. Implementing household surveys and running regressions such as those presented here is not too difficult for most countries. The difficulties arrive in collecting the data needed from the entire population, as in a census, and in setting up an administrative network to deliver the transfers. Almost all countries have carried out censes, but usually only every 5 to 10 years. Transfer eligibility should be updated more often than that, perhaps on an annual basis. Although many countries have instituted transfer schemes (usually in the form of food rations or food stamps) the administrative success of these is clearly mixed (cf. Alderman, 1988). Some countries may find themselves better equipped to implement such programs than others. On a more optimistic note, technological advances in information technology should reduce many of the implementation costs in the near future.

One last note. This paper has only examined targeting with direct transfers of money, goods, etc. Obviously there are many other kinds of policies which will benefit the poor and can indeed be targeted for their benefit, such as price support policies and the provision of public services (cf. Besley and Ravallion (1988) for an examination of targeted food subsidies). These have not been discussed here in order to focus on some basic issues. Future work on targeting should include any government policies intended to benefit the poor.

25/ See Nicholas and Zeckliauser (1982) for a discussion of how transfers can be set so that it is not optimal for better off individuals to "masquerade" as poor.
regulatory quality, (5) rule of law and (6) control of corruption. For each dimension they created an index that ranges from -2.5 to 2.5 with higher values indicating a lower burden. These measures have often been used in the literature to determine the impact of institutional quality on the location of FDI in general and FDI in banking in particular (see, for example, Galindo et al., 2003 and Stein and Daude, 2004).

All relationships displayed in Figure 1 are positive and highly significant.<sup>2</sup> If absolute differences were driving entry decisions, we would expect a scatter around the 45 degree line, but this is not what we find in the plots. In other words, the positive correlation between institutional quality in host and source country does not seem to be driven by minimizing absolute differences and provides some preliminary evidence that competitive advantage might play a role in the location decisions of banks.

The study of Van Horen (2006) also provides some indication of the importance of competitive advantage in location decisions. This study finds that foreign bank ownership by banks from developing countries is more significant in low-income than in middle-income countries, while banks headquartered in a rich country are more strongly represented in middle income developing countries. The fact that foreign banks in developing countries are mostly from middle income developing countries suggests that competitive advantage over foreign competitors may be important in location decisions. By being more familiar ⎯ as compared to banks from rich, developed countries ⎯ with the more challenging investment climate in developing countries, banks from middle-income countries may have a competitive advantage over foreign competitors in low-income countries. Vice-versa, for banks from high-income countries, it may be easier to operate in middle-income countries. If similarity in institutional quality mattered most for banks’ entry, instead of competitive advantage, banks from middle-income countries would largely invest in other middle-income countries and not in low-income countries.

> 2 The individual indicators are based on their value in 2000. However, correlations are very similar when taking the values for different years.

6
# **Distance and Regionalization Of Trade**

# **For Low-Income Countries**

**Céline Carrère**<sup>+</sup> CERDI – CNRS

# **Jaime de Melo**<sup>♣</sup>

University of Geneva and CERDI

**John Wilson**<sup>♦</sup> World Bank

+ CERDI (University of Auvergne, France) and CNRS

- ♣ University of Geneva, CERDI and CEPR

- ♦ The World Bank

JEL Classification: F10; F40 Keywords: International Trade; Gravity Model; Distance Effect We are grateful to Caroline Freund, Nuno Limao, Jacques Melitz and participants at seminars at the World Bank and CERDI for useful comments on an earlier draft of this paper. This paper has benefited from support from DFID.

1
In a number of countries in MENA, the creation of security interests that are enforceable are cumbersome and require unnecessary formalities that make the system more burdensome for creditors to expand lending secured with movable property. Lebanon, Oman, Saudi Arabia, Tunisia and Yemen for example require that security interests be registered in specific institutions (courts, notaries) in order to be enforceable.<sup>22</sup> A credit agreement between creditor and debtor should be enforceable without any other required formalities. A distinction must be made between enforceable agreements and the priority of a claim against third parties (for which the registration in a public registry is necessary).

# _2.4 Publicity and Registration of Security Interests_

A key feature of a modern secured transactions law is an efficient centralized registration system. Such movable collateral registration serves two functions: (1) it notifies third parties of the existence of the security interest and (2) it establishes the priority status of a security interest based on the date of registration. Unlike title (ownership) registries such as a land registry, a secured transactions registration system does not create or transfer property rights. The registry under a modern system is known as a ―notice‖ registry. That is, it is a registry in which only a simple notice of the essential facts of the secured transaction, i.e. the identity of the debtor, the identity and contact information for the secured creditor, a general or specific description of the collateral and the amount of the loan secured by the collateral. A number of best practice principles for registries have been developed from the experiences of countries that have successfully implemented modern secured transactions systems. The notice registration concept for a collateral registry was developed with the first modern secured transactions laws established in the 1950s in the United States (UCC Article 9). Other countries such as Australia, Canada, New Zealand, Albania, Bosnia, Slovakia, Cambodia, China, Romania, Peru that have adopted modern secured transactions laws have also adopted some version of notice registration. A modern registry should be characterized by the following principles illustrated in Box 2.

> 22 See _Hawkamah Reports_ for Lebanon, Saudi Arabia, Oman and Yemen and _Legal Benchmarks for Monitoring Implementation of Euro-Mediterranean Association Agreements,_ Draft August 5, 2004, unpublished, Annex 4c Secured Lending, Tunisia.

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