rafmacalaba/datause-encoder-data huggingface dataset:
# **Figure 4: Cumulative volume of dollar-denominated central government debt issued under U.K. and U.S. governing laws**

<!-- Start of picture text --> $ billions<br>350<br>300<br>250<br>200<br>150<br>100<br>50<br>0<br>Pre‐crisis (1990‐2008) Post‐crisis (2009‐2012)<br>U.K. law U.S. Law<br><!-- End of picture text --> Source: Authors’ calculations based on Dealogic data.

Also, there are differences in the evolution of these two jurisdictions in terms of their regulatory stringency. The re-emergence of the U.K. as a major financial center commenced with the rapid deregulation of U.K. financial markets and changes in the London Stock Exchange carried out during the tenure of Margaret Thatcher in 1986.<sup>5</sup> However, it was only in the post-crisis period that the volume of dollar-denominated central government debt issued under U.K. law came close to and at times surpassed that of U.S. law issues (Figure 3). This transition coincided, in part, with major regulatory changes brought about in the United States after the crisis, while Britain continued with its “light touch” regulatory approach. It is possible that the new regulations made U.S. law less attractive for certain bond issuers. Even prior to the crisis, studies have raised concerns that U.S. financial enforcement is more intense with higher costs and more empowered regulators when compared to U.K. or Germany (Jackson 2007). This may attract some investors, but put off potential issuers of various securities (Coffee 2007). The prominent holdout of entities such as Elliott Management Corp. and Aurelius Capital Management LP in the long-drawn Argentine default case has also reinforced the notion that the United States as a legal jurisdiction offers strong investor protection. Equally, it would make sovereigns cautious of issuing under U.S. law given that across the extended period of dispute, Argentina was restricted from borrowing abroad.<sup>6</sup> Even though no region (and often not even individual countries) can be fully associated with one or the other jurisdiction, regions concentrate _the majority_ of their issuances in a certain market. Eastern European and Sub-Saharan African countries tend to issue bonds under U.K. law, and this tendency became more pronounced after the crisis. Moreover, their share of the emerging markets total and the volumes issued grew after 2008. On the other hand, Latin American and East Asian countries (which overwhelmingly issue under U.S. law) saw their volumes decline.

> 5 See ‘Big Bang 20 years on’. _Centre for Policy Studies. October 2006._

> 6 See “Argentina Offers Holdout Creditors $6.5 Billion”, Wall Street Journal, 5 Feb. 2016. <u>http://www.wsj.com/articles/some-creditors-accept-argentinas-formal-offer-1454711245.</u>

6
Evaluation of Door-to-Door Tax Enforcement Strategy in

# INDONESIA<sup>*</sup>

Paulo Antonacci<sup>†</sup> Muhammad Khudadad Chattha<sup>‡</sup>

## **JEL:** H20,C54,C99,D04

*We thank Peter Arcidiacono, Christopher Alexander Hoy, Viet Anh Nguyen and Naranggi Pramudya Soko for their valued comments. In memoriam, we thank Raka Rizky Fadilla for his exceptional research assistance, work ethic and kindness. We are grateful for the cooperation and assistance of the local government representatives in Gorontalo. We thank Alma Kanani, Habib Rab, Rama Krishnan Venkateswaran, Jurgen Blum and Daniel Ortega for their guidance. The work was financed by the governments of Canada, Switzerland, and the European Union, through the World Bank’s Public Financial Management Multi-Donor Trust Fund for Indonesia. All potential errors are our own.

> †Duke University; paulo.antonacci@duke.edu

> ‡World Bank; mchattha@worldbank.org
1. **Limited human, technical, and legal resources.** Subnational tax agencies often struggle with enforcement due to inadequate IT systems and limited human resources. In 2020, for instance, Tres de Febrero’s tax audit department operated with just five employees overseeing 130,000 TSG payers and over 4,000 businesses subject to a local turnover tax (TISH). This team relied on data from a 1980s IBM mainframe to determine taxpayer debts and payments, leading to high costs for identifying debts and noncompliance, making large-scale audits infeasible. Given their limited resources, local tax agencies typically focus their enforcement efforts on a few large businesses that generate most of the income and tax revenue, rather than overseeing tens of thousands of households. For example, in 2020 ten companies accounted for half of the business tax revenue, compared to 25,000 properties that made up half of TSG’s revenue.

2. **High political cost.** The political economy of enforcing a local property tax is contentious (Cabral and Hoxby, 2012), especially in high-inflation contexts. In the Province of Buenos Aires, municipal elections occur biennially, and mayors tend to avoid comprehensive tax enforcement campaigns on delinquent households during odd years to maintain voter support. Moreover, mayors have been reluctant to update the cadastral value of properties (i.e., the tax base) for the same reason (Christensen and Garfias, 2021). Consequently, the property tax’s share in the overall tax structure has declined over time.

3. **Financial disincentives to compliance.** Frequent debt regularization programs and a partial adjustment of delinquent tax debt can further disincentivize timely tax payments. Until 2022, the municipality charged an annual simple interest rate of 12% on late payments, significantly below the inflation rate. Additionally, the municipality has implemented payment plans with preferential interest rates and debt forgiveness ( _moratorias_ ) in four of the last five years. These actions incentivize taxpayers to postpone payments to reduce the real value of their tax debt or even wait for the next _moratoria_ to settle their obligations (e.g., see Lauletta and Montano Campos, 2023).

Collectively, these factors provide indicative evidence of low enforcement capacity for property taxes in developing countries. In this context, property tax compliance is essentially quasivoluntary and potentially driven by intrinsic motives such as social norms and reciprocity (Luttmer and Singhal, 2014). Consequently, there is potential for soft interventions (e.g., tax information letters) to influence outcomes like tax delinquency. Furthermore, in this setting of imperfect enforcement, it is worth examining whether compliance rates differ between women and men.

6
# **References**

Adhvaryu, Achyuta and Anant Nyshadham (2017) “Health, enterprise, and labor complementarity in the household”, _Journal of Development Economics_ 126: 91-111.

Banerjee, Abhijit and Andrew Newman (1993) “Occupational choice and the process of development”, _Journal of Political Economy_ 101(2): 274-98.

Bardhan, Pranab and Christopher Udry (1999) _Development Microeconomics_ . Oxford University Press, Oxford.

Bartelsman, Eric, John Haltiwanger and Stefano Scarpetta (2013) “Cross-country differences in productivity: The role of allocation and selection”, _American Economic Review_ 103(1): 30534.

Bartelsman, Eric, John Haltiwanger and Stefano Scarpetta (2009) “Measuring and Analyzing Cross-country Differences in Firm Dynamics”, pp. 15-76 in Timothy Dunne, J. Bradford Jensen, and Mark J. Roberts (editors) _Producer Dynamics: New Evidence from Micro Data_ , NBER, Cambridge, MA.

Benhassine, Najy, David McKenzie, Victor Pouliquen and Massimiliano Santini (2016) “Can enhancing the benefits of formalization induce informal firms to become formal? Experimental evidence from Benin “, World Bank Policy Research Working Paper 7900.

Bernard, Andrew B. and J. Bradford Jensen (2002) “The deaths of manufacturing plants”, NBER Working Paper 9026.

Blattman, Christoper, Jeannie Annan, Eric P. Green and Julian Jamison (2016) “The returns to microenterprise support among the Ultrapoor: A field experiment in Postwar Uganda", _American Economic Journal: Applied Economics_ 8(2): 35-64.

Campos, Francisco, Michael Frese, Markus Goldstein, Leonardo Iacovone, Hillary Johnson, David McKenzie and Mona Mensmann (2017) “Teaching personal initiative beats traditional business training in boosting small business in West Africa”, _Science_ , forthcoming.

Campos, Francisco, Markus Goldstein and David McKenzie (2015) “Short-term impacts of Formalization Assistance and a Bank Information Session on Business Registration and Access to Finance in Malawi”, _World Bank Policy Research Working Paper_ no. 7183 Cressy, Robert (2006) “Why do most firms die young?”, _Small Business Economics_ 26: 103116.

Davies, Elwyn and Andrew Kerr (2015) “Firm Survival and Change in Ghana, 2003-2013”, CSAE Working Paper 2015-06.

De Mel, Suresh, David McKenzie, and Christopher Woodruff (2016) “Labor drops: Experimental evidence on the return to additional labor in microenterprises”, _World Bank Policy Research Working Paper_ 7924.

De Mel, Suresh, David McKenzie, and Christopher Woodruff (2014) “Business training and female enterprise start-up, growth, and dynamics: Experimental evidence from Sri Lanka”, _Journal of Development Economics_ 106: 199-210.

25
<!-- Start of picture text --> 0% . . . . . . .<br>-5%Y 1 1qA ioc j<br>-10%<br>-15% 20%<br>-25* .'<br>-30%<br>-35%<br>Overall surplus(+)/deficit(-), Including grants.<br>--O.verall surplus(+)/deficit(-), excluding grants<br><!-- End of picture text --> <!-- Start of picture text --> Figure 9: Overall Surplus/Deficit (as % of GDP)<br>Source: World Bank Data<br><!-- End of picture text -->

**_Support for reform from donors._** During field interviews with many groups involved in the reform process, including members of the taskforce, non-governmental organizations, government officials and the donors themselves, almost all groups agreed that pressure from donors was one of the most important, if not the most important, factor encouraging reform. This pressure took several forms, including discussions with the Government,

putting conditions related to sector reform in loans and grants<sup>and offeringaid followingreform.</sup> Malawi's high level of budget deficits, which averaged over<sup>5percentof GDPincludinggrants</sup> and 12 percent of GDP excluding grants between 1995<sup>and1999,madetheGovernment</sup> especially susceptible to pressure from donors (see Figure<sup>9).32.</sup> After the Government had passed the<sup>1998CommunicationsAct,theDanish</sup> International Development Agency (DANIDA), which<sup>wasthedonoragencymostheavily</sup> involved in sector reform, provided financial assistance<sup>to theGovernmenttohelpit withthe</sup> reform process. This aid was used to help establish the Malawi<sup>CommunicationsRegulatory</sup> Authority (MACRA), to hire consultants to advise<sup>on theseparationofMPTCinMalawi</sup> Telecom and Malawi Posts, and to develop rural telecommunications.

> 32 In addition to pushing hard for telecommunications reform, donors,<sup>includingDANIDAwhowereproviding</sup> considerable support for telecommunications reform, resisted proposals<sup>toseparatebroadcasting reform from</sup> telecommunications reform.

27
32 let alone establish a feedback between gains and economic decisions. The most obvious inefficiency of mutual trade -- the disadvantaged position of the USSR derived from its specialization in exports of hard raw materials and imports of soft manufactures, with biased price formation practices -- became in-reasingly evident.

For the Six, this pattern implied a short-term advantage and served as an incentive to retain and strengthen underlying production structures, regardless of changes in trade patterns and relative prices in competitive markets. Furthermore, the monopolistic domestic and regional sellers’ market removed all incentives for producers to keep up with international standards of product and process technology and to develop effective marketing know-how and infrastructures outside the CMEA. These mutually reinforcing, cumulative effects became evident in a secular decline of exports to competitive markets and a down-market shift of export mix. (Table 5 illustrates the long-term loss of world market shares and of international competitiveness.) Thus, with several decades of symbiotic relations within the CMEA and with the sheer weight of intraregional transactions, a pervasive “structural dependency" developed between the member countries. Even so, the degree of dependency varies. The USSR can divert a large share of exports of raw materials to CC markets (either in the West or for convertible currency payment by former CMEA countries) in the short run; the obverse is not the case, since the results of structural, technological, and marketing defects can be corrected only in a complex process of modernization and learning extending over an unknown length of time.

# Table 5. World Export Shares (Percentage)

|_<br>.|.<br>1970|1380|1987|
|---|---|---|---|
|Eastern European Six||||
|Share in world exports, total trade|6.8|4.5|4.7|
|Share in world exports, engineering products|0.79|0.7|0.43|
|Shase in world exports, high and advanced<br>technology engineering products|0.25|0.14|Ot|
|Share ofhigh and advanced technology<br>products in engineering exporia|31.3|26.8|25.9|
|Kong)||||
|Share in world exports, engineering products|1.0|3.9|6.3|
|Share in world exports, high and advanced<br>technology enginecring products|0.49|1.73|3.21|
|Share in world exports, technology in<br>enginseringexportsproducts<br>;<br>__<br>___|50.8<br>|44.5|50.9|

Source: BCE Economic Survey of Europe in 1989-1990, New York (1989).
# **1. Introduction**

The scarcity of long-term credit in developing market economies is recognized as an obstacle to productivity growth and a source of volatility that further hampers growth. Investments across infrastructure, factories, equipment, new housing, commercial business, education, and research and development are all necessary to expand the productivity frontier. Firms and households need to fund these investments through financial markets. The scarcity of long-term credit is one of the most important impediments to the operations of firms in emerging markets; rollover risks prevent borrowers from undertaking long-term investments with short-term loans, which in turn negatively affects productivity (Almeida et al. 2011; Demirgüç-Kunt and Maksimovic 1998; Jaramillo and Schiantarelli 2002; Schiantarelli and Sembenelli 1997; Schiantarelli and Srivastava 1997). Scarcity of long-term financing has also been argued to increase the pro-cyclicality of investment, amplifying macroeconomic volatility and lowering growth. According to the 2014 Financial Development Barometer, 75 percent of respondents indicated that the low usage of long-term finance in their countries was primarily a supply problem.<sup>2</sup> The recent economic growth performance of the countries in Latin America and the Caribbean (LAC) has been hampered by poor productivity growth. Even in countries that experienced strong economic growth over the past decade, such as Colombia or Peru, factor accumulation rather than productivity gains was the main driver of growth. While many factors explain the poor productivity and growth performance in the region, lack of financial development, particularly long-term credit, has been identified as a particular problem in LAC (CEPAL 2006; de la Torre, Ize, and Schmukler 2012). However, there is no comprehensive data set on the credit maturity of financing in LAC that can be used to explore the trends, determinants, and effects of long-term credit.

Banking systems are the main providers of long-term financing to the private sector around the world. Long-term funding is typically defined as debt (loans or bonds) with maturity of over one year (following the definition of fixed investment in national accounts). The Group of 20 countries (G-20, 2013) defines long-term fund, however, as debt with maturity of over five years. Equity, as it is not immediately repayable, can also be considered as long-term finance. Firms

> 2 Financial Development Barometer. www.worldbank.org/financialdevelopment.

2
Table 4: Balancing test of quality shocks

# **In 2007 (for original sample)**

||**Bad50=1**<br>**(N=14)**|**Bad50=0**<br>**(N=39)**|**Difference**|
|---|---|---|---|
|Survival rate of village population in 2005|0.54|0.62|-0.08|
|Good aid boat/Survivingcaptains in 05 1/|0.38|1.76|**-1.38***|
|(ExcludingLhok Nga and Pulo Aceh)|0.38|0.66|-0.28|
|Ln(distance to Banda Aceh)|2.82|2.64|0.18|
|**Agencies’ involvement**2/||||
|Oxfam|0.07|0.06|-0.01|
|Kuwaitgovernment|0.14|0.06|0.08|
|Localgovernment/BRR|0.71|0.30|**0.41*****|
|TriangleGeneration Humanitaire|0.21|0.28|-0.07|
|**Village governance**2/||||
|Old village head survived|0.36|0.38|-0.02|
|Old PL head still in the office|0.79|0.69|0.10|

*** p<0.01, ** p<0.05, * p<0.1

1/ Total number of good boats provided by donors by 2007 divided by the number of survived captains in 2005. T-test which excludes two outliers (11 villages in Lhok Nga and Pulo Aceh where aid boats were overfunded) is also reported.

2/ Dummy variables.

# **In 2009 (for supplementary sample)**

||**_q=1_**<br>**(N=93)**|**_q=0_**<br>**(N=322)**|**Difference**|
|---|---|---|---|
|Boat ownerpre-tsunami|0.59|0.61|-0.02|
|Captainpre-tsunami|0.89|0.85|0.04|
|D_large boatpre-tsunami|0.18|0.32|**-0.14****|
|High education in2007|0.01|0.01|0|
|Good aid boat/Survivingcaptains in 05|1.68|1.42|0.26|
|(ExcludingLhok Nga and Pulo Aceh)|0.95|0.71|0.24|
|D_BandaAceh|0.06|0.17|**-0.11*****|
|D_AcehJaya|0.39|0.11|**0.28*****|

*** p<0.01, ** p<0.05, * p<0.1
# **1. Introduction**

The great divergence in economic performance among developing and transition economies in the past several decades has invigorated the debates on the proper role of the government in economic development, especially in the context of the so-called East Asian miracle (Wade, 1990; World Bank, 1993; Page, 1994; Aoki, et al., 1996; Stiglitz, 1996, 2003; Shleifer, 1997; Stiglitz and Yusuf, 2001; Easterly, 2001; Rodrik, 2008a and 2008b; Brown et al., 2009; Lin and Monga, 2010). As Rodrik (2008b) points out, in theory there is ample room for governments to correct the rampant market failures in a developing country, but identifying the conditions under which government intervention is likely to improve economic performance remains an open empirical issue.

A vast literature on the role of government in economic development focuses mostly on national level government policies. However, in this paper we look at the issue of local government activism in economic development. Using data from a large survey of Chinese firms, we investigate what determines local government activism, and whether or when it contributes to firm efficiency. We focus on two specific roles that local Chinese governments have played in supporting local businesses. The first is an informational role in which local governments provide firms with helpful contacts or information on products, technologies or market opportunities. This role likely requires little extra cost for the government because much of the information supplied can be a side product of routine functions.

The second is a financial role in which the local government helps businesses to secure bank loans. This second role may be more controversial because a bank loan for one firm might be allocated more efficiently to another firm in the absence of government intervention. In China’s case, bank loan decisions became more centralized after the Asian financial crisis in 1998, and thus the influence of local governments on loan decisions has waned. Local governments cannot dictate that a state-owned national bank lend to a specific firm, but only act as a go-between or as a guarantor for the firm. Local government facilitation may help secure loans for firms that may have promising businesses but cannot get sufficient credit, perhaps due to the lack of collateral or rigid national level bank policies that are poorly adapted to local situations. On the other hand, it may also prop up inefficient firms, especially SOEs. And indeed, 2
# **Table 4. Pooled-Mean-Group Dynamic Error Correction Models for Changes in Log Spreads: Fixed Effects, Non-crisis periods, 1991M1-2004M6**

**Coefficient values**<sup>**17**</sup> **(absolute t-ratios)**

|**Explanatory variables**|**Full model**|**Parsimonious model**|
|---|---|---|
|<br>**(1) Long-run coefficients**|||
|**10-yr Treasury rate**<br>|**-.2301 (4.29)**<br>|**-.2058 (4.41)**<br>|
|**US hi-low corporate**<br>**spread**|**.00585 (.29)**|**.00753 (.43)**|
|**US Tbill rate times**<br>**country’s debt/gni**|**.000775 (1.80)**|**.000562 (1.48)**|
|**trade openness**|**-.4676 (1.84)**|**-.5352 (2.27)**|
|**debt/gni**|**.00471 (1.21)**|**.00734 (2.08)**|
|**reserves/debt**|**-.0221 (3.40)**|**-.0225 (3.83)**|
|**short-term/total debt**|**-.00628 (.77)**|**-.00116 (.16)**|
|**(2) coefficient on lagged**<br>**EM spread, by country:**|||
|**Argentina**|**-.0720 (2.08)**|**-.0577 (2.03)**|
|**Brazil**|**-.1312 (3.28)**|**-.1301 (3.39)**|
|**Bulgaria**|**-.1372 (3.00)**|**-.1362 (3.04)**|
|**Colombia**|**-.3232 (1.92)**|**-.2851 (1.87)**|
|**Ecuador**|**-.1286(3.28)**|**-.1315(3.41)**|
|**Mexico**|**-.1699(2.96)**|**-.1823(3.10)**|
|**Morocco**|**-.1601(3.99)**|**-.1547(4.14)**|
|**Nigeria**|**-.1393(3.93)**|**-.1188(3.99)**|
|**Panama**|**-.4963(3.50)**|**-.5228(3.67)**|
|**Peru**|**-.4452(3.81)**|**-.1420(5.11)**|
|**Philippines**|**-.1405(2.50)**|**-.1461(2.91)**|
|**Poland**|**-.1545(2.64)**|**-.1339(2.70)**|
|**Russia**|**-.1205(2.74)**|**-.1254(2.97)**|
|**South Africa**|**-.0191(.39)**|**-.0157(.37)**|
|**Turkey**|**-.3084(1.47)**|**-.3139(1.98)**|
|**Ukraine**|**-.3742(1.76)**|**-.3420(2.04)**|
|**Venezuela**|**-.1321(3.20)**|**-.1345(3.39)**|
|**(3) statistics**|||
|**no. of obs.**|**1443**|**1443**|
|**R2**|**.3294**|**.3194**|
|**Adjusted R2**|**.2458**|**.2703**|
|**p-value for zero**<br>**coefficients**|**.0000**|**.0000**|

17 Coefficients on the explanatory variables in first-differences and separate constant terms, which are allowed to differ across countries, are not reported.

23
Ravallion also notes that the value of this consumption floor is essentially the same as a biological floor estimated by Lindgren (2015), who aims to estimate a “barebones basket” of food items with a minimal allowance for nonfood needs. Using different data and methods, Allen (2016, Table 12) similarly constructs a near-survival line and estimates an average cost in nonOECD countries of $1.02 (in 2011 PPP terms) to consume 1,700 calories per person per day. While the survival lines estimated by Lindgren and Allen are conceptually different from the consumption floor estimated by Ravallion, each suggests a minimum value that corresponds to the intercept of a dollar a day (in 2011 PPP terms).

Our finding that national poverty lines are increasing in economic development over the entire range is in contrast to Ravallion and Chen, and Atkinson and Bourguignon, who proposed relative poverty lines that had floors set at the international poverty line. The motivating reason for a floor, as articulated by Ravallion and Chen and RCS (2009) is that for the poorest of countries, there was no correlation between national poverty lines and measures of national wellbeing (mean consumption or income). They asserted that the relationship between poverty lines and national income was non-increasing for the poorest of countries, and therefore the national poverty lines for these countries reflected absolute minimum needs.<sup>26</sup> Panel B of Figure 3 plots both the RCS and Jolliffe-Prydz national poverty lines on a measure of national income (i.e. household final consumption expenditure). A fitted line from a locally weighted scatterplot smoothing (lowess) estimator reveals that both sets of national poverty lines are upward sloping in national income, indicating that the definition of basic needs

> years). Inflating $0.67 by 52 percent results in $1.01. Further, direct re-estimation of Ravallion’s consumption floor using 2011 PPPs gives a value of $1.00 at 2011 PPPs.

> 26 This idea of viewing poverty lines from the poorest of countries as reflecting minimum absolute needs was also proposed in RDV (1991) and World Bank (1990).

18